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    Published on: January 10, 2023

    I've always felt strongly about the importance of a continuing education in life and work - and there are few better examples of how industry players come together to prioritize it than how the Western Association of Food Chains (WAFC) works with the University of Southern California (USC) on a variety of programs.  Today, I chat with Stater Bros. COO Greg McNiff about these initiatives, as well as discuss what retailers are looking for when they recruit undergraduates.

    Full disclosure:  WAFC is a longtime and valued MNB sponsor, but I would've done this story regardless.

    Published on: January 10, 2023

    by Kevin Coupe

    Sportico is out with its annual list of the "Top 100 Most-Watched TV Broadcasts" of the previous year, reporting that - by far - National Football League games dominate the list with 82 of the top 100 programs.  There were just five college football games on the list, four political programs, three World Cup games, and two college basketball games.

    The business/retail relevance, you may ask?

    Simply this.

    Every one of the top 100 broadcast TV programs last year was a unique, "live" event - if you wanted to have the non-replicable experience, you had to watch them when the were on.

    Which, in so many ways, is what retailers need to do.

    If, as a retailer, you don't have items, services and/or experiences that are unique to you, then you haven't really established a differential advantage.  Being five or 10 cents cheaper on Oreos or Tide or Corn Flakes will only take you so far … you have to have that  unique certain something that people can only get from you.

    Look at the chart below.  Think about it in terms of your business.

    It is an Eye-Opener.

    Parenthetically … this is the reason that streaming services, looking for advantages and audiences, are turning to live events as a way to generate viewership.  It is why Amazon, Apple and, reportedly, even Netflix, are seeking to offer live sports on their services.

    It doesn't always work right away, though - Business Insider  reports that Amazon, having spent $11 billion for an 11-year deal giving it the rights to Thursday Night Football games, now is "scrambling" to offer advertisers make-goods because audiences were 25 percent lower than projected.  

    In part, this is because finding Thursday Night Football on Amazon required a significant change in viewing habits.  (Amazon may be ubiquitous, but not quite as ubiquitous - yet - as ESPN, CBS and Fox.). In addition, Business Insider points out that Amazon "faced a learning curve on the ad sales front."

    But this is early days, and there's one nugget of hopeful news in the Business Insider story - that "TNF" viewership on Prime Video h"ad a median age of 47, according to Amazon — 7 years younger than the NFL average on linear TV."  It never is a bad thing when your audience gets younger, and now Amazon is faced with the challenge of bringing the total audience up to what the NFL and advertisers expect.

    Published on: January 10, 2023

    Albertsons this morning said that its Q3 same-store sales were up 7.9 percent, while e-commerce sales were up 33 percent.  Q3 net sales were up to $18.2 billion from $16.7 billion during the same period a year earlier, while net income for the period was $375.5 million, down from $424.5 million a year earlier.

    CEO Vivek Sankaran, in a prepared statement, said, ""Our investments in digital transformation, differentiation in Own Brands and Fresh offerings, and the modernization of our operational capabilities contributed to these results … As we look ahead to the balance of the year and into fiscal 2023, we believe that all of these initiatives position us well to continue to drive top-line growth and deepen our customer and community engagement both online and in-store. At the same time, our ongoing productivity engine is expected to continue to support our investments and partially offset anticipated inflationary cost increases, declines in COVID-19 vaccination and at-home test kit revenue, and macro-consumer headwinds."

    KC's View:

    Albertsons may have had a strong quarter, fueled in part by inflation that creates higher sales numbers, but it is going to spend much of the next year weathering legislative, regulatory and popular reactions to its proposed $24.6 billion acquisition by Kroger.  And, more immediately, it has to get the $4 billion special dividend cleared by the courts.

    The biggest challenge that Sankaran has, it seems to me, is maintaining a focus on innovation and other initiatives while keeping the company's eyes on the prize.  I think they'll get there and that the merger will go through, but it my end up being a contentious year on a lot of levels.  The best thing Albertsons can do - and Kroger, for that matter - is to keep telling the story.  Don't just focus on the numbers, but create a compelling narrative that focuses on people and communities, with specific anecdotes that speak to opportunity at a variety of levels.

    Published on: January 10, 2023

    The monthly Brick Meets Click/Mercatus Grocery Shopping Survey is out, reporting that "the US online grocery market finished December with $9.1 billion in total sales, up 2.4% compared to a year ago, and only 2% lower than the record high of $9.3 Billion last seen in Q1 of 2021.

    "December’s strong monthly sales results and year-over-year gain was driven by a combination of more households buying groceries online during the month and slightly higher average order values (AOVs) although these still trailed grocery price inflation. The AOV gains were partially offset by lower order frequency among monthly active users (MAUs) in December."

    According to the survey, "More than half of all U.S. households ordered groceries online during December, up 4% versus year ago. Pickup benefited the most from this increase in demand as almost 5% more MAUs opted to use this receiving method in December. Delivery was slightly positive, and Ship-to-Home experienced a drop of more than 8% in MAUs. By format, while the Grocery MAU base climbed nearly 7% versus the prior year, the Mass MAU base expanded nearly three times faster and attracted almost half of the total MAU base in December."

    The survey goes on:  "Overall order frequency, defined as the number of orders received by an MAU on average during the period, slid 7% versus December 2021 at the aggregate level. By service method, Ship-to-Home’s order frequency contracted twice as much as the aggregate; Delivery’s drop wasn’t as severe but still a double-digit decline; and Pickup saw order frequency grow slightly among its MAUs. By format, order frequency continued to show divergent year-over-year trends as it decreased by 7% for MAUs of Grocery and increased 3% for MAUs of Mass."

    KC's View:

    No question that inflation is goosing the numbers a bit, but the larger lesson is that while inflation and a recessionary mindset have put the brakes on the warp-speed growth that e-commerce saw during the pandemic, there is a lot of life left in the segment.  In fact, I think the greatest growth may be ahead, not behind.

    Published on: January 10, 2023

    The New York Times reports that "Danone, the French dairy giant, is being taken to court by three environmental groups who say it has failed to reduce its plastic footprint sufficiently, in a lawsuit challenging corporate social responsibility in the face of the climate crisis.

    "The groups accuse Danone - one of the world’s top 10 plastic polluters, according to a recent study - of 'failing to live up to its duties' under a groundbreaking French law that requires large companies to address their environmental impact and has opened ways to sue them should they fail to do so … The lawsuit is likely to put the spotlight on the explosive growth of plastics pollution, which scientists say is affecting air and water quality, global warming, as well as human and animal life. The issue is so pressing that the United Nations last year agreed to begin writing a treaty designed to curb plastics production.

    "But Monday’s announcement also spoke to a broader trend in environmental activism, with advocacy groups increasingly suing governments and companies in an effort to bridge the gap between their climate promises and their actual record."

    According to the Times, "A spokeswoman for Danone said the company 'strongly' refutes the accusation, adding that it was taking action to 'reduce the use of plastic, develop reuse, reinforce collection and recycling channels, and develop alternative materials'."

    KC's View:

    We live in a world there transparency is imposed upon almost every situation, like it or not.  So Danone can say what it wants, but if the numbers don't ad up, then it can be held accountable.  And I like the idea of the French law that essentially makes it possible for citizens to hold companies accountable when their actions don't live up to their promises.

    Published on: January 10, 2023

    CNBC reports that Walgreens CFO James Kehoe is conceding that "the company may have overblown concerns about thefts in their stores after shrinkage stabilized over the last year."

    “Maybe we cried too much last year,” Kehoe said. “We’re stabilized,” he added, saying the company is “quite happy with where we are.” 

    CNBC writes that "shrinkage was about 3.5% of sales last year but that number is now closer to the 'mid twos.' He also said the company would consider moving away from hiring private security guards."

    According to the story, "Kehoe said the company has spent a 'fair amount' to crack down on the thefts but acknowledged the private security companies they’ve hired have been 'largely ineffective.' These guards can do very little but call law enforcement or hold a suspect until police arrive. "

    Walgreens hasn't been alone in its concerns:  "Walmart CEO Doug McMillon claimed he might have to close stores and raise prices if the problem doesn’t get under control. Target claimed in its last earnings report that it recently lost $400 million from shrinkage."

    KC's View:

    It may be that theft is receding a bit, but that doesn't mean that retailers and the culture don't have a systemic problem - the breakdown of basic rules and the inability/unwillingness to enforce laws.  I believe in a compassionate justice system, but the justice part of that construct is just as important as the compassionate part.

    Published on: January 10, 2023

    •  From CNN:

    "Ring parent company Amazon is introducing a Ring camera for your car.

    "It’s a small dual-facing camera that sits on the dashboard and captures the vehicle’s exterior as well as its interior.  The camera is able to detect activity, such as a break-in, and begin recording while also sending an alert and live video to the owner.

    "The 'traffic stop' feature lets drivers start recording when they get pulled over or have an accident.

    "The device supports a cellular connection, but requires a subscription to Ring’s 'protect-go' service for $6 a month or $60 a year."

    Published on: January 10, 2023

    •  From Bloomberg:

    "Relief from skyrocketing egg prices is coming even as consumers in some parts of the country still see shortages as a lingering effect of an historic avian flu outbreak.

    "Midwest large eggs, the commodity’s benchmark price, fell to $4.63 a dozen on Friday, according to commodity researcher Urner Barry. That’s down from a record high of $5.46 a dozen in December.  'The rally is definitely over — at least for the time being,' said Karyn Rispoli, an egg market reporter at Urner Barry. 'While some suppliers continue to note pretty strong retail demand, orders for many have started to slow.'

    "Egg prices soared last year to record highs after the worst global bird flu outbreak on record ravaged flocks, and consumers are feeling the pinch, with some areas having trouble finding eggs at all."

    •  From Bloomberg:

    "CVS Health Corp. is exploring an acquisition of Oak Street Health Inc., which runs primary care centers for Medicare recipients, according to people familiar with the matter. 

    "A deal could be reached within weeks that would value Oak Street at more than $10 billion, including debt, said the people, who asked to not be identified because the matter isn’t public. Talks between the companies are ongoing and could end without an agreement, the people said … Oak Street, which went public in 2020, aims to reinvent care for Medicare patients with low incomes and chronic health problems. The company says its high-touch approach — frequent checkups, preventive screenings and meetings with social workers — can reduce patients’ medical costs."

    •  From CNBC:

    "The Securities and Exchange Commission charged former McDonald’s CEO Steve Easterbrook on Monday with misrepresenting his November 2019 firing.

    "Easterbrook has agreed to a $400,000 fine, without admitting or denying the claims, and will be barred from serving as an officer or director for any SEC-reporting company for five years.

    "McDonald’s board fired Easterbrook in 2019 for a consensual relationship with an employee, which violated the company’s fraternization policy. However, he wasn’t fired for cause, allowing him to receive a severance package.

    "Months later, the fast-food giant sued its former chief executive, claiming he committed fraud and lied to cover up additional inappropriate relationships with employees. In December 2021, the two parties settled the lawsuit, and McDonald’s successfully clawed back Easterbrook’s severance, valued at $105 million."

    Published on: January 10, 2023

    •  From the Wall Street Journal:

    "Rite Aid Corp. on Monday said that President and Chief Executive Heyward Donigan has left the drugstore chain, whose shares have been hovering near all-time lows as losses mount.

    "The company tapped board member Elizabeth Burr as an interim CEO as it conducts a search for a new leader. Ms. Burr is a health industry veteran, having previously served as chief innovation officer at the health insurance giant Humana Inc.

    "Ms. Donigan was named Rite Aid CEO in 2019, leading the company through the Covid-19 pandemic that put pharmacy chains on the front lines of testing and later, vaccinations. But the company has been posting wider losses over the past year as the pandemic abated and revenue plunged."

    Published on: January 10, 2023

    Yesterday we took note of a CNBC story about how "quiet hiring" is a workplace phenomenon likely to occur this year, defined as "when an organization acquires new skills without actually hiring new full-time employees … Sometimes, it means hiring short-term contractors. Other times, it means encouraging current employees to temporarily move into new roles within the organization."

    I commented, in part:

    One of the examples cited in the CNBC story is "Australian airline Qantas, which asked executives to address a labor shortage last year, in part, by rotating in as baggage handlers."   This reminded me of the conversations we were having here last week about Southwest Airlines, and how the company's founding CEO, Herb Kelleher, exemplified this sort of attitude before it was a management buzzword.  There are few messages more clarifying than when a senior executive grabs a mop or takes over a checkout lane or carries bags out to a car.  And when this kind of attitude is institutionalized - part of the executive's regular responsibilities, it becomes a cultural norm, not an anomaly.

    MNB reader Julie L Covar wrote:

    It's interesting, I think, that your examples highlight flexing down levels — executives hopping on a register or handling baggage.  Yes, those things send a signal that we are all in this together to get the job done, that no one is more important than anyone else, and that everyone is responsible for the company’s success.  What I see in real life is employers asking lower level employees to flex UP - taking on responsibilities and tasks that have historically belonged to higher level roles - and failing to accompany those requests with appropriate additional compensation and/or title.   THAT sends an entirely different message - and not a good one. 

    MNB reader Bob McGehee responded:

    My first job in the grocery industry was in a union shop.  One of the rules was when someone is temporarily (40+ hours) replaced by a lower paid employee, that person receives ½ the difference between their regular pay and the person being replaced.  I.E., person being replaced regular pay is $10/hour and the replacement’s regular pay is $5/ hour.  While doing the temporary job, their pay was $7.50/hour.  Both the employee and employer recognize there is a skill/proficiency difference and pay is adequately adjusted.  Sounds like that equation might be applied today.  Very simple but might be a good starting point. 

    Another idea.  I have had the privilege of hearing Dan Cathy of Chick-fil-A speak.  It is their policy that all executives serve at least 4 hours/week on the Help Desk.   Also, very simple and good starting point. 

    On another subject, this note from an MNB reader:

    You have long decried the Bed Bath & Beyond coupons as creating customers who won’t buy without the discount, which is probably fair, but I don’t think it’s the real (or at least *only*) reason for their lowered performance.  Yes, I keep a bale of their coupons handy in all our cars so we’re never caught out, but I’ve found them to be not as reliable as I need.  So many times over the past year or more I’ve searched their website for things I need (a specific baking pan, a specific organizing item, etc) and been told that they are available in my local store and for a certain price, only to get there and have them NOT in store, or not at the price shown on the website.  And to make matters worse, when you step into the store, the search that was up on my phone gets hijacked and changes - something that Best Buy got into trouble with years ago, if you recall.  (Actually, I think theirs was just their in-store website was rigged to not show the low price that people were seeing on their home computers—before the pervasiveness of smartphones.)  I’ve also experienced frustration from inaccurate descriptions—driving to the store to pick up a specific size of cake pan, only to discover that it isn’t the size claimed online.  Admittedly, that isn’t unique to BB&B. 

    Published on: January 10, 2023

    In the NCAA National Championship game, the University of Georgia Bulldogs wiped out the Texas Christian University Horned Frogs 65-7, making the Bulldogs the first team to repeat in a decade.