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    Published on: June 7, 2021

    KC has some thoughts coming out of last week's GMDC-Retail Tomorrow Mid-Year Meet-Up … focusing on the enabling of consumer empowerment, and the degree to which retailers need to focus less on transactions and more on being service providers.  No time like today to prepare for tomorrow, he suggests.

    Published on: June 7, 2021

    by Kevin Coupe

    Amazon founder and (for the next month) CEO Jeff Bezos announced this morning that when his space travel company Blue Origin sends up a spaceship carrying passengers for the first time next month, he will be one of them.

    The New Shepard spacecraft is scheduled to take off on July 20 - the 52nd anniversary of the Apollo 11 moon landing.

    CNBC writes that "Bezos’ brother Mark will join him, as well as the winner of a public auction being held for one of the seats. The highest bid stands at $2.8 million as of Monday morning, with the auction closing on June 12."

    CNBC goes on:   "Blue Origin’s space tourism system New Shepard, a rocket that carries a capsule to the edge of space, has flown more than a dozen successful test flights without passengers on board, including one in April at the company’s facility in the Texas desert.

    "New Shepard is designed to carry as many as six people at a time on a ride past the edge of space, with the capsules on previous test flights reaching an altitude of more than 340,000 feet (or more than 100 kilometers). The capsule has massive windows to give passengers a view, spending a few minutes in zero gravity before returning to Earth."

    “I want to go on this flight because it’s a thing I’ve wanted to do all my life,” Mr. Bezos said in a video posted to Instagram. “It’s an adventure. It’s a big deal for me.”

    It may also be a big deal for Amazon investors, who could legitimately wonder if Bezos is ignoring his fiduciary responsibilities to the company by putting his life at risk in this way.  On the other hand, Bezos - probably not coincidentally - is stepping down from the CEO role several weeks before, cementing his succession plan.

    Gotta say this, though.  The guy has money, but he also has guts - this is as plain a statement of confidence as I can imagine.

    I do have one serious thought about future flights, though.  Bezos and Blue Origin ought to reserve one seat on each flight for people of influence who would not be able to afford the privilege.  And not just scientists.  I'm talking poets and artists and musicians and teachers who can communicate the majesty of what they see, disseminating not just words but feeling and context to a global community.

    That'd be an Eye-Opener.

    Published on: June 7, 2021

    The New York Times this morning reports that workers seem to have gained the upper hand in dealing with management, and that "the change is broader than the pandemic-related signing bonuses at fast-food places. Up and down the wage scale, companies are becoming more willing to pay a little more, to train workers, to take chances on people without traditional qualifications, and to show greater flexibility in where and how people work.

    "The erosion of employer power began during the low-unemployment years leading up to the pandemic and, given demographic trends, could persist for years … People are demanding more money to take a new job. The 'reservation wage,' as economists call the minimum compensation workers would require, was 19 percent higher for those without a college degree in March than in November 2019, a jump of nearly $10,000 a year, according to a survey by the Federal Reserve Bank of New York.

    "Employers are feeling it: A survey of human resources executives from large companies conducted in April by the Conference Board, a research group, found that 49 percent of organizations with a mostly blue-collar work force found it hard to retain workers, up from 30 percent before the pandemic."

    Perhaps the most important point made in the story is that this is not just about people not wanting to go back into the workforce because of pandemic fears and a reliance on expanded government benefit, which created a situation in which workers are hard to find.  The Times argues that this is a trend that began in the years before, as unemployment was low, which began the process of shifting power to employees … which was a profound change that followed "decades in which union power declined, unemployment was frequently high and employers made an art out of shifting work toward contract and gig arrangements that favored their interests over those of their employees."

    That's not the case at the moment.  The Times writes that "whether it’s a bigger paycheck, more manageable hours or a training opportunity offered to a person with few formal credentials, the benefits of a tight labor market and shifting leverage can take many forms.

    "What they have in common — no matter how long this shift toward workers lasts, or how powerful a force it turns out to be —  is that it puts the employee in the position that matters most: the driver’s seat."

    KC's View:

    Rather than a shifting in the balance of power that this story describes, I wish that labor and management would actually use this as a moment to find balance - to understand that they're both essential to the success of any enterprise.  

    The people on the front lines deserve to know they are not just a cost, but rather an investment, to the companies for which they work.  That "essential" isn't just a term of convenience, but rather reflective of a company culture.

    Not that I have any confidence that such a thing will happen.

    Published on: June 7, 2021

    Edge Retail Insight is out with a new study concluding that "US sales at on-demand food delivery firms, including DoorDash, Uber and grocery-focused intermediary Instacart, are accelerating at a compound annual growth rate (CAGR) of almost 17% (16.8%) a year to reach $138.77 billion by 2025. That is almost 1.7 times faster than the total ecommerce market in the US."

    "Instacart, the largest grocery-focused on-demand delivery service in the US, and Uber will surpass Target’s digital business by gross merchandise value (GMV) sales by 2025," the study says.  "DoorDash, the largest food delivery service in the US, will overtake eBay.com (excluding consumer-to-consumer sales) in the US in terms of GMV sales by 2025.

    "By 2025, US GMV sales at on-demand food delivery firms will grow to almost $140 billion - more than double 2020 levels."

    The forecast also suggests that "DoorDash, the leading app-based restaurant delivery service in the US, will overtake ecommerce giant eBay.com in the US by 2025. DoorDash, which expanded into grocery last summer to accommodate booming demand during the pandemic and is actively partnering with retailers in other categories, will add $48.57 billion worth of GMV sales in 2025, doubling 2020 sales."  There's also a prediction that "DoorDash will become the third largest ecommerce banner in the US, behind Amazon and Walmart.com by 2025."

    KC's View:

    The thing that I believe retailers need to think about going forward is whether these delivery systems are inventing a new segment of the industry, able to stand up separately from traditional retail businesses and fulfill customers' orders out of warehouses and dark stores and ghost kitchens.  

    Many customers already see themselves as patronizing Instacart and Door Dash for their food, not the retailers that stand behind them.  Which means that these companies have been empowered and enabled by their retail clients to disintermediate them from the online shopping experience.

    Published on: June 7, 2021

    The New York Times has a piece about the challenges that grocers face as they try to live up to online customers' expectations and still make a buck.

    "The pandemic prompted millions of Americans to buy their groceries online and pick them up curbside or have them delivered," the Times writes, which means that "grocery companies are using tools that promise to map workers’ routes through stores and track their speed and accuracy, bringing metrics typically associated with warehouse jobs into local grocery aisles. Pickers, in turn, find themselves doing work that can be physically taxing, mentally stifling and increasingly guided by automation and technology … Online orders are costly for grocers, which already have incredibly thin profit margins and now find themselves building infrastructure to perform a task previously done by customers. Many customers expect the service to be cheap and fast, which requires labor."

    The Times adds:  "While many consumers will likely return to stores as the pandemic abates, more than a third of online grocery shoppers said in a recent survey from Coresight Research that they expected to continue shopping that way."

    You can read the entire piece here.

    Published on: June 7, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Wall Street Journal reports that Google has agreed to pay a fine of more than a quarter-billion dollars to resolve an antitrust case brought by French regulators who accuse the company of abusing "its leading role in the digital advertising sector."

    According to the story, "France’s competition authority said Monday that, in addition to imposing the fine, it has accepted Google’s proposed commitments to settle the case, which include promises to make it easier for competitors to use its online-ad tools.

    "The authority also alleged other forms of self-preferencing between Google’s advertising-technology tools, including AdX’s offering better interoperability options to DoubleClick for Publishers.

    "Google’s commitments will be binding for three years, the authority said."


    •  CNBC has a piece about Teladoc Health CEO Jason Gorevic, who was recently asked about the threat Amazon poses in health care, and responded, “Based on the fact that it has one enterprise client of 385 employees, it is overrated."

    Maybe.

    But CNBC writes that while Gorevic is entitled to be confident about his company's ability to compete with and beat Amazon in the virtual health care segment, it also would be prudent for him to keep an eye on the disruption-minded competitor.

    While Amazon Care, the app-based system first designed to serve Amazon's own employees, has indeed only signed up one outside client, it "is expected to expand to its own employees in all 50 states this summer. It has been adding workers faster than any company in history, more than 500,000 in 2020. It also has had a deal with employer health provider Crossover Health for in-person employee health clinics that continues to expand across states with a goal of putting these clinics within a few miles of all Amazon employees, especially in light of the attention its workplace injury rates have received."

    There are a lot of moving parts in the segment that could have an impact on both dedicated telehealth companies as well as a company like Amazon that sees a disruptive opportunity.  Like, to what degree will the approach maintain traction in a post-pandemic environment?  Will there be consolidation in the segment that will affect different companies' ability to compete?  How these scenarios play out will have an impact on health care in general and the retailers that want to play a role in that ecosystem.


    •  From Bloomberg:

    "Amazon.com Services has no obligation to pay fulfillment center workers for time spent undergoing mandatory COVID-19 screenings, which benefit the public in general, the company says in a motion to dismiss a would-be class-action lawsuit filed in the Eastern District of California.

    "The required screenings, conducted in accordance with government regulations and guidance — not just for employees, but for all visitors — aren’t compensable 'work' under the Fair Labor Standards Act because they aren’t primarily for Amazon’s benefit, the Thursday motion says. According to Amazon, the screenings benefit everyone, and its benefit is merely incidental.

    "Even if considered work-related, the pre-shift health screenings are 'preliminary' to their principle activities, Amazon argues, likening them to the security screenings the U.S. Supreme Court found not compensable under the Fair Labor Standards Act."


    •  Fortune reports that Amazon is announcing "a major expansion of its 'returnship' program, which recruits and provides paid job training to candidates who have left the workforce for a year or more - usually meaning women who stopped working to take care of young children or other relatives.

    "Big tech and finance companies have offered returnships for more than a decade, on a limited basis; Amazon started piloting them in 2019, and has since hired more than 30 corporate employees who have gone through its paid return-to-work training.

    "But now - after a year in which the pandemic closed schools and day-care centers, and decimated industries that rely on majority-female workforces - Amazon is making what one expert calls the largest ever commitment to returnships by a single employer. The e-commerce giant will hire up to 1,000 people to go through its paid return-to-work training 'in the next several years'."

    Published on: June 7, 2021

    •  The Associated Press reports that Walmart has announced that it will close all its US stores on Thanksgiving this year, following a similar announcement by Target.

    Walmart said on Friday that "it wants to give workers time off for all their 'hard work and dedication' to the company."

    The AP writes:  "The move shows how the pandemic will have lasting effects on the retail industry's strategies, even as the health virus ebbs. For almost a decade, Black Friday store shopping had been kicked off with big crowds on the Thursday of Thanksgiving and expanded into Friday. However, last year, given safety concerns, most stores were closed on Thanksgiving.

    "Walmart, like other stores, successfully pushed more sales online to reduce crowds in its stores. But, even as safety protocols relax, the Bentonville, Arkansas-based retailer apparently believes that not having the Black Friday kickoff on Thanksgiving won't hurt its business."

    Published on: June 7, 2021

    •  Reuters reports that Tesco and Carrefour are not going to extend a joint purchasing alliance beyond the original three-year term.

    The story says that the agreement was designed "to allow Carrefour and Tesco to cut prices and expand ranges of their own-label products."  

    However, Reuters writes, "Carrefour has been keen to show it can grow by itself, after its potential takeover from Canadian rival Couche-Tard unravelled this year following French government opposition."  


    •  Staples is making yet another bid to acquire Office Depot, making a $1 bid offer for its consumer business, which consists of Office Depot and OfficeMax stores.

    The New York Times reports that "Staples tried to buy all of Office Depot for more than $2 billion in January, but Office Depot rebuffed those efforts. Office Depot’s business-to-business unit comprised about half its $10 billion in sales last year … Staples and Office Depot have tried tie-ups before in hopes of gaining scale and becoming the country’s singular office supply store. But the retailers abandoned efforts to combine in a $6.3 billion deal in 2016 after the Federal Trade Commission sued to block the proposed merger on antitrust grounds.

    "The retail landscape, though, has changed significantly since then, given the rise of Amazon and other online retailers. Staples, sold itself to the private equity firm Sycamore Partners in 2017 for $6.9 billion."

    Published on: June 7, 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 34,210,782 Covid-19 coronavirus cases, resulting in 612,366 deaths and 28,122,737 reported recoveries.

    Globally, there have been 174,064,740 total cases, with 3,744,513 resultant fatalities, and 157,083,929 reported recoveries.  (Source.)


    •  The Centers for Disease Control and Prevention (CDC) says that 63.5 percent of the US population has received at least one dose of vaccine, with 52.8 percent being fully vaccinated.


    •  Texas News Today reports that "United Airlines will require new employees to prove they have been vaccinated against the new coronavirus this month, following a similar move by Delta.

    "Under the new rules, external candidates who have been offered a job offer after June 15 must ensure that they have been fully vaccinated by the start date, said a Chicago-based airline."


    •  The Seattle Times reports that King County, Washington (which includes Seattle), public health officials have concluded that "of King County’s recent COVID-19 cases, 97% had occurred in unvaccinated people."

    This effectively means that "the only people still catching coronavirus here in King County are people who haven’t gotten the shots," the Times writes.  "It also means the disease that just a few months ago threatened the entire nation is now almost exclusively circulating among a shrinking few."

    Published on: June 7, 2021

    Last week we took note of a Wall Street Journal report about how "the tight labor market is hampering new restaurant and supermarket openings, putting a potential check on growth in a food industry that is being reshaped by the pandemic.  'Many food sellers are adding stores to capitalize on high consumer spending as Americans emerge from a year spent largely at home. But grocers and restaurants say they are struggling to hire all the workers they want for these stores. They are adding perks and bonuses to entice job seekers and in some cases delaying openings'."

    I commented, in part, that at least some of the employees not going back to work "are the same employees called 'essential' not too long ago.  It may be that they are demonstrating exactly how essential they really are."

    One MNB reader wrote:

    This whole "essential worker" movement is a farce. I am/was considered an essential worker because I work the frontlines in retail.  I've been doing it for nearly four decades.  We were considered essential for basically two months when we got a pay bump.  After that, it was "thanks, but the company will go bankrupt if we keep appreciating you".  Say goodbye to the pay bump, and, yet, CEO's were paid a kings ransom for a job well done.  Now companies have boosted starting pay for new employees and the rest of us who have been here all along get nothing extra … By the time I retire in the next few years, I'll have gone full circle back down to minimum wage.

    In my commentary, I wrote:

    Retail executives like to say that we'd all be better off if increases in the minimum wage were left to the demands of the marketplace as opposed to being determined by legislative action.  In some ways, that's what happening now … though not entirely, since the extended unemployment benefits are an act of government that are having an impact on the employment situation.

    That said, we've just gone through a year in which the pandemic had a tectonic impact on the lives and careers of almost everybody.  It may take some time for things to regain a sense of balance.

    That said, it may be that in some cases, some workers are feeling a little betrayed by the companies where they worked.

    Fast Company has a story based on a preliminary report from the Economic Policy Institute, which each year reports on CEO compensation trends based on data from the 350 largest firms:

    "At the start of the pandemic, some CEOs announced, to much fanfare, that they’d give up their salaries in order to protect their companies from layoffs or closures. But those gestures did little to curb the trend of soaring CEO earnings (because salary is often just one component of CEO compensation). In 2020, what CEOs took home rose nearly 16%, according to preliminary data, while the average worker’s compensation rose just 1.8%."

    It may be that some employees are looking at that disparity and are wondering why they're being demonized by looking out for themselves and their families."

    One MNB reader wrote:

    I find this type of rhetoric somewhat disturbing.  The issue I see here is that people are trying to tell other people that they make too much money and must share it.  Well, my answer is a resounding NO.  No one has the right to tell anyone that they make too much or enough.  The individual is the only one that can make that determination for themselves.  The individual has their own drive to fulfill their needs and wants.  So, to all those that don’t agree I say, “ Hey, I think you make too much and need to reduce your income, so I’m going to do that for you”.  Don’t worry I’ll figure out how much and let you know.  You’re welcome.


    We also had a story last week about how a number of companies are tying executive compensation to specific goals related to diversity and inclusiveness.

    I commented:

    This isn't just political correctness.  In the end, investors and boards of directors are interested in return on investment, and as one expert tells the Journal, "there’s a growing body of evidence that shows that companies that have diverse teams outperform companies that are not diverse, whether they’re looking at operating performance or financial performance or innovation."  Which makes total sense.

    Not everyone agreed.

    One MNB reader wrote:

    Seriously!  Now Executives are going to get incentive pay for hiring minorities?!? 

    Come on now!  Where does this end?  Talk about discrimination!! 

    How about “Executives/Managers are retrained to hire the most qualified candidates?

    I spent 34 years in CPG Sales Management. I also did interviews and hiring. I’ve seen things change dramatically over the years. Some of those changes did lead to more diversity. However, eventually it led to reverse discrimination. HR would insist on hiring minorities and women over White Males. This was blatant!  So, what started out as becoming more diverse, ended up with reverse prejudice. I would suggest that good intentions have become excuses for hiring and even worse, promoting less skilled and at times incompetent people over more qualified ones in the name of “Diversity”. 

    In my humble opinion, it has defeated its purpose. 

    But, what do I know?  I only spent 34 years in Major Fortune 100 CPG’s Company, and 45 years in the business world. I’m just a old retired White Man.


    Regarding Target's promotional plans, one MNB reader wrote:

    I saw the news on Target Deal Days and meant to email you earlier about my experience using the Target website a few weeks ago.

    I had some gift cards from Christmas, so I loaded them on the website and figured I would use them at a later date.

    So a few weeks ago I had to get some shoe in-soles and a few other small things... needless to say my bill came to like $28 and for the life of me I couldn’t figure out how to ship it.  The website wouldn’t let you ship anything under $35- you couldn’t even pay extra for it!

    So then I had to try to find some small item for like $6 or $7 bucks- I figured oh I’ll get some mints I like…nope couldn’t do that- some of those are only in-store and can’t be shipped and some are out of stock, so finally I found some massive bag of minty gum they would ship.  When I got to the checkout you could ship the items together and save some money- so I said sure why not- I’m not in a rush for these.   And I ordered on a Thursday…my items didn’t arrive at my house till almost a week later (the next Thursday) and arrived separately.   It was a horrible user experience.  I’ll stick with Amazon.  There’s no online sale Target could run at this point to get me to use that website again.   


    We had a story the other day about how Weis Markets announced that "it will offer free virtual cooking classes for preschool- and elementary-aged children and adults throughout the summer.

    One MNB reader wrote:

    This is an excellent opportunity for retailers to market the “ better for you “ options to the up-and-coming consumer.  Focus and advertising in this direction would provide more immediate results and create a greater sustainable direction.


    And, reacting to what we said last week about how Denver-based retailer Tony's Market communicated with its shoppers about any potential impact of a ransomware attack on JBS, the world's largest meat processing company, one MNB reader wrote:

    Agreed. Wholeheartedly. More retailers should take this approach yet the bureaucracy often gets in the way of fast, transparent responses.