Fresh & Easy yes, bangers & mash no

Well, Tesco's Fresh & Easy is finally open, and I really wish I had a chance to see what they look like. I need to line up a client visit to southern California soon. The first six stores opened there last week, to positive reviews, according to the LA Times:

... Times staffers ... gave the markets high marks for:

* interior design, because of wide aisles, clearly written signs, bright lighting and an uncluttered feel.

"I like the nice atmosphere," said shopper Sakinna Hamdan, appraising the Arcadia market. "It doesn't overwhelm you like other stores."

* product selection, including Spanish meats, such as jamon serrano and sliced chorizo, and cheeses from around the world.

"This is the first time I've had decent ricotta outside Bellwether Farms from up north or Italy," Kleiman said.

* prepared foods, including single-serving offerings of Greek salad, chicken fajitas and macaroni and cheese.

* convenience -- for instance, nearly all the produce is packaged in plastic bags or net sacks. (But that was a negative for Barasch. "If I want one tomato, I want to be able to buy one tomato," she said.)

* neat presentation of fresh-looking fruits and vegetables. "The apples and pears are beautiful," said Upland store shopper Lauren Ramos, whose husband works for Trader Joe's.

* unexpectedly low prices on items, including a 6-ounce tube of Total Advance Clean Colgate toothpaste selling for $2.47.

So far, so good, though a wise comment was appended:

Kleiman cautioned against making firm decisions right now, when floors aren't scuffed and none of the shopping carts is out of alignment yet.

"It's hard to separate the newness from the niceness," she said.

If anyone has been there, I'd like to hear your opinions. Will it revolutionize American grocery retailing?

Disappointing note in the article: "A British retailer it may be, but Tesco didn't make a big deal out of that. There were no bangers or mash at the Fresh & Easy stores The Times visited." What?!? I love bangers and mash!

A video report from BBC is here.

Continuing bad news for media

A bit of deja vu -- I think I've written that headline before. Several times, in fact. Spooky, huh?

Newspapers: The latest circulation reports are out, and they're as bad as ever. All daily papers down 2.5, Sundays down 3.5%. Twenty-one of the top twenty-five down. New York Times down 4.5% daily, 7.6% Sunday, Washington Post down ... But why go on? You've heard it all before.

Radio: The radio biz had been expecting a bad September, but it was much worse than expected:

Radio ad revenues fell an alarming 7% in September compared to the same month in 2006--a far steeper decline than the 1% dip forecast by industry analysts. The weak performance is especially ominous as September 2006 provided an easy comparison benchmark for the industry to beat. [...]

The 7% drop is sending analysts scrambling to readjust their current forecasts for the third and fourth quarters of 2007. In a note to investors, Jim Boyle, a senior analyst with CL King and Associates, predicted a 3% drop in radio revenues during the third quarter. He also warned that fourth-quarter comparisons "are substantially harder" than the third quarter's.

Magazines: Just to provide a bit of company for the misery, Newsweek dropped its circulation base by 500,000 -- a 16% cut.

All traditional media: A study published in Adweek says that traditional media will lose 30% of their revenues over the next five years.

About 30 percent of the advertising revenue now resting in the coffers of traditional media companies will shift to online ad exchanges like Yahoo! and Google in the next five years, according to a new report from IBM Global Business Services.

More than half of the 80 industry executives IBM polled for its survey anticipate a shift of this magnitude, which would involve billions of dollars, said Saul Berman, a co-author of the report, "The End of Advertising as We Know It."

What happens to a business that loses 30% of its revenue? I think we all know.

Love that report title.

SEC closes OfficeMax investigation

The day after I posted the item below, concerning possible vendor allowance problems at Office Depot, the two-year-old SEC investigation of OfficeMax finally ended, with no action against the company, which had cooperated with the Commission and fired six people who were involved in the alleged falsification of documentation.

The Naperville, Ill.-based company had launched an internal review in December 2004 after receiving claims from a vendor alleging that OfficeMax employees requested inappropriate promotional payments and falsified supporting documentation.

The internal investigation was conducted under the direction of the company's audit committee and was completed in March 2005. Six employees were fired in connection with the probe.

In June 2005, the SEC started its investigation, with which the company cooperated. OfficeMax said Thursday in an SEC filing that it was notified last month that the agency had completed the investigation.

Office Depot: more vendor allowance problems

Office Depot announced last week that it was delaying its Q3 report because of an internal investigation of possible problems in accounting for vendor allowances.

Office Depot Inc. on Monday delayed its third-quarter earnings report due to its audit committee's independent review of vendor program funds, a development that one analyst said raised questions about the nation's second-largest office supplies retailer's financial statements.

Its shares fell more than 14 percent.

The review primarily relates to the timing of the recognition of certain funds, the Delray Beach-based company said. Office Depot had been scheduled to release its third-quarter results Tuesday; a new date wasn't released.

Numerous other retailers have had similar problems in the recent past, including competitor Office Max. In fact, it's amusing to note that such problems are so common that the AP article I linked quotes an analyst as minimizing the impact on the basis of "what the heck, they all do it" (or something like that:

Lehman Brothers analyst Brad Thomas stressed that it was too early to tell how this affects Office Depot, but he said delays related to the timing of reporting vendor funds happen rather often in the retail industry. Suppliers enter into agreements with retailers for rebates and advertising allowances, which companies must account for.

"This often has been a one-time issue rather than something that impacts growth rate and cash flow," Thomas said.

The legal vultures took note quickly, and several shareholder lawsuits have already been filed.

Kohl introduces bill to overturn Leegin

Senator Herb Kohl of Wisconsin (yes, that Kohl) introduced a bill to overturn the Supreme Court's recent Leegin decision. We reported on Leegin here -- the decision changed retail price maintenance regulation from "per se" to "rule of reason":

The ruling, in the case of Leegin v. PSKS, overrides the Court’s 1911 Dr. Miles decision, which had established a per se standard in vertical price maintenance cases, and replaces it with a rule-of-reason standard. Translated from the legalese, this means that under the Dr. Miles standard, any manufacturer-imposed price plan was a violation of the Sherman Act, but now such a plan is a violation only if it can be proven to have anti-competitive effects.

The case has generated more interest than the norm for antitrust decisions (admittedly, not a very high standard). My own guess is that it will not have a very wide effect, since it probably will only allow MSRP to be applied by manufacturers with no market power (had you ever heard of Leegin before this case?)

Nonetheless, Kohl wants to overturn the decision. From his press release:

"In the last few decades, millions of consumers have benefited from an explosion of retail competition from new large discounters in virtually every product, from clothing to electronics to groceries, in both 'big box' stores and on the Internet. Our legislation will correct the Supreme Court's abrupt change to antitrust law, and will ensure that today's vibrant competitive retail marketplace and the savings gained by American consumers from discounting will not be jeopardized by the abolition of the ban on vertical price fixing," Kohl said.

I'm guessing this won't get far until 2009 at the earliest, and that it won't make much difference either way.