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    Published on: March 4, 2022

    Kroger this morning announced that it plans to bring its hub-and-spoke approach to an pure-play e-grocery model to three new markets - Austin and San Antonio, Texas, and Birmingham, Alabama.

    "As a continuation of Kroger's successful entry into Florida in 2021 without physical stores, the new Texas and Alabama facilities will serve as new geographies for the organization, bringing innovation and modern e-commerce to the cities and extending the grocer's reach and ability to provide customers anything, anytime, anywhere," the announcement said.

    Kroger said that "the 70,000-square-foot spoke facility in northeast Austin, pending finalization of lease negotiation, will collaborate with the hub in Dallas, TX, serving as a last-mile cross-dock location … The 67,000-square-foot spoke facility in northeast San Antonio, pending finalization of lease negotiation, will also collaborate with the hub in Dallas, TX, serving as a last-mile cross-dock location."  In Birmingham, "the 50,000-square-foot spoke facility … (will) collaborate with the hub in Forest Park, GA (Atlanta), serving as a last-mile cross-dock location."

    All three facilities are expected to be operational later this year, Kroger said.

    In a prepared statement, Kroger CEO Rodney McMullen said, "We continue to feel great about the momentum we're experiencing with Kroger Delivery and our partnership with Ocado, supporting Kroger in strategically leveraging our unique assets to expand in existing regions, including Atlanta, Cincinnati and Dallas, as well as enter into new geographies like Austin, Birmingham, Cleveland, Oklahoma City, Orlando, San Antonio, South Florida, and the Northeast through a flexible network of differently sized, high-tech facilities operated by friendly and knowledgeable associates."

    Some context from the announcement:

    "The delivery network relies on highly automated fulfillment centers. At the hub sites, more than 1,000 bots whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems in the unlicensed spectrum. The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders.

    "As customers' orders near their delivery times, the bots retrieve products from The Hive and are presented at pick stations for items to be sorted for delivery, a process governed by algorithms that ensures items are intelligently packed. For example, fragile items are placed on top, bags are evenly weighted, and each order is optimized to fit into the lowest number of bags, reducing plastic use."

    KC's View:

    If memory serves - and this is both the irony and the implicative power of this announcement - two of the markets - Birmingham and San Antonio - are places Kroger used to serve decades ago but pulled out of for various reasons.  (Not Austin, where the letters H-E-B tend to serve as a cautionary note to all potential competitors.)

    It seems to me that what we are watching here is the creation of a new competitive reality that will affect every retailer, and give some enormous advantages - the battle will be played out not just in stores and on websites, but, increasingly, also in the various permutations of distribution centers that are positioned to provide differential advantages in terms of speed and efficiency.

    It is much cheaper for Kroger to serve these markets with a pure-play e-grocery model than it would be to build stores;  it has a highly recognizable brand name, and its longtime investment in data-centric technology developed (and more important, effectively implemented) by dunnhumby and its successor US company, 84.51°, that allows it to effectively target and serve customers.

    The enormous investment in this infrastructure cannot help but ramp up the pressure on Kroger's competitors, big and small, to respond.  And it certainly has the potential for raising the bar on consumer expectations.

    Let's be clear.  Having infrastructure is not the same thing as delivering service.  Kroger is establishing an expanded value proposition and is making brand promises that it needs to keep.

    But this is a 21st century competitive map with tons of potential and, almost certainly, more than a few potholes around which Kroger will have to navigate.

    It also underlines a reality that Amazon began creating more than two decades ago, and that companies like Kroger and Walmart seem to be embracing - competition does not know geography, nor borders, nor inherent limitations.  Market share and trade-area-analyses may take on very different meanings going forward.

    The author Philip K. Dick once wrote, "“Reality is that which, when you stop believing in it, doesn't go away.”

    No kidding.

    Published on: March 4, 2022

    by Kevin Coupe

    I like reading the daily blog postings of author/entrepreneur Seth Godin, and this week he wrote one about outsourcing.

    "Everything we do uses materials and tools that were made by someone else," he writes, but suggests that "the question that isn’t asked, but that must be asked, is: Which part are you going to do yourself?"

    If you want corn for dinner, for example, you have choices ranging from planting it yourself and waiting for it to grow, going to the supermarket to buy some, or ordering it online and waiting for someone to deliver it.

    There's no bad choice, necessarily, but there always are choices.

    And that's when he asked a question that I think is really important:

    What are you doing today that only you can do? 

    Let me translate that into retail-speak:

    What products and services are you offering in your store that only you can offer?

    Or, to use a word that became ubiquitous during the pandemic, but that I haven't heard anybody else using in recent months:

    What makes you essential to your shoppers?

    I would argue that if you cannot answer that question, and then defend your answer,  then you have an issue, and very little time in which to address it.

    The answer to the question ought to be an Eye-Opener.  And if you don't have an answer, well, that's a very different kind of Eye-Opener.

    Published on: March 4, 2022

    From CNBC this morning:

    "Job growth accelerated in February, posting its biggest monthly gain since July as the employment picture got closer to its pre-pandemic self.

    "Nonfarm payrolls for the month grew by 678,000 and the unemployment rate was 3.8%, the Labor Department’s Bureau of Labor Statistics reported Friday.

    "That compared to estimates of 440,000 for payrolls and 3.9% for the jobless rate.

    In a sign that inflation could be cooling, wages barely rose for the month, up just 1 cent an hour or 0.03%, compared to estimates for a 0.5% gain. The year-over-year increase was 5.13%, well below the 5.8% Dow Jones estimate.

    "For the labor market broadly, the report brought the level of employed Americans closer to pre-pandemic levels, though still short by 1.14 million. Labor shortages remain a major obstacle to fill the 10.9 million jobs that were open at the end of 2021, a historically high gap that had left about 1.7 vacancies per available workers."

    Yesterday, the Wall Street Journal reported:

    "New applications for unemployment benefits edged lower and remained near historically low levels as the labor market stays tight following a decline in Covid-19 cases.

    "Initial jobless claims, a proxy for layoffs, fell by 18,000 to a seasonally-adjusted 215,000 for the week ended Feb. 26, down from the revised 233,000 the week before, the Labor Department said Thursday. The four-week average, which smooths out volatility, fell to 230,500.

    "Continuing claims, a proxy for the total number of people on unemployment rolls through regular state programs, ticked up by 2,000 to 1,476,000 for the week ended Feb. 19. The four-week moving average of continuing claims that week fell to 1,539,500, the lowest since April 1970. Continuing claims are reported with a one-week lag."

    KC's View:

    The general consensus seems to be that these numbers are terrific … surprisingly so.  

    But we're certainly in a time of economic bifurcation, with many people legitimately worried about their economic prospects.  And we have no ideas the extent to which the war in Ukraine, and the actions of the madman/war criminal who seems to be in charge of Russia, will have both short-term and long-term impacts.

    And we're also in an election year here in the US, which means the rhetoric on both sides is likely to be overheated.

    But good numbers are good numbers.  Fingers crossed.

    Published on: March 4, 2022

    The Milwaukee Journal Sentinel reports that the Lakefront Brewery there has released an anti-Putin crowler, with the goal of raising at least $10,000 to send to Ukrainian charities.

    The legend on the crowler, written across Putin's forehead on the label:  'Putin is a Dick."

    According to the story, "When someone purchases one of these anti-Putin crowlers — a 32-ounce to-go can filled with any one of the brewery's draft beers — $10 will be sent to the National Bank of Ukraine’s Humanitarian Assistance to Ukrainians, according to a Facebook post from the brewery.   Crowlers with this label will cost $5 more than the usual $10 or $11."

    The brewery says that "the label's name was inspired by Pravda Brewery, a Ukrainian craft brewery in Lviv that has a popular beer called 'Putin is a Dick,' the post said. Lakefront has brewed two collaboration beers with Pravda in the past."

    The story notes that Pravda Brewery "has switched from craft beer-making to producing Molotov cocktails to be used by the Ukrainian Territorial Defence Forces … Lakefront, which has been exporting beer to Ukraine for seven years, is encouraging other breweries to create their own anti-Putin brand to raise funds."

    KC's View:

    Insurgencies come in various forms, and sometimes are funded from great distances.  What has been remarkable over the past few weeks is the degree to which I think most - but sadly, not all -  Americans have realized that the distance between the US and Ukraine isn't so much after all.

    The word in Ukrainian, I think, is Budmo … which, ironically, in addition to being a common Ukrainian toast, translates directly to "Let us be."

    And when the broken hearted people living in the world agree

    There will be an answer, let it be

    For though they may be parted, there is still a chance that they will see

    There will be an answer, let it be.

    Published on: March 4, 2022

    Dollar Tree said this week that during the current fiscal year, it "plans to open 590 new stores and to renovate 800 Family Dollar stores. The new stores are expected to consist of 190 Dollar Tree stores and 400 Family Dollar stores. Approximately 350 of the new Family Dollar stores will be in the Combo Store format. Additionally, the Company plans to expand the $3 and $5 Plus assortment to more than 1,500 Dollar Tree stores."

     “This year, we are laser-focused on meeting our customers’ needs while driving our initiatives that are delivering the best returns," said the retailer's president/CEO, Michael A. Witynski, in a prepared statement.  "These initiatives, combined with our strong balance sheet, position us well to deliver long-term value for all of our stakeholders – customers, associates, suppliers, and shareholders.”

    KC's View:

    Question:  Are rodents considered a stakeholder at Dollar Tree/Family Dollar these days?  Just curious, since lately it has been the dead rats in one of the company's distribution centers that have gotten all the attention.

    Axios reported this week that it had gained access to an inspection document at the US Food and Drug Administration (FDA) detailing rat "carcasses on the conveyer belt" … rats “climbing up rack scaffolding and through a pallet containing potato chips in cardboard cases" … "droppings 'too numerous to count' near food, including Jell-O packages, cans of herring and an open bag of popcorn" … "'a putrid odor' in a room that had been cleared … "'rodent nesting materials' and 'significant gnawings,' including bags of products that had been chewed open" … "live rats scurrying across the floor" … and "dead birds and 'active ant hills'."

    "Laser-focused on best returns" would appear to mean not prioritizing basic sanitation and food safety.  That's what happens when the bottom line is measured in dollars, and not in more important concerns that matter to shoppers and customers.  Makes me wonder how they define "stakeholders."

    I know they're facing regulatory examination and lawsuits over this, but I don't how management at this company - "leadership" would be the wrong word to use here - are keeping their jobs.

    Published on: March 4, 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…

    •  Here are the US Covid-19 coronavirus numbers:  80,843,570 total cases … 981,729 deaths … and 54,136,964 reported recoveries.

    The global numbers:  442,664,547 total cases … 6,004,077 fatalities … and 375,702,950 reported recoveries.  (Source.)

    I was looking at the numbers this morning, and wondered about something I hadn't checked for a long time.  The answer to my question came from the Centers for Disease Control and Prevention (CDC) -  As a result of the 1918 influenza pandemic, "it is estimated that about 500 million people or one-third of the world’s population became infected with this virus. The number of deaths was estimated to be at least 50 million worldwide with about 675,000 occurring in the United States."  In other words, if I'm reading the numbers correctly, a lot more people died around the world in 1918, which makes sense because of superior health care in the 21st century … but, in fact, significantly more people have died in the US because of Covid-19.  Which makes no sense at all, and yet is somehow not surprising because of how much disinformation has been spread and how superior and proven medical care has been politicized.

    •  The CDC is reporting that 76.4 percent of the total US population has received at least one dose of vaccine … 65 percent is fully vaccinated … and 43,9 percent has received a vaccine booster dose.

    • From the Associated Press:

    "The European Medicines Agency said it has authorized Moderna’s coronavirus vaccine for children aged six to 11, in addition to recommending booster shots of Pfizer’s vaccine for those aged 12 and over, in decisions aimed at providing further protection against COVID-19 for children across Europe.

    "At a press briefing Thursday, the EU regulator's vaccines chief Dr. Marco Cavaleri said the Moderna vaccine for younger children will be a half-dose of what is given to older teens and adults. He said research showed young children had an immune response comparable to that seen in older populations 'as measured by the level of neutralizing antibodies' against the COVID-19 virus."

    Published on: March 4, 2022

    •  From the Wall Street Journal this morning:

    " Inc. has given the Federal Trade Commission a fast-approaching deadline to deliver a verdict on its proposed $6.5 billion acquisition of the MGM movie and television studio, a move that could make it difficult for the agency to challenge the deal before the tech giant completes it.

    "Amazon recently certified to the FTC that it had provided all the information requested by antitrust investigators, according to people familiar with the matter. That certification triggered a ticking clock for the FTC that expires in mid-March, the people said. If the commission doesn’t file a legal challenge before the deadline, Amazon could be free to consummate the deal.

    "Amazon wouldn’t necessarily be clear of an FTC threat if the deadline expires, because the commission has the ability to challenge mergers and acquisitions after they close. And in recent months, the commission started warning some merger partners that their deals remained under investigation even after the legally mandated waiting period had expired. The commission also has opened a long-running investigation into the company’s business practices.

    "But Amazon’s closing of the MGM deal would reduce some uncertainty for the companies and allow Amazon to move forward with its plans. The FTC could still file suit, at which point the outcome would be determined by antitrust litigation that could drag on for months or years.  The European Union’s antitrust enforcers also are reviewing the deal and could take steps that would impact U.S. deadlines or give the FTC more time."

    Published on: March 4, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Brookshire Grocery Co. announced the opening of a new FRESH by Brookshire’s store in Fate, Texas, which it described as "focused on bringing the wonders of food to the Fate community with a team excited about providing an extraordinary shopping experience, along with special events and entertainment for the entire family."

    According to the announcement, "The 66,000-square-foot store features the following: chef-prepared entrees; authentic Asian and sushi counter; a Mexican taqueria bar; brick-oven authentic-Italian pizza; an artisan bakery; full-service meat and seafood counter; a charcuterie and cheese selections; fresh produce with a large variety of organics; a full-service floral shop; a gourmet coffee bar; hand-crafted gelato; fuel center; patio dining; outdoor grill and bar; live music, and on-site park with children’s playground."

    Haven't seen the store, but the description makes me think that Brookshire is doing the kinds of things necessary to differentiate the brand in an increasing competitive marketplace, giving people reasons to go to the store.

    •  USA Today quotes Costco CFO Richard Galanti as saying it is possible that the slub chain could raise membership fees this year;  it would be the first increase since 2017.

    "I think the question will continue to be asked until we do or don't do something, but at the end of the day, we certainly feel very good about our member loyalty," Galanti said during a call with analysts to discuss the retailer's quarterly earnings. "At some point, it'll happen. But stay tuned."

    •  Friendly's Restaurants this week announced "the launch of Friendly's Cafe, a fast-casual concept, in Westfield, Massachusetts (291 East Main St.) which opened on Feb. 26. The new concept aims to deliver beloved Friendly's menu items, from craveable hamburgers, supermelts and entrees to decadent ice cream sundaes, via a fast-casual service model providing guests flexibility to order and pay at their own pace … The 2,700 square-foot Friendly's Cafe will have seating for 45 guests and a dedicated side of the building with four parking spots reserved for curbside pick-up."

    Not entirely sure how this differs from the old format.  

    The press release says that "Friendly's Cafe will feature innovative menu items like the Tater Kegs appetizer, $100,000 Cobb Salad, Legendary Honey BBQ Chicken SuperMelt, Dorito's Cool Ranch@ ChoppedCheese Burger, and Bangin' Beef Stroganoff."  Which makes me think that they didn't get the memo about "healthier eating."

    Though, to be honest, I'd be disappointed if they didn't sell Fribbles.  (Haven't had one of those in about 30 years, but I have fond - though probably flawed - memories…)

    From the Wall Street Journal:

    "The Justice Department is investigating whether poultry companies have engaged in anticompetitive sharing about employment practices that held down plant workers’ wages, according to people familiar with the matter.

    "The civil probe by the Justice Department is examining actions at several poultry companies, the people said, and adds to the scrutiny that U.S. meat processors are facing from the government and their workers. The department has put at least some companies on legal notice that they must preserve documents, several of these people said.

    "Pilgrim’s Pride Corp. , the second-largest U.S. chicken company by sales volume, recently said in its annual securities filing that it was notified by the Justice Department in February that it had opened a civil antitrust investigation into human resources issues.  Colorado-based Pilgrim’s said in the filing that it planned to cooperate with the investigation. A company spokeswoman declined to comment further.

    "A spokeswoman for poultry producer Perdue Farms Inc. confirmed it received a similar notice. Tyson Foods Inc., the biggest U.S. meat processor by sales, declined to comment. Other poultry processors, such as George’s Inc. and Sanderson Farms Inc., declined to comment.

    "A Justice Department spokeswoman declined to comment. It is too early to know if the probe, at its preliminary stages, will lead to action from the department."

    Published on: March 4, 2022

    •  Cathy Burns, currently co-CEO of the new International Fresh Produce Association formed by the combination of United Fresh Produce Association (UFPA) and the Produce Marketing Association (PMA), will become its singular CEO effective March 31, the organization announced.

    Tom Stenzel, currently Co-CEO and past President of United Fresh, will move into a consulting role, working closely with Burns through June 2022.

    March 31 will mark a year since the two former Boards of Directors announced the merger plan to bring UFPA and PMA together on January 1, 2022. 

    Published on: March 4, 2022

    Yesterday we reported that Walmart has announced what it calls "the next phase" of integration of its store and online operations - Market Fulfillment Centers (MFC) that the retailer says "are poised to serve as automated fulfillment centers that are located within a Walmart store. An MFC's inventory is separate from the store’s, allowing us to continue enhancing our service for both online and in-store customers."

    I commented:

    It seems likely to me that this is about a broader transformation that we're going to be seeing at Walmart in coming years, as it shifts its physical footprints to better integrate its digital approach and Walmart+ program, expanding into dark stores and ghost kitchens, building up its MFC locations, and maybe even opening health care centers that can support that side of its business.  This won't happen all at once, nor will it happen everywhere … but I do think this likely is where Walmart is headed.

    Somewhere in Bentonville there is a locked room, probably without windows, where the future is being plotted out.

    Prompting one MNB reader to write:

    I kid you not, they do have a very large room that has no windows.  You have to sign an NDA to get in, mine has expired.  The room has cubes shoulder to shoulder.

    Good to know.

    On the subject of C&S bringing back the Grand union banner and bringing the Piggly Wiggly banner to upstate New York, MNB reader Tom Murphy wrote:

    Okay, this is almost too much…nostalgia gone haywire!  Bringing back the Grand Union banner…what is the brand promise, “hey, we are dingy, dirty and stink…but welcome back?”  I have to believe that the only people with fond memories of Grand Union are the executives who sucked it dry over the years before it collapsed. Although, on second thought…the bar to be better is set pretty low!

    Regarding MLB's labor issues, one MNB reader wrote:

    It is my long-held belief that it isn’t the NFL’s salary cap that makes their system better, it’s how it works in conjunction with the salary floor. MLB teams can put out laughably bad teams and still make money due to the media contracts. These owners don’t give a rip about their fans or the game of baseball and it hurts the league. It’s as if some of the owners read the How to run an MLB team, by Fast Eddie Lampert.

    I wrote yesterday that a bipartisan coalition of state attorneys general is launching an investigation into TikTok, seeking information about whether and how the video-sharing platform contributes to online harms to children.

    I mentioned that "the story comes one day after President Biden, in his State of the Union address, said that 'we must hold social media platforms accountable for the national experiment they’re conducting on our children for profit … it’s time to strengthen privacy protections, ban targeted advertising to children, and demand tech companies stop collecting personal data on our children."

    I thought that was an opinion shared by many people across party .lines, but of course, not held by everybody.  One MNB reader wrote:

    The two dirtiest words in Joe Biden's vocabulary are "for profit."

    Gee, I would’ve thought they were "cancer diagnosis."

    But that's my problem. I try not to have a knee-jerk reaction to people with whom I may disagree on a variety of issues.

    Published on: March 4, 2022

    The two streaming TV series that I'm captivated by at the moment could not be more different, but I'm finding them both riveting, though for different reasons.

    "The Marvelous Mrs. Maisel" is back for a fourth and penultimate season on Amazon Prime Video, and it continues to sparkle as what sometimes appears to be a highly fictionalized version of Joan Rivers' life story, set in fifties New York City (and art directed with amazing specificity).  Writers-producers Amy Sherman-Palladino and Daniel Palladino continue to deliver sparkling dialogue that is delivered with rat-a-tat-tat conviction by an amazin cast that includes Rachel Brosnahan in the title role, and especially Tony Shaloub as her father, a university professor turned Village Voice theater critic.

    I've only gotten through a few episodes (they're dropping them two a week, rather than making them available for bingeing), so I cannot report much about this season's plot, but I am hoping that the series will delve into the fact that Midge Maisel can be very casual about other people's feelings.  She comes into season four, best I can tell, totally in denial about any responsibility she might have for actions that derailed her career path last season.  It so happens that Mrs. Content Guy just finished watching season one, which reminded me that this is something of a pattern.

    I hope the producers deal with this at some point, but in the meantime, "The Marvelous Mrs. Maisel" continues to be a extremely funny and very observant.

    The other show I'm watching - I'm two episodes into the three that have dropped so far on Apple TV - is "Severance" which is part psychological drama and part sci-fi thriller, and so far at least, totally amazing.

    The premise is fascinating.  Selected employees at Lumon Industries work in a "severance program" that essentially allows employees to separate their work lives from their personal lives;  once they go into the office, a brain implant removes all their memories of the outside world.

    The tension comes from the odd work that is being performed in the office - it seems nonsensical, abstract, something that would not have seemed out of place in the old "The Prisoner" TV series.  At the same time, outside the office there appears to be a slight but growing unease with the procedure, which apparently cannot be undone.

    The cast is excellent - Adam Scott, John Turturro, Christopher Walken and Patricia Arquette all perform variations on their known personas, which gives "Severance" an interesting tilt, and the show is produced and directed by Ben Stiller.

    Coming at a time when we've all found our work and personal lives forced together by the pandemic, 'Severance" is provocative and timely, and totally worth your attention.

    One of the pleasures of my time at NGA in Las Vegas this week was getting to hang out - live - with old and good friends.  One of the sessions I did was with Tom Furphy and Scott Moses, below … and I think it is safe to say that we all look pretty happy.

    Had a wonderful wine this week - the 2016 Heitz Cabernet Sauvignon from Napa Valley … rich and intense, perfect with a steak, though I'd be happy to drink it pretty much anytime, anywhere.  (Thanks to the great Tony Stallone for introducing me to this wine.)

    That's it for this week.  Have a great weekend, and I'll see you Monday.