retail news in context, analysis with attitude

Published on: June 17, 2013

Yahoo! Sports has a story about how a federal court judge stood up to basketball legend Michael Jordan last week, taking a dim view of a lawsuit that Jordan filed in 2009 against Safeway-owned Dominick's in Chicago.

The suit was filed when Jordan was elected to the Basketball Hall of Fame, and Dominick's took out an ad in local newspapers congratulating him - and, saying that he was "a cut above" other players, offered a coupon good for a discount on its Rancher's Reserve steaks.

Jordan, apparently annoyed that his image and name had been used without permission, sued Dominick's for $5 million.

While U.S. District Judge Milton Shadur has ruled that Dominick's has some liability for using Jordan's likeness without permission, he also said last week that Jordan's $5 million price tag was "greedy," and that he was making a "legal mountain" from a "legal molehill."

He did all this without excusing Dominick's for what he called an ad that was "ultimately stupid and really totally without common sense." But the judge seemed verklempt about the fact that Jordan did not even want to appear in court to make his case (he forced him to), and Shadur said he thought "it would be a constructive use of time to see whether some element of sanity cannot be introduced into this matter." (Perhaps making him a lonely beacon of rationality in the legal system.)

What was intriguing about this is that in reading some of the other coverage of this lawsuit, the general consensus seemed to be that while Jordan may think he's being the best defender of his own image and brand equity, in fact he's managed to reinforce the image of him as being a great basketball player but often poor excuse for a human being. (I did not remember, for example, his petty and vindictive speech at the Hall of Fame induction ceremonies ... but the stories about this lawsuit brought those up again.) Imagine how different the case would be if Jordan had argued that, in exchange for the use of his image, Dominick's should be required to supply steaks to Chicago's homeless shelters for a set period of time.

Brand equity is, for most businesses, the most important thing they have. And it is interesting to consider what the best ways are to sustain and grow that equity. The suggestion from stories about this case suggest that Jordan, in defending what he views as his rights, is actually hurting the broader case.

Worth thinking about.

Published on: June 17, 2013

The Washington Post reports that the US Department of Agriculture (USDA) is saying that there are "no indications that genetically modified wheat found in Oregon last month has spread beyond the field in which it was found."

It was just about two weeks ago that a field in Oregon was been found to be growing gene-altered wheat that was never approved by the USDA. Monsanto, which had tested the strain from 1998 to 2005 before withdrawing its application for approval, has denied any responsibility or culpability for the rogue GM wheat.

Since its discovery, Japan, Korea and Taiwan have suspended imports of western white wheat from the Pacific Northwest, and Monsanto has been sued by two Oregon farmers who say that the discovery has hurt their business.

Published on: June 17, 2013

The Consumer Goods Forum (CGF) and KPMG International are out with a new survey saying that "retailers across the world are increasingly opting for traditional ‘back-to-basics’ strategies to drive growth, foregoing newer business trends.

The report says that "43 percent of businesses ranked sales growth among the top three levers for improving profitability over the next two years. This is followed closely by product innovation (39 percent) and cost reduction programs (36 percent). Interestingly, IT transformation – a new approach to ensuring profitability – only ranked in the top three growth levers for 19 percent of businesses, much lower than might be expected."

And, the study goes on, "When it came to marketing strategies, brand building ranked as the top strategy by 21 percent of businesses, followed by pricing (13 percent) and the new trend of consumer data analytics (13 percent), one of the only novel approaches to be ranked highly. However, online/mobile sales (8 percent), social media (7 percent) and app development (4 percent) were all placed as much less of a priority. In all cases, traditional business tools were seen as holding the key to business growth over more trendy alternatives."

And, it continues: "This back-to-basics approach is also reflected in how retailers are maintaining and directing their focus, explicitly back towards their customers. The survey has revealed that businesses have recognized the power and influence of today’s consumer, causing them to alter their focus to work with the customer and meet their needs, rather than trying to influence them.

"An increase in informed consumers is expected to be the most positive impact on profitability, with 64 percent of businesses stating this belief. In fact, one-third of retailers now expect to collaborate with consumers as a means of driving innovation. The survey suggests that for businesses, the old adage that the customer is always right is once again true."

Published on: June 17, 2013

Whole Foods on Friday said that it is establishing a new language policy for its employees, responding to criticisms that came after two New Mexico employees said they were suspended for speaking Spanish to each other on the job. (The company said that it had suspended the employees for poor behavior.)

On his blog, co-CEO Walter Robb said:

"On behalf of our senior leadership team, I apologize that a section of our employee handbook regarding team member interactions in the workplace was not clearly written, and for any misunderstandings or offense it has created. Its intention was to foster inclusion, not exclusion. We have changed the wording of this section and will ensure the new wording and more importantly, the intention behind it, is reviewed and discussed at all store and facility meetings, which will be within 45 days' time."

The move came as MoveOn.org delivered a petition to Whole Foods headquarters with some 15,000 signatures threatening a boycott if the company did not change what was seen as an "English-only" policy.

Published on: June 17, 2013

The Middletown Journal has a nice little story about Dorothy Lane Markets and Jungle Jim's, two Ohio independent food retailers that are highly differentiated reflections of their longtime owners, Norman Mayne and Jim Bonaminio.

Two quotes worth repeating:

From Mayne: “I want to make the time in our store the best it can be ... We may have the best service and the best quality. But we will never be the cheapest."

From Bonaminio: "“If I can make it interesting — whether it be the animations, selection of beer, or service — that is what I want to do. We have taken a negative experience and turned it into a family experience with something for everyone. How cool is that?"

Published on: June 17, 2013

The Washington Post reports that now that Washington, DC, "is undergoing an economic and demographic resurgence, Safeway is at the center of a battle among grocers to cash in on the Washington area’s boom."

According to the story, "At the moment, Safeway is building two new local stores, both with hundreds of apartments on top, and is planning to build or rebuild four stores beginning this year or the next in Alexandria, Rockville, Upper Marlboro and Hyattsville. Another four stores are in the pre-planning stages for redevelopment, and the chain has already made clear to D.C. Mayor Vincent C. Gray (D) that it would like to build a new store at the former site of the Walter Reed hospital, which the District is planning to redevelop.

"Much of this course was plotted in 2005, when Safeway - acknowledging that it had allowed some stores to flag - decided that it would do one of three things with each of its Washington area locations to address new competition: close the store, upgrade it with more offerings or rebuild it altogether."

Published on: June 17, 2013

• The Wall Street Journal reports that Wal-Mart de Mexico, "which has been struggling to reinvigorate sales at its core supermarket business, said Friday it has put its Vips restaurant chain up for sale and will consider bids from third parties."

While Walmart operates a number of formats in Mexico, the Vips chain has been seen as a distraction as the company has tried to reinvigorate its same-store sales while at the same time grappling with charges that it bribed local officials to grease the wheels for growth there.

Published on: June 17, 2013

My newest Forbes column has been posted, and you can read it here.

The subject is customer service - how to deliver it, and how to totally screw it up.

The title: "I Learned It At The Movies."

Hope you enjoy it.

Published on: June 17, 2013

• The BarringtonPatch.com writes: "Say goodbye to discounted gasoline through Jewel-Osco's Fuel Rewards program. Many Jewel-Osco shoppers took advantage of the program, offering 5 cents off per gallon at participating Shell locations for every $50 spent at the grocery store.

"As of June 25, the Fuel Rewards program will end, according to jewelosco.com. A message on the store’s website reads the following: 'Due to our ongoing commitment to bring you lower prices on the items you use most, we will be discontinuing the Fuel Rewards program at the end of this month'."


• The Chicago Tribune reports that Kraft Foods Group is creating "two business units in an effort to streamline its structure and reinforce its marketing efforts," dividing itself "into a Meals and Desserts division, with brands such as Cool Whip, Kraft Mac & Cheese, and Stove Top, and an Enhancers and Snack Nuts division, with brands including Grey Poupon, A.1., Miracle Whip and Planters."

The division, the story says, "is expected to ease marketing efforts for brands that cross a number of categories, such as Planters, with which the company markets both nut mixes and nut butters."

Kraft's other business units include beverages, cheese, refrigerated meals and international and food service.

Published on: June 17, 2013

On a subject often discussed on MNB, reader Stephen Goldberg wrote:

I’ve been reading the debate regarding requiring Nutritional Facts for Prepared Foods and decided it was time for me to chime in as I have a little more experience w/ the topic than the average bear (partial disclosure, I cut my teeth in this space creating, running, designing and driving Prepared Foods at Whole Foods essentially in the NE for a very long time and now ‘consult’).

For now, I’ll ignore the proposed regulation and dwell on the fact that for every retailer w/ more than (say) 20 locations, there’s really no reason not to have nutritional facts available on prepared foods for their guests.

Here’s why, though much of this is redundant from Thursday's views:

• Industry should ALWAYS lead w/ its best foot forward.

• The lion’s share of prepared foods sold by conventional Grocers (excluding Rotisserie Chicken) is prepared by the big commercial kitchens (Sandridge, Summer Fresh, Greencore, ASK, Winter Garden, etc, etc, etc) and the ingredients and Nutritionals are already available.

• Customers demand quality, continuity and consistency which requires the strict use of recipes!

• Owners, operators, shareholders demand profitability, consistency and predictability of margins. This to = recipes! That should gain the attention of your inner Ferengi.

I’m sure you’re picking up where this is leading!). IF you have recipes and you have continuity w/ ingredients (which you need to preserve customer satisfaction AND your profit margin!) then guess what? It's not a big leap to generate Nutritional Facts.

Think about this, some of the highest cost ingredients are also the ingredients that most contribute to (call it) uglier nutritional facts panels. IF, those who create the recipes are also reviewing those formulas for their nutritional profiles, as well as costs, they will be able to MANIPULATE recipes to be (potentially) more nutritious as well as cheaper (music to your ears?).

Most supermarket employees are NOT Chefs, even if they were, not all chefs are both creative and good at making money.

It’s a competitive advantage IF the retailer is serious about prepared foods.

Complete transparency is here to stay, as you have mentioned once or twice, and this may be the only place left in the store where complete information is not available. For those retailers that want to prosper in the coming decades vibrant prepared foods offering will be part of the equation, and thanks to a supermarket’s size, many have the volume to leverage Nutritional Facts that the local take-out joint can not!

My guess is that the MNB community believes that Grocers are a vital piece of our communities; therefore, we have a responsibility and obligation to foster wellness and health whenever possible, and supplying this information provides just that (true, not for all!). And those retailers that are pursuing full disclosure as well as healthier, more nutritious options seem to be rewarded by fantastic consumer loyalty and FAR higher bottom lines.

Lastly, yes, there are obstacles. Yes, it requires an investment. Yes, some items will have to be exempt (i.e. build your own sandwich bar). Yes, it requires a change in company culture as well as dedicated leadership... but, to me, it’s a no brainer…

You make excellent points ... and you get extra credit for the "inner Ferengi" reference.




Responding to stories about how Whole Foods is opening stores in urban markets and hoping to change its "whole paycheck" image, one MNB user wrote:

I too enjoy their stores but could not shop there for everything. I can tell you that the CEO is sending the same message down to his people, but he needs a reality check. I know firsthand that certain departments are requiring twice the margin of their competition. That needs a long term fix as you know, and it cannot all come from suppliers.




On the subject of Walmart apparently doing business with factories in Asia that it previously said were on its banned list because of unsafe employee conditions, one MNB user wrote:

I want to give Walmart the benefit of the doubt about them doing business with factories it said it would not buy from.  I really do want to think it’s simply because of the complexity of the distribution system.  However, given their previous track record of bribery, making people work off the clock, and other problems they’ve  had with doing the right thing, it’s hard to.  They’ve made it too easy to think of as a company whose sole purpose is to buy things cheap, and not a company with a soul or any kind of social responsibility.

From another reader:

I totally agree with your statement, “The other is that Walmart is behaving in a cynical manner, saying one thing and then behaving in another, figuring that at the end of the day, the most important thing is cheap goods, and that the safety of workers in places like Bangladesh is less important than the price of sports bras in Ash Flat, Arkansas”.

To show you how one sided they are they require any factory producing a private label product to conduct quarterly fire inspections and it has to be documented by an outside company. For Walmart that does not apply. The home office in Bentonville is one of the largest with thousands of people working there. They have not had a fire drill this year. My guess is that they don’t mind making their suppliers become less efficient and increase their cost, which they can’t pass along, but they are not willing to spend the money to protect their own people.

Their leadership is at the bottom of the list when it comes to ethical and moral obligations. This is not the Walmart when Sam ran the company.

Wow. Didn't see that one coming.




I did a piece last week about the importance of sampling, which led one MNB user to write:

I stopped at a Kroger store last weekend, out front they had a deli employee grilling baby back ribs, chicken and a few other meats.  It smelled wonderful.  She was giving out free samples and was selling a good bit of product.  I’ve long wondered why stores don’t do more of this.

If you go into a Costco store on the weekend, you’ll find food samples all over the place.  Sam’s does sampling 7 days a week.  To me this is just smart retailing, like baking bread during the evening rush, or making sausage in the morning, cooking bacon, anything that smells good and makes you think of food.  Too many stores are missing out.




Regarding Safeway's decision to sell its Canadian division to Sobeys, MNB user Greg Seminara wrote:

The Safeway Canada sale appears as a win for Sobeys and Safeway and a loss for Western Canada.

Safeway was the #  6 player in Canada after Loblaw's,Sobeys,Metro,Walmart, & Costco.

So Safeway needed to get bigger through an acquisition of one of the "big 3" retail groups or exit.

Safeway would have likely fumbled a Canadian acquisition, as the three big players are all multi-format and have corporate stores as well as independents and are fairly well optimized. So Safeway sold and they appeared to get a good price. Canada has regional rivalries and food producers just like the USA. Safeway was a dominant player and anchor in Western Canada which accounts for 30 % of population. The loss of Safeway will concentrate 90 % + of Canada's retail buying decisions in the East.

There will be promises of local offices and buying in Western Canada etc., but in the long run all major decisions for Western Canada supermarkets will now be made at least two thousand miles away. This could signal a loss for Western Canada produced brands as well as USA brands from our west coast that entered Canada from the west through Safeway USA connections.




Responding to the possibility that Ron Burkle's Yucaipa Cos. could acquire Fresh & easy with an eye toward reviving the Wild Oats brand, one MNB user wrote:

I've always maintained that ANYBODY who would consider the purchase of Fresh & Easy with the idea of keeping it a grocery/food retailer would be absolutely delusional.

To be certain, F & E had many problems, but one of the biggest was their locations, footprints and interior "structuring."

Even non-industry people I know found the locations wildly inconvenient and described their visits as akin to shopping at a fabric store or a Blockbuster in a strip mall.

Really, how inviting is a drab, small building with a small parking lot and little to suggest that these are food/grocery stores.

At minimum, anybody purchasing the chain would have to execute some serious remodeling on all of their stores, something JC Penney tried to do and didn't get very far due to, uhhh, costs.

Does this look like a food store?




I got a number of emails on Friday for my piece remembering my friend, Joan Parker, the widow of novelist Robert B. Parker, who died last week.

MNB user Susan Pedrazzini wrote:

Thank you for sharing your thoughts on the passing of Mrs. Parker. I didn't know her personally, but I from her interviews and appearances at book signings, it was so very, very obvious she was a remarkable person. Do you still have a link to the interview you did with Mr. Parker in 1985? He is my favorite author and I would love to read it.

Thanks. To read it, click here.

From another reader:

Your summary of time with Joan Parker was beautiful, truly heart felt and wonderful. Thank you for sharing your thoughts about this amazing person.

And another:

Your writing abilities are unreal. Your story about your friend Joan Parker got to me! What a wonderful life experience for you my friend! We should all be so lucky...

And another:

So I don’t really read books, and obviously never met her or Robert… but that piece you wrote on the friendship you developed was captivating… whether because it mimicked my own views of my respected ‘elders’ or because it was simply fantastically written…but either way, well done.  Your reverence for the woman and her husband couldn’t be more palpable

And MNB user John Parvin wrote:

Thanks for sharing your story/Experience about Joan Parker.  It was powerful, interesting, and of course a bit sad.  But, it had a "feel good" sense to it.  You have a way of expressing yourself that is both easy to follow, and interesting (I think that was a compliment :).  Keep doing what you do...

It's definitely a compliment. And thanks.

Finally, from MNB user Joanie Taylor:

Loved, loved, loved your tribute to Joan Parker.  My sympathies for your loss…and my thanks for sharing her in a way that otherwise never would have happened.  You - and the people to whom you are instinctively drawn - continue to inspire and delight me.

A lot of the great women I've known in my life have had the name. My mom. My daughter's middle name is Joan. Joan Parker. And, by the way, Joanie Taylor.

Coincidence?  I think not.

Published on: June 17, 2013

Justin Rose won the 113th US Open yesterday with, as the Wall Street Journal describes it, "a brilliant 230-yard approach shot into the final green at Merion Golf Club that suffered nothing in comparison to Ben Hogan's famous one-iron shot from almost the same spot in 1950."