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    Published on: June 11, 2015

    This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, Kevin Coupe here and this is FaceTime with the Content Guy, coming to you this week from the Food Marketing Institute annual convention - FMI Connect - in Chicago.

    Y'know, the first one of these I ever went to was in 1985 - which I think makes this my 30th FMI. Except that I may have missed one in there somewhere ... though I can't remember when or why. (Might've been a kid being born...)

    As I stand here surrounded by all these booths and attendees, I can't help but think about how much the industry - and this show - has changed. Back in 1985, when people talked about getting online, they were talking about grabbing a bus or cab back to downtown Chicago. (These days, by the way, they take Uber ... which is a concept that none of us could possibly have dreamed up back then.) And that only scratches the surface on the changes that have taken place.

    But the thing I keep thinking about as I stand here, surrounded by people trying to figure out what the next big thing is going to be, is how the biggest thing of all is as obvious as can be.

    It all comes down to four things: differentiation, authenticity, relevance and transparency.

    See? Wasn't that easy? All these folks came to Chicago, and I had all the answers, and I gave them away for free.

    Of course, it isn't really that easy...because all four of those things hinge on understanding who the customers are, what the customers want, and how best to satisfy them.

    That's probably the big change - the fact that the balance of power has changed in ways that nobody would've expected 30 years ago. Companies no longer can think just about what is good for them and how they can be more efficient. They have to focus more than ever and to at least an equal degree on being effective, and on making sure that they can satisfy consumer needs and desires - knowing where the products they sell came from, and knowing that they are properly and accurately labeled.

    It means being able to offer the online services that in fairly short order people will believe are as much a requisite of the store as a shopping cart or scanning. It means establishing sustainable business practices that are gaining in importance all the time. And it means being sensitive to people's growing mistrust of big food, however that plays out in coming months and years.

    Like I said, easy.

    And you didn't even have to come to Chicago. I did it for you.

    That's what's on my mind this Thursday morning. As always, I want to hear what is on your mind.

    By the way, in other FMI-related news...

    • FMI released its annual US Grocery Shopper Trends study, with two interesting sets of statistics.

    For one, thing, more and more people say they are doing all or most of the family's grocery shopping, with eight out of 10 people saying that they do at least half their household food shopping. One has to wonder if that is accurate or a kind of wishful thinking...often people perceive that they are responsible for something that they, in fact, are not.

    The other assertion that grabbed my attention was the poll's conclusion consumers seem to believe overwhelmingly that farmers and "primary food stores" are helping them address health concerns, while a majority of polled consumers said that fast food chains and food manufacturers are working against their health interests.

    This is interesting on the face of it because one has to assume that it is people's primary food store that, in fact, is selling shoppers the products made by food manufacturers. But that said, this plays into the broader issue of a growing consumer mistrust in what is called "big food," which has come up in several recent studies and been noted here on MNB.

    And so I would draw two conclusions. One is that at least for the moment, some retailers seem to have done a good job of using fresh food and differentiated services to gain some distance from many of the products they sell in the core of the store (and for which many are amply rewarded in slotting allowances and promotional fees). The other is that they should not be complacent about this, because mistrust in "big food" could transfer to "big retail" quickly and easily.

    • Russell T. "Tres" Lund 3rd, chairman/president/CEO of Lund Food Holdings, received the Robert B. Wegman Award for Entrepreneurial Excellence.

    • Cheryl Macik, director of consumer affairs for Wakefern Food Corp., received the Esther Peterson Consumer Service Award.

    • And Steve Smith, president/CEO of K-VA-T Food Stores, received the Glen P. Woodard Jr. Award for his involvement in public affairs.

    KC's View:

    Published on: June 11, 2015

    by Kevin Coupe

    We talk a lot here about food safety. I've spent most of my time at the FMI Connect show in Chicago working on a food safety-related project.

    To be honest, some retailers understand and are embracing the idea that the new Food Safety Modernization Act (FSMA) regulations are going to increase responsibility and culpability, and are being progressive and proactive in doing what they need to do, understanding that if these new rules are pro-consumer, it will be good for the industry long-term.

    But some don't.

    And I think many would agree that when some people and companies don't do the right thing, it creates the possibility that the entire food industry could be tainted.

    And so, it was with some dismay yesterday that I read in the New York Times about how "a federal inspector on a routine visit to food service facilities at Los Angeles International Airport in January found conditions that, she wrote, could compromise the safety of food meant for airline passengers.

    "Bathrooms where employees washed their hands were dirty. Machines used to control bacteria were not adequately maintained. And clutter in the food storage area created a potential for pests, the inspector for the Food and Drug Administration wrote, according to a report to be issued Wednesday by Unite Here, a union representing airline food workers.

    "The Los Angeles facilities were one of several catering operations owned and operated by Flying Food Group, which prepares meals for some of the world’s largest airlines. Inspectors over the past few years have found unsanitary conditions in several kitchens operated by the company."

    According to the story, a spokesman for Flying Food Group "acknowledged the findings of the F.D.A. inspections cited in the union report, but added that the problems at the facilities had been fixed. The company also said the report from the union was part of an effort to organize workers at the company."

    That statement alone is an Eye-Opener.

    Here's the deal.

    I don't give a damn whether the FDA findings were made public because of a union. That doesn't change the findings. To blame the union strikes me a a desperate attempt to change the subject.

    And while it's nice that Flying Food Group has fixed the problems, it does not address the fact that however the company was structured, staffed and supervised a culture existed that allowed these problems to develop and exist in the first place.

    So, I have two questions.

    One. What kind of person comes to work each day, knowing that he or she is dealing with food, and looks at these sorts of disgusting conditions and says, this is an acceptable way to conduct business? Because I cannot even fathom that.

    Two. What kind of person thinks that in 2015, they can get away with this crap?

    Flying Food Group ought to be told by every company with which it does business to take a flying leap. Trust violated. Business over. It is that simple.

    Here's the sad reality that must be faced by every company in the food business, and by every executive who thinks that "this could not happen here."

    It can happen. It will happen.

    Vigilance is critical. Transparency is vital. And a progressive approach to food safety has to be fundamental.
    KC's View:

    Published on: June 11, 2015

    The Cincinnati Business Courier reports that Kroger is slowly expanding its e-grocery service in Cincinnati - offering its click-and-collect service to customers at its Liberty Township store.

    Previously, the system had only been offered to employees as Kroger worked the bugs out.

    The Cincinnati Enquirer writes that "Kroger officials did not provide any further details about their future plans for 'click and collect' in Cincinnati. The grocer is known for carefully testing new concepts in limited markets before rolling them out to customers nationwide.

    "For the past decade, Kroger has been tinkering with an online ordering home delivery service at its King Soopers division in Denver.

    "Kroger acquired the technology in 2014 with its $2.5 billion takeover of North Carolina-based Harris Teeter, which has the e-commerce option available at 150 of its 200 stores in the Southeast."
    KC's View:
    I know some very smart people in the supermarket industry who cannot fathom why Kroger has moved so slowly when it comes to e-commerce, suggesting that its deliberate approach reduces the risk of mistakes but raises the risk that it will have further to catch up when it finally rolls the thing out.

    I suspect that the folks at Kroger think that it makes sense to risk the latter in the interest of strategic decision making. But this is not a game without a time clock, and I hope for its sake that when the rollout comes, it happens swiftly.

    Published on: June 11, 2015

    USA Today reports that the Los Angeles City Council yesterday approved a minimum wage hike to $15 per hour, a 66 percent increase that will be phased in over five years.

    "Specifically, the Los Angeles City Council approved an ordinance that would take the minimum wage from $9 an hour to $15 an hour in five years," the story says. "The rule would require companies with more than 25 employees to comply over time in small increments until hitting $15 an hour by 2020. Smaller businesses would get an extra year to comply. The ordinance still must be signed into law by Democratic Mayor Eric Garcetti. Garcetti is expected to sign the ordinance by this weekend."
    KC's View:
    I continue to believe that higher wages can lead to more productive and engaged employees, though I also think that this is more likely to happen when a company decides to raise salaries on its own rather than having the higher wages imposed upon them by government.

    Here's the discussion the retail industry needs to have: "How and why to pay your employees more." That's the panel I want to moderate ... because I think that it is the only way to approach this issue these days.

    Published on: June 11, 2015

    Ahold announced yesterday the introduction of a magazine and digital platform called Savory Fast, Fresh and Easy, described as "designed to help make every day a little fresher, a little easier, and a little more delicious for our busy customers ... Savory is a go-to guide with inspirational recipes and meal solutions that help our customers save time, save money, and eat well ... Items used in recipes are tied to store promotions and will be tagged in store creating a 'savory' customer journey that is easy to shop."

    The announcement noted that "the magazine, which is a component of the overall digital content platform, is free to customers who use their loyalty card, and it will be issued four times this year, both in stores and online."
    KC's View:
    Two things.

    One is that it sounds like Ahold is avoiding a mistake that has been made with other retail magazines - licensing content from other non-food-oriented magazines that did things like make vacation recommendations. Food retailers don't have credibility for that kind of content, but they used it because it was easy. in fact, every page of these magazines ought to be devoted to reinforcing the food store's core mission, which is to offer a compelling food-oriented experience.

    The other comment I'd make is that I might've avoided the "Fresh and Easy" reference ... but maybe for much of the country, those words don't have the negative connotation for people who pay attention to failed bids by British retailers to open stores in the western US.

    In general, this strikes me as a smart move.

    Published on: June 11, 2015

    Bloomberg reports that Kellogg Co. is planning to start a subscription snack service that would essentially disintermediate traditional retailers.

    According to the story, "Kellogg has assembled a team and invested capital to create the direct-to-consumer food business."

    Bloomberg notes that the new service would be similar to the recently discontinued Nibblr subscription snack business that was launched by General Mills, which itself was similar to the UK's Graze business that recently expended to the US. Graze allowed customers to use a website "to customize snack boxes featuring individual portions of nuts, dried fruits and other items. Graze sends $6 boxes by mail once a week, every other week or monthly."

    Kellogg said it was premature to discuss details at this time.
    KC's View:
    Two important trends at work here. One is the idea of a subscription service, which, despite a spotty history, as a lot of potential. (Just ask Amazon about Subscribe & Save.) The other is the disintermediation of traditional retail, which I think continues to be a threat to a lot of companies as manufacturers look for ways to circumvent a part of the supply chain that sometimes can be a colossal pain in the neck.

    Published on: June 11, 2015

    The joke may have been that Walmart would invest in anti-aircraft guns to shoot down the Amazon drones that some expect to be covering the landscape, delivering products, in fairly short order.

    But the Wall Street Journal reports that its Sam's Club division "is betting drones will be a popular holiday gift this year and plans to stock about a dozen kinds—from $100 models to $4,000 versions with high resolution cameras or the ability to pick up small objects."

    Sam's officials reportedly got interested in drones when they noticed that one version with a $1,169 was selling well on its website, and a survey of customers confirmed that this could be a big holiday season for drone sales.

    Costco reportedly does not sell drones. Yet.
    KC's View:
    Amazon, on the other hand, does. You should check out the selection. It is a little scary, I must admit...

    Published on: June 11, 2015

    In Rochester, the Democrat and Chronicle reports that Wegmans customers "using the Apple Pay feature on their iPhones will be able to redeem Shoppers Club discounts at the same time. Currently, customers have to give the cashier their Shoppers Club card and then hold their phone near the payment terminal."

    The Buffalo News adds that "Wegmans will be among the first grocery stores in the country to partner with Apple on the feature. It will be available this fall."
    KC's View:

    Published on: June 11, 2015

    Re/code reports that Facebook is giving away free beacons - described as "small devices that can send a signal to a person’s smartphone when they get within a certain proximity" that can be used "to push information and deals to people while they’re in a prime position to make a purchase" - to retailers and other businesses.

    The offering is part of a Facebook feature called Place Tips, "which works by showing Facebook users posts and photos about a specific retailer or business when they open the app within the actual store," the story says.
    KC's View:
    Targeting is better than not. End of story.

    Published on: June 11, 2015

    VideoMining Corp. is out with its annual Grocery MegaStudy, saying that "shoppers are spending 5 percent less time in supermarkets compared to the previous year," and six percent more time in convenience stores.

    The shift, according to the study, has an economic impact. The organization's e C-Store MegaStudy "showed a correlation between time in store and average dollar basket size, which grew by 9 percent.
    KC's View:

    Published on: June 11, 2015

    Business Insider reports on a new study that it has done examining the advantages and disadvantages of e-grocery.

    The disadvantages for both consumers and businesses include"the cost and complexity of logistics, shipping fees, and the quality and freshness of orders. For online grocers to deliver the freshness consumers want, they have to be able to deliver orders fast while maintaining the quality of easily damaged foods like produce."

    But the advantages include convenience and selection, and the reports suggests that two trends - new models that include concierge shopping and subscription meals, and new players that include Amazon, eBay and Google - create the possibility, even the probability, that the disadvantages will be overcome.
    KC's View:
    At the end of the day, an entire demographic of people has been trained to believe that online purchasing is the smartest, most convenient way to get what they want ... and they are being encouraged in this by companies looking to make same-day delivery a pervasive reality in much of the country.

    Disadvantages lose. it is that simple.

    Published on: June 11, 2015

    • The Associated Press reports that "Wal-Mart could be on the hook for more than $100 million in back pay after a federal judge ruled the company failed to pay California minimum wage to truck drivers for activities that included inspecting and washing their trucks, an attorney said Wednesday. The ruling came after the company argued that the drivers are paid for particular activities that include those tasks."
    KC's View:

    Published on: June 11, 2015

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

    • The Wall Street Journal reports that "Coca-Cola Enterprises Inc. said it plans to cut its calories per liter 10% by 2020 as consumers continue a shift toward more healthy beverage options ... The new goals are influenced by strong stakeholder feedback, said the company’s director of corporate responsibility, Joe Franses. The company also plans to halve its carbon footprint by 2020, having already reduced its by 29%, in absolute terms, since 2007."

    MarketWatch reports that in response to an investors union in the Netherlands,. Ahold said yesterday that it "would eventually explain the timing of its disclosure of talks between it and rival Delhaize last month."

    "We cannot comment further at this time, without disclosing the nature and status of the preliminary talks", the company said. "We will continue discussing this subject at a later time," Ahold said in a prepared statement.

    • The Minneapolis/St. Paul Business Journal has a story saying that Supervalu gave Sam Duncan, its president/CEO, a 40 percent raise last year, increasing his total compensation to $6.92 million, up from $4.95 million in 2014.

    According to the story, "Duncan's jump in pay this year was mainly a result of a large stock award he received for the company's continued positive turnaround, which includes improved same-store-sales, adjusted earnings and shareholder returns, among others metrics, according to the company's proxy. Supervalu's total market capitalization grew from $1.59 billion at the end of fiscal 2014 to $2.59 billion at the end of fiscal 2015."

    I don't begrudge anyone the right to make as much money as they can. But I wonder if it is a little hard to sell much smaller raises to employees when you've gotten a 40% bump? Optics matter.

    Reuters reports that the US Department of Agriculture (USDA) is predicting that "the average price of a dozen eggs in the United States will climb to a record this year because of the nation’s worst-ever outbreak of bird flu in poultry." The USDA "increased its forecast for the price of Grade A large eggs in New York: $1.60 to $1.66 per dozen. That is up from its May estimate of $1.30 to $1.36 and tops last year’s average price of about $1.42, which was a record high, according to government data. In the fourth quarter, the report says, eggs will average $1.73 to $1.87 per dozen."
    KC's View:

    Published on: June 11, 2015

    Christopher Lee, the British actor who had a remarkable career spanning more than six decades, has passed away, Variety reports this morning. He was 93.

    Lee appeared in projects as varied as the The Lord of the Rings series, three Star Wars films, one James Bond movie (The Man with the Golden Gun), several Sherlock Holmes movies, a bunch of Shakespeare adaptations, and played Dracula 10 times.
    KC's View:

    Published on: June 11, 2015

    ...will return.
    KC's View: