business news in context, analysis with attitude

Published on: June 28, 2021

A Note from the Content Guy…

I recently had the opportunity to visit one of the most interesting retail concepts that I have encountered in recent memory, one that takes a unique retail-minded and customer-centric approach to health care.  It is called HealthQuarters, and the first unit has been opened in New York City's Greenwich Village - a distinctive effort to bring together a wide variety of wellness-oriented medical options in a single location that is designed to eliminate friction at all levels.  In short, a kind of medical miracle built for 21st century health care needs.

What initially grabbed my attention was the fact that the guy at the center of all this innovation is Bhavdeep Singh, who brings long experience in both the health care business and retail stints at Ahold and A&P.  You can see the company's website here, and there are some pictures below.

But after visiting HealthQuarters and chatting with Bhavdeep, I'm even more persuaded that this is a concept with a lot of potential - there is the opportunity here for retail partnerships that could be game changing for both the businesses and, even more importantly, the customer/patient.

I hope you'll enjoy our conversation.

Published on: June 28, 2021

by Kevin Coupe

MarketWatch has a story saying that while Amazon "has built a network of distribution centers, fulfillment centers, locker hubs, stores and more that bring the e-commerce giant within swift delivery distance to many customers," the fact remains that Walmart and Target, "with their thousands of brick-and-mortar stores, are still closer."

That conclusion was reached by the UBS Evidence Lab, which says that "Amazon delivery stations are now within 60 minutes of 77% of the U.S. population, up from 71% the previous year … But Walmart stores are within an hour of 99% of the U.S. population. And Target is an hour from 94% of the U.S. population."

There are a couple of things that people need to keep in mind.

First, these statistics are not set in stone.  Every one of these companies - plus other competitors, such as Costco - will continue to spend hundreds of millions, if not billions, of dollars working to improve their supply chains.

There was a Barron's piece over the weekend about how Walmart "is surging capital spending to $14 billion this fiscal year from just over $10 billion last year. Stores will take a backseat; the bulk of the money will go toward e-commerce, technology, and supply-chain improvements."  The point of the story was that Walmart is highly focused on becoming an e-commerce company - and proximity is a big part of that.

Second, when someone tells you that speed of delivery is not a critically important factor in terms of customer demands, don't pay any attention.  It is … and these major companies are betting it will remain so.

And third, if you are a smaller competitor without these resources, it becomes even more important for you to clarify your value proposition, becoming the retailer of choice in whatever category of product and or service at which you believe you can excel.

There's no room for average.

That's the Eye-Opener.

Published on: June 28, 2021

The Seattle Times has a story about how two delivery companies - Last Mile and Triton Transportation - have stopped serving the Portland, Oregon, market, saying that working conditions have become "unsafe" and that there has been "a deteriorating relationship with the retail giant."

"'Amazon has been nickel and diming us so bad that if we don’t make change we can no longer offer the support and incentives that thus far we have been able to provide. This leaves all of you without help to do over 200 stops while getting paid less to do so,' Tracy Bloemer, co-owner of Last Mile Delivery, wrote in a note to her drivers.  'For 2 years now, we have heard your concerns and outrage when it comes to how Amazon treats the delivery driver,' Bloemer wrote. 'We believe most of the routes are unsafe and require drivers to deliver in an unsafe manner'."

An attorney for the two companies said that "the companies are preparing to sue Amazon for 'arbitrarily, capriciously and unreasonably' changing the terms of their business relationship. He said Amazon frequently dictates new terms of its agreement with the two Oregon companies, cutting delivery fees, changing work requirements and even firing the contractors’ own drivers without notice."

Amazon has responded by saying that the two companies' claims about safety issues are "unfounded."

The Times notes that "the two companies have about 155 drivers between them, averaging 22,000 Amazon deliveries each day in the Portland area. That may not be enough to disrupt Amazon’s local deliveries and get the company’s attention. The Seattle-based company uses other delivery contractors, including the U.S. Postal Service, and has its own drivers, too."

Published on: June 28, 2021

Bloomberg reports that "Samokat, Russia’s biggest instant grocery-delivery service by orders, is aiming to be the first of its peers to take a share of the booming U.S. market.

"The founders of the St. Petersburg-based company are launching the service, to be called Buyk, in August in New York. They are targeting 10,000 orders a month there by year-end … Buyk already has agreements for dark stores -- small, centrally-located warehouses that will help it fill orders quickly -- in New York that will open in August."

Bloomberg makes the point that one of the challenges that Buyk will face in New York will be an expensive workforce - a problem that it does not have in Russia.

Published on: June 28, 2021

CNBC reports that Starbucks CEO Kevin Johnson is denying reports of shortages on key supplies, including coffee and cups, though he did say that "we’ve had some shortages in the bakery case."

According to the story, Johnson was responding to reports "that said some Starbucks stores were short on cups and coffee syrups, among other things, as traffic at Starbucks rebounds from last year’s slowdown," and comments from "an unnamed spokeswoman who said select markets were being hampered by the shortages."

Published on: June 28, 2021

The Washington Post has a long piece about how much about the dietary supplement business is unknown and/or unregulated, which has the potential of putting consumers at significant risk.

The basic problem, regulators say, is that "the Dietary Supplement Health and Education Act of 1994, or DSHEA, was created with heavy input from the supplements industry and consumers who use their products. As a result, the measure is widely seen as tilting the scales in favor of providing consumer access to supplements rather that ensuring safety. It limits government interference in the huge and growing market."

That can be a problem.  Earlier this year, Pieter Cohen, a physician at Cambridge Health Alliance, "published his 14th paper concerning dietary supplements that contained either prohibited or unlisted ingredients. This time, he and his colleagues analyzed 17 brands of sports and weight-loss supplements sold in the United States, and they detected nine prohibited stimulants in them. Almost half of the brands tested included more than one prohibited stimulant."

The core issue, the Post suggests, is that regulators do not know what is on the market, does not known what is in those products, and does not have the agency to be able to regulate much of the industry.  The dietary supplement business has grown by more than 10 times in the past three decades, but the budget of the Food and Drug Administration (FDA) has not, even if it has the ability to crack down on the supplements industry.

You can read the piece here.

Published on: June 28, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Amazon has released additional information about its Prime Day promotion performance, saying that "in the first twenty-four hours of the promotion, more than 2.5 million customers bought products from small businesses. After the full two week period, customers had spent over $1.9 billion on more than 70 million items, which was more than a 100% year-over-year increase on sales compared to the Prime Day 2020 promotion in October."

The company says that "a key goal for Prime Day 2021 was helping Amazon's small business selling partners connect with new customers and grow their sales. As part of a new $100 million investment to help small business sellers succeed, Amazon funded a Spend $10, get $10 promotion in the days leading up to Prime Day. With the promo, Prime members received a $10 credit to spend on Prime Day when they spent $10 on small business products offered by more than 300,000 sellers in Amazon's store during the two-week lead-up to Prime Day—from June 7 to 20."

These numbers have to be seen in the context of a broader defense that Amazon is going to be making when accused of antitrust violations that make its offering bad for shoppers.  Amazon will argue that not only is it good for consumers, but it also is good for small and medium sized businesses that are able to sell far more things to far more people than they would if Amazon did not facilitate those sales.

Published on: June 28, 2021

•  Fox Business reports that "Walmart is using artificial intelligence (AI) to aid customers and personal shoppers and better handle still-surging online demand for groceries amidst the COVID-19 pandemic."

Srini Venkatesan, Walmart's global tech executive vice president, says that "deciding what's closest to the item (a customer) had initially selected is a complex and 'highly personal' process … with nearly 100 different factors into making that decision.

"In addition, he said that wrong choices can negatively impact customer satisfaction and increase costs and that manual processes are difficult and time-consuming.

"The 'technology solution' to this problem uses 'deep learning AI' to consider the hundreds of variables in real time, including size, type, brand, price, aggregate shopper data, individual customer preference and current inventory … Venkatesan said that as Walmart updates and enhances the AI, customers are responding positively and the system is 'learning and getting smarter' based on data."

Published on: June 28, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Bloomberg reports that "7-Eleven was ordered by US antitrust regulators to sell 293 gas-station retail stores acquired earlier this year as part of its $21 billion purchase of Marathon Petroleum Corp.’s Speedway business.

"The order disclosed Friday by the US Federal Trade Commission resolves lingering concerns over the transaction. In May, FTC Acting Chairwoman Rebecca Kelly Slaughter and her fellow Democratic commissioner said the agency would continue to investigate the acquisition even as 7-Eleven said the deal had been completed.

"7-Eleven’s parent, Tokyo-based Seven & i Holdings Co., agreed in August to acquire about 3,900 Speedway outlets from Marathon to create a dominant position of almost 14,000 stores in the US and Canada."

•  Wine Spectator reports that "Delicato Family Wines, which has quietly become one of the fastest-growing wine companies in California, is now adding the sizable Francis Ford Coppola Winery portfolio. The company announced today that it is acquiring the wines and brand names of Francis Ford Coppola Winery, including the Diamond Collection, Director's Cut and Sofia, as well as the Francis Ford Coppola Winery and Virginia Dare Winery facilities and the Archimedes Vineyard, all located in Sonoma.

"The Coppola family will continue to own and operate Inglenook in Napa Valley and Domaine de Broglie, the Oregon Pinot Noir property they purchased in 2018.

"No purchase price was disclosed. The parties expect the transaction to be completed within a month."

Dare I suggest that Delicato must've made Coppola an offer he couldn't refuse?

Published on: June 28, 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 34,494,677 cases of the Covid-19 coronavirus, with 619,424 deaths and 28,927,335 reported recoveries.

Globally, there have been 181,924,652 coronavirus cases, resulting in 3,940,426 fatalities and 166,422,997 reported recoveries.   (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 66 percent of the US population age 18 and older has received at least one dose of vaccine, and 56.8 percent has been fully vaccinated.

•  From the New York Times:

"The coronavirus vaccines made by Pfizer-BioNTech and Moderna may have caused heart problems in more than 1,200 Americans, including about 500 who were younger than age 30, according to data reported on Wednesday by researchers at the Centers for Disease Control and Prevention.

"Still, the benefits of immunization greatly outweigh the risks, advisers to the C.D.C. said. They strongly recommended vaccination for all Americans 12 and older.

"The heart problems are myocarditis, inflammation of the heart muscle; and pericarditis, inflammation of the lining around the heart. The risk is higher after the second dose of an mRNA vaccine than the first, and much higher in men than in women. Researchers do not know why.

"But the side effect is very uncommon, just 12.6 cases per million second doses administered."

•  Bloomberg has a story saying that while in the US it is beginning to feel as if the pandemic is over, "new, more contagious variants of the virus are on the rise, and there are regional pockets of vaccine holdouts that threaten to keep Covid in circulation.

"All this suggests, unfortunately, is that it’s likely the U.S. isn’t done with the coronavirus just yet.

"'While it's not purely a function of cooler temperature, Covid will rise again in the fall (if it doesn't before),' says Andrew Noymer, a professor of public health at University of California, Irvine.  'Covid's future is as a seasonal disease in the fashion of influenza — and Covid's future is now. Covid will be back in the fall or winter, or both'."

•  CNBC reports on an interview with Starbucks CEO Kevin Johnson in which he says that the retailer "is seeing big upticks in business in places where vaccinations are on the rise … Starbucks’ same-store sales are surpassing pre-pandemic levels in regions where consumers are being vaccinated.

"The relation between higher business activity and increasing vaccination rates is simple, Johnson said. The company found that when at least 35% or more of adults were vaccinated against the virus in a market, governments begin easing Covid restrictions, making way for business to rebound."

Published on: June 28, 2021

…will return.