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    Published on: December 1, 2021

    The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Today, Tom and KC address the ways in which Amazon is turning the supply chain issues facing many retailers into a differential advantage, turning short-term moves made from the early days of the pandemic into long-term strategies.  They talk about what Amazon's competitors - which is to just about everyone - need to do in order to turn the crises of the moment to their own advantage.  And, as avowed New York Mets fans, Tom and KC also look at business lessons from the New York mets' acquisition of pitching star Max Scherzer.

    If you'd like to listen to The Innovation Conversation as an audio podcast, click below.

    Published on: December 1, 2021

    CNBC has a piece about how "a big focus in the C-suites of many of the world’s largest corporations has been the creation of a new executive rank: Chief Customer Officer.

    "Over the past few quarters, companies across the economic spectrum — from McDonald’s, CVS Health, Under Armour and Walgreens to wholesale grocer United Natural Foods — have added the top job to help the boardroom better stay in touch with a rapidly changing landscape of the consumer … it’s being seen as critical to make one senior person responsible for influencing employees across the organization to become more tuned into customer wants."

    The story notes that "the role of a chief customer officer, who reports directly to the CEO, can be defined differently across industries and vary greatly from one organization to another. Typically the post is some amalgamation of marketing, branding and maybe sales, with digital and data being the roadmap. The rise of mobile computing led to a wave of chief digital officers who were responsible for the digital interactions with customers."

    CNBC says that "ninety percent of 401 companies said their company employed a chief experience officer, according to Gartner’s 2019 Customer Experience Management Study, which was up from 61% in 2017. Gartner expects the number to be higher today."

    KC's View:

    I guess this is a good thing, in that it represents a shift in orientation - and, if done right, a breaking down of silos - that makes sense.  But it also sort of avoids the larger question, which is why any business that has customers wouldn't make their happiness and satisfaction - not to mention the quality of their experience - central to everybody's job?

    The CNBC story makes the point that this isn't exactly a new phenomenon, that companies long have talked about the importance of making customers a priority.  Witness this classic United Airlines commercial from more than three decades ago:

    (Digressive thought:  How great is it to hear the voiceover by Gene Hackman, who is long retired from performing but sorely missed?)

    The rise of a technology-centric technology, while it can improve communication, doesn't always heighten real connections between businesses and their customers.  I think that we sometimes labor under the delusion that businesses and customers are better connected than ever, but how many retailers, for example, can name their 10, 20, 30 best customers?

    So let me throw out a challenge, perfect for this time of year.  If you are a retailer, whether you are running a business with a thousand stores or one, that you want to know who your 20 (or pick another number - that's up to you) best customers are … and then, once you have names and email addresses, reach out to those people and say hello, say "happy holidays," ask if there is anything you can do for them, and make sure they know that they can contact you via email anytime they have a problem.  And then, tell your store managers and maybe even department managers to do the same thing.

    This takes the notion of being customer-centric from being abstract to being tangible.  You're gonna blow some people away … and in the end, I would argue, it is going to be even better for you than it is going to be for them.

    Published on: December 1, 2021

    From the Wall Street Journal:

    "Brands had been toying with the metaverse for some time before Facebook’s recent name change turned the term into a household word. Now some of them are getting serious.

    "Companies including Chipotle Mexican Grill Inc., Verizon Communications Inc., and streetwear brand Vans earlier this year built their own digital worlds on metaverse-like platforms such as Roblox Corp. and Fortnite Creative in an attempt to improve brand recognition and get existing customers more engaged.

    "Their efforts are a sign that advertisers, which have long been hesitant to spend marketing dollars on experimental efforts, are warming to new digital platforms."

    Some context from the story:

    "The metaverse is a relatively new term to describe a futuristic internet with virtual experiences where people can customize avatars—digital images representing themselves—to play games, make virtual purchases and interact and attend events such as concerts and comedy shows. Roblox is currently among the highest-profile metaverse-like platforms.

    "This futuristic version of the internet is unlikely to become a significant branding platform for companies anytime soon. Meta Chief Executive Mark Zuckerberg said last month that the metaverse was five to 10 years away from being developed and adopted by a large number of users. Marketing executives from companies currently present in the metaverse, including Vans and Chipotle, said they have yet to use the platform to sell physical goods."

    KC's View:

    Maybe I'm getting old and grumpy, but I find myself worrying about that people are going to get so addicted to their screens and virtual experiences that they'll stop seeking out real experiences.

    On the other hand, I've always been intrigued by the premise of the holodeck, which was used as a plot device on numerous "Star Trek" shows … so maybe it won't be so bad.

    The one thing that seems clear to me is that retailers have to be preparing to dip their toes into the metaverse waters, so as not to be caught unawares when the concept gets real consumer traction.  Because if history teaches us anything, it is that when traction occurs, momentum will be greater than expected.  It is inevitable.

    Published on: December 1, 2021

    The Los Angeles Times reports that the Strategic Organizing Center, a labor group with members that include the International Brotherhood of Teamsters and the Service Employees International Union (SEIU), is accusing Amazon of providing "'misleading or grossly incomplete' data about the number of COVID-19 infections potentially spread in its U.S. facilities," and is asking the federal government to conduct an investigation.

    According to the Times story, the group charges that "of the almost 20,000 employees the company said contracted the coronavirus last year, Amazon maintains that only 27 potentially caught it at work … Federal authorities last year required companies to report work-related COVID-19 cases.

    "The center … compared Amazon’s COVID-19 disclosures with county health department records about COVID-19 outbreaks in Los Angeles, Salt Lake City and the Portland, Ore., suburb of Troutdale. The three health departments found more than 750 COVID-19 cases among Amazon workers, but Amazon’s disclosures suggest none of them were work-related, according to the study."

    The Times writes that "Amazon disputed the study’s conclusions, saying that the Occupational Safety and Health Administration has acknowledged the difficulty of proving whether a person contracted COVID-19 while on the job. Amazon interviews employees to determine exposure risk and has conducted 1,800 vaccination events at its facilities, spokeswoman Kelly Nantel said."

    Meanwhile, The Verge reports that "Amazon is facing new questions over failed COVID protections in its fulfillment centers, spurred on by New York Attorney General Letitia James. After more than a year of protests from workers and inquiries from legislators, James is now seeking a court order to require Amazon to appoint a monitor to oversee health and safety measures at its warehouse on Staten Island … The motion asks the court to order Amazon to change how it monitors employees’ productivity to allow time for cleaning and social distancing and require the company to adopt adequate disinfection protocols when an infected worker has been in the facility. The AG’s office also wants the company to institute better COVID-19 contact tracing protocols, which would include notifying close contacts of infected workers. The suit seeks to have a court-appointed monitor oversee these changes."

    Amazon spokeswoman Nantel tells The Verge that "the company had incurred more than $15 billion in costs as part of a 'comprehensive approach to COVID-19 safety' measures, to support customers and employees," and expressed disappointment that James had politicized the issues.

    KC's View:

    This doesn't happen in a vacuum, of course - Amazon also is facing calls for unionization of some of its US distribution centers, and accusations like these have the potential of eroding the perception that Amazon is doing everything it can on the safety front.

    I'm not sure about the science, but I do have to say that the Amazon numbers seems suspiciously low.  However, the question may have as much to do with how infections are defined by the public health community as it does with how Amazon classifies them - though I'm sure that Amazon is exploiting every loophole it can.  Like every business does.

    Published on: December 1, 2021

    The Conference Board said yesterday that its Consumer Confidence Index "decreased in November, following an increase in October. The Index now stands at 109.5, down from 111.6 in October. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—fell to 142.5 from 145.5 last month. The Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—fell to 87.6 from 89.0."

    "Consumer confidence moderated in November, following a gain in October," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board, in a prepared statement.  "Expectations about short-term growth prospects ticked up, but job and income prospects ticked down. Concerns about rising prices - and, to a lesser degree, the Delta variant - were the primary drivers of the slight decline in confidence. Meanwhile, the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months decreased.

    "The Conference Board expects this to be a good holiday season for retailers and confidence levels suggest the economic expansion will continue into early 2022. However, both confidence and spending will likely face headwinds from rising prices and a potential resurgence of COVID-19 in the coming months." 

    KC's View:

    Headwinds?  Depending on how the twin problems of inflation and the Omicrom Variant play out, that could end up being the understatement of the year.

    (I still think "The Omicrom Variant" sounds like the title of a Robert Ludlum novel.)

    Published on: December 1, 2021

    The New York Times this morning that "while the widespread availability of vaccines is translating into a busier shopping season than last year, businesses of all sizes are grappling with the impact from factory shutdowns overseas, backups at ports, and trucking and other labor shortages.

    "The unpredictability this year has forced many small businesses to make buying decisions months or weeks earlier than they normally would and to tie up more of their cash in inventory, which can be risky."

    The story goes on:  "While many small businesses are affected by manufacturing issues overseas, some have used this moment to their advantage. Etsy, which powers online stores for millions of sellers, said more than half of its U.S. vendors sourced materials from within their own states, allowing them to bypass many of the supply chain problems that are affecting the global economy."

    KC's View:

    It is not without risk, of course, but it is heartening to read about small businesses that, rather than whine, instead work to make a tough moment work to their advantage.

    And I love that one of the retailers cited in the Times story is my local running store … which I talked about earlier this year as doing a great job of telling a story and connecting to community:

    Published on: December 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, there now have been 49,428,913 total Covid-19 coronavirus cases, resulting in 803,045 deaths and 39,205,902 reported recoveries.

    Globally, there have been 263,248,745 total cases, with 5,237,114 resultant fatalities, and 237,742,998 reported recoveries.   (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 70.2 percent of the total US population, and 74.7 percent of the five-and-over population, has received at least one dose of vaccine, while 59.4 percent of the total US population and 63.1 percent of the five-and-over population has been fully vaccinated.

    The CDC also says that 20.9 percent of the total US population and 22.4 percent of the 18-and-over population has received a vaccine booster shot.

    •  From the Wall Street Journal:

    "The Omicron variant of the coronavirus could lead to more infections among vaccinated people but they will most likely remain protected from a severe course of illness, according to the inventor of one of the first Covid-19 vaccines.

    "While the new variant might evade the antibodies generated in reaction to the vaccine, the virus will likely remain vulnerable to immune cells that destroy it once it enters the body, BioNTech SE co-founder Ugur Sahin said.

    "'Our message is: Don’t freak out, the plan remains the same: Speed up the administration of a third booster shot,' Dr. Sahin said in an interview Tuesday."

    From the New York Times this morning:

    "A federal advisory committee on Tuesday voted to recommend that the government for the first time authorize the use of an antiviral pill to combat the worst effects of Covid-19.

    "The advisory committee, in a surprisingly narrow 13-to-10 vote, endorsed the pill from Merck, while public health officials worldwide raced to buttress their defenses against the newly emerging Omicron variant of the coronavirus.

    "The Merck treatment, known as molnupiravir, has been shown to modestly reduce the risk of hospitalization and death from Covid. The pill could be authorized for use in the United States within days and available to patients within weeks.

    "In the coming weeks, the F.D.A. may also authorize a similar pill from Pfizer that appears to be significantly more effective than Merck’s. Together, the arrival of the two easy-to-use treatments could provide a cushion against a resurgent virus.

    "The F.D.A. advisory panel, a group of experts on antimicrobial drugs, recommended that Merck’s treatment be authorized for people with Covid who are at high risk of becoming severely ill. That would most likely cover tens of millions of Americans who are older or have medical conditions such as obesity, diabetes or heart disease.  But the committee’s close vote reflected doubts about the pill’s effectiveness and concerns that it could cause reproductive harm."

    •  Also from the New York Times:

    "The Centers for Disease Control and Prevention plans to toughen coronavirus testing and screening of international fliers to the United States by requiring them to provide a negative result from a test taken within 24 hours of departure, a spokesman for the agency said Tuesday night.

    "The move to strengthen the testing regime reflects growing concern about the Omicron variant, a highly mutated form of the virus that was first documented by researchers in South Africa and detected in more than a dozen countries around the world."

    Published on: December 1, 2021

    •  CNBC reports that "U.S. shoppers spent $10.7 billion on Cyber Monday, according to data from Adobe Analytics, marking a 1.4% decline from year-ago levels. Black Friday online sales also fell slightly short of last year’s total, with retailers recording $8.9 billion in sales, Adobe said."

    •  CNBC also reports that "Amazon said Tuesday it rang up record-breaking sales during the post-Thanksgiving rush, providing an upbeat outlook for a holiday shopping period that’s been lackluster for the retail industry.

    "In a blog post, Amazon said home goods, toys and apparel were among the top categories in the period from Black Friday to Cyber Monday. Popular purchases included Apple AirPods, Fire TV sticks and the Revlon One-Step Hair Dryer.

    "Amazon didn’t disclose sales figures for the two notable shopping days, which are typically its busiest in the holiday period. Analysts and investors will have to wait for Amazon’s fourth-quarter results in late January or early February for a fuller picture of the shopping season."

    Published on: December 1, 2021

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  FMI-The Food Industry Association said yesterday that it will bring back Supermarket Employee Day - February 22 - back in 2022, and make it an annual event.

    The observance started in 2021 as a way of recognizing the efforts of food retail workers during the pandemic.

    Entirely worthwhile, but aren't the really good retailers the ones that don't need an official "day" to recognize the fact that front line workers always are essential to the company's success?  Don't the really good retailers make the contribution of their front line employees - people who are treated like assets, not costs - a core factor in their strategic and tactical initiatives?

    Supermarket Employee Day is a good idea, but it also represents a bare minimum of how retailers ought to think about their employees.

    Published on: December 1, 2021

    On the subject of the continuing unionization efforts at Amazon, one MNB reader wrote:

    My father was a 30 year textile mill worker.  He told me he joined the union when they fought for fair pay for a fair day's work.  And he left the union when they started fighting for higher pay (and union dues) for less work to hold on to their power.  The day he was asked to greet the union officials at the airport tore it. They arrived in a private plane. 

    Responding to our story about the FTC looking into price increases and supply chain issues at major retailers, one MNB reader wrote:

    The FTC is looking too far in the weeds on this.  I would bet money that the findings come back from the likes of C&S, AWI, McLane, and retailers that the issues created by supply chain fall on the doorstep of manufacturers.  When in actuality, it is a compilation of everything in the supply chain.  Manufacturers have ingredient sourcing issues and are unable to keep up with demand.  Truckers are flat out not available, or cherry pick loads, or don’t show for appt. times.  Wholesalers / retailers don’t extend receiving windows, so more loads are crunched into tighter times, which is causing trucks to take longer to unload therefore missing next appts. or they can’t get in to deliver needed product.  DC’s are full and short staffed, therefore causing backups and delays on inbound and outbound PO’s.  Retailers ordering systems can’t react to spikes in product demand therefore further exasperating shelf issues.  So instead of everyone working together to solve this mess, they are working in silos and pointing fingers at each other. 

    All that is done is that the manufacturers get fined, and nothing gets solved.  All parties need to come together for a true resolution.  We as an industry should not need to have government step in.  This should be able to be handled internally.  Where are all the associations we all belong to in this?  What are they doing??  Again, working in silos.  They would be a tremendous asset in bringing all to the table for resolution. Stop pointing fingers and start joining hands.   There, solved.  FTC, you can go back to doing something more constructive like finding a way to get more truckers in the seats.

    You say that the FTC is going too far into the weeds on this, but then seem to argue that the FTC won't go into the weeds far enough.

    We'll see.  There remains the possibility that the new FTC leadership could surprise us.

    On another subject, an MNB reader wrote:

    I was fascinated to read the update on Williams Sonoma – I guess it explains the ridiculously terrible e-commerce experience in which I’m enmeshed. My order placed on October 22 has yet to arrive. Rather than receive updates, it’s up to me to visit the original email and click on “Track Delivery.” Original dates of October 27-28 for one item and November 5 for the other three have blown past.

    The updates once I click through to track state “We regret we are currently unable to provide a delivery estimate. We are committed to resolving this quickly and apologize for the inconvenience. Thank you for your patience.” That’s for two of the items…the other two have updated delivery dates of 12/3-12/6 and 12/7.

    While one of the three items is particular to Williams Sonoma, the other three could have been purchased many other places, including Bed Bath & Beyond, Target, or Amazon. Once I’m through this debacle – if I’m ever through this debacle – Williams Sonoma won’t be in my consideration set to get fooled again.

    Boy, compare that to the description of the customer experience at Runamok Maple that was described here yesterday….

    Let's take this back to our story above about companies being more customer-centric.  You have to take ownership of every part of the customer experience, because these moments define how you are perceived by shoppers, who then decide where and where not to do business.  You can't be casual about it, can't outsource it, can't do anything but be relentlessly focused on it.