Below is the list of articles you will find for the week ending 6/29/12 edition of Retail Industry News. Thanks to MNB for this selection of articles.
- Sansolo Speaks: Wasting Away - Another Case for Efficiency
- Assessing The In-Store Health Clinic Business
- Starbucks Brings Beer, Wine, Expanded Food Initiative To Windy City
- Supervalu Looks To South Florida For Save-A-Lot Growth
- Retail Reaction To The SCOTUS Health Care Decision
- The MNB Wal-Mart Watch
- Executive Suite
Sansolo Speaks: Wasting Away - Another Case for Efficiency
by Michael Sansolo
There’s a simple rule to business success. Essentially, find a way to do more with less.
Do that and you become more productive, more profitable and a much tougher competitor. Simple words, of course, but the real trick is finding a way to make it happen. Certainly in tough times like we have today, doing more with less is a constant challenge and one that at times can even seem counter-productive. (Consider the chatter over Kevin’s recent article about the impact of cutting staff while emphasizing service.)
There’s good reason we spend a lot of time here talking about issues like the economy, technology and demographics. The food industry is always tightly linked to the changes in our communities - large and small - and those three issues in many ways are the catalysts for much of today’s change. But they aren’t the only ones.
It’s hard to think back just four short years, before the economy melted down, to issues that were getting massive discussion. Among them were the growing global competition for resources, spearheaded by the booming economies in China and India, the world’s two most populous countries. In 2008 we started seeing the impact of that change in sharply rising fuel and food prices caused by global competition (crises that were eased somewhat by the global economic collapse.)
Here’s the bad news: those problems didn’t go away. Not even close. That’s why the issue of efficiency requires yet another angle.
The Washington Post recently convened a panel of experts, including representatives of the retail and supply communities, to examine the strange global dynamic that currently exists: millions of people are obese at the same time that millions are starving. In a special summary report issued last week the Post highlighted some of the key statistics behind these dueling trends and the incredibly important role played by the food industry. I’m sorry to say that this won’t read nearly as easily or simply as the debate over the size of soft drinks in New York City. When it comes to problems, this is the deep end of the pool.
Consider a couple of statistics:
• Every year, 1.3 billion tons of food produced worldwide gets lost or wasted - more than 1 ton per hungry person worldwide. Food loss and waste occur in production through to consumption. More than 30 countries have experienced food riots in the past five years.
• In the US, approximately 40% of the food we grow is not eaten. By another measure, the waste equals 1,400 calories per day per person even while some 48 million Americans currently live with some insecurity about getting enough food.
These are complex issues and certainly ones that defy any pithy or rapid solution in a column such as this. These are issues that extend from nutrition to food deserts, genetic engineering to global supply chains. In other words, I don’t even have a clue how to start solving this beyond urging readers to examine how their companies contribute to waste and consider efforts to improve.
Then again, awareness matters too. This is an issue that this industry is certain to grapple with for decades to come. Economics, demographics and technology are huge issues, but so is the environment and global hunger.
Luckily, the food industry has a great record of doing more with less. So maybe there is a reason for optimism after all.
Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here.
Assessing The In-Store Health Clinic Business
• The Washington Post has an interview with Andrew Sussman, president of MinuteClinic, a division of CVS Caremark that operates in-store health clinics. Among his comments about the business:
Patient demographics... "Eighty-five percent of our patients are insured. Almost all insurers accept MinuteClinic as an in-network visit. Often patients pay a primary-care co-pay. . . . For the uninsured, we have transparent, low pricing: The average visit is $79." In addition, he says, "About half of our patients don’t have a primary-care physician. If they don’t, we have a list of physicians in the area that are accepting new patients that we give them. We do that to make sure they get hooked up with a primary-care medical home..."
Continuity of care... "At the end of every visit, we give a copy of the medical record to the patient. And we send a copy to the [patient’s] physician if the patient gives permission. And as we integrate with health systems, we can do that very promptly in the electronic medical record. We send medical records of patient visits to physicians every night, usually by fax, since lots of them don’t have electronic medical records."
Profitability... "By the end of 2011, we reached break-even on an all-in basis, with all costs and benefits to the company accounted for."
• At the same time, the Wall Street Journal has a piece about how Walmart has fallen behind in the in-store health clinic race. While former CEO Lee Scott pledged to open 2000 of them by this year, the company only has 149 such clinics, and closed 33 of them this year.
Experts say that Walmart "has fallen behind in the clinic push because its initial strategy to outsource the facilities hasn't worked. While Wal-Mart has leased space to dozens of third-party care providers, other retailers have purchased clinic operators and taken control of their pricing and service standards."
And here's what John Agwunobi, Walmart's president of health and wellness, has to say about the state of the business: "By any account, clinics are still a pilot ... We continue to watch and tweak, and we're candidly evolving and innovating to see where to go."
Starbucks Brings Beer, Wine, Expanded Food Initiative To Windy City
The Chicago Tribune reports that this Friday, a Schaumburg, Illinois, Starbucks begin will selling beer and wine, as well as "small plate" meals, after 4 pm, the first instance where the coffee retailer has expanded its "Starbucks Evenings" initiative outside the Pacific Northwest.
The story notes that the move - which is expected to be replicated in other markets - has several implications for the retailer:
• "Starbucks Evenings is the latest expansion into new business for the quick-service chain, which removed the word 'coffee' from its corporate logo early last year to underscore its ambitions beyond coffee. Within the last six months, Starbucks has opened test stores for Tazo Tea, Seattle's Best Coffee and Evolution Fresh juice. In May, Starbucks announced the acquisition of La Boulange bakery, promising to bring the products to its stores and expand the bakery chain. However, the Tribune notes, "some experts wonder if the company is straying from its core coffee-and-espresso mission, a problem that plagued the chain four years ago."
• "The seven Starbucks cafes offering wine and beer in the Pacific Northwest have seen double-digit same-store sales increases after 4 p.m., the company said." Which means if the concept works in Chicago and elsewhere, Starbucks may have found an effective way to build its bottom line sales from existing stores.
Starbucks is said to be hoping to introduce the new evening menu into as many as six more Chicago-area locations by the end of the year.
Supervalu Looks To South Florida For Save-A-Lot Growth
In Florida, the Sun-Sentinel reports on how Supervalu-owned Save-A-Lot "is looking to create a competitive edge in the South Florida market." The discount-driven, limited assortment format, in less than a month, "has opened a new store in Oakland Park, announced plans for a new distribution center in Pompano Beach and will launch another Fort Lauderdale location in the newly redeveloped area off Sistrunk Boulevard, in late July ... The supermarket chain plans to open 50 stores across the country this year, including 10 in Florida. A new store will open in Pompano Beach later this fall. Two stores in Miami and one in West Palm Beach will open sometime next year."
Retail Reaction To The SCOTUS Health Care Decision
The US Supreme Court, in a decision that seemed largely unexpected, issues a 5-4 ruling yesterday that left President Barack Obama's centerpiece legislation, the Patient Protection and Affordable Care Act (PPACA), almost completely intact, including the individual mandate requiring people who can afford it to have health insurance.
Numerous retail associations quickly weighed in on the decision.
• The Food Marketing Institute (FMI): “Today’s Supreme Court ruling upholds PPACA’s multitude of reporting requirements and mandates for food retailers and wholesalers to offer health coverage to their employees. As employers of millions of full-time, part-time and seasonal workers, uncertainty still remains for food retailers in every community in this country.
“As employers, food retailers will need to follow government agencies’ yet-to-be-released criteria for determining which employees are required to be offered health coverage under PPACA and whether that employer-offered coverage, as required under the new law, is deemed ‘affordable’ and passes the ‘minimal value’ requirements in the statute. Within the coming 18 months, federal agencies must issue new regulations covering all of these issues and more, and each company across the industry will be forced to decide how best to adjust its health coverage and work schedules, to comply with the new law – or whether to simply withdraw from offering coverage and pay any penalties that may be required.
“In addition, there are two provisions in PPACA that specifically impact the grocery industry: a restaurant menu labeling requirement that was incorporated into the legislation just prior to its passage followed by a proposed rule from FDA that could expand to supermarkets the regulations intended for restaurants; and a requirement that customers present a doctor’s prescription before being allowed to use an FSA debit card to purchase over-the-counter medicines at their local food stores, while continuing to allow the use of FSA debit cards to purchase eligible items that are not medicines.
“We will continue to work with Congress and the Administration to address these concerns as soon as possible.”
• The National Grocers Association (NGA): "Today's decision by the U.S. Supreme Court to uphold the constitutionality of the individual mandate, a key provision of the Affordable Care Act, makes the future more certain for employers who must now continue to prepare for 2014 when the majority of the law's provisions will take effect.
"With this decision, N.G.A. will redouble its efforts to minimize the impact and burdens on independent retail grocers by continuing to work closely with fellow members of the Employers for Flexibility in Healthcare Coalition to educate the administration on the important need for maximum flexibility in regulatory requirements.
"N.G.A. will also continue to work closely with Congress to address key provisions and requirements of the law that are most troublesome to N.G.A., such as the 30 hour threshold for full-time employees, the need for maximum flexibility when determining an employee's status as full or part-time and the chain restaurant menu labeling provision that Congress did not intend for grocery stores. Additionally, N.G.A. will continue to educate our members on how to implement and comply with the law, which can be a challenge for even the most sophisticated operations.
"N.G.A. supports healthcare reform that increases competition in the marketplace and reduces costs on employers making it easier to provide benefits to employees and their families. N.G.A. will continue to work closely with Congress and the administration to push for regulations and support legislation that supports this goal while addressing the unique needs of independent retail grocers and wholesalers and their employees."
• The National Retail Federation (NRF): “As the voice of retailers of all types and sizes, we’re disappointed by today’s ruling. The Court missed an opportunity to redress the many shortcomings of the law.
“As it stands, the law wrongly focuses more on penalizing employers and the private sector than reducing health costs. For these reasons, NRF has been a consistent skeptic of the Affordable Care Act.
“NRF worked closely with lawmakers throughout the debate with the hopes that bipartisan reform would help make coverage more accessible and affordable. The law that emerged in 2010 was a controversial and partisan measure riddled with punitive mandates and penalties that were as unreasonable as they were unworkable.
“Although the Court upheld the law’s constitutionality, many problems remain: it penalizes employers too much; it doesn’t do enough to reduce the cost of health care; and it is unreasonably complicated and difficult to implement and administer.
“This law will have a dramatic, negative impact on every employer and employee in the United States and further constrain job creation and economic growth.
“NRF will redouble our efforts to repeal the law while we continue to work, in good faith, with regulators to smooth implementation for retailers and businesses alike.”
• NACS: “The Court’s decision to keep in place employer mandates will place significant burdens on nearly 40% of our industry and put these businesses at a substantial competitive disadvantage ... For NACS, the health-care debate was very focused. Rather than engaging on the broad tenants of whether the government should or should not be involved, we focused directly on the effects that mandate would have on convenience retailers, and today’s ruling is bad news for our members.
“We are well aware that the country’s health-care system is broken and requires a serious overhaul. We will continue to support common-sense reform to make the system more efficient and eliminate waste and fraud, but today’s decision is a step in the wrong direction.”
• The Retail Industry Leaders Association (RILA): “With the Supreme Court decision now behind us, the focus must turn to the employer-mandate and the effect that impending changes to employer-sponsored coverage will have on the nearly 170 million Americans who receive healthcare through their employer.
“President Obama repeatedly assured Americans that if they liked their health insurance, they could keep it. However, today, with just 17 months until the law takes effect, and no meaningful implementation guidelines available for employers, those assurances are in doubt.
“While retailers are committed to continuing to provide health coverage to their employees, overregulation jeopardizes their ability to do so.
“RILA continues to urge the Administration to protect retailers’ ability to offer quality, affordable coverage that fits the unique needs of their workforce and not to undermine the flexible, voluntary system that provides coverage to millions of employees and their families.”
• The National Council of Chain Restaurants (NCCR): “Today’s decision will impose costly burdens on the chain restaurant industry, thousands of small business franchisees and their employees. Throughout the legislative debate on the ACA and over the last two years, NCCR has voiced the industry’s consistent concerns that the law would do significant harm to job growth and the economy. We’re afraid that continues to be the case as the industry braces itself for 2014.
“The ACA imposes heavy mandates on employers using punitive penalties for non-compliance. The law will particularly damage the chain restaurant industry, which operates on thin margins and cannot support costly government imposed mandates. Many chains have indicated they will have no choice but to cut back on workers’ hours or close restaurants in order to avoid the penalties.
“NCCR opposed the ACA and has advocated instead for reforms that expand access through lower costs. In 2009, Congress and the president went about health care reform the wrong way. Instead of making health insurance more affordable, they focused on unrealistic mandates and penalties that do nothing but punish employers and weigh down the economy.
“NCCR will continue to work to repeal the ACA and replace it with common-sense reforms that lower the cost of health care insurance for all Americans.”
• Nash Finch Company announced that ribbon cutting festivities for two new Family Fresh Markets are scheduled for today and tomorrow, in River Falls, Wisconsin, and Farmington, Minnesota. These stores mark the third and fourth Family Fresh Market locations, which are described as delivering "the freshness and quality you expect from a gourmet store, but at an affordable price.
• Reuters reports that U.S. drugstore chain Walgreen Co and several other pharmacies are offering free, rapid HIV tests in a small number of stores under a two-year pilot program to make diagnosing the AIDS virus more convenient and accessible to Americans.
"The pilot program announced on Tuesday by the U.S. Centers for Disease Control and Prevention (CDC) will use information gleaned from the testing to develop a nationwide model for pharmacists and nurse practitioners to detect the virus."
• Tops Friendly Markets announced that the company will add its 35th store in Erie County, NY by purchasing the North Boston Market Place, located in North Boston, NY. Specific terms of the agreement were not disclosed.
The MNB Wal-Mart Watch
• In Toronto, the Globe and Mail reports that Walmart Canada "will open 47 hiring centres across the country as it adds a total of some 4,000 new employees this year and next, about 500 more than previously announced.
"By the end of 2013, the company expects to spend some $750-million to open, relocate or remodel 73 stores. Included are most of the 39 former Zellers Inc. stores for which Wal-mart Canada purchased leasehold rights in June 2011. They will reopen as Wal-mart stores in this fiscal year."
By 2014, the story suggests, Walmart could have as many as 94,000 employees in Canada.
• Reuters reports that Walmart's Canadian business "is offering discounts on more than 10,000 products starting Friday, aiming to build sale momentum and market share ahead of its aggressive expansion and next year's arrival of Target Corp."
According to the story, the discounts will be on apparel, electronics, health and wellness products, hardware and home merchandise, as well as on about 3,000 grocery-store items from dry goods to fresh produce. Walmart said the program will run through July.
• Delaware Supermarkets, a five-store member of Wakefern Food Corp., announced that Christopher L. Kenny, chief operating officer, will assume the role of president and chief executive of the company, effective immediately. Former president and DSI founder Bernard F. Kenny, Jr. will remain chairman of the board as his son transitions into his new role. Christopher L. Kenny is also a member of the DSI Board of Directors.
• CVS Caremark announced the appointment of Stephen J. Gold to the position of Chief Information Officer. Gold joins the company from Avaya, Inc. where he held the position of CIO. Prior to that, he served as the CIO and chief technology officer for the eCommerce solutions provider.