Regarding the continuing efforts by the Federal Trade Commission (FTC) to derail the acquisition of Wild Oats by Whole Foods – even though the deal has been closed – MNB user Bev Bennett wrote:
I'm not happy that Whole Foods and Wild Oats are merging. As someone who shops in both I find the culture very different, and as you've pointed out that's important. Wild Oats, for example, has a 10% discount day for seniors, which my Whole Foods doesn't have.
But just as Al Gore moved on, so should the FTC. Enough.
And MNB user David Livingston made an excellent point:
Recent headlines also say "Four top executives from Wild Oats Markets here have left the company." So who does the FTC think will run Wild Oats if they are successful in blocking the merger?
The folks at the FTC are delusional on this issue, and I cannot figure out why. Is it political? Cultural? Personal?
Of all the mergers and acquisitions that have been proposed and closed, why this one would get under the FTC’s skin – as opposed to a lot of others that seem to me to be far more anti-competitive and harmful to consumers – is beyond me.
MNB user Glen Terbeek had some thoughts about my observation that Wal-Mart would be building a lot more Neighborhood Markets if it could figure out how to make the ROI work.
The problem with the neighborhood stores is that they don't have enough high margin items like a supercenter has to produce the total margin yield out of the store that is acceptable. The supercenter uses low margin food (core) items to draw traffic into the store with the hopes of selling a few high margin items to make the customer and store profitable. Even the original WM discount store used low prices (even below cost) for high volume food categories to divert traffic to their stores with the hopes of selling higher margin general merchandise. The neighborhood store broke their profit model.
And MNB user David R. Schools addressed a story we had that looked at how Wal-Mart has systematically worked to lower its state tax exposure:
Wal-Mart does a lot of things with which I disagree: shamelessly importing from China at a real social cost to America; crushing small competitors; bullying suppliers; etc. But, legally avoiding the payment of taxes is a problem created by the tax codes, not by the Behemoth.
Agreed.
And another MNB user had some thoughts about Wal-Mart lowering the number of stores it will open next year:
I'm so old I can remember when Wal-Mart didn't even have 140 stores. I can also remember back when building 90-100 supercenters a year had us all shaking. Now we are so used to the onslaught of Wal-Mart that when they only build 140 supercenters a
year, we are conditioned to believe they are actually going backwards. How many large grocers are building 140 stores? But we are all making a big deal out of Tesco opening 10,000 sq ft stores. It will take about 7 Tesco stores to equal the supermarket sales area of one Wal-Mart Supercenter. And perhaps a lot more if they can't equal Wal-Mart's sales per sq. ft. of sales area, which is often the highest compared to other chains in the typical trade area.
All excellent points.
I keep pushing for Country of Origin Labeling (COOL) legislation, and MNB user keep pushing back.
MNB user Kody L. Thurston wrote:
You are part of the “hyped” media and slightly out of touch with the consumer on this. While COOL may come about, the China “region” as a contributor to world food is not going away and will not disappear because we American’s over-react. Be careful with what you print KC!
I never said China would, or should, go away. I just think US consumers deserve to know where the products they eat come from.
And MNB user Jan Matsuno wrote:
Kevin, every time I see you comment about the “inevitability of country of origin labeling”, I want to point out that for finished products, country of origin labeling IS required by US customs! Any product (including food) produced and packaged overseas must state “product of ___” on the label. Things where country of origin is NOT required are 1) fresh meat and produce (this is what COOL was all about) and 2) ingredients and components for “further manufacture” in the US. It is largely these ingredients that have caused concerns recently. On the other hand, according to the FTC, only products made from all or virtually all US ingredients and components may be labeled “product of USA”.
It is not hard to see that, for a food product with multiple ingredients, listing the origin of each one is confusing and impractical. Rather, perhaps the US needs to figure out how to become, in addition to energy self sufficient, food self-sufficient as well. After all, what kind of forward-thinking country squanders fossil fuels to import cheap, low quality food from overseas, while its farmers are going bankrupt? Something is wrong with this picture.
But at least someone agreed with me – MNB user Lisa Malmarowski:
I'm in agreement with you about the COOL labeling. It's something that needs to be done. And until it is, companies like Trader Joe's can spin a good story by removing 'single source' items from China while keeping the lion's share of their lines comfortably ensconced on their shelves. Meanwhile, shoppers enjoy the halo effect created by their new policy and believe that everything at Trader Joe's isn't sourced from China.
Good marketing move on their part. But until customers really start asking and demanding information about where their foods come from, they won't really know. We need mandatory COOL labeling.
And, on the broader issue of food safety, one MNB user wrote:
I do not pretend to be an expert in the food safety aspects of food plant operations. However, in my view, an experience I had many years ago when working for a then Fortune 100 food company supports the establishment of a single food agency, or at least transferring it all to FDA.
This company for many years produced canned seafood chowders under FDA inspection. The product was produced and canned in an area that reminded me of an operating room. The sealed cans then went to an area where they were retorted (heat sterilized), labeled and packed into cases. This area was reasonably clean and orderly, insect and rodent controls in place, but had wooden floors etc. and would not have been suitable for manufacturing involving exposed food.
FDA was satisfied with this - after all, the cans were sealed when entering this area.
This company decided to expand their line to include chicken chowder. (No chickens were processed here - they used frozen chicken meat from a USDA inspected supplier.)
That would require meeting USDA approval and continuous USDA inspection (at taxpayer expense by the way). USDA required full detailed blueprints of the 100 year old plant. USDA also required extensive renovations to the area (floors, walls, ceilings) where the sealed cans went to be retorted, labeled and packed into cases. About nine months and $500,000 in improvements later USDA approved the plant to make Chicken Chowder.
I suspect that the TOPPS plant had nice floors, walls and ceilings everywhere and to USDA this looked all well and good. The TOPPS plant also had continuous USDA inspection - a taxpayer expense that obviously was a waste of money.
A frozen pepperoni pizza is a another good example of this waste of resources. The USDA inspects the pig when it is slaughtered. The USDA then inspects the process of making pepperoni from that meat. The USDA then inspects again when the pepperoni is used to make the frozen pizza. Pepperoni is so stable you may have noticed it is sold out of refrigeration.
Will we get a single food agency? Probably not. The USDA is resisting this loss of turf, and there are a lot of jobs at stake. The food industry (trade associations) appears to be backing USDA, probably because they don't want to risk making them mad.
For the record, FMI CEO Tim Hammonds started pushing for a new, single food safety agency years ago, and it appears now he was prescient. Of course, everybody else either disagreed with him or ignored him. (Except me…I liked the idea then and have kept promoting it every chance I get.)
I also got a lot of email this week about a story quoting an NPD survey suggesting that women are leaving the workforce and therefore could change the balance of power between supermarkets and restaurants.
One MNB user wrote:
As a former corporate retail executive who chose to leave the workforce eighteen months ago to focus on family and quality of life issues, this report does not surprise me. After over twenty-five years of putting business ahead of family, many women of my generation are discovering that you truly don’t get “do-overs” with your children and loved ones, and all of the family events we missed because of “pressing business needs”, we can’t remember what those were. However, we can relate what family events we didn’t attend.
When you transition from a lifestyle of desperately trying to get some semblance of dinner on the table before 8 p.m. to one where you can actually prepare a meal, there is less reason to eat out. And, your family doesn’t want to eat out either. One of my great joys was that my eighteen-year-old son and his four buddies had a cook-off at our house. All the food had to be made from scratch and be complete from appetizers to dessert. These young men took great pride in what they cooked, how good it tasted, and how much cheaper is was than eating out. The young women were impressed as well.
I am betting that we will see more of this as the next generation chooses a better quality of life over the one chosen by their parents. Quality time with family is important: but it is just like leadership. Leadership is often just showing up – which is a strong mix of quantity time as well. Something that has been missing for many women.
This is not a dress rehearsal – this is Showtime.
MNB user Sue DeRemer wrote:
I'd like to see those NPD numbers broken down by age group. Are they saying that fewer young women are entering the work force? Or is the decline the result of older boomer women retiring? That distinction could make a big difference in food retailer strategy.
Another MNB user wrote:
From my experience here in the workplace, I noticed that many of the women that left to stay at home did so because the cost of day care was almost equal to their take home pay. That does not include gas, lunch (which was bought at the cafeteria), etc. All of those women that left were in administrative roles, which are not high paying jobs, but something to take into consideration when reading that article. They told me that when weighing the little amount left over with the fact that they could stay home with their children, they said it was a no-brainer.
Yet another MNB user wrote:
I wonder if this study takes into account women who work out of their home? Where I live, quite a few women are self-employed, as many have young children and need the flexible hours. My wife's design business occasionally has her scheduling evening appointments, which means that dinner on those nights is my responsibility … and it's no less hectic. I've noticed locally, when I shop, it's not just time-strapped moms in the store. You make good points on the potential impact to retailers. Finding out "why" is key.
And another MNB user chimed in:
The brief recap in MNB of the Advertising Age article loses some of the broader context of the article and the quotes from Harry Balzer of NPD. The quote is very objective, other than the comment that restaurant meal increases were “fueled for decades by the migration of moms to the work force.” I think that line is driven by the subjective opinion of Harry Balzer of NPD. It is a simplistic conclusion to assert and disregards other societal shifts, such as increased affluence, more restaurants per capita driving growth and now more focus on health as a reason for decline.
For anyone who has ever seen Harry speak, he is a traditionalist (or the less PC term “male chauvinist”). The article includes his standard quote that women try to trick the men into cooking by complimenting their grilling skills. He has been using the same material for at least the last five years and I have found it to be insulting as a working mom whose working husband does a decent amount of the cooking – and not just on the grill. I believe his narrow view of gender roles is reflected in the article, and is indicative of his age. For those of us in Gen X/Gen Y, I think there is a broader context to the discussion of women in the workforce and am insulted by his positioning.
On the subject of private label’s growing strength, MNB user Philip Herr wrote:
I believe the openness of American consumers to private label offerings is part of a larger phenomenon -- specifically the decline in loyalty to national brands. I recently did an analysis on loyalty towards national brands over time and compared that to how loyal consumers were to retailers over the same time period. While retailers had enjoyed stable levels of loyalty, national brands showed significant declines. And I believe that this was the culmination of many years of discounting and cutting advertising budgets and cutting costs to accommodate Wal-Mart. In time manufacturers had abdicated responsibility for maintaining brand equity. And the consequence of that has been a shift in trust from what's on the shelf, to the banner over the door. So given those circumstances, why shouldn't private label goods flourish?
Finally, we reported yesterday that that Whole Foods is launching a promotional push to sell Thanksgiving turkeys and other traditional Thanksgiving dishes – such as cranberry sauce and stuffing. Which wouldn’t be a big deal, except that it is doing so in the UK, where they don't celebrate Thanksgiving. The retailer reportedly is targeting the London’s large American population, which it feels will welcome a little bit of holiday home cooking on a day that is just another day for the locals.
I said that I loved this idea, but wondered if Whole Foods would ever consider a selective promoting of Guy Fawkes Day celebrations here in the US?
I got a number of responses to this wisecrack, all of them along the lines of this email:
I guess you haven't seen “V for Vendetta” or you would know that a push to celebrate Guy Fawkes day would make our government very nervous.
Good point…there were a lot of explosions in that movie, weren't there? Upon doing a little research, I see that Guy Fawkes actually tried to blow up Parliament and assassinate King James I on the 5th of November 1605…though some would argue that the motivations were honorable.
Okay, maybe Guy Fawkes Day wasn't the best example…
I'm not happy that Whole Foods and Wild Oats are merging. As someone who shops in both I find the culture very different, and as you've pointed out that's important. Wild Oats, for example, has a 10% discount day for seniors, which my Whole Foods doesn't have.
But just as Al Gore moved on, so should the FTC. Enough.
And MNB user David Livingston made an excellent point:
Recent headlines also say "Four top executives from Wild Oats Markets here have left the company." So who does the FTC think will run Wild Oats if they are successful in blocking the merger?
The folks at the FTC are delusional on this issue, and I cannot figure out why. Is it political? Cultural? Personal?
Of all the mergers and acquisitions that have been proposed and closed, why this one would get under the FTC’s skin – as opposed to a lot of others that seem to me to be far more anti-competitive and harmful to consumers – is beyond me.
MNB user Glen Terbeek had some thoughts about my observation that Wal-Mart would be building a lot more Neighborhood Markets if it could figure out how to make the ROI work.
The problem with the neighborhood stores is that they don't have enough high margin items like a supercenter has to produce the total margin yield out of the store that is acceptable. The supercenter uses low margin food (core) items to draw traffic into the store with the hopes of selling a few high margin items to make the customer and store profitable. Even the original WM discount store used low prices (even below cost) for high volume food categories to divert traffic to their stores with the hopes of selling higher margin general merchandise. The neighborhood store broke their profit model.
And MNB user David R. Schools addressed a story we had that looked at how Wal-Mart has systematically worked to lower its state tax exposure:
Wal-Mart does a lot of things with which I disagree: shamelessly importing from China at a real social cost to America; crushing small competitors; bullying suppliers; etc. But, legally avoiding the payment of taxes is a problem created by the tax codes, not by the Behemoth.
Agreed.
And another MNB user had some thoughts about Wal-Mart lowering the number of stores it will open next year:
I'm so old I can remember when Wal-Mart didn't even have 140 stores. I can also remember back when building 90-100 supercenters a year had us all shaking. Now we are so used to the onslaught of Wal-Mart that when they only build 140 supercenters a
year, we are conditioned to believe they are actually going backwards. How many large grocers are building 140 stores? But we are all making a big deal out of Tesco opening 10,000 sq ft stores. It will take about 7 Tesco stores to equal the supermarket sales area of one Wal-Mart Supercenter. And perhaps a lot more if they can't equal Wal-Mart's sales per sq. ft. of sales area, which is often the highest compared to other chains in the typical trade area.
All excellent points.
I keep pushing for Country of Origin Labeling (COOL) legislation, and MNB user keep pushing back.
MNB user Kody L. Thurston wrote:
You are part of the “hyped” media and slightly out of touch with the consumer on this. While COOL may come about, the China “region” as a contributor to world food is not going away and will not disappear because we American’s over-react. Be careful with what you print KC!
I never said China would, or should, go away. I just think US consumers deserve to know where the products they eat come from.
And MNB user Jan Matsuno wrote:
Kevin, every time I see you comment about the “inevitability of country of origin labeling”, I want to point out that for finished products, country of origin labeling IS required by US customs! Any product (including food) produced and packaged overseas must state “product of ___” on the label. Things where country of origin is NOT required are 1) fresh meat and produce (this is what COOL was all about) and 2) ingredients and components for “further manufacture” in the US. It is largely these ingredients that have caused concerns recently. On the other hand, according to the FTC, only products made from all or virtually all US ingredients and components may be labeled “product of USA”.
It is not hard to see that, for a food product with multiple ingredients, listing the origin of each one is confusing and impractical. Rather, perhaps the US needs to figure out how to become, in addition to energy self sufficient, food self-sufficient as well. After all, what kind of forward-thinking country squanders fossil fuels to import cheap, low quality food from overseas, while its farmers are going bankrupt? Something is wrong with this picture.
But at least someone agreed with me – MNB user Lisa Malmarowski:
I'm in agreement with you about the COOL labeling. It's something that needs to be done. And until it is, companies like Trader Joe's can spin a good story by removing 'single source' items from China while keeping the lion's share of their lines comfortably ensconced on their shelves. Meanwhile, shoppers enjoy the halo effect created by their new policy and believe that everything at Trader Joe's isn't sourced from China.
Good marketing move on their part. But until customers really start asking and demanding information about where their foods come from, they won't really know. We need mandatory COOL labeling.
And, on the broader issue of food safety, one MNB user wrote:
I do not pretend to be an expert in the food safety aspects of food plant operations. However, in my view, an experience I had many years ago when working for a then Fortune 100 food company supports the establishment of a single food agency, or at least transferring it all to FDA.
This company for many years produced canned seafood chowders under FDA inspection. The product was produced and canned in an area that reminded me of an operating room. The sealed cans then went to an area where they were retorted (heat sterilized), labeled and packed into cases. This area was reasonably clean and orderly, insect and rodent controls in place, but had wooden floors etc. and would not have been suitable for manufacturing involving exposed food.
FDA was satisfied with this - after all, the cans were sealed when entering this area.
This company decided to expand their line to include chicken chowder. (No chickens were processed here - they used frozen chicken meat from a USDA inspected supplier.)
That would require meeting USDA approval and continuous USDA inspection (at taxpayer expense by the way). USDA required full detailed blueprints of the 100 year old plant. USDA also required extensive renovations to the area (floors, walls, ceilings) where the sealed cans went to be retorted, labeled and packed into cases. About nine months and $500,000 in improvements later USDA approved the plant to make Chicken Chowder.
I suspect that the TOPPS plant had nice floors, walls and ceilings everywhere and to USDA this looked all well and good. The TOPPS plant also had continuous USDA inspection - a taxpayer expense that obviously was a waste of money.
A frozen pepperoni pizza is a another good example of this waste of resources. The USDA inspects the pig when it is slaughtered. The USDA then inspects the process of making pepperoni from that meat. The USDA then inspects again when the pepperoni is used to make the frozen pizza. Pepperoni is so stable you may have noticed it is sold out of refrigeration.
Will we get a single food agency? Probably not. The USDA is resisting this loss of turf, and there are a lot of jobs at stake. The food industry (trade associations) appears to be backing USDA, probably because they don't want to risk making them mad.
For the record, FMI CEO Tim Hammonds started pushing for a new, single food safety agency years ago, and it appears now he was prescient. Of course, everybody else either disagreed with him or ignored him. (Except me…I liked the idea then and have kept promoting it every chance I get.)
I also got a lot of email this week about a story quoting an NPD survey suggesting that women are leaving the workforce and therefore could change the balance of power between supermarkets and restaurants.
One MNB user wrote:
As a former corporate retail executive who chose to leave the workforce eighteen months ago to focus on family and quality of life issues, this report does not surprise me. After over twenty-five years of putting business ahead of family, many women of my generation are discovering that you truly don’t get “do-overs” with your children and loved ones, and all of the family events we missed because of “pressing business needs”, we can’t remember what those were. However, we can relate what family events we didn’t attend.
When you transition from a lifestyle of desperately trying to get some semblance of dinner on the table before 8 p.m. to one where you can actually prepare a meal, there is less reason to eat out. And, your family doesn’t want to eat out either. One of my great joys was that my eighteen-year-old son and his four buddies had a cook-off at our house. All the food had to be made from scratch and be complete from appetizers to dessert. These young men took great pride in what they cooked, how good it tasted, and how much cheaper is was than eating out. The young women were impressed as well.
I am betting that we will see more of this as the next generation chooses a better quality of life over the one chosen by their parents. Quality time with family is important: but it is just like leadership. Leadership is often just showing up – which is a strong mix of quantity time as well. Something that has been missing for many women.
This is not a dress rehearsal – this is Showtime.
MNB user Sue DeRemer wrote:
I'd like to see those NPD numbers broken down by age group. Are they saying that fewer young women are entering the work force? Or is the decline the result of older boomer women retiring? That distinction could make a big difference in food retailer strategy.
Another MNB user wrote:
From my experience here in the workplace, I noticed that many of the women that left to stay at home did so because the cost of day care was almost equal to their take home pay. That does not include gas, lunch (which was bought at the cafeteria), etc. All of those women that left were in administrative roles, which are not high paying jobs, but something to take into consideration when reading that article. They told me that when weighing the little amount left over with the fact that they could stay home with their children, they said it was a no-brainer.
Yet another MNB user wrote:
I wonder if this study takes into account women who work out of their home? Where I live, quite a few women are self-employed, as many have young children and need the flexible hours. My wife's design business occasionally has her scheduling evening appointments, which means that dinner on those nights is my responsibility … and it's no less hectic. I've noticed locally, when I shop, it's not just time-strapped moms in the store. You make good points on the potential impact to retailers. Finding out "why" is key.
And another MNB user chimed in:
The brief recap in MNB of the Advertising Age article loses some of the broader context of the article and the quotes from Harry Balzer of NPD. The quote is very objective, other than the comment that restaurant meal increases were “fueled for decades by the migration of moms to the work force.” I think that line is driven by the subjective opinion of Harry Balzer of NPD. It is a simplistic conclusion to assert and disregards other societal shifts, such as increased affluence, more restaurants per capita driving growth and now more focus on health as a reason for decline.
For anyone who has ever seen Harry speak, he is a traditionalist (or the less PC term “male chauvinist”). The article includes his standard quote that women try to trick the men into cooking by complimenting their grilling skills. He has been using the same material for at least the last five years and I have found it to be insulting as a working mom whose working husband does a decent amount of the cooking – and not just on the grill. I believe his narrow view of gender roles is reflected in the article, and is indicative of his age. For those of us in Gen X/Gen Y, I think there is a broader context to the discussion of women in the workforce and am insulted by his positioning.
On the subject of private label’s growing strength, MNB user Philip Herr wrote:
I believe the openness of American consumers to private label offerings is part of a larger phenomenon -- specifically the decline in loyalty to national brands. I recently did an analysis on loyalty towards national brands over time and compared that to how loyal consumers were to retailers over the same time period. While retailers had enjoyed stable levels of loyalty, national brands showed significant declines. And I believe that this was the culmination of many years of discounting and cutting advertising budgets and cutting costs to accommodate Wal-Mart. In time manufacturers had abdicated responsibility for maintaining brand equity. And the consequence of that has been a shift in trust from what's on the shelf, to the banner over the door. So given those circumstances, why shouldn't private label goods flourish?
Finally, we reported yesterday that that Whole Foods is launching a promotional push to sell Thanksgiving turkeys and other traditional Thanksgiving dishes – such as cranberry sauce and stuffing. Which wouldn’t be a big deal, except that it is doing so in the UK, where they don't celebrate Thanksgiving. The retailer reportedly is targeting the London’s large American population, which it feels will welcome a little bit of holiday home cooking on a day that is just another day for the locals.
I said that I loved this idea, but wondered if Whole Foods would ever consider a selective promoting of Guy Fawkes Day celebrations here in the US?
I got a number of responses to this wisecrack, all of them along the lines of this email:
I guess you haven't seen “V for Vendetta” or you would know that a push to celebrate Guy Fawkes day would make our government very nervous.
Good point…there were a lot of explosions in that movie, weren't there? Upon doing a little research, I see that Guy Fawkes actually tried to blow up Parliament and assassinate King James I on the 5th of November 1605…though some would argue that the motivations were honorable.
Okay, maybe Guy Fawkes Day wasn't the best example…
- KC's View:
