business news in context, analysis with attitude

Published on: April 27, 2023

Some final thoughts from my trip to Minnesota, where Lunds & Byerly's carves out a differential advantage through a simple yet enormously effective strategy - they're in the food business.  The goal is to make you hungry and inspire you to try new products.  Mission accomplished, IMHO.

In this store - located in the Highland Park section of St. Paul, on the ground floor of the Highland Bridge apartment complex - the levels of excellence are typical for Lunds & Byerlys, with a focus on fresh foods, grab-and-go meals, and a strong presence of local brands.

Published on: April 27, 2023

The Street has a story about how Walmart, Kroger, Target, Amazon, Albertsons and all traditional supermarkets have a problem bigger than inflation - the general public thinks that "prices are higher than they actually are and that brands are taking advantage of the situation."

Which is bad for traditional grocers, and good for the likes of dollar stores and limited assortment stores.

An excerpt from the story:

"When people shop, few of them track prices. Some might know the regular prices of a few items, but most people base their perceptions on the final prices at checkout. It's an inexact science, and it's led to large consumer misconceptions.

"'Americans believe that grocery retailers are earning a 35.2% net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5%, and that food-at-home inflation is 24.3%, double the annual rate reported by the U.S. Bureau of Labor Statistics,' according to February's dunnhumby Consumer Trends Tracker."

What traditional grocers need to do, The Street suggests, is "continue to try to show value to consumers and make bold moves like the one Walmart did over Thanksgiving. The chain publicly declared that the components of the traditional holiday dinner would be held at the previous year's prices.

"It's very hard to change perception, which probably gives Walmart and Costco an edge over Target and Kroger, given that the first two have built their brands around low pricing.

"Still, with more than 17.000 Dollar General outlets nationwide, the four giant retailers as well as the regional grocery chains need to work to change the narrative with consumers or risk losing customers."

Published on: April 27, 2023

Bloomberg reports that Walmart " is leaning on AI for a more pragmatic purpose: bargaining with suppliers.

"The retail giant uses a chatbot developed by Mountain View, California-based Pactum AI Inc., whose software helps large companies automate vendor negotiations. Walmart tells the software its budgets and needs. Then the AI, rather than a buying team, communicates with human sellers to close each deal."

“We set the requirements and then, at the end, it tells us the outcome,” says Darren Carithers, Walmart’s senior vice president for international operations.

According to the story, Carithers says Pactum’s software - which Walmart so far is using only for equipment such as shopping carts, rather than for goods sold in its stores - has cut the negotiating time for each supplier deal to days, down from weeks or months when handled solely by the chain’s flesh-and-blood staffers. The AI system has shown positive results, he says. Walmart said it’s successfully reached deals with about 68% of suppliers approached, with an average savings of 3% on contracts handled via computer since introducing the program in early 2021."

Published on: April 27, 2023

CNBC reports that "Target is dangling a new perk to get shoppers to swing by its stores: customers can make returns without leaving their car.

"The curbside-returns service, which began last week at roughly a quarter of Target’s nearly 2,000 stores nationwide, will be available across the chain by the end of summer. 

"Target is sweetening its curbside-pickup service, Drive Up, to attract and retain customers as the retailer braces for a potential sales slowdown and tries to hang on to pandemic-fueled gains … The company hopes convenient perks like curbside returns will boost customer loyalty and jolt sales."

Published on: April 27, 2023

Bloomberg reports that Amazon "is pulling the plug" on its line of Halo fitness devices, ending all support for the service on August 1.

The move is seen as reflecting CEO Andy Jassy's desire "to wind down marginal programs and streamline the retail and cloud-computing giant’s businesses."

The line included wrist-worn health and fitness trackers introduced in 2020, as well as the Halo Rise, described as "a bedside device that uses radar to analyze a person’s sleep patterns," which debuted last September.

According to the story, "The devices, some of which made use of cutting-edge speech recognition technology designed to interpret a person’s emotional state, were among Amazon’s first public efforts to enter the market for health and fitness tools. Since then, Amazon has expanded that project by acquiring 1Life Healthcare Inc., the parent of the One Medical line of doctor’s offices, for $3.49 billion, as well as launching an expanded online pharmacy and telehealth offerings.

"Amazon encouraged users who want to keep their health data to download it before the devices and a companion smartphone app cease to function on Aug. 1. The company says it’s offering a refund on Halo device purchases made in the last 12 months, as well as unused subscription fees associated with the gadgets."

Published on: April 27, 2023

Bloomberg reports that Starbucks "has refused to negotiate in good faith at more than 100 newly unionized cafes, US labor board prosecutors alleged in a complaint.

"The coffee chain has illegally 'failed and refused' to collectively bargain fairly at 144 sites. Those include the first two cafes to unionize with Starbucks Workers United, the National Labor Relations Board’s Seattle regional director said. At those two locations, both in upstate New York, the agency alleges that Starbucks 'bargained with no intention of reaching agreement' with the union, including by 'insisting upon proposals that are predictably unacceptable to the union,' and 'demeaning and otherwise undermining the union’s chosen representatives,' according to a filing Tuesday filing.

The story notes that while Starbucks has not yet reacted to the allegations, it has consistently denied similar charges.

Bloomberg notes that "complaints issued by NLRB prosecutors are considered by agency judges, whose rulings can be appealed to labor board members in Washington DC, and from there into federal court. Regional NLRB directors have issued more than 80 complaints against Starbucks, accusing the company of illegal anti-union tactics including threats, store shutdowns and terminations of dozens of activists … The agency has the authority to order companies to change their behavior but not to issue punitive damages for violations."

Published on: April 27, 2023

•  Walmart announced that it is expanding its healthcare centers business into Oklahoma, opening four new Walmart Health centers in the Oklahoma City area.

According to the announcement, "The state-of-the-art facilities will be approximately 5,750 sq ft, located beside Walmart Supercenters, and will feature Walmart Health’s full suite of health services. These services may vary by location, but include primary care, labs, X-ray and EKG, behavioral health, dental, hearing, select specialty services, community health and telehealth.

Each of the health centers will integrate modern equipment and technology to enable providers and patients alike to experience best-in-class healthcare technology. This includes integrating Epic’s electronic health record system across all our Walmart Health locations."

Published on: April 27, 2023

•  The Seattle Times reports that "Amazon began another round of layoffs Wednesday, part of a wave of job cuts that began in November and is expected to reach 27,000 roles globally … In this most recent round, Amazon is cutting from its cloud-computing division — Amazon Web Services — as well as advertising, human resources and gaming. Already, Twitch has cut 400 jobs and Amazon laid off about 100 people from other gaming divisions. On Wednesday, Amazon began notifying workers who have been laid off from AWS and its human resources team, which Amazon calls People, Experience and Technology."

Published on: April 27, 2023

•  Ahold Delhaize-owned The Giant Company this week announced what it called a "major milestone in its sustainability and food waste reduction efforts," saying that its partnership with Flashfood, "a digital marketplace that connects consumers to heavily discounted food nearing its best-by date … has diverted six million pounds of food from landfills."

The two companies began their partnership in May 2020.

•  Sheetz, the mid-Atlantic convenience store and restaurant chain, said this week that "it has surpassed a major milestone of more than two million electric vehicle (EV) charging sessions. A leader in the EV charging industry, Sheetz has one of the largest charging networks in the country and is actively expanding its network across its footprint. An early adopter of EV charging, Sheetz installed its first EV charger in Pennsylvania in 2012. Today, Sheetz has 650 total electric vehicle chargers at 95 of its store locations. Sheetz surpassed one million charging sessions at this same time last year."

Published on: April 27, 2023

Executive Suite is sponsored by Robin Russell Executive Search.

•  In the UK, the John Lewis Partnership, which operates the Waitrose stores, has hired Emily Wells to be its first pan-Partnership Head of Loyalty.  Wells is the former Head of Loyalty Strategy at Tesco.

Published on: April 27, 2023

The other day we took note of a Harvard Institute of Politics poll with some troubling revelations about people age 30 and younger - many feel unsafe, worried about being victims of gun violence or sexual assault, and it is taking a toll on their mental health.  "Nearly half (47%) of young adults under 30 report 'feeling down, depressed, or hopeless,' and 24% have had thoughts that they would be 'better off dead,' or of hurting themselves in some way at least several days in the last two week."

MNB reader Tom Gordon responded:

I was reading your Eye-Opener today about people feeling unsafe in their everyday lives.

I’m not going to lie, as soon as I read it, I was immediately transported to an article I read yesterday in the NY Times:  "At Sandy Hook, Crime-Scene Investigators Saw the Unimaginable."

As a former teacher, someone who is married to an educator, and honestly, just a concerned American, this article literally brought me to my knees.

I think the only way I get through the day is by trying not to think about what happened to Sandy Hook.

I’m not sure if there is a way to tie this article into what you do, but I feel like we need to get a wider audience to consider what our reticence to deal with both the gun issue and mental health in this country is doing to people.

I couldn’t sleep last night, just had excerpts of this article running through my head. 

I’m not sure if this is something you want to address or not, but as someone who I respect and appreciate addressing challenging topics, I at least wanted to share it with you.

I read the story, and suggest that everyone should.  You can access it here.

It is an extraordinary piece of journalism - managing to be both matter-of-fact and heartbreaking, and deeply disturbing on a number of levels.  

My wife is a retired teacher.  My daughter is a teacher.  My father was a teacher and principal.  I have a brother and sister who are teachers.  And I've spent a little time in the classroom (I'd never describe myself as a teacher - I'm more an educational dilettante).  So I understand how you feel.  You wait for the moment.  You wait for the phone call.  It feels inevitable.

I vividly remember the day that Sandy Hook happened.  I was in Washington, DC, and had a meeting at FMI's offices.  I walked into the lobby, and there was a TV on, with the headline, "Mass Shooting In Connecticut Public School."  My wife was a Connecticut public school teacher, and my heart sank;  it took a few minutes to ascertain that it was not her school, but those were long, long minutes.

The Times story refers to the "corrosive reality" of what the crime scene investigators had to deal with at Sandy Hook.  In some ways, that understates the reality of what is happening all over the country with what seems like increasing frequency.  In grocery stores.  Malls.  Churches.  Concerts.

I don't understand the world.  Children die, and many people continue to celebrate guns and say they should be more available with fewer restrictions, less training.  Sure, there should be a greater emphasis on mental health - but how many people who say that also vote to reduce spending on such programs?

Corrosive reality, indeed.  And so we all wait for the moment.  We wait for the phone call.  We wait for the inevitable.

Responding to Michael Sansolo's column yesterday about the power of mentorship, one MNB reader wrote:

Loved this article. I have been in the retail business for over 50 years. If not for Tom Testa, my store manager at the Liverpool Big M, I would probably not have pursued a career in supermarket/c-store retail.

Another MNB reader wrote:

Amen ! I feel that those of us at a more “advanced”level of our careers have both the privilege and responsibility to reach back and help those who come behind us. 

Regarding the speculation that Amazon should buy all the stores that might be divested as a result of a Kroger-Albertsons merger, one MNB reader wrote:

Amazon should stay out of the retail store business.

I live between a Lowe’s and a Home Depot each 1/4 mi away in opposite directions. I is much easier to order from Amazon, than trying to find something in the store many times. Not try to be all things to all people!

On another subject, MNB reader Howard Schneider wrote:

The piece on Gen Z workers, and your response – that perhaps managers just aren’t interested in understanding folks who are different from them – brought back my experience in the 1960s as a box boy at Ralphs in Southern California. The managers were mostly Korean War-era veterans, and they ran a tight ship. During the “summer of love,” when I was sixteen, the dress code required black slacks, shined black shoes, a white shirt, and a black bow tie. (Long hair or facial hair strictly prohibited.) All covered by an ankle-length red-and-yellow striped apron. I was once sent home because I wore dark navy blue slacks under my apron. There was no chatting with the checkers or other fellow employees. It was a stifling environment. Fast forward to today’s casual dress and cordial attitude, and you’ll see that the generational culture tends to win out over time. Managers, resist Gen Z’s style and values at your risk – your atavistic efforts are doomed.

And MNB reader Mackenzie Anderson chimed in:

I am in the upper age range of Gen Z and while the technology issues with Gen Z being discussed may be surprising at first, it’s not as crazy as it sounds. My generation may have grown up with near-ubiquitous technology, but that technology was much more user-friendly than what Millennials grew up with. Building and working on computers has been a hobby of mine since high school, but most of my generation is nowhere near that technically inclined.

On the other side of it, being more comfortable with technology does not remove the need for training on systems that you have never used before. I think a lot of managers expect Gen Z to require much less training on various software and computer systems because of the reputation of the generation.

As for the workplace issues, that’s a more complex problem. You made a great point about the pandemic; Gen Z is pretty new to the workplace with many still in college. Most of Gen Z lost at least one (and usually around two) “normal” college years and that has definitely hurt the development that helps build career skills in college, such as in-person group work, normal classes and the social interaction that helps people learn how to get a long in a shared space.

Additionally, I have also noticed a very different perspective on working and careers both in terms of work-life balance and even ideologically regarding how this generation feels about business and companies overall.

More discussion of the Bud Light marketing fiasco.

One MNB reader wrote:

I think you miss the Marketing Point.  A-B has spent years and billions of dollars training their consumers that drinking their products makes you more manly, more attractive to women, more virile and more successful.  In one small gesture, they shattered that illusion for a lot of people who unfortunately believed the advertising.

I'm not missing anything.  At a pure business level, I'm arguing that two marketing people were turned into scapegoats for a strategy that everybody in the organization, especially the CEO, had to sign of on.  I'm saying that the A-B CEO threw his people under the bus, which is not my definition of leadership.

The points I've been making about bigotry, and A-B's willingness to knuckle under to it, is a separate issue.

MNB reader Alan Shepherd wrote:

Hey Kevin, 1000% agree with you on the Bud Light issue, has nothing to do with anything except hatred and bigotry. Kinda brave of you to stick your neck out on the issue, which is a sad commentary on our times.

I did get this other email which, while I don't completely understand it, seems to disagree with you:

Pathetic.  Bud has made their decision in advertising will never rebound from the loses currently and in the future.  1%....enough said.

And no, Kid Rock didn't write that email.