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    Published on: January 27, 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.

    As retailers consider the ways in which their stores must adapt to consumer behaviors and technological advancements that have accelerated during the pandemic, Tom and KC put into context contactless payment systems, chatbots, smarter and faster Wifi systems, and virtual experiences that can change the game for businesses.  The key, they say, is to achieve balance while avoiding "that'll never happen" syndrome.

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

    Published on: January 27, 2021

    by Michael Sansolo

    Early on in this crazy covid period (was it 11 months or decades ago?) a friend offered this insightful comment. The problem, he said, wasn’t that we couldn’t see the light at the end of the tunnel.  The problem was that we couldn’t even find the tunnel.

    Now that vaccinations are (albeit slowly) happening there is some sign of both a tunnel and a light, so it has to get us thinking about what the world might look like once the virus is actually tamed. To be honest, none of us knows anything because we haven’t ever been here before.

    It’s possible to take a wildly optimistic point of view in the food industry that somehow everything will return to the world of 2019, with stores full of shoppers, continued growth of prepared meals and more. Except there is also hope that shoppers have reawakened to the joys of home cooking and that even the most mundane grocery departments will enjoy improved sales now that shoppers see incredible value in frozen and canned products that they generally passed on in recent years.

    It’s a nice vision, but to be fair, the most optimistic idea rarely comes to pass.

    Kevin featured an article Monday from Fast Company that should be required reading on how the pandemic likely accelerated forces of change in the industry. The view from that article isn’t at all pessimistic, just far more realistic about changes long underway that might now grow to dominance.

    To be totally transparent on this, I have a bias. As I’ve written before, I am the research director of the Coca-Cola Retailing Research Council and the events of the past few months have me reflecting on some recent reports and the ability of a group of smart executives to see the future.

    A few years back a group of those executives (everything the council does is by consensus) discussed the challenge of remaining relevant given changing shopping patterns, technology and consumer lifestyles. One particularly important finding in that report is that location no longer is the ultimate competitive advantage, especially in a time when shoppers can sit on their sofa, order food and have it delivered.

    Relevance today is more challenging than ever, unless we all look at how shoppers’ needs and choices have been altered during covid. Even the best operating model - whether it’s Whole Foods, Wegmans or Costco - is challenged by the new habits shoppers have adopted in the past year. New fads, repeated for a full year—which has now happened—become new ingrained habits. 

    The Washington Post had an interesting article on how post-war Baby Boomers who now (horrors) are classified as "older shoppers" have learned to love shopping on line.  In the article, the CEO of Levi Strauss says he cannot see himself returning to a supermarket once covid ends.

    He’s obviously not representative of everyone, but that comment should still give you pause. Likewise, Fast Company speculated on how Amazon Go-style checkouts could dominate with shoppers who are learning to avoid lines and unnecessary human interaction.

    All of these changes should move your focus on how to recreate the shopper experience in the very strange times ahead. Again, I have a bias here. That same council that studied relevance created a second report speculating on the future supermarket experience given the advent of new technologies. Covid simply accelerates all those issues. 

    (The Council studies on supermarket relevance and the future experience can be found here under the North American council tab. For a study about the challenges of moving to omnichannel operations, visit the same website under the Latin American council tab.)

    The bottom line is the past isn’t coming back and that means this incredibly difficult period will morph into yet another period of great change. You can wistfully hope for a miraculous return to a more comfortable world or you can prepare yourself and your company for the new challenges to come. 

    Hopefully that an easy choice to make.

    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 27, 2021

    Walmart said yesterday that it plans "to build warehouses at its stores where self-driving robots will fetch groceries and have them ready for shoppers to pick up in an hour or less," according to a story from the Associated Press.

    The AP writes that "Walmart hopes the warehouses will speed up curbside pickups, where orders are brought outside to shoppers’ cars. Both options became increasingly popular as virus-weary shoppers avoid going inside stores. At the start of the pandemic last year, Walmart said delivery and pickup sales grew 300%."

    Walmart tested the first such warehouse at a store in Salem, New Hampshire, more than a year ago, and now has begun construction on new units in Lewisville, Texas; Plano, Texas; American Fork, Utah; and Bentonville, Arkansas.

    The AP notes that the technology is similar to that used by Amazon in its warehouses, adding, "Walmart said the robots save time since employees don’t have to walk store aisles to find items. Workers will, however, have to go into the store to pick out fresh groceries, such as meat, fish and vegetables. They’ll also have to grab TVs, vacuum cleaners and other large items that are too large for the robots to carry."

    KC's View:

    This is very smart, especially if we accept the premise that the change in consumer behavior that has accelerated the e-commerce segment will persist even when the pandemic ends.  Stores will need to be reconfigured to adapt to these shifts, and it is better to start figuring this out now rather than later.

    Published on: January 27, 2021

    The Walgreens Boots Alliance said yesterday that Starbucks COO Rosalind Brewer will be its new CEO, succeeding Stefano Pessina.

    The Wall Street Journal reports that "as CEO of Walgreens, Brewer will be the only Black woman leading a Fortune 500 company.

    "Her departure from Starbucks comes as investors, regulators and activists push for more diversity in corporate America. Nasdaq has proposed changes that would push for greater racial and gender diversity on the boards of publicly traded companies listed on its exchange. "

    Brewer also is the former CEO of Walmart-owned Sam's Club, and also serves on Amazon's board of directors.

    The Journal also offers some context for Brewer's move:

    "At Walgreens, Brewer will face numerous challenges as the company looks to turn around its business and create new revenue streams. The drugstore chain struggled in the early months of the pandemic as foot traffic dropped, particularly at its Boots stores in the United Kingdom. The company reported earlier this month that sales were picking up but reiterated its outlook for low single-digit earnings growth.

    "The drugstore chain has been cutting costs in some areas and investing in others. It closed hundreds of Walgreens and Boots stores last year and cut the size of its workforce.

    "Walgreens’ bigger rival, CVS Health, acquired health insurer Aetna and was quicker to expand in health-care services. CVS opened Minute Clinics, and Walgreens has been playing catch-up."

    KC's View:

    Forget about Brewer's gender and ethnicity.  From everything I've ever heard, she is an exceptional leader … and quite frankly, Walgreens desperately can use some of what she has brought to Starbucks.

    Published on: January 27, 2021

    The Conference Board said yesterday that its monthly consumer confidence index hit 89.3 in January, up from 87.1 in December, an improvement on two straight months of declines.  However, the Wall Street Journal reports, "it remains below the October level of 101.4, which was the highest since the coronavirus pandemic hit the U.S., and February’s pre-pandemic level of 132.6."

    Lynn Franco, senior director of economic indicators at the Conference Board, pointed to the pandemic as the cause for diminished confidence, and said that "the January increase was driven by consumers’ more upbeat outlook for the economy and jobs, suggesting they foresee conditions improving in the not-too-distant future."

    Published on: January 27, 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've now had 26,011,222 confirmed cases of the Covid-19 coronavirus, resulting in 435,452 deaths, and 15,767,413 reported recoveries.

    Globally, there have been 100,913,073 confirmed coronavirus cases, with 2,169,344 resultant fatalities, and 72,951,857 reported recoveries.  (Source.)


    •  From the Wall Street Journal:

    "Hospitalizations due to Covid-19 in the U.S. continued to decline and newly reported cases remained well off recent peaks, as the White House sought to bolster the nation’s vaccine supply.

    "The number of people hospitalized because of the disease fell to 108,957 as of Tuesday, the first time since Dec. 12 that the figure has been below 109,000, according to the Covid Tracking Project. Intensive care units also saw fewer patients due to Covid-19, though the total number of people in ICUs remained above 20,000.

    "The U.S. reported more than 142,000 new coronavirus cases for Tuesday, the 10th consecutive day the daily tally has come in below 200,000, according to data compiled by Johns Hopkins University."


    •  The Wall Street Journal reports that the federal government plans to "boost the supply of coronavirus vaccines sent to states by about 16% for the next three weeks and will purchase enough additional doses to vaccinate most of the U.S. population with a two-dose regimen by the end of the summer.

    "Senior administration officials said the federal government is working to purchase an additional 100 million doses each of the Pfizer Inc. and Moderna Inc. vaccines, increasing the total U.S. vaccine order by 50% to 600 million from 400 million. Officials said they expect the additional doses to be delivered over the summer.

    The purchases will provide enough supply to vaccinate 300 million Americans in a two-dose regimen over the summer."


    •  From the Dallas Morning News:

    "CVS Health said Monday that it has completed the first round of COVID-19 vaccines to almost 8,000 long-term care facilities in the U.S. and expects to be done with second doses in four weeks.

    "The federal program that partnered with CVS and Walgreens has been criticized by some governors who think it’s taking too long. There were challenges with getting the vaccines delivered and in completing paperwork, including consent forms from nursing home residents that often required locating family for approvals."

    However, "Karen Lynch, executive vice president of CVS Health, said in a statement that CVS has so far administered 2 million shots to the vulnerable population, in many cases with its staff going room to room."


    •  From CNN:

    "Google Maps will soon display locations that offer Covid-19 vaccinations, further bolstering awareness of the virus - and how to avoid it.

    "The feature is rolling out in the coming weeks, beginning in four states: Arizona, Louisiana, Mississippi and Texas. Google announced Monday that searches for 'vaccines near me' have increased five fold since the beginning of the year and it's implementing this feature to ensure it's 'providing locally relevant answers.'

    "The results, which will also be shown in search results in designated information panels, include details about whether an appointment is required, if the vaccine is only available to certain groups and if there's a drive-thru. Google said it's working with 'authoritative sources' for the information, including local governments and retail pharmacies. Information about vaccine sites will roll out to other states and countries later."


    •  From the Washington Post:

    "Located deep in Canada’s Yukon, the remote community of Beaver Creek is home to only about 100 people, most of them members of the White River First Nation.

    So when an unfamiliar couple who claimed to work at a local motel showed up at a mobile clinic to receive coronavirus vaccines, it didn’t take long for locals to become suspicious. Authorities soon found that the couple were actually wealthy Vancouver residents who had chartered a private plane to the isolated outpost so that they could get shots intended to protect vulnerable Indigenous elders."

    According to the story, "Canadian media outlets have identified the couple as casino executive Rodney Baker, 55, and his wife, Ekaterina Baker, a 32-year-old actress whose recent credits include the 2020 films 'Fatman' and 'Chick Fight.' Each faces fines totaling the equivalent of about $900 for violating quarantine guidelines."

    The Post notes that "investor disclosures show that Baker earned more than $10.6 million in 2019 as CEO and president of the Great Canadian Gaming Corp., which owns more than 20 casinos across Canada and is the subject of a separate money laundering probe."

    The White River First Nation's position is that $900 fines are essentially meaningless for people like this, and I agree.  I'm thinking that they each ought to be forced to work in a ICU ward, taking care of Covid-19 patients, for 90 days.  

    Published on: January 27, 2021

    The New York Times has a story about the death of former Zappos CEO and e-commerce visionary Tony Hsieh, writing about a new report from police and fire investigators saying that he "deliberately locked himself in a shed moments before it was consumed by the fire that would kill him … They said Mr. Hsieh could be seen on a security video from Nov. 18 looking out the shed door about 3 a.m., even though no one was about. Light smoke rose behind him.

    "When Mr. Hsieh closed the door, there was the sound of the door lock latching and a deadbolt being drawn."

    According to the story, "Investigators said they didn’t know exactly what had started the fire, partly because there were too many possibilities. Mr. Hsieh had partly disassembled a portable propane heater. Discarded cigarettes were found. Or maybe the blaze erupted from candles. Investigators said his friends had told them that Mr. Hsieh liked candles because they 'reminded him of a simpler time' in his life.

    "A fourth possibility is that Mr. Hsieh did it on purpose."

    You can read the entire piece here.

    KC's View:
      It seems like such a sad story, about a man consumed not so much by fire and smoke as by his inner demons.

    I am reminded for some reason of a line from Raymond Chandler:

    “There is no trap so deadly as the trap you set for yourself.” 

    Published on: January 27, 2021

    FMI-The Food Industry Association yesterday announced the winners of its FMI Foundation 2020 Gold Plate Awards, designed to "highlight outstanding programs implemented by the food industry that help families stay strong with family meals."

    The winners include:

    • Category A (retailers with 1 to 49 stores) Winner:  Coborn’s, Inc., “Kids Cook at Home for National Family Meals Month!” program.

    • Category B (retailers with 50 – 199 stores) Winner:  SpartanNash Company, “Family Meals at Home” program.

    • Category C (retailers with 200 or more stores) Winner:  Wakefern Food Corporation, “Just Add Family” program.

    • Food Manufacturer Category:  Campbell Soup Company, “Campbell Helps Families Stay Strong with Family Meals” program.

    • Community Collaborator Category:  National Pork Board and the U.S. Dry Pea and Lentil Council, “Powerful Pairings” program.

    • Rising Star Category:  The Grocery Gal, “The Grocery Gal Presents Family Meals Month,” social media campaign.

    • COVID-19 Heroes Category (created to recognize charitable programs that help all families share meals together):

    Hy-Vee, Inc., 2020 National Family Meals Month™ campaign, built on the theme of “coming together.”

    The GIANT Company, “For Today’s Table,” campaign.

    The FMI Foundation also awarded what it is calling its first-ever Supper Bowl champion - Hy-Vee, Inc. for their stuffed pork chops with a Brussels sprouts side and apple pie rosettes family meals recipe.

    Published on: January 27, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  USA Today reports that North Carolina-based department store company Belk is going to file for Chapter 11 bankruptcy protection after more than a century in business as it looks to recapitalize and eliminate some $450 million in debt.

    According to the story, private equity firm Sycamore Partners will retain control of the retailer but will sell minority stakes to "a group of the department store's creditors, led by the private equity firms KKR and Blackstone."

    The USA Today story also includes this familiar refrain:  "The sale to Sycamore loaded the chain with over $2 billion in debt at a time when department stores were losing popularity. The department store has struggled during the coronavirus pandemic as customers flocked to online shopping and avoided in-person shopping."  


    •  From the Wall Street Journal:

    "Starbucks said Tuesday that global same-store sales fell 5% in its quarter ended in December from the same period a year earlier. A quarter earlier, sales by that measure fell 9% from a year earlier … Sales of $6.7 billion during the quarter were down 5% from the year-ago period, with Starbucks attributing the decline to fewer customers, reduced hours and store closures related to the pandemic."

    Published on: January 27, 2021

    Yesterday we had a piece about how Tops Friendly Markets has a new TagBack program it is instituting, working with a company called Bedford to help shoppers recycle small produce tags or twist ties.

    One MNB reader responded:

    I’m sorry to say, but recycling is a beautiful myth. This is a feel good program but unless retailers and manufacturers start working together to ‘pre cycle’ and keep items from getting produced, it’s really just garbage. It’s expensive to recycle, there aren’t good, if any, secondary markets for recycled items and the petroleum industry has spent billions of dollars to greenwash their industry. And honestly, tags and ties are the tiniest drop in the bucket. 

    Ultimately, manufacturers should be responsible for the life cycle of their packaging. I guarantee they would get very innovative in a hurry if that were the case.

    Now cork IS recyclable and there are programs for that. Our store take back corks for recycling. This should be mandatory. But it’s not. 

    Sorry to be Debbie Downer, but our company works every day to reduce our reliance on plastic and it’s pretty tiring to have to be the innovator when we have a 4-store chain. Why aren’t ALL grocery stores banding together to do this? Most of our time is spent untangling the intricate greenwashing around every single plastic item INCLUDING the so-called biodegradable or ‘green’ plastics. It’s such a sham. 

    From another reader:

    At Wegmans, most stores are set up with the SCAN app which allows customers to scan UPC codes while they shop and scan a barcode at self checkout to pay in one step.  In produce, customers can weigh their items and scan the UPC on the produce scale and never use a bag, twist tie or label in the first place and not waste the time and energy to recycle these items.  The more we can reduce our consumption in the first place or reuse items ourselves, the better it is for the environment. 

    MNB yesterday took note of an Eater Seattle report that the Seattle City Council has unanimously passed a  new ordinance that mandates a $4-per-hour raise for "grocery workers in large stores," with the expectation that Mayor Jenny Durkan will sign it into law shortly.

    I  commented:

    I am troubled by this legislative trend, which seems to be getting traction in certain markets.  It just strikes me as fundamentally unfair to impose a mandate like this on a subset of a specific segment.  I have no problem with hazard pay, and think that retailers that gave raises and then took them away made a mistake - the optics around who was essential and to what degree were just awful.  But this ought to be the company's decision - pay levels will determine which companies are preferred and which ones are not.  (This is different that a mandated minimum wage, which applies to everyone.)

    This is just bad public policy.

    We also referenced a piece in Fast Company by Scott Galloway about where there is a real need for government regulation.  He wrote, in part:

    "… the biggest economic boost that the Biden-Harris administration can deliver won’t be stimulus or bailouts, it will be committing funding and political support for serious antitrust enforcement."

    This all prompted one MNB reader to write:

    Your article on government dictated hazard pay and on anti-trust are twin sons/daughters of a different mother/father.

    At the moment those companies are providing necessary services, employment growth or at least stability and continue to invest in a very sketchy economy.  

    I covered Amazon in an earlier memo (+500,000 jobs, already at $15 hour and benefits, largest corporate commitment to alternative fuels).  Even Facebook continues to keep hundreds of chefs and other workers who once fed their in-office armies ON THE PAYROLL while those armies stay at home.    Government, on the other hand, is directly responsible for hundreds of thousands of unemployed, tens of thousands of lost businesses and a great deal of short and long term damage to early education.

    And again, I do not believe that any of these companies are altruistic, and I downright abhor some of their actions.   

    Government often deflects attention toward big business as evil. (think phone companies, oil companies, other big retailers, etc.)  Antitrust claims it's aim and legal authority come from a consumer benefit: price, options or both.   How will moves against Apple, Amazon, Google or Microsoft achieve that?   

    Government actions re: hazard pay, are simply price and wage controls (think 1974) and how is the government better at this than the free market?   Amazon pays $15/hour now.   Many of the big retailers have adopted that rate, or close because it made sense for them to do it.    Government actions in these areas simply add red tape and costs, and while Amazon may be able to afford it, the local bar, grocer, garage, for fish market simply cannot.

    Also about the hazard pay issue, an MNB reader wrote:

    Initially, when supermarkets were just about the only retail establishment still operating when the pandemic first took hold, and these businesses on the whole were not prepared or able to quickly establish health and safety protocols, they were in reality hazardous places to work.  And if memory serves correct, most supermarkets initiated hazard pay or increases in wages across the board. 

    Remaining open in a pandemic basically forced supermarkets to adapt and create systems, barriers, protocols that supported the health and safety of their Team Members and their communities at large.  And today they are probably some of the safest environments in which to work.  Masks are generally mandated, sanitation practices are pure and consistent, wipes and sanitizer sprays, lotions, gels are plentiful, gloves are worn, people are kept at a distance and maximum occupancy rates are enforced.  Break rooms are shuttered, common eating areas gone, and customer flow is in/out efficiently. 

    As other retail businesses reopened, either all businesses are hazardous or really, none are more hazardous than any other.  As supermarkets on the whole have taken these essential measures in order to create a healthy and safe environment then why should they be on the hook for hazard pay in addition to all of the infrastructure and investment already made on behalf of the Team?  I agree, poor legislation, imbalanced, and unwarranted.  That's my two cents.

    And from another reader:

    Wouldn’t a better system be that there be no minimum wage?  If unskilled labor is free to go anywhere it would force employers to compete for labor.  Costco has already proven that they can attract better workers by not following any minimum wage rules and actually pay at higher wages.  Conversely if a $15 minimum wage is good, wouldn’t $20 be better, then why not $50 be the ultimate?  I hope you get my point. 

    Costco is an example of free market capitalism at its finest and proof we do not need a minimum wage.  In fact the minimum wage prevents unskilled workers from getting jobs to gain the skill necessary to move up and earn more based on their new skill set.  What further depresses the labor market is the abject failure of our public schools.  We spend more today on public education and the data confirms it’s an absolute failure.  Education is another area where the principals of free market capitalism by means of a voucher system would lead to much better results.

    I understand your points, which isn't the same as getting either of them, I'm afraid.

    Eliminating the minimum wage would just empower some people and companies to exploit poor people with few options and no hope of being treated equitably.  I'm happy to engage in a reasonable conversation about how to structure a nuanced minimum wage law, but eliminating it completely strikes me as abdicating one of the responsibilities that a government ought to have.

    Free markets work a lot better for the people at the top than the people at the bottom, it seems to me.  To think otherwise is, to coin a phrase, to accept a beautiful myth.

    Published on: January 27, 2021

    •  The Baseball Writers’ Association of America has decided that no players will be inducted into the Major League Baseball Hall of Fame in 2021, the first time this has happened since 2013.  The decision means that "character," which is mentioned in the current guidelines for induction, has become the criteria by which Barry Bonds, Roger Clemens, and Curt Schilling - three of the most dominant players of their era - still are being denied entry to the Hall.

    There are different issues involved.  In the case of Bonds and Clemens, their records have been tarnished by the use of performance-enhancing drugs.  In Schilling's case, the writers seem to be reacting at least in part because of his post-baseball rhetoric on social media, which has been described as incendiary.  (Boston Globe columnist Dan Shaughnessy writes this morning that Schilling is at best "a borderline Hall candidate. Look him up on Baseball Reference and you’ll see that the ex-players he most closely resembles are Orel Hershiser, Bob Welch, Kevin Brown, and Tim Hudson. None of those guys are in the Hall and none of them travel with Schilling’s baggage.")

    If there is an induction ceremony in Cooperstown this summer, there will be players on the stage - Derek Jeter, Larry Walker, Ted Simmons and union organizer Marvin Miller, all of whom were voted in last year but were not officially inducted because of the pandemic.

    Schilling also has tweeted en endorsement of the idea that journalists should be lynched … which probably was enough to annoy the baseball writers.


    •  The New York Times reports that "the Washington Football Team promoted Jennifer King to assistant running backs coach on Tuesday, making her the first Black woman to become a full-time coach in the N.F.L.

    "King’s promotion accentuates the importance the Washington franchise has placed on diversifying after a tumultuous year in which its longtime logo and nickname, widely perceived as racist, were dropped. The move also comes as the N.F.L. faces increasing scrutiny because of its paucity of Black head coaches.

    "King, 36, was a coaching intern with the team this past season and previously served as an intern with the Carolina Panthers and as an offensive assistant at Dartmouth College."