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    Published on: December 7, 2020

    by Kevin Coupe

    "The best laid schemes o' Mice an' Men, / Gang aft agley,”  poet Robert Burns once wrote.  And for modern proof that the adage is true, go no further than Santa Monica, California.

    It is there, the Los Angeles Times reports, that an old Sears store that had been there since immediately after World War II, becoming a kind of local landmark, had "spent more than two years getting a $50-million makeover to turn it into a chic office building for creative types, spiced with a choice handful of restaurants and stores appealing to locals and the millions of annual visitors who typically visit the seaside city."  The project, the Times writes, was intended to "be a showcase for how to reuse obsolete department stores in urban areas."

    However, the "timing has run into a global catastrophe" as "the pandemic has knocked the office and restaurant rental markets on their heels."

    The hope is that with the end of the pandemic will come a resurgence in interest in office space, restaurants and bricks-and-mortar retail.  But, of course, that is all unknown at the moment … though the answer, when it comes, will be an Eye-Opener.

    Published on: December 7, 2020

    e-Marketer reports that as the pandemic shook up "the grocery landscape" and accelerated "the shift to online grocery faster than we previously anticipated," one of the byproducts was Kroger bearing fruit from its "digital investments over the years."

    Kroger, the story says, "will see its ecommerce sales in the US surpass $11 billion this year, growing by more than 79% year over year.  And for the first time, Kroger will break into the top 10 US ecommerce retailers list and hold the No. 9 spot, inching just past Costco Wholesale."

    Kroger "will also surpass Macy’s, which held the No. 10 spot in 2019 but has since dropped out of the list."

    Cindy Liu, eMarketer senior forecasting analyst at Insider Intelligence, analyzes it this way:  "“The pandemic has shifted consumer priorities.  Kroger will benefit from two tailwinds this year: Eating at home continues to be in favor among Americans, and there’s been greater interest by consumers in ordering groceries online. With these two forces at play, we shouldn’t be surprised by Kroger’s strong growth this year.”

    KC's View:

    I would expect that as Kroger pursues new approaches to the supply chain - both through robotic warehouses and micro-fulfillment at store level - we will see its e-commerce numbers continue to grow.  

    The companies I feel bad for are the ones that only now are recognizing that they need to invest in this sector.  

    Published on: December 7, 2020

    The Wall Street Journal reports on how troubled bookseller Barnes & Noble, led by CEO James Daunt, "is abandoning the strategy that made it a bookselling behemoth two decades ago - uniformity designed to create economies of scale and simplify the shopping experience. Instead, the company is empowering store managers to curate their shelves based on local tastes.

    "In recent months, Mr. Daunt has cut the ranks of once-powerful staffers who supervised large groups of stores and fired nearly half of the company’s New York-based book buyers, powerful tastemakers who decided which titles stores should carry. In the process, he has severed decadeslong relationships with publishers who paid to have their books placed in stores … It’s the most ambitious restructuring ever undertaken at the company, one that will help determine the future for traditional bookselling. Mr. Daunt, who took the reins after hedge fund Elliott Management Corp. bought Barnes & Noble in August 2019, has little margin for error."

    Daunt says that the future of the bookstore business is at stake.

    “I don’t think we have any God-given right to exist,” he says.  “How is it that bookstores do justify themselves in the age of Amazon? They do so by being places in which you discover books with an enjoyment, with a pleasure, with a serendipity that is simply impossible to replicate online.”

    Daunt tells the Journal that in the end, "I expect to give the booksellers complete freedom in all the things that I think should matter.  Freedom to put the books wherever they like, display them however they like, arrange them however they like."

    KC's View:

    The story makes the point that Barnes & Noble was in trouble before the pandemic hit, and while the coronavirus made things worse, the closure of stores and the hitting of bottom actually gave Daunt room to maneuver.

    Freedom, as Kris Kristofferson once wrote, is just another word for nothing left to lose.

    The ending of deals with publishers that gave Barnes & Noble revenue in favor of a model that focuses on local control is one version of what we've often talked about here on MNB - the importance of making money on the sell and not the buy.  This is something that the great Glen Terbeek - one of the great sages of the food retailing business - was talking about more than two decades ago … that, and how locally focused retailing that is responsive to consumers is the best way to create differentiated experiences.  Glen was right then, and he's even more right now at a time of heightened competition.

    Published on: December 7, 2020

    Forbes has an excellent story about Nordstrom and how it "has found that the combination of its legacy and traditions, along with new ideas and an expanded internet presence, will leave it well prepared for 2021."

    The main points:

    •  "Despite COVID-19, Nordstrom went forward with its annual Anniversary Sale, a long-standing sale event. In contrast to most retailers who focused on excessive summer stock clearance sales in August, Nordstrom offered new, specially curated merchandise."

    •  "The company has expanded its curbside pickup service designed for 'the safest and most convenient holiday ever.' The contactless service includes complimentary gift wrap with all curbside purchases. Special surprises and gifts are frequently offered to the first 50 curbside pickup customers each day as a gesture of thanks."

    •  "Nordstrom has stressed convenience in its stores this holiday season. Stores are stocked with specially selected pre-packaged merchandise designed for quick checkout, extensive toy shops, prominent directional signage, and in-store 'pop-up' gift departments."

    The bottom line:

    "Nordstrom has significantly increased its online investment and the results have been fruitful. Last week’s third quarter earning call stated that digital sales have reached 54% of the entire business, up 33% over pre-COVID levels. CEO Erik B. Nordstrom told investors, 'we are a majority digital business right now'."

    KC's View:

    The question I'd ask is whether these trends add up to a company that will focus a lot more on its Nordstrom Local format, or some version of it, and a lot less on its traditional big department store format.

    Published on: December 7, 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 15,159,529 confirmed cases of the Covid-19 coronavirus, with 288,906 resulting deaths and 8,855,593 reported recoveries.

    Globally, there have been 67,459,536 confirmed coronavirus cases, with 1,542,969 fatalities and 46,665,740 reported recoveries.  (Source.)

    •  From the Associated Press:

    " The head of the U.S. vaccine development effort said Sunday he believes the COVID-19 vaccine could have long-lasting effect once distributed.

    "Dr. Moncef Slaoui told CNN’s 'State of the Union' that only time will tell for certain, but that in his opinion, the vaccine’s effectiveness could last for 'many, many years,' with older people and others who are more vulnerable requiring a booster every three to five years.

    "He said that one of the hallmarks of immune systems is memory, so the body’s response to the coronavirus will be much faster once vaccinated.

    "Still, Slaoui said it’s not known whether vaccinated persons could spread the virus to others even if protected themselves. He said there may be an initial indication on that sometime in February or March.

    "Slaoui stressed that the continuing unknowns make it important for people to remain cautious and take safeguards to protect themselves and others against COVID-19.  He said that once 70 to 80% of the population is vaccinated, 'the virus will go down'."

    •  From National Public Radio (NPR):

    "With coronavirus cases surging and capacity inside intensive care units rapidly nearing dangerously low levels, nearly 85% of California residents will soon be under sweeping new restrictions as part of the state's latest salvo to bring the pandemic under control … The rise in cases hitting California has mirrored the surge currently tearing through the rest of the country. On Saturday, the U.S. recorded 213,875 new cases and more than 2,200 deaths, according to the latest figures from Johns Hopkins University. More than 101,000 Americans were in the hospital, with roughly a fifth of those patients in the ICU."

    According to the story, "The latest directive will be felt in nearly every aspect of daily life. It asks residents to stay at home 'as much as possible' and for '100 percent masking' when they are outside. Restaurants will be open only for takeout or pickup, while businesses such as hair and nail salons, movie theaters and bars will be closed. Playgrounds, museums and zoos will be closed as well.

    "Retailers, including grocery stores, will remain open, but capacity will be limited to 20%. Schools that are currently open will be allowed to continue in-person learning. Places of worship will also be allowed to stay open, but only for outdoor services."

    "Staying home for three weeks is a sacrifice, but if every Californian did that for a month, we could stop this disease in its tracks," says Dr. Erica Pan, the state's acting public health officer.  "This public health order strikes the balance between saving lives, providing essential services that we all rely on and still allowing Californians to participate in lower-risk outdoor activities that are crucial for our physical and mental health."

    •  The Los Angeles Times provides a local angle, reporting that a new stay-at-home order was imposed "on Southern California and the San Joaquin Valley Sunday night, as the coronavirus crisis spirals out of control with a speed that has exceeded health officials’ most dire projections.

    "Some 33 million Californians will be subject to the new order, representing 84% of the state’s population. The state mandated the restrictions in the Southland and Central Valley as capacity at hospitals’ intensive care units hit dangerously low levels. Five Bay Area counties will also begin lockdown restrictions in the coming days despite not yet reaching the threshold at which such action is mandated by the state.

    "The rules are less sweeping than California’s pioneering stay-at-home order in the spring, which is credited with slowing the first COVID-19 wave. But the new order will change daily life for many, especially in suburban Southern California counties like Orange and Ventura, which so far have enjoyed more open economies than hard-hit Los Angeles County."

    •  Axios reports that "President Trump's personal attorney Rudy Giuliani, 76, has tested positive for COVID-19," and reportedly is being treated in Georgetown University Hospital.

    •  Fox News reports that Costco has decided to "extend its senior shopping hours "until further notice" due to the recent uptick in COVID-19 cases … The company previously planned to reduce the hours for seniors and other vulnerable shoppers back in July but reversed course after cases surged this past summer."

    •  Reuters reports that "Smithfield Foods, the world’s biggest pork processor, said on Thursday it had offered to help U.S. health officials distribute COVID-19 vaccines and store them in ultra-cold freezers that are in high demand to support a public vaccination campaign."

    The story notes an irony:  "Thousands of meatpacking workers employed by Smithfield and rivals like Tyson Foods and JBS USA have been infected with COVID-19. Nearly 20 U.S. meat plants were shut in the spring due to outbreaks, tightening supplies, raising prices and making meatpacking one of the industries most impacted by the pandemic in the United States."

    •  The Wall Street Journal reports this morning that "Next summer’s Olympics in Tokyo will cost at least an extra $2.5 billion because of the Covid-19 pandemic, event organizers said.

    "The International Olympic Committee and organizers in Japan say they are confident the Games can go ahead in July after a one-year postponement, but costs have been piling up and opinion polls show the Japanese public would prefer a further delay or cancellation."

    •  The New York Times reports that it did an informal survey of 700 epidemiologists, and "half said they would not change their personal behavior until at least 70 percent of the population was vaccinated. Thirty percent said they would make some changes once they were vaccinated themselves.

    "A minority of the epidemiologists said that if highly effective vaccines were widely distributed, it would be safe for Americans to begin living more freely this summer."

    The story notes that "epidemiologists are a very cautious group. Most said that even with vaccines, it would probably take a year or more for many activities to safely restart, and that some parts of their lives may never return to the way they were … Epidemiologists worry about many unknowns, including how long immunity lasts; how the virus may mutate; the challenges of vaccine distribution; and the possible reluctance to accept the vaccine among some groups."

    One epidemiologist tells the Times of one other change the pandemic has wrought:  "I will never again have to explain what an epidemiologist is.”

    Published on: December 7, 2020

    The New York Times reports this morning  that even as e-commerce has become "a lifeline for consumers and companies during the pandemic," the current holiday season is likely to "strain the industry as never before: An estimated three billion packages will course through the nation’s shipping infrastructure — about 800 million more than delivered last year.

    "This flood of packages is hitting shipping companies at the end of a year of frenzied demand for everyday household items by a public largely stuck at home and wary of doing its buying in person. The deliveries could make or break some smaller retailers already on the edge financially because of lockdowns and fewer customers in their stores."

    The story goes on:  "Packages that don’t arrive by Christmas will be a disappointment for customers but a disaster for these struggling retailers, which have been forced by the coronavirus pandemic to rebuild their business around e-commerce. The future of retailing is increasingly online, and companies don’t want to give customers any reason to think they can’t deliver."

    KC's View:

    Got an email from an MNB reader over the weekend about how he was "walking through my neighborhood (Williamsburg) today (and) saw UPS carriers unloading out of an unfamiliar truck and I realized that it was a rented Budget truck.   Figured I would send to you since I think it is a perfect example of capacity challenges this holiday season when a logistics giant like UPS (whose trucks are a brand presence in and of themselves) needs to rent trucks. Maybe this happens in normal times, but I’ve personally never seen it. It was an eye opener for me and hoped it would be for you too. "

    It is … and an example of how far these shipping companies will go to keep up with the traffic.

    Published on: December 7, 2020

    •  CNN has a story about how the food delivery business may about to face a second reckoning, having dodged a bullet on the first one.

    Here's the premise of the story.  A year ago, with costs high and consumer demand mediocre, many of the best-known food delivery businesses were considering their tenuous futures, pondering the possibility of changed business models or mergers that would give them new life.  Then the pandemic hit, creating enormous demand for their services, and suddenly everyone was in clover.  A number of them saw it as the perfect time to announce IPOs and cash in on their new and better reality.

    But now, CNN reports, "The vaccine rollout signals what could be the beginning of the end of the pandemic, and with it, yet another shift in demand."

    "People have gotten much more used to ordering food and other products through delivery services. Some of that will decline once it's safe to do things in person, of course," Scott Duke Kominers, an associate professor at Harvard Business School, tells CNN.  "But new habit formation is powerful."

    •  The Wall Street Journal reports that changed "shopping habits during the pandemic are reshaping America’s labor market.

    "The nation added jobs for the seventh straight month in November, the Labor Department said Friday. Most came in the transportation and warehousing industries - the ones that package, ship and deliver goods to consumers."

    The story goes on:  "The shift is creating a divide in the workplace. U.S. employment is still 6.5% smaller than it was in February, the month before the pandemic caused businesses across the U.S. to close. But employment in warehousing and related industries has boomed. Warehousing and storage jobs have grown by 97,000, or 8%, since February. Courier and messenger jobs—workers who deliver goods—have expanded by 182,000, or 22%.

    "Much of the growth is tied to consumer spending. Even before the pandemic, U.S. households were increasingly buying retail items online, including clothing, gifts and groceries. The pandemic has accelerated that trend. Now, increasingly consumers are even buying cars online, instead of going to the showroom."

    •  The Chicago Tribune reports that "Amazon Fresh, the e-commerce giant’s budding chain of physical grocery stores, is set to open Thursday in Naperville, the first of four stores the company is planning in the Chicago area.

    "The high-tech shopping experience will include the option to use Dash Carts, which use cameras, sensors and scales to identify the items selected and ring them up, allowing customers to skip the checkout line. Terminals outfitted with voice-enabled Alexa, Amazon’s personal assistant technology, will help shoppers locate products and offer recipe suggestions.

    "The 35,000-square-foot Naperville store, at 3116 S. Route 59, is the fifth Amazon Fresh store nationwide and the first outside of California. Amazon has been using the space since July to fulfill online grocery orders."

    Published on: December 7, 2020

    •  The Wall Street Journal reports this morning that fast feeder Chick-fil-A has sued a number of poultry producers - including Tyson, Pilgrim's Pride, Sanderson Farms and Perdue - accusing them of price fixing.  According to the story Chick-fil-A says the companies "coordinated pricing for meat supplies and collectively reduced production to push up prices."

    Chick-fil-A is said to be seeking unspecified damages and legal fees.

    The Journal notes that "the lawsuit adds one of the U.S. poultry industry’s biggest customers to a four-year legal battle over alleged collusion among companies that produce the bulk of the roughly 37 billion pounds of chicken consumed annually in the U.S.

    "Major supermarket operators and food-service distributors have filed civil suits alleging anticompetitive behavior, and this year the U.S. Justice Department indicted senior chicken-industry executives and sales officials on criminal charges of bid-rigging and price-fixing. The defendants have pleaded not guilty to the criminal charges, and major chicken companies are contesting the civil-court claims."

    •  From AdWeek:

    "Walgreens Advertising Group is the latest retail media creation to enter the fray at the tail-end of a year that has seen both major store brands and ad service providers undergo substantial disruption.

    "In launching WAG, the retailer hopes to tap into lasting behavioral changes driven by both consumers and advertisers.

    "WAG offers media buyers ad placements across the retailer’s owned and operated properties, including a vetted network of third-party websites. Its analytics capabilities are based on using first-party data gauged from its MyWalgreens loyalty program."

    Published on: December 7, 2020

    We have continued criticisms of my approach to reporting about the pandemic.

    One MNB reader wrote:

    KC... fear mongering and recycling the left bias news doesn’t really tell the true story. If you persist in spreading the fear then maybe you should reference someone who follows the science and has no political agenda...  Dr. Jay Bhattacharya / Professor Stanford University is a Covid expert who speaks from Science. Can we expect lockdowns to prevent the spread of Covid...the answer is No ! Ruining the economy and people’s lives is not acceptable. We need to accept reality and learn to live with this epidemic. Young people and poor people are paying the ultimate cost as we move forward which means more government dependency... Is that a good thing?

    Maybe I'm wrong on this, but Dr. Fauci - who has had his job since being appointed by President Ronald Reagan and has worked for three other Republican presidents (Bush, Bush, Trump) and two Democratic presidents (Clinton, Obama) - strikes me as a very model of a scientist who has no political agenda.

    I'm not sure it would be called a political agenda, but Dr. Bhattacharya certainly has an agenda of some kind - he is one of three authors of what has been referred to as the Great Barrington Declaration, which promotes a herd immunity approach to the pandemic.

    The New York Times described the Great Barrington Declaration this way:

    "The central proposition — which, according to the declaration’s website, is supported by thousands of signatories who identify as science or health professionals — is that to contain the coronavirus, people “who are not vulnerable should immediately be allowed to resume life as normal” while those at high risk are protected from infection.

    "Younger Americans should return to workplaces, schools, shops and restaurants, while older Americans would remain cloistered from the virus as it spreads, receiving such services as grocery deliveries and medical care.

    "Eventually so many younger Americans will have been exposed, and presumably will have developed some immunity, that the virus will not be able to maintain its hold on the communities, the declaration contends."

    The Times goes on:

    "Dr. Anthony Fauci, the government’s top infectious disease expert, has dismissed the declaration as unscientific, dangerous and 'total nonsense.' Others have called it unethical, particularly for multigenerational families and communities of color.

    "Alarmed and angry, 80 experts on Wednesday published a manifesto of their own, the John Snow Memorandum (named after a legendary epidemiologist), saying that the declaration’s approach would endanger Americans who have underlying conditions that put them at high risk from severe Covid-19 — at least one-third of U.S. citizens, by most estimates — and result in perhaps a half-million deaths."

    Herd immunity is essentially the approach taken in Sweden, and it hasn't worked.

    From Bloomberg:

    "There’s little evidence that herd immunity is helping Sweden combat the coronavirus, according to the country’s top epidemiologist … In a recent OECD study, Sweden consistently ranked among the hardest hit nations in Europe, as measured by relative Covid mortality and infection rates. It was also the slowest at containing transmission.

    "Sweden was recently forced to recalibrate its approach against the virus, as the daily case rate topped 7,000. In what Prime Minister Stefan Lofven called an 'unprecedented' step earlier this month, Swedes will no longer be free to gather in public in groups larger than eight. The sale of alcohol is now also banned after 10 p.m."

    As I've said here before, I'm no scientist … but it seems to me that if we'd followed that approach from the beginning, we probably would have a lot more souls than we've lost.

    Here's what I am fairly sure of:  If you think Bhattacharya has no agenda, but that Fauci does, I'm not going to convince you otherwise.  All I'm going to do is try to report the science the best I can, with a constant and consistent eye on how it all may impact retailers.

    On this point, let me reiterate something:  Fauci has consistently said that lockdowns are not necessary if people wear masks when outside the home, practice physical distancing and wash their hands frequently.  When people congregate without wearing masks, they are being most successful at perpetuating and exacerbating conditions that make lockdowns necessary.

    That's why stores have to be vigilant about enforcing the rules, and consumers have to do their part.

    On a related subject, one MNB reader wrote:

    To your reader’s point about the Covid recovery rate being 99.5%, note that using that same rate of recovery for successful airline flights, we would have had over 200,000 crashes in 2020.

    We had over 40 million flights so far this year even with Covid

    Think people would be more careful flying if that were the case?

    %’s are one thing.  Raw numbers are another.

    Responding to the calculator in the New York Times that allowed people to estimate when they might get the vaccine, one MNB reader wrote:

    No priority list is perfect I suppose, but as an older guy with a number of health related concerns who can (and typically does) spend relatively less time out and about, it seems to me everyone would be better served by vaccinating my son who works in a grocery store, my daughter who is a child protection investigator with the sheriff or my wife who works at Walgreens before me. Just saying.

    You're right.  No list will be perfect … and as pointed out, the calculator was "only is an estimate, based on available information," and not anything official.  I'm with you, by the way … the calculator suggested that I'd get the vaccine before my daughter, who is a teacher.  I'd want her to get it first.  (If you vaccinate all the nation's teachers, you go a long way toward addressing the problem of school closures.)

    On the same subject from another reader:

    Just took the NYT test.  I find it very disconcerting that my “place in line” is behind people that break the law and people that do not contribute to our society and economy.  How left of them.  BTW, I’m 64 and employed.

    "Left?"  What the hell does that have to do with anything?  The Times only took the best available information and created an algorithm.

    Some of those people who may be ahead of you on line may be there because they live in places - like, say, jail - that have become breeding grounds for the virus, and so getting them vaccinated could save a lot of lives.  Even if they are lives that, in your view, don't contribute to society and the economy.

    Published on: December 7, 2020

    In Week 13 of the National Football League season…

    New Orleans Saints 21, Atlanta Falcons 16

    Detroit Lions 34, Chicago Bears 30

    Cleveland Browns 41, Tennessee Titans 35

    Cincinnati Bengals 7, Miami Dolphins 19

    Jacksonville Jaguars 24, Minnesota Vikings 27

    Las Vegas Raiders 31, NY Jets 28

    Indianapolis Colts 26, Houston Texans 20

    LA Rams 38, Arizona Cardinals 28

    NY Giants 17, Seattle Seahawks 12

    Philadelphia Eagles 16, Green Bay Packers 30

    New England Patriots 45, LA Chargers 0

    Denver Broncos 16, Kansas City Chiefs 22