business news in context, analysis with attitude

I did a FaceTime video yesterday about a bartender who explained his priorities when making recommendations this way:  "You pay my wages, not the guys in the back."  I thought that was a pretty good way to think about customer service.

One MNB reader wrote:

I think your commentary on “The Wages of Service” has a direct correlation to the point you made a couple of weeks ago about the need for senior management to spend more time on the front lines.  I’ve spent 40 years in the industry and have had the good fortune to work for some amazing retailers and even more amazing people.  I spent over 20 years at H-E-B, half of that time in operations and the other half in merchandising.  I was taught one very important lesson when I moved to merchandising and that was “The people closest to the checkstand should have the loudest voice”.

Frankly, I built a career around that one phrase.  Later in my career, when I held senior level merchandising roles I used the following phrase with my VP’s and Directors, “Let’s get out into the stores and see the practical application of all of our genius”.  A great idea that is built into a strong program but fails to gain traction with the people that do the work typically leads to failure.  The retailers that are winning today still have a focus on the customer, the stores and the people in those stores.

But another MNB reader wrote:

I understand your point… but…were it not for the financial risk, creative abilities, willingness to hire and train employees, incredible work ethic, passion to be successful, willingness to risk-taking, etc, your excellent bartender would not have had an opportunity to give you sound advice. How about suggesting to the bartender that they provide feedback to the owner(s) based on customer feedback to improve the overall experience?

Neither of us know that he doesn't do that.  I still think the message is a good one, and if more employees thought about it that way, it would end up being good for the owners.

Reacting to Michael Sansolo's column about how the Shake Shack experience has measurably declined as the company has grown, one MNB reader wrote:

Your comment on customer services (Shake Shack being just one example) was spot on! I have found the same thing in countless customer service encounters recently, from fast food to department stores, restaurants to hotel checkin counters. There is a labor shortage, so businesses are going to have to make a decision to either pay more to attract better employees or they need to limit hours or close locations to preserve their reputation. Chick-Fil-A seems to have figured out how to deal with the current environment as my interactions in many locations across the US would indicate they still "get it". It's all about management, training, coaching, and replacement where needed.

Responding to a recent story and commentary, one MNB reader wrote:

I appreciated your comment, “They do it by positioning themselves as advocates for the shopper, not sales agents for the supplier.  They use transparency about pricing - explaining why some prices are going up and highlighting places where they can give shoppers wins - as a differential advantage.”

Where I live, I can choose to shop at Meijer, Wal-Mart, or Family Fare.  For many reasons, I have always preferred Meijer.  Their prices have always been on par with Wal-Mart, the selection is better, and the stores are nicer.  With that said, they appear to be doing whatever they can to alienate me as a loyal customer.  Examples:

To get a sale price, you now (usually, not always) have to buy multiples of the item.  That may be fine for potato chips, but Avocados? Yes, to get a sale price on avocados, I must buy 3.  We are a family of two, so 3 avocados that inevitably will ripen within moments of each other ends up wasteful.

Other items have had much larger price hikes than Wal-Mart for the same items, so it goes beyond the manufacturer price increases.

When I have raised these practices as not being friendly to their customers, they respond by having a store director reach out. That poor guy has zero control over pricing practices and can only be sympathetic. Unfortunately, no one at corporate ever responds.

Being advocates for the shopper is how I felt Meijer used to be.  Now they are blatantly interested in only their bottom line.  It’s unfortunate.

We had a story the other day about how Walmart is using AI to bargain with vendors, and one MNB reader responded:

I have a national CPG vendor that regularly sends me emails coming from a bot to communicate P.O. price discrepancies.  When I respond to confirm the correction, I don’t know how that is completed, but the original communication is AI generated.

Yesterday, we took note of a Stars and Stripes report that "five Army bases could soon have private companies instead of soldiers serving food in dining facilities through a new pilot program that aims to completely overhaul the way the service feeds troops in garrisons.  "The hope is to take an approach similar to college campuses and offer brands that have healthy options and are recognizable to young people, such as Panera Bread or Chick-fil-A."

I commented:

It is instructive that the story seems to focus on national fast food and quick-service chains, as opposed to supermarkets.  And yet, there are some terrific food retailers operating in these areas.  Wegmans could handle Fort Drum and Fort Bragg, for example.  Harris Teeter could service Fort Stewart.   Metropolitan Market could serve Joint Base Lewis-McChord.  And if it were me, I'd turn to Tony's Meats and Market to serve Fort Carson.

My point is that supermarkets ought to make a play for this business, and that the government ought to recruit great food stores - which could offer far more extensive and healthy offerings - to serve the needs and desires of service personnel, who deserve better than fast food.

I may have been a little naive.

One MNB reader responded:

A lot of great logic. However, there is a behind the scenes reality factor here.  Arguably, such a contract might well fall under the federal government contracting rules — and subject the entirety of the retail company (stores, distribution, manufacturing, corporate, etc.) to federal contractor status.  

This has a significant compliance cost re reporting, audits, and other factors in hiring, promotions, terminations, wages and affirmative action plans.  While companies whose businesses rely on federal contracts selling goods and services to the feds (i.e. “defense contractors”) are accustomed to this territory—it would be quite a shock to a retailer.  The additional compliance cost might not be worth the return on the federal contract.

Safeway for many years sold dairy products from its manufacturing plants to military bases.  In large part, the company decided to get out of that business because the profit on the contracts was far less than the company-wide compliance costs.  While the federal  rules may certainly have changed since then to make it less onerous to do business with the feds, it is far better to determine the broader ramifications of a federal contract before signing that to find out later what the company actually signed up for.  

And from another reader:

You do realize the cost, regulation, and complexity of filings, applications, and general over the top requirements to being a Federal Government contractor, especially when competing with the Post Exchange bureaucracy?    No rational grocery operator would ever consider entering into the government cesspool of inefficiency and cost.