business news in context, analysis with attitude

Published on: May 31, 2022

It was fitting that over the Memorial Day weekend, I read a piece in The Atlantic about a controversy brewing in the US military - and specifically within the ranks of the Marines - about whether a new age of warfare has begun, one for which traditional platform-centric structures, strategies and tactics may not be prepared.  It is a fascinating conversation about a subject about which there isn't unanimity one way or the other, but it also offers numerous metaphors about retailing and how to compete in the 21st century.

My analysis is in the video above.  The article can be read in its entirety here.

Published on: May 31, 2022

by Michael Sansolo

“The reports of my death are greatly exaggerated.”  - Mark Twain

"I'm not yet dead." - Monty Python

Retailers need to think about these two lines, from two highly quotable sources.

Sure, there have been predictions from a wide variety of sources in recent years about the death of retail.  Of course, for every report of retail's imminent demise comes one of a new store or format being opened.  (Even by Amazon, which, while it closed its physical bookstores and 4-Star stores, continues to open grocery stores and last week opened its first physical clothing store.)

Perhaps the best way I’ve heard of looking at this comes from Chang So, a three-store independent retailer from San Juan Bautista, California.  I met Chang at a recent conference where he spoke one of the best lines I have heard in a long time.

“Retail isn’t dead,” Chang said. “But bad retail is.”

He’s got that absolutely right.

The world of retail has taken quite a body blow in the past two years thanks to the pandemic. The consumer acceptance and adoption of on-line shopping was clearly turbo-charged by shopper fears of visiting stores and possibly contracting covid and clearly enabled by improved Internet service that made the entire process more effective than ever.

In short, the future got here really fast and that future brought an entirely new and powerful challenge to traditional retail. But as is often said, the future hasn’t been distributed equally. Some retailers have suffered significantly while others have found a way to quickly evolve and even thrive.  As we've pointed out here on MNB, retail innovation in part accelerated because business leaders did not think of it as innovation.  For them, in the moment, it was survival - no committees, no surveys, no focus groups, no time to dither.

The difference, back to Chang’s point, is only the good made strides.

For many retailers their three most important attributes of success have remained: location, location and location. After all, wasn’t it always that way?

Well, "always" ain't what it used to be.

Location matters, but the explosion of e-commerce completely changes the meaning of location and convenience. Yes, your store might be in a great location, with all the right traffic lights and turns to enter your shopping center. But that’s not more conveniently located than my laptop and my sofa and that’s the new reality.

To go back to Chang’s point, the challenge is to ensure your store wouldn’t be considered “bad” retail. Make sure your store (your products, your services and your people) brings points of differentiation and distinction that would convince shoppers to go past competing choices and come to you. Those same points of differentiation need to convince them to take the time and trouble to get off the sofa and go to your store.

Finding points of distinction is nothing new in retail. Offering the best butcher shop, the finest produce, the simplicity of one-stop-shopping or just creative merchandising have all been part of this very same journey. For decades on end, retailers have found a way to stand out from the crowd in order to survive and thrive. The only difference today is simply the degree to which it is so important today.

Bad and even mediocre retailers - the ones that are inflexible, unimaginative, boring and indistinct - are at risk.  The reports of their imminent demise may in fact not be exaggerated at all.

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: May 31, 2022

From the Washington Post:

"For more than two years, while Americans rode out the pandemic by bingeing on televisions, furniture and home projects, businesses that relied on face-to-face commerce suffered. Movie theaters went dark. Airplanes flew empty. Restaurants starved.

"Now, consumers are returning to their previous habits with the balance between goods and services spending back to where it stood in May 2020, according to data adjusted for inflation from Flexport, a freight forwarder. A separate metric cited by Goldman Sachs shows goods consumption about 5 percent higher from before the pandemic, down from a peak gap of 15 percent.

"'We are just in the early stages of seeing the rotation of consumer spending from goods to services. As time goes on, you are going to see more of that. Food services are quite strong. Travel is picking up, airfares and hotel occupancy,' said Kathy Bostjancic, chief U.S. economist at Oxford Economics. 'The consumer is looking more to services spending, especially with spring and summer upon us'."

Published on: May 31, 2022

Instacart announced late last week that it is changing the system that allows its customers to rate/rank its shoppers in a way that makes it fairer and more informative for consumers.

TechCrunch reports that "the company will now remove a rating if it’s from a customer who consistently rates their shoppers below five stars. Instacart is also going to forgive more ratings for reasons that may be outside of a shopper’s control.

"Shoppers will now also just need to maintain a 4.7 or above rating to get prioritization for 'batches,' which is a term Instacart uses to describe delivery jobs that include more than one order at a specific store. Prior to this change, the prioritization of batches was based on having the highest rating possible. Instacart notes that a few low ratings shouldn’t have a significant impact on a shopper’s access to batches."

TechCrunch also reports that Instacart "is introducing a new 'Your stats' screen that shows shoppers information about their account, including their average customer rating, customer feedback and statistics like how many orders they’ve completed.

"There’s also a new section within the Shopper app that will provide shoppers with information about batch accuracy, including details about items found, replacements and more. Instacart says a shopper’s accuracy information does not have an impact on their rating or access to batches, but can provide additional insights.

"Shoppers will also now be notified when they are close enough to a store location to see available batches. When a shopper enters a store’s designated vicinity, they’ll be notified that they are ideally situated and if they can expect to see batches from this retail location in the near future. Shoppers may also see other recommended store locations nearby that have higher batch availability."

Published on: May 31, 2022

The Washington Post reports that the US Food and Drug Administration (FDA) and the Public Health Agency of Canada are investigating a hepatitis outbreak, positing that it may be linked to fresh organic strawberries.

According to the story, "The agencies said the strawberries were purchased between March 5 and April 25. They were sold at various U.S. retailers, including Aldi, Kroger, Safeway, Walmart and Trader Joe’s. In Canada, the affected strawberries were sold between March 5-9 at Co-op stores in Alberta and Saskatchewan.

"The potentially affected strawberries are past their shelf life, but health officials say consumers who purchased them and froze them to eat later should throw them away.  There have been 17 illnesses and 12 hospitalizations reported in the U.S., the FDA said. Ten cases and four hospitalizations have been reported in Canada."

The story goes on:  "Mexico-based FreshKampo, which grew the strawberries, said in a statement Sunday that it is working with regulators to determine how the problem occurred. FreshKampo said the label on the containers of potentially affected strawberries would have said 'Product of Mexico' or 'Distributed by Meridien Foods'."

Published on: May 31, 2022

•  Kudos to Kroger, which teamed up with the USO, which supports US service members and their families, for a series of "Stuff the Truck" events in military communities.

Through this partnership, the companies said, Kroger and the USO provided "nutritious meals to military members" and brought them "a taste of home, whether they're supporting natural disaster relief, serving in remote locations, or at basic training."  Custom co-branded trucks and trailers from the mobile USO fleet collected donations from local shoppers and delivered food to various military bases."

"The USO and Kroger have long worked together to support our military service men and women and their families," said Denise Osterhues, Kroger's senior director of sustainability & social impact. "We're introducing three new mobile kitchen units in the next two years to take our partnership to the next level. Together, we'll bring warm meals and taste of home to service members wherever the are – at military installations, providing food at USO centers, or disaster relief services in our communities. This new Kroger-USO mobile kitchen fleet will be at the center of our shared mission to nourish our neighbors."

•  From the Los Angeles Times:

"Citing the climate crisis, the Los Angeles City Council voted Friday to ban most gas appliances in new construction, a policy that’s expected to result in new homes and businesses coming equipped with electric stoves, clothes dryers, water heaters and furnaces.

"More than 50 California cities and counties have adopted similar rules banning or discouraging gas hookups in new homes and other buildings."

The new rule, the Times writes, "will require newly constructed buildings to be emissions-free, meaning they don’t add to the carbon dioxide pollution that’s heating the planet and leading to more destructive wildfires, more intense droughts and deadlier heat waves.

"The zero-emission policy is likely to take effect in the next few years, although the timeline isn’t clear yet. The motion leaves the details to city agencies, directing them to draft a regulation and bring it back to the council for approval by the end of 2022."

This may come as a blow to home cooks who prefer gas stoves to electric, but it could be a real problem for professional chefs who fervently believe that gas stoves give them far better control over temperature in their restaurants.  I have to believe there will be some court challenges … though maybe we'd be better served by some new technology that can address chefs' needs at the same time as climate concerns.

Published on: May 31, 2022

•  The GIANT Company announced last week that Jennifer Heinzen Krueger, most recently the chief learning officer and vice president, learning and development at Ahold Delhaize, has been named the division's vice president, team experience.  She replaces Matt Lutcavage, who the company said is pursuing an opportunity outside of the company.

Published on: May 31, 2022

Last Thursday I featured a conversation with David Katz, founder-CEO of Plastic Bank, in which we discussed his organization's use of blockchain and some high-level plastic regeneration (which is different from recycling) to create a business  - and a compelling narrative - around making maximum use of resources, and building economic independence in places and for people who desperately need it.

This prompted one an MNB reader to write:

We have been submitting and processing a staggering amount of price increases in 2021 and 2022.  In presenting price increases, manufacturers are asked to provide the reasons for the increase, one of which is typically an increase in the cost of commodities.  This is packaging.   In the past, we haven’t given much thought to the value and complexity of  the “throw away” packaging in consumer products.  Product delivery is part of the experience of using the product.  Your interview with Mr. Katz provided insight into something that most of us working in consumer products take for granted- the actual value of that packaging.

That was the point - that Plastic Bank is a great example of an organization and its people trying to turn traditional thinking about packaging on its side, and examine ways to convert it from waste to a real financial asset.

As part of our conversation, I referenced (and linked to) a piece I read in the Tufts Observer, a student magazine at Tufts University, by an impressive young writer named Meghan Smith.  She argued that the benchmarks traditionally used in a capitalist society may not be appropriate or sufficient when grappling with climate change.

Not surprisingly, this article also generated some reactions.

One MNB reader wrote:

She may not be wrong, but how do you get there from here?

Capitalism has its obvious problems, including not truly accounting for all costs (waste, pollution…), but it has also brought much of humanity out of poverty.

We need an answer to climate change, pollution…whatever you want to call it.

But I don’t know or think it can be done by sacrificing growth, without sacrificing the welfare of millions if not billions of lives.

Part of it goes back to the cost accounting…what are the costs, now and to future generations for restoring, cleaning up, deaths… Stop ignoring these costs and work them into the accounting.

The other part has to do with scarce resources. But we can still have abundance. Take the point of David’s comment about there already being more than enough plastic…we don’t need to produce more. Better thinking may disrupt entrenched industries, but also create new ones (a central tenet of capitalism).

And, from another reader:

There is so much wrong with the author’s understanding of business, capitalism, history, and climate science that it’s legitimately embarrassing. Let’s assume her premise that temperatures are rising at the rate she states and it’s largely anthropogenic are correct.

Let me ask you one question:

What economic system has led to increasingly lower levels of pollution, has led all the technological advances in green energy, and has lifted more people out of poverty in the history of mankind? You want to look at ecological disasters, look no further than the economic system people like the author want to impose.

I would suggest that if you are going to venture into areas outside your core expertise, I would suggest doing some research and putting up some counter arguments.

First of all, if I have a core expertise, it is in trying to be a provocateur - which is why Im posted the piece to begin with.  (My other core expertise is in being a wisenheimer, but that's for another conversation.)

Second, good for Meghan Smith, who I may just invite to do a Zoom conversation on MNB.

Let's be clear about something.  I don't think she was arguing for a system other than capitalism, just that maybe some of the traditional benchmarks of capitalism need to be examined to see if they meet the larger needs of the moment.  I don't think that is such a radical argument - I have long argued here that businesses that adhere to a traditional shareholder-centric approach to growth without taking into consideration a company's broader stakeholders (employees, customers) are being myopic and need to adjust their cultures.  I find it hard to believe that we cannot figure out how to achieve responsible growth that still respects the climate issues that humanity faces.  (Meghan Smith didn't invent her understanding of climate science, by the way … she's clearly done a ton of research and thinking about the issue.)

If you don't want to agree with the people and studies she cites, that's fine. We're not going to solve that disagreement here.  But I'll buy what David Katz pointed out, that in the end the world will be just fine.  It'll be humanity that will not survive.

I believe that our species' survival requires us to be willing to think about whether traditional benchmarks are sufficient or appropriate, and that to be unwilling to engage in such a conversation is an example of epistemic closure.