News

Swipe-fee reform amendment squashed by Senate

BY CSA STAFF

WASHINGTON — The retail industry won a big victory in Washington, D.C., as the Senate defeated an amendment that proposed to delay swipe-fee reform for another 12 months.

As reported Wednesday morning by Drug Store News, Sens. Jon Tester, D-Mont., and Bob Corker, R-Tenn., offered an amendment to legislation that was designed to delay swipe-fee reform — which is set to go into effect July 21 by the Federal Reserve — and built on Tester’s previously introduced Debit Interchange Fee Study Act of 2011. The Senate vote was 54-45, with one senator opting to not vote, leaving the amendment six votes shy of approval.

The retail industry, particularly the lobbying groups, lauded the decision late Wednesday.

“This is a landmark victory for American consumers that will give them the break from skyrocketing swipe fees that they have been seeking for years," National Retail Federation president and CEO Matthew Shay said. "With the economy still trying to gain momentum and consumers facing skyrocketing costs for necessities like food and fuel, this badly-needed reform will help ensure our nation’s economic recovery. It will prevent more than a billion dollars a month from being pocketed by big banks and, in turn, allow retailers to hold down prices for consumers."

The National Association of Chain Drug Stores, which represents the drug retailing industry, said the defeat of the amendment was a victory for both consumers and the retail industry, curbing costs that affect each group.

“We thank Sen. Dick Durbin,D-Ill., for his leadership in bringing this issue to the forefront of Congress, and working diligently to prevent a delay to the pro-retailer and pro-consumer swipe fee reform,” NACDS president and CEO Steve Anderson said.

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News

Target’s $100 billion plan

BY CSA STAFF

MINNEAPOLIS — Target ended last year with sales of $67.4 billion and earnings per share of $4, but if company chairman, president and CEO Gregg Steinhafel has his way, within six or seven years earnings per share will double to $8 and sales will top $100 billion.

Steinhafel provided a brief overview of the strategies in place to achieve those targets at the company’s annual meeting Wednesday afternoon held inside a soon-to-open Target stores in downtown Pittsburgh. The location was a fitting venue since the store is the company’s first within the city limits, and a key element of Target’s growth plan involves penetrating urban markets with new small format stores. The first of these stores, dubbed CityTarget, are scheduled to open next year in Los Angeles, San Francisco, Chicago and Seattle.

Other elements of the growth plan detailed by Steinhafel during the one-hour meeting included a continuation of an ambitious store-remodeling program known as PFresh, expansion into Canada, further penetration of the 5% REDcard Rewards program launched last fall and the upcoming relaunch of Target.com this fall with an emphasis on mobile integration.

“As we progress through this recovery, we continue to focus on what matters most to our guests; a highly competitive value proposition, an unbeatable combination of national and owned brands, a continuous pipeline of new merchandise that surprises and delights and a consistently superior shopping experience, both in our stores and on line,” Steinhafel said. “This differentiated combination delivered with disciplined execution on in-stocks and thoughtful expense control is s key to profitable market share growth and sustaining our strong results.”

Most recently, the key driver of those results has been the rollout of the PFresh format, which involves adding fresh food to the company’s traditional discount stores, expanding the offering of consumables and upgrading product assortments and presentations in such key departments as electronics, shoes and housewares. Target remodeled 341 stores last year and now has 462 stores in the PFresh format with another 350 units due to be remodeled this year.

In addition to those remodels, Target added its new rewards program in October, which offers shoppers a 5% discount and according to Steinhafel, enables the company to deepen its relationship with its best customers. In a similar vein, Steinhafel said the company will achieve a much deeper level of customer engagement when its e-commerce site relaunches later this year along with some industry leading mobile applications.

The investments in technology, coupled with physical improvements in the form of remodeling activity and new market entries in urban areas and Canada did little to impress shareholders who attended the meeting. When Steinhafel opened the meeting to questions from shareholders not a single question was asked about the effectiveness of the strategies, challenges associated with the Canadian expansion or the financial impact of the 5% rewards program.

What shareholders who attended the meeting cared the most about was needling Steinhafel about a political donation the company made eight months ago to a candidate opposed by gay rights activists. After fielding several questions on the topic and thoroughly explaining the company’s revised approach to future political donations, Steinhafel began directing subsequent questioners to the company’s website where an abundance of information resides. Although the topic is a serious one, the repeated questioning became comical as Steinhafel noted, “Qe have exhausted this topic. Does anyone have questions about the business?” That appeal was met again with subsequent questions on the political donation topic with questioners all coming at the subject from a slightly different angle.

Eventually, one long-time shareholder rose to comment on the fine work done by Target’s front line store employees. Since the meeting was being held in a store that is due to open next month, the shareholder asked that the employees be recognized, and Steinhafel obliged.

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OPERATIONS

Aldi tops survey of low-cost grocers

BY Marianne Wilson

Boulder, Col. — Discount grocer Aldi ranks as the nation’s low-price grocery leader, according to a recent consumer survey conducted by Market Force Information.

The survey asked consumers to indicate which retailer captured most of their grocery dollars. Ten grocers topped the list, including Aldi, Costco, Giant Foods, H-E-B, Kroger, Meijer, Publix, Safeway, ShopRite and Walmart. The survey then asked consumers to rank those 10 top grocery retailers on a number of attributes such as low pricing, cleanliness, service, food quality, location and the checkout process.

Results showed that consumers view Aldi as the affordable price leader, ranking it ahead of the other nine grocery chains. On an index scale with the average score set at 100, Aldi received a 157, followed by Walmart with a 129. Costco ranked third in the low-price category with an index score of 120, followed by Giant Food and HEB.

Market Force’s study revealed that the choice of a supermarket is primarily driven by location (67%). Second on the list was price (57%), followed by good sales and promotions (52%). The availability of good private-label products was high on the list (38%), revealing a growing opportunity for stores to differentiate. A mere 5% were shown to prefer their primary grocer for its sustainable environment and green policies.

The survey has some good news for grocers: The results showed the vast majority of consumers are satisfied with their grocery experience. When asked to think about their most recent grocery-shopping trip at their primary retailer, consumers were overall pleased, with 90% indicating they were somewhat or very satisfied. Only 10% of consumers said they were dissatisfied, with long wait times driving the most discontent.

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