Published on: October 24, 2022
I found a recent Wall Street Journal piece about "productivity paranoia" - employers who believe that remote workers are not as productive or as honest as those in the office - to be problematic. And kind of sad. It doesn't speak well of these organizations, I think, nor of the current state of management-labor relations. And the real problem is that nobody seems to be doing anything to address the actual issues.
Published on: October 24, 2022
Walmart said last week that it will "spread the excitement of Black Friday savings over three events throughout November and cap off a month of deals with Cyber Monday … Walmart’s 'Black Friday Deals for Days' events will begin on Walmart.com every Monday in November."
According to the announcement, "Walmart is also bringing back its … Early Access benefit … Paid Walmart+ members will have the advantage of an extended early access window that begins seven hours before the scheduled start times for all three events on Walmart.com."
Charles Redfield, executive vice president and chief merchandising officer for Walmart US, said in a prepared statement: “Black Friday has evolved over the years from a single day to an entire season and is without a doubt the most anticipated shopping event of the year. Our customers are counting on us more than ever to help them find the season’s best gifts while delivering incredible savings like only Walmart can. That’s why we continue to challenge ourselves to offer an unparalleled Black Friday experience each year, giving customers more of what they love – more opportunities to shop even bigger savings on Walmart’s best assortment of gifts, easily and conveniently, online or in our stores.”
It is going to be an interesting holiday shopping season. Amazon's second Prime Days promotion apparently ended up being more fizzle than sizzle, and now we have competing retailers (including Target and Best Buy, as well as Walmart) are trying to jump start things early. At the same time, we have inflation high, unemployment low, and the economy continuing to grow even as we all worry about a likely recession.
Lots of conflicting data points. I have no idea how it all will shake out by the end of the year.
Published on: October 24, 2022
• The Chicago Business Journal reports that Kroger has opened a new concept store in Monroe, Ohio, about midway between Cincinnati and Dayton, that the retailer describes as having a "game changing" checkout experience.
According to the story, " The new concept gives customers a variety of options that include a group of Kroger’s new high-tech modes of checkout as well as the traditional low-tech methods … Customers at the new concept store now have the ability to use Kroger’s KroGo carts that have built-in scales and cameras. They enable customers to scan groceries as they shop, pay at the cart and completely skip the checkout line. Kroger, the nation’s largest traditional supermarket operator, has tested those high-tech carts in a few markets.
"Additionally, customers can use the belted self-checkout lanes Kroger has also tested recently in a few markets … Those are similar to Kroger’s typical self-checkout lanes, but they have conveyor belts that are useful for larger orders. If two people are shopping, one can scan the items and the other can bag them.
"If the test works well, Kroger plans to expand it. It would bring the concept to about six Greater Cincinnati stores next year as well as some in Columbus, Ohio."
• The La Crosse Tribune reports that Hy-Vee has opened its fifth store in Wisconsin, on the site of a former Sears store in the Valley View Mall, while also building a 4,100-square-foot Hy-Vee Fast and Fresh convenience store nearby.
According to the story, "it is the fourth Hy-Vee with the company’s reimagined flagship store design," offering "a new dining experience for customers with a large open food hall dining area for fast-casual dining, which includes an expanded breakfast menu; a pub with full sit-down bar, 32 taps and outdoor patio; mealtime offerings; Mia Italian; HyChi and Hibachi; Nori Sushi; Market Grille; Long Island Deli and a Wahlburgers restaurant.
"The new store also has a full-service bakery, full-service deli, full-service meat counter that includes a dry-aged steaks case, full-service seafood counter with sustainable seafood options, large fresh produce area, an in-store Starbucks, a large floral and gift department and a pharmacy with a drive-up window. It also has a Joe Fresh clothing department, a beauty department, an expanded Candy Shoppe and a large Hy-Vee Wine and Spirits department."
These openings reflect a continued emphasis on incremental innovation on the part of retailers, though it is interesting that the coverage suggests divergent priorities - Kroger seems more focused on technology and convenience, while the Hy-Vee focus appears to be more on foodservice.
They're different markets, of course, and I haven't been to either store so I can't speak from personal experience. But it seems logical to suggest that there are two primary buckets where we're going to see innovation going forward, as retailers look to enhance the customer experience.
Published on: October 24, 2022
The Los Angeles Times has an op-ed piece by Benjamin Lorr, author of “The Secret Life of Groceries: The Dark Miracle of the American Supermarket," in which he writes about the proposed $24.6-billion merger of Kroger and Albertsons, suggesting that it will have "profound implications."
Lorr - who talked to MNB about his book in September 2020 here and here - writes that the supermarket industry is trapped in an unsustainable model, "chasing higher and higher volume to fund cheaper and cheaper prices. Which by necessity means grocers are always looking over their shoulder at their competition. Getting underpriced is an existential threat. Growing bigger is your only chance at survival.
"This has been, and will always be, a rickety and unstable path. It creates a route to the top that allows for two or three dominant firms to grow so big they have a real advantage. And it simultaneously creates a race to the bottom for nearly everyone — including those dominants lest they lose their place. This is why Kroger and Albertsons can be both mighty and insecure.
It is a model where costs forever need to be cut. Where labor is always a tax on the bottom line. As a paradigm shift, using volume to drive price cuts was an explosive engine for individual chains. When it becomes the only game in town, we suddenly have a self-devouring feedback loop as an industry.
"Because there truly is no lowest point. Because you will always live in terror that one of your competitors will go lower."
Lorr suggests that the drive to lower prices and yet maintain the kinds of margins that will assuage investors means that retailers almost always have to look for ways to exploit the system, cutting costs everywhere and anywhere: "Exploitation isn’t an exception to the system; it is its only logical extension."
Lorr writes that "the endgame consolidation — the type that pushes two giants like Kroger and Albertsons together" means that "the incentives to keep margins low break down. Kroger executives will swear that this deal will allow them to reduce prices. They claim they are going to take $500 million in synergies and plow it back into consumer prices.
"If they had a few more competitors, I might take them at their word.
"As it is, they’ve gobbled them all up."
You can read the entire piece here.
It is worth reading the entire piece just for Lorr's historical perspective. (Indeed, it is worth reading his book.)
From the moment this was announced, I was pretty sure that this would be a good deal for the investor class (at least in the short term). The larger question is whether it will be good for employees, good for customers, and good for the competitive balance in the industry. (It goes almost without saying that it will be good for the lawyers and lobbyists.)
The biggest challenge these folks will face is making sure that the two companies' leadership teams are not so preoccupied with all the nuts and bolts of engineering such a mammoth merger of companies, banners and operations that they are not as focused as they should be on individual stores. Because someone has to be charge of that … making sure that individual stores - and, most importantly, their people - deliver on whatever differentiated value proposition they're offering to shoppers.
Published on: October 24, 2022
From the New York Times:
"Thanksgiving 2022 is shaping up to be a tough one for turkey. The star of the holiday meal will be both hard to find and more expensive than ever.
"Turkey supplies have been tight for a long time. Producers began to cut back on raising the birds back in 2019 after turkey prices crashed. Then the pandemic hit, further curtailing production.
"Inflation has also pushed up the price of whole turkeys. Farmers and processors are paying a lot more for feed, fuel and labor, which can be scarce. They face supply shortages and drought.
"All of it means that home cooks this year could be paying more than twice as much for a turkey as they did last year, some in the poultry industry predict.
"And then there’s the avian flu. A particularly persistent and contagious strain carried by migrating birds has killed at least 3.6 percent of the nation’s turkeys, or about 7.3 million birds, so far this year, according to figures from the Department of Agriculture and Watt Global Media, which monitors the poultry business."
Seems to me that retailers have to be really transparent with shoppers about the turkey situation, and start the process now - it won't be good for anyone to simply have shoppers find this out when they come to their stores. (Trust me. Despite a lot of press attention to the issue, most shoppers will be surprised by a shortage and high prices.)
There also is an opportunity here - in the face of shortages, retailers can suggest to shoppers that it is time to create new traditions. As I've said here before, we stopped eating turkey on Thanksgiving years ago because none of our kids really liked turkey. So for us, it is almost always filet mignon served with a short rib mac and cheese, and some sort of vegetable - usually asparagus - and maybe some salad. That's our tradition, and we love it.
Published on: October 24, 2022
The New York Times reports that even as the UK economy "has been buffeted by the effects of Brexit, the war in Ukraine and, most recently, the government’s dramatic reversal on a series of planned tax cuts that led to the resignation of Prime Minister Liz Truss," there is at least one segment of its economy that is booming - whiskey production.
According to the story, "The volume of whisky exports from Britain has grown over the past two years, including a 10.5 percent increase during the 12 months ending in July over the same period the year before, according to government data … The surge in exports, driven by higher demand from the United States and the Asia-Pacific region, comes as 20 distilleries have opened in Scotland in the past six years, bringing the total number of distilleries there to 141."
One likely factor, the Times writes, "is that the ad campaigns from some of the beverage giants that in recent years have bought smaller distilleries have helped to broaden the appeal of whisky to younger consumers."
Another factor probably is the likelihood that the current world situation has a lot of us drinking more than ever before, despite reports that there is a trend toward being "sober-curious."
Published on: October 24, 2022
• United Natural Foods, Inc. (UNFI) announced a new deal with digital coupon provider CoupDog that will allow UNFI's independent retailer customers to transition to a new standard Universal Digital Coupon "that can be integrated into consumers mobile wallets such as Apple Pay and Google Wallet, or even printed on paper." This, the announcement, suggests, "can help UNFI’s more than 30,000 customer locations drive increased participation in manufacturer-funded coupon redemption."
• From Bloomberg:
"Amazon.com Inc. is poised to take a stake in the parent of Hawaiian Airlines as part of a deal to expand the e-commerce giant’s cargo-hauling operations using a fleet of Airbus SE freighters.
"Hawaiian Holdings Inc. issued warrants allowing Amazon to acquire as much as 15% of the carrier’s outstanding shares, according to a statement Friday. The warrants are exercisable over the next nine years.
"The agreement may signal a revival of Amazon plans, reported in 2021, to use long-range Boeing Co. and Airbus freighters to move goods using its own planes, stepping up its rivalry with United Parcel Service Inc. and FedEx Corp. It also offers a new source of income to Hawaiian amid a slow rebound in Asia-Pacific travel, with some countries only recently lifting coronavirus-related travel restrictions."
Published on: October 24, 2022
• Reuters reports that "the Teamsters union, representing more than 18,000 workers, said it had ratified on Friday a national contract with Costco Wholesale Corp.
"The first-ever national agreement provides members with significant wage improvements over the next three years and a substantial increase in pension contributions by Costco, the International Brotherhood of Teamsters said in a statement … The contract, which was ratified by a vote of 72% of the membership, also provides for higher semi-annual bonuses and a more flexible attendance policy, alongside other workplace benefits."
• FMI-The Food Industry Association and the North American Meat Institute said that they have redesigned this year's conference - scheduled for March 6-8 at the Hilton Anatole in Dallas - to evoke what they called "a modern, personalized protein experience."
This includes, they said: "Creating a forum and re-establishing connections with potential partners, contacts and opportunities – both within and throughout the industry … Delivering data, trends and insights to give brands and products a distinctive point of view to differentiate and position attendees’ businesses … providing an extensive range of food and sensory experiences, product demonstrations and exciting presentations that can only be experienced in-person at AMC." And, as usual, there will be the release of "the Power of Meat, a key industry analysis of shoppers’ attitudes and purchasing decisions for meat."
• The Wall Street Journal reports that "the backup of container ships off Southern California’s coast that was at the heart of U.S. supply chain congestion during the Covid-19 pandemic has effectively disappeared.
"The queue of ships waiting to unload at the ports of Los Angeles and Long Beach fell from a peak of 109 ships in January to four vessels this week, according to the Marine Exchange of Southern California. Shipping specialists say fewer ships than normal are heading to the main U.S. gateway complex for imports from Asia in coming days and that cargo volumes that had long swamped the ports now are receding.
"Bottlenecks continue to delay cargo at other major U.S. seaports and at inland freight hubs, but the end of the backup at the big ports in California signals broader supply-chain tangles that have been troubling retailers and manufacturers are unwinding."
• Delish reports that pasta company Barilla is being sued for its use of the slogan, "Italy's No. 1 brand of pasta."
The lawsuit argues that the slogan "leads reasonable consumers to believe that Barilla's products are made and/or manufactured in Italy using ingredients from Italy," when in fact "Barilla's products are primarily made in the company's plants in Ames, Iowa and Avon, New York."
The manufacturer has responded: " "Barilla remains committed to vigorously defend against these unfounded claims, as the wording on the box clearly states: ‘Made in the U.S.A. with U.S.A. and imported ingredients.' We're very proud of the brand's Italian heritage, the company’s Italian know-how, and the quality of our pasta in the U.S. and globally."
• From the Financial Times:
"Executives at some of America’s publicly listed companies will earn millions of dollars in equity-based bonuses this year because sympathetic boards have reworked their incentive plans — even though stock market declines have wiped trillions of dollars off corporate valuations.
"Companies adjusted bonus plans in 2020 to account for the coronavirus pandemic and have since revisited pay and eased performance assessments in response to inflation, energy crises and other macroeconomic problems, said Matteo Tonello, a managing director at the Conference Board, an economic research organisation."
Published on: October 24, 2022
• The New York Times has a story about how unionization efforts at Starbucks have entered a new phase, following a series of elections that resulted in the unionizing of employees at some 250 of its 9,000 US stores, and then a kind of "uneasy stalemate in which organizers struggled to sign up new stores even as the company was hard-pressed to reverse their gains."
The Times writes:
"That has led to a third phase of the campaign, in which the union, Workers United, has stepped up efforts to win concessions from the company through collective bargaining, which is scheduled for the coming weeks.
"Some of the concessions sought by the union, like a commitment by the company to stay neutral in future elections, could make it easier for workers to unionize. Others, like paid leave tied to a pandemic, which the company has discontinued, could encourage more workers to join the union by showing it can deliver concrete benefits.
"But to win such concessions and greatly expand the union’s reach, labor experts say, supporters will almost certainly have to increase pressure on the company, through strikes or other means. And that has heightened the importance of a number of cities — in addition to Boston and Buffalo, places like Eugene, Ore.; Albany, N.Y.; and Ann Arbor, Mich. — where there are several unionized stores, dozens of workers willing to coordinate their actions and a community that is largely sympathetic."
• The BBC reports that "the first ever ballot for strikes at a UK Amazon warehouse site has failed to reach the legal threshold for industrial action.
"According to union GMB, it was missed by just three votes, despite 99% of those who took part backing action. UK law states at least 50% of members entitled to vote must do so for strike ballots to be valid.
"Amazon said it had increased pay and offered a 'comprehensive benefits package' to employees in Coventry.
Published on: October 24, 2022
…will return.
Published on: October 24, 2022
• The Philadelphia Phillies yesterday earned the National League pennant with a 4-3 win over the San Diego Padres, taking the best-of-seven National League Championship Series four games to one.
And, in the American League Championship Series, the Houston Astros beat the New York Yankees 6-5, completing a four game sweep.
The Phillies and the Astros now will meet in the World Series, starting Friday, October 28.
• In Week Seven of National Football League action…
Cleveland Browns 20, Baltimore Ravens 23
Tampa Bay Buccaneers 3, Carolina Panthers 21
Atlanta Falcons 17, Cincinnati Bengals 35
Detroit Lions 6, Dallas Cowboys 24
New York Giants 23, Jacksonville Jaguars 17
Green Bay Packers 21, Washington Commanders 23
Indianapolis Colts 10, Tennessee Titans 19
Houston Texans 20, Las Vegas Raiders 38
New York Jets 16, Denver Broncos 9
Kansas City Chiefs 44, San Francisco 49ers 23
Seattle Seahawks 37, Los Angeles Chargers 23
Pittsburgh Steelers 10, Miami Dolphins 16
