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: May 21, 2021

    A recent phone encounter with a government entity illustrated to KC how important it is for businesses to stay in touch with shoppers' reality, lest they be seen as peripheral rather than essential to their lives.

    Published on: May 21, 2021

    Reuters reports that "Walmart and Target are testing their own home package delivery services in the United States - stealing a page from Amazon's play book - as e-commerce demand strains traditional carriers like United Parcel Service, FedEx and the U.S. Postal Service."

    The story says that Walmart "has been trialing its first company-branded 'last-mile' delivery vans … Since January, a small, electric van fleet has made package deliveries in the Bentonville and Rogers areas near Walmart's Arkansas headquarters, company spokeswoman Camille Dunn said. The drivers work for Walmart, which also employs its semi-truck drivers."

    Target, on the other hand, "so far is depending on independent drivers from Shipt, which it bought in 2017.  The retailer earlier this year began testing home package delivery from a new sorting center in its hometown of Minneapolis. Workers in that center group packages by zone and hand some over to drivers for Shipt, who use their own cars for deliveries."

    The moves mimic how "Amazon has recruited armies of small businesses to provide delivery services from vans emblazoned with the company's logo - an effort that has helped it control customer wait times and costs."

    KC's View:

    Controlling costs and delivery times are two reasons to do this, but the third reason is just as important - they get to control the customer experience in a way that using a third party contractor does not.

    Everybody is going to be looking for differentiators going forward.  (Well, maybe not everyone.  But everyone should be.)  The final yards of the so-called "last mile" could be where the game is won or lost, depending on how retailers approach them.

    Published on: May 21, 2021

    Amazon has decided to retire its Prime Now mobile app, and will now make its services available via the Amazon site and app.

    Stephenie Landry, vice president of grocery at Amazon, said in a blog posting this morning that "Prime Now has become a customer favorite, attracting millions of Prime members around the world with ultrafast delivery of everyday essentials, gifts, toys, high quality groceries, and more from Amazon and local stores. To make this experience even more seamless for customers, we are moving the experience from a separate Prime Now app onto the Amazon app and website so customers can shop all Amazon has to offer from one convenient location.

    "Whether it's two-hour delivery from Amazon Fresh, Whole Foods Market, or one of our local stores like Bartell's in Seattle, Morrisons in Leeds, or Monoprix in Paris, Prime members will find what they need alongside the millions of items available on Amazon. Now that the Prime Now experience has a new home on Amazon, we will retire the Prime Now app and website worldwide by the end of this year."

    Landry notes that "in India, Japan, and Singapore, we've already moved the Prime Now experience onto Amazon and retired the Prime Now app and website. In the U.S., we began making two-hour delivery from Amazon Fresh and Whole Foods Market available on Amazon in 2019."

    KC's View:

    I'm a big Prime Now user - I have a Whole Foods about a quarter-mile from my house, and I've loved the ability to order using Prime Now and then just drive to the store for curbside pickup during the pandemic;  lately, I've been walking down and going into the store.

    It'll be interesting to see how it all integrates with Amazon … I can't imagine it'll be a problem, since eliminating customer friction is a high priority at the company.

    Published on: May 21, 2021

    The Washington Post this morning has a story about how "with nearly half of all Americans at least partially vaccinated and 100 percent of Americans tired of their own cooking, restaurant traffic is rocketing back.

    "Restaurant reservations, including diners who placed themselves on waiting lists, were up 46 percent in April compared with April 2019, according to the review site Yelp (and up 23,000 percent compared with April 2020, when most Americans began staying at home during the pandemic). Yelp’s competitor OpenTable paints a similarly rosy picture … Total U.S. restaurant traffic is 16.3 percent below its pre-pandemic level in the week ending Tuesday, but it is rising fast, according to OpenTable. It recently reached its highest seven-day average nationally since the pandemic closures began. And among restaurants that have reopened from the crisis, things look even better — they’re nearly back to their pre-covid levels."

    The Post goes on:  "In some states, restaurant traffic has blown by pre-pandemic levels, prompting industry experts to draw parallels between now and the Roaring ‘20s, which followed the 1918 influenza pandemic, bringing boom times for restaurants and other parts of the hospitality industry."

    KC's View:

    As mind-blowing as that "up 23,000 percent" number is, it is important to keep certain things in context.

    First, there is a lot of pent-up demand … and so it is not surprising that in a lot of markets we're seeing this kind of activity.  The weather is improving, and restaurants all over the country have embraced al fresco dining, enabled by loosened government regulations - all of which creates enthusiasm and momentum.

    But there are shortages out there that could inhibit growth.

    The Wall Street Journal this morning has a piece about how "Americans are returning to restaurants, bars and other dining places" is "adding new strains in food supply chains. Suppliers and logistics providers say distributors are facing shortages of everyday products like chicken parts, as well as difficulty in finding workers and surging transportation costs as companies effectively try to reverse the big changes in food services that came as coronavirus lockdowns spread across the U.S. last year."

    I also think that we have to keep in mind the rising prices that continue to bedevil the food industry in general, and specifically the restaurant biz - a meal and a nice bottle of wine can cost a more than it did before the pandemic.  For a lot of people, this could dampen their enthusiasm going forward and reduce the frequency with which they eat out.  (I had this happen to me the other day.  Went out for a light meal and a couple of drinks with my wife and daughter, and it was more than a hundred bucks before tip and taxes.  It was enjoyable and I was glad we did it, but there was a bit of sticker shock … I couldn't help but think that a bottle of wine at home would've cost less than the two glasses of wine that I consumed.)

    This could happen a lot, and it actually creates an opportunity for food stores to emphasize that advantage - that you can have a quality meal at a fraction of the cost of a restaurant meal, and, oh by the way, we'll help you make it (or provide it already cooked) and find you a good bottle of wine to go with it.

    But that's going to require a lot of engagement on the part of retailers.

    Retailers have had more than a year to think about what they would do when this moment came, about how they would differentiate themselves and compete effectively when the pandemic is over.  I wonder how many have had any sort of epiphany during the past 16-18 months.

    Published on: May 21, 2021

    The Dallas Morning News reports that The Container Store - having just posted online sales that were up 72.2 percent in Q4 and up 109.5 percent for the year, and total sales up more than 8 percent for the year to $990.1 million - "has some new ideas for how the retailer can take a bigger share of the $20 billion storage and organization market."

    CEO Satish Malhotra tells the News that "the company plans to open a smaller store concept next year," and perhaps most intriguingly, is considering a store-within-a-store concept that would put curated Container Store boutiques inside another "quality retailer."  The News notes that Malhotra knows something about how to do this - he joined the retailer from Sephora, which also has been using that strategy.

    The story also says that "stores will be focusing more on demonstrations and will use their expert organizers to beef up the level of service. Before-and-after real-life pictures and testimonials will be used to make better connections with customers, he said. The company’s loyalty program just surpassed 10 million members."

    KC'S View:

    I've always thought that The Container Store has such an interesting niche, not to mention a fascinating culture - they've been really careful about not over-saturating the market with stores.  The notion that it can grow through different formats, plus e-commerce, will present it with new challenges and demand new disciplines.  But the embracing the future requires taking chances.

    Published on: May 21, 2021

    National Public Radio's Marketplace reported yesterday on improving US Department of Labor statistics, as "444,000 people filed first-time unemployment claims last week, the lowest number since mid-March last year. The number of people claiming benefits through state and pandemic-related programs also fell to a pandemic low (16 million, down from 16.9 million a week earlier)."

    However, Marketplace says, "there’s a really significant number within that number: 4.2 million, the number of people who are long-term unemployed, meaning unemployed for 27 weeks or more.

    "Long-term unemployment, as well as a scourge to those trapped in it, has negative economic implications," with one expert saying that the size of long-term unemployment numbers can be an indicator of how long it will take for a full recovery.

    Marketplace notes that a number of "states are pressing ahead with plans to stop the payment of federal unemployment benefits in June or July to gig workers or the self-employed and anyone who’s on extended unemployment. 

    Published on: May 21, 2021

    An MNB reader yesterday referred me to a new video dropped on YouTube by Curiosity Stream, entitled, "The Incredible Logistics of Grocery Stores."

    You gotta love any video that describes supermarkets as "a marvel obscured by banality…."

    Published on: May 21, 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 a total of 33,833,181 total cases of the Covid-19 coronavirus, resulting in 602,616 deaths and 27,358,651 reported recoveries.

    Globally, we've had 165,912,336 total coronavirus cases, with 3,446,477 resultant deaths and 146,619,133 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 60.5 percent of the US population 18 or older has received at least one dose of vaccine, and 48.4 percent has been fully vaccinated.

    •  CNBC reports that Amazon "will soon stop requiring face masks for fully vaccinated workers inside warehouses, except where required by law.

    "Starting Monday, fully vaccinated operations employees in the U.S. will no longer be required to wear a face covering at work unless it is mandated by state or local regulations, according to a notice Amazon sent to workers that was obtained by CNBC … Amazon said in the notice to workers that it considers them to be fully vaccinated once it has been 14 or more days since their final vaccine dose. Workers must also have a copy of their vaccine card, the company said."

    •  From the Los Angeles Times this morning:

    "A California workplace safety board postponed a vote Thursday on a proposal that would have allowed workers to return to their jobs without social distancing or face masks so long as everyone in a room is vaccinated.

    "As a result, workers must continue to wear masks and practice physical distancing for now, unless they’re alone — either in a room or outside. Workers can remove masks when eating or drinking but must be physically distant from others.

    "The delay came after the deputy chief of the California Division of Occupational Safety and Health, known as Cal/OSHA, wrote a memo asking the seven-member Occupational Safety and Health Standards Board to 'not vote to approve the current proposal.'

    "The request followed this week’s announcement that California would broadly loosen its mask rules in nonworkplace settings effective June 15, allowing everyone who is vaccinated to remain maskless in most indoor and outdoor settings, while still requiring unvaccinated or partially vaccinated people to keep wearing masks in most settings when near other people."

    •  From the New York Times this morning:

    "After more than a year of remote work, Marc Metrick, the chief executive of Saks, has a message for the company’s 500 corporate employees in New York: Starting in September, the office will again become the company’s primary workplace.

    "'This was really great to be able to get work done at a time when it just wasn’t safe, but as it becomes safe, this isn’t the right option for us and we need to be much more office-based,' Mr. Metrick said of remote work during a recent Zoom interview. There will be new flexibility, he said, but 'the default needs to be our office'."

    •  The Wall Street Journal reports that "supermarkets are on a mission to get rid of hand sanitizers. Once nearly impossible to find, America is awash in it … Covid-19 cases are declining as more people get vaccinated. Health officials have said in recent months that the virus is airborne and that the disinfectants aren’t as effective as masks and distancing. Sales of hand sanitizers are down 80% to $9.2 million for the week ended May 8 from the year prior, according to NielsenIQ. Weekly sales hit as high as $52 million in July. Average unit prices are $2.10, about 40% lower than a year ago."

    Published on: May 21, 2021

    •  The Wall Street Journal  this morning reports that Amazon has "suspended rider training on a new three-wheeled cargo e-bike to be used for package delivery in New York City after one toppled onto its side last week during a practice session, according to people familiar with the matter.

    "Whole Foods Market, which is owned by Amazon, already uses two-wheeled cargo e-bikes to deliver groceries from three stores in the city. The three-wheeled customized cargo bikes are for a new program yet to launch. It isn’t known if the suspension of the training will delay the program’s start … The rider was among about 10 people participating in a training program conducted by Bike New York, an education and advocacy group. Bike New York expected to train more than 200 riders on the cargo bikes over the next few months, the people familiar with the matter said."

    “We always put safety first and conduct rigorous testing before launching any new program, and we look forward to launching this one as soon as we’re ready,” said Alexandra Miller, an Amazon spokeswoman.

    Published on: May 21, 2021

    •  The Associated Press reports that "BJ's Wholesale Club Holdings Inc. on Thursday reported fiscal first-quarter profit of $81.6 million … The wholesale membership warehouse operator posted revenue of $3.87 billion in the period."

    •  Reuters reports that "McDonald's Corp. was sued on Thursday for at least $10 billion by two companies owned by media entrepreneur Byron Allen, who accused the fast-food chain of racial discrimination for not advertising enough with Black-owned media outlets.

    "The complaint filed in Los Angeles County Superior Court said McDonald's violated federal and state civil rights laws through its 'racial animus and racial stereotyping' in allocating ad dollars.

    "According to the complaint, Chicago-based McDonald's has refused to advertise with Allen's Entertainment Studios Networks, which owns several lifestyle channels, or his Weather Group, which owns The Weather Channel.  The complaint said Blacks comprise about 40% of McDonald's customers, but the company devoted less than $5 million of its $1.6 billion U.S. ad budget in 2019 to Black-owned media."

    Published on: May 21, 2021

    On the subject of e-commerce economics, one MNB reader wrote:

    My guess is that picking customer orders from a warehouse, even using the Ocado system, is at best significantly less profitable than sales from typical brick and mortar retail locations.  So without physical stores where they can rob Peter (customers who do their own shopping and delivery) to pay Paul (the extra costs of online ordering and delivery) online shopping is always going to be less profitable than in store sales.  

    Isn't it also possible that running a warehouse/dark store actually eliminates a lot of the costs of a physical store that has to be maximized for customer contact?

    There's a phrase often used:  With all things being equal …

    I think it is important to realize that all things don't have to be equal.  

    Published on: May 21, 2021

    Reading Michael Lewis's new book, "The Premonition: A Pandemic Story," for some reason reminded me of the Albert Einstein quote:  "Logic will get you from A to B.  Imagination will get you everywhere."

    "The Premonition," in the same way that Lewis used in books such as "The Fifth Risk," "The Big Short," and "Moneyball," celebrates imagination - mostly, in this case, as it is found in the unknown doctors, scientists and public health officials who, long before anyone ever knew what Covid-19 was, had a passion for figuring out how to combat a pandemic efficiently and effectively.

    The book has an extraordinary cast of characters and a wonderful way of portraying their quixotic belief that the United States was ideally positioned to deal with the next pandemic, whenever it would come.  (It is worth noting that in "The Premonition," Covid-19 does not show up until about halfway through the book.)  However, reality taught them a painful lesson - that there was a kind of rot eating away at the nation's public health foundation, enabled by politics though not attributable to any one person's politics, that made it difficult, even near impossible, to deal with a pandemic to the degree necessary.

    I must admit that I was surprised at the degree to which "The Premonition" sparked competing, conflicting emotions as I read it.  To some degree, I felt hope - there are a lot of really smart people working for various government agencies, not interested in fame or fortune, but completely committed to the public good.  (I've read some criticisms of these folks as "medical elites." but if that's true, they give elitism a good name - they are simply smarter than everyone else, able to see patterns and probabilities that most cannot.)  But at the same time, I found myself dispirited by a system that seems largely built to diminish or squash their contributions.  I find myself worrying about the observation made by a member of one team, an immigrant from Poland, who looks at the US public health system and observes, "These are the symptoms of a failed state."

    It is interesting reading a book like "The Premonition" at this point in time, when there seems to be so much hope about the pandemic receding into memory.  The real problem, Lewis suggests, is a corrosive attitude toward the public good that, if we've dodged this bullet (and that's hard to argue when more than 600,000 people have died), doesn't mean we'll survive the next skirmish, the next battle, or, heaven help us, the next war.

    Read Michael Lewis's "The Premonition."  It is as thought-provoking a book as I can imagine for times like these.

    There are few things in the world that I enjoy as much as what I would call a "pizza wine."  Red.  Uncomplicated,  Great mouth-feel.  Bold.  Smooth.

    Which is exactly how I would describe the 2018 Cesari Rosso Justo Veneto from Italy - we had it the other night when I made pizza on the grill, and it was perfect.  


    That's it for this week.

    I hope you have a great weekend, and I'll see you Monday.

    Stay safe.  Be healthy.