business news in context, analysis with attitude

Published on: January 25, 2022

by Michael Sansolo

A quick search of the MNB archives finds that six times in the past year we featured articles on a “frictionless” shopping experience, usually centered on the checkout counter. In fact, just last Tuesday, Kevin talked about the topic again in his daily FaceTime commentary.

And frankly, I understand why. 

Technology has changed shopper expectations of how any process takes place. Not that long ago we thought nothing of waiting a few minutes for a dial-up connection to get us on the Internet. And seriously, it wasn’t that long ago that the instantaneous nature of the world of Google, Waze and everything else was beyond imagination.

So naturally it seems like there must be a better way to move shoppers through the front end than by making them stop, wait, unload a cart and reload the same cart with items now in bags. I remember back 20 years ago when one industry visionary wondered when the shopping cart could be engineered so that the entire contents could be loaded into a car, taken home and shelved, without the whole bagging/un-bagging process.

So surely we still have a long way to go in becoming frictionless. But looked at another way, we’ve made a lot of progress.

While the discussion on reducing friction always focuses on the front end, retailers and suppliers may need to do a better job explaining and enhancing a wide range of frictionless activities and improvements.

Most prominently, think of meal preparation.  It’s really not that long ago when cooking anything meant cooking it from scratch. But in today’s supermarket there is a plethora of products - in all sections of the store - that offer step saving for the shopper. Isn’t that friction reducing?

Likewise, cross-merchandising (a low tech procedure in any age) can also be viewed as reducing friction. If we make it simpler for a shopper to find complementary products necessary for creating a meal, haven’t we reduced friction?

It could be argued that the discussion the industry needs to have is all about identifying and reducing friction everywhere.  It’s near impossible to convene a focus group of shoppers these days, but it shouldn’t be hard to find ways to quiz regular customers on their points of frustration in any shopping trip. 

That frustration could range from locating products or finding recipes, finding staffers for help or even navigating a website. Anything that causes frustration is, in essence, creating friction and should be highlighted as an area to address.

(And it goes without saying that the same conversation extends to the industry supply chain and not just because of current covid-related issues. Friction in the supply chain leads directly to inefficiency, which in turn leads to higher costs.)

If we re-orient the notion of frictionless around simply making the shopping trip less aggravating and more enjoyable, we might find that eliminating friction isn’t just a technological solution requiring massive financial investment. Rather it might simply revolve around giving the shopper a more pleasant experience in whatever they do to make your store stronger than friction.

And to double down on one of Kevin’s recent argument, it might even involve looking for ways to make the checkout experience more pleasant, even if it still involves, waiting, loading, unloading and more.  

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: January 25, 2022

Following up on yesterday's FaceTime about the opportunities being created by supply chain issues, KC has some additional thoughts about why retailers need to act like they are advocates for the shopper, not sales agents for the supplier community.

Published on: January 25, 2022

by Kevin Coupe

Timing is everything.  And when you blow the timing, the best thing to do is be transparent, admit it, apologize, and move on.

Case in point.

Last week, Weber, the barbecue company, sent out one of its regular emails containing a recipe that, naturally, included the use of a grill.

The problem … it was promoting barbecued meat loaf on the same day that it was announced the Meat Loaf, the iconic rock 'n roller, had passed away at age 74.

Oops.

Give Weber credit, though, it immediately followed up with an apology email to everyone who got the first one:

Sometimes, tonight's not the night … but the way you handle awkward moments is to acknowledge them, apologize and move on.  Do it right, and it can even be an Eye-Opener.

Published on: January 25, 2022

Amazon announced this morning that it will in coming months unveil a new version of the Amazon Go checkout-free store, this one designed to "serve customers in suburban-area locations that are closer to their home … The new format will offer customers a quick and convenient shopping experience to pick up grab-and-go food, snacks and beverage items, and a few everyday essentials.:

The first in the fleet will be located in Mill Creek, Washington, about 20 miles north of Seattle;  the total square footage will be 6,150 square feet, with the front of the house about 3,240 square feet.

Amazon said that the new format also will be opened in the Los Angeles area "in coming months."

To this point, Amazon Go stores - allowing customers to enter using a mobile app and walk out with purchases without going through any sort of traditional checkout process, with a receipt delivered within minutes to their smartphones - have been located in metropolitan neighborhoods in Seattle, San Francisco, Chicago and New York.  Late last year, the company opened a test combo store with Starbucks in New York City that combines elements of the checkout-free experience with Starbucks' "third place" approach, offering a small lounge area with workspaces.

This rendering was supplied by Amazon:

Published on: January 25, 2022

From the New York Times this morning:

"Unionization efforts involving some of the most recognizable names in business have dominated headlines across the United States in recent months. Starbucks workers in Buffalo and Amazon employees in Bessemer, Ala., and on Staten Island have recently moved to unionize, as have workers at an REI store in Manhattan last week. Successful strikes at John Deere and Kellogg have drawn new attention to the state of the labor movement as well.

"The prominence of these organizing efforts, however, obscures the steady downward trend of union membership in the United States for more than four decades. In 1983, about 20 percent of employees belonged to a union; by 2021, that number had dropped to just over 10 percent, according to data from the United States Bureau of Labor Statistics."

These numbers factor in total union membership, at both private companies and in government.  However, in the private sector, "union membership has steadily declined for decades, falling to 6 percent last year from 17 percent in 1983.

The Times notes that in the private sector, when faced with unionization efforts, companies walk right up to the line - and sometimes, according to the National Labor Relations Board (NLRB), jump over it - to undermine organized labor.

The degree to which organized labor is seen as gaining traction also has been over-hyped by high-profile actions that Lane Windham, a labor historian at Georgetown University, describes as a "strike wave … sort of that worker uprising that’s been going for a few years, but that has been definitely deepened by worker dissatisfaction during the pandemic."

Published on: January 25, 2022

Business Insider reports that "Shopify has terminated or reduced the scope of its work with several warehouse and fulfillment partners, a move that could vastly reduce its capacity to pack and ship orders for merchants in the near term … Once Shopify implements these changes, its network is expected to have roughly half of its previous capacity to pack and ship e-commerce orders for merchants, two fulfillment partners told Insider. The changes mark a shift in strategy for the company's two-year-old effort to launch an e-commerce fulfillment service to rival Amazon's."

However, according to a Reuters story, the company says that these changes "would help merchants on its ecommerce platform compete better with big retailers and would not reduce capacity … Shopify said it had informed warehouse partners and merchants that capacity would not be reduced due to the proposed changes."

The story notes that "Shopify provides infrastructure for retailers to set up their stores online and generates revenue mainly through subscriptions and merchant services. It has benefited from the widespread shift to e-commerce during the pandemic."

Published on: January 25, 2022

The Financial Times reports that in France, Carrefour - a company operating hypermarkets that seem to be on the wrong side of a consumer trend away from big weekly shopping trips - is endeavoring to find new ways of connecting with customers.

As CEO Alexandre Bompard plots a broad strategic overhaul, the company is said to be testing some unique formulations:

"For lossmaking French stores that Carrefour cannot fix, Bompard has farmed them out to motivated entrepreneurs, often former employees who want to be their own bosses.

Under a 'lease management' model, Carrefour signs a long-term contract under which the entrepreneurs run their stores as they see fit, employ the staff directly and choose their own inventory and promotions. The stores must still carry some Carrefour products, and the group shoulders capital expenditures. Both share any losses for a transition period."

Another example of what Carrefour is doing:  "In the affluent Paris suburb of Montesson, Carrefour store manager Laurent Pasguay has plastered his mobile phone number and photo throughout the sprawling hypermarket.

"'Customers say the store is too big, so it’s up to us to find ways to help them navigate and enjoy it,' said Pasguay. 'They call or text when the lines are long at the cashier or when they can’t find the products being promoted this week.'

"The food retailer has adopted this tactic at all its hypermarkets in France."

Published on: January 25, 2022

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 72,958,690 total cases of the Covid-19 coronavirus, with 891,595 deaths and 44,828,957 reported recoveries.

Globally, there have been 356,081,089 total cases, with 5,625,000 fatalities and 282,534,252 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 75.6 percent of the US population has received at least one dose of vaccine … 63.4 percent has been fully vaccinated … and 40.1 percent of the total population has received a vaccine booster dose.

•  Axios reports this morning that "Omicron infections are trending down nationally, but the number of deaths is as high now as it was during the summer's Delta wave."

The story says that "preventing death is the ultimate goal, and thousands of Americans continue to die from this coronavirus every day even though vaccines have been available to the public for roughly a year … More than 2,000 people are dying from COVID every day right now, and that number has been rising for the past week, according to the latest seven-day rolling averages.

"Roughly three out of four deaths are people who are 65 or older, according to the CDC.  Unvaccinated people are 100 times more likely to die from COVID than people who have gotten three doses of an mRNA vaccine."

•  The Wall Street Journal this morning reports that "Pfizer Inc. and BioNTech SE have started a trial evaluating an adapted version of their Covid-19 vaccine that targets the Omicron variant of the coronavirus.

"The drugmakers said Tuesday they began enrolling adults ages 18 to 55 in the U.S. and South Africa to examine the safety, tolerability and immune response generated by the vaccine if it is given either as a primary series or as a booster dose … Initial study results are expected in the first half of the year, Pfizer said. The drugmaker could ask U.S. regulators for authorization and begin distribution in March, should the Omicron-targeted shot prove to work safely, Chief Executive Albert Bourla has said.

"Should the vaccine be needed, Pfizer and BioNTech would still be able to manufacture 4 billion doses of the shot this year, the companies said."

Published on: January 25, 2022

•  From the New York Times, a story about how "Amazon has an insatiable appetite for electric vans, thanks to a ballooning logistics operation and a pledge that half of its deliveries will be carbon-neutral by 2030. But that hunger is running into the reality that the auto industry barely produces any of the vehicles yet.

"While consumer electric cars are finally hitting their stride — Tesla delivered almost a million cars last year — the market for commercial electric vehicles is still nascent, with their heavier loads multiplying the technology challenges. Amazon would not say if Rivian delivered the first 10 production vans in December, as was expected, and other automakers are not manufacturing at scale yet, either.

"Even though Amazon owns nearly 20 percent of Rivian, it has also put in orders with other automakers, to lay claim to as many vans as it can before they are even under production.

The story notes that "delivery vans are well suited to electric propulsion because they usually travel 100 miles or under in a day, which means they don’t need large battery packs that add to the cost of electric cars. Delivery trucks are often used during the day and can be recharged overnight, and usually require less maintenance than gasoline trucks. Electric vehicles don’t have transmissions and certain other mechanical components that wear out quickly in the heavy stop-and-go typical in delivery routes."

But, a real question remains about when supply is going to meet demand.

“The scale and speed at which we’re trying to do this requires a lot of invention, testing and learning, and a completely new playbook,” Ross Rachey, who oversees Amazon’s global fleet, tells the Times.

•  Gothamist reports that the New York City Council has passed a series of bills designed  "to improve some of the harsh conditions faced by the city's 65,000+ food delivery workers.

"The six bills will establish minimum payments required for delivery workers, and allow workers to set a maximum distance per trip that they will travel, including parameters they can set around bridges or tunnels. They will stop apps from charging workers fees to receive their pay and require workers be paid at least once a week. One bill will force apps to disclose their tipping policies and make them more transparent to workers; another will stop apps from charging delivery workers for insulated bags, which can cost up to $50. And one will require that restaurants allow workers to use their bathrooms."

•  The Washington Post reports that state attorneys general from Indiana, Texas and Washington State, as well as Washington, DC, are filing suit against Google, "arguing that the search giant deceived consumers to gain access to their location data."

The suits charge that "the company made misleading promises about its users’ ability to protect their privacy through Google account settings, dating to at least 2014. The suits seek to stop Google from engaging in these practices and to fine the company.

"The complaints also allege the company has deployed 'dark patterns,' or design tricks that can subtly influence users’ decisions in ways that are advantageous for a business."

Google denies the allegations.

“The Attorneys General are bringing a case based on inaccurate claims and outdated assertions about our settings,” Google spokesman José Castañeda said in a statement. "We have always built privacy features into our products and provided robust controls for location data. We will vigorously defend ourselves and set the record straight.”

•  The Guardian reports that in the UK, Aldi has ended a relationship with Deliveroo that was establishing during the height of the pandemic "when shoppers increasingly chose to shop online" and did not want to go to the store.

According to the story, Aldi plans to "focus on its own home shopping service as consumers return to stores in greater numbers."  The emphasis now will be on click-and-collect.

•  Bloomberg reports that "Indian food-delivery platform Swiggy raised $700 million from investors led by Invesco to expand its on-demand grocery service as demand rises … Backed by the likes of SoftBank Group Corp., Swiggy is among a slew of Indian startups disrupting traditional industries as more consumers venture online. It competes with fellow unicorn Zomato Ltd., which went public last year in a $1.3 billion initial public offering, and the food-delivery arm of Amazon.com Inc.’s India unit.

"While Swiggy’s food-delivery business has almost doubled in gross order value in the past year, the startup is also expanding its Instamart grocery service. That now operates in 19 cities across the country.

"Swiggy wants to lead the emerging quick grocery market, which typically means delivery within 10 to 30 minutes. Instamart is set to reach an annualized gross merchandise value run rate of $1 billion in the next three quarters, the company said."

Published on: January 25, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Colorado Sun reports that "workers at Denver-area King Soopers grocery stores approved a new three-year contract on Monday that includes wage increases of more than $5 an hour for some employees, which the union called 'the most significant wage increase ever secured by a United Food and Commercial Workers local for grocery workers.'

"The contract also creates more full-time employment opportunities and more stringent workplace safety measures. Details of the contract were not shared by the UFCW Local 7, which led roughly 8,000 unionized grocery store employees on a nine-day strike that ended Friday."

•  Kroger has announced that as part of a partnership with Gravity Diagnostics, it now is offering in its 224 Little Clinics "3-in-1 multiplex tests for flu A/B, RSV, and COVID-19 combined, to help differentiate these three types of infections in respiratory specimens … The convenient 3-in-1 multiplex test allows the consumer to test for 3 viruses with only one swab collection. Once you receive your results, the multiplex test can help health care providers know which targeted treatments and supportive care is the right choice for you.

Colleen Lindholz, president of Kroger Health, said in a prepared statement that “Gravity Diagnostics’ 3-in-1 multiplex is another way we are expanding partnerships and our portfolio in the wellness, proactive health and longevity initiatives at Kroger Health. We look forward to expanding convenient care services across our network of pharmacies where we can, as well.”

•  National Public Radio reports that "Krispy Kreme says it will provide a dozen free glazed doughnuts to anyone who can prove they donated blood from Monday through the end of January … At Krispy Kreme, people can prove they gave blood by showing their donation sticker or confirmation of donation in the Red Cross blood donor app. All types of blood are needed, especially O positive and O negative, according to the Krispy Kreme announcement."

The story notes that "the promotion follows an announcement from the Red Cross earlier this month that it is facing its worst blood shortage in more than a decade. Over the course of the pandemic, blood donations and blood drives have dropped off significantly — a problem that's been compounded in recent weeks by severe winter weather."

I give blood at least a couple of times a year -  I have O positive, and so it is nice to be of some use to folks - and so when I saw this story I immediately went to see when I'm eligible to give again.  Alas, not until February … but that's okay.  I really don't need to be eating doughnuts anyway…

Published on: January 25, 2022

Yesterday we wrote that much has been made in recent months of the degree to which the pendulum has swung in labor's direction, with workers - organized or not - able to demand and/or negotiate for higher wages at a time of low unemployments and millions of unfilled jobs.

But the Boston Globe had a story suggesting that despite the higher ages, workers may not in fact be satisfied - since inflation in many cases has wiped out whatever financial giants they may have made.

One MNB reader responded:

I think it is amazing that the media is finally seeing this.  I have been having this same conversation with people since the push for $15hr jobs has begun.  $15hr is now the base and that is not a good thing for inflation or our economy.  It is the small businesses that will ultimately be hurt the most.  Sure, wages go up, but only for a short time because the economy will find the new level and wipeout any or more then the gains that have been achieved.  So then, people want more.

The upward spiral continues.  For all of those that were/are on the living wage band wagon, your vision needs to be focused further out and what truly is the effect of this mandate.  I will say this.  The real reason for all this mess is rooted in one thing.  Higher taxes.  That is the end game.  Higher wages, more tax dollars.  High cost of goods, more sales tax.  Higher home costs, more property taxes. Higher transportation costs, more taxes.  Business will never lose money.  Therefore it is the consumer that ultimately pays for it all.

On the other hand, are workers being paid what they deserve? Interesting that the first thing you go to is the folks traditionally at the bottom of the food chain, the front line workers often finding it tough to survive. Why is that always the first place folks want to cut costs?

It may be radical to suggest this, but is it possible that inflation - painful as it is for all of us, and especially for people who can least afford it - also is serving as a means of telling us what things actually cost?  I concede that "actually" may be the wrong word to use here, but I think it is fair to say that most people have no idea what things really cost, and why.

Yesterday I did a FaceTime video from the shopper's point of view about what retailers can and should be doing to mitigate supply chain issues that are creating empty shelves - and, he suggests, even challenging brand loyalty and established habits - and staffing issues that result in long lines at checkout.

I agree that the current supply chain interruptions, although challenging, offer a unique opportunity to enhance communications with customers.  This could be as simple as encouraging managers to walk around the store during peak hours and engage with their customers as they encounter empty shelves.   The issue may be as simple as there being more of the needed product merchandised off-shelf, or easily accessible in the backroom.

We took note of a story in the New York Times about how CVS Health CEO Karen S. Lynch wants to make the retailer more central to people's lives …. and, of course, their health care needs.

To which MNB reader Tim Callahan responded:

CVS has a lot of issues:  out of stocks … do they care about the front end? … does their coupons/receipt program really reward shoppers? … will I ever walk out of of CVS happy?

The basic “blocking and tackling of retailing” doesn’t seem to be a priority.

What’s next?

All excellent points.