Where’s the Beef?

I used to love that commercial. Wendy’s (!) made fun of McDonald’s and the entire world started using that phrase to single out thin arguments, lack of facts or just plain superficiality.

But, we use it here to describe what has ailed Loblaw’s (or is it Loblaw? – more on that in a minute). In a failed attempt to counter the Wal Mart effect in Canada, Loblaw’s (the largest grocer in the country with multiple banners) started a massive effort to sell everything but the kitchen sink (but lots of accessories to use in the sink itself). The company tried to restructure its entire supply chain itself to handle the gidgets, gadgets and apparel that they never used to handle. Alas, even before this economic downturn, they went into a tailspin and it cost their bright CEO his job.

But what about the beef? In the interim, the worst thing that happened is that they forgot they were a food retailer, and they used to be an exceptional one at that. Their trail blazing private label brand “President’s Choice” had ME reading their Insider’s Report for goodness sake to see what creative food items they had come up with on a monthly basis. This franchise was gaining traction internationally where they sold the brand into major supermarkets in the U.S. and abroad. But they took their eye off the ball and let the 500-pound gorilla in the room dictate their strategic thinking. Not to say it isn’t difficult, but when you have a huge advantage in a staple like food and you have the largest market share of any competitor, my advice is to get better at what you do and in that way you will keep that gorilla at bay.

It didn’t work out that way. It became an obsession. Not only did it distract the entire company but as a result, their core business suffered. Time and again the shelves weren’t fully stocked, our family’s favourite cheese was constantly out of stock and lean ground beef was nowhere to be found. It has been better lately although they have a new merchandising strategy for some locations as they call them “Loblaw” and they do not carry such common items as a mop or a duster like all supermarkets carry. The Loblaw without the apostrophe ’s’ denotes food only. Who thinks of these ludicrous things?

Anyway, they are trying now to pump up their private label brands once again. In addition to “President’s Choice”, they are pushing their “Blue Menu” healthier brand, their “PC Green” environmentally friendly brand and their “No Name” value brand. They have also struck some gold with their “Joe Fresh” apparel brand thanks to Joe Mimram. That is something at least Wal Mart cannot get right (and should have) -inexpensive fashionable apparel. It is just not in Wal Mart’s bones.

I am hopeful that Loblaw’s (or whatever they want to call themselves) will ultimately prevail. I have to say that Metro is looking better and better and giving them a run for their food dollar. Hopefully Loblaw’s has learned their lesson not to look in their rearview mirror so much and keep their eyes firmly fixed on their own road ahead which was already smoothly paved for them long ago.

TheRetailTherapist

No Spoons

I believe by now everyone understands the plight of our economy here in North America and indeed globally. I don’t think anyone has missed hearing about (or indeed, feeling) the shocking loss of value in the stock markets, housing prices and the dire straits some globally iconic companies find themselves such as Citigroup, AIG, Merrill Lynch, General Electric (GE), General Motors (GM), Chrysler, Ford and Bank of America. It is hard to believe but we have already been in this recession’s grasp for at least a few months now, the headlines ensuring everyone on the planet knows we are in this  “Global Economic Crisis”. It’s the only thing that may sell newspapers these days as they are staring at possible extinction as well.

As every retailer knows, it is now time to batten down the hatches, reduce costs, conserve cash and manage your business tightly. Wherever it is that a retailer makes money, that is where all the attention and focus of the organization should be.

A company like Starbucks should know we are in a recession by now. As a matter of fact, I believe they were in their own little “recession” for about a year or so prior to the market meltdown this past fall when their founder Howard Schultz stepped back in in January, 2008. Apparently he has re-focused the company, created a new “value” coffee for customers in the freeze dried variety and pared down the menu to the most profitable items. He has also emphasized, in a very wordy manifesto, the culture of the company and how important the store/customer “experience” is. He was so serious about this shift back to the company’s roots that he had every store in the world close for a few hours one evening last year so that the staff could be “re-trained” on the basics of the customer experience and individualized coffee preparation

So why, I ask, for the second time in a month, at the same Starbucks store, are they out of spoons? They sell yogurt parfaits which are delightful, but hard to eat without spoons. I asked the employees how that can be, and they shrug and giggle and apologize. To be perfectly honest, this is unacceptable.

It is a bad sign for this company, which is busy closing more stores than they are opening in the U.S. at the moment. Their operations, judging from the spoon experience, is not up to snuff, neither is their focus. I know this is an isolated example. If it had happened once, I can understand. But twice within a matter of weeks at the same store leads me to believe that Starbucks has serious problems.

Not only that, in this new era of every sale being more cherished than ever before, there is no excuse for this kind of incompetence. It is symptomatic of a larger issue, especially right now in this economic downturn. If times were booming and the line-ups were out the door and they keep tripling the spoon order and still can’t keep it in stock, that is one thing. But there are no line-ups, every sale is difficult, people are trading down to Tim Horton’s or McDonald’s – you better be as close to perfect in your execution in this economy or you are in serious trouble. They lost two parfait sales this past month from one customer. Multiply that a few times on what else they missed and you get a clear picture of what could be transpiring.

I would say any retailer is in serious trouble if they cannot figure out how to stock up on “spoons”, especially now.

TheRetailTherapist