retail news in context, analysis with attitude

Published on: August 17, 2020

These are serious times, which require serious thought and serious commentary.  Except that today … well, today KC wants to submit for your approval, scenes from an old "Seinfeld" that explain everything you need to know about a subject that is the center of debate and controversy these days - the US Postal Service.

Enjoy.

Published on: August 17, 2020

CNBC reports that new data from ShipMatrix says that Amazon delivered 66 percent of its own packages in July, a five point in crease from the April-June period, during which it delivered 61 percent of its own packages.

ShipMatrix suggests that the trend points to the possibility that Amazon could deliver as much as 80 percent of its packages by next year, which will put pressure on both United Parcel Service (UPS) and the United States Postal Service (USPS) to find new business to replace Amazon-related volume.

The story points out that "UPS and FedEx also saw a boost in volume in July, according to ShipMatrix.  UPS saw volume grow 26% in July compared with average monthly growth of 23% in the April to June period.  FedEx volume rose 22% compared with 19% growth, on average, in the first three full months of the coronavirus pandemic."

The CNBC story also notes that "Amazon shipped 415 million packages in July compared with a monthly average of 389 million between April and June."

Published on: August 17, 2020

The Wall Street Journal reports on how Ahold Delhaize "is allocating more funds to its e-commerce operations as the coronavirus pandemic prompts more people to buy groceries online."  The company's US businesses currently have seen a 50 percent increase in their online sales - up to 3.6 percent from 2.3 percent of the total - but still lag behind the kind of volume being done by competitors such as Walmart and Amazon.

"Covid was kind of a wake-up call for us," says CFO Natalie Knight.  "My role as CFO is to make sure that we are rethinking capital allocation for omnichannel [capabilities]."

The Journal also writes about how the company's US stores have been transitioning the e-commerce brand identification away from Peapod - which it also owns - to its own local banners.

According to the story, "Ahold plans to have about 1,100 stores in the U.S. with click-and-collect functionality by the end of the year, up from 765 as of June 30. The company is also ramping up spending on hand-held shopping devices and software to help in-store customers check out without going to a cashier.

In recent quarters, the company has focused less on refurbishing stores and more on longer-term growth opportunities such as its omnichannel business."

Published on: August 17, 2020

The Seattle Times reports that "more than a dozen trade groups are launching a new coalition aimed at forcing e-commerce companies such as Amazon.com to take stronger measures to fight stolen or counterfeit goods sold on their platforms.

"The industry associations, which represent Walmart, Target, and Best Buy among other companies, announced on Friday they are founding the Buy Safe America Coalition to back legislation that would require digital marketplaces to verify information about third-party merchants."

According to the story, "Together they are backing the so-called INFORM Consumers Act, which would require digital marketplaces to collect information about some third-party sellers such as their government ID, tax ID and bank account details. The legislation also would direct companies to disclose to shoppers their high-volume sellers’ names, phone numbers, business addresses and emails.

"The bill defines high-volume sellers as firms that make 200 or more sales in a year amounting to $5,000 or more."

Published on: August 17, 2020

In Portland, Oregon, Green Zebra - the innovative c-store concept that combines a  7-Eleven-style footprint with a Whole Foods-style selection and vibe - is closing two out of its four stores.

In a letter to shoppers over the weekend, founder-CEO Lisa Sedlar wrote, "The Covid-19 pandemic has had a negative impact on so many in our community. Our small company is no exception. Our Portland State University and Lloyd District locations, which rely on student and business populations, have been the hardest hit and we can no longer afford to continue to operate these two stores. It is with a heavy heart that we are announcing the closure of our PSU and Lloyd Stores along with our Store Support office. As a result, we will be significantly downsizing our work workforce and laying off approximately 60 team members."

Sedlar adds, "We were on pace to close our Series B round of financing in February and then Covid hit and the world changed.   We thought we could ride out the financial losses of these two stores until the pandemic was over but it’s become clear we cannot.  

"Our positive vision of the future is that we are able to successfully restructure and downsize now in order to have a secure future later. We will continue to serve our neighbors in the Kenton and Division neighborhoods and through our online shopping program. We hope to be able to hire back some of those who are being laid off down the road."

Published on: August 17, 2020

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, there now have been 5,566,632 confirmed cases of the Covid-19 coronavirus, with 173,128 deaths and 2,922,724 reported recoveries.

Globally, there have been 21,843,793 confirmed coronavirus cases, with 773,284 fatalities and 14,570,899 reported recoveries.

•  From the Wall Street Journal:

"The U.S. reported just over 42,000 new cases for Sunday, a sharp drop from Friday’s total of more than 64,000, according to data compiled by Johns Hopkins University."  The US continues to represent about 25 percent of the global total.

"Deaths from the coronavirus are skewing younger for many minorities, a stark disparity that offers a clear picture of the pandemic’s outsize impact on vulnerable populations. Among people in the U.S. who died between their mid-40s and mid-70s since the pandemic began, the virus is responsible for about 9% of deaths. For Latino people who died in that age range, the virus has killed nearly 25%, according to a Wall Street Journal analysis of death-certificate data collected by federal authorities."

•  From the Washington Post:

"The number and rate of coronavirus cases in children have risen since the pandemic took hold in the spring, the Centers for Disease Control and Prevention said in recently updated guidance, underscoring the risk for young people and their families as the school year begins.

"According to the CDC, the infection rate in children 17 and under increased 'steadily' from March to July. While the virus is far more prevalent and severe among adults, the true incidence of infection in American children remains unknown because of a lack of widespread testing, the agency said."

•  The New York Times this morning carries an op-ed piece by Dr. Haider Warraich, a cardiologist, in which he writes:

"SARS-CoV-2, the virus that causes Covid-19, was initially thought to primarily impact the lungs — SARS stands for “severe acute respiratory syndrome.” Now we know there is barely a part of the body this infection spares. And emerging data show that some of the virus’s most potent damage is inflicted on the heart."

You can read the piece here.

•  Also from the Washington Post:

"In an effort to make testing faster and cheaper, the Food and Drug Administration granted emergency use authorization Saturday for a saliva-based coronavirus test, developed by researchers at Yale University, that aims to reduce turnaround times in commercial laboratories.

"The diagnostic test, called SalivaDirect, does not require a swab or a special collection device; a sample can be collected in any sterile container, the FDA said. Nor does it require a separate step to extract nucleic acids, a process that is time-consuming and relies on components that have often been in shortage.

"Efficient and reliable testing will be essential this fall, as a new academic year increases the urgency of questions about the virus’s spread among children. School closures and other public health measures may have contributed to low rates of coronavirus infections in children early in the pandemic, according to the CDC."

•  From the New York Times:

"The U.S.’s second-largest school district has a broad testing program for the virus.

"Amid alarm over the inadequacy of coronavirus testing across the nation, Los Angeles schools on Monday will begin a sweeping program to test hundreds of thousands of students and teachers, as the nation’s second-largest school district goes back to school — online.

"The program, which will be rolled out over the next few months by the Los Angeles Unified School District, will test nearly 700,000 students and 75,000 employees as the district awaits permission from public health authorities to resume in-person instruction, said Austin Beutner, the district’s superintendent.

It appears to be the most ambitious testing initiative among major public school districts, most of which are also starting school remotely but have yet to announce detailed testing plans.

"New York City, where the virus has been under control, is the only major school district in the country planning to welcome students back into classrooms part time this fall. The city is asking all staff members to be tested before school starts on Sept. 10 and has said it will provide expedited results."

•  From USA Today:

"After five months of operating with reduced hours amid the coronavirus pandemic, Walmart will increase hours by 90 minutes at 85% of stores across the nation.

"Walmart, the nation’s largest retailer, reduced hours March 15 ,and then cut them again that same week to 8:30 p.m."

•  Patch reports that "the Connecticut Freedom Alliance has begun legal action against the state Department of Education's requirement that students must wear masks when they return to school this fall … The Ridgefield-based Connecticut Freedom Alliance is requesting the court to order the CSDE to rescind all requirements regarding the use of face coverings."

Not only does the organization - which "lists two parents in East Lyme and Manchester as plaintiffs" - want to stop the state from mandating mask be worn by students in school, but it also wants to stop individual school districts from issuing such requirements.

According to the story, "The battle over regulations requiring the wearing of masks during the coronavirus pandemic has see-sawed with the waxing and waning of transmission rates, region by region. Fought mostly in social media and grocery stores during the spring and summer, the battleground is now shifting to courts and schools. There have been legal dust-ups already in Utah, California and Illinois, and more may be on the horizon … Guidance from the Centers for Disease Control and Prevention recommends schools allow students to stay at home whenever possible, encourage them to wash their hands frequently and wear cloth face coverings to slow the spread of COVID-19."

I'm thinking of starting my own organization - the Alliance For Freedom from Idiots.  We'd have a lot of causes, but in this case, I'd want to point out that these parents actually are teaching their children that their own desires are more important than the needs of the society at large, that selfishness is more important than selflessness, and that science is to be ignored whenever it is deemed inconvenient.  Masks help protect other people … and not only that, but they communicate the broader message that we actually all are in this together, as opposed to just being in it for ourselves.

One other thing:  Masks help protect teachers.  Without teachers, there is no education.

Connecticut is ranked fourth in the nation in terms of residents with advanced degrees, behind top-ranked District of Columbia, Massachusetts, and Maryland.  (I'm an underachiever, BTW.  I don't have an advanced degree of any kind.)  But these people in the Connecticut Freedom Alliance suggest that having an advanced degree doesn't necessarily make you intelligent.

•  The Wall Street Journal reports that New Zealand has decided to delay a national election for about a month, until October 17, "after a coronavirus outbreak in its largest city of Auckland put a third of voters into lockdown."

The story notes that "New Zealand went 102 days without any known local transmission of the coronavirus, but that streak ended early last week with the discovery of new cases in Auckland. The source remains unknown, but public health experts say a breach of border controls is the most likely scenario."

•  The New York Times writes:

"College students are used to seeing fees on their semester bills: activity fees, lab fees, athletic fees, technology fees, orientation fees and so on.

"This year, some students are noticing a new item: coronavirus fees.

"Faced with extra expenses for screening and testing students for the virus, and for reconfiguring campus facilities for safety, some colleges and universities are asking students to pay a share of the cost.

"The level of testing and protective steps, and the associated cost, vary widely by campus. Some colleges are testing all students at the start of the semester, while others will also test repeatedly throughout the academic term. Testing is mandatory at some campuses, voluntary at others … Other colleges may still be calculating whether and how to charge fees, since plans for testing and safety protocols are changing daily as the start of the academic year approaches, health experts say.  Students are already heading back to some campuses, but others won’t show up until after Labor Day."

 I have no idea about the answer to this question … but I wonder how many of the schools charging new fees also gave rebates last spring when all schooling went virtual?

•  The next problem:  Twindemic.

From the New York Times this morning:

"As public health officials look to fall and winter, the specter of a new surge of Covid-19 gives them chills. But there is a scenario they dread even more: a severe flu season, resulting in a 'twindemic.'

"Even a mild flu season could stagger hospitals already coping with Covid-19 cases. And though officials don’t know yet what degree of severity to anticipate this year, they are worried large numbers of people could forgo flu shots, increasing the risk of widespread outbreaks.

"The concern about a twindemic is so great that officials around the world are pushing the flu shot even before it becomes available in clinics and doctors’ offices. Dr. Robert Redfield, director of the U.S. Centers for Disease Control and Prevention has been talking it up, urging corporate leaders to figure out ways to inoculate employees. The C.D.C. usually purchases 500,000 doses for uninsured adults but this year ordered an additional 9.3 million doses."

•  Fox News reports that the pandemic is having an impact on our ability to order a pepperoni pizza.

According to the story, "Pizza shops across the United States say they’re paying higher prices for the popular topping and have noticed that the supply has become tighter … Restaurants from New York to South Dakota have reportedly seen a significant increase in price, with the cost nearly doubling in some areas."

There are said to be two probable reasons for the shortage and price increases.  One is that pepperoni actually is a complicated product to make, and a reduced number of workers in processing plants has reduced the amount of pepperoni being made.  The other is the higher demand for pizza in general, and pepperoni pizza in particular, during a pandemic in which takeout has boomed.

Published on: August 17, 2020

The Wall Street Journal has a story about how the pandemic affected Home Depot - though not in the way management expected.

"This year, as the coronavirus pandemic started to spread through the U.S., Home Depot canceled its spring sale events," the Journal writes.  "Staff cleared aisles of discounted goods to make room for social distancing, abandoning the linchpin of the retailer’s peak season."

They were, to be sure, abnormal times.  But, "The abnormal times drove traffic anyway. Americans, stuck at home without much to do, started painting, building, fixing and decorating. Government stimulus checks buoyed long-delayed home improvements, as did less money spent on restaurants and summer travel.

"Daily foot traffic to Home Depot stores since April has been running at least 35% above last year’s, according to Unacast Inc., which tracks location data from 25 million cellphones on any given day. In 26 states, traffic doubled following a surge in late May.

"Americans, stuck at home without much to do, have used the pandemic to remodel, fix and redecorate. Home-improvement stores were deemed essential services during lockdowns in many locations and allowed to remain open."

KC's View

William Shakespeare may have written in "The Tempest" that "what's past is prologue," but at the moment Home Depot - and a lot of retailers in a lot of segments - have to puzzle out the degree to which they can depend on the trends of the past five months to forecast what they need to have in place for the next five.

The Journal writes that "uncertainty abounds for Home Depot and other retailers as summer winds down and the virus continues to spread in parts of America. Costs are mounting to try to keep front-line workers safe, and delivery giants like United Parcel Service Inc. are raising their fees for e-commerce packages. Unemployment benefits have ended for millions of Americans; a new round of benefits ordered by President Trump extends the aid, but at reduced amounts. The economic outlook is murky at best."

I'm sure there are a lot of retailers, especially in the food sector, also going through the process of trying to figure out how high demand will be going into the end-of-year holiday season.  So much of this is hard to project, since we have no idea what the nation's health - physical and emotional - will look like in a few months.

Published on: August 17, 2020

Bloomberg reports that former McDonald's CEO Steve Easterbrook is fighting back against the company's attempt to take back tens of millions of dollars in severance payments.

Easterbrook was fired last year because of a consensual relationship with an employee that violated company policy, but walked away with some $40 million in stock options and other compensation.  Last week, McDonald's charged that he, in fact, had similar undisclosed relationships with other employees, and even gave one of them shares in the company - a violation of company policies.

Bloomberg writes that "Easterbrook says McDonald’s had the information about his relationships with employees when it negotiated his separation agreement.

"'McDonald’s -- a sophisticated entity represented by numerous internal and external experts when it entered into the separation agreement -- is aware it cannot credibly allege a breach of contract claim,' Easterbrook’s lawyers said Friday in a filing Delaware Chancery Court, seeking to have the lawsuit thrown out. 'Instead, it improperly seeks to manufacture claims for a breach of fiduciary duty or fraud'."

Published on: August 17, 2020

•  The Wall Street Journal reports that the US Postal Service (USPS) "plans to add new fees onto commercial packages starting in October as it looks to offset the increased expenses from coronavirus and surge in volume expected from online shoppers during the holidays."

It is said to be the first time the USPS has imposed these fees, which have been used in the past by FedEx and UPS.

The Journal writes that "the proposed fees, which still need approval from the Postal Regulatory Commission, come as carriers have been overwhelmed with shipping volume during the coronavirus pandemic. Now they are trying to offset costs and manage capacity with new fees and higher rates."

•  The Washington Post reports that "Canada’s competition regulator is looking into Amazon.com Inc. over concerns the e-shopping giant’s practices hurt local companies and consumers.  The Competition Bureau of Canada said Friday in an emailed statement it is examining allegations of 'potential abuse of dominance'."

Specifically said to be at issue are "Amazon practices that may discourage third-party sellers from offering products at a lower price or force them to use its fulfillment services to sell their products in Canada."

•  Reuters reports that Tesco is dealing with Amazon's decision to break into the UK online grocery business by offering free grocery delivery to  Clubcard Plus subscribers.

Published on: August 17, 2020

•  From the New York Times:

"Even as coronavirus infections continued to spread, in-person school reopening plans were scrapped and unemployment stayed near record highs, Americans kept shopping in July with retail sales rising 1.2 percent from June, reflecting a rare bright spot in the battered economy.

"The jump in sales reported on Friday by the Commerce Department, though far smaller than the increases in the previous two months, showed that the bounce back in spending to pre-pandemic levels was not a fluke. It was instead a sign that consumerism, buoyed by government support, remained resilient even as many other facets of American life were increasingly bleak."

•  A sign of the times … in Connecticut, the Patch reports that the owners of the Connecticut Post Mall, the largest in the state, want to build 300 luxury rental units on property that was occupied by an old Sears auto center.

Local officials are not thrilled, and reportedly would prefer offices to housing.

Offices?  Really?  Have these folks not seen the newspapers, and the news about how the work-at-home trend is putting commercial real estate between a rock and  a hard place?

Published on: August 17, 2020

I loved this multi-subject email from an MNB reader, who started out by commenting on my use of a clip from Titanic to illustrate our after-we-hit-the-iceberg approach to dealing with the pandemic:

Thanks for sharing the clip from Titanic.  I’ve seen the movie a few times and always amazed at the great special effects.  The scene you shared with us reminds me of life in general.  It shows people who are resigned to what is going to happen and want to spend their last few precious moments with loved ones.  It shows the people who don’t care about their fellow human beings who are taking seats on the life boats and life vests that in a just world would go to women and children first.  And, it shows many of us in the “rat race” just trying to survive and helping our fellow human beings.  A very touching scene that brought a tear to my eye watching the orchestra, the captain, and I think the man who designed “the unsinkable” ship.

BTW – Totally agree with your take about Ted Williams record.  I always joke with some of my baseball loving friends that when someone would hit a home run on opening day it meant they were on pace for 162 home runs.  It’s a ridiculous comparison.

Last BTW – I enjoyed Tom Furphy’s interaction with you today on the Innovation Conversation.  It was very informative and humorous at the same time.

I thinks it’s time for another virtual happy hour.  I want to know how my friends are doing who you connected me to over these past few months. 

Done.  Mark your calendar for Friday, August 28 at 6 pm EDT.

I'll promote it more starting next week.

On another subject, from another reader:

Agree with your comment on Amazon bearing some product responsibility.   At a higher level the retail, restaurant, hospitality, entertainment, and travel businesses live and die on consumer satisfaction.   A weakness of the tech and finance industries is that they in general dislike real people, average people, consumers, etc.   Amazon’s cultural challenge is that they are a retailer, even though they want to be a tech company (if for no other reason, valuations).

One of my lessons from CV-19 is everyone needs to buck up and take= responsibility – for their products, their customers, and their staff.   That means not having fiction about workers being independent contractors instead of employees, or that they are just a broker (“marketplace”), without any responsibility for product liability (physical or digital), or that “allowing” people to work for tips or on gigs, is somehow a fair way to treat their staff.  It means looking at your business model and understanding with a cold eye does it work?  I come out of retail and now work with extended restaurant industry which has this essential fiction that it’s all about the food and ambiance, because we’ll churn through staff and use beverages to subsidize food in a 2:1 ratio – restaurant is like retail in early 1990s, beginning of existential change time, beginning with the elimination of a lot of nonsense.

Maybe despite the above comment, I am a hard core, red-state, live free or die person.  I can separate what you are entitled to do as an individual from the obligations of a business to the triad of customers, staff, and investors.  (Everyone has the right to be an ***hole and be treated like one).

Your comment on Amazon liability clarified another piece of thinking – can’t let operations be prioritized around risk avoidance/compliance/force protection.    Mission attainment must assume risk – manage appropriately, but  understand it is not risk free.   Officers in the field have to achieve their mission at the risk of their soldier’s lives.  Bringing everyone home safe can’t be the primary objective or you lose.  Part of the problem with policing is that force protection (officer safety) seems to have a larger share of the mission focus than citizen service – thus the militarization of the police.  Amazon doesn’t want to assume any product liability, just the margin.  Facebook doesn’t want to be a publisher.

Walking into a Starbucks is like visiting the third basement level of the CDC.  If you are in a customer facing business,  safety of your staff can’t be your primary objective.  The whole school thing drives me crazy – teachers have no more inherent worker right to not face their customers than Walmart workers have to not face their customers – the mission of schools is to teach students, not protect teachers.  Staff is a valuable asset and needs to be treated as one – that said, asset protection is not the primary objection – not that different than retail theft – do you inconvenience most people by locking down merchandise, fixtures, stores, etc or accept some level or risk.  Management’s job is to manage risk while accomplishing the mission.   I am not sure we are on the same page with you on this, but I think you should rethink some of your CV-19 comments in the context of your Amazon comment.

I cannot emphasize enough how much I disagree with you on two of your points.

One.  Amazon is a tech company.  It is not just a retailer.  It started as a retailer and uses retail as part of its plan to become intrinsic to every part of our lives, but its ambitions - for better or worse, depending on your point of view - are far more grandiose than just selling stuff.

Two.  I would argue that Walmart cannot take care of its customers unless it takes care of the health and safety of its employees, and that school districts are teaching all the wrong lessons if they do not prioritize the safety of their teachers along with the safety and education of their students.  If an organization does not prioritize worker safety, then they are effectively communicating that the people on the front lines are not important, which is a helluva way to run a business or a school district.

Staff is the most important asset.  They are the ones who actually make the business possible.

Go down this road, and you end up being a member of the ludicrously named Connecticut Freedom Alliance (which I wrote about above).