business news in context, analysis with attitude

Published on: September 18, 2012

by Michael Sansolo

Earlier this summer a freak storm hit my neighborhood wrecking my roof, fence, siding and destroying virtually all the rain gutters on my house. Ten days ago another “freak” storm hit the neighborhood. A big limb came down and although we sustained no injuries or major damage, our luck didn’t improve. The limb took down the only piece of gutter that wasn’t damaged in the previous storm. Stuff just happens.

And sometimes it keeps happening.

Take a moment today to reflect on a world-changing anniversary - not September 11th anniversary, which justly gets all our attention - but September 15th.

It was on that day just four years back that Lehman Brothers failed and the global economy has never been the same.

It’s hard to remember just how bad it was four years ago, but it was. That summer gasoline prices hit levels we had never seen before as oil rose to nearly $150 per barrel (50% higher than it is today.) That summer also saw the collapse of a number of key financial institutions, but the storm came after Lehman. By the time a month passed the stock market lost nearly 30% of its value (and continued to sink for months to come.) Financial institutions fell like dominos and there seemed to be no end in sight.

This isn’t about politics though; it’s about your consumers. The Great Recession, which actually began in 2007, starting wiping out their careers and their home equity. After Lehman it took their 401ks and optimism. It’s the reason every company needs to reflect back on Sept. 15, 2008, and question what changes they’ve made to become more efficient, more effective and certainly more sensitive to customer needs.

Now think about my little storm problem and think of those same consumers because more limbs are hitting their metaphorical homes.

The Food Institute reported recently on the very real impact consumers will feel from the drought of 2012. Thanks to likely hikes in food prices the average family of four is going to spend $350 more for food in 2013. (Point of transparency: I am currently vice chairman of the board of the Food Institute.)

Now, $350 isn’t a gigantic amount, in fact, it’s only $6.75 a week. But keep in mind the pressures facing that average family. Since 2007 the net worth of the median American family has dropped by almost 40% thanks to declining home prices. And a large percentage of these families are living closer to the edge, barely getting by week to week.

For them, $6.75 per week is a problem and we know they’ll face more. As we learned back in 2008, pressures on the food supply tie closely to rising fuel prices thanks to competition for resources to make ethanol. The drought is likely to increase food and fuel prices together (and, of course, rising fuel prices raise costs in the food industry as well). That means struggling families will put even greater emphasis on value during their food-shopping trip is going to be stronger than ever.

The bottom line is the pressure will be on the industry to find ways to be even more efficient so that consumers can find the values they seek and need. Both you and your shoppers need you to be creative, sensitive and incredibly focused on finding a way to be better than ever.

In so many ways, the short time period from Sept. 7-15 is full of world changing anniversaries. On Sept. 7, 1998, Google debuted; on Sept. 11, 2001, Al Qaeda changed our view of the world; and on Sept. 15, 2008, Lehman Bros. lit fire to the economy.

All three events changed the status quo for our world, our businesses and our shoppers. So ask yourself: How have you changed? What will you change next?

The status quo isn’t an option.

The tree limbs keep falling.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: September 18, 2012

by Kevin Coupe

The Wall Street Journal reports this morning that a new survey by Wells Fargo suggests that when Amazon.com began collecting sales taxes in Texas last July, it had virtually no impact on the e-tailer's sales there - down a bit, but within the survey's margin of error.

The survey also revealed that when Texans were asked about why they previously shopped on Amazon, "lack of sales tax" was the last important factor. And, in fact, most Texans questioned did not even realize that Amazon had started collecting state sales taxes.

This is worth noting if you happen to be a retailer - and there are many - who has clung to the desperate hope that once Amazon starts collecting state sales taxes, it would lost all or most of its differential advantages and plummet to earth, leaving just a broken carcass to be ravaged and picked apart by bricks-and-mortar competitors.

Think again.

Yes, Amazon is now collecting sales taxes in some states. California became the latest just this past weekend. Soon, states such as New York and Pennsylvania will follow. In part, this is because states got desperate for increased revenues ... and in part, it is because Amazon decided that the downside of collecting taxes would be more than compensated for by the fact that an expansion of its distribution facilities would allow it to quicken its delivery times.

And yet, a lot of retailers have believed that sales tax collection would level the playing field.

The Texas survey suggests that maybe it is time to look to Plan B ... that retailers have to find a way to offer some of the same services that Amazon does, or something the neuters the differential advantages that Amazon continues to build for itself.

Published on: September 18, 2012

The US Centers for Disease Control & Prevention (CDC) is out with a new report saying that US children eat as much salt each day as US adults - or about 1,000 milligrams too much.

According to the New York Times, that 1,000 milligrams of salt is the equivalent of what is in one Big Mac.

"The CDC researchers looked at data on 6,200 kids aged 8 to 18 involved in 2003-08 national health surveys," the Times reports. "The children were asked twice over several days to detail all foods they'd eaten the previous day; the researchers calculated salt intake from their answers.

"Overall, 15 percent had either high blood pressure or slightly elevated blood pressure called prehypertension. Those who ate the most salt faced double the risk of having elevated blood pressure, compared with those who ate few salty foods. But among overweight or obese kids, the risk was more than triple.

"The recommended daily salt or sodium intake for kids and adults is no more than 1 teaspoon daily, or about 2,300 milligrams. On average, study kids ate 3,300 milligrams daily."

Published on: September 18, 2012

The Wall Street Journal reports this morning that US food manufacturers are trying to circumvent moves to limit their advertising to children by "embedding their products in simple and enticing games for touch-screen phones and tablets. The new medium is far cheaper than Saturday morning TV commercials and could prove as effective.

"The mobile games demonstrate how new technology is changing U.S. commerce, drawing tighter bonds between marketers and young consumers."

The story goes on to say that "makers of snacks, sweet drinks and candy have long been under government and public pressure to limit advertising to minors on TV and the Web. They are now finding the unregulated medium of mobile devices an effective substitute to trigger demand and cinch brand loyalty.

"Young children can master the largely intuitive touch screens well before they read. A recent survey by research firm NPD Group found that 37% of 4- and 5-year-old Americans were using such mobile devices as a smartphone, tablet or iPod Touch, compared with less than a quarter of children that age who used a laptop computer."

Published on: September 18, 2012

The Charlotte Business Journal reports that Harris Teeter is converting two existing stores to a new format that it is calling "201 central," which will feature a broader selection of alcoholic beverages and specialty foods.

According to the story, "Each store will carry more than 3,100 varieties of wine and over 680 varieties of beer from around the world, the company says. That will include about 35 brands of keg beer and local beers such as Red Oak, Olde Mecklenburg and Carolina Brewing. In addition, the stores will carry home-brewing and wine-making systems and products.

"Other specialties of 201central will include cigars; specialty cheeses and olives; artisan breads; bulk foods such as coffee, tea, nuts, grains and rice; and an expanded offering of international foods. The stores also will feature in-store wine consultants, event coordination and catering as well as party rentals and classes on wine, beer and food pairings."

Published on: September 18, 2012

USA Today has a story about the continuing debate over the health benefits of milk: "While some consider milk a nutritional powerhouse, others see it as unnecessary for good health and question the rationale behind some government-related programs that try to help the marketing of milk."

Here's how the paper frames the debate:

"The National Institutes of Health estimates about 30 million Americans have lactose intolerance, the inability to digest a type of sugar in milk. The condition is more common in people of Asian, African, Native American or Mediterranean ethnicity, and, while not dangerous, it can cause nausea, bloating, gas and diarrhea. Milk allergy, an immune system reaction that can cause hives, eczema and wheezing, as well as digestive problems, is thought to affect 2% to 5% of babies, though many outgrow it by age 3, according to the Asthma and Allergy Foundation of America."

"While there are drawbacks for some, the nutritional benefits of milk are clear, says Ruth Frechman, a registered dietitian and spokesperson for the Academy of Nutrition and Dietetics, formerly the American Dietetic Association. 'Milk is a nutrient-dense beverage; it's relatively inexpensive and is an easy source of hydration,' she says. It contains protein, calcium, vitamin D, phosphorus, potassium, vitamin B12 and other vitamins and minerals." It also contains calcium, which "is needed to build bone and teeth, help muscles to contract, and improve nerve function, she says. It plays a role in blood clotting and the dilation and contraction of blood vessels, which affects blood pressure."

Published on: September 18, 2012

• The South Florida Business Journal reports that Walmart "is is making a push in South Florida with planned expansions and new stores, especially in urban areas of Miami-Dade County." These efforts, the story says, will cost Walmart an estimated $350 million over the next two years, as the retailer attempts to move up from its number three position among area grocers, behind Publix and Winn-Dixie.

• Crain's Chicago Business reports that a new price comparison tool on Walmart's website, allowing people to compare receipts from Walmart's competitors with prices available at the discounter on the same items, can be a little "clunky" and inaccurate - though the general agreement seems to be that it is the right moment for Walmart to exploit the perceived weakness of both Jewel and Dominick's.

“Using actual individual receipts is a unique spin on price-comparison ads,” Bill Wunner, who runs an Atlanta-based website, Coupons in the News, tells the paper. "This is a very gutsy move by Wal-Mart, considering it runs the risk of showing some customers that they might actually have spent more at Walmart."

Published on: September 18, 2012

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

• The Chicago Tribune reports that a Mariano's Fresh Market is scheduled to open today near Jefferson Park -- the third outlet for owner Roundy's Supermarket Inc. in the city of Chicago."

Also, by the way, trying to exploit the perceived weakness of both Jewel and Dominick's...

• The New York Times reports on a study from SymphonyIRI Group suggesting that the recession-fueled shift to more cooking-at-home has been good for the spice business, and that "revenue for individual spices (excluding salt and pepper) grew 4.1 percent, to $1.34 billion, for the 52 weeks that ended Aug. 12, according to SymphonyIRI Group ... Over the same period, pepper revenue grew 6.8 percent; salt, seasoned salt and salt substitute grew 2.1 percent; and dry seasoning mixes for meat and seafood grew 1.3 percent."

• Did you see the stories about Christine Hall, the Virginia woman who says she lost 76 pounds by eating almost all her meals at Starbucks, buying only its pre-packaged meals with clearly labeled calorie counts?

"On an average day, she'd start with a 145 calorie breakfast of oatmeal and coffee and grab a bistro box of fruit and cheese for lunch." one story, in Yahoo News, says. "For dinner, she'd dig into a panini ... She began tracking her calorie intake in May of 2010 and by November, she had dropped 40 pounds thanks to a lot of bistro boxes."

Now, one has to wonder if she was drinking venti coffees with all those meals. Coffee, as we know, can have a certain impact on the metabolism, so it may not just have been intake that led to all that weight loss....

Published on: September 18, 2012

• The Grocery Manufacturers Association (GMA) yesterday named Michael R. Gruber as vice president of federal affairs. Gruber joins GMA from the House Committee on Energy and Commerce where he currently serves as senior policy advisor; he previously worked for Rep. Tom Latham (R-IA) for more than eight years, first as chief of staff, and later as appropriations associate. In this role, Gruber served as chief liaison to the Appropriations Subcommittee on Agriculture, Rural Development and the Food and Drug Administration.

Published on: September 18, 2012

I have been a subscriber of yours for several years and have enjoyed it . BUT – I think if I read one more of your comments on accuracy in labeling, my blood pressure will no longer allow me to be a subscriber. Your views on “pink slime” nearly drove me away, and now your GMO views are putting me over the edge.

I'm not sure what you want me to do.

Change my mind? Or just shut up?

Let's be clear. I realize I could be wrong on this. And I know that from an industry perspective, my position is unpopular. And I completely agree that any regulations on this ought to be written in a way that the floodgates don't open to spurious litigation. If the food industry is to undertake an initiative like this, there has to be some room for it to make honest mistakes as it tries to get things right.

But I think that this is not necessarily true from a consumer point of view.

It was not that long ago that people would have argued that calorie counts on fast food menu boards would never happen. Or that front-of-the-package labeling would not happen. Or that nutrition labeling systems such as NuVal and Guiding Stars would not get traction. And yet, all those things have happened. Some with prodding, some because companies saw that providing more and better information to shoppers was the right thing to do, and even in their own competitive best interests.

I am a little surprised that someone from a retailer as influential, progressive and consumer-oriented as this reader is from,(I know where he is from, but my privacy rules forbid me from sharing, since he did not "sign" his email), would take this position.

I think, considering how consumers act and what technology makes possible, that I am on the right side of history on this one.

I hate to put anyone over the edge. But I promise to listen and pay attention to the arguments against GMO labeling, and hope that the folks who disagree with me will continue to read MNB and keep an open mind.

After all, if we only listen to the people who agree with us, what chance is there for illumination?




Got the following email from an MNB user about the lawsuit filed by Beef Products Inc. against ABC News, saying that the network engaged in "false and misleading and defamatory" journalism about lean, finely textured beef - better known as "pink slime" - that it says created the illusion that the filler was unsafe, which then resulted in the company losing 80 percent of its business, closing three of its four US plants and firing 700 employees.

I really sympathize with the folks at BPI.  They didn’t do anything wrong and yet their business was ruined and hundreds of honest workers lost their livelihoods because of shoddy journalism.  And yet I believe their lawsuit is doomed  from the start.
 
The story reminds me of a favorite old Paul Newman movie; 1981’s Absence of Malice with Sally Fields as the irresponsible reporter and Paul Newman as the unfairly targeted business owner.  There’s a quote that has stayed with me all these years:
 
“Suppose you picked up this morning's newspaper and your life was a front page headline... And everything they said was accurate... But none of it was true?”
 
Somewhere Wilford Brimley is smiling (or not).

Extra points for making a movie reference....and a really good movie reference, too.




And to those of you who wrote in yesterday about my reference to the Hotel Portmeirion, I only have one thing to say:

Be seeing you.

Published on: September 18, 2012

In Monday Night Football action, the Atlanta Falcons defeated the Denver Broncos 27-21, as Broncos quarterback Peyton Manning threw three interceptions in the first quarter.