business news in context, analysis with attitude

Published on: April 20, 2023

I've been trying to puzzle out the Bud Light kerfuffle, and what exactly the problem was that inflamed so many people and led to more than 5,000 news articles and countless social media mentions.  Having read a bunch of stories about it, I'm sure about three things.  First, there is just one person who isn't guilty of anything.  Second, cruelty is alive and well.  And third, I don't understand the world anymore.

Published on: April 20, 2023

H-E-B announced that it is converting its convenience store fleet to a new banner that it is calling H-E-B Fresh Bites, which is says will offer "on-the-go customers fresh produce and convenient meal options."

According to the announcement, "On April 17, the first H-E-B Fresh Bites opened at a new convenience store location adjacent to the Leander H-E-B on Ronald Reagan Blvd, which also features the company’s second True Texas Tacos restaurant. Additionally, the H-E-B convenience store in Lytle is currently undergoing renovations and will introduce the Fresh Bites brand when work is complete in the coming weeks. The Lytle location, which remains operational during renovations, also will include a True Texas Tacos restaurant."

H-E-B says that it "has 12 convenience stores throughout Texas. Starting this year, the company will continue its plans to update the layout of the remaining convenience stores to the H-E-B Fresh Bites brand with many also including a True Texas Tacos. No plans or timelines have been set for updates to the other locations."

Published on: April 20, 2023

The Consortium to Reinvent the Retail Bag has announced "two reusable bag pilots in three states, with multiple retailers including Consortium Founding Partners CVS Health and Target, as well as Sector Lead Partners DICK'S Sporting Goods, Dollar General, The Kroger Co., TJX and Ulta Beauty."

According to the announcement, the first pilot "will focus on testing the impact of collective action by retailers in driving broader cultural shifts, where bringing reusable bags becomes the norm wherever customers shop.

"Participating retailers include seven national brands - CVS Health, Target, DICK'S Sporting Goods, Dollar General, The Kroger Co., TJX and Ulta Beauty. The Consortium is also engaging retailers beyond the Consortium, from mom-and-pop shops to large brands, to reach even more local residents. All participating retailers will test the same solutions from the Consortium's recently published Playbook - including signage, marketing and customer prompts about reusable bags - in stores across Denver, Colorado; Tucson, Arizona and the surrounding areas."

The second pilot "will test a new reusable bag solution to serve customers when they forget to bring their own reusable bags to stores. CVS Health and Target, two Founding Partners of the Consortium to Reinvent the Retail Bag, will collaboratively pilot a new 'returnable bag' service model across multiple stores, offering customers the opportunity to buy a bag at checkout, to be returned to any participating store to get their $1 deposit back. The bag will then be washed, redistributed and reused by other customers."

The organization said that these pilots are "a key step" in its efforts "to reimagine the retail bag in stores and across emerging channels, such as buy-online-and-pickup-in-store and local delivery. This work builds on the Consortium's progress in identifying innovative solutions, conducting customer research, analyzing policy and infrastructure needs and engaging diverse stakeholders."

Published on: April 20, 2023

CNN reports this morning that "two teenage cheerleaders were shot after one said she mistook the suspect’s vehicle for her own in a supermarket parking lot near Texas’ capital – making this at least the third incident this week in which young people who’d made an apparent mistake were met with gunfire."

According to the story, "Authorities arrested Pedro Tello Rodriguez Jr., 25, the man they say shot the two teens. He was taken into custody early Tuesday, the Elgin Police Department said in a news release later that morning … Tello is accused of deadly conduct with a firearm, a third-degree felony. He is being held on a $500,000 bond. It was not immediately clear whether he has an attorney.

"Officers responding just after midnight Tuesday to an H-E-B supermarket parking lot found two people in a vehicle who’d been struck by bullets, police said, citing preliminary reports. One with serious injuries was rushed by helicopter to a hospital and was in critical condition, while the other was treated at the scene, the release said."  The teen with serious injuries suffered from a ruptured spleen, which was removed, and she also suffered damage to her pancreas and diaphragm.

The story notes that "Tuesday’s shooting was yet another case this week in which young people were shot after apparently going to the wrong place, including a 16-year-old struck in the head after ringing the wrong doorbell in Kansas City and a 20-year-old killed by the owner of a home whose driveway she’d inadvertently turned into."

Published on: April 20, 2023

From the Wall Street Journal:

"Some restaurants in New York City would have to offer customers the option of reusable, returnable containers for dine-in, takeout and delivery, rather than rely on the single-use packaging still ubiquitous in food service, under a new bill introduced in the City Council this month. 

"The so-called Choose 2 Reuse bill aims to improve sustainability in the restaurant business, but would add some friction to a customer experience that is typically defined by its convenience. Consumers would be asked to later return their reusable food containers, knives, forks and chopsticks either through delivery or logistics partners who come to pick them up or in person via receptacles at participating restaurants. The bill doesn’t require reusable beverage containers.

"Proponents say they believe many customers are ready to sacrifice the convenience of dumping containers in the trash for the benefit of reducing their reliance on throwaway plastics, while those who aren’t would still be able to receive single-use packaging. Companies are already testing ways to make drop-offs as convenient and enticing as possible, they say.

"But trials of similar programs haven’t always gone smoothly, nor ended in widespread implementation. And integrating a new system for packaging food is an unappealing prospect in an industry with tight margins that is still recovering from the pandemic shutdowns, sustainability and restaurant executives say."

Published on: April 20, 2023

The Hollywood Reporter reports that DVD rental company Redbox, which has a network of more than 30,000 kiosks all over the country, is interested in buying Netflix's DVD rental business, which is scheduled to be shut down later this year.

Netflix said earlier this week that it would shut down the business that sent out the familiar red envelopes - revolutionizing the DVD rental landscape and putting Blockbuster out of business - in late September, and will focus exclusively on its streaming and original production business.

“I’d like to buy it,” Bill Rouhana, CEO of Redbox owner Chicken Soup for the Soul Entertainment, tells the Hollywood Reporter.  "I wish Netflix would sell me that business instead of shutting it down.”

Rouhana concedes that previous efforts to buy the business from Netflix have been rebuffed.  And Netflix told the Hollywood Reporter that the DVD rental business is not for sale.

The story notes that "Redbox is already the biggest DVD rental company in the U.S.," and continues to grow - it announced plans this week to add kiosks to some 1,500 Dollar General stores.

Rouhana tells the Hollywood Reporter that "he believes Netflix’s decision to shutter the service will benefit his company.  'This could be a great boon to us because now there are a whole bunch of people who are going to look for a new place to get their DVDs, and we’re close to 90 percent of them based on where our kiosks are located,' he says."

Published on: April 20, 2023

The National Association of Convenience Stores (NACS) is out with its annual State of the Industry report, saying that "total convenience industry sales were $906.1 billion, of which $302.8 were from in-store sales, which accounted for 33.4% of industry sales. Overall, in-store sales increased 9.0% in 2022. Packaged beverages, other tobacco products, salty snacks, candy and packaged sweet snacks all had double-digit sales growth year over year. The average basket—what customers spend per visit—increased 4.9% to $7.52."

NACS said that "the strong in-store sales came as the result of a variety of factors. First, the convenience industry store count increased 1.5% to reach 150,174 stores. Industry growth was fueled by an increase in single-store operators, which increased 1,087 to 90,423 stores (60.2% of all convenience stores). Second, inflationary pressures pushed prices higher in 2022; the annual merchandise CPI increased 7.9% and the foodservice CPI increased 9.7% last year.

"The third factor increasing in-store sales was the continued growth of foodservice and as industry operators continue to focus on providing restaurant-quality food. Overall, average foodservice sales represented 25.6% of average, monthly in-store sales and 36.1% of in-store gross margin. . Convenience store foodservice includes prepared food, commissary, and hot, cold, and frozen dispensed beverages. Prepared food accounted for 67.3% of all foodservice sales in 2022, while commissary contributed 9.5%, followed by hot dispensed beverages at 9.2%, cold dispensed at 8.0%, and frozen dispensed at 6.0%."

Published on: April 20, 2023

•  AdExchanger reports that "Kroger Precision Marketing, the grocer’s retail media arm, announced a deal Wednesday with Disney Advertising to share first-party behavioral data for targeting streaming audiences and measuring the results, including sales and conversions by household.

"The partnership is launching in limited beta and will be available as a managed service with a 'handful' of CPG advertisers. Disney and Kroger declined to share how many.

"The plan is to make the program generally available during the second half of this year.

"For now, the test will run on Hulu inventory only, although ESPN+ and Disney+ are on the agenda for 'some point down the road,' said Danielle Brown, SVP of data enablement and category strategy at Disney."

Published on: April 20, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

• From Business Insider:

"The US Supreme Court has given the Mall of America a chance to get out of a deal that it made more than 30 years ago to lease space to Sears for just $10 a year … The matter dates back to 1991, when the biggest shopping mall in the US was lining up tenants for its grand opening. For one of its four anchor stores, the Mall of America booked what at the time appeared to be a can't-lose deal with an icon of American retail: Sears.

"The deal gave Sears a 100-year lease on a 120,000-square foot space spanning three floors at the Bloomington, Minnesota, mall for less than a dollar per month."

Two decades later, that didn't seem like such a good deal as Sears' prospects faded because of mismanagement and an inability to meet shopper expectations and keep up with consumer trends.  In 2018, the retailer closed its Mall of America store.

But:  "As part of its reorganization, Sears sold $5.2 billion of its assets to its former chairman's hedge fund, which placed them under a company called Transform Holdco. Sears later told the bankruptcy court that it wanted to transfer its lease on the Mall of America store to Transform Holdco, so that another Transform subsidiary could sublet the $10-per-year space to new tenants – presumably at a higher price to pocket the difference."

Mall of America objected.  While the bankruptcy court disagreed and an appeals court said that appeals were not allowed in such cases, the mall's management appealed that decision all the way to the Supreme Court, which now has said that Mall of America can appeal.  "In other words, the Mall of America isn't getting the newly negotiated lease it wants on the highly prized space, but it is allowed to continue fighting for it," Business Insider writes.

Gee, what a surprise that Fast Eddie Lampert would pull something like this - turn his own mismanagement of Sears into a real estate killing.  I'm shocked.

•  From Reuters:

"IKEA stores owner Ingka Group will spend 2 billion euros ($2.2 billion) expanding in the United States over the next three years, its biggest investment in a single country, in a bet to win American customers as other big-box retailers close stores.

"Sweden's IKEA, which opened its first U.S. store in 1985, near Philadelphia, is seeking to win market share in the U.S. as cash-strapped consumers look for more affordable products."

The plan is "to open eight new big IKEA stores and nine smaller stores as well as upgrading existing stores in the U.S., which is IKEA's second-biggest market by sales after Germany, the company said on Thursday … Specific locations for the stores had not yet been decided. The new stores, including nine 'plan and order points,' smaller stores where customers can get advice and order furniture for delivery, are in addition to already planned IKEA openings in downtown San Francisco and in Arlington, Virginia."

I've always liked the small store IKEA format, and did a piece about it, pre-pandemic, which you can see here.

•  Another tough story about urban dysfunction:

KOIN-TV reports that "just a week before its grand opening, the Shake Shack location in downtown Portland was vandalized … Earlier this week, officers responded to the location at 1016 Burnside Street where a window was smashed. It doesn’t appear the vandal was hungry for a burger as PPB says there’s no evidence anyone entered the business."

The Shake Shack was scheduled to open next week.  It is located at the edge of the Pearl District, the same neighborhood where REI said that it plans to close its store there because of crime and concerns about customer and employee safety.

Again, my heart breaks for the city that I used to think of as my home away from home.  And I'm outraged by the situation.

•  From the Financial Times:

"Tesco may have to stop using its Clubcard logo in its current form after discounter Lidl won a trademark lawsuit against the UK grocer over the use of a yellow circle on a blue square.  London’s High Court has ruled in Lidl’s favour and will issue an injunction ordering the UK’s largest supermarket to cease using its Clubcard logo, Lidl said in a statement.

"However Tesco will ask the Court to pause any requirements to change its logo until an appeal is heard. Lidl had sued Tesco for infringement, passing off and copyright, claiming that the group had used a blue square with a centred yellow circle to promote its Clubcard scheme, which was too similar to its own Lidl logo. Tesco had disputed the claim and brought a counterclaim against Lidl seeking to cancel some of the trademarks and saying some of Lidl’s trademarks were invalid."

It is, FT writes, a reflection of "the fierce battle for market share among supermarkets as consumers struggle with the cost of living crisis."

Published on: April 20, 2023

Executive Suite is sponsored by Robin Russell Executive Search.

•  The CBC reports that Galen Weston has stepped down as president of Canadian retailer Loblaw, though he will remain chair of the company's board, as well as CEO of Loblaw's parent company, George Weston Ltd.

He will be succeeded by Per Bank, most recently "CEO of Danish retail chain Salling Group A/S, which runs more than 1,700 supermarkets across three countries in Europe."

The CBC writes that "Loblaw says the leadership transition was planned in advance, and part of a 'global talent search' that began in August of last year, when chief operating officer Robert Sawyer announced he was stepping down … Weston has been president of Loblaw since 2021, when Sarah Davis retired from the job. He never assumed the CEO title, which remained vacant."

The story also notes that Weston's move out of the chain's presidency may alleviate some of the criticism of Loblaws, which took some hits because of increased profits during a time of consumer pain, especially since it was controlled by one of Canada's wealthiest families.

•  Wakefern Food Corp., the nation’s largest retailer-owned cooperative, announced that it has hired Elena Kabasinskas, most recently senior vice president for Estée Lauder Companies' Global Transformation Office and Special Projects, to be its new group vice president, Strategy, Planning and Transformation.

Kabasinskas will report to Michael Day, who has been promoted to senior vice president, Strategy, Business Development and Architecture.

Published on: April 20, 2023

Got the following email from MNB reader Lynn Olsen:

In reviewing your Innovation Conversation, I noted your ever-present reminder that change is not an option; it’s only our reaction to it that makes a difference for us and our businesses. 

I teach graduate and executive leadership programs at a local university, programs in which this theme is front and center. Here are some recent fun facts regarding big data and it’s role as a driver (and enabler) of change; 

An astonishing 90%+ of the world’s data has been created in the last two years alone.

1.7 MB of data is being created every second by the average person (including all forms of digital media).

~1.145 trillion megabytes of data are produced by humans every day.

~2.24 million messages are sent every day on Whatsapp.

In 2022, 332.2 billion emails were sent, and 650 million Tweets were made – EVERY DAY

By the end of 2025, 200+ zettabytes will be held in global cloud storage

(A zettabyte equals one trillion megabytes)

As for the accelerating rate of change, Futurist Ray Kurzweil wrote way back in 2003: "The whole 20th century, because we’ve been speeding up to this point, is equivalent to 20 years of progress at today’s rate of progress, and we’ll make another 20 years of progress at today’s rate of progress equal to the whole 20th century in the next 14 years, and then we’ll do it again in seven years. And because of the explosive power of exponential growth, the 21st century will be equivalent to 20,000 years of progress at today’s rate of progress, which is a thousand times greater than the 20th century, which was no slouch to change.”

I have two takeaways: First, this can be intimidating if not embraced and shaped to our advantage.  Second, it’s inevitable, so hang on, we ain’t seen nothin’ yet! 

Overall, I’m optimistic; human capacity is capable of making the leaps. 

One of the points that Tom Furphy and I made yesterday was that senior executives need to be in the business of knocking down the silos that prevent organizations from embracing change.  If someone is swinging a sledgehammer to do that, we said, it isn't vandalism - its construction.

Prompting MNB reader Andy Nash to write:

"It's not vandalism, it's construction." Gold.

Thanks.

Referring to the growth of dollar stores, one MNB reader wrote:

Dollar Store?  What are they?  I thought it was Dollar and a Quarter Store.  I think it is great that they are remodeling.  However, how long will the upgrade last?  We have had 4 new ground up, locations open in our area over the past 5 years and now you go into them and they are total “S” shows.  Shelves are a wreck.  Stock all over the aisles.  Gapping chasms of no product.  They should take the money they are spending on upgrades and get more help, and better ordering systems.  Plus, ad hand sanitizers at the outdoor because I always feel I need a shower after leaving.  

Yesterday we took note of a KDKA-TV News report that "Giant Eagle will start mailing a new weekly circular to Pittsburgh-area customers next month.

"Giant Eagle moved towards a digital version but announced the return of weekly print ads on Monday, saying they'll be back in mailboxes beginning May 2."

I commented:

I must admit that I don't understand this move.   Sure, there will be some folks who don't/won't/can't access digital versions, but that cohort is shrinking and, I'd guess, is responsible for a diminishing percentage of sales.  Print circulars also don't allow for the kind of data-centric targeting that retailers ought to be doing.  I'm sure there is a rationale for this move.

One MNB reader responded:

The rationale for this move is pure and simple.  Profit center.  They can spin it any way they want but print ads are dead.  Plus, the general public never reads them anyway.  They get used to light the smoker.

We also referenced this week a Washington Post report that Iowa is "poised to approve some of the nation’s harshest restrictions on SNAP. They include asset tests and new eligibility guidelines. By the state’s own estimate, Iowa will need to spend nearly $18 million in administrative costs during the first three years - to take in less federal money. The bill’s backers argue the steps would save the state money long term and cut down on 'SNAP fraud.'

One MNB reader responded:

One of the worst things about Iowa’s bill is the inclusion of “Work Requirements” for some recipients. Ugly echoes of Reagan’s “Welfare Queens” dismissal of poor people.  And apropos of “means testing” it also brings to mind Dick Gregory’s comment about Cadillacs - people don’t recognize that that the Cadillac parked at the curb  represents 1,000 skipped dinners.

And regarding Netflix's decision to shut down its DVD rental business, one MNB reader wrote:

I never used the Netflix DVD rental.  Why?  I can go to my local library (remember what they are) and sign out a movie for free.  That being said, I don’t have to see the latest and greatest and can wait, so this service was perfect for my family and continues today for my children.  Yes, I still read hard copy books too.

Good for you.  But for a lot of folks, waiting isn't the preferred option.  There's no moral superiority in either position.  People are just different.

Published on: April 20, 2023

The Associated Press reports that "the Oakland Athletics have signed a binding agreement to purchase land for a new retractable roof ballpark in Las Vegas after being unable to build a new venue in the Bay Area.

"Team president Dave Kaval said Wednesday night the team finalized a deal last week to buy the 49-acre site where the A's plan to build the stadium close to the Las Vegas Strip with a seating capacity of 30,000 to 35,000.

"The A's will work with Nevada and Clark County on a public-private partnership to fund the stadium. Kaval said the A's hope to break ground by next year and would hope to be move to their new home by 2027."

Some context from the AP:

"The A's had been looking for a new home for years to replace the outdated and run-down Oakland Coliseum, where the team has played since arriving from Kansas City for the 1968 season. They had sought to build a stadium in Fremont and San Jose before shifting their attention to the Oakland waterfront.

"Las Vegas would be the fourth home for a franchise that started as the Philadelphia Athletics from 1901-54 … Commissioner Rob Manfred said in December the A’s would not have to pay a relocation fee if the team moved to Las Vegas."