From the desk of the ALA President 11/25

Thanksgiving…a special time for resale programs and people.  Happy Thanksgiving all.  It’s a special time for resale programs.  For exchanges, it means they are now in the thick of their Holiday season and their most critical shopping period, made all the tougher by pandemic restrictions.  Same holds true for commissaries in which Thanksgiving and the Holidays are their busiest time as well.  Here again, commissaries have been hit from many pandemic-related directions including restricted base and store access and limited quantities being supplied from some manufacturers.  Tough times require tough and dedicated people and there is no shortage of dedicated headquarters and base level associates and managers, and headquarters and in-store industry partners who keep the wheels turning, under pressure, and now, under risky conditions.  They do it all to take care of our military folks…remarkable and commendable.  The Nation can give thanks for the hard work and sacrifice of all who make this system work and ALA is proud to be part of it.

Military retailers are doubling down on safety precautions during the holidays.  All resale headquarters are reporting that they are ramping-up sanitation and other safety measures to ensure that both customers and employees are safe.  More curbside pickup, capacity limits and social distancing.

Commissaries ramping up protection.  Commissaries are adding digital contactless thermometers and children’s reusable masks to store inventories, the Defense Commissary Agency’s director of sales announced.  These additions, along with new lines of adult disposable masks and several sizes of hand sanitizers, first became available in stateside stores in late September. Shipments of thermometers to stores in Europe and the Pacific are expected by late November, Tracie Russ, the agency’s sales director, said. The new products join existing brands of personal protective gear that commissaries have been selling since June.  “By having protective masks, thermometers and other items available for purchase in our commissaries, we are doing our best to help our customers reduce exposure to COVID-19,” Russ said. “We also want our customers to know that commissaries adhere to the highest standards of DOD health protection.”

Cases up in military.  Base access and store restrictions are ramping up.  In Italy, some exchanges are only open on weekdays and in Germany reports are that only active duty and their dependents are allowed on base through this weekend.  (ALA posts base access restrictions to its website.)   The recent uptick in cases in the U.S. — more than 1 million over the past seven days — has military leaders scrambling to impose tougher restrictions on the thousands of personnel that work in the Pentagon.  U.S. officials this past week recorded more than 1,300 new confirmed cases of COVID-19 among members of the armed forces, with nearly a quarter of the roughly 300 sailors stationed on guided missile destroyer USS Michael Murphy testing positive for the virus.  Though the test positivity rate among the armed forces is now 6.8 percent, lower than the U.S. national average, COVID-19 cases in the military have continued to grow alongside those in the United States.  More than 73,000 coronavirus cases have been confirmed among members of the military, while tens of thousands more have been recorded among DOD family members, contractors and civilian personnel.

Government shutdown status.  Bottom line up front—we think one way or the other (either through regular appropriations or another funding patch or “Continuing Resolutions”), the Government will stay open and commissaries will not have to close.  Funding expires for most Government programs on December 11.  And unless Congress and the White House get it together, the Government could shut down again.  Yesterday negotiators on Capitol Hill got one step closer to averting a shutdown.  They agreed on what we call in D.C.  302 (b) allocations.  That’s the money that is allocated to different Federal Agencies.  They haven’t revealed the numbers, but they’re said they got agreement.    Basically, they’ve deciding how to divvy up $1.4 trillion between 12 different appropriations bills.  We thought they needed to get agreement before Thanksgiving to get it together by December 11.  With this agreement in place, they can now move to a bicameral and bipartisan deal.  It’s unclear whether the appropriations bills would be rolled into several “mini-busses” funding a few agencies or an “omnibus” that would fund all agencies, including Defense Veterans and Homeland Security.   At issue are Veterans health care spending, nuclear cleanup, and unemployment costs.  Then there’s the wall… The Senate’s draft fiscal 2021 Homeland Security bill would provide the requested $2 billion. The House version provides no funds for the wall and would rescind $1.375 billion provided in fiscal 2020 for wall construction. If lawmakers were able to agree on most of the bills but not on the Homeland Security bill, the fallback would be to pass a continuing resolution extending Homeland Security funding into next year, including wall construction spending.

The Veterans Canteen Service got $140 in funding relief already in the Continuing Resolution that was passed last month.  Exchange funding relief is being provided from CARES I funding (the first pandemic relief package passed earlier this year).  But there is a huge chunk of exchange and MWR relief ($1.4 billion) in the House version of the second Stimulus bill that ALA is actively supporting.  Some want to up the game at attach pandemic stimulus relief to the bills.  “We have been working on the omnibus bill and I thought that would be a segue into” coronavirus relief, House Speaker Nancy Pelosi said Friday during her weekly press conference. “Let’s hope that it is.”  Senate Republicans have been cautious on attaching pandemic funding to the appropriations bills.   I’ll keep you posted of course.

Defense policy bill at risk over forts named after Confederate generals.  As I have been reporting, there are several issues included in the annual Defense policy bill or Defense Authorization Act that affect resale programs including GAO reviews of consolidation data, reviews of commissary reforms, reports imposed on resale industry related to forced labor in China, and food ingredient labeling for products sold in resale programs.  I worked on the House Armed Services Committee for about ten years and I know how much work goes into the annual Defense policy bills that have passed Congress for the last 59 years.  And every year something comes up that slows the bill down.  But negotiators always get beyond it and get a bill.  Staff has been negotiating the hundreds of provisions in the thousands of pages bills and only last week were formal negotiations started with the appointment of House conferees.

This year is made particularly difficult because there is are provisions in the House and Senate versions of the NDAA that requires the renaming of forts named after Confederate generals (There are about ten of them).  Trump wants it removed and has threatened a veto.  37 Senators have written and said they want it to remain in the bill.  And the House so far isn’t budging.

But the chairman of the Senate Armed Services Committee, Sen. James Inhofe, R-Okla., indicated that he’s gotten the message from Trump, and he called it a “big issue” of contention in negotiations with Democrats. “Only the president can say whether or not there’s any room for a negotiation,” Inhofe said, adding that he doubts that Senate Majority Leader Mitch McConnell, R-Ky., would put legislation up for a vote on the floor “that has a veto on it.” Sen. Jack Reed of Rhode Island, the ranking Democrat on the Senate Armed Services Committee, acknowledged that the issue has become a central sticking point.”  Rep. Adam Smith, D-Wash., chair of the House Armed Services Committee, who is leading negotiations with Republicans, said the issue could derail the whole bill, which has passed every year for 59 straight years, a rarity in a polarized Congress.  “It’s a simple thing, and it’s getting in the way of a lot of very important stuff over something that we all ought to support, and most of us do,” Smith said.  Trump’s feelings haven’t changed, and that the reality is that the next administration would probably change the names even if the language isn’t included in the defense bill. “Why put a large, important bill at risk for something that will come to pass anyway?” the aide asked. After his inauguration, President-elect Joe Biden, who released a statement supporting the name changes in June, could issue an executive order to change the names, and the changes would likely be implemented faster than any legislation could implement them, a defense official said.  The Biden transition team has declined to comment on whether he would sign an executive order renaming the bases.

Adding to the complexity is that control of the Senate is still in play and dependent on the results of a run-off election in Georgia to be held on January 5, 2021.  All bills that do not pass expire at the end of each Congress.  If the bill is not enacted before Congress adjourns on January 3, they will have to start all over again…a monumental task that forces the bills through the laborious process all over again in the 117th Congress.

Biden team coming together.  The Biden transition is underway as the General Services Administration has formally announced that it will use Government resources to assist in the transition.  I reported last week that the Biden Defense and other transition teams are in place.  This week, Joe Biden has announced several members of his National Security Team.  One notable exception is his pick for Department of Defense.  Bident announced Antony Blinken for Secretary of State, Avril Haines for Director of national Intelligence, Jake Sullivan as National Security Advisor, Linda Thomas-Greenfield as Ambassador to the UN, Alejandro Mayorkas as Secretary of Homeland Security, and John Kerry as a special envoy for climate.   For Secretary of Defense, we’ve heard that several people are in the running.  IT was thought that Michele Flournoy had the inside track for the Secretary of Defense position.  Some say that her announcement was held up because they are vetting her ties to lobbying and business including her work at the Boston Consulting Group where a press release said her experience would be “invaluable in helping our government clients tackle their most critical challenges.” Boston Consulting Group’s defense contracts increased from $2.6 million in fiscal year 2013 to $32 million in this period.  Other contenders for the Defense job reportedly are Jeh Johnson, former Secretary Homeland Security and senior counsel at DoD, and Senator Tammy Duckworth, an Iraq-war veteran and Senator from Illinois.  We’ve also heard that Bob Work who served as a deputy secretary of defense in the Obama Administration is being considered for a top post in the Administration. Here’s an excerpt from a Pentagon statement on the transition:

“The Department has received notice that pursuant to the Presidential Transition Act, the GSA Administrator is making certain post-election resources and services available to the Biden-Harris Transition Team. This evening, DOD has been contacted by the Biden-Harris team and their designated lead for the DOD Agency Review Team and based on the ascertainment by the GSA Administrator, we will begin immediately implementing our plan to provide support in accordance with statute, DOD policy and the memorandum of agreement between the White House and the Biden-Harris team.  The DOD Transition Task Force will arrange and coordinate all DOD contact with the Biden-Harris team.  DOD is prepared to provide post-election services and support in a professional, orderly, and efficient manner that is befitting of the public’s expectation of the Department and our commitment to national security.”

The pandemic is complicating the transition as social distancing and other restrictions are in place at the Pentagon.  Biden’s transition team will have dedicated office space at the Pentagon and the Pentagon transition team held their first meeting with the Biden people yesterday,

Prime Team vacating California.  We have learned that Prime Team, a vendor stocking company has announced that it will no longer work in California.  The other vendor stocking company, Top Gun, has said that they have no plans to leave the state.  DeCA is asking for industry to continue their fulfillment of vendor stocking responsibility support to help fill the void.   NEXCOM is currently assisting in some vendor stocking under a previous program.  We expect an DeCA notice to the trade on this soon, perhaps Friday.

Retail sales lift.  The National Retail Federation today forecast that holiday sales during November and December will increase between 3.6 percent and 5.2 percent over 2019 to a total between $755.3 billion and $766.7 billion. The numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with a 4 percent increase to $729.1 billion last year and an average holiday sales increase of 3.5 percent over the past five years.  NRF expects that online and other non-store sales, which are included in the total, will increase between 20 percent and 30 percent to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.  NRF said households have strong balance sheets supported by a strong stock market, rising home values and record savings boosted by government stimulus payments issued earlier this year. Jobs and wages are growing, energy costs are low and reduced spending on personal services, travel and entertainment because of the virus has freed up money for retail spending.  As a result of store shutdowns and stay-at-home orders last spring, not all retailers and categories have rebounded as quickly, including small and mid-sized retailers. E-commerce sales were up 36.7 percent year-over-year during the third quarter.

Berry Patrick nets OSD policy slot.  Berry Patrick has been selected as the new Director of OSD’s MWR and Resale Policy Directorate.  Berry, a frequent speaker at ALA events, has served as Associate Director for Business Policy with MC&FP since July 2018, where he has been responsible for policy and management oversight of DoD commissaries, military exchanges, and lodging programs, as well as a broad range of programs and services that address the needs of Service members and their families.  An announcement by Kim Joiner, Deputy Assistant Secretary of Defense for Military Community and Family Policy said that: “While in this position, Berry led the planning and successful execution on January 1, 2020 of the largest expansion of patrons to the military commissary system and exchanges in 65 years under the Purple Heart and Disabled Veterans Equal Access Act of 2018.  Berry is an Army veteran, both as an active-duty soldier and a reservist, who brings more than 40 years of combined military and DoD civilian service experience to his new position.  He has extensive experience leading numerous MWR, resale, and other installation management organizations at the installation, region, major command, and headquarters levels.  He has served in leadership positions with the Office of the Secretary of Defense, Army, Navy, Air Force, and the Special Operations Command, with multiple assignments both in the U.S. and overseas, to include serving for more than 22 years in assignments in Japan, Cuba, and Germany.”  Congratulations Mr. Patrick.

ALA commissary council tackling tough issues.  ALA’s Commissary Council continue to take on more issues related to the supply chain emphasis being made by DeCA.  Council Chairman Alex Sizemore reports that issues being addressed include reject reports, DeCA’s signage program, PowerDAX, EBS, pricing and promotions, and VCMs.  Sizemore and the council have also been orchestrating regular meetings with DeCA category managers.

Poland NEX opens.  NEXCOM has opened its newest NE location at Naval Support Facility Redzikowo, Poland. The new NEX is the first facility to be open for use on the base.  “We are proud to open our newest NEX location on the Navy’s newest base at Naval Support Facility Redzikowo,” said Bill Darwin, NEXCOM’s District Operations Manager Europe. “Our mission is to support Sailors no matter where they are located around the world. It was a great team effort between the base leadership and NEXCOM to open the NEX ahead of schedule to support our military members and civilians working there. We look forward to being a part of the NSF Redzikowo community for years to come.”  Located in the base’s Multi-Purpose Facility, the new 1,300 sq.-ft. mini mart offers its customers an assortment of food and beverage items, personal and health care items, household essentials and some portable electronics. The store is currently open five days a week. Adjacent to the NEX will be a barber shop which will open in spring 2021.

Push for pandemic worker safety.  The United Food and Commercial Workers union is pushing for more worker safety measures and hazard pay for the holiday season.  A statement said that “as the pandemic grows, so will the threat to our communities –and our food supply.  They point to 350 frontline worker deaths including 109 grocery workers with over 17,000 grocery workers infected or exposed to the virus.  they are calling for free testing, free PPE, mask enforcement for customers at all stores, paid sick leave, hazard pay and freezing al stock buybacks at companies until the pandemic is over or under control.    A Brookings Institution reported that profits at grocery chains are up with Amazon reporting a 53 percent increase, Walmart up 45 percent, and Kroger up 90 percent.  Here3 are some highlights from the Brooking report: “The extreme and unequal sacrifices shouldered by low-wage frontline workers require policy solutions such as federal hazard pay during the pandemic and a higher minimum wage so that workers permanently earn a living wage. And even without policy change, America’s biggest companies shouldn’t wait to give their employees economic security. Here are their three recommendations for the public and private sector:  Congress should focus federal dollars on modest hazard pay for the low-wage workers who need it most.   Profitable companies should reinstate hazard pay and permanently raise wages to $15 per hour.  Workers need bolder policy changes, during the pandemic and long after.

DeCA sales.  Month-to-month comparisons (October to October) show Central region took a hit of 9.47 percent with some stores registering sales hits north of 15 percent.  East and West showed 2.5 percent and 3.26 percent hits respectively.  This impact was offset by gains in the Pacific and Europe. DeCA sales are off 2.16 percent for the year-to-date October 30.

Here’s some DeCA transaction data:  

Grocery headlines:  

  • Instacart reportedly started planning a $30 billion IPO.
  • Winn-Dixie cooked up new concepts in its latest Florida stores; and
  • Amazon entered the prescription-drug market with Amazon Pharmacy.
  • Albertsons started accepting SNAP EBT payment for curbside-pickup orders and online grocery continued to be a mainstay for COVID-concerned consumers, according to an Oracle Grocery Retail survey.
  • Hy-Vee said it would hire 10,000 workers to prepare for the holiday rush.
  • Walmart doubled its personal-shopper count for the holiday season.

Probably the biggest (and most telling) grocery news of the week is Ahold Delhaize announced plans to buy online grocer FreshDirect.   “FreshDirect is a leading local brand in the fast-growing online grocery sector in the New York City metro area, one of the most important e-commerce food markets in the United States,” said Frans Muller, Ahold Delhaize CEO. “With its unparalleled quality of fresh food, exceptional brand recognition, and dedicated people, it has generated remarkable customer loyalty. This acquisition further propels our omnichannel evolution. It is a great addition and fit for our portfolio of leading local brands. The deal allows us to reach additional customers in the New York trade area and therefore will add incremental sales to the business. It further enables us to address customers’ growing preference for convenient ways to shop. Finally, we are excited to have Centerbridge alongside of us in this venture and believe our combined focus, expertise and scale will help us maximize the success of FreshDirect going forward.”  FreshDirect is a leader in the U.S. online grocery sector, with more than 20 years of local market and customer experience. As the name implies, the company focuses on fresh food, which represents more than 60% of its sales. It differentiates itself with direct and exclusive relationships with local farmers, coupled with unique meal solution capabilities. The company’s efficient supply chain enables faster and more direct delivery of fresh food than many other conventional grocery services, providing a further enhanced freshness experience to customers.   “We are strong believers that the future of grocery retail involves getting customers the best-quality food, exactly when they want it, with the best customer service,” said David McInerney, FreshDirect’s CEO. “We have built FreshDirect into a reliable and recognizable business to serve this purpose. This transaction marks an important milestone in the continued growth of FreshDirect. I believe Ahold Delhaize’s global scale; focus on strong, leading local brands; and ability to utilize cost-of-goods synergies will allow FreshDirect to achieve its full potential.”  Just last week Ahold revealed new initiatives aimed “to solidify [its] position as an industry-leading local omnichannel retailer” in 2021 and beyond, including doubling its click-and-collect locations in the United States.

NEX direct mission pandemic support.  On Nov. 24, the Navy Exchange Service Command’s (NEXCOM) Navy Lodge Program reached 100,000 cumulative total room nights supporting Restriction of Movement (ROM) guests due to the COVID-19 pandemic. At the onset of the COVID-19 pandemic, the Navy Lodge Program stepped up to provide a safe and secure location for the U.S. Navy to house Sailors as well as family members who are placed on ROM status. Since March, a total of 32 Navy Lodges around the world supported a cumulative 100,000 rooms to sustain this effort.   Rear Adm. Dave Welch, commander, Carrier Strike Group (CSG) 15, sent a note to Maria Gonzalez, General Manager, Navy Lodge North Island, California, stating, “I wish to express my sincere gratitude for your efforts and support with the pre-underway billeting for the Carrier Strike Group FIFTEEN staff and augmentees. The service you provided is a direct reflection of the super hospitality that the Navy Lodge is known for throughout the world.

Vaccine deployment.  ALA is working with the Department of Defense to determine what aspects of the resale supply chain need to be given priority for vaccines, once they are available.  Overall, DoD has announced that vaccines will be voluntary.   However, once FDA approves them mandatory action is under consideration but not yet announced, according to Military.com.    According to officials, the vaccine will remain voluntary as long as it is authorized under emergency conditions and doesn’t have official approval from the FDA.  “It is expected that these vaccines will be voluntary until achieving full FDA approval,” said Lou Burton, chief of media operations for the Air Force Surgeon General.  VA and DoD are preparing to receive doses of the vaccine as allocated by the Centers for Disease Control and Prevention.VA Press Secretary Christina Noel said Friday that no VA facilities currently have the vaccine, but the department is working “diligently, both internally and externally with its CDC partners, to develop a comprehensive plan” to ensure that it is available across the system, first to high-risk veterans and staff.  According to the CDC’s COVID-19 Vaccination Program Interim Playbook for Jurisdiction Operations published Oct. 29, the CDC plans to allocate vaccines as available to DoD for active-duty personnel and their dependents, the Coast Guard, but not their dependents, and all military retirees, but not their dependents.  DoD civilian employees and contractors also will be given priority for DoD’s allocation. Still to be determined, however, is whether CDC will allocate doses to DoD to cover Reserve and National Guard members, and how Tricare plans to cover military and retiree family members.

Senators Thom Tillis and Joni Ernst, both Senate Armed Services Committee members have written to DoD saying: “We urge you to immediately make plans to utilize the latest rapid antigen tests for coronavirus to detect the asymptomatic carriers of the coronavirus.”

Reimbursing contractors for paid leave.  Section 3610 of the CARES Act permits federal agencies to reimburse contractors for the costs of providing paid leave to employees who cannot perform work on a government approved site (or otherwise perform remotely) due to the effects of the pandemic.  While this is not a complicated concept to grasp, contractors must satisfy a number of technical requirements to access funding under this section, and agency guidance regarding this process is continuing to evolve.  DoD has released a draft of its much-anticipated guidance implementing Section 3610 of the CARES Act, which authorizes the government to reimburse qualifying contractors for the costs of providing certain paid leave to employees as a result of the COVID-19 pandemic.  DoD previously published a collection of memoranda, Q&A documents, and a class deviation addressing Section 3610 reimbursement, but the new draft guidance (“Guidance”), which includes a “reimbursement checklist” and accompanying instructions, provides significantly more detail regarding the process for requesting and substantiating claims for reimbursement under the statute.  A number of open questions remain pending the issuance of final guidance, as discussed below, but the contours of DoD’s Section 3610 process are becoming increasingly clear.  Contractors interested in pursuing recovery under the statute should start preparing now to satisfy these emerging rules and requirements.

The Guidance is detailed and highly technical in some respects, and a comprehensive treatment of the proposed process.  The Guidance does offer additional insight into three fundamental questions at the heart of Section 3610: (1) Who is eligible?  (2) What is the scope of coverage? and (3) What substantiation will be required?

Military food insecurity.  Texas military families are struggling with a lack of food at a higher rate compared to military families elsewhere in the country, according to a report released Thursday by the Military Family Advisory Network.   which is now partnering with local organizations to find out the causes.  MFAN, a nonprofit organization focused on military family needs and services, conducted a survey in 2019 that asked about military food insecurity and found that one in eight respondents said yes to at least one question, indicating that they were at risk of food insecurity, about the same as in 2017.  The U.S. Department of Agriculture defines ranges of food insecurity. Low security includes reduced quality of food. Very low security includes multiple reports of reduced food intake.

Data regarding food insecurity among military families is limited. Many food banks do not ask many questions about the circumstances of those who use their services, out of concern they may not return, experts say.  The researchers saw that Texas respondents were showing higher responses to food insecurity questions in the 2017 and 2019 surveys, so MFAN decided to look further into its 2019 data for the state to see what challenges these families are facing, according to Shannon Razsadin, president and executive director of MFAN, during a virtual event Thursday.  They found that one in six military and veteran respondents in Texas were experiencing low food security or hungry, even before the coronavirus pandemic hit. Shelley Kimball, senior director of research and program evaluation at MFAN, said that she’s nervous how the pandemic is worsening the areas of concern they have been studying related to food insecurity, such as unemployment and loneliness.  Among those Texas respondents who indicated they were experiencing a lack of food, 46.6% were active duty families, 28.4% were veteran families and 14.8% were military retiree families. Most respondents were from the Army, followed by the Air Force, which is matches the large population of those service personnel in the state. More active duty families were also saying they were experiencing hunger than veteran families or retirees.

Most families who said they were struggling with hunger were mainly living near Killeen where Fort Hood is located. The Army post has the highest number of service members and family members in Texas, at just over 81,000 people in 2018, according to the report.  Enlisted active duty service members were most likely to say they were food insecure, with the largest group at the rank E4 to E6, or corporal to staff sergeant. MFAN also found that 80.5% of these active duty families also had children younger than 18.  Military families in Texas were also more likely to go hungry than ask for assistance, according to the report.  “It really gave me pause when I was analyzing the data was the topic of not seeking assistance among those who are on the food insecurity scale,” Kimball said. “I think all of us would agree that we want to pave the way we want to make sure people get what they need.  The report also looked at the financial challenges these families may have. Texas active duty families were more likely to report that they did not have an emergency savings fund or had less than $500 in emergency money compared to those who lived outside of the state. The top reasons active duty families had difficulties saving money was not enough income, spouse unemployment and the costs of a military move.

Organizations have been advocating to Congress to add the Military Family Basic Needs Allowance to the fiscal year 2021 National Defense Authorization Act. A provision for this is currently in the House version of the bill, but not in the Senate version.  If passed in the final version of the NDAA, the allowance would allow the Defense Finance Accounting Service to automatically notify service members whose basic pay is at or below 130% of the Federal Poverty Guideline. They would also be provided with financial resources to help manage their budget. The Congressional Budget Office estimated that the average assistance to junior enlisted families was about $400 per month.  The MFAN Texas report also looked at experiences military families were having, from access to health care and mental health services to loneliness, as related to food insecurity. Feelings of loneliness can impact a family’s overall well-being, said Jennifer Hurwitz, deputy director of research and program evaluation at MFAN. Family members of active duty service members were the loneliest group in Texas, according to the report.  Following the release of this report, MFAN’s next step starts in January when it will conduct a research study in Texas to see what life events or situations bring military families closer to becoming food insecure, according to Razsadin. They are partnering with the University of Texas at Austin and other local organizations to create “journey maps” to understand how and why food insecurity happens, and when to provide specific services to help. They hope to use this new data to help other communities where military families live.

Consumers are panic-buying key items again…as the coronavirus surges across the country — paper towels, disinfecting wipes, baking mixes and wine — but this time around, grocery chains and food manufacturers say they will be able to meet America’s urge to hoard and keep supply chains moving, even during the holiday season.  While Kroger, Giant, Target and other grocery chains have reinstated limits on high-demand items such as paper goods and disinfecting wipes, causing anxiety among shoppers, retailers and supply chain experts say they do not expect a return to the panicked hoarding and empty shelves of the spring.  “I’m not going to be a Pollyanna and say things are perfect,” says Geoff Freeman, chief executive of the trade group Consumer Brands Association. “But we are fundamentally in a different place than we were in March and April. Even retailers rationing is a demonstration of lessons learned. The psychology of empty shelves causes a vicious cycle.”  Grocery chains say they were too slow to place limits on high demand products early on and are trying to prevent hoarding so there isn’t another round of shortages. Retailers and manufacturers say they’re less panicked about widespread shortages now that they’ve spent months simplifying their supply chains, adding shelves and workers to fulfillment centers, and taking other measures to counter panic buying.  However, they don’t rule out the prospect of price spikes or local or temporary shortages due to transport bottlenecks.  “We saw a major demand spike in March and April, and we’re certainly seeing another wave now as case numbers crest again across the country,” says Nick Green, chief executive of Thrive Market, an online grocer that specializes in organic food and natural products. “This time it’s a little bit of everything: cleaning products, toilet paper, cold and flu medicine, shelf-stable food. There’s less fear than there was at the beginning of the pandemic — people aren’t as worried that stores are going to run out of toilet paper or that grocery stores will be completely empty, but they’re definitely shifting their consumption habits again.”

Similar calculations are taking place across the country with stores increasing inventory, expanding the number of distribution centers and adopting new technology to become more efficient at anticipating consumer behavior and managing restocking. Retailers also say that consumers’ shift to online purchasing has taken pressure off brick and-mortar stores.

Melanie Nuce, senior vice president for corporate development for GS1 US, a company that investigates new technologies, says the whole food supply chain is trying to be more predictive, overcoming inventory inaccuracies and gaps in communication with artificial intelligence, smartphone-enabled bar codes and computer-connected instore cameras to monitor stock levels.  “Once we got over the initial shock, what happened in March and April kick-started some technology investment that the industry had been postponing,” she says. “The technology is there to understand what the consumer’s intent is and how to fulfill that.”  Target is stocking stores with more inventory than usual this holiday season and limiting purchases of disinfectant wipes, cleaning sprays and disposable gloves. Other items, such as food, over-the-counter medicines and baby products, are being “fast-tracked through the supply chain and prioritized for restocking,” spokeswoman Jessica Carlson said.

And while grocery chains are confident in their ability to meet demand over the holiday season, their success depends in part on smooth shipping and transportation.  James Kwon, chief executive of technology and logistics wholesale platform ePallet, says freight costs have risen significantly from last year and that production costs are also expected to increase because of labor shortages due to coronavirus outbreaks.  Boxed.com, a website that sells household products in bulk, says sales of essentials have doubled since last week, as shoppers stock up on cleaning and disinfecting products (up 134 percent from a week ago), baking mixes (132 percent), wine (126 percent) and toilet paper (123 percent).  “People are hunkering down again,” said Chieh Huang, the company’s co-founder and chief executive. “It’s not the ‘Oh, my gosh, the world is ending’ panic we saw in early April, but we’re definitely moving in that direction.”

Francesca’s closings.  In a sign of how much the pandemic has complicated its turnaround, Francesca’s said it plans to close 140 stores by Jan. 30 in a filing with the Securities and Exchange Commission on Monday. The retailer runs about 700 locations, mostly in malls. The apparel retailer also said that if it’s “unable to raise sufficient additional capital to continue to fund operations and pay its obligations,” it will likely seek a restructuring under bankruptcy protection. The company noted that it previously disclosed that it’s “evaluating various alternatives to improve its liquidity and financial position,” including lease, cost cuts, debt refinancing and restructuring its debt and liabilities in or out of bankruptcy.  Francesca’s runs about 700 stores mostly in malls. Enclosed malls themselves are in dire straits as people continue to shy away from shopping indoors during the pandemic.   Francesca’s Holdings Corporation (the “Company”) has adopted a plan to close approximately 140 boutiques by January 30, 2021.

Thank you to retiring DeCA Director of Public Health and Safety Angela Parham.   Army Lt. Col. Angela Parham, the Defense Commissary Agency’s (DeCA) director of Public Health and Safety, retires from the Army on Jan. 31 and will exit the agency on retirement leave Nov. 21.   DeCA is going through the selection process for her successor. DeCA’s food safety mission ensures all edible products destined for commissary shelves are inspected by military Veterinary Services personnel, who check items for documented place of origin, and ensure they are within appropriate temperature ranges and free of any pests or signs of contamination that could cause food-borne diseases.  In the area of occupational health and safety, agency specialists are charged with tracking U.S. federal requirements along with those governing the local national employees in the country where the store operates.   “I expected my position to mostly involve food safety issues like recalls, but it seems the types of public-health related issues that can arise are practically endless,” Parham said. “We have to stay ahead of any potential issues to ensure our stores and products remain safe and that we comply with all regulatory requirements. It has given me a new respect for the entire retail grocery industry.”   “I will always remember my DeCA assignment as one of the most interesting and rewarding assignments of my career,” she said. “I’m very proud of the work my team does and the work everyone has done in light of the pandemic.  “Despite having some COVID cases, which is unavoidable in a situation like this, DeCA has performed very well in keeping employees and customers safe. I hope everyone realizes what a great job they are doing as they continue performing to such a high standard.”

Best regards,

Stephen Rossetti

President

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