business news in context, analysis with attitude

We continue to get email about the report about Supervalu reducing items in 10 major food categories by 20 percent, a move intended to leverage lower costs with suppliers and free up shelf space for the grocer's private-label products.

My feeling was that this seemed similar to what Walmart recently tried to do, but had to back off from; the emails posted here yesterday suggested that this is an ill-conceived idea that has more to do with using leverage to generate higher slotting fees and promotional allowances than it does with creating a compelling in-store shopping environment.

One MNB user continues the conversation:

I enjoy that every manufacturer chimes in and claims that slotting fees caused this and that all that SVU is looking at when reducing skus is vendor funds. Most of that is probably true. What no one is getting at is why are they doing this now...

It has ZERO to do with consumers. It has ZERO to do with funds. They will lose many customers and they will lose MASSIVE Vendor funds.

They are doing this because the centralized group can't manage the business. Too many banners are too unique.

If they eliminate the uniqueness and make the assortment the same across all banners, they think they will be able to get their jobs done. There are rumors that more announcements are coming to eliminate corporate positions in the banners and that ALL control will be in Minnesota. Local relevance will be gone (as if it was ever planned to stay).

But another MNB user disagrees with some of the carping:

I think we’re being a bit cynical regarding Supervalu’s decision to reduce the number of SKU’s it carries on their shelves.  Everyone is jumping to the conclusion that Supervalu will be axing national brands and/or popular products in the name of slotting fees and ad funds.  I have no doubt that this undertaking will result in some people’s “favorite” products being eliminated from the shelves which will be frustrating and annoying to those customers.  I think the bigger picture is to reduce the redundancy in any one product or brand and not necessarily just the number of brands.

Fewer products…..more importantly fewer variations of the same product results in fewer out of stocks, fewer products to stock, fewer items to order for a store, fewer items to ship to a store, fewer items to stock in the distribution centers….etc.  All of this will, hopefully, result in higher volume/turnover of the products that are on the shelves, less waste and lower prices.

Seriously, are we really going to miss the choice of an 12oz, 14.5oz, 16oz, 24oz and 32oz, and 102oz can of tomatoes on the shelf...

You may be right. But the common theme in many of the comments I’m hearing is that Supervalu is becoming Fleming...and that part of the problem is that much of the institutional memory has been purged in recent months.

Now, let’s be fair. Supervalu is operating in a different economic climate than the one in which Fleming collapsed. It could succeed in ways that Fleming did not. It could succeed at doing something that even Walmart was unable to do.

But to ignore the failures of the past is to risk repeating them.

The discussion will continue, no doubt. Here, we’re just thrilled to be part of it...and were pleased by this email that we got yesterday:

I was just reading the reader comments this morning and had to say—this is great stuff. 

Where else can you get insights into the inner workings of Walmart and Supervalu?  Not on Retail Wire, or PG or SN or anywhere……proof that the people who read and interact with MNB are the real insiders.

Thanks. We like to think so.

And we’re a lot more fun...

(BTW...are you going to FMI in Las Vegas in a couple of weeks? Shoot me an email if you are...maybe we can find a way to rendezvous at some point during the show...)

Yesterday’s MNB Radio was about the growth of texting, and why retailers need to embrace this technology as a way of interacting with customers ... even if some folks think it is the end of civilization as we know it.

MNB user Dan Jones wrote:

People forget how obnoxious the advent of cell phone usage was.  People speaking so loud into a phone, repeating the same mundane message over and over, oblivious to people around them.  I heard ½ of lots of conversations I had no business hearing.

Texting is private, quiet, and instant.   The end of western civilization?  Seems to me things are more polite than before.


MNB user Kevin Stopher wrote:

I'm not sure how many text alerts I would sign up for but I received my 6am text from Heavenly ski resort telling me they received 15 inches of fresh powder last night, just in time for the last weekend of skiing.

Now I don't think I would ever sign up for an alert that the local mart just received a truckload of apples or the bread just came out of the oven fresh but I would definitely sign up for an alert that a once a year beer was just received (like Pliny the Younger) at the local brewhouse.

Clearly there are opportunities for texting your customers that can build relationships and increase sales. I don't have to tell you where I will be this weekend...

It is all about permission marketing. People will sign up for text messaging that connects to their priorities. That’s called an opportunity.

MNB user Philip Herr wrote:

Not sure I agree with your imprecation that if retailers don’t connect with shoppers via this technology they will miss out or potentially lose customers. I’m not sure. Do consumers/shoppers enjoy having marketers insinuating themselves into all conversations? Any conversations?  Like social networks, the level of communication is intimate and in some cases private. And in those circumstances I believe that any intrusion by marketers is not only unwelcome, but potentially likely to have a negative effect and drive them off.

I repeat:

It is all about permission marketing. You are not intruding if you have been invited to do so.

Another MNB user chimed in:

Each quarter, Akamai publishes a “State of the Internet” report tracking attack traffic, connection speeds, Internet penetration and broadband adoption, as well as trends seen in this data over time. Since key findings in this quarterly report shows a large increase in mobile traffic, here are a few eye-opening stats on how often we check our crackberrys:

• 95% of all text messages are read within 15 minutes.
• Twice as many people use text messaging as opposed to email.
• 17% of all text messages are forwarded virally.
• 20% of people respond to a mass text message.
• 1/3 of the entire world’s population have mobile Internet access.
• 1.8 billion people will send a text message today.

MNB user Ken Wagar wrote:

I may well be missing something here regarding texting. At 60 years old I admit I am not in the mainstream of this phenomenon.

It seems to me that texting is primarily a communication vehicle that allows two or more people to communicate without the need for either to be at a specific location such as at a landline telephone and without the need for all of the people to be free for a direct conversation at the same time. Pretty neat technology and obviously extensively used particularly by young people.

It also seems reasonable that merchants should stay abreast of developing technology and communications tools to determine how they may best be used to improve their business.

But having said that, I can’t help but wonder about the real utility of marketing by text message. Most of those my age grew up with the landline telephone as our primary non face to face communication device and although we may have used it extensively we rebelled strongly with regard to solicitation calls to our homes to the point of no call registries.

Is it reasonable to think that young people texting at the rate of 1000s of texts per week and or month have any interest in receiving unsolicited text messages from companies trying to sell them something?

Cell phone apps make all of the sense in the world to me where people can opt in or opt out of applications of all kinds including shopping etc but I am not so sure about texting. At the very least I think that unsolicited marketing texts could readily backfire on companies rather than enhance their business opportunities.
What am I missing here?

If marketers use texting to send spam, they will kill it. No question.

But one more time...if they get permission from consumers to text them with relevant and appropriate ads, then they can hit home runs.
KC's View: