business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: December 14, 2022

    The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive who led the team that developed Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

    Today, Tom and KC offer some predictions for 2023, as they engage in the last Innovation Conversation of 2022.  They range from how technologies will be deployed to how retailers will establish priorities … and include one big personnel move that seems more possible at the moment than it would have six months ago.

    If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

    Published on: December 14, 2022

    Two Kroger stores in the Columbus, Ohio, market are adding menu items from Saladworks to the new Kitchen United Mix Food Hall locations situated in those stores … "Kitchen United's Mix Food Hall provides customers with a seamless takeout experience, offering a variety of restaurant brands and menu options including Saladworks," the announcement says.  Delivery also will be available.

    It goes on:  "Customers will be able to place their order at on-site kiosks at Kroger locations or online at Customers can also order through third-party delivery apps but ordering from multiple restaurant menus featured at Mix Food Hall is exclusively available through the Mix Food Hall ordering platform."

    KC's View:

    I'm sure that this is a good idea, but I always struggle with the idea that a retailer that has invested time and effort in creating viable and attractive produce departments now will add a component to their stores that offers fresh produce from a company that is a competitor for share of stomach.

    The food halls are designed to be a point of differentiation, as well as a way to cater tio evolving consumer needs.  So maybe it doesn't really matter if Kroger lays out the welcome mat for the competition.  But it strikes me as a concession, not just a competitive statement - does it enhance the Kroger brand, or diminish it?

    Published on: December 14, 2022

    CNBC reports that Dollar General, which already is pursuing an aggressive growth strategy for its eponymous chain, also is planning to ramp up expansion plans for its Popshelf format, which "caters to suburban shoppers with higher incomes, but sells most items for $5 or less" and is "designed to be a treasure hunt that keeps shoppers coming back."

    According to the story, "It aims to double the banner’s locations to approximately 300 stores next year. Over the next three years, it plans to grow to about 1,000 locations across the country. Eventually, it sees an opportunity to reach about 3,000 total locations. It is also testing mini Popshelf shops inside of some of its Dollar General stores. So far, it has about 40 of those shops."

    The challenge, CNBC suggests, is "to prove it can hold up in a tougher economy. Walmart, Best Buy, Costco and others have warned of weaker sales of discretionary items as consumers spend more on necessities. Target recently cut its holiday quarter forecast, and Kohl’s pulled its outlook, citing middle-income consumers who feel stretched."

    KC's View:

    It certainly is impressive to see such a growth-oriented company such as Dollar General find the resources to put behind a new concept that focuses on a customer outside its core demographic.  I suspect it helps that there are going to be some Popshelf sections inside Dollar General's more traditional format;  it probably allows for at least some of the assets being created to have a more immediate ROI.

    Is going after a more affluent customer, in the middle of an inflationary period during which many people already have adopted a recessionary mindset, a good idea?  I certainly don't think it is a bad idea - after all, this isn't a format created for this year and next.  I'm sure Dollar General believes the concept will have staying power,  and that there is no better cauldron in which to test it than it harder-than-usual times.

    Published on: December 14, 2022

    From the New York Times:

    "Inflation slowed more sharply than expected in November, an encouraging sign for both Federal Reserve officials and consumers that 18 months of rapid and unrelenting price increases are beginning to meaningfully abate.

    "The new data is unlikely to alter the Fed’s plan to raise interest rates by another half point at the conclusion of its two-day meeting on Wednesday. But the moderation in inflation, which affected used cars, some types of food and airline tickets, caused investors to speculate that the Fed could pursue a less aggressive policy path next year — potentially increasing the chances of a 'soft landing,' or one in which the economy slows gradually and without a painful recession."

    In his analysis, John Cassidy of The New Yorker writes:

    "The inflation news isn’t all reassuring. At 7.1 per cent, the headline rate is still far above the Fed’s target of two per cent, which means that Jerome Powell and his colleagues are virtually certain to raise the federal funds rate by another half percentage point on Wednesday. (They have already signalled this move.) And the prices of some individual items remain greatly elevated. The price of fuel oil went up 1.7 per cent in November; compared with twelve months earlier, it was up sixty-five per cent. The price of food - purchased at home and in restaurants - rose another 0.5 per cent. During the previous twelve months, it increased by more than ten per cent.

    "The recent rises in food prices came despite the fact that some key inputs to the food industry - including corn, wheat, and certain types of energy - have experienced substantial price drops in recent months. If these cost reductions aren’t soon reflected in supermarkets and takeout places, Americans will have good reason to be angry - and to suspect that big food companies are padding their profits at the expense of their customers. I doubt that the owner of my corner deli, who faces a lot of competition, is doing that. I’m pretty sure he’s merely passing along his increased costs. All the same, I’d be as relieved as anybody else to see the price of milk come down. But it’s also important to look at the over-all inflation picture, which is slowly but steadily improving. Rather than overcorrecting for its failure to predict the earlier price spike, the Fed should be mindful of this as it decides how to set policy in 2023."

    KC's View:

    I think I speak for everyone when I say, "Soft Landing = Good."

    And maybe I'm just a cockeyed optimist, but for some reason I'm thinking this is what is going to happen.

    Published on: December 14, 2022

    Entrepreneur suggests in an analysis that we can "expect to see an increase in the term "smart home automation" — referring to Internet-connected devices that monitor and control essential household functions such as lights, cameras, locks and climate. As the industry transforms, it presents a prime opportunity for entrepreneurs, corporations and investors.

    "Touchless interactions and whole-home automation that drive efficiency and save energy are among the concepts driving consumer interest. Automated heating and cooling will see high demand, with new government efficiency regulations requiring replacing or retrofitting existing systems. In January 2023, all residential central air-source heat pump systems sold in the U.S. must meet new minimum energy efficiency standards.

    "This trend is about improving the home experience — from programming devices that always behave the same to automating devices that anticipate and understand the homeowner's needs. As evidence, Grandview Research predicts that smart kitchens will see an impressive compound annual growth rate of 30.5% from 2021 to 2030."

    KC's View:

    Two things.

    First, of course "smart home automation" is going to grow over the next few years.  As technology improves and becomes more accessible, inevitably it will find more homes - in this case, literally.

    Second, the question is how much it will grow.  At the moment, numbers like "30.5%" - which is just the smart kitchen number, seem a little hyperbolic.  But that's just now.  Depending on how the economy improves, that number might end up seeming conservative.

    Published on: December 14, 2022

    •  Food Lion announced this week "the expansion of its Food Lion To Go grocery pick up service to 25 more stores in the Carolinas beginning Dec. 12. With the availability of this service at these new stores and the recent expansion of home delivery (to new zip codes in Georgia and South Carolina) the omnichannel retailer now offers Food Lion to Go pickup or home delivery at 86% of its 10-state operating area."

    Published on: December 14, 2022

    •  The Main Street Alliance this week has come out against the proposed Kroger-Albertsons merger:

    "“The proposed Kroger/Albertsons merger will be a disaster for small and emerging independent brands. Continued consolidation and monopolization will severely limit the ability of small companies to compete in the larger marketplace.

    "'Simply put, larger grocers have very little interest in working with small brands. It takes just as much (if not more) time and effort to onboard a small brand compared to a larger counterpart. The larger, more well-known brands will continue to flourish while small brands won't be able to ever make it to store shelves. Over time, all major grocery chains will look substantially similar with fewer choices offered to consumers,' said Main Street Alliance member Kyle Lafond of Wisconsin. 

    "Main Street Alliance is committed to ensuring small businesses are able to fully compete in the economy. The Kroger-Albertsons merger will have a severe impact on small businesses around the country and we urge the FTC to deny their request."

    •  FMI – The Food Industry Association said yesterday that it has "filed a letter opposing the U.S. Department of Labor’s (DOL) revamp of the rule that determines if a worker is an independent contractor. FMI’s letter calls on DOL to retain the current independent contractor framework and not replace it with the proposal to expand the factors for determination. FMI also joined several associations and businesses in signing a coalition letter opposing the proposed rule. 

    "The Fair Labor Standards Act governs how a business classifies a worker, including an independent contractor in a gig profession, as an employee for purposes of applying federal wage and overtime requirements. The proposed rule applies six or more factors in determining whether an independent contractor must be classified as an employee instead of the current policy that applies two core factors. 

    "'FMI members need the flexibility to utilize the staffing resources of vendors and contractors, such as on-demand delivery services, to address evolving requirements of our 21st century economy and workforce,' said Christine Pollack, FMI’s vice president of government relations."

    Published on: December 14, 2022

    •  Ahold Delhaize yesterday announced that Peter Agnefjäll is to be reappointed as member and Chair of the Supervisory Board at the Annual General Meeting of Shareholders on 12 April 2023.  Agnefjӓll has been a member of the Supervisory Board since April 2019 and was appointed Chair as per 1 January 2021. His reappointment for another four year term is subject to shareholder approval.

    Published on: December 14, 2022

    …will return.

    Published on: December 15, 2022

    Over the past few years, I've been pretty harsh in my assessment of a new mall - the SoNo Collection - that opened near me;  "mausoleum" is the kind of sword I've bandied around.  But now, as the pandemic recedes (?), I figured it was worth a return visit, and I was perfectly willing to eat my words.  But …

    Published on: December 15, 2022

    by Kevin Coupe

    Pew Research is out with a year-end report on what it calls its most striking research findings of 2022 - and one of them was that "roughly four-in-ten Americans (41%) say none of their purchases in a typical week are paid for using cash, a July survey found. This is up from 29% in 2018 and 24% in 2015.

    "Meanwhile, the portion of Americans who say that all or almost all of their purchases are paid for with cash in a typical week has declined from 24% in 2015 to 18% in 2018 to 14% today.

    "While growing shares of Americans across income groups are relying less on cash than in the past, this is especially the case among the highest earners. Roughly six-in-ten adults whose annual household income is $100,000 or more (59%) say they make none of their typical weekly purchases using cash, up sharply from 43% in 2018 and 36% in 2015."

    Now, that's an Eye-Opener.

    BTW … among the other "most striking" findings of 2022 were that "if recent trends continue, Christians could make up a minority of Americans by 2070," because " large numbers of Americans have left Christianity to join the growing ranks of U.S. adults who describe their religious identity as atheist, agnostic or 'nothing in particular'" … "a third of adults who use TikTok say they regularly get news there, up from 22% two years ago" … "most Americans who have experienced extreme weather in the past year – including majorities in both political parties – see climate change as a factor" … and "about 5% of Americans younger than 30 are transgender or nonbinary – that is, their gender is different from their sex assigned at birth, according to a survey conducted in May. By comparison, 1.6% of those ages 30 to 49 and 0.3% of those 50 and older say that their gender is different from their sex assigned at birth. Overall, 1.6% of U.S. adults are transgender or nonbinary – that is, someone who is neither a man nor a woman or isn’t strictly one or the other."

    All Eye-Openers.  In fact, I'd argue that one of the worst things that we can do - whether speaking as an individual, a business, or a culture - is to close our eyes to the forces that are shifting all around us.  We have to open our minds and, when appropriate, our hearts, to people who no longer fall into the neat definitions of the past, no longer act predictably or fit into traditional slots.

    George Bernard Shaw once said that "“Those who cannot change their minds cannot change anything.”  I don 't know about you, but for me this whole exercise - this whole conversation that we've been having for 21+ years - has been about trying to understand and appreciate change and, when possible, use MNB's soapbox to encourage change.  

    Published on: December 15, 2022

    Axios reports that a new survey of the CFO community by Deloitte released today reveals that "as the global economy roils from what feels like a relentless series of economic and geopolitical shocks — the era of the polycrisis — executives at some of the world's biggest companies are increasingly anxious … That often means taking fewer chances, pulling back on investment and hiring; the kinds of actions that could trigger the downturn they fear."

    Steve Gallucci, Deloitte's Global and US CFO Program Leader, tells Axios that "the aversion to risk means that companies are less willing to do big deals, increase capital investment or take on more leverage."

    "Looking inside their companies," Axios writes, "CFOs are worried about hiring in a tight labor market.  Looking externally, they're nervous about geopolitics — war, supply chain shocks, climate."

    KC's View:

    I met a guy this week (I'm hoping to have him on MNB as a guest in the new year) who has written a book about how it is almost always more dangerous to avoid risk than it is to embrace it.

    This goes back to something we talk about a lot here on MNB - how companies that invest and innovate in tough moments like these often can find them to be defining moments.

    Published on: December 15, 2022

    Bloomberg Businessweek reports that Dave Limp, the Amazon senior vice president in charge of the company's devices business, says "the company remains committed to building out the Alexa ecosystem despite job cuts in the once fast-growing division."

    The story notes that "when Amazon last month initiated its biggest-ever round of layoffs, they fell first and hardest on the Devices and Services group. The unit is responsible for the Alexa voice-activated assistant, Echo smart speakers, Fire streaming devices and home robots."

    But Limp says, "Is there some lack of commitment to Amazon’s devices and services business? By any measure, the answer is no.”

    Limp "cited continued big bets on Alexa, Zoox self-driving taxis and Kuiper internet satellites as evidence that Chief Executive Officer Andy Jassy is willing to invest billions on projects that might not pay off for years.

    "'I’ve yet to be in a meeting where he doesn’t call out those as big inventions and big bets,' Limp said. 'But at the same time, he also is inspecting them and spending time with them'."

    The story goes on:

    "Limp insisted that engagement with Alexa has been growing and that the number of people using the software is at an all-time high. But he conceded that the devices group is still not profitable, though he disputed published reports that operating losses in recent years had totaled as much as $5 billion. (Limp declined to provide a precise figure.)

    "The devices themselves are often sold at or near cost. Becoming profitable will require persuading customers who use the hardware to pay for such services as online shopping, music or audiobooks, Limp said."

    KC's View:

    I am reminded of what the British writer G. K. Chesterton once said:

    “Art consists in limitation."

    Sometimes, innovation thrives to a greater degree when borders are created.  And maybe that is exactly what Amazon is doing here.

    Published on: December 15, 2022

    From the Dallas Morning News, a story about how "the owners of nearby retail properties and buyers of land near future H-E-B stores are also excited to see the popular grocer expanding to Dallas-Fort Worth."  These companies believe in the aphorism that a rising tide will lift all boats, generating new occupants for shopping centers and new customers even for competing retailers.

    “It’s all about sales,” Herb Weitzman, founder of Dallas-based retail real estate firm Weitzman, tells the News. “Nobody in the state comes close to doing the volume H-E-B does.

    “These stores reach volumes that are so much greater than what the other grocery stores are doing.  They absolutely have an effect on the area and pull in new customers.”

    KC's View:

    I remember decades ago, Costco announced plans to open a new store in Danbury, Connecticut, not far from a then-new Stew Leonard's.  Leadership at Stew's was very clear - Costco would bring new customers into the area, and some of them would come to Stew Leonard.s which had a fundamentally different value proposition than the membership club.

    That's an important lesson for the Dallas-Fort Worth retailers.  It is hard to do, but if you are going to be effective with all these new customers, you have to have a differentiated offering.  You can't just hope to survive from crumbs off H-E-B's table, because that's neither nourishing nor sustaining over the long term.

    Published on: December 15, 2022

    The Associated Press reports that the environmental group Oceana says that "Amazon’s plastic waste jumped from 599 million pounds in 2020 to 709 million pounds last year — an amount that can circle the planet more than 800 times in the form of air pillows."

    That's an 18 percent increase, year over year - and also runs contrary to Amazon's narrative.  The company says "it has reduced its use of single-use plastic across its network …  Amazon also said it was able to reduce the average weight of plastic in a shipment by over 7% but it did not disclose if its overall plastic footprint grew between 2020 and 2021, when it was seeing a boom in sales due to the pandemic."

    “While we are making progress, we’re not satisfied,” the company said in the blog post. “We have work to do to continue to reduce packaging, particularly plastic packaging that’s harder to recycle, and we are undertaking a range of initiatives to do so.”

    KC's View:

    Both things can be true at the same time.  It all depends on how the measuring is done and, apparently, who is doing the measuring.   Where organizations can get into trouble is in doing  some kind of shell game, selectively reporting only numbers that support a position.  Not saying that is happening here, but a debate over numbers and honest reporting can impact credibility over the long term.

    Published on: December 15, 2022

    Associated Wholesale Grocers, Inc. (AWG) yesterday announced that its president and CEO, David Smith, will retire at the end of 2023.

    Dan Funk, AWG's COO, will assume the office upon Smith's retirement. 

    From the announcement:

    "Smith joined AWG in 2003 and became president and CEO in 2015. Smith has focused solely on independent supermarket operators' development and success throughout his career. He is in his 48th year in the industry and 36th year of service in wholesale.

    "During his time with AWG, he has seen the cooperative and membership grow from a Midwest company with 1,200 stores and three Divisions with sales of $3.2B to a sprawling central US company with retail sales exceeding $24B and wholesale sales exceeding $11B."

    Funk, ther company says, "started his career with AWG as president of Valu Merchandisers Company (VMC) in October 2012. After two years leading the AWG subsidiary, he assumed the SVP of the Center Store role. In December 2015, Funk became EVP and chief merchandising and marketing officer. In January 2019, he became AWG's first-ever chief supply chain and merchandising officer, and in 2020 became the COO of AWG."

    Full disclosure:  AWG is a longtime and valued MNB sponsor.

    Published on: December 15, 2022

    From Bloomberg:

    "Baristas at an experimental Starbucks-Amazon Go store in New York say the tie-up between the coffee chain and e-commerce giant has doubled their workload with no additional pay.

    "Some 30 Starbucks Corp. employees at the Times Square location will decide Dec. 15 whether to join Starbucks Workers United, which has already unionized hundreds of cafes in cities around the US. Inc. itself has been roiled by labor activism at its warehouses, but this is the first time workers have sought to hold a union election at one of its retail locations."

    The story goes on:

    "Starbucks workers stock Amazon inventory, such as prepared hot foods in the morning, which they say is a safety hazard. Employees claim they have been mildly burned while heating up Amazon foods. Management’s only response was to provide ointment, they said. 

    "Employees also clean both the Starbucks and Amazon areas. Amazon representatives worked frequently in the store when it first opened, but now only come in a couple of times a week to check on the technology, the workers said.

    "Employees, who filed for the union election in October, say the difficult nature of the job, compared with working at a regular Starbucks, has fueled high turnover."

    KC's View:

    In some ways, this seems to be emblematic of all the union issues that Starbucks is having, and probably those of Amazon as well.  The format has created twice the work, but the pay has not kept pace - which means that management is out of touch with the realities of this format's demands.  I think it can be fairly argued that often, when workers consider unionization, it is because they feel they have no voice, and that management has no ears.

    Published on: December 15, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the New York Post:

    "Amazon was hit with a $280 million lawsuit Tuesday for allegedly abandoning a company that makes specialized structures used by the e-retail giant’s robotics division.

    Vietnamese manufacturer Gilimex claims Amazon pushed it to produce the structures – called fabric pod arrays, or FPAs – during the pandemic but then promptly ended their deal in May, according to the lawsuit filed in New York Supreme Court.

    "The company is suing Amazon for negligent misrepresentation, unfair trade practices, breach of contract and breach of fiduciary duty, according to the complaint."

    Amazon has not yet commented on the suit.

    •  From Business Insider:

    "An executive involved in Amazon's 'earth's best employer' initiative was recently investigated by the company after multiple employees alleged she created a hostile work environment, according to people familiar with the situation.

    "The investigation focused on Justine Hastings, the vice president of human-resources science and chief of people-centered science at Amazon, the people said. They spoke on condition of anonymity so they could discuss sensitive matters. Their identities are known to Insider.

    "Hastings' team of researchers, data scientists, and economists is generally tasked with studying and improving workplace culture across Amazon. The group often conducts internal research and presents the results to Amazon's most senior leaders. Hastings reports to Beth Galetti, the company's top HR executive. 

    "The investigation over the summer followed allegations that Hastings overused the company's Focus performance-improvement program, often with no clear justification, nine current employees familiar with the investigation said.

    "Insider could not verify the outcome of the inquiry. The company's investigation lasted several months, much longer than the typical few weeks, seven people familiar with the investigation told Insider

    Published on: December 15, 2022

    •  The Wall Street Journal this morning reports that "sales of private-label products, which are typically cheaper than brand-name equivalents, have surged in recent months as shoppers look for ways to economize amid soaring inflation … Supermarkets typically make a higher profit margin on private-label goods than they do from selling branded products made by consumer behemoths such as Kraft Heinz Co. and Unilever PLC. Pushing lower-priced products could also enable grocers to win the loyalty of consumers by casting themselves as the shopper’s ally during difficult times."

    The story notes that "a recent survey of food retailers by FMI, a food-industry trade group, revealed that more than 80% of respondents plan to moderately or significantly increase their investments in private brands over the next two years."

    •  The FMI Foundation yesterday announced the 2022 Gold Plate Awards recipients during a livestreamed Gold Plate Awards Celebration, with Martin’s Super Markets winning among companies of 1-49 stores for its “Be A Family Meal Champ” program … SpartanNash Company willing among 50-199-store companies  for its “Our Family, Building Strong Families” program … and HY-Vee winning among 200+ store companies for its "special events that infused National Family Meals Month messaging with the celebration of National Hispanic Heritage Month."  In the supplier community, Pure Flavor won for its “Eat Well Together to Be Well Together” program.

    Honorable Mentions went to Brookshire Grocery Company, ButcherBox, Skogen’s Festival Foods, Merchants Distributors, Rouses Markets, and Weis Markets.

    A number of organizations earned blue ribbons for "effectively connected family meals to mental health benefits in their family meals programs," including ButcherBox, Coborn’s, Hy-Vee, K-VA-T Food Stores, Martin’s Super Markets, Pure Flavor, Rouses Markets, and SpartanNash.

    Published on: December 15, 2022

    MNB reader Tom Murphy weighed in on yesterday's predictions segment of The Innovation Conversation:

    Great predictions…well thought-out and reasonably likely!  Especially agree with the continued and accelerated movement to subscription services.  I wonder if any grocery has thought to use subscription services to drive store-brand growth.  For example, “Select a subscription to save 10% on your Ritz Crackers purchase or substitute our award winning crackers for 20% off?”  This would be a great way to highlight store brands and to capture value/cost sensitive customers in 2023 and beyond.

    Another MNB reader wrote:

    Absolutely agree with Tom that 2023 will be a tighter year for most households.  For us, the return to hybrid in-office work in mid 2022 quickly dissipated any gains from 2020 and 2021.  An additional $200 a month for gas, new work clothes in post-pandemic sizes (ugh, real pants), more expensive lunches and breakfasts, a hefty rent increase (Austin housing is a BEAST, man), higher grocery costs - all of this rapidly depleted our reserves.  2023 looks like less eating out, less discretionary spending, fewer luxuries, and fewer conveniences.  

    On another subject, from MNB reader Glenn Cantor:

    Although the Kroger-Albertsons merger appears inevitable, I disagree that the new, larger company won’t want to work with smaller brands.  The people managing local markets are smarter than that.  They know that small, unique, and local brands bring shoppers into their stores.  Grocery stores cannot be like National chain drug stores.  Shoppers expect them to offer unique products and ideas. Albertsons maintains the Acme brand in Philadelphia because it is locally relevant.

    One MNB reader had a question prompted by a Wegmans story earlier this week:

    I am curious what your view is on the Wegman’s calculus of keeping stores open?  Closing 27 sores over the years on a total store base of 109 current stores seems like a lot of turnover. Any concern there? 

    Nope.  That's over a lot of years … and just think about how neighborhoods, store formats and customers have evolved since Wegmans started.

    I got another email, this one from MNB reader Steven Ritchey, about my FaceTime from Arlington National Cemetery:

    Your commentary at the National Cemetery for a fallen friend was moving, poignant, and thought provoking.

    I came along too late for the draft having turned 18 in November of 1976, my senior year in high school.  

    I learned later I most likely would not have been taken. I was born blind in my right eye,  I am also partially deaf in my right ear.  The cause was my mother was exposed to the measles in her first month of pregnancy.  I'm very lucky the damage was not worse.

    I've often wondered how my life might have been different if I had served

    That's just one of several things I wonder about.  What if I'd gone off to college instead of commuting.  I never had the experience of going off and living in a dorm, living on campus and bonding with other people living away from home for the first time.

    I wonder how my life would have been different if I had served in the military.  Would I even have survived?

    I see people who brag about how much they love their country, when they've never served.  I don't brag about love of country, or boast about my patriotism, since I never put it to the test as others have.  I look at those who have, who put their lives on hold for several years, and how it's changed them.  Some changed for the better, some not so much.

    I go about my business and support the military in small, quiet ways.  We have a PX at church which supports a military base overseas, we send snacks, toiletries, and the like.  I used to send homemade beef jerky which was always at the top of the list of things they wanted and needed, at least I did until a new rule was made that we couldn't send homemade foodstuff anymore.  I understand that, one never knows what conditions those things were made in.  It's not much, but it's what I can do, hopefully I've helped make things a bit better for some of our service people.

    Yes,  your commentary from the National Cemetery was moving, poignant, and thought provoking.  It made me think of all these things, and much, much more.

    And, from another reader:

    A great reminder of the sacrifice of others so we can enjoy our lives. 

    I too did not serve in the military.  My father did a two year stint in the US Air Force before I was born, but he left after two years because he wanted to be a pilot.  Back then if you wore glasses, like he did, they would not select you for flight training so he went on to a very successful career as a petroleum engineer.

    In 2004 my wife and I were visiting France and being a history buff we went to Normandy to see where D-Day took place.  It was like visiting a cathedral.  We walked through the American cemetery above Omaha Beach.  The tombstones perfectly level and in perfect rows.  It is the only land in France that is deeded to the US Gov’t.  I saw a man in the near distance who looked old enough to be a WWII veteran and quite possibly a soldier who landed on the beach that day.  He had his head in his hands and was crying.  I wanted to go up to console him, thank him for his service,  but I too was crying profusely seeing in-person the results of war.  It is one of my biggest regrets that I couldn’t overcome my own emotions to help this veteran.  It still brings tears to my eyes every time I think about it.

    About 15 years ago, Mrs. Content Guy, one of our sons and I visited Normandy, accompanied by a good friend (the smartest person I know) named Fiach O'Broin.  It was a remarkable visit, and exactly what I was thinking about last week at Arlington.

    Another MNB reader had some thoughts about another subject:

    I understand your concern for supermarkets sharing market space with the competition as in restaurants.  but, honestly, that ship sailed many decades ago.

    I remember over 40 years ago seeing Night Hawk frozen dinners, which was a division of Night Hawk Steak Houses in Texas.

    Long before that, a restaurant owner named Stouffer figured out a way to quick freeze his Mac and Cheese, then Lasagna for people to reheat at home.  We all know who that is now.

    Today we see Whataburger and Chick Fil A ketchup, Mustard and sauces on grocery shelves.  The other day I saw Whataburger Pancake Mix.  We have  Marie Callenders Frozen Meals.  

    I understand the concern, but it started before I was born, honestly, and I've been around more than 6 decades now.

    However, one thing in my hometown that gave me pause years ago.  We have a chain of Barbecue Restaurants name Dickey's Barbecue, been around a long time.

    We also have a Dickey's Funeral home that started as a different name and morphed over the years.  It used to be owned by one of the cities first furniture store owners who was also an embalmer. He sold furniture on the first floor of his store, did embalming on the second floor. In later years he built an actual funeral home  down the street from where I grew up.

    It is two different Dickey's family's, they are not related.  But, anyone who's seen the movie, "Fried Green Tomatoes" will know exactly what I'm talking about.

    If they were somehow related, it would be one hell of a brand extension, and I wouldn't eat in their restaurants.

    I got several emails about my attendance earlier this week at a "boot camp" for public speakers, which I did to tune up my skills and get new perspectives on how to deliver value when speaking to audiences.  One MNB reader wrote:

    My greatest fear is not being relevant, admire your desire for "lifelong learning" never know when in life you hit your stride or create your masterpiece! 

    And, from MNB reader Tom Jackson:

    GOOD FOR YOU !  Like you I am still doing some speaking and facilitating, but my goal every day is to learn something new or get updated on new approaches or information regarding the retail food industry.  I applaud you for investing in yourself and wanting to get better and that demonstrates notable humility . I read your stuff pretty much every day and look forward to your next venture, but the good part is you will CONTINUE to write and speak well because  of your  positive approach to what you do so well ! 

    Thanks, Tom.  I appreciate it.

    Published on: December 16, 2022

    A few weeks ago, I did a short piece about Titan Caskets, which is a disruptive influence in the funeral home business.  The more I learned about Titan, the more curious I got … and so I arranged for a Zoom conversation with the company's COO, Joshua Siegel, in which we discussed the impetus behind the company's creation, Titan's somewhat unconventional marketing approach, and some commonalities that Titan's priorities have with with those that I think retailers should have.

    (One note:  a technical glitch affected the format in which we did this.  Hope you don't find it too distracting.)

    If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

    Published on: December 16, 2022

    by Kevin Coupe

    Axios reports that "dishes that are an aggressive mash-up of global flavors — like sashimi tostadas and tandoori spaghetti — will hit restaurant menus in 2023, a style that's been dubbed 'chaos cooking' … With dining out almost back to pre-pandemic levels, people continue to crave novelty in their meals."

    According to the story, " A review of year-end restaurant prediction reports reveals many common themes, such as the rise of 'eatertainment,' new interest in Latin American cuisine and nonalcoholic booze, and the emergence of a jumbled culinary genre called chaos cooking.

    "Eater describes chaos cooking as 'a new, brash food style' that's 'part neo-fusion, part middle finger.'

    "Examples include pork keema papadi nachos from Nashville's Chauhan Ale & Masala House and pastrami tacos from Delirama in Berkeley, California … Colombian restaurants are having a moment, as is other Latin and South American fare, as well as Hawaiian cuisine."

    Fascinating stuff … and I, for one, am all in for sashimi tostadas and tandoori spaghetti.  Plus, I have a hankering to travel to Nashville so I can visit the Chauhan Ale & Masala House.  (Not the kind of stuff we tend to get in suburban Connecticut … which may explain why I still love traveling.)

    I've always believed that this kind of stuff should not just be the province of restaurants.  It wouldn't be right for every food store in every place, but more than ever, people in all corners of the country have access to information about exotic foods and innovative meals via the internet and television programs that feature what sometimes is referred to as "food porn."

    Stores have the opportunity to provide Eye-Opening food experiences for their shoppers.  If I were a retailer, one of the things I would do is make sure that near the front of my store there would be a small display kitchen, and I'd be hiring chefs to come in on a rotating basis to make exciting, challenging, provocative foods that would appeal to people's imaginations.  Lots of aromas, lots of sampling … and in some cases, these chefs might be able to use their rotations to launch their own businesses.

    This is a moment to be bold, to be innovative.  It is a remarkable time in the world of food, and supermarkets should not let is pass by.

    Published on: December 16, 2022

    CNBC reports that "Walmart CEO Doug McMillon says the retail giant is managing for inflation and a slowdown in consumer demand that extends into 2023, and the economic conditions are changing what shoppers will see on the shelves of the nation’s largest retailer.

    “We’re managing this item by item, category by category,” McMillon says.  “We have a plan and adjusted our inventory to be ready for this next year."

    CNBC writes that "grocery sales, responsible for 56% of Walmart’s revenue, is a key inflation read for the McMillon and company."

    “What we’re seeing is that if you take the fresh food categories, commodities, things like proteins, things are starting to move. Chicken right now is more expensive, but beef is down. Fruit and vegetable is in pretty good shape,” McMillon says. “But dry groceries, consumables is where we’re seeing the most stubborn and persistent inflation, mid double-digit inflation. And we’re not hearing from our suppliers looking forward that’s going to come down soon."

    According to the piece, "McMillon said Walmart is continuing to look for new technology to maintain inventory and increase the speed of its e-commerce business. That includes a commitment to purchase thousands of delivery EVs from General Motors’ subsidiary BrightDrop and Canoo; the opening of next-gen fulfillment centers that use automation and artificial intelligence; and the acquisition of robotics startup Alert Innovation."

    KC's View:

    If fresh food costs are under control for the most part, and packaged food prices are staying stubbornly high, isn't this a great time for retailers to try to move shoppers into fresh food categories that tend to be higher-margin and more differentiating?  Maybe this is a time to turn traditional metrics on their head, and reorient food businesses toward food, with less of a focus on bottles and bags and cartons and jars.

    Published on: December 16, 2022

    The New York Times reports that "Amazon has agreed to a settlement with European Union regulators that will force the company to make significant changes to its business practices but also allows the e-commerce giant to avoid a drawn out legal fight and billions of dollars of potential fines, according to three people with knowledge of the deal.

    "The settlement, expected to be announced on Dec. 20, will end two antitrust investigations in Europe. The deal will require Amazon to give makers of rival products equal access to valuable real estate on its website, said the people, who would speak only anonymously before the official announcement. The company will also be barred from using nonpublic information it gathers about independent merchants to inform Amazon’s own product offerings, among other changes.

    The story says that the deal "will last five years and applies only to Amazon’s operations in the European Union, though the company could choose to adopt some of the changes outside the region. The deal helps Amazon avoid a fine of up to 10 percent of its global revenue, which was about $470 billion last year."

    KC's View:

    I'm not an antitrust expert, but I would have to imagine that the Federal Trade Commission (FTC) will be looking at the EU agreement for signs of how far it can push Amazon on making changes here in the US.

    Published on: December 16, 2022

    The Conference Board is out with a new economic forecast, predicting that "the global economy will grow 2.1 percent in 2023 … That’s down from 3.2 percent in 2022, and notably below the average pace of growth (3.3 percent) set between the Great Recession and COVID-19 pandemic."

    The forecast anticipates "global GDP to see slower, but still positive, growth through 2023," and that "regional downturns remain highly likely. Facing inflation, rapid interest rate hikes, and war, both the US and Europe are on the cusp of recessions. However, these should be relatively short and shallow, leaving growth for 2023 as a whole at zero in the US and 0.2 percent in the Euro Area."

    And, the Conference Board says, while there are "better days ahead," folks probably shouldn't get too excited:  "As inflation and COVID disruptions are tamed, the global economy is set for a modest revival in 2024, though growth will remain below the prepandemic average."

    KC's View:

    Everything is cyclical, and it is important to remember that sometimes one has to endure a certain amount of pain to get to the other side.  That said, the modesty of the recovery means that retailers able to offer consumers aspirational offerings without breaking the bank are likely to be winners.  

    Published on: December 16, 2022

    A coalition of organizations and advocates - including FMI-The Food Industry Association, the National Grocers Association (NGA), and the Consumer Brands Association (CBA) - is asking Food and Drug Administration (FDA) Commissioner Robert Califf "to make a commitment to support a new leader to oversee its food program in light of the Reagan Udall Foundation’s report detailing longstanding problems that have undermined the agency’s effectiveness.

    "The groups urged Commissioner Califf to name an empowered deputy commissioner to manage the program, one of the options recommended in the Foundation’s report to strengthen leadership and accountability at the FDA.  The coalition letter calls on Commissioner Califf to appoint a food safety expert by February to serve in that role on an acting basis while the agency works through how best to implement the empowered deputy commissioner model."

    An excerpt from the letter:

    "We believe the Expert Panel report the Foundation issued on December 6 accurately captures the problems involving the structure, leadership, culture, transparency, and accountability within the FDA’s foods program, all of which are preventing the agency from doing its best to protect consumers and enable industry to innovate. We also appreciate the Expert Panel’s conclusion that having a single leader who is empowered and accountable for the success of the foods program is central to its success; it is noteworthy that all of the panel’s options for structural change include this critical element. We also agree with the Expert Panel’s recognition that the inspection and compliance functions of the Office of Regulatory Affairs (ORA) needs to be integrated with the policymakers that reside in the FDA’s Centers.

    "We continue to believe that the option of placing an empowered food expert in a deputy commissioner position with line authority over all elements of a unified Human and Animal Foods Program is the critical element of a successful organizational and leadership structure."

    Published on: December 16, 2022

    Capterra - which describes itself as "a free online marketplace vendor serving as an intermediary between buyers and technology vendors" - is out with its 2022 Amazon Seller Survey, which suggests that "while just 31% of surveyed FBA (Fulfillment By Amazon) users currently sell on eCommerce marketplaces other than Amazon, 99% intend to sell on other marketplaces in 2023, including Google Shopping, Facebook Marketplace, and Walmart Marketplace."

    Here's the rationale:

    "Amazon has again raised fees for its third-party sellers, in response to the rising cost of eCommerce logistics. This time, it’s through a new holiday peak fulfillment fee for Fulfillment by Amazon (also known as FBA, Amazon’s sprawling in-house fulfillment service that makes Prime same-to-two-day delivery possible).

    "While fee hikes are nothing new for FBA users, especially since the beginning of the pandemic, small retailers may be approaching the end of their rope … Nearly half of small retailers on Amazon say recent fee hikes will make their business less profitable."

    The argument is that "the increasing cost of using Fulfillment by Amazon is a risk to Amazon, given sellers’ reliance on FBA and customers’ expectations for low prices and fast shipping. By making it more expensive for sellers and consumers to participate in its marketplace, Amazon is opening the door to rivals like Walmart, which offers similarly convenient shopping and selling experiences at a lower cost."

    KC's View:

    Are we getting to a tipping point where some of Amazon's e-commerce dominance may be diminished?  It kind of feels that way to me … it is likely to happen slowly, maybe even imperceptibly at first, but I have this sense that there's something happening.

    I suggested in our Innovation Conversation predictions segment this week that Jeff Bezos will return to Amazon as CEO in 2023.  The more I think about it, the more it comes back to this - Andy Jassy, the current CEO, is in the unfortunate position where he is battening down the hatches, patching holes, and shoring up defenses as Amazon deals with significant headwinds.  The question is whether, under these circumstances, Amazon is able to innovate and grow to the degree it needs to so that its influence and roles in our modern life remains undiminished.  If attention is steered away from shopper-centric innovation and toward operations-focused efficiency, the ground will have been prepared for a Bezos return.

    That's my prediction, and I'm sticking to it.

    Published on: December 16, 2022

    •  From Fox Business:

    "For the first time ever, some Walmart customers in Florida, Texas and Arizona will be able to have their packages delivered by drone.

    "Walmart's drone service officially launched for select customers in Tampa and Orlando, Florida; Phoenix and the Dallas-area just ahead of the holidays.

    "The nation's largest retailer has been working with national drone services provider DroneUp since 2020 when it began trialing deliveries of at-home COVID-19 self-collection kits.

    "Walmart announced in May 2022 that it was expanding its DroneUp delivery network to reach 4 million U.S. households across six states including Arizona, Arkansas, Florida, Texas, Utah and Virginia by the end of the year.

    "This means drone deliveries will be available in 23 cities across the nation by the end of the year, according to Walmart."

    •  Walmart said this week that it has launched a new Text to Shop offering, which it says is "seamlessly connected to your Walmart account, so we know your usual ordered items. Simply text the items you need, and they get added to your cart. Choose from the full selection of Walmart’s products, including items from your local store and from Text 'reorder' to quickly review and add your frequently ordered items to your cart."

    The Text to Shop experience is available on iOS and Android devices.

    Published on: December 16, 2022

    •  The Associated Press reports that "the number of Americans applying for unemployment benefits fell significantly last week, a sign that the labor market remains strong even as the Federal Reserve continues to raise interest rates in an effort to cool the economy and slow inflation.

    "Applications for jobless claims fell to 211,000 for the week ending Dec. 10, down by 20,000 from the previous week’s 231,000, the Labor Department reported Thursday. Jobless claims are seen as a proxy for layoffs, and last week's level was the lowest in more than two months."

    •  The Wall Street Journal reports that "November retail sales fell 0.6% from the prior month for the biggest decline this year, the Commerce Department said Thursday. Budget-conscious shoppers pulled back sharply on holiday-related purchases, home projects and autos. Manufacturing output declined 0.6%, the first drop since June, the Fed said in a separate report."

    •  From the Associated Press:

    "Starbucks workers around the US are planning a three-day strike starting Friday as part of their effort to unionize the coffee chain’s stores.

    "More than 1,000 baristas at 100 stores are planning to walk out, according to Starbucks Workers United, the labor group organizing the effort. The strike will be the longest in the year-old unionization campaign.

    "This is the second major strike in a month by Starbucks’ US workers. On Nov. 17, workers at 110 Starbucks stores held a one-day walkout. That effort coincided with Starbucks’ annual Red Cup Day, when the company gives reusable cups to customers who order a holiday drink.

    "More than 264 of Starbucks’ 9,000 company-run US stores have voted to unionize since late last year.  Starbucks opposes the unionization effort, saying the company functions better when it works directly with employees. But the company said last month that it respects employees’ lawful right to protest."

    Published on: December 16, 2022

    …will return next week.

    Published on: December 16, 2022

    In Thursday Night Football action, the San Francisco 49ers defeated the Seattle Seahawks 21-13.

    Published on: December 16, 2022

    I have to admit it - I watched the entire second season of "The White Lotus" on HBO.  I did this despite the fact that I wasn't an enormous fan of the first season.  But the buzz about the second season was so great that I decided to give it a shot … and found it to be every bit as irresistible as a great trashy novel, with a knock-out finale that aired last weekend.

    I have two favorite characters from the second season - F. Murray Abraham's Bert Di Grasso, who is an aging womanizer torn between regret and what he remembers as being lust, and Tom Hollander, who plays Quentin, a British expat in Italy with expensive tastes and questionable motives.

    One note:  there was a moment when I was at speaker's bootcamp earlier this week when several of us were saying that we hadn't seen the finale and were avoiding all press coverage because of concern about spoilers.  One woman said that she couldn't wait to get on an airplane so she could watch it, and my response was fast:  "You can't watch that on an airplane!  Somebody might be sitting behind you and will see your screen!  Plus, it could be a kid, or someone with sensitivity to sex and violence."

    Which also is my message to you.  "The White Lotus" is great, decadent fun, but be careful about where and when you watch it.

    I want to be clear about something:  This is not a movie in which I had the slightest scintilla of interest.  None.  But … this morning this trailer dropped, and suggests a subversive approach that I must admit got me a little bit interested:

    My wine of the week:  the 2019 Sokol Blosser Estate Pinot Noir, from the Dundee Hills of Oregon's Willamette Valley, which is perfect with grilled salmon or even a nice seafood risotto.  Fantastic!

    That's it for this week.  Have a great weekend, and I'll see you Monday.


    Published on: December 19, 2022

    We've talked about the ESG (Environmental, Social, Governance) movement from time to time here on MNB, but it was interesting to see a new report from The Conference Board - hardly a bastion of liberal progressivism - that spoke to the impact that companies can have when taking such an approach, as opposed to traditional philanthropy.

    Published on: December 19, 2022

    by Kevin Coupe

    The New York Times this morning has a piece about how some fashionistas are turning to a new fabric as they design their wares - grocery bags from FreshDirect.

    An excerpt:

    "Before the pandemic began, leather was a go-to material for the handbag designer Shelley Parker. But when life went remote during the lockdowns, Ms. Parker, 54, couldn’t stand the idea of buying it online. 'When I buy leather,' she said, 'I touch it, I feel it. I smell it.'

    "As her leather supply depleted in 2020, Ms. Parker started to experiment with a medium that by then had become more plentiful at her Queens apartment: the colorful plastic totes used to deliver groceries from FreshDirect, which feature the company’s logo surrounded by produce … Ms. Parker began by slicing the FreshDirect bags into pieces. With those scraps, she made a handful of purses and small pouches using techniques including plaiting, macramé and sashiko, a form of Japanese embroidery."

    The price tag for one such handbag:  $899.

    She's not alone.  A number of artists and designers are doing the same thing, trying to find new uses for the bags, which FreshDirect used to take back and recycle.  It stopped that policy back in 2020, however, which led many of its customers with way too many bags to keep.

    The Times also writes about Theda Sandiford, an artist and the senior vice president of commerce and digital at Def Jam Records, who "cannot look at the bags without being reminded of the pandemic during which they proliferated, and the grief and stress that it has caused. To help process those feelings, Ms. Sandiford sliced up FreshDirect bags that she had collected from the trash room of her apartment building in Jersey City, N.J., and wove the pieces through shopping carts to create artworks for a series she called Emotional Baggage Carts … The first cart she made using FreshDirect bags, called 'Wide Load,' now belongs to the Museum of Contemporary African Diasporan Arts in Brooklyn. She showed other carts, earlier this month, at the Satellite Art Show in Miami Beach, Fla. On her website, one cart she made using FreshDirect bags is for sale for $15,000."

    Now that's an Eye-Opener.

    Published on: December 19, 2022

    Reuters reports that the Washington State Supreme Court extended a block on a $4 billion dividend payment by Albertsons to its shareholders that would precede the company's planned acquisition by Kroger.

    The temporary injunction was imposed by a state court while the state's Attorney General appeals a previous decision to allow the dividend to be paid.

    In a statement, Albertsons said that it has "filed a motion to expedite the Washington Supreme Court’s review."

    And, the company said, it "continues to believe that the claim brought by the Attorney General of the State of Washington, and the similar lawsuit brought by the Attorneys General of California, Illinois, and the District of Columbia, are meritless and provide no legal basis for preventing the payment of a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors."

    Kroger, the country's second largest food retailer, said in October that it wanted to acquire fourth-ranked Albertsons for $24.6 billion, a move that would leave the newly combined company still at number two behind Walmart, but with some 5,000 stores around the US.  The deal is subject to regulatory approval by the Federal Trade Commission (FTC), with the divestiture of a number of stores in select markets expected.  However, the proposed deal has been roundly criticized by some lawmakers, labor groups and consumer advocates as being bad for competition and likely to result in higher prices for shoppers.

    KC's View:

    While under any circumstances a merger of Kroger and Albertsons would have gotten both legislative and regulatory attention, the $4 billion dividend payment has heightened both the heat and light around the proposed deal.  The dividend has been presented within the context of the merger agreement, though Albertsons has argued that it embarked on a return-value-to-shareholders strategy even before the merger was negotiated and actually has nothing to do with the deal.  But the fact remains that it was announced at the same time as the merger, and so at the very least, the optics are bad.

    I don't know a lot about the M&A business, and so I was interested to read a piece in the New York Times by Joe Nocera in which he looked at the proposed merger and dividend through the prism of how it rewards private equity.

    You can read the entire piece here, but it essentially points out that "dividend recapitalizations — or dividend recaps, as they are called — have become a fairly common trick in the private equity playbook. Last year, according to a Bloomberg report, companies borrowed around $80 billion — a record — to pay out dividends to their private equity owners. Critics say that dividend recaps too often leave companies without enough capital to withstand a business downturn … Dividend recaps are usually under the radar, as private companies are not required to make the same level of financial disclosure as public companies. The Albertsons recap, however, was right there in the merger documents — and critics quickly pointed to it as a classic example of how private equity firms take care of themselves ahead of the companies they own."

    The Albertsons dividend, Nocera writes in his Times piece, would happen despite the fact that "Albertsons did not have $4 billion in hand; it would have to borrow $1.5 billion, adding to its nearly $7.5 billion debt load."

    Now, to be clear, Albertsons argues that even after the dividend is paid, it will still have $3 billion in liquidity and well-positioned to continue competing even if regulators decide not to allow the merger to take place.

    Expect all of these numbers to be front and center as the FTC examines the rationale and likely impact of a Kroger-Albertsons merger.  Nocera writes in the Times that "even if the higher court rules against Washington State, and the dividend is paid, the scrutiny it has received suggests that government officials are no longer willing to shrug their shoulders at the excesses of private equity. Almost everyone I spoke to about Albertsons’s dividend mentioned the Toys 'R' Us bankruptcy in 2017. The toy company’s debt rose to $5 billion from $100 million while under private equity ownership; in the end, that debt load sunk it."

    I do think that there is one thing that the Kroger-Albertsons deal has lacked up to this point - a distinctive and credible voice that is able to put the facts in a context that creates a vision for how this deal, in the end, will be good for consumers, good for labor, good for suppliers, and not unfair to other retailers with a compelling competitive strategy.  The Nocera piece in the Times only underlines the need for such a voice.

    Published on: December 19, 2022

    Over the weekend, I got email from both Wegmans and Walmart that, I thought, illustrated different but equally compelling takes on how to market to consumers during the current holiday season.

    The notion of essentially rolling back prices at a time when inflation is driving up the cost of food and shoppers have a recessionary mindset (even if we are not officially in a recession), is a powerful one.  People trying to get the biggest bang for their buck this year are likely to find this simple image to be persuasive.

    Wegmans, of course, takes a different approach - the image is designed to make you hungry, and the instructions are there to make the cooking of a holiday meal to be both accessible and aspirational.  And, the idea that the credited author of the piece is an actual Wegman … well, that completes the picture of a family company dedicating to helping families eat better during the ultimate family holiday.

    Published on: December 19, 2022

    The Associated Press reports that "Amazon failed to properly record work-related injuries at warehouses located in five states, a federal agency said Friday while announcing it issued more than a dozen citations during the course of its ongoing investigation of the company.

    "The Occupational Safety and Health Administration said it handed out 14 citations during inspections over the summer at six Amazon warehouses in New York, Florida, Illinois, Colorado and Idaho.  The citations were for failing to record, or misclassifying, injuries and illnesses, not recording them within the required time and not giving the agency 'timely' records of such matters, OSHA said. The e-commerce giant, which earned over $33 billion last year, faces about $29,000 in penalties."

    Amazon spokesperson Kelly Nantel responded to the citations by saying that Amazon has a “robust safety program” to protect workers.

    “Accurate record keeping is a critical element of that program and while we acknowledge there might have been a small number of administrative errors over the years, we are confident in the numbers we’ve reported to the government,” Nantel said, adding the company was pleased OSHA acknowledged “all of the alleged violations are ‘other than serious’ and involve minor infractions.”


    KC's View:

    Wow.  A 29 grand fine.  Jeff Bezos probably loses that much in the couch cushions of his 417-foot, $485 million mega yacht during an average week.

    Published on: December 19, 2022

    Willamette Week has a long piece about the growth - and now, the apparent retreat - of the ghost kitchen business ion Portland, Oregon.

    Here's how WW frames the story:

    "A few years ago, restaurants started sprouting up in Portland like toadstools, with names like Mr. Beast Burger, Sticky Wings and Man vs. Fries. They served smash burgers, hot wings, and cheese fries to patrons ordering with a tap of their phones.

    "None of these places really existed—at least, not in the way people usually think of restaurants. They were “ghost kitchens,” where one or more cooks prepare as many as seven kinds of cuisine at commissary kitchens, brick-and-mortar restaurants and, in some cases, food trucks. At the edge of an empty parking lot. All for delivery only.

    "On apps like Uber Eats and Grubhub, ghost kitchens overwhelmed Portland’s brick-and-mortar restaurants floundering in the pandemic … And in this city, more than a quarter of the ghost kitchens appear to be run by one company: a privately held Miami-based corporation called Reef Technology, which likes to put ghost kitchens in trailers, or vessels as it calls them, and place them in parking lots around the city."

    But now, Reef seems to be in retreat, closing down a number of its ghost kitchens amid questions about the expertise of its staff, the conditions in which food was being prepared, and the viability of the long-term economic assumptions upon which the business was being built.

    You can read the entire piece here.

    KC's View:

    I've always thought that there is a place for ghost kitchens, but it seems to me that a couple of things have happened here.

    One is that the concept and its progenitors have slammed into the same headwinds as every other e-commerce and tech company.  Accelerated by the pandemic, but now dealing with inflation and a recessionary mindset.  Some retrenchment was inevitable.

    But, if you read the story, there's something else at work here - Reef appears to be a company driven by ambition, hubris and greed, without realizing that a dedication to food quality and authentic community relations was necessary to make its ghost kitchens work.

    I still think there is promise in the concept, but the positioning and priorities have to be right.

    Published on: December 19, 2022

    •  Meijer announced a new partnership with Uber Technologies "to offer on-demand and scheduled grocery delivery to customers" in Michigan, Indiana, Illinois, Ohio, Wisconsin and Kentucky.

    According to the announcement, "Beginning this week and continuing through the winter, nearly 250 Meijer locations will be available to shop through Uber and Uber Eats. This upcoming holiday season, customers will be able to order their favorite Meijer must-haves, from fresh and frozen turkeys to baked goods, produce and more, delivered on-demand, right to their doorsteps. Meijer locations will be featured stores throughout the Uber Eats app this season and will be included in Uber's Holiday Shop—a one-tap destination for holiday essentials."

    •  From CNBC:

    "Hundreds of Amazon workers will go on strike, Britain’s GMB union said Friday, marking a first for the company’s employees in the U.K.

    "Employees at Amazon’s Coventry warehouse in central England voted Friday to go on strike, with the walkout likely to happen in January 2023. Roughly 1,000 people work at the Coventry facility.

    "The workers are unhappy with a pay increase of 3%, or 50 pence per hour, Amazon introduced in the summer, which they say fails to match the rising cost of living. They want Amazon to pay a minimum of £15 an hour.

    "Inflation has soared due to increased energy costs and supply chain disruptions, with consumer prices currently at a 41-year high. The Bank of England hiked interest rates on Thursday in an effort to slow inflation.

    "Though Amazon workers in the U.K. have previously stopped working in August and on Black Friday in November in protest over the summer pay increase, these were spontaneous, unsanctioned withdrawals of labor.  This will be the first legally mandated strike to take place in the U.K." to hit Amazon.

    •  From Bloomberg:

    "German labor union Verdi called on Inc. warehouse workers to go on strike across the country during the holiday season, seeking to press the company for higher pay and to join collective bargaining agreements … Verdi called on Amazon employees at Bad Hersfeld, Dortmund, Graben near Augsburg, Koblenz, Leipzig, Rheinberg and Werne to join the strikes."

    According to the story, "The timing and location of individual walkouts won’t be announced in advance, the union said in a statement on Sunday. Amazon didn’t immediately respond to a request for comment."

    Published on: December 19, 2022

    •  Kroger Health, Kroger's healthcare division, last week announced an agreement with Prime Therapeutics LLC, described as "a diversified pharmacy benefit manager collectively owned by Blue Cross and Blue Shield Plans that serves more than 33 million people," that will allow Kroger's pharmacies to remain in-network.

    The announcement says that "this direct agreement demonstrates a continued commitment to provide millions of patients with quality, affordable healthcare services."

    •  Caribbean-based holding company Massy, which owns 57 stores in various markets there, announced that it has acquired Florida's Rowe's IGA Supermarkets, a seven-store independent, for $47 million (US).

    According to the announcement,  the acquisition "is aligned with the Massy Integrated Retail Portfolio's strategy to expand its retail footprint in the US market.  The acquisition will represent a 1% increase in the Massy Group's assets and is expected to contribute to an increase in the Group's profit before tax of approximately 4%. For the

    Integrated Retail Portfolio, the acquisition is expected to increase its profit before tax by 7%."

    •  Consumer Reports has announced "its support … for the USDA’s proposed regulatory framework for reducing salmonella illnesses from poultry. In a letter sent to the USDA, CR endorsed the proposal to test incoming flocks for salmonella contamination before they are sent to processing plants and called on the agency to focus prevention efforts on the strains that are most likely to make people sick."

    According to the announcement, "An estimated 1.35 million Americans are sickened by salmonella every year and nearly a quarter of those cases come from chicken or turkey.  Salmonella contamination is widespread in chicken in part because of the often crowded and filthy conditions in which they are raised. A recent CR investigation, for example, found almost one-third of ground chicken samples tested contained salmonella. Of those, 91 percent were contaminated with one of the three strains that pose the biggest threat to human health: Infantis, Typhimurium, and Enteritidis.

    "While the USDA currently requires producers to test poultry for salmonella, a processing facility is allowed to have the bacteria in up to 9.8 percent of all whole birds it tests, 15.4 percent of all parts, and 25 percent of ground chicken.  Producers that exceed these amounts are given what amounts to a warning, but not prevented from selling the meat … Under the USDA’s proposal, poultry producers would be required to test incoming flocks for salmonella before slaughter and provide documentation of salmonella levels or serotypes to processing plants. The requirement is meant to incentivize plants to implement measures to reduce the salmonella load in the final poultry product."

    Published on: December 19, 2022

    MNB reader Henry Stein sent me an email about last week's In Conversation piece with Joshua Siegel, COO of the Titan Casket Company:

    Amazingly educational and provocative interview with Joshua Siegel at Titan Caskets. Clearly a guy and company that recognized an unfulfilled consumer need, satisfied only by a near monopoly. No doubt, Joshua is well grounded and thinking way outside the box……

    And, from another reader:

    Just a wonderful interview ! Could not help but recall the “Chuckles the Clown “episode from the Mary Tyler Moore show years ago.

    One of the funniest episodes of television ever produced…

    On the subject of growing sales of private label, one MNB reader wrote:

    Private label is still just okay.  Even though there have been strides made towards improving quality, for most retailers it still does not match the quality of branded.  The consumers know this too.  The other issue I see facing more PL is that most retailers do not drive the PL like the brands do.  Unless you have “branded mentality” that drives PL, it will never meet the branded sales.  Also, add in the cost of goods along the entire supply chain, and you have PL costing that is much closer to branded.  Which hampers the ability for retailers to drive their PL direction.  PL is seen as a tool to separate them from their competition.  This may be true, but it also puts them on an island when it comes to cost of goods, instead of utilizing the brand efficiencies of scale.  It is a tricky path through a hedge of thorns.

    And, continuing our conversation from last week about the importance of continued learning, MNB reader Steven Ritchey wrote:

    Learning.  I am incessantly learning new things, from your site, from friends, from people I'm not friendly with.

    I want to continue learning until the day I pass on from this life.

    I have a good friend who is a true "Nerd."  He is the organist at my Methodist Church, yet is an ordained Lutheran Pastor.  I cannot begin to tell you all I have learned from this man, and not all about religion.  He sometimes calls me "Nerd Boy, " which from him is a high compliment.  He says it's because I'm insanely curious and am always asking questions, always wanting to know how something works, why one idea was successful and another one failed.

    I'm with you, I want to be learning every day for the rest of my life, and maybe pass some knowledge on to others along the way.

    Finally, this email on a number of subjects from MNB reader Brian Blank:

    I’m a little of two minds about your report on the SoNo Collection.  We visited it for the first time on Labor Day of this year, coming back from a trip to Queens and LGA (returning our grandson to his parents who’d been in the City for a wedding).  We thought about making a trip into Manhattan, but decided we’d rather get back on the road, especially since the weather was promising rain.  We were very excited when the mall opened, but never made it down there to check it out…living in central CT, it quickly became apparent that by the time we got all the way to South Norwalk, we may as well just go to NYC; this time, it was kind of a spur of the moment decision to pull off the highway and check it out.

    There were shoppers, but nothing crazy.  Labor Day would keep things slow, except that the weather *could* have driven people indoors since it wasn’t beach/pool weather.  But people here do tend to go out of town…  Also, the sheer size of the mall would disperse people.  The 3rd floor bar/restaurant at Nordstrom was quite enjoyable, and we encountered so many friendly and helpful staff at the Bloomingdale’s.  But other than Zara, there weren’t many support stores that pertained to us. (In fairness, Apple pertains to us, but we didn’t have any particular Apple needs that day.) Or for that matter, that I’d ever heard of—which could be indicative of our age, our gender, or our socio-eco (Hartford doing OK is different from Shoreline doing OK…).  We poked into a couple of stores but the stores I would automatically go into even if I didn’t *need* any thing (Vineyard Vines, Tommy Bahama, Gap, Banana Republic, to name a few) were notably absent.  I’m guessing at least two of those are probably well-established nearby with no need of joining a new mall.

    My local shopping this holiday season bears out that malls are less crowded than before - however the people in them are buying.  I noted in your video that it was clearly daytime, when people are working and children are in school (unless you recorded it over the weekend).  COVID, flu and other concerns I’m sure are keeping children off of strangers’ laps.  My shopping trips have been after work and on weekends.  Yes, I remember not only pre-COVID days, but also pre-Amazon days—malls were jam packed and opened early and stayed open late.  Long gone, sometimes to my frustration, sometimes to my relief.  (Definite relief that I’m no longer a mall worker!)  With that in mind, maybe your daytime assessment of mall traffic was a little unfair, but I can also see the many reasons why it’s on point as well.  Was a giant honking 3 level mall the best decision this far into the new millennium?  Probably not.

    Sorry for such a lengthy dissertation on a mall!

    Your eye-opener mentioning the changing demographics of Americans identifying as “Christian”, or more to the point, Americans no longer identifying as Christian, was in fact an eye-opener, but not for the reasons one might expect.  I took particular note that the narrative was about people dropping out of the faith to whatever degree, and not the typical narrative of “ethnic replacement”, which was not only a relief, but strikes me as more honest.

    Lastly, you have long been an advocate of lifelong learning, which reminds me of my grandfather on my mother’s side.  He passed away in 2011 at the age of 99, and loved learning the entire time.  One significant difference between you and my grandfather:  he retired, which started a whole new (and fortunately long) chapter of his life, full of enjoyment and the ability to continue seeing, doing and learning.  He loved his work (he owned a Super Dollar-later SuperValu store in my little hometown) but he appreciated being freed from it.  Then again, being your own boss is a bit different from being not only your own boss, but the boss of a whole store full of other people, isn’t it?

    Published on: December 19, 2022

    •  Argentina won the World Cup yesterday, defeating France in a thrilling 3-3 game that ended with Argentina winning in a 4-2 penalty shootout.

    •  In Week Fifteen of National Football League action…

    Indianapolis Colts 36, Minnesota Vikings 39

    Baltimore Ravens 3, Cleveland Browns 13

    Miami Dolphins 29, Buffalo Bills 32

    Philadelphia Eagles 25, Chicago Bears 20

    Detroit Lions 20, New York Jets 17

    Pittsburgh Steelers 24, Carolina Panthers 16

    Kansas City Chiefs 30, Houston Texans 24

    Atlanta Falcons 18, New Orleans Saints 21

    Dallas Cowboys 34, Jacksonville Jaguars 40

    Arizona Cardinals 15, Denver Broncos 24

    New England Patriots 24, Las Vegas Raiders 30

    Tennessee Titans 14, Los Angeles Chargers 17

    Cincinnati Bengals 34, Tampa Bay Buccaneers 23

    New York Giants 20, Washington Commanders 12

    Published on: December 20, 2022

    Today, I talk about an essay by Salon's Michael La Corte, in which he writes about his late father's food enthusiasms, which touched my heart but also revealed the degree to which food - any kind of food - can connect people.  It is, and always will be, a wonderful lesson for every food retailer.

    Published on: December 20, 2022

    by Kevin Coupe

    I frequently use Stew Leonard's - which happens to be my primary store, in Norwalk, Connecticut - as an example of effective communication with customers, and I'm going to do so again today.  This email, which I got yesterday, strikes me as the very model of talking to shoppers in a way that is relatable and accessible - it positions Stew's as being an advocate for the shopper, and presents meal and product options in a way that is less about selling and more about guiding.  In that way, it is very much an Eye-Opener.

    Published on: December 20, 2022

    From Bloomberg, a story suggesting that Jeff Bezos' prediction may be coming true - that eventually Amazon would be disrupted in the same way that is caused so much disruption.

    "The idea seemed absurd in the middle of the pandemic. Amazon’s online sales had exploded as people avoided stores. Restless consumers, buoyed by stimulus payments, were on a shopping spree. Between 2019 and 2021, Amazon’s online store sales grew 57% to more than $222 billion; subscription sales, which include its prized members’ service Prime, surged 65%; and its share of  consumer retail spending surged to overtake it biggest rival, Walmart Inc. It became more of a utility in consumers’ minds than an online store. What would we have done without online delivery? Without Amazon?

    "At the same time, retailers that had been lagging behind in e-commerce were forced to catch up — and fast. Nearly everyone from luxury names to department stores ramped up online. Walmart, for one, expanded its online assortment, opened its marketplace to international sellers, rolled out curbside and in-store pick up, and ramped up online order fulfillment out of its stores. In the first nine months of the pandemic, its online sales grew at twice the rate of Amazon’s, albeit off a far smaller base, according to data from retail technology research firm YipitData."

    Now, Bloomberg writes, "Amazon no longer seems unassailable. This year saw the world’s largest e-commerce company at one point lose a trillion dollars in market value as growth in online shopping slowed sharply and its forecast for the all-important holiday quarter disappointed. Prime memberships have flat-lined following the pandemic surge. And the firm is in the midst of its biggest-ever employee cull, targeting about 10,000 jobs across the devices and retail businesses.

    "Inflation-squeezed shoppers are more cautious about what they do with their wallets, and less willing to spend on novelties like $20 for an avocado chopper or $25 for a few wands that remove histamines from a glass of wine. Instead of impulse buys, people are spending more on groceries and other necessities — Walmart’s sweet spot. Amazon’s prices are still generally cheaper than Walmart, but Walmart does price matching all year around and its annual Walmart+ membership of $99 compares with $139 for Prime. With some back of the napkin math, a pack of toilet paper may end up cheaper to buy from Walmart than Amazon.

    "The dramatic shift in sentiment coupled with more aggressive online competition have seen Amazon fall back in the battle for consumers’ wallets as Walmart leverages its advantage as the country’s largest grocery store. So long as we’re in an inflationary environment, Walmart’s lead in groceries and Prime’s increased cost put Amazon on the back foot, according to Tom Forte, a senior research analyst with D.A. Davidson.   Research firm Insider Intelligence estimates that the brick-and-mortar giant will generate roughly $39 billion in online grocery sales this year, and widen its lead over Amazon through 2024."

    KC's View:

    First of all, let's stipulate that, as we've long said here on MNB, there is no such thing as an unassailable business model.  (Bezos always has known this.)

    I take issue with some of the Amazon Prime vs. Walmart+ comparisons.  Sure, Amazon costs more, but the Prime value proposition also is far greater, with discounts extending to Whole Foods and all sorts of benefits including access to Prime Video and live sports events.  If all you are worried about is the cost of toilet paper - and granted, that is the bottom line for a lot of folks - then maybe Walmart+ makes more sense.  And cents.  But this underlines the key difference between Walmart and Amazon that I've always emphasized, that Walmart just wants to sell you more stuff, while Amazon wants to be inextricably intertwined in every aspect of your life.  (Nothing wrong with either approach, but they are very different.)

    This is something that Tom Furphy and I have discussed in recent Innovation Conversations.  Amazon has some decisions to make - there is a lot of upside, as well as some risk, for Amazon to continue  investing in grocery.  But that's one of the retail categories where Amazon has not dominated, and so it makes sense to keep pushing.

    (By the way, Amazon's lack of dominance in grocery is one of the reasons that Kroger and Albertsons probably shouldn't be using it as a reason for them to merge.  Just sayin'…)

    Retrenchment and rightsizing makes sense at this moment for Amazon, but it has to continue innovating in customer-centric ways at a faster pace than the competition.  That's always been the secret sauce for the company, even when it flies in the face of conventional economic wisdom.

    I keep coming back to something that an MNB reader wrote in some time ago.  It used to be that Amazon obsessed about customer satisfaction at any cost, but lately it seems that it obsesses about customer satisfaction "at an appropriate cost."  That's a lot more than a semantic difference … if accurate, it would represent a cultural shift of significant magnitude.

    I'm also going to come back to my previous prediction - this story simply reinforces for me that it is better than 50-50 that Jeff Bezos returns in 2023 as the Amazon's CEO.

    Published on: December 20, 2022

    The Wall Street Journal reports that "retail chief information officers are weighing technology developments that would streamline the in-store payment process, refocusing on an area they say has lagged behind."

    The reason:  While the pandemic prompted retailers to put more of the energies - and money - into e-commerce, the end of the pandemic, combined with headwinds created by inflation and a recessionary mindset among many consumers, has resulted in e-commerce being "16.4% of all retail shopping, down from 18.8% at the height of the pandemic.  CIOs say they could risk losing their customer base to antiquated in-store technology, although cost could be a barrier to making some of these investments."

    According to the Journal, "Tech leaders at companies like Kroger Co., Nordstrom Inc. and Halfords are considering what new technologies could improve the payment process for customers, offering the type of seamless experience in stores that customers are used to when shopping online … Kroger is testing a shopping cart equipped with cameras and sensors that track what a customer is buying so that individual items no longer have to be scanned at checkout, said senior vice president and CIO Yael Cosset.

    "Mr. Cosset also said he is looking at the possibility of installing checkouts in individual aisles so that if customers want to quickly grab an item they can check out right there."

    At Nordstrom, Dennis Bauer, the company's president of credit, loyalty and payment services, "said he has his eye on a nascent technology that would allow payment to be received via a mobile phone rather than a traditional payment terminal."

    KC's View:

    One of the most important things that retail leaders can focus on these days is eliminating friction for the customer - and for internal operations - wherever it exists.

    That means both in-store and online.  Retailers can focus on both areas at once.  And, quite frankly, should … because while there may be some backsliding in terms of e-commerce sales, that's probably situational and temporary, reflecting both a post-pandemic mindset and inflationary realities.  Neither of which are permanent.

    Published on: December 20, 2022

    The Wall Street Journal this morning reports that "dollar stores, boosted by demand for less expensive groceries and goods in underserved rural areas, are far outpacing other retailers in opening new stores.

    "Bricks-and-mortar shopping has rebounded strongly since the height of the pandemic, with many companies now adding new locations. Leading the pack are the two largest U.S. dollar-store chains, Dollar General Corp. and Dollar Tree Inc., which combined expect to have opened more than 1,300 net new stores by the end of the fiscal year that ends in late January, according to the companies … Dollar stores’ expansion shows their ability to thrive in far-flung areas that are too sparsely populated to attract other major retail chains, according to retail and real-estate analysts. Dollar stores are able to bring national buying power to places where the cost of labor and operations is lower than more urban and suburban areas."

    And, some context from the Journal piece:

    "The growth of dollar stores has been significant over the past two decades. Dollar General now has roughly 18,800 stores across the U.S., compared with 5,000 in 2001, according to Coresight Research. Dollar Tree acquired Family Dollar Stores Inc. in 2015, and has since added more than 2,400 locations for a current total of more than 16,000.

    High inflation has increased the appeal of dollar stores’ relatively low prices. But the expansion of the sector is rooted in structural changes in U.S. shopping habits that predate the current economic cycle, according to John Mercer, head of global research at Coresight. Surveys have shown that members of the millennial and Gen Z generations are more price-sensitive and tend to look for savings on retail and household goods in favor of spending more on services and experience-based purchases, he said."

    KC's View:

    The growth of the dollar store format, and its perfect positioning at a moment of inflation and recession concerns, means that it may be the biggest threat to many conventional stores - especially those without a definitive and differentiated value proposition and brand image.

    I do find myself wondering, though … would it have made more sense for Kroger to acquire a dollar store chain rather than Albertsons?  Would such a move been more additive in terms of depth, and not just breadth?  

    Published on: December 20, 2022

    Amazon and Google-owned YouTube reportedly are the last players standing in the negotiations to gain the rights to NFL Sunday Ticket.

    According to The Verge, "Both companies have reportedly placed bids on Sunday Ticket and have already made forays into live sports, with Amazon Prime Video streaming Thursday Night Football and YouTube TV carrying a number of sports networks."

    Apple reportedly has pulled out of the competition "because it doesn’t 'see the logic'" of spending that kind of money;  reports suggest that Disney-owned ESPN may or may not still be in the hunt.

    The story notes that "DirecTV has owned the rights to NFL Sunday Ticket for nearly three decades, but these rights will expire at the end of this football season."  The Athletic has reported that "the NFL was asking for more than $2 billion per year for Sunday Ticket rights, a price that was at least $500 million more than what DirecTV had been paying to air Sunday games."

    KC's View:

    Amazon may be retrenching and rightsizing, but that doesn't mean it isn't spending money that it sees will advance its goal of inextricably intertwined itself in every aspect of our lives.

    Published on: December 20, 2022

    •  From the Wall Street Journal this morning:

    " Inc. agreed to settle two European Union antitrust cases related to allegations about its treatment of third-party sellers on its platform, ending some of the bloc’s most advanced cases targeting a U.S. tech company. 

    "The online retailer won’t pay a fine as part of the settlement, something it first proposed in July, but it will be forced for up to seven years to adhere to commitments to change certain business practices that EU regulators had alleged were harmful to third-party sellers on its platform. 

    "As part of the deal, Amazon is committing to give third-party sellers that use Amazon an equal shot at being selected as the default option for the buttons in Amazon’s so-called Buy Box and to qualify for its Prime shipping program. The Buy Box contains the 'Add to basket' and 'Buy now' buttons on the Amazon website. The company will also abstain from using nonpublic data about sellers on its marketplace in order to compete against them."

    •  The Wall Street Journal reports that the European Union has charged Facebook parent company Meta Platforms "with antitrust violations for allegedly distorting competition by tying its online classified ad service to its social network.

    "The European Commission, the bloc’s antitrust enforcer, on Monday issued a charge sheet against Meta that said the U.S. tech company automatically gives Facebook users access to its Marketplace service, potentially pushing aside competitors. The commission said it is also concerned that Meta imposes unfair conditions on competing for online advertising services through its terms and conditions.

    "Meta will have an opportunity to argue its case before the commission makes a final decision. If the commission concludes the company breached antitrust rules, Meta could face a fine of up to 10% of its global annual revenue."

    Published on: December 20, 2022

    •  From Bloomberg:

    "CVS and Walgreens, two of the largest US pharmacy chains, are limiting purchases of children’s pain-relief medicines amid constrained supplies and high demand.

    "CVS is restricting shoppers to two products each for in-store and online purchases. Walgreens is limiting online orders to six products and isn’t setting limits for in-store purchases. Walmart isn’t placing any purchase limits, while Kroger said it is asking shoppers to limit purchases to two kids pain medicine products. Rite Aid isn’t limiting purchases."

    The story notes that "pediatric medicines containing acetaminophen and ibuprofen, which relieve pain and reduce fever, have been hard to come by across the United States and Canada since at least October as respiratory viruses spread. Rates of hospitalization for respiratory syncytial virus, or RSV, and influenza have reached heights not seen in recent years. The drugs don’t kill the viruses, but they do relieve symptoms."

    •  The Oregonian reports that "gas-powered cars, light-duty trucks and SUVs are on their way out in Oregon.

    "Policymakers for the Oregon Department of Environmental Quality on Monday approved a rule that bans the sale of new gasoline-powered passenger vehicles in Oregon by 2035.

    "The effort comes as Oregon aims to cut climate-warming emissions by 50% by 2035 and by 90% by 2050. The transportation sector accounts for almost 40 percent of greenhouse gas emissions in Oregon and is the biggest source of pollution in the U.S.

    "The new rule, based on vehicle emission standards adopted by California in August, requires car manufacturers to sell a certain percentage of zero-emission vehicles – electric cars, plug-in hybrid electric vehicles and hydrogen fuel cell vehicles – as part of their total sales, starting with 35 percent in 2026 and increasing to 100 percent by 2035."

    The story points out that "the ban on gas cars does not affect cars already on the road and does not require Oregonians to stop buying gas-powered vehicles. Used gas-powered cars will continue to be available for sale within the state. Customers who want a new car that runs on gasoline will have to shop out of state.

    "But more than a dozen states also are looking to follow suit. Oregon will be the third state to adopt the standard. Vermont and Washington just adopted a similar standard. The Clean Air Act allows Oregon and other states to either follow federal vehicle emission standards or align with California’s more stringent rules."

    Published on: December 20, 2022

    Got the following email from an MNB reader:

    I spent over 35 years of my career selling retailer brand and manufacturer's brand products simultaneously to almost every retailer in North American with products across the store.  There are no absolutes in the business, some retailers/wholesalers demand national brand quality in their private brand products and test them regularly to ensure that is the case, while others might be willing to compromise for the right costs on some items.  There are brands that cannot be duplicated due to innovation, unique processing equipment or unique spice blends in the taste but if they are popular brands, you can be assured that a private brand manufacturer is trying very hard to duplicate it due to retailer demand. Retailers now have the scale to support retailer brand product innovation and to give manufacturers the volume needed to buy the same equipment that national brand manufacturers have.

    A little known fact is that  national brand quality can be a moving target and in many instances, products with the same ingredients, run on the same equipment can come out with slight variations in color taste and texture that are within an acceptable range.  It can also be difficult to make the exact products in different production plants, even with the same formula and ingredients due to local water and equipment set ups.  National brands constantly look to "value engineer" products and your favorite item can be very different when comparing samples over a long period of production runs as incremental changes in ingredients to save costs can create surprising differences.

    A consistent finding is that there are two distinct consumers with some buying mostly national brand products and others buying mostly private brand products in their shopping cart.   There is not much switching once a consumer has determined which product meets their needs for a given category.  When I have supplied the leading brand as well as the retailer brand in categories at the same time,  the  sales data backs this up across several different categories over long periods of time.  If low cost was the only factor, retailer brands would have more than the current low 20% market share, because surveys show that over 70% of shoppers buy retailer brand products, and if perceived higher quality was the only factor, then national brands would have more than their current share.  It is no different than someone who is a Cadillac buyer probably does not start off looking in the Chevrolet dealer and the Chevy Malibu shopper doesn't go to the Cadillac show room.  But a Cadillac buyer might go to the Chevy dealer for a pickup truck even though Cadillac may offer trucks.  The value proposition for each is derived from different factors and the factors are hard to change.

    We have such a large, diverse population that no one product or type of product satisfies everyone.  The successful retailer understands the make up of the population that shops their store and is able to merchandise a mix of retailer brands and manufacturer brands to meet the value needs of many different people at the same time.

    Published on: December 20, 2022

    In Monday Night Football, the Green Bay Packers beat the Los Angeles Rams 24-12.

    Published on: December 21, 2022

    by Michael Sansolo

    As any casual MNB reader knows, we love to find metaphors for business lessons in any place you can and might never imagine. But for today’s lesson, I even surprised myself.

    For more reasons than I can name, I have never been a fan of Howard Stern, the well-known, well-compensated and both widely loved and detested shock jock. His style of humor just never worked for me.  But balancing that with my love of Bruce Springsteen’s music, I decided to checkout Stern’s recent interview with The Boss as Springsteen is known. (Kevin wrote about it a couple of weeks ago;  You can find it on HBO Max and no doubt on the Sirius radio stations dedicated to both Stern and Springsteen.)

    The spoiler is this: the interview is fabulous and at no point does Stern behave unprofessionally or rudely, as used to be his wont. Instead he comes across as a knowledgeable Springsteen fan who can’t believe he gets to ask an endless array of insightful questions.  And Springsteen answers everything in his trademark style of humility, self-reflection and authenticity.

    Late in the interview they get on a topic that should resonate or at least challenge any business. Stern recalls that Springsteen once likened his career of music making to a continuous conversation with his fans, listeners and audiences. And as they discussed the topic, Stern admitted that his long career is basically the same thing.

    Honestly, your business or mine is the exact same as well. You have a long-running relationship with your customers whether you are running stores, offering services or producing products. Your hope is that they’ll stay loyal and keep buying from you.

    But you also know that your consumers (like Springsteen’s) change. They age, their tastes shift and your hope is that you move with them, retaining their business in the process even while you try to enlarge your audience. (Quite honestly, all the same might be said about what Kevin and I do here on MNB or what we continually do in our speeches. I promise you this: what we say and write today is miles away from whatever we were saying in 2001, when MNB began.)

    Springsteen’s take on that long-term conversation is especially fascinating because he knows that his concerts (and they are legendary) must include his standards be they "Born to Run," "Rosalita," "Born in the USA" or "Thunder Road."  But he talks about how his music and messages have shifted as he aged from a young rocker into a long-married senior citizen with adult children. In countless ways his lifelong conversation with his audience has evolved with him. Stern said the same applies to him.

    And it applies to all of us. We have to constantly challenge ourselves to find paths to reinvention, so that our offering is always fresh, relevant and current, yet at the same time, stays true to who we are. It’s not hard to think of companies that failed to do one or both parts of that challenging mix and no longer matter or even still exist.

    So whether or not you like Springsteen or Stern or whether you get to see the interview, take with you the concept of a lifelong conversation or relationship with your customers and question of how your conversation has evolved and grown to make it stronger today than ever.

    And remember, it still has to keep changing tomorrow and beyond. 

    Michael Sansolo can be reached via email at

    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.

    Published on: December 21, 2022

    The Information has a second-day piece that offers some context and analysis regarding yesterday's story about Amazon settling two European Union antitrust cases - not paying a fine, but agreeing to change business that regulators said hurt third-party sellers on its Marketplace platform.

    An excerpt:

    "Amazon agreed to let merchants selling under the Prime label use any delivery service rather than limiting them to its own. When Sen. Amy Klobuchar proposed that idea as part of a big tech bill earlier this year, Amazon argued that it had tried to let merchants use other delivery services, only to find they couldn’t make the time frames Prime customers expected. Amazon’s pushback is believable: Why would the company spend money building its own logistics networks if other suppliers could do the job just as well? The problem with the European settlement is that if non-Amazon delivery services get a product to a customer late, the merchant, the customer and the Prime brand will all suffer.

    "What Europe’s antitrust police forget is that the big tech companies are doing a good job of screwing up their own businesses without getting the bureaucrats involved. As we pointed out earlier this month, Amazon is jamming so many ads into its website that its search results are now often useless. Ditto for Google’s search. In fact, Facebook has hurt Facebook Marketplace by allowing scammers to proliferate on the site. (Why wasn’t that in the EC’s complaint?) If regulators just wait a bit, these companies will lose market share of their own accord, if they’re not doing so already. There’s no need for the Europeans to accelerate that process, particularly if it hurts consumers along the way."

    KC's View:

    I think this analysis points to a couple of things that are really important.

    First of all, there is the contention - which I think is true - that by forcing Amazon to adhere to practices that deliver a sub-par customer experience, it damages the company's brand, and shopper, and, where they realize it or not, the third parties that opt to use a logistics network other than Amazon.  Why should I be able to sell my product on Amazon, getting the advantages of access to all its customers, but then take a fulfillment shortcut that subverts the Amazon brand and disappoints the shopper?  That doesn't seem fair, or right.

    Second, I think the analysis correctly observes that companies like Amazon may be making some decisions - some, not all - that prioritize monetization over customer satisfaction.  In the old days, that would have been cause for excommunication from the Amazon community.  But these days, not so much.  Which, I think, opens the door for competitors and alternatives to make their case for why shoppers should patronize them and not Amazon.

    Published on: December 21, 2022

    The Detroit Free Press has a story about how southeast Michigan is home to what appears to be a significant expansion of Amazon Fresh supermarkets, with the suburbs of Plymouth and Dearborn slated to join Grand Blanc, Livonia, Rochester Hills, Roseville, Shelby Township and St. Clair Shores as locations where stores are being built.

    The speculation is that Amazon would like to open all the stores simultaneously, thus assuring itself a public relations splash;  Amazon itself is not commenting on its Michigan store plans.

    KC's View:

    A few things here.

    I have not been a fan of the Amazon Fresh format;  the stores I've seen strike me as being akin to dark stores that just happen to be open to shoppers, with more employees picking for online orders than there are customers.   That said, I've also maintained that the format is just one great retailing executive away from turning a corner.

    I do think that opening a bunch of them in one region at roughly the same time makes a lot of sense.  It could provide both synergies and momentum that could help the stores establish a tangible and viable presence in a way that a one-store-here-and-one-store-there strategy does not.  I'm a little skeptical about Amazon's ability to deliver fast on this promise - there's what appears to be an Amazon Fresh store under construction about 10 miles up the Boston Post Road from me that has been that way for what seems like years.  So, we'll see.

    That said, I don't envy Amazon Fresh going into Plymouth, Michigan, where it will have to face off against Westborn Market, a wonderful independent retailer that I have often describer here and in speeches as the best food retailer in the country that nobody ever has heard of.  Amazon Fresh may have the power of Amazon behind it, but in my view, Westborn is so good that I don't even think it will be a fair fight - I know where I would do my shopping.

    Which, in the end, is the point.  You do battle with companies like Amazon and Walmart and Kroger not by doing what they do, but by having a differentiated and distinct value proposition that you do better than anyone else.  Whining, it seems to me, is a lot less impactful than winning.

    Here's a FaceTime video I did about Westborn a little over five years ago.

    Published on: December 21, 2022

    The Information reports that if/when the IPO market begins to thaw - it has been virtually frozen recently because of inflation and recession concerns - "a path to profitability, have reconciled themselves to lower valuations and—perhaps just as important—are simply sick of waiting."

    Like Instacart.

    The Information writes:

    "Instacart may be first out of the gate among high-profile firms. It had planned to go public for much of this year, even while stock markets were volatile, before it iced those plans in the fourth quarter. Executives have said it intends to list soon. Through the first half of the year, it was on pace for more than $2 billion in 2022 revenue and generated about $30 million in earnings before interest, taxes, depreciation and amortization in the second quarter, a person familiar with the matter said. Instacart has turned a profit on that basis between 2020 and 2022, the person said.

    "Those numbers would make it slightly smaller but more profitable than delivery rival DoorDash was when it went public at the end of 2020 amid a boom for tech stocks."

    KC's View:

    I know that there are lots of folks obsessing about an Instacart IPO, but I'm not one of them - I'm more interested in how the company is evolving in serving customers, supporting retail brands, and continuing to serve as a way for retailers to compete with Amazon, Walmart and Kroger.

    Published on: December 21, 2022

    A new report out from digital insights firm Incisiv and digital solutions company Wynshop makes the following predictions for 2023:

    •  "Overall grocery spending will increase by 3-7% in 2023, as compared with 2022."

    •  "Digital grocery will continue to grow, with a predicted 87% of grocery shoppers ordering through digital channels for at least some of their grocery needs."

    •  "81% of grocery execs say they must upgrade their technology tools and regard "budget, integration, and talent" as their top 3 challenges for 2023."

    •  "In accordance with predicted shopper demand, 67% of shoppers will maintain or increase their spend on 'prepared food' in 2023."

    Published on: December 21, 2022

    •  From Axios:

    "Google and Meta, known together in the ad industry as the "duopoly," are expected to bring in less than half of all U.S. digital advertising this year for the first time since 2014 … The duo's ad dominance has for years made both companies the target of antitrust investigations and lawsuits. While they still tower over digital rivals, their momentum is starting to slow as competition moves in."

    Among the competition:  Amazon, which "is expected to capture 12.7% of all U.S. digital ad dollars, while Meta is expected to capture 17.9%."

    Axios writes that "with the ubiquity of screens in the home, workplace and on the go, virtually any company can target customers with digital ads, expanding the set of competitors for Google and Meta from other publishers and social media firms to streamers, e-commerce companies and beyond.

    "Streaming companies like Hulu, Roku, Paramount's Pluto and Fox's Tubi are collectively gaining digital ad market share as more television dollars flow away from traditional television."

    Published on: December 21, 2022

    •  Walmart yesterday "announced it has surpassed the first threshold required for finalizing the company’s $3.1 billion nationwide opioid settlement framework announced on Nov. 15. The company now has settlement agreements with all 50 states, including four states that previously settled with the company, as well as the District of Columbia, Puerto Rico, and three other U.S. territories, that are intended to resolve substantially all opioids-related lawsuits brought by state and local governments against Walmart. The participation exceeded the 43 states that were required to join the nationwide settlement framework by Dec. 15 for it to move forward. The settlement will take effect if a sufficient number of cities and counties also join.

    "Walmart believes these settlements are in the best interest of all parties and will provide significant aid to communities across the country in the fight against the opioid crisis, with aid reaching state and local governments faster than any other nationwide opioid settlement to date, subject to satisfying all settlement requirements. Walmart strongly disputes the allegations in these matters, and these settlements do not include any admission of liability. Walmart will continue to vigorously defend the company against any lawsuit not resolved through these settlements."

    Published on: December 21, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Wall Street Journal this morning:

    "Barnes & Noble plans to grow its fleet by 30 stores next year, the latest sign that big-box retailers are expanding again after years of shrinking their real-estate footprints.

    "The bookseller had been contracting for more than a decade as it struggled to compete with Inc. and other online retailers, and now has about 125 fewer stores than it did at its peak 14 years ago. But this year Barnes & Noble is opening more stores than it is closing, including two Boston-area stores in locations formerly occupied by Amazon Books.

    "Barnes & Noble stores have experienced robust customer demand coming out of the pandemic as all booksellers benefited from people turning to books while stuck at home, according to Chief Executive James Daunt. The company also benefited from improvements it made to stores while they were closed, he added."

    The story also notes that "several other big-box retailers are expanding again after years of shutting stores, a sign of the industry’s resilience emerging from the Covid-19 pandemic."  Among them:  Burlington, T.J. Maxx and Marshalls.

    However, the Journal writes, "Big-box operators are expanding more cautiously than in the past, retail and real-estate executives say, when companies opened too many locations too quickly and sales couldn’t keep up. Retailers today are researching potential locations extensively before signing leases and using sales and location-tracking technology to pinpoint where new stores will be successful and what size footprint is needed."

    In other words, they're being smart and strategic.  Never a bad thing.

    •  The New York Times reports that "New Zealand on Tuesday passed extensive legislation aimed at preventing minors from becoming smokers, including a lifetime prohibition on cigarette sales to everyone born after 2008.

    "Under the new laws, which take effect next year, the country’s smoking age of 18 would be raised year by year until it applied to the whole population. Beginning in 2023, those under 15 would be barred from buying cigarettes for the rest of their lives.

    "The legislation is the result of more than a decade of public health campaigns. In 2011, New Zealand first announced its plans to reduce smoking levels to below 5 percent of the population by 2025, a target extending across all ethnic groups, including Indigenous Maori and Pacific Island citizens. Over the years, the price of cigarettes has been hiked to among the highest in the world, with a pack of cigarettes costing about $20.

    "With these measures, smoking has declined overall. The national smoking rate for adults has halved in the past decade. Only 8 percent of New Zealand’s adult population smoked every day in 2022, according to government statistics."

    I'm not sure what I'm more impressed with - the fact that New Zealand has been so responsible in terms of public health policy, or that New Zealand apparently also has banned lobbying and lobbyists.

    Let's face it.  The world is a much more pleasant, healthier place for the vast majority of people now that smoking has been virtually extinguished from most indoor spaces, as well as ballparks and other outdoor public venues.  And now, New Zealand is taking the lead in going even farther in eliminating a product engineered to addict people and, potentially, kill them.

    •  The Wall Street Journal reports that Delta Air Lines "is expected to begin rolling out free wireless internet for its passengers as soon as early 2023, people familiar with the matter said.

    "The Atlanta-based carrier is initially expected to offer free Wi-Fi on a significant portion of its airplanes before turning on the service on more of its fleet through next year, some of these people said. The move is likely to intensify competition over in-flight offerings as airlines rebound from the pandemic."

    I would assume that we'll see similar developments at United and American - it is a reflection of the degree to which people want to be connected all the time, and expect (especially when paying robust amounts of money for airline tickets) it to be included in the fare.  It wasn't all that long ago when we couldn't get online at all when in the air;  now, if for some reason a plane's internet is not working, it feels like an outrageous inconvenience.  

    •  Marketing Dive reports that "Major League Pickleball (MLP) has named Margaritaville as title sponsor and introduced new branding as 'MLP by Margaritaville' … The hospitality company founded by Jimmy Buffett will develop fan activations and immersive entertainment for the league. Margaritaville positioned itself as a 'driving force' behind interest in the sport, with over 30 pickleball courts across its locations.

    "Margaritaville has served as the title sponsor of the USA Pickleball National Championships since 2018 and is the official lodging partner of the Professional Pickleball Association (PPA). The tie-up follows MLP restructuring amid growing brand activity around the sport."

    Just love this story - I love pickleball, and am a big Buffett fan.  Next question - will pickleballs replace beachballs at Buffett concerts?

    And another question:  Will Buffett write a new lyric to follow this famous one? 

    "I like mine with lettuce and tomato

    Heinz 57 and french fried potatoes

    Big kosher pickle and a cold draft beer

    Well, good God almighty which way do I steer

    For my … Cheeseburger in paradise …"

    Published on: December 21, 2022

    •  Alimentation Couche-Tard announced that Alex Miller, the company's Executive Vice President, Operations North America and Global Commercial Optimization, is being promoted to the newly created position of Chief Operating Officer.

    Published on: December 21, 2022

    We had a piece here yesterday about the growth in the dollar store channel, which led me to comment:

    The growth of the dollar store format, and its perfect positioning at a moment of inflation and recession concerns, means that it may be the biggest threat to many conventional stores - especially those without a definitive and differentiated value proposition and brand image.

    I do find myself wondering, though … would it have made more sense for Kroger to acquire a dollar store chain rather than Albertsons?  Would such a move been more additive in terms of depth, and not just breadth?  

    MNB reader Monte Stowell responded:

    Great question Kevin about Kroger buying a Dollar Store chain. Why has Kroger not adopted that it’s pricing and merchandising to go after the Dollar Store Customer?  All I know is lots of my friends are buying a lot of items at Dollar stores instead of Fred Meyer. All Kroger has to do is take a look at certain category items and create a Dollar store in their existing stores. Fred Meyer for example has plenty of square footage to do so. Sometimes the obvious cannot be seen and  the appropriate action to do something has not been acted upon. The pricing disparities between the Dollar Stores, er’ $1.25 stores and the conventional retailer had created the paradigm shift of where people are shopping. Opportunity awaits for major chains to wake up. Today's consumer is a pretty smart lot.

    Another MNB reader responded:

    Regarding the dollar store growth article, the expansion of these formats from the major chains in the channel has been interesting to watch over my 40 year career in the industry.  The new modern “dollar store” is a welcome sight in most rural markets by the consumer base, however, as with most retailers, many of the legacy stores are not well maintained, nor updated.  For example, in our small Missouri town, the dollar store competes with one regional grocery store.  The grocery store is newer, while the dollar store is very old, dirty, hard to shop and located in an area that is off the beaten path.  This same dollar store is very competitively priced versus the grocery store for consumers looking to stretch their dollars. 

    It reminds me of a chain that built stores based on cheap real estate, and as those stores continue to be profitable (often due to a consumer base with limited options in rural cities), Capex for those locations are often reduced or eliminated.  Horrible parking lots in need of repair, dilapidated store conditions, narrow aisles, no ease of shopping due to stock carts placed on every open aisle space, and out of stocks due to trucks not being worked to the shelf.  We know this is part of the limited staffing business model and “cash-cow” status of these legacy locations, but what could the volume be in these legacy stores if they were properly maintained? 

    And from another reader:

    Seems to me that Kroger is using their delivery program to combat $ stores. I live in an area that I pass 4-6 $ stores to get to grocery store. They often get my money, but increasingly their staffing and conditions have worsened (2 different chains). Seems to me where the store gaps lie, there are gaps in the available qualified work force. My guess is that the $ store needs to do more with each man hour to hit a return?

    On another subject, from another reader:

    The article mentioning Kroger looking at frictionless check out made me chuckle.  I’m a loyal shopper (not that I have a choice) of Kroger in their headquarter town of Cincinnati.  They don’t even have credit card readers where you can “tap” your card.  Their readers are probably 10 years old and work “most” of the time.