retail news in context, analysis with attitude

Published on: July 22, 2013

by Kevin Coupe

I was interested to see the press release over the weekend about how Ahold-owned Peapod is working with Wisconsin-based Harvest Moon Farms to sell "Local Farm Boxes" as part of a Community Supported Agriculture (CSA) initiative for five weeks beginning in mid-August.

As the announcement states, "Peapod.com will sell Harvest Moon Farms' CSA "Local Farm Boxes" for weekend deliveries.  Harvest Moon Farms crops include everything from beans, beets and broccoli to tomatillos, tomatoes and turnips, and the CSA boxes will contain 5-7 items – whatever is ready for harvest that week.  The CSA boxes are priced at $24.95 each, and to add to the value, a newsletter from the farm – complete with recipes for the produce – comes with each box."

In addition to providing fresh produce to consumers, the goal of the initiative is to provide financial support to Harvest Moon, which has been facing significant issues because of the summer drought.

In the past, I would've found this interesting from an intellectual point of view. But I feel differently about it this year ... because while living in Portland, Oregon, we've had the chance to visit and patronize a few farmers' markets. Which has been an Eye-Opening experience, because while we have some small farmers' markets back home, they are nothing like the extravaganzas one finds here in Portland, full of fresh and delicious foods that challenge the palate and stretch the imagination.

Here's what visiting the farmers' markets has taught me: that if one is exposed to such plenty on a regular basis, it cannot help but change the way one thinks about food and nutrition and cooking. It has been the best kind of Eye-Opener.

So good for Peapod and good for Harvest Moon. I hope they are enormously successful with this initiative.

Published on: July 22, 2013

The Philadelphia Enquirer reports that "Phil Lempert, food-trend observer and chief executive officer of the newly formed Retail Dietitians Business Alliance, estimates that the number of registered dietitians in supermarkets, now 500 to 600, will more than double by the end of 2014."

"We know what to eat, what not to eat, know we need to exercise and so on, but the message is not getting through. We need someone to hold our hand," he says.

Published on: July 22, 2013

There is a long but fascinating piece on Salon.com ... excerpted from the book, "Nutritionism: The Science and Politics of Dietary Advice," by Gyorgy Scrinis ... that looks at the outsized role that major food corporations have played in developing the nation's nutrition consciousness, especially as it relates to functional foods and even foods with genetically modified ingredients. The story notes that many food companies "market their foods not merely as restoring and maintaining good health but as enhancing health, optimizing bodily functioning and performance, and delivering a broad range of targeted health benefits relating to such issues as weight management, joint and bone health, immunity, digestive health, cardiovascular health, mental performance, and physical energy ... One of the aims of nutritional marketing is to create what I refer to as a nutritional facade around a food product - an image of the food’s nutritional characteristics and benefits. This nutritional facade then becomes the focus of food marketing campaigns. The other purpose of a nutritional facade is to cover up or distract attention from the underlying ingredients and processing techniques used to manufacture a food."

An excerpt:

"The marketing of foods with nutrient-content and health claims has become the primary means through which the public now encounters nutritional information. Beyond its role in selling products, nutritional marketing now also shapes and disseminates the functional nutritionism paradigm itself. Through these nutritionally engineered products and nutritional marketing practices, the food industry promotes the most simplified, decontextualized, deterministic, and exaggerated ways of understanding nutrients, foods, and the body. The food industry has also capitalized on, and accentuated the shift to, a more positive and functional view of foods and nutrients that target internal bodily functions. It also exacerbates the anxieties surrounding the perceived lack of these nutrients in conventional foods and dietary patterns.

"The sheer volume of nutritional advertising has maintained the focus of many consumers on nutrients and other functional components of foods, rather than on the quality of food products and their ingredients. The marketing budgets of some food corporations now run into the hundreds of millions of dollars, easily overwhelming government agencies’ modest nutrition education and health promotion efforts. Many of these food companies are transnational corporations that are able to invest significant resources in the development of new products, in new technologies for designing nutritionally engineered foods, and in scientific research to support the claimed health benefits of their products."

You can read the whole story here.

Published on: July 22, 2013

• The Washington Times reports that six major retail businesses have sent a letter to Vincent Gray, mayor of Washington, DC, asking him to veto 'living wage" legislation that would require non-union retailers of a certain size to pay employees a minimum wage of $12.50/hour - more than four dollars more than the city's current minimum wage.

The retailers making the request are Home Depot, Target, AutoZone, Lowe's, Walgreen and Macy's, and they suggest that if the bill, already passed by the City Council, is not vetoed, it could affect their long-term development plans in the district.

Walmart already has responded to the bill by saying it is canceling development plans for three stores, and will reconsider its plans for three other stores it planned for Washington.

Published on: July 22, 2013

Salon.com has a piece about Amazon.com's business growth, and how it could end up hurting itself in the long run, suggesting that "by defeating its competitors, Amazon is choking off some of its own air supply."

Here's the logic:

"The problem is, by killing off stores, Amazon is making life difficult for the publishers who give them something to sell in the first place, and the retailer’s dominance could pose a threat to the long-term health of the industry. Amazon does deserve credit for reaching far-flung readers and expanding the e-book market. A person who lives a hundred miles from the nearest decent bookstore now has access to nearly any literature published in English, whether as an e-book or by home delivery. Other vendors can now offer this too, but Amazon is the best at it. On the whole, the company is outstanding at what it does — and that’s just the trouble.

"According to survey research by the Codex Group, roughly 60 percent of book sales — print and digital — now occur online. But buyers first discover their books online only about 17 percent of the time. Internet booksellers specifically, including Amazon, account for just 6 percent of discoveries ... The brick and mortar outlets that Amazon is imperiling play a huge role in driving book sales and fostering literary culture. Although beaten by the Internet in unit sales, physical stores outpace virtual ones by 3-to-1 in introducing books to buyers. Bookshelves sell books. In a trend that is driving the owner of your neighborhood independent to drink, customers are engaging in 'showrooming,' browsing in shops and then buying from Amazon to get a discount ... Never mind the ethics of showrooming — it’s self-defeating. You’re killing off a local business you like."

Published on: July 22, 2013

• The Huffington Post reports that Tesco CEO Philip Clarke has said in an interview that the era of cheap food in the UK is over:

"Because of growing global demand, it is going to change," he says, "There's going to be more demand and more pressure.

"Over the long term I think food prices and peoples' proportion of income may well be going up but we'll be doing our bit. Unless more food is produced prices must go up. It's the basic law of supply and demand."

Clarke also says that customers are less interested in bargains such as buy-one-get-one-free than they used to be.

Published on: July 22, 2013

• The Houston Business Journal reports that Fiesta Mart there is opening its newest concept store, Fiesta Mart Place, in the Sugar Land community, which features "Executive Chef Gilbert's menu at the Market Place Eatery, featuring entrées and side dishes at the Chef's Table, breakfast tacos and yogurt parfaits, plus daily hot bars for lunch and dinner ... Additional meal options include the Chef's Corner: a sandwich bar, sushi, a salad station, a burrito bar and a pizza station which uses traditional artisan crusts.”


• The Birmingham Business Journal reports that "Belle Foods' largest creditor, C&S Wholesale Grocers Inc., may shutter its warehouse in Oxmoor Valley, laying off 203 people." Belle has filed for Chapter 11 bankruptcy protection with $42 million in debt, is reorganizing, and has said that it plans to continue using C&S, but the continued operation of the warehouse apparently depends on whether the two companies continue to do business.

Published on: July 22, 2013

• Dekkers L. Davidson, formerly Managing Director at Barclaycard US, has been named CEO of the Merchant Customer Exchange (MCX), a company created by a number of major retailers - including Walmart, Hy-Vee, Best Buy, CVS, 7-Eleven and Target - to develop a mobile payment network that will enable shoppers to use their smartphones to make purchases.

Published on: July 22, 2013

Regarding Meijer's opening of its first store in now-bankrupt Detroit, MNB user Pat Patterson wrote:

Meijer's bold move creates an interesting study situation for those wanting to serve diverse population elements..  For those who don't know Detroit, 8 Mile Road is the northern boundary of the city and Woodward is a major multilane access road serving Detroit and the northwestern suburbs.  The specific site is located on the southeastern corner of these two arteries at an interstate style interchange.

Even though the site is in Detroit, it is barely so.  Move directly north across 8 Mile, about 200 feet, and the site is in Ferndale.  Without presenting a full blown study, the northern and western portions of Meijer's immediate prospective trade area are moderate to middle income predominantly white communities, Hazel Park 90%+ white, Ferndale 80%+ white and Royal Oak 90%+ white.  The southern trade area will be Detroit and is a significantly lower income predominantly black community, 80%+ black.  Detroit, like many major cities experiencing a long decline is underserved by major retailers.  Twenty years ago I conducted a site study in Detroit, population then was approximately a million and there were two major chain grocery stores in the city.

In the past conventional wisdom has held that major retailers would have difficulty serving middle income white and lower income black areas simultaneously.  The best approach was to locate well within the upscale area and draw the downscale market out.  You have only to contrast historical retailing in the Grosse Pointes and nearby Detroit to see examples of this storing approach.

My opinion, with 40 years in and around site analysis, disregarding any problems the financial condition of Detroit may bring, if this site can be made to work, Meijer would be the right retailer and this would be the right location.




Regarding "living wage" legislation, MNB user Chris Utz wrote:

Chicago tried to block Walmart from adding Supercenters by creating arbitrary rules about stores over 99,000 square feet.  This caused Costco and Lowe's to back away from approved new stores, which eventually caused Chicago to change its law.  The unintended consequence was that Walmart began retrofitting existing conventional stores in Chicago with limited food and began exploring 99,000 square foot Supercenters, which turned out to be very profitable.  The main driver of Chicago's regulations seems to have been Walmart's anti-union stance.

When Walmart caved and allowed union construction crews to build their stores, Walmart Supercenters started popping up in Chicago and in other areas of the country that had been anti-Supercenter; most notably San Diego County, where planners had promised never to allow a new Supercenter.

The goal of these arbitrary minimum wage hikes is most likely union-related.  It is an attempt to protect unionized Supercenter competitors, especially supermarkets.  It is also a heavy handed new club used in the continuing attempt to compel Walmart, and other large discounters, to unionize.

MNB user William J McCollum wrote:

If the company proposing the same new stores in DC was Target, this would most likely never have happened.  Wait, Target would never plan stores in a low income areas!

And from MNB user John J. Toner V:

I could not agree with you more!  Having a couple of Wal-Marts open up would be good for the DC food retail scene.  Either shape up and compete or get out of the way, and that’s a message for the Unions too.  Their sense of entitlement in DC creates un-inspiring workplaces which in turn affects basket size.

And another reader chimed in:

The hypocrites that run D.C. don’t pay their maintenance and other low-skill workers $12.50 an hour but expect Wal-Mart to pay it.

But another reader disagreed:

What exactly would Washington D.C. get out of 3 Wal-Mart stores coming to town?  More taxes going to keep people with full-time jobs on welfare. A job that does not pay a living wage is no more than slavery and tax payers pay for Wal-Mart’s profits. A person who works full-time for a living should not live in poverty.

MNB user Tim McGuire wrote:

Kevin - you describe a conflicted view about the living wage legislation. What's to be conflicted about?  How can you support in any way legislation that sets one rule for some companies and another for others?  If the legislators in D.C. want a higher minimum wage for their citizens, they should set it - just as you describe San Francisco having done - but it has to apply to all businesses.  You can't arbitrarily decide to make some businesses less competitive by making them pay more than the competition across the street - period.  Of course there will be lawsuits if this legislation ever passes - it is discrimination, pure and simple, and there is no legal or moral basis for deciding that the competitive playing field should be tilted by local legislators.  Hard to believe anyone would think this was acceptable or sensible policy - regardless of what you think of any individual company.  Set the same rules for everyone and let them earn their success, or not.  Isn't that what American free enterprise is supposed to be all about?

And from another reader:

I think all the discussions about living wages at places like McDonalds and Walmart are really scary. These entry level jobs, intended primarily for high school and college aged kids. The expectation that these be long term jobs to sustain whole families speaks volumes about our president’s economic policies and his supporters.

It is my experience, when I shop at places like these, that many if not most of the employees that I see working there don't look like high school and college kids. They look older than that, like the are dependent on these jobs to survive.

I want to be clear about my position on the living wage legislation. I am troubled by having one set of rules for one group and a different set of rules for another. However, there is a part of me that thinks that small businesses maybe ought to have different considerations than Walmart ... though I'm not sure how you legislate this. Still, it seems appropriate to me that we have a mature discussion about the subject, rather than settling for ideological reactions that side with one position or the other.

As troubled as I am by the issues above, I think what worries me more is the fact that we seem to have an entire class of people who are working full-time in respectable jobs, and yet are unable to make a living - you know, pay their bills, feed their families, afford a place for them to live, get them an education - in doing so. And I cannot help but worry that at a time when top executives and investors are making ever-higher salaries, the people on the front lines are unable to make any headway without holding down two or three jobs, and perhaps still find it to be a struggle. The living wage debate highlights this problem, and the story last week about McDonald's seeming to acknowledge that its employees need to work two jobs to support themselves throws it into sharp relief.

I believe in hard work. I think most people do, and I think most people do their best. I believe that people who work hard deserve to get ahead. But I worry that we're creating a system that works against even their best efforts.

There are some - and I get email from them - who suggest that many people who hold these jobs are takers, and it is only by holding two or three jobs and working 70 or 80 hours a week that people prove their worthiness. I have a problem with that attitude, just as I have a problem with living wage bills. The world isn't as simple as either approach would suggest.

I think the entire subject is worthy of serious and thoughtful examination, with an eye toward the long-term implications for the culture.




On another subject, from an MNB reader:

Whether a food item contains GMO or not, the use of the word "natural" should be regulated by the FDA. Many food companies leverage natural as a marketing tool to position their product as "better for you" but these same products could have used tons of pesticides in the production process. While I agree that we cannot cost effectively sustain the world's population with only organic food, non-organic products that use cheap short cuts, like industrial mono-cropping, should not be able to make the natural claim.  As a young father, the argument has become more more clear to me. Is it "natural" to feed your family food that has been produced with harsh chemicals that could potentially have deleterious impact on our bodies and the environment?

Published on: July 22, 2013

Phil Mickelson staged a remarkable comeback in the final round of the British Open yesterday, coming from five shots back to win his fifth major career championship.