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    Published on: October 20, 2022

    I have another chapter in our ongoing saga about local retailers who don't compete effectively and blame everybody else for their problems.  Except in this case, I found a local business that has been doing it effectively for decades, and was our first, best choice when circumstances forced me to shop for a new washer and dryer.

    Published on: October 20, 2022

    by Kevin Coupe

    We appear to be in the middle of a pandemic baby boom, suggesting that when people were working from home over the past few years, they weren't just working from home.

    Axios reports that new numbers from the Centers for Disease Control and Prevention (CDC) indicate that " that the birth rate for U.S. mothers increased by 6.2% relative to the 2015-2019 trend line — and that the pandemic led to a net increase in births for U.S.-born mothers of around 46,000 children.

    "They also discovered that a widely publicized drop in fertility rates in 2020 — agonized over in the press — was largely due to a sharp decline in births to foreign-born women, who were blocked from entering the country."

    In addition, Axios writes, "The researchers looked at birth data from California in 2022 and found that the uptick there has continued — suggesting the pandemic changed the trajectory of fertility in the U.S. longer-term.

    "The pandemic baby dividend might keep paying," says Hannes Schwandt, a professor at Northwestern University, who analyzed the CDC figures.

    That's Eye-Opening good news for retailers - especially food retailers - because an increase in US birth rates means that those folks are going to have to eat.

    That means more sales.

    Published on: October 20, 2022

    Bloomberg reports that "Gopuff has fired hundreds of staff members, coming after earlier rounds of job cuts this year, as the rapid delivery startup struggles to stem its cash burn in a slowing economy … the job reductions primarily affected customer service staff, which included a mix of full-time and temporary employees."

    Sources tell Bloomberg that about 250 people have been laid off.  Gopuff had about 15,000 employees earlier this year.

    The story notes that "closely held Gopuff is navigating an uncertain economic environment while facing increasing competition from rivals like DoorDash Inc. In March, the company laid off 3% of its global workforce and further reduced headcount in July, letting go of about 1,500 people. Over the summer, Gopuff also shuttered 76 warehouses, roughly 12% of its network, across the US to consolidate its footprint in some cities."

    Gopuff said that the new layoffs were part of a "planned" downsizing, and that “there are no plans for incremental layoffs.”

    Reuters reports that "some employees who were let go described the firings as chaotic and said they weren’t given a warning before access to internal systems like Slack, email, and human resources portals were revoked, even as they were still working shifts. Other full-time employees were told severance packages were 'coming soon'."

    KC's View:

    "No plans for incremental layoffs?"

    Just curious.  Does anyone really believe that?

    I hear comments like that, and I think back to the days when I was a young writer working in the video division of the company that then owned Progressive Grocer.  And every time senior executives had to lay people off, they'd call together the survivors and say that layoffs were coming to en end, and that we were turning the corner.  It didn't take many repeat performances before we all knew when these guys were lying to us - their lips were moving.  (In the end, I'm grateful - I was eventually laid off, which started me on the path that led here.)

    Gopuff is part of a broad reset taking place after the pandemic boom, as inflation and a likely recession forces the delivery industry to rightsize.  It'll be painful for some, fatal for others.  Think of it as the circle of life.

    Maybe "rightsizing" needs to be a daily discipline, not an emergency measure.

    Scott Galloway said the other day that the best way to define "recession" is as something that happens every seven years … and it has been 13 years since we've had one.

    Published on: October 20, 2022

    Reuters reports that Amazon "is launching a home insurance portal in Britain and has signed up three big-name insurers as it pushes further into financial services across the globe … The new portal, Amazon Insurance Store, will also include customer reviews and ratings on insurance companies and the rate at which the claims were accepted for policies offered, Amazon said."

    The story notes that "last year, 29.4% of UK consumers bought household insurance through price comparison sites in Britain, according to analytics firm GlobalData.  Insurers worry that tech firms will steal a march on their business, and are keen to partner with them, offering them commissions for selling their products."

    Reuters points out that this is just Amazon's the latest foray into the UK insurance area - it already has had a portal allowing small and medium sized businesses to access insurance products.  "It started offering motor insurance in India in 2020 through Acko General Insurance and also provides product warranty insurance in Europe."

    KC's View:

    Just part of Amazon's continued push into financial services, taking place roughly on a parallel track next to its continued push into healthcare, with all tracks leading - if it works - to an inextricable, inevitable connection to every part of our lives.

    If you're into that sort of thing.

    Published on: October 20, 2022

    The Hustle has a fascinating story about how nuns around the country, who used to be responsible for making tens of millions of communion wafers each year for use in the Catholic mass, have been virtually put out of business:

    "Communion wafers used to be almost entirely produced by nuns running small-scale operations … They provided an integral role in developing a product that they, along with the rest of the Roman Catholic Church, believe is turned into the literal body of Christ at mass.

    "But today it’s a different story.

    "Now, almost every communion wafer comes from the for-profit Cavanagh Company, the United States’ altar bread monopoly."

    The irony is that Cavanagh originally got into business by manufacturing  equipment that nuns used to make the wafers … and while it said it had no interest in competing with the nuns, that's exactly what it did, by developing more complicated equipment that allowed it to develop and sell wafers that were superior in quality, better tasting, and lower priced.

    There's also another intriguing plot twist - a group of Benedictine Sisters who decided not to bow to the competitive challenge, and actually got aggressive as they worked to maintain market share.  (They even created a gluten-free wafer.)  Which worked for a time, until the pandemic created another series of soul-crushing challenges.

    You can read the entire piece here.

    KC's View:

    All I say say is:  Dominus Vobiscum … Et cum spiritu tuo.

    Published on: October 20, 2022

    •  Ahold Delhaize-owned Peapod Digital Labs has announced its intention "to grow its media network – AD Retail Media – by building an end-to-end, in-house retail media business."

    The in-house decision means that the company will launch "a unified on-site and off-site platform to deliver a single point of activation and measurement," leverage "proprietary data to create more targeted ads and improve returns on ad spend," and enable "one dashboard for transparently measured campaign results spanning transactions made on-site and across the web."

    "“Retail media is already a sizable percentage of total advertising spend – with forecasts showing it will continue to grow significantly,” said JJ Fleeman, President, Peapod Digital Labs, in a prepared statement.  “By bringing AD Retail Media inhouse, we will create a connected go-to-market offering for CPGs, grounded in new capabilities, simplicity and value generation. As the space continues to grow, we’re proud to invest in retail media to continue to propel our companies – and our CPG partners – forward.”

    •  Bloomberg reports that Amazon "faces a UK class-action lawsuit over claims the tech giant uses a 'secretive' algorithm to abuse its dominant position in the online marketplace.

    "Amazon has made millions of customers pay more by hiding better deals on platforms to boost its own products, Hausfeld, the law firm behind the case, alleges. It does this by using a 'secretive and self-favoring algorithm' in its Buy Box feature.

    "A spokesperson for the Seattle-based company said the claim 'is without merit and we’re confident that will become clear through the legal process'."

    •  Add Amazon founder Jeff Bezos "to the chorus of voices warning of hardship ahead for the US economy," the BBC reports.

    "The probabilities in this economy tell you to batten down the hatches," Bezos writes on Twitter.

    Published on: October 20, 2022

    •  FMI-The Food Industry Association announced its FMItech Pitch Competition to showcase food retail technology start-up solutions. After contestants provide a three-minute video that is reviewed by the FMItech at Midwinter Advisory Council, six top-scoring start-up companies will vie for first place at the … FMI Midwinter Executive Conference, highlighting their solutions to industry leaders and an expert panel of judges."

    FMI says that "start-ups will share their expertise in areas such as process automation and robotics; AI-targeted loyalty and shopper behavior monitoring; digital receipts; and coupons, all to assist retailers in achieving business outcomes and meet consumer expectations."

    •  From the New York Times this morning:

    "There are signs that inflation in Europe is getting worse. Data released on Wednesday showed that overall consumer prices rose at a rapid pace in September from a year earlier, climbing nearly 11 percent in the European Union and 10.1 percent in Britain. The cost of food jumped nearly 16 percent in the European Union and more than 14 percent in Britain, while energy prices surged around 40 percent across both places.

    "As inflation continues to flare, few matters are causing more concern than the cost of a basic loaf. Prices for the most essential food staple have never been higher, and are now up nearly 19 percent from a year ago, the fastest rise on record, according to Eurostat, Europe’s statistics agency.

    "Russia’s war in Ukraine has been a major factor behind the increase, Eurostat said, by roiling energy markets and driving up prices for grains, oilseeds and fertilizers."

    •  Also from the New York Times:

    "Nestlé and Procter & Gamble, two of the world’s largest consumer-facing companies, continued to raise prices last quarter, generating higher sales even as shoppers, squeezed by inflation, cut back on the amount of cereal, yogurt, detergent and other goods they bought, the companies reported on Wednesday. Executives also said that the prices would remain high in the coming quarters.

    "Nestlé, the Swiss conglomerate whose brands include Kit Kat and San Pellegrino water, raised prices by 9.5 percent in the third quarter versus the same period last year, up from a 7.7 percent increase in the previous quarter. The effect of accelerating prices was reflected in a small decline in the volume of goods sold in its latest quarter, the first fall in years."

    Published on: October 20, 2022

    •  The Cincinnati Business Courier  reports that Scott Hays is retiring after more than four years as president of Kroger’s Cincinnati/Dayton division, and will be succeeded by Ann Reed, who currently president of Kroger’s Louisville Division.

    Published on: October 20, 2022

    More comments from the MNB community about the proposed Kroger-Albertsons deal…

    One MNB reader wrote:

    One key learning after going through this process that I feel is evident to both Kroger and Albertsons management is the follow up to divestiture. Recall the Haggen's debacle, where Albertsons sold some 88 stores to Haggen, (who failed miserably in their new markets) only to buy them back for pennies on the dollar when the FTC dust had settled. That's also a real possibility in this scenario as well.

    And from another reader:

    I agree with you that everyone will profit from this, but maybe not the consumer.  At least in my markets, the Albertsons-Safeway divisions have the highest retails of any competitor in their markets.  Kroger, middle of the road.  So, competition will continue post-merger.

    The challenge will come on the manufacturing side with the increased cost pressures placed on them from the new mega retailer.  Unfortunately for consumers, I don’t think this will trickle down to the shelf tags.  It hasn’t yet.  A/S is a prime example.

    And one more MNB reader chimed in:

    I worked through:

    Pathmark / Ahold.

    Rite Aid / Walgreens.

    Rite Aid / Albertsons.

    IMHO, Stick a fork in it.

    I wrote the other day about how I think companies like WinCo, Aldi and Dollar General are likely to take advantage of the current economic situation to build their own market shares, prompting one MNB reader to write:

    Don’t share your optimism on Hard Discount potential in USA, as the format has struggled to exceed 2 percent market share.

    Aldi has been in USA 46 years, not a game changer, and Lidl’s USA launch after 5 years viewed as a disaster, now appears closing as many stores as opening.

    USA consumers frequently buy their favorite brands on sale at a price better than private label . Every full service USA supermarket is stacked with private label, so why make an extra stop at a place like Aldi or Lidl?

    There is a big pond separating USA retail dynamics and UK.

    From another reader:

    I agree with you to a degree.  Aldi, WinCo, and Dollar General are positioned well since they have been entrenched in the US market for a long time and will definitely benefit from a recession.  However, Lidl?  Not so much.  They may gain some share but are still trying to figure out their consumer and item mix.  Unfortunately for them, I see them going to own brand items as their direction for market gains and not store growth.

    To me there are two issues with this approach.  1. They are not big enough to command “best cost /best ingredients” for their products.  Unless it is being produced in the EU, but the offset with the dollar and transportation across the pond negates any savings there.  2.  Locations.  Where are they going to grow?  If it is ground up growth, where?

    I believe the competition is way ahead of them on the good sites.  Purchase existing locations?  Not really.  If they are buying existing locations, generally these are being sold due to slow performance, and they simply cannot purchase enough to compete on the national retail stage.  I think they have a long, long way to go. 

    And finally…I used a picture of a coin-filled urn on my desk in a story the other day about the national coin shortage:

    One MNB reader asked:

    What's that odd shaped coin at the top of the jar?

    Geez … I hadn't even noticed.

    I checked.  It was a Bahamian dime.

    Good eyes.

    Published on: October 20, 2022

    In Game Two of the National League Championship Series, the San Diego Padres beat the Philadelphia Phillies 8-5, making the best-of-seven series 1-1.

    In Game One of the American League Championship Series, the Houston Astros beat the New York Yankees 4-2.