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    Published on: March 1, 2021

    A note from the Content Guy…

    Today's conversation is with Neil Stern, the CEO of Good Food Holdings, which owns such specialty-and-fresh-food banners on the west coast as Bristol Farms, New Seasons, and Metropolitan Markets.  We talk about a lot of things - managing through a pandemic (naturally), the unique value propositions inherent in the company's retailers and the advantages they offered in challenging times, the technologies he finds to be intriguing, future expansion/acquisition plans, and where future opportunities exist.

    I think it is a fascinating chat, and I hope you enjoy it.

    Published on: March 1, 2021

    by Kevin Coupe

    In the world of journalism, yesterday represented a kind of milestone - it was the last day on which Martin Baron was serving as executive editor of the Washington Post before heading into retirement.

    Baron, the New York Times writes in its assessment, is worthy of journalism's Cooperstown, having served as top editor of the Miami Herald during the coverage of the 2000 election recount and Elián González’s repatriation.  After that, he moved to the Boston Globe, where he oversaw the investigation of sexual abuse in the Catholic Church - it was turned into the film Spotlight, in which Baron was played by Liev Schreiber.

    Then, it was on to the Washington Post.

    Now, I recognize that for some readers, the Washington Post represents everything that you think is wrong with America.  For others, the Post is a hallowed institution.  (Full disclosure - count me in this latter group, even though they didn't hire me when I went there for an interview more than 30 years ago.)  But let's put all that aside for the moment, because there are business lessons in Baron's tenure at the Post.

    One is that resources matter.  When Baron started at the Post, it was with the expectation that he'd have to figure out how to do more with less.  Like many newspapers, the Post was losing money … and it was only with the purchase of the paper from the Graham family, which owned it for 80 years, by Amazon founder-CEO Jeff Bezos , who had plenty of money and a commitment to making the Post viable.

    Which leads to the second lesson:  vision matters.  Give Bezos credit here, too.  Bezos understood the pain that traditional newspaper journalism was feeling, but also felt that the internet offered them a gift - the ability to distribute content globally at an almost negligible cost.  Bezos didn't just offer Baron money, but also a challenge - turn the Post from a local paper (albeit one covering a locality called Washington, DC) into a global paper.

    Baron knew what to do with that:  "I had long felt — actually well before that — that we needed fresh thinking in the industry,” he said. “Because I was not hearing any new ideas from anybody.”

    The Post wrote over the weekend that "during Baron’s tenure, the Post grew to have more than 3 million digital-only subscribers, even as print circulation has declined, and has enjoyed five straight years of profitability. The staff grew from 580 to more than 1,000. The Post opened new bureaus, after years of shuttering them, and this year expects to have 26 locations around the world. The Post, under Baron’s leadership, has won four Pulitzers for national reporting, two for explanatory reporting and one each for public service, investigative reporting, criticism and photography."

    Not bad.

    But there was another line from the Post story over the weekend that grabbed my attention, and that I think illustrates a third and perhaps most important business lesson.  It was a line delivered by Emily Bell, director of the Tow Center for Digital Journalism at Columbia University, who described Baron as someone who "operated as an editor who was wedded to news but not to paper."

    Which strikes me as really important - that form is less important than the core expertise.   It is an Eye-Opening lesson that is important for newspaper editors to learn, and for retailers, especially these days.

    Published on: March 1, 2021

    Bloomberg reports that Walmart has made an important move as it looks to "become a one-stop shop for consumers’ financial needs" - it has hired "a pair of senior bankers from Goldman Sachs Group Inc. to run its fledgling financial technology startup."

    According to the story, "To lead the effort, Walmart plucked Omer Ismail, a longtime veteran of Goldman Sachs who was a key architect of the lender’s consumer efforts in recent years. Ismail will bring along David Stark, who inked Goldman’s partnership with Apple Inc. and oversaw its tie-ups with JetBlue Airways Corp. and Amazon.com Inc.

    "Ismail’s hiring could be a precursor to Walmart filing an application to become a bank of its own following a Federal Deposit Insurance Corp. rule late last year that paved the way for non-financial firms to seek banking charters. Banks have been adamant that these new charters for so-called industrial loan companies allow firms to enter banking while escaping the capital and other liquidity demands they are forced to follow."

    While Walmart has said it has no plans to file for such a charter, its CEO, Doug McMillon, "has begun to tease some of his ambitions, telling analysts just weeks ago that customers have been asking the retailer to offer affordable financial products and that he wants to find ways to 'monetize' the retailer’s vast data.

    "With more than 150 million customers and 5,300 stores across the U.S. -- many of which are open 24/7 -- Walmart would instantly have a consumer base and network of branches that would rival those of JPMorgan, Bank of America Corp. and Wells Fargo & Co."

    The Wall Street Journal notes that "Mr. Ismail, who first joined Goldman nearly 20 years ago, was among a group of executives who came up with a strategy to expand into digital banking services in 2014. By the end of last year, that business generated $1.2 billion in annual revenue, had amassed $97 billion in deposits and held $8 billion in consumer-loan balances."

    The hirings "struck fear on Wall Street, which has been begging regulators to halt recent efforts by retailers and startups to begin offering core banking products to millions of consumers," Bloomberg writes.

    The story says that "Walmart has so far been tight-lipped about its plans for the new financial technology company, which it formed with the venture capital firm Ribbit Capital … Ribbit already has its hands in many of the world’s most successful financial technology startups such as the banking startup Revolut and Credit Karma, which allows consumers to check their credit scores and compare financial products. In some cases, the firm even has had stakes in companies that Walmart already does business with. So it is with Affirm, the installment lender that already provides financing to Walmart customers online."

    KC's View:

    I think there is plenty to be concerned about in terms of consumer power if Walmart is able to open a bank, but I suspect that should be more worrisome to the traditional financial services industry than to potential customers.  I've been arguing this for a long time - Walmart would bring real competition to a business segment that desperately needs it.  All you need to know is that the financial services business has spent millions on lobbyists to prevent this ever happening.

    The Bloomberg story gives one example - overdraft charges, "the fees that banks assess when a consumer spends more than they have in their account. The country’s largest banks collect $17 billion a year in overdraft fees, and regulators have found that much of that comes from a subset of consumers who overdraw their accounts one or more times each month."

    Imagine if The Bank of Walmart lowered or eliminated overdraft fees.  Then imagine of Amazon decided to get into the act.

    Think we'd see a banking revolution?

    I just think we need to see sufficient regulation that the revolution doesn't lead to a collapse of the system.

    Published on: March 1, 2021

    The Financial Times this morning reporting that Ahold Delhaize plans "to make more acquisitions in the US as the shift to ecommerce drives smaller businesses out of the market."

    CEO Frans Muller tells FT that he expects considerable consolidation among small and family-owned companies without the capital to expand into e-commerce or succession plans that make their businesses viable in a post-pandemic environment.

    Some context from FT:

    "Ahold has already been on the acquisition trail. Last year it took an 80 per cent stake in the New York online grocery service FreshDirect for an undisclosed price. Its Food Lion chain also agreed to acquire 62 BI-LO and Harveys Supermarket stores in North and South Carolina and Georgia from Southeastern Grocers, also for an undisclosed price.

    "Ecommerce is an increasingly important part of its strategy. Although online grocery retail is less well established in the US than in Europe, partly because of the existence of intermediary delivery services like Instacart, Ahold nevertheless doubled its US online revenues to more than $2bn in the year to January 3 and expects sales to grow another 60 per cent this year."

    KC's View:

    I want to see how the FreshDirect integration works before I'm ready to say that this will be a good thing.  But that said, it appears to be a sellers' market …  If you match Muller's criteria, I'd shoot him a note at frans.Muller@aholddelhaize.com.

    Published on: March 1, 2021

    The Washington Post has the story of Ben Bonnema, a New York-area Trader Joe's employee, who recently wrote a letter to the company's CEO, Dan Bane, asking for "more stringent" Covid-19 safety protocols, saying that only the company's chief executive could mandate the kinds of changes necessary to protect employees who "put our lives on the line everyday by showing up to work."

    Bonnema, the story says, asked for "improving filtration, requiring masks without exception and adopting a 'three-strikes' policy for removing uncooperative customers from stores."  The letter came after Bonnema "was 'shouted and sworn at by a customer who would not wear his mask above his nose, despite Mates already asking him to do so.' The customer was allowed to continue shopping."

    Trader Joe's response to the request:  Bonnema was fired.

    The termination letter, which Bonnema shared on social media, "said his recommendations went against company values," the Post writes:

    “In a recent email, you suggest adopting a ‘3 strike’ policy against customers and a policy enforcing the same accommodation for every customer with a medical condition that precludes them from wearing a mask,” the letter said. “These suggestions are not in line with our core Values. In addition, you state that Trader Joe’s is not ‘showing up for us’ without adopting your policies. It is clear that you do not understand our Values. As a result, we are no longer comfortable having you work for Trader Joe’s.”

    Trader Joe's spokesperson Kenya Friend-Daniel tells the Post that "'misinformation' was circulating about the circumstances of Bonnema’s termination. She said he was fired 'because of the disrespect he showed toward our customers' and added:  'Nothing is more important at Trader Joe’s than the safety of our Crew Members and customers'."

    There may be a flaw in that rationale, though:  "Bonnema posted what he says is his August employee review, in which Trader Joe’s gave him high marks across the board. He was rated as meeting expectations in every category and praised for humor, kindness and embracing 'the Kaizen spirit' - a reference to the Japanese philosophy of continuous improvement used by the company.

    "He was commended for the 'dedication and care' he showed to customers, with the reviewer writing:  'You continue to have thoughtful interactions with them at the register and on the sales floor'."

    The Post notes that "the company’s coronavirus safety measures include requiring face coverings, providing employees with gloves and masks, pre-shift wellness checks, enhanced cleanings and increased sick time, according to its website."

    However, public health experts say that Bonnema's request was "an excellent science-based request," while employment experts say he was within his rights to make such requests.  

    Bonnema is expected to file a complaint with the National Labor Relations Board (NLRB) seeking reinstatement.

    KC's View:

    I'm not sure that everything Bonnema was asking for was possible - the three strikes request seems an unlikely rule to be imposed - but it also doesn't sound like firing him was a reasonable response.  It is hard to argue that he is an employee out of synch with core company values when his official review says precisely the opposite.

    I suspect that this is not a hill that Trader Joe's wants to die on … if it really believes in the essential-ness of its employees, this is a place to prove it.  Otherwise, the words ring hollow.

    Published on: March 1, 2021

    Fast Company has a long piece about Door Dash's business model, framing the company this way:

    "For almost all of DoorDash’s seven-plus years, two things about the company have been true: It has aspired to be a logistics company that did more than restaurant delivery - one of the first articles ever written about the startup, in March 2014, was headlined ‘DoorDash enters food-delivery fray with much grander ambitions’ - and it’s been controversial as it’s pursued those dreams.

    "It has been accused of 'swiping' delivery driver tips, and restaurants have sued it for listing their eateries on its platform without their consent. DoorDash has also fielded complaints from the restaurants it aims to serve for taking too fat a slice of their revenues. Finally, it took part in a $200 million-plus campaign last year to convince Californians to legalize the use of contract labor in delivery, via ballot Proposition 22, thereby preventing workers from attaining the protections that come with employee status."

    The bottom line questions:  Can Door Dash build a sustainable business model?  Can Door Dash make money?

    "DoorDash believes that as people continue to struggle with balancing work and the rest of their lives - from child rearing to carving out time for themselves - its path to profitability lies in soothing the anxieties of middle-class customers who don’t have the time or energy to make dinner or go shopping. The end of the pandemic may dampen Americans’ appetite for delivery. But if it doesn’t, what do we lose when we value convenience at all costs?"

    You can read the piece here.

    Published on: March 1, 2021

    Fast Company has the story of Petaluma, California, a city of fewer than 15 square miles that has 16 gas stations.  "But there will never be another one, even if one of the existing stations goes out of business," the story says.  "The ones that are left also can’t ever expand the number of fuel pumps, either, though they can add electric charging stations and hydrocarbon pumps. City officials recently approved a permanent ban on new gas stations in a move that climate activists say is national first, and a crucial step towards curbing our reliance on fossil fuels."

    The argument is that such a move will help the city transition to the infrastructure necessary to support the electric vehicle boom expected to happen in coming years.

    KC's View

    This strikes me as a bit radical, but in a world where more and more car companies are leading the way toward electric cars, maybe it is the right move.  Instead of saying "can't work" or "won't work," they seem to be saying, "Let's make it work."

    Published on: March 1, 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 29,255,365 confirmed cases of the Covid-19 coronavirus, resulting in 525,778 deaths and 19,694,337 reported recoveries.

    Globally, there have been 114,738,603 confirmed coronavirus cases, with 2,544,254 resultant fatalities and 90,294,960 reported recoveries.  (Source.)


    •  The US Food and Drug Administration (FDA) over the weekend authorized the Johnson & Johnson single-shot Covid-19 vaccine for emergency use, making it the third vaccine to be available in the US.  The move is expected to be "a big boost for a mass-vaccination campaign rushing to end the deadliest pandemic in more than a century< in the words of the Wall Street Journal.

    Shipping reportedly has begun, and does are expected to be administered starting in a couple of days.


    •  The New York Times writes that "Johnson & Johnson has pledged to provide the United States with 100 million doses by the end of June. When combined with the 600 million doses from the two-shot vaccines made by Pfizer-BioNTech and Moderna slated to arrive by the end of July, there will be more than enough shots to cover any American adult who wants one.

    "But federal and state health officials are concerned that even with strong data to support it, some people may perceive Johnson & Johnson’s shot as an inferior option."


    •  Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said on "Meet The Press yesterday that he would have no problem taking the new Johnson & Johnson Covid-19 vaccine, and urged Americans to take whatever vaccine is available to them when they are able to be inoculated.

    "All three of them are really quite good, and people should take the one that’s most available to them,” Fauci said.  "If you go to a place and you have J&J, and that’s the one that’s available now, I would take it … I think people need to get vaccinated as quickly and as expeditiously as possible.”


    •  The Washington Post reports that "at least 49.8 million people have received one or both doses of the vaccine in the U.S.  This includes more than 24.8 million people who have been fully vaccinated … 96.4 million doses have been distributed."


    •  The Wall Street Journal reports that "nearly half of the U.S. population ages 65 and older has received the first dose of the coronavirus vaccine, White House senior adviser Andy Slavitt said."


    •  From the Washington Post:

    "Health experts say the coronavirus vaccines may do more than protect recipients from covid-19. Researchers say people who are vaccinated and still contract the virus may carry less of it and also shed less of it — meaning those whom they expose to it may not become as sick.

    "There isn’t a lot of evidence yet to support this hypothesis, but researchers say it is likely the case based largely on observations in animal studies, as well as some preliminary research in humans.

    "This, however, doesn’t mean that vaccinated people should stop taking precautions, such as wearing a mask."


    •  The Wall Street Journal reports that "hospitalizations in the U.S. continued their steady decline, with 47,352 logged for Sunday, the second day in a row the number was less than 50,000 after crossing that threshold on Nov. 3."


    •  The Washington Post reports that "a steady decline in new coronavirus cases in the United States appears to have stalled in recent days, public health officials said, warning that new, more transmissible variants could be taking hold. The number of new infections has started to plateau and remains critically high, with more than 76,000 cases reported Saturday, even as hospitalizations continue to drop."


    •  The New York Times writes about how, while widespread testing is crucial in controlling the spread of the coronavirus and squashing new outbreaks …. the amount of testing being done in the United States has fallen by 30 percent in recent weeks."

    There are, essentially, five reasons:  fewer exposures leading people to get tested, less travel leading to fewer exposures, bad weather around the country that curtailed testing, the vaccine rollout that has become the center of public health efforts in most places, and pandemic fatigue.

    However, the Times writes, "The slump in testing, at a time when a clear picture of the pandemic is still badly needed, worries some epidemiologists … Among other things, less testing makes it harder to follow the virus’s mutations and to get ahead of variants that may be more contagious or deadly."

    But, there is a silver lining:  "The decline in testing may not be a cause for alarm - and may even be a good sign - if it reflects wider progress in tamping down the pandemic."

    Seems to me that this could be an opportunity for retailers that happen to have databases that give them information about who their older customers are.  Reaching out and helping these folks their vaccinations would be a real service that would resonate for a lot of demographics.


    •  The New York Times reports that "the chaotic vaccine rollout has come with a maze of confusing registration pages and clunky health care websites. And the technological savvy required to navigate the text alerts, push notifications and email reminders that are second nature to the digital generation has put older adults … who need the vaccine the most, at a disadvantage. As a result, seniors who lack tech skills are missing out on potentially lifesaving shots.

    "The digital divide between generations has always been stark, but the pandemic’s abrupt curtailing of in-person interactions has made that division even more apparent."


    •  The Daily Voice reports that "new research suggests that a common accessory that is already worn by millions of people can make the wearer three times less likely to catch COVID-19.

    "While face masks have been found to reduce the risk of catching or spreading COVID-19 through the mouth and nose, not much research has been done on how to keep the virus from entering via people’s eyes.

    "However, a recent study found that people who wear glasses at least 8 hours a day are two to three times less likely to catch COVID-19 than people who are not wearing them."

    Published on: March 1, 2021

    •  The Des Moines Register reports that "a unionization effort is underway among employees of Amazon.com's Iowa warehouses, with organizers threatening a strike.

    "International Brotherhood of Teamsters Local 238 Organizing Director Buzz Malone said Friday that he has been recruiting workers to organize since November. He said the union has approached '400 to 500' current or former employees, primarily tied to Amazon's distribution centers in Grimes and Iowa City … The union's announcement comes after Amazon quickly scaled up in the Des Moines metro and eastern Iowa last year. In addition to the Grimes and Iowa City distribution centers, Amazon opened a 1,000-employee fulfillment center in Bondurant in December."


    •  The Orange County Register reports that a new Amazon Fresh grocery store has opened in Fullerton, California, a 45,000 square foot unit that "offers the techy bells whistles Amazon customers have become accustomed to, such as geeked-out shopping carts that scan merchandise as customers put items in the basket. Alexa, the artificial intelligence assistant used in millions of American homes, also lives in the aisles, guiding shoppers to goods throughout the store."

    The new Amazon Fresh virtually shares a parking lot with a Costco, the story points out.

    Published on: March 1, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From USA Today:

    "Some Target stores are getting an Apple upgrade.

    "The Minneapolis-based retailer announced Thursday that a new 'enhanced Apple shopping experience' debuts online and will begin rolling out this month to 17 stores across the country and is scheduled to arrive in additional stores by the end of fall.

    "The new concept doubles Apple’s footprint in select Target stores and brings displays for iPhone, iPad, Apple Watch, AirPods and other accessories together in one space 'designed for guests to experience new products through demonstrations,' Target said in a news release, adding its tech employees are receiving specialized training from Apple.

    "Five Texas and four Florida stores are getting the upgrade along with one location apiece in eight other states: California, Delaware, Massachusetts, Minnesota, New Hampshire, New York, Oklahoma and Pennsylvania."

    The story notes that "this is not the first time Target worked with a popular national brand. In October 2019, mini Disney shops opened in 25 Target stores with a "shop-in-shop" layout with an average of 750 square feet … Target and Ulta Beauty announced in November that they were teaming up to bring 100 small 'Ulta Beauty at Target"' beauty shops to more than 100 Target locations and online in the second half of 2021, with plans to 'scale to hundreds more over time'."  And, "in October, Target announced it was expanding its partnership with Levi Strauss & Co and would bring Levi’s Red Tab collection to 500 Target stores by fall 2021."


    •  From the Wall Street Journal:

    "Traditional retail chains like Macy’s Inc. that derive much of their income from shoppers who pay with a store credit card are making room for a less-lucrative customer: buy now, pay later.

    "The emerging payment option is a modern take on old-fashioned layaway plans, allowing shoppers to pay for purchases over time. The difference is they get the goods upfront. Chains from Macy’s to Gap Inc. to Neiman Marcus Group Inc. have introduced buy now, pay later options in recent months to attract younger shoppers, who are less likely to use credit cards."

    Maybe it is just me, but this doesn't exactly sound like the answer to competitive woes.  Is the problem that people want to shop at these stores and don't have the money?  Or is the problem that people don't want to shop there, and not having to pay for products up front won't make a damned bit of difference?  Methinks that they may be putting their focus on the wrong problem.


    •  Kantar is out with a new report on integrated print and digital promotion activity, saying that "overall print promotion activity saw a decrease of -15.1% in 2020, while year-over-year digital activity decreased -8% for the first time as manufacturers and retailers reacted to COVID-19."

    According to the report, "181 billion print coupons distributed $427 billion in purchase incentives across 85 billion pages in 2020. Looking at digital promotions, there were 7.9 billion print coupons 'clipped,' $15 billion in purchase incentives 'clipped' and 1.3 billion coupon pages viewed."

    Published on: March 1, 2021

    On Friday we reported on how the Los Angeles City Council is the latest body to vote in favor of hazard pay - a mandated hourly bonus for grocery store employees dealing with pandemic issues.

    I commented:

    I repeat, it is bad public policy to focus on just one category of workers.  I'd be a lot more impressed if these lawmakers would send medical vans to every grocery store in their communities to make sure that workers can get vaccinated.  

    Prompting MNB reader Bill O'Neill to write:

    They not trying to impress you!  They are trying to reward those that have worked through the many challenges. 

    I get that.  I'm not sure it is good public  policy for government officials to reward one set of employees with companies' money.


    I suggested last week that instead of raises, what cities ought to do is send vaccination vans to supermarkets so that employees can get shots, prompting MNB reader Brian Parker to write:

    I like the idea of a rolling shot-mobile!  That would be a great call.  Don’t come to us, we’ll come to you.  We’ve got you covered.


    Costco announced last week that it is instituting a $16 minimum wage nationwide for its employees.  I wrote:

    The difference between Costco and a lot of retail entities is that Costco seems to understand that its growth is dependent on satisfied customers who continue to pay their membership fees and shop at its stores - and that is dependent on a strong employee base that makes customers happy.  That's a priority and a core value.

    At a lot of retailers, the priority and core value is keeping labor costs as low as possible - even if, in some cases, part of the value equation is customer service.

    You'd think more businesses would understand the wisdom of Jelinek's words.  If they did, there might not even be a debate over a national minimum wage.

    One MNB reader wrote:

    While I appreciate your comments on this story, I have to disagree a bit. I work for a fairly large supermarket chain and watch these stories with great interest. The problem I see and I have dealt with is the compression this causes for the longer term folks who have dedicated their lives to our company. When a change like this is made, it’s great for the incoming hires and newer employees, but creates a situation where they are making the same or more than a five or ten year employee.

    My company has been dealing with compression over the last few years as our state continues to raise its minimum wage. There are no easy answers as it costs millions of dollars to “get everybody right” and it still isn’t perfect. I am in a position where I have to communicate these changes and the answers to their questions aren’t simple. You can’t fix the economy by just increasing minimum wage while alienating those who don’t get an increase because they are making $16.50 after ten years of employment.

    I don’t have the answers, but let’s not forget how critical these folks are to our business and the financial  pressure this puts on an entire organization when faced with this scenario. I want to know how Costco is handling the compression this will create, if at all, and how they will manage customer service when seasoned employees aren’t so giddy that the person just hired makes more than they do. 


    Regarding the popularity of ghost kitchens, one MNB reader wrote:

    The ghost kitchen concept has a definite place in today’s environment, and it is helping to keep businesses afloat.  My question is longevity.  Will this concept last past the covid years or will businesses / restaurants go back to self-production and just maintain the delivery channels created for their own benefit?  Although it would not be a win for the “ghost” concept,  it would definitely could become a newly acquired capability for existing business’s. 


    And, responding to our Covid-19 coverage, one MNB reader wrote:

    I recall Winston Churchill’s speech after the English victory at El Alamein in 1942:

    “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

    Let's hope. Though, I have to admit, the recent news seems a lot more hopeful than just a few months ago.

    I'm looking forward to the day when I don't have to write an "MNB Covid-19 Coronavirus Update."