retail news in context, analysis with attitude

Published on: September 6, 2012

This commentary is available as both text and video. Enjoy both, or either. For past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

I just want to say for the record that when I ran my first Marine Corps Marathon, in October 2001, beginning and ending in the shadow of the recently attacked Pentagon, I did it in 5 hours, 35 minutes and 29 seconds.

My second - and almost certainly last - Marine Corps Marathon, in October 2004, just days before my 50th birthday, was a marginal improvement - I did it in 5 hours, 29 minutes and three seconds.

Those days are imprinted indelibly on my mind. I know exactly how fast - or, to be more accurate, how slowly - I ran them. Not only would I never think of misstating my times, because among other things, it can be easily checked, but most of the runners I know also would never misstate their times. It just isn't done, because however long it takes you to run a marathon, it is arduous, hard work. I may be a slow runner, but I take a certain perverse pleasure in the fact that it took me five and a half hours to finish ... because the key word in that sentence is "finish."

I'm telling you this not to make a political point, although the whole question of marathon times became a political hot potato the other day when the GOP vice presidential candidate, Paul Ryan, claimed to have run a marathon in under three hours, when it actually took him more than four. I am perfectly willing to take him at his word that he forgot ... though he may be one of the few marathon runners to have forgotten his or her time by such a large margin.

I actually want to make a business point about this. Not surprisingly, it is about the importance of transparency and accuracy, especially in a 21st century environment.

If you had asked me a couple of weeks ago about my marathon finishing time, I would have said I did both in about five and a half hours. When I first read the stories about Paul Ryan's marathon and was contemplating this commentary, it took me exactly 45 seconds to find my exact finishing times on the Internet. Exactly 45 seconds.

Ryan is a serious person with serious ideas about how to run the country. Whether one agrees with him or not, I think we can all agree on that. By not being both transparent and accurate, he actually raises questions - at least in the minds of some people - about his character.

Let's be clear. I'm not saying this should be a deal breaker if you were considering voting for the Romney-Ryan ticket. I actually think it will make no difference to the 45 percent of Americans that will vote Republican in the next election, nor to the 45 percent of Americans that will vote Democratic. (And I certainly hope it is not the sole criteria on which the last 10 percent of voters make their decision.)

But in today's world, whether you are talking about marathon times, or ingredients on a label, or a product's health benefits, or whether something is organic or not, or what an item's environmental profile happens to be, you have to get it right. The big stuff, and the little stuff.

In part, because if you get it wrong people are going to find out. But most of all, because getting it right is what people expect. Get it wrong, and you risk eroding people's trust.

Now, in the interest of transparency, I have to admit right here that I have misled people from time to time. About my height. I'm five-eight-and-a-half, but used to round that up to five-nine. Then I sort of forgot, and started thinking I was actually five-nine-and-a-half, and rounded that up to five-ten. Then I started thinking I was really five-ten-and-a-half, and I rounded that up to five-eleven ... but the first time I said that in front of Mrs. Content Guy, she stopped me and said, in essence, "You are such an idiot. You're five-eight-and-a-half, you've always been five-eight-and-a-half, and the only way that is going to change is when you get old and start shrinking. So cut the crap."

It wasn't that I was misleading people on purpose. I just got so used to telling people one thing that I sort of started thinking it was the truth. Until Mrs. Content Guy set me straight.

That's why I love her. She keeps me honest and transparent.

Everyone - and every organization - needs someone just like her.

Anyway, that's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: September 6, 2012

Troubled Supervalu Inc. said yesterday that "it will close approximately 60 underperforming or non-strategic stores this fiscal year including 38 in its retail food reporting segment and 22 Save-A-Lot locations. The majority of the stores are expected to close before December 1, 2012, the end of the Company’s fiscal 2013 third quarter ... Over the next three years, the Company estimates that closing these locations will generate between $80- $90 million in cash from monetizing owned real estate, eliminating cash operating losses, and selling departmental assets."

“These decisions are never easy because of the impact a store closure has on our team members, our customers, and our communities,” said Wayne Sales, Supervalu’s chairman/president/CEO. “Today’s announcement reflects our commitment to move with a greater sense of urgency to reduce costs and improve shareholder value.”

Published on: September 6, 2012

by Kevin Coupe

Business Insider has a piece about a new National Retail federation (NRF) survey saying that college students are spending more than $900 apiece to customize their dormitory rooms - a spending pattern that adds up to a $50 billion annual market.

Two interesting things in the story - that the spending is at least in part "spurred by obsessive parents," and that it seems to be immune from economic ups and downs.

Now, I think this may be one of those cases where the survey could have gone a little deeper.

For example, does "customizing a dorm room" include computers and flat screen television sets? If so, that explains the number. If not, I suspect that their may be some demographic trends....

We just took our youngest child to college. She's our third, and only daughter.

And it would be my observation that if the average is about $900, it is that high largely because girls make up half the college population.

When we took our two boys to college, they would have been reasonably happy if we'd thrown their clothes in a big garbage bag and their toiletries in a cardboard box, and sent them on their way.

My daughter, not so much. I've been to Broadway productions that were lower-key than this effort.

And I would say one other thing, which you can interpret anyway you want.

The problem is not "obsessive parents." All you really need is one obsessive parent...

Trust me. It's been an Eye-Opener.

Published on: September 6, 2012

Safeway said yesterday that it plans to take its Blackhawk Network gift card and payment services unit public, probably during the first half of next year.

According to Reuters, "Safeway, one of the largest U.S. supermarket chains, said it plans to file a registration statement for a potential initial public offering of a minority stake in Blackhawk, a move long- awaited by Wall Street investors."

Published on: September 6, 2012

• Bloomberg reports that Scott Price,, who runs Walmart's Asian operations, says he is "optimistic" that the Indian government will eventually allow foreign companies to make direct investments in retailers there, despite the fact that politicians there were forced to reverse a previous move in that direction because of public opposition.

As the story notes, "India currently bars foreign retailers such as Wal-Mart that sell multiple brands from investing in supermarkets. A loosening of those restrictions would allow companies including Wal-Mart and Carrefour SA access to a retail market that is currently estimated at $505 billion according to Technopak Advisors Pvt. Wal-Mart currently has wholesale outlets in India through a joint venture with local partner Bharti Enterprises."

Price made the comments while attending the Asia-Pacific Economic Cooperation summit.

Published on: September 6, 2012

• ZDNet reports that Tesco has acquired Mobcast, an e-book provider, as a way of being more competitive with Amazon.com. The deal cost it the equivalent of $7.2 million (US).

According to the story, "Mobcast provides a digital book retail platform with a catalogue of more than 130,000 of the UK’s most popular titles which can be bought and read on smartphones, tablets and e-readers. Additionally Mobcast offers a cloud-based service that lets customers build up an eBook library collection without being locked-in to one single device."

Published on: September 6, 2012

The Salisbury Post reports that "Food Lion notified 29 people at its corporate headquarters in Salisbury Tuesday that their positions are being eliminated.

"The headquarters employs 2,200 people, and many of the associates being laid off will be eligible for other jobs posted today at the Food Lion home office or at the store level, according to Christy Phillips-Brown, director of external communications."

The story goes on: "The position reduction ties in with a new brand strategy Food Lion has implemented at more than 700 stores in North Carolina, South Carolina, Virginia and West Virginia efforts Food Lion has been making in reducing prices in stores, operating more efficiently and repositioning the company for future success, according to Phillips-Brown.

"The new strategy encompasses lower prices, more convenience, improved service, greater value in private brands and better produce, and the company has been adding jobs at the retail level. Phillips-Brown put the number of new retail jobs at 2,100 this year."

Published on: September 6, 2012

• The Los Angeles Times reports that with Amazon set to begin collecting sales taxes on Internet sales made in California as of September 15, "many tech-savvy consumers (are) trying to cram in some last-minute tax-free shopping."

The story goes on to say that "depending on where they live, Californians pay 7.25% to 9.75% in sales taxes, so the savings are substantial — especially on big-ticket items such as electronics. But bargain hunters are also stocking up on inexpensive goods such as food, DVDs and carpet cleaner ... Amazon won't say whether sales to California customers have spiked in recent weeks. But judging from comments on social media sites and reportedly increased buying activity in other states before similar sales tax laws went into effect, many shoppers see these final days as an excuse to shop freely."

Published on: September 6, 2012

The Nielsen Co. is out with the results of a new online survey about how rising food prices are affecting global shopping habits, reporting that "85% of respondents worldwide say that rising food prices are impacting their choice of grocery purchases, with more than 52% stating higher prices are a major influence."

On the issue of price:

"Asia-Pacific respondents are most responsive to special prices with 53% ranking this as the top benefit of loyalty cards, compared to 23% of North Americans ... The opportunity to accumulate points and redeem gifts is the preferred benefit among 31% of global respondents and most valuable to North Americans (36%) ... Cash rewards based on amounts spent in-store over time is the preference for 33% of global respondents and most favored in the Asia-Pacific region."

In addition, the study says, "the influence of health factors on shopping choice is most significant in Asia-Pacific," and that "retailer loyalty programs significantly impact shopping choice for 1-in-4 consumers worldwide ... Soaring fuel prices, leading to increased transportation costs, are also affecting consumer choice. 35% of global respondents consider the cost of traveling to buy groceries a major obstacle, ranking it among the top four key implications that affect grocery shopping choice across all regions; 42% regard transportation costs as a minor issue." (Though these concerns occur most often in the Philippines, Indonesia, Thailand, Mexico, Italy and Chile.)

"Among the health and wellness factors measured, those that relate to physical condition have the most significant impact on grocery purchase choice among global respondents," the study says. "Food labeling information on packaging is a key concern for 31% of total online shoppers, the availability of products with enhanced nutritional benefits is a major issue for 25% of global consumers and the availability of organic foods is a chief concern among 24% of respondents worldwide."

Published on: September 6, 2012

The St. Louis Business Journal reports that Schnuck Markets is partnering with BrightFarms to build a one-acre, $2 million greenhouse that will provide the retailer "with fresh, local produce year round ... the greenhouse will be located within close proximity to a network of Schnucks stores. A local farmer, in partnership with BrightFarms, will operate the greenhouse and deliver produce to Schnucks."

Supervalu-owned Cub Foods signed a similar deal with BrightFarms earlier this year.

Published on: September 6, 2012

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

• Lund's and Byerly's this week have launched the NuVal nutritional scoring system, which uses a proprietary algorithm to rate virtually every product in the store on a scale of 1-100, with 100 going to the most healthful items. The company notes that it is the first retailer is the Twin Cities to offer the service.

• The Wall Street Journal reports that Amazon has signed a multiyear licensing deal with Epix, the cable channel, that will allow it to stream popular movies (such as The Avengers) online - not to mention compete more effectively with rival Netflix.

Epix, which is owned by Paramount Pictures, MGM and Lions Gate Entertainment, had an exclusive deal with Netflix expire earlier this summer.

"We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers. We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year," Bill Carr, vice president of video and music at Amazon, tells the Journal. Amazon plans to offer the Epix movies free to people who subscribe to its Prime service.

See my comments above about the Tesco-Amazon battle, and apply here. Everybody is moving their chess pieces around the broad...

Published on: September 6, 2012

• The Grocery Manufacturers Association (GMA) announced the appointment of Elise Fennig as vice president, industry affairs.

Fennig is the former vice president of member services for the American Frozen Food Institute (AFFI), as well as executive director of the Frozen Food Foundation.

• Curt Cullison, most recently the national corporate director of consumer promotions for Supervalu and a quarter-century veteran of the company, has landed a new gig as president of operations for Alliance Harsha Advertising's Nashville office.

Published on: September 6, 2012

We had a series of stories yesterday about prices - one about dynamic pricing on the Internet that looks for the lowest possible price, and another about how some retailers are getting away from price promotions as a driving strategy.

Which led MNB fave Glen Terbeek to write:

Prices are being driven down to the lowest common denominator.  It will be difficult for retailers to compete and make money on price in the future.  They better start competing on value added differentiation.

On the subject of how third party retailers manipulate pricing on Amazon and try to be the lowest, one MNB user wrote:

Of course, Amazon could use its own algorithms to weed out these phony ‘changes’ – e.g. ignore anything in the decimals or look for a variant > one dollar, five dollars, or whatever.  Call me old-fashioned, but this smacks of a shell game or three-card Monte.   Or programmed trading on the Stock Exchange…

It isn't in Amazon's interest to weed out these price manipulators. In the segments where it believes it is important, Amazon makes sure it is the lowest priced retailer ... and everything about that is transparent. This allows it to cement its image as the low-priced competitor.




On a related subject, one MNB user wrote:
 
I had an experience this weekend that revolves around the discussion of shopping at Bricks/Mortar outlets versus online retailers.
 
I had to replace the microwave oven in my kitchen this weekend. I am an avid ‘do-it-yourselfer’ but have limited time to do home improvement projects. Short story is that I had to have the microwave replaced this weekend and I did not have the time to wait for online purchasing.
 
I went to the local Lowe’s store to check out what they had and while I found what I liked and wanted, they did not have it in stock The floor model was all they had and it did not work. However, the salesperson was quick to ask if I was willing to drive and found the same model at a store across town.
 
The downside for him was that between the these two Lowe’s outlets was a Home Depot that allowed me to compare, shop, and possibly buy an alternative to what I found at Lowe’s.
 
I went to the Home Depot and found an alternative appliance, but again, the floor model was all they had. To aggravate the issue further, the associate at Home Depot was unwilling to sell the floor model (unlike at the Lowe’s store).
 
SO….I drove to the other Lowe’s outlet. When I got there, the associate told me that he had sold the last model just an hour earlier. But, he was quick to offer me the floor model, which I bought, took home, and mounted in my kitchen.
 
While Lowe’s gets the “A” for effort, and Home Depot gets an “F” in customer service, I have learned that I need to rethink my purchasing behavior. Even if I could have waited for the online purchase to be delivered, I would have still needed the bricks/mortar outlet to use as a “showroom” to make a purchasing decision. If either outlet could have promised/guaranteed next day delivery, that may have been all the sales service I needed.




One MNB user wrote in to comment about another email in which the reader said that "older Americans are working longer because many of them have done such a terrible job of saving money for retirement":

Really a broad stroke sweeping indictment of all the retiree’s working today as doing a terrible job of prioritizing and saving and reducing spending and keeping up with the Joneses.??
Man you must really have it made..??

I now plan to work until I am 65 BECAUSE I was lucky enough to live through TWO Stock Market “corrections”.

I will give you credit you did mention it as a possible reason…Well how about it is the SINGLE BIGGEST reason people don’t have the savings they anticipated.

The entire decade of the 00’s I was saving as much as possible to make up ground, buy cheap and watch my existing 401k barely get back to flat ..an ENTIRE lost decade of growth.

And some people actually think returning to the policies that created that market collapse is a good idea…WTH?




And, finally, from another reader:

Hey!  How about a good Star Wars reference once in a while?!  I like Captain Picard, too, but there is a whole other fictional universe out there, ya know...

I'll try. The problem is that Star Trek is my default science fiction reference....I am a Star Wars fan, but I love Star Trek.

Published on: September 6, 2012

In the opening game of the National Football League season, the Dallas Cowboys defeated the defending Super Bowl champion New York Giants 24-17.