PriceSmart in deal to build 6th location in Costa Rica
San Diego — PriceSmart announced that on January 9, 2012 it entered into an agreement to acquire approximately 16,038 square meters of property in La Union, Cartago, Costa Rica, upon which it plans to build its sixth warehouse club in Costa Rica.
PriceSmart currently anticipates opening the Cartago Club in the summer 2013 in the market area where local Costa Rican press has reported that Sam’s Club plans to operate its first warehouse in the Costa Rica market.
PriceSmart entered the Costa Rica market 13 years ago and is currently operating five PriceSmart Membership Warehouse Clubs, pending the opening of the planned sixth Club referenced above.
The press release never said Cornell was retiring
Recently departed Sam’s Club president and CEO Brian Cornell is a little like legendary Cleveland Browns running back Jim Brown in that both walked away from their professions at the height of their careers. However, unlike Brown who gave up football for good after his best season ever, no one is expecting Cornell to stay retired.
At only 52, Cornell is in the prime of his executive leadership years, and he’s coming out of a couple of really solid years at Sam’s Club. So while news of his departure last month was unexpected and surprising, no one will be surprised in the months ahead if his name shows up near the top of an org chart of a major corporation based in the Northeast. The first company to pop up on the list of potential suitors is PepsiCo where Cornell spent 13 years prior to Sam’s and his CEO stint at Michael’s. Cornell knows PepsiCo wel,l and the company knows him too as former PepsiCo chairman and CEO Steven Reinemund has served on the Walmart board since 2010.
Last week, Bloomberg reported that Cornell was in talks with PepsiCo to join the Purchase, N.Y.-based company in a senior leadership capacity. Such a move is conceivable as the press release announcing Cornell’s departure from Sam’s never said he was retiring, only that he desired to relocate to the Northeast for family reasons.
“After 30 years of asking my family to follow me all around the globe, it is time to put them first,” Cornell said. “My wife and I want to put down roots in the Northeast and live in the same ZIP code as our children – not just occasionally seeing them in hotels and restaurants.”
They were probably nice hotels and restaurants, but still not the same as being home. And if Cornell was in line to eventually succeed Doug McMillon as president and CEO of Walmart International he would have been in for several years of extensive international travel overseeing Walmart’s expanding global operations. Whether that was in the cards for Cornell had he stayed at Sam’s is unclear, but it was the path that McMillon took when he moved from being CEO of Sam’s to CEO of international. The assumption of those with familiarity with Walmart’s senior leadership structure is that McMillon will eventually be given additional responsibilities creating the need for new leadership in the international area, which will now need to be satisfied by someone willing to live out of a suitcase for three years.
“Great For You” is great for Walmart and select shoppers
Walmart’s goal of making food healthier and healthier food more affordable is a noble undertaking that has favorably affected the company’s reputation and put it in good stead with the Obama administration. The question that remains, as the company begins affixing to products and packaging its new “Great For You” food label unveiled this week in Washington D.C., is whether shoppers will behave in a manner consistent with their stated intentions.
As Walmart SVP sustainability Andrea Thomas explained, “Walmart moms are telling us they want to make healthier choices for their families, but need help deciphering all the claims and information already displayed on products.”
She contends the “Great For You” icon provides shoppers with a way to do just that because they can easily and quickly identify healthier food choices.
“As they continue to balance busy schedules and tight budgets, this simple tool encourages families to have a healthier diet,” Thomas said.
As First Lady Michele Obama noted in the press release on Tuesday announcing the icon, “Today’s announcement by Walmart is yet another step toward ensuring that our kids are given the chance to grow up healthy.”
Her choice of the phrase, “given a chance,” and the reference by Thomas to encouraging a healthy diet are key to understanding the Great For You initiative. It is important to remember that Walmart is an emporium of choice and temptation and all the icons and encouragement in the world can’t save some people from making dietary choices that are inconsistent with a healthy lifestyle. It’s also worth pointing out that shoppers’ intentions frequently differ materially from their actual behavior.
Those behaviors will be in focus this April when fruits and vegetables and select Great Value and Marketside brand product begin carrying a Great for You logo, which looks a little like an alien performing calisthenics but in a good way. It will be interesting to see whether in-store promotional efforts, a national ad campaign and considerable media exposure can actually move the needle on shopper behavior around healthier foods because Walmart is giving shoppers what they have said they want.
The strategy of affixing yet another label to packaging to eliminate confusion caused by other labels is an interesting one and decades of shopper behavior suggest it won’t be effective. Warning labels on cigarettes are probably the best example. Those who quit smoking usually do so after their health deteriorates, not because they notice a label warning of their eventual death. The inverse of this situation exists in the food industry where instead of warning labels to discourage bad behavior Walmart and others are attempting to promote good behavior with positive labels.
Ironically, as Walmart may discover, these labels can produce unintended consequences as some shoppers equate “lite,” “lo-cal,” or “reduced sodium,” with a diminished flavor profile. Restaurant operators are keenly aware of this phenomenon. They face constant pressure to provide enhanced disclosure of nutritional information on menus and to offer more low-calorie options, which are sometimes accompanied by a little heart or other icon to denote healthfulness. These choices are typically the lowest volume items on the menu as some diners avoid ordering them for fear they won’t taste good. Meanwhile, the fastest growing segment of the food service industry remains, as it has been for years, the burger joint where new and existing concepts are expanding rapidly.
Walmart’s efforts to make food healthier and healthier food more affordable are laudable and great news for those who make those types of product choices. And for those who don’t, well they will continue to have plenty of options at Walmart as well.