business news in context, analysis with attitude

Responding to a story we had the other day about various market moves in Texas, one MNB reader wrote:

I spent many years in these Texas markets, competing against HEB,  and with family in San Antonio shopping at HEB.  A couple of quick points on the Dallas moves and Kroger offering delivery in San Antonio.

I don’t think Kroger will hurt smaller players in San Antonio, because there really aren’t any left.  HEB has run them all out of town, except for Walmart, and a couple of token Trader Joes (2), Whole Foods (2), and Sprouts(2).  My mother, who lives in San Antonio, used to love to come visit us in Dallas, and go grocery shopping.  She was always amazed at seeing all the various food products she couldn’t find at HEB in San Antonio.  HEB is a great merchant that pushes their private label very well, but the downside is that you don’t end up with the variety of products that a market with strong multiple competitors provides.  And side note, HEB has somehow kept Aldi out of San Antonio, so Walmart is their only genuine competitor, and yes, grocery pricing is higher in San Antonio as a result.

As to their entry into Dallas, let’s just say… it’s about time.  I remember discussing this as a young Kroger Dallas Co-manager in 1984 (38 years ago).  They (HEB) are a great food merchant and should elevate the competition, which is great for consumers. 

One thing to watch is, will Kroger be able to disrupt HEB home turf in San Antonio enough to slow down HEB moves into Dallas.  I really love what Kroger is doing with these "delivery only” moves into new markets, and think that their ability to profitably change the cost structure of ecommerce is yet to unfold."

And, from another MNB reader:

As a Houston-based commercial real estate developer and a consumer, I think HEB does a better job than Kroger of understanding the Texas customer. Today’s Texas is a mix of cultures including “Texana”, Hispanic, Black, Vietnamese and other SE Asians, Caribbean and Africans. Texas-based (San Antonio) HEB seems to understand that and they market and stock their stores accordingly.  That would be an incredibly difficult task for a behemoth like Kroger - and based on anecdotal observations of parking lot “occupancy”, my sense is that the consumer agrees.  

Got a number of emails about Starbucks' travails.

MNB reader Dean Chilcote wrote:

I worked for Starbucks a number of years ago and left the company about a year after they implemented mobile ordering. Even back then I could see what was coming. The training we received always stressed the importance of the customer experience but as you pointed out, as the mobile orders increased, so did the lines waiting for them which then crowded those who were seated and trying to enjoy their lattes. It’s hard to focus on experience when the mobile and drive-thru orders are backing up.

I suggested that Starbucks should have 2 kinds of stores, one that is drive-thru and mobile orders only and one that is sit-down only. Maybe even change the look of each kind so they are easily distinguishable to customers. Perhaps that is the only way to get the best of both worlds of in-store customers and mobile ones. I guess my suggestion fell on deaf ears.

MNB reader Gary Breissinger had a thought:

I have always thought that it was crucial for brands to be available to their consumers wherever and whenever…and how…they want to buy or consume them.

It could be that Starbucks needs to reposition its offerings in response to changing consumer lifestyles and expectations, e.g., more take out/pick up orders than on premises consumption orders.

If that is the case, then hiring a Chief Technology Officer with fast food experience to help rationalize its mobile/takeout capability is a step in the right direction… and not necessarily an abandonment of its traditional emphasis on creating “a special space” with an unique ambiance.

These things don’t necessarily need to be mutually exclusive.

From another reader:

One of the issues that I always thought would become a problem for Starbucks is the plethora of small format stores. As they expanded drive through and digital ordering, I’ve watched how frustrated both the employees and the customers have become that comes from being too successful and not having the proper size stores and parking lots to handle the work flow and the customer flow. I think this is a serious long-term issue, which will not be easy to overcome, even for Howard.

Michael Sansolo yesterday wrote a column about the unwritten rules that "are frequently called institutional knowledge, the informal system by which insights are passed down inside a company to improve job performance. These bits of lore could be as simple as the right way to make a balky machine work or as complex as understanding why a certain customer must be treated in a specific way to retain their business.

"And quite frankly, the great resignation that is taking place could cause a significant amount of institutional knowledge to disappear thanks to the cascade of boomers opting for retirement."

Michael cited a number of examples, including some from Rochester, in upstate New York, which pleased one MNB reader from the region:

Good stuff. In the ROC we have various debates about the “Garbage Plate” and who makes the best. The original came form Nick Tahou’s, but every Greek family restaurant in town has their own version of it, called something else because Nick’s trademarked the name years ago.

If you go to the BillsMafia Facebook page, you’ll see the occasional question, “Hey, coming to town for my first home game, where should I go for wings?” Hundreds of passionate responses, also extolling the benefits of certain flavors only available at their favorite spot, try the Beef on Weck, and NEVER order wings in Buffalo with Ranch Dressing; Bleu Cheese or nothing. This is what makes our communities unique and great. I love this stuff.

Michael also pointed out that there are unwritten rules in our favorite sport:

 For example in baseball recently there has been a kerfuffle over teams ignoring the unwritten (and incongruous) rule to stop trying too hard once your team has a large and presumably insurmountable lead.

(I actually would suggest that this metaphor has limitations.  In business, unlike in baseball, there is no such thing as an insurmountable lead.  But that's for another day and another column.)

Prompting one MNB reader to write:

As an announcer for the Cubs used to say: “The game is never over until the last man is out.”  Something about there being no clock in baseball, perhaps.

Just one of the things that makes baseball the Best. Sport.  Ever.

One note, if I may:

I made a mistake when proofing Michael's column:  it was my job to add in - for context - the Mets' won-loss record, which I said was 12-5.  In fact, I got it wrong.  By the time I edited the piece on Monday night, the Mets had completed an amazing ninth inning comeback - they were down to their last strike, and went from being down 2-0 to winning the game 5-2 - against the St. Louis Cardinals.  So, in fact, they were 13-5.

Mea culpa, mea culpa, mea maxima culpa.

A perfect example, by the way, of there being no such thing as an insurmountable lead.

And one last note.  The Mets beat the Cardinals again last night, 3-0.  So now they are 14-5.