business news in context, analysis with attitude

Published on: June 11, 2018

by Kevin Coupe

Here’s a number that’s an Eye-Opener, courtesy of the Los Angeles Times, quoting the National Center for Health Statistics, an arm of the Centers for Disease Control and Prevention (CDC):

“More than half of U.S. households — 53.9% — rely entirely on cellphones.”

In other words, they don’t have landlines.

According to the story, “The number is remarkable for how rapidly it has increased, according to researchers behind the survey. In 2006, only 15.8% of survey respondents said they didn’t have a landline telephone. The iPhone and its Android counterparts launched the next year, and the rate of landline abandonment has since steadily climbed.”

It isn’t surprising, the Times writes, because “cellphones can now do more than landline phones; cell service quality and connectivity have become increasingly reliable; and many people who grew up in the age of cellphones and data plans have never even had to use a landline.”

But, it is nothing compared to some European countries, the story says, where “80% to 90% of households are wireless only.”

I must admit that we still have a landline … but that’s only because we’ve been living in the same house, with the same phone number, for 34 years; we also have a package that gives us internet, cable and phone service for one fee, and it actually gets more expensive to eliminate any one of them.

But the minute we move, the landline is gone.

Though there is one passage in the Times story that gives me pause:

“The health statistics center’s survey also found that members of cellphone-only households were more likely to engage in risky behaviors such as smoking, binge drinking, lacking health insurance and driving without seat belts, although the survey did not delve into why that might be.”

Yikes.

Published on: June 11, 2018

Amazon announced this morning that it will expand its Prime savings program to Whole Foods stores in 10 new states - Arizona, Alabama, Georgia, Hawaii, Oregon, North Carolina, South Carolina, Washington, Louisiana and Mississippi.

The move brings to 23 the number of states where Amazon is offering 10 percent savings on selected items at Whole Foods stores to members of its Prime program; the discounts also are available at every 365 by Whole Foods store nationwide.

A.C. Gallo, president/COO of Whole Foods Market, says that the company is “accelerating our timeline to expand these savings to all of our U.S. stores” based on positive response to the initial rollout.

Prime members can access the savings by downloading the Whole Foods app to their smartphones and then accessing their Amazon accounts and then scanning the code at checkout, or by providing their smartphone numbers when checking out.

At the same time, the Wall Street Journal has a story about how Amazon’s “year-old acquisition of Whole Foods is prompting the food industry to retool how it sells fresh food to consumers.”

Among the shifts cited in the story:

• “Grocery chains have invested in online delivery and pickup services, in some cases bumping plans ahead to two- to three-year timelines instead of five to seven years, according to Steve Caine, a Bain & Co. partner who consults with grocers on their online strategies.”

• “Food retailers, manufacturers and other suppliers have begun to make fundamental changes to their selling strategies, driven partly by stronger sales and delivery from Whole Foods stores since the acquisition.”

• “Of 11 supermarkets analyzed … Trader Joe’s and Sprouts customers were most eager to try out Whole Foods after the acquisition to check out subsequent price cuts, with 8% of their regular shoppers visiting the rival chain.”

• “Many food makers are redesigning their packaging and formulas to better sell through Amazon and Whole Foods, placing an emphasis on online repeat purchases instead of impulse buys.”

Retailers, the story says, “haven’t been surprised by Amazon’s moves.” But in the words of Bain’s SteveCaine, “It’s this anticipation of what may come next that has turned up the heat on everyone.”

Published on: June 11, 2018

In Virginia, the Daily Press reports on a new consumer survey from Oliver Wyman suggesting that “German discount grocer Lidl is stealing customers from existing grocers and is resonating with millennial shoppers.”

According to the story, the survey “found that 48 percent of 600 Lidl shoppers in six states — including 164 in Virginia — said they shopped at the store two to three times or more a month. Sixty-one percent of the surveyed shoppers under 45 years old shop at Lidl more than twice a month, compared with 34 percent of the age group 45 and up.”

The Free Press goes on: “When Oliver Wyman surveyed 300 Lidl shoppers last year, 58 percent said they bought more than $20 worth of items. This year, 84 percent of the 600 surveyed shoppers said they spend more than $20 … Sixty-seven percent of Lidl shoppers believe that prices at nearby grocery stores have decreased since Lidl’s arrival, according to the report.”

Published on: June 11, 2018

Bloomberg Businessweek has a story about the rise and demise of Toys R Us, chronicling how it pioneered the “category killer” strategy but eventually became a victim of market forces and its own labyrinthine history and financial structure.

Toys R Us, the story says, was “killed by bigger and more powerful rivals, with the inevitable ending hastened by the cold logic of its private equity owners and bankers. But it goes deeper than that. As the company’s advisers liquidate its 735 U.S. stores, make deals for the operations around the world, and determine the value of its intellectual property, it’s become clear that Toys “R” Us didn’t only have an improvident amount of debt—it also had a debt structure as complex and precarious as a Jenga tower, which obscured the company’s tenuous finances.”

Gravity, Bloomberg Businessweek writes, “always wins in the end.”

Terrific piece, and you can read it here.

Published on: June 11, 2018

The Associated Press reports on a US Labor Department study saying that “more than 15 million Americans were working as independent contractors, on-call workers, temporary workers and for contract companies as of May 2017. That’s equal to about 10.1 percent of the American workforce, down slightly from 10.8 percent when the government last conducted the survey, in 2005.”

These figures, the story notes, are at odds with conventional wisdom that more people than ever are working as independent contractors, including a 2016 study saying “that the number of people in alternative work had risen by more than 50 percent in 2015 from a decade earlier, to 23.6 million.”

The reason for the disparity?

For one thing, according to the AP, “There are more independent workers in some industries, but they were offset in the government data by declines elsewhere, says Lucas Puente, chief economist at Thumbtack, an online marketplace for photographers, plumbers and other contractors.

“The number of independent contractors rose by about 200,000 in transportation from 2005 to 2017, the government’s report found. That likely reflects the growth of ride-hailing services. But the number of independent contractors in construction fell by about 225,000 over the same period, probably because of the housing bust, Puente said.”

And, the story says, the improvement in employment figures over the past two years may mean that people who used to work as independent contractors may have been lured into full-time jobs.

Published on: June 11, 2018

National Public Radio has a piece about its new NPR/Marist poll saying that “close to two-thirds of Americans now say they've bought something on Amazon … That is 92 percent of America's online shoppers — which is to say, almost all of them.”

In addition, the story says, “More than 40 percent say they buy something on Amazon once a month or more often. In fact, when people shop online, they're most likely to start on Amazon … The NPR/Marist poll found that among Americans, roughly 75 million online shoppers pay for Prime - plus another 35 million use someone else's account. Put together, almost two-thirds of American online shoppers are living inside the Amazon retail universe.”

Amazon also scores high when it comes to trust: “ The NPR/Marist survey found a staggering 67 percent of American online shoppers say they have ‘quite a lot’ or ‘a great deal’ of trust in Amazon to protect their privacy and personal information, even though the majority of them had little to no such confidence in online retailers in general.”

Still, NPR reports, it is important to remember that “only about a 10th of all our shopping dollars are spent over the Internet.”

Published on: June 11, 2018

• Bloomberg reports that “a watchdog group is calling on Amazon to improve conditions for factory workers in China who make Echo speakers and Kindle e-readers.

The report, by China Labor Watch, “paints a picture of low pay and intense working conditions,” including a requirement that workers put in “more than 100 hours of monthly overtime in violation of Chinese labor law that limits overtime to 36 hours a month,” that “employees did not receive adequate safety training
Workers are required to arrive at work stations 10 minutes before their shift, and that “staff dormitories lack adequate fire-safety precautions such as fire extinguishers.”

The story notes that the criticisms argue that Amazon CEO Jeff Bezos “became the world’s wealthiest man on the backs of low-paid laborers.”

Published on: June 11, 2018

• The New York Times reports that “a salmonella outbreak that sickened dozens of people last month has been linked to pre-cut melons from a food distributor in Indianapolis, spurring a recall of products in eight states.

“Packages of fresh-cut watermelon, honeydew melon, cantaloupe and mixed fruit have been recalled in Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina and Ohio. An investigation is underway to see if other products or states were affected.

“So far, 60 people have been sickened by the outbreak — 32 were in Michigan — and at least 31 people have been hospitalized, according to the Centers for Disease Control and Prevention and the Food and Drug Administration. No deaths have been reported.”


• The Atlanta Business Chronicle has a story about how Publix plans to open a Publix GreenWise Market - the company’s 25,000 square foot organic foods concept - in the Atlanta market, just down the street from an existing Publix store. The opening is part of a broader GreenWise expansion to markets that include Tallahassee, Boca Raton and Charleston, South Carolina.

The Atlanta store is expected to open in about a year.

Published on: June 11, 2018

Big weekend in sports…

• The The Golden State Warriors defeated the Cleveland Cavaliers 108-85 on Friday night to complete a four-game sweep of the best-of-seven NBA championship series. It is the Warriors’ third title in four years.

• Justify won the Belmont Stakes on Saturday afternoon, completing a sweep of all three legs of the Triple Crown and becoming the second horse to do so in four years. (The last was American Pharoah; there have been just 13 overall since 1919.)

• Yesterday, Rafael Nadal defeated Dominic Thiem in straights sets 6-4, 6-3, 6-2 to win the French Open Men’s Singles Championship and become the most successful player in French Open history.

And, in the Women’s Singles Championship match, Simona Halep defeated Sloane Stephens 3-6, 6-4, 6-1 and earned her first Grand Slam title.

Published on: June 11, 2018

Regarding Howard Schultz’s departure from Starbucks, one MNB reader wrote:

I think Schultz has timed his departure to miss all the blowback from excessive growth and Philadelphia. Following up with price increases some people will no longer remain loyal. A perfect time for Peet’s and others to take advantage of a possible tough time ahead.

From another reader:

In addition to the problems Starbucks is facing with a “potential over stored” marketplace, they deem it necessary to raise the price of coffee AGAIN! I have been a loyal Starbucks coffee drinker for many years but they are approaching my point of resistance.

Aside from too many stores, they are having problems (as are many retailers) hiring good people.

And at $2 + dollars a cup for 12oz of coffee the coffee at a minimum should be fresh!  Starbucks has a timer designated by a red light, used on each urn that blinks when the coffee is past their standard and a fresh urn needs to be brewed.  Yet, time and again, (especially in the afternoon) the red lights are blinking and the barista is tilting the urn trying to get the last drop of coffee.

Good to the last drop may have worked for Maxwell House but if Starbucks wants to revive afternoon coffee sales – offer fresh coffee!




On Friday, we reported the breaking news of the death by suicide of Anthony Bourdain, 61, the chef turned “Kitchen Confidential” author who then became a television fixture with series that traveled the world and celebrating cultures and cuisines; most recently, he was working on the CNN series, "Parts Unknown,” and he was on location in France working on an episode at the time of his death.

We noted that Bourdain’s death came just days after the suicide of designer Kate Spade at age 55, who was said to have long dealt with severe bouts of depression.

I commented:

CNN notes that “the US Centers for Disease Control and Prevention published a survey Thursday showing suicide rates increased by 25% across the United States over nearly two decades ending in 2016. Twenty-five states experienced a rise in suicides by more than 30%, the government report finds.”

That’s extraordinary. And terribly sad.

If you are having thoughts of suicide, call the National Suicide Prevention Lifeline at 1-800-273-8255 (TALK). Or, you can click here.

One MNB reader responded:

I have read your Blog for seems like 20 years and never commented but thank you for your view on the death of Kate Spade and Anthony Bourdain.  Mental illness carries a stigma that causes many people to be reserved about talking about it.  I have battled some mental illness in my past and I am not shy about talking about it now, to me it is just like a bum knee or having the cold, it is an illness.  So thank you for bringing up a subject that most want to ignore, hopefully your comments will help someone who is have suicidal thoughts.  Keep up the good work.

Almost every family has experience with someone who has committed suicide, or tried to. It gets more headlines when celebrities commit suicide, and that’s probably a good thing; while experts do worry about a contagion, calls to suicide help lines also go up in the wake of such a reported event.

But one of the more heartbreaking funerals I’ve ever been to was of a young teenaged boy who had taken his own life; we didn’t know the young man, but he was the nephew of good friends of ours, and we wanted to show our support in a difficult time.

His older sister totally blew the place away with her eulogy for her brother, noting at one point that depression is both a liar and a thief - it lies to you that things will never get better, and then it steals your future. I’ll never forget her, or those words, and it was one of the first things I thought about when the Bourdain news broke last Friday.

I’ll say it again:

If you are having thoughts of suicide, call the National Suicide Prevention Lifeline at 1-800-273-8255 (TALK). Or, you can click here.

Take care.