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    Published on: November 5, 2012

    by Kevin Coupe

    The New York Times is writing that in addition to the short term impact of Hurricane Sandy, which battered New Jersey, New York and parts of Connecticut, "many economists expect the storm to shave up to half a percentage point from growth in the fourth quarter. That is a big reduction, with growth estimated to reach an annual rate of 1 to 2 percent before the storm, and the economy facing other significant headwinds, including fiscal uncertainty in Washington."

    While the economic losses are expected to be lower than those from Hurricane Katrina, the long-term impact could actually be greater, the story suggests, because the Northeast is more densely populated and "is responsible for about $3 trillion in output, or roughly 20 percent of the country’s total gross domestic product."

    On Fox Business last week, the always reliable Burt Flickinger III, of the Strategic Resource Group, suggested that Hurricane Sandy could have an enormous impact on consumer spending - that $800 that people might have spent on Christmas presents or holiday trappings now will have been spent on dealing with the natural disaster.

    Which means that as the lights and heat come on, and the detritus is cleared, there still will be lasting implications for retailers and manufacturers of almost every stripe.

    It is an Eye-Opener.
    KC's View:

    Published on: November 5, 2012

    Great piece in the New York Times reports on how some bricks-and-mortar book retailers have decided to fight back against the Amazon juggernaut, and the lessons it might offer to other retail segments. Here's now the Times frames the story:

    "Amazon rides itself on unraveling the established order. This fall, signs of Amazon-inspired disruption are everywhere.

    "There is the slow-motion crackup of electronics showroom Best Buy. There is Amazon’s rumored entry into the wine business, which is already agitating competitors. And there is the merger of Random House and Penguin, an effort to create a mega-publisher sufficiently hefty to negotiate with the retailer on equal terms.

    "Amazon inspires anxiety just about everywhere, but its publishing arm is getting pushback from all sorts of booksellers, who are scorning the imprint’s most prominent title, Timothy Ferriss’s 'The 4-Hour Chef.' That book is coming out just before Thanksgiving into a fragmented book-selling landscape that Amazon has done much to create but that eludes its control.

    "Mr. Ferriss’s first book, 'The 4-Hour Workweek,' sold nearly a half-million copies in its original print edition, according to Nielsen BookScan. A follow-up devoted to the body did nearly as well. Those books about finding success without trying too hard were a particular hit with young men, who identified with their quasi-scientific entrepreneurial spirit.

    "Signing Mr. Ferriss was seen as a smart choice by Amazon, which wanted books that would make a splash in both the digital and physical worlds. When the seven-figure deal was announced in August 2011, Mr. Ferriss, a former nutritional supplements marketer, said this was 'a chance to really show what the future of books looks like'.

    "Now that publication is at hand, that future looks messy and angry. Barnes & Noble, struggling to remain relevant in Amazon’s shadow, has been emphatic that it will not carry its competitor’s books. Other large physical and digital stores seem to be uninterested or even opposed to the book. Many independent stores feel betrayed by Mr. Ferriss, whom they had championed. They will do nothing to help him if it involves helping a company they feel is hellbent on their destruction."

    You can read the whole story here.
    KC's View:
    We took note of these issues a few weeks ago when we wrote about how a Penny Marshall memoir published by Amazon was being spurned by other booksellers, turning what was expected to be a best-seller into an also-ran.

    This is incredibly important for any retailer competing with Amazon to remember - that they have to exploit points of differentiation, find products and services to offer that Amazon cannot, and try to play a different game than Amazon does.

    The American humorist Finley Peter Dunne once said that "politics ain't beanbag."

    Neither is retail.

    Published on: November 5, 2012

    The Chicago Tribune reports that "for the past couple of months, Minnesota-based Supervalu has been using Jewel's 180 outlets as a laboratory. It's discounting many Jewel items, seeking to increase the value of visiting Jewel apart from price and taking cues from consumers in others ways it's not ready to share publicly.

    "'Not only will (consumers) get competitive pricing, but they will experience something different than what they've experienced before, and I wanted to make sure that we take the necessary time to learn from Jewel,' Supervalu Chairman Wayne Sales, who added the post of chief executive this summer, told analysts recently.

    "The company said last month, about six weeks into the experiment, it was moving more goods at Jewel, but gross profits had yet to improve. The idea is to take the lessons learned here, where Jewel remains a market leader, and eventually apply some of them to weaker chains in the company. But Sales seems to have learned the lesson of his predecessor as CEO, former Wal-Mart exec Craig Herkert. There will be no broad-brush approach to the company's problems."
    KC's View:
    In some ways, one gets the sense that Supervalu is just trying to plug the leaks in the Titanic, hoping it can prevent the ship from sinking before it sells the whole damn thing off. If Jewel is the jewel, then maybe it can polish it to the extent that it makes the rest of the enterprise more attractive.

    Jewel may be a leader in the market, but that may have more to do with legacy issues and real estate ... not actual enthusiasm, which the company's competitors are trying to capture. The company can sell more stuff through aggressive pricing, but the question is whether that will make it more competitive and differentiated in the long run.

    Published on: November 5, 2012

    Meanwhile, the Boston Globe reports that Supervalu-owned Shaw's Supermarkets "plans to cut 700 jobs, or just under 4 percent of its total employee headcount ... Total headcount after the reduction will be about 17,000, a company spokesman said, and there are no plans to close any stores. The company’s store count includes stores operating under the Star Market name."

    “A decision of this nature is never easy, but after careful evaluation, it is unfortunately the necessary step for us to take to help improve our business, reduce expenses, and reinvest in more customer-facing initiatives,” Shaw’s president Mike Stigers said in a statement.
    KC's View:
    A couple of things.

    One, I always find it interesting when companies say that they are cutting people to focus on "customer-facing initiatives." That strikes me as such a disconnect ... a basic lack of understanding that the people on the front lines can be your most effective customer-facing initiative. Fewer people can lead to fewer open checkout lanes and more out-of-stocks, and that generally is not a great way to attract customers.

    Second, if Supervalu is hoping that focusing on making Jewel more attractive will help keep the ship from sinking before it is sold, the approach at Shaw's may be more akin to getting rid of dead weight. (Not saying the people being laid off are dead weight ... just that they may be perceived that way.)

    Published on: November 5, 2012

    Unionized employees at California supermarket retailer Raley's went on strike yesterday, after more than a year of negotiations, the first time that the company has faced a strike after some 77 years in business.

    Raley's has continued to object to the fact that its unionized employees have not had the opportunity to vote on its last contract offer.

    "It is unfortunate that after 15 months of talks and nearly 60 negotiation sessions, we were not able to agree on a new contract since it is clearly understood that we must reduce our operating costs to become more competitive against non-union retailers" said Raley's spokesman John Segale, who noted that all the company's 100 stores were open and operating as usual.

    "The company's position is fairly breathtaking. They really haven't changed much of any of their positions in the 15 months that we've been in talks," responded Mike Henneberry, a spokesman for the United Food and Commercial Workers (UFCW).

    Last week, Raley's announced that it was unilaterally imposing the terms of what it called its final and best contract offer on its employees - including a two-year wage freeze, the elimination of extra pay for Sunday hours, and a reduction in bonus pay for holiday shifts - because it said it needed the concessions in order to remain financially viable in the face of non-union competition. It delayed the imposition of the contract terms pending last-ditch negotiations over the weekend, but those talks collapsed, leading to the walkout.

    In a memo to the company's management team yesterday, Thomas Lee, senior business manager at the company, wrote:

    "Unfortunately, our negotiations broke down last night.  We tried our best, including extending our deadline another 48 hours until midnight Saturday.  Unfortunately, the two sides are too far apart.

    "Now it's time to get ready for some kind of Union action.  This is the time we have been preparing for. Make contact with your key folks and prepare them to come to work as assigned and planned. Stay calm and let them know that everything will work out as the initial calls are made.

    "We are still trying to get the Union to vote on our Final proposal.  Employees should continue to insist upon it.  Until they are  given that opportunity, we ask them to please come to work.....don't strike.  No vote = no strike!

    "In keeping with earlier statements, we will be implementing premium pay reductions starting with Sunday pay today, however we will not be implementing our health care proposal. Therefore the employees health care, sick leave, etc., will remain the same."
    KC's View:
    Not good news. For anyone.

    Published on: November 5, 2012

    Reuters reports that Walgreen is bring out a new private brand line under the name of Ology, saying it will have no harmful chemicals.

    According to the story, the "first 24 baby and personal care products, cleaners, paper products and compact fluorescent light bulbs ... will hit its more than 7,900 drugstores this week ... The company is hoping to tap into a consumer trend toward products that are safe and free of harmful chemicals, Maurice Alkemade, Walgreen's group vice president of retail brands and global sourcing, said in an interview."

    The story says that Walgreen expects to double the line by another 24 items next spring.
    KC's View:

    Published on: November 5, 2012

    • The Boston Globe reports that after 65 years in business, Johnnie's Foodmaster is ending its run - in addition to the six stores already announced as being sold to Whole Foods, one store is being converted to a Stop & Shop, and three units are being shut down.

    USA Today reports on a study from The NPD Group saying that "millennials are eating out roughly once a week less than the same age group's eating habits in 2007 ... The news is a punch in the gut for $632 billion restaurant industry, which is already struggling. Its most important generation of eaters appears to be drifting away. Behind this cultural change is a generation utterly unable to rebound from the financial effects of the recession. Many who are unemployed or underemployed are returning home with their heads down and their hands out. This, in turn, is slowing the growth of the restaurant industry and left it in a nasty battle for market share."

    Internet Retailer reports that Toys R Us "has added 'pay in store' to the list of payment options available on its e-commerce checkout pages on ToysRUs.com and BabiesRUs.com. Consumers who select the option at checkout then have to visit one of the retail chain’s 873 bricks-and-mortar stores and pay at any register to have their web orders processed.

    "At the register, consumers can opt to pay with cash, check, credit card, debit card or gift card, the retailer says. Payment must be made within 48 hours of receiving the confirmation e-mail for the online order. Consumers must bring a copy of that e-mail or be able to display the e-mail on their mobile phone to complete the payment."

    Walmart began offering a similar service earlier this year.
    KC's View:

    Published on: November 5, 2012

    • The Lakeland Ledger reports that M. Clayton Hollis Jr. is retiring from Publix Super Markets Inc. after four decades with the company, most recently as vice president of public affairs.

    As the story notes, "There is a long Hollis family history at Publix. Clayton's father, Mark C. Hollis, once served as president and then vice chairman of the Lakeland-based chain, and grandfather, the late ­William M. Hollis, was a vice president."

    "Once I reached 40 years I thought maybe this is a good time," the 56-year-old Hollis said, adding, "I feel I've had an unbelievable life at Publix — not a career, a life."

    • Convenience store chain Sheetz Inc. announced that Joe S. Sheetz, the company's executive vice president of Finance and Store Development, will become president/CEO of the chain as of October 2013.

    The company's current president/CEO, Stan Sheetz, will move into the role of Chairman, while Steve Sheetz, will leave his Chairman seat to fill a newly created position of Family Council Chairman.
    KC's View:

    Published on: November 5, 2012

    Last week, MNB took note of a Wall Street Journal piece about Rosalind Brewer, president/CEO of Walmart's Sam's Club division, and her goal to turn it into a $100 million business and catch up to Costco; I suggested that Brewer, described as the first African American and first woman to lead a Walmart business unit, might well be the in the running to be the next CEO of Walmart, which would be an enormous cultural change for the company. (I probably should have said that she may be a future Walmart CEO; it seems to me that Walmart needs to be looking to people like Brewer and Shelley Broader, who runs Walmart Canada, to be the future of the company.

    Not everybody shared my enthusiasm for Brewer. One MNB user wrote:

    FYI....she is way over her head, and Sam’s has being trying since it started to be Price Club / Costco and it will never happen ...

    The next CEO will either be Doug Mc Million or Rob Walton's son-in-law.


    But another MNB user wrote:

    Now wouldn’t that be a smart move on Wal-Mart’s part? Make a women the next CEO, it should help with image on several levels and give a new perspective missing from the Good ‘ole boys’ network. Plus at least from your excerpt, she sounds like a smart person with vision.




    Regarding the ongoing resistance to the proposed settlement of the swipe fee lawsuit, MNB user Mark Raddant wrote:

    I applaud the move by the retailers to resist this settlement.  The fees for your chosen mode of payment should be itemized on your bill.

    No different than the price of the items you are buying.  The cost of the transaction should be itemized completely, and the fees should be shown, just like the taxes.

    And just like the taxes, if the cost is too high, you can go somewhere the taxes are lower if you want to.





    On another Walmart move - a growing use of self-checkout systems - one MNB user wrote:

    This is rather interesting.  Wal-Mart Canada HAD self-service checkouts a couple of years ago and took them all out in favour of a single line express checkout with up to six cashiers.  I hate it.  As with any store, there are always those people who think that 13 or 14 or maybe even 18 items somehow qualify as 12.  What I truly dislike about Wal-Mart are the long lines at their checkouts; perhaps they simply do not staff enough but I have tried to limit any visits to their stores during hours that are less busy.
     
    On the topic of self-service checkouts, there are times when I feel that one must be licensed in order to qualify as a user.  There is nothing worse than getting behind someone who has no idea what he/she is doing and your “express” checkout experience becomes interminably long.


    And yet, there are young people - my 18-year-old daughter is one of them - who will choose a store based on whether it offers self-checkout.




    Chiming in on our discussion of Target, MNB user Guy Wheeler wrote:

    I made my first visit to a new Target that competes with Wal-Mart, Price Chopper and Hannaford for groceries within a half mile radius.

    One of my objectives the day after Sandy passed by the Albany area was to get a 6 volt battery for our lantern.

    One of the managers walked me over to the empty battery section. He asked if it was an emergency which it wasn't. He offered that had it been, he owned the same lantern, had it in the back room and would lend me the battery.

    Couldn't be much better customer service than that!





    Responding to a musical reference last week, MNB user Mark Walton wrote:

    It took me about 3 seconds to recognize the “Wonder of Wonders, Miracle of Miracles” reference to Fiddler on the Roof.  A subtle reference to a great movie.  Keep the “tradition” going!

    Hey, it ain't all Jimmy Buffett and Taylor Swift lines around here. We're big Broadway show tunes folks at MNB...
     



    Finally, an email that made me laugh out loud ... coming in response to my note on Friday about going to Standard Time from Daylight Savings Time:

    I wish my clocks were running so I would have a reason to reset them.  Maybe tomorrow.

    I hope that by now they are.
    KC's View:

    Published on: November 5, 2012

    It's Week Nine in the National Football League...

    Denver 31
    Cincinnati 23

    Baltimore 25
    Cleveland 15

    Green Bay 31
    Arizona 17

    Houston 21
    Buffalo 9

    Indianapolis 23
    Miami 20

    Detroit 31
    Jacksonville 14

    Chicago 51
    Tennessee 20

    Carolina 21
    Washington 13

    Tampa Bay 42
    Oakland 32

    Seattle 30
    Minnesota 20

    Pittsburgh 24
    NY Giants 20

    Atlanta 19
    Dallas 13
    KC's View:

    Published on: November 5, 2012

    Just wanted to take a moment this morning to thank you for all your best wishes and expressed concerns last week and over the weekend.

    I was finally able to get home on Friday night, and was pretty lucky - the house, while without power, remained reasonable warm and there had been no damage - just some branches and leaves down in the back yard. The power, cable and internet were back on by midday Saturday, so I have nothing to complain about.

    (I heard someone on NPR say over the weekend that there were three kinds of people affected by the storm - people who were inconvenienced, people who had their lives devastated, and people who were inconvenienced but were acting like they'd had their lives devastated. There is no excuse to be the latter, and the good news is that I didn't bump into anyone who was acting that way.)

    Also, I'm touched by the outpouring of happy birthday wishes that I got via email, text message and Facebook over the weekend. It ended up being an almost perfect couple of days - my daughter came home from college, and we all went out to dinner on Saturday night (gumbo and a good Albarino for me) and then to a movie (Flight, which I will review on Friday). And the constant "ping" on my iPhone as messages came in were a reminder of how lucky I am.
    KC's View:

    Published on: November 5, 2012

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    KC's View:

    Published on: November 5, 2012

    Future Connect 2013 provides a roadmap to success in the dynamic food retail industry.

    Drive your team to their best potential at this unique leadership event. Your investment in this conference will ensure that your company has the leadership skills, knowledge, business partnerships and resources needed to be successful in the next generation and beyond.

    Programming addresses four concurrent breakout tracks: Strategic Leadership, Operations Leadership, Industry Collaboration and Technology. Reach your company's leadership goals faster and make it a team effort.

    Join us in Orlando April 30-May 2. Register today by clicking here.
    KC's View: