business news in context, analysis with attitude

Published on: June 9, 2020

This weekly series of Retail Tomorrow podcasts features Sterling Hawkins, co-CEO and co-founder of CART-The Center for Advancing Retail & Technology, and MNB "Content Guy" Kevin Coupe teaming up to speculate, prognosticate, and formulate visions of what tomorrow's retail landscape will look like post-coronavirus.

Lots of companies and business leaders talk about transformation, especially now, as they look to a post-pandemic future.  But are they doing the hard work and engaging in the kind of tough and uncomfortable work necessary to make transformation happen?  Sterling and Kevin offer numerous examples of how it can work - and some how is doesn't - concluding that sometimes you can't just transform the stuff that's not working, but actually have to transform the stuff that is.  Because it won't always.

You can listen to the podcast here, or on iTunes and Google Play.

Published on: June 9, 2020

by Michael Sansolo

It may seem strange, but I remain convinced that we can find lessons for business and leadership in most everything around us - including the civil unrest we saw in streets around the world in the past week. Only this one surprised me and I hope it will do the same for you.

As you might imagine, the local news in Washington, DC, was transfixed on the demonstrations especially those that seemed to instantly turn from peaceful to violent. One local news crew found a young man who offered an incredible insight into what had just happened.

Thanks to the novel coronavirus, the young man said, the demonstration had an unusual demographic mix. He explained that marches in Washington (a near daily thing, by the way) usually are filled with marchers of all ages.  Only last week, the marches following the death of George Floyd were at first all young people as those in their 40s, 50s, 60s and beyond stayed away for fear of contracting the virus.

That absence, he said, left the crowds without the moderating and possibly mature influence of older demonstrators who might have prevented some of the angry mayhem that followed. It was an incredible comment especially when you consider the track record of us boomers. We’re rarely called the mature or moderating voice of anything, but maybe we have become just that.

We talk all the time about the importance of diverse voices around the table. Whether the topic is the power of emerging technologies or even trying to comprehend racial, ethnic and gender issues, we are best served by having diverse voices, experiences and viewpoints around the table.  Quite often here we emphasize the need to include those young voices who can help us understand why exactly Tik Tok matters so much.

But as this young marcher in Washington so insightfully explained, a chorus of younger voices isn’t the answer either. We need the mix.

Frankly, this is something I’ve learned in the strangest way in the past decade. As I have written before, my son is a professional musician and teacher, which means my home office often is filled with the sound of fledgling trombone players. This shouldn’t surprise you but even the best trombone player performing alone doesn’t create the most wonderful sound.

What I learned from my son was how great symphonies balance and incorporate different sounds. My son’s trombone (and most of the brass section) frequently is featured to emphasize specific parts of a symphony, to bring the music and the audience experience to an entirely different level than we’d get from just violins. 

Simply put, a great symphony is created by blending these very different musical voices together.

It’s hard to know what long-term lessons we’ll all get from the demonstrations of the past 12 days. I’d like to hope that we’d learn to better listen and understand the opinions and experiences of those who are different from us to make us better leaders, managers and possibly even better people. In the process it might help us run better and more profitable businesses.

Kevin yesterday talked of the importance of retailers enhancing their role as curators of products to better serve the specific needs of specific shoppers. It strikes me that an industry built on being the “purchasing agent of the shopper” (as opposed to being the "sales agent for the supplier," a role that too many retailers have adopted) need to better include the voices and needs of all those shoppers.

Sometimes that can even include those of us in our 60s and beyond. 

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com.

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: June 9, 2020

Synthetic selfies?  That seems kind of like a misnomer ... and yet, technology may make them possible.  But sometimes, KC suggests, what matters more is how a thing works, not what it is called (though he does prefer greater linguistic precision).

Published on: June 9, 2020

The Washington Post reports that the National Bureau of Economic Research said yesterday that the US economy officially entered recession last February, which ended a 128-month economic expansion.

That more than 10-year expansion was the longest on record.

The Post notes that "the coronavirus outbreak began in China in December and spread to the U.S. in January, although it wasn’t until mid-March that the WHO declared it a global pandemic and President Trump declared it a national emergency.

"The World Bank estimates that global gross domestic product will shrink 5.2 percent in 2020 as the pandemic continues to disrupt business, travel and manufacturing around the world."

Published on: June 9, 2020

There are more stories this morning about businesses taking public positions as communities around the country experience anti-racism protests keyed to the Black Lives Matter movement, a direct outgrowth of the murder of George Floyd by a Minneapolis police officer that was caught on video.

Some examples:

•  The Hill reports that Walmart CEO Doug McMillon has committed $100 million over the next five years that will be used "to create a new center on racial equity" that he said will “seek to advance economic opportunity and healthier living."

McMillon also said Walmart will "ramp up recruitment and support of people of color."

According to the story, "The Walmart CEO laid out several initiatives the company will undertake, including making the recruitment, development and support of African Americans inside the company 'even more of a priority.' The company will also invest in improving fairness, equity and justice in society broadly.

“We will find the natural overlaps between Walmart’s core business and society’s larger needs that perpetuate racism and discrimination,” McMillon wrote, adding, “Specifically, we’re going to focus the power of Walmart on our nation’s financial, healthcare, education and criminal justice systems.”

CNBC reports that McMillon also plans to use his chairmanship of the Business Roundtable to address the issue, and has formed "a special committee to advance racial equality and justice solutions."

The story goes on:

"Business Roundtable will be studying a problem that’s clear, even in its ranks. Like in many C-suites across the U.S., the vast majority of its members are white and male. Only four Fortune 500 companies are led by black chief executives.

"McMillon said companies represented in the Business Roundtable have worked on diversity and inclusion initiatives. Now, though, he said, it’s time to do more.

“'There’s this moment here where the country is experiencing horrendous pain as a result of what happened with George Floyd’s murder and all of us seeing that on TV, but we all know that that was just one isolated event of many,' he said.  'This isn’t about just one tragic event. It’s about what’s happened in our country for a long, long time and what’s happening today.'

"He said corporations’ charitable giving is important, 'but that’s not enough'."

•  Kroger announced that it will create a $5 million fund through its Kroger Foundation that will be used to address issues of diversity and inclusion.

Kroger CEO Rodney McMullen said in a  video to employees that "We share in feelings of sadness, fear and outrage. We must use our voice to express that we are against racism and injustice against the Black community. We can and we must do better as a company, community and country … It's my responsible to help Kroger be part of the solution." 

•  From Delish:

"A statement from President and CEO of Alberstons Companies Vivek Sankaran 'categorically and unambiguously' condemned racism and brushed off damaged stores in favor of speaking to its customers and employees about race issues.

Sankaran said, "We will fix these stores and be back in business soon, but we have a more important agenda that demands our collective attention immediately."

The story reports that "he went on to say that the company will continue to monitor its diversity and inclusivity policies but that 'workplace policies and procedures are a small part of the solution. Listening with compassion and taking action when it is needed are critical to ensuring that racism and hatred have no place at our company.'

"I am fortunate that I have spent my career at companies where the voices of employees are heard, and as always, we are committed to ensuring that is the case at Albertsons Companies," Sankaran said.

Published on: June 9, 2020

TechCrunch reports that "U.S. e-commerce sales will jump 18% this year due to the impact of the coronavirus pandemic that forced more shoppers online, according to a new forecast released today by eMarketer. However, the surge in new online orders won’t make up for the overall hit that the U.S. retail sector will take this year, the firm noted. The analysts estimate that total U.S. retail sales, which also includes auto and fuel, will drop by 10.5% in 2020 to $4.894 trillion — a level not seen since 2016."

FYI … retail sales only dropped 8.2 percent during the 2009 recession.

Published on: June 9, 2020

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, there have been 2,026,597 confirmed cases of the Covid-19 coronavirus, with 113,061 deaths and 773,505 reported recoveries.

Globally, there have been 7,216,982 coronavirus cases, 409,095 fatalities, and 3,553,009 reported recoveries.

•  From Axios:

"Today's curveball comes from the World Health Organization, which said it's 'very rare' for the coronavirus to spread through asymptomatic carriers."

The story goes on:  

"Earlier evidence suggested person-to-person transmission among asymptomatics could spark runaway outbreaks … Young people and healthy people who did not experience symptoms were also suspected to be potential carriers to more vulnerable populations … The WHO is now relying on data obtained through contact tracing, said Maria Van Kerkhove, head of the emerging diseases and zoonosis unit."

However …  as I understand it, there is a difference between "asymptomatic" and "presymptomatic" - the first means that you have the virus but no symptoms, and the second means that you just haven't developed symptoms yet.  The problem is that you can't really tell the difference - and therefore don't know if someone is spreading or not - until it is too late.  Hence, the importance of continued vigilance.

•  From the San Jose Mercury News:

"Google said Monday it’s adding new features to its Maps program that are designed to provide individuals with more information about coronavirus-related restrictions for services such as public transit and local COVID-19 testing centers.

"The new features are becoming available amid an increase in new coronavirus case in California as cities and counties across the state have begun to reopen after almost three months of restrictions aimed at slowing the spread of the disease.

"The alerts will include information such as if transit services have been disrupted or had a schedule change because of coronavirus, as well as information that shows when train or bus stations have been historically more or less busy at specific times of the day. Google Maps will also provide information for drivers about possible COVID-19 checkpoints along a highway, such as at national borders."

•  The New York Times has a story about the often crushing impact that delivery apps can have on restaurants that have been depending on them during the pandemic lockdowns.

"Even as apps like Grubhub have cast themselves as economic saviors for restaurants in the pandemic, their fees have become an increasing source of difficulty for the establishments," the Times writes.  "From Chicago, Pittsburgh and Tampa, Fla., to Boise, Albuquerque and Richardson, Texas, restaurant owners have taken to social media to express their unhappiness. Some restaurants have shut down, while others have cut off the apps and are looking for other ways to take orders.

"Complaints about the fees that the apps charge to both restaurants and consumers are longstanding, but the issue has become heightened as many restaurants have shut down in-room dining. Even as they begin reopening, delivery is likely to remain a bigger part of their business than before the pandemic.

"Several restaurants have also publicly worried that if Uber’s talks to acquire Grubhub succeed, small restaurant owners will have even less power in pushing back against the fees."

I'm a cynic.  Every time I see an ad for one of these delivery services proclaiming that together, we can all save the restaurant industry, I think to myself that what they really want to do is preserve their own cash cows.  I know it is hard for these businesses to handle their own deliveries, but putting so much of their business equity into these outsourcing services creates its own level of risk.

•  The Cinemark movie theater chain, the third largest in the world after AMC and Cineworld, said this week that "it has the financial wherewithal to survive even if theaters remain shut down for the rest of the year—though it isn’t expecting to test that assertion. The company outlined a plan to begin a phased reopening of its theaters on June 19, starting with classic movies for $5 a ticket. Chief Executive Mark Zoradi strongly hinted on the call that even the popcorn will be cheap."

The statement comes just days after AMC said it was unsure of its ability to survive if the movie theater business is unable to get back to some level of normality.

The Journal writes that the summer movie season - traditionally a huge revenue generator for theaters and studios - seems to hinge on whether audiences turn out to see Tenet, the new film from writer-director Christopher Nolan (Batman Begins, The Dark Knight, The Dark Knight Returns, Inception).  Tenet is scheduled to hit theaters on July 17, and the producers have held fast to that date even as other films bailed out of their summer dates and moved to the Christmas season or even summer 2021.

The Journal writes that while three-quarters of regular movie-goers say they will return to theaters if sufficient safety precautions are taken, roughly a third of movie-goers are 50 years old or older - which makes them higher risk for contracting the coronavirus.   And so there is a lot of ambiguity about projections and expectations.

•  MediaPlayNews reports that "the  National Association Theater Owners (NATO) reportedly expects upwards of 90% of movie screens in the world to re-open by July 17 … The trade group, which represents 68,000 screens in 99 countries, is pushing the optimistic data as global economies get back on line and coronavirus infections slow."

However, the story also points out that "no theatrical chain has officially announced a re-opening date in the United States."

•  The New York Times reports that "the nation’s largest airlines are preparing for a limited rebound next month as more Americans book vacations in places like Florida and the mountains and national parks in the West.

"That resurgence would offer some hope to the travel industry, which racked up billions of dollars in losses as tourists and businesspeople canceled trips in the last three months because of the coronavirus epidemic. Some in the industry said the recovery was now already underway."

The Times goes on:  "After cratering in April, the number of travelers and airline and airport employees filtering through the Transportation Security Administration’s airport checkpoints has steadily climbed in recent weeks. The low point arrived on April 14, when the agency screened fewer than 90,000 people, just 4 percent of those screened the same date last year. On Sunday, the agency screened more than 440,000 people, about 17 percent of last year’s number and the best day since March."

•  USA Today also reports as the nation begins to slowly open up, the travel industry seems to be benefitting.

"The number of nights booked in the USA was higher from May 17 to June 3 compared with the same weeks in 2019, according to Airbnb via Bloomberg. Among the most popular sites for stays are Southern California’s Big Bear Lake and the Smoky Mountains, per the report. 

"Similar domestic holiday booking trends are happening in other countries, including Germany, Portugal and South Korea, Bloomberg reported … Other vacation rental sites, including Expedia Group’s Vrbo and Booking Holdings, are seeing a rise in reservations as states reopen, Bloomberg reported."

The story notes that "it's unclear if or when travel will return to pre-pandemic levels, though the hotel and hospitality industry rushed to update cleanliness procedures to boost confidence among wary travelers."

I have to wonder how many people are doing what Mrs. Content Guy and I did - we booked something for mid-August, thinking that we wanted to go as late in the summer as possible, but also made sure the booking could be canceled with minimal penalties if we're not confident at that time in how safe things will be.

Published on: June 9, 2020

The Washington Post has a long piece detailing the pandemic-related problems that continue to plague the nation's meat processing business.

An excerpt:

"Tyson Foods, the largest meat processor in the United States, has transformed its facilities across the country since legions of its workers started getting sick from the novel coronavirus. It has set up on-site medical clinics, screened employees for fevers at the beginning of their shifts, required the use of face coverings, installed plastic dividers between stations and taken a host of other steps to slow the spread.

"Despite those efforts, the number of Tyson employees with the coronavirus has exploded from less than 1,600 a month ago to more than 7,000 today, according to a Washington Post analysis of news reports and public records.

"What has happened at Tyson — and in the meat industry overall — shows how difficult it is to get the nation back to normal, even in essential fields such as food processing. Meat companies have spent hundreds of millions of dollars on measures such as protective gear, paid leave and ventilation systems since they were forced to shut dozens of plants that were among the top coronavirus hot spots outside urban areas.

"But the industry has still experienced a surge in cases, and some companies say they are limited in just how much they can keep workers separated from one another."

You can read the entire story here.

Published on: June 9, 2020

•  Investor's Business Daily reports that RBC Capital Markets analyst Mark Mahaney is projecting that Amazon's stock price could go as high as $3,300 per share, significantly higher than the previously projected  $2,700.  (The stock closed on Monday at $2,524.06.)

This raised projection, the story says, is based on a new survey suggesting that the "adoption of online shopping has accelerated materially during the coronavirus pandemic, causing more consumers to purchase goods online rather than venture out."

The story goes on:  "Some of the best beneficiaries of this shift, in addition to Amazon, include Walmart, Etsy, and eBay. (Mahaney) declared Amazon the 'structural winner.'  That's fueled by Amazon's highly lucrative rewards program, called Amazon Prime.

"'All in, Amazon appears to be running away with the U.S. online retail crown and remains in a very strong position, while Walmart's position is incrementally improving,' Mahaney wrote in a note to clients."

•  Fox Business reports that "Instacart is revising its tipping policies to crack down on customers who take advantage of the system through 'tip baiting,' where shoppers are lured in with a big tip which is changed or removed by customers after delivery … Starting Monday, Instacart will require customers to leave feedback if they decide to remove the tip after delivery and share it directly with shoppers in the coming weeks. The company will also deactivate the account of any customer who repeatedly engages in 'tip baiting'."

•  Pymnts reports that discount retailer Big Lots, which has 1,400 stores in 47 states, has signed on with Instacart to provide delivery services.

According to the story, "Erica Fortune, vice president of eCommerce at Big Lots, said the company hoped to bring Big Lots’ array of items to customers’ homes, and that Big Lots remained committed to 'exceptional value, surprising products and an easy shopping experience to families across the U.S.,' according to the release … Customers can visit the Instacart website or use the Instacart app on their phones and shop for the items they need. They can select same-day delivery as an option at the checkout screen, with all delivery options defaulting to leave deliveries at the door for compliance with social distancing guidelines, the release states."

Every story about Instacart these days reminds me of Hydra, the multi-headed serpent of Greek mythology … it is getting its head into everybody's business, nibbling away a little bit here and a little bit there, and eventually will devour them by weaponizing these stores' own data against them.

I am aware, by the way, that one could use the Hydra metaphor to describe Amazon as well.  There's only one difference.  Amazon clearly, unambiguously is the competition.  Instacart is the enemy that a lot of businesses are sleeping with.

Published on: June 9, 2020

•  Sprouts Farmers Market announced that J. Scott Neal, most recently senior vice president and general merchandise manager for the fresh food division of Walmart U.S., will join the company as chief fresh merchandising officer.

•  Rick Delie, who spent more than a quarter-century at Costco, concluding his career there as SVP of Non-Foods, has joined the Simpactful CPG-retail consultancy as a senior advisor and consultant.

Published on: June 9, 2020

Responding to yesterday's stories about the demonstrations taking place all over the country, one MNB reader wrote:

I’d like to throw my 2 cents in the balance.

The real issues have been highjacked by the partisan press/politicians and twisted with the intent on destroying the current administration and imposing political correctness. America is not a systematically racist country, some people are racists and prejudiced from all races and colors and religion.

Singling out one group or another is counter-productive, equality means equal and that compass points you in the right direction 100% of the time, in all situations: private, public, in business, etc. At a societal level, attempting to favor (or retribute) some over the others upsets the balance and no one has the magic formula to create equality out of non-equality.

I would agree that America is not a systematically racist country.  It is, however, often a systemically racist country.  (There are times and places where it is both.)

I don't think the issues have been hijacked in this case by politicians or the media.  I think the issues are being pressed by the thousands of people who have marched in so many communities - people of all races and ethnicities and ages and genders - and largely the media and politicians have struggled to keep up.

I think some of the coverage, by the way, has been a little unfair.  Mitt Romney, who marched over the weekend and said that "Black lives matter," got some shade thrown at him who suggested that he may have been late or insincere.  But this is the son of George Romney, who felt these issues deeply … I have no doubt that Mitt Romney is absolutely sincere.

If the suggestion by some is that black people don’t have a strike against them in many situations because of the color of their skin … which often leads to a series of societal circumstances that inhibit their access to the same sorts of opportunities that many (not all) white people have by virtue of their skin color, well, then, we’re just going to have to agree to disagree.

I actually believe in something simple:  Everybody counts, or nobody counts.  (Yup.  It is the Harry Bosch rule.)  I think there is pretty good evidence that in this country, people of color often matter less.

I wrote yesterday, when commenting on a customer-goes berserk story:

The nation clearly is at a boiling point, and summer doesn't even start for another couple of weeks.  Hard to imagine what things might be like in the dog days of summer.  (There's also a story out that utility companies are expecting the demand for electricity to be higher than usual this summer because of so many people working at home.  If the grid blows … well, all bets are off.  Welcome to dystopia.)

Prompting one MNB reader to write:

If the grid blows? That wasn’t on my 2020 Bingo card, but due to the aging infrastructure in the U.S. it’s probably going to happen. Thanks for the early warning!

But another MNB reader was reassuring:

Just a note regarding your comment on the electric grid. I did a project about 5 years ago to assist the company responsible for the distribution of power across one particular state.  As part of that project, I learned that the grid on average operated at 52% capacity. Why?  The grid is overbuilt across America because NERC and FERC will fine the utility companies for the smallest of blips in power supply. And, these fines are not inconsequential.  Hurricane impacted customers will wait about 3 days before complaining about a power loss; for everyone else the complaints start with “blips” simply because of the amount of devises and their clocks that have to be reset.

In fact, the system is built for heavy A/C days. It’s the heavy heater days that tax the grid. With regard to the statewide system I’m referencing, its only operated at > 100% capacity for 3 days in something like 8 years.

I conclude that A/C isn’t going to create a grid overload.  If the grid were to go down, that would create some welcomed mall traffic. 

As it often happens in China today, Walmart shoppers will have a lengthy shop  just to enjoy the A/C….

Go figure.  I learn something every day.

Commenting yesterday about Chuck E. Cheese - a company with which I am unimpressed, and that may be facing bankruptcy - I said that I feel the same way about it as James T. Kirk felt about Klingons:

This prompted one MNBN reader to write:

I see your point, but the use of this particular scene at this particular moment in time may be seen by some as…inappropriate?...tone-deaf? Do Klingon Lives Matter?

I thought a was safe with a Star Trek joke.  Go figure.

Push me on this, however, and I will point out that the movie from which this clip is taken, Star Trek VI: The Undiscovered Country, is about how prejudice eats away at you.  Kirk makes that comment because he cannot see past his hatred of the Klingons, and that colors his actions and reactions.  The movie is how he learns to move past his biases, to embrace what Shakespeare first called "the undiscovered country," the unknown future about which so many feel dread.

So sure, Klingon lives matter … but let's not equate a science fictional creation with the very real problems faced by people of color in the US.

On a couple of other subjects, from MNB reader Annette Knapp:

Just a quick note to you. Giving you tastemaker props due to the following:

Providing me with a heads up that a new Jimmy Buffet album was out. My husband is a huge parrothead, and obviously a subpar fan, was out of the loop on that and the information filled him with delight during – waves hand – 2020. Amazon hooked him up in no time.

Promoting "Bosch" over the years. We finally started binge watching based on your most recent recommendation and are probably starting season 5 this weekend.

Michael Connolly novels. Because my husband likes "Bosch" so much and is an avid reader, he’s picked up a few of the books at the struggling local used book store. Here you are out with yet another series – the Jack McEvoy novels - recommendation I’m passing along to him which will undoubtedly see payoff with further engagement solely based on what you write in this daily blog.

People who know me would tell you that this note brings me enormous happiness.  I'm glad I could help.

And finally … I mentioned yesterday that Yosemite National Park had opened up on a limited basis, which prompted one MNB reader to write:

Just got back from a weekend in the Yosemite backcountry.  Enjoy 11 seconds of bliss from the Merced River above Yosemite Falls…

Thanks.  I needed that.

Published on: June 9, 2020

The Financial Times reports this morning that two private equity groups, Apollo Global Management and Blackstone, are engaged in conversations about possibly acquiring the New York Mets,  seeing the largely underperforming franchise as a potentially good investment at a time when the pandemic has driven down team values.

The Mets have been the subject of considerable interest in recent months, though the owning Wilpon family reportedly has put so many conditions on a sale - like their continued participation in management - that negotiations with financier Steve Cohen fell apart, and talks with Alex Rodriguez and Jennifer Lopez reportedly never really got started.