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    Published on: June 7, 2022

    Today, Michael Sansolo gets personal with a PSA (public service announcement) about another kind of PSA (prostate-specific antigens) that also offers a seat-of-your-pants business lesson.  (Spoiler alert:  It has a happy ending.)

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.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: June 7, 2022

    Today, I muse about the recent statement by new JC Penney CEO Marc Rosen that he wants his company to be more focused on its best customers, as opposed to attracting new (and younger, hipper) shoppers.  It strikes me that JCP may be using life support to keep alive (just barely) a brand and format that may be obsolete.

    Published on: June 7, 2022

    TechCrunch reports that "Amazon is launching a new invite-based ordering experience for high-demand, low-supply products … the purpose of the new option is to help prevent inventory shortages and price gouging caused by robot traffic for high-demand items with limited quantities," ensuring that "genuine customers are able to purchase these sorts of products."

    Here's how the program will work, according to TechCrunch:

    "In order to ensure that genuine customers receive invitations to purchase, Amazon will remove bot-like submissions and send invitations to remaining customers. The company will verify genuine customers by looking at a number of factors, including the account’s prior purchase history and when the account was created. If the customer’s invitation to purchase is granted, they will receive an email with instructions on how to purchase the item.

    "The email will detail how long you have to complete the purchase. It will also include a link to the item so you can place the order. Once you’re taken to the product page, you can add the item to your cart or select 'Buy now.' The product page will also show you how many hours and minutes you have before your invitation expires. Amazon will grant more invitations to purchase as it receives more units of that item in stock … The new ordering option will allow customers to request an invitation to buy high-demand items from the product detail page, at no additional cost. Any customer with an Amazon account can request an invitation to purchase the item, which means that you don’t need a Prime account to send in a request."

    The story says that "the new ordering option is available starting today for the PlayStation 5 in the United States, and will be available for the Xbox Series X in the next few days. Amazon plans to expand the program to other countries and products in the future."

    KC's View:

    This is a terrific example of using technology in the shopper's best interests.  If it is possible to create a mechanism that prevents bots from buying up all the product and instead giving preference to so-called "genuine customers" - especially your best customers - then it is in the long-term interests of the business to do so.

    Published on: June 7, 2022

    Axios reports that "restaurants are getting creative with new fees you may not notice unless you examine the bill closely:  There may be a 'fuel surcharge' for high gas prices ... a 'noncash adjustment' for using credit instead of cash ... a 'kitchen appreciation fe e'… and just a plain old 'temporary fee'."

    The story notes that "the number of restaurants adding service fees increased by 36.4% from April 2021 to April 2022 … Mastercard and Visa raised transaction fees for many merchants in April. The National Retail Federation, along with a group of retailers, said that was 'driving up inflation'."

    KC's View:

    To me, this signals a real opportunity for supermarket retailers.

    During the early days of the pandemic, as the restaurant industry collapsed, all that business went to supermarkets, which had to move quickly and innovate in order to meet those consumer needs.  But too many food stores didn't continue to innovate around this segment as the restaurant industry came back, and so were unable to keep much of that volume.

    Some of it, of course, always was going to go back to restaurants … but the battle for stomach share should be a lot tougher on the part of food stores.

    So here's another opening.  How about retailers using these new fees in their own marketing, pointing out - unambiguously - that it costs more money than ever to eat in restaurants because of inflation, and that supermarkets can save you money as well as creating the opportunity to build community with family and friends?

    Play hardball.  Fight for every meal.

    Published on: June 7, 2022

    Fortune has an interview with Walmart CEO Doug McMillon.  Here are some excerpts:

    Re: the environment and his commitment to making Walmart a "regenerative company" … "We’ve got project gigaton underway right now with about 4,500 suppliers, where we’ve already had them report they’ve saved over 500 million metric tons of greenhouse gases. But it’s not enough… Becoming regenerative means that you take nature, and you take humanity, and you put it even more into the center of your decision making.”

    Re: stakeholder capitalism … "I think it all boils down to timeframe. Yes, we are here to provide a return for shareholders. The best way to provide a return for shareholders over time, is if you have strong communities, associates that are well compensated and happy with their jobs and excited about their futures. A planet that works.”

    Re: inflation … "It’s going to last a while.”

    And finally … "One of the interesting things that I’ve learned over the last few years is when you make the switch from being purely analog to being more of a digital company, it unlocks opportunities to grow a lot of other businesses… When I was going to business school, we were taught about silos and conglomerates. In a digital world, it all feels a lot more connected. It doesn’t feel like they’re silos. It just feels like you are designing for a family or a customer or for members. And these other things kind of naturally come together and result in one experience for them. And that’s what we are trying to build.”

    The full interview is available on both Apple and Spotify.

    Published on: June 7, 2022

    Two stories this morning about how a pair of companies are testing new formats as a way of expanding their appeal.

    •  The Minneapolis/St. Paul Business Journal reports that there is a new two-story Taco Bell drive-through-only format - named "Defy" - opened in the Brooklyn Park section of the Twin Cities.

    The format, which also has an extra-large kitchen, has "the goal of reducing service times to two minutes or less.   Only one of the lanes is used for the conventional drive-up orders. The three others are focused on pickup, delivering food already ordered either through the Taco Bell app or a third-party delivery app, like Uber Eats or DoorDash. Orders are sent down from the upstairs kitchen to waiting cars via a proprietary vertical lift."

    The format was developed by Taco Bell franchisee Border Foods.  Border's CEO, Lee Engler said in a statement. "It is a creative, technological solution for a faster, contactless experience for as many Taco Bell fans as possible and is poised to be the future of quick-service dining."


    •  Culture Map Dallas reports that "Irving-based convenience store king 7-Eleven has opened a new store in Dallas with a previously unheard-of offering at a 7-Eleven store: a patio.

    "Located at 13635 Preston Rd. at the corner of Alpha Road, this is one of the chain's 'Evolution Stores,' a concept that strives to upgrade the convenience store model, serving as a testing ground featuring their latest products and innovations.

    "According to a release, it's the fifth Evolution Store in the Dallas-Fort Worth area and ninth in the country.

    "All Evolution Stores include a restaurant concept, although no two locations are exactly alike, as they tweak the design and product mix based on customer feedback and shopping habits with every new location.  For this new store, that means a covered outdoor patio on one side of the building for customers to enjoy outdoor seating, frozen margaritas, and beer on tap. Hey let's go have a beer and chill on the patio at 7-Eleven."

    7-Eleven Vice President of Store Evolution and Design Molly Long says in a statement that "these lab stores give us an opportunity to test, learn, and scale successes into our new store standards which ultimately allows us to continuously improve the experience for all our customers."

    KC's View:

    I think it is important for different kinds of retailers to push the format envelope … see what is possible and workable and, in the end, credible to the consumer.  Every retailer should think about this, and have an answer to this question:

    What are we planning today, that we are going to test tomorrow, that we never would've tried yesterday?

    If you don't have a good answer, you m ay not have a promising future.

    Published on: June 7, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Walmart, via a blog posting by Anthony Soohoo, Executive Vice President, Home, Walmart U.S., announced an expanded partnership with Gap.

    "Our partnership with Gap is a big part of that strategy as we continue to expand into new categories following the introduction of Gap Home last summer and Gap Home Furniture in the fall," he wrote.  "The customer response has been fantastic across the entire Gap Home assortment, which includes furniture, décor, tabletop, bedding and bath options that offer timeless American style for modern living.

    "As we continue to deepen our partnership with Gap and look for ways to surprise and delight customers, today we’re launching Gap Home Kids exclusively at Walmart.com. The inaugural collection is a fun mix of youthfully optimistic styles at an incredible value, with over 200 items across bedding, bath, pillows, throws, rugs and window treatments priced from only $20-$79."

    Soohoo also writes that in addition to the collection being available online, for a limited time the company will open a physical location "at the Hunker House, an experiential showroom from digital media brand Hunker, in the Abbot Kinney neighborhood of Venice Beach starting in late June."

    This last bit is the most interesting thing about the story to me … the idea of Walmart having a presence in the Abbot Kinney neighborhood of Venice Beach is a little disorienting.  And yet, it reflects Walmart's willingness to try new things in new places.

    Published on: June 7, 2022

    •  From Axios:

    Autonomous trucks developed by Gatik will soon be delivering paper plates and toilet tissue to Sam's Club stores throughout the Dallas-Fort Worth area … It's a new frontier for self-driving truck technology, which has been primarily focused on long-haul semi-truck highway pilots.

    "Gatik instead is targeting the so-called 'middle mile' between distribution warehouses and stores or fulfillment centers."

    The story says that "in Dallas, each of Gatik's trucks will drive about 300 miles a day on a complex network of urban, suburban and highway routes.

    "A backup safety driver will be on board, but CEO Gautam Narang tells Axios the company's narrow focus will allow it to go completely driverless more quickly than other trucking companies.

    "'Instead of trying to boil the ocean' to solve autonomy for every scenario, 'we focus on repeatable routes, from distribution center to micro fulfillment center,' he said. 'This is how we envision growth over the long term'."

    Published on: June 7, 2022

    •  The Wall Street Journal this morning reports that Kohl's Corp. is in "advanced talks" with retail holding company Franchise Group Inc. about a possible sale that would value the department store retailer at about $8 billion.

    The negotiations are taking place within a three-week exclusivity window.

    Franchise Group, which acquires and manages mainly franchise companies, has a brand portfolio that includes The Vitamin Shoppe, Pet Supplies Plus, American Freight (a mattress and appliance retailer), Buddy's Home Furnishings, Badcock Home Furnishings & More, Wag N Wash (self-service pet cleaning), and Sylvan Learning.

    The Journal writes that "Kohl’s, already struggling, was further battered by the Covid-19 pandemic, which ate into sales and wiped out profit in 2020. Sales and profit rebounded in 2021, but by January 2022 the retailer’s stock was worth less than it was two decades ago."



    •  Crain's Chicago Business reports that "Carl Icahn ended a proxy fight focused on the treatment of pregnant pigs at grocery-chain Kroger Co. after losing a similar battle with McDonald’s Corp. last month.

    "The activist investor told shareholders of both companies on Monday that he was conceding the fight at Kroger, saying that he expects the same outcome there as at McDonald’s due to the grocer’s financial position.

    "The dispute revolves around the practice of keeping sows in individual pens so small that they can’t lie down or turn around. Icahn had sought to nominate board members to McDonald’s and Kroger as a way to force their pork suppliers to end the practice. His McDonald’s nominees lost in a shareholder vote last month."

    Published on: June 7, 2022

    •  SpartanNash announced that Greg Crane, most recently the CFO at GHSP, Inc., has been named the company's new Vice President, Finance – Food Distribution.

    Published on: June 7, 2022

    Got the following email from MNB reader Mike Sommers:

    Surprised by your dismissive context regarding Amazon changing Whole Foods Market Prime delivery options.  What happened to, 'compete is a verb', and customer-centric approach?  In the rear-view perspective this looks like a bait and switch tactic, Amazon allowing new customers to sign-up for a service which included free WFM delivery, then changing it.  Simply canceling the subscription per your recommendation, to my knowledge, isn't pro-rated so you pay for the year and if you cancel halfway through, you don't get a refund.  Amazon should be required to offer the services for the duration of someone's subscription even if they've discontinued it for new customers, or allow a refund, or have their day in court to defend a seemingly bait and switch tactic.  

    I was a little glib in my commentary about the story, from GeekWire, which reported 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."

    I commented:

    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.

    To be clear, I wasn't arguing that Amazon/Whole Foods was right … just that they probably had a loophole in whatever contract we all signed.

    But you make a fair point.



    Chiming in on the discussion about whether climate change requires that traditional benchmarks of capitalism need to be adjusted to some degree, - which was prompted by a piece that I ran by Tufts University senior Meghan Smith - one MNB reader wrote:

    You are assuming that climate change is completely the result of humans. Read counterpoints to that. I suggest "Inconvenient Facts," by Gregory Wrightstone if you claim to have an open mind that you are espousing.

    Actually, I'm not assuming anything … I am trusting the vast majority of climate scientists who believe that human beings have contributed to the climate crisis, and who argue that it would be foolhardy to do nothing to try to combat it.

    I'm not a scientist … though when I googled the book you mention, I did see an awful lot of entries that debunked the book, citing its willingness to twist data to support its own biases and promote myths that many educated people feel are unsupportable.  (I feel like this is the same argument that took place during the pandemic, when what should've been a public health policy conversation somehow became a political football.)

    That's okay.  We're not going to resolve the argument here, and MNB probably isn't the place to have an extended debate about the source of climate change.  I don't expect to persuade you, and you're probably not going to persuade me.

    Here's my bottom line feeling.  I think it seems utterly reasonable to believe that human beings have contributed to climate change, and that it makes a lot more sense to try to do something about it and then find out it was not necessary, as opposed to assuming that nothing could be done about it and then find out we should have tried.  Especially when there seems to be ample evidence that while this approach may upend some traditional businesses and industries, in the end it will be good for the economy.

    So I'm sorry.  I'm not going to read the book, because I just don't need to go down that rabbit hole.  If I do, I might not find my way out, and then I'll start using MNB to spout QAnon conspiracy theories, and eventually I'll find myself joining the Proud Boys.



    I did a piece last week about a shopping experience that left me enormously dissatisfied with two retailers and a supplier - Chobani Vanilla Oat Yogurt was a new product that appeared on Whole Foods' and Stop & Shop's shelves, only to disappear without explanation.  I mentioned that I'd written to Chobani asking if there was a supply chain issue, but had heard nothing back, which prompted this email:

    The failure for Chobani to reply to your question is very unlike them. Agree 100% that failure to reply make a bad situation worse...and they know that.

    Now that you have gone public....share their response.

    I expect it to be fast and acknowledging their error.

    Nope.  Nothing,  Not from Chobani.  Not from Whole Foods.  Not from Stop & Shop.

    Which says a lot about all of them, IMNSHO.



    Yesterday we cited a Wall Street Journal story saying that the once-and-current CEO of Starbucks, Howard Schultz, plans to stay in the job longer than originally scheduled.  His current timetable is to stay until next March, at which point he will be succeeded by someone from outside the organization.

    I commented, in part:

    Schultz says that new and changed circumstances have required "Starbucks to rethink its operations in ways no CEO could have fully anticipated."  If that's true, why did (just-departed CEO Kevin Johnson have to go?  (And don't tell me that he left voluntarily.)

    Also … for the record, I think it is fair to describe Johnson as an "outside hire."  After all, he was with Microsoft for 16 years and then Juniper Networks (as CEO) for more than five years before coming to Starbucks as president/COO in 2015.  And when Jim Donald joined the company in 2002, becoming president/CEO in 2005, it was as someone with an outside retail pedigree - he'd been at Walmart, Safeway and Pathmark.

    In both cases, Schultz's messiah complex kicked in.  Is there any reason to think that it will go differently this time?

    Just asking.

    MNB reader Dan Jones wrote:

     It is an indictment of Schultz and the remaining Starbucks team that they need to go outside the organization for talent.   There are nearly 400,000 Starbucks employees.  If none of the current employees have driven change or suggested adjustments for operating in these times it is a poor reflection on the leaders and culture at Starbucks today.

    And, from MNB reader Bob Thomas:

    It should be noted that Johnson was CEO when Juniper Networks was involved in offering bribes in China and Russia.  “Though Juniper learned of these practices in late 2009, according to the SEC, it allowed the payments to continue for another four years until 2013.”  Johnson left Juniper in 2013.  The company paid more than 11 million dollars in fines to avoid prosecution.  Juniper Networks neither admitted nor denied it engaged in any wrongdoing, 



    On the subject of Amazon's over-expansion of warehouse space, MNB reader Steve Anvik wrote:

    Best wishes to any Monday morning QB who thinks Amazon over-expanded warehouse or delivery capability during Covid. As an Amazon customer I for one applaud they “did what it took” to support supplies & delivery norms. To have errored the other way would have brought a criticism from other MMQB.  Stop whining Jassy, others.



    On the subject of the economy the wild range of projections about what will happen next, one MNB reader wrote:

    It’s called the “dismal science” for a reason, KC.    Economists cannot agree on what they had for dinner last evening, much less what will happen in the future with something as complex as the economy.



    And finally, from MNB reader Deborah Faragher:

    Sorry to hear your Portland venture is not on the schedule this year but happy to know you’ll at least be in the area.

    As for Philly cheesesteaks, I highly recommend on your next visit a trip to Jim’s at 4th and South Sts.  I figure this is up there with your cheeseburger study but, in all honesty, Pat’s and Geno’s, while garnering praise, are not our favorites.  Try Jim’s and let me know!  My preference is with American Cheese though Whiz is good.  They also do a mean hoagie and you usually don’t have to wait in line for that!

    Next time.