business news in context, analysis with attitude

We had a story last week about a new online shopping survey from the Retail Feedback Group (RFG), concluding that Amazon and Walmart both get high marks, and that traditional retailers with online functionality still have a lot of work to do. RFG principal Doug Madenberg wrote in with some clarifications:

One of the survey findings has gone below the radar in terms of media coverage but should be a warning call for brick-and-mortar food retail:  We asked respondents which aspects of the grocery shopping experience were best served by ordering online, versus shopping in-store (or somewhere in between).  While online shopping won out on the more obvious factors like “efficient use of my time” and “more convenient for me,” shopping online was also roughly equal to shopping in-store when it comes to “more enjoyable” and “can be more pleasantly surprising.”

It seems to me that physical stores should own the sensory, experiential elements of food retailing… where a shopper can sample a product or smell something cooking, or run into a gregarious butcher or baker, and come away with an experience that can’t be replicated on a two-dimensional screen.  But it seems that stores are not generally capitalizing on what can (and should) make them stand out.  One encouraging image advantage for shopping at physical stores, according to our shopper panel: it demonstrates that the company knows and cares about food.  Amen at least to that.

Responding to our recent story about Amazon pushing Whole Foods to become more centralized in its purchasing behavior, and eliminate some in-store third party support, one MNB reader wrote:

I have to say this could be the first miss step by Amazon/ WF and the WF team is letting it happen. They surely know that turnover in most grocery chains approaches 100% over a two to two and a half year period. That said, the only consistent retail support in the grocery store is manufacturer rep and broker retail support team. This second and third party support in many cases is the difference between success and failure for many grocers, even is some don’t see it. These outside services provide reset, grand opening, re-grand opening support. They stock promotional and regular priced items, rotate product, fill voids and support speed to shelf on new product introductions. They check promotional and regular pricing tags. And, they provide competitive activity if asked for the grocers, as well as serve as emergency blitz support for hurricanes, power outages and store equipment failures.

These businesses go in when the store employees don’t show up, they have to sell in order to make a living! The grocer doesn’t need to worry about hourly wages, unions, hours, training employees with these outside services. In other words these services give the grocer more bang for the buck than any 5 of their own in-store employees.
My goodness, doesn’t WF know this, I am confident when I say that most if not all grocery retailers do!

From another reader:

At the risk of starting a centralization/decentralization religious debate, let me just offer the following thoughts on the Amazon and Whole Foods enterprise business model.  There is no doubt that the closer you can make the decisions that impact customers near the customers, the better customer experience you are likely to have for a given business unit, the store in this case.  That said, unbridled decisions can often solve the same problem or meet the same customer expectations in different ways but at a higher cost, e.g., lost volume leverage, multiple costs duplicated across units, etc.

The real trick given all the data available to understand customer expectations that is being analyzed by some smart business people…both local, regional and national, is deciding what is best for the customer and what is best for cost efficiency.  I gotta believe that Amazon will look to balance those positions with any question as to which is best…falling on the side of the customer.  Which after all, is how Amazon got here.

And another:

Please, Amazon, go and get rid of the local selections and vendors in Whole Foods. We, at Kroger and our other banners, are happy to continue to promote local entrepreneurs and their products!

And still another:

How tragic that the real power of local brands will be left behind. I love being able to buy local at Whole Foods. Not all last, but I love supporting those with the courage to step up and create something new and put it out there. Whole Foods has been such an important platform for new and local producers. And we all get to know and become friends with the vendors who come to our store every week. I truly don’t think Austin can really know what or how to promote a small Vermont Cheese company in Massachusetts. Or if they would even blink along enough for a tiny new company to come into their radar and get their attention. But what do I know….?

We had a story the other day about how Beth Newlands Campbell, the former president of Hannaford Supermarkets, Food Lion, and the Atlantic/Ontario Business Unit of Sobeys, has been named president of Rexall Drugstore, which operates 471 pharmacies across Canada.

Prompting one MNB reader to write:

While in downtown Toronto this summer with my pharmacist wife, we stopped in a newly remodeled Rexall.   As my wife visited with the young pharmacist behind the counter, I walked the store and found it to be bright and well-merchandised.   Despite its small footprint, its shelves had a high profile that allowed them to carry most everything an urban resident might need.   Most interesting to us was the large selection of colognes and perfumes, none of which was locked in a case or had security tags on them as you typically would find in the US.

The other day we took note of a New York Times story about how “marriage, which used to be the default way to form a family in the United States, regardless of income or education, has become yet another part of American life reserved for those who are most privileged. Fewer Americans are marrying over all, and whether they do so is more tied to socioeconomic status than ever before. In recent years, marriage has sharply declined among people without college degrees, while staying steady among college graduates with higher incomes.”

MNB reader Steve Baus responded:

Regarding marriage, a few years ago I remember reading a list of things to do to increase your chances of not being poor.  On the list was get married, stay married and do not have kids until you are married.  If you followed the list, the chances of being poor were in the very low single digits.  Now my wife would say one way to not be poor is to buy the roasted chickens at Costco for $4.99.

MNB reader Mary Cosper pointed to another trend:

A monogamous relationship with children but not married.   I do not have any data to back up this idea, but I have several antidotal stories of friends, family and acquaintances from various socioeconomic backgrounds living this lifestyle (both straight and homosexual).

From another reader, another reason for the decline in marriage:

Don't forget the marriage penalty with taxes.  I think a lot of people are starting to realize that Uncle Sam takes a much higher cut of income from married couples than two singles.

And from another:

I fall into the jaded/complacent/cynical bunch whose parents divorced when I was young. I’m very much the “third option” you mentioned; I’m 27 and in a relationship with no plans of marriage, but it is a topic of conversation often amongst many people my age. Some feel pressured by society/social media to find the perfect partner and other do not feel that pressure. I have friends who:

• Have children but aren’t married. Some in relationships still, some single parents.
• Have children and are married.
• Have already been married & divorced.
• Have been engaged but broke things off (some seem to chronically be engaged & breaking things off…).
• Have opted for the I guess “traditional marriage” route – High school or college sweethearts, move in together, get engaged/married after a few years.
• Have dated for a long time with no desire to ever be married.

A ring and a ceremony don’t really mean that much to me, nor are they indicative of a happy/successful relationship by any means. But I’m glad Mr. & Mrs. Content Guy seem to have things sorted out!

To be honest, a ring and a ceremony don’t mean much to me, either … we had them, but that’s not the reason we’ve been together for so long. (The other day we celebrated the 38th anniversary of our first date.) I got lucky … because nobody else would’ve or could’ve put up with me for so long.

Regarding Amazon’s expanding Alexa universe, one MNB reader wrote:

I’m a big fan of Alexa and have the Dots scattered throughout the home and even have the smart plugs and switches.  I’m hoping that Amazon will create a standalone store similar to the Apple store where one can go and learn more on how to use Alexa and to set up one’s dwelling to better utilize the ecosystem that Amazon is creating for the home and to purchase products there.   I think this would be a huge step forward in promoting the Amazon products and providing a great customer experience.

That’s part of what they offer in their Amazon Books stores. But I agree with you - the larger and more nuanced the ecosystem gets, the more of a resource Amazon will have to be.

We had story the other day about a Ralphs store that just gave away food to local residents driven out of their homes by fires, prompting MNB reader Andy Ellen to write:

How many e-commerce retailers were there to lend a helping hand? But those same people who walked into Ralph’s to be helped in a time in need will go back to their laptop or smart phone to order their groceries and other purchases when their lives return to normal soon forgetting the kindness shown by Ralph’s.

I agree with your first point, but I’m not sure about your second. I’d like to think that people are not quite that cold and forgetful about the kindnesses of strangers.
KC's View: