business news in context, analysis with attitude

We posted a story yesterday about Spartan Stores separating its wholesale and retail functions because the previous combined structure “wasn’t working.” We received the following email from a member of the MNB community who asked to remain anonymous, but who has a clear perspective on the Spartan situation:

“Was not working" is such an understatement. Those who deal with the organization have never seen it in such a state of disarray. People have been clearly frustrated and concerned with lack of direction and when direction did come, the apparent conflicts that were apparent within the direction.

“What this company appears to be suffering from more than anything else is a lack of strategic focus and leadership. One cannot expect those in positions to make or break a company, e.g., merchandising, to be able to move forward when the forward always appears to be changing, indeed, almost daily.

“This company has gone through at least a dozen Vice Presidents in the past five years. That kind of change at the top does not allow for the building of a solid, cohesive team that can drive a company forward. That is not to say that those who were at Spartan should have stayed, quite the contrary. The
very problem was caused by those departed.

“On can only hope that those in place now can become a high performing team and turn this company around. The potential is incredible even in the face of Wal-Mart and other competitors. Spartan is perfectly positioned to be a solid regional performer. The next year will one of the most critical in their history. We can only wait and see if they can make it happen.”

Sounds like tough-love to us…

In response to our story yesterday about a new interactive shopping cart system being tested at Ahold’s Stop & Shop, we got an email from MNB user Charles Young:

“Smart Cart, Klever Kart, all these carts that talk to us. Palm Pilots and other PDAs, Symbol Technologies all offering mobile information sources in the stores. These tests seem endless!

“For years people have been trying to wire and "wireless" stores to give consumer in-aisle information. This includes people like ERS and electronic shelf labeling. So far no go, why? It costs money to wire these things and the benefits to the retailer have not been enough to warrant the expense. But more, technology is not the answer; it is a means to an end, an undefined end? What is the consumer need being fulfilled?

“I am sure the model justifying the new cart includes revenues from advertising and promotion, the same bottomless pit that gave us the dot com revolution. I don't know what makes retailers or technologists think that they will get a larger share of these dollars if they have a new technology. I believe all they do is split the same budget into more media, reducing the profit for all media in general.

“Seems to me that the store needs to be wired for multiple applications and then managed.”

MNB user Richard B. Oakley had a slightly different take:

“I feel like a soothsayer! I described this exact item some 2 years ago at a California Grocers Association Board of Directors meeting during a discussion of shopping cart theft.

“I opined that when the carts got "smarter" we would need to really keep track of them and not let them become food transports for the trip home. I guess next time I should patent my ideas and keep my opinion to myself!”

We reported yesterday about Home Depot testing a smaller format that it believes will be more attractive to women customers, a story that generated a number of emails. One MNB user wrote:

“If the new format retains the lackluster customer service of their primary locations, it won't matter what color the racks are or where the kitchen displays are. Service is the problem that needs to be addressed.”

Good point. And we agree wholeheartedly.

Another MNB user wrote:

“I haven't been in enough Home Depots to really judge their store size vs. a Lowes, which has had a store in my home town for years and just built a new store right behind the Wal-Mart I work in. To me they appear to be about the same type and size store. I wonder what they're talking about every time I read the statement about HD down-sizing to compete with Lowes.

“To me they appear very similar; just like a 200,000 sq. ft. Supercenter is very similar to the smaller size ones of 150,000 sq. ft. I know they carry a little more merchandise in the bigger ones, but, all in all, having a little more room in all areas of the store is the biggest difference I see. If square footage is the only basic difference in a HD and Lowes, then that's not much difference.

“Now, when you go to 80,000 sq.ft., you're talking about eliminating categories of merchandise from the smaller store. You're not going to get every size nail that's made.”

We got an email from another MNB user who highlighted the Home Depot-Lowes differences:

“While new shelving in the stores might be a step in the right direction, I still think Lowe's has the better approach for women.

“Case in point, this evening when I checked my mail, I had a sample from Lowe's in the mail for a new line of cabinet hardware. What in the world would I want with a sample piece of cabinet hardware? At least that was my first thought.....

“Inside, complete with a satin trimmed blue jewelry bag, was a beautiful oak leaf and acorn drawer pull that had been turned into a pin from their new Betsy Fields Design Collection.

“They also included enough information about the new line to spark my interest in redoing some of my cabinet hardware as part of a remodeling project I am in the process of doing.

“New shelves may help Home Depot, but beautiful free
that's the way to attract women's attention.”


On the subject of the USDA’s new organic rules, we got an email from a member of the MNB community:

“I would rather eat organic than not. These new labeling rules are fabulous. They will help retard those who try and take advantage of customers like myself. However, there will still be the select few who will get away with lying to the public. Hopefully, these shady types will be put out of their misery by this law.”

Following our story yesterday about private label SKUs increasing, but private label sales not showing any increases, we got several emails. MNB user Richard A. Cognetti Jr. of Kinney Drugs wrote:

“We are seeing a wiser consumer. Value packs, bonus packs etc. are doing extremely well in Nutrition and also household for our Kinney Brand line. Calcium, Vit E, C and Multivitamins are growing in the 500 cts. and slowing in the 100 cts. Paper Products and detergents fly on ad.

“Private Label sales and units slower when compared to 2000/2001.”

And MNB user Paul Schlossberg chimed in:

“What we might be seeing is a channel shift by shoppers away from chain drug, mass merchandisers, etc. Perhaps consumers have decided that their time can be used better by consolidating fill-in shopping at another type of outlet. That allows them to pick up a prescription and a half-gallon of milk without making another stop. The real question behind that data is whether or not the shift includes weekly shopping trips too.

“It's obvious that supermarkets are responding by adding other services. We wonder if it might be the issue of smaller stores being preferred for quicker in/out cycles.”

And finally, we got this email from MNB user Missy Maguire:

“I have a question regarding Krispy Kreme that came up while visiting my sister over the weekend... She wants to know what they do with all of the doughnuts that they pull off the line and throw into bins (apparently not meeting quality control specifications). Of course, I understand the need to pull substandard products, but if one in ten doughnuts are thrown out, that is A LOT of food. I certainly hope that this is not the case... Please let me know your thoughts.”

Well, Missy, we checked, and found out from Aaron Richard, a spokesman for Krispy Kreme, that it is policy to donate all leftover doughnuts to local charities, soup kitchens, and shelters. While it is up to individual franchisees to identify and work with these organizations, Richard said that this is standard operating procedure.
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