retail news in context, analysis with attitude

I got a number of emails yesterday responding to my interview yesterday with Park City Group CEO Randy Fields, whose ReposiTrak business focuses on the broader out-of-stock issue, for an assessment.  Fields' observation - an industry focus on just-in-time delivery created an infrastructure that focused too much on efficiency and not enough on effectiveness, which gave retailers and suppliers too little flexibility to adjust to rapidly changing circumstances.

MNB reader Mike Slattery wrote:

Over the years you have published some very informative interviews, but today’s piece with Randy Fields of Park City Group was IMHO the best ever. The clarity with which he explained the foibles inherent in the grocery supply chain was truly impressive. We can only hope that both ends of the supply chain were  listening.

One MNB reader wrote:

Very good interview, Kevin. It was extremely informative and straight to the point. I can tell you that in nearly 55 years (since I first started in the grocery business), I have never seen anything like the current state of the industry. One thing I do know, however, is that our grocery industry will figure out how to overcome the challenges and be successful. Keep up the great work! Thank you.

MNB reader Monte Stowell wrote:

What is interesting is going into a grocery store and looking at what is on the shelf versus what is out of stock. Now is the time for grocery and mass merchandise retailers to look long and hard at what does not sell and ask themselves, “why are we carrying all these items?” The real reason is that they soaked up the slotting dollars as an easy revenue source. Look at all the extra costs that have been incurred by adding new warehouse slots, slow moving inventory, taking holding power away from faster moving items, the cost of redoing schematics, and then the frustration of the consumer not being able to find the item they want due to out of stocks. I will mention just one category that boggles the mind, toothpaste. Take a look, about 80-100 skus. Colgate and Crest, 20-25 skus each. Most of the skus are very slow moving, and do not give a very high ROI. Lastly, the increased labor costs throughout the system to move skus in and out of the entire supply chain to shelf, and take a long hard look at what is driving category sales. 

I agree with you … but I'm not sure that now is the best time to be making these decisions.  It might make sense to let things calm down a bit.

From another reader:

Kevin, having spent a lifetime in the supermarket business including time spent on the ECR committee regarding inventory, just in time, etc, I find little to disagree with in your interview. However, lauding Amazon for doing a better job is just simply wrong with respect to grocery items, their out of stocks on the same grocery items have been as bad or worse than our local supermarkets with no indication of when they may be back in stock and many overpriced scam items from outside sellers. Number 2 because I have a compromised immune system we have used grocery delivery by Instacart twice and order and pickup once in the past two weeks and they have worked well for us in terms of filling our needs and keeping us protected so in spite of a few issues of delay due to volume and the same out of stocks one would find if shopping in the store the system has worked for us and the price differential has been worth it for us.

And, from still another reader:

Thank you for the great insight offered in your interview with Mr. Fields from ReposiTrak.  While listening to Mr. Fields’ ideas, two ideas came to mind.

First one of my largest retailer customers had already started a major SKU rationalization initiative prior to the current crisis, with the objective of reducing center store space in favor of sections that help them differentiate themselves in their competitive market.  Everyone sells the same center-store stuff, including Amazon, and low-price is no longer a competitive option.  The best option for using physical retail store space is to use it to attract shoppers with something they cannot get elsewhere.

Secondly, we currently have a process in place to ship and store critical product closer to retail stores through our hurricane preparation programs executed in the Southeast.  It is the same philosophy as the new, micro-warehouses.  Keep the most needed products close to where they will be needed to reduce costs of rush shipments when an emergency occurs.  

One defect in the process is that nobody wants to pay to keep inventory that is not immediately offered for sale.  There should be a financial tool through which retailers or wholesalers are able to benefit by keeping emergency inventory long-term.


Regarding the passing of Dr. Tom Haggai, one MNB reader wrote:

The death of Tom Haggai is a real loss to the industry. In a business that often has ruthless interactions between retailer and vendor, Tom simply did not play by that rulebook. Distinguished, impeccably dressed, formal, gracious are words that come to mind. While at Coca-Cola, I attended, on many occasions, the annual IGA Vendor Conferences. Despite huge crowds of vendors, and plenty of Coca-Cola attendees way higher up the ladder than I was, he never missed an opportunity to greet me (and my wife, since they invited spouses), always remembering our names and treating us like welcomed guests. He was one of the first who recognized partnerships, not simply negotiations. He understood the difficulty that IGA was facing, a worldwide patchwork of independent retailers facing the threat of consolidating retail chains, as well the growth of retailers like Whole Food Markets and Trader Joes. He challenged suppliers to never ignore the neighborhood IGA retailer who knew your name, supported your products, and worked with you, not against you. Tom was a great leader and a gentleman. A tough loss.   


I commented yesterday about the threatened strike by Instacart workers concerned about inadequate pandemic protections:

This is a company upon which way too many retailers are placing their trust to carry not just their products, but their brand equity, top consumers all over the country.  

No retailer is going to change its e-commerce arrangements at this moment in time, but I do believe that they need to be examining their outsourcing deals to make sure that the retailer brand equity is the highest priority, that their customers' needs are being served in ways that bolster their connection to those shoppers, and that the potential for disintermediation is being minimized.

You can't wait until the crisis has passed to start making these assessments.  You have to start now, before it is too late.

One MNB reader responded:

While I clearly understand the issues you have with Instacart and agree that retailers need to look at the possibilities of doing this themselves, in our market there are no options or choices for delivery so: In the land of the blind, the one eyed man is King. Don’t begrudge the one eyed man, shrink the land of the blind!

Ah … but there are none so blind as those who will not see.


Yesterday we took note of a Boston Globe report that in just the few weeks that Beantown has been dealing with the Covid-19 coronavirus pandemic - much of the state is shut down and residents are being encouraged to avoid unnecessary contact and practice physical distancing - the city's air actually has gotten fresher.

I commented, in part:

It seems to me that there is an enormous lesson here.  Granted, the precipitating events are anything but desirable, but the mark of an evolved culture is that you learn from even the bad stuff.  We have a decision to make here.  Are we going to be an evolved culture?   Or are we going to ignore the lessons of the moment and just go back to the same-old, same-old way of doing things? … At the same time, this story ought to serve as a business lesson.  Retailers and suppliers - and, for that matter, consumers - are learning hard lessons about what works and what does not work, what is essential and what is not, and how to best anticipate and serve customers needs and desires.  Are these lessons going to be factored into future strategic and tactical plans and decisions?  Or are businesses going to go back to business-as-usual?

Prompting one MNMB reader to write:

Our opportunity is that we get to shape our new normal.  

Absolutely.

On the other hand, we don't always take advantage of opportunities.  We could know, intuitively, that when fewer vehicles are on the road he air gets cleaner, but then we'd probably go ahead and roll back current automobile fuel efficiency standards.  Which you'd think we wouldn't do if we had a choice.

Oh, well.


MNB reader Mike Bach had a question:

I wonder if national auto insurance rates will fall, since there’s less claims being paid out with less drivers on the road.

(In some states, that means the Attorneys who file these claims will have to get as much as they can from accidents that do occur. Fewer “loss of consortium” claims, like the attorneys in FL like to file.

Brings a whole new meaning to “pain and suffering”…)


Regarding our story about retailers re-evaluating how they deal with vendors, one MNB reader wrote:

As a vendor “sales guy” for over 40 years, I have always felt that vendors were always minimized in your discussions. The expectations and demands placed on vendors have increased over the years as slotting fees, late charges and reset costs have increased with a “take it or lose the business” attitude with the trade.

I waiting to see the new normal.


On another subject, from another reader:

Regarding the lack of condoms story and the possibility of a baby boom in 9 months, I heard that when these babies reach adolescence they may be referred to as Quaranteens.

Boom!


Responding to our story about e-funerals, one MNB reader wrote:

I like this idea, although I hate that it’s needed. Having lost all 4 of our parents in just over a 2 year timespan, my wife and I are acutely aware of how helpful it was to be able to gather, to celebrate, and to remember their lives with family and friends. Not having the opportunity to do that seems like the unkindest cut of all, denying people the fellowship and support needed as they navigate the valley of death.

I know our church has had to quickly develop new ways to stay connected; launching pre-recorded worship services on YouTube for Sunday mornings and using Google Hangouts/Meets for mid-week prayer time. Creating a virtual space for folks to grieve is an idea born out of necessity and humanity. It, too, will continue beyond this pandemic in some form, I’m sure.


It was so nice to get some emails from folks who were part of Friday's MNB Virtual Happy Hour.

Here's one:

Thanks so much for hosting – I  truly enjoyed the happy hour and the feeling of connection with other retail folks across the US.

I wanted to share with you a few creative ways businesses near  me are adapting to the current situation.

A local distillery, Boardroom Spirits, is now making hand sanitizer and giving out 4 oz. per person per day for free. Truly a BYOB - (for the sanitizer!). While picking up your sanitizer you can also pick up pre-orders of anything on their menu and they even deliver for $5 within 20 miles of Lansdale, PA (Will even bring free sanitizer too) 

Our veterinarian is doing curbside visits outside their practice.

A local car dealer will bring the test drive and the finance person to you.

List goes on, but it’s encouraging we can still do some of the ‘same’ things – just differently.

And from another:

Truly enjoyable, and the connection was needed & relevant.  I was able to hang with the group for an hour then dropped, so missed my chance to point out that I’m the one in Portland and “for the team” will venture to Willamette Vineyards to enjoy their fab facility & view of the vineyards off to the East.  Looks like they have some screeching specials! 

A later start time would be good for us out here, yet HH at 8pm EDT is hardly all that happy.   I was able to do some ceremonial sips even at 2:30, and can again.  Go with where the majority of your readers are, and others will have to adapt.  I’ve learned trying to make everyone happy results in frustration for the host, and inevitably a group who still aren’t happy with what you decided.  Any HH is welcomed.