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    Published on: February 17, 2021

    Kroger, having already announced that it is closing two Southern California stores because of a local hazard pay mandate, is doing the same thing in Seattle, announcing the closure of two QFC units there because of the city's new law requiring large grocers to pay workers an extra $4 per hour.

    The retailer said the two units were underperforming, and that the new hazard pay rules made them untenable.

    In a statement, QFC noted that supermarkets in general operate on thin margins:  "When you factor in the increased costs of operating during COVID-19, coupled with consistent financial losses at these two locations, and this new extra pay mandate, it becomes impossible to operate a financially sustainable business."

    The stores will remain open until April 24.

    KC's View:

    Even before these hazard pay bills got passed and Kroger started closing marginal stores, my position was that hazard pay that targets just one segment of retailing is bad public policy.  Minimum wages are what they are, and in many places retailers are paying more than that;  the pandemic led to many companies offering hourly bumps and bonuses to front line workers.  But such increases should be a matter of company policy, not governmental mandate.

    In the long run, companies that treated front line employees as if they were essential before the pandemic will continue to do so now and in the future.  But that has to be cultural, not the result of short-term legislation.

    Published on: February 17, 2021

    Ahold Delhaize-owned Peapod Digital Labs said yesterday that it is working with the company's Giant Company to develop a new micro-fulfillment technology pilot in the Philadelphia market.

    The pilot, the company says, will utilize "Swisslog’s solution which includes AutoStore technology empowered by Swisslog’s SynQ software, as well as Peapod Digital Labs’ proprietary manual picking capabilities," in the new e-commerce fulfillment center (EFC).

    The announcement says that "the hive robotic technology for the new EFC will include the AutoStore storage and retrieval system, empowered by Swisslog’s SynQ software and pick stations, as well as Peapod Digital Labs’ proprietary manual picking capabilities. Applying the advantages of the Autostore grid storage density and goods-to-person productivity gains in tandem with Peapod Digital Labs’ picking system will create a flexible solution ideal for streamlining grocery e-commerce order fulfillment."

    The EFC is planned for the Philadelphia market, where it is designed "to help meet customer demand in Center City and South Philadelphia. This location is expected to fulfill approximately 15,000 online orders per week for delivery to customers’ homes."

    "Over the past year, all Ahold Delhaize USA companies have seen a tremendous increase in online sales growth, and we believe this growth is here to stay,” said JJ Fleeman, president of Peapod Digital Labs and Chief E-commerce Officer. “As we think about shifting consumer expectations and the future of omnichannel shopping, we must continue to build and evolve our already strong infrastructure to optimize pick-up and delivery. We’re excited to kick off this pilot with The GIANT Company and Swisslog as we continue to build out e-commerce fulfillment capabilities, which we believe will be key in supporting continued omnichannel growth."

    The company says that "Ahold Delhaize USA companies will continue other micro-fulfillment tests, such as the multi-shuttle pilot with Stop & Shop and TakeOff Technologies in the Hartford, Conn., market. Additional micro-fulfillment pilots will be announced in the coming months."

    KC's View:

    Seems to me that one of the most important things that retailers can do these days is test lots of different fulfillment and supply chain options.  Me, I'm a big fan of the micro-fulfillment center model, but this is not a one-size-fits-all scenario.  

    Published on: February 17, 2021

    Fast Company has a piece about how "some of the country’s largest retailers - including Walmart, Target, Kroger, and CVS - teamed up on the Beyond the Bag Initiative," which is designed as "an ambitious plan to fund and scale replacements to the plastic bag."

    The story says that Beyond The Bag has "announced nine winners out of hundreds of entries from around the world<" as it continues to seek solutions.  The entries "range from biodegradable bags that are meant to disappear into the Earth’s soil, to internet-connected bags that gamify reuse. And while the variety may sound like a cop-out - where is our one perfect replacement for the plastic bag? - our retail economy is a lot more complicated than ever before."

    You can check out some of the solutions here.

    Published on: February 17, 2021

    The BBC has an interesting story about the now-finalized purchase of Asda Group in the UK from Walmart by, as the described in the story, "the Issa brothers, two entrepreneurs from Blackburn who made billion-pound fortunes running petrol stations."

    The story makes the point that the acquisition cost the equivalent of $9.4 billion (US), but that more than $8 billion (US) of that is being financed - meaning that Asda now is operating with an enormous amount of debt.

    According to the story, "the new owners will sell off parts of Asda to raise the rest of the purchase price.  Asda will sell its warehouses and distribution system for £950m. It will still use them, but in future, it will have to pay rent to their new owners.

    "And Asda's 323 petrol stations will be sold for £750m to EG Group, adding to the portfolio of more than 6,000 around the world."

    The story suggests that current low interest rates in part made the structure of the deal appealing … though Asda will have more debt than its main rivals, such as Tesco.  That could change as Asda reduces its debt load.

    "There are stories of businesses where private equity buyouts have led to underinvestment and subsequent collapse," the BBC writes, noting that "most of the thousands of private equity buyouts do not end that way.

    "Businesses with big debts pay much less tax on their profits. They can deduct the interest payments from their profits before calculating how much tax to pay, which reduces their corporation tax bill."

    KC's View:

    The debt won't matter as long as Asda maintains its value proposition.  But as soon as it raises prices to service the debt, it'll be in trouble … and everybody will know it, and everybody will know how the last chapter will be written - especially in the UK, where price wars seem to be perpetual.

    If you serve debt at the expense of serving customers, you're screwed.

    Published on: February 17, 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, there now have been 28,381,220 total confirmed cases of the Covid-19 coronavirus, resulting in 499,991 deaths and 18,479,418 reported recoveries.

    Globally, there have been 110,102,025 confirmed coronavirus cases … 2,431,445 resultant fatalities … and 84,924,522 reported recoveries.  (Source.)

    •  The Washington Post reports that "at least 39.9 million people have received one or both doses of the vaccine in the U.S.  This includes more than 15.2 million people who have been fully vaccinated … 71.7 million doses have been distributed.

    •  From the Wall Street Journal:

    "Newly reported Covid-19 cases in the U.S. rose from a day earlier, as did deaths, but the numbers remained significantly lower than last month’s highs … There were 64,533 people hospitalized with Covid-19 in the U.S. on Tuesday, according to the Covid Tracking Project, another in more than a month of daily decreases."

    Also from the Journal story:

    "Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases and the U.S. government's top infectious-disease official, said the initial supply of Johnson & Johnson's Covid-19 vaccine would be smaller than originally thought, which could delay access to vaccination for some Americans.

    "Moderna Inc. said Tuesday that it has supplied about 45.4 million doses of its Covid-19 vaccine for use in the U.S. and is on track to meet production commitments despite recent delays in the release of doses."

    •  Kroger Health yesterday announced that it plans to offer "the first smartphone-enabled, at-home Gauss COVID-19 Rapid Antigen Test Kit to patients nationwide, expanding the company's existing portfolio of in-clinic and employer-focused COVID-19 testing solutions … The new at-home testing solution, which is currently awaiting Food and Drug Administration (FDA) Emergency Use Authorization (EUA), will offer affordable access to cutting-edge testing technology developed by Gauss, a leader in computer vision-aided healthcare diagnostics. Once authorized, it will be the first rapid COVID-19 test that can be fully performed using only a smartphone and a lateral flow assay (similar to an at-home pregnancy test), without involving a laboratory, a telemedicine visit or any specialized electronics."

    •  From the New York Times:

    "Teenagers contract the novel coronavirus almost twice as often as younger children but vaccines authorized in the United States are mostly for adults — Moderna’s for 18 and older, Pfizer’s for 16 and up. While teenagers don’t become severely ill from the virus as often as adults, research suggests that because they are often asymptomatic and casual about social distancing, they can be efficient spreaders — to one another as well as to adults like parents, grandparents and teachers. Although vaccinating educators will be an important factor in keeping schools open, vaccinating students will also be a key element.

    "Bottom line: If widespread immunity to the coronavirus is to be achieved, adolescents are critical links. They need a Covid vaccine that works for them.

    "But teenagers are harder than adults to enroll and keep in clinical trials. They are difficult to wrangle and not so great with compliance, which includes keeping a symptom diary and keeping appointments, as many as six a year, that include blood draws (for some, an instant deal breaker)."

    •  The Washington Post reports that "the global number of new coronavirus cases has declined by 16 percent over the past week, the World Health Organization said, even as more virulent strains of the virus spurred outbreaks in multiple regions.

    "There has been a 10 percent reduction in the global number of deaths over the past week, the agency added. Europe and the Americas, including the United States, in particular, have seen the greatest drops in new cases reported. The number of new U.S. infections has fallen by 23.7 percent in the past week, while nearly 28 million cases and 486,000 deaths have been reported in the past year."

    •  The New York Times reports that when the storm that has hammered much of the south and midwest forced retailers to close, it also meant that these retailers - such as Walmart, CVS and Walgreen -  had to put their vaccination schedules on hold.

    Even retailers that did not have to close stores because of the storm had problems with some of their vaccination schedules, since the storm also hindered the shipping companies charged with getting the vaccine into the hands of retail pharmacists.

    •  Axios reports that "U.S. airlines carried about 60% fewer passengers in 2020 compared with 2019, according to Department of Transportation data released Tuesday … The drop underscores the dramatic impact that the coronavirus pandemic - and the travel restrictions and stay-at-home orders that hallmarked much of the year - had on the travel industry."

    •  From the New York Times:

    "A technology executive in California has apologized for hosting a conference in Culver City after which two dozen attendees and staff members at the event tested positive for the coronavirus.

    "The executive, Peter H. Diamandis, was among those who contracted the coronavirus. He hosted the conference - an annual summit for a paid-membership group called Abundance 360 - indoors in late January, with a total of about 80 attendees, panelists and members of the support staff.

    "The gathering flouted guidance from public health officials in Los Angeles County, who had repeatedly urged people to avoid excess travel or public mingling. At the time of the conference, Southern California was just coming down from a surge in coronavirus cases, and many hospitals were still overwhelmed.

    "Mr. Diamandis, the founder of the X Prize Foundation, a nonprofit group that awards cash prizes for technological innovation, said in a blog post on Friday that he was “deeply sorry.” He added that safety protocols for the event - including repeated Covid-19 testing for attendees, none of whom showed positive results at the time - had created a false sense of security, leading people to be less vigilant about masks and distancing.

    "'I was wrong,' Mr. Diamandis said."

    Diamandis likes to cast himself as a futurist.  Anyone with common sense could've seen this in his future … what is it about the pandemic that creates blind spots for people who normally act in intelligent ways?

    Published on: February 17, 2021

    Amazon and Global Optimism announced this morning that "20 new signatories around the world have joined The Climate Pledge: ACCIONA, Colis Prive, Cranswick plc, Daabon, FREE NOW, Generation Investment Management, Green Britain Group, Hotelbeds, IBM, Iceland Foods, Interface, Johnson Controls, MiiR, Ørsted, Prosegur Cash, Prosegur Compañia de Seguridad, Slalom, S4Capital, UPM, and Vanderlande."

    The announcement says that "with the addition of the new signatories, 53 companies across 18 industries and 12 countries have committed to working toward net-zero carbon in their worldwide businesses - which in aggregate has the potential to significantly reduce corporate carbon emissions. Each organization is at a different stage in its journey to net-zero carbon emissions, but all 53 signatories are committed to The Climate Pledge’s ambitious goal of meeting the Paris Agreement 10 years early."

    Published on: February 17, 2021

    •  The Wall Street Journal reports that New York state Attorney General Letitia James "has filed a lawsuit against Inc. that accuses the online retailer of not doing enough to protect workers in the state from the coronavirus … Ms. James said in the complaint that Amazon failed to comply with state cleaning and disinfection requirements at its facilities. The company also didn’t adequately notify employees of infected co-workers, according to the complaint."

    Last week, the Journal notes, "Amazon sued New York’s attorney general to prevent the state from taking legal action against the company over its handling of worker safety during the pandemic and the firing of one of its warehouse workers last year."

    •  Bloomberg reports that Amazon "has acquired Selz, a Sydney-based e-commerce platform that helps small businesses create their own websites much the way Shopify Inc … The acquisition signals Amazon’s interest in letting small businesses use their own websites rather than trying to direct all their traffic to its marketplace, where merchants pay commissions on each sale as well as delivery fees. Shopify is popular among many online sellers because the Canadian company gives them more control over the customer experience."

    Terms of the deal were not disclosed.

    •  Marketing Dive reports that Mitsubishi unveiled its new 2022 Outlander yesterday in an unusual place - on Amazon Live, "marking the first time a vehicle is revealed on the e-commerce giant's video livestreaming platform … The livestreamed event on Amazon is another sign of how the e-commerce company is expanding its platform for brand awareness campaigns, rather than advertising that's aimed lower in the purchase funnel to drive direct sales."

    Published on: February 17, 2021

    •  The Wall Street Journal reports that "Nestle SA agreed to sell most of its North American bottled-water brands, including Poland Spring, Arrowhead and Pure Life, for $4.3 billion, hoping to jump-start growth by focusing on a slimmed-down group of upscale, more on-trend brands.

    "The world’s largest bottled-water maker said the sale to private-equity firms One Rock Capital Partners LLC and Metropoulos & Co. would allow it to focus on premium brands Perrier, San Pellegrino and Acqua Panna."

    •  CVS Health said that its Q4 net income fell to $973 million, from $1.75 billion during the same period a year ago.  Total revenue rose 4.0% to $69.55 billion, as same-store sales rose 5.7 percent.

    •  Ireland-based Total Produce announced that it is merging with Dole Food Company, with their combined businesses operating under the Dole name.

    Total Produce spent $300 million to acquire 45 percent of Dole in 2018, and is making this deal with Castle & Cook, which owns the other 55 percent.  The goal of the move is to "simplify the existing structure between the two companies by unifying Dole and Total Produce under common ownership, with the objective of enabling full operational integration, realisation of synergies and value creation across the enlarged business."

    •  The New York Times reports that "Ford Motor became the latest automaker to accelerate its transition to electric cars, saying Wednesday that its European division would soon begin to phase out standard gasoline-powered vehicles. By 2026, the company will offer only electric and plug-in hybrid models.

    "The plan is part of a bid to generate steady profits in Europe, where Ford has struggled for several years, as well as to meet increasingly strict emissions standards in the European Union."

    The move is part of a trend that seems to be gaining momentum.  Last month General Motors said it would make only electric vehicles by 2035, and Jaguar also will transition to selling only electric vehicles.

    Published on: February 17, 2021

    •  Target has made a series of executive changes…

    Christina Hennington, the company's EVP Chief Merchandising Officer Hardlines, Essentials & Capabilities, has been named Executive Vice President and Chief Growth Officer, a new position for the company.

    Jill Sando, the company's EVP and Chief Merchandising Officer, Style and Owned Brands, has been named Executive Vice President and Chief Merchandising Officer for hardlines and softlines.

    Rick Gomez, Chief Marketing, Digital & Strategy Office, has been named Executive Vice President and Chief Food and Beverage Officer.

    Cara Sylvester, Senior Vice President Merchandising - Home, has been promoted to Executive Vice President and Chief Marketing and Digital Officer.

    Katie Boylan, the company's Chief Communications Officer, has added the title of Executive Vice President to her title.

    Published on: February 17, 2021

    Marriott International CEO Arne Sorenson passed away after a battle with pancreatic cancer.  He was 62.

    Sorenson became Marriott CEO in 2012 and was the first non-family member to run the company.  On his watch, Sorenson engineered the $13 billion acquisition of Starwood Hotels and Resorts, which created a behemoth with more than two dozen hotel brands.

    Here's a passage from the Wall Street Journal obituary:

    "Over the past year, the coronavirus pandemic has caused a drop in hotel bookings and prompted Marriott to close hotels and furlough thousands. 'I have never had a more difficult moment than this one,' Mr. Sorenson said in a company video last March in which he choked up as he announced layoffs.

    "At the time of the video, chemotherapy treatments had left him totally bald. 'Some of my team said I’m not sure we should put you out there on a video because you’re going to look like a cancer patient,' he recalled at the Wall Street Journal’s 2020 Future of Everything event in September.

    "He decided to go ahead. 'To deliver bad news particularly, the more it can be done face to face and personally, with an explanation of what’s behind it, to me is essential,' he said. 'We’re being honest with each other, we’re not hiding behind the difficulties of communication'."

    The Journal also writes that Sorenson cautioned people not to see the Starwood acquisition as a triumph:  "We have not done anything to be congratulated for. We paid more for Starwood than anybody else would pay for it. That is not victory. Victory is what we do with this deal, and that work is just starting."

    KC's View:

    I wrote an Eye-Opener about Sorenson almost two years ago when I read a piece in the New York Times about his approach to changing the properties in his various chains.  It all came down to one phrase:

    Beige won’t cut it.

    I wrote:

    Let’s be clear. Beige can be a color. It can be an attitude. A culture. A flavor. A perception. 

    But whatever it is, it ain’t good.

    Marriott, to its credit, seems to realize it. There are more than a few retailers, afraid of sinking in rough and rising competitive waters, that also have realized it.

    But not everybody has, and to be clear, everybody needs to.

    Repeat after me.

    Beige won’t cut it.

    And Sorenson seemed to feel that in a way that appeared to be unique.

    Published on: February 17, 2021

    …will return.

    Published on: February 17, 2021

    Big day for Major League Baseball today, as pitchers and catchers report for a number of teams:  Arizona Diamondbacks, Baltimore Orioles, Chicago Cubs, Chicago White Sox, Detroit Tigers, Kansas City Royals, New York Yankees, Oakland Athletics, Philadelphia Phillies, Pittsburgh Pirates, St. Louis Cardinals, San Diego Padres, San Francisco Giants, and the Texas Rangers.

    KC's View:

    Fingers crossed.

    Two things, if I may.

    Spring training, always an important time of the year, took on new meaning a few years ago when my brothers and I took our Dad to Arizona to see some Cactus League games.  Dad was having issues, but the dementia that eventually would rob him of so much of his personality had not yet done so, and it was one of the best trips I ever took.

    And finally, just because I can't play this scene too much: