business news in context, analysis with attitude

Published on: March 14, 2019

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here, and this is FaceTime with the Content Guy, coming to you this week from the SWSX festival in Austin, Texas.

This is my first time at SWSX, and I have found it to be a remarkable experience - I can’t wait to come back next year, and to spend more time here.

I came to SXSW to record a couple of GMDC-sponsored Retail Tomorrow podcasts that we’ll be posting here over the next couple of weeks. I think they’re really interesting. One focuses on how the “frictionless” marketplace needs to evolve into a “fluid” marketplace, and how technology will enable this shift; the other does a deep dive into the opportunities and challenges of the cannabis market. The people who joined me in these podcasts were, to be honest, dazzling … and I hope you’ll enjoy these podcasts when they are posted. Stay tuned.

The thing about SXSW is that it offers an unusual confluence of brainpower and money. There are people from business, technology, culture, government and finance. I hung out a lot at a place called Funded House, which served as a meeting place for venture capitalists and people who were looking for second round funding. (This is important, because people looking for first round funding may only have a great idea, while second round funding seekers have some proof of concept. There’s a huge difference.)

It isn’t just the big tech companies - you know, the ones that Elizabeth Warren wants to break up - that have a presence at SXSW. (Though they’re there, often taking over buildings and restaurants to promote their wares and services. It seems like every place in town has been booked by somebody, and that every rooftop had a group playing and singing and adding to the remarkable SXSW aura.) Walmart was there, positioning itself as a tech company, and H-E-B catered an extraordinary dinner at a local hotel.

It has nothing to do with retailing, but while hanging out there I ended up in a conversation with a venture capitalist who told me about a business his firm had invested in that had proven enormously successful. What they’ve done is come up with a chip that is roughly half the size of your fingernail, that goes into a device that, when a person is injured on the battlefield. goes behind their ear … and instantly provides a readout on all their bodily functions. The doctor/medic knows who to treat first and exactly how to treat him or her. Just imagine the applicability on the battlefield, or for EMTs or in emergency rooms.

This is really world-changing technology, and that’s the thing about SXSW. There were ton of famous folks there from a variety of worlds, but I couldn’t shake the feeling that it was the people having conversations in this bar or that cafe who were really going to change the world. I find that heartening. I’m neither young and smart enough nor rich enough to change the world - the best I can do is write a clever sentence - but I’m happy just to be exposed to what these folks are doing and thinking and imagining … because everybody is thinking about possibilities and nobody is considering the possibility of limits.

I heartily recommend it. It is good for the mind, and good for the soul.

That’s what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: March 14, 2019

by Kevin Coupe

I love a story that makes me hungry.

Which is what happened when I read the Chicago Tribune piece about how Kroger-owned Mariano’s is teaming up with a barbecue chain with the delicious name of Pork & Mindy’s, and will open mini restaurants inside 28 Mariano’s supermarkets.

According to the story, “Co-founded by Jeff Mauro, host of The Food Network’s ‘Sandwich King’ and co-host of ‘The Kitchen,’ the pig-focused eatery currently has six locations in Chicago, Denver and Minneapolis.

“Mauro said he is eager to bring his smoked meats to new audiences, while Mariano’s will find new customers in the celebrity chef’s fan base.”

The story says that “Pork & Mindy’s will operate in a 200-square-foot branded space near the front of each store, where it will staff a counter serving a half dozen of its signature ‘sangwiches’ and other menu items such as ‘tottys,’ which are tater tots piled with meats and garnishes. It will also feature a case of grab-and-go hot foods exclusive to Mariano’s, including bacon-wrapped spare ribs, smoked honey mustard meatloaf and Peruvian-style rotisserie chicken.”

The Tribune points out that Mariano’s “already features stalls serving up gelato and wood-fired pizza and operates sit-down sushi bars, a ‘groceraunt’ model that encourages customers to stay and eat as well as shop.”

Good for Mariano’s. Especially in this age when competition comes from so many places, the most Eye-Opening way for bricks-and-mortar stores to resonate with shoppers is to have food that tastes and smells great.

And few things smell as wonderful as barbecue.

Published on: March 14, 2019

Business Insider has a story about how, when Walmart US CEO Greg Foran “asked workers to email him their biggest complaints,” the most common response was about “Walmart's removal of toilet-seat covers from restrooms.”

"Small thing, but really important," Foran says. "In the interest of saving money, we'd taken those things out.”

The story noes that in response to his email, asking people to tell him where the company "cut muscle instead of fat,” Foran got some 2,700 responses.

At the time, the story notes, Foran “was trying to execute a turnaround following two years of quarterly same-store-sales declines.” But he found that “returning the toilet-seat covers and fixing other ‘hygiene factors’ were vital to getting employees involved in the turnaround plan.”

Having done this, he says, employees started to buy into his turnaround plan: “These investments gave workers ‘a reason to believe,’ which is critical when you're trying to motivate a workforce of 1.2 million people,” he says.

Published on: March 14, 2019

The Associated Press reports that “Amazon has removed books from its website that promoted ‘cures’ for autism, the latest major company to try to limit the amount of misinformation related to autism and the bogus notion that it's caused by vaccines.”

Facebook, the story notes, “announced it would hide groups that spread misinformation about vaccines causing autism from search results. It also plans to reject similar ads.”

The AP points out that “the Center for Disease Control and Prevention says there is no cure for autism spectrum disorder, only medications that can help some function better. It also says there is no link between vaccines and autism.”

Published on: March 14, 2019

The Wall Street Journal reports that Sears Holdings, which used to own Sears, has gone to court to demand the repayment of $57.5 million from Eddie Lampert’s hedge fund - the money, it says, represents “credit card and cash proceeds from sales made at stores after the closing of the sale to Mr. Lampert, as well as remaining cash in bank accounts and a portion of February rent paid.”

Lampert’s ESL Investments acquired 425 Sears and Kmart stores last month for $5.2 billion, positioning the purchase as the company’s only chance for survival.

According to the story, “The request from old Sears comes days after Mr. Lampert’s new Sears, known as Transform Holdco LLC, made public the dispute between the two companies and called for a mediator to step in. The new Sears says old Sears has breached the asset purchase agreement by intentionally delaying payments to vendors and shortchanging the new owner on promised inventory.”

The new company says that it is willing to go to a mediator to work out the dispute, but the old company says that the “call for mediation to settle disputes is just an attempt to add further distractions to the process, and will delay the filing of a chapter 11 plan … Without the payment, the old Sears said it will be unable to pay lawyers and advisers - which cost millions of dollars - and added that withholding the money ‘is jeopardizing the debtors’ ability to timely file a chapter 11 plan withholding these funds’.”

Published on: March 14, 2019

The Los Angeles Times reports that an Oakland, California, jury has ruled that Johnson & Johnson “must pay $29 million to a dying California woman who blamed asbestos-tainted talc for causing her cancer.”

The jury said that J&J’s baby ;powder was responsible for Teresa Leavitt’s mesothelioma, which is “a cancer linked to asbestos exposure,” and that the company should’ve warned Leavitt “that its baby powder was tainted with the carcinogen.”

It is just the latest talc-related loss for J&J: “The verdict is J&J’s seventh trial loss over claims it hid the health risks of its baby powder for 50 years. It’s the company’s first defeat since a Missouri jury ordered it last year to pay $4.69 billion to 22 women who blamed their cancer on the product.”

And the situation isn’t likely to get better - the Times points out that “J&J still faces more than 13,000 lawsuits.”

Published on: March 14, 2019

The New York Times reports that the US Food and Drug Administration (FDA) has “moved to restrict sales of flavored e-cigarettes to try to reduce the soaring rate of teenage vaping.

“The agency issued a proposal requiring that stores sequester flavored e-cigarettes to areas off limits to anyone under age 18. Retailers, including convenience stores and gas stations, will be expected to verify the age of their customers … the proposal issued on Wednesday outlines details for how retailers must wall off the areas where the products can be sold. For stores that are open to consumers of all ages, the guidelines call for a physically separated room, a spokesman said, adding that stores cannot simply hang a curtain to create a space where flavored e-cigarettes could be sold.”

Not everybody is in favor of the new proposals.

“Retailers, including convenience store and gas station owners, are on Capitol Hill this week, lobbying against the F.D.A.’s proposals. Some have threatened to fight the restrictions in court,” the Times writes. “Lyle Beckwith, a senior vice president for the National Association of Convenience Stores representing thousands of retailers, said the group did not believe the F.D.A. had the authority to impose the new requirements.”

In addition, “Conservative groups and vaping trade associations also have come out in opposition, saying that the agency’s efforts to regulate the e-cigarette industry amount to government overreach.”

Published on: March 14, 2019

The Financial Times has a story about gene editing (GE), described as “the biggest technical advance in bioscience since the discovery of ‘recombinant DNA’ technology - artificially mixing genetic material - in 1973.” It isn’t the same as genetic modification, but researchers are concerned that regulators will equate the two, which could slow down the advances that they feel GE can provide.

An excerpt:

“Proponents of gene editing hope it can avoid the criticism and regulatory scrutiny that slowed the introduction of GM, because it usually alters existing genes rather than adding foreign DNA to the plant. In the US and Canada, the initial response of authorities has been that gene-edited crops will not fall under the regulatory regime of genetically modified organisms (GMOs) but the EU is taking a different view.”

You can read the entire story here.

Published on: March 14, 2019

• Bloomberg reports that Walmart is coming out with a competitor to the iPad, with plans “to introduce an inexpensive, kid-friendly tablet computer under its ONN store brand, part of a broader redesign of its electronics department.”

No word on what the device, made by a Chinese supplier and running on Google’s Android operating system, will cost.

According to the story, “After spending last year overhauling its apparel offering, Walmart will make electronics and home goods a focus this year, according to presentations given by senior management at a recent meeting of the company’s suppliers.” At the same time, “Walmart’s device could bring some life to the sluggish tablet market, which has been declining for several years. Tablet users don’t buy new ones at the same pace as they replace smartphones, which have also grown in size and capacity, reducing the need for a larger device.”

Published on: March 14, 2019

• Kroger said yesterday that it has completed the sale of its You Technology digital coupon and digital rebate publishing platform to Inmar, for a total of $565 million.

Part of the deal requires Inmar to sign a long-term agreement to provide digital coupon services to Kroger.

The announcement says that “YouTech's cloud-based retail platform bridges the gap between online engagement with product manufacturers and in-store purchases. Together, Inmar and YouTech will bring innovation and new products to market faster to meet the evolving needs of CPGs and retailers, no matter the size, and to better compete in this rapidly evolving and competitive space.”

Published on: March 14, 2019

Regarding Sen. Elizabeth Warren’s call to break up technology companies, including Amazon, MNB reader Jim Huey wrote:

I was surprised you only posted the emails that were strongly against Elizabeth Warren, but maybe there weren’t any supporting her? I am quite conservative politically, but I do share her concerns about the “little guy” being able to compete. I would argue however, that it is government regulation that has contributed greatly to large corporations.

We as a society increasingly want our companies to operate safely and treat all employees fairly (which are good things)so we have stood by (and even applauded) as government has passed increasingly stronger laws to mandate these things. Unfortunately there are many examples of these laws contributing to the rise of large corporations. The catalytic converter in the auto industry is one of many examples. I would argue for societal pressure being a much better agent for corporate change, though I recognize that this happens much slower and therefore leaves many bodies in its wake. Although I disagree with her politically I do not believe Senator Warren is stupid. She is likely well aware that her extreme measures have little chance of passing, and may just be trying to spur society and corporations in the right direction for fear of her proposals coming to pass.



On another subject, from an MNB reader:

I know you commented earlier this week that zero-waste establishments aren’t likely to become a major trend but I’d like to disagree slightly. From Amazon pushing SIOC (ship in own container) to establishments like Nada and Trader Joe’s,

I think it will become a trend as consumers become more conscientious of their consumption and waste. It has long made me crazy that some grocery stores sell bell peppers, string beans, and any manner of produce plastic-wrapped to a Styrofoam tray when both plastic wrap and Styrofoam are broadly unrecyclable by US facilities.

My hope is that a shift in consumer preference will happen organically as conversation on this topic increases and as companies become more transparent about the components contributing to items’ costs: naked green beans are clearly cheaper than those with added packaging (Aldi’s refusal to spend on merchandising in favor of keeping low costs is a great example). I am the person who brings reusable bags and takes every opportunity to give establishments feedback that I’d like to see them use less packaging/paper straws/not offer plastic bags unless requested but that’s because I grew up with parents who brought it to my attention: I think that people can and will change their habits when these things are brought to their attention AND mechanisms and systems are put in place to ease the transition, I’m not idealistic enough to think it won’t take both.