business news in context, analysis with attitude

Responding to the report that A&P executive chairman Christian Haub said that if his company is involved in any sort of consolidation move in the northeast – either buying a company or being bought by a company - a likely result would be the sale of its Detroit-based Farmer Jack chain, MNB user Thomas Murphy wrote:

Christian Haub has become the "ultimate employee motivator" for Farmer Jacks by telling the press that A&P would probably divest of them if a northeast merger/acquisition came about. I think Winn-Dixie and A&P should least you will be crossing two mutts!

We said yesterday that we thought the worst news that a chain could get is that it is being acquired by A&P…which led MNB user Bob Warzecha to observe:

I would like to slightly change your assessment of the worst news that any northeastern retailer could get would be to find out that its company was merging with or being bought by the following retailers:

1) Winn-Dixie
2) Stop & Shop (Ahold)
3) A&P

We reported yesterday about concerns raised about whether Bud TV - Anheuser-Busch’s planned online entertainment network – will be restricted to people old enough to drink. (A-B says it will use the honor system.)

The general feeling among MNB users who responded to this story is that the discussion is much ado about nothing.

MNB user Shawn Ravitz wrote:

The last place a "kid" is going to go to for "racy" content is this site...C'mon. As long as Google is available, a kid’s imagination can take him a long way!

We don’t think we’re talking about leaving things to the imagination here…but we get your point.

And MNB user David Farnam wrote:

What playbook exists for marketing “cool” to 21 year olds while at the same time saying its not cool for 20 year olds?

The largest consumers of beer are young men under the age of 30. If you were to look at the behaviors of these young men, more specifically the marketing opportunities to reach them you will likely find that the demographics of their interests overlap with those of under-age young men.

I really don’t see the problem with marketing to young men when retailers are required to card.

On the subject of obesity education, we suggested yesterday that parents, schools and even the food industry ought to focus on the three E’s – Empathize, Educate, Enlighten – rather than the three D’s – Deny, Deny, Deny. It’s healthier – both physically and mentally – and encourages choice rather than paranoia.

To which MNB user Ariel Schaffer responded:

I think you have an excellent point…My cousin is a first grade teacher in the Bronx where the incidence of asthma, illness and obesity is high amongst her students. She has employed tactics like praising students for bringing in healthy snacks like apples for snack time. The result is that some of her students begin requesting apples from their parents to bring into class. She doesn’t restrict her students from bringing in other kinds of snacks but she creates an environment that is changing behavior and introducing good food into her students’ diets if only for one snack a day.

MNB user Karl Heink chimed in:

I agree whole-heartedly to the comment about the three E's as opposed to the three D's. I think I may use that as an opening comment at my next Weight Watcher's class. There is a lot of truth in that. I feel like I am smack in the middle of this very controversy with my children in Elementary school and my own attempt at losing weight. As I have told you before, I am losing weight with the Weight Watchers plan and have lost about 85 pounds since January. My favorite response to everyone that asks what I had to give up to lose the weight is "Nothing". I can eat anything I want as long as I understand what the 'costs' associated with each item I eat are. Obviously, eating more fruits and vegetables is the program's preferred way to lose weight, but cutting out pizza, beer and chocolate would seem to be a huge psychological hurdle to jump.

As for the kids, cutting out cupcakes and cookies is not the way to change children's eating habits. Education would seem to be the most critical part of this equation (and isn't that what the kids should be getting at school?).

And, on a related subject – Hannaford’s new nutritional education and labeling program – MNB user Mike Spindler observed:

-information convenience, making it easy for a consumer to understand complex nutritional and ingredients issues

-access convenience, putting the information at the point of purchase on the shelf label/strip. This enables the “three-inch decision shift” from one sku to a healthier (or not) product. A great improvement over kiosk, hard copy or general, non-branded list based programs.

-anonymity convenience, the consumer can “do or not do” without on-package reminders or other intrusive programs.

Pretty cool all the way around. Should be interesting to see adoption.

Yesterday, MNB continued the discussion of new court filings in a gender discrimination case filed against Costco saying that the company’s top management ignored internal warnings that female workers couldn't get promoted, and that CEO Jim Sinegal opposed recommendations to post all management positions. Sinegal even reportedly said in a deposition that “fewer women were in the higher-level positions because of their own preference for family-friendly hours,” and that assistant manager and manager jobs ought to be awarded based on merit and not posted so anyone can apply for them.

One MNB user wrote:

…For me, as a customer, the warehouse manager of our local Costco happens to be a woman. She was most helpful on the one and only bad service occasion that I have ever had at Costco. I wonder how she feels about the statement. Do you think she feels bad because she is less family friendly than the other women Sinegal mentioned, or do you think she is proud of the fact that she was promoted because of her meritorious conduct and not a quota that the company felt it had to adhere to in its hiring practices?

It's a shame that this could not be fixed internally. Wow, what a lesson it would be if management, instead of being forced to focus on the quota shortcoming, could study the 12.9% who have obviously clawed and scratched their way to the top. What was different about these women, and how can Costco teach other men and women to be and to manage just like them?

I can tell you how our local Costco manager is different. She understands customer service. I believe it was Zig Ziglar who said; "Creating customer service excellence is realizing the customer is not always right, but the customer is always the customer."

Sorry to ramble, I just hope lessons can be learned from all of this, but I hope they are the right lessons. Retailing needs the kind of innovation that Costco brings to the table.

Another MNB user responded:

I cannot believe Senegal really said that. Where has he been for the past twenty years? That argument went out in the 60's with the now much maligned affirmative action programs which helped level the playing field for women. I am today reconsidering my Costco membership. It's no longer a company I want to support.

We carried an email from MNB user Glen Terbeek yesterday that read, in part:

Wal-Mart's move to six demographic store offerings is a good first step, but of course, it is only an incremental step to what it needs to be done. As an example, an affluent urban market, say Chicago's North side, may have the same upscale wine offering as an affluent suburban market, but the pet section will be completely different.

But the more important message from the article is that Wal-Mart is moving marketing/merchandising organizations out to the markets (away from centralized Bentonville) so that they can be more relevant to these emerging market definitions. (Wait a minute, this isn't ECR). I would guess that not too long from now, each store's strategic offering will be fine tuned to the local market that it is in, by the people working there. I'm not just talking about how much space each item needs, but what categories are carried and their strategic goals to support the marketing needs of each store.

There are some interesting questions to be raised by this:

1. Why aren't retailers' merchandising/marketing professionals located at stores where the shoppers are, vs. at the headquarters (often at the distribution centers) in the first place?

2. How will the manufacturers' customer teams deal with the fact that all items won't be carried in all stores?

Wal-Mart is moving to shopper, local market relevance. Again they will lead the way. And again, are they defining another un-level playing field?

One MNB user begged to differ…

I am a little confused by the story and Glen Terbeek's comments regarding Wal-Mart move to more targeted efforts. I have not been directly involved with Wal-Mart since the end of 2004, however, prior to then, in capacities including promotion agency for manufacturer teams, and as a decision maker for resources and programs for Wal-Mart teams, all of these things sound like “Store of the Community” initiatives I worked on in the late ‘90s and earlier this decade. For instance, we introduced a line of products that geo-demographically targeted to the 435 highest potential SuperCenters, which involved a number of different warehouses, and retail sets. It was a lot of coordination, but nothing we couldn’t handle within the team, and with the support staff on Wal-Mart’s side. Also, in developing promotions for clients, we often executed different versions of the program depending on the store area potential for the brand. I will say that these efforts did add complexity and cost to the model, however, what is being described as the big new initiative now, sounds very familiar to me.

Sometimes, we’d guess, old news is presented by companies as new news more as a way of assuaging investors and analysts. But that’s just a guess.

Another MNB user wrote:

The response that W*M is leading the way (again) on store-level merchandising is inaccurate...Kroger has already been doing this, thanks to the wealth of data collected by its loyalty card, and its partnership with dunnhumbyUSA (who helped Tesco in the UK). Over the past 2+ years, it is Kroger that has paved the way (in the US) for targeted merchandising, pricing, & promotions, as well as a bevy of test/control markets for other relevant customer-based ideas. While Tesco is constantly praised for its utilization of its loyalty card, it seems as though you forget to mention that Kroger is following the same path that fueled Tesco's growth (which W*M couldn't keep up with and/or battle). While I love your columns & opinions, I feel like your focus on Tesco, W*M, & the upscale grocers (Whole Foods, etc) has caused you to miss an important component of the US retail battle that's about to heat up...

Probably a fair point, though we’ve hardly ignored dunnhumbyUSA over the years. But we should give credit where credit is due, especially to Kroger in this area.

On the subject of Ahold being pushed by dissident investors to sell off its US operations as a way of maximizing shareholder value, one MNB user wrote:

Not too long ago, an investment group, Loeb Partners was calling for the sale of Spartan Stores, to "maximize shareholder value". Last week the stock topped $18. Its lowest was two-something. I suspect that a lot of these "sale mongers" are not at all concerned about long-term strategies, but just the buy-low, then sell out the working class, strategy that only benefits the larger investment firms.

According to Loeb ...

"Loeb Partners Corporation is an investment firm that represents the interests of the Loeb family and its affiliated entities.”

So I would say to the Ahold board, "Hang tough", with hard work & dedication, the turnaround IS possible.

KC's View: