Published on: June 3, 2022
Today, I talk about a shopping experience that left me enormously dissatisfied with two retailers and a supplier. The mistake they made was all about communication, and the error was completely unforced. They could've done better, but they didn't. Which is a really good way to lose customers in a competitive marketplace.
Published on: June 3, 2022
Albertsons announced that it will begin offering "consumer-generated product ratings and reviews, enabled by PowerReviews," on 11 of its retail websites, including those of Safeway, Vons, Jewel-Osco, and Shaw’s.
According to the announcement, Recent research supports this new offering, "with 83% of grocery shoppers saying they are more likely to purchase a new grocery item online if customer reviews exist for that product." Mark Dillon, CEO at PowerReviews, said in a prepared statement that "ratings and reviews have become such a significant factor in buyer decision-making that shoppers actually choose where they buy from based on the availability of this content."
The two companies said that in addition to allowing consumer interactivity and the posting of product reviews, PowerReviews is providing "the ability for brands to syndicate their user-generated content to related product pages on Albertsons Cos.’ sites to ensure a consistent shopper experience."
This isn't an entirely new idea - Amazon has been doing it for several decades - but it is. not a concept that to my knowledge has been embraced by most supermarket companies. So good for Albertsons.
I have two thoughts.
One is that companies deciding to go down this path should be really transparent about the negative reviews, putting them in a special section called something like "Tough Love." Be clear about the fact that a business can learn the most from the people who criticize it, and that this will be a place to highlight and respond to criticisms, with follow-ups posted when issues have been addressed.
The other is that in addition to allowing for the posting of customer reviews about products sold online, there ought to be a place where reviews of store services and the store itself can be reviewed. If one is going to embrace the idea and physical and digital operations and strategies need to be integrated, then the same ought to go for shopper reviews.
Published on: June 3, 2022
Kroger said yesterday that it is partnering with an organization called Market Wagon to launch "a digital farmers market in Atlanta, Georgia … Developed as an e-commerce marketplace for local farmers and businesses, the service is a digital platform that offers customers a wide range of fresh, local products."
According to the announcement, "The delivery-only service offers a uniquely local assortment of over 1,150 local products by grouping local vendors together including local farmers, bakeries, and food artisans. All items found on Kroger Farmers Market are exclusive to the service and cannot yet be found at Kroger stores … The all-new partnership service will service a 60-mile radius across Atlanta that includes 28 counties in the Atlanta metropolitan area. Featuring the added convenience of delivery, customers can choose their preferred delivery day of either Tuesday or Friday."
Market Wagon defines itself as enabling "food producers to thrive in their local markets by operating as an online farmers market. Market Wagon partners with more than 2,500 local farmers and artisans to take their produce and products the very last mile to the doorstep of 45,000+ local customers."
I have to wonder if this is a testing ground for something that could be far more ambitious. After all, Kroger already has jumped into the pure-play e-grocery waters with operations in Florida, and planned for Texas and the northeastern US, where it does not have stores. If it could add to that offering the kind of produce marketplace that it is launching in Atlanta, it could be a strong differential advantage that would bring customers to its dot-com doorstep.
Published on: June 3, 2022
CNBC reports that Walmart increasingly is using its fleet of stores - about 4,700 just in the US - as the foundation for a network of fulfillment services that will support and differentiate its e-commerce business, especially against Amazon.
The clock is ticking. AdWeek reports on a new study from digital commerce service Edge by Ascential, that "predicts Amazon will surpass Walmart in its share of the overall U.S. retail market in just two years. The findings come despite a recent slowdown in the pandemic surge in ecommerce growth that led to Amazon’s first quarterly loss in seven years earlier this year … The report authors expect Amazon to add $294 billion to its retail sales by 2026, growing its share of the retail market to 14.9% with Walmart at 12.7% and Costco the third largest at 4.4%. Walmart and Costco currently control around 13.2% and 3.8% respectively."
But it is its stores, Walmart believes, that will give it a significant advantage over Amazon, which continues to dominate e-commerce with a close to 40 percent market share. They will, the CNBC story suggests, develop into "hubs for (Walmart's) e-commerce business, serving as launch pads for delivery drones, automated warehouses for online grocery orders and departure locations for direct-to-fridge drop-offs. Eventually, they will help pack and ship goods for individuals and independent companies that sell on Walmart’s website through its third-party marketplace."
“The store is becoming a shoppable fulfillment center,” Tom Ward, chief e-commerce officer for Walmart U.S., tells CNBC. “And if the store acts like the fulfillment center, we can send those items the shortest distance in the fastest time.”
Meanwhile, CNBC also reports, Walmart said this morning that "it plans to build four new fulfillment centers that use automation to pack and ship online orders more efficiently, with the first location opening this summer in Illinois. For customers, the new warehouses will mean next-day or two-day delivery could be more common for items including cereal and T-shirts."
At Walmart’s existing fulfillment centers, the story says, "employees can walk nine miles or more a day to pluck items off shelves and lug them back to areas for packaging, said Michael Prince, Walmart’s vice president of supply chain innovation and automation. That won’t be necessary at the new warehouses, where an automated system will retrieve items from an expanded storage space and shuttle it to an area where an employee packs it in a box, which will be custom made to fit the order’s measurements."
Here's how CNBC frames the story about store-based fulfillment:
"Walmart is leaning into two key advantages to drive its e-commerce business: its roughly 4,700 stores across the United States and its dominance in the grocery business. Ninety percent of Americans live within 10 miles of a Walmart store. The company is the largest grocer in the U.S. by revenue. Walmart wants to expand its assortment of merchandise, improve the customer experience and increase the density of delivery routes to turn e-commerce into a bigger business.
"The Covid-19 pandemic created an opening for Walmart to expand its online business. The retailer’s e-commerce sales surged, helped in large part by the curbside pickup service it launched years before other retailers scrambled to set on up during the pandemic. One dollar out of $4 that Americans spent on click-and-collect orders last year went to Walmart — more than any other retailer, according to an Insider Intelligence estimate."
CNBC notes that "Amazon has 39.5% of online market share in the U.S. compared with Walmart’s 7%, according to estimates by research firm eMarketer. Last year, based on the 12-month period from June 2020 to June 2021, consumers spent more money at Amazon than the big-box retailer for the first time, according to company filings and estimates by the financial research firm FactSet.
"But the e-commerce environment has gotten tougher in recent months. Gains have slowed dramatically as more customers return to stores. Even Amazon saw stagnating numbers in the most recent quarter, reporting its slowest sales growth rate in about two decades."
But both Amazon and Walmart, it seems fair to say, believe that this is just a temporary stall, created by a perfect storm of high inflation and a post-pandemic desire to get off the couch.
A few things here…
The prediction about Amazon surpassing Walmart in terms of sales isn't really much of a surprise. I'm pretty sure that Tom Furphy has been making that prediction, based on his reading of both companies' sales trends, for about as long as we've been doing The Innovation Conversation here on MNB. (Which, for the record, has been since 2015.)
The term of art that we've used around here has been "Clash of the Titans," mostly because we like to use movie titles and quotes whenever possible.
Walmart won't go down without a fight, and in some ways I think both Walmart and Amazon are happy to have the other - it makes it easier to argue against antitrust actions focused on lack of competition, and, quite frankly, the best heavyweight champions are defined by how they did against great challengers.
As I've said here before, it is important to remember that Amazon and Walmart see their roles in the world in fundamentally different ways - Amazon wants to be inextricably intertwined in every aspect of your life, and Walmart wants to sell you more stuff. Lots more stuff. There's no right or wrong about these two approaches - they're just different, with their own opportunities and limitations.
Here's the question I would ask about Walmart's approach: Are its core customers on board with its strategic vision, and/or does it depend on a large-scale onboarding of a new and expanded customer base? I may be wrong about this, but it seems to me that Amazon's customers - present and future - already have bought into its definition of the future, which gives it an advantage. It remains to be seen whether Walmart's core shopper demographic feels the same way about its vision of the future.
As for Amazon … it is facing its own headwinds. There's an overbuilt fulfillment system. Persistent labor issues. Legislative and regulatory challenges. A seeming inability to master the grocery business, especially at Whole Foods. Inflation that is driving up costs. And so on.
Plus, if nothing else, we've learned over the past couple of years that winds can shift dramatically almost overnight, which means that businesses have to tack this way and that to maintain momentum, even if it means they can't take the most direct route to their destination.
Economic experts seem to differ somewhat on what is happening. I saw one headline that described the economy as "storm clouds with a chance of hurricanes," while another expert noted that "there are hurricanes every year," and that we shouldn't overreact.
Either way, Amazon and Walmart need to consider the words of Robert Redford's Nathan Muir in Spy Game:
Published on: June 3, 2022
Alimentation Couche-Tard announced yesterday that it "will deploy more than 10,000 Mashgin Touchless Checkout Systems branded as "Smart Checkout," to over 7,000 of its Circle K and Couche-Tard stores during the next three years. The AI-powered self-checkout system developed by Mashgin will improve customer checkout times as much as 400%, driving customer experience forward while allowing store staff to focus their time on helping customers."
The Mashgin Touchless Checkout System is described this way: "a compact countertop device that fits easily into the existing store layout. It uses computer vision to recognize items presented from virtually any angle and instantly ring them up in a single transaction. Customers place their items on the Mashgin Touchless Checkout System, which uses cameras to ring up everything in under a second. There is no need to download an app or find and scan barcodes; shoppers simply put items down, pay as they normally would, and are on their way in as little as 10 seconds – eight times faster than traditional self-checkout."
"We're committed to investing in and scaling technology that sets a new standard for convenience with our customers and advances our mission to make our customers' lives a little easier every day," said Magnus Tägtström, Vice President, Global Innovation at Couche-Tard, in a prepared statement.
Couche-Tard and Circle K has been making interesting moves of late, like partnering with e-grocery start-up Farmstead to "explore innovative supply chain, distribution, e-commerce fulfillment and marketing models." Now this smart checkout rollout, which it says will allow "store staff to focus their time on helping customers" … which is not what one usually thinks of c-store employees doing.
The aim seems to be to redefine what convenience retailing is all about, repositioning the stores to have a much larger impact on the markets they serve. Big swing … but that's probably what's necessary these days.
Published on: June 3, 2022
CNN reports that "the last surviving Howard Johnson's restaurant has closed.
Open for most of the past 70 years, the restaurant was located in Lake George, New York, a popular summer vacation spot near the Adirondack Mountains. The restaurant closed its doors in recent weeks and the property is up for lease, according to a local affiliate."
The story notes that "the longtime roadside staple had about 1,000 restaurants in the 1960s and 1970s, and it was once America's largest restaurant chain. Instantly recognizable for its orange roofs, the diners served 28 types of ice cream and became a part of American culture … But Howard Johnson quickly found itself in the shadow of McDonald's and other fast-food chains that maximized efficiency and better managed supply chains."
Back in 2016, I did a FaceTime commentary from that last Howard Johnson's restaurant, which you can read/watch here.
In a nutshell, I found a restaurant suffering from nobody-gives-a-damn disease … people who suggested that this Howard Johnson's reflected a better and simpler America either had bad memories or low expectations.
The name and the format will be relegated to history, where the most common adjectives used to describe it will be "irrelevant" or "obsolete," reflective more accurately of a kind of business leadership that ignores changing realities, shifting consumer tastes, and toughening competition.
Published on: June 3, 2022
• From CNBC:
"The union backing organizing efforts at Starbucks is creating a $1 million fund to cover lost pay for baristas who go on strike, giving workers more firepower in their fight to unionize.
"The financial backing comes amid a nationwide unionization push that has already included workers at some Starbucks locations staging walkouts and strikes. In Boston, employees at a store went on strike Tuesday after having to work through a water leak. In Columbia, South Carolina, workers walked out for three days in protest of alleged anti-union retaliation.
"Once it’s established, the strike fund could lead to more frequent and longer-lasting strikes since baristas won’t have to worry about the near-term financial repercussions."
The story points out that "Workers United is an affiliate of the Service Employees International Union, which represents roughly 2 million members. Its size provides access to crucial resources for Starbucks organizers, who are facing off against a coffee chain that reported $29.1 billion in revenue in its last fiscal year.
"As of Tuesday, 100 Starbucks cafes have voted to unionize under Workers United, according to the National Labor Relations Board. Only 14 locations have voted against unionizing, giving the union a win rate of 88%. Roughly 120 other locations are waiting on their elections or are currently voting."
Published on: June 3, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• GeekWire reports that "a proposed class action lawsuit alleges that Amazon breached its contract with Prime members last year when it stopped offering free two-hour delivery on Whole Foods purchases of $35 or more.
"The case, filed Tuesday in U.S. District Court in Seattle, names as plaintiffs two California residents who say the Whole Foods delivery benefit was a major motivation for signing up as Prime members.
"Amazon, which acquired the grocery chain for $13.7 billion in August 2017, started rolling out free Whole Foods grocery delivery for Prime members in February 2018, before implementing a $9.95 surcharge in September 2021.
"The surcharge came after demand for grocery delivery soared during the pandemic. The economics of grocery delivery are notoriously difficult, and Amazon has made regular changes in its Amazon Fresh delivery fees and business models over the years in an attempt to create a viable business."
“Hundreds of thousands, if not millions, of Amazon Prime members paid for a membership because they wanted to take advantage of Prime’s free Whole Foods delivery service,” the suit says in part. “As a result of Amazon’s unfair business practices, consumers paid $119 for a service that was unfairly terminated.”
Might've been easier, not to say with fewer legal bills, to just cancel Amazon Prime service. Hard to imagine that Amazon doesn't have a legal loophole that allows it to change the rules when it wants to.
• From CNBC:
The US House of Representatives Oversight Committee is charging that Amazon is "obstructing" its probe into a deadly warehouse collapse caused by a tornado last December in Illinois by "refusing to produce key documents related to its internal review of the tragic incident, which killed six workers."
According to the story, "In a Wednesday letter addressed to Amazon CEO Andy Jassy, the Oversight Committee’s chairwoman, Rep. Carolyn Maloney, D-N.Y., and Reps. Alexandria Ocasio-Cortez, D-N.Y., and Cori Bush, D-Mo., said the company has 'failed to produce' key documents requested by lawmakers … The House Oversight Committee in April opened a probe into Amazon’s labor practices and is specifically zeroing in on its handling of the warehouse collapse. Lawmakers gave Amazon until April 14 to respond to its inquiry and produce the requested documents. The committee is seeking communications between Amazon managers and employees at the Edwardsville, Illinois, facility, among other things."
If Amazon does not produce the documents, lawmakers say, the next step could be a subpoena and open hearings.
Published on: June 3, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• From the Washington Post:
"Demand for workers remained near record highs, with 11.4 million job openings in April, as the tight labor market continues to be a bright spot for the U.S. economy.
"Some 4.4 million Americans quit or changed jobs that month, according to a report released Wednesday by the Bureau of Labor Statistics, using their leverage in an economy where job openings still outnumber job seekers by close to 2 to 1.
"Employers reported hiring 6.6 million people in April. Layoffs, meanwhile, fell to an all-time low of 1.2 million, as businesses sought to keep the workers they did have."
The story goes on: "The latest figures come as the U.S. job market notches month after month of solid growth. U.S. employers added 428,000 jobs in April — the 12th consecutive month of at least 400,000 new jobs. The unemployment rate is at a pandemic low of 3.6 percent."
• Starbucks announced this week that in California, if you want straws or cutlery at one of its cafes, you'll have to ask for them.
Here's the email that the company sent out:
Starting on June 1, California law requires us to offer single-use serveware only when requested. In accordance with this new law, our baristas will no longer pass out straws, cutlery, or splash-sticks unless you request them at the drive-thru window or in our cafés. We’re happy to provide you any of these items if you need them, please just ask us.
Thank you for helping us reduce waste.
• The National Retail Federation (NRF) is out with projections saying that "consumer spending this Father’s Day is expected to total $20 billion, nearly on par with last year’s record-setting figure of $20.1 billion … Approximately 76 percent of U.S. adults are expected to celebrate Father’s Day." NRF says that "consumers plan to spend an average of $171.79 to honor their fathers and other important men in their lives, nearly mirroring last year’s expected average spending of $174.10."
• IRI is out with new research suggesting that "shoppers will opt for at-home entertaining this summer over travel as inflation concerns continue to grow."
Among the findings:
"93% of surveyed consumers feel the cost of food is higher than last year, up 3% since IRI’s 2022 Spring Holidays Report … 95% of shoppers are concerned about food cost inflation in relation to their own household, 48% being 'extremely concerned' … 48% of consumers are planning to do more outdoor entertaining than last summer … Most shoppers plan to host family and friends (70%) or host a barbecue (69%) at their house this summer … Nearly half of all respondents plan to travel less this summer than last, and 81% of those not planning to travel cited finances as a main reason."
This may all be true, though the findings do seem to contradict the guidance being offered by the airlines, which seem to feel that inflation will have minimal impact compared to consumers' overwhelming desire to get the hell out of the house.
Published on: June 3, 2022
• Kroger announced that Micheal Cristal, a 37-year company veteran who most recently was VP of operations for Kroger's Fry’s Division, is the new president of the company's Delta Division, succeeding Victor Smith, who is moving over to the presidency of Kroger's Atlanta division.
Published on: June 3, 2022
The other day we pointed out a story in the Los Angeles Times piece saying that, "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."
One MNB reader responded:
Here in So Cal we have plenty of clean burning natural gas. It is efficient and affordable. The leftists that run this state are working to push us to all electric when we do not have an electrical grid that meets our needs today. We keep hearing on the radio and TV about curtailing our electrical use in the afternoons and evenings and that is before summer when the demand will increase. There is a Reuters story in US New & World Reports about how we are facing a potential shortfall of 1,700 megawatts to as high as 5,000 megawatts. We are seeing more and more black outs and those foolish enough to sign up for the Smart Energy Program will see brown outs when demand exceeds supply. If feels like we are moving towards being a third world state.
I disagreed with that characterization, as did another MNB user:
Regarding LA banning gas appliances in new construction, and the reader who claims we don’t have the electricity to support such a move…FYI California started requiring all new house builds to come equipped with solar panels back in 2020. So, theoretically the solar panels on top of the house should operate the electric appliances inside it making it more sustainable (and cheaper) than continuing to run appliances on natural gas. Hardly becoming a 3rd world country, more like leading the nation in sustainability efforts to curtail greenhouse gas emissions (but maybe I think that because I’m a one of those “radical lefties”).
Maybe.
I don't live in California, but I did go to school there and have a soft spot in my heart for the state … and I have to say that I get real tired of people crapping all over the state. While there has been a minor exodus from California in the last couple of years, the fact remains that more people live there than in any other state, and it does set the agenda in a lot of areas for trends that move elsewhere.
It may not be for everybody, but that's okay.
If I may … there was an interesting story about the subject in the Washington Post earlier this year that was brought to my attention by an MNB reader:
"Gas-burning stoves in kitchens across America may pose a greater risk to the planet and public health than previously thought, new research suggests.
"The appliances release far more of the potent planet-warming gas methane than the Environmental Protection Agency estimates, Stanford University scientists found in a study published Thursday in the journal Environmental Science and Technology. The appliances also emit significant amounts of nitrogen dioxide, a pollutant that can trigger asthma and other respiratory conditions.
"Scientists and climate activists have increasingly urged homeowners to switch to all-electric stoves, water boilers and other appliances, even as the natural gas industry fights in New York and across the country to keep the signature blue flames of gas-burning stoves as a staple in American homes."
Here's more from the Post story:
"Nationally, more than one-third of households — about 40 million homes — cook with natural gas. In California, 60 percent of households favor the popular fuel.
"The researchers in Thursday’s study measured emissions from stoves in 53 homes across seven California counties. They used their findings to estimate that methane emissions from gas stoves in the United States have a comparable climate impact to about 500,000 gas-powered cars driven for a year … Methane, the main component of natural gas, is the second-largest contributor to climate change among greenhouse gases. Although it dissipates more quickly than carbon dioxide, it is more than 80 times as powerful in the first 20 years after it is released into the atmosphere."
And so, it would appear that if Los Angeles moves to ban most gas appliances in new construction, it is an act of self-preservation that suggests a progressive culture dealing with reality, not a third world culture.
Though … I do think the issue of the state's electrical grid is worth considering. But the answer is to improve the grid, not embrace practices that are themselves problematic.
Yesterday MNB took note of an Axios report that a new study published in the Annals of Internal Medicine says that "those who drank coffee - even with sugar - were less likely to die than non-coffee drinkers in the following seven years."
My reaction: Yippee.
MNB reader Matt Nitzberg concurred:
As a 2-cup-a-day coffee drinker, it looks like I’m right in the sweet spot identified in the study. Besides the longevity benefit, I’m glad you included “enjoy” in your headline. Without coffee, life just *seems* longer.
Finally, I got a number of emails about yesterday's FaceTime piece about The Giant Company.
One MNB reader wrote:
As a long term store manager with the Giant Company, I really appreciate the video, pictures and kind words. Nick Bertram brought a lot of vibrancy and vision to the company and the results speak for itself. During my time with the company, my fellow team members and peers always pulled together to accomplish acquisitions or projects. Focused, appreciative leadership makes all the difference.
And, from MNB reader Deborah Faragher:
Enjoyed this piece, particularly since I had a 30 year career at Strawbridge & Clothier, the “iconic” department store that now houses Giant’s Heirloom Market in part of the first floor. I have not traveled to Philadelphia recently so I have not had the opportunity to visit the Heirloom market. I had, however, been very pleased to see they retained a lot of the original character of the store—Il Porcilino sculpture in the elevator lobby as well as the original paintings over the elevators. What’s particularly interesting is that The Tap Room is housed in the entrance to what was the Food Hall.
You didn’t note any eating you may have done while in Philadelphia—would have loved to set you on the right Philly Cheesesteak path!
As always, Kevin, thank you for doing what you do and doing it so well. By the way—watching your Covid vaccine updates is like watching the Bataan Death March! Sad to say.
Thinking there’s a shot you’ll spend some time in Portland this summer? Long overdue.
I totally agree with you about how the Heirloom Market has retained the character of the original store.
As for cheesesteaks … I've been to both Pat's and Geno's numerous times, and so this time went to The Original Tony Luke's, which I thought compared very favorably.
As for the Covid vaccine updates … I agree. Unfortunately.
Finally … I won't be going to Oregon to teach at Portland State University this summer … the third summer in a row that I've missed it, after seven or eight summers spent there. And I really do miss it … but in a post-pandemic educational environment, my skill set isn't quite in alignment with how the curriculum is laid out. I hope to go back, I'm still an adjunct faculty member, and so my fingers are crossed.
I will be back in the area, though, in September, when I'll once again be emceeing the annual City of Hope gala, taking place this year just across the river in Vancouver, Washington. It is one of my favorite events, and I've been privileged to be part of it for a number of years - the work that City of Hope does in terms of cancer research and the nurturing care of patients is just extraordinary.
Published on: June 3, 2022
Today, in my ongoing series of conversations with a wide variety of authors - largely people whose books I like, and just want to have the chance to meet - I talk with M.P. Woodward, author of a new intelligence thriller called "The Handler." This is a book I would assign to the can't-put-down category, a smart and intelligent novel that also happens to be his first. Woodward has a background in intelligence, and also spent seven years as an executive at Amazon - which is something we also talked about.
I hope you enjoy my conversation with author M.P. Woodward:
If you'd like to listen to our conversation as an audio podcast, click and download below.
M.P. Woodward's "The Handler" is available on Amazon, the iconic Portland independent bookstore Powell's, on Bookshop.org, and wherever books are sold.
My wine of the week is a delicious California red - the 2020 Presqu'ile Pinot Noir from Santa Barbara, which was wonderful with an asparagus pizza that had garlic cream, parmesan and bacon.
That's it for this week … hope you have a great weekend, and I'll see you Monday.
Sláinte!!
