business news in context, analysis with attitude

Published on: January 13, 2021

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

Having survived 2020 and, in some cases, having one of the best years ever, retailers nonetheless are likely to have a make-or-break 2021.  Tom and Kevin offer an agenda for the coming year - how they should take control of the customer experience, be smarter  about they use their data, be more aggressive about they identify and cater to best customers, and be willing to continue to invest to be more competitive.  It is a year, they suggest, in which the retailers that are willing to do what is necessary will be separated by a wide chasm from those unwilling to do so.

If you're interested in listening to this Innovation Conversation, you can do so here (or can download this file):

Published on: January 13, 2021

by Michael Sansolo

Successful management or leadership frequently requires two skills that are compatible and yet, in many ways, in opposition. Those skills are talking and listening.

This came to mind last week following the sad news of the death of Tommy Lasorda, the long-time manager of the Los Angeles Dodgers.

Lasorda, a Hall of Fame manager, was known throughout his long tenure for his incredibly upbeat manner. I’m a big baseball fan and I can remember watching a Dodger game on television in the 1980s. I knew nothing about Lasorda until I heard him introduce his line-up for that day’s game.

He spoke glowingly of each player in the line-up, specifically mentioning each individual's strengths in a way that would make a Little League manager blush. But Dodger players at the time and upon reflection said Lasorda’s upbeat manner always mattered. 

In other words, a manager’s words and enthusiasm can lead to heightened performance, in virtually any circumstance.

What I didn’t know was Lasorda’s ability to listen until I read a remarkable obituary following his passing. The story told in the obituary took place during the 1988 World Series, when Lasorda’s Dodgers were a distinct underdog against the then-fearsome Oakland A’s. The Dodgers were trailing by one run in the last inning of the first game and the A’s were set up to win.

At that moment, a Dodger batboy (basically a glorified equipment collector) went over to the very occupied manager with a message. Lasorda, according to the story, fired off an expletive, but then asked the batboy what he wanted.  In other words, at an incredibly pressure-packed moment, he listened to possibly the lowest ranking person around.

Luckily he did.  The batboy had been sent to tell Lasorda that Kirk Gibson, the Dodgers’ hulking, but badly injured slugger, was warming up under the stadium and felt he could actually hit.

Lasorda ran down to meet Gibson and decided to give the injured player the opportunity he desired. What followed was possibly one of the most storied moments in baseball’s long history - nine  very dramatic and well-spent minutes for even those who don’t like baseball:

But what Lasorda demonstrated, in a business sense, was the ability to stop and listen, and a willingness to believe in key employees.  Not just Gibson, but the batboy.  Obviously, things transpired in a way that made Lasorda’s decision look fantastic, but the lesson to managers in less stressful situations in clear. 

Talking enthusiastically about your team is incredibly important and can have an enormous impact on morale. But it’s equally important to listen and to believe in your team because doing so might make you a champion.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.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 13, 2021

by Kevin Coupe

Edelman is out with its annual Trust Barometer, concluding that the "epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world" has left four major institutions - business, government, NGOs and media - "in an environment of information bankruptcy and a mandate to rebuild trust and chart a new path forward."

What's interesting about this, for MNB's purposes, is how business is seen in the broader landscape:

"While the world seems to be clouded by mistrust and misinformation, there is a glimmer of hope in business. This year’s study shows that business is not only the most trusted institution among the four studied, but it is also the only trusted institution with a 61 percent trust level globally, and the only institution seen as both ethical and competent.

"When the government is absent, people clearly expect business to step in and fill the void, and the high expectations of business to address and solve today’s challenges has never been more apparent. The heightened expectations of business bring CEOs new demands to focus on societal engagement with the same rigor, thoughtfulness, and energy used to deliver on profits."

Some fascinating numbers:

•  86 percent of people surveyed said they expect CEOs to lead on societal issues.

•  68 percent said they believe CEOs should step in when government does not fox societal problems.

"Trust," Edelman writes, "remains the most important currency in lasting relationships between the four institutions studied and their various stakeholders. Particularly in times of turbulence and volatility, trust is what holds society together and where growth rebuilds and rebounds. Every institution must play its part in restoring society and emerging from information bankruptcy … Business must embrace its expanded mandate and expectations, with CEOs leading on a range of familiar and unfamiliar issues. It's important to take meaningful action first and then communicate about it."

I am reminded of a Latin proverb to which I have referred numerous times over the years:

Trust, like the soul, never returns once it goes.

For retailers, the trust of consumers is the most important currency … it makes everything else possible.  For retail leaders, engendering and sustaining that trust may be their most important charge.

We've seen different forms of that in recent days.  We had a story about it yesterday, referencing an Axios story about how "CEOs became the 4th branch of government."

And that's the Eye-Opener.

Published on: January 13, 2021

Walmart announced yesterday that it will team with a company called Home Valet " to pilot a new solution that could eventually allow the retailer to deliver groceries to customers’ homes 24 hours per day," TechCrunch reports.  The solution revolves around a "temperature-controlled smart box that’s placed outside the home. Customers’ groceries can be delivered, contact-free, to the secure box and kept cold at any time — even if the customer isn’t at home."

According to the story, "The HomeValet boxes themselves are an Internet of Things platform that offers three temperature-controlled zones, making them capable of storing frozen, refrigerated and pantry items. The boxes communicate with the delivery provider’s device, which gives them secure access to the smart box at the time of the delivery to place the items inside."

TechCrunch also reports that the boxes "disinfect the exposed surfaces of delivered items as well as the inside of the box itself, in between deliveries, using UVC light.  This could appeal to customers who have been trying to reduce their exposure to the novel coronavirus by wiping down all their groceries before putting them away. (The HomeValet website, however, makes no specific claims about COVID-19. Instead, it simply says the UV-C LED disinfection method it uses can create 'inhospitable environments to microorganisms such as bacteria, viruses, molds and other pathogens.')"

In the beginning, the Walmart test will be limited to northwest Arkansas and will be invitation-only;  Walmart will reach out to existing delivery customers to offer them the opportunity of participating in the pilot.

Published on: January 13, 2021

The Financial Times reports that Canadian convenience store giant Alimentation Couche-Tard has broached the possibility of acquiring France-based supermarket chain Carrefour, a deal that would create a retailing entity valued at upwards of $50 billion (US).

According to the story, "the talks were at an early stage, the companies said on Tuesday night in separate statements. Couche-Tard, which owns the Circle K brand, had made the approach fairly recently, said one person briefed about the matter, while a second said Carrefour needed time to study the idea."

Some context for the FT story:  "Couche-Tard, based in Montreal, has a network of more than 9,200 convenience stores across North America through several brands, employing about 109,000 people. The group has a smaller presence in Europe, where it has fewer than 3,000 stores. It also owns petrol stations, often located on site. Carrefour is France’s largest grocery chain with about 2,000 supermarkets and more than 700 large-format hypermarkets in Europe; it also has a presence in Brazil and Argentina."

Published on: January 13, 2021

Bloomberg has a story about how digital retail brands, which a year ago seemed to be burdened with "bloated valuations, rising advertising costs and ever more competition" that threatened their existence, enter this new year with a new lease on life.

The pandemic meant that, "with their brick-and-mortar competition shuttered and the virus raging, Americans flocked online and loaded up on home goods, comfy clothes and much more. And this wasn’t just 20-somethings, but pretty much everyone.

"This helped remove a big hurdle to continued growth for direct-to-consumer brands: finding new customers," Bloomberg writes.

Even the advertising expenses that were too high for many digital start-ups went down when the pandemic hit, as many of the companies driving up prices were taken out of the market when the coronavirus shut them down or curtailed their operations and profitability.  Suddenly, marketing expenses were more affordable, and digital companies had the money to invest.

All of which add up to what could be a big moment for these companies:  "Not only do these brands have an opportunity to push into a new demographic or part of the country, but they are luring older customers who are often more loyal. Many have shopped at the same stores for decades and could be as devoted to a digital brand they trust."

Published on: January 13, 2021

Albertsons yesterday reported Q3 results that included a 225 percent increase in e-commerce sales and a 12.3 percent same-store sales increase.

According to the announcement, Albertsons' Q3 sales were $15.4 billion, up from $14.1 billion during the same period a year ago.  Net income was $123.7 million during the third quarter of fiscal 2020 compared to $54.8 million during the third quarter of fiscal 2019.

Albertsons CEO Vivek Sankaran told analysts yesterday, "We continue to see fewer trips per household but larger baskets … We are encouraged that customers spending more time at home are looking to us."

Sankaran also is quoted as saying that "the trend that I think is going to continue to stick, even after the pandemic, is all of us working just a little bit more at home, having that flexibility to work more at home. And when people work more at home, you eat more breakfasts and lunches at home, and that’s going to drive more in-home consumption. So, the broad theme I’ll leave you with is what we’re excited about is this notion of in-home consumption, either cooking at home or eating at home, both of which drive more sales from people like us who carry a wide variety of fresh product."

Published on: January 13, 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…

•  Here are the numbers in the US:  23,374,560 total confirmed cases of the Covid-19 coronavirus … 389,790 deaths … and 13,820,516 reported recoveries.

Globally:  92,102,570 confirmed coronavirus cases … 1,972,408 fatalities … and 65,951,898 reported recoveries.  (Source.)

•  From the Wall Street Journal:

"The U.S. reported its highest daily number of deaths from Covid-19, and newly reported cases again exceeded 200,000.

"More than 4,300 people died from the disease in the U.S. on Tuesday—a single-day record, according to data compiled by Johns Hopkins University. The nation’s total death toll surpassed 380,000.

"More than 215,000 new cases were reported for Tuesday, the eight consecutive day above 200,000, according to Johns Hopkins … The stretch of elevated daily caseloads is weighing on the nation’s hospitals. More than 131,000 people were hospitalized for Covid-19 as of Tuesday, according to the Covid Tracking Project, slightly higher than the previous day’s tally. The number of patients in intensive care units rose to 23,881, the 14th day in a row above 23,000."

•  From the Wall Street Journal:

"The Trump administration is releasing second doses of coronavirus vaccines that had been held back for booster shots and is urging states to administer the vaccine to anyone over age 65 and people with pre-existing health conditions, a shift from its earlier guidance to give priority to doses for health-care workers … According to the Centers for Disease Control and Prevention, more than 25.4 million doses of vaccine have been distributed, but only 8.9 million Americans have received a shot … The decision could help increase the number of people who receive the vaccine. But it also raises the risk of not having reserves to provide booster shots and could strain some states that lack the staffing or infrastructure to meet potential demand."

•  The New York Times reports that "Johnson & Johnson expects to release critical results from its Covid-19 vaccine trial in as little as two weeks — a potential boon in the effort to protect Americans from the coronavirus — but most likely won’t be able to provide as many doses this spring as it promised the federal government because of unanticipated manufacturing delays.

"If the vaccine can strongly protect people against Covid-19, as some outside scientists expect, it would offer big advantages over the two vaccines authorized in the United States. Unlike those products, which require two doses, Johnson & Johnson’s could need just one, greatly simplifying logistics for local health departments and clinics struggling to get shots in arms. What’s more, its vaccine can stay stable in a refrigerator for months, whereas the others have to be frozen.

"But the encouraging prospect of a third effective vaccine is tempered by apparent lags in the company’s production. In the company’s $1 billion contract signed with the federal government in August, Johnson & Johnson pledged to have 12 million doses of its vaccine ready by the end of February, ramping up to a total of 100 million doses by the end of June.

Federal officials have been told that the company has fallen as much as two months behind the original production schedule and won’t catch up until the end of April, when it was supposed to have delivered more than 60 million doses."

•  The New York Times reports that "before boarding their flights, all international passengers headed to the United States will first need to show proof of a negative coronavirus test, according to a new federal policy going into effect on Jan. 26 … The new policy requires all air passengers, regardless of vaccination status, to get a test for current infection within the three days before their flight to the United States departs, and to provide written documentation of their test results or proof of having recovered from Covid-19.

"Proof of immunization will not be sufficient, because the vaccines have only been shown to prevent serious illness, said Jason McDonald, a spokesman for the C.D.C. Vaccinated people may still become infected, in theory, and transmit the virus on a flight."

•  From MarketWatch:

"U.S. bars and restaurants got crushed again in December after the biggest coronavirus surge yet across the country.

"Eating and drinking establishments lost 372,000 jobs last month, marking the first decline since April when they laid off a whopping 5.4 million people."

The story goes on:  "Restaurants and other businesses in the broader category of leisure and hospitality — such as hotels, theaters, casinos and theme parks — have suffered the most during the pandemic.

"The restaurant industry, for example, is one of the largest employers in the country and had 12.3 million workers before the coronavirus began in March. That doesn’t even include several million food-service workers at hotels, hospitals and the like."

•  The Wall Street Journal reports that Zoom Video Communications has "filed papers Tuesday to sell $1.5 billion worth of common stock, its first offering since going public in April 2019 … Zoom’s videoconferencing business is still booming, in large part because of Covid-19, but investors are already grappling with what post-pandemic life could mean for the company. The once-highflying stock is now 40% off its mid-October peak. And while still richly valued at around 30 times forward sales, it is no longer the most premium play among cloud stocks. At least a dozen now carry higher multiples relative to projected sales.

"But Zoom is still valued at close to $100 billion, a level that software companies don’t typically reach until they have established multiple lines of business. So the company still faces some pressure to show it is no one trick pony."

What this suggests, analysts say, is that Zoom is likely to be looking for acquisitions that can supplement and expand its business model, keeping the company's business model relevant for a post-pandemic world.

•  Another casualty of the pandemic:  the CNN Airport Network, which for three decades has played newscasts in dozens of US airports.

The company said that the company is shutting down the business because of a "steep decline" in the number of travelers because of Covid-19.

Management also acknowledged that most travelers don't need a broadcast network to get their news because of the easy accessibility of smart phones and other mobile devices.

•  The New York Post reports that "New York will turn Citi Field into a 24/7 'mega' coronavirus vaccination site by the end of January in an effort to vaccinate thousands of residents daily, Mayor Bill de Blasio announced Tuesday.

"NYC Health and Hospitals will operate the site, home to the New York Mets, with the aim of giving between 5,000 and 7,000 shots a day, de Blasio said in a joint announcement with Mets owner Steve Cohen."

As a Mets fan, may I suggest that the first vaccines be given to Francisco Lindor, James McCann, Pete Alonso, and Jacob deGrom?  Please?

Published on: January 13, 2021

•  From the Washington Post:

"International makeup chain Sephora is implementing sweeping changes in its merchandising, marketing and employee training practices in one of the most public efforts by a major retailer to mitigate the potential for racial profiling and other discriminatory practices at its stores … Among the changes, Sephora is pledging to double its assortment of Black-owned brands, to 16, by the end of the year and create programs to help entrepreneurs of color. It also will enact new customer-greeting protocols so all shoppers are treated consistently, as well as reduce the presence of third-party security guards and police officers in its 500 U.S. stores."

The story says that the initiatives are "the culmination of customer and employee surveys, interviews and academic research that have been underway since 2019. But issues around race and inequality took on new urgency following the summer’s Black Lives Matter protests and the police killing of George Floyd in May, executives said. The chain also has faced backlash from Black shoppers, including the rapper SZA and comedian Leslie Jones, who have spoken publicly about unfair treatment by its employees."

•  From CNBC:

"Starbucks is starting a $100 million fund aimed at investing in community development projects and small businesses in areas populated by Black, Indigenous and people of color.

"The company’s Community Resilience Fund is part of a broader plan to step up its commitment to racial and social equity, particularly in the communities where it operates cafes. In June, as Black Lives Matter protesters took to streets to push for an end to racism and police brutality, the Starbucks Foundation pledged $1 million in neighborhood grants, joining numerous companies that said they would give money to fight against racism. The foundation ultimately ended up giving out an additional $500,000 in grants."

Published on: January 13, 2021

•  Michael Dubin, the founder of Dollar Shave Club, is stepping down as CEO of the company that he sold to Unilever in 2016 for $1 billion.  He will remain on the company's board and will function as a special advisor.

Dubin is being succeeded by Jason Goldberger, who most recently was CEO of Sur la Table, where he saw the company through a bankruptcy, the closure of the vast majority of its stores, and the shift to a more digital-centric model.

Published on: January 13, 2021

MNB reported yesterday about how dunnhumby is out with its fourth annual Retailer Preference Index (RPI), concluding that Amazon is most preferred by US consumers - a leap seen as driven by safety concerns created by the pandemic.

MNB reader Glenn Cantor responded:

My household continues to regularly shop for our groceries in a variety of local, physical stores.  Two, Aldi and Lidl, are relatively new and always crowded.  The traditional grocery chains in my area have not appreciably changed their retail shopping experiences as a result of the Covid-19 pandemic.  For example, daily necessities are still located in the same places.  Milk and eggs are in the back, and shopping for ready-to-eat deli is still a pain the butt.  Also, paper towels and toilet paper are stocked in the very far, back corners of two of our regular stores.  In fact, other than the increase in store-employed shoppers, the wearing of masks, and offering one or two hours a week for seniors, I cannot think of any notable changes or improvements made to improve the shopping experience. 

P.S.  Stores needs to make sure the hand sanitizer and wipes at their front entrances are kept full.

I respect the fact that your shopping experience isn't much changed.  I'm not sure that invalidates the dunnhumby findings … and I think that retailers ignoring the shift could find themselves disadvantaged in the long term.

MNB reader Joe Axford wrote:

Kind of ironic that Kroger isn't in the top 20...

Fair point.

More comments about Feargal Quinn and his Superquinn stores.  MNB reader Gwen Morrison wroteL:

Loved the comments in your newsletter today.  While running WPP’s Global Retail Practice, we made the pilgrimage to Ireland. I was struck by F. Q.’s  refusal to let being at the top interfere with his connection to the customer.

He strayed from our small group to help a shopper in the parking lot unload groceries and then took her trolly back to the store. Feargal was religious about attending customer focus groups each week and took actions from these sessions.

Great lessons for any business.  Thanks for the reminder.

Responding to the continued discussion about Instacart, one MNB reader wrote:

Yes, there are drawbacks to any process, however, look at the over all experience.  The shopper may be looking for an item that cannot be found because it is OOS.  That has nothing to do with the shopping service, it is supply chain. That OOS is what creates the back and forth messaging they referred to.  Regarding “ditching” a custom cut, that has been a problem since groceries stores been around.  It is not inherent to Instacart or other shopping services.  

So now let’s not forget, the “customer” is shopping from the comfort of their home and their groceries are delivered to their door step.  They don’t have to go out, if they can’t or don’t want to.  They don’t have to stand in lines at the register because the store is understaffed (not in every store) to get out the door.  While still patronizing their favorite store.

Seems to me, if I had a store, I would welcome the “shoppers” and find away to connect to the customer, so that they know how appreciative the store was for their continued business.  What a novel idea.

Regarding the drone delivery test that will take place in The Villages, one MNB reader wrote:

I don’t know about anyone else, but if I lived in The Villages and had these high pitched drones buzzing around all the time, I think it would be very annoying.  Way too “Jetsons” for me.

We noted yesterday that a number of businesses - including, now, Walmart - are cutting back on their political contributions because of current events.  One MNB reader reacted:

One of the best things that could happen from all this is the removal of PACS – removal of all money going to Congress so people might actually put people into office who really do act on behalf of the people instead of acting on behalf of where the money is coming from. 

I really don’t trust big business because big business, most of the time, makes decisions based on profit or worse: GREED.  A LOT of our health problems, environmental problems, social problems, and economic problems stem from BIG BUSINESS and their desire for profit and at the head of those big businesses are CEO’s who answer to stock holders and boards of directors – and within that mix of people, there are undoubtedly some who are solely out for more money.   Not saying ALL of them are bad, but the pressure to grow profit can be overwhelming and we are living in a time where money has the power. This article says business is our 4th branch of government and God help us if that is true.  I’ve worked for many different CEOs and I can say first hand – I would NOT have wanted most of them interfering in our government.

Our constitution was not written based on who would gain from it monetarily – it was written with Godly principles of what is best for the people,  what brings freedom and justice,  NOT MONEY.    When all people in government have people, freedom, and justice in mind and they vote and act according to those principles, we will be a lot better off for it.

MNB reader Charles Bartell chimed in:

Amazon is going to pay a price for removing Parler from the AWS platform.  Jeff Bezos will be seen as having too much power.  Freedom of speech is sacred in the United States.  This move was a step too far.

Y'think?

I'm not sure about that.  I wonder how many people will give up their Prime memberships and "free" two-day delivery because Parler is harder to access.

And, for the record, Amazon argues that by refusing to police violent content on its site, Parler was in violation of its rules of service.

“This case is not about suppressing speech or stifling viewpoints,” Amazon’s attorneys write. “Instead, this case is about Parler’s demonstrated unwillingness and inability to remove from the servers of Amazon Web Services ('AWS') content that threatens the public safety, such as by inciting and planning the rape, torture, and assassination of named public officials and private citizens.”

And you think it was Amazon that went too far?