business news in context, analysis with attitude

Published on: March 21, 2022

Using an installment plan to pay for a tank of gas?  That's not a joke - it actually is happening.  But KC thinks it could be a move that is not in consumers' best interests, and therefore a plan to be avoided by retailers.

Published on: March 21, 2022

by Kevin Coupe

My enthusiasm for Stew Leonard's has been well-chronicled here, but sometimes even I get surprised by the company's activities.

I had just such a moment over the weekend when I saw a blog posting by a local rock 'n roll radio station promoting the fact that Stew Leonard's has released nine songs - all sung by its audio-animatronic Farm Fresh Five - on a variety of streaming platforms, including Apple Music, Spotify, and Amazon.

The songs include such "classics" as "The Customer is Always Right," "It's Fun Shopping at Stew Leonard's," and "We're the Farm Fresh Five" … the latter of which, though it may not be "Hey, Hey, We're The Monkees," is the kind of song that sticks in your brain once you've heard it while navigating the store.

This may sound a little over the top, but I can tell you from experience - I've been shopping at Stew's on an often-weekly basis for more than 35 years, and Saturday morning trips to the store with my kids were a regular part of our weekends - that little kids respond to those songs.  They sing along with them, they dance a little bit, and the melodies are a kind of soundtrack for the experience.

Here's a video of what I'm talking about:

We didn't have the technology then, but I can imagine parents being able to play those songs in the car or at home as a way of keeping their kids occupied.

It is a really smart thing for Stew's to do - it keeps the brand top of mind, and reinforces the connection that families feel to its stores.

In my mind, a marketing Eye-Opener that defines the nature of independent retailing.

Published on: March 21, 2022

The New York Times reports that "a court on Friday threw out what was thought to have been the first government lawsuit in the United States arguing that Amazon had broken antitrust laws.

"Judge Hiram E. Puig-Lugo of the Superior Court of the District of Columbia granted Amazon’s motion to dismiss the complaint, which was filed last year by Karl Racine, the district’s attorney general, according to court records. The records did not state the reason for the dismissal.

"The lawsuit focused on how Amazon treats merchants that use its website to sell products. According to the lawsuit, Amazon made them sell their wares on its site at the lowest price they charged elsewhere on the web or at a lower price entirely. That caused merchants to raise prices across the board, the suit argued."

The Wall Street Journal writes that "the case has marked an early effort to challenge Amazon’s practices as anticompetitive at a time when other big tech companies such as Facebook parent Meta Platforms Inc. and Alphabet Inc.’s Google unit have been sued repeatedly by federal and state authorities. Both companies have denied any anticompetitive behavior."

From Engadget:

"At the center of Racine’s suit was Amazon’s Fair Pricing Policy. In 2019, amid antitrust scrutiny, the company stopped telling third-party sellers they couldn’t offer their wares at lower prices on competing marketplaces. The complaint alleged that Amazon added a near-identical clause under its Fair Pricing Policy. The suit said that those guidelines allow the company to impose sanctions on merchants that sell their products for less money elsewhere.

"When Racine's office first filed its complaint, Amazon argued that many retailers employ pricing restrictions in their contracts. 'The DC Attorney General has it exactly backwards — sellers set their own prices for the products they offer in our store,' a spokesperson for the company told Engadget at the time. 'Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively. The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law'."

In a statement, Racine's office pushed back against the ruling:  "We believe that the Superior Court got this wrong.  Its oral ruling did not seem to consider the detailed allegations in the complaint, the full scope of the anticompetitive agreements, the extensive briefing and a recent decision of a federal court to allow a nearly identical lawsuit to move forward … We are considering our legal options and we’ll continue fighting to develop reasoned antitrust jurisprudence in our local courts and to hold Amazon accountable for using its concentrated power to unfairly tilt the playing field in its favor."

Published on: March 21, 2022

The Washington Post reports that "even though only a fraction of the food eaten in the United States is imported, with much of that coming from Mexico and Canada, the ripple effects of the conflict in Ukraine will conspire to further drive up food prices and keep them high into next year, analysts say. And because Russia is a main producer of fertilizer and other agricultural chemicals, the conflict is likely to have an impact what is grown this year on American soil."

Some context from the story:  "Even before the conflict, input costs had surged for key segments of the consumer packaged goods industry, said Geoff Freeman, president of the Consumer Brands Association, with food manufacturing prices up 14.2 percent overall since February 2021. While goods that travel by truck or ship are seeing price increases because of rising fuel costs, grocery categories that lean heavily on cooking oils, aluminum packaging or commodity grains such as wheat will see higher prices and tighter supply because of the uncertainty associated with the conflict. That would include breads, baked goods, pasta, cereal and many items in the center aisles of the grocery store."

The Post goes on:  "Sophia Murphy, executive director of the Institute for Agriculture and Trade Policy, says that because the food system we have is sufficiently concentrated — 80 percent of U.S. beef is controlled by just four companies; Walmart sells more than a quarter of all groceries; Unilever owns more than 400 food brands — consumers will see prices surge right away, even if tight supplies for things such as wheat and corn are a ways off.  'Companies will ask the consumer to bear the cost,' she said. 'Every corporate boardroom is protecting shareholder interests, looking to hedge risk and thinking about what consumers will bear'."

Published on: March 21, 2022

Bloomberg has an interesting story about a community of TikTok users has been driving sales at Barnes & Noble.

According to the story, "The group is called BookTok and its members tag videos of themselves raving about books, often in the aisles of physical bookstores. Some of the videos have gone viral racking up millions of views. This has created a class of influencers that have made bestsellers out of titles that have been sitting on shelves for years."

Barnes & Noble’s Director of Books Shannon DeVito says that books that typically might sell a few hundred copies in total suddenly "were selling tens of thousands of copies every two to three weeks."  Hundreds of books are trending, she says, which has led Barnes & Noble to begin "stepping up its investment in remodeling its stores to make them feel more welcome. Tables or shelves filled with popular BookTok titles and topped with colorful signs can now be found across its 630 U.S. shops."

Remarkably, the business isn't coming in e0-books:  "Teenagers are going to physical stores to buy hard copies, sometimes 10 a month, she said. They’re staying to film videos, further boosting engagement."

Published on: March 21, 2022

From Business Insider, a story saying that "Amazon has worried for years that it tricks customers into signing up for Prime subscriptions. A previously undisclosed inquiry from the Federal Trade Commission has put more pressure on the company to fix it.

"Internal documents obtained by Insider show the company has been concerned since at least 2017 that user interface designs on Amazon.com have led customers to feel manipulated into signing up for Prime.

"These design decisions, commonly known as 'dark patterns,' push customers into acting unintentionally often through misleading imagery or intentionally vague offers. For example, a single click on the 'Get FREE Two-Day Delivery with Prime' tab at check out — with no additional confirmation step — gets shoppers automatically enrolled into a 30-day free trial of Amazon's Prime program, which later converts to a paid membership unless the user cancels it. For cancellations, users have to jump through a number of pages to end the subscription.

"Amazon was aware of these complaints for years but did not take serious action, according to these previously unreported internal documents and six current and former employees who spoke to Insider. In several cases, fixes for these issues were proposed and considered, but resulted in lower subscription growth when tested, and were shelved by executives, the documents show."

The story goes on:

"The confusion over sign-ups isn't limited to Prime, and Amazon is now looking to clarify language over other subscription services as well, internal documents show.

"These issues come as Prime, best known for free delivery and streaming video content, has enjoyed unprecedented growth to become one of the most popular subscription programs in the world, with more than 200 million members as of last year. Prime, to former CEO Jeff Bezos and other top Amazon executives, represents the best of the company's mission in putting the customer first by offering fast delivery and a bevy of other perks at what it perceives to be a bargain price of $139 a year in the US.

"But Amazon's perfunctory measures on addressing subscriber confusion also run counter to these professed values of customer-centricity, and show how the giant retailer can sometimes use the veil of customer obsession to its advantage — in this case, enticing users to free delivery when the motivation is boosting membership count and revenue."

Published on: March 21, 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:  81,410,101 total cases … 997,933 deaths … and 63,006,762 reported recoveries.

The global numbers:  471,192,134 total cases … 6,101,917 fatalities … and 407,446,795 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 76.8 percent of the total US population has received at least one dose of vaccine … 65.4 percent are fully vaccinated … and 44.5 percent have received a vaccine booster dose.

Published on: March 21, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  PYMNTS reports that "nearly 60% of all online retail purchases in the U.S. were done on Amazon last year … reflecting the company’s tightening grip on eCommerce sales and a continuation of the stair step market share advance it has made over the past twenty years.

"In fact, the new findings defy the logic that says it gets harder to grow a large business, having doubled its share of the domestic retail piece to 56.7% in 2021 from 28.1% in 2014 … The findings also show how much Amazon is dominating Walmart when it comes to online-only sales, having added over 3 ½ percentage points to its share of digital sales last year, completing a 10-percentage point COVID-era jump since 2019.

By comparison, during that same 2-year pandemic period, Walmart’s share of domestic digital retail sales has grown nearly 50% — albeit off a much smaller base — ending 2021 with a 6.2% portion.

"Said another way, despite all of Walmart’s efforts and the investments it has made to grow its eCommerce sales and diversify its traditional reliance on the 5,000 physical store locations that dot the country, the digitally-native Amazon still holds nearly a 10x lead over its rival on this front."

•  The Boston Globe reports that "Amazon this week opened what it calls a 'mini-fulfillment' center in Bridgewater (Massachusetts), a first-of-its-kind facility in New England that will enable the company to deliver packages to customers’ doors within hours of an order.

"It’s the latest move in the e-commerce giant’s ongoing push to speed up delivery times in Boston and other large markets. It will enable same-day or overnight delivery of more than 3 million items across a dozen categories, including beauty and health, kitchen and dining, electronics, and pet supplies."

We were putting out the patio furniture over the weekend on what was a lovely and warm Saturday afternoon, and Mrs. Content Guy discovered that the two water hose nozzle sprayers were broken.  We didn't feel like going to the store, so she went on Amazon and ordered a couple of them, plus a few other things we needed … and less than 24 hours later, they arrived at our front door.  I don't know how they do it, but this is how Amazon makes itself essential, and the standard by which other retailers will be measured.

Published on: March 21, 2022

•  The Boston Globe reports that Massachusetts-based dairy company Hood "fell victim to a cyberattack that prompted it to shut down production" last week, during which "Hood was unable to manufacture products or receive new raw materials, including milk. The company tried to divert its deliveries, but an unspecified amount of milk had to be 'disposed of'."

The Globe writes that "Hackers have long targeted organizations with sensitive information, such the federal government, or critical infrastructure like fuel distribution networks. Groups with ties to Russia are blamed for two prominent cyberattacks last year targeting the Colonial pipeline and the JBS meat packing facility, and there are growing fears of more from Moscow amid Russia’s war in Ukraine. But Hood’s struggles this week are a sign that cyberthreats can extend even to the most wholesome of consumer products."

Reports are that most of Hood's facilities are back on-line.

•  CNBC writes that while "automation and robotics are typically associated with multi-million budgets at multi-billion dollar companies," as the "cost of technology has come down, it’s become more affordable to smaller companies — even small businesses."

And that's a good thing, since "according to a recent report by the National Restaurant Association, seven in 10 restaurant operators said they currently don’t have enough employees to support customer demand. The restaurant industry added 1.7 million jobs in 2021, but many restaurants are still severely understaffed and expect labor shortages will continue to constrain growth."

Which means that increasingly, smaller restaurant companies are investing in systems that "use QR codes at the table that push customers to order and pay from their phones," or "free-standing kiosks that can take in-store orders and integrate those with online orders and a point-of-sale system," or provide a "robotic inventory taker (that) can check an entire store’s inventory three to four times a day and place orders directly when items start to run low."  And providers are devising payment plans that allow smaller companies to avoid major up-front investments, but rather pay monthly licensing fees.

Published on: March 21, 2022

Last week we took note of a Wall Street Journal piece about how, in his virtual address to the US Congress, Ukrainian President Volodymyr Zelensky called for elected officials to put pressure on companies in their states and districts still doing business in and with Russia, and called out some specific companies, including Nestlé SA, Mondelez International Inc. and Unilever PLC, among “other giants of the food industry."

Got the following email from an MNB reader responding to the story, calling out another US company:

KC, I am a daily reader, have been from the start and have the tee shirt to prove it.

Your independent comments on Multinational companies still operating in  Russia were “spot on”.

I am a former P & G employee and distraught that P & G is still operating in Russia.

P & G always talks about a Force for Good, serving others.

Today, it feels like a bunch of hogwash! I thought they (Mars,Mondelez, too) were much better than this.

Russia is a top market for P & G, and it appears that they are putting “profits before principles."

As you said, prescription medicines are essential, but there are many Russian companies that will supply detergent, diapers, and razors if P & G exits.

Meanwhile, today Ukrainians are leaving strollers in their central square to remember all the Ukrainian children who died who will never be able to wear Pampers again.

Got this email from MNB reader Frank Klisanich about my Feargal Quinn piece last week:

I always enjoy your articles that include the wisdom of Feargal...he wanted to know what was important o his valued shoppers...he wanted to know what the front line staff felt...he cared about both and everyone had to focus on the insurer experience. Simply brilliant.

Marketers and Sellers need to understand, watch and engage with those consumers and  truly partner with Retailers to deliver the right products at the right price at the right time.

I wish I had met Feargal, but, your articles are a great alternative.

There also was a story in the Lakeland Ledger speculating about whether Publix Super Markets could see its longtime dominance in the state challenged by online offerings by the likes of Amazon, prompting MNB reader Andy Casey to write:

Publix is always my first choice for in-store shopping but when the pandemic pushed some of my shopping online, I just never got into the Instacart habit. I wasn’t too impressed with Amazon Fresh and with the ease of Walmart pickup and now Kroger delivery in Florida, investing the time to get comfortable with another platform just doesn’t seem worth the effort.  That would likely change if Publix put together their own offering.

By the way, rumor is there is an Amazon store soon to open in a former Winn-Dixie site in Safety Harbor (Tampa area) so they are definitely coming.

There was another story last week, this one in USA Today about how Walgreens "has recently rolled out digital screens replacing the traditional doors available in these sections, and some consumers are upset.  The high-tech doors were created in partnership with startup Cooler Screens, a company building technology where 'consumers experience in-store what they love about shopping on-line'."

However, not everybody loves them.  One MNB reader writes:

It would be interesting if these cooler door screens could tell shoppers when o.o.s. product would be back in stock, or suggest what the closest substitute might be. Or for items in stock a new recipe to go along with it... you know, stuff that might help the customer…

Be nice.

We wrote on Friday:

A few weeks ago we reported here on Chicory's third annual Online Grocery Usership survey, but yesterday an MNB reader emailed me a chart from the survey that she said seemed particularly resonant in view of comments that I've made here over the years.  I missed this chart in my original reporting, so I thought I'd share it with you.

My argument was that this is a vivid illustration of the degree to which Instacart is disintermediating its client retailers.  But one MNB reader noticed something else:

interesting chart to share but how much credit do you put into a chart that can’t spell one of the largest players in the grocery market by store count correctly?

One of the largest problems with today’s society is a lack of attention to small details and laziness.  Here’s another example of that.

I take your point … but as someone who has had more than his share of misspellings over the past 20+ years, I tend to be forgiving.

Plus, if I am going to be honest, I didn't even notice that Albertsons was misspelled.

My bad.