business news in context, analysis with attitude

Published on: April 17, 2023

Some thoughts this morning about margins, price increases, and the importance - in the interest of long-term success - of making sure customers get the occasional win.

Published on: April 17, 2023

Axios reports that "the humble and familiar barcode will soon be replaced with a more robust and muscular successor that offers far more information about the product inside."  The new 2D barcodes, the story says, "will unlock reams of online extras (for consumers) and revolutionize inventory management (for retailers) … Scanning them may tell us the field where something was grown, the factory where a garment was sewn, the sustainability practices of the company that made it — or the washing instructions … Consumers will gain online access to a trove of useful data — everything from ingredients, recipes and potential allergens to promotional offers and information about how to recycle the product."

The technology, Axios writes, "promises to improve product safety, give us greater transparency into the origins of the items we buy, and enhance our lives with handy suggestions about how to use or prepare our purchases.

Stores will be able to respond immediately to product recalls, identifying faulty items and removing them from shelves."

Carrie Wilkie, SVP of standards and technology at GS1 US, which is orchestrating the shift in a worldwide initiative called 'Sunrise 2027,' tells Axios that the 2D upgrades will "take you on an experience that the brand wants you to have."

By 2027, the story says, "only the 2D barcodes will be accepted at registers globally."

Published on: April 17, 2023

The National Retail Federation (NRF) reports that while March retail sales were down slightly compared to February, they remained significantly higher than the same month a year earlier.

"NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed March was down 0.5% from February but up 4.6% unadjusted year over year. In February, sales were up 0.5% month over month and up 6.7% year over year. NRF’s numbers were up 6% unadjusted year over year on a three-month moving average as of March.

"The results come as NRF is forecasting that 2023 retail sales will grow between 4% and 6% over 2022."

According to NRF, "Grocery and beverage stores were down 0.1% month over month seasonally adjusted but up 5.6% unadjusted year over year … Health and personal care stores were up 0.3% month over month seasonally adjusted and up 7.3% unadjusted year over year … (and) online and other non-store sales were up 1.9% month over month seasonally adjusted and up 12.4% unadjusted year over year."

Published on: April 17, 2023

Coborn's announced that it is acquiring Sullivan's Foods - which consists of 11 grocery stores, a convenience store/fuel center, three Ace Hardware stores, a central office and limited-assortment warehouse - in northern and central Illinois, marking Coborn's first entry into the state.

Terms of the deal were not disclosed.

“The Sullivan family has run their family of stores with great care and is a highly respected retailer,” Chris Coborn, Chairman and CEO of Coborn’s, said in a prepared statement. “We look forward to extending the same operating philosophies in these locations that have made us successful for 102 years – investing and training for our people, supporting our communities and investing in our stores to improve the experience for our guests. We look forward to having the entire Sullivan’s team join our team to learn more about their operations and communities.” 

Published on: April 17, 2023

Axios reports that "Americans are spending more money at restaurants than on groceries - and the gap has been widening … People spent 20.7% more at restaurants than they spent on groceries in 2022 - and that figure rose to 29.5% in the first two months of the year, per Commerce Department data compiled by JLL.

The story suggests one possible reason:  "Inflation has been battering consumers on both fronts — restaurants and groceries — so people probably figure they won't save much money by eating at home. So why not go out?"

Published on: April 17, 2023

The Washington Post reports that "Ben & Jerry’s workers at the company’s flagship ice cream shop in Burlington, Vt., are filing for a union election on Monday, adding momentum to a string of service-industry campaigns at high-profile companies such as Starbucks, Trader Joe’s and Apple.

"If the workers vote to unionize, they will be the first among Ben & Jerry’s U.S. locations to do so. The company, started by two former hippies, has built a reputation on serving up zany ice cream flavors like Half Baked and Cherry Garcia while unapologetically supporting social justice causes.

"The union drive serves as a test of the company’s values, workers said.

"Scoopers in Burlington said co-founder Jerry Greenfield showed up briefly at the store on Sunday — an unusual occurrence — but he skipped a meeting where workers announced to management their intent to unionize."

The Post points out that "Ben & Jerry’s has not yet made its stance known on the new campaign at its flagship store, but in 1998, it challenged a unionization attempt led by its plant maintenance workers in Vermont that ultimately failed."

One of the main issues for the workers is employee safety;  the city of Burlington "has long grappled with heavy heroin use and overdoses among its population."  In addition, the Post writes, organizers have asked management "to adhere to a set of 'free-election principles' for the organizing drive. Those include a pledge not to retaliate against pro-union workers; permission for workers to hold union-related meetings with staff if management holds union-related meetings with workers on company time; and a promise not to change wages and other working conditions to influence a worker’s stance toward unions."

“We are working with Ben and Jerry’s, not against it,” Parker Kimberly, a pro-union shift manager and forestry major at UVM, tells the Post.  “This is about us having a seat at the table. We’d love to be part of their conversations.”

Published on: April 17, 2023

•  Bloomberg reports that Amazon has "resolved issues affecting Amazon Web Services and Alexa products after users reported running into problems Sunday morning.

"Users first reported issues with AWS’s signup page at 6 a.m. Pacific time, according to Amazon Web Services’s dashboard. As of 10:49, the issue was resolved, and the signup is operating normally, the dashboard said. Around the same time, reported outages for its Alexa product surged to just over 16,000, according to Downdetector.com."

Published on: April 17, 2023

•  9to5Mac reports that "Kroger, the largest supermarket chain in the United States, has been a longtime Apple Pay holdout. According to several 9to5Mac tipsters, as well as other reports on social media, it looks like Kroger is finally changing its tune and beginning to roll out Apple Pay.

"As of right now, Kroger has not acknowledged or confirmed its plans to support Apple Pay. With that being said, however, 9to5Mac has received multiple tips from readers who have spotted Apple Pay at their local Kroger store. Additionally, other shoppers have taken to Reddit to share their experience with Apple Pay at Kroger."

According to the story, "Kroger, along with Walmart, has been one of the largest retailers to resist adding support for Apple Pay. Instead, the company has tried to push its own 'Kroger Pay' platform as an Apple Pay alternative. Kroger Pay, which is based on QR codes, has failed to gain widespread adoption among shoppers."

•  The Sun reports that Wegmans is testing the removal of its in-store Buzz Coffee Shops, replacing them with self-serve coffee machines.

The reason:  "Fewer customers have been using the in-house coffee shops as more people work from home," Wegmans tells The Sun, adding, "Coffee-brewing technology has come a long way, and our new self-serve coffee machines use our same high-quality coffee beans and offer a similar menu of lattes, cappuccinos, and brewed coffee drinks.”

The change is being piloted at several Rochester-area stores, the story says.

•  From the BBC:

"Aldi, Lidl and Asda have joined rival supermarkets Sainsbury's and Tesco in cutting the price of milk by at least 5p.

"The retailers are reducing the price of a pint to 90p, in order to match other grocers.

"While the drop will be welcomed by people struggling with higher living costs, milk still costs more than double the average price before Covid.

"In March 2020, a pint of milk was around 43p, according to official data.

"All five supermarkets have confirmed the reductions in price will not affect how much they pay farmers.

"Tesco said it made the decision because its costs for buying in milk had fallen.

"Asda said that it had taken 'swift action to reduce the price of milk as commodity prices have eased'."

Published on: April 17, 2023

Executive Suite is sponsored by Robin Russell Executive Search.

•  CNBC reports that Walmart announced that "Chief Merchandising Officer Charles Redfield is stepping down next month.

"Walmart U.S. CEO John Furner said in an employee memo on Friday that Redfield will leave the role on May 1 to spend more time with his family. He will stay on as an advisor for the business."

The story notes that "Redfield, a 32-year veteran of Walmart, is leaving as retailers navigate a tougher sales environment. Walmart in February gave a weaker-than-expected outlook for the fiscal year ahead, saying it expects same-store sales for Walmart U.S. to rise between 2% and 2.5% excluding fuel."

A replacement is expected to be announced soon, Walmart said.

•  SpartanNash announced that David Sisk has been promoted from Senior Vice President to Executive Vice President/Chief Customer Officer.

Published on: April 17, 2023

One MNB reader sent me an email with some thoughts about the lawsuit filed by consumers objecting to the Kroger-Albertsons merger:

Do you think concerned grocery shoppers are most worried about a lack of competition (choices) or low prices?  I think many of us are guilty of supporting a "just cause" and shopping the opposite.  Frankly, I'm not convinced that more competition = low prices.  Anymore it seems to me (a shopper, not a retailer) that the bigger your buying power, the lower the prices.  I'm still pondering where I stand on this subject…

MNB reader Patrick Smith wrote:

As a grocery industry “lifer” it is amazing that anyone in the industry could take seriously the posit that this is pro consumer? If I were in the FTC it would take me about ½ a second to say no to this proposed merger.

Kroger has asked for the lawsuit to be dismissed, arguing that objections based on concerns about it bering anti-consumer were "speculative."

I commented:

I'm not a lawyer, but aren't most lawsuits "speculative," in that they take a position opposite that of another entity and then go before and judge and jury to attempt to prove that the speculation is factual?

And since Kroger and Albertsons both maintain that this merger is not anti-competitive and in fact is pro-consumer, shouldn't consumers actually have the most standing, rather than the least, to challenge the deal?  "Roving antitrust enforcer" may sound ominous, but this sounds more like consumers finding and using their voices to influence public policy.  Isn't that a good thing?  And shouldn't, at some level, Kroger and Albertsons welcome the opportunity to prove their case in a public forum?

I'm not even against the merger.  I'm just asking.

One MNB reader responded:

Since you’re not against the merger, just asking….  Here are some answers…….

No, most lawsuits are not speculative.  Outcomes may be unknown, but that does not make them by default, speculative.

Wasn’t there a Congressional hearing on this merger?  Is that not enough of a public forum? Plus,  aren’t a dozen state AG’s suing already? Are those not enough of s public forum?  

Lastly, let’s not be naive….  these lawsuits are not filed by consumers with a true grievance or even employees fearful of losing their jobs, they’re filed by law firms whose only aim is to get paid to go away (a rather successful business model, as it turns out, because in the rush to a $25billion Merger, $30-50mm sprinkled to 4-6 law firms shut up & go away is just line noise). Truth can be had  if one finds out which law firm filed, and on behalf of who. Example: Morgan & Morgan filing on behalf of “all grocery shoppers in LA County” will tell us what true motivations are.

There are many law practices where this is their bread & butter and all they do.

So, while I don’t disagree that consumers should have exulted standing, assuming that these lawyers represent real consumers just because they said so comes across as hopelessly naive.  

Hey, I have no dog in the fight. There are no Krogers or Albertson’s in Miami.  My wife shops at Whole Foods 3x/week and I shop at Milam’s, a great local Independent in Dade County, FL. I  can't stand the moral superiority of Whole Foods (or the fact they don’t carry Tostitos, Crest nor Tide).  

Reacting to my FaceTime video from last Friday, MNB reader Mike Sommers wrote: 

I'm surprised by your seemingly giddy excitement over the robot in the United Club.  My initial take was this is another customer contact point taken away by robots.  No different than self checkout at a grocery store.  If I can go to a grocery store and have zero interaction with an employee, driven by the retailer's choice to install self check-outs, then the only difference between shopping in the store or having the instacart's of the world delivering me the groceries is the hassle of me going into the store.  Isn't this a key piece to Amazon's past success?  Poor customer service experiences across retailers and industries and the ease of click today and have the item show up at my door hours or days later?  I know I grew tired of employees experiencing, 'don't-give-a-damn-syndrome'.  Haven't shopped at a Target for 2 years after asking an employee about an out of stock on shelf, and after the employee searched their hand held device, told me it delivered yesterday, was in the backroom, but wouldn't be put on shelf until the following evening and I could come back later in the week if I still wanted it.  Jeff Bezos delivered it to me 36 hours later and it's on subscription now...but I digress.

Isn't United losing out on another point of contact with the customer by using these robots?  However, maybe that's a good thing given the poor customer service provided by the airlines these days..and maybe United realizing their employees are suffering from don't-give-a-damn, and at least while the robot may not bring a smile or laughter during a brief conversation, it won't cause a negative experience from a conversation either since there isn't one happening.  

Was I giddy? I would've characterized myself as bemused.

Your points are good ones, though points of human contact can be hjard to maintain if there is a shortage of humans.

And I will say that, of all the airlines I fly, United does a pretty good job of getting me from point A to point B, and the folks who work there are generally pretty pleasant.

Last week, we took note of a Wall Street Journal story about how Uber Technologies CEO Dara Khosrowshahi last year "made dozens of trips as a ride-share driver … ferrying people around the hills of San Francisco."

I brought it up because of the details of what Khosrowshahi found and how it is impacting Uber, but rather because what he did was so important - getting out from behind the desk and experiencing the company's value proposition on the ground.

MNB reader Scott Nelson responded:

This reminds me of my days working at Ralphs in So Cal.  I was a grocery manager at the time in Ventura County.  We would get a heads up from the District Manager that the VP was coming to the area so we would get additional hours to make the store look good.  It was always about the labor hours.  We had a store in Calabasas at the time that was struggling and somehow the VP heard a customer complaint that was so bad that he decided to go to the store unannounced.  It was a particularly bad day.  The receiver and one of the night crew called in sick.   The store was a mess, worse than normal.   He called the District Manager and told him to get to the store NOW.  It was bad.   The one thing I remember hearing is that the VP took the DM practically by the back of his neck from check stand merchandiser to check stand merchandiser and pointed out each of the many empty hooks and shelves and said “loss of sales” “loss of sales” over  and over.   Surprisingly the struggling store received more labor hours and things improved.