business news in context, analysis with attitude

Published on: April 1, 2020

MNB Content Guy Kevin Coupe needed food for dinner, but didn't want to go to the store.  (It wasn't laziness.  It was a government stay-at-home order.)  So he did something he'd never done before ... he went on Amazon and ordered from his local Whole Foods.  Can you guess how the adventure played out?

Published on: April 1, 2020

by Kevin Coupe

Yesterday I got an email from a restaurant group that I like that is based in Manhattan beach, California;  one of their restaurants, MB Post, was once named one of LA's best restaurants by the legendary food critic Jonathan Gold.

Like restaurants virtually everywhere, MB Post is closed to sit-down diners as the country goes into virtual lockdown to fight off the Covid-19 coronavirus pandemic.  But like many restaurants, MB Post is offering a take-out menu.

But it also is offering something else … what it calls a Home Essentials Kit.

As you can see, the kit includes protein, fresh produce, chocolate chip cookie dough … and a roll of toilet paper.  (Every emergency kit these days has to feature a roll of toilet paper.)

The cost: $75 plus tax.  (Not cheap.  But this is one of LA's best restaurants…)

The company also has a take-out menu for lunch and dinner, which includes a family dinner for 4-6 people.

As I read this email - especially the Home Essentials Kit description - I found myself wondering if this company is likely to abandon this business segment if/when the current crisis level recedes.

I doubt it.

First of all, the crisis may recede, but "normal" is likely to look very different in two or six or 12 or 18 months, however long it takes to get to that point.  And so, a Home Essentials Kit is likely to still have some currency.

Second, the folks at MB Post and its brethren likely are learning more about their customers and creating even deeper relationships with them … and will be able to build on that foundation by being essential to them.

That is something for which every retailer needs to aim.  Those that don't may find themselves irrelevant and eventually obsolete.

Published on: April 1, 2020

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

•  In the US, and number of Covid-19 coronavirus cases has climbed to 188,592 as of this morning (up from 164,359 at the same time yesterday), with 4,056 deaths (up from 3,173 yesterday) and 7,251 reported recoveries (up from 5,507).

Globally, the numbers are 872,830 cases … 43,271 deaths and 184,533 reported recoveries.

•  Fox News reports that the White House coronavirus task force yesterday "warned that even if the U.S. were to continue to do what it was doing -- keeping the economy closed and most Americans in their homes -- the coronavirus could still leave 100,000 to 240,000 people in the United States dead and millions infected."

However, "without any measures in place to mitigate the contagion's spread, those projections jump to between 1.5 and 2.2 million deaths from COVID-19."

President Trump, Fox News reports, "told Americans to brace for 'a very painful two weeks' and warned of thousands of more virus-related deaths."

"The surge is coming, and it’s coming pretty strong," he said.

•  From the New York Times:

"In a matter of days, millions of Americans have been asked to do what might have been unthinkable only a month ago: Don’t go to work, don’t go to school, don’t leave the house at all, unless you have to.

"The directives to keep people at home to stunt the spread of the coronavirus began in California, and have quickly been adopted across the country. By Tuesday, more than half the states and the Navajo Nation had told their residents to stay at home as much as possible, with many cities and counties joining in.

This means at least 270 million people in at least 33 states, 89 counties, 29 cities, the District of Columbia and Puerto Rico are being urged to stay home."

•  In the Washington Post this morning, Bill Gates - the co-founder of Microsoft and a co-chair of the Bill & Melinda Gates Foundation - has an op-ed piece in which he offers recommendations for how to deal effectively with the pandemic.

Gates has a lot of credibility on the subject - in 2015, he delivered a Ted talk in which he urged governments around the world to prepare for a pandemic "the same way they prepare for war — by running simulations to find the cracks in the system."'

In this piece, he recommends three steps - one of them being that "we need a consistent nationwide approach to shutting down. Despite urging from public health experts, some states and counties haven’t shut down completely. In some states, beaches are still open; in others, restaurants still serve sit-down meals.

"This is a recipe for disaster. Because people can travel freely across state lines, so can the virus. The country’s leaders need to be clear: Shutdown anywhere means shutdown everywhere. Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths."

You can read Gates' piece here.

•  Kroger announced yesterday that "it will provide all hourly frontline grocery, supply chain, manufacturing, pharmacy and call center associates with a Hero Bonus – a $2 premium above their standard base rate of pay, applied to hours worked March 29 through April 18. The premium will be disbursed weekly to ensure associates have access to additional cash."

This is in addition to Kroger’s previously announced one-time bonus to frontline associates, which pays out on April 3.

“Our associates have displayed the true actions of a hero, working tirelessly on the frontlines to ensure everyone has access to affordable, fresh food and essentials during this national emergency,” said Rodney McMullen, Kroger’s chairman and CEO. “The Hero Bonus is just one more way we continue to convey our thanks and gratitude not only to our existing associates but also to the more than 30,000 new hires who have joined in the past two weeks and those who will soon join the Kroger Family of Companies.”

Kroger also said that in addition, it is "ensuring associates who are affected by COVID-19 – whether experiencing symptoms and self-isolating, diagnosed or placed in quarantine – can recover with the support of emergency paid leave … Beginning next week, the Kroger Family of Companies is adding ExpressPay – a new benefit that allows most hourly associates to access some of their pay faster, putting money in their pockets sooner than usual."  And, it is "making $5 million available for those facing hardship, including lack of access to childcare and for those considered higher-risk, due to COVID-19 through the Kroger Family of Companies Helping Hands fund."

The company also said that it is "enhancing our daily sanitation practices, including cleaning commonly used areas more often like cashier stations, self-checkouts, credit card terminals, food service counters and shelves … permitting and working hard to procure protective masks and gloves for associates … installing plexiglass partitions at check lanes, and pharmacy and Starbucks registers across the enterprise … adding floor decals to promote physical distancing at check lanes and other counters … adjusting store operating hours to allow more time for associates to rest, clean and replenish inventory … (and) continuing to expand pickup and delivery services and contactless payment solutions like Kroger Pay."

•  BuzzFeed News reports that Trader Joe's employees "working during the coronavirus pandemic fear for their health and the safety of customers," saying that "employees of at least four store locations in New York and Washington, DC, have tested positive for the coronavirus - but the locations have remained open with workers expected to come in as normal … Workers also fear that even if the store itself is not contaminated, they may have been infected by a sick colleague and might be unwittingly passing it on to each other and customers. All this is worsened by communication from their managers and corporate that the workers say has been poor and haphazard, leaving them feeling unsafe and undervalued."

The story notes that "like other supermarkets across the country, Trader Joe’s stores are staying open as essential businesses to ensure people can still get food and supplies during the pandemic. But employees say guidelines around store safety have varied; some stores have brought in professionals for a deep clean after COVID-19 cases were discovered, but other stores have not done so because of the amount of time that had passed since the sick staffer had worked."

According to BuzzFeed News, company spokesperson Kenya Friend-Daniel said that "all Trader Joe’s staffers have been granted seven extra days of paid sick leave and that the company is 'providing up to two weeks of paid sick leave to all Crew Members quarantined for or diagnosed with the coronavirus.'  Additionally, corporate policy now allows for workers to wear gloves and masks — something many store managers were previously prohibiting."

She also said that "in some cases, stores have temporarily closed in order to undergo a deep clean after employees have tested positive for the coronavirus."

•  Ahold Delhaize USA, the largest grocery retail group on the East Coast and fourth largest in the nation, yesterday announced "a substantial $10 million relief package to address critical needs in the wake of the coronavirus pandemic."

"We take to heart our responsibility during this time of need," said Kevin Holt, CEO of Ahold Delhaize USA. "We’re inspired by the selfless dedication of medical professionals and first responders, the acts of kindness and compassion across the globe, and the commitment from our own team to serve and feed their families, friends and neighbors."

The funding will include "$2 million for associate care funds – Lion’s Pride, Helping Hands and Take Care. These funds are for employees and their families in times of need. … $3.5 million in new funding to feed and care for communities on the East Coast through local brand efforts with Stop & Shop and Food Lion giving an additional $1 million each and $500,000 each by Giant Food, The GIANT Company and Hannaford … (and) $3 million already infused through local brands, giving local funding and in-kind product donations."

•  Hy-Vee, Inc. announced yesterday that "it will be reserving one hour of Hy-Vee Aisles Online shopping time slots each day for customers who are considered 'high-risk.'  Aisles Online is Hy-Vee’s grocery ordering service available at hy-vee.com/grocery/ or via the Hy-Vee Aisles Online mobile app.  Starting this Thursday, the reserved Aisles Online time slots will be from 7 a.m. to 8 a.m., seven days a week, which coincides with the in-store hours reserved for these customers:

ages 60 and older, expectant mothers, (and) anyone with an underlying health condition(s) that makes him/her more susceptible to serious illness … All other customers are asked to please respect this hour reserved for these high-risk customers, and limit their online shopping orders to time slots available 8 a.m. or after, seven days a week."

•  Tyler,Texas-based Brookshire Grocery Co. (BGC) announced that all its Brookshire’s, Super 1 Foods, FRESH by Brookshire’s and Spring Market stores will be open Easter Sunday from 8 a.m. to 5 p.m.

“As a Christian company, BGC has traditionally prided itself on observing Christmas and Easter holidays but recognizes the calling to serve our neighbors during this difficult time,” said Brad Brookshire, chairman/CEO. “Our founder, Wood T. Brookshire, believed it was his God-given calling to serve humanity through the grocery business. Today, we are also serving God by serving man during these times. It was not an easy decision to break from our 92-year history on closing on Easter, and we do not take it lightly.”

•  It was just two weeks ago that Powell's, the iconic Portland, Oregon, independent bookstore, announced that because it had to close its five locations as a result of the coronavirus pandemic, it was going to lay off the majority of its 400-person workforce.

But now, Forbes writes, it has gotten so many online orders from faithful customers that Powell's has had to hire back more than 100 people to process them.

“We don’t know what the future holds – none of us does. We’re going to keep the doors to Powells.com open as long as we can, and we will open the doors to all of our stores as soon as it is safe to do so,” Powell wrote in an online posting, adding, "Your orders allow us to keep working and keep our team of incredible booksellers employed.”

Meanwhile, National Public Radio's Marketplace reports that Bookshop.org, which provides e-commerce services to independent bookstores unable to afford their own online operations, "has 'seen a steady rise in book sales' and that stores are selling 'about 800% of what they were selling four weeks ago'."

This rallying of book readers who want to patronize a bookseller other than Amazon, and for the time being need to do so via the internet, is seen as at least a possible solution to the threat that the coronavirus pandemic presents to the independent bookstore sector.

The independent bookstore segment is getting a lot of attention;  Slate had a piece the other day about the danger that they find themselves in, running "on even slimmer margins than the typical mom-and-pop shop—but the ones that have survived in the Amazon era have made it for a reason.

"Until this month, independent bookstores were experiencing something of a cultural, if not necessarily financial, renaissance. Where they’ve persevered, they are often beloved community institutions, not just selling goods but bringing people together around events and serving as a central gathering place. They can also be ad hoc sanctuaries in times of difficulty."

But the problem is that the pandemic has taken away one of the segment's core advantages - the ability to create communal experiences.  But what at least some of them - presumably the really good ones that are both relevant and resonant to their customers - are finding is that their appeal transcends the physical nature of community.  Which is a nice surprise.

•  C-store chain 70-Eleven announced yesterday that it will donate one million face masks to the Federal Emergency Management Agency (FEMA).

•  LL Bean CEO Steve Smith told CNBC yesterday that he believes that the nation's middle market retailers - mid-sized companies that don't sell essentials like food and drugs - have been virtually ignored in recent stimulus packages passed by the US Congress and signed by President Trump, and need to be included in any future stimulus.

According to the story, Smith said "essential retailers were holding up amid the coronavirus pandemic, while retailers with less than 500 employees are eligible for the small business loans in the $2 trillion stimulus package signed Friday by President Donald Trump.  But there is a 'huge segment in the middle' that is so far 'being missed,' he said."

“All of those apparel retailers, every label of a piece of clothing that someone is wearing right now, all of them are struggling mightily with full rent, full payroll and, if they’re store-based, close to zero sales,” Smith said, adding that this segment of the retail landscape has close to “30 million employees or supporting employees.”

As reported here last week, LL Bean has closed all of its bricks-and-mortar stores, and a number of its employees, who normally make its iconic boots, now are stitching together 5,000 masks daily, with plans to ramp up to about 10,000 by the end of the week.  Those masks will be tested by the Massachusetts Institute of Technology before being distributed.

•  USA Today reports that "JC Penney Co. said Tuesday it will furlough most of their store employees. The company employs about 95,000 workers."  The company also said "it would extend the temporary closure of stores and business offices because of COVID-19."

•  CNBC reports that "the biggest U.S. mall owner, Simon Property Group, has furloughed about 30% of its workforce … as the company copes with all of its properties being temporarily shut because of the coronavirus pandemic.

According to the story, "The furloughs impact full- and part-time workers, at its Indianapolis headquarters and at its malls and outlet centers across the US … Simon permanently laid off some employees also, but the exact number could not be immediately determined."

•  MarketWatch reports that "Christmas came early for U.K. grocers as supermarket sales in March trumped those usually posted over the festive period and broke all records, new data show … Households facing lengthy lockdowns appear to have panic bought long-life items such as pasta, rice and tins of vegetable, as they splashed out a hefty £10.8 billion ($13.4 billion) over the past four weeks at Britain’s grocers, according to latest figures from market research firm Kantar."

One of the categories affected by the stockpiling:  "Alcohol sales were boosted by 22%, an additional £199 million, in the past month, as Brits hit the bottle," MarketWatch says.

I'm not sure that the "Christmas came early" line was the best choice by MarketWatch.  I'm often accused of being too glib for my own good, but I'm trying to tone it down at the moment.  Maybe MarketWatch needs to do the same?

•  The United Fresh Produce Association announced yesterday that it will replace its annual June show - scheduled to take place in San Diego - with a new, weeklong virtual platform, United Fresh LIVE!

The week of June 15, the organization said, the online platform "will attract thousands of colleagues from every sector of the industry, but (will be) intimate enough to truly engage with business partners throughout the show. You'll explore our online expo floor to discover the latest in fresh produce marketing and merchandising, packing and processing equipment, new labor-saving technologies, sustainable packaging options and more. Further enhance your experience through unique destinations, discussion areas, and special learning pavilions.  Networking experiences will set the mood as participants gather virtually with old friends and make new connections."

Registration will be free for all participants.

Here's a message from United's CEO, Tom Stenzel:

•  The International Dairy Deli Bakery Association, (IDDBA), announced  that IDDBA 2020 scheduled for May 31-June 2 in Indianapolis, Indiana, has been cancelled due to the worldwide COVID-19 pandemic.

Planning for IDDBA 2021 in Houston, TX, scheduled to take place June 6 -8, already is underway, the organization said.

•  At the same time, Phil Kafarakis, president of the Specialty Food Association (SFA), said that no decision has been made yet about whether the SFA Summer Fancy Food Show - scheduled to take place in New York City from June 28-30 - will be held.  "The SFA continues to carefully monitor developments around the coronavirus," the organization says on its website.

The Fancy Food Show is scheduled to be held in Manhattan's Javits Convention Center, which has been transformed into a 1,200-bed emergency field hospital dealing with the overflow from the city's hospitals;  the convention center apparently can be expanded to hold almost 3,000 beds.  I can understand why SFA may be delaying the decision - for financial reasons, it probably can't cancel until told it has to cancel.  But if I were a regular Fancy Food Show attendees, I wouldn't be making any travel plans … not that they even could these days.

•  Variety reports that a Nielsen analysis shows how the pandemic has affected TV viewing, - "Over the first three weeks of March 2020, the total estimated number of minutes streamed to the TV was 400 billion, up 85% compared with the comparable three-week period in 2019, according to a Nielsen analysis.

"And during the week of March 16, consumers watched about 156.1 billion minutes of streaming content on TV, up 22% from the week prior, and 2.2 times the comparable week the year prior."

The story makes the point that "Nielsen is reporting just streaming to TVs: The analysis doesn’t measure mobile or PC video streaming, so the total amount of online video U.S. consumers are watching is even higher."

In addition, Variety writes, "Netflix has the biggest share of video streaming on TV among the services Nielsen measures, representing 23% of all streaming minutes viewed for the week of March 16. That’s followed by YouTube at 20%, Hulu at 10% and Amazon Prime Video at 9%."

The question - and this can be applied to a lot of industries - is whether at some point in the future consumers (of media, food, clothing, etc…) will return to some semblance of old behavior, or whether these new habits, developed during the pandemic, will remain ingrained and maybe preferred.  If the latter is true, it will create a lot of problems for legacy businesses, which will either adapt or, eventually, fail.

Published on: April 1, 2020

Reuters reports that New York City Mayor Bill de Blasio has ordered the investigation of Amazon's firing of an Amazon employee there who helped to organize a walkout over the company's coronavirus-related policies.

According to the story, "The dispute centers on a walkout by 15 workers on Monday at Amazon's warehouse in Staten Island, New York, amid concerns over reports of coronavirus cases among the facility's staff.

"The total number of workers at the warehouse was not immediately clear.

"De Blasio said he had ordered the city's commission on human rights to look into an allegation the worker was fired after raising health and safety concerns over the coronavirus outbreak."

Amazon has maintained that the employee was fired for ignoring physical distancing rules and for coming to work even after ordered to stay home after coming into contact with someone who was infected by the coronavirus.

New York State Attorney General Letitia James said that the firing was "disgraceful" and she called for an investigation by the National Labor Relations Board (NLRB).

Published on: April 1, 2020

MarketWatch reports that "traffic at Walmart Inc., Costco Wholesale Corp. and Target Corp. dropped for the first time in the weeks since the coronavirus pandemic ramped up in the U.S., according to Placer.ai."

According to the story, "Walmart traffic was down 6.7% year-over-year for the third week of March. The previous week, traffic was up 18.4% … At Costco, traffic fell 8.7% year-over-year for the third week of March. The second week of March, traffic jumped 34.7% … And at Target, traffic slumped 20.5% in the third week of March after climbing 19.2% year-over-year the previous week.

The decline in traffic is attributed to a pair of  reasons - people have stocked up during the first weeks of the pandemic crisis and don't need to keep obtaining basic supplies, and people are using more delivery services as government warnings against going outside have become more specific and amplified.

Published on: April 1, 2020

Axios reports on a new poll conducted with Ipsos that reveals two ways in which the coronavirus pandemic is having differing impacts on differing levels of society.

On the one hand, "The survey finds Americans with less education and lower incomes far more likely either to have to keep showing up at their workplaces — putting themselves at greater daily risk of infection — or more likely to have seen their work dry up."

On the other, "Those with the most resources and the least exposure are significantly more likely to say their emotional health is taking a hit.  47% of respondents designated as coming from the upper socioeconomic status and 45% of those from the upper-middle status said their emotional well-being declined. That was the case for just 34% of the lower and lower-middle groups and 36% of the middle group."

On the surface, Axios says, "the survey results show one nation shifting toward remote work and handling the emotional challenges of the crisis. But dig deeper, and you find Americans' experiences deeply bifurcated along economic and educational lines.  Concerns about job security and ability to pay the bills are tied to socioeconomic level.

"There are also correlations across the survey respondents' race, ethnicity, age, region of the country and whether they live in urban or non-urban settings. But the driving factor appears to be socioeconomic status."

Published on: April 1, 2020

•  Amazon Web Services yesterday announced "the general availability of Amazon Detective, a new security service that makes it easy for customers to conduct faster and more efficient investigations into security issues across their AWS workloads. Amazon Detective automatically collects log data from a customer’s resources and uses machine learning, statistical analysis, and graph theory to build interactive visualizations that help customers analyze, investigate, and quickly identify the root cause of potential security issues or suspicious activities … Using machine learning, statistical analysis, and graph theory, Amazon Detective produces tailored visualizations to help customers answer questions like 'is this an unusual API call?' or 'is this spike in traffic from this instance expected?' without having to organize any data or develop, configure, or tune their own queries and algorithms."

Published on: April 1, 2020

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

•  From MarketWatch:

"Millennials may not like 'labels' in general, but they’re as hooked on Amazon as boomers and Gen X.  That’s according to the latest Brand Intimacy Survey by marketing and branding agency MBLM, which measures how emotionally connected Americans are to the brands they buy. Their scale is based on factors such as the positive feelings a user has for a company or label, and how much their values align, as well as the depth and intensity of the emotional connection in the brand relationship."

According to the story, "Amazon was one of the few companies to be beloved across every age group, appearing in the top five for Gen Z/millennials, Gen X and baby boomers alike — and with boomers naming it their No. 1 brand overall. [In fact, a recent Morning Consult survey also found that more Americans trust Amazon and Google than they trust the police or the U.S. government.] Apple also made each age group’s top 10, and was in the top three for boomers and Gen X."

One interesting - and to brands, potentially concerning - note from the survey:  "Boomers — who control almost 70% of disposable income in the U.S. — stood out for being the only ones really showing a taste for consumer packaged brands."

While Boomers may have more disposable income than anyone else, they won't always, because they - we - are not going to be around forever.

Published on: April 1, 2020

Bloomberg reports that "hospitals are threatening to fire health-care workers who publicize their working conditions during the coronavirus pandemic -- and have in some cases followed through."

The story notes that "doctors are a famously independent profession, where individual medical judgment on what’s best for the patient is prized over administrative dictates. That’s reared its head during the Covid-19 outbreak, with many physicians, nurses and other health-care workers taking to social media to express deep concerns about the lack of protective gear or much-needed patient-care equipment like respirators. Some posts have gone viral and are being shared hundreds of thousands of times, often tagged with #GetMePPE. Privacy laws prohibit disclosing specific patient information, but they don’t bar discussing general working conditions."

However, the story says, "Hospitals have traditionally had strict media guidelines to protect patient privacy, urging staff to talk with journalists only through official public relations offices."

But the current situation - and the lack of resources available to many health care workers in hot zones like New York City - has energized many in the medical community, prompting them to turn to social media to draw attention to the plight of their patients.

You can read the story here.

Published on: April 1, 2020

Got the following email from MNB reader Mark Heckman, responding to yesterday's FaceTime musings:

Kevin….

Enjoyed sharing your walk with Spenser.   I agree totally with you that life Post COVID  (PC) is going to be necessarily different  for those of us in retailing…some more than others, but all need to be thinking right now about how shopper behaviors and attitudes will be altered as we attempt the put the virus in our rear view mirror.   Some areas to think about:

•  Demonstrating to your in-store customers how you are safeguarding your stores and associates from viruses.  This could meaning shopper spacing, more cleaning, even sanitary packaging. It could also mean re-designing or re-formatting your stores to facilitate less congestion and faster shopping trips so shoppers are not exposed to other shoppers for long periods of time.  (totally counterintuitive to most retailers).

•  Understanding the steps and investment needed to offer new ways to get product to shoppers…or in some cases accelerating your ability to execute eCommerce, BOPIS, home delivery.

•  New product development and additions.  Are there new products that lend themselves to viral safety that you may want to include in your store’s offering that you would have never thought of offering before?   Gloves, masks, cleaners.

•  Shopping services for Seniors.  What more can you do for the aging and more vulnerable customers to safeguard them.  Perhaps continue on with special hours, special delivery service rates, etc.

•  For larger retailers, insure you have a senior leader whose chief responsible is associate and shopper safety.  I’m sure NRF, FMI, NGA and other organizations will be conducting workshops and webinars on this topic…..

If COVID 19 is seasonal and makes another un-welcomed appearance later this year…time is of the essence to get started now on a plan of action.

Yesterday MNB took note of a Reuters report that "U.S. senators are calling for investigations of record profit margins for beef processors like Tyson Foods and Cargill, after ranchers complained surging meat prices due to coronavirus hoarding did not translate into higher cattle prices."

One MNB reader responded:

We need to keep in mind that many commodity prices are rising on Covid-19 shopper demand, are all raw materials producers being examined?

Grain prices have been very low ever since the China Trade wars, when grain prices are low, farmers feed more animals to use the grain, as all farmers do this animal numbers climb and often exceed demand at which point cattle prices fall.

A lot of beef sold in the US comes from Mexico and Canada, is this currently taking place?

Beef processors buy cattle, process them into beef cuts and other items and resell. Wonder how those cow hides are selling these days. Processors primarily use immigrant labor which has been impacted by our recent crackdowns and their employees are as subject to Covid-19 as anybody. So their capacity may be constrained in spite of ready cattle supplies. Also keep in mind that one of the largest producers in the USA is owned by a Brazilian company.

In times of high retail demand processors can easily raise prices regardless of their raw materials costs.

Bottom line here is that there is a lot to examine and it may or may not be the cattle guys at all. I hope they examine the entire supply chain instead of blaming anyone other than their own constituents or contributors.

Referring to a New Balance ad we posted yesterday…

…one MNB reader wrote:

The New Balance ad clearly takes a cue from the WWII ad messaging from manufacturers and CPGs. I assure you I’m not old enough to have personal memories of that time, but during a lifetime in advertising, I have studied the wartime ads at length. By stressing shared sacrifice (consumers were forced to forego favorite products while markers’ output went to the war effort), companies emphasized their contribution to the country while earning goodwill and keeping their brands in play. Smart strategy then and now.

On another subject, from an MNB reader:

Kevin, I read with great interest the HBR story on Retailer / Vendor negotiations.  I’ve been on both sides of these discussions (and also on the 3^rd and 4^th side, when you consider either the manufacturer to vendor and/or retail service provider). There’s really nothing new here, honestly. There’s a ton of waste in many parts of the process.

The retailers would be better served to disclose their scorecards of success and insist the vendors figure out how to build customized programs to support it.

The vendors need to hire people who are skilled at figuring out customization without creating channel conflicts. Not just stealing people who know similar (maybe even competing) products.

Both statements sound simple. Some could read this and say “we do that today, but the other side doesn’t”. 

There’s too much focus early-on by the retailers in setting up Vendor Agreement forms, indemnity (risk) arrangements and “selling programs”.  The vendors, who more and more are small, new-to-market brands which have a better solution to consumers changing needs, are more often focused on being able to say to their VC “I landed retailer X” in hopes of getting more investment monies.  Vendors focus less on execution and only a few of them really think about sell through. Very few think about cash collection, therefore miss the details around PO match to invoice, until 30+ days after the invoice is issued.

What HBR says is true, that the problem with current company-vendor relations starts at the beginning of the relationship. Vendors often employ poorly-trained negotiators, who don’t have a clue about retailer KPI’s or business strategy.

Adding to the problem is that negotiation training companies, like the GAP Partnership or Karass (two of the better marketers of this service in CPG / FMCG) focus less on the business needs and KPI’s and more on the negotiation process. Better negotiation training companies today include Conlego or The Dealmaker, both of which focus on business partnerships that enable an indispensable relationship where price / terms is one element of a plan.

Retailers that share data and their KPI’s can use this to create a cost advantage. Anyone studying Walmart and Retail Link learned this long ago, as the vendors always came to Walmart more prepared, since the data is shared. One factor in Amazon’s growth is data transparency, both in sales and consumer feedback. Kroger, too, has advanced through its relationship with 82.51, although small vendors struggle to pay the fee(s) for this data. “# of doors” doesn’t correlate exactly to consumer sell-through; finding retailers with shoppers that match a particular brand often correlates better and means we can sell more where it matters.

Its true all retailers must have contingency plans. With most SKU’s sourced globally these days, a Category Mgr must have options if the POG vendor can’t fulfill. But, vendors who manage to an agreed strategic plan will generally get first consideration over vendor simply having the lowest price.

The VC’s can help the upstart vendors by bringing this expertise to them for the “must-have” retailers. There’s many retired (e.g.1099) types out there that can be used as a subject matter expert to help new vendors.  Retailers benefit when they share more consumer and sales insights to all their vendors vs. simply seeing this as a revenue center by selling data to other 3^rd parties. They should reward vendors that “get it” with T2T meetings and challenge the vendor to do more, even sharing next years plan.  Those that don’t get it will remain transactional.

Last point: all parties will benefit more through a stronger emphasis on execution, if the mutual goal is to “sell more”. You don’t have to be DSD to manage execution but you better know the stores that matter.

HBR can spin this as they need, but really, much of this debate hasn’t changed in the last couple of decades. 

And, another email about last week's MNB Virtual Happy Hour:

Thank you so much for the happy hour on Friday. I absolutely loved being part of it.   It was great to connect with fellow fans of MNB.  Having everyone share what they were drinking was a great way to engage people.  I was very impressed with the variety of backgrounds and the knowledge shared.

I think one of the positives of what we are dealing with now is that I learned a new technology (Zoom) and found how easy it is to use and think it will be a great way moving forward to connect with customers, family, and friends.  I have also signed up for a free 45 minute Zoom hacks seminar that is being hosted by a career coach and business strategist that I know.  She made it clear in the sign-up section that this would not be a commercial for her services, but 45 minutes of learning to maximize the features of Zoom. 

I hope that you will be able to “host” another happy hour on 4/17 and that even more people will join.

That's the plan.

Published on: April 1, 2020

Every year since I started MNB, with the exception of when the date fell on a weekend, April has been a day on which the lead story has been an April Fool's joke.

But not this year.

I hope you'll forgive me, but there isn't a lot at the moment that seems particularly funny.  The crush of sobering news is just too oppressive at the moment.  

I hope when Thursday, April 1, 2021, rolls around, the mood will be brighter, and I'll be able to come up with something that will make you laugh.

I will, however, respond to the many emails that I keep getting by offering you something that I hope will make you smile: