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    Published on: November 4, 2020

    The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Tom and Kevin look at the growing consumer resentment of the technology sector that could lead to tougher regulation, how companies can and should address the challenges created by calls for greater oversight, and how to assure that popular opinion does not stifle long-term innovation.

    Published on: November 4, 2020

    by Michael Sansolo

    Given the ubiquity of smart phones, apps and more it’s hard to imagine any new technology that might actually shock us. Except the reality is that technology always finds a new way to shock us.

    So think about this: Burger King has a whopper of a new use of predictive technology that promises to completely change the drive-through ordering experience. In short, everything about it at BK will be your way and not just when it comes to what you want on your burger.

    As WTOP radio in Washington reported recently, the fast food restaurant is rolling out a new generation of drive through ordering kiosks that take personalization to a whole new level. 

    Thanks to predictive technology, the menu board will be able to identify the shopper, refer to him or her by name, and both offer promotions and build an order based on what the customer bought the last time they visited Burger King, factoring in things like the weather, time of day and whatever other factors the restaurants can include. According to WTOP’s story, BK is planning to roll out 10,000 of these smart ordering stations, which means they’ll be coming to a town near you soon.

    One has to imagine similar improvements will follow shortly at McDonalds and all other BK competitors assuming the rollout goes well. And that means that customer expectations are about to take another giant step forward, which means you have a new challenge to confront.

    Honestly, I can’t say this is or should be a surprising advance. After all, for years now every visit to Amazon has started with a personalized welcome message followed by a reminder of what I bought the last time I visited and then suggestions about what people like me also bought. That form of predictive technology was clearly raising the bar on customer expectations and BK of all people is jumping over it. 

    The question you need to ask yourself is when do you need take a similar leap.

    In addition, as I have written before, the most recent study from the Coca-Cola Retailing Research Council of North America examines how technologies like artificial intelligence and 5G phones will change the shopping experience. Predictive, interactive and personalized technologies are a big part of that model too.

    Obviously, none of these types of improvements come easily or inexpensively, but the reality is that competition constantly makes things more challenging. More than ever all businesses need keep an eye trained on the horizon to see what future challenges and possibilities are coming. Then we need figure out how to surmount those very same challenges.

    You can get a Whopper your way, but competition demands that you do it however the shopper demands. And those demands are growing and evolving constantly.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.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: November 4, 2020

    KC has some thoughts about a recent Wall Street Journal article about "College Courses Entrepreneurs Wish They Had Taken," and how its revelations led him, inevitably and pleasurably, to the works and lessons from Elmore Leonard, one of the greatest of American novelists.

    Published on: November 4, 2020

    The Wall Street Journal reports that Walmart is in discussions with Comcast Corp. about a possible deal "to develop and distribute smart TVs, according to people familiar with the matter, as the cable giant looks to become a dominant hub for streaming apps, not just TV channels.

    "Under the terms the companies are discussing, retail giant Walmart would promote TV sets running Comcast software, and would get a share of recurring revenue from Comcast in return, the people said. A third party would likely manufacture the sets, and one possibility is that they could carry Walmart branding, they said."

    Comcast's strategy is to better position it against the likes of Amazon, Apple and Roku and "would enable Comcast to market to consumers nationwide, a change in a U.S. cable industry where players have stuck for decades to their regional footprints.  Comcast would be able to promote its new streaming service, Peacock, front and center in the smart TVs."

    KC's View:

    It is sort of interesting to me that the WSJ looks so hard at how this would benefit Comcast, but doesn't spend nearly as much time looking at how this could allow Walmart to compete more effectively with Amazon - perhaps with multiple shopping apps that get priority on its own TVs.

    Published on: November 4, 2020

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

    •  In the US, there now have been 9,694,176 confirmed cases of the Covid-19 coronavirus, resulting in 238,656 deaths and 6,237,271 reported recoveries.

    Globally, the numbers stand at 47,929,034 confirmed coronavirus cases, 1,221,889 fatalities and 34,401,296 reported recoveries.  (Source.)

    •  From the Wall Street Journal this morning:

    "The U.S. reported its second-highest count of daily new Covid-19 cases on record and hospitalizations reached their highest levels since early August … States including Ohio, Pennsylvania, Minnesota, Idaho, New Mexico and Maine logged record-high daily tallies Tuesday."

    According to the Journal, "The nation’s seven-day moving average of newly reported cases, which helps smooth out irregularities in the data, rose to 86,363 as of Tuesday, the latest in a series of record highs. The 14-day moving average was 79,124. When the seven-day average is higher than the 14-day average, as it has been since Oct. 5, it suggests cases are rising."

    •  From the New York Times:

    "The Northeast held back the coronavirus tide this summer after enduring the worst of America’s catastrophic first wave in the spring. But now states like Maine, Rhode Island and Connecticut have all reported records for new daily cases in the past week."

    Last month, the Times writes, "it became apparent that many Northeastern states had won only a temporary reprieve. A second wave of infections had come, forcing state and local officials to reinstate restrictions on businesses, schools and mass gatherings.

    Connecticut has been averaging over 800 new cases per day, approaching its April peak of over 1,000.

    "Maine is well above its May peak with a seven-day average of 88 new cases per day as of Tuesday, when the state set a record with 127 new cases.

    "Rhode Island, with fewer people than Maine, has been averaging over 400 new cases per day, above its spring peak."

    Still, the New England numbers remain much lower than those in states like North Dakota, South Dakota and Wisconsin.

    The Times also writes that "on Monday, a judge in Connecticut ruled against a conservative group’s emergency request to block Gov. Ned Lamont’s requirement that students wear masks in the classroom. 'There is no emergency danger to children from wearing masks in school,' the judge wrote, adding, 'Indeed, there is very little evidence of harm at all and a wide ranging medical consensus that it is safe'."

    Speaking as the father of a teacher who is with students every day in Connecticut, I'm glad the judge ruled this way.  Masks on kids help to keep their teachers and other students safe.  Not only that, they promote the notion of selflessness - we wear masks to protect others as a demonstration of patriotism as opposed to self-interest.  

    •  The Los Angeles Times reports that "California is no longer the state with the highest number of coronavirus cases, as Texas officially surpassed the overall case count despite having 10 million fewer residents … The Lone Star State’s leapfrog illustrates both the magnitude to which COVID-19 cases are surging there, and the extent to which California — so far — has escaped the significant spikes striking many other parts of the United States."

    •  Reuters reports that the US Food and Drug Administration (FDA) is cautioning "clinical laboratory staff and healthcare providers that false positive results can occur with COVID-19 antigen tests … The U.S. agency said false positive results may occur when users do not follow the instructions for the use of antigen tests for rapid detection of SARS-CoV-2."

    The other problem, Reuters writes, is that communities and institutions trying to stave off a second wave of Covid-19 "are turning to faster, cheaper but less accurate tests to avoid the delays and shortages that have plagued efforts to diagnose and trace those infected quickly."

    •  The Financial Times reports that "the virus that causes Covid-19 was present in New York City weeks before the first confirmed case of the disease, infecting more than 1.7m New Yorkers and killing them at a rate 10 times greater than flu, a new research paper has shown. Researchers have discovered antibodies to the virus in samples from February as part of a study of more than 10,000 plasma samples conducted at Mount Sinai, the New York-based hospital system, and published in a peer-reviewed paper in the science journal Nature on Tuesday."

    FT notes that "New York — whose initial response to the virus was hampered by a lack of access to tests — identified its first confirmed case on March 1. But the study suggested it could have been circulating in early February."

    •  The Las Vegas Review-Journal reports that the Park MGM hotel on the Strip there "will close at noon Mondays and reopen at noon Thursdays. Its casino, pool, restaurants, amenities and the NoMad hotel within Park MGM will remain open throughout the week."

    The closure is expected to remain in place through the end of the year.

    According to the story, "The new operating hours come as the Strip property faces low midweek occupancy rates and the absence of major meetings, conventions and events during the slower holiday season."

    The Las Vegas Review-Journal notes that "other casino operators have announced midweek hotel closures amid the pandemic, including Wynn Resorts Ltd. and Las Vegas Sands Corp."

    •  CNN reports that "US cruise lines have canceled sailings through at least the end of the year because of new safety guidelines related to the Covid-19 pandemic.

    "The Centers for Disease Control and Prevention on Friday announced a new framework for resuming sailings. The CDC technically lifted a ban on sailings to and from US ports, but it raised concerns about the safety of resuming sailings while cases of Covid-19 increase around the globe."

    The CNN story notes that "cruises worldwide were essentially halted in March following the outbreak of the disease. US cruise lines had been set to resume sailings as of December 1. The Cruise Lines International Association, the industry trade group, Monday issued a statement that they will work with the CDC to resume sailings as soon as possible."

    •  From the New York Times:

    "The blueprint for France’s second national lockdown, which started Friday, sounded straightforward enough: Shutter restaurants, bookstores and other “nonessential” businesses, but let supermarkets, electronics chains and online retailers like Amazon keep operating so consumers can work and shelter at home.

    "Instead, the measures have ignited a nationwide backlash. Small businesses are revolting against what they say is unfair competition from dominant retailers — especially Amazon — that continue to sell items the shopkeepers can’t. Politicians and trade groups have joined the outcry, forcing President Emmanuel Macron’s government to scramble to come up with a new game plan.

    "On Tuesday, the government announced its solution: Supermarkets such as the retail giant Carrefour were given until Wednesday morning to drape giant plastic tarps over items considered nonessential, including books, clothes, toys, flowers and even dishes, to put them off-limits to consumers during the monthlong lockdown. Since smaller stores can’t sell such items, the thinking goes, big stores shouldn’t be allowed to, either."

    •  It may seem counterintuitive, but the BBC has a story this morning about how "independent shops have been 'more agile' and better at surviving Covid-19 than chain stores."

    According to the story, "Small independent firms on the High Street suffered a net decline of 1,833 stores in the first half of 2020, according to research by the Local Data Company (LDC) and accountancy firm PwC.  That was less than a third of the 6,001 chain stores lost, the LDC said."

    The BBC writes that "Lucy Stainton, head of retail and strategic partnerships at the LDC, said it had been 'an immensely challenging few months for the retail and hospitality sector'.

    "She said the independent market had fared better as those businesses had been 'more agile, bringing in new product lines and offering food deliveries'.  They also had a smaller cost base to cover during periods of little or no trade and had been able to take advantage of government support schemes.

    "'However, as we continue through the year with various local lockdowns and restrictions, life will not get any easier for operators,' she added."

    •  Fox News reports that in the UK, Burger King actually is suggesting that its customers should patronize the competition.

    The fast feeder used its Twitter feed this week to suggest that people order from the likes of McDonald's - as well as KFC, Taco Bell and Five Guys - as a way of supporting the fast food sector, which has been hard hit by the pandemic and now is enduring a second national lockdown as the UK tries to slow down the spread of the pandemic.

    •  The Washington Post reports that the National Football League "continued to grapple" with the coronavirus, as Denver Broncos front office executives John Elway and Joe Ellis both tested positive for Covid-19, "and the Dallas Cowboys placed quarterback Andy Dalton on their covid-19 reserve list."

    The Post adds that the NFL also "announced several new game-day measures, including a renewed call for mask-wearing by players and additional distancing provisions on the sideline, in reaction to the positive test results by Baltimore Ravens and Green Bay Packers players from Sunday’s game-day testing … The NFL told teams in a memo Tuesday that it continues to 'strongly recommend' that players wear masks while on the sideline during games. Coaches and team staffers are required to wear masks while on the sideline, but that requirement does not extend to players except in certain cities under applicable state and local guidelines. The NFL said Tuesday that players are required to wear masks for any interactions between teams before and after games."

    The Post also reports that "Wisconsin’s football game Saturday against Purdue has been canceled as the Badgers continue to deal with a coronavirus outbreak among the team’s players, coaches and staff members.  It’s the second cancellation for Wisconsin this season after it played its opener against Illinois on Oct. 23."

    Published on: November 4, 2020

    The New York Post reports that "more than 100 truck drivers who deliver gourmet groceries to Whole Foods stores in the New York area are threatening to strike over COVID-19 safety issues … Teamster’s Local 445 members claim that their employer United Natural Foods — better known as UNFI, a publicly traded supplier to Whole Foods with $27 billion in revenue — has refused to give them basic protective equipment including masks and hand sanitizer, and that the company hasn’t disinfected their trucks in months."

    In a statement, UNFI spokesman Jeff Swanson accused the union of “disseminating falsehoods and shamelessly exploiting the pandemic in an effort to try gaining negotiating leverage.”

    KC's View:

    UNFI says it has "robust plans" for mitigating any problems created by a strike, but this would be a bad time for any sort of supply chain glitch, as revived worries about the pandemic seem to have created a new wave of stockpiling.

    Published on: November 4, 2020

    Delish reports that Starbucks plans to close 100 stores in addition to 400 units that already were announced as shutting down.

    The company says that the closures will "reflect changing consumer habits," and are expected to be largely in "dense metro trade areas."

    According to the story, "These closures will also be part of 'clearing the way for the development of new, more efficient retail store formats that cater the customers' increasing desire for convenience, while also improving trade area profitability,' said executive vice president and Starbucks CFO Patrick Grismer. Those new stores, as we previously reported, will be more focused on to-go orders, and were already planned before the COVID-19 pandemic, but have now been sped up."

    KC's View:

    When you calculate in the number of stores that Starbucks plans to open in the coming year, there's actually a net 50 store increase in its US fleet.  That seems pretty small for Starbucks - there are neighborhoods in Seattle where it seems like there are 50 stores in a six-block radius.

    Published on: November 4, 2020

    •  From CNBC:

    "Ocado, a British online supermarket, announced Monday that it has acquired two robotics companies in the U.S. as it seeks to make its warehouses more efficient.

    "The company, which also raised its full-year profit forecast, said it has agreed to buy San Francisco-headquartered robotics firm Kindred Systems for $262 million in cash and Las Vegas firm Haddington Dynamics for $25 million in cash and shares."


    •  The Wall Street Journal reports that "Uber Technologies Inc., Lyft Inc. and DoorDash Inc. won a pivotal vote in California that exempts them from reclassifying their drivers as employees … The companies, along with Postmates Inc. and Instacart Inc., collectively contributed around $200 million to support Proposition 22, a measure that allows them to bypass a state law intended to provide employee-like protections for their drivers.

    "The campaign was the most expensive for any ballot measure in state history. With more than 60% of ballots counted, the vote was running 58% in favor of the measure and 42% against … The outcome allows the ride-hailing and delivery companies to avoid complying with a law that could have reshaped their business models and battered their business in the most populous U.S. state. It also sets the tone for gig-worker regulation in the rest of the country."

    Published on: November 4, 2020

    •  The Washington Post reports that "Florida voters approved an amendment Tuesday to raise the state’s minimum wage to $15 an hour over the coming years …  The initiative will amend the state’s constitution to enshrine minimum wage increases that will scale up to $15 by 2026, up from $8.56 an hour now."

    The Post writes that "Florida joins just seven other states in the process of raising their minimum wages to $15 an hour. And it’s the first state to raise the minimum wage to as high as $15 an hour via ballot measure.

    "The federal minimum wage remains at $7.25 an hour."


    •  Fox News reports that H-E-B has opened its first store in Lubbock, Texas, which, the story says, "ends years of talk" about the iconic Texas retailer entering the market.  The 122,000 square foot unit includes a BBQ restaurant and Sporting Zone store with Texas Tech gear.

    Published on: November 4, 2020

    Responding to our piece the other day about a new Walmart Express format opening in Mexico, one MNB reader wrote:

    I was on the team that created Walmart Express in the US. We were the "Small Formats" modular (WMT term for plan-o-gram) development team. Bill Simon was CEO of WMT US and Anthony Hucker (sound familiar?) was President (or some lofty title) of Small Formats (actually, I think it might have been of Walmart Express). The format was mostly grocery with very limited GM.

    When we opened our first store in Gentry, AR, I was standing next to Anthony at the GO and he showed me an email from Bill. "Congratulations on your 1st, 10,000 more to go." This was going to be HUGE!!

    Several Sr. leadership changes later, Walmart Express was no more. WMT can run Supercenters but had no clue how to run 12,000 sq/ft stores in the US profitably, or for that matter, how to get product to them efficiently and cost effectively.

    I believe the format will be much more successful in Mexico because that business unit has "bodega" experience.

    MNB took note the other day about an op-ed piece in the Iowa Capital Dispatch suggesting that Hy-Vee's election efforts may have gone too far when Chairman-CEO-President Randy Edeker did a video for employees promoting a political point of view.

    One MNB reader responded:

    After reading your comments regarding Kathie Obradovich’s story on Randy Edeker, I felt a need to weigh in.   During Randy’s time as Hy-Vee CEO, his management style has evolved to become more than somewhat similar to that of the political candidate he was specifically endorsing.  Randy’s authoritarian leadership has stifled originality and the right to dissent among Hy-Vee’s key management people and he has demonstrated that he will not hesitate to demote or discharge those who would challenge him.   I do not find it surprising that he would choose to use this bully pulpit to advance his political beliefs, whether he admits to it or not.

    In a bit of irony, Randy is also a past chairman of the National Association of Chain Drug Stores (NACDS) and currently serves on its Board of Directors.   During his time as chair of NACDS, Randy railed about the use of DIR fees (Direct and Indirect Remuneration fees) on the part of pharmacy benefit managers to claw back revenue from community pharmacies, sometimes taking back funds paid to pharmacies as much as 18 months or more after the prescription transaction has been completed.   DIR fees have had a tremendously negative impact on the bottom line of community pharmacies including Hy-Vee, driving many larger firms to consolidation and pushing enormous numbers of independently owned pharmacies out of business.  Randy has made no secret of the fact that DIR fees have had an enormously direct effect on Hy-Vee’s corporate bottom line and he specifically has mentioned them when reviewing Hy-Vee’s financial results with its stockholder employees.   However, the political candidates whom Randy perceives will benefit Hy-Vee from a tax standpoint in this election are the same politicians whose pockets are legally being lined by the pharmacy benefit managers through their campaign contributions......and those candidates will be highly discouraged from voting for DIR reform by virtue of accepting those same contributions from the PBMs.   Nothing is going to change.

    Whether you are the CEO of an $11 billion company or a single parent struggling to raise children on a minimum-wage income, this story illustrates the risks of voting for a cause or a candidate on the basis of a single issue.  Unfortunately, there is no one on the executive staff who would risk telling the emperor that he is not wearing clothes.

    What distresses me the most about this email is the suggestion that Hy-Vee, traditionally the model of decentralized management, may now have a culture in which there is "authoritarian leadership" that "has stifled originality and the right to dissent."

    I guess my message would be that if this is inaccurate, Hy-Vee at the very least has a perception problem … because I don't think this email is coming from someone who could be described as a disgruntled employee.

    We had a piece the other day about how in New York City the iconic Strand bookstore's owner Nancy Bass Wyden appealed to customers to help it stay viable.   One of those orders was "a purchase of 197 books from a customer in the Bronx. 'I’ll have to write her a thank you letter,' Ms. Wyden said."

    I commented:

    If it were me, I would've put the 197 books in the back of my car, driven them up to the Bronx and delivered them myself … and would've checked with the customer to see if I could pick her up some Starbucks on the way.

    I hope to hell a thank-you letter isn't all that customer gets.

    Because if that's the best the Strand can do to demonstrate loyalty to its customers - as opposed to begging for loyalty from them - then it may explain a lot about its competitive issues, and suggest that the pandemic may just have accelerated them, as opposed to having created them.

    One MNB reader responded:

    Easy there Crusty.  Maybe the reason Strand had such an amazing response to their plea for business was because they have, over their 90+ years in business, delighted their customers.

    Perhaps Ms. Wyden was a little tongue in cheek with her response...I’m sure more than a thank you letter is awaiting this customer. 

    Years ago I read a great quote from Indra Nooyi on “the best advice I ever received.”  It was “assume positive intent,”  which I think fits here.

    Maybe.  But that's not what she said.  And if I were talking to the New York Times, I would've made that clear.