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    Published on: March 1, 2022

    In a Retail Tomorrow session at the National Grocers Association (NGA) show this week in Las Vegas, what started as an academic conversation about "uncommon partnerships" moderated by KC turned into the formulation of a business plan with all the potential pieces falling into place.

    Published on: March 1, 2022

    by Michael Sansolo

    If anyone harbored doubts that at MNB we can find business lessons everywhere here, just revisit Kevin’s Monday video about a pro-Ukraine demonstration in Las Vegas. It makes a wonderful point and demonstrates that lessons these days come in endless ways and forms.

    To be honest, I don’t have any special insights on the Russian invasion of Ukraine.  I know nothing beyond what I see on television and Twitter. But from just those two places, I’m seeing clearly how the world has changed in a way that impacts us all.

    A few nights back I was watching a meeting of the United Nations Security Council on the topic of the invasion and I was overwhelmed by a speech by the beset Ukrainian ambassador.

    It wasn't just his moving words:  "There is no purgatory for war criminals. They go straight to hell."

    What got me was when he said to his Russian counterpart that he’d be happy to show him Russian President Putin’s just concluded speech, and he offered his iPhone to play the video. I’m too young to remember any UN debate over the Cuban missile crisis or the Berlin airlift, but I’m betting no one had a smartphone video to show back then.

    (It should be noted that the US ambassador to the UN at the time, Adlai Stevenson, was pretty good with words, too.  He started a speech there, addressing the Soviet delegate, Valerian Zorin, by saying, "I want to say to you, Mr. Zorin, that I do not have your talent for obfuscation, for distortion, for confusing language, and for doubletalk. And I must confess to you that I am glad that I do not!>. And later on, Stevenson memorably said, "Let me ask you one simple question: Do you, Ambassador Zorin, deny that the U.S.S.R. has placed and is placing medium- and intermediate-range missiles and sites in Cuba? Yes or no - don't wait for the translation - yes or no?")

    Last week's UN debate made me think about a couple of things. First, it seems that Apple (or maybe it was Samsung) successfully invaded Ukraine and everywhere else, in ways Putin could only envy, and secondly that the world endlessly demonstrates how much technology has changed everything.

    For a more informed view of this, consider what NY Times Columnist Thomas Friedman wrote this weekend:

    "This is the first war that will be covered on TikTok by super-empowered individuals armed only with smartphones, so acts of brutality will be documented and broadcast worldwide without any editors or filters. On the first day of the war, we saw invading Russian tank units unexpectedly being exposed by Google maps, because Google wanted to alert drivers that the Russian armor was causing traffic jams."

    I’d argue the lesson in all of this is that we clearly live in a new world. Today, as shown by the footage from Ukraine, everyone is carrying a camera all the time. More than ever, any incident no matter how small or large can be recorded and possibly shared thousands if not millions of time with minimal effort. You need not be a photojournalist from the NY Times or CBS to have your shots gets worldwide attention.

    Customer facing businesses need to absorb and share that lesson throughout their teams. No one ever wants a customer to have a bad experience, but in today’s world a nasty exchange between a deli clerk and a shopper will travel halfway around the world before anyone considers what actually happened or whether they should care.

    Today, like it or not, we’re all in the public eye and need to behave that way (or at least try a little.)

    One of my favorite chapters in "The Big Picture," the book Kevin and I co-authored about business lessons from the movies, is When Harry Met Sally and the famous scene in a New York City deli.  (Are we allowed to say "simulated orgasm scene" on MNB?).  If such an event ever happened in real life today, every smartphone in that restaurant would capture Meg Ryan’s histrionics and within days thousands of customers would be banging down the doors saying, “I’ll have what she’s having.” (If you don’t get that, watch the movie!)

    Just remember, in today’s world someone is always watching (a line, by the way from Ocean’s 11) and everyone in every store, warehouse and office has to remember that.

    Bravely or not, we are living in a new world.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.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: March 1, 2022

    Albertsons said yesterday that it has launched a "review of potential strategic alternatives aimed at enhancing Albertsons’ growth and maximizing shareholder value.  The review will include an assessment of various balance sheet optimization and capital return strategies, potential strategic or financial transactions and development of other strategic initiatives to complement Albertsons’ existing businesses, as well as responding to inquiries."

    The company said that there is no timetable, that no pre-determinations have been made, and that "there can be no assurance that the review will result in any transaction or other strategic change or outcome."

     Goldman Sachs and Credit Suisse have been retained to serve as financial advisors to assist in this review.

    The Wall Street Journal writes that "Albertsons’s strategic review comes after the company went public in summer 2020, following years of unsuccessful attempts. Its stock is up nearly 90% since then, though it has been relatively flat so far in 2022."

    The Journal adds that "Private-equity firm Cerberus Capital Management LP, which invested in Albertsons in 2006, holds about a 31% stake in the company, according to FactSet. Cerberus merged Albertsons with Safeway Inc. in 2015, and investors tried unsuccessfully then to take the company public. In 2018, Albertsons struck a deal to go public by acquiring most of drugstore chain Rite Aid Corp., but the companies walked away from the deal later that year due to investor pushback."

    KC's View:

    Translation - after 16 years, Cerberus wants out, and sees this as the best time to maximize its investment, which has gone a lot longer than many private equity investments ordinarily last.

    The bigger question is who buys the Cerberus stake, because on the face of it, there would not seem to be a lot of options.  From where I sit, there are very few retailers that can afford to.  Walmart and Kroger would seem to be out of the question - way too many  antitrust issues.  There already is some speculation that Ahold Delhaize might be interested, and that it would run into fewer regulator hurdles, but to this point the company has shown little appetite for expanding beyond its east coast markets.  There will be some who will suggest that Amazon could make the move - in 2017 it spent $13.7 billion to buy Whole Foods and its then-fleet of 460 stores, a far smaller physical footprint than Albertsons' more than 2,270 stores across 34 states.  But the timing could be wrong for Amazon;  buying Albertsons would be a distraction for a company with a still-evolving grocery strategy, plus Albertsons would bring with it union contracts that it might find distasteful.

    So, we'll see.  Another private equity group could step in, or Apollo Global Management, which already has a stake in Albertsons, could expand its percentage of the company.   And, there almost certainly are options that I'm not seeing.

    I do think that Albertsons has started to gain real traction on a number of tracks, and I hope this doesn't become a distraction for the company, or result in moves that aren't primarily focused on drawing the retailer closer to its customers.

    Published on: March 1, 2022

    Forbes has an interesting piece examining why a variety of retailers have decided to package and sell or license what previously might have been thought of as proprietary technology to other retailers - in other words, competitors.

    The sellers, Forbes observes, "likely see something of even greater value than sales in some of these collaborations – the shared data and telling customer insights they yield. (As long as it adds value and consumers are willing to share their data in these environments.) 

    "And those insights in turn lead to more effective sales opportunities: Nearly 50% of brands had experienced at least a 4% sales bump from sharing their data with retailers, according to Coresight research (nearly 27% saw a gain of at least 8%)."

    Among the examples cited in the story are Walmart, which is offering its GoLocal delivery service to smaller retailers, and Amazon, which is doing the same with the Just-Walk-Out technology it first tested in Amazon Go stores.

    Forbes writes, "No matter who the customer is, retailers know that getting the relationship right takes an optimal understanding of consumers and their needs and then, using that knowledge to create the right experiences. These retail services therefore will be tasked with the same challenges customer services face: a seismic-sensitive gauge to predict operational shifts, a constant eye toward next-stage needs and providing what the customer wants and sometimes what they don't expect – at a value.

    "This is what one of the toughest industries in business demands. Competition is tough. But it makes retailers tougher, and working together may be the glue that cements the value they can bring."

    KC's View:

    I'm in favor of uncommon partnerships, but getting into bed with the enemy strikes me as a bridge too far.

    At least the way Forbes characterizes it, these deals include shared intelligence about customers that makes everybody smarter, but I'd also argue that it also makes some companies - especially large, carnivorous ones - a lot more dangerous.

    Let's be clear:  one of the motivations is to create new revenue streams -  but those are revenue streams that help to find the activities of competitors that do not have your best interests at heart.

    I would only be in favor of arrangements such as these if they included a thick, impenetrable wall that would assure that the likes of Walmart and Amazon would not have access to any of my sales data.  And even then, I must admit, these deals would make me nervous.

    And even if promises are made and intentions seem to be good, never forget - in this scenario, you always are the frog, and Amazon/Walmart always will be the scorpion.

    Always.

    Published on: March 1, 2022

    The Minneapolis/St. Paul Business Journal reports that "Target Corp. on Monday said that it will boost its starting pay for workers beyond $15 an hour and expand health benefits for employees and families.

    "The Minneapolis-based retailer said its new starting wage for hourly workers at Target stores, supply chain facilities and headquarters locations will range from $15 to $24 per hour. The highest wages won't be available everywhere or for all jobs — warehouse workers often make more than store employees, for example — but Target said the goal was to position itself "as a wage leader in every market where it operates."

    The story notes that "the move is Target's latest bid to attract and retain workers in an increasingly tight labor market. The company has steadily increased its minimum wage to $15 per hour over the past few years — though wages at some distribution facilities, for example, are already well beyond that, according to job posts from the company."

    KC's View:

    The move also is Target's bid to avoid some of the labor strife that is affecting other companies, like Starbucks and Amazon, and that I continue to believe will come other other companies, like Walmart.

    That said, this move is going to create pressure on other businesses to do the same.  Target seems to have decided that if a rising tide raises all boats, it wants to be the tide.

    Published on: March 1, 2022

    Morning Consult is out with a new survey concluding that, in a global sense, "consumer comfort with in-store shopping is rising as online sales growth stabilizes after a period of pandemic-driven acceleration."

    The key takeaways, based on "interviews with more than 8,000 adults across the U.S., Europe, Mexico, Australia and China:"

    •  "Comfort with in-person shopping is growing, and most people still prefer physical stores."  However, the survey suggests, "Investment in digital tools to meet consumers where they were — in their homes, for much of the last two years — was not for nothing. Shoppers’ journeys will increasingly bridge digital and physical channels."

    •  "The growth of online shopping has largely plateaued:  The continued growth of online shopping will require investment in digital product discovery. Emulating the tactile experience of in-person shopping will be the next big challenge for online retailers."

    •  "Consumers aren’t driving the push for faster. delivery:  The competition for ultra-fast fulfillment in the grocery sector is heating up. If consumer expectations shift, all retailers will be impacted — but for now, people are generally happy with delivery speeds."

    •  "Failure to differentiate could be the death knell for brick-and-mortar stores:  This report reveals what drives key demographics to shop online or in person. The future of physical stores lies in off- price expansion and high-end experiences, with little value in the middle."

    KC's View:

    I would agree with many of these conclusions, and would even suggest that some of them aren't really that new.  (I've been making that whole "little value in the middle" case for what seems like decades, and I'm not alone.)

    Two things need to be kept in mind, though.

    One is that online retailers are most certainly going to make significant investments in improving and differentiating their site experiences for consumers.  This is not a segment that tends toward complacency.  And that very fact argues for the likelihood that this segment will continue to find ways to attract people away from stores - not totally, not for every category, but in ways that emphasize the way online shopping frees you up to do other things in your life that bring you greater value than shopping.

    Physical retailers who ignore this likelihood are playing a very dangerous game that they are almost certainly going to lose.

    Published on: March 1, 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 US now has had a total of 80,647,343 cases of the Covid-19 coronavirus, resulting in 975,150 deaths and 53,500,262 reported recoveries.

    Globally, there have been 437,601,961 total cases, with 5,977,517 resultant fatalities and 369,226,920 reported recoveries. (Source.)



    •  The Centers for Disease Control and Prevention (CDC) says that 76.4 percent of the US population has received at least one dose of vaccine … 64.9 percent is fully vaccinated … and 43.7 percent has received a vaccine booster dose.



    •  From The Information:

    "Amazon is lifting mask mandates for its legion of warehouse workers in response to changed health guidance as the company continues to roll back restrictions despite the Covid pandemic.

    "A note sent to staff on Sunday seen by The Information said face coverings would become optional starting Tuesday. The note said the move was being made in line with updated guidance by the Centers for Disease Control. Last week, the CDC said more than 70% of the country lived in areas where masks were no longer recommended. But Amazon said in the note that masks would still need to be worn if required by local or state authorities, and that workers who are not fully vaccinated were “strongly recommended” to continue wearing face coverings."

    Published on: March 1, 2022

    •  From The Verge:

    "Amazon customers can now connect with healthcare providers through Echo devices, the companies announced today. The service is provided by telemedicine company Teladoc, one of the largest telemedicine companies in the United States.

    "Customers can connect with Teladoc by saying 'Alexa, I want to talk to a doctor.'  They’ll get a call back on their device from a Teladoc doctor. The service is only for non-emergency visits, like allergies or flu symptoms. At this point, visits are audio-only, but video visits are 'coming soon'."

    The story goes on:

    "Visits will be $75 for users without insurance. For people with insurance, costs will vary; under some plans, the call could be free.

    "The announcement is part of Amazon’s continued expansion into healthcare. The company has its own telehealth service, Amazon Care, which was initially available to Amazon employees and has since been expanded to other companies. It also launched an elder care service in December that connects with an emergency hotline and can pair with fall detection hardware."

    Published on: March 1, 2022

    •  Alexa Sobsey of California's Nugget Markets  yesterday won the 2022 Best Bagger contest at the National Grocers Association (NGA) show in Las Vegas.  The contest is sponsored by PepsiCo.

    Other finalists:  

    2nd Runner Up: Justin Dea, Macey's (Utah)

    3rd Runner Up: Destiny Edwards, K-VA-T Food Stores, Inc. (Virginia)

    4th Runner Up: Justin Marshall, Kowalski's Market (Minnesota) 

    5th Runner Up: Morgan Spears, K-VA-T Food Stores, Inc. (Kentucky)

    Published on: March 1, 2022

    •  Sprouts Farmers Market announced that Nicholas Konat, Petco's chief merchandising officer, has been hired as its president and chief operating officer.

    Published on: March 1, 2022

    •  Joyce Raley Teel, the only child of Raley's founder Thomas P. Raley who spent  more than two decades as owner and co-chairman of Raley's and its various banners, has passed away of natural causes.  She was 91.

    Published on: March 1, 2022

    On the subject of dynamic pricing, which we talked about here yesterday, MNB reader Henry Stein wrote:

    On the issue of Dynamic Pricing, and the raising and lowering of retail prices 24 hours a day and 7 days a week; this practice has been done in the airline (and hotel) sector forever, known more commonly as Yield Management. As frequent travelers to Ohio, what my wife and I find on a Tuesday to Cleveland differs on the same fight from the Monday, and the Wednesday, and can differ at 8 am vs. 10 pm on the same day. As the reservations build on any flight, the yield management (airline algorithm) kicks in to raise the price hour by hour, to the dismay of travelers who are seeking the lowest flight cost. It is rumored that a flight with 150 passengers has at least 50 different seat costs (33%) on that flight just in the main cabin. Airlines are the “Amazon” of the skies.

    MNB reader Howard Schneider made a similar observation:

    I would point out that dynamic pricing, aka, yield management, has long been the norm in the travel industry. Not that consumers necessarily like it – it can be annoying, especially for the uninitiated, to find the passenger next to you paid a lower price for the same product – but dynamic pricing has been accepted for years in the airline and hotel industry, not to mention the most opaque and volatile sector of all, the rental-car industry.



    On another subject, from an MNB reader:

    So I left work Thursday from Hannaford) wearing my mask, as we were required to do, and I have no problem with, having an autoimmune condition. Exeter NH had a mask mandate, for all stores, requiring customers to mask up too.

    I go to work Saturday, and associates and customers are no longer required to wear masks per the CDC. I'm still going to wear mine, as this is school vacation week and I'm sure many of our shoppers will be vacationing all over the country, and could bring Covid back with them. I recently got my 4th Moderna shot, but I'm still not willing to chance getting Covid.

    Don't blame you at all.



    Yesterday we took note of an old-fashioned Chicago battle playing out between Plum Market there and Dom's Kitchen & Market, and we used some Untouchables references to make some points.  Prompting one MNB reader to write:

    What you are intimating here is nothing new to me.

    Back when I was a kid growing up in the exurbs of Chicago and working in an independent, family-owned Certified Grocers-supplied store, it was long rumored that Dominick’s was funded with the Mafia’s laundered money.

    Next thing you know, you’ll have some wise guy commenting about “vote early and often”.

    That, too, is the Chicago way.   

    Different movie, but I think that "leave the gun, take the cannoli" would actually be more appropriate…