business news in context, analysis with attitude

In a story yesterday about customer service, we made the following observation:

If you are a retailer and you really believe that customer service isn’t the most critical part of your business, then you immediately should order and read Feargal Quinn's "Crowning The Customer." (You can get it from Raphel Marketing at www.raphel.com, or from Amazon.com…and we're not just suggesting this because we had the opportunity this week to spend time with both Feargal and Eamonn Quinn, and to walk their extraordinary stores.)

If, after reading this primer on customer service, you still feel that this is a low priority, we'd suggest you make plans for retirement. Sell the business, close it down, divvy up the money to the family or the shareholders…just get out.

Because the retailing business is the service business…no matter what kind of store you operate and what demographic you serve.

If you believe you are just in the business of buying product, getting slotting allowances, and then selling product - without being connected to the needs and desires of the shopper - then you are a fool. And it is no wonder that you’re losing market share and the respect and loyalty of your customer base.


MNB user Mark Olivito responded:

I have been a loyal reader of MNB for the past year. The last blurb of this commentary may have summed up the CPG industry better and more precisely than any I have seen. Well done. I am in the business of working with CPG manufacturers to increase brand loyalty through grocery retailers (nearly everyone EXCEPT Wal-Mart) and the challenge continues to be: "how can my brand investments be viewed/leveraged more than a cost of doing business?" Great job and keep up the "tell it like it is" style.

Thanks.




We continue to get email in response to the guest column written last week by the Hartman Group's Jack Whelan, "Where Wal-Mart Can't Dance."

MNB user Art Turock wrote:

Wal-Mart has "soul" and they can dance .....in the view of their target shopper.

Gallup organization has done an extensive research study on customer satisfaction. They essentially found that high "satisfaction ratings are meaningless, i.e., they don't translate to more shopping trips per month or total sales per month. Only when high functional satisfaction is accompanied by high ratings for emotional connection do the desired results happen. And Wal-Mart does extremely well on emotional connection with their "target customer," even scoring better than Target in a brand-to-brand comparison.

In my Strategic Report, "Achieving Sales Growth When Wal-Mart Makes the Rules," I connected the four Gallup research factors that produce emotional connection and here's my take:

  • Confidence. Wal-Mart offers the rock solid promise of "Always low prices-- always." Customers shop with the peace of mind of knowing that if they bought it at Wal-Mart they probably got the lowest price. Wal-Mart shoppers also trust the product selection consisting largely of trusted national brands.


  • Integrity. Wal-Mart offers double money back guarantees when a shopper proves they can get a product for a lower price. If a shopper is dissatisfied with any perishable purchase, Wal-Mart offers a 200% refund. To simplify returns, they are all handled at the customer service desk not at the departments where purchases were originally made.


  • Pride. Wal-Mart shoppers are welcome by the greeter at the front door while other associates convey a down-home friendliness. Wal-Mart's TV advertisements and ad signage feature Robin Hood, a character who symbolizes robbing the rich manufacturers to whittle down price for the Wal Mart customer on a tight budget. This symbolism has powerful emotional connection with lower to middle income families.


  • Passion. Wal-Mart's four store formats are customized for a specific type of customer and shopping trips, such as Sam's Club targeting small business owners and resellers involved in bulk quantity purchases. Store managers and department heads determine which category traits or schematics are appropriate for their shoppers and community characteristics (e.g., college town, retirement community, large Hispanic population). Customization leads to the passion of sensing this store is suited for me.


Wal-Mart's success makes the powerful point that emotional connection is not just for upscale retailers.


Another MNB user offered:

I enjoy reading the varying opinions on Wal-Mart's march across the country.

I especially enjoyed several of the comments in the column…regarding consultant's view of the real retailing world.

One reader wrote: "Those that can, do. Those that can't teach. And those that can't even teach, consult."

Could talk all day on this subject about the tens of millions Fleming spent on consultants the past 10 years instead of listening to their own people about ways to improve performance, manage customers and win at retail. Many of the consultants we used were fresh MBA's with limited real world business experience much less grocery industry experience.

Another reader wrote, "Too many retailers are touting Wal-Mart and letting them have the business"

I agree, there are many quality retailers across this country both regional chains and independents that are excellent operators, take customer service seriously and hold their own on market share. While other retailers are content to whine, not reinvest in their stores and blame Wal-Mart for their inefficiency.

Wal-Mart is a value proposition for many consumers in this economy. Consumers can normally save 10-20% (my estimate) over conventional chains. Last week a new Kroger opened in my area and I shopped the specials, at the bottom of my receipt in a 24 font in bold it said I saved $32.96 with my plus card or 46 percent (in a 10 font) from the regular price, requiring mgr override. Another topic to discuss another day on savings cards and the perception or reality of saving.

Savvy, value conscious/quality conscious shoppers will continue to shop multiple retailers. The day of shopping at one store because of pure loyalty is over. The independent conventional, chain, or specialty store that offers excellent service, clean stores, competitive prices, quality produce, meat, specialty items will reap the benefits and maintain or grow market share even against the Wal-Mart American success story.

KC thanks for the daily dose of industry happenings and reader comments.


And another MNB user wrote:

The only observation that I will add is this: When Sam first started out and until his death, the Company said, "We sell only goods manufactured in the USA." It didn't take long and offshore they went, cutting out the source of supply in the US. That has got to be a dying legacy of Sam himself and I'm sure that he would like to come and haunt his successors for making those decisions.....perhaps he has!




Regarding Bashas' expansion plans, MNB user Mike Wieltschnig wrote:

As a supplier of Bashas', you couldn't find more professional people in the food industry. They will survive with their TOP NOTCH customer service, selection and excellent communication to their vendors.




In response to our story about veal being raised with synthetic growth hormones and our comment that, having not eaten veal for 20 years, Mrs. Content Guy would probably read this and go another 20 years without, one MNB user wrote:

I will never eat veal. This is inhumane, and I am shocked that more people don't see that and boycott veal also. I am with Mrs. Content Guy on this one.




We had a piece the other day about Procter & Gamble courting the dollar store business, which led one MNB user to write:

Of course P&G is courting the dollar stores...just like they courted Wal-Mart in the Eighties.

What's incredible to me is that P&G has an army of analysts and support for the grocery trade talking about all the ways that retailers need to protect themselves from channel erosion. One of their favorite recommendations is to tell you to leverage the big P&G brands since alternate channels don't carry them...so much for that idea.

I'm not denying their right to pursue their business, but in order for P&G to play at the $1 level, they will have to create special sizes that are exclusive to those channels. The average customer will not recognize that the Pert shampoo bottle at the supermarket is 13.5 oz and the one at Dollar General is 10.25 or that the Charmin roll is 25% smaller.

P&G brands will take dollar stores to a whole new level of credibility with customers...and help strengthen that competitor format.





Regarding the Safeway situation, one MNB user wrote:

Clear indicators (really a hundred) of why Burd should go:

Safeway quit selling groceries when he took control. The focus went to driving up margin (had to cover debt and finance private label) at the expenses of vendors and consumers, cost controls (many justified, but the company's focus was lost), service reductions and in-store standardization (really sterilization).

He has suppressed some of the greatest talents that came from the divisions, especially Vons (they used to sell groceries before centralization).

However, the best example that I could find is that our nearest supermarket was about 8 miles from our previous home, then they built a Safeway around 2 miles away. Unprompted, my wife said she tried the Safeway but the prices were ridiculous and mostly she didn’t want to have a choice of buying Maraschino Cherries, and not be forced to buy Safeway Select. She continued to make the drive (as most our neighbors did) to the competitor, only stopping in for a hurried gap fill trip.





About the growing popularity of branded beef, one MNB user wrote:

It appears that once again consumers are either not educating themselves or aren't being educated by the retailer or supplier. Branded beef is no guarantee of "safe" beef. Nor is "natural" or "antibiotic or hormone free". Only cattle that have not been feed ANY animal parts can really been seen as safe -from what I understand.

Consumers and retailers should demand that cattle be treated humanely and feed a vegetarian diet.





We've been sharing with you some of our culinary adventures in London and Dublin over the past week, which generated a lot of mail.

One MNB user wrote about our saying that we'd never had a bad meal in London:

You actually liked the food ? I can honestly say, my trip to London was the only vacation I have ever taken that I came home weighing less than when I left.

I had actually thought about promoting Travel-Diet excursions to the British Isles. The world has certainly seen worse fad diets.


One MNB user wrote us to express shock about our good luck eating in London, to which one London resident who is a regular MNB user wrote:

Your correspondent has a very good point. Until the late twentieth century, the UK was a barren wasteland in terms of cuisine.

Fortunately, various restaurant chains began to emerge that started to fill the yawning void that was the UK culinary experience. Charming eating places such as McDonald's and Burger King - which served tasty nutritious foods in stylishly decorated premises - began to proliferate, spreading the joy of healthy meals served by attentive and courteous waiting staff. The rapid growth of these chains now mean that affordable, balanced diets are now available to all residents of London and any visitors who choose to grace us with their presence. If only the
city could one day offer a variety of Michelin-starred restaurants,
gastro-pubs or an extensive array of outlets serving cuisines from around
the globe, then we truly would have something going for us. Until then, I am led to believe that larger supermarkets are able to provide ranges of international delicacies, such as Pop Tarts, Oreos and Doritos.


We think a tongue may have been firmly in cheek while writing that one…

We wrote about Delhi Brasserie, our favorite Indian restaurant, which is in London's Soho district, and one MNB user responded:

Oh, Kevin, you ate in one of my favorite restaurants! In fact, I think some of best Indian food around is in London. There are also great Thai restaurants, and the cheese is good, not to mention the pints.

First the wine descriptions, now the food...you really shouldn't torture your readers this way.
Hey, this is tough duty…as MNB user Ted File pointed out:

I will wager that you just picked up 10 pounds without even trying. Good luck on your return diet.

No kidding. We finish MNB this morning and we're going jogging.
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