Published on: April 14, 2022
Tomorrow is Good Friday, and I'll be taking the day off. MNB will be back on Monday … I hope you have a great weekend.
Sláinte!
Day: April 14, 2022
- KC's View:
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I find myself wondering who the "legal counsel" is that Schultz is citing. Is it Rachel Gonzalez, the General Counsel who was dismissed as soon as he returned the CEO role? Just curious.
I think it is fair to say that the third-time-around version of Howard Schultz doesn't appear to be kinder and gentler. He's willing to play hardball, whether it is referring to unionization as an "assault" on the company - ignoring the fact that at least some employees seem to feel that the company has let them down - or telling a barista that "if you hate Starbucks so much, why don’t you go somewhere else?"
There are different ways to present this. Schultz could've said, "We're developing a new benefits package that, once complete, we'll be extending to all our non-union employees. I can't promise that they'll be extended to unionized workers because all that needs to be negotiated."
He's right that companies cannot unilaterally change compensation packages for unionized workers, but that doesn't mean that all the unilateral changes made for non-union workers necessarily are good ones. Unions are designed to make sure that nothing happens unilaterally - good stuff, nor bad stuff.
I just think that Schultz sounds petulant and mean in how's he's presenting things. One MNB reader suggested to me that maybe Schultz needs to cut back on the lattes; maybe he just needs to switch to decaf.
- KC's View:
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A few things here…
First, in the interest of full disclosure, I have to point out that Replenium is a long-term MNB sponsor.
Second, Replenium's CEO is Tom Furphy, who joins me here on MNB regularly for The Innovation Conversation.
The thing is, I would've reported on this study's results if they'd been sponsored by the Jones Company, which had as its CEO Mary Jones. So I saw no reason not to do so because of the Replenium-Furphy connection.
I've always been a longtime fan and user of Amazon's Subscribe & Save, which is an auto-replenishment system that was launched - by a team that Tom Furphy led - back in 2007. I've been arguing pretty much since then that auto-replenishment was a threat to many of the sales done by traditional food retailers, and they needed to find an answer to it.
We have some two-dozen items on Subscribe & Save in our household, which means that we are absolutely loyal to Amazon on those items, and absolutely loyal to the brands that we have on our list. Because of the convenience, these are items that, while we used to buy them in stores, we'll never have to buy in a store ever again. For us, they also are items for which there is absolutely no advantage to buying them in the store.
Auto-replenishment, I've always felt, provides a dynamic way for the retailer to become more intimate with the shopper's needs and, therefore, more responsive because the data is there to be acted upon.
And so, I'll repeat what I've said almost from the moment that I placed by first Subscribe & Save order - retailers have to offer their own version (which is what Replenium is … and yes, that's a free plug), or figure out an answer to it. Ignoring auto-replenishment and all its implications is not an option.
- KC's View:
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Of course, grocers cannot appear to be enjoying inflation too much, or taking advantage of their customers. It is a balance that has to be struck in reality, but also a situation in which optics matter. (Maybe companies need a new COO position - Chief Optics Officer.)
- KC's View:
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Somehow it is not surprising that big labor organizations have grown out of touch with their members' lives and needs. It actually takes a lot of effort for any institution, as it grows, to stay attuned to the front lines … which is why so many big companies have trouble doing so. There's no reason that unions should be immune from this syndrome.
There's a reason the grass roots organizing at Amazon, at least to this point, has been more successful than organizing done by outside groups. It ought to be an object lesson - not just for unions, but also for companies, about the critical importance of the front lines.
- KC's View:
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Hardly a surprise. The question is whether inflation will be long and steep enough to require another surcharge at some point.
Published on: April 14, 2022
Fast Company has the results of an anonymous survey of close to 1500 c-suite executives around the world in which 58 percent of them admit to "greenwashing," or making unsupportable sustainability claims. In the US, it is actually worse - 68 percent admitted it. To me, this is a combination of two sins - not doing what needs to be done when it comes to sustainability, and lying.
Published on: April 14, 2022
There are multiple reports that Starbucks CEO Howard Schultz is working on a new package of benefits that would only be available to employees who have not voted for unionization. Legal restrictions, he says, would mean that unionized employees need not apply.
The Wall Street Journal reports that "Schultz told store leaders that expanded benefits will help reduce attrition among Starbucks workers, but that those new benefits legally can’t go to the growing number of stores that have voted to unionize. Federal law requires separately negotiated contracts for union-represented workers’ pay and benefits, and the company can’t change their compensation unilaterally, Mr. Schultz said, citing Starbucks’s legal counsel."
Cathy Creighton, director of the Cornell University ILR Buffalo Co-Lab and a past attorney for the National Labor Relations Board (NLRB), confirms to the Journal that "once workers have unionized, the law states that employers can’t unilaterally change compensation and other terms for those workers without bargaining with their union … But an employer can ask unionized workers if they also want additional benefits, she said."
“It’s a union avoidance technique,” Creighton tells the Journal.
The story notes that "nearly 200 of Starbucks’s 9,000 U.S. corporate stores have petitioned for union elections since last year. The National Labor Relations Board said it has certified unions at eight Starbucks locations."
Published on: April 14, 2022
A new study of Amazon Prime members - conducted by Kantar Marketplace and sponsored by Replenium - found that:
• "One in four shoppers are already using repeat shopping automation for products they need regularly."
• "A wide-range of product categories, from personal care to perishable food, are included in repeat shopping purchases."
• "Appetite for repeat shopping automation also exists across a wide array of retail formats, with one in three indicating they’d consider using in mass retail, one in four in grocery, and one in five in drug, if offered, over the next six months."
• "Over two-thirds of shoppers indicate they would allocate some of their spend at their favorite retailer to repeat shopping automation, if offered. Offering the capability across shoppers’ favorite retailers is estimated to lead to a 33% increase in spend, among those spending $101+/month on the capability, a
result of more shoppers moving into this spend bracket."
• "Convenience, in the form of delivery and time savings, product discounts, and the ability to stay in stock on most frequently used items are top reasons shoppers like repeat shopping automation."
Published on: April 14, 2022
Bloomberg has a piece entitled "Tesco Is Being Way Too Pessimistic About Inflation," in which it argues that while "Tesco Plc has become the first British food retailer to warn about the impact of the cost-of-living crisis," it is "worth remembering that inflation — even at a 30-year high of 7% in March — isn’t all bad for grocers."
Bloomberg frames one way to think about it:
"Tesco risks being overly pessimistic. While most investors are focused on the detrimental effect of inflation, periods of higher food prices can actually be helpful for supermarkets.
"If shelf prices are rising, supermarkets’ sales automatically jump too. As long as customers don’t cut back too much on what they buy, that should lead same-store sales — a measure closely watched by investors — to expand. In contrast, deflation is pernicious. In this type of environment, supermarkets must sell more cans of beans and loaves of bread to reach the same level of sales.
"What’s more, as customers’ budgets are squeezed, they may trade dining out for more grocery dinners. Why not choose a meal from Tesco’s premium Finest range instead? Rising gasoline prices may keep more people away from the office and stuck at home, too."
Published on: April 14, 2022
Axios reports that regardless of all the attention being garnered by unionization efforts at Amazon and Starbucks, momentum is being hampered at the "big labor" level because "the big unions are too focused on getting legislation passed in Congress and haven't paid enough attention to grassroots organizing efforts."
The story goes on:
"Institutional labor is out of touch, said one person familiar with the inner workings of the AFL-CIO who didn't want to publicly criticize their own organization. Too many union officers didn't start out as unionized workers — but instead rose through the ranks as staffers for the organization. 'If you can't relate to the people you're representing, you're lost,' the source said.
"'There's a lot of money spent on polls and focus groups. Each word gets tested,' said another person who's spent decades at some of the biggest unions. 'We kind of overlay what we think [workers] need, as opposed to what they really want'."
Published on: April 14, 2022
Fox Business reports that Amazon told its third-party sellers yesterday that "it will soon implement a 5% "fuel and inflation" surcharge on top of existing Fulfillment by Amazon (FBA) fees, saying the move was in lieu of making a permanent fee increase … While fuel surcharges are common for shipping firms, this is the first time Amazon has added such a fee amid the persistence of soaring inflation driven by high gas prices."
The story goes on: "Amazon said the new surcharge will be implemented April 28. Once it goes into effect, the added cost for inflation and fuel will come out to $0.24 per unit, making total fees to sellers (covering services such as storage and managing orders) $2.52 per unit. The company said that as of March 21, UPS and FedEx's fuel surcharges were at $0.42 and $0.49 per unit, respectively.
"The retail behemoth followed Uber and Lyft in adding a fuel surcharge for the first time ever in 2022. The rideshare competitors both added fuel surcharges in an effort to provide some relief to their drivers, but have received pushback from customers who complain the costs have risen too high."
Published on: April 14, 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…
• The United States now has had a total of 82,192,880 total cases of the Covid-19 coronavirus, resulting in 1,014,114 deaths and 80,052,061 reported recoveries.
Globally, there have been 502,226,891 total cases, with 6,214,922 resultant fatalities and 452,486,233 reported recoveries. (Source.)
• The Centers for Disease Control and Prevention (CDC) says that 77.3 percent of the total US population has received at least one dose of vaccine … 65.8 percent are fully vaccinated … and 45.3 percent of fully vaccinated people have received a vaccine booster dose. In addition, the CDC says that 49.6 percent of eligible Us residents have received their first vaccine booster dose.
• Axios reports that "the Centers for Disease Control and Prevention is extending its travel mask mandate for two weeks to monitor a spike in COVID-19 cases … The transportation mask mandate, originally set to expire on April 18, is now in effect until May 3. The mandate applies to planes, buses, trains and transit hubs.
"In order to assess the potential impact the rise of cases has on severe disease, including hospitalizations and deaths, and health care system capacity, the CDC Order will remain in place at this time," the CDC said.
Published on: April 14, 2022
• Amazon said yesterday that it has partnered with the Houston Astros to bring its Just Walk Out technology - used in Amazon Go units, as well as in select Whole Foods stores - at Minute Maid Park, "providing fans a faster and easier shopping experience during the 2022 Major League Baseball season and beyond … The Just Walk Out technology-enabled ‘19th Hole’ store is located on the Concourse level behind Section 156, and the Just Walk Out technology-enabled ‘Market’ store is located on the Honda Club level behind Section 211. Both stores offer a selection of snacks, soda, candy, and ready-to-drink alcoholic beverages. The Concourse level store also offers pre-packaged salads, wine bottles, and souvenirs."
Remember the estimate by one expert that within three years, roughly half the country will have had at least one checkout-free store experience. Which will rewire their brains and raise their expectations.
Published on: April 14, 2022
• The National Association of Convenience Stores (NACS) is out with a report saying that "total in-store sales increased to a record $277.9 billion in 2021 … The in-store increase in sales came despite a 1.5% decline in the number of convenience stores, which totaled 148,026 stores at the start of 2022.
"Factoring in fuels sales of $427.8 billion, total convenience store sales reached $705.7 billion in 2021, meaning that overall sales were 3.1% of the total U.S. GDP of $23.0 trillion in 2021.
"The average in-store basket size increased 6.3% in 2021 to $7.59 and has grown 22.4% over the past two years, making up for a 6.9% decrease in in-store transactions since 2019."
• Tasting Table reports that in an open letter posted on Facebook, Aldi CEO Jason Hart "reassured customers that saving them money will continue to remain Aldi's number one priority. 'No matter what happens in the world around us, Aldi will always be the low-price leader in every community we serve … No tricks. No gimmicks. Just real savings that help stretch your dollar further for the things that matter most'."
Published on: April 14, 2022
• Walmart announced that it has hired John List, an economics professor at the University of Chicago and until recently the chief economist for Lyft, to be its first-ever chief economist.
• Save A Lot announced the hiring of Trey Johnson, most recently the EVP, Chief Merchandising, Marketing & Supply Chain Officer for The Save Mart Companies, as its new Chief Merchandising Officer.
The announcement notes that "Johnson brings over 30 years of experience leading complex business operations, merchandising strategy and supply chain efforts, working with prominent brands and organizations including Albertsons, Big Lots, Family Dollar, Jewel Food Stores, SuperValu and Walmart."
• United Natural Foods, Inc. (UNFI) announced that it has hired Chris Finck, the former Chief Commercial Officer for Dean Foods and Chief Customer Officer for Treehouse Foods, as its new President, Atlantic Region
Published on: April 14, 2022
Got the following response from an MNB reader to Albertsons' posting yesterday of its Q4 and FY 2021 results:
Glad to hear that Albertsons is doing so well! With skyrocketing fuel costs and 8.5% inflation rate, one of their banners that I work for was generous enough to give the full time employees a 40¢/hr wage increase. It's so nice to feel valued (insert sarcasm).
Not feeling essential, huh?
I feel your pain.
Got some interesting notes yesterday about our posting of the finalists in the FMI—The Food Industry Association 2022 Store Manager Awards.
One MNB reader wrote:
Looks like the FMI—FIA doesn’t get into retail stores west of Michigan. Not a single Store Manager finalist from this half of the country? Especially Category A, where New Seasons, PCC, Bristol Farms, Zupans, etc. has excellent store managers and retail stores!
I checked, and it appears that this list is not compiled by FMI … store managers have to be submitted.
Store Manager Award nominations are submitted by peers and food retail companies to recognize outstanding managers who generate sales growth, effectively communicate company and store goals and objectives, demonstrate team leadership in their store/company, provide exceptional customer service through in-store programs and improve community relations.
It may be that the awards are not seen as being as relevant to west coast companies as to east coast companies. Or maybe it is just a time zone thing. But I agree with you - the retailers you mention all have excellent stores run by some wonderful people.
This is sort of like the Best Companies To Work For list - the companies have to submit to be considered. if you don't make the time and effort, you have no shot of making the list.
BTW … a note I did not make the other day … did anyone else notice that Starbucks - for the first time I can remember - did not make this year's Best Companies To Work For list?
Maybe they didn't apply. Maybe they didn't bother, because they understand their cultural weakness of the moment. Or, maybe they applied but didn't make the cut.
MNB fave Glen Terbeek had another thought about the FMI list:
I think it is interesting that this store managers award is organized by chain size. The shoppers only care about their store, not the size of the chain. Does chain size make it more difficult to manage a store to its local market? It shouldn’t.
Regarding higher accident rates at Amazon facilities, MNB reader Chris Weisert wrote:
I cannot help but wonder if the increased accident rate is tied to the understaffed issue.
And, regarding Amazon's efforts to hire recent high school graduates to work in its warehouses, MNB reader Mark Hannay wrote:
I feel the job opportunities at Amazon are a great starting level opportunity in a great industry. It is an important opportunity that could lead to a life time of high paying leadership positions for young people that love to work.
I grew up in the food industry starting at the age of 16 working in high school at Ralphs Grocery Company in Southern Ca. That starting pay was $1.67 1/2 per hour in 1968.
While working for Ralphs I was able to be promoted while working nights and weekends. Sure I closed the store on Friday nights till 10:30 and opened the store at 1:30 on Saturday and worked Sunday. While working nearly full time and going to school full time I was able to graduate from High School, BS Degree and an MBA from USC debt free. I got married, bought a small condo and drove a new Corvette. All paid for from working at Ralphs and going to college. I was one of 8 children so my parents were not able to support my school expenses. So hard work paid the bills and I had no time to get into trouble.
The hard work of working all night for many years, unloading 3 trailers, cutting open, price marking and stocking shelves motivated me to get a degree. During college moved up the management positions till graduation when there was an industry of opportunity for hard working young people. Of course I missed all Friday night Football games and parties as I was at work. Saved a lot of money by working. So many life lessons learned early.
I would encourage any young person to embrace the challenge of hard work and they will never forget how hard those jobs are and respect anyone doing manual labor for the rest of their lives.
The joy of a job well done is a big reward. Wishing these young people much success.
I also started working in retail at around the same time, making the same minimum wage.
I was the oldest of seven children, and used my ages to pay my way through private high school (Iona Preparatory School) and college (one year at SUNY Purchase, three years at Loyola Marymount University). Though I did find time to get into some trouble, to be honest …
That said … I would never equate the working conditions I experienced with the working conditions at a modern Amazon warehouse. I think they are entirely different animals.
I also think that it is important to remember that what a college education cost when you and I went to school was a lot less than what it costs now. Living expenses were a lot lower than what they are now.
The world in which you and I grew up was an entirely different place than the world that exists now - in some ways for the better, in some ways for the worse. But I am never so naïve as to think that much of what I experienced 50 years ago has much relationship to what young people experience now.
Yesterday we had a piece about March's inflation numbers, and I didn't do a commentary … I just couldn't think of something to add. The numbers speak for themselves.
One MNB reader noticed:
A 40 year high on inflation… and no comment from Kevin? You think the the Biden administration’s policies might have something to do with these outrageous numbers? Food, gasoline, new and used cars, car rental, hotel, rent, services… all of these surging. Let’s hope voters smell the coffee, study the issues and vote sensibly in the mid-terms…
Are you kidding?
I think we should blame the Biden administration for everything that has gone wrong. And, if there's something for which we cannot assign blame to Biden, we should blame it on Obama. And Hillary.
Because let's face it … there can't be anything or anybody else to blame. What's the point of nuance and contextual thinking when blame can be arrived at so easily, and arguments can be made so facilely?