7-Eleven looks to expand

(The Asbury Park Press) Where you might see an empty store, convenience store chain 7-Eleven sees opportunity (Click HERE for full story.)

Safeway 1st Grocer to be founding member of The Sustainability Consortium
(Progressive Grocer) Safeway, Inc. yesterday became the first U.S.-based retail grocery chain and manufacturer of private label merchandise to join The Sustainability Consortium, a science-based group of companies working to develop a more sustainable global supply chain. (Click HERE for full story.)

App Watch, New York Edition: Fresh Direct
(The Wall Street Journal) Since online grocer Fresh Direct opened in 2002, many New Yorkers have grown accustomed to ordering their groceries from their computer. Now, with the company’s new app, customers can also order from their iPhone.

The app is for current customers only; non-customers who download the app will be prompted to go to the Web site. That’s for the best, because the app’s big selling point lies in its ability to suggest items based on previous buys. The app’s first screen highlights earlier orders, special deals and a scrolling list of “favorites.” (This blogger apparently has a penchant for milk, chocolate pudding and … fennel. Strange but true.)

Fresh Direct CEO Rick Braddock says the company’s database — it tracks every purchase a customer has ever made — provides one of the biggest benefits of online shopping as compared with a traditional store. “We’re using the customer’s own shopping behavior to give them a better experience,” he said.

As with the Web site, the app includes ratings of perishable goods such as fruits and vegetables and highlights the products that raters have deemed best for delivery the next day. The items are rated on a scale from one to five stars, and Mr. Braddock says the rating system has solved one of the biggest hurdles the company faced — getting people to order food without seeing it first. The company, which has filled more than 10 million orders since 2002, says that more than 60% of customers use these ratings when making decisions.

There are some features of the Web site that aren’t available in the app. Most noticeable is the lack of a browsing menu. On the site, people looking for, say, Fresh Direct’s microwave meals might go to the “Heat & Eat” section and browse. On the phone, there is no such section, and searching for “heat and eat” or “four-minute meals” gets you nowhere, although specific meals can be found using keywords. Fresh Direct’s executives tout the time-saving benefits of a system that knows what you typically shop for, but there’s still something to be said for a bit of browsing.

All in all, the Fresh Direct app is a helpful addition for those who order from the company. It might not replace the Web-based ordering system for everyone, but it is particularly useful for those times when you realize you’ve forgotten an item but aren’t near a computer.

The app, which was developed by Schematic, was planned after Fresh Direct found that about half of its customers use the iPhone. Dean Marano, Fresh Direct’s chief information officer, said the company did not seriously look at developing a BlackBerry app. “The experience just isn’t there, because of the feel of it,” he said. Still, Fresh Direct is considering expanding beyond the Apple platform — to Android.

Farm Fresh president Ron Dennis to retire

(Daily Press) The grocery business was a lot simpler more than 50 years ago, when Farm Fresh president Ron Dennis started in the business. (Click HERE for full story.)

Digital coupon redemption value beats newspapers
(MediaPost) According to statistics from Coupons.com, the Grocery iQ smartphone app grew 170% in value during 2009 to more than $858 million. (Click HERE for full story.)

Navarro drugstore chain ready for a face-off with competitors
(The Miami Herald) Navarro Discount Pharmacies wants to be known as more than just the store where abuelita shops. (Click HERE for full story.)

Hhgregg: Making its move into local electronics market
(The Roanoke Times) In the retail world of laptops, flat-panel televisions and shiny, stainless steel refrigerators, Hhgregg may be considered a small player by some standards. (Click HERE for full story.)

Inside Eddie Lampert's Brain: His plan to make Sears both bigger and smaller

(bnet.com) Eddie Lampert says less is more when it comes to Sears. (Click HERE for full story.)

Today's AM Edition

Nestlé hopes to spread Wonka magic to high end

Giant-Landover/Stop & Shop Roll Out Online Community for Moms

(Progressive Grocer) Ahold USA divisions Giant-Landover and Stop & Shop have launched www.smallvictories.com, an online community for moms. Celebrating the little wins that make a difference in moms’ everyday lives, the site will be updated daily with such new content as recipes, money-saving advice and survival tips from fellow moms. (Click HERE for full story.)

Wal-Mart unveils plan to make supply chain greener

(The New York Times) Wal-Mart, the nation’s largest retailer, announced on Thursday that it would cut some 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015 — the equivalent of removing more than 3.8 million cars from the road for a year. (Click HERE for full story.)

Ex-Chief of Kmart ordered to pay a $10 million fine

(The New York Times) A federal judge ordered a former chief executive of the Kmart Corporation, Charles Conaway, to pay more than $10 million for misleading shareholders about the retailer’s prospects before its 2002 bankruptcy. (Click HERE for full story.)

Bashas' amends reorganization plan

(Phoenix Business Journal) Bashas’ Inc. filed an amended bankruptcy plan on Thursday that lays out how the company plans to pay back creditors. (Click HERE for full story.)

On the call: Safeway CEO Steve Burd
(The Associated Press) During the tough economic times, many consumers cut back on discretionary purchases and traded down to less-expensive items when they went shopping. Safeway Inc. was among the retailers that saw that behavior impact their bottom line. (Click HERE for full story.)

Food sellers signal weak recovery

(The Wall Street Journal) The weak recovery rippled through the food chain Thursday as ketchup maker H.J. Heinz Co. said it was able to raise prices 1.8% in its latest quarter while supermarket giant Safeway Inc. said it ended a recession-fueled cost-cutting campaign.

After a year of recession-weary consumers rejecting higher food prices, which battered the bottom lines of grocers, Steve Burd, Safeway chairman and chief executive officer, said during an earnings call with Wall Street analysts Thursday that the nation's third-largest food retailer expects to see "moderate inflation" in 2010.

"There is a dramatic change in deflation that has already occurred between the fourth quarter and the first quarter," said Mr. Burd, who didn't offer a precise inflation forecast.

But any shift in the willingness of consumers to swallow higher prices came too late to help Safeway's fiscal fourth quarter ended Jan. 2, when its same-store sales plunged 4.1%, as cautious consumers coped with a stubbornly high unemployment rate.

It's far from clear how much more consumers are willing to spend. Pittsburgh-based Heinz warned analysts that it will likely have to lean heavily on promotions, discounts and advertising to stop the defection of consumers to cheaper, private-label brands. "This is a tough environment, there's no doubt about it," said Art Winkleblack, Heinz's chief financial officer.

The federal government's Consumer Price Index for food at home—or grocery store prices—climbed just 0.5% in 2009 compared to 6.4% in 2008, when a commodity price spiral lifted retail food prices at their fastest rate since 1990.

Until 2008, a generation of food executives had grown accustomed to operating in an environment in which retail food prices climbed between 2% and 3% annually, big enough to allow them to pass along rising labor, packaging and commodity costs.

Pressure is building on food manufacturers to raise prices in part because their costs of everything from milk, meat, sugar and petroleum-based packaging is expected to climb this year. If food companies are able to pass along their higher costs, retail food prices will climb between 2.5% and 4% this year, according to a range of estimates by economists. If consumers resist higher prices, however, the food sector will struggle.

Heinz said Thursday that income for its fiscal third quarter ended Jan. 27 sank nearly 6% to about $229 million, which reflects the sale of two businesses. However, profit from continuing operations rose 9% to 83 cents a share in part because the company was able to raise prices.

Quarterly sales climbed nearly 13% to $2.7 billion, while sales excluding currency changes and acquisitions and divestitures grew 3%. In addition to raising its prices, Heinz increased its overall spending on marketing during the quarter by 41% to $111 million.

The increased marketing and promotional spending helped boost the overall volume of food Heinz sold in the quarter by 1.2%, after it had fallen 6.2% in the year-ago quarter. The Pittsburgh company said it expects its marketing budget in the current quarter to grow about 50% from the same quarter last year.

Safeway, based in Pleasanton, Calif., said its fourth quarter profit, excluding the $1.6 billion write down of its Vons division and stores on the East Coast, sank 38% to $209.1 million, or 53 cents per share, compared to the year-ago quarter's $338 million, or 79 cents per share. Fourth-quarter sales dropped 8.1% to $12.7 billion.

Supermarket chains such as Safeway were hit hard in 2009 by intensive price wars over products such as milk, cheese and fresh produce. "In the 17 years I've been in this business, the kind of deflation that we've experienced in the fourth quarter, it's unprecedented. It's never happened," said Mr. Burd, the Safeway CEO.

Diamond Foods to acquire Kettle
(The Wall Street Journal) Diamond Foods Inc. said Thursday it has agreed to acquire Kettle Foods from Lion Capital LLP for $615 million, a move that gives the snack-nuts producer a much bigger bite of the premium potato-chip market.

The Stockton, Calif., company also reported strong profit and sales for its fiscal second quarter and an upbeat forecast.

"By adding Kettle, including its talented team of employees, our snack business will have greater scale, which will help us to drive even greater innovation in the snack market," said Michael J. Mendes, Diamond Foods' chairman and chief executive.

The addition of Kettle Foods, based in Salem, Ore., will more than double the size of Diamond's snack business, enabling cross-promotional opportunities with Diamond's Emerald and Pop Secret brands