retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: June 8, 2012

    Last night on "The Daily Show," Jon Stewart went on yet another riff about the proposed ban in NYC of jumbo soft drinks ... and compared the potentially stricter rules on soda with a proposed lightening of restrictions on marijuana.

    It is hysterical, and can be seen here.
    KC's View:

    Published on: June 8, 2012

    A new study on private brand usage conducted by Perception Research Services (PRS) suggests that "the vast majority of shoppers still purchase some Private Label products on a regular basis (86% - on par with the 84% seen in November 2010). This is true across income groups and other types of classification.

    "The latest data shows more types of Private Label being purchased as significantly more shoppers claim to have bought more Private Label products than they did in 2010 (38% vs 32%), and reported purchasing 54% more product categories (7.4 vs. 4.8)."

    The study also says that "over half (51%) say they feel smart/savvy when they buy Private Label products; and very few - only 11% - say they feel self-conscious, with almost none – 3% - saying they feel embarrassed when doing so." And, the largest gains seen for Private Label penetration were for soft drinks, salty snacks, frozen meals,  vitamins/medicines, and cookies.
    KC's View:
    I'm not really surprised by these numbers, considering that a lot of people still have a recessionary mindset and find private brands to be attractive because of the price points and improved perception of quality.

    However, it also is important to point out that while PRS conducted the study, it is not saying who paid for it. Not that the sponsor makes the numbers illegitimate, but it is always important to be transparent about this stuff. And, the research was done "in April 2012 across the U.S., among roughly 600 primary household grocery shoppers aged 18-64."

    I'm no statistician, but I'm always amazed when the habits and attitudes of hundreds of millions of people are extrapolated from just a few hundred.

    Published on: June 8, 2012

    CNBC reports that Starbucks may have been trying to demonstrate a stiff upper lip this week, but it ended up with a black eye.

    The occasion was Queen Elizabeth II's Diamond Jubilee, celebrated all across England. And so, in an effort to be local-minded, Starbucks posted the following statement on its Twitter account:

    “Happy hour is on! Show us what makes you proud to be British for a chance to win. Don’t forget to tag #MyFrappuccino.”

    The problem was, the message was posted on Starbucks' Ireland site ... which prompted catcalls and criticisms from people who pointed out that Ireland is not Britain, and this demonstrated a classic lack of understanding of the local market.

    Starbucks pulled down the message after three hours and apologized, saying that it had been mistakenly posted on the wrong page.

    But the damage was done.
    KC's View:
    Oops.

    Published on: June 8, 2012

    ABC News reports that JC Penney has once again put itself in a position where it is being targeted by conservative activists.

    The first time was last year, when it hired Ellen DeGeneres to be its spokesperson. DeGeneres is openly gay, and an organization called One Million Moms (OMM), an outgrowth of the American Family Association, objected and called for a boycott. No boycott materialized, and both JC Penney and DeGeneres were largely praised for the ads.

    Now, JC Penney is at it again - with a Father's Day ad that features a real-life gay couple, Todd Koch and Cooper Smith, and their children. (Apparently this follows on the heels of a Mother's Day ad that featured a lesbian couple that nobody paid much attention to.)

    OMM has taken the bait, is accusing JC Penney of "promoting sin," and is calling for another boycott.

    “It’s obvious that JCP would rather take sides than remain neutral in the culture war,” OMM said in a statement. “JCP will hear from the other side, so they need to hear from us as well. Our persistence will pay off! One day we will answer for our actions or lack of them. We must remain diligent and stand up for Biblical values and truth. Scripture says multiple times that homosexuality is wrong, and God will not tolerate this sinful nature.”
    KC's View:
    JC Penney isn't only featuring a gay couple in its ads; it also is featuring real-life heterosexuals as well.

    Now, I don't want to be too cynical about this. Sure, it is true that JC Penney has been fighting some marketing and financial headwinds lately, and that a controversy over gays and lesbians in its advertising could serve to a) take people's minds off the other issues, and b) differentiate it from the competition. But those can't be the only reason for these ads.

    The thing is, more people are going to notice the gay ads because people are calling for a boycott (which won't work, by the way). So OMM is actually doing JC Penney a favor by getting this story into the news.

    It is interesting that OMM, if it can be believed, actually wants JC Penney to be "neutral" in the culture wars ... since it has no intention of being neutral.

    I don't want to inflame the culture wars here, but I do have to say that I am not neutral on this issue. I have a sister who is a lesbian, and who is lucky enough to live in a state where she has been granted the right to marry her partner. She's been with this partner for something like a quarter-century ... in my family, except for Mrs. Content Guy and me, it is the romantic relationship with the longest staying power. I'm proud of her, I'm happy for her, and I cannot be neutral when other people want to judge her with language of intolerance.

    Published on: June 8, 2012

    The Sacramento Bee reports that Save Mart Supermarkets has given its unionized employees its "last, best and final" offer, which was instantly deemed by the United Food and Commercial Workers (UFCW) as "not acceptable."

    The Bee says that the standoff could lead to a strike, though the UFCW says it wants to meet with Save Mart next week to make "every effort to reach a settlement."

    According to the story, "With Raley's already on the brink of a walkout, the move by Save Mart intensifies the labor crisis in the Northern California supermarket industry.

    "A final contract offer is an ultimatum of sorts - if the workers don't agree to the company's proposal, they have little choice but to go on strike.

    "In a prepared statement, Save Mart indicated it was growing impatient with the contract negotiations."
    KC's View:

    Published on: June 8, 2012

    Interesting confluence of soft drink-related stories this morning...

    • The Washington Post reports on how Todd Putman, a former top marketing executive with Coca-Cola, spoke to a "National Soda Summit" in Washington, DC, this week about how he feels the soft drink industry - and especially his former employer - has too much power.

    Putman, the Post writes, "wanted to give an inside account of what he contends has been a drive by Coca-Cola to replace not just its direct competitors but all beverages in the American diet — a campaign for what the company called 'share of stomach.' He wanted to warn about the industry’s particular focus on young people and minorities.

    "But mostly he wanted to level the playing field.

    "'I’m not against soft drinks per se,' he began carefully. 'What I am for is balance of power. And I think the power has shifted in the wrong direction. The resources, the scale, the intelligence, the strategy these companies use is intense. We need to take all that thinking . . . all that strategy and convert it — jujitsu it — to healthy products'."

    The Post writes that, "contacted for a response to Putman’s comments, a spokesman for Coca-Cola, Ben Sheidler, said share of stomach is no longer 'part of our company’s strategy.'

    “'Todd Putman left Coca-Cola over 12 years ago after working here for only three years,' Sheidler said. 'Since Putman left, our business has changed dramatically.'

    "As an example, he said that 41 percent of the total volume of Coca-Cola trademark products sold in North America is now low- or no-calorie — up from 1 percent in 1982 and 32 percent in 1999.

    "The company has also voluntarily removed full-calorie carbonated drinks from schools, and voluntarily lists calorie information on its packages, Sheidler said."

    • Meanwhile, USA Today has an interview with Katie Bayne, Coca-Cola's president of sparkling beverages in North America, in which she refutes some of the claims made by NYC Mayor Michael Bloomberg as he pushes for a ban on jumbo sugared soft drinks as a way of combatting obesity.

    Bayne says that "during the period from 1999 through 2010, when obesity was rising, sugar intake from beverages was decreasing. During that period, she says, sugars from soda consumption fell 39% even as the percentage of obese kids jumped 13% and obese adults climbed 7%."
    KC's View:
    I have no doubt of Putman's sincerity, but I would point out that he currently runs a marketing company that only handles healthy products. So while he may have started that company as a reaction to his feelings about Coke, going public with these criticisms can only be good for business.

    Just sayin'...

    Published on: June 8, 2012

    USA Today reports on "a loosely knit association of Walmart employees called the Organization United for Respect at Walmart — OUR Walmart, for short. They are prodding the giant retailer to provide better wages, affordable benefits and reasonably reliable schedules for store employees nationwide. Their campaign comes not only at a time when many low-wage workers in the U.S. are struggling to make ends meet, but also as Walmart is rededicating itself to attracting price-conscious consumers like them — by holding down its expenses and guaranteeing the lowest prices.

    "OUR Walmart is not a labor union and lacks the right to bargain with the company on workers' behalf. The group receives financial and technical support from the nation's largest retail workers union — the United Food and Commercial Workers (UFCW), which has tried to organize Walmart workers in the past.

    "OUR Walmart claims about 5,000 members who pay monthly dues of $5 each. Members learn how to stand up for themselves with store managers and about their legal protections as workers. They try to recruit fellow associates at their stores, and local groups hold meetings to discuss specific grievances. About three dozen members traveled to Walmart's annual shareholders meeting last week in Bentonville, Ark., to pass out fliers about their cause."

    The story notes that "Walmart says wages and benefits for its 1.4 million U.S. employees are as good as or better than other retailers' and that OUR Walmart's members — helped by the UFCW — are just trying to promote discontent. While conceding there are 'some people who may have individual issues in individual stores,' Walmart spokesman David Tovar says about 300,000 U.S. workers have been with the company more than 10 years. He says that shows how many are happy with their jobs."
    KC's View:

    Published on: June 8, 2012

    • The Toronto City Council has voted to ban single-use plastic shopping bags at the city's retailers as of January 1, 2013.

    The ban will replace a five cent bag fee that reportedly has lowered plastic bag usage in the city by 53 percent.
    KC's View:

    Published on: June 8, 2012

    • Empire Co. Ltd. announced that Marc Poulin, president of Sobeys IGA operations, is being promoted to be president/CEO of the Sobeys Inc. supermarket chain. He succeeds Bill McEwan, who is retiring.

    At the same time, Claude Tessier, Sobeys' senior vice president of finance, will replace Poulin as President, IGA Operations Business Unit.
    KC's View:

    Published on: June 8, 2012

    • Eugene Ferkauf, who founded the now-defunct EJ Korvette's chain of discount department stores, passed away on Tuesday. He was 91.

    The obit in the NY Times notes that "Ferkauf was one of the first businessmen to grasp the emergence of a new breed of postwar consumer. Seeing a population of Americans financially better off, impatient to get on with their lives after World War II and susceptible to the advertising shown on the latest new thing, their television sets, he concluded that victory belonged to the very bold. Mr. Ferkauf would not only discount, he would discount more deeply than anyone ever had.

    "Seeing people streaming to the suburbs, he imagined the sort of sprawling, free-standing, conveniently situated, no-frills variety store that came to define American retailing. After he built it, Sam Walton came to New York to pick his brain; two years later, Mr. Walton founded Wal-Mart. By the mid-1960s, the Korvette chain had dozens of stores, including one on Fifth Avenue in Manhattan, and scores of imitators had followed Mr. Ferkauf’s model."

    Ferkauf sold his ownership in the company in 1966 for more than $20 million; EJ Korvette's went out of business in the early 1980s.
    KC's View:
    I grew up in the suburbs of New York City during the late fifties and sixties, the oldest of seven in a family where our dad was a schoolteacher of limited financial means. Which meant finding places to buy stuff at a discount whenever and wherever possible. And that meant trekking up to the EJ Korvette's in Port Chester, NY, with some degree of frequency. So when they talk about this chain being the model for so many others, especially Walmart, I know exactly what they are talking about.

    One thing. I actually knew very little about the company, but I was disappointed to find out from the Times obit that the urban legend was untrue - EJ Korvette did not stand for "eight Jewish Korean veterans" who founded the company. It was all Eugene Ferkauf.

    Published on: June 8, 2012

    Got a number of emails responding to the decision by Supervalu-owned Albertsons in Southern California to reduce its store-level workforce by an estimated 2,200-2,500 positions. These reductions, which will occur across all 247 Albertsons stores in California and Nevada, will begin the week of June 17 and should be completed near July 1. The change is expected to directly impact a small number of positions at any specific store location.

    The company said that the decision is part of the company's focus "on simplifying its organization and reducing expenses to help reinvest in more customer facing initiatives."

    I commented, in part:

    somehow doubt that if we all had polled Albertsons customers in Southern California a few months ago, would people have said that there were too many employees in the stores, that the service was too good, and that what they really wanted were fewer cashiers and stock clerks and department employees?

    Supervalu has decided that fewer people on the front lines is the way to be more economical. The question is whether fewer people on the front lines will make it more competitive ... which is a completely different thing.


    One MNB user wrote:

    This continues to amaze me… companies like SVU that are struggling for sales, aren't priced right, fail over and over to make stores locally relevant… lay off workers at store level but continue to recruit and over pay for what those executives/board members believe to be the "top talent" that can change the company.

    When a company makes these kinds of moves, and SVU is not unique, the impact on sales is usually noticeable within 90 days max. If you graph labor cuts at stores against comp sales it always follows the same axis.

    If  you look at the org chart of the corporate office the layers and layers of individuals performing similar functions is astounding!

    … can you imagine a company that does 4 billion in sales with 4-5 grocery/center store directors reporting to a vp of center store who reports to a group vp of center store who reports to a senior vice president of merchandising…. and by the way the directors have 3 or more category managers, 2 or more assistant category managers and admin assistants… oh and by the way - this group doesn't even "buy" the product.. there is a supply chain procurement team that actually cuts the PO's…. and there is a financial team that actually crunches the numbers to ensure the merchandising team didn't over invest on advertising, give up too much margin on promotions and every day pricing….. and we wonder why we can't get help in the deli at 7pm (most of us don't work 9-5 anymore!) and we wonder why we have to pay more for groceries here than let's say WalMart or Aldi or why we are shopping in a "vanilla box" paying the same prices we would expect to pay at retailer like Whole Foods.

    Over promise, under deliver- corporate decision and lack execution. Raise prices, focus on making money on the buy and cut store labor to compensate for the lack of sales. Sure, makes great sense.


    Another MNB user wrote:

    Got to love the irony…..
     
    The company's focus "on simplifying its organization and reducing expenses [reduce Store personnel] to help reinvest in more customer facing initiatives."
     
    Last I checked, aren’t store personnel (especially in the front end) “customer facing”……  What few customers remain would probably prefer people to some “Initiative."

    So I guess there are a few less people to play musical chairs on the Titanic now.


    From another reader:

    Same old song, different verse. No retail ever "saved" themselves into long term profitability and this isn't likely to be the first.

    MNB user Dave McKelvey wrote:
     
    I remember quite clearly a lesson taught to me at Retail Counselor Training at none other than Supervalu way back in 1982. It was called the downward spiral. The article on SV cutting labor at their SoCal stores reminded me of that very spiral. Sales drop, so you cut labor and services. Sales drop even more as a result of the cuts, so you cut even deeper, resulting in a downward spiral you can’t pull out of. I guess the teacher forgot the lesson.
    KC's View:

    Published on: June 8, 2012

    Some weekends are different, because they make you think and reflect and experience great joy.

    I'm about to have one of those weekends.

    My daughter, the youngest of my three children, will simultaneously graduate from high school and celebrate her 18th birthday this weekend. While I don't feel nearly old enough to have a youngest child her age, the photographic evidence (at left) is clear.

    My daughter is funny. On the one hand, she hates it when I revert and treat her like my little girl. (I explain to her that she'll always be that.) And then, every once in a while, she'll call me "daddy." (I tell her that I hope she'll always be able to call me that.)

    I guess most daughters are like that. I suspect most dads are like me.

    It's going to be an exciting weekend. A couple of months from now, she'll go off to college.

    Today, I just wanted to brag about her for a moment. To paraphrase something one of my favorite writers once said, she's not always easy, but she's never a bore. She's tough and strong minded and funny and a cool kid who is great fun to hang out with.

    My kid. My little girl.

    Happy Graduation. Happy Birthday.




    My wine of the week: the 2008 Marche Rosso Fontezoppa, a wonderfully smooth blend of Cabernet Sauvignon and Sangiovese that is perfect with Italian food.




    I saw Snow White & The Huntsman last weekend. It's okay. It looks beautiful, the special effects are wonderful ...and Charlize Theron is, as always, the best special effect of them all (and she happens to be really good as the icy cold and cruel evil queen). But the movie as a whole was less than the sum of its parts.

    It made me even more excited to see the next movie that Charlize Theron is in this summer - Prometheus, which comes out today.

    I can't wait.




    That's it for this week. I'll be back Monday, and hope you have a great weekend. I know I will.

    Fins Up!

    KC's View: