retail news in context, analysis with attitude

Published on: June 2, 2015

by Michael Sansolo

Which fat is best for you to eat: saturated, unsaturated or trans?

Or try this: is the cholesterol in eggs good or bad for you? How about salt or carbs or gluten?

Some of these answers are absolutes (trans fats are to be avoided). Some are under constant reconsideration and interpretation (is gluten good, bad or what?). Incredibly, these may be among the simplest questions when it comes to how shoppers perceive health.

The reason is perception usually becomes reality and that means the healthy attributes that lift you one day may sink you the next. An incredible lesson is developing right now at Subway, the nation’s massive sandwich shop.

Subway, which has nearly 44,000 units - far more than even McDonald’s - is suddenly in trouble. Sales are declining faster than any other top chain, franchisees are getting anxious and prospects are looking poor.

Incredibly, the culprit seems to be the very issue that propelled Subway’s sales growth for most of the past decade: healthy eating. Apparently the feel-good story of Jared losing all his weight by eating Subway subs and the clever marketing of fat and calorie counts compared to McDonald’s and Burger King isn’t selling any more.

There was a single telling line in a powerful Washington Post story about Subway that all businesses need to consider concerning health or any other issue.

“What Americans see as healthy has evolved; Subway has not.”

As the article points out, the image of healthy fast food has shifted. Consumers like the upfront information and open preparation at Chipotle far more than the pre-sliced meats on wax paper at Subway.

(You can read the entire article here.)

The calorie counts and fat content story hasn’t changed, but consumer perceptions of healthier food has shifted. Now Subway is suffering.

That’s a cautionary tale for every other type of business out there - a reminder that customer wants, competition and standards are constantly changing.

It is the Annie Hall reference we use often here on MNB - that sharks need to constantly swim forward or die. Every business competitor has to be like a shark - moving forward in order to survive. Subway seems to have stopped moving forward.

Healthy eating trends move as fast as anything. Today the intersection of food and health fashion meets at items like kale, Sriracha and ancient grains. A few years back it was pomegranates and probiotics. If you haven’t moved forward with those changes, you look dated and irrelevant.

Like a dead shark.

Join me for a discussion of healthy eating issues during a special webinar being held Wednesday by The Food Institute. You can get more information here.

Published on: June 2, 2015

by Kevin Coupe

The US Supreme Court ruled yesterday that a Muslim woman can sue Abercrombie & Fitch for employment discrimination after the company refused to hire her. allegedly because she wore a head scarf, or "hijab."

The woman, Samantha Elauf, says she wears the scarf for religious reasons. Abercrombie & Fitch says it did not hire her because the scarf clashed with its dress code, described as "classic East Coast collegiate."

In allowing the lawsuit to go forward, the New York Times writes, Justice Antonin Scalia described the decision as "really easy."

The Times writes that Scalia said that the retailer "at least suspected that the applicant, Samantha Elauf, wore the head scarf for religious reasons. The company’s decision not to hire her, Justice Scalia said, was motivated by a desire to avoid accommodating her religious practice. That was enough, he concluded, to allow her to sue under a federal employment discrimination law." While Elauf had not specifically informed the retailer that she was requesting a religious exemption, Scalia said the law forbids the use of religion as a motive for making employment decisions, whether it is inferred or informed.

The Supreme Court decision was 8-1, with only Justice Clarence Thomas dissenting.

And it means that as companies hire in an increasingly diverse world, they will have to be more sensitive, more intuitive, and even more responsible for the decisions they make.

It is an Eye-Opener.

Published on: June 2, 2015

The Associated Press reports that in what is called "the next wave of wage hikes by the nation's largest private employer," Walmart is raising the starting wages of more than 100,000 department managers and employees in various store departments.

According to the piece, "Wal-Mart told the Associated Press late Monday that department managers of complex and service-oriented jobs in areas like produce, electronics and auto care, will start at $13 per hour and top out at $24.70 per hour, beginning next month. Starting next February, they will be paid at least $15 per hour. Previously, the pay range was from $10.30 to $20.09. Meanwhile, those managers of less-complicated departments like clothing, and consumer products like paper towels and luggage, will earn from $10.90 to $20.71 per hour. Previously, they earned from $9.90 to $19.31."

The story notes that earlier this year Walmart "announced it was increasing minimum wages for entry-level and long-term hourly employees to at least $10 by next February. That increase affected 500,000 of its 1.3 million U.S. workers ... The wage hikes are part of a $1 billion program at Wal-Mart that also includes improving training and offering employees more control of their schedules."

Published on: June 2, 2015

CNBC has a piece about Target and its CEO, Brian Cornell, in which it notes that "the consumer has drastically changed in the past 15 years to go from a largely white middle class, to including many different demographics, creating a challenge to Target if it tries to appeal to all those constituencies at once.

"We really can't," Cornell says. "We've got to make sure we stay very focused and we understand our sweet spot. Our sweet spot today is what we call the demanding enthusiast."

The story goes on: "Cornell added that the millennial family these days are very diverse, love to shop, expect great value and are digitally connected. So that means in one hand they could have a shopping cart, and the other hand a smart phone. His goal is to ultimately make sure that Target embraces the new consumer, and continues to appeal to them with dazzling collaborations in the future through localization, and a thorough understanding of their customer."

Published on: June 2, 2015

A new study from Coupons.com and the GfK market research firm says that "heavy digital coupon users shop 47 percent more often than the average shopper, spending $6,081 annually on groceries and household goods alone — an incredible 114 percent more than the national average."

According to the report, "the study divided consumers into three categories: all shoppers, digital coupon shoppers and heavy digital coupon shoppers. Digital coupon shoppers are defined as consumers that use at least one coupon per year, while heavy digital coupon shoppers are defined as those that use 90+ coupons annually. Within each of these categories, the study analyzed the frequency of shopping trips and the average basket price per trip.

"In addition to making more frequent shopping trips and spending more on grocery and household items annually, heavy digital coupon users are also spending more each time they shop. The average shopper spends $41.17 per shopping trip while heavy digital coupon users spend $63.97, underscoring their value to retailers."

Published on: June 2, 2015

The Cincinnati Business Courier reports that "Kroger was approved for a 65 percent, 10-year job creation tax credit on Monday morning from the Ohio Tax Credit Authority. The estimated value of the tax credit is nearly $4.7 million."

According to the story, the tax credit is keyed to $46 million that Kroger plans to invest in the city of Blue Ash, Ohio, over the next five years, including "upgrades to a distribution facility it purchased earlier this year, a human resources center and an expansion for the company’s pharmacy call center ... Together, the expansion projects will create 649 new jobs. The new jobs will be in Kroger's digital innovation, human resources recruiting and pharmacy customer service groups, as well as logistics and distribution."

Published on: June 2, 2015

The Gloucester Times reports that a new documentary chronicling last summer's Market Basket controversies - as two sides of the Demoulas family fought for control of the chain, with the perception that one side was on the side of investors and the other was on the side of employees and customers - is scheduled to be released later this year.

The film, entitled We The People: The Market Basket Effect, is produced by the father-son team of Mike Buzzell and Nick Buzzell, and directed byTommy Reid. It is being narrated by Michael Chiklis of "The Shield," who grew up in Massachusetts and whose grandfather worked at the original Demoulas store.

Published on: June 2, 2015

• Reuters reports that the California State Senate has passed a bill that would raise the state's minimum wage to $11 per hour next year, a move that, if it becomes law, "would supersede a measure passed less than two years ago raising the minimum wage to $10 over the same period."

The bill "would still have to pass the state Assembly and be approved by Democratic Governor Jerry Brown. It is opposed by numerous business organizations including the California Chamber of Commerce."


• The New York Times reports that "stepping into line with many of its competitors, Foster Farms, one of the nation’s largest poultry producers, is moving to stop using antibiotics that are also administered to humans ... Foster is also introducing a line of organic poultry products. Poultry companies like Perdue and Tyson Foods have previously announced plans to eliminate human antibiotics from their processes, as major customers like McDonald’s and Chick-fil-A have demanded antibiotic-free meat."

Published on: June 2, 2015

• The Sacramento Bee reports that Raley's has hired Keith Knopf to be its new COO. Knopf is the former Senior Vice President, Retail Operations and Omni Channel Store Integration at Kohl's, Vice President of Business Planning, Strategy and Operations at Victoria's Secret, and Vice President of Store Operations at Macy's.


• Andronico's Community Markets has announced that it has hired Suzy L. Monford, most recently the Head of Fresh Product / Concept Development at Woolworths Limited in Australia, to be its new CEO. She also is the former CEO/President of Cheers Inc. a Texas-based restaurant chain, and the founder and president of FoodSport International, described on her LinkedIn page as "an international consultancy that was founded to build a link between food retailing and manufacturing, with global health."

Published on: June 2, 2015

Yesterday, we featured an email from a reader who reacted to a story we'd had about a company where the founder had announced his plan to pay for the college tuitions of all the children of employees who helped him start the company, asking whether this would "demotivate" people without children.

I responded:

Forgive me, but it seems to me that this email is illustrative of one of the things that is wrong with America. (Okay, I may be painting with a broad brush here, but hear me out...)

If I were an employee without children at a company where they offered this kind of benefit, I think there would be something seriously wrong with me if I found this benefit to be "demotivating," or if I wondered when I'm going to get mine.

I'd like to think that I'd believe that this policy says something really positive about the place where I work, that it reflects a willingness to invest in employees rather than treat them as costs, and that the health and sustainability of a company has to be measured in big ideas, not small-minded thinking.

Which prompted another MNB reader to chime in:

In an earlier life, I worked in the investment management industry.  The benefits package was second-to-none and included 100% paid medical for employee’s families.  It was a good recruiting tool and appreciated by most.  At least once a year though, someone would come forward and demand additional compensation because they had no spouse or children and that they were somehow damaged because they hadn’t gotten their piece of the pie.  It was always a man making those complaints…and looking back I can see why they were single.
 
So, sadly, there will ALWAYS be someone who will be demotivated.  If it isn’t the benefits or education for children, it’ll be the coffee or the free pens or select the imaginary slight of your choice.

I love the observation that the people imagining that they'd been wounded were always men and that now you understand why they were single. (I suspect that this is because men are taught from an early age that you have to keep score all the time. That's not always the healthiest attitude.)

I don't doubt that this all happens. I just think, as I said, that it illustrates one of the things that is wrong with this country.




In a 'Your Views" exchange yesterday, I wrote the following:

I've gotten emails from people who have questioned my frequent assertion that better paid, better appreciated employees will result in more motivated and productive employees. They think I'm smoking something, that the responsibility of businesses is to get as much out of their employees for as little compensation as possible. In short, they think I'm a flamin' liberal for suggesting any such thing.

Well, they can think anything they want. But in the George Bailey-Henry Potter debate, I'll go with George Bailey. Every time.

MNB reader Tom Redwine responded:

Thanks for the It's a Wonderful Life reference at the end of Your Views today, Kevin. Pretty sure I heard a bell ring as I was reading it…



Finally, we had two pieces yesterday that one reader's attention. One was about a new business, zTailors, that brings men's tailoring services to people's homes (which I said would provide disruptive competition to business like my local tailor), and the other was about Shazam's new visual recognition software (in which I talked about how I love using Shazam to identify music I hear on the radio).

This MNB reader wrote:

I think your tailor just got the biggest business opportunity of the past 20 years…just figure out how to be one of the service providers…he IS the competition…if he wants to be.

And BTW, you still listen to real free radio…WHAAAAATTTTT? Now that is an eye opener right there.

Not always free radio. Often it is satellite radio in the car. But I get your point.