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    Published on: May 4, 2023

    A brief report from Micucci's, a remarkable Italian grocery I found in Portland,Maine, that has been there for some 75 years.  Micucci's celebrates products in a way that appeals to all the senses, and that offers lessons for larger retailers with less heart and soul.

    Published on: May 4, 2023

    by Kevin Coupe

    To a great degree, I thought I was done with this particular story - the controversy surrounding Bud Light's decision to broaden the brand's appeal by sending a swag bag to a transgender "influencer" named Dylan Mulvaney, who took to social media to promote the brand.  (Which is exactly what "influencers" are suppose to do.)

    The stated goal was to reverse sales declines by going beyond the brand's traditional "fratty" appeal and marketing focused on "out of touch humor."

    However, the "fratty" contingent took offense at this, and responded by calling for boycotts and posting videos with people shooting guns at Bud Light packages.  Two marketing execs were forced to take a leave of absence, and the Anheuser Busch CEO issued a statement that was so mushy that it was hard to know that he was addressing the controversy.

    I made my opinion pretty clear here, but thought that the story had played itself out.

    But then I read an interesting Fast Company piece that reminded me of something:

    Fast Company wrote about another Bud Light commercial:

    “Gender identity is really a spectrum and we don’t need these labels!” says Schumer.

    “Beer should have labels, not people! We don’t care: We’ll sell you beer!” shouts Rogen.

    Right on! What a proud, definitive stance for a beer brand to take on a social issue. Upon its release, Anheuser Busch declared that the campaign “continues to champion the brand’s message of inclusivity among modern beer drinkers and bringing people together,” and this ad aims to encourage “unity among everyone - men, women, and people of all gender identities - for fun over ice-cold Bud Light.”

    This wasn’t a bold, defiant response to the recent transphobic hysteria surrounding the brand for working with trans influencer Dylan Mulvaney on a small social media promotion in April 2023.

    This is from . . . 2016.

    In other words, this isn't really a new story.  (I'd forgotten that I actually wrote about this campaign on MNB back in 2016.)

    Beer in general has been seeing declining sales.  And Bud Light's market share has been in decline for much of the past decade.

    Before the new controversy broke out, and before she was forced by management to take a leave of absence, Bud Light’s VP of marketing Alissa Heinerscheid explained the reality:  "If we do not attract young drinkers to come and drink this brand, there will be no future for Bud Light."

    I've had a few readers who have criticized me for politicizing this story.  That's fine, though I'd argue that I'm just writing about how other people politicized a declining brand's effort to reverse those declines.  (But it is fair to say that my commentary was opinionated.  That's the definition of commentary.)

    Look.  This controversy ended up being about the future.  The future of a brand.   The Eye-Opening part of it was what it revealed about how different people view of the future of the culture.

    Published on: May 4, 2023

    The Economic Policy Institute (EPI) - which describes itself as "an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States" - is out with a study saying that if the Federal Trade Commission (FTC) allows the $24.6 billion acquisition of Albertsons by Kroger, it will "reduce the number of outside employment options available to workers, lowering grocery store workers’ annual wages by a total of $334 million—about a $450 loss in annual wages per worker."

    Here's the rationale from the EPI report:

    "Historically, antitrust concerns have focused on the damage to consumers caused by concentration in product markets that gives large firms pricing power. However, a recent wave of economic research has called attention to potential damages to workers’ bargaining power over wages stemming from concentration in labor markets. In this policy memo, we discuss these labor market implications of the proposed merger. We find that the merger of two of the largest supermarket chains in the country will increase employer concentration and reduce the wages of all grocery store workers in affected cities across the country.

    "Workers’ ability to negotiate better pay and working conditions rests on their capacity to switch jobs. By decreasing the number of outside options available to workers, the merger will limit competition for hiring and retaining employees, and grocery store worker earnings will fall as a result. Crucially, the wage effects we identify are solely driven by this increase in labor market concentration. If the merger also leads to layoffs or hours cuts, this would add another dimension of damage to affected workers.

    "Our analysis uses grocery store employment and earnings data and the specific locations of Kroger and Albertsons stores. We find that:

    The merger will lower wages for 746,000 grocery store workers in over 50 metropolitan areas of the U.S. Increased concentration will suppress wages for all grocery store workers in affected cities—not only those workers currently employed by Kroger or Albertsons;

    The total annual earnings of grocery store workers will fall by $334 million in affected metropolitan areas;

    Because Kroger and Albertsons employ about one quarter of all grocery store employees, most of the wage losses caused by the merger will be a negative externality that falls on grocery store workers employed by other firms. On average, all grocery workers in affected markets will lose about $450 per year in wage income."

    EPI concludes:

    "The expected earnings losses are a pure windfall for the employers. In our analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation."

    You can read the entire report here.

    KC's View:

    The broader argument - here and elsewhere, including by Kroger and Albertsons - has been that the antitrust rationales of the past cannot be applied to the deals of the present that have to position companies to compete in the future.

    I think that's entirely fair.  I'm no antitrust expert, not am I a lawyer, but I've been saying that here for years.

    But if we're going to suggest that regulators in charge of making antitrust assessments need to take a broader and longer view of competitive realities, that means, I think, that they also have to be empowered to consider factors like those highlighted by EPI.

    I don't doubt the veracity of statements like the one made by Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran in a recent Cincinnati Enquirer piece:

    "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."

    But - and this is a big but - the EPI statement seems fairly reasonable.  Less competition among retailers could mean that businesses will be better able to hold the line on wages.  They'll be better able to take a hard line with unions.  While jobs may not be lost, the simple fact is that management personnel in these companies - including McMullen, Sankaran and their successors - are assessed and compensated based on the degree to which they can hold down expenses in a way that increases profits.

    So even if jobs are not eliminated, it will be in their best interests (and the interests of company shareholders) to do exactly what EPI is suggesting will happen.

    However, it seems to me that there is another possibility - that whether the merger is approved or not, a continuing lack of available employees could result in continued wage increases.  And so EPI could be wrong.

    Is this enough for chairperson Lina Khan and the rest of the FTC to stop the deal?  I'm not sure.  But I do think that this kind of analysis will factor into their thinking.

    Published on: May 4, 2023

    Walmart is out with a new ad campaign using the theme, "Welcome To Your Walmart," that is designed to reinforce that it is prepared to meet customers where they want, how they want, and when they want - in store, online, for delivery or pickup.

    Walmart may not be able to call itself "the everything store" - that title has been taken - but it clearly wants to send the message that it can be many things to many people:

    Published on: May 4, 2023

    ZDNet has a story about Deloitte's 17th annual "Digital Media Trends" survey, which "suggests traditional television shows and movies are no longer the only forms of entertainment."

    According to the story, "Younger generations, often called Gen Zs and Millennials, are increasingly turning to user-generated content (UGC) -- which relies on unpaid contributors rather than traditional media professionals -- and video games to find personal fulfillment, value, and meaning.

    "These younger users are creating a vibrant, immersive, and social tapestry of experiences with UGC, video games, music, and social media all playing significant roles. And that move towards UGC and gaming could have big implications for everyone.

    "Deloitte's survey found that about a third (32%) of consumers view online experiences as meaningful substitutes for in-person interactions, with that proportion increasing to 50% among Gen Zs and Millennials. Almost half (48%) of these younger generations engage more with others on social media than in the physical world, and 40% of them socialize more in video games than offline."

    KC's View:

    I think this survey is instructive for businesses that depend on traditional media to reach younger customers, especially since we've also been having a conversation here about the efficacy of retailers moving away from traditional weekly print ads.

    Not only does that shift make sense, but requires companies to find ways to be more customized and personalized in the way they deliver and design those communications.  It seems to me that the shift has to start now.  Wait, and it may give the competition too much of a head start.

    Published on: May 4, 2023

    FMI-The Food Industry Association has announced the 12 finalists for the 2023 Store Manager Awards, culled from a record 175 nominations.

    FMI says that "these outstanding store managers stood out from the crowd for their ability to generate sales growth; effectively communicate company and store goals and objectives; demonstrate team leadership in their store/company; provide exceptional customer service through in-store programs; and improve community relations."

    The finalists are:

    •  Category A (1-49 stores):

    Greg Glisch, Skogen’s Festival Foods 

    Kevin Perino, ShopRite Supermarkets, Inc. 

    Wander Rezende, Roche Bros.

    •  Category B (50-199 stores):

    Sean Conlon, Giant Food

    Brad Holt, Food City

    Patty Kuehn, SpartanNash

    •  Category C (200+ stores):

    Anthony Gentry, Brookshire Grocery Company  

    Delton Schafer, Albertsons Companies

    Joel White, The Kroger Co. (King Soopers-City Market)

    •  Category D (International):

    Anton Bredenkamp, SPAR South Africa

    Ana Esther Estupian Rodriguez, SPAR Gran Canaria

    John Fox, SPAR Northern Ireland/Henderson Group

    FMI says that from May 8 – 12 it will host "its People’s Pick category, during which we ask the public to vote for their favorite Store Manager Awards finalist. Winners from all four categories and the People’s Pick recipient will be announced during a live, virtual celebration on May 16 at 2:00 p.m. ET via FMI’s YouTube channel. Four Grand Prize winners receive a crystal award and $1,000 each. The People’s Pick recipient is awarded a special trophy and $500 to celebrate their store employees."

    Published on: May 4, 2023

    •  From TechCrunch:

    "Pinterest today announced a multiyear strategic ad partnership with Amazon aimed at bringing more brands and relevant products to its platform. The new deal will make the e-commerce giant Pinterest’s first partner on third-party ads, the company said in a blog post shared alongside its first-quarter earnings beat.

    "The partnership is a step in a new direction for the image sharing and social media site, which has been working to adjust to consumers’ changing interests around product discovery in recent years. As demand for video platforms like TikTok and Reels grew, Pinterest’s image pinboard began to feel dated, leading it to launch its video-first Idea Pins and increase its investment in creator content."

    The story goes on:

    "While Pinterest has for years worked to connect product inspiration to purchases, the Amazon ads partnership could potentially offer consumers a more seamless buying experience. Unlike on some e-commerce websites, Amazon shoppers may not have to fiddle with filling out forms, as most have their payment information already on file with the company, leading to faster checkouts.

    "When users click on an Amazon ad on Pinterest, they’ll be taken directly to Amazon to make the purchase, Pinterest says."

    Published on: May 4, 2023

    •  Kansas City-based Balls Food Stores said yesterday that during the coming year it will be celebrating its 100th anniversary, having grown from a single building opened in 1923 by Sidney and Mollie Ball to a 25-store company run by their grandchildren.  The company operates four banners - Hen House Market, Price Chopper, Sun Fresh and Payless Discount Foods.

    I've always found my visits to Balls stores to be rewarding - I think I went to the very first Hen House stores that the company began operating back in the late eighties.  I've found them to have a nice balance between fresh food and strong customer service, and going in has been a pleasure.

    •  Good Food Holdings-owned New Seasons Market announced that it will open its 22nd store in 2025, in the Portland, Oregon suburb of Hillsboro, about 20 miles west of downtown.

    The 27,000 square foot store will be located in an old Office Depot location in the Tanasbourne neighborhood, making it New Seasons' second store in the community;  the first is located in the Orenco Station neighborhood, about three miles away.  

    •  USA Today reports that Stew Leonard's is on track to open a second New Jersey store, and its eighth overall, in Clifton, about a dozen miles south of its Paramus store.

    The new store will integrate the independently owned Stew Leonard's Wine & Spirits store in Clifton;  state laws allow for wine and spirts to be sold in the New Jersey Stew Leonard's stores, unlike in its Connecticut and New York units.

    "We will start construction this summer and will open in 2024," Stew Leonard Jr. said in a prepared statement.  "We are still in the process of designing the store and hope to share more details soon.”

    Published on: May 4, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  Kroger announced that Jordan Poff, the company's senior director of e-commerce operations and experience, has been promoted to the role of VP of retail and e-commerce operations.

    Published on: May 4, 2023

    I did a FaceTime video yesterday about a bartender who explained his priorities when making recommendations this way:  "You pay my wages, not the guys in the back."  I thought that was a pretty good way to think about customer service.

    One MNB reader wrote:

    I think your commentary on “The Wages of Service” has a direct correlation to the point you made a couple of weeks ago about the need for senior management to spend more time on the front lines.  I’ve spent 40 years in the industry and have had the good fortune to work for some amazing retailers and even more amazing people.  I spent over 20 years at H-E-B, half of that time in operations and the other half in merchandising.  I was taught one very important lesson when I moved to merchandising and that was “The people closest to the checkstand should have the loudest voice”.

    Frankly, I built a career around that one phrase.  Later in my career, when I held senior level merchandising roles I used the following phrase with my VP’s and Directors, “Let’s get out into the stores and see the practical application of all of our genius”.  A great idea that is built into a strong program but fails to gain traction with the people that do the work typically leads to failure.  The retailers that are winning today still have a focus on the customer, the stores and the people in those stores.

    But another MNB reader wrote:

    I understand your point… but…were it not for the financial risk, creative abilities, willingness to hire and train employees, incredible work ethic, passion to be successful, willingness to risk-taking, etc, your excellent bartender would not have had an opportunity to give you sound advice. How about suggesting to the bartender that they provide feedback to the owner(s) based on customer feedback to improve the overall experience?

    Neither of us know that he doesn't do that.  I still think the message is a good one, and if more employees thought about it that way, it would end up being good for the owners.

    Reacting to Michael Sansolo's column about how the Shake Shack experience has measurably declined as the company has grown, one MNB reader wrote:

    Your comment on customer services (Shake Shack being just one example) was spot on! I have found the same thing in countless customer service encounters recently, from fast food to department stores, restaurants to hotel checkin counters. There is a labor shortage, so businesses are going to have to make a decision to either pay more to attract better employees or they need to limit hours or close locations to preserve their reputation. Chick-Fil-A seems to have figured out how to deal with the current environment as my interactions in many locations across the US would indicate they still "get it". It's all about management, training, coaching, and replacement where needed.

    Responding to a recent story and commentary, one MNB reader wrote:

    I appreciated your comment, “They do it by positioning themselves as advocates for the shopper, not sales agents for the supplier.  They use transparency about pricing - explaining why some prices are going up and highlighting places where they can give shoppers wins - as a differential advantage.”

    Where I live, I can choose to shop at Meijer, Wal-Mart, or Family Fare.  For many reasons, I have always preferred Meijer.  Their prices have always been on par with Wal-Mart, the selection is better, and the stores are nicer.  With that said, they appear to be doing whatever they can to alienate me as a loyal customer.  Examples:

    To get a sale price, you now (usually, not always) have to buy multiples of the item.  That may be fine for potato chips, but Avocados? Yes, to get a sale price on avocados, I must buy 3.  We are a family of two, so 3 avocados that inevitably will ripen within moments of each other ends up wasteful.

    Other items have had much larger price hikes than Wal-Mart for the same items, so it goes beyond the manufacturer price increases.

    When I have raised these practices as not being friendly to their customers, they respond by having a store director reach out. That poor guy has zero control over pricing practices and can only be sympathetic. Unfortunately, no one at corporate ever responds.

    Being advocates for the shopper is how I felt Meijer used to be.  Now they are blatantly interested in only their bottom line.  It’s unfortunate.

    We had a story the other day about how Walmart is using AI to bargain with vendors, and one MNB reader responded:

    I have a national CPG vendor that regularly sends me emails coming from a bot to communicate P.O. price discrepancies.  When I respond to confirm the correction, I don’t know how that is completed, but the original communication is AI generated.

    Yesterday, we took note of a Stars and Stripes report 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."

    I commented:

    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.

    I may have been a little naive.

    One MNB reader responded:

    A lot of great logic. However, there is a behind the scenes reality factor here.  Arguably, such a contract might well fall under the federal government contracting rules — and subject the entirety of the retail company (stores, distribution, manufacturing, corporate, etc.) to federal contractor status.  

    This has a significant compliance cost re reporting, audits, and other factors in hiring, promotions, terminations, wages and affirmative action plans.  While companies whose businesses rely on federal contracts selling goods and services to the feds (i.e. “defense contractors”) are accustomed to this territory—it would be quite a shock to a retailer.  The additional compliance cost might not be worth the return on the federal contract.

    Safeway for many years sold dairy products from its manufacturing plants to military bases.  In large part, the company decided to get out of that business because the profit on the contracts was far less than the company-wide compliance costs.  While the federal  rules may certainly have changed since then to make it less onerous to do business with the feds, it is far better to determine the broader ramifications of a federal contract before signing that to find out later what the company actually signed up for.  

    And from another reader:

    You do realize the cost, regulation, and complexity of filings, applications, and general over the top requirements to being a Federal Government contractor, especially when competing with the Post Exchange bureaucracy?    No rational grocery operator would ever consider entering into the government cesspool of inefficiency and cost.