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    Published on: May 6, 2015

    by Kevin Coupe

    We've had several pieces and a number of emails over the past week or so about the Bud Light labeling controversy, in which the brand and its parent company, Anheuser-Busch InBev, were hammered in social media because of labels that seem totally insensitive to growing concerns about date rape and domestic violence. The label was part of Bud Light's "Up for Whatever" campaign, and described Bud Light as being "the perfect beer for removing ‘no’ from your vocabulary for the night.”

    Well, as he usually does on his Sunday night HBO show,, "Last Week Tonight," John Oliver had a comedic and yet highly observant take on the controversy. And you can see it by clicking on the video screen.

    As always, be warned: the language can be pretty rough, and so you need to be careful if you are working in a cubicle or an office with an open door, or you;re at home and there are kids present. (Though, to be honest, Oliver's description of Bud Light may be even rougher than the verbiage...)


    KC's View:

    Published on: May 6, 2015

    The Wall Street Journal this morning has a story about how manufacturers hoping to have their products carried in Whole Foods stores face an enormous amount of work and cost to make sure they qualify - making sure the ingredients and labels are accurate and consistent with the retailer's mandates, getting organic certification where appropriate, sometimes agreeing to exclusivities, and even changing brand names when Whole Foods thinks it is a good idea.

    According to the story, "Whole Foods may not dominate specialty-foods retailing the way it once did, but for startups targeting Americans’ growing hunger for natural and organic fare, it remains the ultimate gatekeeper. Its imprimatur can open the way not only to Whole Foods’ more than 400 stores, but to bigger retailers who covet the cachet of brands carried at Whole Foods, entrepreneurs say.

    "As a result, small companies are willing to do a lot to get into Whole Foods and stay there—from changing recipes and tweaking packaging to selling certain products exclusively through the chain."

    The story notes that this isn't just a matter of exerting control over retailers, but also finding ways to differentiate itself in an increasingly crowded marketplace. The Journal writes:

    "Cultivating new brands and exclusive products has become even more important to Whole Foods as mainstream retailers have expanded natural-food offerings. Kroger, the biggest traditional supermarket operator in the U.S., with 2,600 stores, last year sold more than $1 billion of Simple Truth, a line of natural-and-organic foods it launched in 2012. Such competition has helped slow Whole Foods’s growth: Revenue rose 10% last fiscal year to $14.2 billion, versus growth of nearly 16% in fiscal 2012.

    "Whole Foods buyer Errol Schweizer said that over the past 12 to 18 months the retailer has offered 250 products that were exclusive for at least some time."
    KC's View:
    While I think it probably is fair for some of these suppliers to feel that they are being pushed around, and I'd probably feel the same way if I were a small supplier, it also must be said that by doing this stuff, Whole Foods is doing them a favor. Less so than at some other retailers, Whole Foods is pushing them to be better, to be more differentiated, to aim for a higher common denominator. In the end, that should be good for all involved.

    Published on: May 6, 2015

    The New York Times this morning has its usual Thursday technology column by Farhad Manjoo, in which he looks at start-ups and how they are endeavoring to disrupt entrenched companies with established business models ... even entrenched and established companies that themselves could be considered to be disruptors.

    There are two ways to get into the e-commerce business, he writes - one is to mount a frontal attack on Amazon, and the other is to do something "out of left field."

    Manjoo writes:

    "In the last few months, two retail veterans have been working on companies that explore these different avenues of breaking into online commerce. Ron Johnson, who, with Steve Jobs, created Apple’s lucrative physical stores, has been working on something out of left field — a selective online store called Enjoy, which, for no additional cost, will send an expert to hand-deliver tech products and spend an hour helping people set up and learn to use their new things. The service, Mr. Johnson said, is a smartphone-era take on his past at Apple — an effort to create the friendliness of an Apple Store in people’s homes and offices.

    "Then there’s Marc Lore, an e-commerce veteran who in 2010 sold his company, Quidsi, to Amazon for about $550 million. Mr. Lore’s new service,, represents a frontal assault on Amazon. Mr. Lore has raised more than $200 million — a staggering sum before even opening up shop — to create a nationwide e-commerce giant to compete with Amazon on selection, service and, especially, price. Jet’s promise is simple and, if the company can keep it, potentially momentous: to offer the absolute lowest price on just about everything, from paper towels to oatmeal to tennis rackets, guaranteed."

    It is a fascinating piece, and you can- and should - read it here.
    KC's View:

    Published on: May 6, 2015

    Reuters reports this morning that all four of the UK's major supermarket chains - Tesco, Walmart-owned Asda, Sainbsury, and Morrison - experienced sales declines in the last quarter.

    Tesco was down one percent, Asda was down 2.2 percent, Sainsbury was down 0.2 percent, and Morrison was down 1.1 percent.

    The story, based on numbers generated by Kantar Worldpanel, notes that "the overall grocery market saw sales fall 0.2 percent," and that the major chains continues to struggle as they face increasingly aggressive competition from discounters Aldi and Lidl.

    During the same quarter, Aldi's sales were up 15.1 percent, and Lidl was up 10.1 percent ... though the Kantar folks suggest that the discounters' growth may be slowing a bit.
    KC's View:
    Betcha the big four would like to have that kind of slowing sales growth, instead of what they're actually experiencing.

    It seems to me that US retailers need to play close attention to the UK situation, examining how the major chains have faced off against the discounters, and looking to see what worked and what did not. (Mostly, what did not.) Aldi is growing fast here, and Lidl has plans ... what has played out in the UK is likely to play out in the US. The canvas will be bigger, and the competitive circumstances different ... but it is not hard to imagine these kinds of wars taking place here, with plenty of collateral damage. (Which you can add to the collateral damage created by the inevitable Amazon-Walmart wars...)

    Anybody who suggests that this can't happen, or won't happen, is kidding themselves.

    Published on: May 6, 2015

    The Associated Press reports that the Federal Aviation Administration (FAA) has "given rare approval to farmers to use drones large enough to carry tanks of fertilizers and pesticides. The drone developed by Yamaha Corp. U.S.A. is a remotely piloted helicopter that weighs 207 pounds."
    KC's View:
    If those same drones could be multi-tasked so that they also deliver products to some of those hard-to-reach rural locations, would this be the modern equivalent of backhauling?

    Y'know, it wasn't that long ago that the FAA seemed intransigent about drone usage. But these days, it seems to far more malleable, agreeing to tests and exceptions that seem to take the whole concept of commercial drone deliveries a lot closer to everyday reality.

    Published on: May 6, 2015

    Mobile Commerce Daily reports that "McDonald’s is joining the shift towards mobile delivery by partnering with mobile application Postmates for a test at 88 New York locations ... The franchise is testing delivery of its full menu in 88 locations in New York with the third-party app, giving in to consumer demands for delivery. McDonald’s is using Postmates, along with many other retailers, to ensure the effectiveness of the feature and to avoid any unforeseen issues as little as possible, instead of developing the service through its own branded app."
    KC's View:

    Published on: May 6, 2015

    Loyalty One is out with a new survey suggesting that more than seven out of 10 US consumers prefer grocery discounts to fuel rewards.

    According to the survey, "72% said they’d prefer that grocers offer discounts in the aisle instead of at the pump. The preference is strongest in the densely populated Northeast, where 81% said they’d opt for grocery discounts over gas savings. It’s weakest but still noteworthy, in the West, where 65% favored grocery discounts.

    "Among the biggest spenders, those who budget $700 a month on groceries, no less than eight out of ten (83%) expressed a preference for grocery discounts versus gas rewards. Similarly, the majority of shoppers (74%) spending $300 to $500 a month, said they prefer grocery discounts to gas savings.

    "Age-wise, older millennials are leading the charge for grocery discounts over gas rewards. Among shoppers 25-35 years old, 76% said they prefer grocery, rather than gas rewards. That’s five percentage points higher than any other age group in a range spanning from 18 years old to over-65."

    "Fuel reward programs still have relevance and value, but our research and client engagements confirm they're also not a cure-all for building loyalty," says LoyaltyOne Consulting Managing Partner Dennis Armbruster.
    KC's View:

    Published on: May 6, 2015

    Politico reports that "the Food Marketing Institute is not pleased with the National Restaurant Association’s recent suggestion that leaving grocery and convenience stores out of the national menu labeling mandate would “deprive” consumers.

    "NRA said Tuesday that the recently re-introduced 'Common Sense Nutrition Disclosure Act' would not only 'create an unfair advantage between competitors' but it would 'deprive thousands of consumers nutritional transparency when purchasing restaurant-type food in these establishments.'

    "But Leslie Sarasin, president and CEO of FMI, responded forcefully today to both charges. The idea that grocers would deprive consumers is 'baseless and simply a diversion tactic in that organization’s attempts to argue for inclusion of supermarkets in a chain restaurant menu labeling regulation ... Shoppers continue to cite supermarkets as their best allies when it comes to their health. FMI’s grocery members have provided nutrition information in response to the Nutritional Labeling and Education Act to shoppers for more than 25 years under a system designed for — and effective within — a grocery system.”
    KC's View:

    Published on: May 6, 2015

    • Kansas City-based Associated Wholesale Grocers announced the promotion of four executives.

    Bob Pickerill, most recently senior vice president and division manager in the company's Fort Worth, Texas division, has been promoted to senior vice president and division manager for the Kansas City division.

    In addition, Linda Lawson, the company's vice president of merchandising, has been promoted to senior vice president and division manager for the Fort Worth division ... Tye Anthony, vice president of sales and merchandising with the Nashville division, will become vice president of sales and marketing for the Fort Worth division ... and Terry Roberts, director of fresh sales, has been named vice president of sales and merchandising for the Nashville division.
    KC's View:

    Published on: May 6, 2015

    Responding to Michael Sansolo's column yesterday, "Zombie-Proof Your Conference Room," MNB user Elaine Howard wrote:

    One of the best TED talks ever is Margaret Heffernan’s Dare to Disagree. Pretty sure I learned of it from you. It supports exactly what Michael suggests. The contrarian role has to be formally supported by the most senior levels of the organization and made part of the structure of the problem solving discipline. Enjoyed the current examples of why this is important.

    She's right ... and we have that TED talk at left. It is worth watching.

    And from MNB reader Michelle Phelps:

    Very interesting viewpoint from Michael Sansolo today.  Just thought I’d recommend a great book by Susan Cain that offers perhaps another contributing factor when poor business decisions are made, “Quiet:  The Power of Introverts in a World that Won’t Stop Talking.”  The book addresses some big failures (Enron, for example), where the loudest, most enthusiastic voices in the room drowned out any quieter voices of reason. 

    Thanks always for insightful & engaging articles.

    Our pleasure.

    Speaking of being engaging...we've gotten a number of emails from folks with personal experience in Haggen stores that have been converted from Albertsons or Safeway stores. The reviews are not promising.

    One MNB user wrote:

    I live in the Portland, Oregon market and have been in the food industry, both retail and sales for over 40 years. Below is my take on the Haggen's transition.

    I have been in 4 of the stores that have been changed from Albertsons to Haggen's. You are correct, a few signs and some paint is not enough to rebrand the store. Frankly, I am under whelmed at what I see in the stores. They do have a clean floor policy and that makes the stores look quite sterile. The bakery and deli are an improvement, meat and produce are okay, not much different from being an Albertsons. The center store is boring, displays have been heavy with private label skus, and the pricing is not competitive with Fred Meyer or Safeway. After three weeks of ads at the closest Haggens location from where I live, they have not given me or any potential new customers a reason to come in and shop their changeover.  They have a rough road ahead if they are going to make a difference from Fred Meyer, Safeway, New Seasons, and Albertsons. These chains already have a pretty darn good model to keep their core customers shopping with them.

    And from another:

    This should be filed under, “you only get one chance to make a first impression.”

    Several weeks ago when in San Diego for family matters I specifically went to see one of the Haggen stores that had been “converted.”

    Since there was no mention of this process being done in specific stages-at least I hadn’t see that until today specifically mentioned, and since I’m familiar with the stores in WA/OR having not only visited them over the years, shopping in them and liking them but also having met with one of their corporate buyers there in the course of trying to get their business.

    It’s mid-morning  when I land and decide to go to the closest store from the airport-the location on University in North Park not too far from Balboa Park.

    This isn’t an area that’s been “gentrified,” no million dollar homes going up, no tourists.  It’s an older neighborhood diverse economically and culturally.  Having grown up in Southern California it was a like a time-warp reminding me of the 1970’s with bungalow and arts and crafts-inspired  type houses in white stucco, tall thin palms, and canyons here and there filled with dense scrub and some funky older store fronts lining this part of University.

    As I’m pulling up to the store’s large parking lot which is encircled by a low stucco wall of about 4 feet I notice a group of five homeless guys under a small tree next to the outside of the wall. Strange I thought. Not a welcoming sight.  I wondered if Haggen had any idea they were there and used that area as regular place to hang out.

    Pulled into the lot, checked the cars out. Some beaters. One guy was parked near the wall and had his hood up as if he was fixing it or putting oil in...

    The outside had the large “Haggen” name in white against the green back ground. Nothing special about the signage at all.  The colors were flat. And…more importantly …nothing outside…no produce stands like people wheel out in front, no flowers…nothing you might typically see in a Haggen in the Northwest. Nothing. It was blah. Disappointing.

    So I  walk inside and I’m  …underwhelmed. I was expecting something…something that would inspire, make you feel like you’d entered a new store. Something like what Haggen in the Northwest does.. But there was nothing to set this store apart when entering from any mid-tier supermarket you’d find anywhere. Surprising given the Haggen pedigree.

    To the right was produce with some workers putting things out. There were a few bins but overall it just looked like an old produce area with the  old coolers lining the perimeter walls. But nothing about the visual merchandising made for a compelling desire to shop. No particular fruit set stood out. Nor did any particular color. No vibrancy.

    Then as I continued walking it hit me…the lighting in this store is bad. It’s the same tired old lighting supermarkets built decades ago used. A fluorescent yellowish tint to the light.  And it made the whole store dreary. It looked and felt  like nothing had changed. Long center aisles with unvarying shelving amplified by the lighting. Nothing drew your attention.  To one side of the POP area were a few islands with donuts or baked goods I think.  But under the light the old linoleum on the floor looked drab and uninviting.

    There was just no energy to the store. Nothing that made it stand out in any way-at least in the way a typical Haggen in WA does.   The cashier was nice enough. But unlike other stores there didn’t’ seem to be store associates walking around attentive to the potential needs of shoppers like in  Gelson’s or Bristol Farms where an associate might stop and ask if they can help you find something. But who can blame them? The store felt like it was just going through the motions.

    Contrast this conversion with the way Mariano’s moved to quickly get their stores from Dominick’s up to speed. Mariano’s establishes its identity  right from the start with signage, lighting, smells, great visuals-everything that hits the senses. Their name is in the mediums –the products they offer and the way they’re displayed.

    Even if Mariano’s didn’t tackle every square inch of their stores they made sure to get certain “signature” offerings in them right from the start-like the coffee bars, the way they use lighting to enhance the visual merchandising and other treatments they do to make you feel you’ve entered their special shopping environment-the Mariano’s shopping experience.  They have a program that’s tailored to aesthetics as well as functional details like changing the signage but in Mariano’s case my guess is they understand the connection between aesthetics and building basket size and repeat customers.

    Based on my first impressions, Haggen may be missing the essence of what it takes to lure new and old customers into these stores. And given the density of stores in Southern California it’s hard to imagine they can just take their time to let people know there’s something new happening. They’ve got to demonstrate on every level. And that’s not what I saw here. There’s a disconnect between the original Haggen approach as seen in WA/OR and the approach they’re taking in Southern California.


    KC's View: