business news in context, analysis with attitude

Published on: August 4, 2020

This weekly series of Retail Tomorrow podcasts features Sterling Hawkins, co-CEO and co-founder of CART-The Center for Advancing Retail & Technology, and MNB "Content Guy" Kevin Coupe teaming up to speculate, prognosticate, and formulate visions of what tomorrow's retail landscape will look like post-coronavirus.

Sterling and Kevin  take a look back at last week's Congressional testimony by for technology CEOs - Amazon's Jeff Bezos, Facebook's Mark Zuckerberg, Apple's Tim Cook, and Google's Sundar Pichai - at a hearing that shed more heat than light.  They use comments by the four executives to launch a broader discussion about competition, differential advantages, and the importance for retailers to "find their inner barbecue."  (Trust us.  The metaphor works.)

You can listen to the podcast here, or on iTunes and Google Play.

Published on: August 4, 2020

Today, part two of an extended conversation about the food industry's unique challenges with Scott Moses, managing partner at PJ Solomon and head of its grocery, pharmacy and restaurants practice.

In this segment, Scott talks about how some independent and family retailers are embracing the challenges created by the pandemic, looks at some of the business models that may be cerated by new competitive realities, and reflects on the degree to which recession could dovetail with the pandemic to create a new retail landscape.

Published on: August 4, 2020

Bloomberg has a story about how, as the pandemic has accelerated e-commerce and a number of companies made the shift from being B2B distributors to direct-to-consumer, "payment companies that process online transactions are seeing a boom."

For example, "PayPal Holdings Inc. posted a surge of as much as 30% in the number of newly-active customers in core markets who use the service four times or more in 10 days."

“People are jumping in with both feet, and not just dipping their toes in the water,” says PayPal CEO Dan Schulman. “It’s not hyperbole that we’ve seen a three- to five- year acceleration. That’s the math.”

Bloomberg writes that "Visa Inc. has seen online spending excluding travel increase by 25% from a year earlier every week since mid-April, twice the growth it was generating before the pandemic.  In-store spending, meanwhile, cratered 50% in early April, Visa said. It improved in recent months as cities around the world started to reopen, but still posted a decline in the high single digits by late June."

The e-commerce boom is good for banks and payment companies in several ways.  First, "the widespread shift to online shopping is an opportunity to help counter a decline in overall spending on credit and debit cards. Online, their cards don’t have to compete with cash or checks, which are still widely used for in-person transactions in the U.S."

And second, "Merchants pay a higher fee for these so-called card-not-present transactions. The networks argue it’s because fraud is more rampant in online purchases, meaning they have to do more to root out the bad guys."

Published on: August 4, 2020

From CNN:

"Convenience store operator Wawa is testing a new store format as people look for contactless ways to shop during the pandemic.

"Wawa said the 1,850 sq-ft test store is expected to open in December in Falls Township, Pennsylvania. It's one of two drive-thru locations planned this year. (The other one will be in Westhampton, New Jersey).

"At the Pennsylvania store, shoppers will pull up to a drive-thru window to place their order and a Wawa employee will process payment and hand over their items, the company said.  If the drive-thru line gets too long, or if someone has a large order, customers will be directed to curbside parking where the order is brought out to the car."

Wawa says that it was planning the concept before the pandemic but accelerated development once conditions changed and made it a potentially more powerful entry.

Published on: August 4, 2020

Fascinating story from Bloomberg about how some Instacart contract shoppers are upset by how some of their brethren are using bots to steal the largest and most lucrative orders.

Here's how Bloomberg describes the problem:

" Instacart pays contract workers to shop for groceries and deliver them to customers. Normally, the shoppers open the Instacart shopping app and, as orders flash by, click on the ones they want to fulfill. But in order to gain an edge, some shoppers are paying software developers who have created bots — in the form of third-party apps — that run alongside the legitimate Instacart app and claim the best orders for clients.

"In this way, the app tilts competition between shoppers but is invisible to customers and doesn’t take business away from Instacart either. The cost of the third-party apps ranges from $250 to $600 in cryptocurrency or bank deposits, according to the darkweb research firm, DarkOwl."

According to the story, "Instacart said it’s combating bots by cranking up pressure against app makers and banning violators when they find them. The company said it deactivated 150 shoppers found to be misusing the platform and shut down half a dozen sites claiming to sell batches to Instacart shoppers."

“We take the integrity of the Instacart platform very seriously and have a trust and security team dedicated to monitoring the unauthorized use of the platform which includes all efforts to prevent illicit and fraudulent third-party apps from violating our terms of service,” Natalia Montalvo, Instacart’s director of shopper engagement and communications, tells Bloomberg.

Published on: August 4, 2020

The Wall Street Journal has a good story about the endangered US department store sector, which used to be "on the leading edge of retailing—big, exciting places to shop, where consumers could find everything from the latest toaster to an evening dress and matching shoes. Now, they are fighting for their lives," seemingly on the edge of obsolescence.

The story says that "saving the department store - or at least salvaging it - isn’t impossible, but doing so will require a radical rethink of how stores operate and relate to shoppers, say veteran retail executives."

While department stores' problems often are laid at the feet of e-commerce and so-called fast-fashion stores, the Journal writes that those same competitors exist elsewhere in the world, and yet department stores are a healthier breed.

"In the U.K.," the Journal writes, "Harrods and Selfridges are renowned for their food halls, which provide a sensory experience not replicated online. In Japan, the department store Nihombashi Mitsukoshi has hosted exhibits where artisans make ceramics, weave fabrics and practice other traditional crafts, creating a sense of theater."

Published on: August 4, 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 4,862,513 confirmed cases of the Covid-19 coronavirus, with 158,968 deaths and 2,448,295 reported recoveries.

Globally, there have been 18,471,207 coronavirus cases, 697,954 fatalities, and 11,698,016 reported recoveries.

•  From the Wall Street Journal:

"The U.S. reported fewer than 50,000 new coronavirus cases for the second day in a row, with some hard-hit states recording smaller increases even as the virus continued to spread in other parts of the country.

"The daily tally of new cases in the U.S. was more than 45,000, slightly lower than the previous day’s total, marking the smallest daily gain since July 6, according to data compiled by Johns Hopkins University. The U.S. death toll was more than 155,000.

"In California, Gov. Gavin Newsom said Monday that new infections in the state had fallen over the past week for the first time since June. Hospitalizations were down, too, he said, suggesting that perhaps the state was starting to see the spread of the virus, which surged through June and July, slow again."

The Journal goes on:  "A Wall Street Journal analysis of Johns Hopkins data found that while the spread of the virus appeared to be slowing in some hot spots such as California and Florida, some states in the Northeast and Midwest are experiencing increases in cases. In Connecticut, Maryland, Maine, Massachusetts, Rhode Island and New Jersey, the seven-day averages of new cases exceeded those states’ 14-day averages, suggesting the number of cases is rising."

A friend of mine put it this way:  "You know how when a doctor gives you antibiotics, he tells you to make sure you take the whole two weeks' worth … that it is important not to stop taking them a week in just because you feel better.  That's the metaphor for dealing with the coronavirus … you have to go the distance in dealing with it and not delude yourself that when the numbers go down or stabilize, the threat is over."  He's right - it is when things start to stabilize that the hard work really begins.

•  The Washington Post writes that "the novel coronavirus is surging in several Midwestern states that had not previously seen high infection rates while average daily deaths remained elevated Monday in Southern and Western states hit with a resurgence of the disease after lifting some restrictions earlier this summer.

Missouri, Montana and Oklahoma are among those witnessing the largest percentage surge of infections over the past week, while, adjusted for population, the number of new cases in Florida, Mississippi and Alabama still outpaced all other states … Experts also see worrying trends emerging in major East Coast and Midwest cities, and they anticipate major outbreaks in college towns as classes resume in August."

•  The National Retail Federation (NRF) is out with an assessment of the current retail environment, concluding that "despite broad indications that the economy has begun to recover as businesses reopen from the coronavirus pandemic, conflicting data makes it difficult to say how steadily the comeback will continue."

"Optimism about the economy and retail spending is being tested daily with the spread of the coronavirus," says NRF Chief Economist Jack Kleinhenz. “Big questions are looming, and we are all grappling to discern what incoming data is telling us about the health of the economy and consumers. Depending on the data selected, the answers are not entirely clear.

“A key question is whether the pace of growth and momentum will carry forward over the next few months.  Based on quarterly and monthly data, the U.S. economic recovery continues despite elevated COVID-19 cases. But in examining weekly data, the pace of improvement appears to be slowing. Could it be that we are at or heading back to the same spot we were at two months ago?”

I'm not an economist, or a doctor … but it seems pretty clear to me that the pandemic won't be subsiding anytime soon - it may even get worse as we move into autumn and a more traditional flu season, with people going back to work and school - and the economy won't be able to fully recover until we have a vaccine.

•  From the Washington Post:

"Across the country, families are facing fraught decisions — and fierce disagreements — over whether to see one another this summer. From California to Chicago to Charlotte, family gatherings of all kinds have been linked to coronavirus outbreaks that have sickened scores of people. But as the pandemic drags on, it is testing relatives’ resolve to remain apart.

"Summer reunions offer a preview of what could happen later this year, when Americans celebrate their first Thanksgiving and Christmas since the pandemic’s start."

Examples from the Post story:

"A covid cluster at an Idaho onion-ring factory was traced back to a family reunion … A party of two dozen relatives in Charlotte led to 41 infections … And a family dinner for six in Dallas resulted in 14 people getting sick, one of whom died and another one of whom remains on a ventilator."

Last week, the Post writes, Maryland Gov. Larry Hogan "warned people not to assume spending time with relatives was risk-free.  'The number one activity of those who have tested positive recently, reported by a staggering 44 percent . . . was attending family gatherings,' he said at a news conference in which he tightened mask and travel restrictions.  'We have people saying, ‘We’re not going out. We’re going to rent a beach house together with 20 or 30 of our family and we are staying home.’ But they are spreading the virus'."

Published on: August 4, 2020

•  The Dallas Morning News reports that Retail Ecommerce Ventures, the new owner of Pier 1 Imports, is "preparing to launch a new e-commerce business under the 58-year-old brand’s name in late August.>

Some background from the story:  "The sale of Pier 1 Imports, announced earlier in July, was approved in bankruptcy court Thursday to Retail Ecommerce Ventures, a company co-owned by social media influencer Tai Lopez and former NASA scientist Alex Mehr.

"The investors paid $31 million for Pier 1′s intellectual property, which includes its trademark name, its data, including customer lists, and other assets related to e-commerce.

"Pier 1 had operations issues and came to the e-commerce business late, but its strengths were its in-house designers, its merchandisers and its longtime relationships with factories and artisans all over the world. Pier 1′s early signature items were decorative patio wind chimes and wicker and rattan furniture, including papasan chairs. Then, for years, the retailer had success selling its own dinnerware, glassware, linens and decorative furniture and accessories."

The story says that "Lopez and Mehr have acquired brands and built new online businesses with names with consumer recognition but failed operations. Lopez calls distressed retail brands 'low-hanging fruit' to be in invested in and revitalized."

Published on: August 4, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Forbes is out with its annual "best places to work for women" list - looking at employer "culture, opportunities for career development, image, working conditions, salary and wages and diversity" - and concluding that a retailer, REI, is best-in-class.

There are, in fact, several retailers on the list - Ulta (#3) and Best Buy (#8) make the top 10 - and three supermarket companies:  Save Mart at # 35, Whole Foods at #39, and H-E-B (#82).

Probably is best to take some of this with a grain of salt - these lists tend to be made up of the companies that want to make them.  Also, there are at least a few companies - JC Penney, for example - that may not be good long-term bets for employment, no matter what your gender.

But it is better to be a great place for women to work than not.  So I don't want to be too cynic al about this.

•  Three months after its originally scheduled opening, delayed because of the pandemic, Wegmans is scheduled to open its first store in New York's Westchester County tomorrow.

The 121,000-square-foot store is in Harrison, a stone's throw from White Plains … about 30 miles north of New York City … and just seven miles or so from the New York-Connecticut border.

It is going to be very interesting to see the impact of Wegmans on the local market.   There's an Ahold-Delhaize-owned Stop & Shop about three miles away with terrible parking that I have toi imagine is really going to feel it.

Stew Leonard's has two stores almost equidistant from Wegmans - one in Yonkers, New York, and the other in Norwalk, Connecticut.  One would imagine that they'll take a bit of a hit, but I also think that Stew's has been raising its game almost from the moment that Wegmans announced it was coming to the market.   The potential is there for some pretty intense competition.

•  Publix Super Markets is out with its quarterly numbers, saying that "sales for the three months ended June 27, 2020 were $11.4 billion, a 21.8% increase from $9.3 billion in 2019. Comparable store sales for the three months ended June 27, 2020 increased 19.9%. The company estimates its sales for the three months ended June 27, 2020 increased approximately $1.5 billion or 16.1% due to the impact of the coronavirus pandemic.

"Net earnings for the three months ended June 27, 2020 were $1.4 billion, compared to $661.1 million in 2019, an increase of 106.8%."

Published on: August 4, 2020

•  Stater Bros. announced that Bertha Luna, a 20-year veteran of the company who most recently has been serving as Senior Director Retail Operations, to be Regional Vice President - Retail Operations.

•  Bloomberg reports that "Tyson Foods Inc. is replacing its top boss just as the pandemic boosts costs and clouds the outlook for America’s top meat producer.

"Noel White, 62, will step down as chief executive officer after just two years on the job, but will remain at the company as executive vice chairman, Tyson said in a statement Monday. He will be replaced by 46-year-old Dean Banks, currently Tyson’s president, effective Oct. 3."

Published on: August 4, 2020

Yesterday, MNB took note of a New York Times report that Trader Joe's has declared that its ethnic food labels, using terms such as "Trader José," "Trader Giotto," and "Trader Ming," are not racist, and that it will not change them.

"The announcement comes after an online petition argued that these names tended to reinforce racial stereotypes.  Trader Joe's responded by saying last month that even before the petition it was re-evaluating the names.

"Kenya Friend-Daniel, the company’s national director of public relations, said that 'while this approach to product naming may have been rooted in a lighthearted attempt at inclusiveness, we recognize that it may now have the opposite effect — one that is contrary to the welcoming, rewarding customer experience we strive to create every day.  With this in mind, we made the decision several years ago to use only the Trader Joe’s name on our products moving forward.'  This weekend, however, Friend-Daniel said that she only was referring to labels created since 2017.

"Now, the company is saying that 'we disagree that any of these labels are racist.  We do not make decisions based on petitions'."

I commented:

I don't know what decision Trader Joe's ought to be making about its labels, but I am pretty sure that they need to make some changes in how it handles public relations.  There are few things worth than the kind of public dithering in which it engaged.

I assume that Trader Joe's decided that it would do less harm to its brand by keeping the names than changing them, and that's a legitimate conclusion … as long as they realize that they may take a hit from consumers who feel differently.  It is a calculation.

Me, I would've changed the names and erred on the side of sensitivity.  I would've decided that what I saw as lighthearted might be seen as offensive by others.

When people use derogatory terms to talk about me, they usually are not specific to my heritage.  I can imagine that I might be offended if a retailer started describing Irish products as being perfect for "bog trotters."

MNB reader Tony Moore responded:

I’m Irish American and I never heard the term “Bog Trotter”, so I am not sure I would be offended if directed at me.  Perhaps dumb Mick, but I think having not really been harassed because of my ethnicity, at this point in my life I would laugh that off if some actually threw a line like that at me in an attempt to offend.  Maybe that is “white privilege”?

I rarely shop at Trader Joe’s, so I was not familiar with the brand variations such as Trader Jose and Trade Ming.  However, I did check out the packages images and  I really saw nothing “offense”, at least to me.   I have been mulling through my thoughts on the cultural/racial sensitivity issues since the reaction to George Flynn exploded a couple of months age.  Base on conversations I have had with people there is a compendium of sensitivity and willingness to change ( I guess this is true on every issue). I am in the camp that a lot needs to change - certainly Confederate statues and team logos /names that have been issues for years.  I am less sure about objects that at least for me are a stretch.  Of course what is a stretch is subjective, but my concern here is that for us as a society to move forward, levels of support for change are needed.  If forced too far down this compendium, support will erode and a backlash could occur. 

Two example that frankly surprised me were union employees at Ford asking the company to stop manufacturing police cars and an article evoking images of the torching of Atlanta by Sherman in the Civil War with the Calgary Flames NHL team logo.

Subjectively,  this goes too far down this compendium for me and potentially starts to cause backlash or  at least a loss of support .  As with a lot of highly reactive issues, the pendulum goes to far, and over some time settles down.  I would like to think when the pendulum comes to a rest, real, permanent change on racial/cultural issues has been effected.

I would certainly agree with you about Ford - I think it is important to be able to understand that misconduct by some police officers does not diminish the critical work that police officers do every day in every community.  

As for the use of certain terms that strike some as racially insensitive, I would say that the most important phrase in your email was this one:  "…having not really been harassed because of my ethnicity…"

MNB reader Tom Hahn wrote:

Congrats to Trader Joe’s for standing up to the cancel culture!

My friend Beatrice Orlandini provided some context:

Funny, I always thought that Trader Joe's was such a fun place to shop at and that these names made it even more fun.

BUT, I am Italian and European.  We are not as sensitive as you are on all of these issues.   Our society is not (yet) as diverse as yours.

At any rate, NO Italian could be offended by being called "Giotto", the great painter.

There could only be pride.

When I was a child living in the USA the names used to offend Italians were quite different, believe me.  They would never have made it to a product label.

From another reader:

Simply trying to shame people into conformity.  Appears their labeling has produced results so why change......marketing is like politics, you can’t please everyone but you make decisions for the market, and profitability of your company.  In these times a strong statement about your position could be welcomed by those that shop your products.  Petitions should not drive marketing, just buyer behavior.  I’m actually offended by Apple since it’s a statement about the way  of the Devil and how he continually baits us into sin and I am considering a petition and boycott 🙂 Come on, man.

Actually, a pretty good argument can be made that petitions - if they represent the passions of your customers - should drive marketing decisions.  Not always, but I wouldn't be so quick to dismiss them.

Let me be clear about my opinion here.

Trader Joe's is perfectly entitled to keep those names despite petitions and public pressure.  I assume that they've made the calculations, and worked out that it made more economic sense to keep them than get rid of them.  That's fine.  They made the decision, and now they'll live with the results, whatever they happen to be.

I probably would've made a different decision, but that's me.  I tend to be sensitive about these issues, precisely because in my life I've never had to be.

I'm much more critical of how they dealt with the issue, sending mixed messages that only made them look worse.  It was ham-handed at best.  (Apologies to the pork lobby, which probably be sending me an angry email.)

To digress just a little, I did want to mention an email received from another MNB reader:

Don’t cave into the MOB! I agree with Trader Joe’s that they have the balls to stay the course!

My wife and daughter have pointed out to me that it is a strange fact of our cultural life that when we want to say that when someone has physical or moral courage, they have "balls."  And, they've added, when we want to say that someone is soft morally or physically, the inclination often is to use an epithet that refers to female genitalia.

It is especially strange since when we think of a man thinking with his balls, it is usually to suggest that he's doing something stupid.

I get their point.

Published on: August 4, 2020

ESPN reports that "a group including actor and former WWE star Dwayne Johnson has agreed to purchase the XFL for about $15 million … The XFL declared Chapter 11 bankruptcy April 13 and has been seeking a buyer for the past three months, marketing itself as a made-for-TV product that could transition as early as 2021 to a bubble concept during the coronavirus pandemic.

"Johnson and his investors -- who include his business partner Dany Garcia along with RedBird Capital Partners -- are making plans to play next season, Garcia told ESPN."

Axios Sports reports that the acquisition "does not necessarily mean the upstart football league is returning.  Axios has learned that the buyers plan to first seek major media deals before committing to the major capital expense of launching a new season.

They landed the deal just hours before the league was set to be up for sale at auction, and there were no other qualified bids, according to the court filing."

The move in some ways is a gamble that the NFL, with 32 teams, could run into trouble trying to play in a pandemic world, which will leave the US hungry for football next year, and the XFL able to deliver a product that, with just eight teams, could be easier to isolate in a bubble in the same way that the NHL and NBA are.

It also isn't an especially expensive gamble, since WWE founder Vince McMahon put some $200 million launching the XFL.