business news in context, analysis with attitude

We had a story yesterday about how the Supreme Court heard arguments in a case about online sales taxes, which prompted MNB reader Jeff Gartner to write:

Related to the Supreme Court case on online retailers collecting state sales taxes and Trump’s obsession with Amazon, the Chicago Tribune reports that the Trump Organization collects sales tax in only 3 states for its online sales (Florida, Louisiana and Virginia). Was he not aware of this when he blasted Amazon? We should not be surprised at all.

On another subject, MNB reader Jeannine Wilkins wrote:

Interesting article on the Catalina article that concludes the center store aisle business is “alive and well”. I agree with you that this business is certainly vulnerable. I also suspect the study doesn’t take into account how quickly things can shift. First, someone starts buying large bags of dog food online because it’s easier than lugging it around. That experience goes well and they recognize the benefits of doing so – maybe they even sign-up for an auto-ship option after they get comfortable with the switch they made. Then they end up buying all their pet items online because now at least one online retailer knows they have a dog and can target them accordingly. At this point they no longer even enter the pet aisle, or pet specialty stores.  Switching another product(s) now becomes easier because they have built confidence in the process. Next, maybe it’s cleaning products because the exact item they want isn’t always in stock at the store they regularly shop at. Now they get targeted ads for related products…and so the shift continues.
Even fresh items are at risk – there are now regional websites that combine offerings at all the local farms so you can order organic product from Farm X, Y and Z, free range eggs from another farm and organic dairy from yet another farm. Maybe even organic/GMO free meat cuts from other farms.  So, a person for whom organic/GMO free/ethically produced foods can now live by their values without having to spend a few days dashing about the countryside. From what I have seen they are pricey and likely only for a very niche group that isn’t at all price sensitive but it’s yet another way the grocery industry is being disrupted.
Fascinating stuff – I know I have a variety of theories about where grocery retail will be in 10 years and center aisles as they are now will be a thing of the past in all of those theories J.

Another MNB reader wrote:

I read into this with a different perspective....Grocery by default has the biggest cut of the pie in a supermarket, so of course there is more grocery sales penetration ...With that , in a recent A.T Kearney  survey said is that 93% of shoppers prioritize fresh other than price and convenience....Hence the customer choosing to shop that particular store.

Yes, grocery attributes a lot of volume, but what is missing here, is why the customer shops that store .....Fresh offerings will differentiate and be the separator.

MNB reader Paul Schlossberg wrote:

That's a lot of floor space to sell "one item per trip." That item is probably a "necessity," whether for a recipe or to clean one's home, etc. The preferred and discretionary items will be purchased on the perimeter of the store. 

Average annual center store purchases at $1,408. Question: What is the share of total spending, per shopper, for center store versus the perimeter? 

Recalling an excellent presentation (years ago) by Jack Trout. He made the same point in his 2001 book, Differentiate or Die. Paraphrasing here: "There are 40,000 SKUs in an average supermarket. Families get 80-85% of its needs from 150 SKUs."  

If the average supermarket is 40,000 sq. ft. or more, what will they do with the wasted space? Being cynical for a moment, think of all the slotting fee which would be lost if they allocated less shelf space to the center store. 

That’s not being cynical. That’s a real issue.

Regarding the Starbucks racial bias controversy, MNB reader Marcel Ste. Marie wrote:

I think a lot of this is just that there is a zillion Starbucks and they just can't bat 1.000 all the time. But overall they do a good job. Every major restaurant chain has had something like this happen. Obviously the more units you have the chances are higher it will happen. There was that Nazi guy in Chicago who punched a black customer and so on. McDonalds has had some really weird things happen. Walmart as well. Don't pick on Starbucks too hard. Glad to see they are responding in a better way than most companies. I have nothing against Starbucks other than their crappy tasting coffee.

But, from another reader:

This smells almost like a set-up.  These “victims” could have quickly and quietly avoided the social-media-feeding-frenzy by simply ordering a cup of coffee.  Isn’t that why they were there in the first place?  The temptation to blow it up into another victim-event just must have been too overwhelming to resist.

I profoundly disagree with this blame-the-victim perspective.

I have gone to many Starbucks overt the years and waited for someone to arrive without ordering coffee, largely because it seemed polite to wait. I’ve never been questioned. There seems to be little doubt that these men were questioned because they were black … and I don’t blame them for being outraged by being held to a different standard or required to behave a different way simply because of the color of their skin.

They’re not being victims. They’re standing up for their rights.
KC's View: