business news in context, analysis with attitude

Got the following email yesterday regarding yesterday’s story about Supervalu making 800 job cuts as a way of trimming costs:

I do a fair amount of consulting work for the supermarket industry in both CPG and retail and have gleaned some useful insights on SVU. Let me begin by expressing concerns for the many that were impacted by the announced downsizing.

Unlike today's MNB reader comments, I think the reduction in force is long overdue however, misdirected and not deep enough.

The Board of Directors must start at the top of the house, if they really hope to change the trajectory. 17 (?) consecutive quarters of comp sales decreases should not be tolerated, PERIOD.

The CEO and his 30+ year cronies are too entrenched in a flawed and bureaucratic culture, too focused on things that don't matter when your house is on fire and are not prepared to quickly change the paradigm. It appears self protection is at the core of recent exec departures (Shaner, Jungman, Berg, etc). ! Once a new leadership team is in place, they must focus on things that matter- 1) massive org restructure with a focus on driving synergies from the center vs. trying to appease all of these chains and their large infrastructures (you can do local from the center- others have figured that out) 2) Improving the value proposition NOW before it's too late and scream from the mountaintops to customers so they know (+25% higher isn't going to cut it) 3) Overhauling the in-store experience (massive remodeling, getting customer service right) 3) Establishing Fresh and PL as key differentiators, 4) Shedding massive costs, like the army of consultants that have taken over their company (I'm a consultant but there's a difference between 'consulting' and running the company), and 5) Become a retail partner for vendors versus a wholesaler that shakes down vendors to pad the bottom-line...thus exacerbating the value proposition issue since vendors don’t want to invest where there isn't a good return.

So how do you pay for all of this? Massive restructuring focused on their chains, move the consultants out saving millions/year, motivate vendors to ante up once you have a selling story that works for them), sell wholesale and become a retailer (to pay down debt and get focused), close/sell more unproductive stores.....and go private if they can find someone that will pay the $2B (market cap plus premium) and accept the massive debt or pull guidance from the street with a message that they're in it for the long haul. How bad could the stock price get when it's already trading an an all-time low? Drastic situations call for drastic action. I think the options described above are better than going belly up.

But I think it is fair to say that MNB user Larry Lyons disagreed with some of this analysis:

Let’s eliminate our most valuable employees to “cut costs”…

Let’s forget about the cost of training we have invested in them.

Let’s forget about the loyalty these people have developed over the years.

These folks have proven they will show up each day, not steal from us, and do a good job…so what?

Let’s not pay attention to their productivity, nor knowledge of our products.

Let’s not worry about this vast brain-drain “helping” our competitors.

Customers will not care that their favorite “expert” is no longer at our store.

Who was sitting at the table when this decision was made, and thought it was a good idea?

Does anyone remember the sinking ship that was Circuit City? Something about those who pay no attention to history…

Regarding the new yoga room at San Francisco International Airport, one MNB user wrote:

Quite often I intentionally route my travels through airports that I know provide pedicures and/or massages, since it seems I spend more time in airports than I do at home. Who would have thought I could actually look forward to a lay-over, and can magically produce a healthy budget for it! I love retailers that cater to my personal/emotional needs while I’m out doing my “chores”, which then gives me more time to cater to my kids’ needs during the precious time when I’m home.

Excellent point.

On the subject of concerns about imported orange juice that may be contaminated with a fungicide, and my suggestion that maybe this makes a case for country-of-origin labeling so people would have choices clearly laid out in front of them, one MNB user wrote:

Too bad that we as consumers don't feel the same way when it comes to athletic clothing, and all apparel..  Most of these products come from off-shore countries.

Just think of all the jobs we could add if those same jobs were here in the U.S.


In response to our obit for Larry Zettle, one MNB user wrote:

Larry Zettle:   A great man and leader who taught us all much about being a "leader as well as a manager."

Regarding the CDC report saying there is too much sodium in the American diet, MNB user Derek Bionelli wrote:

There are a number of study’s, books and documentary’s that make a case that the CDC has no idea what they are talking about and their guidelines are in fact nothing more than a way to get dollars funneled into their departments.

The only type of “food” that has been consistently shown to negatively affect health is processed grains.  This does not include people that simply over eat any type of food.

A rounded diet of fresh fruits, veggies, meats and naturally found spices, including salt, has been found to be extremely healthy.  In short, the government is almost certainly wrong with their recommendations, look at trans fat.

Are you suggesting trans fats are not bad for us? Because a guy from the Culinary Institute of America (CIA) told us during my panel discussion at the Food Marketing Institute (FMI) that his understanding is that trans fats are just a few degrees away from being plastics.

On another subject, MNB user Gary Narberes wrote:

Thank you for always enlightening me with your website!  With regards to the WalMart's Nutritional Labeling Program as well as those at other stores (full disclosure, I work for Raley's) I sometimes wonder if it's more "fluff" than "stuff".  If stores think a customer cannot figure out that a candy bar is less healthy for you than an apple, methinks we've got a bigger problem on our hands! Likewise Rice Chex would be a better choice than Lucky Charms.  Unless these individual "programs" are rolled into one national program adopted by all stores, what's the use?  When I shop Wal Mart I'll be deciphering their program, Raley's another, and so on.  It's a point of difference that I find to be a dull one.

And, about Netflix and the apparent flood of competition it is getting, MNB user Jenefer Angell wrote:

I’ll tell you what: I’m so sick of Netflix’s disinterest in improving anything about my customer experience that a competitor will have to work hard not to get me. I am astonished that after four years of streaming they have never done anything to enhance their queue, such as defaulting to the STREAMING page, which I visit approximately 25 times a week, rather than the DVD queue, which I access about once per week. Also, hello: anyone else part of a family? One in which you need to track and negotiate three different tastes and priorities. Did they ever think of adding a favorites spot, so a person can return to certain movies but keep them out of the new lineup? Or how about what happened just today: I’m eagerly awaiting the first disc of Downton Abbey’s second season; however, the first disc has a long wait, so they sent me the second and third discs. Thanks! So now, I have two discs I can’t watch for who knows how long, so they’ll have to be returned. I have been a customer for eight or so years, and I think the only enhancement they have offered to the user interface in that time is to redesign the front page for better browsing. I would be glad of some better filters and search returns. I really don’t care how big the picture it.

Yes, I’m bitter, and counting the days until someone gives me a better alternative. I hope someone out there is going to get it right.

KC's View: