retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: January 6, 2021

    by Michael Sansolo

    The business model for survival in what’s like to be a tumultuous new year comes from, of all places, the Bee Gees, a music group that reached superstardom in the disco era.

    In many ways, that’s the essence of the story. The Bee Gees (or brothers Gibb) started their musical journey light years away from the disco tunes that would earn them stardom and scorn at the same time. In the many decades of their success the Bee Gees mastered, what the New York Times called the most rare of pop culture skills: adaptation.

    Adaptation, as Charles Darwin opined in the 1800s, is the key to survival. In his studies of the natural world, Darwin posited that "it is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”

    Which brings us back to the Bee Gees.

    Prior to their successful songs for the ultimate disco movie, Saturday Night Fever, the Bee Gees had a run of hits that made them appear to be more of a knock off of the Beatles, the New York Times article, as well as a new HBO documentary, explains.

    The importance of adaptation is worth considering as we head into a new year fresh off one of the most complex and challenging years in history. The retail food industry was thrown for a never ending series of ups and downs thanks to Covid-19  - from the panic shopping of early March to supply chain breakdowns in key products to a designation as essential businesses and then to reaping incredible sales gains thanks to lockdowns and the near-total shutdown of the food-away-from-home industry.

    In many ways 2020 provided enough challenges to last a few decades.  Heading into 2021, countless questions remain such as whether shoppers, now accustomed to online shopping, will ever return to stores … whether restaurants will survive and compete again … will vaccinations tame the virus … and when and if the economy will stage some kind of rapid recovery.

    All of these questions are connected - the answers that emerge to one will impact the answers to the others.  And, none of these questions is simple because not one of them comes with any modern precedent. There may well be lessons from the Spanish flu pandemic of 1918, but that happened before supermarkets, the Internet or modern global commerce existed. In other words, it’s not much of a precedent to consider.

    That means that companies will spend a large part of 2021 and maybe 2022 searching for paths to success.

    And that’s again why we need consider the Bee Gees, a group that should be best remembered for its ability to adapt rather than an album of disco tunes. 

    The brothers Gibb never tired of finding new ways to create a successful sound. Take for example how they landed on oldest (and only surviving) brother Barry’s falsetto that dominated the disco songs. Listen to older songs by the group and the falsetto never appears until Barry employed it in the background of a long-ago non-disco hit. One of his brothers insisted they had found something and the hits followed.

    In that same way businesses need to consider what unexpected efforts paid off in 2020 and how could they be employed going forward. It might be the use of curbside pickup or even plumbing data to better decide variety decisions. Maybe it comes from how to position once invisible staffers as the stars of the show. Or how to best position the benefits of home meals.

    No matter what, adaptation will be the key. So start limbering up, you are going to need to be very flexible.

    It is all part of stayin' alive.

    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: January 6, 2021

    Two industries that have been devastated by the pandemic are restaurants and hotels.  KC happened upon a story about how, in several markets, these two segments came together with an ingenious idea to generate some new business and fresh enthusiasm.

    Published on: January 6, 2021

    Ahold Delhaize said yesterday that it has completed its acquisition of e-grocery pure play FreshDirect, in which it will own 80 percent of the business;  private equity group Centerbridge Partners is acquiring the remaining 20 percent.

    Frans Muller, Ahold Delhaize’s CEO, said, “We are very pleased that we can now definitively welcome FreshDirect to our family of great local brands. This leading local online brand with a large and loyal following will help us reach additional customers in the New York trade area and further propel our omni-channel evolution. We are looking forward to working with our new FreshDirect colleagues.” 

    Ahold Delhaize has said that FreshDirect will retain its brand name and operate independently out of its New York City warehouse, from which it delivers fresh food and prepared meals there and in select markets between Connecticut and Washington, DC.

    KC's View:

    Ahold Delhaize has a real opportunity here.  It can extend certain operational and financial efficiencies to FreshDirect, and it can learn much from how its new addition uses the e-commerce channel in fresh food.  And, it can incorporate the brand into its stores, creating FreshDirect sections with high-quality prepared foods and meals that can differentiate it from competitors.

    But it has to embrace the opportunity in an intelligent and nuanced way.  Because it actually is easier to kill the brand than it would be to celebrate it.

    Published on: January 6, 2021

    The Associated Press reports that Amazon has spent an undisclosed amount to buy 11 jets from Delta and WestJet, intending to use them to improve its fast-expanding delivery network that competes with the likes of FedEx and UPS.

    It is, the story says, the first time that Amazon actually has bought jets - normally it leases jets for its fleet.

    “Our goal is to continue delivering for customers across the U.S. in the way that they expect from Amazon, and purchasing our own aircraft is a natural next step toward that goal,” said Sarah Rhoads, Vice President of Amazon Global Air. “Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises.”

    All of the planes are Boeing 767-300s, and will be converted to hold cargo instead of passengers.

    Bloomberg adds, "A report last year estimated that Amazon’s fleet would likely grow to 200 aircraft in the coming years, rivaling UPS in size. Amazon operates mostly from smaller, regional airports close to its warehouses, routing packages between locations to accommodate quick delivery.

    "The deals announced Tuesday mark the second time Amazon has taken advantage of the depressed market for aircraft since the Covid-19 pandemic crippled air travel and sent many aircraft into storage. In June, Amazon said it was leasing an additional 12 planes. As with the leased planes, the newly purchased aircraft will be operated by contractors."

    KC's View:

    Every time I see a gray Amazon delivery truck come down my street, I think about how it would be completely natural for it to carry products other than those sold by Amazon.  I have to imagine that this is in the cards before too long, and the same thing goes for its planes.

    Published on: January 6, 2021

    Following up on yesterday's reporting 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, the San Francisco Chronicle reports that the company has chosen DoorDash to handle deliveries for its stores.

    "While we know that this move will help us create a more efficient operation, it wasn’t a decision we made lightly or without a great deal of consideration," said spokesperson Wendy Gutshall.  "This decision will allow us to compete in the growing home delivery market more effectively."

    Yesterday's first-day stories suggested that Albertsons made the decision because of  the passage of Proposition 22 in California, which exempts app-based gig companies from a law that requires them to treat their drivers and delivery workers as employees, allowing them to continue classifying them as independent contractors.  The argument was that outsourcing delivery would save Albertsons some considerable money.

    Marc Perrone, the president of the United Food and Commercial Workers International Union (UFCW), said yesterday that "exploiting the passage of Prop. 22 to destroy the good-paying jobs of these dedicated frontline workers, in the middle of this public health crisis, is simply wrong."

    However, Albertsons and DoorDash maintain that the decision was made before the passage of Prop 22.

    KC's View:

    I'll buy that this move makes Albertsons more financially efficient in the delivery business … but it remains to be seen whether outsourcing an important - and potentially differentiating - part of the customer experience actually will be more effective long-term.

    Let's not forget that DoorDash already has DashMart, an online convenience store concept that competes with its c-store retail clients.  How long before it uses customer data and access to Albertsons' consumers to expand DashMart's reach?

    Published on: January 6, 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, we now stand at 21,579,641 total confirmed cases of the Covid-19 coronavirus, resulting in 365,664 deaths and 12,862,216 reported recoveries.

    Globally, there have been a total of 86,959,605 confirmed cases of Covid-19, with 1,878,706 resultant deaths and 61,674,108 reported recoveries.  (Source.)

    •  From the Washington Post:

    "The United States has entered the new year with record numbers of Americans hospitalized with the coronavirus, straining a health-care system bracing for a post-holidays surge that has the potential to further stretch hospitals.

    "More than 131,000 covid-19 patients were hospitalized nationwide as of Tuesday, eclipsing the record set in the last week of 2020. Facilities across the West and South are especially burdened.

    "Los Angeles County has been so overwhelmed it is running out of oxygen, with ambulance crews instructed to use oxygen only for their worst-case patients. Crews were told not to bring patients to the hospital if they have little hope of survival and to treat and declare such patients dead on the scene to preserve hospital capacity. Several Los Angeles hospitals have turned away ambulance traffic in recent days because they can’t provide the air flow needed to treat patients.

    "Arizona now has the nation’s highest rate of coronavirus hospitalizations. In the Atlanta area, nearly every major hospital is almost full, prompting state officials to reopen a field hospital for the third time.

    "The optimism that came with new vaccines and a new year is colliding with a grim reality: The United States has reached the worst stage of the pandemic to date, with the deadly results of holiday gatherings yet to arrive."

    The Post goes on:

    "Public health experts say the country faces a similar challenge it did last spring: buying time. In the early months of the pandemic, authorities urged the public to 'flatten the curve' by following stay-at-home orders to give hospitals time to expand their capacity and protect their staff. They are pleading with Americans to keep following basic precautions - wearing masks, socially distancing, avoiding crowds - with the promise of a vaccine on the horizon."

    •  The Wall Street Journal reports that "newly reported Covid-19 cases in the U.S. were back above 200,000, putting the nation’s total reported infections above 21 million … The nation reported more than 230,000 new cases for Tuesday, according to data compiled by Johns Hopkins University, up from 180,477 reported for Monday. Tuesday’s figure was also up from the 202,145 reported a week earlier."

    The story says that "hospitalizations jumped again, to a record 131,195, according to the Covid Tracking Project. It was the first time the number has risen past 130,000, and the 10th day in a row it has been above 120,000. There were 23,509 people in intensive care, according to the project, also a record."

    •  From CNN:

    "Now that coronavirus vaccines are starting to roll out in the US and abroad, many people may be dreaming of the day when they can travel, shop and go to the movies again. But in order to do those activities, you may eventually need something in addition to the vaccine: a vaccine passport application.

    "Several companies and technology groups have begun developing smartphone apps or systems for individuals to upload details of their Covid-19 tests and vaccinations, creating digital credentials that could be shown in order to enter concert venues, stadiums, movie theaters, offices, or even countries."

    One example:  "The CommonPass app … allows users to upload medical data such as a Covid-19 test result or, eventually, a proof of vaccination by a hospital or medical professional, generating a health certificate or pass in the form of a QR code that can be shown to authorities without revealing sensitive information. For travel, the app lists health pass requirements at the points of departure and arrival based on your itinerary."

    •  The New York Times reports that "as England re-entered lockdown on Tuesday, new figures showed that one in 50 people had recently been infected with the virus, and officials warned that some restrictions on daily life could still be needed next winter.

    "Speaking at a news conference, Prime Minister Boris Johnson promised to focus government efforts on rolling out its strained mass vaccination program intended to prevent a surge in infections of a highly transmissible variant of the virus from overwhelming the health service.

    "With more than a million confirmed cases in the week ending Jan. 2, or 2 percent of England’s population, Britain is in a race against time to distribute vaccines."

    •  The BBC reports that "travellers to the UK from abroad could soon be required to prove they have had a negative coronavirus test.  The Department for Transport (DfT) said the measure is one of several being considered to 'prevent the spread of Covid-19 across the UK border"."

    •  The Washington Post reports on how MorseLife Health System, described as "a high-end nursing home and assisted-living facility in West Palm Beach, Florida," made coronavirus vaccinations available not just to its residents and staffers, but also to members of its board of directors and major donors, "including members of the Palm Beach Country Club."

    The exact number of invitations to jump the line that were proffered by MorseLife is unknown, as is the number of people who accepted the offer, the Post writes.

    The Post offers this context:

    " the arrangement, in appearing to rely on a program run by chain pharmacies for nursing home residents and staff, may have violated national immunization guidelines, as well as state protocols, even though state officials, speaking on the condition of anonymity to address sensitive matters, acknowledged that the rules have not been spelled out clearly enough by Gov. Ron DeSantis. Vaccine doses are allocated to the state by the Trump administration but reserved for people living in long-term care facilities, who are at the highest risk of dying from covid-19.

    "The MorseLife episode highlights how the country’s patchwork approach to immunization against the coronavirus — leaving decisions about eligibility to state and local authorities as well as to individual providers — is creating opportunities for facilities to provide access to well-connected people while thousands of others wait in line. In Florida, some elderly residents have camped out overnight in hopes of receiving a shot."

    If accurate, this report would illustrate something particularly distasteful about the current state of affairs.

    •  From the New York Times:

    "The auto industry sputtered through its weakest year in nearly a decade in 2020 as the pandemic kept buyers away from dealerships and forced companies to shut down factories for two months last spring.

    "But automakers are counting on a rebound in 2021, and foresee possibly strong growth in the second half, as they roll out a parade of new sport utility vehicles, pickup trucks and electric cars. Those hopes rest in large part on the expectation that the distribution of Covid-19 vaccines will accelerate this spring and summer after a slow start in recent weeks."

    •  The Washington Post reports that "the Grammy Awards have been postponed due to coronavirus concerns, according to the Associated Press. The ceremony, now pushed to March, was scheduled to be held Jan. 31 in Los Angeles … The Recording Academy waited to postpone the Grammys but inevitably followed in the footsteps of the Academy Awards, the Tony Awards and the Golden Globes, all of which announced last year that ceremonies would be moved to later in the winter or spring."

    •  Axios has an interview with Goldman Sachs CEO David Solomon in which he says that "some of the survival pivots entrepreneurs have made in the past year will last past the pandemic."

    "A lot of small businesses have had to make some investment in digitization and technology to connect to their customers more digitally than directly," Solomon says. "Some of that will last and will help their businesses."

    The story points out - similar to what Michael Sansolo writes in his column today - how important it is to be able to adapt:  Solomon talks "about a business that went from making leather bags to making masks, and he met today with a restaurateur who now basically runs a delivery business."  And, he recently "visited a Chick-fil-A where the drive-thru overflowed, but the parking lot had an army of workers taking orders on iPads."

    One of the things that retailers should've learned during the pandemic is how not to over-think and over-analyze innovation.  Because they thought of it as survival, they simply made the moves that they needed to make, the changes that they believed would allow them to survive.

    Survival, however, is an ongoing challenge - its demands will not ended when the last vaccination is injected in someone's arm.

    Published on: January 6, 2021

    •  Amazon this morning announced the creation of a Housing Equity Fund that represents "a more than $2 billion commitment to preserve and create over 20,000 affordable housing units in Washington State’s Puget Sound region; Arlington, Virginia; and Nashville, Tennessee—three communities where the company has or expects to have at least 5,000 employees each in the coming years."

    The announcement says that "Amazon’s Housing Equity Fund will help preserve existing housing and help create inclusive housing developments through below-market loans and grants to housing partners, traditional and non-traditional public agencies, and minority-led organizations. The Fund underscores Amazon’s commitment to affordable housing and will help ensure that moderate- to low-income families can afford housing in resource-rich communities with easy access to neighborhood services, amenities, and jobs."

    First up for the fund, investments that "include $381.9 million in below-market loans and grants to the Washington Housing Conservancy to preserve and create up to 1,300 affordable homes on the Crystal House property in Arlington and $185.5 million in below-market loans and grants to King County Housing Authority to preserve up to 1,000 affordable homes in the state of Washington, with additional investments to come in all three regions."

    Published on: January 6, 2021

    •  The Atlanta Journal Constitution reports that Lidl "plans to boost its minimum pay in metro Atlanta to $15 an hour next month … Lidl’s new starting pay locally will be double the federal minimum wage of $7.25. In metro Atlanta, starting pay was $12.50 an hour.

    "The discount, Germany-based chain, which began operating the U.S. in 2015, has 12 Atlanta area stores. Another is slated to open this month in Sandy Springs and five more are expected later this year. The company currently has about 350 employees locally, with plans to add a regional distribution center in Covington with another 250 jobs."

    •  CNBC reports that Macy's " has notified the employees at about 45 of its department stores that they will close by the middle of this year," including its store in Water Tower Place on Chicago's Michigan Avenue.  "The closures are part of a previously announced plan by Macy’s to shut 125 locations by 2023, which the retailer outlined last February."

    NBC News reports that "Chicago Mayor Lori Lightfoot said Macy's Water Tower decision came even before the coronavirus pandemic fully hit the area."

    According to the CNBC story, Macy’s Chief Executive Jeff Gennette has said "the company was still betting on the best malls in the country, but that it would look to grow off-mall in the future."

    CNBC points out that "there are about 1,000 malls operating in the U.S. today, according to commercial real estate services firm Green Street Advisors. A large majority of those malls are classified as so-called B-, C- and D-rated malls, meaning they bring in fewer sales per square foot than an A mall. An A++ mall could bring in as much as $1,000 in sales per square foot, for example, while a C+ mall does about $320."

    I have trouble understanding exactly what Macy's differential advantage and core value proposition are.  Perhaps someone can help?

    Also … Macy's tend to be pretty big stores.  Hard to imagine what retail business might take over these about-to-be vacant locations … which will make problematic malls even more so.

    •  From USA Today:

    "Highland Ventures LTD, the owner of Family Video and Marco's Pizza, announced the closure of the remaining Family Video stores in a press release. 

    More than 250 stores are set to close following the sale of all remaining inventory. All stores, including 40-plus Wisconsin locations, have begun their liquidation sales with an everything-must-go mentality. 

    "Customers can purchase everything from movies and CBD products down to store fixtures. 

    "This announcement follows a similar closing for the movie rental chain in November, when Highland Ventures closed half of its stores due to the financial strain brought on by the pandemic."

    Published on: January 6, 2021

    Got another email from an MNB reader about Instacart:

    We use Instacart for my 93 year old mother and it has proved very effective and customer friendly, unlike the experiences we had with other chain specific services. 

    She can’t get out and the service is far less expensive than paying someone to come in and take her to the store.  This removes one hurdle from being 5hrs plus hrs away.

    If the retailers are having issues with Instacart and services like them, then maybe they should have done something about it years ago instead of crying in their soup now.  I say kudos to Instacart and keep up the great job!

    I want to repeat what I think is the most important sentence of your email:

    If the retailers are having issues with Instacart and services like them, then maybe they should have done something about it years ago instead of crying in their soup now. 

    Exactly.


    And, responding to our mention yesterday of "The Honeymooners," one MNB reader wrote:

    Dang, what great comedy Gleason and Carney had in this scene in The Honeymooners. The “Great One”, Jackie Gleason was a perfect personification of what a great comedian was.  The comedy of today cannot match the simplicity of comedy in the 1950’s. I will be spending time this week watching episodes of the Honeymooners. Keep us laughing Kevin.

    I agree that much of "The Honeymooners" is timeless … but it also is important to remember that a good deal of the humor was built around the threat of spousal abuse.  Which isn't funny now.

    I'm not saying that we should hold "The Honeymooners" to modern standards of what is acceptable, but I do think that we at least have to be willing to acknowledge the moral flaws of the past.