business news in context, analysis with attitude

Published on: February 22, 2022

by Michael Sansolo

Sometimes I don’t like being right.

The last assignment I had in my days as a senior leader at FMI - then the Food Marketing Institute, now FMI-The Food Industry Association - was anything but simple, but it turned out to be enormously prescient.

Back in 2006, I was asked to research the following problem:  that the massive Baby Boom generation was occupying the vast majority of top and middle management positions. Basically, we Boomers were clogging up the system, much as we had done with everything in our lives.

And, because our generation was so large, and the successive Generation X relatively small, the normal transition of leadership from one generation to the next wasn’t happening.

Our goal was to find ways to help member retailers cope.  My research included interviews with executives of retail, wholesale and manufacturing companies of all types and sizes.  The concern they expressed to me was about the near future, when those boomers started to retire and in the process would leave companies short on experienced leaders ready to step in.

As I did my research I learned this wasn't a problem limited in the food retail sector. Many airlines cited the same fear about aging pilots and even the military talked about a similar generational crunch among officers. And, as I’ve written before, the situation was especially acute with truck drivers, which leads to today’s massive shortfall in numbers.

The future, it seems, as arrived. And unsurprisingly, Covid played a hand.

A recent article in the Washington Post examined how boomer retirements in many ways has exacerbated the “great resignation” being blamed for much of the current labor shortage. But as the article makes clear, the retirement piece jumped into high gear during Covid as many boomers tired of waiting for the return to normalcy or simply decided the moment was right to stop working altogether.

(I do have acknowledge there is some irony in writing this article as your two main correspondents here at MNB are respectively 67 and 66, and neither is rushing toward retirement. At least, not this week.)

The question many companies must be asking now is whether the problem they so well articulated to me during my interviews 16 years back was ever properly addressed. Many leaders back then told me the only solution was to quickly train top-performing millennials (the only generation with sufficient numbers to replace the boomers) so they would be ready once the time came. It remains to be seen who, if anyone, got that right, but clearly on an aggregate basis we weren’t ready.

There’s no going back 15 years now to address this situation, but hopefully company leaders are carefully examining their leadership pipeline to ensure a proper succession plan is in place.

The clock is clearly ticking.  To me, it sounds like a generational time bomb.

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: February 22, 2022

H-E-B just announced that it is offered a limited edition private label ice cream called "Education Heroes," and donating 10 percent of proceeds to help fulfill the classroom wishlists of teachers in Texas.  KC thinks this is an excellent idea, and refreshing. coming at a time when education is being politicized, some districts are banning books, and teachers seem to be considering retirement or career changes in record numbers.

Published on: February 22, 2022

The New York Times reports that Family Dollar had to temporarily close "more than 400 stores after the discovery of a rodent infestation and other unsanitary conditions at a distribution center in Arkansas touched off a far-reaching recall of food, dietary supplements, cosmetics and other products.

"A recent Food and Drug Administration inspection of the facility, in West Memphis, Arkansas, found live and dead rodents 'in various states of decay,' rodent droppings, evidence of gnawing and nesting, and products stored in conditions that did not protect against these unsanitary conditions, the agency said in a statement Friday.

"A fumigation of the facility last month revealed more than 1,100 dead rodents, and a review of company records indicated the collection of more than 2,300 rodents from late March to September, 'demonstrating a history of infestation,' the agency said. Rodent contamination can cause salmonella and infectious diseases, the FDA said."

According to the story, "Family Dollar said in a statement that the voluntary recall, which also covers drugs, medical devices and pet food, includes FDA-regulated products that were stored and shipped from the distribution center to 404 stores in Alabama, Arkansas, Louisiana, Missouri, Mississippi and Tennessee … The recall covers products that were stored at the distribution center from the beginning of 2021 to the present. It does not apply to items shipped directly to the stores from distributors or manufacturers. Family Dollar said it was not aware of reports of illness related to the recall."

The Times goes on:  "Kayleigh Campbell, a Dollar Tree spokesperson, said in an email that the company had 'temporarily closed the affected stores in order to proficiently conduct the voluntary recall,' and that the stores would reopen as soon as possible.

"'We take situations like this very seriously and are committed to providing safe and quality products to our customers,' Campbell said. “We have been fully cooperating with all regulatory agencies in the resolution of this matter and are in the process of remediating the issue."

Published on: February 22, 2022

From the Wall Street Journal over the weekend:

"Some of tech’s biggest players - Apple Inc., Alphabet Inc.'s Google, Amazon Inc. and Samsung Electronics Co. - have established smart-home platforms, so your iPhone can turn off the lights or Alexa can change the thermostat without too much extra setup. But that still means shoppers must check if new products work with the tech they already have at home.

"Compatibility issues and setup complexity have made people slow to go all-in with smart-home technology. A new standard, called Matter, aims to change that.

"When it rolls out this year, Matter will act as a common language spoken by most new - and many older - smart-home products. You could buy any gadget you wanted and connect it to whichever app you prefer. You’ll be able to control it with the voice assistant of your choice, or even use multiple assistants and apps inside your home."

And here's the surprising part, according to the Journal:  "All the biggest names in smart-home tech are on board, so going forward, you won’t be trapped in one walled garden. If you get tired of Alexa and want to switch to Apple’s HomePod Mini, you could do it without having to also buy new automated blinds … Along with the tech giants, over 220 other companies support Matter. Between now and the end of the decade, vendors will ship more than 5.5 billion Matter-compliant smart-home devices, according to ABI Research. 

"Matter is designed to be more secure and private than other smart-home systems, in part because it can perform some basic functions without sending messages to the cloud. And you probably won’t have to throw out all your old smart devices."

The reason for the unexpected collaboration is simple:  these companies, which are looking to smart home to technology to get ever-smarter and drive their growth, also realized that by being restrictive about their platforms they actually were limiting their growth potential.  The story makes the point that companies will look for ways to convert customers to being all-in on one platform or another, but that short of that, they'll encourage a larger embrace of smart home-oriented technological advances.

Published on: February 22, 2022

The San Francisco Chronicle has a story about how on March 10, Amazon-owned Whole Foods is scheduled to open a new "flagship store" there:  "its newest location at 1185 Market St. is nearly 65,000 square feet, making it the city’s largest Whole Foods option for residents>. The store, the Chronicle writes, attempts "to represent familiar neighborhood brands, and its design takes the local emphasis a step further by taking inspiration from several San Francisco neighborhoods and landmarks such as the former Crystal Palace Market, the Tenderloin district and the iconic colors of the Golden Gate Bridge."

The story goes on:  "It’s slated to feature more than 3,700 local products throughout its aisles, including organic mushrooms from Far West Fungi and salad greens from Plenty’s San Francisco farm.

"Besides its extensive wine offerings from Napa and Santa Cruz vineyards, there are more than 300 craft beverages with Barebottle sour beers, low-calorie margaritas from Laughing Glass and hoppy suds by San Francisco Brewing, all represented on shelf space.

"For those with a sweet tooth, find these local favorites in the bakery: croissant toasts from La Boulangerie, breads from Wise Sons deli, macarons from L’Artisan and hearth breads from Acme, Semifreddi’s and Firebrand.

"The wellness and beauty section will offer more than 50 local products, namely clean skin care line Cocokind and supplements such as green moringa powders from Kuli Kuli based out of Oakland."

Published on: February 22, 2022

CNBC over the weekend posted the following story (which was forwarded to the Content Guy by numerous MNB readers):

"Amazon has spent almost three decades perfecting the art of bringing everything imaginable to your doorstep in the shortest amount of time, at the lowest possible price. By almost any measure, it’s been one of the greatest corporate successes in history.

But despite Amazon’s unquestioned dominance in e-commerce, one giant market has proven particularly vexing: groceries. 

"Amazon has introduced a dizzying array of services — Prime Now, Fresh, Go and others — in its effort to become a giant in the $750 billion U.S. grocery market. In 2017, it spent $13.7 billion to acquire Whole Foods, a price tag more than 10 times higher than Amazon had paid in any prior deal.

"Still, it’s just a niche player in the industry. As of mid-December, Amazon.com and Whole Foods accounted for a combined 2.4% of the grocery market over the past 12 months, while Walmart controlled 18%, according to research firm Numerator. Amazon’s delivery services have struggled to stand out in a crowded field, while the Go automated convenience stores have been deprioritized, according to people familiar with the company’s strategy."

The CNBC story suggests that poor stock performance over the past six months or so - down 13 percent during a period that, coincidentally or not, founder Jeff Bezos was succeeded as CEO by Andy Jassy - could "give investors a reason to start looking for things they don’t like. One area of scrutiny could be Amazon’s physical stores unit, which includes Whole Foods and Fresh stores. It saw lower sales in 2021 than in 2018, even as its footprint of leases expanded by 17% over that stretch."

The story details the internal competition - some call it chaos - at Amazon over the best strategic approach to grocery, the "bake-off" that took place between the "Fresh" and "Prime Now" brands, and the logic behind the de-emphasis on the Amazon Go stores and new success on the new Amazon Fresh grocery store brand.

It is worth reading here.

Published on: February 22, 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…

•  The United States now has had a total of 80,145,282 cases of the Covid-19 coronavirus, resulting in 960,157 deaths and 51,929,244 reported recoveries.

Globally, there have been 426,913,172 cases, with 5,912,365 resultant fatalities and 354,156,596 reported recoveries.   (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 76.1 percent of the total US population has received at least one dose of vaccine … 64.7 percent is fully vaccinated … and 43.2 percent has received a vaccine booster dose.

•  From the New York Times:

"As people across the world grapple with the prospect of living with the coronavirus for the foreseeable future, one question looms large: How soon before they need yet another shot?

"Not for many months, and perhaps not for years, according to a flurry of new studies.

Three doses of a Covid vaccine — or even just two — are enough to protect most people from serious illness and death for a long time, the studies suggest."

The story goes on:

"Federal health officials including Dr. Anthony S. Fauci, the Biden administration’s top Covid adviser, have also said that they are unlikely to recommend a fourth dose before the fall.

"The Omicron variant can dodge antibodies — immune molecules that prevent the virus from infecting cells — produced after two doses of a Covid vaccine. But a third shot of the mRNA vaccines made by Pfizer-BioNTech or by Moderna prompts the body to make a much wider variety of antibodies, which would be difficult for any variant of the virus to evade, according to the most recent study, posted online on Tuesday.

"The diverse repertoire of antibodies produced should be able to protect people from new variants, even those that differ significantly from the original version of the virus, the study suggests."

The betting here … and, to be clear, I know absolutely nothing other than what I read … is that with autumn and the annual urging by public health officials that we all get flu shots will come a suggestion that we also get a Covid vaccine booster shot to help us get through the colder months.  I'm happy to make my reservation now.

Published on: February 22, 2022

•  From the Boston Globe this morning:

"In the ever-escalating race to get goods to consumers faster, more so-called dark stores are cropping up around Boston, promising to deliver everything from ground beef to hummus to dairy-free ice cream in about 15 minutes.

"The spaces look a lot like a convenience store, with aisles, refrigerators, and freezers stocked with 2,000 to 3,000 items. But customers are not welcome inside. Instead, they place orders for delivery through a smartphone app.  The companies hire couriers to pack orders into insulated backpacks or containers and transport them via electric bike.

"The stores ― which are essentially mini-warehouses ― gained popularity in many US cities during the pandemic, including Boston, where about half a dozen companies now operate, including JOKR, Getir, Fridge No More, and Gopuff. Based on filings with the state and city and company estimates, there could soon be more than 20 instant delivery stores in the Boston area.

"But in the effort to cover the area with strategically located delivery centers, some companies appear to be flouting regulations and zoning codes, while others opened before obtaining a health permit to sell food. At least one city official, as well as residents, who live near the stores say more needs to be done to regulate these businesses, which are not required to go through a special permitting process that governs how a space is used. As it stands, a former mattress store could turn into an instant delivery warehouse overnight, with no community input."

According to the story, "Boston City Councilor Ed Flynn said he is concerned about how the stores are zoned and permitted, according to letters he’s sent to Mayor Michelle Wu’s administration … A spokesperson for Wu said in a statement that 'neighbors absolutely deserve a say in who becomes a part of their community.'  Her administration is 'monitoring the situation and its implications for small businesses, fair treatment of workers, and the revitalization of street life'."

One more thing from the Globe story:

"For now, Boston customers are enjoying deeply discounted prices and promotions, as companies look to hook people on the concept. Downloading any of the apps means getting constant push notifications, sometimes with discounts of up to $30 off an order.

"It’s coming at a steep price for the businesses. Industry investors and executives recently told the Wall Street Journal that instant-delivery companies are losing more than $20 on every order. In New York City, where the businesses saturated the market before coming to Boston, some are already shutting down and considering merging."

•  Travel & Leisure reports that "Delta Air Lines is teaming up with the online grocery delivery site Instacart to give SkyMiles members even more ways to earn miles while they shop … Loyal travelers can link their SkyMiles number to their Instacart account and start earning 1 mile for each dollar they spend and Instacart Express members will earn 1.5 miles for each $1 they spend … As a bonus, SkyMiles Silver and Gold Medallion members will receive a three-month complimentary Instacart Express trial, which offers customers free delivery on orders over $35 and 5% back on pickup orders. Platinum and Diamond members will receive a complimentary 12-month trial, according to Delta."

Instacart strengthens its value proposition, but I'm not sure it is doing the same for its client retailers. You get these points by using Instacart ... and the impact on retailers, at the very least, is diluted.

Published on: February 22, 2022

•  The Associated Press reports that "farms that raise turkeys and chickens for meat and eggs are on high alert and taking steps to increase biosecurity, fearing a repeat of a widespread bird flu outbreak in 2015 that killed 50 million birds across 15 states and cost the federal government nearly $1 billion.

"The new fear is driven by the discovery announced Feb. 9 of the virus infecting a commercial turkey flock in Indiana. The 29,000 turkeys in the flock were killed to prevent the spread of the virus.

"Indiana officials said Tuesday a second flock of 26,473 turkeys near the first infected farm is suspected to have the same virus. Testing is underway to confirm. The second location already is within a quarantine zone established for the first farm.

"The USDA also has confirmed the presence of bird flu in a flock of commercial broiler chickens in Fulton County, Kentucky, and are awaiting results of a potential second case about 124 miles northeast in Webster County, Ketucky. A backyard flock of mixed species birds in northern Virginia also is positive for the virus. State officials quarantined areas and the birds at the new positively identified sites will be killed and removed."

•  The Washington Post reports that the United States has "lifted its temporary ban on imports of Mexican avocados.

"Mexico supplies about 80 percent of the avocados eaten in the United States. The import ban — stemming from purported threats to a U.S. inspector in the Latin American country — shook a billion-dollar industry. Not only did the commotion showcase the law enforcement issues that growers are frequently subjected to in Mexico, but experts said it underscored the importance of one of the strongest and most successful bilateral trade agreements."

•  The Financial Times this morning writes Starbucks has joined Apple and Disney "in adding new environmental and workplace targets to 2021 pay, according to an analysis by Sentieo, a data provider. Shareholders will get to vote on these provisions in March when the companies hold annual meetings.

"Pay tied to corporate social responsibility has jumped above 20 per cent at Russell 3000 companies, up from 7 per cent in 2018, according to Institutional Shareholder Services ESG, the proxy adviser’s responsible investment arm. Pay provisions tied to workplace diversity hit 11 per cent in 2021, from 2.5 per cent in 2018, the proxy adviser said."

One example: "Kevin Johnson, Starbucks’s chief executive, earned a slice of his 2021 bonus by slashing plastic straws and methane emissions — an example of a trend by US companies to add environmental and social targets to bonus packages."

•  Wine Spectator reports that "one of Napa's iconic wineries is changing hands. Doug Shafer, president of Shafer Vineyards, announced … that Shinsegae Property, a luxury brand firm based in Seoul, South Korea, with department stores, shopping centers, golf resorts, hotels and other interests, has acquired his family's winery.

"While neither side disclosed details, the price tag is a reported $250 million and includes 225 acres of vines. Shinsegae acquired the winery through its U.S. subsidiary Starfield Properties, lnc. Shafer winemaker Elias Fernandez and the core winemaking and vineyard staff will continue with the winery for the foreseeable future."

Published on: February 22, 2022

Last week I had a story about what I called "the gathering labor storm," talking about unionization efforts at both Starbucks and Apple.

I commented:

To be clear, there are close to 10,000 company-owned Starbucks stores in the US, so there is a long way to go.  But it wasn't that long ago that unionizing efforts at 100 of them would've been unthinkable.  Now, not so much.

Apple has 270 stores in the US.  Also a long way to go there.  But there was a story this week about there is some investor resistance to a compensation package for Apple CEO Tim Cook that could total close to $100 million a year, which could make a unionization movement play out differently than in the past.

There's something happening here … and what it is seems to be becoming clearer with every passing day.  I'm not sure it is as much about a rebirth of the union movement on a broad scale - I think that horse may already have left the barn - as much as it is a reflection of a further bifurcation taking place within American business.  Even companies that traditionally have been seen as having progressive, pro-worker cultures are now seen as lacking.

It would be foolhardy for any company to think, "This cannot happen here."

MNB reader Steve Anvik responded:

Hmmmm … only a few CEOs, or CFOs really seem to understand that it’s Always Been bottom-up support of Every Employee - that makes and maintains successful companies, in the long run.  Time to learn fast, or go away.  What a gift this upheaval has been as a reset.  Welcome to the real world folks. 

Reacting to last week's piece about the Albertsons' and DoorDash's  "express grocery delivery, a new service that offers consumers faster and more convenient delivery of fresh groceries in under 30 minutes," one MNB reader wrote:

I used this service on Super Bowl Sunday and it was great.  We had forgotten rolls and ice cream for our party.  It was quick and  accurate.  For Albertsons, they do not need to have employees on call to deliver and customers can get things quickly.  I have an Albertsons Fresh Pass and use it for large orders.  This DoorDash quick option is really handy.  I have a DoorDash annual option which has already paid for itself.  DoorDash has a delivery option for RiteAid in my city, but I don't have a relationship with them so I don't order from them.  We use DoorDash a lot for in-home dining and this Albertsons relationship will actually strengthen my loyalty to Albertsons and to DoorDash.    

And, on another subject, from MNB reader Jacob Powers:

It’s been a few years since we’ve met, you came and spoke at my USC FIM class in 2017.  Jim Lee asked us to do one thing, study the industry.  Since then, I can probably count on one hand how many issues of MNB I’ve missed.  Thanks for doing such a great job bringing me the most important things happening around the industry, it helps to keep me current and in the know.

Your facetime was spot on with something that’s been on my mind since yesterday.  I LOVE wordle, it’s the perfect mental break during the day.  And like you and your wife, my wife and I play each day and compare results.

Here is what’s been on my mind about wordle.  Yesterday I was scrolling through Facebook and saw this post from In-N-Out.  I looked through the lines and came up with the word “shake”.  Later in the day I started the wordle and remembering this I started with the word “shake”.  To my surprise, that was the wordle of the day.  I see two possible reasons, either 1 – the social media person at In-N-Out did the wordle early, saw that the word was in line with a product and In-N-Out and quickly put this together.  Or, what I think is more likely,  2 – the New York Times has already found a way to monetize Wordle and is selling the words of the day to companies.

Interested to get your take on it?

Here's the Facebook posting that Jacob refers to:

I think I disagree with Jacob on this one.  I think it is a lot more likely that the social media person at In-N-Out was on the ball, and quickly developed a posting that was timely and smart.

If I'm wrong on this, and anyone in the MNB community has been approached by the salespeople at the Times offering product placement on Wordle, let me know.  But I'd be surprised … or, to use a five-letter word, it'd be a shock.

But I appreciate his kind words, both about MNB and my participation at USC. I look forward to having the opportunity to do more of that going forward.