business news in context, analysis with attitude

Published on: June 15, 2021

by Michael Sansolo

It’s amazing how large a small advantage may loom. Consider this true story: Way back in 1934, the New York Giants football team won the league championship because of footwear. 

Now you are likely wondering what on earth you can learn from a nearly 90-year-old football game, but hang with me. Sometimes, a small change can lead to big results and it’s something all retailers need to think about thanks to some recent news.

First, if you are curious, the Giants defeated the heavily favored (and defending champion) Chicago Bears on an icy field by borrowing sneakers from a local New York college. The footwear change, which happened late in the game, helped the Giants come from behind to beat the Bears soundly. And the players all said it was thanks to the sneakers.

Keep that anecdote in mind as you replay the recent news of Walmart deciding to give nearly a million workers free smartphones, complete with an installed app that could be as game changing as the Giants’ footwear.

Think of how the app supercharges the skills of every front-line Walmart worker and could lead to a vastly improved shopping experience. With the app, a shopper could approach any staffer in the store and get instantaneous directions to the location of whatever item they seek.

Likewise the app could allow store management to instantly alert staff to sudden needs, such as handling front-end lines or shoring up an overwhelmed department.  No doubt it would be extra helpful in serving the now very important curbside pick up areas.

The app could help on scheduling, inventory and likely countless other areas we might not yet fully understand. For years now, smaller stores such as Old Navy or Sephora have used technology to link together store staff creating easy ways to serve customers or even build staff attention to sales goals, promotions or whatever. Plus as a Sephora staffer told me years ago, “it’s also really cool.”

Now clearly this isn’t the biggest or most newsworthy thing Walmart has done lately.  It might not even make the top 10 list. But I would argue that if used well, this could be the type of innovative move that allows well-managed stores to operate at a much higher level, making the stores more attractive to both staffers and shoppers.

In many ways, it could be like those sneakers the Giants football team used years ago. Not an earth-shattering change, but just a small advantage that well deployed could leave the competition slip sliding away.

And let’s be honest, it’s not like Walmart needed another advantage. But if the phones and app help improve the in-store experience, it will be a classic case of a front-runner finding yet another gear. 

And that’s bad news for everyone else.

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 15, 2021

The US Department of Labor says that more Americans are quitting their jobs than at any other time in at least two decades.  There are a lot of reasons - a desire to change careers, a need for greater work-life balance, a longing for higher compensation.  But KC suggests there may be something else at work - people who want to feel invested in a business, and that only comes when people feel like the business is investing in them.  It is about people on the front lines feeling like an asset, not a cost.

Published on: June 15, 2021

There are a couple of stories this morning about Amazon that focus, in different ways, on the impact that Amazon has on communities that it serves - and, some would argue, exploits.  Though, to be clear, it is a picture of mixed blessings and curses.

The New York Times has an extraordinary front page story called "The Amazon Customers Don't See" about the only Amazon distribution facility in New York City. and how it achieved "the impossible during the pandemic":

"With New York’s classic industries suffering mass collapse, the warehouse, called JFK8, absorbed hotel workers, actors, bartenders and dancers, paying nearly $18 an hour. Driven by a new sense of mission to serve customers afraid to shop in person, JFK8 helped Amazon smash shipping records, reach stratospheric sales and book the equivalent of the previous three years’ profits rolled into one.

"That success, speed and agility were possible because Amazon and its founder, Jeff Bezos, had pioneered new ways of mass-managing people through technology, relying on a maze of systems that minimized human contact to grow unconstrained."

However, the Times writes, "In contrast to its precise, sophisticated processing of packages, Amazon’s model for managing people - heavily reliant on metrics, apps and chatbots - was uneven and strained even before the coronavirus arrived, with employees often having to act as their own caseworkers, interviews and records show. Amid the pandemic, Amazon’s system burned through workers, resulted in inadvertent firings and stalled benefits, and impeded communication, casting a shadow over a business success story for the ages."

While Amazon could be herky jerky in its dealings with employees, often lacking consistency and even, sometimes, compassion - some of this is attributed to sheer size and the dizzying acceleration of its offerings - the Times also makes the point that there were many people grateful for the ability to have a steady job at JFK8, and appreciative of benefits that helped them care for their families.

There also seems to be a new appreciation in management that it has to do better, with even Jeff Bezos conceding that in recent public comments.

Meanwhile …

The Philadelphia Inquirer has an interesting piece about the impact that Amazon can have on the areas it serves - and it isn't just one-day delivery.

"As Amazon expands across the Philadelphia region, it is facing something of a neighborhood revolt against its oldest warehouse in the city," the story says.  "The last-mile facility at 4219 Richmond St. has proven to be an unpopular addition to the tight-knit rowhouse section of Bridesburg in the city’s lower Northeast section."

The biggest problems are the traffic the facility generates, and what some locals say is the bad attitude shown by some drivers;  neighbors complain that truckers drive too fast, putting residents - especially children - at risk.

The upside is that the facility employs 150 people, and is open around the clock.

The Inquirer notes that this isn't the only neighborhood, nor the only city or state or even country in which Amazon is having this kind of impact.

"Amazon’s growth has been astronomical during the pandemic, both nationally and in the region," the Inquirer writes.  "The company posted more than 35,000 job openings in the Philadelphia area last year, compared with 5,000 for the second-biggest advertisers, Lowe’s and Penn Med, according to Burning Glass Technologies. By the end of this year, Amazon will have 57 warehouses across the region, with more than half opening in the last year. Worldwide, Amazon added 500,000 workers in 2020, including 400,000 in the United States, and grew its real estate footprint by a startling 50%, largely to meet growing consumer demands for home deliveries.

"While the largest Amazon warehouses exceed one million square feet, the Bridesburg center comes in at 65,490 square feet. But what counts as small in the Amazon universe can make a big impact on a dense urban neighborhood."

Published on: June 15, 2021

The Wall Street Journal reports this morning that "Express Inc., best known as a presence in American malls, has been testing a new strategy: selling other brands’ merchandise online.

"Visitors to the retailer’s website can shop for items from dozens of other brands in addition to Express apparel. That approach is an increasingly popular one as retailers like Express, Urban Outfitters Inc. and J.Crew Group Inc. look to benefit from listing products that are sold and shipped by other sellers. The goal is to increase the chances shoppers can find what they need on the company’s site, boosting web traffic - and revenue - without veering too far off brand."

It is, the Journal notes, a strategy first employed at scale by Amazon, which has gotten to the point where more than half of its sales are generated by third-party sellers in its online marketplace, and more recently adopted by Walmart and Target.

The approach, the story says has "created a whole new calculus for businesses. Host retailers need to determine whether they dilute their own brands by featuring others. Likewise, sellers need to figure out whether being on these bazaars helps boost their brand - not to mention their profit, once they pay for the lead. And for shoppers, marketplaces can be confusing if they aren’t sure who they are ordering from or what to do if problems arise."

Published on: June 15, 2021

Digital marketing agency Adtaxi is out with a new survey saying that "more than half of respondents (54%) report the pandemic has permanently changed how they shop.''

In addition, the survey concludes, "after the pandemic, 63% will prioritize shopping at small and local businesses. This follows 74% of respondents who said they planned to shop small and local for the holiday season."

The survey also says that "a resounding majority of online shoppers - 73% - prefer when the cost of shipping is rolled into the price of a product, rather than charged as a separate fee at checkout … 96% of online shoppers report free shipping is important to them. 93% say the same for a no-cost return policy, while 74% say loyalty rewards are important and 70% rank same or next-day delivery as important."

And, a cautionary note about privacy issues:  "Though 45% of respondents say they generally give permission when apps or websites ask to collect their data, 60% believe that companies are not working hard to protect this personal information and 72% regard companies’ online data privacy disclosures as purposefully misleading … 44% of all respondents report their online experience is better because apps and websites collect their personal information. 49% disagree – and 7% were unaware their data was being collected in the first place."

Published on: June 15, 2021

JPMorgan has released a report suggesting that Amazon will be the largest retailer in the US by 2022, passing Walmart.

CNBC writes that "Amazon’s U.S. retail business is the “fastest growing at scale,” according to the company’s analysts. Between 2014 and 2020, Amazon’s U.S. gross merchandise volume, or GMV — a closely watched industry metric used to measure the total value of goods sold over a certain time period — has grown 'significantly faster' than both U.S. adjusted retail sales and U.S. e-commerce, the analysts said."

The date proposed by JPMorgan is several years ahead of one predicted just a couple of months ago by Edge by Ascential, which said it would happen in 2025.

CNBC goes on:

Amazon’s pandemic-fueled sales surge has helped it grow its slice of the e-commerce market. JPMorgan estimates Amazon expanded its share of the U.S. e-commerce market to 39% in 2020, up from 24% in 2014.

"The accelerated adoption of e-commerce has also provided a lift to other areas of Amazon’s business.  Amazon is on track to 'become one of the largest delivery companies' in the U.S., analysts at Bank of America wrote in research published Tuesday … This has allowed Amazon to deliver most of its own orders. Amazon currently delivers packages for other businesses in the U.K. and could one day expand that service to the U.S."

Published on: June 15, 2021

•. Amazon announced this morning that for the first time, the Just Walk Out technology pioneered in its Amazon Go stores "is available in a new full-size Amazon Fresh grocery store" that will open on Thursday in The Marketplace at Factoria in Bellevue, Washington.

"Veggies, fruit, meat, seafood, prepared foods, and pastries - all the amazing selection customers love and expect, with the option to skip the checkout line," the blog posting says.  "This is the very first time we’ve built the option to shop using Just Walk Out or traditional shopping all in one full-size grocery store, and we’re thrilled to open our doors.

"In this store, customers can come in, shop for the groceries they want, and skip the checkout line using Just Walk Out technology. Alternatively, customers can opt to shop using our traditional checkout lanes, staffed by our employees, who are also available throughout the store for assistance."

The 25,000 square foot store also has Alexa-powered kiosks and Amazon One biometric technology.

Published on: June 15, 2021

With brief, occasional, italicized and sometimes gratuitous commentary…

•  USA Today reports this morning that "the Girl Scouts have an unusual problem this year: 15 million boxes of unsold cookies."

According to the story, the organization says that "the coronavirus — not thinner demand for Thin Mints — is the main culprit. As the pandemic wore into the spring selling season, many troops nixed their traditional cookie booths for safety reasons … The impact will be felt by local councils and troops, who depend on the cookie sales to fund programming, travel, camps and other activities. The Girl Scouts normally sell around 200 million boxes of cookies per year, or around $800 million worth."

My daughter makes the most amazing brownies by folding Thin Mint cookies into the batter.  I'd suggest that maybe some supermarket retailers could purchase the cookies from their local troops and then whip up their own version of these thin mint brownies to sell in their bakeries - it'd be good for their communities and their customers.  Maybe even good for the bottom line.  (I might even be willing to buy a half-dozen boxes or so if some enterprising Girl Scout wants to reach out to me.)

Published on: June 15, 2021

•  Skogen’s Festival Foods today announced the hiring of Leslie Atkinson, most recently vice president marketing with Texas-based Brookshire Grocery Company, as its vice president of marketing.

•  Rite Aid announced that Andre Persaud, the company's executive vice president of retail, has been promoted to the role of Chief Retail Officer, a new position in the organization.

Published on: June 15, 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…

•  The United States now has had a total of 34,335,239 Covid-19 coronavirus cases, resulting in 615,232 deaths and 28,436,981 reported recoveries.

Globally, there have been 177,058,825 total coronavirus cases, with 3,828,480 resultant fatalities, and 161,259,669 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 64.5 percent of the US population age 18 and older has received at least one dose of vaccine, with 54.4 percent being fully vaccinated.

• From the Washington Post this morning:

"States with higher vaccination rates now have markedly fewer coronavirus cases, as infections are dropping in places where most residents have been immunized and are rising in many places people have not, a Washington Post analysis has found.

"States with lower vaccination also have significantly higher hospitalization rates, The Post found. Poorly vaccinated communities have not been reporting catastrophic conditions. Instead, they are usually seeing new infections holding steady or increasing without overwhelming local hospitals.

"As recently as 10 days ago, vaccination rates did not predict a difference in coronavirus cases, but immunization rates have diverged, and case counts in the highly vaccinated states are dropping quickly."

Published on: June 15, 2021

Yesterday's coverage and commentary about five bills introduced in the US House of Representatives that are designed to rein in the ambitions and force the breaking up of some of the world's biggest technology businesses prompted me to write:

I have three concerns about this.

One is that tech companies may be held to a different standard than n on-tech companies.

Two, I worry that legislators don't really understand how retailing works - the whole private label emphasis reflects a lack of nuance in the proposals, best I can tell.

And three, I still think that it will be hard to prove that much of what the lawmakers s object to is actually bad for consumers.

Expect that even if these bills get passed - which is far from assured - there will be legal challenges for years.

One MNB reader responded:

Politicians without any inkling about retailing should not attempt to legislate in ways that undermine free market competition and the ability to compete on the basis of delivering superior customer choice, value and service.

How does competition conducted on electronic platforms differ from competition in retail stores? Don’t bricks and mortar retailers control distribution, shelf position and pricing on every item sold in their store? Don’t they create arbitrary barriers to entry with slotting allowances? Don’t they intentionally give preference to their own brands?

There are clearly important issues regarding personal data privacy and potential censorship and restriction of free speech by social media companies which warrant investigation and potential regulatory action.

However, when a company wins by out- innovating it’s traditional competition, delivering superior value, convenience and satisfaction that earns the loyalty of its customers—that is the ultimate free market system at work.

If we punish the innovators to protect inferior legacy business models, we are heading down a very counterproductive path!

And from another reader, with a seemingly different attitude about one of the nation's great trustbusters (though he actually was more anti-monopolies):

Theodore Roosevelt just sat up in his grave.

Better that than rolling over in it.  I think.

In my obit yesterday for actor Ned Beatty, I took note of his role in Network, and linked to a clip of an iconic. three minute monologue.  Prompting one MNB reader to write:

Interesting clip you selected.  After it ran YouTube selected a few more suggestions.  I clicked the “Howard Beale: Turn off you TVs” video.

It starts off with a show, a counterculture show, with the opening announcer asking a live audience “How do you feel?” and their response “We’re mad as hell and we’re not going to take it anymore!”

The speech from Mr. Beale in this clip is probably more relevant today than ever.  For a film produced in 1976, I was 5 when it came out, what an indictment of society then and now.

I’m adding Network to my watch list!

Everyone should watch Network, even if you did see it back when the film originally was in theatres.

I was the film critic for the Loyola Marymount University school paper when Network came out, and because LMU is in Los Angeles, we tended to get really cool screening invitations.  I remember on a Saturday driving to the MGM backlot in Culver City for an advance showing of the film for college-level film critics, followed by a Q&A with director Sidney Lumet, writer Paddy Chayefsky, and stars Peter Finch and Faye Dunaway.  (It had to be the fall of 1976 … the movie came out in late November of that year, and Finch passed away at age 60 in January 1977.  Finch won the Best Actor Oscar posthumously a couple of months later.). Believe me, Network played very differently then, when it seemed like an impossibly bitter satire of a possible media future, than it does now, when it seems amazingly prescient.

Still an amazing film, and one of my all-time favorites.  I've seen it numerous times over the years, and it always grabs me.  (The older I get, the more I find myself relating to William Holden's character.  It always amazes me that he was only in his late fifties when he made Network, and died just a few years later at age 63.)