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    Published on: April 14, 2021

    The closure of the ArcLight Cinemas and Pacific Theaters chain in Southern California - which includes the famed Cinerama Dome - is an example not just of another pandemic victim, but also of how the last 12 months have accelerated changes that probably were going to happen anyway.  KC explains why this is a lesson for retailers.

    Published on: April 14, 2021

    The Wall Street Journal this morning writes about how supermarkets, having been major winners last year during the pandemic as people ate almost exclusively at home, "look poised to slip this year" as many people return to pre-pandemic eating habits.

    Here's how the Journal frames the issue:

    "As more Americans get vaccinated, they are showing a desire to eat out again and may spend less money filling up their cupboards and refrigerators. Grocery owners are competing against each other to grow their e-commerce business while delivery companies like Instacart Inc. expand aggressively. And Inc. is entering neighborhoods with its new grocery chain, taking on some stores that had faced little bricks-and-mortar competition … It’s grocery store owners’ turn to face fresh headwinds and new competition.  Some analysts noted that unless grocers expand in high population growth areas, the pie doesn’t get bigger. Instead, it gets split up between more players."

    There are a variety of approaches cited in the article as retailers adjust to ever-changing realities:

    •  "Kroger Co. has undertaken a major initiative to improve profitability on digital sales, including building automated warehouses in Florida, where it has no stores. The chain is spending hundreds of millions in increased automation and robotics that includes the option of delivering goods directly from warehouses."

    •  "At Sprouts Farmers Market Inc., which plans to open about 20 new locations this year, the pandemic is accelerating plans to streamline and upgrade the shopping experience, said chief format officer David McGlinchey. The grocer aims to expand areas for pickup orders and add more self-checkout stations, while pulling back salad bars, seating areas and production space."

    •  "Aldi, a discount supermarket chain with more than 2,000 stores across 37 states, said it plans to open approximately 100 stores this year, focusing on Arizona, California, Florida and the Northeast."

    KC's View:

    There will, of course, be analysts who will not look at 2021 comps in context - it is almost inevitable that supermarkets are going to see some slippage in sales this year as  competitors from the restaurant business get back into business.

    The degree of competition, I think, will be an ongoing and important story … I continue to believe that the supermarket industry may be about the embark on some of the most intensely competitive periods in its history.  And essential-ness will be key to survival.

    Published on: April 14, 2021

    Online grocer and delivery platform Farmstead has announced a partnership with delivery-and-logistics company DoorDash that seems aimed at expanding both companies' ability to both serve and compete with the traditional supermarket industry.

    Farmstead essentially has two businesses.  It is an online grocer, pledging "fresh, high-quality groceries, delivered for free, at better prices than local supermarkets," serving its original market of the San Francisco Bay Area as well as Charlotte, North Carolina, with plans to "launch service in Raleigh-Durham, Nashville, Miami and at least 13 other cities in 2021."  And, it offers its Grocery OS software to other grocers, which it says "boosts the delivery capacity and profitability of any grocer-controlled pickup/delivery fulfillment operation."

    Now, the Farmstead app will be available via the DoorDash app, which will extend its penetration in the markets it serves, and grocers using Farmstead's Grocery OS will have "immediate access to DoorDash’s platform and delivery network via Drive, DoorDash’s white-label fulfillment platform that powers direct delivery for any business."  And, grocers will be able to "list their own brands powered by dark locations on DoorDash’s app and websites for one-hour delivery, increasing their reach and simplifying delivery operations."

    “We’re excited to partner with Farmstead to support its national expansion while offering our customers even more local grocery selection on the app,” said Fuad Hannon, Head of New Verticals at DoorDash, in a prepared statement.  “We’re proud to play a part in accelerating the growth of local grocers and serving their local communities, with a focus on selling essential perishable staples customers need.”

    Pradeep Elankumaran, co-founder and CEO of Farmstead, added, "Together, Farmstead and DoorDash can remove the two biggest barriers to grocery e-commerce success: order picking and packing efficiency, and low-cost, high quality delivery with a production capacity of thousands of orders per day. Farmstead’s Grocery OS facilitates efficiency inside the warehouse, and DoorDash provides the last-mile delivery logistics and marketplace platform to reach consumers."

    KC's View:

    Seems likely that at some point, if this partnership works out, that DoorDash could well acquire Farmstead … which would be interesting, since DoorDash doesn't just serve retailer-clients, but even competes with them at some level in the c-store space with its DashMart offering.

    The question that retailer-clients of both companies will have to answer is which brands are being bolstered … and are their individual brands being subsumed?

    Published on: April 14, 2021

    The San Jose Mercury News reports that Redwood City, California, just south of San Francisco, has become the latest municipality "to require temporary hazard pay for grocery and pharmacy workers … City council members voted unanimously to require all grocery stores and pharmacies with more than 750 employees nationwide to give $5 an hour in extra hazard pay to workers because of the COVID-19 pandemic. That means employees at stores such as Nob Hill, Rite Aid, Safeway, Whole Foods and Target in Redwood City will get a boost in pay until July 11."

    The rule only applies to companies with more than 750 employees nationwide.

    According to the story, "The measure comes after more than a dozen other cities across Northern California passed similar measures, including Millbrae, San Mateo and South San Francisco on the Peninsula. Colma and San Carlos are also considering doing the same.

    KC's View:

    This continues to be bad public policy that seems patently unfair in how it lumps different kinds of companies together while differentiating between employees who work in some segments of retail from others.

    The story says that proponents say that "the increase in pay will go a long way to show essential workers who risk their health by interacting with the public that their work is valued."  Which I agree with … but it ought to be up to the companies to decide how much appreciation to show above and beyond minimum and negotiated wages.

    Published on: April 14, 2021

    Fortune is out with its annual list of the 100 Best Companies To Work For, and as usual, Wegmans is in the top 10, coming in at number four this year.

    Other retailers that made the 2021 list are Target (#14), Nugget Market (#24), CarMax (#36), Publix Super Markets (#36), Burlington Stores (#69), and Sheetz (#83).

    Coming in ahead of Wegmans in the top 10 are to-ranked Cisco, followed by Salesforce and Hilton.  Rounding out the top 10, in order, are Rocket Companies, UKG, Texas Health Resources, Camden Property Trust, Capital One Financial, and American Express.

    KC's View:

    I don't want to diminish the achievements of the companies on the list - it actually is extraordinary that the retailers making the list have pretty much done so every year.  Their positions fluctuate a bit from year to year, but they consistently remain great companies to work for and clearly see doing all the work to apply for inclusion as being worthwhile to their recruitment and retention strategies.

    Published on: April 14, 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…

    •  The current Covid-19 coronavirus numbers in the United States:  32,072,562 total cases, 577,191 deaths, and 24,626,413 reported recoveries.

    The global numbers:  138,113,914 total cases, 2,974,677 fatalities, and 111,122,518 reported recoveries. (Source.)

    •  The Washington Post reports that "at least 122.3 million people have received one or both doses of the vaccine in the U.S.  This includes more than 75.3 million people who have been fully vaccinated … 245.4 million doses have been distributed."

    •  From the Wall Street Journal:

    "Newly reported coronavirus cases in the U.S. rose, as health authorities suspended use of a Covid-19 vaccine to investigate cases of blood clots.

    The U.S. reported more than 77,000 new cases for Tuesday, according to data compiled by Johns Hopkins University that was published early Wednesday … The seven-day average, which helps smooth out differences in data reporting, was 68,960 on Monday, while the 14-day average was 66,824, according to a Wall Street Journal analysis of data compiled by Johns Hopkins. When the seven-day average is higher than the 14-day average, it indicates cases are rising."

    •  The Los Angeles Times reports that "Uber Technologies Inc. said gross bookings last month were the highest in a year as vaccination rates increase in the U.S., encouraging more people to get out of their homes."

    At the same time, the story says, "Uber’s delivery service grew more than 150% from a year earlier, crossing a $52-billion annualized run rate in March."

    The Times notes that Uber "was hard hit when the pandemic struck last year and people stopped going in to work and school and avoided most communal transportation. Its food-delivery service, Uber Eats, benefited, however, with restaurants closed and more people ordering takeout. The filing showed that Uber is seeing strong demand for both offerings."

    Uber says that its next move way well be into marijuana delivery, as soon as federal laws make it advisable.

    Published on: April 14, 2021

    •  ZDNet reports that "the next few years will see billions of users regularly using facial recognition technology to secure payments made through their smartphone, tablets or smartwatches, according to new analysis carried out by Juniper Research.

    "Smartphone owners are already used to staring at their screens to safely unlock their devices without having to dial in a secret code; now, facial recognition will increasingly be deployed to verify the identity of a user making a payment with their handset, whether that's via an app or directly in-store, in wallet mode … In addition to facial features, Juniper Research's analysts predict that a host of biometrics will be used to authenticate mobile payments, including fingerprint, iris and voice recognition.

    "Biometric capabilities will reach 95% of smartphones globally by 2025, according to the researchers; by that time, users' biological characteristics will be authenticating over $3 trillion-worth of payment transactions -- up from $404 billion in 2020."

    •  CNBC reports that "Taco Bell will open its first digital-only U.S. restaurant on Wednesday in New York’s Times Square.

    "To buy a Crunchwrap Supreme or soft taco, customers will have to place a digital order ahead of their visit or use one of the 10 self-order kiosks inside the restaurant. The kiosks can also be used to buy Taco Bell souvenirs. The location, inside the iconic Paramount Building, also features a separate entrance for mobile and delivery order pick-up from cubbies."

    The format, at the corner of 43rd Street and 7th Avenue, is believed to be ideal for a Time Square customer base that in normal times would be enormous;  "Times Square is usually one of the city’s busiest tourist hotspots, with an estimated 50 million visitors every year."

    Published on: April 14, 2021

    •  The Wall Street Journal reports that Walmart "is searching for a new chief ethics and compliance officer as Daniel Trujillo - who for the past two years led the retail giant’s global compliance program - prepares to leave the company."

    The story notes that "Trujillo joined the company in 2012 as a senior vice president and international chief compliance officer. He was promoted to executive vice president and global chief ethics and compliance officer in 2019 … Mr. Trujillo’s time in Walmart’s compliance department coincided with long-running investigations by the U.S. Justice Department and U.S. Securities and Exchange Commission into allegations of bribery in Mexico and elsewhere.  The company in 2019 agreed to pay $282 million to resolve the Foreign Corrupt Practices Act investigations. The company also spent heavily to strengthen its compliance program, accruing more than $900 million in costs for compliance enhancements and internal investigations by the time of the settlement."

    •  Digital Commerce 360 reports that "Walmart Inc.’s ecommerce unit, Flipkart Online Services Pvt., signed a pact with tycoon Gautam Adani’s conglomerate to build one of the largest retail warehouses in India as the U.S. giant gears up to battle Inc. and homegrown rivals in the South Asian nation.

    "The partnership marks the entry of Adani, India’s fastest-rising billionaire, into the three-way fight for domination of India’s online shopping space. Up against the Walmart-Adani alliance is not just Amazon, but also Reliance Industries Ltd., the conglomerate owned by Mukesh Ambani, India and Asia’s richest man.

    "They all want a slice of a market estimated to generate $200 billion in sales by 2026—turbocharged by pandemic restrictions that are keeping people away from brick-and-mortar stores."

    Published on: April 14, 2021

    •  Honest Co. the diapers-moisturizer-shampoo and other personal care products company founded by actress Jessica Alba, has filed for an initial public offering (IPO) that would value the company at about $2 billion.

    The company's growth, the Los Angeles Times writes, has been fueled by a "steady rise in demand for goods that are seen as free of chemical and artificial additives in recent years — a trend that has been accentuated by the COVID-19 pandemic."

    Published on: April 14, 2021

    •  Hy-Vee announced that it has hired Jason Buhrow, most recently Business Technology Vice President for FBL Financial Group, to be its new Chief Data Officer.

    •  SpartanNash announced that it has hired David Petko, most recently Senior Vice President of Supply Chain for C&S Wholesale Grocers, to be its new Senior Vice President and Chief Supply Chain Officer.

    Published on: April 14, 2021

    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.

    From the New York Times this morning:

    "More than 300 businesses, including Google, McDonalds, and Walmart, are pushing the Biden administration to nearly double the United States’ target for cuts to planet-warming emissions before an April 22 global summit on climate change.

    "In a letter to President Biden, CEOs from some of the nation’s largest companies called on the administration to set a new Paris Agreement goal of slashing the nation’s carbon dioxide, methane, and other planet-warming emissions at least 50 percent below 2005 levels by 2030.

    "That is roughly what most major environmental groups want, and the corporate executives called the target 'ambitious and attainable'."

    The Times writes that "the corporate response is all the more remarkable because Biden’s plan for curbing climate change would be paid for in large part by raising corporate tax rates, a move sure to raise objections among at least some of the climate-conscious corporations. He also has called for a clean electricity standard and promised new regulations on the utility sector, automobile makers and oil and gas industries."

    Which is interesting, since the Washington Post reports that "the nation’s top business leaders are pushing back against President Biden’s plans to raise corporate taxes to pay for his infrastructure plan … the Business Roundtable, a lobbying group that represents the chief executives of more than 220 large companies, plans to launch a digital and radio ad campaign against Biden’s proposal to raise the corporate tax rate from 21 to 28 percent."  The organization "published a survey showing that 75 percent of the 178 members queried said a tax hike would negatively affect their investments in research and development."

    The Post writes that what we are seeing is "something of split screen for those observing America’s largest corporations, which are being pulled off the sidelines and into the social and political melee as employees and the public demand it."  Corporate America, the story says, continues to wade " into a growing number of hot-button policies that put it at odds, by turns, with lawmakers and stakeholders, and test the development of its public voice."

    Published on: April 14, 2021

    Yesterday we took note of a Wall Street Journal report that restaurants in New York City, tired of paying fees to the third-party contractors responsible for delivering their meals, "are increasingly finding a way around the issue by avoiding the platforms and assuming ownership of the process themselves. And they say the benefits go beyond the potential savings on third-party fees."

    I commented:

    The third party delivery services justify their fees by saying they're providing more than just deliveries, but also the kind of promotion that restaurants cannot achieve on their own.

    But the restaurants referenced in the Journal article clearly have come to a conclusion with which I entirely concur - that if you want to preserve and sustain your brand, you have to own the customer relationship.  You can't outsource it, because when you lose control you run the risk of losing connection.,

    This is, I hope, the conclusion that food retailers, having outsourced much of their e-commerce business to third-part contractors, also will reach.  In the search for a quick solution, they may have engineered their long-term demise.

    MNB reader Howard Schneider responded:

    KC, I have always agreed with your perspective on this topic. Not only do third-party intermediaries take away the restaurant’s (or retailer’s) chance to interact with the customer; they also get extremely valuable customer data, which allows the service – not the restaurant – to market more effectively to the customer.

    Writing about my piece looking at the new Roche Bros. store at Arsenal Yards in Watertown, Massachusetts, MNB reader Rich Heiland offered:

    Your commentary on the new store grand opening, with all the residential developed around it, made me think there’s nothing really new under the sun. This is how it used to be, if you think about it. In most US urban areas clusters of stores developed to serve dense populations. Even in the rural America of my youth, we had small markets that were walkable for many folks. That’s remained the case in a lot of places overseas.

    Recently my wife and I moved from Huntsville, TX to West Chester, PA. In Huntsville, we had two cars and had to drive for our every need. We now live in a two-bedroom apartment in a complex in vibrant, bustling downtown West Chester. We have gotten rid of one car. We still have to drive 5-8 minutes to the closest Acme and Giant supermarkets. But, the YMCA, Farmer’s Market, bank, drug store, library, arts center, more bars, restaurants and shops than I can count all are within walking distance. There are two or three complexes like ours in downtown and almost all the second story uses over several square blocks are residential. When we moved to suburbia post WWII and put two cars in every driveway we broke up markets.

    Maybe it’s the pandemic. Maybe it’s environmentalism. But, whatever it is it seems in many cases were are returning to the market wisdom of the past. I, for one, am enjoying the hell out of. Now, I have to walk over to the Y……

    But MNB reader David Spawn had a different perspective:

    I have to take exception to your characterization of Arsenal Yards in this excerpt:

    “The "lifestyle center" is an easy eight-mile commute to downtown Boston, and Cambridge is even closer. It is all part of creating a suburban center that offers urban amenities that will make it even more attractive.”

    What’s “urban” about a suburban lifestyle center??  Acres of parking if even in a parking deck, access to office space from large format retailers, 8 miles from downtown Boston?  This is a suburban development with amenities that serve customers better – doesn’t seem like there’s anything ‘urban’ about it.  Maybe we can ascribe that over-used term ‘new urbanism’ that implies there was something to avoid about ‘old urbanism’ – and really seems to be about making white folks more comfortable by making it more ‘suburban’.

    My point was that many people living in the suburbs now want the amenities traditionally offered by urban markets … in the way that Rich Heiland described above.

    We had a piece yesterday about how Domino's Pizza is rolling out a robotic delivery service in Houston, Texas.

    MNB reader Gregory Gheen responded:

    I saw this on the news last night. A video showing it driving through the streets/neighborhood, at a pretty fast clip. 

    I immediately thought:  What if someone steps in front of the delivery device and gets hit, hurt, or killed? Prior, you could blame the driver, etc. Now it would be....Dominos? The virtual driver? Human driving reaction vs computer? Capability to determine conditions, kids playing (so slow down), etc.

    Great idea but they should reshoot their video driving through the neighborhood at a much slower speed.

    Hey, they only have 30 minutes to get the pizza to wherever it is going.  The rest of us will just have to get the hell out of the way.

    Yesterday's FaceTime video focused on Taylor Swift's re-recording of her album, "Fearless," which is part of a project that has her redoing six of her early albums because of a dispute with the businessman with whom she has been in a long dispute;  she is redoing the albums in order to render virtually worthless the original work, which he bought.

    One MNB reader objected to my analysis:

    Kevin go to Bob Lefsetz site and see what music attorneys say about this situation.

    Don’t assume Big Red machine is a villain.  Stick to groceries please.

    Anyone who has read MNB for any period of time knows that I never stick to groceries.

    A couple of things.

    First of all, Big Red Machine is a baseball team - the nickname refers to the dominant Cincinnati Reds teams of 1970-79.  The company you're talking about is Big Machine.

    Second, I made the point in my commentary that I was not really talking about the relative ethics of people in the music business.  This is a management-labor dispute, but in this case the labor is worth about $300 million.  So I'm not really worried about her.  (I'm also not putting too much stock in music industry attorneys.)

    Third, my point was metaphorical.  Frame the dispute as business-related, not ethical, and you realize that Taylor Swift has done an amazing job of creating a fan base that believes in the rightness of her cause, is willing to shell out money for music that it already owns, and that is in favor of her sticking-it-to-the-man perspective.

    I believe this because my daughter tells me it is so … and then shows me all the social media postings that support her position.

    That all said, I think the music is terrific - in August 2009, I took my then-teenaged daughter to see Taylor Swift on the original "Fearless" tour at Madison Square Garden, and it was a hell of a show.  Also made my daughter happy … and she remains a fan of Taylor Swift all these years later.  (She thinks I'm okay, too.)