The journey to actually stage the 2022 FMI Midwinter Conference mirrored what’s occurred in many of our lives that have been interrupted and disrupted by the devasting and continuing effects of COVID.
The annual top-to-top trade event, featuring industry leaders from all segments of the grocery business, was originally scheduled to be held in Boca Raton, FL in late January. Then, last fall, citing concerns over health and safety protocols, the big trade association switched locations to the Hyatt Regency in Orlando. Unfortunately for FMI, which canceled its 2021 conference, the omicron virus began to take hold in December which forced the “pausing” of this year’s event. FMI wisely waited until they could get more timely data on the trends of the virus before rescheduling the Midwinter Conference which was finally held March 28-31 in Orlando.
While this year’s meeting focused primarily on technology, the four-day event also offered some interesting speeches and panel discussions as well as enough social activity to offset the seriousness of the work sessions.
However, there was one intangible that was obvious from the outset that made this year’s confab special: the genuine joy of industry friends and cohorts personally interacting with each other again. For many of us, the FMI Midwinter Conference marked the first time in more than two years that we were able to fly to an out-of-market destination to meet our industry peers. During the course of the show, I must have heard, “I really missed seeing you,” or “it’s great to get together again” more than a dozen times. Even FMI CEO Leslie Sarasin publicly noted how wonderful it was to be able to assemble in this format again.
Yes, Zoom or Teams Meeting calls have been effective in filling an important need over the past 24 months and they will remain a significant factor going forward as the industry evolves post-COVID. But there’s something special about meeting face-to-face. More than 10 retailers and vendors told me how effective the strategic executive exchange meetings were specifically because they were able to have a “live” buyer/seller dialogue. Even sharing a cocktail with someone you haven’t seen in two years seemed more meaningful (and tasty) this year.
There were a couple of presentations that I found noteworthy. The always entertaining John Phillips detailed the importance of navigating the volatile, uncertain, complex and ambiguous workforce (VUCA) in the post-pandemic era. The Pepsico senior VP focused on the importance of employers developing a better understanding of their associates in order to ultimately improve supply chain efficiency. He urged companies to created hybrid environments featuring both in-person and remote work scenarios where associates can maximize their effectiveness by simply being comfortable in a particular environment. Phillips added that the industry’s continuing priority on leveraging automation will be more effectively implemented if employers can better grasp the evolving needs of their associates.
I was also impressed by a discussion between PJ Solomon’s Scott Moses (fresh off completing a deal in which PE firm Kingswood Partners acquired Corona, CA-based Save Mart for $1.3 billion) and Alix Partners’ Joel Rampoldt. The highly-educated and very successful duo addressed competitive and investment challenges facing the food industry. Of note, Moses and Rampoldt apprised the audience of how the effects of Russian’s invasion of Ukraine will adversely impact certain products including wheat (30 percent of the world’s supply comes from Ukraine), soybeans, sunflower and raisins. Additionally, the cost of fertilizer, a major Russian export, is expected to increase significantly. Moses stated that he expects inflation will continue to rise and expressed concern over the rising dominance of Amazon (unrelated to their speech, financial research firm PYMNTS recently revealed that Amazon’s share of total U.S. e-commerce sales reached a record 56. 7 percent in 2021).
Both men, while noting the growth of e-commerce during the pandemic, said that online grocer revenue will continue to gain share with “click & collect” orders becoming the most dominant method that consumers will utilize e-commerce. Moses and Rampoldt also cautioned traditional grocers not to abandon their brick & mortar investments as they predicted that in-store shopping will still control about 80 percent of revenue even if five-year e-commerce projections are accurate.
‘Round The Trade
The ever-revolving workforce continues to be…ever-revolving. According to the Bureau of Labor Statistics (BLS), Americans continued to change jobs at a near record pace in February. During the 28-day period, it is estimated that 4.4 million workers left their jobs and employers hired 6.7 new people for jobs at their companies. The BLS said that 11.3 million jobs nationally remain available. While the addition of nearly 700,000 jobs is positive news, the fact that more than 4 million people switched positions is concerning. Of course, overriding much of this is the spiraling inflation that both employers and their associates (new and old) are facing. As COVID hopefully continues to ebb and more people (especially former working moms) re-engage with the job market, there will be more stability with our supply chains. However, one thing seems pretty certain: prices aren’t coming down significantly, or perhaps at all.
On April 4, “Humble” Howard Schultz returned to the company he helped launch, Starbucks, as its CEO on an interim basis. Schultz’s return follows the retirement of Kevin Johnson who stepped down after nearly five years as the Seattle-based coffee merchant’s chief executive. According to media outlet, Vice, “Humble Howie” began his third tour of duty as CEO by hosting a town hall with Starbuck’s associates in which he decried the ongoing effort to unionize the company’s employees (“We didn’t get here by having a union.”) We can argue all day about the virtues (or lack of them) of unionization. That shouldn’t be Schultz’s first concern upon returning. How about improving the culture at the global organization which has diminished considerably since Schultz last sat in the CEO chair? How about visiting some stores and building morale like in the old days? Clearly, he’s not going to change the union momentum which has already picked up lotsa speed (and is impacting other large organizations). Is it possible that Howard’s too long in the tooth and out of touch to change the direction of Starbucks?
Another company that’s generating even more labor-related headlines is Amazon. Frankly, I was wrong (and surprised) that employees at “Godzilla’s” Staten Island, NY distribution complex voted to organize despite several readers pointing out that the unionization mindset is much different in the New York Metro area. However, I believe that successful effort will ultimately become an aberration with the organizing process and employee attitudes much different in right-to-work states like Alabama, where despite legal challenges and a mandated second election, Amazon still prevailed. And don’t underestimate the financial and legal power that companies like Amazon and Starbucks have in shaping choices.
More stuff: Walmart is suing BJ’s, claiming the club merchant blatantly stole the “Behemoth’s” self-checkout technology which allows customers to scan items and place them in their carts while they shop eliminating the traditional standing-in-line checkout process. Walmart also said it will remove cigarette sales from some of its stores in Florida, California, Arkansas and New Mexico. The exact number of stores that have dropped or will drop cigarettes has not been announced (the company operates 4,700 units in the U.S.), but this is surely a positive first step. Shortly after the “Behemoth made that announcement, Walgreens said, it, too, is considering ending cigarette sales at its nearly 9,000 U.S. drug stores. Walgreens’ chief rival, CVS, stopped selling all tobacco products in 2014.
Instacart is attempting to ramp up its game by adding mini-fulfillment centers in a yet undisclosed number of markets to assist its partnering retailers in offering 15-minute deliveries (an untenable time span and execution rate if you add in safety and in-stock product batting average). I can’t blame the San Francisco-based delivery service, whose market cap has dropped from a ridiculous $39 billion to a slightly less ridiculous $24 billion, for attempting to penetrate all aspects of the grocery delivery business. But I remain very concerned about retailers who feel compelled to do business with Instacart fully knowing the delivery organization is collecting valuable data from the retailer’s about their customers’ buying habits. Today, they might be draining potential ad revenue from a retailer’s trade coffers. However, it might not be long before Instacart captures trade funding from those same vendors – a domain that was once totally owned by those retail partners Instacart is affiliated with.
Local Notes
Amazon Fresh opened its newest store on April 7 in Fairfax, VA. The 30,000 square foot unit located on Fairfax Boulevard is the area’s first full-size “Fresh” store to feature the company’s “Just Walk Out” technology. The new store is Amazon’s fourth “Fresh” location to open in the DC area in the past 10 months.
On April 3, Target cut the ribbon on its newest store in Kent Island, MD. The 95,000 square foot unit, which was formerly a Kmart, will be the Minneapolis merchant’s third Eastern Shore location.
Chesapeake, VA-based Dollar Tree Stores announced it has settled a lawsuit by activist investor Mantle Ridge, which sought to take over the director’s entire board of directors, citing Dollar Tree’s lagging stock price. While Mantle Ridge, which is led by Paul Hilal and controls 5.7 percent of the retailer’s common stock, did not fully get what it wanted, it got enough. That means gaining seven of the 12 board seats and the naming of former Dollar General CEO Richard Dreiling as executive chairman (he was also a Safeway exec). Hilal will also join the board as vice chairman.
Publix, whose sales and earnings have been spectacular over the past two years, announced it has approved a 5-for-1 stock split, increasing the number of common shares available to the employee-owned company to 4 billion shares. Before the split, which becomes effective on April 14, Publix’s stock was trading at $68.80 per share, up from $61 per share from a year ago.
We have a few obituaries to report this month, including two from the food industry. Passing on late last month at the age of 80 was Bill Bishop, a pioneer in data research for the past 50 years. I first met Bill when he was VP of research at the Supermarket Institute which later became FMI. In 1976 he founded Willard Bishop Consulting, which he sold in 2016 to research firm Inmar. In 2011 with his son Steve, he founded another start-up – Brick Meets Click – which focused on the impact of digital technology on the retail grocery industry. I can’t think of anyone who contributed more to educating retailers and vendors than Mr. Bishop. His gentle and passionate style and his incredible knowledge of the industry clearly left an imprint on those who knew him and on the entire food biz.
Charles P. “Buzz” McCormick, who served three times as chairman or CEO of the spice company that his great-uncle Willoughby McCormick founded in 1892, has also left us at the age of 93. I got to know “Buzz” pretty well over the last 40 years and I was always impressed by his intelligence, quiet passion and ability to listen to others. “Buzz” began working at the Baltimore-based spice maker (now based in Hunt Valley, MD) as a teenager before joining the company on a full time basis in 1949. During a long tenure with McCormick, he worked in virtually every aspect of the business including the packaging and former real estate divisions. McCormick also presided over the most embattled period in the company’s recent history when he helped thwart an effort from Australian competitor Burns Philp, which had recently acquired the Durkee and French brands and vowed to challenge McCormick for market share dominance.
Also passing away just before presstime was Nehemiah Persoff, a true “that guy” among character actors, who left us at the age of 102 (that’s not a typo). Born in 1919 in Jerusalem, which at the time was the British Mandate of Palestine, he immigrated with his family to America in 1929 and began his acting career shortly after World War II. In a career that spanned nearly 55 years, Persoff appeared in 206 film and TV roles, often playing rabbis, gangsters, western desperados, spies and military officers. A man of many dialects, his characters included portraying Greeks, Russians, Italians and Middle Eastern characters. Persoff treated acting as a capitalist as much as he did an artist. He appeared in such frivolous TV shows as “Gilligan’s Island,” “Land of The Giants” and “Mod Squad,” but also displayed a more serious touch in “The Untouchables,” “Naked City” and “Playhouse 90.” His best movie work could be seen in such classic films as “On The Waterfront,” “Some Like It Hot” and “Yentl.”
Two of the most unsung athletes in my lifetime have also died recently. Gene Shue, 90, a first round NBA draft choice from the University of Maryland in 1954, went on to have an impactful career as player, coach and scout that spanned nearly 65 years. A Baltimore native, Shue enjoyed a stellar career as a Terrapin. He was selected as third overall pick by the then Philadelphia Warriors in the 1954 draft. In his 10 year pro career, he also played with the Knicks, Pistons and then Baltimore Bullets. Two years after retiring as a player, he began his coaching odyssey in Baltimore taking over a Bullets team that had only won 16 games the previous season. By 1968-69 Shue helped reinvigorate the once dismal franchise by posting 57-25 record (it didn’t hurt that Hall of Famers Earl Monroe and Wes Unseld were on that squad). By 1971, Shue’s Bullets had advanced to the NBA finals where they were swept by a Milwaukee Bucks team comprised of Kareem Abdul-Jabbar and Oscar Robertson. In 1973, he took over a Philadelphia 76ers team (the old Warriors had moved to San Francisco in 1962) that closely resembled his first Baltimore Bullets team in 1966. The Sixers posted an all-time NBA worst 9-73 record in 1972. By 1977, behind Julius Erving’s sensational play, they lost to the Portland Trail Blazers in six games in the NBA finals. Shue later became coach of the San Diego (now Los Angeles) Clippers before returning to the Bullets (this time the Washington Bullets) for six years before going back to the Clippers for a year and a half in the late 1980s. Overall, his NBA teams won 784 games and lost 861.
Tommy Davis, who could have been a baseball superstar if it were not for a career impacting injury, has also died at the age of 83. Born in Brooklyn, the heavily recruited Davis signed with the then Brooklyn Dodgers in 1956 because of the impact that an earlier Dodger, Jackie Robinson, had on his life. Davis’ first major league action was in September 1959, two years after the Dodgers relocated to Los Angeles. In 1962, at the age of 23, Davis enjoyed one of the greatest individual seasons of the past 75 years, batting a league-leading .346 with 230 hits, 27 home runs and an impressive 153 RBIs. Also notable was that, in 556 plate appearances that season, Davis struck out just 59 times. He continued to have strong seasons for the next two years, but in early 1965 his career was permanently altered when he broke his ankle and missed the remainder of that season. With his range and quickness limited by the injury, Davis became a part-time player who still had a keen batting eye, but his power and speed had significantly diminished. When the designated hitter rule (DH) was adopted by the American League in 1973, Davis’ career found new life and when Davis retired after the 1975 season, his career statistics were indeed impressive: a .294 batting average, 153 home run, 1,052 RBIs and 2121 career hits.