retail news in context, analysis with attitude

Published on: September 28, 2015

by Kevin Coupe

New York Times columnist Joe Nocera has a provocative - and timely - piece that compares the salmonella outbreak caused by deliberate food safety malpractice committed by the Peanut Corporation of America (PCA) and its CEO, Stewart Parnell, with the safety problems created by faulty ignition switches installed in a number of cars made by divisions of General Motors.

PCA is out of business, and Parnell has been sentenced to 28 years in prison; General Motors, while agreeing to "a $900 million fine and a three-year deferred prosecution agreement," has seen none of its executives indicted or even prosecuted.

Here's the question that Nocera poses:

"How is it possible that the executive of a company whose product killed nine people gets a lengthy jail sentence yet the executives of a company whose product killed 124 people get off scot free?"

There are a number of answers to this question. One has to do with criminal intent. And there's also the way that PCA was prosecuted, using fraud laws instead of food safety laws.

But it is column worth taking a look at, in part because federal officials seem to believe something that Nocera writes, that prosecuting corporate executives is "the single most powerful deterrent imaginable — far more powerful than a fine, which is meaningless to a company like G.M."

And that's important, since the food industry is facing new regulations that are part of the Food Safety Modernization Act (FSMA), which will, among other things, put industry c-level executives on the spot if their companies do not meet the higher bar that the federal government is setting.

You can read the Nocera column here.

It is an Eye-Opener.

Published on: September 28, 2015

The Federal Trade Commission (FTC) ruled on Friday that it has agreed to modify a previous decision, saying that Albertsons now can rehire employees who had become Haggen employees when Haggen bought stores that had to be divested when Albertsons bought Safeway.

As pat of the original deal, the FTC said, "the parties agreed to certain restrictions on Albertsons’ ability, after the divestiture, to solicit and hire employees of stores Albertsons had transferred to Haggen. In light of Haggen’s announced store closings and pending bankruptcy, the parties now seek to modify that contract. According to the application, the modification will allow Albertsons to re-hire former employees without incurring 'the risk of being accused of violating' its contract with Haggen.

"The Commission has approved this application on an expedited basis (and waived the 30-day public comment period) to help employees of the divested stores more quickly find alternative employment."

In other, related news...




• The Portland Tribune reports that while Haggen is selling or closing all of its Pacific Southwest units and 21 stores in Oregon and Washington that it acquired when Albertsons bought Safeway and was forced by federal regulators to divest stores, two stores - in Lake Oswego and West Linn - are not on the list, and apparently will remain in business.

Published on: September 28, 2015

The New York Times reports on how "subscription snack and food box businesses are popping up everywhere, hoping to cash in on America’s insatiable appetite for novelty, convenience and munchies ... Food businesses view the subscription services as a relatively inexpensive opportunity to get new products in front of consumers — and to get feedback and data fast."

The story notes that "the business is not so easy or lucrative, apparently. General Mills started a subscription snack box service, Nibblr, in 2014 — and closed it down a little more than a year later. Walmart, too, tried its hand at a food subscription service, Goodies.co, for about a year before shutting it down." But if there have been failures along the way, the Times also suggests that "the real business in food subscriptions may be in the data they generate on what consumers like." And that helps these companies develop broader marketing plans and flavor profiles that are in synch with the information being generated by the subscription services.

Published on: September 28, 2015

The New York Times has a long piece about the Volkswagen scandal ... framing it this way:

"Volkswagen’s unbridled ambition is suddenly central to what is shaping up as one of the great corporate scandals of the age. On Tuesday, Volkswagen said it had installed software in 11 million diesel cars that cheated on emissions tests, allowing the vehicles to spew far more deadly pollutants than regulations allowed. About 500,000 of the cars were sold in the United States, including Passats that rolled off the assembly lines in Chattanooga.

"Disabling the emissions controls brought major advantages, including much better mileage — a big selling point in Volkswagen’s push to dominate in America.

"The admissions forced (CEO Martin) Winterkorn to resign and have led to a management overhaul. Several executives were dismissed, including two top managers in research and development. Volkswagen shares declined about 34 percent last week, and the company faces penalties of as much as $18 billion from the Environmental Protection Agency."

It is a fascinating, detailed and cautionary tale, and you can read it in its entirety here.

Published on: September 28, 2015

The Financial Times reports that Aldi has announced its intention to expand into online shopping in the UK next year, "further stepping up the pressure on Britain’s big supermarkets.:

The story notes that "Aldi said it would launch an online shopping site next year, selling wine and its non-food special offers," with Aldi UK CEO Matthew Barnes saying, “Our launch online is another exciting chapter in our story. This will enable us to introduce the Aldi brand and some of our best-selling, best quality and best value products to thousands more customers across the UK.”

In the UK, discounters like Aldi and Lidl have steadily growing sales, eroding the market share of traditional UK grocers.

Published on: September 28, 2015

The Miami Herald reports that 7-Eleven is expanding its delivery initiatives and commitment to the "on-demand economy" with an announcement that "17 Miami stores have partnered with Postmates, the San Francisco-based tech company that began servicing the Miami area with deliveries a year ago." Indeed, the story says that "after successful pilot launches in San Francisco and Austin, 7-Eleven is adding 233 stores in Miami, Seattle, Chicago, Los Angles and New York City to the Postmates partnership."

Earlier this month, MNB reported that 7-Eleven was partnering with DoorDash, using that delivery company in Chicago, Los Angeles and New York, with Washington D.C. and Boston next on the list of markets to be served.

Published on: September 28, 2015

Hydrox, the chocolate sandwich cookie brand that predates Oreos but has been pretty much gone from supermarket shelves since 1999, is coming back ... via Amazon.

The Los Angeles Times reports that an entrepreneur named Ellia Kassoff, who says he has fond childhood memories of eating Hydrox cookies - and dipping them in glasses of cold milk - has purchased the brand and is making them available on Amazon.

The story says that "Hydrox debuted in 1908, originally manufactured by Sunshine Biscuits. In 1996, the Keebler Co. bought Sunshine and in 1999 changed the recipe and renamed the cookie Droxies ... In 2001, Kellogg's acquired Keebler and Droxies soon was dropped. Other than a brief reappearance in 2008 for the cookie's 100th anniversary, Hydrox has been absent from shelves."

"Under federal law, a brand goes back into the public domain if it is not used for three years. Interested buyers can pay $275 to the U.S. Patent & Trademark Office to apply for the trademark. Last year, Kassoff snapped up the Hydrox trademark."

The biggest challenge, according to the Times, "was finding the original recipe, before it was reformulated. Kassoff is tight-lipped about how he accomplished that: There are enough people in the cookie industry that could serve as consultants, he said, and the original vendors for Hydrox ingredients helped rebuild the recipe."

And now Hydrox is back on the market, albeit only on Amazon.

Published on: September 28, 2015

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

• MarketWatch reports that Albertsons "inched closer to an initial public offering Friday, saying it expects to raise up to $1.84 billion from the listing on the New York Stock Exchange. The company didn’t indicate a time line or a price range for the shares, and didn’t say whether existing shareholders, led by private-equity firm Cerberus Capital Management LP, would sell any of their holdings."


• The Oregonian reports that New Seasons Markets there has announced that "it would increase its starting wage from $10 to $12 an hour in January 2016. The chain employs 3,300 and operates 17 stores in Oregon, Washington and California."

According to the story, New Seasons also "called for pay increases throughout the state. Labor groups across the country are pushing for a $15 minimum wage. New Seasons' chief executive Wendy Collie warned, though, that the grocer could not reasonably raise wages to $15 per hour on its own. Instead, she called for public-policy changes that would create a level playing field while 'rising the tide for all ships.'

"...Oregon needs an increase in the minimum wage," Collie said in a prepared statement. "It needs to be done in the right way, and we are hopeful that the 2016 legislative session will resolve this issue for the state of Oregon ... "The wage that supports self-sufficiency in urban areas such as Portland could be $15 per hour, while the differences in cost of living in rural communities could make the same wage unsustainable."

Published on: September 28, 2015

Last week, I made several comments about the importance of retail companies putting the focus on stores, and relegating headquarters/head office facilities to the role of being "support offices." (Superquinn did this years ago ... Walmart has started making noises in this direction...)

MNB reader Tom Murphy responded:

Sorry, Kevin, but this makes me laugh…and is one of the few times I have ever taken exception to one of your comments.  I certainly agree that being prescriptive and conservative on HQ support organizations is merely prudent in any business, but especially retail.  On the other hand, with the exception of customer touch (and I don’t mean to downplay the importance of this), much of what happens in the stores could not happen without a strong support team in HQ.  Especially as we move to more technology supported growth, more consolidation of supply chain to maximize performance and reduce costs, and more data-driven marketing and merchandising decisions…the strength of the “home office” team is vitally important.

In fact, I would say that most retailers would do better to reduce total headcount, but improve overall capability.  The cheapest assets in HQ probably won’t lead to the best results in the stores…and certainly won’t provide for the best support for the all-important store employee.

MNB reader Beatrice Orlandini wrote:

I had the privilege of translating Feargal's "Crowning the Customer"into Italian in 2000. It was - by then - already 10 years old.

I recently gave a copy to an Italian retailer who had never read it.

He was amazed by how totally up-to-date it still is.

Of course, some situations have changed, but the basics are perfect and to be kept constantly in mind by anyone who daily deals with customers.

Of course Feargal is unique.

Had there been more like him within the organization, perhaps he wouldn't have been forced to leave, even with Tesco's fierce competition.




On another subject, MNB reader Marilu Quinn wrote:

Yesterday, I ran across what I consider to be the best customer service I have ever received in fashion retail. I was clothes shopping because I have lost a great deal of weight and don’t have anything that fits. I went to Christopher & Banks, where the salesperson greeted me, and asked if I needed assistance. Most places you don’t even get acknowledged. After explaining the situation, she guided me through selecting pieces that would work for multiple events, and showed me how to “mix and match.”  The store was organized in coordinated color groups to make this even easier to do. She gladly went into the back room to check for more colors in the size I wanted if it wasn’t on the rack. When checking out, the salesperson provided me with brochures on how to use and tie scarves for accessorizing. She offered her services on a return trip to help me pick out more outfits after I had time to assess how my new pieces would work with what I had in my closet that still fit.  After I commented on the impressive service and store conditions, she shared with me that their corporate office really understands the customer, and is very much aware of what needs to happen on the sales floor to “make things work.”  They spend a lot of time to ensure that the displays are as helpful as possible in teaching customers how to dress. It did the trick for me!

When I got home, I opened the bag and undid the tastefully wrapped clothing (they use tissue with a seal to close it!) and found the clincher – a note from the President & CEO, and “Ambassador of Style,” saying, “How can we ever say “thanks” enough? Thank you for shopping with us. We know you have so many options, we’re honored you chose us. Thank you for inspiring us to carefully consider every color, every design, every style with you in mind. Thank you for believing in timeless fashions and for being true to your own personal style. We truly hope you enjoy your purchase!”

In a world where very few associates say “thank you” anymore (I find usually it is me thanking them, without getting that reciprocation), this was a refreshing and welcome surprise. I have noticed a marked decline in customer service at stores where it used to be a focus. Christopher & Banks has definitely taken it to the nth degree, with obvious success! I will definitely return to this location.. they have won my loyalty!

Thanks for sharing ... it is amazing how these sorts of moves can add up to something really, really big.

By the way ... I'd point out that the headquarters folks seem very focused on supporting the folks in the stores and making sure that the front lines experience is as positive as possible.

Published on: September 28, 2015

Week Three in the National Football League...

Bengals 28
Ravens 24

Saints 22
Panthers 27

Buccaneers 9
Texans 19

Jaguars 17
Patriots 51

Eagles 24
Jets 17

49ers 7
Cardinals 47

Bears 0
Seahawks 26

Raiders 27
Browns 20

Falcons 39
Cowboys 28

Colts 35
Titans 33

Chargers 14
Vikings 31

Steelers 12
Rams 6

Bills 41
Dolphins 14

Broncos 24
Lions 12



And, in Major League Baseball, the New York Mets clinched over the weekend the National League East championship, sending them to the postseason for the first time since 2006.