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    Published on: November 1, 2021

    Last week's decision by Atlanta Braves manager Brian Snitker to pull starting pitcher Ian Anderson, who was pitching a no-hitter against the Houston Astros in game three of the World Series, struck some as baseball sacrilege.  But KC argues that it actually teaches us an important business lesson about how to achieve championship level play.

    Published on: November 1, 2021

    The Wall Street Journal this morning has a piece about how supermarket chains are coping with out-of-stocks created by myriad supply chain issues.

    An excerpt:

    "Supermarket chains are revamping their operations to navigate persistent product shortages, expanding storage space and curbing discounts to make sure they don’t run out.

    "Companies are planning for shortages of popular brands of food and staples to continue for months and managers are trying to keep up as different products run short from week to week, industry executives said. While food supplies overall remain plentiful, Nutella spread, Prego pasta sauces and Pringles chips are among many items that have been tough to secure in recent weeks, some supermarket companies said. Lunchables snacks and Capri Sun drinks have been hit-or-miss for months."

    The Journal story goes on:

    "Some packaged-food makers, struggling with stretched staffing and hard-to-find raw materials, are limiting shipments of products, companies said. In response, grocery buyers, who are in charge of planning and coordinating orders, are spending more time tracking down vendors, managing trucks that arrive late and searching for substitutes for out-of-stock items. Food retailers are buying extra inventory whenever they can, ordering items months earlier than usual and sending their own trucks directly to manufacturing plants to make pickups and speed up delivery times."

    The Journal quotes Albertsons CEO Vivek Sankaran:  "The fact is, it’s like whack-a-mole.  On any given day, something is out of stock in the store.”

    KC's View:

    Two things.

    First, for those of you who may have missed it on Friday, this is a situation I directly addressed in my FaceTime commentary.

    Here's the gist:  These out-of-stocks, as much as they can be a pain in the neck, also are an opportunity.  Rather than leaving holes on the shelves or trying to disguise the holes by refacing available product, retailers ought to explain to consumers why those holes exist.  (Most consumers, I'm guessing, really don't understand the supply chain issues that create out-of-stocks.). And then, they ought to ask consumers to tell them which products they want but can't find and then offer to contact them when the items become available and even put some aside for them.

    Instead of being a problem, the out-of-stocks then become an opportunity to create a relationship, to reinforce to the shopper that the retailer is on his or her side.

    The other thing that I find interesting in this story is the note that "some retailers are withdrawing discounts to reduce demand."

    This seems reminiscent of how, during the height of the pandemic, promotions and sales seemed to go away - there was no reason to discount anything because all anyone needed to do to send stuff out the front door was to bring it in through the back door.

    I have to wonder if the confluence of all these events could lead to a time when the industry will be smarter and more targeted about how discounts and sales are deployed, with retailers figuring out ways to reinforce and deepen their relationships with best shoppers rather than putting stuff on sale to generate traffic that may not lead to sustainable growth.

    Published on: November 1, 2021

    Dollar Tree announced over the weekend that it is expanding on its relationship with Instacart "to provide same-day delivery within as fast as an hour from close to 7,000 Dollar Tree stores."

    The two companies began working together in November 2020, and according to the announcement, "after achieving success with the pilot project, the companies broadened their collaboration to over 6,000 Family Dollar stores in January 2021 and tested the same-day delivery service in August.

    "With the current expansion, the companies now provide deliveries as fast as one hour from close to 13,000 Family Tree and Dollar Tree stores across Washington D.C. and 48 states."

    KC's View:

    So, let me get this straight.

    Instacart offers Dollar Tree customers same-day delivery as a differential advantage, which over the past few weeks it has worked with other retailers - Kroger and a couple of the Ahold Delhaize banners - to offer 30-minute delivery as a differential advantage.

    I still struggle with understanding how any of this ends up being a differential advantage for anyone … except, of course, Instacart, which continues to gain vital customer shopping information that it can use to compete with its current client retailers … or, at the very least, dissuade any of these clients from looking elsewhere for e-commerce services.

    Published on: November 1, 2021

    Los Angeles Times business columnist David Lazarus poses a question this morning:

    How come a box of Special K Fruit & Yogurt that shows "a spoon being lifted from a bowl … the spoon holds crunchy-looking flakes accompanied by white clusters and little bits of red … prominently featured beside the bowl are a juicy-looking strawberry, raspberry and blackberry" actually has no berries in it?

    "There are no strawberries," Lazarus writes.  "No raspberries. No blackberries. The only fruit listed is dried apples, which aren’t even depicted on the box."

    The actual ingredients:  "“Whole grain wheat, rice, sugar, whole grain oats, wheat bran, contains 2% or less of corn syrup, salt, palm kernel oil, dried apples, brown sugar syrup, rice flour, nonfat milk, natural flavors, nonfat yogurt powder (cultured nonfat milk; heat-treated after culturing), mixed tocopherols for freshness, wheat, citric acid, molasses, vegetable juice for color, modified corn starch, lactic acid, honey, soy lecithin, barley malt extract, malt flavor, spice, BHT for freshness.” Plus vitamins and minerals.

    Lazarus writes that "the federal Fair Packaging and Labeling Act, enacted in 1967, prohibits 'consumer deception ... with respect to descriptions of ingredients'."  But, he concedes, "consumer deception" is a vague construct.   The Federal Trade Commission (FTC) wouldn't comment on it.  And, he writes, "The Food and Drug Administration has its own rules for food and beverage packages, with highly specific regulations for how ingredients are presented."  An FDA spokesperson says that "a food that contains no berries can feature berries on the package if it contains berry flavoring."  (This particular cereal does contain "natural flavors," but does not specify berry flavoring.)

    And, Lazarus writes, "No one at Kellogg responded to my repeated requests for comment. (Maybe the company is focusing instead on lawsuits alleging it has more dried apples than strawberries in its strawberry Pop-Tarts.)"

    It ends up that at least one legislator is paying attention.  Rep. Frank Pallone (D-New Jersey) has "introduced a bill that would, among other things, require that images of fruits and vegetables on packaging correspond with actual ingredients."

    In a statement, Pallone says that "the Food Labeling Modernization Act will update our nation’s packaging requirements to provide clear nutritional information to consumers to help them make healthier and more informed purchasing decisions."

    KC's View:

    When we reported here on three different lawsuits targeting Pop-Tarts about a week ago, I said that I was sympathetic to these suits.  There are so many cases of products that are labeled as one thing, and when you look at the labels, you see that they have none of the so-called featured ingredient, or so little as to be irrelevant.

    My go-to example tends to be frozen blueberry waffles, which in many cases contain absolutely no blueberries.

    I got a little pushback on this, with one MNB reader arguing that no reasonable person should expect that "a Pop-Tart is filled with strawberries; fresh or otherwise."  Another wrote that "I think that there is a very different issue between an item with a listed 'flavor' vs an item that is listed as an ingredient."

    At the risk of seeming like a purist, I think there is not unreasonable about thinking that a strawberry Pop-Tart should have at least some actual strawberries, or that a cereal on which the packaging shows fresh berries should actually have some fresh berries.

    At one point did our standards for accuracy and truthfulness get so low that we are willing to accept such misdirection, especially in the food we eat?

    Here's the deal.  The food industry can continue to perpetrate the dubious argument that these questions don't matter, which strikes me as being anti-consumer, or it can begin to take an ethically more defensible approach of saying, "We are on the shopper's side.  We are going to go out of our way to make sure that things are what we say they are, because that's the right thing to do."

    I don't think this is being purist.  I just think it is trying to be as accurate as possible, which is in the best interests of consumers, which means that in the end it will be in the best interests of the industry.

    Published on: November 1, 2021

    Good piece in the Wall Street Journal about how the Cheesecake Factory dealt with the challenges created by the pandemic.  An excerpt:

    "When Covid-driven closures cut deeply into sit-down business in Cheesecake Factory’s cavernous, lavish dining rooms, the 208-restaurant chain emphasized to-go orders to help buttress sales. It worked: The chain is averaging more than $3 million in to-go orders per location this year, more than double its typical amount before the crisis.

    "Cheesecake, in particular, travels well, and people order it at all hours. The company said it sold more cheesecake as a percent of sales last year than it did before the pandemic. 'You have a few more people who are just getting slices at nine o’clock at night delivered to their house,' said David Gordon, the chain’s president."

    Now, as the pandemic recedes, Cheesecake Factory has another problem - it has more customers … returning to Cheesecake Factory’s 10,000-square-foot dining rooms," which "has stretched the company and its workers, some of whom say they are at a breaking point."

    You can read the piece here.

    KC's View:

    I love cheesecake, though I cannot afford (from a waistline point of view) to eat much of it anymore.  But I have to be honest - it never would've occurred to me to order a slice from the local Cheesecake Factory during the pandemic.

    Maybe it is because I have a general antipathy for the format - I much prefer a small restaurant with a dozen or so items that are great to a giant restaurant that serves everything;  I'm just innately suspicious about the ability of such a place to be really good at anything.

    But I do find Cheesecake Factory's ability to pivot and develop a new business model to be admirable, even if they didn't manage to pull me into the fold.

    Published on: November 1, 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 46,823,938 Covid-19 coronavirus cases, resulting in 766,299 deaths and 36,715,313 reported recoveries.

    Globally, there have been 247,557,800 coronavirus cases, with 5,016,975 resultant fatalities and 224,207,750 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 78 percent of the US population age 12 and older has received at least one dose of vaccine, with 67.8 percent of that group being fully vaccinated.   The. numbers also show that 66.7 percent of the total US population has received at least one dose of vaccine, with 58n percent being fully vaccinated.

    The CDC also says that 24.4 percent of the US population age 65 and older has received a vaccine booster shot.

    •  The Washington Post reports that "the pandemic appears to be winding down in the United States in a thousand subtle ways, but without any singular milestone, or a cymbal-crashing announcement of freedom from the virus … There could still be a winter surge since respiratory viruses thrive when people huddle in heated rooms. Some experts said they expect at least a modest uptick in infections over the next few weeks. Last year’s brutal winter wave of infections, which peaked in January, was just getting rolling at this point on the calendar."

    The Post writes that "the trends are favorable. With most people vaccinated and infection rates dropping, the United States has entered a new phase of the pandemic in which people are adapting to the persistent presence of an endemic but usually nonlethal pathogen. They really have no choice. The virus isn’t going away."

    Jennifer Nuzzo, an epidemiologist at the Johns Hopkins Bloomberg School of Public Health, tells the Post, “It doesn’t end. We just stop caring. Or we care a lot less.  I think for most people, it just fades into the background of their lives.”

    And Robert M. Wachter, chair of the Department of Medicine at the University of California at San Francisco, tells the Post, "“My feeling now is that we’re nearing a steady state where things might get a little better or worse, for the next few years. It’s not great, but it is what it is … There’s no cavalry coming, so decisions now should be predicated on this being something near steady state. To me, particularly once I got my booster, it prompts me to accept a bit more risk, mainly because if I’m not comfortable doing it now, I’m basically saying that I won’t do it for several years, and maybe forever.”

    •  From the Wall Street Journal:

    The Food and Drug Administration is delaying a decision on Moderna Inc.’s application to authorize use of its Covid-19 vaccine in adolescents to assess whether the shot leads to a heightened risk of myocarditis, the company said.

    "The FDA notified Moderna on Friday evening that an analysis may not be completed until January of next year while the agency reviews recent international data on the risk of myocarditis after vaccination, the company said Sunday … Moderna also said it would delay asking the FDA to authorize use of a lower dose of its shot in even younger children, ages 6 to 11, while the agency continues to review its request to clear the shots in adolescents."

    Published on: November 1, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From Reuters:

    "Labor shortages have cut into Inc's plan to make one-day delivery standard for members of its Prime loyalty club, delaying its bid to cement its lead in e-commerce and sending costs surging ahead of the all-important holiday season."

    Amazon CFO Brian Olsavsky describes one-day delivery for Prime members as "unfinished business," at first hit by the demands of the pandemic and now impacted by the staffing and supply chain issues hitting every retail business.

    •  Reuters reports that Amazon has increased its stake in electric vehicle company

    Rivian Automotive, and now owns about 20 percent of the company.  "Rivian is also aiming to raise between $5 billion and $8 billion in a stock market debut later this year, and seeking a valuation of about $80 billion," the story says.

    Be interesting to see if Amazon's stake in the company dissuades other companies - almost all of which compete with Amazon at some level - from doing business with Rivian.  After all, do they want to do something that will line Amazon's pockets to the degree that it will be better able to compete with them in other areas? 

    •  The Financial Post reports that "the German labor union Verdi on Sunday called on employees to strike at seven different Amazon locations in an ongoing pay dispute.

    "Amazon did not immediately respond to a request for comment on the strikes, which are planned to start on Nov. 1 at some of the locations."

    Published on: November 1, 2021

    •  The Wall Street Journal has an interview with Andrew Cathy, who today starts his new job as CEO of Chick-fil-A, the fast food juggernaut that was founded by his grandfather in 1967, who says that while the company has no intention of selling hamburgers, "We are looking at some plant-based options for customers. I’ve actually tried a couple of the products. I’m really excited about it. I do think there’s a tremendous opportunity as the market continues to evolve."

    Cathy also says in the interview that there is no chance that the company ever will go public … its stores will remain closed on Sundays … and that the Chick-fil-A foundation last year "changed its giving after criticism that it had given to groups perceived as antigay" because "it helps us stay focused on really targeting those investments to make the biggest difference possible. What people conceive of or construe is not anything that I can control … I think the most important thing for us, being in the restaurant business, is that we serve everybody. My grandfather, he would say, 'I’m not right wing or left wing. I’m the whole chicken'."

    Published on: November 1, 2021

    On the subject of the importance of employee engagement and a nourishing corporate culture, MNB reader Rich Heiland wrote:

    Some years ago I was facilitating a group of a managers in a company around creation of employee retention. The ideas were stagnant and all seemed to have to do with money or material benefits. I was frustrated and ended up sending all 12 off alone to sit in corners and come back and tell me the time in their lives when they felt most valued and appreciated. Care to guess what resulted? None of the 12 came back with experiences involving money. It was all about "thanks," acceptance, feeling valued and appreciated and most were small things. The ideas flowed after that.

    And, responding to last Friday;'s review of "Dopesick" on Hulu, which I find to be a devastating portrait of the opioid crisis, one MNB reader wrote:

    We too have enjoyed, yet struggled to watch "Dopesick."  We have a family member who is still struggling with Oxycontin addiction, as well as friends who didn’t make it.  But….the story must be told in hopes that we all learn from it, hopefully never to be repeated again. Thank you for covering this!

    Published on: November 1, 2021

    In Game Five of the World Series, the Houston Astros' bats came alive as they beat the Atlanta Braves 9-5.  The Braves maintain a 3-2 game lead in the best-of-seven series as the Fall Classic now returns to Houston.

    It is Week Eight in the National Football League…

    Carolina Panthers 19, Atlanta Falcons 13

    Miami Dolphins 11, Buffalo Bills 26

    San Francisco 49ers 33, Chicago Bears 22

    Pittsburgh Steelers 15, Cleveland Browns 10

    Philadelphia Eagles 44, Detroit Lions 6

    Tennessee Titans 34, Indianapolis Colts 31

    Cincinnati Bengals 31, New York Jets 34 (not a typo)

    Los Angeles Rams 38, Houston Texans 22

    New England Patriots 27, Los Angeles Chargers 24

    Jacksonville Jaguars 7, Seattle Seahawks  31

    Washington 10, Denver Broncos 17

    Tampa Bay Buccaneers 27, New Orleans Saints 36

    Dallas Cowboys 20, Minnesota Vikings 16