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    Published on: March 8, 2019

    by Kevin Coupe

    The New York Times reports this morning that the City of Philadelphia has passed legislation that will require retailers to take cash.

    According to the story, “Retail outlets that have stopped accepting cash say it is faster and easier for their employees to process digital payments. But critics say the practice discriminates against people without bank accounts or credit cards, or who simply prefer to pay cash.”

    The new law goes into effect on July 1. Fines can go as high as $2,000.

    The story points out that “the State of New Jersey and the cities of New York, San Francisco, Chicago and Washington are considering similar bills.” Just a few days ago, we reported here that in Atlanta’s Mercedes-Benz Stadium, home to the Atlanta Falcons, the concession stands no longer will take cash.

    However, the Times also notes that at least in Philadelphia, “many transactions will be exempt, including those at parking lots and garages; businesses that sell goods through a membership model; rentals that require security deposits; online, telephone or mail-in transactions; and goods sold exclusively to employees.”

    Which makes me wonder …

    My first reaction to this story was that Philadelphia has, for all intents, banned the opening of checkout-free stores such as Amazon Go. But maybe not, if Amazon were to argue that it has a kind of membership model for people who shop at its Go stores.

    It would be an interesting, and even Eye-Opening, test.
    KC's View:

    Published on: March 8, 2019

    Bloomberg reports that Amazon, “determined to boost profits at the core e-commerce business,” has stopped purchasing products from wholesalers and instead “is encouraging vendors to instead sell directly to consumers on its marketplace.”

    The story notes that “Amazon makes more money that way by offloading the cost of purchasing, storing and shipping products. Meanwhile, Amazon can charge suppliers for these services and take a commission on each transaction, which is much less risky than buying goods outright … Pushing more suppliers onto the marketplace is part of Amazon’s larger effort to reduce overhead by getting more suppliers to use an automated self-service system that requires no input from Amazon managers.”

    Bloomberg makes the point that the Amazon move puts many of its vendors in a potential hole. If they’ve been counting on Amazon purchasing merchandise that they already have ordered, they’ll now be faced with selling those items on Amazon’s Marketplace, which complicates their revenue situation.

    In what can only be called a semi-explanatory statement, Amazon said, “We regularly review our selling partner relationships and may make changes when we see an opportunity to provide customers with improved selection, value and convenience.”

    Digiday points out that the change came as a surprise to many vendors when they “tens of thousands” of them “didn’t receive their weekly purchase order replenishments from the retailer.”

    And, Digiday goes on: “Essentially, Amazon wants as much of its retail business to be as hands-off as possible. That means maximizing volume for its third-party marketplace, which is already growing faster than Amazon’s retail business. There, sellers can set up a direct business, monitor dashboards and use tools like Fulfilled by Amazon to enable Prime distribution.

    “While Amazon does pitch account managers to sellers, they charge a monthly retainer for the service. Seller Central has become favored by some vendors because sellers are able to set their own prices, avoiding pricing wars and undercutting, but Amazon has recently begun rolling out measures to exercise control over seller prices. For example, it’s begun to set a maximum retail price for every product.”
    KC's View:
    There doesn’t seem to be much debate about the likelihood that this is going to make life tough for many of Amazon’s vendors, who are doing a lot of business on its site and now find themselves in financially tenuous territory. It certainly sounds to me like Amazon is flexing its muscle … the question is whether it is doing so because it can, or because, for some reason, it has to.

    Actually, there are more important questions: How will this impact Amazon’s customers? Will it make products harder to get in a timely fashion? Will it result in more out-of-stocks? Will Amazon’s long tail get a little bit shorter?

    I’m not sure how cognizant most shoppers are about where the products they buy on Amazon are coming from, but they will notice if Amazon’s value proposition narrows at all.

    Published on: March 8, 2019

    Business Insider has a piece about Greg Foran, the Walmart US CEO, noting that he told a UBS Global Consumer and Retail Conference this week that “shoppers will soon be able to return purchases without walking more than a few steps inside a store,” an innovation that will help customers avoid long and annoying waits to return items at service counters.

    The story says that “employees called ‘customer hosts’ will soon have the power to process returns and issue refunds at store entrances.” Foran said that “the customer host will have the technology to do a refund for you right there, including cash.”

    The Business Insider story also offers a number of quotes from his appearance:

    • “There was a period in time when Walmart was David and Sears and Kmart were Goliath. And it's always fun being David. Everyone loves David. No one likes Goliath … We woke up at some point in 2000 and whatever and found out we were Goliath. And when you are Goliath you find that there are other Davids that start throwing stones at you and you've got to learn to deal with that. If you become immobile, you just end up taking a lot of hits.”

    • “This concept of the store being more than just a good store but being a fulfillment center feels like a pretty safe bet … So place your bets where you know you've got it right. Put a foot in the water on some of the other things, and let's test and learn. And some of the others, maybe you just sit back and wait and see.”

    • “When we heard that Lidl were coming, trust me, what a galvanizing moment for the eastern seaboard for Walmart. We just got people fired up — North Carolina and South Carolina and Virginia — and said we're going to take the battle."

    • “I love competing and I think competition makes us better … It galvanizes an organization into doing something. So I like it. Bring it on.”
    KC's View:
    Love the idea that returns can be taken at the front door. I don’t go into Walmart that often, but there always seems to be a line at the service counter. It is very smart to cast an appraising eye on the store and look for the pain points … and then do something about them.

    Published on: March 8, 2019

    Kroger yesterday announced its annual and fourth quarter results, with the general consensus that its hundreds of millions of dollars in investment in various e-commerce initiatives have not yet begun to bear fruit.

    Q4 total sales decreased 9.5% to $28.1 billion in the fourth quarter compared to $31.0 billion for the same period last year, for example, as fourth quarter net income of $259 million was down from $854 million a year earlier.

    For the total year, sales decreased 1.2% to $121.2 billion in 2018 compared to $122.7 billion in 2017.  Adjusted net earnings totaled $1.75 billion, down from $1.78 billion a year earlier.

    The good news - digital sales for the year were up 58 percent, as the company expanded pickup or delivery services to reach 91 percent of Kroger households; in addition, Kroger said that it “achieved over $1 billion in cost savings through process improvements.”

    In a statement, chairman/CEO Rodney McMullen said that “Kroger solidly delivered on what we set out to do in 2018, which was an investment year that laid the groundwork for us to achieve our 2020 Restock Kroger targets including financials … As America’s grocer, Kroger has the winning combination of local presence plus a digital ecosystem enhanced by strategic partnerships enabling us to offer our customers anything, anytime, anywhere. We are transforming from grocer to growth company by deploying our assets to serve even more customers and create margin-rich alternative profit streams. We are well positioned to deliver on our Restock Kroger vision to serve America through food inspiration and uplift.”
    KC's View:
    Takes time and patience to rejigger an entire system for new competitive realities. In the end, if Kroger can take better care of its customers, things will be fine.

    Published on: March 8, 2019

    The Axios/Harris poll that evaluates and ranks the reputations of the most visible companies in the United States. is out, and Wegmans is at the top of the list, supplanting Amazon, which has slipped to number two.

    The balance of the top 10 spots are taken up by, in order, Patagonia, LL Bean, Disney, Publix, Samsung, Procter & Gamble, Microsoft, and Sony.

    Other retailers on the list include Home Depot (#12), Costco (#18), Lowe’s (#20), Kroger (#21), Aldi (#23), Ikea (#26), Best Buy (#34), Walgreens (#40), Nordstrom (#46), CVS (#48), and Starbucks (#59).
    KC's View:
    Y’think the folks at Wegmans ever get tired of always being ranked so high in virtually every survey or study where its name comes up?

    Published on: March 8, 2019

    The Food Marketing Institute (FMI) is out with its 2019 Power of Produce analysis, suggesting that while “produce is a big, profitable focus for food retailers,” the reality is that “the produce purchase is losing momentum to other channels, and younger shoppers are catalysts for this shift.”

    According to the report, “Fifty-five percent of grocery trips contain fresh produce, and half of all shoppers identified a full-service supermarket as their primary outlet when buying fresh produce. While traditional grocery maintains a dominant lead in sales, a younger generation shows a greater propensity for supercenters and alternative channels, including online, dollar stores, convenience stores and farmers’ markets. In fact, only 34 percent of older Millennials identified a supermarket as their primary grocery store for produce.”

    Among its observations:

    • “Fifty-three percent of survey respondents want expanded local assortment. However, the very definition of local has a wide range, with the average response being an 88-mile radius, so retailers will need to develop their own consistent and store-wide definition of local.”

    • “Value-added produce – cut, chopped, halved, hearts, microwave-ready or even snack packs – delivers myriad solutions for time starved customers. In fact, shoppers could be prompted to buy value-added produce under certain conditions, such as competitive pricing (59 percent) and longer shelf life (35 percent).”

    • “This year’s analysis notes there’s room for growth in consumption occasions, since 36 percent of shoppers eat fresh produce about three times a week or less, and they’re interested in incorporating produce into different meal occasions. Most notably, 56 percent of shoppers report purchasing veggie shakes or fruit smoothies and 53 percent purchase cold press juices.”
    KC's View:

    Published on: March 8, 2019

    • Nielsen yesterday announced that it is working with Headset, described as “the leading data & analytics service provider for the legal cannabis industry,” to form “a U.S.-specific strategic alliance to deliver a read into the U.S. legal cannabis market for consumer packaged goods (CPG) companies. This move comes as Nielsen steadily develops a full suite of cannabis measurement capabilities, inclusive of strategic partnerships and beyond, to help CPG companies monitor the evolution of the legal cannabis space, and the potential impact of legal cannabis sales to better mitigate threats and identify future opportunities.”
    KC's View:

    Published on: March 8, 2019

    Remember ... for most of us in the US, this weekend marks the end of Standard Time and a blessed return (IMHO) to Daylight Savings Time. On Sunday, March 10, at 2 am, it will be time to turn your clocks forward an hour. (Assuming, of course, you actually have clocks that require manual changing.)
    KC's View:

    Published on: March 8, 2019

    …will return next week.
    KC's View:

    Published on: March 8, 2019

    I’m not the biggest comic book movie fan, but I must admit to being impressed by the degree to which the Marvel folks have managed to not just make an amazingly consistent series of entertaining, profitable movies featuring such iconic characters as Iron Man, Captain American, Thor, Hulk, Black Panther, etc… Even though in the end many of them get pretty silly, the movies tend to be well directed and acted, with as strong an emphasis on character as one can expect in the genre. And, unlike most of the DC movies, they tend not to be dour, which is a huge advantage.

    This weekend, the Marvel ecosystem gets a new character, its first real female superhero, in Captain Marvel. While I must admit that the first half hour had me completely confused - maybe I’m just not familiar enough with the comic book source material - Captain Marvel actually manages to be a diverting piece of fantasy mixed with science fiction.

    Most of this is due to a terrific, tongue-in-cheek performance in the title role by Brie Larson, who manages to simultaneously take her character seriously while sort of luxuriating in the silliness of it all. Most of all, it is because she seems to be having so much fun … she is the very model of the ultimately empowered woman, and she’s enjoying every minute of it.

    Supporting her as Nick Fury - a part he has played in a bunch of other Marvel movies - is Samuel L. Jackson, with the difference being that he’s been digitally upgraded to look like he’s in his thirties; if this works out, Jackson may get to have his career all over again. He’s clearly enjoying himself, playing a less hardened and cynical version of Fury.

    It is all good fun, and it sets up Captain Marvel’s appearance in the upcoming Avengers: End Game, where it would appear that she’s going to be a game-changer for the franchise. If I were Thanos (the big bad guy in End Game), I might be a little concerned…

    It was sad to read this morning that Tom Seaver, 74, one of the best pitchers ever in baseball and a major part of New York Mets history, has been diagnosed with advanced dementia.

    His family released the following statement: “Tom will continue to work in his beloved vineyard at his California home, but has chosen to completely retire from public life … The family is deeply appreciative of those who have supported Tom throughout his career, on and off the field, and who do so now by honoring his request for privacy.”

    Seaver will not attend this summer’s 50th anniversary of the Mets team that won the 1969 World Series. But he will be in everybody’s hearts.

    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    KC's View: