business news in context, analysis with attitude

Regarding yesterday's story about the Coca-Cola Research Council study on consumer need states, MNB user Glen Terbeek wrote:

After reading the Coke research report, I couldn't believe how well it supports the concepts of the shoppers' Agentry Agenda. The point that most supermarkets are at best generalist is right on; as we all know, it is hard to make money being all things to all people.

Rather than building 60,000 square foot stores, carrying everything for everyone or for every need, why not build 3 to 4 much smaller stores in the same market, each focused on a demographic or "needs" shopping trip. If leveraged with a complimentary consumer direct offering, these stores could be much more focused while carrying many less items. The employees could be hired and trained to support that format's market requirements, and paid accordingly. And if the practices of the industry (trade dollars, slotting allowances, buying and self distribution) were changed to reflect the current marketplace realities, the profitability of the industry would improve substantially. Rather than having the shopper come to the everything store, this would enable the retailers to move towards the shoppers' moment of value; closing the gap between creating demand and satisfying the demand.

All you have to do is to look at the success of specialty stores at the expense of department stores; and of limited assortment stores: of dollar stores; of fast food; of Starbucks; of clubs; and even street markets at the expense of supermarkets for proof of the concepts.

Central buying and distributing to a generalized food store business model is probably over as a sustainable business model.

We would agree…and that the folks hanging onto the past are the same ones doomed to live in it.

MNB user James Curley had some additional thoughts about the "need states" of consumers, and how they connect to other issues discussed on the site: usual, your commentary continues to 'dovetail' with prior observations in MNB. Just last week you stated: "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." Sadly, these two points - slotting allowances and filling the 'discovery need' - are very inter-related. I have been working in small brand development and category innovation for most of my career. I can say with conviction that many (if not most) innovative products come from smaller, nimble companies, often start-ups. These are the exact companies who don't have legacy brands on the shelves to use as cash cows to finance slotting.

Because they are small, quick to respond, and often full of creative executives who felt stifled at larger companies, these kind of firms bring lots of value to categories. Here's a handful of brands who started out small and brought huge value to their categories through various means: Celestial Seasonings, Snapple, Clean Shower, Pace Picante, Nile Spice Foods, Ben & Jerry's, Balance Bar. We recognize them now as divisions of much larger companies (or ex-divisions...), but at one time they were small, breakthrough brands with more vision than money. Retailers and wholesalers would do well to remember this, and look at new items to see if they bring real value and innovation to a category. If so, waive the slotting and get out in front of the competition by serving the 'discovery' need. Your customers will thank you by buying more.

Kudos to the retailers who already do this - you know who you are.

We had a piece yesterday that followed up on the story about how Kmart, desperate to control costs and keep every penny it can, is suing almost 500 local governments for a total of $8.6 million in what it believes are property taxes improperly assessed while it was in bankruptcy.

We still think that suing communities on which you depend for a relatively small amount of money is a dopey thing to do. If we lived in a town being hurt by such a suit, and we knew that having to refund property taxes would have an impact on public school funding (which it will in many cases), not only would we refuse to shop at Kmart, but we might get on a picket line to protest the retailer's moves. This is what happens when non-retailers run retailing entities. They just don't get the nature of the relationship that should - and must - exist between shopper and shopkeeper.

One member of the MNB community responded:

Unfortunately most taxing groups whether they are elected or appointed such as a mosquito abatement district think that your money is theirs. Their sense of fairness is further distorted with regards to corporate sites with headquarters in distant cities. Most well run chains have a system to compare their assessed valuations with neighboring property. They take action if they are being unfairly treated.

The fact that K-Mart has so many actions going attests to the fact that they are playing catch up on an expense item that they should have been monitoring. The public thinks Kmart is suing corpulent wart faced tax collectors wearing eyeshades while hunched drooling over their money. Your philanthropic view of taxes is one shared by the guilt ridden super rich but Kerry and Babs do not shop at K-Mart. It's good business and not bad PR.

People can disagree…though the notion of being lumped in with the "guilt ridden super rich" gave us goosebumps. We're not telling Mrs. Content Guy, though…she'll want to know where all the money went.

MNB user Jim Veregge had a thought:

Hey Kevin, taking the Kmart mentality a step further, does this mean if I file bankruptcy that I don't have to pay my property taxes? Or my income taxes? Maybe we've hit on something......

Seems a very disingenuous way to treat the local municipalities and counties that Kmart operates in, huh?

That's how we saw it…but you know us, we're part of the out-of-touch guilt-ridden super rich. What do we know?

MNB user Maurine Sticker offered:

You are SOOO right on K-Mart...they seem to forget not only am I a retail shopper, but a vendor representative who clearly sees a different kind of treatment which leaves a very sour taste...

You have to treat everybody right…whether they are customers, vendors, colleagues or employees. Maybe we're just simple minded, but we think we'd get confused if we tried to act differently around different classes of people.

Regarding customer service levels in stores, one MNB user wrote:

The real problem is that we are in an, “It’s all about me” society. Many store employees just want to satisfy themselves and their own needs without thought of anyone else, let alone the customer. We all need to start thinking about others first and customer service will improve.

Actually, we're thinking that the real problem is that nobody is teaching these folks how to act correctly. They're capable of it…but they have no role models.

MNB user Christian Hill wrote:

You hit the nail on the head. I don't know why, but I am consistently amazed at the deterioration of customer service over the last few years. No wonder people are looking to other channels, with less interaction, to purchase goods and services.

And MNB user Joseph Friedman wrote:

I wholeheartedly support every word you’ve written about customer service. My company has taken this subject to the next level by bringing in an “educator” in customer service from the Carroll Keller Group to present a two part lecture series to every employee in my company. This individual, Darryl Harris, did a phenomenal job of touching each and every employee on the importance of Responsiveness, Attitude, Responsibility, and Empathy. In addition, we were all reminded of the importance of extending customer service principles internally amongst ourselves that ultimately help please our end customers.

Yet another MNB user wrote:

It has been so long since I have observed adequate customer service that I thought the term was removed from the dictionary.

MNB user Tom Russell had some thoughts:

In college I worked in a Jewel Food Store. Tommy Moran, the store manager, had an asst mgr who ran operations. Tommy’s job was to walk the aisles, remember and greet customers by name, ask about the family, and check that she was finding everything she needed. If the store was out of something she wanted, Tommy would send me across the parking lot to the competition to buy it while she finished her shopping. Then Tommy would present it to the woman and thank her again for shopping at his Jewel.

They loved him and his store.

A reaction from one MNB user to our story about "zoomers":

I was surprised by this pathetic statement about personal finances in the U.S., "households headed by someone in the 55-to-64 age group had a median net worth of $112,048 in 2000..." So after working almost 40 years, the AVERAGE AMERICAN HAS SAVED LESS THAN $3,000 PER YEAR.

I know the retail community may not like this statement, but our savings rate is abysmal. Shame on us. Plan for your future and stop expecting the government to take care of you.

And another MNB user wrote:

Given the fact that I was born during WWII, I am the age that puts me in the leading edge of Boomers.

I find it extremely interesting that there is sudden interest in my spending power. That spending power is no different than is was 5 years ago when corporate retailing America did not give two whoops and a holler about my money or the money of anyone else in my age and interest bracket. Suddenly when the figures are in flashing lights, they grab retailers' attention.

The idea of a niche in the market does not cross the minds of retailers. They want the whole pie to be one flavor, not made up of a variety of flavors so many consumers can find the things they wish to purchase. Don't believe me? Go to Target and take a look at women's clothing. Only the trendiest clothing is on the racks. If a woman does not have the body of Twiggy (I know that dates me), there is nothing there to even look at. If a woman's coloring does not look good in hot pink, orange or lime green this spring, she had better not plan to shop there.

Demographics can help the retailer, but they should not be the be all and end all when it comes to decisions of what to put on the shelves. Many may want those things, but many others want and need other things and THERE IS MONEY TO BE MADE from these consumers as well. As our country continues to grow, a niche market can be huge. Boomers aren't interesting and new and exciting, but our money blackens the bottom line like any other money.

Some reactions to this week's essay about the new Apple Stores and their approach to retailing.

One MNB user wrote:

Intriguing essay. Wondering why more people don't look for principles of success and creatively apply those principles to their own business. Used to work for a struggling grocery chain here in Chicago but was laid off when they consolidated out west. Currently employed by a drug retailer and find principles from previous experience that, with a little cobbling and shoehorning, can be adapted or lead to new ideas here. Guess it's the liberal arts B.A. in philosophy...

And another MNB user offered:

Thanks for reprinting that article on the Apple Store's lessons for retailers; I had not seen it elsewhere. It's message is right on (and I'm not just saying that because I have three Macs at home)!

On the subject of Safeway and Steve Burd under pressure from investors, one MNB user wrote:

Maybe the shareholders are tired of Burd being the only one to profit by while the company is losing money? He profited quite well last year selling his shares. In fact, every time he dumped some the price fell!

We got an email from a member of the MNB community that surprised us:

Why are you so pompous about Wal-Mart suing and getting their way around community officials yet condemn Kmart for being stupid to do so?

I read you only because you are slanted and put a different perspective on reality and common sense.

To which we responded:

I'm sorry...but I am confused. Do you think I approve of Wal-Mart's moves in Inglewood?

And he replied:

I think you are enamored with Wal-Mart!

Their size and their power are rapidly, if not already, at the level of the old "American Tobacco" company that the congress of the United States broke up in the early 1900"s.

As a businessman and a citizen, the power and control exercised by Wal-Mart cause me great consternation. Too much dictatorial control over manufacturers, wholesale and negative impact on small local business retail. This type of control is not good for democracy and free enterprise.

Recently, certain toy manufacturers have taken the position they will not sell to Wal-Mart this year. They are tired of being dictated to by Wal-Mart. I have 7 grandchildren and I intend to buy the toys manufactured by those courageous folks for Christmas and birthdays this year.

It really makes me ill when community leaders and local citizens say no Wal-Mart stores and they go to some judge and get it set aside so they can build a "super center" that in 15 years becomes an empty eyesore. Wal-Mart is building super centers in cities (or attempting to) with the intentions of leaving empty their previous large store only a mile or two away. One instance of this is a center in Bakersfield, California, in the neighborhood of White Lane and Hughes Lane. They are meeting resistance but I am sure their legal machine and political clout will prevail. With all of their profits, why not buy up the center, tear down the old building and build a super center on that same property? I come from a small community in Oklahoma and saw what a Wal-Mart store does to small family owned businesses that were in business for many years.

We're amazed, quite frankly, that we're being accused to being enamored with Wal-Mart…we know some folks down in Bentonville who feel quite the opposite.

But hey, in general we try never to see things in black-and-white terms. A lot of the world is gray…
KC's View: