business news in context, analysis with attitude

Published on: April 27, 2020

What did KC do this weekend?  He made a frittata.  Baked fresh banana bread.   Made plans to make spaghetti al tonno later this week.  And in the process, came up with what he thinks is a good lesson for food retailers.

Published on: April 27, 2020

by Kevin Coupe

I don't know about you, but there is much about the pandemic that I have found to be humbling.

You think that the world is an ordered place, that we have a nuanced understanding of how the planet works - even if we don't act on that understanding - and then a virus comes along that throws everything into chaos and challenges one's confidence in what we think of as "normal."

Humility is a good thing.

So, I think, is awe … at what we don't know or understand, or things with which we have limited or negligible experience.

Which is why I posted the picture above.

It is from the Hubble Space Telescope, currently celebrating its 30th year of what NASA calls "unlocking the beauty and mystery of space."

This new picture from Hubble, NASA says, shows "the giant red nebula (NGC 2014) and its smaller blue neighbor (NGC 2020) are part of a vast star-forming region in the Large Magellanic Cloud, a satellite galaxy of the Milky Way, located 163,000 light-years away. The image is nicknamed the 'Cosmic Reef,' because it resembles an undersea world."

I look at this and feel humbled and awed … and, somehow, an Eye-Opening sense of context and perspective that strikes me as important at a time when we all, by necessity, find ourselves looking inward.

Below is a video from NASA that explains more.  Enjoy.

Published on: April 27, 2020

The Wall Street Journal reports that just three months after it issued its annual predictions about the year's prevalent consumer trends, market researcher Euromonitor International has had to issue an update that accounts for the pandemic.

"Some shifts have taken hold much faster than Euromonitor expected, notably the home’s transformation into a multifunctional refuge used for work, school, leisure and exercise," the Journal writes.  "But the pandemic has stalled other trends - relaxing previously rising privacy concerns and damping interest in reusable products."

Some excerpts:

"Euromonitor forecast in January that consumers would be less trusting of companies using their data without transparency, adequate security and opt-out options. But Covid-19 put those worries on hold, it says."  The reason?  Giving up some privacy issues could make it easier for health officials to track and stifle the coronavirus.

"Consumers have suddenly become far more comfortable with robots and other types of artificial intelligence performing jobs traditionally done by humans. Euromonitor earlier this year noted that consumers were buying more AI-enabled home appliances and virtual assistants, like Amazon.com Inc.’s Alexa."  The reason?  Any computer you can talk to is a computer you don't have touch, and touching is suddenly and understandably out of vogue.

"The coronavirus has 'all but stalled' demand for better transportation options, which Euromonitor in January had said was on the rise … Before the virus, people were seeking easier navigation through crowded cities, including more public transportation and more opportunities to share bikes, scooters and even helicopters. Now such needs have waned."  The reason?  For the moment, at least, nobody is going anywhere.

"The pandemic has fueled consumer demand for more local brands and products, Euromonitor says. Overnight, international travel and supply chains closed. Meanwhile, the virus has created a feeling of 'getting through this together' and wanting to support local businesses and communities to keep them going."

"Euromonitor initially predicted more circular business models that aimed to promote sharing, reusing, refilling and renting to avoid waste. But now, concerns over health and touching products that have previously been used have led consumers to again embrace disposable products."

"As access to broadband grew, Euromonitor in January had predicted that more consumers would become reluctant to leave their homes. Amid the coronavirus-fueled lockdowns, consumers fully retreated to their homes and immediately transitioned to working, learning, exercising and socializing there."  In addition, "Casual dressing will become the norm and virtual socializing will continue even when physical gatherings resume, the market researcher predicts."

Published on: April 27, 2020

The Washington Post had a long and detailed investigative piece over the weekend about how "three of the nation’s largest meat processors failed to provide protective gear to all workers, and some employees say they were told to continue working in crowded plants even while sick as the coronavirus spread around the country and turned the facilities into infection hot spots."

The Post continues:  "The actions by three major meat producers — Tyson Foods, JBS USA and Smithfield Foods — continued even after federal guidelines on social distancing and personal protective equipment were published March 9, according to 25 interviews with employees, elected officials, regional health officials, union leaders and federal safety inspectors as well as dozens of documents, including worker complaints filed with local and federal officials.

"Because of outbreaks of the novel coronavirus, over the past several weeks Tyson, JBS and Smithfield have closed 15 plants, devastating rural communities and threatening the nation’s supply of beef and pork. Industry analysts say production is already down by at least 25 percent.:"

You can - and should - read the entire story here.

Published on: April 27, 2020

Cathy Burns, CEO of the Produce Marketing Association (PMA), chats with MNB Content Guy Kevin Coupe about how her industry has adapted to circumstances dictated by the pandemic, and how they are prioritizing innovation opportunities in the future. One thing they agree on:  There will be nothing normal about the "new normal."

Published on: April 27, 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 are within hours, perhaps minutes, of having more than one million confirmed cases of the Covid-19 coronavirus - this morning, the number stands at 987,322.  There have been 55,415 deaths (up more than five thousand over the weekend) and 118,781 reported recoveries.

Globally, there have been 3,006,113 confirmed coronavirus cases, 207,265 deaths and 883,216 reported recoveries.

•  The Associated Press reports that Walmart has announced "that it will extend special shopping times for seniors and those vulnerable to coronavirus through the end of May.

Walmart's stores and pharmacies will be open from 6 to 7 a.m. on Tuesdays (at most locations) through May after originally announcing the special hours would be in effect through April.

"Walmart's sister retailer, Sam's Club, will continue senior shopping hours on Tuesdays and Thursdays from 7 to 9 a.m."

According to the story, "Target will continue on Tuesdays and Wednesdays opening for those over 65 years old, pregnant women and those defined by the CDC as vulnerable or at-risk for the first hour of the day.

"Kroger will continue dedicating the first hour of shopping several days a week for seniors and those vulnerable to the virus."

•  Kroger Health, Kroger Co.'s healthcare division, "announced the expansion of free COVID-19 testing sites to Colorado, Michigan, Ohio and Tennessee, joining existing sites in Kentucky and Tennessee, for all priority groups, including healthcare workers, first responders and symptomatic groups.

"Additionally, the company will begin piloting site-specific testing for Kroger associates in Michigan and Colorado, while also empowering its own pharmacists to initiate the lab order and observe self-administered testing where allowable by applicable law … For the testing, patients remain in their cars throughout the process, which is completed in just a few minutes using self-administered test kits. The test uses self-administered nasal swabs, which are less painful and designed to increase safety.

"Testing services are provided at no-cost to all priority groups, including healthcare workers, first responders, and symptomatic individuals through various partnerships, including with the U.S. Department of Health and Human Services, Commonwealth of Kentucky, eTrueNorth and Gravity Diagnostics. Kroger Health testing sites are generally located off site at closed schools, businesses and public grounds in partnership with local communities."

•  From the Wall Street Journal:

"The Texas Attorney General filed a lawsuit Thursday accusing Cal-Maine Foods Inc., the nation’s largest egg producer, of price-gouging and profiting illegally off the coronavirus pandemic by selling eggs at more than 300% of their normal cost … The lawsuit shows the concern among law-enforcement officials and consumer-protection authorities over price-gouging on essential goods during the pandemic."

“We strongly disagree with the allegations made by Attorney General Paxton,” a spokesman for Cal-Maine Foods said in an emailed statement. “We are steadfast in our belief these charges are grossly unfair and without merit. The domestic egg market is intensely competitive and highly volatile.”

Doesn't a competitive marketplace usually lead to prices going down?  Just asking.

•  From Salon:

"As early as April 8, the United States Labor Department recommended that any stores with the capacity to do so should transition to either drive-through or curbside pick-up as a way to mitigate the spread of the novel coronavirus through social distancing. It's a service many U.S. grocery store chains like Kroger and Ralphs already had in place, but according to some store employees the increase in online orders hasn't left them feeling any safer."

The  challenge, the story says, is that orders have quadrupled or more, which means that people have to work harder and faster to fill them."  This doesn't lead employees to necessarily feel safer, even as chains try to create new policies and infrastructures designed to protect them.

Three things are important here.  First, doing the best job possible to see that employees are as safe as possible.  Second, communicating hat effectively with employees, so they know that the company believes that their interests are the ultimate bottom line.  And third, transparently communicating this to the shopper, in the hope that the vast majority of them will understand that at a time like this, safety has to be the top priority.

Some won't understand.  Most will.

•  Willamette Week reports that Portland, Oregon-based New Seasons Market "will require anyone entering its stores, including customers, to wear masks … The rule goes into effect Wednesday, April 29. The company will initially provide cloth coverings for customers at store entrances, then shift to requiring shoppers to bring their own."

Good policy decision.  

•  From the New York Times:

"For most American restaurateurs and their customers, the idea of reopening a dining room with waiters and a wine list may seem unthinkable when most of the country remains locked down and the nation’s death toll from Covid-19 has topped 50,000.

"But even before the first of the nation’s scattered restaurant openings in Georgia and Alaska got the green light, chefs and public health officials around the country began considering in some detail how a post-pandemic restaurant might look. Although many restaurateurs are still unsure if they will ever open their doors again, there are plenty — from fast-food operators to chefs at the most elite temples of haute cuisine — who spend their days strategizing how to get back to hosting diners.

"Culinary and health organizations are drawing up guidelines and protocols for re-creating the American dining room as a safe space — even while acknowledging that could take many months or even longer to happen … The questions pile up fast. Should you rely on disposable paper menus, or is wiping down plastic-covered ones safe? What kind of thermometers are best to check employees’ health, and will diners submit to temperature checks? Can air-conditioning spread the virus? What is a restaurant’s liability if a customer gets sick? How does a sommelier taste wine while wearing a mask, and how do you rewrite a menu so cooks can stay safe in the tight confines of a restaurant kitchen?"

One approach has been tested with some success at Hong Kong's Yardbird, where the "designer fashioned plexiglass dividers for booths, and the owners have found a way to keep its energetic buzz at least somewhat intact …  Customers waiting for a table can’t congregate in what was once the restaurant’s crowded bar. Diners have their temperatures checked, and use a freshly sterilized pen to sign a health declaration form. Tables are spaced one-and-a-half meters apart, and parties larger than four aren’t allowed."

It will be interesting to see whether the prospect of having one's temperature taken will dim people's enthusiasm for eating out.  (Also to see whether there is blowback from people who are denied entry to a restaurant but say they "feel fine."  I can imagine fights breaking out.)  I do think that people would love to be able to go to restaurants again, but they are thinking about that in terms of how restaurants used to be, not how they will be.

•  Fast Company has a piece about yet another industry that is getting wrecked by the pandemic:

"For countless small businesses that make up the $78 billion wedding industry, there is little relief amid the fallout from the coronavirus. As stay-at-home orders rolled out across the U.S., many couples who were planning to get married this year had no choice but to call off their weddings—slowly, and then all at once. In a survey of more than 470 couples by the Knot, 96% said they were rescheduling their weddings; of those couples, 65% are pushing their weddings to later in 2020, while the rest are undecided or opting for a 2021 date."

 •  The Associated Press reports that "NBA players will be allowed to return to team training facilities starting Friday, provided that their local governments do not have a stay-at-home order prohibiting such movement still in place as part of the response to the coronavirus pandemic.

"Any workouts that take place would be voluntary and be limited to individual sessions only, according to a person familiar with the league’s decision."

•  The New York Times reports that "free Shakespeare in the Park, a treasured rite of summer in New York, will not take place this year because of the coronavirus pandemic.

"The annual festival, staged as the sun sets in an open-air amphitheater surrounded by trees, is just too big and too soon to pull together at a time when no one knows when large gatherings will be permitted again.:

The story notes that "the pandemic has forced the cancellation of programming and taken a huge financial toll at arts institutions around the world. Even as elected officials begin to discuss whether and how it might become safe to restart the economy, major summer events — including, in the theater world, the Edinburgh festivals, the Oregon Shakespeare Festival and the Williamstown Theater Festival — have already been called off."

If you've never been to Shakespeare in the Park, I heartily recommend it to you whenever people start going to the theater again … it is worth a summer trip to New York City all by itself.  One of the best theatrical experiences of my life was in 1978, when I saw Meryl Streep (the same year as she was in "The Deer Hunter" and a year before "Kramer vs. Kramer") and Raul Julia in "Taming of the Shrew."  It was 42 years ago, and I can remember it as if it were yesterday.

Sad that it won't be happening this year.  But, as William Shakespeare wrote in "Richard III" … "True hope is swift, and flies with swallow's wings."  I hope that it won't be long before it alights again and makes our spirits whole.

•  Finally … from the Wall Street Journal, an op-ed piece about a prominent scientist who is at odds with the conventional wisdom about how to deal with the pandemic. 

Here's an excerpt:

"scientists are almost never unanimous, and many appeals to 'science' are transparently political or ideological. Consider the story of John Ioannidis, a professor at Stanford’s School of Medicine. His expertise is wide-ranging—he juggles appointments in statistics, biomedical data, prevention research and health research and policy. Google Scholar ranks him among the world’s 100 most-cited scientists. He has published more than 1,000 papers, many of them meta-analyses—reviews of other studies. Yet he’s now found himself pilloried because he dissents from the theories behind the lockdowns—because he’s looked at the data and found good news.

"In a March article for Stat News, Dr. Ioannidis argued that Covid-19 is far less deadly than modelers were assuming. He considered the experience of the Diamond Princess cruise ship, which was quarantined Feb. 4 in Japan. Nine of 700 infected passengers and crew died. Based on the demographics of the ship’s population, Dr. Ioannidis estimated that the U.S. fatality rate could be as low as 0.025% to 0.625% and put the upper bound at 0.05% to 1%—comparable to that of seasonal flu.  'If that is the true rate,' he wrote, 'locking down the world with potentially tremendous social and financial consequences may be totally irrational. It’s like an elephant being attacked by a house cat. Frustrated and trying to avoid the cat, the elephant accidentally jumps off a cliff and dies'."

You can read the piece here.

I was glad to read this piece, though I cannot say that I find it to be more persuasive, say, than Dr. Anthony Fauci.  I also think it is somewhat disingenuous to suggest that people reacting one way to the pandemic are political and/or ideological.

I think it was Fauci who said early on that he'd rather be accused of over-reacting than under-reacting, since under-reactions almost always end up with more body bags.  I'm good with that … and while some will inevitably say, if the death tolls are not as bad as predicted, that this is a sign of an over-reaction by scientists and the media, I would argue that for the most part scientists and the media are doing their jobs by sounding the alarm.  They are saving lives.

There is a line in the Journal op-ed piece in which Ioannidis says, “I think that we should just take everything that we know, put it on the table, and try to see, OK, what’s the next step, and see what happens when we take the next step. I think this sort of data-driven feedback will be the best. So you start opening, you start opening your schools. You can see what happens.  We need to be open minded, we need to just be calm, allow for some error, it’s unavoidable. We started knowing nothing. We know a lot now, but we still don’t know everything."

My wife and daughter are teachers, and opening the schools right now to "see what happens" strikes me as irresponsible.  I've read way too many stories and reported way too many statistics to think that we know nearly enough to put people young and old in a situation where physical distancing is impossible.

Published on: April 27, 2020

"Saturday Night Live" returned last weekend with the second of its pandemic-era shows, produced remotely during the week in various locations, as opposed to live in the studio.  (Quarantining and social distancing making that impossible, of course.)

The first of these "at home" editions was a more slapdash affair than this second one, which had better production values and graphics.  One of the segments was a parody commercial for "Bartenson's Grocery Store," in which clerks played by Kate McKinnon and Aidy Bryant make their sales pitch:  “We want to give you what you want, but first we need you to buy what we have.”

And "what they have" is a lot of stuff that nobody would want … and in its own way, the list serves as a kind of satiric indictment of the SKU proliferation - much of it inaccurately passed off as "innovation" - that plagues the retail food business.

They say that there is a grain of truth in every joke … and that is certainly the case here.

Published on: April 27, 2020

Confirming a story that was reported on Friday, President Donald Trump said that a "$10-billion loan for the U.S. Postal Service unless the agency raises charges for Amazon and other big shippers to four to five times current rates," the Associated Press reports.  The story says that "The president was responding to a question about reports his administration plans to force major changes in postal operations as the price for approving a $10-billion loan that was included in the government’s $2-trillion economic rescue package.

"Under the rescue package legislation, Treasury Secretary Steven T. Mnuchin must approve the loan before the Postal Service can receive the money."

“The Postal Service is a joke because they’re handing out packages for Amazon and other internet companies and every time they bring a package, they lose money on it,” Trump told reporters, repeating what has become a common refrain for the White House.  In addition, Trump has had 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.

Published on: April 27, 2020

•  From the New York Times:

"In an effort to fight off fraudulent or misleading online ads, Google will require that all advertisers across its sprawling network prove who they are and where they operate … The names of the companies or people behind ads, as well as their countries of origin, will begin appearing on Google ads this summer, starting with several thousand advertisers a month in the United States before expanding worldwide. The measure, which could take years to implement, is designed as a defense against businesses and individuals who misrepresent themselves in paid online promotions, Google said.

"The move comes as Google tries to tamp down misinformation and scams related to the coronavirus pandemic. It expands a 2018 verification policy focused on political advertisers serving election ads."

Published on: April 27, 2020

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

•  The Wall Street Journal reports that China’s top business and commerce regulator is investigating Luckin Coffee, a self-style Starbucks competitor there that has admitted that it inflated its financial results as a way of driving up its share price.

According to the story, "More than a dozen officers from the country’s State Administration for Market Regulation descended on Luckin Coffee’s headquarters in Xiamen on Sunday, the person said, adding that they demanded access to the company’s accounts and other records. The company is complying with the requests for information, the person said.

"Luckin said in a statement on its official Weibo account that it is 'actively cooperating' with the market regulator and providing information about its business."

I cannot imagine there is anything remotely positive about more than a dozen Chinese government officials showing up at any business.  Good luck, Luckin.

Published on: April 27, 2020

We reported last week on a Wall Street Journal story about how 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.

The story made the point that this was not only in violation of company policy as expressed to those sellers, but also at odds with its Congressional testimony.

I commented, in part:

If Amazon is assuring third party vendors that it won't use their sales data to make decisions about competitive private label items, and it is doing so, that would be wrong … If Amazon assured Congress under oath that it doesn't do this, and it does, that could be more than problematic … But if I am a vendor selling via Amazon and I think that it isn't using my sales data when deciding whether to compete with me, then I'm delusional.

Because that's what virtually every retailer does … Now, does Amazon have access to both more and more granular data?  Sure.  Is Amazon better at using it effectively?  Almost certainly … But should anyone be shocked by this story?  Only people who really would go to Casablanca for the waters…

One MNB reader responded:

Of course retailers use internal seller data when making Private Label decisions.  The sellers consider this information proprietary and the retailer wouldn’t share it with the seller’s competitors, but that’s the catch 22 with Private label.  The retailer becomes both a competitor and a partner.

Internal seller data is nice, but I think internal customer data is better when selecting Private Label SKUs. 

I think it might have been you that once said, “Walmart knows their vendors better than anyone, but Kroger knows their customers better.”  Even without  dunnhumby/84.51°, I assume Amazon may know their customers as intimately as Kroger does, if not more so.  As a category manager, I'd rather understand my customers' shopping habits when choosing the PL SKUs that will grow sales, share and margin. 

I don't know if I said that, but I'd like to think so … it sounds like a pretty smart thing to say.

Got the following email from one MNB reader:

I continue to see many, many stories about the toll of COVID-19 which almost always include some numbers/statistics trying to explain the many situations we all face.  

I'm sure everyone is familiar with the Mark Twain /  Benjamin Disraeli quote:  "There three kinds of lies: lies, damn lies and statistics." 

Along those same lines, I have a specific memory of the opening lecture of my college statistics instructor.  "A group of women were  asked:  'Would you have sex with a man within 15 minutes of meeting him?'  80% of the women answered 'Yes'.  Now, before you males take up all my office hours wanting to know where this survey was done, you need to know 4 of the 5 women in the group were prostitutes.  Statistics are numbers which can be manipulated.  From this moment forward you will always question any statistic given to you.  As well you should.  Open your books, turn to chapter 1 and I will continue your education." 

Good advice, I say.  Cynical but good nevertheless. 

On the other hand … I tend to trust the statistics put together by a preponderance of scientists, simply because it would seem to be foolish not to … 

Last week we took note of a Washington Post report 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."

The story went on:  "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 commented:

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. 

One MNB retailer responded:

It amazes me that there is a federally funded postal service and two overnight delivery private companies all operating in the same communities.  Two of the three are profitable.  Why not have UPS and Fedex place bids to privatize the postal service?

Unless you think that a federal postal service - that serves the entire population, regardless of means or location - is a legitimate service that ought to be provided by the government.  Though not necessarily in the same way that it was provided in a pre-internet society.

MNB fave Glen Terbeek wrote:

An easy place for the USPS to start is to cut the number of “ordinary mail" home deliveries to 2 or maybe 3 days a week.  I don’t know about others, but most of the daily mail deliveries we receive could easily wait a day or two, and much of them go directly to the recycle bin. We receive/process/send most of our important “mail/information" via the internet.  Of course, mail requiring special delivery could/should be delivered as required for an appropriate fee. 

It is time for the USPS catch up to the realities of today starting with needs of today's "mail customers"!

And finally, one MNB reader wrote in about my Friday review of the sixth season of "Bosch," just out on Amazon Prime Video:

I too am a big fan of Bosch and as I’ve watched the first four episodes of the latest season I found myself with another reason for appreciating the show.

As a resident of LA county I found myself longing for a martini and wedge salad at Musso & Frank.  The show is supported through shooting on location at a variety of restaurants and bars (some iconic and some local off-the-beaten-path kind of places) which, I think, helps reinforce the landscape in which the story is told in.  I can’t wait to get through the rest of the season, but more than that, I long to be able to share a meal and/or drink in the city that I call home with those I hold close to me in several of those establishments when it is appropriate!

I know what you mean.  I only lived in LA during college, but I try to visit as often as possible, and I get the same feelings when I watch "Bosch" … like a craving for pancakes at Du-par's.

One of my favorite moments in "Bosch" comes in season three, when Bosch and his daughter Maddie are waiting on line at Shake Shack, and he says, "This is why I like In-N-Out. You’re in, you’re out.”  It is such an LA moment, in a series filled with them.