business news in context, analysis with attitude

Published on: June 22, 2020

A lot of attention was paid - not just on the streets of many American communities, but also by companies all over the country - to Juneteenth, often referred to as our nation's second Independence Day.  But KC was struck by the words of one commentator, who suggested that the attention would be worthless unless something else happens, and that companies will be held accountable.

And one other note:  For context, if you haven't seen it, check out this video from Procter & Gamble, entitled "The Look."  It is a good reminder of something that many of us never have to endure, but that too many do.

Published on: June 22, 2020

by Kevin Coupe

There was a good piece from Axios the other day that illuminated a real opportunity for retailers are we move forward through the pandemic.

The problem:  "We have pandemic hair. Distressed skin. Emotional turmoil and existential fear about the gruesome drumbeat of news. And we're sitting around in our shabby wardrobes feeling lonesome from the requisite social distancing."  The fact is that "the social and psychological toll of COVID-19 - which comes at the same time that our nation is pursuing its all-important quest for racial justice - is affecting our physical and mental health."

Put bluntly, "We don't feel good. Various polls tell us things that we already know, like that we are scared about getting coronavirus, concerned for our family members and so forth.  Big negative events - like pandemics and major disasters - are correlated with increased use of tobacco and alcohol, which in turn correlate with more violence, says Dr. Joshua Morganstein of the American Psychiatric Association."

Which struck me as both a problem and an opportunity … because food retailers are ideally positioned to start addressing these issues and help their shoppers get through them.

This is a good time, both in customer communications and in-stores, for retailers to talk openly about how self-care, especially as it relates to what we eat and drink, can help us feel better even when we're stressed.

These messages can be cheerful, aspirational.  Provocative without being preachy.  

The goal should be simple:  Communicate with shoppers in a way that reinforces the notion that the store is on their side.  It could, for everyone involved, be an Eye-Opener.

Published on: June 22, 2020

Dreyer’s Grand Ice Cream, the maker of Eskimo Pies, is joining the list of companies saying that they are changing a product's name because of concerns that it reflects a racial or cultural stereotype.

The name and marketing of Eskimo Pies are scheduled to be changed by the end of the year, with  Elizabell Marquez, head of marketing for Dreyer’s, tells the New York Times that "we are committed to being a part of the solution on racial equality, and recognize the term is inappropriate.  This move is part of a larger review to ensure our company and brands reflect our people values.”

The Times writes that "the packaging has long featured a small, dark-haired child wearing mittens and a heavy parka with a fur-lined hood. The term Eskimo is commonly used in Alaska to refer to all Inuit and Yupik people but it is considered derogatory by many who associate it with racist, non-Native colonizers who settled in the Arctic and used the term."

Similar decisions were announced last week by the companies that make Aunt Jemima, Cream of Wheat, Uncle Ben’s, and Mrs. Butterworth’s - each of which has built a brand identity based on a racial stereotype of African-Americans.

The Times notes that in a similar move, "consumer giant Johnson & Johnson said it would no longer sell Neutrogena Fine Fairness and Clear Fairness by Clean & Clear, which have been advertised as dark-spot reducers but used by some purchasers to lighten skin tone.  Those product lines were not distributed in the United States and sold only in Asia and the Middle East."

Published on: June 22, 2020

TechCrunch reports that Google-owned YouTube has "announced a new direct response ad format that will make YouTube video ads more 'shoppable' by adding browsable product images underneath the ad to drive traffic directly to brands’ product pages. The introduction of the format comes at a time when advertisers are trying to find new ways to capture consumers’ growing interest in e-commerce shopping, amid a pandemic that’s kept people from shopping brick-and-mortar physical stores for fear of infection."

According to the story, "To use the new shoppable format, brands will first need to sync their Google Merchant Center feed with their video ads. They can then visually expand an ad’s 'call to action' button with the best-selling products it wants to feature in the ad in order to generate traffic that sends viewers directly to the product listing on the brand’s own website."

Published on: June 22, 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 as of this morning, there now are 2,356,715 confirmed cases of the Covid-19 coronavirus, with 122,248 deaths and 980,367 reported recoveries.

Globally, there are 9,067,560 confirmed coronavirus cases, with 471,027 fatalities and 4,850,475 reported recoveries.

•  On Meet The Press yesterday,  Dr. Michael T. Osterholm, the director of the Center for Infectious Disease Research and Policy at the University of Minnesota, said that he now believes that the coronavirus's progression will be different than he originally believed, and that it won't come in waves.

“I don’t see this slowing down for the summer or into the fall,” he said.  “I think this is more like a forest fire … I think that wherever there’s wood to burn, this fire is going to burn it.”

•  The New York Times reports that "nationwide, cases have risen 15 percent over the past two weeks, with the most significant increases reported in the South, West and Midwest.

California, the most populous state, reported 4,515 new cases on Sunday, setting a record for the highest daily increase in the number of infections since March. And Missouri and Oklahoma also broke records for the number of new cases reported in a single day … Across the United States, the number of new infections has steadily risen over the past five days after plateauing for the previous 80 days.

"At the same time, overall deaths have dropped dramatically. The 14-day average was down 43 percent as of Sunday."

The Times writes that "also on Sunday, the World Health Organization reported the largest one-day increase in infections across the globe. It said that there were 183,020 new cases, with Brazil (54,771) and the United States (36,617) accounting for the most new infections."

•  Bloomberg reports that "Florida reported a total of 93,797 Covid-19 cases on Saturday, up 4,049 from a day earlier, the biggest daily increase since the pandemic began."

The Seattle Times reports that "Gov. Jay Inslee said Saturday he would order Yakima County residents to wear masks while shopping or in other public places, a move that reflects what he termed an 'existential threat' posed by soaring case counts of the virus there … Yakima this spring has emerged as one of the coronavirus hot spots in the United States. There were early outbreaks in nursing homes as well as in fruit- and meat-processing plants, helping to fuel what is now a much broader outbreak. County hospitals are overwhelmed, and because of critical staffing shortages are transporting COVID-19 patients to Western Washington facilities."

 “Essentially this means, no masks no services. No masks, no goods,” Inslee said. “This is the next step. Frankly, it is not necessarily the last step to mitigate measures in Yakima County … we are going to be swamped with a tidal wave of COVID-19 if we do not act now.”

The Times notes that "in the past week, Oregon Gov. Kate Brown issued a similar directive requiring face coverings in public spaces for seven counties."

•  The Wall Street Journal reports that "demand for U.S. warehouse space is rebounding as upheaval from the coronavirus pandemic pushes businesses to retool their supply chains.

"Industrial real-estate activity, such as lease renewals and new leases, jumped 43% from April 15 to May 14 from the previous 30-day period, recovering more quickly than expected from the economic shocks of the pandemic, according to real-estate firm CBRE Group Inc."

According to the story, "The push for more storage space comes as retailers are re-evaluating their logistics networks in the wake of the upheaval during coronavirus-driven shutdowns … Retailers and food and consumer goods suppliers ramped up their e-commerce operations during that period after a surge of orders from housebound shoppers during quarantine. Companies are also securing new space to modernize their distribution operations, including locations near big population centers, for what they expect to be continued strong demand for services such as online grocery delivery."

•  CNBC has a story about how the pandemic has affected grocers' approach to foodservice.

"The deli and prepared food areas that used to draw traffic to stores and differentiate grocers have fallen from favor as customers worry about the spread of the coronavirus, cook more from scratch and try to limit their time in stores," CNBC says.  "Grocers are trying to revive those parts of the store with new approaches. At Publix, salad bars and hot bars have reopened, but employees dish out each item. Wegmans moved hummus, olives and more behind a counter where cheese shop employees fill orders. And at Texas-based H-E-B, some coolers carry prepared meals from local restaurants and a former food bar became an ice chest of beers.

"Companies and industry watchers say self-serve bars may be gone for awhile, and perhaps forever, even as consumers return to more typical buying patterns … Many Americans are still working from home, limiting social gatherings and juggling a lighter-than-usual schedule, too … That means consumers do not need a grab-and-go meal to scarf down between the office and a child’s soccer practice or cheeses or olives to put together a charcuterie plate for a party."

I'm intrigued by the idea that some retailers are going to be able to use the change in circumstances to actually increase their service levels, like turning hot bars into service counters.  This will affect labor costs, to be sure … but since most grocers are coming off quarters in which their sales were off the charts, maybe this is the moment to invest some of that money in initiatives that will be both relevant to their shoppers, but also have the potential to making the shopping experience more personal, more connected.

More from the CNBC story:

For some companies, closed salad bars have created new opportunities. California-based Chowbotics previously marketed its foodservice robot to hospitals and college campuses: Two places with a strong demand for healthy and tasty meals at all hours, the startup’s CEO Rick Wilmer said.

The robot, dubbed Sally the Robot, holds up to 22 ingredients. It can put together a range of menu items from a Greek yogurt muesli bowl to a pineapple blueberry upside-down cake. 

"Each robot costs $35,000, including training, maintenance and marketing, he said.

Customers order on the robot’s touchscreen, get a bowl and put it under the dispenser. Items typically range from about $5 to $11, Wilmer said.

"As coronavirus cases spread, business at colleges ground to a near halt and dropped off at hospitals, Wilmer said. The start-up looked around and saw the need at grocery stores, he said.

"He said Chowbotics has signed three grocery store deals, and it has pilots underway with others. He said it’s accelerated development of an app that allows customers to order on their own smartphones and scan a QR code at the robot rather than having to press the robot’s touchscreen."

A robot may not exactly provide the personal touch, but it could provide a novel marketing opportunity.  Not a surprise that some retailers would want to give it a try.

•  From the Associated Press:

"Tyson Foods is looking into reports that China’s customs agency has suspended poultry imports from a Tyson facility in the United States after coronavirus cases were confirmed among its employees … The announcement out of China on Sunday gave no details of the quantity of meat affected."

According to the story, "A Tyson spokesman said Sunday that the plant in question is in Springdale, Arkansas.

“'At Tyson, our top priority is the health and safety of our team members, and we work closely with the US Department of Agriculture’s Food Safety and Inspection Service to ensure that we produce all of our food in full compliance with government safety requirements,' wrote spokesman Gary Mickelson in an email to The Associated Press.

"He added that all global and U.S. health organizations agree that there is no evidence to support transmission of COVID-19 associated with food."

•  From the Washington Post:

"As coronavirus cases surge in the U.S. South and West, health experts in countries with falling case numbers are watching with a growing sense of alarm and disbelief, with many wondering why virus-stricken U.S. states continue to reopen and why the advice of scientists is often ignored.

“'It really does feel like the U.S. has given up,' said Siouxsie Wiles, an infectious-diseases specialist at the University of Auckland in New Zealand — a country that has confirmed only three new cases over the past three weeks and where citizens have now largely returned to their pre-coronavirus routines.

“'I can’t imagine what it must be like having to go to work knowing it’s unsafe,' Wiles said of the U.S.-wide economic reopening. 'It’s hard to see how this ends. There are just going to be more and more people infected, and more and more deaths. It’s heartbreaking'."

•  The New York Times reports that "Apple said it was temporarily closing 11 retail stores across four states amid a surge in the number of coronavirus cases in those areas.

"Stores will be closed in Arizona, Florida, North Carolina and South Carolina 'with an abundance of caution,' Apple said in a statement. The closings come about one month after Apple started reopening outlets in the United States. The company closed most of its stores globally in mid-March when the pandemic started to take hold in the United States."

The Times goes on:  "The decisions come amid growing outbreaks in much of the South and West. Officials in Arizona, California, Florida and Oklahoma all reported their highest daily case number yet on Thursday. And Texas became the sixth state in the nation to surpass 100,000 cases, according to a New York Times database. Cases there have doubled over the past month.

"As in much of the Sun Belt, testing in South Carolina has increased, but that alone does not account for the surge. About 14 percent of people being tested for the virus in South Carolina are positive, up from about 5 percent a month ago."

•  From the Washington Post:

"WeWork, the shared office space company, is making plans to change its shared workspaces in a post-coronavirus world, proposing new floor layouts, adding sanitizing capabilities and shifting office traffic flows.

"In an email to brokers and other industry clients, chief executive Sandeep Mathrani said the company will be posting new capacity signage for meeting rooms, applying 'every other' desk occupancies in private offices and enhancing cleanings while adding sanitization stations in common spaces. The ideas will start to be implemented over the next six weeks, he wrote."

WeWork was in trouble before the pandemic.  Hard to imagine that reducing capacity for the foreseeable future is going to be good for its bottom line.

•  From the Financial Times:

"Brookfield is chasing small retailers to pay thousands of dollars in rent on outlets that were forced to close during the coronavirus pandemic, even as the Canadian investment group skips payments on its mortgages and asks lenders for forbearance. Some shopkeepers who lease kiosks and small stores inside Brookfield malls have been told to pay rent for April and May, a period during which the properties were mostly closed, according to people familiar with the discussions and correspondence reviewed by the Financial Times.

"Several tenants who asked for rent forgiveness described being asked to provide extensive financial information, including their personal tax returns for the past two years. The merchants, who requested anonymity for fear of antagonising a powerful landlord, said Brookfield ultimately refused to waive the payments, although it offered to give them until the end of 2021 to come up with the money."

I've been sympathetic to the idea that it is tough for malls owners to simply extend rent forgiveness to retailers unable to open during the shelter-at-home period of the pandemic.  After all, malls have mortgages, too, and bankers may not be forgiving.  And so, I reasoned, it simply made sense for everybody toi work together on finding solutions that work for everyone, with the overarching goal being the the development of a strategy that will revive the business model that was in decline before the pandemic.

What Brookfield seems to be doing strikes me as unconscionable.  Typical, but unconscionable.

•  As economies reopen around the country, what's one of the first things Americans want to do?

Get a haircut.

Bloomberg reports that "as the U.S. begins to emerge from the Covid-19 lockdown, a trip to the stylist, among the first businesses to reopen in many areas, will be at the top of to-do lists for Americans desperate for a haircut and some social contact. That will make the return to barbers and salons a test case — a mirror on how society has changed as we try getting back to our daily affairs in the shadow of a virus we can’t cure or prevent.

"Hairstylists have always been more than just businesses for the customers they serve. In many communities, they’re a cornerstone of cultural, social and political life, where news and gossip are shared from the swivel chairs or under the dryers. So as we turn attention to our hair once again, the shops will be centers of a national conversation — about the economy, race, the upcoming presidential election and other topics."

•  On Friday morning, it was reported here and elsewhere that when the AMC movie theater chain reopens its facilities in mid-July, it would not require patrons to wear masks.  To do so, CEO  Adam Aron said, would be to take a political position that the company did not want to take.

By Friday afternoon, AMC changed its mind and said it would require masks after all.

No, mask, no movie.

Also last Friday, movie theater chain Regal reversed its earlier decision and said it would require masks as well, regardless of local ordinances.

I'm not saying that AMC listen to me, but … I was one of the folks who spoke out on Friday, saying that even though I see a lot more movies in theaters during a given year than the average American, I cannot see myself returning for the foreseeable future.  I also argued that the "we don't want to be political" argument was specious - masks are about science and health, not politics, and are a way of keeping our fellow citizens safe.

I'm glad they changed their minds.  But I worry that too many companies are thinking about the so-called politics of masks and not the way in which they contribute to the goal of slowing down Covid-19 spread.

Published on: June 22, 2020

Esquire has an interview with Christian Smalls, the Amazon warehouse employee who was fired after he led a demonstration at the New York facility calling for greater safety measures.  (Amazon said he was fired for endangering other employees through his actions.)

Some excerpts:

•  "You want to call us 'essential,' you’ve got to think about our health," he says.  "Our health is just as essential."

•  "On March 24, my colleague tested positive. We were both supervisors, process assistants. There was no transparency. Management was told not to tell our employees, but I couldn’t stand for that. I’d built relationships with these people. I saw them more than I saw my own kids, so for me not to say anything was just insanity. So my coworker and I came back to the building off the clock, on our own free will, and we sat in the cafeteria break room and told the truth. And that’s when we started to form a coalition."

•  "The front-liners, the first responders - we see that there needs to be a change in the balance of power. Capitalism profits off of lower- and middle-class people, especially during this time, when it’s life or death. And these billionaires, they’re still making money, yet they can’t protect their workforce. I have no respect, man. They should be ashamed of themselves. We can’t have this happen again. We cannot."

•  "I heard that I’m 'not smart, or articulate.' That was funny to me. For someone who’s not smart or articulate, I sure managed to bring the world to my home. For someone who makes twenty-­five dollars an hour to be talking to the richest man in the world, that means that I’m speaking the truth. It cost me my career, but it was worth it."

Published on: June 22, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Advertising Age reports that Patagonia, REI and The North Face all are pulling their ads from Facebook, "following calls for a boycott from civil rights organizations such as the NAACP and Anti-Defamation League," which had taken out full-page newspaper ads last week asking "advertisers to use their power to force Facebook to make changes to how it handles hate speech and disinformation."

The story notes that "Facebook has said that it is working through the issues and trying to come to a better understanding with any concerned advertisers."

The three companies' moves are unlikely to have an impact on Facebook, which generated $70 billion in ad revenue in 2019.  The question is whether this becomes more of a popular movement - outdoor brands like these three tend to be more progressive in their politics and outspoken in their approach.

Published on: June 22, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  GeekWire reports that "Whole Foods workers in Seattle protested outside of the grocer’s Westlake location on Friday after being told they could not wear face masks with the Black Lives Matter slogan … In a statement, Whole Foods said that the masks did not meet the company’s dress code policy. The Amazon-owned company confirmed that six of its employees were part of the protest."

Starbucks took the same position regarding its store employees wearing Black Lives Matter t-shirts … and then not only reversed itself, but designed and bought the t-shirts for its employees.  I understand that businesses don't want to be embroiled in politics, but this movement isn't just about politics - it has touched something visceral for a lot of Americans.  It would not be considered off-brand for Whole Foods to make a move similar to Starbucks, and I suspect we'll see it happen fairly soon.

Published on: June 22, 2020

Responding to one of my commentaries last week, MNB reader Mike Moon wrote:

Yes, the funeral home business is struggling. Not just because of the pandemic, but also due to the increasingly high price of caskets/embalming/burial. Funeral homes are getting cut out of the death business, as more and more people are opting for cremation, with visitations/celebrations of life in other venues. Like bars.

And why not? I'd rather celebrate a life well lived, than attend a gathering focused on death. If I was a funeral operator, I would have a full cash bar in my operation, with many places for people to sit and talk and share stories. Maybe a few food offerings, also. I'd have it hidden from view for those families not interested in that kind of gathering, but well stocked with a trained bartender for those that do. I think this would be a great way to generate additional revenue. Surely someone has thought of this already?

That's what I'll want when I go.  Have a party.  Of course, there will be some who will want to poke my body just to make sure I'm actually dead.  But I'm okay with that, too.

Another MNB reader thought my criticisms of funeral homes for not posting prices online was a little unfair:

Kevin, my recent experience with the funeral home was as painless as that could be..  No, I didn't shop around on line, nor would I.  But I was informed up front what the charges were and  what services would be rendered, which were mandatory by State law, etc.

I'm glad.

Regarding the role of private label and how retailers use to compete with their own suppliers, MNB reader Philip Herr wrote:

To weigh in on the conversation, my career in marketing was devoted to supporting national brands (KO, UL, JNJ among many others). To that end I looked at retailers as an insidious competitor. Private label offerings were and still are, parasitic. Invariably, the chain knocks off the national brand and undercuts pricing. Frequently imitating, if not outright stealing, trade dress. And the manufacturer has little option but to suck it up.  So for these reasons and the myriad fees and penalties levied by retailers, I support disintermediation and direct selling whenever possible.

Got the following note from MNB reader Tim Callahan:

I know you say that you miss traveling.  It will be a long time before I will think about getting on an airplane for a two hour flight or even a 30 minute puddle jumper.

I miss it.  Desperately.  (Mrs. Content Guy may miss my being on planes even more.)  But that's different from being in a hurry to get on a plane again.

A note from MNB reader Bob Vereen:

As a journalist covering the hardware/home center industry, Kevin, it has been kind of amazing to see that sales in hardware stores and privately owned home centers have been running at rates up to 50% greater than the previous year.  As people had to stay at home, they decided to do some home repairs, painting, other upkeep and do some outdoor yard work.

And, reacting to a video from a few years ago - from Northgate Gonzales Market - that I posted last week, one MNB reader wrote:

I tried to listen to what you were saying but found myself completely fixated by the fact that I didn’t see one person wearing a mask (including yourself).

I know.  Seems like a lifetime ago.

Responding to last week's conversation between Michael Sansolo and me about baseball lessons for retailers, one MNB reader wrote:

As I listened to you and Michael speak about the current impasse in MLB and the adversarial effect in retailer-manufacturer relationships, I was reminded of the adversarial relationships Trader Joe’s has with the food broker community. Brokers have played and continue to play a very important role in business transactions world wide for thousands of years. They provide a cost effect method for principals to “go to market” and the food industry is a prime example of the value food brokers have played in the principal-retailer relationship. 

Under the guise of disintermediation and sourcing direct for the benefit of their customers, Trader Joe’s has eliminated a valuable resource in sourcing new items for their customers. In addition to finding new items from world wide sources, food brokers serve a valuable role in finding suppliers who many times provide better quality products than some existing suppliers.  In the end, as you stated, customers don’t care how the product gets on the shelf… they want the best product at the best price and the best selection. It’s a shame Trader Joe’s has such an adversarial relationship with food brokers who have played such a vital role in the development of the Trader Joe’s brand. 

MNB reader John LeTourneux wrote:

Another view regarding the triumvirate of supply chain, retailer and customer:

The crack of the bat, the smell of the Carmel corn, the gentle murmur from the stands erupting into a fevered pitch as the runner slides home.  What makes that so great? The competition between the two teams coming together for a game on one field. That is a game I want to experience.

The hum of the registers, the fresh baked bread smells mixing with the brewed coffee from the snack bar and the aroma of garden fresh strawberries from the produce department. What makes that experience so great? The competition between teams coming together in order to produce a game that their fans pass the minor leagues to enjoy.  That is a store I want to experience.

But of course, in my world we all play with sportsmanship.

And finally, a lovely note from MNB reader Scott Young:

I have known you and Michael Sansolo from my days as a senior executive at Coca-Cola for a long time.  I still religiously read your retail newsbeat each morning, and now as a business owner occasionally have to read it in the afternoon/evening.  As an African American, I was truly touched by today's post on Juneteenth.  We need more words, listening, and action by people of all races to make this world a better place.  Thanks for the part you are playing to enlighten people of all races on the history that a lot of people in this country are unaware of.

Proud of you dear friend, keep up the great work!

I am touched.  Thank you.

Published on: June 22, 2020

Things aren't looking any more promising for Major League Baseball, as the Associated Press reports that "every team in Major League Baseball will shut its spring training camp over concerns about the coronavirus pandemic, a move that came in the wake of the Philadelphia Phillies announcing Friday five players had tested positive for COVID-19 … The facilities will undergo a deep cleaning and disinfecting. No one will be permitted back inside without a negative test for the virus."

That's not all that was in the wake of the Phillies situation.

The AP writes, "Soon after the Phillies became the first known team to be affected by the outbreak, Toronto shuttered its site in Dunedin, Florida, about five miles from Philadelphia’s camp in Clearwater. The Blue Jays said one player showed symptoms consistent with the virus.

"The San Francisco Giants’ facility in Scottsdale, Arizona, was shut after one person who had been to the site and one family member exhibited symptoms Thursday. Texas closed its camp about 30 miles away in Surprise, saying no one had tested positive but that it wanted to expand testing protocols.

"Also, the Houston Astros said a player working out at their spring camp in West Palm Beach, Florida, tested positive several days ago and was recovering."