retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: October 1, 2013

    by Michael Sansolo

    There’s a big reason why marketers endlessly hunt for the large sweet spot in the population - because there’s always more money to be found there. It’s why Hispanics and Gen Y are so attractive, while other groups get ignored; large numbers mean a bigger pot of money to pursue.

    That’s also why the post-World War II Baby Boomers, now hitting 65 in record numbers daily, remain so important and so relevant. My generation may be getting older, creakier and crankier, but there so many millions of us that we still matter.

    That also means that this huge generation continues to need plenty of attention because in keeping with our pedigree, we keep finding ways to surprise.

    There were two recent articles about my generation that made it clear that our endless battle against aging continues to rage on and I’d argue that both articles offer insights and implications for business.

    First the Washington Post reported on the growing trend of older Americans getting tattoos. As the article explained, body inking now so common among the young, is finding new fans among people aged 50, 60 and older. Many of those interviewed in the article said they decided to get a tattoo to commemorate family or various life moments.

    But many also said they did it to make a point about their independence or simply because they just wanted it. Some said they no longer worry about how the tattoo will look when they age or gain weight because that’s already happened. Another said the pain of getting a tattoo is nothing compared to childbirth.

    The second article found a very different expression of the Boomer attitude. The New York Times reported that the number of Americans above the age of 50 who are divorced for the first time tops the number who are widowed. Fifty years ago, less than 3 percent of Americans over 50 were divorced; today 15.4 percent are divorced and another 2.1 percent are separated. By comparison, 13.5 percent today are widowed.

    The Times article explained that many factors are behind this shift including the higher rate of divorce overall that continues into later years, plus the better health and life expectancy of the Boom generation. The impact is even hitting long-term married couples, who are splitting up in ever-higher rates.

    Stephanie Coontz, a  family history professor at Evergreen State College in Washington State who was interviewed for the article, said, “If you are a healthy 65, you can expect another pretty healthy 20 years. So with the kids gone, it seems more burdensome to stay in a bad relationship or even one that has grown stale.”

    For marketers, these are not idle trends to ignore. These are among the countless signs of possibilities and challenges beyond the impact on household size, which impacts the size and types of products people buy.

    Aging Boomers are continuing to emphasize our generational attention deficit disorder. That is, we continue to look for something new, different and hopefully exciting to try. Loyalty to the past - skin and spouses included - can crumble if the experience is burdensome or even stale.

    That in turn says should be cause for concern for products, stores, services and more. People willing to make life changes like opting for divorce or indelible ink in their later years are unlikely to put up with boredom or mediocrity in their shopping experiences.

    But then, you didn’t need a reminder on that. Did you?


    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: October 1, 2013

    Bloomberg reports that Tesco-owned Fresh & Easy Neighborhood Markets in the western US has filed for bankruptcy protection in a Delaware court "so it can sell itself at auction with an affiliate of billionaire Ron Burkle’s Yucaipa Cos. as the lead bidder." The filing listed debt of as much as $1 billion and assets of up to $500 million.

    "Under the proposed deal," Bloomberg writes, "a Tesco affiliate would loan the Yucaipa affiliate $120 million to help fund the takeover. Tesco would get warrants to buy as much as 10 percent of the equity in the reorganized supermarket chain. Should Yucaipa win a proposed court-sanctioned auction, a Tesco unit would retain 22.5 percent of the equity in the reorganized chain."

    Yucaipa has already agreed to buy 150 of Fresh & Easy's stores. Filing for bankruptcy makes it easier for the company to cancel outstanding leases for stores it does not want to retain.
    KC's View:
    Tesco continues to maintain that the economic downturn, beginning in 2008, was primarily responsible for Fresh & Easy's failure. Which ignores, I think, the fact that Tesco's misreading of the marketplace was enormous, and wholly unexpected considering Tesco's reputation for consumer research.

    One can only assume that Yucaipa will do better, regardless of what it does with the Fresh & Easy stores.

    Published on: October 1, 2013

    The Wall Street Journal reports this morning that Walmart "is building a pair of dedicated warehouses to handle Internet orders and speed up shipments, its latest move as it tries to catch up to online rival Amazon.com ... The two new fulfillment centers—one of which opened this month in Ft. Worth, Texas, and will handle the upcoming winter holiday load—will allow Wal-Mart to get millions of additional items to customers faster and cheaper, said Joel Anderson, president of Walmart.com."

    The second warehouse is scheduled to open next year in Bethlehem, Pa., and will "put Wal-Mart within a day's haul of a third of the shoppers in the U.S. and Canada."

    The Pennsylvania facility, the story notes, is just "10 miles from Amazon's own Lehigh Valley warehouse operations."

    The facilities, the story says, are designed to address what Walmart believes has been one of its handicaps in competing against Amazon: "Wal-Mart's online sales aren't growing faster in part due to difficulties in figuring out how to efficiently and economically deliver products into the hands of online shoppers. It is an unfamiliar position for a company that muscled its way to retail dominance by creating an unrivaled logistics and distribution system that helped it relentlessly push down costs."

    While Walmart is a much bigger company than Amazon, its internet operations do not compare. Walmart's online sales were about $7.7 billion in 2012 and are projected to reach $10 billion this year; Amazon's total sales, all online, were $61 billion last year. And while until now Walmart has had only one dedicated warehouse to deal with e-commerce orders, Amazon has more than 40 facilities spread across the country as it positions itself to offer most of its customers same-day or next-day delivery.
    KC's View:
    I continue to believe that this will be a big challenge for Walmart. Hardly insurmountable, but big. And that's simply because the company has so many legacy issues to deal with, which Amazon does not have. Walmart will have both internal and external battles as it struggles to master the e-commerce space.

    Published on: October 1, 2013

    Amazon.com announced yesterday that it will create more than 70,000 seasonal jobs across the United States, 40 percent more than during last year's end-of-year holiday shopping season.

    As part of the announcement, Amazon noted that "in 2012, Amazon converted thousands of seasonal employees into regular, full-time roles after the holidays, and expects to do the same this year. On average, seasonal employees earn 94 percent of Amazon fulfillment center employee starting wages and are eligible for health care benefits." Since the start of the financial recession in September 2008, the announcement said, "Amazon has added more than 40,000 jobs in the U.S. across all parts of the company."

    The Seattle Times reports that "Amazon’s competitors have been a bit more cautious in their holiday hiring. Target has said it plans to hire about 70,000 temporary workers for the holiday run, 20 percent less than last year. The company said it plans to give current workers more hours during the peak shopping season. Wal-Mart is increasing its holiday hiring, by 10 percent, to 55,000 workers this year."
    KC's View:
    It is interesting to watch Amazon make the broader political point about its hiring practices, since in many quarters it is painted as being negative for the economy.

    Published on: October 1, 2013

    Business Insider reports that it appears that Walmart is being beaten by dollar stores "in the competition for budget-conscious customers." The story notes that amid reports that Walmart has been adjusting its Q3 and Q4 ordering plans because of excess inventory, companies like Dollar Tree are "opening legions of stores and increasing traffic and sales at a rapid pace."

    In response, the story says, "Walmart is also planning on building more than 240 stores under 50,000 square feet by the end of this year. The industry has speculated that the smaller stores will allow Wal-Mart to operate more like Family Dollar and Dollar Tree."
    KC's View:
    This is the other battle for Walmart, in addition to the e-commerce issues described above. Not easy to do for a company geared to survive on the ROI from supercenters.

    Published on: October 1, 2013

    Business First reports that a new study sponsored by United Parcel Service (UPS) and conducted by ComScore suggests that while 83 percent of US online shoppers are satisfied with their experiences.

    The story says that "consumers in the Asia-Pacific region are least satisfied, at only 50 percent. Regions with the least flexibility for delivery and returns were among the areas with the least satisfaction across the globe," and that "more than half of consumers around the world said they would shop more with a retailer offering a hassle-free returns policy."

    The study goes on to say that "mobile and social media channels are continuing to change the way consumers shop, according to the release. The study found creating a mobile app can help prevent comparison shopping in all markets, especially in Mexico and Europe."
    KC's View:

    Published on: October 1, 2013

    • The Food Marketing Institute (FMI) and United Fresh Produce Association have announced that they have reached a three-year agreement to co-locate the organizations’ respective trade shows: United Fresh 2014 and FMI Connect, the Global Food Retail Experience. The first of the events will take place June 10-13, 2014, in Chicago.


    • Fairway Markets said yesterday that it has signed a long-term lease to open a 52,000 square foot, two-story store in Manhattan's TriBeCa neighborhood.  The store is expected to open in Fall 2014 and will be It will be the first Fairway location in Lower Manhattan and the 16th Fairway food store to open in the New York, New Jersey and Connecticut tri-state region.


    • Associated Wholesale Grocers, which has acquired 43 bankrupt Belle Foods stores at auction for $16.3 million, said yesterday that Rouses Markets will expand into Alabama for the first time by buying six of them, and that HAC - which operates under a number of banners - is y buying ten Belle Foods store in Georgia and one in Alabama.


    • Arden Group announced yesterday that its Gelson's Markets subsidiary plans to open a new store in La Cañada Flintridge, California. Expected opening date: February 2014. Gelson’s currently operates sixteen full-service supermarkets in Southern California with another one scheduled to open in November 2013 in Long Beach, California.

    The openings come just two months after the Los Angeles Times reported that Arden is exploring a possible sale of the company. Technically, the company is exploring and evaluating "strategic alternatives," but the Times suggested that increased competition, a tough economy, high prices and a sometimes "lackluster" approach to marketing and merchandising may have forced the company's hand.


    • The Reuters reports that the US Postal Service (USPS) has "defaulted yet again on a prepayment for the healthcare of its future retirees as its finances remain in the red and legislative reform remains elusive." The USPS blames the prepayments - more than $5 billion a year, mandated by the US Congress - for contributing to the annual losses that have pushed it to the edge of the fiscal cliff.


    • The Huffington Post reports that a new poll suggests that "57 percent of Americans approve of Starbucks' new policy asking that gun owners not carry weapons into its stores, even in states with laws permitting open carry. Thirty-two percent disapprove."

    Previously, Starbucks abided by state laws when it came to customers carrying guns. But as the politics of the issue changed, Starbucks adjusted its position and asked that customers not bring weapons into stores without actually banning firearms.

    HuffPost writes that "in the new poll, respondents who said that they personally own a gun were more likely to disapprove of Starbucks' policy, 53 percent to 40 percent. But 68 percent of people in households where nobody owns a gun said they approved of the policy, while 21 percent disapproved. Those who said they did not own a gun themselves, but lived in a household where someone owns one, were more likely to approve than disapprove, 50 percent to 40 percent."


    FreshFruitPortal.com reports that Whole Foods is going to begin offering "in-store guidance for ethically and environmentally conscious produce shoppers," via a three-tier system that will rate products as good, better and best based on sustainable farming methods used to produce them. "Qualifications for the rankings," the story says, "include pest management, farmworker welfare, pollinator protection, water conservation and protection and soil health. The criteria also include management of ecosystems, biodiversity, waste, recycling and packaging, energy and climate."
    KC's View:

    Published on: October 1, 2013

    • Walmart announced that Kathleen McLaughlin, previously a senior partner at global consulting firm McKinsey & Company, has been named president of the Walmart Foundation, effective October 15. 


    • Joe S. Sheetz, executive vice president of Finance and Store Development, today formally moves into the position of president/CEO for Sheetz, Inc. Stan Sheetz, who has been president of the c-store company for 18 years, remains as chairman.

    The succession plan was originally announced a year ago.


    • Park City Group announced that Mark Trowbridge - most recently Executive Vice President of Operations for CCF Brands, as well as a former executive with both Walmart Neighborhood Markets and Ralphs Grocery Co. - has joined the company as Senior Advisor, responsible for developing business solutions, consulting and expanding efforts in the retail channel. 

    Full disclosure: Park City Group is an MNB sponsor.
    KC's View:

    Published on: October 1, 2013

    • LC Greenwood, part of the vaunted Pittsburgh Steelers "Steel Curtain" defense in the 1970s - along with “Mean” Joe Greene, Ernie Holmes, and Dwight White - has passed away of kidney failure. He was 67.
    KC's View:

    Published on: October 1, 2013

    Advertising Age reports that Buitoni, the Nestle-owned pasta brand, has responded to the controversy over comments made by Guido Barilla, chairman of the competing Barilla pasta brand. Barilla, in comments made on an Italian radio program that quickly went viral, said that his company's commercials would never feature a homosexual couple because he disagrees with same-sex marriage, that he believes in traditional family units where women play a "fundamental role," and that if gay people don't agree with him, "they can go eat another brand."

    While Buitoni is not commenting directly on the statements, Ad Age notes that its Facebook page pasted the following message: "A remarkable dish can bring people together," while quoting the late legendary food writer James Beard, who was gay: "Food is our common ground, a universal experience." And, its Facebook page also features a graphic showing gender symbols made out of pasta with the message, "Pasta for all."
    KC's View:
    This illustrates the ultimate point I was trying to make last week when this story first broke ... that senior executives, who have the right to think, feel and say anything they want, really have to be careful in the current environment, lest they disenfranchise a significant portion of their customers. In this case, that's not just people who are gay, but also people who feel strongly about gay civil rights.

    And when they do so, they run the risk of being targeted by the competition, which can take advantage of the moment.

    Let me add something here. I've gotten a few extraordinarily personal emails over the last couple of days attacking me for my personal beliefs, questioning my morals and my values, and accusing me of being "militant."

    To be clear...in every one of my comments, I have used some variation in the following phrase:

    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.

    I think this is demonstrably factual. Not a matter of opinion. And executives who do not realize this may lack the basic knowledge of how the world works may lack the capacity to be 21st century executives. (If they understand all this and do it anyway, then fine. They've made a choice. And then it is up to the marketplace to decide.)

    I am transparent about my beliefs in this matter only because my biases inform my opinions, and it seems only fair to be up front about them. I would only suggest that it is amusing to be seen as militant, since I actually find ideologues on both side of the political aisle to be annoying. I've often quoted the great Pete Hamill on this issue: "Ideology is a substitute for thought."

    BTW,,,

    I did get an email yesterday from MNB reader Beatrice Orlandini, who happens to live in Italy. And she wrote:

    I never thought the Barilla controversy would reach to other side of the ocean so fast and be so big there as well.

    Guido Barilla apologized openly.

    His brother criticized him.

    He was widely ridiculed since his last TV ad had Antonio Banderas talking to a chicken ... Anyway, just a note to all the pasta lovers in the USA: Barilla is definitely NOT the best Italian pasta!

    De Cecco is better.

    Garofalo is better.

    I don't know Colavita; it's not widely sold so I will hunt for it and give it a try.

    Published on: October 1, 2013

    ...will return.
    KC's View:

    Published on: October 1, 2013

    In Major League Baseball, the Tampa Bay Rays defeated the Texas Rangers 5-2 in a one-game playoff that now sends the Rays into a one-game matchup on Wednesday against the Cleveland Indians, the other American League Wild Card team.



    In Monday Night Football, the New Orleans Saints beat up on the Miami Dolphins, winning 38-17.
    KC's View: