business news in context, analysis with attitude

Published on: May 13, 2020

KC considers one of the most profound and divisive left vs. right questions ... when you are setting the table, where do the forks and knives go?  Does it really matter?  And is this just a generational issue?

Published on: May 13, 2020

by Kevin Coupe

I don't know about you, but I can always use a little pick-me-up these days … so I was thrilled when an MNB reader sent me a link to this Facebook page, put up by the Shorecrest High School Drama Club in Shoreline, Washington, less than a dozen miles north of downtown Seattle.

Like all schools around the country, Shorecrest is closed these days, which put the kibosh on the drama group's plans to do "Les Miserables" as its spring production.

As someone who was a high school and college theater geek, I was jazzed to see that these marvelously talented kids decided that, to some degree, the show must go on … and if you have a heart, I think you'll find this bit of video utterly thrilling on lots of levels.

Enjoy.

"One Day More"

Tonight would have been opening night of SC Drama's "Les Miserables." We are grieving the loss of bringing our production to full fruition and sharing it with our wonderful audiences. Still, our bond and our work continue to bring us love and light in the midst of this time, and we are proud to share some of that with you. Here is "One Day More."

Posted by Shorecrest High School Drama on Thursday, 7 May 2020

Published on: May 13, 2020

Bloomberg reports that Amazon is promising that " the one- and two-day delivery times that shoppers have come to expect should gradually return in coming weeks as the online retailer catches up from a demand surge tied to the coronavirus outbreak."

The story says that "the company on Sunday lifted restrictions on the amount of inventory its suppliers can send to Amazon warehouses and is shortening delivery times - which had stretched for weeks for some products since the outbreak began - back to days."

According to the piece, "Quick delivery is central to Amazon’s customer promise, helping it attract more than 100 million people who pay monthly or yearly dues for Prime memberships. Prime members spend more on the site than non-Prime members, making it critical for Amazon to get its delivery times back to normal especially as retail stores begin reopening and shoppers have more options."

Published on: May 13, 2020

The Washington Post reports this morning that "U.S. consumers paid 4.3 percent more in April for meats, poultry, fish and eggs, 1.5 percent more for fruits and vegetables, and 2.9 percent more for cereals and bakery products, the Labor Department said.  Overall, consumers paid 2.6 percent more in April for groceries, the largest one-month jump since February 1974."

This increase, the Post writes, "came in a month when more than 20 million Americans lost their jobs, driving 1 in 5 households into food insecurity."

The  Food Research & Action Center attributes the inflated prices to two things:  "a shift in where consumers are purchasing their food, and supply chain disruptions due to covid-19 outbreaks in food production facilities as well as slowdowns related to social distancing and sheltering in place."

Published on: May 13, 2020

The New York Times reports on how changing consumer habits during the pandemic have had the greatest impact on the grocery sector.  An excerpt:

"There are few activities that have been upended more than grocery shopping, which had long been analog and resisted the world of online commerce. All that changed in a few short weeks, as people were told to stay home, without their need for food diminishing. According to several surveys, more than a third of all Americans have ordered groceries online for the first time over the last month, and people have spent more ordering groceries online each succeeding week of the crisis.

"The clear winner so far has been Instacart. It was not the biggest going into the crisis, but it has the advantage of working with several grocery chains rather than directly selling products on its own, unlike most of its competitors."

The story notes that "FreshDirect and Peapod have been relatively flat … despite being some of the most established names in the industry. FreshDirect, which is largely focused on New York, talked publicly about its difficulty finding healthy employees. Peapod, meanwhile, made ill-timed cutbacks right before the virus hit.

"The central battle now is most likely between Instacart and the biggest forces in online retailing, Amazon, Walmart and Target, all of which have been investing more heavily in grocery sales. Walmart had the biggest established presence, but it has grown more slowly than Amazon and Target."

Published on: May 13, 2020

The Wall Street Journal reports that Uber Technologies "is seeking to acquire Grubhub Inc. in a deal that would unite two of the biggest players in the cutthroat meal-delivery business at a time when the coronavirus pandemic has sparked a surge in demand for their services."

A deal would allow Uber to combine GrubHub with its Uber Eats delivery service.

The story says that Uber "in February approached Grubhub with an all-stock takeover offer and the companies have been in talks since then, people familiar with the matter said.

"Grubhub recently proposed that Uber pay 2.15 of its shares for each Grubhub share, which Uber rebuffed as too high, and now the two sides are discussing a lower price, some of the people said."

The Journal notes that "a combined company would control an estimated 55% of the third-party food-delivery market, with DoorDash number two at roughly 35%, according to analysts at Wedbush Securities. It would also have the most expansive footprint, combining Grubhub’s strength in large U.S. markets with Uber’s operations around the globe."

Published on: May 13, 2020

Random and illustrative stories about the global pandemic and recovery efforts, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the US, there have been 1,408,636 confirmed cases of the Covid-19 coronavirus, with 83,425 deaths and 296,746 reported recoveries.

Globally, there have been 4,358,304 coronavirus cases, 293,236 deaths and 1,611,734 reported recoveries.

•  The Associated Press reports on testimony delivered yesterday to the US Senate Senate Health, Education, Labor and Pensions Committee, Dr. Anthony S. Fauci, the nation's top infectious disease expert, warned against moving too quickly to open up the nation, arguing that this could result in extending the virus's impact and exacerbating the economic impact.

Fauci also argued that the death toll almost certainly is higher than being reported at this point, and refuted suggestions that coronavirus-related deaths are being overestimated.

•  Fox News reports that Kroger management, having decided to end its hourly "Hero Bonus" pay for employees on May 16, is in conversations with labor unions objecting the change.

The story notes that Kroger "announced the temporary bonus for its front-line workers in March as grocery stores saw a surge in demand for everyday items amid the pandemic."  Organized labor has started appealing to consumers to help it pressure Kroger to not pull back on the salary increases.

"In the coming months, we know that our associates’ needs will continue to evolve and change as our country recovers," a Kroger spokesperson told Fox News. "We continuously evaluate employee compensation and benefits packages. Our average hourly wage is $15 and with benefits factored in, like health care, the hourly wage is over $20."

Said it before and I'll say it again.  These jobs are no less essential, hazardous or stressful than they were three weeks ago, and retailers eliminating these pay bumps run the risk of appearing like they are cutting wages.  From the beginning, I've argued that bonuses would've been a better way to go - the money would've been the same, but the expectations might have been different.

•  Walmart announced yesterday that it "plans to provide another special cash bonus for all U.S. hourly associates to recognize them for their many contributions to communities across the country during this unprecedented time. This includes hourly associates in stores, clubs, supply chain and offices, drivers, and assistant managers in stores and clubs. The bonus will be $300 for full-time hourly associates and $150 for part-time hourly and temporary associates, and will add up to more than $390 million. Associates must be employed by the company as of June 5 to qualify, and it will pay out on June 25."

•  The Washington Post has a story about how the state of Nebraska, and the meatpacking plans operating there, have stopped providing numbers about coronavirus infections and related fatalities.

"In a change initiated last week," the Post writes, "Gov. Pete Ricketts (R) announced at a news conference that state health officials would no longer share figures about how many workers have been infected at each plant. The big companies weren’t sharing numbers either, creating a silence that leaves workers, their families and the rest of the public blind to the severity of the crisis at each plant."

The story notes that "around the United States, meatpacking plants have been associated with some of the worst outbreaks of the pandemic: Of the 30 counties in the States with the highest per capita prevalence of the coronavirus last week, 10 are home to major meatpacking plants.  Of those 30 counties, four are in Nebraska."

The Post reports that "Ricketts has said the numbers can be unreliable because some people who have tested positive have given misleading information about where they work. He recommended that local health departments withhold the case counts unless they get permission from the plants.

"The company officials declined to share numbers, citing privacy concerns and the fast-moving nature of the virus. They note that they are implementing worker protections at their plants.  But workers and advocates say that without knowing how many infections have occurred at a plant, it is impossible to know how effective any such precautions have been."

This is exactly the kind of transparency that will reassure employees and customers about the dependability and trustworthiness of these companies, and confirm for voters that government is looking out for their best interests.

•  GeekWire reports that "Amazon is developing a robot that would roll through grocery stores and distribution centers, using banks of ultraviolet light to kill viruses on surfaces … It’s part of a technological show-of-force from the company, seeking to demonstrate its efforts to battle COVID-19 in the face of criticism from employees and others."

•  CNN has a story about the one continent where the Covid-19 coronavirus has not made an appearance - Antarctica.

"The region had a close brush with Covid-19 when outbreaks hit the final cruise ships of the season, but the virus didn't reach its frozen shores," the story says.  "And, because it's currently descending into winter, when it's completely cut off, it should stay that way for now.

"Although there's no official native population here - unless you count the many penguins, whales, seals and albatrosses - around 5,000 people, mostly scientists and researchers, currently reside in its 80 or so bases."

CNN notes that some 78,500 tourists were expected to visit Antarctica during the current season, "stations began putting restrictions on tourist visits early in the year, as the virus began to spread around the world and the region was later put into lockdown, with all tourist visits canceled."

•  Reuters reports that American, Delta and United airlines managements have instructed "flight attendants not to force passengers to comply with their new policy requiring face coverings, just encourage them to do so."

But the policy is potentially confusing.  The airlines have empowered employees to not allow passengers to board planes if they are not wearing masks, but once the flight is underway, they cannot require passengers to keep them on.

Flight attendants and crews are encouraged to use their "de-escalation skills" when faced with such situations.

I'm not normally a confrontational person in such situations, but I'm not sure how calm I would be if I were flying, wearing  a mask, but were seated next to some moron not wearing  a mask and coughing.  That would be pretty distressing … and I can imagine that in some cases, it all could get pretty ugly.

•  From the New York Times:

"Even as health experts working with the Trump administration warned a Senate panel on Tuesday against reopening the country too quickly, the U.S. retail sector is beginning to get back to business. As some states allow a handful of businesses to reopen and other regions charge ahead full throttle, it is an experiment for bookstore owners and other retailers attempting to strike a balance between staying afloat and keeping workers and customers safe … Among retail businesses, bookstores, especially smaller independent stores, face particular challenges as they navigate reopening. Many indies occupy cramped spaces with warrens of bookshelves, and serve as community centers and cultural outposts as much as retail operations. Book lovers often come in to linger, browse and chat with the staff about what to read next, all behaviors that in a pandemic are potentially life-threatening."

Of course, the real problem for booksellers is that there happens to be an online company that is pretty accomplished at book selling.  But traditional bookstores do have the advantage of a highly committed and even evangelical customer base … though it can only depend on those folks for so long.  They still have to be competitive.

•  The New York Times reports that "in the most sweeping sign yet of the long-term impact of the coronavirus on American higher education, California State University, the nation’s largest four-year public university system, said on Tuesday that classes at its 23 campuses would be canceled for the fall semester, with instruction taking place almost exclusively online.

"The system is the first large American university to tell students they will not be returning to campus in the fall. Most of the nation’s colleges and universities have gone out of their way to say they intend to reopen, but they are also making backup plans for online classes."

•  The Broadway League announced yesterday that theaters in New York City will remain closed at least until Labor Day, and the Hollywood Reporter writes that some experts think that Broadway could remain essentially closed until early next year.

The 41 top-tier New York theaters went dark March 12, and were originally expected to open on June 7.

It isn't just New York.  The story says that "in what could turn out to be a harbinger of things to come for many of the country's stages, Minneapolis' Guthrie Theater, one of America's largest and most respected nonprofits, last week took the bold step of announcing that operations will resume with a compressed mini-season of just three productions running March-August 2021. That represents a massive reduction from the originally scheduled 11 shows, with a budget slashed from $31 million to $12.6 million. Those drastic measures make necessary allowances for the time required to build and rehearse productions, underscoring the complicated logistics for the theater sector of emerging from lockdown."

Broadway is an important economic engine for New York City, and so this tells us a lot about how the city - harder hit than almost any other place in the world - is going to manage recovery efforts.  (Other communities should pay attention, because NYC could end up being an leading indicator.)

•  FSR reports that Buffalo Wild Wings today is scheduled to "debut its first 'GO' concept in Atlanta, a restaurant specifically for to-go and delivery orders."

According to the story, "The 1,800-square-foot restaurant will have a walk-up counter, digital menu boards, and a small seating area with TVs to entertain customers while they wait for their order. The sports bar chain is seeking to create a frictionless experience, as well. Those who order ahead will be able to pick up their meal from a heated locker."

•  CNBC reports that "select venues at Universal Orlando Resort’s CityWalk will reopen Thursday.  The CityWalk shopping center will be open to the public from 4 p.m. to 10 p.m. daily, the company said Tuesday. Guests will be able to park for free and will be expected to adhere to guidelines from the Centers for Disease Control and Prevention when visiting the area.

"Face masks will be required to enter CityWalk, and there will be temperature checks at the gates. Universal has also asked that visitors abide by all social distancing markers and signage. Guests will be permitted to remove face masks while eating.

"The Universal Studios Store will be open, as well as a number of merchandise carts.  Other shopping venues include Airbrush and Hart & Huntington Tattoo Company.

Auntie Anne’s Pretzels, Bubba Gump Shrimp Co., Jimmy Buffett’s Margaritaville, Red Oven Pizza Bakery and Voodoo Doughnut will be available for food orders. Each restaurant will have a limited menu and limited seating available.

"Hollywood Drive-In Golf will also be open. Blue Man Group, all nightclubs and Universal Cinemark will remain closed."

•  The BBC reports that Twitter has informed staffers that they can continue to work from home "forever."

According to the story, "The decision came as the social media giant said its work-from-home measures during the lockdown had been a success.  But it also said it would allow workers to return to the office if they choose when it reopens … It has allowed employees to work from home since March and doesn't expect to reopen its offices before September.:"

Google and Facebook have both said that employees can keep working from home at least until 2021, while Amazon has said at least until October.  But what we have here is companies, especially tech companies with different mindsets, re-evaluating their bricks-and-mortar needs in ways that could have enormous impact on communities where they were building and/or operating offices.

What we have to think about is how these shifts may be reflected in other consumer behaviors, like how they shop.

•  REI sent an email to members and customers yesterday saying that it has begun opening its stores, "just in time to celebrate our 82nd anniversary."

The email says:

"In some places 'opening' will mean curbside service for orders placed online. In others, our doors will open for a limited number of customers. In every case, we’ll be taking precautions for the health and safety of our employees, customers and communities. We’ll have health and safety procedures in place for our store teams, and clear guidance for you on how to shop or do curbside pick-up. We’ll also be closely following guidance from national, state and local authorities to make sure we’re operating in compliance with any restrictions in your area.

"We have made significant progress in all of these areas over the last month, and we are ready to begin expanding services in many of our stores. Our hope and expectation is that more than half of our stores will be open for curbside pick-up in time for our Anniversary Sale, May 15–25, and a small number of stores will be open for in-store services as well … We’re doing our part to make the curbside and in-store experience as safe as possible for everyone, and we need your help. When you come into our stores, our employees will be wearing face coverings, and we’re going to ask that you wear one too. It’s a simple thing that we can all do right now to take care of one another and, if you forget yours, we’ll have disposable face coverings available."

•  The New York Times reports that "when Patagonia announced on March 13 that it was temporarily closing its 39 stores and e-commerce business in North America because of the coronavirus pandemic, it was one of the first major retailers to take such a drastic step.

"The company’s chief executive thought the situation would last about a month."

Now, the story says, " the retailer that aggressively moved to close before any government shutdowns were announced is being very cautious in deciding how to open up again … Patagonia does not anticipate opening any locations for in-store shopping until June at the earliest and it’s prepared to wait until the fall or even early winter. Even then, it may decide to limit operations to curbside pickup, which it plans to begin offering at 10 stores on May 20."

CEO Rose Marcario says, "We’re going to be cautious about the way we open up — we’re not going to necessarily follow what the state decrees are.  There are some areas that aren’t as hard hit, but I don’t think you can assume those places won’t see a surge in cases if people stop social-distancing.”

The Times  writes that Marcario "believes 'the shape of retail will change.'  People will be more reliant on e-commerce and 'the return to walk-in retail will be slow'."

The story goes on:  "Despite the steep business decline that Patagonia is facing, Ms. Marcario believes the brand will ultimately benefit as the pandemic encourages people, particularly younger generations, to 'buy things that last.' The crisis has, in some ways, reminded people 'of the value of wild and open spaces and clean air and clean water and if we can channel that to some good, all is not lost,' she said."

In other words, no matter what, true to its value proposition … which is all consumers really can ask of the companies with which they do business.

Published on: May 13, 2020

CNN reports that PepsiCo has announced "the launch of Snacks.com - a purveyor of its products such as Cheetos, Doritos and Lay's potato chips - as well as Pantryshop.com, which offers bundles of oatmeal, cereal and other options.

"The sites could offer a short-term fix for people who are having a hard time placing orders on major e-commerce sites like Amazon, or those who want a quick way to order a variety of products."

"We wanted to give the consumer another choice," says Gibu Thomas, PepsiCo's head of e-commerce, adding that "if people respond well to the new sites, it could help shape the company's retail strategy in the future."

Published on: May 13, 2020

•  The Wall Street Journal reports that Shane Perry, a former Walmart in-house lawyer and ethics officer, has filed a wrongful termination suit against the retailer, accusing it of "drumming up false claims of child abuse and inappropriate workplace conduct to undermine his work investigating bribery allegations in Mexico."

According to the story, "In the complaint, Mr. Perry says he was pressured to change a memo on his findings on allegations that Walmart had violated the U.S. Foreign Corrupt Practices Act, an antibribery law, in its efforts to rapidly expand in Mexico.

"Walmart, however, said the corporate lawyer was fired in 2017 for violating company policies."

Some context from the Journal:

"Walmart last year agreed to pay $282 million to resolve a yearslong investigation by U.S. authorities into the bribery allegations, which became public as a result of a 2012 New York Times investigation. The probe into the company had later expanded to its operations in other countries, including Brazil, China and India.

"Mr. Perry was sent to Mexico in 2011 to look into the allegations, according to his complaint. After a four-day investigation, he wrote a memo to Walmart’s senior management summarizing his findings.

"He received no response, and no word was mentioned to Mr. Perry about his findings until five years later, he said.

"The memo later became a topic of discussion between Walmart’s lawyers and U.S. authorities, his complaint said. In 2017, he was asked to submit to an interview on the content of his memo. He agreed, and within 24 hours was interviewed twice by five lawyers on Walmart’s defense team.:

Perry maintains that he resisted attempts to intimidate him into changing his findings, and was fired as a result on trumped-up charges.

Published on: May 13, 2020

•  From the Wall Street Journal:

"Big advertisers from General Motors Co. to PepsiCo Inc. to General Mills Inc. are seeking to walk back spending commitments they made to broadcast and cable networks, a dynamic that is testing the industry’s five-decade-old way of doing business.

"TV ad spending fell in the initial weeks of the coronavirus pandemic, but was insulated from an even bigger drop. That is because the majority of the roughly $42 billion spent on national TV ads in the U.S. is bound by contractual commitments that are made well in advance of a new TV season, which starts each September.

"Under those “upfront” deals, the first real opportunity since the pandemic struck for advertisers to cut back future spending commitments began May 1. Companies now have the option to cancel up to 50% of their third-quarter ad spending."

•  Bloomberg reports that "Czech billionaire Daniel Kretinsky took a stake in Macy’s Inc. and plans to engage management on ways to improve performance of the struggling U.S. retailer.

"Kretinsky’s Vesa Equity Investment amassed a 5% holding in Macy’s for strategic investment purposes, according to a securities filing. The purchase makes him one of the company’s top five shareholders, according to Bloomberg data."

Macy's, which had significant competitive issues before the pandemic, has seen its troubles worsen and has been seeking new sources of capital with which to shore up its finances.

Published on: May 13, 2020

•  Yahoo News reports that Jenny Zhiya Qian, CEO of Luckin Coffee, and Liu Jian, the company's COO, have been fired as the result of an accounting scandal - there was evidence that company executives had faked more than $300 million in sales last year as they hyped their ability to compete with Starbucks.

Published on: May 13, 2020

Chiming in on the discussion about efficiency vs. effectiveness, one MNB reader wrote:

It is probably about positioning for convenience vs. experience.  In your neck of the woods, it would be the difference between Stop and Shop and Stew Leonards.  Here in Salt Lake it's the difference between Smiths and Harmons.  Harmons differentiates on the basis of experience, and so knowledgeable employees and high quality foods are a key element of their positioning.

Responding to Michael Sansolo's column yesterday, MNB reader Dian Tucker wrote:

As a proud and long-standing Lexus owner, I have to agree with the “Customer First” strategy.

I purchase Lexus because it’s never a hassle to get repairs or checkups. If I need a ride home, they provide it.

If I need them to pick up my car to change the winter tires, they do it. They store my tires, so I don’t trip over them in the odd season.

Do I need a car, while my car is in the shop? Certainly. And it’s an upgrade, that rides like my current ride.

Do they treat me like a woman who doesn’t know anything about cars? No way.

When I bring my car in for service I pull into a heated garage. They have coffee for me, if I choose to wait.

And do I wait? Not for more than a few minutes, and even then with an apology for my valuable time.

100% I am at Lexus for the customer service, and I’d go back again and again.

MNB reader Tom Williams added:

The article reminded me of the “Go and See” podcast by Malcolm Gladwell.  In the podcast, Malcolm travels to Japan to experience how Lexus approaches the design of their cars.  I highly recommend listening to the 6 short episodes.

And another reader quoted and adjusted Michael's column:

“When we first opened our doors, it didn’t take us long to realize that we weren’t in the (insert the type of business you are in here!)  business. At (insert the name of your business here)  , we were in the people business. We needed to be helpful, respectful, and passionate — to treat people like guests. It’s what we all signed up for. And now when people need us most, (WE) do what we’ve always done — take care of people first. The rest will follow.”  

And now...send this out to your entire Team!  (I did.)  

Thanks for the reminder.

Regarding the survey of stores where appropriate behavior is not being observed or encouraged to the degree it should, one MNB reader wrote:

I am not surprised. Americans cannot stand back six feet.

Retail aisles are too narrow. The flow and layout leads to Americans congregating in certain areas.

I no longer shop at Kroger or Giant Eagle because these stores do not give a whit’s lick about their employees or consumers.

Fresh Thyme outside of weekend hours is better.

Meijer’s management should be fired. The store is poorly designed for physical distancing. Its employees are refreshing the shelves, preventing customers from physically distancing.

Costco hung signs regarding physical distancing but it is not enforced in the store.

Americans must change their behavior in the store. The stores need to encourage this change.

But MNB reader Tom Hahn disagreed:

This is madness. Are we going to measure success by how proficient businesses are at following random rules dictated by power-drunk politicians and unelected health commissioners? Or are we going to measure success by re-starting the economy, salvaging businesses and the futures of people who own and work at them, while minimizing the impact of the virus on those who are most vulnerable?

Nobody is forced to enter a restaurant or business where they don’t feel comfortable. Simply move on down the block until you find one that suits your safety preferences. I believe there is a term for this: common sense!

And finally, on another subject, from another reader:

In reading Your Views section today your wife spoke of you “being on a high horse” on your comments about civility.  I must say you got right back on your high horse on your comment about the designated hitter and “real baseball”.

Any 10 year old can figure out a double switch.  And I would argue that 25 teams in the league play “real baseball” better than the Mets on any given day that Noah Syndergaard is not on the mound. 

Whoa!  Fighting words … and interesting that you minimize the importance of Jacob deGrom, who only has won two Cy Young Awards in a row.

For me, it is not about the double switch.  It is about pitchers having to hit.

Let's hope that it won't be too long before the argument plays out on the field.