Published on: September 14, 2022
Got the following email from MNB reader Tim McGuire:
I understand your skepticism about Howard Schultz’s record of repeat returns to the CEO role. But don’t fall into the trap of underestimating Laxman Narasimhan.
I worked with Laxman at McKinsey for 20 years. You say he has no retail experience - the major retailers he consulted to during his McKinsey career would beg to differ. He helped 3 of the top 20 global food retailers turn around their businesses. You could equally say he had little experience in consumer packaged goods, but he rapidly rose to #3 in PepsiCo worldwide, and a smart board would have chosen him as Indra Nooyi’s successor.
He took the CEO role at Reckitt when the company was in turmoil and turned it around.
You are skeptical. I can tell you the day his appointment was announced I bought $500,000 of Starbucks stock. People have underestimated Laxman since he showed up from India with $100 in his pocket and a dream. Every single time they’ve been wrong. He’ll fix it.
Okay. I could be wrong. It happens several times a day.
I would suggest, however, that consulting with major retailers may be different than running a major retailer. Leading such a company, more than ever, requires EQ as well as IQ. The question I am asking is not whether he is smart enough to lead Starbucks, but whether he will be able to forge the emotional connections to employees that are necessary to fix the company while remaining true to its unique value proposition.
I think that's a question worth asking.
And, by the way, good for you to be able to buy a half-million dollars in Starbucks stock.
MNB reader Rickard Werner had a thought about an IRI report on inflation that at one point observed that "the most significant drop-offs in volume are in categories where prices have risen dramatically, including frozen dinners/entrées, cookies and coffee."
It occurs to me that it could be driven by, or at least heavily influenced by a return to food-away-from-home. Frozen dinners = fast casual meal solutions; and cookies and coffee = Starbucks and Dunkin Donuts. A quick check of Starbucks' sales show record revenues and I keep hearing that restaurants can't find enough workers to keep up with returning customers. My guess is that this is more influential in these categories than inflation, especially when you consider the cost of eating out!
Yesterday, we took note of how Wegmans customers received an email from Colleen Wegman, the company's president/CEO, announcing the end of the company's SCAN app, which allowed customers to scan their groceries as they shopped the store. The email blamed "losses" for the decision, and, she said, "We've learned a lot and we will continue to introduce new digital solutions to streamline your shopping experience for the future."
I conceded that I've never used the Wegmans SCAN app, but my youngest sister, Clare, has, and I let her offer some commentary. It included the following statements:
WORST NEWS!!! Okay, there are worse things. But this is pretty bad.
For me this has been a game changer. I can scan as I shop, and bag my own groceries. (Wegmans cashiers are the WORST baggers I have ever experienced. I do believe they bag the way they are trained, but they are terrible.)
It is rare that I wait in line. I usually scan at the checkout, pay and leave. Waiting in line will add time to my shopping trips. Minimal human interaction. In the wake of Covid, I value this.
I will also tell you that I am doing more comparison shopping, with inflation. I have not done this in a while b/c I always felt the prices and quality at Wegmans beat everyone else. Not really feeling that way of late. I am surprising myself and shopping at Aldi's for produce, milk and some other items.
I also had some suggestions for Wegmans (a retailer that, to be clear, has done very well for itself without listening to my suggestions):
First, you should've quantified and qualified the word "losses" to a greater degree. It is a little vague. If you had been more specific, customers using the SCAN app might have been more sympathetic.
As for Clare's analysis … Wegmans has a choice, They can act as if she is an outlier, just one dissatisfied customer. (In a variety of areas, apparently.). Or, they can proceed as if she is representative of a much larger customer group, many or most of whom did not write emails. Or hand an older brother who has a soapbox and is not afraid to use it.
Wegmans usually is not tone-deaf. But it is possible that in this case, it needs to listen a little harder.
One MNB reader responded:
Interesting comments by your sister. It’s a bit hard for me to reconcile her complaints given Wegmans overall customer satisfaction ratings.
There is no doubt every retail establishment can improve… I’m an ardent fan of continuous improvement. Clearly, Aldi, Lidl and Costco (to name a few) can provide better retail pricing than a conventional supermarket, but I would ecstatic if I lived in an area with a Wegmans. Maybe your should ask your sister to compare the the positives of shopping at Wegmans vs. the negatives. If “minimal human interaction” is a major issue for her, explain the shopping experience at Amazon Fresh.
You are perfectly entitled to your opinion, but I would argue that it is precisely the wrong way to respond to consumer comments.
Sure, Wegmans gets great customer satisfaction ratings…but that doesn't mean a) that every customer is satisfied, or b) that as the company has gotten bigger and more spread out, there hasn't been slippage. Companies that are not vigilant about such things - and I'm not referring specifically to Wegmans - run the risk of missing or ignoring problems until it is too late.
Plus, you're ignoring the fact that Clare was a huge Wegmans fan and constant customer. But something has changed … and to suggest that what really needs to happen is that someone should "explain" things to her is precisely the wrong approach. (It is really the wrong approach with Clare, who takes after our late mom in being a force of nature not to be reckoned with.)
Besides, she's apparently not alone.
One MNB reader wrote:
Yes!! 1000% yes to what your sister shared. I have recommended the SCAN app to so many friends and family because of how easy it is – and how seamless the transaction is. The inefficiency of unloading my groceries on to a belt and then bagging them myself (because, again, your sister is right, they are terrible at bagging) was frustrating; the speed and control I had to scan and bag my own groceries the way I wanted to, in the time I had, was a huge seller of the SCAN app. My weekend routine (it’s become a “date” for my husband and I), is to go to Sam’s Club – use their Scan & Go app, and then drive across the street to Wegmans and finish our trip using their SCAN app. I scan, he does the bagging. It’s fun! We look forward to it! It also required you bringing your own reusable shopping bags, which was a win-win.
I am surprised at how Wegmans handled this; I have been a proponent of them and their customer service and shopping experience, but this really put a sour taste in my mouth. There was no indication that they were phasing it out; how do you offer this for years and then give less than a week’s notice, and your solution is only a coupon? They definitely pulled the rug out from under me. I am annoyed at how tone deaf their response is and their lack of solutions.
They didn’t explain what they meant by “losses,” but wonder if they factored in customers like me as a weekly shopper!
And, from another reader:
What a great way to respond to this story. Your sister makes for compelling reading.
I don’t know a lot of the details about how SCAN works, but I have operated these systems before and can say that the shrink issue can be overcome in several ways. It’s unfortunate that Wegmans did not better respond to their concerns by working smarter to fix the issue rather than eliminate the service. Shows the need for a stronger collaboration (and perhaps skill) between operations, digital product, IT, and the commercial teams. That being said, Wegmans should probably be even more concerned about your sister’s feedback about their price competitiveness and overall value proposition.