business news in context, analysis with attitude

Published on: May 18, 2023

The other day my son and I had the opportunity to test-drive a Lucid - a very high-end electric car that, to be honest, I'm never going to be able to afford.  But the test drive did offer a business lesson for retailers.  Go figure.

Published on: May 18, 2023

The Seattle Times reports that "in yet another sign of the pandemic’s lingering grip, PCC Community Markets posted its first loss since the ’90s, with much of the red ink flowing from the co-op’s struggling new store in still-flagging downtown Seattle."

PCC said that it lost $250,000 in 2022 and "was canceling members’ dividend for the year, as soaring costs offset rising sales and growing membership at its 16 locations."

The continuing impact of the pandemic was evident in the company's higher costs - such as government-mandated hazard pay at some of its stores.

And, CEO Krishnan Srinivasan "conceded that roughly a third of PCC’s 2022 loss reflected the poor performance of the downtown location in Rainier Tower at Fourth Avenue and Union Street.

"Despite high hopes by PCC, city leaders and downtown residents that the store could help kick-start downtown’s lagging recovery, the location has generated only around two-thirds of projected sales since it opened in January 2022, Srinivasan said.

"Even though PCC delayed the opening by a year to bypass the worst of the pandemic, the store suffered heavily as many the office workers that were key to its business model stayed home with remote or hybrid work.

"Although the downtown PCC does a brisk lunchtime deli business Tuesday to Thursday, it sees less of the more lucrative after-work business with 'the same office worker picking up maybe a steak, a bottle of wine and some asparagus for dinner on the way home,' Srinivasan said."

However, "Srinivasan insists PCC has no plans to leave. 'We’re not going to cut and run at the first sign of trouble,' he says. To the contrary, the co-op expects better performance overall in coming years, in part because exceptional costs such as hazard pay are gone."

Published on: May 18, 2023

Marketplace, on National Public Radio (NPR), reports that "retailers have increasingly been using discounts and promotions like this to encourage shoppers to keep spending, pointed out Sonia Lapinsky, a retail analyst with AlixPartners … Retailers who cater to middle- and low-income shoppers are especially leaning on discounts since inflation is hitting those consumers hardest, Lapinsky added.

"That includes stores known for their discounts, like Walmart, that may have additional reasons for slashing prices, said Mintel retail analyst Diana Smith."

However, Smith tells Marketplace that "too many discounts can be bad for business. They can hurt a store’s image long-term, and 'it does eat into bottom-line profits,' she said. 'Retailers are already challenged right now because they’re having to deal with the higher costs as well'."

Published on: May 18, 2023

Ahold Delhaize-owned Stop & Shop said this week that it is banning single-use plastic bags across all its stores in the northeastern US, with the decision expected to take effect in July.

“Stop & Shop is committed to sustainability and helping to protect our environment,” the company said in a prepared statement.  “In addition to eliminating all single-use plastic bags from stores across the Northeast by July 2023, a taxable 10-cent charge is now applied on all paper bags provided to customers in an effort to minimize waste and encourage customers to shop with reusable bags.”

The Boston Globe reports that "the 10-cent charge went into effect on April 30.

"A spokeswoman for the chain said some stores may already have shifted to paper bags, while others may still be working through their existing supply of single-use plastic bags.  'However we anticipate they will all be gone by July,' she said.

"Stop & Shop officials said reusable bags are available for purchase at all stores, 'as low as 10 cents per reusable bag'."

Published on: May 18, 2023

The Wall Street Journal reports that on a new study from Quest Diagnosticssaying that "as legal marijuana expands in the U.S., a record share of workers is testing positive for the substance in workplace drug screening … Of the more than six million general workforce tests that Quest screened for marijuana in 2022, 4.3% came back positive, up from 3.9% the prior year. That is the largest marijuana positivity rate since 1997."

According to the story, "More than two-thirds of U.S. states have legalized recreational or medicinal use of marijuana. That push has some employers questioning whether to keep testing for the drug, as they weigh safety risks and legal liabilities.  The U.S.’s patchwork of rules makes employer oversight a minefield, said Scott Pollins, an employee-rights lawyer in Philadelphia. Workers might live in areas where marijuana is allowed and still be subject to federal testing requirements, or they may work for a company with a policy that subjects employees to testing. Employers should be careful about punishing workers based on a positive marijuana test, he added."

One cautionary note:  "The percentage of employees that tested positive for marijuana following an on-the-job accident rose to 7.3% in 2022, an increase of 9% compared with the prior year. From 2012 to 2022, post-accident marijuana positive test rates tripled, tracking with widening legalization."

The story also points out that during the past year, positivity rates "for certain classes of opioids and barbiturates declined," while "more tests also came back positive for amphetamines. Positive tests for amphetamines rose to 1.5% in 2022, up from 1.3% in 2021, according to Quest, which doesn’t differentiate between prescribed medications and illicit drug use."

Published on: May 18, 2023

From the Wall Street Journal:

"Montana’s governor signed the country’s first bill that outright bans TikTok, paving the way for a legal fight that could determine the fate of a nationwide prohibition that is under consideration in Washington.

"Republican Gov. Greg Gianforte on Wednesday signed the bill into law after Montana’s legislature passed it last month. The legislation drew criticism from Chinese-owned TikTok and free-speech advocates including the American Civil Liberties Union.

"The Montana ban is set to go into effect on Jan. 1. Any legal challenge, though, could trigger an injunction to delay the ban’s start date.

"The law would bar TikTok from operating within the Treasure State, and would also forbid app stores, such as Google’s and Apple’s, from making TikTok available to download within Montana. TikTok and app stores would be liable for fines of $10,000 a day for violating the law. Individual TikTok users wouldn’t be punished.

"'Gianforte signed a bill that infringes on the First Amendment rights of the people of Montana by unlawfully banning TikTok,' a TikTok spokeswoman said in a statement … TikTik, in an earlier statement, said, “The bill’s constitutionality will be decided by the courts.”

Published on: May 18, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Amazon yesterday introduced "a new lineup of Echo products - the all-new Echo Pop, Echo Show 5 and Echo Show 5 Kids, and all-new Echo Buds."

The Echo Pop is a new shape for the line - semi-sphere - and goes for $39.99.  Echo Show 5, Echo Show 5 Kids, and all-new Echo Buds are new versions of existing products with improved audio and access to the Alexa-powered system.

Glad to see that even as Amazon has been reducing investment in its devices division it is still coming out with new stuff.  I love my Echo - I have an original model on my desk, and we have a couple more scattered around the house, as well as three or four Sonos speakers that have Alexa accessibility.  For us, they're must-used infrastructure.  (And the new Pop makes me think that it is time to upgrade from the one on my desk.)

Published on: May 18, 2023

•  Two more Maryland ShopRite stores - in Riverside and Howard Park, both owned and operated by Klein’s Family Markets and part of the Wakefern retailer-owned cooperative - have adopted the coop's Fresh to Table, described as "an innovative store-within-a-store where customers can find fresh, on-trend foods, easy to prepare ingredients and meal solutions in a variety of grab-and-go formats."

The description goes on:  "Fresh to Table reinvents traditional produce and fresh food departments, providing additional high-quality options for shoppers looking for a one-stop shop experience. Customers can choose from ready-to-cook items ('Prep & Eat'), ready-to-heat and serve items ('Heat & Eat'), and ready-to-eat meals ('Grab & Eat'). The multi-purpose space also features new and innovative foods from ShopRite’s private label lines, including the supermarket’s award-winning Bowl & Basket and Wholesome Pantry products."

Klein’s Family Markets already has rolled out Fresh to Table at four other Maryland stores, in Forest Hill, Aberdeen, Bel Air, and Jacksonville.

•  From the Boston Globe this morning:

"Two years after its launch, CVS Health is planning to close its clinical trials unit by the end of 2024 to refocus on core operations.

"Since the pandemic began, the drugstore chain has doubled down on its efforts to build a health care business that would move it further into the home health and primary care spaces. The Woonsocket-based company announced in late 2021 a plan to close 900 stores in three years in order to expand its primary care services. At the time, executives told investors they planned to become the 'nation’s leading health solutions company for consumers.'

"Closure of the clinical trials unit is part of a regular 'evaluation' of assets to ensure the company aligns with long-term strategic priorities, a spokesperson said. CVS first revealed its clinical trials unit in May 2021, which had a focus on driving access to clinical trials and boosting engagement."

The story notes that "the news comes as the CVS recently completed its acquisition of primary care company Oak Street Health in a $10.6 billion deal earlier this month, and completed a $7.8 billion acquisition of home health care provider Signify Health in March.

"The two acquisitions are CVS’ biggest deals since its $70 billion mega-merger with insurer Aetna in 2018, and executives told investors the transactions could help CVS expand more quickly than previously projected."

•  From Fox Business:

"Oscar Mayer’s iconic Wienermobile has a new name.

"The American meat and cold cut producer announced the hot dog-shaped vehicles are being rebranded in honor of the company’s new 100% Beef Franks, according to a press release issued by the Kraft Heinz Company on Wednesday.

"Now called Frankmobiles, a fleet will hit the highways nationwide this summer and will have painted lettering that references the vehicle’s new name and 'all beef' frank recipe."

Published on: May 18, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Yesterday's FaceTime referenced the fact that a number of car manufacturers - BMW and Tesla among them - have decided to not offer AM radio in their electric vehicles, saying that it creates electromagnetic interference that huts their cars' performance.   At the same time, Ford is considering eliminating AM radio from all its cars, believing that AM radio is past its expiration date.

But, not so fast.

Axios reports this morning that "a bipartisan group of lawmakers wants to make it illegal for carmakers to eliminate AM radio from their cars, arguing public safety is at risk … The proposed legislation, to be introduced today by Sens. Ed Markey (D-Mass.), Ted Cruz (R-Texas) and others, would require all new vehicles to include AM radio at no additional charge."

The story notes that "while AM might seem like a relic of the past, nearly 50 million people still listen to it, according to Nielsen figures provided by the National Association of Broadcasters."

"The importance of AM radio during large-scale emergencies cannot be underestimated, and it has, without a doubt and without interruption, saved lives and kept our communities informed," said Rep. Josh Gottheimer (D-N.J.), the lead sponsor in the House.

Bipartisanship lives.

•  Last week we had a story about how former First Lady Michelle Obama is a co-founder and strategic partner for Plezi Nutrition, described as a food company designed to "create higher standards for how the U.S. makes and markets food and beverages for kids, leading with nutrition, taste, and truth."

PLEZi Nutrition's first product - a kids' drink called PLEZi - has 75% less sugar than average leading 100% fruit juices, no added sugar, plus fiber and nutrients, like potassium, magnesium, and zinc.

Just one problem:  Under the standards that Obama championed as First Lady, the drink would not qualify as healthy.

Bloomberg reports that it "interviewed 12 independent health professionals and organizations and spoke with Plezi Chairman  Sam Kass, as well as with members of the company’s advisory board. Nearly all of the experts conveyed their respect for Obama and her achievements in improving child nutrition.

"But most were critical of the new line of drinks … The experts largely agreed that the product is an improvement on soda, though a small one. At the heart of the matter is whether 'healthier than soda' is good enough for a product aimed at children as young as 6, especially one that comes with Obama’s endorsement.

"Under the Obama-era school-meal regulations currently under review, US elementary and middle schools may only serve water, milk, or 100% fruit or vegetable juice with no added sweeteners (the regulations do permit schools to dilute juices with water) — and none of Plezi’s four current flavors meet these criteria.

"Several of the health professionals characterized the Plezi drinks as an ultra-processed food, or one made largely from extracts of other foods or artificial additives. Numerous medical studies point to overconsumption of these kinds of foods as potential drivers of cardiovascular disease,  diabetes, even death."

Well, that's awkward.  Proponents of Plezi will argue that you can't allow perfection to be the enemy of the good, and Kass says that he understands "the perspective of academics who focus on what kids should be eating in an ideal world,” but such experts “hinder progress."  That's not an illegitimate position, but harder to make when in previous roles you've been arguing for an ideal world.

Published on: May 18, 2023

MNB has initiated a new sponsorship tier that, as I've pointed out here in the past, reflects what I think is a new approach to the topic - I've decided that I really want to forge sustained relationships with companies that have value propositions and missions in which I believe and that, in turn, believe in MNB's value proposition and mission.  My goal is to not just provide a forum for these "Charter Sponsors," but also commit to helping them grow their businesses in a variety of ways.  In other words, it ain't just about banner and tile ads.  It is about moving the needle forward in terms of innovation and, ultimately, service to the shopper.

I am happy to announce this morning that Recall InfoLink has joined the MNB family as a charter sponsor.

Recalls are a reality in the food industry that almost always highlight a problem somewhere in the system.  Equally important, recalls have the potential to damage a brand, because they threaten consumer trust - and if there is something that has been a consistent message here on MNB over the past two decades, it is the importance of trust in maintaining a company's brand equity and value proposition.

Which is why I think Recall InfoLink is so in-synch with MNB on this subject.  They've created an easy and effective automated solution - with a system built on the industry-standard GS1 data set - allowing businesses to competently and confidently handle recalls in a way that instills confidence rather than eroding it.  That offers the kind of peace of mind that is priceless because you know that your brand and shoppers are protected.

That's a great fit - and why I'm thrilled to welcome Recall InfoLink to the MNB family. 

Published on: May 18, 2023

From an MNB reader:

A quick note in response to the email you posted Tuesday on remote working.

Companies were forced to go into remote work arrangements during covid and many associates enjoyed the freedom it allowed, particularly if their company did not offer some version of remote working days pre covid. While many workers can be productive working remotely how does a company instill its company culture remotely, how do you train and mentor the new hires just joining the ranks?

For those retail companies, how do you justify to the rank and file store associates that must show up at the store each day that their office counterparts get to work from home?. Remote work will be with us until some other shift in the employer/employee balance changes but requiring at least 3 -4 days in the office is not a big ask for an employer. Having worked through Covid and observed what transpired you won't convince me that the remote work was as productive as when workers were present in the office. Not to say that people in the office didn't find ways to distract themselves from the work at hand.

Yesterday we had a piece about Trader Joe's rejecting any sort of e-commerce component to its business, and I commented:

Maybe Trader Joe's never will embrace e-commerce.  But there was a time when the company rejected scanning, too.  (My local Trader Joe's, when it opened in 1998, didn't have scanning when it first opened its doors, and that was well past the time when almost every grocer had adopted the technology.)

I would be the last person in the world to tell Trader Joe's how to be an effective retailer.  But I would suggest that times change, and it isn't impossible to imagine that a time will come when it will make more sense for it do offer e-commerce options than to reject it.

MNB reader Steve Anvik wrote:

Aren’t you always advocating unique retailer connectivity (most recently old school Bill’s Toggery) .. so Trader Joe’s is just that, yet you still challenge their status quo, in your comments. 

Does Mrs. KC notice indecision in you … since you often quote her?

I don't think Mrs. Content Guy thinks of me as being indecisive.  "Stubborn" and "pig-headed" are adjectives she tends to use more frequently.  (There also are a couple of nouns she uses that I can't repeat here.)

But I actually reject your characterization.  All I said was that "I would be the last person in the world to tell Trader Joe's how to be an effective retailer," but that times could change, and Trader Joe's could adjust its strategy.

Isn't that what all smart retailers do - reinvent themselves when the evidence suggests that it is time to do so?  

I did get a very thoughtful email on this subject from another reader:

My wife and I operate a small Jam and Jelly business with no retail stores of our own.  We are in 50 stores in 4 states and growing and have a website that includes a map to all the retail locations where you can find our products.  It's been tempting and people question us on it all the time, but we have no desire to sell over the internet.  First, it's expensive to ship jelly as it is heavy.  Second, Amazon has set the expectation that shipping is free, and nothing in this world is free.  Third, we would rather support our local retailers than compete with them online and we tell them so.

One might argue that we are giving up sales, reach and new/remote customers in the digital age.  But we view it differently.  For what is the purpose of a business?  We want to make money sure, but we also view the company as a vehicle to support employees by creating employment and an opportunity to support local brick and mortar businesses.  If nobody supports them, they die.  So, we've decided to forego competing with them online and instead encourage customers wishing to purchase online to support our retail partners who do just that.

With all the talk lately about the merger of Kroger and Albertsons plus the pressure brought to businesses from Walmart and Amazon, small businesses are hurting.  Not all of our retail partners survived Covid.  We are small boutique brand supporting local boutique businesses and grocers.  We will never sell into Walmart either.  Probably half our retail partners would drop us like a hot rock if we did so.  In their eyes we would no longer be special and so why carry us?  It would hurt the relationships we've built with people who took a risk on a small local brand and supported us, so we support them.