business news in context, analysis with attitude

Published on: March 5, 2020

This commentary is available as a video, above, or as text, below.  They are similar, though not identical;  enjoy both, or either.

Hi, Kevin Coupe here and this is FaceTime with the Content Guy.

So we've had a number of stories about the coronavirus over the past week or so.  I don't think MNB has been obsessed by it, and I think we've played it appropriately - especially considering the fact that so many industry conferences are being postponed or cancelled, and that there clearly are going to be implications for the supply chain and the economy, which is likely to affect so many MNB readers.

But I keep getting emails and running into people who suggest that this is much ado about nothing, that it essentially is a creation of a media elite with a political motive, and that it really isn't any worse than the flu, which kills a lot more people each year - it has a mortality rate of 0.1 percent, compared to this coronavirus, which is estimated to have a mortality rate of between two and three percent at this point.

Forgive me, but I cannot help myself.

This is not about politics.  This is about science.  This is about respected scientists who think that this coronavirus could end up being a major problem for a lot of people - especially the elderly and medically compromised.

There is a huge, huge difference between 0.1 percent and two percent.  Call me crazy, but I think it is worth talking about and putting resources against on a global scale.

I've talked to and been to a number of retailers, and one of the things I've seen is that folks who normally do a lot of sampling aren't doing that for the time being.  That's smart.

But I think they actually can go a step further.  I have an idea about that.

Instead of just stopping sampling programs, they ought to post signs that say something like:

You may notice that we're not doing the kind of sampling we normally do.  It's not because we don't want you to taste our food.  We do.  But in view of all the concerns related to the coronavirus outbreak, we're pulling back on those programs, and will bring them back as soon as makes sense.

In the meantime, know that we are doing everything we can to bring you the safest food, to keep our people healthy and safe, and make sure that we have all the products you need and want.  If you have any questions, just let us know … because your concerns are our concerns.

And then, maybe they ought to offer a supply of disposable gloves that people could use while they shop, in addition to wipes that allow them to clean off their shopping carts.

This is opportunistic in the best possible way - you're letting your shoppers know something incredibly important, and you're being transparent about it.

I hope that the coronavirus end up not being as bad for people's health and the global economy as some are predicting.

But let me suggest that if it isn't - if two or three or four months from now we are all saying that it seemed to be much ado about very little - it may well be because the media focused so much on it.  Because the media helped educate the population about how to protect itself.  Because the media reminded people to wash their hands frequently, to cough into their elbows, to be careful about what they touch and who they interact with.

I say this recognizing that there will be some members of the MNB community who will disagree with me.  To be fair, I have a dog in this hunt - I am a member of the media, albeit a tiny niche of the media.  But I think that for the most part, the mainstream media is doing exactly what it is supposed to do - reporting what the experts are saying and providing context so that consumers know what they are supposed to do.

Sorry.  But I just can't help myself.

That's what is on my mind this morning.  As always, I want to hear what is on your mind.

For past MNB videos, click here.

Published on: March 5, 2020

by Kevin Coupe

The New York Times had a story the other day that put a spotlight on food delivery fees.

The story says that "when you order through a delivery app, you pay multiple parties, including the driver and the companies that offer the apps, like Uber Eats and Postmates. In some cases, you pay the restaurants extra fees as well.

"The markups can be downright egregious. Take Panda Express, the fast-food chain. If you ordered a $39 Family Feast value meal using Uber Eats, your tab would be 49 percent higher than if you bought the same meal at the restaurant.

"You would have to really love Panda Express to pay this kind of premium — and that doesn’t even include a tip.

"The extra fees creep into your bill for various reasons. Some restaurants hike the prices of food ordered for delivery. And most of the popular apps charge a delivery fee and cram tax and extra service costs into a single line on the bill, making it difficult to notice the inflated costs."

The story suggests that depending on the fast food restaurant and the delivery app, markups can range between 10 and 90 percent.

To be clear, I haven't confirmed this.  In fact, I have never used an app to order fast food.  Other than Chinese food and pizza - for which I use local purveyors, not chains - I'd rather buy food at a supermarket and make it at home.  (One exception: Green Zebra in Portland, which makes a helluva tuna melt.  I'll use the ChowNow app to order it - no markup over store prices - and then will walk a couple of blocks to pick it up myself.)

But it seems to me that if these numbers are even close to accurate, they ought to be the focus of some sort of retailer-centric marketing program that challenges the conventional wisdom of fast food in general, and the costs of ordering it via app specifically.

Fast food just ain't worth it.

It will require some infrastructure to back it up, but food retailers ought to be making the following pitch to consumers:

Don't waste a meal.

Which, to be honest, is a corollary to the axioms … life is too short to drink cheap wine … lousy beer … and eat lousy food.

There ought to be an app for that.

Published on: March 5, 2020

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

•  IGA CEO John Ross yesterday announced that the 2020 IGA Global Rally, scheduled for next week in Nashville, is being postponed because of concerns related to the spread of the coronavirus.

"Last night the World Health Organization raised the mortality rate estimate for the virus by more than 50 percent. Safety has to be our main concern," Ross wrote.

"As a consequence, I have decided to postpone the 2020 IGA Global Rally.  I know this will place many hardships on our brands, retailers, LDCs, and of course the IGA team. And it will certainly delay sharing the incredible content we had designed for this year’s event.

"But given the uncertain status of the virus, consumer confusion, and unknown impact on our retailers, I have decided to err on the side of caution. Right now it may be more important for our store leadership to be on the ground in their local markets, serving shopper needs and running their stores."

IGA is looking for an alternate date when it can mount the 2020 show.

•  Yahoo Finance  reports that "amid rising concerns over the spread of coronavirus, Amazon has asked all of its employees globally to test their VPN connection on March 5 by logging in remotely … The email sent to employees on Wednesday asks them to log in via VPN at any time on Thursday, for at least 10 minutes. The email does not specifically mention coronavirus or COVID-19, but multiple sources say that is the impetus of the test."

The story notes that "JPMorgan Chase is doing something similar, asking 10% of its U.S. employees to work from home on the same day to test their remote access capabilities."

Obviously store employees can't work from home, but it seems to me that this would be a wise test for a lot of business to run - because while we all hope this won't be required, it is best, in the words of Robert B. Parker's Spenser, to "prepare for what the enemy can do, not what he might do."

•  USA Today reports that  Starbucks said yesterday that it "is temporarily stopping use of reusable, personal mugs in stores because of the coronavirus."  (However, it will continue offering a ten-cent discount to people who bring in their own cups or request 'for here' cups.)

Rossann Williams, the company's executive vice president, says that Starbucks is taking "a series of precautionary steps in response to this emerging public health impact … Our focus remains on two key priorities: Caring for the health and well-being of our partners and customers and playing a constructive role in supporting local health officials and government leaders as they work to contain the virus."

Williams also says that the company is increasing "cleaning and sanitizing for all company-operated stores to help prevent the spread of all germs."

The story notes that "in January, Starbucks closed half of its China stores because of the outbreak, but many have reopened."

•  The Wall Street Journal writes that Starbucks "also said Wednesday that it was no longer holding, due to the epidemic, its annual shareholders meeting in person that was scheduled to take place March 18 at a theater in downtown Seattle, where it has its headquarters. The company said it would hold the meeting virtually instead.

"Target Corp. on Monday broadcast its annual investors meeting online rather than hold it in person in New York City as originally planned."

•  CNBC reports that "Campbell Soup CEO Mark Clouse said Wednesday that the company is increasing soup production in response to the coronavirus outbreak … Clouse said the company has been talking with some retailers to better understand what demand could look like. Campbell’s noticed an uptick in demand from both online and brick-and-mortar retailers over the weekend, but Clouse said it was still too early to call it a trend."

"We made the decision last week to up production in certain areas where we’re using a little bit the analogy of weather or natural disasters,” Clouse tells CNBC.  "Where do we see demand coming in a greater rate? And we’ve upped that level of production to be able to maximize our inventory to be prepared for whatever unfolds here.”

Ironic, huh?  For the last couple of years, Campbell's has been the subject of criticism and derision because of what was seen as an old-school approach to canned soup that was out of step with what people wanted today.  But you throw in a little pandemic, and suddenly that shelf-stable, long-lasting canned and condensed soup sounds like a pretty good business model.  

•  Fast Company has a piece about how the Corona beer brand is dealing with the fact that it shares a name with the coronavirus - a fact that has been much remarked upon in social media and the subject of numerous memes.

(It is similar to when during the eighties, a once-popular diet candy had an unfortunate name: Ayds.)

The Corona folks have done the right thing in dealing with the name issue, Fast Company says.  They've done absolutely nothing.

"Corona has avoided making any public comments or acknowledgment of the name similarities on social media," the story says.  "There’s no social-media manager taking over the Corona Twitter account to do an irony-soaked performance piece and trade quips about N95 masks with the Netflix and Wendy’s accounts."

The story suggests that "it cannot have been an easy decision … For the last 15 years, as social media has grown, brands have been told that they need to participate in the cultural conversation around their brands."  

Corona, fast Company writes, "has found itself the unintentional beneficiary of perhaps the worst kind of earned media a marketer could imagine. Saying nothing goes against just about every natural instinct of any marketer. In this case, the silence is as refreshing as a beer with a lime in it."

•  It may not be the biggest impact of the coronavirus spread, but to some of us, it matters a bit - No Time To Die, the 25th James Bond movie and the last in which Daniel Craig will play the iconic spy, has seen its April release dates postponed until November.

The reason:  According to Variety, "The spread of coronavirus has led to closures of theaters in major markets such as Italy, South Korea, China and Japan. That could have been a major blow to No Time to Die, which cost more than $200 million to produce and millions more to market. Given that hefty budget, the film will need to perform well in international markets if it wants to make a profit."

As part of the movie's marketing program, Daniel Craig is scheduled to host "Saturday Night Live" this weekend.  I can imagine a cold open in which he emerges from his dressing room to do the monologue, only to find that nobody is there - the hallways are empty (except maybe for Chevy Chase wandering around), the audience is empty, and he doesn't know what to do … until he is rescued by Pierce Brosnan, who comes by to tell him that there is life after Bond.

At least, that's how I'd write it.

Published on: March 5, 2020

WineBusiness reports that California-based Raley’s has announced that "Curtis Mann, the organization’s Director of Alcohol & Beverage, has been named Master of Wine (MW) by the Institute of Masters of Wine. As the most prestigious wine certification in the world, Mann will join an accomplished group of 396 Masters around the world, with only 53 of those residing in the United States."

Mann is described as "currently the only Master of Wine buying for a grocery chain in the United States."

The story notes that "the MW examination was first held in 1953 and is designed to test the breadth and depth of one’s theoretical knowledge and practical skills in the art, science, and business of wine. To receive the elite certification, Mann passed the Institute's examination, which consists of several theory and practical exams and culminates in the submission of a final research paper … Mann joined Raley’s in 2013. As the grocer’s wine buyer, he gained much of his knowledge for the MW through his experience at Raley’s, traveling the world finding unique wines and meeting with winemakers and winery owners."

Published on: March 5, 2020

The Wall Street Journal reports on how cauliflower "is one of the fastest-growing food products, as consumers substitute the versatile vegetable for meat and carbohydrates.  Rich in protein and fiber but low in calories, cauliflower is benefiting from the rise of keto and paleo diets that advise people to avoid grains and seek high-fat foods."

The story notes that "cauliflower’s mild flavor and adaptability have encouraged food makers to substitute it for starches and dairy in gnocchi, pizza crust, hummus and vegan Gruyère cheese. U.S. sales of raw cauliflower and foods containing the vegetable rose to $700 million last year, according to research firm Nielsen, up nearly 40% from 2016."

Some examples of how retailers big and small are exploiting cauliflower's popularity:

•  Albertsons, the story says, "has introduced 14 store-branded items featuring cauliflower over the past year, including rice, mashed cauliflower and a cheese bake."

•  "The cauliflower rice that Aldi Inc. started selling in 2017 is now the German discount grocer’s top-selling frozen item in the U.S., said Scott Patton, vice president of corporate buying at Aldi US. Aldi has since introduced 12 items featuring cauliflower, including tortilla chips, gnocchi and buffalo dip."

•  "Cauliflower-crust pizzas account for one-quarter of total pizza sales at Stew Leonard’s Inc., a chain concentrated in the Northeast, CEO Stew Leonard Jr. said. The grocer started selling it in 2018 and the item already has more share than plain cheese pizzas with a wheat crust, he said."

The Journal goes on:  "Aside from specific diets, consumers say they like prepared foods made with cauliflower because they are a convenient way of being more healthy. A serving of cauliflower rice contains 85% fewer calories than a serving of white rice, according to food makers, and a pizza crust made from wheat flour contains about 23 times more carbohydrates than pizza made with cauliflower."

Published on: March 5, 2020

The Chicago Business Journal reports that Nordstrom is closing down its Trunk Club business and will integrate it into its mainstream physical and online operations.

Describing Trunk Club as "a once-promising business that started a decade earlier in Chicago" and that was bought by Nordstrom in 2014 for $350 million, the Journal writes that Nordstrom "said on Tuesday that by year’s end it plans to fully 'integrate' the Trunk Club subsidiary into its full-line stores and into the chain’s website, nordstrom.com.

"That integration will mean the closing of Trunk Club brick-and-mortar clubs in Chicago, New York City, Los Angeles, Boston, Dallas and Washington, D.C.  Without the physical club outposts, it remains to be seen what, if anything, will be left of Trunk Club as the brand disappears inside the Nordstrom's sprawling department stores."

Published on: March 5, 2020

Bloomberg has an excellent piece about James Daunt, charged with returning Barnes & Noble to profitability and relevance.

Some context from the story:

"Daunt has opened about 60 bookshops in his three-decade career, every one of them profitable, making him one of the Amazon era’s most successful booksellers. After founding Daunt Books, a popular, independent brand of stores in the U.K., he was credited with saving the country’s largest chain, Waterstones, from ruin by giving managers more agency over their inventory. Those credentials impressed Elliott Management Corp., a notorious $40 billion hedge fund better known for seizing an Argentine warship as collateral and berating corporate governance at Twitter Inc. and AT&T Inc. It acquired Barnes & Noble Inc. last year for $683 million including debt and appointed 56-year-old Daunt chief executive officer, the man in charge of its rescue."

Daunt tells Bloomberg that he believes he is "answering a higher calling."

“There aren’t remotely enough independents to maintain our industry. Publishers won’t keep that infrastructure going, it will become a world completely dominated by Amazon, and the traditional bookshop will disappear,” he says.

The irony, of course, is that he now is faced with the challenge of saving a big box store chain that once would've been classified as the enemy.

You can read the story here.

Published on: March 5, 2020

•  Publix Super Markets said this week that "sales for the fiscal year ended Dec. 28, 2019 were $38.1 billion, a 5.6% increase from $36.1 billion in 2018. Comparable store sales for the fiscal year ended Dec. 28, 2019 increased 3.6%.  Net earnings for the fiscal year ended Dec. 28, 2019 were $3 billion, compared to $2.4 billion in 2018, an increase of 26.2%."

Q4 sales "were $9.8 billion, a 5.1% increase from $9.3 billion in 2018. Comparable store sales for the three months ended Dec. 28, 2019 increased 3.6% … Net earnings for the three months ended Dec. 28, 2019 were $789.3 million, compared to $407 million in 2018, an increase of 94%."

•  The BBC reports that "John Lewis has warned it could close shops as a plunge in profits forced it to cut staff bonuses to their lowest level in almost 70 years.

"The retailer, which also owns Waitrose, has launched a review of the business which it said would involve 'right sizing' its stores across both brands.  The review would involve store closures 'where necessary' as well as space reduction in existing stores, it said."

The BBC story notes that "the John Lewis Partnership is owned by its staff - known as partners - who usually receive a bonus each year.  This year, staff bonuses have been set at 2%, the lowest since 1953 when it paid no bonus."

Published on: March 5, 2020

…will return.

Published on: March 5, 2020

Digital strategies aren't just about creating alternatives to the bricks-and-mortar shopping experience.  Done effectively, they can actually bring people back to the store, while also eliminating customer anonymity, creating rich and actionable data, and deepen relationships between the store and consumer in a way that transcends the simple transaction.

Our newest Retail Tomorrow podcast, which brings together a terrific panel of experts from a wide range of disciplines, was recorded at Google’s New York City offices during the recent National Retail Federation (NRF) Show.  Our guests:

•  Matt Alexander, co-founder of Neighborhood Goods, an unusual and fascinating take on physical retailing with stores in Dallas and New York.

•  Patrick Flanagan, senior vice president of digital marketing and strategy for Simon,  which has more than 200 properties in 37 states and Puerto Rico.

•  Tom Furphy, CEO and Managing Director of Consumer Equity Partners, a member of the Retail Tomorrow podcast family and a regular contributor to "The Innovation Conversation" on MNB.

•  And Jalna Silverstein, a leader in Ernst & Young’s Transaction Advisory Practice and its Real Estate, Consumer Experience and Retail Strategy.

You can listen to the podcast here.

This Retail Tomorrow podcast is sponsored by the Global Market Development Center (GMDC).

Pictured below are our panel members, from left:  The Content Guy, Matt Alexander, Tom Furphy, Patrick Flanagan, Jalna Silverstein.