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It's A Bird, It's A Plane, It's The Mailman!
C&S complicates grocery wars, Target Sortation Centers, Visa / Mastercard Revenue
Ok, it’s actually the UPS worker, not the mailman, but that doesn’t really fit the word play. And in fact it’s not really the UPS worker, it’s the absence of the UPS worker. Actually you know what, just read on to get the full story…
UPS & Zipline’s Critical Drone Approvals
C&S, H-E-B, Kroger, Albertsons Keep Grocery Drama Alive
Chart Time | Visa & Mastercard’s Prodigious Profits
Target Reveals Sortation Center Secrets
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AUTOMATION | UPS’ Drone Ambitions Take Off
UPS’ Flight Forward drone delivery subsidiary received a critical authorization from the Federal Aviation Administration, clearing its Matternet M2 drones to operate beyond the visual line of sight (BVLOS.) uAvionix and its Rapace / Vantis Network powered drones also received the authorization, while Phoenix Air Unmanned received the same permission for its SwissDrones SVO 50 V2 fleet two weeks prior. Zipline, which has shown strong ambitions in not only the instant delivery and smart fulfillment categories, but in using drones to transport critical supplies to hospitals and in under-developed countries, is also expected to receive the approval shortly.
The Big Picture: BVLOS certification is a critical step for moving drone delivery past the novelty stage. Without it, the quadcopters couldn’t fly past where an operator could physically see them; now they can traverse real terrain and use the assistance of autonomous navigation tools. We’ve recently seen Walmart and Wing make big strides in this category, now it’s Brown’s turn to take to the skies.
GROCERY | C&S Makes Buyout Offer As Kroger-Albertsons Heats Up
The slowly gestating Kroger-Albertsons merger has another twist, as grocery holding co C&S Wholesale (17th largest in the U.S.) puts in a bid for 413 of the Kroger (4th largest) and Albertsons (9th largest) stores that the FTC is likely to require the supermarkets to offload should their proposed merger proceed. The stores span the country, including 104 in Washington State, 66 in California, 10 in Greater D.C. and many in between; stores would largely continue to operate under the Albertsons banner.
The Big Picture: Will this offer be enough to mollify the FTC, or will the government have concerns about an enlarged C&S having enough cash to make the necessary investments to keep up in a grocery game that’s getting more and more competitive. In 2015, Albertsons sold a number of its California stores to the Pacific Northwest’s Haggen, to help seal the deal on its Safeway Merger. Within six months, Haggen would file for bankruptcy, claiming to be hamstrung by both Safeway-Albersons’ misactions and consumers’ unfamiliarity with the new brand. Grocery has only gotten more competitive since then, with brands needing to invest deeply into digital fulfillment, as seen in this new 100,000 square foot H-E-B build-out near Houston. With Kroger reporting another fine quarter of results, including 12% growth in digital sales, it’s unclear if the FTC will find a reason to approve its tie-up.
CHART TIME | Mastercard & Visa’s Record Revenue
With Visa and Mastercard in the news as they prepare to hike merchants’ rates, it seemed like a good time to put these two financial utilities under the chart time microscope. As you can see, they’re doing just fine as-is, with 2022 revenue hitting $29.310 billion at Visa, and $22.237B at Mastercard. Profit margins hovered around an incredibly healthy 45-50%. Maybe someone ought to reinvigorate Diners Club or Discover Card?
LMD | Sortation Centers Key to Target’s Success
Target has been rolling out Sortation Centers nationwide: starting in its hometown of Minneapolis, with a 10th just opened in Miami, and plans to hit 15 across the country by 2026. The company sees it as a key part of its “stores as hubs” strategy, with sortation centers increasing speed / efficiency, and improving the time and space efficacy of each worker. The company says use of the system has increased next day delivery orders by 150%.
The Big Picture: Target hasn’t been afraid to experiment as it looks to get LMD right. It’s complementing select Sortation Centers with smaller secondary hubs: a low cost build-out in Smyrna, GA increased the reach of its Atlanta hub by an additional 500,000 customers. The Sortation Center strategy also dovetails nicely with Target’s ownership of 3PD Shipt, which is now seeing 40% of orders delivered next day or better. Target expects to double Sortation Center to 50 million packages by EOY.
A Few Good Links
DoorDash CEO Xu has throws shade on competitor’s grocery ambitions. Grubhub adds customer frequency insights for restaurants’ top purchasers. TikTok’s Shop marketplace appears to be full of junk and data violations (shocker…) Wawa debuts first electric truck. Can grocers make foray into beauty segment? Potbelly looks to digital kitchens to juice growth. Cartwheel and ezCater score P.F. Chang’s deal. PayFacto acquires NEOPOS. Whizz launches partnership with DoorDash to get ebike rentals in front of couriers in NYC. Frubana’s LatAm restaurant supplies marketplace seeks VP of Online Growth. UPS matches FedEx’s rate raise: up 5.9%.
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