business news in context, analysis with attitude

Published on: September 27, 2021

Last week, while attending the National Grocers Association (NGA) and Groceryshop shows in Las Vegas, KC got asked an interesting question - in making decisions about which technologies to adopt, which strategies to pursue and which tactics to employ, who should take the lead?

KC thought about it, especially in terms of all the innovative companies with which he visited while there:  VTex.  Alert Innovation.  Relex.  Precima.  And numerous others.

In the end, though, he thought the answer was an easy one.

Published on: September 27, 2021

Amazon on Friday informed its Prime members that "starting October 25, 2021, delivery orders from Whole Foods Market … will include a $9.95 service fee. This service fee helps to cover operating costs so we can continue to offer the same competitive everyday prices in-store and online at Whole Foods Market."

The email continued:  "One-hour grocery pickup at Whole Foods Market will continue to be free for Prime members in your area. Other exclusive benefits for Prime members at Whole Foods Market include special deals throughout the year and an additional 10% savings on top of sales prices storewide (excluding alcohol). Additionally, Prime members with an Amazon Prime Rewards Visa card will continue to get 5% back on all credit card purchases in-store and online at Whole Foods Market."

The email then went on to list all the other benefits that accrue to Prime members.

Bloomberg writes that "Amazon, which bought the Austin, Texas-based grocer in 2017, spent the following years adding grocery delivery from Whole Foods stores. That service was offered at no charge to members of Amazon’s Prime program, which costs $119 a year in the U.S., on orders exceeding $35.

Published on: September 27, 2021

The Washington Post follows up on the mass shootings at a Tennessee Kroger last week noting that "such events are no longer exceptional: at least three other deadly shootings have taken place at supermarkets this year, continuing a recent trend.

"According to data from the Federal Bureau of Investigation, shootings at grocery stores have risen in recent years. Between 2000 and 2020, 78 people were killed in 28 such incidents, FBI data shows."

The Post writes that "for grocery workers, the threat of violence adds to a growing list of hazards they have faced during the pandemic, from an increased risk of coronavirus infection to belligerent customers refusing to wear masks … Grocery stores have been a recurrent setting for this kind of violence in part because they are open from early morning until late at night, they cater to a broad demographic range which occasionally results in interpersonal friction, and, even in the pandemic, they have been one of the few retail environments that were consistently open."

The Post notes that "while some of the shootings were at smaller markets or convenience stores in gas stations, major chains such as Walmart and Kroger have experienced multiple shootings at their locations since 2018. Earlier this year, a gunman killed 10 people at a King Soopers outlet, owned by Kroger, in Boulder, Colo."

Published on: September 27, 2021

The Dallas Morning News has a piece about  the shape of the city's grocery market as H-E-B prepares to open stores under its banner there late next year.

According to the piece, "Walmart, its Sam’s Club and Kroger now control more than half of the D-FW grocery market.  The combined market share of No. 1 Walmart and No. 5 Sam’s jumped to 34.2% this year vs. 29.9% in 2019 before the pandemic started."

The News says that "San Antonio-based H-E-B is making its entrance at a time when there’s been very little new store construction. H-E-B has bought prime acreage throughout D-FW over the years, including a recent purchase in Forney."

But, "The D-FW sprawl is ripe for new grocery stores again, experts say. Just last year, area builders added about 30,000 apartments and around 45,000 single-family homes … Dallas-Fort Worth’s hyper-competitive grocery market grew to $23.5 billion, or by more than 13%, since before the pandemic started, not only as more meals were cooked at home but also because of its ongoing population gains."

Published on: September 27, 2021

Fox News had an interview with Burt Flickinger of Strategic Resource Group in which he predicted that "the US will experience another 'massive shortage' of toilet paper soon as supply chains continue to suffer due to pandemic-related issues."

"'"Product shortages as bad as they were in the beginning of COVID are coming back," he said, saying that only 60 percent of toilet paper ordered by retailers is being shipped at the moment.

And just like that, Costco announced that it was imposing some limits on customers' ability to buy toilet paper, cleaning products and Kirkland Signature water.

The New York Times writes that CFO Richard Galanti attributed the decision to “the uptick in Delta-related demand" as well as to “port delays; container shortages; Covid disruptions; shortages on various components, raw materials and ingredients; labor cost pressures, and trucker and driver shortages.”

The Times writes that "to keep store shelves filled, Costco has been 'ordering as much as we can and getting it in earlier,' Mr. Galanti said. The company has chartered three ocean vessels to transport containers between Asia and the United States and Canada, he said. Each ship can carry 800 to 1,000 containers at a time."

Meanwhile, the Wall Street Journal has a big-picture story about how in California, "despite mounting shipping delays and cargo backlogs, the busiest U.S. port complex shuts its gates for hours on most days and remains closed on Sundays. Meanwhile, major ports in Asia and Europe have operated round-the-clock for years."

The story goes on:  "The American supply chain has so far failed to adapt to the crush of imports as businesses rush to restock pandemic-depleted inventories. Tens of thousands of containers are stuck at the ports of Los Angeles and Long Beach, Calif., the two West Coast gateways that move more than a quarter of all American imports.

"More than 60 ships are lined up to dock, with waiting times stretching to three weeks.

Participants in each link in the U.S. chain - shipping lines, port workers, truckers, warehouse operators, railways and retailers - blame others for the imbalances and disagree on whether 24/7 operations will help them catch up. All of them are struggling with a shortage of workers."

Published on: September 27, 2021

The Wall Street Journal this morning has an interview with Lauren Hobart t, the CEO of Dick's Sporting Goods, who is the first non-family member and first woman to have the job at the company.  (Ed Stack, whom she succeeded, was the son of founder Richard Stack.)

The story notes that Dick's has seen strong growth during the pandemic, though like every other retailer, it now faces constraints created by a snarled supply chain.  This all leaves Dick's "taking several steps to increase market share. This year it opened the first of several planned Dick’s House of Sport, a larger version of a Dick’s store with more interactive elements such as a rock-climbing wall. Today in Pittsburgh, Dick’s opened its first Public Lands store, a chain that aims to appeal more squarely to outdoor enthusiasts. Ms. Hobart says Dick’s also is focused on expanding its base of female shoppers. 'Women were coming into our stores and leaving with products for their family and not for themselves,' she says."

Some excerpts from the interview:

•  "At PepsiCo I worked under [former CEO] Indra Nooyi, who was a mentor in many ways. Between Indra and the very strong mom I have, it never occurred to me that women couldn’t be anything they wanted to be. I don’t want to minimize struggles that I know many, many women have in terms of being considered for opportunities and being taken as seriously as male counterparts. At Dick’s, the relationship I developed with Ed just was never dominated by the fact that I’m a woman. We bring very different things to the table when it comes to a partnership. He’s a merchant through and through, and he’s an entrepreneur, and I had a history in marketing and strategic planning. We just balanced each other out. I think the female-male dynamics, somewhat stereotypically, also balance each other out really well. I have felt like being a female leader is a huge asset."

•  "I feel that as a female, it was very natural to me to lead with a people-first approach, one that was about engaging teammates and engaging our customers. It has been a huge strength."

•  "I have been a person who is extremely open. I write letters. In my time as chief marketing officer, I wrote weekly emails to the marketing team, and I would tell them stories about my kids, or about my mom, or a fight I had, or this or that realization about the business. It was always very nonpresidential, in my opinion. I did say to Ed, 'Now I’m going to have to change absolutely everything. I can’t be posting selfies in emails to the whole group and to the whole company.' He disagreed and said, 'What got Lauren Hobart to be in this position is Lauren Hobart, and we don’t want Lauren Hobart to change.'  And so, I haven’t held back at all."

Published on: September 27, 2021

From the Washington Post, a story about how "marijuana dispensaries and cultivation facilities - deemed 'essential' by many states at the beginning of the coronavirus crisis - became an early refuge for retail and restaurant workers who had been furloughed or laid off. The industry has continued to grow, adding nearly 80,000 jobs in 2020, more than double what it did the year before, according to data from the Leafly Jobs Report, produced in partnership with Whitney Economics.

"An estimated 321,000 Americans now work in the industry, a 32 percent increase from last year, the report found, making legal marijuana one of the nation’s fastest-growing sectors. In other words: The United States now has more legal cannabis workers than dentists, paramedics or electrical engineers."

What this means, the story suggests, is that the burgeoning cannabis business is competing with everyone else who is looking to hire employees at a time when "many Americans reassessed their jobs and career prospects as the pandemic reshaped their social and working lives. Retail workers in particular are quitting at record rates, in search of consistent hours, better benefits and more opportunities to advance — which many say they’re finding in the legal cannabis industry."

Published on: September 27, 2021

Content Guy's Note:  Last week while at the National Grocers Association (NGA) show in Las Vegas, I had a chance to visit with Shawn Tuckett, the new CEO of Webstop.  

I have a long history with Webstop;  as noted on MNB last week, the company and its founder, Robert Hemphill, were instrumental in getting MNB started and functional in its early days.  Webstop itself has been in business for a quarter-century, starting as a company that built simple websites for retailers and evolving into one that has a more sophisticated approach to customer engagement.

I recorded my conversation with Shawn to share with you because I think it offers a big-picture view of what food retailers - especially independents - need to do in order to remain competitive going forward.  I hope you enjoy it.

Published on: September 27, 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, we've now had a total of 43,750,983 Covid-19 coronavirus cases, resulting in 706,317 deaths and 33,186,261 reported recoveries.

Globally, there have been 232,654,742 total Covid-19 cases, with 4,763,357 resultant fatalities and 209,286,162 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 75.2 percent of the US population age 12 and older has received at least one dose of vaccine, with 64.7 percent being fully vaccinated.

•  The Wall Street Journal reports that new studies from the CDC indicate that "face-mask requirements in schools drastically reduce the spread of Covid-19 among children.

"Researchers in Arizona found that schools that didn’t require masking at the start of the academic year were much more likely to experience Covid-19 outbreaks than those that did. A second study found that counties without mask requirements for schools saw larger increases in pediatric Covid-19 case rates compared with counties with school mask requirements.

"The CDC recommends universal indoor masking in schools for both students and staff, regardless of vaccination status. The agency and many public-health experts are pushing a so-called layered approach that includes not only masking, but also social distancing, screening testing, improved ventilation and handwashing."

•  CNBC reports that CDC director Dr. Rochelle Walensky said yesterday that children should be able to go trick-or-treating on Halloween this year, especially outdoors, despite the resurgence of the Covid-19 virus and the Delta variant.

"I wouldn’t necessarily go to a crowded Halloween party, but I think that we should be able to let our kids go trick-or-treating in small groups,” Walensky said.

•  From Bloomberg:

"Parts of the U.S. health system 'are in dire straits,' as the spread of the Covid-19 delta variant forces some states to prepare for rationed medical care, Rochelle Walensky, head of the U.S. Centers for Disease Control and Prevention, said.

“'That means that we are talking about who is going to get a ventilator, who is going to get an ICU bed,' Walensky said on CBS’s 'Face the Nation' on Sunday. 'Those are not easy discussions to have, and that is not a place we want our health care system to ever be.'

"Idaho, among the U.S.’s least-vaccinated states, and Alaska have said that hospitals can begin to ration medical care if needed. A major hospital in Montana also implemented so-called 'crisis of care standards' to prioritize who is treated. Health officials warned the measure could be widened across the state."

Published on: September 27, 2021

•  Bloomberg has a piece about how, "as the pandemic supercharges online grocery shopping, a study from researchers at the Massachusetts Institute of Technology has a warning" that prices can vary wildly. depending on where you are shopping and what online retailer you happen to be using.

These variations, the story suggests "are a reminder that retailers have much more flexibility to experiment with pricing online than in stores."

In addition, Bloomberg writes, "the study, which used software to track 88 items across 30 ZIP codes and then compared that to physical stores, found that Amazon appeared to closely track Walmart’s prices, responding in kind to nearly three-quarters of the largest retailer’s price changes, often within hours."

Published on: September 27, 2021

•  In Massachusetts, the Patriot Ledger reports that Ahold Delhaize-owned Stop & Shop plans to close 19 of its in-store pharmacies within the next six weeks or so.

The company says that the reason is "steadily declining prescription reimbursements by private and government third-party payors. That decline is impacting retail pharmacies across the country."

Stop & Shop will still have some 200 pharmacies operating even after the closures.

Published on: September 27, 2021

Responding to Friday's coverage and commentary about the Kroger mass shooting, one MNB reader wrote:

Kevin, I agree with on the additional stress this is putting on retailers.  However, you and the media continue to focus on the gun being the issue and not the person behind the gun.  We have a serious mental health issue that has to be addressed in this country.  The people behind the mass shootings have had and/or exhibited behavioral issues that if properly treated may have prevented these shootings.

Each time these events occur the discussion in the media and congress is we need to get guns off the street.  There is little mention on trying to solve the issue as to why someone would want to go into a populated area and kill people.  We have to find a humane way to help those with debilitating mental health issues.

I don't think I said we "need to get guns of the streets."  In fact, what I said about addressing the issue was:

Metal detectors in stores?  More armed, trained security guards?  A total ban on customers carrying weapons into stores?  Personally, I am comfortable with all of this, but I know that these kinds of  rules would be politically and culturally untenable in places around the country where I do not live.

I have always said when discussing gun control - especially here on MNB, where the issue has come up more than I would like - that I recognize that not being from a gun culture, I have to be careful not to simply dismiss people who feel differently than I do.  (I would hope that the folks who feel differently than I do about this issue would do me the same courtesy, but, alas, this is not always the case.)

I was very careful to spend the bulk of my commentary last week focusing on one specific side of the issue - the potential culpability of the retailer in these situations.  In the end, whether we as a culture deal with mass shootings by getting guns off the street, enacting stricter gun control laws, doing a better job enforcing current gun control laws, dealing with the mental health crisis, or some combination of all of these, it does not affect the core argument I was making - if someone I love goes into a store and is shot by some idiot/troubled person with a gun, I am going to in part hold the retailer responsible.  (I am not by nature. litigious person.  But I might make an exception this this case.)

And, since the Protection of Lawful Commerce in Arms Act (PLCAA) protects firearms manufacturers from being sued when the products they make are used in such a manner, it seems to me that this makes the retailer where the act took place even more vulnerable.  (Though, having said that, it seems at least possible that trade associations will start seeking legislation that will protect the retailers, because that is always easier than addressing the problem.)

Again, let's be clear.  I am not making a cultural argument here.  Simply an economic one.  Retailers have a fiduciary responsibility to their owners and shareholders, and not addressing this problem in a comprehensive manner puts them at risk.

On the same subject, MNB reader Matt Nitzberg wrote:

Regarding the mass shooting at the Memphis-area Kroger, the 517th mass shooting in the US so far this year, you posed the following: “I'm not sure what all this means. Metal detectors in stores? More armed, trained security guards? A total ban on customers carrying weapons into stores? Personally, I am comfortable with all of this, but I know that these kinds of rules would be politically and culturally untenable in places around the country where I do not live.”

For your readers who are concerned about our epidemic of gun violence and the needless tragedies it causes, it might be worth highlighting the very effective, people-driven work of Moms Demand Action to reduce gun violence with common sense solutions. 

Let’s never forget that we don’t have to live like this.

Last week MNB took note of a New York Times report that the New York City Council took "aggressive steps" to improve the working conditions and wages of delivery workers there.

The Times wrote:

"On Thursday, the city became the first in the nation to take aggressive steps to improve those employees’ working conditions, approving a groundbreaking package of legislation that will set minimum pay and address the plight of couriers employed by app-based food delivery services like Grubhub, DoorDash and Uber Eats."

I commented:

Will this result in higher rates and charges?  Sure.

But to be honest, there's nothing really wrong with that.

I've been making the argument here on MNB for a long time that in this country, nobody really knows what things cost.  It is all sort of hidden, obscured by promotions and sales and clutter.   Maybe customers who want the convenience of having food delivered ought to pay for the privilege … it is simply not fair that one group of people should be able to enjoy one standard of living at the expense of another.

One MNB reader responded:

Nope it is not. Life can be and is brutally unfair.  We would all love to have positive sum outcomes in all things that life brings to us. But that is not the world that has been created. 

Ok - so what do you propose? What is the alternative?  State mandated salaries? Guaranteed employment? Collectivism?  What maybe fair to you may not be fair to me. What maybe fair to me - may not be fair to you. The comment sounds whiney when your leave it hanging. One lesson in life - if you want to complain - then complain with a solution. Children whine. Adults find answers to life's cruelest inequity. Actually inequity drives innovation, it is the greatest equalizer. From the bottom up not the top down.

Forgive me … but what a crock.

I didn't suggest any of those things.  Not state mandated salaries, not guaranteed employment, not collectivism.

And I certainly don't think I was whining.

What I do think is a good idea is that everyone in the supply chain - from suppliers to retailers to consumers (and in this case, I was really referring to consumers) - to understand what things cost.

As I noted last week, "free delivery" has become a cost of doing business, but it isn't really free, is it?  Somebody has to pay.  Probably shouldn't be the people doing the actual work.

As I understand them, the New York City bills addressed specific issues, like wages being paid to employees that are way below minimum wage, with the balance designed to be made up by tips.  Except that there have been times when delivery people actually had to pay a fee to get wages and tips, which reduced their income even more.  There also was a lack of transparency about tips, which left workers uninformed about what tips were actually being paid.  The new rules also prevent delivery companies from preventing workers from going to the bathroom.

To be blunt, I don't think it is collectivism to suggest that a delivery worker ought to be able to take a leak when necessary.

Taking advantage of an entire class of people just because you can doesn't strike me as a reasonable cost of innovation.

To quote Harry Bosch (who uses the line in a different context), "Everybody counts, or nobody counts."

On a related subject, from MNB reader Mike Bach:

Interesting to see the auction underway for seasonal staffing.  One of my clients, who runs a chain of eyeglasses stores, put out “help wanted” ads at $15 / hour.  Not one single application. They tried it again, at $20 / hour. Received average of 20 applications / store.  The Incoming CEO at Southwest Airlines, Robert Jordan said he had a job application attached to his recent drive through order at WhataBurger.  Vail Resorts raised all minimum wages to $15 / hour AND is giving benefits for part time seasonal help this winter.  The latter is drawing more attention, particularly among the 55+ age crowd that already have homes in the resort areas and just want / need health care benefits to get to 62 / 65 years old.  Earlier this week, Bloomberg  shared a term “ghosting coasting” a new buzzword for employees who leave restaurants after a few days to go work elsewhere.

Healthcare benefits (company paid) will soon be the new currency in hiring workers. $15 / hour is so yesterday…..

We had an email on Friday about the piece I did regarding a robotic barista I saw at San Francisco International, suggesting that it was a step away from the personality that has characterized so many coffee shops.

To which MNB reader Paul Schlossberg responded:

Vending coffee, looking back some years, could have been described as "brown, flavored water." Next there were major equipment upgrades allowing for fresh-ground coffee. Much better. But it was no match for what happened with the rise of Starbucks and others. 

Then robotics changed the game. 

Some locations do not have adequate foot traffic to justify having a staffed operation. There might be sufficient traffic, and thus transactions, to justify an unstaffed and less capital-intense solution. Perhaps a vending deployment might work. 

Some occasions might not fit in to the typical operating times for a location. Even though airports have staffed coffee service, those might have closed while passengers are waiting to head out on a flight delayed to an 1100pm departure...or maybe a red-eye leaving at midnight. A vending solution might work. 

Think about a college campus at 100am. Odds are coffee vending service might be a good choice for student night owls.  

Don't forget 24-hour work locations for the late-shift staff. Hospitals. Data center sites. Customer-service centers. Maybe a vending machine could sell some coffee. 

Transactions that might have been realized but "never happen" are lost opportunities...lost revenue. 

These robotic baristas do a reasonably good job serving a variety of coffee beverage alternatives. Taste the coffee. You might decide it is better than "reasonably good." 

How do you bring your brand to locations where potential buyers cannot easily access it? In this case it's coffee vending machines. Who woulda thunk it? 

Writing about my Friday video from Folsom, California, where I enjoyed a moment at a winery that reminded me of the before-times, MNB reader Rich Heiland wrote:

Great Folsom vid. On my gigs I always build in an extra day to see what an area has to offer. Don't think I've ever been disappointed and I have missed it.

And MNB reader Gregory Gheen wrote:

If only you had your better half with you to share it with!

Yeah.  Join the chorus.

Finally, got this email from an MNB reader about my coverage of the National Grocers Association show:

I was somewhat surprised by your calm demeanor surrounding NGA’s live show.  You certainly had a very different view on PLMA’s decision to postpone their show.  What is missing?

I think my reaction to the PLMA story had more to do with moving the show to late January in Chicago, which seems problematic from a weather perspective.  Though I did note that pandemic concerns could be worse at that time of year, when you can't really be outside.

As for NGA … in one of my FaceTime videos, I said that while NGA seemed rigorous about making sure that attendees were either fully vaccinated or recently tested, it was noteworthy that an awful lot of people in the casinos seemed to be ignoring the city's mask mandate, with no enforcement evident.

I was calm, but that doesn't mean I was complacent.  I'm getting a Covid test today, just to be safe.  (I have no symptoms, but I must admit to being relieved in the morning when I can both smell and taste the coffee.)

One other thing on this subject.  I have no idea what the policies may be at NGA or any other group holding live conventions these days … but to my mind, it is absolutely essential that if they get any reports about someone who attended being diagnosed with Covid, they must send an email to every attended informing them of that fact.

To do otherwise would be unethical.  

Published on: September 27, 2021

It's Week Three in the National Football League…

Los Angeles Chargers 30, Kansas City Chiefs 24

Arizona Cardinals 31, Jacksonville Jaguars 19

Chicago Bears 6, Cleveland Browns 26

Washington 21, Buffalo Bills 43

Indianapolis Colts 16, Tennessee Titans 25

New Orleans Saints 28, New England Patriots 13

Atlanta Falcons 17, New York Giants 14

Cincinnati Bengals 24, Pittsburgh Steelers 10

Baltimore Ravens 19, Detroit Lions 17

NY Jets 0, Denver Broncos 26

Miami Dolphins 28, Las Vegas Raiders 31

Tampa Bay Buccaneers 24, Los Angeles Rams 34

Seattle Seahawks 17, Minnesota Vikings 30

Green Bay Packers 30, San Francisco 49ers 28