It was one year ago today that the pandemic forced the NBA to shut down and Tom Hanks announced he and his wife had contracted Covid-19 - a concurrence that persuaded most people that the coronavirus needed to be taken seriously because it would affect all our lives. But, KC argues, it is more important to look forward, because the imprint of the pandemic is likely to be seen to dramatic and traumatic effect.
Kroger said yesterday that it will close three more stores - all in the city of Los Angeles - in response to the City Council's vote to mandate $5 an hour "hazard pay" on top of regular wages for grocery store employees.
The closures include two Ralphs stores and one Food4Less unit.
The retailer said that the stores had been underperforming before the hazard pay mandate, and that now they are simply not viable:
“It’s never our desire to close a store, but when you factor in the increased costs of operating during COVID-19, consistent financial losses at these three locations, and an extra pay mandate that will cost nearly $20 million over the next 120 days, it becomes impossible to operate these three stores,” a Kroger spokesperson said.
The Los Angeles Times writes that "the Kroger announcement comes as businesses continue to argue, some in court, that the extra pay is too costly to sustain and that the ordinance unfairly singles out grocers when there are other businesses employing front-line workers."
The Times goes on:
"Long Beach became one of the first cities in California to pass hazard pay rules, approving an ordinance mandating an extra $4 an hour for grocery workers in late January. Backlash was swift, with the California Grocers Assn. launching a lawsuit against the ordinance in federal court.
"Other jurisdictions that have approved similar proposals, including San Jose, San Francisco and Montebello, have also seen pushback from trade groups.
"Last month, Kroger announced the impending closure of a Ralphs and Food 4 Less in Long Beach, blaming the new pay boosts. Kroger also announced plans to close two stores in Seattle after the city passed a hazard pay mandate; the two Quality Food Centers slated for closure were already underperforming, the company said."
The Times story points out that "an analysis released by the city days before the vote noted that the grocery industry is a low-profit-margin sector and warned that companies could respond to the ordinance by closing stores, laying off staff or raising food prices. Experts say grocery stores should generally be able to absorb temporary pay boosts, though already-struggling stores could be more adversely affected."
Which is exactly what is happening.
These mandates are knee-jerk reactions and bad public policy.
"As many businesses struggled to survive the pandemic, Amazon.com Inc. was quietly building a national grocery chain.
"The first Amazon Fresh store opened to the public in Los Angeles in September. Store No. 11 opened Thursday, and Amazon is working on at least 28 more, from Philadelphia to the Sacramento suburbs. The company is also testing the 'Just Walk Out' cashierless shopping technology created for its Go convenience stores at an Amazon Fresh location in Illinois.
"More than a decade after it started selling groceries, Amazon has a tiny sliver of the $900 billion U.S. grocery market and has watched traditional chains finally start figuring out how to sell food online. Amazon Fresh, industry watchers say, is a way for the company to become even stickier with devoted Prime members, as well as appeal to a broad cross-section of America—from lower-income shoppers who frequent discounters like Walmart Inc. to wealthier customers looking to pick up online orders."
The story goes on to point out that prices at Amazon Fresh "at least so far, are low. A basket of 30 commonly purchased grocery items in one of Amazon’s Chicago-area stores last month undercut Jewel-Osco, an Albertsons Cos. Inc.-owned mainline grocer, by as much as 20% when including items on sale, and is competitive with Aldi and Walmart.
"Grocery analysts say Amazon Fresh stores are likely cheap to launch and even cheaper to run - the perfect weapon to stake a long-term claim in a famously low-margin industry."
There's no question that Amazon is getting into a highly competitive segment, and the opposition isn't going to just allow it to take market share the same way that so many bricks-and-mortar retailers did when it came to e-commerce.
But Amazon brings some big weapons to the fight, and the biggest is its data - knowing exactly how many of its shoppers and Prime members live anywhere near one of its Fresh stores, knowing exactly what they buy and what their preferences are, what buttons it can push that will work most effectively, and owning the delivery method to communicate with those shoppers.
Huge advantage. Underestimate it at your own peril.
The Financial Times reports that "confidence among large US employers has surged in the past three months, as an accelerating vaccine rollout and Joe Biden’s $1.9 trillion stimulus package boosted companies’ willingness to hire and invest.
"A quarterly poll of chief executives by the Business Roundtable, Washington’s leading big-business lobby group, reported a 21-point jump in its economic outlook index since December. The index’s reading of 107 was far above both the 50-point level that indicates growth and the historical average of 82."
It was, according to Josh Bolten, CEO of the Business Roundtable, "among the sharpest and quickest recoveries in optimism in the history of our survey."
According to the FT story, "The advance in the BRT survey came on the heels of other reports showing confidence rising across US industry. The National Association of Manufacturers reported on Tuesday that optimism among its members had jumped in the past quarter from 74 per cent to 88 per cent - its highest rate in two years."
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…
• There now have been 29,862,124 confirmed cases of the Covid-19 coronavirus in the United States, resulting in 542,191 deaths and 20,640,270 reported recoveries.
Globally, there have been 118,723,992 confirmed coronavirus cases, with 2,633,965 resultant fatalities and 94,312,350 reported recoveries. (Source.)
• Axios writes about how "today, one year after the World Health Organization declared COVID-19 a pandemic, the end of that pandemic is within reach.
"The death and suffering caused by the coronavirus have been much worse than many people expected a year ago — but the vaccines have been much better."
The story goes on: "A year ago today, the U.S. had confirmed 1,000 coronavirus infections. Now, we’re approaching 30 million.
"In those early days, Americans were terrified by White House projections - informed by well-respected modeling - that 100,000 to 240,000 Americans could die from the virus … Many models thought the virus would peak last May - nowhere close. The deadliest month of the pandemic was January."
• The New York Times writes that "as vaccine production and deliveries and inoculations ramp up, a growing number of U.S. states are allowing ever more people to get vaccinated, providing optimism for those who have been waiting for their moment."
"Next week, Texans age 50 and older will be eligible, the state’s health department announced on Wednesday, the same day Gov. Brian Kemp of Georgia said that people in that state over 55 would be able to get a shot next week. New Yorkers age 60 and older became eligible on Wednesday, with Gov. Andrew M. Cuomo citing increased supply from the federal government. The governors of Minnesota and Ohio also said this week that they would open eligibility to larger groups of residents."
This is addition to Alaska, which earlier had announced expanded eligibility, and Utah, which also is expanding availability.
Vaccines currently are being administered at the rate of more than two million a day.
• The Boston Globe reports that "Massachusetts recently moved up teachers in the state’s vaccine rollout. Now, several dozen lawmakers are calling on Gov. Charlie Baker to give grocery store workers the same treatment.
"In a letter Tuesday, 35 state lawmakers … implored Baker to 'prioritize the vaccination of supermarket workers in a most expeditious manner'."
The letter pointed out that "grocery store workers are disproportionately people of color, a community that has been hard hit by the pandemic due to structural inequities."
According to the Globe, "Supermarket workers aren’t quite at the 'bottom' of the state’s three-phase vaccine rollout. Rather, they’re included in the third priority group in Phase 2 along with a number of other frontline workers.
"Educators had also been lumped into that group. However, Baker announced last week that they would allow teachers and other school staff to begin signing up for appointments at any of the state’s vaccination sites this Thursday."
• Politico reports that Maryland Gov. Larry Hogan has signed an executive order "to roll back capacity limits on restaurants, retailers, fitness centers and religious establishments and loosen those on large venues like convention centers and concert halls.
"Hogan’s order also eliminates quarantine requirements for out-of-state travelers - but the state’s masking requirement is so far still in place, and bars and restaurants must still keep customers physically distanced."
• From the Wall Street Journal:
"Newly reported Covid-19 cases and deaths in the U.S. edged higher, as the country continued to ramp up its vaccination effort and more states expanded eligibility for shots … Rising vaccination rates across the U.S. offer a hopeful note that the country could be turning a corner nearly a year into the pandemic, public-health officials have said. Still, they continue to advise caution. While key metrics have broadly declined from records set in January, they remain high and could be plateauing."
• The Washington Post reports that "at least 62.5 million people have received one or both doses of the vaccine in the U.S. This includes more than 32.4 million people who have been fully vaccinated … 127.9 million doses have been distributed."
• The federal government said yesterday that it is in the process of securing an additional 100 million doses of the Johnson & Johnson vaccine, with the New York Times noting that "the White House said that the additional doses could help the country begin to vaccinate children after the necessary clinical trials are completed. The doses could also, if necessary, be used as boosters or be reformulated to combat emerging variants of the virus."
And, federal officials said, extra doses of the vaccine could also be distributed to foreign countries in need of assistance.
• Fox Business reports that "Target is partnering with CVS to distribute coronavirus vaccines at store locations across 17 states, the companies announced Wednesday.
More than 600 CVS pharmacies within Target locations nationwide will be offering vaccinations to eligible guests … The two companies will follow state and federal guidelines for COVID-19 vaccine distribution."
• From Axios:
"Despite severe technological barriers, some Native American tribes are vaccinating their members for COVID so efficiently that they've been able to branch out and offer vaccines to people outside of their tribes."
The story says that "Native Americans are one of the most at-risk groups for contracting and dying from COVID-19. But tribal nations have rallied to get members vaccinated and helped nearby communities while major cities have struggled with rollouts.
"Three Indigenous principles have helped provide the impetus to get vaccinated, according to activist Allie Young, a citizen of the Navajo Nation: Recognize how Native Americans' actions will impact the next seven generations … Act in honor of ancestors who fought to ensure their survival and elders who carry on their traditions and cultures … Hold on to ancestral knowledge in the ongoing fight to protect Mother Earth."
Seems to me that these three indigenous principles would be worth adopting by we non-indigenous folks.
• The Wall Street Journal reports that AMC Entertainment, having just announced a 2020 loss of $4.59 billion because the pandemic shuttered the vast majority of its facilities, "said roughly 527 out of its 589 domestic theaters were open as of Friday, including those in New York City. Cinemas in Los Angeles are expected to open shortly."
Big change … though I'm not sure I am ready to go to a movie theater just yet. But once I get that second vaccine, I may feel differently. But still, the numbers are hopeful.
I am still staggered by one thing, however. The Journal story says that AMC had total 2020 revenue of $162.5 million and yet, according to the Hollywood Reporter, AMC CEO Adam Aron "received compensation of $20.92 million in 2020, up from $9.67 million in 2019." I'm not sure exactly what the pay boost was a reward for, and his compensation package is more than 10 percent of the company's total annual revenue. Must be a cold comfort to all the AMC employees who lost their paychecks during the year to know that at least their boss didn't have to suffer.
• Finally…the Ad Council and the the COVID Collaborative have released a new commercial in which four well-known Americans and their spouses get together (virtually) to urge citizens to get the vaccine when it becomes available to them, how it is safe, and how it will allow all of us to get back to the lives we enjoyed before the pandemic:
Just one thought this morning … it just seems like for the first time since I started doing these daily Coronavirus Updates, the majority of the news is good news. That must be hard for the people who are still losing loved ones to Covid-19, and to be sure, it won't be all good news until virtually nobody is dying from this coronavirus. But still … one year in, it just feels different.
• Amazon Music announced "the integration of artist merchandise within its mobile app, combining the convenience customers have come to know and love from Amazon, with a new way for artists to engage with their audience and enrich the fan experience.
"Artist merchandise will now appear in the Amazon Music app on participating artists’ pages, side-by-side with their songs, albums, live streams, and music videos. By seamlessly tying artist merch and music together in the app, fans in the U.S. can now easily shop a genre-spanning selection of merchandise, a majority of which is available with Prime shipping for Prime members, from artists including Billie Eilish, Jack Harlow, King Princess, Lady Gaga, and Gucci Mane while listening to their favorite music, uninterrupted."
• CNN reports that "Costco is having trouble stocking imported cheeses because of a shortage of shipping containers around the globe and bottlenecks at key West Coast ports, such as Los Angeles, Long Beach, Oakland and Seattle. The combination has led to delays for suppliers shipping their goods, retailers like Costco receiving products, and higher costs along the supply chain."
CFO Richard Galanti says that "the problem isn't just limited to cheese, but also seafood, olive oils, furniture, sporting goods and lawn and garden equipment."
Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.
• The Wall Street Journal reports that "Congress is considering the most significant changes to antitrust law in decades, including some proposals with bipartisan support. Lawmakers are looking at setting a higher bar for acquisitions by companies that dominate their markets; making it easier for the government to challenge anticompetitive conduct; and potentially forcing some giant tech companies to separate different lines of their businesses.
"For these measures to become law, lawmakers will have to move beyond their general unease with dominant companies - particularly in the tech sector - and navigate constituencies that don’t agree on whether antitrust law needs a major overhaul or targeted changes."
It starts today, when "an antitrust subcommittee led by Sen. Amy Klobuchar (D., Minn.) holds its first hearing on possible reforms. Ms. Klobuchar has offered a package of proposals, including new civil fines for antitrust offenses and changes to legal standards to make it easier to challenge proposed mergers and business practices that threaten competition."
The Journal goes on:
"While Republicans are unlikely to support Democrats’ farthest-reaching proposals, there appears to be more common ground than in the past. Makan Delrahim, the Trump administration’s antitrust enforcer at the Justice Department, said before leaving office that it made sense for Congress to place more of a legal burden on companies with 50% or greater market share to prove that their future acquisitions wouldn’t harm consumers. That proposal is in the Klobuchar bill.
"Big businesses are poised to fight many of the measures, which they see as threats to their bottom lines. Facebook and Amazon spent more on lobbying in 2020 than any other U.S. corporations, seeking to influence legislation on antitrust and other matters. The tech giants say they face vigorous competition that forces them to constantly innovate, and that they have acquired large market shares because consumers love their products.
"Facebook and Google, meanwhile, are waging parallel battles in federal courts. Last year, the Justice Department and state attorneys general brought antitrust cases against Google and the Federal Trade Commission and most states sued Facebook. Those cases all focused on claims of unlawful monopolization."
• In a related story, the Wall Street Journal reports that Facebook has "asked a federal judge to dismiss antitrust lawsuits by the Federal Trade Commission and state attorneys general, arguing that government enforcers have no valid basis for alleging the social media giant is suppressing competition.
"The FTC 'utterly ignores the reality of the dynamic, intensely competitive high-tech industry in which Facebook operates,' the company said in seeking to dismiss the commission’s case. In a second motion, Facebook argued the states’ case 'does not and cannot assert that their citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of Facebook’s challenged actions'."
The Washington Post reports on the passing of Steven Spurrier at age 79, and notes that Spurrier was the British wine merchant who engineered what was called "the Judgement of Paris" - a 1976 event that pitted the finest French wines against "relative upstarts from California’s Napa Valley" in a blind tasting by France's foremost wine experts.
For the vast majority of wine experts, the outcome was a foregone conclusion - California wines weren't thought of as even being on the same planet as French wines at the time.
The Post writes: "To the shock and horror of the French wine élite, California’s Chardonnays and cabernet sauvignons were rated higher than the classic local wines. A 1973 Californian Stag’s Leap cabernet out-rated a 1970 red Bordeaux from the legendary Chateau Mouton-Rothschild. A California Chardonnay, Chateau Montelena, beat its French rival."
From that seismic day," the Post writes, "the Californian wine industry began to foster global ambitions, and its vintages are now praised and enjoyed around the globe. The bursting of the historic French bubble also led many other would-be wine-growing countries to begin competing internationally with increasing success." And, it encouraged winemakers from Australia, South Africa, Chile, Argentina, and even East European nations such as Bulgaria and Hungary to begin making and exporting fine wines.
Spurrier's story was broadly fictionalized and turned into the 2008 movie, "Bottle Shock," in which he was played by Alan Rickman:
Yesterday on MNB we wrote about how "a 77-year-old, longtime Trader Joe's employee at its Coolidge Corner store in Brookline, Massachusetts, finds herself the beneficiary of a GoFundMe campaign after the retailer fired her for selling a six pack of beer to a family member who was a couple of months shy of turning 21. (Gloria was just weeks away from a promised $4000.00 bonus for those who worked through the pandemic, but now is no longer eligible for this hard earned bonus.)
The goal of the fundraising campaign was $10,000 … and it already has raised more than $36,000 from some 589 people. (That's up from more than $25,000 from 273 people just 24 hours ago.)
Let's be clear. We don't know all the details of this case.
But … if I'm understanding the recitation correctly, Gloria Cocuzzo actually reported her own misdeed.
And when I look at that GoFund Me page, I see hundreds of passionate customers and a pretty persuasive 563-word defense.
If it is legally possible, Trader Joe's needs to find a way to walk this decision back … there's no percentage in the company not siding with its customers on this one.
MNB reader Steve Ham disagreed:
Gotta agree with the painful decision to have her fired. Liquor laws are not ambiguous, nor open to interpretation. It’s not like horse shoes & hand grenades – close is not good enough.
Although she might have been a beacon of light, & a hardworking senior front line worker who was the model employee, she made an unacceptable decision. Pay her the $4K bonus, let the go fund me create even more, and realize that there was no grey area. Even charming 77 yr old Gloria’s are not exempt from the law.
So did another MNB reader:
Sorry Kevin – I disagree. Gloria probably violated at least two associate policies:
Waiting on a family member, and selling alcohol to a minor.
While #1 could have been written up as a warning, #2 can not. If the minor had consumed the beer, got behind the wheel of a car and got pulled over (or worse) – Trader Joe’s would have been liable.
I truly feel for Gloria, but being a 16 year veteran she should have known better! It’s not clear whether she reported herself or was ‘called into the office’. She may be a wonderful person and a favorite of the customers, but selling alcohol to a minor in MA is big offense!
But MNB reader Jerry Sternberg wrote:
If I were Trader Joes I would take a page from the history book and look at what loyal customers can mean to a beloved store person. Not that this is exactly the same thing but one should not forget how powerful customer response was to Market Basket.