retail news in context, analysis with attitude

Published on: February 11, 2013

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Published on: February 11, 2013

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Published on: February 11, 2013

LAS VEGAS - Independent grocers from all over the country came here, to a city that virtually defines the word "excess," to hear two political veterans describe how the United States has brought itself to the precipice of financial ruin, and why uncommon political courage is required if the nation is to pull itself back from the brink.

The National Grocers Association (NGA) is meeting here at the Mirage Hotel and Convention Center, for its annual show, designed to celebrate the independent retail sector as well as the organization's 35th year.

For the opening night keynote, following a "state of the industry" presentation from NGA chairman Joseph Sheridan of Wakefern Food Corp. and NGA president/CEP Peter Larkin, the stage was set for former Sen. Alan Simpson (R-Wyoming) and Erskine Bowles, chief of staff in the Clinton White House, who together chaired the National Commission on Fiscal Responsibility and Reform, formed to frame solutions to the nation's fiscal crisis.

Bowles told the audience that the nation must confront five challenges if it is to put its fiscal house in order: the rising cost of health care, national defense expenditures that are way out of proportion, an antiquated and anti-competitive tax code, Social Security, and compound interest that continues to raise the cost of the nation's debt. Bowles added that we find ourselves in "the most predictable economic crisis in history," as well as "the most avoidable economic crisis in history."

However, Simpson said, the climate for the kind of political compromise necessary to address these issues in a honest way as been poisoned by the fact that people in both parties "don;t just want to win, but they want to make the other guy lose, and there's a helluva lot of difference."

Bowles argued that one of the only ways that the nation can get to the point where the "sensible center" can dominate is to change the ways in which redistricting has allowed politicians to only cater to their most extreme bases, rather than having to forge positions that appeal to people on both sides of the aisle.

To considerable applause, Simpson urged the retailers in the audience to make their voices heard: "You are most effective people to bring this message," he said, because grocers are so important to the communities that they serve.

In other NGA news....

• At Saturday's NGA Board of Directors Dinner, Mike Needler, Sr., CEO of Fresh Encounter, was awarded the 2012 Thomas K. Zaucha Entrepreneurial Excellence Award.
Needler, a successful entrepreneur whose business was founded in 1964 and has successfully grown to 29 stores in Ohio and Indiana, is recognized as an outstanding leader in both the industry and his community.

• Andrew Borracchini of Metropolitan Market at Admiral in Seattle, WA has won the 2013 National Grocers Association (NGA) Best Bagger Championship, sponsored by ConAgra Foods, Pringles, Bunzl Distribution, and Pan-Oston Company.  Look for him to appear on "The Late Show with David Letterman" later this week.

Published on: February 11, 2013

There is a fascinating profile in the February 11-18 edition of The New Yorker of artist Brendan O'Connell, who has an unusual oeuvre - he paints the aisles and shelves and shoppers at Walmarts all over the country.

O'Connell, who worked his way through part of college at a Winn-Dixie, as an affinity for retail, and Walmart - the biggest retailer on earth - has proven to be an enormous inspiration because it seems so in tune with everyday life and yet, in his eyes, filled with art that almost nobody sees.
"Anything related to Walmart is freighted with meaning," writes Susan Orlean in her piece. "The company is either the salvation of country folk or the slayer of small towns; newly devoted to sustainability or the one with a lousy labor record; a major purveyor of guns or frequently the first company on the spot with post-disaster relief; a monument to cheap, unthinking consumerism or a way to make comforts available to many people. A painting of an endless row of Oreos can be interpreted as an ironic statement about gluttony and commercialism or as a study of a pattern seen by millions of people every day that has its own ubiquitous beauty."

One of the most interesting things about the story is how O'Connell's relationship with Walmart has evolved. he used to get thrown out of stores regularly for taking pictures in the aisles, but now that Walmart actually understands what he is doing, it is a lot more agreeable and willing to help his efforts ... to a point.

Published on: February 11, 2013

The BBC reports that the horse meat scandal, which originally seemed focused on the UK and Ireland, now has spread to at least 16 European countries and there are concerns that this is not accidental contamination but rather "the work of a criminal conspiracy."

French ministers, the story says, are conducting talks with meat industry companies, and "seven French supermarket chains ... have already withdrawn some of their frozen meat-based meals, including lasagne, from the shelves."

It is a complicated story, as this passage from the story suggests:

"An initial investigation by French officials revealed that French firm Poujol bought the frozen meat from a Cypriot trader, France's Junior Minister for Consumer Goods, Benoit Hamon, said in a statement on Sunday.

"The trader had, in turn, received it from a Dutch food trader, and that Dutch company had purchased the meat from two Romanian slaughterhouses.

"Poujol supplied the meat to a Luxembourg factory owned by French group Comigel.

"The meat was then sold under the Sweden-based brand, Findus, which has said it has been misled by its Romanian meat supplier."

Published on: February 11, 2013

The New York Times had a story over the weekend about the unusual passions that drive shoppers in Pennsylvania to one of two convenience store chains - Sheetz and Wawa - despite the fact that "convenience stores are supposed to be interchangeable, selling low-priced gas and self-serve coffee based on the proposition that when you need a pit stop, you turn in to the first you see, right there."

Both companies, the story says, have gone beyond the traditional gas-and-tobacco-and beef jerky model to offer a broader selection of food and beverages that is designed to foster loyalty from their shoppers.

And, they brim with personality:

"Sheetz is the slightly smaller chain," the Times writes, "with 226 stores in Pennsylvania and a total of 435 in the region. Wawa has 216 in-state stores and 607 over all, as far south as Tampa, Fla., and north to Parsippany, N.J.

"There are clear differences. Sheetz has neon colors, pumps loud country music and is overly fond of the alliterative use of its name in products. It sells Sheetz Shweetz, a CinnaShmonster and Shmuffins. Near its corporate headquarters in Altoona, it offers employees a Shwellness Center.

"To Sheetz’s country mouse, Wawa is a more suburban creature. Its décor features muted browns and blonds, and a central island of healthy food includes diced mangoes and apple slices."

You can the entire story here.

Published on: February 11, 2013

PacificStandard.com has a story about new research published in the journal Psychological Science, which concludes that there is "a relationship between voting behavior, high levels of religiosity, and 'seemingly inconsequential product choices' ... They argue that your decision to vote for a certain candidate, and purchase a particular brand of detergent, springs from the same basic impulse."

The study says:

“Our empirical results, based on extensive field data, provide strong evidence that more conservative ideology is associated with higher reliance on established national brands (as opposed to generics) and a slower uptake of new products.

“These tendencies are consistent with traits typically associated with conservatism, such as aversion to risk, skepticism about new experiences, and a general preference for tradition, convention, and the status quo.”

In other words, conservatives like branded products, which are the primary focus at Walmart, while liberals are more likely to shop in a store like Trader Joe's, with its private brand dominance.

Published on: February 11, 2013

• In Toronto, the Globe and Mail reports that Toronto-based West Face Capital, described as an "activist fund," has acquired a minority stake in Safeway Inc., saying that "investors are ignoring the value of Safeway’s Blackhawk gift-card business and Canadian supermarket business."

Safeway already has said that it is planning an IPO of a minority stake in Blackhawk.

• The Bellingham Herald reports that Haggen Inc. will open its "eighth and the final" remodel of a Whatcom County Haggen Food & Pharmacy store into its new Northwest Fresh format on Wednesday.

• The Associated Press reports that Royal Ahold will sell its 60 percent stake in ICA, the Scandinavian retailer, for the equivalent of $3.3 billion, to Hakon Invest, a private equity group.

Published on: February 11, 2013

• In the UK, the Telegraph reports that Clive Humby and Edwina Dunn, the husband-and-wife team that created dunnhumby, the breakthrough data analysis technology firm, have resigned from their positions as non-executive directors of the company.

Humby and Dunn founded the company in 1989, began working with Tesco in 1995, and then sold a majority stake to Tesco in 2001. Tesco bought the rest of the firm in 2010, but the pair remained with the company in non-executive roles.

Published on: February 11, 2013

We had a piece last week about how Jim Donald, the former CEO of Starbucks, Pathmark and Haggen, currently is reinvigorating the company and culture at Extend Stay America, the hotel chain, with a strategic plan called "DANCE," which is an acronym for a variety of changes being made within the company.

Well, MNB user Michael Schillo was not impressed:

Can Jim Donald do no wrong in your eyes??

DANCE is dis-ingenious.  Another corporate acronym that is aimed to motivate the troops….when in all reality motivation comes from within.

Here is the issue in my mind. 
 
"D" is for delighting guests through property refreshes and enhanced service.
 
What does delight me?  My definition of delight will be different.  I may prefer a 24 hr snack bar like aloft where others may want room service.  Delight is a consultant term for “don’t piss off”.  Refresh and enhanced?  Again…vs. what  vs. doing nothing?

"A" is for activating associates and preventing slack.
I read this as hey all you desk clerks,  “get off your butts and work”.  Activating?  Haha….nice one.  I should use that in my reviews.

"N" is for neutralizing costs through cost-containment measures.
 
Read:  layoffs, less soaps, no free water, etc.  Hey, the economy is rough.
"C" is for caring for the community of both guests and employees.
Ahhh…caring for community.  Who doesn’t love that.  I don’t want a caring hotelier.  I want a nice clean room with free wifi, an opportunity to get a snack…and leave me alone.

"E" is for expanding revenue.
 
Read:  raising prices…but not too high as people will go to Courtyard or 4 Points.  Oh yeah, that water is now $3 too.  Welcome, enjoy your stay.

Okay, that's one perspective.

But MNB user Lindy Bannister wrote:

This man never ceases to amaze me. I worked for him years ago when Albertsons was a company  that we were all very proud to work for. He connected with every employee. I remember him out jogging early (very early) in the mornings and stopping in to the nearest store to throw freight with the over night crew. He said it was the best way to find out what was happening in his division! We would have followed him anywhere.

And from MNB user David Logue:

Jim was another one of the Great Albertsons Team members when it was a GREAT company. I had the honor of spending 3 days with him while I was on a training program. He is a GREAT LEADER!! Great story today!

I suppose you can be cynical about what Jim Donald is trying to do ... but I have to say that when I talk to people who have worked for him over the years, the broad consensus is that when he develops these kinds of programs, it isn't just talking points and manipulation. And my sense is that he is a master motivator, especially at companies where people feel like leadership has been sadly lacking.




Regarding the layoffs at Delhaize America, we have a report from the front lines:

I was one of those let go...You were absolutely right the other day - sitting in your cube, trying to work like everything is normal, while loss prevention and HR folks are swirling around smiling and offering boxes for those who need them and waiting for a tap on your shoulder was HELL. Then those who got the ax emerge from the conference room with a giant (you could hang-glide with the thing) envelope full of materials, so everyone pretending to not stare at the door out of the corners of their eyes knows exactly what just happened to you.

It was the most undignified thing I have ever been through in the workplace. Classic Food Lion: the plan made a lot of sense on paper but the execution was thoroughly screwed up.  That said, the severance packages and outplacement services are more than generous.  The company is trying to do right by us.  There are hundreds of smart, kind people there who taught me tons about real estate, so I hope for everyone's sake Delhaize turns it around.  I haven't heard the final body count, but I'll bet you lunch it was more than 350. You can look at the parking lot and know that.




We continue to get emails about the Super Bowl ads.

MNB user Jeff Gartner wrote:

Good afternoon Kevin, you replied "You're entitled to your own opinion" to one of your readers when they disagreed with your own review of some of the Super Bowl ads. Those words "entitled to your own opinion" are characteristic of successful branding and advertising.

Very few successful products and their ads have universal audiences. Indeed, most successful brands and their ads choose a particular audience, which also means not selecting other audiences. That's difficult for many organizations to accept, and why too many brands (which includes retailers as well as products) are not distinctive from their competitors. So my first thought when I see or hear or read an ad that doesn't appeal to me is that I must not be the target audience. 

You often say "compete is a verb," and the first steps to successfully compete are to be distinctive and choose (another verb) your audience.

And from another reader:

I don't think the person who made the comment that all the people in the farmer ad were men actually understands the American Farmer. I come from a family of farmers. The American Farmer is predominately male, one of the few professions that still is. It also takes a special woman to be married to a true farmer because its not an easy life.

All the great farmers at the farmers market are women? I hate to burst your bubble but the people selling at farmers markets are rarely farmers. They have a small sub plot
of land (often called a victory garden) where they raise various vegetables and flowers for the specific reason of selling at a farmers market. I see these plots all over Minnesota. I don't believe that makes them a farmer. The real American farmer is working his land and livestock and does not have time to bring a couple of bushels of apples, potatoes or what have you to a farmers market, there is not enough money in that for them. And for those that do, the reason the women are there is to sell the product while he is back tending to the farm. I'm not saying women don't help out on the farm, they do, but everyone helps on the farm, that's the way it is.

Whether you think its right or wrong, the fact is that RAM did the commercial correctly, ask any farming family and they will tell you. The sole purpose of that commercial was to remind Americans what the American farmer really is.

Another reader chimed in:

In response to the comments on Go Daddy commercials, I don't care for them either but it was reported that they had their biggest day ever on Monday, over 10,000 in new clients. The only thing I can say is I'm not their target market ... And they DID hit their target!

Good point.

Published on: February 11, 2013

In Major League Baseball, pitchers and catchers are reporting to Spring Training, which means that at least in some parts of the country, the sun is warm and the grass is green. And in the rest of the country, hope springs eternal, and at least for a few days, we think and talk about the game instead of things like performance enhancing drugs and what is perceived as widespread cheating.

Play ball. Please.

Published on: February 11, 2013

by Kevin Coupe

There is an old saying in retailing that it can take years, even decades to build a reputation ... and then about 30 seconds to lose it if you behave in a way that seems at odds with whatever brand equity that you've established.

Apparently, the same rules apply at 30,000 feet.

The Los Angeles Times reported over the weekend that Southwest Airlines - long seen as a no-frills, budget-conscious airline industry maverick that put customers first - seems to be losing some of its vaunted reputation. While it continue to be profitable, it has been losing some respect among its customers "since it recently began to shift its focus away from low fares and friendly service toward swelling its bottom line.

"Among the changes that critics say show Southwest's new profit-boosting attitude: It cut the legroom on many planes to fit more seats, retooled its frequent flier program to make passengers spend more money to collect points and adopted new fees to board early."

You can read the whole story here.