business news in context, analysis with attitude

We reported last Friday that the National Bureau of Economic Research, an independent business tracking group, announced that the recession that began in March 2001 actually ended eight months later, in November 2001 - meaning that the economic turmoil in which the country has found itself over the past year and a half, with jobs being lost and unemployment rolls getting larger, actually has been a recovery.

This prompted several letters. One MNB user wrote:

The lies just keep adding up. why am I out of a job if everything is so good? My parents always told me not to lie, because if you tell one lie you have to tell another to cover that one up. And it goes on and on and on -on on...

Another MNB user linked this news to another recent story:

Where? Here in the US where we own our home, pay taxes and shop in the local community (but currently NOT in a Safeway store)? My husband and his entire staff of technical support people have been down sized by Safeway to an "offshore" group located in the Philippines. Recent news indicates a planned commitment by Safeway to spend $685 million in the next three years developing resources outside the United States. How does this hemorrhage of technical jobs get accounted for in the assessment of our economic woes? We represent a family that will soon be unable to participate in our local community. We will have to sell our home, give up medical insurance and seek out a less expensive place to live. Our job loss impacts more than our bank account and creates a ripple effect in all the places where we have spent our wage dollars.

When Steven Burd recently attended a $2,000 lunch with the President, did he talk about his company's contribution to the work force in the US or how much cheaper it is for Safeway to hire offshore labor in other countries like India, China, and the Philippines? Watch out for catch phrases like "Offshore", "Outsourcing", and "Global Community" - indicators that large corporations are wooing stockholders on a short-term basis with a disastrous impact on the American worker in the American community.

Sour grapes? Even those will taste good soon.

Further reaction to last Friday's commentary about supermarket loyalty marketing programs, as one MNB user wrote:

In response I have to say that if all Safeway and Giant offers is discounts on their card then shame on them and serves them right. As a retailer with a loyalty card program (notice I use the term loyalty card not frequent shopper card) it would go against the best interest of the customer for them to share/swap their card number. We offer many rewards and additional incentives to customers based on their shopping history.

I also know that my company would cut off a 2 arms, 2 legs, and then some before providing any personally identifiable information to any outside company. That would be financial suicide even with a confidentiality agreement the outside party could sell to your competition or worse. Sure you have the signed agreement and you can sue BUT the damage is already done. The customer is lost, the trust has been breached.

Another MNB user wrote:

I live in North Carolina and the two major food chains here are Harris Teeter and Food Lion. Both chains require their respective cards in order to receive the discounted prices. The important difference is that Harris Teeter requires the card no matter what. No card, no discount! (They will allow you to bring the card back with your receipt and then provide you the difference back, but that is a major hassle.) Food Lion on the other hand has a "generic" card available at each checkout. If you don't have your card with you, they will scan the generic one so that you still receive the discounted prices. As a result, I basically refuse to shop at
Harris-Teeter. The only time I shop them is to purchase an item that is listed in the sale paper, and it has to be a really good buy before I spend the time to walk in their store. Food Lion however gets the majority of my business, because I know I will get their best price, even if I picked up the wrong set of keys.

And MNB user Valerie Hicklin-Thomas of Catalina Marketing got in the last word…for the moment:

For the past 5 years I (have worked) with the majority of grocery retailers in the US, I can state that many of them do give offers to their clients based on past purchase history. Some of those offers are brand related and some are category related. Many of the retailers are looking for categories not shopped as opposed to categories/brands shopped. Could they do a better job... of course. But the problem lies with the company structure.

Changing grocery stores from being category driving where the category manager gets paid on units or dollars move to a strategy where category managers would get paid on customer category retention or % of best shoppers shopping in the category or some other customer satisfaction measure would only benefit those grocers who are trying to build relationships with their customers. Too many times the loyalty department has one goal and the category department another. In this conflict they are battling for company resources or using company resources to meet these different goals instead of working together towards satisfying the customers wants or needs. The smaller companies have it easier not because they have less data or less customers to work with but because the store personnel, loyalty and marketing departments and category managers work together as a team, communicate with each other and have the same goals.

We had a number of stories last week about Wal-Mart's reception in various communities, which prompted MNB user Glenn Cantor to write:

Even though stories about community opposition to new, or expanded Wal-Mart stores appear often, one never sees stories about Wal-Mart having to close stores due to low sales. Apparently, the community opposition is a vocal minority. Once the new store is in operation, the majority speaks with their dollars and many visits to the store.

I have been in many Wal-Mart and Wal-Mart Supercenters, and I have NEVER been in one that does not have a packed parking lot, busy aisles, and many busy checkouts, particularly on the peak shopping days.

Wal-Mart's long-term brand equity is PRICE, and it appears that this is the benefit most people want, even if they express otherwise when surveyed. They meet the needs of American consumers, which is why Wal-Mart's sales revenue will soon top 1/4 TRILLION dollars.

We reported last week that Wal-Mart's Asda Group would soon be providing facilities for private medical consulting. MNB user Dennis Barthuly responded:

The move by ASDA will in all likelihood, be required in most if not all US pharmacies. Pharmacy doctrine requires that the patient be informed of the proper regimen for the medication they are receiving, including possible side effects, possible interactions with specific foods or other medications (Rx or OTC). This discussion often includes patient medical history.

HIPAA, as most of us who have either been to the Dr. or pharmacy in the last 3 months are all now aware, went into effect in April of this year. This overblown act has taken "privacy" to a whole new level, if followed to the letter of the law. All of the above information is required to be held confidential by the HIPAA regulations, and it will take only one complaint and subsequent fines that could add up to $25,000 per year to make the ASDA action seem prophetic. While the actual penalty is in reality $100 per occurrence, maxxing out at $25,000, a chain of 1000 stores with pharmacies now have a very real liability of $25 Million dollars for NOT being able to comply with the privacy issue. HHS, while being contacted by only one person, could conduct an inspection of the facility and find that ALL patients being served have a viable complaint, thus bringing each store into non-compliance for all patients.

While this is only speculative, the painful reality of the matter is that when the son of a close friend was involved in a mountain biking accident, breaking his neck, his parents and fiancé were unable to receive any information on the condition of their loved one because of this ridiculous regulation. The hospital was forced to do something that was both potentially hurtful and harmful to the care and recovery of a patient, and that was to keep his family in the dark as to his medical condition, until he was able to waive his privacy rights. Fortunately his fractures were relatively minor (compared to the alternatives) and while his neck is immobilized for 12 weeks, he will be fine, with no long-term complications.
While the rule is fairly simple, it is vague...leaving to interpretation the meaning of "reasonable steps".

We reported last week that an ABC News survey revealed that if consumer products in the United States were labeled as containing genetically modified ingredients, 55 percent of those surveyed would avoid buying and eating such foods. The percentage of women who would not buy labeled GM foods is even higher - 62 percent. In addition, the survey revealed that more than nine out of 10 consumers said that they believed that the federal government should require that food labels include information about genetically modified ingredients, even though almost half of those surveyed said that they considered GM foods to be safe.

One MNB user responded:

I’d like to see how one sided and/or biased the questions were to get the results they’re stating.

I know my wife and I wouldn’t be concerned about GMO’s. If they were of same or higher quality, healthier, same or more economical to purchase, we’d buy the GMO foods. As I’ve mentioned to you before, almost all crops are healthier and stronger today by cross pollination, cross breeding, grafting, etc. GMO is just a faster way of accomplishing the same thing.

On the subject of Country of Origin Labeling (COOL) legislation, one MNB user wrote:

COOL is another issue that is blown out of proportion. I certainly don’t care which country my vegetables, coffee, meat or poultry comes from as long as it’s been processed and handled properly. Canada, the U.S.A. and Mexico are on the same continent. What difference does it make if the beef comes from Canada or from Wisconsin or from Wyoming. Are we going to start labeling which state the meat comes from? As far as I’m concerned, those borders are nothing more than artificial lines drawn on a map. On an open range with lengthy unpatrolled borders, how do we know whether the cattle that grazed in the US were butchered in the US or Canada. So, what’s the country of origin if it grazed 90% of the time in the US, 10% in Canada (who knows), butchered in Canada, processed in the US, etc.?

Also on the subject of COOL, an MNB user wrote:

This morning, on my way to work, I slipped into a grocery to get some needed items. Right by the door was a lovely display of peaches and nectarines. The wonderful smell emanating from the display drew me back from the aisle after passing it to buy myself a morning snack for later. WRONG. Every single peach I touched (more than 10) was rock hard. The suggestion might follow to buy a few and let them ripen. At $1.19 per pound, I will not risk that investment. Past experience has taught me that such peaches rot from the stone outward so that by the time it appears and feels to be ripe, the inside is trash. Eating the peach before this stage means hard flesh and sour taste. Having lived in the fruit belt of western Michigan, I am spoiled in a sense, because of the availability of tree ripened, flavorful, juicy, ambrosial peaches there. However, if the store cannot obtain good quality, edible fruit of any kind, they will not get my business.

Near my home is a tent fruit market. Prices are astronomical there, BUT the owner provides samples of fruit for his customers. More than once we have purchased things there because of the flavor of a sample. I am convinced he hand picks the fruits and vegetables he sells from his produce provider. I have seen the same produce truck go from there to a grocery store in the same parking lot. Produce in the displays at that store is not the same high quality as at the fruit stand.

Because of my job, I have been inside produce company coolers. The array of good quality product is unbelievable to me. Never have I found this quality in the grocery store produce department. What happens? Is it not handled properly at the grocery? Does the grocery buy lower quality produce because of price? Do they have it on hand too long? I have seen poor quality produce of many kinds from strawberries, potatoes, corn on the cob, tomatoes, grapes to green beans. Often the displays are beautiful, but a silk purse out of a sows ear is not possible, proven when the stuff does not taste good at home.

Another issue is the matter of pre-packaged produce. Experience has taught me not to buy things boxed, bagged, basketed, or cartoned. Poor quality product is often under other produce and/or hidden inside. Produce with the same degree of ripeness is not packaged together. Buying a bag of grapes, for example, to serve to a group for supper, is an unwise purchase. Some ripe, some green, some in between are all together. Self-selecting which bunches I want is the only way I want to purchase grapes. Bags are provided. It may take a few moments of my time, but that is time well spent.

Living in the heartland means that most of the produce consumed here is not locally grown. That creates its own set of problems for the shipper and produce company, but I believe those professionals for the most part, ship and sell good quality produce. Something happens after that to make the product often less than desirable.

Country and state of origin means little to me. I want a good peach.

On the subject of Wal-Mart suing Kmart over the use of its bag carousels at checkout, one MNB user wrote:

Wal-Mart should give the carousels to Kmart. On several occasions items that I have purchased at Wal-Mart remained in bags on the carousel, as they were overlooked by the bagger that loaded my cart at completion of checking out.

MNB user Bill White added:

Is it not enough that they put Kmart out of business? Now they have to sue them, too! Talk about kicking someone when they are down. This is the ultimate! When and how is this behemoth called Wal-Mart going to be stopped? Will they have to put everyone in the country in the retail business out of business before the government realizes they are a net detriment to our society as a whole? It's one thing to protect your patent rights, but couldn't they at least wait to see if K-Mart survives, then sue them????

On the subject of the obesity issue, we pointed out last week that we believe that people are looking for simple answers (it must be EITHER what people eat or how much they exercise) when a more holistic approach is called for. MNB user Lorri Putnam had a different take:

The real problem with our society is not the desire for simple answers, but the propensity to point fingers.

When we wrote, "Because the real problem is both portion size and sedentary lifestyle habits…not to mention food that is laden with fat and other things that aren't particularly good for you," this inevitably led one MNB user to ask:

Does that include doughnuts?

Of course not.

We had several reactions to the story last Friday about a Boston survey revealing chain supermarkets in the market such as Ahold's Stop & Shop and Sainsbury's Shaw's Supermarkets tended to be ranked as low in quality and high in price. Demoulas Market Basket and Hannaford were ranked as having the lowest prices of the supermarket chains, with the study suggesting that a market basket of national brand products would cost about 18 percent less at Demoulas than at Stop & Shop

Roche Brothers, Sudbury Farms, and Trader Joe's had the highest overall quality ratings.

The Boston Globe reported that "Barry Berman, executive vice president of procurement and marketing at Stop & Shop, said his own internal research and price comparisons contradicted the Consumers' Checkbook results. 'Our research tells us our customers like our stores, our prices, and the quality of the products we offer to them,' Berman said. ''I think it shows in the market share we have.' A Shaw's spokesman voiced similar concerns."

One MNB user responded:

Note that Barry Berman of Stop & Shop said "OUR CUSTOMERS" like the stores, prices, and quality. Surveys done only among current customers lack the perspective of the people who are not current customers and could potentially mask big issues as a customer base dwindles. The survey reported by the paper covered the whole market place and reflected the perception of all shoppers. It also put supermarkets in a context vs. other types of retail establishments, which will put the respondent into a different frame of reference than if they were being asked only about supermarkets.

And MNB user Bill Green wrote:

If the residents of the Boston area think food prices are high they better stay clear of the San Francisco Bay Area. Boston prices are rock bottom by comparison.

And yet another MNB user wrote:

It's scary when companies start saying things like, "look at our market share". It's pretty much along the lines of "we must be doing something right, look how big we are". The folks in Bentonville must just smile broadly when they hear things like that. Market share can evaporate very easily especially when you stop listening to your consumer and rely instead on your "own internal research" - meaning what? Did they ask their most loyal shoppers? Or worse, their own store personnel. If I were in their shoes, I would welcome that kind of information and honestly consider how it could make my stores better. They didn't make the information up so they must have talked to some of their consumers...

Finally, in last Friday's report, we offered the Content Guy's 10 steps to a perfect weekend, which included margaritas, Margaritaville Calypso Coconut Shrimp, mango chutney, and a bottle of 2000 Chateau Ste. Michelle Syrah.

Well, MNB user Jim Duban apparently thought we were getting out of touch with reality, so he sent in a rebuttal list:

    1. Turn on KMOX and listen to the Cardinals pre-game broadcast.

    2. Ice down a cooler full of Bud Light cans and Michelob Low Carb bottles.

    3. "Field Test" a can of Bud Light for it's consistency, temperature and quality.

    4. Start the charcoal on the Weber kettle.

    5. Take the slabs of ribs (previously dry rubbed) from the fridge.

    6. Test another Bud Light for consistency.

    7. Turn up the ballgame to drown out the neighbor's lawnmower.

    8. Put the ribs on the slow heat side of the Weber and close the lid.

    9. Consume another of St. Louis's finest brews.....again for the purpose of quality and temperature testing.

    10. Enjoy the game.

    11. Close eyes while the pleasure of life sinks in.....the ribs consume the flavor of hickory smoke.....the Cardinals win another game..........your neighbor shuts off the mower........and your wife gladly adds more beer to the cooler.

    12. It doesn't get much better than this.......summertime in St. Louis.

Point taken.
KC's View: