business news in context, analysis with attitude

Published on: August 23, 2022

by Michael Sansolo

When it comes to getting a meal on the table, where do shoppers find the better value? It’s a question worth considering especially now that restaurants, as Kevin reported last week, are claiming they offer the superior value.

After all, you can drive down to the local McDonald’s and chow down on the value menu of $1 burgers, fries and drinks. And yes, for $3 plus tax you have a meal. It’s tough to top that, unless you remember (and as Kevin wrote) that price isn’t a synonym for value or a satisfactory dining experience.

But with inflation making shoppers more sensitive to pricing, it seems like a very good time to take this issue on directly, rather than let shoppers do the math for themselves. And that requires clear communication and a hard-nosed strategy.

Last Thursday our family got a beautiful glossy ad supplement from Wegmans and in many ways it’s a handbook on how to fight back. The message in the ad was simple, pointed, clear and detailed, and echoed on the company's website  “Wegmans Flavorful Meals As low as $2 per serving.”

Even McDonald’s can’t match that price.

Inside the 12-page ad were quick and affordable meal ideas such as chicken and potatoes with frozen vegetables; garlic Parmesan tilapia with rice and broccoli; or even pizza and salad.

The supplement went on to offer suggestions on cost saving ideas for lunch, breakfast, snacking and beverages, with even some health and beauty items thrown in for good measure.

And to ensure no ambiguity, the supplement carried an important message: “We’ve always believed you shouldn’t have to sacrifice flavor for savings. That’s why we’ve worked with our chefs to create meal options as low as $2.00 per serving that are incredible delicious, which you can find at wegmans.com/meals.”

Now there may be countless reasons why you might say you cannot run the kind of stores Wegmans does or offer the same level of service. Wegmans has a well-deserved reputation for excellence that few in the industry can match.

However, you do have many of the exact same tools. Sure you might not have chefs, but you certainly have a wide mix of products that you could merchandise as simple and affordable meal ideas that are certainly tastier and far more nutritious that a McChicken sandwich. 

You too can look for ways to highlight price specials on national and store brands and you can do the quick math to help shoppers see the incredible bargain that food cooked at home offers. And you can remind them of all the step-saving items you have to make cooking easier than ever.

One of our favorite movie moments feels like a perfect philosophy to consider here. It comes from The Untouchables when Jimmy Malone teaches Elliot Ness how to beat gangster Al Capone. “He pulls a knife, you pull a gun. He sends one of your guys to the hospital, you send one of his to the morgue. That’s the Chicago Way.”

When it comes to the battle for share of stomach the restaurants are playing hardball. Wegmans doesn’t have stores any where near Chicago, but this new ad shows the company is fighting back “The Chicago Way.” It’s a lesson and strategy others would be wise to copy and quickly!

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: August 23, 2022

Yesterday I told you about my visit to the Susanville, California, IGA store, where the doughnuts are fantastic - the very definition of a differential advantage.  My only regret was that the blueberry fritters - which were the subject of much rhapsodizing on social media - were not in stock.  Well, I was in the area because I was speaking at the C&S food show in Reno, Nevada, and it was while I was there that I got a terrific and tasty surprise, plus learned a great lesson about independent retailing from store owners Rick and Anna Stewart.

Published on: August 23, 2022

The Information has a piece suggesting that there is a reason that Amazon has gone on what looks like an acquisition binge…

"We’re learning how Amazon plans to deal with Federal Trade Commission Chair Lina Khan’s anti–tech acquisition policy - by striking so many deals that the FTC will have a hard time fighting them all.

"You could call it the whack-a-mole M&A strategy. That’s one interpretation of Sunday’s news that Amazon is a bidder for Signify Health, a health analytics company with a market capitalization of $6.6 billion. The bid follows Amazon’s deals to purchase the One Medical chain of primary care clinics and iRobot, maker of the Roomba robot vacuum cleaner, over the past few weeks.

"And those two acquisitions were in addition to Amazon’s $8.6 billion purchase of MGM earlier this year. There’s no certainty Amazon will succeed in its bid for Signify: It faces competition in the bidding from UnitedHealth and CVS, according to The Wall Street Journal. But if it wins, Amazon will have spent more than $20 billion on acquisitions this year, roughly 10 times its acquisition spending in each of the past three years. Amazon can easily afford that outlay - it had $60 billion in cash and marketable securities as of June 30. Moreover, Amazon is striking while asset prices are cheap, so you can’t fault its timing.

"But it is telling that CEO Andy Jassy has become so acquisitive at a moment when Khan has been getting more aggressive about blocking big tech deals … Presumably Jassy wants to signal that he won’t let the government get in the way of Amazon’s expansion strategy. And he apparently sees healthcare as a big new source of growth that will fit in alongside the company’s cloud computing, entertainment and original e-commerce businesses. While he might be right, you have to wonder whether he can manage so many disparate businesses within the one organization."

Published on: August 23, 2022

From the Wall Street Journal this morning:

"Beef is getting cheaper, bringing some economic relief to U.S. consumers.

"Prices of beef, typically among the costliest grocery store purchases, are falling after more than a year of increases, as consumer demand softens for some cuts. Supplies are improving due to better staffing at meat plants, and supermarkets are offering more discounts on rib-eye, New York strip and other often-expensive products.

"For months, prices for food and consumer products have been rising across grocery aisles due to higher costs of transportation, ingredients and labor. Some of the biggest increases have been in the meat section, and shoppers have been buying cheaper cuts or switching to less expensive protein like chicken. As beef prices plateau, consumers are finding more deals and options, industry executives and analysts said.

"Retail beef prices fell 0.7% for the four-week period ended Aug. 7, compared with the same period a year ago, according to data from research firm Information Resources Inc. That decline came after beef prices fell 1% during the prior four-week period, which was the first monthly decline since June 2021. U.S. retail beef prices hadn't fallen for two straight months in over a year and a half, though they remain at historically high levels."

Published on: August 23, 2022

The Wall Street Journal has a piece about how some private equity groups are investing in small businesses - like car washes, dentist offices, auto-repair shops and dry cleaners - with a simple goal:  "The strategy of buyout firms, flush with cash and facing stiff competition to invest it, is to bundle these modest businesses - a move known in the private-equity industry as a 'roll up' - and find new ways for them to make money. The goal is to create bigger, more valuable companies that can be sold down the line for multiples of what they paid."

You can read the entire piece here.

Published on: August 23, 2022

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  The US now has had 95,449,606 total cases of the Covid-19 coronavirus, resulting in 1,066,082 deaths and 90,893,151 reported recoveries.

Globally, there have been 601,813,537 total cases, with 6,474,316 resultant fatalities and 576,467,606 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 79 percent of the total US population now has received at least one dose of vaccine, with 67.4 percent. being fully vaccinated.  The CDC also says that 48.4 percent of the total US population has received a first vaccine booster dose, with 33.2 percent of the 50+  population and 40.4 percent of the 65+ population having received a second vaccine booster shot.

•  Dr. Anthony Fauci, who has led the National Institute of Allergy and Infectious Diseases since 1984, named to the post by President Ronald Reagan and advising seven presidents during his career, announced that he will retire in December.  Fauci is 81.

The Washington Post writes that Fauci's tenure "put him on the front lines of every modern-day scourge, including AIDS, the 2001 anthrax scares, Ebola, Zika and the coronavirus pandemic. During the nearly four decades Fauci led the agency, it grew from a little-known institute with a $350 million annual budget to a globally recognized powerhouse with a budget exceeding $6 billion."

Fauci was awarded the Presidential Medal of Freedom by President George W. Bush.

Look, I recognize that not everyone is going to agree with what I am about to say, but I'm going to say it anyway and, to be honest, I'm not going to turn MNB into a place where we are going to have an extended debate about Fauci's career.  I do believe that the US has been lucky to have a public servant of Fauci's quality and dedication, and it is shame that some decided that his response to the coronavirus pandemic into a political football.  I had an MNB reader who wrote me the other day, responding to a study suggesting that workers defined as "essential" continue to be impacted by Covid-19, becoming reinfected at a greater rate than others.

"It's especially affecting those who have been vaccinated and boosted," he wrote.  "Turns out it is actually the pandemic of the vaccinated."  Which - forgive my bluntness - is one of the dumbest things I've ever heard.  Those people aren't reinfected because they are vaccinated and boosted - they're getting reinfected because their jobs put them at greater risk.  The government's response to the pandemic wasn't perfect - the coronavirus was a moving target, and the response had to evolve as our understanding of it changed.  And certainly the people in charge of public health policy ought to learn from the experience to fashion an ever more efficient, science-based approach to future pandemics.

But a lot more people would've gotten sick and died if not for dedicated public servants like Fauci who did their level best to respond to the emergency.  

Y'know what I think is a shame?  Since I last did a "MNB Covid-19 Coronavirus Update," on July 29 - and trust me, I'm thrilled not to be doing them every day, like I did for close to two years - the numbers of vaccinations and boosters have not changed a whole hell of a lot.  That's too bad.

Published on: August 23, 2022

•  The Wall Street Journal reports that "Instacart orders and revenue grew in the second quarter as consumers stuck to online grocery delivery despite rising prices and store reopenings, a promising sign for investors as the company prepares for an initial public offering as soon as later this year.

"Instacart is one of the few companies in Silicon Valley moving toward a public listing in what might be one of the slowest years for IPOs in decades … Revenue for Instacart during the three months ended in June climbed 39% from the year-earlier period to $621 million, investors said, the highest quarterly revenue in Instacart’s history. The increase was stronger than in the first quarter, when revenue increased 15% year over year.

"The San Francisco-based company’s growth was driven by an increase in the number of orders placed on the app, which climbed 25% from the year-earlier quarter to more than 60 million, people familiar with the matter said. The quarter also was helped by the growth of new consumer price plans including lower-cost scheduled delivery and more expensive fast delivery options, as well as lower average fulfillment costs by grouping individual orders."

The numbers, the Journal writes, "provide support for the grocery-delivery startup ahead of the planned public listing as soon as this year."

Published on: August 23, 2022

•  CNN reports that McDonald's is bringing to the US a sandwich that has proven to be a big hit in the UK, selling out 10 days after it was introduced - a Chicken Big Mac.

According to the story, "Beginning later this month, the burger chain is testing the fan favorite at select restaurants in Miami for a limited time. The Chicken Big Mac is similar to its meaty sibling, however it replaces the two burgers with two tempura chicken patties. Of course, it also includes the signature Big Mac sauce, pickles, shredded lettuce and a slice of American cheese."

Published on: August 23, 2022

We took note the other day of a Washington Post story about specific food product shortages that exist in a number of different countries.  The one identified in the US was Sriracha, which prompted me to joke about hoarding a bunch of it after I read about a coming shortage several months ago.

One MNB reader seemed appalled:

Kevin, congrats on beating your neighbors out of sriracha sauce. I hope you sleep better at night knowing that you don’t have to forego this basic necessity.

Really Kevin, I saw the headline and read the article expecting to see a screed about the perils of food shortages around the globe. In your vain attempt at humor, you come off looking pretty high-brow and elitist.

I did a long piece yesterday about Amazon's healthcare intentions, prompting MNB reader Andrew Huth to write:

Missing from the discussion is the biggest question that none of the interested parties wants to ask (because they know the answer) – should my health care be a profit center for any organization? The rational answer is, of course, a resounding “NO” but we are alone among all developed nations in consistently answering “YES.” Until that changes American healthcare will not improve. It is not a business; it is a right.

But we live in a country where healthcare is not seen as a right.  It is a business.  Not that there is anything rational about that approach.

We had a piece the other day of how Walmart is canceling billions of dollars in orders around the world as it deals with too much inventory, prompting one MNB reader to write:

This is the exact reason I tell my clients to not do business with Walmart until they are no more than 10% of your business, or 20% if you have good reserves of cash to weather things like this. If all these vendors had ordered, or received inventory it could be devastating. But what we don’t know is how far into the order process they were cancelled. Let’s hope they cancelled new orders and not ones that were ready to ship.

MNB also pointed out a story about higher grocery transaction costs in Texas, which led to that rarest of things - an email critical of H-E-B:

As a loyal HEB customer, I can attest to the higher transaction cost. Unfortunately, those of us in the San Antonio market do not have great alternatives. There is Walmart, a few Whole Foods, and a couple of  Trader Joe’s. Consequently, HEB has pricing power.

For those of us who actually like the store experience, I wish that there were more options. I know Kroger is establishing an online ordering system for delivery, but that’s no fun. 

It just exemplifies what happens when there is not adequate competition in the market.

On the subject of whether grocery stores can make malls more attractive and viable, one MNB reader wrote:

A few weeks ago, Costco announced it will be replacing a Sears store in Escondido, Ca at the Westfield North County Mall. This location also lost a Nordstrom’s after Covid hit. What I find most interesting about this location is there are 3 other Costco’s within 10 miles of this planned store.

Yesterday we took note of a Business Insider report that Amazon, having "struggled to open physical stores amid high costs and tension with Whole Foods," has decided to pause "the rollout of self-checkout Amazon Fresh stores following disappointing sales and economic headwinds."

I commented:

Okay, time for some hard truths and tough love.

If the Amazon Fresh physical stores are not living up to expectations, it is because …stick with me now, Amazon … they are crappy stores.

Now, to be clear, I have not been to all of them.  But the ones I have been to have struck me as underwhelming, poorly merchandised, and basically designed to be dark stores that happen to let customers in to shop.  The technology is great, but the stores themselves are soulless.

Want to fix the dysfunction?  Hire someone with strong store operational experience and empower them to do what is necessary to make these stores run right.  Amazon, if you want some suggestions, call me.  Email me.

I actually don't think this is hard to fix.  But I do think it is a matter of misplaced priorities and poor leadership, and it will require some strong hands at the tiller to put things right.

One MNB reader wrote:

Agree with you- they are underwhelming.  We’ve been to the new one in Paramus, NJ for 3 Saturdays in a row.  Yes- it is cool to just put items in your bag and walk out.  But:

Very dark store- thanks for confirming that I’m not the only one who thought that.  Dark floors (warehouse like) and lighting was weird. 

I did not get my emailed receipt for several hours.  This might be a tech glitch because they just opened.

While their produce looked great- no flavor at all (except the corn on the cob).

Some days, we weren’t charged for items; other days, we were charged for items we did not purchase.  Seemed to even out cash wise - so I didn’t report anything.

Small deli - and only one person working there.  The slowest person.  While she was working on our order- the two people behind us on line left. AND, they didn’t have any turkey.  No turkey in a grocery deli?  UNHEARD of.  All we bought was cheese.

Merchandising - I’ve been in grocery for over 10 years.  But I’m on the finance side- forecasting, budgeted etc.  I am NOT a merchant - nor do I want to be.  However, I even know that you need to block out shelves, and make them look full.  Make it look welcoming.  This Fresh store just looked dark and dingy to me.

This location was a former Fairway Market - a bright store with beautiful tiled floors (with their own issues).  Sad to see Fairway changed into this.

To summarize- we will not go back.

MNB reader Steven Ritchey wrote:

You seem to be almost begging them to call you so you can fix them.  Now, I've never been in one of their stores so I only have your description of them to go by.

Honestly though, I'd like to see you in charge of turning a store around, just to see if you can do it.  Pardon me if it seems I'm taking a dig at you, as I'm really trying not to.

But, it always seems as if pundits who want to tell others how to fix their businesses, frequently have no real experience in running that kind of business.  It's easy to tell others how to do things when your job isn't affected by the success or failure of your ideas.

I made some comments like this several years ago, and your reaction to my comments suggested you thought I was full of it, or at least was being disrespectful of you.  Believe me, I'll never try to tell you to run your blog, as I'd have no clue how to make something like this work.

I like your other idea better, it seems they really do need someone who has a real background in merchandising to bring their stores up to something a consumer wants to visit and maybe buy a few things..

Seriously, no disrespect intended.

First of all, I'm not begging them to do anything.

And I certainly am not capable of fixing anything.  Never said otherwise.  What I said was this:

Want to fix the dysfunction?  Hire someone with strong store operational experience and empower them to do what is necessary to make these stores run right.  Amazon, if you want some suggestions, call me.  Email me.

I am, to be clear, completely unqualified for the job.  I do have some ideas about people who would be.

That doesn't mean that I don't have some basic understanding - based on covering the industry for more than 30 years and having spent a lot of time with a lot of folks who a) are a lot smarter than I am, and b) have been willing to share their knowledge and experience with me - of what needs to be fixed.

But here's the deal.  Looking at the business, and seeing things that don't work and then writing about bow they might be better, is kind of what I do for a living.  People can agree with me, or disagree with me.  My goal is to get people think about stuff differently, as well as to get them to make me think about stuff differently.