business news in context, analysis with attitude

Yesterday we took note of a Washington Post report about Oxnard, California, where the city council has "unanimously approved a measure last week to give anyone who worked at least three months in a grocery store or pharmacy during the first 12 months of the coronavirus pandemic a $1,000 bonus," using "$2.5 million in stimulus money allocated to the city by the American Rescue Plan."

Oxnard officials had considered following the path taken by a. umber of other west coast cities, imposting an hourly hazard pay mandate on retailers of a certain size, which businesses have decried as making it much harder to keep some stores economically viable.  However, the city took this approach once it was determined that "there was a mechanism in the stimulus law for doing such a thing.

I commented:

At least this city is putting its money where its mouth is.  Workers get a nice little bonus, but retailers don't get screwed in the deal.  Works for me.

One MNB reader wrote:

You're absolutely right.  Only taxpayers get screwed.

I don't see it that way.  The money was part of recovery funds being distributed by the federal government to communities that needed it to drive their recoveries from a pandemic that threatened their survival.  These workers were essential to keeping people fed and healthy during that pandemic.   As a taxpayer, I see this as an investment that didn't threaten the viability of retail businesses but did help people who needed it.

I'm good with that.

Regarding the steps that Amazon is taking in healthcare that could be putting traditional drug chains at risk, one MNB reader wrote:

The Amazon threat is not about taking prescriptions from the CVS’s of the world but more about taking more away from the traffic in-store.  The shopper that says“ I’ll grab something else while getting my script” is where they make their money.  Scripts bring people to the store.  So with less people, less impulse sales, less $$. 

Yesterday we commented on a Boston Globe piece about how supermarket chain Roche Bros. is getting some grief for having decided to outsource deliveries to an outside contractor called The Grocery Runners, which is using gig workers to make deliveries in their own cars:

I think the Globe did a reasonably fair job of laying out the various arguments, though the headline, which quoted a former driver as saying, "I thought I was a hero, but I’m expendable," didn't do the retailer any favors.  (It appears that Roche Bros. management did not provide any quotes for the story.)

Burt Flickinger makes an excellent point, which in many ways is sort of the closing argument - at a time when inflation is causing prices to go up, and labor is getting more expensive, an independent retailer like Roche has to find ways to keep prices down, which means looking for efficiencies wherever and whenever possible.  That may be the only way to compete with retailers that have deeper pockets and big ambitions to dominate the market.

That said, my biases on this subject have been stated here many times - I think that retailers do run a risk of being disconnected from an important part of the customer experience when they outsource delivery services.  But it may be that the folks at Roche would argue that at this time, it is a tough call, but one that has to be made.

MNB reader Chuck DeZutter disagreed:

Aside from the labor issues, I think your comments around the Roche Brothers outsourcing delivery are showing your (and my) age.

I have four young adults in my household ranging from 17 – 23 years old.  All of them have part time jobs in the retail food industry and based on the deliveries that show up on my doorstep are very versed in leveraging e-commerce for their retail needs.  When I talk to them about their e-commerce experiences, as I often try to do to gain insight, they have a very different view about delivery.  They view the delivery aspect of e-commerce as a separate entity to the retailer or service provider.  If their mobile food order is late or has an issue, they contact the mobile food company, and view it as their issue – not the restaurant they ordered from.  If there is a problem with a UPS or Fedex delivery, they look at it as a failure of the delivery service, not the retailer that engaged the delivery service.  In their view, the delivery service is responsible for delivery and the retailer is responsible for the product.

These young adults don’t know a world where e-commerce wasn’t an option, as us older folks do, so they have the view that outsourced delivery isn’t an extension of the retailer – but a standalone service of its own.  Amusingly, when the pizza was late last week, they really didn’t know who to call, they didn’t realize that the pizza delivery driver was employed by the pizza place and wasn’t outsourced.

While your thoughts and views about outsourced delivery may be valid when applied to us older folks – that application may change as younger folks gain more spending power.

I agree that young people don't care about who is making the deliveries … which is exactly my point.  The retailer is being disintermediated out of the experience, which could be problematic down the road if the delivery company gets into the retailing business.

Albertsons and Fetch Rewards announced that they will roll out a new loyalty/rewards program to more than 2,200 supermarkets under 20 different banners.

I commented:

I tend to have two priorities when it comes to retailer loyalty programs.

First, it needs to demonstrate that the retailer is loyal to the shopper, not just be a vehicle for discounts that try to "buy" loyalty.

And second, it should reinforce the core retailer value proposition;  I like it when a program creates a kind of flywheel, as opposed to have them building value for other brands.

One of my recent favorites was a program developed for Price Chopper by tcc, which allows shoppers to use points to help kids pay off student debt - this just struck me as a big, enormously relevant idea.

It will remain to be seen if the Albertsons-Fetch program meets my priorities.  On the other hand, Albertsons may not give a crap about my standards, figuring, what the hell does he know.

One MNB reader responded:

I’m not sure the ABS-Fetch program will check the box on your priorities.  I just noticed a Fetch offer in a local grocery ad for a specific brand’s products where the customer has to buy $15 worth of product, snap a picture of the receipt, text the image, and get a $5 gift card of their choice. So, is it really a loyalty program for a retailer if others offer the same service. Does it meet either of your priorities?   

Maybe they don’t care about your standards, but they’re ones many believe should be adhered to with a loyalty program.