business news in context, analysis with attitude

Published on: October 21, 2020

The 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, the originator of 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.

Bob Perry, director of business development at the NBC Universal-owned Television Station Group, joins Tom Furphy and Kevin Coupe this week to talk about how technology allows businesses to create targeted networks even in a consumer environment becoming more fragmented with every passing day.  This is yet another area that has been accelerated by the pandemic, with the the dawning of capabilities that will allow retailers to partner with media companies to a greater and more effective degree than ever before.

Published on: October 21, 2020

by Michael Sansolo

Weird as it may sound, Covid may bring some benefits along with all the pain and, please, allow me to explain before you punch your computer screen.

A few nights back, my wife and I were taken aback by a very non-controversial ad on television. It was one of those endless mattress store commercials; only this one touted how seriously the company is taking the Covid crisis.

At the company’s stores (honestly, I don’t know which company it was), customers can rest assured that precautions are being taken through things like disposable covers for mattresses and pillows that are changed after each customer. After all, in a mattress store we are always encouraged to actually lie down on the bedding.

As we heard the ad, my wife and I jumped to the same conclusion. “Didn’t they always do this?” we both exclaimed having reached the simultaneous conclusion that we might have stretched out on a pillow or mattress that wasn’t covered. Frankly, it wasn’t a happy moment as our thoughts drifted to bed bugs, head lice and more.

I have to believe that buying a mattress will never be the same, even after Covid is blessedly a memory.  One has to imagine that even once vaccinated we’re all going to look at the world through Covid-tinted glasses.

That means it might become table stakes for gyms, airlines, hotels and car rental companies to better clean their facilities. (Take a few minutes to revisit the video Kevin posted on Monday about Portland, OR, and how Covid will change higher education permanently.)

It might become commonplace for supermarket shoppers to insist on antiseptic wipes for shopping carts and sanitizer dispensers to allow us to clean our hands throughout the shopping trip. It might even mean that the notion of wearing a mask during flu season will become as accepted here as it is in densely populated Asian cities. 

And it might certainly mean that shoppers will expect stores to offer curbside pickup and other new shopping conveniences, made commonplace by Covid.

One of the countless questions we all need contemplate is about what happens next and what Covid-related changes are going to become permanent and that goes beyond how whether home cooking becomes dominant again. It means questioning how to make self-serve salad, hot food and olive bars acceptable again? Or how to assure shoppers about sampling stations?

And the overarching question for operators is how to create an environment that creates feelings of safety and comfort as we grapple with whatever the new normal will be. 

Despite all the misery of Covid time it has certainly created a new level of expectation, where “white glove” service is not just offered, but expected in countless daily transactions. Let’s remember that it wasn’t so long ago that driving without a seatbelt or eating a rare hamburger were pretty common choices.

Things change and there’s no reason to expect this time will be any different.

Except for this. My wife and I both slept soundly after that epiphany about mattress stores. After all, the last two mattresses we bought were both purchased on line, which meant all types of new benefits up to and including a hermetically sealed delivery.

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: October 21, 2020

The US Department of Justice announced yesterday that, along with 11 states, it has filed an antitrust lawsuit against Google, charging that it has illegally dominated the search business by using anticompetitive tactics.

Axios writes that "the long-awaited suit is Washington's first major blow against the tech giants that many on both the right and left argue have grown too large and powerful. Still, this is just step one in what could be a lengthy and messy court battle."  The crux of the government's argument is that "Google has unfairly dominated the search market by locking in its search engine as the default in browsers and on mobile devices including Apple iPhones and phones that run Google's own Android operating system."

The Washington Post writes that "in bringing its case, the Justice Department did not explicitly ask a judge to break apart Google. Instead, it urged the court to consider 'structural relief,' which theoretically could include a requirement that the company sell a portion of its business and cease other practices that federal regulators see as harmful and unlawful."

The Wall Street Journal reports that "Google’s partnership with Apple is at the heart of the U.S. Department of Justice antitrust lawsuit claiming that the Alphabet Inc. unit misused its power in an anticompetitive manner, potentially threatening a major revenue stream for both tech giants.

"It has long been known that Google relies on search traffic from Apple’s popular line of phones. Google’s flagship search engine is the preset default on Apple’s Safari phone browser, meaning that when consumers enter a term on their phone, they are automatically fed Google search results—and related advertising.

"What’s new is just how central it is to both companies, and to the antitrust case. While the government stopped short Tuesday of asking for specific remedies, the prominence of the Apple arrangement in the lawsuit leaves little doubt that the Justice Department will seek to intercede."

The New York Times writes:  "The lawsuit, which may stretch on for years, could set off a cascade of other antitrust lawsuits from state attorneys general. About four dozen states and jurisdictions, including New York and Texas, have conducted parallel investigations and some of them are expected to bring separate complaints against the company’s grip on technology for online advertising."

The Post goes on:  "The Justice Department’s filing alone … serves as a stunning turn of events for Google, marking the first major salvo challenging Silicon Valley’s size in decades. It also follows roughly seven years after the government last probed the company for potential antitrust violations — and opted against suing Google or seeking significant penalties. The inaction in Washington for years had stood in stark contrast to the withering antitrust scrutiny Google has faced in Europe, where competition regulators over the past decade have slapped the Mountain View, California-based tech behemoth with $9 billion in fines.

"Since then, Democrats and Republicans alike have found rare accord in re-examining Google and looking anew at other Silicon Valley tech titans, fearing they have become too big and powerful — and that the U.S. government had fallen far short in its responsibility to police them. The heightened concern has prompted a wave of probes targeting Apple, Amazon and Facebook, as well as a fresh effort to toughen federal antitrust laws in anticipation of future fights."

Published on: October 21, 2020

Albertsons was out with its second quarter results yesterday, saying that online sales alone were up 243 percent compared to the same period a year ago - suggesting that the acceleration of this part of its business, driven by pandemic-induced changed consumer needs, continues.

Q2 sales and other revenue increased 11.2 percent to $15.8 billion, on same-store sales that were up 13.8 percent compared to same period a year ago.

Albertsons said that "net income was $284.5 million during the second quarter of fiscal 2020 compared to $294.8 million during the second quarter of fiscal 2019," but noted that "net income for the second quarter of fiscal 2019 included the benefit of gains related to sale leaseback transactions."

"We continue to successfully execute against our strategic priorities, which translated into outstanding second quarter results. We have a value proposition that is resonating with customers and driving market share gains across all of our markets," said Vivek Sankaran, President and CEO, who described the company as being "in the early stages of a transformation to become a modern, growing food retailer."

Published on: October 21, 2020

ShopRite has opened three new “Fresh to Table” concept stores - in Greenwich and Burlington, NJ, and Monroe, NY - that it describes as delivering "a reimagined retail destination where customers can find fresh, on-trend foods and meal solutions in a variety of flexible grab-and-go formats. The seamless in-and-out of store experience also leverages a host of digital innovations to help customers save time."

Here's how ShopRite characterizes the section's various facets:

"Designed within each store’s existing footprint, 'Fresh to Table' reinvents the produce and fresh departments to provide inspired, high-quality options for shoppers looking for a one-stop-shopping experience. These include sections with ready-to-cook items ('Prep & Eat'), ready-to-heat and serve items ('Heat & Eat'), and ready-to-eat meals ('Grab & Eat'). The concept’s clean, modern aesthetic and distinctive signage provides an easy and intuitive experience for quick navigation and meal selection.

"The concept’s 'One Stop Dinner Shop' showcases five-ingredient meals crafted by ShopRite chefs and dietitians that change weekly. The easy-to-prepare meals are featured on the Recipe Shop on ShopRite.com and can also be accessed by scanning QR codes on in-store digital screens for extra customer ease … A 'Tasty & Trending' section highlights on-trend and seasonal foods, also chosen by ShopRite chefs and dietitians, to inspire customers to explore unique and healthy food options. Drawing from fresh departments across the store – including Meat, Seafood, Produce, Bakery and more – items change every two weeks."

The store also offers "the  latest in integrated technology such as online ordering via ShopRite’s Order Express app, which allows customers to order ahead of time for express pick-up, or arrange at-home delivery via DoorDash."

The company says that "it is expected that the 'Fresh-to-Table' concept will be rolled out to additional ShopRite locations in the coming months."

Published on: October 21, 2020

•  CNBC reports that "Amazon is launching free, one-hour grocery pickup for Prime members at all Whole Foods stores in the U.S. … To qualify for one-hour pickup, grocery orders must total $35 or more. There are currently 487 Whole Foods stores in the U.S."  Until now, pickup only was available at select stores.

The offering is being positioned as yet a new benefit for Amazon Prime members, who pay $119 a year for membership.

One of the select stores offering pickup throughout the pandemic is the Whole Foods that is less than a half-mile from my house, and I have found it to be a transformational offering - enormously convenient and allowing me to do frequent shopping while staying in the bubble of my car.  As for the $35 minimum - it is hard to make a trip to Whole Foods without spending $35.  But that's another issue.

•  Fox Business reports that Amazon "announced plans Tuesday for the expansion of its new grocery store concept, Amazon Fresh with stores opening in the Chicago suburbs of Naperville, Bloomingdale, Oak Lawn and Schaumburg," saying that it will need to hire some 1,500 people in the area to staff the stores.

The format is said to be similar to one opened in the Woodland Hills section of Los Angeles a couple of months ago.

According to Fox Business, "The company said that full-time and part-time positions, including managers, will be available. Employees will be cross-trained in everything from customer service to stocking shelves, packing customer orders and preparing food offerings for customers each day and will receive pay starting at $15 per hour and variety of benefits packages."

Published on: October 21, 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 US, there now have been 8,521,465 confirmed cases of the Covid-19 coronavirus, with 226,204 deaths and 5,546,675 reported recoveries.

Globally, there have been 41,094,667 confirmed coronavirus cases, 1,130,550 fatalities, and 30,656,153 reported recoveries. (Source.)

•  The Washington Post reports on new Center for Disease Control and Prevention (CDC) numbers suggesting that "the novel coronavirus has caused about 285,000 more deaths in the United States between Feb. 1 and Sept. 16 than in an average year … The health agency said people ages 25 to 44 were particularly hit hard, with an 'excess death' rate shooting up 26.5 percent over that in past years. Racial and ethnic minority groups, including Black Americans and Latinos, were found to be among the hardest hit."

•  From CNN:

"A leading health expert says US Covid-19 cases will begin to rapidly accelerate in a week as the country topped 60,000 new infections Tuesday -- triple what the daily average was back in June, when restrictions had begun to ease.

"The prediction comes after several state leaders reimposed some measures to help curb the spread of the virus, fueled by small gatherings increasingly moving indoors with the colder weather, as well as other factors such as college and school reopenings. The national seven-day case average has increased at least 18% since the previous week and is now a staggering 61% higher than what it was five weeks ago. And as multiple experts have warned, things will likely get worse before they get better."

The health expert cited by CNN is Dr. Scott Gottlieb, former commissioner of the US Food and Drug Administration (FDA), and he says that "it's going to be a difficult fall and winter.  I think we're about two or three weeks behind Europe -- so we're about a week away from starting to enter a period where we're going to see a rapid acceleration in cases."

•  The Wall Street Journal reports that "the seven-day moving average of new cases, which smooths out irregularities in the data, was 58,397 on Monday, and the 14-day moving average was 53,970, according to a Wall Street Journal analysis of Johns Hopkins data. When the seven-day average is higher than the 14-day average, it suggests infections are increasing.

"The seven-day average has surpassed the 14-day average for 15 days, the longest it has done so since a 43-day stretch that ended July 26. Monday’s seven-day average was the highest since Aug. 4.

"Hospitalizations in the U.S. continue to rise as well. There were 39,230 people with the disease in hospitals as of Tuesday, according to the Covid Tracking Project. That is the most since Aug. 22 and the eighth consecutive daily increase."

•  CNN reports that "in Nevada, Gov. Steve Sisolak warned of 'Covid fatigue' and said more restrictions could be on the way if residents don't help bring Covid-19 numbers down … Illinois Gov. J.B. Pritzker announced Tuesday several regions of the state will see more restrictive mitigation standards go into effect by the end of the week … New Mexico is also implementing more measures to help slow the spread, state officials announced Tuesday."

In Washington State, the story says, "Gov Jay Inslee said the state was battling outbreaks on college campuses and 'significant increases in Covid-19 infections that have occurred particularly in congregate living areas, like Greek houses, and large social gatherings of students.'  He announced new restrictions for campuses including limiting the number of residents sharing a sleeping area and requiring people in all common areas to wear a mask and remain socially distant."

•  The Boston Globe reports on how the supermarket industry appears to have recovered from the product shortages that plagued it during the early days of the pandemic, but poses the question:  "But with winter approaching, and the threat of a second surge of the virus looking more likely, are we on the verge of another period of shortages and panic buying?

"Not necessarily. This time, grocers, suppliers, and even consumers have the benefit of experience. And people in the industry say they’ve taken advantage of the time they’ve had to prepare for another onslaught.

"Retailers and wholesalers have been stockpiling items that would be most coveted if customers must retreat to their homes again, and they are hopeful that shoppers will be less likely to hoard supplies this time around — reducing the strain on the system."

The question that nobody really has the answer to is, what happens during the holidays?  Right now, everybody is guessing … but I suspect that consumers may be less patient a second time around if they have to deal with shortages.  If there is a shortage of needed products, there also may be a shortage of Christmas spirit.

•  Amazon said yesterday that because of concerns about the health of its employees, people who want to work from home can continue to do so through at least 2021.

“We continue to prioritize the health of our employees and follow local government guidance,” an Amazon spokesperson. “Employees with work that can effectively be done from home can continue to do that work from home through June 30, 2021.”

CNBC writes that "Amazon follows in the footsteps of several tech companies that have extended their work from home policies until at least early 2021, including Apple, Facebook and Uber. Twitter has allowed employees to work from home 'forever' if they wish."

•  The New York Times reports that "California health officials issued long-awaited guidance for reopening theme parks in the state on Tuesday, setting targets for when attractions like Disneyland Resort, in Anaheim, and Universal Studios Hollywood, in Los Angeles, can open their doors. For the big parks, it could be a long road: their counties must reach the least-restrictive 'yellow' tier of the state’s four-tier Covid-19 economic-reopening plan.

"In terms of coronavirus cases, Orange County, home to Disneyland, is currently in the 'red,' or second, tier and Los Angeles County, Universal Studios’ location, is currently in the most restrictive 'purple' tier. It could be months before either county meets the guidelines for the 'yellow' tier, which requires there be fewer than one case a day per 100,000 residents and a testing positivity rate of less than 2 percent. The parks have been closed since March."

The story also says that "when parks do reopen, they will have to implement a reservation system allowing guests to book visits ahead of time. They will also have to screen guests for symptoms and mandate masks everywhere inside the park, except when people are eating and drinking. Larger parks, like Disneyland and Universal Studios Hollywood, will have to limit capacity to 25 percent."

Disney officials shot back describing the guidelines as "“arbitrary” and “unworkable.”  DisneyWorld, in Florida, has been open for months and the company points to its ability to keep the park open while minimizing the impact on public health as being indicative of its ability to make it work.

Published on: October 21, 2020

The Drum has an interview with Accenture Interactive CEO Brian Whipple in which he talks about the three pieces of advice that he is giving brands:

Equip yourself for the permanency of new consumer behaviors:  "There is this false expectation that Covid-related consumer behavior is temporary. Consumer behavior has changed, likely forever, in a number of different ways. Brands, marketers and sales organizations need to start equipping themselves for that permanency."

Understand that brands aren’t really built from ads any more:  "There used to be a notion that brands were built through consistent messaging. If you tell people something about a particular product and service in the right way, with the right emotion and the right tone, consistently over enough time, they will begin to perceive certain attributes about that product or service.  I would argue, however, that that is largely untrue today. People are more cynical. They rely on the experience with brands to form their view. Brand are built on experiences, not just advertising."

Don’t downplay purpose if you want to keep future customers:  "There is a misconception that you have to choose between being ‘for profit’ and ‘for good’."  That;'s not true for younger consumers, he argues:  "Those buyers in the future – care a lot about how their goods are manufactured, and whether or not the labor practices are fair and sustainability."

Published on: October 21, 2020

•  Variety reports that Netflix actually chilled a bit during the third quarter, as the company was unable to maintain the momentum that it achieved because of the pandemic during the first two quarters of the year.

According to the story, "The company netted 2.2 million subscribers in the third quarter, below the 2.5 million it had projected, and well below "record net adds of 10.1 million in Q2 and 15.8 million in Q1 this year — a massive lift Netflix attributed to stay-at-home orders amid the coronavirus crisis."

•  It was just a few weeks ago that Netflix announced that it was ending its 30-day free trial offering in the US, but now it is considering a new promotion - a single weekend during which everyone would be able to get Netflix for nothing.

The concept would be tested in India before being tried in the US, Variety reports.

•  DigitalCommerce 360 reports that "return service vendor Happy Returns announced …  that shipping service provider FedEx Inc. will now accept returns from retailers in the Happy Returns network at most of its locations. The expansion to more than 2,000 FedEx locations increases the number of Happy Returns kiosks, called Return Bars, by 400%, up from the initial 500 locations."

The story explains that "when a shopper goes to make a return from a merchant, she receives a QR code and instructions on where she can drop off her return. She goes into that physical location, either a FedEx store or another retailer with a Return Bar, and looks for the Happy Returns sign. A store employee scans the QR code and takes the unboxed product from the shopper. The return takes less than a minute, and the shopper receives her refund immediately, the vendor says."

Published on: October 21, 2020

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The National Grocers Association and Clarion Events Food & Beverage Group announced new dates for the annual conference and trade show, and have added two new  events for 2021. The new calendar of events includes: 

The NGA Show, originally scheduled for March 7-9, 2021, at the new Caesars Forum Convention Center in Las Vegas, has been rescheduled for May 16-18, 2021, for the same location. 

NGA Show Extension: Virtual Edition, a new event scheduled to provide access to unique educational content and facilitate product introductions and 1-to-1 meetings, will be held online on Tuesday, August 3, 2021.   And The NGA Show Summit, an intimate hosted buyer/vendor gathering, will take place December 1-3, 2021, Orlando, Florida at the Hyatt Regency Orlando.

Hate to say it, but I hope NGA got a force majeure clause in the May contract with Caesars Forum.  I hope they're able to hold it, but I wouldn't bet the house on it.  In fact, I wouldn't even bet the patio.

•  CNBC reports that as Impossible Foods looks to create "dairy-free milk that looks, acts and tastes just like cow’s milk," it has announced its intention "to hire more than 100 scientists to double its research and development team over the next year and accelerate new product development. As part of its hiring plans, it is launching a program to add 10 scientists who would otherwise work in academia."

Seems udderly likely that dairy farmers are going to have a cow about this, and will ask the government to stop "impossible Milk" from being called milk.  

Published on: October 21, 2020

Gerald L. Harp, former chairman-CEO of Arkansas-based Harps Food Stores and a son of the founders, has passed away.  He was 80.

The obituary in the Northwest Arkansas Democrat Gazette notes that Harp "was instrumental in selling the 70 year old company to the Employees in 2001," and "gave 10% of his share of the sale to long term employees of the company."

Published on: October 21, 2020

Regarding the filing by Southeastern Grocers for an IPO, one MNB reader wrote:

I don't want to belabor this, but there is not much rubber left on these tires!

Also got this email from another MNB reader:

Big fan and I am one that has learned from you, even at my age! Exceed people’s expectations, seems easy right?

On Thursday  evening 10/15 I ordered stamps from USPS, I am still old fashioned and mail some of my bills in and I have one coming due. I am respecting the virus and staying in where I can and I sure thought stamps would save me a trip and time. Well it is Wednesday 10/21 (a week later) and I am still waiting, how hard can it be?  They must have them in stock and they are delivering political stuff to my door every day, why can I not get stamps delivered in a timely matter? And  they charged me a delivery fee???? If I ordered from Amazon I would have had it by Friday and been free delivery as I ordered over $25 worth of stamps.

Just proves that Amazon has changed our expectations.

Exactly.

And, on another subject we've been discussing, MNB reader Kari Mitchell wrote:

I too loved the "Die Hard" commercial (the lift one as well) and I loved your remembrance of watching Die Hard with your wife.  This begs the question, "Is it a Christmas movie?"  Several people say it is.  I am on the fence, yet you can see it on TV during the holiday season.

It is totally a Christmas movie, IMNSHO…

Published on: October 21, 2020

•  In Game One of the World Series, the Los Angeles Dodgers defeated the Tampa Bay Rays 8-3.

•  And the Associated Press reports that "the proposed purchase of 95% of the New York Mets by an entity of billionaire hedge fund manager Steve Cohen has been approved by Major League Baseball's ownership committee, and final approval is likely to take place in the next month.

"Approval by the committee was disclosed Tuesday by a person familiar with the decision who spoke to the Associated Press on condition of anonymity because no announcement was made … Baseball's executive council will consider the deal next and is expected to forward it for a vote by all major league owners. The sale values the franchise at $2.4 billion to $2.5 billion."