business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: April 26, 2021

    by Kevin Coupe

    Earlier this month, in Shanghai, China, people there were able to look up in the night sky and see some 1,500 drones in flight, creating a dance promoting a role-playing game … and then, forming a QR code that people were able to scan and then download the game to their mobile phones.

    It was an extraordinary show … perhaps a little too uncomfortably reminiscent of Blade Runner, and yet, a vision of what is to come.  Just watch:

    Published on: April 26, 2021

    Inmar Intelligence is out with the results of a new survey that it says illustrates the degree to which consumers "have become more willing to take advantage of new high-tech offerings if it will expedite the entire shopping process or provide other layers of convenience in their purchasing journey."

    Key findings:

    •  "57 percent of shoppers would be open to trying out a drone delivery service or robotic delivery service."

    •  "Of consumers who have used contactless payment at checkout, 81 percent say they prefer it over cash."

    •  "75 percent of shoppers are willing to use technology that allows them to check out from their cart."

    •  "Of those who have tried an Amazon Go or similarly formatted grocery store, 76 percent prefer it over traditional grocery store formats."

    •  "76 percent of shoppers responded that they would be extremely likely to order from their favorite grocery stores at a convenient pickup location of their choosing if they were offered their choice of pickup time and if it had lower fees than doorstep delivery."

    The survey concludes that, "whether it be convenience, safety, or another factor, consumers have shown they have an increased willingness or even desire to change their shopping habits from traditional methods. Most grocers heavily invested in their e-commerce solutions over the course of the pandemic and saw a return on their investment. However, this survey shows that this drive toward digitalization is just beginning, and those who remain stagnant will reap the negative consequences."

    KC's View:

    The thing that all these initiatives have in common is that they are designed ultimately to reduce friction for shoppers, to make their lives easier/faster.

    Technology that works isn't really about technology.  It is about the shopper.

    Published on: April 26, 2021

    USA Today is out with a "Best Supermarkets" in America  survey, concluding that The Fresh Market is number one.

    The list is rounded out by, in order:  Hy-Vee, Lidl, Market Basket, ALDI, Stew Leonard's, Publix, Sprouts Farmers Market, Wegmans Food Markets, and Trader Joe's.

    KC's View:

    To be honest, I always find these kinds of surveys to be of dubious value - after all, there are tens of millions of people who have never been to any one of the supermarkets making the list … supermarkets, as much as any retail format, can be a highly regional, even local, business sector.  How many people have actually been able to compare a Hy-Vee to Stew Leonard's or Wegmans?

    And, there are wonderful retailers - I'm thinking of Dorothy Lane Markets, Zupan's Markets, and Westborn Markets - that are the very model of food excellence, but that are relatively unknown to shoppers outside their individual markets.

    Published on: April 26, 2021

    Bloomberg writes:

    "The willingness to pay a premium for healthier food has always been a marketing point for the 'organic' brand, and a big reason businesses stretch its meaning to the breaking point, labeling products 'organic' when they aren’t. But as lucrative as the sector has become, there’s a more rarefied label the industry can aspire to, one encompassing organic while introducing the promise of climate benefits to the supermarket aisle.

    "It’s called 'regenerative,' and it may very well become the next 'organic'."

    Regenerative farming, the story notes, "relies on crop rotation and leaving the ground as undisturbed as possible. Cash crops are alternated with cover crops, like alfalfa and peas. Roots are left in the ground as cover is cut or consumed by grazing animals, who add natural fertilizer. The vegetation suppresses weed growth as it turns to mulch, allowing the soil to retain nutrients usually depleted by traditional farming.

    "The result is a great way to grow food with less energy, less water, and no chemical fertilizers. And more importantly, it keeps carbon dioxide locked up in the soil and out of an already warming atmosphere."

    KC's View:

    A couple of months ago, I did an MNB/In Conversation with Carl Jorgensen, who is an expert on these issues … and we talked a lot about how companies can connect with farmers focused on sustainable organic and regenerative agriculture.  The goal is to build expanded coalitions that will drive the food industry in a healthier direction … in all the meanings of that word … and to craft a narrative that will appeal to a growing shopper segment.

    You can check out the conversation here.

    Published on: April 26, 2021

    The Wall Street Journal reports that entrepreneurs in New York City are hoping "to cash in" on the city's unique desire for fast delivery.

    "Two companies based in the city, 1520 and Fridge No More, have set up shop in recent months with just that promise," the Journal writes.  "They are positioning themselves as alternatives to traditional delivery providers, such as FreshDirect or Whole Foods Market (through its parent company, Amazon. com Inc.), by virtue of their speed, saying that New Yorkers can’t always wait the hours that it takes for established companies to bring items to the doorstep.

    "And that is especially the case, they said, when New Yorkers are looking for just a few essentials or extras, be it toilet paper or a pint of a favorite ice cream. As it is, many locals have limited kitchen space and rarely shop for groceries the way the rest of the country does by buying a large quantity of products at once."

    This is not to suggest there won't be challenges:  "For starters, the model, which has already become popular in Europe and elsewhere, is based on limiting choice, which might not appeal to shoppers looking for umpteen options. The rapid-delivery companies service select neighborhoods by working out of miniwarehouses, almost like bodegas without the customers, scattered throughout the city. These warehouses have a much smaller number of products than what can be found in a typical supermarket or, for that matter, in a warehouse maintained by a provider such as FreshDirect, which has a 640,000-square-foot main distribution point in the Bronx."

    According to the story, "Currently, 1520 delivers to Manhattan’s Upper East Side, Upper West Side and Hell’s Kitchen neighborhoods from two warehouses, while Fridge No More services a handful of Brooklyn locales from three warehouses in the borough. Fridge No More doesn’t charge for delivery, while 1520 charges $2.99 only if an order is below $40.

    "Both 1520 and Fridge No More have garnered support and attention from the investment community - 1520 has received $7.8 million in seed money while Fridge No More has raised $17 million - and plan to soon expand their service areas by adding more warehouses in the city."


    KC's View:

    There are some who suggest that such small entrepreneurs will be vulnerable to competition from larger, better funded companies, and that may be true.  But there may be  limits to how successful big companies  can be in this space - they bring a level of bureaucracy and inflexibility that smaller businesses don't have, though, to be fair, they also are lot better capitalized.

    These smaller companies must be fighting the clock as much as anything - not just the promises they're making to shoppers, but also the time it will take them to get enough scale to make money before their funding runs out … while fighting off the competition coming from big traditional retailers as well as Amazon, not to mention each other.

    It isn't just in New York, of course - this stuff is happening in a lot of metro areas in the US as well as elsewhere;  the BBC had a story the other day about fast delivery competition unfolding in the UK.

    Published on: April 26, 2021

    The Washington Post reports that President Biden on Friday "signed into law a new measure that designates sesame as the ninth major food allergy and ramps up allergy research, enacting a bipartisan attempt to address marked growth in certain deadly allergies.

    "The Food Allergy Safety, Treatment, Education and Research (Faster) Act passed the Senate in March and the House of Representatives this month. It received bipartisan support."

    The story notes that over the past 20 years, "life-threatening childhood food allergies have risen steadily, growing by about 4 percent per year to afflict 32 million Americans, according to research by Northwestern University, McKinsey & Company, and Food Allergy Research and Education, a nonprofit."   There are, the Post writes, 1.6 million Americans with sesame allergies, and the new law "will require foods containing sesame to be clearly labeled by January 2023. But perhaps more significant, the legislation says the Department of Health and Human Services must prioritize regular reviews of promising food allergy treatments and research."

    Published on: April 26, 2021

    The Wall Street Journal reports on how, while "US restaurants increasingly are seating and serving customers again, after a year when quarantining and seating restrictions forced many to launch online-only food brands or rely on takeout business … servers, hosts and line cooks aren’t similarly rushing back, restaurant owners say - whether because they are fearful of Covid-19, have moved on to other industries or remain on unemployment benefits."

    According to the story, "Nationwide chains and independent eateries alike said they can’t hire enough workers to staff kitchens and dining rooms, just as Covid-19 restrictions relax and more consumers want to eat out again."

    Some examples of what they're doing to compensate:  "Fast-food operators, including owners of Jimmy John’s Gourmet Sandwiches restaurants, are offering signing bonuses for recruits. Chipotle Mexican Grill Inc. is offering free college tuition to employees who work at least 15 hours a week after four months on the job.  Taco Bell is giving paid family leave to company-store managers. McDonald’s Corp. owners are assessing what pay and benefits its U.S. employees most want, to better pitch the Golden Arches as an employer."

    KC's View:

    It isn't just the restaurant industry, of course … there are a lot of business sectors struggling with similar problems.  And I'm hearing this a lot - retailers that are having trouble hiring people despite the relatively high unemployment rate.

    I do think there is some level of people not wanting to work because of government benefits, but there also is a measure of feeling unsafe.  Which is why getting vaccinated and continuing to observe smart public health policies is so important.

    Published on: April 26, 2021

    The Wall Street Journal has a piece by former Best Buy CEO Hubert July - which is an excerpt from a book he has coming out - that addresses how he taught himself about retailing … a segment with which he had limited experience before taking charge at what was then a troubled company in decline.

    His efforts were immediately focused on stopping the bleeding, and this meant dealing with both culture and policies … and here's where he started:

    "I had spent my career in technology, videogames, travel and consulting so I was new not only to Best Buy, but to retail in general. I had a lot to learn. I also knew that listening to front liners was the best way to do that. On my first day as CEO I drove about 60 miles north of Minneapolis to St. Cloud, a town hugging the Mississippi river. My plan was to spend my first three days on the job working in a Best Buy store on Division Street.

    "Wearing my khaki pants and Best Buy’s uniformed blue polo shirt with a 'CEO in Training' tag, I spent my first day meeting the staff, listening, asking questions, walking the store and visiting every department. After my shift, I had dinner with the store management team at a local pizzeria. They knew a lot about what was really going on at Best Buy. A lot! During that dinner, for example, one employee pointed out that the website’s search engine was a problem. She demonstrated just how bad by typing 'Cinderella' in the search bar. Inexplicably, the search engine spat out a list of Nikon cameras. I couldn’t believe it. Over dessert, I found out that employees were also unhappy about a reduction in worker discounts—a perk they valued since many loved electronics."

    It is a really interesting piece, an a great example of how the front lines of any retail business can be a source of extraordinary intelligence about what works, what doesn't and how to fix it.

    You can read it here.

    Published on: April 26, 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 US Covid-19 coronavirus numbers:  32,824,389 total cases … 586,152 deaths … and 25,379,831 reported recoveries.

    The global numbers:  147,874,905 cases … 3,124,681 fatalities … 125,450,701 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 53.6 percent of US adults 18 or older have received at least one dose of the vaccine, while 36.5 percent have been fully vaccinated.

    •  The New York Times reports that "millions of Americans are not getting the second doses of their Covid-19 vaccines, and their ranks are growing.

    "More than five million people, or nearly 8 percent of those who got a first shot of the Pfizer or Moderna vaccines, have missed their second doses, according to the most recent data from the Centers for Disease Control and Prevention. That is more than double the rate among people who got inoculated in the first several weeks of the nationwide vaccine campaign."

    There are two problems at play.  First, vaccination hesitancy on the part of some, as people worry about side effects (the second shot can be tougher than the first one), and the feeling that one shot ought to be enough.

    And second, "a number of vaccine providers have canceled second-dose appointments because they ran out of supply or didn’t have the right brand in stock."

    •  The Associated Press reports that "US health officials lifted an 11-day pause on COVID-19 vaccinations using Johnson & Johnson’s single-dose shot on Friday, after scientific advisers decided its benefits outweigh a rare risk of blood clot.

    "The government uncovered 15 vaccine recipients who developed a highly unusual kind of blood clot, out of nearly 8 million people given the J&J shot. All were women, most under age 50. Three died, and seven remain hospitalized.

    "But ultimately Friday, the Food and Drug Administration and Centers for Disease Control and Prevention decided that J&J’s one-and-done vaccine is critical to fight the pandemic — and that the small clot risk could be handled with warnings to help younger women decide if they should use that shot or an alternative."

    •  The New York Times reports this morning that "American tourists who have been fully vaccinated against Covid-19 will be able to visit the European Union over the summer, the head of the bloc’s executive body said in an interview with the New York Times on Sunday, more than a year after shutting down nonessential travel from most countries to limit the spread of the coronavirus.

    "The fast pace of vaccination in the United States, and advanced talks between authorities there and the European Union over how to make vaccine certificates acceptable as proof of immunity for visitors, will enable the European Commission, the executive branch of the European Union, to recommend a switch in policy that could see trans-Atlantic leisure travel restored."

    Published on: April 26, 2021

    •  USA Today reports that "Honda is aiming to sell only electric vehicles in North America by 2040, joining several other automakers that have made similar announcements recently.

    "The Japanese automaker called it a goal, not a commitment, echoing similar language used by its competitors as they leave open the possibility of selling conventional cars for longer.

    "But the move further signals that the future of the gas engine is looking murkier as automakers embrace EVs.

    "Jaguar, Volvo and General Motors recently also announced plans to phase out gas vehicles by 2025, 2030 and 2035, respectively."

    Published on: April 26, 2021

    I've always been intrigued by the ways in which Amazon has utilized its third-party Marketplace to grow its retail footprint, using it to extend its already rather long tail to one of considerably greater scope and depth - to the point where its Marketplace represents more than half its total retail sales.

    Now, with Amazon having provided proof of concept, there are a number of companies in various stages of developing their own Marketplace offerings - Walmart, Kroger, and Albertsons among them.

    This prompts questions.  Does it make sense for other retailers to do the same?  Should size be the determining factor in whether a retailer decides to open and link to a Marketplace on its website?  And what's the ROI on such a strategic move?

    All good questions, I think … which is why I was pleased to be asked to host/moderate an online session next week on the subject of "The Business Case For An Online Marketplace."  Setting the table will be Scott Compton, Senior Analyst, Digital Commerce, with Forrester, who will lay out the challenges and opportunities.

    The session is set for next Thursday, Apr 29, 2021 at 2 pm EDT/ 11 am PDT.

    I hope you'll join us for this complimentary webinar, sponsored by VTEX.  My goal is to make sure the session is both illuminating and entertaining, while asking the questions that you'll want answered.  And if I don't - you'll be able to.

    For information about how to register for this session, click here.

    Published on: April 26, 2021

    We had a story the other day ab=out how Amazon was developing AI that could evaluate produce quality.  One MNB reader wrote:

    If Amazon’s new AI for produce quality can help me pick out ripe cantaloupe or ripe honeydew melon, bring it on.

    Regarding the configuration of freezer and refrigerated sections, which I argued the other day needs to be disrupted by a technology genius, one MNB reader wrote:

    Hey KC, not sure if you've been in a Shaw's lately, but they've started to put glass doors on ALL refrigerated cases, where possible.

    Think end caps, dairy department, deli (bacon, hot dog case), even the produce cut fruit, bag salad wall now … However I think their reasoning is to capture all that wasted electricity and refrigeration, not exactly thinking outside the box, but it's a start!

    What they have to do, I think, is use the doors for something other than a divider that saves electricity.  Maybe, rather than using them to separate people from product, they could be used to draw people in.

    MNB reader Rich Heilen wrote:

    Been traveling so if you have commented on this and I missed it, oops, sorry…

    Been stories the past week or so in our area about restaurant delivery – the delivery companies, the restaurants and consumers.

    Two key points. One is some delivery companies are adding restaurants without telling them. So, a driver shows up, sometimes when an out-dated menu,  wanting an order. The other is, no one seems to be making money at this.

    A story from our area talks about restaurants that while appreciative of delivery services in the beginning times of COVID are tired of rate hikes so are starting their own delivery service. The gist is that the services raised rates because they were losing money.  Now restaurants have cancelled so still losing money. Added to this is a break point where consumers feel prices, whether from restaurant or delivery service fees, are getting too high.

    The story points out delivery fees of 30 percent when restaurants are operating at less than full capacity (really hurts on bar side where margins are higher) are saying “no.”

    A poll shows 60 percent of customers – 71% millennials – are likely to continue with delivery after the pandemic.

    So, where does this go? At some point there has to be profit at both the delivery and restaurant levels. So, where does that come from? The consumer most likely. If that’s the case what is the consumer breakpoint where some of that 60 percent (or 71 percent) says delivery isn’t worth it. If people start going back to dining in, do delivery rates drop? Who survives?

    Guess my point is whether or not the pandemic has created habits we cannot really afford to sustain and if that’s the case, what’s the answer? One may be that we accept delivery works in dense core urban areas, less so in outlying urban, suburban and rural areas and it becomes a niche service. 

    And, on another subject, from another MNB reader:

    Morning KC…I always enjoy my morning read of the MNB, but especially when there is a "Ted Lasso" trailer! 

    I may have missed it, so forgive me if you have already covered this, but have you heard much rumble about the real struggles with manufacturers (including CPG) specifically around (lack of)  labor issues?  I work for a small frozen food manufacturer, and it has been historically difficult to attract, hire, and retain employees for production facility work. Many employees are members of families where multiples of the households work in the same facility, so if one is quarantined….they all are.

    Government programs like extended unemployment and stimulus checks allow employees the ability to take additional (unplanned) time off.  The impact is far reaching as attainment drops, fill rates decrease, out of stock levels increase, stress/patience levels of retailers is stretched further…not to mention the short staffing that ensues causes smaller and an overall lower number of production runs, which means less efficient operations and higher COGS (and likely pricing increases at retail if the trend continues).

    In talking with my many peers in the industry, this is not isolated to us….nearly everyone is struggling to keep up and keep moving forward in a time where demand has been unparalleled (and not slowing down).  The extent that many companies are going through in order to hire entry level workers is nothing like I’ve seen in 30+ years in the CPG business.

    Published on: April 26, 2021

    The 93rd annual Academy Awards were last night, and here were the winners:

    Best Picture:  Nomadland

    Best Actor:  Anthony Hopkins, The Father

    Best Actress:  Frances McDormand, Nomadland

    Best Actor in a Supporting Role:  Daniel Kaluuya, Judas and the Black Messiah 

    Best Actress in a Supporting Role:  Yuh-Jung Youn, Minari

    Best Director:  Chloé Zhao, Nomadland

    Best Adapted Screenplay:  The Father

    Best Original Screenplay:  Promising Young Woman

    Best international Feature FilmAnother Round

    Best Animated Feature:  Soul

    Best Original Song:  “Fight for You," Judas and the Black Messiah

    Best Score:  Soul

    KC's View:

    The Oscars, which I've always viewed with some mixture of skepticism and voyeuristic curiosity, this year demonstrated the power of disruptive influences - Netflix won more Academy Awards this year - seven - than any other studio, after having gotten more total nominations (36) than anyone else.  (Amazon had two wins.)

    The show also illustrated the "don't count your chickens before they're hatched" principle.  The producers reordered the awards so that the Best Picture did not come last … they made Best Actor the final award, anticipating that it would go to the late Chadwick Boseman in what would be an emotional climax to the evening.  And then Anthony Hopkins won for The Father, and wasn't there to accept the prize … leaving the show to end, as TS Eliot said, "Not with a bang but a whimper."