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    Published on: July 14, 2022

    On my way to a speaking engagement at the Organic Produce Summit (OPS) in Monterey, California, I swung into San Francisco - I wanted to see the dystopian hellscape that the city reportedly has become.  But I found something different, which offered a lesson in how the obvious isn't always the complete picture.

    Published on: July 14, 2022

    Kroger announced yesterday the expansion of its Boost loyalty marketing program, which it started testing in four of its divisions late last year, chainwide.

    The two-tier program, Kroger says, offers "annual membership levels at $59 or $99," providing "free next-day delivery or free delivery in as little as two hours on orders of $35 or more, respectively. Boost members also receive 2X fuel points for every dollar spent as well as exclusive savings on Our Brands, including Murray's Cheese, Vitacost, and Home Chef, Simple Truth and Private Selection."

    Boost has been operating until now in Greater Cincinnati as well as in the retailer's Atlanta, Columbus and Indianapolis regions.  The pilot, according to the company, resulted "in a growing number of new members and a significant increase in delivery sales compared to non-Boost divisions."

    KC's View:

    In the end, programs like these have to be focused on connecting retailers and shoppers in a more intimate way.  They have to be about creating consistent and ongoing communication between the store and the customer.  They have to be eliminating friction to the greatest degree possible.  And they have to be about  moving away from transaction-based relationships and creating something deeper, stronger and less vulnerable to disruption.

    Amazon Prime proved the degree to which this is possible.  Walmart+ is endeavoring to do the same thing.  And so is Kroger Boost.

    I'm not saying that every retailer has to have a version of this.  But every retailer does have to focus on finding ways to do all of the above, and competing with those creating programs like Prime and Boost.

    Published on: July 14, 2022

    The Wall Street Journal reports that "U.S. consumer inflation rose last month from the year before at the highest rate in more than four decades, as prices climbed throughout the economy.

    "The consumer-price index rose 9.1% in the 12 months ended in June, the fastest pace since November 1981, the Labor Department said on Wednesday. The June increase also eclipsed May’s 8.6% rate, which led Federal Reserve officials to shift to a faster pace of benchmark interest-rate increases in its campaign to bring down inflation."

    Bloomberg reports that "the 'Food at Home' category jumped even more, rising to 12.2% from the same time last year … According to the latest data from Datasembly’s Grocery Price Index, baking goods jumped 7.6%, snacks such as cookies and chips increased 7.5%, and dairy and eggs were up 6.9% across the US, the research firm said Tuesday. In some parts of country, grocery prices jumped even more."

    Published on: July 14, 2022

    Yesterday MNB reported that Walmart has signed a deal with EV manufacturer Canoo to buy 4,500 electric vehicles that it will use for last-mile deliveries, with an option to buy 10,000 EVs, all of which of Walmart's goal to achieve net-zero emissions by 2040.

    However, there apparently is a caveat in the deal.  Bloomberg reports that one provision in the agreement is that Canoo can't sell EVs to Amazon.  "The language says that for the duration of the pact, Canoo 'will not enter into any agreement for any services involving the design, manufacture, consult, advice, lease, or sale of EVs to, or issue any equity, equity-linked or debt securities of any type, or enter into any agreement for the purpose of transferring control of the Company to,, Inc., its subsidiaries, or affiliates'."

    Two other points from the Bloomberg story.

    •  As part of the contract, Walmart has a non-binding option to buy up to one-fifth of Canoo.

    •  Amazon has its own deal, with manufacturer Rivian, to buy up to 100,000 EVs;  that deal reportedly allows Amazon to take an equity stake in Rivian, and also gives Amazon priority over other potential Rivian customers.

    KC's View:

    Competing retailers are going to have make their own deals, create their own exclusivities, and invest with their own partners if they are going to keep up.  That much seems clear.

    Published on: July 14, 2022

    Texas Monthly has a fascinating story about how the Proud Boys - classified by the FBI as an "extremist group," by the Southern Poverty Law Center as a “hate group," and currently implicated in the January 6, 2021, insurrection at the US Capitol, with seditious conspiracy charges for multiple members - are now appropriating Buc-ee’s brand merchandise at rallies and protests.

    From the Texas Monthly story, a report from a recent protest at which proud Boys members made an appearance:

    "Some of their garb - tactical vests, black and yellow Fred Perry polo shirts, and black baseball caps with laurel wreath emblems - were instantly recognizable symbols of the Proud Boys, the all-male neofascist group that is routinely linked to political violence, including during the January 6 riot at the U.S. Capitol, which led to seditious conspiracy charges for multiple members … several members of the group had added another distinctive garment: a bright red Bucky the Beaver face covering, complete with the rodent’s signature buck-toothed grin, arguably the foremost symbol of the Buc-ee’s chain of huge gas station emporiums.

    "The same iconic, goofy smile is emblazoned above the entrance of more than forty stores across the state, coaxing drivers off the road and into the chain’s warehouse-size travel centers, where, among other things, shoppers can experience restrooms that have been designated America’s finest, purchase a deer hunting blind, or select from one of 83 types of soda. For ­untold numbers of Texas travelers, the quirky mascot, whose face graces everything from pillows and swimsuits to glassware and beef jerky, is more than a symbol of convenience, it’s a source of state pride that inspires cultish devotion."

    In recent months, Texas Monthly writes, Proud Boys "have been spotted wearing the mask in cities across the state. Last month, at the NRA convention in Houston, Proud Boys wearing Bucky masks were spotted among the demonstrators outside the George R. Brown Convention Center. This month, at a city council meeting in Frisco, twenty miles north of Dallas, in which local leaders issued a proclamation designating June as Pride month, Proud Boys wearing Bucky masks openly mocked the proceedings and derided members of the LGBTQ+ community who were on hand, referring to them as 'pedophiles,' according to one account.

    "Weeks earlier, the same masks were spotted during a violent confrontation between Proud Boys and student protesters at an anti-transgender event at the University of North Texas in Denton. Afterward, as video of the incident circulated online, surprised Redditors slammed the Proud Boys decision to co-opt Bucky’s 'good name.' And in recent weeks, the masks were again spotted among anti-gay activists in Frisco and outside a drag queen brunch in Arlington, which is located between Dallas and Fort Worth."

    And, the story goes on:

    "Should the mask grow in popularity among far-right activists, Buc-ee’s and its many fans might not find it cute at all. Ever since the black polo with yellow stripes (which sells for $90 at some stores) became part of the Proud Boys uniform - a phenomenon known as 'hatejacking' - Fred Perry, the British streetwear brand, has struggled to disassociate itself from far-right toxicity. The company published a lengthy statement calling the appropriation 'incredibly frustrating' and noting that lawyers had been summoned to stop any 'unlawful use of the brand.'  Two years later, the statement remains, and so does the association between the Proud Boys and their shirt of choice.

    "Fred Perry’s struggle is hardly a new one. Though it been embraced by various strains of counterculture, Dr. Martens, the British footwear brand, has never fully shed its association with Nazi skinheads. More recently, New Balance raced to distance itself from white supremacists after a neo-Nazi blogger declared the brand the 'official shoes of white people,' according to the Washington Post.

    "Reached by email, Buc-ee’s declined to reveal whether the company was previously aware that its face masks were being worn by members of the Proud Boys. 'We have never had contact with these people and do not know who they are,' Jeff Nadalo, the general counsel of Buc-ee’s, told Texas Monthly, adding: 'No third party is going to prevent us from providing clean bathrooms equally to all people'."

    KC's View:

    One of the things that the story suggests is that in some ways, Texans seem more outraged by the "hatejacking" than Buc-ee's management:  "Texans are famously loyal to their favorite brands, and thus unlikely to hand over a beloved symbol of spotless restrooms, fresh brisket tacos, and sixty-pump gas stations without a fight."

    That's how I feel when I read the weak-tea response by Buc-ee's lawyer.  Really?  In 2022 America, you "do not know who they are"?   (You sell newspapers at Buc-ee's?  Maybe you ought to try reading one.)

    I think when a hate group tries to appropriate your brand and equate a poisonous philosophy with your name, that is the moment for the founders/owners to stand up themselves and condemn it.  Without equivocation.  

    Keep in mind, this could happen to any brand at any time.  Be vigilant.

    Published on: July 14, 2022

    Food & Wine reports that French regulators have banned "words that have been used to describe meats or fish — like 'steak' — from being used for their meatless counterparts.

    "'It will not be possible to use sector-specific terminology traditionally associated with meat and fish to designate products that do not belong to the animal world and which, in essence, are not comparable,' the country's official decree said."

    France is said to be the first European country to implement such a ban, though the story notes that the decision "came just days after South Africa's government passed a similar ban on meatless manufacturers using names and terminology 'prescribed and reserved for processed meat products'."

    "It will not be possible to use sector-specific terminology traditionally associated with meat and fish to designate products that do not belong to the animal world and which, in essence, are not comparable," France's official decree says.  "The new ruling is only applicable to plant-based products that are manufactured in France … plant-based dairy products are already subject to similar restrictions throughout Europe, and the words 'butter,' 'cheese,' or 'milk' cannot be used on the labels of plant-based products."

    Food & Wine points out that the traditional meat industry is said to be celebrating the move, but companies in the plant-based space .. not so much.

    KC's View:

    Interestingly, one word that avoids being clumped in with all the other traditionally beef-oriented words os "burger," which the story says can still be used to describe plant-based or meat-free patties.

    I sort of have mixed reactions to this.  On the one hand, I'm never quite sure why plant-based companies want to use traditional meat jargon if they want to really differentiate themselves.

    On the other, so often these words have less to do with what the product is and more to do with helping consumers put them into context and help them figure out how the products will cook and be eaten.  

    But … c'est la vie.

    Published on: July 14, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Los Angeles Times reports that delivery company GoPuff "is slashing 10% of its global workforce and closing dozens of warehouses, reining in spending amid signs the delivery company expanded too quickly during the pandemic.

    "The job reductions will affect about 1,500 staff members, a mix of corporate and warehouse employees in the US …  It’s the second time in four months that the embattled startup has eliminated positions. It cut about 3% of jobs in March and shelved plans to go public.

    "Gopuff also intends to shutter 76 warehouses, roughly 12% of its network, across the U.S. to consolidate its footprint in some cities."

    According to the story, "The Philadelphia-based startup’s retrenchment also underscores the dramatic shift in sentiment in the rapid-delivery sector, into which investors poured $9.7 billion globally in 2021. With venture capital firms moving away from the 'growth-at-all-costs' model, proving that the economics of instant commerce can work in a post-pandemic world is a looming challenge for Gopuff and its competitors … Through reduced spending, a culling of lower-performing warehouses, and a focus on higher-margin revenue streams such as advertising, Gopuff is aiming to be profitable by 2024."

    •  eMarketer reports on a recent State of Personalization report from Twilio saying that "49% of consumers said they would likely become repeat buyers if offered a personalized experience by a retail brand.

    "Another 62% said they not only want, but expect personalization, and that a brand that doesn’t offer a personal experience could lose their business. That’s up from 45% in 2021, showing personalization is becoming a key competitive advantage for brands.

    80% of business leaders say customers spend 34% more (on average) when offered personalized shopping experiences."

    However … the story also says that "while the demand for personalization is clear, the study showed brands are woefully ill-equipped to meet it.

    "Only 35% of companies said they felt they achieved omnichannel personalization.  47% of companies offer personalized experiences based on live consumer data, meaning over half are missing out on a significant aspect of personalization."  Only "thirty-seven percent of brands exclusively use first-party data in personalization, up from 31% last year, according to Twilio."

    Published on: July 14, 2022

    •  From Reuters:

    "Alibaba's supermarket chain Freshippo is seeking to raise funds at a valuation of about $6 billion, much lower than a hoped-for valuation of up to $10 billion earlier this year, three people familiar with the matter told Reuters.

    "The company had to cut its valuation expectations after China's COVID-19 restrictions, in particular a draconian lockdown in the economic hub of Shanghai, badly dented business, they said.

    "Investors are also sceptical about whether loss-making Freshippo can keep growing and turn a profit anytime soon given the company's bleak outlook as the world's second-largest economy continues to pursue a strict policy of stamping out COVID-19 cases, said two of the people.

    "The supermarket chain, known as Hema in Chinese, is aiming to raise $400 million to $500 million from outside investors, two of the sources said."

    The story notes that "Freshippo's lowered ambitions for its first independent private fundraising round come amid a drop-off in investor interest globally in tech ventures that have yet to turn a profit … Private fundraising in China has also slowed since last year due to a sweeping regulatory crackdown on the tech, tutoring, gaming and other sectors."

    •  Foot traffic analytics firm is out with a report saying that at Starbucks and Dunkin' last month, "coffee visits dropped below QSR levels for the first time all year, as a combination of inflation, high gas prices, and the rise in COVID cases kept some consumers away … The fall in foot traffic was evident at both chains in June, with visits falling 7.8% year-over-year at Dunkin’, and 4.1% at Starbucks. Compared to June 2019, visit growth was flat (0%) at Dunkin’, and down 6.6% at Starbucks.

    "The outlier: Dutch Bros., conversely, continues to grow. Visits to Dutch Bros. locations were up 22.8% in June year-over-year, and up 178.2% compared to 2019, as the brand has expanded rapidly over the past few years."

    Published on: July 14, 2022

    We wrote yesterday about Kroger's successful ghost kitchen initiative, prompting one MNB reader to ask:

    What’s a ghost kitchen?

    Fair point - I shouldn't assume that all MNB readers are familiar with all the things we write about here.

    EHL Insights defines a ghost kitchen this way:

    Ghost kitchens are also referred to as micro-cloud kitchens or virtual kitchens. They refer to restaurants that don't offer dine-in services. They are built to fulfill online orders, hence their menus are only available to customers that require delivery. Think of it as a co-working space. There are no tables or walk-in customers. You just rent a space, create a menu and start selling your food to online customers through third-party delivery apps. 

    Some ghost kitchens serve as a way for restaurants to move their take-out business to another location, where to-go orders won't overburden the restaurant's kitchen.  In Kroger's case, its ghost kitchens are developed in partnership with ClusterTruck, a technology start-up that operates delivery-only restaurants.  The kitchens provide a variety of freshly prepared meals on-demand with no service or delivery fees, and allow Kroger to spread its bets around a bit.

    Responding to yesterday's FaceTime video about eliminating friction and emphasizing communication, one MNB reader wrote:

    I wonder if any grocery store execs, especially those who work for the market share leader in the Bay Area, took your FaceTime to heart about eliminating friction.  Stop by any of their stores, at any time of day when you are here this week and you will see friction in action at check-out with long lines and non-existent bagging skills - if there's bagging help at all.  When I shop, I can bet I'll hear a beleaguered employee asking for checking help, not once, but sometimes 3 times.   It's no wonder delivery has grown as much as it has. 

    And another MNB reader wrote something that resonated with me:

    Whenever you mention your education by nuns my knuckles begin to hurt.

    It was an education.  Very little of it had to do with books.