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    Published on: June 17, 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 and Kevin Coupe look at how L'Oréal has accelerated its e-commerce business in three months to what it thought it would look like in three years, and how shopping for cars has and hasn't changed because of the pandemic.  In each example, they find business lessons for retailers working to navigate their businesses into a new reality.

    Published on: June 17, 2020

    KC draws a business lesson from the funeral home industry, where a lack of transparency - despite the fact that they are catching their customers at one of the most stressful times of their lives - seems to be prevalent.

    Published on: June 17, 2020

    Retail sales during May showed a 17.7 percent increase, the US Department of Commerce announced yesterday, numbers that stood in sharp relief to the two previous months - there was a 14.7 percent drop in April and an 8.3 percent decline in March.

    However, the New York Times reports, "the underlying data presents a more complicated picture and shows just how arduous an economic recovery from the coronavirus pandemic will be.

    "The May numbers followed two months of record declines, and overall sales were still down 8 percent from February. Some categories, like clothing, were down as much as 63 percent from a year earlier. And many of the stores and restaurants that welcomed back customers last month did so with fewer employees, reflecting a permanently altered retail landscape and an ominous sign for the labor market."

    The story notes that "May’s retail sales figures became the latest data point fueling the debate in Washington and on Wall Street about whether a broad reopening of businesses will cause the economy to snap back quickly or if additional stimulus measures are needed."

    KC's View:

    It would have been extraordinary if the numbers had not gone up in May, a month during which the retail economy opened up - to varying degrees, depending on the location - and a lot of people went back to stores and restaurants after having been cooped up for months.

    My biggest concern is about what will happen when the second wave hits … which seems inevitable especially as we see some of the infection and hospitalization numbers going up in some of the states where reopening happened the fastest.  The question for me is how much pounding the economy can take.

    Published on: June 17, 2020

    Luke Saunders, founder-CEO of the Farmer’s Fridge vending company, has a piece in Fast Company in which he makes 10 predictions about how the food business will change in the next five years, shifts that will be a direct result of the stresses place don the industry over the past few months.

    Those changes include:

    •  "Food safety as the new norm … Expect 'Tell me about your food safety' to become the new 'Is it organic?' for discerning consumers."

    •  "A less-diverse food scene - in the short term … Many customers will have to trim their food-away-from-home budgets out of necessity, and the economics of running under socially distant protocols won’t make sense for many eateries."

    •  "Closing the kitchen to the public eye … it won’t be as easy for patrons to digest the visual of just how many people touch your lunch or dinner before it makes its way to you. It will also be easier to keep the food safe in more highly controlled environments, out of sight for customers."

    •  "No more 'serve yourself' … The future is pointing toward individually packaged, contactless, grab-and-go food options in places like grocery stores, restaurants, and business and university cafeterias."

    •  "Restaurants will get a face-lift … think 50% fewer tables; dividers between cashiers and patrons; UV sterilization lights used over tables between seatings; antimicrobial coatings on most everything; face masks worn by front of house AND back of house employees; dedicated safety personnel; and separate handwashing/sanitizing stations for patrons to use outside of the bathroom."

    •  "Lines?  No, thank you … Rather than a sign of success, crowded restaurants may be seen as poorly managed places to avoid."

    •  "Embracing a more limited menu … As supply-chain interruptions become the norm, menu offerings will shrink and could change more often as certain ingredients fluctuate in price and availability."

    •  "Tech dominance … In a post-COVID food scene, ordering through a touchscreen or with your phone will soon feel as normal as giving an order to a server or cashier does now."

    •  "The evolution of the server …  In this new world, their role as a guide for the customer will be critical as they are leaned on to orchestrate safety and direct customers through their restaurant journey."

    •  "Restaurants will be back … While these changes might seem daunting, I firmly believe that restaurants as we know and love them will be back. It might take time, but there is no replacing the energy, excitement, and buzz of a night out at a new–or beloved favorite–restaurant. And when our thriving, diverse restaurant community does return, I predict they’ll be even better poised to weather the next storm."

    KC's View:

    All of this seems reasonable, but in some ways the first nine predictions work against the final one - because all those things make the restaurant experience seem a lot less compelling, at least to me.

    There are just so many unknowns.  For the moment, I think I'll just stay home and cook.

    Published on: June 17, 2020

    A new study from Deloitte Digital and Zuora concludes that there is both strong loyalty and room for growth in the subscription business - especially in the food sector.

    In fact, almost seven out of 10 customers who have subscriptions have at least one for food - far more than in electronics (43 percent) or fashion (32 percent).

    In addition, the study says that "consumers who currently have at least one subscription are 2x more likely to increase subscriptions in the next 3 years than they are to decrease."

    The study goes on:  "Customer satisfaction with subscription ranges from 80% to 93%, but churn remains high … For the CPG sector, the transition to subscription products is still in the relatively early stages, which is why there is more urgency than ever to build direct relationships with customers before the competition builds them first. While there is plenty of room for growth, the stakes for CPG brands are high because, in most CPG categories, customers will only choose one subscription service."

    KC's View:

    I think that one of the things that ought to come out of the pandemic is an increased usage by retailers of subscription/auto replenishment programs - like Amazon's Subscribe & Save - that can give them deeper and enduring connections to their shoppers.  Especially as supply chains are challenged, these programs can give everybody from the consumer to the supplier a greater sense of stability.  

    Published on: June 17, 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 have been 2,208,486 confirmed Covid-19 coronavirus cases, with 119,133 deaths and 903,136 reported recoveries.

    Globally, there have been 8,282,689 confirmed coronavirus cases, 446,519 fatalities and 4,337,963 reported recoveries.

    •  From the New York Post:

    "Coronavirus deaths in the US could climb past 200,000 by October, according to the latest projections — as new cases reached record highs in several states Tuesday.

    "An influential model from the University of Washington now predicts the death toll from the virus to now reach 201,129 by Oct. 1 — 18 percent higher than earlier forecasts — as states reopen and relax social-distancing measures."

    Projections are just that.  Projections.  By October 1, the actual number could be lower.  Or higher.

    But let me suggest that we have a choice.  As citizens, we can behave responsibly, and help achieve a lower number.  Or, we can go the other way, and the number could be higher.  We are not at the service of these numbers.  The numbers will be determined, to a great degree, by us.

    A friend of mine told me yesterday that one of the state associations is telling its members that "the relaxation of isolation rules doesn’t mean the pandemic is over. It means they currently have room for additional patients in the ICU."

    Well put.

    •  From the Wall Street Journal:

    "Anthony Fauci, the U.S. government’s top infectious-disease expert, warned the nation risks a resurgence of coronavirus infections should states fail to remain vigilant as they reopen their economies.

    “'When I look at the TV and I see pictures of people congregating at bars when the location they are indicates they shouldn’t be doing that, that’s very risky,' Dr. Fauci said in an interview Tuesday. 'People keep talking about a second wave,' he added. 'We’re still in a first wave'."

    More from the story:

    "While more testing does result in more cases, Dr. Fauci said, higher percentages of positive tests in many states 'cannot be explained by increased testing.'

    "With coronavirus infections increasing rapidly in a number of states, Dr. Fauci said a relaxed approach to public-health measures that reduce risk and spread poses significant hurdles to state and federal efforts. Throngs of people have gathered in many parts of the country, often without social distancing or mask wearing, prompting new warnings from state leaders of a return to shutdowns or possible punitive actions."

    •  The Daily Beast reports that "doctors behind a COVID-modeling study used by the president’s coronavirus task force are now warning that virus hot spots are beginning to converge and jump from county to county as people increase their travel for work and summer vacation.

    "According to doctors working on a study put together by PolicyLab at Children’s Hospital of Philadelphia, the virus is moving along major highways and interstates - such I-10 in California, I-85 in the south and I-95 on the East Coast - as states continue to reopen their economies. With an uptick of coronavirus cases taking place in states in the south and southwestern parts of the country, this new finding has raised fears that new outbreaks may soon move north to major metropolitan regions, reversing the progress already made in flattening the curve."

    •  From CNN:

    "Loosening restrictions and increasing public gatherings may make it seem as though the worst of the Covid-19 pandemic is over, but just this week Florida, Texas and Arizona set daily records for new cases.

    "The states are among 18 across the nation seeing increasing trends in new cases from one week to the next … Health experts are warning that more infections and deaths are in store as states continue their reopening plans.

    "Florida recorded almost 2,800 new coronavirus cases on Monday -- the highest number of new and confirmed cases in a single day the state has seen, according to the Florida Department of Health."

    •  CNN also reports that "18 states are seeing upward trends in newly reported cases from one week to the next: West Virginia, California, Oregon, Nevada, Arizona, Montana, Wyoming, Texas, Oklahoma, Arkansas, Louisiana, Kansas, Alabama, Georgia, Florida, South Carolina, North Carolina and Hawaii."

    There are "10 states are seeing steady numbers of newly reported cases: Washington, Utah, South Dakota, Mississippi, Indiana, Tennessee, Ohio, Alaska, Maine and Delaware."

    The rest of the states are seeing a downward trend, with only Michigan seeing "a decrease of at least 50%."

    •  The Wall Street Journal also writes that "New York Gov. Andrew Cuomo on Monday said some areas could face new shutdowns and bars could lose liquor licenses if regulations on reopening weren’t followed. He said the state had received 25,000 reports of reopening violations, predominantly in Manhattan and the Hamptons on Long Island.

    "In Texas, the alcohol and beverage commission is warning restaurants and bars they can be closed for not following social-distancing measures such as reduced seating capacity."

    •  The Independent reports that "three months after the Covid-19 pandemic forced bars and restaurants to close in Florida, some businesses have shut within one week of reopening as coronavirus cases spike in the state.

    "At least six bars in northern and central Florida have now announced their closures amid new Covid-19 cases, which peaked on Sunday.

    "The state’s health department has since confirmed two consecutive days with more than 2,000 new cases, breaking records set when the pandemic began in March."

    •  Gallup is out with a survey saying that only one-third of Americans who have left the house during the past week wore a mask while in public.

    •   From Engadget:

    "Amazon has created a new AI called the Distance Assistant to help its fulfillment facility employees keep a safe distance from one another during the ongoing coronavirus pandemic. Using a time-of-flight sensor similar to the depth-sensing cameras you'll find on modern smartphones like the Galaxy S20, the assistant measures the distance between employees. The AI component is there to help it differentiate people from the background. What the AI sees is then displayed on a 50-inch screen for workers to glance at as they pass high-traffic areas."

    And then, "in a kind of magic-mirror like way, employees will see a green or red circle around them on the display. As you might have guessed, green means they're at least six feet apart from one of their co-workers, while red means they're too close. The entire system runs on a local computer and doesn't need assistance from the cloud."

    The story correctly makes the point that this is a tech solution to a persistent policy issue, as Amazon continues to deal with lawsuits, regulatory probes and the perception in some quarters that its warehouses are unsafe.

    •  The Richmond Standard reports that Save-Mart Companies, which hired about 1,000 temporary employees to "meet overwhelming customer demand" during the early days of the pandemic, has transitioned about 70 percent of those people to full-time positions with its Save Mart, Lucky and FoodMaxx grocery stores.

    That's impressive … and speaks well of how Save-Mart will be positioned to serve consumers during the economic tough times we are about to endure.

    •  The New York Times has a story about how the pandemic has done wonders for cookie and cracker sales, as people who were sheltering at home turned to traditional brands and processed foods for a kind of comfort.

    Research done by Mondelez International, the story says, "revealed that sheltering in our homes — where many of us will continue to work — turns our kitchens into one huge vending machine … many of us are finding ourselves drawn toward products that never attracted us before — a marketer’s dream. More than 40 percent of the soaring sales in Fig Newtons and Nutter Butter cookies came from first-time buyers."

    The Times goes on:  "Data from the research firm Nielsen that tracked Americans’ grocery buying from March to May bore this out. Campbell’s reaped a 93 percent increase in sales of its canned soup before settling back to a still-amazing 32 percent growth. At General Mills, breakfast cereal jumped 29 percent in late March, and jumped again to 37 percent in the third week of April. Deep into the pandemic, we were still buying 51 percent more frozen waffles, pancakes and French toast from Kellogg’s. And so on."

    The pandemic may end.  (Hopefully.)  But the Times story makes the point that we can expect these CPG companies to try to continue to press their new advantage, using technology to stay top-of-mind, fighting for shelf space, and even disintermediating traditional retailers in some cases by going consumer-direct.

    One thing that will work in the CPG companies' favor, in all likelihood, will be the fact that we'll be sliding from pandemic to recession - attractively priced processed foods that appeal to our need for comfort and continuity can look very good to people under economic stress.

    •  Ice cream sales are expected to melt away this summer.  Blame the pandemic.

    Slate reports that "like many goods, the summer staple has had a rough start to the season due to the ongoing coronavirus pandemic. While grocery sales for the frosty dessert have largely remained consistent, with even modest gains in some cases, ice cream shops are still floundering under the new strictures that COVID-19 has placed on the food industry, even as Americans spend more time out in the ice cream-beckoning heat. The overall effect is an economic slump for the industry."

    No question that  long lines  at ice cream shops often have during the summer months will seem distinctly unattractive in the new reality - they're going to have to figure out a new business model, which will include not just plexiglass inside, but also things like drive-throughs and new take-out packaging and products.

    One of the things that I think we will see is more aggressive partnering and promotions by ice cream companies with supermarkets, as they look to compensate.  I saw a picture of an impressive display for Graeter's - an MNB fave - at Jungle Jim's in Ohio, and think that we may see more of this kind of thing.

    One big advantage that ice cream does have, at least from my perspective - it is the best kind of comfort food.

    •  The Los Angeles Times tells the cautionary tale of pandemic-related public policy that can lead to new outbreaks.  Here's how it frames the story:

    "When American Airlines flight 341 to Los Angeles lifted off the tarmac at New York’s John F. Kennedy Airport on a cloudy Thursday in mid-March, much of the country was already on coronavirus lockdown. The flight was far from full, but the 49 passengers and eight crew shared restrooms, cabin air and a narrow aisle for the six-hour trip.

    "Though no one knew it then, a man in first class, a retired Manhattan surgeon, was infected with the virus. The day after the flight, he was rushed by ambulance to Cedars-Sinai Medical Center with a high fever and phlegmy cough. The virus spread quickly among those he had come in contact with in the hours after leaving LAX, including at a Westside assisted living facility where a 32-year-old nurse and a dozen others later died.

    L.A. was still in an early stage of the COVID-19 pandemic when the surgeon’s flight touched down, with fewer than 250 confirmed cases. Local health officials regularly assured the public then that the county was investigating each case and engaging in aggressive contact tracing to control the spread of the virus.

    "Despite these pledges, no one in public health informed any of the passengers and crew who had flown cross country with the surgeon that they were at risk. The airline only recently learned of the case from The Times.

    "It was one of two long-haul flights into LAX in March identified by The Times in which public health officials failed to alert passengers and crew who had flown with a person who later tested COVID-positive. In the other, a March 8 flight from Seoul, the stricken passenger reported running a fever days before boarding the aircraft and went into cardiac arrest the morning after she landed, becoming the first confirmed COVID-19 death in L.A. County.

    "Without instructions to self-quarantine or seek testing, more than 200 people on these flights returned to their families and communities ignorant of their exposure, potentially seeding new outbreaks."

    Yikes.  In this case, what we don't know can kill us.  

    Published on: June 17, 2020

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Washington Post reports that "Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai signaled they are open to testifying to Congress as part of lawmakers’ ongoing antitrust probe into the tech industry."

    Amazon CEO-founder Jeff Bezos said earlier this week that he would testify before the House of Representatives Judiciary Committee.

    Apple CEO Tim Cook reportedly has not yet responded.

    The Post writes that "if lawmakers proceed as planned, the hearing could represent the most high-profile, public grilling of the tech industry’s most powerful chief executives, a made-for-television moment that comes as federal agencies continue to probe whether Apple, Amazon, Facebook and Google threaten competition, and in the process, harm corporate rivals and consumers."

    Like I said yesterday, I'll have the beer and popcorn ready.

    •  Got this press release yesterday:

    "Northgate González Market, California’s premiere family-owned, Latino themed supermarket chain has announced a strategic partnership with Instacart, the North American leader in online grocery, to deliver grocery items from 36 store locations in Los Angeles, Orange, Riverside and San Diego counties."

    I love this company - I think its stores are some of the best in the country.  I did a FaceTime about it several years ago…

    So I simply do not understand why such a differentiated store, with such a specific customer experience offering, would outsource a growing component of its operations in this way, putting its sales data and brand equity at risk.

    Published on: June 17, 2020

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The St. Louis Post Dispatch reports that "Schnuck Markets will close its only store in Iowa this summer, the grocer said.  The 61,000-square-foot store in Bettendorf, one of the Quad Cities that straddle Illinois and Iowa roughly 250 miles north of St. Louis, opened in 2005."  The reason is simple:  Todd Schnuck, chairman-CEO, said that the store was not profitable.

    •  Lubbock, Texas-based United Supermarkets, a subsidiary of Albertsons, announced this week that it will be converting four Albertsons stores in the region to the United banner, saying that the move will take advantage of the brand's strong image and footprint there.

    Albertsons acquired United in 2013.  

    •  Kroger's Louisville Division announced that it  is "making a $1.5 million pledge to the University of Louisville as part of a broad-ranging effort to reduce hunger and waste in the local community.

    "The gift will create the Kroger Zero Hunger, Zero Waste Fund at UofL. The fund will provide support in three main areas: diversity and inclusion, food security and sustainability, and leadership development."

    •  The Wall Street Journal  reports that McDonald's yesterday said that May same-store US sales were down five percent - which was seen as something of a victory after the double-digit decline of the previous month, which was attributed to a severe reduction in store services related to the pandemic.

    According to the story, " McDonald’s is preparing for the virus to impact consumer habits for some time. McDonald’s executives are also deciding which changes made during the pandemic to keep, including a more-limited menu that has improved restaurant efficiency. Average drive-through wait times have fallen by 25 seconds in the U.S., in part, because the menu has been stripped of all-day breakfast and some slower-selling items, executives said."

    •  There were reports earlier this week that three New York City police officers had been poisoned at a Manhattan Shake Shack, which prompted some to suggest that they had been deliberately targeted by anti-police activists.  (One of those making thr claim was the Police Benevolent Association.)

    However, a police investigation into the incident reveals that, in fact, it appears that there was no criminality involved - that, in fact, the officers got sick because of cleaning solution that had not been completely washed out of the milkshake machine, which contaminated their drinks.

    USA Today reports that Frito-Lay-owned Doritos is introducing pickled-flavored chips this week, but that they only will be available at Dollar General and Circle K stores.

    Sounds ready-made for an SNL skit.

    •  The New York Times  reports that  Christopher Lischewski, the former president-CEO of Bumble Bee Foods, "was sentenced to 40 months in jail and a $100,000 fine on Tuesday for his role in a yearslong conspiracy to fix prices of canned tuna," which " affected over $600 million worth of canned tuna sales, according to prosecutors."

    Lischewski was said to have been the scheme's mastermind.  There were three other company executives involved, each of whom pleaded guilty and turned state's evidence against their former boss.

    It could've been worse.  At least he didn't end up sleeping with the fishes.

    Published on: June 17, 2020

    Yesterday, I made mention of the fact that the pandemic has "shut down the nation's movie theaters."

    Except that I misspelled "shut."  I will leave the rest to your imagination.

    I got a bunch of emails pointing this out fairly quickly, and made the matter right.  (Most of you seemed amused by the goof.  Maybe it is time for an R-rated version of MNB?)

    But to those of you who saw the mistake and were not amused … mea culpa, mea culpa, mea maxima culpa.

    Published on: June 17, 2020

    I had a FaceTime piece the other day about how how, while Instacart is looking out for their customers and its own relationship with them, they may not be looking out for its retailer/client's best interests.

    One MNB reader responded:

    If you substitute you (KC), for the Instacart shopper, and that you really wanted a NY strip steak, so you decided to go to store B to get it. In that scenario Instacart has nothing to do with it. It has to do with store A not having what you wanted. Store A didn't lose the business to you (KC), they lost it to store B which had what you were looking for.

    The point is that in my real-life example, Instacart is facilitating the loss of business by its retailer-client.  Which is good for Instacart's relationship with the shopper, but not exactly what the client is playing for, methinks.

    Another MNB reader weighed in on my commentary about probes into Amazon's private label policies.  In this case, I wrote:

    I would continue to argue that when it comes to private label, Amazon is doing what every retailer does - when it sees a brand that is particularly successful, it decides to knock it off and undercut it on price.  Amazon may do this better than anyone else - with more robust data and greater effectiveness - but this is the way the game is played.

    The reader wrote:

    First off, I am a big fan of MNB and have been an almost daily reader the past couple years.

    Something I noticed when reading through was that your pro-Amazon anti-Instacart views may be coming through here and resulting in a little bit of hypocrisy.  You have repeatedly stated how you think Instacart is bad for retailers with the main reason being they can turn around and use their data against them but in this article mentioned how Amazon is doing the same thing with their third party sellers you seem to brush it off as okay since "everyone does that".  

    In my opinion, the difference in what Amazon is doing using their third party seller data could actually be seen as worse (or more harmful) than what Instacart is doing.  The people who Amazon could be harming likely do not have the means to survive if Amazon "steals" their information and uses it against them.  Meanwhile, the companies that Instacart may be doing something like this to are mostly massive corporations with tons of money and resources to compete even if Instacart does end up putting them in a tough e-commerce situation.  I guess the way I see it is the basics of what each company is doing by using someone else's data to benefit themselves is similar, they are just targeting different people.  Amazon is taking from the poor while Instacart is taking from the rich.

    Interesting point.  Hadn't thought of it that way.

    I want to give it some more thought - it could reshape my views of Amazon and/or Instacart.

    But … I guess my first reaction is that the main difference is one of roles.  If we think of Amazon as a retailer, then creating private label alternatives to brands being sold on its site (store) is a time-honored tradition.

    Instacart doesn't position itself as a store.  It positions itself as a service provider … though my argument is that over time, it is perceived as a store by consumers.

    Plus … it may be that some brands have to think about whether they want to be on Amazon, in the same way that some companies have decided not to sell to Walmart.

    But you make a good point.  As I said, I will cogitate on it.

    Responding to the questions I raised yesterday about Wegmans' new distribution deal with UNFI, one MNB reader wrote:

    Don't knock success.

    Good point.  Though I sort of make a living knocking success when I think there are questions to be raised.

    From another reader:

    UNFI is far from perfect , but they specialize on “the tough work that no one else wants to handle”.

    Specialty Food assortment importantly allows retailers to appeal to the upscale crowd and differentiate versus Walmart, Costco, Dollar channel etc.

    However, the average specialty food item sells only 1 unit per store per week versus a typical grocery item moving 10 units per store per week.

    Retailers need to organize their warehouses to efficiently move truckloads and pallets quickly to stores. Outsourcing specialty food distribution to UNFI (or Kehe, DPI) solves a problem by keeping slow movers out of the central warehouse. Managing inventory, stocking, and logistics of more than 100,000 niche items is an enormous challenge, that supermarkets do not want to manage.

    I am Wegmans fan, they are a global all star. However, their over reliance on grocery private label (at the expense of national brands) drives their shoppers to visit other supermarkets for their favorite brands instead of using Wegmans as a “one stop shop”.

    And from MNB reader Bob Wheaton:

    I have been a faithful Wegman Richmond, VA from their arrival and like many recognize the areas they excel in and there are many.  The pandemic exacerbated, in my opinion, exposed their distribution in stock weakness in core dry grocery, frozen food, household items and dairy and they are still struggling.  The out of stock positions in national brands may be altered with this distribution move, but that will do nothing to cure the private label shortfalls which is another issue altogether.  Meat items were a separate altogether out of stock situation.  

    They know their business much better than anyone else, however I believe Wegmans currently has out-stored their distribution capability.  The planned Virginia distribution center will go a long way to solve that problem but that is years away.  I truly hope that succeed.  I also trust they will.

    I think I was very careful yesterday, whenever I asked questions about Wegmans, to say, "I could be wrong."

    Regarding another subject, from another rteader:

    Having spent quite a bit of my career in the Beauty Industry I see a problem with Costco trying to get into the cosmetics business.  The beauty industry manages channels better than any industry I am aware of.  And the most profitable channel is the professional channel – barbers, spas, salons, beauty stores such as Sally’s and a bunch of small independent stores that sell professional products to professionals.  I worked for a subsidiary of Shisedo  (located near you in Darien, CT) who freaked out every time one of their professional shampoos showed up in a CVS or Walgreens.  Distributors were fired for diversion.  When you go into a Sephora you will see a salon in the back of the store.  That is so they qualify for professional products but even those are limited by the manufacturers. 

    Beauty companies are just as channel conscious in the International Markets.  You can go into a Costco and find a Wahl clipper or a Remington clipper but they are not the professional clippers being sold.  Once a professional product hits the retail market professionals drop the product and sometimes the company making it.

    So Costco will be selling products that are available at other retailers or available to other retailers.  What would probably be best for them is to bring in their own brand of cosmetics and base the line on quality.

    Chiming in on the Black Lives Matter discussion, one MNB reader wrote:

    Quick point on one of the potential pitfalls here. There is a big difference between black lives matter, and Black Lives Matter. The former is exactly as you described; the desire to bring awareness to issues concerning race. Black Lives Matter is an organization that has many other goals that are outside these specific issues (e,g,, socialized medicine), so the distinction is important. Also, BLM is a loosely organized group, so each chapter may have its own take on things.

    Those distinctions may be irrelevant at the moment … especially if being in favor of socialized medicine isn't seen as so bad in an environment where people of color have been far harder hit by the pandemic than other demographics.

    On another subject, from another reader:

    The issue with MLB is that there’s too much money, not enough – between the owners and players.  

    In my opinion, make the players a final offer and those that don’t / wont accept, they can sit the rest of the year out.  Owners can then bring in replacement players on a 44 game contract. Then, depending upon the collective bargaining agreement in ‘21, the “scabs” may or not have to deal with potential fallout in future seasons. The stars who want to sit out can watch their merchandise sales fall along with their personal brand recognition. 

    Ticket takers, parking lot attendants, beer man, popcorn lady, vendors (who paid distribution rights) and countless others do not be compromised (by a cancelled season) in making some money. The fans who like baseball can enjoy it, even if every other seat is blocked off.

    It is time both the owners and players understand who really signs their paychecks – it’s the fans.

    Plus Kevin, what a great time to trial the designated hitter rule in both leagues. 

    It is that last line that really bothers me.  Suddenly, the National League won't be playing real baseball.  Oy.

    From another reader:

    Hi Kevin, regarding baseball’s potential start, you said:

     If the owners originally agreed to prorate the players salaries based on the number of games played, I'm not sure why they get to renegotiate now and argue that they should only pay a percentage of those prorated salaries.  

    I’m pretty sure the reason the owners are pushing back is that at the time of the agreement the assumption from all sides was that there would be fans in the stands, and thus significant revenue from tickets, food, etc.  No argument that the owners are very wealthy, as are many players.  Years of animosity have finally come home to roost, and now we all get to witness this greedy struggle.  Both sides lose, as do we fans.  

    And from MNB reader Keith Hamden:

    The reason the owners are looking to reduce the salary proration from what was agreed upon in March is that when the agreement was made in March, it was assumed that there would be fans in the stands,  concession and souvenir sales, etc.

    I read somewhere that 40% of revenue came from in-stadium activity. Not stating this as fact, just what I read but it is a significant revenue source that will not be there for the foreseeable future.

    Either way, MLB (players and owners)  better get their act together .  Plenty of people won’t have much sympathy for either side based on the current economic condition of our country.

    Here's the deal.  As I understand it, the owners and commissioner could set a start date, season schedule and whatever else needs to be established today.  They can pay the players prorated salaries … and all the players are saying is that they want the right to file as grievance and go to arbitration.  Which is their right - they want the owners to live up to the agreement they signed … even if the owners now think it wasn't such a great deal.

    Why would they want to give uyp their right to go to arbitration?  If the positions were reversed, do you think the owners would give that up?

    You should check out Tom Boswell's excellent analysis in the Washington Post, in which he writes that "the average MLB team has increased in value by more than $1 billion in just the past six years, from $811 million to $1.852 billion … As a frame of reference for who is getting richer faster - owners or players - over the past four off seasons, player salaries have increased by 1%."

    It is, Boswell writes, "time for a basic lesson in baseball arithmetic and the incredible, shameless greed of major league owners. The bosses are - again - on the verge of bashing their sport to maximize their profits in an industry that pours vast increases in wealth on them each year as they whine."

    The piece can be read here.