Shop Talk
Retailers, consumers and prices
Check Out Line: Luxury goods execs discuss global demand
Check out what executives at luxury retailers around the world are saying about consumer demand.
Early feedback from the Reuters Global Luxury Summit, which gathered top executives from Asia, Europe and the United States, sounds positive. Some executives even predicted that the sector will rebound this year after suffering during the weak economy.
Paris-based luxury fund SG Gestion, for instance, said watches and spirits are set for a solid comeback, with LVMH, Swatch and Richemont topping the list of companies with the biggest upside.
Meanwhile, sales at British luxury fashion brand Jaeger have grown strongly, helped by a booming online business that is set to double in size over three years. Italian fashion house Valentino is building up its business and Japanese upscale jeweler Mikimoto and Japanese cosmetics firm Shiseido are eyeing growth in China.
Luxury goods groups have been enjoying a strong rebound since January, but dark clouds remain as the European debt crisis is a threat to discretionary spending. Nevertheless, global luxury sales are expected to rise 4 percent this year after falling 8 percent last year, according to Bain & Co. For more stories from the United States, Europe and Asia, check out the summit web page.
This week also will provide another snapshot into the health of the U.S. economy as May retail same-store sales will be reported. The results are expected to be up, but spending is still seen as erratic.
Check Out Line: The latest bookseller boss shakeup
Check out the new guy in charge at Barnes & Noble.
On Thursday, Barnes & Noble named William Lynch, the (young) father of its Nook e-reader, as its new chief executive. Outgoing CEO Stephen Riggio — the chairman and founder’s brother — is sticking around as a vice chairman.
Barnes & Noble appears to be betting that the Nook will be a prime source of future growth. Lynch, 39, called e-books “key to our future” during a morning conference call.
Lynch’s appointment comes less than two months after smaller rival Borders saw its CEO leave after a year.
Also in the basket:
Check Out Line: Imitators vs the innovators
Check Out the ongoing battle between food makers and retailers.
As the recession crimps household budgets, retailers like Wal-Mart and Target are increasingly looking to woo shoppers with their own private label food items that often look very similar to name brand products but are sold at lower prices.
Wal-Mart is relaunching its Great Value private brand, adding more than 80 new products, like double-stuffed sandwich cookies and organic cage-free eggs.
Foodmakers are defending their turf, telling the Reuters Food and Agriculture Summit in Chicago this week that they are the ones who develop innovative new products and spend marketing dollars to draw shoppers into retailers’ stores.
But they acknowledged that retailers are giving them a run for their money, introducing better products at a faster pace and squeezing out tertiary brands in the process.
The question now looms as to whether retailers will make the leap from simply imitating name brand foods to innovating on their own.
Wesley Moultrie, a Fitch Ratings senior analyst, said it is in foodmakers’ best interest to lead the way with innovation.
Yes, I but as much store-brand items as possible. Certain products I have to have the name brand, because they really do have a distinct taste to them. but mostly I like to save the money 
Food shortage + financial crisis = bleak outlook
The global economic meltdown has the World Bank on high alert. As the financial crisis deepens, the World Bank is issuing even bleaker warnings about rising poverty and hunger in the developing world. Initially, it estimated that 46 million people in developing countries could be pushed into poverty. Now, that level is up another 7 million.
“We estimate that about 130 million people were pushed into poverty from the food crisis and if you add the financial crisis on top of that we are estimating that about 53 million more people could be pushed into poverty as a result of the financial crisis,” World Bank Managing Director Ngozi Okonjo-Iweala told the Reuters Food and Agriculture Summit. Children and women are being hardest hit, she said. The World Bank estimated that the current financial downturn may add between 200,000 and 400,000 additional infant deaths per year on average in the 2009 to 2015 period. That means a total of 1.4 million to 2.8 million more infant deaths, if the financial strain continues. “The one big piece we need to look at in this financial crisis and its translation into the food crisis is that we’re talking about human beings,” said Okonjo-Iweala. “Remember that 923 million people are malnourished the world over. When you talk about the financial crisis becoming an unemployment crisis in the developed world, in the developing world for many poor people it’s not an issue of unemployment, it’s an issue of life and death.” (Reuters photos of Ngozi Okonjo-Iweala, Jan. 2009/Girls waiting for drinking water in Kathmandu, March 2009)
Food safety worries? Join the club
Are you worried about the rash of high-profile and often deadly tainted-food scandals involving everything from peanut butter and chili peppers to spinach and baby formula?
You are not alone.
“When I heard peanut products were being contaminated earlier this year, I immediately thought of my 7-year-old daughter, Sasha, who has peanut butter sandwiches for lunch probably three times a week,” U.S. President Barack Obama said recently, referring to a salmonella outbreak that has made 683 people in 46 states sick, killed as many as nine and forced the recall of more than 3,000 products.
“No parent should have to worry that their child is going to get sick from their lunch,” said Obama, who is leading a charge to improve the U.S. food safety system.
Parties ranging from the CEO of cereal maker Kellogg to Rosa DeLauro, chairwoman of a House of Representatives Appropriations subcommittee that oversees the FDA, have joined the call for stricter oversight.
China will enact a new food-safety law on June 1aimed at preventing another massive health threat like last year’s melamine-tainted milk formula that killed at least six toddlers and made almost 300,000 sick.
But in a chilling reminder of the troubles in an increasingly global food chain, China’s Ministry of Health said in a document: “At present, China’s food-security situation remains grim with high risks and contradictions.”
from Summit Notebook:
Feeding America’s six degrees of separation
While the six degrees game is tied to Kevin Bacon, connections to other celebrities are helping a major charity.
Feeding America, formerly known as America's Second Harvest, has several celebrities on its entertainment council, including chairman David Arquette.
The actor, who volunteers at a Venice, California, food pantry twice a week, and wife Courteney Cox Arquette introduced Feeding America to Ben Silverman, the co-chairman of NBC Entertainment and NBC Universal Television Studio, President and CEO Vicki Escarra said at the Reuters Food and Agriculture Summit. One large way Feeding America has gotten its name out over the past few months is through its mentions on NBC's "The Biggest Loser" weight loss television show. Escarra said Feeding America met last week with Silverman "to see if there's a way that Feeding America can really be more involved in the properties of NBC." She said Silverman is now considering the idea.
Among many campaigns from corporations that highlight Feeding America is one that caught even Escarra by surprise. "We now have a really nice piece that I didn't even know we had. I was watching TV Sunday night and I saw this really beautiful Visa commercial," she said. Escarra also spoke about some upcoming campaigns. The Arquettes will appear in 40 magazines and on signs in U.S. post offices in April and May promoting the Letter Carriers' food drive. Last year, the drive collected 73 million pounds of food, according to Feeding America. And for Easter, along with the egg producers, Feeding America is doing an event in Hollywood. For every egg decorated by celebrities and their children, a tractor trailer full of eggs will go to a food bank.
(Reuters photo)
from Summit Notebook:
Sleek new look for Wal-Mart’s Great Value
Wal-Mart's Great Value private brand is getting a makeover just in time for its sweet sixteen.
Great Value, which first hit stores in 1993, is being relaunched with more than 80 new products and packaging that "pops" according to Andrea Thomas, who helped oversee the relaunch and spoke to the Reuters Food and Agriculture Summit in Chicago.
Want to take a look?
Here is a picture of Wal-Mart's Great Value broccoli, pulled from its website:
from Summit Notebook:
Recession? Not at Reckitt, really
The recession has hit U.S. consumers, yet Reckitt Benckiser has not felt as much of a pinch. The maker of Lysol disinfectants and Air Wick air fresheners said shoppers did not shy away from its products even as the overall household products industry felt the impact of pantry destocking, or consumers using up what they had at home rather than buying more products. Rob De Groot, head of the group's North America and Australia region, told the Reuters Food and Agriculture Summit in Chicago that he did not see a massive consumer destocking. Click here to hear his comments.
De Groot expects Reckitt's U.S. market share to rise this year, even as the overall market remains flat.
He added that the group had not seen any effect of the U.S. recession hitting its results. Click here for De Groot's thoughts.
Campbell Soup’s CEO steps up
Campbell Soup CEO Doug Conant, who spends his day selling soup, V8 vegetable juice and crackers, wrapped up his appearance at the Reuters Food Summit in Chicago with an exercise tip.
“Our lives are incredibly chaotic,” said the 57-year-old CEO, who says he has found an easy way to step up his exercise and burn off calories from some of his favorite foods, such as Campbell’s tomato rice soup and a grilled cheese sandwich made on his company’s Pepperidge Farm bread.
“My assistant looks for a free half hour every day,” said Conant, who is ready to lace up his sneakers when the moment is right.
“Conant says he can get in 3,000 steps or more in a half hour. Some studies suggest that 10,000 steps a day can help control weight. But even if you fall below that, experts say any amount of exercise is good.
“It’s a great way for busy people to get fit,” he said.
(Photos: Campbell Soup, Reuters)
Mr. Conant sets a pretty good example by moving around while eating soup. It is surprising that Campbell Soup has not capitalized on the obesity reducing properties of their (non dairy) soups. Soups are quite seasonable in the US and norther Europe, but in Asia soups are popular year round. The water in the soup fills people up and reduces their caloric consumption without thinking about it. Evidently all people eat based on weight and portion size cues as opposed to caloric density.
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