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    Published on: September 21, 2022

    The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Today, Tom Furphy reports in from Groceryshop 2022 in Las Vegas, where innovation in the retail food business is front and center in terms of conversations and exhibitions.  Tom and KC talk about the degree to which data accumulation and usage, as well as the development of retail media networks, seem to have captured the imaginations of those in attendance.  They explore the degree to which both these concepts, if applied to the pursuit of seamless, shopper-first concepts, can become differential advantages.  And, Tom and KC consider the degree to which Instacart is setting many of the terms of engagement for the industry.

    If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

    Published on: September 21, 2022

    by Kevin Coupe

    The United States Preventive Services Task Force yesterday issued draft guidance that all US adults under the age of 65 should be screened for anxiety disorders, and all adults should be screened for depression.  These mental health conditions are seen as being far more prevalent in the US as a result of the Covid-19 pandemic.

    The Wall Street Journal reports that this is "the first time that the United States Preventive Services Task Force has made a recommendation on screening adults for anxiety disorders. The move comes months after the task force issued similar draft guidance for children and adolescents … The task force said that there wasn’t enough evidence on whether or not screening all adults without signs or symptoms ultimately helps prevent suicide. The group didn’t recommend for or against screening for suicide risk, but called for more research in the area."

    The Journal writes that "more than 30% of adults reported having symptoms of an anxiety disorder or depressive disorder this summer, according to estimates from the federal Household Pulse Survey. The percentage of U.S. adults who received mental-health treatment within the past 12 months increased to 22% in 2021, up from 19% in 2019, according to the Centers for Disease Control and Prevention."

    The task force, the Journal writes, is a panel of 16 independent volunteer experts that "issues guidance on preventive-care measures. Health insurers are often required to cover services recommended by the task force under a provision in the Affordable Care Act."

    Now, while this may not at first glance be seen as an Eye-Opening retail or business issue, the fact is that these people are company employees who may be struggling as a result of Covid-related circumstances.  They may not even know they're struggling, but lingering issues both physical and psychological may be affecting their ability to perform and capacity to be happy.  And that ought to matter to companies, especially those that prioritize the creation of cultures of caring, knowing that this can help their organizations be more productive and profitable.

    Good doctors already are doing this.  I know that my doctor, over the past few years, has spent time during my annual checkups inquiring about my mental health.  (I assume she's doing this with everybody, and that it's not just me.)  But not everybody has a general practitioner who is attuned to these issues, and I hope that this task force recommendation will awaken more people to a growing problem that needs to be addressed.

    Published on: September 21, 2022

    Fox Business reports that Kroger is testing a new electric grocery delivery cart developed by General Motors under its "new BrightDrop brand, which sells its new all-electric commercial vans and associated technology.

    "The BrightDrop Trace Grocery features nine temperature-controlled drawers and is weatherproofed for four-season use.  Its propulsion system can handle loads up to 350 pounds and reach speeds of 3 mph.  The compartments are lockable, and the cart can be integrated into a store's app, so it can be left for a customer to retrieve their own purchases using a verification code."

    "Covid has driven a dramatic increase in online grocery shopping, and fulfilling these orders profitably has become a major challenge for retailers of all sizes. With the Trace Grocery, we saw an opportunity to help companies like Kroger tackle these challenges head on," BrightDrop President and CEO Travis Katz said in a prepared statement.

    KC's View:

    Clearly we're at a point where there are a lot of different solutions being tossed out there, and smart retailers will be looking to test as many of them that make sense - there almost certainly won't be a one-size-fits-all solution.  Some of the products will come from traditional vehicle companies, and some will come from start-ups with unique takes on the problem … and it'll be interesting to see which ones survive.

    But let's not forget the study we cited here recently suggesting that one of the problems these technologies will face is a lack of supportive infrastructure.  This could great potholes both actual and metaphorical.

    Published on: September 21, 2022

    Walmart said yesterday that its Walmart Connect "closed loop omnichannel media business" has signed a deal with Firework, described as "a leading video e-commerce solution," to offer "livestream and premium shoppable video content" on its digital properties.

    Some context from the announcement:

    "The move comes amid seismic changes in the retail industry, as exploding US e-commerce sales are expected to break the $1 trillion mark for the first time. Consumers who turned to online shopping during the pandemic have remained there, and live shopping trends that have taken Asian markets by storm are picking up steam in the states as consumers increasingly turn to short-form video to discover and research products in their omnichannel journey."

    And, Walmart said:

    "By partnering with Firework, Walmart Connect aims to bring shoppable, short-form, social-media-style videos to its own digital properties while also making them available to advertisers, creating a premium video commerce experience. By bringing product discovery and final transactions together under a single immersive experience, Walmart Connect is supporting the entire customer continuum … Firework has partnered with Walmart Connect to launch a live shopping experience in support of Walmart’s Mega Beauty Event with partners J&J, L’Oreal, P&G and Unilever. The event includes four livestreams, which took place from September 13th through 16th, and continues to leverage replays and shoppable videos for featured products."

    Rich Lehrfeld, Walmart Connect’s SVP and GM, said in a prepared statement, "“Video and livestream commerce truly works when you put the customer at the center of the experience … Our partnership with Firework further underscores how Walmart Connect is committed to evolving our business and expanding our offerings to actively stay ahead of what advertisers need."

    KC's View:

    The evidence, anecdotal and otherwise, seems to suggest that these kinds of programs have the potential to be really successful with a percentage of the population that wants a more immersive and entertaining shopping experience.  Me, I'm in the percentage of the population - dwindling, I'm guessing, because we're dying off - that is tired of always being sold on something.

    Published on: September 21, 2022

    Business Insider has a piece about Whole Foods CEO Jason Buechel, who has just succeeded the company's founder, John Mackey, in the top job.

    "Buechel plans to roll out more of Amazon's innovations like its cashier-free Just Walk Out technology and smart shopping carts in stores, he said during a keynote at Groceryshop, an annual industry conference, in Las Vegas.

    "But he also noted that Whole Foods stores should be 'theater' for shoppers, giving them insight into how their food is raised and what's in it by interacting with workers."

    According to the story, "Buechel pointed to Just Walk Out and Amazon One palm payment technology as examples of technologies Whole Foods plans to roll out from Amazon. 

    "Amazon's Dash smart carts also provide another quick way for shoppers to buy their groceries, Buechel said. Amazon unveiled a new version of Dash earlier this year that weighs less, carries more groceries, and can be taken to shoppers' cars in the parking lot … Buechel also acknowledged that the Dash cart is easier to roll out into new stores than Just Walk Out's complex system of cameras that track what shoppers pick up."

    However, Buechel emphasized that "he doesn't want to compromise on Whole Foods' stringent standards for products, which include banning ingredients such as high-fructose corn syrup and developing fair-trade relationships with mango farmers in Haiti.

    "'One of the key reasons why many of our customers come is our quality standards, so I have no intention of us changing,' he said. 'In fact, I feel like this is going to be an opportunity for us to further elevate our quality standards as we go forward'."

    KC's View:

    Seems to me that one of his biggest challenges is persuading a lot of folks that Whole Foods hasn't actually lost a step since the acquisition by Amazon.  Because that's certainly a popular perception.

    Published on: September 21, 2022

    dunnhumby has released a special edition of its Retailer Preference Index (RPI), looking at which grocers are best serving their customers in a faltering economy, and concluded that the top five are Market Basket, Aldi, WinCo, Grocery Outlet and Save A Lot.

    Rounding out the top 10:  Lidl, Dollar General, Food4LessFoodsCo, Family Dollar, and Military Commissaries.

    Two other key observations:

    •  "While Amazon is better positioned than any retailer for long-term success in grocery, their value proposition for inflationary times is no better than the average grocer. As a result, Amazon dropped out of the first quartile as their web traffic declined -6.5% so far this year."

    •  "Inflationary times are a big headwind for premium specialty retailers (such as Sprouts, Wegmans, and The Fresh Market) and for regional grocers with a quality-first position (i.e., Publix and Harris Teeter). These retailers are not well positioned for inflationary times since they currently are too far behind most of the market in save me money perceptions. These retailers are also behind the market in year-over-year visit growth during 2022."

    Published on: September 21, 2022

    From the Wall Street Journal this morning:

    "A European private-equity firm agreed to buy a controlling stake in Eataly SpA, with the aim of helping the Italian-marketplace chain continue to expand globally.

    Investindustrial is taking take a 52% stake in Eataly, the companies said Wednesday.

    "The deal … involves an investment of around 200 million euros, equivalent to $199 million, as well as the purchase of additional shares.

    "Eataly plans to use the investment to retire debt and open more flagship stores as well as develop new formats.

    "Eataly was founded in 2003 by Oscar Farinetti. Its marketplaces feature a mix of restaurants and retail, all with a focus on Italian food and drink. It currently has roughly 40 locations in countries including the U.S., the United Arab Emirates, Japan and Brazil, with more planned.

    "The Farinetti family, the Baffigo/Miroglio family - another family long involved with Eataly - and Italy-based Tamburi Investment Partners will own the remaining 48% of the company."

    Published on: September 21, 2022

    •  The Information has an assessment of Instacart's current prospects for an initial public offering (IPO):

    "If Instacart goes public in the current market, it’s likely to be ugly. Mutual fund investors in Instacart have already marked down the price at which they value the company to as low as $14.7 billion, less than half the $39 billion price at which Instacart raised money early last year. But even at those discounted levels, Instacart shares look pricey compared with those of DoorDash, its nearest public comparable."

    The story notes that "DoorDash is currently trading at 2.6 times its projected sales for the next 12 months, down from as high as 19.4 times in February last year, around the time Instacart was raising money at its $39 billion valuation. If you apply DoorDash’s current multiple to Instacart—and assume Instacart’s revenue rises 20% this year from its 2021 total, based on our report of its 2021 revenue—Instacart would be worth just $5.6 billion.

    "Now, you might say it’s unfair to pick these rock-bottom numbers. We’re in a very depressed market, and in the long term, both DoorDash and Instacart would trade up from these levels. But the long term doesn’t matter—Instacart wants to go public soon. In this environment, anyone agreeing to buy stock in an Instacart offering will want protection against the chance that the stock drops sharply when it starts trading. That suggests they’ll demand a big discount to rosy estimates about what Instacart might be worth in the long run. (Instacart declined to comment.)

    "It may be that Instacart has little flexibility around the timing of an initial public offering. Early employee stock grants could be expiring, as was a factor in Airbnb’s IPO timing. And for very early employees, even a valuation of $5.6 billion could yield big gains. Even so, once the stock recovers, those early employees might regret having sold at a rock-bottom price. If Instacart can find a way to delay, it should."



    •  CNN reports that "the Federal Trade Commission is taking a closer look at Amazon’s proposed acquisition of iRobot, the company that produces the Roomba series of automated vacuum cleaners, according to a financial disclosure on Tuesday.

    "On Monday, the FTC requested more information from both companies about the $1.7 billion deal, according to an investor filing from iRobot, in what’s known as a 'second request' and an indicator of deeper scrutiny by antitrust officials.

    "The investigation highlights how FTC officials are closely reviewing Amazon’s merger activity following calls by consumer advocates for the iRobot deal to be blocked."

    Published on: September 21, 2022

    •  Congrats to Lee Ann Parsons and Kaytlyn Stanuszek, designers with Love Cakes by Dorothy Lane Market, who this week were named grand champions at Pillsbury’s Creative Cake Decorating Competition at the International Baking Industry Exposition in Las Vegas.

    Here's what we know:

    "Six two-person teams from bakeries around the world came to compete, including designers from Quebec, Mexico, and other United States teams representing bakeries in Baton Rouge and Illinois. Lee Ann has been with Love Cakes by DLM, the boutique cake division of Dorothy Lane Market, for seven years. Kaytlyn joined the Love Cakes team just three years ago. Judges evaluated everything from artistry and skill to imagination.

    "Starting on Sunday, the competitors completed cakes live on the exhibit floor, working for several hours both Sunday and Monday. Winners were announced at the award show on Tuesday in each of the four categories: Wedding cake, rolled fondant, buttercream, and hyper-realistic. The Love Cakes team came in first place in the Wedding Cake and Buttercream Cake categories, in addition to being honored for their cumulative points as the overall grand champion."



    •  FMI-The Food Industry Association and the National Grocers Association (NGA) have both come out in favor of bipartisan legislation being introduced in both the US Senate and House of Representatives that "would require more than one network option on credit cards, giving merchants like food retailers greater choice in payment routing and fostering innovations in vendor services and fraud protection for merchants and consumers alike."

    FMI Chief Public Policy Officer and Senior Vice President, Government Relations Jennifer Hatcher said that the "legislation simply establishes parameters to foster competition and transparency so that card networks would compete for our business on fees and terms – just as we have to compete for our customers’ business."

    “Credit card payments are among the highest costs of doing business for many U.S. merchants, including independent community grocers,” said Christopher Jones, NGA SVP of government relations and counsel. “These ‘swipe fees’ have a direct impact on our members' operations and the viability of their businesses. Swipe fees are the second largest operating costs for grocers and are out of their control.”



    •  The Boston Globe reports that Walgreens Boots Alliance Inc. said yesterday that it will spend $1.37 billion to acquire the 30 percent of Shields Health Solutions that it does not already own.

    Shields, the story says, " was among the first companies to work with hospitals to establish their own specialty pharmacies, focusing on treatment areas such as oncology, neurology, rheumatology, and diabetes where treatments can cost hundreds of thousands of dollars a year. In doing so, it took on the pharmacy benefit managers typically picked by patients’ insurers to supply the drugs.  Unlike rival CVS or Cigna, Walgreens Boots doesn’t own a pharmacy benefit manager or health insurance company. Shields Health Solutions has set up specialty pharmacies for nearly 80 health systems representing about 1,000 hospitals nationwide."



    •  The Wall Street Journal reports that Gap Inc. "is eliminating about 500 corporate jobs, according to people familiar with the matter, moving to reduce expenses at the apparel retailer amid declining sales and profits.  The jobs are mainly at Gap’s main offices in San Francisco and New York, as well as in Asia, the people said. The company is laying off staff and eliminating positions that are currently open across a range of departments. Some employees have been notified of the layoffs in recent days, the people said."

    "'We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability,' Bob Martin, Gap’s executive chairman and interim chief executive, wrote in a memo to employees on Tuesday."

    Published on: September 21, 2022

    •  GeekWire reports that this week, "Teamsters leaders including Sean O’Brien, general president of the union, brought their campaign to organize Amazon warehouse and logistics workers to the company’s doorstep in Seattle … A large crowd marched past the Amazon Spheres and the company’s headquarters towers, filling the streets north of downtown Seattle, and delivering loud chants in protest of Amazon and its founder, Jeff Bezos … The Teamsters accuse Amazon of mistreating warehouse and logistics workers, and allege that the company has illegally thwarted efforts to unionize its fulfillment centers in some parts of the country … The march by the Teamsters on Amazon HQ coincides with the Teamsters Women’s Conference, taking place in Seattle this week."

    An Amazon spokesperson responded to the protest:  "We respect the rights of individuals to peacefully protest.  And as we’ve always said, it’s our employees’ choice of whether or not to join a union — it always has been. As a company, we don’t think unions are the best answer for our workforce and our focus remains on working directly with our team to continue making Amazon a great place to work.”

    GeekWire notes that "Amazon CEO Andy Jassy hinted at the Code conference earlier this month that the company would continue to appeal to the landmark vote to approve a union at its Staten Island warehouse, saying there were 'a lot of very disturbing irregularities' in the vote."

    Published on: September 21, 2022

    …will return.