business news in context, analysis with attitude

Published on: August 12, 2020

by Michael Sansolo

There’s an insult you hear frequently in politics. One person or another will decry their opponent’s gilded upbringing by saying, “You were born on third base and thought you hit a triple.”

I think there’s an apt metaphor for the retail food industry at the moment. Currently sales are soaring to unthinkable levels, but it’s not because anyone hit a triple. Basically it’s because restaurant competition is minimal in the covid-19 world and home cooking is ascendant for the first time in decades.

So the truth is, you didn’t hit a triple, but as long as you are on third base it’s time to score a run. In other words, make the most of this moment for today and tomorrow.

We all know that no one gets a second chance to make a first impression, but incredibly that’s exactly the opportunity the industry has right now.  For two, or possibly three generations, mealtime had moved outside the home thanks to numerous social and economic reasons, most prominently the explosive growth of women working outside the home. 

Cooking at home dropped from the default at dinner to the secondary option as countless millions found themselves lacking the time, skills or desire to cook at home. 

Thanks to Covid-19 they are back. So now the question is what to do with them.

Despite the limitations of the moment, there are countless potential steps. First, start by reaching out with the information and support these sudden home chefs need. The Harrisburg (PA) Patriot-News recently profiled a program from Weis Markets that features quick on-line cooking classes for both adults and kids.

Weis’s program is admirable to in two ways. First, thanks to the disappearance of home economics classes in school and generational lessons at home, many kids (and adults) don’t have basic cooking skills. (Me included!) By offering lessons simple enough for kids, adults (again, like me) can unashamedly take the class knowing we won’t be overmatched.

Secondly, Weis is wisely using technology (social media in this case) to offer the classes, making it simple for even these locked in times.

Cooking skills are clearly a critical part of winning back those meals at home, but it’s not the only piece of the picture. Home meal preparers need skills, but also need new recipes to keep things interesting and even menu ideas to help them plan out a night or maybe a week.

In the process, let’s educate shoppers on all the incredible step-saver products in the store that can help even the most basic chef produce some really interesting meals. And while we are at it, let’s help these new cooks understand the economic and nutritional benefits of eating at home.

Stores cannot do anything about clean up after the meal or the fussy eaters who won’t touch certain color foods. But we can do a lot to make the process of meal preparation more interesting, simpler and fulfilling. It’s all those aspects of mealtime headaches that helped propel eating out from something done about one-third of the time to more than half of food spending.

Second chances don’t come around often so please don’t leave this one untouched. Perhaps that will help us get something good out of covid.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com.

His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

And, his book "Business Rules!" is available from Amazon here.

Published on: August 12, 2020

KC builds on Michael Sansolo's column this morning by focusing on a smart move by Whole Foods - teaming up with Teachable, an online education platform, to develop a course called Home Ec 365, designed to help people be more effective in the supermarket and the kitchen.  Which will make them more self-sufficient.  If supermarkets take advantage of this moment, KC argues, it will help them know and serve their customers better.  And he has some suggestions about the kinds of questions they ought to be asking.

Published on: August 12, 2020

Walmart said yesterday that it partnering with delivery company Instacart to pilot same-day delivery offerings in four California markets and Oklahoma.

CNBC reports that "Walmart’s partnership comes at a key time. Consumers are relying on grocery delivery at an unprecedented rate due to the Covid-19 pandemic, and some analysts believe customers will continue to shop online even as things go back to normal … By offering quick delivery, big chain grocers have a stronger position against Amazon, which offers grocery delivery services Amazon Fresh and Amazon Prime Now from its own warehouses and Whole Foods stores."

If the pilots work, it almost certainly presages a national partnership for Walmart and Instacart.

Instacart already delivers for Aldi, Target, Costco, Albertsons, Kroger and Walmart’s Sam’s Club, among other food and drug retailers.

Published on: August 12, 2020

Kroger announced yesterday that it is expanding its Kroger Ship program to include "an extended ship-to-home assortment through a marketplace offering of third-party sellers powered by Mirakl, the leading software platform enabling B2C and B2B digital marketplaces."

It is the first time that Kroger has opened its online platform to third part sellers, and it brings it into direct competition with Amazon and Walmart's marketplace offerings.  Amazon in particular has been aggressive about its marketplace, with about 60 percent of all its online sales taking place on the third-party platform.

"Our customers are increasingly turning to our e-commerce solutions provided at Kroger.com for their grocery and household essential needs. To better serve our customers, we're continuing to invest in technology that enables us to expand our digital services to deliver anything, anytime, anywhere," said Jody Kalmbach, Kroger's group vice president of product experience. "Leveraging Mirakl's best-in-class marketplace solution, we are broadening Kroger's ship-to-home capabilities by offering more relevant products for our customers through exciting new partnerships with reputable third-party sellers."

In its coverage, Bloomberg writes that "Kroger is looking to capitalize on growth in its digital platforms and heightened demand for essential goods as quarantined customers stock up during the pandemic. Amazon’s marketplace remains the undisputed leader in terms of selection, with hundreds of millions of products listed -- but with demand surging amid the global pandemic, many merchants are seeking new online partners."

The Mirakl website lists other retail clients that include Office Depot and Urban Outfitters in the US, Best Buy in Canada, Walmart in Mexico, and Carrefour in Brazil.

Published on: August 12, 2020

The New York Times has a story about how retailers seem to be abandoning New York City in the wake of the pandemic.

Here's how the paper frames the story:

"Even as the city has contained the virus and slowly reopens, there are ominous signs that some national brands are starting to abandon New York. The city is home to many flagship stores, chains and high-profile restaurants that tolerated astronomical rents and other costs because of New York’s global cachet and the reliable onslaught of tourists and commuters.

"But New York today looks nothing like it did just a few months ago.

"In Manhattan’s major retail corridors, from SoHo to Fifth Avenue to Madison Avenue, once packed sidewalks are now nearly empty. A fraction of the usual army of office workers goes into work every day, and many wealthy residents have left the city for second homes."

The Times writes that "in the heart of Manhattan, national chains including J.C. Penney, Kate Spade, Subway and Le Pain Quotidien have shuttered branches for good. Many other large brands, like Victoria’s Secret and the Gap, have their kept high-profile locations closed in Manhattan, while reopening in other states."

The story goes on:  "Some popular chains, like Shake Shack and Chipotle, report that their stores in New York were performing worse than others elsewhere, investment analysts said. A few dozen Subway locations have closed in New York City in recent months … A Gap Store near Rockefeller Center has stayed closed and has not paid its $264,000 monthly rent. Two T.G.I. Friday’s in prime locations, one near Rockefeller Center and another in Times Square, have remained closed while its restaurants elsewhere in the country have reopened."

Part of the problem is rent - the high costs of operating in Manhattan have made reopening prohibitive.  

Michael Weinstein, CEO of Ark Restaurants, which owns Bryant Park Grill & Cafe and 19 other restaurants, tells the Times that he will never open another restaurant in New York:  "“There’s no reason to do business in New York.  I can do the same volume in Florida in the same square feet as I would have in New York, with my expenses being much less. The idea was that branding and locations were important, but the expense of being in this city has overtaken the marketing group that says you have to be there.”

Published on: August 12, 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 5,306,851 confirmed cases of the Covid-19 coronavirus, resulting in 167,761 deaths and 2,756,107 reported recoveries.

Globally, there have been 20,544,424 confirmed coronavirus cases, with 746,366 fatalities and 13,461,683 reported recoveries.

•  Notes from the Washington Post:

-  "Coronavirus-related deaths in the United States topped 1,300 on Tuesday, with Florida and Georgia recording their highest single-day death tolls since the start of the pandemic."

-  "Of the more than 1,332 deaths reported Tuesday, Florida and Georgia recorded their highest single-day death tolls since the start of the pandemic, with 277 and 122 coronavirus-related deaths respectively, according to a data analysis by the Post. Tuesday marked the first time Georgia has exceeded 100 deaths in a day and its highest reported seven-day average.

"Texas and California also ranked among the deadliest counts, with 220 and 109 dead.

"Wisconsin surpassed 1,000 coronavirus-related deaths since the state’s first reported death in mid-March."

-  "Aside from Georgia exceeding its average death count, Puerto Rico and five states — Alaska, Montana, North Dakota, Tennessee and West Virginia — tied for their highest seven-day death averages, which is considered a more accurate metric than daily figures. The country’s seven-day average for deaths was 1,052."

-  "Before Tuesday evening, Omaha was the largest city in the nation that did not require residents to wear face coverings in public spaces.

"But after a marathon meeting, the Nebraska city’s leaders unanimously adopted a mask mandate — the public policy tool that is perhaps the single easiest way to combat the spread of the coronavirus."

•  From the New York Times this morning:

"Across the United States this summer, restaurants and bars, reeling from mandatory lockdowns and steep financial declines, opened their doors to customers, thousands of whom had been craving deep bowls of farro, frothy margaritas and juicy burgers smothered in glistening onions.

But the short-term gains have led to broader losses. Data from states and cities show that many community outbreaks of the coronavirus this summer have centered on restaurants and bars, often the largest settings to infect Americans.

"In Louisiana, roughly a quarter of the state’s 2,360 cases since March that were outside of places like nursing homes and prisons have stemmed from bars and restaurants, according to state data. In Maryland, 12 percent of new cases last month were traced to restaurants, contact tracers there found, and in Colorado, 9 percent overall have been traced to bars and restaurants.

"It is unclear what percentage of workers transmitted the virus among themselves, or to patrons or whether customers brought in the virus. But the clusters are worrisome to health officials because many restaurant and bar employees across the country are in their 20s and can carry the virus home and possibly seed household transmissions, which have soared in recent weeks through the Sun Belt and the West."

•  Go figure.  Not every face covering is created equal.

The  Washington Post reports on how researchers recently "unveiled a simple method to evaluate the effectiveness of various types of masks, analyzing more than a dozen different facial coverings ranging from hospital-grade N95 respirators to bandanas. Of the 14 masks and other coverings tested, the study found that some easily accessible cotton cloth masks are about as effective as standard surgical masks, while popular alternatives such as neck gaiters made of thin, stretchy material may be worse than not wearing a mask at all."

It ends up that the precise things that make neck gaiters a preferred face covering, especially for joggers, also make it less than optimal in terms of preventing spread.

Some may suggest that this is just another example of how intelligence changes.  They're right.  It does.  If you're intelligent, you understand that time often breeds greater understanding.

•  The Associated Press reports that New Zealand has gone back into lockdown - four cases of the Covid-19 coronavirus have been detected there, the first to be found in 102 days.

The government has contacted some 200 people who may have come into contact with the four people to see if there is further community spread.

Figuring out sourcing and spread will be a lot easier on what essentially an island nation of five million people.  I admire the decisiveness of the authorities, though - no dithering, no dissembling.  Just moving quickly to lock things down.

•  From the Wall Street Journal:

"The Big Ten and Pac-12 Conferences voted on Tuesday to postpone college football and other fall sports because of the coronavirus pandemic, a move that could begin the final unraveling of a lucrative season that collegiate sports officials have labored for months to save."

The Big Ten, at least, "will evaluate the possibility of playing the affected sports - which also include cross-country, field hockey, football, soccer and volleyball - in the spring."

The story goes on:  "With two of the five most powerful leagues punting on fall and some winter sports, the pressure on the rest of college football’s major conferences immediately ratcheted up. The Southeastern Conference and Atlantic Coast Conference issued statements around the same time Tuesday evening expressing confidence that the medical protocols in place on their campuses would permit safe athletic competition."

Some more context from the Journal:

"College administrators have become increasingly concerned about growing evidence that athletes who contract even mild cases of Covid-19 may be at increased risk of developing myocarditis, an inflammation of the heart muscle that can be fatal if left untreated.

"But the prospect of not playing this week brought vocal objections from some of college football’s biggest stars, such as Clemson quarterback Trevor Lawrence. The athletes early Monday had begun advocating, via a loose coalition, for a season to be held, provided certain safety and scholarship concerns were met.

"At the same time, several of the Big Ten’s most prominent coaches this week came out against the idea that playing football this fall is unsafe."

I don't envy these college administrators having to make this decision, especially since it will cost them so much money even as challenging entrenched interests and even some political pressures.  But there is evidence that the coronavirus can have a lasting impact on the health of people who contract it - even young athletes who are in terrific shape.  There was a report from ESPN saying that myocarditis - a rare heart inflammation that could be linked to COVID-19 - has been found in at least five Big Ten athletes as well as several athletes in other conferences.  It up to the adults in the room to make mature decisions even if those decisions work against their self-interests.

Published on: August 12, 2020

Good piece in Fast Company that focuses on the supermarket shopping experience as it has been changed by the pandemic, and uses two products as an example of how things are likely to continue to change:

"The future of grocery may come down to how we buy things like toilet paper and avocados - or the difference between transactional and experiential purchases. From the beginning, the supermarket’s appeal has been the convenience of everything under one roof. Looking ahead - and in light of COVID-19 - that model is ripe for disruption.

"For toilet paper - and the many functional things we buy - online, subscription, and delivery services will likely continue to grow. The more shopping becomes a chore due to the lasting effects of the pandemic, the more people will take the path of least resistance. Add low price, convenience, sustainability, and the eventual help of artificial intelligence, and delivery remains compelling so long as the system itself doesn’t break down.

"For avocados - and the smaller number of things we buy based on direct experience, expertise, and emotion - in person is superior. We may see the growth of specialty retailers, farmer’s markets, and smaller markets focused exclusively on grocery, and new hybrid service models that blend the best of all worlds."

The Fast Company piece also explores how temporary changes imposed on the experience may become permanent and more sophisticated … and you can read the story here.

Published on: August 12, 2020

•  Stamford Patch reports that the Fairway store in Stamford, Connecticut - the only store operated by the rapidly diminishing and bankrupt retailer in the state - now has signs saying that the unit is closing and that "everything is on sale."

While other stores have been sold by Fairway to the likes of Amazon and Wakefern-affiliated Village Supermarkets, this store has remained on the market with no apparent takers.

According to the story, closure is set for on or about August 20.

This store never really caught on - it was like a xerox copy of Fairway's better stores that lost definition in the translation.  Plus, it had strong competition from Stew Leonard's, which is just a few exists east on I-95, and is about to get even more competition from Wegmans, which has opened about a dozen miles away just over the Connecticut-New York border.  At this point, there were no good options.  There weren't even any better bad options.

•  Ahold Delhaize USA, the parent company of Food Lion, Giant Food, The Giant Company, Hannaford and Stop & Shop, has announced "new sustainability policies for genetically modified food (GMOs) and farm animal welfare … Under the new GMO policy, Ahold Delhaize USA companies are requiring all private brand products to have clear on-pack Bioengineered Food labeling, well ahead of the Federal Bioengineered labeling deadline of January 1, 2022.

"All Ahold Delhaize USA companies support the National Bioengineered Food Disclosure Standard. The companies are also committed to monitoring science and assessing risk around GMOs and will look to organizations like the World Health Organization, the U.S. Food and Drug Administration and the U.S. National Academy of Sciences to continue to enhance the GMO policy."

•  The New York Times reports that "one of the nation’s largest egg producers has been accused by New York authorities of raking in $4 million in illegal revenue by gouging customers with exorbitantly high prices when the state was grappling with rising coronavirus cases.

"A lawsuit filed on Tuesday by Attorney General Letitia James of New York contends that the producer, Hillandale Farms, at times quadrupled the price of eggs to cash in on a surge in demand in March and April.

"In particular, Hillandale targeted distributors in New York City, as well as the military installations at West Point, Fort Hamilton and Fort Drum, according to the lawsuit.

"The company was not raising prices to offset increased costs, the suit says, but 'simply to line its own pockets and profit off New Yorkers during a time of crisis'."

•  The Seattle Times reports that "Sur La Table, the bankrupt upscale cookware chain, sold for almost $90 million and a promise to keep at least 50 stores open, according to court papers.

A joint venture between e-commerce investment firm CSC Generation and Marquee Brands topped an opening bid from affiliates of Fortress Investment Group at auction last week, according to court papers and a lawyer for Sur La Table’s junior creditors."

The story notes that "Sur La Table, known for its in-store cooking classes and pricey kitchenware, shut its stores as COVID-19 gripped the United States, then filed for Chapter 11 bankruptcy in July. The company was headed toward a full-blown liquidation until Fortress stepped in with a so-called stalking-horse offer, which sets the floor for further bids … The sale still needs bankruptcy-court approval."

•  The Wall Street Journal reports that "a venture backed by apparel-licensing firm Authentic Brands Group LLC and mall owner Simon Property Group Inc. has agreed to buy Brooks Brothers Inc. for $325 million.

"The proposed purchase of America’s oldest apparel company, which requires bankruptcy court approval, includes a commitment to keep 125 Brooks Brothers stores open. The retailer has roughly 200 stores in North America … Brooks Brothers filed for bankruptcy last month after more than two centuries in business, unable to withstand store closures because of the coronavirus pandemic. The company has struggled in recent years with a shift toward more casual dress styles at work."

Published on: August 12, 2020

Sterling Hawkins and I will be doing a segment later today for "Brave New World," the Retail Tomorrow virtual learning series that will be out with a new episode looking at how e-commerce has achieved 10 years of growth in 10 weeks.

We'll be looking at the Amazon dark store in Woodland Hills, California, which serves as a starting point for a broader discussion of new trends in e-commerce fulfillment.

You can sign up to participate here.

Published on: August 12, 2020

Last week, MNB reported that "delivery company DoorDash has announced the launch of DashMart, which it describes as 'a new type of convenience store, offering both household essentials and local restaurant favorites to our customers’ doorsteps,' often in 30 minutes."

I commented:

If I am reading this right, DashMart also potentially puts DoorDash directly in competition with convenience stores - which is sort of ironic since, as TechCrunch notes, "the move into the virtual storefront comes a few months after DoorDash partnered with more than 1,800 convenience stores throughout the country to better respond to the needs of customers during the COVID-19 pandemic."

If this is an accurate reading of the stories and DoorDash's own blog, then I am wondering how those c-store companies may be feeling about this.  (Maybe the way that Instacart's retail clients should be feeling about that company's ability to weaponize their data and compete directly against them?)

DoorDash isn't just serving as a delivery service here.  It is creating its own online marketplace, cutting out the retail middleman in some cases, and competing against the very clients it has been servicing.  It is like the c-store version of a ghost kitchen.

One wonders if there will be a backlash.  And if there isn't, one wonders, why the hell not?

MNB reader Tom Ewing responded:

Once you have developed the store to consumer delivery service and made it as efficient as you can and still don't make money, the next logical step is to go back up the supply chain and try to be the store too.  DashMart can determine the limited number of items that meet virtually all of it's customer orders, instead of trying to pick through 15,000 to 20,000 items from a supermarket, they can deal with the less than 2,000 items that make up over 95% of consumer orders.  DashMart can then make the wholesale and retail margins to help offset the delivery costs as well as gaining the promotional opportunities with product manufacturers trying to reach consumers that DashMart touches regularly. 

Because delivery is their only business, DashMart's entire effort is focused on profiting from home delivery of the only key items from the manufacturer directly to the consumer  whereas retailers are trying to make money on their existing model and use  home delivery defensively as a service to keep the stock up shopping trip from their best customers.  Think of DashMart adding a subscription model like Costco uses on top of home delivery directly from the manufacturers and now you have a structure that could deliver a profitable venture and change food retailing.

It is an ever changing world.

I'll make the same observation about DashMart as I have made consistently - and insistently - about Instacart:  It seems like a terrific business for DoorDash.  But not so much for its c-store clients, which now may find themselves competing with the same company to which they have outsourced a considerable part of their e-commerce business.

Regarding how Amazon has adapted to pandemic-era realities, one MNB reader wrote:

Good companies not only are good at strategizing for the future but they are also good at seizing the moment, always looking to turn the big battleship if necessary.  Regardless of how one feels about them, they prepare themselves for opportunity of the moment as well as creating those opportunities in the future.  Just in time seems to be a fundamental now that they are pressing for the at home consumer, even more so because of the pandemic (Subscribe and Save).  The gift that keeps on giving!

Last week, MNB took note of an Axios story suggesting that the "wave of defaults, bankruptcies and evictions expected in cities across the US" that is likely to "remake the retail landscape across the country" is not necessarily a bad thing.

One MNB reader responded:

This all makes absolute sense.  It reminds me of when a grocery or retail chain acquires and existing chain.  They take a deep dive into the books and realize some of the they have acquired and some of their own are underperforming.  The new combined organization can close underperforming stores and also get rid of overlap where you stores too close together so support themselves.  A friend of mine in the construction industry said when they had a “resizing” or as is the newer buzzword, a “right sizing” they were able to get rid of what he called some dead wood.  People who had been with the company for years, but were no longer pursuing their jobs with the enthusiasm and results they once had, but do to their longevity with the company they were allowed to hang on.  It reminds all of us that we can never get too complacent, that we need to challenge ourselves, learn new things to remain relevant and an asset to our companies and even in our personal lives.

Regarding the proposed merger of Albertsons and Kroger, one MNB reader wrote:

I'd love to see this happen, but I don't see how, they have too much geographic overlap, and would have to divest too many stores.  I can't even see them buying Shaw's to get into the Northeast, Market Basket is killing Shaw's here. They would have to spend a fortune remodeling stores that haven't been touched in years.  

MNB reader Travis Hubbard wrote:

I like a Alibaba/Kroger deal.

And finally, on another subject, from another reader:

Covid 19 is not political, it’s a virus.  It is People who are political, as are their views.  Across the spectrum: politicians, experts, so-called experts, You and Me  think they can truly help educate, sway the dullards into enlightenment, or use the “power” of social media.  It’s just not possible now.  What Can happen, is personal thought-full-ness and personal decision.

Our family observes Sweden, who collectively has done the opposite of U.S. actions, and yet their cases, hospitalizations, and deaths as a % of population are better than the U.S.  I’m no fan of Sweden politically, but that is beside the point.  The social contract in Sweden must be strong on common sense, common good, self awareness, and personal responsibility.  Your thoughtful actions are your choice, best arrived at by thinking more, listening less, and talking little.

Points taken.  My only problem is that I sort of talk for a living.  I just try to think and listen more.  Though sometimes it is a dead heat…