business news in context, analysis with attitude

We wrote yesterday about how little consumers seem to know about food safety, prompting MNB user Mary Burns to write:

An alarming trend that I see in some of my local supermarkets is take home food that is self-serve. Vons has soup bars where I routinely see people lifting tureen lids to look at the contents and taking a ladle full and hold it up for inspection, even smell it. Not in a million years will I ever buy soup, salad, olives, etc. from open bars in a supermarket.

I have also seen “Pizza Day” specials where stacks of boxed unbaked pizzas are simply offered up for sale from a table by the front door. I don’t care how good the special is, I would never buy an un-refrigerated item like a pizza.
I once chewed out a Vons manager for have a large display of cases of pre-cut lettuce near the front door – un-refrigerated. This was shortly after I had read an article in the LA Times about salmonella poisoning being associated with improperly refrigerated packaged lettuce.

I guess the point is that not only do supermarkets not do a good job of educating the public about proper food handling, they don’t seem to be educating their employees very well either.

Responding to yesterday’s piece about Whole Foods, one MNB user wrote:

This story on Whole Foods reminded me of an experience I had there several weeks ago. On Saturday evening I had a craving for a steak. While we had steak in the house, they were all frozen and wouldn't be ready for dinner. I mentioned to my wife that I would go to Vons and buy one. She reminded me (she's the primary shopper) that we've had some bad experiences with Vons' meat in the past and although the price/pound is cheaper, you need to double it if you throw out half the product. She suggested Whole Foods.

At Whole Foods I had a great conversation with the man at the meat counter who suggested a cut of meat (NY strip, $18.99/lb) that would be suited for grilling and not require lengthy marinating. If I had gone to Vons it's likely that whomever was working the meat counter would have been in the process of hosing down the back room and unlikely to give me any guidance of which cut would satisfy my particular needs. That's if I could have even gotten his attention. This Vons happens to be a newly remodeled Lifestyle store, but that's a whole different story.

Upon returning home I told my wife, "I love Whole Foods. It just
want to eat healthy." Now, while some may debate the health aspects of a NY strip, my reference to "healthy" is really more of a euphemism for fresh, high quality food. The steak was delicious and I will never buy meat at Vons again.

Poor Vons is taking the hits this morning, which may not be entirely fair.

The real point, though, is that mainstream stores are being bested in areas where they should be showing their expertise, not their weaknesses.

MNB user Richard Sokolnicki didn’t agree with the rave review given Whole Foods by Wall Street Journal columnist James B. Stewart:

James Stewart's comments about Whole Foods make me think he lives under a rock when he states that: " I think of it as a stealth Google, a company with huge potential."

Whole Foods is a nice store to shop in, an interesting and pleasant place, and one with a unique point of view. It will also always represent a fraction of the marketplace because of pricing alone. It will never be the Google of the grocery industry.

Stewart states: "I suspect the main reason people shop at Whole Foods, and are willing to pay more for the experience, is that it is fun." Yes, it may be fun...for the minority that can afford it. Fun and all the good things about WF that he mentions comes at a the customer.

MNB user Jeff Folloder wrote:

Your piece on Whole Foods got me to thinking about the grocery business and its evolution/devolution. As you know, I'm third generation in the "game". Even though I still have family in the business (a brother at a manufacturer and two uncles at brokerage houses), I'm out. Why? It's just not fun.

And there's the tie in with your Whole Foods piece. Grocery retailers are spiraling down because *it* just isn't fun anymore. For the overwhelming majority of folks involved in the process, groceries aren't any fun. Shopping is a tremendous pain for the consumer. They have little positive interaction with store employees and finding what they want is usually tedious. The store employees are not much better. They rarely smile, are marginally trained, and are usually bitter or watching the clock. Store management has its collective head on a swivel wondering when the store is going to get bought out or shut down. Move into the buying offices and the situation isn't much better. Regardless of the "spirit of cooperation", there's still an awful lot dread that swirls around "the appointment". The rep girds himself/herself for battle knowing that they're going to get "beat up". The buyer always wondering if he/she could have driven a better deal; wondering if their bottom line numbers will be good enough to make the cut. Nobody is having any fun any more.

This is not a lament for the good old days of grocery. You know, those days when the grocer knew your name, helped you find things, ran a tab for you. When the butcher knew how you liked your steaks cut or even took a "freezer order". When the checker would tell your mom if you tried to buy a pack of cigarettes. When the sacker wouldn't *let* you take your bags to your own car and wore a tie and had clean fingernails. Those days when you went to the grocery store to buy things used to *make* dinner instead of heating it.

Well, I still make dinner. I shop almost daily and I love to cook. I am located in a residential community that has offerings from four major grocery chains (and two national drug stores) within a mile and a half of my front door. All of them present a miserable shopping experience.

I still shop regularly, but it's a matter of expedience, not enjoyment. I will make dinner for my family. These stores aren't making it any more enjoyable. And they should be. They are not going to win the price war, so why not battle for the consumer's affection? Give me a reason to shop the store. Make it worthwhile. Clean and polish your floors, make the perimeter so attractive and inviting that I can't *help* but buy something from you, train your employees (to do their jobs and to smile), and give me ideas that are generated by my great shopping experience. Lay out your store in way that doesn't make me think that I have been trapped in some kind of non-Euclidian nightmare. It can be done. I know, because I have done it…

Today, the store is all about the numbers. Reps spending precise amounts of time on a given task (regardless of if the job gets done or accomplishes its goal), stores keeping labor costs down, eking out every last decimal point, squeezing every margin. The grocery business has become a cadre of green-visored bookkeepers and we all moan about how Wal-Mart is wining the game. As far as I am concerned, all things being equal, the customer will shop where he/she perceives the lowest price to be. It's the customer that causes all of this. Why isn't this business more focused on the consumer?

I will gladly pay more to get what I want. Sadly, there aren't too many grocers who are concerned about delivering what I want, so they don't get as much of my money as they could. I walked into an upscale grocer in the area (a 24 mile drive) and after just two minutes looking over some produce, a department manager came up to me, smiled, and asked "What's for dinner tonight?" My answer was "I don't know; you tell me!" And he did. Took me around the store pointing out all different kinds of cool things for dinner. And I spent a LOT of money. It didn't take long, either. And I bought things that I might not have. But I had a *relationship* with that store, if only for a brief period of time, because they took an interest in my experience. That store does what my grandfather would call a "land office business". It's always packed and customers and employees are smiling.

So, what's the point of all of this? I'm not 100% certain. The dissection of the numbers is important, the removal of inefficiencies is important, but this business, or at least a large part of it, seems to have forgotten that a smiling, happy customer is profitable. I'll be shopping for groceries this afternoon and I will have a less than pleasant experience. Do you think I'll spend any more time (or money) than I have to to complete the task? Probably not.

We wrote yesterday that one of the reasons that Whole Foods succeeds and Krispy Kreme is having problems is that the latter decided that the most important customer was the stock trader on Wall Street, not the person buying coffee and doughnuts, while Whole Foods knows who the most important customer is – the person coming in the front door.

Which led one MNB user to reply:

I was always told that the primary reason you were in business is to "fulfill a need or provide a service." Making money was secondary. If you were dedicated to the primary, the money would follow. Still believe this is true today, and Krispy Kreme is learning the hard way.

On the subject of Winn-Dixie saving $10 million in administrative costs as it tries to put its financial house in order, one MNB user wrote:

They cut $10 million in administrative costs, but spent over $15 million is lawyers, accountants and so-called restructuring expert fees. The professionals will “glean” at least $150 million over a 2-year period out of this bankruptcy. And they won’t care one bit about the employees, trade suppliers, and the customers. Really shame the way our legal system works, just not in bankruptcy but in many other areas like the “Tobacco Settlements’. The only real winners are the greedy lawyers.
KC's View: