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    Published on: September 18, 2020

    In this conclusion of a two-part conversation, Errol Schweizer - former retailer, food activist, podcaster, and self-described "asset in an innovation culture" but "pain in the ass in a maintenance culture," offers KC some prescriptions for how the food industry can become more ethical, egalitarian and socially conscious.

    Errol Schweizer's new podcast, "The Checkout," has as its goal bringing "forward diverse voices and stories from the frontlines of our food system," focusing on farm, retail and wholesale sector analyses as well as on public policy, labor organizing and community struggles.   It can be heard here, or on Apple Podcasts, Spotify, and Stitcher.  

    Published on: September 18, 2020

    Bloomberg reports that Walmart "is rolling out sweeping changes to staffing in its U.S. stores just as the holiday crunch begins, bringing pay raises for some -- but not all -- members of a massive workforce that’s already been upended by the coronavirus pandemic."

    Starting next month, the story says, "all of Walmart’s U.S. supercenter locations will switch to a new team-based model that the retailer has been testing over the past year and a half in many of its smaller stores. About 165,000 hourly staffers will see a raise, Walmart said in a memo outlining the move, but the program will also trim the ranks of leaders per store, and could prompt some to leave … The new system replaces most longstanding leadership positions like co-manager, assistant manager and department manager, replacing them with a new 'future-focused' hierarchy of store leads, coaches and team leads. A typical supercenter could have one store lead, seven coaches and two dozen team leads. The team leads’ hourly wage will start at $18 and can rise to $30 in some cases, the memo said."

    The story goes on:  "The changes are part of a broader rethinking of how to most efficiently deploy Walmart’s 1.5 million-person U.S. workforce in a more digital age. The pandemic, which has spurred demand for groceries and household essentials, shocked supply chains and boosted e-commerce, has tested workers’ patience, with some shoppers railing about missing items and others refusing to adhere to mask-wearing mandates. Once-mundane tasks, like store cleaning, have become critical."

    KC's View:

    While it is necessary to adjust a workforce based on changed circumstances, it will be curious to see the degree to which these changes help a workforce that no doubt has been battered  by the pandemic.  One of the things I hear from retailers across the board is that employees are generally feeling beat-up and exhausted … it has been a long six months, and there are few signs that things are going to get a lot better anytime soon.

    The other thing I wonder about is whether fewer leaders means that more front line employees have great responsibility and autonomy to make decisions.

    Published on: September 18, 2020

    The Los Angeles Daily News reports that thew first Amazon Fresh supermarket, opened several weeks ago just to neighborhood invitees in Woodland Hills, California, how has been opened to the general public.

    Amazon says that the store offers "consistently low prices for all, and free, same day delivery and pickup for Prime members," as well as Amazon Dash Cart technology that "enables customers to skip the checkout line," and Alexa-based features "to help customers manage their shopping lists and better navigate our aisles," providing directions to shoppers as well as meal recommendations.

    The Amazon Fresh store does not, however, feature the Amazon Go checkout-free technology used in its c-store-style units in cities that include Seattle, San Francisco, Chicago and New York.

    Here's how the local CBS affiliate covered the opening:

    KC's Video:

    Two points…

    Interesting to see that Whole Foods' 365 private label is being sold in the store, which may suggest that there will be a some blurring of the two banners going forward.  Amazon has been clear that this is not a Whole Foods lookalike - no "whole paycheck" stuff here! - but it seems to be willing to use that advantage where it works.

    Also … one of the things that distinguished the original Amazon Go store in Seattle was its positioning food prep at the front of the store - you could see people making the sandwiches, etc… from the street, because there were enormous windows offering a view of their work.  That may tell us something about they'll approach the segment in a store that does, after all, have the word "Fresh" in its name.

    Published on: September 18, 2020

    The Washington Post has a story about the rise of ghost kitchens (or, depending on your preference, dark kitchens, virtual restaurants, or cloud kitchens), defining them as " kitchens without dining rooms, culinary concepts designed for delivery, most never becoming a bricks-and-mortar destination for diners."

    "The path forward for restaurateurs trying to escape the collapse of their business models is illuminated by a digital glow," the Post writes.  "The stratospheric rise in online ordering and food delivery during the pandemic has prompted restaurateurs to chase those delivery dollars in a number of novel ways.  For many, it’s a matter of survival."

    The story goes on:  "Ghost or dark kitchens can be urban warehouses containing multiple small kitchens leased by a restaurant or restaurant’s subcontractor for delivery only, and orders are often delivered by 'third-party aggregators' such as DoorDash, Uber Eats or Grubhub. Sometimes restaurant companies launch a virtual brand as a trial balloon, a time-limited, digital-only test run of a concept under consideration for a future bricks-and-mortar restaurant. A virtual restaurant concept also can be produced in an existing bricks-and-mortar restaurant as an ancillary revenue stream — so, a restaurant within a restaurant."

    The reason it is a critical and potentially life-saving development:  "Technomic, a consulting firm for the restaurant industry, estimates that 20 to 25 percent of independently owned restaurants will never reopen."

    KC's View:

    There seems to be little question that this concept - which runs in parallel with the notion of dark stores and micro-fulfillment centers - marks a trend that virtually every retailer and restaurateur has to consider.  Especially in the food industry, which may be forever changed by the impact of the pandemic, these concepts allow businesses to survive and maybe be even closer to the customer than ever before.  And that's what this is all about - figuring out ways to connect to the shopper more intimately.

    Published on: September 18, 2020

    From this morning's Wall Street Journal:

    "Backers of a proposed new group to take over Chinese-owned video-sharing app TikTok are working to create an ownership structure that would give U.S. interests a majority stake, in an effort to ease the Trump administration’s security concerns.

    "Under the latest plan for TikTok, Oracle Corp. and Walmart Inc. could together own a significant stake, according to people familiar with the situation. That move, if combined with existing American investors, could put majority ownership in U.S. hands, the people said.

    "Walmart Chief Executive Doug McMillon is expected to get a board seat if the deal goes through, said some of the people familiar with the matter. As part of the current plan, TikTok would file for a U.S. initial public offering in about a year, said one of these people.

    "Walmart, which previously looked to join with Microsoft Corp. on a TikTok deal, has been looking to ramp up its online presence to generate new revenue streams."

    TikTok's Chinese owners ByteDance Ltd. has been seeking a structure that would alleviate US concerns about data mining and get President Trump to sign off on a deal.

    KC's View:

    There was no way that Walmart was going to let this deal get away from it if there were any way it could stay involved.  It may end up being one of the most significant investments the company has made, if using TikTok in the US to create a robust and profitable third-party marketplace has the desired results.

    Published on: September 18, 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 6,876,126 confirmed cases of the Covid-19 coronavirus, with 202,237 deaths and 4,155,933 reported recoveries.

    Globally, there have been 30,375,397 coronavirus cases, with 950,988 fatalities and 22,060,016 reported recoveries.

    •  The Pew Research Center is out with a new report saying that "as efforts to develop and test a COVID-19 vaccine spur debate around the timing and release of a federally approved vaccine, the share of Americans who say they would get vaccinated for the coronavirus has declined sharply since earlier this year.

    "About half of U.S. adults (51%) now say they would definitely or probably get a vaccine to prevent COVID-19 if it were available today; nearly as many (49%) say they definitely or probably would not get vaccinated at this time. Intent to get a COVID-19 vaccine has fallen from 72% in May, a 21 percentage point drop.

    "The share who would definitely get a coronavirus vaccine now stands at just 21% – half the share that said this four months ago."

    The study finds that "three-quarters of Americans (77%) think it’s very or somewhat likely a COVID-19 vaccine will be approved in the United States before its safety and effectiveness are fully understood. And when asked about the pace of the vaccine approval process, 78% say their greater concern is that it will move too fast, without fully establishing safety and effectiveness, compared with just 20% who are more concerned approval will move too slowly, creating unnecessary delays."

    •  From the Washington Post:

    "Several states that moved quickly to lift lockdown restrictions this summer — only to slam the brakes as coronavirus infections began surging — are once again moving ahead with reopening.

    "In Texas, Gov. Greg Abbott (R) announced Thursday that restaurants, retail stores and gyms in most parts of the state could resume operating at 75 percent occupancy, the limit that was in place in June before Abbott reversed course and imposed new restrictions. Bars, however, will remain closed. The state is also resuming elective surgeries in most hospital districts, with exceptions for parts of the Rio Grande Valley that are still seeing high numbers of hospitalizations.

    "In Nevada, a state coronavirus task force authorized reopening bars in Clark County, where Las Vegas is located, for the first time since July. Shutdowns were also lifted for Elko County, which had been the only other county where bars remained closed because of a failure to meet key testing metrics.

    "Florida also plowed ahead with reopening this week, allowing bars statewide to welcome back patrons at 50 percent capacity. Gov. Ron DeSantis (R) initially closed bars when outbreaks began appearing in March, but allowed them to reopen in early June, a move that was followed by a steep uptick in cases. Later that month, state liquor regulators intervened and shut down bars for a second time."

    •  The Washington Post writes that in the UK, "Health Secretary Matt Hancock said Friday that the coronavirus was once again 'accelerating' in Britain and did not rule out the possibility of another nationwide lockdown if cases continue to climb.

    From the Post story:  "Britain has imposed restrictions in high-risk areas in recent weeks, taking a targeted approach to slowing the spread of the virus where new outbreaks appear. More than 30 areas are under local restrictions, according to British media reports, with an estimated 10 million people already under lockdown and unable to see family or friends.

    "Nationally, gatherings of more than six people have been banned as of this week in an effort to contain the virus’s resurgence."

    •  New York City parents counting on sending their kids back to school next Monday may be disappointed.

    The Gothamist writes that "the school year slated to begin Monday will instead commence remotely, with only blended learning 3K, Pre-K and special education students going to school in-person, Mayor Bill de Blasio announced Thursday in a sudden shift that upended the plans and schedules of educators and families across the school system.

    "While all students will commence remote learning Monday, blended learning students attending K-5 and K-8 schools will not set foot in school buildings until September 29th. Blended learning students attending middle and high schools, as well as students in secondary schools (schools spanning grades 6-12), and transfer schools/adult education schools, will return to buildings on October 1st.

    "The switch comes after weeks of mounting pressure from unions and educators who say many of the city’s 1,600 schools are in buildings that are unsafe, with antiquated ventilation systems, windowless classrooms, and disorganized distribution of personal protective equipment. They also pointed to the need for many more teachers to implement the blended learning model."

    •  The Washington Post reports on one impact of the pandemic in the UK - the price of a puppy has more than doubled to an average of almost $2,500 (US).

    The reason?  People on lockdown decided that what they really needed was a pet to keep them company.

    One just hopes that puppy farms, which often have little regard to the welfare of the dog, being more concerned about the price tag, are not the beneficiaries of this trend.  Even more importantly, I hope that when the lockdowns end, people don't cast the pets aside as no longer relevant.

    Published on: September 18, 2020

    From CNBC:

    "First-time claims for unemployment insurance beat Wall Street estimates last week as the U.S. economy enters a critical new stage.

    "Filings totaled 860,000 for the week ended Sept. 12, the Labor Department reported Thursday. Economists surveyed by Dow Jones had expected 875,000, against the previous week’s upwardly revised 893,000."

    The story notes that "the number represents a modest downshift in claims, which had hit a peak of 6.9 million in late March as the economy shut down to try to slow the coronavirus pandemic. Since then, the labor market has recovered though millions remain displaced from job closures associated with the virus measures."

    KC's View:

    I'll take good news where I can get it.  Not a lot of it out there these days.

    Published on: September 18, 2020

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The New York Times reports that "Blue Bell Creameries must pay $17.25 million in criminal penalties for shipments of contaminated products linked to a 2015 listeria outbreak, a federal court in Texas declared on Thursday.

    "The fines constitute the largest-ever criminal penalty following a conviction in a food safety case and are consistent with the terms of a plea agreement filed previously in the case, according to the Department of Justice."

    Blue Bell, the story notes, "pleaded guilty in May to two misdemeanor counts of distributing adulterated ice cream products. Prosecutors in the case charged that the company dispensed products that were manufactured under unsanitary conditions and contaminated with listeria monocytogenes, a bacteria that causes an illness that can be life-threatening."

    What makes me happiest in this case is that Blue Bell had to plead guilty.   None of that we-wrote-a-check-but-didn't-admit-guilt crap.

    Published on: September 18, 2020

    •  The Associated Press reports that SpartanNash Company has hired Shaquanda Gordon, most recently vice president, North American Human Resources for Gordon Food Service, as its Vice President of Human Resources, Talent and Diversity, a new position at the company.

    Published on: September 18, 2020

    Roger Angell, the longtime baseball columnist for The New Yorker, turns 100 years old tomorrow, and has justifiably been getting a lot of attention - his mastery of both language and the game has proven an enormous gift to longtime readers (I've been reading The New Yorker for more than four decades, and think it is a magazine that actually has adapted to the digital environment exceptionally well).

    It is worth reading an interview with Angell in today's Wall Street Journal, a lovely piece that covers Tom Seaver, the rise of statistics, the mastery of the New York Mets broadcast team, and the best ballplayers he ever saw.  And more.  You can read it here.

    Also, if you're interested, check out a piece that Angell wrote for The New Yorker back in 1980, about Bob Gibson.  Pure poetry, pure pleasure.

    Published on: September 18, 2020

    Got this response to the first part of the interview with Errol Schweizer:

    Very interesting interview.  I like how he speaks his mind.

    When I turned 16 I was fortunate to get a coveted job at Stater Brothers as what was called back then, a “box boy.”  I was making $2.66 an hour when minimum wage was below $2.00 per hour.  I bagged people’s groceries, help load them in their cars if asked, and gathered grocery carts.  I eventually was promoted to a clerk.  When I worked my way through the classifications (it was based upon total hours worked) I became a journeyman clerk making a great wage, especially for an 18 year old.  I don’t remember the amount, but it was somewhere around 12-15 dollars per hour with great insurance benefits and that was in the late 70’s to early 80’s.  I was fortunate enough to go to college and one of the guys I worked with said what a waste of time to go to school.  I said the amount I am making now is great, but it won’t be so great when I am married and trying to support a family. 

    I think the unions caved in too easily to the retailers demands.  It always upset me that union management was making significant money, but if we were out on strike, which happened one time in my career, the union employees continued to get paid and didn’t seem to care about the issues their membership was dealing with.  It shocks me to think I made more money per hour with benefits than many people are making in the same positions today.  When I was in the industry you could make a middle class living, own a house, maybe even a car or two and still survive.   I am so lucky that I was able to go to college, get a degree, and eventually get out of working at store level. 

    Also got the following email from an MNB reader, prompted, I think, by themes sounded in the Schweizer interview:

    I've often struggled to understand some parts of our society and capitalism and what I perceive as bad behavior.

    Sony is releasing the PS5 in November with preorders starting today in the US.  According to the news, there will be a shortage of units well into next year due to COVID-19 and demand. I checked online this morning at 6am, just hoping to preorder and unsurprisingly, all the preorder sites were sold out. Out of curiosity/frustration, I checked eBay and there are over 3k listings for the PS5. The kicker is these folks are selling the PS5 with huge markups. The more expensive PS5 goes for $499 but these eBay sellers are selling them anywhere between $700 up to $84,500 per console.

    My first thought is someone is laundering money because who is going to spend that much on a console? How can eBay or the government even think the $10,000+ prices are even remotely legitimate?  My 2nd thought was this is capitalism at it's worst (Regarding the more "reasonable but still ridiculous $1,000 consoles). Do these people seem themselves as opportunists and they are somehow helping the PS consumers? How I wish nobody would purchase these items and these folks would be stuck with the many units they purchased.(wishful thinking). Just because you can ask for huge markups, doesn't mean you should. I'm sure there will be people who will pay these prices which encourages these scalpers to move to other items to repeat this process again. Now a PS5 is not a necessity and people can live without it but people will go into debt because of FOMO or because their kids "have" to have it or a million other reasons. These scalpers are adding an extra 200+ dollars to an already expensive purchase.

    In line with this thought, I had a friend who had an online eBay business for years where he would hire people to go shop at certain high end outlets. His people would purchase high end clothing which were marked down (returns, exchanges, defective, discontinued, etc.) and resell it on eBay even though these outlets had signs stating all purchases were for personal use only and not for resale. He saw himself as helping redistribute the clothing (Robin Hood with a markup?) to people who didn't have physical access to these stores. He had to go through all sorts of gyrations to get around the restrictions these outlets would put into place, trying to prevent his behavior. He has since moved on into a different line of work but had lived an extremely comfortable lifestyle for nearly 10 years.

    When did our society change to say these types of behavior are fine? Is it ok because nobody is "forcing" people to purchase these marked up items? I certainly don't have a retail answer and I'm sure any comments I might say about doing the right thing (as individuals) would be shot down by people who feel whatever they want to do is the "right thing." Just a Business case I wanted to mention and hear comments on.

    I think "Robin Hood with a markup" is close to being an oxymoron.

    To paraphrase H.L. Mencken, Nobody ever went broke underestimating the greed of the American public.

    Responding to the story about H-E-B getting into the micro-fulfillment center business, one MNB reader wrote:

    About a year ago, HEB closed the likely underperforming lawn and garden center at my local HEB Plus store.  I heard rumors back then that the space was going to repurposed for one of these micro-fulfillment centers.

    Makes sense.

    Another MNB reader wrote:

    Similar to your Amazon Delivery Hubs article today, micro-fulfillment centers hurt local grocery stores and all the people who work for those stores. Am I right about that?  There’s also less social interaction among all of us. We just sit at home and wait for stuff to be delivered?? Then... there’s all the waste due to packaging etc etc. I want to bring my own re-usable bags to stores, a better environmental choice.

    On the subject of Kroger's e-commerce growth, one MNB reader observed:

    Some key points on ecommerce growth in Grocery, and Kroger’s path forward with this.

    Kroger has publicly stated what everyone else knows…You cannot pick orders in-store (with store labor) for curbside pickup, and do it profitably (in the majority of cases).  As this piece of business grows, the cost structure is incrementally higher, which is a big challenge to be addressed.

    Kroger knows #1, and thus their investment in Ocado robotic warehouses.  And…when you put one in a market where they have no stores, like Orlando, Kroger will surely leverage their existing test/partnership with Walgreens to help distribute customer orders.  But wait…there’s more!  With no store overhead in Florida, Kroger will have a competitive cost advantage over Publix, which should make it interesting as it relates to how they price to gain market share.  Publix will have a hard time competing on price, with a substantially higher cost structure.

    Exciting times.  Unfortunately it’s like be in the stands watching a chess match, but instead of taking hours, this match is taking months and years to play out.  Need to bring a big bottle of water to this one!

    Regarding Walmart+, one MNB reader wrote:

     Like you, I was curious to sample the WM+ offering to see what it was all about.  Fortunately my home in the Portland Oregon metro area has the free delivery available, so I signed up for the free trial, and in the matter of minutes was able to build a quick cart at around 10 am, and the groceries were on my porch by 7 pm.

    The experience was way more seamless and easy to navigate than I expected, and with their real time inventory system, based on the pick store for my address, I knew what items weren’t available before even checking out.  I never thought I’d see the day when I started to consider WM an innovative tech driven company, but they are quickly changing my perception.  While I’m still not sure I’ll stick around for the long haul (where Stumptown coffee is sold is where my heart will go), I do see the appeal here and could see the program attracting a lot of new customers while increasing their share with more loyal shoppers.  Some traditional grocers who feel they don’t need to invest as much in online/web experience because their in store experience is superior should be worried, especially in the age of Covid where your website is quickly becoming your store experience. 

    KraftHeinz's decision to sell off its natural cheese business led to this email from MNB reader Paul Schlossberg:

    Interesting move. It will do what they say. Simplify the business by eliminating SKUs. Reduce inventory since the product aging process is an investment in inventory. 

    Reminded me of something our group did at Borden Foodservice (way back many years ago). Did find my "old" notes. We improved ROI by eliminating 150 of 250 line items (almost all were aged cheese) from a $50 million line of business. Result: Volume increased on continuing products and inventory investment was cut 50%.    

    Looks like a good idea to me.

    And finally, this email from MNB reader Stephanie Steiner, reacting to an email I got from another reader who accused me of - well, something - when I wore a mask in a parking lot while waiting for the results of a Covid-19 test.

    I'm sorry that you have to deal with people like this.

    I’m really happy your test was negative. Mine was as well.

    I’m thrilled you have access to a testing site that provides results that quickly. A friend had to insist on getting tested (even though he had no taste or smell, and his wife was already positive and hospitalized). He was finally hospitalized 8 days later without test results back yet.

    His wife was sent home the day after he was admitted.  The didn’t see each other for about four weeks.

    The week after he was sent home on a video call with his doctors, he learned that they had not been optimistic that he would be one of the few to survive (he is seventy).  I now have friends how have lost people dear to them. I fear that with how this is being managed, we’ll all lose someone dear to us.

    The person who wrote to you is the perfect example of “herd mentality.” 

    It's okay.  I don't mind when people take issue with what I write or what I do.  It keeps the conversation lively.

    I recognize that the wearing of masks somehow has become a political issue.  That's too bad.  I prefer to think of it as being both patriotic and responsible.

    Published on: September 18, 2020

    In Thursday Night Football, the Cleveland Browns defeated the Cincinnati Bengals 35-30.

    Published on: September 18, 2020

    Content Guy's Note:  This is part of an effort to add a little fresh spice to Friday's "OffBeat" column - a series of occasional interviews with authors (or other personalities when the opportunity and urge strike) whose work I like and who I find to be interesting.  Basically, I'll be interviewing anyone I want to, just because I want to.

    Today's OffBeat/MNB Interview is with Ted Bell, an advertising legend who now plies his trade as a novelist - his newest book, "Dragonfire," is the 11th in a series of thrillers featuring British agent Alex Hawke.  In addition to talking about the book, however, KC engages with Bell about the fine art of storytelling, which is something that cuts across a wide variety of disciplines - books, advertising and even retailing.


    Ted Bell's latest Alex Hawke thriller, "Dragonfire," which is a rollicking good time - a spy novel that prompts memories of the likes of Ian Fleming with a dash of Tom Clancy -  is available on Amazon, from the iconic independent bookstore Powell's, and at your local bookseller.

    I have a really nice rosé to recommend this week - the 2019 from WillaKenzie Estate in Oregon's Willamette Valley, which is just lovely and perfect for those late summer evenings when the air is still warm but we know that the leaves and the temperatures soon will be falling.

    That's it for this week.  I'll see you Monday.

    Have a great weekend … stay safe … be healthy.