We reported yesterday that Dollar General plans to carry a greater number of national brands in its stores, hoping that the quality message associated with recognized brand names will help it turn around stagnant sales and declining profits. At present, about a third of Dollar General’s inventory would be considered to be national brands, but management reportedly feels it doesn’t get credit from consumers for even those products. Hence, the company also plans a more aggressive marketing campaign focused on its branded products.
We wondered whether this violates the whole concept of a dollar store, and whether this suggests that the company’s management might be getting a trifle desperate and mistrustful of its core concept.
One MNB user responded:
Your comments are right-on about Dollar General. They have virtually abandoned the niche that got them to where they are, or once were; very little of their store is devoted to the "dollar" items that intrigued the customers and unleashed the dollar-store phenomenon. They seem to be morphing into a conventional supermarket, but without the most important departments: meat, produce, bakery, frozen foods, dairy, deli and other perishable products. Family Dollar seems to be on the same track.
And another MNB user observed:
There’s another angle to this. As the National Brands step up and work with DG, they have to do a delicate dance. DG will push for standard pack sizes, which, when priced at DG rock-bottom prices, will cause big issues at Wal-Mart, Target, etc. Wal-Mart will not accept seeing common items offered at lower prices at a competitor like DG, so the pricing dominoes will start to fall… The big loser ends up being the National Brand.
Commenting on an interview with a PepsiCo executive that stressed the role of energy drinks in the company’s growth, we said that we’re convinced that down the road, energy drinks will come in for a lot of investigation and criticism. To which one MNB user responded:
I agree that energy drinks may be a time bomb as they become more popular they become more scrutinized. The company that goes in the direction of an all natural , healthy, non sugar or caffeine version that tastes good, works, and still has a cool image will be the winner long term…
We had some debate yesterday on the site about whether or not Albertsons’ Super Saver stores – now being closed by Cerberus, which got them when it bought more than 600 of the retailer’s stores – were viable or not, with one MNB user arguing that they were seeing double digit sales increases and that Cerberus was just being short-sighted.
To which MNB user David Livingston responded:
Anybody chain can show double digit sales increases when your base is practically nothing. What does moving towards profitable mean? Every money losing chain can say that too. "Moving quickly towards profitable" is a long long way, from really being profitable. The new Albertsons will be facing many challenges and is looking for any break they can get.
They have obviously written off Super Saver as a total loss. KC, you and I may not know everything about Super Saver, but we can spot a lame mule in the paddock when we see one.
On the subject of big beer companies buying small brewing companies, MNB user Edward Burg wrote:
As a born-and-raised Wisconsinite who avidly supports Miller Brewing Co., I was happy to see Miller purchase 49% interest in Leinenkugels. With this arrangement, Leinenkugels was able to keep controlling interest and preserve the name and heritage of their beer, while at the same time enjoying the benefit of Miller's expanded distribution network. The upside for Miller was more profits on an expanded beer line.
Similar to your feeling with Blue Moon and Coors, the purchase in no way affected my feeling towards the Leinenkugels brand, which by the way, is an outstanding "micro"-brew.
MNB user Al Kober had some thoughts about our MNB Radio commentary:
The floral department is one of the greatest resources for additional sales and profit. A large percent of sales should be from impulse sales. Flowers are a wonderful surprise gift, when given because of no apparent reason. retailers would be wise to capitalize on these impulse sales by displaying flowers at every express check out lane, at the customer service counter and other high traffic areas. Signs like, "Surprise her tonight, She will love you for thinking about her" "The best reason to give her flowers is because there is no reason" Play to the heart of a man. "Show her you love her" "Every time she looks at these flowers she will be thinking of you" Many times women will want to buy just for themselves because of what flowers bring to the atmosphere of the home. Signs for women. "Brighten you home with color" "Take home some flowers. You deserve it" "They do not talk back or bark, They just look beautiful"
And, we continue to get email about the estate tax.
One MNB user wrote:
It’s a bit of a white lie to say that the “death tax” is a tax upon a tax. Much of the estates that exceed the limits probably have a large proportion of assets tied to capital gains (e.g. real property, stocks, bonds, etc) which incurs no tax until the gain is realized. The heirs would receive a “stepped up” base upon inheriting the estate and would pay no tax on the gains realized to that point. The estate tax is currently the way to make sure those gains are finally taxed although in a rather heavy handed way. Would those proponents of eliminating the estate tax agree to a tax on the proportion of those assets which have never been subject to tax before? Otherwise it’s just one more example of the rich not paying their fair share.
Another MNB user wrote:
I must respond to the estate tax issue. I think the amount of people affected is less than 1%, and they are the wealthiest Americans. We are fighting a war, my son has been over there twice and getting ready for a third tour. The (Republicans) want no estate tax and no tax on dividends, so a wealthy son or daughter would pay no estate tax and no tax on dividends, and they sure as hell aren’t fighting our wars. We have left enough dept on the table for our kids and grandkids it is time to stop piling it on them and start paying our way. Bill Gates feels that we need an estate tax and that is good enough for me.
But another MNB user disagreed:
The “Death Tax” is just down right immoral. I am astonished that many of your readers believe that the government is justified in confiscating wealth because someone dies and wants to leave their life savings to their children, surviving spouse, or whomever they want to leave it to. Now if one believes that the government is entitled to a portion of their savings at death, or a part of their parents nest egg, or an aunt or uncle that they may be due inheritance from, I say this: Have a lawyer write up a document that states that the first 25% of any inheritance you may receive go the government. In addition to that, rather than start that 529 for their kid’s education, start an interest bearing account in which the proceeds are to go to the government at their death. Remember though that this is after tax money and you will have to make allowances for someone to pay taxes on the interest that account made over the years at your demise, because I guarantee the government will take principal and interest. I’m sure though that the government will pass legislation stating that deposits in such accounts to be tax deductible.
As for me, I believe that the government collects enough taxes from my earnings while I am alive. This is a free country though and if you want to give the federal government a portion of your wealth at your death rather than to your family; cool, do it, but don’t tell me I have to.
This all boils down to a great case for the Fair Tax and those that can’t stand the fact other people may have more material assets than they do. A person inherits fifty million and spends twenty million in the first year, or whenever they spend it, they will pay $4,600,000.00 in taxes on that twenty million dollar spending spree. Fair Enough?
One thing stands out to us about the estate tax debate – there is no single industry opinion about it. While the Food Marketing Institute (FMI) and the National Grocers Association (NGA) have been steadfast in trying to get it permanently eliminated, it seems clear to us that there are plenty of people in the industry who think differently.
The lesson here is that the industry and its people are not monolithic. And that’s healthy.
We wondered whether this violates the whole concept of a dollar store, and whether this suggests that the company’s management might be getting a trifle desperate and mistrustful of its core concept.
One MNB user responded:
Your comments are right-on about Dollar General. They have virtually abandoned the niche that got them to where they are, or once were; very little of their store is devoted to the "dollar" items that intrigued the customers and unleashed the dollar-store phenomenon. They seem to be morphing into a conventional supermarket, but without the most important departments: meat, produce, bakery, frozen foods, dairy, deli and other perishable products. Family Dollar seems to be on the same track.
And another MNB user observed:
There’s another angle to this. As the National Brands step up and work with DG, they have to do a delicate dance. DG will push for standard pack sizes, which, when priced at DG rock-bottom prices, will cause big issues at Wal-Mart, Target, etc. Wal-Mart will not accept seeing common items offered at lower prices at a competitor like DG, so the pricing dominoes will start to fall… The big loser ends up being the National Brand.
Commenting on an interview with a PepsiCo executive that stressed the role of energy drinks in the company’s growth, we said that we’re convinced that down the road, energy drinks will come in for a lot of investigation and criticism. To which one MNB user responded:
I agree that energy drinks may be a time bomb as they become more popular they become more scrutinized. The company that goes in the direction of an all natural , healthy, non sugar or caffeine version that tastes good, works, and still has a cool image will be the winner long term…
We had some debate yesterday on the site about whether or not Albertsons’ Super Saver stores – now being closed by Cerberus, which got them when it bought more than 600 of the retailer’s stores – were viable or not, with one MNB user arguing that they were seeing double digit sales increases and that Cerberus was just being short-sighted.
To which MNB user David Livingston responded:
Anybody chain can show double digit sales increases when your base is practically nothing. What does moving towards profitable mean? Every money losing chain can say that too. "Moving quickly towards profitable" is a long long way, from really being profitable. The new Albertsons will be facing many challenges and is looking for any break they can get.
They have obviously written off Super Saver as a total loss. KC, you and I may not know everything about Super Saver, but we can spot a lame mule in the paddock when we see one.
On the subject of big beer companies buying small brewing companies, MNB user Edward Burg wrote:
As a born-and-raised Wisconsinite who avidly supports Miller Brewing Co., I was happy to see Miller purchase 49% interest in Leinenkugels. With this arrangement, Leinenkugels was able to keep controlling interest and preserve the name and heritage of their beer, while at the same time enjoying the benefit of Miller's expanded distribution network. The upside for Miller was more profits on an expanded beer line.
Similar to your feeling with Blue Moon and Coors, the purchase in no way affected my feeling towards the Leinenkugels brand, which by the way, is an outstanding "micro"-brew.
MNB user Al Kober had some thoughts about our MNB Radio commentary:
The floral department is one of the greatest resources for additional sales and profit. A large percent of sales should be from impulse sales. Flowers are a wonderful surprise gift, when given because of no apparent reason. retailers would be wise to capitalize on these impulse sales by displaying flowers at every express check out lane, at the customer service counter and other high traffic areas. Signs like, "Surprise her tonight, She will love you for thinking about her" "The best reason to give her flowers is because there is no reason" Play to the heart of a man. "Show her you love her" "Every time she looks at these flowers she will be thinking of you" Many times women will want to buy just for themselves because of what flowers bring to the atmosphere of the home. Signs for women. "Brighten you home with color" "Take home some flowers. You deserve it" "They do not talk back or bark, They just look beautiful"
And, we continue to get email about the estate tax.
One MNB user wrote:
It’s a bit of a white lie to say that the “death tax” is a tax upon a tax. Much of the estates that exceed the limits probably have a large proportion of assets tied to capital gains (e.g. real property, stocks, bonds, etc) which incurs no tax until the gain is realized. The heirs would receive a “stepped up” base upon inheriting the estate and would pay no tax on the gains realized to that point. The estate tax is currently the way to make sure those gains are finally taxed although in a rather heavy handed way. Would those proponents of eliminating the estate tax agree to a tax on the proportion of those assets which have never been subject to tax before? Otherwise it’s just one more example of the rich not paying their fair share.
Another MNB user wrote:
I must respond to the estate tax issue. I think the amount of people affected is less than 1%, and they are the wealthiest Americans. We are fighting a war, my son has been over there twice and getting ready for a third tour. The (Republicans) want no estate tax and no tax on dividends, so a wealthy son or daughter would pay no estate tax and no tax on dividends, and they sure as hell aren’t fighting our wars. We have left enough dept on the table for our kids and grandkids it is time to stop piling it on them and start paying our way. Bill Gates feels that we need an estate tax and that is good enough for me.
But another MNB user disagreed:
The “Death Tax” is just down right immoral. I am astonished that many of your readers believe that the government is justified in confiscating wealth because someone dies and wants to leave their life savings to their children, surviving spouse, or whomever they want to leave it to. Now if one believes that the government is entitled to a portion of their savings at death, or a part of their parents nest egg, or an aunt or uncle that they may be due inheritance from, I say this: Have a lawyer write up a document that states that the first 25% of any inheritance you may receive go the government. In addition to that, rather than start that 529 for their kid’s education, start an interest bearing account in which the proceeds are to go to the government at their death. Remember though that this is after tax money and you will have to make allowances for someone to pay taxes on the interest that account made over the years at your demise, because I guarantee the government will take principal and interest. I’m sure though that the government will pass legislation stating that deposits in such accounts to be tax deductible.
As for me, I believe that the government collects enough taxes from my earnings while I am alive. This is a free country though and if you want to give the federal government a portion of your wealth at your death rather than to your family; cool, do it, but don’t tell me I have to.
This all boils down to a great case for the Fair Tax and those that can’t stand the fact other people may have more material assets than they do. A person inherits fifty million and spends twenty million in the first year, or whenever they spend it, they will pay $4,600,000.00 in taxes on that twenty million dollar spending spree. Fair Enough?
One thing stands out to us about the estate tax debate – there is no single industry opinion about it. While the Food Marketing Institute (FMI) and the National Grocers Association (NGA) have been steadfast in trying to get it permanently eliminated, it seems clear to us that there are plenty of people in the industry who think differently.
The lesson here is that the industry and its people are not monolithic. And that’s healthy.
- KC's View:
