Economic Chum: Kroger/Ralphs Marketing, Ford Family, Small Business Credit, Job Market

Last night, I had the occasion to talk to my broker about building college funds and investing in this economy, and I pointed her to a number of articles I had seen during my lunchtime news reading. So, for today’s lunchtime chum, I thought I would share them with you:

  • From the “Targeted Marketing” Department: The LA Times has an interesting article on the Kroger chain, which out here in Los Angeles we know as Ralphs (disclaimer: My brother-in-law works for Ralphs as some sort of manager). Oldtimers in Los Angeles will remember Kroger as the one-time owner of the Market Basket chain (and if you are into grocery history, check out this site). Kroger, it seems, is making money through intensive analysis of their customer base, and by silently tiering their stores: the ones with wealthier clientele get more national brand products, the ones with more price-conscious consumers get more private-label products. They individualize coupon book mailings. Now, I’ve never particularly liked Ralphs since Kroger took over — we still prefer TJs and Gelsons — but that could be because we’re not going to a correctly-tiered store for our style.
  • From the “There’s A Ford In Your Future” Department: The NY Times has an interesting article on Ford Motors, which you’ll recall is the only US-HQed carmaker to not accept US Govt funds. The article claims that one reason is that the Ford family is still at the helm and actively involved. I should note that the NY Times also has an interesting piece on which autos are actually made in the US. By the way, when you buy that car, expect to see some colors you haven’t seen in a while. USA Today is reporting that carmakers are using colors in lieu of new models to lure buyers.
  • From the “Feeling Squeezed” Department: The LA Times has an interesting piece on the tightening credit squeeze for small business. It notes how the credit cards that small business depends upon to smooth cash flow are disappearing or having rates raised… and that the same companies that are doing this may be going out of providing private-label cards to these stores. This could affect those with private label cards (think Best Buy), or those trying to take advantage of the 0% financing deals (which are often private-label credit).
  • From the “Get A Job” Department: The NY Times has an interesting article on the job market: in particular, how certain skilled professions are begging for people. These include professions such as critical care nurses, welders, licensed civil engineers, special education teachers, geotechnical engineers, and electrical lineman. All are fields that require some aspect of professional experience or training on top of the school experience (making the people harder to come by). Interesting article, especially if you are looking for work, or know someone looking for work.

Chum For A Thursday Lunch

After a brief hiatus, here’s some lunchtime news chum, gleaned from the droppings of the papers scanned during lunch:

  • From the “Are You Going or Coming?” Department: U-Haul has released its list of Top 50 Destinations, i.e., where people are moving to. It is an interesting list. With the housing price drops, Los Angeles has become more affordable and is number 3 on the list, topped only by Atlanta GA and Houston TX. Las Vegas is #4. Austin, #9. Sacramento, #15, with San Francisco at #18.
  • From the “Peripheral Damage from Teabagging” Department: All these “tea parties” behind promulgated by the conservative right are having an unintended side-effect, and I’m not talking about teaching everyone about what teabagging really means. No, it is slurring the good name of the beverage known as tea. Specifically, there is the fear among tea drinkers that tea is being associated with a set of really negative emotions — anger, bitterness, divisiveness — and people are getting the idea that tea is something you can just throw around and waste. We need to show people that tea parties are a good thing, and good for their health, not a political statement.
  • From the “I Can’t Hear You La La La La” Department: Despite the fact that it is losing money in the US, Tesco is continuing the expansion of Fresh and Easy. They just opened their 64th store in Corona (and we’re eagerly awaiting the opening of their new Northridge store). Still they have delayed a planned expansion into Northern California despite having announced leases for 38 sites and, in many cases, having built out the stores complete with empty shelves and working cash registers. It will be interesting to see if this is an experiment that works, or crashes and burns. We hope it works, as they have a large selection of Gluten-Free products.
  • From the “So Will He De-Friend Me Now?” Department: According to the WSJ, via LA Buisness Observed (la_biz_observed), Chris DeWolfe and Tom Anderson (the founders of MySpace) have stepped down. Does this mean that I no longer have to have Tom as a friend?
  • From the “When the Going Gets Tough, The Tough Go Shopping” Department: Tuesday night we had a program on Resiliancy of the Soul at our congregation, and we looked at how people deal with stress. Some go shopping. Well, it appears that teens who go shopping are increasingly price, not brand conscious. This is creating a significant slump at retailers that depend on teens to buy their overpriced merchandise, such as Abercrombie & Fitch (who in the old days, had wonderful professional clothing, but I digress). Nowadays, teens seem to favor stores like American Eagle and Old Navy, which fit their budgets better.
  • From the “How To Get Out of Traffic Tickets” Department: Ever wonder why elected officials don’t seem to get traffic tickets? It turns out they have special license plates, which make their records confidential. The program started with the shielding of information related to plates belonging to police officiers, back when anyone could walk into a DMV office with a license plate number and walk out with the car owner’s home address. In the first seven years of the program, lawmakers added judges, district attorneys – and themselves. Since then, the list of people afforded confidentiality has swelled to include jail guards, district attorney investigators and National Park Service rangers, as well as city council members and city attorneys, among others. Further, officials can keep the secret plates when they retire. If they change to a civilian job, they can stay shielded for another three years. To make things worse, they are talking about expanding the program to about 100 Board of Equalization investigators, as well as code enforcement officers, zoo veterinarians, humane society shelter workers and the five elected members of the Board of Equalization.

Chum for your Friday Lunch

Some more lunchtime news observations, skimmed from the lunchtime perusal of the paper:

  • From the “One Step Over The Line” Department: Global warming is having numerous effects on society. One that peaked piqued (no pun intended) my interest as a Diplomacy player is the fact that Italy and Switzerland are being forced to redraw their borders. The previous border was the ridge crest of the glaciers, and as they shrink and move, that’s no longer viable. As a result, a new criterion has been proposed so that the new border coincides with the rock. The border between Italy and Switzerland was fixed in 1861, when Italy became a nation, but it has been occasionally modified, most recently in the 1970s when the Switzerland-Italy highway was built at the Brogeda crossing. The border change only affects uninhabited mountaintop terrain. No families should have to change citizenship.
  • From the “Not Only Do They Clog the Arteries” Department: KFC (the chain formerly known as “Kentucky Fried Chicken”) is standing up for their civic duty. They are offering to fill potholes in a number of cities, if they can plaster their logo on the street afterwards. Some cities don’t like the idea, but I think it is a great way to fill civic coffers. After all, it is not as if we don’t have advertising almost everywhere else that we ignore.
  • From the “Chop Chop” Department: Earlier, I wrote how an increasing number of airplanes are being mothballed. That’s not economical for some: some are just chopped and recycled. This article profiles one of the companies that does it. I’ve always found this process interesting, since I first read about it in Airliners.
  • From the “Looking Good at 48” Department: There are certain actresses of my youth (and possibly your youth) who were just your personal model of beauty and cuteness. Dawn Wells. Valerie Bertinelli. Danielle Fischel. Karen Valentine. Susan Dey. I mention this solely because the Chicago Tribune has an article about Valerie Bertinelli appearing on the cover of People in a bikini, looking quite good at 48 (only a year younger than me).
  • From the “The Teflon Market” Department: I’ve often made fun of Whole Paycheck. But TJs seems to be below scorn (or is that above?). But is it? Here’s an article that questions TJ’s green credentials. Yes, they use a lot of packaging, but they also use compostable trays and really encourage the use of bags. Is the problem as bad as they state?
  • From the “Social Networking” Department: More and more boomers seem to be finding social networks. Even Kirk Douglas has a MySpace page. I wonder if this means it isn’t cool any more. I don’t know, but I still find it freaky to get friend requests from folks I went to camp with in 7th and 8th grade (not that I mind reconnecting). But given all this, why is it so hard to reconnect with the people you actually want to reconnect with?

Catchin’ Up On The Chum

Yes, the conference is past, and so it is time to throw some news chum in the waters. Of course, times being what they are, this chum is economic. Will it sink or swim? Only you can tell.

  • From the “Iris Lucerne” Department: Back in the 1970s, during the last economic crisis, the Ralphs grocery chain introducedPlain Wrap”. Well, guess what? Store-brands are hot again. Dollar sales of store brands increased 10% during the 52 weeks before Nov. 1, compared with a 3% gain for branded products, according to the Nielsen market research company. Store brands now account for nearly 22% of products sold at the grocery, up from 20% a year ago, Nielsen found. At Kroger (now the parent of Ralphs), store brands account for 26% of grocery sales. I can certainly attest to buying store brands, especially from Trader Joes and Fresh and Easy, who are primarily store-brand products.
  • From the “Would You Like an Ad on the Side?” Department: Another article in the NY Times talks about the difficulty social networking sites such as Facebook are having with advertising. It seems that most folks ignore the text or banner ads, and only pay attention to specially crafted sites. I don’t know how this has affected LJ advertising, but it could explain some of the sponsored communities that have been showing up.
  • From the “Smokum Peace Pipe. Tobacco. Rot Lungs.” Department: The chief of the Unkechaug Nation in New York has vowed to keep selling cigarettes, even in the face of a lawsuit from the City of New York that claims that nation — the closest reservation to New York City — has become a “tax evasion haven” and a drain on the city’s coffers. New York City officials say millions of cartons of untaxed cigarettes are sold every year by Poospatuck retailers to bootleggers who smuggle them into the city to resell for about $5 a pack, not the $8 or $9 charged by New York retailers who pay the state and city taxes of $4.25 a pack. Where’s Stan Freberg when we need him?
  • From the “I Get A Charge Out Of This” Department: The Federal Reserve on Thursday will vote on sweeping reform of the credit card industry that would ban practices such as retroactively increasing interest rates at will and charging late fees when consumers are not given a reasonable amount of time to make payments. Among the many provisions is a ban on raising interest rates on existing balances unless the customer was 30 days or more late in paying the minimum. Other circumstances in which a rate change would be allowed would be if the card had a variable rate or a promotional rate that was set to expire. Banks would also not be able to treat a payment as late if the customer had not been given a fair amount of time to make that payment. The proposal would also dictate how credit card companies should apply customers’ payments that exceed the minimum required each month. When different annual percentage rates apply to different balances on the same card, banks would be prohibited from applying the entire amount to the balance with the lowest rate. Many card issuers do that so that debts with the highest interest rates linger the longest, thereby costing the consumer more.
  • From the “This Mall Is Going To The Dogs” Department: More and more stores, according to the LA Times, are allowing dogs in the store. Every store is different, and the rules often vary depend on the size of the dog, but the bottom line is: they would probably rather clean up after an accident than lose a sale, especially these days.

Unrelated Observations on the News

A late lunch today due to a late meeting, but here are some observations from scanning the headlines:


We’re Back From Perris… and we visited the MotherShip

We made it back from the Orange Empire. Today seemed to be a slow train day… at least on the car we were working (B on the Thomas Train), we had no passengers after 2pm. Paul says the second weekend of Thomas is always more crowded due to word of mouth, so I hope attendance picks up next week. However, we won’t be there to see it due to nsshere’s 13th birthday on Saturday.

On the way back from the museum, we stopped by the new Whole Foods in Pasadena for dinner. Evidently, this is a mother-ship Whole Foods (the region’s flagship), but not a DeathStar (the chain’s flagship). Their restaurant still has kinks to be worked out (and not the good kind): ordering was slow and confused. However, they do have a great GF selection (certainly much more than our local Whole Foods, which is in a converted Alpha-Beta). Naturally, gf_guruilla and nsshere wanted to explore and shop. I was tired from the day and fighting acid-kickback from something I at at OERM, but we did get a bunch of stuff (and I think they are happy).

Now, we’re home, and its time to toddle off to bed. Unlike the guvvies, I have to work tomorrow :-(.


Using What You Learned in School

Many (OK, some) of us here are former (or current) Computer Science majors. This likely means that, at some point, we studied Queueing Theory, which is the study of waiting lines. It is applicable to lots of things in real life, but for us CS majors, it had to do with servicing requests in operating systems.

Here’s a real life example. Different stores use different models. Go into your typical grocery store or WallyWorld, and you’ll see multiple queues with multiple servers. You have to pick just right here: get a fast server and a short queue, and you’re in great! Choose wrong, and you’re there forever. Other stores use other models: for example, Best Buy uses a single queue, multiple server model. Most department stores have multiple queues scattered around the store, which often leaves servers idle.

The New York Times is reporting today how Whole Foods in New York is introducing the single queue, multiple server model to the grocery store. Quoting from the article:

By 7 p.m. on a weeknight, the lines at each of the four Whole Foods stores in Manhattan can be 50 deep, but they zip along faster than most lines with 10 shoppers.

Because people stand in the same line, waiting for a register to become available, there are no “slow” lines, delayed by a coupon-counting customer or languid cashier. And since Whole Foods charges premium prices for its organic fare, it can afford to staff dozens of registers, making the line move even faster.

This is significant: Since arriving in 2001, Whole Foods stores in Manhattan have won bragging rights as the top sellers among grocery chains here, with sales of $42 million per store last year. It has impressed Trader Joes.

I wonder how long until we start seeing it at markets in California.