business news in context, analysis with attitude

Published on: March 12, 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.

One of the byproducts of the COVID-19 coronavirus outbreak has been that a lot of businesses have been reaching out to their customers.

Those of us who spend a lot of time on airplanes have been hearing frequently from the companies with which we do business.  We haven't always liked what these airlines have been saying - I wrote earlier this week about how I thought their policies toward change fees left a lot to be desired - but with every passing day they seem to be getting more flexible and accommodating.  So that's a good thing … and I have been impressed by the degree to which they've tried to be good communicators.

Not surprisingly, I've also been hearing from a lot of the online travel services with which I often book flights and hotels, informing me about their policies and initiatives - even though I don't have anything booked with them at the moment.  Again, that's a good thing.  Communication is good.

It has been a little surprising that we haven't heard a whisper from Airbnb, with which we do have a booking.  A little information and a demonstration of simple awareness would be a good thing.  Radio silence?  That's a bad thing.

I got an email the other day from Nordstrom, designed to reassure me with information about their cleaning policies, how they are assuring that their employees are either healthy or getting the care they need, and reminding me that if I need something and don't want to go the store, I can always go to Nordstrom's website.  I don't begrudge them the sales pitch - they are communicating with me, and that's a good thing.

One thing that has really surprised me is the fact that I haven't gotten so much as an email or text message from any food retailer with which I do business or that has my email in their customer databases.  Absolutely nothing.  I just don't understand that - people go to supermarkets more often than they go to any other retail establishment, which makes them prime candidates to inform shoppers and illuminate the situation.  This is the time to reassure people about the food supply, tell people about the stores' employment policies, and just generally be an institution that people can trust and rely upon.  But again, as a consumer, I've heard nothing.

I'm not saying that no food retailers are talking to their shoppers this way.  I'm sure there are some.  But not the ones that have me on their mailing lists.  To me, this is an opportunity missed … and none of the retailers that have not reached out should ever complain about losing customers to the competition.  They don't deserve loyalty, because they haven't demonstrated any.

One of the best emails I got was from Tom Douglas, whose restaurant company is based in Seattle - which is sort of the center of the maelstrom.  I'm a big Tom Douglas fan, and often have written here about Morgan, the best bartender on the planet, who works at Etta's just north of the Pike Place Market.

Douglas's letter talked a little about the situation there, commenting that "we are a strong, resilient city, but this crisis is going to take every one of us to stay vigilant  for our neighbors and care for the underserved."

Douglas talked about the safety protocols in place at his establishments, and noted that all of his restaurants have dramatically cut back hours simply because people in Seattle aren't going out to eat or drink very much.

And then he wrote something kind of cool:  " If you are working from home or unable to go out and dine," he wrote, "I am going to start a simple video cooking series next week from our Hot Stove Society cooking school. These videos will offer easy, quick one-pot meal suggestions, utilizing a few fun recipes with items you might already have in your pantry."

That was so great - it establishes that Tom Douglas and his restaurants are part of the community, and want to create a sense of community that envelops both employees and customers.

The COVID-19 coronavirus outbreak is creating enormous uncertainty in the culture and the economy.  A lot of people and companies are going to suffer, but there's no excuse for not building on the foundation of community that good retailers already have established.

Of course, if that foundation doesn't exist, it probably is too late.  Those retailers have a malady, but it isn't a coronavirus.

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

Content Guy's Note:  Last night, after I'd recorded this video commentary, I got an actual email from a food retailer - Dorothy Lane Market, where I'm on the mailing list because I shop at the DLM online site.  This email, sent to all its customers and signed by Norman Mayne and Calvin Mayne, did everything one could ask - it laid out the stores' food safety and employee policies and procedures, and explain what DLM is doing to keep its people and customers safe.  And then, it concluded:

"Part of the very fiber of our culture is to always do the right thing. We are your local grocer. We live here with you. We eat the same wonderful food that we sell to you. We love our community and we will continue to give you our very best every day."

Bingo.

As I sit here this morning, I've gotten informational emails from Trader Joe's and Starbucks.  So perhaps the dam has broken a bit.

One other note.  While I commented admiringly of how Tom Douglas was handling the Seattle crisis, the Seattle Times reported last night after I recorded the FaceTime video that he will "temporarily close all his 12 restaurants effective Sunday."

Spokesperson Madeline Dow Pennington said that sales at his restaurants had declined 90 percent since the outbreak began, and it was only after long discussion and analysis that this decision was reached.  Management hopes to reopen the restaurants within eight to 12 weeks, if market conditions improve.

I am bereft.   I worry for all these businesses, and I am concerned about my friend Morgan.  

Published on: March 12, 2020

Random and illustrative stories about the global pandemic, with brief, occasional, italicized and sometimes gratuitous commentary…

•  The World Health Organization (WHO) yesterday said that the COVID-19 coronavirus outbreak can officially be labeled a pandemic.

A pandemic, the WHO says, happens when a "virus emerges and spreads around the world, and most people do not have immunity."

WHO director Dr. Tedros Adhanom Ghebreyesus says that this move "does not change WHO’s assessment of the threat posed by this coronavirus. It doesn’t change what WHO is doing, and it doesn’t change what countries should do."

Good to have clarity.  I was getting tired of writing "outbreak/epidemic/pandemic" every time I referred to the coronavirus.

•  From this morning's Washington Post:

"The coronavirus outbreak is taking a deep toll on the U.S. economy, prompting hundreds of layoffs over the past week alone and halting a historic 11-year bull market in stocks.

Strong job growth and soaring financial markets have fueled the U.S. economic expansion over the past decade. Now the rapid market decline and initial layoffs are heightening fears that the longest economic expansion in U.S. history could come to a sudden end, just a month after unemployment stood at a half-century low.

"The Dow Jones industrial average lost 1,465 points, or 5.9 percent, Wednesday with every sector slumping after the World Health Organization designated the coronavirus a pandemic. The Dow closed in bear market territory, meaning it had shed more than 20 percent from its high less than a month ago.

"Airlines, hotels, travel agencies and event companies have all been suffering, but interviews with more than two dozen firms and workers reveal that the pain is now translating into layoffs in a wider circle of industries … Economists fear more layoffs in the coming weeks as supply chains come to a halt and people stay home and spend less."

•  From the New York Times:

"President Trump said on Wednesday night that he was suspending most travel from Europe to the United States for 30 days, beginning on Friday, to stem the spread of the coronavirus. The restrictions do not apply to Britain, he said.

"Mr. Trump imposed a 30-day ban on foreigners who in the previous two weeks have been in the 26 countries that make up the European Union’s Schengen Area. The limits, which take effect on Friday at midnight, will exempt American citizens and permanent legal residents and their families, although they could be funneled to certain airports for enhanced screening.

"Later on Wednesday, the State Department issued an advisory telling Americans to 'reconsider travel' to all countries because of the global effects of the coronavirus. It is the department’s second-strongest advisory, behind 'do not travel'."

•  The Financial Times reports that the Italian government has ordered the closure of virtually every retailer in the country, with the exception of supermarkets and pharmacies, in what is seen as "a further extension of stringent measures to contain the country’s coronavirus outbreak."

Some businesses will be allowed to stay open, "including factories and agriculture, as well as the public sector and transport … banks and tobacconists."

FT writes that "the extension of nationwide lockdown measures came after officials said the country’s total infections increased to 12,462, up from 10,149 on Tuesday, at a time when its health service is coming under pressure to cope with the rising numbers needing intensive care. Officials said 10,590 are currently sick, 1,028 are in intensive care, and 1,045 have recovered from the virus."

I heard an expert say on the news last night that if the US does not get its act together fast and radically improve access to testing, we're just two weeks away from being Italy.  The argument is that the US has no idea how many people might be sick because so few people are being tested.

This could've been hyperbole.  But somehow, it didn't seem like it.  And I am finding increasingly difficult to be panglossian about any of this.

•  MarketWatch reports that "a Walmart Inc. associate in Kentucky has tested positive for the COVID-19 virus, the company said Wednesday while announcing potential store-hour restrictions at 24-hour locations even though traffic is rising.

"Walmart said its stores are cleaned daily, including sanitizing high-touch areas and assigning one associate who is responsible for key areas throughout the day.  The company is also looking into ways to more easily sanitize shopping carts and exploring the possibility of shutting its 24-hour locations to make time for additional cleaning."

•  CNBC  reports that Starbucks "is offering 'catastrophe pay' to U.S. baristas who have been exposed to the coronavirus."

According to the story, Starbucks "will pay employees for up to 14 days if they have been diagnosed with, exposed to or in close contact with someone with the coronavirus.  Workers who may be considered higher risk because of underlying health conditions are also eligible for catastrophe pay with a doctor’s note."

Starbucks already has implemented this policy in China.

•  WSB-TV News reports that "the demand for disinfectants due to the outbreak of COVID-19, the coronavirus, has sparked an uptick in production for the Clorox plant in Clayton County.  The company says the new demand for its products has employees working around the clock to keep up."

Make it faster.  Please.

•  From Bloomberg, a report suggesting that China is beginning to recover from its coronavirus woes:

"Alibaba Group Holding Ltd.’s parcel and meal delivery arms have returned to pre-coronavirus outbreak staffing levels, the latest example of how China’s largest corporations are getting back to work after Beijing’s entreaty to safeguard economic growth.

"Cainiao, of which Alibaba owns more than 60%, is again at full strength after a few weeks during which the epidemic disrupted transport and held up shipments. Meal delivery unit Ele.me and grocery chain Freshippo are also back at full strength and operating at 'full capabilities' at present, an Alibaba spokeswoman said.

"That recovery underscores how the world’s No. 2 economy is slowly getting up to speed after Covid-19 confined millions to their homes and paralyzed roads and rail nationwide. Cainiao, the company at the heart of Alibaba’s e-commerce business, oversees a network of millions of delivery people that can handle upwards of a billion packages daily at their peak."

It is critical that we as a society take the coronavirus pandemic seriously - but it also is important to recognize that there is a light, however distant, at the end of the tunnel.  How long it takes us to get through the tunnel, however, depends on the degree of seriousness and alacrity of action that we bring to the situation.  People and institutions in denial, for whatever reason, do themselves and the culture no favors.

•  The New York City St. Patrick's Day Parade, scheduled for next Tuesday, has been postponed for the first time in its 258-year history.

Chicago, Cincinnati and Kansas City are among the other cities that have cancelled or postponed their St. Patrick's Day parades.

•  The NCAA announced last night that its annual men's and women's college basketball tournaments - known as March Madness - will be played in athletic facilities without the presence of spectators.

NCAA President Mark Emmert wrote:  

"The NCAA continues to assess the impact of COVID-19 in consultation with public health officials and our COVID-19 advisory panel. Based on their advice and my discussions with the NCAA Board of Governors, I have made the decision to conduct our upcoming championship events, including the Division I men’s and women’s basketball tournaments, with only essential staff and limited family attendance … This decision is in the best interest of public health, including that of coaches, administrators, fans and, most importantly, our student-athletes. We recognize the opportunity to compete in an NCAA national championship is an experience of a lifetime for the students and their families. Today, we will move forward and conduct championships consistent with the current information and will continue to monitor and make adjustments as needed."

•  The National Basketball Association (NBA) last night canceled all games for the foreseeable future after, as Axios reports, a Utah Jazz player tested positive for the COVID-19 coronavirus.

•  Variety reports that late night television talk and comedy shows will start being taped without their usual studio audiences, a decision made by various networks "amid rising fears about the spread of coronavirus."

The shows affected include CBS’ “Late Show With Stephen Colbert,” NBC’s “Tonight Show Starring Jimmy Fallon” and “Late Night With Seth Meyers,” Comedy Central’s “The Daily Show with Trevor Noah” HBO’s “Last Week Tonight with John Oliver, TBS’ “Full Frontal with Samantha Bee” and Fox News Channel’s “The Greg Gutfeld Show."

All the shows affected are taped in New York City.  Late night shows produced in Los Angeles, such as CBS’ “The Late Late Show with James Corden”and HBO’s “Real Time with Bill Maher," are for the moment not affected.

No word yet on whether "Saturday Night Live," scheduled to return with a new episode on March 28, will adopt the same policy.

•  It got a lot of attention last night because it put a recognizable face on the pandemic:  actor/writer/director/producer/national treasure Tom Hanks and his wife, Rita Wilson, both have been diagnosed has having the COVID-19 coronavirus.

They were diagnosed while in Australia for a film project, and have been hospitalized and put in isolation.

The point that a lot of folks were making yesterday is that it was very easy to be diagnosed in Australia because testing is free and available.  They didn't feel well, and they got tested.  

Published on: March 12, 2020

by Kevin Coupe

CNBC has an interesting story pointing to the Eye-Opening growth of service-based retailing.

"The number of service-based retailers — a category that includes a Dave & Buster’s entertainment venue, a local spa and nail salon operator or a Cheesecake Factory restaurant — surged 20.5% from 2002 to 2017, totaling 1.2 million spaces, a new report from commercial real estate services firm JLL found. Retailers selling goods — such as a Gap or Victoria’s Secret — fell 4.5% to 1.1 million shops during the period.

"Taking those shifts into account, service tenants now make up 52.6% of America’s retail space, while companies focused on selling goods account for 47.4% of space, JLL said. In 2002, retailers selling products made up 53.2% of physical retail, it said. But that number has been shrinking ever since."

Fascinating.

What this does not seem to take into account is the number of goods-selling retailers that have segued into the sale of services … which is what a number of supermarkets have done.

In fact, I'd argue that this is what the smart retailers have done … because services often are the thing that cannot be easily replicated by the competition.

In view of the dominant story in the news, however, it has to be noted that restaurants, entertainment venues, spas and nail salons - apparently the source of so much retail growth - are about to encounter what the great Bob Murphy used to call "nine miles of bad road," as they deal with a coronavirus economy that is not likely to be kind to them.

Published on: March 12, 2020

CNBC reports that Amazon Go-style checkout-free technology will debut in a non-Amazon store for the first time next week at a CIBO Express store in Terminal C of Newark Liberty International Airport.

The story says that "other CIBO Express locations at Newark Liberty and New York’s LaGuardia Airport will add the technology soon."

As with Amazon Go stores, consumers will be able to take products off store shelves, put them in bags or even their pockets, and then be accurately charged after they leave the store.  Unlike with Amazon Go stores, they will not need a mobile application to enter stores, but rather will just use a credit card to gain entry; that card will then be charged when they depart.

It was just earlier this week that Amazon confirmed that it would be licensing the technology, saying that it had deals with place with several companies.

There are 25 Amazon Go stores operating right now - in Seattle, San Francisco, Chicago and New York - as well as one larger Amazon Go Grocery store in Seattle.

Published on: March 12, 2020

Fairway Market, together with its debtor affiliates in their Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York, has announced what is called a "qualified overbid" by Bogopa Enterprises, Inc. for 6 Fairway stores and its Distribution Center, for $75 million. 

Bogopa is a family-owned business that has operated grocery stores in the New York area for 32 years, and currently operates 26 supermarkets under the "Food Bazaar" banner in New York City, New Jersey, Long Island, Connecticut and Westchester.

An auction will be held on March 16, 2020, pursuant to the Court-supervised sale process.  Fairway has also received competitive bids for various other stores that are being evaluated.

Fairway Market's M&A investment banker is Scott Moses of PJ Solomon.

Published on: March 12, 2020

The New York Times reports that sporting goods store Modell's, which traces its beginnings back to a first store that opened in New York City in 1889, has filed for Chapter 11 bankruptcy protection and plans to close all of its 141 stores.

Mitchell Modell, the company's president/CEO, told the Times that "the combination of an unseasonably warm winter, six fewer days in the shopping season this year between Thanksgiving and Christmas, competition from Amazon and the coronavirus pandemic have hurt the company’s bottom line."

Published on: March 12, 2020

The Wall Street Journal reports that PepsiCo has a deal to acquire Rockstar Energy Beverages.  The cost:  $3.85 billion.

The Journal writes that the move is designed to "expand the beverage giant’s presence in the fast-growing energy-drink category … PepsiCo and rivals including Coca-Cola Co. have been working for years to shift their beverage sales away from sugary sodas and toward lower-calorie offerings including water and tea as well as coffee drinks.

"Energy drinks are a weak spot for both Coca-Cola and PepsiCo, and neither owns a major brand in the category," though Coke owns a stake in Monster Beverage Corp.

Published on: March 12, 2020

MNB learned yesterday of the death of Harvey Hartman, founder of the Hartman Group, who passed away on February 24 after a battle with cancer.

Hartman pioneered the employment of full-time social scientists to develop innovative research techniques that combine anthropological methods with quantitative surveys.  Since founding the company in 1989, he grew The Hartman Group into the food and beverage industry's leading authority on consumer culture.

Published on: March 12, 2020

Yesterday, Michael Sansolo wrote a column about how he felt a Mike Bloomberg campaign ad aimed at young people but played on a rock oldies terrestrial radio station seemingly aimed at Baby Boomers was an example of not knowing the audience.

Which prompted one MNB reader to write:

I saw your piece titled on Know Thy Audience!

As someone who works in the media industry, I always find it industry to hear other people's perspectives on radio – especially when it relates to how younger generations consume radio and its reach.

Candidly, both your points … 

1.      A classic rock station isn’t a place to target millennials and adults under 45 years old.

2.      Young people don’t use radio.

… are completely false.  Your perception is clouded and I’d like to take second to stand up for the radio industry which quite frankly doesn’t get its fair share.

For reference, I consider Millennials 25-40 (people born 1980-1995). 

1.      As an example let’s use Chicago as our market.  Looking at Nielsen data in the Chicago DMA demos adults 25-34 and 18-44.  The top-rated radio station in Chicago during prime listening hours (6a-7p) is WDRV-FM a CLASSIC ROCK Station.  (Source: This report was created using the following information: CHICAGO; JAN20 / DEC19 / NOV19; Metro; Multiple Dayparts Used; Multiple Demos Used; See Detailed Sourcing Page for Complete Details. Copyright © 2020 The Nielsen Company. All rights reserved.)  I understand that every market is different and music preference varies across the country but I would be cautious before making a blanketed, un-researched statement as you did. 

2.      Radio is America’s #1 Reach Medium.  229 million listeners tune in to radio each week – that’s 92% of all people, surpassing TV in scale mass reach.  When looking at younger people whom you say don’t use radio, you may be surprised to know that radio reaches 86% of teens 12-17 and 90% of adults 18-34.

I could go on and on about the power of radio but I’ll stop here so you can continue to sing along with Bohemian Rhapsody.  Just remember…Know Thy Facts before writing.­

We had a piece yesterday questioning whether the magic is less at Whole Foods since its acquisition by Amazon.

MNB reader Clay Hoerauf wrote:

I recently stopped at Milwaukee’s original Whole Foods, which used to be a nearly Disneyworld experience for foodies. Now it is just a grocery store stripped of its soul. Gone is the in store smoke house where you could always get excellent ribs brisket and pulled pork, not to a dozen local and imported beers on tap to enjoy while shopping (Hey that’s important in Wisconsin). I ended up leaving without buying a thing. I drove a mile or so to the Kroger/ Pick & Save Metro Market and fortunately they still know how to wow the customer. Excellent customer focused shopping experience. I doubt Jeff Bezos needed that $100 bucks I dropped but a couple years ago I never would have even gone into the Metro Market.

There is no compelling reason to ever go back to Whole Paycheck.

MNB reader Olivier Kielwasser chimed in:

The thrill left Whole Foods long ago.  The reason? Turnover, complacency, lower team member productivity.  Twenty years ago, living in Houston and shopping at Whole Foods, a growing chain at the time, I was delighted by the products but shocked by the slowness of store associates… A year ago in Fayetteville, AR, and today in the San Francisco Bay Area, at Whole Foods the assortment remains a step up from the rest of the supermarket channel, while freshness has declined, large swaths of shelving (mostly in Perishables and Dairy) often are OOS or not faced correctly, and employee productivity remains unchanged at its abysmal low with people taking their time accomplishing repetitive tasks that other people would take personal pride in accomplishing faster.

A Kroger, Walmart or Safeway store associate is generally faster and more productive, than a higher paid Whole Foods team member.  How good are their store managers, to allow this type of complacency?  Their district/regional managers?  Their VP of Operations?  At the end of the day, these are the ones to blame.

Yesterday, as part of our coronavirus coverage, I referenced a Sacramento Bee story:

"A prominent Northern California mega-church whose members believe their prayers heal the sick and raise the dead is advising the faithful to wash their hands, urging those who feel sick to stay home, canceling missionary trips and advising its faith healers to stay away from local hospitals.

"Bethel Church leaders say they’re in close contact with local health officials, but they’re not yet canceling services for the 6,300 people who attend services each week in Redding, one of the largest regular gatherings in far Northern California."

I commented:

Really?  Because you'd think that battling a little coronavirus wouldn't be such a big deal for a sect that believes it can raise the dead.  It's enough to shake my faith in their belief.

Not a comment that went over well in all quarters.

One MNB reader wrote:

Your comments about Bethel Church were in bad taste.  I live in Arizona so I have no affiliation to the church.  I believe peoples faith, how they worship and who they worship should be off limits.  Did you really need to poke fun at their believe that they can “heal the sick and raise the dead”?  What good did it serve?  What value did you bring to the conversation by poking fun?

Respect and civility has been lost around the world.  Your comments were intended to tear down not build up.

Shame on you!

And another MNB reader wrote:

I thought your comment this morning regarding Bethel Church’s religious doctrine, as it applied to healing was not needed.  If it was meant in humor, I did not think it was very funny.  Not really showing your finer side.

MNB reader Jeff Gartner, however, wrote:

Loved reading about Bethel church that can raise the dead but refuses to lend their healing powers to covid-19 victims. The headline should be “The irony, oh the irony.”

So you’re sh** out of luck if you get the virus, but you can then just wait until you die and you’ll be fine.

It is entirely fair to tell me that my little joke wasn't funny.  I have an entire family that believes I am only about half as funny as I think I am.

But … I must admit that there are few things about which I won't crack a joke.  I wasn't being disrespectful … just pointing out an irony that struck me as funny.  Maybe I shouldn't have said it … but I've sort of made a career out of saying stuff that a lot of people won't say.