business news in context, analysis with attitude

Published on: April 17, 2020

MNB Content Guy Kevin Coupe finds a story that strikes him as so outrageous that it prompts him to say, "You gotta be kidding me!"  And then, go figure ... it provides a metaphor that is no joke.  And maybe a business lesson.

Published on: April 17, 2020

This week, MNB has had a couple of stories detailing treatment of vendors by two companies - Ahold Delhaize and SpartanNash - that suppliers found to be tone-deaf, insulting, and, in the end, bad business.

Now, both companies seem to be backing off, making nice with their vendors.

First, some context.

In the memo to vendors provided to MNB by one of those suppliers, Ahold Delhaize thanked the manufacturers for "continued support" meeting the challenges of the pandemic, and told the companies that it needs their help "in making sure we deliver on our commitments."  But it also told the vendors that "pandemic-related costs will be evaluated. As we continue to evaluate the impacts of this pandemic on our business, we will review ancillary costs we are incurring and revisit with each supplier as needed at a later date."

Suppliers with whom MNB spoke saw the memo as serving them notice that Ahold Delhaize intends to charge them for as many of the costs incurred during the pandemic as it could.   And they were not pleased.

And then several vendors provided MNB with a letter from SpartanNash to its suppliers saying that because of supply chain issues that caused some trucks to come in light, the company "made the decision that beginning with the ship date of March 16, 2020 and until the COVID-19’s impact on deliveries is rectified, SpartanNash will deduct for freight dollars" where it deemed appropriate, and that "SpartanNash cannot be burdened with a higher landed cost of goods due to product availability issues and we are not able to order excess inventory (not needed) to achieve a best truckload bracket price."

Again, vendors were not pleased.

In both cases, suppliers told MNB that they also were incurring higher costs, which were being ignored by Ahold Delhaize and SpartanNash, and that it seemed clear that the two companies intended to pass off as much of the cost of operating in a pandemic reality to manufacturers.  Which they felt was unfair, and betrayed a continuing lack of trust and cooperation, even in a time of crisis.

In other words, "we're all in this together" only went so far.

Now, both Ahold Delhaize and SpartanNash are backing off.

In a letter to vendors from SpartanNash signed by Lori Raya EVP and Chief Merchandising and Marketing Officer, and Walt Lentz EVP and President, Food Distribution, it is said that the original letter was not supposed to go out.  (That letter was signed by  David Frizzle, SVP SpartanNash Transportation, and Steve Bidgood, Regional VP - Transportation.)

Here's the text of the new letter:

Thank you for reaching out to us regarding the letter you received on Friday, April 10, 2020. 

We deeply regret the letter was sent without final approval as it did not properly communicate our intentions, nor reflect the value we place on our relationship with you. Our teams have been working diligently to respond to the unprecedented demands, evolving protocols, and additional procedures brought on by COVID-19, and unfortunately inaccurate information was sent out. 

For that, we apologize and ask for your understanding. 

The relationships we build with our CPG partners are critically important to us. While we each play complimentary roles within the supply chain to ensure our communities receive the food, medicine and essential household goods they need; we believe we both have the same objective. Plain and simple, we want to sell as much of your company’s product as possible to our customers. To date, we have done so by building solid, transparent relationships and working with you to forge mutually beneficial solutions. It is our sincere hope that we continue to do so throughout the COVID-19 pandemic and beyond. 

We are most grateful for you collaborating with us during these unprecedented times to drive freight efficiencies and creative solutions that will ensure freight costs are covered. We also want to call out that we will not bill retroactively, as erroneously stated in our previous letter. 

We wish you continued good health and encourage you or your team to reach out to your SpartanNash contact so we remain aligned to execute mutually beneficial opportunities for both parties.

Ahold Delhaize didn't acknowledge any problem with the original memo, but did try to take a different approach:

Dear Vendor Partners,

Thank you for the support you have shown our team, our stores, and our customers. Your partnership has allowed us to continue to serve our communities during this unprecedented health crisis. To show our appreciation, we have created the attached special vendor offer for you to use the next time you or your team visits our stores.

Again, we’re truly grateful for everything you do day-after-day to support our critical work. We have always been in this together and now, more than ever, our shared work will ensure that we can continue to be there for our customers.

And, the Ahold Delhaize letter came with an attachment.

Published on: April 17, 2020

by Kevin Coupe

Yesterday, Clarion Events, which handles the National Grocers Association (NGA) trade show, sent out an email to previous attendees selling booth space for the 2021 event in Las Vegas … which struck me as incredibly tone-deaf at a time when businesses are stressed, a lot of people are sick or dying, and nobody has any idea what 2021 will look like.

"NGA Show is an experience that brings the grocery industry together, and while we cannot physically do that at this time, we wanted to provide a way for us, and our exhibiting community, to come together and provide support," the email said.  "Just as the grocery industry has come together to safely support their local communities with essentials, here at Clarion Events we believe as an organization that we also have a role in helping our industries and communities, especially in times like these."

Okay, they offered a discount if you book in the next two weeks.  And sure, they offered to donate a small percentage of their payments to the Red Cross.  But the email also conceded that "with supply shortages and costs rising for many communities, we know the coming weeks will be challenging."

But not so challenging that Clarion isn't willing to hit people up for some cash.

The email was signed by Ed Gallo, Clarion's sales director for the NGA Show, which actually make explain something.

I'd like to think that NGA would be smart enough to understand that its retailers, and the suppliers that support them, are under enormous pressure right now, and the last thing they need is to be pitched for a convention that may or may not take place 10 months from now.  While it makes sense for trade associations to sometimes outsource the management of their shows to companies that specialize in such things, it does create the risk that those companies will have less of a tactile feel for the business, and will be laser focused on sales, sales, sales at a time when compassion and subtlety are called for.

This isn't really an attack on Clarion, or NGA.  I think there is a bigger point here - that every business has to put itself in the shoes of its customers, and understand that business-as-usual is definitely not the way to go.  But there are a lot of organizations out there that have had to cancel or postpone events, and I think that the ones I''ve talked to are trying to be as empathetic as possible about their members' and supporters' current priorities and issues.

And that is the best, most Eye-Opening approach.

Published on: April 17, 2020

Two interesting emails have come in during the past few days that show how traditional format borders are breaking down.

One, from Morton's, shows that the steakhouse chain now is offering "Chef's Table Home Kits" that presumably allow customers to replicate -sort of - the Morton;'s experience at home.

The other was from the Perkins restaurant chain, pitching its new approach as a market - selling burgers, bacon, fresh produce and, of course, toilet paper.

Published on: April 17, 2020

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

•  As of this morning, there have been 678,210 confirmed cases of the Covid-19 coronavirus in the US, with 34,641 deaths and 57,844 reported recoveries.

Globally, there have been 2,193,558 confirmed coronavirus cases, 147,378 deaths and 555,533 reported recoveries.

•  The Washington Post reports that the Covid-19 coronavirus is quickly becoming the most fatal disease in America:  "In early and mid-March, when America began widespread closures, quarantines and social distancing, covid-19 caused many fewer deaths than other common causes — fewer in a week than chronic liver disease or high blood pressure, and far fewer than suicide or the common flu. By the end of March, the toll was closer to the average weekly deaths from diabetes and Alzheimer’s disease. Into April, weekly covid-19 deaths climbed past those from accidents and chronic lower respiratory disease. And last week, covid-19 killed more people than normally die of cancer in this country in a week. Only heart disease was likely to kill more people that week."

The Post notes that these are only confirmed Covid-19 coronavirus cases.

•  Meanwhile the New Atlantis, which describes itself as a "journal of science and technology," offered a chart showing "coronavirus deaths along with deaths from other common causes in the past to which the disease has recently been compared," such as car crashes and other kinds of flu.

•  Axios makes the point that even as the federal government has published "guidelines" for steps states could take as they begin to step back from pandemic-prompted restrictions, and even as governors make decisions about how far and how fast they can safely go, business leaders are confronting a basic reality - people are unlikely to return to their "normal" lives if they don't feel safe.  And, businesses need to protect their employees and customers, and are only going to embrace policies that do so.

The Axios  story points out that "a range of CEOs and government leaders agree that scaling up testing is crucial to convince Americans it's safe to engage in pre-coronavirus activities."

The piece quotes Amazon CEO Jeff Bezos as saying in his annual shareholder letter that "those who test positive could be quarantined and cared for, and everyone who tests negative could re-enter the economy with confidence."

(In his letter, Bezos wrote:  "We’ve begun the work of building incremental testing capacity.  A team of Amazonians - from research scientists and program managers to procurement specialists and software engineers - moved from their normal day jobs onto a dedicated team to work on this initiative. We have begun assembling the equipment we need to build our first lab and hope to start testing small numbers of our frontline employees soon. We are not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn.”

And J.P. Morgan CEO Jamie Dimon as saying that people "will only return to work 'after there’s enough capacity in the hospitals, after there’s proper amount of testing'."

The bottom line, Axios writes, is that "reopening the economy will look different across America — but it will mean very little anywhere if people don't feel safe enough do the things that keep the economy humming.

"One stark warning:  'If we don’t get this right, the public health and economic costs could become even more daunting,' Suzanne Clark, the U.S. Chamber of Commerce CEO, wrote in a USA Today op-ed."

I'm no CEO, but it always has seemed evident to me that the financial crisis can only be resolved when we effectively address the health crisis … which can only mean vast and available testing, which will have to do until we have a vaccine.

Reuters reports this morning that, echoing similar pacts made by governors on the east coast and west coast, seven governors of Midwestern states have agreed to "work in close coordination to reopen their economies battered by efforts to contain the coronavirus."

According to the story, "The governors for Michigan, Ohio, Wisconsin, Minnesota, Illinois, Indiana and Kentucky have formed a partnership to work together on restarting the economies in their states, they said in a statement.

“Phasing in sectors of our economy will be most effective when we work together as a region,” they said. “This doesn’t mean our economy will reopen all at once, or that every state will take the same steps at the same time. But close coordination will ensure we get this right.”

The seven states represent about 16 percent of US economic output;  the eastern (New York, New Jersey, Connecticut, Delaware, Massachusetts, Pennsylvania and Rhode Island) and western (California, Oregon, Washington) states that made their own pacts account for about 38 percent of US economic output.

•  California Gov. Gavin Newsom yesterday signed an executive order "requiring companies in the food sector that employ 500 or more people to provide two weeks of supplemental paid sick leave for full-time workers who contract COVID-19 or are exposed to the virus and need to isolate themselves," the Los Angeles Times reports.    "Under the order, part-time workers are eligible for a lesser amount of sick time determined by the number of hours they typically work in a two-week period."

“We don’t want you going to work if you’re sick, and we want to make sure that you know that if you’re sick, it’s OK to acknowledge it,” Newsom said. “It’s OK to let your employer know and still know that you’re going to get a supplemental paycheck for a minimum of two weeks.”

The executive order is supported by both the California Grocers Association (CGA) and the United Food and Commercials Workers (UFCW).

“I’m not aware of anywhere where there has been a standard that applies to all workers in a division or sector,” said John Grant, president of UFCW 770. “This is pretty significant.”

“Today’s announcement expands on safety efforts already underway and provides added comfort to valued grocery store employees and customers that a consistent set of best practices is being followed by all essential retailers regardless of size and location,” said Ron Fong, CGA's president.

•  The Wall Street Journal this morning quotes Kenneth Sullivan, CEO of Smithfield Foods - the nation's largest pork producer, which has been forced to close down three different plants around the country because of Covid-19 coronavirus issues - as saying that "the U.S. cannot allow coronavirus cases to derail meat industry operations."

The Journal writes that Sullivan believes that "elected officials and the public must recognize meatpacking plants as infrastructure critical to national security … They must work with meat companies to strengthen safety practices and ensure plants continue to produce bacon, ground beef and chicken breasts, he said.

“'We’re going to have positive Covid cases,' said Mr. Sullivan, referring to the disease caused by the coronavirus, Covid-19. 'The question is what do you do in the face of that—do you stop the harvest, or continue, because it’s essential to life? There’s only one option there … The right thing for Americans is that we operate these plants,' Mr. Sullivan said. The country is grappling with an 'atmosphere of fear' over the coronavirus, he said, and public support for meat-processing employees and keeping plants open is necessary to help workers feel comfortable going to work."

However, companies like Smithfield also are facing pressure to do more for employees affected by the pandemic:  "Oxfam, the Southern Poverty Law Center, the United Food and Commercial Workers International Union and other groups that have advocated for protecting workers on Thursday sent a letter to meat processors calling for paid sick leave for plant employees, new gloves after every break, job protection for employees dealing with illness and other measures. When Covid-19 cases are identified, parts of the plant or the entire facility need to be shut down, the groups said."

•  The Washington Post reports that "people working during the pandemic have filed thousands of complaints regarding their exposure to the novel coronavirus and a lack of safeguards at their places of employment, according to records obtained under a Freedom of Information request … The employee complaints offer a snapshot of the fear experienced by the Americans compelled to work while the majority have been urged to stay at home, and they arise from an array of workplaces: hospitals, airlines, construction companies, call centers, grocery stores, beauty spas, pharmacies and shipping companies, among others.

"Collectively, the records depict the desperation of the employees as well as their frustrations with employers who in their view were at best simply unprepared for a pandemic and at worst callously unconcerned with worker safety."

The Post notes that it "requested all worker complaints regarding the coronavirus filed with the Occupational Safety and Health Administration from January through early April. There were more than 3,000 such complaints filed. The records do not state what actions were taken as a result."

•  The Wall Street Journal reports that New York Gov. Andrew Cuomo has extended the state's "on pause" directive to at least May 15, "asking people to stay home as much as possible during the coronavirus pandemic and maintain social-distancing.

"Mr. Cuomo said he would assess when to lift the policy in coordination with nearby states, depending on the rate of infections. The governor imposed the policy by executive order on March 22, saying all nonessential businesses statewide would be closed, and all nonessential gatherings canceled."

In addition, the story says, Cuomo "said all people riding in and driving private taxis should wear masks. This came after his announcement Wednesday that he was signing an executive order requiring people to wear face coverings when in a public setting where they can come into contact with others, such as shopping in stores and using public transit. The order takes effect at 8 p.m. Friday."

•  New Jersey Gov. Phil Murphy said yesterday that schools in the state will remain closed in the state at least through May 15.

•  Fox Business reports that "Wegmans is requiring all of its employees to go through a wellness check before the start of each shift as it strives to keep its stores safe during the coronavirus pandemic.

"Employees will be asked questions regarding their health and asked to do a temperature check with an infrared thermometer … An employee exhibiting symptoms or carrying a temperature of 100 degrees or higher will be asked to leave and contact a medical professional, but will still be compensated for the shift, Wegmans said."

The story notes that "The grocer is among a growing list of companies adopting additional precautionary quarantine procedures in an effort to keep their facilities operating virus-free.  Walmart, Home Depot, Amazon and Tyson Foods and Starbucks are among the retailers who have implemented similar measures as they continue to face a surge in demand."

•  Kroger announced "the acceptance of Supplemental Nutrition Assistance Program (SNAP) benefits for Pickup. The low-contact, convenient service allows customers to shop online for groceries on Kroger.com or the Kroger app and pick up their order curbside at a nearby Kroger store."

“Kroger is rolling out a payment capability across our nearly 2,800 grocery stores to allow more customers to access fresh, affordable food and essentials through our Pickup service,” said Rodney McMullen, Kroger’s chairman and CEO. “We are committed to supporting all families as we work together with our associates and communities and government agencies and health organizations to flatten the curve during this unprecedented pandemic.”

•  Fox News reports that "BJ’s Wholesale Club is offering free membership and reserved hours for all first responders and healthcare workers starting Sunday … The big-box chain announced in a press release Thursday that it would be designating Sundays from 8 a.m. to 9 a.m. as 'Appreciation Hour' for first responders and healthcare workers to shop – even those without a BJ’s membership – beginning April 19."

•  CNN reports that "Starbucks is adopting a 'monitor and adapt' strategy to reopen some cafes in the US following their closures in mid-March.

"CEO Kevin Johnson told employees in an open letter that the initiative means 'every community will continue to monitor the Covid-19 situation' and decide when to fully reopen their cafes depending on local conditions.

"Johnson acknowledged the decision is a 'human one,' based on complex and ever-shifting information. But field leaders will assess the situation in their areas based on four main factors:  'the local status of the public health crisis, guidance from health and government officials, community sentiment and store operational readiness'."

The approach, CNN points out, mimics that taken by Starbucks in China to positive effect.

•  The Wall Street Journal has a story about perennially "beleaguered" drug store retailer Rite Aid, where new CEO Heyward Donigan is "banking on a strategy that, in part, has the company’s pharmacists playing a more central role in tending to customers’ health-care needs - a move she says the pandemic is likely to accelerate. Meanwhile, Rite Aid is hiring 5,000 extra workers to help meet a coronavirus-fueled surge in business," and has "announced plans to open drive-through coronavirus testing sites outside stores in seven states, overseen by company pharmacists."

"If we can get through this in a way that allows us to go back to business as usual—which is a question mark—we are going to be a changed organization," Donigan tells the Journal.  "We have adapted to work-from-home unbelievably well. I had a philosophy that I want to hire the best and the brightest even if they work from a different location, and now, ironically, we’re all working from another location. We’ve learned that we can work remote, and we can now hire and manage a company remotely."

Donigan also says that "the question is going to be, 'How much can a pharmacist do now that, otherwise, a physician would do?'  We do vaccines, though that’s not our focus now. We do, in some cases, testing. So, in a crisis like this, we’re asking, “What services can we be allowed to do with some sort of a waiver program, with some type of oversight from a provider, just to lessen the load?”

•  MarketWatch reports that Bed Bath & Beyond is saying that it is seeing "a 400% year-over-year jump in sales of bread makers during the past month and a 100% increase in the number of vacuums purchased in the past week."

CEO Mark Tritton says that "consumer demand has shifted during the stay-at-home period and is now focused on categories including water filtration, air purifiers, kitchen appliances, and cleaning and coffee needs."

The story notes that "Bed Bath & Beyond has rolled out curbside pickup and buy-online-for-pickup-in-store capabilities as its locations were shuttered."

•  Idaho News 6 reports that "all Albertsons and Safeway stores in Idaho are providing a free stamp for absentee ballots in the upcoming May 19 election. Due to the coronavirus, all voting for the election will be done through absentee ballots.

"When the absentee ballot is filled out, people should make sure there is not already postage on the return envelope. The voted ballot should be placed into the ballot return envelope, sealed and then signed. This ensures the ballot cannot be tampered with."

Good for them.  It is critically important that no voter be disenfranchised, and that every effort is made to make voting easier.

•  The BBC reports this morning that the Covid-19 coronavirus has caused China's economy to shrink "for the first time in decades in the first quarter of the year, as the virus forced factories and businesses to close.  The world's second biggest economy contracted 6.8% according to official data released on Friday."

The story points out that "the financial toll the coronavirus is having on the Chinese economy will be a huge concern to other countries.  China is an economic powerhouse as a major consumer and producer of goods and services … Last year, China saw healthy economic growth of 6.4% in the first quarter, a period when it was locked in a trade war with the US.  In the last two decades, China has seen average economic growth of around 9% a year, although experts have regularly questioned the accuracy of its economic data."

•  From Fast Company:

"As demand for rides plummets during the coronavirus pandemic, Lyft says it’s now delivering food, medical supplies, and other necessities with a new pilot service called 'Essential Deliveries' … Lyft is recruiting drivers to deliver 'meals, groceries, life-sustaining medical supplies, hygiene products and home necessities' for nonprofit groups, government agencies, and - Lyft wrote on its blog - 'businesses and healthcare organizations.'  Lyft says the deliveries will be 'contact-free,' and it plans to pay drivers as if they were fulfilling standard rides."

“We are committed to running this current program so long as it is helpful for our communities during the COVID pandemic,” the company said in a prepared statement.

Published on: April 17, 2020

…with brief, occasional, italicized and sometimes gratuitous commentary…

•  The Organic Produce Network and Category Partners are out with their regular quarterly report, saying that total organic produce sales were up 22 percent in March, compared to the same period a year ago, and up eight percent for Q1.

“Organic fresh produce sales in the first quarter of the year were strong, and the impact of COVID-19 in March pushed numbers even more,” said Matt Seeley, CEO of the Organic Produce Network. “And we continue to see organic fresh produce sales outpace the dollar and volume growth rate of conventional fresh produce.”

Organic produce sales may be up, but the pandemic also has claimed yet another meeting casualty - the annual Organic Produce Summit, originally scheduled for mid-July in Monterey, California, has been cancelled this year.

I've been privileged to speak at and facilitate numerous sessions at the Organic Produce Summit since its inception a few years ago, and I've always found it to be one of the most energizing events I do each year.  Matt Seeley already has booked me for next year's dates - July 14-15, 2021 - and I'm already looking forward to it.

Published on: April 17, 2020

Brian Dennehy, whose credits ran from films like Tommy Boy and Cocoon to plays like Eugene O'Neill's "The Iceman Cometh" and "Long Day's Journey Into Night," has passed away.  He was 81, and the family noted that it was from natural causes and not related to the Covid-19 coronavirus.

Published on: April 17, 2020

…will return next week.

Published on: April 17, 2020

I'm happy to announce that tonight, 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!

Published on: April 17, 2020

I have to be honest this week.  I got nothing.

I've been making way through Amazon's new series, "Tales from the Loop," but I haven't seen enough of it to comment yet.  (I like it, but I'm still trying to understand what whole the various episodes add up to … just hoping it doesn't add up to a hole.)

The sixth season of "Bosch" has dropped on Amazon … and I can't wait.  I'll definitely have something to say about this next Friday.

I haven't even tried any new wines to recommend.

Just been working.

Mea culpa, mea culpa, mea maxima culpa.

I do have a puppy picture…

I promise to do better next week.

Have a great weekend … I hope I see you tonight at the MNB Virtual Happy Hour … and I'll be back Monday.

Stay safe.  Stay healthy.