business news in context, analysis with attitude

Published on: November 6, 2012

by Michael Sansolo

For every season—or weather disaster—there is a time. On Monday, when Superstorm Sandy tore through the East Coast, tragically destroying homes, towns and lives in its path, it was the time for retailers to step up or shut up.

As Yahoo Shine first reported on Monday, many major fashion brands did neither. - Yahoo Shine, Nov. 8, 2012

There’s a theme that runs through the movie Jurassic Park that business needs to constantly remember: just because you can do something, doesn’t mean you should. Sadly, in the midst of Sandy, that rule was forgotten by American Apparel, the Gap and Urban Outfitters, all of which used Twitter to announce poorly thought-out storm-related promotions.

Those ridiculous examples stand in sharp contrast to the many supermarkets in the path of this storm that did their best to actually serve their customers and communities, just as we’ve seen in countless other storms, emergencies and disasters throughout the years. In truth, supermarkets and many other retailers perform so admirably in severe conditions that the lack of news is almost news in itself.

Certainly stores can’t do the impossible and for that reason some run out of key products or are unable to open due to power, water and other issues. But there’s rarely a report of price gouging or any despicable behavior from stores. Somehow, trucks get through, people come to work and in the midst of the worst times, the stores take care of their customers as best they can.

We saw it in countless cases during Sandy including (as Kevin reported last week) offers by local ShopRite stores to provide refrigeration space to people left without power. It came through the special e-mails from Wegmans on coping with the storm and understanding the food safety challenges that accompany power outages. It was there at the IGA in Ridgefield Park, NJ, where the owner-operator personally walked the front-end to talk with customers trying to return to normal. And we saw it at Walmart, Lowe’s and Home Depot, all of which deployed trucks loaded with important post-storm goods prior to the storm itself.

As Yahoo Shine said: that was retail stepping up.

(One aside here from this native New Yorker: Sandy is obviously getting a lot of attention and for good reason. In part it’s because the storm hit the nation’s media capital, but it’s also because the New York area is so densely populated that the scope of every problem is magnified. For any of you not familiar with the stunning size of New York, consider that Brooklyn, the city’s most populous borough, has a population bigger than Houston or 14 entire states. Staten Island, the least populous borough, has as many people as Kansas City, MO.)

While the enormity of this tragedy won’t be forgotten soon, neither should some of the business realities and lessons that follow including the vast differences between shutting and stepping up.

In fact it might be time for talking to and educating shoppers.

When the warning of the storm went up, my family, like so many others in the potential path of destruction, did the exact same thing: we headed to the supermarket. It’s not really a matter of logic; it’s a matter of doing something. Turning to e-commerce suddenly wasn’t an option. The comfort of the local store a mile away mattered. (We were not as lucky as Kevin. Stuck in Southern California as the storm bore down on his family and Connecticut home, he went to the beach.)

The challenge for retailers, I think, is finding a way to highlight service in the midst of a disaster without bragging or seeming insensitive to the plight of customers devastated by the storm. (Refer back to the top of this column for the examples from American Apparel et. al. and do the opposite.)

Perhaps this is a good time to use social media and marketing to highlight the extraordinary efforts of individual associates who left their own damaged homes to get the store up and running. It’s a small gesture that would mean the world to that associate and might remind the community just how local this industry really is.

Because no matter how much things change, that aspect of life really doesn’t. Especially in the worst of times.

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: November 6, 2012

Staples Inc. announced yesterday that it will install Amazon.com lockers in all of its US stores, which will allow shoppers to order online from Amazon and have those orders delivered to a nearby Staples rather than to their homes, if that is a preferred option.

Amazon already has such lockers in some supermarkets, c-stores and drug stores, and even in municipal garages, but the Staples deal is a major move toward enlarging its footprint in the physical retail world.

As Reuters notes, "With the service, Amazon sends customers an email with a pickup code, which is entered on a touchscreen to open the locker containing the package. Shoppers have three days from the delivery date to pick up the package. The online giant pays a small fee to the owners of the stores that house its lockers."

Published on: November 6, 2012

by Kevin Coupe

Remember the old saw about how there is no such thing as bad publicity?

Anheuser-Busch InBev would disagree.

The maker of Budweiser beer has gone to Paramount Pictures to ask the film studio to remove its product - or at least obscure its label - from all future digital copies of the movie Flight, which, as the Hollywood Reporter writes, "centers on an alcoholic pilot who guzzles alcohol and takes drugs both before and after he takes prevents a malfunctioning airplane from crashing."

Budweiser isn't the only label seen in the film, which also shows products such as Rolling Rock, Yuengling, Smirnoff, Absolut and Stolichnaya being abused by the main character. According to the Hollywood Reporter, none of those brands were asked for or gave permission for their brands to be used in the film.

The Reporter writes: "Trademark and copyright laws can prevent logos or other protected images from being used without permission in films. But filmmakers also are granted certain 'fair use' privileges under Federal law, which allows for certain use of protected materials without receiving permission from the rights holder. Fair use is invoked for everything from films to television and newspaper reports."

Paramount is not commenting on the report.

As I mentioned yesterday in a different context, I'll be reviewing Flight on Friday. But I have to say here that while I understand Anheuser's objections, I think the company is making a mistake. I was aware of the fact that Budweiser and the other labels were in the movies, but it wasn't like I ever thought that the brands were endorsing alcoholism or addiction. If I were the filmmaker, I would have insisted on using real brands, too ... fake brand labels always call more attention to themselves, especially if they are designed to mimic real brands.

So this is one of those cases where me thinks they doth protest too much ... and actually are creating more awareness of the brands presence in the movie than the movie actually did. (Maybe that's the point?)

Published on: November 6, 2012

Giant Eagle announced this week that it has launched its first Good Cents Grocery + More store, defined as "bringing a uniquely fresh approach to value-priced grocery shopping in Pittsburgh.

"Providing extremely low prices on produce, deli, meat, cheese and grocery items, the Pittsburgh-based company's 46,000 square-foot store will feature a 3,800 square-foot produce section offering more than 230 conventional and organic produce items, a cheese department with more than 60 specialty items, a full-service deli and a fully-stocked meat department featuring meat cut and ground fresh in-store," the company said. "The new Good Cents Grocery + More will also offer groceries with a popular mix of name brand national and regional brands alongside Food Club and Valu Time store brands ... To keep prices low, Good Cents focuses on lower operating costs, without compromising quality or a clean and safe shopping environment.  To that end, Good Cents does not accept checks as a form of tender, and also encourages customers to bring their own traditional and reusable bags.  Customers may also purchase grocery bags for a nominal fee."

Good Cents Senior Vice President John Tedesco describes the format this way:  "Think of it as the missing link between discount stores and supermarkets. Good Cents reflects the real fresh, not real fancy experience for customers who know how to recognize a great deal on high quality products. Good Cents comes to Pittsburgh at the perfect time, as families continue to struggle through a sluggish economy and rising food and commodity costs."

Published on: November 6, 2012

In the UK, the Retail Bulletin reports that Tesco has created a special "Commuter Zone" on its website, offering "a limited number of popular products for breakfast, lunch and dinner such as cereals, sushi, fresh fruit and chocolate as well as Tesco Finest £10 Meal Deals," targeted at "workers who want to avoid the hassle of carrying heavy shopping home at the end of the day by buying food and groceries via their smartphones."

Ken Towle, the company's director of internet retailing, explains the rationale this way: "We know that many of our customers have busy lives, but that they still want quick and easy access to great food at great value.  Our new commuter zone is the latest way we’re helping customers to manage their time, by pulling together a range of high quality products and categorizing them to reflect the working week ... As the nights close in and it gets colder and darker, customers needn’t worry about stopping to shop on their way home – Tesco can deliver their order straight to their door, giving them more time to enjoy their evenings and weekends.”

The story says that Tesco's Commuter Zone "has launched nationwide, with initial marketing activity in London."

Published on: November 6, 2012

Fast Company reports that in West Oakland, California, "one local organization is banking on the community to alleviate the problem" of being a food desert "by funding a startup grocery store."

Here's how the magazine frames the effort:

"The vision for the for-profit People’s Community Market sprung out of a decade’s worth of community food activism from People’s Grocery, a nonprofit organization that in the past has launched projects like the Mobile Market, a fresh food truck that drove around the neighborhood, and the Grub Box, a local community-supported agriculture box for residents. Despite the success of these initiatives, they weren’t enough to fulfill the food needs of West Oakland, which sees 70% of grocery expenditures from residents each year (about $40 million) going to other cities. A lack of fresh food also contributes to the 48% of residents that are obese or overweight."

When it finally opens on a site yet to be confirmed, the story says, "People’s Community Market will carry just 40% of the inventory of traditional grocery stores, with a focus on fresh food--produce, seafood, dairy--and quality prepared items ... The grocery store has secured two-thirds of its $3.6 million budget from the California FreshWorks Fund, a collaboration between the California Endowment and a number of partners that aims to bring fresh food to the state’s food deserts. But there’s a hitch: FreshWorks will only offer up the loan if the grocery can raise the rest of the money ($1.2 million) first. That last chunk of cash will come from the community via a direct public offering--a system where People’s Community Market sells shares of the company directly to California residents ... People’s Community Market has already raised $200,000 thanks to the large donor base from People’s Grocery. The direct public offering permit from the state is good for a year, so the grocery store has a bit of time to collect the rest of the money."

The story says that it has been determined that private capital simply is not available for a project like this, and that crowdfunding options - like Kickstarter.com - generally are not able to generate the kind of money that the People's Community Market needs.

Published on: November 6, 2012

USA Today writes that "as smartphones proliferate, more stores and banks are offering to e-mail shoppers their receipts rather than giving them a printed copy. These electronic or digital receipts, touted as green for saving paper and convenient for saving time, enable retailers to market directly to customers ... This year, Macy's began offering paperless receipts at its stores nationwide and, beginning in August, Wells Fargo extended this option - begun at its ATMs in 2010 - to transactions inside bank branches. Citibank announced in September that it would also offer electronic receipts at its ATMs. Other companies with an e-receipt option include Nordstrom, Best Buy, Whole Foods, Kmart, Sears and Gap."

The story goes on to say that "a third, or 35%, of retailers offer digital receipts, and half of them do so at all their stores, according to a survey of 3,900 retailers released earlier this year by marketing firm Epsilon."

Published on: November 6, 2012

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

• Wholesaler Unified Grocers announced that "it is offering independent retailers an exclusive 'eShop-Rewards' program that allows consumers to earn points toward a $25 prepaid Visa Rewards card (in addition to their regular credit card points) while shopping online at more than 1,000 of the nation's top online merchants ... When consumers accumulate 27 points on the eShop-Rewards website, they simply click on the "earnings" button and a $25 Visa Rewards card is mailed to them. The reloadable Visa Rewards card may be reloaded in $25 increments with each additional 27 points earned by clicking on the "earnings" button.

The rewards website identifies some of the online merchants involved, and they include Macy's, Target, Best Buy, iTunes and Staples. One of those online merchants - Target - competes with independent food retailers. Staples will now be hosting Amazon Lockers, and Amazon competes with independent food retailers. The question is whether those independents are going to find themselves sleeping with the enemy...

• Reuters reports that "Americans will be able to enjoy relatively cheap Thanksgiving turkeys this year, thanks to many retailers locking in their costs before a drought this year drove up U.S. feed prices. And retailers are determined to keep prices for the traditional Thanksgiving main course as low as possible, even though sky-high corn prices have nearly doubled the cost of producing a pound of turkey meat this year."

Published on: November 6, 2012

Got the following email about a familiar subject:

Supervalu and its subsidiaries are part of the group of retailers that have focused on making their money from slotting. Look at the chains that are in trouble, versus the ones doing well. Against the big box guys that price to the bone, dollars need to be put into cost of goods. Over time, the bottom line will follow as the consumer comes back to their stores.

Slotting also forces bad selection. Take the product in, if they will pay, no matter weather its good, bad or needed.

Some continue to believe that their instant slotting dollars are over and above what they get in cost of goods.

There is one pot of money. How you choose to take it determines how you compete.
Like being on drugs, It just takes a lot of intestinal fortitude to quit and refocus. Once you do, you level your playing field and let the best format win. Big Box and others, cannot compete with the conventional retailers in store perimeter. Get back to making good product decisions, completive pricing and let the best format win.




The following email from MNB user Steven Ritchey weighed in on the issue of efficiency vs. effectiveness:

Many years ago, when I was a teenager, I went to work for Tom Thumb in October of 1976.  My first Store Director was a man named Tom.  Tom was probably one of the best managers I ever worked for.  He was there for a couple of years, and the company did what it did with good managers, they promoted him to a larger, higher volume store.  His replacement was OK, but didn’t have Tom’s personality, ability to relate to employees and understand what was important the variety of employees at the store.  We had everything from teens, to single moms to older people nearing retirement.  One of the first things the new manager announced was that wage cost at this store was too high, we had too many employees who were at the top end of the wage scale because they’d been with the company so long.  I remember thinking at even age 19 or 20, well duh, if people like where they work, they will stay there for a long time, I also noticed many of these very experienced employees were also very efficient at their jobs.  I couldn’t help but notice as he got people transferred to other stores and got in younger, cheaper help, the store didn’t run as smoothly as it had.  Things didn’t always  get done in a timely manner.  Yes, his wage costs per hour were down, but it was taking more hours to get the same work done.   Under the previous manager, when a new Skaggs opened up a mile or two from my store, we noticed a drop in business for a few weeks, then it was right back to normal.  When a  new Tom Thumb opened up 5 miles away, we lost business we never got back.  With the personnel changes, we started to lose some customers who weren’t happy to see old, familiar faces leave and they left too.

The point is, you have to be careful about perceived high wage costs, with those wages, may come experienced employees who are very efficient and very effective at their jobs, who also may be bringing in customers.  A cheaper employee may not come with those efficiencies and also may cause you to lose sales.  In this case, the store was actually more profitable with almost the highest average wage cost per hour in the company.  With cheaper, less experienced help, we came dangerously close to losing money.




On the subject of new layoffs at Supervalu-owned Shaw's, one MNB user wrote:

If you layoff 700 people, each of those has 4 or 5 family members, numerous friends, neighbors, FB contacts, who now won't shop at the store.  So, you have now upset, just using the 700 number, approximately 5000 people, i.e. lost 5000 customers.

MNB user Scott Nelson wrote:

I find it funny that Shaw’s President Mike Stigers says they are cutting employees to “reinvest in more customer-facing initiatives”.  In order to “face your customers” don’t you need “faces”, aka employees?




On the topic of Walgreen's new green private label, one MNB user wrote:

Walgreen chose "Ology" as the trademark for its new private label brand of products free of harmful chemicals?  I thought it would be "Really Nice!"

Walgreen's must have used the same firm that came up with Mondelez.




Linda Ballew-Johnson had a criticism of one of our storm-related references:

A slight complaint about a continued oversight in the NY, NJ and Conn press.  Also seriously impacted by the storm are Eastern PA, (including Phila) Delaware, Maryland and West Va.  Some areas devastated as severely as those in NY and NJ.  Not trying to nitpick, there are friends of mine who are trying to pull their lives back together after their losses.

Excellent point. Apologies.




Finally, in yesterday's piece about the impact of Hurricane Sandy, I wrote:

...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.

This led one MNB user to write:

Okay, now you are just showing off.  I might not be the smartest of your readers, but that is playing SAT vocabulary games.  Fortunately Google was able to tell me that you meant debris….  I am concerned that you might have too much time on your hands.

I really wasn't playing vocab games. Nor do I have too much time on my hands. (I wish.)

I'm not a particularly smart guy, but I read some, and so I'm often learning words that I might not otherwise know. When I write, they sometimes pop out, hopefully when appropriate. I'm not showing off, but I'm also not censoring myself - it would never occur to me to not use a word because some folks might not know it.

Published on: November 6, 2012

In Monday Night Football action, the New Orleans Saints defeated the Philadelphia Eagles 28-13.