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: June 10, 2021

    Go figure. The Record Industry Association of America says that vinyl record sales grew 29% to $626 million during 2020 - and surpassed compact discs in sales revenue.  KC believes that the sudden interest in stacks and stacks of wax and tracks offers some valuable lessons for retailers.

    Published on: June 10, 2021

    The New York Times reports this morning about best-selling author Dave Eggers ("The Circle"), who has a new novel coming out this fall called "The Every."

    The hardcover version will be sold in independent bookstores around the country - but not on Amazon.  The paperback and audio version will come out six weeks after the hardcover, and will be sold on Amazon.

    The reason?  “I don’t like bullies,” Eggers says.  "Amazon has been kicking sand in the face of independent bookstores for decades now.”

    The Times writes that "the novel follows a former forest ranger and tech skeptic, Delaney Wells, as she tries to take down a dangerous monopoly from the inside: a company called The Every, formed when the world’s most powerful e-commerce site merged with the biggest social media company/search engine."

    Eggers says that "one of the themes of the book is the power of monopolies to dictate our choices, so it seemed a good opportunity to push back a bit against the monopoly, Amazon, that currently rules the book world.  So we started looking into how feasible it would be to make the hardcover available only through independent bookstores."

    It wasn't easy, but they got it done … and the result could be an Eye-Opener.

    Published on: June 10, 2021

    The Wall Street Journal reports this morning that "US consumer prices continued to rise rapidly in May as the economic recovery picked up, reflecting a surge in demand along with shortages of labor and materials.

    "The consumer-price index surged 5% from a year ago, the highest annual inflation rate in nearly 13 years.

    "The index measures what consumers pay for goods and services, including clothes, groceries, restaurant meals, recreational activities and vehicles.

    "The annual inflation measurements are being boosted by comparisons with figures from last year during Covid-19 lockdowns, when prices plummeted because of collapsing demand for many goods and services. This so-called base effect is expected to push up inflation readings significantly in May and June, dwindling into the fall."

    Published on: June 10, 2021

    The Washington Post reports that the world's largest meat supplier, JBS, when faced with a ransomware attack that temporarily stopped production at nine processing plants in the US as well as other facilities, paid the equivalent of $11 million to the hackers to protect its data and customers.

    The Post writes that JBS paid the ransom after its plants restarted their operations, and JBS USA CEO Andre Nogueira described it as "a very difficult decision to make for our company and for me personally."

    The story notes that "the FBI attributed the attack to a Russian-linked ransomware group known as both REvil and Sodinokibi."

    Some context from the Post story:

    "Ransomware attacks have dramatically increased across the country in the past two years, and have recently hit high-profile targets including JBS and Colonial Pipeline. The latter caused long lines and shortages at gas pumps on the East Coast and sent government regulators scrambling to address cybersecurity in both public and private realms.

    "Colonial paid about $4.3 million in bitcoin to cybercriminals as a result of its ransomware attack, though federal authorities said this week that they had recovered more than $2 million."

    KC's View:

    This appears to be a new reality of the world in which we live - that at any moment, hackers who may be state-sponsored are able to bring businesses and utilities to a halt, not to mention get into US government systems.

    One wonders why US hackers haven't figured out a way to empty Putin's bank accounts, just as a way of demonstrating that we can do it, too.  (Maybe we can't?)

    Published on: June 10, 2021

    A new convenience store has opened in San Diego that its developer describes as "an automated shopping experience" and "shared pantry for neighborhood shoppers" that combines checkout-free technology with what it is calling a "Last Step delivery offering."

    The Valet Market, developed by Accel Robotics, is located in the high-end Vantage Pointe apartment complex, and allows shoppers to use a mobile app to enter the store, take items off the shelves and then leave without having to go through any sort of checkout, in the style of Amazon Go.  "Advanced technologies including computer vision, shelf-level sensors and artificial intelligence automatically track products as shoppers remove them from the shelves," the company says.

    Valet Market's fully-automated shelves feature everyday convenience items as well as locally-sourced produce, dairy products, and baked goods. (PRNewsfoto/Accel Robotics)
    Valet Market is a new way to shop for everyday items. After downloading the app, consumers simply use their phone to check in to the store, grab the items they want, and walk out. A receipt is then sent to their phone.

    The 1,500 square foot store is open to the general neighborhood from 9 am to 9 pm, but will be accessible to complex residents on a 24-0hour basis.  The store also gives "residents at Vantage Pointe … the added convenience of having items delivered directly to their door in addition to 24/7 access to in-store shopping."

    "We're experiencing incredible momentum around delivering autonomous shopping solutions for enterprise customers across the retail sector," says Brandon Maseda, CEO and co-founder of Accel Robotics, in a prepared statement.  "With Valet Market, we have the opportunity to showcase our next-generation, contactless shopping experience directly to consumers while providing our real estate partners with a cutting-edge, innovative tenant amenity."

    KC's View:

    The interesting thing about this concept is that it could be deployed in a variety of scenarios, and could allow a retailer to use it to extend its physical footprint to neighborhoods not being served by its full-sized stores, creating a network of service that, intertwined with an effective e-commerce offering, could be part of an ambitious reimagining of how to build a business.

    Think about it.  Kroger is going to Florida with what essentially seems to be a pure-play e-commerce offering, but it could units like these to give it a physical presence.  It would be an unconventional approach to building a retail footprint, but could be very effective.

    Published on: June 10, 2021

    PCC Community Markets yesterday said that it will delay the opening of a planned downtown Seattle store, originally scheduled for this summer, until early 2022.

    The reason, the Seattle Times writes, is "a shortage of workers and likely customers."

    According to the story, "PCC CEO and president Suzy Monford cited company concerns about finding the 100 or so workers necessary to staff a new store when the natural-foods retailer already has vacancies at its existing 15 locations.

    "'Our focus is on filling those roles first' at existing stores, Monford said in a statement.

    "But PCC also worried about a lack of foot traffic from office workers in downtown office buildings, notably the Rainier Square tower itself. Many remain largely empty due to employers’ work-from-home policies."

    The 20,000 square foot store will be in the Rainier Square project located on the block between Union and University and Fourth and Fifth in downtown Seattle.

    KC's View:

    This likely is going to be a problem we'll see play out again and again in coming months, especially in urban locations that have seen a certain amount of flight because of Covid, and where there remains some concern about going back to work.  But I have top believe it is just temporary, and by fall we'll see a lot of these conditions receding - assuming, of course, that the pandemic continues to recede, as well.

    Published on: June 10, 2021

    The Washington Post has an interesting piece this morning about how staff-strapped businesses in a number of markets found that they could attract workers by raising their own minimum wages to $15 an hour.

    The Post writes that "across the country, businesses in sectors such as food service and manufacturing that are trying to staff up have been reporting an obstacle to their success — a scarcity of workers interested in applying for low-wage positions.

    "The issue has raised concerns about the strength of the country’s recovery as coronavirus cases abate, with the economy still down more than 7.5 million jobs compared with before the pandemic.

    "Republicans have blamed enhanced unemployment benefits for the shortage; Democrats and most labor economists say the issue is the result of a complicated mix of factors, including many schools having yet to fully reopen, lingering concerns about workplace safety and other ways the workforce has shifted during the pandemic."

    But, when a number of businesses went to $15 an hour, they found that, in the words of one owner, "“It was like a dam broke."

    You can read the piece here.

    Published on: June 10, 2021

    Guiding Stars, which 15 years ago started offering objective at-shelf nutrition guidance to consumers by ranking qualified products as good, better or best, said yesterday that it is giving its graphic look a refresh.

    “As we’re emerging from the pandemic, consumers are more interested in health and nutrition then ever as they care for themselves and their families and manage health conditions, as well as look to boost their immune systems,” said Julie Greene, director of Guiding Stars. “As the focus on healthy eating intensifies and Guiding Stars nears our fifteenth anniversary, it was the right time to freshen our approach and make it even easier for consumers to make good choices.”

    The new graphic ingredients, the company says, "come together to demonstrate a positive approach to communicating nutrition guidance, which is reinforced by the gold star. In consumer testing, the new mark was widely understood as a guide for nutritious foods … The new look-and-feel is now integrated into the Guiding Stars website, which also offers insights and tips on food and nutrition. Consumers will begin to see the new branding on product packaging, in stores and on online shopping platforms for subscribing grocers and other clients beginning this summer."

    KC's View:

    From the beginning, I've always been a fan of the simplicity offered by Guiding Stars.  After 15 years, it probably makes sense to freshen things up a bit.

    Published on: June 10, 2021

    •. Reuters reports that Amazon "is fielding bids to replace U.S. lender JPMorgan Chase & Co (JPM.N) as the issuer on its co-branded credit card portfolio … 

    Amazon and JPMorgan first issued a joint card in 2002 and their offerings have long operated on the Visa Inc network."

    The story says that "American Express Co and Synchrony Financial were among those bidding on the portfolio … which contains more than $15 billion in credit card lending."

    •. Hy-Vee said yesterday that it "has signed a multiyear partnership with Google Cloud to stay on the cutting edge of digital technology and drive new and unique innovation for its customers – both in store and online. The company is utilizing a suite of services powered by Google Cloud to make online shopping easier for customers who use its Hy-Vee Aisles Online services, to integrate Hy-Vee’s virtual dietitian services, and to enable customers to schedule vaccinations online including the COVID-19 vaccine, among other offerings.

    "While Hy-Vee has worked to stay at the forefront of digital shopping trends, the COVID-19 pandemic affected grocery shopping in many ways, causing more consumers to shop online and create higher demand in its virtual shopping space. Utilizing Google Cloud’s solutions, localized information and features will make it easier for customers to complete their grocery shopping online and allow Hy-Vee to provide more personalized service, easier ordering, pickup and delivery, and predictive shopping carts."

    "The pandemic accelerated many digital initiatives for Hy-Vee as consumers shifted the way they shopped at our stores,” said Aaron Wiese, President, Digital Growth, and Co-Chief Operating Officer at Hy-Vee. “Google Cloud is helping us provide a unique and more personalized experience as we work to integrate all our digital platforms and look to further simplify the customer’s interaction with our services – whether that be in our aisles in person or online.” 

    Published on: June 10, 2021

    • The Wall Street Journal this morning reports that "jobless claims declined to a pandemic low last week, a sign companies are hesitant to lay off employees as the U.S. economy quickly recovers.

    "Unemployment claims fell to 376,000 last week from 385,000 a week earlier, the Labor Department said Thursday, bringing claims to the lowest level since the pandemic hit last spring. Claims remain well above weekly filings of just over 200,000 logged before the pandemic shut down large parts of the economy last March. But they have steadily declined in recent weeks as rising vaccination rates and easing business restrictions spur economic activity."

    CNBC reports that "Chipotle Mexican Grill has hiked menu prices by roughly 4% to cover the cost of raising its workers’ wages."

    According to the story, "CEO Brian Niccol said the company prefers not to raise its prices but that the move made sense in this scenario.

    "The timing of the price hikes coincides with rising ingredient costs across the restaurant industry as suppliers grapple with the return of demand. For now, Chipotle isn’t planning on further price increases."

    •. The Wall Street Journal this morning reports that Starbucks "is running short in some stores on basics including cups and coffee syrups, baristas said, as the chain grinds back to full operations in the wake of the Covid-19 pandemic.

    "Cake pops, cup stoppers and mocha flavoring are among the items that have run out in places at times, some baristas said. The company is pausing production on several lower-sales items to focus on higher-selling ones, one person familiar with those plans said.

    "A Starbucks spokeswoman said shortages of some items are temporary and vary by store and market. The company has temporarily removed from its app oat milk and beverages made with the dairy substitute until it restocks its inventory, she said."

    Published on: June 10, 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 34,264,727 cases of the Covid-19 coronavirus, resulting in 613,494 deaths and 28,254,091 reported recoveries.

    Globally, there have been 175,225,510 coronavirus cases, with 3,778,523 resultant deaths and 158,747,958 reported recoveries.   (Source.)

    • The Centers for Disease Control and Prevention (CDC) says that 63.9 percent of the US population age 18 and older has received at least one dose of vaccine, with 53.3 percent being fully vaccinated.

    • The New York Times offers "the latest about the rules in the United States on vaccinations in the workplace.

    "Employers can require employees to get vaccinated and offer incentives to do so.

    "Federal laws do not prevent companies from requiring employees to provide documentation or other confirmation of vaccination, though they must keep that information confidential. Employers can also distribute information to employees and their family members on the benefits of vaccination, as well as offer incentives to encourage employees to get vaccinated, as long as the incentives are not coercive.

    "If an employee will not get vaccinated because of a disability or a sincerely held religious belief, the agency said, he or she may be entitled to an accommodation that does not pose an 'undue hardship' on the business. The agency said examples of reasonable accommodation could include asking the unvaccinated worker to wear a face mask, work at a social distance from others, get periodic coronavirus tests or be given the opportunity to work remotely."

    Still, the Equal Employment Opportunity Commission guidelines recommend employers to keep in mind that some individuals or demographic groups may face more barriers to receiving a vaccine than others.

    From the Wall Street Journal:

    "A growing number of states are slowing the pace of their reports on key pandemic data, including cases, deaths and hospitalizations, concerning some epidemiologists and researchers, who say such moves may be too soon given how crucial data is for spotting outbreaks.

    "They worry lagging data will leave public-health leaders with blind spots as new variants of the coronavirus circulate and many parts of the world battle rising cases … According to data collected by Johns Hopkins University, half of states are no longer providing daily reports. Some have gone from reporting data every day to five days a week. At least three states have lessened that frequency to three times a week, and Florida and Alabama this week shifted to a once-a-week schedule."

    • H-E-B said yesterday that it will no longer require masks in its stores, saying that fully vaccinated people won't have to wear them … though there is no way to determine whether people are being honest about their vaccination status.

    When Gov. Greg Abbott eliminated the statewide mask mandate back in March, H-E-B initially followed suit, but then backtracked when employees objected.  Until now, masks have been required, but the requirement was not be enforced because H-E-B wanted to avoid conflicts between staffers and shoppers.

    Published on: June 10, 2021

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    •. FMI-The Food Industry Association yesterday came out against "the U.S. Senate’s passage of S.1260, the U.S. Innovation and Competition Act," which it said "includes language from the Country-of-Origin Labeling (COOL) Online Act that would create duplicative and burdensome requirements for online sales administered and enforced by the U.S. Federal Trade Commission."

    FMI said that it is "strongly opposed to the creation of these new requirements, as they would conflict with the United States Department of Agriculture’s (USDA) existing COOL program and be unworkable for agricultural producers, food manufacturers, and grocery retailers."

    Published on: June 10, 2021

    Yesterday we took note of a Washington Post report about Oxnard, California, where the city council has "unanimously approved a measure last week to give anyone who worked at least three months in a grocery store or pharmacy during the first 12 months of the coronavirus pandemic a $1,000 bonus," using "$2.5 million in stimulus money allocated to the city by the American Rescue Plan."

    Oxnard officials had considered following the path taken by a. umber of other west coast cities, imposting an hourly hazard pay mandate on retailers of a certain size, which businesses have decried as making it much harder to keep some stores economically viable.  However, the city took this approach once it was determined that "there was a mechanism in the stimulus law for doing such a thing.

    I commented:

    At least this city is putting its money where its mouth is.  Workers get a nice little bonus, but retailers don't get screwed in the deal.  Works for me.

    One MNB reader wrote:

    You're absolutely right.  Only taxpayers get screwed.

    I don't see it that way.  The money was part of recovery funds being distributed by the federal government to communities that needed it to drive their recoveries from a pandemic that threatened their survival.  These workers were essential to keeping people fed and healthy during that pandemic.   As a taxpayer, I see this as an investment that didn't threaten the viability of retail businesses but did help people who needed it.

    I'm good with that.

    Regarding the steps that Amazon is taking in healthcare that could be putting traditional drug chains at risk, one MNB reader wrote:

    The Amazon threat is not about taking prescriptions from the CVS’s of the world but more about taking more away from the traffic in-store.  The shopper that says“ I’ll grab something else while getting my script” is where they make their money.  Scripts bring people to the store.  So with less people, less impulse sales, less $$. 

    Yesterday we commented on a Boston Globe piece about how supermarket chain Roche Bros. is getting some grief for having decided to outsource deliveries to an outside contractor called The Grocery Runners, which is using gig workers to make deliveries in their own cars:

    I think the Globe did a reasonably fair job of laying out the various arguments, though the headline, which quoted a former driver as saying, "I thought I was a hero, but I’m expendable," didn't do the retailer any favors.  (It appears that Roche Bros. management did not provide any quotes for the story.)

    Burt Flickinger makes an excellent point, which in many ways is sort of the closing argument - at a time when inflation is causing prices to go up, and labor is getting more expensive, an independent retailer like Roche has to find ways to keep prices down, which means looking for efficiencies wherever and whenever possible.  That may be the only way to compete with retailers that have deeper pockets and big ambitions to dominate the market.

    That said, my biases on this subject have been stated here many times - I think that retailers do run a risk of being disconnected from an important part of the customer experience when they outsource delivery services.  But it may be that the folks at Roche would argue that at this time, it is a tough call, but one that has to be made.

    MNB reader Chuck DeZutter disagreed:

    Aside from the labor issues, I think your comments around the Roche Brothers outsourcing delivery are showing your (and my) age.

    I have four young adults in my household ranging from 17 – 23 years old.  All of them have part time jobs in the retail food industry and based on the deliveries that show up on my doorstep are very versed in leveraging e-commerce for their retail needs.  When I talk to them about their e-commerce experiences, as I often try to do to gain insight, they have a very different view about delivery.  They view the delivery aspect of e-commerce as a separate entity to the retailer or service provider.  If their mobile food order is late or has an issue, they contact the mobile food company, and view it as their issue – not the restaurant they ordered from.  If there is a problem with a UPS or Fedex delivery, they look at it as a failure of the delivery service, not the retailer that engaged the delivery service.  In their view, the delivery service is responsible for delivery and the retailer is responsible for the product.

    These young adults don’t know a world where e-commerce wasn’t an option, as us older folks do, so they have the view that outsourced delivery isn’t an extension of the retailer – but a standalone service of its own.  Amusingly, when the pizza was late last week, they really didn’t know who to call, they didn’t realize that the pizza delivery driver was employed by the pizza place and wasn’t outsourced.

    While your thoughts and views about outsourced delivery may be valid when applied to us older folks – that application may change as younger folks gain more spending power.

    I agree that young people don't care about who is making the deliveries … which is exactly my point.  The retailer is being disintermediated out of the experience, which could be problematic down the road if the delivery company gets into the retailing business.

    Albertsons and Fetch Rewards announced that they will roll out a new loyalty/rewards program to more than 2,200 supermarkets under 20 different banners.

    I commented:

    I tend to have two priorities when it comes to retailer loyalty programs.

    First, it needs to demonstrate that the retailer is loyal to the shopper, not just be a vehicle for discounts that try to "buy" loyalty.

    And second, it should reinforce the core retailer value proposition;  I like it when a program creates a kind of flywheel, as opposed to have them building value for other brands.

    One of my recent favorites was a program developed for Price Chopper by tcc, which allows shoppers to use points to help kids pay off student debt - this just struck me as a big, enormously relevant idea.

    It will remain to be seen if the Albertsons-Fetch program meets my priorities.  On the other hand, Albertsons may not give a crap about my standards, figuring, what the hell does he know.

    One MNB reader responded:

    I’m not sure the ABS-Fetch program will check the box on your priorities.  I just noticed a Fetch offer in a local grocery ad for a specific brand’s products where the customer has to buy $15 worth of product, snap a picture of the receipt, text the image, and get a $5 gift card of their choice. So, is it really a loyalty program for a retailer if others offer the same service. Does it meet either of your priorities?   

    Maybe they don’t care about your standards, but they’re ones many believe should be adhered to with a loyalty program.