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: September 20, 2012

    This commentary is available as both text and video; enjoy either, or both. And to see past FaceTime commentaries, go to the the MNB Channel on YouTube.

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

    There was an interesting exchange that took place a couple of weeks ago between Whole Foods founder John Mackey and a food blogger who suggested that if Whole Foods really wants to be as socially responsible as it says it is, it would stop selling meat.

    The blogger, a fellow named James McWilliams, said that while Whole Foods has done a lot to be admired for, its meat counter "taints everything" it has accomplished. And he suggested that Whole Foods should get rid of a department that is "defined by obscurity, animal exploitation, and the perpetuation of unhealthy food," and in doing so, would actually help to change the dietary habits of consumers.

    Now, Mackey essentially responded to this blog post by saying, "give me a break." He said that only 10 percent of Whole Foods' customers are strict vegetarians, and that all that would happen if he stopped selling meat is that 90 percent of his customers would go elsewhere. It would be, he said, akin to "business suicide." And this coming from a guy who says he follows a vegan diet.

    Now, I happen to agree with Mackey on this one. (Not that he is looking for approbation from the likes of me.) Whole Foods does it right, providing about as much information about its products as one could ask for. People who shop at Whole Foods already have made a decision about their eating habits, and so they really don't need to be lectured to ... but if they want to eat meat, that's okay.

    It is an interesting discussion, though, because it really is about where different people and different companies draw the line.

    In many ways, what really is important is figuring out where the line should be, drawing it, and then being consistent about applying standards and transparent about explaining them. It is when companies do not clearly define themselves that they get in trouble ... while this blogger may have been an annoyance, it was not like he could legitimately accuse Whole Foods of violating the pact that it has with shoppers, and that put Whole Foods in a far better position when dealing with the complaint, even though it went a little bit viral online.

    When you don't do this, you end up in the muddy middle...which these days, is more like quicksand.

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

    KC's View:

    Published on: September 20, 2012

    The Chicago Tribune reports that in a new national survey, Five Guys was ranked as the best burger chain the US, followed by In-N-Out, Fuddruckers, A&W and Smashburger.

    According to the story, "Five Guys ranked best in categories including food quality and taste, service, cleanliness and atmosphere. The only category in which it failed to rank No. 1 was best overall value; In-N-Out won that category. Smashburger, a newcomer in the so-called better burger industry, ranked second in every category except overall value."

    On the bottom: Burger King, Hardee’s, McDonald’s, Jack in the Box, and Dairy Queen.

    It must be noted that the list does not include those little independent burger joints that so many of us enjoy, many of which were enumerated in the Best Burgers in the US List.

    But I would suggest, at the risk of annoying McDonald's enthusiasts, that in the end, it is not that much harder and not that much more expensive to make a better hamburger.

    And, I would add, one of the best ways that McDonald's can get people to ignore (at least for the moment) the calorie counts of its burgers is to make them better and tastier.

    That would be an Eye-Opener.
    KC's View:

    Published on: September 20, 2012

    A week after the Cornucopia Institute criticized Stonyfield Farms CEO Gary Hirshberg for not having provided any financial support to the movement calling for the passage of California Proposition 37, which would mandate the labeling of genetically modified (GM) ingredients in food, the Institute said yesterday that Hirshberg has now "cut a check supporting the campaign."

    Hirshberg was just one of a number of prominent executives in the organic segment that were challenged for what some perceived as a lack of enthusiasm for the campaign, though the organization conceded that Hirshberg is "one of the founders and the Chairman of the Just Label It Campaign, working to secure uniform, federal GMO labeling nationwide, as is the standard throughout Europe."

    Most of the reporting from California has suggested that while the "yes on 37" forces have been vastly outspent by those opposing the mandate, including biotechnology companies with a vested interest in preventing the referendum from passing, many of the polls indicate that the electorate supports it.
    KC's View:
    realize that some folks will point out that by writing a check, Hirshberg could be accused of violating the tenet that suggests business leaders need to be careful about taking political positions. But I think this is different, because Prop. 37 is so closely aligned with the business proposition and core values associated with companies like Stonyfield Farms.

    Published on: September 20, 2012, which is sort of a catch-all website that allows people to structure and circulate petitions online, now is featuring a petition calling for Starbucks to reconsider changes to its rewards program.

    That didn't take long.

    As reported yesterday here on MNB, Starbucks announced in an email to customers that it is revamping its rewards program, with the big change being that frequent shoppers will no longer have to wait for postcards that they can use to redeem for a free drink. Now, those rewards will load automatically onto the Starbucks card or mobile application, and consumers can redeem them simply by telling the barista. In addition, Starbucks said that customers can redeem their freebie for any food product as well as drinks, and will get freebies for every 12 purchases, rather than 15.

    Two previous benefits are going away - Starbucks no longer will offer syrups and soymilk on the house, and no longer will offer a free tall drink when customers buy a pound of coffee. says that the most popular petition on its site right now "was started by devoted Gold Card Rewards member Chris Hansen, of Huntington Beach, CA. Chris visits Starbucks daily to get a Venti iced coffee with soy, vanilla, and caramel, but says he’ll go less often as a result of the change."

    Hansen says that the previous system "was great because it rewarded people on a daily basis for supporting them.  Now, with the new card changes, there is no reward, and no benefit. The most ridiculous part for me is that after all this time of having a cool benefit, Starbucks wants to now charge customers more if they're vegan or lactose intolerant or just like soy milk better.”
    KC's View:
    I got a number of emails yesterday from people who felt disenfranchised by the Starbucks changes, and who felt that I just didn't "get it." (You can see them in "Your Views.")

    Maybe they're right, because I have to admit that I don't entirely "get" the objections being raised by Hansen.

    I completely understand that for people who made a practice of getting a free cup of coffee when they bought a pound of coffee, or who routinely got soy milk or syrups in their coffee drinks, these changes are not positive. Those didn't affect me, because I drink neither of those liquids, and I get my bags of Starbucks Verona coffee beans delivered once a month.

    On the other hand, I was enthusiastic about the fact that I now get a free cup of coffee for every 12 I buy, instead of 15, and that I no longer have to remember to bring in the postcard entitling me to a free drink because it now is all deliverable through my smartphone app.

    I'm not entirely sure how people can say that with the changes, there are no rewards and no benefits. It seems clear that there are benefits and rewards ... though maybe not benefits and rewards relevant to them.

    It is an interesting lesson that goes back to an old truism...that it is almost impossible to please all of the people all of the time. We judge everything based on the benefits and rewards that are relevant to us...

    That doesn't mean that people and companies should stop trying.

    Published on: September 20, 2012

    The Los Angeles Times reports that "Chick-fil-A will no longer donate money to anti-gay groups or discuss hot-button political issues after an executive's controversial comments this summer landed the fast-food chain in the middle of the gay marriage debate.

    Executives agreed in recent meetings to stop funding groups opposed to same-sex unions, including Focus on the Family and the National Organization for Marriage, according to Chicago Alderman Proco Joe Moreno."

    The agreement, the story suggests, will lead to local officials not indulging in anti-Chick-fil-A rhetoric and suggesting that the chain would not fit into cities with, shall we say, a more liberal electorate.

    The controversy began this summer when CEO Dan Cathy said that he supported what he called "the Biblical definition" of marriage, and suggested that he would support organizations that took that position.

    As the Times writes, "Supporters swarmed restaurants around the country in early August, as protesters gathered outside, for Chick-fil-A Appreciation Day, launched by former presidential candidate and conservative Mike Huckabee.

    "A report from LGBT advocacy group Equality Matters found that from 2003 to 2009, Chick-fil-A donated more than $3 million to Christian groups that oppose homosexuality. In 2010, the fast-food company gave nearly $2 million to such causes, according to the report."

    Now, the story says, the company has said it "will remain true to its stated philosophy of not supporting organizations with political agendas."
    KC's View:
    With all the grief that I got this summer for writing about this story, or writing about it the wrong way, or not writing about it when I should have, ultimately the only reason I wrote about it at all was to make the point that when companies or even senior executives take political positions, it can have an impact on business. I really did not have another agenda, though my transparency about my own feelings got me in trouble with some folks. (Mrs. Content Guy is still asking me questions about the fellow who wrote in to tell me that I should keep the fact that I am gay to myself.)

    For the record, while I may have disagreed with his position on gay marriage, I never have had any question in my own mind that Dan Cathy and Chick-fil-A would treat all of its customers and employees with respect. No doubt at all.

    And, also for the record, I thought the government officials who said they would prevent Chick-fil-A from operating in their cities were totally and completely out of line.

    This agreement suggests that while there may have been an outpouring of support for Cathy's position in the form of chicken sandwich purchases, the company saw that there were some long-term downsides, and that it needed to back off.

    I hope that now we can all just get along.

    Published on: September 20, 2012

    The Charlotte Observer reports that Publix plans to open its first North Carolina store in 2014, with Charlotte store that it intends to be the first of a number stores that it will open there.

    According to the story, "Company executives said Publix will open a Charlotte division, with a divisional vice president and a leadership team based in the city, to oversee the expansion ... Publix has been openly inching closer to Charlotte since it announced plans to build two stores in South Carolina, just across the state line. Those stores, in Fort Mill and Indian Land, are both set to open in October. The Indian Land supermarket site is just six miles from Publix’s planned Ballantyne location."
    KC's View:

    Published on: September 20, 2012

    The New York Times reports that once again, the Indian government is facing "stiffening opposition from political allies and opponents" because of its decision last week to allow foreign retailers such as Walmart, Tesco and Carrefour to open and own stores there.

    Until now, foreign companies were only allowed to operate wholesale stores in joint ventures with Indian companies. An attempt last year to loosen these regulations also was shot down because of political pressure.

    For example, the Times writes, "On Tuesday, an important regional leader, Mamata Banerjee, announced that she would withdraw her support from the governing national coalition on Friday afternoon if policy makers did not abandon their change agenda. Ms. Banerjee, a tenacious politician from West Bengal, last year helped torpedo an earlier effort to open the doors to foreign retailers."

    Proponents of loosened regulations believe that they will help drive foreign investment and "prompt a new economic boom in India, where once-brisk growth has slowed markedly in recent years," the Times reports.
    KC's View:
    Haven't we all seen this movie before?

    Published on: September 20, 2012

    MarketWatch reports that in a speech yesterday at the World Retail Congress in London, Tesco CEO Philip Clarke said that what he called "the first downturn of the digital age," fueled by economic turmoil in Europe, is having an impact on consumption in China, Thailand and South Korea - previously areas of rapid growth for Tesco.

    "The tectonic plates are shifting," he said, forcing companies to adapt or lose competitiveness.

    Reuters reports that in the same speech, Clarke gave Tesco's US operation, Fresh & Easy Neighborhood Markets, "a renewed vote of confidence."

    Clarke said, "The stores that we have continue to grow nicely and the reason it's worth persisting is that the stores themselves fulfill a particular need for a particular group of customers. It's only five years old, it's playing in a play ground with some very big and very old retailers who are very wise and it's fighting nicely."

    Tesco has slowed its expansion plans in the US, and projected that Fresh & Easy will be profitable in the 2013-2014 fiscal year, about a year later than earlier projected.
    KC's View:

    Published on: September 20, 2012

    • The National Grocers Association (NGA) has announced what it is calling "a first of its kind study ... to capture the extraordinary economic impact of the independent grocery channel on the food distribution system and the economy of the United States.  John Dunham and Associates, a third-party research firm, will compile the data (on a state-by-state basis drilling down to specific congressional districts) and present it in a report by early 2013 that will showcase the economic contributions of the independent grocery industry."

    Among the things that will be measured are sales volume, employment, value of goods and services procured and sold, taxes and fees paid, and the value of invested capital.

    • The Associated Press reports that Starbucks plans to begin selling its new single-serve brewing machine - dubbed Verismo - online this week for $199. The machine will begin being sold in its stores next month. The Verismo is described as using "a high-pressure system that can make lattes and other espresso-based drinks, as well as brewed coffee."

    According to the story, "The arrival of the Verismo ... comes amid intensifying competition in the rapidly growing market for single-serve brewers and the coffee pods they use." The product will be supported by a multimillion dollar ad campaign.

    • The National Grocers Association <(NGA) also this week presented Congressman John Kline (R-MN) with the Spirit of America Award at its fall conference.

    "Congressman Kline has been dedicated to making sure that community focused grocery retailers and wholesalers serve as a keystone in our free enterprise system," said NGA President and CEO Peter J. Larkin, who presented the award. "Our industry is grateful for his commitment to federal fiscal responsibility that ensures a level playing field for employees and employers."

    • The Oregonian reports that as Supervalu closes 60 underperforming stores around the country, among these closures will be all seven of its Save-A-Lot stores in Oregon.
    KC's View:

    Published on: September 20, 2012

    Got the following emails about the changes (noted above) to the Starbucks rewards program...

    MNB user Mike Jackson wrote:

    As a long time Starbucks fan I also am thrilled I won’t have to carry around the postcard for the free beverage.  It’s also nice they dropped the threshold from 15 to 12 for a free drink.

    Now if they would just change from tracking purchases to drinks for the free drink credit I would be a very happy camper.  I seem to always buy multiple drinks and get the same credit as someone who buys a single drink.  You can spend $5.00 and get a credit for a free drink; if you treat the office and spend $50 dollars you get the same one credit for a free drink.  Sure, you can beat the system by having them ring up each drink separately but who wants to do that; the loyalty program is nice but it still needs work to align the rewards with their most profitable customers.

    And, we got the following email from another reader, Michael Schillo:

    Not sure you know, but you get a “point” for every transaction and if you ask a barista, they will ring you separately. 

    Example, I stopped this morning with a pal and was also getting a drink for a co-worker. 3 drinks ordered.  3 tabs.  3 Gold Stars.   ¼ of a free drink.

    Agreed - Starbucks should set it up so you get a star for every drink ordered, even if they are all on the same receipt.

    It is all part of setting up a consumer-friendly rewards program.

    On this subject, by the way, MNB user Howard M. Schneider wrote:

    Emphatically agree except for one nuance. While a successful loyalty program must be driven by shoppers’ priorities and not the marketer’s, programs must be built to meet BOTH shoppers’ wants, needs and expectations, AND the marketer’s need for a cost-effective, measurable program that truly motivates customers to consistently act as desired.

    No argument. I'm just saying that if the process does not serve the consumer, then the program is pointless.

    Not everyone agrees with my position on the changes, as MNB user John J. Toner wrote:

    I’m a much bigger fan of the monthly postcard I get in the mail – it made me feel special and like I was winner (I don’t get enough mail anymore obviously). 
    And I was a big fan of the free cup of coffee when buy bi-weekly bag of coffee for the house…

    And MNB user Bill Hogan wrote:

    So Starbucks is moving away from their gold embossed post card for free drink delivery.  What will be lost is that smile I get when I go to the mailbox and see my golden ticket (I always save it for a Quad Cappuccino).

    The real opportunity is to give choices to shoppers for reward delivery.  Mobile will be central to reward engagement but wise retailers will give delivery options to shoppers.  I am sad that my two favorite features of the program are going away…the free tall drink and free syrup.  Both were “gift with purchase” benefits.  This will give me less incentive to by my beans at Starbucks and more incentive to try different roasters.  A combination of soft and hard benefits make for the strongest reward platforms.

    Point taken.

    And another MNB user chimed in:

    I had to laugh at your point..".postcards are old world even if they serve the bottom line."

    What you apparently didn't want to point out (I'm curious as to why)  is that the elimination of the "freebies" and inevitable  "augmented" future price hikes will more than offset the higher subsidization of Starbucks baseline sales  (i.e.. meaning the redemption of electronic discounts that would NOT have occurred had postcard coupon usage been maintained).  Net/net the discount is essentially eliminated and becomes a "smoke and mirrors" marketing tactic.

    "Bottom line,  us "old worlders" will be pay more but we'll know it.  You on the other hand,  will get your " new world discount" but actually pay at a higher level and still be happy because it's convenient.  You're apparently a smart guy,  think it through a bit more and don't throw the old world under the bus unless true productivity is being created or minimally  maintained.

    Maybe I'm not as smart as you think I am, or as you think I think I am...

    On another subject, MNB user Lucretia Nesbitt wrote:

    Just because the government doesn’t seem to have an appetite for regulating ads on games and mobile devices doesn’t mean that food companies should be using this medium as a way to target young children.  As a parent to a 3.5 year old who uses my iPhone better than I do some days, any app or game targeted at her that had ads like this would be immediately removed, whether I paid for it or not.  I would be angry enough over this tactic to stop buying that company's other products as well.  I may be the minority, but I strongly believe our children do not need to have ads that “trigger demand and cinch brand loyalty” at such a young age, particularly when they are still learning about what is a healthy choice and what isn’t.  It smacks of greed and a complete disregard for the health of our children.

    I wrote yesterday that Apple's stock closed Tuesday at $701.91, and as the Times notes, Apple, as the world's most valuable company, "is now worth nearly $656 billion - about six times its value in June 2007, when it released the first iPhone."

    Got a bunch of emails from MNB users along the same lines...

    "I wish I had bought it when Lt. Dan did. LOL


    My hand is raised wishing I’d bought Apple stock when Lt. Dan bought into it for Forrest Gump!!


    Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don't have to worry about money no more. And I said, that's good! One less thing.
    I wish I would have invested when Forrest Gump did.  His initial investment of $100K would be worth over $7B today.

    Here's what I think when you all send me emails with movie references...

    KC's View: