business news in context, analysis with attitude

Last week, one MNB user wrote in about the need for retailers to create differential advantages in the center store, not just on the perimeter, noting that "we can 'value-add' the perimeter of the store with all the whistles and bells we want, but in the end, if there is no discerning reason to shop the center store, the exodus towards supercenters will continue."

This generated the following response from another MNB user:

Where I shop in the Atlanta area I don't see that much difference in the "center store" be it a Wal-Mart, Kroger or Publix, the three we mainly rely on for groceries. Merchandise may be stacked higher, lower, or in a different sequence, but what's in the "center section" seems to be pretty much the same in every store. The perimeter areas are where the differences lies. To me, that's the major difference in supermarkets. There can be a world of difference in the selection or types of goods, etc., in these areas; hot food to go, fresh flowers, bakeries, foods for certain ethnic groups, just about anything the operator finds that will attract customers to the store. Then if they pick up groceries in the same visit, he's ahead of the game.

I'm still of the belief that the typical shopper shopping for basic food items is going where they finds what they want at the most reasonable price consistent to being comfortable in shopping there. If they find the store dirty, busy, etc., as some do, then they will go where they are comfortable. You can almost always find the same groceries in all stores, private brands excepted.


Which is part of the problem that mainstream groceries have.

There are a few choices here. Carry mainstream grocery products that are like those carried by supercenters, but understand that you're just not going to be competitive in that area. Or, you can carry these products, and cut your own throat trying to be competitive with the supercenters.

Or (and this is the big "or"), you can take a different approach to grocery, carrying fewer items, focusing less on price than quality, innovation and education…and market these items so that consumers feel like they’re not getting the same-old, same-old.

Sure, this last approach wouldn’t be for everybody. But it will work for some
People, and maybe enough to make a difference.

And if you don’t believe this, just ask the folks at Stew Leonard's or Trader Joe's.

Last week, in a comment about Canada's approach to mad cow disease, we commented that "you'd think folks would have a better handle on the origins of the cattle they sell."

Canadian MNB user Westall Parr wrote:

Actually they do.

There is an incredibly good system in place now. It was put in about three years ago and included everything from THAT date forward.

Older animals were being brought in but the assumption was that the older animals would be bleed out of the system.

The crime, from my personal point of view, is with the farmer that took an animal in for slaughter knowing that it was not well.

It was skinny and malnourished.

An inspector on the line spotted the animal and pulled it out of the slaughter line.

We have two levels of inspectors.

Federal inspectors who look at every animal in slaughter houses that can shipped to the US. These tend to be higher levels of inspection.

And, provincial inspectors for animals that cannot be shipped outside the country - only to beef packing houses with the province and in some cases to other provinces.

So, you people are well protected.

The ban should have been put in place and it should stay in place for a while yet.

We might have to put down a couple of thousand animals - but this is a $1.3 billion business.

Better to be safe than sorry.

Thanks. But we're not just worried about our people. We're worried about your people, too…

In response to our reference last week that HEB is a company that belies its presence in the top ten of the nation's supermarkets by acting far more like a smaller, more flexible entity, one MNB user wrote:

Also, one fact that is not given consideration is that HEB is an ever expanding international presence, with stores in Monterrey, Mexico. They may be undertaking a "stealth" approach to industry leadership. Not to mention, their private ownership keeps them on the quiet side.

Quiet. But not unappreciated.

On the subject of McDonald's suing an Italian food critic because he criticized the company's cuisine, MNB user Don Sutton wrote:

Once again, McDonald's takes itself a little too seriously. For openers, most people who frequent fast food joints don't read the latest food critic columns to pick their destination. If they want to take the time and money to go after the guy, why not take out some ads and go for some humor? Suggest the guy has a pallet that doesn't know the difference between pizza or pasta.

Some years back (when this sort thing was absolutely unheard of ), a McDonald's in Omaha actually went out of business, for lack of sales. The restaurant that took over the property named the establishment "Fallen Arches." And everyone who heard about it thought it was a great laugh. Then the legal end of the Ronald McDonald family came down on the Arches like a ton of manure. The name changed immediately. When that word got out, a huge number of people changed their burger loyalty. (Americans instinctively tend to side with the little guy).

In the long run, what good does it do McDonalds to look like the humorless bully on the block?

No wonder their mascot is a clown.

Another MNB user added:

McDonald's gives the food industry an undeserved bad name, and it's peers ought to take the opportunity to speak up rather than be tainted with the same stink.


On the ongoing topic of how grocers compete while dealing with scrutiny of their books, MNB user Richard D. Furash wrote:

Grocers simply have to move to a “net-net” invoicing from all vendors. They will not be able to price compete with Wal-Mart until they do so AND they will not be able to “safely” account for their vendor incentive monies until they do so.

On the subject of slotting allowances, MNB user Harris Semegram wrote:

While looking over Trader Joe's May flyer, it was interesting to find a blurb about slotting allowances and vendor monies in something aimed to the consumer.

The flyer takes about how TJ's prices at retail by saying: "We don't accept slotting allowances and monies from vendors for product placement - whether it's in our stores on the pages of our Fearless Flyer." For your edification, slotting allowances add bottom line costs to the price of a product. Here at Trader Joe's, we just pay our suppliers for the product, not the marketing hoopla that often accompanies it."

Which sort of defines the debate, doesn't it?

We had an MNB user write in last week and wax rhapsodic about, a New York e-grocer that she found delightful. Another member of the MNB community was not convinced:

I have heard of this and it sounds great but lets wait and see how long they are in business. At some point you have to make a profit. Giving free stuff and selling below grocery stores (which I doubt) can't last forever.

And you folks think we're cynical…

On the subject of Krispy Kreme's terrific financial numbers, one MNB user wrote:

Visit a Krispy Kreme and you will know why. Execution and consistency.

We have to be honest. We visit a Krispy Kreme, and we don’t think about execution and financial performance.

We think, jelly or no jelly? Chocolate or glazed? We think, would we be piggish if we ate the whole half-dozen?

On the subject of store autonomy and making sure store managers feel like entrepreneurs, one MNB user wrote:

Not letting the managers treat their stores like they were their own is why Safeway has become so unsuccessful in Chicago. Mr. "D"s advice to Dominick's managers was to act like they owned their store. It gave managers the leeway to order products that the consumer wanted, thus increased sales. When Safeway took over they stopped that practice and drove the customers away.

Finally, we received a couple of emails about our wine comments last Friday.

One MNB user wrote:

While I LOVE the Content Guys wonderful MorningNewsBeat, (especially all the Kmart content), the best part is the wine suggestions! I have been trying all the favored grapes and am especially delighted that Content Guy appears to have my same taste in rich reds, thus making the "test" on his dime, not mine, and that is truly over and above in the customer service department! Vive la Coupe! and Danke!

Our pleasure.

Another MNB user, Mark Peters, noted that we weren't a s specific about last Friday's recommendation as he needed us to be.

To amplify…

The Château de Flaugergues we were drinking was a French Red Languedoc Wine...

According to the vineyard's site:

    The Château de Flaugergues is situated in one of the twelve terroirs found in the
    Côteaux du Languedoc known as 'La Mejanelle'.

    The Romans cultivated vines and olives here over 2000 years ago. The monks of Grand Mont maintained this tradition, and after them the ancestors of the current owners have continued to do so from 1696 until the present day.

    This exceptional terroir is made up of rounded pebbles calles 'les Grés' (from deposits in the Rhone delta) and thrives in the area's Mediterranean climate with its strong maritime influence

    The 30 Ha (75 acre) vineyard is dominated by early-ripening grapes; it is the harmonious combination of different vines which allows for the creation of such a rich range of fine aromatic wines.

    All of our red wines contain a 92% proportion of the three finest grape varieties of the Languedoc: Grenache (47%), Syrah (30%) and Mourvèdre (15%), as well as a small quantity of Carignan (5%) and Cinsault (3%).

Which pretty much tops out our knowledge of the wine. We'd settled for "tastes yummy."
KC's View: