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    Published on: April 16, 2020

    The prospect of food shortages continues to worry some, especially as the coronavirus pandemic shutters some of the the country's most productive processing plants.  There also is the sluggish pace of shifting the supply chain from the largely dormant foodservice business to the consumer segment, which could cause some shortages.  All of which, MNB Content Guy Kevin Coupe suggests, points to yet another reason why retailers seeking a differential advantage need to put a relentless emphasis on developing a fresh food expertise.

    Published on: April 16, 2020

    The US Department of Labor announced this morning that 5.2 million Americans applied for unemployment benefits last week.

    The new total, which is slightly below those reported over the past two weeks, nonetheless means that more than 16 million people have applied for unemployment benefits in just the past three weeks.

    This is, Axios reports, that "more jobs have now been lost in the last month than were gained since the Great Recession."

    Furthermore, CNBC reports that JPMorgan Chase is projecting that by the end of the year, unemployment could hit 20 percent

    And, the story says, "the St. Louis Fed has predicted job losses of 47 million, which would equal a 32.1% unemployment rate."

    KC's View:

    It is a little early, but reading numbers like these make me want to pour out my coffee and replace it with Tito's.  or maybe some bourbon.  Or maybe just add some Pearse's Irish whiskey to my coffee.

    Published on: April 16, 2020

    The US Department of Commerce yesterday said that March retail sales were down 8.7 percent from a month earlier, which CNBC noted was the largest single drop ever in government reporting.

    In some ways, the 8.7 percent drop almost is the calm before the storm - April is expected to be worse.

    According to the CNBC story, "The economic reports showed the double whammy of state shutdowns in mid-March on two pillars of the economy — the consumer and business. The reports were even more dire than expected, and foreshadow even worse declines in April’s activity, with state shutdowns affecting areas responsible for more than 90% of the economy."

    One of the few bright spots in the retailing sector was grocery, which was up 25.6 percent in March;  health and personal care sales were up 4.3 percent.

    At the other end of the spectrum, however, was the foodservice and drinking sector, which saw sales that were down 25.6 percent.  That wasn't as a bad as the clothing-and-accessories sector, which was down more than 50 percent.

    The CNBC story notes that "March retail sales also showed barely a blip in online purchases, only up 3.1%, though consumers are shopping from home. The Commerce Department acknowledged it had difficulty collecting data as many businesses have shut down."

    KC's View:
      I fear that the devastation hitting much of physical retail will last for many months, but I do think that as we emerge from this tunnel, the truly differentiated businesses that have created offering both relevant and resonant are likely - or least more likely - to survive and maybe even thrive in the long run.

    But those that are saying, "when we get back to normal"?


    Published on: April 16, 2020

    After having shuttered a South Dakota pork processing plant because of a Covid-q19 coronavirus outbreak among its employees, Smithfield Foods now is closing two more plants, is Wisconsin and Missouri.

    The Wall Street Journal reports this morning that "Smithfield said that employees at all three plants have tested positive for the coronavirus and that the Missouri plant needed pork supplies from the South Dakota facility to operate."

    Some context from the story:

    "Since the start of the month, beef, chicken and pork plants have closed across the country after hundreds of workers contracted the coronavirus and hundreds more stayed at home for fear of catching it. The close quarters on meat-processing lines have made some meat plants Covid-19 hot spots.

    "Companies such as Smithfield, Tyson Foods Inc., Cargill Inc. and JBS USA Holdings Inc. have offered bonus pay to workers, while trying to distance employees with staggered breaks and shift-start times. In some cases meatpackers have placed barriers between line workers. Unions and worker-advocacy groups have called on meat companies to do more."

    While there have been some concerns raised about food shortages, "meat industry officials have said that supplies overall remain robust and that meat stockpiles were large before the U.S. coronavirus outbreak," the Journal writes.  "Restaurant dining room closures across the country mean that large quantities of ground beef and chicken breasts destined for food service are now sitting in storage and in some cases are being repurposed for supermarkets."

    However, Smithfield CEO Kenneth Sullivan has suggested vigilance:  "“Our country is blessed with abundant livestock supplies, but our processing facilities are the bottleneck of our food chain … For the security of our nation, I cannot understate how critical it is for our industry to continue to operate unabated.”

    The Journal reports that "Sullivan warned that the meat-plant closures are creating a domino effect in the food industry that lays bare the interconnected nature of the U.S. agricultural system. As meat plants close, production of chicken, beef and pork is declining and farmers are left with nowhere to send slaughter-ready livestock."

    Smithfield is owned by Hong Kong-based meat conglomerate WH Group.

    Published on: April 16, 2020

    From Reuters:

    "The coronavirus pandemic should be Amazon’s moment to shine. Some 90% of U.S. shoppers are under stay-at-home orders and Inc  offers grocery delivery through its 487 U.S. Whole Foods stores.

    "Instead, Whole Foods has been overwhelmed. Amazon Prime subscribers, who pay $119 a year for free delivery, are having difficulty finding Whole Foods delivery windows, according to interviews with a dozen customers and numerous posts on social media. And when their orders do arrive, many desired products are unavailable, they say."

    The story goes on:  "Amazon told Reuters the setbacks are due to the spike in demand and social distancing constraints in its facilities and stores.

    Amazon has said it would hire an additional 75,000 people for jobs ranging from warehouse staff to delivery drivers and switched a California Amazon grocery store and a Manhattan Whole Foods to online-only as demand for orders surges.

    "Whole Foods said its distribution network is strong and that it is working with suppliers to overcome increased demand and supply chain constraints without compromising quality standards that 'further limit the number of products we can source'."

    Amazon also has responded to the pandemic's stresses by putting new online shoppers on waitlists and prioritizing existing shoppers.

    KC's View:

    I don't think anyone would argue with the notion that Amazon has not lived up to what many consumers expected of it … but, without being an Amazon apologist, I'm not sure that those expectations were realistic.  Jeff Bezos likes to say that he always is thinking three and four quarters ahead, but the pandemic actually propelled the e-commerce business in general and the e-grocery business specifically ahead by six or seven or eight quarters.  Even Amazon has limits, and even Jeff Bezos is human.

    There is a line that Jean-Luc Picard utters in an old episode of "Star Trek: The Next Generation" … that "life itself is an exercise in exceptions."  I'm sure that Amazon and Bezos were confident in the company's ability to adapt to almost any circumstance, but that confidence, which may have occasionally strayed into arrogance or hubris, certainly has been tested by the pandemic.

    To me, the measure of Amazon in this environment will be the degree to which it learns from its current challenges and integrates those lessons into its strategies, tactics, operations, and culture.  If it does that, and if it is able to create effective and sustainable change where necessary and desirable, then it will have met the criteria once laid out by former GE CEO Jack Welch, who once said that "when change is happening on the outside faster than the inside, the end is in sight."

    The key is making change happen faster on the inside.  Y'think Amazon knows this?  Y'think Amazon is capable of meeting the challenge.

    On the other hand, Bloomberg notes that the pandemic has been good for Bezos in some ways:

    "The world’s richest person is getting richer, even in a pandemic, and perhaps because of it.

    "With consumers stuck at home, they’re relying on Jeff Bezos’s Inc. more than ever. The retailer’s stock climbed 5.3% to a record Tuesday, lifting the founder’s net worth to $138.5 billion."

    Published on: April 16, 2020

    Random and illustrative stories about the global pandemic, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  In the US, there now have been 644,348 confirmed cases of the Covid-19 coronavirus, with 28,554 deaths and 48,708 reported recoveries.

    Globally, we now have passed two million coronavirus cases, reaching 2,094,725 confirmed cases as of this morning, with 135,562 deaths and 520,930 reported recoveries.

    As a side note … my local Patch reports that in my home state of Connecticut, which lies just to the east of New York - which has been the nation's largest pandemic hot spot - authorities yesterday "announced another 197 coronavirus-related deaths Wednesday along with 766 new cases … State COO Josh Geballe said the high death toll was due to a catch-up period of processing data over the past two weeks. Part of that was due to a backlog from the Office of the State Medical Examiner."

    It is an example of how the virus does not respect borders or boundaries.  I live in a town where a large percentage of adults get on the train each morning to commute to New York City.  Those trains are running mostly empty these days, but a growth in cases and deaths is a clear reflection of the degree to which the pandemic is spreading.  Its impact should not be minimized.

    •  The New York Times this morning reports that New York Gov. Andrew Cuomo yesterday said "that he would start requiring people in New York to wear masks or face coverings in public whenever social distancing was not possible.

    "The order will take effect on Friday and will apply to people who are unable to keep six feet away from others in public settings, such as on a bus or subway, on a crowded sidewalk or inside a grocery store … The new requirements are bound to make face coverings an inescapable and perhaps jarring sight in New York City for the foreseeable future. They could also introduce a level of mutual obligation and civic duty about wearing masks in public that is more firmly established in Asia than in the West."

    Similar rules also were announced for Connecticut and Maryland.

    •  MarketWatch reports that Walmart-owned Sam's Club announced yesterday that "it will reserve Sunday morning shopping hours between 8 a.m. and 10 a.m. for healthcare workers and first responders. Previously, the hours had been set aside for Sam's Club associates to shop."

    •  From the Boston Globe:

    "Grocery delivery has gone mad.

    "People are setting alarms for the wee hours based on rumors that slots are released after midnight. They are jumping at five-day windows, when even five hours used to be unacceptable. Horribly, they are reportedly luring Instacart gig workers with big tips and then changing the tip to $0 once the job is done.

    "With health officials warning Americans to stay away from grocery stores, and Massachusetts bracing for a COVID-19 surge, scoring a delivery or pickup slot is like winning the world’s most pathetic lottery."

    The conclusion, after chronicling all the various tactics people are using to get food delivered:  "Oh, for the days when Thanksgiving shopping was stressful."

    •  Digital Commerce 360 reports that "Amazon Business is going all-out to build inventory of supplies that medical professionals, first-responders, scientists and others need to fight the coronavirus pandemic, the company says."  Those supplies include such personal protective products, or PPE, as facial shields and N95 masks; ventilators, digital thermometers, exam gloves and sanitizers.

    “Inventory of these critical supplies is currently very limited and products will have quantity limits,” Amazon says in the special COVID-19 supplies section of Amazon Business. “We are urgently working across suppliers and manufacturers to procure additional inventory of critical supplies.”

    •  From the Seattle Times:

    "In a step toward normalcy, two popular Seattle farmers markets — the University District and Ballard markets — will reopen this weekend, but with new rules, and a request that shoppers take an oath.

    "The markets, which had been closed due to the novel coronavirus pandemic, will be open from 9 a.m. to 2 p.m. Saturday.

    "The reopenings are part of a partnership among the Neighborhood Farmers Market Alliance (NFMA), Public Health Seattle-King County, the city of Seattle, and Mayor Jenny Durkan’s office."

    The rules include:  "Modified layouts to ensure 6 feet to 10 feet between vendor booths to allow for greater circulation and distance … Limited market entrances to control capacity and foot traffic … Hand sanitizer provided at Market Manager tents, with public hand washing stations available in the markets … No sampling or prepared food until further notice … No music, entertainment, cooking demos, or public seating areas."

    Baby steps.  But welcome.

    •  In Minnesota, the Star Tribune reports that "Best Buy will furlough 51,000 store employees in the U.S., or about 40% of its total workforce, as its stores remain closed aside from curbside pickup.

    "The Richfield-based retailer's sales were up 4% heading into stay-at-home orders because of the coronavirus pandemic — and surged 25% in one mid-March week as consumers prepared to hunker down and rushed to buy computers, keyboards, webcams and freezers.

    "But while Best Buy continues to see strong demand for products, it said Wednesday that sales have plummeted 30% in the last month since stores have closed to the public."

    •  The  Financial Times reports this morning that Amazon is closing its warehouses in France for four days "as it races to comply with a court order to limit its sales to essential products, following a high-profile battle with a French union over protections against Covid-19 for its employees."

    A French court this week ordered Amazon only to ship products deemed "essential" during the coronavirus pandemic "until it did a systemic assessment of worker safety at its warehouses."

    That order, FT writes, "followed inspections by the government's worker safety regulator and other watchdogs, which found problems at five of Amazon's six warehouses, according to Le Monde newspaper, including workers being unable to respect social distancing rules, and a lack of hand sanitisers."

    FT notes that "the dispute comes as Amazon workers in Italy, the US and the UK have also raised concerns about whether it is possible to practise social distancing and hand washing in the massive warehouses. French labour law gives employees more protections than they have in places such as the US, so unions have used the courts to press for more action against Covid-19."

    Amazon reportedly will ship products into France from other countries, and will allow third-part vendors to sell in France on its site as long as they handle their own fulfillment for the time being.

    The reaction from the French public has been predictably split (and, I suspect, would be replicated in other markets if Amazon had to curtail its operations for any period of time).  On the one hand, people celebrated a victory for labor interests … but other people went on social media to ask, where do we shop now?

    The simple reality is that while Amazon is a for-profit company that is a shining example of modern American capitalism, it also has become a kind of public utility in terms of its ubiquity and the expectations of its customers.  That may ultimately be an uneasy tension that is hard to resolve.

    •  The Associated Press reports that TV cooking show host Rachael Ray is responding to the pandemic by taping a new show, “#STAYHOME With Rachael” two days a week from her home in upstate New York.

    According to the story, "She wears sweats and no makeup, cooking low-budget meals based around pantry staples like chickpeas and pasta, offering a refreshing peek into her kitchen — she misplaces the garlic sometimes — and a comforting smile.

    "'This is a weird time. I can’t say there’s a silver lining ... but there are found moments every day,' she said at the start of the first at home show.

    "She recently announced her organizations will donate $4 million to several charities including food banks and relief funds for laid off restaurant workers, saying she wanted to “help people more than just, 'hey, here’s three things you can do with canned tuna’."

    •  The Wall Street Journal reports that you can add the Tour de France to the list of sporting events delayed by the pandemic.  Organizers announced yesterday that it will be delayed two months, with the Nice-to-Paris event now scheduled for August 29-September 20.

    The story points out that "the dates are more aspirational than etched in stone. Holding the race in August assumes the absence of a second wave of the coronavirus pandemic and that the French government will still be on board by then.  But the Tour insisted that it could not imagine outright cancellation. In the race’s 117-year history, only the two World Wars have prevented it."

    But right now, the Journal writes, "Imagining a three-week bike race that draws 10 to 12 million fans to the roadsides is harder for France right now than picturing bread without a crust. The entire country is under lockdown until May 11 and cycling more than a kilometer from your apartment is banned. Travel from abroad is suspended until further notice. And the peloton itself, with more than a hundred cyclists riding, breathing and spitting in close quarters, could be considered a germ-laden mass gathering."

    •  Finally, a lovely story from the Seattle Times about 96-year-old James Thompson, a World War II veteran who, when he contracted the Covid-19 coronavirus, was given such small odds of surviving that he was moved into comfort care, not intensive care.

    But after a lifetime of experiences that has given him a plethora of stories to tell, Thompson wasn't quite done … and now he is out of the hospital.

    "“He’s a tough old (bleep),” says his son Jim Jr. “Plus keep in mind what’s important here, which is that now he’s got one more story to tell.”

    You can read the piece here.

    Published on: April 16, 2020

    California-based Raley's yesterday opened a new flagship store - right in the middle of California's shelter-at-home policy that has roiled the retailing business.

    The store is in Sacramento's Land Park community, which the company points out it has served since 1941;  the new store, it says, "provides a more modern shopping experience centered around the company’s health and wellness vision."

    From the company's press release:

    "The 55,000 square foot store, located at the corner of Freeport Boulevard and Wentworth Avenue, has a large selection of quality prepared foods. Specialized culinary offerings include fresh juices, smoothies, specialty toasts, acai bowls, sushi, a meat carving station, hearth baked pizza and sandwiches, and a gourmet salad bar and hot food case. However, self-serve offerings are temporarily closed out of an abundance of caution. The store also expands Raley’s partnership with Chocolate Fish Coffee Roasters, offering a variety of coffee and tea drinks from the Sacramento-based coffee company.

    "For customers in self-isolation and for all who take advantage of Raley’s online ordering platform, eCart, the store can process up to 250 orders for pickup or delivery per day. Pickup customers have access to covered, pull-through parking spots, and the proximity of those spots to eCart storage will significantly reduce the wait time for customers when they arrive."

    “For 85 years, Raley’s has been committed to serving our communities, even during uncertain times,” said Keith Knopf, Raley’s President & CEO. “Today’s unique situation is no different. It is our hope that opening a modern, customer-centric store in Land Park will help the community during this challenging time. Our team members are eager to serve our neighbors.”

    KC's View:

    I don't report on every new store opening during more traditional times, but I am thrilled to take note of this one … because the idea of a new and improved store being positioned to serve an old neighborhood is such a lovely slice of normality.

    Kudos to Raley's.  

    Published on: April 16, 2020

    USA Today reports this morning that JC Penney, suffering from both longtime struggles and recent issues created by the coronavirus pandemic, is considering filking for bankruptcy protection, though it also is considering "other options, including out-of-court debt restructuring."

    The story notes that JC Penney needs to ""rework its unsustainable finances and save money on looming debt payments" in hopes of continuing operations … With all of its stores temporarily closed because of the coronavirus, J.C. Penney is bleeding cash while it awaits the chance to get back on its feet."

    KC's View:

    Not to be cruel here … but does anyone actually think that if JC Penney manages to resolve its immediate problems that it actually will be able toi convert itself into a vital, vibrant, relevant 21st century retailer?

    Just curious.  Because I've seen absolutely no evidence of this ability or even a recognition of what needs to be done to achieve this goal … which, I think, has to be the goal.

    Published on: April 16, 2020

    •  Sprouts Farmers Market announced that it will "expand its grocery pickup service with Instacart to all of its more than 340 stores by early May as an added convenience for shoppers during this incredible time of need. The rapid expansion will first roll out to Los Angeles and Central California locations. Additional local market expansion details will be announced later. Before this announcement, Sprouts offered pickup at 55 stores and grocery delivery in all major markets via Instacart."

    •  How the world has changed.

    Variety reports that "Netflix — for now — is worth more than Disney, after the streaming company’s shares hit an all-time high Wednesday."

    The explanation:  An increase in Netflix's stock price gives the company "a current market capitalization of $187.3 billion, putting it just over Disney’s $186.6 billion, after the media conglomerate’s stock finished down 2.5% amid a broader market decline Wednesday … Investors clearly are expecting Netflix to benefit from the COVID-19 crisis, with millions of people under stay-at-home orders — and looking for a diversion."

    Published on: April 16, 2020

    •  Reuters reports this morning that the Pentagon's Inspector General is saying that it cannot be determined whether the Trump administration improperly influenced the decision to award a $10 billion could computing contract - known as the Joint Enterprise Defense Infrastructure (JEDI) - to Microsoft instead of Amazon, because several conversations were classified by White House officials as privileged “presidential communications.”

    Amazon originally was the favorite to win the award, and blamed its loss of the contract on Trump's antipathy for its CEO-founder, Jeff Bezos, who in a private investment also owns the Washington Post, which has been aggressive in its coverage of the administration.

    Predictably, the report's lack of a conclusion prompted very different reactions, with the Department of Defense saying it should end any speculation about improper influence by the White House, and Trump critics saying it continues a "troubling" trend of improper presidential influence and resistance to oversight.

    Published on: April 16, 2020

    Got the following email from MNB reader Warren Solochek:

    Kevin, age-wise I am a contemporary of you and Michael Sansolo. To-date I had never used Instacart at a grocery store or mass merchant because my wife likes to select her own fruit, vegetables, meat and poultry. But, given the current circumstances brought on by the presence of the coronavirus, we agreed to try using Instacart at Costco. I have to say, the overall experience was much better than I had anticipated- they exceeded my expectations in several ways.

    1. Though I had a delivery window set, I expected that they would make the delivery towards the end of the 2 hour window. I was wrong. Not only did they tell us via text that they had started shopping for us, they also told us as they went through the store if they could not find items on our list. In the end, they arrived 15 minutes into the 2 hour window of delivery.

    2. Frozen items arrived still frozen. Fruits and vegetables were of good quality (I know because my wife ok’d each item). I was told what the shoppers could not find as they shopped on our behalf, and what was substituted for an out of stock item if there was an opportunity to do so.  In the end, they got everything we had on our list, except for 1 item. Given our in-person shopping experience at local grocery stores in Chicago in the past month, this success rate was much higher. Parenthetically, our list included both paper towels and TP, which I had doubted we would get. Both made it to our doorstep. 

    3. The delivery team was polite and was willing to bring each box/package up our front steps to the front door. They did not ask for a tip, it was included in my order. So, I knew a tip was provided up front, less to worry about. They dropped off their load and moved on in a very short amount of time.

    This is not a service I would have chosen to use had COVID-19 not hit the US. But, now that I have used it, I plan to do so again. This experience has encouraged me to try more grocery shopping on line. I am an avid Amazon Prime customer, and have switched much of my non-food purchasing to Amazon because I appreciate their scheduling and updates to delivery dates if there is a delay-and for several items recently if the items are to be delivered sooner than originally planned. It is all about setting my expectations, which I have to admit are pretty high these days. Instacart certainly exceed my expectations on this shopping trip- hopefully they will continue to do so in the future.

    To be clear … I have never argued that Instacart is bad for consumers.  What I have argued is that Instacart in the long run will be bad for its client retailers because it disintermediates the retailer out of the relationship … people think about shopping Instacart instead of the store.   And, as Instacart starts opening dark stores that will mean it won't need client retailers anymore, the threat becomes more serious.

    MNB reader Tom Jackson reacted to my suggestion yesterday that temporary raises could create problems for retailers when they attempt to back wages down to previous levels, and my idea that care packages - toilet paper, sanitizer, etc. - could be used to reward employees:

    Kevin ---I agree with you on the pay raises.  I suggested using bonuses or other forms of meaningful recognition---but not pay raises. You are so right ---2 months from now they are going to have some disappointed employees. Also, I like your idea of toilet paper, paper towels , etc. but not using it as compensation, but  more of a nice/kind gesture.

    MNB reader Mark Heckman had a thought about the prediction that some distancing policies may last until 2022:

    Prepare for the worst, and be pleasantly surprised when it does not occur.   In this environment,  two weeks is an eternity in terms of prognostication…two years is beyond conjecture, even if it is science-based.

    And finally, one MNB reader reacted to yesterday's story about dire predictions by the International Monetary Fund (IMF):

    I am sure the IMF will be able to persuade policymakers as long as they use Dan Briggs, Jim Phelps, or Ethan Hunt and their teams.


    Kudos for knowing that in addition to the International Monetary Fund, IMF also can refer to the Impossible Missions Force (as in "Mission: Impossible").

    And extra credit for knowing that in addition to the current leader, Ethan Hunt (Tom Cruise) and the previous leader, Jim Phelps (Peter Graves … I don't count Jon Voight's portrayal in the awful Mission: Impossible movie that turned Phelps into a villain), the original leader of the IMF was Dan Briggs, played by Steven Hill (who went on to play D.A, Adam Schiff in "Law & Order").

    Published on: April 16, 2020

    I'm happy to announce that tomorrow, between 5:30 and 6:30 pm EDT, we're going to do it again … an MNB Virtual Happy Hour.

    We did one back on March 27, and people seemed to enjoy it, and so, since we're all still grounded for the duration, I thought it was worth another effort.

    The folks at GMDC have once again agreed to sponsor and host it, and here is the link.

    Hopefully, you can put it on your calendar … choose a libation for Happy Hour … and then prop up your laptop or warm up your computer for a conversation and a drink.  (You don't have to let me know you're coming, but it would be nice to know.)

    One other thing - if you are on the west coast and the timing is a little early for you, I'm going to do another one on Friday, May 8, but I'll do it at 5 pm your time just to make it easier.  Of course, everybody is welcome to join either one or both.

    Looking forward to seeing you!