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Day: May 9, 2023

    KC/In Conversation:  Randy Fields on Food Safety’s Ticking Regulatory Clock

    Published on: May 9, 2023

    Food safety and product transparency have been subjects addressed for years here on MNB - more than a decade ago, we were talking with Randy Fields, CEO of ReposiTrak, about the demands of the Food Safety Modernization Act (FSMA) and what it was going to require of retailers, suppliers and producers.  Now, the chickens have come home to roost - after many delays (some of them bureaucratic, some of them because of the pandemic), new regulations are in place and regulators are poised to enforce them.  And so, we return to Randy Fields (who always has reminded me of John the Baptist on this issue) for an update on what the government is mandating, what business needs to do, and the consequences of not meeting the moment.  Today, Part One of an in-depth Conversation.

    If you'd like to listen to this Conversation as an audio podcast, click and download below.

    For more information about what you need to do in order to conform to FSMA requirements, click here.

    Retailer-Supplier “Partnering:”  An Offer They Can’t Refuse

    Published on: May 9, 2023

    Late last month, Calli Schmid, vice president of grocery at Meijer, sent the following email to "all Meijer grocery suppliers," essentially saying that the cost of doing business with the company would include the supply of free product to the half-dozen new stores being opened by the company this year:

    Meijer is excited to continue another consecutive year of growth in the Midwest.  As we all look ahead to 2023, we are excited to be committed to investing in new stores and remodeling existing stores to continue growing our respective businesses. 2023 will see the building of six new Meijer stores across various prototypes!

    To further accelerate growth, we are asking suppliers to help partner and support our investment of new stores with one case of goods for each item carried. This small investment, shared across hundreds of suppliers in partnering with the Meijer, will showcase a shared commitment by all parties to see our businesses grow.

    To ensure this commitment is done efficiently, here is the process we will be following:

    •  Meijer Grocery division will be requiring all vendors to supply a one (1) case free fill to go forward new stores.

    •  Calculation has been completed by the Meijer team.

    •  We will launch this program in our 2023 Super Center store openings (3) and will continue for the foreseeable future.

    •  The Grocery Inventory Managers will be setting up all trade agreements by 5/5/2023 and will need each vendor to approve those trade agreements by 5/12/2023.

    If you have any questions on these expectations, please contact your Director for additional clarification. Thank you for the continued investment, and we are excited for growth in 2023!

    KC's View:

    The industry insider who provided me with this email included the following comment:

     Once again, a retailer goes down the path that manufacturers need to partner by giving their new stores a complete free fill.  Sad.

    There is a strong-arm nature to these emails that is disquieting - I assume that this free product is in addition to all the fees, allowances and promotional money that is being sent from the manufacturer to the retailer.  But that's not enough - the supplier is being told that if you want to continue being a supplier in good standing to Meijer, you have to supply this much free product, at a cost determined by Meijer, and that the deal will continue for the foreseeable future.

    And it is all bathed in the aura of "this is a partnership," while the reality is that Meijer is making suppliers an offer they can't refuse.

    The retailers' perspective is that this is a way to mitigate the massive investment that it takes to build a new store, and while that has some validity, don't they realize that somebody, someplace has to pay for this product?  It is going to come out in the cost of goods - and, in the end, it will be the consumer who will pay.

    If I were a retailer - and it probably is a good thing that I am not - I would make these deals being made by my competition a centerpiece of my advertising and marketing.  I would explain how all these promotional deals work, and why, in the end, all they do is obscure what things really cost.  And I'd promise not to dip my beak in the same way other retailers do, with the goal of actually being a partner with suppliers to deliver the best possible value to my shoppers.

    And, by the way - the very fact that this email was forwarded to me suggests that there is a degree of antipathy, if not outright resentment, in the supplier community about demands like these. Don't you think that suppliers are going to try to stick it to retailers when they get the opportunity?

    Boon & Boom:  Good Times For Suburban Retail 

    Published on: May 9, 2023

    From the Wall Street Journal this morning:

    "A growing number of retailers in city office districts are relocating their businesses to the suburbs, where visits to shopping centers are on the rise as fewer people commute to downtown workplaces. 

    "With average office usage rates still only around half of where they stood before the pandemic in many major cities, many bars, restaurants and other retailers that cater to the five-day-a-week office crowd have been reeling. 

    "Pedestrian foot traffic in U.S. urban downtowns was down about 25% in April compared with the same month in 2019, according to real-estate software provider MRI Springboard. Nordstrom’s announcement last week that it was closing two stores in San Francisco was the latest sign of retailers’ discontent with declining sales and rising property crime in big cities."

    The story goes on:

    "Some restaurants and retail businesses are now moving from their once bustling urban locations to the nearby burbs. Several restaurant chains have expanded beyond office corridors since the pandemic, including salad shop Sweetgreen, which closed several locations in Los Angeles, Boston and New York City last year.

    "While the firm said it isn’t abandoning cities, as of last summer, half of Sweetgreen’s footprint was in the suburbs, up from 35% at the end of 2019, the company reported.

    "Suburban landlords say demand from retailers was strong during the first months of this year, even with high inflation and rising interest rates. Shopping-center owner Site Centers reported record-high leasing in the first quarter, while owner Phillips Edison reported a new high for occupancy. Retail Opportunity Investments Corp. said its portfolio is more than 98% leased."

    KC's View:

    I can vouch for this, just from the perspective of my small Connecticut town (about 13 square miles, with about 21,000 residents), where there are three major retail developments in various stages of construction.  And yes, there's a new Sweetgreen.  We've traditionally been a commuter town, with a train line that goes directly to Grand Central Terminal in New York City (that's why we bought our house here 39 years ago - at the time, both Mrs. Content Guy and I were commuters);  today, however, the train station parking lots are usually pretty empty on Mondays and Fridays, and the tenor of the town has changed.

    I used to write a lot here about the urbanization of America, as people got married later, had fewer children, got apartments and condos instead of houses, and might not even buy cars - it was the national trend, and cause to think about how traditional suburban retail had to adjust.

    The pandemic changed a lot of that, though I do think the point the Wall Street Journal makes is valuable - that these new suburbanites, who work part-time at home and value having yards and greater work-life balance, also are going to want the kinds of retail and services to which they had access in the city.  

    Which is why our town, and so many towns, are seeing significant retail development. The mistake would be to think that the retail of yesterday is going to satisfy the consumers of today and tomorrow.

    Worth Reading:  Why Amazon Go Didn’t

    Published on: May 9, 2023

    The Information has a piece breaking this morning entitled "How Amazon’s Big Bet on ‘Just Walk Out’ Stumbled."

    Here's an excerpt:

    "In 2020, Amazon went on a blitz offering up the grab-and-go cashierless technology behind its Amazon Go convenience stores to large retailers around the world.

    "That included offering up the Just Walk Out technology to Woolworths, the largest retailer by revenue in Australia, according to a person with knowledge of the talks. And executives at department store chain Kohl’s weighed the pros and cons of installing Just Walk Out, a person with knowledge of the discussions said. But few deals with big retail chains have materialized in the years since, and Amazon has yet to deploy the tech in a large store that it doesn’t own itself.

    "These previously unreported discussions underline the challenges Amazon has faced in selling its Just Walk Out tech to other retailers, efforts that it’s stepped up in recent years as it struggles to find the right formula for success with its own brick and mortar stores … Some of the retailers Amazon approached about Just Walk Out were concerned about whether the shoppers would embrace the technology and if it made financial sense, the people said."

    The story notes that "Amazon currently uses the technology in more than 20 Amazon Go stores, more than 40 Fresh grocery stores and two Whole Foods stores, a company spokesperson said. That number could shrink, however, as Amazon closes some Go and Fresh stores as the company continues to search for a mass market physical store format it wants to scale.

    "Where Amazon has seen the most traction is in selling Just Walk Out to companies that operate small grab-and-go stores installed in specialized venues. An Amazon spokesperson said that Just Walk Out has been installed at over 30 stores operated by other companies in U.S. sports stadiums, 12 airports and one university in Arlington, Virginia. The outside stores that have installed Just Walk Out so far are much smaller than Amazon Fresh stores, which tend to be 25,000 square feet or bigger."

    You can read the entire story here.

    KC's View:

    This is something we've talked about here on MNB, especially in The Innovation Conversation - the degree to which Amazon may be thinking that its future could be more as a service provider, as opposed to being an actual retailer.  It is a lot less expensive that way, though it also could undercut the "everything" nature of Amazon's foundational value proposition.

    The question is, what's the sustainable business proposition?

    Albertsons-Safeway Agree To Settle BOGO Suit For $107 Million

    Published on: May 9, 2023

    Marketing Daily reports that Safeway and its parent company Albertsons have agreed to write a $107 million check to settle a lawsuit charging that stores in Oregon deceptively inflated meat prices before launching a buy-one-get-one (BOGO) promotion.

    According to the story, "In a suit filed May 2016, Oregon residents and Safeway shoppers Schearon Stewart and Jason Stewart alleged that Safeway inflated the regular purchase price of meat in order to pass along the cost of the supposedly 'free' items to its Club Card members.

    "The plaintiffs claimed that Safeway had violated the Oregon Unlawful Trade Practices Act in BOGO promotions involving beef, chicken and pork by making 'false or misleading representations of fact concerning the reasons for, existence of, or amounts of price reductions.'

    "In some instances, Safeway added 'de minimis' services like seasoning or cutting that typically would have been free to Club Card members, according to the suit."

    Marketing Daily writes that "Safeway and Albertsons will pay $107 million into a settlement fund to benefit shoppers who participated in Buy One, Get One Free or Buy One, Get Two Free promotions at Safeway locations in Oregon using a Club Card between May 4, 2015 and Sept. 7, 2016.

    "The estimated payment for each person who qualifies as a class-action member is $200."

    KC's View:

    The irony, of course, is that theoretically, Club Card holders are supposed to be the retailer's best customers - you know, the ones who are supposed to get the best deals, preferential treatment.  The ones to whom a retailer should be most loyal.

    Guess they didn't get that memo.

    Labor Forced:  Americans Getting Too Old To Work

    Published on: May 9, 2023

    Axios reports on a new study from Moody's Investors Service suggesting that "more and more Americans are getting too old to work."

    Here's the deal:

    "The percentage of Americans age 55 and over has doubled over the last 20 years, as this 2020 paper notes, and that population (the baby boomers) is expected to grow.

    "And while certainly many older Americans are working longer than ever before, they still do retire at some point.

    "This was a demographic trend in place long before COVID-19 but was accelerated by the pandemic, which pushed many older workers into retirement.

    "Moody's estimates that 70% of the decline in labor force participation since the end of 2019 was due to aging workers — about 1.4 million additional Americans retired."

    It is all part of a bigger problem, Axios writes:  "Declining fertility rates, and increasing life expectancy, is expected to lead to a drop in working-age populations across all G20 countries."

    KC's View:

    Part of the problem with these retirements is that companies are losing an enormous amount of institutional knowledge.  I've long felt that companies ought to find ways to keep some of these folks engaged after retirement, maybe by creating a new tier of employees who can supply advice and guidance to younger folks.

    E-conomy Beat

    Published on: May 9, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Reuters reports that Amazon "is offering customers $10 to pick up a purchase rather than have it shipped to a home address, as the e-commerce giant joins other retailers in racing to slash costs for home delivery and returns amid slack consumer demand.

    "Amazon over the last few days has emailed an unknown number of Prime subscribers offering them $10 to retrieve an order of $25 or more at company pickup points at locations such as Whole Foods, Amazon Fresh or Kohl's stores."

    The idea seems to be part of Amazon's recent emphasis on cost-cutting;  reducing the number of residential and office deliveries presumably would also reduce the cost of Amazon highly vaunted shipping infrastructure.

    The move also comes at the same time as Amazon "has started charging some customers a $1 fee if they return packages via a United Parcel Service (UPS.N) store when there is an Amazon pickup/return location closer to their delivery address," Reuters notes.

    Presumably, Amazon is saving more than $10 for every delivery it can convert to a pick-up.  The question is whether an offer like this undermines its basic value proposition - that you order online and they get it to you ASAP.

    The larger question is the degree to which Amazon currently is resolutely committed to the value proposition on which the entire company has been built.

    FastNewsBeat

    Published on: May 9, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Placer.ai was out yesterday with a study saying that "visits to shopping malls across the country fell further from 2022’s levels in April. But there was some positive movement measuring month-over-month visits, with visits to outlet malls growing nearly 3% over March and visits to open-air lifestyle centers (OALCs) growing 0.3% — indoor mall traffic, however, fell 1.3%."

    Maybe not the best study to release as many Americans were reeling from the mass murder that took place at a Texas outlet mall.  As these incidents continue to happen, making places like malls (and schools and churches and stores and concerts) increasingly dangerous, I have to wonder how that will impact customer traffic at malls.  You have to go to school, but you don't have to go to the outlet mall.  People are going to make choices.


    •  Reuters reports that "the California woman suing Subway for claiming its tuna products contain ingredients other than tuna wants to end her lawsuit because she is pregnant, prompting Subway to demand her lawyers be sanctioned for bringing a frivolous case.

    "Nilima Amin said her 'severe' morning sickness and 'debilitating' conditions as she prepares for a third child have left her 'unable to proceed with the obligations as plaintiff,' and require her to focus on her health and family.

    "Amin wants to dismiss the case in San Francisco federal court without prejudice, which would let her sue again when she feels better.

    "In a May 4 filing, Subway said Amin's excuse flunked the 'straight-face' test, and her lawyers likely realized it would not 'simply pay the windfall settlement that they hoped to get by constructing a high-profile shakedown.'

    "Subway also said the 'media frenzy' from the lawsuit caused severe harm, and faulted Amin's 'ever-changing' theories to debunk its claim that its tuna sandwiches, salads and wraps contained '100% tuna.'

    "The chain wants Amin's proposed class action dismissed, and her seven lawyers to pay at least $618,000 of its legal bills."

    I thought pregnant women had to restrict their consumption of tuna.  If that's true, I would thing pregnancy would mean that this woman actually could start going to Subway again.

    Executive Suite

    Published on: May 9, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  Earth Fare announced that Mitch Orland, the company's vice president of Merchandising and Procurement, and before that the company's vice president of Purchasing, Fresh Merchandising, E-Commerce and Executive Chef, has been promoted to the role of senior vice president of Merchandising & Procurement.