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    Published on: September 27, 2013

    Go figure.

    Bloomberg Businessweek has a story about how, in the two years since Patagonia began a campaign imploring its customers to "buy less" as a way of addressing the problem of conspicuous and environmentally irresponsible consumption, the company's sales have gone up almost 38 percent to $575 million, and Patagonia continues to project annual sales increases of 15 percent.

    Now, while it is aware of the dichotomy, Patagonia management is engaged in a new, similarly-themed campaign - selling used clothes under the rubric "Better Than New." The story says that Patagonia "is selling used clothing at five of its retail stores ... It grants store credit for trade-in gear, reconditions the garments, and stocks them as 'Worn Wear,' generally at prices that provide a 50 percent profit margin.

    "It is the latest gambit in the company’s effort to sacrifice its profits for the environment—or at least tell consumers it’s willing to. The green marketing, however, has proved very effective at cultivating the same growth Patagonia is railing against."

    The company concedes that some might accuse it of hypocrisy - of promoting the sale of less while actually selling more. But it says that its goal is to develop a business model that is sustainable in a myriad of ways, and proving that being a responsible steward of the environment is not inconsistent with making a buck.

    And so, Bloomberg Businessweek writes, "Rather than back away from the buy-less program ... Patagonia is turning up the volume, launching a new publicity campaign today dubbed 'The Responsible Economy' to highlight its environmental work. Patagonia is hoping the initiative will get executives to question business models that rely on compound annual growth (which is basically every business model when one considers competition and sheer population dynamics)."
    KC's View:
    This is going to be a hard one for a lot of execs to accept, since most leaders and managers are judged on the bottom line of growth, and things like environmental responsibility are not often factored into assessments by investors and boards of directors.

    But I do think there is a growing class of consumers out there that wants to do business companies that do good while doing well ... and certainly there is nothing about this story that dissuades me from wanting to shop at Patagonia next time I need something in fleece.

    Published on: September 27, 2013

    Reuters reports that Target has launched a free service "that lets shoppers set up recurring deliveries of bulky baby goods, a move that mimics Amazon.com Inc and is aimed at attracting more moms.

    "Target has a battle ahead since it is not the first to offer such delivery, and for now is only selling 150 items such as diapers, baby wipes and formula ... Target is the largest bricks-and-mortar retailer to offer a service dedicated to baby goods. For now, Target Subscriptions will not offer baby food. Most of its orders will be sent via United Parcel Service Inc."
    KC's View:
    For some reason, the Reuters story compares this to Amazon Prime, when what it really ought to be comparing it to is Amazon's Subscribe & Save program.

    Target may be late to the game compared to Amazon, but the whole subscription model - locking customers in on products that they buy consistently - is an enormous opportunity that has been a game-changer for Amazon, but that few other retailers have looked to implement.

    Published on: September 27, 2013

    The Associated Press reports that federal prosecutors have filed "little-used misdemeanor counts of introducing adulterated food into interstate commerce" against two men who owned "a southeastern Colorado cantaloupe farm linked to a 2011 listeria epidemic that killed 33 people."

    The prosecutors said that the misdemeanor charges were the ‘‘best, most serious charge we could find," and acknowledged that the charges do not suggest that the contamination was deliberate or that the accused should have known about it. The two men - brothers Eric Jensen and Ryan Jensen - pleaded not guilty and were released on unsecured bonds.

    Only four other people reportedly have faced such charges over the past 10 years.

    According to the story, "The FDA has said the outbreak probably was caused by pools of water on the floor and old, hard-to-clean packing equipment at the Jensens’ farm, which later filed for bankruptcy. The agency said investigators found positive listeria samples on equipment and fruit at the operation’s packing facility."
    KC's View:
    What I don't have a sense of from the charges is whether the Jensen brothers were ignorant, incompetent, or just clueless. But people died ... and so there has to be some kind of justice.

    I was curious, though, when I read this story. So I went online to see what charges and/or convictions might have taken place in the case of the Peanut Butter Corp. of America where, if I recall correctly, the evidence was pretty compelling that management thought that short term bottom line numbers were more important than cleaning feces off the equipment.

    And I was happy to see a Bloomberg story from earlier this year that "Stewart Parnell, president of the now liquidated Peanut Corp., was charged along with three managers in a 76 count indictment unsealed yesterday in federal court in Albany, Georgia. He’s charged with conspiracy, wire fraud and introduction of adulterated food into interstate commerce with intent to defraud or mislead."

    I don't think there has been a disposition of that case. Though I continue to believe that whatever fines and jail time that Parnell and his folks might get hit with, they also ought to be forced to subsist on a steady diet of their own products.

    Published on: September 27, 2013

    The Jacksonville Business Journal reports that Bi-Lo Holdings, looking to raise as much as $500 million, plans to take the company public.

    The move comes after Bi-Lo bought Winn-Dixie and took the company private. Since then, Bi-Lo also has agreed to acquire Sweetbay, Harveys and Reid's from Delhaize for $265 million in cash.
    KC's View:
    Not being a stock analyst, I probably need to be careful about how I phrase this. But I'm not sure that Bi-Lo is where I would invest my hard-earned money ... I'm just not persuaded that despite the fact that it is bigger than it used to be, there is a plan in place that will allow it to transcend its roots and offer a compelling and differentiated shopping experience to consumers.

    Now, some will suggest that not every retailer has to do this to survive. And I'd agree with that. But if I'm going to invest my money, it is going to be with a company that wants to change the game, not just play the game.

    It is possible that Bi-Lo will disagree with my conclusions. I am happy to be proven wrong.

    Published on: September 27, 2013

    The Associated Press reports that JC Penney is looking to raise $810.6 million via a stock offering, that would sell "84 million shares priced at $9.65 per share. That is a 7.3 percent discount to Thursday's closing price of $10.42 per share."

    The announcement comes as its senior vice president and controller, Mark R. Sweeney, left the company. he is being replaced on an interim basis by Dennis P. Miller, senior vice president of finance.

    JC Penney continues to try to recover from an unsuccessful turnaround effort begun when CEO Myron Ullman was replaced by Ron Johnson, formerly of the Apple Stores, who was brought in to reinvent the department store chain and move it away from its discounts-and-promotions approach to marketing. When that didn't work out - sales, traffic and profits plummeted - Johnson was fired and Ullman was rehired.
    KC's View:
    There are probably all sorts of reasons to buy JC Penney stock, having to do with going long or going short or hedging this bet or whatever.

    But the one thing that would certainly give me pause is that nothing has happened at JC Penney to convince me that leadership there has anything like a long term plan for making the company relevant. Investors can go long or go short, but if they go deep, they'll put their money elsewhere.

    Published on: September 27, 2013

    Barilla, the pasta manufacturer, is facing threats of a boycott because of comments its chairman, Guido Barilla, made on an Italian radio program.

    According to various translations, Barilla said that his company would never feature gay couples in advertisements "not for lack of respect but because we don't agree with them ... Ours is a classic family where the woman plays a fundamental role."

    Barilla added, "I have no respect for adoption by gay families because this concerns a person who is not able to choose ... Everyone has a the right to do what they want without disturbing those around them."

    And he said, if gay people don't agree with him, "they can go eat another brand."

    Which is precisely what LGBT activists now are suggesting.

    Since the public backlash against his comments, Barilla reportedly has tried to walk back his positions a bit, saying he respects gay people and gay marriage, but just wanted to stress the importance of women to the family unit. "I apologize if my words have generated controversy or misunderstanding, or if they hurt someone’s sensitivity," reads a statement on the company's website.
    KC's View:
    People - even senior executives - have a right to their opinions, and even have a right to make statements like these. But they have to know that if they make comments that a segment of their customer base will find demeaning, there likely will be consequences. Especially these days, when comments made on an Italian radio show can find their way onto websites all over the world.

    Do I personally find these comments to be offensive? Sure. Will it affect what pasta I buy? Probably. I don't use Barilla pasta much (these days I'm using Colavita because they are an MNB sponsor), but next time I see Barilla on the shelf, I'll bypass it because of these comments. And there will be plenty of people like me ... just as there probably will be folks who will buy Barilla now because they approve of his position. Though, to be fair, most people probably won;t know or care.

    Poor Guido. I feel bad for him, in part because his 19th century sensibilities just got exposed to the harsh light and cold air of 21st century realities. It isn't only gay people who ought to be annoyed at him. He also seems to think that women ought to be home making pasta, and that runs counter to the way much of the world works these days.

    Published on: September 27, 2013

    SkyNews reports that in the UK, Tesco and Walmart-owned Asda have pulled Halloween costumes from their shelves that generated complaints about insensitivity to people with cognitive disabilities.

    The costumes included a "mental patient" getup that looked like a blood-splattered straitjacket."

    Criticisms of the costumes and the chains could be found in social media, where people complained that the outfits reinforced negative stereotypes about people who already may feel stigmatized about their mental health issues.

    Both Tesco and Asda apologized for any seeming insensitivity.
    KC's View:
    Kind of reminds me of a few years ago, when the Vermont Teddy Bear Co. sold a bear in a straitjacket that came with the inscription, "Crazy for you."

    They got a lot of grief for that, and stopped selling it. Of course, by the time they had stopped selling it, they were sold out.

    I know this in part because I'm one of the people who bought one. Gave it to Mrs. Content Guy, who, while she is not a teddy bear kind of person, continues to treasure it. (I think it reminds her of me.)

    I actually agree that the costumes seem insensitive and should have been pulled. But a lot of costumes strike me that way - how many kids go out for Halloween dressed up as axe murderers and serial killers and hookers and whatnot? (Walmart this week in the US had to pull a "naughty leopard" costume that some felt was overly sexual - and that was designed for toddlers.

    It's all just wrong ... but, in my view, yet another symbol of the slow decline of western civilization.

    Published on: September 27, 2013

    Yesterday on MNB, the FaceTime commentary referenced a BBC story about "Cookisto," an online community of local cooks in Athens who, when they make too much food for that evening's dinner, can post descriptions of what they've made and sell portions to local residents who may want a home-cooked meal but don't have the time, ability or inclination to make it themselves.

    According to the story, "the site has attracted 12,000 cooks in Athens in the last few months. What began as a master's degree thesis ... has now become a reality in crisis-stricken Greece, and is due to launch in London next month."

    Well, several MNB readers wrote in to tell us about an NPR story about Leftover Swap, described as "a smartphone app to help you barter or give away your leftovers.

    "The basic gist is this," NPR reports. "Let's say you have some leftover pizza. Snap a photo of it and post it to the app's database. Strangers in the same geographic market then have an option of trading you for the food — or just taking it off your hands."

    The founders have no idea of this is a moneymaker. Co-founder Dan Newman says, "We're not gonna make millions. [The environmental concern] is a big part of it. There's a bunch of studies about how much more food we need to produce for the world population by 2050, and how fertilizers are less effective and our current rate of producing food isn't going to suffice. Meanwhile, in the US we produce so much more food than we consume and so much is going to waste."

    And this is at least one way to address the issue.

    The story notes that there are legal and liability issues, and Newman "says that they won't be allowing users to formally sell their leftovers, rather, individuals can offer to donate for particularly tasty or premium grub. He's also studying up on liability concerns and regulations surrounding individual food sharing.

    "The bottom line is, this thing is for real, and it's happening."
    KC's View:

    Published on: September 27, 2013

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

    • In Iowa, KCRG-TV News reports that Fresh Market plans to open a store in Cedar Rapids, in an old Kmart location. It will be Fresh Market's first Iowa store, and is scheduled to open sometime in 2014.

    Fresh Market currently operates 144 stores in 26 states.


    Reuters reports that McDonald's will shortly begin offering side salads, fruits or vegetables as part of its Value Meals. French fries will still be available, but there will now be these other options.

    According to the story, "McDonald's, which often bears the brunt of criticism over the restaurant industry's penchant for tempting diners with indulgent and often high-calorie food, said it would offer the option in all of its 20 major global markets by 2020. McDonald's also vowed to promote only water, milk and juice as the beverages in its popular Happy Meals for children as part of its announcement at the Clinton Global Initiative annual meeting in New York on Thursday ... McDonald's said its announcement is part of a plan developed with the Alliance for a Healthier Generation, which was founded by the Clinton Foundation and American Heart Association, to increase customers' access to fruit and vegetables and help families and children to make informed eating and lifestyle choices."

    Good for McDonald's. (Don't hear me say that much, do you?) Though I think the "by 2020" caveat sounds a little drawn out, I'm happy to concede that Mickey D's is addressing the obesity issue to a greater extent that I thought it would. Like McDonald's or not, doing things like this, and doing things like posting calorie counts on menu boards nationwide, all strike me as responsible moves to address a serious situation. So, good for McDonald's.


    • United Natural Foods said yesterday that it has entered into a definitive agreement to acquire Trudeau Foods, described as "the largest Minnesota-based distributor of natural, organic and specialty food products," from a holding company owned by Arbor Investments II. Terms of the deal were not disclosed.


    • The Associated Press reports that "Starbucks has filed a trademark application for the term "Fizzio" as it continues its test of carbonated drinks. The Seattle-based coffee company says in the filing with the U.S. Patent and Trademark Office that the name would be for beverage-making machines, as well as a variety of drinks, including soft drinks."

    Think Soda Stream. But probably a lot more expensive.


    • The Associated Press reports that 98 percent of voting United Food and Commercial Workers-represented employees of Safeway, Fred Meyer, QFC and Albertson's in the Puget Sound region have authorized a strike, saying that "the companies want to reduce holiday pay, hold wages at current rates, and force part-time workers to get health benefits through the new government health care plan."

    The story reports that management "says the strike authorization vote is premature because neither side has put out a best and final offer."


    • Delhaize America yesterday announced the creation of the Pierre-Olivier Beckers Award for Excellence in Values, named in honor of the longtime Delhaize CEO who is retiring at the end of the year.

    The company said that "the inaugural award will be presented during the first quarter of 2014 to a Delhaize America associate who exemplifies the stellar leadership and values that Beckers has brought to the organization. Delhaize America’s core values include: determination, integrity, courage, humility and humor."
    KC's View:

    Published on: September 27, 2013

    • Schnuck Markets announced yesterday that it has hired Anthony T. Hucker,former president of Ahold-owned Giant of Landover, to be EVP/chief strategy officer, a new position.
    KC's View:

    Published on: September 27, 2013

    ...will return next week. I promise.
    KC's View:

    Published on: September 27, 2013

    In Thursday Night Football action, the San Francisco 49ers defeated the St. Louis Rams 35-11.
    KC's View:

    Published on: September 27, 2013

    First of all, my heartfelt thanks to the folks at Marzetti for all the hospitality this week in Hilton Head, where I had the privilege of speaking to the company's sales meeting. Terrific company, and we had, I think, a provocative and plainspoken exchange of ideas during the Q&A. And that's one of my favorite things. We also gave away and signed some books, which is another of my favorite things.




    Just a few reviews to offer this week...

    Forget the spectacular weather that autumn brings. I'm just happy that after a generally dreadful summer movie season, some decent films are going to start finding their way into theaters.
    First up: Prisoners, the Hugh Jackman-Jake Gyllenhaal drama, which is a bleak and suspenseful piece of work about how parents react when their children are kidnapped one Thanksgiving afternoon. The parents are played by Jackman, Terrence Howard, Maria Bello and Viola Davis; all are strong, but if I had one complaint it would be that except for Jackman's survivalist/devout Christian/recovering alcoholic, the rest of the characters are merely sketched out. Jackman is great - he's used to playing angry, but here he finds a kind of seething, reality-based intensity that goes way beyond much of what he's done before onscreen.

    But the best performance in the film is Gyllenhaal's as the police detective charged with finding the girls and dealing with distraught parents. Not an easy job - Jackman's character, fed up with what he sees as police inefficiency, decides to kidnap and torture the man who he feels sure is guilty of the kidnapping, and Gyllenhaal is all internalized conflict as he fears that justice is slipping away.

    Prisoners is not a perfect movie, but it is very good - directed by Denis Villeneuve and written by Aaron Guzikowski, a couple of relative movie biz newcomers from whom I expect we'll see very good work down the road.




    I have two wines to suggest this week.

    First off, the 2010 Jovino Pinot Noir from Oregon, which I enjoyed last night with a spectacular blackened redfish at a little Savannah restaurant called Garibaldi. It worked really well with the seafood, and I heartily recommend it.

    Second, I can enthusiastically recommend Evolution White, a blend of nine different varietals from Oregon that is absolutely delicious, and great with spicy seafood.




    That's it for this week. Have a great weekend, and I'll see you Monday.

    Slàinte!
    KC's View: