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    Published on: July 28, 2022

    Walmart's profit warning this week caused its stock to drop and some folks to declare it a train wreck.  But I think that's shortsighted, and that these are the moments that big companies like Walmart (and I can name a few others) get really, really dangerous, especially to smaller competition.

    Published on: July 28, 2022

    From the Wall Street Journal this morning:

    "The U.S. economy shrank at a 0.9% annual rate last quarter, the Commerce Department said Thursday. That marks a second straight quarterly decline in gross domestic product–a common definition of recession.

    "Inflation hit a fresh four-decade high during the second quarter, hammering consumer sentiment and eroding Americans’ purchasing power. The Federal Reserve responded by aggressively raising interest rates, which in turn cooled the housing market, reducing brokers’ commissions and denting residential investment.

    "The U.S. economic recovery is following an unusual trajectory, with weakening output but strong job gains. The unemployment rate, a key barometer of economic health, held steady at a low 3.6% for the past four months, and employers continued to hire at a strong pace. Most economists in a Wall Street Journal survey expect the economy to grow in the third quarter and in 2022 as a whole, though lately they have been dropping their estimates."

    KC's View:

    One expert tells the Journal that we're in a "sentiment recession," which may matter even more than a technical recession as defined by economists, who can never agree on this stuff anyway.

    If they're right, however, that the economy is likely to grow during the rest of the year, however anemically, I'd think this will largely be because of growth in retail.  Which may be the very definition of a somewhat silver lining.

    Published on: July 28, 2022

    Hy-Vee announced yesterday that Randy Edeker, who has been chairman-CEO of the company since 2012, will step down as CEO on October 1, to be succeeded in the CEO job by Aaron Wiese, currently company vice chairman and president of Hy-Vee Supply Chain and Subsidiaries.

    Edeker will remain as the company's chairman.

    Jeremy Gosch, Hy-Vee's president and chief operating officer, will remain in those roles.

    “Both Aaron and Jeremy have been trusted leaders of our executive team for many years, and I am thankful for the leadership they continue to provide our great company,” Edeker said in a prepared statement. “With this announcement, I can continue to focus on Hy-Vee’s strategy and evolution in today’s changing environment, while Jeremy can focus on overseeing our stores and Aaron can focus on the day-to-day operations of the overall company.”

    All three men are Hy-Vee lifers - Wiese started with the company while still a college student in 1993, and Gosch started as a part-time clerk two years later.  Edeker has worked for Hy-Vee in various capacities for more than four decades.

    KC's View:

    Edeker has overseen an expansion of Hy-Vee's traditional market areas, but there are folks in the industry - and inside the company - who feel that he also has been responsible for a more autocratic approach to management at the company.  Not sure if we're likely to see any of this change - the need to grow is at the heart of almost every retailer (though different companies calibrate that in different ways), and there certainly is an argument that greater centralization is necessary as a company becomes larger.

    Published on: July 28, 2022

    The Wall Street Journal this morning reports that "two US senators are preparing legislation that would give merchants power to process many Visa Inc. and Mastercard Inc. credit cards over different networks.

    "The bill, which could be introduced as soon as this week, aims to create more competition among U.S. credit-card networks, a sector where Visa and Mastercard have long dominated. Sen. Dick Durbin, an Illinois Democrat, and Sen. Roger Marshall, a Kansas Republican, are expected to introduce the bill.

    "Mr. Marshall said banks and major card networks lobbied his office to not sign onto the bill. He decided to move forward after hearing from a growing number of merchants, including small businesses, restaurants, gas stations and convenience stores, about the toll of the rising credit-card fees set by Visa and Mastercard that are often pocketed by large banks."

    The story notes that "Mr. Durbin spearheaded a similar rule for debit cards over a decade ago. The Durbin amendment, part of the 2010 Dodd-Frank law, requires that merchants have the ability to choose from at least two unaffiliated debit-card networks when routing transactions."

    KC's View:

    Seems to me that if lawmakers take positions that are being pro-consumer/taxpayer, it usually is a good idea.  The argument is that retailers better protect the shopper's interests, and as long as retailers live up to this promise, I'm totally on board for the kinds of regulation being proposed here.

    Published on: July 28, 2022

    Philadelphia's St. Joseph's University announced yesterday that the Erivan K. Haub School of Business is combining three customer-focused disciplines to create The Department of Food, Pharma and Healthcare in a move that it believes will "better address the needs and desires of (the) new consumer," putting the shopper at the center of its educational efforts.

    “The pandemic accelerated many trends in our society, from buying groceries online to tele-medicine. The Department of Food, Pharma and Healthcare is being built out to ready students for the ‘New Normal’ the organizations that employ them will face by giving them the tools needed to understand the multi-faceted consumer of today and tomorrow,” said Dr. John Stanton, chairman of the department, in a prepared statement.

    According to the school, "The Department of Food, Pharma and Healthcare is dedicated to preparing students for successful careers in the food, pharmaceutical and healthcare industries. It offers both undergraduate programs - notably the renowned food marketing major - and MBA programs in food marketing and pharmaceutical and healthcare marketing. The program also features graduate degrees in the fields of health administration and health informatics, and graduate certificates in food marketing and health informatics."

    KC's View:

    If students actually are going to be prepared for the retail world they are going to face when they leave school, there has to be an acknowledgement within the halls of academia that traditional definitions don't apply, old-world boundaries don't matter, and that a strong connection to the consumer has to be at the core of every retail enterprise.

    Good for St. Joe's for making this change.  This stuff matters.

    Published on: July 28, 2022

    FMI—The Food Industry Association is out with its inaugural Power of Plant-based Foods and Beverages 2022 report, which it describes as being "the first-ever comprehensive review of the plant-based topic broadly, addressing naturally plant-based foods such as fruits, vegetables, beans and whole grains and alternatives to traditional animal-derived items."

    One conclusion:  "Nearly half (42%) of shoppers put either a lot or some effort into selecting plant-based foods or beverages."

    “More than 40% of shoppers at least occasionally eat a meat, dairy or seafood alternative, but dairy alternative sales are more than twice those of meat alternatives,” said Steve Markenson, director of research and insights for FMI. “The plant-based foods most likely to be regularly consumed by shoppers are naturally plant-based — fruits and vegetables (75%) and beans, nuts, or grains (47%).”

    Other conclusions:

    •  "Shopper feedback indicates confusion about plant-based foods and beverages and a lack of knowledge about key attributes of these options. The majority of shoppers surveyed responded that the word 'healthy' came to mind when thinking of plant-based foods and beverages. Others associated plant-based foods with words such as 'vegan,' 'vegetarian,' 'organic' or 'natural'."

    •  "The research found that curiosity is a major characteristic for shopper experimentation. Millennials are more likely than Gen X and Boomers to put effort into selecting plant-based foods, and nearly half of shoppers buying plant-based foods and beverages live in households making over $100,000 and have children. Shoppers interested in these foods and beverages tend to have bigger basket sizes, but also shop online."

    Published on: July 28, 2022

    Axios reports that "in an innovative pushback against paper and plastic waste, eco-companies are starting to pump out cups, spoons and straws that you can eat after you use them — no need to recycle … New edible products, made from ingredients like rice and sugar, include strawberry-flavored drinking straws for your smoothie (or margarita), oat-and-grain coffee cups (in regular or chocolate), and black pepper-flavored spoons that pair well with soup or mac and cheese … Edible utensils and tableware are starting to crop up at major retail, dining and entertainment chains — which are using or selling them not only as a novelty, but to boost their green credibility."

    The story notes that "Disney, Busch Gardens, Carnival cruises and Tropical Smoothie Cafes offer Sorbos edible straws — which come in eight flavors (including ginger, chocolate and cinnamon) but don't flavor your drink unless you bite them.

    "T.J. Maxx, Marshalls and Home Goods are selling Incredible Eats spoons, made from a mix of wheat, oats, corn, chickpeas and brown rice.

    "Lavazza coffee is being served in edible cups from Cupffee, which boasts that its vegan coffee cups stay crunchy and crispy for up to 40 minutes — and are only 56 calories."

    "We're trying to revolutionize the way we eat our food by replacing single-use plastic with edible cutlery," says the founder of Incredible Eats, Dinesh Tadepalli, whose company makes spoons and sporks in flavors like chocolate and oregano chili … Incredible Eats' savory spoons and sporks taste 'like a crouton or a cracker,' while the vanilla options resemble a waffle cone or fortune cookie, says Tadepalli, who adds that the company revised its formulation three times to improve the taste."

    KC's View:

    Coffee being served in an edible cup?  I must admit that I am intrigued.

    Published on: July 28, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  New research from ChaseDesign says that "the number of retail customers using buy online pickup in-store (BOPIS) 'all the time' declined by one-third (45% down to 32%) last year and is expected to shrink further in 2022. Shoppers relying on home delivery of groceries purchased online will also decline in the near-term future by nearly one-quarter. In-store shopping remains the dominant channel for buying consumer goods and is expected to grow in 2023."

    According to the report, "home delivery, which became a vibrant part of many shoppers’ overall shopping routine during the pandemic, now faces issues with value delivered, possibly accelerated by inflationary times. The number of people who claimed to 'always' use delivery to home when buying groceries dropped by half (16% in 2022 down from 31% in 2021)."

    I mention this not because it is news - it would've been far more noteworthy if these changes were not taking place.  I think there is a tendency in some quarters to act as if a shift away from "always" using BOPIS or home delivery somehow reflects a broader return to the way things used to be.  I think that nothing could be farther from the truth.  The combination of a receding pandemic and inflation are propelling people to behave differently when they did when we all were worried about Covid, but the availability of alternatives to shopping in-store, especially for products that depend less on a physical presence, will power long-term consumer behavior shifts in the food business just like they've done in so many other sectors.

    Published on: July 28, 2022

    •  The Dallas Morning News reports that "H-E-B has purchased land east of Dallas in Rockwall as the San Antonio-based grocer continues to buy up property for its North Texas expansion.

    "The grocer bought two parcels that total 12 acres on the southwest corner of I-30 and John King Boulevard. The land is just east of the car dealerships Honda Cars of Rockwall and Clay Cooley Hyundai of Rockwall," which "is the biggest city in Rockwall County, which has a population of more than 100,000 and surrounds Lake Ray Hubbard. Many of the major food retailers operating in Dallas-Fort Worth are already in Rockwall County, including Kroger, Tom Thumb, Walmart, Aldi, Target and Costco."

    The story notes that  H-E-B "has been buying land in D-FW for years with long-term plans to eventually expand into North Texas in a big way. H-E-B has four stores under construction in Collin County, with two opening this fall in Frisco and Plano. Two others are scheduled to open next summer in Allen and McKinney."

    Published on: July 28, 2022

    •  Carlisle, Pennsylvania The Giant Company announced a number of executive changes at the Ahold Delhaize-owned division.

    Manuel Haro, currently divisional vice president of Greater Philadelphia, has been promoted to the role of vice president of finance and strategy.

    Joanna Crishock, director of strategy and chief of staff to company president Nicholas Bertram, has been promoted to the role of vice president of marketing and commercial planning.

    Daren Russ, director of e-commerce operations, has been promoted to the role of vice president of omnichannel operations.

    Tim Santoro, regional director for 19 Giant stores in Lancaster and York counties, has been promoted to the role of divisional vice president of Greater Philadelphia.

    And April Mock, director of communications and corporate social responsibility, has added the role of chief of staff to the president to her responsibilities.

    “Today’s appointments are the intended result of our ongoing investment in our greatest asset – our team members,” Bertram said in a prepared statement. “By growing through these new opportunities, each of these leaders will deepen their current abilities and hone new skillsets while propelling our omnichannel strategy forward, positioning The GIANT Company for long-term growth and success.



    •  Raley’s Operating Division announced the promotion of Levi Wingo to Senior Vice President, Operations. Wingo most recently served as Vice President of Operations.  

    Published on: July 28, 2022

    Yesterday, we took note of local news reports in Connecticut, where I live, that pointed out that Tuesday's Mega Millions drawing had a whopping $830 million jackpot … and that Stew Leonard's, which operates stores in Connecticut, New York and New Jersey, took advantage of the moment to give each one of its 2,500 employees a single lottery ticket.

    Several MNB users wrote in to point out that fast food chain Raising Cane's founder and CEO Todd Graves did the same thing for his employees … except in his case, that meant buying 50,000 Mega Millions tickets at $2 apiece.

    For which we applaud him … especially since he didn't have any more luck than Stew Leonard's.  No winning tickets were sold for Tuesday night's drawing, which means that the next drawing - on Friday - will be for $1.02 billion.

    Your turn…

    Published on: July 28, 2022

    Regarding Amazon's acquisition of One Medical, MNB reader Frank Rich wrote:

    I'm not sure I would be so concerned with One Medical sharing my medical history/data with Amazon's other businesses...but are there any laws keeping One Medical from accessing the enormous trove of data that Amazon has on me?

    They know a lot about what I eat, if I buy exercise equipment or clothes, if I watch too much TV...

    Fair point.

    Another MNB reader wrote:

    Have we seen this movie before?  Amazon acquires PillPack to revolutionize the pharmacy business.  Amazon acquires Whole Foods to upend the grocery sector.   Amazon teams with Warren Buffet and JP Morgan to rethink health insurance.  How are these moves/movies faring in creating the new normal?  Primary care requires the ability to manage well educated health care professionals making highly regulated clinical decisions in a complex healthcare ecosystem.   As IBM Watson demonstrated, physicians do not respond well to being told how to do their job by computer algorithms.  Fool me once ...



    On another subject, an email from MNB reader Lori Buss Stillman:

    I applaud Apoorva Mehta’s decision to leave Instacart. The passion, talent and skills required to build a successful organization is dramatically different than that which is required to lead and grow and public company. More executives – and their boards – would well serve the organizations they lead by knowing where their strengths lie and when those strengths become a liability.

    Instacart – and their stakeholders – will likely benefit greatly from aligning the leadership for the future with the new expectations and requirements that come with their next chapter.



    Responding to yesterday's story about Albertsons' Q1 numbers, one MNB reader wrote:

    Of course dollar gross and net revenue is up- that’s not a surprise give all the price increases and inflation.  Which has resulted in a whopping additional $39.4 million in profit margin for ABS.  Prices increases benefit retailers since they typically take the retails up much prior to the actual increase date and their margin increases accordingly.  Interesting that several large retailers are “pushing back” against price changes - they certainly don’t seem to offset most of them.



    Yesterday, MNB took note of a Wall Street Journal report that Shopify is laying off about 1,000 employees, representing about a tenth of its global workforce.  Founder-CEO Tobi Lütke took responsibility for making a bet - that e-commerce sales would continue to grow apace even as the pandemic receded - that didn't pay off.  "Ultimately, placing this bet was my call to make and I got this wrong," he wrote.

    Prompting MNB reader Mike Bach to write:

    Nice to see a CEO take personal responsibility. His was a major strategic mistake which could have been balanced with more customer behavior and a better analysis of the market, to understand what truly was scalable.

    Makes me wonder what level of rigor the Board of Directors consider when brought to them.  It would be easy to buy into the hubris of eCommerce growth but several false positive signals were there. Did the Board put in their own due diligence?  (Even get asked?)



    Finally, regarding our story about  how Stew Leonard's gave each one of its 2,500 employees a single lottery ticket for Tuesday's Mega Millions drawing, which had a whopping $830 million jackpot, one MNB reader wrote:

    This is the first I've seen you every mention anything about Lottery.  I' be interested in what else you have to say about it. Walmart is putting Lottery in all their US stores where allowable.  Lottery players in c-stores generally add other items to their purchase.

    To be honest, I don't know much about lotteries, so I don't have any strong feelings about their efficacy.  I may have to buy a ticket this week, though.

    Published on: July 28, 2022

    The Us Weekly brand is bringing its celebrity lens on culture, content and commerce to local grocery beauty aisles with a new program featuring the latest in celebrity-inspired trends, brands and products. Merchandised as floor displays or endcaps, thousands of Us Weekly Now Trending fixtures have been added to Kroger banners, Albertsons banners, Meijer stores and Food Lion locations. New items and trending brands will be showcased seasonally.

    “Grocery shopping is the most habitual kind of shopping there is, with a frequency that is unrivaled,” said Nikki Laughlin, chief innovation officer and president of marketing and brand development of accelerate360, the parent company of a360media and Us Weekly. “Us Weekly is a cultural powerhouse uniquely positioned to leverage its extraordinary brand recognition and trust to disrupt that habit, and surprise and delight customers, ultimately inspiring discovery and purchase. It’s a win for retailers, it’s a win for their customers, and it’s a win for our brand partners.”

    Current selections include:  Blossom Beauty moisturizing lip glosses & cuticle oils infused with real flower petals … Nailtopia eco-friendly, bio-sourced, chip-free nail lacquer in summer colors … Arches & Halos professional eyebrow care co-founded by Tonya Crooks, the world’s most celebrated celebrity brow expert … Bella & Bear vegan and cruelty-free sugar scrubs and body butters made with natural ingredients … and Defy & Inspire high-pigment and long-wearing nail lacquer formulated free of 17 free of harsh chemicals 

    “Our excitement for this program is underscored by an incredible retailer and customer response,” said Trey Holder, chief business officer and president of distribution and logistics of accelerate360. “Combining our understanding of media and retail is a great example of how accelerate360 can bring value to partners in a dynamic and entertaining way.”

    For more information, contact support@accelerate360.com 

    About Accelerate360

    accelerate360 is an omnichannel sales, distribution and logistics, marketing and media company that unlocks growth for retailers and brands at the intersection of culture, content, and commerce. For more than 100 years, with delivery to over 56,000 retail locations weekly, the company's customized solutions have connected people, products, and point of sale with a specialization in General Merchandise, Health, Beauty, and Wellness categories. Headquartered in Atlanta, accelerate360 has offices and fulfillment centers strategically positioned across the United States and is proud to employ more than 1,300 employees.