business news in context, analysis with attitude

Published on: September 24, 2013

by Michael Sansolo

Never miss an opportunity to focus on what’s really important in life or business. That’s why every year around this time I find myself writing about the exact same thing.

I repeat it because I firmly believe the end of September provides a great opportunity to open up an important discussion that needs be held inside your company again and again.

The anniversary is a dark one: the global economic collapse of 2008. By now you’ve probably seen or read about some of the key five-year anniversaries. About how on Sept. 15, 2008, Lehman Brothers failed and that failure seemed to be the spark that ignited a global economic fire.

In reality, you aren’t done with the anniversaries yet because in 2008 Lehman’s collapse wasn’t the end of the news. In fact, the stock market trembled after the 15th, but kept rallying for a few days until plunging in October. You may remember the uncertainty, the fears and the endless bad news.

Yet that isn’t the desired lesson. Rather, it is this: ask yourself and ask throughout your company, “What are we doing differently today than we were in August 2008 and in every year since? How are we providing value to customers whose lives were changed permanently by those events?”

Hopefully the answers will flow.

The sad truth is that while some of the economic damage from that summer and fall has healed - consider the stock market for example - much of it hasn’t. Economic worries, unemployment and underemployment remain too high, while optimism remains low.

Just last week we saw a flurry of reports on the economic health of Americans that should also give you pause. On top of all the recent reports of ongoing softness in housing or poor prospects for the retirement of the Boomer generation, we continue to see stagnation in wages for most of the population. Other studies highlight the growing economic anxiety felt by many, including those whose paychecks are fairly good and stable.

Certainly we've seen the broader debate play out here on MNB, with continued back-and-forth about the issue of wage disparity.

For the food industry none of this discussion is remotely about politics, even though politicians are quick to point fingers and offer up simple and simple-minded solutions. For the food industry it’s about the facts of life.

More than any other part of the economy, the food industry is front and center in the economic problems facing Americans. Food is, after all, their most basic need and shopping for food is likely their most regular economic activity. So every worry that impacts shoppers heading off to the supermarket demands the constant attention of the entire industry.

That’s why the discussion of what you and your company are doing better today matters so much because only that way can you meet the needs of these shoppers. Yes they want food that tastes good and is good for them, and they want food that is interesting to eat and delights their families.

But they also want sharp prices and good values, however it is they may define the word value.

So that’s why this anniversary of economic collapse is so important. It’s a great cause for reflection and discussion to make sure that you and your company are doing everything possible to meet the needs of your community and customers.

After all if you don’t reflect and evolve, someone else might. Don’t waste this moment to have that discussion.

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: September 24, 2013

by Kevin Coupe

Two competing pieces of news emerged from the technology world yesterday that illustrated the different paths and fortunes of two companies.

Apple said yesterday that it sold a record nine million new iPhones over the weekend, when its new iPhone 5S and iPhone 5C were available to consumers. According to the San Jose Mercury News, "Sales easily topped analyst estimates, which mostly ranged from 5 million (the same amount Apple sold in the debut weekend of its last iPhone) to 8 million, and exhausted the supply of the more expensive model."

At virtually the same time, the Wall Street Journal writes, "BlackBerry said on Monday that it had reached a preliminary agreement to be taken private by a group led by Fairfax Financial Holdings. The company signed a letter of intent that would pay shareholders $9 a share in cash, a deal that values the faltering smartphone maker at about $4.7 billion, according to a press release. Fairfax, a Canadian insurer, already owns 10 percent of BlackBerry.

"BlackBerry entered into the agreement on the recommendation of a special committee of its board, which has been evaluating strategic options for the company as its market share has continued to erode in recent months." The theory is that "being privately held would allow BlackBerry to restructure without worrying about bad news affecting its share price."

I don't think that share price is always the best barometer, but it is worth noting that at its height, Blackberry shares were selling for $148 per share in June 2008. (To be fair, Apple's stock price is well below the more than $650 per share that it was worth a little over a year ago.)

But the real lesson here is how important it is for companies to continue to innovate, to continue to be relevant. BlackBerry, by virtually any standard, lost touch with the market and the evolving consumer. And its downfall should be instructive to Apple, which, in the post-Steve Jobs era, is facing questions about its future.

"We're gambling on our vision," Jobs once said, "and we would rather do that than make 'me too' products. Let some other companies do that. For us, it's always the next dream."

Wise words.

Published on: September 24, 2013

Weis Markets Inc. said yesterday that David J. Hepfinger, its president/CEO since 2008, has left the company "to pursue other interests." Hepfinger also resigned from the company’s Board of Directors.

Company Vice Chairman Jonathan H. Weis replaces him as interim CEO, while a search is conducted.  Robert F. Weis remains as company Chairman.

Weis said in its announcement that "as part of the reorganization, Kurt Schertle, Executive Vice President, Sales and Merchandising will report directly to Mr. Weis who will also oversee the Company’s Real Estate/Store Development, Finance and Human Resources’ teams.  Until the reorganization is complete, Mr. Schertle will take on additional responsibilities, overseeing Store Operations and its operations support team."

Published on: September 24, 2013

National Public Radio reports thatDoug Rauch, the former president of Trader Joe's, is opening a new store in Dorchester, Massachusetts, called The Daily Table that is designed to prepare and sell food close to its expiration date at deep discount prices.

"It's the idea about how to bring affordable nutrition to the underserved in our cities," Rauch tells NPR. " It basically tries to utilize this 40 percent of this food that is wasted. This is, to a large degree, either excess, overstocked, wholesome food that's thrown out by grocers, etc. ... at the end of the day because of the sell-by dates. Or [it's from] growers that have product that's nutritionally sound, perfectly good, but cosmetically blemished or not quite up for prime time. [So we] bring this food down into a retail environment where it can become affordable nutrition."

The Daily Table, he says, is "kind of a hybrid between a grocery store and a restaurant, if you would, because primarily it's going to take this food in, prep it, cook it [for] what I call speed-scratch cooking. But the idea is to offer this at prices that compete with fast food ... This is about trying to tackle a very large social challenge we have that is going to create a health care tsunami in cost if we don't do something about it. I don't regard Daily Table as the only solution — there are wonderful innovative ideas out there — but I certainly think it is part of and is an innovative approach to trying to find our way to a solution."

Published on: September 24, 2013

• Bloomberg Businessweek that yesterday in Miami, US District Judge Robert N. Scola dismissed "class-action claims in a regional gender discrimination lawsuit filed by women who were formerly part of a nationwide lawsuit against the world’s largest retailer," saying that "governing law in the appellate circuit in which his court is located prohibits the filing of a second class action if the time to do so expired while the prior case was pending."

The case was filed last year after the US Supreme Court ruled that a national class action gender discrimination suit against Walmart did not rise to the level of being a class action. Since then, more localized suits have been filed against Walmart on the same grounds, but it appears that none of them have yet been successful.

Published on: September 24, 2013

• The Wall Street Journal reports that Tesco has rolled out its Hudl tablet computer, a seven-inch device that costs the equivalent of $190 (US).

According to the Journal, "The device isn’t expected to compete directly with the likes of Apple Inc.’s iPad in the growing but fragmented tablet market. Rather, it is seen as another plank in Tesco’s strategy to improve its U.K. sales performance, particularly online, and boost the company’s recently purchased digital services, such as music and movie downloads.

"A button built into the user interface of the device, offered in an array of bright colors, links directly to Tesco’s online shopping, banking, loyalty program, and music and video services. Hudl users can also download competitors’ supermarket apps onto the device, which goes on sale next week and will run Google Inc.’s Android Jelly Bean operating system."

Published on: September 24, 2013

CNBC has a story about a new study from WSL Strategic Retail saying that "63 percent of men say they actively look for sales in stores and a little more than half admit to regularly using coupons. Millennial and Gen X men are driving this trend, the survey of 740 male and 780 female shoppers found.

"Although both sets are exhibiting signs of being shaky consumers, a higher percentage of men than women say their financial situation improved over the past year and more men also expect it to improve more over the next year."

While the men's fashion business is much smaller than the equivalent women's business, it also has been growing faster in recent years. In order to nurture the men's side of the business, the study suggests, retailer need "to make shopping more efficient so guys don't feel like the experience is tedious.

"Having readily available staff helps. More men than women ask for assistance from a sales associate, according to WSL's findings—shattering the myth that men don't ask for directions (or at least they do in the retail arena)."

Published on: September 24, 2013

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

• Sprouts Farmers Market said yesterday that it will reopen tomorrow the Boulder location (2525 Arapahoe Ave.) that was damaged in the recent Colorado floods.

In addition, Sprouts said that 2.5 semi-trailers of non-perishables and paper products were donated to the Food Bank of Larimer County last week, to help people in Fort Collins, Greeley and Louisville. In addition, an event called Grab 'N  Give is being held Sept. 25 – Oct. 6, in which "shoppers are invited to help Sprouts feed Boulderites in need by purchasing and donating bags of groceries at a 10% discount. All bags are pre-packaged and contain items that the local Community Food Share food bank needs the most." And, from Oct. 4 – 6, Sprouts will take 10% off every shopper's total purchase and donate 10% of all net proceeds to Foothills United Way.


• Walmart said yesterday that it plans to hire 55,000 seasonal workers for the upcoming end-of-year holiday shopping period and also will promote 35,000 temporary employees to part-time jobs, and 35,000 part-time employees to full-time jobs.

At the same time, Toys R Us is saying that it plans to hire 45,000 seasonal employees for the holiday shopping period - the same number as last year.


• Burger King has announced that it is launching a new french fry that has 20 percent fewer calories than its traditional fries - 270 calories for a small order, vs. 340 calories. The reason for the lower calories - a new batter that doesn't absorb as much oil.

Burger King is saying that its new fries also have 30 percent fewer calories that McDonald's french fries.

The new fries - dubbed "Satisfries" - also cost more - $1.89 for a small order, versus $1.59 for the traditional fries. That's 19 percent more.

Does anyone go to Burger King for the fries? This isn't me being snarky. It is an actual question ... because I know a lot of people who go to Mickey D's for the fries.


• The Los Angeles Times reports that the National Retail Federation (NRF) is saying that 158 million people are expected to celebrate Halloween this year, spending $75.03 apiece on costumes, decorations, candy and other stuff. The bad news? That's down from the 170 million people who celebrated it in 2012, spending almost $80 apiece. The problem? About 86 percent of those polled say that the "uncertain state of the economy" is affecting their plans.

Published on: September 24, 2013

• Kroger said yesterday that Chris Hjelm, its Senior Vice President and Chief Information Officer, has received the Fisher-Hopper Prize for Lifetime Achievement in CIO Leadership from the Fisher CIO Leadership Program at the University of California-Berkeley's Haas School of Business.

According to the announcement, Hjelm was selected by a group of his peers "for the enduring impact he has had on not only Kroger, but also FedEx, Orbitz, and the information technology industry at large."

Published on: September 24, 2013

Responding to last week's piece about marketing to Baby Boomers, one MNB user wrote:

Just read your piece on the Gap between Need & Want.  What strikes me the most is when you mentioned companies trying to develop products that would meet the 50+ crowd and their $3 trillion in spending power.  I am in an industry where you get the opportunity to see hundred’s of new product launches and line extensions each year.   All of the presentations are by Brand MGRs, Asst Brand MGRs or Sales Strategists who are in their 20’s or at the very most early 30’s.
Not faulting the age of these people who are very bright .  It’s the culture of many of the CPG companies.  If you are still a brand mgr who hasn’t moved up after 18 months- you are failing inside the walls of the company.

What many of these companies need is someone who thinks like a 50+ year old.   Not very easy to think like a 50+ year old when you are 28.  ( I was never able to do it and believe it is virtually impossible for just about anyone.)   You have to walk a mile in those shoes ……)    Maybe the CPG’s should start or foster a Silver Division 50’s & 60’s inside their company walls that have Brand MGRs and Sales Strategists who are 50 +.  And who knows , maybe even a Golden Division  . Maybe CPG companies should cull back their financial drive to exit everyone over 50.  It might pay a hidden dividend.

MNB user Joe DiVincenzo wrote:

Regarding those of us in the over 50 crowd all being very different:
Case in point with your very next editorial on Wet Wipes which you concluded with “IMHO”.    I’m 52 and had to look up what that meant.  My parents who are both in their mid 80’s wouldn’t even have a clue how to look that up.  To find ways to market to the over 50 crowd as one demographic seems silly at best.

And from another reader:

I think you hit the nail on the head. I understand that I am over 50, but in general I don’t think about it much. I am not thinking about retirement because I am not ready to retire and I don’t know when I will be ready. I don’t have a bucket list, because I plan on being around for a while. I do have goals and objectives and plans. I don’t feel like I am the same as my grandparents were at my age, but that could be wishful thinking on my part. I don’t have the same needs as my dad who is in his 70’s, but he doesn’t have the same needs as my in-laws, who are also in their 70’s. We are definitely not a homogenous group and treating me like my dad will not endear me to your brand.
 
And from MNB reader Steven Ritchey:

One thing I think food companies may be missing out on.   As we get older, it gets harder to open cans and  other containers.  Plus, we tend to eat less, don’t have kids to feed all the time.  So how about products that come in a size that doesn’t mean copious waste or leftovers and is easy to open.
 
I’ll soon be 55, so I’m right behind you, and I don’t have any kids to burden with my care when I get old and feeble.  I watched both of my  parents exist, I hesitate to call it living, their last few years in a nursing home, so the idea of long term care is something I’m thinking of as well.  I’ve seen up close and personal how expensive that kind of care is.  It’s smart to  think of it now rather than later.

And, from yet another reader:

Sorry...which one of you is constantly complaining about the senior discounts making you feel old ....and angry...is it Kevin or Michael.... amnesia is what makes me feel old 🙂

That would be me.




On a related issue, the new Gap ads starring the adult children of Billy Joel and George Harrison, one MNB user wrote:

Love it! It’s perfect. And by the way, age is only a state of mind. I don’t feel old just because I see children of my contemporaries making a statement – their own statement, in their own way. Shoot, I’m almost 70 and still shop at the Gap for jeans. Hoorah for the Gap, and Alexa Ray Joel.




On the subject of Dave Dillon's retirement from Kroger, one MNB user wrote:

Kroger is an amazing company and David Dillon displayed equally amazing leadership. I spent one year with Kroger (having been part of the Fred Meyer, Inc. management team) and in that short time, I came to really appreciate who Kroger is, what they do, and how they work. David Dillon came into leadership at that time and I have been so impressed with what he accomplished. I wish him well and hope he does get some time to go fishing…

And from another:

I think it is fitting that Dillon and former Safeway CEO Steve Burd retire at relatively similar timeframes.  Both leaders helped to reshape their organizations during a timeframe that saw enormous change in the Grocery business.  From the dramatic Grocery expansion of Target, Wal-Mart, and the Dollar channel, to the numerous battles with Labor Unions….Burd and Dillon, faced the same enemy over the years, and although tumultuous, have successfully navigated their companies through battle to fight another day (as opposed to Supervalu for example).

And yet, I think it would be hard to find two business leaders with more disparate styles.

Published on: September 24, 2013

In Monday Night Football, the Denver broncos defeated the Oakland Raiders 37-21.