business news in context, analysis with attitude

Published on: April 19, 2021

KC has the definition of what makes a food store special - an item so good, so differentiated, that people will drive dozens of miles in the rain, in rush hour traffic, to get it.

Published on: April 19, 2021

by Kevin Coupe

Think of it as Go - to go.

Amazon had said that it was going to license out its just-walk-out technology, which it pioneered in its Amazon Go stores, to other retailers … and now, the concept seems about to take flight.  In an airport.

Future Travel Experience reports that there is a new Hudson Nonstop store operating at Dallas Love Field Airport, utilizing the technology to allow travelers "to seamlessly enter the Hudson Nonstop store with a swipe of their credit card or using 'Tap to Pay,' take the products they’re looking for, and then walk out of the store. The store merchandising layout provides visibility to essential products needed for the travel journey."

"The opening of our first Hudson Nonstop store is a significant milestone in delivering on Hudson’s vision for accelerated digital innovation in-store and overall digital transformation across the business,” says Brian Quinn, Hudson's executive vice president/COO.  "Hudson Nonstop represents a new way of retailing that emulates an end-to-end digital shopping experience which we believe is the future of retail, even after COVID-19 – we look forward to serving travellers in this exciting new store concept for years to come."

The story goes on:  "Hudson’s branding is reflected throughout the DAL store’s design and expansive product offering. The freestanding store design and designated single point of entry and exit allows travellers to easily navigate the store. Acknowledging the need for social distancing protocols in the COVID-19 environment, the store is designed for one-way traffic and eliminates checkout-line friction to manage crowd control."

Amazon's involvement in the technology is made clear in the branding as you can see from the pictures below, which were taken a couple of days ago by friend-of-MNB Patrick Spear, president/CEO) of GMDC/Retail Tomorrow.

It's just the beginning, I'm guessing.   And a potential Eye-Opener about a technology that I've long felt could end up being as important to retailing as scanning.

Published on: April 19, 2021

CNBC writes about how three different acquisitions by Target are forming the backbone of a strategy that will allow the retailer to not just depend on outside shipping companies, but rather use its own resources "to get online purchases to customers’ doors even faster."

According to the story, the systemic change "begins with employees picking and packing orders at stores. Items are transferred from the store’s backroom to a sortation center multiple times each day. Then, it will use technology it acquired from two companies, Grand Junction and Deliv, to group packages for the most efficient routes to neighborhoods. Finally, contract workers for Shipt, a same-day delivery service that Target bought in 2017, will deliver packages to customers who live in the same parts of town in addition to traditional carriers."

"Shipping is the majority of the cost for getting a product to a guest. Shipping is the big number," Target COO John Mulligan tells CNBC.  "We continue to work on picking better and optimizing our pick and optimizing the batches [of packages] for the team - all of that is really important - but the key to the whole game from our perspective is to improve that ship cost.”

Mulligan tells CNBC that the new model will allow Target "to better handle the rising number of packages that pile up in its stores throughout the day. He said it will also give the company more control over the customer experience and make e-commerce orders more profitable."

In the end, the story says, this new strategy should help Target "compete with larger and sometimes faster e-commerce rivals like Amazon and Walmart. It is an answer to customers’ expectations for speed, as they use on-demand services from Uber to DoorDash. And it is an alternative to relying solely on carriers like United Parcel Service and FedEx, which have dealt with a spike in demand during the coronavirus pandemic and responded in some cases by hiking fees or limiting parcels."

Published on: April 19, 2021

Dollar Tree last week announced the creation of a new retail media network, which it described as "an innovative platform for brands to engage with their customers in a personalized and ultra-targeted digital experience like never before. The key benefit, backed by insight and analytics, offers brands the ability to instantly connect with shoppers, contributing to purchase decisions in real time."

The platform, called Chesapeake Media Group, will focus on the company's Family Dollar brand, says it will provide "full-funnel solutions and closed-loop reporting. Key strategies include promoted items, category takeovers, brand experiences, premium advertisements and coupon placements, personalized videos, static interstitial advertisements, expandable rich media and standard banners, along with analytics that optimize performance to maximize results … With approximately 14 million users registered in the Family Dollar Smart Coupons program, nearly 7,900 Family Dollar stores across the U.S. and plans to open hundreds of new stores annually, the Company is focused on leveraging its assets to deliver great values for shoppers."

Published on: April 19, 2021

Good piece in the Washington Post about the failure of organized labor to unionize a single Amazon warehouse in Bessemer, Alabama.  Here's an excerpt:

"The loss of the union drive at the United States’ second largest private employer — the first large-scale attempt at Amazon domestically — has sent reverberations through the world of labor, serving as a reminder of the steep obstacles that activist workers face even in what is shaping up to be the most pro-labor political climate in decades.

"Amazon won a decisive 2-to-1 victory during the vote this month after months of organizing efforts by the New York-based Retail, Wholesale and Department Store Union, dashing hopes that a union win could help touch off an organizing renaissance amid the newly labor-friendly climate in Washington.

"Now a debate is emerging over whether the RWDSU committed tactical blunders that hurt its ability to reach workers in the face of the company’s relentless anti-union campaign."

You can read the entire piece here.

Published on: April 19, 2021

Good piece in the Boston Globe this morning about how many retailers may be about to seen an enormous surge in customer demand, though the degree to which spending will grow remains unknown.

An excerpt:

"The signs are all there: Vaccination rates are rising, retailers are hiring, and signs of normalcy, such as sports games with fans and concert announcements, are sprouting with the warmer weather. A combination of pent-up consumer demand and sharp increases in savings for some and federal stimulus payments for others will fuel an unparalleled spending spree, said economist Eric Hilt.

"'This recession has been very different from historical patterns. It’s highly unusual for households to come out of a recession with an enormous accumulation of savings,' said Hilt, an economics professor at Wellesley College. The conditions of the past year, he said - a fall in spending in high-ticket categories like travel and hospitality coupled with a big increase in some household incomes - has resulted in 'this giant accumulation of savings that’s historically unprecedented'."

The Globe notes that LL Bean is an example of what is happening at the moment.  During 2020, many consumers went on "a pandemic buying binge for stuff that provided comfort in a time of fear and alienation," which resulted in a revenue increase of five percent for the year, as well as  a million new customers.

Now, the story says, "like thousands of other retailers around the country, the famed Maine outfitter is trying to guess what we’ll splurge on next. It’s doubling the number of bike mechanics on staff in Freeport (Maine, where its headquarters is located) and has crews hurriedly building Adirondack chairs. It’s restocking adventure duffels, backpacks, and travel clothing and preparing for another record-breaking year of water and winter sports sales.

CEO Stephen Smith has said that he hopes the buying patterns established in 2020 "will translate into a lifestyle change that begets even more business, since 'once you’ve hiked a coastline or paddled a kayak next to seals,' the couch seems much less appealing."

You can read the entire piece here.

Published on: April 19, 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 a total of 32,404,463 confirmed Covid-19 coronavirus cases, resulting in 581,061 deaths and 24,961,229 reported recoveries.

Globally, there have been 142,066,934 coronavirus cases, with 3,034,412 resultant fatalities, and 120,633,661 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) is reporting that more than half the country age 18 or older - 50.4 percent - has received at least one vaccine, with almost a third (32.5 percent) having been fully vaccinated.  Eighty-one percent of people 65 or older have received at least one dose of the vaccine, with 65.9 percent being fully vaccinated.

•  The Wall Street Journal reports that "states including Connecticut, Maine, New Mexico, Vermont and South Dakota have more than 30% of their populations vaccinated, the data show, while 24 states have reported more than 40% of their populations have received at least one dose. More than 58% of those in New Hampshire have received at least one dose, the data show."

•  The New York Times reports that "all adults in every U.S. state, Washington, D.C., and Puerto Rico are now eligible for a Covid-19 vaccine," meeting the deadline set by the federal government.

The Times goes on:  "Hawaii, Massachusetts, New Jersey, Oregon, Rhode Island and Vermont were the last states to expand eligibility, opening vaccinations to all adults on Monday."

•  "The nationwide pause in the use of Johnson & Johnson’s coronavirus vaccine is likely to be lifted Friday, according to Anthony S. Fauci, the nation’s top infectious-disease expert," the Washington Post reports.

"In interviews on political talk shows Sunday morning, Fauci said that he expected federal health officials would decide the vaccine’s future in the United States by the end of this week and that he did not anticipate its use would be canceled outright."

Published on: April 19, 2021

•  Bloomberg reports that Amazon "is experimenting with a premium service that lets customers opt to have furniture or appliances assembled as soon they arrive at their homes, according to people familiar with the plan."  The new service would require "drivers to unpack and assemble the items, remove the packaging and take the item back on the spot if the customer isn’t satisfied."

According to the story, "The move, if adopted widely, would help the world’s largest online retailer compete more effectively with Wayfair, Best Buy, Home Depot and Lowe’s -- which all offer similar options."

•  Variety reports that Amazon's strategy of offering differentiated and proprietary services can be seen in its budget line for Prime Video content.

"Amazon spent a cool $11 billion on TV series, movies and music for its Prime services last year, an increase of 41% from $7.8 billion in 2019," the story says.  "The total content spending includes licensing and production costs associated with video and music offered to Amazon’s Prime members, as well as costs associated with digital subscriptions and content that the company sells or rents, the company said."

One dramatic example of what Amazon is willing to spend (and how deep its pockets are):  The Hollywood Reporter writes that Amazon will spend $465 million to produce the first season of a new "Lord of the Rings" TV series that will be shot in NewZealand.  "That's far above previous reported estimates that pegged the fantasy drama as costing an already record-breaking $500 million for multiple seasons of the show," the story says.

Additional seasons may not cost as much;  the first season of a series like this, which is labor intensive because of the costs of building Middle Earth from scratch, plus all the special effects, tends to be more expensive.

Published on: April 19, 2021

•  From the Wall Street Journal this morning:

"Grocery sales boomed throughout the pandemic. One of supermarkets’ biggest and least-known suppliers missed out.

"TreeHouse Foods Inc., based in Oak Brook, Ill., is the nation’s largest manufacturer of store-brand foods. Its low prices and variety helped make it a growing threat to packaged-food giants such as Kraft Heinz Co. , General Mills Inc. and Kellogg Co. over the past decade.

"When Covid-19 disrupted the U.S. food sector, however, TreeHouse’s strengths became liabilities, the company’s top executives said, preventing it from benefiting as much as other grocery suppliers during the pandemic.

"Over the past year, TreeHouse ran into more capacity constraints and supply-chain problems than well-known brands because of coronavirus outbreaks. Cost cuts had to be delayed while labor, packaging, ingredients and freight got pricier. Not prepared to market its products online, TreeHouse fell behind as more consumers took their grocery shopping to e-commerce platforms."

CEO Steve Oakland explains the problem this way:  "We had built this supply chain designed for tremendous efficiency but very low volatility.  When the pandemic hit, we had complexity meet volatility."

•  The BBC reports that "the billionaire Issa brothers who own Asda have bought the British fast food chain, Leon.

"More than 70 Leon restaurants across the UK and Europe have been sold to the brothers' giant petrol forecourt business EG Group … The deal includes 42 company-owned restaurants, as well as 29 franchise sites which are mainly found in airports and train stations across the UK and a handful of European countries such as the Netherlands and Spain."

Terms of the deal were not disclosed.

Published on: April 19, 2021

•  The Puget Sound Business Journal reports that "Jeff Wilke, Amazon’s former second in command, has joined the San Francisco startup Scale AI in the role of adviser to the CEO … Wilke will be assisting Scale CEO Alex Wang as the company works to solve a bottleneck in deploying machine learning models: Datasets have to be properly labeled so that computers can learn from them and correctly. Without properly labeled data, machine learning algorithms are of little use, the company said in a blog post.

"Among Scale’s customers is Toyota, which needs large volumes of high-quality training data for its autonomous vehicle program. Other customers include the U.S. Air Force and fintech companies like PayPal and Square."

Published on: April 19, 2021

Got the following email responding to our stories about how malls are becoming obsolete:

Years ago when the Granite Run Mall in Media PA closed, they took a different approach and began changing to an outdoor format.  Pods of stores.  Look at the stores around Foxborough Stadium.  Look at the locations all throughout the Carolinas.  This format is taking hold.  The younger, 2 income, less time, working from home generation, have populated these multi use locations for years because they prefer the convenience of shops, restaurants and work environments.  I have thought for years that the indoor design is becoming passé.  The property managers of this large facilities need to make that adjustment now or they won’t be around much longer.  Personally, I would not want to be stuck in a mall if “S” hits the fan.

Last week, Jeff Bezos talked in his annual investors letter about consumer value creation - 168 words that I felt were extremely persuasive:

"Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important. We’re all busy in the early 21st century.

"So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation."

One MNB reader wrote:

What this does not calculate is that when the store shopper returns home they have all their purchases. With ordering online it may come in 1 day-2 days, whatever. Do you calculate the time waiting for the purchase to arrive in part of the equation?

And another MNB reader wrote:

Hey honey, look at how much I saved from buying all my stuff on Amazon!  Great premise to place a value on time.  Really makes you rethink how much time is wasted standing in check out lines.  Hmmm.  Could getting customers out the door faster be a way to retain foot traffic?  If you couple that with a very positive sensory experience while in your store, then I say yes. 

Finally, responding to my review of Minari, MNB reader Tom Stenzel wrote:

Kevin, glad you saw Minari.  (Director) Isaac Chung is a good friend.  We met 10 years ago when he filmed his second movie using my old family beach cottage in NC.  Lucky Life didn’t make it to the Oscars, but you can see his early style developing.  And, it’s still a hoot to watch the cottage I spent my summers in as a kid on the big screen!

Hope he wins an Oscar!  Or more than one!

I liked Minari, but I'd be surprised if it wins the Oscar next Sunday.  I'll have my Oscar picks on Friday (though, as usual, I'll be picking what I think should win, not what I think will win).