retail news in context, analysis with attitude

Got the following email from an MNB reader about my Amazon Fresh coverage:

I visited the first store in Woodland Hills 3 weeks after it opened, three other stores and the Woodland Hills store three more times, and the last time was last week.  My observations:

Woodland Hills store first visit - a repeat of what you saw and I would give them a F.

Woodland Hills and the other stores I would give a C or a C+.

General observations:

At no time was any of the stores busy.

However, for every live customer I saw three employees doing online fulfillment.  I asked a couple of those fulfillment folks if it was for pick up or delivery-they said 80% for pickup.

I also loved the technology of the shopping with the smart shop basket.  However, they don't allow that shopping basket to leave the store so the customer will have to transfer the bags to another shopping basket to take it out to their car.

All of the locations would be considered B's.

Produce pricing was like conventional supermarkets.

Produce quality - B.

Produce selection - C-.

Produce presentation - C-.

Produce personal knowledge - C-.

Produce pace of stocking - C.

I timed one of the Amazon fulfillment shoppers and it took her 14 minutes to fill the order, which was four bags but not full bags.  This 14 minutes doesn't include the checking of the order or when it leaves her hands.  At the minimum wage of $15.00 per hour and a 20% fringe, that selection would cost $4.25 and it hasn't gone to the customer yet.  At the average LA conventional supermarket rate and 45% fringe, it would have cost over $7.00.

All of the perishable department were C's due to presentation and variety.

Grocery dominated with PL and too many OOS even on last week's visit. 

With the B locations and size of the store their volume, hurtle rate for a ROI may be as low as $250,000 per week, and that would include the online.

They must love the financial results as they are rolling them out nationwide.  They don't have to cluster to make supply chain sense, because they are being supplied by Whole Foods.

Wow.  That's what I call an in-depth analysis.

I suggested yesterday that what the Amazon Fresh store I saw may really be suffering from is nobody-gives-a-damn syndrome, with more focus on being a dark store that just happens to allow customers to enter.

One MNB reader replied:

Thank you for addressing this topic head on in your FaceTime!

Your comments mirror exactly what I’ve heard about Amazon Fresh (being a dark store that just happens to be open to the public), and the conclusion that immediately came to mind about Amazon might be thinking about their purported “Department” stores. 

As always, your perspective and commentary is refreshing and informative!  Keep up the great work!

From another reader:

How disappointing KC, I can't imagine a store of associates with no sense of urgency, no pride in what they do, how the store looks to customers? They should be embarrassed!

Sounds like they could use a Jim Donald maybe? Also I'd be curious as to how that store looks today, or the day after your visit.

On another subject, from an MNB reader:

Kevin, I wanted to give you some clarity into the adversarial relationships between retailers, distributors and manufacturers.  The first example speaks to " just charge the vendor philosophy".  The second is flat out thievery.

While I was reading your site today, I received a message from a customer that stated due to our order not being here prior to the beginning of the promotion we are charging you lost sales. Which BTW, may or may not occur.  So we eat it.  Now this was caused solely by the transportation company and not us. In this case the retailer is not the only one losing sales. We both are. Could we charge the trucker for lost sales?? Not really.

The second was a charge for a show that we never attended nor did we give authorization to attend.  That was a big FU from a distributor.  So then what is our recourse?  Pull promo spend?  We lose. Shut them off?  We lose.  Attempt to negotiate a lesser bill?  Why, they stole the money.

These are just 2 examples of many that all add into the cost of goods, the cost of transportation and ultimately the increased prices for the consumer.

It is very frustrating to see the integrity of some (a lot) of retailer/distributors degenerate to such levels.  My question, especially in this time of crisis and yes it is crisis, why can't we all work together.  It will ultimately benefit all of us.  All for one

and one for all.  Not all for me and none for you.  Then no one benefits.  Especially the consumer.

Regarding our coronavirus coverage, an MNB reader wrote:

The Pfizer approval is a good one.  This hopefully will change some of the “it’s not approved” nah sayers to go get the vaccine.  However I don’t think even with increased advertising, it will create long lines at vaccine locations.  If people that don’t want the vaccine have not gotten the message yet, then they never will….until they get sick.

Responding to the open letter written by a Boston Globe reporter to Russo's, the iconic Boston-area produce market closing next month, one MNB reader wrote:

Sounds to me Mr. Russo sells his wares based on what he would expect, if he was the shopper.

Radical concept, huh?

The other day we took note of a Los Angeles Times report that "the Academy of Country Music Awards is making the switch to streaming, moving from a TV network to Amazon Prime Video and marking the first time the streaming service will exclusively air an awards show …  the ACMs announced the move from CBS, which previously said it would air the Country Music Television awards show next year."

ACM painted it as a decision driven by its desire to be innovative, but one MNB reader wrote:

Interesting spin on the part of the Academy of Country Music, but the fact of the matter is that viewership of the ACM awards ceremony has been in steep decline and advertising revenue has fallen well short of the license fee the ACM received for airing the awards for some time now. It will be interesting to see – if such information ever becomes publicly available – whether Amazon ponied up the $22 million the ACM unsuccessfully sought from CBS or if Amazon turns a profit on the streaming-only venture. Incidentally, CBS is still on the hook for airing the Tonys (another loss leader, albeit one with considerable prestige) through 2026.

Yesterday, MNB took note of a Wall Street Journal story about how "drought is blistering key U.S. cash crops, further elevating prices for staples including corn and wheat … Farm incomes have been hit hard over the past two years, first when Covid-19 shutdowns hammered prices and afterward when hot, dry weather reduced output, limiting farmers’ capacity to cash in on rising demand and higher prices … Extreme heat is baking most of the U.S. North Dakota, South Dakota, Minnesota, Iowa and Nebraska all contain areas of extreme drought, according to data from the U.S. Drought Monitor. North Dakota and Minnesota, in particular, are experiencing near-record lows in soil moisture, according to data from the National Oceanic and Atmospheric Administration.

"As a result, many crops planted this spring are wilting. Some 63% of the U.S. spring wheat crop is in poor or very poor condition, versus 6% at this time last year, according to Agriculture Department data."

I commented:

While lousy weather and drought are part of a natural cycle, the concern that scientists seem to have is that the extended problems being suffered in agricultural regions around the world may have a permanent impact on the cost and availability of basic foods on which we rely and even have taken for granted.

Which, clearly, will have an impact on the retailers who sell these products and the consumers they serve.

Prompting one MNB reader to write:

I spent hours driving from Wisconsin through Illinois Indiana and Ohio over the past 2 weeks, corn and bean crops looked wonderful every where I looked, no issues with those crops.

I don't doubt that, but your observations also don't make me doubt the Journal story or the conclusions being reached by the Department of Agriculture and the National Oceanic and Atmospheric Administration.