business news in context, analysis with attitude

…with brief, occasional, italicized and sometimes gratuitous commentary…

• Kroger announced last week that it is backing off its net 90 payment policy, which would have it routinely waiting three months to pay its vendors, but only for suppliers in the produce business.

As reported here on MNB a few weeks ago, Kroger’s policy change was of particular concern to the produce industry, where there is a belief that the new terms violated the federal Perishable Agricultural Commodities Act (PACA, which requires that fresh vendors be paid within 30 days. George Radanovich, president of the California Fresh Fruit Association (CFFA), for example, said that “it is inappropriate, if not illegal, to force suppliers to forfeit their rights under PACA, an act created specifically to protect the perishable fruit industry … By this action, they have opened the door for other retailers to violate supplier rights protected by law. Our industry should not and will not stand for attacks like this.”

This whole notion sounds like an accountant’s dream and an operator’s nightmare, because all it does is drive a wedge between Kroger and all the small, innovative companies that could help it differentiate itself. If I were any of Kroger’s competition, I’d announce an immediate 15-day payment policy for vendors under a certain size. If you’re small and innovative, I’d tell them, come to use first.

• The Atlanta Journal Constitution reported the other day that The Fresh Market plans to close 15 stores in various locations, after an “organizational analysis and careful consideration of the overall growth strategy and long-term financial performance.”

Which means, I think, that they weren’t making any money. The closures leave The Fresh Market with about 150 stores, and I’ll bet that number gets smaller sooner rather than later.

Fast Company reports that Starbucks and McDonald’s, normally fierce competitors, “ are joining forces to build a fully recyclable, compostable cup of the future within the next three years–one that may include not just the cup itself, but a lid and straw to go along with it … The initiative is called the NextGen Cup Challenge, and it invites entrepreneurs, large and small, to develop materials and designs that can replace today’s cups. The challenge will provide grants to good ideas, and help startups work together to combine them into market-ready solutions. It was launched by Starbucks earlier this year with the earth-friendly innovation and investment firm Closed Loop Partners. Now, McDonald’s is joining the initiative.”

• The Irish Times reports that France’s Autorite de la Concurrence - the government’s competition watchdog - “has launched an investigation into the strategic tie-up between Tesco and Carrefour,” which has the two companies reaching a purchasing agreement designed to drive efficiency.

According to the story, “Tesco and Carrefour have embarked on a partnership to jointly buy own-brand products and other items over a three-year period in a bid to negotiate better deals with suppliers … The regulator is also investigating similar alliances between France’s Auchan, Casino, Schiever, and Germany’s Metro, and Carrefour and Systeme U.”
KC's View: