retail news in context, analysis with attitude

The other day we had a story about how UPS is going to start charging large scale shippers extra fees during the holidays, which made me wonder why they're charging good customers more than smaller customers.

One MNB reader responded:

This is like lumber. A piece of white pine 2x4 is cheap but an 8x8 piece of western red cedar is crazy spendy. The more limited the resource the more it costs because of scarcity. As a carrier approaches maximum capacity every incremental unit shipped  further stresses the end to end capacity of the carriers to meet their delivery promises. The marginal cost of each unit begins to go up after a point rather than down,  adding a fee once that point occurs helps the carrier break even or improve margins while encouraging the shippers to think of alternative strategies to spread the demand out across carriers or over a longer period of time. Seasonal shipping companies don't really exist, yet.

But another reader wrote:

Ha, when I was running a large DC if you come in with something like that you better have a good story..... I would already be having meetings about alternate strategies and suppliers.  Feel this is a developing story. 

On another subject, from another reader:

Your reader that commented on Sweden’s approach leading to better results is misinformed.  While they do have fewer cases as a percentage of population, they have more deaths.  Sweden hasn’t locked down and hasn’t required masks – and all the recent reporting I’ve seen on their situation indicates that they are second guessing their approach.  What’s more, to contrast Sweden’s approach with the US approach ignores the fact there hasn’t been a unified approach here – each state and even many counties within each state are handling the pandemic differently, and even the stricter states have plenty of people ignoring the advice and regulations being implemented.  Much of the US has had functionally the same response as Sweden.

Sweden’s higher deaths per million population (571 vs. our 507) despite few cases per million (8258 vs. 16,030) is a strong indication that their approach hasn’t worked – they aren’t identifying cases early enough.

Michael Sansolo and I both had columns this week about retailers helping their customers to shop and cook better, leading MNB reader Bob Wheatley to write:

Amen, amen and amen!!

One of my favorite messages you periodically revisit is “don’t just be a source, try to be a resource.”

Now is the time to do this. I think it constitutes the path to authentic customer relationship vs. being another seller of 60,000 skus.

MNB reader Rita held wrote:

Wow! Home Ec 365   As someone who has a home economics degree (aka BS in foods and nutrition), I’m delighted to see that even Whole Foods recognizes the value of home ec.  I’m in the SF Bay Area, and here we have a home ec group that is alive and well. It was started in 1923! :o)

Really appreciate The MorningNewsBeat. Thank you.

Regarding the move away from offices by various companies, one MNB reader wrote:

I saw this story the other day and it just kind of made me sad, not sure what about it in particular, but maybe it’s the feeling that there is something that gets lost when we lose day-to-day connections to others, especially for those of us who really respond to social interaction.  I try to do the Zoom happy hours or calls with friends to stay in touch, but it’s just not the same and doesn’t provide me anywhere near the level of emotional “high” I get from interacting with others in person (and that I would get in an office setting).  I know and get that I am responsible for my own happiness (and health, of course), but the more that moves like this occur, the less I feel like some companies really want to do what’s best for all of their employees.

I get that folks can be inventive and productive on their own (and that some folks really blossom during work from home), but I wonder if there’s a hidden cost for some folks that we may not see for a while – lost inspiration from not seeing others, lost opportunities from random moments that take ideas to the next level, or lost connections, not to mention the mental health issues from too much staring at screens all day.

It may be the flavor of the month/season/year? to believe that the end of the office is nigh, but I think it’s going to be like many things that folks have said are going away and we just end up with more choices and options because once folks have tasted something different, they want all options, not just one or the other (kind of like your commentary about folks moving to the suburbs, again, for the space but wanting urban amenities on top of it, delivery, rather than having to go the store they are next to).

There are those of us who do miss an office environment and when it is safe to do so will be happy to return – assuming it still exists.

Responding to story about customers being likely to starting stocking up and panic-buying again - and the pressure this will put on retailers, MNB reader Doug Harris wrote:

Well, many months' into this thing and both Walmart and Food Lion -- my only practical food-shopping choices -- are still struggling with out-of-stocks. If some of their shelves are bare now, heaven help us shoppers when supplies truly run short!

MNB reader Joe Axford wrote:

What I didn't know KC, until talking with a store manager, is that the reason the large soda and beer manufacturers were cutting back their brands was due to a shortage in cans, because nobody was buying either one in restaurants anymore.  Restaurants had to pay to have expired cola syrup disposed of, because in that state it's a hazardous material!  Frozen food aisles look terrible in most stores, due in part to not enough vegetable pickers.  And on and on.  Everything has been affected, to one degree or another.  Depressing!

From another reader:

Kevin, this is much easier said than done. As a category manager for a decent sized grocer (remain unnamed) I spend the most of my time now chasing inventory.  Every day a different supplier has a new issue.  Perhaps they closed a production facility due to a COVID outbreak and are trying to catch back up.  Many suppliers are reporting that their workforces are afraid and reluctant to return to the job, who can blame them.  In some cases the supplier is ready to go but their ingredient or packaging suppliers are having their own set of problems. I have heard of double and triple lead times for components that used to arrive in a week or two. Many suppliers have made changes to their production floor (spacing employees farther apart) that has resulted in slower line speeds and thus lower capacity.

There are many segments of the grocery business that are performing at all time highs and facilities that are running at above capacity and the unprecedented demand is much higher than the industry capacity. Many commodities are just coming out of the fields and are being processed to fill gaping holes at the shelf.  Did farmers grow enough tomatoes to last a long term shut down?  What about all the frozen fruit?  The meat industry had their share of issues recently.  Products that depend on a steady supply of fresh meat have been impacted.  As you know pizza sales both in grocery and in food service are strong. Pepperoni is made from meat and then takes a period of time to cure.

High early COVID sales wiped out stocks of pepperoni and now there is a waiting period for replacement product to finish curing. Pretty sure all grocers are doing all they can to obtain back up inventory when suppliers are able to ship. Sadly what we see is a never ending stream of products on allocation and cancelled/shorted deliveries. In this case I think you are giving Amazon too much credit.  They are certainly able to build up on general merchandise but household cleaning and food are a problem everywhere. 

Not the first time I've been accused of giving Amazon too much credit.

From MNB reader Andy Schoenhoft:

The problem does not lie solely with the retailers. There are still glass bottle and aluminum can shortages, and manufacturing is still not back up to speed with production.

Clorox is producing at over 2x their normal production and can’t keep up.

If another lockdown occurs sooner rather than later, I am afraid we’ll be back in the same condition as before.

Retailers are reaching out to suppliers with increased projections, but if the suppliers can’t produce (for any or all the above mentioned reasons) it doesn’t matter.

Another MNB reader concurred:

My issue with this is I still can't buy some basics because they aren't in stock. I find myself buying some things when I find them because at some point I couldn't find the item. I could start shopping more online but really dislike doing that for groceries especially since some items are significantly higher priced (generally due to being in glass bottles) online than in store. I am trying to be patient but find my patience wearing thin as items I once considered staples and readily available are difficult to find. It is a quandary and as I am one of the lucky ones who can work from home I am reluctant to complain. I could have it worse and I try to remember that when I can't find my preferred brand of tea bags. So my panic buying is more along the lines of purchasing multiples of my staples when I find them in stock.

I did a FaceTime commentary yesterday about how there's speculation about a major league baseball player perhaps hitting .400 this season, which would be the first time since Ted Williams did it in 1941.  This irritates me, and I pointed out that Teddy Ballgame did it over 154 games.  It isn't the same thing … and I drew a business lesson from it, suggesting that just because retailers had great quarters this year doesn't mean that they always will - they also have to be exceptional in more normal times.

One MNB reader wrote:

Great FaceTime today, KC!  As a huge fan of Ted, I'm insulted at the thought of someone hitting .400 for 60 games.  I grew up 30 miles north of Boston, and he's one of my childhood heroes.  The business lesson is spot on, retailers can't rest on their laurels.  Every day should be day one.

Another MNB reader wrote:

Kevin, totally agree with your baseball rant.

While there have been asterisks all over the baseball record books, based on more games played in modern baseball vs. pre-modern times, and designated hitter rules in AL that make no sense when comparing records to NL, the 60 game season should not include any records. The pandemic changes everything, most evident in looking at the fact the Cubs are currently 12-3, while the Cardinals, same division, are 2-3 due to Covid-19. Records will be meaningless.

Agreed.

I did a piece yesterday taking note of an Axios story about how "bidding wars, frantic plays for a big suburban house with a pool, buying a property sight unseen - they're all part of Americans' calculus that our lives and lifestyles have been permanently changed by coronavirus and that we'll need more space (indoors and out) for the long term … There's a gold rush in real estate across the U.S., driven by record-low mortgage rates and the dawning realization that for many of us, our homes are going to be the only place we work and play for the foreseeable future."

This is a shift away from the urbanization of America, and may be yet another long-term impact of the pandemic.

I also wrote, in a personal note:

Some of this breaks my heart.  I have lived in the same Connecticut home for 36 years, and have been looking forward to moving to a city and enjoying the pleasures of an urban environment.  I'm looking out my home office window at the moment at the backyard, where the dogs are wandering around happily, and feeling like maybe I got it at least a little wrong.  Or that maybe my timing is bad.

One MNB reader wrote:

This is especially true in Southern California.  For years, many of my co-workers have had 2-3 hour each way commutes in order to have a nice sized house at an affordable price.  This situation is now very much in their favor as companies are looking at allowing work from home beyond the pandemic.  They will now have it all – a great home, great neighborhood, affordable cost and NO commute – not to mention getting 4-6 hours back in their day to spend with their families.  I believe there are going to be several areas like Corona, Temecula and more that are going to see a huge surge in new purchases as this opens up such a great opportunity.  I am sure this will be true in other parts of the country as well and will change how as retailers we go to business more and more!

And from another reader:

We are in our 60s- have lived in northern NJ for 35+ years on one acre where we raised 3 sons.  There are many trees on our property, and a brook that borders the back yard.  The space inside got a little small when all 5 of us were here- but now it is perfect for just the two of us.  Yes, we thought one day we would move to a smaller condo/townhouse in our retirement.  But now- I like my house.  I love my house.  I like the fact that I can work in my office, or at the dining room table.  Or outside on my deck; or even off the family room under the deck.  I can even just walk around outside my house to get steps in.  I don’t think I ever appreciated my home more until the past few months.

The real estate market is booming here.  Maybe we should sell our home now while the market is hot?  We are asking ourselves this very question.  But do we really want to live in a smaller place with no yard?  Tough question for us.  Until we can agree on an answer- we will enjoy our home inside and out.   It sounds like you are enjoying your home too.

I am.  A little grudgingly, if I'm honest about it.  But I'm lucky, and try not to forget it.