business news in context, analysis with attitude

A reaction to our series of interviews on loyalty marketing came from one member of the MNB community:

“I live in Cincinnati... where the "hometown" team went to loyalty cards about a year ago - right when I stopped shopping there and "thriftily" went to a non-carder - until *they* started a card program.

“As I went through their checkout line for the last time, I remarked to the cashier that I had left my previous grocer for them because of cards, and they were now off my list. She chuckled and said "You know, you're the third person since I started my shift to say that."

“Lot of loyalty going on, eh?

“As a manager, I know when I satisfy my customer they'll tell 3 others, but when I tick one off he or she will tell 10 more! These stores are shooting themselves in the rump with the cards and the smart ones will rethink their use.”

We also got a number of reactions to our Friday piece about the philosophical struggle taking place in America’s kitchens, one that will have an impact on what is bought and sold in America’s supermarkets. Some argue that the notion of home cooking is coming back, as illustrated by the resurgence of slow cookers (which used to be called “crock pots”), casseroles and meat loaves. On the other hand, there is an argument that nobody cooks anymore, and that what passes for scratch cooking today actually is anything other than take-out, typified by the putting together of packaged and semi-prepared foods in a way that emulates home cooking.

One MNB user wrote:

“If this is true, then someone will have to explain to me the phenomenon and popularity of the FoodTV network and all the chef-cooking & food related shows. Even my 30-year-old daughter has taken an interest in kitchen upgrades and cooking, for the first time in her life! Nielsen/Netratings ranks the top 17 food & cooking websites, which are manufacturers and cooking catalogs doing a very good job of being interactive with recipes and lifestyle tips. Don't let Viking ranges or Williams & Sonoma get wind of this doomsday prediction...”

MNB user Brad Morris wrote:

“Are we the population that lives on frozen pizza, chicken nuggets and macaroni & cheese, or the population that knows more about food and cooking than ours mothers did? We are both.

“The same family that lives on fast food five days a week makes a roast chicken with pesto and risotto with sun dried tomatoes when the neighbors are over on Saturday.

“The same family that has cheese in a green tube from Kraft, has a block of the real stuff from Parma, Italy.

“We no longer cook because we must, we do it because it is now a hobby, a diversion, a passion. We purchase more cooking books than ever before. Our chefs have become celebrities in their own right. We have a Food Network. Those that can afford it buy Viking Ranges, All Clad Cookware, and Sub-Zero Refrigeration.

“We have pushed our local outlet of choice to source quality ingredients from around the world that merely a decade ago many Americans had no idea existed outside of a restaurant. In areas where our supermarkets could no longer meet our needs, or could not react fast enough, we have rediscovered our butchers, bakers, and green grocers. If we aren’t cooking, what are we doing with all of these great ingredients?

“There are fewer of these gem-store than there once was. We are still time-starved. We don’t live like this all the time or shop daily anymore. However, we are willing to go a greater distance for the real-deal when we need it. Those that have survived can draw from a greater shopper base, as long as they can get them in the door.

“When we eat at a fine restaurant the service is as important as the food. Why should it be any different in the grocery store? We have shown that we do not mind paying more, as long as we perceive a value?

“The best grocery operators have managed to move in the right direction.

“There is a small Italian grocery in Milwaukee; on Blake, I think. On the wall is a simple sign, ‘Quality is remembered long after price is forgotten.’

“I don’t believe that they are over-concerned about Wal-Mart taking their business away.

Another MNB user wrote:

“The scary thing to me is that if availability of "raw" food diminishes, the people who DO wish to do their own food preparation will be forced to buy what is available or grow and raise their own. Could such a happening cause the cycle of an agrarian society come around again?”

We love to cook, and believe heartily is the use of fresh food. But the minute someone suggests that we need to milk some animal in the early morning hours, or hoe some field, we’re going to start adjusting our attitude…

And another member of the MNB community wrote:

“Okay . . . Gene Roddenberry was more of a visionary than any of us could have expected . . . push a button, out comes the meal of our dreams . . . no cooking involved, just the ability to program it into the replicator. And the best part yet . . . No Clean Up. YIPPPPEEEE! (Please note the sarcasm.)”

On the same subject, MNB user James Curley brought a different – and alarming -- perspective:

“As I was shopping this morning for our weekly groceries at my local grocery store (our market leading chain) and doing my industry store ‘check’, I was startled to overhear the conversation an elderly couple was having in the meat department. Upon picking up several packages of chicken and other items, the woman looked at the man and said: “Honey…it’s cheaper to eat out than to buy these things. Let’s just do that.” At that, she put all the meat items back into the shelf and walked over to the produce section to do the same.

“I was, to say the least, intrigued. Unable to contain myself, I introduced myself as a ‘grocery industry’ worker and asked her if she’d mind explaining why she thought it was cheaper to eat out than to make a meal at home. She patiently explained that the package of chicken breasts and the various fresh vegetables she picked up added up to over $15. “We can eat at the diner for $6 each, and get soup, salad, meat, vegetables, dessert and coffee and not have to bother with clean up. It’s not right, the supermarket should be cheaper but it’s not anymore.” I pointed out that there were other things on sale she could have for dinner that would be less than $10 and she said: “Why should I have to wait for chicken to be on sale to be able to buy it? That’s what we want to eat and it’s cheaper to go to the diner.”

“Now, here are people who can cook for themselves, on a limited budget, realizing that value restaurant dining is more economical than shopping at the supermarket. We don’t have to wait for the time when people can’t make themselves a meal to wonder if the supermarket is already failing to create a reason for their existence. By the way, the ‘other items’ I pointed out all required a “loyalty card” to get the discounted price. I wonder how ‘loyal’ these customers feel.”

All good questions, with no easy answers.

On Friday, we wrote about Marsh’s decision to continue expanding its O’Malia specialty food store operation, and how this represented effective “little box thinking” in a big box world. We also suggested that this approach to strategic thinking means that it won’t be long before Marsh gets back into the e-commerce business. (It was just last week that Marsh decided to suspend its e-commerce activities.)

MNB user Mark Heckman wrote:

“Kevin, as the former marketing research director at Marsh (1989-97), I think your analysis of this move is right on target. Marsh has been very resourceful over the years in responding to Cub Foods in the 80’s, then Club Stores in the 90’s. Now with Indianapolis being the besieged with SuperCenters, not to mention Costco’s recent entry, Marsh is leveraging their best point of distinction, high-end service and superior perishables. These smaller store formats can offer higher margin/lower break-even stores that will balance their mix of larger Super Stores and their LoBill division, which targets the more price sensitive shopper.

“I also agree that they will re-enter e-commerce sometime down the road with a new approach and business model, which may grow out of their O’Malia’s initiative.”

We wrote the other day about Toys R Us deciding to cut 700 store management and supervisory positions, less than two percent of its U.S. work force, and reallocate those labor dollars to hire and train more salespeople for its stores.

MNB user Dave Tanger wrote:

“Other retailers should take a look at this reallocation of labor dollars. How many times have you went into a Lowe's, Home Depot, or for that fact any large format store to only walk out frustrated because you couldn't find what you wanted and worse you couldn't find anybody to even help you. Taking this to the next level how about the small independent retailer, what if he were to put "friendly helpful" people eager to help you, throughout the store, waiting to check you out, do you think people would be willing to pay that little extra??????? I know pie in the sky thinking, where would one find smiling, friendly, helpful people. They are out there you just have to entice them, pay them justly, and make sure understand what you expect of them.

“I frequent a Wendy's which has an older gentleman circling, cleaning
tables, talking and joking with customers, the other day two ladies came in one with a baby, with space a premium she sat the baby, in a carrier, on the floor next to her, this gentleman went and found an extra chair to set the baby on, too small wouldn't fit so he went and got a high chair trying fit the carrier across it, didn't work so he found an empty table slid it over so the baby could be up off the floor. I was impressed by his tenacity, I'm sure Wendy's does not pay him much but that day he should have earned as much as the CEO, he probably worked harder. Just food for thought.”

And MNB user Tina Engberg wrote:

“Babies R Us, a store I've only recently come to frequent with our first baby due in a few weeks, has utterly and completely surprised me with its emphasis on customer service. The more cynical might say they just see dollars signs strapped to my abdomen, but I have genuinely received top of the line service (akin to what I've received at Neiman-Marcus) at my local Babies R Us. The woman who manages the registry area calls me by name when I come in the door! I received ample, constructive help from a male staffer when I was comparing strollers. In short, I'll direct as much of my baby business there because they seem to have the system down right.

“I am all for front line workers (in every retail establishment, not just Toys R Us) knowing their stuff, and even better, being empowered by their employer to make decisions about situations that truly do affect the bottom line. I wonder if Toys R Us has employed such aggressive front line training in the past for its Babies R Us franchise and is expanding the exercise. If this is the case, I say two big thumbs up!”
KC's View: