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    Published on: June 3, 2020

    The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Tom Furphy & Kevin Coupe debrief each other about last week's "De-Invest to Re-Invest" Leadership Summit, looking at lessons learned as well as applying those lessons to one of the nation's best retailers - Wegmans.

    Note:  Participants in last week's "De-Invest to Reinvest" Leadership Summit have received an email instructing them how to replay the conference's various segments.  In the next few weeks, segments from the conference will be available to people unable to attend, and download information will be made available on MNB.  Stay tuned.

    Published on: June 3, 2020

    The story this week that Amazon has patented a blockchain system designed to provide transparency from product source right through to the consumer reflects a larger reality - that consumers deserve to know everything about the provenance of the products they buy.  KC argues that retailers and manufacturers need to figure out ways - independently, or using third-part systems - to make that data available and accessible.

    Published on: June 3, 2020

    It appears from media reports that even as the nation was caught up in an almost unprecedented wave of protests, yesterday's efforts seemed to be less violent and destructive - perhaps because of enforced curfews, perhaps because of a growing awareness by peaceful protestors that bad actors were trying to co-opt their message for nefarious and political reasons.

    Some excerpts…

    •  From the Washington Post:

    "After a week of increasingly violent unrest in the United States, peace largely prevailed on Tuesday night. Brutal clashes between police and the public seemed to subside, and there were only sporadic reports of looting and other mayhem across the nation.

    "Still, the night was filled with tension in major cities where tens of thousands of protesters defied curfews to express outrage over racism and police brutality following the death of yet another a black man in police custody."


    •  From CNN:

    "Peaceful demonstrators defied curfews and remained on the streets of American cities for another night of protests over the death of an unarmed black man in police custody.

    "The eighth night of protests saw less violence, fewer police clashes and more acts of civil disobedience.

    "Unprecedented curfews are in place in Washington, DC, Atlanta, New York City, Cleveland, and several California cities to dissuade gatherings after a weekend of sometimes violent confrontations and looting.

    "But that didn't stop thousands of people from showing up to call for justice following the death of George Floyd, who died last week after he was pinned to the ground by a Minneapolis police officer with his knee on Floyd's neck for 8 minutes, 46 seconds … Though there were some instances of looting, it was nowhere as widespread or chaotic on Monday night."


    •  From the New York Times:

    "Peaceful protesters defied curfews, but minimal mayhem was reported overnight.

    "For an eighth day and night, tens of thousands of people staged peaceful protests and impassioned marches across the United States, while the widespread destruction and looting that had followed demonstrations in recent days was largely absent."

    The Times goes on:  "While demonstrators in many cities defied curfews, they did so peacefully.

    "They sang 'We Shall Overcome' at the Barclay’s Center in Brooklyn. Outside Wrigley Field in Chicago, crowds chanted 'Hands up' as they raised their arms to the sky. In Los Angeles, hundreds gathered outside the home of Mayor Eric Garcetti, who earlier in the day had joined the crowds and taken a knee as he listened to pleas. On a bridge in Portland, Ore., hundreds lay face down, hands behind their backs, for a 'die in' intended to emulate the death of George Floyd."


    •  From the Wall Street Journal:

    "Mass demonstrations across the U.S. gave way to a night of relative calm Tuesday, in contrast with the destruction of recent nights, as anger simmered over the death of George Floyd in custody and police violence more broadly.

    "Thousands of peaceful demonstrators gathered during the day in New York, Los Angeles, Philadelphia, Chicago, Milwaukee and the Washington, D.C., region, protesting the death of Mr. Floyd, which was captured in a video that circulated widely last week."

    The Journal also writes:

    "Even as tensions began to ease in Minneapolis, where Mr. Floyd’s killing sparked nationwide protests, state officials announced a civil rights investigation into the police department. They also began tallying up the economic costs of a week of unrest, saying early estimates showed damage to property is approaching $1 billion. The estimate from the Minneapolis Regional Chamber of Commerce doesn’t include job losses or looting."

    KC's View:

    The economic losses aren't just in Minneapolis.  In communities all over the country, businesses - many of them just getting back on their feet after being closed because of pandemic-related shelter-at-home orders - had to once again close, either as a precaution or because of serious damage being inflicted upon them.

    What has amazed and impressed me is how many business owners, large and small alike, while decrying the criminal behavior of a relative few, have come out in support of the peaceful demonstrators and their message.  As I wrote here yesterday, the overwhelming sentiment seems to be sadness, not anger.

    The New York Times makes the point that "as the sustained protests have made clear, the fuse has been burning for a long time, and despair has mounted with each case of a black person dying at the hands of the police."

    This may have been made most clear in a provocative video that ran yesterday afternoon on various cable networks owned by ViacomCBS.  The video, produced with civil rights/activist group Color of Change, lasts eight minutes and 46 seconds - the same amount of time that Minneapolis police officer Derek Chauvin had his knee on George Floyd's neck, preventing him from breathing and, eventually, killing him.  

    The screen is all black, except for the words, "I can't breathe."

    Published on: June 3, 2020

    11 am UPDATE:  In addition to the sale of 62 stores to Food Lion, Southeastern Grocers said that it would transfer 57 of its in-store pharmacy businesses to CVS and Walgreen, and is in the process of looking for a buyer for 63 stores - 61 Bi-Lo units and 2 Harveys - not included in the Food Lion deal.

    According to the announcement, "These transactions build on previous announcements made by SEG — such as the opening of a new store earlier this year and the acquisition of eight new store locations from Lucky’s Market and Earth Fare — as part of its business transformation strategy to strengthen its overall performance in an increasingly competitive sector. The Company continues to maintain momentum with its commitment to refreshing stores; nearly 40 percent of the total store fleet has benefited from renewal in the past three years. The proceeds from this transaction will be used to further strengthen Southeastern Grocers’ balance sheet and grow SEG’s core banners."

    Scott Moses of PJ Solomon is serving as financial advisor to Southeastern Grocers for these transactions.

    Original story:

    Ahold Delhaize-owned Food Lion this morning announced that it is acquiring 62 stores from Southeastern Grocers that have been operated under the Bi-Lo and Harveys banners.

    Terms of the deal were not disclosed.  Regulatory approvals are required before the deal can be finalized, which is expected to be early 2021.

    The stores will be converted to the Food Lion banner.  The deal also includes the acquisition of an additional Southeastern Grocers distribution center in Mauldin, S.C. 

    “We are so excited to add these new locations to our more than 630 stores across Georgia and the Carolinas,” said Food Lion President Meg Ham in a prepared statement.  “We’ve been serving customers in these larger regions for almost 60 years. We’re thrilled to add these locations and serve even more towns and cities across these three states with fresh, quality products at affordable prices every day with the caring, friendly service customers expect from their local Food Lion.”

    Food Lion currently operates more than 1,000 stores in 10 Southeastern and Mid-Atlantic states.

    Published on: June 3, 2020

    CNBC reports that Amazon has set June 22 as the launch date for a "Summer Sale" that it says is designed to "drive excitement and jump-start sales," as well as "drive customer engagement."

    No formal name has been given to the event, but according to the story, "The company sent a notice to sellers early Tuesday informing them that it’s hosting a 'Fashion Summer Sale Event' on June 22, according to a document viewed by CNBC. The notice says that participation in the promotional event is by 'invitation only' and it’s expected to run anywhere from seven to 10 days long."

    Amazon's traditional Prime Day promotion, which has been an enormous success when it has been run during past summers, has been delayed until September this year because of the coronavirus pandemic.   Stresses on Amazon's supply chain and distribution network made Prime Day a problematic enterprise, and leadership there believed that it was preferable to let the world regain some semblance of normality before running the 2020 edition.

    KC's View:
     

    Maybe I'm wrong, but it almost sounds like Amazon is adding a new self-created promotional event to its annual schedule, as opposed to just delaying one out of deference to embattled systems and shoppers.

    I have to wonder if Amazon's operations have regained stability faster than the company expected, leading the folks there to test the notion of a Summer Sale.  If it doesn't work, it was just a test.  If it does, expect the company's calendar to be altered more permanently … with all the impact on shoppers' discretionary spending that this implies.

    Published on: June 3, 2020

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

    •  In the United States, there now have been 1,881,256 confirmed cases of the Covid-19 coronavirus, resulting in 108,062 deaths.  There also have been 646,260 reported recoveries.

    Globally, there have been 6,469,868 confirmed coronavirus cases, 382,822 fatalities, and 3,079,601 reported recoveries.


    •  Bloomberg writes that "as thousands of stores and restaurants across the country reopen with shutdown restrictions easing, Americans are discovering a reshaped shopping experience. Along with all the plexiglass shields and social-distancing signs, comes the rapid adoption of contact-less checkout. This is safer for employees and customers, while also forcing the evolution of a U.S. retail industry that has woefully trailed much of the world in technology."

    The story goes on:  "The traditional checkout experience - marked by cashier banter, scanning items, pressing a pin pad or handling cash - was fading before coronavirus arrived in America, and the outbreak has only quickened its demise. Mobile apps are increasingly being used in stores to place orders, get questions answered via chat and pay. To avoid any contact, more customers are opting for delivery or curbside pickup … This shift will speed up purchases and let employees help consumers, instead of scanning items and swiping credit cards. It may also get customers in and out more quickly at a time when retailers and restaurants are required to reduce capacity as part of social-distancing measures."

    A paradigm of this new approach is said to be Starbucks, which has been pioneering in its approach to app-based ordering and payment.

    While many of the new technologies are pricey, the story suggests, "this can reduce labor costs by lowering the need for cashiers and making existing employees more productive."


    •  From LiveScience:

    "Social distancing, face masks and eye protection all appear to reduce the spread of COVID-19, in both health care settings and the general community, according to a new review commissioned by the World Health Organization (WHO). 

    "The review found that keeping a distance of at least 3 feet (1 meter) from other people lowered the chances of coronavirus infection or spread by 82%, and keeping a distance of 6 feet (2 m) could be even more effective.

    "Wearing face masks and cloth face coverings was also linked with COVID-19 protection for the general public; the same was true for health care workers, but N95 masks provided greater protection in health care settings than other types of masks. Eye protection, which people perhaps tend to think about less than nose and mouth protection, may also provide additional benefits in both community and health care settings, the authors said.

    "However, the authors note that the findings on face masks and eye protection are based on limited evidence. And overall, none of the practices examined in the study fully protected against COVID-19."


    •  In Texas, H-E-B has announced that while it still encourages customers to wear masks when in its stores, it no longer will be a requirement.

    Employees and vendors still will be required to wear them.

    In its statement, H-E-B said, "The CDC, State of Texas, and local health officials strongly recommend the use of masks or facial coverings in public spaces. As Texans Helping Texans, we wear masks to keep each other and our families safe. Social distancing, wearing masks, proper hand washing, and sanitization are all things we do to help keep Texas healthy."

    At the risk of annoying my friends at H-E-B, if there ends up being a second wave of the coronavirus, it is going to look like making masks optional is a policy that is all hat, no cattle.


    •  The New York Times reports on how "clean" is the new keyword in the hospitality business:

    "According to the American Hotel & Lodging Association, an industry group, the coronavirus outbreak has cost hotels in the United States more than $23 billion in room revenue since mid-February. As these properties prepare for a new operational reality — one that must balance federal, state and local laws and consumer anxiety about getting sick — the world’s largest hotel companies have all come forward in recent weeks to announce new cleaning playbooks."

    The Times goes on:  "Program names riff on the hottest word in hospitality right now: clean. There’s Hilton CleanStay, Choice Hotels’ Commitment to Clean, Best Western’s We Care Clean, Omni Safe & Clean and IHG Clean Promise. Four Seasons has Lead With Care, Wyndham has Count on Us, Mandarin Oriental has We Care, Rosewood has Commitment to Care. Marriott launched a Global Cleanliness Council; Hyatt, a Global Care & Cleanliness Commitment. Topping it off is the American Hotel & Lodging Association’s Safe Stay, a list of general industry recommendations."

    And:  "Although there are no hotel-specific disinfection guidelines from the Centers for Disease Control, the agency’s general Covid-19 resources — including everyday steps for employers and best reopening practices for businesses — has offered a foundation for hotels as they’ve sought to create their own. Many of the new cleaning plans include a consultancy with a leading medical organization, products and technologies from Ecolab (a major hygiene and safety company), some element of social distancing, increased disinfection of guest rooms and public spaces, and a commitment to procure and test new technologies like robots and ultraviolet light."


    •  Another one bites the dust…

    The New England Produce Council (NEPC) announced yesterday that its 2020 Produce Floral & Food Service Expo, originally scheduled for late August in Boston, has been cancelled because of the coronavirus pandemic and Massachusetts guidelines that made the gathering problematic.

    The Expo has been rescheduled for Aug. 25, 2021, at the Hynes Convention Center in Boston.


    •  The New York Times has a story about some of the items that seem to be popular in a pandemic reality…

    "Staring down the barrel of a long, hot summer — with vacations on hold and many camps, playgrounds and public pools closed because of the coronavirus — homeowners are hunting for creative ways to stay cool, active and sane.

    For some, not having to pay for camps or vacations means more money to spend on other things.

    "Landscapers and retailers say sales of gardening soil, mulch and firewood — for fire pits — are soaring. Trampolines are hard to come by. And swing sets at one large Long Island distributor that has been taking orders online and by phone, Backyard Solutions, have been out of stock since March … And then there are the pools.

    "High-end in-ground varieties remain in demand among homeowners with deep pockets and the luxury to wait months for permits and construction.

    "But it is the aboveground versions that are the hottest items at many pool stores, both because of their relative affordability and ease of installation."

    Just over the past six weeks, the story says, "Google searches for aboveground pools have climbed steadily, outpacing the number of inquiries each spring for the last five years by about 300 percent."


    •  Also from the New York Times, a story about the impact of the coronavirus on commercial real estate:

    "Before the pandemic shut down businesses, a robust economy had powered a building boom, sending office towers skyward in urban areas across the United States. The coronavirus outbreak, though, has scrambled plans and sent jitters through the real estate industry.

    "Skyscrapers scheduled to open this year will remake skylines in cities like Milwaukee, Nashville and Salt Lake City. Office vacancy rates, following a decade-long trend, had shrunk to 9.7 percent at the end of the third quarter of 2019, compared with 13 percent in the third quarter of 2010, according to Deloitte.

    "Developers were confident that the demand would remain strong. But the pandemic darkened the picture."

    Suddenly, everybody seemed to be working from home.  Major companies have said that many of their workers can continue to do so for the foreseeable future.  And experts have suggested that the pandemic could reshape the role of the office in American life - not eliminating it, but forcing a rethinking of how it is used and populated.

    The Times goes on:

    "The question facing the owners of office towers is: Will anyone still want the space when coronavirus crisis fades?

    If the economic pain drags on, there could be long-lasting changes to the way people work and how tenants want offices to be reimagined, said Joseph L. Pagliari Jr., clinical professor of real estate at the University of Chicago’s Booth School of Business. Some of the changes — like more spacious elevators — could be costly to put into place, he said.

    "The pandemic could be a 'pivot point,' Mr. Pagliari said, and that would be bad news for building owners. The office towers were designed to be “best in class,” he said, but the pandemic has suddenly made their most salable amenities — common areas, fitness centers and food courts — into potential liabilities.

    "The economic crisis could also spur high interest rates on debt, which would cause building values to fall, Mr. Pagliari said. That may happen even if the crisis diminishes in the weeks ahead."


    •  And finally…

    It was totally cool that Steve C. Smith, CEO of Food City, decided to rename the NASCAR Cup Series race that the company long has sponsored as the Supermarket Heroes 500.

    The Bristol Herald Courier quoted Smith as saying, “For the last 76 days, our country has been in really uncharted territory with this COVID-19 pandemic.  Like our counterparts throughout this great nation, our dedicated team of associates have gone above and beyond the call of duty to meet the needs of our customers and the communities we serve.

    "We’re proud to have this opportunity to honor supermarket heroes around the country for their hard work and dedication."

    Published on: June 3, 2020

    From MarketWatch:

    Alphabet Inc.-owned Google "is facing a potential class-action lawsuit claiming illegal privacy infringements that seeks at least $5 billion," which would translate, according to the story, to " $5,000 in damages per user since June 1, 2016."

    Google is accused of "covert and unauthorized data collection from virtually every American with a computer or phone." What made the data collection "covert and unauthorized" is the fact that Google was tracking users' actions even when they had switched into "incognito" mode, the suit charges.

    KC's View:

    Expect Google to defend this aggressively.  it isn't just about the $5 billion - it is about behavior that undermines the basic contract it has with its users.

    Published on: June 3, 2020

    CNBC reports that "Zoom reported revenue growth of 169% from the previous year in its first-quarter earnings report on Tuesday, and nearly doubled its revenue guidance for the full year, as the coronavirus pandemic drove millions of new customers to the video calling service and turned it into a household name."

    The company's margins aren't what they used to be - there have been higher costs in terms of adding capacity and improving the system's security infrastructure.  And, Zoom suddenly is facing a lot of high-profile competition from the likes of Facebook, Microsoft and Verizon.

    But one piece of good news for users:  Zoom so far has refused to allow advertising on its service.

    KC's View:

    Zowie.

    One note.  I hadn't heard of it until recently, but even Amazon has a version - Amazon Chime.

    Y'think they'll figure out a way to build awareness and market share in coming months?

    Published on: June 3, 2020

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  CNBC reports on Amazon's announcement that it will provide backup day care for all its US employees, at least until October 2.

    According to the story, "all of Amazon’s 650,000 part- and full-time U.S. employees, including Whole Foods associates, will have access to 10 days of subsidized emergency backup child or adult care. Amazon moved to offer backup day care as a result of new challenges experienced by working parents during the coronavirus crisis, the company said."

    The daycare will be provided by an outside company, "Care.com, which allows users to request backup care online or via an app. Amazon will cover more than 90% of the cost of the service, the company said. Employees pay a co-pay of $25 per day for in-center child care or $5 per hour for in-home child or adult care."

    The benefit reportedly will cost Amazon several million dollars.

    Which it can afford.  Probably out of petty cash.

    This new benefit is being provided because of internal pressure - more than 1,500 Amazon-employed working mothers had urged the company to make this available, pointing out that companies such as Apple, Microsoft, and Google offer it.  But that's okay - while one might prefer that some companies, especially those that we admire and to which we feel a certain loyalty and/or kinship, would not need nudging, there's also something to be said for responsiveness.  

    In this new reality, which remains unformed with working parents having no idea the extent to which their children's schools will be open in the fall, benefits like this one will be increasingly important, and will establish the companies making the investment as employers of choice.

    Published on: June 3, 2020

    •  From CNBC:

    "Companies trimmed another 2.76 million workers in May as the coronavirus pandemic continued to slice through the U.S. economy, according to a report Wednesday from ADP.

    "Job losses were especially deep in large businesses, which reported a decline of more than 1.6 million. Manufacturing took one of the biggest hits as the sector lost 719,000 workers.

    "The reported total was well below the 8.75 million estimate from economists surveyed by Dow Jones. The reason for the wide disparity was not immediately clear.

    "May’s count also marked a precipitous drop-off from the 19.6 million plunge in April, an estimate that was revised from the initially reported 20.2 million. The April loss was by far the worst in the history of the ADP survey."

    Published on: June 3, 2020

    •  Target-owned delivery service Shipt announced that it has hired Molly Snyder, most recently the SVP of public affairs and communications for U.S. Bank, to be its first-ever chief communications officer.

    Published on: June 3, 2020

    Axios reports this morning that "the Yomiuri Giants, Japan's most famous baseball team, called off a preseason game hours ago after two players tested positive for COVID-19 … All Giants players, coaches and staff will be tested for the coronavirus."

    The 12-team Japanese baseball league was hoping to open a shortened season in a couple of weeks, though without spectators in the stands, but Axios makes the point that this puts those plans "in jeopardy."

    KC's View:

    As much as I want baseball to come back - as much I would like all sports to come back - I have found myself not being very optimistic.  This story illustrates why.

    You can bring back sports, but all you need is a couple of positive tests and suddenly the whole thing seems like a bad idea.  It isn't just about limiting spread.  It is about modeling responsible behavior.