business news in context, analysis with attitude

Published on: October 15, 2019

by Michael Sansolo

The very smart folks at the Institute for the Future have a fascinating way of presenting potential future trends. They create “artifacts from the future” as if an archeologist centuries from now was looking back on our time or our near future and finding relics from our age.

In that spirit I want to offer us a story about future shopping that highlights the degree to which things are changing, and the breakneck speed at which these changes are taking place.

The son of a friend of mine (his name, nicely, is Michael) recently got married and headed off to Disney World to start his honeymoon before moving on to a Caribbean island. At Disney World, Michael, as is his way, started collecting souvenirs to the point that he needed an extra suitcase.

He went to a shop at Disney World where a standard suitcase was priced at around $300 and he knew he needed another way. When he asked me what I thought he did, I speculated that he summoned Uber, went to Costco, Walmart or Target and bought a suitcase.

Apparently, I am much older than I think.

No, he said. He told me that he pulled out his phone, went on Amazon and ordered a suitcase and had it shipped to his hotel. In two short days, and at a vastly cheaper price than Disney World was charging, he had the new suitcase. It's actually more impressive than that - because in that time Amazon shipped him the wrong suitcase, and after he notified him of that fact, they shipped him the one he was supposed to have gotten in the first place.

Two days. Think about that for a moment.

Here’s what I think we all need learn from Michael and his suitcase. First, Michael is 29 and what he did clearly fit the shopping pattern of his generation. For his entire adult experience he has learned that any problem can be solved with just a smart phone in just a few seconds. Plus, he knows there is always someone who will solve that problem for him.

In fact, it is more than the fact that he knows these things. He expects these things. Which creates an enormous challenge - and opportunity - for anyone who wants Michael and the rest of his generation as a customer.

I think his purchase also demonstrates how little location matters anymore as a competitive advantage. There are few environments in the world more insular than Disney World. As any parent can tell you, when you are enjoying the magic you also know that everything is going to cost you. When your kid wants an ice cream or a drink, you can get it, but it will cost because there is no competitive alternative in the Magic Kingdom.

But even Disney’s borders cannot repel an invader like Amazon. So if you need a suitcase, you can get it.

I was curious how far this would go, and found that with just a few keystrokes, I was able to buy a complete “Elsa, Ice Queen” ensemble (complete with gloves and tiara) on line for under $25. Thankfully I don’t think I have to buy one of these anytime soon, but I’d be willing to bet it costs a lot more than that at Disney.

It’s a stark reminder that traditional retail strengths aren’t enough in this new world with new shoppers like Michael. And there is no magic sufficient to bring back what some might say were the good old days.

Like it or not, Michael and all those Michaels out there are in charge and they know where to go to get exactly what they want, where they want it, when they want it - and for a price that they - not the retailer - think is appropriate.

Fantasyland? Nope. This is Realityland, folks.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.

Published on: October 15, 2019

by Kevin Coupe

National Public Radio's Marketplace has a story about how, "according to an analysis of U.S. Census Bureau data, roughly 37% of Californians between 18 and 34 live with their parents." In fact, in one "expensive part of Orange County, 55% of 18 to 34-year olds live with a parent, one of the highest rates in the state."

It isn't just California, of course.

There are a lot of factors that go into the increased numbers of adults who are living with their parents. High housing costs is one.

“Increasing housing costs make it harder for young people to launch,” Jessica Hardie, a professor of sociology at Hunter College in New York who studies family living arrangements, tells Marketplace.

But there's also the crushing student debt with which many of these adults are dealing, which takes up an inordinate amount of their income.

At a time when people are waiting longer to get married and have children, which usually means having fewer of them, all this adds up to a generation that not only has less money to spend at retail, but in all likelihood different priorities when looking to buy something.

One interesting piece from the Marketplace story is a note from experts who say that when married couples move in with their parents, it doesn't just have an impact on their wallets. Because they're just down the hall from mom and dad, it also means that they're having less sex. Which may end up meaning fewer children. And different shopping priorities.

The overarching trend, I think, is one to which retailers and their suppliers need to pay attention, because it suggests a generational portrait that will be very different, and require different things of the companies that want to do business with these people.

In other words, an Eye-Opener.

Published on: October 15, 2019

Bloomberg reports that Walmart is investing in its ongoing price war with Amazon, essentially subsidizing the third party vendors listing products on its marketplace site so they can undercut Amazon's prices and yet maintain their margins.

According to the story, Walmart "introduced a program to temporarily lower the price consumers pay for some items on its marketplace site, where third-party vendors pay Walmart a fee to list their goods. The merchants selling on the site, however, will still be paid the same amount that was listed before the cuts, with Walmart subsidizing the difference."

Bloomberg goes on: "The move appears to be a response to a program Amazon rolled out over the summer where the e-commerce giant has full control to set prices of third-party products sold on its marketplace -- in return for a minimum payout. Amazon has also come under scrutiny for increasingly leaning on vendors to ensure that their products aren’t offered for a lower price on Walmart.com or any other rival website."

Published on: October 15, 2019

Bloomberg reports that a new study from the United Nations' Food and Agriculture Organization says that "the world loses about $400 billion of food before it even gets delivered to stores," which means that "some 14% of all food produced is lost annually, with central and southern Asia, North America and Europe accounting for the biggest shares."

The story points out that "food wastage is drawing increased scrutiny because of the contribution to greenhouse gas emissions and as more than 820 million people are estimated to go hungry each day. World leaders have pledged to try to halve global food waste at retail and consumer levels by 2030 and reduce food production losses. Companies are also trying to improve efficiency in the food industry." The study says that "better cold storage and infrastructure would help reduce losses," but that much more research needs to be done if governments and corporations are to deal with the problem effectively.

Published on: October 15, 2019

Really good story on Vox about how Amazon recently "has removed several barriers that previously made it difficult for customers to purchase a single sub-$5 item on its own. The result is a flood of low-priced items — a $2 roll of dental floss or a 75-cent makeup brush — made available to Prime customers with free one-day shipping."

Such items used to be add-ons - you had to buy such things as part of a larger order, and there was a minimum purchase. The rationale was that it didn't make sense for Amazon to be offer free shipping to Prime members on items that were less expensive than the shipping costs.

But no longer. Or, at least, less often.

"The changes could have huge ramifications for retailers like Target or CVS, where one-off purchases of consumer packaged goods are common," Vox writes, adding that "the combination of these changes, coupled with Amazon recently speeding up Prime shipping from two days to one, means that Amazon could become the go-to retailer for a category of regularly consumed household items that it has yet to deeply penetrate."

But … Vox suggests that "the moves could also add to complaints that Amazon engages in anticompetitive behavior, though current laws typically protect companies that keep prices low for consumers."

Published on: October 15, 2019

The Washington Business Journal reports that Ahold Delhaize-owned Giant Food has decided to stop using the Peapod sobriquet for its e-commerce business and instead will use the name Giant Delivers.

The story notes that while both Giant and Peapod have the same ownership, the decision has been made to localize the service.

The Journal writes that "Giant Food recently rolled out Giant Pickup, where customers can buy groceries online and pull up curbside to pick up that order locally. By the end of this year, they will no longer be redirected to Peapod's website to shop for their pickup order, but instead will put in their orders on the Giant website or mobile app. Local customers seeking online delivery will now be redirected to Giantfood.com, where they can schedule their grocery deliveries."

Published on: October 15, 2019

The New York Times writes this morning about the latest trend in the meatless meat segment:

"With plant-based burgers, sausages and chicken increasingly popular and available in fast-food restaurants and grocery stores across the United States, a new group of companies has started making meatless meat: the food conglomerates and meat producers that Beyond Meat and Impossible Foods originally set out to disrupt.

"In recent months, major food companies like Tyson, Smithfield, Perdue, Hormel and Nestlé have rolled out their own meat alternatives, filling supermarket shelves with plant-based burgers, meatballs and chicken nuggets."

The reason is simple.

"There is a growing demand out there," John Pauley, the chief commercial officer for Smithfield, tells the Journal. "We’d be foolish not to pay attention."

You can read the entire story here.

Published on: October 15, 2019

USA Today has a story about new competition in the smart speaker business coming from Chinese tech giant Baidu, which "has made a huge splash in 2019 with their smart display speakers. The company sold an estimated 4.5 million units in the second quarter, up from about 100,000 a year ago.

"To give you a feel for just how out of left field Baidu has come – the company grew smart speaker shipments 3700% year-over-year. That kind of growth helped them take the number two spot by units-sold, outshining Google and fellow Chinese companies Alibaba and Xiaomi." (The story notes that "Alibaba, Xiaomi, and Baidu were all able to grow shipments thanks to a huge surge in interest in smart speakers in China.)

It is a segment that has been dominated by Amazon, which "in the second quarter (had) 6.6 million shipments, up 61% year over year." That gives Amazon "about 25% of the market."

Interestingly, USA Today writes, "the story is a little murkier for another U.S. tech company – Alphabet's Google. They've historically been #2 in the rankings, playing the Robin to Amazon's Batman. Recent data shows Google's grip on the smart speaker market is slipping. Google was the only major company to show year-over-year declines in devices sold, and saw their market share nearly get cut in half from where it was in 2018."

One company that seems not to be playing in the same league as these others is Apple, and the story suggests that the reason may be structural: "Apple is largely a hardware company and it shows with its smart speaker approach – the company's HomePod retails for several times the cost of devices from Amazon and Google. Some of that is classic Apple premium pricing, and some of it is driven by the fact that Apple is in a position where it needs to make money on its device sales, while other companies are willing to sell smart speakers at or near cost because they plug into a larger platform strategy."

Published on: October 15, 2019

From this morning's Wall Street Journal…

"Employers are increasingly going the distance to control health spending, paying to send workers across the country to get medical care and bypassing local health-care providers.

"One of the latest is Amazon.com Inc., which will pay travel costs for workers diagnosed with cancer who choose to see doctors at City of Hope, a Los Angeles-area health system. More than 380,000 of the Seattle-based company’s employees and families across the U.S. are eligible for the travel benefit.

"Travel programs are winning over employers despite added costs for airfare, hotels and gasoline. Proponents say companies can get competitive prices and employees get better care - such as avoiding unnecessary treatment - by shopping around the country instead of always relying on local providers. Employer health plans, which cover roughly 153 million people in the U.S., struggle to command competitive prices and quality controls in some markets as health-care providers have consolidated and gained leverage in negotiations."

You can read the entire story to get a sense of the implications here.

Published on: October 15, 2019

…with brief, occasional, italicized and sometimes gratuitous commentary…

• Engadget reports that "Amazon has cut ties with three delivery contractors that were recently implicated in multiple deaths by a joint BuzzFeed News and ProPublica investigation. According to state documents obtained by the two publications, those companies now plan to lay off more than 2,000 employees, and in two of three cases, stop delivering packages for the e-commerce giant."

The story goes on: "The reports last month describes how Amazon micromanages the delivery process, where drivers were pressured to hit delivery quotas of up to 300 packages in a single shift. Despite those steep requirements (in an eight-hour workday, that translates to completing about 37 deliveries every hour) the arrangement puts liability for accidents on drivers or their direct employer -- not Amazon. BuzzFeed News and ProPublica found evidence that suggests Amazon contractors have been involved in at least 60 major road accidents, 10 of which have lead to deaths."

Amazon responded this way: "We work with a variety of carrier partners to get packages to Amazon customers and we regularly evaluate our partnerships. We have ended our relationship with these companies, and drivers are being supported with opportunities to deliver Amazon packages with other local Delivery Service Partners."

I don't mean to be thick here, but I'm not sure that it is entirely the fault of the delivery companies and their employees if all these accidents are taking place. I would hope that Amazon also is evaluating its own standards and requirements, and thinking about its own ethical - if not legal - culpability. I often write here in a variety of contexts that nobody really knows the cost of anything … but it seems to me that in this case, we do sort of know the cost. And it ought to be unacceptable.


• The Associated Press reports that Uber "is laying off 350 employees from its food delivery, autonomous vehicles, safety, insurance and other teams," with the company describing it the "last wave" in a series of cuts that have resulted in more than a thousand people losing their jobs.

CEO Dara Khosrowshahi told employees in an email that "everyone has to play a part in establishing a new normal, by identifying and eliminating duplicate work and taking actions when expectations aren’t being met."

Interesting move at a time when Uber also is acquiring CornerShop in Canada and building out a ghost celebrity restaurant concept with the likes of Rachael Ray. I guess that when one door closes, a window opens. Or something like that. Though it probably isn't very comforting to the folks who lost their jobs.

Published on: October 15, 2019

…with brief, occasional, italicized and sometimes gratuitous commentary…

• The Seattle Times reports that Seattle's iconic Uwajimaya store in the city's Chinatown district is getting a major makeover - almost 75 years after it opened and 20 years after it moved to the current location.

According to the story, the store will capitalize on "its best-selling products and services, after management gathered feedback from customers who browse its aisles often. The new front doors will open up into the produce section, aisles will be moved to make them easier to navigate with a cart, and the cash registers, which are in the middle of the store between the grocery and the beauty/kitchenware section, will be moved to the front.
The new store will feature an updated grab-and-go section for customers to buy poke, Chinese BBQ and lunchtime meals, and different sections of the store will be labeled to showcase categories such as sake and beer, health and beauty products, and different types of groceries."

It is, the story says, "an effort to make the store more accessible for new customers who want to explore products they’ve never seen or used before — a recognition of the changing demographics of the Chinatown ID." What this means is that Uwajimaya will look to do a better job educating consumers who may have less knowledge about their products that its traditional customer base: "The remodel will include information cards and a demonstration station for customers to make sense of the dozen types of soy sauces … the difference between soybean paste and miso … and how to remove the tough, waxy skin of a mature karela."


• From the New York Post:

"The city slapped the 'lox' on famed Upper West Side deli Barney Greengrass this week, citing the eatery for a host of sanitary violations — including mice and roaches, The Post has learned.

The Jewish deli, which bills itself 'The Sturgeon King,' was shuttered Thursday after Department of Health inspectors discovered six violations, five of them critical, including not keeping food hot enough, mice, live roaches and lack of vermin-proofing, records show … In addition, employee clothes were 'soiled,' and food was not protected from contamination."

The story says that Barney Greengrass can reopen as soon as it address all these issues … but notes that the store has had some of them since 2016.

Store employees tell the paper that they'll get things cleaned up quickly and reopen the store, but I don't know … I love lox and bagels, but I think if I lived on the Upper West Side I might be thinking about finding another purveyor. I'd be worried about the capers on the lox, and that the schmear on my bagel isn't cream cheese…


USA Today reports this morning that Transformco, the ironically named company that, under the management of financier and former Sears CEO Eddie Lampert bought Sears and Kmart out of bankruptcy, plans to close more stores early next year - though it is not saying how many or where.

When Lampert bought the Sears assets, the plan was to close 142 units and keep about 400 open. With additional announced closings and the new undisclosed closings, it is estimated that there will be fewer than 300 open stores to the company's name.

With Lampert's recent track record, I'm kind of surprised that he hasn't announced that he's turning all the closed Sears locations into WeWork facilities…

Published on: October 15, 2019

• Wegmans Food Markets has announced the retirement of Jack DePeters, who has spent 52 years with the company, ending his career there as Senior Vice President of Store Operations.

Published on: October 15, 2019

Yesterday MNB took note of numerous press reports about a series of class action suits filed against ice cream manufacturers - such as Unilever, Danone and Nestlé Dreyer - and retailers - such as Wegmans - arguing that the vanilla in their vanilla ice cream is largely derived from non-vanilla sources as opposed to real vanilla.

The suits are being filed by by attorney Spencer Sheehan of Great Neck, Long Island, who says that "class action cases provide a valuable mechanism that Americans have to address certain wrongs. This is a valid and lawful means for doing so."

I commented, in part:

So on a whim over the weekend I ventured into the frozen food section of a local independent grocer and checked out the ingredient list for various vanilla ice cream brands - and there was no "vanilla" listed. Now, to be sure, when the ice cream was "vanilla bean" or "french vanilla," there was vanilla on the ingredient list. In one case, the presence of vanilla was in a footnote under the ingredients list.

As a consumer, I kind of think these folks ought to be sued. Or at least ought to be held to account in some way. Because what they're doing really is kind of a cheat … like the folks who sell frozen blueberry waffles that have absolutely no blueberries in them. This makes me nuts … I'm not a purist by any means, but there is just something wrong with this system.

Personally, I'm glad I eat Graeter's ice cream. It is what it says it is. (And it's delicious.)

If I were a retailer, I'd go to my ice cream section right now and check to see what the ingredients are in my vanilla ice creams … and if there's no vanilla listed, I'd consider pulling them. Because this lawyer is out there hunting for targets, he's got a legitimate complaint, and if you don't do your best to take the target off your back, you only have yourself to blame.

MNB reader Buddy Martensen responded:

Although I agree that when something is called “VANILLA”, there should be at least a trace of actual natural vanilla included in the recipe. I get it.

But, I also believe that this Law firm has happened upon something that has been acceptable practice for eons. And, over those eons, the term VANILLA has been used as much to describe the COLOR of Ice Cream, as the flavor of Vanilla. I’ll bet the same holds true for all those many Vanilla Shakes I have ordered over the years.

It certainly does not mean that what was acceptable should continue. Ingredients today are more important than ever. But, it is suspect that the firm representing this suit is doing it for the good of all consumers,…or the good of their payout. I think the latter.

If that Vanilla Ice Cream or Vanilla Shake contains no real Vanilla, then maybe we should just revert to the same terminology used by a 3 year old child, that has a hard time pronouncing the word Vanilla.

"I’ll have some White Ice Cream",…or... "I’ll have a White Shake”. After all, even without Real Vanilla,...it can still taste good.

Good thing the word CHOCOLATE is both an ingredient and a color!

I would argue that just because something is "acceptable" doesn't make it right … and we live in a world where it is a lot more important than it used to be where things are from, how they are made, and who makes them. Personally, I think this is a good thing … and it became more important because there folks out there who were passing things off as something that they weren't.

I'm not sure that people describing things as "white ice cream" or "black ice cream" or "brown ice cream" is going to work, though … it seems likely that this would create some political correctness issues. To me, it would be a lot easier if companies would actually put vanilla in the damned vanilla ice cream, and some actual blueberries in the freakin' frozen blueberry waffles.

Interestingly enough, I happened to get an email from attorney Spencer Sheehan, the fellow who is filing all these lawsuits. He said that mine was a "good article," and added:

I’ve heard about Graeter's … it sounds like the Notre Dame of ice cream factories!

All true.



Regarding the possible sale of Fresh Direct - both Amazon and Walmart are said to be kicking the tires - MNB reader Tom Murphy wrote:

I am not sure there is anything Amazon can learn or gain from FreshDirect at this point and suspect the same holds true at Wal-Mart. Sounds like their client base has abandoned them, their market has dramatically shrunk and their technology doesn't work. What is to buy...goodwill or expertise...I don't think so? Maybe a small local chain can pick them up for a penny on the dollar?

I certainly didn't mean to suggest that Fresh Direct could teach Amazon - or Walmart for that matter - anything. An acquisition might give them expanded presence in a place where it might be useful. Or it could be a defensive play, to make sure the other cat doesn't get it.



I also got the following email about yesterday's MNB:

Please just give the business intel and not the political side…You maybe only printing article captions; however you are the one selecting, and in my opinion need to stay away of your personal political views to stay relevant…The “KC’s View Section” is fine and understand whether I agree or disagree; however, the article captions prior seem to print / underscore your personal narratives.

To be honest, I'm not really sure what this is about. MNB stories don't have "captions." I suspect he may have meant "headlines." I wrote back to him asking if I was correct on this, and wondered which story he might be referring to. No word back.

But for the record … I try to write my stories fairly … be provocative and occasionally funny with my headlines … and be honest in my commentaries while leaving open the possibility that other opinions have merit. And, I've even created a "From The MNB Politics Desk" section to cover stories where politics and retailing are intersecting … like a lot of retailers, I find myself getting into areas where I'd rather not, but the job demands it.

Do I miss sometimes? Sure. But in the end, I have to concede that for almost 18 years MNB has largely been about my personal narratives. For better or worse. I just have to own it.

Published on: October 15, 2019

• In Game Three of the National League Championship Series, the Washington Nationals continued their utter dominance of the St. Louis Cardinals, winning 8-1 and taking a commanding 3-0 lead in the best-of-seven series.


• And, in Monday Night Football, the Green Bay Packers defeated the Detroit Lions 23-22.

Published on: October 15, 2019

There is a health, beauty and wellness revolution taking place, driven by enlightened consumer thinking about selfcare and startup companies that are innovating in the space. In this new Retail Tomorrow podcast, recorded in front of a live audience at the recent GMDC Selfcare Summit in Indianapolis, two such startup companies - in very different spaces - talk about how their strategies and tactics are helping retailers perform more effectively and efficiently.

One important shift that has to take place: Retailers need to say "help me," rather than "show me." Which is more than a semantic difference.

Our guests:

• Monte Ahlemeyer, chief revenue officer at Accelerate, which is on the front lines of the CBD marketing revolution.

• Dan Bourgault, VP, Sales & Business Development at Replenium, which provides consumer-level replenishment services to retailers.

The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

You can listen to the podcast here, as well as on iTunes and GooglePlay.

This edition of the Retail Tomorrow podcast is brought to you by GMDC, the Global Market Development Center.

Pictured, below, from left: Kevin Coupe, Dan Bourgault, Monte Ahlemeyer