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    Published on: September 30, 2021

    John Mackey, who co-founded Whole Foods in 1980 and helped to build it into a preeminent purveyor of natural and organic foods, said this afternoon that he will retire from the company, which he sold to Amazon several years ago for $13.7 billion, on September 1, 2022.

    In a memo to employees, Mackey said he will be succeeded as CEO of the division by the company's current COO, Jason Buechel.   Mackey said that Buechel, who joined Whole Foods in 2013, had been his choice as a successor and that he was "pleased" that Amazon agreed.

    Mackey wrote that he would compare his relationship to Whole Foods with how a parent feels about a child.  "As a parent, I have always loved Whole Foods with all my heart. I have done my best to instill strong values, a clear sense of higher purpose beyond  profits, and a loving culture that allows the company and all our stakeholders to flourish," he wrote. “All parents reach a time when they must let go and trust the values imparted will live on within their children. The time has nearly come for me and for Whole Foods.”

    "Words cannot begin to express how deeply grateful I am for your partnership on this incredible journey and how much I love the company and all of you," Mackey also wrote in his memo. "I may be retiring from Whole Foods a year from now, but so long as I am still alive, I will remain connected to Whole Foods and will do all that I possibly can to help us all continue to flourish."

    In its coverage, Bloomberg notes that as the company grew - it now has more than 500 stores - it also grew more difficult to manage, "as large mainstream grocers started stocking their own shelves with organic and natural products. Under pressure from an activist investor, Mackey brokered the sale of his company to Amazon for $13.7 billion in 2017. Despite fears among mainstream supermarket chains that the acquisition would help Amazon dominate yet another industry, the company has struggled to crack the code on physical retail."

    Mackey famously compared being owned by Amazon to marriage.  He once told CNBC, “Do I absolutely love everything about my wife? The answer is that I love about 98%,” he says. “There are little things that I wish were different, but you can’t really change people … Amazon is like a marriage.  Do we love absolutely everything about Amazon? No. We probably love 98%.”

    KC's View:

    So, if I'm reading the metaphorical evolution correctly, this is less about a marriage breaking up than it is about allowing your child to fly on his/her own?

    This probably was just a matter of time.  It always seemed unlikely that Mackey was going to last very long once Amazon bought the company and, in fact, he survived in that culture longer than I would've expected.

    When you think about it, Mackey has had an  amazing run - he co-founded Whole Foods 41 years ago and during that time, before being acquired by Amazon, the company essentially ate all of its competition, including companies like Wellspring Grocery, Bread & Circus, Mrs. Gooch’s, Fresh Fields, Bread of Life, Merchant of Vin, and Harry’s Farmers Market, as well, of course, as Wild Oats.

    Of course, I suppose that one could argue that one of the ways that Whole Foods stayed successful was not by competing, but my eliminating the competition through acquisition … and that when real competition came along as more mainstream retailers decided that this was a category with opportunities, Whole Foods ran into trouble and needed Amazon to rescue it.

    This almost sounds like the Tony Soprano school of management - if someone looks like competition, whack them so you don't actually have to compete.  Until, at some point, someone comes along and whacks you.  (So much for "conscious capitalism"…)

    There are are a couple of issues that immediately come to mind.

    First, with Mackey departing (eventually), what path does Whole Foods take?  There are a lot of people who would argue that the retailer has lost something off its fastball over the years, with the decline (such as it is) accelerating since the Amazon deal.  With Mackey gone, how does the company define its mission?  If the goal is to reach a broader audience, it may mean that it has to ease off on the nutritional evangelism a bit … which could actually have the effect of alienating its core customer base without really making it appeal to more people.

    Whatever.  Seems to me that Buechel is going to be under a lot of pressure even beyond the pressure that comes when you are the direct replacement for a founder.

    Plus, it'll be interesting to see how a Mackey-less Whole Foods sees its operations absorbed into Amazon's broader bricks-and-mortar universe.  I would imagine the temptation to do find efficiencies this way will be too great to ignore, though, again, this easily could lead to a softening of the brand's value proposition, which will make it less effective and lead to the efficiency issue being moot.

    Second, what will Mackey do next?  He's gonna have a ton of money and a non-compete …. and he is 68 years old.  Here's my recommendation:  if the non-compete allows it, open a chain of restaur-markets that serve healthy cuisine to patrons on the premises, but also offer both prepared meals and highly curated ingredients to people who still want to cook at home.

    Of course, Mackey may be tired of the whole thing and just wants to kick back, smoke a cigar, eat some Fritos, have a beer and watch the world go by.  Though I doubt it.

    Published on: September 30, 2021

    The last 18 months have not been kind to the restaurant business, as the pandemic forced many to close, a labor shortage hurts service levels, costs are increasing, and a sometimes-toxic customer base makes things miserable for everyone.  KC argues that while supermarkets have dined out to some degree on restaurants' discomfiture, they should not take the moment for granted.

    Published on: September 30, 2021

    Reuters reports that Walmart said yesterday that it plans "to hire about 150,000 new U.S. store workers, most of them permanent and full-time, in preparation for the busy holiday season."  The retailer also said "it would offer extra hours to many of its store workers during the period," a move similar to one announced by Target just days ago.

    The story notes that "retailers have been offering pay raises and other incentives to retain staff to ensure they have enough workers during the holiday shopping season, which starts a day after Thanksgiving and continues into early January … Walmart had previously announced it would hire 20,000 workers in its supply chain facilities to permanent roles as people have increasingly adopted curbside pickup and delivery during the COVID-19 pandemic."

    KC's View:

    It is hard to imagine that all the retailers hoping to hire all these folks are going to be able to satisfy their requirements.

    They'll have to hope that, in the words of the Rolling Stones, "You can't always get what you want … But if you try sometime you find … You get what you need."

    Published on: September 30, 2021

    Inmar Intelligence is out with its 2021 Future of Food Retailing Report, suggesting that over the next five years there will be "an overall return to pre-pandemic channel trends.

    "The growth of Traditional and Non-Traditional Grocery will come at the expense of the Convenience format -- small stores that sell staple groceries, non-foods, and ready-to-eat foods designed for easy and quick access, and can include gasoline. This format is projected to continue to decline from 15.2 percent of dollar share in 2020 to 12.9 percent in 2025."

    Other insights from the Inmar study:

    •  "E-commerce sales of grocery and consumable items grew 48.9 percent year over-year to $119.0 billion in 2020, driven by a 74 percent increase in digital sales of food and beverage. This increase is partially attributed to partnerships between retailers and third-party shopping and delivery services, like Instacart (100 percent year-over-year increase in partners) and Target (partnership with Shipt saw 300 percent increase in same-day deliveries)."

    •  "Traditional Grocery experienced an overall 10.9 percent increase in sales in 2020, growing to $623.3 billion from $562.3 billion in 2019. This channel saw the highest year-over-year percent boost in sales, resulting in a 1.9 percent year-over-year increase in dollar share to 44.4 percent, a reversal of the share losses in 2018 and 2019 to Non-Traditional Grocery. In addition to the sales increase, Traditional Grocery store count increased 0.6 percent to 40,616 locations at the end of 2020. The largest store count increase was within Limited Assortment, while Super Warehouse had a 16.2 percent store count year-over-year decline."

    Jim Hertel, Senior Vice President at Inmar Intelligence, said in a prepared statement that "digital acceleration is affecting the long term growth plans of food retailers and manufacturers.  Consumers have convenience at their fingertips with the option to order groceries online, yet in-store sales are climbing back up to pre-pandemic levels. So for retailers across the board, now is the time to build loyalty through digital hybrid experiences. These personalized engagements on digital and tailored and thoughtful in-store experiences will help meet expectations now, which will solidify loyalty in the long run.”

    KC's View:

    A lot can happen in the next 4-5 years to make these prognostications inaccurate.  As we've certainly seen in the past 18+ months, disruptions can come from a wide variety of directions, forcing businesses to take new paths and explore new models.  As I've suggested here before, it sometimes seems that we're just one variant or one natural disaster away from a complete breakdown of the social order.

    I also think that there are lots of reasons that a return to pre-pandemic norms may not happen, not least of which is the fact that there is some percentage of retailers who don't understand that they cannot be complacent about all this - they have to compete for every customer and every sale.

    Published on: September 30, 2021

    The New York Daily News reports that "even though Dollar Tree stores brand themselves as the place where everything sold there is only a dollar, the company will soon be selling products that cost more than a buck as costs of products in every area have increased … The retail chain had already started a pilot program that included selling higher-priced goods at a couple of hundred of the company’s 8,000 locations across the country at 'Dollar Tree Plus' section of the store. Items sold in that area can go for as much as $5 while items that range in prices of $1.25 to $1.50 will soon make their way to the dollar section of some locations."

    “For decades, our customers have enjoyed the ‘thrill-of-the-hunt’ for value at one dollar — and we remain committed to that core proposition — but many are telling us that they also want a broader product assortment when they come to shop,” CEO Michael Witynski said in a statement.

    KC's View:

    These days, I don't think too many people will take umbrage at Dollar Tree for this.

    Published on: September 30, 2021

    Willamette Week reports that the Oregon Liquor and Cannabis Commission (OLCC) has fined a California winery $50,000 for mislabeling grapes that it represented as being pinot noir from Oregon, but were not.

    The OLCC said in a statement that winery Copper Cane "stated that the grapes were from the Oregon Coast or the coastal area.  Consumers, growers and Oregon winemakers noticed the geographic inaccuracy, since Oregon’s grape-growing regions do not touch the Pacific coast and are separated by the Oregon Pacific Coast mountain range.”

    According to the story, "An OLCC investigation found fault with Copper Cane’s labels and its marketing materials. The underlying issue is that Oregon pinot noir commands a premium price, so it could be profitable to pass off lesser varieties as the real thing … Copper Cane agreed to settle the allegations and pay the OLCC fine. The company did not admit to doing anything wrong but told the OLCC it will follow labeling rules in the future."

    KC's View:

    I'm glad that the OLCC has ruled in favor of integrity, though I'm always amazed when these companies are able to pay the fine without conceding guilt.  I think that in such cases, the regulators ought to hit the companies with much bigger fines if they won't admit wrongdoing.

    This isn't Copper Cane's first experience with questionable labeling.  Back in 2018m, MNB covered what we called "an ongoing and pitched battle taking place in Oregon over the legitimacy of a wine brand that claims to be from the Willamette Valley, but is not. Now, federal regulators have ruled in favor of Oregon winemakers seeking to defend their terroir."  It was Copper Cane that was in trouble then, and Copper Cane that is in trouble now.

    My broader feeling is that products ought to be labeled as what they are. No excuses, no wiggle room.  Period.  

    Published on: September 30, 2021

    Axios reports that a new report from Salesforce suggests that end-of-year holiday gifts are likely to cost a lot more this year - maybe as much as 20 percent more - with retailers suggesting that consumers "start holiday shopping yesterday — in order to avoid the worst of the empty shelves and inflated prices."

    The story says that "price increases, and consumers’ willingness to pay them, may help save manufacturers’ and retailers’ bottom lines in a season riddled with shipping and logistics logjams … Pent-up demand for goods and record household wealth are continuing to translate into strong consumer spending and more corporate pricing power to cover the rising costs of materials and logistics."

    KC's View:

    One note from the story that resonated with me was the suggestion that while people may spend more for gifts, they also may buy fewer gifts … which could undercut the prediction of robust spending.

    I also think the whole construct is built on a house of cards.  If the federal government defaults, and the US Congress is unable to get out of nits own way, that could undermine consumer confidence and spending.

    Published on: September 30, 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 44,199,496 total cases of the Covid-19 coronavirus, resulting in 713,953 deaths and 33,634,702 reported recoveries. 

    Globally, there have been 234,157,747 total coronavirus cases, with 4,790,066 resultant fatalities and 210,951,945 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 75.4 percent of the US population age 12 and older has received at least one dose of vaccine, with 65 percent being fully vaccinated.  

    What this means is the one-quarter of the US population that is able to be vaccinated has not received even one dose of vaccine.

    •  Axios reports that the CDC yesterday issued an "urgent health advisory" to people who are pregnant or planning to become pregnant to get the COVID-19 vaccine.

    According to the story, "The CDC said it 'strongly recommends' vaccination because its benefits for a pregnant person and the fetus outweigh the risks. It added that pregnant people with COVID-19 are at 'increased risk' of outcomes such as preterm birth, stillbirth and admission of a newborn into the ICU.

    "The CDC is also calling on health departments and health care professionals to educate pregnant individuals on the safety and effectiveness of coronavirus vaccines."

    •  Axios does report some hopeful news, though - that "new coronavirus infections in the U.S. fell by 25% over the past two weeks … The U.S. is now averaging roughly 114,000 new cases per day. That's still a lot, but it's a significant improvement from this summer, when the Delta variant unleashed a new wave of infections, hospitalizations and death.

    Important to keep in mind that public health officials have largely said that the goal, in order to say that the pandemic really is under control, has to be 20,000 new cases a day or fewer.

    •  Axios also says that "Alaska experienced the country's biggest COVID spike over the past two weeks, and is now averaging more cases per capita than any other state.

    Tennessee saw the biggest improvement over the past two weeks, while Connecticut has the lowest absolute number of cases per capita, at just 14 per 100,000 people."

    Connecticut, I'll point out with a certain amount of self-satisfaction, being where I live.

    Also, I've gotten some queries about something I said the other day after returning from a trip that took me from Monterey, California, to Las Vegas, to the Organic Produce Summit, the National Grocers Association show and Groceryshop.  My Covid test came back negative.  Whew.

    •  The Wall Street Journal reports that Google-owned YouTube said yesterday that "it would remove content that falsely alleges approved vaccines are dangerous and cause severe health effects, expanding the video platform’s efforts in curbing misinformation on Covid-19 to other vaccines.

    "Examples of content that would be taken down include false claims that approved vaccines cause autism, cancer or infertility or that they don’t reduce transmission or contraction of diseases … The policies cover general statements about vaccines and not only for Covid-19 and specific routine immunizations such as those for measles and hepatitis B, YouTube said. The platform said it has removed more than 130,000 videos for violating its Covid-19 vaccine policies since last year."

    •  There is a story from the Associated Press about how "more than a year after U.S. healthcare workers on the front lines against COVID-19 were saluted as heroes with nightly clapping from windows and balconies, some are being issued panic buttons in case of assault and ditching their scrubs before going out in public for fear of harassment.

    "Across the country, doctors and nurses are dealing with hostility, threats and violence from patients angry over safety rules designed to keep the scourge from spreading."

    Some examples from the story:

    - "Doctors and nurses at a Coeur d’Alene, Idaho, hospital have been accused of killing patients by grieving family members who don’t believe COVID-19 is real, said hospital spokeswoman Caiti Bobbitt. Others have been the subject of hurtful rumors spread by people angry about the pandemic."

    - "Over Labor Day weekend in Colorado, a passerby threw an unidentified liquid at a nurse working at a mobile vaccine clinic in suburban Denver. Another person in a pickup truck ran over and destroyed signs put up around the clinic’s tent."

    It is hard to imagine that there are people out there who believe that this kind of crappy behavior is somehow acceptable, that they have the "freedom" to treat people who are dedicated to the public health in such an abhorrent way.   

    •  The lights may finally have gone back on for Broadway theaters, but yesterday we got a reminder that all has not returned to normal.  The music "Aladdin" was forced to shut down just a day after reopening because "unnamed members in the musical’s cast and/or crew tested positive for Covid-19."  No word on when the show will be able to reopen again.

    Published on: September 30, 2021

    •  The Seattle Times reports that "Amazon has settled a complaint with the National Labor Relations Board that it wrongfully terminated two Seattle office employees, Emily Cunningham and Maren Costa, in retaliation for their advocacy on behalf of warehouse workers at the beginning of the COVID-19 pandemic.

    "The settlement stipulates that Amazon is required to pay Costa and Cunningham lost wages, and notify all of its employees that they have the right to take collective action and make public statements about work-related issues."

    Published on: September 30, 2021

    …will return.