business news in context, analysis with attitude

Published on: March 26, 2018

by Kevin Coupe

There has been a lot of coverage of last week’s crash of an Uber self-driving car in Arizona, when a Volvo XC90 SUVs killed a 49-year-old woman as she was walking her bike across the street. The evidence to this point indicates that at no time did the car slow down when approaching her, and that the car’s “safety driver” - who is supposed to take control of the vehicle in such a circumstance - wasn’t looking at the road.

In short order, Uber said that it was suspending autonomous car tests that it was conducting in Arizona, Pittsburgh, San Francisco and Toronto. There were stories about how to some folks, this wasn’t a surprise; the New York Times wrote that Uber’s “robotic vehicle project was not living up to expectations months before” the accident, that “the cars were having trouble driving through construction zones and next to tall vehicles, like big rigs. And Uber’s human drivers had to intervene far more frequently than the drivers of competing autonomous car projects.”

In addition, it didn’t take long for the CEO of Waymo, a competing self-driving car company, to say, essentially, that it wouldn’t have happened with one of his cars.

Wired had a good piece, I thought, about the questionable practice of having humans teach robots how to drive safely, and having human safety drivers in the self-driving vehicles, “just in case.” An excerpt:

“Along with the entire notion that robots can be safer drivers than humans, the crash casts doubt on a fundamental tenet of this nascent industry: that the best way to keep everyone safe in these early years is to have humans sitting in the driver’s seat, ready to leap into action.

“Dozens of companies are developing autonomous driving technology in the United States. They all rely on human safety drivers as backups. The odd thing about that reliance is that it belies one of the key reasons so many people are working on this technology. We are good drivers when we’re vigilant. But we’re terrible at being vigilant. We get distracted and tired. We drink and do drugs. We kill 40,000 people on US roads every year and more than a million worldwide. Self-driving cars are supposed to fix that. But if we can’t be trusted to watch the road when we’re actually driving, how did anyone think we’d be good at it when the robot’s doing nearly all the work?”

That’s actually a pretty good point.

It is an Eye-Opening statistic, when you think about it - 40,000 people dying each year in automobile-related crashes. That works out to almost 110 people a day.

A couple of other stats from the Association for Safe International Road Travel: more than 1,600 children under 15 years of age die each year in car crashes, and nearly 8,000 people are killed in crashes involving drivers ages 16-20.)

And yet, nobody - to my knowledge - ever has suggested that we suspend all automobile traffic until this serious problem is solved.

I’m not making light of the Uber crash, or the death that it caused. In fact, I think that suspending the tests was absolutely the right move … though I don’t think we should delude ourselves that this technology doesn’t have a future.

The Times explains why: “Tech companies like Uber, Waymo and Lyft, as well as automakers like General Motors and Toyota, have spent billions developing self-driving cars in the belief that the market for them could one day be worth trillions of dollars.”

In other words, money.

But there’s also another good reason. As LeoMcGarry says in an episode of “The West Wing,” in words given him by the great Aaron Sorkin, “There's been a time in the evolution of everything that works when it didn't work.”

Which is probably the Eye-Opening way we ought to view most stuff.

(There is, by the way, another great line from that episode, this one uttered by President Josiah Bartlet: “They say a statesman is a politician who's been dead for 15 years. I'd like us to be statesmen while we are still alive.”)

Published on: March 26, 2018

Reuters is out with a new survey saying that “fewer than half of Americans trust Facebook to obey U.S. privacy laws,” which puts it below a number of other technology companies in terms of consumer trust, including Apple, google, Amazon, Microsoft and Yahoo.

The gaps, in fact, are significant: “Some 41 percent of Americans trust Facebook to obey laws that protect their personal information, compared with 66 percent who said they trust Amazon, 62 percent who trust Google, 60 percent for Microsoft and 47 percent for Yahoo.”

Some other relevant excerpts from the story:

• While “Facebook, with more than 2 billion monthly active users, made almost all its $40.6 billion in revenue last year from advertising,” the poll found that “many people take a dim view of those ‘targeted’ advertisements.

• “Some 63 percent said they would like to see ‘less targeted advertising’ in the future, while 9 percent said they wanted more. When asked to compare them with traditional forms of advertising, 41 percent said targeted ads are ‘worse’ while 21 percent said they are ‘better’.”

• “A plurality of adults said they would like the government to take a bigger role in overseeing the industry's handling of user information. According to the poll, 46 percent of adults said they want more government regulation, while 17 percent said they want less. Another 20 percent said they wanted no change, and the remaining 18 percent said they did not know.”

The poll was taken late last week, after the news broke that Facebook made missteps and mistakes that gave a political consultancy, Cambridge Analytica, access to data for some 50 million of its users.

It one of its stories about the issue, the New York Times writes that current events have “inspired a good deal of debate about more restrictive futures for Facebook and Google. At the furthest extreme, some dream of the companies becoming public utilities. More benign business models that depend less on ads and more on subscriptions have been proposed, although it’s unclear why either company would abandon something that has made them so prosperous … The greatest likelihood is that the internet companies, frightened by the tumult, will accept a few more rules and work a little harder for transparency. And there will be hearings on Capitol Hill.”

The Times piece, by the way, is a good one and can be read here.

And meanwhile, Bloomberg reports that Apple CEO Tim Cook “has called for stronger privacy regulations that prevent the misuse of data in the light of the controversial leak of Facebook user information. Cook called for ‘well-crafted’ regulations that prevent the information of users being put together and applied in new ways without their knowledge … His comments will ramp up pressure on Facebook Inc. and other technology companies that rely on the huge reams of data gathered from billions of people to power their products, services and sales.”

Published on: March 26, 2018

Business Insider reports that Amazon-owned Whole Foods has “decimated” its marketing staff, telling employees in a seven-minute conference call at the end of last week that “the position of store graphic artist and all regional marketing office positions below associate coordinator would be terminated. The cuts are companywide … It’s not clear exactly how many jobs will be affected, but the company operates about 450 stores and 11 regional offices in the US.”

Employees were told that if they want to collect severance, “store graphic artists must work until July 2 because the brand is not yet ready to replace its signage.”

The Seattle Times writes that “There have also been reports of tensions, not an uncommon feature of big corporate deals, as an online-retail conglomerate with a reputation for speed, efficiency and relentless drive linked up with a grocer famous for quality products and relatively generous treatment of employees … The layoffs announced this week appear to further centralize operations at Whole Foods, which formerly gave wide leeway to local managers to customize the look and feel of stores and the food on their shelves.”

During the conference call, Nicole Wescoe, the president of Whole Foods' northeast region, said that the company “will help support, partner, and champion you to find another position within Whole Foods Market. If you believe that you want to stay with the company and move forward, I want to tell you that I will make it my business to help you do just that.”

And, Wescoe said, “"I want you guys to understand that decisions like this across the company — it is no reflection on how we value you, the work you do, and how you show up every day.”

Published on: March 26, 2018

USA Today has a story about how Campbell Soup is “no longer a canned soup company.”

Those are the words of company president/CEO Denise Morrison, who has been engineering Campbell’s $4.9 billion move into the snacking business. This week, the story says, Campbell’s is expected to complete its acquisition of snack food company Snyder’s-Lance, which “would diversify Campbell’s product offerings, bringing brands like Snyder’s of Hanover pretzels, Lance sandwich crackers, Cape Cod potato chips and Pop Secret popcorn. Campbell’s would also find itself peddling pork skins, tortilla chips and chocolate-chip breakfast pastries, among other treats.”

According to the story, “With the acquisition, the growing snack market would produce 46 percent of Campbell’s net sales, up from 31 percent currently. Soup sales, which have cooled lately, would fall to 27 percent of the total, from 35 percent now. Revenues from V8 juice and other beverages, as well as brands like Swanson, Prego and Pace, would make up the balance.”

USA Today notes that Campbell believes it can cut expenses at the two companies through synergies to the tune of almost $300 million; while Morrison concedes that “there will be some heavy lifting,” she also believes that the “transformational” deal “will dramatically shift Campbell's center of gravity.”

Published on: March 26, 2018

The Wall Street Journal reports that the US division of Mexico’s Grupo Comercial Chedraui, Bodega Latina, has agreed to acquire Texas-based Fiesta Mart.

According to the story, the deal “values closely held Fiesta Mart at as much as $300 million including debt, according to people with knowledge of the discussions.” Fiesta Mart has been owned by private-equity firm Acon Investments since 2015.

The Journal writes that “the deal positions Bodega Latina to become one of the largest Hispanic food retailers in the U.S. by revenue, as it would add more than 60 stores and another region to its growing terrain in California, Arizona, and Nevada.”

Published on: March 26, 2018

• The Buffalo News reports that “Wegmans customers can now order groceries online, then pick them up at the curb at three more locations in Buffalo, Depew and Amherst. The story notes that Wegmans has been testing the concept at stores in Hamburg and Pittsford.

According to the News, “Customers can shop and pay for groceries online at Instacart.com or Wegmans.com, or in the Instacart app … Wegmans began piloting a curbside pickup program at its Pittsford store years ago with Wegmans staff before partnering with Instacart, which also delivers groceries from its stores. Instacart workers have since begun complaining about pay rates that have fallen below minimum wage.”

Published on: March 26, 2018

…with brief, occasional, italicized and sometimes gratuitous commentary…

• Twice.com reports that Sears has decided to get back into the consumer electronics business, more than three years after it got out of the category in part because of low margins.

At the time, Sears thought it made more sense to focus on selling “smart home” technologies, but now - with a change of leadership - the company has decided that selling televisions might actually make sense.

According to the story, “To date, 175 of Sears’ 570 stores now feature … ‘a relatively wide selection’ of TVs, headphones and accessories, and another 45 locations are expected to join the tech brigade by early May.” In addition, at those stores “Sears has reentered the gaming business with console, headphone and accessories bundles, and is matching up Apple iMacs, MacBooks and Mac Minis with cases, headphones, cords and other accessories to create complete computer packages that sell for upwards of $3,600.”

I cannot imagine going to Sears for anything that is either expensive or smart. Just seems counterintuitive.

Published on: March 26, 2018

• The Wall Street Journal has a piece about Erivan Haub, the longtime CEO of Tengelmann, who, in the late seventies, “implanted the company deeply into the U.S. by acquiring a controlling stake in Great Atlantic & Pacific Tea Co., operator of the A&P grocery chain, by then long past its prime. Mr. Haub and his son Christian spent more than two decades struggling to revive the chain. They couldn’t stop its slide toward a liquidation that has played out over the past few years.”

According to the story, “When he bought control of A&P in 1979 - initially with a 42% stake and later raised above 50% - it was a leap into the unknown. ‘I had never seen its headquarters, I had never seen its balance sheet,’ he told the Inquirer. ‘Only based on the name of that one great company, I believed there were hidden assets there.’

“There were also hidden traps. Within a year, amid continuing losses, Mr. Haub told reporters he had underestimated A&P’s problems, including high costs and poor locations. Mr. Haub’s team persuaded A&P to set up a new chain of no-frills grocery stores under the Plus brand, but they bombed.”

A&P, the story notes, has gone out of business. Erivan Haub passed away at his Wyoming ranch on March 6. He was 85.


• H. Wayne Huizenga, who built businesses that included the Waste management garbage disposal company, Blockbuster and AutoNation, in addition to three Miami sports franchises — the Florida Marlins, Florida Panthers and Miami Dolphins - has passed away. He was 80, and was being treated for cancer.

Published on: March 26, 2018

We had a story the other day about some changes that Amazon has been making in how items are sold through its Prime, Fresh and Pantry programs, which prompted MNB reader Kathy Bailey to write:

When I read this portion of your article on Amazon today … it reminded me about what happened to me this past Christmas season and why I will not be bullied into joining Amazon Prime.
 
I don’t need to have stuff on my doorstep in a day or two, much less in mere hours. I plan ahead. (former Girl Scout – motto – be prepared, I guess) I have no interest in streaming or whatever else they offer. I don’t feel the need to pay $99 yearly for anything that they are offering.

My company puts out a tree in the employee lounge with the names of children in foster care with the local Children’s Services. You can pick a name and purchase a requested gift. The child that I selected wanted Legos items. I went to Amazon and selected the Legos airport and the corresponding Legos plane. I also selected the Legos farm and the corresponding Legos tractor. When I went to finalize the order, one of the Legos airport/plane items and one of the Legos farm/tractor items told me I could not order these items unless I was a Prime member. WTF!!!!!!!!!!! What fun is an airport without the plane? Or a farm without a tractor to go along with it? I was so incredibly pissed!
 
I went to Walmart.com and got all my items. Screw Amazon for being such a crass manipulator and assholes for thinking they were going to force me to become a Prime member just to get ALL of the items that I wanted! My view of Amazon is not as rosy as yours.

I can understand your frustration, but I’m not exactly sure what Amazon did wrong here. It doesn’t sound like Amazon is bullying anyone … just offering the best service to its best customers.



On the subject of Target, one MNB reader wrote:

I was involved with setting some Super Target stores back when they first came into Dallas.

It looked like they took the company with the largest market share in each section, and let them draw the schematic.  I swear the soap and paper look like P & G showcases.  I did McCormick Spices at the time, and that section had things even I'd never seen.  So, yes, Target grocery does need some help in merchandising, allocating space. and in store processes.

I've seen the stores they've remodeled recently, and while the stores are clean, and are beautiful stores, they aren't merchandised very well.

We have some Aldi's in my area, and I've been underwhelmed by them.  They have a few offerings I do like, but I don't make a special trip to Aldi's just for them,   I understand the concept, but there are some things I do want the brand name product, I want a larger produce selection, larger meat selection.  Since I'm buying for one, I don't need a bag of onions, I may need one onion, I may need 2 or 3 potatoes, not a 5 or even a 10 pound bag.

Published on: March 26, 2018

The NCAA men’s basketball final four now are set, in what has been one of the more unsettled tournaments in years. Kansas will play Villanova and Loyola-Chicago will play Michigan next weekend, with the winners of those two games to play for the championship a week from tonight.