business news in context, analysis with attitude

Published on: November 9, 2022

by Michael Sansolo

One of the great mysteries facing any business is deciding whether a single consumer complaint represents a large and silent group of shoppers or is simply one person’s gripe. Thanks to the megaphone given every upset shopper through social media, this dilemma is only magnified these days.

So we have to consider the importance of a complaint from someone of renown with a larger than usual megaphone, especially when it is pointed directly at food retailers.

Rick Reilly is a fairly well known sportswriter and author who recently took his local supermarkets to task for the increasing presence of self-scanning checkouts. In short, Reilly hates them and doesn’t understand why he, a shopper, has to something that previously was handled by workers.

(Reilly seems to hate any self-service situation from airport check-ins to McDonald’s.)

In the course of his screed against self-scanning, a column in the Washington Post, Reilly explains that he once unhappily worked at a supermarket and also details the many ways customers can fool the scanners to lower the price of goods.

There are many points we can take from Reilly’s article. First, I don’t think he speaks for all shoppers and certainly not younger shoppers who, from everything I see, seem to prefer self-service to interacting with staffers. But I also don’t think he is alone in his anger at self-scanning. (Sorry to pick on CVS again, but go to the self-scanning area of any CVS drug store and watch the collapse of humanity as products and coupons fail repeatedly.)

The point I think we need take from Reilly’s complaint is pretty straightforward. Self-scanning actually solves a lot of problems. Some shoppers prefer it to be sure, but it also is a way of allowing stores to vastly increase the number of open checkouts at any time, no matter what the staffing issues, which reduces lines.

However, I wonder if any retailer has helped explain the benefits to shoppers or provided any reason for a cranky shopper (like Reilly) to find any personal benefit to self-scanning. In addition, very little has been done to educate shoppers on how to best use the scanners or even to safely pack a grocery bag. One has to wonder if there are lessons from the past when shopping moved from all service to self-service.

And let’s not think of this as an isolated issue. Increasingly shoppers are moving on-line, which means the labor they used to happily supply in selecting their own items and bringing them home is now being done by workers and the jury is out on whether there can or should be an additional charge for that. 

Certainly shoppers might understand the extra charge better if they were given some small incentive, maybe a minor discount or a small coupon, for scanning their own groceries. If they better understand that every part of the shopping trip requires labor and generates cost they might better appreciate when things are done for them such as on-line shopping and delivery. At the very least some education as to why these changes are being made would seem in order.

Again, you could read Reilly’s article and dismiss him as an individual crank with a overdeveloped sense of entitlement. But then again, what if his sentiments speak for many, many more people who don’t have his megaphone or his ability to articulate his anger?  Perhaps his screed is giving us some long overdue insight into an issue that should have gotten a lot more attention.

I also hope Reilly visits an Amazon Go store one day and comments on the just walk out technology. Those insights could be pretty helpful as well, and maybe somewhat scary.  But then again, in those stores no effort is required at all, which might appeal to him and others. Especially when it’s well explained.

Minus that, shoppers might never understand why the difference between self-service and self-serving is only two letters, but means so much more.

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: November 9, 2022

Would you plan a trip that required you to leave the house by 7:30 am and drive three and a half hours just to make sure that you could get to a restaurant in time for brunch?  (Needless to say, a really, really good brunch.). I would.  I have.  More to the point, isn't that the kind of reputation that any food-centric business ought to have?

Published on: November 9, 2022

by Kevin Coupe

I hate to say "I told you so."

Actually, that's not true.  There are times when I love saying "I told you so."  If you're in the punditry business like I am, it is nice from time to time to a) get one right, and b) be able to say so.

That's what happened when Howard Schultz returned to Starbucks as CEO.  (To be fair, I did get it wrong when I suggested that having returned, Schultz would give up the CEO gig there when they pried it from his cold, dead fingers.  He says he's leaving.  I'm taking him at his word.  At least, for the moment.)

Here's another one, which didn't surprise me at all, and that offers an important retailing lesson.

The Wall Street Journal reports that Netflix "is warming up to the idea of offering live sports on its platform—as long as it can do so without breaking the bank, according to people familiar with the discussions.

"The company recently bid for the streaming rights for the ATP tennis tour for some European countries, including France and the U.K., but dropped out, one of the people said. It also discussed bidding for a series of other events including U.K. rights to the Women’s Tennis Association and cycling competitions, the people said.

"Additionally, in an effort to bypass the ever-escalating costs of bidding for sports rights, Netflix executives have had discussions about buying lower-profile leagues, people familiar with the discussions said. The company late last year was in talks to buy the World Surf League, but negotiations fell apart because the two organizations couldn’t reach an agreement on a price, people familiar with the potential deal said.

"Some Netflix executives believe that given the size of its platform, Netflix could turn lesser-known sports like surfing into big franchises, and create new sporting tournaments or events, the people said."

I've been predicting this for some time now.  There is a reason that the likes of Apple and Amazon have been securing the rights to various sporting events, spending billions of dollars to be able to say, "This is the only place to watch X event."  (Like Thursday Night Football on Amazon Prime Video.). It is proprietary content - you can't get it anywhere else, which brings more people to their sites.  The goal is simple - Apple wants some of these people to buy iPhones and AirPods, and Amazon wants these people to buy … well, everything else.

It was inevitable that Netflix - which, having pioneered the streaming business, has been struggling lately because of competition - would join them in getting into the sports business.  It is interesting that Netflix may take a slightly different approach to the strategy, which makes sense - if they can build something strong in an untapped area, it could be even a greater competitive advantage.

(One quick note.  Expect these folks to also get into the news/public service business at some point.  If I were at Amazon, Apple or Netflix, I'd be thinking about - depending on the race takes shape - streaming some presidential campaign debates during the 2024 cycle and trying to find a new approach to the concept.  I have some ideas about this, if any of these three companies want to chat about it.)

The Eye-Opening retail lesson?  

Simple.  Retailers have to find ways to offer proprietary, differentiating, unique products, and use these items to distinguish themselves in the marketplace.

Look at your store(s).  How many of the products that you sell also are available at your closest competitor?  At your most effective competitor?  Ninety percent?  More?  (Be hard-eyed about this.  Self-delusion is not your friend.)

And then, figure out a strategy to consistently innovate with new items, new services, and transformational approaches to retailing that make you indispensable to your shoppers.

Okay, maybe not so simple.  But I do think that it is critical to survival, to success.

Published on: November 9, 2022

Reuters reports that a US federal court judge has refused to temporarily block a $4 billion dividend payment to its shareholders in advance of the company's proposed acquisition by Kroger.

According to the story, "The federal court in Washington D.C. denied issuing a restraining order in the case, which was filed by the attorneys general of California, Illinois and Washington D.C and sought to block the payout until antitrust reviews of the proposed merger were completed."

However, Albertsons still faces an obstacle in Washington State, where a state court "barred Albertsons from paying the special dividend until Nov. 10, saying that it would weaken its ability to compete as the antitrust reviews go on.

"'"By eliminating its cash-on-hand and nearly doubling its debt, Albertsons will be in a weakened competitive position relative to Kroger, thereby harming grocery consumers and workers throughout Washington,' State Court Commissioner Henry Judson wrote in issuing that temporary restraining order."

In a statement issued yesterday, Albertsons said that it "continues to seek to overturn the existing temporary restraining order granted by the Washington State Court on November 3, which was based on the incorrect assertion that payment of the Special Dividend would impair the Company’s ability to compete while its proposed merger (the “Merger”) with The Kroger Co. (“Kroger”) is under antitrust review. This order, which restrains the Company from paying the Special Dividend, remains in effect until November 10, 2022, unless within that time, an order is entered extending or dismissing the temporary restraining order.

"Albertsons Cos. continues to maintain that the lawsuit brought by the State of Washington is meritless and provides no legal basis for canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors. After payment of the Special Dividend, Albertsons Cos. will have approximately $3.0 billion of liquidity, including approximately $500 million in cash and approximately $2.5 billion available under its already existing asset-based lending facility, and expects to continue to generate strong revenues and positive free cash flow, further increasing liquidity. Albertsons Cos. is confident that it will continue to make strategic progress following the payment of the Special Dividend, given its strong cash flows and low debt profile.

"The Company remains fully committed to investing in the associates, stores, and digital capabilities that have made its recent growth and strong performance possible."

Published on: November 9, 2022

FMI-The Food Industry Association is out with its Power of Foodservice at Retail 2022 report, suggesting that the stars are aligned for food retailers to "compete for consumers’ food dollars by maximizing value, nutrition and convenience, while clearly communicating these benefits to consumers"

Key insights from the report:

•  "As inflation continues to affect Americans’ budgets, shoppers are preparing more meals at home – focusing on weekly meal planning and scratch cooking. Fifty-three percent say grocery foodservice items are a good value compared to eating at a restaurant or ordering takeout. Retailers are well-positioned to capitalize on consumer needs by supporting shoppers’ meal planning through targeted strategies, like suggesting different meal themes by day, expanding the variety of meal bundles and total meal solutions and promoting meal components for specific dishes."

•  "A growing number of shoppers are ranking nutritional value highly when considering foodservice options. Fifty-eight percent of consumers are interested in vegetables or other healthy options, but only slightly more than a third (36%) are very satisfied with the nutrition levels of current foodservice offerings. Consumers suggest retailers can satisfy their palates by reducing the number of fried foods and adding more plant-based options. The study also finds grocers can attract shoppers to new and existing nutritious options by promoting them on in-store signage, printed circulars, store apps and social media channels."

•  "The report reveals retailers should consider adopting restaurant-style amenities. For example, 50% of shoppers say the ability to order grocery foodservice items in advance through a mobile app or website and pickup at an inside pre-order station is appealing. Drive through lanes (48%); a separate checkout in the foodservice area (44%); delivery by the grocery store (42%); and outside pickup stations (38%) are other potential offerings to attract grocery shoppers to foodservice."

“It’s our opportunity to put grocery foodservice on the map,” said FMI’s vice president of fresh foods, Rick Stein, in a prepared statement.  “At a time when consumers are rethinking where to put their food dollars, retailers need to demonstrate the value of grocery foodservice and exceed expectations."

Published on: November 9, 2022

Michelle Gass, the CEO at department store chain Kohl's and a former 16-year executive at Starbucks, is getting out of the retail business.

The Wall Street Journal reports that Gass is leaving the company to go to Levi Strauss, where she will become "president with oversight of Levi’s brand and global digital and commercial operations. She will succeed Levi’s CEO Chip Bergh within 18 months."

The Journal writes that "At Kohl’s, Ms. Gass has been under attack from activist investors for sales declines and a steep drop in the company’s stock price. In September, activist investor Ancora Holdings Inc., urged the company to replace Ms. Gass and its chairman … Kohl’s, with roughly 1,100 stores, has struggled to attract shoppers amid rising competition from discounters, fast-fashion chains and online competitors. Earlier this year, Kohl’s scrapped plans to sell itself to the owner of Vitamin Shoppe."

According to the story, "Kohl’s appointed Tom Kingsbury to serve as interim CEO until a permanent successor is named. Mr. Kingsbury is a former Burlington Stores Inc. CEO who joined Kohl’s board in 2021 as part of a settlement with activists."

Published on: November 9, 2022

•  The Washington Business Journal reports that Amazon founder-chairman Jeff Bezos may be interested in being part of an ownership group that would acquire the Washington Commanders football team.

According to the story, "Dan and Tanya Snyder, the current co-owners of the NFL franchise, said Wednesday they had retained a Bank of America Corp. affiliate to 'consider potential transactions' related to the team. The Commanders have told multiple outlets they are 'exploring all options,' which would include an outright sale or the offering of minority stakes in the team.

"Dan Snyder and the franchise have been the subject of investigations into their workplace culture and business practices, as well as alleged sexual misconduct involving team personnel and Snyder himself. Snyder has repeatedly denied the allegations. That has all amplified pressure on the Snyders to sell.

"Dan Snyder purchased the franchise in 1999 for $800 million. Today, Forbes values the franchise at $5.6 billion, making it the sixth-most valuable team in the league. If the franchise sells for $5 billion, a 30% stake of that price — in this case, $1.5 billion — would have to be presented upfront. Three-quarters of the 32 NFL owners must also approve any sale."

The story notes that there likely will be a number of suitors looking to buy the team.

Published on: November 9, 2022

•  "Retailers expect a busy holiday season the next two months but imports at the nation’s major container ports should continue to slow from records set earlier in the year, according to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates.

“'Cargo levels that historically peak in the fall peaked in the spring this year as retailers concerned about port congestion, port and rail labor negotiations and other supply chain issues stocked up far in advance of the holidays,' NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. 'With a rail strike possible this month, there are still challenges in the supply chain, but the majority of holiday merchandise is already on hand and retailers are well prepared to meet demand'."

Published on: November 9, 2022

Lots of reaction to yesterday's"What's wrong with America" FaceTime video.  One MNB reader wrote:

You are right, people don’t care anymore; there is almost a pathetic pride in doing whatever pleases you and that SUV is a perfect example. That guy could care less or maybe it’s some spoiled kid who would go home and cry to Daddy if someone confronted them! Thanks again for some decency.

Another MNB reader wrote:

Great rant and well said!

From another MNB reader:

I am so with you about the entitlement mentality in our country and I would bet around the world too.  I get irritated when people who are physically able don’t put away shopping carts, drop their trash wherever they want, and the most irritating, people who park in handicapped spots and no parking spots like the large white SUV in the background of your video.  I regularly call people out who do these things (I don’t want my wife doing it) but I am a larger man and rarely has anyone wanted to physically challenge me.  What happened to common courtesies and looking out for your fellow human? 

I’m sure you’ll get a lot of “get off of my lawn” comments, but when we care only about ourselves and what’s convenient for me even if it causes you problems it reflects a much deeper mindset that has evolved.  Thank you.

And from another:

You are spot on!  The other day while flying out of the Chicago Midway Airport, I saw a TSA agent (she had her TSA uniform on) park her car in a handicap parking spot in the garage, which was close to the pick up area for the bus taking us to the terminal.

She proceeded to take her lunch box and backpack to the bus and board along with me.

Maybe she is deserving of it, but from what I saw, she was able to carry the large backpack and lunch box with no difficulty, taking away a parking spot for someone who may have had difficulty walking.

And another:

Absolutely  these people don’t give a fig snd there seems to be no accountability  just do whatever you want in almost every scenario in todays society  Very  few people are polite and respectful in everyday situations this has nothing to do with politics.

And still another reader wrote:

Here is another incident that occurred this morning that adds credence (unfortunately) to your video.

My wife was in our local Dunkin Donuts(sorry, we are Starbucks fans like yourself) getting coffee this morning, like she does every morning.  A person was sitting in their table area lounging with his feet up on another chair.  The owner kindly asked him to take his feet off the chair and the individual became abusive. He was yelling at the owner “to get a life” and proceeded to get nose to nose with the owner.  The patron continued his verbal assault. He briefly left DD, went out to his pick-up truck only to come back in and start yelling, AGAIN.  Fortunately, this did not escalate to any physical or worse confrontation.  

Maybe the guy had a little too much caffeine?  Well, that’s my contribution to What’s Wrong With America.  Sadly, we no longer have a society that has respect for each other.

Another MNB reader chimed in:

On point, Kevin! I was just talking about this with my daughter the other day.  Traffic laws seem to have gone the way of the dinosaur.  Where is law enforcement?  Where is personal accountability? I've made several comments about how driver's licenses must be coming out of Crackerjack boxes.  It's so frustrating.  Keep calling 'em out.

And one more MNB reader wrote:

I’m not sure if the sense of entitlement has grown or if we are just grumpy old men.

I'm not sure they are mutually exclusive.

I also got a number of comments reacting to my piece about Phil Lombardo, who is retiring from his role as COO at Lunds & Byerlys.

MNB reader Kevin Duffy wrote:

I was fortunate enough to have conducted the executive search that resulted in Phil joining Lunds as the Director of Grocery in 2002.  We’ve stayed in touch over the years and I’ve been amazed and frankly proud of his impact at LFHI and upward career progression at the company.  As I mentioned to Phil the last time we spoke, no one that I have placed in my 30+ years in executive search has moved vertically in one company from a Director of Grocery to Chief Operating Officer.  A shout out also appropriate to Tres Lund, who recognized Phil’s talent and fostered his career growth over the years. 

Phil’s had an amazing run, a Sinatra type run…Best to Phil as he enjoys the next stage of his life.      

MNB reader Rick Steigerwald wrote:

Having reported directly to Phil for 14 years, prior to my retirement,  I can say unequivocally that your description of Phil’s leadership skills are spot on. He is truly one of the best in the business.

MNB reader Henry Stein wrote:

Place me in the (very long, I am certain) line of industry veterans who will echo the nice words from Tres Lund and from you, Kevin, on the announcement of Phil Lombardo’s retirement. Not unusual to see Phil regularly in stores, at all grand openings, and never managing from the office only. He has treated suppliers with respect, been a huge supporter of local Twin City brands, and has helped contribute to the fine reputation Lunds & Byerlys has cultivated over the years. 

And another MNB reader wrote:

I had the pleasure  to work with Phil at American Stores in Salt Lake City as a part of the “Delta” project that brought folks from Lucky Stores, Jewel, Acme, Save On Drugs and later Shaws to Utah to create the future. It was a rare time where we got to think about the business minus the pressure of “the business”. Phil, myself and several others spent some of the best times of my career trying to figure out what’s next in 1995. It was some great leadership, Phil, Peter Whitsett (Meijer), Larry Biggerstaff, Tommy O’Boyle, and many others all went on the great things. I’ve kept in touch with Phil over the years and always enjoyed conversations at FMI Midwinter….and you are correct, he’s way to young to retire but best of luck my friend….

On the subject of Elon Musk's adventures/misadventures as the new owner of Twitter, one MNB reader wrote:

Quit Twitter when it was official that Musk purchased the company. Hope that every employee affected by the layoffs sues him due to breaking the California law. Now if we can get advertisers to dump Twitter……

Responding to my FaceTime video about how one person's "wine rut" can be another person's comfort wines, MNB fave Glen Terbeek wrote:

"Wine ruts" are a great opportunity for adding value to “loyalty programs”.  We have a great wine merchant in SD that had wine tastings, would order any wine we wanted, even if he didn’t carry it, and carried our favorite wines for when we needed them.  He was individual shopper focused.  In addition, his prices were very competitive, usually equal to or better than the chains.  We didn’t go anyplace else for wines.  Why can’t a food chain do the same?

MNB reader Kathy Means wrote:

Your FaceTime this morning resonated immediately. My (our) comfort wine is Ruffino Chianti. My partner’s brother recommended it when she and I were first dating in 1993. We drank a whole bottle (a lot for her, normal for me) one night, the night we knew we were forever partners. Always have a couple of bottles in the house because it does evoke memories – of that night for sure, but also the nearly 30 years of memories we’ve created together. It’s “our” wine.

And MNB reader Karen Labenz wrote:

One of my go-to favorite wines is Freakshow Cabernet.  I love the crazy label.

On another subject, one MNB reader wrote:

Interesting dialogue regarding the eat at home vs dining out for Thanksgiving.   I'm old enough to remember when you had no choice but to stay home for Thanksgiving because restaurants were closed that day.   For me it isn't about the cost.  I would feel guilty going out that my presence meant those employees at the restaurant weren't home with their families on Thanksgiving.   That is priceless.

Regarding the banning of plastic bags and the move in California to require bag manufacturers to document and prove claims that their products are recyclable, one MNB reader wrote:

Here in Panama plastic bags have been out of grocery stores for several years.  Just recently single use silverware in restaurants has been banned.  There is no outcry, nor chest beating or demonstrations. People go to shop with their canvas totes (advertising the store where they bought it for 39 cents).  There is more work to be done here but I am sure it will be done soon.  Being a country dependent on rain (the Panama Canal is the largest earner of money for the Government) they take the environment very seriously.  Panamanians are much more united than some people North of them.  And I. like you, have canvas bags in the car.

Some thoughts from an MNB reader about the Kroger-Albertsons merger:

In 1988, after KKR acquired Safeway (hostile takeover) and then dismantled it by selling off many of their locations, Kroger averted a similar KKR move against them, by issuing a one time $40/share dividend.  This additional debt made Kroger unattractive and allowed them to maintain ownership and control of their destiny. 

Fast forward to today, and it’s hard to not see this Albertsons dividend for what it is, a way to provide current investors with a huge windfall.  And, since they own the majority of Albertsons stock, they will get paid twice.

Oh…and a fun fact is that the current Kroger CEO, Rodney McMullen, worked on the Kroger dividend move in 1988, as an accountant working for the then CFO, Bill Sinkula.  Small world.

Finally … we reported yesterday that the Cincinnati Bengals said that Dayton, Ohio-based Dorothy Lane Markets' iconic Killer Brownie has been named the team's official brownie.

I commented:

I love the Mayne family.  Love Dorothy Lane Market.   Love the Killer Brownies.  (I'm a Jets fan … but three out of four ain't bad.)

I think this is terrific … I hope they sell a million Killer Brownies as a result.  As Norman Mayne would say, "It's a living."

And MNB reader Calvin Mayne responded:

Thanks for the kind words. We are big fans of you and MorningNewsBeat as well. And since I used to live in New York, I’ll trade you a “Jets, Jets, Jets!” For a “Who Dey!”