Preventing Brand Equity From Going Up In Smoke
It started with the revelation that Wegmans, the legendary western New York food retailer, would no longer sell tobacco products in its 70 stores.
Then Andronico’s, which operates stores in a similar vein in Northern California, made the same announcement: No more tobacco sales.
Shortly thereafter, I got an e-mail from ShopRite Supermarkets of Cherry Hill, N.J., informing me that when they bought three former Stop & Shop stores last year, they’d made the decision—without fanfare—not to sell tobacco in those units.
A few weeks later, DeCicco Markets, a six-store family-owned chain that operates stores north of New York City, announced that once it had sold off its current stock of tobacco products, it would no longer carry any SKUs in that category. “We want to try to promote better health as much as possible,” said John DeCicco Jr., VP for operations.
And then, another e-mail, telling me that Ohio-based Dorothy Lane Markets no longer sells tobacco.
Yikes. I’m not the brightest guy, but even I can sense when a mini-trend is taking place.
I’m not going to turn this into an anti-tobacco screed, though I will be perfectly honest about my bias in this area. My mother, a two-pack-a-day smoker for four decades, died years ago of lung cancer. But that was her fault, not the tobacco companies,’ though they were certainly complicit in her addiction and death.
But the mini-trend to which I refer has less to do with the product category than with the broader issue of brand equity and how supermarkets are going to create thick, straight lines between the products they sell and the increasingly important health-and-wellness segment. It has to do with a kind of brand purity, or at least consistency, that these retailers seem to be seeking.
Now, this isn’t a decision that every chain will make, or should make. There is a good argument, though, that food retailers looking to establish their credentials in the health-and-wellness field may see this decision as attractive, even inevitable. (If a retailer is going to go to the expense of installing a health clinic, doesn’t it make sense to get rid of at least some of the products that have the most insidious impact on shoppers’ well-being? And, in doing so, make the argument that supermarkets are better than chain drug stores at really taking care of their customers—especially since most chain drug stores still sell tobacco products, an oxymoron.
While none of the retailers have cited it, their decision seems to be consistent with work currently being done by the Coca-Cola Research Council, which, with the Institute for the Future has developed a kind of “road map” for how retailers can create new value for shoppers by drawing a direct line between food and health. They foresee a time when a woman gets a prescription for sleeping pills filled, and the labeling informs her that bananas, whole-wheat bread and turkey can also help her sleep.
This approach builds on an awareness that already exists with some consumers, and research by the Institute for the Future shows that virtually all customer demographics would be open to it. The chairperson of the Coca-Cola Research Council, Shelley Broader, CEO of Sweet-bay Supermarkets, says, “food, health and wellness … are all converging in the minds of consumers,” and such an approach would help retailers re-define their futures, serving as a kind of portal to the health-care system. Paul Boyer, a member of the council and vice chairman of Meijer Inc., suggests many of the pieces are already in place.
“Customers already are connecting food and health to preventive treatment,” he says, noting that supermarkets already have the brand equity, consumer trust and, in many cases, pharmacies. All that remains is to develop the infrastructure that connects the dots.
If and when those dots get connected, the retailers most successful at doing so will have drawn those connections with a thick, unmistakable line that emphasizes that their brand is about health and wellness. That will be their brand image, their brand equity and their brand promise. It will require consistency and focus—but it can offer them a differential advantage.
Since originally writing about this a few months ago on my Web site, I’ve gotten a lot of e-mails questioning whether these companies’ decisions are shortsighted or even hypocritical, since at least some of them sell alcohol and all of them sell products containing fat.
But it can be argued that of all these, tobacco products are the only ones designed to addict and maybe kill you. For retailers working to encourage a connection between good food and good health, selling tobacco may actually violate and subvert the essential value proposition.
These retailers shouldn’t just stop at not selling tobacco, however. I think it is fair to suggest that through strong and transparent informational programs, they can help consumers make smarter decisions about food. Think of the “Guiding Stars” and the “ONQI” shelf-labeling programs that are beginning to do just that.
Through the judicious use of nutritionists and signage, these retailers can help nudge consumers in a healthier direction.
Note that I wrote “a healthier direction,” not “the right direction.” This is an individual decision, and not every retailer will be comfortable making it. Roger Corbett, former CEO of Australian retail conglomerate Woolworths, told me not long ago that while he thinks of his company as being similar to Whole Foods, he would never stop selling tobacco as long as it is legal and customers wish to buy it. To do otherwise, he suggested, would be presumptuous.
It is all how you define your brand. Making sure, of course, that you are consistent to your value proposition, never letting it simply go up in smoke.
Wal-Mart to sell earth-friendly CDs
SANTA MONICA, Calif. As part of Wal-Mart’s “Earth Month” the company is selling more than 20 Universal Music Group titles that come with special earth-friendly inserts. The inserts are made with special seed paper and, according to the companies, can actually bloom into wildflowers.
The inserts, in addition to being good for the environment, also offer consumers three free digital downloads from Universal Music. Universal also said that a number of its new CDs will be packaged in third-party certified, renewable recycled board and recyclable paper.
ODP urges rejection of Levan nominees
DELRAY BEACH, Fla. Office Depot is continuing to urge its shareholders to reject dissident nominees and elect the company’s nominees to its board of directors at its annual shareholders meeting this April.
In a proxy statement sent to investors, Office Depot said that Alan Levan’s proposed nominees would do little to help improve shareholder value. According to the statement, Levan’s company, Levitt Corp. has seen its share price fall about 93% over the past three years and that its subsidiary, Levitt and Sons, is in bankruptcy. Office Depot also noted that BankAtlantic, of which Levan is chairman and ceo and one of his nominees, is president of real estate, construction and development, share price has dropped approximately 75% over the past three years.
Office Depot also cited news reports that commented on Levan’s failing business ventures, as well as others that said that his nominees are not qualified to serve on Office Depot’s board of directors.
The company pointed out nominee Mark Begelman’s experience with Mars Music, a company he founded in 1997 that went bankrupt in 2002. According to Office Depot, many news reports attributed this failure to a flawed business strategy.
According to Office Depot, when Levan’s other nominee, Martin Hanaka served as chairman of Sports Authority from 1998 to 2003, the company saw its price fall by about 13%.
Office Depot stressed that its directors best understand the company and are well-suited to help the company grow.
“We strongly believe that removing two of the most experienced retailing executives from our board, including our current ceo who is driving the implementation of our strategic turnaround plan, would be highly disruptive, could delay the implementation of internal and external initiatives and could damage prospects for a successful turnaround,” Office Depot said in the proxy statement.