business news in context, analysis with attitude

On Tuesday, we reported that there were more than 22,000 new product introductions during 2002, a 15 percent increase over 2001 and the biggest year for new products since 1995. In our commentary, we wrote:

“Despite the millions of dollars spent on all these new product introductions, we find it hard to believe that consumers in general have any real understanding and appreciation for most of them. It is all just a blur, as many companies often replace real innovation with a frenzy of desperate marketing activity.”

MNB user Glen Terbeek, author of Agentry Agenda, had some thoughts on the subject:

“I am sure that much care is taken before all 22,000 new items (about half of the items in a store) are introduced each year, including good market research. I am also sure that there is documented support for each of the products. After all, who wants to take responsibility for a failure?

“It is only common sense that as more and more items are introduced, the market for them becomes more and more specialized. For sure, they are not basic, core items that everyone uses like sugar, milk, etc. They are items that meet certain, but more limited tastes, dietary, ethnic and other differentiated shoppers' needs. You mentioned seasoning and sauces and cosmetics, which are good examples. And if you believe all that is written about individual consumers needs and wants, this makes a lot of sense. I predict that the need for these specialized items will only increase in the future.

“But then the process fails. It fails because the industry is built around a mass marketing, product distribution model; not a model built around the local store market's needs and the individual shopper's needs that shop in that market. It just won't let specialized, niche items make it through the economic and cultural barriers built over the years as the mass marketing model matured. Therefore, most of the 22,000 items will fail, often for the wrong reasons.

“The answer is simple; the transition is tough. If retailers rationalized each real store's offering to what makes value added sense for its market and compliments it with a virtual offering of all other available items, the system would be much truer to real market acceptance of new items. Why? Because the individual shoppers would have more control over the success of an item.

“Of course, this would mean that self-distribution, inside margins and trade dollars as we know them today would need to be replaced. The good news is: they would be replaced by much more efficient logistics and marketing processes as measured in more loyal shoppers for "stores" and products by eliminating "false economics" of today.

“It obvious to me that Wal-Mart is winning the mass marketing, core item battle. It is also building a significant supply chain infrastructure around it, maybe to its long-term disadvantage. Will the industry continue to emulate Wal-Mart in the supply chain area, or try to beat them in the local marketplace? The real question then becomes "Can the supermarket industry adjust in time?" The New Year is a good time to start!”

In our year-end commentary on Tuesday, we wrote a number of things that generated some reaction among members of the MNB community, including:

"Go into most supermarkets in the United States -- not all, but most -- and within about 15 seconds you know where everything is. It doesn't matter if you've never been there before. You can figure out quickly where produce is, and from there knowing where the meat and seafood departments are located, and where the deli and bakery are, is no big deal. It‚s intuitive. Habit. There are no surprises.

“There will be those who would suggest that this predictability is a good thing, that it helps people navigate stores easily and confidently. This may be, but it also is the surest path to boredom. And beyond that, to irrelevance. And finally, perhaps, to extinction.”

One MNB user differed with at least part of our premise:

“Have to offer that it's not that you find it where you are looking for it that causes boredom but that's it what's not there that should excite the shopper.

“Being able to walk into a familiarly named building and be able to go to the item you wish to buy is comforting and makes shopping easier, but it's even more enjoyable when you are excited by the selection of merchandise available that wasn't even in mind as you walk to your intended purchase.

“That's what may be missing in too many cases.

“And that may be what I often forget when I have to move a stack-base display of merchandise to a different location in the same department, despite the fact that customers are buying from it in its previous site.

“Sam called it ‘a different look’ for the customers who shop his stores on a regular basis.

“I guess it must be working in most cases.”

Surprise is surprise…whether it is found in layout or selection or some unexpected customer service initiative. We’ll take it where we can get it.

What frustrates us is sameness and lack of innovation and imagination.

We also wrote:

“I can guess that Wal-Mart will invade yet another major country as it continues its inexorable march toward world domination, but it’s just a guess." In addition, we noted that most supermarkets “have a brain, used mostly for counting money and calculating efficiencies and projecting profitability and productivity. But no soul. No heart.”

MNB user Larkin Toler wrote:

“Good guess. You are correct. I only would change only one letter and it will be even more true. Change country to county. In the world in which I live, rural East Texas, Wal-Mart has dominated as Generals Sherman and Patton on their marches. County after county across the country, after Wal-Mart marches in, local businesses are defeated.

“They celebrate New Year different on my town's Square than they do in NYC's Times Square, but here, there and soon to be everywhere the Bentonville Behemoth dominates and leaves home town independent merchants searching for their viability and survival. It is not a brain issue, or lack of soul or heart question when merchants keep getting gut shot by 'always lowest price.' I remember my grandfather's fondly remembering 'coming to town' meant "hitting" every side of the Square and making a great day out of it. I guess all I get to tell my grandkids about is the cheap gas and deep price slashing deals at Wal-Mart.

“It is I who have lost my heart.”

In case you were off on Tuesday, and you’d like to read the entire commentary,
Coda 2002: “Woulda, Coulda, Shoulda”, you can find in the MNB archives:

We also got some email about our ongoing doughnut discussion:

“Isn't anyone else sick to death of Krispy Kreme? The Winchells we used to visit on Sunday mornings closed after KK opened, probably due as much to its lack of cleanliness and the uncaring attitude of its employees as the new competition. The other source for donuts--grocery stores--sell KK donuts now. Heck, here in the Midwest, KK is everywhere! KK stores sell KK donuts, of course, but so does everyone else! Grocery stores, discount stores, heck, even gas stations and c-stores sell KK! Even Hospitality Hour after church features KK donuts with bad coffee.

“KK donuts are only good when they're fresh and hot--only at the KK store itself--so replacing site-made donuts with cold KK was in my mind a mistake. We only buy KK at the KK store, but we haven't been there for several months. The reason? We're bored--and disappointed. Every KK donut is glazed and they all taste pretty much the same. Their so-called cake donuts (like blueberry or devil's food) are never cooked clear through, so we avoid those, and they too are glazed. KK coffee is only okay, and the last time I was there the store was unkempt and sloppy--crumbs and cups and napkins littering the tables.

“Bring back Winchells, or my made-in-the-supermarket donut!”

Not a Krispy Kreme stockholder, we’d guess…

Once again, Happy New Year to everyone in the MNB community. We’ll see you tomorrow…
KC's View: