business news in context, analysis with attitude

Published on: November 24, 2020

This weekly series of Retail Tomorrow podcasts features Sterling Hawkins, co-CEO and co-founder of CART-The Center for Advancing Retail & Technology, and MNB "Content Guy" Kevin Coupe teaming up to speculate, prognosticate, and formulate visions of what tomorrow's retail landscape will look like post-coronavirus.

Site selection is a time-honored art and science in the retailing game, but it no longer is as simple as figuring out which side of the street to be on, and what end of town.  These days, technology gives retailers an almost unparalleled ability to chart and predict consumer traffic to a granular level - and gain from the data insights that are accurate, dependable, and actionable.

This week, co-hosts Sterling Hawkins and Kevin Coupe talk with Ethan Chernofsky, vice president of marketing at Placer.ai, a company that offers extraordinarily deep and wide perspectives into location and consumer traffic information, and then parlays that knowledge into uncommon insights about broader shopper behavior.

You can listen to the podcast here…

…or on The Retail Tomorrow website, iTunes or Google Play.

Published on: November 24, 2020

From the Washington Post this morning:

"Workers at Walmart, Amazon, Kroger and other major retailers are calling on their employers to reinstate hazard pay and strengthen safety protocols ahead of the busy holiday shopping season as coronavirus infection rates skyrocket.

"The United Food and Commercial Workers Union (UFCW), which represents 900,000 grocery employees at chains such as Kroger, Safeway and Giant, on Monday urged retailers to do more to protect workers from the virus that has sickened more than 12.3 million Americans.

"Separately, the workers rights group United for Respect called on such employers as Walmart, Amazon and Petco to pay an extra $5 an hour for the duration of the pandemic. Although many grocery and retail chains offered extra pay - typically an additional $2 an hour - early in the pandemic, most have since done away with the premium."

And, along the same lines, from CNBC:

"Grocery workers say they face new challenges as the coronavirus pandemic intensifies across the country. Covid-19 cases and hospitalizations have risen in communities from big cities to rural towns. Shoppers are rushing to stores for holiday items, such as turkeys and baking supplies, along with stocking up again on toilet paper. And extra hourly pay meant to show appreciation or compensate for additional health risks has ended."

The CNBC story notes that "retailers from Walmart to Kroger … offered temporary pay increases and special bonuses in the spring. Some of those wage increases have continued. Target ended its $2 an hour pay bump, but sped along a planned minimum wage increase to $15 an hour. Lowe’s recently announced a sixth bonus for hourly workers that will be paid in mid-November. And Home Depot said it would make some pandemic pay increases permanent. Walmart and Target also said they’ll remain shut on Thanksgiving Day to express appreciation for employees, too.

"Yet the toll has been significant, particularly on grocery store workers who can’t work from home and often have low pay and limited health benefits. At least 350 of its members have died since the start of the pandemic, including 109 grocery workers, according to UFCW."

The CNBC story points out that "Kroger said its 'most urgent priority throughout this pandemic has been to provide a safe environment for our associates and customers while meeting our societal obligation to provide open stores, e-commerce solutions and an efficiently operating supply chain so that our communities have access to fresh, affordable food and essentials.'  It said it has invested more than $1 billion in extra pay and bonuses to hourly workers since March — including a $100 store credit and 1,000 fuel points that employees will receive Nov. 19."

Published on: November 24, 2020

The New York Times this morning has a story about the growing importance of e-commerce, as reflected in how different the holidays are this year for major retailers.

One example is Macy's conversion of two stores into fulfillment centers for e-commerce orders;  CEO Jeff Gennette tells the Times that "the dark stores are part of an experiment as the company responds to customers buying more online and demanding ever-faster shipping for free. But the conversion of a department store into a fulfillment center, even temporarily, reflects how retailers are succumbing to the dominance of e-commerce and scrambling to salvage increasingly irrelevant physical shopping space."

The Times goes on:  "Last week, Walmart, the nation’s largest retailer, reported that e-commerce sales increased 79 percent in the third quarter, while its rival Target said its e-commerce business was up 155 percent. Amazon’s sales increased 37 percent and its profit was up nearly 200 percent in the most recent quarter.

Retail executives said that staggering growth was not a fluke of the pandemic lockdowns, but the result of a permanent shift in how people shop … Across the industry, online sales are expected to increase at their fastest rate in 12 years, accounting for 20 percent of all retail purchases this year. That’s up from 16 percent in 2019, according to Forrester Research."

“We think these new customer behaviors will largely persist,” says Walmart CEO Doug McMillon.

Published on: November 24, 2020

The Wall Street Journal this morning reports on the continuing battle over how many carbohydrates should be in the American diet, and specifically should be recommended in US government dietary guidelines.

An excerpt:

"Low-carb advocates believe the current guidelines - which recommend Americans get about half their calories from carbohydrates - are partly to blame for America’s high rates of obesity and Type 2 diabetes. Lining up against them are supporters of plant-based diets, among others, who argue that low-carb diets often include too much saturated fat from meat and dairy products and neglect important sources of nutrients like fruit, certain vegetables and whole grains.

"During heated public hearings over the past 18 months, low-carb advocates pushed to include a low-carb diet option in the new dietary guidelines, which the government is expected to finalize in December. A federal advisory committee rejected that idea, saying evidence supporting that approach wasn’t conclusive. Now low-carb advocates have regrouped and are pushing the government to include a disclaimer with the final guidelines saying they are 'only for healthy Americans'  - marking them irrelevant for the majority of the country who are overweight or have diabetes or prediabetes."

You can read the story here.

Published on: November 24, 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, we've now had 12,778,924 confirmed cases of the Covid-19 coronavirus, resulting in 263,701 deaths and 7,551,839 reported recoveries.

Globally, there have been 59,612,605 confirmed coronavirus cases, with 1,403,800 resultant fatalities and 41,248,180 reported recoveries.  (Source.)

•  From the Wall Street Journal:

"The death rate from Covid-19 is falling in the U.S., according to infectious-disease experts and biostatisticians, a signal of advancements in treatment of the disease.

But the death rate could climb with the latest nationwide rise in cases, they warn.

The coronavirus is now killing around 0.6% of people it infects, an improvement from April, when the death rate was about 0.9%, says the Institute for Health Metrics and Evaluation at the University of Washington."

The Journal notes that the current death rate has improved for a number of reasons - a better understanding of the disease, the development of effective treatments, and a growing infection rate among young people who are less likely to succumb to the coronavirus.

•  From Axios:

"It wasn't long ago that public health experts were pointing to Europe as a warning sign for the U.S. But the U.S. now has a higher per-capita caseload than the EU ever did during its recent surge … As of Saturday, 15 states had higher per-capita caseloads, averaged over seven days, than the European country with the highest caseload — Luxembourg."

The story points out that "Europe's steady rise in coronavirus cases over the last couple of months prompted many countries to bring back lockdowns or other strict behavioral restrictions."  However, "in the U.S., some of the hardest-hit states — like Iowa — are just now adopting mask mandates, and airports over the weekend were packed with people traveling for Thanksgiving."

•  Nielsen is out with some new numbers indicating the degree to which some Americans may be changing their Thanksgiving habits because of the pandemic - "70% are planning a Thanksgiving gathering with fewer than six people (compared to 48% last year)."

•  The Daily Beast has the story of Rolla, Missouri, where it appears that not only did parents collude to throw a homecoming dance for the local high school - as many as 200 students, plus parents, showed up at a local steakhouse for a dance that was surreptitiously promoted online, with masks made optional - but they deliberately obscured attendee information from the local health department, making it difficult to track-and-trace infections when they started to emerge.  In fact, attendees told the local health department that "organizers intentionally hid the number and identity of those in attendance to avoid contact tracing in the event of an outbreak."

Which there has been.

The Daily Beast writes that "the story out of Rolla mirrored many others throughout the country, where health departments face an uphill battle against COVID-19 skepticism and the politicization of mask-wearing - and the potential for one event to spark massive outbreaks. But it stood out for what residents described as a purposeful effort to ward off health officials’ scrutiny even as the pandemic’s third wave breaches new frontiers of horror nationwide."

Rolla elected officials reportedly are considering a town mask mandate, but past discussions along these lines have met with significant opposition.

I know some MNB readers don't like it when I get all judgmental about this kind of stuff … but are you freakin' kidding me?

This is wrong on so many levels, but I think I am most offended by the lesson that these parents tried to teach their kids - that it is okay to behave irresponsibly, to pay no attention to the rules that serve as a cultural fabric that is supposed to bind us together as a society, and to say that my own pleasure is the most important thing.

•  Less than 100 miles northeast of Rolla, in Missouri's St. Louis County, they are demonstrating that it is possible to inform and remind people about pandemic-related precautions they should be taking without being too preachy.

Here are a couple of public service announcements that have been running on local media:

Published on: November 24, 2020

From the Dallas Morning News:

"Barricades block off the main entrance to what was once the grand rotunda of the J.C. Penney headquarters in Plano. In view through the windows are rows and rows of desks that have been cleaned out with signs on them that say 'Done.'

"At the tail end of its bankruptcy case and after not paying rent on the space for several months, the department store chain has quietly vacated its headquarters … When Penney moved into the Plano headquarters, it had 195,000 employees. It now has 60,000 employees and is expected to exit bankruptcy this year … The company is being sold to its two biggest store landlords, Simon and Brookfield, and its first-lien lenders."

The story notes that Penney's remaining employees have been largely working from home because of the pandemic, so it isn't like there was a mass exodus from the building under cover of night.

Published on: November 24, 2020

•  Eater Seattle reports that Washington State Gov. Jay Inslee has "announced a statewide cap on fees charged to restaurants by third-party delivery apps such as Uber Eats, DoorDash, and GrubHub. The proclamation caps delivery fees at 15 percent and total fees at 18 percent for each order, and goes into effect Wednesday, November 25, at 12:01 a.m."

The story notes that the cap does not affect Seattle, which already has established a 15 percent limit on fees.  The story says that "though several cities and counties across the country have applied caps on third-party apps, the broad mandate is a rarity for U.S. states - New Jersey instituted a similar rule in June and Massachusetts had one in the works as well, but it hasn’t been signed into law yet."

Published on: November 24, 2020

•  Fierce Healthcare reports that "Walmart Health just opened two new locations adjacent to revamped Walmart supercenters in Chicago. 

"The new Walmart Health clinic locations have primary medical care, optometry and hearing services with plans for other offerings—such as labs, x-rays, diagnostics and counseling—to be added in the future.  Walmart's clinics charge patients a flat fee for services regardless of insurance status."

•  Reuters reports that "Walmart's Mexico unit said on Monday it was notified by Mexico's federal competition authority that it is being investigated for possible antitrust behavior in the supply and distribution market of wholesale goods and retail of these goods and services."

While Mexico's competition watchdog did not comment on the statement, it has said in the past that there is "a need to facilitate the entry of more competitors to the retail market."

The Reuters story notes that "Walmart de Mexico, or Walmex, said it has always acted in accordance with applicable law and that its participation in the Mexican market has resulted in lower prices for consumers, benefiting poor families especially."

Published on: November 24, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Fortune  is out with its annual "15 best large workplaces in retail" list, and grocers make up a large percentage of the winners.

In order, the winners are Wegmans Food Markets … CarMax … Publix Super Markets … Recreational Equipment, Inc. (REI) … Nugget Market … Sheetz … Custom Ink … Target … Altar’d State … Burlington Stores … Wireless Vision … Cumberland Farms … QuikTrip … Trek Bicycles …. and Brookshire Grocery Co.

•  The West Virginia Metro News reports that "Kroger and the United Food and Commercial Workers Union Local 400 announced Friday night the two had reached agreement on a tentative contract, averting a possible strike by more than 4,200 Kroger workers in the Mountain State."

Among the components of the new contract are improved health care benefits and raises for the rank and file.

•  MLive reports that Kroger "plans to quickly hire 2,000 people to fill positions in Southeast Michigan … using a rapid hiring process to bring people on-board in 48 hours."  Fifty of the 2,000 jobs are said to be full-time.

•  There is a story in QSR that looks at Sbarro, the food court mainstay that has been troubled by the fact that so much of its fleet is located in malls - which is not exactly the positioning that most companies would be seeking these days.

The story says that CEO David Karam remains focused on "four main categories - malls, areas of transportation (airports, train stations, travel centers, and premium end convenience stores), entertainment venues (amusement parks, convention centers, casinos, and tourist locations), and health, education, and employment (hospitals, colleges, office buildings, and military bases.)"  While a lot of those locations have been hurt by shutdowns related to the pandemic, the company seems to believe that it can continue to grow its mall footprint, saying that malls remain attractive because they require a lower initial investment and these days charge lower rent.

“My intention is to develop the brand—move it to 1,000 plus units—but continue to be disciplined about focusing on what we call this impulse pizza occasion,” Karam says. “And in that segment, we don't want to sound arrogant or cocky, but in that segment, there's not even a close second to a brand that’s as effective in optimizing sales and profitability in those types of venues."

I'm not sure which I find most dissonant about Sbarro's positioning - that it seems to believe that malls remain a viable engine for growth, or that it believes that its pizza is any good.

•  The Wall Street Journal this morning reports that "McCormick& Co. is nearing a deal to buy hot-sauce maker Cholula, according to people familiar with the matter, seeking to capitalize on demand for spicy condiments.  The seasonings company is discussing a deal with L Catterton, the private-equity firm that has owned Cholula since 2019, that would value it at around $800 million, the people said."

Published on: November 24, 2020

Got the following email from an MNB reader challenging my approach to reporting on the pandemic:

Your closing comment in today’s news letter along with the bantering going between you and your subscribers about COVID has given me the spark to write this note. You mentioned the relenting news about COVID.  

Why don’t you stop reporting on COVID?

In June of 2009 The World Health Organization declared a pandemic with H1N1, however you did not mention this in your news letters on 6/11/09 (date WHO declared pandemic), 6/12/09 or 6/15/09. You kept your topics then on subjects that your subscribers expected read about.

I do not want to get into a debate comparing the ‘09 pandemic to the ‘20 pandemic.  They are both very different and the current one is more dangerous. My point is you stayed away from the ‘09 version and today you are regurgitating news stories that most of your subscribers have already read, or saw in the morning news cast.  

Why not take your time off and think about why we signed up for your news letter.  Get back into solid industry issues.  There are other issues facing this industry such as; minimum wage laws, unemployment, data security laws, technology innovation (you cover this very well) and so on.  Please think about dropping the COVID news.

I would appreciate it if you kept my name out.

You certainly are entitled to your opinion.  I would suggest that in various ways I've reported on all those things over the past eight months and the past 19 years … and one of the reasons that I group all the pandemic-related news in one section is so people don't have to read it if they don't want to.

I think that the current pandemic is one of the most important stories of the past two decades in terms of its impact on consumer behavior, trust in institutions, and retail development, accelerating some trends that were happening anyway and creating some that nobody saw coming.  You may think that this is roughly the same as the H1N1, but best to my recollection, stores were not being shut down when that pandemic took place, consumers were not stockpiling, schools were not being closed … and most importantly, not nearly as many people died.

It wasn't the same thing.

In addition, while there are some folks who really don't want to read my pandemic coverage - or disagree with my commentary about it (which I suspect you might) - there are a lot of readers who have encouraged me to keep it up.

Which I plan to do.  Always trying to be thoughtful about it.  Always giving people a choice about whether or not they read it.   And always … always … looking forward to the day when Covid-19 isn't a story anymore, isn't a factor in the daily conduct of business.

MNB reader Kelly O’Connor weighed in on the vaccines that seem to be getting traction:

In addition to the encouraging news about the effectiveness of the AstraZeneca vaccine, one of the most positive components of that particular vaccine is that it does not require cold storage, and can be distributed through traditional immunization distribution channels. This will make it much easier to handle throughout the supply chain, especially for developing countries, along with the lower cost per dose. It’s great to see this combination, and I’m hoping and praying that they, along with Pfizer and Moderna, will get approval and be able to start distributing the vaccines soon.

That's something we're all hoping for.

On a related subject, from another reader:

I think it's shameful that retailers have not, at this point, reinstated pandemic pay for their employees.  This pandemic has dragged on for months and now we're facing a surge AND the holidays.  Now THAT would be the right thing to do.

MNB took note yesterday of a CNN report that "shoppers are once again loading up on paper goods and cleaning supplies in areas of the United States hard hit by rising coronavirus infections, leading to empty shelves at some Walmart stores.

"Officials at Walmart, the largest retailer in the country, said Tuesday that supply chains have not kept up with rising demand, and these goods have been harder to stock consistently in locations with sharp spikes in new virus cases."

According to the story, "Walmart CEO Doug McMillon called it 'disappointing' to see 'as many out-of-stocks as we have in consumables right now generally,' although he said the situation had improved since the spring. He stressed that Walmart was better prepared to handle the demand than it was earlier in the year."  Walmart also said that the shortages seemed to be localized, and not system-wide, which is why store managers have been empowered to set limits on purchases of certain items depending on circumstances.

Prompting one MNB reader to write:

For Doug to say they are disappointed in consumables in-stock rates in their stores, I think he should be reminded that “You get what you measure” and Walmart has always been highly focused on measurement in this area, by pushing inventory back to manufacturers. Its worked well for Walmart for awhile.  The out of stock challenge is not solely an issue with suppliers.

We had a piece yesterday about how Walgreens is trying to improve its game.  I was dubious, and was joined in that by several MNB readers.

One wrote:

Look at the number of out of stocks the next time you go to a CVS or Walgreen’s.  The stores either can’t keep up or they don’t care about “the front end”. Why should a healthcare store devote so much space to greeting cards, pet care or beach chairs etc. I think that they should stick to the “blocking and tackling” and do that better.

And MNB reader Frank Loffa wrote:

Standing in line at a CVS or Walgreens is a dreadful experience, they need to make the experience less intense and I must say that the addition of drive-up prescription pick up generates twice the stress on the pharmacists inside the store who are trying to keep two groups of customers happy!

From another reader:

CVS, Walgreens, and to a lesser extent Rite Aid, need to confront the high pricing perception that they have for just about everything sold in front of the pharmacy.  Most of what they sell in the front aisles can now be purchased elsewhere online, with more convenience and at much lower prices.  The national retail drug chains have well over 10,000 physical locations in the US and nearly all of them devote over 80% of their physical footage to front-of-store inventory that cannot possibly turn anywhere near as fast as it does in on-line retailer or mass-merchandiser competitors.    Additionally, a good part of what they sell in this space is unhealthy, like candy and soft drinks.

Radical transformation would be to find a way to better utilize this space to provide consumers with products and services they cannot get elsewhere.  For example, why are urgent care medical centers and chain drug stores in different physical locations?

Good question.

One more email from another MNB reader:

I am of the humble opinion that community pharmacy is headed the way of the independent bookstore, both thanks to the same massive institution. 

Retail pharmacy companies have known for some time that this day was coming, between Amazon’s applications for state licenses with their respective Boards of Pharmacy and their purchase of PillPack.   Amazon will complete the process of commoditizing this industry and drive independent community pharmacies out of business, including the one that employs my spouse.   The loss of these pharmacies might not affect people living in urban areas much, but they stand to have a tremendous impact in areas where patients have to drive to seek help from a pharmacist.   Amazon Pharmacy says that their pharmacists are available 24 hours a day, but if you try to contact them outside of their hours of 8 am -10 pm ET, you have to leave a voicemail and “a pharmacist will get back to you as soon as possible”.  (quote taken directly from their website)   Even if they return your call promptly, when you have a sense of urgency how will they solve your problem to get you what you need outside of those hours?   Or even during those hours?  Not everyone lives in an area where they can reasonably expect an Amazon delivery in a matter of a few hours. 

My spouse carries a pager and has been summoned to help patients in the middle of the night and on weekends as the nearest 24-hour chain pharmacy could be as much as 50 miles or more away for a patient in dire need.  Pharmacists serving in this role will tell you that’s what their job is all about and they are glad to provide the service, provided the patient remembers to also see them for their other medication needs at other times.  When Amazon squeezes all these independents and small chains out of business, who will be meeting you at 2 am to explain to you how to administer a pain med that you need to have RIGHT NOW for a screaming child?   No one. 

Pharmacists are the most frequently visited healthcare professionals in the US healthcare system.  When provided with the opportunity to do so by their employers, pharmacists can be invaluable in helping you to identify drug interactions and other medical issues before they require a doctor’s office visit or an emergency room trip.  If the CVSs and the Walgreens and the mail order pharmacies of the world hadn’t placed such an emphasis on just filling as many scripts as possible and simply handing out a bag to their patients, more people would know that pharmacists should be providing counseling to them every time they come into the store and, by doing so, they can ask you educated questions simply based on their ability to see you face to face on a regular basis.  It’s not unlike the difference between using telehealth for a doctor’s visit versus seeing a well-trained physician in person.  Done correctly, personal service from your pharmacist will do more to take costs out of the US healthcare system than any website can. 

On another subject, I got the following email from MNB reader Joe Axford:

I think your idea of a paid day off for every employee is a great one.

From what I can see, all the big chains in New England are open Thanksgiving, except for Market Basket.  If you must be open, why not close Friday then?  It's a very slow day, and I do realize they have to put the store back together after a busy week.  Kudos to the smaller chain stores closing both days, even knowing the shrink will be high for all dated items, with 2 days less to sell. Food for thought at least.

Regarding how companies are trying to deal with "last mile" issues, one MNB reader wrote:

Not exactly in the same context, however I did notice UPS is advertising for a “Seasonal Personal Vehicle Package Driver”, which I thought was odd yet in some ways brilliant. With the exponential increase in demand and the inability to add short term capacity within the existing fleet they took a page from the gig economy to solve an issue.

On another subject, from an MNB reader:

The BBC story on banning junk food ads on social media is a tad bit off target.  The obesity in UK children is not due to the ads, it is due to what the parents are feeding their children.  Looks to be just a “see what we did” move that will have no impact on childhood obesity.

How about they go play football (soccer)instead of vegging in front of the tube?? 

Point taken.

And finally, from another reader:

The Santa Claus announcement was the best!!!  Thank you.

Agreed.  It is reassuring to know that Santa has built-in immunities to Covid-19.

Published on: November 24, 2020

In Monday Night Football, the Los Angeles Rams defeated the Tampa Bay Buccaneers 27-24.