business news in context, analysis with attitude

One MNB reader had some thoughts about the strategic decisions that Kroger seems to be undertaking:

It is impossible to overstate my respect for everything Kroger has managed to do in the last decade or so. But at the same time, it is possible it is veering off a good path with its latest moves as noted in your Friday article prompted by Cleveland Research.

Kroger is indeed putting more pressure on suppliers – which is a Walmart sort of move, and sooner or later raises everyone’s costs. In my opinion, in a world where the real competitive threat is probably less about Walmart than it is about Amazon, differentiated retailing, and the myriad of changes fueled by a new generation of shoppers , Kroger has not yet totally refocused on anything sufficiently different. As long as the slotting money of new items is more important than the item itself, as long as the buyer is focused on buying and not on the shopper, Kroger will be unable to break free of its own historical behavior.

Not too many years ago a little company in Arkansas dropped all its trade dollars into the cost of goods and built an empire on efficiency.  Which, like all empires, changed when it got big enough. Just sayin’.

And private label is all very well but tasting your own product in a cutting ceremony is literally the sound of one hand clapping. Kroger is not Trader Joe’s or Aldi and certainly not Lidl. Kroger may well be right to benchmark against European own-brand penetration levels as an aspiration, but it is risky to rig the system to try and force it on consumers. Go ahead and compete on the shelf, I am all for that – but there is a lot of evidence that US consumers are not yet quite the same as Europeans.

At the same time, suppliers are even more guilty- constantly bringing “me too” items and line extensions to market that add little value and mostly just increase inventory and the frustration shoppers feel navigating a vast physical pile of stuff to find the few things they actually want or need.

One of these business models will break, sooner or later. Suppliers will stop bringing the money – or the retailers will stop accepting the endless pointless item extensions. Whoever moves first will have a cleaner business, a cleaner balance sheet, and a chance to do things a different way. Until then, the disruption will continue to come from outside.

On another subject, from another reader:

Kevin, you make a great point about the Grocery industry has an opportunity to do more with the fact that they contribute heavily to their local economy. I would suggest that this can go a step deeper as part of adding context to what these retailers mean when they say they are part of the community.

I like to think that I grew up in the industry like I suspect many readers have. I started working in the retail business at 17 and have remained there ever since. For me, the community was the coworkers that I became friends with and interacted with daily. As I moved up and gained more insights into the community involvement, I thought the term was code for the donations to charitable causes both in terms of product and services. When I watched as store managers frequently took time to serve individual customers by personally delivering a shopping order for a loyal customer that couldn’t make it to the store I gained further understanding. In other words, because I grew up inside the industry, I always saw community involvement as giving to the community in some way and that is a part of it but as I have learned, it is only one aspect.

Because I worked in the stores, I developed many habits that made it so that I was not welcome to do the shopping or go along on the trips. My switching of products, as I knew many were the same or insisted that we use the one I sold, and  cleaning or facing the stores was too much for my wife to take if we were together. She was very happy to take that responsibility to “let me come home from work” as she would politely tell me. I think I just drove her nuts.

All of this changed as I learned to compartmentalize that part of my life a little better so I could help out. What I have learned as I am now welcomed to come along on the shopping trip is the way an average shopper might view the store as part of the community. It may seem obvious to some but I didn’t realize the very genuine connection that my wife feels to many of the workers at the grocery store. From Anna in the deli that knows my wife and her work /shopping schedule in addition to her usual orders to Steve in frozen that makes sure she can get the Veggie burgers my daughter likes when she is home from school for the summer, it’s a weekly part of her life to visit these friends in the community.

When I came to this realization, I asked if this was part of the reason she was adamant that she did not want to do more shopping from Amazon or home delivery options I had suggested to save time in a busy schedule. Or if this was in part why she was so frustrated when I would try to get her to go to new stores in the area for the shopping as I thought they were great stores. I learned a lot about what her answer to “I just like this store better” was really saying. The shelving layout or great merchandising, the layout, the ads, none of those things really made the big difference to her. The differentiator that had to be earned and was hardest to replace is Anna and Steve.

On the subject of the Boy Scouts being willing to admit girls (a move that some believe has more to do with finances than anything else), one MNB reader wrote:

This topic has made for some interesting conversations in our family as my wife earned the Gold Award as a Girl Scout (Girl Scouting’s highest honor) and our younger son is an Eagle Scout.    All four of us (me, my wife and both sons) have been involved in Scouting as both members and volunteers.

Interestingly (but not surprisingly to me), my wife and son share the same opinion on this topic and believe the Boy Scouts organization is misguided in its efforts to encourage the membership of young girls.

Boy Scouts can provide excellent opportunities for all its participants and all of us worked with numerous female volunteers in Boy Scouts.  Both my wife and son agree that in order to increase their odds of success in life, girls need more examples of both older girls and women as role models, not only in Scouting, but also in other areas of life.   No matter how hard they try, the  Boy Scouts will likely never provide the ratio of female leaders in its program that would be best suited for young female “Boy Scouts”.

You might also be familiar with the Boy Scouts’ Venturing program that is suited for both young men and women aged 14 and up and has been co-ed for almost 50 years.   After completing his Eagle Scout requirements, our younger son attended Philmont Scout Ranch for a week with a co-ed Venture Crew and had an excellent experience hiking in the mountains of New Mexico.   He said that both genders in the group were equally capable and everyone worked together well.

But, from MNB reader Mary Schroeder:

There’s a certain status assigned to those men who attained the Eagle Scout designation.  It applies in employment as well as socially.  There hasn’t been an equivalent for girls until now.

I say, on behalf of the WMPG (World’s Most Perfect Grandchild - a girl), Bravo to the Boy Scouts.

The playing field just got a tiny bit more even.

Loved this email from MNB reader Steve Colditz:

Boy Scouts has Financial problems?  Don’t sell popcorn. Sell Thin Mint cookies.

Problem solved.

KC's View: