business news in context, analysis with attitude

I did a FaceTime earlier this week suggesting that Aldi's acquisition of Winn-Dixie and Harveys indicates that anything can happen, and I mentioned that an MNB reader observed that since Aldi and Trader Joe's are owned by the same company, maybe we'll see Trader Joe's sections in Winn-Dixie stores.  (I noted that the two companies are completely separate, but acknowledged that anything is possible.)

One MNB reader responded: 

Just wanted to give you a little insight after your FaceTime today.  ALDI South (Sued) runs ALDI US.  ALDI North (Nord) runs Trader Joe’s.  While the ALDI South and ALDI North are run by brothers, they are 2 separate companies.  So, there is little chance ALDI will be putting Trader Joe sections in Winn Dixie or Harvey stores once the acquisition closes. 


Another MNB reader wrote:

Having been on the inside of several of these M&A deals, like you, the Aldi - Winn Dixie deal surprised me based upon the seeming incompatibility of those two operations.

However, with the cost of real estate and the wariness of banks to finance new store growth in such an economic challenging environment, this deal likely has more to do with converting most of these stores to the Aldi banner, which is growing, rather than to spend time and effort on trying to revive the WD brand with new branded departments and a different marketing and operational strategy.  

Real estate assets can make bad deals good and good deals great.  I bet this deal is more about a land grab than anything else.

And from another MNB reader:

The Aldi takeover of Winn Dixie is a replay of Lidl's takeover of Best Markets on Long Island on steroids. Lidl did it to gain entry into a tough market with strong barriers to entry and to re energize their struggling store roll out. Best Market only had 27 stores and it took them 4-5 years to complete. One of the problems was the Best Market stores were leased and landlord's did not want to take back the space remaining after the conversion of the Best Markets into Lidl units. This was Lidl's approach as they did not want to keep the remaining space, It slowed the process and led to battles with landlord's. Aldi stores at around 20,000 SF are two third the size of Lidl's prototype at 30,000 SF resulting in more vacant space to be repurposed. I don't see this being any easier for landlords in the Winn Dixie market which lacks the barriers to entry Lidl faced in Long Island. I don't see the upside for Aldi in this takeover and see it as a major distraction and disruption to how they go to market. Aldi has succeeded by developing and perfecting a very focused model. I believe more grocery operators have failed at trying to operate multiple store prototypes than have succeeded.

Yesterday we took note of a Parade report that Publix Super Markets has started putting up signs in its stores noting its "ban on pets and emotional support animals."  The move - which actually just serves to enforce a policy that has existed for years - is generating some controversy among customers.

According to the story, "The sign states, 'Under federal law, service animals are dogs or miniature horses trained to perform tasks for people with disabilities.  Non-service animals are not allowed in grocery stores by the FDA'."

I commented:

Let's start with what strikes me as new information:

Miniature horses?

We've raised and socialized guiding eye dogs, but the possibility of raising/socializing miniature horses never came up.  (Thank goodness.  I can only imagine what the back yard would like if we'd gone down that trail.)

I can't criticize Publix for this one, and people upset with the chain have only the people who take advantage of the law to blame.  Apparently it is not that hard to have a pet certified as an emotional support animal, which leads to pets being in all sorts of places they shouldn't be.  I'm sure that Publix just got to the point where there were all sorts of animals in its stores and it had to draw the line.

That said, I hope that anyone who sees a miniature horse certified as a support animal inside a supermarket will send me a picture.

MNB reader Mike Moon responded:

When I was a city councilman, we had a woman who came to our council meeting to plead for a change in our animal ordinance that banned barnyard animals in town (horses, cows, sheep, etc). She claimed she wanted to keep a miniature horse for her husband as an emotional support animal. Behind the scene, we jokingly called it the Seeing-Eye Pony ordinance. It did not pass....(you don't have to print this part of my email if you think it is insensitive...)

When I ran my stores we had a customer who had adopted a retired service animal. "Clifford", a standard poodle, had been fully trained and certified and had a long career helping his master. But for this customer, he had not been her service dog, he was her pet. She took him everywhere;  to the grocery store, to council meetings, and even to a funeral service for one of our notable citizens. After a few complaints of her bringing her dog into the grocery store, I asked her if she would please leave Clifford at home. I got an earful about how he was registered and certified and could go anywhere a human could go. I even got a call from Clifford's trainer, to let me know where the law allowed him to go. While this customer was obviously abusing the situation, she eventually started leaving Clifford at home for her grocery trips.

With that being said, my wife and I travel with our dogs. If we are out hiking or sightseeing with our animals, we are not going to leave our dogs in a potentially hot car while we run in for supplies. Fortunately, many businesses in tourist areas are pet tolerant, as long as the animals are supervised and well behaved. If we were denied to take our pet in, we would shop elsewhere.

I'm sympathetic.  I subscribe to the notion that every dog is a rescue dog - but every dog rescues, in one way or another, its owner.

From another reader:

Check out the ADA regulations...miniature horses and dogs are the only recognized service animals.  

Horses are big and sturdy enough to support a disabled person, as well as being smart enough  to assist with other issues.

Okay.  I just didn't know it.

Another MNB reader was, shall we say, less sympathetic:

How dare Publix ban my “fur baby”! Animals have become such a part of the family, and are treated as human, that I can see a movement forming to stop discrimination against “Animal-Americans.” I don’t mean to be insensitive, but can’t some of these people with legitimate emotional support animals, but not actually service animals, use online delivery? On-site pickup? You can’t say retailers haven’t tried to accommodate people with special needs by adding these kinds of services. And they can surely take their business to a store that does allow animals, if that’s part of their business model. But we don’t need herds of animals roaming the grocery aisles. What could POSSIBLY go wrong?

On another subject, one MNB reader wrote:

Good piece on Rao’s. I know a bit about Rao’s, as they have been a client.

It is significant that on the day the Campbell’s deal was announced that Mark Clouse, Campbell’s CEO, and Todd Lachman, CEO of Sovos, were in Italy at LaRegina (Raos’ Italy producer) to be with Felice Romano (the sauce meister) to assure him of their commitment to his recipe/process.

Rao’s is thriving and soared during Covid. Italian food is a favorite and people couldn’t eat out, so with Rao’s, treated themselves to restaurant quality meal, at “grocery store” price.

Post Covid, a pullback at higher end Italian restaurants, with consumers opting not to pay $20-30 for a plate of pasta which has helped continue the Rao’s momentum.

With Rao’s, it can actually be a cost savings vs. making your own sauce when you add up the cost of ingredients.

Rao’s must also thank Retailers who aggressively pushed Rao’s……..the sales message make more profit from the sale of one jar of Rao’s than you do from the entire sale price of a lower price brand.

I agree with everything you said, except that I think making my own sauce isn't so much about quality and cost.  For me, it is about finding a kind of peace as I mix the various ingredients for a bolognese, listen to a little Art Pepper or Coleman Hawkins, and sip some good red wine.

Can't get that from a bottle.

Yesterday we took note of a Fox News story about how in a recent earnings call, restaurant company Yum! Brands said that it has "plans to eventually move to 100% digital sales at its restaurants.  This includes fast food chains like Taco Bell, Pizza Hut and KFC … CFO Chris Turner said that it is inevitable that 'more customers would be ordering through apps, websites or kiosks in the stores,' and that the company already is 'testing the use of artificial intelligence to take drive-thru orders'."

One MNB reader wrote:

That timeline will be a long time coming – especially when it comes to specific demographics. Here in the Los Angeles area, there is a movement underway by Los Angeles City Council member Heather Hutt to ban cashless operations. I thought this statistic was enlightening:

“A 2022 Pew Research Center study found that roughly 40% of Americans go “cashless” each week – meaning none of their purchases involved physical dollars and cents. That’s up from 29% in 2018 and 24% in 2015….The Pew study also found that roughly a quarter of Black adults (26%) and 21% of Hispanic adults make almost all of their purchases using cash in a typical week, compared with just 12% of white adults.

“As a City that has promised to be a safe and fair place for all, we must be proactive in ensuring that all our systems create fairness and equity for each and every individual,” Hutt said.”

And finally, yesterday in a story about Albertsons' ESG and DEI initiatives, we quoted the company as saying that "Albertsons Cos. is committed to cultivating a diverse workforce and fostering an inclusive culture that embraces differences and provides equal opportunity for all associates."

I commented (with tongue slightly in cheek):

All good stuff, the only downside being that somebody probably will sue Albertsons over its Diversity, Equity & Inclusion (DEI) initiatives, saying that it is bad for business.

One MNB reader responded:

As they should.

ESG and DEI is [sic] bad for America.

I disagree.  Profoundly.  I believe that both are good for business and that there is a lot of evidence to that effect.  Plus, diversity in the workforce - hiring a variety of people with different perspectives and experiences - makes business more able to cater to customers with different perspectives and experiences.  What makes a business exceptional is celebrating differences and making room for diverse peoples, just as that is always what has made America exceptional.

If people do not want to invest in, or work for, or hire businesses with ESG and DEI programs, there are plenty of options.  I believe the people filing these suits and indulging their grievances are simply looking for a fight.