business 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 28, 2021

    When a bank starts letting its customers know that it is pulling all of its branches out of the supermarkets where they've operated for years, it may offer a broader lesson about the importance of owning the customer experience.  KC explains.

    Published on: January 28, 2021

    Charged reports that "Ikea is set to begin selling spare parts for its iconic flatpack furniture in its latest major push to increase the sustainability of its products.

    "The world’s largest furniture retailer has developed an online ordering system which will be rolled out worldwide this year, enabling customers to order new parts for their Ikea products … this is aimed at not only allowing customers to fix broken furniture but also upgrade and update old furniture by buying things like fresh covers or table legs, significantly expanding the life of its products."

    It has been Eye-Opening to watch the degree to which Ikea has tweaked its business model over the years.  It used to be monolithic - big stores where, as Tina Fey once said, "marriages go to die," and assembly instructions that would kill marriages that survived the store experience.

    But the company has evolved.  Smaller stores in urban markets that could serve as showcases, as well as pick-up locations for orders placed online.  The elimination of its print catalog.  Offering assembly services.  Reselling used furniture.  And now, selling spare parts.

    The ability of Ikea to make small pivots when and where necessary, keeping in synch with where consumers seem to be going, is admirable.  And yes, Eye-Opening and worth emulating.

    Published on: January 28, 2021

    The Dallas Morning News reports that "Kroger is turning one of its Dallas stores into an all self-checkout experience as a test.

    "The store, one of Kroger’s smallest in the market, is at 4142 Cedar Springs Road. It converts to all self-checkout on Feb. 17 and will be the only location among the grocery chain’s 2,700 U.S. stores trying out the idea."

    The story says that "Kroger is installing new self-checkouts that should please customers who struggle with too many items for the smaller versions that have been around for many years at grocery and big box stores.

    "The wide-belted self-checkouts can accommodate large volume purchases and look a lot like regular cashier-staffed checkout lanes, with bagging stations at the end of each. Kroger said it will have staff there to help customers performing their own checkout."

    KC's View:

    A move that seems appropriate to a world where casual human contact seems less necessary that just a year ago.  It'll be interesting to gauge the reaction … a year ago, it might've been negative, but the world has shifted.  

    Published on: January 28, 2021

    In Minnesota, the Pioneer Press reports that the communities of Eagan and Burnsville appear to have locations that soon will be occupied by a "mystery national grocer" that in planning documents goes by the name "Mendel."

    Which sort of solves the mystery - since, as the paper reports, "'Mendel' is a name that Amazon has used in planning documents for Amazon Fresh stores in Washington, D.C., and other markets."

    Amazon currently has five Amazon Fresh supermarkets - where consumers can "shop in-store, use Alexa features to help them manage their shopping lists and skip the checkout line with Amazon Dash Cart technology" - in California and two in Illinois, with a third in Illinois under construction."

    Amazon says it does not comment on speculation about future stores.

    KC's View:

    I assume that "Mendel" is a coy reference to Gregor Mendel, who lived in the mid 1800s  and was a scientist, meteorologist, and mathematician who commonly is referred to as the father of modern genetics.  He also, remarkably enough, was a Catholic priest.

    The Twin Cities is a good place for Amazon to find out how strong the Amazon Fresh value proposition is - there is lots of great competition that will make it work hard to succeed.

    Published on: January 28, 2021

    Forbes has a long piece about Instacart and the immediate challenges the company faces.  Here's how it frames the story:

    "Apoorva Mehta pauses for a moment to consider the past ten months of chaos. A year ago, he was running Instacart as a popular app that was gaining momentum. Then last spring came a massive Covid-fueled boost. Things quickly morphed into a nightmare: striking shoppers, inventory shortages and the challenge of meeting the kind of blistering demand Mehta wasn’t expecting until at least the next presidential election. 

    "As it turns out, the tribulations of March were just the beginning. As the country’s leading grocery delivery app, Instacart is now besieged by a growing number of well-funded competitors. Mehta himself is under pressure to justify a valuation that more than doubled during those 10 months to $18 billion, a highly anticipated public offering and a strategy aimed at proving Amazon - when it comes to supermarkets, at least - has it all wrong."

    You can read the entire story here.

    KC's View:

    I think the Forbes piece does a fair job of outlining the challenges facing Instacart, though I do think it understates the issues from confronting the retailers that do business with it.

    For example, Forbes writes:

    For customers who order $35 or more, Instacart charges as much as $9 per delivery—or free delivery with an annual $99 subscription. The grocers pay too, forking over an average 10% per order, a painful proposition in an industry where net margins have historically averaged 2% or less. Mehta says the high fees are necessary to cover the hundreds of Instacart engineers, designers and technicians toiling to turn a purely physical transaction into an almost entirely virtual one.

    That's fine … except that high fees that have the impact of reducing (or eliminating) retail profitability erodes those stores' viability.

    At the same time, as the story points out, Instacart already is siphoning off promotion money from manufacturers and is getting into the advertising business, which also inevitably will have the impact of cutting back of manufacturer funds going to retailers … funding that, for better or worse, many retailers depend on for profitability.

    Sure, Instacart says it has no plans to open stores … but it has customer data from its retailer clients, shoppers who think of themselves as buying from Instacart as opposed to from local retailers, manufacturer funding and ad dollars that will support it economically, and a broader trend toward dark stores and micro-fulfillment centers that absolutely support Instacart becoming independent of the retailers it has used to build its business.

    Sure, Instacart helps retailers get into e-grocery fast.  They don't have to invest a lot of money in their own infrastructure.  But these same retailers are putting at risk all the investments they have made in their brand equity and value propositions.

    Some retailers are growing leery of Instacart, which is to their credit.  But one retailer tells Forbes about Apoorva Mehta, "As a founder of a fast-growing technology company, his openness to evolve and seek input and industry knowledge is a true testament to the partner he is.  After a 500% increase in his business this year, he is still asking how to get better. That is a key reason for his success."

    Of course Instacart is open to your suggestions.  Of course Instacart is asking how to get better.

    Haven't these people ever seen the classic "Twilight Zone" episode about the aliens who come to Earth, saying they want to serve humanity?  In fact, they even have a book about it, "To Serve Man" … which (spoiler alert!) in the final moments, we find out, is a cookbook.

    Published on: January 28, 2021

    IRI is out with new research suggesting that "small and extra-small CPG manufacturers’ and retailers’ own brands gained U.S. market share over larger players during 2020. Of the CPG industry’s $933 billion of total U.S. sales in measured channels in 2020, large manufacturers collectively lost 1.3 share points, or $12.1 billion in sales, to smaller players due to channel shifts, supply constraints and category shifts."

    The report goes on:

    "In 2020, the CPG industry grew 10.3%, with smaller manufacturers (including players with annual measured channel sales of less than $1 billion) collectively capturing nearly one-third of that growth, and private label products accounting for roughly 18% of growth. These impressive growth rates resulted in smaller manufacturers and private label products gaining 1.1 and 0.2 share points, respectively, from larger manufacturers (companies with measured channel sales exceeding $5.5 billion annually), which captured 34.1% of total CPG growth in 2020. Large manufacturers have lost market share in each of the past five years, but still represent 46.7% of total U.S. sales in measured channels."

    Published on: January 28, 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 26,166,423 confirmed cases of the Covid-19 coronavirus, resulting in 439,521 deaths and 15,942,827 reported recoveries.

    Globally, there have been 101,529,722 confirmed coronavirus cases, 2,186,606 resultant fatalities, and 73,441,147 reported recoveries.  (Source.)

    •   The Washington Post  reports that "at least 21.1 million people have received one or both doses of the vaccine in the U.S.  This includes more than 4 million people who have been fully vaccinated … 47.2 million doses have been distributed."

    •  The Los Angeles Times reports that the International Air Transport Association is asking the World Health organization (WHO) to rule that "it’s safe for people to fly without quarantining once they’ve received a Covid-19 vaccine," saying that "acknowledgment of that principle from the WHO, a United Nations agency, is vital to the development of a proposed digital travel pass aimed at getting people moving again once infection rates ease."

    The Times writes that "the aviation and travel industries have been appealing to governments and global institutions to work together on a unified way to ease passage across borders since the early months of the pandemic. A lack of consistency and a number of abrupt changes in policy have put off most people from making journeys, leaving many companies with bleak prospects."

    Seems to me that a coordinated global approach to creating a viable travel pass makes a ton of sense for lots of reasons, and if such a WHO declaration helps the process along, that's a good thing.  People have to understand that it isn't just getting a shot, though.  My understanding is that if you're getting the two-shot vaccine, you get the first shot, then the second shot four weeks later, and then have to wait two weeks after that for the immunities to kick in.  So it really is a six week process … plus, we have to hope that these same people keep wearing masks and washing their hands frequently.  (Can we get an app for that?)

    •  From the Wall Street Journal:

    "The U.S. saw further declines in the number of people hospitalized because of Covid-19, while newly reported cases hovered around 150,000 for the third day in a row.  Hospitalizations, which totaled 107,444 as of Wednesday, have been on the decline since Jan. 12 when the figure was at 131,326, according to the Covid Tracking Project. The number of people in intensive care units also fell slightly to 20,497."

    •  The Journal also writes:

    "As the number of new cases eases in parts of the country, some states have begun rolling back restrictions on businesses and everyday life.

    "On Friday, the statewide risk level in North Dakota will be dropped to its lowest level, allowing for increased occupancy limits at bars, restaurants and other food-service establishments. Michigan, meanwhile, will allow indoor dining starting Feb. 1, as cases have dropped to levels last seen in October. Restaurants will be required to operate at below 25% normal capacity, and tables must be set at a minimum distance of six feet apart.

    "Indoor dining at restaurants in New York City may also soon return. The state is considering a plan that would permit indoor dining at a capacity of 25%, New York Gov. Andrew Cuomo said Wednesday. A decision will come by the end of the week, he said, after consultation with local health officials and New York City Mayor Bill de Blasio."

    •  The National Restaurant Association (NRA) is predicting that sales and US eating and drinking establishments will grow 10.2 percent in 2021 … which would be a significant turnaround from the 19.2 percent drop in sales that took place in 2020.

    Considering we have no idea when we're going to emerge from the pandemic tunnel, this strikes me as being the very definition of betting on the come.  I hope they're right, but I wouldn't bet the mortgage.  I completely believe that the economy will surge at some point because of demand pent up during the pandemic, but the timing is a little iffy.

    •  From the Seattle Times:

    "With better testing, new treatments and vaccines raising hopes for an eventual end to the COVID-19 pandemic, Bill Gates is mapping out a battle plan for the next time a dangerous new pathogen appears.

    "In the annual letter from the Bill & Melinda Gates Foundation, the Microsoft co-founder calls for billions of dollars in investments to develop a global alert system for emerging germs and build the capacity to respond quickly … While the cost may sound high, billions spent on infrastructure and technology would represent a huge savings compared to the estimated $28 trillion global toll of COVID-19 and its associated economic fallout, he said.

    “We can’t afford to be caught flat-footed again,” Gates wrote. “To prevent the hardship of this last year from happening again, pandemic preparedness must be taken as seriously as we take the threat of war.”

    Published on: January 28, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Seattle Times:

    "Amazon has asked federal regulators to block a number of shareholder proposals that strike at the heart of many recent criticisms of the Seattle-based commerce behemoth, including its stances on curbing hate speech and offensive content, diversity in hiring, workplace conditions for hourly warehouse employees and its surveillance technologies.

    "If granted, Amazon’s requests would mean shareholders would not have an opportunity to vote on those proposals at the company’s shareholder meeting this year, where they would likely be rejected regardless."

    The story goes on:

    "Companies often ask the SEC for permission to drop shareholder proposals they see as needless meddling into day-to-day business, and Amazon is no exception.

    "Last year, it sought to exclude nine shareholder proposals before the annual meeting. The SEC sustained Amazon’s request in seven of those instances.

    "According to letters filed Tuesday with the SEC, Amazon is now requesting the regulator block shareholder proposals asking the company to report on its efforts to check hate speech across its many platforms, consider qualified women and nonwhite candidates for open positions in all roles, add an hourly associate to its board of directors and assess whether its products with surveillance capabilities violate human rights … Amazon said in a Monday letter to the SEC that a report on its efforts to repress hate speech is unnecessary because it had published a 559-word blog post the previous day outlining its policies and efforts to remove offensive product listings. And by Tuesday, Amazon had quietly updated its guidelines for books and similar materials to add a ban on 'offensive content' that includes prohibitions on hate speech, according to archived versions of Amazon’s Content Guidelines for Books."

    It strikes me as at least mildly ironic that the Washington Post, which Amazon founder Jeff Bezos owns in a personal investment, uses as its mantra, "Democracy dies in darkness."

    •  The Wall Street Journal reports that Apple "finished 2020 with its most profitable quarter ever, fueled by an uptick in higher-end iPhone sales and a pandemic-induced surge in demand for its laptops and tablets.

    "All together, the Cupertino, Calif., company generated $111.4 billion in quarterly sales, an all-time high and the first time it has topped $100 billion in quarterly revenue … Profit rose 29% to $28.76 billion in the three months ended in December, its fiscal first quarter.

    Published on: January 28, 2021

    •  From CNBC:

    "Beyond Meat and PepsiCo announced Tuesday that they’ve formed a joint venture to create, produce and market snacks and drinks with plant-based substitutes … The partnership gives Beyond, a relative newcomer to the food world, a chance to leverage Pepsi’s production and marketing expertise for new products. For its part, Pepsi can deepen its investment in plant-based categories, which are growing increasingly crowded, while working with one of the top creators of meat substitutes."

    •  KQEN News reports that C&K Markets, which operates 38 stores in Oregon and Northern California, "has completed a transaction to become 100 percent employee-owned through an employee stock ownership plan trust.  A release said this enables employees to receive retirement benefits linked to the company’s future equity value."

    Published on: January 28, 2021

    •  Cloris Leachman, a supremely versatile actress who achieved high levels of excellence on the stage as well as in film and on television, delivering memorable comic and serious performances, has passed away.  She was 94.

    An example of her range:  She played a repressed, small-town Texas housewife (and won an Oscar for her performance) in Peter Bogdanovich's The Last Picture Show, scaled comic heights as Frau Blücher (neighhh!!!!!) in Mel Brooks' masterpiece, Young Frankenstein, and probably was best known for playing landlady Phyllis Lindstrom on “The Mary Tyler Moore Show."