business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: June 10, 2020

    The New York Times recently interviewed more than 500 epidemiologists to find out when they would adapt traditional social behaviors.  Their responses are not heartening ... though they are instructive.  KC has some thoughts.

    Published on: June 10, 2020

    From the Washington Post:

    "U.S. retailers will shutter 20,000 to 25,000 stores this year, according to projections released Tuesday by Coresight Research, with as much as 60 percent of those closures occurring in malls. That marks a sharp increase from the 15,000 forecast earlier this year and raises the stakes for a sector already in turmoil before the coronavirus pandemic catapulted the country into recession."

    While many communities are in the process of reopening their economies and public services, for many, the Post writes, these "various phases of 'reopening' won’t come soon enough.

    "J. Crew, Neiman Marcus, J.C. Penney, Tuesday Morning and Stage Stores - which operates hundreds of Palais Royal, Bealls and Goody’s locations - have all filed for bankruptcy. Brooks Brothers is in talks with banks about financing a possible bankruptcy, which could come as soon as next month, CNBC reported. And Tailored Brands, which owns Men’s Wearhouse and Jos. A. Bank, is considering the same fate, according to Bloomberg News.

    "Coresight has tracked more than 4,000 planned closures since Jan. 1. Those include more than 900 from home goods store Pier 1 Imports, plus hundreds more from nutrition brand GNC, Tuesday Morning and Victoria’s Secret."

    Two other points from the Post story:

    "The retail sector was in transition long before the coronavirus pandemic - more than 9,800 stores closed in 2019 - as bricks-and-mortar storefronts steadily lost ground to e-commerce. And those housed in mid-tier malls that didn’t evolve fast enough were put further behind."

    "As with so much of the economy, the path forward may ultimately hinge on finding a vaccine and ending the pandemic. Even then, retailers who can hang on will face painful questions about paying rent, having the money to place advance orders, bringing employees back on the payroll and filling holes in their supply chains. Then comes the possibility that a second wave of infections could force additional lockdowns."

    KC's View:

    This isn't a retail apocalypse, though you can expect to see that term thrown around a lot in coming months.

    This is about bricks-and-mortar … retail is going to be just fine.  Retail just is taking on different permutations, reshaping itself according to the needs and wants of shoppers, the capabilities and potential of technology, and the cultural and economic impact created by the pandemic and recession.

    There will always be sellers and buyers.  That's the definition of retail.

    There also will always be survivors and victims.  The victims will be the ones that don't adapt, the ones that keep hoping for the good old days to return.

    Published on: June 10, 2020

    The Wall Street Journal reports this morning that some retailers - including Macy's and Kohl's - are seeing a surprising amount of traffic and sales as their stores reopen around the country.

    Here's how it frames the story:

    "Macy’s Inc. Chief Executive Jeff Gennette said sales at reopened stores are down by about half compared with before the pandemic, which is better than the 85% decline the company had predicted. At Kohl’s Corp., stores are doing about three-quarters of their pre-pandemic sales volume, up from about two-thirds in late May, Chief Executive Michelle Gass said. The executives spoke at a virtual conference Tuesday hosted by the investment bank Cowen and Co."

    KC's View:

    I hope these folks don't get complacent, or begin to believe that things may go back to the way they were.  Because that would be delusional, not to mention a kind of retail malpractice.

    Published on: June 10, 2020

    Bloomberg has a story about how Shopify, a Canadian technology company that "has become the platform of choice for businesses seeking to get online quickly and cheaply," enabling many of the transactions not made on Amazon, is having its moment as the pandemic changes consumer behavior.

    This year, the story says, "has given Shopify - and online retail - a huge push. Whether the behavior shift is permanent remains to be seen, but it’s put a tech company few had heard of into the spotlight."

    Some context:

    "In the U.S., the world’s biggest e-commerce market after China, any purchase not made on Inc. is probably done via a website powered by Shopify. The Ottawa-based company claimed the second-largest share of online retail sales in the U.S. last year. Globally, it powers more than 1 million merchants across 175 countries, from Victoria Beckham’s clothing line to megabrands such as Heineken and PepsiCo. All told, Shopify helped flog $61 billion of goods in 2019."

    The story goes on:

    "Early on in the crisis, Tobi Lutke, Shopify’s convention-bucking chief executive officer and founder, told staff to 'delete all our existing plans and re-derive them from this new reality.'  For three days, employees dropped their usual jobs and focused on identifying what small businesses needed most to survive. In subsequent weeks, Shopify rushed out features to help merchants set up curbside pickup and local delivery. It announced new partnerships with Facebook Inc. and Pinterest Inc. to expand social media as a shopping tool. According to Chief Technology Officer Jean-Michel Lemieux, Shopify was seeing 'Black Friday-level traffic every day' in April. As brick-and-mortar stalwarts such as J.C. Penney Co. and Neiman Marcus Group Inc. tipped into bankruptcy, Shopify saw a 62% surge in store creations over a six-week period.

    “'The future of retail is everywhere,' says Shopify Chief Operating Officer Harley Finkelstein."

    KC's View:

    Seems to me that there are four advantages to how Shopify approaches the marketplace…

    •  It is relatively fast and cheap, enabling brands to pivot nimbly rather than dither in place.

    •  It supports companies' brand equity, rather than compete with it.

    •  It actually may position some brands to disintermediate traditional retailers to some degree, which is what many of them would like to do.  

    •  It ain't Amazon.

    Published on: June 10, 2020

    Albertsons-owned United Supermarkets this week announced that it is adopting a new technology-based solution designed to enhance and speed the curbside pickup experience at its 94 stores.

    After shoppers place e-commerce orders and are notified of its availability, "the store immediately receives an accurate ETA, gains visibility into the guest’s journey, and receives timely alerts which give our team members time to fulfill the order and meet the guest as soon as they pull up … The real-time location updates are extremely helpful for team members, enabling them to prioritize orders based on guest arrival times, and deliver the orders as soon as guests arrive … Guests are provided with a fast and easy curbside experience, and significantly decreased wait times, which is a crucial part of the pickup program."

    The FlyBuy proprietary machine-learning technology that enables the process is designed by Radius Networks.

    “As you can imagine, we are currently working on all cylinders to service our in-store, curbside, and delivery guests,” said Chris Farr, director of ecommerce at United Supermarkets, in a prepared statement.  “Being able to reduce the guest wait time by preparing their order before they arrive is a game changer.

    KC's View:

    I assume that if this works at United the system could be rolled out throughout Albertsons' vast network of stores, where needed and necessary.

    I think this is a smart move.  I've become an enormous user of supermarket pickup services over the past few months, far more than I would've expected.  Having a system that makes the experience faster and smoother probably will be a cost of doing business for many retailers - especially food retailers - for the foreseeable future.  Maybe forever.

    Published on: June 10, 2020

    The New York Times reports on the mixed prospects that may face mixed-use developments.

    From the Times story:

    "Mixed-use projects have been a hallmark of the country’s urban renaissance over the past couple of decades. They are often thriving complexes built with an ecosystem of residences, offices, plazas, hotels, shops and restaurants. Developers like them for the scope, and business owners like them for the round-the-clock density of people.

    "In some cases, these projects have transformed whole areas: The 28-acre Hudson Yards over an old train yard brought new life to an underused corner of Manhattan, and the 56-acre Water Street Tampa in Florida will connect the city’s downtown with its waterfront. In general, they have helped define the live-work-play ethos that many younger professionals seek in cities.

    "But the coronavirus threatens to upend the allure of retail and restaurants in these developments. Safety concerns and a changing patchwork of state and local virus-related regulations have led developers to rethink the layouts and designs of such areas. Ideas coming to the fore could be around for years, or they could start to fade away at the first sign of a coronavirus vaccine."

    On the other hand, mixed use continues to be an attractive model to developers, since it spreads out their bets - a development isn't dependent just on retail, or just on office space, or just on housing.

    KC's View:

    This isn't just big mixed use developments.  In my little Connecticut town (population, about 20,000), there are three separate such developments in various stages of progress, and I would imagine that these folks have to be rethinking what the changed world means in terms of the real estate balance, the allocation of space, and the degree to which certain safeguards have to be built in just in case.

    One advantage these suburban mixed use developments may have is the ability to provide certain desirable urban-style amenities that people still want while still offering greater space and access to things like fresh air that suddenly seemed a lot more important and attractive during the pandemic.

    Published on: June 10, 2020

    Reuters has a partial accounting of some of the companies that over the past two weeks "have pledged more than $1.7 billion for racial and social justice causes amid worldwide protests over the death of George Floyd, an African-American man who died after a Minneapolis police officer pressed a knee into his neck."

    Among them:   Alphabet Inc's Google - $12 million … Amazon - $10 million … Bank of America - $1 billion … Coca Cola - $2.5 million … Facebook - $10 million … Home Depot - $1 million … Microsoft - $1.5 million … Netflix - $1 million … Procter & Gamble - $5 million … Sony - $100 million … Starbucks - $1 million … Target - $10 million … and Walmart - $100 million over five years.

    KC's View:

    Giving money is a good thing.  Absolutely necessary.   But it only is part of the response that business must provide to these issues and problems.

    Axios features a commentary from its CEO, Jim VandeHei, in which he suggests that every business and business leader in the US "is witnessing a new reality - and a whole new set of unwritten workplace rules and unambiguous expectations."

    He writes that "this new reality and its rules include:

    "There’s no market for half-assed diversity and inclusion efforts: This was true before the renewed focus on racism. But it'll be an urgent essential for many years to come, thanks to the public response to the George Floyd murder.

    "This means constant conversation and action internally - including quicker, more decisive moves on increasing the number of people of color at work and in leadership, and taking time to truly understand the perspectives and realities of those who look or think or live differently than you."

    VandeHei writes that if they "can't speak authentically to these issues, leaders need to listen and learn authentically. It's amazing how much tension and suspicion gets eased with an honest ear."

    Plus, he writes:  "Doing good is no longer a niche. It's a necessity: The judgment CEOs feared most in the past was pesky reporters or regulators. The judgment they should fear the most now is idealistic employees on the inside, and the social media warriors on the outside."

    This last point is particularly timely, considering how many leaders have lost their jobs in the past couple of weeks because of past or current sins that seem far more insidious when seen in the current light of awareness and culpability.  These include editors of newspapers and magazines, the founder of an exercise-technology company, writers and actors, athletes and broadcasters,  a food business executive, and a financial services executive.  

    Published on: June 10, 2020

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  In the United States, there now have been 2,045,741 confirmed cases of the Covid-19 coronavirus, with 114,151 deaths and 788,885 reported recoveries.

    Globally, there have been 7,342,582 coronavirus cases, with 414,124 fatalities and 3,619,977 reported recoveries.

    •  The New York Times reports on a speech given to biotech executives by Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, in which he described the Covid-19 coronavirus as his "worst nightmare … In a period of four months, it has devastated the whole world.  And it isn’t over yet.”

    Fauci said that "although he had known that an outbreak like this could occur, one aspect has surprised him, he said, and that is 'how rapidly it just took over the planet.'

    "An efficiently transmitted disease can spread worldwide in six months or a year, but 'this took about a month,' Dr. Fauci said. He attributed the rapid spread to the contagiousness of the virus, and to extensive world travel by infected people."

    The Times writes that "vaccines are widely regarded as the best hope of stopping or at least slowing the pandemic, and Dr. Fauci said he was 'almost certain' that more than one would be successful. Several are already being tested in people, and at least one is expected to move into large, Phase 3 trials in July.

    "But much is still unknown about the disease and how it attacks the body - research that Dr. Fauci described as 'a work in progress'."

     "It isn’t over yet.”  Those are the words that are most sobering.  And he means them to be.

    •  The Wall Street Journal writes that "more people were hospitalized with Covid-19 in North Carolina on Monday than any other day during the pandemic, Gov. Roy Cooper said, as the state surpassed 1,000 deaths."

    "It isn’t over yet.”

    •  From the Los Angeles Times, an assessment of some of the broader impacts of the pandemic :

    "After weeks of catastrophic job loss across the country, May’s labor report held out a glimmer of hope: The nation’s overall unemployment rate ticked down to 13.3%, from 14.2% in April.

    "But for black Americans it was more bad news: A staggering 16.8% of the African American labor force was out of work, up a notch from 16.7% in April.

    "In California and nationwide, the coronavirus shutdown is widening the racial divide between haves and have-nots. And the pandemic-driven economic meltdown has helped to inflame the black community’s deep sense of injustice as uprisings over police brutality spread across the country this week … Since COVID-19 began claiming lives, black Americans have died at twice the rate of white ones. In Los Angeles County, African Americans have suffered 26 deaths per 100,000 residents, compared with 22 for Latinos, 16 for Asian Americans and 13 for whites."

    Nothing happens in a vacuum.  Not anymore.  Everything, it seems, is intertwined.

    •  One lesson from the pandemic:  food companies may need to hoard ingredients the same way that consumers hoarded toilet paper and paper towels.

    Here's how the Los Angeles Times reports the story:

    "Businesses are spending more on raw materials like oats and sugar so they can maintain production in case supply lines get disrupted or imports are held up.

    "Campbell Soup Co., the maker of Goldfish crackers and Pacific broths, is buying more ingredients amid a boom in demand for pantry staples. Bobo’s, a Boulder, Colo.-based producer of snack bars and toaster pastries, has stocked up on organic oats, sugar and coconut oil…"

    The Times writes that "this is a striking shift in strategy for food companies that for years built up just-in-time inventories, which minimize storage costs. It also underscores the lessons that were learned after the coronavirus outbreak upended supply chains and sparked concerns over shortages of some ingredients."

    Efficient isn't always the most effective.  Some companies seem to have learned that lesson.

    •  The Boston Globe reports that Massachusetts Gov. Charlie Baker has moved bars that don't serve food from the third stage to the fourth stage of the state's phased opening plans.

    According to the story, "The change came as officials clarified that establishments permitted to serve food and technically categorized as restaurants — including breweries, wineries, beer gardens, and many places that might colloquially be known as 'bars' — could reopen for outdoor dining at the start of Phase 2, which began Monday. Indoor dining will be able to resume during a later date in Phase 2, under a number of restrictions. During Phase 2, restaurants that are allowed to reopen are still required to keep bar seating and service closed.

    "However, places without licenses to serve food must wait to reopen until Phase 4, which officials refer to as the 'new normal' when a vaccine or effective treatment has been developed for COVID-19. In other words, don’t expect Phase 4 to come with the same speed as the three-week turnaround that occurred between Phase 1 and Phase 2."

    So much of this is perception.  I have a friend who went to a bar recently, saw it was crowded, and said to himself, "Great!"  And then went in to have a beer.  Me, if I'd seen that, I would've gotten back in my car and gone home.  Me, I'm taking Dr. Fauci seriously.

    •  Bloomberg repots that starting June 15, Best Buy "will allow a limited number of shoppers inside most of its stores, moving past an appointment-only model that it had instituted in the wake of the Covid-19 pandemic.

    "The retailer will bring back about 9,000 employees to support the move, which will take place in more than 800 of its roughly 1,000 stores. In April, it announced plans to temporarily furlough 51,000 domestic hourly store employees, including nearly all part-time workers.

    "Best Buy will limit the number of customers inside the store at one time to 25% of capacity, which usually works out to about 60 shoppers, it said. The retailer will also resume in-home consultations, which it halted in favor of virtual support in March."

    •  MarketWatch reports that MGM Resorts International "is reopening more resorts in Las Vegas over the next few weeks. Luxor and The Shoppes at Mandalay Bay Place will open their doors again June 25 at 10 a.m. PST, followed by Aria at 10 a.m. PST, and Mandalay Bay, Four Seasons Las Vegas at 11 a.m. PST on July 1 … Last week, Bellagio, MGM Grand, and New York-New York opened. Excalibur is expected to open June 11."

    •  The Wall Street Journal reports that AMC Entertainment, the world's largest movie theater chain, expects that 97 percent of its locations will be reopened, and CEO Adam Aron says the company believes "there will be a significant pent-up demand to get back into the world."

    The story notes that "few industries have seen revenues dry up to the extent that exhibition did following the spread of the novel coronavirus. But as consumer and entertainment companies of all stripes struggle to survive in the pandemic, AMC’s prospects appear to be among the bleakest. With more than 1,000 theaters playing movies on more than 11,000 screens in several countries, AMC is among the most high-profile of companies whose revenue relies entirely on public gatherings can weather the shutdown."

    AMC had a $2.2 billion loss in Q1.

    I am not hopeful.  I see more movies in theaters than the average American.  (The average American sees five movies a year in theaters;  I probably see 20.  Which for me is an enormous decline - there was a year, when I was in my 20s, that I saw 150 in theaters - there was no Netflix or any other streaming service.)  But it'll be awhile before I go back to a theater. 

    Here's a question:  I have been a regular AMC customer, often using Fandango.  So there is data about my shopping behavior.  I wonder if they'll be communicating with me directly to encourage me and reassure me that it is safe to return to the theater.  If they don't use their data to communicate directly with customers, then shame on them - they have no rationale for staying in business.

    BTW … AMC doesn't seem wildly optimistic, either.  It already has publicly conceded that it may not have a sustainable business model, depending on how events unfold, and has said that "heading into 2021 and 2022 the company will consider closing an unspecified number of unprofitable locations."

    Published on: June 10, 2020

    The Financial Times reports that Uber has decided to get out of the dark kitchen business, closing down a Paris hub that it opened a year and half ago where it rented "kitchen space to restaurateurs to make delivery food for its Eats business."

    The move came because of Uber's desire to "cut costs and focus on profitability."  It also takes Uber out of a business in which it would've been directly competing against its founder and former CEO, Travis Kalanick, who "has rapidly expanded his CloudKitchens start-up in the US, Europe and Asia, spending heavily to buy up warehouse space and convert it into delivery kitchens."

    The business hasn't been bump-free for Kalanick, either:  "One of his key collaborators from the restaurant industry has backed out, unconvinced the model can both produce quality food and make money."

    KC's View:

    I continue to believe that restaurants are going to be changing their models, and that some combination of dine-in, dark kitchen and 'restaurmarket' is going to look really attractive going forward.  It may take time to find the economic balance, but it'll happen.

    Published on: June 10, 2020

    The New York Times has a piece about the changes Amazon is making in its warehouses to assure greater worker safety without sacrificing efficiency.

    You can read it here.

    KC's View:

    Important to note that a) Amazon picked the warehouse into which it invited journalists and photographers, and b) it is a pretty good bet that one could find other Amazon warehouses that are less well-equipped.

    By the way, this isn't suggested necessarily as a negative.  This is all a work in process, for Amazon and for every company.

    Published on: June 10, 2020

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Jungle Scout is out with its 2020 Consumer Trends Report, with these insights about a world in which pandemic and recession have combined to impact shopper behavior:

    -  "Half of U.S. consumers (52%) have reduced their overall spending."

    -  "63% have increased or maintained their online spending."

    -  And "61% have increased or maintained their Amazon spending."

    Can you feel the earth shift under your feet?

    Published on: June 10, 2020

    •  Walmart yesterday announced "the expansion of Live Better U (LBU) education benefits to include in-demand skilled trade and digital skills programs, beyond their traditional college programs … LBU is designed to support working adult learners and meets associates where they are on their educational journey by focusing on degree completion through a number of supportive elements, free student coaching, college credit for Walmart training, and career pathways for LBU graduates. Regardless of which path an associate chooses, those who take advantage of LBU have one thing in common – they are earning a degree or certificate along with a paycheck, without lifelong student debt."

    The announcement goes on:  "In just two years, Walmart has built one of the largest employer-based educational benefits programs in the U.S.

    "The majority of associates who have engaged in a LBU program are female, the average age is between 30 and 40, and 47% are people of color.

    "More than 25,000 Walmart and Sam’s Club associates from all 50 states have taken advantage of education offerings, including $1 a day college degrees and free high school completion.  Walmart is expanding LBU to offer eligibility to all part- and full-time Walmart and Sam’s Club associates starting on their first day of employment based on LBU’s results in driving associate retention and promotions."

    Published on: June 10, 2020

    •  Axios reports that new research from ZipRecruiter says that the following jobs saw the greatest decline in job postings:  Uber/Lyft driver (-91%) … Flight attendant (-90%) … Car washer (-87%) … Tour guide (-85%) … Retail store associate (-84%) … Event/conference planner (-82%) … Hotel staff (-82%) … Office manager (-81%) … Chef (-80%) … and Catering assistant (-80%).

    •  Reuters reports that "Nestle SA is selling the North American business of its Buitoni pasta brand to private-equity firm Brynwood Partners."  The deal values the brand at $115 million.

    Published on: June 10, 2020

    •  Hanesbrands Inc. announced that it has hired Stephen Bratspies, most recently chief merchandising officer at Walmart, to be its new CEO, succeeding the retiring Gerald Evans Jr.

    Published on: June 10, 2020

    Michael Sansolo yesterday had a column about the importance of diversity, prompting MNB reader Mark Heckman to write:

    Strong message, beautifully written.  My hope is that the perspectives of those of us that have had success and have learned from our failures increases in value....thanks Michael!  

    On another subject, from an MNB reader:

    I’m a little late to the boiling point conversation, but I blame it on the fact that literally every single day my job involves talking about masks, answering angry customers about why we strongly suggested they wear masks, answering angry customers about why we are not mandating masks, answering staff who are upset that customers aren’t wearing masks, answering staff that refuse to wear masks…. 

    But we are going to require all shoppers to wear masks as of this week. We have a whole lot of disposable masks available and yes, we have hired a security guard (think friendly bouncer) for each store to meet and greet shoppers so our staff aren’t put in that position. It’s time and we’re done arguing about it. We need to do all we can to protect our community. 

    I can’t believe this is our world right now. 

    Regarding my coverage and comments about the demonstrations all over the country, MNB reader Christopher Durham wrote:

    You are on the right side of history and I appreciate your stand.


    Weighing in on expected meat shortages, one MNB reader wrote:

    As a retired person with extremely bad investment skills (read ‘idiot’) I find myself working in the Deli of a local store operated by a large chain.  Gives me a chance to see how the incredibly sophisticated POS information collected by the chain to tap into demand fails to translate into good local orders.   In March, Covid turned me into an “essential” worker.  I’ve had over three months to observe Covid Quarantine dynamics, and it’s not pretty.  We’ve just resumed cutting cold cuts and cheese to order at the counter to a limited degree.  The ongoing effect of the meat packing plant closures have become manifest as shortages just at a time when consumers think it’s a return to normal.  Yesterday, I explained to a customer that when you have to kill a bunch of pigs, you’re not going to be able to get the usual supply of deli ham for a while.  That was mean of me.  Good thing I was wearing a mask.  

    And finally, reacting to yesterday's video from Yosemite that was sent in by an MNB reader (We'd mentioned the limited reopening of the park), MNB reader Tom Gordon wrote:

    Loved your waterfall video, I went hiking maybe two weeks ago at Arethusa Falls, in New Hampshire, and am passing along this video for you.

    May I say that this is one of the things I love most about the MNB community… if it isn't puppies, it is waterfalls and babbling brooks.