business news in context, analysis with attitude

Published on: June 6, 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.

I recorded this week’s FaceTime video from a bridge overlooking I-95, on the outskirts of Stamford, Connecticut. A hundred or so yards away, you could see another bridge, which seemed cut in half, very much a bridge to nowhere … and in that bridge, there’s a good business lesson.

Some context. Next to that bridge to nowhere is another bridge that carries on in the Boston Post Road. In what now seems to be the great American tradition, that bridge is in terrible shape. It needs to be replaced, before it falls down on its own.

The people in charge of fixing such things had a choice. Replace it the usual way, and create traffic problems that could last months or maybe years. (We all are familiar with those road repair projects that never seem to end.) That seemed like a lousy alternative, considering that the traffic on this stretch of I-95 is generally awful to begin with.

Or, they could take another approach - build a replacement bridge next to the road, and then close everything down for two successive weekends to dismantle the old bridge and lift the new one into place using hydraulics.

That’s the approach they chose - two weekends of potential nightmares for people traveling I-95 and the streets of surrounding towns. But then, if all goes well, it’ll be over.

My friend Tom Furphy often has said, here on MNB and elsewhere, that almost every business that wants to compete these days has to endure pain - financial, infrastructural and often cultural - if they want to keep up. That’s just the way it is. But, Tom says, it is far better to move fast and endure short term pain than to drag it out … if you take the latter approach, it ends up being more painful, and when it’s over, you find out it really isn’t, because the competition moved forward, too, and if they moved faster, you may be even further behind.

There’s very little about the way Connecticut’s infrastructure works in which I normally might be able to find positive examples or metaphors. But in that bridge to nowhere, which shortly will be a bridge to somewhere, there is one - the argument that it is better to fast and aggressive and nimble than to be caught in slow and heavy traffic that never seems to get anywhere.

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

Published on: June 6, 2019

by Kevin Coupe

I was just reading a Fast Company piece about how the movie theater business is fighting back against the home viewing trend - driven by companies such as Amazon and Netflix that are spending millions of dollars on proprietary content that don’t require you to leave the house - by offering increasingly high quality experiences that make it worth getting off the couch. And, to a great extent, the revival is being driven by smaller, independent companies.

“In the age of streaming and on-demand and bit-torrenting and hyper-speed release cycles and home theaters and even apparently, 1%-ers getting Endgame delivered right to their in-home Imaxes or whatever, there’s a school of thought that where you see a movie doesn’t matter,” the story says. “But the ‘old-fashioned’ way of paying money to sit in a windowless room with a bunch of strangers hasn’t diminished at all. In fact, it’s flourishing and the options are growing.” With strong and differentiated food and beverage available to audiences, movie theaters are being aggressive in unexpected ways and in unexpected places.

You can read the story here … and it is instructive and Eye-Opening.

I had just finished reading the piece when I was chatting with Mrs. Content Guy about maybe going to the movies this weekend to see Late Night, the new Emma Thompson-Mindy Kaling comedy. She agreed, but then said, “I’d love to go to one of those theaters I’ve been hearing about where I can get a good glass of wine to enjoy while I’m watching the movie.”

Hmmm. I remember a time when a decent movie and my company would be enough.

Talk about an Eye-Opener.

Published on: June 6, 2019

The Washington Post reports this morning that Walmart executives and Sen. Bernie Sanders (I-Vermont), who is running for the 2020 Democratic presidential nomination, found common ground yesterday - that America needs a higher minimum wage.

They did not, however, agree on how much higher. And not on much else.

Walmart CEO Doug McMillon said yesterday at Walmart’s annual shareholders meeting that Congress should raise the $7.25/hour federal minimum wage, saying that it is “lagging behind” Walmart’s national minimum of $11/hour. “It’s clear by our actions and those of other companies that the federal minimum wage is . . . too low,” McMillon said. “It’s time for Congress to put a thoughtful plan in place to increase the minimum wage.”

Sanders, who was invited to the meeting by Walmart employees hoping to advance a proposal that would give them a seat on Walmart’s board, argued that Walmart ought to raise its minimum wage of $15/hour, which he said already is being paid by the likes of Costco and Amazon.

“Despite the incredible wealth of its owner, Walmart pays many of its employees starvation wages,” Sanders said. “Surely Walmart can afford to pay its employees a living wage of at least $15 an hour.”

The Post writes that “Sanders has long argued that the nation’s largest private employer should be doing more for its 1.5 million U.S. workers. Last fall, he introduced the Stop Walmart Act, which would prohibit corporations from buying back their own stock — which drives up share prices and ultimately benefits shareholders — unless they pay workers at least $15 an hour, offer seven days of paid sick leave and limit executive pay.”

Published on: June 6, 2019

Reuters reports that Amazon now is saying that it will have a new kind of delivery drone in the air within months, able to get packages to customers within 30 minutes.

Jeff Wilke CEO of Amazon’s consumer business, told a technology conference that “the new drone takes off and lands vertically like a helicopter, is more stable than prior models and can spot moving objects better than humans can, making it safe.”

No word yet on where Amazon will begin using the drones to make deliveries.

Some context from the Reuters story:

“For years, the world’s largest online retailer has promised that packages would be landing on shoppers’ doorsteps via these small aircraft, but hype around the service has long outpaced reality. The company has worked to ensure that hard-to-see wires would not trip up its vehicles, for instance, and it has faced tough regulations limiting commercial flights, particularly in the United States.

“The company’s announcement indicates its ambitions have hardly shrunk. Wilke said Amazon has been working to build fully electric drones. These can fly up to 15 miles (24 km), and Amazon is adding facilities closer to urban areas. They also can carry goods that weigh under 5 pounds (2.3 kg), which represent the majority of the items it sells.”

Published on: June 6, 2019

The Los Angeles Times has a story about how the Trump administration is proposing a new approach to GMOs that “would exempt many new genetically engineered crops from regulation by the U.S. Department of Agriculture under a broad overhaul of biotechnology rules announced on Wednesday.”

Here’s how the Times fames the changes, noting that it is a diametrically opposite approach from that taken by the Obama administration:

“The overhaul, which the department said would cut the cost of developing genetically engineered plants, would exempt crops with traits ‘similar in kind’ to modifications that could be produced through traditional breeding techniques. Developers would be allowed to make a ‘self-determination’ that their products are exempt from regulation.
The administration argues the approach will allow regulators to focus on ‘increasingly complex products which, in turn, may pose new types of risks.’

“The USDA estimates the proposal would save developers an average of $3.6 million for each new genetically engineered crop, if the product isn’t also regulated by the Food and Drug Administration or Environmental Protection Agency. If another government agency also regulates the plant, the average savings would drop to $730,000.”

The goal, according to Greg Ibach, under secretary of agriculture for marketing and regulatory programs, is to “give farmers more choices in the field and consumers more choices at the grocery store.”

Published on: June 6, 2019

The Lakeland Ledger reports that Publix Super Markets is integrating a new mobile payment system into its smartphone app, though it is not providing much in the way of additional information about the rollout plans.

“By integrating a mobile pay solution within the Publix app, we can offer a way for our customers to plan, shop, save and pay with ease,” Publix spokesman Brian West tells the Ledger. “Mobile payment through the Publix app on iOS (Apple devices) is currently being rolled out in phases throughout the company. Additionally, we plan to expand this service to Android devices.”

West says that Publix has been testing Apple Pay in some of its Virginia stores, but did not say what system would be used throughout the chain nor how long it would take to have it up and running in all of its 1,218 stores.

Published on: June 6, 2019

It is a good time to be a paid lobbyist in Washington, DC.

The New York Times reports that “faced with the growing possibility of antitrust actions and legislation to curb their power, four of the biggest technology companies are amassing an army of lobbyists as they prepare for what could be an epic fight over their futures.” The four companies - Amazon, Apple, Facebook and Google — “have rapidly built themselves into some of the largest players in the influence and access industry as they confront threats from the Trump administration and both parties on Capitol Hill.”

The four companies doubled their spending on lobbying efforts to $55 million last year, compared to the year before, and the spend rate in 2019 seems to be even higher, which means that they will be spending as much - or more - than “long-established lobbying powerhouses like the defense, automobile and banking industries.”

The story points out that “Facebook and Google are dogged by concerns over their handling of consumer data, harmful content and misinformation. Amazon’s rapid expansion has been met with unease over labor conditions and the company’s effect on small businesses. Apple’s control over its app store makes it hard for new apps to get discovered, some rivals say.

“Earlier this week, the threat of government action became more real, driving down their stock prices. The House Judiciary Committee announced a broad antitrust investigation into big tech. And the two top federal antitrust agencies agreed to divide oversight over Apple, Amazon, Facebook and Google as they explore whether the companies have abused their market power to harm competition and consumers.”

The Times writes that lobbying efforts take many forms, “including calls on members of Congress, advertising, funding of think-tank research and efforts to get the attention of President Trump, whose on-again, off-again streak of economic populism is of particular concern to the big companies. Last month, the industry lobbying group, the Internet Association, which represents Amazon, Facebook and Google, awarded its Internet Freedom Award to Ivanka Trump, the president’s daughter and White House senior adviser.”

To get a sense of the extent of the efforts on both sides of the argument, it makes sense to read the story.

In its story, Reuters notes that some tech executives are going on the record as welcoming government oversight.

Jeff Wilke, CEO of Amazon’s consumer business, said, “Substantial entities in the economy deserve scrutiny, and our job is to build the kind of company that passes that scrutiny.”

And Apple CEO Tim Cook has said that “with size, I think scrutiny is fair. I think we should be scrutinized … I don’t think anybody reasonable is gonna come to the conclusion that Apple’s a monopoly.”

Published on: June 6, 2019

• Yahoo Finance has an interview with Walmart's U.S. president and CEO Greg Foran in which he says that the company’s embrace of online grocery shopping, pickup and delivery means that “we're transforming ourselves from being not just a mass merchant, but to also being a personal shopper … "[It's] a real skill to be able to do this, but as you develop the skills to become a personal shopper, what happens is you create a halo effect on the rest of your business because things have to improve.”

Published on: June 6, 2019

• Reuters reports on a new Amazon innovation - “StyleSnap”, which is described as “a feature on its smartphone app that lets shoppers upload a picture of an outfit they like and get recommendations for similar items to buy … When providing recommendations, StyleSnap considers factors such as the brand, price range and customer reviews, the company said in a blog post.”

Published on: June 6, 2019

• GeekWire reports that “Starbucks has struck a first-of-its-kind clean energy deal that will generate enough power to run 3,000 of its stores by 2021. To pull it off, the coffee giant worked with green energy marketplace LevelTen Energy to purchase stakes in two solar and one wind project across North Carolina, Oklahoma and Texas.”

Essentially, Starbucks is investing in a portfolio of clean energy projects that has been specifically designed to attract multiple businesses looking to make such investments but minimize any risk. The story says that “LevelTen’s platform aims to make it easier for corporate buyers to shop around for clean energy projects. For Starbucks, spreading cash across several projects reduces the overall risk by diversifying a portfolio, much like any other investment. The added peace of mind could attract more companies to directly purchase renewable energy.”

Published on: June 6, 2019

• Casey’s General Stores announced that it has named Darren Rebelez, former president of IHOP and before that an executive with 7Eleven, as its new president and CEO, succeeding Terry Handley, who is retiring.

Published on: June 6, 2019

• The St. Louis Business Journal reports on how Dierbergs has begun selling products containing cannabidiol, or CBD - the non-psychoactive compound in cannabis - at all 25 of its grocery stores.

“Customers were asking for CBD Oil,” Ron Edelen, Dierbergs' nonfoods category manager, said in a statement. “The interest was significant enough that we felt it was time to bring the product in. Now we hear from customers who appreciate its availability in our stores.”

According to the story, “Dierbergs began a rollout of the CBD products this spring, and its offerings now include leading national brands such as Charlotte’s Web, Plus CBD Oil, RE Botanicals and Sagely Naturals. The CBD products include sprays, drops, capsules and softgels.

“Dierbergs' shelves also offer hemp-derived CBD oil in balms, creams and other health-and-beauty aids, the grocer said. The company also stocks pet-friendly CBD products, which it says ‘is increasingly prescribed by veterinarians for the products’ purported calming effects on cats and dogs’.”

Published on: June 6, 2019

Yesterday we took note of a Reuters report that Amazon will “open pop-up shops in Britain to give more than 100 small online businesses an opportunity to sell on the high street for the first time. The first of the 10 stores, which are branded ‘Clicks and Mortar’ and will sell homeware, health and beauty, food and drink and electronics, opens in Manchester, north England, on Monday.” The initiative comes as British “high street” shopping centers have struggled in recent years, hit by store closures and diminished consumer traffic that is the result of changing shopper preferences.

I commented, in part:

At a time when Amazon is under increasing regulatory and political pressure, it makes a lot of sense for it to invest in ways to help revive bricks-and-mortar shopping centers as well as in small businesses with which it might otherwise be competing. It may cost some money, but it probably is a rounding error; after all, Amazon CEO Jeff Bezos just spent $80 million on three NYC apartments, so investing in initiatives that protect Amazon’s long-term interests is a no-brainer.

MNB reader  Bill Kadlec responded:

I think we're seeing evidence of Amazon doing what they have been doing all along. They invest "research" money in a concept. It's Bezos's "always be innovating". Maybe 1 in 10 actually sees the light of day. But, they go into each with clearly defined objectives and make sure they measure each research effort that gives them highly informed results with which to make decisions. The difference now is, more of their experiments are in the public eye than previously because they've ventured out into the physical store space.

They were a primary catalyst in the current changed consumer preferences that made shopping malls ghost towns. Now, they are being primary catalysts in testing, measuring and pursuing strategies that support and reflect those same preferences. Their methodical approach is almost certain to bear fruit.

Brilliant but, ultimately, more of what made them the monster they are.

I’ve always said that Amazon can be seen either as the evil empire or the rebel alliance … it all depends on where you’re standing.



On another subject, from another reader:

Regarding the article - FTD Files For Bankruptcy Protection - it reminded me of a particularly bad experience with FTD online.  I had ordered flowers at least a week in advance for my wife for Valentine’s Day, to be delivered to her office at work.  Females tend to like receiving flowers & gifts in front of all their working friends.  Valentine’s Day arrived and, while the other ladies in her office received big bouquets of delivered flowers, nothing came for my wife.  You can only imagine what happened then.  I received an email from FTD late in the afternoon letting me know that they would not be able to deliver the flowers to my wife, and were cheerfully refunding my money.  L 
I had to write back to FTD, of course it likely went nowhere.  Really!!??  I mean, it’s not like Valentine’s Day snuck up on them.  This is one of their biggest days of the year for flower delivery.  Their advertisements are all about saying it with flowers.  What did they just say to me?  FTD waited until late in the day to let me know that my wife wouldn’t be getting any flowers!  I was left trying to explain to my wife what happened and apologizing to her for their mistake.  There really is no way to clean up that mess.  Fortunately, I did have the email from FTD to show her – which didn’t help a lot.  Of course, we went to dinner that evening and everything, but something like this is difficult to recover from.



Our story yesterday about La Croix’s troubles prompted several emails.

One MNB reader wrote:

What goes around…comes around.  Couldn’t be a better scripted ending to La Croix.  Nick and Joe (company owners) are now reaping exactly what they deserve.   Not quite in the league of “Fast Eddie” but not for a lack of trying.

And from another:

I am the weirdo that only buys the plain version. Early on a 12 pack was about $3.99. Over time that escalated to $5.99. For. Plain. Carbonated. Water.

Now there are a myriad of options (private label, brands) selling for $3.99 or less.
 
Hard to spend the extra $2 for no point of difference. IMO.



And finally, regarding yesterday’s Eye-Opener about the unexpected defeat of heavyweight champion Anthony Joshua by Andy Ruiz Jr., MNB reader Chris Weisert
wrote:

Not a single Rocky mention?

Sorry. It just seemed so obvious that I decided - uncharacteristically - not to make the movie reference.