business news in context, analysis with attitude

Even though we took a few days off, the world kept turning and stories kept happening. So let’s see if we can sum up a little of what we missed (with some brief commentary in italics)

  • The US Department of Agriculture (USDA) said last week that the newly identified case of bovine spongiform encephalopathy (BSE), better known as mad cow disease, was found in a cow that had spent its entire life in Texas…therefore making this the first domestic case of mad cow.

    USDA is not identifying the ranch, saying it is “privileged information.” The government says that the infected cow probably contracted the disease before a 1997 ban on feeding protein from ruminants like cows and sheep to other cattle, and that it is working to make sure that current rules are being complied with.

    Just because the government tells us everything is okay is no reason to believe that everything is okay. There may be some false confidence because the announcement about the new BSE case didn’t seem to affect beef sales; don’t know about you, but we haven’t cut back on our beef consumption. But that doesn’t mean that the government is being entirely honest and/or accurate in its statements.

    We remain skeptical.


  • The Great Atlantic & Pacific Tea Co. (A&P) announced that it is transferring its US distribution operations, including some warehouse facilities and equipment, to New Hampshire-based C&S Wholesale Grocers.

    The move, estimated to save A&P as much as $40 million a year, is part of A&P’s strategy of focusing only on core Northeastern US retail operations, which has led it to put it Canadian business on the sales block and divest its Midwest operations.

    A&P can keep cutting and trimming, but until it comes up with a retail concept that speaks to the 21st century consumer and differentiates it (in a positive way) from the competition, the company is going to continue to have more than its share of troubles.


  • In a new report on the food industry and its prospects, management consulting group Retail Forward wrote that “alternative food formats will grab almost two-thirds of growth in food-at-home spending during the next five years forcing supermarkets to redefine their concepts and the shopping experience to capture their fair share. Suppliers must also reexamine their operations to maximize efficiencies while they too look for growth.”

    Nick McCoy, author of the study, said that “the middle-of-the-road approach historically taken by many conventional supermarkets no longer offers many compelling reasons to shop there.”

    The report suggests that in order to survive, retailers need to 1) know what shoppers want, 2) invest in new formats, 3) seek more efficiency, and 4) embrace the notion that “business as usual” no longer is an acceptable game plan.

    Y’think?

    Listen, we’ve been saying this for a long time. The biggest danger in mainstream marketing is the threat of drowning – in the whirlpool of competition, and from marketing mediocrity that makes it near impossible to stay afloat, much less gather any forward momentum.

    We agree completely with the Retail Forward assessment. In fact, we’ve been assessing the industry the same way for years…it’s just that it is a management consultancy, and we’re just a simple pundit.


  • The Canadian government plans to ban the bulk export of prescription medications to the US, according to a report by the CBC.

    Health Minister Ujjal Dosanjh told a press conference that "Canada cannot be the drugstore for the United States of America.”

    The bans would not be across-the-board, but rather would be applied to specific times, circumstances and medicines. There seems to be some urgency to create a mechanism for bans in Canada because of concerns that the US is about to change its policy to allow bulk drug imports from other countries.


  • The San Antonio Business Journal reported that after two years of development and testing, HEB is unveiling a new "Central Market Organic and All-Natural" food line – encompassing 28 categories and more than 85 SKUs - that will be sold at HEB and Central Market stores throughout Texas.


  • USA Today reported last week that that Wonder Bread will be coming out with “a 100% whole-wheat loaf… made with an albino wheat variety that doesn't have the harsh taste of whole red-wheat flour, the bread has the same spongy texture, the same mushability and pretty much the same taste as Wonder Bread. But it's a shade or two browner because it's made from 100% whole wheat, and it has three times the fiber.”

    Hate to kvetch about something that is almost a cultural icon, but can you imagine any other product or circumstances about which “mushability” would be considered a positive trait?


  • IHL Consulting released a study saying that supermarkets plan to increase spending on self-checkout systems and workforce management software in the next 12 months.

    Thirty-one percent of those surveyed saying that they will install self-checkout systems in 2005 and a total of 50 percent will do so by June 2006. And, 44 percent are planning new workforce management solutions in the next year and over 40 percent are planning new kiosk implementations at the store level by June 2006.


  • Home Depot said last week that it will test the concept of installing company-operated convenience stores in the parking lots of four of its stores.

    Smart move.


  • Starbucks, in concert with its ice cream partner Dreyer’s, last week gave away ice cream for free at more than 6,000 of its coffee shops around the country. The goal was to encourage sampling and new sales of the product line, which has been in supermarkets for a decade; however, Starbucks said there are no plans to start selling its line of ice cream in its cafés on a regular basis.

    There’s nothing like sampling to generate good buzz for a food product. Good move by Starbucks, which continues to put demonstrate that, to use one of our favorite phrases, “compete is a verb.”


  • John Walton, the billionaire son of Wal-Mart founder Sam Walton and a member of the company's board, died last week in a plane crash in Wyoming. RIP.


  • Kmart announced that it is launching a new line of Martha Stewart Everyday ready-to-assemble furniture, utilizing a major multi-media advertising push.

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