business news in context, analysis with attitude

Published on: June 18, 2018

by Kevin Coupe

USA Today has a piece about the Amazon Treasure Truck, which the story describes as “a quirky way for the online retailer to connect with shoppers in person,” and which now operates in some 40 US and UK markets.

The story describes the truck format this way:

“What's sold on the trucks? The item is a secret until the day the trucks roll out. People who sign up get a morning text announcing the deal of the day. At the circus-like trucks, which light up and blast music, Amazon workers play games with shoppers and help them take selfies. They have custom designs, like a lobster and lighthouse on the Boston truck; cowboy boots in Dallas; and a race car in Indianapolis. A bubble-blowing machine is usually going … Amazon picks what's sold on the trucks … There are holiday-related goods, such as the Godiva chocolates and dozen red roses it sold before Valentine's Day; trendy items, like the Instant Pot pressure cooker; or food, such as uncooked shrimp or raw chicken wings.”

The story notes that “the trucks go out a couple times a week and spend a few hours roving between the parking lots of malls, office complexes or banks. Amazon rents those spaces, but it can also park in front of its own Whole Foods stores.”

I like this idea a lot, and it ought to serve as a lesson to traditional retailers about the importance of breaking the mold and trying unconventional means to connect with shoppers. Don’t just wait for folks to come to you … find ways to go to them, to challenge and entertain them, to extend your brand in innovative and compelling ways.

There is one Eye-Opening thing, though, that I do not understand.

The USA Today story starts with an anecdote about a shopper buying two pounds of flank steak from an Amazon Treasure Truck parked in a Costco parking lot.

A Costco parking lot? What the hell is Costco - which, last time IO checked, sells steaks and compete with Amazon in a plethora of categories - doing in letting Amazon sell stuff from its property?

I don’t care if the argument is that Amazon will bring in customers. Allowing an Amazon truck that kind of visibility is akin to retail malpractice.

Published on: June 18, 2018

Terrific piece in the Wall Street Journal about how Amazon increasingly is making its presence felt in Whole Foods stores. Excerpts:

• “Sky-blue signs advertising discounts for Prime members greet shoppers in some Whole Foods parking lots. Inside the stores, blue placards spotlight lower prices for Prime members on organic nectarines and sausage.”

• “More stores have Amazon pickup lockers, pop-up stores, price-reduction tags, Prime membership promos and even delivery stations out front. Online delivery is moving to new markets.”

• “At some locations, Echo speakers, Fire tablets and Fire TVs are for sale alongside Amazon lockers where customers can pick up their e-commerce orders.”

• “Customers browsing Amazon’s website now are likely to see Whole Foods beans, baking soda and other store-brand goods displayed prominently. Amazon also appears to be giving a boost to Whole Foods’s “365 Everyday Value” products. The chain’s private-label sales have grown as a percentage of store purchases since the deal, according to advertising firm inMarket.”

While Amazon’s efforts are driving down some prices at Whole Foods, the story notes that “Whole Foods’s new delivery service has led some customers to gripe. Some parking spots now are reserved for delivery drivers, and store sections have been converted to busy order-assembly areas. Some store entryways and service counters now are crowded with workers picking up orders, customers said.”

Published on: June 18, 2018

The Dallas Morning News reports that Walmart is in the middle of building out a new format store in the Lower Greenville neighborhood of the city - 32,000 square feet in size, the small format comes from the company’s Sam’s Cub division, but does not yet even have an announced name.

This much is known:

“The store will have about 1,000 to 2,000 items versus 6,000 in a regular Sam's Club. It will lean more on the convenience items and mostly fresh foods and grab-and-go meals. Sam's Club has been upping its menu with its own Member's Mark brand. New items include smoked gouda pimiento spread and pre-cooked beef brisket.

“While not a traditional Sam's Club, the new store will be member exclusive and shoppers will be able to use the Scan & Go self-checkout system powered by their smartphones that Sam's added to Dallas-area stores in 2016.  The app lets customers scan items as they shop and then pay at self-checkout on the way out.”

Nathan Barr, a Sam’s Club spokesman, describes the format this way: “We think it's going to be a cool store for a cool neighborhood.”

Published on: June 18, 2018

The Washington Post reports that two US Senators - Jeff Flake (R-Arizona) and Christopher A. Coons (D-Delaware) have sent a letter to Amazon founder/CEO Jeff Bezos posing six questions about how its Alexa-powered devices work, including whether they record private conversations or misinterpret human commands.

According to the story, the lawmakers - who sit on the Judiciary Committee’s subcommittee on privacy, technology and the law - are looking for answers about “what the company is doing to protect the privacy of its customers, who often place the Alexa-powered devices in the most intimate spaces in their homes.”

The letter, the Post writes, “asked for the number of complaints the company has received about misinterpreted commands; the reasons Amazon might use and retain customer voice data captured by Echos; and what policies are in place to prevent the misuse of voice data and to prevent future episodes where conversations are shared without a customer's consent. The senators also asked more granular questions about Alexa and Echo's protocols for activation, recording voices, and access to third party developers.”

The senators’ interest was prompted by a recent incident in which an Echo seemed to record a couple’s conversation and then send it, unbidden, to friends on their contacts list. Amazon attributed the occurrence to an unlikely string and convergence of events, but has said that it is looking into ways to prevent it from happening again.

Amazon has not yet commented on the senators’ request.

Published on: June 18, 2018

California’s Office of Environmental Health Hazard Assessment has proposed a rule saying that Proposition 65 - which “requires sellers to inform customers about chemicals known to cause cancer, birth defects or reproductive problems” - should not be applied to coffee, which means that coffee shops won’t be required to “warn drinkers about a cancer-causing chemical in their brews.”

The Newsweek story notes that “the science regarding the health effects of coffee is controversial and inconsistent. While acrylamide, which is created naturally through the brewing process, has demonstrated cancer-causing properties in mice, researchers have not performed these tests on humans, and the small amount in your morning brew may or may not ever hurt you … California officials decided that warning consumers of carcinogens in coffee was taking Proposition 65 too far, and that people would just start ignoring these warnings if they see them too often.”

The rule proposal now faces a public comment phase before it becomes finalized.

Published on: June 18, 2018

CNBC reports that in the year since Amazon acquired Whole Foods, Google “has become an increasingly attractive partner for retailers looking for ways to compete with Amazon, allowing it to explore new business models and alliances.

“For example, Target, Walmart, Costco and others all agreed to a new advertising program with Google that makes their products appear in search and through its smart, voice-activated Assistant at the same time, with a universal shopping cart that routes purchases through its Express shopping delivery service. Instead of paying for an ad, the retailers now have to give Google a cut of each purchase. It's an interesting new model for Google and helps retailers stay on par with Amazon by giving consumers a simple, consistent purchasing process.”

The story says that “there's been a kind of perfect storm where retailers are worried about losing sales to Amazon while Google's worried about losing product advertising.”

Published on: June 18, 2018

Consumer Reports is recommending that “consumers avoid buying and eating pre-sliced melon until the end of June and discard any that they've already purchased. That’s because in the past two months, 60 people in the U.S. have gotten sick from a dangerous strain of Salmonella bacteria, likely from eating presliced watermelon, honeydew, or cantaloupe shipped to major retailers across the country.”

The Food and Drug Administration (FDA) probe into the outbreak has led to a recall being expanded to 22 states: Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Virginia, West Virginia, and Wisconsin.

Published on: June 18, 2018

The New York Times has a piece about how, “ whether women work at Walmart or on Wall Street, getting pregnant is often the moment they are knocked off the professional ladder. Throughout the American workplace, pregnancy discrimination remains widespread. It can start as soon as a woman is showing, and it often lasts through her early years as a mother.”

An excerpt:

“The New York Times reviewed thousands of pages of court and public records and interviewed dozens of women, their lawyers and government officials. A clear pattern emerged. Many of the country’s largest and most prestigious companies still systematically sideline pregnant women. They pass them over for promotions and raises. They fire them when they complain.”

The discrimination, the Times writes, ranges from the overt to the subtle. And here’s a fascinating passage:

“Each child chops 4 percent off a woman’s hourly wages, according to a 2014 analysis by a sociologist at the University of Massachusetts, Amherst. Men’s earnings increase by 6 percent when they become fathers, after controlling for experience, education, marital status and hours worked.”

Great piece, and you can read it here.

Published on: June 18, 2018

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

• CNN reports on a 23-year-old man, Thomas Frudaker, who was arrested last week and charged with making fraudulent returns - to the tune of $1.3 million - at more than 1,000 Walmart stores around the country over the past 18 months. He was arrested when trying to do so in Yuma, Arizona, and charged immediately with six felony charges, “including two counts of theft, two counts of fraudulent schemes and two counts of criminal damage.”

Think about that. This guy visited almost 25 percent of the Walmart stores in the US in less than two years. I wonder how many Walmart executives did that. They ought to go after him with the full force of the law, but they may want to consider pulling an Alexander Mundy with him, and use Frudaker as an invaluable resource.

Published on: June 18, 2018

• Variety reports that as Apple ramps up its investment in original content in order to allow its iTunes business to compete more effectively with Amazon and Netflix, it has signed a multiyear content deal with Oprah Winfrey, which will have her developing programming for Apple.

The story says that “even before the Oprah deal, Apple has a robust slate of originals prepared to launch. In addition to the previously mentioned morning show drama, the streamer is prepping shows like a reboot of Steven Spielberg’s ‘Amazing Stories,’ a psychological thriller series from executive producer M. Night Shyamalan, the true crime podcast drama series ‘Are You Sleeping?’ starring Octavia Spencer and Aaron Paul, and an Emily Dickinson series starring Hailee Steinfeld among many others.”

Published on: June 18, 2018

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

• The Seattle Times reports that “two months after Starbucks faced nationwide outrage after the arrest of two African-American men at a Philadelphia Starbucks,” Kroger-owned QFC “quickly apologized and suspended a store manager after learning that two black men said they were harassed Tuesday at the Harvard Market store on Capitol Hill … The QFC statement did not say exactly what it was apologizing for. But it said the manager would be suspended ‘until we have all the facts.’

“It also said staffers are participating in a training this year that in part deals with unconscious bias.”

While the customers said that they “felt discriminated against because of their race,” and a video clearly shows a confrontation, there are mixed reports about what led to it … and a number of shoppers told the Times that racial bias would be out of character for a manager who has been decent and inclusive in his “treatment of customers and employees.”


• USA Today reports that “McDonald’s said Friday that it will start testing alternatives to plastic straws at select locations in the U.S. later this year.

“The burger giant also announced that it will adopt more eco-friendly paper straws across all its 1,361 restaurants in the United Kingdom and Ireland, a region where the company started testing the alternative to plastic straws earlier this year. The regional rollout begins in September.”

Banning the use of plastic straws - an initiative embraced by many companies and communities - has become a major component of efforts by environmentalists to reduce the 8 million metric tons of plastic said to pollute oceans each year.


• Hostess Brands has announced the launch of Jumbo Donettes, described as “a new way to enjoy the brand’s signature mini donuts that suits breakfast, snacking, and dessert occasions alike. Jumbo Donettes come in two flavors -- Glazed and Chocolate Iced with Sprinkles.”

”Jumbo Donettes”? Isn’t that sort of an oxymoron?

Published on: June 18, 2018

• United Fresh announced that Dr. Emily Griep has joined the staff as Manager, Food Safety, reporting to Vice President of Food Safety & Technology, Dr. Jennifer McEntire.

Griep recently received her Ph.D. from Cornell University as a USDA National Needs Fellow in the area of ‘food safety for a global economy’, focusing on food science and technology and minoring in international agriculture & rural development as well as nutrition.

Published on: June 18, 2018

Charles (Charlie) Hooley, co-founder of Cub Foods (with is brother, Jack, brother-in-law Bob Thueson, and friend, Culver “Cub” Davis), has passed away at age 89.

Cub originated as Food Bonanza - the Pioneer Press describes it as “a bare-bones operation featuring concrete floors, block walls and unpainted wood shelving that catered to price-conscious shoppers” - in 1968, and converted it to the Cub name (“Consumers United for Buying”) shortly thereafter.

The Pioneer Press writes that “when Cub was acquired by Supervalu in 1980, Jack Hooley stayed on as CEO of Cub for two years. He retired in 1985. Charlie Hooley retired in 1981.

“Cub now has 80 stores, 79 in Minnesota and one in Illinois, and more than 6,000 employees.”

Published on: June 18, 2018

Responding to last week’s piece about how Amazon seems to be catching up with Chewy, one MNB reader wrote:

I love Amazon but will continue to remain faithful to Chewy.  I started using Chewy after reading this review:

I recently had to cancel my auto ship cat food order because of the loss of my beloved Maine Coon Ali Cat of 18 years. I was told when I called that my order was scheduled to ship that day and if they could not stop it to to donate it to a kennel and there would credit my account. The following week I received a beautiful boutique of fresh flowers from a local florist with a sympathy note attached. I was literally blown away by the sympathy and their act of kindness which was totally unexpected. THANK YOU chewy for lighting up a very sad time in our lives. This act will never be forgotten. Pat I., Orchard Park NY

As much as I like shopping on Amazon I do not feel I would ever get such a response in thin particular case.
 
For my pets - Chewy is my place!!



Regarding Kroger’s decision to close its 14 stores in the Raleigh-Durham, North Carolina, market, citing an oversaturated marketplace, one MNB reader wrote:

A lot of the old Kroger stores in North Carolina were some of the most rundown Kroger stores that I have seen.  They were not competitive in the marketplace and do not really reflect well on the Kroger brand.  Harris Teeter has a much better reputation.



Last week we took note of an Esquire report that German discounter Aldi has won an award for heaving the best whiskey in the world.

Leading MNB reader Glenn Cantor to write:

Hey, New Jersey, please let my Aldi sell wine and spirits.  $17 and $23 for great Scotch will only make all great scotch more affordable.




Weighing in on our continuing coverage of where Amazon’s HQ2 might go, one MNB reader wrote:

Raleigh! Bet you a bottle of Blantons!

No bet … mostly because I’ve gotten dozen of emails wanting to bet me that various places are going to get HQ2. That kind of action, I just don’t need.



Finally, responding to my review of the new IHOP burger, one MNB reader wrote:

A few weeks ago I challenged you to try an Impossible Slider from White Castle after your 6/6/18 feature "Disrupting the Humble Hamburger". You were pretty quick to try IHOP, I'm still interested in your take on the Impossible Slider!

I was able to act faster on IHOP because there’s one about five miles from my house. White Castle is a much longer haul … it may have to wait until late summer, since I’m headed out to Portland, Oregon, in a couple of days and won’t be back for awhile. (No White Castles on the west coast, I’m afraid … though I will manage to get to an In-N-Out and a Burgerville at some point, I’m sure.)