After a six-week election, the results of the vote to organize a single Amazon distribution center in Bessemer, AL will likely take longer to tally than the actual election timeframe itself.
That’s because the ballot-counting protocol is detailed, complex and time consuming. The unique protocol, which began on March 30, starts with the reading of the names of the voters by a staff member of the National Labor Relations Board (NLRB) without opening the inner envelopes that contains each voter’s ballot. Labor representatives from the Retail Warehouse and Department Store Union (RWDSU) and from Amazon will watch the process on a private video conference. As each voter’s name is read, those representatives will check each employee’s name against a staff list. If either side questions an employee’s eligibility, that ballot will be set aside. Also attending in person at the counting site will be representatives from both sides.
Once that process has been completed, the NLRB will begin counting the uncontested ballots. After every 100 votes, the NLRB will recount those ballots until they are all counted. Reporters will be able to watch the actual counting virtually via video conference. The distribution center in Bessemer employs 5,800 workers, but at this point it is unknown how many employees actually voted, although more than 2,000 had signed vote authorization cards by late December (the election began on February 8).
Even after the count has been completed, either side has an additional seven days to contest the overall fairness of the process. Expect the post-count fireworks to be explosive.
Obviously, this election symbolizes much more than the traditional labor vs. management battle. As progressive and fair as Amazon claims it is towards employees at its Bessemer warehouse ($15.60 an hour starting wage and health insurance from day one), the RWDSU and other labor organizations have long criticized the Seattle-based merchant for creating unfair, pressurized environments at its fulfillment centers.
Amazon counters that its warehouses are safe and they offer their associates an inclusive workplace. However, Amazon is facing some intangible demons over which it has only limited control. As one of America’s largest and fastest growing companies, they – like Facebook, Google and Twitter – have become symbols of uncontrolled greed and monopolistic goals. To wit: Amazon now has nearly 1 million employees after increasing its workforce by 40 percent in the past year alone. Nevertheless, to many, even its critics, Amazon has become a necessary part of their weekly routines, especially during the pandemic.
For organized labor in general, getting this far (a vote to unionize) is already a victory of sorts. Looking at unionization efforts over the past 30 years, labor unions have had a dismal organizing record. If you micro-view just the grocery sector in the Mid-Atlantic, you’ll find that retailers that entered the market or expanded their store bases in that timeline – such as Walmart, Food Lion, Harris Teeter, Wegmans and Target – not only remain non-union, but their initial entries were also essentially unchallenged when they arrived.
RWDSU president Stuart Applebaum implied as much when he said: “Even though we don’t know how the vote will turn out, we believe we have opened the door to more organizing around the country. We have exposed the lengths to which employers will go to crush their employees trying to gain a union voice – the campaign has become the prime example of why we need labor reform in this country.”
Once you subtract Applebaum’s bravado, he’s right. But do most employees feel they have been treated unfairly? And do they fear, as some have expressed, that if Amazon loses, it would shutter the Bessemer facility, one of the largest in Amazon’s vast distribution network?
I would doubt that because, according to multiple sources, Amazon is on the hook for more than $360 million in leases and equipment; but, more importantly, closing a large warehouse where most of the employees are Black would send a horrible signal to Amazon employees at other facilities. A radical move like that would also be a big loser in the court of public opinion and potentially in Washington, DC.
The whole world might not be watching, but enough of us are. That’s why the outcome of this election has become so important.
‘Round The Trade
The cost of the pandemic for companies involved in the food sector during the past 12 months: $24 billion. That whopping amount was announced by FMI in a newly released study, “Receipts from the Pandemic: Grocery Store Investments Amid COVID-19 and the Resulting Economics of an Essential Industry” (this must be the “War and Peace” version of report titles). The national trade association for food retailers said the results come from 52 member companies that operate almost 14,000 stores with nearly two million employees in all states and the District of Columbia. A $24 billion expense load is a powerful number, but let’s balance that with the tremendous sales gains achieved by retailers since March 2020, whose balance sheet in most cases is a lot stronger than it was pre-pandemic. The most important part of the study in my opinion is the projection of sales and earnings declines this year by a majority of retailers that were polled. “This has undoubtedly been a tremendously challenging year for all Americans, and I’m especially grateful for all of the work and the commitment and the perseverance of our industry’s workforce throughout this time,” said Leslie Sarasin, president and CEO of FMI. “And while 2020 presented a once-in-a-lifetime challenge, the food industry stands ready as essential partners to not only provide food and household products, but also to serve as safe, convenient places for customers to receive the COVID-19 vaccinations in the weeks and months ahead. Our 12,000 supermarket pharmacies are working fervently to get Americans vaccinated as safely, efficiently and quickly as possible.”
I had to laugh when I read that Ocado CEO (and Kroger online partner) Tim Steiner said that he regarded Amazon as a “very small competitor in the grocery arena,” adding that “Godzilla”’s home delivery offerings were almost at an “unnoticeable level.” First, that’s patently untrue; second, it’s never a good idea to tempt the beast.
Store of the month honors go to The Giant Company’s new (and first) Center City Philadelphia supermarket, which opened last month on Arch Street. The 65,000 square foot two-store unit is truly a unique offering that does the best job of offering the “stores within a store” model. It may take a while before the location becomes profitable (primarily due to the vast amount of new construction in the regentrified area), but the Carlisle, PA-based brand has certainly made a powerful statement with its initial entry.
Dollar store heavyweight Dollar Tree said it will open 600 new stores and remodel another 1,250 of its Family Dollar units this year. The Chesapeake, VA-based discounter also said it would continue to expand a test it began nearly two years ago in which both the Dollar Tree and Family Dollar models are combined. Most of those locations previously operated under the Family Dollar banner. And not to be outpaced, national dollar store leader Dollar General said it will open 1,050 new stores and remodel an additional 1,750 other units. The Goodlettsville, TN-based discounter said that its new units and remodels will feature more square footage devoted to produce and meat, a larger assortment of HBC items and additional checkout lanes.
Albertsons CEO Vivek Sankaran said at a recent Citigroup financial conference that he can visualize the day when e-commerce comprises 20 percent of Albertsons’ total sales, which were $62.5 billion for the period ended April 30. As you can imagine, this year’s annual revenue numbers will be considerably higher when released in a few months.
The National Grocers Association (NGA) is asking federal regulators and lawmakers to crack down on some of the largest retailers in the business, claiming that they unfairly utilize their size and scale to gain a competitive advantage. NGA’s membership is largely comprised of independent retailers along with a few regional chains. “These power buyers exercise their market power to demand lower prices and packaging deals, securing advantages for themselves. They also exercise market power to demand better products and better service at the expense of rivals. Independent grocers are told they cannot get popular products or popular SKUs that are available on the shelves of dominant firms,” said Greg Ferrara, president and CEO of the Washington, DC-based trade group. “The COVID-19 pandemic has unfortunately exacerbated this problem against independent grocers,” he said. “A year into the pandemic, our members are still struggling to stock store shelves with key products their customers are demanding. Yet, when you walk into the closest big-box store, you may find those same products not only fill the store shelves, but in some cases, they are on promotional displays,” he noted. “Not only have independents lost access to popular products, but they’ve also lost promotional opportunities that allow them to compete on price, discounts and sales.” You know what, Ferrara’s charges are right on the money. The sad part is that it’s unlikely that politicians and regulators will even blink twice about this.
Two other industry trade associations – the Produce Marketing Association (PMA) and the United Fresh Produce Association – have agreed to merge. That’s actually good news for growers, distributors and suppliers, but the underlying question is, what took them so long? For more than a decade, both groups have talked both informally and in detailed negotiations, but never came down to an agreement. Although the press release didn’t phrase it in this way, my interpretation is that when United Fresh CEO Tom Stenzel (a good man, by the way) likely retires in 2023, it will create a clearer path for the two groups to bond. The two groups will remain independent for the remainder of 2021 (they will spend the next six months planning and building the new organization) and officially launch on January 1, 2022. Stenzel and PMA CEO Cathy Burns will jointly lead the new group next year with the very talented Burns taking the helm as sole chief executive in 2023.
In some surprising news (not) – Bloomberg reports that Facebook and Amazon are now the two largest corporate lobbyists in Washington, DC. Facebook increased its spending to $19.7 million, a 56 percent increase from 2018-2020. Amazon’s lobbying budget also jumped by 30 percent to $18.7 million during the same period. It’s no wonder both these firms are so beloved!
Local Notes
A month ago, there were high hopes that a new bill introduced in the Maryland legislature to allow beer and wine to be sold in food stores had a chance of passing. But as the great Mark Knopfler might say, “Boom, Like That,” those hopes were dashed quickly, when the bill did not even make it out of the Maryland House subcommittee. Two sources told me that several legislators on the subcommittee still believe that liquor store and tavern owners would be critically damaged if larger retail boxes were allowed to sell beer and wine. Clearly backward thinking, with no consideration of free enterprise in a state that could certainly use new tax revenue and jobs. I’m told that another effort to get legislation passed will be attempted next year.
In a year when there have been very few new store openings comes news that three new food stores will be debuting in Baltimore City. Two of the stores will be operated by Streets Market which will open its second and third Baltimore units (and 11th overall location). Opening late last month was the 23,000 square foot Streets Market in a new mixed-use development at the old Pemco chemical site on Eastern Avenue in the Greektown section of the city. Next up for Streets Market is a new store at the site of the former Eddie’s Market in Charles Village that closed at the end of 2020 when longtime owner Jerry Gordon retired. The DC-based independent will operate in the current 6,000 square foot space and then the entire retail complex will be torn down to make room for a new mixed-use project (and larger supermarket) by the same developer (MCB Real Estate) at the Eastern Avenue site. Also opening later this year is Market Fresh Gourmet, a minority-owned business that will open an 8,000 square foot grocery that features fresh and prepared foods later this year. The store will be located at the corner of Fayette and Schroeder Streets in the underserved Poppleton neighborhood.
Utz Brands, which in September 2020 became a publicly-traded firm, posted Q4 and full fiscal 2020 results. In a nutshell it was a very good year for the Hanover, PA-based snack foods firm. For the 14-weeks ended January 3, sales were $246.3 million (pro forma net sales – 53 weeks vs. 52 weeks – were $268.6 million. Adjusted net income was $20.4 million compared to $0.5 million in Q4 of fiscal 2019. Full year sales jumped 25.5 percent (pro-forma sales increased 11.9 percent). “2020 was a transformational year for Utz. We began our new chapter as a publicly traded company, and we delivered double-digit retail sales growth, making Utz the number three brand platform in U.S. salty snacks and one of the fastest growing salty snack platforms of scale. Growth was led by our power brands and we added three million more buyers during the year. Despite the challenges of the pandemic and the demanding environment for our team, we reacted quickly and put protocols in place to protect our associates and customers, which enabled us to deliver these strong results,” said Dylan Lissette, CEO of Utz. “Looking ahead, we remain excited about our opportunity for continued long-term profitable growth, as we actively deploy our value creation strategies for the benefit of our stockholders.”
Affinity Group, the sales and marketing agency where our buddy Bill Chiodo (ex-Acosta) is president of the firm’s new and growing retail division, has made two deals in the past month. First, the Buffalo-based sales agency that specializes in perishables acquired Triangle Sales & Marketing and Burns & Associates, two well-established sales agencies serving the Pittsburgh and Cleveland markets. With these two transactions, Affinity Group has acquired five retail sales organizations in the last 24 months. As the businesses are quickly integrated, Jim Tepe, former owner of Triangle Sales & Marketing and Burns & Associates, will be appointed executive VP of the new Affinity Group Retail – Pittsburgh/Cleveland team, and will report to Chiodo. Jack Burns, former owner of Burns & Associates, will become VP of the Pittsburgh/ Cleveland team. In announcing the acquisitions, Enzo Dentico, chairman of Affinity Group, who cut his teeth in the foodservice channel before expanding into retail, said, “Both of the agencies we are acquiring have been doing business in the Pittsburgh and Cleveland markets for over 30 years, selling all categories and retail classes of trade, with a focus on perishables. The new team will be working from their offices in Warrendale, PA. The team, customers and clients will also have access to the brand new, state-of-the-art Affinity Group Culinary Center that is currently under construction in Pittsburgh.” Chiodo added: “Strategically, these acquisitions represent another important step in Affinity Group’s efforts to become the premier retail sales agency in the eastern half of the United States. And we want our clients and customers to know that this new team will be fully integrated into Affinity Group Retail and will be utilizing our trimester planning process, our retail reporting system, and our syndicated data-based category selling approach.” A few weeks after that announcement Affinity also reported that it has merged its retail business in Wisconsin with the Wisconsin retail business of Perishable Sales Inc. (Psi). The new entity, which began operating on March 1, is called Affinity Group/Psi of Wisconsin, and will be led by Greg Pellegrino, president; Doug Applequist, VP-Wisconsin Retail; and Kurt Rautenberg, Director of Sales- Wisconsin Retail. With the formation of this strategic partnership, the retail sales team from the Affinity Group Midwest Division have transitioned to the new entity. In support of this announcement, Dentico said, “We are delighted to team with Greg and Psi with our Wisconsin retail business, and we look forward to working together on additional business and market development opportunities throughout the Midwest. With these types of partnerships, we think a cultural fit is critical to success, and in this instance, both Affinity Group and Psi share a common culture where high-value client and customer service is central to both organizations.” Added Chiodo, “We expect the merger and further development of this strategic partnership to provide us the opportunity to help grow our clients’ business across a broader geography, while still maintaining a stakeholder mentality in all our local markets; Greg shares this philosophy. This will also allow us to expand the use of our fact-based selling approach and consistent retail reporting to find sales opportunities in every market.”
From the obituary desk, we have a few deaths to sadly announce. Shon Boney, co-founder and former CEO of Sprouts Farmers Market, has passed away at the way-too-young age of 52. Born into a family of retailers, Boney opened the first Sprouts store in Chandler, AZ in 2002. He served as the company’s CFO from 2002 to 2005 and as its chief executive from 2005 until 2012. He remained a member of Sprouts’ board until he retired in 2019. In reading Boney’s obit, I found one fact that was especially noteworthy: He became a pilot at the age of 16 and became skilled at flying a variety of aircraft including multi-engine jets. He often used his aviation skills to fly cancer patients and veterans to and from medical treatments around the country. I never met Shon Boney, but I sure wish I had.
Larry McMurtry, arguably one of the greatest modern Western novelists, has died at the age of 84. McMurtry wrote many excellent stories about the American West that were often unromantic and demoralizing, but his writing skills were so great that even the most depressing scenes and unlikeable characters resonated with his many readers. Among his classics were “Horseman, Pass By” (1961, his first novel that was also known as “Hud”); “The Last Picture Show” (1966); “Lonesome Dove” (1985); and “Texasville” (1987). McMurtry’s catalog also included a number of non-Western novels, including “All My Friends Are Going To Be Strangers,” (1972) and “Terms of Endearment” (1975). Nearly 10 of his novels were later made into films. Additionally, McMurtry wrote almost 30 screenplays, including “Brokeback Mountain” (2006), for which he won the Academy Award. If you haven’t read any of the Texas native’s novels, I’d suggest picking up “Lonesome Dove,” but be prepared, it’s 843 pages long.
From the movie and television world, we recently lost three memorable characters. George Segal, whose career began in 1960, was both an excellent dramatic actor and comic performer. His 126 TV and film credits include “King Rat” (1965), “Where’s Poppa?” (1970) and “The Cable Guy” (1996). Segal, 87, continued to work until the end, appearing as “Pops” Solomon in the popular comedy series “The Goldbergs” (2013-2021). The New York Times called Segal, “…one of America’s most reliable and familiar comic actors.”
Jessica Walter, who like Segal, appeared in many movies and TV shows (161 credits), could also fluidly transition between comedic and dramatic roles. And like Segal, she was born in Brooklyn and began her TV career in the same year, 1960. Her big break came in the 1966 Formula 1 racecar flick “Grand Prix” for which she earned a Golden Globe nomination. Other notable film roles included “Play Misty For Me” (1971) and “Airport ’79.” In television, her best role, in my opinion, was as Lucille, the wealthy and evil matriarch of the dysfunctional Bluth family in the very funny “Arrested Development” (2003-2019). She was 80 when she passed.
Finally, one of my favorite character actors has left us. Yaphet Kotto, a Black man of Cameroonian royal ancestry who was born in Harlem and was raised both the Jewish and Catholic faith, was 81 when he died last month. Kotto was often cast in roles of villains or cops but in fact was a classically-trained actor. He began his film career in 1964 and four years later got his first meaty role as Carl in “The Thomas Crown Affair” (1968). He was great in (and won an Emmy award for) his portrayal of Ugandan dictator Idi Amin in the 1976 TV movie “Raid On Entebbe.” Kotto also excelled as Lt. Al Giardello in the terrific TV series “Homicide: Life On The Street” (1993-1999). Perhaps his most memorable and unique role was in the 1973 James Bond thriller “Live And Let Die” in which he played both drug trafficker Mr. Big and his alter ego, evil Caribbean dictator Kanaga.
