We paid a visit to Wal-Mart’s new Walmart Express concept visiting the first two stores that just opened in Gentry and Prairie Grove, Arkansas, within driving range of Wal-Mart’s Bentonville headquarters.
About 15,000 square feet each, both with pharmacies and the Gentry store with a gas station, both are perfectly nice little stores.
The design seems to emphasize economy with unadorned polished concrete floors, a ceiling with exposed AC vents and no graphics or adornments on the walls.
In these rural small towns, the stores are made warm by the people in the local community who shop there. Both stores were busy during our mid-day visits and, at both, you found what is often found in small town rural America, people who know each other bumping into each other.
Just sitting in the parking lot for a while, you constantly had people rolling down their windows to say hi to those walking to the car; you heard people inquiring about the health of a sick spouse or parent and inquiring about new babies, what children are doing for the summer and just-started businesses.
We didn’t do a formal study, but it was pretty clear that Wal-Mart was doing a little micro-marketing or, at least, some experimentation. The Prairie Grove store seemed to carry more products on Wal-Mart’s Great Value brand, while the Gentry store seemed to have more national branded product and more expensive lines, such as Hebrew National hot dogs.
There is no service deli, and there was probably some discussion internally at Wal-Mart on whether to use precious space for that purpose. Probably it came down to a pharmacy or a deli, and Wal-Mart probably made the right decision as the barrier to entry in opening an independent sandwich shop or deli is much lower than in opening a pharmacy where, of course, one needs a pharmacist and benefits greatly from negotiating power with insurance companies.
The decision to incorporate gas stations where the location allows it is a winner as well. Not only is this a big business in and of itself, but it encourages the use of the store for quick fill-ins and perishable purchases. Most importantly, it allows Wal-Mart to pay the price for the best locations. In contrast, Tesco’s Fresh & Easy’s decision not to sell gas doomed it to mostly secondary locations.
We received quite a number of calls from British publications who see this new concept as being aimed at competing with Tesco’s Fresh & Easy concept. Although some units may overlap geographically, we doubt that Wal-Mart was very focused on Fresh & Easy in developing this concept as we saw the Marketplace stores, which we wrote about here and here, as much more effective tools to compete with Fresh & Easy. In fact, Wal-Mart cared so little about Marketplace competing with Fresh & Easy that Wal-Mart basically abandoned the project, turning the Marketplace name into a brand for prepared foods and fresh-cuts.
These stores — and Wal-Mart executives have expressed this — are really suitable for rural areas where existing Wal-Mart customers can save 20 minutes by not having to run to a Wal-Mart supercenter. Already familiar with the company and the brands, customers will probably be happy to have the opportunity to shop at this local outpost where they can pick up a prescription, cash a check, etc.
Wal-Mart has added a little sex-appeal to the concept by offering the stores as a depot for picking up things ordered online. This program builds on Wal-Mart’s Site-to-Store and Pick Up Today services and, in giving small stores the assortment of a giant store, may well be a bonus. Still, it is hard to see these as too much of a win. Wal-Mart still can’t offer same-day availability of products that the stores don’t stock, and anyone who buys enough online to purchase a membership in Amazon Prime for $79 can get free two-day deliveries not only to their own home but also for gifts etc.
This same Walmart Express concept, in addition to being a fill-in between supercenters in rural areas, is being touted as an answer to Wal-Mart’s desire to expand into urban areas. Since stores of this scale can open “as of right” almost everywhere — whereas getting 200,000 square foot locations suitable for supercenters in urban areas is almost always very difficult and typically requires zoning variances that enmesh the whole effort in the political arena — this can be an excellent tool to allow Wal-Mart into urban areas. In fact, a Walmart Express is expected to open in Chicago this year.
The success in sales of these stores is likely to be determined by the available competition, and rural towns without good supermarkets as well as urban areas where the competitors are typically small size independents offer good environments for Walmart Express.
As we have pointed out many times during our discussion of Tesco’s Journey to America as Fresh & Easy, Tesco’s big problem has always been with a mismatch between these stores and where they opened. Suburban Phoenix or Las Vegas are car-driven towns with lots of large, modern supermarkets, and consumers will typically use a small store format only as a convenience store because it doesn’t contain the assortment necessary to do a complete shop. So it becomes a pain for most consumers — not “easy” at all — as they have to go both to a large store and to a small store to buy all the products they wish to purchase. A Fresh & Easy might be very successful, sales wise, in Manhattan, for example.
The economics of small stores are not easy. The rural stores may work as they are relatively inexpensive to operate and can be viewed as a business unit in combination with nearby supercenters. By keeping customer business in with Wal-Mart by providing a local option, Wal-Mart may pick up enough business to knock some independents out of the market and keep some chains from coming in. The problem for Wal-Mart is that this is also true of its Neighborhood Market concept, and Wal-Mart has never been reconciled to accepting lower returns on capital than it could earn on supercenters to implement a strategic sales-building strategy.
We doubt the urban stores will work very successfully. Some chains, such as Pathmark, have been successful with urban stores, but Pathmark specialized in working with political leaders to participate in urban development projects that enabled it to operate large scale stores. Craig Carlson used to be VP of Produce and Floral Merchandising at Pathmark and now is a Senior Director of Produce at Wal-Mart with responsibilities supervising procurement and category management for apples, pears, citrus and stone fruit.
One wonders if the powers that be in Bentonville called Craig in to tap his expertise on operating urban stores. When Craig was still at Pathmark, he gave us a tour on Pathmark’s Harlem Store. One big part of our conversation was the cost of the off-duty New York City police officers that Pathmark hired to provide round-the-clock security.
It was expensive and required a large, high-volume store to justify the cost. If Wal-Mart opens small format urban stores, it will be competing against independents and ethnic marketers that have many advantages. These stores buy produce on the terminal markets, often for less than Wal-Mart pays, and they often are run by large extended families that guard against theft and work on a defacto profit share plan. They have the ability to respond instantly to product offerings and have a laser-like focus on the ethnic groups they serve.
These stores also fly under the regulatory radar and do things Wal-Mart can’t do — from bribing the health inspector to beating up a shoplifter in the basement to locking the nightshift inside to avoid theft, to selling some unlabeled foodservice packs that were available at a bargain price. If Wal-Mart can open its supercenter concept in Brooklyn, the Bronx and Queens, it can have the critical mass to pay for the expense of operating in urban areas and might have its most successful stores. If it tries to operate stores on the scale of independents and ethnic marketers, it will probably lose money.
Yet, whether the Walmart Express concept is adequately profitable where it opens strikes us a secondary question.
The real problem with the Walmart Express concept is that it is not an answer to Wal-Mart’s problem, which is declining public confidence that Wal-Mart offers the best price. On the way from the Prairie Grove store to the Gentry store, the GPS guided us past an Aldi and we stopped in. Physically the stores are similar — the Aldi actually a warmer store with more attractive graphics.
Two seconds in the Aldi store demonstrated that the Walmart Express concept is simply non-responsive to the marketing challenge Wal-Mart faces. The Walmart was designed to look “bargain basement” with concrete and metal exposed — but there was nothing in the function of the store to allow Wal-Mart to operate less expensively… indeed it will probably be more expensive to operate than a supercenter per dollar of sales.
Almost every item was less expensive in Aldi and the quality was often better or certainly would be perceived as better by many consumers. Take a showcase item such as bananas: The Walmart Express stores were selling unbranded bananas with a generic Fruits & Veggies More Matters sticker for 54 cents a lb. Not only was Aldi 44 cents a lb., but it was selling Del Monte brand.
True, the Aldi bananas were bagged so, perhaps, a broke person could buy one or two bananas at WalMart Express and pay less out of pocket. Still, allowing Aldi to sell cheaper and better on a profile item day after day helps educate consumers that Wal-Mart is not a bargain.
In the not too distant past, this would have been culturally unacceptable at Wal-Mart. On a national level, it wouldn’t have been acceptable and, locally, a store manager would have been expected to react to such pricing. In fact, a store manager could have been fired for allowing a competitor to undercut Wal-Mart on such a high profile item.
Wal-Mart needs a concept that is dedicated to underpricing Aldi, Save-a-Lot and Dollar stores and deep discounters of all sort. It also needs to rebuild a culture that is dedicated to providing consumers with satisfaction-guaranteed product at the lowest possible cost.
Walmart Express, whatever its utility, does not seem to be the answer to the challenge Wal-Mart actually faces.
We’ve written in the past pieces such as this and this about the Environmental Working Group’s annual publicity stunt of releasing a so-called “Dirty Dozen” report that purports to identify the produce items that have the most pesticide residues on them.
The annual stunt is self-evidently silly as it does not purport to actually measure risk of any kind. That is to say that if the whole conventional produce industry magically reduced each pesticide residue by 99% next year, there would still be 12 items that by this methodology would constitute a “Dirty Dozen” — and in light of the publicity this annual show garners the EWG, we could probably count on this group continuing its annual publication.
We would say that the actions of the produce industry, especially The Alliance For Food and Farming whose efforts have been partially underwritten by the Produce Marketing Association, as well as Western Growers Association and United have, in fact, both made EWG a little more temperate in its claims and made the media a tad more skeptical – even if the headline is close to irresistible and so the industry has a long way to go.
Still, if you read Marion Nestle’s blog, the famed professor of nutrition and food author, whose comments we have featured many times including here, here, here, here, here, here, here, she recounts much that is favorable for the produce trade – using material the EWG included in its release:
EWG explains that its Shopper’s Guide is not built on a complex assessment of pesticide risks but instead reflects the overall pesticide loads of common fruits and vegetables….
Most available research supports the health benefits of eating fruits and vegetables regardless of their pesticide loads. Ken Cook, the president of EWG says:
“We recommend that people eat healthy by eating more fruits and vegetables, whether conventional or organic,” says Ken Cook, president and founder of Environmental Working Group. “But people don’t want to eat pesticides with their produce if they don’t have to. And with EWG’s guide, they don’t.”
Nestle also is quoted in an LA Times piece that is rather dismissive of the EWG report:
A study published earlier this year in the peer-reviewed Journal of Toxicology, using the same USDA data from 2004 to 2008, said scientists found the levels of pesticides in 90 percent of cases from the 2010 Dirty Dozen were at least 1,000 times lower than the chronic reference dose — the concentration of a chemical a person could be exposed to on a daily basis throughout life before risking harm.
A person would need to eat "so much (of the produce on the Dirty Dozen) you can't even imagine," said Dr. Marion Nestle, author and professor of nutrition, food studies and public health at New York University.
One area that we would differ with professor Nestle — and the EWG — is the endorsement of organically grown produce as necessarily more healthy.
It is one thing if Ken Cook wants to man the ramparts over people’s rights to make an aesthetic choice to avoid synthetics.
Yet in the LA Times piece, Professor Nestle makes a substantive claim:
…for those trying to limit their exposure to pesticides, the Environmental Working Group recommends choosing organic produce whenever possible.
But Herrington (A registered dietician at Northwestern University) points out that organic does not necessarily mean pesticide-free. The USDA allows pesticide use on organic crops, though "the pesticides in organic agriculture are mostly natural, meaning they are found in nature and less toxic," Nestle said.
We don’t think the science exists to back up the good professor on this point. Pesticides exist to kill pests. Natural substances can kill as surely as synthetic ones. If natural substances are “less toxic,” then organic farmers would have to use more of them to achieve the same lethality against insects that conventional farmers have with synthetic pesticides. That residues would be “less toxic” is not at all clear.
We have seen no research at all to indicate that residues of say, copper sulfate, on organic produce is somehow healthier than a residue of a synthetic pesticide on conventional produce.
Of course, whatever the EWG writes in its release and whatever experts such as professor Nestle contribute to op-eds, the sadness here is that plenty of consumers, unable or unwilling to get into the gritty details, are likely to read the headline, say a Pox on both conventional and organic, and buy their kids cookies or candy bars instead of apples for their lunch box.
The EWG should be ashamed of itself for pushing such non-science in order to boost its fund raising, and the media should be ashamed of itself for falling for it — year after year.
From time to time we’ve been fortunate to hear from experts overseas that they have found our work sufficiently valuable to merit translation to allow for a wider audience. We are always humbled by these requests for permission to translate.
For example, our piece for The New Atlantis, titled How to Improve Food Safety: Aggrandizing the FDA Only Distracts from Real Solutions, appeared in its entirety, in French, on Le Blog d’Albert Amgar, which is published under the auspices of the French magazine, Process Alimentaire. It appeared under the title Comment améliorer la sécurité des aliments aux Etats-Unis? Donner plus de moyens à la FDA détourne seulement des vraies solutions.
Now, we are pleased to report that our Special Report, As The European E. coli 0104:H4 Outbreak Causes Illness And Death, It Wreaks Havoc On The Produce Trade And Breaks Confidence In Public Health: Lessons From Europe, has also been translated by Albert Amgar and is appearing now in French in two parts under the titles:
L’épidémie à E. coli O104:H4 vue des Etats-Unis, 1/2
L’épidémie à E. coli O104:H4 vue des Etats-Unis, 2/2
We trust our Francophone readers will find these links convenient and thank both Albert Amgar and Process Alimentaire
A really fascinating study done at the Weizmann Institute of Science in Israel, in collaboration with University College London in the UK, has interesting — and mostly scary — implications for advertising, marketing and society at large.
The question researchers were studying is whether social pressure can create false memories. This is a different question than whether people will change their answers to conform to the group — we already knew that to be true. The assumption, though, has been that people are willing to lie to fit in or to not make waves... that, in effect, people knowingly falsify their beliefs to conform to social demands.
This study took an interesting approach:
How easy is it to falsify memory? New research at the Weizmann Institute shows that a bit of social pressure may be all that is needed. The study, which appears Friday in Science, reveals a unique pattern of brain activity when false memories are formed – one that hints at a surprising connection between our social selves and memory.
The experiment, conducted by Prof. Yadin Dudai and research student Micah Edelson of the Institute’s Neurobiology Department, with Prof. Raymond Dolan and Dr. Tali Sharot of University College London, took place in four stages. In the first, volunteers watched a documentary film in small groups. Three days later, they returned to the lab individually to take a memory test, answering questions about the film. They were also asked how confident they were in their answers.
They were later invited back to the lab to retake the test while being scanned in a functional MRI (fMRI) that revealed their brain activity. This time, the subjects were also given a “lifeline”: the supposed answers of the others in their film viewing group (along with social-media-style photos). Planted among these were false answers to questions the volunteers had previously answered correctly and confidently. The participants conformed to the group on these “planted” responses, giving incorrect answers nearly 70% of the time.
But were they simply conforming to perceived social demands, or had their memory of the film actually undergone a change? To find out, the researchers invited the subjects back to the lab to take the memory test once again, telling them that the answers they had previously been fed were not those of their fellow film watchers, but random computer generations. Some of the responses reverted back to the original, correct ones, but close to half remained erroneous, implying that the subjects were relying on false memories implanted in the earlier session.
An analysis of the fMRI data showed differences in brain activity between the persistent false memories and the temporary errors of social compliance. The most outstanding feature of the false memories was a strong co-activation and connectivity between two brain areas: the hippocampus and the amygdala. The hippocampus is known to play a role in long-term memory formation, while the amygdala, sometimes known as the emotion center of the brain, plays a role in social interaction. The scientists think that the amygdala may act as a gateway connecting the social and memory processing parts of our brain; its “stamp” may be needed for some types of memories, giving them approval to be uploaded to the memory banks. Thus social reinforcement could act on the amygdala to persuade our brains to replace a strong memory with a false one.
The study reminds us of a piece we did entitled, Altered States: How Price/Branding Affect Pleasure Centers. In that piece, we reviewed a study which found that people experienced greater pleasure when drinking wine they thought to be more expensive rather than a wine they thought was cheap. That study showed not merely that people claimed they enjoyed these wines more — that could just be snobbism. The study found an increase in …blood-oxygen-level-dependent activity in medial orbitofrontal cortex, an area that is widely thought to encode for experienced pleasantness during experiential tasks.”
In other words, people didn’t just say they enjoyed the pricey wine more, they actually did, even though the wine was, actually, the same.
In this new Weitzman study, it finds not only will people conform to peer perception, their perceptions — their memories themselves — will alter in the face of peer perception. So people who went to Disney World, not only will feel pressure to say it was fun – even if it wasn’t — they may actually come to believe it was fun, if this is the perception of their peers.
The implications for marketing are breathtaking. For example, the marketing campaign that Disney had run, where it paid athletes to declare that “I’m going to Disneyland” or “I’m going to Disney World,” might have been enormously effective by creating a general societal expectation that people will enjoy Disney theme parks. In fact, what the study is saying is that people who went to Disney and did not enjoy it may find that their memories of the experience actually change to positive to conform with peer expectations.
Obviously much more research is required. There are loads of variables that we don’t know much about — for example, would the results be different if the peer group was noticeably different –say by race, religion or economic status? How close a peer group is required? For example, would a national political poll indicating that a President had been a very successful President or a failure as a President, change the recollection of those old enough to have been politically aware at that time?
This study could point to reasons why consumers might report that local or organic is more flavorful, if that is the consensus, even if their experience doesn’t support it. One interesting point for further research is the degree to which the same effect on memories can be generated by media reports. In other words, the implications of this study are that if they gave everyone some locally grown broccoli and some California-grown broccoli and if, for argument's sake, everyone agreed the California broccoli tasted as good or better than the locally grown, that merely telling everyone that all the respondents thought the locally grown was best, would change people’s memories.
Would reading an article that said chefs all agree that the locally grown product tastes better have the same effect? Would an article that said a poll of people all agree that locally grown tastes better have the same effect?
Can marketers use social media to create this memory effect?
While we sit here and think of ways to use this insight to effectively market, one has to be a little horrified at the prospects for democracy. Though we suppose one could find value in the fact that this effect could reinforce what Lincoln referred to as the “mystic chords of memory” that serve to unite a people, it seems that democracy depends on free-thinking people. If memory itself can be altered, we can see how susceptible people may be when confronted with popular, but dangerous, ideologies. One thinks of the crowds cheering the Nazis and one wonders to what degree the rallies themselves shaped people’s understanding of reality.
It sends a shiver down one’s spine.
Here is a video explaining the study:
As his Father prepared to leave, Junior Pundit Primo, aka William, age nine, gave Dad a hug and, with that, he turned to eating lunch.
Visiting day at summer camp is in just three weeks, and yet as I hugged him back I knew I would never hug the same child again. As Adam and Eve were forever different after they ate from the Tree of Knowledge, I knew that when I next saw William, he would know something he didn’t actually know before… that he could get along without Mom and Dad.
After I dropped off William, I stopped at the Roscoe Diner for lunch, about 15 minutes from the Camp in upstate New York. It is a famous pit stop between New York City and the colleges upstate, its walls festooned with college pennants, and I have dined here many times before. On this day, I wasn’t actually hungry, yet I stopped and ordered, and dawdled. I thought of Carly Simon as I looked at the “clouds in my coffee” and I thought of her metaphor for, as she once explained, the confusing aspects of life and love.
I waited, for no rational reason at all, just some irrational thought/hope that perhaps the camp might call and tell me it was all a terrible mistake, that he was much too young and I had to pick him up and bring him home right away.
Of course, I had told William nothing of these thoughts. We had flown up the day before, spent an afternoon and a night scoping out Hancock, New York, the small town where French Woods, a camp dedicated to the arts, is located. It is the perfect place for William and he had chosen it himself. He watched the video and read the materials and he liked that they would let him set up his own schedule.
He was exuberant when we reached the camp. He just wanted to absorb it all and, within minutes he had gone off to audition for a play — we learned later that he made the part of Bloat, the puffer fish in Finding Nemo.
I’m told this is much harder for the parents than the children, and I suspect that is typically true. I remember when William was not even two years old… Mrs. Pundit coming back from his first “separation” class which transitions the children between Mommy & Me and pre-school and her reporting that he had been insultingly willing to separate.
The separation is probably harder today than it was for previous generations. We are just not accustomed to being out of touch any more.
Of course, good parents want their children to grow up to be independent and self-reliant. Indeed William’s Mom stayed home with Junior Pundit Segundo, aka Matthew, who just turned eight, in no small part because she would have cried as she said goodbye.
As all parents know, children do not come with instruction manuals, so all we can do is our best. As I got up to leave the Diner, I had finished drafting a letter to my son. I adapted it from a letter I had once sent to my oldest nephew as he went off to camp. This was the best I had to send him. I hope it will be good enough:
I have many very fond memories of my time away at sleepaway camp and know that, one day, you will have such memories as well.
I think what I liked best about summer camp was that it gives you a chance, far from most of the people who know you so well at home, to test out different aspects of your personality without being pigeonholed into some identity that has followed you around since kindergarten. Beyond that observation, since you will turn 10 years old in October, let me suggest 10 ideas for maximizing the value you get from this experience:
I would urge you to be open to people. It has been over 30 years since I went to summer camp, yet some of my closest friends were met there. When I went to a kind of mini-reunion, it was shocking how easy it was to be friends again with people I hadn’t spoken to in so long. You don’t know who is worth being true friends with if you aren’t open to learning their story.
I would urge you to be kind. You will find that some boys are cruel and they will make fun of a boy who is different in some way. There is a temptation to join in. In the long run, though, you will be more respected as one who has more constructive things to do with his time.
I would urge you to be a good confidante. Sleepaway camp is a time in which people learn how to deal with many things on their own. They can use a good friend who listens, will give advice and keep a secret.
I would urge you to admire achievement without expecting yourself to be equally good at everything. There will be great athletes… great musicians… guys who can tell a story and make everyone laugh… guys who attract girls. Watch everyone, learn all you can, don’t be afraid to give praise but remember you have your own skills and talents.
I would advise you to learn all you can. Every activity, even ones you don’t like or seem trivial, will one day prove useful. If they give you archery class, take it as if you were going to be an archer in an army. I guarantee you that one day you will shoot a bow and arrow again.
I would advise you to be the good person you are. Don’t lie, don’t cheat, and don’t steal. Be the guy who, when you are not there, nobody has a legitimate bad thing to say about you.
I would advise you to not shrink from difficult things. In the camp I attended, there was a very long walk to the dining hall and someone was always whining about it. Don’t be that guy. Beyond this, remember that accomplishment requires effort and the things that are easy are often the things you already know how to do. Very often true satisfaction comes through undertaking the difficult and, through practice, making it easy.
I would advise you to take time to appreciate the environment. There is a glory in nature and you should take a moment to marvel at the beautiful country in which you find yourself.
I would advise you to respect and learn from your counselors. I’m still friends with one of my counselors from when I was 12 years old.
I would advise you to appreciate the opportunity and make the most of it. Remember most young boys never get the opportunity to go to a place like French Woods. Count your blessings.
Beyond these specifics, I would hope you write to both your mother and me frequently as well as to your brother, your grandparents, uncles, aunts, cousins and friends from school. It is no small thing for a parent to send their oldest child off for the summer. Each time you tell us you are Okay, you will make our hearts calmer.
You are blessed with loving family and friends; you should remember to reciprocate that love. All your family and friends desperately hope you will want them to be a part of your life so every time you send a note and share an experience; it is like giving them a bouquet of flowers.
One final thought to you, William… to you, our brave young son off at camp for the first time: Do not be afraid, William. If you are ever sad or lonely, use the emotion to look deep into your soul and understand yourself better and know that, in time, you will be stronger because you went through the experience.
I hope some of this helps make the summer better. Though it is the reality of life that much of what you wish to accomplish, you must accomplish on your own, still, I hope you also know that now, and throughout our time together on this earth, if Mommy or I can ever help you in any way, you will always know you can turn to us.
Remember that wherever you go, no matter how distant your travels, you always have a home with us. A great poet named Robert Frost once defined home. He wrote:
“Home is the place where, when you have to go there,
They have to take you in.”
I remember the moment you were born and when the doctor placed you in my arms. I remember, in the hospital, typing my columns with one hand while I held you with the other because as long as I held you, you were happy, but if I put you down, you would certainly cry. Now, how proud I am that you are so independent. When we arrived at camp and you rushed off to audition, rushed off to achieve your goals, you made your father very proud.
I’m proud you can take care of yourself and proud that you care enough to try to take care of others. Make the most of every day; suck the very marrow from the bones of life. The Latin phrase is carpe diem — seize the day!
Oh, and, please, have a lot of fun!
So far we have received a few e-mails. William needs some more swim trunks and wants a Disco ball for a party they are going to have in the bunk. Those are on the way.
I like to think that at moments of decision, my letter will be with him as well. Or maybe, just the fact that I love him enough to write this letter will, in the end, give him enough security that he can grow up to fly free.