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    Published on: May 17, 2012

    "Past is Prologue: Part two of a 12-Part Series

    This morning, MNB continues a series of videos culled from a presentation that I did at the recent Food Marketing Institute (FMI) 2012 Show in Dallas. The session, entitled "From Amazon to Zipcar: Innovations from the E-Revolution," featured an extended conversation with Tom Furphy, CEO of Consumer Equity Partners and the guy who helped Amazon.com get into the grocery business.

    Today: Why what Amazon has done in the CPG business to date is just preparation for what is likely to come, and what that means to competitors.

    This series is made possible by MyWeb Grocer, the leading provider of digital grocery and CPG solutions.

    For more information about how you can fight an efficient and effective battle in the e-revolution, email MyWebGrocer by clicking here, or call  (888) 662-2284.

    KC's View:

    Published on: May 17, 2012

    by Kevin Coupe

    Yet another Eye-Opening example of how the gaping maw of technology is changing the way marketers create products for consumers....

    The New York Times had a story the other day about how writers of mysteries, thrillers and romance novels who traditionally had put out one book a year now are "pulling the literary equivalent of a double shift, churning out short stories, novellas or even an extra full-length book each year ... trying to satisfy impatient readers who have become used to downloading any e-book they want at the touch of a button, and the publishers who are nudging them toward greater productivity in the belief that the more their authors’ names are out in public, the bigger stars they will become."

    Part of it is e-book technology can create voracious readers - once they finish one book, they can order up another one by the same author with just the click on a button on their iPad, Kindle or Nook. But if such a book does not exist, then they might order a book from a competing author, which, in essence, erodes brand loyalty. And so, in order to keep readers happy and loyal, authors such as Lee Child and John Grisham are turning out two books a year, hoping that quantity won't hurt quality, and that technology won't force them to compromise in ways that will hurt the product long-term.

    Or, to put it another way, to make sure that the gaping maw of technology goes not eat them alive.
    KC's View:

    Published on: May 17, 2012

    The Associated Press reports that a new study from the US Department of Agriculture (USDA) is out with a new study saying that "most fruits, vegetables and other healthy foods cost less than foods high in fat, sugar and salt," a finding that "counters a common perception among some consumers that it's cheaper to eat junk food than a nutritionally balanced meal."

    According to the story, "The government says it all depends on how you measure the price. If you compare the price per calorie -- as some previous researchers have done -- then higher calorie pastries and processed snacks might seem like a bargain compared with fruits and vegetables. But comparing the cost of foods by weight or portion size shows that grains, vegetables, fruit and dairy foods are less expensive than most meats or foods high in saturated fat, added sugars or salt."
    KC's View:
    In addition, one has to consider the extended costs of not eating in an intelligent, moderate fashion. Seems to me that one has to think about that stuff as one makes food choices.

    Published on: May 17, 2012

    The New York Times reports on how in Chester, Vermont, Dollar General has received narrow approval from the town to open a 9,100 square foot store ... which seems a lot simpler than it actually is.

    To begin with, the state is Vermont - a state that has been rigorous in its opposition to big box stores run by Walmart (which has just four there) and Target (which has none). According to the story, "more than two dozen Dollar General, Dollar Tree and Family Dollar stores have cropped up around the state. All three companies are thriving in the bad economy - between them, they have more than 20,000 outlets nationwide, selling everything from dog treats to stain remover and jeans to pool toys. Their spread through Vermont, with its famously strict land-use laws, has caught chain-store opponents off guard."

    According to the Times story, "The spread of dollar stores has come during a period of decline of the general store, a Vermont institution that in many towns served as a meeting place and all-purpose emporium." Dollar General now has 15 stores in the state, and while the company has made concessions in terms of architecture and other operating procedures, there remains considerable concern that continued expansion of the format in the state could lead to a diminished sense that Vermont is someplace special, someplace different.
    KC's View:

    Published on: May 17, 2012

    • In Arkansas, CityWire.com reports that Walmart's private brand food prices are "at an all-time high." According to the story, a shopping basket of private brand items purchased at Walmart is up 1.7 percent compared to a year ago ... and while a basket of branded products bought from Walmart remains less expansive than identical products bought at competitors such as Target and Publix, the gap is not as big as it used to be. And when compared to Aldi, the story suggests, Walmart's private brand prices are considerably higher.

    Reuters this morning reports that "Wal-Mart Stores Inc posted a better-than-expected quarterly profit on Thursday as its Walmart U.S. division showed a 2.6 percent rise in sales at stores open at least a year."

    Regarding the ongoing investigation into systemic and systematic bribery took place in its mexico division, and charges that the company covered it up when the allegations came to light, Walmart said that it does not think there will be any impact on its business but "can provide no assurance that these matters will not be material to its business in the future."
    KC's View:
    Walmart - and its leadership - needed some good news, and after nine consecutive quarters of stagnant US same store sales, now it has had three good quarters. Maybe that gives top execs there some breathing room ... but I'm not convinced that the bribery case won't have a material impact on the Bentonville Behemoth.

    Published on: May 17, 2012

    US News and World Report has a story about how Nordstrom has been named by the magazine as "one of America's Most Connected Companies for its use of technology to expand shopping options, Nordstrom has been aggressive about snapping up promising Internet ventures to diversify its business and experiment with new retail platforms. Its social media strategy extends well beyond Facebook, Twitter, and YouTube to an array of buzz-generating fashion and photo-sharing sites. Recognizing that its customers always want to stay connected, the company introduced complimentary Wi-Fi in its high-end department stores in 2010.

    "To improve customer engagement at its 227 department and discount stores in 31 states, Nordstrom joins a growing list of retailers that are turning to Apple. Late last year, it distributed 6,000 modified iTouch devices to sales staff that can ring up purchases on the spot, a process called 'mobile checkout,' and track inventory. Sales personnel also use iPads to assist customers with the selection of everything from wedding wardrobes to cosmetics to business suits."

    • Amazon-owned Diapers.com said yesterday that it has launched a new Clothing & Shoe Shop online "with more than 30,000 clothing and shoe items, 100+ brands and sizes ranging from newborn to 5." The company said that "the shop makes it easy for parents to find everything they need to keep up with baby's growth. As with all Diapers.com orders, parents will continue to enjoy fast, 1-2 day delivery*, free shipping on orders $49+, and free, no-hassle returns."
    KC's View:
    It's not like Diapers.com needed to do more business ... the general perception is that the site, and Amazon.com ... are pretty much dominating the retail diaper business these days.

    Published on: May 17, 2012

    ...with brief, occasional, italicized and sometimes gratuitous commentary...

    • The New York Times reports that a federal judge has "struck down new regulations governing union elections, saying the National Labor Relations Board did not follow proper voting procedures when it approved the rules last year."

    The legitimacy of the new rules was not addressed by the judge, who simply aid that when the NLRB voted, it did not have a quorum. The judge said that the NLRB was free to vote again.

    The rule changes at issue would have sped up union elections in the workplace, which organized labor says is necessary to avoid stalling litigation; business interests say that faster elections don't give them time to effectively argue that union representation is not necessary.

    • The Whole Planet Foundation and BlueAvocado announced that they have launched a "Make Change. Not Waste" mobile iPhone application that they say "rewards Whole Foods Market shoppers with coupons for green lifestyle actions, while raising awareness and funds for poverty alleviation.

    "The app provides shoppers with badges and coupons from a catalog of 45 green lifestyle behaviors including recycling, using a reusable bag and biking to work. After completing 10 green actions, customers can unlock one coupon from leading green brands including: Nature's Path, Alexia Foods, Dr. Bronner's Magic Soaps, Stonyfield, Frontier Co-op and Organic Valley. Shoppers can also donate a percentage of the coupon value back to Whole Planet Foundation."

    • The Chicago Tribune reports that "Denny’s Corp., the chain of diners known for its pancake stacks and discount menus, is joining major companies such as McDonald’s and Wendy’s to stop its suppliers from cramming pregnant pigs into tiny cages."

    I'm glad they're advocating humane treatment of animals. Now, if they'd just be better at humane treatment of people b y serving them decent food...

    • Safeway said yesterday that "after a three-month nationwide search, a People's Choice vote, three regional cook-off events, and one final cook-off event ... Dave Histed has won the "Search for Our Next Chef" competition, a first-of-its-kind opportunity in which chefs from across the country competed for a full-time position with the Safeway Culinary Kitchens and the chance to have their recipe sold as an Open Nature Skillet Meal in Safeway stores."
    KC's View:

    Published on: May 17, 2012

    • Publix Super Markets Inc. announced a promotion for Gino DiGrazia, the company's vice president and controller for business analysis and reporting, to the role of Vice President of Finance.
    KC's View:

    Published on: May 17, 2012

    Responding to a report suggesting that Americans want more nutritional information on product labels, one MNB user wrote:

    Americans want what?  Really?  Which Americans are they asking?    Who on earth is clamoring for a list of possible side effects for all the potential allergens contained in a food product???  Must be a group of lobbyists for Big Pharma looking to distract us from the litany of dire “rare, but possible side effects” recited on the all-too-prevalent commercials for prescription drugs. The Americans that I know see a jar of peanut butter warning us that it contains peanuts and say “I should _____ HOPE so!” 

    I’m not against being informed, but for information to be effective, it needs to be concise, practical and useful, in order to be readily understood and intelligently used.  And should probably be legible on a soup can or yogurt cup and not require a fold-out the size of a map of Saskatchewan. 
     
    I’m just sayin’...


    I get your point, but the "map of Saskatchewan" comment portrays old world thinking. Technology such as QR codes make it possible to provide a vast amount of information that people can access if they want to. It always has been my belief that providing information, regardless of whether people use it, is one of the best ways to engender trust.

    From another MNB user:

    The issue is further complicated in that many companies will simply add “may include genetically modified ingredients” to the existing label to ensure they comply with the rules.  In the end, if we over-label, no one is really any better informed.

    Again, I'm not sure that the word "over-label" is applicable in 2012.




    Got another comment about the whole "back to basics" debate...

    I have the greatest job in the world, sharing best in class “proven” fundamental and ‘new” insights to help our retailers increase top line sales.

    A few weeks ago in a top to top call I again heard the most famous quote "oh we knew that 20 years ago”… even thought the retailer wasn’t following the practice… that is proven to increase sales immediately with no investment.

    The challenge is sometimes getting retail leadership into this century , not this decade.


    My larger point here is not that people don't need to cover the basics, but that if they are not doing so and need to "get back to basics," then they're probably in big trouble.




    On another subject, an MNB user wrote:

    All I'll say is Aldi better bring it in Houston.

    HEB has been perfecting their alternative format "Joe V's" for a couple of years, opening up multiple locations, and believe me when I say the independent trade in Houston will not shirk from their responsibility to continue servicing their respective neighborhoods. Wal-Mart has a number of very high volume neighborhood markets in H-Town, and it's home of course to one of the better Kroger divisions. Not to mention Fiesta Mart is back on their game......

    This will be a fascinating look at what Aldi is really made of....





    Regarding the Americans who believe that Facebook is just a fad, MNB user Samantha Wilding wrote:

    I agree with you that calling Facebook a 'passing fad' may be a serious error of judgement.  It reminds me of the now famous story of Decca Records in London turning down the Beatles back in 1962.  Executive Dick Rowe turned down a chance to record the Beatles in favour of local beat combo Brian Poole and the Tremeloes.  Dick Rowe, head of the pop division, famously told the Beatles' manager Brian Epstein: "We don’t like their sound, and ‘guitar music’ is on the way out" - but alas, it was not just a passing fad !  Dick Rowe did not make the same mistake twice, and signed the Rolling Stones soon after.

    Thanks for your always amusing commentary.


    Most people don't get a second chance.

    Responding to Facebook's high valuation in its current IPO, one MNB user wrote:

    I have long struggled with the concept that a company that doesn’t produce something of true value (e.g., a product or physical service) can be valued so astronomically.  Yes they provide a service, but is it that valuable?

    There are three articles in the WSJ this morning that outline just such a juxtaposition – GM has decided not to advertise on FB, although they will keep a free presence; an editorial on Facebook’s challenge to monetize the value as they move to IPO (as was the ultimate challenge and demise of AOL); and then one on Pepsico’s ‘new’ investor.

    Monetizing FB to the levels of valuation is fraught with challenges, privacy being the main one, but also, in my view a change in consumer behavior that has become significantly different, and to some degree abhorrent / unmoved by constant advertising and sales pitches.  I see an eventual backlash to what started as a ‘private network’.  Perhaps not a fad, but definitely not the cornerstone of a profitable, long-term business model (read: AOL)

    As to the juxtaposition – Pepsi is currently valued at $106 B, Facebook estimate is around $100B, yet Pepsi serves as many customers or more on a daily basis with a wide array of products around the world.  Great that FB has all this info, but what is it they really providing – a way to connect with hundreds of people you knew once?  Doesn’t email, Skype, texting, phone (and who knows what else is coming down the line) do that?  Consumer behavior is erratic, although at times predictable, but ever changing – I think GM and others have it right – limited ROI! As a marketer you have to play, but how can you ultimately make a payback?


    All good questions. But I think one makes a mistake in diminishing the impact that Facebook has had. Does the company face real challenges in continuing to innovate and remain relevant, as opposed to going the way of MySpace? Sure.

    Another MNB user wrote:

    Social media is certainly not a fad.  The form that it takes may well change every few years.  To your point, Facebook will need to continue to evolve to maintain it's leadership position.  The question is, can they develop the revenue stream to be popular with Wall St. while still maintaining their hip consumer image.

    Worst case scenario, Mark Zuckerberg buys the Sacramento Kings and is the new face on Shark Tank.


    That would be the worst case...

    KC's View: