retail news in context, analysis with attitude

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.
KC's View: