More musings prompted by Wednesday's "De-Invest to Re-Invest Leadership Summit," as KC focuses on the various scenarios - as sketched out by Dialogic Group's Thom Blischock - that may confront businesses moving forward. It is critical to be prepared operationally and organizationally, but equally important to have a vision of what the business should be like when we get to the end of the tunnel.
Business Insider reports that Dollar General yesterday posted Q1 same-store sales that were up 21.7 percent and net sales that were up 27.6 percent - growth that seems to be a reflection of two things.
First, there is the fact that a declining economy makes Dollar General's value proposition particularly appealing.
And second, there is Dollar General's geographic ubiquity - Business Insider notes that "according to GlobalData Retail, 75% of the US population is now within five minutes of a Dollar General store."
Reuters reports this morning that Nordstrom has posted Q1 sales that were down 40 percent, to to $2.03 billion from $3.35 billion a year earlier. The iconic department store chain also said that it had a net loss of $521 million, compared with a profit of $37 million a year ago.
There was a scintilla of good news - online sales rose 5% to $1.1 billion.
CEO Erik Nordstrom released a statement saying that the company "strengthened our financial flexibility by increasing liquidity, lowering inventory by more than 25 percent from last year and significantly reducing our cash burn by more than 40 percent from March into April. We're entering the second quarter in a position of strength."
Reuters writes that "Nordstrom said roughly 40% of its stores have reopened, though they are in smaller markets. It plans to reopen its entire fleet of shops by the end of June, including in major markets California and New York."
I don't think there is any question that Dollar General - along with other value-driven formats like WinCo, Grocery Outlet, Aldi and even Lidl (smaller than the rest, but expanding) - are ideally positioned to take advantage of a troubled economy in which unemployment will continue to be high as the nation slides from pandemic to recession. It is a good time to have a price-centric format in your arsenal.
As for Nordstrom … I suspect that they're going to be fine, though it certainly will take some time to get there. My confidence is largely based that Nordstrom has for some time been investing in technologies that are designed to transform the shopping experience, as well as testing the Nordstrom Local concept that I think gives it the ability to offer a unique hybrid experience to its shoppers and fans.
Brick Meets Click is out with a new survey saying that "online grocery sales set another record in May, increasing 24% over April sales, to reach $6.6 billion."
More from the survey:
• "The total number of online grocery orders increased 18% on a month-over-month basis from 62.5 million in April to 73.5 million in May. This increase was driven by expanded capacity associated with retailers who reopened their services and others who added more time slots to better meet the surge in demand for these essential shopping services."
• "Household penetration hit 33% in May (up from 31% in April) as approximately 43 million customers shopped online for groceries during the previous 30-day period. This gain further reflects increased capacity, making it easier for people to secure a time slot for pick up or delivery as they wrestle with concerns about the virus and shopping in-store."
• "The average order value climbed nearly 6% to $90 in May, an increase of almost $5 compared to April. Higher consumer prices starting in April, improvements in product availability, and more customers becoming comfortable with online grocery shopping all contributed to this trend."
The Wall Street Journal reports this morning that the United Parcel Service (UPS) will impose new "peak" surcharges on companies that "have been inundating its delivery network with many more packages and oversize items during the coronavirus pandemic." It is, the story says, "an unprecedented move to manage a summer flood of shipments and higher costs."
According to the piece, "The surcharge adds 30 cents on each package shipped under UPS Ground and SurePost, the service in which UPS drops packages at the Postal Service for delivery to homes. The added fee kicks in only on shippers that topped their average weekly volume in February by more than 25,000 packages."
The story notes that "retailers will have to calculate whether to raise prices, absorb the added cost or a combination of the two. They can also try workarounds to avoid the fee by closely monitoring the amount and sizes of packages they ship with UPS, using another carrier or nudging customers to pick up online orders in stores."
Seems reasonable to me … so much so that I think that maybe the US Postal Service, which is under the same kind of financial pressure as UPS (and additional political pressure), ought to consider the same thing.
I have to say that while as a consumer I love getting Sunday deliveries, I would have no problem if an online retailer gave me the option, but also passed along whatever the shipping surcharge might be for that service. Let me make the decision, let me prioritize. That seems eminently fair.
The Associated Press reports that CVS is partnering with robotics company Nuro to use autonomous vehicles to deliver prescriptions from a Houston store.
Nuro is familiar with the roads there - it has done previous tests in Houston with Kroger and Domino's Pizza.
According to the story, "A CVS spokesman said the prescriptions will routinely be delivered within an hour of being ordered. Customers will have to confirm their identity in order to unlock their delivery after the vehicle arrives." Customers will be able to choose whether they want the Nuro vehicle to make the delivery, and then can track the car via the Nuro app.
The AP points out that there have been other tests of non-traditional delivery methods for prescriptions and other health care products: "Last September, Walgreens started testing drones capable of delivering some products five or 10 minutes after being ordered. But that test in Christiansburg, Virginia, did not include prescriptions.
"Using unmanned vehicles to deliver potentially sensitive prescriptions is uncharted territory. Some hospitals in North Carolina have been testing drone delivery of medical samples and supplies.
"CVS and UPS tried drone prescription deliveries last fall in Cary, North Carolina. The companies started offering the service earlier this month to a big retirement community in Florida."
The move to autonomous vehicles, which seemed to be subsiding a bit a few months ago, now looks to be caught up in the desire to create non-contact scenarios between employees and customers. Me, I'm more intrigued by drones … but I'd chose one of these vehicles to deliver stuff to my house.
(Though the way that autonomous vehicles were portrayed on "Westworld" on HBO does give ms some pause…)
"Some of the world's biggest food brands are realising long-held ambitions to sell directly to consumers in the pandemic, using coronavirus disruption to sidestep retailers. PepsiCo started selling boxes of snacks and drinks, including Tropicana fruit juice, Cap'n Crunch cereal and Quaker granola bars, this month on its PantryShop site, which ships to any zip code in the contiguous US. A sister site, Snacks.com, allows online shoppers to pick from more than 100 Frito-Lay products, such as Doritos crisps and Tostitos tortilla chips.
"In the UK, Kraft Heinz began delivering bundles of its eponymous canned food and sauces about six weeks ago. The prospect of cutting out supermarkets might seem like a big prize for food manufacturers: the absence of a middleman should mean they can retain the profits themselves. However, like most grocery delivery ventures, the sites are not expected to make money. Executives behind them say they have no ambition to replace retailers on a substantial scale any time soon.
"Instead, they are using the initiatives to learn first-hand what works and what does not in ecommerce, and to gather valuable data about customers that are normally captured by retailers."
It has long been the view here that if given the opportunity, a lot of manufacturers would love to find ways to disintermediate traditional retailers. They won't replace retail, but they certainly can supplement it in effective ways, establish more direct relationships with shoppers, and maybe even nibble away at market share a bit.
Just because it hasn't happened yet doesn't mean it can't.
Random and illustrative stories about the global pandemic and recovery efforts, with brief, occasional, italicized and sometimes gratuitous commentary…
• In the United States, there have been 1,768,608 confirmed cases of the Covid-19 coronavirus, 103,344 deaths, and 498,762 reported recoveries.
Globally, the number of coronavirus cases is closing in on six million - it stands this morning at 5,925,659, with 362,555 fatalities and 2,593,676 reported recoveries.
• From the New York Times this morning:
"As new hot spots emerge, the pandemic may be entering another phase.
The simplest way to track the progress of any outbreak is by seeing how many new cases and deaths are reported in a given area each day. And in the United States, falling numbers in some of the hardest-hit places have offered glimmers of hope. Totals for the country have been on a downward curve, and in former hot spots like New York and New Jersey, the counts appear to have peaked.
"But infections and deaths are rising in more than a dozen states, as they are in countries around the world, an ominous sign that the pandemic may be entering a new phase.
"Wisconsin saw its highest single-day increase in confirmed cases and deaths this week, two weeks after the state’s highest court overturned a stay-at-home order. Cases are also on the rise in Alabama, Arkansas, California and North Carolina, which on Thursday reported some of the state’s highest numbers of hospitalizations and reported deaths since the crisis began.
"In metropolitan areas like Fayetteville, Ark.; Yuma, Ariz.; and Roanoke and Charlottesville, Va., data show new highs may be only days or weeks away."
• Interesting piece in the Financial Times about how the pandemic could bring about a new - and perhaps legitimized - ageism.
"Covid-19 has reinforced the idea of older people as frail and vulnerable. Some previous pandemics have largely affected the young - the polio outbreaks of the 1950s mainly hit children under five; the devastating 1918-19 flu killed millions of young adults - but Covid-19 mostly kills older sufferers. In the US, 80 per cent of those who have died of Covid-19 have been over 65, with the most severe rates for those aged over 85, according to the Centers for Disease Control and Prevention. The same pattern has been repeated throughout the world."
The question is whether concerns about old people's susceptibility to the coronavirus will allow society in general and business in particular to marginalize people of a certain age.
The FT piece also makes the point - and I'm glad it does - that it isn't like the pandemic is going to wipe out everybody over 60 (thank goodness!). Society, it says, will has to grapple with the economic and infrastructural challenges of an aging society in which greater longevity is the rule, not the exception.
But we should not ignore the possibility that some companies won't want to hire older people - you know, the ones with the experience and accumulated wisdom - just because of their age. That would not be right, and it would deprive companies of an important natural resource.
• The Wall Street Journal writes: "The coronavirus crisis has brought massive shifts in how Americans buy and consume food. For America’s major packaged-food companies, which have struggled in recent years, that meant an unexpected upswing in sales. Now the question is which changes will last."
The story says that "surges in demand put pressure on supply lines. Grocery stores responded by allocating more shelf space to big, widely known brands, at the expense of upstart competitors who had gained ground in recent years. It all added up to a golden opportunity for America’s corporate food giants that had been struggling with shifting tastes and stagnating sales.
"But these trends are unlikely to prove permanent. Already, the initial surge in sales of pantry and comfort foods is fading. In the week ending May 16, canned-soup sales were up a more modest 22% from a year earlier and potato chips by just 15%. This suggests Campbell, which specializes in both soup and snacks, may see less enduring benefit from the crisis than others."
• Bloomberg report that Costco plans to reopen all its food courts and once again offer samples, albeit on a smaller scale, by mid-June. It had eliminated sampling and reduced the number of food courts that were open in a response to the pandemic and concerns about Covid-19 spread.
According to the story, "Costco said yesterday that 'it will start a 'slow rollout' of some form of sampling in mid-June, but it won’t be stuff on open trays, picked up with fingers. 'I can’t say anymore,' Galanti said cryptically'."
• The New York Times reports on "sweeping new recommendations from the Centers for Disease Control and Prevention on the safest way for American employers to reopen their offices and, at the same time, prevent the spread of the coronavirus among their employees."
If followed, the Times writes, "the guidelines would lead to a far-reaching remaking of the corporate work experience. They even upend years of advice on commuting, urging people to drive to work by themselves, instead of taking mass transportation or car-pooling, to avoid potential exposure to the virus.
"The recommendations run from technical advice on ventilation systems (more open windows are most desirable) to a suggested abolition of communal perks like latte makers and snack bins."
The guidelines call not just for attitudinal changes, but also infrastructural challenges - how many new buildings don't have windows that open, for example?
How will this work in buildings with elevators? Will these elevators take just a few people at a time? How will that work?
It may end up being a lot easier and more productive for offices to just let people continue working from home, which then will decimate the commercial real estate market.
• WGN-TV reports that "Mayor Lori Lightfoot announced Thursday that Chicago will advance to the next phase of reopening amidst the coronavirus pandemic on Wednesday, June 3 … Under 'Phase 3' of reopening, a wide range of businesses can open their doors with capacity restrictions and other preventative measures in place. This includes office-based jobs, hotels, childcare facilities and in-home daycares … Restaurants and coffee shops can allow outdoor dining, and personal services like barbershops, salons and tattoo parlors can also reopen with certain measures in place."
• CNN reports that Las Vegas is scheduled to reopen to tourists on June 3, but it will be a different place: "Half-empty casinos. Reservations-only dining. No shows, nightclubs or sporting events."
"Like much of the country," the story says, "the city effectively has been shut down to visitors since mid-March, an effort on the part of casino companies and local officials to slow the spread of Covid-19.
"Now, after more than 70 days of locked resorts, shuttered restaurants, lap-less lap dances and a deserted Las Vegas Boulevard, Sin City is gearing up to lean into sin again — at least, as much debauchery as one can experience wearing a face mask, sanitizing hands regularly and standing or sitting six feet from everyone else."
The story goes on to say that "most hotels will reopen with pool access; some will have pool decks operating on reduced schedules. Though the raucous pool parties that Vegas is known for are probably not coming back anytime soon.
"Two other pluses: Many hotels will roll out keyless entry programs to minimize queues at the check-in desk, and most will reopen with free parking — a longtime Vegas amenity that gradually disappeared over the course of the last two years."
The well-know "what happens in Vegas stays in Vegas" ad campaign also is changing, to the more benign and reassuring, "The world has changed, and Vegas is changing with it."
I'd go back to Vegas for work, but I cannot imagine any circumstances that would compel me to go there by choice. Not for a long time.
• From the Boston Globe:
"For the first time in its 124-year history, the Boston Marathon has been canceled, dashing the dreams of thousands of runners and delivering an emotional and economic blow to a region hit hard by the coronavirus pandemic."
However, Marathon organizers have come up with a work-around:
"Thomas Grilk, chief executive of the Boston Athletic Association, which organizes the world’s oldest annual marathon, said the group will instead offer a virtual marathon, in which participants will be required to complete the 26.2-mile distance within a six-hour period and show proof of their time. They can run anytime between Sept. 7 and Sept. 14, and all those who complete the race will receive an official race program, T-shirt, medal, and runner’s bib."
• Wine Spectator reports that "Caymus Vineyards, one of Napa Valley's best-known wineries, has filed a lawsuit against California's governor and public health officer, alleging that the state's reopening plan is treating winery tasting rooms inequitably. Chuck Wagner, the winery's proprietor, is calling on a federal court to strike down the measure that has allowed some tasting rooms to open while others remain closed.
"'The orders permit the reopening of winery tasting rooms if, and only if, they also provide 'sit-down, dine-in meals,' the complaint alleges. 'The orders provide no explanation for this requirement. Any winery that does not - or, under local ordinances, cannot - provide such meals may not reopen. The governor and the state public health officer have an obligation to promulgate orders that treat like businesses in a like manner'."
There is an irony to the suit - California Gov. Gavin Newsom is a co-owner of the PlumpJack Group, which has four Napa wineries.
• The Washington Post reports on how, "as statewide coronavirus orders are easing, many stores and restaurants nationwide have taken the opposite route: They have made face coverings a requirement, kicking out those who fail to comply and even going to court to enforce their directives.
"Yet in the emergent culture war over masks, a handful of businesses … are fashioning themselves as fortresses for the resistance."
One example - the Liberty Tree Tavern in Elgin, Texas, where there is a sign on the door saying, "Sorry, no mask allowed. Please bare with us thru the ridiculous fearful times."
The Post goes on: "At one Kentucky gas station, no one is allowed inside the adjacent convenience store if they are wearing a mask. Near Los Angeles, a flooring store encourages hugs and handshakes while prohibiting face coverings. The owner of a campground in rural Wisconsin vowed to treat clients sporting them inside facilities as she would 'a robbery in progress'.
"Scientific and medical experts agree that people should cover their faces in public to stop coronavirus, which has now killed at least 100,000 people in the U.S. The Centers for Disease Control and Prevention maintain that masks serve as an especially important safeguard in crowded spaces, where social distancing is impossible."
I am gobsmacked. Maybe I shouldn't be anymore, but I am. These so-called protests strike me as the height of selfishness, since science tells us that masks don't protect the wearer as much as they protect the people around him or her. They're not perfect, they're not convenient, but they say, quite simply, "I care about you." Why anyone would take the opposite position is something I do not understand.
Now, to be clear, I am not in favor of the wholesale demonization of people who do not wear masks. That's what happened recently in a Staten Island, New York, ShopRite, where a woman who walked in without wearing a mask was treated to a uniquely New York reaction.
You can watch a snippet below … but be warned that the language is rough and is not suitable for playing if there are children present. Use earphones!
Columnist Steven Pearlstein has an excellent piece in the Washington Post this morning in which he challenges the notion that the world will change forever as a result of the coronavirus pandemic.
"There is, of course, a germ of truth and a measure of logic behind many of these prognostications, alongside the rampant myopia and overreach," he writes. "But if history is any guide, once a vaccine has been found and the economic storm has passed, life will return pretty much to the way it was before."
He goes on: "The coronavirus crash was fast and hard. The recovery will be slow and uneven. That said, the pandemic will certainly accelerate some structural changes in the economy that were already underway."
Like the demise of many department stores. And the demise of many of the malls that house them. And the growth of e-commerce.
It is an excellent and provocative column, and you can read it here.
Here's one more excerpt:
Even before the pandemic, there were encouraging signs that American capitalism was beginning to shed its single-minded focus with maximizing shareholder value. Companies that offered shoddy products and services began to find themselves at the receiving end of nasty social media campaigns, while those whose business models depend on squeezing employees, despoiling the environment and ignoring their responsibility to the rest of society were finding it increasingly hard to attract the most sought-after talent.
"The pandemic has given fresh impetus to that shift."
"Walmart's US ecommerce sales are expected to rise 44.2% to $41.01 billion this year, a significant bump from 2019’s stellar 36.8% growth - and an increase from our January 2020 estimate of 27.
"With this increase, Walmart will solidify its No. 2 spot on our top 10 ecommerce companies list, still far behind Amazon but pulling further ahead of eBay, which is expected to grow just 3.0% this year."
• USA Today reports that Aldi, after a successful series of pilots, "is adding curbside pickup to nearly 600 stores in 35 states by the end of July."
"We are always looking for ways to make the ALDI shopping experience even more convenient and accessible for everyone," Aldi CEO Jason Hart said in a prepared statement. "Whether shopping in-store, or online for delivery or pickup, we'll continue to be here to safely serve our customers."
With brief, occasional, italicized and sometimes gratuitous commentary…
• The Minneapolis / St. Paul Business Journal reports that "Minneapolis Mayor Jacob Frey declared a local emergency and Gov. Tim Walz activated the Minnesota National Guard to help quell looting and violent unrest that spread throughout the Twin Cities on Thursday in the wake of the death of George Floyd in the custody of Minneapolis police earlier this week.
"Meanwhile, Target Corp. said late Thursday that it would close 24 Twin Cities stores — its entire retail footprint in the metro — until further notice, following looting incidents by mobs at at least two of its locations."
The story also details some of the violence occurring in Minneapolis and its impact on retail:
"Violence, which developed Wednesday evening after initially peaceful protests at the Minneapolis Police Department's Third Precinct, grew worse and spread beyond the city. Crowds that had looted and burned dozens of small businesses along Lake Street — as well as some large ones, like Target's Lake Street store and a nearby Cub Foods — appeared at retail locations in St. Paul. Target's Midway store was struck by looters, leading to an hours-long standoff with police and Minnesota state troopers. Police reported fires at NAPA Auto Parts, T.J. Maxx, The UPS Store and Furniture Barn, the Pioneer Press reported."
• From the Des Moines Register:
"Kum & Go will open an urban convenience store in downtown Des Moines, a new concept for the locally owned gas station chain.
"Its 3,000-square-foot store will be located in the renovated Edna M. Griffin Building, a historic structure that was the scene of a major event in the city's civil rights history. It is slated to open in spring 2020.
"The walk-up store will focus on 'healthy and better-for-you products,' as well as traditional convenience store items, said Tanner Krause, president of Kum & Go. It will also serve as a test store for the chain's new items, and, if the business model is successful, a prototype for additional stores in the 11 states the company serves."
I assume that these folks have gone to visit Green Zebra in Portland, Oregon - which is the gold standard, I think, for how to do this.
I moved around some of the stuff on my office walls this week - in an in-vain attempt to get noticed by Room Rater on Twitter, and also because some folks (including Mrs. Content Guy) thought it all looked too cluttered.
Because this all shows up in many of my videos, it prompted one MNB reader to write:
KC! Good morning – glad to see you’re staying safe (and wearing a helmet … yikes)! Quick question which has nothing to do with anything. In the most recent FaceTime with the Content Guy segments, you’ve been in your home office. I’m admiring the mini posters of Bullitt and the shamefully underappreciated The Long Goodbye, but I can’t quite make out the third one that’s usually peeking over your right shoulder … inquiring minds – well, my inquiring mind – want to know!
I answered via email:
It actually is a lobby card for “The Big Fix,” the Richard Dreyfuss private eye movie from 1978 - talk about under-appreciated! It is an adaptation of a Roger L. Simon novel about Moses Wine, a Berkeley-era campus activist from the sixties turned LA private detective. Amazing cast - Susan Anspach, Bonnie Bedelia, John Lithgow, Fritz Weaver, F. Murray Abraham, Ron Rifkin, and, in a tiny, tiny role, Mandy Patinkin.
One of my personal favorites … and almost nobody has seen it or remembers it.
The reader responded:
Beautiful! Thank you! – I’ll try to find it! I’m a sucker for the genre, too. In fact, I pulled James Garner’s Marlowe off the shelf a couple weeks ago. Always plays a little bit like a hardboiled warm-up to “The Rockford Files” to me. Harper and The Drowning Pool are on my list to revisit too. Thanks for the info – and the recommendation, KC!
And I wrote:
How do you feel about Night Moves?
And he came back to me:
It’s a crime, but I’ve never seen it! I know it’s 1970s Hackman – that’s about it.
Night Moves, in fact, is one of the best movies ever made in the genre - directed by Arthur Penn (Bonnie & Clyde), and Gene Hackman giving one of his best performances ever in a career full of amazing performances. (It also has a very young Melanie Griffith.)
It is bleak, moody and totally compelling. See it. (Night Moves is on Amazon Prime, FYI.)
I'm happy to announce that tonight, at 5:30 pm EDT / 2:30 pm PDT, we're going to do it again … our fourth MNB Virtual Happy Hour.
The folks at GMDC have once again agreed to sponsor and host it, and I'll have a link and instructions for you later this week.
Hopefully, you can choose a libation for Happy Hour … and then prop up your laptop or warm up your computer on Friday, May 29, for a conversation and a drink. (You don't have to let me know you're coming, but it would be nice to know.)