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    Published on: December 17, 2014

    by Kevin Coupe

    "Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

    Content Guy's Note: "Fresh Talk" is an MNB feature that alternates on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.

    This is a lesson in how to get 'em while they're young…

    The Wall Street Journal has a story about how "school cafeterias, long run by no-frills lunch ladies, are turning to fancier chefs and culinary-school graduates to improve their food. While some districts have employed professionally trained cooks for years, the introduction of tougher nutrition rules in 2012 is making them more of a necessity as students shun wholesome dishes and cafeteria revenues fall, schools say."

    The scenario that precipitated the story took place in California's Santa Clarita Valley school system, where they "lost $250,000 in cafeteria sales last year when students rejected healthier fare designed to meet new federal nutrition standards … The new standards, pushed by first lady Michelle Obama, require schools to provide a greater amount of fruit, vegetables and whole grains at breakfast and lunch. In the two years since the standards took effect, the number of students participating in the lunch programs dropped by an average of 1.4 million a day, the largest decline in more than 30 years, according to U.S. Agriculture Department data … Under the original rules, the cost of complying with the guidelines was expected to triple this year, to $1.2 billion, according to USDA estimates. Some stricter standards for this year are still in place, such as a requirement that schools offer twice as much fruit at breakfast."

    Now, I've made my feelings about school-served meals pretty plain over the years. "Slop," if I'm not mistaken, has been the term I've employed more often than not. And I've long argued that one of the problems with making these programs work better is that they are often seen in a vacuum. Sure, the meals ought to be better. But these same schools ought to be teaching kinds about nutrition. Ought to be teaching cooking. (A return to Home Ec, anyone?) Ought to be offering 21st century gym classes. In the broadest terms, educating kids about things that matter and that will have sustainable impact.

    I've always believed that as a matter of good public policy, if schools are going to serve food, it ought to be healthy, nutritious food. There's two reasons. One, childhood obesity has been cited by many experts as being a matter of national security, and it strikes me as entirely appropriate to use school meal programs as a place to address the issue. Two, there is an economic issue … since tax dollars (which is to say, citizen dollars) are used to underwrite school lunch programs, it seems sensible to spend the money on fresh, healthy food, not slop.

    It is a matter of getting the most bang for your buck.

    Now, I would also argue that it makes sense for the fresh, healthy food to be edible. Even, dare I say, delicious. So it makes sense to invest in better people who know how to make better food.

    That's a matter of smart category management.

    In Santa Clarita Valley, the Journal writes, they hired Brittany Young, a chef trained at Le Cordon Bleu. "To make the lower-fat, reduced-sodium fare more appealing, (she) is employing restaurant-style techniques. She moved popcorn chicken out of a steamy wax bag and into an open boat serving platter. She told kitchen staff to wipe down serving bowls so chow mein noodles don’t hang over the side … Ms. Young plans to add a new item to the school menu in January, a chicken quesadilla that scored high marks with student taste testers."

    It is a matter of smart merchandising and smart marketing.

    Like in a great food store, what really matters is finding ways to identify great products that will have strong and relevant appeal, and then offering them in a way that appeals to the target customer. Like in a great food store, it is about not always aiming for the lowest common denominator.

    (Of course, politics being what it is, rather than figure out a way to make school meal programs better, the folks in Washington have decided to water down the standards … likely at the behest of lobbyists. The Journal notes that the new "federal funding bill passed by Congress and expected to be signed into law by President Barack Obama weakens the nutrition rules. It proposes freezing limits on sodium that were supposed get tougher over time, and allows states in certain circumstances to waive a requirement for the use of whole grains." What this has to do with the federal budget is anybody's guess, but as I say, that's politics. And in DC, aiming for the lowest common denominator is pretty much the national pastime.)

    The most bang for your buck. Smart category management. Smart merchandising and marketing. And targeting the customers with appealing, relevant, fresh foods.

    To do anything less is to squander opportunity.

    Some retailers, of course, already are doing this. But for some, maybe it's time to go back to school.

    Published on: December 17, 2014

    by Kevin Coupe

    One of the things we write about a lot here on MNB, especially recently, is the importance of establishing a retail ecosystem.

    Which means creating a store that doesn't just sell stuff, but becomes the first, best, and the only credible option for the consumer within a specific category.

    That's what Apple has done, with a great deal of success. If you have an Apple computer, it's a pretty good bet that you also have an iPod, iPad, iPhone and use iTunes and maybe even Apple TV. They all work together, generally seamlessly, and keep the business within the family.

    That's what Amazon is trying to do … its Fire phone and Fire TV and other new hardware offerings, it seems to me, are designed to keep you in the Amazon ecosystem. And we had a story yesterday how about Google is trying to imitate Amazon's strategy, working to keep people within the Google ecosystem as much as possible.

    There are food stores that do this very well. I'd argue that this is what Dorothy Lane Markets and Wegmans have done, for example - they are very different stores, but for their customers, they serve as source and resource, part of their shopping DNA.

    The commercial above, it seems to me, does a great job of illustrating the emotional connections that can be inherent in a smartly evolved ecosystem. In many ways, it is metaphor … but it also is much more than that, and is yet another example of Apple hitting it out of the park with a commercial that informs and moves the consumer.

    It is an Eye-Opener, and a lovely piece of work.

    KC's View:

    Published on: December 17, 2014

    The Pennsylvania Supreme Court has upheld a state Superior Court of Appeals ruling that Walmart must "pay $188 million in back pay and fees for failing to pay employees for all hours worked and denying them breaks."

    However, Walmart says it is considering another appeal, saying that it "disagrees with Monday’s decision, arguing the claims shouldn’t be bundled together into a class action lawsuit."

    The Journal story notes that "Wal-Mart has paid out millions over the years to settle legal battles over its treatment of workers. In 2012, Wal-Mart agreed to pay employees $4.8 million in back wages and damages, as well as $464,000 in civil penalties, after the U.S. Department of Labor found the company failed to pay overtime to more than 4,500 workers. That followed a $352 million settlement the Bentonville, Ark.-company paid in 2008 to settle 63 suits across the country over allegations it didn’t provide workers with proper rest and meal breaks."
    KC's View:
    I'm always sort of amused when Walmart works hard to make sure that cases against it do not reach class action status; the argument seems to be, at some level, that these people are ganging up on Walmart, and the retailer would rather deal with the claims on an individual basis.

    I don't often refer to Walmart as the Bentonville Behemoth for nothing, and the idea that anybody could "gang up" on Walmart is silly.

    What's interesting to me, considering that these suits keep getting filed against Walmart and that the company continues to write checks, is that there would appear to be two possibilities. One is that while the folks at Bentonville are not condoning such policies, somehow a culture has evolved that makes people in the regions and stores believe that such behavior is necessary and appropriate. The other is that, in fact, Walmart's vaunted reputation for operational efficiency has created a centralized labor policy that has created a series of fires that the company is spending money to put out.

    Either way, it strikes me as something that needs to be dealt with. Decisively.

    Published on: December 17, 2014

    CNN reports that "as Christmas nears, Toys R Us said it will keep its stores open for 39 straight hours, from 6 a.m. Tuesday, Dec. 23 through 9 p.m. the next day, Christmas Eve.

    "Its flagship Times Square location, meanwhile, will remain open from 7 a.m. Wednesday, Dec. 17 to 10 p.m. on Christmas eve a week later -- over 180 hours of shopping time."

    The story notes that this is actually a cutback from what Toys R Us did in the past: "Toys R Us kept all of its stores open for four straight days as early as 2010, so this year's event isn't the marathon it once was.

    "But this year the store is looking to cut expenses and rejuvenate its business, and the cost of keeping its 900 stores open for days on end are high. But at the last minute, brick-and-mortar stores can do what online sellers can't: guarantee the gift you buy will be under the tree on Christmas morning."

    Toys R Us isn't the only bucks-and-mortar retailer offering extended hours. Kohl's has announced that it will be open 24-hours-a-day for the five days leading up to Christmas.
    KC's View:
    I am reminded of the line they used on the Weekend Update segment of "Saturday Night Live" a year ago when they noted the extended hours at Toys R Us, and then said, "In a related story, the internet announced that it will be open all the time, forever."

    Of course, maybe it'll play out a little differently this year, since Amazon (among other online retailers) is being careful not to over-promise and under-deliver when it comes to Christmas presents; you have to order by this Friday, the 19th, to guarantee getting your items by the 24th. So that does give bricks-and-mortar retailers a window to press their advantage.

    That said, I'd rather have a colonoscopy without anesthesia than go to Toys R Us anytime, much less during the Christmas holidays. (FYI…this is a long-held view. We were having a conversation the other evening, and all of my kids agreed that they have almost no memory of ever being taken to a Toys R Us.)

    Published on: December 17, 2014

    Drug Store News reports on analyst presentations made yesterday by CVS executives in which they offered their view of the company's future.

    CEO/president Larry Merlo, the story says, "outlined how the company is well positioned to meet the evolving needs of the evolving marketplace as demographics and reform continue to transform the market," especially as "consumers take a more active role in their health care decisions, and providers increasingly forming strategic alliances to share both the risk and the upside of providing outcomes with greater cost efficiency."

    Merlo said that the "retailization" of health care will continue, DSN writes, quoting him as saying: “Last year, we talked about this ‘retailization of healthcare’ and we expect this trend to continue as more employers move their employees into consumer-directed health plans … We will be able to win with our consumer-friendly offerings, whether it is the convenience of our CVS pharmacies, or the low-cost, transparent pricing model of MinuteClinic.”
    KC's View:
    I'm not always the biggest CVS fan, but I do think that the folks there have done an excellent job of becoming what I think retailers have to do - become a resource for consumers as well as a source of product. And they've done it with a real focus on burnishing their retail brand.

    Published on: December 17, 2014

    In Minnesota, the Star Tribune reports that Aldi, which "used to accept only a select number of debit cards is now accepting all credit cards, including Visa, MasterCard, Discover and American Express" - though only in select stores in Minnesota and New York.

    The credit card test began in November and has been embraced by customers, the story says, leading to the possibility that it could be expanded.

    In addition, the Star Tribune writes, Aldi has been running select coupon offers in certain newspapers - also unusual for the company.
    KC's View:

    Published on: December 17, 2014

    Bloomberg reports that Tesco "had its best quarterly sales performance since June as a revenue decline eased, Kantar Worldpanel said, providing some rare good news for the troubled U.K. supermarket leader ahead of the peak holiday season.

    Sales fell 2.7 percent from a year earlier in the 12 weeks ended Dec. 7, the researcher said today, compared with the 3.7 percent decline it reported a month ago."

    Kantar framed the shift as "limited signs of stabilization."
    KC's View:
    What the hell. It's Christmas. Let's be of good cheer. Even good news with a caveat is good news. And Tesco can use all the good news it can get.

    Published on: December 17, 2014

    It is a statistic that speaks volumes about how technology is affecting the consumption of content, with a lesson to which bricks-and-mortar retailers need to pay attention.

    Folio reports that "There were more magazine startups in 2014 than there were last year, but nearly twice as many titles stopped publication when compared to 2013, according to research firm, MediaFinder."
    KC's View:
    Now, to be fair, the ratio of openings to closures means that there was a net gain of 91 new titles … but, as the story notes, "two magazines were added for every one that closed in 2014—a ratio that had been closer to 3-to-1 in each of the last two years."

    Two things at play here. One is that more magazines are failing, which speaks to the declining power of print. Second, the magazines being launched are largely targeted, specialty titles … which tells you something about mass marketing.

    Attention must be paid.

    Published on: December 17, 2014

    Bloomberg reports that"McDonald’s restaurants in Japan are rationing french fries after a labor dispute at U.S. ports crimped supplies of potatoes." The story says that for the time being, Japan's McDonald's stores "will only offer small fries to customers as it copes with the shortage."

    According to the story, "For the Japanese operations of McDonald’s, the fry shortage deals another blow to a business already suffering from a vendor scandal. The company, Japan’s biggest restaurant chain, had to remove chicken products that used meat from China from its menus in July after Shanghai Husi Food Co. acknowledged that it had changed sell-by dates. The fallout continued to be felt last month, when McDonald’s same-store sales in Japan fell 12 percent."


    • The New York Times reports that "the list of companies working with Apple Pay continues to grow.

    "On Tuesday, Apple announced that in recent weeks the company had signed up dozens more banks, retail stores and start-ups to adopt Apple Pay, the company’s new e-commerce product, which allows customers to buy things with little more than a wave of their iPhone … With the new additions, Apple says it supports the cards that represent about 90 percent of the credit card purchase volume in the United States.

    "Staples, the big-box office supplies retailer, now accepts Apple Pay at its 1,400 United States locations. Chain grocers like Winn-Dixie and Albertsons take it, too. And on Friday, Amway Center, the home to the Orlando Magic basketball team, will accept Apple Pay at many of its retail and food and beverage stands during games."


    • The National Association of Convenience Stores (NACS) is out with its monthly Consumer Fuels Survey, concluding that "the recent decline in fuel prices has resonated with consumers, 80% of whom report that gas prices are lower than they were 30 days ago and, for the first time in two years, more consumers think that gas prices will be lower in the next 30 days (30%) rather than higher (27%)."

    The report goes on: "The lower prices have not had an appreciable effect on consumers’ feelings about the economy in general, however. Consistent with the prior three months, 47% of consumers are 'somewhat' or 'very' optimistic about the economy. Meanwhile, 77% of consumers said that gas prices are having a 'great' or 'some' impact on their feelings about the economy, which is the lowest percentage recorded in two years."
    KC's View:

    Published on: December 17, 2014

    …will return.
    KC's View: