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    Published on: December 2, 2021

    Content Guy's Note:  For today's conversation, I wanted to engage with one of my favorite independent grocers - Lauren Johnson of Newport Avenue Market in Bend, Oregon.  [Lauren is my kind of retailer;  her title is "Leader of the Pack (vrrrooom!)/CEO & President."]  My goal was to talk about a three-store retailer works to innovate and deals with the panoply of issues facing retailers these days.  One of my observations has been that retailers have to come out of the pandemic different than how they went in, and Newport Avenue Market is a great example - in the last few years, it has grown from one store to three.  And Lauren has gone through her own changes - since I last saw her, she's gotten married, and now is Lauren Redman.

    I hope you enjoy our conversation.

    If you want to download and listen to this conversation as an audio podcast, click below.

    Published on: December 2, 2021

    by Kevin Coupe

    MNB reader Tom Williams sent me a story yesterday that he correctly identified as "a great example of how a business with a hard-to-meet need changed how they did things and the results were beneficial to them and their employees."

    The story is from The Welder, and focuses on retail fixture (checkout counters, self-checkout counters, wire displays, and shelving units) manufacturer Lozier Corp., which "faced a critical need for welders" - hard to find pre-pandemic, and virtually impossible to hire during the pandemic.  The company, the story says, "had two choices: Continue down the same path of traditional hiring practices or dare to think outside the box."

    Hannah Bolte, Lozier’s corporate communications manager, tells The Welder that all of Lozier's competition was in the same boat:

    "With everyone hiring, we decided to get a little creative with how we recruited talent, specifically welders. We decided to have a welding hiring event at one of our plants back in July. We sought out certified welders but also those with no experience who wanted to learn. We were committed to teach those inexperienced individuals to be able to weld and to do it correctly and safely. The positions we were hiring for weren’t entry-level positions, so we had to find the right people who had a desire to learn but who also had an aptitude."

    Most of the people that came to the hiring event, she says, "were of the mentality of always wanting to learn how to weld but never had the means or the time to do so … We ended up hiring 13 people at that event, and eight of them had no prior welding experience. The five with welding experience were put to work right away. The eight with no experience went through a two-week class at the community college."

    The Eye-Opening bottom line, Bolte says, is that the company has found "that people become more loyal to you when you invest in them. To us, investing in our employees is totally worth it. And the folks that we have invested in are some of our best employees."

    In other words, employees treated like assets, not costs or liabilities, end up being totally worth the investment.

    Published on: December 2, 2021

    The Information reports that Instacart "is planning to launch a pilot program to provide delivery of groceries or convenience items in 15 minutes or less to U.S. customers …  As a part of the proposed program, Instacart would pay a company that manages couriers to quickly deliver goods from the same grocery stores whose merchandise Instacart already offers to its existing customers, most of whom currently receive their orders within two hours or less."

    The story says that "people with direct knowledge of the plan" say that Instacart has requested proposals from logistics companies, with a goal of getting a pilot up and running in Q1 2022.

    The Information writes that in making this move, "Instacart would thrust itself into competition with ultrafast grocery delivery startups including Jokr, Getir and Gorillas. If Instacart stuck with the program, it would suggest that the instant delivery model, which has faced some skepticism, could be here to stay, even as the startups in the sector burn through venture capital."

    KC's View:

    This last point is a good one, and it makes me think about the degree to which Webvan burned through an enormous capital before collapsing under the weight of its own unfulfilled promises and excessive infrastructure.  It strikes me that 15 minutes is an almost impossible standard to live up to;  I have a Whole Foods that is about a quarter-mile from my house, and it can be hard to get in and out of the parking lot in less than 10 minutes, which would make it almost impossible for anyone to provide me with 15-delivery … and the only way I could live closer to Whole Foods would be if I lived in an RV stationed in the middle of its parking lot.  Promises are one thing, but the laws of physics are immutable … and I think that this is another example of how Instacart may be building an increasingly vulnerable house of cards.

    One other point.  If this plan in put in place, Instacart will be contracting out the 15-minute deliveries to courier services, which essentially means that there is even greater distance being placed between the customer and the retailer.  I place an order that is being fulfilled by retailer X, but I may think of myself as being an Instacart shopper.  And then, if I want 15-minute delivery, it is handing off that order to yet another outside contractor.  

    I know the retailers think they have to put their futures in the hands of Instacart because they can feel Amazon's hot and carnivorous breath on the back of their necks.  They feel the need for speed (though I'm not entirely clear that consumers are demanding 15-minute delivery as much as Instacart is selling them on the idea that the want 15-minute delivery.)  This becomes increasingly problematic, I think, as these same retailers find themselves increasingly disintermediated from the customer relationship.

    Published on: December 2, 2021

    NielsenIQ is out with its Global Inflation Report, designed to evaluate "inflationary trends and assess consumers impacts as we move into 2022."

    Among the conclusions:  "73% of global consumers have changed their spending patterns to cut costs since COVID-19."  In October 2021 alone, the story says, the prices for fast moving consumer goods (FMCG) in the US increased 7.2 percent, with household products seeing the highest increase at 12.9 percent.

    And, NielsenIQ says, "FMCG prices in Australia increased 1.5% … FMCG prices in South Africa increased 4.6% … (and) FMCG prices in Brazil increased 24.6%.

    On the basis of inflation, however, the Philippines seems like the place to live - FMCG prices there decreased –2.5%.

    Published on: December 2, 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 49,573,122 total Covid-19 coronavirus cases, resulting in 805,004 deaths, and 39,318,563 reported recoveries.

    Globally, there have been 263,934,210 total cases, with 5,245,591 resultant fatalities, and 238,241,187 reported recoveries.   (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 74.8 percent of the US population age five and older, and 70.4 percent of the total US population, has received at least one dose of vaccine.   The CDC also says that 63.2 percent of the five-and0-older population, and 59.4 percent of the total population, has been fully vaccinated.

    According to the CDC, 22.8 percent of the US population age 18 and older, and 21.2 percent of the total US population, has received a vaccine booster shot.

    •  From the Wall Street Journal:

    "The first known case of the Omicron variant in the U.S. was identified in a person in California who recently returned from South Africa, the Centers for Disease Control and Prevention said.

    "The CDC said Wednesday that the fully vaccinated traveler, who returned to California on Nov. 22, has mild Covid-19 symptoms that are improving. The person has been self-quarantining since testing positive, and all known contacts have so far tested negative for the variant, the CDC said.

    "The confirmed U.S. case raises the number of countries where Omicron has been identified to at least 24 on five continents since scientists in South Africa first identified it in late November. The World Health Organization days later designated it a variant of concern, formally alerting health authorities around the world to the extra risks the new strain appears to carry."

    •  From the New York Times this morning:

    "As recently as last week, many public health experts were fiercely opposed to the Biden administration’s campaign to roll out booster shots of the coronavirus vaccines to all American adults. There was little scientific evidence to support extra doses for most people, the researchers said.

    "The Omicron variant has changed all that.

    "Scientists do not yet know with any certainty whether the virus is easier to spread or less vulnerable to the body’s immune response. But with dozens of new mutations, the variant seems likely to evade the protection from vaccines to some significant degree.

    Booster shots clearly raise antibody levels, strengthening the body’s defenses against infection, and may help offset whatever advantages Omicron has gained through evolution.

    "Many of the experts who were opposed to boosters now believe that the shots may offer the best defense against the new variant. The extra doses may slow the spread, at least, buying time for vaccine makers to develop an Omicron-specific formulation, if needed."

    •  The Wall Street Journal reports that the federal government "plans to tighten up Covid-19 testing timelines for travelers entering the U.S. and extend a mask mandate on airplanes and other public transportation as part of a broad administration effort to combat the Omicron variant.

    "International travelers coming to the U.S. will have to test within a day of departure, regardless of vaccination status, rather than the 72 hours currently required for vaccinated travelers, under new protocols early next week, senior administration officials said. The new testing rules will apply both to U.S. citizens and foreign nationals entering the country.

    "The administration will also require travelers to wear masks through mid-March on planes, buses and trains, and at domestic transportation hubs such as airports and indoor bus terminals, rather than allowing the requirement to expire on Jan. 18 as planned."

    •Los Angeles Magazine reports that "indoor businesses in Los Angeles will face fines and citations if they fail to comply with some of the strictest COVID vaccination mandates in the country. Although the rules went into effect on November 8, enforcement of the regulation that employees must check the vaccination status of their patrons commences today … businesses such as restaurants, bars, theaters and gyms—as well as the operators of large outdoor events—will be given a warning the first time they’re caught failing to review the vaccination proofs of guests, followed by a fine of $1,000 for a second offense. The third strike will earn establishments a $2,000 fine, and if that doesn’t get the message across, fourth and subsequent violations will be met with a penalty of $5,000."

    Published on: December 2, 2021

    •  From TechCrunch:

    "Convenience store giant 7-Eleven is pairing up with Nuro to pilot a commercial delivery service using autonomous vehicles in the Silicon Valley enclave of Mountain View, California.

    "The service, which customers can access beginning December 1 through 7-Eleven’s 7NOW delivery app, will initially use Nuro’s self-driving Priuses. Eventually, the service will use Nuro’s R2 delivery vehicles, which were custom built to delivery only packages — not people."

    The story notes that "7-Eleven has experimented with autonomous delivery in the past. In 2016, the company tested autonomous delivery in Reno, Nevada with drone company Flirtey. This month, the operator of 7-Eleven stores in Korea, began testing the use of sidewalk delivery robots developed by local startup Neubility in the southern district of Seoul."

    Published on: December 2, 2021

    •  Kroger announced this morning that its Q3 total sales were $31.9 billion, compared to $29.7 billion for the same period last year. Excluding fuel, sales increased 2.9% compared to the same period last year.

    Same-store sales were up 3.1 percent from the same period a year ago and 14 percent from two years ago.

    Digital sales for the quarter were up 103 percent from two years ago.

    Kroger said that its Q3 operating profit was $868 million, compared to $792 million in the same period a year ago.

    •  Pennsylvania-based Weis Markets said yesterday that it "has achieved Ratio Institute’s Sustainable Food Retail Certification," which means that it "successfully completed the requirements for Steward Tier certification, demonstrating not only its commitment to be a sustainable food retailer, but also its efforts at continuously improving its sustainability performance."

    According to its website, the "Ratio Institute is an independent, non-profit organization dedicated to accelerating measurable sustainability and viability in food retail through expert collaboration, industry resources, and practical tools."  It has "worked with over 1,000 grocery stores and 20 grocery chains to create store-level and enterprise sustainability solutions that reduce costs, shift internal cultures, and improve overall performance.:"

    Ratio Institute says that Weis Markets "is the first food retailer to achieve the certification."

    •  In Minnesota, the Star Tribune reports that "the nation's first Shake Shack drive-thru is opening Monday in Maple Grove, serving up its ShackBurgers and crinkle-cut fries to people on the go.

    "Shake Shack has been envisioning drive-thru service for some time, said Randy Garutti, chief executive of the New York-based company. To make it happen, executives have rethought the fundamental workflow of the restaurant.

    "Shake Shack workers typically assemble, and sometimes cook, orders after they are placed, leading customers to wait a bit longer than at other fast-food providers. But with people in cars, long wait times create the prospect of traffic jams, slow-moving lines and lost business.

    "In Maple Grove, drive-thru orders will be fulfilled in a separate kitchen from orders for people who walk in for sit-down or takeout service."

    The story notes that Shake Shack, "which has about 220 locations in the U.S. and 100 in other countries, plans to add up to 10 more drive-thrus in 2022."

    •  From USA Today:

    "Under new ownership, Toys R Us is opening a U.S. flagship store at the American Dream mall in New Jersey complete with a two-story slide, an ice cream parlor and more than 10,000 toys.

    "The two-level store is scheduled to make its debut in mid-December in time for last-minute holiday shoppers … This is the second effort to revive the toy brand in recent years. Toys R Us filed for bankruptcy in 2017 and closed all of its U.S. stores the next year."

    Published on: December 2, 2021

    •  Kroger announced that Juan De Paoli, most recently senior vice president of private brands at Ahold Delhaize, has been named the company's new head of private brands. 

    •  McLane Company announced that Chris Smith has joined the company as President of McLane Grocery.

    Before joining McLane Company, Smith worked at Walgreens Boots Alliance, a global leader in retail pharmacy, as the Senior Vice President – Chief Supply Chain Officer.  Before Walgreens, he served as the Executive Vice President – Chief Supply Chain Officer at C&S Wholesale.

    Published on: December 2, 2021

    Yesterday we took note of a CNBC 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.:"

    I commented, in part:

    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?

    MNB reader Tom Murphy responded:

    I get a big kick out of this movement…really, in the last 5 years this has become a trend?  Remember what happened to Efficient Consumer Response (ECR) in the early-mid 1990’s?  It was never about the customer, it was about lowering costs, creating efficiencies and squeezing the hell out of the manufacturers.  Even in the first 10 years of the 2000’s customer focus was a joke.  I had a grocery client once that wanted to implement a customer loyalty program to focus on the consumer and generate data.  Two results:  1) they were too cheap to hire someone that could actually analyze data so it was mostly an electronic discount program and 2) when we finally produced a Category vs Customer matrix for a discussion regarding the shrinking of a product category/assortment, all hell broke loose.  The highest sellers on the category list were sold to the lowest margin/lowest frequency customers (think discounts, coupons, cherry pickers, yada, yada) while the best, most loyal customers were buying the mid-to-lower margin products.  What to cut…why the lowest sales/margin items of course!

    Unfortunately, in grocery, the old adage of “stack it high, price it low, watch it go” has been dying a slow death!  This is lead by the real power executive, the Head of Merchandising.  The great grocers are finally moving away from this, but the others need to cycle some old-timers out of leadership before they can gain any traction.

    From MNB reader Jim House:

    Excellent points! Most companies are in the people business, they just happen to sell some type of product. I love the idea about contacting your top customers and asking what we can do for them! I agree that we will probably benefit from this experience more than they will!

    Published on: December 2, 2021

    Major League Baseball owners early this morning enacted a labor lockout, preventing discussions between clubs and players, trades or signings, as the collective bargaining agreement between the two sides expired.

    In a message to fans, Commissioner Rob Manfred wrote:

    “We believe that an off-season lockout is the best mechanism to protect the 2022 season … We hope that the lockout will jumpstart the negotiations and get us to an agreement that will allow the season to start on time. This defensive lockout was necessary because the Players Association’s vision for Major League Baseball would threaten the ability of most teams to be competitive. It’s simply not a viable option. From the beginning, the M.L.B.P.A. has been unwilling to move from their starting position, compromise, or collaborate on solutions.”

    The union responded:

    “This shutdown is a dramatic measure, regardless of the timing. It is not required by law or for any other reason. It was the owners’ choice, plain and simple, specifically calculated to pressure players into relinquishing rights and benefits, and abandoning good faith bargaining proposals that will benefit not just players, but the game and industry as a whole.”

    KC's View:

    Oy.

    I am reassured by the Axios story comparing lockouts to strikes: that "Either employers withhold work (lockout) or workers withhold services (strike). While neither is ideal, lockouts are far less intrusive. Those five strikes led to 1,720 canceled games. The three lockouts? Zero."