business news in context, analysis with attitude

Published on: January 5, 2021

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.

The beginning of a  new - and hopefully better - year calls for a new approach to the concept of a transaction.  Is it just when money changes hands for as product or service?  Or, if you think about it differently, is a transactional mindset actually the foundation for a framework on which to build a business and approach to work?

Our guest today is  is John Patterson, co-founder and CEO of Influence Ecology, which has been educating business leaders in Transactional Competence since 1987.  In his conversation with Sterling and KC, Patterson talks about "transaction competence," what the objectives and benchmarks for transactions should be, and why, to use his words, "those who transact powerfully, thrive."

You can listen to the podcast here…

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

Published on: January 5, 2021

MarketWatch reports that Albertsons has made the decision that its California banners - including Safeway, Vons, and Pavilions - should all stop handling their own deliveries and instead will use third-party providers such as Instacart (with which the retailer has had a relationship since 2017).

The story quotes spokesman Andrew Whelan as saying that "Albertsons Companies made the strategic decision to discontinue using our own home delivery fleet of trucks in select locations, including Southern California, beginning February 27, 2021 … We will transition that portion of our eCommerce operations to third-party logistics providers who specialize in that service."

The story attributes the decision to changes created  by the passage of Proposition 22 in the state, which "exempts app-based gig companies from a law that would’ve required them to treat their drivers and delivery workers as employees, allowing them to continue classifying them as independent contractors. Workers and others who opposed the ballot measure - which was backed to the tune of more than $200 million by companies that do deliveries, such as Instacart, Uber Technologies and DoorDash - had warned that it could affect employees in other industries."

Published on: January 5, 2021

Haven Health, a three-year old venture that was backed by Amazon, JPMorgan Chase and Berkshire Hathaway with the intention of revolutionizing their approach to health care, is being disbanded, with the players essentially saying that their ambitions exceeded their ability to deliver on them.

The Wall Street Journal writes that "Haven Health, sparked by an idea from JPMorgan Chief Executive Jamie Dimon and supported by Amazon’s Jeff Bezos and Berkshire’s Warren Buffett, sought to 'transform health care' and reduce costs for hundreds of thousands of workers at the three companies by pooling resources and technology."  But, the arrangement "proved unwieldy for solving the three sprawling companies’ problems, people familiar with the matter said. Different employee bases and locations led to different priorities, and each employer’s existing health-care system required different fixes, according to one of the people. After Haven struggled to implement any changes, the three companies opted to close it down, this person said."

The three  companies say they hope to be able to split Haven's employees among them, and that they gained some insights from "piloting new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use and prescription drugs more affordable."

While just the announcement in 2018 of Haven Health's creation was enough to drive down the stock prices of traditional insurance companies, the venture lost its CEO - writer, surgeon and Harvard University professor Atul Gawande - last May when he stepped down to become executive chairman.  A new CEO never was named, and there was a high turnover rate at the venture's executive levels.

The New York Times writes that "some of the ideas Haven’s employees generated were tested by the three companies, according to one of the people familiar with the collaboration. JPMorgan, for instance, tested telemedicine options - which became much more popular after the coronavirus pandemic forced the country into lockdown last spring - for employees in Ohio and Arizona, the two states where it has the most employees outside of New York.

"The bank also tested a program that let employees assess the cost of a test or doctor’s visit before it occurred, so they could better prepare to pay their medical bills, the person said."

The Journal notes that "even as Haven sought to improve health-care offerings for the three companies, Amazon teams worked separately to expand the company’s programs for its workers, particularly in Seattle. It launched a virtual primary-care clinic for employees there in 2019 dubbed Amazon Care. The program, which offered Seattle-area workers at-home visits by nurses or clinicians, is now available for all Amazon employees who use company coverage in Washington state, including warehouse workers."

Amazon also "has long pursued its own health-care ambitions, launched an online pharmacy in November that will ship insulin, asthma inhalers and other common generic or branded medications. It won’t sell opioids or other drugs deemed at higher risk of theft, and customers will need prescriptions for their medications."

Published on: January 5, 2021

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, here are the numbers:  21,353,051 confirmed Covid-19 coronavirus cases … 362,123 resultant deaths … and 12,736,512 reported recoveries.

Globally:  86,186,625 coronavirus cases … 1,862,862 fatalities … and 61,164,999 reported recoveries.  (Source.)

•  From the Wall Street Journal:

"The U.S. reported fewer new Covid-19 infections than a day earlier, as hospitalizations again hit a record high.

"The nation logged more than 180,000 newly reported cases for Monday, according to data compiled by Johns Hopkins University, down from 210,479 a day earlier.  The number of newly reported cases tends to be lower at the beginning of the week, as fewer people are tested over the weekend, but a gap in some states’ reporting on New Year’s Day led to a backlog in cases that has skewed national numbers in recent days."

•  From the Washington Post:

"More than 128,000 people across the United States are currently hospitalized with covid-19 on Monday, according to data tracked by The Washington Post. That number is a record and represents an increase of 2,800 patients in a single day."

•  The Wall Street Journal writes that "the U.S. is struggling to roll out enough vaccine doses to get ahead of the virus. In California - the hardest hit state, with more than 2.45 million cases, according to Johns Hopkins - Gov. Gavin Newsom said Monday that logistical hiccups in vaccine distribution meant the majority of doses sent to the state hadn’t been administered."

•  The Wall Street Journal also reports that the US Food and Drug Administration (FDA) yesterday rejected "suggestions to cut the recommended dose of Covid-19 vaccines so more people could be inoculated. The federal health agency said suggestions, including from Moncef Slaoui, chief adviser to the federal government's Operation Warp Speed coronavirus response program, to lower the doses, weren't supported by evidence and could put public health at risk.

"The two vaccines authorized for use in the U.S.—from Pfizer Inc. and Moderna Inc.—require two doses, given three or four weeks apart. Mr. Slaoui had suggested on Sunday that some people could be given two half doses of Moderna’s vaccine."

•  The Wall Street Journal reports that "British Prime Minister Boris Johnson began a national lockdown Monday, ordering the British population to stay home until mid-February amid spiraling infection rates caused by a new variant of the coronavirus.

"As of Monday evening, schools and nonessential shops are to shut across England and people have been told to only leave their homes if necessary.

"The imposition of a third national lockdown came after the government’s chief medical officers warned the more-contagious strain was spreading quickly across the country and that some hospitals risked being overwhelmed within three weeks if new restrictions weren’t put in place … There are now more Covid-19 patients in British hospitals than at the height of the pandemic in the spring."

•  Reuters reports that a coalition of major US airlines is proposing that the federal government simultaneously implement "a global testing program requiring negative tests before most international air passengers return to the United States" and at the same time "rescind current entry restrictions on travelers from Europe, the United Kingdom and Brazil as soon as possible."

The group, Airlines for America, "represents American Airlines , United Airlines, Delta Air Lines and other major carriers," Reuters writes.

The story says that the airlines support a Centers for Disease Control and Prevention (CDC) proposal for global testing of people returning to the US, but the proposal "faces significant opposition at top levels of the administration."

No word on how the incoming administration might deal with the CDC recommendations after January 20.

•  The Washington Post reports that the Trump administration has decided to pump $1.5 billion into the Farmers to Families Food Box program, which "has been a staple of food banks and food pantries throughout the pandemic" and "pays large food distributors to supply pre-packed boxes to nonprofits running food lines."

The move signifies a federal government reinvestment in a program that has distributed more than three million meals to hungry families around the country, but that ran out of money at the end of the year, forcing "the cancellation of weekly food drives across the country, leaving tens of thousands without a critical supply of food just before the holidays."

•  From the New York Post:

The highly-contagious UK variant of the coronavirus has been detected in Saratoga Springs, marking the first known case in New York State, Gov. Andrew Cuomo announced Monday.

"A 60-year-old man recently tested positive for the mutated COVID-19 strain, and is recovering, Cuomo said during an afternoon conference call.  'He appears to be on the mend,' said Cuomo.

"It’s believed that the patient, who was not identified by name, contracted the disease at a jewelry store in Saratoga Springs.

"Three other people in the store have also fallen ill, though it is not yet clear if they have the UK variant, Cuomo said.

"He had not traveled recently, suggesting that he contracted the strain from another yet-unidentified person within the community, Cuomo said."

•  Meanwhile, CNBC reports, Cuomo "said he plans to propose a law that would make it a crime to sell or administer coronavirus vaccine shots to people who are trying to skip ahead in line.

"Providers in New York can already lose their license if they fraudulently administer vaccines, though the law would add criminal penalties if approved by the state legislature, he said. So far, health-care workers and people living in nursing homes and assisted living facilities are eligible for Covid-19 vaccines.

"'If there’s any fraud in the distribution - you’re letting people get ahead of other people, or friends or family, or they’re selling the vaccine - you’ll lose your license, but I do believe it should be criminal and I’m going to propose a law to that effect,' Cuomo said at a press briefing.

"The Democratic governor also pushed for the state’s hospitals to administer the shots faster, saying they could face fines up to $100,000 if they don’t administer their allocated doses by the end of this week."

•  Axios reports on how "efforts to reopen America's public schools are running up against teacher unions who say they're more scared of Covid-19 than losing their jobs."  In Chicago, the union "says some of its staff won't return for in-person class, and it's holding a teach-in today on the dangers of school reopening plans."

The story points out that "public health officials - including in Chicago - say schools can safely reopen for in-person instruction.  They are pushing for reopening because of the toll that remote learning has taken on young students, particularly minority and poor children."

•  The Indianapolis Star reports that "the NCAA and city of Indianapolis have finalized plans to hold the entire men's NCAA tournament here.

"What is an unprecedented move comes in response to unprecedented challenges.   The ongoing COVID-19 pandemic, which forced the cancellation of last year's tournament, has already caused significant disruption across college basketball. Games have been canceled or postponed, and several programs around the country have had to pause activity midseason because of the virus … Holding the tournament in one centralized location, the NCAA hopes, will make the logistics of doing so safely and smoothly more manageable."

Published on: January 5, 2021

•  CNBC has a good story about why Walmart is expanding its presence in the healthcare business, and what the obstacles are:

Published on: January 5, 2021

•  A sign of the times - Amazon takes over an abandoned mall to be a new distribution  center.

The Associated Press reports that in Worcester, Massachusetts, the Greendale Mall - which used to house retail names that included Best Buy, Marshalls, TJ Maxx, DSW, and GNC - will be demolished and replaced by an Amazon “last mile” distribution center.

The approval by local planning officials came despite some local residents complaining that traffic, environmental impacts and noise would negatively impact the community.

Published on: January 5, 2021

Fast Company has an excellent piece in which a number of startup CEOs, executives at big companies, investors, and other experts offer their vision of what a post-pandemic world might look like, "from collaboration services to medical innovations to fresh ideas in AI, commerce, and even the tools we use to sustain our democracy."

You can read it here.

Published on: January 5, 2021

•  CNBC reports that "McDonald’s will launch three chicken sandwiches in February as it tries to reach new customers with more poultry on its menu.  Starting Feb. 24, consumers will be able to buy the Crispy Chicken Sandwich, Spicy Chicken Sandwich and the Deluxe Chicken Sandwich."

The story notes that "in November, executives told investors that they would boost the number of menu items with chicken because the category is growing faster than beef. While the new chicken sandwiches are only part of that strategy, Joe Erlinger, president of McDonald’s USA, said at the time that the new options will help consumers look at McDonald’s differently.

"In recent years, privately held Chick-fil-A has leapfrogged other restaurant chains to become the third-largest in the United States by sales, lagging behind only Starbucks and McDonald’s. Its chicken-focused menu has attracted new consumers as it has expanded beyond its Southern base and heightened competition with McDonald’s."

•  From Bloomberg:

THG Holdings Ltd., a British e-commerce operator that sells beauty and nutrition products, has agreed to buy Dermstore LLC as it expands its reach in the U.S.

THG is acquiring the retailer of high-end skincare and specialty beauty brands for $350 million in cash from Target Corp … The move will allow THG, whose sales have been boosted by the e-commerce boom amid Covid-19 lockdowns, to tap a new and large U.S. customer base for its own brands. It also comes after the company raised 1.9 billion pounds ($2.6 billion) in September in one of Europe’s biggest initial public offerings this year."

Published on: January 5, 2021

•  Festival Foods announced the retirement of Mike Mesich, the company's senior vice president of operations, and the promotion of Randy Munns, senior vice president of marketing and merchandising, to the role of COO.

Frank Abnet, currently vice president of store operations, will succeed Mesich as senior vice president of operations.

Sean Sanders, center store senior director, has been promoted to vice president of center store, while Joe Zink, merchandising senior director, has been promoted to vice president of center store merchandising.

Published on: January 5, 2021

Yesterday, with what I must admit was a certain amount of satisfaction, MNB took note of a Wall Street Journal piece about how Instacart, which "once seemed like the perfect partner for supermarkets looking to break into e-commerce," is beginning to lose some of its perceived luster.  "After several years together, though, some grocers are starting to question the relationship … many supermarkets say they aren’t making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order. Some of Instacart’s retailer partners say the service holds too much control over customer interactions and expect it to take an increasing share of money that food makers spend on marketing."

I commented:

Gee.  Y'think?

The argument here for quite some time has been that while Instacart's business model makes sense for Instacart, it is a lot less sensible for the retailers with which it does business - it threatens their vale proposition, brand equity, customer relationships and even their economics as it siphons off some promotional dollars from manufacturers.

MNB reader Joan Hume-Cohen responded:

I shop online every other week using Instacart.  I now live in Ohio and my 96 year old aunt is home bound in CT with a caregiver.  We use the Shop Rite option and purchase an average of $200 each time.   I do increase the suggested tip.    The shoppers communicate with me via chat when they need to substitute items and it all works well.   The shoppers have to be paid.  Maybe that is how the 10% is used?   Instacart is an invaluable service and I sure would miss them!   

To be clear, I've generally said that I understand why consumers like it.  It just undermines the retailer.

From another reader:

In general, I totally agree with you that Instacart isn’t building the customer relationship and brand equity that a retailer needs in order to better compete.  However, that assumes that the retailer can provide a better customer experience (or at least prevent a bad experience), than using a partner like Instacart (or Shipt).  My real life example is Hy-Vee Aisles Online vs Shipt, which I’ve used both….and for me, Shipt has been the better customer experience by far, which is a shock because I really love Hy-Vee and think they have done a great job entering the Minneapolis/St. Paul market.  With Shipt, I’m able to add items all the way up until the shopper pays.  The shopper connects directly with me all along the shopping experience (via text message) for anything I need, specific questions about substitutions, and any special requests. Alternately, when using Hy-Vee’s Aisles online, once I complete my order….it’s locked & done, and I’m unable to make any changes to my order (add a loaf of bread or gallon of milk), even if the pickup/delivery is for a time that is hours away.  For substitutions, my options are for the Hy-Vee shopper to find something “close”, make a specific note of what to do during the ordering process, or as seems to most often be the case…drop my item from the order all together.  After using both Hy-Vee Aisles Online and Shipt several times, with really the same results, I have moved to only using Shipt, and that opportunity that the retailer had to build that brand equity has now been lost.  It’s not enough just to have the e-commerce platform, it has to be as good or better than the alternative or else it becomes a negative.

If any retailer doesn't think it is important to a) control every aspect of ther customer experience and b) insure that it does a better job than a company to which it outsources the function, then shame on that retailer.  It deserves to lose its business to the likes of Instacart.

From MNB reader Avie Rosacci:

Tried it twice and sorely disappointed both times on the inability to substitute out items as well as poor quality of produce selected. Considering they are making money from consumer and retailer I am afraid ultimately it will drive up prices.

From another reader:

Restaurants have the same gripe with GrubHub, Door Dash, etc. There seems to be more collaboration needed between these companies because I can’t ever remember a time in the last 8 or so years that any restaurant has been happy with these third parties.

I think curbside pickup is the best option for retailers and restaurants. Not quite as convenient as having product delivered to your door but much safer than going in.

MNB reader  Aaron Gottschalk  of Wildberries Marketplace wrote:

I'm going to offer a shameless plug for ShopHero, an online shopping facilitator, specializing in supporting independent retailers.  

Sure, we had an opportunity and option to go with Instacart.  Talk about the challenges of reaching or working with someone!   And then we heard about ShopHero and they are a smaller company, with real people including one of the founders, who personally communicated and helped provide the compelling reasons why we selected them to help us set up and get our online shopping portal off the ground.  

They have a set up fee and monthly fees, but the great thing about partnering with ShopHero is our online prices match our in-store prices.  And we do the shopping, the customer service, and the resolutions to problems/complaints.  We control the entire experience and boy does that end up serving the customer and our store really well, in the end.  

We feel fortunate and grateful every day that we did NOT go with Instacart.  And when we read articles about how they treat their shoppers, and that they are profiting at the expense of retailers and consumers, it only supports our decision even more.  

MNB reader Terry Marshall had some thoughts about innovation in the food business:

I agree with you in regards to innovation, but what is truly innovation vs a line extension?  Some manufacturers are viewing a new flavor or size as “innovation” but is it?  I argue on the side it isn’t.  In regards to reducing the number of skus by retailers, it is a challenging concept for them that takes an enormous amount of analysis to do this correctly.  When I worked for a major retailer, this was part of my responsibilities in assisting in reducing duplicity and skus.  We used internal loyalty data to help guide the decisions to help determine transferability of sales.  This was some years after a disastrous experiment in which the bottom 25% of skus in many categories were deleted.  It was found a lot of people walked when their brand was no longer on the shelf.  Some choices are easy, like how many sizes do you truly need, or how many flavors do you need.  Others not so much and that requires the real work.  With the advancement in technology and analytics many retailers will figure it out to some extent, but others won’t.  The big question will be is if they find they made an error, how quick will they be to fix it before losing that customer completely.

Online ordering will help cover some of the mistakes but retailers can’t get lulled into a false sense that it will cover all as consumers will switch even more frequently because they can at the touch of a button.

Regarding retailer entities seen as potentially being in danger during 2021, one MNB reader wrote:

I’m pretty sad about Macy’s.

They’ve had opportunities to better the in-store shopping experience, but they junked up their stores and down-graded the quality of the their signature brands. They also dived way into the crazy coupon discount game, which only serves to confuse shoppers and further cheapen their image. 

Not surprised they’re struggling. And really not surprised these other retailers on the list. 

Sigh… 

On the subject of traction being gained for the $15 minimum wage, one MNB reader wrote:

Seems incredible to me living on the MA/NH border, that the difference in minimum wage is now $6.25/hour.  $13.50 in MA, while NH is stuck at $7.25.  If you were a student living in either state but close to the border, where would you look for a job? 

MNB reader Joe Axford wanted to comment on the interview about leadership that we did yesterday with Steve Campbell of Provoke:

I really enjoyed the interview KC, great way to start 2021, and welcome back!

And finally, one MNB reader addressed yesterday's FaceTime video, in which I used a scene from City Slickers to illustrate the importance of communications relevance:

Had a similar experience to yours, but on a less profound level over the holidays.  Can’t remember why but said 'Yabba Dabba Doo' to my 6 year old right after Christmas.  He laughed and asked me what that was and I began talking to him about the Flintstones.  He asked if we could watch so ended up buying a season.

Couple of observations, couldn’t believe the Flintstones began in 1961, that was 10 years before I was born which really surprised me.  Second was how many thing my son couldn’t understand, rotary phones and rabbit ears are just a couple of examples.  Either way, we both enjoyed watching in the mornings over break, he belly laughed and I reminisced.  Had a great time with my kid and made another good memory.    

Some things stand up and some things don't.

"The Flintstones" was sort of a kid's version of "The Honeymooners," which is so many ways does not hold up.  For example, this scene:

On the other hand, some scenes remain priceless: