We had a story the other day about how Target plans to adjust its approach to grocery by focusing more on specialized products, and moving away from the something-for-everyone strategy.
I was, to say the least, dubious. In wrote, ion part:
The thing is, it isn’t easier to be an effective specialty food retailer. It’s harder. And I will remind you that eight months ago, when I visited a just-opened Target store, I found it already to be suffering from nobody-gives-a-damn disease, and the worst symptoms could be found in the grocery section. I think I used the phrase, “depressing, dispiriting, mediocre retailing experience.” … There’s nothing delightful, joyful, or special about shopping at Target, and I would argue that Target’s apparent decision to shift to a more specialized grocery approach is the result of throwing spaghetti against the wall to see what sticks – and in Target’s case, it is mass market, lowest-common-denominator spaghetti.
One MNB reader responded:
Agreeing with KC, the grocery experience is not great at Target, causing lost grocery households to outlets he mentions and beyond, myself included. Now we have the next big idea hatched from the Nicollet Avenue Nest to create a specialty environment that further narrows the grocery households they expect retain and the new ones they hope to capture. I can just imagine the Great Hall pep fest they put on to sell this internally. Can this Mass, yes Mass, retailer afford to create an increasingly selective experience when other retailers are openly selecting their shoppers away from them? To me this move may just further “unique” themselves away from even more grocery households, resulting in fewer shoppers across the rest of the store. Genius.
MNB reader Kevin Stopher wrote:L
I’m in the PNW now and spending a lot of time in Fred Meyer’s stores. Target as always great at GM/HBC. I had high expectations when Brian Cornell came in with his grocery background. When Target added grocery, they buried the sections far from the entrance and poorly managed what should have been the primary traffic driver.
Fred Meyer typically has multiple entrances. One entrance leads directly into grocery, like a standard grocery store, produce and deli. The other entrance is typically liquor, banking and a pharmacy in the front (where most grocery stores now put them far in the back).
I find when I just need a few items, I will go to Safeway/Carrs for the small footprint and quick in/out shopping. If I need a few random items, Fred Meyer does a great job of offering everything I could ever want while still catering to smaller trips. Target seems to fail on all of these points. Kroger has the data (as does Target), I’m sure they can confirm the customer LTV and overall value of multiple entrances with trip driver departments located near them to increase traffic.
Within the same concept, Fred Meyer stores have multiple parking lot entrances and improved traffic flow. Every Target I’ve been to has a traffic choke point making ingress/egress very poor.
Some of these items can be addressed with store remodels, some cannot without major location moves. But I have always felt these were things that the Old Guard of Target has refused to consider changing about their go to market strategy.
Got this email from MNB reader Mike Carter about my reviews of Elote and Mariposa, two terrific restaurants we went to during our recent trip to Sedona:
Totally agree with your comments about the two restaurants in Sedona. Been to both and they are wonderful. Did you notice the amazing customer service feature at Mariposa Grill, but not advertised or even noticed by many? Like you, I am a fanatic about getting good customer service.
They have a baffling sound system installed that keeps ambient noise down so you can hear your table conversations. I noticed it two years ago while dining, not knowing what they had done. As we were leaving I mentioned it to the manager on duty at the door. He thanked me for noticing and explained about the system they had installed. I have never come across it anywhere else.
You might say that it is baffling why it is isn’t more used.
I’ve been spending a lot of time writing about what I think is an evolving technology backlash among US consumers, suggesting that businesses need to pay attention to it on a number of fronts. Be responsible, I’ve said, or risk being culpable.
One MNB reader wrote:
Keep beating the drum. I think we need a smart phone/social media ban until a minimum age 16. Flip phones will work fine for those that need the leash. Money talks so the movement to sanity in the United States is slow but my hope is that social media/smart phones will eventually get the treatment cigarettes got. “Everyone” smoked back in the day and attempts to dial the usage back were castigated. But eventually the truth of the health crisis won. Surely, sanity will prevail. Oh, maybe not, I forgot how dysfunctional our Congress is.
Not just Congress.
This week I wrote about how plans are moving ahead in New York City for Mayor Zohran Mamdani’s promised city-owned grocery stores; he plans to have one in each of ther city’s five boroughs by the end of his term in 2029.
The New York Times wrote that the Manhattan store will be in the East Harlem neighborhood: “The mayor wants to spend roughly $30 million to build the store at La Marqueta, a city-owned marketplace under elevated train tracks in a predominantly Latino neighborhood … a diverse community with high poverty rates.”
La Marqueta, the Times wrote, “has for decades hosted vendors beneath the Metro-North Railroad tracks along Park Avenue. It once covered five city blocks and had many vendors. But it has struggled over the years and now has a smaller footprint and fewer shops, including a garden center and a vegan soul food shop. Mr. Mamdani said that he wanted the new grocery store to offer discounts on basic groceries and to provide ‘quality jobs.’ The city will waive rent and real estate taxes for the store. It will be built on an empty lot and will not displace current vendors.”
I commented:
I remain skeptical about the city’s ability to run effective and efficient grocery stores that actually are are able to provide lower prices on quality food to people who are underserved – or just feel underserved – by the traditional grocery industry.
(Very quickly, let’s put aside Catsimatidis’ comments – he’s a failed mayoral candidate who runs, in my view, pretty crappy stores. Soviet-style bread lines? Really? And in a tradition of all sore losers, his response to the idea of city-owned stores is to threaten to close all his New York City stores – which would leave the neighborhoods they serve even more underserved. Give me a break.)
That said, Mamdani’s proposal seems more relevant today than it did during the campaign, since inflation has persisted and food has become even more expensive. And I really don’t blame Mamdani for looking at out-of-the-box solutions that he hopes will make the city more affordable. He may learn – quickly or slowly – that selling groceries is more complicated than he expected, and will have to back away. Or maybe – this is a long shot – his folks will figure out something that nobody else has.
Over the past 16 months or so, the federal government has begun taking direct equity stakes and demanding “golden shares” in various companies and industries – so it’s not like Mamdani is forging new ground here. He’s actually working on a smaller scale – which is what mayors do. They endeavor to make sure the potholes are filled, the garbage is picked up, the public schools are more effective, the crime rates go down, and the snow gets cleared – and they largely are judged based on deliverables. So why not try grocery stores? We’ll know pretty quickly whether it works or not, and either way, Mamdani will face the voters.
A key decision will be who Mamdani names to run the stores – he needs someone with experience who is able and willing to break a few eggs to make an omelette. I have some suggestions.
How about Jim Donald? He knows the market from his time as Pathmark’s CEO, and he recently retired as Albertsons’ chairman – one of his strengths is as someone who is capable of both dealing with the tough financial realities of the grocery business as well as rallying the troops and getting people to move in the same direction. Or Steven Goddard, the former CEO of WinCo, who knows how to run an employee-owned, price-driven supermarket chain? While former Trader Joe’s exec Doug Rauch’s attempt to create The Daily Table, stores that would offer affordable food to underserved Boston communities, didn’t work out, maybe he’d like another shot in a different city under different circumstances? And hey, if the lawsuit doesn’t work out, former Market Basket CEO Arthur T. Demoulas (and his kids) may be looking for a gig.
I do think they have to be careful about what models they use in building the business. The Times story notes that “city officials have examined different models, including commissary grocery stores run by the Defense Department that offer lower prices to military members and veterans.”
But there a lot of commissaries that have trouble competing with the Walmart located just off-base, and so that’s not where I’d go. (The fact is that the East Harlem store will compete with Aldi, Target and Costco. And CNBC had a story the other day about how the Navy Exchange Service Command, or Nexcom, “could be at risk as larger, savvier retail giants like Walmart, Amazon and Target chip away at Nexcom’s U.S. market share, … sales have been in decline for the last 12 years, falling 19% between fiscal 2012 and 2024 and outpacing declines in total military personnel. The most recent year with data available, fiscal 2024, saw the lowest sales in nearly 20 years outside the Covid-19 pandemic. So maybe not the best model for New York City.)
As I said, I’m skeptical. I think I’d rather see New York City create an alliance with an existing supermarket business to make affordable food more available. Tax breaks and free rent could go a long way, and maybe the installation of NYPD substations in those stores. And maybe tie the stores’ operations to the public schools, creating entrepreneurial programs that help kids discover the dignity of the work and the possibilities of a career in the food industry.
But what the hell. I’ll go back to some things Andy Jassy wrote last week in his annual letter to shareholders:
“You need to invent and experiment like crazy. Many of these experiments will fail, and it might feel like you’re getting nowhere. But, your culture must possess the tenacity to keep at it … You need to move fast, have teammates that act like true owners, and be scrappy … You have to be willing to reimagine not only every customer experience, but also how you organize and get work done. Challenging conventions that have existed a long time (and worked) is difficult. People sometimes call these ‘change management’ obstacles. That’s true, but in times of transformational tumult, they’re almost like reexamining your faith.
“And, you have to be able to withstand criticism as you’re making your way through an inflection.”
I think I’d rather give Mamdani a shot and let him succeed or fail on the merits and effectiveness of his decisions than simply accept the crude cynicism of someone like Catsimatidis.
One MNB reader took exception to my commentary:
So tell us, which of these mayoral functions are performed in NYC today with enough excellence to inspire confidence that they can run grocery stores well, or better than the private sector?
And then you make the point he (Mamdani) has to experiment and they may learn it doesn’t work. You even bring up Andy Jassy’s letter on this point.
The BIG HUGE difference is Andy is playing with his investors’ money, who can opt out by simply selling their shares, a half-second thing on any equity trading platform. NYC taxpayers, with whose Money hizzoner Mamdani is playing, can’t quite pull that trigger. if he blows $70-75 mill learning it was a bad idea, what are taxpayers to do? Say oops, “We voted for the guy, at least he tried?“ Really? At least what Trump is doing is taking equity positions where all the taxpayers will see is upside. The investors in those companies ought to be the ones upset, their upside is being co-opted by Trump. But then what are taxes if not that? So its another tax, by a different name.
Mamdani is a mendacious immature SOB full of himself, just like any of the Tech Bros you despise. Too young to be experienced enough and too arrogant to know better.
MNB reader Gary Breissinger seems to agree:
Jassy’s insightful comments aside, do you really think that NYC politicians and bureaucrats can envision, create and effectively operate a grocery store? That free rent and tax free status will be enough to overcome the challenges of creating an efficient/ cost effective supply chain in the absence of scale?
It seems to me that the city’s money would be much better spent by offering incentives to existing retailers with well established business models, highly efficient supply chains and talented/experienced operations management to build and operate retail outlets in the city’s “food deserts”.
However, that would require real commitment from the city to address the massive shrink and security issues which have made it virtually impossible to be successful.
Mamdani should focus on establishing a secure environment where citizens are safe to shop and invent world class retailers to operate outlets which can generate a fair return on the private capital invested…rather than naively ignoring some of the fundamental societal problems which created the “ food desserts” in the first place.
Collaboration with the private sector likely has a higher probability of success than trying to compete with it.
To be clear – I did say (several times) that I was skeptical of the city-owned grocery strategy.
While I am not a fan of Mamdani’s politics – though to be sure, I respect his skills as a politician, because this is a guy who has game – I’m not sure I buy all of these criticisms.
We are only about 100 days into an administration, so it is fair to say that a) it is too early to tell, and b) Mamdani hasn’t yet been tested to any great degree. But to my knowledge, to this point there haven’t been any major complaints in the city about the degree to which the potholes have been filled, the garbage has been picked up, and the snow has been cleared (this latter function was a big deal this past winter, when we had more snow than we’ve had in recent years). Harder to judge the public schools and the crime rate at this point.
I’m also note sure what Mamdani has done to merit being called mendacious and immature. Ambitious? Sure.
A digression, if I may.
For those not paying attention to New York City politics, here’s part of how the New York Times evaluated his first 100 days:
One hundred days into his mayoralty, Mr. Mamdani has hustled up a litany of quick accomplishments. He has reignited projects to improve bus speeds; built a City Hall rest stop for delivery workers; opened a long-delayed new infirmary for Rikers Island detainees; secured state money to fund an incremental expansion of free preschool; and wielded the powers of his office to go after both abusive employers and bad landlords.
“But he has also quickly retreated from one campaign promise after another. He once vowed to relinquish unilateral control of public schools in a nod to the teachers’ union; now he supports renewing the law that established it. He had pledged to expand a rental voucher program; now he is trying to limit its growth. Where once he called for reducing class sizes, now he is asking for more time to implement the costly mandate.
“The mayor has made no discernible progress toward fulfilling his vow to eliminate a police unit assigned to protests that has been known for heavy-handed tactics. Nor has he followed through on his prior support for legislation to eliminate a police database of people said to be gang members.
“Mr. Mamdani has instead been forced to confront an awkward reality, one easily lost in the joy of an insurgent, successful campaign: As New York’s first modern mayor to wholly embrace democratic socialism, Mr. Mamdani has little actual power to impose that ideology on city government.”
In other words, I think, the jury is out. Digression over.
I would argue that there always are taxpayers who would quibble with how federal, state and local government officials spend the money we send them – we differ on priorities, and while elections have consequences, that does not mean we have to shut up about it. In this case, while I disagree with Mamdani’s approach to bringing down the price of food, a) I don’t live in NYC so I don’t get a say, and b) he won the election and this was one of his campaign planks.
So, yeah. Let’s see if he is able to do it, and if it works. And if he fails, he has to face the voters.
I actually got a number of emails regarding my suggestions for who could run the grocery business for New York City.
One MNB reader wrote:
I think any of your nominations could make a successful run at a city or NGO model, (although Jim Donald is my vote).
If I was to make it simple I would push for Aldi’s running their stores as is with city coverage for shrink costs. That feels a lot less expensive overall than the city trying to run things.
Agreed.
From another reader:
For what it’s worth I agree with the Jim Donald suggestion. I’ve worked with him at 2 different retailers and he has all of the qualities necessary to make this a success.
From still another reader:
It seems to me that if Mamdani offered the La Marqueta cite and waived rent and real estate taxes he would receive interest from a host of businesses. By considering a grocery partner with the “sweetheart deal” he is suggesting for the city he could save NYC the $30M in building costs plus the infrastructure costs to build a grocery department within the city. And probably get a compelling profit share or building arrangement.
I do admit this is not a socialist solution – but it seems like a better one.
And, from one more reader:
My guess is some consultants are going to make a boat load of money on this deal. As far as your statements regarding John Catsimatidis, I’m sure you would not make those statements if he was a Democrat.
Methinks his political party has very little to do with his mediocre stores.
But if it makes you happier to assume my criticism is political, go for it.
MNB reader Alex Jackson makes the case for Mamdani’s proposals:
I look forward to seeing what Mamdani does to reduce food insecurity in NYC. I agree with you- from a supply chain and cost efficiency standpoint, a partnership with an existing retailer (Wegman’s, Stop & Shop, Aldi, LIDL) would be much more efficient. I think there’s a chance he still does that. Or, will he work with a broadline distributor (UNFI, Bozzuto’s, Sysco) to ensure they have total store represented.
My worst fear is that he bids it out to big companies who are going to do what is best for their brand, and not for the consumer. Think about Coca-Cola or Pepsi: their strategy to get vending machines in schools to create lifelong customers from a young age (and therefore addicts of their product) who will purchase their product for a lifetime works. And, it feeds established habits of cheap calories rather than nutritious calories that keep kids, and adults, fuller for longer. The communities Mamdani is serving not only struggle with food insecurity, they struggle with nutritious food insecurity. How will he not only change access to food, but access to nutritious food so he can also reverse generations of obesity, diabetes and high cholesterol?
Being in the produce business, my mind goes to ways we can introduce affordable fresh fruits and vegetables in these markets. What if the International Fresh Produce Association (IFPA) put together a network of suppliers who could ensure good quality produce that normally would go to waste or be donated gets sent to this store to be sold for almost nothing? What if Planet Harvest created awareness of their produce prescriptions by offering their boxes at these stores for almost nothing? Or, what if Misfits Markets was the “retail partner” for these stores, taking product that may be left in the supply chain and bringing it to those who won’t let it go to waste? If Mamdani is able to accomplish this, he then needs to ensure shoppers understand how to select, prepare and store these fresh ingredients they aren’t used to so they not only don’t go to waste, but so they enjoy the eating experience and come back for more.
I believe in what Mamdani is doing, and that this could become a case study in how we reverse food insecurity and obesity in this country, and increase consumption of fresh fruits and vegetables.
All really interesting ideas.
Zohran Mamdani, meet Alex Jackson.
The post Your Views: Backlashes appeared first on MNB.
View Original Article
