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    Published on: August 20, 2018

    by Kevin Coupe

    Got an email on Friday from MNB reader Mike Bach:

    Kevin, I was surprised that the NYU free tuition story didn’t get mentioned in Friday’s MNB.  It’s often mentioned that the student debt is one of the major issues that impact spending for college students / graduates … Hopefully this action will encourage Universities around the nation to carefully consider “investing back” in their student population.  I can’t imagine these Universities (that follow same pathway as NYU) won’t get their rewards.  To me, this is big news and NYU is to be congratulated on this decision.

    The fact is that I saw the headline before posting MNB on Friday, but didn’t immediately connect to the relevance of the story to my audience. But Mike makes a good point.

    The original New York Times story went like this:

    “The New York University School of Medicine announced on Thursday that it would cover the tuition of all its students, regardless of merit or need, citing concerns about the ‘overwhelming financial debt’ facing graduates.

    “N.Y.U.’s initiative comes at a time when affordability has become an increasingly urgent issue in higher education, with some graduates struggling with thousands of dollars in debt … The plan does not cover room and board or fees, which together are an additional $27,000, on average.
    About 62 percent of N.Y.U.’s School of Medicine graduates leave with some debt; the average debt incurred by members of the class of 2017 was $184,000.”

    The Times writes that “only a handful of institutions have tried to make medical education tuition-free, according to Julie Fresne, senior director of student financial services of the Association of American Medical Colleges, a nonprofit organization that represents medical schools. At UCLA’s David Geffen School of Medicine, a $100 million fund announced several years ago pays for the entire cost of medical school for all four years, including tuition, fees, books and living expenses for roughly 20 percent of its students. But that program is based on merit, not need.”

    And, the Times point out, “Most of the roughly 20,000 students per year enrolled in American medical schools take out sizable federal loans to support their studies. According to the Association of American Medical Colleges, in 2017, the median debt for graduating medical students was $192,000. The median cost of medical school attendance, including living expenses, was $60,945 a year for public medical school and $82,278 for private medical school.”

    I’m glad Mike drew my attention to this, and not just because I had no idea how many Americans enroll in in medical school each year. (Though, to be honest, I’m not sure if 20,000 is higher or lower than I would’ve guessed.)

    He’s right about the issue of student debt, not least because the adults who enter adulthood saddled with enormous amounts of college-related debt will not be able to engage in the kind of discretionary spending for their age group that traditionally has helped to drive economic growth in this country.

    It is, I think, just part of a broader series of changes that threaten many traditional retailers. How many of them are engineered for a world in which young adults get married, buy a house with a basement and lots of storage space, have two or three kids, and then buy a minivan or SUV? What they are facing is a growing number of young adults are waiting longer to get married and have fewer children, are living in an urban environment, and may not even own a car … while having less money because of oppressive student debt.

    Seems to me that more companies need to have their Eyes Open to the implications of this sort of future and preparing action plans. This can take a lot of forms, though I’d suggest that one powerful way is to invest in student loan repayment programs as an employee benefit (that would have the added advantage of making a company an employer-of-choice).

    Just a thought for a Monday morning.
    KC's View:

    Published on: August 20, 2018

    Great piece in the New York Times over the weekend about JÜV Consulting, a Brooklyn-based marketing firm that is designed “to illuminate the inner workings of kids these days without condescending to them.” In other words, figure out how to talk to - and sell to - people between the ages of 10 and 21 … which doesn’t always come naturally to people older than that.

    What makes JÜV Consulting unique is the fact that it is “staffed entirely by young people who range in age from 14 to 22,” who are “out to teach brands, companies and nonprofits what it means to be a young person by commodifying their own quality time.”

    The CEO is Ziad Ahmed, 19, “a rising sophomore at Yale (major undecided). He co-founded the consultancy firm in 2016 with Nick Jain, 19, the company’s C.O.O. and a rising sophomore at Princeton and Melinda Guo, 19, who goes to Stanford and serves as a member of the board.

    “This summer, Mr. Ahmed, Mr. Jain and six other members of the executive team lived and worked in a loft in Brooklyn, where they would meet with clients and then just hang out. In addition to an executive team, JÜV has five senior partners, 15 junior partners and 90 consultants on staff, all of whom (it should perhaps go without saying) are paid. Their de facto informants consist of friends — and friends of friends — from around the world.”

    You can read about the company, and the fascinating people who work there, by clicking here.
    KC's View:
    This is sort of ingenious … young people figuring out a way to market themselves by marketing people just like themselves. These are all people with big futures, I suspect … entrepreneurial, smart and able to identify a real market opportunity.

    I suspect that most companies would be happy and lucky to have any of them.

    Published on: August 20, 2018

    Bloomberg reports that Marybeth Hays, who has been Walmart’s executive vice president of consumables and health and wellness for about a year, will leave the company in January 2019.

    The story notes that “Hays joined Walmart in 2009 from Lowe’s Cos. and had risen quickly up the ranks, but was sidelined when the company named a former Humana Inc. executive to run the health-care unit last month.”

    Furthermore, Bloomberg writes, “Her exit illustrates Walmart’s struggles to hold onto high-profile female executives. While the retailer recently elevated Judith McKenna to run its international business, last year it lost Sam’s Club chief Rosalind Brewer, who’s now at Starbucks Corp. Many of the women in senior executive roles at Walmart are in areas like human resources and legal, such as Rachel Brand, who left the Justice Department to head global governance earlier this year. Hays was one of the few in an operational role, which is the natural path to the corner office at a retailer.”
    KC's View:
    Not sure anyone should be thinking about the Walmart corner office anytime soon. CEO Doug McMillon is just 51 years old, and Marc Lore - who, if things go well on the e-commerce front, could well be his successor - is a half-dozen years younger than that. This could limit upward mobility for folks with any sort of ambition in this direction.

    Published on: August 20, 2018

    The New York Times reports that the American Heart Association is out with a new study suggesting that longtime dietary recommendations that it is critical to “eat a variety of foods” for a “nutritionally adequate diet” may actually be both outdated and wrong.

    That advice, the study says, “is largely based on old studies of low-income populations that found that consuming a broad range of foods helped prevent nutritional deficiencies.
    But in today’s environment, where food is plentiful and malnourishment less prevalent, that advice could backfire.”

    A panel put together by the Association, the Times writes, “released a scientific report on Thursday in the journal Circulation that found that in some studies, people whose diets contained the greatest variety of foods tended to eat many nutritious foods, like fish, fruits and vegetables, but also many junk foods, such as sugary snacks and beverages, refined grains and other processed foods … Greater dietary variety was also linked to a higher overall calorie intake and weight gain.”

    The panel says that dietary recommendations need to be adjusted, and that “people should worry less about variety and more about diet quality, even if it means filling half your plate with one or two vegetables you like and avoiding others. Ultimately it’s the amount of fruits, vegetables, nuts and other nutritious foods you eat that matters, not the variety.”
    KC's View:
    One has to be careful about putting too much credence in studies that simply reinforce one’s own life decisions. But I think this one makes a lot of sense - better to eat good food than lousy food, and excessive variety be damned. Life’s too short to eat crap.

    Published on: August 20, 2018

    Bloomberg reports that Walmart is requesting that its cosmetics suppliers “consider sourcing their goods in countries outside of China,” a move that reflects a desire on the retailer’s part to “dilute the impact of the Trump administration’s looming tariffs.”

    According to the story, “A ‘large amount’ of items in the cosmetics category fall under the most-recent proposed levies on Chinese goods, according to an Aug. 7 email sent from Walmart’s procurement division to some of its cosmetics suppliers. The list of Chinese goods that could get hit with additional tariffs includes lipstick, eye makeup, powders, shampoo and other haircare products. The missive asks suppliers if they have facilities outside of China, and if not, whether they would consider investing in some to broaden their sourcing ability.”

    Walmart CFO Brett Biggs said last week that the impact of the Trump tariffs “is difficult to quantify,” though he also conceded that Trump’s “foreign trade policies could hurt its results,” and that the company is “monitoring the tariff discussions” and “actively working on mitigation strategies.”
    KC's View:
    Walmart is just one of many companies that will be hit by the tariffs. I’m no economist, but I’ve yet to be persuaded that the tariff policy makes a lot of economic sense, and I suspect as time goes on we’re going to hear a lot more cries of pain from companies and consumers.

    Published on: August 20, 2018

    The Verge reports that Google has its eye on a location in Chicago’s Fulton Market for its first permanent retail store.

    The two-story space, the story says, “would total 14,000 square feet across several interconnected brick buildings, according to The Chicago Tribune. This planned store would be several blocks south of the company’s Midwest HQ.”

    The story notes that “this isn’t Google’s first attempt at a brick-and-mortar store, which would be a prime locale to show off its ever-growing selection of hardware products. But until now, Google’s been relegated to the occasional pop-up and ‘stores within stores’ in the US and UK, sectioning off space to show demos of Chromebooks, smart speakers, and phones … Previously, it spent millions renovating a planned 5,000-square-foot retail space in New York’s swanky SoHo district before ultimately abandoning these plans and leasing the space out instead.”
    KC's View:
    Be interesting to see if Google doesn’t just use the store to sell its own hardware, but also figures out a way to turn into a component from which it can market its relationships with companies doing business via its platform. I suspect they won’t make the Microsoft mistake, and create something that seems like a Grade B Apple Store; rather, it’ll create something that serves as a clear-cut alternative to the kinds of bricks-and-mortar stores being opened by Amazon.

    Published on: August 20, 2018

    TechRadar reports that Amazon is planning to introduce yet another piece of technology, though this one sounds a little retro by Amazon’s standards - a DVR that plugs into a television “for recording live TV that will let you catch up on your favorite shows whenever you've got time.”

    The device “codenamed Frank, will have local storage space as well as connecting to streaming players including the Amazon Fire TV,” the story says. “The same wireless tech that's built into the Amazon Echo range of speakers will also be built into whatever Frank turns out to be.”

    TechRadar writes that “in what is already a very crowded space, the Amazon Frank would be another box for getting content up on your big screen. Whether it would also have the same apps and capabilities as a Fire TV device remains to be seen.

    “With many apps and services now streaming content straight from the cloud, we'll have to wait and see how much appetite there is for a new device that saves video to a disk instead.”

    And, the Seattle Times writes, “The e-commerce giant’s Lab 126 research and development center is working on the DVR, the latest in a series of connected gadgets aimed at the home. The group created the Echo speaker and is building a home robot known as Project Vesta.

    “Amazon wants to occupy living rooms through its devices and services. The company has been investing in original movies, TV shows and live sports to make its Prime membership an alternative to streaming services like Netflix. Prime members pay annual or monthly fees for shipping discounts, video and other perks. Customers who watch Amazon video content spend more on other company offerings and are more likely to renew memberships.”
    KC's View:
    There’s got to be a component in this that makes it differentiated from TiVo and all the various cable boxes that integrate DVR technology into them. Not sure what it’ll be exactly, but there has to be something.

    Published on: August 20, 2018

    The New York Times has a story about how some retailers appear to be going too far in their efforts to prosecute shoplifters. Way too far.

    Here’s how the Times frames the story:

    “Crystal Thompson was at home watching the Rose Bowl parade when a county sheriff came to arrest her for shoplifting from the local Walmart.

    “Ms. Thompson, 43, was baffled and scared. An agoraphobic, she had not shopped at a Walmart in more than a year. She was taken to a Mobile jail, searched, held in a small room and required to remove her false teeth, something she didn’t even do in front of her husband.

    “Four days after she returned home, the letters from Walmart’s lawyer started to arrive. The lawyer demanded that Ms. Thompson pay the company $200 or face a possible lawsuit. She received three letters over two months in early 2016.”

    The Times notes that many shoplifting laws “were established so retailers could pursue shoplifters without clogging up the courts. Retailers, though, often move on both fronts, pressing criminal charges against suspects, while demanding that they pay up before cases are resolved.” The result can be innocent people caught in the system, with retailers “playing games with people’s futures” and far from sympathetic about unintended consequences.

    You can read the entire story here.
    KC's View:

    Published on: August 20, 2018

    Business Today reports that Walmart has completed its $16 billion investment in Indian e-commerce company Flipkart, giving it a 77 percent controlling stake in the firm.

    According to the story, “. The Bentonville giant's investment includes USD 2 billion of new equity funding to help accelerate the growth of the Flipkart business.

    “The mega deal, announced in May this year, is the largest so far in the Indian retail space. This is also Walmart's biggest acquisition and will help it compete more aggressively with its US-based rival Amazon.”
    KC's View:

    Published on: August 20, 2018

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

    • The Los Angeles Times has a story about “a group of 7-Eleven franchisees across the country who are at odds with the American subsidiary of Seven & i Holdings Co. — the Japanese company that bought 7-Eleven from its distressed American ownership in 2005 — over a new 15-year franchise agreement … Among the leading points of disagreement is a contract provision that would require franchisees to potentially split more profits with 7-Eleven Inc., which the U.S. store owners allege is a move to boost the profit of the Japanese parent.

    “They point to a new $50,000 fee to renew franchise agreements, which vary in length and expire at different times depending on when a store was acquired. Renewals used to cost 20% of a store owner’s franchise fee, which varies too, but the disgruntled owners say it was generally less expensive except for the highest-volume outlets.”

    The entire story can be read here.

    We took note of a New York Times story on this same subject a couple of weeks ago, but I think it is worth repeating the concern I expressed then - that all these folks have to be careful about spending too much time talking about the wrong stuff. Not to say the economics aren’t important, but if you’re arguing about hot dogs and Slurpees, how are you going to effectively compete with Amazon, Walmart’s new c-stores, and all the other formats that are being developed to appeal to consumers’ convenience needs?

    • The Financial Times has a piece about what it called “perhaps the most sensible tweet of Donald Trump’s presidency so far,” in which he called “for the Securities and Exchange Commission to study ending quarterly earnings reporting and shifting to a six-month system is eminently worthwhile.”

    MNB took note of this story on Friday, but it is worth taking note of FT’s caution - that “the central issue is not how often earnings reports are, but what they involve.”

    The concern, FT writes, is that “quarterly reporting fosters a short-termist culture across corporate management and the investment community. Longer-term capital spending may be skipped if it would damage quarterly numbers. CEOs can become obsessed with ensuring constant quarter-on-quarter improvements instead of the best long-term interests of their businesses … The priority for businesses and bosses, however, should not be trying to hit quarterly guidance, but devising strategic development plans, articulating them to investors, and setting goals based on long-term operational and value-creation measures. Executive pay should be linked to those targets. Then, companies and their leaders should be able to carry investors with them through any bumps and troughs in earnings.”


    • The San Jose Mercury News reports that Greenpeace is out with its annual list of supermarkets with the best sustainable seafood practices, and, from one to 22, they are:

    Whole Foods, Hy-Vee, Aldi, Target, Giant Eagle, Wegmans, Albertsons, Sprouts, Ahold Delhaize, Meijer, Kroger, Supervalu, Walmart, Trader Joe’s, Costco, Southeastern Grocers, Publix, WinCo, H-E-B, Price Chopper, SaveMart, and Wakefern.

    Greenpeace says that it ranks the stores based on information obtained “from supermarkets through a standardized eight-page survey, email and phone conversations, publicly available information, and in-store visits.” Supermarkets were scored in four categories: policy, initiatives, transparency and inventory.
    KC's View:

    Published on: August 20, 2018

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    • Sen. Cory Booker (D-New Jersey) has introduced legislation that would stop financial institutions from “from charging overdraft fees on debit card transactions and ATM withdrawals. The bill would also restrict the frequency of such charges on payments made by check,” Vix reports. These fees, the story notes, “have become a crucial source of revenue for financial institutions and have long targeted low-income customers who struggle the most to stay out of debt …In 2016, US customers paid roughly $15 billion in overdraft and bounced check fees. That’s the equivalent of nearly 10 percent of the net income that banks raked in that year.”

    The legislative proposal, Vox reports, was “informed by a survey of several large banks that his office conducted last year.”

    Lauren Saunders, with the National Consumer Law Center, tells Vox that “it’s been well-documented for many years that banks have used a variety of methods to push people into incurring overdraft fees to boost their income. They do a lot to push huge costs on the people least able to bear them.”

    And Rebecca Borne, of the Center for Responsible Lending, says that it used to be that “as debit cards gained popularity, banks initially rejected transactions if users didn’t have enough money in their accounts … Institutions quickly discovered, however, that enabling such transactions to go through and charging the customer a subsequent overdraft fee could be a handy source of income.”
    KC's View:
    I checked in with Jennifer Hatcher, senior vice president of Government and Public Affairs at the Food Marketing Institute (FMI), to see what the trade association’s position might be on this legislation. She responded:

    Senator Booker recently introduced legislation that attempts to tackle the problem of predatory overdraft fees. His legislation includes a number of different strategies to combat the problem, but a card with a PIN or another secure authentication cannot overdraft, is faster, allows for cash back and is less expensive to customers and grocers. This is something FMI, too, has long advocated and our members have recommended to customers.

    “Predatory” seems to be a word that is - and should be - attached to most financial institutions. While I think that it is all well and good to simply encourage customers to make their transactions in certain ways, I’m not sure that this is enough. At a time when Kroger has thrown down the gantlet - it no longer takes Visa cards at the 21 stores and five gas stations that are part of its Foods Co chain, and has threatened a broader band if some sort of accommodation on interchange fees cannot be reached - it seems to me that it is time to play hardball on every front, with consumer interest always front and center.

    Published on: August 20, 2018

    Last week, we took note of a BuzzFeed report that the same baker who recently won a Supreme Court case in which he argued that he was not legally required to sell a custom wedding cake to a gay couple - his rationale was that it conflicted with his religious beliefs, which include disapproving of same-sex marriage - is back in court, arguing that he is within his rights not to make a birthday cake for a transgender woman, and once again, he is citing religious freedom as his rationale.

    I commented, in part:

    I believe in religious freedom, but I do not believe that religious beliefs should be used to justify discrimination and intolerance. (And yes, I recognize that I now will be accused by some of being intolerant of religious freedom. I guess it is inevitable, especially these days, that choices have to be made, or priorities set, between civil rights and religious freedom.)

    Where does the line get drawn? What if Phillips’ religious beliefs also opposed mixed-race weddings? Should he be allowed to deny them service? What if he were anti-Jewish? Or anti-Muslim? Can he deny them cakes or cookies of muffins as well?

    Here’s the deal. If you are a baker, bake and sell cakes. If you don’t approve of gay marriage, then don’t marry someone of the same gender. If you don’t approve of transgender people, then don’t go through gender reassignment.

    MNB reader Mark Phillips wrote:

    I appreciate your vantage point on this - and other - controversial issues.

    However, regarding Jack Phillips and his Masterpiece Cake Shop, I couldn’t disagree with your vantage point MORE.

    In my business, I sell both stock and custom advertising displays to retail chain stores. You want to buy some of our stock advertising displays? Sure, no problem. You want me to print pornographic images on something custom for your Sex Shop? Sorry, I draw the line. I guess that I would be labeled “intolerant”.

    The comparison is no different than Jack’s cakes. You want to go into his shop and buy an off the shelf cake? Great, go at it. But REQUIRING him to produce a custom product that CELEBRATES / ENDORSES / PROCLAIMS practices in which he disapproves, well that is simply (imo) harassment!

    I’m no lawyer, but believe the 1st amendment is abundantly clear that you can’t make me do something that suppresses a) my religious freedom and b) my freedom of speech. From my limited research, Jack Phillips simply wanted to bake cakes and his Christian beliefs dictated the TYPES of cakes he would bake! To which I say, have someone else produce your pornographic advertising displays….

    For the record, I don’t think there was anything pornographic about the cake. It think the request was for a cake that had a blue exterior and a pink interior. And I think the comparison, while convenient if you agree with the baker, sort of breaks down because there is no equivalency here.

    From MNB reader Drew Steverson:

    I think you said it best: “Here we go again.”
    The perspective that I shared with you regarding the first cake incident applies here as well.
    Masterpiece Cakeshop is not refusing to serve customers because of who they are. Instead, the bakery is refusing to bake cakes that celebrate things which violates their religious beliefs. In both situations the baker claims to have offered to make any other product for the customer and only declined to make creations that violate his beliefs (and I have not seen any refutation from the complainants).
    In this situation the complainant specifically stated that the cake was to celebrate their birthday and gender transition. That means that the cake no longer simply is a birthday cake, it now has become a birthday and gender transition cake. The baker doesn’t make gender transition cakes.

    MNB reader Mike Nichols wrote:

    The key point to this case is that the baker, in refusing service, is demonstrating intolerance of homosexuals and transgender people. Those of us who think he should not be permitted to refuse service to homosexual and transgender people are essentially drawing a line in the sand that we will not tolerate intolerance. All of this is perfectly consistent.

    The philosopher, Karl Popper, explained it as the Paradox of Tolerance (which is not really a paradox at all, but an observation about what is required to maintain a tolerant society): “Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend our tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them … We should therefore claim, in the name of tolerance, the right not to tolerate the intolerant.”
    There is a very simple reason why refusing service to homosexuals or transgender people or people of color is very different from refusing service to “rude, crude and violent customers.” Violence and crudeness smack of the very intolerance that we, as a tolerant society, should not feel comfortable tolerating. You cannot say the same about being homosexual or transgender. I think that may be what is driving your intuition when you correctly observe that one is just “bad behavior” while the other is “simply who these people are.”

    The Paradox of Tolerance. I like it, though I had no idea that I was a nascent Popperian.

    I thought that Bill Maher was pretty funny on Friday when he was talking about this story and said that he thinks it illustrates a pretty powerful business opportunity. “I’m going to move to Grand Junction, Colorado,” he said, “and open a shop called Bang Whoever You Want Cakes.”

    On another subject, from an MNB reader:

    About the spreading of the pot industry to beverages: The CBD drink you had as you likely know has no THC in it. CBD has many good benefits without any high.

    Seems to me while I believe you are correct on the spreading of legalization on pot, the discussions on both sides are coming as it gets legalized, which is a mistake.

    Is it being done “highly” for tax reasons?

    How much of this tax money is going to drug education beginning in grade school?

    What in heck happen to DARE programs and the just say no campaign?

    Those that say it will be grown in a controlled environment note:

    What is the THC limit that is acceptable? Right now you can but 99%. That clearly is not a pot high.

    By comparison, what was around when we were in high school was 3-5%. Yes, I inhaled then.

    Has anyone read the results to date of what has happened in Colorado on total usage increase, usage increase in children, usage increase in surrounding areas, usage increase of next level drugs?

    That does not even consider the candy.

    Seems like those discussions need to happening before votes.

    We got mostly filtered cigarette smoking down to a small percentage of the population, now we have non filtered weed?!

    How is that helping our health?

    Oh, if you do not want to smoke, you can get the THC in the vape form. That is happening all over in public as it does not smell.

    I strongly suggest the book by William Bennett which is called “Going to Pot.” He was the US drug czar long ago.

    We are in the middle of a “heroin” crisis, and we are running without education on this topic.

    I may not make many friends here, but would love to see what those educated on the subject would have to say, not just the weed smokers.

    Scary situation!

    Finally, from MNB reader Bryan Silbermann:

    Thanks for sharing the link to David Remnick’s article on the Queen of Soul. For another inspiring look at what her music meant to so many, check out this

    profound analysis by New York Times critic-at-large Wesley Morris.

    I’ve been listening repeatedly to many of her finest performances for the past 24 hours and recall what an impact she had on a young band I drummed with in my native South Africa back in the late 1960s/early 70s. Four white boys, playing to white audiences in then-segregated South Africa, kept getting repeat requests for Respect and Chain of Fools. Her talent and her soul transcended race and appealed to everyone. Thank the Lord for her talent … and for YouTube which gives us access to the chills and inspiration whenever we need them.

    KC's View: