business news in context, analysis with attitude

Published on: June 14, 2022

by Michael Sansolo

The rapid-fire changes in business in the past three years, not surprisingly, mean there are changes operators must incorporate as necessary. In other words, omni-channel operations means omni-channel thinking or maybe omni-thinking.

I heard a simple, yet profound reminder of this recently from Merrick Rosner, the chief resource officer of Rosie, an Internet shopping solution provider geared to smaller supermarket operators.

At a conference of independent operators (Rosner and I were both speakers) he reminded the group that in the new world operators have to “walk their virtual store.” It’s a reminder well worth taking.

Thanks to the pandemic, electronic commerce has become a much more important, possibly vital, part of every retail business. And just as retailers take time to walk their stores to look for cleanliness, out-of-stocks and countless other important details, the same is completely true for the virtual store.

I have to believe that my wife and I aren’t the only e-shoppers out there who have been flummoxed by hiccups in the world of on-line shopping. It could be anything from finding a way to order a pizza with or without a specific topping to understanding the best way to navigate the “aisles” of an on-line store.

Early in Covid, my wife (who’s handles most computer issues with ease) was frequently left yelling at her tablet (and husband) when entire orders disappeared thanks to a glitch or when the simple process of making a shopping list suddenly became either illogical or impossible. The ease or difficulty of the on-line shopping trip became the reason that we switched our main food retailer.  (And the issue is no less important if you are using a third party on-line partner. Your reputation is in their hands.)

And that’s why Rosner’s suggestion is so important. Just as good retailers need always listen to shoppers to hear what’s both right and wrong in their stores, they need do that now with on-line shoppers. Keep in mind that in the virtual world a shopper (like my wife), frustrated with your website, need only switch to another store with a few quick mouse clicks…and just like that, a sale and maybe a customer are gone. (And, to be honest, few sites are as easy to navigate as Amazon’s, which is now a major competitor.)

Retailers need to both shop their own stores on-line to share the experience and have their teams and families do the same so they can provide important input and insights. Sure this is all new and challenging but your customers are not going to cut you a lot of slack.  And let’s remember that not all shoppers are computer savvy or have the latest devices on which to navigate. As always, education can be a powerful tool for customer satisfaction.

(Think about the diversity of your shoppers as you do this. “Walk” your virtual store with a 19-year-old who might compare your experience to a world of other web-based shopping trips. Do the same with an 80-year-old who might struggle with web-based shopping. Take a “walk” with someone who struggles with English and do it with those using tablets, phones or laptops. The walk should be easy no matter how they do it.)

Even before Covid many shoppers had a sense of websites that made shopping simple and easy and unless yours can equal that experience, those dollars and shoppers could be gone forever.

So take a stroll on the web to visit your site and as always ask others for commerce sites they prefer and why.

And then, when you're done walking your virtual store, go check out the competition's e-commerce site.  See what they do better than you.  Learn from them.  Be as rigorous as you would be walking their physical stores.

But … if you don't walk your competition's physical stores and virtual stores, it's really no problem.  I'm sure you'll enjoy your forced retirement.

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: June 14, 2022

Not to minimize the impact of the baby formula shortage, but in my house, there's another looming shortage that is causing me some distress.  (Hoarding may be called for.)

Published on: June 14, 2022

Amazon announced yesterday that it will begin making drone deliveries later this year in the California town of Lockeford, California - about 50 miles south of Sacramento, about eight square miles in size, with a population of 3,572.

The deliveries will be made using Prime Air drones and will, according to CNBC, "use feedback from the service to improve its system. Amazon said the drone technology can detect and fly around obstacles like chimneys."

The CNBC story goes on:

"The company received approval in 2020 from the Federal Aviation Administration to fly drones, and other firms, like Alphabet and Walmart, have already started to make similar flying deliveries. Walmart’s drone delivery program is available to more than 4 million households in the U.S., for example. And Alphabet’s Wing program has been delivering food and other products in Australia."

Published on: June 14, 2022

Apollo Funds said yesterday that it plans to acquire 59-unit Hispanic grocery chain Cardenas Markets from investment firm KKR.  Terms of the deal were not disclosed.

According to the announcement, "Upon completion of the transaction, Apollo Funds will combine Tony’s Fresh Market, a Chicago-based portfolio company, with Cardenas Markets, which operates across California, Nevada and Arizona, to create a leading Hispanic- and ethnic-focused grocer. Both companies will continue to operate under their respective brands and local leadership, while benefitting from greater scale, complementary capabilities and an expanded operating footprint."

The combined entity will have close to 80 stores, will be led by current Cardenas CEO Doug Sanders, and will have approximately $1.8 billion in combined revenues.  Sanders will serve as CEO of the combined company and Cardenas chain, while Frank Ingraffia will continue to serve as the CEO of the Tony’s chain.

Ther announcement notes that "in 2016, KKR acquired Cardenas Markets from the Cardenas family with the thesis of transforming the business into a growth platform. Under KKR’s ownership, Cardenas doubled in size through a combination of organic growth and strategic acquisitions."

Scott Moses, Managing Director and Head of Grocery, Pharmacy & Restaurants Investment Banking at Solomon Partners, served as lead financial advisor to Cardenas and KKR.

In a statement, Moses said, "I first met Doug nearly 17 years ago, when he was with Sprouts, which was at that time a small, growing specialty grocer with just a few stores in Phoenix.  We then worked together on Sprouts’ mergers with Henry’s and Sunflower in 2011 and 2012, respectively, to build the foundation from which Doug and Apollo then transformed Sprouts into a multi-billion-dollar public company, with hundreds of stores and over 35,000 employees across the country."

Published on: June 14, 2022

The Wall Street Journal this morning reports that Wonder Group, a food delivery startup led by Marc Lore, has just completed a new $350 million funding round that values the company at about $3.5 billion at a time when it is planning its expansion beyond the cluster of New Jersey suburbs - totaling 132,000 households -  it currently serves.

Lore tells the Journal that had the completed this funding round six months ago, when the economy was cooking, it would have been valued at a much higher number.

The Journal writes that "the investment and valuation come at a time when funding for startups is drying up, a swift reversal from recent years when tech enthusiasm, low interest rates and other factors helped nudge investors further into betting on companies without near-term plans to earn a profit."  Lore says that the current funding and valuation gives Wonder plenty of runway to grow.

Lore has described Wonder this way:

"Wonder is an exciting new approach to in-home dining that combines the convenience of delivery with the quality of the best dine-in restaurants. It has a real opportunity not only to completely change how people eat, but also to create a better future by giving them access to the world’s best food — with nutritious options — in a convenient, affordable, and sustainable way … Our innovative, vertically-integrated approach begins with exclusive menus from the country’s best chefs and restaurants. A central commissary sources high-quality, fresh ingredients and serves as the start of each meal’s journey. Orders are then fired, finished, and plated in our mobile kitchens just steps away from your door, and served as soon as they’re ready — allowing you to experience the food the way it’s meant to be enjoyed."

The Journal writes that "Wonder aims to expand to a second part of New Jersey later this year, then eventually to regions across the U.S. by 2035."

And, the Journal writes:

"Food-delivery and meal-kit businesses have been able to attract more customers through the Covid-19 pandemic but have faced sharper pressure on their bottom lines as a result of higher operating costs, including payments to restaurant partners, staff and drivers. Investors are worried about the fate of pandemic-fueled businesses: Uber Technologies Inc. shares are down more than 48% this year, and Blue Apron Holdings Inc. shares are down more than 64%."

The Journal notes that "So far at Wonder, hundreds of millions of dollars has been spent figuring out how to re-engineer high-quality restaurant meals such as seared steak in a small kitchen with limited gear, as well as how to speed up cooking.

"Having made progress on the recipes, executives said they have turned their attention to speeding up the cooking process in a bid to make the venture profitable. Wonder has taken steps such as redesigning the kitchen layout and using software that helps chefs identify the most efficient way to prepare a meal."

Lore is a serial entrepreneur.  In the early part of the century, he was the cofounder and CEO of Quidsi, which included Diapers.com;  he sold that company to Amazon for about $500 million in 2010 and then ran the division for two years.  Then, he was founder and CEO of Jet.com, which he sold to Walmart for $3.3 billion in 2016, where he ran the company's US e-commerce operations for more than four years.

Published on: June 14, 2022

Stew Leonard Jr., of Stew Leonard's, appeared yesterday morning on CNBC's "Squawk Box," offering his view of the food inflation numbers, how it is impacting business and shoppers, and even expressing some level of optimism about where things are going:

Published on: June 14, 2022

Bloomberg has a piece assessing the positive impact that the Covid-19 pandemic had on the retail business.  An excerpt:

"When Covid-19 erupted 21 months ago and upended retailers around the world, it looked like just another chapter in the sad story of an industry’s decline.

"The reality of the pandemic era, however, hasn’t played out that way.

"Yes, there was a shakeout with thousands of stores, and some chains, closing for good. A wave of retail workers lost their jobs, some permanently, and an unknown number got sick. But Covid’s shock to the system also brought overdue changes that will fortify the sector for years to come, including big investments in technology, the creation of new methods to connect with consumers and speeding online delivery.

"For all the human misery the coronavirus has brought, it’s not hard to make the case that the pandemic will ultimately strengthen the global retailers who made it through. It’s a startling turnaround from the doom-and-gloom predictions for the industry in mid-2020."

You can read the entire story here.

Published on: June 14, 2022

•  John Oliver, on HBO's "Last Week Tonight" this past weekend, offered a typically pungent and occasionally profane assessment of technology monopolies, especially as practiced by Amazon, Google and Apple.  It is really worth watching … though as usual, it is definitely NSFW (or anywhere there happen to be children).

Published on: June 14, 2022

•  From CNBC:

"Walmart is the nation’s largest grocery by revenue, but it wants to drive more sales of higher-margin items such as apparel. Over the past five years, the retailer has launched new brands and struck partnerships with companies like Reebok, Gap and Justice to expand its offerings in apparel, home and other discretionary categories. Those brands have often come with a higher price point and a focus on style. Many are expanding to more of Walmart’s big-box stores."

Which is why, the story says, "Walmart’s redesigned SuperCenter, located just 16 miles from its Northwest Arkansas headquarters, reflects the retailer’s ambitions to get more customers to turn to its stores and website to fill their closets and living rooms, along with their fridges … Walmart plans to open 30 more redesigned stores by late January and and hundreds more in the following fiscal year, Chief Merchandising Officer Charles Redfield said.  He said the locations will vary slightly and will have different elements of the pilot store."

CNBC points out that "the retailer’s strategy has taken on more urgency, after Walmart’s first quarter earnings disappointed Wall Street last month and cut profit expectations. Walmart’s mix of merchandise in the period contributed to its earnings miss. As customers spent more on groceries and gas because of inflation, some decided to not buy other, more-profitable items like clothing and TVs — the very purchases that tend to lift profits."

Published on: June 14, 2022

•  Wegmans announced yesterday that it "will remove single-use plastic grocery bags from its six remaining Virginia stores – Leesburg, Dulles, Potomac, Lake Manassas, Virginia Beach, and Charlottesville – and all four North Carolina stores. This move comes after the company’s announcement in April to eliminate single-use plastic grocery bags companywide by the end of 2022.:"

The email explained:

"While paper grocery bags will continue to be available for a 5-cent charge per bag, Wegmans’ goal is to shift customers to reusable bags, the best option to solve the environmental challenge of single-use grocery bags. The amount collected from the paper-bag charge will be donated to each store’s local food bank.

"Incentivizing the use of reusable bags by charging five cents per paper bag is an approach that has proven successful in Richmond and Fairfax County, Virginia, as well as other markets. In stores where the company has already eliminated plastic bags, on average, paper bags are used for 20-25% of transactions, while the remaining 75-80% use reusable bags, or no bag at all.

"Throughout the remainder of the year, Wegmans will continue its phased approach to eliminating single-use plastic bags at its remaining 27 stores in Maryland, Pennsylvania, and Massachusetts. At the time of each rollout, Wegmans will work to ensure consistency in its approach across all markets, unless legislation dictates otherwise."

Published on: June 14, 2022

Yesterday we reported that Ahold Delhaize-owned Stop & Shop plans "a $140 million capital investment in its New York City stores to improve the shopping experience for local customers with a focus on adding thousands of new items from around the globe to ensure the assortment at each store reflects the diversity of the neighborhood it serves."

I commented:

The first thing I wonder about is the impetus for this move.  Is it just a sense that the stores are out of date and need refreshing?  Or is there something else going on here?

Kroger has announced its plan to move into the northeast with a pure-play e-grocery model, but has not said where in the northeast.  I wouldn't have bet on the New York City metropolitan area, but it is possible that Stop & Shop is worried about a bigger competitor coming and starting to steal market share.  Better to play offense than defense.

I cannot recall the last time I was in any of these NYC Stop & Shop stores, so I have a limited frame of reference from which to work.  But if those stores are anything like the Connecticut Stop & Shop stores with which I am familiar … well, they have some work to do.  My experience is that those stores are just good enough, but never transformative, never exciting.  There are a couple of them within miles of where a new Wegmans is scheduled to be built, and I suspect they'll be in a world of hurt when that store opens.

Good enough rarely is good enough these days.  Depending on how things play out, Stop & Shop may find that out the hard way.

MNB reader David Diamond responded:

I have a slightly different take on this.  The Stop and Shop urban stores are primarily the remnants of Pathmark, and to describe them as “good enough” is being very kind.  I actually do not think that they have the appetite for building big, beautiful stores in the urban environment – it costs too much and takes too long.  Whole Foods will do it, but that is about it.  I think that the real agenda is that delivery is becoming the primary distribution method in the city, and they have reached the conclusion that consumers go to their stores and say “I’m not ordering from this dump”, so they need to upgrade the physical stores essentially to sell the brand to those who are ordering for delivery.

I could be totally wrong on this, but I think that is where their heads are at.

So when I think some Stop & Shop stores are dark, it is because they actually are being turned into dark stores that let customers in?

Never thought of it that way before.

MNB reader David Spawn wrote:

Completely agree with you on this one. 

Their stores in the city are very lackluster and seem to survive simply by offering better pricing and product breadth relative to the local small-scale competition (Key Foods, Trade Fairs and C-Towns that are our other local options w/out a car).  I live in Jackson Heights and have shopped their “Astoria/Long Island City” store – it is the epitome of “good enough,” uninspired and under-managed from its presentation & cleanliness, to its staffing, to its lack of grocery carts on weekend days (when they are all left on the rooftop parking structure). 

Despite this, I shopped there on a monthly basis since even with an Uber ride home it was less expensive than doing the same trip in our neighborhood.  However, it was just announced that it is closing earlier next year – a fact that was noticeably absent from the article trumpeting the reinvestment in the city.  A new BJ’s just opened across the street and Stop and Shop does not seem to have been able to compete with a new player.  I wish them luck in their new endeavors in the Big Apple!

I offered a business lesson last week that I gleaned from a new book, "The Baseball 100," by Joe Posnanski, which prompted one MNB reader to write:

"The Baseball 100" is the best bathroom book since the Guinness Book of World Records…

I'm so glad you said that.  When Michael and I wrote "The Big Picture: Essential Business Lessons from the Movies," we wanted the publisher to promote it as the perfect bathroom book - lots of short, standalone chapters - but the publisher resisted the imagery.

And from another reader:

Thanks for sharing.  I am a sports nut, a baseball geek in particular – just added this book to my reading list.

A fun read about Mike Mussina is “Living on the Black” by John Feinstein where he follows Mussina and Tom Glavine for an entire baseball season.

I'll add it to the stack.  Thanks.