business news in context, analysis with attitude

Regarding Country of Origin Labeling (COOL), MNB user Al Kober had some thoughts:

It continues to amaze me how poorly COOL is understood. Especially when reviewing the surveys ask about COOL. 90% of those who responded to the survey want COOL because they want safer food. COOL is perceived to provide some measure of Food Safety. It may emotionally but not scientifically. Knowing the country of origin says nothing about the food safety of the product. It may be perceived that product from the USA is safer than product from some other country, but there is nothing in COOL that can support this.

COOL is and has always been nothing more than a marketing tool. Many states have tried to use "State Of Origin Labeling" (SOOL) as a marketing tool with little success. If COOL had any added value to consumers, some one would be using it now to sell their products.

My biggest concern is that consumers will get a very misguided feeling of food safety security by knowing the country of origin, that will in reality have no true basis. This legislation will burden the retail industry to spend a lot of money, a lot of time, which will produce a lot more confusion and misunderstanding, then the perceived benefits it will produce.

The road block will be at store level. The number of different labels that go onto different packages of meat and making sure they are all on the right packages in the meat department, will be a nightmare. The only solution will be for the retailer will be to have the distributor or the packer, only ship the meat that will allow them to use just one label. This will shift the burden onto the packer, who will transfer that responsibility on to the producer. Adding this burden to the already complexities in the producer segment of the beef industry will make it almost impossible to be sure of the accuracy of the labeling that will on the final meat package in the retailers meat case.

In other words, it won't work. Yes there will be COO labels on meat packages and the consumers will feel a non-supported level of food safety, and the industry will be spending tons of money, with no real value, other than a lot of people will FEEL good. Maybe that is where we have come. Junk the real science and as long as people feel good, that is all that matters.

I don’t think that COOL makes food safer, nor that all consumers will really understand the labels and what they mean. But I do think that consumers demand transparency … and that the industry has to live up to that standard.

Commenting on yesterday’s story about Jungle Jim’s winning a “best rest rooms” award, one MNB user wrote:

The condition and maintained of the rest room does tell more about that store and most store owners realize.

True. Very true.

Another MNB user wrote:

A couple of years ago I was in Branson MO for a business meeting (client likes Jurassic Rock) and saw a good example of creating a competitive advantage with plumbing. There were nearly 100 theaters with various acts and attractions. The challenge is how to differentiate . One performer ... a fellow with a Japanese name I won’t try to spell...was always packed and had a week or two wait for tickets. Other theaters were discounting heavily for that night’s performance. The music was average and he sang in Japanese in the middle of the Ozarks ! His secret ? He made the following claim ...” World’s largest ladies wait or the show is free”. He clearly understood who makes the entertainment decision in most families.

Weighing in on the continuing saga of Whole Foods, Wild Oats and the FTC, MNB user Elizabeth Archerd wrote:

(Whole Foods CEO John) Mackey should resign. He is damaging his company. If he had stated the obvious, which is probably what he meant anyway, he would not be in any trouble: "The reason to do the merger is to become more competitive." The FTC is being strangely literal in this case. Mackey's thought processes and word selection do not have any bearing on whether or not the merger increases the competition in the industry.

I wish they would give me a call. When Whole Foods moved in to the Twin Cities markets all the local grocery stores, cooperative natural food stores and conventionals, got busy with upgrades and price-structure reviews. In other words, we all got better. Consumer wins.

MNB user Tim O'Connor wrote:

It appears the judge ruled on the facts and chose to ignore that Mackey perhaps wrongly thinks that it would reduce competition in the grander scheme of things. Nice to know someone in this escapade is being rational. Mackey can be forgiven for overstatement from excitement and passion for his business. What’s the FTC’s excuse for their stupidity?

And another MNB user wrote:

The natural foods industry used to be a small niche within the food industry with great potential for growth. Whole Foods did the best job of tapping into that growth. Although the supermarket industry would always looks for margin categories, they didn’t see mass appeal in natural foods. Specialty and natural foods sustained higher margins for the most part because of limited availability compared to the mainstream. Higher margins became the standard within that industry and supported many small players for many years. And yet the industry looked the other way. Natural, was viewed as an industry that attracted a fringe consumer – the college crowd, the tree huggers, the anti-establishment, the health geeks. All in all, the industry was clearly apart from the mainstream. The supermarket industry saw this as marginal competition and one where slotting revenue was difficult to come by, with product movement slow by their standards, hence not really worth their time and effort.

Whole Foods was one of the first to sell the attractiveness of this venue to a broader segment of consumers. Where the supermarket industry was very traditional and staid, Whole Foods saw the opportunity to create an experience for shoppers interested in food. Many of the traditional department store merchandising techniques were applied to the food industry. Décor became important. Lighting became something to enhance food as it did to clothing. Departments became something that didn’t have to be in long singular aisles. Produce became art. Meat stressed quality over price. Cheese became a department in itself, with product tastings offering customers a chance to experience a new sensation. Wine sections became boutiques stressing premium wines, not jugs. Classes about health and food and cooking became something that set them apart and helped build strong loyalty. Each department had knowledgeable staff who became Whole Foods ambassadors with each consumer -- definitely out of the norm for the food industry.

Whole Foods was not the first, however, but they were the leaders. They were well capitalized and able to acquire excellent regional players that in some cases were better than they, but whose skills improved the whole. This all happened within a relatively short period of time, and occurred because the traditional food industry didn’t have the foresight to grab it for themselves, instead tried to fight it out with the competition using the same rules – hi-low, EDLP - that had been used for years. Tried and true. But now they play catch-up in this area – some, however, doing an excellent job, and destined to take advantage of Whole Foods if they slip.

To say that the acquisition of Wild Oats will hurt the consumer because of higher prices could be a true statement in the short run. It is also conceivable that Whole Foods could take the same path of the majors by cutting costs first – usually labor. After all it is the quickest return aside from price hikes. But aside from corporate consolidation, I doubt it – that will hurt the package that they’ve worked so hard to build. It is conceivable that they will continue down the same path that made them successful. Their prices are already high, but they’re still the leader. But if they cross the line and even higher prices result, it will open the floodgates for increased competition – and not just from Wal-Mart, Safeway, Kroger and others. It most likely will occur from individuals out there that are doing what Whole Foods did years ago. There are retailers that do look for advantageous differences between themselves and the giants of the industry, and it’s these individual retailers who apart from the mainstream are the creative, the entrepreneurs, the risk takers, and the next up and coming competitors. To be the same is safe, but tough with so much competition. To be able to read the trends and go down a different path can have great rewards as Whole Foods has done before. This industry has broadened tremendously this past decade, and will grow even more with the aging baby boomers and the heightened emphasis on health. Food can be art. Food can appeal to the senses. Food can make us feel good for it nourishes the soul. Some people understand that and take advantage of it – I look forward to the outcome.

Finally, MNB user Jeff Davis had something to say about yesterday’s guest column by Art Turock about his experience at a USC football fantasy camp and what it taught him about business:

One of the all time great one-liners came from John McKay when he was the head coach of the then hapless Tampa Bay Buccaneers. After yet another loss McKay was asked what he thought about his teams execution.

His answer? "I think it’s a good idea."

KC's View: