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    Published on: June 24, 2016

    by Michael Sansolo

    If misery loves company, traditional food retailers have a new source of solace: farmers' markets.

    That probably seems unexpected to you, since farmers' markets have been really hot of late, giving some shoppers a chance to buy direct from what they believe are locally owned and operated sources. But the farm stands are discovering a problem supermarkets have been battling for years.

    People don’t always want to cook.

    The Washington Post reported recently that many participants in these open-air markets are struggling with competitors in their midst: stands that offer ready-to-eat products. Sellers of raw products are increasingly seeing shoppers flock to the market to socialize and grab a meal rather than stock up on fruits, vegetables and other fare.

    As retailers know all too well, that leads to changes in sales and marketing strategies. The Post story says the participants in farmers' markets are learning to shift their selling strategies to stay successful.

    Sound familiar?

    Not a new story, but certainly an Eye-Opener.
    KC's View:

    Published on: June 24, 2016

    In Minneapolis, the Star Tribune reports that Kansas Sen. Pat Roberts, the Republican Senate Agriculture Committee chairman, and Michigan Sen. Debbie Stabenow, the ranking Democrat on the committee, say they have "agreed on what could become the first mandatory national standard for labeling foods that contain genetically modified organisms — better known as GMOs." The deal was reached just days before the first mandatory state GMO labeling law, in Vermont, which takes effect July 1.

    According to the story, "The new Senate agreement requires foods from big companies to carry one of three types of GMO notices — text, a symbol or an electronic digital link. Small food manufacturers would also have the option of using telephone numbers or websites on packages ... The national standard still faces a Senate vote and agreement from the House of Representatives, which earlier this year voted for a food industry-backed national ban on mandatory on-package GMO labels."

    Leslie Sarasin, president/CEO of the Food Marketing Institute, released statement saying that “FMI commends the bipartisan Roberts-Stabenow agreement on biotechnology labeling and hopes that all senators will vote in favor of the compromise. A national standard for GMO labeling is essential if we are to avoid the economic costs incurred by a patchwork of differing state laws. By preventing this patchwork, the Roberts-Stabenow agreement will avoid greater consumer confusion, allow efficiency, and enable the industry to proceed in a more orderly and reasonable fashion to provide consumers the information they want. We and the 800 other Coalition for Safe Affordable Food member organizations nationwide stand ready to do all we can to work for rapid passage of the agreement.”

    Peter Larkin, president/CEO of the National Grocers Association (NGA), concurred: “NGA appreciates the leadership and bipartisan work done by Chairman Roberts and Ranking Member Stabenow to reach an agreement that provides a national uniform labeling standard for foods containing genetically engineered ingredients.  Operating under a patchwork of state labeling laws is inefficient and unworkable, only creating major logistical complications for food distributors and consumer confusion in the marketplace. We strongly urge the Senate to immediately pass this measure.”

    And Pamela Bailey, president/CEO of the Grocery Manufacturers Association (GMA) said, “America’s food industry fully supports the disclosure provisions in this legislation. GMA members are committed to making available the product information that consumers want. We are pleased to see that the legislation enables transparency, clarity and consistency in disclosure and reflects the wide variety of ways that consumers will get this information about the foods they buy."
    KC's View:
    I'm sure there will be some folks who will complain that this does not go far enough, but as far as I'm concerned, the whole notion of mandatory labeling is something I've been arguing for ... and I'm glad to see it is in the agreement. I'm sure the devil will be in the details, and the legislative process could hurt the deal ... but I think this is a good starting point.

    I've always favored a national approach ... I just didn't like a national approach that prevented states from having their own mandates, if the national approach included banning all mandatory GMO labels.

    Published on: June 24, 2016

    The New York Times is among several newspapers this morning reporting on a series of problems encountered by Costco as it has switched its credit card alliance from American Express to CitiVisa, saying that it seems to have turned into a "customer service fiasco."

    On Monday, the Times writes, "Costco took the final step in severing its 17-year relationship with American Express and began exclusively accepting Visa for credit card purchases at its stores. For more than 11 million customers, the switch meant cutting up their Costco-branded American Express cards and swapping them for a new Visa card issued by Citigroup."

    Since then, it "has logged more than 1.5 million customer service calls," and "Costco’s social media pages are filled with thousands of scathing complaints. Many customers say their new cards have not yet arrived, and some report problems activating or using their cards or getting access to their accounts online. The deluge of complaints swamped Citigroup’s call center, leaving some people waiting for more than an hour or unable to connect at all. A note on Citigroup’s website warns of high call volume and apologizes for 'the long wait time that you may encounter'."

    While many retailers offer branded cards, the Times writes, "Costco’s is uniquely powerful. The company made sales of nearly $114 billion last year to its 81 million members. For nearly two decades, it accepted no cards other than American Express at its retail stores." But negotiations to continue the relationship fell apart with Amex decided the numbers did not add up.
    KC's View:
    I wonder if there is a degree to which Costco simply isn't used to having these kinds of problems with its customer service. It also seems to me that at some level, it may not have communicated effectively with its shoppers about the reasons behind the shift. The tenor of the complaints seems to suggest that people believe Costco did it so it could make more money ... and any effective communications program should have emphasized that Costco did it to save customers money. I'm a Costco customer, though I don't have one of its branded cards, and I cannot remember getting any sort of letter or email from the company.

    Published on: June 24, 2016

    Tech Crunch reports that Tel-Aviv-based Kwik has designed a new product that it believes that compete effectively with the Amazon Dash buttons that allow people to quite literally purchase everyday products quite literally at the touch of a button.

    According to the story, Kwik is "working with Domino’s, Budweiser, Huggies and other brands," and is working with a venture capital group to land $ million in seed financing.

    The story says that management believes that "Kwik’s approach, which lets brands choose their delivery and payment partners, will encourage more companies to sign up for Kwik ... The buttons are free for consumers, but Kwik makes money by taking a cut of each transaction. Kwik acts as a liaison between the delivery and fulfillment partners."
    KC's View:
    This is both inevitable and good for consumers. Amazon still has the advantage because it has sold a million of its Dash buttons and has more control over the entire process. Kwik has more work to do, simply because it has to create connections and relationships, but the impulse is the right one.

    Keep in mind ... Amazon's experience is that the Dash buttons creates enormous brand and retailer loyalty. Which is why somebody had to come up with a competitive product.

    Published on: June 24, 2016

    The Wall Street Journal reports this morning that Barnes & Noble plans to test four new stores that "will feature cafes offering wine and beer in spaces that will be double the size of its typical cafes. The retailer is also throwing its hat into the competitive restaurant business, a strategy that some independent booksellers have successfully embraced. In addition to its traditional cafe fare, Barnes & Noble will offer a full breakfast, lunch and dinner menu, together with waiter service at the four new stores."

    The restaurants are said to be moderately priced, and seen as a way to drive new traffic to Barnes & Noble, which has been suffering from almost congenitally weak traffic numbers as it wilts under pressure from Amazon.

    During a recent investor conference, the reports, "Barnes & Noble provided more detail about its bookstore business at a time when it has significantly diversified beyond hardcover and paperback books. Today, books generate about 60% of bookstore revenue, while gifts, music, DVDs, toys and games contribute 20% of bookstore revenue combined. The cafe business adds just under 10% of bookstore revenue. The retailer didn’t break out its newsstand segment."
    KC's View:
    Probably a test that makes sense, but I think I'd rather go to a real restaurant - or Starbucks - and just bring my iPad or Kindle. Hate to say it, but I can't even remember the last time I went into a Barnes & Noble ... I go into independent bookshops all the time (especially mystery bookstores), but Barnes & Noble, to me, has all the appeal of a mausoleum.

    Published on: June 24, 2016

    Fox Business reports that FedEx "is spending big on improvements to its ground delivery segment to keep pace with increased demand from leading retailers, including Amazon Inc. and Walmart. The story says that FedEx "forecasts capital spending of $5.1 billion in 2017, with $2 billion dedicated to further expansion of ground shipment facilities," this after spending "$4.8 billion in its 2016 fiscal year."

    The story notes that FedEx's expenditures have proven to be something of a drag on overall results, "FedEx’s continued emphasis on ground expansion has begun to pay off. FedEx Ground revenue grew 20% to $4.29 billion in the 2016 fiscal year. Alan Graf, FedEx’s executive vice president and CFO, said the company is 'expanding Ground as rapidly as we can' to meet increased shipping demand."
    KC's View:
    FedEx is facing a world in which Amazon has declared its intention to take greater control of the shipping function, and we all know that Walmart will do anything it can to save money in the supply chain. For FedEx to continue to get their business, it has to continue investing in being faster, better and stronger.

    Published on: June 24, 2016

    The Des Moines Register reports that Hy-Vee is adding a clothing boutique to its new, 91,000 square foot Lakeville, Minnesota, store.

    The 3,300 square foot section is branded as F&F, and will sell women's, men's and children's clothing, shoes and accessories. "F&F is a British company that sells clothing similar in style to Forever21 and H&M offerings at Old Navy prices," the story says.

    The Register goes on to say that "Hy-Vee also plans to open clothing boutiques later this year in its Iowa stores at 4605 Fleur Drive in Des Moines and 410 N. Ankeny Blvd. in Ankeny. Other boutiques will be added to other large Hy-Vee stores in the next four to five years."

    Jeremy Gosch, Hy-Vee's executive vice president strategy and chief merchandising officer, tells the Register that the departments are seen as adding convenience for shoppers.
    KC's View:
    I bow to Hy-Vee's greater marketing and merchandising knowledge, but I've never been a big fan of buying clothes in food stores. It always seems sort of dissonant to me ... but clearly Hy-Vee feels differently. I'll be interested to see how this turns out.

    Published on: June 24, 2016

    • The Lowell Sun reports that in Massachusetts, a Suffolk County Superior Court judge has "ruled that Market Basket CEO and owner Arthur T. Demoulas violated his rival cousin's contractual right to participate in the company's IRS audit, but the violation was 'minor'." The judge has "issued a preliminary injunction allowing Arthur S. Demoulas and his sister-in-law Rafaela Evans to participate in the company's IRS audit as part the 2014 agreement that shifted control of the multi-billion dollar supermarket chain to Arthur T. and ended an unprecedented consumer boycott of supermarket chain."

    Company management had maintained that the audit only recently was announced, was being managed by an accounting firm hired when Arthur S. Demoulas was running the company, and that the other side of the family would be included in the process when it is appropriate.

    AFP reports that Tesco saw a 1.1 percent increase in Q1 sales, delivering growth in what CEO Dave Lewis said "remains a challenging market with sustained deflation."

    Tesco also said that it is continuing its efforts to sell off non-core businesses with the offloading of its Harris + Hoole coffee shop chain to Caffe Nero. Terms of that deal were not disclosed.

    • The Charlotte Observer reports that Delhaize-owned Food Lion has announced that it now is accepting "mobile payments via Apple Pay, Android Pay and Samsung Pay at all of its nearly 1,100 stores. The grocer also said it has completed its 'chip-and-pin' rollout, meaning all of its stores now accept new chip-and-pin credit and debit cards, which are meant to be more secure."
    KC's View:

    Published on: June 24, 2016

    • Macy's CEO Terry Lundgren has announced his retirement, effective in 2017, though he will remain as chairman. He will be succeeded by the company's president Jeff Gennette.
    KC's View:

    Published on: June 24, 2016

    Those of us who grew up in the New York metropolitan area during the 1960s had as part of the soundtrack of our lives the rock 'n roll stylings of the Good Guys on WMCA-AM, which featured disc jockeys such as Jack Spector, Joe O’Brien and Harry Harrison. There also was "Dandy" Dan Daniel, who, if I recall correctly, occupied the evening drive-time slot ... and it is worth pointing out that he passed away earlier this week at age 81, taking with him just a little bit more of our youths.
    KC's View:
    Dan Daniel was a Texas native, but he lived for the past half-century in Larchmont, NY ... which also happens to be where I grew up. He was a family friend, and I can tell you that he actually was a good guy. I remember, when I was young and pondering career choices, how he talked to me about the magic of radio and how it allowed on-air people to "create word pictures" in a way that other media did not. I think I last saw him about six or seven years ago, at a birthday party for my dad ... and while he was frail, he still had the pipes.

    Published on: June 24, 2016

    Yesterday, MNB took note of a Wall Street Journal report that new US census figures say that "white Americans no longer account for the majority in hundreds of counties across the U.S., a trend transforming America’s social and political landscape as Latinos, Asians and blacks outpace white population growth."

    To which MNB reader Alan Finta wrote:

    A couple of recent experiences have reinforced with me just how diverse our nation has become since my parents’ 1940’s generation.  The first is in regards to an old Steve Allen clip I saw on-line after Muhammed Ali’s passing.  It was probably from the 1960’s, and Steve had a lengthy Q&A session with the champ.  The T.V. studio audience asking the questions looked like they were all straight out of “Leave It To Beaver” (the millennials will have to Google that one).  Men and women, boys and girls, almost all white.
    Fast forward a few days and I’m thumbing through my kids’ junior high year book.  This is the new face of America…Asian, Indian, Hispanic, Russian, Italian, European, Philippine…the variety of faces and names goes on and on.  I’m Hungarian, my wife is Mexican/ son looks like me, my daughter looks like my wife.  My kids’ have so many different friends, from so many different cultures and backgrounds, I have to imagine they will grow up to be much more open, understanding, and appreciative of the differences.  For the good of the country, let’s hope so…

    KC's View:

    Published on: June 24, 2016

    First of all, and most importantly, thanks to the couple of dozen folks who showed up at Boss Bar in Chicago this week during FMI to hang out, have a couple of beers, and swap a few stories. It always is great to catch up with old friends, and also to meet new folks ... for example, there was a 25-year-old "data scientist" (which is a very cool title) who came by, which was just terrific. I always think that while it is important to be relevant to the CEO class, it is equally important that MNB speak in a way that also is accessible to millennials.

    My goal is to do this again in Portland next month ... and hopefully more often in cities around the country as I travel. When I do, I hope you'll join me.

    Independence Day: Resurgence opens today, and I can say without reservation that you can feel very comfortable about finding another way to spend two hours of your time this weekend.

    As the movie, a sequel to the very-successful-and-actually-fairly-decent-for-an-alien-invasion-movie Independence Day, started, I almost immediately began getting a very uncomfortable feeling. I was recalling sequels like The Sting II, which starred Jackie Gleason and Mac Davis in the roles made famous in the original by Paul Newman and Robert Redford, or the prequel Butch and Sundance: The Early Years, with Tom Berenger and William Katt playing the roles created by Newman and Redford. Both were awful, and both seemed utterly unnecessary, as if the studios had made a financial calculation that the titles alone would guarantee them enough box office to make them worthwhile.

    Independence Day: Resurgence is almost that bad ... and if there is any good news, it is that it brings back Jeff Goldblum, Bill Pullman and Brent Spiner in the roles they created in the original. But as good as these three actors are, they cannot save a screenplay - about the aliens returning to Earth to take revenge on humanity, which vanquished them the first time around - that seems as if it were painted by the numbers. There is almost no originality, and none of the jaunty humor and genuine spectacle of the original. The special effects may be better, but in some ways they seemed less impactful ... there is so much noise and smoke and destruction, and at such a fast rate, that there is almost no way for any of it to actually register on the audience.

    I have no problem with sequels. Sometimes, they can be pretty good ... and sometimes (like The Godfather, Part Two, they actually can be masterpieces. But Independence Day: Resurgence strikes me as the epitome of cynical filmmaking.

    In fact, there's a sequel out there in the theaters right now that is actually funny, charming, and a worth follow-up to the original. If you're looking for a movie to see this weekend, I'd go see Finding Dory.

    That's it for this week.

    Have a great weekend, and I'll see you Monday.


    KC's View:

    Published on: June 24, 2016

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