Natural~Specialty Foods Memo: 2009

Thursday, May 7, 2009

Natural~Specialty Foods Memo Will Be On Publishing Hiatus Until January 14, 2010

Tuesday, May 5, 2009

Retail Memo - Alternative Formats Follow-Up: Toys 'R' Us Confirms Our Report About its New 'R Market' Grocery Sections in Toy Stores

Above is a photograph of one of the Toys "R" Us "R" Market store-within-a-store grocery and packaged goods sections located in the front of over 260 of the chain's U.S. toy superstores. The retailer has done a pretty good job of basing the item selection in the grocery sections on the Toys "R" Us overall format, striking a balance between essential items geared to mom and dad and items focused on the kids. The "R" Market sections contain about 1.300 SKUs, according to the retailer. [Photo courtesy of Toys "R" Us, Inc.]

On April 3, 2009, Natural~Specialty Foods Memo (NSFM) reported in this story [Retail Memo - Alternate Formats: Toys 'R' Us Testing Store-Within-Store 'R Market' Grocery Departments in Three Chicago-Area Toys 'R' Us Toy Stores] that the Toys "R' Us toy store chain was testing grocery and packaged goods product sections called "R" Market in some of its toy superstores.

On April 28, Toys "R" Us, Inc. confirmed Natural~Specialty Foods Memo's April 3 report, issuing a news release announcing the addition of the new "R" Market limited assortment grocery and consumer packaged goods sections in what are now over 260 of its 565 U. S. Toys "R" Us toy stores. The sections contain a mix of about 1,300 SKUs in the consumable and household packaged goods categories, along with a couple other related categories.

We got it about right in our April 3, 2009 report, which we published over three weeks before the retailer confirmed the "R" Market grocery store-within-a-store sections. Numerous supermarket industry trade publications and general business publications have ran stories since April 28, using the Toys "R" Us news release as their source.

The most significant added information by Toys "R" Us, Inc. is that the "R" Market grocery sections are now in 260-plus Toys "R" Us stores.

Here is what Toys "R" Us Chairman and CEO Jerry Storch said in the April 28 news release about the retailer's establishment of the "R Market" grocery sections, which are located in the front of the toy superstores:

"As part of our business strategy, we are continually focused on improving the shopping experience for customers in our stores. This includes looking for new ways to provide busy parents with the convenience of finding everything they need for their kids under one roof. The introduction of "R" Market offers customers a uniquely edited presentation of differentiated, kid-focused products from well-known manufacturers, as well as newer brands."

Read the full Toys "R" Us April 28, 2009 news release here. The statement offers a few other added tidbits of information about the "R" Market sections, making it well worth reading.

As we asked in our April 3, 2009 story: 'Will all retailers become grocers eventually'? At least in various limited but serious ways like Toys "R" Us is doing?

The way it's going, our intentional hyperbole in posing that thought question just might turn out to be closer to a statement of fact than one of provocation.

Tuesday, April 21, 2009

NSFM is Away On Special Assignment; Returning May 5, 2009

Natural~Specialty Foods Memo (NSFM) will be away on special assignment until Tuesday, May 5, 2009. Look for fresh news, features, insight and analysis beginning again then. You can follow us on Twitter.com for updates at www.twitter.com/nsfoodsmemo.

Friday, April 17, 2009

Friday Frolic - Memo to Ashton Kutcher - Follow-Up: Will Ashton Kutcher Get 'PUNKED' On Twitter? More on Our Kutcher-Whole Foods Market Challenge

Ashton Kutcher now has over 1 million followers on Twitter. But he is only following 80 of them at present. Can there really only be 80 people out of a million of interest to the self-described social media lover and devoted Twitter-user? Sort of gives a new meaning to the old phrase: "one in a million."

Earlier today in this post [Friday Frolic - Memo to Ashton Kutcher: We 'Dare' You to Challenge Whole Foods Market to a Twitter 'Tweet-Off' ] we reported on and wrote about actor and reality television show producer Ashton Kutcher's winning his "Tweet-off" against cable news network CNN, a challenge to see which one could reach 1 million followers on Twitter.com that the celebrity issued to the news network earlier this week, and which CNN accepted.

In our story we also issued a challenge to Ashton Kutcher (and in-turn to Whole Foods Market www.twitter.com/wholefoods) : Take on Whole Foods Market, which has the most followers of any grocer on Twitter, in a "Tweet-off."

Kutcher (www.twitter.com/aplusk) rose to fame not so much in the movies, although he does well, but rather because of the reality-based show he created for MTV called "Punked." For the uninformed, "PUNKING" a person is basically the same as pulling a well-crafted prank on them.

The premise of Kutcher's "Punked" show is that he and his team create elaborate pranks that they then pull-off on unsuspecting celebrities. Things like having a phony police officer pull the celebrity over and then launch into an elaborate roadside investigation, for example, complete with informing the celebrity that he or she outstanding warrants out for them and the like. When the celebrity is near meltdown point, Kutcher and his crew then jump out and tell the victim that he or she have been "PUNKED."

Kutcher is cashing in from a publicity standpoint today on his "Tweet-off" victory over CNN's CNN News Feed (www.twitter.com/cnnbrk) . You can view the details of the challenge and victory here: [April 17, 2008 - Friday Frolic - Memo to Ashton Kutcher: We 'Dare' You to Challenge Whole Foods Market to a Twitter 'Tweet-Off']

Earlier today Kutcher appeared on America's most popular daytime talk show, "Oprah" (no last name needed), and is appearing on CNN's "Larry King Live" this evening.

On "Oprah" Kutcher talked Twitter with Ms. Winfrey (caught us, we used her last name), including his "Tweet-off" victory over CNN.

His appearance on "Oprah," along with the CNN "Tweet-off," are getting some mention on Twitter.com in the form of "Tweets," which is "Twitter-talk" for the 140 word-maximum posts users, including Natural~Specialty Foods Memo (NSFM) (www.twitter.com/nsfoodsmemo) make on the micro-blogging social media site.

Here is a "Tweet" about Ashton Kutcher's appearance on "Oprah" today that a Twitter-user made just minutes ago: Ashton Kutcher and Evan Williams Talk Twitter With Oprah [Video] http://ping.fm/yafXQ via @mashable. Just click the link to view the video.

In response to that "Tweet," (and one other) Twitter-user ("Tweeter" perhaps) rveturis (www.twitter.com/rveturis) wrote and posted the three "Tweets" below on the topic:

>@LeviDayley I'm not following Ashton either! Celebs r annoying. They have enough influence & don't really add value.20 minutes ago from Tweetie in reply to LeviDayley.

>That's hilarious!! Lets punk Ashton Kutcher - unfollow & bring him back to ZERO by Monday morning #unfollowfriday - please RT via @debweeva23 minutes ago from Tweetie.

>So can someone explain the Oprah thing today? Was this her 1st day on Twitter? I feel like I missed something ...26 minutes ago from Tweetie.

The "Tweet" of most particular interest and not is the one in the middle that we have in bold.

We ask: Is Ashton Kutcher getting a taste of his own medicine and getting "PUNKED" at this very moment on Twitter.com?

Well...since rveturis' post there have been a couple others, saying they were going to "un-follow" (no longer follow) Ashton Kutcher (www.twitter.com/aaplusk) on Twitter, so as to "PUNK" him.

The tale of the tape

When we published this piece [Friday Frolic - Memo to Ashton Kutcher: We 'Dare' You to Challenge Whole Foods Market to a Twitter 'Tweet-Off' ] at 1 p.m. today, Ashton Kutcher's Twitter feed had 1,049,833 followers. As of this moment he has 1,104,815 followers -- that's a net gain of 11, 054,982 in less than four hours today -- putting Kutcher thus far out of the "PUNKED" danger zone. OF course all the post-"Tweet-off" publicity is helping add followers.

But the "Punk Ashton Kutcher on Twitter" movement has just been launched.

Could it gain steam? If so that would be good news for Whole Foods Market in the event Kutcher "man's up" and embraces our challenge to challenge the natural grocery chain to a Twitter "Tweet-off," rather than basking in his glory of having defeated CNN.

After all, Kutcher (www.twitter.com/aplusk) has more than double the amount of followers that Whole Foods Market (www.twitter.com/wholefoods) does at present. Therefore any loss of his followers do to Twitter.com-generated "PUNKING" would put the natural grocer in a better position, although we don't think it matters, since if the challenge is made we think Whole Foods will pull out all of its natural and organic tricks to defeat Ashton Kutcher.

Of course, Whole Foods Market, which reads Natural~Specialty Foods Memo (NSFM) could beat Ashton Kutcher to the punch, taking advantage of his post-"Tweet-off" glow, and issue its own challenge to the actor-reality show producer-celebrity.

We suggest a Kutcher v. Whole Foods "Tweet-off" (specifics and details arranged by the two parties) in which the loser has to make a cash donation to the winner's favorite charity.

Earth Day is coming up on April 22. How about a "Tweet-off" of some kind between the two parties in which the loser donates money to the winner's favorite environmental organization, for example? Call it a "Green" "Tweet-Off" for Earth Day.

Bring it on!

[You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Friday Frolic - Memo to Ashton Kutcher: We 'Dare' You to Challenge Whole Foods Market to a Twitter 'Tweet-Off'

Actor, reality television show creator ("Punked," "Beauty and the Geek") husband of actress Demi Moore, and Twitter.com heavy-user Ashton Kutcher (www.twitter.com/aplusk), threw down the guantlet earlier this week, challenging cable news channel CNN, also on Twitter.com, to a "Tweet-off."

Specifically Kutcher, who as of 12.59 p.m today Pacific Time has the highest number of followers on Twitter -- followed by number two CNN News Feed (www.twitter.com/cnnbrk), Britney Spears (www.twitter.com/britneyspears), and number four (yes behind Kutcher and Ms. Spears) Barack Obama (www.twitter.com/barackobama) -- challenged CNN earlier this week to see who could reach 1 million Twitter followers first, Kutcher or CNN.

On Wednesday (April 15) afternoon CNN was in the lead with 937,000 followers (number one on Twitter), when we checked at noon. Kutcher, pictured at top, wasn't far behind (number three on Twitter), seeing his number of followers grow to 888,000 on the heels of issuing his challenge to the cable news network founded by Ted Turner, who no longer has anything to do with the network, which is owned by Time-Warner. Pop singer Britney Spears maintained her second-place ranking as of Wednesday noon, with 903,000 followers, pushing President Obama fell to number four.

In announcing his CNN Twitter-follower challenge earlier this week in a video posted on his Twitter Feed, Kutcher said if CNN wins the contest he will ding-dong or doorbell ditch (that kids' prank that reminds one of why Kutcher created the show "Punked") CNN founder Ted Turner's house, ringing Turner's doorbell and then running away, assuming of course he could first figure out which of his many houses Turner would be at, and then get through the gate.

In a more serious tone, Kutcher said in the video: "I find it astonishing that one person (him) can actually have as big of a voice online as what an entire media company (CNN/Time Warner) can on Twitter. I just thought that was kind of an amazing comment on the state of our media."

Natural~Specialty Foods Memo (NSFM) basically agrees with Kutcher, and in a positive way. We think it is great that individuals can gain as many eyeballs on sites like Twitter as huge media companies can. But we do think it amazing that Aston Kutcher has that many followers on Twitter. Frankly, at first we thought it was one of his "Punked" pranks; that he somehow was able to manufacture that many followers. Could that actually be the case (tongue in cheek, of course)?

As of 4 .p.m eastern time today (1 p.m Pacific time) the follower tally in the "Tweet-off" between Kutcher and CNN is:

Ashton Kutcher (www.twitter.com/aplusk)
=1,049.833

CNN Breaking News (www.twitter.com/cnnbrk)
=1, 025, 844

Aston Kutcher is the winner, as the "Tweet-off" has officially ended. We congratulate the David (Kutcher) for defeating the Goliath (CNN).

In fact, CNN has conceded to Kutcher. This is the network's concession "Tweet" on its Twitter feed: Ashton Kutcher is first to reach 1 million followers in Twitter contest with CNN. CNN also sent Kutcher a personal congratulatory "Tweet" here: Congrats @aplusk. Ashton Kutcher is the first twitter account to reach 1MM followers.

Ashton Kutcher will be on CNN's Larry King Live tonight to discuss the challenge -- and now his victory. Note to Kutcher's PR rep: Perhaps you should have him appear wearing a boxer's robe, with the theme song from the movie "Rocky" playing, as he enters King's CNN set

It should be a fun segment since earlier this week King, who is CNN's highest paid host, tossed his suspenders into the middle of Kutcher's "Tweet-off" challenge to CNN, posting a video on YouTube in which King boasts that there is no way Kutcher can beat CNN.

In the video Larry King says: "Are you (Kutcher) kidding? Do you think you can take on an entire network. Do you know how big we are? DO you know what CNN is? Kutcher, you're playing out of your field. You're in another time zone. CNN will bury you!!"

King will be eating crow, organic and locally-produced we trust, for dinner tonight, along with the rest of the CNN team. We wonder how Anderson Cooper likes his crow prepared?

Meanwhile, Britney Spears looks to have gotten a Kutcher-CNN Twitter-follower bounce from the "Tweet-off." Currently her follower count is up to 973, 921, closing in on the magical 1 million followers mark.

Spears has a number of imitators on Twitter. Therefore on her Twitter feed (click here) she includes a sentence saying she is "The Real" Britney Spears. The word is her PR people do most of her "Tweets" on Twitter. Hard to believe, isn't it? But in reading through the "Tweets," we can tell she makes a number of her own posts as well:)

The current top-four rankings on Twitter.com as of this moment are:

1. Ashton Kutcher
2. CNN News Feed
3. Britney Spears
4. Barack Obama

The Natural Specialty Foods Memo (NSFM) Challenge: We Dare Ashton Kutcher to Challenge Whole Foods Market to a "Tweet-off"

This brings us to our challenge to Ashton Kutcher, who no doubt, high on his winning the "Tweet-off" against media-giant CNN, is feeling his oats, organic and locally-grown we trust.

Of the numerous supermarket and natural foods chains with Twitter.com feeds -- these include Wal-Mart, Trader Joe's, Wegmans, Tesco's Fresh & Easy Neighborhood Market, Raleys, Earth Fare, Natural Grocers, New Seasons Market and many others -- Austin, Texas-based Whole Foods Market (www.twitter.com/wholefoods) is the Twitter-follower champion of all grocers, with 448,753 followers, which is hundreds of thousands more than its nearest grocer-on-Twitter rival.

We challenge Ashton Kutcher to challenge the natural and organic foods retailing giant to a "Tweet-off." And if Kutcher issues the challenge, we challenge Paige Brady and the social media team at Whole Foods to accept.

Yes, Whole Foods has a social media team, led by Ms. Brady. It's no accident the natural grocer has nearly half a million followers on Twitter -- the retailer mines Twitter.com for followers.

Whole Foods therefore is the natural grocer giant, from a Twitter.com perspective, to CNN's media giant on Twitter -- making the natural and organic grocery chain the next logical Goliath to be taken on by Kutcher (David). at least in our minds.

Whole Foods Market loves a challenge. That's what makes it want to become a monopoly in U.S. natural and organic foods retailing after all, at least according to the U.S. Federal Trade Commission (FTC):)

And Whole Foods' has the resources to defeat Kutcher. It has nearly 300 stores and thousands of employees, all who could be enlisted to grow the grocer's number of followers on Twitter and win the challenge.

The challenge also would test the medal of the Whole Foods Market social media team. Can they defeat a lone man, Ashton Kutcher? He the same one man Twitter force of nature who just defeated media giant CNN, despite all of its resources, including Anderson Cooper and Larry King?

In our very best Larry King voice, our thumbs under suspenders: "Come on Kutcher, challenge Whole Foods. Do you know they have an entire social media team? Do you know they live and breath Twitter? If they want they can make CNN look like a little old country television station when it comes to gaining Twitter followers."

And to Whole Foods Market, embrace the challenge. In fact, circumvent our issuing of it to Kutcher. Issue the challenge to him first. Show CNN that when it comes to giants, Whole Foods Market is the King, and we don't mean Larry.

A Hollywood PR contact also tells us Ashton Kutcher and his wife, actress Demi Moore, like to shop at a Whole Foods Market store or two in Southern California, which adds a grocer-customer angle to the challenge. Perhaps the loser of the challenge donates a chuck of change to the winners favorite charity?

Readers, if you agree that the challenge -- Kutcher vs. Whole Foods Market -- is a worthy one, offer your comments on it by using the "comments" link below.

If you are a follower of Ashton Kutcher (www.twitter.com/aplusk) or Whole Foods Market (www.twitter.com/wholefoods) on Twitter, send them a link to this post/challenge.

Additionally, feel free to use the power of social media to get the word out on our challenge. Use Twitter, Facebook, ect. E-mail the post to Ashton Kutcher, Whole Foods Market and friends and business associates. We leave it up to you.

Let the certified organic "Tweet-off" begin.

[Follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www/twitter.com/nsfoodsmemo]

Monday, April 13, 2009

Reader Memo: NSFM Away Until Friday, April 17

Natural~Specialty Foods Memo (NSFM) will be away until Friday, April 17. We're on a research project.

You can follow us on Twitter.com at www.twitter.com/nsfoodsmemo for updates until Friday though.

Stay tune for a whole new batch of fresh news, features, insight and analysis beginning again on Friday, April 17.

Editor.

Friday, April 10, 2009

Retail Memo: Newest Texas 'Newflower Farmers Market,' Which Sprouted From Parent 'Sunflower Farmers Market,' Blooms in Dallas, Texas

What's a "Newflower?"

Well, for purposes of this piece, it's a seedling that sprouts from a Sunflower, in this case Boulder, Colorado-based Sunflower Farmers Market, the fast-growing, fighting tiger chain of natural foods grocery stores founded and run by Mike Gilliland, who's first crack at the natural foods retailing game was Wild Oats Markets, which he founded in Boulder and ran for many years, and which today exists only as a now near-fully integrated part of Austin, Texas-based Whole Foods Market, Inc., which acquired Wild Oats in 2007 and finally gained full control of it on March 6 of this year, when it reached a settlement agreement with the U.S. Federal Trade Commission (FTC) over the regulator's nearly two year antitrust legal challenge against the acquisition. [See a linked bibliography on FTC v. Whole Foods here: Retail Memo: David Wales, Who Headed Up the FTC's Nearly Two Year Legal Challenge Against Whole Foods' Acquisition of Wild Oats is Leaving the Agency.]

Sunflower Farmers Market opened its third and newest "Newflower Farmers Market," banner store in Dallas (pictured at top), deep in the heart of Whole Foods Market country in Texas on March 18, less than a month ago. Whole Foods was founded in the 1970's and is headquartered in Austin, Texas.

Sunflower Farmers Market opened its first Texas store in November 2008 in Plano. It's second "Newflower Farmers Market" store bloomed in February 2009 in Austin, Whole Foods Market's hometown.

Why "Newflower" and not "Sunflower" in Texas?

When Sunflower Farmers Market opened its first store in Plano, Texas in November 2008 it went by the Sunflower Farmers Market banner.

However, the name "Sunflower Market" for natural foods stores happens to be owned by the supermarket chain Supervalu, Inc. Supervalu used to operate a handful of natural foods markets in the Midwest named Sunflower Market. The chain closed the stores in 2008, ending what was a new format test for Supervalu. However, the company retained the ownership of the Sunflower brand as it pertains to retail natural foods stores. [See our January 25, 2008 piece here: Breaking Retail News: SuperValu, Inc. to Close Sunflower Market Stores.]

Boulder, Colorado-based Sunflower Farmers Market, which currently operates 23 stores has a license from Supervalu to use the "Sunflower" name in the states of Colorado, Arizona, New Mexico and Utah, where it operates 20 of its 23 stores.

But Sunflower Farmers Market doesn't have a license from Supervalu, Inc. to use the "Sunflower" name in Texas, as well as in numerous other U.S. states, hence why the natural foods grocer changed the name of its then one store in Texas to "Newflower," and why the newest two Texas stores, and the all the other stores in the Lone Star State it will open, are and will be named "Newflower."

There's been some speculation that the reason Sunflower Farmers Market is using the "Newflower" name for its Texas stores is because there is an independent heath foods store in Texas named Sunflower. That's true, there is such a store. But the reason for the Newflower rather than Sunflower Farmers Market banner in Texas is because of the Supervalu ownership of the Sunflower name in the state.

Newflower Market, Inc. (the business name Sunflower Farmers Market uses) has a license from Supervalu, Inc. for the name Sunflower for certain states, but not for Texas," Bennett Bertoli, vice president of real estate for Sunflower Farmers Market, told Natural~Specialty Foods Memo (NSFM).

Additionally, Supervalu, Inc. confirmed to us that is owns the Sunflower Market name and currently licenses it to Sunflower Farmers Market only in Colorado, Arizona, New Mexico and Utah at present.

Supervalu, Inc. has no plans to bring back its small-format Sunflower Market natural foods format or stores anytime in the near future. The stores were a test of a standalone natural foods retailing format for the supermarket chain, and Supervalu decided to close the stores and beef up the natural and organic foods item selections in its over 2,000 U.S. supermarkets, including creating a new natural and organic store brand, rather than go forward with opening more Sunflower stores and creating a natural foods store chain.

Although from a retail marketing standpoint being able to use the Sunflower Farmers Market name in Texas and in other new states the natural grocer enters is a plus, there is a certain delight in the fact it is using "Newflower" in its newest state and market -- Texas. After all, sunflowers are plants that shed lots of seeds. And for Sunflower Farmers Market, other than being able to use its flagship "Sunflower" banner in Texas, which it obviously wanted to do, "Newflower," which sprouted from the "Sunflower" banner, seems to us to be about the next best thing. And to take the metaphor to a further extreme, more Newflower Farmers Market stores will "bloom" in Texas over the next couple years.

Dallas Newflower Farmers Market blooms

The grand opening on March 18 of the Dallas "Newflower Farmers Marke"t store, which is located at 1800 North Henderson Avenue at Lewis Street in the city, was jam-packed. The Sunflower-Newflower format (the store formats are the same, just the names are different) focuses on offering natural and organic groceries and fresh foods at discount prices. In fact, it's slogan is "Serious Food...Silly Prices."

Dallas residents aware of the discount pricing focus of the stores, along with hearing about it via the pre-Dallas store opening press attention and advertising in the city, turned out in large numbers for the store's grand opening, many with reusable shopping bags in hand, looking for natural and organic food and grocery bargains.

Newflower didn't let the shoppers down. The natural grocer offered hot grand opening deals in every department of the store. Sunflower-Newflower puts a major emphasis on offering fresh produce at everyday low prices, and the Dallas store's produce department was packed with opening day shoppers grabbing up cart fulls of low-priced fruits and vegetables.

The store's grand opening began at 6:30am with a free breakfast served in the store's parking lot to opening day early birds courtesy of the natural grocer.

The Dallas "Newflower Farmers Marke"t store's doors were opened at 7am on March 18. And the first 200 shoppers to enter the store and make a purchase were given a nice surprise -- each was presented with a free reusable shopping bag filled with $50 worth of free groceries courtesy of the Newflower store team.

Day-long grand opening activities included lots of food sampling throughout the store, a free beef bbq and even free chair massages for the bargain hunting grand opening day shoppers.

Sunflower-Newflower founder and CEO Mike Gilliland, who attends every new store grand opening, was at the Dallas store event on March 18, spotted throughout the store, and often in the produce department, which some say is his favorite part of the stores.

Sunflower Farmers Market founder and CEO Mike Gilliland stationed in the Dallas "Newflower Farmers Market" store's produce department on grand opening day. The word is that the produce department is the grocer's favorite of all. In fact, a Dallas Newflower store employee says that on the March 18 grand opening day that the CEO, who also bagged customers grocery as part of the opening, kept running off from the store front end to spend more time in the produce department.

Never the shy entrepreneur and grocer, Gillian said at the grand opening: " We're thrilled to bring our grocery store concept to Dallas, especially with today’s hard economic times. Newflower is the most cost-effective grocery choice, by offering fresh produce and all-natural meats from local vendors at down-home prices. We make healthy cooking easy, with in-store recipe cards, nutritional programs and the lowest prices around."

The Sunflower-Newflower markets are a bit of what we call a hybrid natural foods store, reminiscent of what Gilliland did with the Henry's (Southern California) and Sun Harvest (Texas) banners when he was at Wild Oats and the banners were a part of the chain. By this we mean they aren't orthodox natural-organic foods stores. The stores feature more mainstream-type and specialty items, along with natural and organic products.

Whole Foods Market, Inc. sold off the 35 Henry's and Sun Harvest stores in Southern California and Texas to Los Angeles-based Smart & Final shortly after acquiring Wild Oats in 2007. Gilliland had left Wild Oats long before the Whole Foods acquisition.

The format

The Sunflower-Newflower stores are no frills markets in terms of their design; attractive but basic. This allows the natural grocer to have less overhead, which allows it to achieve cost savings, and in-turn offer natural and organic food and grocery items at generally everyday lower prices than Whole Foods market and most supermarket chains do.

In a sense, Gilliland and team are attempting a natural-organic foods retail natural-organic category killer format, while at the same time trying to make sure sure the markets are both destination as well as neighborhood-oriented markets. The format seems to be working so far in all three regards, from our observations and analysis.

The new Dallas "Newflower Farmers Market" store also has a number of "green" features, according to the retailer. These include: energy efficient light fixtures, the use of recycled and refurbished equipment, cases and fixtures whenever possible, and cash registers that use double sided receipts to reduce paper waste by 40%.

The front of the store also features a skylight-style awning designed to let natural light into the front of the store, as the photograph at the very top of this piece shows.

One of the fighting tigers

Natural~Specialty Foods Memo (NSFM) has termed Colorado-based Sunflower Farmers Market one of what we call the three fighting tiger natural grocery chains. The other two fighting tigers are Arizona-based Sprouts Farmers Market and Colorado-based Natural Grocers.

All three of the Western U.S.-based natural grocers are fast-growing, and all three fear not to take on Whole Foods Market head-to-head in various markets, hence the fighting tiger name. All three, for example, are taking on or plan to take on Whole Foods right in its very own backyard of Texas, as they are in Colorado, Arizona, Southern California (Sprouts only so far there), New Mexico and Utah.

All three of the fighting tigers are using a similar, no frills everyday low-price formula as well, although each does so in its own unique way. It's not an accident that Whole Foods is focusing much more on value and pricing these days in its stores. The competition from these three fast growing natural grocery chains, along with the bad economy, has and is forcing Whole Foods to become much more price competitive, both on everyday prices and in its promotions. And Whole Foods is doing so.

Competition good

This competition, along with the competition from supermarkets and discounters that are getting deeper and deeper into the natural and organic foods categories, is good for the industry overall because it will lead to a greater democratization of healthy, natural and organic foods.

The better the prices on the category items the more consumers can buy them, changing the industry from a niche (and some might say even elitist) enterprise to one aimed more at the masses. That's good for retailers and suppliers as well. More shoppers equals more sales. And more sales equals more efficiencies, which translates into higher profits.

That's a prescription both Dr. Natural and Dr. Organic would love to write.

Below are photographs from the grand opening of the new Dallas Newflower Farmers Market that sprouted in Dallas, Texas on March 18, 2009:

Shoppers check out and get "checked out" at the Dallas "Newflower Farmers Market" store on grand opening day, March 18, 2009.

The produce department is a central departmental feature in the Sunflower-Newflower stores. Although the stores average about 15,000 -to- 25,000 thousand square feet, the produce department in the stores is much larger than an average store of that size would have. This is by design. Sunflower-Newflower prices both conventional and organic fresh produce at low everyday prices. This serves not only as a way to draw shoppers to the store but helps grow market basket sizes in the stores as well. Notice the no frills, farmers' market-style design of the produce department above in the new Dallas Newflower store. Doing so provides cost savings which allows for the everyday low produce pricing practice. It obviously also fits in with the chain's overall theme and name.

Inside the Newflower Farmers Market store that opened in Dallas, Texas on March 19, 2009. Notice the basic, no frills product refrigerated cases and the painted cement floors. This is part of the chain's no frills store design which allows it to offer natural and organic products at lower everyday prices than many of its competitors. The focus is on the the product and its price rather than on the store's design. The balloon the happy little girl is holding were given out to children, along with other treats, all day at the store's March 19 grand opening event. The balloon is doing a great job of holding her attention so that mom can concentrate on her shopping.

Below is a selection of related, past stories and posts from NSFM:

~March 12, 2009: Retail Memo: Whole Foods Market is Selling Brand 'Wild Oats'- We Offer Three Retailers We Suggest Could Benefit From Buying the Brand

~December 6, 2008: Retail Memo: Fast-Growing and Scrappy Sunflower Farmers Market Ventures Deep in the Heart of (Whole Foods Country) Texas

~October 27, 2008: Retail Memo: Sprouts Farmers Market Store Number Eight 'Sprouts' in Texas; Deep in the Heart of Whole Foods Market Country

~October 21, 2008: Retail Memo: Natural Grocers Joining Sunflower Farmers Market in Opening First Stores in Whole Foods Market's Home City of Austin, Texas USA

~October 21, 2008: Retail Memo: H-E-B Set to Open 127,900 Square Foot Hybrid Mega-Store in Houston, Texas Suburb; Miles and Aisles of Organic and Premium Delights

~August 15, 2008: Retail Memo: 'Business Week' Discovers Sunflower Farmers Market, Just As Many Shoppers Are Doing Daily

~June 19, 2008: Retail Memo: Two Food Retailing Chains (Among the Growing Legions) Who Fear Not the Whole Foods Market, Inc.-Wild Oats Juggernaut

~July 8, 2008: Retail Memo: Former Raley's CEO Michael Teel and Partner Developing New Prepared Foods, Natural-Specialty Foods Chain in Sacramento, California

~May 18, 2008: Small Format Food Retailing Special Report: Raising (the stakes in) Arizona: Wal-Mart On-Track to Open First Marketside Stores in Arizona This Summer

~May 13, 2008: Small Format Food Retailing Special Report: Sprout's Farmers Market Gets $22 Million in New Financing; Will 'Sprout' 100 New Stores Over Next 5 Years

~April 29, 2008: Independent Grocer Memo: Utah's 75 Year Old Harmons Combats the Big Chains With Low-Prices; Gets Ready For Whole Foods' By Going Upscale & Natural

~February 24, 2008: Retail Memo: The Whole Foods Mrkt., Inc. as Monopolist Fallacy: How Sprouts Farmers Mrkts. and Others Are Growing Into the Heart of Whole Foods Country

~December 20, 2007: Retail Memo: Natural-Born Category Killers

[You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Thursday, April 9, 2009

Small Format Food Retailing Memo - Design Innovation: Supermarket Design Firm Wins Award For Design of Independent 'The Market' Specialty Grocery

Design Services Group (DSG), the supermarket design firm owned by supermarket chain Supervalu, Inc. has won the 2009 Outstanding Merit Award from the Association for Retail Environments (A.R.E.) design association for its design work on the independently-owned small-format specialty and natural foods store "The Market" (pictured above), which is located in Plymouth, Massachusetts USA.

DSG won the prestigious Outstanding Merit award at the just-ended 2009 A.R.E. Retail Design Awards event at GlobalShop, held in Las Vegas.

The award recognizes excellence in retail store design, craftsmanship and innovation. This is the second time DSG has been awarded an A.R.E. Retail Design Award: it won a grocery store category award in 2006 for its design of "Highland Park Market" in Windsor, Conn.

The 13,500 square foot "The Market" is the creation of specialty and natural foods retailing veteran Michael Szathmary, who is the store's managing director, and his associates. Szathmary's 40 year retailing career includes having founded and launched the Nature’s Heartland grocery store and Szathmary’s market/cafes in Needham and Brookline, Massachusetts. [Related post - January 20, 2008: Retail Memo: Designing the 'Perfect' Small-Format Grocery Store in a 'Near-Perfect' Place.]

The store's manager is food retailing veteran Mark Guinasso. Guinasso been in the grocery business for over 30 years, with previous management positions at Purity Supreme, Western Beef Supermarkets, Walter’s Meat Market and Nature’s Heartland, where he worked closely with Michael Szathmary.

The fresh produce department (above), named "Farmers Market," at the small-format "The Market" store keeps with the store's overall design theme of showcasing fresh foods in a rustic setting modeled after a 19th century farmers' market.

This is how the owners and management of "The Market" describe the store's format and retailing approach: "We’re The Market. And we want to change the way you shop — for the better, quicker, healthier and happier. With fresh, locally grown foods in season, expert help and our everyday value pricing on the everyday conventional groceries you need . . . every day.Our name says it all: simple, direct, not too fancy — full of good things waiting to be discovered. In fact, we want to make shopping an experience you actually enjoy.

It begins with healthy, high-quality food: like locally grown, seasonal produce. Freshly baked artisan breads. A delectable deli. Certified Angus beef and naturally raised chicken. And fish right off the boat. Fresh is best.

We also offer a constantly changing array of specialty items created in our own kitchen by our own chef and team — in case you’re too busy or tired to cook. Just heat and serve.

Plus, we have experienced people who know their stuff and are ready to help you. Whether it’s catering a party of fifty or just carrying your bags to your car. We’ve made the aisles more convenient, the displays a little tastier. You can pick up a bouquet by Martin’s Flowers just next to our bakery. And we’ve opened a doorway to Long Ridge Wine & Spirits next door. We’ve even selected great music for you to shop by."

You can learn more about the small-format grocery store at its Web site here.

The Deli department (above) at the independently-owned, small-format "The Market" features scores of deli items and ready-to-heat and ready-to-eat fresh, prepared foods.

DSG's Architecture and Engineering department designed the interior of "The Market" the store, working closely with Elkus Manfredi Architects, a Boston firm that designed the exterior shell.

With only 13,500 square feet to work with, DSG store planners had to carefully account for every bit of available space. They settled on an open layout with relatively low shelves to give shoppers a broad view of the entire store from nearly every vantage point, the design firm says. The small-format store has the look of a country store of decades best with a modernistic twist.

The store's design philosophy, according to DSG, is to showcase fresh foods in a rustic setting modeled after a 19th century farmer's market.

"The Market" looks like a modernistic barn by design. An open floor plan directs customers from one department to the next, from the full-service cheese, deli, meat and seafood departments to the bake shop, seasonal and locally grown produce department, the prepared-food section, salad bar, dairy, frozen foods, chef’s cove and floral department, and then to the aisles of groceries.

The 13,500 square foot store features basically all of the departments a large supermarket offers: dry grocery, fresh produce, meat-seafood, deli-prepared foods, bakery, wine, cheese and the like, each designed to fit into the small-format footprint and limited store interior space.

The store has high arched ceilings which make it appear much larger than its 13,500 square feet.

The small-format store is in the Pinehills development in Plymouth, Massachusetts. "The Market" opened in September, 2008.

As Natural~Specialty Foods Memo (NSFM) first declared in the summer of 2007, there's a small-format food and grocery store mini-revolution happening in the U.S. and in many other parts of the world. This includes chains like Aldi (Europe and U.S.), Lidle (Europe), Supervalu, Inc.'s Sav-A-Lot (U.S.), with there small-format, deep-discount grocery stores; Tesco (globally) with its mid-range small format stores like Tesco Express in Europe and Fresh & Easy in the Western U.S., along with Giant Eagle and its small-format Giant Eagle Express format; Safeway (its The Market format), Supervalue (Urban Fresh by Jewel), Wal-Mart (Marketside) and others in the USA (plus Waitrose and Sainsbury's in the UK) on the more upscale end, and numerous independents focusing on small-format stores, the original small-format grocers. Many other chains are playing in the small-format world as well, in the U.S. and internationally.

The current severe global economic recession has slowed down what in 2007 to mid-2008 was a very robust small-format revolution. But the fact is it has slowed down a ll new store development in the U.S. and globally considerably.

But despite the recession, small-format innovation continues.

And in the case of "The Market" in Plymouth, Massachusetts, it continues on an award winning pace.

[You can view "The Market" store's complete design project from DSG at the link below:
Download Project PDF (7790kb).]

[You can view a slide show of the store's interior here. There are links to photographs and information about other food stores designed by DSG at the site.

[Readers: You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.]

Wednesday, April 8, 2009

Green Retailing Memo: One Year Since Eliminating Plastic Bags Whole Foods Market Says Reusable Use Has Tripled; 150 Million Less Bags in Landfills

Whole Foods Market teamed up with singer Sheryl Crow (pictured above, right) to design its value-priced "A Better Bag" reusable canvas shopping bag (pictured above, left). The reusable bags, which feature a tree drawn by Crow, come in two sizes and sell for 79-cents and 99-cents (large bag) respectively.

Nearly one year ago, on Earth Day, April 22, 2008, Whole Foods Market, Inc. eliminated offering free single-use plastic carrier bags as an option in all of its stores in the U.S., Canada and the United Kingdom. Instead, Whole Foods' decided to offer shoppers only free 100% recyclable paper grocery bags (made from at least 50% post-consumer recycled paper), along with making a major push to encourage customers to bring there own reusable shopping bags with them to the stores, as well as offering a variety of reusable bag varieties for sale at a variety of price points in its natural and organic foods markets.

[Read our April 21, 2008 story about Whole Foods Market's banning the plastic bags in its stores here: Green Retailing Memo: Whole Foods Market, Inc. Self-Bans the (Plastic) Bag Tomorrow; Has Related Regional Earth Day Promotions Planned For All Stores.]

A.C. Gallo, Whole Foods Market, Inc.'s co-president and chief operating officer says the Austin, Texas-based natural grocery chain decided to eliminate the single-use plastic carrier bags on Earth Day last year "in an effort to help protect the environment and conserve resources, a move that aimed to protect nature and wildlife and reduce litter by encouraging customers to bring reusable bags when they shop for groceries."

Last year hundreds of Whole Foods Market's store-level team members joined the non-profit Ocean Conservancy group's annual coastal cleanup day in which thousands of volunteers pick up litter and catalog what they found along beaches and coastal waterways throughout the world.

"During Ocean Conservancy's 2008 International Coastal Cleanup, 1.4 million plastic bags were found littering our oceans, lakes and rivers," says Dianne Sherman, Director of the International Coastal Cleanup. "Trash travels. Even if we live thousands of miles inland, our actions have a profound effect on the ocean. A bag can blow from a picnic table, wash down a storm drain into a river and wind up harming or killing a sea turtles, birds or other marine life. Trash is one of the most pervasive - but solvable -- pollution problems facing our oceans and waterways. Whole Foods Market and their customers are demonstrating how simple lifestyle changes can make a sea change."

When it eliminated the plastic grocery bags last year from the checkouts in all its stores Whole Foods Market became the first major U.S. grocery chain to do so.

Gallo says that in the one year since Whole Foods' eliminated the single-use plastic carrier bags from all of its natural foods supermarkets the chain has seen the amount of reusable bag use among its customers triple. Additionally, Gallo says that the natural and organic grocer has kept an estimated 150 million plastic bags out of landfills since last Earth Day.

That's a considerable amount of plastic bags for one food retailing chain with just under 300 stores to keep from going into municipal landfills, which is where most of the single-use bags go because there isn't a comprehensive recycling system for the plastic bags in the U.S. like there is for paper grocery bags.

"At first we wondered if shoppers would just switch to paper but to our great surprise, people have been truly excited about using reusable bags," Gallo says. "I think Whole Foods Market has also helped that along by offering various versions of stylish, affordable 99 cent bags that have become quite popular - our shoppers have been inspired to make a positive environmental change and have really incorporated the reusable bag mindset into their daily lives. Eliminating plastic bags was definitely the right move at the right time."

Whole Foods' sells a variety of reusable bags in its 279 stores in the U.S., Canada (six stores) and the United Kingdom (five stores). Its value-oriented "A Better Bag," which sell for 79 and 99-cents respectively, depending on size, is constructed primarily (80% of its content) from recycled plastic bottles. The bags currently feature a charcoal sketch of a tree drawn and signed by singer Sheryl Crow.

The natural grocery chain also sells a variety of lower -to- mid-ranged priced reusable tote bags on up to its premium $29.99 cotton and burlap FEED 100 bag. Each FEED bag purchased by shoppers helps provide 100 nutritious lunches to hungry Rwandan school children through the United Nations World Food Program's School Feeding Program, as part of charitable program Whole Foods Market contributes to.

Whole Foods Market also offers customers a refund of either five or 10 cents per-reusable bag used at the stores' checkouts. The amount varies depending on the store and where it is located.

Paper bag use has increased at Whole Foods' stores since the retailer self-banned the plastic bags nearly a year ago. We know this because we've talked to store-level employees in at least 40 Whole Foods Market stores over the last year who have told us this is the case. However, that's to be expected, and we have no problem with it for a couple reasons.

First, the paper grocery bags are 100% recyclable. Nearly every city and town in the U.S has convenient, curbside recycling programs. And many of the smaller town that don't have the curbside programs allow resident to toss their paper waste into their green waste garbage cans. Since paper, including paper grocery sacks, is compostable, the disposal companies turn it and the green waste into compost which the towns use in parks and also sell to companies and often give away for free to town residents to use in their gardens

Additionally, the paper bags used at Whole Foods Market stores are at made from at least 50% post-consumer recycled materials, and the grocer is working on 100%. This means the bags a shopper gets today came from at least half of a bag that was recycled and turned into the new bag.

Unfortunately single-use plastic carrier bags are seldom recycled in the U.S., largely because there isn't a comprehensive recycling system established to do so . Few if any curbside recycling programs allow single-use plastic carrier bags, for example.

In states like California and New York, supermarkets are required by state laws to place bins in the stores so that shoppers can return the plastic bags. The retailers also are required to arrange to have the bags picked up by a company that will have them recycled.

But the simple fact is that American consumers generally will only recycle if its convenient to do so, which is why residential the curbside system works best. Before that cities used drop off centers. Recycling rates were minimal. Curbside increased the rates dramatically.

In addition, only about three or four states have such laws.

In 2007, Whole Foods Market introduced all-natural fiber packaging at its in-store salad and food bars that comes from plants that grow wild or are cultivated and harvested annually.

Whole Foods' is currently searching for alternatives to its use of plastic bags and plastic containers in its stores' produce, seafood, bakery and bulk foods departments, according to Gallo. Since customers generally use a single plastic bag for each individual item purchased in these departments, that adds up to using lots of these single-use small bags storewide for Whole Foods.

Any replacement bag for these uses though requires that the material used in the bag is food grade, since it will be coming into contact with fresh and ready-to-eat foods.

Before the invention of the plastic bag for use in produce and plastic bags and containers for in-store bakery, supermarkets used paper bags and paper boxes (remember those pretty pink bakery boxes?) in these departments.

Some supermarkets still use paper along with plastic in their in-store full service bakeries. However few do largely because the cost of plastic is cheaper.

Switching to paper is something we think Whole Foods should take a look at and consider for both bakery and bulk foods. It's a bit more difficult for produce, although their are supermarkets that still offer a choice of plastic and paper bags for shoppers in the produce departments. Paper can be used to wrap fresh fish but usually stores put it in a bag first in order to preserve its freshness. That could be more difficult to find a solution for.

One of the reasons retailers like using plastic in produce, bakery and bulk departments is because the store checkout clerks can see the item through the bag, which speeds up checkout. However, we think in the case of bakery and bulk, going to paper for Whole Foods wouldn't slowdown checkout all that much, particularly once the clerks got used to peeking inside the bag when the need to, mostly in the case of produce since the bulk bags are supposed to be identified by code numbers anyway.

It would be hard of course to go to paper completely in any in-store bakery we realize because in some cases clear packaging, prepacked cakes and the like, is needed to display the product in self-service. But items in the full-service cases could be packaged using paper bags without much difficulty. Safeway Stores, Inc. for example does this in its stores, using a mix of paper (for service bakery) and plastic.

Of course, a truly biodegradable-compostable plastic bag for seafood, fresh meat, produce, bakery and bulk that doesn't cost retailers an arm and a leg would be a great solution. But none are available at a decent cost yet on the market that we've been able to find.

There is a slow behavior change going on among consumers in terms of bringing their own bags to the grocery store. And since Whole Foods Market happens to cater to the "greenest" of "green" consumers it's likely the behavior change is and will always be more dramatic in its stores, compared to say conventional supermarkets.

But with steady education, along with economic incentives designed to decrease plastic and even paper bag use by shoppers, its our analysis that over the next few years we will see more and more shoppers, regardless of where they shop, bringing there own bags to the grocery store.

In fact, it is some of the no frills, deep-discount grocery chains like Germany-based Aldi (Europe and the U.S.) and Lidl (Europe), and Supervalu's Sav-A-Lot (U.S.) that are leading the way in encouraging shoppers to bring their own bags to the store because they charge customers a small fee (usually five to 15-cents per-bag) for each single-use plastic bag they request at checkout, providing a small but still real economic incentive to shoppers to bring their own bags to the store. Many shoppers bring single-use plastic bags or paper bags from previous trips or from other stores with them to these stores, not just specifically designed reusable tote bags. Doing this takes the "single-use" out of the paper and plastic bags.

And of course more and more cities, counties and even states and nations (Ireland, China) have and are passing plastic bag ban laws or laws requiring shoppers to pay for the single-use plastic bags in stores if they request them. As more of these laws are passed, which they will be, that obviously will decrease the amount of single-use plastic bags used overall, both in the U.S. and globally. [Related story: Green Memo: Ireland Has Reduced the Use of Single-Use Plastic Carrier Bags By 94 Percent With Bag-Fee Law; Has Exceeded EU Recycling Targets.]

For example, China banned the bags nationwide last year. That resulted in a huge global decrease in usage in one legislative fiat. Of course it would be better if consumers adopted the use of reusable bags without all the added new legislation.

What's needed are additional and new creative ways to change shopper behavior more towards the bring-your-own-bag concept, along with some solid economic incentives designed to move the behavior change along more rapidly. We see both coming.

Reader Notes

~Click here to read a selection of past posts in Natural~Specialty Foods Memo (NSFM) on the plastic and reusable bag topic and issue. You can also use the search box at the top of the Blog. Just type in the search terms "plastic bag issue," "reusable bags," "plastic grocery bags," or "single-use plastic carrier bags."

~You can follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.

Monday, April 6, 2009

Retail Memo: David Wales, Who Headed Up the FTC's Nearly Two Year Legal Challenge Against Whole Foods' Acquisition of Wild Oats is Leaving the Agency

FTC v. Whole Foods Market, Inc.: Settlement Agreement Post-Mortem

David P. Wales, the Acting Director of the U.S. Federal Trade Commission's (FTC) Bureau of Competition, and the man who in that role spearheaded the nearly two year antitrust legal challenge by the regulatory agency against Whole Foods Market, Inc.'s acquisition of Wild Oats Markets, Inc., is leaving the FTC to, as they say, pursue other interests.

Mr. Wales' departure comes just one month after the FTC and Whole Foods Market reached a settlement agreement over the Austin, Texas-based natural grocery chain's 2007 acquisition of Wild Oats Markets, its then main rival in the natural foods retailing class of trade segment.

New FTC Chairman Jon Leibowitz offered some strong praise about the departing Acting Director of the FTC's Bureau of Competition, which among other tasks is charged with enforcing antitrust regulations and bringing charges of antitrust violations involving mergers and acquisitions, saying about Mr. Wales: "Dave has done a terrific job in leading the Bureau of Competition during an active period of antitrust enforcement and a successful time for the agency in court. American consumers owe him a debt of gratitude, and all of us at the Commission are grateful that Dave agreed to stay on to help ensure a smooth transition."

Chairman Leibowitz's comment about Wales' staying on has to do with the fact that he was the Bureau of Competition's Acting Director.

Mr. Wales joined the FTC in April 2006 as Deputy Director of the Bureau of Competition.

As Acting Director of the competition bureau since August 2008, he has supervised nearly 300 lawyers and staff in the merger and non-merger enforcement divisions and led the bureau in bringing more than 20 enforcement actions, according to Chairman Leibowitz.

According to the FTC's public affairs office, David Wales directed several litigated enforcement efforts that blocked proposed corporate mergers in CCS/Newpark Environmental Services, Oldcastle/Pavestone, and CCC/Mitchell.

In CCC/Mitchell, the Bureau obtained the first preliminary injunction order from a district court in nearly seven years.

Wales also led the Bureau in challenging several consummated mergers in court, including Polypore/Microporous and Ovation Pharmaceuticals, both of which are still pending, and he oversaw the continuing litigation and subsequent March 6, 2009 settlement involving Whole Foods/Wild Oats.

He also helped lead the FTC in obtaining important relief for consumers in other merger matters, including Reed Elsevier/ChoicePoint, Fresenius/Daiichi Sanyo, Dow/Rohm & Haas, King Pharmaceuticals/Alpharma, Hexion/Huntsman, Teva/Barr Pharmaceuticals, Herff Jones/American Achievement, Getinge/Datascope, and Lubrizol/Lockhart, according to the FTC's public affiars office.

Additionally, according to the public affairs office, in the anticompetitive conduct area, Mr. Wales oversaw the Bureau’s two lawsuits against pharmaceutical firms that entered into exclusion payment agreements – Cephalon and Solvay Pharmaceuticals.

The departing head of the competition bureau also helped lead the FTC in obtaining critical relief for consumers in other conduct matters in the health care, retail, consumer product, and real estate industries, including Dick’s Sporting Goods, Boulder Valley Independent Practice Association, AllCare IPA, Inverness, ESL Partners/ZAM Holdings, West Penn MLS, National Association of Music Merchants, and Bristol-Myers Squibb, the FTC says.

Further, in the energy sector, Mr. Wales oversaw several regional gas price investigations, as well as the Commission’s rulemaking to prohibit market manipulation in the petroleum industry, according to the FTC Office of Public Affairs.

David Wales' departure in many ways helps turn the page on the FTC v. Whole Foods Market, Inc. legal case and overall issue. As the Assistant Director of the Bureau of Competition in 2007 Mr. Wales played a major role in the FTC's challenging Whole Foods' acquisition of Wild Oats Market's in 2007.

And as the bureau's Acting Director since August 2008, Mr. Wales was in-charge of the FTC's legal challenge against the deal until the settlement agreement was reached on March 6 of this year.

The first page-turner at the FTC was the naming in late February, 2009 by President Obama of then FTC Commissioner Jon Leibowitz as the regulatory agency's new Chairman. Just a couple weeks after Mr. Leibowitz took over as the FTC's new Chairman, the agency reached the March 6 settlement agreement with Whole Foods Market, Inc., as we reported and wrote about in this piece: Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge.

Take our word for it, that timing wasn't accidental. The fact a settlement agreement was reached so soon after Chaiman Leibowitz assumed his position involved more cause than effect in turns of the settlement deal getting done. Chairman Leibowitz is a registered Democrat but was appointed an FTC Commissioner by Republican President George W. Bush. [Suggested reading: Retail Memo - Breaking: FTC Commissioner Jon Leibowitz Odds On Favorite to Be Named Chairman; Positive Development For Whole Foods' Settlement Talks.]

FTC Chairman Leibowitz has yet to announce who will replace David Wales as the competition bureau's chief. However, we expect the Chairman's choice to be a person who is proactive and strong on antitrust actions, as well as consumer protection issues. Mr. Leibowitz has said he plans strong enforecemnet of both antitrust, competition and consumer protection during his tenure at the FTC.

Meanwhile, perhaps the FTC, as a gesture of good will, should have one of the Washington, D.C. Whole Foods Market stores provide the food and drink, paid for by taxpayers of course, for David Wales' retirement party from the regulatory agency.

After all, it at least would be a small gesture in terms of giving Whole Foods Market, Inc. and its shareholders a little cash back towards the about $30 million the natural grocery chain spent defending the company against the taxpayer-financed, wrong-headed, nearly two-year false premise-based antitrust challenge to Whole Foods' acquisition of Wild Oats, which tried as it might in 2006-2007 to find a buyer, but couldn't until Whole Foods Market, Inc. came along.

It's just a thought.

Reader Notes:

>Natural~Specialty Foods Memo (NSFM) predicted that the settlement agreement between WHole Foods Market, Inc. and the FTC would have as its central proposition or condition the divestment and sale of certain stores by Whole Foods. We were correct. You can read an overview piece about it here: Retail Memo: The FTC-Whole Foods Market Settlement Agreement Looks Much Like Our January 'Blueprint-Template For A Settlement Deal' Proposal
>Follow Natural~Specialty Foods Memo (NSFM) on Twitter.com at www.twitter.com/nsfoodsmemo.

>Below is a linked bibliography to Natural~Specialty Foods Memo's (NSFM) coverage and analysis of FTC v. Whole Foods Market and related issues and topics.

FTC v. Whole Foods Market, Inc. Recent Bibliography

Post March 6, 2009 Settlement Agreement:

March 31, 2009: Retail Memo: The 'Legal Times' Offers A Legal Legacy of the FTC-Whole Foods' Settlement Agreement; We Offer an Antitrust Case Blast From the Past

March 19, 2009: Retail Memo: Whole Foods Market Opens New Store in Santa Cruz, California Today ... And There's Plenty of Competition

March 12, 2009: Retail Memo: Whole Foods Market is Selling Brand 'Wild Oats'- We Offer Three Retailers We Suggest Could Benefit From Buying the Brand

March 8, 2009: Retail Memo: The FTC-Whole Foods Market Settlement Agreement Looks Much Like Our January 'Blueprint-Template For A Settlement Deal' Proposal

March 6, 2009: Daily Memo: It's A Done Deal: Whole Foods Market and the FTC Reach A Settlement Agreement On Wild Oats' Acquisition Antitrust Challenge

Pre-Settlement Agreement

March, 2009:

Friday, April 3, 2009

Retail Memo - Alternate Formats: Toys 'R' Us Testing Store-Within-Store 'R Market' Grocery Departments in Three Chicago-Area Toys 'R' Us Toy Stores

Will All Retailers Become "Grocers"?

The Toys "R" Us toy store chain has never been just for kids. After all, it's mom and dad who have the cash. Plus, we all know mom and dad also love shopping at the toy stores nearly as much as the kids do. After all, doing so can be the retail version of the fountain of youth, at least until checkout time.

But if what the New Jersey, USA-based retailer appears to be up to from a merchandising standpoint in at least three stores in the metropolitan Chicago, Illinois market is a harbinger of things to come for the chain's hundreds of other Toys "R" Us branded retail stores in the U.S. (and perhaps internationally), mom and dad might just have a far more practical reason for shopping at the toy superstores on a much more frequent basis. [The retailer operates a total of 846 Toys "R" Us toy superstores (about 600) and Babies "R" Us stores in the U.S. Additionally, it operates 700 stores internationally, in 32 countries, along with having four online stores.]

What's the mega-toy store chain up to?

Toys "R" Us has remerchandised three of its Toys "R" Us flagship toy stores in the Chicago area to include a selection of shelf-stable food, grocery, beverage, snack and household packaged goods items.

The packaged goods items are being merchandised in a store-within-a-store department setup in the toy superstores, which has been named "R Market."

The grocery store-within-the-toy store is clearly set-off with colorful green signage featuring the "R Market" name, according to a Natural~Specialty Foods Memo (NSFM) correspondent who visited one of the stores this week.

The perimeter of the "R Market" department features primarily household-oriented packaged items like bath tissue, paper towels, laundry detergent, cleaning supplies and similar related goods. It's the draw, the lure, into the store-within-the-toy store.

Inside the "grocery store" gondolas are stocked with a limited assortment of shelf-stable packaged goods and beverages representing numerous categories. Among the items include beverages such as juice, bottled water and various types of drinks; breakfast cereals, cereal and nutritional bars, cookies, crackers, various types of snack foods, and an assortment of other packaged foods.

There's also a full aisle dedicated to baby foods and drinks, a fitting tie-in for the Toys "R" Us core offering, which are toys and related products for kids of all ages.

The retailer has carried baby-related packaged goods items like disposable diapers, wipes and the like for some time in its stores. But a full-section of baby consumables is unique to the three Chicago-area test stores.

The grocery department also features a wall of candy. The wall of treats has a header at top that reads "Candyland," according to the NSFM correspondent. That signage is a tie-in to the popular "Candyland" board game, which is one of the chain's all time top-sellers.

The Toys "R" Us consumables and packaged goods store-within-the-store carries a mix of well-known national brand products, along with an assortment of lessor-known brands. There's also some natural, organic, specialty and healthy food, grocery and beverage items on the shelves.

Big brands include General Mills (cereals, snack bars), Kellogg (cereals), Gerber (baby), Proctor & Gamble (laundry detergents, bath tissue, paper towels, disposable diapers and related household items), Nestle (packaged goods and beverages) and some others.

Proctor & Gamble items like Pampers, Bounty Paper Towels and Charmin Bath Tissue are featured at discount prices on pallet-style displays on the floor inside the store-within-the-store area.

Among the natural, organic, specialty and healthy food and beverage items include: Barbara's Bakery (cereals, snacks), Kashi (cereals and related items), Dr. Sears' brand organic snack food items, Nestle nutrition items, Apple & Eve's Fruitables fruit drinks, and Clorox's and Seventh Generation's "green" household cleaning items.

Our correspondent also reports that there is some cross-merchandising in the "R Market" store-within-a-store department, featuring related consumable items and toy items, which is a logical and smart merchandising move.

Additionally, there's some cross-merchandising tie-ins with baby food and baby products in the aisle dedicated to baby and toddler consumables.

Further, a number of healthy, natural and organic snack and beverage items targeted to kids were also displayed on endcap-type displays in the department.

Toys "R" Us is keeping hush about the three store test, not publicly commenting on what it is up to, or if it's more than just a test. We call it a test because we spoke this week with a representative of one of the companies supplying grocery products to the toy store chain, who told us from what he has been told the "R Market" department and remerchandising scheme is just that for now -- a test.

It appears Toys "R" Us is attempting strategically a few things with its limited assortment, store-within-a-store "R Market" consumer packaged goods sections.

First, based on the item selection, the retailer has selected consumable and other packaged goods products that (1) primarily complement its core target demographic: toys and related goods; and (2) it's mixing that core shopper demographic-focused limited assortment with a selection of basic household items targeted to adult shoppers who are likely to pick up a few things on impulse (cleaning products, bath tissue, ect.) while taking their children toy shopping. The retailer has seen this to be the case in the past with items like disposable diapers.

And of course, the focus on kid-related breakfast cereals, juices, snacks and other consumables fits both of the criteria described above. Kids will ask mom to buy the juice boxes, candy and snack items, for example, along with mom grabbing some needed household items, especially if the price is right.

This is our analysis. As we said, Toys "R" Us isn't commenting publicly at present on the development.

With nearly 600 flagship Toys "R" Us stores and about 250 Babies "R" Us stores, the retailer could feasibly move lots of volume of consumable and other packaged goods items nationally were it to install the "R Market" departments in all of its 846 U.S. units. (We would think the focus would be more limited in the Babies "R" Us stores, concentrating on baby and toddler foods and the like.)

We also suspect the current economic recession has much to do with the development or test of the consumables/packaged goods departments in the three Chicago-area Toys "R" Us stores. After all, consumers aren't buying much in the way of durable items like toys at present.

In fact, Toys "R" Us just introduced what it calls $1, $2 and $3 value toy sections in the front of all of its flagship stores as a way to add value and create sales in the down economy. [You can read more about those new departments here.]

A very popular and long running advertising campaign jingle from Toys "R" Us features a person singing: "I don't want to grow up... I want to be a Toys R" Us kid."

It appears, based on the three store test, that if the retailer decides to put the limited assortment, petite grocery departments in all of its toy superstores, adults will have another reason to be even more frequent "Toys "R" Us kids," along with their children, picking up toilet paper, breakfast cereal, laundry detergent, and healthy snacks and drinks, along with toys and board games, at the toy superstores.