business news in context, analysis with attitude

We had a story the other day from Bloomberg about how people were spending more money in restaurants than in supermarkets, which prompted an email from MNB reader Brian Todd, who also is president/CEO of The Food Institute:

Need to opine a bit on the Bloomberg item:

Americans are not spending more dining out than for groceries, contrary to the report by Bloomberg. They are, however, not always doing so at their local supermarket. We have been tracking retail sales of food for decades and restaurant and bar sales in March did outpace sales at grocery stores by about $2.54 billion. However, consumers spent about $25 billion more for groceries at other retail venues selling food and consumable products that were not included in the numbers used by Bloomberg.

Breaking it down, The Food Institute estimates $17 billion more was spent for groceries at warehouse clubs and supercenters, another $6 billion at other food retailers like butchers, bakers and specialty food stores, approximately $1.5 billion at drug stores, and nearly half a billion online.

Adding the above into the mix puts actual grocery sales at around $75 billion in March - 42% more than eating and drinking place sales. And that doesn’t even include groceries sold at mass merchandisers like Walmart and Target’s traditional locations.

From another reader:

One contributing factor to this spending, I suspect, is that March is a big month for restaurant week(s), in New England at least.  I definitely go out to eat more often during this time period, to experience a new restaurant or to enjoy a prix-fixed menu at an oldie but goodie.  I live just outside of Portland, Maine.  I think at one point, and this may still hold true, Portland was determined to have the most restaurants/bars per block than any US city out there.  Anyway, even with the great deals available during restaurant week, I spend more going out in March than any other month of the year.  I know the same for many of my friends and family in the area also.  We very much look forward to this month!
Just a thought…guess we'll see what April and future months bring.
On a broader (and more important) note, I very much agree with you that stories should not 'over-characterize generations.'

Regarding the decision by Walmart to close five stores because of "plumbing problems," and accusations by labor that this is actually a move to crack down on pro-union employees, one MNB user wrote:

In the past it's had to do with bad construction issues.

Don't have five bad plumbing issues across the U.S. at the same time and take that long to fix.

Last time they had this in a store in Texas they did same thing then had to tear it down do to wall roof separation.

From another reader:

I work about 3 miles from the Wal-Mart that closed in Oklahoma.  The local news cited plumbing problems, but the buzz around the office is that the level of theft in the store and most importantly, the criminal activity in their parking lot is astounding!  Many Tulsans will not shop there for fear of being robbed in the parking lot.  Don’t you find it odd that they closed a group of stores simultaneously, in different states, all citing plumbing problems?  Oh yea, and the local Health Department contact knew nothing about plumbing issues in their store.  Go figure!

Meanwhile, 6-7 miles to the south at another Wal-Mart a corpse was just discovered in an SUV that allegedly had been parked in their lot since February!

And another:

You don't have to be in the amen corner of the UFCW to have a gut feeling that this just wrong!

I went off on an anti-FSI rant the other day, and it prompted more than a few emails...

One MNB reader wrote, in response to my comment that FSIs would die because newspapers are dying:

There are no newspapers delivered to my home or office. However, every week my mail boxes are full of the FSI's from the local supermarkets and drugstores and other retail establishments. No newspapers required.

Fair enough. But another reader chimed in:

I'm always tickled every other Thursday when there is a happy confluence of the recycling pick up with the FSIs in my morning Star Ledger. When I walk out my driveway and pick up the paper I can immediately deposit the waste in the recycling bin.

MNB reader Joseph Barbara wrote:

Been a fan and daily reader of MNB for 4 years now.  My wife, 37 years old, grocery shops for our family of 4, and 2 dogs.  She is technically savvy with her iPhone and uses digitally downloaded coupons frequently for odd, non-grocery, one-off stuff, usually for dining out.   We are not big fans of our local newspaper, but we still subscribe for Sunday’s edition for one reason, the FSIs.  In the digital age, I know this seems counter-intuitive, and I get your prognosis on FSIs being a “dead-man walking”, but they still work.  Yes, they are a little labor intensive, but when actually planning the shopping list, and then executing those purchases, paper is just easier than mobile phones.  It’s tough to utilize 6, 10, 12 coupons from your phone on a  shopping trip, but handing them to the cashier for scanning is easy.  Just my 2 cents…

From another reader:

As long as the cents-off coupon markdowns, mfg. coupon processing and FSI ad space non-sales revenue generators are subsidized by CPG companies those who make the money will keep snapping those buggy whips... and paying for studies like the one to which you refer.

From MNB reader Matt Nitzberg:

I’m writing with regard to the insights from GfK and News America on paper coupon usage. I haven’t seen the full report, so my views are informed by what was selected for inclusion in the press release.

While the release seems to have a clear communication objective (something like “FSIs remain important”), I agree with your stance that newspaper-driven executions are going to decline over time as circulation and impact fade. At the same time, this report raises some additional considerations about shopper behavior and smart marketing:

Being shopper-centric means avoiding a channel-centric model. Some valuable shoppers still prefer paper coupons, and they should receive them when aligned with the marketing, financial, and operating strategies of the business. That’s because personalization shouldn’t just include personalized product content, but also a personalized contact strategy including channel (driven by individuals’ media engagement and response rates), frequency (driven by shopping patterns and other factors), and personal value drivers (coupons vs. recipes, for example).

Targeted and relevant paper coupons work better than non-targeted paper offers. The press release is not clear on whether all of the data is from FSI usage. At several points, it seems to broaden the universe, using language like “print-based coupons such as those in free standing inserts (FSI) typically found in Sunday papers,” and “traditional paper coupons.” If “print-based” includes reference to a wider range of non-FSI paper coupons (including precisely-targeted and personalized content), this may blur the lines and conclusions. Redemption rates are dramatically higher on relevant content and offers, compared to FSIs and other non-personalized offers. And these highly-targeted printed offers don’t depend on newspapers.

While the press release referred to better redemption rates for paper vs. digital offers, redemption rates climb quickly on digital offers when they are (1) made available to digital-desiring consumers via their preferred touchpoints (personalized website content, smartphone app, CRM communications, etc.), (2) highly personalized, and (3) supported by a learning mindset which drives continual improvement. However, many businesses are primarily focused on the low cost of digital distribution, and the resulting executions emphasize efficiency vs. effectiveness. This can lead to a proliferation of irrelevant offers which may maximize reach and frequency but undermine brand equity and sales results. In today’s context – a sea of undifferentiated promotional offers – it’s not surprising that redemptions for many digital offers can be low. I expect this will change as more marketers and their agencies master the elements required to engage grocery shoppers in a digital context, and as more shoppers opt out of weaker programs.

Looking to the future: As digital capabilities become more integrated in the shopping and consuming experience, and as digital natives begin to represent a larger share of grocery shoppers, getting digital right will be even more important for retailers, brands, and their partners. New shopper expectations will emerge, and success will be won by marketers who anticipate, create, and deliver on the new normal in ways that improve shoppers’ experience and earn their appreciation.

On the subject of Chipotle's continued success, MNB user Anjana Agarwal wrote:

One of the reasons the restaurant does well is that millennials/ teenagers love it.

They use fresh ingredients, offer a choice in putting together your food, and offer low-carb version - the burrito bowl which incidentally is even more popular than the wrap. They also have an order ahead app which my high-schooler and her friends use religiously to order food, and pick up instead of eating their school cafeteria food (Juniors and Seniors are allowed to step out for lunch). Due to the fast and casual ambiance and food, it's become a hangout for after sports, during school and college lunch times, in addition to the usual customers. The menu is simple and the pricing is simple too - most items are the same price, which takes the math out of ordering lunch.

Even my gluten-free health nut friends dine there with their kids, as it offers them choices. Their low-key advertising with their blend of humor helps too!

Finally, on an other subject, from MNB reader Elaine Howard:

Thanks for this most interesting article on D’Agostino’s.  My grandmother, an English immigrant, shopped at Gristede’s and I recall going to both stores when visiting her as a child. My mother dated Bill Wrightson who was a VP at A&P under the Hartford era.   I am not surprised that the heyday for D’Agostino’s is over, but the change in  store counts are shocking.
KC's View: