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    Published on: April 7, 2022

    We've been talking a lot about community and cultures of caring here on MNB the last couple of weeks.  Well, here's another example … a crisis in Oregon where a retailer saw that it could make a difference, and, working with suppliers, worked to address an intolerable situation.

    Published on: April 7, 2022

    The Wall Street Journal this morning reports that the US Securities and Exchange Commission (SEC) are investigating how Amazon "has disclosed certain details of its business practices, including how it uses third-party-seller data for its private-label business."

    The question, the Journal writes, is how Amazon "handled disclosures of its employees’ use of data from sellers on its e-commerce platform … The SEC’s enforcement division has asked for emails and communications from several senior Amazon executives, according to one of the people."

    Amazon has not commented on the probe.

    Some context from the Journal story:

    "In April 2020, a Wall Street Journal investigation, citing internal documents and interviews with former Amazon staffers, found the company’s employees routinely used individual third-party-seller data to develop products for its own brands. A company spokesman denied that such actions were taken, echoing an Amazon lawyer’s congressional testimony a year earlier, saying the company does 'not use their individual data when we’re making decisions to launch private brands.'

    "Amazon has since launched an internal investigation of the group but has declined to provide a copy of its report to a congressional committee that earlier investigated Amazon and other technology companies’ size and power, the Journal has reported."

    The result:  "members of the antitrust subcommittee of the House Judiciary Committee referred Amazon and some of its top executives to the Justice Department for potentially obstructing Congress in relation to its cooperation during the probe and disclosure of how its private-label business is run."

    KC's View:

    The argument here consistently has been that there is nothing inherently wrong with a retailer looking at sales numbers and determining, based on volume and potential profitability, what branded products ought to be knocked off as a private label offering.  It is, in fact, what virtually every retailer does … if Amazon is prevented from doing so (and, admittedly, it almost certainly is faster, better and more precise in its analysis and implementation), then those same regulations need to be extended to Walmart, Kroger, Albertsons, CVS, Walgreens, etc…

    That said, if Amazon is obfuscating the facts of the case and systemically being less than transparent with lawmakers and regulators, then it will end up paying the price.  The case can be made for a certain kind of behavior up to a certain point, and Amazon needs to tell its story.  But iut cannot hide the chapters it finds to be inconvenient.

    Published on: April 7, 2022

    Kroger and Bed Bath & Beyond yesterday announced the official launch of what they are calling a joint "e-commerce experience"," designed to provide online access through Kroger's online marketplace to "several thousand items from Bed Bath & Beyond and buybuy BABY. The curated digital experience is divided into easily shoppable categories to help customers find exactly what they need quickly."

    The collaboration, which originally was announced late last year, "includes some of the most sought-after items from bedding and storage to baby furniture and gear."

    Stuart Aitken, Kroger's Senior Vice President and Chief Merchant & Marketing Officer, says in a prepared statement that "this collaboration expands our e-commerce selection, enabling our customers to send a new homeowner a beautiful cheese board and the cheese that goes with it. Or they can send new parents a stroller alongside diapers and a Home Chef meal – all in one digital transaction, saving our customers time and providing a positive shopping and gifting experience."

    KC's View:

    This strikes me as one of those cases where the collaboration can't hurt.  I have no idea if people want to buy a cheese board and a stroller in the same online trip, but there may well be cases where impulse purchases can be generated, and so it makes sense to at least create an environment in which they can happen.

    This has to be seen in the context of so many other moves that Kroger is making - using Ocado-powered warehouses, for example, to create a network that allows it to serve markets where it doesn't have stores.  Or opening. a restaurant supply division in Dallas.

    What doesn't seem to be happening - yet - is Kroger having a presence on the Bed Bath & Beyond site.  I just went on it, and noticed that it is promoting a "Beyond Cooking Event," with a big emphasis on cookware.  One can imagine that there could be a nice tie-in with Kroger's food offerings.  

    I also can imagine that Kroger and Bed Bath & Beyond could engineer an arrangement in which they serve as pick-up depots for the other's products, as well as the previously announced intention to test a small BBB boutique in select Kroger stores.

    I think they have to be selective and not try to do too much at once, but as long as there is a consistent narrative that can be presented to the shopper in a compelling and coherent fashion, the sky, potentially, is the limit.

    Published on: April 7, 2022

    Interesting piece this morning in the New York Times that leads this way:

    "After the stunning victory at Amazon by a little-known independent union that didn’t exist 18 months ago, organized labor has begun to ask itself an increasingly pressing question:

    "Does the labor movement need to get more disorganized?

    "Unlike traditional unions, the Amazon Labor Union relied almost entirely on current and former workers rather than professional organizers in its campaign at a Staten Island warehouse. For financing, it turned to GoFundMe appeals rather than union coffers built from the dues of existing members. It spread the word in a break room and at low-key barbecues outside the warehouse.

    "In the end, the approach succeeded where far bigger, wealthier and more established unions have repeatedly fallen short."

    The Times story makes the point that unionization movements at this point in time may in fact be more successful when they are grass-roots in nature, rather than be engineered from the outside.

    You can read the story here.

    KC's View:

    What this essentially means is that people in favor of unionization have to understand that it is the workers on the front line who will have the best understanding of the working environment, and therefore are better positioned to know how to go forward.  Ironically, this is kind of the same thing that unions (and MNB) argue that retailers need to do - the people on the front lines are the lynchpin of success.

    By the way … I have to wonder if this also means that companies have a greater opportunity to establish comity with these front line workers, if they treat them with respect and assets.  If they can just get away from seeing these folks as the enemy, then maybe they can make substantial and sustained strides in the right direction.

    Published on: April 7, 2022

    The New York Times the other day had a piece about how community colleges are ramping up their cooking schools, creating a pipeline of trained cooks and chefs available to be hired by restaurants and supermarkets.

    While just a few years ago the number of cooking schools in this country was rising, "the last few years have been challenging," the Times writes.  "Confronted with increasingly steep operating costs and a pandemic that hamstrung the restaurant business, several schools have permanently closed campuses, including the New England Culinary Institute and the International Culinary Center (which licensed its curriculum to the Institute of Culinary Education). Johnson & Wales University, which has a well-known culinary program, closed two campuses in 2020. Even before the arrival of Covid-19, Le Cordon Bleu closed all of its outposts in the United States.

    "What’s left, for the most part, are the most recognizable names - like the Culinary Institute of America and the Institute of Culinary Education, which each reported steady enrollment throughout the pandemic - and culinary schools at community colleges."

    One example cited in the story is Northern Essex Community College in Haverhill, Massachusetts, where the price of an education is "about $6,500 for a certificate and $14,000 for an associate degree - or less, as many culinary students receive grants or scholarships. Compare that with the Culinary Institute of America, the acclaimed private school where a single semester at its Hyde Park, N.Y., campus costs nearly $20,000."

    The job placement rate at Northern Essex is "100 percent," the story says.

    KC's View:

    This may be a pipeline that some retailers haven't known exists … and so if you have openings in your commissaries or kitchens, you may want to do a little quick research into community colleges with cooking schools, and start creating relationships that will make you an employer of choice, with first crack at the most creative graduates.

    At the end of the day, I continue to believe that food stores can best differentiate themselves in a highly competitive environment with - wait for it - their food.  But you have to have the right talent in place to achieve this position.

    Published on: April 7, 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 a total of 81,950,247 total cases of the Covid-19 coronavirus, resulting in 1,010,537 deaths and 66,088,151 reported recoveries.

    Globally, there have been 495,511,025 total cases, with 6,192,585 resultant fatalities and 431,334,302 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 77.1 percent of the total US population has received at least one dose of vaccine … 65.7 percent are fully vaccinated … and 45.1 percent of fully vaccinated people have received a vaccine booster dose.

    The CDC also says that just 49.7 percent of the eligible US population has received a vaccine booster shot.

    •  From Axios:

    "Half of the states are seeing COVID case numbers rise again while nationwide totals continue to fall … Overall, cases dropped 5% across the U.S. to an average of about 28,700 cases from an average of more than 30,000 cases two weeks ago.

    "Three states — Alaska, Vermont and Rhode Island — had more than 20 new cases per 100,000 people.  Nine states — Utah, Montana, South Dakota, Kansas, Louisiana, Iowa, Arkansas, Indiana and Tennessee — had three or fewer new cases per 100,000 people."

    Even better news:  "Deaths fell to an average of 600 a day, down 34% from just over 900 a day two weeks ago."

    Published on: April 7, 2022

    •  From Bloomberg:

    Walmart Inc., which for years has managed its sprawling operations from a famously drab home office, is following through on plans to boost the amenities at its new headquarters complex. "

    According to the story, "A fitness center will feature tennis courts, three indoor pools and a teaching kitchen, while a child-care center will be able to accommodate as many as 500 kids, Walmart said in a statement Wednesday. The Walton family, which owns about 47% of the retailer, is chipping in $225 million for the facilities and they are scheduled to open late next year. "

    The goal, Bloomberg writes, is to better compete "with tech giants, banks and consulting firms to entice talented employees. The Walton family has also played a key role in sprucing up the retailer’s home city of Bentonville, Arkansas, with a landmark art museum, world-class bike trails and upscale bars and restaurants."

    Published on: April 7, 2022

    •  From CNN:

    "Instacart is once again tweaking its tipping policy in a bid to address the effects on its workers of a practice known as 'tip baiting,' where customers zero out a tip after an order is delivered.

    "The company said Tuesday that it will cover the cost of a shopper's tip, up to $10, should a customer remove the tip after delivery without reporting an issue with their order.

    "The update is just the latest incremental measure Instacart has announced in recent years to address so-called tip baiting, while maintaining that it is an 'exceedingly rare' event for its shoppers. Two years ago, CNN Business reported that some Instacart customers were bait-and-switching workers by offering up a large tip - sometimes $50 or more - and then taking it away after the delivery was dropped off."

    Published on: April 7, 2022

    •  From the Wall Street Journal this morning:

    "New applications for U.S. unemployment benefits fell last week to a near 54-year low as employers held onto workers in a tight labor market.

    "Initial jobless claims, a proxy for layoffs, fell to 166,000 during the week that ended on April 2, compared with a revised 171,000 the prior week, the Labor Department said Thursday. Economists expected 200,000 new claims last week.

    "The four-week average for claims, which smooths out volatility, fell to 170,000.

    "The Labor Department changed its methodology for computing seasonal adjustments, which contributed to some of the revisions in the report.

    "Jobless claims have hovered around historic lows since late 2021 as the labor market has tightened during the economic recovery."

    •  The Chicago Sun Times takes note of yet another nail in the coffin of traditional shopping malls - Brookfield Properties said this week that it is abandoning its ownership of the iconic Water Tower Place in Chicago, "turning over the vertical mall to its lender, a unit of New York-based insurer MetLife. The action indicates Brookfield believes the mall is worth less than an estimated $300 million in debt on the property."

    According to the story, "It’s another setback for a complex that once defined retail chic but whose fortunes were cut down when the pandemic forced prolonged shutdowns."

    Published on: April 7, 2022

    Yesterday we reported that Kroger announced that its Dallas division s launching Kroger Restaurant Supply there, which it says will offer "an alternative to ordering in large quantities that have highly variable pricing and require deliveries on a set schedule. This service offers competitive wholesale pricing, opportunities to purchase items by the case or unit and seven-day-a-week delivery."

    MNB reader Joe Hermes wrote:

    I read this yesterday and my first thought was they can't keep their stores in stock, why are they going to dilute the service to the stores by spreading scarce inventory over a broader customer base?

    Then I started to think strategically.   This opens the door to another "class of trade" and the inventory and deal monies available in food service.   

    Now Kroger is playing chess instead of checkers.  Good move. 

    And, from MNB reader Tom Russell:

    I was in a Food Lion recently got into a conversation about supply chain issues; she said restaurants are now shopping her store for supplies.

    Chess, huh?  Good point.  And, as I said yesterday, I cannot imagine that this will be limited to Dallas.  If it works, other divisions can do it … as can the Ocado-powered warehouses that Kroger will be using to serve markets where it does not have physical stores.  This has the potential to be a disruptive, opportunistic play.

    Got a number of reactions to our various stories about Howard Schultz's return to Starbucks.

    One MNB reader wrote:

    Stopping the stock buyback of $20 billion? That alone says they were more interested in stock price, than they were teammates and facilities. Way too many companies spend way too much on stock buybacks ( equals nice executive rewards) than investing in people, innovation and nuts and bolts. 

    I’m not a union person, but they certainly will make executives refocus on what they lost sight of.  Interesting times right now. 

    Another MNB reader wrote:

    Wow, Howard Schultz's savior complex on full display.  Does he really need to return...again?  Had Starbucks not put together a leadership succession plan, or was the plan for Howard to come back all along?  

    Tired of C-Suite employees squeezing every last bit out of their compensation packages either via handling the negotiating themselves or through their recruiters.  However, they get upset when rank and file employees, most of whom have never gone through a negotiating training, start demanding increased benefits.  Labor is not there to be exploited, Howard should consider himself in a store-support role and not the almighty coffee deity he acts like.  The C-Suite greed is appalling in this country.  I would boycott Starbucks, but I already stopped buying their burnt/over roasted 'coffee' years ago and began supporting my local coffee roaster.  Would love to stay on the soap box, but I think I'll go patronize my local establishment instead and include an extra large tip in Howard's name. 

    And, from another reader:

    Howard has a rather well-developed Messiah complex and it’s gonna get ugly at Starbucks. 

    From another:

    I've asked this question before, and feel the need to do so again after reading your Starbucks piece this morning. What are the employees who vote in favor of unionization looking for, or demanding?  I still have not seen anything anywhere detailing what their gripes are, or what they want Starbucks to do.  Could be I missed something along the way, but seriously, I don't think so. Again, this company seems to be one of the most forward thinking regarding the benefits it provides its employees, even the part time ones.  College tuition assistance, solid healthcare insurance, good pay, etc.  I mean, what more is there?  Do you have insight to this?

    Regarding Schultz getting out to the stores vs sitting in HQ,  I  agree wholeheartedly.  He'll either get a  better understanding of the demands, and perhaps pledge to accept them, thereby staving off unionization, or he will educate the "partners" so they won't feel the need to unionize.

    I think the employees at some stores - still a very small minority - believe that the company was insufficiently sensitive to their concerns and safety during the pandemic.   And, there are issues about scheduling.  Fair to say, I think, that Starbucks' reputation as a progressive employer has been lost on some employees.

    Yet another MNB reader wrote:

    Schultz would be smart to reach out and bring back Jim Donald, a person who knows how to relate to front line associates and one of the best communicators in the business. 

    MNB reader Bob Joyce elaborated:

    In his time as Pathmark CEO, Jim sent about 10,000 letters a year to associates. Associates loved Jim and he knew success was in the hands of front line associates. 

    Agreed.  But, I think Jim has another gig at the moment.