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    Published on: July 13, 2022

    I'm on the road as you see this, heading to Monterey, California, where I'm moderating a panel at the annual Organic Produce Summit (OPS).  (One of my panelists is Richard Gonzales, Vice President Global Produce Sourcing for Walmart … I'll have more about this later in the week.). But being in an airport, particularly at a time when air travel can be totally fugazi, I'm thinking about business lessons that can be applied to retail.

    Published on: July 13, 2022

    by Kevin Coupe

    Variety reported yesterday that "Spotify is adding buzzy music game Heardle to its arsenal — acquiring the daily name-that-tune website patterned on the massively popular Wordle game.  Financial terms of the deal aren’t being disclosed."

    In Heardle, Variety explains, "players try to guess a song as quickly as possible based on its opening notes; they get six tries, getting a few more seconds of music with each attempt. Like Wordle, Heardle then lets users share their results for bragging rights … the audio-streaming giant is making changes to slipstream it into the Spotify business: Starting today, Heardle players can listen to the full song on Spotify at the end of the game."

    I find this fascinating, in part because I am a Wordle addict.  Or would be if they'd let me play more than just once a day.  (So thank goodness they don't.). Pretty much every morning, as I am warming up my fingers in preparation for writing MNB, I do Wordle - it is like stretching before I go for a run.  (FYI…I have played 156 times…have a winning percentage of 98 percent…and my current.maximum streak is 85.)  And then, later in the morning, I compare scores with Mrs. Content Guy and our oldest son, mostly so we can see the thought processes that each of used - it is less about being competitive than being social.

    I've never played Heardle.  Largely that's because I am terrible at recognizing music cues.  Back in the old days, when a bunch of us would play Trivial Pursuit, the general pattern that I would excel at most topics but would be stymied by any music-related question.  It never bothered me;  in the words of Clint Eastwood, " Man's gotta know his limitations."  (Mine are many.)  

    But I've also resisted playing all the other Wordle-style games because I like the idea of playing just once every 24 hours.  Not only does it prevent my addictive personality from kicking in, but there's also a certain elegance to the singularity of the experience.

    But I digress…

    The simple business lesson that I take from this acquisition is that competition can come from anywhere.

    Think about it.  The New York Times bought Wordle to bolster its games section, which it hopes will give it access to new potential subscribers.  Spotify buys Heardle to bolster its music business, and it hopes the move will generate new subscribers.  While the Times and Spotify, on the face of it, would not appear to be competitors, in fact they are - they each are competing, along with myriad other companies with varying business models, fir people's time and attention.

    We all only have so much time to dedicate to such pursuits.  There only are 24 hours in a day … 60 minutes in an hour … 60 seconds in a minute.  Multitasking notwithstanding, there are limits.  And so everybody competes.  With.  Everybody.

    It is, I think, an important and Eye-Opening lesson for retailers, no matter what you happen to be selling.

    Regardless of how good you are, there always is going to be somebody else with a different insight, a different value proposition, with the goal of taking your customers.

    And even if there isn't, you should act like there is.  In the words of Mark Twain, "Nothing so focuses the mind as the prospect of being hanged."

    Published on: July 13, 2022

    From the Cincinnati Business Courier:

    "Kroger Co. is getting a big boost to its store traffic thanks to its ghost kitchens, a trend that could prompt it to open more of those prepared foods facilities.

    "Downtown Cincinnati-based Kroger, the nation’s largest operator of traditional supermarkets, only operates the ghost kitchen concept at a handful of its 2,726 supermarkets in 35 states. But those are fueling big gains in the limited markets where it runs the facilities, according to a new study by location analytics and data provider Placer.ai.

    "The study looked at markets where Kroger partners with ClusterTruck to offer a range of prepared foods under a single brand, and Kitchen United to offer a variety of prepared menu items from numerous restaurants. Kroger uses an on-site ghost kitchen concept in which the meals are prepared in its stores for customers to carry out.

    "Placer.ai’s study found Kroger’s stores that offer ClusterTruck in Indianapolis and Columbus 'were seeing stronger visit recoveries than neighboring Kroger branches' … Similarly, Placer.ai found customer visits to Kroger’s Ralphs store in Los Angeles that opened its first Kitchen United concept in January 'have skyrocketed'."

    KC's View:

    I've always liked the ghost kitchen model, largely because it expands the retailer's business definition.  It is less about being a "supermarket" and more about figuring out ways to feed people.  A broader definition along these lines expands the potential for sales, profits and market share.

    Published on: July 13, 2022

    Reuters reports that "internal Amazon documents, previously unreported, reveal how routinely the company measured workers’ performance in minute detail and admonished those who fell even slightly short of expectations - sometimes before their shift ended. In a single year ending April 2020, the company issued more than 13,000 so-called 'disciplines'" in a single Staten Island, New York, warehouse alone, a facility that had about 5,300 employees around that time."

    The story goes on:  "The records and interviews of current and former employees show the enormous pressure faced by Amazon line workers to complete tasks as accurately and quickly as the company demands - creating an environment that some workers told Reuters has fueled unionization efforts around the country."

    Indeed, the Staten Island warehouse is one that voted this past spring to unionize, the first Amazon facility in the US to do so.

    The numbers came to light in a lawsuit filed by the National Labor Relations Board (NLRB) on behalf of Gerald Bryson, who was fired from his job at the warehouse - Amazon says it is because he made consistent mistakes, while Bryson argues it was because of his union activity.

    Reuters notes that in 2018, Bryson received a "Supportive Feedback Document" from his manager, pointing out that he had made "22 errors … including tallying 19 products in a storage bin that in fact had 20. If Bryson erred like this six times within a year, the notice stated, he would be fired from the Staten Island warehouse."

    According to Reuters, "In a statement, Amazon said the goals it sets are 'fair and based on what the majority of the team is actually accomplishing.' The company says it delivers more praise to workers than criticism. 'We give a lot of feedback to employees throughout the year to help them succeed and make sure they understand expectations,' Amazon said."

    Here's some context from the Reuters piece:

    "Amazon told the judge in Bryson’s case that it could not meet NLRB demands in a subpoena to provide the thousands of disciplinary notices it delivered to employees that year, calling the requirement 'unduly burdensome.'

    "However, it provided statistics for what it called 'disciplines' - which include firings, suspensions and warnings - at three warehouses, and it turned over scores of personnel files. These included more than 600 notices for workers between 2015 and 2021 that were positive, negative or neutral. It is not clear from the records whether the notices were a representative sample of the company’s feedback. Also in the records were worker affidavits and email exchanges between Amazon and government lawyers.

    "Among the documented violations for which Amazon faulted employees:  Being off task for six minutes in June 2018, resulting in a reprimand that a Carteret, New Jersey, warehouse worker received at 2:57 a.m. during the same shift … Meeting 94% of the company’s productivity goal instead of 100% … Exceeding break time by four minutes … Making four errors grabbing items shoppers ordered in a single spring 2019 week, during which a New York City warehouse worker picked more than 15,800 goods correctly for customers."

    Amazon also said, however, that "these write-ups did not accurately reflect its current policies."

    KC's View:

    I have to be honest - when I saw all these disciplinary write-ups and threats by Amazon, I flashed back to second grade, when Sister John Aquin essentially terrorized me with essentially the same volume of disciplinary notices.  At least, that's how I remember it.  (I also still have some explained welts…)

    Which is my way of expressing some level of sympathy with the Amazon workers.  I simply cannot imagine being able to function, much less excel, with that kind of scrutiny in that kind of culture.

    Even if Amazon has adjusted its policies, the question is whether the basic environment has changed.  Hard to believe.

    Add to the probability possibility that there is a certain amount of anti-union animus playing out here, and the recent story that Amazon expects to run out of available people to hire in the not too distant future, and you have the makings of a potential flaw in Amazon's business model.  It'll be like a game of Jenga … and Amazon may find that by pulling out the wrong building block, the structure could topple.

    I've said it before and I'll say it again - if Amazon just applied the same level of innovative thinking to labor issues that it does to everything else, it would be a game changer.

    Published on: July 13, 2022

    Reuters reports that Walmart will buy 4,500 electric vehicles from EV manufacturer Canoo "as part of the U.S. retailer's goal to achieve net-zero emissions by 2040."

    Terms of the deal were not disclosed.

    Walmart also said yesterday that it has "an option to purchase up to 10,000 units as it electrifies its delivery fleet."

    The story notes that "in June, Walmart said it was expanding transportation pilots with the manufacturers of electric, hydrogen and natural gas-powered vehicles, including Cummins Inc. and Daimler Truck's Freightliner.  The retailer in January said it had reserved 5,000 electric delivery vans with General Motors' commercial EV business, BrightDrop."

    The purchase agreement reportedly "includes Canoo's fully electric Lifestyle Delivery Vehicle (LDV). The EV startup anticipates starting production of the LDVs beginning in the fourth quarter of 2022, according to the statement."

    KC's View:

    This seems a particularly apt decision for Walmart to make in the context of yesterday's story about California cities deciding to prohibit the building of any new gas stations - after all, why dedicate new land to technology that eventually will be obsolete?

    Those California cities may be a little ahead of the curve, but I think Walmart is making the move at exactly the right moment.  Why invest in the past when you can invest in the future?  This decision could even be self-fulfilling … because Walmart does it, the investment curve for EVs will accelerate, which will hasten the obsolescence of fossil fuel-thirsty vehicles.

    Leaders lead.  Almost as important, leaders decide to lead.

    Published on: July 13, 2022

    Starbucks has added to the number of stores that it says it is closing around the country "after workers reported incidents related to drug use and other disruptions in cafes."   The number now is 16, and include six in Los Angeles areas, two in Portland, Ore., and one each in Philadelphia and Washington, D.C., in addition to the six closures already announced in Seattle.

    The closures are slated to occur by the end of the month.

    The Wall Street Journal writes that "the company said it received reports from workers about incidents that they said involved drug use by some customers and in some cases, members of the public, in certain locations. Starbucks said it would transfer employees to other locations when it permanently closes the stores … Starbucks also said that it would give store managers leeway to close restrooms, limit seating or reduce operations in response to safety concerns. The moves are part of policies aimed at addressing workers’ concerns, including about their safety on the job, the company said.

    "Managers can continue to change store layouts if needed, including limiting seating to customers, the spokeswoman said. The company said it would provide additional guidance to baristas in how to deal with active shooter scenarios and conflict de-escalation at work."

    “Like so much of the world right now, the Starbucks business as it is built today is not set up to fully satisfy the evolving behaviors, needs and expectations of our partners or customers,” Howard Schultz, the company's past and current CEO, wrote in a letter to employees this week.

    KC's View:

    Yikes.

    It so happens that I'm very familiar with one of the Starbucks locations being closed in Portland - it is about a block away from the Apple Store, across the street from Pioneer Place shopping center, right on the light rail line that I used to take into the city from PDX, and about a half-mile from the apartment where I used to stay each summer.  (I used to walk past this Starbucks in the morning on my way to Stumptown Coffee.). It is distressing to hear that things have gotten so bad in that neighborhood that Starbucks has to close down the store.

    One thing, though … there are at least some whispers out there that the real misbehavior that Starbucks is worried about is unionization.  I hope that's not the case here, that Starbucks is making neighborhoods look worse than they are because it wants to disrupt labor organizers.  Because that would be awful, and the very definition of poor citizenship, especially at a delicate time in the lives of some cities and neighborhoods.

    Published on: July 13, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Amazon yesterday announced that it has opened "the second Starbucks Pickup with Amazon Go in The New York Times Building at 40th Street & 8th Avenue in New York City.

    "This comes after the first Starbucks Pickup with Amazon Go store opened in November 2021 in New York City.

    "These stores integrate the digital and physical retail experience, bringing together the connection and comfort of a Starbucks café and convenience of Amazon Go’s Just Walk Out Shopping experience.

    "Like the first store, this store is a combination of a Starbucks Pickup and Amazon Go - utilizing the order ahead and pay feature in the Starbucks app and Amazon’s Just Walk Out technology to create an easy checkout experience, alongside a modernized lounge that features individual workspaces and expanded tables.  The store offers the full Starbucks menu and a curated assortment of food and beverages in the Amazon Go market, including fresh-prepared salads, sandwiches, bakery items, and snack options."



    •  TechCrunch reports that DoorDash is shutting down its Chowbotics business, which marketed a salad-making robot named Sally, later this summer.

    DoorDash acquired Chowbotics in February 2021.

    TechCrunch writes that "it seems likely Chowbotics’ robotic kiosks just weren’t the right fit for the food delivery service. DoorDash was flying high amid pandemic-fueled deliveries when it made the acquisition, and perhaps ultimately thought better of expanding its footprint. Unfortunately, Chowbotics is a casualty of that decision-making a mere 17 months after the deal was announced."

    I wonder if Sally can collect unemployment.

    Published on: July 13, 2022

    •  The Wall Street Journal has a piece about people preferring whole chickens, as opposed to acquiring parts:

    "Roasting whole chickens is nothing new for many cooks, of course, but rampant inflation is introducing a new flock to the practice. Rising grocery-store bills also are leading savvy consumers to try pickling, canning and inexpensive recipes, such as potato pancakes.

    "A whole chicken costs less than the sum of its parts. Breasts and boneless, skinless thighs are more expensive on a per-pound basis than buying the whole bird and cutting it up at home. Over the years, Americans have grown more willing to pay the premium to have the yucky stuff done for them, rather than hacking up the whole bird themselves.

    Rookie whole-chicken chefs have been rudely introduced to giblets, struggled to carve around bone and ended up with more leftovers than they know what to do with.

    "As of last week, the price for a whole chicken, on average, was $1.56 a pound, according to the Agriculture Department, up from $1.09 a year ago. Boneless, skinless chicken breast prices were $4.26 a pound, up from $2.46 a year ago."

    Published on: July 13, 2022

    •  Gelson's announce3d that John Bagan, the company's COO, has been promoted to the role of president;  it is his second promotion in just over a year, having moved from the job of Chief Merchandising Officer to COO in May 2021.

    Rob McDougall remains as Gelson's CEO.



    •  Dollar General said yesterday that COO Jeff Owen will succeed retiring CEO Todd Vasos in the top job on November 1, 2022.

    The Wall Street Journal writes that "Vasos, age 60, has led the company since 2015, overseeing the addition of around 7,000 new Dollar General locations that primarily serve rural communities across the U.S. He helped push the chain into new categories such as selling more fresh produce, and annual sales revenue grew by more than 80% during his tenure."

    Published on: July 13, 2022

    Got the following email yesterday regarding my FaceTime video about the value of recognizing companies' histories:

    Regarding your FaceTime segment today, the Mets recognizing Tom Seaver and the history of the organization that the new statue brings to the conversation, I have mixed emotions. I’ve been in the grocery business for over 35 years, same company. I’ve seen and experienced a lot of changes over that timeframe. The history of the company is amazing and what a difference so many people have made not only to my company but to the industry itself.

    However, today, is a company only as good as it’s current leadership and how well they lead and inspire the workforce?  If we want inspiration for upcoming talent, we might have to forget the history of middle aged white guys making all the decisions for the company.  With diversity and inclusion throughout the ranks, companies will be better for all customers – today and tomorrow!

    I don't think that valuing history - including mistakes - means that companies don't or can't move on in terms of diversification of leadership.  Quite the contrary.  In all things - not just retail - I believe that understanding the past (including decisions made from ignorance about values that many of us hold dear today) is critical to avoiding those same mistakes and ignorance in the future.

    And I say this as someone who used to be a middle aged white guy.  (My kids tell me that I can't claim to be middle aged unless I'm planning to live to 130.)

    Remember the line from philosopher George Santayana:  “Those who cannot remember the past are condemned to repeat it.”

    Too many people want to censor or ban books that recognize the mistakes of the past and acknowledge moral judgements that have not aged well because they think these things somehow diminish us.  I always think that this, in fact, celebrates our ability to grow, to evolve, to be better as a culture.  To do otherwise is to put your head in the sand.  (Or, in some cases, elsewhere.)



    Yesterday we cited a Los Angeles Times report that there is "a new front in California’s efforts to reduce carbon emissions" - five cities in the San Francisco Bay Area have voted to halt the opening of a any new gas stations.  And now, there is a move - nascent at the moment, but expected to gain at least some traction - to pass a similar ban in Los Angeles.  One advocate said, “L.A.’s enormous and damaging ecological footprint really helped set us on this path … If you have lung cancer, you stop smoking; if your planet’s on fire, you stop pouring gasoline on it."

    Which led me to comment:

    You'd think.  Except the world is filled with lung cancer patients who can't or won't stop smoking, just as it is filled with people who don't acknowledge the existential threat that continued reliance on fossil fuels - by their very nature, a limited resource - may create for the human species.

    MNB reader Steven Ritchey responded:

    There are many people who don't believe science.  I know a few of them.  They believe the coronavirus was and is a hoax, at least until someone close to them unfortunately dies from it, all of a sudden they believed it.

    We know fossil fuels will run out, but in too many people's minds, it won't be in their lifetimes, so it won't affect them, so they won't get on board with new technology..  I personally am not a new adopter, I want to make sure the technology works and is reliable before I take the plunge.  But since my electricity provider has the option, I pay the minuscule amount of extra money to have my electricity generated by green means of generation, wind, solar, all those sorts of things..

    Now cigarette smoking, I can kind of understand as I understand nicotine is very, very addictive, and the manufacturers I think deliberately held back information on their addictiveness, and the dangers of smoking.  I'm personally just happy I can go to a restaurant or bar and not leave reeking of cigarette smoke, or even a concert or sporting event.  It's been a long time since I've smelled a cigarette burning, and I'm glad.

    I take your point … it isn't apples to apples.  I was just using the lung cancer metaphor to make a larger point … that in a lot of ways we're addicted to fossil fuels.



    Regarding the issues that Amazon continues to face, one MNB reader wrote:

    I think Amazon is learning that selling food and more importantly making a profit at selling food is not as easy as it may look. They are not going anywhere anytime soon however they will continue to see the issues being profitable in the food business. 

    But they're learning.  They'll get better.  And it would be foolish to underestimate Amazon.  Remember, it is not all that long ago that some folks thought that Walmart would never be successful selling groceries.



    On another subject, from an MNB reader:

    Is it just me observing that the spread between the price private labels products and branded is growing? Great time period for private label to expand share, increased retailer margin while providing consumer value.



    And finally, responding to Michael Sansolo's column extracting a business lesson from Sen. Chuck Schumer's continuing dedication to visiting all 62 counties in New York State that he represents for the past 23 years, MNB reader Brian Burnam wrote:

    Michael, our Senator, Chuck Grassley, has been visiting every county in Iowa for over 42 years.  We have 99 of them to visit.  

    Good for him.  The lesson stands - retail leaders should follow their lead and visit as many stores as possible every year.  Office time is overrated, and the last two years have proven that you don't need to be at headquarters to get things done.