business news in context, analysis with attitude

Published on: June 6, 2014

In anticipation of next week's Food Marketing Institute "FMI Connect" conference and exhibition in Chicago, MNB this week will feature interviews with three FMI board members.

Today: Randy Edeker, CEIO of Hy-Vee, and FMI's vice chairman of Member Services.

What is the biggest transition you think the industry is going to have to make over the next 10 years?

Randy Edeker: I believe our industry is entering a time of transition in multiple areas, and each will be crucial in its own right. There’s the changing landscape of competition as a result of acquisitions and new competitive models that have emerged in recent years. Then there’s the transformation of health care and the potential roles those changes create for our industry. Add to that evolving marketing tactics in mobile and social media as well as new store sizes and you can see we are living in a complicated and rapidly evolving time.

What do you think will be the biggest adjustment you'll have to make in your own company, and how are you laying the groundwork for it now?

Randy Edeker: We must develop new ways to speak to our customers on a much more personal and intimate level. Technology will help us do that, but it takes more focused training and making sure we have the right systems in place. Every employee in our company is challenged to do whatever it takes to completely meet—and exceed—our shoppers’ expectations. The key is making sure we provide those experiences consistently, not just occasionally.

What demands do you think an empowered consumer base will put on the food industry? How about an entire new generation of employees that have different expectations of what the work experience should be like?

Randy Edeker: Never before have we faced a consumer with such a wide range of exposure to incredible foods, ingredients and culinary experiences. Chef-influenced foods are virtually everywhere, so it’s inevitable that today’s consumers will have high expectations of fresh food, variety and easy access to everything they’ve been exposed to. When you combine that shopper profile with today’s transparent, competitive environment, you end up with shoppers who are more empowered than they’ve ever been before.

Just as consumers want to be engaged on a personal level, so, too, do employees. I believe employees today are ready and willing to help us be successful, but they won’t just blindly follow the directives. We have to do everything we can to ensure they not only understand the company’s mission, but buy into it. Then we have to empower them to carry out the vision and recognize them when they do.

How important do you think transparency (about product sourcing, nutritional info, GMOs, etc...) will be going forward, and is there a line you think retailers should not cross because it will be going too far? Do you think that retailer priorities will always be in synch with supplier priorities in this area?

Randy Edeker: Whether one thinks transparency is important or not is irrelevant. The concept is here to stay. And it doesn’t matter if you’re a retailer or a supplier, transparency sheds light on how one conducts business. You can’t lean on marketing tools and techniques to promote an item. The product must be everything you say it is. All of us—suppliers and retailers—must increase our transparency efforts to meet our customers’ expectations of quality, nutrition, food safety and retail price.

What's the biggest - and in retrospect, the most important - mistake that you've ever made, and how did you grow from it?

Randy Edeker: Probably the biggest mistake I’ve made is learning the pace of change within an organization. You can’t underestimate the power of an 85-year-old culture. If I’ve made a mistake, I’d say it’s forgetting that culture eats strategy for breakfast, especially if you don’t explain the “why” to your people very well. Sometimes I move at a pace that leaves some behind.

What is the most significant thing you do each week, and why?

Randy Edeker: The best thing I do every week is talk one-on-one with our people in the stores. I remind employees that our corporate office is not Hy-Vee. Hy-Vee is out in our communities, in our stores. To most of our customers, Hy-Vee is an employee they encounter, not a place. When I talk to our people, I get a good sense of what is working and what isn’t. It is also when I feel the best about what we do, and how we do it.

What is the single, most important retailing rule that you've learned in your career, and how did you learn it?

Randy Edeker: When I was a brand new store director in Columbus, Nebraska, I had the opportunity to work with a gentleman that had been very successful with his own ad agency. He taught me that “the fastest way to kill a bad business is with great marketing.” It speaks volumes to the fact that your store better be better than your story. To do that, you have to master the basics first and foremost. Claiming to be something that you’re not will not only raise expectations but also deliver greater disappointment when you don’t live up to them.

If you had to define the most important aspect of leadership, what would it be and why? (And, if you are so inclined, could you give an example of this quality in practice?

Randy Edeker: Humility makes you approachable, believable and easier to follow. If you deflect praise to others and remember how you got to where you are, and where you came from, you will be a better leader.

Bonus question: What is your favorite movie, and why? (And is there a business lesson in it)?

Randy Edeker: Skyfall. I think this was the most brilliant movie because it repositioned and reintroduced an age-old icon James Bond in an entirely new light and to an entirely new audience. It transformed him into more of a millennial hero similar to Jason Bourne. Never before had we seen James Bond somewhat vulnerable, less than perfect. Still you learned new things about him, like where he was from and how he got to where he was. There are some great branding lessons in this movie.


Next week: See you at the FMI Connect / United Fresh show in Chicago!

Published on: June 6, 2014

by Kevin Coupe

It had to happen.

Slate reports that last Monday, when Suzi LeVine, the new American representative to Switzerland, took her oath of office, she placed her hand on an unusual book.

A Kindle Touch. Which was showing a digital copy of the US Constitution, turned to the 19th Amendment (which says that people can't be stopped from voting because of gender).

The story notes that "e-readers are a growing trend for oath-taking. As the Washington Post points out, firefighters in New Jersey were sworn in on an iPad version of the Bible last year because the firehouse's IRL Bible had gone missing. LeVine worked at Microsoft from 1993 to 1999 and again from 2009 to 2012, and also did a stint at Expedia from 2003 to 2005, so she probably wasn't fazed. How long until the president is sworn in on a smartphone?"

It'll be an Eye-Opener.

Published on: June 6, 2014

USA Today reports this morning that Target, which has a less than impressive image among Millennials, "is trying to win the hearts — and clicks — of Gen Y with a heavy hand on mobile and new digital initiatives, including an overhaul of the company's wedding and baby registry business, integrated shopping lists with live store maps, and tests of same-day delivery for some online orders."

And, the story says, "in a first-ever ad campaign for Target's digital services launching this weekend, the brand will heavily market these new features as a convenience proposition to young couples and families. No time to shop after having your first child? Order everything online and pick it up the same day."

Target also is developing a mobile application that "allows users to build shopping lists that tell them exactly where in a store to find each item," is building a personalization function that will allow it to offer more customized recommendations to online shoppers, and will begin using some 140 of its stores as warehouses for online orders, which will allow it to expedite delivery times.

Published on: June 6, 2014

The Chicago Tribune reports that CVS says it is on track to remove all tobacco products from its 7,600 stores by October 1, a decision that it announced earlier this year and that will "abandon its $2 billion-a-year tobacco business in favor of bolstering its reputation as a true health care company."

The company says it will continue selling tobacco products until a still-to-be-determined date, at which all those items will be pulled from the shelves.

According to the Tribune, "The move already has paid dividends in bolstering CVS’ reputation with some consumers and, perhaps more importantly, with prospective clients like health plans and hospital systems." However, competitors like Walgreen and Rite Aid have not made similar moves; there are other chains, such as Wegmans, that have not sold tobacco products for some time.

Published on: June 6, 2014

The Oregonian reports that there is a new food retailer in the Portland area - and it is on wheels.

According to the story, "My Street Grocery is a health food store on wheels from Whole Foods Market that partners with Portland-area health clinics to make fresh, healthy food more accessible.

"Amelia Pape co-founded My Street Grocery as an independent business in 2012 after developing the concept in graduate school at Portland State University. The store's first ride was a refurbished Franz bread truck. The start-up worked with non-profits, but after Pape's partners left she approached Whole Foods about combining forces."

It took Whole Foods about 10 minutes to agree to do it, she says.

The paper writes that "the mobile store opened May 21 and celebrated the launch Monday in Northwest Portland. On Wednesday morning the trolley was stationed at Oregon Health and Science University's Family Medicine of Richmond clinic on Division Street." It is open four days a week, the location varies by day, it accepts cash, card and food stamps, and "houses freezers and refrigerators that store meat, dairy and juice, among other products. The shelves are lined with whole grain pasta, dried fruit and soups. Fresh produce, nuts and cereal sit on tables and shelves outside."

Published on: June 6, 2014

USA Today conducted a survey in the wake of the Target data breach and reports that:

• "A full 24% of those surveyed said they had stopped buying anything online in recent weeks because they were concerned about the safety of information they might put online.

• "56% said they had cut back on the number of Internet sites they used and were only going to large, well-known companies they were confident were safe."

• "The poll found that users are also keeping a closer eye on their accounts, with 55% saying they had started checking banking, investment and credit card sites more often for signs that someone had hacked into their accounts."

• "People with less education and lower-incomes were more likely to stop buying anything online. Those with more education and higher incomes were more likely to have changed passwords and cut back on the sites they use."

Published on: June 6, 2014

The New York Times reports that the move by the New York City Board of Health - prompted by then-Mayor Michael Bloomberg - to limit the sale of jumbo sugared soft drinks in the city - was heard by the State Court of Appeals this week. The Times notes that this is the final chance for the ban to survive, having been struck down by a lower court last year.

However, the case is seen as something about far more than large-sized soft drinks. Here's how the Times frames the real issue:

"Health advocates and legal experts say they are less concerned about the fate of two-liter Coca-Cola bottles than something more consequential: how far local governments can go to protect the health of their citizens.

"The American soft-drink industry, in suing to stop the plan, contended that the city’s Board of Health — which banned lead paint in 1959 and once cleared slums to prevent the spread of cholera — went beyond its powers in trying to regulate the size of sugary drinks, saying the board should be restricted to narrower concerns, like eradicating diseases.

"That argument, if upheld, could limit the role of mayors and public health agencies to influence consumer behavior. And it would rewrite the role of New York City’s Board of Health, an obscure but powerful agency that has been a national leader in creating policies intended to encourage healthier habits, like banning trans fats from restaurants and posting calorie counts on menus."

Published on: June 6, 2014

• Media attendees at this week's annual meeting of Walmart shareholders in Arkansas got a peek at the company's innovation labs there, CityWire reports, and "items revealed included 3-D digital printers in stores that allow shoppers to replicate their own images for wedding cake toppers and digital watermarks in print circulars that allow shoppers to scan the item on the page into their phone to glean a host of additional product information including reviews."

Walmart said that its innovation lab "has held eight in the past two years which has yielded scalable ideas such as 'Amazing on a Budget' – a shopping tool that allows a shopper to get help stretching a food budget. The innovation came from a real-life situation when a shopper in Chicago asked the store manager to help feed her family of four on a limited budget. She gave the manager the budget and the store gave her list of items. 'Amazing on a Budget' does the same thing in a seamless manner while also allowing the shopper to stay within a budget. It can refer a private label or access a manufacturer coupon if available to help the shopper access savings."

“We are testing lots of things, learning fast and willing to fail fast which is part of the startup mindset, " says Gibu Thomas, senior vice president of mobile and global e-commerce for Wal-Mart.


• Fortune reports that Walmart "received $104 million in tax breaks for giving its executives huge bonuses, according to a report released on Wednesday."

The story says that Walmart got the write-offs "for doling out $298 million in performance pay to executives over the last six years," and the study charges that "such loopholes ultimately cost regular taxpayers dearly in terms of government service and higher tax rates."

The report was issued by the Institute for Policy Studies, a Washington think tank, and Americans for Tax Fairness, described as "a coalition of 400 national and state organizations for tax reform."

Walmart responded to the study by saying that "this is the same group that put out a similar flawed report last year based on promoting their agenda rather than on the facts,” pointing out that executives are paid for performance, not to take advantage of tax loopholes, and asserting that "unlike some companies, Wal-Mart pays billions of dollars per year in U.S. federal, state, and local taxes, helping to fund education, public safety, and infrastructure improvements in the communities where we operate.”

FYI…there is legislation pending in the US Congress that would prohibit companies from getting tax write-offs for executive bonuses.

Published on: June 6, 2014

• Advertising Age reports that "McDonald's is setting up shop in the tech community epicenter of Silicon Valley. The company's new outpost, on San Francisco's Market Street, is the brainchild of McDonald's Chief Digital Officer Atif Rafiq, who came to the company in October. Mr. Rafiq said that San Francisco office will enable it to better attract and recruit digital talent; buttress business development; and provide the company 'a way for us to be more plugged into the flow of ideas'."

Published on: June 6, 2014

• The Hachette Book Group, which is fighting a battle over prices with Amazon that has led to a kind of virtual boycott of its books by the e-tailer, said yesterday that it is laying off some 30 people, or about three percent of its workforce.

The reason, it said, is a "changing marketplace," and the layoffs are not "directly related" to the Amazon dispute.


• The Wall Street Journal reports that Nestlé SA plans to sell off underperforming food brands from its portfolio, as it continues to conduct reviews of its 2,000 business units.

"We will divest certain businesses or subcategories of certain businesses," CEO Paul Bulcke is quoted as saying to an investor conference. "We will not allow problems to drag on." These decisions, he says, free up management time and resources: "We don't have stupid discussions, discussing the same problem five times."

Published on: June 6, 2014

• The Food Marketing Institute (FMI) announced the appointment of Richard (Rick) Stein as vice president of fresh foods, a new position that makes him responsible for developing a portfolio of services and activities to assist members in developing and executing their fresh foods strategies. 

Stein previously was vice president of retail merchandising and marketing execution for Safeway.


• The National Grocers Association has hired Tom Dozier for the newly created position of Director of Member Services. He comes to NGA from the National Auto Auction Association, where he served as the meetings manager, and oversaw logistical planning and execution of annual conventions, trade shows, bi-monthly webinars and quarterly training classes.

Published on: June 6, 2014

Responding to yesterday's story about Revolution Foods, the company that is making healthier school lunches, MNB user Alan Finta wrote:

There’s an interesting challenge here for Revolution Foods between satisfying the “purchaser” of the product (the parents), and the “end-user” (the kids).  I live in a suburb of Sacramento and had Revolution Foods lunches offered at my kids charter school a couple years ago.  As parents, we loved the healthier fare offered, and from what I remember, at a reasonable cost.  The issue, was that my kids wouldn’t eat all of the meals, and threw away a good portion because “it didn’t taste good” or “it had weird things in it” (water chestnuts comes to mind).

My kids are not the pickiest eaters (though neither one likes peanut butter and jelly sandwiches…go figure).  We have them eating Chinese, Indian, and even Peruvian food, as well as our good ol’ basic American fare.  We try to balance every meal with lots of fruit and vegetables and a good source of protein.  They’re not unaccustomed to variety, but for whatever reason they did not care for these lunches.  Literally throwing money in the trash can, we stopped buying the meals.  This past year the program was not offered at the school, so I’m guessing we weren’t the only family with this issue.

From another reader:

Revolution is the lunch contractor at the charter school my son attends.  When they came in as the new vendor, they held tastings for the adults and kids at various events - I was impressed by their outreach as well as the food.

That said, my son still thinks the lunches are disgusting.  But just because my kids don’t want to eat healthy food doesn’t mean I’m giving up the ghost and just feeding them junk! 

I think it’s a smart investment - I just wish my son would eat their lunches so I could stop packing them.




Regarding the paradox of choice, MNB user Craig Espelien wrote:

I was very intrigued by the discussion around the Paradox of Choice as I have done quite a bit of work in this area – understanding how a consumer chooses a product and even when they don’t.  This started when I was first in retail 35+ years ago and International Coffee and Celestial Seasonings teas were first huge – both sections were tiny (boxes were tiny) and way overcrowded as both lines had too many SKU’s.  Customers would provide feedback in the store that they could not find the flavor they were seeking as there were too many other products.

Several years later when I worked for Supervalu, there was some work done in the Cub stores where the mustard section in one of the stores was reset and the number of SKU’s were cut in half – and the consistent feedback was that Cub had added SKU’s (but in reality, the consumer could now find what they were seeking).

Recently, I have boiled this down into a consumer segmentation model that focuses on the value level consumers are seeking (Value, Mid-Price, Premium, Luxury) and how brands/products differentiate themselves (Value Equals:  Quality, Quantity, Price, Differentiation) which shows that if there are more than 16 choices, there will be duplication as there are no other squares in the matrix to occupy.  Now, 16 options is not necessary in every category (but color and flavor options may expand the number of SKU’s as well) so a strong retailer can curate their offering to eliminate the duplication and provide the consumer with the right number of choices to provide variety but eliminate the confusion.

Unfortunately, too many retailers (when I have spoken to Amazon, their goal is to offer EVERYTHING available regardless of the confusion created) carry too many duplicate SKU’s with no real differentiation – harming not only their consumers but also creating a complex supply chain that increase costs due to inefficiency (manufacturers are not innocent here either – they reward their sales teams for SKU expansion regardless of if it makes sense for the retailer or consumer – but that is an entirely different discussion).  This has allowed the limited assortment folks (first mass with only the fast moving SKU’s, then Aldi/Save A Lot with a private brand approach and finally dollar with core products only) to offer a more curated version of what is needed (and steal volume from the confusion grocery channel).

Kroger has done the most work on providing a more curated assortment (through their Dunnhumby relationship) and has been rewarded with higher sales and profits.

My point – being everything to everyone does not work anymore and retailers – regardless of channel – need to focus more on who their consumers are, what they need and/or want and get the best (not most) variety on the shelf to fit that need.  I doubt it will happen quickly (or painlessly) but those who do not do this will continue to struggle with the Paradox of Choice.




Regarding our interview yesterday with Colleen Wegman, one MNB user wrote:

What a great read!  She is so authentic!  Content was not surprising, Wegman's as a company walks their talk.

I have some concern about federal GMO legislation, because there are all indications the requirements for labeling will be watered down, and allow for crafty manipulation.  I like very much what she said about transparency.  We consumers want it, are demanding it, the purveyors of food should simply provide it.

But one reader had a problem with one of Colleen Wegman's responses:

“Stop selling cigarettes” and “That’s how the free enterprise system works” seem at distinct odds with one another.

I don;t think so. Not at all. "Free enterprise" also means being free to decide what you want to sell and what you don't want to sell.




On another subject, one MNB user wrote:

In his mind-boggling 65 years in the game, Zimmer also worked with the Padres,  Rangers,  Red Sox,  Cubs (taking them to the playoffs,  no less), and the last decade as a senior advisor to the Rays, where tears were evident in the dugout last night.

I'm not a huge fan of the game, but even I can see what a huge impact he made on the game and how big a hole he leaves.




I wrote yesterday about how more people get their information and news from the likes of Jon Stewart, Stephen Colbert and John Oliver, which prompted one MNB reader to write:

Kevin, I have been getting my news from the nightly “Daily Show” and “Colbert Report” for years .  And I am way older than their demographics.  Now, anytime there is a breaking story, that’s where I tune in to see their (usually) enlightening, broadening, and of course, entertaining, take on what has happened that day.  They are smart, see the issues clearly, and can state in a simple but understandable way, what is happening and how it affects us.  Brilliant.

And another:

I think the reason why shows like Colbert, Daily and John Oliver have such an informed audience is that you have to know what’s going on to get the jokes.  My teenage son watches the news and engages with us on current issues and debates so that he can enjoy the late night shows.  Being smart is the new cool.

That's a really, really good point.

I can only hope you're right about smart being cool. Because for too long in this country we've been in a period when intellect is seen as suspect, information is seen as irrelevant, and people think that they have a right not only to their own opinions but their own facts.

Published on: June 6, 2014

A sobering moment this morning, as we observe the 70th anniversary of D-Day, a day that in so many ways served as a hinge for history.

It has been fascinating this morning to watch some of the coverage. I will tell you this. If you have the opportunity, you should make your way to France, to Normandy and Omaha Beach and the surrounding villages. We did this about eight years ago with one of our sons, Brian, and were given a guided tour by our friend Fiach O'Broin (who, in our family, is referred to as "the smartest man on the planet"). It is an awe-inspiring place, and one of those experiences that actually surpasses any and all expectations. It is a privilege to go to Omaha Beach … just as it is a privilege to be an American and know the extent top which that greatest generation sacrificed itself to, quite literally, save the world.

If you ever get the chance, find your way to Omaha Beach.




On a less reverent subject…

An MNB user suggested the other day that it might be interesting for people to write in about their five favorite or best movies, and we've begun getting emails suggesting that this was an appealing idea.

One MNB user wrote:

Planet of the Apes
Jaws
Star Wars III, IV, V
Titanic
Avatar

From another:

Princess Bride
2001
The first Star Wars or Indiana Jones movie, take your pick
Catch 22
Dr. Zhivago

And another:

One Flew Over The Cuckoo's Nest
The Wizard of Oz
The Shawshank Redemption
Blazing Saddles
Young Frankenstein

And still another:

Star Wars
When Harry Met Sally
Cousins
Monty Python’s The Meaning of Life
A Christmas Story

Interesting group of choices … and almost none of them would make my list (which would be very different depending on whether zI'm talking about "favorite" or "best" movies). I'll keep this list going in coming weeks…




That's it for this week. Have a great weekend, and I'll see you Monday.

Slàinte!