retail news in context, analysis with attitude

Published on: February 26, 2014

by Kevin Coupe

Longtime MNB readers know that burgers are a passion around here. (It isn't just a song … I really do think that a Cheeseburger is Paradise.)

And so, I was jazzed when MNB friend Mara Upson found a story on BuzzFeed Food that listed the "27 Reasons That In-N-Out Is Actually Heaven On Earth." An assertion, by the way, with which I would never disagree.

Among the reasons are the fact that the burgers actually "are handmade by angels" … "the secret menu is what dreams are made of" … and that "when you order the fries Animal Style, an angel gets its wings."

It is a pretty clever piece … and, if you are a burger and In-N-Out fanatic, entirely credible.

You can read it here

Published on: February 26, 2014

Health authorities are saying that over the past decade the obesity rate from children between the ages of 2 and 5 has dropped from 14 percent to eight percent, a 43 percent drop.

The trend, the New York Times writes, was a "welcome surprise" to researchers, and is seen as something that could have an impact on long-term health issues and costs, since childhood obesity can lead to weight problems that cause cancer, heart disease and stroke. It is, the Times writes, "the first clear evidence that America’s youngest children have turned a corner in the obesity epidemic."

Cynthia Ogden, a researcher for the Centers for Disease Control and Prevention (CDC) and author of the study, "cautioned that these very young children make up a tiny fraction of the American population and that the figures for the broader society had remained flat, and that for women over 60, the obesity rate had even increased. Still, the lower obesity rates in the very young bode well for the future, she said."

Experts tell the Times that there likely are several reasons for the trend, including a decline in the sugary beverages consumed by children, as well as the high-profile public relations efforts that have been conducted - including the current initiatives being championed by First Lady Michelle Obama - on the diet-and-exercise front. The story says that calorie consumption for boys has dropped seven percent over the period studied, and for girls it has dropped four percent.

Perhaps not coincidentally, the Journal reports this morning that "logos for sugary soda and unhealthy snack foods would no longer appear inside schools under proposed nutrition rules released Tuesday by the Obama administration … The rules, from the Agriculture Department, apply to foods sold in school vending machines, school stores and the alternative meals and snacks offered in the cafeteria."

According to the story, "The proposal, part of the 2010 Healthy, Hunger-Free Kids Act, is the latest piece of first lady Michelle Obama's campaign to reduce childhood obesity. Last summer, the administration restricted the amount of calories, fat, sodium and sugar allowed in school snack foods, and required that they contain a certain portion of healthy ingredients starting next school year.

"Now, the administration is effectively trying to remove from schools any marketing of foods that don't meet those guidelines. For example, schools may still have a cooler in the gym with a soda logo, or a vending machine plastered with salty snack graphics. Those would be phased out under the proposal."

Published on: February 26, 2014

The Wall Street Journal reports that Target has been retaliating against Procter & Gamble for what it sees as preferential treatment being given to Amazon.

The story notes that last October, it was reported that P&G had allowed Amazon to set up shop inside its distribution centers, which would allow the online retailer to more efficiently and economically fill orders for P&G goods.

At the time, the Journal wrote, "P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them ... The under-the-tent arrangement is one Amazon's competitors don't currently enjoy, and it offers a rare glimpse at how the company is trying to stay ahead of rivals including discount chains, club stores and grocers."

Now, Target is fighting back and sending what it hopes is an ambiguous message. The Journal writes that "several months ago, the discount chain started to give some P&G products less-prominent placement in stores, including less space on 'endcaps' … Target also stripped some big P&G brands of their 'category captain' status, meaning the retailer chose to seek advice from other providers on how to boost sales in their product areas … In addition, Target encouraged some suppliers that compete with P&G to work together on promotions, like offering discounts on combined purchases of their products."

The story notes that Target has been particularly vulnerable to competition from Amazon, in part because it allowed Amazon to run its e-commerce operations for a decade, which left it far behind where it needed to be in the e-commerce continuum. In addition, while "Amazon is still a relatively small player in selling consumer staples … it sees large growth potential in the area and has attracted a growing pool of shoppers—including many new mothers—with a membership program that provides generous discounts on bulk purchases of diapers and other products."

That plays into P&G's long-term growth plans … but isn't a good thing for Target.

Published on: February 26, 2014

Bi-Lo Holdings and Delhaize America said yesterday that the Federal Trade Commission (FTC) has approved the acquisition of Delhaize's Sweetbay, Harveys and Reid's chains, pending the completion next month of a 30-day comment period.

The closing of the deal is contingent on the closing/divestiture of 12 stores by Bi-Lo, and the retention of two stores by Delhaize, which will convert them to its Food Lion banner, thus satisfying concerns about competitive and antitrust issues.

It was just 10 months ago that Bi-Lo Holdings, parent company to both Bi-Lo and Winn-Dixie, announced its intent to acquire 155 operating Sweetbay, Harveys and Reid’s supermarket chains from Delhaize Group for $265 million.  At the close of the transaction, Bi-Lo Holdings will operate 134 of the stores.

Published on: February 26, 2014

Thanks to MNB reader Rich Heiland for passing along this piece by Ken Hoffman in the Houston Chronicle in which he wrote about how H-E-B's private label ice cream brand, Creamy Creations, is effectively competing with the iconic Texas brand Blue Bell.

The point is that H-E-B really took ownership of the own-label brand, spent two years developing a product that was "at parity, or better," and then focused on creating a market for it.

Hoffman writes:

"I talked with Scott McClelland, the nerdy guy with glasses in the TV commercials. He really is the president of H-E-B Houston.

"Creamy Creations ice cream isn't leftovers or a moonlighting job from an established dairy plant. H-E-B has its own ice cream factory in San Antonio.

"'I worked on this project (Creamy Creations) 15 years ago,' he said. 'For two solid years, we ate ice cream every Wednesday afternoon for three hours. And I got paid for it! We refused to launch Creamy Creations until it was at parity, or better, in blind taste tests against Blue Bell … At H-E-B, (owner) Charles Butt's name doesn't go on it until the quality goes in. That's why it took us two years to develop our ice cream. In particular, vanilla was a challenge because Blue Bell Homemade Vanilla has a custardy taste that was hard to match. Blue Bell was the standard for us to meet'."

Published on: February 26, 2014

As Tesco looks to recapture sales and profit momentum in its home UK market, writes that "key among its strategic priorities … would be 'continued leadership in multichannel and online' and a 'seamless multichannel offer'. It also plans to invest £200m in keeping prices low, while continuing to develop multichannel measures such as click and collect: it now has more than 1,750 dedicated desks for online general merchandise, and 232 locations for online grocery click and collect."

The story says that Tesco is adapting to a market "in which online sales are growing strongly as ecommerce has gone mainstream, convenience is growing as customers buy more locally and more often, and large out-of-town stores are under pressure as a result."

Published on: February 26, 2014

Reuters reports that the US House of Representatives Committee on Oversight and Government Reform "has turned up the heat on Target Corp, demanding that the No. 3 U.S. retailer turn over internal documents and messages describing how and when it learned of a recent massive consumer data breach … The committee set a deadline of March 10 for Target to turn over the materials. If the company does not comply, the committee's majority Republicans have the power to issue a subpoena forcing the company's compliance."

The story suggests that the committee, which is controlled by a Republican majority, was dissatisfied with the answers provided by Target execs in a previous hearing: "The House committee also requested any documents generated between November 1 and December 19 referring to discussions about notifying others about the data breach, and any documents generated since December 12 in which any federal agency advised the company to avoid providing information to Congress."

Published on: February 26, 2014

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

• Marketing Daily reports on a new study saying that men are becoming more involved in food shopping, suggesting that "men are becoming household helpers, perhaps as they are supplanted at work by women -- a big change from household engagement meaning coming home for dinner now and then … In the study, based on an online panel performed by Hunter Qualitative Research, more than 65% of respondents said they now hold primary shopping responsibility for several household product categories, with 67% saying they enjoy shopping for the household, and close to 63% open to choosing new brands.

"About 54% of surveyed men said they shop for groceries and household supplies more often than their spouses, with many saying they are the decision makers when it comes to grocery shopping as well. Fifty percent said their spouses do not tell them what brands to buy, and nearly 70% said they are willing to sacrifice career advancement for more time with family."

I think men are shopping more than ever. Though I have to wonder if men are doing quite as much at home as they say they are doing. After all, we men are pretty good at self-delusion…


• A good sign for one segment of the economy, perhaps? But not so much for the economy overall?

The Wall Street Journal reports this morning that Home Depot "is adding more upscale items to its lineup, as its customers show a willingness to splurge on their homes.

"The giant home-improvement retailer said sales of premium products have posted four straight quarters of growth. The results highlight the growing divergence between chains that can cash in on wealthier shoppers who benefit from rising home and stock prices, and retailers like Wal-Mart Stores Inc. that cater to lower-end customers and are suffering because of reductions in federal food stamp outlays and unemployment benefits."


• The San Francisco Chronicle this morning reports that "Rancho Feeding Corp., the Petaluma slaughterhouse that recently recalled 8.7 million pounds of beef, is under criminal investigation by the federal government for killing and selling meat from dairy cows with cancer, according to sources who would speak only on the condition of anonymity.

"Rancho was allegedly buying up cows with eye cancer, chopping off their heads so inspectors couldn't detect the disease and illegally selling the meat, the sources said."

The story notes that while these practices are illegal, they are unlikely to make anyone sick, and, in fact, there have been no reports of illness related to the company's practices.

Not yet, anyway. But y'know who I think ought to be the lab rats used to see if this indeed is the case? I'm thinking we can find them in the executive offices at Rancho Feeding Corp.

Published on: February 26, 2014

• Kroger announced that Dennis Gibson, vice president of merchandising in its Columbus division, has been named president of its QFC division in the Pacific Northwest. He succeeds Joe Fey, who was named president of Kroger's Mid-Atlantic division in January.

Published on: February 26, 2014

MNB reader Carl Jorgensen responded to yesterday evisceration by Michael Sansolo of the Best Buy shopping experience:

I had a similar experience at Best Buy recently. After exhaustive research on the best tablet for both personal and business use I settled on the Microsoft Surface. My wife and I went to Best Buy to make the seemingly simple purchase. The sales person we were finally able to snag proceeded to convince me to get the Surface Pro on the basis that it had the full-function Microsoft Office suite, which I use every day in business.

Although it was more money than the Surface, his reasoning seemed sound. I got the tablet home and discovered that I would have to pay hundreds of dollars more to purchase Microsoft Office!  Needless to say, I promptly returned it. I next went to the Microsoft Store. They have taken a page from the Apple Store, and provided the best, most well-informed service I have experienced in years. They explained that the Surface has Office already loaded, and while not as fully functional as the full version, it has more features that I would ever use. Later when I had a problem with the tablet I went back to the store and they simply handed me a new one. I think Microsoft deserves a lot of credit for getting this retail experience absolutely right. What a contrast with Best Buy.

From another reader:

Michael Sansolo’s Best Buy experience describes all of my trips there to a T.  The lack of urgency and always being seemingly understaffed is exactly why I stopped going there five years ago.  I’m almost happy to see I haven’t missed anything in five years.  They just don’t get it.  Never have, and apparently never will.  All the cosmetic changes mean nothing if you don’t address the glaring inefficiencies in customer service.

But MNB user Jim Marr had a different experience:

Prior to my recent experience at Best Buy, I would have agreed with you 100%.  I went to Best Buy to look at a new computer on 02/17/2014.  My intention was to just get ideas on a potential buy since I have not bought a computer in 10 years.  I encountered a sales representative by the name of Majeed, in the Dublin CA store.  This individual was Mr. Customer Service.  He was knowledgeable and operated with no pressure.  He answered every question that I had and was definitely versed on computers.  He wanted me to fully understand that he did not work on a commission basis, but would like an honest review on line since he would be able to get additional work hours for a positive response.  The bottom line is that I bought the computer from him.  My wife has went back to get the computer since it involved a data transfer and the geek squad operated in the same manner.  I highly recommend these individuals.




On another subject, an MNB user wrote:

I witness the ongoing debates between the “tough love free market conservatives” and the “socially progressive and concerned liberals” (my characterizations being inadequate, as I assure you I understand).

Both are seasoned by the occasional pure wing nut who is so far from what we once called mainstream I am surprised they can exist in the presence of other people. But most are apparently sincere, if not particularly analytical. This always bothers me because I was taught in another age where we tried to use facts and reason to find truth, not merely to restate our own positions.

Every  once in a while someone uses a fact or two, or a partial fact, or a an opinion disguised as fact, to support a position. Most people these days seem unable to tell the difference between these – and aren’t listening anyway, sadly.

But this one “got me” today:

“Your rebuttal as to whether a publicly traded company should reinvest income into higher wages is naive at best.  Management and boards are entrusted with delivering shareholder value which in most cases works directly against increasing expenses.  I would also argue that minimum wage should be tied to inflation given the basic economic formula that the only justification in increased wages is either a corresponding increase in productivity, or inflation.”

OK – let’s be honest for a second, There is some truth here. Many boards and management DO interpret their mission as a narrow service to stockholder value. This is not, by the way, the original description under which corporate law and charters were established, but never mind.

Here’s a fact – at least in retail, these companies are almost  always outperformed by companies that are much better at balancing shoppers and employees interests with (and have presented to any number of retailers and suppliers) that more people in direct service to shoppers DIRECTLY correlates to increasing sales per square foot. In other words, people really ARE an investment. One that pays off. And trained people retained through career progression, are more productive and capable than high levels of turnover of untrained people. Which means minimum wage should not be a long term proposition for any company that wants to succeed with shoppers and consumers. (I can’t speak to industrial jobs on that one, I have experience there but no data as it is not my area of study.)

Second point – “the only justification is an increase in productivity or inflation”  - OK, suppose we agree. Does anyone think we have not seen dramatic improvements in productivity in the last 25 years? Check it out – depending on the industry, productivity has enjoyed a major increase no matter how you measure it – dollars per foot, per man hour, profits per dollar, per ounce, per transaction - you name it – the US economy as a whole has been extremely good at increasing productivity especially around labor as a percentage of finished product (manufacturing) or of delivery and transportation(supply chain) or of many levels of  operations, including store operations, when defined as man-hours per customer served.

But minimum wage did NOT reflect these improvements.

And it doesn’t take much memory to realize how inflation has risen steadily on the past couple of decades – fuel, housing, cars, food, education, health care.

But minimum wage did NOT reflect these increases.

SO – like the man said – if we accept that productivity and inflation are the only justifications for increasing starter (minimum) wages – then raising the minimum is a simple matter of fairness combined nicely with enlightened self- interest.

My grandmother used to say, “let your ears hear what your mouth speaks.” I wish more people would follow that.

Agreed.

Published on: February 26, 2014

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