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    Published on: May 26, 2021

    Amazon will acquire MGM Holdings, with its vast content library and ownership interests in brands that include the James Bond and Rocky franchises, for $8.45 billion.

    The Washington Post this morning calls it "a landmark marriage of tech and Hollywood" that has the potential to make Amazon "a dominant entertainment player."

    It is the second largest acquisition in Amazon's history - the largest, for more than $13 billion, was Whole Foods.

    The New York Times writes that "the Whole Foods deal was a major strategic change for the company, pushing it into new markets of groceries and physical stores, which it had largely avoided. MGM is more about augmenting a current strategy: Amazon most likely paid more than others thought MGM was worth because of its all-important Prime membership program."

    The construct is well-known - Amazon Prime members spend as much as twice as much on Amazon as non-Prime members.  More robust content on Prime Video creates more Prime members.  

    The Wall Street Journal, while noting that "the pact signals that Amazon is renewing its emphasis on entertainment and seizing an opportunity to jump up in weight class," also cautions that "the deal could heighten antitrust concerns for Amazon, which is already at the center of multiple probes because of its size and power."

    Variety reports:

    "For Amazon, snapping up MGM — which has more than 4,000 movies and 17,000 TV shows in its catalog — is a way to supercharge its Prime Video service with a slew of well-known entertainment properties. In addition, Amazon is anticipating being able to tap into Metro-Goldwyn-Mayer properties like the Pink Panther, Rocky, and, yes, the 007 franchises for new originals.

    "'The real financial value behind this deal is the treasure trove of [intellectual property] in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,' Mike Hopkins, senior VP of Prime Video and Amazon Studios, said in announcing the deal.  'It’s very exciting and provides so many opportunities for high-quality storytelling'."

    Advertising Age writes that the acquisition could offer Amazon an almost unrivaled opportunity to connect content with commerce, and offers the following scenario:

    "MGM loads Bond films with marketing - think, Aston Martin cars, Omega watches and Heineken beer. If Amazon has its way, those brand shoutouts could point viewers to sales. Amazon owns Prime Video, IMDb TV, Fire TV and Twitch, which all have interactivity in their advertising. For instance, Prime Video has an 'X-Ray' feature, which is a pause screen that leads viewers to more information about shows and movies. Amazon has promoted X-Ray as a potential venue for brands to present more information."

    KC's View:

    What they said.

    There's another cautionary note being sounded is that MGM's control of the James Bond franchise has its limitations - it only owns 50 percent of the film rights, and control actually is exercise by Eon Productions, owned by siblings Barbara Broccoli (a graduate, by the way, of the Loyola Marymount University film school) and Michael G. Wilson, who dictate which films get made, when they get made, who plays James Bond, and virtually every other aspect of production.

    That said, expect Amazon to be fully invested in making this deal work.  If nothing else, it'll give Jeff Bezos something to do when he steps down as CEO and becomes chairman.

    Published on: May 26, 2021

    The Washington Post reports that Washington, DC's attorney general, Karl Racine, yesterday filed an antitrust suit against Amazon, "alleging that the e-commerce giant wields monopoly power that has resulted in higher prices for consumers."

    The accusation is that Amazon fixes prices "through contract provisions with third-party sellers who peddle their products on its platform. The attorney general said that Amazon prevents sellers from offering their products at lower prices or on better terms on any other online platforms, including their own websites, and that that prohibition results in 'artificially high' prices across e-commerce sales."

    "The DC Attorney General has it exactly backward — sellers set their own prices for the products they offer in our store,” Amazon spokesman Jack Evans said in a statement. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”

    The Post provides some context:

    "The suit follows years of Washington antitrust scrutiny of Amazon and comes as consumer advocates have called on the Biden administration to bring federal antitrust charges against the company. Biden recently nominated one of the company’s key critics, Lina Khan, to the Federal Trade Commission.

    "The latest legal salvo highlights the critical role attorneys general are playing in checking tech giants’ power, following years of little action from the federal government. Last year, groups of state attorneys general brought two antitrust lawsuits challenging Google’s dominance in search and advertising. A separate group of 48 attorneys general filed a landmark antitrust suit against Facebook, seeking to break up the social networking giant."

    KC's View:

    I have to admit I am a little skeptical about this suit, largely because Amazon is transparent on its own site when products are being offered by marketplace vendors for a lower price than even Amazon sells them.  It would just seem to run counter to Amazon's commitment to eliminating friction and doing things that are consumer-centric.

    But, who knows?  Maybe there are incriminating documents that will prove the case.  Maybe Amazon has been fooling us all these years.

    But I'm dubious, and think it may be hard to prove that Amazon is bad for consumers.

    Published on: May 26, 2021

    The Tampa Bay Business Journal reports that Kroger has commenced making deliveries to -grocery customers in the Tampa, Florida, marketplace, using a new Ocado-powered robotics warehouse in central Florida to serve shoppers in a state where it has virtually no bricks-and-mortar presence.

    Kroger just a few weeks earlier started delivering to e-customers in the Orlando area;  its warehouse is in nearby Groveland.

    The new distribution center is designed to serve shoppers in a roughly 90-mile radius.

    KC's View:

    Kroger's Florida adventure strikes me as one of the most interesting things it is doing.  It isn't just the Ocado-powered warehouse, but what it is trying to do with that warehouse.  Essentially, it is looking to prove that in some cases and some places, stores may not be necessary.

    Published on: May 26, 2021

    From the Wall Street Journal this morning:

    "As vaccination rates climb and restrictions on human interaction ease, shopping carts are filling up with items designed to facilitate people’s re-entry into civilization instead of toilet paper and baking flour … Deodorant, teeth whitener and condoms are in high demand. Sales of perfume, nail polish, swimsuits, sunscreen, tuxedos, luggage and alarm clocks are climbing fast, according to companies that make these products and large retailers."

    The story notes that "the surge in grooming products and travel gear is smaller than pandemic-driven rushes on hand sanitizer and disinfectant wipes," which last year often were out-of-stock because of pandemic-prompted demand.  

    The good news:  "there’s an ample supply of deodorant and mouthwash."

    KC's View:

    One note in the story that sort of surprised me was that alarm clock sales doubled during April.  Not that people need to be more conscious about when they wake up these days, but rather that people actually use alarm clocks.  I haven't used once since I got my first smart phone, and I sort of assumed that everybody else was the same way.

    Published on: May 26, 2021

    FMI—The Food Industry Association is out with its 2021 edition of "U.S. Grocery Shopper Trends," concluding that there are three significant ways in which shopper behavior changed during the pandemic:

    •  "Today, 58% of shoppers report eating more at home and nearly half (49%) report cooking or preparing their own meals more than before the pandemic. When it comes to grocery shopping to support these at-home meals, shoppers have a newfound appreciation for the task, with 42% saying they like or love to grocery shop."

    •  "The number of online grocery shoppers grew to nearly two-thirds (64%) of all U.S. adults, with newcomers from every generation. Frequency of online grocery shopping also increased, with more than one-fourth (29%) of online shoppers placing a weekly order. For the first time, we saw many more online grocery shoppers now consider a Mass retailer to be their primary store."

    •  "Today, shoppers’ concept of being well involves an interlocking, circular relationship among the domains of shopping, cooking and eating and this phenomenon helps us understand shoppers’ engagement with the evolving retail landscape."

    "Throughout this past year, American grocery consumers have developed a deeper relationship with their kitchens, increased their healthy eating consciousness, and have learned new ways to shop," said Leslie Sarasin, FMI's president-CEO.  "We see shoppers engaging in more stock-up trips to support their at-home cooking, exercising new online shopping skills, and letting their personal concept of being well impact their food and shopping behaviors. Looking ahead, we expect many of these trends to continue."  

    The report is available here.

    Published on: May 26, 2021

    The Organic Trade Association (OTA) yesterday released its annual survey, saying that "U.S. organic sales soared to new highs in 2020, jumping by a record 12.4 percent to $61.9 billion. It marked the first time that total sales of organic food and non-food products have surpassed the $60 billion mark, and reflected a growth rate more than twice the 2019 pace of 5 percent."

    "The pandemic caused abrupt changes in all of our lives. We’ve been eating at home with our families, and often cooking three meals a day. Good, healthy food has never been more important, and consumers have increasingly sought out the Organic label. Organic purchases have skyrocketed as shoppers choose high-quality organic to feed and nourish their families,” said Laura Batcha, OTA's CEO-executive director.

    Some notes from the survey:

    •  "Leading the charge for healthy food was the desire for fresh produce. Fresh organic produce sales rose by nearly 11 percent in 2020 to sales of $18.2 million. Frozen and canned fruits and vegetables also jumped with frozen sales alone rising by more than 28 percent. Including frozen, canned and dried products, total sales of organic fruit and vegetables in 2020 were $20.4 billion. More than 15 percent of the fruits and vegetables sold in this country now are organic."

    •  "Pantry stocking was overwhelmingly the main growth driver in 2020. As bread making and cookie baking took kitchens across the country by storm, sales of organic flours and baked goods grew by 30 percent."

    •  "Black beans, flour, and chicken broth are not typically out of stock. They were in 2020. In that unprecedented year, organic’s reputation of being better for you and the planet positioned it for dramatic growth. In almost every organic food aisle, demand jumped by near-record levels, propelling U.S. organic food sales in 2020 up a record 12.8 percent to a new high of $56.4 billion. In 2020, almost 6 percent of the food sold in the United States was certified organic."

    The survey concludes:  "While the growth in organic food sales is not expected to continue at 2020’s fast rate, organic food sales are expected to stay on a strong growth path in 2021. It’s anticipated that the grocery industry at large will get a lasting lift from the pandemic for the foreseeable future as many consumers continue to cook more at home."

    Published on: May 26, 2021

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  In the United States, there now have been a total of 33,947,189 Covid-19 coronavirus cases, with 605,208 deaths and 27,606,442 reported recoveries.

    Globally, there have been 168,572,518 coronavirus cases, with 3,501,271 resultant deaths, and 150,118,659 reported recoveries.   (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 61.6 percent of the US population has received at least one dose of vaccine, and 50 percent has been fully vaccinated.

    •  There's an excellent piece in The New Yorker entitled "The Beginning of the End of the American Pandemic," that looks at what the future may hold for the country as the pandemic recedes.

    An excerpt:

    "The shift toward reopening is not without risk. The first issue is timing. Less than half of Americans have received even one shot of a covid-19 vaccine, and only around four in ten have been fully vaccinated. This means that the majority of the country remains susceptible to infection and disease. Meanwhile, the pace of vaccinations has slowed: in April, the U.S. was routinely vaccinating about three million people per day, but the daily average is now nearly two million. It’s unclear whether the new guidance will encourage or deter unvaccinated Americans from getting immunized."

    Some are choosing not to be vaccinated, and some have not yet had access to vaccines.  Regardless, The New Yorker writes, "until now, unvaccinated people have been shielded from high levels of viral exposure by government mandates and social norms that have kept their friends, neighbors, and colleagues masked and distanced, to varying degrees. But, in the coming weeks, those protections will likely erode. For unvaccinated Americans, this could be the most dangerous moment in the pandemic. In most contexts, there is no reliable mechanism for verifying who has and hasn’t been vaccinated. Inevitably, against the C.D.C.’s advice, many unvaccinated people will resume normal life, too, threatening their own health and that of others."

    You can read the entire piece here.

    •  If stores are going to no longer require masks … a decision that I'm not entirely comfortable with at the current rate of vaccinations in the US … there are ways to send a positive message.  Like this one, affixed to the door of a local independent retailer in my town:

    Published on: May 26, 2021

    •  The Seattle Times reports that Washington State regulators are saying that "Amazon is violating the law by pressuring warehouse employees to work at speeds that exacerbate injuries without adequate time to recover," finding a "direct connection" between "the incidence of injuries at the warehouse and Amazon’s expectation that warehouse employees 'maintain a very high pace of work' or else face discipline."

    These conclusions, the story says, came after an inspection at Amazon's DuPont, Pierce County, fulfillment center. 

    The Times writes that while Amazon was fined $7,000, it also is required "to take steps to lessen the risk of injuries at the warehouse. The agency recommended a list of changes, including setting the pace of work based on an ergonomic risk analysis. It said Amazon must submit a detailed written plan for fixing the problem and provide quarterly updates on its progress."

    Amazon says that it plans to appeal the citation.

    Published on: May 26, 2021

    •  AdWeek reports that Target is unveiling a new advertising campaign this week, using the tagline, “What we value most shouldn’t cost more.”

    "Target’s latest campaign is meant to serve as a framework or creative platform over the long term for all the retailer’s marketing efforts going forward," Cara Sylvester, Target's chief marketing and digital officer, tells AdWeek.

    “In today’s world, both marketing and retail is all about understanding the consumer and pursuing the most meaningful, authentic connections,” Sylvester said.

    •  In Colorado, the Daily Camera reports that "the Boulder County District Attorney’s Office has filed additional charges against the man accused in a mass shooting at a King Soopers in March.

    "Ahmad Al Aliwi Alissa, 21, was initially charged with 10 counts of first-degree murder after deliberation and one count of attempted first-degree murder in the days after the shooting on March 22.  In April, prosecutors added 33 more counts of attempted first-degree murder, one count of first-degree assault and ten counts of felony possession of a prohibited large capacity magazine.

    "Now prosecutors have once again added more charges to the case, with 13 more attempted murder charges and 47 crime of violence sentence enhancers for use of a deadly weapon on each of the attempted murder charges, bringing the total counts in the case to 115."

    Published on: May 26, 2021

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

    •  CNBC reports that "more than two dozen groups representing U.S. businesses and employers unveiled a new coalition to fight against virtually every Democratic plan to raise taxes on self-described 'job creators.'

    "The coalition of 28 industry groups argues that hiking taxes on corporations will hamper the U.S. economy in the wake of the coronavirus pandemic.

    "The alliance emerges in direct opposition to President Joe Biden, who is pushing trillions of dollars in spending on a slew of economy-overhauling projects, to be paid for in large part by raising rates on corporations and the richest Americans."

    Among the organizations that are part of the coalition are the National Grocers Association, International Foodservice Distributors Association, and the Wine and Spirits Wholesalers of America.

    Published on: May 26, 2021

    Got the following email from MNB reader Rich Heiland:

    We just got back from a cross-country drive from West Chester PA to Colorado, down into Utah, Arizona, back through New Mexico. I would have to say based on that experience it appeared a "what pandemic?" has taken hold. There were some places where masks were required but by and large they, along with social distancing, seemed a thing of the past. Even though my wife and I are both vaccinated we wore ours.

    What concerns me is that I have to assume many of those who were unmasked, un-distanced were not vaccinated. The scientific reality is that even if you are vaccinated you still can get the virus - it would just won't be as bad. And, you still can be a carrier. As an aside, I am noticing now that when people approach in closed spaces the greeting seems to be "I've had my shots." "Hi" has been replaced...

    And, from MNB reader Gregory Gheen:

    Going into Fry's market late afternoon yesterday they still had their face mask signs up. I wore my mask as I always do (even though I have had my shots), our of respect for others (and the 5-10% that I am not protected against). Much to my surprise nearly half of the people in produce had no mask on, and this continued throughout the store.

    I contacted one Fry's employee and asked what the policy was now - and are they enforcing it? She stated they still had their mask policy but if a shopper had their shots they didn't have to wear them. I saw 10-15 years olds with their parents without masks (both).

    This is very confusing.

    No argument.

    Regarding shifts in private label marketing and positioning, one MNB reader wrote:

    I remember when Ralphs in Southern California (long before it was acquired by Kroger) had a private label line called “Plain Wrap” that had a white label with a navy blue band around it.  It was all the rage during the early 80’s and garnered lots of publicity.  It was so popular that one homeowner painted his entire house to look like a plain wrap label and of course called the local news station to be on television.

    I think it lost favor over time because the actual quality was not that great.  It was a pure price discount play.  I personally agree with the philosophy that private label should be at least equivalent to the national brand, but should strive to be even better.  If I were a retailer I would want my customers to know what great quality products we have whether it be a national brand or private label.

    And finally, it's been great to get so many emails about the Bob Dylan videos we've been running this week as we observe his 80th birthday.

    Here's another, from 1963: