business news in context, analysis with attitude

Responding to a piece we had about the growth of private label, one MNB reader wrote:

Agree that every retailer should have private label as a part of their overall strategy.  However, retailer success is measured by increasing sales per store and private label trades a consumer down.

National brands represent 80 % of sales. Should a retailer focus on the 80% or the 20% ?

Wegman’s extreme promotion of their private label is their right, but in my opinion is backfiring  by encouraging many upstate New York customers to rediscover Tops to get their favorite national brands.

I would also point out the dismal performance of Lidl USA and low sales per store at Aldi (about $9 million) as consumer votes on stores with a prominent private label programs. Publix and Grocery Outlet are two of the fastest growing USA retailers who focus on national brands while offering private label for those who want it.

I think Aldi and Lidl are playing a different game.  And maybe you're seeing something I'm not, but I'm not aware that Wegmans' private label strategy is backfiring in any way.

MNB reader Janis Raye also had some thoughts:

This article about private label really hits a nerve with me. You know how picky I am, and recently, even I’ve started to test my local Price Chopper (Market 32 now!) private label products. I’m a complete convert for the plain whole milk Greek yogurt, salsa, canned kidney beans, nuts, canned tomatoes, and the list keeps growing. These are all changes I’ve made because food is getting ridiculously expensive and these staple products are easily just as good as the manufacturer’s brand names, in my opinion. None of them are the kind of private label products you talk about (DLM killer brownies or some of the Trader Joe’s snack foods). Here in northern Vermont, they aren’t easily available to me, and that’s not primarily what I buy. I want ingredients, not processed products. I think that’s still an area where private label can make even more traction, if the quality remains high but the price is less (and often on sale). Can’t imagine the manufacturers are happy about this turn of events, but I suppose some of them are making the private label product, so they’re in on it anyway.

By the way, the money I save buying private label I more than make up for by buying organic produce, meats, chicken and seafood at my local farmer’s market. That’s where paying more makes a real taste difference, I think.

On another subject, one MNB reader wrote:

On Amazon earning their Zero Carbon Certificate so much of these certifications are front loaded to achieve the issuing organization's ends that do not necessarily achieve their stated sustainability goals.

I remember when LEED was the golden standard and many of their targeted goals did not pertain to sustainability but the planners design ideals. This global push to electrical demand before solving the sourcing of the power grid will only create major issues down the line. Legislators' desire to pull the energy consumption towards electrical consumption by punishing gas utilization as NYC, California and other governmental agencies are doing, will create only increased cost for consumers and energy logjams in the future.

Sustainability is a great target but at what cost? Was this new construction or did they tear down reusable structures to build their new "carbon neutral structure"? Most of these new Amazon Fresh stores built by Amazon over 2020-2022, took 2 to 3 times the time to build out then a typical supermarket with most of them now sitting vacant. These buildings need to be heated and cooled with lights on while they sit unused. What is the sustainable cost of these on the environment not to mention the impact they have on the shopping centers in which they were meant to anchor and be traffic generators?

On the subject of Tesco's marketing push aimed at members of its Clubcard loyalty marketing platform, one MNB reader wrote:

It is amazing that Tesco has 21 million Clubcard users, given the UK household count of 28.2 million.  Clubcard has 74% household penetration in the total UK and 80% of sales using the Clubcard.  The data advantage that gives Tesco over it's rivals in astounding.  Kroger, with similar data systems has about 60 million households out of the US total of 131 million households (46%) and they claim that 97% of transactions are captured by their card.  The proposed merger with Albertson's claims to increase the number to 85 million households (62% of total US).  The ability to analyze that much data for a retailer gives them such insights into merchandising of stores and then to make the platform they sell to marketers and advertisers so vast, it gives them a substantial advantage in the marketplace.

We had a story this week about the most - and least - food-forward cities in America, which included this passage:

The bottom five cities - 178 communities were evaluated - included Sioux Falls, South Dakota … La Crosse, Wisconsin … Green Bay, Wisconsin … Fargo, North Dakota … and Wausau, Wisconsin.  Which is not to say that these places don't have good food, just less trendy - the available variety is somewhat lacking compared to other places.

One MNB reader wrote:

It is comforting to know that the bottom five are all within driving distance of Minneapolis.

Pot Roast forever!

To each, his/her own.

Responding to my criticisms of Rite Aid, one MNB reader wrote:

Rite-Aid has the best shopping experience among all 3 Drug Chains (CVS, Walgreens as well) in the large Southern California market in my opinion.

Stores have been universally remodeled, it's a positive shopping experience.  In store partnerships with GNC, Thrifty Ice Cream etc., feel (for different reasons obviously) as they are strategic & complimentary, not a forced fit.  

The Rite-Aid loyalty program is by far the best among the 3.    Easy to understand, execute and highly advantageous to the consumer.   

In some ways "less is more".   The Walgreens and CVS stores locally are a mixed bag, but a common theme is being overwhelmed by a barrage of a blend of merchandising noise up front and throughout the store.    In some way, and maybe it's having one financial hand tied behind their back, Rite-Aid has a more focused assortment in (at least in SoCal) a clean, recently remodeled environment.

I'm glad somebody is standing up for Rite Aid.  To be fair, though, it must be lonely.

On another subject, one MNB reader wrote:

Why Amazon chose South Africa as a new market is beyond me.  There are dozens of markets that are better.  10% of South African households control 50% of income.  True, that 10% does not relish driving with the crime as it is.  The biggest problems for Amazon will be collecting (25% of South Africans have no bank account) and having the delivery trucks pilfered.  Suppliers better read the fine print closely.  It’s estimated that about 40% of South Africans have disposable income of less than $500 per month.  Walmart’s South African business is less than 1% of its total revenue.  Developing on the ground operations in Colombia would be a better bet. And Bogota is 11 hours away whereas Capetown is 21 hours away.

And, from MNB reader Howard Schneider:

I enjoyed your Innovation Conversation on Delta SkyMiles and the lessons retailers and others can learn from their recent program changes. You and Tom make some excellent points. Delta has often been the canary in the coal mine, introducing negative changes first, then pulling back after customer feedback, moderating some of the negatives; others in the industry then introduce their own versions of policies first floated by Delta. American Airlines has made a number of changes similar to Delta’s. But I would point out the vast difference between Delta’s recent announcement and Southwest’s, below, which came out just the other day. As usual, Southwest puts the customer first. While their product has no premium version, it is consistent and friendly. Guests know what to expect, and those expectations are almost always met. Both in substance and tone, Southwest stresses that their changes make things better for the customer – something sadly lacking in Delta’s program revisions. 

This week we referenced a story in The Atlantic suggesting that self-checkout has been a failure, an assessment I profoundly disagreed with.

One MNB reader wrote:

Once again Kevin, you are spot on.  On my most recent trip to Australia, I noticed that almost every retail store had primarily self-check out stands.  This included grocery (Coles & Woolworths) as well as department stores (Kmart - similar to Target) and office supplies (Officeworks - similar to Staples).  There were check-out stands with staff, but they were very limited.  I did notice, however, that at the entrance/exit, there was usually a security person to monitor check out (much like Costco does).  

MNB reader Deborah Faragher wrote:

Funny to read this today.  I was in our local Walmart yesterday and noted to my husband that they were doing an overhaul of their self checkout area.  It appeared to me that they are in the process of opening it up and expanding the number of self checkout stations.  I’ll be back there next week for my Covid and flu shots and will be interested to see the result.

Another MNB reader wrote:

I completely agree with you on your take about self checkouts.    The  Vons at Channel Islands Harbor in the Seabridge community is very close to us.    I shop there all the time.   It happens to be one of the highest wine volume stores in the Vons chain.  I do my part there.  The store is between expensive beach homes to the south and west and a higher crime area to the east.     It has 4 self checkouts and 6 standard checkouts.    The combination of the two gives us shoppers options (unless we are buying liquor, no liquor sales thru self checkout by law). 

I was at a register making a purchase when the cashier reacted to an audible alarm from the bakery department.  I didn’t hear it until she responded.   It was the emergency exit.   She told the manger who took off to close and lock the door.    I asked if that was a shoplifter and she said yes it happens regularly.     I think your take on the check out free stores is spot on.   Just think about it.   To get in a store you scan your card or identify yourself.  That will stop or greatly reduce theft in my opinion. 

Again, thank you for what you do.

And from another reader:

Thank you for calling out the B.S.

I read that and, as you can imagine, steam was coming out of my ears.

Don't know if you have been to the revamped Target in Framingham, MA.  There are, I think, eight self-serve checkouts - at each end.  It is bright and supervised the few times I've been there. 

Also, I was wondering how this new Astor Place Wegmans compared to Natick, MA. You say that NYC students will keep the new store in business - Natick was attached to expensive condos, with two apartment complexes within walking distance. Could they have kept Natick in business if they shuffled things around, ie, food court on top floor grocery store on the first floor? Or was it not worth it?

I think the problem for Wegmans in Natick was that it was in a mall, which meant that it was attached to a dying business model.  I read the other day that they're converting part of that mall into pickleball courts, which tells you everything you need to know.

No danger of that happening to Greenwich Village.

Another question from a reader about the new Wegmans:

How do they handle the shopping carts on two floors? Do people use elevators? Just wondering!

I’m thinking this store might be great for my daughter, who is now teaching at Baruch College. I can picture her walking down to Wegman’s after work and grabbing food for dinner and maybe a few groceries, too, before she hops on the subway to her apartment in Brooklyn. 

There is a specially designed escalator just for shopping carts - it all works very smoothly.  As for your daughter, that sounds like an ideal way to do her shopping.

Another reader email about Wegmans:

Great Facetime on Wegmans.   What an awesome store. 

Out here in the west Northgate Market will be opening a new store in Costa Mesa CA.   The long delayed store should open in November.   It will be to Orange County CA what Wegmans is to Manhattan.   Not as fancy or upscale but pretty exciting.  Northgate has been mainly a Hispanic Market but this one will cross over.    It will have lots of prepared food, multiple Ghost/Community kitchens, a massive tortilleria, a bar with an inside stage plus out door seating, and much more. Like Wegmans in Manhattan the center store grocery is downsized. 

Thank you for what you do!

Love Northgate Market - I try to visit one every time I make it to Southern California.

And, on one more subject, from an MNB reader:

Having the Whole Foods Market Trend Council share its Top 10 Food Trends to the general population is the equivalent of having Trump present the “Top 10 Political Best Practices” at the DNC. Well, maybe not that drastic, but you get my point. To the average consumer trying to put food on the table, this list is a foreign language.

I also find myself wondering what would happen if suddenly the Whole Foods folks found that deep-fried Oreos were among the next big food trends.  Somehow, I suspect they would not make the list.

And finally, following up on yesterday's email that criticized me for not commenting on the current situation in the Middle East, MNB reader Patrick Smith wrote:

I would agree with your take that making a direct business parallel out of the Middle East mess is not timely. The effects of the Israel-Gaza situation in the United States is another version of the metastasized cancer of racism. Anti-Semitism is on the rise as is Islamophobia. This sickness enables those racists who do not like African-Americans, Asians, Hispanics, or any other group who are not of northern European extraction. I am in the same marital boat as you, a Jewish wife, and two children who are Jewish. I am concerned about their safety, as I would be If they were Muslims.  I would ask you to use your opinions to speak about this. Silence is tacit approval.