business news in context, analysis with attitude

Published on: June 17, 2021

Victoria's Secret, which is being spun off from L Brands later this year, is getting a new board of directors.  It is made up of seven women and one man (who may be there for diversity's sake).  KC argues that this is may be an example of choosing leadership that reflects the consumer base as opposed to, at least in this case, is more interested in objectifying the people who purchase its products.

Published on: June 17, 2021

Axios Future shares insights from two prominent economists - Daron Acemoglu of MIT and Pascual Restrepo of Boston University - who argue that "automation has been the single biggest factor in America's widening income inequality over the past 40 years," a trend that is likely to continue as automation grows.

The report says that "the real wages of less educated workers have declined significantly over the past four decades: The real earnings of men who lack a high-school degree are 15% lower than they were in 1980.

"Over the same time, real wages for workers with a postgraduate degree — and to a much lesser extent, those with a bachelor's degree — rose sharply."

The report also says that the economists calculate "that 50-70% of changes in U.S. wages since 1980 can be accounted for by wage declines among workers who specialize in routine tasks in industries hit by rapid automation."

Which is an Eye-Opening perspective on a trend that seems likely to have an impact on any business that depends on being able to sell stuff to people who have money.

Published on: June 17, 2021

CNBC has an interview with Albertsons president-CEO Vivek Sankaran in which he says that "the U.S. consumer has, so far, been able to handle rising inflation."

"The inflation is higher. It is, let’s say, between 3% and 4% if you just do the math on different months and normalize for it … It used to be typically 1.5%, so it’s a little bit higher," Sankaran says, adding, “That said, it’s happening in an environment where the consumer is really strong. We haven’t seen the consumer affected yet by that level of inflation."

In characterizing the strength of ther consumer coming out of the pandemic, Sankaran says that certain behaviors seem to persist:  “They traded up on meats, buying prime beef. They traded up to shellfish. They traded up to premium wines, and they have stayed with that behavior.  Even today, we are selling so many flowers.”

Published on: June 17, 2021

The Seattle Times reports that in Seattle, Amazon and Sound Transit have announced a collaboration "to speed up development of as many as 1,200 affordable homes next to light-rail stations, using vacant lots left over after construction.

"The e-commerce giant is establishing a $75 million low-interest loan fund for developers, and donating $25 million for site preparation, engineering and permits."

At the same time, the story says, Amazon’s Housing Equity Fund announced "similar affordable-housing contributions Wednesday of $125 million around Washington, D.C.-area transit stations, and $75 million along the WeGo bus-rapid transit network in Nashville.

"It’s the latest round in Amazon’s $2 billion housing program, that included a $185.5 million commitment in January to buy 470 apartments in Bellevue, and provide another 530 affordable units across the region."

Catherine Buell, head of community development for Amazon, says that "as developers repay the loans, the money would be recirculated for future financing."

The housing will be targeted at "households earning between 30% and 80% of median income,” Buell said.

Published on: June 17, 2021

ZDNet reports that "WebsitePlanet, together with researcher Jeremiah Fowler, revealed the discovery of an online database belonging to CVS Health. The database was not password-protected and had no form of authentication in place to prevent unauthorized entry.

"Upon examination of the database, the team found over one billion records that were connected to the US healthcare and pharmaceutical giant, which owns brands including CVS Pharmacy and Aetna. 

"The database, 204GB in size, contained event and configuration data including production records of visitor IDs, session IDs, device access information -- such as whether visitors to the firm's domains used an iPhone or Android handset -- as well as what the team calls a 'blueprint' of how the logging system operated from the backend."

According to the story, CVS Health confirmed the breach, said it took place several months ago, and "said the database was managed by an unnamed vendor on behalf of the firm and public access was restricted following disclosure."

"In March of this year, a security researcher notified us of a publicly-accessible database that contained non-identifiable CVS Health metadata," CVS Health told ZDNet. "We immediately investigated and determined that the database, which was hosted by a third party vendor, did not contain any personal information of our customers, members, or patients. We worked with the vendor to quickly take the database down. We've addressed the issue with the vendor to prevent a recurrence and we thank the researcher who notified us about this matter."

Published on: June 17, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Stater Bros. said yesterday that it has made a deal to expand its "digital grocery presence with a retailer-branded and -controlled online shopping experience that will scale with its business."

“Now more than ever, our customers are looking for the convenience of shopping online,” said Pete Van Helden, CEO, Stater Bros. Markets, in a prepared statement.  “We see this as an opportunity to build stronger relationships with our shoppers through an eCommerce journey that truly embodies our brand’s promise of excellence in food and service. With the Mercatus platform, we’re excited to offer a wide range of services and options to make online shopping even more rewarding.”

The new e-commerce package is powered by Mercatus.

The announcement says that the "solution will include an online shopping site that’s fully responsive for optimized browsing on any device and a complete eCommerce mobile app. Customers will be able to shop the full range of Stater Bros. products, including popular prepared meals and customized selections like deli counter foods. Customers can choose from contactless curbside pickup or delivery, and will have the additional option to pay online with SNAP EBT or EBT Cash benefits."

I think it is fair to say that Stater Bros. has some catching up to do - I'm not sure that past leadership believed that e-grocery would catch on to the degree it has, and the pandemic probably hastened the epiphany.  But I am heartened by the degree to which the retailer and its solutions provider are emphasizing "retailer-branded and -controlled," because it means it is putting a priority on owning the experience in a way that builds the retail brand, as opposed to disintermediating it.

Published on: June 17, 2021

•  Walmart said yesterday that it "is empowering people with increased access to their health data through a free, secure digital wallet that they own and decide whether to use to share their health information, starting with the COVID-19 vaccine record. The offering provides individuals with an opportunity to securely store their COVID-19 vaccine record in their pharmacy account on Walmart.com or Samsclub.com. The vaccine record can be printed, saved on a device or shared, giving people the option to use their record however they want.

"The vaccine record is a free digital version of the vaccine cards issued by the Centers for Disease Control and Prevention (CDC), including the individual’s name, date of birth, date of vaccination, vaccine manufacturer, vaccine lot number and location where they received the immunization, so people no longer have to worry about losing their paper copy. Walmart’s digital vaccine record is available to those age 18+ who received their COVID-19 vaccine at a Walmart or Sam’s Club pharmacy or a Walmart-run vaccine event."

Published on: June 17, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Brookshire Grocery Co. (BGC) announced yesterday that "it raised wages for almost 13,500 hourly employee-partners which totals more than $33 million investment in salaries. Part of this investment is the company making the extra $1 per hour in COVID appreciation pay permanent for the hourly retail and logistics employee-partners along with raising the minimum pay for several positions in retail. 

"Most hourly retail jobs will now have a minimum rate of $11 per hour. More than 30 other targeted retail positions have additional increased new minimum hiring rates. Among these targeted positions are bakery, deli and market employee-partners moving to the new minimums which equal a $2.2 million investment in these positions so they will be more competitive with the market. BGC also recently raised the minimum wages for more than 1,000 logistics employee-partners."

•  CNBC reports that "Best Buy is starting to sell luggage and outdoor grills, as it tries to take advantage of the rebounding travel industry and the popularity of investing in the home."

The retailer says that "shoppers can now find Tumi suitcases, Weber grills and other outdoor items, from patio furniture to heaters, on its website and in select stores — along with its usual mix of laptops, videogame consoles and other gadgets. Some of those items are geared toward tech purchases, such as laptop bags and a new esports collection from Tumi that can carry gaming gear.

"With the move, Best Buy joins other retailers breaking into new categories and expanding the online assortment to capture more of consumers’ attention and dollars."

Some of this I understand - it isn't a long leap from buying an outdoor audio system, for example, to buying a grill or outdoor heater.  But the Tumi thing has me a little puzzled … I think of Tumi as being upscale, and have to wonder if having its suitcases (as opposed to laptop bags) sold at Best Buy somehow diminishes the brand.

Published on: June 17, 2021

•  Albertsons announced that it has hired Jennifer Saenz, most recently PepsiCo's global chief marketing officer and president, Global Foods, to be its new executive vice president, chief merchandising officer, "responsible for all areas of merchandising within the company, including Own Brands" and "for further strengthening the company’s relationships with its brand partners."

Published on: June 17, 2021

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  The current US Covid-19 coronavirus numbers:  34,365,985 total cases … 616,150 deaths … and 28,616,495 reported recoveries.

The global numbers:  177,850,723 total cases … 3,849,870 fatalities … and 162,359,667 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 64.7 percent of the US population age 18 and older has received at least one dose of vaccine, with 54.8 percent being fully vaccinated.

Published on: June 17, 2021

I got the following email yesterday from Yin Woon Rani, CEO of MilkPEP.

(Just for context, MilkPEP - which stands for Milk Processor Education Program - is. Washington, DC-based organization that describes itself as "funded by the nation’s milk companies, and dedicated to educating consumers and increasing consumption of fluid milk. MilkPEP activities are led by a 20-member board and monitored by the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service.  MilkPEP’s robust campaign efforts aim to increase awareness for milk’s nutritional benefits and safeguard milk’s reputation against competitive claims and anti-milk messages that impact consumers’ purchasing decisions.")

Thank you for your recent on-the-ground report from the GMNC/Retail Tomorrow Mid-Year Meet-Up in Dallas, Texas. However, I wanted to point out that one of your observations is incorrect. While paraphrasing futurist keynote speaker Nancy Giordano, you made the assertion that “more than half the milk consumed in this country now comes from plants, not cows.” If you look at the latest data, you’ll see that that statement is inaccurate.

According to IRI MULO+C for the latest 52 weeks ending 5/16/21, plant-based alternative milks represent less than 10% of the total milk (dairy + plant-based) volume sold in the United States. Perhaps you misheard Giordano, or she didn’t have her facts straight, but as you can see, the number you cited doesn’t add up.

In reality, nearly every household in the United States buys dairy milk (92.9% penetration) and households that buy dairy milk tend to buy on average 30.3 gallons a year, whereas households that buy plant-based milk purchase only about 6.7 gallons a year. As you can see, that’s quite a difference. These figures come from IRI’s all-outlet consumer panel, one of the most trusted sources in the industry, which we’re happy to share with you for any future reporting you might be doing on the milk category.

To that end, you go on to state that the dairy industry isn’t willing to “embrace change, even when it threatens us.” I strongly disagree with that statement, and so do the facts. 

The dairy industry has been innovating for decades in order to meet the ever-evolving needs of American consumers. In recent years, we’ve gone to great lengths to meet consumers’ increasing demand for better health, wellness and sustainability. In fact, some of the fastest-growing milk segments provide additional health benefits. Here are the most recent numbers according to IRI MULO+C for the latest 52 weeks ending 5/16/21 versus its year ago period:

•  Health enhancements (+12.7% gallons)

•  Organic White Milk (+3.4% gallons)

•  Lactose-free (+15.9% gallons)

Let it suffice to say, the dairy industry is adapting and innovating in response to consumer needs in real time. Beyond the fact that many of our dairy processors are also deeply involved in the plant-based movement, we pride ourselves in offering consumers a wide range of cow milk varieties to choose from, including DHA Omega-3, chocolate milk, lactose-free milk; on and on. Is it any wonder that cow milk can be found in 93% of households?

Thank you again for your report, KC. The dairy industry is counting on you for accurate reporting and we’re happy to act as a source for you at any time.

Apologies for playing fast and loose with the facts in commentary that may have been overly glib.  Points taken.  

Also got some criticism yesterday about some commentary I offered about the National Grocers Association (NGA) offering its regular assessment of the role that its core constituency - independent food retailers - plays in the broader economy.  I wrote:

The ability of the independent grocer sector to remain, as NGA puts it , at the heart of the economy and the communities they serve, depends on retailers' ability and willingness to innovate, disrupt their own business models, and challenge conventional thinking about food, format and functionality.

Anything less will put the sector into perhaps irreversible decline.

 Prompting one MNB reader to write:

Most of the time we align on viewpoints and I read your comments as validation of the scope of an issue.  In this particular case, I have to call attention to the fact that your comments ignore the core issue being offered, that manufacturer favoritism of big box retailers (via trade spend, allocations, etc.) puts the independent sector at a disadvantage.  Are you trying to walk a fine line here or do you not acknowledge the core issue NGA is attempting to address?

I was not trying to walk a "fine line."  For better and sometimes for worse, I tend to trample on fine lines.  My comments were aimed at a segment of the independent retailer community that believes being independent somehow makes them morally superior to chains and enough to guarantee their survival.  (Not every independent, to be sure.  And for the record, my favorite retailers tend to be those that most folks would identify as independent.)

Since you brought it up, I will take note of a conversation I had recently with a supplier who talked about independent retailer complaints about product allocations, especially during the pandemic.  This person said that he was sympathetic to independents, but that if Walmart represents 30 percent of a manufacturer's business, then Walmart is going to get a 30 percent allocation, especially when suppliers are tight.  If Amazon represents 20 percent of its business, then it gets a 20 percent allocation.  But, for the sake of argument, if a wholesaler represents five percent of a manufacturer's business, and an independent represents five percent of the wholesaler's business, then the independent cannot really complain about allocations that match up to its percentage of the manufacturer's volume.  And I suppose the same equation could be laid out for promotion dollars/trade spend.

Is this manufacturer favoritism?  The supplier with whom I was chatting essentially said that this may not seem fair, but it actually is the very definition of fair.