business news in context, analysis with attitude

Published on: November 4, 2021

KC got an email this week that challenged his credentials and opinions, prompted by the debate over out-of-stocks.  It read like this:

I'm beginning to wonder how much time you have spent working in a supermarket.  And the more I think about it, the more I realized I have no idea if you have worked in a supermarket - or any type of retail store.  Could you explain to us readers what your background in retail is?  How many years have you worked as an assistant manager as well as a manager of a supermarket - or any retail store?  Also, how long ago was that?  I know you've been writing this blog and doing speaking engagements for many years so it must have been quite a while ago that you worked in retail.

His response, in part, is relief that his dirty little secret now has been exposed.  But there's more…

Published on: November 4, 2021

WJCT News reports that Southeastern Grocers, parent company to Winn-Dixie, Harveys, and Fresco Y Más supermarkets, has decided to officially end its bid to go public, filing notice with the Securities and Exchange Commission (SEC) "asking to withdraw its registration statement on Form S-1. This form is the initial registration that must be filed by a U.S. company in advance of an initial public offering (IPO)."

Southeastern Grocers originally filed its intention to go public last January, but then delayed it because of concerns that market conditions  would not allow it to get the share price it was seeking.

The story notes that "SEG previously filed for an IPO in 2013 but withdrew that plan in 2014.  SEG was formed in 2012 after Winn-Dixie Stores Inc. merged with BI-LO LLC. Both Winn-Dixie and Bi-Lo went through Chapter 11 restructurings before their merger. And SEG itself also filed for a Chapter 11 bankruptcy reorganization in 2018.

"After selling off more than 80 BI-LO stores in 2020, Southeastern Grocers now operates stores in Alabama, Florida, Georgia, Louisiana and Mississippi."

Published on: November 4, 2021

From the Wall Street Journal this morning:

"CVS Health Corp. says it needs doctors on its payroll to fulfill long-held ambitions of becoming a major provider of healthcare services.

"The nation’s largest drugstore chain has worked for years to build an integrated healthcare system centered on pharmacists, in-store clinics and a massive insurance business. But until recently, the company’s plans have stopped short of including physicians.

"On Wednesday, CVS Chief Executive Karen Lynch said the company is working with 'speed and urgency' to create physician-staffed primary-care practices, which she said will be a priority for CVS as it considers potential acquisitions in the coming year."

The story notes that "in moving to tie up with primary-care doctors, CVS will be following several of its rivals. UnitedHealth Group Inc.’s Optum arm has been buying physician groups, clinics and surgery centers for years, and has said it is adding another 10,000 employed or affiliated doctors and other healthcare providers this year. Humana Inc. also has been getting deeply into primary care, and said Tuesday it planned to expand its footprint further next year."

The Journal writes that "CVS acquired insurance giant Aetna in 2018, having laid out a plan in which the combined company would be a major healthcare player. It was a first: no major healthcare company had tried to build a vertical system that relied on a combination of drugstores, insurance and pharmacy-benefit management, the main businesses of CVS and Aetna."

Published on: November 4, 2021

DoorDash said yesterday that it is adding a security feature to its technology that is designed to protect its delivery drivers.

The Boston Globe reports that it is "partnering with security company ADT on the new features, which will be available to all US DoorDash drivers by the end of this year. Under the new system, DoorDash drivers who are feeling unsafe can connect to an ADT agent using a button in DoorDash’s app. The agent will stay on the phone until the driver feels comfortable; if the driver stops communicating, ADT will call 911. DoorDash is also adding an emergency-assistance button to its app, which drivers can swipe to let ADT know they need immediate help. ADT will contact 911 and then remain in touch with the driver via text messages."

Published on: November 4, 2021

Reuters reports this morning "earlier this year, Amazon.com handily defeated a historic union drive at a warehouse in Bessemer, Alabama. But with the prospect of another vote looming, the online retailer is leaving nothing to chance.

"Over the past few weeks, Amazon has ramped up its campaign at the warehouse, forcing thousands of employees to attend meetings, posting signs critical of labor groups in bathrooms, and flying in staff from the West Coast, according to interviews and documents seen by Reuters.

"It is an indication that Amazon is sticking to its aggressive playbook. In August, a U.S. National Labor Relations Board hearing officer said the company's conduct around the previous vote interfered with the Bessemer union election. An NLRB regional director's decision on whether to order a new vote is forthcoming. Amazon has denied wrongdoing and said it wanted employees' voices to be heard.

"Still, the moves to discourage unionization ahead of any second election, previously unreported, show how Amazon is fighting representation at its U.S. worksites."

Published on: November 4, 2021

The Associated Press reports that "Italy has pledged to defend the name of the popular sparkling wine Prosecco as Croatia petitions the European Union to allow its winemakers to call their sweet dessert wine Prosek. The decision not only is a threat to the carefully protected market for the world's top-selling wine but also the entire system of EU geographical designations created to guarantee the quality of artisanal food, wine and spirits."

The story says that "the Italian government has pledged to defend Prosecco’s name, and other makers of protected products with distinct geographic roots, from Italy's Parmigiano Reggiano cheese to France's Champagne, are mobilizing as the European Commission prepares to deliberate on Croatia’s petition to label its niche wine with the traditional Prosek name."

Winemaker Milos Skabar tells the AP, "Prosekar wine is the original, because it was born 300 years before Prosecco.  So, it is the father of Prosekar, Prosecco, Prosek and all the rest.”

The AP offers some context:

"The dispute, which will be decided in the coming months, is likely to turn on Prosecco’s origin story, emanating from the bilingual Italian village of Prosecco near the Slovenian border above Trieste, where winemaking once flourished.

"It is here, say the ethnic Slovene Italians who make Prosekar, that the grape known as Glera — the basis of both Prosecco and Prosekar — originated.  But besides common etymological roots, Prosekar, Prosecco and Prosek have little in common.

"Prosecco, made predominantly from the Glera grape, is produced by three consortia spanning nine Italian provinces in alpine foothills that curve along the Adriatic Sea. They put out more than 550 million bottles a year.

"Prosek is a sweet wine made in Dalmatia with dried native Croatian grapes, none of them Glera, and may be red or white.

"Prosekar, on the other hand, is an equal blend of Glera and two other grapes, made by fewer than a dozen micro-producers. In decades past, Prosekar was mainly produced at home and shared among friends, family and neighbors, often served from ad-hoc taverns in private houses."

Published on: November 4, 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 47,105,468 total Covid-19 coronavirus cases, resulting in 770,854 deaths and 37,116,604 reported recoveries.

Globally, there have been 248,961,251 total cases, with 5,039,825 resultant fatalities and   225,531,086 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 78.3 percent of the US population age 12 and older has received at least one dose of vaccine, with 68 percent being fully vaccinated.  The CDC says that 66.9 percent of the total US population has received at least one dose of vaccine, with 58.1 percent being fully vaccinated.

The CDC also says that 26.6 percent of the US population age 65 and older has received a vaccine booster shot.

•  The Washington Post reports this morning that "regulators in Britain granted approval to the experimental drug molnupiravir from U.S. pharmaceutical giant Merck on Thursday, marking the first authorization from a public health body for an oral antiviral treatment for covid-19 in adults.

"Experts say that if widely authorized, molnupiravir could have huge potential to help fight the pandemic: Pills are easier to take, manufacture and store, making them particularly useful in lower- to middle-income countries with weaker infrastructure and limited vaccine supplies … The company has applied to the U.S. Food and Drug Agency for emergency use authorization, while the European Medicines Agency has launched a rolling review of the oral antiviral medicine. It said it was also working to submit applications to other regulatory agencies."

•  The New York Times reports that "Tyson’s announcement that it would require vaccinations across its corporate offices, packing houses and poultry plants, many of which are situated in the South and Midwest where resistance to the vaccines is high, was arguably the boldest mandate in the corporate world.

"'We made the decision to do the mandate, fully understanding that we were putting our business at risk,' Tyson’s chief executive, Donnie King, said in an interview last week. 'This was very painful to do.'

"But it was also bad for business when Tyson had to shut facilities because of virus outbreaks. Since announcing the policy, nearly 60,500 employees have received the vaccine, and more than 96 percent of its work force is vaccinated.

Tyson’s experience shows how vaccine mandates in the workplace can be persuasive. It comes as many employers await the start of Biden administration rules that will require vaccines — or weekly testing — at companies with 100 or more workers … Tyson’s aggressive push on vaccines also marks a significant turn for a company that had been criticized early in the pandemic for failing to adequately protect workers in its plants. Its low-wage workers typically stand elbow-to-elbow to do the work of cutting, deboning and packing meat, making them particularly vulnerable to the airborne virus."

Published on: November 4, 2021

•  From the New York Times:

"Jeff Bezos, one of the richest humans on the planet, and who started his financial empire by selling books online, pledged $2 billion to restoring natural habitats and transforming food systems at the climate summit in Glasgow on Tuesday.

"Speaking at a conference where President Biden and other leaders announced a global pact to end deforestation by 2030, Mr. Bezos said that private industry must play a central role in the campaign.

"'Amazon aims to power all its operations by renewable energies by 2025,' he said, restating his goal for the company to be carbon-neutral by 2040."

The story notes that Amazon has said "that the company’s emissions from indirect sources had increased 15 percent last year over 2019. The company has pointed out that when its emissions are measured relative to its booming sales, its carbon footprint has been decreasing. But some climate experts say this calculation, called carbon intensity, obscures that the company is still generating an increasing amount of carbon."

In a statement, Bezos said, "I was told that seeing the Earth from space changes the lens through which you view the world. Looking back at Earth from up there, the atmosphere seems so thin, the world so finite and so fragile. Now in this critical year, and what we all know is the decisive decade, we must all stand together to protect our world."

Published on: November 4, 2021

•  In Pennsylvania, the Tribune Review reports that Giant Eagle has decided to close all its stores on Thanksgiving this year to "allow all of our team members and truck drivers well-deserved time to rest, recharge and enjoy the holiday with their families."

•  Coborn’s, Inc., announced that it "will close its retail locations on Thanksgiving Day, Thursday, Nov. 25 to allow its employees to spend the day with their families. This includes all Coborn’s, Cash Wise, Marketplace Foods and Hornbacher’s grocery stores, along with its liquor stores, convenience stores, coffee shops, online grocery pick-up and delivery, car washes and warehouse operations.  Retail locations will close at their normal time on Wednesday, Nov. 24 and re-open on Friday, Nov. 26 at their normal time."

Published on: November 4, 2021

Following up on my comments in FaceTime this morning, I want to make sure that attention is paid to folks who disagree with me on my idea about how to turn out of stocks into an opportunity to create relationships with shoppers.

To recap, I opined:

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.

I originally made the suggestion at a technology conference where I was speaking, and one of the attendees got back to me:

After presentation I asked some retailers about your idea.  Their overall feeling was it sounds great BUT:

-many retailers don’t have a store level communication process to deal directly with customers other than the old pen and paper for requests.  Most communications go through a corporate team.

-many of the products are on allocation so even if they finally did get the product (Gatorade as an example) they might only get a case of each flavor several times a week.  They felt they do not have the ability at store level to pull product from a delivery and put it in a ‘reserved area’ and then call or email a customer that their product was now in stock, especially if it is not a full case special order. If they did not reserve it, it might be gone by the time the customer arrived at the store.

-with help shortages the effort to tell a customer a product is out is not hard as many CGO users put up a shelf tag with the date it went OOS for long term outs.  They do this  so they don’t keep scanning the same holes every day that will not be in stock for the foreseeable future. However, the rest of the process-reserve/set aside product and communicate with the customer would take considerable labor that is currently not available in most store.

-many of the retailers either currently are or are planning to update the online shopping inventory from CGO for to increase online shopping accuracy and reduce calls to the customer on substitute product for OOS products.  So if there was a ‘reserve’ area, they would need to take that product out of inventory but it is not ‘sold’ yet, a process that currently does not exist and would be time-consuming but necessary in order for the online customer to not order product listed as in stock that was actually ‘reserved’.

Excellent presentation at the conference. However the Ops folks all think in terms of actual processes and execution and they felt it might be a stretch to pull this one off. 

From another reader:

You … have a pie in the sky approach.  To say that the retailer should connect with the customer no matter what the cost is totally unrealistic.  If the retailers took that approach, they wouldn’t have any customers to communicate with,  since no one would shop there due to the high prices necessary to fund such a connection.  Seriously how many cashiers are truly invested in whether an item is out of stock or not?  Unless it is a family run store or a chain that has engrained customer first direction into their eee’s already, I doubt many.  Why do you think that is?  It is because they have no control or ability to influence a change.  Neither does the head cashier, the office manager, or the manager on the floor (if you can find them).  This will never change, unfortunately.

MNB reader George Denman wrote:

I read your suggestions on how a proactive retailer could take action to notify customers on OOS, when they become available again and even to the point on holding some product back for them.  Great ideas but fraught with complexity.

First most retailers have no systems in place to even capture OOS incidences let alone a plan to address the challenge. For years I have asked data companies like IRI, Spins, and Nielsen to provide data that would capture OOS and they have created algorithms that look at lack of movement over a time period and try and capture that as a potential OOS they all admit that this is a guess at best. Short of someone walking the store every day and capturing OOS , up until recently has not been any path to get this data. Kroger tried the walking the store each morning to capture DSD OOS each day but with labor issues and some lack of faith in the data integrity ( why would a store want to punish its own performance by letting corporate know the % of OOS) they are beta testing a new model. It is called DSD Governance and they have chosen a few DSD vendors like Graeter’s and track OOS on a weekly basis. The OOS are captured in click and collect order picking and identify both OOS and substitutions. The retailer assumes that if an item on shelf is OOS when a picker tries to pick it for e-commerce, then it is also OOS for in-store sales. Kroger has set loft goals in this beta test with a 98% in-stock rate and Graeter’s over the past 12+ weeks has come very close to meeting those goals averaging between 95-98% each week. The report generated every Monday for the previous week captures OOS and subs by flavor UPC and by store. It tracks ongoing rates for a 6 -week window and shows each division we supply, the rates by flavor and the Top 10 stores with the greatest loss in sales from the OOS. It has really helped us identify problematic stores and item that may be under-spaced or that our DSD reps have failed to order enough.

So far the program is for DSD vendors only, but I don’t see why this can’t be expanded to warehouse items as well. In the end transparency is critical and Kroger has found an ingenious way to at least capture true data.

MNB reader Monte Stowell wrote:

Interesting reading about in-stock, out of stock, supply chain issues, grocer ads, etc. I have been retired for several years after a long career in the food industry. Some days I enjoy going into several major retailers to see what their store conditions are. Here are my observations on which retailers have the best in-stock and out-of-stock issues here in the Portland, Oregon market. Best in stock, of all retailers is Winco, far and away #1, second is Albertsons-Safeway, Fred Meyer needs a lot of help on out of stock issues, Walmart and Target out of stocks are horrible. Walgreens and Rite-Aid why do they even run an ad. Winco and Albertsons/Safeway still use night crews to stock their shelves, whereas Fred Meyer has people running around stocking shelves during regular shopping hours. 

And, from another reader:

I’m not a computer person but couldn’t the store just hang a sign in front of the OOS item and provide a scan code that you could scan with your phone that is linked to your frequent shopper card. When the item is back in stock you would get a ROBO call/text stating the item is back in stock? Yes a computer programmer would have to set it up but once set up its not like a live person would have to call or text each person individually.

I'm sure more precincts will be heard from.