business news in context, analysis with attitude

Published on: February 1, 2023

by Michael Sansolo

 “Things are only impossible until they’re not.” - Capt. Jean-Luc Picard

There always will be another innovation, another leap forward, another technological advancement.

When it comes to progress, there is no such thing as the status quo.

The impact and importance of technology will be front and center at the upcoming National Grocers Association (NGA) Show in Las Vegas, where on Sunday Kevin and I will host different tracks in the Technology summit. (Obviously, we hope to see you there.)

In preparation for the event, I decided to try an emerging and widely discussed technology to see how it works - that is, I decided to let ChatGPT try to write my opening remarks.

If you are unaware of ChatGPT, it is an artificial intelligence site open to all and generating a ton of concern about exactly how smart is our technology becoming. With that in mind, let me take you through my experiment. (Kevin wrote last week about Chat GPT and some specific concerns at Amazon about how it might be used by its employees in a way that could erode customer confidentiality.)

I told ChatGPT that I needed to explain the importance of technology to business people who are somewhat skeptical and have limited budgets with which to invest. And here’s what I received a few seconds later.

“Technology can bring significant benefits to businesses, such as increased efficiency, cost savings and improved customer experiences. To explain this to skeptical business people with small budgets you can:

1.     Show specific example of how technology has helped other small business in similar industries.

2.     Highlight the cost savings that can be achieved through the use of technology, such as automation of repetitive tasks and reduced need for manual labor.

3.     Discuss the potential for technology to increase revenue, such as through improved marketing and sales efforts.

4.     Emphasize the importance of keeping up with technology to remain competitive in the marketplace.

5.     Show how technology can be adopted incrementally, starting with small investments and building up over time, rather than needing a large upfront budget.

It’s important to address any concern they may have and to tailor your approach to heir specific need and goals.”

That took ChatGPT, an easily accessible, open AI website, less than one minute to write.  And frankly, the damn thing nailed it.  (Maybe I ought to ask it to start writing my column from now on.)

We all need to understand that technology isn’t simply for the sake of being cool or current. Rather it’s about helping businesses find ways to cut costs, stay competitive, possibly rethink use of the workforce and improve the customer experience. And certainly no one, no matter what the budget, has to do everything in one fell swoop. We can certainly move incrementally.

ChatGPT may be more of a threat to what we do here at MNB than it is to you in your business;  for you, it could end up being an invaluable tool, especially as the technology evolves and matures and becomes more nuanced.

In fact, it may be an interesting exercise to start thinking about ways in which you could employ it in your business, either in-store or behind the scenes.  The one thing you should avoid is to simply dismiss the tech, to think that adapting it to your business needs is an impossible leap.

Because things are only impossible until they are not.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.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: February 1, 2023

A company sent me the results of a survey about fans' loyalty to their NFL teams … but the only thing it did was make me question the human condition.

Published on: February 1, 2023

The Seattle Times reports that the US Department of Justice civil division is investigating "whether Amazon executives knew about safety hazards and misled others about the company’s safety record."  Specifically, the story says, the DOJ wants to know whether Amazon's management “engaged in a fraudulent scheme designed to hide the true number of injuries” to its workers, and made "'false representations' to lenders about its safety record to obtain credit."

According to the story, "government officials have asked the company to produce copies of communications and other documents, and to make several executives available for depositions. Information gained in the investigation, the Justice Department says, could provide 'significant evidence' about the severity of ergonomic hazards at Amazon’s warehouses and 'Amazon’s longstanding knowledge of those hazards,' according to court documents."

The Times writes that "Amazon spokesperson Kelly Nantel said the company disagrees with the allegations … Amazon has asked a district judge in Seattle to allow the company more time to gather the information the attorney’s office requested. Prosecutors originally asked for a Jan. 6 deadline. Amazon asked for a six-month extension."

Amazon also "said it has produced more than 46,200 documents - totaling nearly 190,000 pages - and 22 witnesses for depositions, according to a January court filing. Amazon also said it has 'mobilized' 100 attorneys and spent millions of dollars already."

Meanwhile, the New York Times reports that "Amazon violated labor law in advance of unionization elections last year at two warehouses on Staten Island, a federal administrative judge has ruled.

"The judge, who hears cases for the National Labor Relations Board, ruled on Monday that Amazon supervisors had illegally threatened to withhold wage and benefit increases from employees at the warehouses if they voted to unionize. The judge, Benjamin W. Green, also ruled that Amazon had illegally removed posts on a digital message board from an employee inviting co-workers to sign a petition being circulated by the Amazon Labor Union. The union sought to represent workers at both warehouses.

"The ruling ordered Amazon to stop the unfair labor practices and to post a notice saying it would not engage in them … Amazon can appeal the ruling to the labor board in Washington."

Published on: February 1, 2023

The sixth annual dunnhumby Retailer Preference Index (RPI) is out, concluding that "three years after the pandemic upturned the grocery industry, H-E-B has regained its leadership position from Amazon with Costco following closely behind in second place. Amazon fell to third while Wegmans took the fourth spot for the third year in a row.

"The 11 additional retailers with the highest overall customer preference index scores are: 5) Sam’s Club, 6) Market Basket, 7) Amazon Fresh, 8) Trader Joes, 9) Winco, 10) BJ’s Wholesale, 11) Target, 12) Aldi, 13) Shoprite, 14) Walmart Neighborhood Market and 15) Walmart."

Some key findings from the study:

•  "In 2020 and 2021, the pandemic helped propel and then solidify Amazon as the top grocery retailer over H-E-B, Trader Joe’s and Wegmans, since Amazon’s value proposition excels at both saving customers time and providing a seamless eCommerce experience. But in 2022, H-E-B reclaimed the top spot due to their superior ability to deliver a combination of better savings and better-quality experience/assortment."

•  "Digital has staying power but is no longer as key to driving short term retailer momentum as it was from 2020-2021. The pandemic increased the percentage of Americans shopping online for groceries from 39% to 50% of the country — an 11-point rise — and, despite record inflation, over half of those people remained online grocery shoppers in 2022. As a result, there are 9.4 million more omnichannel households today than there were in 2019 with a combined grocery budget of $4.9 billion."

•  "Amazon is still superior in online shopping, but all other online retailers are closing the gap. In fact, 52% of customers of first quartile retailers reported they have an easy online shopping experience, an increase of 13% from 2019. The top six retailers for digital are 1) Amazon, 2) Amazon Fresh, 3) Target, 4) Sam’s Club, 5) Walmart, and 6) Walmart Neighborhood Market."

•  "Retailers in the top quartile outperform the rest of the market in delivering superior customer benefits, savings, or both. Top quartile retailers have an average compounded average growth rate (CAGR) of 7.3% compared to third quartile retailers with a 3.2% CAGR. In addition, 59% of customers of first quartile retailers have a strong emotional connection with retailers compared to 45% of customers of third quartile retailers.

Amazon is still superior in online shopping, but all other online retailers are closing the gap. In fact, 52% of customers of first quartile retailers reported they have an easy online shopping experience, an increase of 13% from 2019. The top six retailers for digital are 1) Amazon, 2) Amazon Fresh, 3) Target, 4) Sam’s Club, 5) Walmart, and 6) Walmart Neighborhood Market."

•  "Club stores are gaining momentum with three of the top 10 spots in the first quartile now occupied by club stores. Costco (2), Sam’s Club (5), and BJ’s Wholesale (10) achieved a high rank through a combination of top-notch dependability and saving customers money while delivering a seamless experience. In dunnhumby’s 2019 RPI, no club store ranked higher than seventh."

•  "BJ’s Wholesale was the biggest mover in the RPI over the last three years, climbing from 27th place to 10th place in 2022, a 17 -point jump in rankings. Schnucks climbed 16 spots and currently sits in the 2nd Quartile overall. Other big ranking movers not in the first Quartile overall but improving were: Food Lion (14 spots up), Food4Less/FoodsCo (12 spots up), Weis (10 spots up) and Food City (9 spots up). These five retailers have two things most in common: they displayed superior ability to navigate supply chain issues by improving their ranking in the Operations pillar, which measures out-of-stock perceptions among other things, and they have existing strengths or made significant gains in their competitive position on saving customers money."

Published on: February 1, 2023

From the Wall Street Journal this morning:

"Grocery chains looking to deploy new technologies are running into internet bandwidth limitations because of aging hardware and remote locations. 

"Even as cutting-edge technology, including AI-enabled inventory tracking systems, moves from the pilot phase to the shopping aisle, many stores remain unequipped to handle network requirements for even basic tech used to boost internal operations and customer shopping experiences.

"Rom Kosla, chief information officer of supermarket operator Ahold Delhaize USA, said some stores in the franchise don’t have enough bandwidth to reliably run the company’s latest human resources system at its highest performance level. Even electronic shelf labels that allow retailers to automatically update pricing displays are a question mark, in part because of their bandwidth demands, said Mr. Kosla."

The story goes on:

"Historically, the grocery industry has been a low investor in bandwidth, according to Michael Colaneri, vice president of global business, retail and enterprise solutions for AT&T Business, a division of telecommunications holding company AT&T Inc.

"Now, the need to digitize operations to cut costs and reduce dependency on manual labor is forcing chains to play catch up on bandwidth, according to Brendan Witcher, vice president principal analyst at research and advisory firm Forrester Research Inc. While operational technologies are a bigger priority, he added that grocers tapping customer experience tech such as automated checkouts or pickup for online orders will face an even greater need for better bandwidth."

“Trying to create things like automated checkout, mobile-enabled associates—all of this is going to lean heavily on the network,” said Forrester’s Mr. Witcher. “As grocers create more digitized experiences in their environments, bandwidth becomes a huge bottleneck.”

Published on: February 1, 2023

Walmart said this week that it is investing in Plenty, an indoor vertical farming company, as part of Plenty's $400M Series E funding round.

The announcement says that "Walmart’s equity investment is part of a broader strategic partnership to utilize Plenty’s indoor vertical farming technology platform to deliver fresh produce to Walmart retail stores … Together, Walmart and Plenty will work collaboratively to create a new, market-leading product category in vertical farming by delivering the freshness and quality that Walmart customers expect, year-round. The long-term commercial agreement allows Walmart to source Plenty’s leafy greens for all its California stores from Plenty’s Compton farm beginning later this year. Walmart is the first large U.S. retailer to significantly invest in vertical farming."

As part of the investment, at closing, Walmart will also join Plenty’s Board of Directors.

Published on: February 1, 2023

The Boston Globe has a story suggesting that there is too little conversation in the country about a serious labor crisis:   "America is running out of working-age adults."

Why are workers evaporating?, the Globe asks.  "A bunch of reasons. Baby Boomers are retiring. Some women are staying home because child care is unaffordable. And working-age men are opting out of the labor force in record numbers, particularly those without college degrees.

"But the single most important reason is that America’s birth rate has largely been below replacement level since the 1970s, and in steep decline for the past 15 years.

Once, the country was brimming with an up-and-coming workforce. In 1960, there were six working adults for every person over 65. In 2030, we’ll hit 2.8 working adults for every person over 65.

"That’s an economic earthquake. And the number of working adults is slated to keep shrinking in proportion to older Americans. So if you think it’s hard finding a home health aide, or a preschool teacher, or a waiter, or a construction worker now, buckle up."

The Globe goes on: "We may be staring down the barrel of worker shortages so severe that our life choices become increasingly constrained. Can you accept that plum job across the country? Not if your dad needs someone to take care of him, and professional help is unaffordable. Can you return to work after maternity leave? Not if there aren’t any slots in nearby preschools."

Published on: February 1, 2023

Women's Wear Daily reports that "CVS Health is going big on personal care, and it’s starting in-house" with a brand that it has dubbed "One+Other (pronounced 'one another') … The offering spans personal care products, from cotton balls to nail polish remover and clippers, and ranges in price from $3 to $25."

According to the story, "The line was born out of consumers’ propensities toward self-care, which the pandemic accelerated. According to a poll conducted by the Harris Poll in partnership with CVS, 91 percent of Americans agreed self-care was important, while 50 percent had a daily practice. Thirty-eight percent of respondents, though, said they couldn’t afford to implement self-care practices. Furthermore, 55 percent said brands didn’t make products with them in mind."

WWD writes that the fundamentals being addressed by the new line "include cotton balls, nail polish removers, tweezers, eyelash curlers and body wash brushes. Making self-care essentials accessible was the brand’s starting point."

The assortment is said to be non-gender-specific, and "inclusivity has also informed the brand’s marketing, which will include in-store marketing, direct mail and email, as well as content on product pages and creator partnerships … All of the products comply with the retailer’s free-from commitment which omits parabens, phthalates and formaldehyde-releasing preservatives."

Published on: February 1, 2023

FastNewsBeat

With brief, occasional, italicized and sometimes gratuitous commentary…

•  KTIV-TV News reports that "a Target store in west Omaha will remain closed as police continue to investigate a fatal shooting incident Tuesday that many witnesses told 6 News could have been far more deadly.

"Omaha Police on Tuesday afternoon were asking the public to avoid the area around a Target location in west Omaha after a gunman was shot at killed at the store.

"At 11:59 a.m., Omaha Police officers were dispatched to the Target location near 180th Street and West Center Road after reports of shots fired in the store. A heavy police presence was seen at the location shortly after noon."

The story says that "in a news conference about an hour after the incident, the chief said that a white man in his 30s walked into the store and began firing immediately as entered, though police didn’t yet know whether the man was firing at anyone in particular or whether he was specifically targeting anyone there.

"A Nebraska State trooper along with OPD officers arrived and shot the shooter, killing him."

Target said via social media:  "Following an incident in our Omaha West store, we can confirm that all guests and team members safely evacuated the store. The store will remain closed until further notice."  Target also said that "employees would be paid while the store was closed and that they would provide access to on-site counseling for those who need it."

This, unfortunately, is a reality that every retailer has to deal with today - that at any moment, random gun violence could break out in their stores.  Welcome to America, where exceptionalism more and more is defined by our ability and willingness to kill each other.  

If I sound disheartened, it is because I just read a piece in our local paper about how all our public schools are going to get new security officers - in addition to the guards at the front doors - who "will be equipped with a firearm, a Taser and pepper spray. They will also have a tourniquet, a body camera and a radio to communicate directly" with local police.  My daughter is a teacher, and I find myself thinking that some sort of shooting in her school is inevitable, not possible.  And I wonder how many parents think the same thing when they put their kids on the bus in the morning.

Published on: February 1, 2023

Yesterday we took note of a Wall Street Journal report that Amazon-owned Whole Foods is pressing suppliers to lower prices as their own costs start to decline.  According to the story, Whole Foods "told suppliers at a recent virtual summit that it wants to bring down retail prices in its store aisles as companies’ own costs start to decline, according to a recording of the meeting viewed by the Wall Street Journal. 

I commented:

In the case of Whole Foods, let's face it - the idea of "low prices" is relative.  To say the least.

That said, I would hope that every retailer is putting this kind of pressure on suppliers, and that retailers themselves are endeavoring to lower prices as costs go down.  I'm not sure that Americans are going to have a ton of patience for what they see as profit-taking - I'm sensing a certain amount of outrage among folks who are seeing stories about record profits at oil companies.  (Not that we should be surprised.)

Food retailers and suppliers could actually differentiate themselves by working to avoid being lumped in with the oil behemoths.

My favorite email responding to this story came from an MNB reader who wrote:

I’m not surprised at your comments  Typical liberal attacking the oil companies!

I must admit that I laughed out loud at this one.

I wasn't aware that annoyance at oil companies - that having raised prices consistently over the past year because their costs were higher, now are declaring record profits - is breaking down along political lines, with only liberals upset by what they're paying at the pump.

I think that my observation is a fair one.  If businesses say their prices are going up because costs also are increasing, consumers are going to be far more understanding than if/when prices go up and companies have record profits.  I didn't think of that as a political statement.

No, I think one of us is guilty of a knee-jerk reaction.  And it ain't me.

Another MNB reader wrote:

I worked in Sales for a Major CPG company for 33 years.  I saw many price increases for legitimate reasons …

But, I never saw a price reduction when circumstances changed!  Never happen!

That's all I'm talking about.

But, from another reader:

This is ridiculous.  Retailers have no control over what a supplier charges them and has no right to tell them what they should charge.  If the supplier wants to charge “X” for their item and the retailer doesn’t like it, then don’t buy it.  This is not a profiteering situation we are in, it is a survival situation.  For years retailers across the country have been gouging the public.  When a manufacturer gives a dollar for a promotion and only $.70 makes it to the shelf, what is that?  It is the same scenario as before, the retailer demands that the supplier lower their cost, while at the same time, they are increasing bogus fees for late trucks, pallets, less pass through on programs, greater program costs, “partnering programs” and maintaining or increasing their margins.  If the story is to be told, tell the whole story.  However, I am happy to see that WF has reduced pricing on sparkling water.

Two things.

First, I'm not sure I agree that there isn't any profiteering taking place.

And second, I think the implication in what Whole Foods is saying is that they may not buy from suppliers that don't lower their prices.

But I'm not going to defend retailers here, at least not when it comes to all the fees and allowances they collect.  I've been pretty clear here that I find this to be a corrupt system (not necessarily in the legal sense) that does not work in favor of the shopper.

MNB reader Doug Madenberg chimed in:

Agree with your sense that shoppers are suspicious of profit motives, which makes it difficult (yet imperative) for food retailers to position themselves as on their customers’ side when it comes to battling price inflation.

We recently asked U.S. grocery shoppers to estimate how much of every dollar they spend is left for profit, after the store pays all its expenses and taxes  (i.e., net profit, which we know is 1-3% industry-wide).  The average answer was 33%!  So there’s a huge perception gap that needs to be smoothed over with frequent, honest communication from the stores.  You’ve shown that Stew Leonard does a remarkable job at this, and many others do as well.

I was speaking with a  marketing director who monitors social media for her independent chain.  When shoppers complain about prices, she’s found the most effective tactic is to point out that the store’s employees shop there too, so they are trying to keep prices as low as possible for everyone’s benefit.  That would resonate with me.

At the end of the day, retailers are better off if they are perceived as being advocates for the shopper, not sales agents for the supplier.

Which leads to this related email from an MNB reader:

I wanted to share my view regarding Amazon’s decision to charge Fresh delivery fees and my personal experience with their deteriorating service level. Frankly, I’ve decided to cancel my Prime membership as the only reason I subscribed nearly a decade ago was for “free shipping.”  No need to pay a $140 annual fee if the primary benefit is being taken away.  Additionally, I feel that Amazon has broken their original Prime commitment as well.  “Free 2 day shipping” was their original promise.  In the past 6 months, they have changed to 3-5 day ship times. I live in one of the Top 5 largest cities in the country, so I don’t believe the change is due to my location where they have economies of scale. This December, at least 5 Christmas presents didn’t arrive on time as scheduled and 2 of those were ordered on Cyber Monday well in advance of the big day.  This happened to my mother and brother too who live in a different state. We sat around the Christmas tree and showed each other photos of what we bought for each other.  

I think it’s important to note that Amazon/Whole Foods is asking vendors to lower prices at the same time they are raising shipping fees for consumers and backend fees for Amazon sellers. Shouldn’t they also be lowering their fees (or at least holding them steady) as their costs come down with 18,000 layoffs and their elimination of big projects like store grand openings and charitable donations through Amazon Smile? 

All fair points.

On the subject of the growing popularity of frozen pizzas, one MNB reader wrote:

There are very good frozen pizzas. HEB offers a private brand called Midtown Pizza made in Italy that rivals many pizzerias and is hands better than any other frozen option.   Compared to the prices these restauranteurs are trying to charge Midtown is a steal. 

And, on another subject, from another MNB reader:

As an EV owner in New Mexico, where the EV charger infrastructure is very “nascent”, I think there’s a huge opportunity for retailers to drive traffic into their stores with chargers.  It takes about a half hour to fully charge my vehicle and I would definitely plan my shopping and dining with retailers who provided charging stations.  It seems like a no-brainer, but I’d be curious as to what effect this has had on retailers in states with more developed charging infrastructures … like California.  Here, it would definitely provide a significant differentiation.

Published on: February 1, 2023

Tom Brady announced this morning via social media that he is retiring.  Again.

"For good," he said.

It was exactly a year ago that he announced his first retirement, only to change his mind and return to the Tampa Bay Buccaneers 40 days later.

Brady is 45.

"I know the process was a pretty big deal last time, so when I woke up this morning, I figured I'd just press record and let you guys know first," Brady said in a video on Twitter. "I won't be long-winded. You only get one super emotional retirement essay, and I used mine up last year, so really thank you guys so much to every single one of you for supporting me."

ESPN writes that "Brady is a seven-time Super Bowl winner who ends his career as the NFL's all-time leader in passing yards (89,214) and touchdown passes (649). The three-time league MVP passed for 4,694 yards -- third most in the NFL -- and 25 touchdowns this past season, his third with the Bucs."