business news in context, analysis with attitude

We got a number of emails responding to yesterday’s piece about supermarkets’ identity crisis in the New York Times, which wasn’t all that different from what we reported the San Francisco Chronicle saying this morning, which isn’t much different from what we’ve been writing for four years or more.

MNB user Frederic Arnal wrote:

Imitation as a reaction to competitive threats may be the most sincere form of flattery but it can also be a sign of a fading retail format. The genius or leitmotif of an original concept pales increasingly with multiple iterations.

Simply adopting some product selections or retail behaviors won't be effective unless a new business model is developed that selects target consumers, determines their needs and ultimately satisfies them. Adding dollar items doesn't make you a dollar store, coffee beans won't make you into a Starbuck's and organic products can't change your format to Whole Foods.

You are exactly right when you say..."We think there has to be some fundamental shift in understanding about how consumers are changing. We cannot believe that our kids are going to shop the same as we do, which is different from how our parents shopped. And it will be the chains that are able to look around the corner or over the horizon that will be the real victors in coming years, no matter who or what the competition is."

Underscoring your comments, history has shown us that all things eventually become an anachronism (general stores, traditional, regional department stores, discount stores, etc.). Perhaps we're seeing the beginning of the end of "conventional" supermarkets as we know them because of these changes in our culture and society.

MNB user Mark Heckman wrote:

Kevin, clearly traditional supermarkets are in the midst of rediscovering themselves. Those, like bloom, Marsh, HEB, and selected other traditional supermarkets are making some strides in this process, but it is also a process that will not be without its false starts and failures. For those that successfully make the transition, the new business paradigm for these retailers is nested in staying dynamic and be truly connected to consumers. Through this connectivity they can manage their business through consumer demand and more importantly be able to ascertain a tenable niche in which they can win.

But the consumer has changed. Just five years ago, most consumers would tell you they go to their favorite traditional supermarket for paper, pet food, detergent, and carbonated beverage and while they were there would impulse buy higher margin specialty items and perishables. Most would have told you that they stock up at a traditional at least once a month. Today, just the opposite is true.

Shoppers remain reasonably loyal to their traditional players for perishables and specialty items, but now only impulse buy the aforementioned center store items if they are on deal and/or they haven't been to their favorite supercenter or wholesale club that month. Stock up trips now belong to a Price Format and traditional stores are becoming very large convenience stores. In fact, one recent study revealed that over half the trips in traditional supermarkets are over in less than eight minutes with five or fewer items in the basket!

Despite all of this, many traditional supermarkets continue to build big stores with huge inventories of product devoted to categories that continue to leak to other formats. I have a difficult time seeing how this approach can stay viable, despite efforts to win back the center store business through "triple double super coupons" and the monotonous "Buy One Get One" and now "10 for 10" promotions. While you can always buy back some of the business with promotion, to truly be a destination for this business, the entire category and store presentation must be re-thought.

As always, the retailers who are good marketers will figure it out. But those that remain mired in the past and rely on promotion to stay in the game, will ultimately find out that even "super quadruple coupons" won't keep them in the hunt.

One MNB user wrote:

Isn't this just a re-run of what we've seen happen to department stores over the past few decades--the "middle-market" being squeezed by the Nordstrom at the top end and Wal-Marts at the bottom?


Another MNB user wrote:

It's the grocery chains’ own service! Wal-Mart has a better service level than traditional grocery chain...price is one thing...standing in a long line is another (includes self-check out)...the grocery chains just don't get's service, service, service...not always selection & price...the persons (CEOs, presidents, vice presidents) running the food chains do not know the grocery business at all…they are from other businesses...they don't know the difference between plastic or paper...

Responding to yesterday’s piece about the FDA preparing to allow the consumption of milk and meat from cloned animals, one MNB user wrote:

Are they kidding? Hundreds of (cloned) animals already "live" around the country??? Are the farmers just burying these animals at the end of their natural lifespans? Or are these animals already being slipped into the food chain?

Food is one of the most personal and emotional things that we each encounter every day of our lives. And it's proven that foods many people wish to avoid -- or prefer to consume -- ought to be and can be marked as such. What would our world be without Kosher food, Hallal meats, organic meats and produce, sugar-free, yeast-free, wheat-free, etc. It would be a shame to have the FDA shove - figuratively and literally - unmarked cloned meat down consumers' throats. It should be the responsibility of farmers who wish to use cloned animals to pay the tab (likely these will be large corporate farming operations anyway) to mark their meat as such. The grocery stores should definitely NOT have to pay for this. An organic milk= producer has to pay for packaging for his/her milk. A kosher salt producer has to pay for the packaging too. Should be the same deal for meat. Why not!!!?

In the meantime, the FDA needs to get back into the business of taking care of the safety and wellbeing of consumers. For the most part they do a good job. But if 63% of us don't want to eat or would never want to consume cloned animals, the FDA ought to pay attention to this now! Mind you, unleashing cloned meat onto general supermarket shelves might encourage more consumers to choose -- and continue to develop the industry of -- organic meats and/or go to organic butchers. Regrettably, it may be the supermarkets may lose by default.

Perhaps the FDA needs to do a poll to see what levels of credibility they currently have with general consumers, and then do a poll with industry insiders…More importantly, supermarkets may want to do and pay for their own polls/surveys to see what their customers will do at their store shelves that will affect their bottom lines and consumer confidence.

Another MNB user wrote:

I want to see evidence about the nutritional aspect of cloned animals and foods. The natural way of food reproduction has brought out civilization this far. I, for one, will never willingly eat one cloned item. It had better be labeled.

We suggested that while there might be some concerns about cloning, the availability of food from cloned animals could have an impact on world hunger…but one MNB user wasn’t buying:

Yes, but…this (in my opinion) is far from the reason the industry is taking this stance. Money drives the rich and it is a cheap and effective (for them) way to produce mass amounts of product. This will never answer any "world hunger issues" even if it could, do you truly want to feed this type of "experiment to third world countries ... that just seems like a very sketchy thing to do. And really, are any of the Americas hungry for anything more than more money? There is an enormous obesity problem in this country! Please if you care about this universe do your research on this sort of practice ... it is NOT ok!

According to America’s Second Harvest, the number of Americans who are “food insecure, or hungry or at risk of hunger” is in the neighborhood of 30 million.

The US may have an obesity problem. That doesn’t mean there isn’t also a hunger problem.

Regarding the decision by Publix to file a lawsuit against Visa and MasterCard, MNB user Joanne Sturm wrote:

Thanks to food giant Publix for taking this bold step. The average consumer would never get the platform for this cause. If not anything else, it's a wake up call to Visa and MasterCard that all of us are sick and tired of being ripped off. I say we shouldn't get mad, let's all get even! Publix takes debit cards.....let's use our debit cards and show them all who's boss!

MNB user Ken Fobes added:

The only way to get the attention of the credit/debit card companies is to hit them where it hurts - in their pocketbooks. What would happen if retailers promoted the fact that they would credit a substantial portion of the credit/debit fees to the customer for using cash, versus their cards. The customer would benefit from a lower price (additional savings) on the goods they are buying, and the retailer would benefit from a lower transaction cost. The only one that wouldn't benefit would be the credit/debit card companies who might find fewer people using their cards. Revenues would fall and these companies might be forced make changes that would enable them to remain viable in the marketplace.

Don't know about the legality of such a move, but certainly it's worth investigating.

There was a study we reported on the other day that suggested that ethnicity plays a role in how people use different kinds of media. While we didn’t dispute the findings, we found ourselves vaguely discomfited by the way the study classified people and their habits.

One MNB user thought we were…well, let him say it his way:

That's just plain stupid!

(The idea that) blacks do things differently from the rest of us (doesn’t mean) that they are a) victims of some nefarious conspiracy and b). condemned to be so forever by some racist plot.

How can you criticize a simple snapshot of different people's behavior patterns? That's the way it is because that's the way they chose to do it. Is there anything wrong with that?

And another MNB user wrote:

I don't think anyone you quoted in that article even came close to implying that human beings are unthinking automatons with no free will, subject to genetic racial dispositions towards owning TVs versus computers. Even remotely insinuating that the authors of this study might possible believe this, as you do in the above referenced statement, is insulting to those you quoted. Shame on you. This is an underhanded way of trying to promote political correctness even when science and hard numbers prove an opposing view. Whether intentional or not, this kind of a comment could easily burn bridges between a journalist and a source.

We’re not worried about burning a source on this one. We were quoting a press release…and we only get dozens of those each day.

If you’re accusing us of being politically correct, we’ll accept that criticism. In fact, as uncomfortable as we were with the survey results, we were almost as uncomfortable criticizing them, for fear of being politically correct.

One MNB user, Michael Tabron, had the same feelings:

I'm with you. Why doesn't it occur to people to at least cross check the results of these surveys with socio-economic indicators? As a middle- to upper-middle class African-American I can tell you that most of my friends and family have multiple computers and broadband access. I think when you have a non-professional job that doesn't earn a lot of money, television is certainly an inexpensive way to relax. Just taking a family of four out for a movie and popcorn is $40+ (another subject!), so a larger TV seems to be a reasonable compromise. The only connection I see to race is that a disproportionately higher number of Black and Hispanic families are in lower income jobs. I'd be willing to bet that White families in the same circumstances by and large have the same media patterns.

This survey says more to me about the bias' the survey-takers bring to process, than how to market to the consumer.

Finally, we had a story the other day about parents giving their children a smart card that tracks their eating habits and allows them to encourage healthier eating habits. One MNB user responded, saying that, “In the olden days, parents used to ask their kids what they ate and the kids generally told them. Occasionally they told fibs or misled Mom and Dad but part of parental responsibility is to teach kids to give a straight answer to a straight question. It really shouldn't be part of a parent's responsibility to teach kids to expect to spend their lives being spied upon rather than trusted.”

To which we answered:

While we don’t like the word “spy,” we have to say that in today’s world, oversight and vigilance about our kids’ activities and decisions is an absolute part of our responsibilities. Wish it weren’t.

Well, this didn’t go over well with this particular MNB user:

What a load of patronising, arrogant, deliberately misinterpreting drivel. Of course parents - not just in "today's world" have a responsibility for oversight and vigilance and poor you for wishing it wasn't. The point of the comment I sent yesterday, if you must have it spelled out for you, is that it should be done through relationships, trust and direct communication, not through external mechanisms and technology.

We disagree.

We have a high school student, and his school gives us the option of going online to check his grades and assignments. And we do so, often. Sure, we talk to him about school and his grades, but we also believe in using “external mechanisms and technology” to make sure that there is no failure to communicate.
KC's View: