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    Published on: December 15, 2022

    Over the past few years, I've been pretty harsh in my assessment of a new mall - the SoNo Collection - that opened near me;  "mausoleum" is the kind of sword I've bandied around.  But now, as the pandemic recedes (?), I figured it was worth a return visit, and I was perfectly willing to eat my words.  But …

    Published on: December 15, 2022

    by Kevin Coupe

    Pew Research is out with a year-end report on what it calls its most striking research findings of 2022 - and one of them was that "roughly four-in-ten Americans (41%) say none of their purchases in a typical week are paid for using cash, a July survey found. This is up from 29% in 2018 and 24% in 2015.

    "Meanwhile, the portion of Americans who say that all or almost all of their purchases are paid for with cash in a typical week has declined from 24% in 2015 to 18% in 2018 to 14% today.

    "While growing shares of Americans across income groups are relying less on cash than in the past, this is especially the case among the highest earners. Roughly six-in-ten adults whose annual household income is $100,000 or more (59%) say they make none of their typical weekly purchases using cash, up sharply from 43% in 2018 and 36% in 2015."

    Now, that's an Eye-Opener.

    BTW … among the other "most striking" findings of 2022 were that "if recent trends continue, Christians could make up a minority of Americans by 2070," because " large numbers of Americans have left Christianity to join the growing ranks of U.S. adults who describe their religious identity as atheist, agnostic or 'nothing in particular'" … "a third of adults who use TikTok say they regularly get news there, up from 22% two years ago" … "most Americans who have experienced extreme weather in the past year – including majorities in both political parties – see climate change as a factor" … and "about 5% of Americans younger than 30 are transgender or nonbinary – that is, their gender is different from their sex assigned at birth, according to a survey conducted in May. By comparison, 1.6% of those ages 30 to 49 and 0.3% of those 50 and older say that their gender is different from their sex assigned at birth. Overall, 1.6% of U.S. adults are transgender or nonbinary – that is, someone who is neither a man nor a woman or isn’t strictly one or the other."

    All Eye-Openers.  In fact, I'd argue that one of the worst things that we can do - whether speaking as an individual, a business, or a culture - is to close our eyes to the forces that are shifting all around us.  We have to open our minds and, when appropriate, our hearts, to people who no longer fall into the neat definitions of the past, no longer act predictably or fit into traditional slots.

    George Bernard Shaw once said that "“Those who cannot change their minds cannot change anything.”  I don 't know about you, but for me this whole exercise - this whole conversation that we've been having for 21+ years - has been about trying to understand and appreciate change and, when possible, use MNB's soapbox to encourage change.  

    Published on: December 15, 2022

    Axios reports that a new survey of the CFO community by Deloitte released today reveals that "as the global economy roils from what feels like a relentless series of economic and geopolitical shocks — the era of the polycrisis — executives at some of the world's biggest companies are increasingly anxious … That often means taking fewer chances, pulling back on investment and hiring; the kinds of actions that could trigger the downturn they fear."

    Steve Gallucci, Deloitte's Global and US CFO Program Leader, tells Axios that "the aversion to risk means that companies are less willing to do big deals, increase capital investment or take on more leverage."

    "Looking inside their companies," Axios writes, "CFOs are worried about hiring in a tight labor market.  Looking externally, they're nervous about geopolitics — war, supply chain shocks, climate."

    KC's View:

    I met a guy this week (I'm hoping to have him on MNB as a guest in the new year) who has written a book about how it is almost always more dangerous to avoid risk than it is to embrace it.

    This goes back to something we talk about a lot here on MNB - how companies that invest and innovate in tough moments like these often can find them to be defining moments.

    Published on: December 15, 2022

    Bloomberg Businessweek reports that Dave Limp, the Amazon senior vice president in charge of the company's devices business, says "the company remains committed to building out the Alexa ecosystem despite job cuts in the once fast-growing division."

    The story notes that "when Amazon last month initiated its biggest-ever round of layoffs, they fell first and hardest on the Devices and Services group. The unit is responsible for the Alexa voice-activated assistant, Echo smart speakers, Fire streaming devices and home robots."

    But Limp says, "Is there some lack of commitment to Amazon’s devices and services business? By any measure, the answer is no.”

    Limp "cited continued big bets on Alexa, Zoox self-driving taxis and Kuiper internet satellites as evidence that Chief Executive Officer Andy Jassy is willing to invest billions on projects that might not pay off for years.

    "'I’ve yet to be in a meeting where he doesn’t call out those as big inventions and big bets,' Limp said. 'But at the same time, he also is inspecting them and spending time with them'."

    The story goes on:

    "Limp insisted that engagement with Alexa has been growing and that the number of people using the software is at an all-time high. But he conceded that the devices group is still not profitable, though he disputed published reports that operating losses in recent years had totaled as much as $5 billion. (Limp declined to provide a precise figure.)

    "The devices themselves are often sold at or near cost. Becoming profitable will require persuading customers who use the hardware to pay for such services as online shopping, music or audiobooks, Limp said."

    KC's View:

    I am reminded of what the British writer G. K. Chesterton once said:

    “Art consists in limitation."

    Sometimes, innovation thrives to a greater degree when borders are created.  And maybe that is exactly what Amazon is doing here.

    Published on: December 15, 2022

    From the Dallas Morning News, a story about how "the owners of nearby retail properties and buyers of land near future H-E-B stores are also excited to see the popular grocer expanding to Dallas-Fort Worth."  These companies believe in the aphorism that a rising tide will lift all boats, generating new occupants for shopping centers and new customers even for competing retailers.

    “It’s all about sales,” Herb Weitzman, founder of Dallas-based retail real estate firm Weitzman, tells the News. “Nobody in the state comes close to doing the volume H-E-B does.

    “These stores reach volumes that are so much greater than what the other grocery stores are doing.  They absolutely have an effect on the area and pull in new customers.”

    KC's View:

    I remember decades ago, Costco announced plans to open a new store in Danbury, Connecticut, not far from a then-new Stew Leonard's.  Leadership at Stew's was very clear - Costco would bring new customers into the area, and some of them would come to Stew Leonard.s which had a fundamentally different value proposition than the membership club.

    That's an important lesson for the Dallas-Fort Worth retailers.  It is hard to do, but if you are going to be effective with all these new customers, you have to have a differentiated offering.  You can't just hope to survive from crumbs off H-E-B's table, because that's neither nourishing nor sustaining over the long term.

    Published on: December 15, 2022

    The Associated Press reports that the environmental group Oceana says that "Amazon’s plastic waste jumped from 599 million pounds in 2020 to 709 million pounds last year — an amount that can circle the planet more than 800 times in the form of air pillows."

    That's an 18 percent increase, year over year - and also runs contrary to Amazon's narrative.  The company says "it has reduced its use of single-use plastic across its network …  Amazon also said it was able to reduce the average weight of plastic in a shipment by over 7% but it did not disclose if its overall plastic footprint grew between 2020 and 2021, when it was seeing a boom in sales due to the pandemic."

    “While we are making progress, we’re not satisfied,” the company said in the blog post. “We have work to do to continue to reduce packaging, particularly plastic packaging that’s harder to recycle, and we are undertaking a range of initiatives to do so.”

    KC's View:

    Both things can be true at the same time.  It all depends on how the measuring is done and, apparently, who is doing the measuring.   Where organizations can get into trouble is in doing  some kind of shell game, selectively reporting only numbers that support a position.  Not saying that is happening here, but a debate over numbers and honest reporting can impact credibility over the long term.

    Published on: December 15, 2022

    Associated Wholesale Grocers, Inc. (AWG) yesterday announced that its president and CEO, David Smith, will retire at the end of 2023.

    Dan Funk, AWG's COO, will assume the office upon Smith's retirement. 

    From the announcement:

    "Smith joined AWG in 2003 and became president and CEO in 2015. Smith has focused solely on independent supermarket operators' development and success throughout his career. He is in his 48th year in the industry and 36th year of service in wholesale.

    "During his time with AWG, he has seen the cooperative and membership grow from a Midwest company with 1,200 stores and three Divisions with sales of $3.2B to a sprawling central US company with retail sales exceeding $24B and wholesale sales exceeding $11B."

    Funk, ther company says, "started his career with AWG as president of Valu Merchandisers Company (VMC) in October 2012. After two years leading the AWG subsidiary, he assumed the SVP of the Center Store role. In December 2015, Funk became EVP and chief merchandising and marketing officer. In January 2019, he became AWG's first-ever chief supply chain and merchandising officer, and in 2020 became the COO of AWG."

    Full disclosure:  AWG is a longtime and valued MNB sponsor.

    Published on: December 15, 2022

    From Bloomberg:

    "Baristas at an experimental Starbucks-Amazon Go store in New York say the tie-up between the coffee chain and e-commerce giant has doubled their workload with no additional pay.

    "Some 30 Starbucks Corp. employees at the Times Square location will decide Dec. 15 whether to join Starbucks Workers United, which has already unionized hundreds of cafes in cities around the US. Inc. itself has been roiled by labor activism at its warehouses, but this is the first time workers have sought to hold a union election at one of its retail locations."

    The story goes on:

    "Starbucks workers stock Amazon inventory, such as prepared hot foods in the morning, which they say is a safety hazard. Employees claim they have been mildly burned while heating up Amazon foods. Management’s only response was to provide ointment, they said. 

    "Employees also clean both the Starbucks and Amazon areas. Amazon representatives worked frequently in the store when it first opened, but now only come in a couple of times a week to check on the technology, the workers said.

    "Employees, who filed for the union election in October, say the difficult nature of the job, compared with working at a regular Starbucks, has fueled high turnover."

    KC's View:

    In some ways, this seems to be emblematic of all the union issues that Starbucks is having, and probably those of Amazon as well.  The format has created twice the work, but the pay has not kept pace - which means that management is out of touch with the realities of this format's demands.  I think it can be fairly argued that often, when workers consider unionization, it is because they feel they have no voice, and that management has no ears.

    Published on: December 15, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the New York Post:

    "Amazon was hit with a $280 million lawsuit Tuesday for allegedly abandoning a company that makes specialized structures used by the e-retail giant’s robotics division.

    Vietnamese manufacturer Gilimex claims Amazon pushed it to produce the structures – called fabric pod arrays, or FPAs – during the pandemic but then promptly ended their deal in May, according to the lawsuit filed in New York Supreme Court.

    "The company is suing Amazon for negligent misrepresentation, unfair trade practices, breach of contract and breach of fiduciary duty, according to the complaint."

    Amazon has not yet commented on the suit.

    •  From Business Insider:

    "An executive involved in Amazon's 'earth's best employer' initiative was recently investigated by the company after multiple employees alleged she created a hostile work environment, according to people familiar with the situation.

    "The investigation focused on Justine Hastings, the vice president of human-resources science and chief of people-centered science at Amazon, the people said. They spoke on condition of anonymity so they could discuss sensitive matters. Their identities are known to Insider.

    "Hastings' team of researchers, data scientists, and economists is generally tasked with studying and improving workplace culture across Amazon. The group often conducts internal research and presents the results to Amazon's most senior leaders. Hastings reports to Beth Galetti, the company's top HR executive. 

    "The investigation over the summer followed allegations that Hastings overused the company's Focus performance-improvement program, often with no clear justification, nine current employees familiar with the investigation said.

    "Insider could not verify the outcome of the inquiry. The company's investigation lasted several months, much longer than the typical few weeks, seven people familiar with the investigation told Insider

    Published on: December 15, 2022

    •  The Wall Street Journal this morning reports that "sales of private-label products, which are typically cheaper than brand-name equivalents, have surged in recent months as shoppers look for ways to economize amid soaring inflation … Supermarkets typically make a higher profit margin on private-label goods than they do from selling branded products made by consumer behemoths such as Kraft Heinz Co. and Unilever PLC. Pushing lower-priced products could also enable grocers to win the loyalty of consumers by casting themselves as the shopper’s ally during difficult times."

    The story notes that "a recent survey of food retailers by FMI, a food-industry trade group, revealed that more than 80% of respondents plan to moderately or significantly increase their investments in private brands over the next two years."

    •  The FMI Foundation yesterday announced the 2022 Gold Plate Awards recipients during a livestreamed Gold Plate Awards Celebration, with Martin’s Super Markets winning among companies of 1-49 stores for its “Be A Family Meal Champ” program … SpartanNash Company willing among 50-199-store companies  for its “Our Family, Building Strong Families” program … and HY-Vee winning among 200+ store companies for its "special events that infused National Family Meals Month messaging with the celebration of National Hispanic Heritage Month."  In the supplier community, Pure Flavor won for its “Eat Well Together to Be Well Together” program.

    Honorable Mentions went to Brookshire Grocery Company, ButcherBox, Skogen’s Festival Foods, Merchants Distributors, Rouses Markets, and Weis Markets.

    A number of organizations earned blue ribbons for "effectively connected family meals to mental health benefits in their family meals programs," including ButcherBox, Coborn’s, Hy-Vee, K-VA-T Food Stores, Martin’s Super Markets, Pure Flavor, Rouses Markets, and SpartanNash.

    Published on: December 15, 2022

    MNB reader Tom Murphy weighed in on yesterday's predictions segment of The Innovation Conversation:

    Great predictions…well thought-out and reasonably likely!  Especially agree with the continued and accelerated movement to subscription services.  I wonder if any grocery has thought to use subscription services to drive store-brand growth.  For example, “Select a subscription to save 10% on your Ritz Crackers purchase or substitute our award winning crackers for 20% off?”  This would be a great way to highlight store brands and to capture value/cost sensitive customers in 2023 and beyond.

    Another MNB reader wrote:

    Absolutely agree with Tom that 2023 will be a tighter year for most households.  For us, the return to hybrid in-office work in mid 2022 quickly dissipated any gains from 2020 and 2021.  An additional $200 a month for gas, new work clothes in post-pandemic sizes (ugh, real pants), more expensive lunches and breakfasts, a hefty rent increase (Austin housing is a BEAST, man), higher grocery costs - all of this rapidly depleted our reserves.  2023 looks like less eating out, less discretionary spending, fewer luxuries, and fewer conveniences.  

    On another subject, from MNB reader Glenn Cantor:

    Although the Kroger-Albertsons merger appears inevitable, I disagree that the new, larger company won’t want to work with smaller brands.  The people managing local markets are smarter than that.  They know that small, unique, and local brands bring shoppers into their stores.  Grocery stores cannot be like National chain drug stores.  Shoppers expect them to offer unique products and ideas. Albertsons maintains the Acme brand in Philadelphia because it is locally relevant.

    One MNB reader had a question prompted by a Wegmans story earlier this week:

    I am curious what your view is on the Wegman’s calculus of keeping stores open?  Closing 27 sores over the years on a total store base of 109 current stores seems like a lot of turnover. Any concern there? 

    Nope.  That's over a lot of years … and just think about how neighborhoods, store formats and customers have evolved since Wegmans started.

    I got another email, this one from MNB reader Steven Ritchey, about my FaceTime from Arlington National Cemetery:

    Your commentary at the National Cemetery for a fallen friend was moving, poignant, and thought provoking.

    I came along too late for the draft having turned 18 in November of 1976, my senior year in high school.  

    I learned later I most likely would not have been taken. I was born blind in my right eye,  I am also partially deaf in my right ear.  The cause was my mother was exposed to the measles in her first month of pregnancy.  I'm very lucky the damage was not worse.

    I've often wondered how my life might have been different if I had served

    That's just one of several things I wonder about.  What if I'd gone off to college instead of commuting.  I never had the experience of going off and living in a dorm, living on campus and bonding with other people living away from home for the first time.

    I wonder how my life would have been different if I had served in the military.  Would I even have survived?

    I see people who brag about how much they love their country, when they've never served.  I don't brag about love of country, or boast about my patriotism, since I never put it to the test as others have.  I look at those who have, who put their lives on hold for several years, and how it's changed them.  Some changed for the better, some not so much.

    I go about my business and support the military in small, quiet ways.  We have a PX at church which supports a military base overseas, we send snacks, toiletries, and the like.  I used to send homemade beef jerky which was always at the top of the list of things they wanted and needed, at least I did until a new rule was made that we couldn't send homemade foodstuff anymore.  I understand that, one never knows what conditions those things were made in.  It's not much, but it's what I can do, hopefully I've helped make things a bit better for some of our service people.

    Yes,  your commentary from the National Cemetery was moving, poignant, and thought provoking.  It made me think of all these things, and much, much more.

    And, from another reader:

    A great reminder of the sacrifice of others so we can enjoy our lives. 

    I too did not serve in the military.  My father did a two year stint in the US Air Force before I was born, but he left after two years because he wanted to be a pilot.  Back then if you wore glasses, like he did, they would not select you for flight training so he went on to a very successful career as a petroleum engineer.

    In 2004 my wife and I were visiting France and being a history buff we went to Normandy to see where D-Day took place.  It was like visiting a cathedral.  We walked through the American cemetery above Omaha Beach.  The tombstones perfectly level and in perfect rows.  It is the only land in France that is deeded to the US Gov’t.  I saw a man in the near distance who looked old enough to be a WWII veteran and quite possibly a soldier who landed on the beach that day.  He had his head in his hands and was crying.  I wanted to go up to console him, thank him for his service,  but I too was crying profusely seeing in-person the results of war.  It is one of my biggest regrets that I couldn’t overcome my own emotions to help this veteran.  It still brings tears to my eyes every time I think about it.

    About 15 years ago, Mrs. Content Guy, one of our sons and I visited Normandy, accompanied by a good friend (the smartest person I know) named Fiach O'Broin.  It was a remarkable visit, and exactly what I was thinking about last week at Arlington.

    Another MNB reader had some thoughts about another subject:

    I understand your concern for supermarkets sharing market space with the competition as in restaurants.  but, honestly, that ship sailed many decades ago.

    I remember over 40 years ago seeing Night Hawk frozen dinners, which was a division of Night Hawk Steak Houses in Texas.

    Long before that, a restaurant owner named Stouffer figured out a way to quick freeze his Mac and Cheese, then Lasagna for people to reheat at home.  We all know who that is now.

    Today we see Whataburger and Chick Fil A ketchup, Mustard and sauces on grocery shelves.  The other day I saw Whataburger Pancake Mix.  We have  Marie Callenders Frozen Meals.  

    I understand the concern, but it started before I was born, honestly, and I've been around more than 6 decades now.

    However, one thing in my hometown that gave me pause years ago.  We have a chain of Barbecue Restaurants name Dickey's Barbecue, been around a long time.

    We also have a Dickey's Funeral home that started as a different name and morphed over the years.  It used to be owned by one of the cities first furniture store owners who was also an embalmer. He sold furniture on the first floor of his store, did embalming on the second floor. In later years he built an actual funeral home  down the street from where I grew up.

    It is two different Dickey's family's, they are not related.  But, anyone who's seen the movie, "Fried Green Tomatoes" will know exactly what I'm talking about.

    If they were somehow related, it would be one hell of a brand extension, and I wouldn't eat in their restaurants.

    I got several emails about my attendance earlier this week at a "boot camp" for public speakers, which I did to tune up my skills and get new perspectives on how to deliver value when speaking to audiences.  One MNB reader wrote:

    My greatest fear is not being relevant, admire your desire for "lifelong learning" never know when in life you hit your stride or create your masterpiece! 

    And, from MNB reader Tom Jackson:

    GOOD FOR YOU !  Like you I am still doing some speaking and facilitating, but my goal every day is to learn something new or get updated on new approaches or information regarding the retail food industry.  I applaud you for investing in yourself and wanting to get better and that demonstrates notable humility . I read your stuff pretty much every day and look forward to your next venture, but the good part is you will CONTINUE to write and speak well because  of your  positive approach to what you do so well ! 

    Thanks, Tom.  I appreciate it.