retail news in context, analysis with attitude

Published on: April 24, 2020

When the sun also rises on inspiration, it is critical to remember that sometimes he bell tolls for inspiration.  That even can happen while in isolation or quarantine ... and MNB Content Guy Kevin Coupe has a story to tell you about that.

Published on: April 24, 2020

This segment, from ABC's "Good Morning America," tells a good news story about how Southeastern Grocers surprised and delighted local first responders.  In a world where, at the moment, surprise-and-delight can be a little rare, that's no small thing.

Published on: April 24, 2020

The Wall Street Journal is reporting that Amazon employees have been using sales data for products marketed by independent sellers on its site as a way of deciding what private label items it should make and market, and how much it should charge for them.

From the Journal story:

"The online retailing giant has long asserted, including to Congress, that when it makes and sells its own products, it doesn’t use information it collects from the site’s individual third-party sellers—data those sellers view as proprietary.

"Yet interviews with more than 20 former employees of Amazon’s private-label business and documents reviewed by The Wall Street Journal reveal that employees did just that. Such information can help Amazon decide how to price an item, which features to copy or whether to enter a product segment based on its earning potential, according to people familiar with the practice, including a current employee and some former employees who participated in it."

Amazon responded to the allegations this way:  “Like other retailers, we look at sales and store data to provide our customers with the best possible experience.  However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.”

The Journal writes that Amazon concedes that "employees using such data to inform private-label decisions in the way the Journal described would violate its policies, and that the company has launched an internal investigation."

The story goes on:

"It is a common business strategy for grocery chains, drugstores and other retailers to make and sell their own products to compete with brand names. Such private-label items typically offer retailers higher profit margins than either well-known brands or wholesale items. While all retailers with their own brands use data to some extent to inform their product decisions, they have far less at their disposal than Amazon, according to executives of private-label businesses, given Amazon’s enormous third-party marketplace."

Published on: April 24, 2020

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

•  In the United States, we have crossed a line - there now have been 50,243 deaths attributed to the Covid-19 coronavirus, with 886,709 confirmed cases and 85,922 reported recoveries.

Globally, there have been 2,736,173 confirmed coronavirus cases, 191,422 deaths, and 751,799 reported recoveries.

•  The New York Times reports this morning that new studies are suggesting that "many more New Yorkers may have been infected than was previously believed."

The Times writes that "more than 21 percent of around 1,300 people in New York City who were tested for coronavirus antibodies this week were found to have them, Gov. Andrew M. Cuomo said on Thursday.

"The results were from a state program that tested 3,000 supermarket customers across New York State. Nearly 14 percent of the tests came back positive, Mr. Cuomo said."

Now, these results are not conclusive - there remain a lot of questions about the veracity of the testing process.  But, "if the state’s numbers indicated the true incidence of the virus, they would mean that more than 1.7 million people in New York City, and more than 2.6 million people statewide, have already been infected.

"That is far greater than the 250,000 confirmed cases of the virus itself that the state has recorded."

The good news about that would be that the fatality rate - 0.5 percent - would be far less than is currently calculated."

•  In Texas, KRIS-TV News  reports that H-E-B-owned delivery service Favor is adding a new component - Express Delivery, "which promises customers H-E-B grocery essentials delivered to their doorsteps within two hours … customers can choose up to 25 items from a list of groceries and essentials which includes dairy, meat, produce, beer and wine."

•  From the Washington Post:

Manufacturers of household cleaning products such as Lysol, as well as assorted medical professionals, yesterday issued statements warning people not to ingest disinfectants into their bodies as a way of killing the coronavirus.  Those warnings about the toxicity of such products came after President Trump mused during a White House briefing that this might be effective, though he also said that he was just throwing out ideas, not making prescriptions.

In a statement, Reckitt Benckiser, the UK-based owner of Lysol, said, "As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route)," said a spokesperson for Reckitt Benckiser, the United Kingdom-based owner of Lysol.  "As with all products, our disinfectant and hygiene products should only be used as intended and in line with usage guidelines. Please read the label and safety information."

•  The Los Angeles Times reports that "Gov. Gavin Newsom has suspended California’s ban on grocery stores providing single-use plastic bags amid concerns that clerks may be at risk for exposure to the coronavirus if shoppers are required to supply their own reusable bags to carry their purchases home.

"Newsom announced Thursday that he signed an executive order to suspend the 2016 plastic bag ban for 60 days after hearing concerns from the California Grocers Assn. about shoppers bringing reusable bags from home that are handled by store clerks filling them with groceries … The governor’s executive order also approves a 60-day pause in redemption of beverage containers in stores and a mandate for recycling centers to operate a minimum number of hours."

•  From CNN:

"The Centers for Disease Control and Prevention issued more than 100 recommendations to the Smithfield Foods pork-processing plant on Thursday, as the facility works to reopen following a coronavirus outbreak.

"The facility, located in Sioux Falls, South Dakota, became one of the nation's largest Covid-19 hotspots before it closed earlier this month, with more than 783 employee cases and 206 cases stemming from employee contact, according to state health officials … Smithfield's managers told the CDC it has a number of changes planned, including requiring face masks for all employees, increasing the number of hand sanitizers and adding plexiglass barriers where workers can't be spaced out."

However, CNN writes, " 11 of the 15 pages in the CDC report include recommendations for further improvement, such as staggering shifts, more flexibility in break times and physical spacing."  

One note:  the CDC recommendations are exactly that.  Not mandates.  Not requirements.  Which, under the circumstances, I don't completely understand.

•  Hy-Vee announced yesterday that because it "is seeing a significant increase in the purchase of hair and beauty products across its more than 265 stores following the temporary closure of many salons, barbershops and spas," it will be "offering a 15% off beauty product sale this Friday, April 24, and Saturday, April 25."

Darren Baty, Hy-Vee’s executive vice president, chief merchandising officer, said,  “At Hy-Vee, our goal has always been to be a convenient one-stop shop for our customers. That mission has never been more important than now, especially as we serve those who don’t want to travel to multiple stores to pick up their essentials.”

•  The San Francisco Chronicle reports that Trader Joe's used its podcast this week to explain why, unlike many of its brethren, it is not offering delivery or curbside pickup.

Matt Sloan, TJ’s Vice President of Marketing, put it this way:  "Creating an online shopping system for curbside pickup or the infrastructure for delivery, it's a massive undertaking … It's something that takes months or years to plan, build and implement and it requires tremendous resources. Well, at Trader Joe's, the reality is that over the last couple of decades we've invested those resources in our people rather than build an infrastructure that eliminates the need for people."

Tara Miller, Trader Joe's Marketing Director, added that such initiatives "don't always translate into positive results."

I am reluctant to criticize Trader Joe's for this approach to business, and I'd guess that to this point it is happy with how it has played out.  But I'd also bet that there are sales that it is leaving on the table because of it.  TJ's clearly is fine with that.

•  CNN reports that delivery service Instacart, which has hired " 300,000 workers in recent weeks to meet surging demand for grocery deliveries spurred by the pandemic," now is saying it needs "to hire another 250,000 workers over the next two months …  Before the hiring spree, Instacart had about 200,000 full-service shoppers."

The story says that Instacart plans to "reintroduce a waitlist for applicants in areas where it has enough workers to satisfy demand to ensure it is 'thoughtfully balancing' how many workers it brings on."

•  Forbes reports that Gap Inc. "is running out of money, isn’t paying rent and warned it likely needs to find more cash within the next 12 months in order to fund operations—joining other large apparel retailers experiencing dire financial uncertainty as stores across the country remain closed."

The situation is so serious that Gap (which also owns Old Navy and Banana Republic), which already has furloughed 80,000 employees, has stopped paying rent for its more than 2,700 North American stores.

In an SEC filing, Forbes writes, "Gap warned that if it doesn’t find more money within the next 12 months, it won’t be able to fund its operations; steps the company expects to take include taking on new debt, laying off employees and reducing orders for merchandise."

•  The Wall Street Journal reports that, as has been much speculated about in recent days, JC Penney " is in advanced talks for bankruptcy funding with a group of lenders, a sign the troubled retailer is about to succumb to the economic collapse caused by the coronavirus pandemic."

Penney is seeking "a so-called debtor-in-possession loan that would keep the department-store chain’s operations funded during a court-supervised bankruptcy, according to people familiar with the matter."  It is expected that a bankruptcy filing could come in a matter of weeks.

•  Vice reports that "Best Buy will direct staff willing to do so to resume work inside customers' homes as soon as Tuesday … This latest move is a sign that some businesses are trying to resume services and emerges as protests around the country try to have states reopen. This comes despite health experts saying it would likely contribute to the spread of the virus if done too quickly."

•  The town of Westport, Connecticut, has bailed out of a pilot program that was using specialized police drones to enforce physical distancing rules.

The Verge reports that the goal of the program was to use the drones, which were equipped with speakers, to yell at people who were standing too close together in public areas.

"However, shortly after announcing the program, the Westport Police Department scrapped the plan to use drones to try to enforce social distancing, following condemnation by the ACLU of Connecticut, who called the plan an example of 'privacy-invading companies using COVID-19 as a chance to market their products and create future business opportunities'."

The story notes that "the company behind the drones, Draganfly, is making some pretty big claims about what it can do, saying that the “pandemic drone” uses 'specialized sensor and computer vision systems” in order to track people with fevers or high temperatures, heart and respiratory rates, people sneezing and coughing in crowds, and large groups of people gathering together. Draganfly also claims that its drone can detect 'infectious conditions from a distance of 190 feet'."

Yeah.  Too much.  Too soon.  And it is just mildly distressing that Westport is only about eight miles east of where I am sitting right now.

•  Donald Reed Herring, the oldest brother of Senator Elizabeth Warren (D-Massachusetts), who until recently was a candidate for the Democratic presidential nomination, died Tuesday night in Norman, Okla., about three weeks after testing positive for the coronavirus.

The Boston Globe writes that "Warren, who has been a vocal critic of the Trump administration’s halting response to the pandemic for months, has not previously revealed that her family was waging its own personal battle against the virus."

In a statement, she said, "“I’m grateful to the nurses and other front-line staff who took care of my brother, but it is hard to know that there was no family to hold his hand or to say ‘I love you’ one more time. And now there’s no funeral for those of us who loved him to hold each other close.  I will miss my brother.”

Herring, the Globe writes, was an US Air Force veteran who "flew B-47 and B-52 bombers. He flew 288 combat missions in Vietnam, eventually becoming a B-52 squadron pilot and a squadron aircraft commander. He earned numerous decorations before retiring in 1973 as a lieutenant colonel."

Warren is not the only former Democratic candidate with a family member affected by the pandemic.  The husband of Sen. Amy Klobuchar (D-Minnesota) also was stricken by the coronavirus, but has recovered.

Published on: April 24, 2020

Scott Moses, Managing Director and Head – Food Retail & Restaurants an investment banker PJ Solomon, appeared o Yahoo Finance yesterday to talk about the continuing supply chain challenges that retailers are facing, and how grocery sales are likely to continue to be robust for the foreseeable future, not least because an elevated unemployment environment makes the supermarket more desirable than ever.

You can watch the interview here.

Published on: April 24, 2020

CNBC reports that "since its fiscal first quarter began Feb. 2, Target’s same-store sales have risen more than 7%, the retailer said. The gain, which compares with an increase of 1.5% in the fiscal fourth quarter, is the result of a doubling of its online sales, partially offset by declines inside its nearly 1,900 brick-and-mortar stores … So far in April, comparable digital sales have increased by more than 275% from a year ago."

CEO Brian Cornell says that "same-day services have gained popularity during the pandemic. In April, Target has had weeks when drive-up volume was up to seven times greater than normal, he said. It’s had single days when the volume of order pickup was twice as high as Cyber Monday. And on the Friday before Easter, he said, it did more volume through Shipt than it typically does in a week.

Published on: April 24, 2020

•  NBCUniversal is out with a new tool it calls NBCUniversal Checkout, which Reuters says allows "consumers to scan a code on their TV screens with their phones, sending the advertiser’s product shown in the content to an online shopping cart powered by NBCUniversal Checkout.

"Users can also purchase items from a sponsored article on NBCUniversal properties like the Today show or Spanish-language news site Telemundo, without leaving NBC’s websites.

"The moves are aimed at reducing the number of steps needed to buy an item online. NBCUniversal said it accelerated the launch of Checkout as retailers from large companies like Macy’s to smaller shops have struggled during the pandemic … NBCUniversal will not take a cut of sales made through Checkout for the rest of the year, to help retailers who normally do not have the budget to advertise on TV."

In a statement, the company said, "As some physical doors close temporarily, we’re helping retailers explore new commerce avenues. For years, we’ve been creating ways for people to easily shop while they watch, bringing them closer to their favorite shows, and helping our partners create new storefronts. Now, we’re accelerating our plans to open up our platform to support more businesses when they need it the most, offering new commerce technology and eliminating extra costs."

Published on: April 24, 2020

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

•  The Washington Post reports that the US Treasury Department "is considering taking unprecedented control over key operations of the U.S. Postal Service by imposing tough terms on an emergency coronavirus loan from Congress, which would fulfill President Trump’s longtime goal of changing how the service does business, according to two people familiar with the matter."

Treasury Secretary Steven Mnuchin reportedly has told senior officials at the USPS in recent weeks "that he could use the loan as leverage to give the administration influence over how much the agency charges for delivering packages and how it manages its finances."

The story notes that "Trump has railed for years against what he sees as mismanagement at the Postal Service, which he argues has been exploited by e-commerce sites such as Amazon, and has sought to change how much the agency charges for the delivery of packages."  Trump has a problematic relationship with Amazon in part because its founder-CEO, Jeff Bezos, also owns the Washington Post, which has been aggressive in its coverage of the Trump administration.

I continue to argue that solving the Post Office's problems is not just a matter of charging Amazon more for shipping.  After all, Amazon could just start up its own private post office to compete with the USPS, which would be worse off without Amazon packages to deliver.

And I'm not sure that any business should want any administration to be able to dictate such policies … it may be Trump vs. Bezos now, but it won't necessarily end there, because Trump won't always be president, and there always will be companies that annoy whoever is sitting in the Oval Office.

What the USPS needs is a couple of executives/entrepreneurs/innovators to get together in a two-pizza team for three months, charged with coming up with a plan for what the Post Office would look like if it were invented from scratch tomorrow. 

Published on: April 24, 2020

The other day, MNB picked up on a story from Glossy:

"To help its existing and potential partners in the long-term, Neighborhood Goods is planning a new project called The Commons, a rent-free and rotating space within each of its three stores for brands, artisans, artists, musicians and chefs to set up shop. Brands have to apply for the limited free space, which will be given out with a preference for smaller local brands that have been hit particularly hard by coronavirus. The Commons will open when Neighborhood Goods’ stores reopen."

I commented:

I love this.  In fact, I think it could be a model for what a lot of retailers could do to help suppliers - especially small and local businesses - as we move into a late-pandemic and post-pandemic world.

If a retailer could create sections for those businesses that would have a different economic model - designed to get those vendors back on their feet - it might be a powerful creative, economic and social statement, focused on a common and greater good.

One MNB retailer responded:

Regarding the Commons concept at Neighborhood Goods stores, a similar approach might thrive at shopping malls with failing traffic and empty storefronts looking for ways to stay relevant. Every vendor, maker or artist given that temporary opportunity brings their own community out to support them and presumably shop other businesses while they're there.

Good point.

Regarding our pandemic coverage and comments,  one MNB reader wrote:

Governments are usually good at reacting to situations. This time, not so much. Long term threats require vision, commitment and investment. Even then engaging and convincing the general population of the future threat when all you want is to get reelected to another term isn't on the top of lawmakers' lists.

Responding to the conversation about how the pandemic is affecting the movie theater business (which I think holds some parallels for retailing), one MNB reader wrote:

Back in the late 70’s, there was a Company called ONTV when we lived in Southern California before satellite TV was even popular. They use to broadcast in-theater movies locally, using a very small dish antenna on your roof, pointed toward Los Angeles.  

Prior to Oscar voting season they would broadcast all the nominated movies, every one of them. It was awesome! 

We didn’t have 85” 4K TV’s back then so we thought 32” screens were the bomb! 

Granted, it is an experience to go to the movies, but the newer theaters are much smaller and we really don’t like eating food now that we cannot see. The movie experience can sometimes be better in your own living room!

MNB reader Robert Hemphill chimed in:

Like you, I’m a big fan of movies and video in the theatre and at home.  Netflix, Amazon Video, Vudu, Hulu, Disney+ and more are great for all of us to isolate in place.  In addition, I'm a home video nut, with over 800 digital movies on my Plex server.  And I haven’t noticed any significant degradation of signal - truly a silver lining. 

Remember the kerfuffle about Net Neutrality?  It was implemented in 2015 and was based on treating the Internet as a static commodity that needed to be governed centrally, with less incentive for investment in improvements or expansion.  It was repealed in 2018, and in the US there has been significant growth in internet bandwidth at much higher levels than the European model which embraces heavy-handed regulations to allocate access to the existing network.

Coronavirus has heightened the need for bandwidth.  In Europe officials have asked Netflix and other services to degrade their streaming quality from HD to SD, whereas US networks have many fewer problems.  It appears the emphasis on private investment in a free commerce society has paid off for us. 

Or ?

To be fair, I think the objection to the rollback of net neutrality rules had less to do with objections to private investment and more to do with concerns that big companies could choke off high-speed access for small companies.

I do know this.  Despite all the changes of the last few months, the internet hasn't broken.  I don't know about you, but I think that is sort of remarkable, and not to be taken for granted.

On another subject, from MNB reader Jim Dunnigan:

I read where Publix stepped in when farmers in FL were reported to be turning crops into mulch in their fields, due to lack of a market for the products (mostly due to the majority of restaurants being closed). Publix agreed to act as a go between moving vegetables between the fields and the food banks that so desperately needed the food….I thought, why can’t more quick solutions like this be the norm any more?

Responding to yesterday's FaceTime video suggesting that when Starbucks starts reopening its US stores again, it ought to use its app to be both strategically smart and socially responsible, MNB reader Mark Dixon wrote:

Great clip this morning, I could not agree more. What a better way to get additional connectivity with your customer base. Spot on observation, hope someone from Starbucks gets to view this.

Published on: April 24, 2020

The sixth and penultimate 10-episode series of "Bosch" has been dropped on Amazon Prime Video, and it continues what has become a dependable tradition - a serious-minded, nuanced police procedural with elements of noir and classic detective fiction, written and produced with respect for the form.

Who could ask for anything more.

For the uninitiated, "Bosch" is based on a long-running series of novels by Michael Connelly, who could be considered a legitimate heir to Raymond Chandler and Ross Macdonald if that were not such a cliche.  No matter.  Since his first effort, "The Black Echo," published in 1992, former crime reporter Connelly has crafted an extended chronicle focused on Harry Bosch, an LAPD detective with a tragic past who compensates for it with a simple manta:  "Everybody counts, or nobody counts."  It is more than a mantra, to be fair.  It is a mission.

The sixth season, which is cobbled together from his novels "The Overlook" and "Dark Sacred Night," is an inventive panoply of plots - Bosch and his partner, J. Edgar, are investigating a possible domestic terrorism threat while separately probing a couple of murders that take them down what Chandler called "these mean streets" where "a man must go who is not himself mean, who is neither tarnished nor afraid."

The various plots - there is a mayoral campaign with political implications for the police department, a sexual harassment suit, and, of course, a subplot concerning Bosch's daughter, Maddie, who is working the other side of the road as an intern in a defense attorney's office - weave in and out and around each other, creating a patchwork quilt of characters and scenarios, each one interesting in its own right.

The casting, as always, is sterling - Titus Welliver is a perfect Bosch, different in some ways from the books' original but consistently compelling.  In supporting roles, actors like Jamie Hector, Amy Aquino, Lance Reddick, Madison Lintz make the most of their moments;  one of the things I admire about the writing is that each one has a plot line, and never is consigned to being supporting wallpaper for the main plot.

"Bosch" isn't fancy or particularly innovative, but it is sold, professional storytelling - respectful of the source material but understanding that a TV series or movie is a very different thing than a book, and so things need to be changed and/or adapted - in other words, the very opposite of what peter Berg and Mark Wahlberg did with Robert B. Parker's Spenser and Ace Atkin's "Wonderland" when they produced an execrable version for Netflix.

"Bosch" is terrific.  Who could ask for anything more.

If you haven't seen the series, go start from the beginning and binge the whole thing.  If you haven't read the books, start with "The Black Echo" and read them in order.

You can thank me later.

I finished watching "Tales from the Loop" on Amazon Prime, and must confess that I still haven't quite made up my mind about it.  "Loop" takes place in a midwestern community, probably sometime in the late fifties or early sixties, but in a parallel universe where some of the technology is way beyond what we have now, and basically lays out eight stories that are connected to each other - some more than others - all concerning the people who live above The Loop, a scientific installation designed to investigate the unexplained.

"Loop" is sort of like "Twilight Zone" mixed in with "The X-Files," except that it seems to be dedicated to avoiding drama or overstatement.   It moves along slowly, deliberately … but never is lethargic or boring,  Cast largely with unknowns (except for the great Jonathan Pryce), the stories manage to be touching and somehow filled with dread about what people are capable of, and what can happen when events are set in motion that cannot be controlled.  I must admit that I kept wishing that there would be more happening, more drama … but in retrospect, it seems unfair to want "Tales from the Loop" to be something it isn't.

I have two wonderful wines to recommend to you this week - both from Santa Barbara, California.  There is the 2018 Piedrasassi Syrah, which is aromatic, smooth and delicious, and the 2018 Sandhi Chardonnay, which I liked a lot more than I do most chardonnays - it has a nice brightness to it that goes great with seafood.  Check them out … and not only will you be doing your palate a favor, but you'll be helping small businesses that have been hurt severely by the impact of the pandemic.

One more thing … in response to your requests:

That's it for this week.  Have a great weekend … and I'll be back Monday.

Stay safe.  Stay healthy.