Friday Eye-Opener: Deathwatch
I'm not entirely sure what the business lesson is here, but this is a fascinating story that reflects an extraordinary shift in behavior: The New York Times reports that "for the first time over a half century, more people in the United States are dying at home than in hospitals, a remarkable turnabout in Americans' view of a so-called 'good death'."
And, the story points out, "About 45 percent of older people have completed advance directives, which often specify that doctors should not take extreme measures to prolong life. And hospice care, usually delivered at home, is more available than ever before. Some 1.49 million Medicare beneficiaries received hospice care in 2017, a 4.5 percent increase from 2016, according to the National Hospice and Palliative Care Organization."
This may, in fact, be a reflection of how a self-care movement evolves out of frustrations with the health care apparatus in America. And while I'm pretty sure that the vast majority of retailers won't be putting in "death sections" anytime soon, this trend - and the broader social, cultural and even commercial implications - is something of which retailers must be aware.
It is about exercising as much control as possible, even over the parts of our lives over which we actually have very little control.
And it is an Eye-Opener.
Albertsons Bets On Micro-Fulfillment Centers For E-commerce Future
Albertsons yesterday announced a strategic partnership with Takeoff Technologies to develop micro-fulfillment centers that will power its e-commerce business, expanding on a relationship that started earlier this year.
The two companies will form dedicated teams "to collaborate on the evolution of the micro-fulfillment capabilities to drive the future of e-commerce order fulfillment.
Albertsons Cos., which operates stores in 8 out of 10 of the largest MSA's in the United States, has also agreed to purchase additional MFCs from Takeoff and is evaluating market expansion opportunities. Albertsons Cos. and Takeoff worked closely together on the successful implementation of the company's first MFC in South San Francisco in October 2019."
Takeoff Technologies maintains that "micro-fulfillment centers increase productivity by up to ten times through improved speed, productivity, accuracy, and efficiency. By providing real-time information about inventory, robotic fulfillment can greatly reduce or even eliminate product substitutions."
"The micro-fulfillment center model is a key element in the store of the future," said Vivek Sankaran, Albertsons president/CEO, in a prepared statement. "It combines the efficiency of automation with the ease of meeting customers when and how they want to shop. In working with Takeoff, we can evolve how the MFC ties into our store and e-commerce ecosystems and accelerate our path to best serve our customers."
I'm a huge fan of the current trend toward things like micro-fulfillment centers, flexible formats, dark stores, and ghost kitchens … it seems to me that in many ways, they provide businesses with ways to be more nimble and reactive to changes in the marketplace. Business leaders need to be looking for the alternatives that give them the greatest number of options and flexibility, so they can move fast when the situation calls for it.
And these days, the situation almost always calls for it.
Pressure Grows In US For Mandatory Paid Parental Leave
Axios has a story about how, "as legislation moves forward to give 12 weeks of paid parental leave to civilian federal workers, corporate America is feeling pressure to follow suit — or at least offer sweeter policies."
The story notes that "the U.S. is the only industrialized country that doesn't mandate paid leave for new parents. While there are federal rules about unpaid leave, most companies set their own rules, with an eye toward their bottom lines … Just 16% of private employees had access to paid family leave in 2018 — which includes maternity and paternity leave — according to the latest data from the Bureau of Labor Statistics. That's up from 10% in 2010."
However, this week the Business Roundtable "wrote letters urging Congress and President Trump to make paid family leave — a broader category than parental leave — available to 'as many working Americans as possible'.
"Ginni Rometty, the CEO of IBM, signed the letter, saying that 'while most Business Roundtable companies provide very generous paid leave, there is a need for economy-wide action'."
The Business Roundtable is the same organization that, now chaired by Walmart CEO Doug McMillon, has opined that companies should not make shareholder value their number one priority, but rather have to look at broader issues, including climate change and gun control, that affect their customers and employees.
I'm no expert on such things, but it doesn't seem to me that there is a lot of appetite in Washington right now for a federal response to the paid family leave issue. I suppose that could change, but I suspect it is a long-term shift, not something that will happen after the next election cycle.
The pressure indeed will be on companies to respond in ways that government cannot or will not, and not only do the right thing, but hopefully provide numbers supporting the notion that a workforce that is treated right can actually make companies more efficient, effective and productive.
FDA Finally Gets A Commissioner
The Washington Post reports that the US Senate yesterday, in a largely bipartisan vote, confirmed Stephen Hahn to be the new commissioner of the US Food and Drug Administration (FDA), taking over an organization that is juggling issues ranging from underage vaping to the import of cheaper drugs from Canada, from CBD to "unapproved treatments by commercial stem cell clinics."
According to the story, "Hahn, a researcher as well as a medical and radiation oncologist, has most recently been chief medical executive at MD Anderson in Houston, responsible for the cancer center's clinical care." He is the first permanent FDA commissioner since the resignation of Scott Gottlieb last spring.
New Jersey Mall Hopes Future Won't Be Tough Sledding
Bloomberg has a story about the he American Dream mega mall in New jersey's Meadowlands, a place "primarily known for football games and as the final resting place for more than a few Sopranos characters" and, in some tellings, Jimmy Hoffa.
Now, it has an indoor ski run. "Big Snow, as it's known, rises 16 stories at an angle from the surrounding marshland, like a massive cruise ship run aground. It's a strange sight from the outside and even more surreal within, as skiers and snowboarders descend a 1,000-foot-long, 200-foot-wide expanse of snow. It's kept at a chilly 28F year-round and serviced by a chairlift that ascends to the rafters, all within sight of the Manhattan skyline."
The American Dream mall until now has been something of a nightmare: "For a decade and a half, drivers on the Jersey Turnpike have witnessed the retail and entertainment mecca take shape in very slow increments. Initially conceived in 1996, it didn't break ground until 2004, then targeting a 2007 opening. Delays, funding issues, and changes of ownership would push the total cost above $5 billion.
"Triple Five Group, the company behind Minnesota's Mall of America, anticipates drawing 40 million visitors annually to the 3-million-square-foot space, set to be fully operational by March 2020. It is projected to include 450 stores and restaurants and 15 entertainment options, including a DreamWorks Water Park, a Nickelodeon Universe, a Legoland Discovery Center, a regulation ice rink, and an aquarium."
Sounds a lot more like an amusement park than a mall. Which probably tells us a lot about the mall business.
That said, I'll bet that in 10 years it'll go the way of Emil Kolar.
• Business Insider reports that Andy Dunn, the founder of Bonobos who went over to Walmart as senior vice president of digital consumer brands when the giant retailer bought his company in 2017 for $310 million, is leaving the company.
According to the story, "Dunn announced his departure in a public LinkedIn note titled 'A Love Letter to Walmart' on Thursday, in which the executive praised Walmart for the 'enormous power of a culture built with a singular focus: the customer.' According to the post, his last day with Walmart will be early next year.
"'I learned a lot more about retail transformation in the digital age at the world's biggest company,' Dunn wrote in the note. 'With my departure, that incubator will now be plugged directly into the Walmart mothership'."
"It's a testament to what kind of company Walmart is that I entered thinking mostly about what I could offer, and ended up being the one who received so much," Dunn added. "When it comes to making the world a better place, the world's largest company is, 57 years later, just getting started. It's a credit to the remarkable teamwork of 2.4 million of the hardest working people on planet Earth, all working together."
Bonobos was part of a spending spree that Walmart went on, looking for acquire e-commerce businesses that could bring greater diversity to its portfolio. One gathers that this has not been an entirely successful strategy … and I wonder if this is a precursor to Bonobos being sold not too far down the road.
E-conomy Beat
• The Washington Post reports that the Eastern Atlantic States Regional Council of Carpenters union is charging that "employers at six construction projects that will house Amazon employees or operations in Northern Virginia have evaded federal and state taxes by misclassifying workers, failing to carry workers' compensation coverage and avoiding overtime pay." The union "alleges multiple violations of federal labor law by general contractors, subcontractors and labor brokers who supply workers for projects owned and managed by four development companies and intended for Amazon."
Amazon has responded to the charges by saying it has "decided as a result to apply the rules it has pledged to uphold for the properties it will build in Arlington to its leased headquarters properties in the county as well. Those rules include requiring all workers to be paid prevailing wages, no independent contractors employed without the property owners' approval, and being subject to oversight by a third-party labor administration team."
• The Richmond Times-Dispatch reports that Wegmans plans to build a $175 million, one million square-foot grocery warehouse in Virginia's Hanover County "to support the Rochester, N.Y.-based chain's growth as it continues expanding into the South with more grocery stores.
"The family-owned retailer entered the Virginia market in 2004 and now has 12 stores in the state. It opened its first North Carolina location three months ago — in Raleigh — and has announced plans for at least five more stores in the Research Triangle area of the Tar Heel state."
There will be three buildings - one for dry groceries, one for refrigerated perishable foods and a third one for frozen foods - all built in a single phase and expected to be fully operational in three years.
• National Public Radio reports that the National Labor Relations Board (NLRB) ruled yesterday that McDonald's cannot be held responsible for the labor practices of its franchisees.
The story says that this is "the latest ruling in a years-long union case that sought to hold the fast food chain liable for the treatment of all workers at both corporate and franchise locations. The agency … The case was closely watched because it had potential implications for a vast array of companies that rely on franchising and contracting for work, such as janitorial services, trucking, construction and warehousing."
An appeal is expected in the "long and bitter litigation" that "began in 2015, when the Service Employees International Union accused McDonald's and its franchisees of retaliating against hundreds of workers who supported the Fight For $15 labor movement."
• The New York Times this morning reports that "the family behind Krispy Kreme Doughnuts, Panera Bread and Pret A Manger is donating 5 million euros, or $5.5 million, to an assistance fund for Holocaust survivors after learning that the family business once used forced labor and supported the Nazi regime.
"The Conference on Jewish Material Claims Against Germany, which seeks reparations for Holocaust survivors and funds social services, announced the donation on Thursday.
"The donation was made by the Reimanns, one of Germany's richest families, through the family foundation, the Alfred Landecker Foundation. The family controls the JAB Holding Company, which is worth more than $20 billion and also owns or has controlling stakes in Peet's Coffee, Einstein Bros. Bagels, Stumptown Coffee Roasters, Keurig and other breakfast brands."
• CNBC reports that Pepsi plans to come to market with a limited edition coffee-cola beverage, Pepsi Cafe, which "will come in two flavors: original and vanilla. The coffee-infused cola beverage has nearly twice as much caffeine as regular Pepsi."
Coca-Cola has a version, Coke Plus Coffee, that it sells outside the US, but has not said when it may be available in the US.
• The Los Angeles Times this morning reports that SuperShuttle, "the shared van ride that has served passengers heading to and from airports around the world," is going out of business and will close down at the end of the year.
The reason: competition from Uber and Lyft made the business increasingly unprofitable.
Some context from the Times story: "Shared van services such as SuperShuttle have been hit hard since the advent of ride-hailing services. At LAX, shared van rides plunged by two-thirds in the first half of this year compared with the first half of 2016, the first full year that Uber and Lyft operated there, according to city data. Trips on LAX's FlyAway buses also sank by two-thirds during that time; taxi trips fell 39%; and courtesy shuttles to car rental facilities, parking lots and hotels saw a 20% decline. The number of Uber and Lyft trips, meanwhile, more than doubled."
Yet another example of how disruptors can bring down a business that doesn't do anything to adapt to changing consumer preferences.
• CNBC reports that ride hailing service Lyft is starting a car rental business, "allowing customers to rent a vehicle without having to go to the counter … The service is initially available for select customers in the Bay Area and Los Angeles. Users tap the key icon on their app to start the process.
"The rental option includes unlimited miles, and Lyft said it will handle refueling at market price … vehicles come equipped with Apple Carplay, Android Auto, and phone chargers," with free add-ons "like ski racks, car seats, and tire chains."
And the disruptions continues…
• The Produce Marketing Association (PMA) announced that Dr. Max Teplitski will become the organization's new Chief Science Officer, leading PMA's science, technology, supply chain and sustainability efforts. Teplitski most recently served as the Acting Director for the divisions of food safety and nutrition at the USDA National Institute of Food and Agriculture (NIFA).
Teplitski is succeeding Dr. Bob Whitaker, who is retiring after 11 years with PMA.
From The MNB Politics Desk
Content Guy's Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.
• The Wall Street Journal reports that "President Trump has agreed to a limited trade agreement with Beijing that will roll back existing tariff rates on Chinese goods and cancel new levies set to take effect Sunday as part of a deal to boost Chinese purchases of U.S. farm goods and obtain other concessions, according to people familiar with the matter."
The deal reportedly "calls for China to buy $50 billion worth of agricultural goods in 2020, along with energy and other goods. In exchange the U.S. would reduce the tariff rate on many Chinese imports, which now ranges from 15% to 25%."
The Journal writes that "the president has stressed that a so-called phase one deal - which also includes measures to improve intellectual property protection, open the Chinese financial services market and prevent currency manipulation - is expected to lead to a phase two deal. That agreement would tackle more difficult problems, including forced-technology transfer, subsidies, and the behavior of Chinese state-owned firms."
Your Views: Multiple Perspectives
One MNB reader had a thought regarding Ahold Delhaize USA's announced plans "to transform and expand U.S. supply chain operations over the next three years by investing $480 million, including leases." The investment, the company says, "supports a strategy to transition the supply chain network into a fully-integrated, self-distribution model. The move includes the acquisition of three warehouse assets from C&S Wholesale Grocers and new leases on another two facilities.
This move will also give them the ability to more easily absorb any mergers or acquisitions that may occur…
On another subject, MNB reader Brian Blank wrote:
Interesting piece on Kroger and Walgreen Boots Alliance furthering their team-up efforts. I hope they do a better job than Target did when it "teamed up" with CVS for its pharmacy and HBC. Back when we lived in Cincinnati, Kroger's pharmacy and HBC department were always competitive with the Walmart next door and the Target a block away. Kroger had our pharmacy business and HBC purchases simply depended on which store we were shopping in when we needed something. Moving to New England, we have moved our prescriptions around, but kept our HBC purchases divided between Target and Walmart—Walmart being slightly lower priced, but Target being more convenient and a bit nicer to shop in at the time. Then, when Target decided to hand over their pharmacy and HBC departments to CVS, the prices of HBC items skyrocketed—suddenly the Target private label goods were ringing up as CVS-brand, at CVS prices. And that was the last time I bought anything of that nature from Target (and truth be told, my overall purchasing at Target dropped precipitously as well).
Brian also had some thoughts about Lord & Taylor's situation:
As to Lord & Taylor, I used to love that store, but I haven't even set foot in the local one this Christmas shopping season. Nothing to do with their selection (they actually have a lot of youthful fashions), it all boils down to two things: they never have sufficient staff, and the staff they do have is somewhat awful (maybe they used to be good, but they've been beat down by the company and conditions—I know I couldn't keep up a good attitude with no one to help me take care of customers; and the condition of the store itself—run-down and ratty (broken chairs, worn carpet, peeling wall covering, etc.). Such a shame, and I can't figure out why. Sure, under May Company ownership, I could see it—May's store's were never quite as nice to be in as the cross-mall competition from Federated or Dayton-Hudson. But when Hudson's Bay took them over, I expected much better and never saw it. Now these new owners…feels like the "Millennials are killing" new parent company are "OK, Boomer-ing" L&T to death.
And regarding Maryland real estate firm St. John Properties, which handed out a total of $10 million in end-of-year bonuses to employees, based on length of tenure, to reward the people who make the company work, one MNB reader wrote:
I loved this article. I fully recognize I'm in a small minority, but when times are good, I truly feel companies need to share the wealth with everyone, not just the C-suite folks. Companies need to focus more on their people and less on what wall street wants or feels it deserves. It's insane we "reward" the institutions we borrowed money from and take away any goodwill from the people actually running the boat.
I remember when I first started with Safeway back in the 90's. At the stores, we were given a bonus and Turkeys/Hams for Thanksgiving and Christmas. Granted, the financial bonus was roughly $100 or less but at least it was something. First, the bonus went away, but hey, we could earn double time if we worked the holidays. Then about 3 years later, the Turkeys and Hams were gone. Finally, before I left the company, we could get 10% off one grocery order. The store managers, assistant stores managers, district managers and upwards (And IT managers and higher) would continue to receive bonus but the normal worker was left always chasing after that dream of making it to a "full time" position where 40 hours a week was guaranteed. After 21 years of service on both the retail and IT sides, I left and found a job which surprised me with yearly bonus if certain financial goals are hit. People are the reason companies function.
No matter how good a CIO/CEO/CFO/President is, no matter how many hours they put in and no matter how many boards they are a member of, if they forget about who is actually doing the work at ground level, I suggest they check their egos and do a reality check.Weakened foundations can only endure so much neglect before either the building collapses or serious issues arise.
I have a friend who owns a his own fledgling company and he makes sure his people are paid bonuses and are given paid time off/holiday time off. To say his turnover rate is low is an understatement. When people are treated like they matter, then the company does better all around and overall.
How Technology Empowers Healthcare & Selfcare: A Retail Tomorrow Podcast
Past Retail Tomorrow podcasts have focused on how technology can have an impact on business models and people's lives. In this edition, however, we drill down to talk about how technology affected one life … and, in fact, makes living a best life possible.
Our guest: Heidi Dohse, senior program manager in Google's Cloud - Health and Life Sciences division. Dohse's personal and professional story makes for a compelling narrative that is at once provocative and inspiring.
Hosted by Kevin Coupe, MorningNewsBeat's "Content Guy."
You can listen to the podcast here, or on iTunes and GooglePlay.
This edition of the Retail Tomorrow podcast is brought to you by GMDC, the Global Market Development Center.
In Thursday Night Football, the Baltimore Ravens blew out the NY Jets 42-21.
OffBeat: Big Wow
I'm a longtime fan of Lee Child's Jack Reacher series of novels, and have felt that the last few gradually have deepened their understanding and portrayal of the protagonist - a former Army military policeman who is wandering the country with nothing but the clothes on his back and a toothbrush, getting into trouble and inevitably fighting his way out of it.
Reacher always has been written as what Leslie Charteris - author of The Saint series of novels - called a Knight Errant, generally rescuing damsels in distress and righting wrongs. The prose always has been simple and direct; Child is a highly specific writer, able to write a fight with enormous specificity - the angles, the force, the calculations that go into the simple throwing of a punch - and it has built him a significant audience.
But I must admit that I was a little disappointed by the new "Blue Moon," in which Reacher, by happenstance, find himself in an unnamed city in the middle of a gang war between Ukrainians and Albanians, all the while protecting a young woman and an elderly couple that have been victimized. The situation spins out of control because of a massive series of misunderstandings, and the narrative creates a lot of tension because of a sense that things may collide in all the wrong ways … there is a sense that this could be the book where things go badly for Reacher.
That's all good stuff. My problem is the body count, which mounts to the point where I pretty much lost count. Somehow, it all became sort of mechanized, as if Child is falling back on old tricks rather than moving the character forward is discernible ways. "Blue Moon" is good, but not great … and I know the Child cam be better than this. Maybe next time.
If you get the chance and find yourself anywhere near Broadway, "Tina: The Tina Turner Musical" is definitely worth whatever you have to pay for the tickets. "Tina" isn't a great show - it is a jukebox musical that sometimes works too hard to shoehorn Tina Turner's songs into the scenario, even if sometimes it doesn't quite work. But it features Adrienne Warren in the title role, and she is extraordinary, amazing, delivering the kind of raw, nuanced performance that I think people will be talking about years from now. She's a big Wow.
"Tina" is tough to watch when the title character is being abused by Ike Turner, her mentor and husband … and also revealing as it details what Tina went through during the post-Ike years. (I had no idea how destitute she was before her career was resuscitated.) But it all comes down to Adrienne Warren … tough and steely while simultaneously vulnerable and desperate to be heard. In this case, she's simply the best.
I have two wines to recommend to you this week.
• the 2018 Dauvergne Ranvier Luberon Blanc, which I gather is a blend of the Rolle (a varietal with which I am utterly unfamiliar) and white Grenache, a light and vivid wine that is excellent when served cold; we had it with sushi, and it was perfect.
• the 2015 McKinlay Pinot Noir, from Oregon's Willamette Valley, which is under $20 a bottle and excellent for the price, just a great wine to serve with a juicy burger and maybe some spicy fries. Terrific.
That's it for this week … have a great weekend, and I'll see you Monday.
Slàinte!