Published on: June 9, 2022
What does it say about the department store business when Saks decides to get into the co-working space (literally)? I'm not sure, but I visited a new Saks Works facility to get a sense of it. I came away no less skeptical, but wondering if there is a better fit. Nordstrom Local, are you listening?
(Some pictures from Saks Works' website.)
Published on: June 9, 2022
Kroger said yesterday that its pure-play e-grocery service, Kroger Delivery, now is serving "customers in South Florida with the opening of a new spoke location in Miami. The 60,000-square-foot spoke facility, in collaboration with the Fulfillment Center in Groveland, FL, will serve as a last-mile cross-dock location that efficiently expands Kroger Delivery's ability to serve more customers."
Kroger said that "this expansion represents an extension of a partnership between Kroger and Ocado, a world leader in technology for grocery e-commerce. In 2018, the companies announced a collaboration to establish a delivery network that combines artificial intelligence, advanced robotics, and automation in a bold new way, bringing first-of-its-kind technology to America. Through the hub-and-spoke delivery network, the organization now serves customers in Central Florida, Tampa, Jacksonville, and now South Florida, without traditional brick-and-mortar stores."
I've said from the beginning that Kroger's willingness to expand its e-grocery infrastructure so it can serve markets in which it does not have stores is one of the most interesting and potentially consequential things it has done.
We know about Florida. We know about Texas. But I'm still curious to see where in the northeastern US it plans to roll its pure-play e-grocery service out. The northeast is a big place in terms of having different markets, and it depends on real estate availabilities and which entities Kroger wants to compete with. I tend to think of upstate and western New York, because while it would put Kroger in competition with Wegmans, it also might set Kroger up to eventually acquire Price Chopper/Market 32 and Tops as way of bolstering a digital initiative with some bricks and mortar. But that's just an uninformed guess on my part.
Published on: June 9, 2022
Well, that didn't take long.
It was just a couple of days ago that Dave Clark, a 23-year Amazon veteran who currently is CEO Worldwide Consumer, in charge of the company's logistics and operations network, announced that he'd be leaving the company, effective July 1.
Yesterday Clark said that on September 1, he'll be joining San Francisco-based logistics company Flexport as CEO. He'll in fact work alongside founder and current CEO Ryan Petersen as co-CEO for six months, at which point Peterson will become executive chairman.
“Over the last two decades, Dave helped scale Amazon into the technology and supply chain juggernaut it is today,” Petersen said in a statement. “He is a builder and an entrepreneur at heart, with the leadership experience that will shepherd Flexport into the most exciting phase of our journey.”
Clark had said one of the reasons he wanted to leave Amazon was that he wanted to get back to building things; presumably, Flexport will provide him with the opportunity to do so. In a LinkedIn posting yesterday, he said, "I am fortunate to have the opportunity to partner with an incredible team who are building a customer-first, rocket ship of a company focused on architecting and building solutions for the most complicated supply chain problems through world class technology for the physical world."
On its website, Flexport describes its mission this way:
Take Control ofYour Supply Chain. Accelerate performance and growth for your entire supply chain. Ship to and from anywhere. Track everything. Collaborate with everyone. See what happens when data drives your decisions.
GeekWire provides the following assessment: "Clark, 49, will take over one of the leading privately held global supply chain companies in Flexport, which was valued at $8 billion after raising a $935 million Series E round in February. Founded in 2013, Flexport provides cloud-based freight forwarding and brokerage services for ocean, air, truck, and rail, among other offerings such as insurance and customs compliance."
While Flexport and Amazon are not direct competitors, GeekWire points out "Amazon has been building out its logistics arm and its recent announcement of a 'Buy with Prime' program, serving e-commerce sites other than Amazon.com, takes the company further down the path of using its fulfillment and delivery network to offer shipping as a service."
The Wall Street Journal writes:
"Flexport has been an investor darling, raising $2.3 billion in venture capital as its efforts to bring digital technology tools to shipping have drawn Silicon Valley investors into the freight business. The company most recently raised $935 million in February in a Series E investment round, led by venture-capital giant Andreessen Horowitz and billionaire Michael Dell’s MSD Partners.
"The founding round brought its valuation to $8 billion.
"Flexport has about 3,500 employees across 23 offices around the world."
Clark will have a significantly smaller playground in which to operate, with fewer resources than the virtually inexhaustible supply that he had at Amazon. But I have to imagine that at some level, he'll have a lot more fun. There were some references in the media coverage about his departure from Amazon that he'd lost the joy in going to work; some of that has to be because of the challenges that Amazon has been facing lately, but it also must've been because that's a natural occurrence when you've spent more than two decades in one place.
Sometimes, it is just time to go. In this case, that probably aligns with Amazon CEO Andy Jassy's desire to get his own team in place.
In an interview with Bloomberg yesterday, Jassy said, "I think that Dave wanted a different gig at this point, and I don’t begrudge him at all."
Published on: June 9, 2022
Bloomberg has a story about an interview conducted with Amazon CEO Andy Jassy at the Bloomberg Technology Summit in San Francisco, in which he discussed numerous issues facing his company, including the overbuilding of facilities and infrastructure, the departure of consumer chief Dave Clark, and labor issues that continue to roil the company's culture.
Perhaps the most noteworthy news: "Despite slowing online sales growth and harbingers of a global recession, Jassy said Amazon was continuing to invest in big bets -- including building a grocery chain, launching a constellation of internet-beaming satellites, Alexa software and Zoox, the company’s autonomous taxi subsidiary."
You can read the entire story here.
Published on: June 9, 2022
Food & Wine reports that "Uber Eats announced their new nationwide shipping option which allows customers anywhere in the contiguous United States to order from 16 'beloved merchants' across four cities — with more cities coming soon.
"The launch partners are Bludso's BBQ, Gotta Have S'More, Dreamy Creations, Western Bagel, Lala's Argentine Grill, Lette Macarons, and The Pie Hole, all from Los Angeles; Sarge's Deli, Juice Press, and Wafels & Dinges from New York City; Sergio's, George Stone Crab, Doggi's Arepa Bar, and Sabores Market from Miami; and La Fromagerie and Stirred, not Shaken from San Francisco."
The story says that "in the Uber Eats app, customers will see an option to 'Get far-off cravings shipped.' Tap to browse restaurants and make your selections, and then FedEx will handle the rest (including sending you the tracking info)."
Goldbelly already is doing this, and I'm not sure this will turn into a big business for Uber Eats. But I'd also guess that it doesn't require a huge investment, and so why not?
Published on: June 9, 2022
Walmart said yesterday that it is working with senior care management company Avanlee Care to make it easier for senior citizens to access online grocery shopping and delivery.
The venue is the Avanlee app, which brings together "care coordination, medication adherence, health and mood monitoring and alerts, private family social activity" on a single platform. Now, the app will also offer grocery shopping through Walmart.com, to "further improve their support for senior customers and their family caregivers."
The announcement notes that studies show that "approximately 90% of Americans ages 65+ want to age in place. That is leading to an increasing burden on the 53 million unpaid family caregivers in the United States." The Avanlee platform is designed to facilitate this preference, helping "families care for an aging relative remotely so they live healthier and happier lives at home."
Smart move for Walmart and Avanlee, getting hooked into a community with something so basic and necessary as grocery delivery.
It reminds me of something we talked about here a few months ago - that the thing doctors worry most ab out when patients are discharged from hospitals after having procedures is their ability and willingness to eat right. Bad nutrition can undermine all the good that doctors try to do, and there is a real effort being made to connect food retailers with patients and health care providers. Seems to me that that this also makes sense when talking to senior citizens, who are more likely to thrive if they are eating well and right.
Just FYI … the health care-nutrition initiative was something I talked about here:
Published on: June 9, 2022
The Washington Post this morning reports that "most Americans expect inflation to get worse in the next year and are adjusting their spending habits in response to rising prices, according to a poll conducted by the Washington Post and George Mason University’s Schar School of Policy and Government.
"Inflation, which is near 40-year highs, has lifted the cost of just about everything, including essentials such as gas, groceries and housing. Overall prices are up 8.3 percent in the past year.
"Families are feeling the pinch. Nearly 9 in 10 Americans say they’ve started bargain-hunting for cheaper products, and about three-quarters are cutting back on restaurants and entertainment, or putting off planned purchases, according to the Post-Schar poll conducted in late April and early May."
The story goes on: "After more than a year of steadily rising prices, many Americans are beginning to rethink their spending habits to account for even inflation. About 6 in 10 people say they are driving less, minimizing their use of electricity and saving less, while about half say they are trying to buy products before prices go up, the poll finds. And just under 3 in 10 say they have taken on a second job or worked more hours as a result of inflation.
"The poll’s results could also be an early warning sign of the path of inflation in the months to come. As more Americans change their behavior assuming inflation will get worse, those actions can drive inflation up, leading to a cycle that’s difficult to break. Indeed, some 52 percent of Americans in the poll said they bought products before the prices went up."
Published on: June 9, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• The Wall Street Journal reports that Franchise Group, which is negotiations to acquire Kohl's for around $8 billion, plans to finance most of the deal by selling of Kohl's real estate.
The story says that "Franchise Group, which mainly owns franchise businesses, is smaller than Kohl’s with a market capitalization of about $1.5 billion. The deal structure that Franchise Group is proposing - selling real estate and adding on debt - has caused problems for other retailers and was seen as contributing to the bankruptcies of Mervyn’s LLC, Shopko Corp. and Toys 'R' Us Inc."
The story goes on: "Selling and leasing back real estate appeals to investors because these transactions bring an influx of cash. But the leases sit on a retailer’s books as debt and the subsequent rent payments reduce profit margins. That can place pressure on the bottom line, particularly if sales slow.
"Neil Saunders, managing director of research firm GlobalData PLC, said selling real estate would make Kohl’s vulnerable to rising rent and property costs. It could also expose Kohl’s to potential credit downgrades, making borrowing costs more expensive. And with additional debt to service, Kohl’s would have less money to invest in improving its business at a time of increasing competitive pressures."
In other words, Kohl's will have more debt, which will ratchet up the pressure to increase margins and prices and lower labor costs … all of which could have the result of diminishing whatever value proposition it has to shoppers. Forgive me, but haven't we seen this movie before?
Published on: June 9, 2022
Here is one of the best emails I've ever gotten, from MNB reader Tom Williams, because it touches all the bases:
I have been a Red Sox fan since that Carlton Fisk moment in the 1975 World Series and my daughter and I go to Anaheim stadium whenever the Red Sox are in town. Last night was the first time back to the stadium since 2018. The baseball was fantastic with the Sox winning after 10 innings 6-5. We sat on the field level just past first base and were surrounded by fellow Red Sox fans. It was difficult to tell we were at an Angels home game.
I had been quite impressed at how the stadium progressed to digital options since our last visit. Our tickets were purchased online and saved in my digital wallet, parking at the stadium was cashless and completed with Google Pay. However, as we strolled through the stadium looking at our food options I kept hearing your voice in my head commenting on points of “friction”.
There were several self-serve beverage sections. Basically, convenience store coolers filled with a selection of can beer with a single cashless register at the end. The line was at least 10 people deep at each one – “Friction”. Why are those not using walk through pay technology? I think the city of Anaheim, the Angels and the stadium can afford it.
Then when I got my bratwurst and beer the pleasant lady that took my order needed to turn and walk 10 feet to the kitchen window to relate my order to the prep station worker. Not too bad except she made the 10 foot walk after each of my four items I ordered. Oy! What a waste of time and “Friction”. Again, there must be a technological solution for this.
There are a few chain restaurant locations inside the stadium – Oggi’s Pizza, Chronic Tacos and Jersey Mike’s, that also have locations near our home that we frequent. The food at the locations in the stadium is just poor quality. If what they serve inside the stadium was served in the neighborhood locations they would be out of business. This is a huge “missed opportunity” on a first impression for those that are not familiar with the neighborhood locations.
It is an “Eye-Opener” to me that we as baseball fans (customers) have all come to expect and tolerate poor quality food and beer at over inflated prices simply because they are inside the ball park. Does the experience of the game really compensate for all that friction? It did for us last night.
Well Done Sir! You have a reserved parking space in my head.
I'll try not to abuse the privilege.
Yesterday we took note of a Fast Company report that "at the 300 publicly held U.S. corporations with the lowest median wages, the gap between what CEOs and median-wage workers earn has grown to a ratio of 670-to-1, according to a new report—up from 604-to-1 in 2020.
"That’s just the average gap; the ratio at 49 of those 300 companies is larger than 1,000-to-1, according to the progressive think tank Institute for Policy Studies, which released its annual Executive Excess report on Tuesday … While CEOs at those 300 corporations saw their pay increase by $2.5 million in 2021 - to an average of $10.6 million - median pay at those companies went up by only $3,556, to an average of $23,968. At more than a third of those firms, median pay didn’t even keep up with the 4.7% average inflation rate in 2021."
One MNB reader responded:
It's just infuriating to read stories like this. I've given nearly forty years of loyal service to the company I work for, and yet even this year, with costs skyrocketing, I was given the same cost of living adjustment that I normally get (which, by the way, never covers the current inflation rate). The "c suite" makes no attempt to hide the fact that they view their associates as a cost rather than an asset. Very sad.
But another MNB reader offered:
If employees do not like how they are treated they have every right to leave, and try and find something better. Numbers don’t tell us where the company’s profits are going but it’s not all going into the pockets of CEO’s ….matter of fact … CEO’s that can’t usually are gone ! Employee’s are hard to come by these days… believe me, we know! We pay way more than $15/hr and yet now that’s not enough? The bar keeps moving up … mainly because of rampant inflation which is man made and out of control. Why not rant about bringing costs down… not up!
I've always thought that it is a mistake to suggest that people can just leave and/or work somewhere else. We don't know what people's circumstances are, or why they stay at companies with which they are unhappy. I would not presume to make that determination for them.
As to one of your other points … sometimes costs should not be brought down, as in a customer service-oriented store where it actually drives sales and profitability to have more people working in the store.
I would also suggest that if employee costs are being driven up right now, it may be that this is poetic justice. It has been a long time since the pendulum swung in the direction of labor. Which is why everybody ought to behave as if the pendulum is going to swing the other way, and create sustained, sustainable management-labor relationships built on a mutual sense of investment in the success of the business.
Another MNB reader wrote:
Hmmm… salaries you say? I can tell you that our salaries are not the bloated salaries those execs at national chains enjoy but still our profit margin is just as low. Of course, being smaller, our cost of goods is higher and we can’t spread the central duties like accounting and marketing over hundreds of locations.
And, from MNB reader Rich Heiland:
I get that CEOs are important. I always said my role as a CEO was to set the vision and supply the resources for everyone in the company to chase that vision. It's a critical and vital function. But was I worth 670 times my lowest paid employee? Not in a million years.
From a customer perspective, when was the last time a customer interacted with a CEO? Now, when was the last time a customer interacted with a front line or even mid-level employee?
To reward CEOs obscenely while slighting, and even abusing, the point-of-contact employees is....well....stupid. While customer service practices, training, hiring-to-service is critical, customer service will always be a point-of-contact business. Companies that don't get that ultimately will lose, in my humble opinion.
Agreed.
On another subject, from MNB reader Mark Kramer:
I’ve been following the Starbucks situation for some time. Clearly the company is having serious trouble connecting with its associate base. The deepest irony here is that Schultz had without doubt the industry’s premier ‘people person’ in Jim Donald. I had the opportunity to work with Jim when he was CEO of Pathmark before he left for Starbucks. In my view there is no-one more capable of connecting with and motivating an associate team than Jim. Schultz may be out looking for what he already had!!!
And finally, regarding the Fox Business report that "Chick-fil-A is testing fully automated delivery with a small army of robots in pilot programs across the country," in markets that include Austin, Texas, California and Florida, one MNB reader wrote:
Chick-Fil-A should design their delivery robots to look just like their cow mascots. Just imagine a robotic cow flying in to make a delivery. Then they would have something.
Udderly brilliant.
