Why Trader Joe's Will Never Deliver
Minimum wage & congestion pricing hit NYC, Kroger Q3, shoplifting stories debunked
We thought we’d head into the weekend with some interesting anecdotes from everyone’s favorite grocer, Trader Joe’s, and why they claim they’ll never do delivery. On the other end of the supermarket spectrum, Kroger dropped its Q3, and delivery sales are up, up, up! Plus, new laws are going to make a big impact on the NYC market, and we shine a light on shoplifting’s dubious claims.
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Congestion Pricing, Minimum Wage Hit NYC Deliverers
Kroger Q3 Driven by Digital Growth
Chart Time | Shops Lying About Shoplifting
Trader Joe’s Won’t Deliver — Here’s Why
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POLICY | Minimum Wage, Congestion Pricing Impact NYC Deliveries
A new law impacting food delivery in the Big Apple inched closer to implementation yesterday, with the New York Supreme Court Appellate Division ruling that the city’s industry specific minimum pay rate — $17.96/hr before tips and rising thereafter — should take effect. While it’s been a rocky path for the legislation, which was paused by the litigation back in July; it now goes before the full state Supreme Court, which is expected to approve it. “While we’re disappointed the city pushed through a rule that eliminates jobs, discourage tipping, and forces couriers to go faster and accept more trips, the higher wage does address another priority of the city by including enough money to purchase their own UL-certified e-bikes and batteries,” said Uber Communications Manager Freddi Goldstein.
The Big Picture: At the same time, the city leaked details of its congestion pricing plan, which will add tolls to access Midtown and Lower Manhattan, funneling the revenue towards transit. Cars will pay $15, trucks as much as $36, taxis $1.25 per trip, and Uber / Lyft $2.50 per ride. Food delivery in the city will not be much impacted, given that its largely done via bicycle and moped. Larger deliveries are likely to incur the fee, but the modest charge will be more than offset to improvements in travel time and reliability. The city is also exploring novel options like aquatic-based delivery. Elsewhere on the policy front, the European Union is turning up the heat in its antitrust investigation, as it raided the offices of Glovo in Spain and parent company Delivery Hero in Germany.
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GROCERY | Digital, Delivery Sales Rise in Kroger Q3
Grocery giant Kroger posted its Q3 — and for a company trying to make the case for a merger, it sure looks awfully healthy as is! The Ohio-based chain had an operating profit of $912 million, off of $34 billion in quarterly sales. Identical / same store sales rose 1% including fuel purchases, decreased 0.6% without them. Gross margins rose mildly to 22% — not too shabby for a commodity business. Digital sales were up 11%, and delivery rose 20%.
The Big Picture: Digital sales, inclusive of pickup, delivery and ship-to-home, have been growing ever more important at the grocer, since that mode surged during the pandemic. That channel rocketed up 116% in 2020, decreased 3% in ‘21, and rose 4% last year. Looking at delivery specifically, in Q2 it rose 24% YoY, in Q1 it was up 30% and in Q4 of last year it increased by 22%.
CHART TIME | Shoplifting or Shopfalling?
While we’ve heard plenty of retailers crying foul about shoplifting the past few years, it seems to be rather disconnected from reality. New data from the Council on Criminal Justice, as compiled by the NYT, shows that the crime is down compared to pre-pandemic. Looking at shrink overall, it sits at 1.57% of retail sales, compared to 1.62% in 2019.
OPS | Why Trader Joe’s Will Never Do Delivery
Ever wonder why famed grocery retailer Trader Joe’s doesn’t do delivery? Because as Tara Miller, VP of Marketing puts it, “At Trader Joe's, we say the store is our brand.” The company prides itself on the experience that happens within the four walls of its bricks and mortar locations, investing in fun themes and engaging staff that make the shopping experience unique. The company also prides itself on low prices, meaning it would be an undue expense to build out a whole network of logistics and delivery infrastructure; nor would it want to tack on the delivery fees and lose the customer relationship were it to partner with a 3PD. And if you’ve ever been to a TJ’s during peak hours, you know how unpleasant it would be if that small store was also being worked by a phalanx of delivery pickers.
The Big Picture: While TJ’s is sticking to its guns on this, clearly a number of shoppers would love to get some Speculoos Cookie Butter and Mandarin Orange Chicken from the comfort of their home. Enterprising middlemen like TJ-Delivery.com have tried operating bootleg delivery operations in Manhattan for a $9.99 fee, but have since been shut down. (The brand also briefly experimented with in-house delivery from its Union Square location.) The stores’ wares are so popular that folks in states like Alaska and Hawaii — which host no Joe’s — have been known to have friends mail them shelf stable grocery items. For any operator starting to dabble with delivery, first sit back and think if your store is more of a TJ’s or a Kroger…
A Few Good Links
Grab’s Q3 shows GMV up 6%, revenue rising a whopping 62%, driven by taking delivery in-house. Warehouse automation to grow in ‘24. South Africa’s speediest delivery worker? Sneak peak of McDonald’s new CosMc concept. Crumbl franchisee finances leaked. New Brinker Int’l SVP. 2023 franchisee bankruptcies. Panera files for IPO. Subtle holiday menu items. Consumers trade down to c-store food. Grubhub highlights delivery for corporate holiday events. New Look and TrusTrace partner on supply chain compliance. UPS adds more zip codes to its surcharge area. Tim Hortons rolls out Volvo EV trucks. Drone data services may hit $15B by 2030.
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