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Perishable Pundit
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a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



At The London Produce Show And Conference:
‘Room at the Top? — What U.K. Retailers Can Learn From U.S. Natural/Gourmet Retailing’
Cornell University’s Rod Hawkes Points Out That ‘Upscale’ Has Changed And That The American Experience Points To The Possibility Of Big Changes Ahead For UK Retailing

The fracturing of the UK retail market has mostly been about price, with ALDI and Lidl challenging the Big Four on the discount end and Waitrose and Marks & Spencer challenging them on the high end. Yet experience in the US market indicates that more than price matters, and that market entrants can start picking off market share by focusing on specific psychographics, such as those hyper-interested in sustainability or those who perceive fresh as the new upscale.

The recent growth of Whole Foods and Costco in the UK market may be the entering wedge by which market fragmentation changes from price to format. In fact, we recently ran a piece on that subject: REVOLUTIONS IN UK RETAILING: Is Tiny Whole Foods Setting An Example For London Retailing? New Retail Dynamics To Be Discussed At The London Produce Show And Conference

So how pleased we were to be approached by Cornell’s Rod Hawkes about presenting at The London Produce Show and Conference. Rod has carefully followed the healthy/gourmet sector in the US and has a theory about what might happen to UK retailing in the future. He titled his talk: “Room at the Top? What U.K. Retailers Can Learn From U.S. Natural/Gourmet Retailing.”

We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:

Rod Hawkes
Senior Extension Associate with the
Food Industry Management Program
and Professor, Charles H. Dyson School of
Applied Economics and Management

Cornell University
Ithaca, NY

Q:  Your talk for The London Produce Show sounds intriguing. What can U.K. retailers learn from U.S. natural/gourmet retailing? With the fracturing of the UK retail market, is there an untapped opening?

A: The U.S. has seen very rapid growth in the natural/gourmet grocer segment over the past four years. Whole Foods and Trader Joe’s, two very different companies, dominate the segment in terms of sales and number of stores. However, the remarkable growth and success of these two companies has attracted a stampede of rapidly growing upstart rivals. These new entrants have grown so quickly that four (The Fresh Market, Natural Grocers, Fairway, and Sprouts Farmers Market) have had successful initial public offerings in the past three-plus years. Each of these smaller companies is positioned differently along the spectrum of positioning that spans from Whole Foods at one end to Trader Joe’s at the other.

Though representing about 5 percent of total U.S. supermarket sales, the natural grocer segment is growing much faster than the traditional supermarkets. In fact, according to Progressive Grocer data, since the U.S. economic recovery began four years ago, total natural/gourmet grocer sales increased by 52.2% vs. just 9.8% for total traditional supermarket sales. Over the same period, the total number of natural grocer stores increased 32% while traditional supermarkets grew by just 3.3%.

Q:  Natural and Gourmet segments are not identical. The Progressive Grocer statistics you reference combine these segments. Talking about Fresh Market and Fairway and Trader Joe’s in the same category as Whole Foods changes the story from one about consumer interest in organic and health to include other potential trends such as the general rise of upscale retailing and perhaps a redefinition of gourmet to focus on high-end fresh products, rather than little bottles and jars of preserves from Europe.

A: I agree. The key is that the category is not all upscale — at least not if by upscale you mean positioned as high price — since Trader Joe’s and Sprouts are clearly value-oriented, and they together represent a huge chunk of the stores Progressive Grocer tracks in the natural/gourmet category. This is a category mostly missing from UK retailing, although with the success of ALDI, one wonders if the folks at Trader Joe’s aren’t taking a look.

Q: What’s your prediction for where the natural/gourmet segment is heading?

A: I think there’s huge upside potential for the U.S. natural/gourmet grocer segment. Despite accounting for just 7.9% of total U.S. supermarket locations and 5.1% of total supermarket sales, the natural/gourmet grocer segment also accounted for 38.9% of the increase in the total number of U.S. supermarkets since 2010 and 17.2% of the total increase in supermarket sales. So the segment is growing at a much faster rate in both stores and sales than the traditional supermarket segment. 

Those differences in growth rates become even more pronounced if we were to subtract the sales and store numbers for the discount supermarkets like Aldi and Save-A-Lot from the supermarket totals.  Just like in the U.K., Aldi and the other discount food retailers have also been growing much more rapidly than traditional supermarkets both during and since the economic recession.

Whole Foods, which currently operates over 370 U.S. stores, has publicly stated that it sees potential for 1,000 more Whole Foods Stores just in the U.S.  Sprouts Farmers Market, with about 170 current stores, has predicted that there could be 1,200 Sprouts stores in the U.S.  Even Natural Grocers by Vitamin Cottage, with just over 70 current stores, sees potential for 1,000 Natural Grocers stores in the U.S. Although these are individual company estimates, they are not mutually exclusive since the market propositions and positioning of these formats is differentiated.

Q: If this is true, wouldn’t we expect conventional supermarkets to co-opt a lot of the business by changing assortment to be more natural or gourmet? Publix, for instance, has a small division of Greenwise stores, but it has Greenwise product in every store.

If Wal-Mart is successful in its plan to offer organic for less, won’t that either steal customers from the natural segment thus slowing the growth of the sector or put margin pressure on the stores and make it harder for them to raise capital to expand?

A: All of these points are valid and definitely are concerns for the natural/gourmet segment. Conventional supermarkets have and will continue to expand their natural/organic/gourmet offers, and that has cut into the growth of these chains.  The Fresh Market has had to close a few stores in California and Texas due to underperformance, and Fairway has not had their suburban stores perform nearly as well as their urban stores (and has lost a lot of money recently). 

Those results reflect a combination of increased competition and those companies expanding too rapidly. So there will be a shakeout and a readjustment in the U.S. market.

What the conventional supers, except for the very best-in-class (Wegmans, HEB, etc.) cannot so easily replicate is the culture these natural/gourmet retailers have that addresses consumers’ needs for information, clarity and confidence. They also have challenges replicating the intimate size and feel of the shopping experience in the generally smaller, more focused natural/gourmet stores. In Wal-Mart’s case, it is difficult to find any employees in their stores currently and less likely that the employee would be knowledgeable and inspire confidence in a customer seeking advice. The other factor here is that the conventional supers do not necessarily have an advantage in pricing. [See the Wells Fargo survey referenced further down.]

Q: What can people in the UK market glean from your presentation?

A: The UK grocery industry should watch these U.S. developments closely because the U.K.’s Big Four recently have been challenged by the impact Aldi, Lidl, and other discounters have had on the market. Although Lidl just announced that it will postpone entering the U.S. market until 2018, Aldi entered the U.S. in the mid-1970s and is well established with over 1300 stores and an estimated $8 billion in sales in just the eastern half of the country. 

Aldi has also been growing rapidly both during and since the Great Recession, and it has yet to enter the western U.S. or Canada. Aldi had been adding about 80 stores per year but announced in December that it plans to add 650 new U.S. stores over the next 5 years, an average rate of 130 new stores per year. Though Aldi’s share of the U.S. market (roughly 1.2%) is very small, Aldi’s impact on market pricing levels is much larger than its share would suggest, and as it expands to the West Coast in the next few years, it will have a nationwide impact on supermarket pricing, as it is having in the U.K.

The Big Four has also been impacted at the high end as Waitrose has also been gaining share. The fact that the Big Four are being squeezed into the middle by losing share at both the bottom and top of the market is parallel to the situation the traditional supermarket operators in the U.S. have been facing for years.

One big difference beginning to reshape the dynamics in the U.S. is that much of the growth in the U.S. natural grocer segment has been in value-oriented stores, positioned as healthy yet affordable to broaden the market to attract more value-driven consumers who are also health-conscious.  The largest company in the value priced natural grocer segment is Trader Joe’s, with over 400 stores and over $11 billion dollars in sales, not far behind Whole Foods’ sales of almost $13 billion. Another rapidly rising value-priced natural grocer is Sprouts Farmers Market, with 167 stores and almost $2.5 billion in sales.

Even Whole Foods itself is experimenting with value-oriented versions of its format for markets with lower income demographics.  Whole Foods’ downtown Detroit store opened in 2013 with a simpler, lower-priced format that has been very successful.  Whole Foods is also building smaller formats, as it has been in the U.K. as well, for smaller cities and less densely populated markets.

Q:  Do you have information/research documenting the financial performance of the Whole Foods’ Detroit store, which does not fit its traditional demographics? Are Whole Foods’ expansion projections based on assumptions that it can be successful in these new environments?

A: Yes, Whole Foods is generally broadening its definition of attractive demographics in its site selection criteria and is exploring smaller stores in smaller markets with fewer bells and whistles and more moderate pricing.  Examples cited in various articles include successful openings in Boise and Brooklyn.

This April 30, 2014 Forbes article indicates the Detroit store is “outperforming expectations.” The second link is to an April 9, 2014 CNN Money article, stating that “…almost a year in, the store is exceeding expectations and is profitable.”

The CNN Money article goes on to say about the Detroit store: “Its patterns follow the rest of the company's locations, which see about 30% of sales from organic products and 12% from Whole Foods' exclusive brands. Prepared foods are doing better than expected. The team has worked to highlight value, such as $5 Panini Thursdays and the bulk-foods section, where customers can buy only what they need. A shopping trip to a local grocery store reveals that prices at Whole Foods are comparable.”

So the reason U.K. retailers should be paying attention to the U.S. market is because the democratization of the natural foods sector is introducing a broader spectrum of Americans to natural foods, and the same shift could happen in the U.K. The rise of these natural/gourmet foods has happened in a very similar way to the rise of discounters such as Aldi in both the U.S. and the U.K.

Initially, traditional retailers do not pay much attention to these specialized formats, yet they are losing sales in key categories to these alternative formats at both the low end and high end of the market.

Traditional supermarkets are increasingly pushed into the middle of the market and, especially in an economy where the recovery has yet to benefit the majority of consumers, being in the middle is a difficult situation. Many consumers trade down to lower priced alternatives, while the most profitable customers may switch their purchases to natural/gourmet retailers, leaving traditional supermarkets scrambling for the remaining sales of increasingly frugal customers. 

Q: Could you walk us through the evolution and the competitive dynamics?

A: While the vast majority of Americans have not recovered from the Great Recession, the highest earning households have realized the lion’s share of the economic gains in the recovery. As a result, the natural grocery sector has rebounded strongly since the depths of the recession five years ago, and now is seeing unprecedented growth. For example, annual same-store sales increases for Whole Foods have averaged around 7 percent the past 4 years, a remarkable rate for most US grocers even in a good economy but more than three times the rate for the supermarket industry overall.  

Sprouts Farmers Market has averaged just under 7% same-store sales growth over that period (but over 10% for the past two years). For perspective, the largest traditional supermarket operators in the U.S. had 2013 same-store sales growth rates that were much lower: Kroger (3.6%) and Safeway (0.2%).

Like all these natural/gourmet retail chains, Whole Foods started as one natural food store in Austin, Texas. That was about 40 years ago, and the company slowly grew by acquiring other individual natural food stores and small regional chains. Its big leap forward came in 2007, when Whole Foods, then operating 194 stores, acquired Wild Oats, then operating 74 stores in 24 states and Whole Foods’ largest rival in the natural grocery space. The acquisition was finalized in 2009 in the depth of the Great Recession in the US.  While Whole Foods struggled for a while during the recession, sales and profits started to rebound in 2010, and its growth has been remarkable since then.

With Whole Foods being the only large national natural grocery chain, other smaller regional natural grocers started to expand and differentiate themselves to grab a larger share of the growing natural/organic market.  Two of those regional chains were Sprouts Farmers Market and Sunflower Farmers Market, both founded in 2002, both based in Phoenix, and both positioned as value-oriented alternatives to Whole Foods.  In 2012, the two companies merged and retained the Sprouts name.   After the merger, Sprouts was a chain of 139 stores and a significant second in market share to Whole Foods.  Sprouts had a very successful IPO in 2013.

At the same time, another regional chain, The Fresh Market, founded over 30 years ago in North Carolina, was expanding rapidly in major markets across the country, went public in 2010 with 100 stores in 20 states primarily in the Southeast, Mid-Atlantic, and Midwest regions of the U.S. 

Q:  Most people in the UK are not familiar with Fresh Market. Could you define this chain? Is this more of a gourmet/fresh chain rather than a natural/organic chain?

A: The Fresh Market is a truly natural/gourmet retailer that attracts upscale customers with high quality prepared foods and fresh produce in stores about half the size (21,000 sq. ft.) of the average Whole Foods store and offering about half the selection (10,000 SKUs) as well.  However, both companies get about two-thirds of their sales from perishables.

Q: How has the rest of the U.S. supermarket operators been reacting to the growing interest in natural and organic foods?

A: All other supermarket companies have been developing their natural and organic offers for many years, and most have ramped up those efforts in the past few years.  These efforts included perishable and non-perishable products and reflect the fact that the appeal of and interest in natural and organic foods has spread broadly beyond the niche segment it had been for many years. 

The tide is beginning to shift in the U.S. toward broad-based consumer interest in healthy eating and living.  The total U.S. market for natural and organic foods was estimated to be over $81 billion in 2012 and is expected to grow at an annual growth rate of 14% through 2018. The actual growth could be even greater because almost 82 percent of Americans are not yet actively purchasing natural and organic foods, with the remaining 18 percent of consumers accounting for 46% of sales.

Naturally, mainstream supermarket operators are seeing the segment’s growth potential and are ramping up their natural and organic programs.  Kroger, the largest pure-play supermarket operator in the U.S., launched a new natural and organic line of private label products, called Simple Truth, in late 2012 and has experienced tremendous growth of those products thus far. 

In an interesting twist, Wal-Mart just announced in April a major initiative to drive organic food prices down by selling Wild Oats branded products for 25 percent less than comparable ones sold at premiums at other retailers.  Although initially there will be about 100 Wild Oats packaged food items, Wal-Mart claims that some 90 percent of its shoppers would purchase affordable organic products if available. 

Also in April, Target announced a new initiative called “Made to Matter,” in which it has partnered with 17 well known producers of sustainable food and non-food products to expand Target’s sustainable, organic, and natural product offerings with, initially, 120 new items, some of which will be Target-exclusive versions of popular products. These are just a few examples of the mainstreaming of sustainable, natural, and organic products in the U.S., and while these are primarily packaged goods efforts, there is equivalent growth in the perishables area, especially including produce.

Q: Isn’t fresh produce, with particular emphasis on organics, central to natural grocer chain positioning?

A: Yes, fresh produce is the key to the positioning for most of these natural grocers.  It’s really the most obvious signal of freshness and quality to shoppers when they walk into a store. The vibrant colors and subtle aromas are enticing and, as we know, fresh produce is key to a healthy diet, and organic produce, especially, truly symbolizes sustainability and wholesomeness in the food shopping experience. So most of the natural/gourmet grocer chains do an outstanding job of merchandising fresh produce, but their approaches vary quite a bit across the chains. 

Sprouts Farmers Market uses a “farmers market” approach with bulk displays featuring great prices.  In fact, Wells Fargo Securities just released results of a consumer survey conducted in seven southwestern and western major market areas from Dallas to Los Angeles, where both Kroger and Sprouts Farmers Market operate. The results were surprising in that Kroger was not surprisingly the most popular store for overall shopping, but Sprouts was the most popular for fresh produce.

Consumers recognize that Sprouts has very good quality produce at great prices. Wells Fargo reported that Sprouts produce prices were significantly lower than major competitors across the seven market areas; beating Whole Foods by 32%, The Fresh Market by 24%, Kroger by 15%, Randall’s by 17%, and HEB’s Central Market by 16%.

Q: While Whole Foods merchandises its organic produce offering with eye-catching signage, isn’t the actual percentage of organic produce sales compared to conventional produce sales at Whole Foods significantly less than many consumers perceive?  

A: That’s true, but it’s still a much higher percentage than other chains would have. It’s the driver of the Whole Foods healthy image.  Whole Foods states that 30 percent of its 21,000 SKUs are organic. It does not publish a percentage for the produce department, but it is safe to say it’s probably higher than 30%.  Overall, according to Progressive Grocer, organic produce represented just 7.4% of total U.S. produce sales, so the natural/gourmet chains are all likely to be higher than the U.S. average.

Q: Many retailers in the U.S. say that consumers are trending toward locally grown over organic. At the same time, several research studies show that consumers have misconceptions and varying definitions of what they consider local or organic. Does this come into play with your analysis? 

A: There’s general confusion for most consumers regarding the definitions of local, organic, natural, non-GMO, Fair Trade, etc. Though the USDA has defined standards for organic fruits and vegetables, consumers are still confused by the myriad descriptors they see in the produce department. For example, consumers generally are concerned about GMOs but sometimes presume non-GMO is the same as organic. Of course, an organic product cannot have GMOs, but a non-GMO product is not necessarily organic.

Likewise, natural and organic cause confusion.  Local definitely resonates with consumers but, since there is no standard definition of local, shoppers are often left to interpret what local means for each fruit or vegetable so labeled in the supermarket. Then retailers each have their own definitions of local, some based on distance in miles or driving time, some based on state boundaries, and some combinations of distance and boundaries.

To a certain extent, the natural grocery chains are growing in popularity because they provide some clarity for consumers who are confused about these descriptors.  Consumers want healthy food for their families but often rely on retailers to edit their assortments to clarify healthy choices and simplify shopping. Most natural grocery chains have many fewer SKUs than traditional supermarkets and tend to not carry mainstream products so consumers have mostly healthier options and fewer choices to make. 

All of these natural grocery chains are very focused on consumer health and provide training and educational programming and materials as an integral part of their go-to-market strategy; it’s part of their corporate DNA. Traditional supermarkets have also begun to provide such services and opportunities but for many of those companies, it’s harder to walk the talk since health and wellness are not as ingrained culturally as is the case for the natural grocery chains.

Q: You place the emphasis on product in this discussion, but aren’t there other reasons and values that people hold for why they are buying at Whole Foods aside from product, such as how the workforce is paid, helping the environment, etc. You mention Fair Trade, for example.

A: Another differentiator for almost all of the natural/gourmet chains is their customer service orientation. This arises directly from the similar company cultures across dimensions such as treating employees very well, encouraging and expecting the employees to be product experts and to engage with customers to provide solutions and education. The climate created by these motivated, enthusiastic, knowledgeable employees helps build trust and loyalty among customers who spread the word to friends and others through word of mouth and social media. As a result, most of the natural/gourmet grocery chains spend a much smaller proportion on advertising and promotion expenses than traditional supermarket chains.

These companies also have very strong cultural commitments to sustainability, and that commitment is reflected in every possible way throughout their operations and organizations.  Sustainability is another area where consumers are often confused by sometimes contradictory messages, so, again, these retailers tend to provide clarity through their messaging and product offerings.

Q: With this flurry of activity in the U.S. natural grocery arena, what are the key takeaways for people in the UK market?

A: The growth of these natural grocery companies is an indicator of consumer concern about wellness and health issues. There has always been a niche segment of those consumers, but now we’re seeing the mainstream more concerned about what they eat, where their food comes from, how it’s grown and processed.

The one sort of damper on all the expansion is that some of these natural grocery companies have expanded too rapidly and their stock performance in going public is not as great as it could have been. That said, I think it’s a bump in the road and not a long-term problem. I think these individual companies that are running into difficulties from growing too fast are a consequence of internal strategies, but not the overall consumer trends.

Europe in general has always been way ahead of us in the natural grocery movement — no GMO’s, and low pesticides, especially in the UK. What’s interesting is that this is happening so fast now in the U.S. There are a few Whole Foods Markets in the UK that have not done so well, where discounting has been driving market places.

Q: Why hasn’t Whole Foods been more successful in the UK?

A: There are several contributing factors causing Whole Foods to not have more success in the U.K. market.  Whole Foods entered the UK market in 2007 with its first 80,000 square foot store in downtown London. That’s a large store for Whole Foods in an expensive premium retail location. The U.K.’s Big 4, as well as Waitrose and Marks & Spencer, already had pretty well developed natural and organic foods offerings and beefed those up — as well as their marketing campaigns — in anticipation of Whole Foods opening.

Combined with the onset of the recession in the U.K. not long after Whole Foods opened its doors in Kensington, the consumer reaction to Whole Foods was not as enthusiastic as it might have been otherwise. Whole Foods’ prices were higher and its product and service offering not sufficiently distinctive from the competition to draw consumers in the large numbers needed to support the high fixed costs of such a large store in a prime London retail location.

Whole Foods’ grand opening in the U.K. was around the same time that it began its acquisition of Wild Oats, then the second largest natural grocery chain in the U.S. That transaction was not a smooth one because the Federal Trade Commission did not want it to be approved due to fears of it being anticompetitive.  Eventually, the acquisition was approved but not before almost 2 years of legal wrangling and financial compromises that were required by the FTC.

I can’t help but think that the Wild Oats acquisition’s juxtaposition with the London store’s development and launch would have taken a lot of the energy and attention that would have otherwise been focused on the London debut.

In the seven years since opening that first store, Whole Foods has struggled to develop scale to reduce average costs and lower prices to drive customer traffic. The eight stores it has opened or re-bannered since the first store have all been smaller footprints and have varied from urban stores to shopping-center settings with larger parking areas. Just this month, Whole Foods began investing heavily with a price-matching program, apparently benchmarking its prices against Waitrose, the leading premium U.K. grocery chain, and narrowing the price gap with Tesco, the U.K.’s largest food retailer. 

I do not know if these changes will help Whole Foods increase its share of the U.K. market and/or lead it to profitability in the U.K., but these are the same tactics it is employing in the U.S. to broaden its appeal to a wider swath of the economic spectrum of consumers. Although Whole Foods losses have mounted recently the company remains committed to the U.K. market.

Q: Could you provide more information about the eight stores Whole Foods opened in the UK? Weren’t some of these stores conversions?

A: Whole Foods acquired Fresh & Wild stores in the U.K. for $38 million in 2004. At that time, Fresh & Wild had 6 (plus 1 about to open) London stores and 1 store in Bristol. F&W had $30 million in sales the previous year and Whole Foods had $3.1 Billion.

At least one of those Fresh & Wild stores was closed in 2008, and it appears that the remaining stores were converted to the Whole Foods banner and format. Currently, Whole Foods has 8 stores in England and 1 store in Scotland. The Scotland store was opened in 2011.

Q: To further the value proposition for the UK audience... If I am the head of produce for a big multiple (chain store) in the UK and I give a report to the management on the day after the show, what do I report I gained from this session?

A: There are a lot of small lessons but the big one is this: Value-oriented natural/gourmet retailers are growing rapidly in the U.S. and there may be an opportunity for an aggressive retailer to replicate such a format in the U.K. The opportunity is to broaden the appeal of natural/gourmet foods with a smaller, focused format that is customer-centric and eases the confusion that may exist around natural, organic, sustainable, Fair Trade, etc., through knowledgeable, engaging staff and focused, edited assortment. The growth is in the models that can do this while offering reasonable pricing.

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The organic category has become confusing in the US. A surprising amount of growth is coming not from consumers electing organic, but from retailers deciding to go 100% organic on low volume items so they can eliminate the burden of multiple SKUs.

In other words, many organic shoppers seek organics and won’t buy conventional. On the other hand, conventional shoppers will buy organic if the price and quality is right

So a supermarket can eliminate a SKU and go all organic on a low volume item and keep its customers happy while simplifying its procurement, logistics and merchandising while freeing up some space for higher selling items.

We would take with a little grain of salt all the thousands of new stores these health and gourmet stores will build. Whole Foods may, in fact, open a thousand stores. If it does so, however, it will be a very different chain, because the demographics will be very different.

Many of the things one reads in press reports don’t really make a lot of sense. If Whole Foods in Detroit is “very successful” because the staff is carefully guiding consumers to discounted specials, then margins will collapse and the store will not be that successful financially.

Wal-Mart may have 90 million customers telling the chain that they would love to buy organic if it is reasonable priced. But this is a Catch-22 situation. Organic is capacity-constrained because of the requirement for transitional years between using land for conventional and then organic production. If organic is typically too high priced and Wal-Mart goes in to discount, and if that discount is even slightly successful and attracts just a small percentage of those 90 million consumers, well prices of organic produce will just go through the roof!

Rod’s focus on chains, such as Sprouts, that are price-focused is intriguing. It would be interesting to see a study of the demographics of these customers. We haven’t seen an indication that, say, construction workers have suddenly focused on organics or healthy eating. We know that in siting its stores in the US, Whole Foods pays a lot of attention to educational levels. There is something aspirational about shopping at Whole Foods, and it is easy to imagine starving grad students still wanting to identify with Whole Foods and shop there.

One insight Rod has that would be valuable for retailers in the UK is the idea of segmented stores. Although the big UK multiples have many formats, those formats differ by store size. They have nothing like HE Butt’s Central Market division or its Mi Tienda division or Supervalu’s Save-a-Lot division or the Publix Greenwise division.

During Tesco’s battle to save its Fresh & Easy division, we often urged it to split the stores in two. Make some a deep-discount concept — such as Aldi — while making the rest an Epicurion concept such as Trader Joe’s, both successful formats in the Fresh & Easy box size.

Tesco, however, was committed to having a store to serve everyone. So now in the US, it serves no one.

What Rod may be actually saying is that just as focused deep-discount concepts are winning markets here, so other concepts — organic, natural, upscale, Algerian, Polish, who knows what else — may next come to win markets here.

If so, all these elaborate attempts to fine-tune various tranches of private label may not be the road to success at all.

We look forward to hearing Rod’s talk and learning more.

We hope you will be there at The London Produce Show and Conference to learn from Rod and discuss this issue as well.

You can register for the London Produce Show and Conference right here.

We have control of the room block in our office, so send us a note here if you would like a discounted rate on a room at the conference venue, the 5-star Grosvenor House.

And we still have select exhibit and sponsorship opportunities available. Let us know here if you would like more information

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Editors Note: Rod Hawkes has been a faculty member for 35 years in the Food Industry Management Program at Cornell University in New York. Throughout his career, he has worked closely with the food industry in a variety of ways but especially through executive education programs conducted both on campus at Cornell and off site in open enrollment and company-specific settings. 

Rod’s work has taken him to over 30 countries on 5 continents. He currently teaches an undergraduate course called “Dynamics of the Food and CPG Industry” and previously taught courses in Food Merchandising, Food Industry Strategy, and Marketing Management. Currently he is engaged with colleagues in a research project exploring the changing nature of supermarket produce procurement in collaboration with a major produce trade association.

 




Explore Iconic London During The London Produce Show And Conference With The All-inclusive Spouse/Companion Program

When the first-ever London Produce Show and Conference gets underway on June 4-6, we will welcome delegates from all over the world, many of whom will be making the trip to the UK with their spouse or partner.

There is no need to worry, even if they have never been to London. For with the Spouse/Companion Program, everyone is always among friends.

While spouses and partners are free to attend the whole event, including the Opening Cocktail Reception on the evening of June 4th, if on show day they would rather relax with friends or enjoy a VIP city experience, they are welcome to join our exciting, all-inclusive Spouse/Companion Program on Thursday, June 5.

At the the London Produce Show and Conference, we are offering spouses and partners a whole host of luxurious and optional activities to maximize their stay in the UK’s iconic capital. At the same time, they will have the opportunity to make new friends and network with the partners of other professionals in the fresh produce industry.

Kicking off at the event venue, central London’s Grosvenor House hotel, we will have a dedicated Park Lane-facing suite at our exclusive disposal for the entire day.

Partners can come to the so-called ‘Spouse Suite’ at any time to relax, enjoy a cup of coffee or tea, and eat a hot or cold breakfast in the morning. A British-themed surprise gift will also be presented on arrival!

For two hours in both the morning and the afternoon, hair, make-up, manicure and pedicure professionals will be on hand for those who wish to look their very best and enjoy some pampering.

The more energetic types can also take part in a one-hour morning yoga-and-stretch session with an instructor to get ready for the action-packed day ahead.

From there, we’ll hop onto a private bus with a driver for a three-hour city tour of the most spectacular sights of London, which will be privately hosted by the UK’s elite Blue Badge tourist guides.

Following the tour, the bus will make a quick stop at the Grosvenor House hotel for anyone wishing to head back for a rest or refreshments in the Spouse Suite.

For everyone else, it’s off to the UK’s most historic department store, Fortnum & Mason, for afternoon tea in the elegant Diamond Jubilee Tea Salon.

This special room was opened by the Queen herself, and with Fortnum & Mason famed for its loose-leaf tea, it has become a stylish destination for the most traditional of afternoon teas in the capital.

Dubbed The Royal Family's favorite food hall, Fortnum & Mason is quintessentially English and so will provide the perfect opportunity to buy some beautifully-packaged delicacies and luxuries to take home as gifts.

Then it’s off to the most popular paid tourist attraction in the UK — the London Eye on the South Bank of the River Thames —  for an exclusive one-hour wine tasting experience hosted by wine experts from Vinopolis while riding in a private capsule.

Not one, but two 30-minute rotations on Europe's tallest Ferris wheel will allow ample time to enjoy a panoramic view of the major landmarks in the capital, including: Westminster Palace, Big Ben, the Houses of Parliament, St Paul’s Cathedral, Buckingham Palace, the Gherkin and much more.

After that, it’s back to the Spouse Suite at the Grosvenor House hotel for more fabulous hair, make-up, manicure and pedicure treatments — just in time for a gala evening. Perhaps you will attend the FPC Fresh Awards or you have a business dinner scheduled. Or maybe your special someone arranged for you to catch a show on the West End or a cruise down the Thames or a romantic dinner at one of London’s top restaurants. 

The spouse program promises to be a wonderfully special day. A fantastic opportunity to enjoy London while making new friends. There are spaces available for everyone. Just register your place now by emailing us here.

To find out more about The London Produce Show and Conference, click here.




Total Produce Pioneers Hi-Tech Access
For Produce-Related Content While
Learning What Consumers Really Love

We received notice that Total Produce, the Irish headquartered spinoff of the old Fyffes Banana and Fresh Produce Group which is a partner of Oppy was employing new technology to create a new tool to interact with consumers:

Local Produce To Take Centre Stage As Total Produce Trials NFC / Beacon “SmartStands”

This month will see Total Produce begin trials of NFC enabled fresh produce retail units, or “SmartStands” in Ireland. NFC, or “Near Field Communications” is a technology behind “Contactless Payments”, an innovation increasingly prevalent across European Retail, one allowing for transactions to be processed or information downloaded through close proximity to an enabled Smartphone.

We asked Pundit investigator and special projects editor, Mira Slott to find out more:

 

Vincent Dolan
European Marketing Manager
Total Produce
Dundalk, Co. Louth, Ireland

Q: What are SmartStands, and how did the concept come about?

A: We’ve been looking at Smartphone produce marketing now for the past two to three years, starting essentially with QR Code scanning, and then how to harness opportunities with NFC or Near Field Communications, the technology behind contactless payments, an innovation increasingly prevalent across European retail, allowing for transactions to be processed or information downloaded through close proximity to an enabled Smartphone. 

Compelling market research re-enforced what we already knew, that as an industry we are very lucky in that consumers have a deep and varied interest in fresh produce and in what we do; how our product gets to market, and uses for our product. We identified a consumer need for finding out more about fresh produce, and with that in mind we wanted to figure out the most efficient way to address that need. Obviously, Smartphones are taking over the world.

Q: That wasn’t obvious to many people, even a short time ago…The produce industry hasn’t always been so quick to pounce on new technologies. Have you experienced any resistance?

A: It was funny that when we started delving into this strategy internally, it took a little bit of convincing that everything consumers do going forward would be with their phones. But in five to six months, that became fairly evident to everybody. We built a website and commissioned a series of videos. Industry research showed that consumers would be receptive to short video clips rather than reading. 

We set up QR codes and they worked but the strange thing is that when we were demonstrating it to people internally some were skeptical. Then they brought the Smart Packs home, and their children, five and six year olds, were showing them how to scan the QR codes on their Smartphones. It very quickly became obvious where this kind of marketing was going.  As an industry, certainly in Europe, there is confusion or a misunderstanding to why produce continues to stagnate and in some countries decline.

We were looking at a new way of approaching the issue beyond posters in shops, to something more contemporary. So we developed a range of Smart Packs with QR codes attached, to learn what was actually impacting consumers and what wasn’t. We’ve all done surveys of why consumers buy fresh produce. What do consumers want to know?

Q: Did you get answers? And were the answers what you anticipated?

A:  What people actually scanned surprised us and contradicted commonly accepted research. For example, we’re told over and over consumers have a huge appetite for nutritional information on fresh produce, but when we linked our packs to nutritional information, the scanning was quite modest for the content we put up. Our most popular videos were fruit carving — making a pram or a buggy out of melon, for example, got hundreds of thousands of hits, while our nutritional video failed to attract attention.

Halloween pumpkin carving got massive hits. So we got a general feel of what consumers actually cared about with fresh produce. The information was very valuable. There was no conjecture any more.  We had facts about what consumers viewed and statistically valid content.

Q: That said, are most shoppers actually going to invest the time to watch these videos?

A: We did some secondary research and the results coming back to us suggested that the effort associated with QR codes was an inhibitor, and that specifically the physical act of scanning was regarded as a little laborious and inconvenient. Similarly, many of the QR codes were linked quite badly. In a lot of cases in other industries you could scan a bar code and jump right into the website homepage, but that isn’t what QR codes are about at all.  

For example, our pear pack, which was one of our more popular videos, had a QR code and we’d advertise the fact it was linked to a video demonstrating how to ripen a pear at home. Consumers had an issue that they’d buy pears that were not ripe, and when they tried to ripen them at home, the pears would just spoil. Our QR code instantly met a consumer need and you didn’t have to go to a home page and then find a link. You could link directly to a video. 

We wanted to bring in the next level from secondary research.  In terms of talking to consumers, it was the act of scanning that was the problem. And we decided NFC technology could be the solution. Not enough phones carried NFC technology at the time. Also, I think it’s equally fair to say some of the networks weren’t able to download the information quickly and consistently enough.

Q: What percentage of phones carry this NFC technology?

A: NFC is the next generation with the exception of Apple. Practically all the other phones are carrying NFC, which is changing the nature of things. Also 4G networks are being extended across Europe and are speeding up interactions. We thought it a good time to try NFC technology because it removes the main obstacles associated with scanning to QR Codes. With the tap of your phone, you can instantly at point of sale download information about fresh produce and it takes away some of the hassle with QR Codes. That was our rationale.

Q: The Apple iPhone exception leaves out a lot of potential customers. Does that concern you? Isn’t that an important obstacle to overcome?

A: It is a major problem. I’ve been watching NFC for a number of years, waiting for it to be added to the iPhone. That hasn’t happened yet. What’s occurred is the introduction of iBeacon, technology which is a similar technology to NFC for the iPhone. It transmits the signals to your phone when it comes in close proximity, so you’d get the same message as if you tapped the NFC tag.  We’re developing use of that technology. It’s a little bit more complicated than NFC, but it’s exactly the same principle. In the interim, our NFC tags are all accompanied by QR codes, so iPhone users can still download our content by scanning these.

Q: Could you tell us more about the pilot program underway?

A: We’ve gone into this technology with units themed around locally grown produce. We focused on videos of local growers. We found the very presence of a video of the grower instills confidence, consumers assume they must have a good story to tell, and the perception is that the product is better, which increases purchases of those products. So it’s not always about scanning and hits.

The way the SmartStand works is simple enough. It’s a question of just tapping the side of the unit and the consumer’s Smartphone takes the consumer to a virtual tour of the farm where the product is grown. We try to keep the video short. Consumers stop watching the video after, on average 3.5 minutes.  So you get a quick story about the farm, and it can be changed by season and product. So that’s where we’re at currently.  

Q: A couple of things: how have you partnered with retailers? Which retailers are piloting the program, and have you received a lot of interest?

A: As the pilot is rolling out, we have a retail partner on board, but we have started with stands in a number of independent stores. We have a technical learning curve to negotiate in the first instance. We’re at that stage at the moment. Retailers are receptive because it is new. This is something different that is not available everywhere.

It’s a point of differentiation. "Meeting" local growers and being provided with more information on the fresh produce supply chain is popular and well received by consumers, and it’s a good message for retailers as well in terms of emphasing their commitment to local growers in the region. There’s no cost for retailers attached to this, despite, we believe tangibly adding value to their produce department. Everyone has provided great feedback.  

Q: So who covers the costs? And what are the different costs involved?

A: We absorb the costs. Everything is relative, of course. You’re sending camera crews out to farms for the videos, and investing in websites and the background technologies, but if you compare that to sending posters and leaflets out to every supermarket you’re supplying, it comes out favorably. It is cost effective in that respect. Of course the stands themselves have costs as well, that’s another side, but even with the bar codes, it’s still cost-effective when compared with many traditional marketing channels.

And there are dividends across the supply chain. In the Irish pilot we’re doing, the growers are very appreciative of it. I think growers wonder sometimes if the consumer understands what’s involved in delivering fresh quality produce, and the process associated with making it readily available to consumers. The farmers genuinely enjoy the process. They take a lot of pride in their work and enjoy talking about their grandfathers owning the land before they did.  

They appreciate the opportunity to point out that "This is a tough job, we’re here morning, noon and night and we do it for the love of it." The consumer wants to know these things, and the retailers are happy to illustrate they're supporting local growers. It’s a story they are happy to tell because it brings welcoming transparency to the supply chain. It’s very positive. A genuine win win for all the links in the fresh produce supply chain.

Q: Have you tested other unit ideas?

A: We do have a second type of unit. It’s what we call Fresh n' Ready concept for convenience stores. The products in the units link to recipes and competitions. The idea is you come to market in the evening, and tap on the unit to get quick recipes and then you can buy the fresh produce and ingredients needed to prepare the recipe when you get home. The options on how to use the SmartStands are endless. It’s up to your imagination.

Q: How long have you been running the pilot? And have you been able to measure results? 

A: We’re only three weeks into the pilot. Obviously the very presence of the stands and the extra shelf-spec that entails is going to impact sales so it’s going to take a little bit of time to assess progress; comparing sales, total shop, monitoring traffic and assessing consumer perceptions and sentiments towards the stands.

Q: What are the key lessons you’ve learned so far in this roll out process?

A: Everyone in the fresh produce industry will be aware of the phenomenon in market research; where we ask consumers are you eating more fresh produce? You never hear the answer, no, I love chocolate. It’s very rare consumers justify why they’re not eating fresh produce. Because these technologies are real time and require the consumer to interact, it gives us a genuine insight into their motivations.

Something we’ve learned when we’ve commissioned new content and are constantly re-watching the videos is remembering that we’re also consumers. If you asked me if I would sit at home and watch a 3.5 minute video on nutrition, the answer is no. We’ve learned what enthuses people, like the pear video, so they can enjoy juicy ripe pears at home and avoid the negative experience of biting into hard ones. 

It also has to be fun, and have some entertainment value to it. We were a little conservative when putting these videos together initially, but we learned quickly. People have such limited time and are possessive as to how they spend it. It's a valuable commodity and they won't waste it on anything which doesn't genuinely interest them.  

While we’ve made and we'll make more. The insights garnered are invaluable. We're confident at least that if we do make mistakes they're new mistakes rather than repeating failed strategies.

And there are practical learnings which have nothing to do with fresh produce. Our first videos were five to ten minutes long, and they didn’t hold people’s interest. You learn the optimum video time and how you lead into it. You learn the tricks to captivate the consumers and hold their interest. There’s also a learning curve to make it easier for consumers to access the information.  

Q: Have you targeted messages to different consumer groups and demographics, getting kids to eat more produce, for instance, or capturing the attention of busy mothers?

A: We included a game we developed on our TOP Fruit Hub App with the idea that parents hand the Smartphone to the kids while shopping to keep them occupied and also educate them on the fun of eating fresh produce. That was the logic behind that one, but I suppose we are going for the core shopper at the moment. And if we crack that shopper, we’ll be successful and can extend our reach to a broader demographic base.

We are hitting a younger demographic at present. With the Smartphone adoption, the younger generation is more user-savvy and understands the technology in ways that older people haven’t. 

Q: So SmartStands in the produce department could end up being quite a novelty there…

A: Fresh produce can be perceived as old fashioned. Often it is perceived as lacking the persona in store of the confectionary department, or the aisles of processed foods and soda. It’s often perceived as the boring department and just not sexy. We like the idea of the experience with NFC, of consumers being in the fresh produce department, where they least expect to find technological innovation — you wouldn’t put those two together, and SmartStands capture their attention.

We believe that consumers will react to produce companies incorporating these technologies precisely because of atheir interest in our products. A farm visit is eminently more appealing than watching a video, of say a gluing facility. We’re fortunate as an industry in that respect. We believe in this path, keeping up with the technology and investing in it because we see it will work.  

The most important thing is that it’s not about the technology. It’s about content. The content is king. It really doesn’t matter if it’s NFC or Beacon or a website. It matters if you can deliver something to the consumers that interests them. I absolutely believe that our research these past three years has given us insight into that. And we will continue tweaking, watching the consumers, taking their feedback, to better our communications and give them what they want.

For me, the technology is a means to an end. The important thing is that we get the content right. The consumer doesn’t care how we got it. Our job is to get it to them easily. It doesn’t matter if it’s the most incredible technology known to man. It’s a waste of time if it does not lead the consumer to where they want to go.

If someone walks into your shop and has a question, you want to answer it more quickly and better than your competition.  I laugh, thinking back as a kid when I’d go into a shop and see an unusual piece of produce, and it would involve going to a library to find out what it was. What a transformation all these years later.

Q: Now consumers are inundated with product information over the Internet, and in store signage and promotional materials. And of course, store merchandising and décor varies greatly based on the retailer. How do SmartStands fit in with all this?

A: SmartStands are a way to differentiate retailers and empower the consumer. It’s not about bombarding them with information they don’t want. If you want to see where product is grown, you can; it’s there if you want it. There’s also an environmental and efficiency aspect, alleviating the need for printing booklets to go in every pack describing how the tomatoes or apples were grown or distributing countless leaflets that create waste.

We have to craft a message consumers are receptive to and that’s the real challenge. We have videos with thousands and thousands of hits and videos that have five hits. It’s about consumer power, and telling us what they want to know. We will follow their lead.

Q: How unique is your SmartStand venture?

A: I’m not familiar with anyone else doing something exactly like this. I’ll see the technology in media sites and for movie posters at bus stops showing trailers for a local movie while waiting for a bus, but I haven’t seen it applied at the retail level.  

Q: How do SmartStands fit within the Total Produce umbrella? And how did you become so committed to the project?

A: I’m a lifer at the company, 19 years so far out of college. I started as a fruit and vegetable merchandiser, and the experience you gain at that level is something you never lose.

In our company, there is a culture embracing drive and passion for produce. We’re building something here. It’s a great industry to be in, promoting fresh produce, but we’re also a very realistic company, which explains why we went down this route. We’re thinking at every stop light, trying to figure out why people are not buying produce. We’re walking into retailers, trying to work with them to promote fresh fruits and vegetables, in this instance by introducing innovative marketing technology.

The SmartStand is a practical solution, yet it is consumer-oriented, the best of both worlds.  When talking to marketing people in other industries, they ask, “Why aren’t you throwing money into TV advertising, and I say, ‘it’s not built into the price of an apple or orange.’”

We try to do things better and cheaper and that’s not easy. SmartStands just might be an example of how we can do that. If we can condition consumers to tap their phones, this can take off. 

******

Technology is very important. Years ago my friend, Stan Silverzweig, and his wife, Mary Zenorini Silverzweig, produced a video series for in store use called “A Minute in the Kitchen with Mary” — in the video Mary would spend one minute giving quick tips for using each item. In controlled experiments we could prove that playing the video caused sales to boom. In real life usage it was much less successful. Why? Because in real life the produce clerks hated the old continuous loop of the video, hearing the same thing 60 times each hour, and they would turn it off.

A little thing, like having to scan a QSR code is enough to kill an innovation. But the technology is improving and the executives at Total Produce are doing a smart thing by trying to see if it has advanced enough to transform the way the trade interacts with consumers.

Mr. Dolan correctly identifies content as the challenge. What, precisely, do consumers want to know about their produce? As he reports, having real data on what people actually choose to do, what they choose to watch, etc. is very different from interviewing consumers and asking them to say what they want.

Mass consumer advertising is difficult for the produce industry and not just because of margins.  Even a market such as America, where brands are common, no brand is in every store with one product. In packaged goods, every store sells Heinz Ketchup or Kellogg’s Corn Flakes or Campbell’s soup. So if their advertising is effective, people can go into the store and buy the product.  In most cases, even if produce advertising is effective, consumers can’t get that specific brand at their store. So the industry needs cost effective ways of talking to consumers.

We hope Total will continue to experiment and gather data. For example, although the hip idea is that everyone wants things local, one wonders if consumers wouldn’t be just as interested in hearing from multi-generational farmers from more exotic locales.

This is closer to the beginning than the end, in a generation the chips may be embedded in our heads not our phones and pre-programed to seek out content that we are interested in. Who really knows?

But in an ancient industry such a fruits and vegetables, it is nice to see the latest and greatest technology being trialed. The folks at Total deserve a tip of the hat.




Pundit’s Mailbag – Unemployed Because It Was Deserved Or Directed By God?

Our pieces, A STORY HALF TOLD: Putting A Spin On The Long-term Unemployed, and Pundit's Mailbag — Pundit’s Critique Of New York Times’ Reporter Annie Lowrey’s Piece … Draws Notice Of Produce Industry Pros, brought many responses including one from long-time Pundit contributor Bob Sanderson. Among the pieces he has contributed here include these:

Pundit’s Mailbag — Does A 1,200-item Audit Necessarily Result In More Safety Than A 40-item Audit?

Pundit Mailbag — Honor ‘Green’ Attempts

Pundit’s Mailbag — The Acceptance Of Risk

Pundit’s Mailbag — Sprout Lessons Echo Food Safety Dilemma

Pundit’s Mailbag — More On Manure

Pundit’s Mailbag — The Tyranny Of Economics And The Goals Of Fairtrade

Pundit’s Mailbag — Can Irradiation Follow The Path Of Pasteurization?

Pundit’s Mailbag — A Look At Organic Versus Conventional Yields

Pundit’s Mailbag — Irradiation, Pasteurization and Labeling

Pundit’s Mailbag — Pesticides And Cancer

Pundit’s Mailbag — Food Prices And Free Markets

Pundit’s Mailbag — Organics And Manure

Testing Sprout Seeds

Bob always has a thoughtful take on interesting matters and here is what he had to say this time:

Well, I know I'll either get clobbered or ignored, and rightly so!

Debating the rationale for long-term unemployment benefits, using the example of the 57-year-old guy with all these degrees and connections, tends to be a weak argument for the underlying question.

But what is the underlying question? As is mentioned in your article, it is impossible to know much about what another person is dealing with.  There is a universal tendency to think that if I am doing OK, it is to some extent because I've made good choices, and so others, who aren't doing OK, must have made bad choices.  Master, who sinned that this man was born blind?

The answer is that no one sinned; the man was born blind so that God's works could be made manifest.  So we have countless people born blind who live active, productive lives — are we to say this shows that the blind should not get help?

It is my positive attitude that explains my success!  And I decided to have a positive attitude. Here, I'll just do it right now!

But... where did I get my positive attitude?  Actually, I was feeling pretty depressed earlier this morning.  Something must have changed in my brain chemistry. Did I turn the spigot? 

Beats me. Just my dumb luck, I guess.

— Bob Sanderson
Owner, President
Jonathan's Sprouts
Rochester, Massachusetts

We thank Bob for his thoughtful letter as the idea that one’s bad circumstances is retribution of God for evil-doing is longstanding.

Master, who sinned that this man was born blind? is a biblical text. And Jesus responds by saying: Neither did this man sin, nor his parents: but that the works of God should be made manifest in him.

In other words, Jesus offered a third possibility. That whatever sins were committed did not cause the blindness but, rather, that it came to him as part of God’s plan for his life.

To a devout person, this is acceptable. This is, in fact, all there can be. Man cannot expect to understand God’s ways. So why an almighty God allows an individual to be blind or millions to be marched to ovens in the Holocaust can only be answered by saying that we are not capable of understanding. For many, this is a deep problem.

Others would simply say that this is a misunderstanding of God’s relationship to man — that as humans we have free will, that God does not or cannot interfere in day-to-day works. After all, if God micromanaged the universe, in what sense could a person ever be virtuous?

However, we never said or implied that Abe Gorelick had sinned or was not virtuous. We wouldn’t even say he made “bad choices”. We just said he made choices. Those choices have consequences. We assume Mr. Gorelick knew what he was doing and is satisfied with the outcome of those choices.

We were critical of the reporter, Annie Lowrey, not of Abe Gorelick, for writing a piece that seemed to imply that someone should get collective help by taxpayers without analyzing why this person may need help.

After all, if his wife’s income is, say, $300,000 a year — and we have no idea since she owns a business and the reporter didn’t ask for documents, say tax returns, to substantiate his plight — why should we tax families who earn $50,000 a year to support this one?

If this family decided to send their son to an expensive private college, why would we tax families that restricted their choice to a state university to facilitate their more expensive choice?

We happen to know a person, who a longtime friend — in fact, she is smart and nice. She also happens to have no interest in working. When she applies for a job — and she has had many — she is mostly focused on how much vacation she is going to get. This is not unethical, much less sinful, and since she enjoys her leisure, it is not necessarily a bad choice — it is how she has chosen to focus her life.

That is her right. I can still be friends with her. But… and it is a big but… when she loses her job, as she often does, I sit on my hands. I have placed hundreds of people over the years in jobs. I get calls every day asking who I would recommend. But I choose not to recommend her. That is my right too. And, I would feel perturbed, if I were taxed to support her.

Now Bob raises a bigger issue. In some existential sense, none of us deserve credit for our lives. We were born out of the chance meeting by a particular sperm and ovum, a joining over which we had no control. We didn’t pick our parents, our siblings, our home environment, so much more.

So everyone has to play the cards they are dealt and that is inherently unequal. But it doesn’t mean it is unfair.

The Pundit has his skills, but in Jr. Pundit Segundo’s opinion — aka Matthew — our talents rank way below those of LeBron James of the Miami Heat. Try as we might, we can’t all be 6’8” or have the grace and athleticism of LeBron. Of course, though he was born with that potential, he had to develop it on his own, so we begrudge him nothing. We give him all the credit in the world. Although we note that had he been born in a different time and place, he could have been a slave on a cotton plantation or been victim to starvation or a childhood disease in Africa.

Kurt Vonnegut Jr. wrote a short story called Harrison Bergeron, which was about a world where efforts were made to make everyone equal. So ballet dancers, being beautiful and graceful, would be given masks and weighted down lest people think they were less beautiful and less graceful — but, of course, that meant the ballet was not very good.

Organizing society so that people have a powerful incentive to make the most of their talents is what gives us a Baryshnikov or a LeBron.

Bob asked in his note if we did not believe in helping the blind.

That is an interesting question, but not the one posed in the article about Abe Gorelick.

First, the reporter — whose job is to ferret out information — gave us not the slightest reason to think Mr. Gorelick had ANY problems — other than not having a job. In fact, it is fair to say that the whole thrust of the reporter’s story was that. 

In fact, the story has something similar to a contemporary story of Anne Frank. She was Jewish, but her worldwide appeal was that her Jewishness was so slight that anyone could feel she was “just like me” and thus horrified by her situation and death. So Mr. Gorelick is supposed to be in good health, hard-working, etc., so that the New York Times could get people saying, “there but for the grace of God go I.”

Second, the issue of helping Mr. Gorelick was never raised until we raised it. We asked where was his family? His friends? His well connected classmates from Ivy League schools and top grad programs? To us, it was logical that a man in his situation, having hit hard times, would in fact get help. But from people who know him, like him, care about him, respect him.

To assume that because someone is in bad straits, not only should they get help but the help should come from the federal government is a large leap.

Many thanks to Bob for helping us think through this important matter.

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