business news in context, analysis with attitude

Published on: May 5, 2021

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.

This week, Tom and KC consider the implications of new projections that Amazon's retail sales will be more than Walmart's by 2025;  consider the potential highlighted by its recent Q1 results;  and discuss an analyst's suggestion that Amazon's "staggering amount of spending should push down delivery times to less than a few hours on millions of products, abolishing the need to shop a retail store for virtually all everyday items … for consumers who do not enjoy or have time to visit a store.  The ability to get a product completely on the consumers’ terms…when, where and how they want…looks like it will be a reality in many North American metro areas within the next 24 months."

If you're interested in listening to an audio version this Innovation Conversation, you can do so here (or can download this file):

Published on: May 5, 2021

by Kevin Coupe

The Wall Street Journal this morning reports that "the number of babies born in America last year was the lowest in more than four decades, according to federal figures released Wednesday that show a continuing U.S. fertility slump.

"U.S. women had about 3.61 million babies in 2020, down 4% from the prior year, provisional data from the Centers for Disease Control and Prevention’s National Center for Health Statistics shows. The total fertility rate - a snapshot of the average number of babies a woman would have over her lifetime - fell to 1.64. That was the lowest rate on record since the government began tracking it in the 1930s, and likely before that when families were larger, said report co-author Brady Hamilton. Total births were the lowest since 1979."

The story points out that "because the Covid-19 pandemic emerged in March, the figures capture just a short period at year’s end when the unfolding health and economic crisis could be reflected in women’s decisions about getting pregnant. Women typically have fewer babies when the economy weakens. Fears of getting sick, making medical appointments and delivering a baby as a deadly virus spread also dissuaded some women from pregnancy."

Whatever the reasons, the fewer births also mean that at some point, there inevitably will be fewer customers … which will have an Eye-Opening impact on brands looking to sell stuff to them.

Published on: May 5, 2021

The Washington Post has a story about how mass shootings like the one at a King Soopers in Boulder, Colorado, have resulted in a supermarket workforce that feels under siege.

An excerpt:

"The Boulder attack and other deadly grocery store shootings, including one last month in Long Island, underscore a new layer of vulnerability for millions of grocery workers, many already overwhelmed after taking on bigger workloads, longer hours and heightened health risks in the year-plus of the pandemic.

"The prolonged stress, public health experts say, can lead to depression, anxiety, high blood pressure, heart disease and other conditions. Now they’re dealing with one more stressor, said Bethany Brand, a psychology professor at Towson University in Maryland who specializes in trauma … Even workers not directly affected by the shootings say they are struggling to sleep and are fearful of going to work, as they confront an ever-present threat of gun violence in the workplace."

You can read the entire piece here.

Published on: May 5, 2021

The Financial Times has a story about how $142 billion worth of new investment into the food delivery segment - supporting new apps with names like GoPuff, Getir, Gorillas, Weezy and Dija - is rattling the leadership at delivery companies that have been around for awhile.  The concern is that they will use "their war chests to offer heavy discounts, a tactic used by the more established food apps as they battled for market share."  

This expected approach to growing market share would then force existing companies to lower their prices and reduce profitability, not to mention "complicate efforts by Delivery Hero, Deliveroo, Uber and others to branch out into grocery deliveries, potentially a larger opportunity than delivering food from restaurants."

Meanwhile, FT writes, "DoorDash, the US-based food delivery group, and Amazon have also been looking at making an investment or acquisition in the sector in Europe, according to people familiar with the situation. Both companies declined to comment. Any deal would bring DoorDash into Europe for the first time."

The story goes on:  "Venture capitalists have taken a particular interest in apps that promise to deliver groceries in as little as 10 minutes, thanks to a network of 'dark stores' across urban centres in London, Berlin and beyond. 'It’s received a ton of venture capital dollars in an incredible amount of time,' said Will Shu, Deliveroo’s chief executive, adding that the apps’ growth was 'pretty staggering'."

Published on: May 5, 2021

MassLive reports that Big Y Foods is launching a new e-commerce platform, myPicks, that is using a 12,000 square foot micro-fulfillment center (MFC) next to its store in Chicopee, Massachusetts, to assemble orders placed online for curbside pickup.

The story says that the MFC will fulfill some 7,000 orders per week.

According to the story, "Big Y said its trained ecommerce shoppers combined with years of supermarket experience for selecting the best and highest quality fresh foods for myPicks … By the end of the year, customers will also be able to pick up their online orders via temperature-controlled totes in secure lockers at additional Big Y locations on Cooley Street in Springfield, as well as East Longmeadow, Longmeadow, Ludlow, South Hadley, two stores in Westfield, West Springfield and Wilbraham … Big Y’s myPicks online ordering service carries no additional fees for orders of $40 or more."

The Big Y MFC was built in partnership with Takeoff Technologies.

Published on: May 5, 2021

The Rochester Democrat and Chronicle reports that Wegmans has no plans to bring back its self-serve hot and cold bars in their previous incarnations at any time soon, but instead will continue offering items previous sold from those installations in pre-packaged form.

New York State health regulations "allow the operation of buffets — but not of the self-serve variety. Instead, they have to be staffed so there is 'no customer touching of common objects,' like serving spoons or tongs."

While acknowledging that the self-serve bars traditionally have been very popular with customers, Wegmans spokesperson Laura Camera says that instead of bringing them back, the company "will continue experimenting (with) new ways to deliver restaurant-style food to our customers."

Published on: May 5, 2021

Reuters reports that "online sales accounted for nearly a fifth of total retail turnover last year as lockdowns to combat the spread of the coronavirus pandemic fuelled a boom in e-commerce, a United Nations study released on Monday showed."  This represented a four percent increase over the year before, and represented about 30 percent of total global economic output.

"Online sales accounted for 19% of overall retail sales in 2020, up from 16% a year earlier, according to estimates from the UN Conference on Trade and Development (UNCTAD) based on national statistical offices in major economies," the story says.  "South Korea reported the highest share at 25.9%, up from 20.8% the year before. China had a 24.9% share, Britain 23.3% and the United States 14.0%."

Published on: May 5, 2021

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, we've now had 33,274,659 total cases of the Covid-19 coronavirus, resulting in 592,409 deaths and 25,966,389 reported recoveries.

Globally, there have been 155,061,321 total coronavirus cases, with 3,243,519 resultant fatalities and 132,557,594 reported recoveries.   (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 56.4 percent US residents 18 years of age or older have received at least one vaccination, with 40.8 percent being fully vaccinated.

•  From the Washington Post this morning:

"President Biden declared a new goal Tuesday that 70 percent of adults will have at least one coronavirus vaccine shot by the Fourth of July as the White House grappled with how to send Americans a complex message: A normal life is within reach if you get vaccinated — but the crisis is far from over, so don’t fully relax your guard.

"Biden has been accused of sending mixed messages recently by continuing to wear a mask outside despite official guidance that he does not need to, since he is fully vaccinated. The White House is reaching out to scientists and public health experts to understand how the science is evolving as more people get vaccinated and which restrictions they can and cannot relax, according to people familiar with or engaged in the conversations … Beyond aiming for 70 percent of adults to have at least one vaccine shot by Independence Day, Biden said in remarks at the White House on Tuesday, he wants 60 percent to be fully vaccinated by the same time, part of an effort to create a nascent sense of normalcy by the holiday.

Published on: May 5, 2021

•  The New York Times reports that "Amazon had a record-breaking year in Europe in 2020, as the online giant took in revenue of 44 billion euros while people were shopping from home during the pandemic. But the company ended up paying no corporate tax to Luxembourg, where the company has its European headquarters.

"The company’s European retail division reported a loss of €1.2 billion ($1.4 billion) to Luxembourg authorities, according to a recent financial filing, making it exempt from corporate taxes. The loss, which was due in part to discounts, advertising and the cost of hiring new employees, also meant the company received €56 million in tax credits that it could use to offset future tax bills when it makes a profit, according to the filing, released in March.

"Amazon was in compliance with Luxembourg’s regulations, and it pays taxes to other European countries on profits it makes on its retail operations and other parts of the business, like its fulfillment centers and its cloud computing services.

"But the filing is likely to provide fresh ammunition for European policymakers who have long tried to force American tech giants to pay more taxes."

•  The Los Angeles Times reports that "the California agency that oversees workplace safety fined Amazon.com Inc. $41,000 for failing to record COVID-19 infections among employees at a Rialto facility and to generally protect workers there against potential exposure to the virus. It’s the second round of fines the state agency has levied against the e-commerce giant during the pandemic.

"After a months-long inspection that began in October, investigators with the California Division of Occupational Safety and Health, or Cal/OSHA, found that LGB7, an Amazon fulfillment center in Rialto, didn’t implement adequate physical distancing, face coverings and physical barriers such as plexiglass screens that would help block infectious particles.

"The citation, issued Monday, also says Amazon failed to record 217 COVID-19 infections among employees from April to October 2020. State occupational health and safety laws require employers to document all workplace illnesses and injuries in a record called Log 300 that is supposed to be available to workers on request."

Published on: May 5, 2021

•  CNN has a story about how Walmart is ramping up its marketplace game, "rapidly expanding the number of third-party sellers on its site.

"Over the past year, it's been adding to its network of merchants. It recently opened up its platform to sellers outside the United States for the first time and is trying to lure even more through incentives like zero commission fees for 30 days."

The story notes that "Walmart's marketplace has been around since 2009, but only in recent years did it become a key priority for the company as it battles Amazon online. E-commerce makes up less than 10% of sales at Walmart, but it's growing rapidly as Walmart shifts from its brick-and-mortar roots to reach customers online."

However, "Walmart has a long way to go to catch up to Amazon, which has more than 1.9 million active third-party sellers. Walmart won't disclose figures, but according to e-commerce data firm Marketplace Pulse, it had fewer than 7,000 sellers at the beginning of 2017. Since then, Walmart has added around 80,000 merchants."

Published on: May 5, 2021

•  CNN reports that Krispy Kreme plans to once again go public.

The company said yesterday that it has filed paperwork for an IPO with the Securities and Exchange Commission (SEC), though "the number of shares that will be offered and their price range has not been determined."

The CNN story notes that "Krispy Kreme has been private since 2016, when it was purchased by JAB Holding Company, a private firm that invests in food and beverage brands. It had previously gone public in 2000, and had some difficult years before the 2016 acquisition."

•  The BBC reports that "Ikea has launched its long-awaited furniture buy-back and re-sale scheme, in an attempt to reduce the number of products going to landfill.

"The move is part of the retail giant's sustainability drive to become "climate positive" by 2030.

"Customers will get vouchers to spend in-store if items they no longer need are returned in good condition.

"Ikea admitted the scheme was a learning curve, but decided to launch it after successful trials in several cities … The initiative, originally scheduled to launch in November but postponed because of the pandemic, is now available in Ikea stores across the UK. It is also being launched in the other 26 countries in which Ikea operates."

Published on: May 5, 2021

In my FaceTime video yesterday, I went all Andy Rooney and said that I was tired of getting stuck behind professional shoppers - like those working for Instacart - at the checkout line, and advanced the suggestion that there ought to be dedicated lines for those folks.  I'm not alone in this; I know a bunch of people who feel the same way.

This prompted a lot of email.

One MNB reader disagreed:

Come on Kevin. What’s the difference if the person in front of you is a regular customer or shopping for someone else? I don’t get it. I usually agree with you but seriously this is ridiculous. Wanting to segregate “professional “ shoppers to use a rear entrance is also head scratching. Not sure what else to say. I’m at a loss for words here.

And, from another reader:

As always, enjoyed hearing your views, but have to ask:  Aren’t the Instacart (and other “professional shoppers”) there to purchase for their customers?  I understand and relate to frustrations of being behind large baskets in check out lines, but that happens with regular shoppers here in Texas (and I would guess in other states, too).  Also, if a store is to set up a checkout line just for those Instacart type shoppers, how is that cost effective?  Do they have to schedule when they shop so the store is ready for them?  I seem to recall that this isn’t a terribly profitable situation for anyone at this point, so does your idea make it worse?

Look, I agree that front end frustrations are the downside of any shopping trip.  I truly believe that was Kmart’s biggest offense and why they couldn’t make it in Texas (full baskets left at the front of the store when only one line was open is a big indicator of an issue).  However, shoppers these days have alternatives.  If it is happening when you normally shop, change to delivery or pick up or go at a different time.  I am part of a regular crowd that is at the store very early in the morning on the weekends---this came out of wanting to pick our own produce and grocery subs for out of stock items and wanting to avoid crowds with the pandemic.  Yes, things are not as scary as they were at the beginning of the pandemic, but the habit has stuck.  It is actually a great time to shop as the shelves are newly stocked and the produce is fresher.  Uh oh, now the secret is out!

One MNB reader responded:

I worked for Fairway Market for many years (I was a controller in the stores at first , and then Dir of FP&A at corporate).  We DID have check outs for Instacart only (customers were not allowed). 

I agree - have check outs dedicated specifically for pickup/delivery services (like Instacart).  Like you said, it makes things easier for the customers who actually shop in the stores.

P.S.  I remember Andy Rooney. 

MNB reader Phil Herr wrote:

I do my regular shopping at a local Stop & Shop, where employees fulfill orders for remote pick up. I see them in the aisles, sometimes competing with me for space. However, they use the scanner gun to ring up purchases as they go. And I believe they check out behind the scenes as I have never seen any of them in a check-out line.  Seems a pretty good solution. On the other hand, when I shop Stew Leonard's I find I do compete with the Instacart shoppers. You would think an organization as forward thinking as Stew Leonard’s would have figured this out.

From another MNB reader:

Yes, the InstaCart and other shopping employees is frustrating.  But what I find frustrating is the way they treat you in the aisles.  Since “time is money” to them they are rude, pushy and just downright impolite.  I find this to be unacceptable and the shopping company needs to train their employees on how to be more courteous while in the store shopping.  At the checkout, well if it is just one order, then it is just like any other customer.  When they have two or three orders in one cart, requiring separate ring-out and specialized bagging so they can keep the orders separated, now that is FRUSTRATING.

From another MNB reader:

I feel your pain KC, however it makes me first look at the woefully understaffed checkouts at Shaw's, for one. Cashiers without baggers is the norm. I'm not a fan of Market Basket, for several reasons, but at least almost every register is open and with a bagger. 

I see this daily … add a few Instacart orders to that and you have very long lines, on a day that may not be all that busy. 

One more reader wrote:

The family needed a few items for dinner on Sunday so I ran up to Target.  I have to say, I was almost hit by the Target online shopper with their ”specialized” red carts about 6 times.  They had their noses glued to their shopping app and paid no attention to the shoppers in the aisle.  I was in the process of picking up a box of cereal (literally reaching my hand out) and the young lady stepped in front of me and grabbed the last box.  Since my hand was at the shelf, she was startled and said an awkward “excuse me” and took the box and ran.  I am glad Target is growing their store pick-up for online orders, but it should not be to the detriment of their shoppers who still come onto their stores.

Maybe it is because I have spent 25+ years as a vendor visiting retail stores and was trained to:  not take the close parking spots, ensure you stay out of the way of shoppers, help the shoppers find what they need, and most importantly, you might not work at the store, but you are representing them to the shopper, so go out of your way to make their experience a positive one.  Retailers need to slow down long enough to understand the impact their strategy changes are having on the shopping experience of their actual shoppers.  And yes, get off my lawn!

Apparently not the only person who feels this way:

I hate shopping with Shipt shoppers, they will run you over or cut you off!

From yet another reader:

Enjoyed your FaceTime this morning, I share the same frustration with Starbucks and the mobile customer…this pick up process has dramatically delayed the preparation time for the in house customer and it is becoming a problem. There is also a delay in Drug Stores that have drive up pharmacy, they need to have more people behind that prescription counter as the store personnel and in store customers appear frustrated.

By the way…nice Andy Rooney, brought back many good memories!

On the subject of Walmart's healthcare efforts, one MNB reader wrote:

One of the major problems as I see it in health care is the lack of transparency especially with regards to pricing.  Health care billing is more conjured than calculated on some complex set of determinants from what insurance you have, to what state you get your care, to your ability to pay among a myriad of other factors.  Our employers pay a portion of our premiums and at the end of the day the true cost of health care is all but oblivious and obscured from the consumer. 

In my view capitalism and competition is the only viable solution that will benefit the patient in the long run.  I applaud Walmart for getting into the fight to lower the cost of health care.  I’m rooting for them to prove and show that capitalism and competition can work, but especially in health care.

One MNB reader commented on something that bugs me as well:

KC, I have to get this off my chest, it's a little thing, but a large company like Market Basket should get basic language/spelling correct in its signage. My problem with MB is the permanent signs that hang down at the beginning or end of each grocery aisle, letting us know what's in that aisle.

Every store I go into of theirs, the signs consistently read "can goods", "can fruits", "can vegetables", etc.  A little nitpicking I know, but retail is detail. Unless I'm wrong, shouldn't it be canned? Help me out here!

I'm with you.  Totally.

And finally, a comment about Kroger's new drone program:

Seems insane and impossible to implement reasonably. I live amongst 100’ tall Georgia pines, not much unnumbered air space! Can’t imagine these buzzing all over the place by the 100’s - 1000’s! What happens when one crashes and the damage it causes?

They're not going to use the drones everywhere … just the places where it makes sense.  They won't use them in big cities, either … but that doesn't mean  they can't be used in appropriate markets in appropriate cases.