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    Published on: April 8, 2021

    It was just yesterday that we had the story about how the plant-based food business grew 27 percent in 2020, which was good news for almost anyone in that segment.

    But that's not to say that the pandemic was easy to navigate.  Today, I talk to Christie Lagally, CEO of Rebellyous Foods, a young company that found itself having to make a significant pivot in terms of strategy and execution when the coronavirus put its model at risk.  But it had two things going for it - smart people and a superior product.

    Published on: April 8, 2021

    The Wall Street Journal this morning reports that Instacart and DoorDash both are planning to launch their own credit cards.  The move allows both companies to build on both the business boom that their delivery offerings have experienced during the pandemic, and the relationships that they are directly developing with customers of their retail clients.

    According to the story, Instacart "has chosen JPMorgan Chase & Co. to issue a credit card that will reward frequent users, according to people familiar with the matter. DoorDash Inc., which specializes in delivering takeout, is also looking to launch its own rewards credit card and received offers from more than 10 large banks and financial-technology firms to issue it, people familiar with the matter said."

    The Journal offers some context:

    "Both Instacart and DoorDash have benefited from the surging popularity of at-home delivery for groceries and meals. They are betting that at least some of the increased demand will remain after the pandemic ends and hoping that the cards will stoke customer loyalty and attract new users.

    "Banks, for their part, see these new partnerships as a way to diversify beyond travel rewards cards, which fell out of favor with some consumers when the coronavirus pandemic brought travel almost to a standstill. Travel co-branded cards, such as those issued for airlines or hotels, have traditionally drawn affluent consumers who are also big spenders."

    KC's View:

    So let me get this straight.  Retailers outsource their e-commerce functionality to Instacart, which is able to put them into that segment fairly quickly and easily, with a minimum of expense.  Retailers give Instacart a piece of the action, plus total access to all the customer data generated through e-commerce.  This allows Instacart to then solicit promotion dollars directly from manufacturers, and even weaponize retailers' own data to market against them if necessary.  Instacart also is able to open dark stores that will serve its markets without the benefit of a local retail partner (though it hasn't done so yet).  And now it will be able to market its own credit card and loyalty schemes directly to those retailers' shoppers, getting an even bigger piece of the action on transactions.

    I think that's a pretty fair assessment of the situation.  (Feel free to correct me if I am misunderstanding.)

    Seems to me that not only have the foxes have been allowed in the henhouse, but they're pretty much having their way with the flock.

    Published on: April 8, 2021

    There's news - though probably not the news you were expecting - from Bessemer, Alabama, where there has been a vote on unionization taking place at an Amazon distribution center there.

    Even though weeks of voting ended on March 29, the ballots have not yet been counted.

    •  The Wall Street Journal reports that it is expected that the counting is expected to begin today or tomorrow.  Over the past 10 days, the story says, "the National Labor Relations Board has been processing ballots to ensure they are valid and allow both parties an opportunity to contest the eligibility of each one."

    The Retail, Wholesale and Department Store Union (RWDSU), which has been at the forefront of the unionization effort, "said there were hundreds of ballots challenged over voter eligibility during the processing of ballots."

    •  Fox News reports that "Amazon has challenged hundreds of ballots," far more than were said to be challenged by the union.

    •  CNBC writes that "more than 3,200 ballots were cast in a high stakes union election at one of Amazon’s Alabama warehouses, according to the Retail, Wholesale and Department Store Union.  The election was open to more than 5,800 employees … With 3,215 total ballots cast, that resulted in a turnout rate of roughly 55%, which is higher than what the RWDSU initially estimated."

    KC's View:

    It seems likely to me that however the initial vote count turns out, there will be legal challenges that will prolong the suspense.

    But I must admit that I cannot quite get over the idea that only 55 percent of the workers at the warehouse voted, and that the union thought this way a high turnout.

    Really?  Is it possible that 45 percent of workers don't even have a freakin' opinion

    What is seems to suggest is however the vote goes, it potentially can be won by a side that gets just 28 percent of the total workforce to vote its way.

    Published on: April 8, 2021

    CNBC reports that Target has committed to spending more than $2 billion between now and 2025 to "hire more Black-owned companies, launch a program to identify and support promising minority entrepreneurs and add products from more than 500 Black-owned brands to its shelves or website."

    According to the story, Target "will more actively seek out advertising firms, suppliers, construction companies and other kinds of businesses that are Black-owned. It said it will create a program called Forward Founders for early-stage start-ups led by Black entrepreneurs to help them develop, test and scale products to sell at mass retailers like Target. It will be modeled off of Target Accelerators, a program for start-ups that the retailer uses to foster up-and-coming brands and ultimately, to sell fresh and exclusive products that attract customers and help it differentiate from competitors."

    “We have a rich history of working with diverse businesses, but there’s more we can do to spark change across the retail industry, support the Black community and ensure Black guests feel welcomed and represented when they shop at Target,” said chief growth officer Christina Hennington in a prepared statement.

    The context, according to CNBC:

    "The killings of George Floyd, Breonna Taylor, Ahmaud Arbery and protests across the country have ratcheted up pressure on corporate leaders to advance racial equity and do more than simply cut a check - or risk losing business. The uneven death toll of the coronavirus pandemic and financial toll of the recession also spotlighted the country’s sharp racial disparities with health care and economic opportunity.

    "Floyd was killed in Target’s hometown of Minneapolis, now the site of the murder trial for the police officer who kneeled on Floyd’s neck. One Target store, located near the site of Floyd’s death, had to be completely rebuilt and some of its other stores were damaged during rioting."

    KC's View:

    One of the other points made by CNBC in the piece is that consumers more than ever before are paying attention to what they perceive as the moral and ethical values talked about - and acted upon - by the companies with which they do business.  This especially applies to Generation Z, " the group of teens and early 20-somethings who are aging into shopping and establishing relationships with brands," which, CNBC writes, cares "more about social justice compared with former generations."

    Sometimes, when companies get involved in what they see as social issues, it puts them in the political crosshairs … which can be a perilous place for any company to be.  But, sometimes they don't see circumstances as giving them much of a choice.

    Published on: April 8, 2021

    The seventh edition of the dunnhumby Consumer Pulse Survey is out, finding that "Americans, for the first time since the pandemic began, are beginning to feel noticeably better about personal finances and are now prioritizing value over speed when they shop."

    The survey found that "58% of U.S. consumers reported that the U.S. economy is weak, a sharp drop of 17% from last March when 75% reported the economy was weak. The study also found that 39% of consumers reported that their finances were poor, a drop of 15% from just November when 54% reported their finances were in bad shape and in the court was in the grips of the third wave of the pandemic. Americans are now at the lowest level of worry about the virus (23%) since the crisis began and have dropped nine percentage points since November on the dunnhumby Worry Index.

    "Even though U.S. consumers’ confidence is beginning to rebound, consumers remain concerned with the cost of food with 43% saying they are paying more than they did before the pandemic. In contrast, just 24% reported they are paying less for food. As a result, 80% are taking at least one action to seek value with the most popular action being to shop at stores with everyday low prices (52%). Consumers return to value seeking aligns with the dunnhumby 2021 Grocery Retailer Preference Index which postulated that the importance of value would return once consumers worry about the virus dissipated."

    Some finding from the survey:

    •  "Value seeking consumers (70%) far outstrip quality seeking consumers (13%) in the U.S. Quality seekers are primarily shopping high quality stores and are willing to pay more to get quality. Half of quality seekers are using one of these behaviors: shop at stores with the best quality (38%), willing to pay more for quality (19%), buy more expensive item (8%), and don’t pay attention to prices (7%)."

    •  "Consumers are utilizing multiple shopping tactics to seek value in the face of rising prices. After shopping at everyday low price stores (52%), the most popular shopping tactics by consumers are: only buying some brands on sale (36%), stocking up on products that are on sale or promotion (36%), searching online to find the best sales (34%), searching online for coupons (34%), and buying private brands when available (33%)."

    •  "Online is now a fully adopted behavior and has grown stronger in every wave. Shopping in stores has dropped from 77% of all trips in March 2020 to 64% in February 2021, while shopping online (pickup and delivery) has increased from 23% in March 2020 to 36% in February 2021."

    •  "The number of online trips is also increasing. In March of 2020, consumers reported that online shopping trips made up 1.3 of their trips each week but by the end of February 2021, online trips now made up 3.6 of their trips each week."

    •  "Consumer satisfaction with shopping online has been ahead of, or equal to shopping in store since September 2020. In addition, survey respondents reported a 53% net satisfaction for pickup and 49% for delivery."

    •  "Walmart continues to dominate all stores when it comes to value. Thirty-three percent of respondents mentioned Walmart first when asked which stores provide the best value, followed by Kroger and Aldi both tied at 10%, and then by Amazon at 6%."

    KC's View:

    There's an interesting dynamic unfolding I think that puts mainstream/middle-of-the-road stores potentially at risk.

    It is very difficult for any retailer to out Walmart Walmart, or out Amazon Amazon, simply because of their breadth and ubiquity.  (I don't think Amazon worries about being defined as a value retailer by just six percent of respondents, because it is defining "value" differently than most traditional competitors.)

    Seems to me that stores that leave their value equation insufficiently defined are at risk of seeing their market shares eroded by the likes of dollar stores and limited assortment stores that are growing their footprints around the country and focusing relentlessly on their value proposition.

    On the other hand … there are a lot of folks out there who believe that as we emerge from the pandemic, the after-times, at least for the next few years, will be characterized by an economic boom that could take the emphasis away from price and value.

    One thing seems clear - a complacent, business-as-usual approach to retailing doesn't make a lot of sense these days.  Or any days, for that matter.

    Published on: April 8, 2021

    Amazon-owned Whole Foods Market has announced that it is launching Sourced for Good, described as "an exclusive third-party-certification program to support responsible sourcing by providing tangible improvements in farmworkers’ lives, strengthening worker communities where products are sourced and promoting environmental stewardship where crops are grown … At launch, the Sourced for Good seal can be found on more than 100 products around Whole Foods Market stores."

    The company says that the Sourced for Good seal "is designed to help shoppers easily identify products that meet the high sourcing standards required by the program. A recent study conducted online by The Harris Poll on behalf of Whole Foods Market among over 3,000 U.S. adults found that 75% of Americans say when grocery shopping, it’s important to them that products are responsibly sourced, while 65% of U.S. shoppers are confused about how to determine whether a product is responsibly sourced."

    KC's View:

    On message, and on point.  If consumers want to know more about the products they buy and the companies that make them - believing that values are as important as value - then providing third party certification for such things makes perfect sense.

    Published on: April 8, 2021

    Bloomberg reports that Walmart has filed a trademark for the name "Hazel by Walmart," which the story suggests is a possible moniker for its new financial technology venture.

    According to the story, " The application with the U.S. Patent and Trademark Office includes a slew of financial services that the startup could potentially offer, from issuing credit cards to offering credit-repair services. The list even includes financial-portfolio analysis and consulting, which suggests that Walmart may target wealthier customers along with its traditional lower-income clientele."

    Bloomberg notes that "Walmart shook up the banking world earlier this year when it unveiled the fintech startup, a partnership with Ribbit Capital, an investor in stock-trading platform Robinhood. The companies said they would start an independent venture that 'will bring together Walmart’s retail knowledge and scale with Ribbit’s fintech expertise to deliver tech-driven financial experiences tailored to Walmart’s customers and associates,' according to a statement."

    KC's View:

    Not big on predictions - I leave that to self-styled "futurists," and I just consider myself to be a pundit and a reasonably good guesser - but I'll make one here:  This is just the beginning of Walmart shaking up the banking world.

    It'll do so in two ways.

    First by undercutting legacy financial services on prices and offering people more for their money.  

    And second, by going after the roughly five percent of US households that are unbanked … Walmart will make banking services accessible, transparent and desirable.

    Published on: April 8, 2021

    FMI—The Food Industry Association is out with its 2021 Power of Produce report, which "finds produce department sales reached $69.6 billion in 2020 - an 11.4% increase … shoppers are purchasing more produce than pre-COVID-19 pandemic with shoppers buying more fresh fruit (+8.9%) and more vegetables (+14.2%)."

    Some trends identified by the report:

    "During the COVID-19 pandemic, 44% of grocery shoppers say they are putting more effort into healthful eating. In fact, 71% of grocery shoppers say nutrition and health is a primary or important reason for purchasing fruits and vegetables."

    "More than three-out-of-four shoppers (78%) have changed their meal preparation with fruits and vegetables, including trying different kinds, using new spices and sauces or testing new preparation methods. Half of shoppers are integrating fruits and vegetables into their meal plans somewhat or at lot more often."

    "The share of shoppers who purchase value-added produce — pre-washed or cut—increased from 31% in 2019 to 37% in 2020. Three-out –of-10 shoppers believe they will purchase more value-added produce in the upcoming year—the highest share in four years."

    Published on: April 8, 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…

    •  Here are the Covid-19 coronavirus figures for the United States:  31,637,243 confirmed cases … 572,849 deaths … and 24,206,539 reported recoveries.

    The global numbers:  133,821,495 cases … 2,904,005 fatalities … and 107,903,691 reported recoveries.  (Source.)

    •  The Washington Post reports that  "at least 110 million people have received one or both doses of the vaccine in the U.S.  This includes more than 64.4 million people who have been fully vaccinated … 225.3 million doses have been distributed."

    •  From the Boston Globe:

    "The B.1.1.7 variant of the coronavirus, first found in the United Kingdom, has overtaken the initial form of the virus in the United States and is now the country’s most common strain, the head of the Centers for Disease Control and Prevention said Wednesday.

    CDC Director Rochelle Walensky said at a briefing that the version had overtaken other mutations that have emerged, as well as the initial version of the virus in the U.S.

    “'It is the most common lineage, period,' she said. 'These trends are pointing to two clear truths — one, the virus still has hold on us, infecting people and putting them in harm’s way, and we need to remain vigilant, and two, we need to continue to accelerate our vaccination efforts.'

    "B.1.1.7 is more easily transmitted and appears to also be more harmful once a person has contracted it, US officials have said. Last week, Walensky said B.1.1.7 was the predominant variant in five U.S. regions, which have two-thirds of the country’s population, though the CDC said at the time that it still trailed the initial version of the virus."

    •  The other day we featured a sports-themed Ad Council public service commercial (PSA) designed to persuade people to get vaccinated for the coronavirus.  Willie Nelson provided the soundtrack, with his version of "I'll Be Seeing You."

    Now, Budweiser, also working with the Ad Council, is out with its own vaccine promotion ad (which also promotes beer drinking).  The song is the same, and the tag line is "Good Times Are Coming."

    Published on: April 8, 2021

    •  From NBC News:

    "Malls that buckled due to e-commerce or suffered during the pandemic are being given new life by the very entity that precipitated their decline — Amazon.

    "Over the last several months, the retail giant has gone on a shopping spree of its own, buying up disused malls across the country and turning them into distribution centers.

    "In March, Amazon won approval to turn a mall in Baton Rouge, Louisiana, into a 3.4 million-square-foot distribution building, and a mall in Knoxville, Tennessee, into a 220,000-square-foot distribution center. In December, the local planning board in Worcester, Massachusetts, signed off on Amazon's request to convert the city's Greendale Mall into a 121,000-square-foot distribution center.

    "Between 2016 and 2019, Amazon converted around 25 shopping malls, according to an analysis by Coresight Research. Last year, it was reportedly in talks with Simon Property Group, the country's biggest mall owner, to convert bankrupt JCPenney and Sears department stores into fulfillment centers. Target and Walmart have also turned some space in their own stores into mini fulfillment centers."

    •  Reuters reports that "U.S. securities regulators on Wednesday turned down an exemption sought by Inc to stop its investors from considering a shareholder proposal related to racial equity at the e-commerce giant.

    "The decision by the Securities and Exchange Commission followed an appeal by Amazon to block the non-binding proposal from being voted on at the company’s upcoming annual meeting."

    The story notes that "the proposal was first filed by New York State Comptroller Thomas DiNapoli on behalf of New York State Common Retirement Fund in December, seeking to independently audit the company’s policies and practices on civil rights and racial discrimination."

    Published on: April 8, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Wall Street Journal this morning:

    "Jobless claims rose to 744,000 last week, the Labor Department said Thursday, bucking a downward trend amid other signs of recent labor-market improvement.

    Weekly claims averaged around 220,000 in the year before Covid-19’s arrival.

    "With nearly one-quarter of U.S. adults now fully vaccinated, consumers are spending more on gyms, restaurants, hotels and other services they had shunned over the last year, setting in motion a post-pandemic spending boom. Economists are closely watching unemployment claims numbers for signs that layoffs are moderating as businesses scramble to keep up with consumers."

    •  From Engadget:

    "Best Buy has started piloting a $200 membership program meant to rival Amazon Prime and Walmart's own take on a subscription service. It's called Best Buy Beta, and while it's a lot more expensive than a year of Prime ($119), it offers perks that focus on providing services to customers who have a bunch of electronics in their homes. Members will enjoy unlimited Geek Squad tech support on all technology they own, whether it was purchased from Best Buy or not. They're also getting free installation on most products and two-year warranty protection on most of their purchases, including AppleCare on Apple products.

    "Its other perks are free shipping with no minimums, a 60-day extended return window, exclusive member sale pricing, 10 percent off subscription services billed through Best Buy and dedicated concierge support."

    But no version of Amazon Prime Video, the story notes … and to my way of thinking, Prime Video is one of the great benefits of Prime membership.  Bosch.  Jack Ryan.  Judas and the Black Messiah.  The Father.  The Marvelous Mrs. Maisel.  The Sound of Metal.  One Night in Miami.  I could go on and on and on …

    Published on: April 8, 2021

    Yesterday, we took note of a Los Angeles Times story about how a new coalition of small business organizations called Small Business Rising "is urging policymakers to break up Amazon," calling for antitrust regulators to separate Amazon's own retail business from its third-party marketplace.

    I commented, in part:

    While I completely understand the motivation behind this effort, and agree that there are ways in which Amazon makes it very tough on small businesses for which it provides a platform, I wrestle with the idea that this all makes it necessary to break up Amazon's two retail entities.

    I would guess that many of the businesses signing on to this effort - especially in the grocery sector - carry private label/own brand items that are similar to national brands that they sell.  They have the choice to price the private label products above or below the national brands, to give them better or lesser promotion, and higher visibility or lower visibility on store shelves.  They make the determination of which private label items to carry based often on sales data for national brands.

    In fact, if I go into the local grocery store, I have to do all the analysis myself - looking up and down the shelves to compare and contrast such items.  Amazon does it for me - telling me if other sellers offer an item at a lower price, though noting that they may not provide free shipping under Prime.

    I'd also guess that for every third party merchant that has found it difficult to do business on Amazon's marketplace  - and, by the way, they don't have to do business via Amazon - there are several that actually have discovered new markets, customers and opportunities because they're now able to scale.  They've understood that Amazon puts them in the middle of a competitive mosh pit, but it also serves as a magnet for shoppers that didn't even know they existed.

    In so many ways, Amazon has disrupted traditional retailing by doing what legacy companies always have done, except doing it faster, more effectively, and with greater customer-centricity.  In the process, it has become bigger and even better at what it does - and hardly a monopoly.

    I get that this is hard.  I get that small retailers are at an enormous disadvantage … but in many ways,  by depending on legacies rather than innovations for their raison d'être, they've put themselves in this position.

    MNB reader Jerome Schindler wrote:

    Many of those private label/own brand items have labeling and often even a packaging shape that mimics the leading national brand to trick consumers into thinking it is the national brand or at least is made by the national brand.  In this situation imitation is not the sincerest form of flattery - it is unethical behavior to say the least. I would characterize it as theft, theft of the reputation of the brand name counterpart.  Litigation is very expensive and in my experience winning is a crapshoot- different day, different judge, different result.  In addition many national brands hesitate/are afraid to sue their retail customers.  

    Another MNB reader wrote:

    I agree with your comments. Would also suggest this is the same whining we got from the grocery industry back in 1995 when Wal-Mart was the 800 lb gorilla kicking their a$$es!  Someone famous once said, "compete is a verb"! Just do it!

    Another MNB reader wrote:

    Understand the concerns of the small retailers and also the value of the Amazon model as you referenced.  Wondering what the unintended consequences of a “break-up” of Amazon would be?  Do you know any retail legal experts that could shed some light on this as I suspect the drumbeat to break-up big tech is only going to grow louder – for business and political reasons.

    MNB reader Rich Heiland wrote:

    I know it's not an exact comparison, but….

    Back in 1991 when I was publisher of the Hanover (PA) Evening Sun, Walmart came to town. Everyone was up in arms. Walmart did an interesting thing. It got with our chamber of commerce and set up a bus to take local merchants to the nearest Walmart. Walmart folks took them through the store and in very direct fashion told them where they could compete with Walmart and where they could not.

    We had two traditional men's stores. One owner came back, got rid of blue jeans, anything he saw in Walmart. He went more upscale, added a formal wear rental business using local kids as models, increased services like tailoring. The other guy went back and continued to rail against Walmart. Two years later he was gone. The guy who adapted was not. I know adapting to, and competing with Amazon, may be more difficult and it could be small retail as a class is doomed. But, I think there will be survivors and they will be the ones with an open ear to the market and where it is at, and going.

    By the way, Hanover Clothing is still in business all these years later...

    Tom Furphy made the point in yesterday's Innovation Conversation:  "You can't out-Amazon Amazon."

    Yesterday we provided a link to a Fast Company piece about how "you won’t find breadfruit in the produce aisle at your local grocery store. But Patagonia Provisions, the food-focused offshoot of the outdoor apparel company, wants to help make the tropical fruit a mainstream ingredient."

    Prompting MNB reader Howard Schneider to write:

    A whole article about breadfruit that doesn’t mention HMS Bounty? Someone should be hanging from the highest yard arm.

    Fair point.  For Fast Company to do that is like cruelty or brutality with no purpose.

    Yesterday there was a reader who suggested that a headline about business that do not do what they need to survive ' "Suicide Ain't Painless" - was highly insensitive because of the number of "mentally fragile" people in the world.

    I replied:

     "I thought that it was a clever - and appropriate, considering the column - headline that also was a movie reference - the theme song from M*A*S*H is entitled "Suicide Is Painless."  And you know how we love movie references around here.

    One MNB reader replied:

    This was a good headline.

    But institutions and GOVT and the media  promote this type of sensitivity. everybody is offended - everyone is being attacked - everybody is a victim. There are very few adults anymore.  The morality of mankind has not changed in 6,000 years. Even though GOD walked the earth in the form of man 2,000 years ago.. and told us how to behave - it hasn't changed - we are just getting weaker in our ability to accept.

    BTW - the interview with the union guy - not sure he had more than 10 minutes of value - he added nothing profound - his job is to complain about the lack of.. ( you pick the subject). Unions are about money - not progress or innovation or efficiency. And wasn't it so appropriate that he was in a wood walled office that came straight out of good fellas? You cant make this stuff up.

    I do want to respond to this.

    First … I have no problem if anyone wants to point out to me when I say or do things that seem insensitive.  I try to do my best to think about people's feelings, but sometimes I blow it.  And sometimes, I just disagree with the conclusion … but I'm happy to air the complaint.

    As for your complaint about my interview with the UFCW's John Grant … I'm sorry you saw no value in it, but I'm glad I did it.  I thought John did far more than complain - I thought he gave a fair accounting of his positions both on the impact of the pandemic and management-labor relations in general.  And I know that I'm better off for having had a conversation with someone with whom I do not not necessarily agree on all issues.

    And to pick on a wood-paneled office seems a little petty to me.  (I've been in those offices.  It is not as if the UFCW has invested in a palace for leadership.  Trust me.  I'm actually pretty sensitive about this stuff.)