business news in context, analysis with attitude

Published on: October 26, 2022

by Michael Sansolo

Stew Leonard Sr. used to advise his staffers to avoid arguing with customers over small issues. Rather, he said, try to imagine how much money they would spend over a year (or years) and consider if the argument was really worth that amount.

It pays to keep that in mind as we think of customer relationships and luckily we have a really clear example to offer. Several weeks ago, Kevin reported on the hostile reception his wife received when trying to get a vacuum fixed at a local shop. The shop owner’s hostility was based largely on the fact that Mrs. Content Guy purchased the vacuum on Amazon rather than through him.  (For the record, she didn't know that he sold vacuum cleaners, since he'd never marketed that fact and his store window was a mess.)

Now let’s consider a very different case. A few years back our vacuum cleaner broke and my wife and I started searching for a replacement. Sure, we could have bought one through Amazon, but we discovered that a local shop was a supplier of Miele vacuums, a highly rated brand. (The same brand, coincidentally, that KC and Mrs. Content Guy owned.). Certainly we could have saved a few dollars at Amazon, but we decided that supporting a local merchant mattered, so we made our purchase.

But let’s remember, that a purchase is only one part of the relationship with shoppers. How we treat them is what truly closes the deal.

As it turned out, in our case, the local shop owner is a guy I used to regularly see at the gym. He was delighted to get our business and always showed it by giving us an extra vacuum bag or filter for free when we came in for supplies. And that led to a relationship that I would argue has paid dividends for Steve (the shop owner) multiple times.

First, we were so impressed with his store and his customer service that we began recommending him to people in person and on local social media. 

Secondly, and maybe most importantly, we learned his shop also provided carpeting and flooring, so when our mudroom flooded, he was our first call to install a replacement floor. (I have to believe that was profitable.) And it was incredibly important that his staff - both sales and installation - were polite, professional and easy to deal with.

Lastly, when both our adult children in subsequent years told us they really needed new vacuums, our next move was obvious. We visited Steve’s store, explained the basic needs of their homes and purchased two more Miele vacuums. By contrast, there is no way Kevin and Mrs. Content Guy would do any of those things with their local shop owner, who berated them for their purchasing choice. I’d bet they never darken his door again.

The bottom line is that yes, we specifically chose to shop locally rather than on-line, but that choice was reinforced by a caring local merchant who always seemed very willing to listen to our issues and offer solutions. In the process he made us loyal and repeat customers. 

The lesson is pretty obvious I think. Competing on price against Amazon, Walmart or countless others is never going to be easy or even possible, simply because of their size and endless economies of scale. But even a small operator, and my “friend” Steve is definitely that, can build a point of competitive distinction with a willingness to build customer relationships and by finding a way to provide services and connection that a much larger company may not.

The unpleasant reality is that your shoppers are going to go elsewhere frequently, either on line or in person. Your job is not to scold them for disloyalty, but to build a lasting relationship that transcends your competitive disadvantages. And by doing so, you may end up winning extra business in the long run.

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: October 26, 2022

I have some second thoughts about our reporting yesterday about an Engadget story saying that Amazon may have $8 billion worth of attrition - "regretted" and "unregretted" - annually.   Even if the number is only half right and is $4 billion, it seems to me that it offers Amazon an extraordinary opportunity.

Published on: October 26, 2022

by Kevin Coupe

•  Axios reports that "just 42% of U.S. adults think today's youth will have a better life than their parents - an 18-point drop since June 2019 and the lowest since 2011," new Gallup polling data suggests.

•  Axios also reports on a new Harvard study saying that "loneliness in America is widespread — and it's a public health problem … More than 1 in 3 Americans are lonely … That rises to 61% when looking at younger people, and 51% among mothers with young kids."

The story goes on to point out that "one analysis likens the negative health effects of loneliness to smoking 15 cigarettes a day … The pandemic spotlighted — and worsened — loneliness in America.  It hit older adults who had to isolate themselves to protect their health, kids who stayed home from school and young professionals who moved back home to live with parents.

"But even the most connected people, with seemingly robust social lives and networks, can be quite lonely. It's more about the quality of our relationships, experts say."

I mention these two Eye-Opening trends for a simple reason - these people, who are concerned about the next generation's ability to thrive, and who are lonely to an almost epidemic degree, are the industry's customers and employees.  And therefore, the industry needs to be cognizant of these trends.

Published on: October 26, 2022

Amazon announced yesterday that "it will begin offering Venmo as a new payment option for orders placed on Amazon.com and the Amazon mobile app."  The option will become available by Black Friday, the day after Thanksgiving that is the traditional beginning of the end-of-year holiday shopping season.

Venmo boasts that it has close to 90 million customers in its system.

According to the announcement, "Placing an order using Venmo is simple and hassle-free. To get started, customers will add their Venmo account as a payment method to their Amazon account. Once their account is added, customers can select Venmo as their payment option during checkout. Customers can also choose to select Venmo as their default payment option after adding their Venmo account."

“We want to offer customers payment options that are convenient, easy to use, and secure—and there’s no better time for that than the busy holiday season. Whether it’s paying with cash, buying now and paying later, or now paying via Venmo, our goal is to meet the needs and preferences of every Amazon customer,” Max Bardon, vice president of Amazon Worldwide Payments, said in a prepared statement. “We’re excited to continue to offer customers even more options when it comes to how and when they want to pay for their order.”

Some context from CNN:

"Launched in 2009, Venmo has evolved from a peer-to-peer payment app that lets users pay back friends for last night’s pizza into a payment system accepted by major businesses, including CVS and Uber.  The app … also offers a credit card and has entered into the crypto market by allowing users to buy and sell Bitcoin, Ethereum and other cryptocurrencies."

Published on: October 26, 2022

As plant-based meat company Beyond Meat unveiled its new Beyond Steak this week, there are reports that the entire segment is "softening."

According to Beyond Meat, its new faux steak is "designed to deliver the juicy, tender and delicious bite of seared steak tips with the added nutritional and environmental benefits of plant-based meat …  Seared to perfection and chopped into bite-sized pieces, Beyond Steak provides a flavorful and satisfying experience for meat lovers and flexitarians alike. Packed with 21 grams of protein per serving, Beyond Steak delivers the tender bite and savory taste consumers crave while offering nutritional benefits, including being low in saturated fat and having 0 mg of cholesterol with no added antibiotics or hormones."

The item is being launched nationwide at Kroger and Walmart stores.

Meanwhile, Axios reports that "companies that make faux burgers and other meat substitutes are laying off employees and staring down weak sales, amid what Beyond Meat describes as 'ongoing softness in the plant-based meat category' …  Beyond Meat announced a 19% workforce reduction this month amid steepening revenue declines … Impossible Foods laid off 6% of employees, though it positions the move as part of a reorganization and says sales are growing."

The story notes that "the biggest fast-food chains and meat producers have raced to cash in on fake meat, sensing consumer appetite for sustainable and animal-friendly alternatives. But high prices and flattening demand have dogged the industry."  One indicator:  "McDonald's shelved plans to introduce a McPlant burger nationally," even as it brings back its McRib sandwich.

Published on: October 26, 2022

•  Vice reports that "representatives of Starbucks walked out of five collective bargaining sessions with union members on Monday, and the company indicated it wouldn’t resume bargaining if the union continued to allow workers to join remotely.

"Starbucks workers in Buffalo, Chicago, Ann Arbor, Louisville, and Lakewood, California, all of whom won their union elections earlier this year, were set to meet with the company Monday to begin negotiating contracts.

"But workers say that after they introduced themselves and colleagues who were physically present and joining via Zoom - some of whom are members of what the union calls its national bargaining committee - Starbucks’ representatives, from both the company and management-side law firm Littler Mendelson, abruptly left and later said they wouldn’t return. At the root of the problem is a disagreement on who should be allowed to participate in the sessions, and how they can join."

According to the story, "Starbucks said that its representatives remained on-site and were willing to bargain if the union met their demand to bargain in-person only. 'It’s disappointing that Workers United would, minutes before bargaining begins, try to create confusion and potential delays,' a Starbucks spokesperson said."

Published on: October 26, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

 • WWD reports that Amazon has unveiled "its latest Amazon Luxury Store: A partnership with reseller What Goes Around Comes Around that places pre-owned and vintage bags from some of luxury’s biggest players — like Louis Vuitton, Hermès, Chanel, Prada and Gucci — on Amazon’s site.

"The shop sees several hundred items available for purchase through the Luxury Stores at Amazon. Over the next two months that number will increase to an inventory exceeding 2,000 bags — as well as select small accessories and jewelry. Pre-owned Rolex watches are also now for sale on Amazon through WGACA.

"The move is clever for both involved parties. It gives What Goes Around Comes Around a much-expanded client base. But it also gives Amazon the goods it has been looking to carry for years, as well as a partner that is responsible for authenticating pre-owned luxury products. One could take it as a simultaneous run at companies like LVMH Moët Hennessy Louis Vuitton, who have repeatedly turned Amazon down, as well as resale start-ups like The RealReal."

I have to admit that I had no idea that one could buy a Rolex on Amazon … not that I'm in the market for one, but I simply didn't know it.  But, this morning…

Published on: October 26, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Mashed reports that Starbucks is planning to open one of its Starbucks Reserve stores in the Empire State Building next month.

It will be the third Reserve store in New York City, and the story points out that "Starbucks Reserve locations are more upscale than traditional Starbucks stores, and depending on the location, they can contain cocktail bars, an expanded baked goods selection, and coffee drinks you won't find on the menu at any other typical Starbucks."

This lease probably has been baked into Starbucks' plans for a long time, but I cannot help but think the company would be better served by focusing to a greater degree on how to make its mainstream stores more relevant and resonant.  That's the real problem - not that there aren't enough Reserve stores in the fleet.

Published on: October 26, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Seattle-based PCC Community Markets (PCC), the largest food co-op in the US, announced that Chris Naismith, a former CFO at both Sur La Table and Microsoft Retail Stores, has been named the co-op's new CFO. 

PCC also announced that Susan Livingston, a former Global Marketing Director and Regional Marketing Director at Whole Foods, has joined the co-op as Vice President, Marketing + Purpose.

And, Michele Mallory, former Head of Information Technology at Farmers New World Life, has been named PCC's new Vice President, IT.

PCC noted in the announcement that Naismith is a graduate of Loyola Marymount University … which gives her a ton of street cred in my book.

Published on: October 26, 2022

Responding to yesterday's Eye-Opener, courtesy of Engadget, that Amazon "is experiencing high levels of attrition (regretted and unregretted) across all levels, totaling an estimated $8 billion annually," one MNB reader wrote:

Some years ago when I was working with Walmart there was a big study shown at one of the Saturday morning meetings showing turnover at a such a rate that it was just a matter of time before 100% of Americans will either be a current or former Walmart employee. While I don’t recall the timeframe it was certainly within a few decades. 

While Amazon has fewer bricks and mortar locations it does seems that as they are pushing for greater physical presence that they too run the risk of running out of eligible employees. 

I think Amazon already has conceded that.  Hence this morning's faceTime, suggesting that the attrition numbers argue for a complete rethinking of management-labor relations and workplace infrastructure.

I argued in my FaceTime video yesterday that there ought to be a sacrosanct rule - data belongs to the shopper, and cannot be used, sold or otherwise provided to any entity (commercial or governmental) without the consumer's permission.

One MNB reader responded:

Data belongs to the consumer until he/she willingly, even eagerly, trades them for the right to use a website for free.  Do you really think the sites should have to give their stores away?

Specious argument, I think.  I'm not suggesting anyone give their stores away.  I am suggesting that customer data compiled by a retailer ought to only be used by that retailer … and not used, sold or otherwise provided to any entity (commercial or governmental) without the consumer's permission.

I think that's a fairly simple premise.  I do business with you, and you can use my data to provide me with a better experience.  But you can't give it or sell it to anyone else. Not without my permission.

We had a piece yesterday about how Ahold-Delhaize-owned, Maryland-based Giant Food said that "local shoppers can now purchase a selection of products in reusable packaging thanks to a new partnership between Giant Food and Loop, the circular reuse platform developed by TerraCycle."

MNB reader Gary Goff wrote:

This is a step in the right direction, but it's expensive and annoying for retailers and consumers when there are still many steps that could be utilized that put the onus on CPGs at the source of the issue, for example, primary packaging that:

• Can be refilled through bulk packaging options available at retail

• Emphasizes efficiency vs. a billboard effect on shelf

• Is resealable thus eliminating the need for consumers to re-package products at home utilizing additional canisters or sandwich bags, etc. (sorry Glad)

• Has an afterlife to serve as a reusable, multi-purpose storage container (sorry Tupperware), etc. 

Yesterday we took note of a Bloomberg piece about "a class of startups that soared during the pandemic, trying to solve a logistics and math puzzle that’s dogged Silicon Valley for decades: Can an e-commerce company whisk products to your house in under an hour? And more important: Can it actually make money doing so?"

Spoiler alert, in case you didn't read the story:  The answer likely is no.

(You can read the whole thing here.)

A number of reactions to the whole "instant delivery" trend …. as one MNB reader wrote:

Is “instant delivery” something that all this energy deserves. I assume 99.9% of “stuff” people order on-line is not really needed in an hour. On a macro level, it would be great if all these resources to “solve” this unimportant problem were applied to solve some critical societal issues.

Well, sure.  You can try to solve the instant delivery riddle, or you can try to save democracy.  But the latter may make the former look like a piece of cake.

Also … there are a lot of things that people don't really need, but just want, that they treat as a need.  We all have them - it is a matter of priorities and perspective.  It is kind of important as marketers not to assume that your priorities match up with everybody else's.

From another reader:

Call me a Neanderthal (I still have a checkbook and carry cash in my wallet), but I have never understood this death-spiral race to deliver things instantaneously.  If I run out of sugar or am in urgent need of a beer and find my fridge depleted, I get in my car and drive to the local grocery or convenience store.  I don’t need a drone to swoop in with a six pack of Fat Tire.

As you point out, I too don’t see how a twenty-minute delivery window will ever be practical or profitable. Retailers should devote their energies to initiatives that are more value-added to their customers. Like customer service?

On a somewhat related topic, I have stopped going into my local Starbucks to get my morning cup of coffee.  I have grown tired of being first in line only to watch a crew of baristas ignore me in favor of filling orders that were sent in on their app. The same is true at the local sandwich shop, the healthy salad place, etc.  And don’t get me started on trying to get a customer service representative to answer a phone or provide capable advice.

My wife recently had a problem with a product she brought home from one of the home improvement big boxes.  She called the store and became frustrated with the lack of any effort to address her concern. She finally asked “I thought the customer was always right”.  The employee responded “no they’re not” and hung up the phone.

Your email points to so many problems…

A near-instantaneous delivery window may not be practical or profitable … but I would also suggest (and I am kind of arguing with myself here) that nobody though two-day delivery was practical not so long ago.  But I do agree that we are seeing a kind of race taking place in which nobody is going to win.

Your Starbucks example is part of why the company is in trouble - management was (and may remain) out of touch with what was taking place in stores.  (Cautionary note to every retail executive!)

I assume you're going to stop doing business with that big box store, and will communicate that experience to the chain's CEO.  If you don't, then you probably can't ever expect improvement.

And finally … I have to admit that a drone swooping in with a six pack of Fat Tire sounds really, really good.  Where do I sign up for that service?

And finally, on another subject, from MNB readerBob McGehee:

This is another aspect of the newly named ‘Quiet Quitting’.  FYI -- While the phrase may be new but the attitude has been around for a long time.  I first heard it as "Some people work just hard enough so they don't get fired and their employers pay them just enough so they don't quit."

Here's another reason:

One year all the planets aligned and I received a "5 / Consistently exceeds expectations", the top performance rating.  This was the result of many things, i.e., exceeding profit/sales goals, new program enrollment plus being involved in a special project requiring I be on the road for several months. I eagerly awaited my 7-9% raise as defined by the overly complex compensation system but was very disappointed when I got 3.5%.  When I asked my boss about the difference, the somewhat expected reply was "Well, you know we have a max budget for all pay increases but I got special permission to get you the extra."  FYI -- Most employees got a "3 / Meets expectations" resulting in a 3% raise.

For the next 10+ years, my performance was driven only by my personal motivation. 

I feel your pain - in so many ways that describes my pre-MNB work experience.  (Which is at least one of the reasons I hung out my own shingle.)

This happens in a lot of companies and organizations, and the deed often is performed by some executive who never would settle for such treatment.  And then that executive hangs out with other executives and bemoans the work ethic demonstrated by employees.

It is utter B.S. (and I feel so strongly about this that I debated long and hard with myself about whether or not to use the initials).