business news in context, analysis with attitude

Published on: March 29, 2022

by Michael Sansolo

We write a lot here about cool technologies and how they are or could remake the shopping process. And, truth be told, we get pretty excited by new apps and new methods to create a more frictionless and efficient environment.

But let’s all remember, that not everyone will see these changes wit h the same level of enthusiasm. In fact, there are very good reasons why some shoppers have a very different point of view and that’s a reality that retailers need keep in mind especially with the growing number of senior citizens.

This issue has apparently come into sharp focus in Spain thanks to a single senior citizen who has actively championed and organized shoppers against changes made by banks in his country.  The man is a 78-year-old retired doctor with Parkinson’s, who is struggling to adapt to how local banks have replaced staffers with technology. In short, his problem centers on his inability to use apps and even ATMs thanks to his infirmity.

He summarized his issue simply, saying, “I’m old, I’m not an idiot.”

According to the New York Times, the doctor is tech savvy enough to quickly galvanize a large group (600,000 plus) of supporters to his cause.

And what might really grab retailers is how astutely he focuses on how a service industry (in his case, banks) have used technology to shift onto shoppers tasks that once were handled by employees. It’s not hard to see how the same argument could be made about self-scanning checkouts and apps.  What some see as progress others see as a burden.

It’s impossible to consider this story and not ponder the incredibly challenge of being relevant and effective for a population as diverse as we find in virtually every American city, town or neighborhood. There’s good reason to believe that the only way to reach and delight younger shoppers is by constantly expanding technology, just as there’s ample cause for worry that the same technologies might distance us from older shoppers. And that situation will only grow more complex as the massive post-World War II baby boom generation continues to inflate the population of retirees and senior citizens.

The same challenge we frequently discuss about managing an increasingly diverse workforce is paralleled with our shoppers and to be clear, this isn’t a new problem. Just as the convenience of one-stop shopping delighted time-pressed shoppers in decades past, those same larger stores became a burden for older shoppers necessitating rest areas and motorized shopping carts.  No doubt, there was similar push back a century ago when self-service stores first competed with and then replaced full-service grocery stores.

But it also creates opportunity to educate shoppers on how to best navigate and use these new technological approaches—be they self-scanners, apps or even QR codes - and in the process possibly building yet another way creative retailers could build stronger relationships with shoppers. High tech is wonderful, but not without the element of human touch to help all shoppers receive an enhanced experience.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com.

His book, “THE BIG PICTURE:  Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available here.

And, his book "Business Rules!" is available from Amazon here.

Published on: March 29, 2022

This is a bit of a long one this morning, but I hope you'll stick with me on it.  I use the story of a Haitian immigrant who brought magic to a retail environment as an example of how management and labor need to approach relationships that seem to be devolving with every passing day.  Rather than re-litigating the past with antiquated and offensive characterizations, I argue, we need to reframe the discussion, rethink the economics, and reinvent the paradigm … all with a goal of future-proofing organizations.

Published on: March 29, 2022

The Wall Street Journal reports that Walmart is removing tobacco products from some stores in select markets - California, Florida, Arkansas and New Mexico - saying that the space can be used more efficiently:  "In some of these stores, Walmart has rolled out a design with more self-checkout registers, as well as other items such as grab-and-go food or candy sold near the front of stores in place of Marlboro, Newport and other tobacco products."

The company is not saying that the initiative will get a national rollout.

According to the Journal, "The shift comes after years of internal debate at Walmart about cigarettes, which U.S. health officials say are linked to 480,000 deaths in the country each year and which are complex for big-box retailers to sell because of regulations. Top Walmart executives decided to start moving out of the category in some locations before the Covid-19 pandemic, some of the people said, a decision now playing out in stores."

At Walmart, the story says, "sales of cigarettes are generally less profitable than some other items sold near the front of stores such as candy, according to the people familiar with the situation. It is also an operationally complex sale, eating into profits. Tobacco is kept in a locked case or blocked from shoppers. Food and Drug Administration regulations require that an employee make the sale. At Walmart, that employee must be over a specific age based on local laws and trained in tobacco sales. Theft is high throughout the supply chain, said some of these people … Like other retailers, Walmart doesn’t sell tobacco in municipalities such as New York and parts of Massachusetts that won’t allow locations with retail pharmacies to sell tobacco. Sam’s Club, Walmart’s warehouse chain, started gradually stopping sales of cigarettes in 2018. Sam’s Club now sells tobacco products in fewer than 40 of its approximately 600 U.S. stores, a spokeswoman said."

The story notes that "some retailers stopped selling tobacco products years ago. Target Corp. eliminated all tobacco sales in 1996. CVS Health Corp. said that its decision in 2014 to stop tobacco sales would result in an estimated $2 billion loss in annual revenue but that those sales ran counter to the company’s goals as a healthcare provider."

Published on: March 29, 2022

The Save Mart Companies, which operates some 200 stores in California and Nevada under the  Save Mart, Lucky California, and FoodMaxx banners, has been acquired by private equity group Kingswood Capital Management.

Terms of the transaction were not disclosed.

According to the announcement, "With the addition of The Save Mart Companies, Kingswood is expanding its existing Northern California presence. It already owns Alameda-based Cost Plus World Market, which it acquired in January 2021 from Bed Bath and Beyond, and Mare Island-based Lind Marine, a diversified marine services business headquartered north of the San Francisco Bay, which it recapitalized in January 2022."

The announcement also notes that in addition to its retail operation, Save Mart "also operates SMART Refrigerated Transport and is a partner in Super Store Industries ("SSI"), which owns and operates a distribution center in Lathrop, and the Sunnyside Farms dairy processing plant in Turlock."

Scott Moses of Solomon Partners acted as financial advisor to Save Mart.

Alex Wolf, the Managing Partner at Kingswood, has supermarket experience on his resume - he was part of the original Cerberus team that invested in Albertsons, and later founded Kingswood.

Published on: March 29, 2022

The Wall Street Journal this morning reports that "the Justice Department Monday endorsed legislation forbidding large digital platforms such as Amazon and Google from favoring their own products and services over competitors’, marking the Biden administration’s first full-throated support of the antitrust measure … The letter, obtained by the Wall Street Journal, expresses support for the American Innovation and Choice Online Act, which the Senate’s judiciary panel approved in January in a bipartisan vote, as well as similar legislation moving through the House.

"Amazon.com Inc., Alphabet Inc.’s Google, Apple Inc. and others oppose the proposed legislation, saying it would make it harder to offer popular services. The bills’ opponents also say it is fair for e-marketplaces, search engines and app stores to profit off their creations’ popularity.

"The department’s letter throws its weight behind a different view: that the platforms’ dominant position gives them unchecked power to influence the fate of other businesses, and that restricting the platforms’ conduct would carry significant benefits."

Published on: March 29, 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…

•  In the United States, there now have been 81,658,973 total cases of the Covid-19 coronavirus, resulting in 1,004,244 deaths and 64,683,169 reported recoveries.

Globally, there have been 483,936,442 total cases, with 6,153,150 resultant fatalities and 418,183,344 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 76.9 percent of the total US population has received at least one dose of vaccine … 65.5 percent are fully vaccinated … and 44.8 percent have received a vaccine booster dose.

Published on: March 29, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Bloomberg reports that "Apple Inc. is working on a subscription service for the iPhone and other hardware products, a move that could make device ownership similar to paying a monthly app fee, according to people with knowledge of the matter.

"The service would be Apple’s biggest push yet into automatically recurring sales, allowing users to subscribe to hardware for the first time -- rather than just digital services. But the project is still in development, said the people, who asked not to be identified because the initiative hasn’t been announced."

Bloomberg writes that "adopting hardware subscriptions, akin to an auto-leasing program, would be a major strategy shift for a company that has generally sold devices at full cost outright, sometimes through installments or with carrier subsidies. It could help Apple generate more revenue and make it easier for consumers to stomach spending thousands of dollars on new devices."

Two thoughts on this.

First, there is a lot to be said for subscription models, which can create enduring loyalty and spending habits, whether we're talking about computers or toilet paper.  Amazon has made an enormous business out of it with Subscribe & Save, and I think we're going to see a lot more of it going forward in a variety of categories.

Second, in some ways it sort of exists - I'm on my second MacBook Pro leased through Apple's business program.  My Apple loyalty never has been in question - I, in fact, have never worked in Windows - but my tendency always was to use laptops until they were worn out and on the precipice of obsolescence.  Now, I lease the laptop as if it were a car … it is pretty much the same cost as buying one, though it is a) spread out over three years, and b) I don't keep it at the end of the lease.  But, I am assured that I'll have up to date equipment, which is important since I am completely reliant on my MacBook Pro.

I think this would be very smart of Apple on a variety of levels.

•  From the New York Times this morning:

"Uber’s plan to lure more taxis onto its platform in the next several years could soon take another big step.

The company is close to completing an agreement with a San Francisco partner, Flywheel Technologies, to allow Uber passengers in the city to call a taxi through the Uber app, according to four people familiar with the matter and a video presentation by the city’s transportation agency that was viewed by the New York Times.

The next step is for the San Francisco Municipal Transportation Agency’s board of directors to approve tweaks to a pilot program at its April 5 meeting. The city’s director of transportation would then need to authorize it, paving the way for Uber and Flywheel, which operates an app used by hundreds of taxi drivers in San Francisco across several taxi companies to accept rides.

"The agreement, after a similar partnership between Uber and taxi companies in New York City was announced last week, would mark an abrupt departure from the years of fierce fighting between the two groups. If approved by regulators, the partnership in San Francisco could begin as soon as May."

Forget watching the roads.  I'd be watching the skies, because any moment we're likely to see pigs flying.

Published on: March 29, 2022

•  From the Washington Post:

"Walmart says it plans to expand its technology hubs and hire thousands of workers across the United States and Canada. The investment is aimed at offering more digital tools to boost convenience for workers and shoppers, the retail giant says.

"As part of the expansion plans, the company — whose global tech team grew by 26 percent to 20,000 workers in the last fiscal year, which ended Jan. 31 — will hire cybersecurity professionals, software developers and engineers, and data scientists. All of them will help make workers’ jobs more efficient and create a more personalized experience for shoppers regardless of whether they’re online or in stores, Walmart says."

The Post writes that these investments will end up in more positive experiences for both workers and customers, and you can read more about it here.

Published on: March 29, 2022

•  From CNBC:

"FedEx plans to test electric carts to make deliveries on its signature Express routes in 10 U.S. and Canadian cities throughout 2022.

"The company hopes electric delivery carts will help address a major challenge it faces in every big city it serves: lack of parking."

The story says that FedEx has been testing "the EP1 electric cart made by General Motors’ BrightDrop" in New York and Toronto, cities where, despite the explosion in e-commerce, there has been virtually no increase in parking spaces and loading zones.

According to the story, "FedEx is encouraged by the early results from its pilot program. The company said its tests in New York and Toronto show a courier can deliver 15% more packages a day with the electric carts than with a traditional delivery model. By deploying a truck of the electric carts and by getting couriers to their routes in a separate passenger van, the company estimates it can reduce the use of trucks on each route by as much 25% per day.

"The company acknowledges that its sample size is small with trials in New York and Toronto so far, and the 10 cities for this year’s pilot program have yet to be finalized."

•  The National Association of Convenience Stores (NACS) is out with new surveys concluding that "despite rising price sensitivity at the pump, both consumers and convenience retailers agree that drivers are willing to go out of their way to visit the c-store they prefer instead of shop for the lowest price … The 2022 NACS Consumer Fuels Survey found that 74% of drivers say they will drive 5 minutes out of their way to go to the store they prefer, contrasted with 64% who say they would drive 5 minutes out of their way to save 5 cents per gallon.

"Similarly, the Q2 2022 NACS Pulse Survey found that 75% of convenience retailers believe consumers would drive 5 minutes out of their way to go to the store they prefer, while 67% say consumers would drive 5 minutes out of their way to save 5 cents per gallon.

"Both surveys show a clear pattern: Preference beats price."

Published on: March 29, 2022

Got a number of mails reacting to the passing of Bill Bishop.

One MNB reader wrote:

I met Bill in the late 1960’s (my Lord!). He was young and wet behind the ears as I was when Leo Kahn invited him to develop a method for determining what has become location and space allocation management in the dairy, the department we “suspected” had a higher return than other departments. This may sound very basic in 2022 but I can assure we were just beginning to ask the right questions back then. Bill developed a simple method which was to watch customers’ purchasing patterns and record incidents on a photo of the department, the forerunner of planograms. I was one of the newbies who watched and recorded the products purchased on one trip to the dairy and how the department was shopped. We then tossed in gross margin dollar profit for good measure.This exercise was useful in determining where products were displayed and how much space to devote to them. As mentioned, Bill went on to become an innovator and leader in the industry and we have him to thank for many of the principles we use today that benefit our industry.

MNB reader Tom Ewing wrote:

Every encounter with Bill Bishop was a gift; stimulating, educational and rewarding every time.  A giant of a man in many ways, but also gentle, caring, inquisitive and generous with all he encountered.    He touched hundreds and made our industry better for decades.

MNB reader Steve Workman wrote:

Sad to see Bill Bishop pass.   I remember when he came our with the Coca-Cola Research Study on Supermarket “Out-of-Stocks”.  Being in the 3PL industry, I used that study for 20 years.  No one ever created a study to replace it.  He also attended several of our NARMS conferences and was always the star of the show, with his statistical presentations.  He will be missed, but his studies live on…..

In talking about a customer email from Stew Leonard's yesterday, I wrote:

Some of you may be getting worn out by the number of times I've referenced Stew Leonard's, especially over the past two years - it is almost as if Stew's, which was really well-known and successful before the pandemic, raised the bar since Civid started …. and has continued doing so.  But no matter.  Because when Stew Leonard's hits a home run, I'm going to tell you about it.

MNB reader Richard Kochersperger responded:

I don’t think you should ever apologize for sharing thoughts/views/information about Stew Leonard’s.  He’s the real deal when it comes to customers!

Your readers can learn a lot from his efforts to connect with the people who visit his stores.  No one communicates better!

He also spends time on the floor on a regular basis rather than managing from a cubicle or glass office.

Noted.

And finally, on another subject, from MNB reader Robert Cuddihy:

As a long time reader & fan of the “program”, I loved your 3-part interview of Ms. Indra Nooyi.  Great questions, even better responses and truly actionable concepts for all to hear!  As a fellow CPG enthusiast, Indra succinctly outlined what it takes to develop professionally.  Pursue your curiosity with passion. If you invest in yourself, you will attract the investment of others – mentors, teammates, projects, opportunities and even funding for the big ideas! 

Loved the interview and keep up the great work!

Thanks.  I appreciate it.