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    Published on: March 2, 2022

    Content Guy's Note:  From my first trip to an Amazon Go store when I got a  preview of the original version in Seattle before it opened to the public, I've been excited about the potential for this technology.  I think it immediately rewires shoppers' brains, creating different-level expectations for the checkout experience, and I've said here many times that I believe this service eventually will be as ubiquitous as scanning.

    Over the years I've visited pilot stores powered by technologies that compete with Amazon Go - specifically Standard Cognition and Zippin. There have been a number of stories lately about the checkout-free trend, suggesting to me that it may be gaining both  traction and momentum, and so I wanted to check in with the leaders of both companies to see what they have to say about their strategies, vision, and rollout expectations.

    Today, we have an MNB/In Conversation segment with Michael Suswal, co-founder and Chief Business Officer at the now-renamed/rebranded Standard AI, and tomorrow we'll have Zippin's co-founder and CEO, Krishna Motukuri.  I hope you enjoy.


    If you'd like to listen to this segment as an audio podcast, click and download below.


    For more information about Standard Cognition, click here.

    Published on: March 2, 2022

    by Kevin Coupe

    I saw this at the NGA Show in Las Vegas, and had to take a picture, mostly because a perfect caption immediately occurred to me:

    ABANDON HOPE ALL YE WHO ENTER HERE…

    (With apologies to Dante, who wrote it as ""Lasciate ogne speranza, voi ch'intrate.")

    Published on: March 2, 2022

    Farmstead, the online grocer that has been slowly but surely expanding its geographic footprint - growing from its original market in San Francisco to Miami, Charlotte and Raleigh-Durham, NC, and Chicago - seems to have made a deal with the potential to kick its momentum into a higher gear.

    Yesterday Farmstead said it has signed a deal with  Alimentation Couche-Tard-owned Circle K, saying they together will "explore innovative supply chain, distribution, e-commerce fulfillment and marketing models."

    This follows an announcement that Farmstead was teaming up with DoorDash to expand its availability over the long term.

    According to the new announcement, "The (Circle K) partnership is expected to bring notable advancements to both parties’ operations," such as "opening up new formats for e-commerce fulfillment in U.S. suburbs using Farmstead’s Grocery OS tech stack and Circle K’s retail footprint … improving Farmstead’s national supply chain for non-perishables and convenience items … collaborating on distribution … (and) co-marketing across a variety of new projects."

    As part of the deal, Circle K is making an equity investment in Farmstead via its Circle K Venture Fund.

    "The convenience landscape is changing dramatically,” said Kevin Lewis, Chief Marketing Officer at Alimentation Couche-Tard, adding that "getting in on the ground floor on industry-leading new technology is a key element of Circle K’s innovation strategy as we continue to grow."

    Pradeep Elankumaran, co-founder and CEO at Farmstead, described the current moment as "the early innings of significant change in the U.S. food system," requiring "new supply and technological alliances."

    KC's View:

    It is obviously way too early to judge this partnership a success, but the potential strikes me as enormous - and right in line with so much of what we talk about here on MNB.

    The best way for any retail business to differentiate itself is to invest in the creation of new formats and models that, if they were created by someone else, would put the retailer out of business.

    The best way for any retail business to sustain itself is through new partnerships - and yes, even "uncommon partnerships," to use a term we've been using a lot here lately - that can forge new ground and create new opportunities.

    This isn't just about technology.  It is about having a vision for tomorrow that doesn't just accept traditional definitions of about formats and segments and services.  It is about defining oneself on one's own terms, always looking for ways to draw closer to the shopper.

    It also is about putting your money where your mouth is.

    We spoke with Farmstead's Pradeep Elankumaran in the early days of his company's development, and I have to say that I am impressed by what he's continued to build.

    Published on: March 2, 2022

    Wegmans said yesterday that it has secured a location for its first Connecticut store, in Norwalk, with easy access to I-95.  While approvals still have to be secured, the expectation is that the store will be a two-story format, close to 95,000 square feet in size, and with a parking garage.

    It will be across the street from a Walmart (not a supercenter), a third of a mile from a Costco, less than a mile west of a Super Stop & Shop and a ShopRite in Norwalk, one mile from the Darien Trader Joe's, less than two miles east of a not-so-super Stop & Shop in Darien, about two miles from the Darien Whole Foods, 3.8 miles from an independent grocer called Palmer's, also in Darien, and 4.5 miles west of Stew Leonard's in Norwalk.  The property is currently an office complex that will be razed to make room for the Wegmans; this is similar to what Wegmans did in Harrison, New York, where it replaced an office park.  That store is about 20 miles from where the new Wegmans will be.

    No timetable has been set for when the store might open, but it took almost four years from the 2016 announcement of the Harrison unit until it actually opened its doors in August 2020, though to be fair, the pandemic contributed to a delay during that period.

    “Each year we receive hundreds of requests from residents for a store in Connecticut, so we’re excited to bring Wegmans to Norwalk and to get to know our new neighbors,” Colleen Wegman, president and CEO of Wegmans Food Markets, said in a prepared statement. “Even before we open the doors to our new store, we’re committed to making a difference in every community we serve.” 

    KC's View:

    First, to be clear, I know this market really well.  The new Wegmans will be about 2.5 miles up the road from my house.

    I don't think there is any question that a new Wegmans store is going to have an enormous competitive impact.  If I had to guess, it would be my expectation that the two Stop & Shop stores may be at the greatest risk - there is nothing special about these stores, no definitive or differential advantage, no compelling narrative or, best as I can tell, connection to its shoppers.  They exist, they sell food, they're relatively convenient but kind of dingy.  But that's pretty much it.  Ahold Delhaize has a lot of work to do if they're going to minimize the impact of a Wegmans, and they'd better start now.

    The ShopRite seems to have a stronger customer connection, especially for folks looking for ethnic products, but the store is kind of run down and badly in need of a refresh.  Again, I'd start now.  But, I also think that the ShopRite folks actually are accustomed to playing competitive hardball, and they've faced off against Wegmans in other markets.

    Palmer's probably will be able to survive - it is a small store with a fairly loyal local following.  I can see them maintaining the level of small fill-in trips by locals, though it could lose a lot of big weekly shopping trips once the Wegmans opens.

    I'm not sure how Walmart responds to this.  The store has a small grocery section, and no fresh foods.  They'll probably do okay just because of increased traffic, and Walmart could decide to up its food game in response to the Wegmans opening.

    (By the way, Post Road traffic has the real potential of turning into a hairball during construction and once the Wegmans opens.  It is pretty crappy most of the time now, but this is likely to only make things worse.  Expect a lot of local blowback on this point.)

    And then, there's Stew Leonard's.

    I want to be transparent here.  More than any of those other stores, I have been a Stew Leonard's shopper for almost 40 years - we moved into this house in 1984, started having kids in 1986, and pretty much raised them on Stew Leonard's food.  I've known Stew Sr. for a long time, have a good relationship with Stew Jr., and even contributed to the company's first effort to get on the 'Fortune Best Places To Work" list.  (It did.)

    When I saw the story about Wegmans coming to Norwalk, I actually was a little pissed off for Stew Leonard's.  Over the years, at least a dozen times I have seen Danny Wegman walking the store with either Stew Sr. or Stew Jr., and there always seemed to be at least a clear long-term friendship and best practices-sharing relationship that made both companies better.

    I have no idea if the folks at Stew Leonard's had advance notice of this, or if they're even as pissed off as I was when I first learned the news.  It is entirely likely that both companies are taking the advice from The Godfather:  "This is business.  Not personal."

    It is also not like this is a Plum Market-Dom's situation in Chicago, in which Plum's ownership believes that Bob Mariano's new Dom’s Kitchen & Market venture was "unconscionable, dishonorable and disgusting" in working with a landlord to drive it out of an existing location.

    And, to be clear, Wegmans and Stew Leonard's have operated in proximity before - Wegmans opened a store in Montvale, NJ in 2017, and Stew's opened a store about eight miles south on the Garden State Parkway in Paramus about two years later.  But Paramus and Montvale strike me as being worlds apart.  Stew's also has been said to be interested in opening a new store in Clifton, NJ, which would be about 20 miles east of a Parsippany Wegmans.

    (A small historical digression, if I may.  Montvale, New Jersey, was the longtime corporate headquarters of a grocer you may have heard of - the Great Atlantic & Pacific Tea Company, better known as A&P, which once was the largest retailer, not just grocer, in the country.  It probably is a good thing that A&P no longer exists - the company was an almost textbook example of calcified management, uninspired leadership, and unimaginative store development.  End digression.)

    Every one of the Connecticut retailers that I mentioned above has plenty of notice.  Wegmans is coming.  They can go to other Wegmans stores to make sure they know what they're competing with.  (There's no doubt in my mind that Stew Leonard's is doing this.  The last time I saw Stew Jr., it was in the Whole Foods that is about a quarter-mile from my house.  He was checking out the competition, and I was picking up a couple of items I needed quickly.  To be honest, I felt like I'd been caught cheating, but he engaged me about what I liked and didn't like about the store.)

    The most important 10 words uttered by Colleen Wegman are these:

    "Even before we open the doors to our new store…"

    Every one of the Connecticut retailers that I mentioned above has to start competing with Wegmans - the promise and the reality - now.  They have to get better. Sharper. Smarter.  More defined. More differentiated.  More special.

    It will be easier for some than others.  I'll be watching.  And reporting in.  Because this should get pretty interesting and a lot more competitive.  (If it doesn't, then the losers will have nobody to blame but themselves, and I'll be writing about that as well.)

    It is important to keep in mind that it isn't just about competing with Wegmans.  I would argue that in a lot of ways, Stew Leonard's is a major league player that has been facing off against largely minor league competition (a statement that no doubt will rile some of the folks I mentioned above).  But when ShopRite gets better, as I expect it will, and if Stop & Shop gets better, they'll also be better competitors against Stew's.

    There is an old and wonderful African proverb:  "'When the elephants fight, the grass gets trampled."  There's going to be a lot of trampling going on in my neck of the woods.

    One more thing…

    About eight miles east of the new Wegmans, and four miles east of Stew Leonard's, a new Amazon Fresh store is being built.  I would work under the assumption that it is just the first of several that will populate the Boston Post Road corridor that runs from Greenwich and New Haven, and that Amazon will be aggressive in its marketing, which will challenge traditional grocery retail and perhaps adjust shopper expectations, especially if any of these stores offers Just-Walk-Out technology.

    Like I said.   Lots of elephants.

    Published on: March 2, 2022

    In Maryland, the Daily Record tells the story of a lawsuit filed by Compass Marketing, which enables companies to help sell their products on Amazon, against Flywheel Digital, charging that former Compass employees built the company by stealing trade secrets.  And there's more.  A lot more.

    Here are some excerpts from the story:

    •  "The lawsuit, brought by a company called Compass Marketing, describes a years-long campaign by former employees to steal proprietary information and divert clients to a new business called Flywheel Digital.

    "It also accuses two brothers of Compass Marketing’s executive chairman, John White, of embezzling hundreds of thousands of dollars through a series of secretive financial maneuvers."

    •  "The complaint names several members of White’s family including his brothers, Michael White and Daniel White. Michael White is the chief judge of the St. Mary’s County Orphans’ Court. Daniel White is a deputy state’s attorney in the Office of the State’s Attorney for St. Mary’s County. It also names Michael White’s son, George White, who is a Maryland State Police trooper … Also named are James “Chip” DiPaula, who formerly served as chief of staff to (former Gov. Robert) Ehrlich from 2005 to 2007, and Patrick Miller, an Anne Arundel County resident who founded Flywheel with DiPaula in 2014. Both men held prominent roles at Compass Marketing before they created Flywheel, the complaint claims."

    •  "Compass hired DiPaula in 2010 and Miller in 2011. Both men resigned in 2014, one day after they had formed their new company, the complaint claims.

    "The lawsuit accuses DiPaula and Miller of misusing trade secrets they learned while at Compass in order to form Flywheel, a company that competes directly with Compass and offers the same services. It also alleges that the two men poached a number of Compass employees and pursued Compass’s clients.

    "In November 2018, Flywheel was sold to Ascential, a British company, for $400 million, according to the complaint. Ascential proceeded with the purchase after Compass representatives notified the company of their claims against DiPaula and Miller, the lawsuit alleges."

    •  "After the sale to Ascential, Compass Marketing fired Michael and Daniel White and launched an investigation into their conduct, the complaint states.

    "That investigation 'uncovered 14 years of substantial mail and wire fraud, money laundering, embezzlement, and attempted extortion perpetrated by Daniel and Michael,' lawyers for Compass wrote in the complaint.

    "The complaint alleges that Michael and Daniel White opened secret bank accounts into which they deposited Compass client checks and used the money for personal gain; that they added family members to the company’s payroll but hid them as 'ghost employees' by falsifying records; that they embezzled millions of dollars by paying large 'tax checks' to the IRS, knowing that those checks would result in substantial refunds; and that they repaid themselves with company money for personal loans that were never actually made."

    •  "The suit brings claims under state and federal trade secrets laws and alleges a civil RICO conspiracy, breach of contract, unfair competition and unjust enrichment. It seeks damages, an injunction blocking the use of Compass trade secrets, and a court order requiring the return of Compass’s networks to the company’s control."

    •  "In an emailed statement, Ascential said: 'The allegations have no merit and will be vigorously defended. There will be no further comment on pending litigation'."

    KC's View:

    Wow.

    This is fascinating stuff, especially because the complaint includes references to Compass's client list, which includes Proctor & Gamble, Colgate and McCormick - all of which at the moment must be wondering what the hell they're involved with.

    I don't mean to be cavalier about this, but I want to keep an eye on this just for the sheer potential entertainment value - this lawsuit appears to have everything but sex, and I won't be surprised if that comes into the picture at some point.

    Published on: March 2, 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 seen 80,697,924 total cases of the Covid-19 coronavirus, resulting in 977,402 deaths and 53,730,805 reported recoveries.

    Globally, there have been 439,261,312 total cases, with 5,986,716 resultant fatalities and 371,817,670 reported recoveries.  (Source.)



    •  The Centers for Disease Control and Prevention (CDC) says that 76.4 percent of the total US population has received at least one dose of vaccine … 65 percent is fully vaccinated … and 43.8 percent has received a vaccine booster dose.

    Published on: March 2, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From Bloomberg:

    "Gorillas Technologies GmbH plans to raise more than half a billion dollars of new financing this year, as the rapid grocery delivery startup tries to scale in a fiercely competitive sector … Gorillas is among the largest companies that deliver groceries and other goods within minutes. It raised about $1 billion in October from investors including Delivery Hero SE, in a round that valued the Berlin-based startup at about $3 billion.

    "It operates in countries including the U.K., France and U.S., and competes with other startups such as Gopuff, Flink, Jokr and Zapp."

    The guess here, no matter what they say, is that the "clear path to profitability," that the Gorillas folks talk about has to do with continuing to raise money while losing money on delivery services, hoping that they can outlast the competition and be the last man standing as a bunch of players go under or merge because of unsustainable business models.

    I love the idea of rapid delivery, but I also think companies are making a land grab here, hoping to gain market share before the whole construct collapses.  At some point, there will be just a few players left, and prices, inevitably will go up.

    Or am I being too cynical here?

    •  DoorDash yesterday announced that " it has entered into a definitive agreement to acquire hospitality technology startup, Bbot. The addition of Bbot's products and technology to the DoorDash platform offers merchants more solutions for their in-store and online channels, including in-store digital ordering and payments. Together, Bbot and DoorDash will be able to better support the evolving needs of restaurateurs and other food and beverage venue operators."

    According to the announcement, "Bbot's in-store digital ordering solution allows merchants to increase sales while creating higher quality experiences for customers and staff. Just as customers benefit from shorter wait times to order and pay, staff benefit from faster table turnaround times and greater focus on service. Merchants also have the ability to utilize all their tables and extend their hours even when faced with staff shortages.

    "Bbot's solutions include … a QR code scanner that brings customers to a merchant-branded, interactive online menu for in-store ordering. Guests can order with one another and alongside servers on a single, open tab. Bbot's flexible technology works seamlessly with a merchant's existing software services, including POS systems, loyalty programs, and reservation services, and operates on a variety of merchant and consumer devices, including handhelds and tablets."

    It is interesting to watch DoorDash's continuing evolution, as it goes from just being a delivery platform to being an actual retailer and now to being an in-house facilitation solution.  

    Published on: March 2, 2022

    •  The National Grocers Association (NGA) annual Creative Choice Awards were announced this week at NGA's show in Las Vegas, with Outstanding Marketer going to Harvest Market’s 'Cooking with Emily' promotion, and Outstanding Merchandiser going to Roche Bros.' 'Football Food Fun' entry.



    •  The National Grocers Association (NGA) this week submitted public comments to the Federal Trade Commission (FTC) on the state of competition in the grocery sector, arguing that "economic discrimination has harmed independent community grocers and consumers across the country."

    An excerpt:

    “For decades, independent grocers have not had equal access to pricing, promotions and packaging deals that are provided to large firms. These practices will only continue after the pandemic is over unless antitrust enforcers like the FTC acts. Consequently, consumers will face reductions in diversity in the marketplace, and choices will be limited to what the few remaining mega-retailers find most profitable."

    The argument is that "these dominant firms have taken advantage of supply chain disruptions by leveraging their dominance to gain market share while forcing smaller competitors to bear the brunt of product shortages and inflation pressures."  

    The comments were solicited by the FTC as it continues its study looking into supply chain disruptions in the food and grocery sector.  



    •  From the Wall Street Journal:

    "After a two-year pandemic run that brought Target Corp. billions in sales, the retailer wants to keep growing by building more stores and e-commerce hubs and new lines of business.

    "Sales grew at the Minneapolis-based retailer in the most recent quarter, helped by stronger traffic in its stores through the holiday season and growth across its merchandise categories including food, apparel and home goods.

    Comparable sales, which include sales from stores or digital channels operating for at least 12 months, rose 8.9% in the quarter ended Jan. 29 from a year prior, the company said. Digital sales increased 9.2%.

    "For the full year, Target’s revenue hit $106 billion, compared with $77.1 billion for the year ended Feb. 1, 2020, before the pandemic upended the global economy and consumer buying patterns.

    "In the latest period, strong revenue growth helped offset higher supply-chain costs and spending on wages for Target. Overall earnings rose nearly 12% from a year earlier to $1.54 billion, or $3.21 a share. Earnings excluding special items also came in ahead of Wall Street forecasts."

    Published on: March 2, 2022

    Got the following email from MNB reader Brad Morris, reacting to the Retail Tomorrow session at the NGA Show in which we formulated a business plan that could give independents a competitive edge:

    Let me first say that, after being a reader for almost twenty years, it a pleasure to finally meet, mask-less and face to face, for the first time at NGA this weekend.

    It was great to watch live the conversation of your panelists evolve into a viable business plan, but not surprising. Having worked exclusively with independent retailers for most of the last ten years, I know that they often represent the very best merchants in their individual communities; with some of the freshest and most innovative ideas. Every day my customers help me reinvigorate my own entrepreneurial spirit.

    I encourage every CPG to invest more intellectual resources to work with their independent retailers. We spend so much time and effort chasing volume we often forget that a third of all US Grocery sales take place within the independent operators. In addition, they really can be more agile and are wonderful partners to test and learn with. Sit down, have a conversation and be surprised by what you can try together.

    It was nice to meet you, too … and I agree completely about the power of creating partnerships and alliances.  The competitive world in which we all live requires that we look for opportunities in which 1+1+4.  or 5.  Or 6.



    On another subject, from another MNB reader:

    Being a retired food industry guy, I have a lot of time to wander around and see how grocery retailers and mass merchandisers in the Oregon market are doing over the past few months. Here are my observations as it relates to food and non-food retailers for distribution and in stock and out of stock issues.

    Regarding store conditions with in stock and out of stock issues. Here are my observations ranking best to worst. 1. Winco Foods best of all, full shelves, full displays, ready to go everyday. Yes, out of stock on many skus, but the shelves are full, no glaring holes. They have a regular night crew to get the shelves stocked at night. 2. Safeway, pretty good in stock conditions with clean stores with a few out of stock conditions. Still many holes on shelf. 3. Fred Meyer, a market leader share wise, but the shelves still have way too many out of stocks. Too many employees and DSD vendors plugging up the aisles during the day making it hard to shop. 4.Target, still experiencing too many out of stocks and store conditions need a lot of attention. 5. Walmart, When the stores get their freight, the aisles are plugged up, making it annoying for shoppers to navigate.  I know it is hard to get people to work on a night crew.

    I am leaving out specialty retailers, Trader Joe’s, Market of Choice, Whole Foods, Zupans, etc. as they are all in a class of their own and always have great store conditions.

    Thanks for the report from the field.



    The other day we took note of an EcoWatch story about how "Kroger is partnering with TerraCycle’s circular reuse program Loop to test a reusable packaging strategy in 25 Kroger-owned Fred Meyer stores in the Portland metro area. Customers will be able to purchase more than 20 products in special reusable containers that they can then return to be used again."

    MNB reader Cindee Lolik responded:

     I was excited about this too and then took a moment to think about the logistics.  Kroger does not say that the containers will be refilled in the store they are returned to and I highly doubt that their stores will have vats and bins of product to refill them - meaning that container is taking a trip back to the manufacturer using fuel and truck space and then is sanitized by the manufacturer (water usage), so just how is this good for the environment?  Looks like more greenwashing to me.



    And finally, from another MNB reader:

    In regard to Albertson’s strategic review, one of the powerful values they own is the brand equity behind the regional brand names they’ve maintained.  Even though the names on the front of their stores differ by region, their stores are now pretty much corporate entities.  Wouldn’t it be nice if some of these brands reverted back to local, independent-like ownership?

    Sure.  Might be nice.  Might also be an unlikely result of this strategic review.

    Published on: March 2, 2022

    •  Major League Baseball's Opening Day will be delayed this year, as the owners and MLB Players Association were unable to come to a labor contract agreement that would've resolved a lockout that began last December.

    The Wall Street Journal writes that "MLB had previously indicated if a deal wasn’t in place by the end of February, it would begin taking down games with no intention to reschedule them or compensate players. The league agreed to keep negotiating until 5 p.m. Tuesday, believing the sides had made enough headway during a marathon session Monday to justify further discussions.

    "But progress stalled Tuesday on the economic issues at the core of the dispute, prompting the parties to break off talks with no immediate plans to resume … The parties remain apart in several key areas that the players have identified as their top priorities. Chief among them is the competitive balance tax, which penalizes teams for spending over certain limits and has been used by some as a de facto salary cap. 

    The players are seeking that threshold to be raised to $238 million from $210 million and climb to $263 million over the life of the five-year deal. Management offered $220 million, topping out at $230 million. MLB’s tax numbers were unchanged from its last proposal on Monday, frustrating players."

    KC's View:

    There are a lot more important things going on in the world that require our attention than baseball's inability to get its crap together.  Oy.  Billionaires vs. millionaires.  (Though, for the record, in that struggle I tend to side with the millionaires.)

    The business lesson here strikes me as stark - neither side seems to understand that, in fact, there are a lot more important things going on in the world that require our attention than baseball.

    In business, as in life, it is critical to understand context.  To ignore it is to risk irrelevance, even obsolescence.

    "Star Trek: Deep Space Nine" posited that baseball would die an ignominious death in 2042, remaining vital only in the memories of a few romantics (like Benjamin Sisko). 

    The owners and players seem intent on accelerating that timeline.