business news in context, analysis with attitude

Amazon announced last week that it will make its Amazon One palm recognition technology available to shoppers in every one of its US Whole Foods stores by the end of the year.  The tech links people's palm prints to their credit cards.

I commented:

There will be folks who won't want to use the Amazon One tech because of privacy concerns, but unless one is going to the store and only using cash, and not carrying any sort of electronic device, the odds are pretty good that if someone wants to track your movements, they can.  And maybe will.

I figure that my movements aren't all that interesting, and for me, the reduction of friction seems to be an advantage that outweighs the potential negatives.  

It is a smart move for Amazon, and I hope just the beginning of an ongoing effort of connecting Amazon's and Whole Foods' value propositions in a way that is relevant to customers of both.

One MNB reader responded:

Agreed that this hopefully brings Amazon and Whole Foods value propositions together to better the customer.  Whole Foods is one of my customers and our team is handling the implementation rollout of the Amazon One device which has been going smooth so far.  There will always be pushback on new tech especially from the boomers.  Heck, I remember when Whole Foods was one of the first tier one retailers to adopt a single station Epson printer that did not accept checks anymore and the uproar they received, albeit short lived.  This was around 2015.  Whole Foods and their customers survived and continued on as they will here. 

And from another reader:

We’re with you on this one.  Less friction is our middle name!! Showed my wife the video you embedded and she was ready to sign up on the spot!  She’s Amazon Prime and at WF 2-3 times a week.  She’s German and Europeans, you know, go to the store every other day.  I keep trying to tell her in America, it’s about how often the truck delivers to the back of the store, not how often you go.  But good luck.  Meanwhile, sign us up for Amazon One!

Last week, the Wall Street Journal reports about how traditional supermarkets are being disrupted out of business, largely by continuing to focus on center aisle sales where they are unable to differentiate themselves from the largest competitors, and not changing their approach because they are addicted to promotional dollars from major CPG companies.

I commented:

Let's be clear.  Glen Terbeek was talking and writing about this decades ago, especially the fact that supermarkets' reliance on promotional dollars could corrupt them out of business.

If traditional grocery stores don't survive, it will be self-inflicted, because they haven't differentiated themselves successfully enough.

MNB reader Mark Heckman responded:

Kevin, your analysis is dead on…as usual.  After I read this article this morning, I thought of Glen, just as you did and sent him a link to the WSJ.

Amazing how “indifferent” even the best retailers are to the slow but certain demise of the traditional supermarket…much to it do to letting the B2B money drive how center store looks, feels, shops and even what products are offered. 

Long, visually busy aisles discourage entry and many center store categories are simply over sku’d due to the irresistible deal monies and slotting fees.  What retailers do not effectively measure is the opportunity cost of the lost sales of shoppers who have found more efficient sources for those products.  Perhaps if they did, they might act.  

We referenced a couple of stories last week about Dollar General - one about how it sued its way into opening a store in town where it apparently was not wanted, and the other about how a US labor-board judge ruled that the company committed 'numerous and blatant' violations of federal labor law in its effort to defeat a unionization drive.

I commented:

I have not had a lot of interactions with Dollar General over the years - I've been in a few and been largely unimpressed, but for the most part they are not in my part of the world.

Yet.  On the other hand, they're the fastest growing retail chain in the country, so maybe the reprieve is only temporary.  And it appears that if they wanted to come to my town, and we voted to not let them in, it might not matter.  They'd just sue.

I really hate bullies.  And I wonder to what degree this mode of operation is consistent around the country.

One MNB reader responded:

There seems to be a real disconnect between DG’s corporate and store operations. Through my many years in the c-store world I have stopped in a number of DG stores and there were just too many disasters. I now live out in the country and Dollar General is the closest store to my house and I continue to see the lack of attention to store operations. I feel very bad for the employee's. I suspect that the turnover numbers are horrific. I can understand why the employees would want to unionize. I’m sure they feel hopeless. 

The out of stock conditions are amazing. The opportunity costs for DG, if they can be calculated, should wake someone up at corporate or maybe some shareholders to make some changes.

Another reader wrote:

Expensive to get distribution into if picked, around $250K per SKU. 

Very true.  I should've referenced that in my commentary - we've reported here on how Dollar General looks to suppliers for a lot of funding - I'd argue exorbitant funding - whenever it opens new stores.

On another subject, an MNB reader wrote:

Just a point of clarification from one of your biggest fans!

The reader who wrote in commenting on WM and Target said TGT HQ is in Michigan. 

We of course know it’s here in Minnesota!

Very true.  I should've noted that.

One MNB reader had a comment about the largest-Costco-ever that is slated to be built in California:

I was surprised to read about a new Costco with 32 gas pumps.  It wasn't that long ago I remembered reading about how CA was banning all new stations.  Turns out after looking it, the bans are city driven initiative and mostly around San Francisco.  It still seemed surprising though.  I don't see the gas car going away in my lifetime but I was also wrongly on the recession bandwagon.  I'm not always right.

I actually think that it won't be long before many of those pumps will have to be converted to electric charging stations.  After all, in just over a decade California will ban the sale of new gas-powered automobiles.

Responding to my video about an Amazon Fresh store (with which In was not impressed, though I return hope), MNB reader Bob Wheatley wrote:

You know the apple never falls very far from the tree. For you and me, everyone for that matter, how we were raised and the influence of our parents shapes the conduct, thinking and behaviors later in life. It doesn’t take long to see the thread of our personal history in how we operate. That same self-awareness and influence of “DNA” exists at the core of Amazon’s Fresh concept. This is a company whose roots are found in logistics and algorithms and love of same. It’s one thing to buy your way into food retail with an ethos driven banner like Whole Foods, and another to create a concept from scratch. We love food on an emotional level. You noticed the distinct absence of food love inside the Fresh Store. More focused on sensors and software? It’s palpable.

Your point about bringing in fresh leadership that knows and appreciates food experience is spot on. But I wonder how far an executive(s) will get inside a company whose culture, decision-making, priorities don’t follow the path of embracing food culture, but are rather enamored with innovations like ‘just-walk-out” tech. If I were Amazon, I would separate this operation from the mothership and enable the creation of a unique culture whose roots and priorities are quite different. If the apple doesn’t fall far from the tree, maybe a different tree is in order. Just saying.

From another MNB reader:

Good video on Amazon Fresh. I think they found out the hard way that leading with their tech, rather than the strength of their offer, isn't enough to drive visits. 

And from yet another reader:

I think a surprising amount of volume is going out through the staging area with pick up. Surprised how aggressive their ads have been lately.

MNB reader Steven Ritchey had a thought about another story:

I read with interest the article about In n Out banning masks in five states, as well as its other issues with ensuring employees are vaccinated and stores closing for violating public health orders.

First off, let me say we have these burger places in my area, I've been to some of them, and I've not been impressed.  I know you and many people absolutely love them, I don't see the big deal

However, things like this say something about the company's culture.  First off that employees health and safety, and their well being don't matter very much, and second that they seem to think that rules don't apply to them.  

The perception that they don't really care about the health and safety of their employees just gives people like me who don't visit their stores another reason to dislike them.  The flaunting of public health and safety rules doesn't make them look like good corporate citizens either, another reason people like me won't care for them.

You never know, that young lady wearing a mask who took your order, she may have an autoimmune disease, her immune system may well be compromised.  We don't and can't know what everyone else's health is like, so we have to allow them to protect themselves.

Now, I know the fact I don't care for them when so many obviously do won't matter one bit to them, I know my influence is minuscule at best, but there are most likely others who feel as I do, and they have to take that into consideration.  Stories like this can have legs, they can spread and that may be a bad thing.

Now, go get what you want at In n Out, I'm heading over to Country Burger, a place that opened in my hometown in 1972 and has been going strong ever since.

I may disagree with In N Out on this one, but I still love them.  And you're right - whether or not one loves a company's product can have an impact on how one feels about the decisions it makes.  Though you're also right - there are lines that companies should not cross if they are to main relationships with core consumers.

Got the following email from MNB reader Jackie Caplan Wiggins:

I am responding to your article about Cost Plus Drug Company.  We signed up for this service a few months ago at the recommendation of one of our doctors. Although the prices are significantly lower than what I would pay using insurance, I have two "issues".  

First is around their Out of Stocks.  Because there is a one time shipping charge (no matter how many prescriptions you refill), we wanted to bundle our refills together. After waiting for a few weeks for one to become available, we decided to no longer wait. By the time we tried to refill the prescription that was previously in stock, that prescription was also out of stock so we couldn't order either.  I have to check each day now, hoping that one or both are available.

The second is using the "name" when refilling. My husband's account is under "Doug".  However, if the doctor submits a prescription under "Douglas" despite having the same email, their automated system doesn't recognize the name and sends an email asking us to set up a new account.   I have reached out to customer service to rectify the issue so we don't have to have multiple accounts, and am still waiting to hear back.

My fear with Kroger joining the fray is that out of stocks will be more frequent and issues with different names will hold things up.

MNB reader Rich Heiland responded to my video about a small moment of great customer service at Starbucks:

A few years ago I had a day off from some work in Portland, Oregon, so went over to drive the coast road. I needed to check some email so pulled into a Starbucks in a cute, cliff town. Got my coffee, booted up- and no internet! I went over to the barista and fessed up - I came here as much for the internet as the coffee and I can't get on. She said "I know, you are in probably the only Starbucks on the West Coast that doesn't have internet." I must have scowled. She said "But, look, here's what you do. I'm going to top you off and you are going to turn left at the next intersection and go to the public library. Park in the lot and you can hijack their wifi." As far as I am concerned she honored the Starbucks brand and I began using that story in all my workshops and speeches on branding and customer service. A little thing.....

Got a great four-word email from a reader responding to the end of the Taco Tuesday lawsuit, in which Taco Bell basically bullied Taco John's into releasing its trademark ownership of the phrase:

Taco Bell sells tacos?

Good point.

And finally, I got more email about our reference to a Business Insider report that a $300 million superyacht, the Kaos, owned by billionaire Walmart heiress Nancy Walton Laurie, was vandalized as it was leaving Ibiza on Sunday.  Two "activists" sprayed the stern with red and white paint and held up a sign saying, "You consume, others suffer."

I was critical of the activists, but also had a bit of fun with the conspicuous consumption that the yacht represents:

"Her vessel, which flies under the Jamaican flag, has four decks and can accommodate 31 guests and 45 crew, per the yacht-enthusiast website Yacht Bible.

"It hosts 16 guest cabins and at least 24 staff cabins as well as an elevator, a steam room, a gym, a cinema, and an indoor beach club.

"It costs from $20 million to $30 million every year to keep the Kaos running, according to Yacht Bible."

Here's my question:  What does one need with an indoor beach club when you're traveling on a yacht?  

And one more question:  Wasn't "Kaos" the name of the evil organization in "Get Smart?"  Who the hell names their yacht that?

I got some criticism last week from a couple of readers who thought I was being judgmental about the yacht.

But another MNB reader wrote:

Just a note on your commentary regarding the Kaos Superyacht vandalism. 

The fact that this news graced your page shows that the work of these activists (no quotes) was not “ineffective,” but brought many of the world’s eyeballs to the absurdity of the mere existence of this “boat” as an expression of income and empathy inequality.

Another MNB reader wrote:

I am sure Nancy Walton can afford to get her Yacht repainted and the incident is more of a reputational issue for her which you contributed to by repeating the story. You missed an interesting point in comparing succeeding generations of Walton's to Sam. Sam was notorious for not being a conspicuous spender. There are many stories of his frugality such as the type of cars he drove, complete with dog hair, and how he lived. I suspect this is often a struggle for the founders who built the successful business to keep their scions grounded. Often the kids want to be executives and not work their way up through the ranks.  Warren Buffet was very cognizant of this in how he treated his kids as was your friend Stew Leonard, who had his kids working in the stores.

And, from MNB reader Kevin Duffy:

I hear the boat also has a Cone of Silence.