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SRG is a leading US retail and consumer goods consulting firm with three decades of experience working with top US and global retail chains, wholesalers, suppliers and investment firms at the executive level.
Our in-depth expertise has been used by leading firms to support mergers and acquisitions, as well as for M&A approval from the Federal Trade Commission (FTC), who has relied on our expertise to provide insight into competitive practices across the retailing, distribution, and consumer brands industries.
In addition, SRG works directly with the top national retail chains consumer packaged goods suppliers. SRG helps these retailers and manufacturers understand the changes occurring across the industry to identify new opportunities to increase sales and consumption.
Over the last three decades, SRG has developed the most comprehensive database of future locations and remodels of Mass Volume Retailers in the industry. Combined with our proprietary competitive compression models, our deep experience and industry insights allow us to perform our due diligence on retail and wholesale businesses with a far greater understanding of the risks associated with MVR competitive activity on top-line sales and bottom-line profits, with visibility out to five years.
SRG is affiliated with several academic institutions—including Cornell and St. Joseph's universities. Because of our past projects and broad experience, SRG offers unparalleled expertise in all aspects of retail operations and strategy. Widely known throughout the industry, our research is often referenced in nationally known publications and Trade journals, such as the Wall Street Journal, The Financial Times, Barron's, Fortune Magazine, Time Magazine, Newsweek, The LA Times, Progressive Grocer, Supermarket News, and many others.
"Burt Flickinger is the best there is in retailing"
-Liz Claymon, Fox Business News Network
Chain Store Age's Editor: "Burt Flickinger is the 'Nostradamus of Retail"
Our research, opinions and expertise have been cited by the New York Times; the Wall Street Journal; the Economist; Convenience Store News; Club Store News; Discount Store News; Supermarket News; MMR/Mass Market Review; AP; Dow Jones; Reuters; Chain Store Age Executive (CSA's Editor, Ken Clark, referred to Burt as “the Nostradamus of Retail” for SRG's ability to analyze the past and present in order to presciently forecast the future with uncanny accuracy.)
"Retail Industrial Complex" article June, 2010
Those who know Burt best refer to him as the "Columbo of Consulting."
While A&P sinks, rivals salivate
http://www.crainsnewyork.com/article/20100808/REAL_ESTATE/308089970#
Grocer's four chains, 48 city locations, draw widespread interest.
The financial free fall of The Great Atlantic & Pacific Tea Co.—owner of A&P, The Food Emporium, Pathmark, Waldbaum's and other chains—has its local rivals salivating.
“We are just observing right now,” insists billionaire John Catsimatidis, who owns the Gristedes chain. But industry-watchers say the one-time mayoral candidate is keen to take over some of the ailing supermarket giant's real estate. So, too, are at least a half-dozen others, including Fairway Market's co-owner, Howard Glickberg.
“If Food Emporium came up for sale, it would be a real estate opportunity for us,” says Mr. Glickberg, whose company is rapidly expanding in the area.
In fact, an implosion of 151-year-old A&P could be a windfall for its competitors. Buildings large enough to accommodate supermarkets are scarce and highly sought-after in the city. A&P's five-borough portfolio of 48 such properties under the Waldbaum's, Food Emporium, Pathmark and A&P banners is one of the largest in the city. The Montvale, N.J.-based grocer has a total of 429 stores across eight states in the Northeast.
While some rivals are biding their time hoping to snap up individual locations—or even entire chains, should they hit the market—many others are not waiting. They are circling the foundering giant, chipping away at its market share.
Target turns grocer
Target, for example, just opened a fresh-grocery division at its new store in East Harlem and plans to do the same at others in New York. The discount department store is spending big money on an advertising blitz to get the word out about its foray into fruits, vegetables and meat.
“Target is taking advantage of A&P's weakness in New York City,” says supermarket consultant Burt Flickinger.
Once one of the most-admired food retailers in the country, with more than 15,000 stores in its heyday in the 1930s, A&P has been struggling for many years, but it was caught completely flat-footed over the past decade as newer competitors like Whole Foods Market and Trader Joe's redefined the supermarket business.
Over the past 12 months, A&P has replaced two chief executives. A third, Sam Martin, was appointed late last month. A former chief operating officer of OfficeMax and Wild Oats Markets, respectively, Mr. Martin has a herculean task ahead of him.
The company has lost money for seven straight quarters. In its most recent fiscal quarter ended June 19, the grocer reported a loss of $122.6 million, compared with a loss of $65.2 million in the same quarter of 2009.
In late July, Standard & Poor's lowered the company's credit rating to deep into junk territory, CCC, because it has too little cash on hand. “While many supermarkets have experienced profit pressures over the past year, performance at A&P has generally been worse than industry averages,” wrote S&P analyst Charles Pinson-Rose.
Mr. Flickinger predicts that the company could face a cash crisis by next February. An A&P spokeswoman says the company's turnaround plan includes the sale of noncore assets, and that's exactly what has its competitors salivating.
Some observers suggest that A&P may sell off Food Emporium. That chain boasts 16 Manhattan stores. Mr. Flickinger notes that they are the most upscale in the company's portfolio and are outperforming its other brands.
“A&P should sell its weakest operating companies, but its history is to sell its crown jewels,” he says. In 2005, it did just that, selling its highly successful A&P Canada subsidiary to help it pay down debt.
At this point, the situation is so dire that union officials are worried.
“We are concerned about stores closing, layoffs and the lack of customers,” says John Durso, president of Local 338, which represents 7,000 A&P, Waldbaum's and Food Emporium employees.
Mr. Durso and his peer, Pat Purcell at Local 1500, which represents 6,000 Pathmark employees, are pinning their hopes on the abilities of billionaire supermarket magnate Ronald Burkle, whose Yucaipa Cos. firm invested in A&P more than a year ago and currently ranks as its third-largest shareholder.
The union bosses have had discussions with Yucaipa executives, who are now advising A&P. Last year, the company brought two Yucaipa officials onto its board of directors.
The local unions would like to see A&P open new stores in neighborhoods the city has identified as underserved, where the locations would qualify for financial incentives. To do that, however, the chain would need to raise capital, and that would mean big asset sales.
“This is a great opportunity for A&P to take advantage of these programs,” says Mr. Purcell.
http://finance.yahoo.com/family-home/article/110437/inside-the-secret-world-of-trader-joes
by Beth Kowitt, Reporter
Monday, August 23, 2010
Inside the Secret World of Trader Joe's
Monday, August 23, 2010
Apple's (NasdaqGS: AAPL - News) retail stores aren't the only place where lines form these days. It's 7:30 on a July morning, and already a crowd has gathered for the opening of Trader Joe's newest outpost, in Manhattan's Chelsea neighborhood. The waiting shoppers chat about their favorite Trader Joe's foods, and a woman in line launches into a monologue comparing the retailer's West Coast and East Coast locations. Another customer suggests that the chain will be good for Chelsea, even though the area is already brimming with places to buy groceries, including Whole Foods (NasdaqGS: WFMI - News) and several upscale food boutiqu
But Trader Joe's is no ordinary grocery chain. It's an offbeat, fun discovery zone that elevates food shopping from a chore to a cultural experience. It stocks its shelves with a winning combination of low-cost, yuppie-friendly staples (cage-free eggs and organic blue agave sweetener) and exotic, affordable luxuries — Belgian butter waffle cookiesor Thai lime-and-chili cashews — that you simply can't find anyplace else.
Employees dress in goofy trademark Hawaiian shirts, hand stickers out to your squirming kids, and cheerfully refund your money if you're unhappy with a purchase — no questions asked. At the Chelsea store opening, workers greeted customers with high-fives and free cookies. Try getting that kind of love at the Piggly Wiggly.
It's little wonder that Trader Joe's is one of the hottest retailers in the U.S. It now boasts 344 stores in 25 states and Washington, D.C., and strip-mall operators and consumers alike aggressively lobby the chain, based in Monrovia, Calif., to come to their towns. A Trader Joe's brings with it good jobs, and its presence in your community is like an affirmation that you and your neighbors are worldly and smart.
The privately held company's sales last year were roughly $8 billion, the same size as Whole Foods' and bigger than those of Bed Bath & Beyond (NasdaqGS: BBBY - News), No. 314 on the Fortune 500 list. Unlike those massive shopping emporiums, Trader Joe's has a deliberately scaled-down strategy: It is opening just five more locations this year. The company selects relatively small stores with a carefully curated selection of items. (Typical grocery stores can carry 50,000 stock-keeping units, or SKUs; Trader Joe's sells about 4,000 SKUs, and about 80% of the stock bears the Trader Joe's brand.) The result: Its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods'. The company has no debt and funds all growth from its own coffers.
You'd think Trader Joe's would be eager to trumpet its success, but management is obsessively secretive. There are no signs with the company's name or logo at headquarters in Monrovia, about 25 miles east of downtown Los Angeles. Few customers realize the chain is owned by Germany's ultra-private Albrecht family, the people behind the Aldi Nord supermarket empire. (A different branch of the family controls Aldi Süd, parent of the U.S. Aldi grocery chain.) Famous in Germany for not talking to the press, the Albrechts have passed their tightlipped ways on to their U.S. business: Trader Joe's and its CEO, Dan Bane, declined repeated requests to speak to Fortune, and the company has never participated in a major story about its business operations.
Some of that may be because Trader Joe's business tactics are often very much at odds with its image as the funky shop around the corner that sources its wares from local farms and food artisans. Sometimes it does, but big, well-known companies also make many of Trader Joe's products. Those Trader Joe's pita chips? Made by Stacy's, a division of PepsiCo's (NYSE: PEP - News) Frito-Lay. On the East Coast much of its yogurt is supplied by Danone's Stonyfield Farm. And finicky foodies probably don't like to think about how Trader Joe's scale enables the chain to sell a pound of organic lemons for $2.
To get inside the mysterious world of Trader Joe's, Fortune spent two months speaking with former executives, competitors, industry analysts, and suppliers, most of whom asked not to be named. What emerged is a picture of a business at a crossroads: As the company expands into new markets and adds stores — analysts say the grocer could easily triple its size in the coming years — it must find a way to maintain its small-store vibe with customers. "They see themselves as a national chain of neighborhood specialty grocery stores," says Mark Mallinger, a Pepperdine University professor who has done research for the company. "It means you want to create an image of mom and pop as you grow." That's no easy task. Just ask Starbucks (NasdaqGS: SBUX - News) CEO Howard Schultz, whose expansion has been a huge success but has come at the expense of credibility with some coffee aficionados. The alternative is to remain a small brand with unflagging devotees, like outdoor clothier Patagonia. If it can get the balance right, Trader Joe's may be one of the few retailers to marry cult appeal with scale. Just don't expect anyone from the company to talk about it.
Who's a fan of Trader Joe's? Young Hollywood types like Jessica Alba are regularly photographed brandishing Trader Joe's shopping bags — but Supreme Court Justice Sonia Sotomayor reportedly is a fan too. "What's not to like?" says Costco (NasdaqGS: COST - News) co-founder and CEO Jim Sinegal. "They're very good retailers, and we admire them a lot." Visit a Trader Joe's early in the day, and there are senior citizens on fixed incomes shopping for bargains; on weekends and evenings a well-heeled crowd takes over. Kevin Kelley, whose consulting firm Shook Kelley has researched Trader Joe's for its competitors, jokes that the typical shopper is the "Volvo-driving professor who could be CEO of a Fortune 100 company if he could get over his capitalist angst."
The rise of Trader Joe's reflects Americans' changing attitudes about food. While Trader Joe's is not a health food chain, it stocks a dizzying array of organics. It sells billions of dollars in food and beverages that years ago would have been considered gourmet but are now mainstays of the U.S. diet, such as craft beers and white-cheese popcorn. The genius of Trader Joe's is staying a step ahead of Americans' increasingly adventurous palates with interesting new items that shoppers will collectively buy in big volumes.
The retailer's foodie roots and quirky in-store culture date to the original Joe. Joe Coulombe (pronounced COO-lomb), now 80, opened the first Trader Joe's 43 years ago in Pasadena to serve a sophisticated — but strapped — consumer. He named the store Trader Joe's to evoke images of the South Seas. He stocked it with convenience-store items and good booze, and at one time his shop boasted the world's largest assortment of California wine. (Decades later Trader Joe's would again become famous for wine, specifically its $1.99 Charles Shaw label, better known as "Two-Buck Chuck.") Coulombe then added health food — a seemingly odd combination that totally worked in 1970s California. By the late 1970s he was operating more than 20 locations.
The company's success did not go unnoticed. German grocery mogul Theo Albrecht, who died in July at age 88, coveted Trader Joe's — not as part of a major U.S. expansion but as a smart financial investment. Even in the early days, Trader Joe's appeal was its narrow but zany selection and loyal customers, recalls Dieter Brandes, who did due diligence on the company for Albrecht. "It was fantastic. It was different," he says. In 1979, Coulombe sold his company to Albrecht. Coulombe tells Fortune he "can't remember" the selling price.
The Albrechts, who own Trader Joe's through a family trust, have generally stayed out of the business. They visit the U.S. operation about once a year, and word around the office spreads that "the Germans" are coming. Coulombe stayed on without a management contract for a decade; in 1987 he hired John Shields, a fraternity brother from his undergraduate days at Stanford, who was CEO until 2001. Under Shields' reign, Trader Joe's expanded outside California to Arizona in 1993 and to the Pacific Northwest in 1995. Although executives worried that Northeastern shoppers wouldn't "get" Trader Joe's, the company in 1996 leapfrogged the country and opened two stores in places crawling with college professors and other bargain-hunting elites: Brookline and Cambridge, both outside Boston.
Push your way into the bustling Trader Joe's in Manhattan's Union Square neighborhood, and it's hard to believe that executives ever worried that East Coasters wouldn't groove on the experience. Make no mistake: A typical family couldn't do all its shopping at the store. There's no baby food, toothpicks, or other necessities. But for this crowd of urbanites and college kids, Trader Joe's is nirvana.
A closer look at its selection of items underscores the brilliance of Coulombe's limited-selection, high-turnover model. Take peanut butter. Trader Joe's sells 10 varieties. That might sound like a lot, but most supermarkets sell about 40 SKUs. For simplicity's sake, say both a typical supermarket and a Trader Joe's sell 40 jars a week. Trader Joe's would sell an average of four of each type, while the supermarket might sell only one. With the greater turnover on a smaller number of items, Trader Joe's can buy large quantities and secure deep discounts. And it makes the whole business — from stocking shelves to checking out customers — much simpler.
Swapping selection for value turns out not to be much of a tradeoff. Customers may think they want variety, but in reality too many options can lead to shopping paralysis. "People are worried they'll regret the choice they made," says Barry Schwartz, a Swarthmore professor and author of The Paradox of Choice. "People don't want to feel they made a mistake." Studies have found that buyers enjoy purchases more if they know the pool of options isn't quite so large. Trader Joe's organic creamy unsalted peanut butter will be more satisfying if there are only nine other peanut butters a shopper might have purchased instead of 39. Having a wide selection may help get customers in the store, but it won't increase the chances they'll buy. (It also explains why so often people are on their cellphones at the supermarket asking their significant other which detergent to get.) "It takes them out of the purchasing process and puts them into a decision-making process," explains Stew Leonard Jr., CEO of grocer Stew Leonard's, which also subscribes to the "less is more" mantra.
Customers accept that Trader Joe's has only two kinds of pudding or one kind of polenta because they trust that those few items will be very good. "If they're going to get behind only one jar of Greek olives, then they're sure as heck going to make sure it's the most fabulous jar of Greek olives they can find for the price," explains one former employee. To ferret out those wow items, Trader Joe's has four top buyers, called product developers, do some serious globetrotting. A former senior executive told me that Trader Joe's biggest R&D expense is travel for those product-finding missions. Trade shows that feature the flavor of the moment "are for rookies," a former buyer said. Trader Joe's doesn't pick up on trends — it sets them.
The other dozen or so buyers, or category leaders, spend more time in the office, fielding hundreds of cold calls a week from vendors tripping over themselves to make Trader Joe's a customer. Trader Joe's is a supplier's dream account: It pays on time and doesn't mess with extra charges for advertising, couponing, or slotting fees that traditional supermarkets charge suppliers to get their products onto the shelves. "It's all transparent — no BS," says a former executive. In exchange, suppliers have to agree to operate under Trader Joe's cloak of secrecy. Fortune obtained a copy of a standard vendor agreement, which states, "Vendor shall not publicize its business relationship with TJ's in any manner."
Why the lockdown? Former executives say that Trader Joe's wants neither its shoppers nor its competitors to know who's making its products. And many suppliers aren't that keen on consumers knowing that they produce a lower-cost version for Trader Joe's either. Take Tasty Bite, which makes much of Trader Joe's Indian food. The Tasty Bite Punjab Eggplant ran $3.39 at a Whole Foods in Manhattan. The seemingly identical Punjab Eggplant that the Stamford, Conn., company makes for Trader Joe's is more than $1 cheaper.
Over the years Trader Joe's has improved the way it distributes Joe's-branded goodies to its stores. Management has sought to minimize the number of hands that touch a product; whenever possible, Trader Joe's purchases directly from the manufacturers, which then ship their wares straight to Trader Joe's distribution centers. A U.S.-made cheese, for example, is sent to distribution centers nationwide, where it's sometimes cut and wrapped, taking another cost out of the equation. At a traditional supermarket, that same cheese would probably go through a distributor first, tacking on another cost. Trucks leave the distribution centers daily for the stores. Trader Joe's small stores don't have much of a back room, so ordering from the distribution centers has to be precise.
This distribution process helps determine where the company opens its stores. Texas and Florida have cities that boast consumers Trader Joe's covets, but insiders say the current distribution infrastructure makes it difficult for the company to efficiently get products to those states. To pick their next locales, employees look at demographics such as education level. In the past they've even looked at who's subscribing to high-end food and cooking magazines as a way of divining where the epicures are.
On a Tuesday evening just before dinnertime, retail expert Burt P. Flickinger III joins the steady hum of foot traffic at the Trader Joe's in Larchmont, N.Y. Because Trader Joe's won't give Fortune any information on its stores, Flickinger, of consulting firm Strategic Resource Group, has agreed to walk through a few suburban locales and offer feedback. In Larchmont, Flickinger does a little bit of his own shopping. (It's what happens when you walk into a Trader Joe's — you get sucked into buying stuff you didn't plan to.) An employee, noticing that he has his arms full, brings him a basket. At the register the perky cashier offers up that the mango sorbet Flickinger has selected is on her top 10 list of favorite Trader Joe's items.
You can't buy engagement from employees, but the pay at Trader Joe's helps. Store managers, "captains" in Trader Joe's parlance — the nautical titles are a holdover from Coulombe (newly promoted captains are commanders; assistant store managers are first mates) — can make in the low six figures, and full-time crew members can start in the $40,000 to $60,000 range. But on top of the pay, Trader Joe's annually contributes 15.4% of employees' gross income to tax-deferred retirement accounts.
All of that can lead to a better customer experience. A ringing bell instead of an intercom signals that more help is needed at the registers. Registers don't have conveyor belts or scales, and perishables are sold by unit instead of weight, speeding up checkout. Crew members aren't told the margins on products, so placement decisions are made based not on profits but on what's best for the shopper. Every employee works all aspects of the store, and if you ask where the roasted chestnuts are he'll walk you over instead of just saying "aisle five." Want to know what they taste like? He can probably tell you, and he might even open the bag on the spot for you to try.
Can Trader Joe's maintain that kind of charm as it expands? Former employees worry that the company is losing its entrepreneurial zeal and that CEO Dan Bane has made the place more corporate, adding more senior vice presidents, and creating new titles such as product developer. At headquarters Bane encourages employees to wear Hawaiian shirts and name tags. But putting systems in place isn't necessarily a bad thing. "You have to grow up at some point," says a former employee. "You have to start following rules. You have to start putting in checks and balances." The stakes are higher now that Trader Joe's has hundreds of stores. A buying error could cost the company millions.
Bane, 62, who has a background in accounting, graduated in 1969 from the University of Southern California, where he played baseball — or, as he's said, "spent a lot of the time on the bench." During a talk at USC, Bane said that he's modeled his leadership style on his famed coach, Rod Dedeaux. Bane joined the company in 1998 as president of West Coast operations and became CEO only three years later.
A few former employees describe him as gruff, but he also has a softer side. In a video tribute to a sixth-grade teacher named Mrs. Bidwell, he talked about how she helped him adjust to life in El Dorado, Ark., after the Navy relocated Bane's father there from Southern California.
Some former employees say Trader Joe's has already lost its quirky cool. "In the early days we never tried to be the neighborhood store," says a former employee. They didn't have to: Trader Joe's was the neighborhood store. And yet walk into the Chelsea location on a busy weekday night and you'll see something you almost never see in Manhattan: strangers chatting with one another. Veteran customers tell newbies what products they absolutely have to try, and serious cooks share tips on how to spike sauces and semi-prepared foods to make them even tastier. If Trader Joe's can maintain that kind of mojo, it could end up the biggest neighborhood store ever.

http://www.myfoxal.com/Global/story.asp?S=13005907
http://www.myfoxal.com/Global/story.asp?S=13005907
Posted: Aug 18, 2010 6:05 PM
NEW YORK (AP) - Sears Holdings Corp., the retailer led by billionaire Edward Lampert that owns Sears and Kmart stores, reports its second-quarter results before the stock market opens on Thursday.
WHAT TO WATCH FOR: How the stalling economic recovery is affecting consumer spending behavior at both Kmart and Sears, Roebuck and Co. Analysts will also want to get early reads on the back-to-school season, the second-biggest period behind the Christmas season. Kmart is offering several exclusives for fall including Dream Out Loud with Selena Gomez, Bongo and Rebecca Bonbon.
Wall Street will also want to know how the unraveling of the housing market's nascent recovery and increased competition from Target Corp., which is expanding its fresh food area, is having an impact on the company's business. Retail consultant Burt P. Flickinger III says Sears has made some key initiatives to help drive business like resurrecting layaway services and its expansion of its "Christmas in July" promotions. Sears' TV ads are also more enticing, Flickinger said. But he noted, "(Sears) has waited too long to invest in its stores."
In particular, "The biggest food fight will between Wal-Mart and Target, and Kmart has failed on that front," he said. That's a big loss, because food brings in customers an average of 70 times a year, compared with discretionary items like clothing, which brings shoppers into stores only about seven times.
Investors will also want to know the company's assessment of the economy and whether it feels comfortable with the inventory levels heading into the final months of the year
In the three-month period that ended May 1, Kmart had seen a key measure of revenue rose for the third straight quarter. Sears, Roebuck stores registered its first quarterly revenue increase for the first time in several years. The measure is based on revenue at stores opened at least a year and is considered a key indicator of a retailer's health.
Still, heavy discounts on appliances squeezed the company's profits in the first quarter even as sales were bolstered by federal rebates for those same appliances. But many customers came to Sears stores only for the deeply discounted appliances and bypassed tools, clothing, electronics and other departments, where revenue fell.
WHY IT MATTERS: Led by Lampert, Sears is closely followed by observers waiting for the reclusive billionaire investor's next move. Outside of his appearance at the retailer's annual meetings each spring, the hedge fund guru rarely communicates with shareholders or the media.
Lampert acquired Kmart out of bankruptcy in 2003 and added Sears, Roebuck and Co. in 2005.
WHAT'S EXPECTED: Analysts polled by Thomson Reuters expect Sears to record a loss of 18 cents per share on revenue of $10.62 billion.
LAST YEAR'S QUARTER: Last year, Sears reported earnings of 42 cents per share on revenue of $10.55 billion.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.nbc.com/news-sports/msnbc-video/christmas-in-july-gets-early-start/

http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704271804575405363647189110.html
Restaurants Serve Perks for Loyalty
By JULIE JARGON
Loyal diners used to be rewarded with free meals or a slice of cake on their birthdays, but now recession-hit restaurants are crafting new ways to hang on to their best customers. They are dangling free trips, a shot at buying pricey items like rare coffee beans and chances to sample new menu items ahead of the pack.
In some ways, restaurants are following the model set by the travel industry by offering an "experience" to their customers.
Club members at Outback Steakhouse, owned by OSI Restaurant Partners LLC, can earn points to win Tim McGraw memorabilia such as CDs, the country singer's namesake cologne and footballs or cowboy hats autographed by him. "My Outback Rewards" members also get automatically entered to win a free trip to Australia in September to see Mr. McGraw perform.
Red Lobster's "Fresh Catch Club" has offered chances to win a trip to coastal cities in New England and the Florida Keys.
In other cases, eateries are framing the perks as privileges. Starbucks Corp. on last week offered gold-level rewards members—customers who have made at least 30 purchases on their Starbucks card— the chance to buy a rare coffee from the Galapagos Islands and to purchase trips there.
More eateries are adding customer-loyalty programs. A sampling:
- Starbucks—Last week Starbucks offered its gold-level rewards members — customers who have made at least 30 purchases on their Starbucks card — a chance to buy a rare coffee from the Galapagos Islands and to purchase discounted trips there.
- Outback Steakhouse—Its loyalty club members can win Tim McGraw memorabilia (CDs, his cologne brand, an autographed cowboy hat or football) and get entered to win a free trip to Australia in Sept. to see the country singer perform.
- Panera Bread—Plans to roll out a rewards program nationwide later this year that, among other things, will let loyal customers preview new menu items.
- T.G.I. Friday's—Members of its "Give Me More Stripes" program get a coupon for a free dessert or appetizer when they first sign up; each time they spend $100 on food, they get an $8 coupon. They also get to sample new menu items before anyone else.
- P.F. Chang's China Bistro—People who sign up for the chain's Warrior card get 10% off meals.
Members of T.G.I. Friday's "Give Me More Stripes" program get to sample new menu items before anyone else. They also get a coupon for a free dessert or appetizer when they sign up; each time they spend $100 on food, they get an $8 coupon.
The recession hurt the restaurant industry, forcing many chains to close stores and deeply discount their menu items. Total restaurant traffic declined by 3% in the year ending in May, according to market-research firm NPD Group Inc.
"Having dollar menus and value menus has become unsustainable, from an operating profit standpoint, so restaurants need to be able to establish consumer continuity with loyalty programs. Instead of getting customers in three or four times per year for special events, they need to get them in two to three times per month," says Burt P. Flickinger III, managing director of Strategic Resource Group, a consumer consulting firm.
Mr. Flickinger says restaurants have lagged behind supermarkets and drugstores, which have long offered customer-loyalty programs. Had restaurants worked harder to retain repeat customers, he adds, "you wouldn't have had the desperation discounting" that many chains resorted to in the last year.
Daneen Feeney, a 43-year-old Chicagoan munching on a salad at a Panera Bread, said she would return to a favorite restaurant more often if it had a rewards program. "If a restaurant can offer a little extra something it would show they appreciate your business," she said.
Panera Bread Co. doesn't yet offer a rewards program in Chicago but said it plans to go nationwide later this year with the one it currently has in 23 markets. Among other things, it allows loyal customers to preview new menu items.
Restaurants decline to disclose what they spend on such programs, which are often marketed right on the menu or through the Internet or at food events rather than through TV or radio. Mr. Flickinger estimates that it typically costs a company 1% of sales to launch a rewards program, an upfront expense that includes the cost of the plastic rewards cards, in-store signage and advertising. The cost of the discounting that'sassociated with rewards programs can range from an additional 5% to 15% of sales during the period in which the perks are being offered. But he said the return on investment is typically 2% of sales.
The "My Starbucks Rewards" program, which launched in December 2009, has three tiers of loyalty: the initial level allows customers who load a prepaid Starbucks card to receive a coupon for a free drink on their birthday. After earning five stars on their card—one star is earned for every transaction—customers can get such perks as free syrup in their drinks and free coffee refills. The gold members who have earned 30 stars get invited to film screenings and receive VIP concert passes.
The program appears to be working: Almost 20% of the transactions at U.S. Starbucks stores are now paid for with a Starbucks card.
Starbucks's private sale was to run last Tuesday through Saturday on gilt.com, a site that hosts sales of luxury brands, but the coffee sold out in less than a day, the company said. All gold-level Starbucks card members— there are currently 1 million—received an e-mail on Tuesday containing a link to the web page where they could buy the coffee, grown on a single farm in the Galapagos, a month before it's sold in Starbucks stores.
The pricey beans—at $12.50 for a half pound—are in short supply, and only a small number of Starbucks stores will even carry the coffee.

http://online.wsj.com/article/SB10001424052748703720504575377463371674970.html?mod=WSJ_NY_News_LEADNewsCollection
By SHELLY BANJO
As a fifth-generation dairyman, Cyrus Schwartz has milk in his blood.
The great-grandson of the founder of Elmhurst Dairy, the only milk-processing plant left in New York City, Mr. Schwartz now runs an affiliate of the dairy called Mountainside Farms. Despite increased competition by larger dairies and superstores, he says he's been able to increase his company's revenue by 20% a year by venturing outside the traditional milk market and anticipating new trends.
His next product to hit the milk market: Evolve Kefir, a low-fat, cultured smoothie drink, which is similar to yogurt. Over the past year, he says Mountainside has acquired a quarter of the market share for evolved Kefir in the metropolitan New York area, and its market share is growing.
Analysts say Elmhurst is making a mark in the otherwise struggling dairy market. "A dairy like Elmhurst can't make enough money on the basic milk products; you need a constant pipeline of new, innovative products to keep consumers interested," says Burt P. Flickinger III, managing director at Strategic Resource Group, a retail and consumer-goods consulting firm.
Unlike water and juice-based beverages that have experienced significant growth in sales, milk consumption has seen a steady decline over the past few decades, he says.
As a percentage of dairy-product market share, Mr. Flickinger says traditional milk, often referred to as supermarket gallons, has dropped from 98% to 75%, with products such as soy, organic and flavored milks, as well as new varieties of yogurt and ice-cream taking its place.
"Eventually, we're not going to be competitive in the conventional milk business so my job has been to look for and test out value-added milk," Mr. Schwartz says.
Mr. Schwartz's family has been operating dairy farms in Queens as far back as the 1880s. Passing down the farm to later generations, Mr. Schwartz's grandfather and father helped turn the company from a farming business to a processing company with more than $100 million a year in sales, mainly pasteurizing and packaging milk farmed throughout New York state.
Mr. Schwartz originally resisted joining the family business and in college chose to focus on accounting, while taking food-science classes on the side. But at 23 years old, a year after he graduated Yeshiva University, he says his father drew him in to the business in order to take over a smaller plant the family had purchased.
The plant, which allowed for smaller runs and experimentation, became a testing ground for new products, and Mr. Schwartz says he had a lot of autonomy to run the business as he saw fit.
"I lead a healthy lifestyle and wanted to create better-tasting milk that's healthier and lasts longer than pasteurized milk," he says.
Mr. Schwartz began traveling around the world to trade shows and conferences to see how other cities and countries were approaching new dairy products. Whether for business or travel, his first stop in every country became a grocery store.
"Some people go to see the Eiffel Tower; I go to the grocery store to check out gallons of milk," he says.
In 1995, Mountainside was one of the first companies to roll out organic milk, a product line he eventually sold to Horizon, a brand of Dean Foods. Then came a line of soy milk and puddings called Zen Soy followed by "UltraPure," ultra-filtered milk that's antibiotic and hormone-free.
Not every new idea has worked: A line of returnable glass bottles ended after a short run of a few years.
"At one point there was an interest in nostalgic milk products but it was complicated getting the bottles back and it didn't really take off," he says.
The trick to making it in the milk market, Mr. Schwartz says is figuring out a trend before it hits and before the larger players are able to get into the market.
Elmhurst, like other regional dairies, has been squeezed in the past few years as big-box stores such as Wal-Mart and Costco, which can offer consumers lower prices on milk and other dairy products, have entered into New York state, Mr. Flickinger says.
"In the last few years, as Wal-Mart pushed its way into the state, we've seen a number of supermarket chains and independent dairies file for bankruptcy," Mr. Flickinger says. "People know Elmhurst to have quality, fresh products but consumers buy the milk and yogurt for the lowest price and that puts a lot of profit pressure on food retailers who are the lifeblood of Elmhurst's business."
To respond to this increased pressure, the privately held company invested in a new distribution system so it could sell its items directly to 2,500 stores in New York and receive daily sales data. Previously, it worked with other distributors and supermarkets and could only track sales every two weeks.
Now, within six months of launching a new product, Mr. Schwartz says he knows if it's a "total failure." He says it can take two to three years to determine if a product is successful.
"We're more nimble than the big guys," he says. Still, "first-mover advantage is important but we can't afford to be complacent, we have to keep trying new things," he says.

http://video.foxbusiness.com/v/4282086/will-retail-sales-hold-through-holidays
http://www.csnews.com/csn/news/article_display.jsp?vnu_content_id=1004072128
7-Eleven To Expand Throughout New Jersey
March 02, 2010 - DALLAS -- 7-Eleven Inc. plans to open 200 stores in New Jersey, this year and next year, according to a report by app.com.
The company will open five 7-Eleven stores in Monmouth County and three in Ocean County this year. It has 31 stores in Monmouth County and 28 in Ocean County, according to The Goldstein Group, a commercial real estate firm in Paramus, N.J.
"7-Eleven stores in the area perform well, and we see a still-growing demand from the consumer for additional 7-Eleven stores," 7-Eleven spokesperson Margaret Chabris said.
7-Eleven is taking offensive and defensive measures in the convenience store market, retail consultant and managing director of Strategic Resources, Burt Flickinger III told app.com. Their biggest competitive threat: convenience store chains Wawa, which has multiple stores along the Jersey Shore, and Sheetz, a chain based in Altoona, Pa., which does not have any stores in New Jersey.
"7-Eleven is trying to get as many good sites in New Jersey and New York City as [the company] can to try to connect with more consumers before the twin powers of strength -- Wawa and Sheetz -- really take the New Jersey and New York and New England markets by storm over the next five to 15 years," said Flickinger.
According to Strategic Resources, Flickinger's firm, consumers between the ages of 14 and 35 will go to convenience stores three or more times a week as compared with a weekly supermarket trip.
High vacancy rates at strip centers and shopping centers are giving 7-Eleven plenty of choices.
"They are very smart and they are very aggressive," said Chuck Lanyard, president of The Goldstein Group. "The marketplace is such that there are numerous opportunities out there that weren't available before as a result of this economy."
In the retail corridors of Monmouth and Ocean counties, vacancy rates are between 3 percent and nearly 13 percent.
"Many other retailers are scaling back or reversing their growth plans," 7-Eleven's Chabris told app.com. "In some cases, this opens the way for 7-Eleven to become an anchor tenant at a retail center."
The chain is focusing on opening convenience stores, not gasoline stations, she said. The company does, however, have a program where gas station operators can convert their existing repair bay into a 7-Eleven.
In other 7-Eleven news, The United States Hispanic Chamber of Commerce has named Darren Rebelez, the retailer's executive vice president and COO, co-chairman for its 31st Annual National Convention and Business Expo in Dallas, Sept. 22 to 25, 2010.
Rebelez, a veteran executive of the convenience store and restaurant industries, has responsibility for operations, franchising, real estate, information technology, facilities, construction, maintenance, gasoline, business transformation, loss prevention and operations support for approximately 6,400 U.S. and Canadian 7-Eleven stores. He will serve alongside Nina Vaca, convention chair and CEO of Dallas-based Pinnacle Technical Resources Inc., which was recently ranked 30th on the 2009 Hispanic Business 500 and is the largest diversity-owned IT staffing and vendor management company in the country.
The four-day event will provide business-focused workshops and panels, networking receptions, business matching opportunities and many other resources critical to the continued growth and success of the Hispanic entrepreneurial community, which numbers nearly 3 million strong nationwide.
"This convention provides a unique opportunity to bring together thousands of Hispanic entrepreneurs, corporate executives, procurement professionals and key government and elected officials here in Dallas," Rebelez said. "I am honored to have been named co-chairman and look forward to contributing to the continued success of the USHCC and its convention. Dallas is a special convention location due to its demographics and the important roles Hispanics play in our community."
Javier Palomarez, USHCC President and CEO, added: "I look forward to working with Darren and am confident that his assistance will be critical in making our convention the key meeting place for America's Hispanic entrepreneurs and those who can partner with them to create new opportunities in the decade ahead.

http://online.wsj.com/article/SB10001424052748703988804575205190922218502.html
Apr 26, 2010 12:00 PM, By MARK HAMSTRA New retailers opening in the shadow of the University of Wisconsin in recent months include West Des Moines-based Hy-Vee, which made its Wisconsin debut with the store late last year, and Fresh Madison Market, a smaller location that is the entrepreneurial venture of Jeff Maurer, a longtime veteran of local independent Pierce's Markets. The Madison area has income that is about 11% above the national average, according to Tucson, Ariz.-based Metro Market Studies, and is somewhat insulated from the blue-collar manufacturing woes of much of the Upper Midwest. Roundy's Copps banner is far and away the market share leader, according to Metro Market Studies, with 11 stores and a 25.2% share, more than double the share of No. 2 Wal-Mart Stores, with three supercenters in the market. The market includes a region of about 565,900 population. Roundy's also has the Pick 'n Save banner in the market, with four stores and a market share of 8.7%. “The university is growing, but the surrounding area is suffering blue collar layoffs, and food stores are battling for fewer customer dollars,” said Burt P. Flickinger III, managing director, Strategic Retail Group, New York. “We are predicting a lot more supermarket closings in 2011 and 2012.” Hy-Vee, however, is planning at least one more opening, with its second store in the market breaking ground this year. “We are very excited to be opening there,” Ric Jurgens, president and chief executive officer, Hy-Vee, told SN last year before the debut of the company's first location. “We have done very well in college towns and in capital cities, and Madison qualifies as both.” The store was also its first LEED (Leadership in Energy and Environmental Design) certified supermarket. “We hope that it can become the model for our future growth,” Jurgens said. Hy-Vee has enjoyed strong success in its expansion efforts, Flickinger noted, even when it breaks into new markets such as Madison. “They can do battle with Wal-Mart and can also compete with Woodman's,” Flickinger said, referring to Janesville, Wis.-based Woodman's Markets, whose two massive stores in the Madison market capture 6.2% of the food-retailing dollars. In addition to Hy-Vee, Flickinger singled out retailer-owned wholesaling cooperative Affiliated Foods Midwest, based in Norfolk, Neb., as another operator that stands to reap increasing market share in Madison.Beyond the Big Box: Wal-Mart Thinks Smaller
By MIGUEL BUSTILLO And TIMOTHY W. MARTIN

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New Players Test the Food-Retailing Waters in Madison
That company last year opened a new, 700,000-square-foot distribution center in Kenosha, Wis., that is expected to facilitate further growth in the in the state. “Affiliated Foods Midwest is probably going to be, along with Wal-Mart, the fastest growing in terms of sales and market share in next few years,” Flickinger predicted, citing AFM's new warehouse. The Kenosha center, along Interstate 94 between Milwaukee and Chicago, was expected to serve Affiliated stores in Wisconsin, Illinois, Indiana, Minnesota, Michigan and Ohio. “Rising transportation costs and logistical concerns make it impractical to serve our northern region from our existing distribution centers,” Martin Arter, president of Affiliated, said in a release when the center was announced.. In addition, Affiliated Food Midwest has rolled out a more aggressive pricing strategy for its members that is gaining traction, Flickinger said. Target Corp., based in Minneapolis, has one supercenter in the market and 2.7% share, but could see that volume grow as it converts more traditional discount stores to the P-fresh format emphasizing grocery offerings, Flickinger said. Meanwhile, Maurer's 18,000-square-foot Fresh Madison Market, located on the ground floor of a residential housing complex for the university, competes at the other end of the spectrum, emphasizing “healthy and environmentally sound shopping choices” and a “full-service grocery shopping experience with fair prices on a good selection of fresh foods,” according the store's website.
A federal court of appeals ruled Monday that more than 1 million female Wal-Mart employees could proceed with the lawsuit, which was originally filed in 2001. The employees, who are seeking billions of dollars in damages, accuse Wal-Mart of paying women less than men and promoting fewer women into management positions. In March, Wal-Mart said in a regulatory filing that an adverse ruling "may result in liability material to the company's financial condition." But it's still a long road before the case gets to trial, if it even gets there. If the case remains in the media, analysts say it could hurt Wal-Mart's image, something the giant retailer has been working hard to repair. At the same time, Wal-Mart is reluctant to just settle the case, because it would likely cost them billions of dollars. "This could be a huge verdict if this goes all the way through," said Terry Clower, director of the University of North Texas Center for Economic Research and Development. "Why do you think Wal-Mart's been fighting it so hard? How does Wal-Mart make up for something that? The folks shopping at Wal-Mart will end up paying for it." As a result, Wal-Mart (WMT, Fortune 500) said it will appeal to the U.S. Supreme Court. The problem is that now isn't a great time for Wal-Mart to take a PR hit. Like other retailers, the company has suffered sales declines with its same store sales falling for three consecutive quarters for the first time in its history. The company's net sales fell in the fourth-quarter for the first time since the company went public 41 years ago. And supermarkets have started to steal away some loyal Wal-Mart customers. In an attempt to boost sales, Wal-Mart has begun a push into urban areas, which have previously been a tough fit for the retailer. But several analysts said they think that any bad press surrounding the company may tip the scales of opinion among local political leaders who have to vote to approve zoning changes for new Wal-Mart stores. "I think there will be a backlash," said Burt Flickinger, analyst at Strategic Resource Group, a retail consulting firm. "Its strategy is backfiring, and this is going to be a big black eye for Wal-Mart for a number of years." Flickinger said an inability to move into cities will hurt Wal-Mart's growth potential and ultimately its stock. At the same time, Wal-Mart has survived hits to its image before. Over the past decade, the company has endured numerous reports of unfair labor practices as well as countless court cases and settlements. Wal-Mart even emerged unscathed from a damning 2005 documentary called "The High Cost of Low Price." Through all of that, customers keep on coming back to Wal-Mart. Total sales have only once fallen at Wal-Mart's U.S. stores on a year-over-year basis in the company's history. Company profits have also recently outpaced Wall Street's expectations, despite the slip in U.S. sales. "The acid test for all of this is how the company is doing," said Robert Passikoff, president of Brand Keys Consulting. "The truth is if all of this were having the kind of negative effect that it has on the PR side of the equation, you'd see a greater effect on profits -- but you're not seeing that." Passikoff said that studies show consumers decide where to shop based on location, value and merchandise selection ahead of factors like store reputation. The retail giant knocked Exxon Mobil (XOM, Fortune 500) out of the top spot on the Fortune 500 list, logging a profit of $14.3 billion on revenue of $408 billion in 2009. Ted Boutrous, the lead attorney representing Wal-Mart in the case, said he believes customers understand that the court's ruling is not an indictment of the company. "Customers are fair-minded, and they know the focus right now is on class-action law," said Boutrous. "The court went out of its way to say it is not saying anything abut the lawsuit's merits. The best way for Wal-Mart to protect its relationship with its customers is to take this to the Supreme Court." Procter & Gamble Co. is waging an aggressive market-share war, cutting prices, accelerating product launches and spending more on advertising in an effort to win over shoppers slowly reawakening from their recession-induced coma. The moves helped the world's biggest consumer-products company report stronger-than-expected results for its most recent quarter, including a 7% surge in year-over-year sales volumes, the best showing in 18 quarters. Price battles are escalating as P&G's major competitors, also reporting quarterly earnings Thursday, cut prices as well. Colgate-Palmolive Co. said Thursday its North American prices for the quarter were 3.5% lower than a year earlier. Unilever PLC, whose Chief Executive Paul Polman, a former P&G executive, began cutting prices to boost volume sales a year ago, said its overall prices were 3.3% lower in the period. "It's war inside stores," says Burt Flickinger III, a former P&G executive who now tracks pricing patterns in the U.S. as a consultant to major retail chains. The last time Mr. Flickinger saw this level of promotional activity was about 20 years ago, when P&G's market share had been dented by a recession, a string of difficult acquisitions and disappointing product introductions. P&G's U.S. prices are lower on average than they were a year ago in categories including batteries, down 12.7% in the 12 weeks ended March 20; liquid laundry detergent, down 4.6%; shampoo, down 4.3%; and diapers, down 1.3%, according to a Sanford Bernstein analysis of data collected by Nielsen. In contrast, P&G's Gillette razor-blade prices rose 5.6% during the period. The data don't reflect pricing at Wal-Mart Stores Inc. or club stores. A 64-ounce bottle of Downy fabric softener, which last summer cost $4.49, or $3.49 on sale, now often goes for $2.99 on sale, says Mr. Flickinger. Mr. Flickinger, a managing director of Strategic Resource Group, estimates the company's promotions have lowered the price of some items by as much as 8% to 10%. P&G's new chief executive, Robert McDonald, "has put the industry on notice, essentially saying, "You can't just take our market share by discounting and promoting around us,'" says Bill Chappell, an analyst at SunTrust Robinson Humphrey. "They're now going to focus on market share first, and profitability seems to be somewhere behind that." P&G profit fell 1% to $2.59 billion, or 83 cents a share, for the fiscal third quarter, weighed down by a charge stemming from the health-care overhaul. Low prices cut into sales growth excluding acquisitions and currency influences, which came in at the lower end of the company's range. Sales rose 7% to $19.18 billion. Profit at Unilever—which makes Lipton tea and Ben & Jerry's ice cream—rose 33% to €973 million ($1.28 billion). Sales increased 4.1% to €10.14 billion when stripping out acquisitions and currency fluctuations, as sales volumes rose 7.6%. Unilever has accelerated the pace of new product launches, including a version of Hellmann's Mayonnaise made using cage-free eggs, and a range of Dove soap and skin goods targeted at men. For Unilever, the strongest region in the quarter was Asia, Africa and Central and Eastern Europe, where sales rose 7.6% at constant currencies and volume rose 12%. A Walmart store in Miami Walmart loves to shock and awe. City-size stores, absurdly low prices ($8 jeans!) and everything from milk to Matchbox toys on its shelves. And with the recession forcing legions of stores into bankruptcy, the world's largest retailer now apparently wants to take out the remaining survivors. Thus, the company is in the beginning stages of a massive store and strategy remodeling effort, which it has dubbed Project Impact. One goal of Project Impact is cleaner, less cluttered stores that will improve the shopping experience. Another is friendlier customer service. A third: home in on categories where the competition can be killed. "They've got Kmart ready to take a standing eight-count next year," says retail consultant Burt Flickinger III, managing director for Strategic Resources Group and a veteran Walmart watcher. "Same with Rite Aid. They've knocked out four of the top five toy retailers, and are now going after the last one standing, Toys "R" Us. Project Impact will be the catalyst to wipe out a second round of national and regional retailers." (See 10 things to buy during the recession.) Though that's bad news for many smaller businesses that can't compete, Walmart investors have clamored for this push. Despite the company's consistently strong financial performance, Wall Street hasn't cheered Walmart's growth rates. During the 1990s, the company's stock price jumped 1,173%. In this decade, it's down around 24% (Walmart's stock closed at $51.74 per share on Sept. 3). "Walmart is under excruciating pressure from employees and frustrated institutional investors to get the stock up," says Flickinger. (Read "Can Toys "R" Us Sell Toilet Paper?") Many analysts believe that the store-operations background of new CEO Mike Duke will keep investors quite happy. Though the recession finally caught up to Walmart last quarter, when the company reported a 1.2% drop in U.S. same-store sales, Walmart was a consistent winner during the worst days of the financial crisis, as frugal consumers traded down. While most retailers are shutting down stores, Walmart has opened 52 Supercenters since Feb. 1. Joseph Feldman, retail analyst at Telsey Advisory Group, estimates that each store costs Walmart between $25 and $30 million. In order to continue the momentum that it has picked up during the retail recession, over the next five years the company plans to remodel 70% of its approximately 3,600 U.S. stores. So what does a Project Impact store look like? One recent weekday afternoon I toured a brand new, 210,000-sq.-ft. Walmart in West Deptford, N.J., with Lance De La Rosa, the company's Northeast general manager. "We've listened to our customers, and they want an easier shopping experience," says De La Rosa. "We've brightened up the stores and opened things up to make it more navigable." One of the most noticeable changes is that Project Impact stores reshape Action Alley, the aisles where promotional items were pulled off the shelves and prominently displayed for shoppers. Those stacks both crowded the aisles and cut off sight lines. Now, the aisles are all clear, and you can see most sections of the store from any vantage point. For example, standing on the corner intersection of the auto-care and crafts areas, you can look straight ahead and see where shoes, pet care, groceries, the pharmacy and other areas are located. And the discount price tags are still at eye level, so the value message doesn't get lost. (See how Americans are spending now.) "They are like roads," De La Rosa says proudly. "And look around, the customers are using them. We've already gotten feedback about the wider, more breathable aisles. Our shoppers love them." The layout is also smarter. "You can kind of guess where everything is going to be," says Sharon Tilotta, 73, a shopper in the West Deptford store. The pharmacy, pet foods, cosmetics and health and beauty sections are now adjacent to the groceries. In the past, groceries and these other sections were often at opposite ends of the store, which made it more difficult for someone looking to pick up some quick consumables to get in and out of Walmart. "Under Project Impact, Walmart is providing more of a full supermarket experience within its walls," says Feldman. "The biggest complaint against them has always been that it takes a long time to get through everything. This definitely improves efficiency." De La Rosa also points out the party-supply section. Favors, wedding decorations, cards and scrapbooks are all in one area. "In the past, these products would be in three different places," he says. And although Walmart won't admit to targeting specific competitors — "We're just listening to what our customers want," De La Rosa says — it's clear that, under Project Impact, Walmart will make major plays in winnable categories. The pharmacy, for example, has been pulled into the middle of the store, and its $4-prescriptions program has generated healthy buzz. With Circuit City out of business, the electronics section has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael's Stores, the country's largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity. Stores are chock-full of scrapbooking material, baskets and yarns. "Look, they're selling the stuff that accounts for 80% of Michael's business, at 20% of the space," says Flickinger. "It's very hard for any company to compete with that." (Read "That Viral Thing: People of Walmart.") Apparel, one of Target's traditional strengths, gets a prominent position at the center. The color palettes of the shirts and dresses are brighter and more appealing than they've been in the past. "Walmart has figured out fashion for the first time in 47 years," Flickinger says. "They've gone from a D to an A-minus." Briefs and underwear have been shuttled to the back. "That's a smart move," Flickinger says. "People know to come to Walmart for the commodity clothing. Now, they have to walk past the higher margin, more fashionable merchandise to get what they need." Of course, Project Impact isn't perfect. You'd think that if Walmart was going to open a massive new store with a cutting-edge layout, the company would at least put a sign up. In West Deptford, it's easy to miss the entrance to the Walmart — which is buried in the back of a parking lot — while driving along a main thoroughfare. And of course, customers will always nitpick. One elderly shopper complained about a shortage of benches in the store (she needed a rest). Another had a more esoteric, yet legitimate, gripe. "Their meat is leaky," says Jeff Winter, 30, a West Deptford shopper. "And instead of giving you a wet wipe to clean it off, they give you a dry towel. How's that going to prevent E. coli or whatever?" (See which businesses are bucking the recession.) What analysts really want to see from Project Impact, however, is a faster pace of implementation. "The biggest hurdle facing Walmart is the speed with which they can roll this out," says Feldman. As more Project Impact stores pop up, the existing stores appear worse by comparison. For example, while the merchandise at the Project Impact store outside of Philadelphia really speaks to that particular market — there's tons of Eagles and Phillies gear — at one regular discount store outside New York City, Minnesota Twins and Seattle Mariners pajama pants wasted away on the racks. There were plenty of associates staffing the electronics section at the Project Impact store; at the discount store, five frustrated shoppers waited in line for help from a customer-service rep. Soon, it was closer to 10. What about the friendly service? In West Deptford, the associates were sunny and bright. At the New York–area discount store, not so much. "You'll notice we've been in the store for two hours, and no one has even said hello to us," Flickinger says after he and I toured that store. He's right, we weren't feeling any love. But if Project Impact keeps picking up momentum, many more Walmart salespeople, and shareholders, should be smiling.Wal-Mart's bad PR comes at a bad time
NEW YORK (CNNMoney.com) -- Wal-Mart has again found itself facing some bad publicity on the labor relations front after a federal appeals court certified the largest gender discrimination class action lawsuit in U.S. history on Monday.![]()

P&G, rivals jump into a pricing war
Consumer-product makers boost spending on promotions, accelerate launch of new goods to gain market share
By ELLEN BYRON
Read more: http://www.time.com/time/business/article/0,8599,1920698,00.html#ixzz0npZmwL1Z


Who Could Eat All This?
The Chains With Free Food Prizes and the People (600,000!) Who Want Them
By JOSEPH DE AVILA
Next month, Denny's will pick the winners of its "Grand Slam for a Year" promotion. Each can order 52 servings of a Denny's Grand Slam breakfast, or two eggs, two strips of bacon, two sausage links and two pancakes. That's a stack of pancakes four feet high, with 17,680 calories, not counting the syrup.
Denny's Corp. hopes the contest brings more customers through the door, especially since people can't necessarily eat this much themselves and often bring along their friends. "Consumers still respond to free," says John Dillon, the company's vice president of marketing.
Doughnuts, popcorn chicken and foot-long sandwiches are free for the taking, too. Among the chains with giveaway contests and other promotions: Subway, Chick-fil-A Inc., Krispy Kreme Doughnuts Inc. and KFC Corp.
Giveaways are an inexpensive way for companies to stretch their marketing dollars during the recession. Contestants also tend to brag about the sport of entering free food contests, something that's easier than ever with social media sites like Facebook and Twitter. That spreads the restaurants' marketing message even further.
Jesse Martin camped out overnight this month outside a San Marcos, Texas, Chick-fil-A for a chance to win a year's worth of chicken sandwiches. The Atlanta-based fast-food chain gives away free meals for a year to the first 100 customers at new stores' grand openings. So far, Mr. Martin, a 34-year-old college pastor from Austin, Texas, has been to five Chick-fil-A grand openings and won at four of them.
Chicken, More Chicken
What the chain calls a year's supply, or about $300 in store credits, lasts about two or three months in the hands of Mr. Martin. "I eat there sometimes two or three times a week. Sometimes I eat there three times a day and eat free all day," he says. He typically orders the chain's classic chicken sandwich and nuggets. Mr. Martin shares his winnings with friends and with his 9-year-old son Josiah and 6-year-old daughter Kelli.
Even when he doesn't have free gift certificates, he typically eats at Chick-fil-A once or twice a week either by himself or with others. In May, he plans on taking his wife to the next grand opening in a nearby town so she can get her own gift certificates for the family to share. "I'm a raving, craving fan," says Mr. Martin, adding that Chick-fil-A has been his favorite fast-food chain since he was 10.
A Chick-fil-A spokeswoman declined to comment.
The public and governmental pressure on restaurant chains to make their menus healthier and encourage adults to stay in the 2,000-daily-calorie range hasn't appeared to dampen the food giveaways.
Fast-Food Nation
1 Million
Doughnuts sold by Krispy Kreme in the U.S. every day.
862
Calories in a Denny's classic Grand Slam breakfast.
79%
Of Americans purchased fast food in the past month.
Source: Sandelman & Assoc. survey
Free-food offers first gained in popularity during the 1970s, when America was hit hard economically by the energy crisis, says Burt Flickinger III, managing director of consulting firm Strategic Resource Group. "The worst of times economically are the best of times for establishments offering something free," he adds.
ShopRite grocery stores, which are members of Wakefern Food Corp., a Keasbey, N.J.-based cooperative, began offering buy-one-get-one-free offers in 1979, a spokeswoman says. In the early 1980s, the company started giving away free turkeys for Thanksgiving and free hams for Easter. Later restaurants began offering all-you-can-drink beverages and then all-you-can-eat buffets, Mr. Flickinger says.
Subway in February announced a food giveaway to promote its "Five Dollar Footlong" sandwich. In it, 71 winners will win free sandwiches for a year, amounting to a $260 gift card. Subway was able to add 400,000 customers to its marketing database with the promotion, says Tony Pace, the company's chief marketing officer.
Krispy Kreme offers a dozen free doughnuts a week for a year to the first customer at new store openings. The next 11 customers get one dozen free doughnuts a month for a year, but the terms vary by location.
Giving away free food for a year to 100 people at a restaurant opening costs a national fast-food chain at least $30,000 per opening, says Lori Walderich, principal of IdeaStudio, a marketing company specializing in chain-restaurant marketing and promotion. This includes food costs, security, advertising and other expenses. "It's an inexpensive way to build customer loyalty," she says.
Denny's, based in Spartanburg, S.C., says that its Grand-Slam-for-a-year prizes are worth about $311 per customer, and that winners are selected at random by a computer.
Fighting for Stomachs
"Our customers are looking to stretch their dollar as much as it can go," says Mr. Dillon, the marketing executive. The competitive landscape has become more cutthroat during the recession. "We are each fighting for a share of the stomach."
An estimated 30% to 40% of free-food coupons are redeemed, says Mr. Flickinger. By contrast, just 1.5% to 2% of coupons offering discounts are used.
And winners rarely dine alone—they're likely to bring friends who maybe have never dined at the restaurant or who may pay for their own meal, says Stowe Shoemaker, associate dean of research at the Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston.
Donna Feild has just $100 remaining of the $1,000 in free meals she won by entering an online contest at KFC Corp. last year. The pharmacist from Brush Prairie, Wash., expects to keep going to KFC after her winnings are up. Her teenage sons have developed a taste for KFC's popcorn chicken and chicken strips. "We've gotten in the habit. Teenagers, they don't tend to change, they want the same thing over and over," Ms. Feild, 49, says.
KFC, a subsidiary of Yum Brands Inc., runs promotions like the one Ms. Feild won, which also included a trip to Walt Disney World in Orlando, Fla., two or three times a year, says Laurie Schalow, a KFC spokeswoman. The chain typically uses a year's worth of free food to bring in customers to promote a new product. Last Mother's Day, the company sponsored a sweepstakes to promote its new grilled chicken, for example.
Last year, Ryan Leer won a video contest sponsored by sandwich-maker Quiznos. For creating a clip that features a fake rocket-launcher shooting the chain's "Toasty Torpedo" sandwiches, Mr. Leer won $10,000 and a year's worth of sandwiches. (Watch the video.) Quiznos sent customers to its Web site so they could vote on winning videos, giving them valuable exposure in return.
This video contest helped add about 68,000 new customers to Quiznos marketing database. "That's the best way to advertise," says Trey Hall, chief marketing officer for Quiznos.
While Mr. Leer entered the video contest for the cash, the year's supply of sandwiches—actually $260 worth of gift certificates—was a nice bonus, he says. The 23-year-old video-production major at the University of Wisconsin-Superior and his friends made about 40 trips to the sandwich shop in six months. "It is supposed to be a year supply, but that went pretty quick," he says. "I have been there a couple times since with my own money, so they did their job."
Joel Levinson, 29, from Los Angeles was a runner-up behind Mr. Leer. For coming in second, he won a year's supply of Quiznos sandwiches. For his video, Mr. Levinson went to New York, Los Angeles, Chicago and Atlanta and compared Quiznos sandwiches to the skyscrapers.
Despite making a video about Quiznos and winning a year's worth of free sandwiches, Mr. Levinson has yet to cash in a single gift certificate. "I'm trying to move away from fast food" and eat more organic food at home, he says.
http://marketplace.publicradio.org/display/web/2010/03/24/pm-tj-maxx-update/
Wednesday, March 24, 2010
Outlets start acting like full-price stores

In 2009, discount stores saw their shelves packed with all the great stuff full-price retailers couldn't sell. But with the economy improving, discounters must find new ways to grow. Stacey Vanek-Smith reports.
Customers shop at a T.J. Maxx store on August 5, 2008 in La Canada, Calif. (David McNew/Getty Images)
STACEY VANEK-SMITH: Last year, nobody paid full-price for anything. Why would they? You could find Coach bags at Ross Dress for Less and Juicy Couture hoodies at Marshall's.
T.J.Maxx AD: Oh sure, you could pay that crazy boutique price, or get the same bag right now at T.J. Maxx for up to half off. How? Simple...
Really simple. Department stores and boutiques were loaded down with stuff they couldn't sell. They slashed prices and slashed them again. Still no sales, so retailers cut their losses and unloaded their merchandise. Discounters bought top-shelf brands by the truckload. And frugal shoppers picked up Prada at J.C. Penney prices.
Burt Flickinger is a retail analyst with Strategic Resource Group.
Burt Flickinger: 2009 was the best year in recorded retail history for most of the discount and off-price players.
But discounters and outlets won't be able to count on runoff from the big retail chains this year.
Will Blizzard Blow Away Sales? Experts divided over impact Super Saturday storm will have on retailers.
Posted on 12/19/2009 7:14:13 PM
Retailers up and down the eastern seaboard could take a major hit over this crucial pre-holiday weekend as the season's first blizzard blasts up ..
http://abcnews.go.com/Business/winter-storm-threatens-retailers-bottom-line/story?id=9382072

http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704532204575397351690732156.html
By CLIFFORD M. MARKS And ELLEN BYRON
A pair of toothpaste makers have squared off in court over a marketing icon, the "nurdle."
For the uninitiated, the nurdle is that curvy squirt of toothpaste—perfectly shaped in advertisements—that people use to scrub their pearly whites.
Toothpaste manufacturer Colgate-Palmolive Co. initiated the legal tussle Thursday morning by asking a judge to find that its packaging didn't infringe on the trademarks of rival manufacturer GlaxoSmithKline PLC, the maker of Aquafresh.
Colgate added that the nurdle design is "extremely widespread" in the industry.
Colgate said it doesn't comment on pending litigation.
The Aquafresh maker countered with its own suit in the same court Thursday afternoon, alleging that Colgate was attempting to "trade off the commercial magnetism" of Glaxo's Aquafresh brand. In a statement, the company said Glaxo created the "highly distinctive" tricolored nurdle design over two decades ago, and has used it ever since.
Use of the nurdle became widespread when toothpastes transitioned from a white paste to colored gels back in the 1970s, said Allen Adamson, managing director of the New York office of Landor, a branding firm owned by WPP PLC. With the introduction of the red gel of Close-Up, the green gel of Aim and the multicolored gel of Aquafresh, showing nurdles in marketing and packaging became an important way of touting a brand's distinctiveness.
"To me, a swipe of toothpaste works in the same way as a spoon in a bowl shown on a box of cereal," Mr. Adamson said.
A picture of a nurdle is important because the oral care aisle is so crowded, said Burt Flickinger III, managing director of consultancy Strategic Resource Group, who adds that the word "nurdle" has been used for decades but who coined it is a mystery. Mr. Flickinger said shoppers typically spend between 1/20th of a second to 1/100th of a second spotting their product in the store aisle.
Trademark battles are common in the consumer-products industry, particularly now, according to Terri Seligman, a partner at Frankfurt Kurnit Klein & Selz who specializes in advertising disputes. "Companies are trying hard to preserve their market share," she said. "Advertising is a battlefield and package design is a battlefield," she said. "You fight where you can."
The suits also concern Colgate's use of the phrase "Triple Action" in a new product. Glaxo alleged in its suit that the phrase runs afoul of the "Triple Protection" trademark used for its Aquafresh brand of toothpaste.
"These extremely valuable trademarks are the exclusive property of GlaxoSmithKline's world famous Aquafresh(R) brand and GlaxoSmithKline will take all necessary steps to defend its rights," Glaxo said.

http://www.bnn.ca/index.html
Lowe's misses Street, sees uncertain demand
Reuters
August 16, 2010
Lowe's Cos. posted weaker-than-expected quarterly results, but kept its outlook for same-store sales growth this year, assuring investors it will benefit once consumer demand picks up.
Shares of Lowe's, the second-largest home improvement chain, rose 2.1 percent in early trading on Monday. Market leader Home Depot, which reports results on Tuesday, gained 1.3 percent.
Lowe's said it still expected sales at stores open at least a year to rise about 2 percent for the fiscal year, which some analysts viewed as a good sign given persistently soft U.S. consumer sentiment.
JPMorgan analyst Christopher Horvers said Lowe's should be able to meet that same-store sales goal as consumers resume projects to maintain or repair their homes.
"We await more discretionary larger-ticket projects" that would further accelerate same-store sales growth, he said in a research note.
Horvers also applauded Lowe's for clearing inventory in the quarter, helping gross margin to rise slightly.
Net income rose to $832 million US, or 58 cents a share, in the second quarter ended on July 30 from $759 million, or 51 cents a share, a year earlier.
Analysts on average were expecting 59 cents a share, according to Thomson Reuters I/B/E/S.
"We expect the 'not so bad' second-quarter results that Lowe's reported today to alleviate growing market concerns of a significant deterioration in trends at the chain over the past few months," Oppenheimer analyst Brian Nagel said.
Lowe's forecast current-quarter profit of 28 cents to 32 cents a share, while analysts were expecting 31 cents. The company said it expected a sales increase of 3 percent to 5 percent for the period.
Sales at Lowe's lost some momentum during the second quarter due to the expiration of a U.S. homebuyer tax credit and cash for appliances programs. Both had helped results significantly in the first quarter.
Sales rose 3.8 percent to $14.36 billion, but missed Wall Street's average estimate of $14.52 billion. Sales at stores open at least a year rose 1.6 percent.

http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748704532204575397351690732156.html
By CLIFFORD M. MARKS And ELLEN BYRON
A pair of toothpaste makers have squared off in court over a marketing icon, the "nurdle."
For the uninitiated, the nurdle is that curvy squirt of toothpaste—perfectly shaped in advertisements—that people use to scrub their pearly whites.
Toothpaste manufacturer Colgate-Palmolive Co. initiated the legal tussle Thursday morning by asking a judge to find that its packaging didn't infringe on the trademarks of rival manufacturer GlaxoSmithKline PLC, the maker of Aquafresh.
Colgate added that the nurdle design is "extremely widespread" in the industry.
Colgate said it doesn't comment on pending litigation.
The Aquafresh maker countered with its own suit in the same court Thursday afternoon, alleging that Colgate was attempting to "trade off the commercial magnetism" of Glaxo's Aquafresh brand. In a statement, the company said Glaxo created the "highly distinctive" tricolored nurdle design over two decades ago, and has used it ever since.
Use of the nurdle became widespread when toothpastes transitioned from a white paste to colored gels back in the 1970s, said Allen Adamson, managing director of the New York office of Landor, a branding firm owned by WPP PLC. With the introduction of the red gel of Close-Up, the green gel of Aim and the multicolored gel of Aquafresh, showing nurdles in marketing and packaging became an important way of touting a brand's distinctiveness.
"To me, a swipe of toothpaste works in the same way as a spoon in a bowl shown on a box of cereal," Mr. Adamson said.
A picture of a nurdle is important because the oral care aisle is so crowded, said Burt Flickinger III, managing director of consultancy Strategic Resource Group, who adds that the word "nurdle" has been used for decades but who coined it is a mystery. Mr. Flickinger said shoppers typically spend between 1/20th of a second to 1/100th of a second spotting their product in the store aisle.
Trademark battles are common in the consumer-products industry, particularly now, according to Terri Seligman, a partner at Frankfurt Kurnit Klein & Selz who specializes in advertising disputes. "Companies are trying hard to preserve their market share," she said. "Advertising is a battlefield and package design is a battlefield," she said. "You fight where you can."
The suits also concern Colgate's use of the phrase "Triple Action" in a new product. Glaxo alleged in its suit that the phrase runs afoul of the "Triple Protection" trademark used for its Aquafresh brand of toothpaste.
"These extremely valuable trademarks are the exclusive property of GlaxoSmithKline's world famous Aquafresh(R) brand and GlaxoSmithKline will take all necessary steps to defend its rights," Glaxo said.
http://www.bnn.ca/index.html
Lowe's misses Street, sees uncertain demand
August 16, 2010
Lowe's Cos. posted weaker-than-expected quarterly results, but kept its outlook for same-store sales growth this year, assuring investors it will benefit once consumer demand picks up.
Shares of Lowe's, the second-largest home improvement chain, rose 2.1 percent in early trading on Monday. Market leader Home Depot, which reports results on Tuesday, gained 1.3 percent.
Lowe's said it still expected sales at stores open at least a year to rise about 2 percent for the fiscal year, which some analysts viewed as a good sign given persistently soft U.S. consumer sentiment.
JPMorgan analyst Christopher Horvers said Lowe's should be able to meet that same-store sales goal as consumers resume projects to maintain or repair their homes.
"We await more discretionary larger-ticket projects" that would further accelerate same-store sales growth, he said in a research note.
Horvers also applauded Lowe's for clearing inventory in the quarter, helping gross margin to rise slightly.
Net income rose to $832 million US, or 58 cents a share, in the second quarter ended on July 30 from $759 million, or 51 cents a share, a year earlier.
Analysts on average were expecting 59 cents a share, according to Thomson Reuters I/B/E/S.
"We expect the 'not so bad' second-quarter results that Lowe's reported today to alleviate growing market concerns of a significant deterioration in trends at the chain over the past few months," Oppenheimer analyst Brian Nagel said.
Lowe's forecast current-quarter profit of 28 cents to 32 cents a share, while analysts were expecting 31 cents. The company said it expected a sales increase of 3 percent to 5 percent for the period.
Sales at Lowe's lost some momentum during the second quarter due to the expiration of a U.S. homebuyer tax credit and cash for appliances programs. Both had helped results significantly in the first quarter.
Sales rose 3.8 percent to $14.36 billion, but missed Wall Street's average estimate of $14.52 billion. Sales at stores open at least a year rose 1.6 percent.








Eli Meir Kaplan for The Wall Street Journal


