business news in context, analysis with attitude

Published on: October 12, 2021

Kroger today announced its intention to enter the northeastern US - one of the few areas of the country in which it does not have a bricks-and-mortar presence - with a pure-play e-commerce model using its Kroger Delivery service powered by new "fulfillment centers powered by the Ocado Group, combining vertical integration, machine learning, and robotics to provide an affordable, friendly, and fast fresh food delivery service."

While it is not disclosing where in the northeastern US it plans to launch the business - saying cagily in its press release that it will "share more insights…in. coming months" - the announcement suggests the degree to which Kroger no longer sees its growth as being tied to traditional stores.

In addition to its plans for the northeastern US, Kroger also said it will "expand its existing operations and boost capacity in California with the addition of two CFCs. The medium and smaller-sized facilities will meet the need for same-day and next-day grocery delivery demand."

And, Kroger said, it will move beyond its current pure-play e-commerce operations launched in central Florida earlier this year and "will enter South Florida and introduce two smaller-sized fulfillment facilities. These will join the already live CFC in Groveland as well as 'spoke' sites in Jacksonville and Tampa. It will also mark the introduction of two automated local fulfillment centers with Ocado, enabling Kroger Delivery to serve customers as fast as 30 minutes with a selection of 10,000 fresh food items and essentials, and to deliver same-day and next-day orders with 35,000 items."

This latter offering is said to be similar to a "Zoom" service that Ocado uses in the UK.

Kroger Delivery currently operates CFCs in Groveland, FL and Monroe, OH and in addition to the newly announced five facilities, Kroger Delivery is slated to open previously announced sites in Dallas, TX; Forest Park, GA (Atlanta); Frederick, MD; Phoenix, AZ; Pleasant Prairie, WI; Romulus, MI (Detroit); and sites in the South, West and Pacific Northwest.

Published on: October 12, 2021

by Michael Sansolo

Hard as it is to find any positives from the entire Covid pandemic, one item does stand out.  Without question, consumers were reminded just how important food retailers are to their lives.

That goes beyond supermarkets.  That was demonstrated in a powerful and emotional session at last week’s convention from the National Association of Convenience Stores (NACS) held in Chicago.

NACS president and CEO Henry Armour hosted a panel of three retailers, each with remarkable stories to share from recent newsworthy and painful times.  They were Don Rhoads of The Convenience Group based in Washington State where the first Covid cases in the US were identified nearly two years ago. Rachel Krupa of The Goods Mart in New York City, the first incredible hot spot in the nation.

And because Covid wasn’t the only story, the panel included Lonnie McQuirter of 36 Lyn in downtown Minneapolis, and just a short walk from the epicenter of everything that happened concerning George Floyd.

All three reflected on the challenges thrown their way and how they responded from Rhoads using his store as a drive-through food bank to McQuirter and Krupa running events to promote community healing.

The message from all three spoke clearly to the power food retailers have to serve any community in good times or crisis.  However, as Spider-Man eloquently reminds us, “with great power comes great responsibility” and here again, all three demonstrated how they rose to that challenge.

However, those challenges are hardly isolated incidents and certainly won’t be the last. Retailers frequently need to rise to the moment after all manner of community trauma, usually in the form of  weather emergencies, but the list is constantly growing.

A forward looking example came in a panel I was moderating, focused on a new study about sustainability and business realities for convenience stores. 

Note:  The study, is from the Coca-Cola Retailing Research Council, done with NACS for convenience stores. As I’ve  reported before, I’m the research director of the group as well as a companion group for supermarkets.  You can download the report for free here.  I'll also report on a companion study for supermarkets in a future edition.

The study on convenience stores provided some interesting insights. During Covid, shoppers told us they came to value the local convenience store more than ever thanks to easily accessible locations and the relatively small size of the buildings, meaning less traffic and potential interactions with the virus.

But power came with responsibility and shoppers say they have high expectations for all retailers to help address the challenges of sustainability. As one retailer in my panel said somewhat bluntly, convenience stores have an even bigger challenge in this area thanks to their reliance on gasoline sales, something all consumers easily associate with environmental issues.

However, the report offers us various paths of action and a strong reminder that retailers need to do a better job telling their stories of how they are improving operations, reducing waste, helping communities and more. The same panelist who talked about the challenge of gasoline sales, urged our audience to improve story telling to shoppers, to help every customer understand any step a retailer can and does take.

Sometimes, community efforts are easy to see such as when McQuirter and Krupa both ran community fairs around their stores during and after Covid lockdowns and protests related to Floyd’s killing. But many times efforts are far subtler such as when buildings, lighting and cases are converted for greater energy efficiency or when ties to local food banks and other charities are constant.

Great power does come with great responsibility. But unlike Spider-Man, you won’t be getting a series of movies and countless comic books, so learn how to tell the story.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com.

His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

And, his book "Business Rules!" is available from Amazon here.

Published on: October 12, 2021

When KC went to a movie theater last week (for the first time in 20 months), he got a reminder about why it is important to have actual people in some roles … and not in others. 

Published on: October 12, 2021

Axios has a piece in which it reports that "the pace of the economic recovery hinges in part on workers returning to jobs that involve dealing with an unpredictable public. But many of those workers say increasingly combative customers — angry about everything from long wait times to mask mandates — have prompted them to quit … Aggressive and violent clashes between customers and service workers over COVID safety protocols over the past nearly two years have led to prison sentences, fines and deaths.

"Many workers say they're simply not willing to put up with the abuse any longer — and their employers are often taking their side, even in industries that have long deferred to their customers."

The story notes that some "businesses have shut down in support of their employees. Some industries have provided self defense classes and banded together on public awareness campaigns."  A reality of the moment, the story says:  "The customer is no longer always right."

The fact is that "restaurants and bars are still about 1 million jobs short of pre-pandemic levels, with more than two-thirds of restaurant workers saying customer behavior is a factor in the industry's labor shortage."

Published on: October 12, 2021

The Wall Street Journal reports that delivery service DoorDash "has started selling restaurant ads that appear atop the search results in its app, as companies in the largely money-losing food-delivery industry dive deeper into advertising to boost revenue.  The company already let marketers pay to run ads offering free delivery or discounts, as well as banner ads, but hadn’t offered ads above its search results before it began testing the tool earlier this year."

At the same time, the story says, "DoorDash is launching 'featured listings' for consumer packaged goods brands to boost their placement within the convenience and grocery categories.

The Journal notes that "DoorDash is wary of turning off consumers in the competitive food-delivery business by shoveling too many ads into its app. For restaurants, it will display only one sponsored listing on top of search results or in cuisine-specific sections of the app. For other areas, like the grocery, convenience, pet or alcohol categories, it will allow two ads."

Published on: October 12, 2021

CBS Sunday Morning last weekend had a piece about the supply chain breakdown, noting that "book publishers are having trouble getting paper … car companies can't buy computer chips … builders can't get lumber … container ships in port are waiting for days to be unloaded … and everyone is back to hoarding toilet paper!

"What's so strange about the shortages is that there's actually a glut of goods entering the country.  And chances are whatever you're waiting for, is somewhere in boxes like these …"

According to the piece, a lot of the problem has to do with trucks.

Published on: October 12, 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 45,313,353 total cases of the Covid-19 coronavirus, resulting in 734,611 deaths and 34,797,165 reported recoveries.

Globally, there have been 239,127,382 total cases, with 4,874,993 resultant fatalities and 216,387,379 reported recoveries.   (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 76.4 percent of the US population age 12 and older has received at least one dose of vaccine, with 66 percent being fully vaccinated.

The CDC also says that 10.9 percent of the US population age 65 and older has received a vaccine booster shot.

•  Business Insider has a piece by Jennalynn Fung, a 19-year-old pharmacy student who works at a Walgreens in New York City, in which she describes the difficult working situation created not just by Covid, but also by her employer.

"We're giving vaccinations all day long as well as keeping up with the steady flow of prescriptions coming from local clinics and hospitals," she writes.  "Since flu shots are also walk-in, there are long lines of people waiting for different vaccinations. This is especially tough on a single immunizer who must keep track of who is getting what shot and what version (flu shots for babies, children and adults, and the elderly).

"In spite of what we do, we're rarely respected as healthcare workers.

"Staff pharmacists have consistently come in at 6 a.m. and stayed until 9 p.m. throughout the pandemic. Had there been one more technician or pharmacist at each store, things might be different — we would be able to catch our own breath and think more deeply about the health of our patients. 

"Walgreens' own treatment has made me feel like they didn't value me as a pharmacy worker. Many days I dread coming into work — every work shift is exhausting, from the rude patients to the constant influx of prescriptions. I continue to wonder: Why am I studying for six long years to be a pharmacist if people are going to treat me with no respect?"

She goes on:  "With the booster shots, Walgreens hasn't gotten any better — in many ways, it's worse. 

"Just a month ago on a Sunday, we had a family of six walk in for their flu shots. There was already a line of six elderly and immunocompromised patients waiting for the COVID booster. The line kept growing — some people were picking up their medications, others were asking for refills. The phone calls never ended. 

"Worst of all was, it was just me and the staff pharmacist working that day. We didn't close on time that night, but in order to keep to hourly budgets, my pharmacist told me I could leave and that she would stay behind. She spent another hour scanning in vaccine forms, filling more prescriptions, and cleaning."

Published on: October 12, 2021

•  The Puget Sound Business Journal reports that Amazon "is effectively dropping its early January office reopening date, instead making it a team-by-team decision at the director level … The decision to return or stay remote will now be made by team leaders, Amazon CEO Andy Jassy said Monday in a companywide email, where he added that he expects some teams to remain mostly remote, others to split their time and others to move mostly to the office. But he also said the company expects the physical office to still be a team's hub, a sign the company doesn't want its employees too far from corporate offices."

The rule will be that employees will be able to get into the office for a meeting with one day's notice.  (Relocating to Tahiti won't be an option.)

The Business Journal writes that "it's the latest departure from the company's once rigid reopening guidelines. Earlier this year, Amazon expected corporate employees to be in the office as often as they were before the Covid-19 pandemic. Amazon then relented and said it expected them in the office at least three days a week, citing the need for an office-centric culture. It then pushed its reopening date from September to January."

Published on: October 12, 2021

•  From CNBC:

"From larger turkeys and taller Christmas trees to more toy brands, Walmart-owned Sam’s Club is betting consumers will go big this year with holiday celebrations.

"The membership-only warehouse club said Friday it had huge gatherings and pent-up demand in mind as it selected and ordered holiday merchandise. It doubled the size of popular holiday side dishes, mashed and sweet potatoes, to 4 pounds from 2 pounds. It developed desserts meant to please a crowd, such as Christmas-themed cupcakes and brownie-topped cheesecake. And it launched a new service that will drop six- and 12-bottle packs of wine at customers’ doors to help them stock up for a party.

"Sam’s Club chief member officer Tony Rogers said that in surveys and during focus groups on Zoom, members told the company that they plan to get together with family and friends and enjoy aspects of the holiday season they have missed."

Published on: October 12, 2021

•  The Washington Post has a long piece about the "condescending" and "demoralizing" systemic "bro-culture" at Jeff Bezos' Blue Origin spaceflight company, which at least some insiders believe has grown so toxic that it has "affected how decisions were made and permeated the institution, translating into condescending, sometimes humiliating, comments and harassment toward some women and a stagnant top-down hierarchy that frustrated many employees."

“It’s bad,” one former top executive tells the Post. “I think it’s a complete lack of trust. Leadership has not engendered any trust in the employee base.”

In a statement to the Post, Mary Plunkett, Blue Origin’s senior vice president of human resources, said the company takes “all claims seriously and we have no tolerance for discrimination or harassment of any kind. Where we substantiate allegations of misconduct under our anti-harassment, anti-discrimination and anti-retaliation policy we take the appropriate action — up to and including termination of employment.”

You can read the entire story here.

Published on: October 12, 2021

Responding to yesterday's conversation with author Larissa Zimberoff about Silicon Valley's obsession with what she calls "New Food," one MBNB reader wrote:

Your discussion with Ms. Zimberoff about “New Food” is fascinating because the stores in which we shop have dedicated large amounts of shelf real estate to foods with ingredients that are made to look and taste like other food.  Both you and the author emphasize the importance of package labelling.  It becomes incumbent upon retailers to critically evaluate what they offer on their shelves so that they maintain trust with their shoppers.  Shoppers should be able to trust that what our stores are selling is actually what it claims to be, and that if the retailer is positioning the department as a “healthy food” section, that the items in that section are, indeed, healthy.  Those who create and then market “new foods” should be careful to offer consumers foods that deliver on the health benefits- good for us- for which they’ve been created.

From another reader:

Absolutely fascinating and one your best posts/conversations. Many moons ago the discussion was what to call spreadable margarine….  the conversation continues! Thank You!

And, from MNB reader Thomas Parkinson:

Loved the interview with Larissa.  Ordering her book.  

Now you know why we created Sifter.  I looked up Just Eggs.  You can see all the diets that this product is ok for.  But when I sifted by Organic or Clean, Just Eggs was not compatible.  FYI, Clean is in Sifter's top 5 diets of our users.

I'm a big fan of the Sifter.shop business model … and you can check out the site here.

We had a piece the other day about how some Amazon delivery drivers are upset by the company's management by machine and algorithm;  I expressed a certain amount of compassion for Amazon, which is trying to manage an enormous enterprise, making it hard to manage with nuance.  (Though I think it needs to try harder.)

MNB reader Charles Bartell responded:

Nuance? What Amazon is up to is nothing new.  In the 1980s the teamsters agreed to incentives for selectors in the warehouse.  Pick tickets were used for tracking cases selected per man-hour.  Now amazon has simply automated what good companies have been doing forever.  Were the systems subject to nuance back then - of course. Overall the incentive pay and tracking worked and grocers were able to wring out higher levels of productivity.   Back then there were those who griped too.  BUT, those who were motivated by cash embraced the opportunity and made up to $50k 35 years ago. I doubt it is much different today. There will be gripes - but those who want to make money will learn the tech and embrace the algorithms to become real earners.

From another reader:

I think Amazon is ignoring a foundational principle at the intersection of technology and humanity: Just because you can, doesn't mean you should.

Agreed.  It is the Jurassic Park lesson.

MNB reader David Spawn wrote:

A brother-in-law just interviewed for a position with a major petrochemical supplier based in Texas.  The interview was conducted via Zoom.  But not with an interviewer.  In place of a person, questions were posed on the screen using a program that measured your response time, delays, the number of “uhs” and other pauses and so on.  In addition, they asked you to disclose exactly how much compensation you expected to earn to a machine.  You then received a rank which told you how you scored in the process and presumably whether you would be moved to the next step in the process

This is efficiency run amok.  What a terrifying new world that is being unleashed upon us, all for what???

On another subject that's come up here on MNB, from reader Steve Ritchey:

I've noted Wal Marts renewed emphasis on Private Label goods in their stores.  I think I first noticed it when I was shopping for some Ore Ida frozen fries.  I know, not something you would buy, sue me.  There were no Ore Ida products to be found, it was all Private Label. On top of that, it was a mess as if stockers just stood back and threw the bags of product into the freezer case.  Now, Ore Ida is owned by Heinz which does a lot of tie in marketing between brands they own.  Plus I've had less than stellar experience with WM's PV products, so I'm less than inclined to buy or even try them at this point.  Just something to think about, the PV product needs to be something approaching the quality of the branded item it's meant to emulate and replace.

MNB reader Christopher Durham wrote:

USA Today misses the scale of Walmart - even if their private brand penetration is smaller than Target it’s revenue is significantly larger. Honestly walk a store count the private brands and skus and then tell me their penetration is small. It’s not and in many categories they are the largest brands in the country. 

And finally … 

Yesterday we had a piece about how remodeled Schnucks store will have "a spot to grab some St. Louis-inspired gear. Arch Apparel has its own section in the store offering customers several clothing choices."

To which I commented, with tongue firmly in cheek:

Alas, these clothing choices will not include St. Louis Cardinals 2021 World Championship jerseys…

I hit a nerve apparently, because I got email like this one:

I guess it goes without saying that there will not be any 2021 Mets World Championship gear either,  anywhere.  35 years is a long time and cheap shots from Mets fans deserve to be addressed….

Next year for both of us.

And this one:

We made it farther than the Mets!!!!!

Fair point … and for the record, I was really just teasing.  (I'm painfully aware of the Mets' shortcomings.)

Also, just so you know, I've come to St. Louis to watch Cardinals games a number of times, and have enjoyed every trip enormously.

In fact, thanks to my friend Joanie Taylor, I was there for the last regular season game at the old Busch Stadium, and also there the following year when the Cardinals won the World Series.  

Published on: October 12, 2021

•  Last night, the Boston Red Sox propelled themselves into the American League Championship Series with a 6-5 defeat of the Tampa Bay Rays, winning the best-of-five AL Divisional Series three-games-to-one.

There they will meet the winner of the other ALDS, the Houston Astros or the Chicago White Sox, whose game was postponed last night because of weather.  Houston leads that series at the moment two-games-to-one.

In the National League Divisional Series, the San Francisco Giants defeated the Los Angeles Dodgers 1-0 in a thriller last night, taking a 2-1 lead in the best-of-five series.

And, in the other NLDS, the Atlanta Braves defeated the Milwaukee Brewers 3-0, also taking a 2-1 series lead.

•  Yesterday also was the running of the 125th Boston Marathon, which was cancelled last year and then postponed from its usual date earlier this year.  (Participants had to either be vaccinated or have a recent negative Covid test, which winnowed the field somewhat.)

The winners were:

- Diana Kipyogei, of Kenya, won the elite women's division.

- Benson Kipruto, also of Kenya, won the elite men’s race.

- Manuela Schär, of Switzerland, won the women's wheelchair race.

- Marcel Hug, also of Switzerland, won the men's wheelchair division.

•  In Monday Night Football, the Baltimore Ravens defeated the Indianapolis Colts in overtime, 31-25.

And, during the broadcast, it was announced that Las Vegas Raiders head coach Jon Gruden was stepping down, it having been revealed that a number of years ago he had written a series of emails in which he expressed misogynistic and homophobic sentiments, including negative comments about the use of women officials and efforts to reduce concussions.  The emails were written while Gruden was working for ESPN as a game analyst;  they were sent to Bruce Allen, who at the time was president of the team that used to be known as the Washington Redskins, as part of a broader NFL investigation into workplace misconduct at that franchise.

The New York Times this morning writes that "taken together, the emails provide an unvarnished look into the clubby culture of one N.F.L. circle of peers, where white male decision makers felt comfortable sharing pornographic images, deriding the league policies, and jocularly sharing homophobic language.

"Their banter flies in the face of the league’s public denouncements of racism and sexism and its promises to be more inclusive amid criticism for not listening to the concerns of Black players, who make up about 70 percent of rosters. The N.F.L. has in the past struggled to discipline personnel who have committed acts of domestic violence and been condemned for failing to adequately address harassment of women, including N.F.L. cheerleaders."