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    Published on: September 20, 2021

    Reporting in from the National Grocers Association (NGA) show in Las Vegas, KC offers some thoughts about the importance of converting data into a digital network that can be monetized by retailers … but argues that monetization and higher transactions are less important than creating a platform that prioritizes customer engagement.  But an even bigger problem facing independent retailers, KC suggests, is not understanding why they became more relevant during the pandemic, and not realizing what they need to do going forward to stay relevant and essential.

    Note:  KC's appearance at NGA on Sunday was at a session powered by CART-The Center for Advancing Retail & Technology.  Central to the session was "Retail 4.0," Gary Hawkins' assessment of where retailers need to be today and how to get there.  A white paper laying out the opportunities can be downloaded here.

    Published on: September 20, 2021

    CNBC has a story about how Amazon increasingly is inserting paid advertising  into search results on its site, and charging consumer brands more and more for the placements.

    According to the story, "Until recently, Amazon put two or three sponsored products at the top of search results. Now, there may be as many as six sponsored products that appear ahead of any organic results, with more promotions elsewhere on the page, said Juozas Kaziukenas, who runs e-commerce research firm Marketplace Pulse … While Amazon doesn’t break out advertising revenue, ads account for the majority of the company’s 'other' sales. That category was the fastest-growing part of Amazon’s overall business in the second quarter, with revenue soaring 87% from a year earlier to more than $7.9 billion."

    Amazon tells CNBC that "the number of ads that appear differs depending on the exact search term and other factors such as whether users are shopping on desktop, mobile or in the Amazon app … An Amazon spokesperson said there are no dedicated ad slots within search results, meaning that a user may see one ad, multiple ads or none at all. The company said advertising is an optional service for brands and sellers, but that using it can improve visibility of their products."

    But here's the passage from the CNBC story, attributed to an Amazon spokesperson, to which everybody should pay attention:

    “Like all retailers, we design our store to help customers easily find and discover the right brands and products, and sponsored ads is one of the many ways we do this.  In all cases we work back from the most useful customer experience and the relevance of the results surfaced, regardless of how they’re presented to the shopper.”

    KC's View:

    Like all retailers?

    Really?  Seems to me that there was a time when Amazon would never have suggested that it is just like other retailers, when it would have pointed to the ways in which it is different, not the same.  It is possible that this phrase tells us something about Amazon's current mindset.

    The story also quotes Kaziukenas as saying that Amazon has shifted from being "anti-advertising" because it has "become such a lucrative business that ads 'have replaced most of the functionality on the site'."

    One of the advantages that Amazon brought to the market has been the perception that everything it does start with the consumer experience, but suggesting that an online environment cluttered with ads is in the shopper's best interests strikes me as a questionable position.

    We all know why Amazon is doing this.  Increased profitability.  Which is fine.  It is in business to make money.

    But if I were competing with Amazon, I would use this moment to adopt a position that our old friend Glen Terbeek has constantly urged retailer to take - be the trusted and consistent advocate for the customer, not a sales agent for the supplier.

    Glen would argue, and I would agree, that this can be a compelling differential advantage for any retailer who takes this approach consistently and effectively.

    Published on: September 20, 2021

    The Produce Marketing Association (PMA) on Friday announced that it is cancelling its 2021 Fresh Summit, scheduled for October 28–30 in New Orleans, Louisiana, citing the damage done to the area by recent hurricanes and the prospect for additional weather-related damages in coming weeks.

    CEO Cathy Burns said in a video statement, "“I believe our industry always has a role to play addressing our community’s largest challenges, and right now, the highest priority is the safety of those impacted by the storm.  While I’m incredibly disappointed that we will be unable to come together this year, we must allow the city, and its citizens, time to regroup and rebuild … Fresh Summit is more than three days in October.  The onsite coordination begins several months before the industry arrives for the event each year. Right now, the priority is clear, and our hearts are with the individual and agencies addressing the aftermath of the storm.”

    PMA has urged the industry to join it in making contributions to organizations involved in the long recovery efforts in the New Orleans region including the American Red Cross and World Central Kitchen.

    There will not be a virtual version of Fresh Summit, PMA said.

    KC's View:

    Perfect storm, indeed.   In addition to the challenges created by weather-related circumstances, the fact remains that we are in a pandemic, and PMA had to be conscious of not wanting to be at the center of a super-spreader event.  The reality would be bad, and the optics could be worse.

    Spending time in Las Vegas this week for NGA, and seeing so many people ignoring mask mandates, I find myself really aware of how tenuous the public health situation is.  I'm not suggesting lockdowns, and I do think we have to be able to conduct commerce.  But caution remains not just necessary, but critically important.

    Published on: September 20, 2021

    The Wall Street Journal reports that "retailers are loading up on goods for the holiday season in a strong show of confidence in consumer demand even as the Delta variant and supply-chain disruptions add uncertainty to restocking efforts.

    "Best Buy Co. , Target Corp. and other large merchants are amassing more inventory compared with last year’s pandemic-depressed levels, in some cases logging double-digit percentage increases as the stockpiles also exceed 2019 values … The companies are stocking up despite swings in demand that have come as coronavirus cases have surged in parts of the U.S. driven by the Delta variant. U.S. retail sales rebounded in August as consumers spent more at stores and online following a sales decline in July."

    These moves, the story suggests, will put even greater pressure on the supply chain than already exists because of a shortage of both products and labor.  As big retailers look to grab as much inventory as they can, there will, of course, be losers.

    "Smaller competitors are often at a disadvantage when negotiating with suppliers or competing for space on container ships as rates surge on tight shipping capacity," the Journal writes.  "If a small business that needed to ship a few sea containers goes up against a big retailer looking to move significantly more product, for instance, the larger order would win, said Joseph Feldman, a senior managing director at Telsey Advisory Group who focuses on retail. Smaller operators, he said, 'don’t have the scale'."

    KC's View:

    To be clear, this is something of a gamble for the big retailers.  "Big bets on inventory could backfire if merchants end up with a glut of unsold goods," the Journal writes.

    The Boston Globe has a story along the same lines, reporting that "global supply systems — from factories to ports to freight carriers — have been under such strain, for so long, that experts say it could wreak havoc on the holiday shopping season, which accounts for the majority of sales for many retailers."

    Now, some think there won't be a glut of goods, because even if shoppers can't go to stores, consumer demand will persist.  But that line of thinking only makes sense if the economy continues to be strong.  I can't help but think that the whole thing is a house of cards, just one new variant or major natural disaster away from collapsing.

    Published on: September 20, 2021

    The Washington Post writes about how a shortage of workers is affecting the fast food industry, saying that the "labor squeeze is transforming an industry that has been an enduring and at times controversial symbol of American capitalism. For many fast-food workers, the coronavirus pandemic opened new and better-paying alternatives to the demands of hot grills and deep-fryers. And a resurgent virus, powered by the delta variant, has compounded staffing shortages, forcing many store managers to reverse recent dining room reopenings or extend closures that took effect early in pandemic."

    Dozens of Chick-fil-A outlets in several states have gone to drive-through only because of a lack of workers, the story says.  "Aberdeen, Md.

    Some McDonald’s outlets have also pivoted to drive-through-only service and reduced hours, while the chain touts polished online ordering tools and invests in technology designed to smooth out the pick-up and drive-through experience. Yum Brands, which operates KFC, Pizza Hut and Taco Bell, has leaned into services that minimize contact between workers and customers, including curbside pick-up and, in some cases, delivery."

    The Post writes:  "Fast-food wages historically trail those in other service industry jobs, with the typical U.S. worker collecting about $11.80 per hour or $24,540 a year as of May 2020, according to the Bureau of Labor Statistics. A retail salesperson, by comparison, made $30,940 a year. But even the biggest among them are going to greater lengths to attract workers: Walmart, Target and Amazon, for example, all announced full-ride college tuition programs for employees in recent weeks.

    "Some current and former fast-food workers say labor shortages merely reflect the limited appeal of low-wage work that can be physically demanding and stressful, conditions that existed long before the pandemic. The labor group known as Fight for $15 has grown into a global movement in more than 300 cities since its formation in 2012. And some economists question the accuracy of the term 'labor shortage' in this context, saying businesses are simply offering too low a wage for an hour’s work … For the industry to meet customer demand, restaurants would probably have to draw workers from other industries, but there are indications that the opposite is true."

    KC's View:

    Labor (and I'm not just referring to "organized labor") is having a moment, and I'm not sure there is a lot of reason to think that it is going to end anytime soon.  And it isn't just about fast food.

    For as long as I have been writing MNB (and probably before), I've made the argument that retailers that want to create strong customer experiences in their stores would be well advised to do everything they can to help their employees feel invested in creating those experiences.  That means investing in employees.  It means making sure they feel like an asset, not a cost.

    (It isn't just retail employees, by the way.  I spent a lot of my career being treated like a cost instead of an asset;  that's what usually happens to editorial people in publishing ventures, where ad salespeople get the glory and the money.  And yet, they often are incapable of writing a coherent sentence or thinking beyond their clients' interests.   I say all this because I need to be clear - I have a large chip on my shoulder about this stuff.)

    What's happening now between employers and employees, especially in places like the fast food business?  That's chickens (and cows) coming home to roost.

    Published on: September 20, 2021

    Reuters has a story about how "global brands from Mercedes and Amazon to IKEA and Walmart are cutting out the traditional financial middleman and plugging in software from tech startups to offer customers everything from banking and credit to insurance."

    What these brands are doing is referred to as "embedded finance," which the story says is "a fancy term for companies integrating software to offer financial services."  Which means that "Amazon can let customers 'buy now pay later' when they check out and Mercedes drivers can get their cars to pay for their fuel."

    For traditional financial institutions, that have jealously guarded their prerogatives as gatekeepers of the financial services sector, "the warning signs are flashing," the story says, adding, "Officials from the Bank for International Settlements, a consortium of central banks and financial regulators, warned watchdogs last month to get to grips with the growing influence of technology firms in finance."

    The story goes on:  

    "For now, many areas of embedded finance are barely denting the dominance of banks and even though some upstarts have licences to offer regulated services such as lending, they lack the scale and deep funding pools of the biggest banks.

    "But if financial technology firms, or fintechs, can match their success in grabbing a chunk of digital payments from banks - and boosting their valuations in the process - lenders may have to respond, analysts say."

    KC's View:

    The story makes the point that consumers could be seen as the actual source of all this disruption, and at some level, I think, consumers don't give a damn about traditional vs. non-traditional financial services companies.  They just want to feel like the services are available, convenient and relevant, and that they're not being exploited for reasons beyond human comprehension (which is where the traditional financial services companies often fall down on the job).

    Beyond the notion that to succeed one has to be in synch with what the customer wants, retailers not in this space may have to be concerned that when these non-traditional players do get into it, the category will create a new source of revenue that they'll use to compete in their traditional businesses.  Which will make the playing field even more uneven than it is now.

    Published on: September 20, 2021

    Kroger announced late last week that it has joined the Buy Safe America Coalition, described as "a diverse group of retailers, consumer groups, manufacturers and law enforcement who support efforts to combat organized retail crime and protect consumers and communities from the sale of counterfeit and stolen goods."

    “As retailers nationwide continue to battle organized retail crime, Kroger looks forward to partnering with the Buy Safe America Coalition to put an end to this public safety risk,” said Mark Stinde, Kroger’s vice president of asset protection. “We are proud to support the coalition’s efforts to pass the INFORM Consumers Act, which will bring much-needed accountability to online marketplaces filled with goods stolen from store shelves.”

    The announcement notes that "organized retail crime has plagued the country in recent years, and the losses from these large-scale thefts are costing American businesses billions of dollars annually. The stolen goods are frequently sold on online e-commerce platforms, where there is minimal verification of seller identities. Store employees have also been put at serious risk as organized retail crime rings become increasingly violent and brazen. The surges have spurred businesses to take swift action to protect both employees and customers."

    Published on: September 20, 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…

    •  Here are the Covid-19 coronavirus numbers for the US:  42,900,906 total cases … 691,880 deaths … and 32,503,995 reported recoveries.

    The global numbers:  229,291,098 total cases … 4,705,472 fatalities … and 205,914,152 reported recoveries.  (Source.)



    •  The New York Times reports that "the average U.S. daily death toll from Covid-19 over the last seven days surpassed 2,000 this weekend, the first time since March 1 that deaths have been so high, according to a New York Times database.

    "Texas and Florida, two of the hardest-hit states in the country, account for more than 30 percent of those deaths: Florida, where 56 percent of the population is vaccinated, averages about 353 deaths a day, and Texas, where 50 percent of the population is vaccinated, averages about 286 deaths a day."



    •  The Centers for Disease Control and Prevention (CDC) says that 74.6 percent of the US population age 12 and older has received at least of vaccine, with 63.9 percent being fully vaccinated.



    •  The Washington Post reports that the Food and Drug Administration (FDA) advisory panel on vaccine protocols recommended that coronavirus booster shots be made available to people 65 years of age and older, as well as for adults who for various reasons and at risk for serious disease.

    According to the story, "The vote is not binding, and Peter Marks, the FDA official overseeing coronavirus vaccines, indicated that the final decision could be slightly different, encompassing people who are at higher risk of infection because of their professions, such as health-care workers and front-line employees, including teachers. The advisory committee members were polled on whether they would agree with making boosters available to people who were at risk of infection because of workplace exposure, and they all said yes.

    "A decision about boosters from the FDA is expected by next week, and a Centers for Disease Control and Prevention advisory committee is slated to meet Wednesday and Thursday to recommend how a third shot should be used."

    The Post also reports that "Anthony S. Fauci, the White House’s chief coronavirus medical adviser, said data about booster shots for those who had received the Moderna or Johnson & Johnson coronavirus vaccines could be a few weeks away from being reviewed by the Food and Drug Administration."



    •  From the Los Angeles Times:

    "Amid persistent concerns that the protection offered by COVID-19 vaccines may be waning, a report released Friday by the Centers for Disease Control and Prevention finds that America’s workhorse shot is significantly less effective at preventing severe cases of disease over the long term than many experts had realized.

    "Data collected from 18 states between March and August suggest the Pfizer-BioNTech vaccine reduces the risk of being hospitalized with COVID-19 by 91% in the first four months after receiving the second dose. Beyond 120 days, however, that vaccine efficacy drops to 77%.

    "Meanwhile, Moderna’s vaccine was 93% effective at reducing the short-term risk of COVID-19 hospitalization and remained 92% effective after 120 days.

    "Overall, 54% of fully vaccinated Americans have been immunized with the Pfizer shot."



    •  From the Wall Street Journal:

    "West Virginia has one of the fastest rates of new Covid-19 cases in the nation, a surge some state health officials say is at least in part due to the state’s low vaccination rate.

    At 46%, West Virginia has the lowest percentage of its eligible population fully vaccinated of any state, according to data from the Centers for Disease Control and Prevention.

    "The low percentage is striking. The state was initially considered a vaccine-rollout success story. In February, it had vaccinated a higher percentage of its population than any other state.

    "Early on, the state excelled at vaccinating people in nursing homes and others who were eager to get the shot, but then it ran into a roadblock of hesitant people, state officials say. It has joined other states with high numbers of hospitalized Covid-19 patients."

    That's too bad, because Gov. Jim Justice has been on the right side of this issue, saying things like, "You don’t need to die and you don’t need to get sick to make a point.”  But I guess some people do … though for the life of me, I do not understand what point they are making, except they think it would be a better world without vaccines for smallpox, polio, measles, mumps, flu, pneumonia and shingles.  

    Published on: September 20, 2021

    •  Pitney Bowes is out with a new study concluding that Amazon n ow makes more deliveries to people's homes in the US than FedEx, though. not as many as the US Postal Service or UPS.

    At least not yet.

    In 2020, the study says, Amazon Logistics delivered 4.2 billion parcel shipments, or 21 percent of the parcels in the US.  FedEx only makes 16 percent, while the Post Office is at 38 percent and UPS is at 24 percent.



    •  CNBC reports that "Amazon warehouse workers in Alberta, Canada, have filed for a union election, a major labor union said Tuesday, marking the latest escalation in tensions between the retail giant and its employees.

    "The International Brotherhood of Teamsters, through a local chapter, late Monday filed with the Alberta Labor Relations Board for a vote on union representation at an Amazon warehouse in Nisku, Alberta, known as YEG1. The labor agency must first approve the election, at which point all workers at YEG1 employed as of Sept. 13 will be able to vote on whether to join Teamsters Local Union 362. A spokesperson from Teamsters Canada said the warehouse employs between 600 and 800 workers."

    The story notes that Amazon says for the record that while it respects the rights of its employees to unionize, it does not think that unionization is "the best answer for our employees."

    Published on: September 20, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Hy-Vee announced last week that it "is seeking to hire 2,000 full- and part-time pharmacy technicians to help support its more than 275 Hy-Vee Pharmacy locations across its eight-state region. 

    "As an added benefit, Hy-Vee is introducing a new pharmacy technician apprenticeship, which prepares pharmacy technicians with the required training and resources to become nationally certified to administer vaccinations such as the COVID-19 vaccine, flu vaccine and more. The apprenticeship is free for all interested Hy-Vee pharmacy technicians and can be completed in as few as eight months (depending on state requirements) while working in the Hy-Vee Pharmacy."



    •  The Financial Times reports that "tobacco company Philip Morris International has taken control of the UK-based inhaler company Vectura after winning over enough of its shareholders, despite concerns from health charities about the cigarette maker’s ownership of a medical devices business."

    According to the story, "PMI, which makes Marlboro cigarettes, outbid the US private equity firm Carlyle for control of Vectura, prompting complaints from healthcare charities that said Big Tobacco was an unsuitable owner of a healthcare business. PMI has said it wants to shift its business away from cigarettes, with some saying the group should be encouraged to reinvent itself."

    I'm sorry, but this is a crock.  The MNB reader who sent it to me - this is like McDonald's owning Weight Watchers.  Or like an arsonist wanting credit for coming back to put out the fire.  



    •  The New York Times has a story about how, in Manhattan, the pandemic for some chains has proven to be a glass half-empty, while for others it is a glass half full.

    Here's the deal.

    When the pandemic hit and shut down much of the New York economy, it means that neighborhoods where chains depended on businesses to survive suddenly had little or no sales.  Some were able to hold on, but many were not.  Even chains such as Starbucks had to recalibrate, closing more than 40 stores while adding pick-up only locations far faster than expected pre-Covid.  Others had to delay rollout plans.

    But some chains - like Sonic - saw the sudden availability of commercial real estate as an opportunity, figuring that they could grab previously unavailable and potentially prime locations and use them to establish themselves in the city.  And some pivoted to locations in residential rather than business neighborhoods, looking to hedge their bets because of uncertainty about when, if ever, the city will return to a pre-pandemic normal.



    •  CNBC reports that "the last Sears department store located in the retailer’s home state of Illinois is getting ready to close its doors for good.

    "The shop, located in Simon Property Group’s Woodfield Mall, is scheduled to shutter on Nov. 14 … A spokesman for the department store chain’s parent company, Transformco, said it will look for ways to revive the space with another tenant because it also manages the real estate."

    This is like the longest, most drawn out death scene in the history of cinema.



    •  CNN reports that " Samuel Adams is launching a new, limited edition beer, and it packs such a potent punch it's illegal in 15 states.

    "The brewer releases a new version of its Utopias brand every two years, and the twelfth edition will be on shelves starting Oct. 11. But don't bother looking for it in Alabama, Arkansas, Georgia, Idaho, Missouri, Mississippi, Montana, North Carolina, New Hampshire, Oklahoma, Oregon, South Carolina, Utah, Vermont or West Virginia. Utopias are illegal in those states because they contain 28% alcohol by volume, more than five times the potency of typical US brews."

    The CNN story notes that "Utopias were first introduced in 2002, and have increased in price over the years. The 2017 version cost $199, 2019's cost $10 more than that. This year's version is also notable as it is finished with 2,000 pounds of cherries and some batches have been aged for up to 24 years in a variety of barrels."

    C'mon, man.  We're still in a pandemic, there are fires, drought and floods (depending on where you live), the global geo-political situation is going to hell, and climate change is going to destroy the planet if man doesn't do it first.  I think higher-alcohol-level beer is exactly what is called for.



    •  The San Jose Mercury News reports that Hager 1 Distillery, which is known for world-class vodka, is out with a new product - Smoke Point vodka, "made from smoke-tainted Napa wine grapes damaged in the 2020 Glass Fire. Smoke Point has an elegant, floral nose with subtle flavors of licorice and allspice — and not a whiff of the fire that devastated Wine Country last year."

    According to the story, " All proceeds from Smoke Point, which retails for $50 in the tasting room, will go to the Sacramento-based California Fire Foundation and will be matched by Hangar 1’s distributor."

    Go figure.  I've heard of how, when handed lemons, one should make lemonade.  But this takes it to a new level.

    Published on: September 20, 2021

    We had an email last week from an MNB reader who expressed considerable disappointment with the state of Walmart's website.

    Here's another one, from another reader:

    Per the email from a reader to you on September 17th regarding ordering “on-line” from WMT, I felt compelled to share my experience which happened to occur the same day I read this!

    To the point, I live close to a beach and was looking for men’s “clearance” swim trunks.  Hey end of season deals-right??  So I look at WMT.com.  Find 3 swim trunks on clearance for $7.00.  Great deal so I “add to cart”.  Go to checkout and price says $14.44 each. HUH?  Re-load and do the drill FOUR SEPARATE times and the swim trunks still come up $14.44 each IN MY CART yet say Clearance $7.00 each BEFORE adding to my cart.  So what’s my solution???  Go straight to AMAZON website and bought some “clearance” swim trunks.

    Wal-Mart can continue to say they are “competing better with AMAZON” but from this consumers experience, they aren’t even close.

    Agreed.

    Which is not the same thing as saying that Walmart can't get there.  Eventually.



    On another subject, from an MNB reader:

    Regarding Kroger requiring it's employees to wear masks, but not customers.  Shaw's has implemented the same policy.  What's the point?  We, as associates, have to wear a mask, but anyone, vaxxed or not, can come in to the store to do their shopping.  That's the problem we have in this country.  Everything is done half-***ed so as not to offend or anger anyone.  We all need to be on the same page to get this pandemic under control, period.



    Responding to a piece about August retail sales being up, which is not that was expected by economists, one MNB reader expressed skepticism:

    My take is that consumers are still backing off.  Reason: CPI was up 2.5% while sales were only up .7%  That is an 1.8% lag in growth.  If consumers were buying more, the sales increase should be higher then the CPI, and this shows they are not.  Consumers are only spending more for less.  Don’t count your chickens just yet.  We still have a long way to go. 



    On Friday MNB took note of a Bloomberg report that "a startup that makes cultured mozzarella and ricotta cheeses without cows has just got record funding from investors looking to tap the growing market for environmentally friendly dairy alternatives."

    I commented:

    Fresh and creamy mozzarella is one of the great pleasures of being alive.  Am I being environmentally irresponsible to not want it replaced, to not want future generations to grow up without knowing what it tastes like?

    Prompting one MNB reader Mike Moon to write:

    I'm with you, Kevin. There's nothing better than several varieties of nice, ripened, cheeses on a charcuterie board with meats and fruits, and a glass of wine on the side. I hope that the cheese industry attorneys are trying to get the word "cheese" defined in such a way that the fake cheese people can't even use the term. Kind of like what the catfish industry did against imported catfish. 

    Published on: September 20, 2021

    It's Week Two of the National Football League:

    Las Vegas Raiders 26, Pittsburgh Steelers 17

    San Francisco 49ers 17, Philadelphia Eagles 11

    Houston Texans 21, Cleveland Browns 31

    Denver Broncos 23, Jacksonville Jaguars 13

    New Orleans Saints 7, Carolina Panthers 26

    Los Angeles Rams 27, Indianapolis Colts 24

    Buffalo Bills 35, Miami Dolphins 0

    New England Patriots 25, NY Jets 6

    Cincinnati Bengals 17, Chicago Bears 20

    Atlanta Falcons 25, Tampa Bay Buccaneers 48

    Minnesota Vikings 33, Arizona Cardinals 34

    Tennessee Titans 33, Seattle Seahawks 30

    Dallas Cowboys 20, Los Angeles Chargers 17

    Kansas City Chiefs 35, Baltimore Ravens 36