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    Published on: October 27, 2022

    Our old friend Gary Hawkins, of the Center for Advancing Retail & Technology (CART), posted a LinkedIn column the other day suggesting that the proposed Kroger-Albertsons deal is no less than a significant move in the direction of a total transformation of the traditional retail food business.  Yikes!  That's quite a statement, and so I engaged with Gary in an extended conversation about his conclusions and rationale.  So extended, in fact, that I'm breaking it into two parts … part one today, and part two tomorrow.

    If you want to listen to this as an audio podcast, click below.

    If you'd like to read Gary's original column, click here.

    Published on: October 27, 2022

    Give New England's Market Basket credit - when Taylor Swift released "Midnights," her newest album, this week - an album that sold more than 1.3 million units in its first three days - it was ready to take advantage of the moment.

    MassLive reports that Market Basket "has curated 13 grocery themes tracks that mimic the 13 tracks on the artist's record breaking album.

    "The firs track on Market Basket’s list is titled 'Lowell Haze,' playing on her first track titled 'Lavender Haze.'  It continues with 'Maroon Jackets,' which pokes fun at Swift’s second track 'Maroon' and the deep red colored uniforms that employees wear.

    Swift’s hit 'Anti-Hero' became 'Antipasto.' Will fans of the song be 'rooting for the antipasto' rather than 'rooting for the anti-hero' as Swift puts it in her song?

    "'You’re On Your Own, Kid' became a way for shoppers to save with 'More For Your Dollar, Kid' and 'Snow on the Beach' became 'Sawdust on the Floor.'  Other puns used by the grocery store became 'New England' for 'Midnight Rain' and 'Sweet Jelly Donuts' for 'Sweet Nothing.'

    "The store also pokes fun of Swift’s lyric 'meet me at midnight' with 'meet me at the checkout'."

    Click here to see how Market Basket took to Twitter to have its fun.

    This is small stuff, but I like Eye-Opening small stuff that is clever … it shows a certain ingenuity and energy.

    BTW … the actual album, "Midnights," is terrific.  I downloaded it via Apple Music as soon as it was available, and I remain in awe of Taylor Swift's talent and prodigious output - not to mention her willingness to take charge of the business side of her career in a way that protects her artistic endeavors.

    (I know I'm not in Taylor Swift's target demographic, but my daughter and I went to one of her concerts more than a decade ago, and she was fantastic.)

    Published on: October 27, 2022

    Bloomberg  reports that a bipartisan group of attorneys general from Arizona, California, Idaho, Illinois, Washington State and Washington, DC, have argued in a letter that Albertsons should delay $4 billion worth of imminent dividend payments to shareholders that was put into place as the company agreed to be acquired by Kroger for $24.6 billion.

    The dividend payments  “could be a massive improper giveaway to certain shareholders,” the attorneys general say, and, "with less cash available, the grocery chain would face difficulty competing in what is already a 'very, very tough marketplace' should Kroger’s planned takeover of Albertsons be blocked" either by regulators or legislators.

    The letter makes the case that "the merger has the potential to impact consumers already hurting from inflation, as well as the wages of hundreds of thousands of employees."  The attorneys general have the option of seeking a court injunction to stop the dividend payments.

    Bloomberg writes that "the move by Racine and his counterparts presents a twist in what has been a long ownership journey for Cerberus Capital Management, which paid $350 million in 2006 for Albertsons. Cerberus, the grocery giant’s largest investor, stands to make more money from an already profitable deal with the proposed merger price valuing its remaining stake at $5.2 billion."

    The story says that "in a statement, Albertsons stood by plans for the merger and the payout. 'Following the dividend payment, Albertsons Cos. will continue to be well capitalized with a low debt profile and strong free cash flow,' the company said. 'Given our financial strength and positive business outlook, we are confident that we will maintain our strong financial position as we work toward the closing of the merger.'

    "A Kroger spokesperson didn’t respond to a request for comment."

    The Los Angeles Times reports that the attorneys general gave Albertsons an October 28 deadline for responding to their letter;  the dividend is scheduled to be paid out on November 7.

    Kroger and Albertsons have said that, subject to all the required regulatory approvals and likely required store divestments, they expect the deal to close in early 2024.

    KC's View:

    I don't completely understand the rationale behind an Albertsons dividend payment of this magnitude at this point in the process.  Even if Albertsons remains "well capitalized"  after the $4 billion is paid out, there is at least an argument that it would be better positioned to compete - by plowing that money into holding the line on pricing and investing in front line employee wages and benefits - if it has that cash in the bank.

    This dividend payment at the very least leaves Albertsons - and, by extension, Kroger - open to accusations that this deal is a lot better for shareholders than for customer and employee stakeholders.  Some will say this this is okay, that shareholder should reap the benefits … but that likely is not the position that regulators and lawmakers will take.

    Perception matters.  Optics matter.  And I'm not sure they're working in Albertsons' favor in this case.

    Published on: October 27, 2022

    Southeastern Grocers (SEG) said yesterday that 375 Winn-Dixie and Harveys stores in Alabama, Florida, Georgia, Louisiana and Mississippi now will offer "a new online shopping and delivery service" that will allow customers to "shop for their groceries online through the Winn-Dixie and Harveys Supermarket apps and websites and receive their orders in as little as two hours for only $9. In celebration of the new online shopping experience, customers purchasing $35 or more worth of groceries will automatically receive free delivery in as little as two hours, for a limited time."

    According to SEG, "Delivery orders placed through Winn-Dixie’s and Harveys Supermarket’s online grocery shopping platform are fulfilled exclusively by DoorDash Drive, DoorDash’s white label fulfillment platform."

    In a prepared statement, Andrew Nadin, Chief Customer and Digital Officer of Southeastern Grocers, said, “This innovative online shopping feature is an extension of shopping our local stores, offering the same promotions and savings they will find in stores. It’s a Winn Win for our customers seeking quality and value with the added convenience of delivery.”

    KC's View:

    First of all, I love the wordplay - "Winn Win" is a great turn of phrase.

    Second, it seems to me that these are table stakes in 2022 - the kind of things that retailers have to do in order to remain relevant and resonant.  So good for SEG.

    Third, I'd just point out that SEG should be a little careful with certain terminology.  In the press release, it calls this a "proprietary new service," but I'm not sure you can say it is "proprietary" when it is being powered by DoorDash, which has to be offering it through other retail venues.

    Published on: October 27, 2022

    The Minneapolis/St. Paul Business Journal reports that Target plans to triple the number of "Apple at Target" mini-shops in its stores, which will bring the chainwide total to about 150 ahead of the upcoming end-of-year holiday shopping season.

    According to the story, "The shops sell Apple's consumer-electronics product lines — iPhones, Apple Watches, Apple TV devices and accessories are included, for example, but not Apple's laptop or desktop computers. They also won't feature Apple's Genius Bar, a feature of Apple's own stores where experts can help customers set up new devices or troubleshoot problems - though they will be staffed by Target tech workers trained by Apple … Target is also offering free trials of Apple Fitness+ — a service that provides free streaming fitness classes that link with the Apple Watch — to members of its Target Circle loyalty program."

    The Journal notes that "the partnership follows a pattern that Target has used before, teaming up with an established brand to drive customer traffic to a particular part of its stores. Other Target store-in-store partnerships include Ulta Beauty Walt Disney Co. and Levi's."

    KC's View:

    A smart way, I think, for Target to differentiate itself from its direct and indirect competition … especially because we Apple customers tend to be dedicated and loyal in our Apple enthusiasms.

    Published on: October 27, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The National Grocers Association (NGA) this week honored Karen and Kim Eskew of Harps Food Stores with NGA’s prestigious Thomas F. Wenning Pinnacle PAC Award, which recognized the Eskews’ years of service to the independent grocery industry in government advocacy.

    In addition, NGA presented the Spirit of America Award to Zulema Wiscovitch, co-CEO of Associated Supermarket Group (ASG).  NGA’s Spirit of America Award has been presented since 1982 to individuals who provide leadership in the areas of community service and government relations and are committed to a free and independent food distribution system.

    And, NGA presented former Kraft Heinz Co. Head of Industry Relations and Sale Operations Michael Ridenour with its Industry Service Award, bestowed annually on "an individual or company whose years of service in the food industry have contributed to better working relations and understanding between retailers, wholesalers and manufacturers."

    The awards were made during NGA's Executive Conference & Public Policy Summit, which took place this week in Washington, DC.

    •  Starbucks said that this week it "welcomed 2,000 retail leaders from across the U.S. and Canada for a District Manager+ Leadership Experience in Seattle, Wa. Designed to build the leadership excellence required for retail leaders to lead their stores and store partner (employees) though the company’s Reinvention, this gathering marks the first convening of its kind since 2014, bringing together District Managers, Regional Directors, Regional Vice Presidents from Company-Operated, Licensed Store and Siren Retail businesses in the U.S. and Canada, as well as leaders from the company’s partner resources organization.

    "Over the course of two days, retail leaders will hear from regional and global leadership, and participate in capability-building forums … Specific trainings and conversations will focus on mastering craft, building connections, communicating with impact and problem solving. Leaders will go back to their markets later this week equipped with the clarity, skills and agency they need to lead, inspire and nurture their stores and store partners, and a deep understanding that they are part of something bigger and their accountability to the enterprise priorities."

    No "Union-Busting 101" on the curriculum?

    •  From Bloomberg:

    "Kraft Heinz Co. and Jeff Bezos-backed startup NotCo are following through with their bet on plant-based foods. 

    "Eight months after announcing their joint venture, the companies are unveiling their first products: animal-free cheese slices and mayonnaise. Not Cheese will first appear on shelves in a small market test in Cleveland in early November, with a national rollout to follow by the end of 2023. Mayonnaise plans are still in the works, but an early 2023 rollout is being targeted.

    "For Kraft Heinz, the joint venture is an opportunity to join a competitive category without making major investments in research and development … For NotCo, it translates into US — and eventually global — distribution, without the need to build costly manufacturing capacity. It also gets a recognizable brand name. 

    "There are clear benefits for both sides, but the collaboration is still risky: The plant-based category’s earlier stratospheric growth has cooled as competition heats up and inflation erodes purchasing power."

    Somehow, "Not Cheese" is a phrase that does not titillate my taste buds.  With a name like that, I half expect the slogan to be, "Also Not Tasty."

    Published on: October 27, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Washington Post:

    "The National Labor Relations Board filed a complaint on Wednesday alleging that Amazon CEO Andy Jassy violated labor law in two interviews he gave this year where he discussed his stance on unions at the e-commerce giant.

    "Jassy’s comments were made after workers in Staten Island voted to organize in April with the Amazon Labor Union, the first warehouse of the e-commerce giant to do so. This year, the NLRB has repeatedly found Amazon to have violated workers’ rights during a handful of unionization campaigns.

    "The Amazon Labor Union praised the NLRB’s decision to file a complaint.

    "'These plutocrats will no longer threaten workers in interviews with the media,' said attorney Seth Goldstein, who filed the charge on behalf of the Amazon Labor Union. 'They’re being held accountable.'

    "Kelly Nantel, a spokesperson for Amazon, said that the allegations were without merit and that Jassy’s comments are protected by the National Labor Relations Act and decades of NLRB precedent."

    I read those interviews, and they didn't sound threatening to me … frankly, the union rhetoric sounds a lot more inflammatory to me. (Jassy isn't allowed to argue that he thinks workers are better off having a direct relationship with their employer?).  I'm not a lawyer nor a union expert, but I cannot understand how we've gotten to the point where the unions have the ability to say pretty much anything they want, but management isn't allowed to say anything … and I make that point as someone who is moderately sympathetic to the unions that are facing off against Amazon.  But give me a break.

    •  From the Seattle Times:

    "Starbucks’ $1 billion commitment to expand benefits for workers at nonunionized stores is under scrutiny this week.

    "A National Labor Relations Board hearing is expected to determine by Friday whether Starbucks can offer more benefits to Seattle employees depending on a store’s union status.

    "Starbucks acted against labor law by extending benefits to nonunionized stores only, an NLRB complaint claims. 

    "At the hearing in Seattle that began Tuesday, union lawyers brought to the forefront the question after months of Starbucks announcing several extended benefits, such as wage increases and more tipping options, to nonunion employees … The union is arguing that, by withholding the benefits, Starbucks is discouraging union activity and breaking labor law."

    The Times writes that "Starbucks asked the NLRB to dismiss the case Tuesday, saying that the company has the right to 'not grant enhanced wages and benefits to partners at nonunion stores while a petition for representation is pending at any store.' As of Wednesday, the motion to dismiss has not been discarded."

    Again, I'm neither a lawyer nor a labor expert, but I don't understand the union's point on this one.  Union representation means that the company has to engage in collective bargaining, right?  And can't just impose changes in wages, benefits and work rules without talking to the union?  The union would not want Starbucks to take something away from employees who are represented, and so it may have to live with the idea that it also cannot give something to non-represented workers.  At the very least, this seems logical … though I guess we'll find out how logical the legal system is.

    Published on: October 27, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  United Natural Foods Inc. (UNFI) said this week that it has named Angie Balian, chief of staff for Chris Testa, UNFI’s president, to be its new Chief Brands Officer, overseeing the company's private label products.

    •  CNBC reports that Bed Bath & Beyond "has appointed interim CEO Sue Gove to the position permanently … Gove was named interim CEO in June after the company’s board pushed out former Chief Executive Mark Tritton. She is the founder of a retail consulting and advisory firm, Excelsior Advisors. Before she became a consultant, she had several financial and strategic roles, including president and chief executive officer of Golfsmith International Holdings and chief operating officer of Zale Corp."

    Not to be a buzzkill, but "permanently" may not be exactly the right word here.  For one, most CEOs, like baseball managers, are hired to be fired - these jobs have expiration dates.  For another, Gove is in charge of a retail business that may have its own expiration date - I'm not sure what Bed Bath & Beyond's value proposition is, nor what the rationale is for its existence.  Like I said, I hate to be a buzzkill.

    Published on: October 27, 2022

    Yesterday we took note of an Axios report 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."

    MNB reader Chuck DeZutter responded:

    Not sure if this is something long lasting, just a reflection of the immediate times, or something systemic in the way older generations think.

    In 1980, I distinctly remembered as a high school freshman our English teacher stating to the class, “My generation reached the highest standard of living in the 1970’s – your generation will never achieve the success we had”.  Inflation in 1980 was 13.5%, mortgage rates were 15% and GDP shrank by 3.4%.  Is it a surprise that an older generation will think this way when the economy is struggling?  When the recovery happens, my guess is those thoughts change.

    Yesterday, we posted an email from an MNB reader that said:

    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.

    I responded: 

    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.

    Which promoted another MNB reader to write:

    Equating saving democracy versus solving the instant delivery window is depressing.

    Knowing your thoughts on many issues tells me we’re doomed if someone like you think these two issues are in any way equivalent   I’m sure you’re going to come back with the notion you’re not putting the two on an equal footing, but you are raising this instant delivery issue to a level far above its value to society. My entire career was in marketing. I never felt it was “important” just a fun thing to make a living.

    Apologies if I was imprecise in my language.  My point was that the two are not equivalent, and that it isn't fair to suggest that there is so much big stuff to solve that it doesn't make sense to deal with much smaller issues.

    Instant delivery, it seems to me, is the very definition of small stuff.

    MNB reader Tom Murphy had a thought about the stories regarding Amazon's alleged $8 billion in annual attrition:

    You don’t often see industry turnover figures in public, but most grocers have extremely high store turnover rates…above 100% annually.  Your same thoughts could apply to them.


    On the subject of "quiet quitting" and why there is discontent among so many workers, MNB reader Karl Graff wrote:

    Good morning from flyover country!

    I am 60 now and have worked a few places- mostly retail, but now for a state  government agency.

    Once when I worked for a major retailer- think bullseye – I received a great performance review. I was told that I scored in the 90’s and that I had the highest score of our exec team.

    Then I was told that since no one else scored that high,  the DM had decided to bump down my score to make things “fair.” These reviews were 95% metric driven.

    I was less than happy and left that retailer within the next few months, once they pulled something like that it usually meant that someone didn’t like you and was starting to push you out.

    Now, years later,  I work for a state government. agency and I recently transferred to a new position. I got my offer/transfer letter that had my hourly wage, etc- essentially it was the terms I accepted the offer under.

    When my next pay date came I noticed that my hourly wage was $2 less than what my letter had stated- the response was “Oh, sorry for the typo, we’ll send you a corrected letter.” Nearly 30 days had passed since I’d received my offer letter. 

    Now I have a wage complaint with the Dept. of Labor and am not hopeful that my employing state agency will have to honor the  wage that was stated in my letter.

    It doesn’t matter where you work, for the most part. The bottom line is always the priority and workers are considered replaceable and expendable by most employers.

    Quiet quitting isn’t exactly what I am doing, but I am not going to go over and above for my employer any more- for my team yes, for our clients yes, but I will do the “work” I am required to and not much more.

    Loyalty and support are two way streets. 

    Be well and enjoy life!

    You, too.