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    Published on: December 14, 2022

    The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive who led the team that developed Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Today, Tom and KC offer some predictions for 2023, as they engage in the last Innovation Conversation of 2022.  They range from how technologies will be deployed to how retailers will establish priorities … and include one big personnel move that seems more possible at the moment than it would have six months ago.

    If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

    Published on: December 14, 2022

    Two Kroger stores in the Columbus, Ohio, market are adding menu items from Saladworks to the new Kitchen United Mix Food Hall locations situated in those stores … "Kitchen United's Mix Food Hall provides customers with a seamless takeout experience, offering a variety of restaurant brands and menu options including Saladworks," the announcement says.  Delivery also will be available.

    It goes on:  "Customers will be able to place their order at on-site kiosks at Kroger locations or online at Customers can also order through third-party delivery apps but ordering from multiple restaurant menus featured at Mix Food Hall is exclusively available through the Mix Food Hall ordering platform."

    KC's View:

    I'm sure that this is a good idea, but I always struggle with the idea that a retailer that has invested time and effort in creating viable and attractive produce departments now will add a component to their stores that offers fresh produce from a company that is a competitor for share of stomach.

    The food halls are designed to be a point of differentiation, as well as a way to cater tio evolving consumer needs.  So maybe it doesn't really matter if Kroger lays out the welcome mat for the competition.  But it strikes me as a concession, not just a competitive statement - does it enhance the Kroger brand, or diminish it?

    Published on: December 14, 2022

    CNBC reports that Dollar General, which already is pursuing an aggressive growth strategy for its eponymous chain, also is planning to ramp up expansion plans for its Popshelf format, which "caters to suburban shoppers with higher incomes, but sells most items for $5 or less" and is "designed to be a treasure hunt that keeps shoppers coming back."

    According to the story, "It aims to double the banner’s locations to approximately 300 stores next year. Over the next three years, it plans to grow to about 1,000 locations across the country. Eventually, it sees an opportunity to reach about 3,000 total locations. It is also testing mini Popshelf shops inside of some of its Dollar General stores. So far, it has about 40 of those shops."

    The challenge, CNBC suggests, is "to prove it can hold up in a tougher economy. Walmart, Best Buy, Costco and others have warned of weaker sales of discretionary items as consumers spend more on necessities. Target recently cut its holiday quarter forecast, and Kohl’s pulled its outlook, citing middle-income consumers who feel stretched."

    KC's View:

    It certainly is impressive to see such a growth-oriented company such as Dollar General find the resources to put behind a new concept that focuses on a customer outside its core demographic.  I suspect it helps that there are going to be some Popshelf sections inside Dollar General's more traditional format;  it probably allows for at least some of the assets being created to have a more immediate ROI.

    Is going after a more affluent customer, in the middle of an inflationary period during which many people already have adopted a recessionary mindset, a good idea?  I certainly don't think it is a bad idea - after all, this isn't a format created for this year and next.  I'm sure Dollar General believes the concept will have staying power,  and that there is no better cauldron in which to test it than it harder-than-usual times.

    Published on: December 14, 2022

    From the New York Times:

    "Inflation slowed more sharply than expected in November, an encouraging sign for both Federal Reserve officials and consumers that 18 months of rapid and unrelenting price increases are beginning to meaningfully abate.

    "The new data is unlikely to alter the Fed’s plan to raise interest rates by another half point at the conclusion of its two-day meeting on Wednesday. But the moderation in inflation, which affected used cars, some types of food and airline tickets, caused investors to speculate that the Fed could pursue a less aggressive policy path next year — potentially increasing the chances of a 'soft landing,' or one in which the economy slows gradually and without a painful recession."

    In his analysis, John Cassidy of The New Yorker writes:

    "The inflation news isn’t all reassuring. At 7.1 per cent, the headline rate is still far above the Fed’s target of two per cent, which means that Jerome Powell and his colleagues are virtually certain to raise the federal funds rate by another half percentage point on Wednesday. (They have already signalled this move.) And the prices of some individual items remain greatly elevated. The price of fuel oil went up 1.7 per cent in November; compared with twelve months earlier, it was up sixty-five per cent. The price of food - purchased at home and in restaurants - rose another 0.5 per cent. During the previous twelve months, it increased by more than ten per cent.

    "The recent rises in food prices came despite the fact that some key inputs to the food industry - including corn, wheat, and certain types of energy - have experienced substantial price drops in recent months. If these cost reductions aren’t soon reflected in supermarkets and takeout places, Americans will have good reason to be angry - and to suspect that big food companies are padding their profits at the expense of their customers. I doubt that the owner of my corner deli, who faces a lot of competition, is doing that. I’m pretty sure he’s merely passing along his increased costs. All the same, I’d be as relieved as anybody else to see the price of milk come down. But it’s also important to look at the over-all inflation picture, which is slowly but steadily improving. Rather than overcorrecting for its failure to predict the earlier price spike, the Fed should be mindful of this as it decides how to set policy in 2023."

    KC's View:

    I think I speak for everyone when I say, "Soft Landing = Good."

    And maybe I'm just a cockeyed optimist, but for some reason I'm thinking this is what is going to happen.

    Published on: December 14, 2022

    Entrepreneur suggests in an analysis that we can "expect to see an increase in the term "smart home automation" — referring to Internet-connected devices that monitor and control essential household functions such as lights, cameras, locks and climate. As the industry transforms, it presents a prime opportunity for entrepreneurs, corporations and investors.

    "Touchless interactions and whole-home automation that drive efficiency and save energy are among the concepts driving consumer interest. Automated heating and cooling will see high demand, with new government efficiency regulations requiring replacing or retrofitting existing systems. In January 2023, all residential central air-source heat pump systems sold in the U.S. must meet new minimum energy efficiency standards.

    "This trend is about improving the home experience — from programming devices that always behave the same to automating devices that anticipate and understand the homeowner's needs. As evidence, Grandview Research predicts that smart kitchens will see an impressive compound annual growth rate of 30.5% from 2021 to 2030."

    KC's View:

    Two things.

    First, of course "smart home automation" is going to grow over the next few years.  As technology improves and becomes more accessible, inevitably it will find more homes - in this case, literally.

    Second, the question is how much it will grow.  At the moment, numbers like "30.5%" - which is just the smart kitchen number, seem a little hyperbolic.  But that's just now.  Depending on how the economy improves, that number might end up seeming conservative.

    Published on: December 14, 2022

    •  Food Lion announced this week "the expansion of its Food Lion To Go grocery pick up service to 25 more stores in the Carolinas beginning Dec. 12. With the availability of this service at these new stores and the recent expansion of home delivery (to new zip codes in Georgia and South Carolina) the omnichannel retailer now offers Food Lion to Go pickup or home delivery at 86% of its 10-state operating area."

    Published on: December 14, 2022

    •  The Main Street Alliance this week has come out against the proposed Kroger-Albertsons merger:

    "“The proposed Kroger/Albertsons merger will be a disaster for small and emerging independent brands. Continued consolidation and monopolization will severely limit the ability of small companies to compete in the larger marketplace.

    "'Simply put, larger grocers have very little interest in working with small brands. It takes just as much (if not more) time and effort to onboard a small brand compared to a larger counterpart. The larger, more well-known brands will continue to flourish while small brands won't be able to ever make it to store shelves. Over time, all major grocery chains will look substantially similar with fewer choices offered to consumers,' said Main Street Alliance member Kyle Lafond of Wisconsin. 

    "Main Street Alliance is committed to ensuring small businesses are able to fully compete in the economy. The Kroger-Albertsons merger will have a severe impact on small businesses around the country and we urge the FTC to deny their request."

    •  FMI – The Food Industry Association said yesterday that it has "filed a letter opposing the U.S. Department of Labor’s (DOL) revamp of the rule that determines if a worker is an independent contractor. FMI’s letter calls on DOL to retain the current independent contractor framework and not replace it with the proposal to expand the factors for determination. FMI also joined several associations and businesses in signing a coalition letter opposing the proposed rule. 

    "The Fair Labor Standards Act governs how a business classifies a worker, including an independent contractor in a gig profession, as an employee for purposes of applying federal wage and overtime requirements. The proposed rule applies six or more factors in determining whether an independent contractor must be classified as an employee instead of the current policy that applies two core factors. 

    "'FMI members need the flexibility to utilize the staffing resources of vendors and contractors, such as on-demand delivery services, to address evolving requirements of our 21st century economy and workforce,' said Christine Pollack, FMI’s vice president of government relations."

    Published on: December 14, 2022

    •  Ahold Delhaize yesterday announced that Peter Agnefjäll is to be reappointed as member and Chair of the Supervisory Board at the Annual General Meeting of Shareholders on 12 April 2023.  Agnefjӓll has been a member of the Supervisory Board since April 2019 and was appointed Chair as per 1 January 2021. His reappointment for another four year term is subject to shareholder approval.

    Published on: December 14, 2022

    …will return.