Published on: May 3, 2023
I may have taken a few days off with Mrs. Content Guy to celebrate our 40th wedding anniversary. But that doesn't mean I wasn't on the lookout for business lessons. And I found one at a restaurant/bar in Portsmouth, New Hampshire.
Published on: May 3, 2023
by Michael Sansolo
Two weeks ago, KC lamented the decline of a once-iconic New York City restaurant and used its plight to make an important point about the trouble with a company resting on its reputation instead of constantly building on it.
I recently had a similar experience, and it surprised me.
In the world of better burger joints, Shake Shack seemed to be a real comer, bringing its New York panache to shopping centers everywhere. Maybe too many places. And maybe too fast to maintain quality.
Within two miles of my house in Maryland are two Shake Shacks, along with two McDonald’s and one Five Guys. And based on a recent experience, Shake Shack is the least likely to get our business.
It started right inside the door where we encountered the employee who takes orders. I’d like to say we were greeted, but that would be a vast overstatement. The staffer didn’t come near making any connection through eye contact, conversation or anything else. In fact, it seemed like my wife and I were inconveniencing her.
Sure, it could've been an isolated circumstance. A bad day. Maybe just a bad moment. And not every staffer has to be extremely extroverted and engaged with customers, especially in the world of retail and foodservice.
But it represents a failure of management, which needs to be paying attention every day and every moment, understanding the truism that there never is a second chance to make a first impression. If you have an employee who simply doesn’t engage well with customers, don’t put them in a customer facing position. Surely there are other things that staffer can do well. And, staffers have to be trained in how to greet and deal with customers, and told why this is important. (See KC's FaceTime this morning for more about this.) At this Shake Shack, all we felt was disinterest and maybe a touch of disdain.
Incredibly, things went downhill from there. My wife is less than pleased with Shake Shack, finding their burgers too salty. On this trip, I agreed with her. Plus our fries were lukewarm at best.
As we sat eating this mediocre meal all I could say was we could’ve done a lot better at the nearby McDonald’s, while my wife made it clear that any burgers we get out from now on would be at the far superior Five Guys.
But I don’t share this story to shame a single fast food outlet, but rather to offer a reminder to retailers out there. Your business, as you know, is built one transaction at a time and one customer interaction at a time. (Again, see KC's FaceTime this morning for more about this.) You can’t guarantee that everything will go perfectly each time, but you have to stack the odds in your favor.
The means making sure your front line managers train their people as best as possible to deliver on the promise each and every time. That means ensuring that the products you sell are always at the level that meets the customer expectation, especially in a time of rising prices.
Now granted there’s little you can do about inflation or the labor shortage, but you still have to deliver the best possible experience every time out.
We quote it a lot here on MNB, but it is worth repeating - Norman Mayne's dictate that "reputation is what you had yesterday. Today, you have to earn it all over again."
That lesson clearly has been lost at Shake Shack, where our recent experience means that it has been shaken out of the mix. Don't let it be lost on you - but rather seize the moment and turn it into a win.
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.
For information about hiring Michael to speak at your next meeting or conference, click here.
Published on: May 3, 2023
CNN reports that "Kroger, the largest grocery chain in the United States, is ditching its long-running weekly newspaper ad circulars announcing the latest grocery specials.
"The ads for Kroger stores and subsidiaries, including Ralphs, Fred Meyer and King Soopers, will shift online. Printed copies will be available in stores, the company said.
"The company said on Twitter that it was ending its print ads because of declining newspaper circulation and many newspapers eliminating their print editions."
The CNN story goes on:
"As more coupons move online, older and low-income shoppers get left out
"The move could deal a blow to shoppers who plan their store trips based on weekly newspaper ads. It also comes amid a jump in grocery prices.
"A Stanford University study in 2006 found that at least 10% of shoppers chose their store based on the week’s ads, and that shoppers were most influenced when the ads promoted discounts on cereal, chips, pizza, cookies and hot dogs."
A lot of grocers ended the weekly print circular during the pandemic, when the idea of touching paper that other people touched seemed unwise, even unimaginable. But then, as those concerns lessened, some returned to the print circulars, even though they were seeing declining impact and cost a lot of money. This astounded me - they'd already made the hard move, and then went back to a status quo that made little sense.
Let's be clear. Kroger may see some decline in sales because of this move. But if it markets the move right, it can argue that it actually can provide a more targeted, customized and effective experience for shoppers. It may require some education, but it will be worth it. Don't fear the downside, my friends. Rather, embrace the upside.
I spoke to a friend of mine who knows a lot about this stuff, and he suggested that "Kroger sees digital engagement as a competitive advantage, and they know that once they get a customer digitally engaged, the cost to communicate with and serve the customer goes down dramatically and their ability to leverage their data goes up." And, if Kroger is smart - and it is - it will "invest some of the savings from reducing print ad distribution into creating additional incentives for customers to engage digitally."
Expect this to be a harbinger of things to come. "Once grocery retailers see Kroger’s move as a strategic move to get ahead of competition," my friend told me, "the enthusiasm for expanding digital engagement will grow rapidly. On the surface, this looks like a move to cut costs, but I think it is designed to shift the battle to digital, where Kroger can dominate."
Exactly.
Published on: May 3, 2023
Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran were credited as co-writers of an opinion piece in the Cincinnati Enquirer that argued in favor of the proposed $24.6 billion acquisition of Albertsons by Kroger, which would merge the assets of the nation's second and fourth largest supermarket chains.
The letter observes that "the landscape is competitive and ever-evolving. That’s why we strive to do better − delivering lower prices and more choices faster. And that is what excites us about our proposed merger.
"Since we announced the merger, we have seen many misconceptions about it. We would like to correct a few of these and share the meaningful, measurable benefits the merger will bring to customers, associates and communities."
The op-ed piece focused on disposing of several "myths" about the merger - that stores will close, people will lose their jobs, and groceries will become more expensive:
• "As a part of the regulatory process, we anticipate divesting − or selling − some stores," the piece says. "These stores will remain open. We are working closely with the regulators and are committed to finding reliable operators for the divested stores."
• "We value and respect our associates and would never move forward with this combination if it could risk their careers. No frontline workers will be laid off as a result of the merger. The combined company will have one of the largest unionized workforces in the country. We are committed to protecting and expanding opportunities for union jobs."
• "Customers look to us to provide high-quality, affordable groceries − particularly today. At Kroger, our business strategy is to lower prices year over year, attracting more customers and earning their loyalty. In fact, Kroger reduced its margins by more than $5 billion since 2018, while growing customer counts.
"We have seen claims we will lower prices by squeezing farmers. This is simply not accurate. Farmers are the backbone of our business and help put fresh, affordable food on families’ tables daily. When we grow, farmers grow with us.
"As a combined company, Kroger and Albertsons will be even more customer focused. We will offer lower prices and more choices on products customers want, need and love."
Some of this is - I won't go so far as to say wishful thinking - beyond the companies' control.
Sure, stores may be divested as opposed to close. But that doesn't mean the new owners, whoever they may be, will be able to make them going concerns. If they can't, people will lose their jobs.
At the same time, it is a little hard to persuade people that grocery prices won't go up as a result of the merger when all people have seen lately is higher grocery prices.
Some of this is optics. Some of this, as I said, beyond their control.
At the end of the day, the argument that Kroger and Albertsons are making is that they need this deal to be approved so they can better compete with Walmart and Amazon. The Federal Trade Commission (FTC), it seems to me, will have to focus on whether their ability to compete with Walmart and Amazon is more important than the competitive disadvantage that this deal likely will put other, smaller retailers at.
Published on: May 3, 2023
In a new blog posting, Lorraine Stomski, Walmart's Senior Vice President, Learning & Leadership, announced the launching of "a new Manager Academy – a week-long training course focused on our culture and values – to ensure our store managers are equipped with the leadership skills to manage hundreds of associates, build relationships in their communities and take care of their customers."
Stomski says that the original intention was to just send new store managers through the course. Now, all store managers will go through the training, and "more than 2,000 store managers are expected to participate in the program this year."
The posting goes on:
"One of the most important aspects of a store manager’s job is managing people, and it’s an in-demand skill in the U.S. right now. The Manager Academy equips store managers with the skills and knowledge to lead hundreds of associates and serve their customers and communities. The training includes:
• Understanding our values and how to be a culture champion in their facilities.
• Leading with empathy and focusing on associate well-being.
• How to further engage with our customers and communities.
• Embracing change and leading with a change mindset.
Stomski says that "the Manager Academy is part of Walmart’s $1 billion investment announced to provide U.S. associates with career-driven training and development through 2026, helping to create a path for every associate to learn and grow."
See Michael's column and my FaceTime this morning. It is all about setting priorities and managing/leading in a way that makes people and service central to the value proposition.
Published on: May 3, 2023
CNBC reports on Home Depot's decision to invest $1 billion this year "to increase hourly wages for every one of its frontline workers," despite projections that its annual sales and profits will be flat this year. (Economic realities mean that people aren;'t spending as much money on home improvement products, plus many did all that work during the pandemic - there isn't as much to do these days.)
According to the story, "Giving pay raises at the same time sales are slumping seems like an incongruous strategy, but Home Depot executives project that it will actually boost the big-box retailer’s industry-leading position."
CFO Richard McPhail has been quoted as saying that the goal is to "continue to capture market share," by exploiting "“the unique advantage that our orange-blooded associates give us over our competition."
CNBC writes that the move is similar to those made by Walmart and Target:
"Although it’s difficult to draw a straight line from the cost of labor to sales, profits and market share - and retailers are also making big investments in automation - retaining a loyal and satisfied workforce can be seen as a wise strategy amid an ongoing battle for talent, and even as persistent inflation and interest rate hikes are expected to further moderate what has been robust consumer spending."
Beyond the fact that this represents a philosophical point of view with which I agree, there's another point worth making - that Home Depot is hiring from essentially the same labor pool as virtually every other retailer. Home Depot seems to recognize that "orange-blooded associates" make the difference in the customer experience, and that it is critical to build compensation plans that reflect the fact that employees are an investment, not a cost.
Other retailers may not competing in the same segment, but they are competing for the same people. And they're going to have to measure up, or settle for second-best. Which may not be good enough.
Published on: May 3, 2023
Military publication Stars and Stripes reports that "five Army bases could soon have private companies instead of soldiers serving food in dining facilities through a new pilot program that aims to completely overhaul the way the service feeds troops in garrisons.
"The hope is to take an approach similar to college campuses and offer brands that have healthy options and are recognizable to young people, such as Panera Bread or Chick-fil-A."
The goal, according to Army Secretary Christine Wormuth is to "make our warrior restaurants more attractive and more accessible to our soldiers."
The story says that "companies can bid on the contract until May 2, according to the federal government’s award management website. The proposal lists future locations for the pilot program as Fort Drum, N.Y., Fort Carson, Colo., Fort Bragg, N.C., Fort Stewart, Ga., and Joint Base Lewis-McChord, Wash.
"It asks companies to be responsible for renovating the dining facility to meet the company’s needs, use a sales system that allows soldiers to pay with their basic allowance for subsistence meal card, and offer food that meets the nutrition standards of the service. Hours of operation should go beyond what dining facility schedules maintain now to meet the needs of the community, according to the online request for business proposals."
It is instructive that the story seems to focus on national fast food and quick-service chains, as opposed to supermarkets. And yet, there are some terrific food retailers operating in these areas. Wegmans could handle Fort Drum and Fort Bragg, for example. Harris Teeter could service Fort Stewart. Metropolitan Market could serve Joint Base Lewis-McChord. And if it were me, I'd turn to Tony's Meats and Market to serve Fort Carson.
My point is that supermarkets ought to make a play for this business, and that the government ought to recruit great food stores - which could offer far more extensive and healthy offerings - to serve the needs and desires of service personnel, who deserve better than fast food.
Published on: May 3, 2023
From Axios:
"Nonprofit grocery stores are springing up with renewed fervor to address worsening food insecurity nationwide … Such efforts are addressing budget, equity and mobility issues for families struggling to get fresh and healthy groceries."
Here are some facts behind the trend:
"According to the latest USDA data, 76 U.S. counties lack even a single grocery store … Many others have only one store, and the quality of the offerings can vary widely … People living in areas where healthy food is scarce face an increased risk of chronic health conditions and cardiovascular issues, per a 2019 study in the Journal of the American Heart Association."
The story notes that "while some nonprofit grocers are struggling or closing up shop entirely due to pandemic-era financial challenges, others are thriving.
"St. Louis, Missouri's MARSH Grocery Cooperative, for example, has stayed afloat in part thanks to a 'pay what you can' model."
This is a real problem, and different communities are coming up with varying solutions.
Check out this National Public Radio (NPR) piece about how, "about five years ago, Emerson, Neb., lost its grocery store. Residents were forced to drive at least 20 miles to stock their pantries at the nearest full-service store.
"Then last year this village of 824 people came together to open a new market. They raised nearly $160,000 of their own money — double their initial fundraising goal. And Post 60 Market was born.
"The cooperatively owned store moved into the old American Legion building. It sells a full range of groceries, including fresh produce, meat, and household supplies.
"Investors receive discounts and dividends and elect a board of directors each year to oversee large financial decisions."
The NPR story also cites the statistic about how "76 counties nationwide are without a single grocery store," which I still find extraordinary.
But the larger lesson from both stories is that stores can best succeed if both customers and employees feel in some way invested in them. That can mean literally, or it can be less tangible. But emotional, and sometimes financial, investment can provide an enormous advantage.
Published on: May 3, 2023
• Instacart yesterday announced an "expansion of its partnership with PetSmart, the leading pet retailer, to offer same-day delivery from the Instacart App and website from nearly 1,500 PetSmart stores across the U.S. The expansion into the U.S. follows the successful launch of the partnership to power same-day delivery from over 150 PetSmart stores in Canada."
• From the Washington Post, a story about Amazon’s growing Hub Delivery Partner program:
"The program is meant to improve the efficiency of Amazon’s delivery network in rural areas. Rather than pay contractors to drive between far-flung houses and down long country driveways, Amazon instead is using small businesses as centralized drop-off points and paying business owners to drive the last mile to deliver those packages.
"Over the past five years, Amazon has built a logistics network that rivals UPS, delivering millions of packages throughout the country every day. To do that, it uses a network of third-party contractors that operate out of Amazon-owned delivery stations. But in hard-to-reach rural areas, Amazon has often been forced to rely on competitors like FedEx and the U.S. Postal Service to get packages delivered.
"Recently, Amazon has acknowledged that its delivery network grew too fast as online shopping exploded during the coronavirus pandemic, and the Seattle-based online marketplace has begun looking for ways to deliver packages faster, cheaper and more efficiently. The hub delivery program could help Amazon achieve that goal while reducing its reliance on competing delivery services. But the program also allows the corporate giant to shift risk and responsibility onto small businesses, some of which say the deal Amazon is offering isn’t as appealing as advertised."
Published on: May 3, 2023
• From the New York Times:
"Job openings in March fell to 9.6 million, the Labor Department reported on Tuesday, the lowest level in two years and a further indication the slowdown in the labor market is becoming more entrenched. It was the third straight month job openings have declined, a notable development after last year, when job openings bounced around month to month … Transportation, warehousing and utilities, professional and businesses services, and construction were among the sectors that posted large drops in open positions, as higher interest rates and fears of a pullback in consumer spending continued to discourage employers from hiring."
• Publix Super Markets announced that Q1 sales were $14.3 billion, up 8.2 percent increase from $13.2 billion in 2022. Same-store sales for the period were up 6.4 percent from the same period a year earlier. And Q1 net earnings were up 100.8 percent, to $1.2 billion, from $618 million in 2022.
• Starbucks is out with its Q2 results, saying that "global comparable store sales increased 11%, primarily driven by a 6% increase in comparable transactions and 4% increase in average ticket. North America comparable store sales increased 12%, driven by a 6% increase in comparable transactions and a 5% increase in average ticket; U.S. comparable store sales increased 12%, driven by a 6% increase in comparable transactions and a 6% increase in average ticket."
At the same time, "• Consolidated net revenues up 14% to $8.7 billion, inclusive of approximately 2% unfavorable impact from foreign currency translation."
And, "Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 30.8 million, up 15% year-over-year."
• The National Retail Federation (NRF) is predicting that "consumers plan to spend a total of $35.7 billion on Mother’s Day this year, nearly $4 billion more than last year’s record high of $31.7 billion … Consumers plan to spend $274.02 per person, the highest in the history of the survey and up from the previous record high of $245.76 in 2022. The top spenders are those ages 35-44, who are expected to spend an average of $382.26 on Mother’s Day.
"Of those celebrating Mother’s Day, most (57%) are purchasing gifts for a mother or stepmother, followed by a wife (23%) or daughter (12%).
"As seen in previous years, the most popular gifts to give are flowers (74%), greeting cards (74%) and special outings such as dinner or brunch (60%).
"Consumers will spend a total of $7.8 billion on jewelry, $5.6 billion on special outings and $4 billion on electronics."
• It is yet another measure of the difficulties facing major US cities that Nordstrom has decided to close its two downtown San Francisco stores - a major store in the Westfield Mall on Market Street, and a Nordstrom Rack discount stores just steps away.
The closing comes after similar announcements from Whole Foods, Office Depot, The Container Store, Anthropologie and Saks Off 5th.
In an internal email, the company said that "the dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully."
Published on: May 3, 2023
Executive Suite is sponsored by Robin Russell Executive Search.
• Walmart announced that Laura Himes, senior director for produce merchandising, has been promoted to the role of VP Sourcing – Fresh for the company’s Walmart International division.
• Dollar Tree announced that it has hired Mike Kindy, formerly executive vice president of global supply chain at Dollar General, to be its new chief supply chain officer.
Published on: May 3, 2023
…will return.
