business news in context, analysis with attitude

The other day we took note of an Associated Press report that "a coalition of consumer groups is asking grocery chains to rethink their digital-only coupons, saying the deals discriminate against people who don’t have smartphones or reliable internet access."

The argument, as advanced by Edgar Dworsky, a consumer advocate and former assistant attorney general in Massachusetts who runs the website Consumer World, is that some stores offer refunds to customers who ask for the digital price, but that requires the customer to make an extra effort. He wants stores to ensure cashiers will honor digital deals upon request, or even go to the lengths of Texas-based H-E-B, which puts physical coupons in its stores next to advertised deals.  Dworsky said older adults are the most likely to lack smartphone or internet access or the technical savvy to figure out how digital-only coupons work.

I commented:

I must admit to being conflicted about this.  On the one hand, I get the consumer complaint … but I am a big fan of retailers offering their best deals to the most loyal customers.  I actually think that retailers ought to go granular on their digital data so they can offer the best deals to their best customers.  Reward the cherry buyers, not the cherry pickers.

I understand that there is a gap between people who interact digitally with retailers and those who do not, but that gap is going to get smaller with every passing day.  

One MNB reader responded:

I’m capable of downloading the coupons. But half the time they do not show up at checkout. The new GM at our Seattle area QFC said you can take a picture of the code of the item in store and it will download to your app. But I can’t get access to the internet at the store. The store manager agreed this was a problem but so far nothing has changed. The clerk will ask me what the price was and I do my best to remember but if I have several items it can be an issue. So far every clerk that I have dealt with at the Kroger stores absolutely hate the digital coupons. In addition it states you can use it 5 times in one transaction. But if I buy 1 milk and 4 other items I can’t buy any more milk during the deal period the next time I shop. Very misleading to say the least. I’ve tried calling the local headquarters but I get someone out of the area or country who is absolutely no help. Good program if they are more transparent and get it to work. 

Yesterday, we cited a Business Insider report that "Amazon has been pressuring managers to identify low-performing workers to push out of the company using performance-improvement plans, according to a series of leaked Slack messages obtained by Insider … The messages were between managers from numerous divisions, including Amazon Web Services, Pricing, and Compliance. The communications reveal a company where stack ranking - the practice of pitting employees' performance against each other and trying to force out the lowest-ranked workers - is a common topic of conversation among managers. And they suggest that Amazon is using performance-improvement plans, or PIPs, to further drive head-count reduction before the end of the year."

The story said that "Amazon employees have long railed against the company's performance-management process. Amazon sets a 6% target for unregretted attrition, Insider has previously reported. Employees labeled 'least effective' are placed in a performance-management program called Focus. Amazon expects roughly one-third of the employees on Focus to end up leaving the company. Amazon instructs managers not to tell their employees if they are on Focus, generating complaints that the process is opaque."

I commented:

I know that these are formal headcount reduction programs, but in the end, shouldn't every manager be evaluating the staff, knowing - based on both tangible and intangible measurements - who the high performers are and who the low performers are?  It seems to me that as leaders build effective and sustainable teams, this should be an ongoing process, and one that is a high priority within any organization.

One MNB reader responded:

Gee, I can’t imagine why any employee would consider the process opaque. I am put on a performance management plan which, I assume, means I have things I need to work on. But my manager hasn’t told me what those things are because he or she has been advised not let me know that my performance needs management.  Sounds like a promising program, one some management consultant was paid a bundle of money to design.  How about an honest discussion with the employee?

Another MNB reader wrote:

The Stack ranking has been used at Walmart for years.  I had an issue with it when it was ranking people that did similar jobs on same teams.  Another manager would rank their person a 1,  I would say mine is a 1 and then we would have to argue.  In small groups, this might work but in a large setting with multiple teams doing the same work, not the best.  Then putting someone on a PIP – those would always be worded to force a person out the door.  You are right on in your comments.  I never aligned fully with it, but managers should easily know who their best performers and lower performers are, if they don’t maybe you need a new manager.

And, from yet another reader:

My company (which will be anonymous) used to stack rank.  Its not a very objective process.   Managers were forced to identify a certain percentage of tope performers and bottom performers of their workforce.  We did for several years before HR decided it wasn't beneficial.   Some mediocre performers were put on performance plans which weren't necessary.  Conversely a few good performers were over compensated when they shouldn't have been.   It sounds like Amazon is taking this too far and you correctly point out that managers should be giving performance feedback ongoing to their employees.   Further Amazon isn't being transparent about this program which only creates an unhealthy and unfair work environment.   Just my 2 cents.

MNB reader Andy Casey chimed in:

“Amazon instructs managers not to tell their employees if they are on Focus, generating complaints that the process is opaque.” Sounds like Dean Wormer’s double secret probation of the Deltas. And Amazon wonders why their people are voting union.

Axios reported yesterday that "the supply-chain woes that thwarted holiday shoppers last year are mostly resolved … Now Walmart, Target, Kohl's and other major chains report surging inventory levels. People have stopped shopping for stay-at-home items like pajamas and electronics … The bottom line is that "consumers were flush with cash last year. That turned into higher demand, putting more pressure on companies to buy.  But rising inflation, plus the post-pandemic rebound in spending on travel and entertainment, have left stores with fewer eager customers — and with overstocked shelves."

MNB reader Dale Tillotson responded:

The article does not pertain to some produce/fresh items. No overstock noticed lately on lettuce, strawberries, cauliflower  and today even sweet potatoes  I did see plenty of eggs and turkeys though and limit of 2 turkeys needs to be enforced and all customers able to celebrate Thursday with no issue. But sadly hoarders remain for turkeys, and obviously limits need be enforced.

But MNB reader Daniel Taber wrote:

This article aligns with what I saw this weekend as I was at Lowes to buy some things for a project and I was surprised to see Clearance signs up in the Holiday/Christmas decoration sections.

It isn’t even Thanksgiving yet and Lowes has already put 25% off clearance deals on 10-20% of the items in the section, which I don’t recall ever happening before.

Looks like it won’t be a good season for those companies, like Lowes, that didn’t foresee an economic downturn when they placed their seasonal orders 8-10 months ago.

Though it will be good for shoppers who wait for the clearances to heat up and can get some good deals to off set the inflation of the last year.

We also took note yesterday of some of the sizzle that has gone out of Beyond Meat's business, and one MNB reader responded:

Beyond, Impossible, and many other plant based meat companies all seemed to push to have their products sold in the meat market section of grocery stores beginning in about 2018-19.  The industry trotted out sales decks indicating that this is where consumers wish to find their products and were able to convince some grocers to make the move. There was a concerted effort among current brands and new brands to be where meat shoppers spend in an effort to grab some of their purchasing power. 

Trouble is the plant based meat simply does not perform as well as natural meats.  At the same time plant based costs much more than natural meat. Why would meat consumers move to something that costs more and doesn't taste as good? This also doesn't take into consideration the false assumption that plant based products are better for the environment. Frankly the plant based industry seems intent on alienating vegans by placing plant based adjacent to natural meats. I have met vegans who will not even venture into the meat market. 

When the price of natural meat is higher than plant based, then people will change but until then good luck. 

And finally, from another MNB reader about Mark Cuban's newest venture, Cost Plus Drugs, which is an effort to build a business by attacking the high cost of pharmaceuticals.

I would speculate that Mr. Cuban is doing a lot of marketing around his new drug business, but also knows full well that the cost for prescription drugs are, in the aggregate, not high. In fact, net drug costs have been increasing only low single digits for most of the past 10 years, and remain at that rate even as inflation has surged for every other category. Though there are still problems with those cancer, or specialty drugs often dispensed by hospitals, and not your local drug store.

Generic penetration has grown and third party payers continue to pursue narrow network arrangements, and lower reimbursement rates. The problem is the so called gross to net bubble,,,the difference between the MFG gross and net price, or price after all the discounts/rebates that flow through the complex supply chain. Cash paying customers pay the gross price, and not the net price after all the manufacturer rebates/discounts. Cuban may have an opportunity to capture a piece of this much smaller market, but there is already lots of competition…and with a GoodRx card, doubtful this type of competition is even necessary.