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    Published on: May 19, 2021

    The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Marc Lore, who sold Quidsi to Amazon and Jet to Walmart and now is continuing his career as a serial entrepreneur, has been getting a lot of attention to bets he is making on new and innovative companies.  Tom Furphy and KC look at some of those bets, but focus more on why Lore is making them, and what his approach to investing and innovation can teach retailers and other companies about doing business in the current hyper-competitive climate.

    If you're interested in listening to an audio version this Innovation Conversation, you can do so here (or can download this file):

    Published on: May 19, 2021

    The newest Brick Meets Click/Mercatus Grocery Shopping Survey is out, concluding that "the U.S. online grocery market finished April with $8.4 billion in sales, contracting by 10% compared to March’s $9.3 billion, but gaining 16% versus April 2020 … Despite this month-over-month decrease, total online grocery sales in April 2021 were more than four times higher than pre-pandemic levels."

    The survey "found that 67.8 million U.S. households bought groceries online in April, a 12% decline versus a year ago. However, this decline in shopper base was offset by

    more engagement as April’s monthly active users placed more delivery and pickup orders. These orders accounted for 78% of April 2021 total online grocery sales."

    More from the survey:

    •  "April 2021’s average order value (AOV) of pickup, delivery, and ship-to-home orders dropped 6% versus the prior year on an order-weighted basis. This drop was driven largely by a 7% decline in ship-to-home AOV. Pickup and delivery AOVs dipped 1% and under 3% respectively but remained $8 (10%) above pre-COVID order values measured in August 2019."

    •  "The repeat intent rate, which measures the likelihood that a monthly active user will make another order within the next month with the same grocery service, jumped to 55% for April, up five percentage points versus a year ago, but continues to remain significantly below pre- pandemic intent. Among less satisfied users in April 2021, 11% are still searching for an acceptable alternative as they are extremely or very likely to use another service in the next month."

    “Online shopping has remained an attractive way to buy groceries for a sizable segment of the U.S.,” said David Bishop, partner, Brick Meets Click, in a prepared statement. “Last year, retailers were in a race to meet the dramatic surge in demand. This year, it’s about executing a sound and sustainable strategy, with the imperative squarely on improving integration and implementation.”

    Full disclosure:  Mercatus has been an MNB sponsor.

    KC's View:

    It isn't surprising that as the world gradually opens up, we're going to see some backing off from pandemic-era e-grocery behaviors.  That simply makes sense.

    That said, a sizable percentage of the population has become comfortable with this form of shopping - they know that it can open up time to do other things and allows them to reorder their priorities.  Even if the percentage of e-grocery sales drops, the behavior has become far more entrenched for a lot of people, and is likely to continue to grow over the long term.

    Published on: May 19, 2021

    GeekWire reports that Amazon is renaming its Amazon Go Grocery stores as Amazon Fresh stores, simplifying to some degree its range of bricks-and-mortar offerings.

    The name change does not seem to affect the fleet of small-format Amazon Go stores.

    The story notes that "Amazon made it a little confusing to track its various new grocery options — Amazon Go, Amazon Go Grocery, Amazon Fresh grocery stores, Amazon Fresh delivery, Whole Foods delivery, Prime Now delivery, etc.  This simplifies the array of offerings a bit.

    Amazon Go Grocery was designed to be a larger version of the Amazon Go format, with checkout-free technology.  There are just two - one in Redmond, Washington, and the other in Seattle.  The Redmond location now is being closed.

    GeekWire writes that Amazon "has been rolling out full-size Amazon Fresh grocery stores that feature smart grocery carts and Amazon Echo devices that help shoppers navigate aisles. The company next month will transition employees from the Redmond Amazon Go Grocery location to the new Amazon Fresh store opening in the Factoria neighborhood in Bellevue, Wash .— one of two Amazon Fresh locations in the Seattle area."

    KC's View:

    This is a Shakespearean move, as in…

    “What's in a name? that which we call a rose

    By any other name would smell as sweet.”

    Amazon is right.  There were a lot of names, and maybe some confusion … though there aren't a lot of places where they overlapped, so consumers probably didn't care much.

    But if this creates greater focus, that's probably a good thing.  This move also could reflect a feeling at Amazon that they've identified the main priority going forward - Amazon Fresh - and are planning a major rollout.

    Published on: May 19, 2021

     The National Grocers Association (NGA), which represents the independent sector, this morning unveiled what it described as "a comprehensive rebranding, including a new logo, the first since the organization was founded in 1982.

    "The central organizing theme of NGA’s rebranding is focused on the association’s new tag line, 'At the Heart of the Community,' which illustrates the importance of independent community grocers to their markets as drivers of the economy as well as support of local families."

    The organization says that "the new logo, supporting graphics and color palette provide a more contemporary look, while enhanced messaging stresses and celebrates community, which is both the source and recipient of support for local independent supermarkets."

    “NGA’s new logo and imagery, and updated messaging, deliver a fresh look and reinforces our mission: to ensure independent, community-focused retailers and wholesalers have the opportunity to succeed and better serve consumers through our policies, advocacy, programs and services,” said Greg Ferrara, NGA president and CEO. “Independent community grocers and their wholesaler partners are critical to the strength and vitality of the people they serve. By advocating for the growth and continuing innovation of these independent business leaders, we help bring choice, convenience and value to hard- working Americans, and ensure ongoing economic advancement and prosperity for our country.” 

    KC's View:

    I think my friends at NGA would agree with me that this rebranding, while important because it lays out the mission, is just a starting point.  Stores are not "at the heart of the community" because they say so.  They have to prove it.  Daily.  Hourly.  Always finding new ways to demonstrate their relevance and resonance.

    Published on: May 19, 2021

    In the UK, The Grocer reports that Tesco plans to "scrap" its Tesco Metro format differentiation, turning 89 of them into Tesco Express stores and 58 of them into superstores.

    The decision comes two years after the company began an internal initiative to determine the future of the brand, which was launched in 1994.

    According to the story, "Having originally been launched as a town centre location that could handle passing trade as well as weekly shops, Tesco’s own research shows nearly 70% of its Metros are now being used for top-up shops and food to go, with less than a third (31%) typically being used for main shops."

    KC's View:

    I remember seeing my first Tesco Metro store back in the nineties, and being impressed by its unique positioning in between the Express and superstore formats.  But the world has shifted, consumer shopping behavior has evolved, and it simply makes sense for banners to reflect external realities and not just internal priorities.

    Published on: May 19, 2021

     FMI—The Food Industry Association proudly announces its 2021 Store Manager Award finalists, saying that "these 10 finalists stand out for their dedication, community commitment and innovation."

    “Our 2021 class of Store Manager Award finalists were already star performers before the challenges of the pandemic entered the picture,” FMI President and CEO Leslie Sarasin said in a prepared statement “The ways they quickly adjusted their businesses, continually rallied their teams and steadfastly served their communities during the extreme circumstances of a national emergency makes them truly exceptional.”

    The 2021 FMI Store Manager Award Finalists are:

    •  Category A (1-49 Stores):  John Salcito, Store Manager, ShopRite Supermarkets, Inc., New Rochelle, N.Y. … Keith Buswell, Store Manager, Skogen's Festival Foods, Onalaska, Wis. … Katie Swenson, Store Manager, Lunds & Byerlys, Minneapolis, Minn.

    •  Category B (50 – 199 Stores):  Morris Lewis, Store Director, Super 1 Foods Store, Brookshire Grocery Co., New Iberia, La. … William Randall, Store Manager, Giant Food, Falls Church, Va. … Hugh "Rusty" Rollins, Store Manager, Food City, K-VA-T Food Stores, Inc., Athens, Tenn.

    •  Category C (200+ Stores):  Brandon Lampkin, Store Director, Hy-Vee, Inc., Omaha, Neb. … Donna Maxwell, Store Manager, Harris Teeter, LLC, California, Md. … John Spaulding, Store Director, Meijer Company, Marquette, Mich.

    •  Category D (International):  Malene Hansen, Store Manager, SPAR Haderup, SPAR International, Haderup, Denmark

    Winners from all four categories and the People’s Pick recipient will be announced during a live, virtual celebration on June 17 at 1:00 p.m. ET via FMI’s YouTube channel.

    Published on: May 19, 2021

    Macy's said yesterday that "it has begun investing in new categories for the business — including toys, health and wellness, pets and home decor — in a bid to attract fresh-faced customers but also to keep its existing customers," CNBC reports.

    CEO Jeff Gennette "mentioned hair products, nail accessories and gourmet food items as three other category opportunities that Macy’s has not typically gone after — but it will soon.

    "The push could make Macy’s a closer competitor to big-box businesses such as Target and Walmart, which are known to offer shoppers a little bit of everything."

    KC's View:

    Macy's should take its best shot, but I'm not persuaded that this is a good idea.  I'm not sure that Macy's was particularly effective at doing what it used to do, and there's no reason to think that it'll be any better at a whole new set of skills.

    Published on: May 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, we've now had 33,774,945 total Covid-19 coronavirus cases, 601,330 deaths, and 27,253,327 reported recoveries.

    Globally, there have been 164,963,559 total cases, 3,420,795 fatalities, and 143,951,585 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 60 percent of the population age 18 and older has received at least one dose of a vaccine, with 47.6 percent being fully vaccinated.

    •  The Washington Post writes about the "millions of immunocompromised Americans, about 3 to 4 percent of the U.S. population, for whom the shots may not work fully, or at all, and who are unsure of their place in a country that is increasingly opening up. Emerging research shows that 15 to 80 percent of those with certain conditions, such as specific blood cancers or who have had organ transplants, are generating few antibodies."

    According to the story, "Federal health officials’ decision last week to rescind almost all masking and distancing recommendations for those who are fully vaccinated only added to the sense of fear, isolation and confusion for those with immune issues. On Twitter and other social media platforms, many such patients expressed frustration that the change might leave them with less — not more — freedom as their risk of infection grows as more of their neighbors and co-workers ditch their masks."

    •  The Washington Post reports this morning that "the European Union on Wednesday agreed to open its borders to vaccinated travelers after more than a year in which travel into the bloc has been severely restricted, a spokesman said Wednesday."

    The date when the opening will take place has not been set, and the Post writes that "a  formal final approval is still necessary, but its passage is not in doubt. Travelers would need to have vaccines approved for use within the European Union - meaning that all the vaccines currently available in the United States would be greenlighted, but vaccines currently manufactured in Russia and China would not be."

    •  Giant Eagle announced that it will no longer require masks for employees and customers who are fully vaccinated.

    “As we continue to navigate this public health crisis, it is vital that we all work together to protect ourselves and each other,” the company said in a prepared statement. “To best do this, we have taken steps to increase access to the COVID-19 vaccine by offering walk-up availability in our in-store pharmacy locations. We encourage anyone eligible who has not yet received the vaccine to consider doing so.”

    •  Axios reports that Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said this week that "many Americans are 'misinterpreting' the CDC's new mask guidance, which lets vaccinated individuals forego masks indoors."

    "I think people are misinterpreting, thinking that this is a removal of a mask mandate for everyone. It's not," Fauci tells Axios. "It's an assurance to those who are vaccinated that they can feel safe, be they outdoors or indoors … It's not their fault.  People either read them quickly, or listen and hear half of it. They are feeling that we're saying: 'You don't need the mask anymore.' That's not what the CDC said. They said: If you are vaccinated, you can feel safe — that you will not get infected either outdoors or indoors. It did not explicitly say that unvaccinated people should abandon their masks."

    Published on: May 19, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Lunds & Byerlys said that it will open a new, 23,000 square foot store on the ground floor of a multi-story apartment building in the Nokomis neighborhood of Minneapolis.

    The company said that "the store will have everything customers expect from Lunds & Byerlys – extraordinary food, exceptional service and passionate expertise – with many convenient features throughout the store, including:  Seemingly endless meal options, including a taco bar, Mediterranean bar, Hissho Sushi, hot food buffet, salads, soups, sandwiches and more. Customers can dine in the café seating area or outside on the patio."

    The store also offers both delivery and click-and-collect services.

    Few food retailers do it as well as Lunds & Byerlys, and I'm always happy when companies like these, which I admire so much, continue to grow and innovate.  Can't wait to see the new store.

    •  CNBC this morning reports that Target's Q1 revenue was up 23 percent, to $24.20 billion, with e-commerce sales up 50 percent compared to the same period a year ago.

    Target's net income jumped to $2.1 billion from $284 million a year ago.

    Same-store sales were up 18 percent.

    •  Marketing Daily reports that "Starbucks Corp. earlier this month submitted an application with the U.S. Patent and Trademark Office to trademark the term 'Puppuccino.'

    "According to the application, the term would apply to milk-based beverages, whipped cream and pet bandanas."

    The story says that Starbucks is formalizing something that seems to be happening anyway - consumers ordering Frappuccino-style beverages with extra whipped cream for their dogs, albeit with the advice that  pet owners should "consult with their vet on what treats are best for their pet."

    I love our dogs.  And I know they like coffee - Spenser in particular is fond of sticking his face in Mrs. Content Guy's morning latte is she's not careful about where she leaves it.  But if he thinks that dropping five bucks at Starbucks for a dog latte, he's going to be very disappointed.

    Published on: May 19, 2021

    •  CVS Health announced that Shawn Guertin will rejoin the company as EVP/CFO.

    Guertin is the former CFO at Aetna, who was expected to stay in that role at CVS when it acquired Aetna in 2018.  He declined the role at the time because of what were termed "personal and family reasons," but now is returning to the company.  He succeeds current CFO Eva Boratto, who is leaving the company.

    Published on: May 19, 2021

    Charles Grodin passed away yesterday.  He was 86, and had been suffering from bone marrow cancer.

    KC's View:

    It isn't often seen - and best I can tell, it doesn't seem to be available online at the moment - but if you get the chance, you need to see the original, 1973 version of Neil Simon's The Heartbreak Kid, in which Grodin plays a nice Jewish boy from New York who, three days into his Miami honeymoon, meets the ultimate shiksa goddess, played by Cybill Shepherd, and decides that he's married the wrong person.  Grodin is a combination of neurotic neediness in the role, and manages to make someone who is clearly despicable and shallow somehow relatable and oddly sympathetic.

    It was just one of a number of roles in which Grodin, always the schlemiel, but with lots going on inside - confounded expectations and convention - the accountant in Midnight Run (1988), the lawyer in Heaven Can Wait (1978), another accountant in Dave (1993).

    My kids remember him from the Beethoven movies, which I cannot remember seeing.  Though this clip, I must admit, made me laugh out loud:

     I saw him on Broadway once, playing opposite Ellen Burstyn in "Same Time, Next Year" - Alan Alda played the part in the film version - and Grodin was terrific.  (I remember the performance clearly, and it was some 45 years ago.)  He was a writer and director and a fabulous talk show guest and occasionally a talk show host, and he always brought to the occasion a keen wit and high degree of aggravation - not to mention self-deprecation - and a  that he knew just how to play for the biggest laugh.

    The thing was, when I saw the news about him passing away, I realized how little I'd seen of him in recent years, and how much I missed his presence.

    I also vividly remember seeing him for the first time in The Heartbreak Kid - I was in acting school at SUNY Purchase … the movie theatre was in Scarsdale, New York … and I'd persuaded one of my fellow students, Martha Zahringer, to go with me.  She looked enough like Cybill Shepherd that people turned to look at her in the lobby when the movie was over.  I was aware in that moment exactly how far out of her league I was, and how movies had nothing to do with real life.  And I felt Grodin's pain.

    Published on: May 19, 2021

    Got the following email from an MNB reader who wanted to respond to our story about Kroger's Florida-based strategy, which apparently focuses on e-commerce, distribution centers, and virtually no stores:

    I saw this Kroger truck driving in Orlando a couple days ago.  This was taken in front of the Costco at Millenia Mall.  As a retired Publix associate I have been following the Kroger Groveland news.  My understanding was that they were not yet making deliveries so perhaps this truck was just a teaser to raise awareness of what’s coming?

    Maybe.  Or, Kroger has moved beyond teasing and now wants to consummate an online relationship with food shoppers.

    From another reader:

    Kroger’s still unpublished strategy in Florida is one to keep a close eye on.  Let’s not forget their partnership they’ve been testing with Walgreen’s for several years, and their role in all of this (there are over 700+ Walgreen’s in Florida).

    Picking customer orders from a store is still an unprofitable model.  If Ocado can drastically change the operational costs, and Kroger can figure out how to efficiently distribute these orders through partners like Walgreen’s, they should be at a significant cost advantage in Florida.  The potential is then there to invest these savings back into price, and offer value that retailers like Publix would struggle to match.  It’s a great story that is unfolding, the only problem is that it feels like we are watching a snail race. 

    Let's remember the Hemingway line about going bankrupt - that it happened "gradually, then suddenly."

    That's exactly what could happen here.

    Another MNB reader wrote:

    Would love to see Kroger find a way into the Northeast as well, which would require an acquisition.

    Maybe not.  Maybe we're learning that stores are not the critical component they used to be, at least in terms of launching a business.

    On another subject, one MNB reader wrote:

    I don’t understand the comment regarding people that are not getting the vaccine and that they only care about themselves? Why would vaccinated people be afraid of unvaccinated people; they cannot get the virus. It’s the unvaccinated people that are putting themselves at risk. I do not plan on being vaccinated; part is for religious reasons and the other is the unknown nature of this vaccine and what the long term effects might be.

    We took note above of the Washington Post story about how immunocompromised Americans continue to be at great risk, and there also have been stories about how we're seeing greater occurrences among children who cannot yet be vaccinated.

    I think that's the concern when it comes to people who have decided not to get vaccinated - or just have not yet been able to.  If they don't wear masks, they potentially put all these people at risk.

    The argument is that the more people who get vaccinated, the better able the country - and the world - is to starve the virus of oxygen.  That's a compelling point, I think - that the decisions we make do not just affect us, but also our fellow citizens.