Published on: January 31, 2022
A kid's game - played on a cold and snowy weekend in front of a roaring fire - taught KC a lesson in business leadership. Not everyone in an organization sees things the same way, and it is up to the person in charge to a) understand that, b) try to see things the way workers see them, and c) be able to communicate the larger picture to everyone.
Published on: January 31, 2022
The Wall Street Journal has a piece about how cutthroat competition among food delivery startups is mostly generating big losses among the players.
Here's how the Journal frames the situation:
"A venture capital-backed battle is raging in New York City in the burgeoning field of instant delivery. At least six startups, including Gorillas Technologies Ltd., Jokr SARL, Getir Perakende Lojistik AS and Buyk Corp., are vying to win the chance to ferry groceries to customers within 10 to 20 minutes of their order placement on an app."
The story notes that "prices are similar to grocery stores, discounts are plentiful, and many services don’t have a fee or minimum order, allowing consumers to request a single pint of Ben & Jerry’s delivered to their doorstep. Food-delivery app DoorDash Inc., based in San Francisco, also recently entered the fray in New York City."
But…
"While these consumer-friendly offerings have brought surging sales, losses are heavy given the high cost of prolific advertising and paying couriers to hand-deliver potato chips, soap and eggs in a short time frame, industry investors and executives said.
Some of the companies are averaging a loss of over $20 per order when factoring in costs like advertising, those people said."
Still…
"Executives and backers of the companies say losses today are investments in a promising prize. Groceries are already an enormous business, and if one or two of the startups grow to dominate the market for quick groceries, the numbers could eventually turn profitable, they say."
The story makes the larger point that the startups face some additional challenges, like not delivering certain items (like bananas, traditionally a product with real appeal - no pun intended - to online shoppers) and not embracing lower-cost models like those used by companies like Uber and Lyft.
The advantage they may have is that they are backed by venture capital companies that seem toi see investing in such enterprises as akin to a trip to Vegas … they know that a lot of the bets won't pay off, but if one does, it'll be a doozy.
For me, the larger problem is that these services seem disconnected from the value propositions offered by retailers. I continue to wonder if this will be a fatal flaw not just for the delivery services, but even for some of the retailers.
Published on: January 31, 2022
Walmart is endeavoring to make its bricks-and-mortar shopping experience more pleasurable, a recognition that at this time in retail history, just being accessible may not be enough.
In a blog posting at the end of last week, the company said it is working to amplify "the physical, human and digital design elements in our stores to inspire customers and elevate the experience. Physical elements include lighting, space enhancements, dynamic displays and more. Our visual merchandising experts have highlighted exciting brands and created engaging experiences that bring to life the human element. Finally, QR codes and digital screens create opportunities for digital exploration. But making the store more engaging isn’t enough. We have to do all of this in a way that is unique to Walmart."
According to the company, that means adhering to certain "guiding principles:"
• "Activated corners: Exciting displays at the corners of certain departments pull customers in and help them touch, feel and become a part of the space, allowing them to discover all that we have to offer. Home may feature a living room or bedroom set up where the customer can squeeze a throw pillow or feel the coziness of a blanket, then find those items onsite to purchase and take home, or order them online."
• "Elevated brand shops: Taking a 'store within a store experience' to the next level.
Apparel will highlight owned and national brands. Great prices are a given, but we’ll celebrate quality and style, in style.
"New parents will not want for inspiration when they visit the Baby department. They will be greeted by elevated displays showcasing all the items needed to create a dream nursery as well as strollers and car seats that are brought out of the box to allow for test drives."
"Beauty will also showcase exciting shops where new and trending items are given a home, and men’s grooming tools can be seen and experienced."
• "More space to discover: In these new reimagined spaces, we have purposefully created more space for our customers to explore and discover the breadth and depth of what our stores have to offer, and we’ve optimized assortment to elevate storytelling that draws customers in."
• "Digital touchpoints: Using our stores as an initial display of the great variety of products and brands, we can communicate to customers the vast range of products and services Walmart offers online through the strategic use of QR codes and digital screens. For example, in our Pets area, a customer may scan the QR code to find additional dog bed options, learn about Walmart’s pet insurance service options or have a 20-pound bag of kibble delivered to their door."
These adjustments, the company said, are being implemented as "a new, signature experience in our incubator location, Store 4108 in Springdale, Arkansas, that we call 'Time Well Spent.' It focuses on making Walmart a destination where customers want to spend their time."
It is interesting - and, I think, fairly accurate - that The Street describes this as Walmart targeting a Target-like experience: "Customers visit Target because they want to browse in the way that people might walk around a mall. That means that people sometimes visit the chain when they don't need something and that leads to added sales -- whether they decide to buy a coffee at Starbucks or end up purchasing something else they didn't know they needed."
I have to be honest - I don't know who those customers are, and I cannot in any way shape or form relate to that described experience. Browse around a mall, a Target or a Walmart without a specific goal in mind? Yikes. I cannot imagine.
I'm not sure that Walmart has specifically said it wants to be more like Target … though it certainly has sought to be more like Amazon in its e-commerce offerings. It certainly makes sense to look at and see who is doing certain things right, and where one has weaknesses, adopt some of the approaches that are working for others - specifically when those things are working for customers.
Published on: January 31, 2022
The New York Times had a story over the weekend about how companies anxious to be considered employers-of-choice - an important distinction in the era of the so-called "great resignation" - are helping with workers' student loans and pitching it as a job benefit.
A 2021 survey conducted by the Employee Benefit Research Institute, according to the Times, "found that about 17 percent of large employers — those with 500 or more workers — offered some form of student debt assistance. Of those, nearly a third (30 percent) offered direct loan subsidies and an additional 40 percent said they planned to start offering direct help in the next year or two."
The story points out that "a Fidelity Investments survey in October of about 1,600 employers of varying sizes found that more than a quarter (29 percent) offered a contribution to student debt as a benefit. And more employers are likely to consider it, now that the federal loan payment pause is scheduled to expire."
I've always thought that this was a good idea, and one that was gaining traction pre-pandemic, even before the labor market became as tight as it is today. Employers backed off the programs because of business pressures created by Covid-19, but now, the Times suggests, momentum in this direction is once again beginning to build.
It would be nice of somehow the federal government would figure out a way to make sure that workers don't get taxed for this benefit, and that employers somehow are incented to offer it - the faster we can get young people to retire their student debt, the better off the economy will be, since they'll be able to use that money to buy cars, houses, and start families.
It is interesting to see what employers are doing to improve their prospects. Axios this morning has a piece saying that "employers are beefing up benefits packages to lure workers in a tight labor market, and many are adding pricey fertility benefits — including in-vitro fertilization and egg freezing."
There's two reasons, apparently. One is the demand for fertility services. The other is that a plethora of such services is driving down the cost, making it more palatable to companies and insurance companies.
Published on: January 31, 2022
From the Boston Globe this weekend:
"Amid steady criticism of the impact of third-party delivery services on restaurants struggling during the pandemic, an industry giant this week dished out $340,000 in grants to Boston-area restaurants.
"DoorDash said Monday that it had chosen 17 restaurants to join its Main Street Strong Accelerator program, an initiative aimed at providing financial and educational support to businesses, particularly those owned by women, immigrants, and people of color. All of the Boston participants fall in at least one of those three categories."
In addition, the story says, "Along with the cash, selected restaurants also will receive an eight-week curriculum with lessons on how to grow their business, one-on-one coaching, and merchandising and marketing benefits from DoorDash. The delivery app partnered with Accion Opportunity Fund, a nonprofit small business lender, to include curriculum centered on business growth, with courses such as 'Finding Your Niche and Defining Your Brand,' 'Hiring & Employee Relations,' and 'Marketing Like a Pro'."
The Globe reports that "DoorDash already has rolled out the program in five other cities over the last year, including New York and Chicago. It’s part of a broader five-year, $200 million Main Street Strong Pledge to strengthen local communities and their restaurants."
In for a penny, in for a pound. This is smart business, cloaked in altruism. Which, when you think about it, is a pretty good combination.
Published on: January 31, 2022
The Wall Street Journal reports on how Bed Bath & Beyond, in changing its inventory strategy in a way that edited selection, ended up leaving "customers with fewer choices when seeking substitutes for out-of-stock items … Swapping out national labels for new private-label brands - aimed at boosting profits and sales - can be disruptive even in normal times, but it created even bigger challenges during the pandemic, said suppliers and the former employees.
"During part of the critical holiday season, the chain ran short of its 200 bestselling items, from kitchen appliances and electronics to sheets and bath towels."
Part of the problem, the story suggests, was caused by "years of underinvestment by prior management in supply-chain systems and technology."
Some context from the Journal story:
"During the pandemic, retailers have struggled to keep items in stock in the midst of factory shutdowns, shipping delays, port congestion and a shortage of truckers. Some chains have weathered the storm better than others. The HomeGoods chain of TJX Cos. posted a 34% comparable-store sales increase in the most recent quarter compared with the same period a year earlier. Target Corp.’s home-department sales posted a double-digit percentage increase."
It isn't exactly the same thing, but in some ways this story reminds me of the Ron Johnson tenure at JC Penney, when he changed things up so much that it alienated traditional customers even before he could attract new ones.
One thing that also seems familiar is that when Johnson was at JC Penney, one of the things he wanted to change was the chain;'s highly aggressive approach to sales and promotions, which seemed more rooted in momentum than any sense of strategy. Bed Bath & Beyond has had a similar problem - over the years, it essentially has trained its customers never to come in and buy anything unless they had those ubiquitous blue-and-white coupons that come in the mail.
It also sounds as if Bed Bath & Beyond may have lost track of its narrative and lost connection with its customers - a terrible combination, and one that every retailer risks suffering through if they don't keep relentlessly focused on the brand's value proposition.
Published on: January 31, 2022
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 75,578,076 total cases of the Covid-19 coronavirus, resulting in 907,190 deaths and 45,937,985 reported recoveries.
Globally, there have been 375,810,232 cases, with 5.683,353 resultant fatalities, and 296,816,219 reported recoveries. (Source.)
• The Centers for Disease Control and Prevention (CDC) says that 75.3 percent of the total US population has received at least one dose of vaccine … 63.8 percent is fully vaccinated … and 41.5 percent of the total population has received a vaccine booster shot.
• The Wall Street Journal reports that "hospitalizations for Covid-19 continue to slow in the U.S., with the seven-day average of hospital patients with confirmed or suspected infections dropping to 146,769 on Saturday, about 8% down from a peak on Jan. 20, according to data from the Department of Health and Human Services.
"The rolling seven-day average of daily deaths with Covid-19, a lagging indicator, continues to rise, however, reaching 2,379 on Friday, according to data from Johns Hopkins University. Covid-19 deaths in the U.S. are running at their highest level since February last year. Even though the evidence suggests the highly contagious Omicron variant of the virus is less likely to cause severe illness and death than previous variants, the sheer number of Omicron infections is leading to a heavy toll.
"The gradual decline in hospitalizations is making health experts cautiously optimistic that the current wave of Omicron may have peaked, and that deaths might trend downward in the coming weeks too. However, while the Omicron tide appears to be receding in heavily populated coastal states such as California and New York, epidemiologists warn that it hasn’t yet peaked in some less-vaccinated parts of the U.S."
Published on: January 31, 2022
• Kroger late last week announced that it "will offer more Americans delivery through the addition of a spoke facility in Louisville, Kentucky powered by the Ocado Group and combining vertical integration, machine learning, and robotics to provide an affordable, friendly, and fast fresh food delivery service as part of the company's seamless ecosystem … The 50,000-square-foot spoke facility located on Robards Lane in Louisville will collaborate with the hub in Monroe, Ohio and serve as a cross-dock to connect customers with fresh food. The facility is expected to become operational later this year and will employ up to 161 full-time associates."
"We're proud to expand the Kroger fulfillment network to Louisville," said Gabriel Arreaga, Kroger's senior vice president and chief supply chain officer. "The new service is an innovative addition to the expanding digital shopping experience available to Kroger customers. The network's delivery spoke facility will provide unmatched customer service and improve access to fresh food in areas eager for the variety and value offered by Kroger direct to their homes."
Published on: January 31, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• The National Retail Federation (NRF) is out with a report saying that Valentine’s Day spending is expected to reach $23.9 billion this year, up from $21.8 billion in 2021 and the second-highest year on record … More than half (53 percent) of U.S. consumers plan to celebrate the holiday in 2022, up from 52 percent in 2021. More than three-quarters (76 percent) of those celebrating indicate it is important to do so given the current state of the pandemic.
"According to the survey, shoppers expect to spend an average of $175.41 per person on Valentine’s Day gifts, up from $164.76 in 2021. The increase comes as many intend to spend more on significant others or spouses.
"Candy (56 percent), greeting cards (40 percent) and flowers (37 percent) remain the most popular gift items this Valentine’s Day."
That's interesting, because I've talked to a number of retailers who are concerned that the timing of the Super Bowl - it occurs on Sunday, February 13, the day before Valentine's Day - could mean diminished spending on the holiday. We'll see.
• The Washington Post reports that Florida's "orange crop will be the smallest since World War II, according to a U.S. Department of Agriculture report earlier this month.
"And the threats to Florida’s 'liquid gold' continue: Weather forecasters predict this weekend’s freezing temperatures in Florida will further hurt the season’s crop."
The result, almost inevitably, will be higher prices at retail.
"Like most groceries, orange juice prices have been going up," the Post writes. "In 2021, orange juice prices rose 13.8 percent, according to the USDA, and according to market research firm Nielsen, retail prices of orange juice have increased another 5.73 percent this month. The 2021 increase in orange juice prices was roughly twice the rate of increase in the cost of groceries."
The Post notes that "Florida is the country’s largest producer of juice oranges, at its peak producing 244 million boxes of oranges annually. This year, the USDA predicts that will fall to only 44.5 million."
• Fox News reports that "Coffee giant Starbucks is facing another union push. This time, it's in Atlanta.
"The Starbucks on Howell Mill Road is the latest in a growing number of stores seeking to unionize. However, it's the first to do so in Georgia, according to Starbucks Workers United. … In a letter to Starbucks CEO Kevin Johnson, Starbucks Workers United claimed that while the company increased its earnings during the pandemic, employees, otherwise known as partners, 'have not shared in this prosperity.'
"The group further claimed that it endures 'unprecedented instability in the workplace' and 'witnessed unfair retaliation.'
"The employees have also felt like they were being 'silenced or ignored.'
The story notes that "last month, a Starbucks store in downtown Buffalo, New York, became the first location to unionize in Starbucks’ 50-year history … Individual stores in Massachusetts, Arizona, Oregon, Illinois, Colorado, Tennessee and Starbucks’ home city of Seattle have petitioned the labor board for union elections.
"Additional stores in Buffalo have also attempted to unionize."
Published on: January 31, 2022
Got the following email from an MNB reader:
I have agreed with you all along on the forced hazard pay and its potential to inhibit organic pay raises. It also feeds the narrative of automation to reduce costs.
In an earlier post response you asked why it is front line or low wage workers that get cut first. I think you answered your own question. When you force minimum wage increases, then force hazard pay and other costly measures on the retailer, and labor is, or at least one of, the largest lines in the budget, that is where they go first. When you reduce the labor force you reduce your cost by double. Now the ROI for technology, is much faster than before. Bottom line, the forced mandates are creating more issues than what they are solving.
In response to our piece last week about Square Books in Oxford, Mississippi, one MNB reader wrote:
I am an alum of Ole Miss and have spent many days in Square Books. One amazing aspect of their business model is that the employee base are all avid readers and are quick to make recommendations. There are placards in front of sections with “(name of associates) favorites”. This serves as a fun guide to future book selections. They also have a hyper focus on local authors and have stacks of autographed editions. I bought a first edition "Joe" by Larry Brown the last time I was in the store. If you haven’t make it to Oxford MS yet, you should put it on your list.
I have not been there yet … and it definitely is on my list.
On Friday we took note of a Washington Post report that federal labor regulators are accusing "Amazon of illegally surveilling and threatening workers who are trying to unionize a Staten Island, N.Y., warehouse.
"The complaint … marks the National Labor Relations Board’s latest brush with the e-commerce giant over questions about its tactics. The NLRB wants to compel Amazon to take certain actions to inform workers of their right to organize, according to Kathy Drew King, a regional director for the agency."
Prompting one MNB reader to write:
What I find most interesting about the report on the Washington Post’s story about possible illegal activities involving Amazon is that it is yet again proof that Bezos lets reporters and editors run stories that could be detrimental to Amazon, even though he owns The Post. Independent and unbiased reporting is what makes The Post great.
I've always felt that Jeff Bezos' acquisition of the Washington Post, providing it with the resources to compete in a tough and crowded media environment, may end up being one of the great contributions of his career. He's not perfect, and there is plenty tio scrutinize about his businesses … and the Post isn't perfect, either. But it is a great American newspaper, and a national resource of almost incalculable value.
Published on: January 31, 2022
• In the National Football League Conference Championships…
Cincinnati Bengals 27, Kansas City Chiefs 24
San Francisco 49ers 17, Los Angeles Rams 20
The Bengals will now travel to SoFi Stadium, coincidentally the Rams' home stadium in Inglewood, California, where they will play Super Bowl LVI on Sunday, February 13.
• In the Australian Open, in an exhausting marathon men's singles final, Rafael Nadal of Spain defeated Daniil Medvedev of Russia 2-6, 6-7 (5), 6-4, 6-4, 7-5. It was an extraordinary five-hour, 24 minute match in which Nadal - who just months ago was not sure he'd be physically able to play in Melbourne, staged as remarkable comeback from two sets down.
This gives Nadal a record 21 men's tennis Grand Slam victories, one more than each of his chief rivals, Roger Federer and Novak Djokovic.
Also at the Australian Open over the weekend, in the women's singles final, Ashleigh Barty of Australia defeated American Danielle Collins 6-3, 7-6(2), to become the first Australian man or woman to be champion there since 1978.
