In the first of a new series of weekly Retail Tomorrow podcasts, Sterling Hawkins, co-CEO and co-founder of CART-The Center for Advancing Retail & Technology, and MNB "Content Guy" Kevin Coupe team up to speculate, prognosticate, and formulate visions of what tomorrow's retail landscape will look like post-coronavirus.
Episode 1: How the pandemic has stress-tested the retailing infrastructure like never before, and what business leaders should take from the experience.
The Washington Post reports this morning that the US Department of Labor is saying that 6.6 million Americans filed for unemployment benefits during the past week, meaning that "more than 17 million new jobless claims have been filed in the past four weeks, a rapid and unprecedented escalation in unemployment in the United States since the week that President Trump declared a national emergency."
The unemployment figures result from the vast number of business closures across the country that have occurred as the country tries to respond to the Covid-19 coronavirus pandemic, which has infected close to a half-million people in the US alone, and killed some 15,000 people. While business closures, sheltering at home and physical distancing all are seen as affective responses to the pandemic, the result has been enormous economic pain.
The Post writes that "the 17 million figure includes new reporting from the Labor Department that even more people filed for unemployment in the prior week, pushing the jobless claims up during the week ending March 28 to a record 6.8 million, up from 6.6 million."
And, the Post adds, "There was hope that swift government aid for businesses would entice companies to keep workers employed and paychecks flowing, but job losses have mounted even after Congress passed a historic $2 trillion relief package. Businesses small and large are struggling to get loans. As companies run out of cash, they are cutting workers and telling them to file for unemployment benefits. But many states have been slow to distribute money.
"It takes two to three weeks to process someone’s unemployment claim in normal times. Since Trump declared a national emergency on March 13, state unemployed systems have been overrun, causing even longer delays."
KC's View:
This doesn't just create economic pressure, but also political pressure to reopen sectors of the economy … but most public health experts argue that if we move too fast on the economic front, it will create big issues on the public health front. If the economy is reopened and then has to be closed down again because of new or resurgent hot spots, it could do even greater economic damage.
MNB Content Guy Kevin Coupe has his first experience with a telehealth appointment, and he came away from it convinced that not only is this the future of certain kinds of medicine, but also the future of certain kinds of retail.
I want you to look at this Facebook posting, which features a video clip of an assistant store manager at a Milford, New Hampshire, Market Basket - the store's website identifies him as K. Pusey - in the parking lot explaining the new rules of shopping to lined up customers.
I love his plain-speaking approach … and never more so than when, about halfway through the clip, he explains to the customers that it is completely inappropriate to scream at 16-year-old employees because the store is out of Lysol. (This incident clearly set him off, and he expresses himself in no uncertain terms.) He explains that the teenagers working in the store "are a godsend. If I don't have those kids to ring a register, I don't open the store." He points out that these kids are working a great personal risk, while their friends are at home watching Netflix … and he says, "Leave the kids alone. I need them. You need them."
I've never met this fellow, but he is my new hero.
Axios reports that office supply retailer Staples has informed its landlords around the US that it will not make its rent payments for April, even on stores that remain open because they are deemed essential.
The story makes the point that Staples only told the landlords about its position over the past three days, made no commitment to paying May rents, expressed no willingness to negotiate for lower rents or make deferred payments, and made it clear that it expects landlords to continue to providing services such as electricity, water, and garbage pickup.
Landlords have few options, Axios reports - they are forbidden to evict anyone under current federal mandates. But these commercial landlords are "stuck in a tightening vise, forgiving or deferring payments from shuttered tenants while still needing to meet their own mortgage obligations."
Axios makes the point that this is not just a case of a distressed retailer not paying its rent: " Private equity firm Sycamore Partners took Staples private in 2017 for $6.9 billion. It also split the company into three independent operating entities — U.S. retail, Canada, and corporate supply.
"Sycamore last year refinanced its buyout via $3.2 billion in new debt, out of which it paid itself a $1 billion dividend. Or, put another way, Staples took on $1 billion in additional debt, thus reducing its financial flexibility in a crisis."
KC's View:
Ah. "Private equity." Two words that increasingly give me agita whenever I hear them, especially when related to retail.
Axios makes the case better than I could - that "most American businesses are struggling, and the pain is particularly acute in physical retail. No one ever made a model for this. At the same time, so many are pulling together to alleviate pain when possible. Staples and Sycamore are an exception, choosing instead to exacerbate it."
And a really smart friend of mine from the business was outraged: "The Sycamore bastards took a $1B dividend on the debt re-fi, but now won’t pay their contractual obligations," he wrote me. "This is SUCH a bad look for PE, and one more reason why they shouldn’t be in retail."
The New York Times this morning reports on how "demand for food assistance is rising at an extraordinary rate, just as the nation’s food banks are being struck by shortages of both donated food and volunteer workers."
Excerpts from the story:
• "Feeding America, the nation’s largest network of food banks, with more than 200 affiliates, has projected a $1.4 billion shortfall in the next six months alone. Last week, Jeff Bezos, the founder of Amazon, announced that he was donating $100 million to the group — the largest single donation in its history, but still less than a tenth of what it needs."
• "The coronavirus is everywhere in America, and so is the hunger. More than a million people have viewed drone footage of a miles-long line of cars waiting for food last week along a bend in the Monongahela River leading to the Greater Pittsburgh Community Food Bank."
• "Even before the current economic crisis, the Federal Reserve found that four in 10 American adults did not have the savings or other resources to cover an unexpected $400 expense. While Congress passed a sweeping economic recovery package last month that promised payments of up to $1,200 to most American adults, it remains unclear when the funds will arrive.
"Adding to the problem, school closings across the country mean that many families who relied on free or subsidized school breakfasts and lunches to keep their children fed are facing even greater need."
This is a social problem that inevitably will have an enormous impact on businesses, and food retailers need to think about how they can serve the food insecure population. It only is going to get worse. (This story was reported by the Times before this morning's alarming unemployment numbers.)
The Wall Street Journal reports this morning that a number of companies - including Equinox, Macy's and Steelcase - are "citing the federal government’s beefed-up unemployment benefits as they furlough or lay off staff amid the coronavirus pandemic. The stimulus package is changing the calculus for some employers, which can now cut payroll costs without feeling they are abandoning their employees."
The logic: "The new stimulus package will give employees who have been laid off or had their hours cut an extra $600 each week for up to four months on top of their state’s regular unemployment payments. By itself, the $600 is the equivalent of working 40 hours a week at $15 an hour. For someone working full-time and normally earning $7.25 an hour that comes to more than double their income before getting laid off."
The Journal writes that "Macy’s Chief Executive Jeff Gennette said the new benefits in the federal stimulus program played a role in the company’s decision to furlough 125,000 workers this past week. The retailer’s leadership team decided that the extra $600 a week, plus the fact that Macy’s would continue paying health benefits through May, provided enough of a cushion to furloughed workers, he said."
KC's View:
I got an email from an MNB reader this week that read…
KC: we are a food manufacturing company. We are open for business, and we are hiring. But the candidate pool is not as deep as one would think. And then we got this yesterday from HR:
"Our recruiter sent us this note from one of her sources.
'I can share with you that we have seen candidates already reacting to the stimulus bill passed on Friday. We had several employees with good attendance not show up for work on Monday. Unemployed people now average $23-24/hour staying at home. The average person makes $350/wk from the state and then the Fed adds $600/wk.'
At this rate, it might take a long time to get people back to work, when 'not working' can seem a more financially rewarding option."
Random and illustrative stories about the global pandemic, with brief, occasional, italicized and sometimes gratuitous commentary…
• In the US, have been 435,160 cases of the Covid-19 coronavirus, with 14,797 deaths and a reported 22,891 recoveries.
Globally, there have been 1,529,084 cases of the coronavirus, with 89,411 deaths and 337,133 reported recoveries.
• From a press released issued yesterday by the US Department of Health and Human Services (HHS):
"Earlier today, the Office of the Assistant Secretary for Health issued new guidance under the Public Readiness and Emergency Preparedness Act authorizing licensed pharmacists to order and administer COVID-19 tests that the U.S. Food and Drug Administration has authorized."
And HHS Secretary Alex Azar issued the following statement:
"Giving pharmacists the authorization to order and administer COVID-19 tests to their patients means easier access to testing for Americans who need it. Pharmacists play a vital role in delivering convenient access to important public health services and information. The Trump Administration is pleased to give pharmacists the chance to play a bigger role in the COVID-19 response, alongside all of America's heroic healthcare workers."
• The Associated Press reports that the US Centers for Disease Control and Prevention (CDC) "has issued new guidelines for essential workers, such as those in the health care and food supply industries. The guidance is focused on when those workers can return to work after having been exposed to the new coronavirus."
The guidance includes: "Do take your temperature before work … Do wear a face mask at all times … Do practice social distancing as work duties permit … Don’t stay at work if you become sick … Don’t share headsets or objects used near face … Don’t congregate in the break room or other crowded places."
There also is related guidance for employers in essential industries: "Do take employees’ temperature and assess for symptoms prior to their starting work …
Do increase the frequency of cleaning commonly touched surfaces … Do increase air exchange in the building … Do send sick workers home immediately … Do test the use of face masks to ensure they don’t interfere with workflow."
• CNBC reports that Panera Bread "is selling groceries as housebound consumers eat fewer meals from restaurants. Customers are able to order breads, bagels, milk, yogurt, cream cheese and fresh produce as part of an initiative that began Monday … The grocery initiative was devised two weeks ago as a way to address consumers’ needs for groceries and to help Panera’s sales … Customers can order groceries on Panera’s app, its website or through Grubhub. Their orders can be delivered or picked up at a Panera location."
Another example of an approach that increasingly is being adopted both by independent restaurant operators and chains, as they look to find ways to do something to rescue themselves from plummeting sales and at the same time provide products and services that are relevant to their communities.
As a result, they may be reshaping their own businesses, and maybe even the broader food retail landscape for the long term.
• The Los Angeles Times reports that "as stay-at-home orders swept across the country, shoppers rushed to grocery stores and stocked up on staples, among them eggs. This surge in demand has boosted egg prices, both nationally and especially in California, and probably will for some time."
The problem: "There’s only a fixed number of eggs available on any given day — you can’t squeeze an unlimited number of eggs out of a chicken, and it can take months to buy more hens and build more coops for them. In the meantime, shoppers are buying extra cartons as they aim to limit grocery runs during the COVID-19 pandemic."
Plus, egg demand traditionally has been high during times of economic hardship, which means that those chickens may be busy for some time.
So what we all need is a crazy brother? Remember the old joke? "A guy walks into a psychiatrist's office and says, 'Hey doc, my brother's crazy! He thinks he's a chicken." The doctor replies, 'Why don't you institutionalize him?' And the guy replies, 'I would but I need the eggs'."
• USA Today reports on how single-use plastic bags are seeing a resurgence in the time of pandemic. While their negative impact on the environment has been much debated, leading to outright bans in a number of states and communities around the country, the fear that the coronavirus could be more easily spread on reusable cloth bags has, at least for the moment, outweighed those concerns.
For example, "Oregon also has suspended its brand-new ban on plastic bags, and cities from Bellingham, Washington, to Albuquerque, New Mexico, have announced a hiatus on their bans.
"In San Francisco, one of the first cities in the US to ban the use of plastic bags, the Department of Public Health issued an order preventing businesses from 'permitting customers to bring their own bags, mugs or other reusable items from home'."
I'm an enthusiastic user of cloth bags that I bring with me to the store, but I totally concur that for the moment, we have to step back from what I see as an ethical and responsible environmental position and adjust to the times. What I'd like to see is a) some research done to see if the presumption about reusable bags spreading the coronavirus is correct, and b) a return to the reusable bags once the crisis has passed and/or the research confirms that this shift was a good idea.
• From the Wall Street Journal:
"One was an executive chef in Milwaukee. One was a small-business owner in Oregon. One managed merchandise for touring musicians. These three newly out-of-work Americans have one thing in common: They are all recently applied to work at an Amazon warehouse.
"Amazon’s 100,000 job openings in its warehouses and delivery network are a rare bright spot in a U.S. economy that has been wracked by the shutdown of ordinary life, causing about 10 million people to apply for unemployment in March due to coronavirus-related layoffs.
"While numerous restaurant, hospitality and hourly workers have flocked to Amazon after being laid off or furloughed, the opportunities are also attracting seasoned professionals in traditionally white-collar jobs. Although some have years of training and experience, they are turning to the tech giant to make ends meet, even as they worry about their own physical safety and financial security."
Three things. The story makes the point that the availability of work at Amazon distribution facilities is something that didn't really exist last time we went through a recession, certainly not to the extent that it does now. So it'll be interesting to see how this affects an economic downturn.
But it'll also be interesting to see if it persists as a recession outlasts the pandemic crisis. If the health crisis subsides, but the economic crisis remains, the level of business that Amazon does out of those warehouses may well decline, which will eliminate a lot of jobs.
And finally, it is important to remember that while working at Amazon warehouses is seen as a feasible option by a lot of folks, that doesn't alleviate the criticisms that the company is getting for how it is treating its DC employees and maintaining a healthy workplace. A lot of questions remain to be answered.
• Bloomberg writes that "Starbucks Corp. said that a sharp slowdown from the coronavirus pandemic will worsen before getting better, with financial impact extending as far as September.
"The company based its assessment on the tentative recovery in the Chinese market, Starbucks’ most important along with the U.S. The coffee chain went through social distancing and mandatory closures in the Asian nation earlier in the year, giving the company an early glimpse at how the situation would play out in the U.S. and elsewhere … While the outlook is dark for the time being, Starbucks is framing the future much as Nike Inc. did last month, saying its experience in China shows the financial suffering is temporary and can be reversed. There, Starbucks said recovery went at a 'slightly faster pace' in March and there’s evidence that its business will 'fully recover over the next two quarters'."
• WCPO-TV News reports that while "Kroger, CVS and Walmart are inviting sick patients into retail health clinics in the same stores where healthy people buy food, water and medicine," saying they "screen patients and follow CDC guidelines to guard against coronavirus spreading," there are concerns that "more should be done."
"Kroger told us only screened patients get in and The Little Clinics have 'separate air filtration systems from the rest of the store, which safeguards against germs potentially being spread around the rest of the store' … CVS said their clinics cannot test for COVID-19 and they give anyone with symptoms directions to doctors 'in a different health care setting' … Walmart did not answer requests for comment."
I think people shopping for food under these circumstances have every right to be concerned, and these stores need to be specific in their enforcement of rules that separate patients from customers. That said, these clinics are designed to make health care more accessible, and especially now, that;'s what we need. I look forward to the moment when these clinics all are able to offer coronavirus testing to anyone who wants it.
• The New York Times reports on how "fans are fuming about being unable to get refunds for concerts that have been postponed, often with no rescheduled dates in sight. As they see it, ticketing outlets are being greedy at a time of crisis, holding billions of dollars in consumers’ cash that people now need for essentials."
A variety of lawsuits have been filed against the likes of Ticketmaster and StubHub, which fans believe have "switched their refund policies mid-crisis to avoid repaying consumers. Fans have drawn attention to the fact that Ticketmaster recently adjusted the language on its website. Whereas a few weeks ago, it said that people can get refunds 'if your event is postponed, rescheduled or canceled,' now it only lists cancellation as a basis for getting your money back, though it suggests there may be other circumstances in which refunds might be considered."
Both organizations have said the sheer volume of cancellations and postponements, and the vast network of people and companies involved in putting them together, has made it impossible for them to just issue refunds upon request.
The Times writes, "Even in the best of times, ticketing vendors are a common target for customer complaints. But the noise has started to bubble up to advocacy groups and attorneys general, posing a potential public-relations crisis for the ticketing industry."
Yes, I think it is fair to say that Attorneys General from a number of states (my bet is that New York, Massachusetts and California will be at the front of the line) will be getting involved, suggesting to the ticketing companies that they actually don't have a lot of legal options here.
The blithe dismissal of consumer interests by these companies is appalling. The problem if that if you want to buy tickets to most events, you have to go through one of them, which gives them an unfortunate level of power. But in the end, you'd better look out for your customers or you'll find yourself treading a treacherous path.
• The New York theater season remains on hold for the foreseeable future, as the Broadway League has announced that its members would keep their theaters closed at least until June 7, with the conventional wisdom being that they probably won't reopen until July 4 at the earliest. It also is possible that the theater season may not resume until Labor Day.
The New York Times writes that "Broadway is not only an important center for the art form, but is also big business: The industry drew 14.8 million patrons last season and grossed $1.8 billion.
"The entire industry — like so many others — is on pause, at the cost of thousands of jobs and millions of dollars.
"Spring and summer programming has already been canceled in other sectors of the performing arts world — all five Edinburgh festivals, the Oregon Shakespeare Festival, the Jacob’s Pillow dance festival, and New York nonprofits including Lincoln Center Theater and the Roundabout Theater Company. In Britain, London’s West End theaters have canceled all performances through May 31, and in Canada, Toronto’s Mirvish Theaters have closed until June 30 'at the very earliest'."
• Songwriter-winger Randy Newman ("Short People," "You've Got A Friend In Me," and about a million other songs and movie scores), brings his sardonic wit to a new song that he wrote at the request of a Southern California radio station about the pandemic.
The title: "Stay Away." And go figure, it is a kind of love story.
Stew Leonard Jr. continues to do an excellent job, I think, of communicating with customers on an ongoing basis via email … in this one, he offers some advice to shoppers about how to be safe while visiting his stores in Connecticut, New York and New Jersey, tells when and which products are available, and puts a face and a voice behind the brand and the value promise - which is one of the best things that any retailer can do.
MNB readers seem to have enjoyed the ones I've posted in the past, and so here is his latest…
Got the following email from MNB reader Howard Carr:
After getting to watch your discussion with Tom Furphy and the issues surrounding investment into future formats for delivery of the goods to the consumer, it became apparent to me that a move we will most likely see will be a format to reward those customers that most often patronize that retailer. Since this is very prevalent in the grocery business with special pricing and rewards for member/card holder shoppers, I can foresee retailers providing special access for high demand products (toilet paper, et. al.) to those with membership and high levels of patronization, in their programs. It would certainly provide a boost to their customer registration efforts and assist in garnering shopper data moving forward. The programs already provide the data on the product preferences of this customer base, but this would provide them with a “leg up” on gaining customer loyalty into the future.
It would be, if I understand your point, a way of proving to consumers that the retailer is loyal to them, as opposed to just bribing them with coupons.
I agree. In fact, I always have.
Responding to my comments about civil unrest could follow the pandemic, one MNB reader wrote:
Interesting thoughts. A person I know has a grocery outlet and said they were not implementing the senior shopping hours because there was no way to enforce it (can’t ask for ID or they could be considered discriminatory) and as a result there was customer shaming happening and they were worried about safety.
Another thought- now they are banning some stores from selling “non essential” items (like electronics at Costco) because they have an “unfair advantage” in the market. Riddle me this- when we receive our stimulus money- where are we supposed to stimulate the economy if we can only buy essentials? Isn’t this giving online businesses the ONLY advantage because that’s the only option if your TV self destructs or your computer gets the blue screen of death. Another badly thought out idea coming from legislators.
MNB reader Chris Breen had a thought about the coronavirus numbers:
I check your email everyday and read the Covid 19 updates.
I put the numbers in a spreadsheet. For that last 10 days the world recovery rate is always 21% of confirmed cases. Interesting how consistent that number is.
Is it good or bad? Not sure. We're not making progress, but we're not backsliding.
And, from MNB reader Jesse Sowell:
Hi Kevin - love the dialogue with readers that was created by your story suggesting the requiring of masks to enter grocery stores.
On the point that many readers made about the lack of availability of masks to purchase, and how to define acceptable masks, I get that these can be hard questions to answer. But I wonder if we could make them simpler. Could the definition of an acceptable mask just be any fabric covering the nose and mouth? And for availability, here's a great short video explaining how to make a non-sew mask from an old t-shirt (I can certify the simplicity - I did it myself).
Keep up the great work.
Thanks.
I commented the other day that the oddsmakers in Vegas won't just be taking bets on who might win all the various sporting events that have bene postponed, but also will be entertaining wagers on whether they'll actually take place.
Prompting MNB reader Mark A. Boyer to write:
With sports on hiatus, people are looking for things on which to wager.
