business news in context, analysis with attitude

Published on: August 5, 2019

by Kevin Coupe

A New York Times story over the weekend about director Ron Howard and his business partner, Brian Grazer, offered some interesting lessons about surviving in a rapidly changing environment.

Howard and Grazer, through their Imagine Entertainment, have been two of the most successful producers in Hollywood over the past few decades, with a wide range of movies and television shows to their credit and making a ton of money in the process in the traditional studio system.

“Now Mr. Howard and Mr. Grazer have recalibrated yet again,” the Times writes. “Imagine has quietly placed itself at the center of the streaming revolution … raising its own funding and aggressively building new content assembly lines: documentaries, preschool television shows, multicultural low-budget films, podcasts, branded entertainment, animation.”

“Instead of narrowing our focus to service a particular need of a particular company, which felt creatively limiting, we took a risk and moved toward vastly more independence,” Howard tells the Times. “It’s us recognizing that this particular era in media represents an incredible opportunity.”

Imagine has gone on a hiring spree of sorts, staffing up so it can provide the diversity of programming that it believes will drive its future. And, of course, it helps that there are so many places these days for it to sell its wares - instead of just a few movie studios and broadcast networks, there are companies like Amazon, Netflix, Apple, Disney and Hulu - to just name a few - willing to spend money on content.

Fun piece and instructive, and you can read it here … it is an Eye-Opener.

Published on: August 5, 2019

Reuters has a story about how Saturday’s mass shooting at an El Paso, Texas, Walmart was actually the second in days in one of its stores the first was at a Walmart in Southaven, Mississippi.

Unlike the El Paso shooting, which appears to have been done by what is being described as a white nationalist domestic terrorist, the Mississippi shooting was done by “a disgruntled colleague allegedly killed two co-workers and injured a police officer.”

But, Reuters says, in that case “Walmart's mandatory ‘active shooter’ program may have helped save lives,” because employees knew what to do and acted quickly.

According to the story, “Walmart employees complete an active shooter training program during orientation and afterwards on computers four times per year.
That level of training is believed to be unique in the retail industry … The training had been required once per year but became quarterly in 2017, the same year separate shooters killed 58 people at a music festival in Las Vegas and 26 people at a church in Sutherland Springs, Texas.”

However, at this time “it is not yet clear whether the mandatory active-shooter training completed by all Walmart employees helped save lives in El Paso.”

Reports now say that the El Paso attack resulted in the deaths of at least 20 people, with another 26 injured. Just hours later, there was another mass shooting - in Dayton, Ohio, where a man wearing body armor shot and killed nine people, including his own sister.

Published on: August 5, 2019

The New Yorker has a story entitled “The Last Robot-Proof Job in America?” that looks at a new tech startup emerging at the 200-year-old Fulton Fish Market in New York City that “allows customers in the rest of the country, both restaurants and individuals, to buy from the market, too, cutting out a chain of regional seafood dealers. The fish is shipped fresh, rather than frozen, thanks to an Amazon-esque warehousing-and-logistics system.”

CEO Mike Spindler tells the magazine: “I can get a fish to Warren Buffett in Omaha, Nebraska, that’s as fresh as if he’d walked down to the pier and bought it that morning.” (Not that there are many piers in Omaha.)

But, The New Yorker writes, there is one thing “that the sophisticated logistics system cannot do: pick out a fish. If Warren Buffett orders a red snapper, the company needs to insure that his fish is fresh, fairly priced, and actually an American red snapper—and not some other, day-old red fish that a vender is trying to pass off.”

And go figure - they have an actual person to do that.

You can read the story of that person here.

And … you can check out the excellent FultonFishMarket.com site here.

Published on: August 5, 2019

Fascinating story in the New York Times over the weekend about “the surge in drug-resistant infections” that the pieces describes as “one of the world’s most ominous health threats, and public health authorities say one of the biggest causes is farmers who dose millions of pigs, cows and chickens with antibiotics to keep them healthy — sometimes in crowded conditions before slaughter.”

These drug-resistant infections, the Times writes, “are spreading to people, jeopardizing the effectiveness of drugs that have provided quick cures for a vast range of ailments and helped lengthen human lives over much of the past century.”

You’d think that this spread would mean that federal investigators and regulators would be working overtime in the field to examine the practices at these farms and the use of antibiotics in animals.

You’d think.

But, the Times writes, “public health investigators at times have been unable to obtain even the most basic information about practices on farms. Livestock industry executives sit on federal Agriculture Department advisory committees, pour money into political campaigns and have had a seat at the table in drafting regulations for the industry, helping to ensure that access to farms is generally at the owners’ discretion.”

These executives, the story says, argue that “farmers needed protection against regulators and scientists who could unfairly harm their business by blaming it for a food-poisoning outbreak when the science was complex and salmonella endemic in livestock. The tension mirrors a broader distrust in agriculture and other business about the intention of federal regulators and other government overseers.”

You can read the entire story here.

Published on: August 5, 2019

The Wall Street Journal reports that as United Parcel Service (UPS) and FedEx introduce Sunday deliveries as a way of keeping up with an e-commerce economy in which customers want everything tomorrow and retailers want to keep them happy, it is possible that one group of folks who will not be happy is going to be their delivery drivers.

According to the story, “Drivers working that day will be paid at a much lower rate than those who drive during the week … FedEx and UPS, with some assistance from the U.S. Postal Service, will rely mostly on this lower-paid army of delivery drivers as the companies work to turn a profit. The bulk of deliveries will be residential, which are more costly than deliveries to businesses.”

The story goes on: “FedEx will deploy Sunday delivery through its Ground unit, which uses an independent-contractor model under which drivers tend to make less than the company’s Express drivers. UPS’s newest labor contract, enacted last year, created a two-tier wage system for drivers, and the company will mostly use the lower-paid workforce during the weekends.

“Lower-paid workers are vital to solving the puzzle of making money on weekend deliveries and helping shippers compete with Amazon.com Inc., which continues to promote speedy shipping times and often through its own delivery network.”

Published on: August 5, 2019

The Washington Post reports on a new culinary innovation: wine-infused water.

The story says that “wine water is a thing, and no, it’s not just watered-down wine. Wine water is water infused with the flavor from discarded grape skins used in winemaking. Purveyors claim it has the antioxidants of a glass of red wine, but fewer calories. None of them contain any alcohol.

“Yet, they try to mimic the flavor of wine, and even reference several varietals.” To varying degrees, these wine-infused waters offer the aroma of wine, but taste as if one has put ice cubes - lots of ice cubes - into a glass of wine.

According to the Post, the wine water is seen as having appeal to the growing percentage of the population that is called ”sobriety-curious.”

The Post writes, “Now that sober-curiosity is a thing, mocktails and grown-up alternatives to booze are becoming more and more necessary. No one wants to drink a boring club soda with lime when their friends are drinking wine or cocktails, so innovative beverages such as Seedlip have stepped up. Slot wine water into the same category — it’s a little funkier than that Martinelli’s sparkling grape juice served at the kids’ table on Thanksgiving, and much more grown-up for people who are choosing sobriety, or are pregnant.”

Published on: August 5, 2019

The Boston Globe reports that Spring Hill Dairy Farm, which has been identified as the source of tainted water that was sold under private labels at chains that included Whole Foods, CVS, Stop & Shop, Market Basket and Roche Brothers.

The story points out that “the water, which was found to have elevated levels of per- and polyfluoroalkyl chemicals, known as PFAs, led the state Department of Public Health to issue a health advisory earlier this month that warned pregnant women, nursing mothers, and infants not to drink or cook with the water.” PFAs have been linked to a variety of diseases, including kidney cancer and low-infant birth weights.

Harold Rogers, one of the owners of the company, reportedly send a note to customers in which he blamed the media and the regulatory environment: “The continued adverse media focusing on you, our customers, as well as fluctuations in regulations and levels among different states and the federal government, and more to come in the future, is of concern to our very small business … For these reasons, we didn’t want to cause you any more uncertainty or undue attention and shall close our business.”

Published on: August 5, 2019

The Wall Street Journal reports that D-I-Y retailer Lowe’s has informed thousands of store employees that “their jobs were being eliminated as the company outsourced tasks such as assembling barbecue grills and janitorial services.

According to the story, “Each of Lowe’s roughly 1,800 U.S. stores has several staff members doing these jobs. Laid off employees, including full-time staff with years of service, aren’t being paid severance. Instead they are being offered ‘transition pay’ totaling up to about two weeks for full-time workers, one employee said. All workers are able to reapply for open positions with the company, employees said, but aren’t guaranteed the same hourly pay.”

The Journal writes that “the move is a sign that new CEO Marvin Ellison plans to continue to cut costs aggressively to improve profits at the chain.”

Published on: August 5, 2019

• The Verge has a story about how Google, Apple and Amazon all have bowed “to pressure from the EU over the issue of humans reviewing recordings from their respective digital assistants.”

They’ve had different responses, though: “While Apple and Google paused human review, Amazon has decided to offer a clearer, more comprehensive opt-out setting to Alexa users.

“Amazon already offered a much clearer set of privacy policies than either Google or Apple — having set up a privacy portal after the last round of scandals over Alexa voice recordings revealed more than most realized. That portal now has updated language around what checking certain boxes will do.”


• Bloomberg reports that the Federal Trade Commission “is scrutinizing a deal Amazon.com Inc. made with Apple Inc. to sell iPhones directly on its e-commerce site,” which seems to be part of ramped-up regulatory interest in big tech companies.

The story says that the government probe was prompted by complaints from vendors who used to sell refurbished and older Apple products on Amazon. Once Amazon made the deal with Apple, it stopped those vendors from selling on the site.

While neither company has commented yet about the probe, Bloomberg points out that “in 2016, Apple filed a lawsuit against Amazon alleging that the online retailer was selling counterfeit Apple products on its web store.”

Published on: August 5, 2019

• Coindesk reports that Walmart “has applied for a cryptocurrency patent that bears some similarities to the Libra token proposed by Facebook in mid-June.

“In its application with the U.S. Patent and Trademark Office, Walmart touts the concept of a digital currency ‘tied to a regular currency’ – that is, what’s commonly known as a stablecoin … the filing suggests that the proposed coin could help provide finance for those with limited access to banking services – one of the major claims Facebook has made for Libra, most likely in an effort to appeal to the public (and regulators) over the token.”

Published on: August 5, 2019

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

• Saying that it wants to be at “the leading edge,” pushing the “boundaries of sustainability initiatives,” San Francisco International Airport (SFO) has announced that it is banning the sale of single-use plastic bottles on its premises.

The Hill reports that starting Aug. 20, tenants, “vendors and permittees will be prohibited from providing or selling ‘bottled water in containers that contain plastic or aseptic paper packaging, including in vending machines’ … Reusable water bottles, recyclable aluminum, glass and certified compostable water bottles can instead be provided or sold.”

The story says that “the ban will apply to purified water, mineral water, carbonated water and electrolyte-enhanced water but will exempt flavored water. Is it me, or has the whole anti-plastic thing begun to gather a certain amount of momentum?


• The New York Times reports that troubled specialty food retailer Dean & DeLuca “has defaulted on federally mandated payments to former employees and stalled payments to current employees in the United States,” following the closure of four of its stores in the US. In addition, the story says, there reportedly have been layoffs at corporate headquarters in Wichita, Kansas.

The US company reportedly has told at least some employees that it is no longer being funded by its parent, and that it has been unable to find a buyer for its US stores.

The Times notes that Dean & DeLuca’s parent company, Bangkok-based Pace Development, continues to say that everybody will be paid, and claim that it plans an aggressive store opening strategy in Asia and the Middle East.

However, the people not getting paid are not impressed, and some say they are planning class-action lawsuits.


• The New York Times reports that “Kayco, formally known as the Kenover Marketing Corporation, announced that it had reached an understanding with the Manischewitz Company to acquire its panoply of products. Those include Manischewitz’s matzos, still the nation’s best-selling brand by far, as well as other foods, and beloved labels like Rokeach and Mother’s.”

The deal does not include Manischewitz wine, which was sold to what is now Constellation Brands in 1987.

The Times notes that “since by some estimates the two companies make up more than 50 percent of the kosher market, the announcement was seen in the kosher world as the equivalent of General Motors acquiring Ford. In theory, it could raise questions about whether Kayco was becoming a monopoly and what that might mean for kosher food prices, already considerably higher than those of nonkosher equivalents.”

Published on: August 5, 2019

• Albertsons announced that Gineal Davidson, the company’s Intermountain Division Vice President of Marketing & Merchandising, to be the new president of its Portland division.

She succeeds Greg McNiff, who is leaving the company to become president of Stater Bros. in Southern California.

Published on: August 5, 2019

• The Telegraph reports on the opening of a new Museum of Weed in Los Angeles, “steered by the people behind the marijuana delivery service, Weedmaps. It will be a 30,000-square-feet space filled with interactive exhibits describing the story of ‘growers, stoners, and activists who expanded knowledge of the plant and kept the cannabis movement alive despite decades of government prohibition and propaganda’. It will have exhibits and areas highlighting the role played by marijuana in several eras, from the pre-prohibition period, to the ‘age of madness’, the counterculture revolution, the war on drugs and more.”

The Museum of Weed, appropriately enough, is about a mile and a half from the new Lowell Farms: A Cannabis Cafe, the first open-air cafe of its kind to open in Hollywood.

Published on: August 5, 2019

In this new Retail Tomorrow podcast, recorded at GMDC’s annual GM conference in Denver, we focus on the ways in which startups are working to disintermediate traditional retailers … how retailers can turn these innovations to their own advantage … why cultural resistance within companies can be the ultimate enemy of progress … and even brainstorm about a business model that could’ve made Toys R Us relevant again.

You can listen to the Retail Tomorrow podcast here, or on iTunes or GooglePlay.

The Retail Tomorrow podcast series is a production of GMDC, the Global Market Development Center.

Our guests:

• Patrick Fore, CEO and co-founder of Fleat.

• Sterling Hawkins, co-founder of the Center for Advancing Retail & Technology (CART).

The host: Kevin Coupe, MorningNewsBeat’s “ContentGuy.”

Pictured, left to right: Patrick Fore, Kevin Coupe, Sterling Hawkins

Published on: August 5, 2019

I’ve gotten some emails from Portland, Oregon-area MNB readers wondering if I am going to have one of those casual get-togethers that we've done here the past few years.

The answer is yes … let's get together Thursday night, August 8, at 5 pm, at Nel Centro, located at 1408 SW 6th Ave, in Portland. I'll plan on being there for a couple of hours, hopefully on the outside patio - and I hope that any MNB readers who'd like to stop by will do so.

Once again, I’m thrilled that our get-together will be sponsored by Portland State University’s Center for Retail Leadership.

Put it on your calendar.

Published on: August 5, 2019

We referenced a Star Tribune story the other day mentioning that “worldwide, Amazon has installed more than 200,000 robots.”

The story went on:

“Not everybody says this is a good thing: “Fear among workers is palpable. A survey by the Pew Research Center found that roughly half (48%) of respondents said the (robotics) advances have mostly hurt American workers; only 22% said they have generally helped.

“A fully automated shipping warehouse is at least a decade away, Amazon officials have said, but the company already is planning for a time when it will need fewer people to run its warehouses. Earlier this month, Amazon announced that it would set aside $700 million between now and 2025 to ‘upskill’ or retrain up to a third of its U.S. workforce — as many as 100,000 workers.”

Prompting MNB reader Dan Jones to write:

As I recall, MNB featured John Oliver's piece about the challenging work environment for Amazon workers in warehouses.  So the work is bad for humans, and augmenting warehouse work with robots is also bad.

Amazon cannot win in the press - but they keep winning customers with superior products and service.

First time in a while that I’ve been accused of being too mean to Amazon. Usually, I get the opposite.



Got the following email about our stories regarding worsening trucker shortages:

Your reference to Bloomberg’s article on the trucking industry - similar to the past several but, perhaps not 100% accurate or at the very least murky. C.H. Robinson is out with the opinion that trucking for the rest of this year will be softer than expected - and a potential drag on profits. Many factors - most of which are short to mid-term while the driver shortage is indeed a longer term concern.

From another reader:

Continuing the conversation today about the truck driver shortage, specifically the reader who said that we should be promoting it in the schools, it seems absurd to suggest that young people should be encouraged to devote their lives to the profession. My husband just got his CDL in order to load trucks for his company, but it is obvious to both of us that even if he decided to drive full-time that he couldn’t make a 30 year long career out of it. Why would anyone want to be promoting a dying career path to students in need? Drive for a year or two to make $70K and pay off some debt? Absolutely! We’ve read on MNB so many times about Uber or Walmart or Amazon investing tons of money on self-driving cars. It’s amazing to me how so many people look at those investments and don’t understand that self-driving trucks are going to be the first thing on the road once the technology is ready, and I’d be willing to bet that the technology is going to be ready sooner than a lot of people believe.

MNB reader John Rand wrote:

For background I retired a couple of  years ago, and fulfilled a long term desire to just knock around the country a little bit. Bought a class A Winnebago RV, and each of the last two years I have both avoided winter in New England and broadened my appreciation for our country, especially in the Southwest.  I have been traveling solo, and I like meeting people.

When you clock some long miles in a good size rig (mine is 28 feet)  you easily meet truckers if you want to. I have spent evenings and mornings in highway rest areas, in Walmart parking lots, in pullouts and truck stops. I have met single guys and gals, long haul and short haul, couples and team drivers, independents and corporate drivers.  It is an often over-looked slice of America and I make no claim to knowing everything about it but I will make an observation: this is a tough and underappreciated way to make a living.
 
Truckers work under a whole set of rules designed to improve safety, which compete heavily with the pressure to move faster, farther, and fulfill contracts. Truckers share the road with auto drivers who generally give them no courtesy and who seem utterly ignorant of the laws of physics. In most states truckers have very few easy options to pull off the road, take a break, get some rest (often mandated by regulation). Convenient roadside truck stops and rest areas are often few and far between, completely inadequate compared to the number of vehicles.
 
Not everyone is willing to take a job where you might have to wait hours for a bathroom, take a number and wait for a shower in a truck stop, sleep in a parking lot.  Few of us would want to push through rain and darkness, sleet and snow, over poorly maintained roads to avoid a penalty for a late delivery or to keep a contract for a load that has to be picked up by morning no matter what, or get penalized because some retailer scheduled you at the loading dock ten minutes ago and now you have to pay a late fine out of your pocket or perhaps risk losing your job as a company driver. And if you arrive early, where you do park for a few hours?
 
Sure, better pay would help, but the working conditions are a function of the fabled “infrastructure” of America – which is at least 30 or more years behind the conditions of today.  These folks live in a different, parallel world from everyone else, always moving, anonymous, hustling to make a living, usually  far from home and family and strangers everywhere they go to everyone but each other.
 
It’s not easy.  I am not surprised there aren’t enough drivers.



We took note the other day of a CNN report that Amazon will disable its entire Dash button network on August 31, ending a replenishment technology that it introduced in 2015. Earlier this year it has said it would stop issuing new buttons to consumers … Amazon had said that even though it was ending the Dash button program, believing that it made more sense to push consumers to replenish products via its Alexa voice assistant system, it would continue supporting the Dash buttons as long as people used them.

I commented:

This means one of two things. Either Amazon got impatient about moving people into voice-driven replenishment and decided to act precipitously, or people just weren’t using the buttons and it believes that ending the program wouldn’t raise any hackles. I suspect it was the latter.

I said it before and I’ll say it again: There’s absolutely nothing wrong with stepping away from a business model that, even though you’ve pretty much created it, has grown to be pretty much obsolete. In fact, that willingness to kill its young is an Amazon hallmark - it doesn’t allow itself to become so emotionally connected to anything that it cannot walk away at the right time.

Which is a pretty good business lesson.

One MNB reader responded:

While you may be correct I believe there is a much more practical business decision. It’s impossible to switch a consumer to different brands, generating advertising, or more importantly to Amazon their private label.

True enough. Didn’t think of that.