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    Published on: April 5, 2023

    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 offers a report and analysis of the recent ShopTalk 2023, where the theme was the "Great Theater of Retail."  It was a telling choice, since "retail theater" usually refers to bricks-and-mortar stores, and there was considerable focus at ShopTalk on what variously was called "Seamless Shopping" and "Unified Commerce."  Tom and KC put this conversation into the context of recent events in the retail business, and consider the rationale behind the optimism and confidence on display at ShopTalk 2023.

    If you'd like to download the Innovation Conversation as an audio podcast, click below.

    Published on: April 5, 2023

    Fox News reports that Walmart is saying that it plans "for about two-thirds of its stores to be serviced through automation in the massive retailer’s supply chain by the end of 2026 … The company explained that, by the end of fiscal year 2026, roughly 65% of Walmart stores will be serviced by automation, about 55% of fulfillment center volume will move through automated facilities and average costs per unit could improve by approximately 20%.

    "Walmart said that as the changes take hold, employees’ roles will require less physical labor but will have higher pay. The company is the world’s largest retailer by sales and is the biggest employer in the U.S. private sector with about 1.7 million workers. It's unclear whether the company will lay off warehouse workers as it undertakes more extensive automation of its processes."

    Fox News notes that "in recent years, Walmart has invested billions of dollars in technology for its online order facilities, including the acquisition of grocery robotics firm Alert Innovation and partnerships with companies like Knapp to streamline its processes. Those actions have cut the number of steps required for employees to process e-commerce orders from 12 to five."

    KC's View:

    The numbers and the deadline may be news, but nobody should be surprised that this is the direction in which Walmart - and other retailers - are headed.  

    The number that keeps being used is that in the US economy today, there are two jobs for every available employee - which means that businesses have to find other solutions.  One obvious option is automation, and we're going to see a lot more of this going forward.

    Published on: April 5, 2023

    The Information exclusively reports that Amazon's assignment of product "badges" on its site, labeling items as coming from small businesses or Black-owned businesses, sometimes are inaccurate.

    Here's how The Information frames the story:

    "What do a bottle of shampoo made by Johnson & Johnson, a lamp from a Chinese seller and an Arc’Teryx jacket all have in common? Amazon has labeled them all as coming from American small businesses.

    "Amazon began adding a 'Small Business' badge to items on its U.S. site about a year ago, pitching it as an effort to “help customers who want to support small businesses while also enjoying the convenience and security of shopping in Amazon’s store.” But the tag has lately popped up on items sold by large companies and overseas merchants. In addition, Amazon has categorized some products as coming from Black-owned small businesses that actually come from companies that are neither small nor Black-owned.

    "Amazon’s rollout of the Small Business badges coincided with an effort to enlist sellers in its battle against proposed antitrust legislation in the U.S. The company is arguing that regulating its marketplace would kill American small businesses. The rollout also came amid mounting pressure from e-commerce rivals, chief among them Shopify, that painted themselves as more merchant friendly.

    "Amazon says only products from U.S.-based small businesses that employ fewer than 100 people and take in less than $50 million in annual revenue are eligible for the Small Business badge. But a cursory look by The Information shows that Amazon has bestowed the badge on items from multinational corporations with thousands of employees, as well as items sold by overseas merchants."

    You can read the entire story here.

    The story notes that "Amazon says only products from U.S.-based small businesses that employ fewer than 100 people and take in less than $50 million in annual revenue are eligible for the Small Business badge."

    KC's View:

    To some extent, the degree to which this will look bad for Amazon will depend on whether these are random mistakes, or the result of negligence tied to Amazon's focus on optics rather than reality.

    The Information makes the point that when it reached out to Amazon with specific examples, the badges were removed from the items that it cited.  But the badges remained on items that it did not identify for Amazon and that did not qualify for them.

    “We are committed to ensuring that the badge is a helpful shopping tool for customers to discover small business brand owners, and we are continuously auditing and refining the information used to award the badge to ensure a trustworthy and accurate experience,” an Amazon spokesperson tells The Information. “If the badge is awarded in error, we move quickly to make appropriate updates.”

    Here's the thing.  These badges aren't just being used to aid sellers that can benefit from being identified in this way.  They also are a tool for customers who choose to spend their money with specific kinds of businesses.

    We have focused here a lot in recent months about the perception - much of it fed by new leadership - that Amazon is focused on priorities other than customer satisfaction and the shopper experience.  This may be another example of of what we've been talking about.

    Over the years, I have often quoted a Latin proverb:

    Trust, like the soul, never returns once it goes.

    This is something about which Amazon may have to back to school, and something to which all its competitors need to pay attention.  

    Published on: April 5, 2023

    Fox News reports that more than 3,000 grocery store employees voted nearly unanimously in favor of a strike at 33 Minnesota Cub Foods stores owned by United Natural Foods Inc. (UNFI).

    "'We voted today to stand up and be heard, and to strike,' workers said in a unified statement announcing the strike on its official Facebook page Tuesday … According to UFCW 663 President Rena Wong, members are seeking a raise of $4 per hour throughout the next two years for full-time employees, and raises every six months for part-time employees (instead of tied to hourly accumulation)."

    Cub responded with the following statement:

    "Cub cares greatly about its team members and has negotiated diligently and in good faith with UFCW local union #663 to finalize a new collective bargaining agreement. As part of its current offer, Cub has proposed historic wage increases and agreed to ongoing union health and pension plans on terms specifically requested by the union.

    "We’re deeply disappointed that the union elected to spend today taking a strike authorization vote instead of using that time to meet with us to reach agreement on terms for a new contract. It is our strong hope that the union will choose to continue negotiations rather than pursue a strike. In the event there is a strike, we are prepared to implement contingency plans to ensure the continued availability of the products and services our guests have come to count on from Cub."

    Published on: April 5, 2023

    National Public Radio's Marketplace reports that the US Bureau of Labor Statistics said yesterday that last month, "job openings in the U.S. fell by more than 600,000, but the number of people hired and let go stayed about the same."

    Experts say that this may presage the "soft landing" that economists have been hoping for.

    Here's how Marketplace characterized the report:

    "Fewer job openings in normal times might be not great news, but right now, it is — cautiously speaking — a good sign. 

    "For inflation to not be crazy, wage growth has to also be not crazy. That is why the Federal Reserve would like to see a cooler labor market. To be clear: cooler, not cold. 

    "The problem is that when the Fed has fought inflation before, it’s usually ended up freezing the labor market and sending the economy into recession. The hope is that this time around, we’ll get a labor market that is just right, inflation comes down to being just right, and the economy lives happily ever after (until the next crisis)."

    KC's View:

    One of the more remarkable statistics from the story is that "before the pandemic, there were around 7 million openings; today, there are just under 10 million."

    I think economists (and politicians) have to be careful not to spike the ball too early on this one.  If we've learned anything from recent events, there always are wild cards, and they get dealt with frustrating regularity.

    Published on: April 5, 2023

    Fortune is out with its annual "100 Best Places To Work" list, and - no surprise - Wegmans is number four, continuing a 26-year streak of making the list.

    "We continue to believe we can only be a great place to shop if we are a great place to work,” said Colleen Wegman, president and CEO of Wegmans Food Markets. “The values we share across our company are demonstrated in the way our employees care for each other, our customers, and our community. We are so grateful for everyone’s dedication to making Wegmans a special place to work and shop for all, and we celebrate this honor together.”

    Wegmans was the only retailer to make the top 10.  Number one this year was Cisco, followed by Hilton and American Express.  The balance of the top 10 spots were occupied, in order, by Accenture, NVIDIA, Atlassian, Salesforce, Comcast NBC Universal, and Marriott.

    Other notable retailers on the list were Target (# 26), Sheetz (# 58), and Publix (# 91).

    KC's View:

    I wonder of the folks at Wegmans ever get tired of coming in so high on the list each year.  I suspect not - the company's continued presence and ranking speaks to the idea that nobody there is getting complacent.

    The one thing you have to remember about the list is that you have to go through a rigorous application process to even qualify - you can't win if you don't play.

    Published on: April 5, 2023

    •  Amazon says that a new internal report "continued progress toward driving counterfeit to zero - both in our store and across the retail industry … In 2022, our strategic combination of industry-leading technology and experts successfully stopped bad actors and made an impact beyond Amazon’s store—identifying, seizing, and appropriately disposing of over 6 million counterfeit products, preventing them from reaching customers and being resold elsewhere in the global supply chain."

    •  The BBC reports that "UK-based online store Book Depository is being closed down by its parent company, the US technology giant Amazon.  Book Depository has told customers it will cease operations later this month after almost two decades in business."

    The story notes that "Book Depository was founded in 2004 by former Amazon employee Andrew Crawford and his business partner Stuart Felton.  The global online book retailer, which was bought by Amazon in 2011, has offices in London, Gloucester, Madrid, Cape Town and Chennai - with fulfilment centres in the UK and Australia."

    Published on: April 5, 2023

    •  From the New York Times:

    "Johnson & Johnson said on Tuesday that it had agreed to pay $8.9 billion to tens of thousands of people who claimed the company’s talcum powder products caused cancer, a proposal that lawyers for the plaintiffs called a 'significant victory' in a legal fight that has lasted more than a decade.

    "The proposed settlement would be paid out over 25 years through a subsidiary, which filed for bankruptcy to enable the $8.9 billion trust, Johnson & Johnson said in a court filing. If a bankruptcy court approves it, the agreement will resolve all current and future claims involving Johnson & Johnson products that contain talc, such as baby powder, the company said.

    "In a statement, a group of lawyers who represent nearly 70,000 plaintiffs, including families of people who died of ovarian cancer and mesothelioma, described the deal as a 'landmark' and a 'significant victory for the tens of thousands of women suffering from gynecological cancers caused by J.&J.’s talc-based products.'

    "For the deal to become final, the court would first have to accept a new bankruptcy filing by the Johnson & Johnson subsidiary, LTL Management, and the settlement itself; the company also needs to persuade enough claimants to support the settlement plan."

    Published on: April 5, 2023

    •  Reuters reports that Walmart is being sued "by the U.S. Equal Employment Opportunity Commission (EEOC), the agency's second lawsuit this week accusing the largest U.S. retailer of discrimination against workers with disabilities.

    "The EEOC said Walmart illegally demoted Calvin Hagan for missing too much work at a Raleigh, North Carolina store because of seizures caused by his generalized convulsive epilepsy, and then illegally fired him for violating its attendance policy.

    "The lawsuit was filed three days after the EEOC sued Walmart for firing Adrian Tucker, a deli worker in a Statesville, North Carolina store, because she had too many "unauthorized" absences related to her Crohn's disease, an inflammatory bowel condition."

    Published on: April 5, 2023

    MNB reader Rich Heiland had some thoughts about the Boxed bankruptcy:

    I was speaking with a friend this morning about an organization we are both involved with and some issues we are having. The common denominator seemed to be the journey through the depths of all that was COVID and then trying to adjustment to the aftermath. Kind of like coming out of a dark building and shielding your eyes from the sun while you get your bearings. I commented to her that I wonder if we will ever really understand all the impacts that COVID had on us all, large and small.

    I thought of that this morning when I read your daily post, which included the bankruptcy or shrinking of businesses that either were created in response to COVID or grew in response to it.

    Now that we have come back into the light and are moving around it strikes me that our movements may have forever changed; or, if we are going to go back to old behaviors, it will be slow and hit or miss. I have to wonder what this means for business leaders, and consumers, as we move into the next few years. What do markets want?  In fact, what are markets? Are they lasting or more transient than ever. I suspect the future for decision makers and leaders will be both frightening and invigorating.

    Buckle up.

    Responding to our piece about Walmart laying off thousands of people from its e-commerce units, one MNB reader wrote:

    Lots of e-commerce lay offs, yet stores are still woefully understaffed, at least in the Northeast.

    Every day is still a struggle, as it has been since Covid started 3 years ago. The large chains do not want to pay more to attract good help, despite the fact that they are very profitable right now. Add that to the truck driver shortage, and the in stock levels are still not good.

    Responding to yesterday's comments about Dom's Kitchen & Market in Chicago, one MNB reader wrote:

    To elaborate on your comment on Rotisserie Chicken about product being out of code @ 10am… price was $12.49. Costco sells their product for $4.99 for 3 1/2 pounds. Makes me wonder about retail pricing in this format…

    It ain't priced like Costco.

    On the other hand, the closest Costco is about three miles away, and the young professionals who seem to be patronizing Dom's would not be able to get a decent Dirty Chai Draft Latte at Costco.

    MNB reader Joe Axford wrote:

    Looks like a great store KC, but one thing I would change is add some color, there is way too much grey - the walls, produce display cases, etc.

    Not sure I would agree - I like the color scheme.

    By the way, Tom Furphy and I spend a bit of time in today's Innovation Conversation doing a deeper dive into Dom's approach to technology.   Check it out.

    Regarding our piece about pickleball courts being built over Wollman Rink in Central Park, where they'll be in operation until the weather gets cold again, charging between $180 and $120 an hour for court time, one MNB reader wrote:

    Charging for pickle ball in NYC.  Typical NYC.   Who paid for this cost?  Answer: the taxpayers of the city.  196 hrs x just $80 per hour, that works out to $15,680 a day!  For a 3 month season it’s $1,411,200!  I am sure that the mayor has a great plan to use the proceeds for the benefit of ALL NYer’s.  They could also set up free tent housing on the courts during the off time so the new term “unhoused” can stay overnight.  Then hire people, union of course, to come in and do the take down and set up for them as well.  Not to worry about the daytime, all the people using the tents could then sit in stands around the courts and cheer everyone on.  While the mayor pays for meals to be brought in, so all the “fans” never have to leave.    Draws a great picture doesn’t it.  We will see how long this last.

    Wow.  Nice to see that you came to this story with an open mind and not a single chip on your shoulder.

    I'm pretty sure you don't actually know who paid for the court conversion, because I don't know - and I've called City Pickle, the organization that is administering the courts.  They haven't called me back, so I haven't yet gotten an answer.

    This also means you don't know where the proceeds will go and how they will be used.  But that doesn't really matter, since you have such an attitude toward New York City.

    I'm. certainly not defending what strikes me as an excessive court fee.  Though, when you think about it, this means that if people are playing doubles, they're really only dropping $20 an hour apiece during non-peak times, and $30 an hour during peak times.  This strikes me as not entirely unreasonable when parsed that way.  (I pay more than that to go to a three-hour Broadway show, or get decent seats at a Mets game, or enjoy a couple of hours of Chinese food at Shun Lee Cafe.  It all depends on what you value, and how much you value it.)

    Now, if NYC is able to take money from people who can afford to pay those fees, and actually use it to help folks who can use the help, I'm not sure this is such an awful approach to public policy.

    Again, I don't know that this is happening this way.  But it is a possibility.  It also is possible that some of the money is being used to fund the police, or hire more teachers, or for some other appropriate purpose.

    I'm still going to find out, and I'll let you know when I do.

    We did a story last week about how MIT was conducting a study about why, when people twist an Oreo apart, the creme always remains on one side or another - not both sides.  Which led to a discussion of how people like to eat Oreos. (I prefer not to twist them at all, but rather dunk them in a glass of cold milk.)

    MNB reader Marv Imus wrote:

    You should have done a survey about how many viewers went out and got an Oreo and did the twist part several times to check the status of the creme, and then did the dunk in milk test ……. Bet sales for Oreo’s got a blip up!  Now somewhere in Oreo corp office is a discussion going on about the sales bump.  

    And another MNB reader wrote:

    You are wrong on eating Oreos.  Freeze 'em.  That's the best way.

    Tried it.  Pretty good.  Even better when frozen Oreos get dipped in milk.