business news in context, analysis with attitude

Published on: November 16, 2021

by Michael Sansolo

It’s said that any sporting event is made better if no one notices the umpire or referee. In other words, if they do their job well, they are largely invisible.

The same could be said about the supply chain. It’s an easy bet that until two years ago, most consumers gave no thought to how products arrived at their store shelves. All they knew was what they saw: shelves full of items waiting to be bought all the time.  

But since March 2020 a host of problems exacerbated by the Covid-19 pandemic have made everyone aware of the long and complicated path products - be it toilet tissue or semi-conductor chips for appliances - take to reach their final destination.

All of us have learned about the key chokepoints in those journeys, none more so than the need for truck drivers to move goods around. There are constant news reports about all the containers laden with products waiting in key US ports and all the consumers laden with shopping lists who can’t find the products they want. In other words, the supply and demand are both there, but there simply are not enough truck drivers to move those products from point A to point B.

A recent article in the New York Times examined this issue, but to be honest, I wrote about it here on MNB five years ago.

Thanks to my work, at that time with the Food Shippers of America,  I became aware that the population of US truck drivers was clearly less than the industry needed and, thanks to the aging population of those drivers, the situation was about to get much, much worse.  This clearly come to pass.

Sadly there is no easy solution to this problem. Truck driving is a taxing profession and there is little reason to expect that suddenly the population of available drivers is about to explode minus a major technological advance in self-driving 18-wheelers.  However, there are steps companies can take to understand the challenges these drivers face and how easily a retail or wholesale partner can become a preferred point of delivery.

Again, through my work with the food shippers, I heard drivers talk about the frustrations that they face in doing their jobs and in this case there are actions any company that works with drivers can take. 

It starts with drivers facing hours-long lines at distribution centers when they arrive to drop off a load. Remember, miles equal money for drivers. So time spent in line waiting to off-load is both a bother and a financial burden. Drivers contrasted that situation with companies that schedule drop off time slots so that they have a shorter window for this process.

But even simpler, the drivers said, is the treatment they received at those drop off points. At the worst, they found no place to use the bathroom or found dirty facilities. At the best are companies that offer plentiful, clean bathrooms and possibly showers. Plus drivers might even find a place to eat and use Wi-Fi. It’s not hard to guess which companies drivers prefer to serve and which they avoid and, to no ones surprise, they share this information among their colleagues.

So sure, no company out there can miraculously increase the number of drivers available, but certainly every company could take steps to ensure these very valuable drivers of the supply chain are treated with respect and more.  It won’t solve the overall problem, but it might make you the preferred end point in a supply chain currently in crisis.

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: November 16, 2021

Sports columnist Sally Jenkins of the Washington Post has a terrific piece about Tom Brady that is replete with business lessons - the importance of "distant horizon goals," about how habitual two percent improvement is more important than one 20 percent gain, and about playing to one's strengths in the quest not to be average.  KC elaborates.

Published on: November 16, 2021

by Kevin Coupe

This is a very good commercial for Instacart, emphasizing its role in providing some of the ingredients that make life worthwhile:

As I say, a terrific commercial … except that I would point out that there is no mention of any of Instacart's client retailers.  It is just the customer ("your mom") and Instacart … the retailer actually responsible for procuring the ingredients has been completely disintermediated.  The identity of the retailer, despite likely decades and millions spent on brand equity and what should be a differentiated value proposition, doesn't matter.

What matters is Instacart.  And I guess the question I'd pose to my retailer readers is, does this matter to you?

If the answer is yes, then it should open your eyes about the implications of whatever e-commerce decisions you've made in the past.

And if the answer is no … well, then I'd suggest that this is an ever bigger Eye-Opener.

Published on: November 16, 2021

Walmart this morning said that its third-quarter same-store sales were up 9.2 percent and 15.6 percent on a two-year stack.  E-commerce sales for the period grew eight percent, and 87 percent on a two-year stack.

In addition, the company said, U.S. inventory is up 11.5 percent ahead of holidays.

The Wall Street Journal this morning quotes CEO Doug McMillon as saying, "We gained marketshare in grocery in the U.S., and more customers and members are returning to our stores and clubs around the world,” adding that "Walmart has enough products to serve customers over the holiday season at a time when supply-chain snarls are making some products hard to find on store shelves."

Walmart says that expects Q4 comp sales of around 5 percent.

Walmart said this morning that total Q3 revenue was $140.5 billion, up 4.3 percent, "negatively affected by approximately $9.4 billion related to divestitures … Walmart International net sales were $23.6 billion, a decrease of $5.9 billion, or 20.1%, negatively affected by $9.4 billion related to divestitures."

Published on: November 16, 2021

Ahold Delhaize held its 2021 Investor Day yesterday, and in a series of presentations laid out its plans and targets for the next several years.  Among them:  "Ahold Delhaize expects to accelerate net sales growth with €10 billion ($11 billion US) in incremental sales from 2023-2025. Net consumer online sales are planned to double between 2021 and 2025. In addition, Ahold Delhaize plans to have eCommerce profitable on a fully allocated basis by 2025."

In addition, the company said, it wants to:

•  "Serve customers through deeper digital relationships across our omnichannel Customer Value Proposition (CVP)."

•  "Accelerate development of/investments in omnichannel capabilities and continue to be the best local operators."

•  "Lead the transformation into a healthy and sustainable food retail system."

•  "Leverage the portfolio to create the ultimate ecosystem for smarter local customer journeys."

Noting that the company began a supply chain transformation effort in 2019, "focused on bringing back its supply chain as it builds out its omnichannel network and adding new facilities in key geographies," Kevin Holt, CEO, Ahold Delhaize USA said: “With these changes, Ahold Delhaize USA will have full control of its supply chain and an optimized network at scale, which enables the local brands to better serve their customers, allows ADUSA to continue to invest in automation and digital capabilities to lower costs to serve, and ultimately enables direct to customer relationships as part of its omnichannel network. The transformation will create one of the largest supply chain networks on the East Coast. It is scheduled to be finished in April 2024, with 26 facilities in the integrated self-distribution network.”

Frans Muller, the company's president/CEO, said: “Our Leading Together strategy has proven to be strong in recent years, and is a great foundation as we head into the future. The COVID-19 pandemic put our people and our strategic choices to the test, and through it all we were able to always deliver for our customers, our communities and our associates in all the brands and support companies … The pandemic has accelerated the pace of change in the retail industry. It has also changed consumer behavior permanently with people shopping more online, eating more at home and having a bigger interest in local and healthier food.”

Published on: November 16, 2021

Bloomberg reports that in London, J Sainsbury is planning to open a store is a couple of weeks that will use Amazon's Just Walk Out technology, first deployed in Amazon Go stores, to create a more frictionless customer experience.

It is, the story says, "the highest-profile corporate customer" for the Amazon-created technology, and is "significant because Sainsbury and Amazon, the largest online retailer, are direct competitors."  Bloomberg writes that while Amazon is the technology provider, that fact is not being trumpeted at the location.

The story goes on:

"The grocer’s pocket market in the High Holborn district is already open to Sainsbury employees. A visit to the store on Monday showed a fully stocked small grocery, with stations on the way in for shoppers to scan a mobile phone. Angled cameras suspended from the ceiling track what shoppers pick from the shelves, and they are charged upon exit … The system of software, cameras and shelf technology is made by 'a third-party supplier,' according to a Sainsbury web page that appears to describe the new store, calling the concept SmartShop Pick & go."

Published on: November 16, 2021

Dollar General announced that it is partnering with delivery company DoorDash to  "offer same-day delivery on food, cleaning supplies and more," MarketWatch reports.  "The program, which piloted in the summer at 600 stores, is now available at 9,000 Dollar General locations. It will expand to more than 10,000 next month."

Published on: November 16, 2021

Reuters reports that Amazon "has reached a deal to sell virtual medical services to Hilton in the United States, landing a marquee customer for its nascent healthcare business."

Terms of the deal were not disclosed.

According to the story, Amazon Care is described as an "on-demand health offering that lets users message or video-chat clinicians and receive home visits in some cities  … Amazon piloted the service for its employees around Seattle in 2019, and this summer it started marketing Care nationwide to other companies.

"The deal with Hilton Worldwide Holdings … marks Amazon Care’s first hospitality customer and only its second disclosed client after fitness equipment maker Precor. It shows how the company is seeking to disrupt the healthcare industry with a tried-and-true playbook  Just as Amazon built data centers to satisfy its e-commerce needs and later sold access to this infrastructure in what became its cloud-computing business, so is Amazon looking to market a healthcare service it built first for its workers’ benefit."

Here's how it will work, Reuters writes:  "Hilton employed about 141,000 people globally as of Dec. 31, 2020. All its U.S. staff enrolled in a corporate health plan will have Amazon Care as a benefit next year.

"That means virtual meetings with clinicians from Care Medical, a company focused on serving Amazon Care users. Amazon also offers house calls in greater Seattle and the Washington-Baltimore metro area, with plans to expand to Los Angeles, Chicago, Dallas, Philadelphia and Boston … Hilton pays for workers’ access to care and for a portion of the visit expenses. Text chats via Amazon Care will be free to the hotel chain’s employees, while provider video or home visits carry a small fee."

Published on: November 16, 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 48,072,898 Covid-19 coronavirus cases, resulting in 784,779 deaths and 38,050,509 reported recoveries.

Globally, there have been 254,751,168 total coronavirus cases, with 5,125,826 resultant fatalities and 230,333,318 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 79.5 percent of the US population age 12 and older has received at least one dose of vaccine, with 68.8 percent of that group being fully vaccinated.  Of the total US population, 68.4 percent has received at least one dose of vaccine, while 58.8 percent has been fully vaccinated.

The CDC also says that 36.1 percent of the US population age 65 and older, and 15.4 percent of the total population, has received a vaccine booster shot.

•  From the New York Times this morning:

"Arkansas on Monday joined Colorado, California and New Mexico in broadening access to Covid-19 boosters, getting ahead of federal regulators who are close to making a decision on expanded eligibility.

"Gov. Asa Hutchinson said at a news conference on Monday that he had directed the Arkansas health department to issue new guidelines on boosters to allow all adults to get one, provided that they met the timing rules.

"State leaders have found themselves in a conundrum since August, when regulators halted President Biden’s plan to make boosters available to all adults. The leaders have had to decide: Do they wait for a federal directive, or do they make their own vaccination rules?

"The decisions they make are more timely than ever, as the United States braces for a possible winter surge. As of Monday night, reported new cases in the United States had averaged nearly 85,000 a day for the past week, a 14 percent increase from two weeks ago, according to a New York Times database. Reported new deaths are down 14 percent, to 1,129 a day; hospitalizations have decreased 7 percent and are averaging more than 46,000 a day.

"And in Europe, whose Covid trends are often a harbinger of those in the United States, a fourth case wave has been driven by the unvaccinated.

"Four states, including Arkansas, aren’t waiting for a federal decision on boosters, and on Monday New York City became one of the first major cities to tell all adults to get a booster if they wanted one."

•  From the Washington Post:

"The U.S. Centers for Disease Control and Prevention on Monday moved four European destinations to its highest-risk category for travel — a reflection of growing concern over rising cases in Europe just as the United States reopens to international travelers from that region.

"The CDC is now recommending that Americans avoid traveling to Hungary, Iceland, the Czech Republic and Guernsey, even when vaccinated. They join other European destinations on the Level 4 list, including some that were added recently — Luxembourg, for example — and others, such as the United Kingdom, that have been on the list for months.

"Countries and territories in this group have an incidence rate of covid-19 of more than 500 new cases per 100,000 people over the past 28 days (or in the case of Guernsey, which has fewer than 100,000 residents, more than 500 cases cumulatively over the past 28 days)."

•  Also from the Washington Post:

"At least 50 percent of people who survive covid-19 experience a variety of physical and psychological health issues for six months or more after their initial recovery, according to research on the long-term effects of the disease, published in the journal JAMA Network Open.

"Often referred to as 'long covid,' the adverse health effects vary from person to person. But the research, based on data from 250,351 adults and children, found that more than half experience a decline in general well-being, resulting in weight loss, fatigue, fever or pain.

"About 20 percent have decreased mobility, 25 percent have trouble thinking or concentrating (called 'brain fog'), 30 percent develop an anxiety disorder, 25 percent have breathing problems, and 20 percent have hair loss or skin rashes. Cardiovascular issues — chest pain and palpitations — are common, as are stomach and gastrointestinal problems.

"Those affected by post-covid conditions, sometimes called 'long haulers,' can include anyone who has had covid-19, even those who had no symptoms or just mild ones, according to the Centers for Disease Control and Prevention.

"But additional research published in a subsequent issue of the journal found that cognitive dysfunction has occurred more often among those who had more severe cases of covid-19 and required hospitalization, and their brain fog issues have lingered for seven months or more. 'One’s battle with covid doesn’t end with recovery from the acute infection,' one researcher said."

Published on: November 16, 2021

•  The Los Angeles Times reports that "Amazon has agreed to pay $500,000 to better enforce state consumer protection laws after California’s attorney general said the company has concealed COVID-19 case numbers from its workers, the first such action under the state’s new 'right to know' law meant to improve workplace safety.

"In a statement from his office Monday, Atty. Gen. Rob Bonta also said Amazon agreed to submit to monitoring and improve how it notifies workers and local health agencies of COVID cases in its workplaces. The measures come 'at a crucial time for workers as Amazon’s peak holiday season approaches,' the statement said."

•  The San Francisco Chronicle reports that "e-commerce mattress maker Casper is being acquired and taken private, less that a year after its public debut, for about $308 million.

The New York City company went public in February 2020 and it's had a rough debut.

After being valued as a private company at more than $1 billion, it began selling shares early last year for $14.50, which put its value as a public company at around $575 million. That was close to its peak.

"At the close of trading Friday, a share of Casper could be had for $3.55.

"On Monday the company, which does have some brick-and-mortar retail locations, posted a $25.3 million loss for the third quarter. It also announced that Emilie Arel, the company's president and chief commercial officer, will take over for Casper co-founder, Philip Krim as CEO.  The deal is expected to close in 2022's first quarter if approved by Casper shareholders."

Published on: November 16, 2021

•  From the Wall Street Journal this morning:

"American consumers spent more at the start of the holiday shopping season, brushing off concerns about higher prices at retailers last month.

"Sales at U.S. retail stores, online sellers, and restaurants rose by a seasonally-adjusted 1.7% in October compared with the previous month, the Commerce Department said. Consumers continue their stepped-up spending despite continued Covid-19 fears and inflation concerns.

"Spending rose sharply, by 4%, at online retailers, along with big gains at electronics, appliance and hardware stores. Grocery-store sales rose by 1.1% while restaurant and bar sales were flat. Other gains occurred at gas stations, where sales rose 3.9%, and auto dealerships, with a 1.8% gain."

Published on: November 16, 2021

Weighing in on our inflation conversation, one MNB reader wrote:

Today's inflation surge can be tied right back to the "Green New Deal" so every supporter of eliminating carbon emissions in the near future, has  to accept this unintended consequence.  It takes time to move the industrialized world to carbon neutrality efficiently, the momentum is strongly in that direction, but to force adoption in a short time frame causes severe disruptions.

Lower coal output and exports to China from the US and Australia are contributing to the power shortage in China that is limiting factory production there, causing shortages resulting in higher prices for the fewer goods available.  Goods for major Holidays in the US for all of 2022 are already affected because Chinese manufacturing is under such pressure already and alternative sources are not ready to take up the slack.

Limiting truck driver hours of service, the move to electronic log books, rise in diesel fuel cost, and long delays in unloading at warehouses have contributed to the reduction in attractiveness of being a truck driver causing the truck shortage we now have. The effect is the back-ups in our ports and dramatically higher costs for each truck that moves goods from point to point in our supply system because every load has a premium to the normal cost now attached.

Limiting oil production in the US with increased methane gas emission regulations and limits on new production,  has reduced oil supply affecting everything from fertilizer to inbound raw material transportation, production costs(heating, cooling cooking and refrigeration), outbound finished goods transportation, plastic & corrugated packaging and others I am sure.  The point is that we are dependent on fossil fuels throughout our manufacturing and transportation industries today, and to strangle the fuel that we are dependent on ripples through the economy quickly.  All of these costs increases are at the root of price increases from manufacturers and inflation to consumers.

Every major recession since the 70's has been started by a precipitous rise in oil prices because it drives inflation and reduces household disposable income so quickly.  An increase in gas prices of $1.00 per gallon, an 18 gallon fuel tank and two cars takes $1,872 of disposable income out of the family budget, and is the equivalent of a $.93 per hour pay cut. 

I take your point, but let me offer a brief reaction.

First, you blame the "Green New Deal" for today's inflation surge.   I may be wrong about this, but I don't believe that the "Green New Deal" has been enacted as legislation - it exists as a set of goals, but I'm not sure it is fair to blame it for all our inflationary problems.

Second, I understand everything you say about fossil fuels.  What worries me is that some very smart people - admittedly, not everyone agrees with them - would argue that in terms of the survival of the planet, we have two choices - we can do enough, or not enough.  But if we don't do enough, it may be as bad as not doing anything.

Does this mean we have to make hard decisions and live with major repercussions from those decisions?  Sure.  But I'm not sure what the legitimate options are … unless, of course, one believes that all the climate change discussion is hyperbolic and that everything is going to be just fine.

Also on the subject of inflation, from MNB reader Mike Carter:

One of your readers tries to make this point –

There are really only 3 ways to make up the increase in costs: 1)Raise retails, 2) Negotiate lower cost of goods, or 3) Become more efficient (which means fewer employees).  

And I have heard others make similar claims that being efficient always means less labor dollars/people. I would like to point out the efficiency can be creating more output with the same or less resources (people and technology). Think Chick Fil-A drive thru operation as an example. They have added people and technology, and are providing better service, and handling more cars.

It is a real challenge with minimum wages going up, no doubt. But it is a flimsy excuse that the only way to make up for increased payroll is to raise prices.

Regarding Albertsons' new in-house media venture, MNB reader Bob Wheatley wrote:

It will be interesting if Albertsons is able to break with the norm of devoting content to overt product promotion. We know that engagement occurs in direct proportion to the relevance and also entertainment value of the communication on offer.

ALDI did just that with their latest holiday spot, a delightful and remarkable story with a message. Appetite appeal is in there but in the best way possible.

Yesterday we reported that the US Department of Labor said on Friday that 4.4 million workers quit their jobs during September, up from 4.3 million people who quit in August and the highest resignation rate during the 20 years that the government has been tracking these numbers.

I commented:

I have to admit that I have trouble wrapping my head around this.

A bit of personal truth here - I've been laid off from five different jobs in my life.   Four of the five times, the company was going out of business or shifting to a contractor-only business model because of lousy management.  (I'm apparently not a good luck charm.)  And even when I got laid off from jobs I didn't really like, or companies that I didn't really like, or by employers that I didn't really like, I was bereft when I didn't have a job.  Which actually is why, the last time it happened, I said screw it (using a different verb), and started MNB.

So I have problems grasping the great resignation.

That doesn't make me right, though.  It just means I have to work harder to understand the motivations behind people who leave their jobs without solid prospects.  As, I think, we all do.

People want to feel greater investment in their careers, no matter where those careers happen to be on the food chain.  I happen to believe that money is important, but so are other things - not least the desire to feel like one is contributing, having a sense of common cause.

I do worry, however, about what happens when the current pendulum swings the other way … how will management react to greater leverage, and what will labor to in response?

Maybe a time for common cause?  What are the odds it happens?

One MNB reader wrote:

The retirement factor is huge. I am 60, worked 40 plus years for my current company, my wife and I are finished at the end of this year. I have seen many co-workers in this store and company-wide retiring. Whatever the reasoning, baby boomers continue to leave. Many companies have made it known (not by words but actions) they are ready for the younger workforce. Experience=expensive. Not to mention every organization has been successful in eliminating the fun out of work. Retail in this day and age is very difficult, the hours, the schedule, the workforce. Good luck to the next generations, everything and everyone changes, if it doesn't you become a dinosaur, and we all know what happened to them. EXTINCT! 

From another reader:

I'll share my personal story, simply one among the million in the wave of the 'great resignation'. 

I quit my job in July.  I'm 59.  I thought that I would work a few more years, maybe to 65, but given all the disruption, social unrest and uncertainty wrought not only by Covid, but also the election of 2020, I decided to end it.   At first I joked that I was taking a gap year (who says it's only for young adults?).  But the longer I'm away from Corporate America, the more I realize that  I'm not going back and I made the right decision.  

I had a good job.  But like all jobs it was just a job, with the usual drama of reorgs, quota pressures, ineffective communication and disconnected management.

Did the paycheck outweigh the stress?  For me the answer was no. Not when I had so much lost time to make up for. 

And from MNB reader Keith Jones:

You are correct, it is hard to understand.  But then, I had a learning moment.  My 27 year old son is walking away from his job with the prospect of moving home to recuperate for a month or two.   You see, he is so burned out by his current position he cannot contemplate where he is going career wise, and he was very successful in his career.  He is burned to the point he is not sure if he will continue in his current profession or change.

I believe, and what I have read from several WSJ articles, during Covid people realized there is a life outside the office.  They are now looking for a better work-life balance.

So, as we see this happen, we just need to be patient and help them along their journey.  Sooner than later they should re-engage into the workforce but it may be in a different area.  I think the idea of job revitalization within the retail industry, making the jobs more intriguing and less mundane and 'military drill Sargent', is a necessary issue for management to address.

And, on another subject, one MNB reader wrote:

Now we still have to hear how covid is back on the rise?  Enough already.  Get your shots.  Then move on.   The purpose of the vac is to lessen the effects of covid.  Nothing will irradicate the disease, but the shots will most likely keep you out of the hospital and lessen remaining effects.  That is the win.  So please stop all the fear tactics and trying to control many aspects of our lives.  The masks?  Unless they are N-95’s, forget them.  They are not affective, but rather, they just make you feel good.   I heard the other day that all the cloth masks, paper masks,  gators, etc are about as effective at stopping the virus, as trying to catch a mosquito with a chain link fence.  So what is the real purpose? 

First of all, ther Mayo Clinic would dispute your mosquito analogy.  But let's let that go.

Telling people that ther virus is resurgent - that more infections are being reported and that, potentially, this could enable new variants that might be resistant to current vaccines - strikes me as being the responsible thing to do.

That's my story … it has been my story since March 2020, when I did my first Covid-19 update … and I'm sticking with it until it isn't  a story anymore.

Published on: November 16, 2021

In Monday Night Football, the San Francisco 49ers defeated the Los Angeles Rams 31-10.