Archive for March 12th, 2009

Uh-oh … Obama & Geithner get failing grades from economists

March 12, 2009

Ken’s Take: Pres. Obama frequently cites broadscale support from economists.  Let’s see if that line keeps rolling off the teleprompter.

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Excerpted from WSJ, ” Obama & Geithner Get Low Grades From Economists”, March 12, 2009

In stark contrast with Pres. Obama’s popularity with the public, he and Treasury Secretary Geithner received failing grades for their efforts to revive the economy from participants in the latest WSJ survey.

A majority of the economists polled said they were dissatisfied with the administration’s economic policies.

On average, they gave the president a grade of 59 out of 100, and  42% of respondents rated Mr. Obama below 60.

Mr. Geithner received an average grade of 51. Federal Reserve Chairman Ben Bernanke scored better, with an average 71.

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Economists’ main criticism of the Obama team centered on delays in enacting key parts of plans to rescue banks. “They overpromised and underdelivered … The uncertainty is hanging over everyone’s head.”

The economists’ negative ratings mark a turnaround in opinion. In December, before Mr. Obama took office, three-quarters of respondents said the incoming administration’s economic team was better than the departing Bush team. However, Mr. Geithner’s latest marks are lower than the average grade of 57 that former Treasury Secretary Henry Paulson received in January.

Despite the growing criticism elsewhere, the respondents were broadly supportive of the Fed. More than 85% of the economists agreed that the central bank’s proliferating lending programs are well-designed, well-executed and helping the economy. And while grades for Mr. Bernanke remain off of their 2007 highs, the average has stabilized after falling as low as 69 in the November survey.

Amid all the gloom, there is a bright spot: Four-fifths of the economists said now is a good time to buy equities, especially if the investor has a long-term view.

Full article and source data:
http://online.wsj.com/article/SB123671107124286261.html#mod=testMod

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Posted in Economics, Financial Crisis, Obama Administration | Leave a Comment »

It’s payday … and I’ve got a deal for you.

March 12, 2009

Ken’s Take:

(1) Surprised this is new news to consumer goods companies. 

(2) Wouldn’t want to be around a cash strapped senior at the end of the month.  Keep reading to find out why 

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Excerpted from WSJ, “Consumer-Goods Makers Heed ‘Paycheck Cycle'” By Anjali Cordeiro, Feb 23, 2009

Makers of household goods and food are paying more attention to the “paycheck cycle” as cash-strapped consumers are showing a tendency to make their largest purchases when their salaries first come in and to cut back as that money runs out.

With more consumers living from paycheck to paycheck, some companies have looked at ways to time their promotions around periods when consumers’ wallets are likely to be well cushioned.

PepsiCo Inc.’s Frito-Lay … has tried “promotions that are different at the beginning of the month than at the end of the month,” CFO Richard Goodman said in a recent interview. “People have more money to spend at the beginning [of the month] and a little less at the end,” he said.

The insight to promote around paychecks came from one of the company’s retailers … That retailer noticed “the strength of the first of the month compared to weakness at the end of the month as people were simply running out of cash” … Early in the month the food and beverage maker started promoting large “multipacks” of snacks sold in the range of $5.98 to $6.98, while near the end of the month it pushed smaller packs that sold for less than $2 … The company’s direct store delivery system, which delivers products directly to retail store shelves, gives it more flexibility on merchandising and promotions.

Consumer purchases can be driven by a paycheck cycle in good times and bad. But the cycle has been heightened in the midst of the U.S. recession and global slowdown. Reaching consumers at the right time and stocking store shelves with the right package size can be key for makers of branded consumer goods …

Kimberly-Clark has watched the paycheck cycle “to make sure we understand it so we have the right things in stock” … The company has seen volume spikes in the first week of the month in its Depend incontinence products business, which is used a lot by senior citizens, who get Social Security checks around that time.

“We want to make sure we’ve got extra inventory, displays set up so we don’t run out of stock at retail … It’s just an understanding of how the consumer wants to buy, so they’ve got the right mix of goods at retail so they are not disappointed.” Consumers have been picking smaller pack sizes rather than the big bundle packs later in the month …

As consumer companies gathered last week at one of the industry’s largest annual conferences, the theme of offering consumers better “value” took center stage. Most consumer makers aren’t cutting list prices for their brands, so finding ways to help consumers stretch paychecks is key. Some companies are rejiggering products to keep prices down and push the value concept …

Heinz is offering consumers larger ketchup bottles that sell at smaller price gaps to private label in the U.S. Meanwhile, Frito-Lay in North America will begin adding 20% more product to take-home bags of its corn-based Tostitos, Fritos, Cheetos and Doritos without increasing the price.

Edit By SAC

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Full Article:
http://online.wsj.com/article/SB123535246479645145.html

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Posted in Mktg - Consumer Behavior, Mktg - Promotion | Leave a Comment »

Unilver Plays Hardball and Gets Axe'd …

March 12, 2009

Excerpted from WSJ, “Big Grocer Pulls Unilever Items Over Pricing” By C. Rohwedder, A. Patrick, and T. Martin, Feb 11, 2009

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A big grocery chain has removed from its Belgian stores about 300 Unilever products that it says are priced too high, a sign of mounting tension between retailers and suppliers as the recession grinds on. The move by Brussles-based Delhaize SA comes just days after Unilever reported strong fourth-quarter profit that was driven in large part by its ability to command big price increases despite the ailing economy.

The banished products include everything from Dove soap and Axe deodorant to a jam brand called Effi … The stare-down shows how fraught relations between retailers and their suppliers are becoming amid the severe slump in consumer spending. Grocery stores across the globe are putting growing pressure on food and drink companies to lower prices or to offer other more favorable terms … Meanwhile, consumer-goods companies such as Unilever are struggling with a drop in demand from stores whose customers are trading down to cheaper private-label brands …

Delhaize says its conflict with Unilever is rooted in the supplier’s effort to push a broad range of goods into its stores, including some that the grocer says it would prefer not to stock because they are unpopular. If the supermarket doesn’t buy the whole range of products Unilever has threatened to raise prices by an average of 30% for the remaining items …

Unilever wants Delhaize to promise it won’t stop selling Unilever products without consulting the company first, Unilever spokeswoman says. The Anglo-Dutch consumer-goods giant wants to increase prices for Delhaize by an average 2.5% … Delhaize is the only large retailer in Belgium that hasn’t agreed to a price rise this year, she says.

Unilever managed to push through steep price increases in 2008 even though the economic crisis drove down the prices of many commodities. In the fourth quarter, its prices rose more than 9% world-wide. But the company could be about to change strategy. A new chief executive, Paul Polman, said that Unilever will now concentrate on increasing the volume of items it sells, suggesting he may moderate future price increases.

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Last month, the chief executive of British retailer Tesco PLC, urged suppliers to pass on to stores the recent drops in commodity and oil prices. “These lower prices need to be fed into the supply chain and passed on to consumers who are under growing financial pressure” … 

Deborah Weinswig, an analyst for Citi believes Wal-Mart’s plans to freshen up its Great Value brand will trigger more price cutting on the national brands sold at Wal-Mart. And if Wal-Mart reduces its national-brand prices, “I think the food retailers will have to follow or they will be at risk of losing market share,” she says.

SuperValu Chairman said during an earnings call last month that the 2009 first half would be a “battle ground” with manufacturers over price. Kroger declined to comment, but Chairman David Dillon said in a conference call on third-quarter earnings that Kroger’s strong private-label program, which accounted for 27% of third-quarter sales, gives the grocer leverage when suppliers approach it about a cost increase.

If national brands won’t lower prices, he added, the store’s private labels “will just pick up even more market share than we have already” …

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123430797027570341.html

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Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Mktg - Distribution, Mktg - Pricing, Retailing | Leave a Comment »

Unilver Plays Hardball and Gets Axe’d …

March 12, 2009

Excerpted from WSJ, “Big Grocer Pulls Unilever Items Over Pricing” By C. Rohwedder, A. Patrick, and T. Martin, Feb 11, 2009

* * * * *

A big grocery chain has removed from its Belgian stores about 300 Unilever products that it says are priced too high, a sign of mounting tension between retailers and suppliers as the recession grinds on. The move by Brussles-based Delhaize SA comes just days after Unilever reported strong fourth-quarter profit that was driven in large part by its ability to command big price increases despite the ailing economy.

The banished products include everything from Dove soap and Axe deodorant to a jam brand called Effi … The stare-down shows how fraught relations between retailers and their suppliers are becoming amid the severe slump in consumer spending. Grocery stores across the globe are putting growing pressure on food and drink companies to lower prices or to offer other more favorable terms … Meanwhile, consumer-goods companies such as Unilever are struggling with a drop in demand from stores whose customers are trading down to cheaper private-label brands …

Delhaize says its conflict with Unilever is rooted in the supplier’s effort to push a broad range of goods into its stores, including some that the grocer says it would prefer not to stock because they are unpopular. If the supermarket doesn’t buy the whole range of products Unilever has threatened to raise prices by an average of 30% for the remaining items …

Unilever wants Delhaize to promise it won’t stop selling Unilever products without consulting the company first, Unilever spokeswoman says. The Anglo-Dutch consumer-goods giant wants to increase prices for Delhaize by an average 2.5% … Delhaize is the only large retailer in Belgium that hasn’t agreed to a price rise this year, she says.

Unilever managed to push through steep price increases in 2008 even though the economic crisis drove down the prices of many commodities. In the fourth quarter, its prices rose more than 9% world-wide. But the company could be about to change strategy. A new chief executive, Paul Polman, said that Unilever will now concentrate on increasing the volume of items it sells, suggesting he may moderate future price increases.

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Last month, the chief executive of British retailer Tesco PLC, urged suppliers to pass on to stores the recent drops in commodity and oil prices. “These lower prices need to be fed into the supply chain and passed on to consumers who are under growing financial pressure” … 

Deborah Weinswig, an analyst for Citi believes Wal-Mart’s plans to freshen up its Great Value brand will trigger more price cutting on the national brands sold at Wal-Mart. And if Wal-Mart reduces its national-brand prices, “I think the food retailers will have to follow or they will be at risk of losing market share,” she says.

SuperValu Chairman said during an earnings call last month that the 2009 first half would be a “battle ground” with manufacturers over price. Kroger declined to comment, but Chairman David Dillon said in a conference call on third-quarter earnings that Kroger’s strong private-label program, which accounted for 27% of third-quarter sales, gives the grocer leverage when suppliers approach it about a cost increase.

If national brands won’t lower prices, he added, the store’s private labels “will just pick up even more market share than we have already” …

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123430797027570341.html

* * * * *

Want more from the Homa Files?
Click link => The Homa Files Blog

Posted in Mktg - Distribution, Mktg - Pricing, Retailing | Leave a Comment »