National Notes are an anthology of retail industry news. All notes are based on actual news stories and are rewritten to comply with copyright law. News sources are cited at the end of each note.
Walmart, Kroger Co., Walgreens among chains to administer free COVID vaccine
Drug stores and supermarket pharmacies nationwide will be administering free COVID-19 vaccines when they become available. Dozens of retailers are teaming up with the Department of Health and Human Services to administer free COVID-19 vaccines. As part of the Federal Pharmacy Partnership Strategy for COVID-19 Vaccination, the pharmacies will receive a direct allocation of COVID-19 vaccine once it is authorized or approved and recommended for use in the United State. The program covers approximately 60 percent of pharmacies throughout the 50 states. The U.S. Department of Health and Human Services (HHS) made the announcement in which it outlined its partnership with grocers and other food retailers to maximize access to COVID-19 vaccines for all Americans. Currently, there are no vaccines approved by the FDA, but at this time it is anticipated one or may be approved in the near future.
Chain Store Age
U.S. Consumer Confidence Largely Unchanged in Early October
Consumer sentiment in the U.S. stalled in early October and stands 15 percent lower than the same month a year earlier. Slowing employment growth, a resurgence of COVID-19 infections, and the lack of a third stimulus packages are attributed. The index of consumer expectations–which reflects the balance of respondents anticipating improved business conditions in the next six months–rose to 78.8 from 75.6 the prior month. The index, despite the recent gain, is still down by 14.4% from its February peak.
The inflation expectations components moved in mixed directions compared with the previous month, with consumers expecting prices to increase 2.7 percent next year, up from 2.6 percent in September, and 2.4 percent over the next five years, down from 2.7 percent a month earlier.
Walmart Health Insurance Is Here
Walmart Insurance Services will begin selling Medicare insurance plans during this year’s Annual Enrollment Period. Walmart said it is committed to offering quality health services at low, transparent pricing. “We want customers to feel confident in selecting a Medicare plan that best fits their needs, budget and lifestyle,” said David Sullivan, general manager of Walmart Insurance Services. “And we want to be a trusted partner on their health care journey. Helping customers select the right Medicare insurance plan to meet their needs aligns with Walmart’s mission of helping people save money and live better.”
At launch, Walmart Insurance Services will provide Medicare plans (Part D, Medicare Advantage and Medicare Supplement plans) offered by Humana, UnitedHealthcare, Anthem Blue Cross Blue Shield, Amerigroup, Simply Health, Wellcare (Centene), Clover Health, and Arkansas Blue Cross and Blue Shield. More carriers may be added in the future.
Bentonville, Arkansas-based Walmart operates more than 11,300 stores under 58 banners in 27 countries, and e-commerce websites, employing 2.2 million-plus associates worldwide. Walmart U.S. is No. 1 on The PG 100, Progressive Grocer’s list of the top food and consumables retailers in North America, while Walmart-owned Sam’s Club ranks No. 9 on the list.
Expected Holiday Shopping Season Spending is Mixed
Social distancing and staying home may lead to a more subdued holiday gift giving season.
Holiday sales—usually spanning November and December—represent roughly 20 percent of annual U.S. retail sales each year, according to the National Retail Federation. And retail spending accounts for about 25 percent of consumer spending in a typical year. As a result, man economists are predicting only a small holiday increase in sales. A bright spot may be online sales which may grow 20 to 25 percent overall compared to in-store sales.
Package Delivery Will be Massive
FedEx and UPS are expected to be over capacity this holiday season due to an increase in online shopping. “There will be days within the holiday season where the industry will be over capacity,” FedEx Chief Marketing Officer Brie Carere said in an interview. Other smaller shippers are also expected to overwhelmed leaving the already strained U.S. Postal Service to pic up the slack.
The outlook has sent retailers on the hunt for alternatives with little luck. Smaller carriers in the U.S. like LaserShip Inc. and DHL eCommerce Solutions said they booked up their capacity for the holidays months earlier than usual and aren’t taking new customers until next year.
The capacity shortfall could average as much as seven million packages a day between Thanksgiving and Christmas, estimates ShipMatrix Inc., a software provider that crunches parcel shipping data. Satish Jindel, the firm’s president, estimates that total shipping capacity for the industry will be 79.1 million parcels a day during that period, with 86.3 million packages looking for space. Last year, total capacity was 65.3 million packages with 67.9 million looking for space.
Target Gives New Bonuses to Workers
Target is handing our more bonuses which reflects an investment of more than $70 million dollars. Mostly, the bonuses will go to frontline workers in stores and distribution centers. “In a year like no other, I’m proud of what this team has accomplished and grateful for the care and connection they’ve provided our guests and communities,” says Melissa Kremer, Target’s chief HR officer. “Target’s success this year is a direct result of our team members turning our purpose into action and meeting our guests’ changing needs day after day.”
Target operates more than 1,800 stores, 39 distribution centers and Target.com. The Minneapolis-based company is No. 7 on The PG 100, Progressive Grocer’s 2020 list of the top food retailers in North America.
Stay-At-Home Sunday: How the Pandemic Has Changed Grocery Shopping
Wars and pandemics change everything, and COVID-19 has changed American retailing. A new report from Placer.ai, which studies retail foot traffic, has found what it calls “fundamental and unprecedented changes” in grocery shopping habits. A new report shed light on how shoppers changed habits. In 2019, Sunday was the busiest grocery shopping day of the week, with 17.4 percent of shoppers picking up food and other items to start the week. Now, only 15.7 percent of shoppers are going out on Sundays to shop for food. By contrast, Tuesday, Thursday, Friday and Saturday have all seen year-over-year increases in grocery shopping, with Saturday now the most popular shopping day.
Penney expects to exit bankruptcy ahead of holiday season
J.C. Penney is closer to being acquired by mall giants Simon Property Group and Brookfield Asset Management. The bankrupt retailer said that it has filed a draft asset purchase agreement, a key step to the eventual closing of the deal, which was announced in September. “This is another important milestone in our restructuring plan, bringing us one step closer to finalizing the APA, closing the sale process and exiting Chapter 11 ahead of the December 2020 holiday season,” said Jill Soltau, CEO J.C. Penney.
Under the terms of the agreement, Brookfield and Simon will acquire substantially all of Penney’s retail and operating assets. The retailer’s real estate assets (which includes about 160 owned and ground-leased store properties) and size distribution centers will be part of a new property holding company, or PropCo, owned by Penney’s lenders, which will rent back the properties to the operating company (Simon and Brookfield). The parties have until Monday to finalize a master lease agreement between the mall landlords and the lenders.
The deal is subject to court approval and other conditions, with a hearing expected to be set for early November. If the court approves, the deal will close in advance of the December holiday season and Penney will conduct business outside of Chapter 11 under its banner with Simon and Brookfield as its owners.
Chain Store Age
Average Consumer Plans to Spend a Total of $997.79
Consumers expect to spend a bit less this holiday season, according to the annual survey released Tuesday by the National Retail Federation and Prosper Insights & Analytics.
Most of that decline will stem from consumers making less use of holiday sales for non-gift purchases. Buying presents for friends and family will still be a priority, though, and people also plan to spend on holiday decorations.
In total consumers plan to spend an average of $997.79 on gifts, holiday items such as decorations and food, and additional non-gift purchases for themselves and their families.
“Consumers have demonstrated their resilience and adaptability throughout these extraordinary times,” NRF President and CEO Matthew Shay said. “Looking ahead to the holiday season, retailers will ensure that their stores are safe for both customers and employees as we all prepare to celebrate family and friends during this special time of the year.”
While overall spending in these categories is down by about $50 from last year, nearly all ($45) of the decrease comes from consumers’ hesitation to use seasonal sales and promotions to buy other, non-gift purchases for themselves and their families. Consumer spending on gifts is on par with last year, decreasing by only about $8, while per-person spending on such holiday items as decorations is actually up slightly, the survey found. The NRF notes that expected spending remains significantly higher than the 5-year average for both those categories. And the holiday season is already top of mind with consumers — 42 percent say they plan to start their holiday shopping by the end of October and another 41 percent will start in November.
Consumers remain flexible with their holiday shopping plans, though, and most admit they could be convinced to start shopping earlier than usual to take advantage of special deals or to avoid crowds or the stress of last-minute shopping.
“Consumers are taking advantage of a variety of offerings from retailers this holiday season including earlier sales promotions and shipping options,” Prosper executive vice president of strategy Phil Rist said. “Consumers are focusing on making the holidays special for others but are playing it by ear when it comes to those ‘extra’ items they might get for themselves.”
The majority (60 percent) of consumers say they plan to purchase holiday items online this year. Nearly all (91 percent) online shoppers plan to take advantage of free shipping, while another 44% plan to use buy-online-pick-up-in-store and 16 percent plan to use same-day delivery. Other top holiday shopping destinations for consumers include department stores, mentioned by 45 percent, discount stores (43 percent), and supermarkets (42 percent).
One in five (19 percent) holiday shoppers say that they typically travel for the holidays but will stay home instead this year. Over half (53 percent) of those who changed their holiday travel plans said they are likely to spend more on holiday items this year, specifically because they will not be traveling.
The survey asked 7,660 consumers about winter holiday shopping plans. It was conducted October 1-9 and has a margin of error of plus or minus 1.1 percentage points.
Consumers Worried About Finances, Raising Food Prices
Concern about personal finances and the economy in general is on the mind of U.S. consumers.
Forty-nine percent of U.S. consumers reported that their personal finances were poor, up 20 percent since July, according to dunnhumby’s latest Consumer Pulse Survey, a multi-phased, worldwide study of the impact of COVID-19 on customer attitudes and behavior. In addition, 68 percent reported that the economy wasn’t doing well and 91 percent said they are closely watching store prices.
Customers are shopping at stores they think have low prices, some are buying the lowest priced items, some are using coupons, and many are buying private label brands. .
Chain Store Age
Kroger Launches COVID-19 Testing
The Kroger Co. is launching rapid tests at its pharmacies nationwide. Kroger Health’s new offering will inform patients if they’ve recently been infected with the virus that causes COVID-19, with most results confirmed in 15 minutes. The FDA-authorized rapid antibody tests — conducted using a finger-prick blood sample —are now available at Kroger pharmacies in California (Ralphs) and Michigan, and will be available at all Kroger pharmacies and clinics by the end of November.
Supplied by Federal Way, Washington-based Whitmire Medical, the tests are available to Kroger customers for $25 and typically provide results within 15 minutes. Individuals who believe they may have previously been infected with COVID-19 and aren’t currently experiencing symptoms are eligible for the test.
CVS Health Expands COVID-19 Testing Services
CVS Pharmacy to include rapid-result testing at nearly 1,000 sites by the end of the year. Rapid-result COVID-19 diagnostic tests are available at no cost to patients who meet Centers for Disease Control and Prevention criteria. In addition, rapid-result tests may also be available as a testing option for eligible employees or students affiliated with an organization that has adopted CVS Health’s Return Ready return-to-work COVID-19 testing solution.
Drug Store News
Best Buy Will Open Early on Black Friday
Best Buy will open its stores at 5 a.m. on Black Friday. They will be closed on Thanksgiving.
“As we’ve said, Black Friday isn’t just one day this year — it’s months long,” Best Buy said in a news release. “Shoppers will have even more opportunities to score deals straight from the Black Friday ad before the end of November.”
Best Buy joins big retailers such as Walmart and Target in closing on Thanksgiving. It said it would be open from 5 a.m. to 10 p.m. on Black Friday, what for years was the tradition open to the holiday shopping season.
Best Buy has already extended its current hours, so doors are now open 10 a.m. to 8 p.m.
MSP Star Tribune
Walmart Stops Shelf Scanning Robots
Walmart is ending its contract with a robotics company after getting similar results from humans. In addition, Walmart found simpler solutions and it was concerned about how customers reacted to robots in the aisles. While Walmart suggested it would have robots in up to 1,000 stores, it reached approximately 500 stores before ending its contract.
Factories Bounce Back
Even as the pandemic rages on, factories around the globe have ramped in October up as consumer demand increased. However, it should be noted there is a sharp difference in demand for companies that make consumer goods and those who provide face-to-face services. This according to a purchasing managers survey who its purchasing managers index rose to 59.3 in October from 55.4 in September, the sixth straight month of expansion. Firms reported a surge in new orders as customer inventories shrank. Firms also reported increased hiring for the first time in 14 months. A reading above 50.0 indicates that activity is increasing, while a reading below points to a decline in activity.
Karen Lynch to take helm of CVS Health in February 2021
Karen Lynch will soon be taking over as President and CEO of CVS Health . Lynch — currently CVS Health executive vice president and president of Aetna — would be taking over as president and CEO from Larry Merlo, effective Feb. 1, 2021.
“This leadership transition comes at the right time for CVS Health. This month marks the two-year anniversary as one company, with our foundation clearly established and significant positive momentum across the company,” said David Dorman, CVS Health board chairman. “As Larry has been transparent with us about his overall plans, we were able to put a thorough, multi-year process in place to consider and evaluate internal and external candidates. That process led to the selection of Karen Lynch. Larry’s collaboration with Karen in the coming months will ensure an effective leadership transition.”
“Karen is a seasoned health care expert who knows our business. She brings a relentless focus on the customer, a strong track record of driving growth and innovation, and proven transformational leadership, all of which position her well for success. Our board of directors believes that Karen is the right leader to guide CVS Health into its next era of growth as the company continues its transformation,” Dorman continued.
Lynch said, “I am deeply honored to have the opportunity to succeed Larry and lead CVS Health on the next phase of our important journey to meet America’s health care needs. Never before has our purpose been more critical than during these unprecedented times. Together with the CVS Health leadership team and all of our colleagues, I will work to build on the strong foundation Larry has put in place to continue to make health care more accessible and affordable, driving better health outcomes for our consumers and communities.”
Drug Store News
Target Makes Ulta-mate Strategic Move
Target may draw new customers as it partners with Ulta Beauty shops. Target will offer a “shop-in-shop” experience in at least 100 locations nationwide. In time, Target will offer more Ulta Beauty shops in additional stores. “The durable strategy we have built has made Target a top retail destination. The ease and convenience of our stores and fulfillment services provide broad reach and relevance for the curated brands our guests love,” said Brian Cornell, chairman and CEO, Target. “In partnership with Ulta Beauty, a company that shares our deep guest focus, we are able to expand our growing beauty business with new, exciting brands, an immersive experience, and loyalty benefits to transform how our guests shop for all their beauty needs.” The Target-Ulta partnership seems like a natural evolution, considering that both retailers are known for excelling at curation, omnichannel engagement and guest-centric experiences.
Recycling has become part and parcel of what Americans do in their kitchens. This, in part, is due to single source sorting. All recycling is thrown into one bin and is sorted somewhere else. However, many consumers throw unrecyclable items into their recycling containers which pollute single source recycling. Polluted recycling often times ends up being dumped into landfills – defeating the purpose of recycling. For the nation’s 600-plus recycling facilities, which process some 67 million tons of waste, recycling robots from, AMP Robotics are one answer to the current single source bottlenecks facing the industry.
AMP, which is based in Louisville, Colorado, has sold or leased 100 of its AI-powered robots since 2017 to more than 40 recycling facilities in North America, Europe and Japan. They’re not cheap, at a cost of up to $300,000 (or around $6,000 a month to lease), but those recycling centers are betting that the hefty capital expense will pay off with lower employment costs and higher efficiency. Forbes estimates that AMP’s revenue this year will reach $20 million, double its $10 million for 2019. And there’s lots of room for growth: Recycling is a $6.2 billion revenue market in the U.S., and while the overall market has been growing at less than 2 percent a year, facilities are trying to figure out how to get more out of their waste, the majority of which still ends up in landfills.
AMP’s specialized robots are part and parcel of the solution. They sort through dirty, polluted, and contaminated items thereby making landfill bound items valuable. This in comparison to human sorting which has its own set of challenges including recruitment, retainment, and speed. Robots are happy to work non-stop and do it at a faster and more accurate pace. Ultimately, robot sorted recycling is a smart solution in adding value to material that often times end up in landfills.
Thanks to both its technological promise and fast growth, AMP was featured on both Forbes’ AI 50 list of artificial intelligence companies to watch and the Survivors and Thrivers list of 25 small business standouts that outperformed during the pandemic.