business news in context, analysis with attitude

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I was reminded of something by a cooking newsletter I got this week:

Cooking, at root, is not an exercise in fantasy. It is a task, quotidian and necessary. If you wanna eat, you gotta cook.

And in those 23 words, I think, is a lesson for food retailers.

Marc Lore, who ran Walmart's US e-commerce business from 2016-2021 after he sold it his Jet e-commerce startup for $3.3 billion, has opened a new food hall inside the retailer's Quakertown, Pennsylvania, store.

Inc. reports that Lore's new food startup, Wonder, dropped its high-tech delivery model last year, opting instead to open what it calls "fast-fine" food halls offering menus from a variety of restaurants.  "The company has also announced two upcoming Wonder locations inside Walmart stores in Ledgewood and Teterboro, New Jersey," the story says.

Wonder is operating 10 stand-alone locations, the story says.

Inc. writes that the location offers "menu items from eight different restaurants through Wonder's quick-prep model."

"Our new Wonder opening at Walmart Quakertown gives us an exciting opportunity to bring our great food and menu options to even more customers," Wonder chief growth and marketing officer Daniel Shlossman said in a statement. "We're dedicated to scaling our unique model and bringing 'fast-fine' dining to new, loyal customer bases."

Inc. writes that "the Walmart partnership, details of which the company has not shared, may help Wonder to further expand its footprint and gain broader brand recognition."

KC's View:

If the concept works, one would imagine that the Walmart partnership will do exactly that.

It is by no means assured.  Ghost kitchens have not been as successful as many people - me included - expected.

But Lore is smart and ambitious, and I wouldn't be surprised if he has figured out some secret sauce to make the concept viable.  And if it works, look for a much broader rollout and maybe a move by Walmart to acquire the company, a move that could give it a proprietary advantage in the space.

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New York magazine's Grub Street column reports that New York City restaurateur Yuji Haraguchi, who owns the Japanese seafood market Osakana in Greenwich Village, is suing Wegmans, which opened its first Manhattan store - with a highly regarded seafood department, Sakanaya - less than a quarter mile away.

The reason:  Haraguchi "says Wegmans was in talks to buy his market first … His lawyers filed a legal complaint last week alleging that the grocery chain and its business partners have committed fraud, trademark infringement, breach of contract, and more. He is seeking no less than $1 million in damages."

According to the story, the complaint says that  "Haraguchi was first contacted in August by Culinary Collaborations, Wegmans’ fish broker, about purchasing Osakana. At the time, he says that he was looking to sell the business so he could move to Hawaii. On August 28, both Haraguchi and Culinary Collaborations signed an NDA that included a noncompete barring each party from hiring the others one’s employees. After signing a letter of intent, Haraguchi says that he disclosed, as he puts it in the petition, all of his 'trade secrets, practices, and the financial information.' The deal never came together, but when Wegmans opened on October 28, it contained Sakanaya, with no involvement from Haraguchi. (Wegmans wouldn’t comment on specifics, but a spokesperson says the company is 'confident' that the claims are 'without merit'.)"

KC's View:

I am a firm believer that companies need to respect intellectual property - if they steal information from businesses with which they are working, they need to be held to account.

That said, I suspect it will take some effort to prove that Wegmans stole anything.  It is not like Osakana invented Japanese seafood marketing, and while the proximity may be uncomfortable, I suspect that Wegmans simply looked at all its options and for either economic or creative reasons - or both - decided to put its own spin on the concept.  

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The Chicago Sun Times reports that the City Council there has approved a new ordinance that "will prevent dollar store operators from opening within a mile of an existing dollar store owned or managed by the same controlling person."

The move comes "amid complaints of filthy, unsafe stores in the city pushing shoppers to cleaner suburban locations."

The Sun Times writes that "the ordinance defines dollar stores as retail establishments that offer or advertise the majority of items at under $5 each and are 4,000 to 17,500 square feet.

"Exempt are stores that have prescription pharmacies, sell gasoline or diesel fuel, 'primarily sell specialty food items' or dedicate more than 10% of their floor space to selling 'fresh meats, poultry, seafood, dairy products, eggs, fruit or vegetables'."

The story points out that "in a statement, the company that owns Dollar Tree and Family Dollar said that 'as passed, this ordinance — essentially a moratorium — won’t solve the issue it claims to be about: addressing the food desert challenge in Chicago. In fact, as acknowledged by a number of government officials in our many conversations, it will bring more harm than help to the very communities it claims to support by limiting the flexibility to improve stores and provide new offerings to people in these communities. With the City Council’s vote, Family Dollar and Dollar Tree as well as other retailers will essentially be prohibited from opening new or relocated stores in Chicago'."

KC's View:

Sounds to me like the exemptions actually incentivize dollar stores to devote more of their space to fresh food, which would be a step toward dealing with the food desert issue.  Of course, I'd also guess that by having more fresh food, these stores would be held to account by the health department for keeping their stores clean and sanitary, which may not be what the dollar stores want.

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Yesterday, MNB took note of a Boston Globe story reporting on continuing efforts by youth organizers to address what they say is inequitable pricing - they found that a shopping cart of items at their neighborhood Stop & Shop in Jackson Square cost $34, about 21 percent more than a similar list at a Stop & Shop in suburban Dedham, essentially penalizing people in less affluent neighborhoods.

This week, the Hyde Square Task Force in Jamaica Plain called on Stop & Shop "to use its consumer data profits to eliminate the price inequities the group uncovered in a study last year."

Today, the Globe offers Stop & Shop's response to its story from earlier this week:

"In response, Stop & Shop said that the youth’s shopping list compared less than 1 percent of the 10,000 items sold at the stores in Jackson Square and Dedham, and that the overall price difference is less than the 21 percent the original study reported … The youth’s original study 'avoided items on sale' to focus on items listed at regular price. However, Stop & Shop said in its statement that almost all of its sale items are equally priced across the entire chain.

"'Knowing this fact, the students still did not include sale items in their follow-up research provided to The Globe in December,' the company wrote, referring to the youth’s subsequent shopping trips at the chain’s Grove Hall, Mission Hill, and South Bay locations … The company also said that the youth’s letter misrepresented an August meeting, at which Hyde Square Task Force youth organizers convened with company representatives to discuss their pricing strategy. In the letter, the youth said the grocery chain’s lawyer 'forcefully ordered the conversation to stop immediately' when probed about its consumer data policies.

"The lawyer only sought to stop that line of conversation because the company’s representatives couldn’t answer questions that were out of their purview, the grocery store said.  'Our lawyer simply directed the conversation back to pricing because it was Stop & Shop’s pricing team in attendance, and they were not the right subject matter experts to adequately address other matters,' the company said.

KC's View:

As I said when the original task force study came out, this was an opportunity for Stop & Shop to create a teachable moment - it could've educated the young people, helped them understand the economics of the situation, given them an appreciation for how retailing works, and maybe even given them jobs in which they could develop their careers.

But that doesn't seem to be the tone of the Stop & Shop response.  (The company lawyers may not have been "forceful," but it is pretty good bet that they were condescending.  Kids know when they are being patronized, and they a sixth sense for detecting arrogance.  They don't like it.)

Maybe this is the moment for the task force to give Stop & Shop a lesson in economics.

As I said yesterday, the task force makes an interesting point about using revenue from consumer data sales to drive down prices in areas where costs might be higher.  But I suspect they'll be frustrated, though - that data is used to feather the corporate nest and improve the bottom line.

Stop & Shop maintains that it is possible for consumers to opt out of being tracked, so I have a suggestion for the task force.  If you're not satisfied with the company's responses, start a grass roots campaign to get customers to opt out of being tracked.  It'll be hard, but you might get some traction if you try to put a dent in what Stop & Shop is able to sell.  You'll also get a lot of earned media coverage, because this is the kind of story that appeals to the media, precisely because it addresses the larger issue of how customers' information is being sold and used.

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With brief, occasional, italicized and sometimes gratuitous commentary…

•  MediaPost reports that measurement and analytics company Adjust has released its annual Mobile App Trends Report, concluding that "despite the downward trend throughout 2022, app installs grew 4% globally in 2023, demonstrating the ability of mobile to bounce back and deliver significant returns.

"Mobile commerce grew 56% in the category of shopping app installs, while overall global ecommerce app installs jumped 43% in 2023. North America saw the largest growth in ecommerce app installs, at 98%."

C-level executives say that generative artificial intelligence (GAI) "is helping to fuel that growth," as advancements help to create "algorithms that power user acquisition platforms," making them more effective.

•  From the Puget Sound Business Journal:

" Inc.'s Seattle workforce shrunk by roughly 5,000 employees last year to 50,000, the company confirmed to the Business Journal on Wednesday.

"That decline follows a trend in Seattle that has seen Amazon's workforce drop by nearly 17% from the company's peak of 60,000 Seattle employees in 2020. At 50,000 employees, however, Amazon is still Seattle's largest private employer and the top employer in Washington with about 90,000 workers statewide.

"Amazon's workforce shift in Seattle underscores its evolution from a Seattle-centric company to a regionally based employer. Even as its Seattle headcount peaked, Amazon internally referred to its largest employee center as the 'Puget Sound headquarters'."

•  EuroNews reports:

"Amazon lobbyists are one step closer to being banned from entering the European Parliament premises in Brussels, after an internal political body … aligned with lawmakers who requested the withdrawal of their access badges.

"The Conference of Presidents, the leaders of the different political groups in parliament, recommended to the quaestors – another internal body elected to oversee administrative matters affecting lawmakers – to ban Amazon’s representatives."

According to the story, "The potential ban follows a call from the Employment and Social Affairs Committee, which wrote in a letter to parliament President Roberta Metsola to withdraw Amazon representatives’ access after the company failed to attend a series of hearings and factory visits in 2021 and 2023."

“'It is unreasonable for members to be lobbied by Amazon while at the same time being deprived of the right to represent the interests of European citizens and inquire about claims of breaches of fundamental rights enshrined in EU Treaties and EU labour laws,' the lawmakers’ letter said."

I kind of like this hardball approach.  If companies and industries don't play by the rules, their lobbyists lose access.  I would imagine that in the EU, Amazon's lobbyists are scurrying around to lobby against this ban.  Probably a little like being in quicksand.

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•  From the Wall Street Journal:

"Walmart is easing its requirements for on-time and in-full shipments from its suppliers, the latest shift in a logistics effort that has historically left companies scrambling to meet the retail giant’s demands.

"The retailer wants suppliers to deliver shipments on time 90% of the time and in full 95% of the time, down from a 98% benchmark for both measures set in 2020 amid a surge in consumer demand. 

"The change marks a significant lowering of Walmart’s 'on-time, in-full' thresholds that are meant to increase the efficiency of Walmart’s sprawling U.S. logistics network of distribution centers serving the company’s thousands of stores."

The story notes that "vendors that fall short of Walmart’s on-time, in-full targets face fines worth 3% of the cost of the goods that didn’t arrive on time or in full."

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•  From the Associated Press:

The number of Americans applying for jobless benefits fell to its lowest level in five weeks, even as more high-profile companies announce layoffs.

"Applications for unemployment benefits fell by 12,000 to 201,000 for the week ending Feb. 17, the Labor Department reported Thursday.

"The four-week average of claims, a less volatile measure, fell by 3,500 to 215,250, down from 218,750 the previous week.

"Weekly unemployment claims are broadly viewed as representative of the number of US layoffs in a given week. They have remained at historically low levels in recent years, despite efforts by the US Federal Reserve to cool the economy."

•  From the New York Post:

"Pharmacies across the country are reporting delays to prescription orders due to a cyberattack against one of the nation’s largest healthcare technology companies.

"Change Healthcare, a company handling orders and patient payments throughout the US, first noticed the 'cyber security issue' affecting its networks Wednesday morning on the East Coast.

"'Change Healthcare is experiencing a network interruption related to a cyber security issue and our experts are working to address the matter. Once we became aware of the outside threat, in the interest of protecting our partners and patients, we took immediate action to disconnect our systems to prevent further impact,' Change Healthcare said in a statement.

"It added, 'We will provide updates as more information becomes available'."

•  The Washington Post this morning reports that "AT&T said Thursday that a nationwide cellphone outage that affected more than 1.7 million customers and disrupted 911 services in several states was caused by an error made while it was expanding its network — not by a cyberattack.

"Spokesman Jim Greer said AT&T would continue to assess the outage, which began spiking early Thursday and quickly grew to tens of thousands of reports on Downdetector, peaking shortly after 9 a.m. Eastern time and gradually decreasing for the rest of the morning. He said AT&T restored service to all customers by about 3 p.m.

"The outage prompted wide concern, particularly over the loss of emergency services — with some 911 centers urging customers to use a landline for any calls, or find a cellphone that uses a different carrier."

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"Masters of the Air," the Tom-Hanks-Steven Spielberg-produced series about the 100th Bomb Group, which was based in eastern England during World War II, is an engrossing bit of television that serves as a kind of a companion piece to the producers' "Band of Brothers" and "The Pacific," which were on HBO.

The show is incredibly tense, as the pilots and their crews fly into Germany-controlled airspace to deliver bomb payloads designed to hurt the Axis war effort.  The odds against them seem incredible, and we get a sense of exactly how vulnerable and yet resolute they all are;  it also is instructive to watch them in between their missions, as they let off steam and try to keep themselves sane.

For me, the series comes at a fascinating time, as a debate takes place in the US about our global responsibilities.  "Masters of the Air" shows us a time when we understood the importance of drawing the line against dictators, realized that appeasement is not a strategy, and were willing to make the greater good and the security of the free world our highest, sacred priority.  In that context, "Masters of the Air" is a reminder of our best nature, not our worst.

Speaking of our best nature  … the 1978 remake of "Invader of the Body Snatchers," directed by Philip Kaufman, is an equally timely movie to catch up with almost 50 years after it was made - it is about our best natures, subverted.

The premise is well established - aliens come to Earth with plans to replace the planet's population.  But this film is a cut above most sci-fi; the moody direction and wonderful performances by the likes of Donald Sutherland, Brooke Adams, Jeff Goldblum and Leonard Nimoy give us a sense of impending doom as the aliens don't just replace bodies, but remove from them the ability and desire to think and feel.  It is all about being mindless and heartless.

This is one of my favorite movies from the seventies, and totally worth catching up with - it is both timeless and timely.

That's it for this week.  Have a great weekend, and I'll see you Monday.


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