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    Published on: February 4, 2022

    Price Chopper/Market 32 on Sunday will launch a unique component of the AdvantEdge Rewards program that is powered by TCC Global - they're actually going to open up a sweepstakes in which customers can use points to enter, with the prize being an NFT (non-fungible token).

    KC has some thoughts about this.  While it took some explaining for him to understand NFTs, he appreciates the fact that Price Chopper and TCC are doing some pioneering here, at least when it comes to supermarkets - he went from WTF to WTHN. It'll be interesting to see how it all turns out.

    BTW … Stephen Colbert recently offered as cogent an explanation as we've seen of NFTs, even while suggesting that what might really have more value is an AFT.

    Published on: February 4, 2022

    From the Wall Street Journal:

    "Amazon.com Inc. said profit nearly doubled in the critical holiday period, as the company managed to control labor and supply costs better than expected and saw gains in its cloud-computing and advertising businesses.

    "The company saw a huge boost in the quarter from its investment in electric-vehicle maker Rivian Automotive, Inc., adding nearly $12 billion to its operating income in the period on gains from that company’s initial public offering in November last year. That accounted for the most of Amazon’s profit.

    "The tech and e-commerce giant reported $137.4 billion in quarterly revenue, up from $125.6 billion in the same period a year ago. Profit rose to $14.3 billion, from $7.2 billion a year ago. The financial results were a surprise to some analysts who expected earnings to be more subdued as Amazon dealt with rising costs on a variety of fronts."

    That said, The Information points out this morning that "Amazon posted a slowdown in online store sales during the key holiday quarter, with sales falling 1% to $66.1 billion. Sales growth has been trending downwards, thanks to a tough comp versus year-ago periods which benefited from a pandemic-driven online shopping boom. Its second-quarter online store sales were up 13% versus a year earlier, while third-quarter sales only rose 3% from the same period in 2021."

    At the same time, Amazon announced that it would be increasing the cost of its Prime membership.  From Variety:

    "Amazon is hiking the price of Prime memberships in the U.S., with the annual fee jumping from $119 to $139 — its first increase in nearly three years. In addition, the monthly fee for Prime is rising from $12.99 to $14.99.

    "Amazon last raised the price of Prime in 2018. For new Prime members, the latest price change will go into effect Feb. 18, 2022. For current Prime members, the new prices will apply after March 25, 2022, on the date of their next renewal.

    "The hike does not apply to Amazon’s standalone Prime Video option, which will remain $8.99 per month.

    "Amazon cited the continued expansion of Prime member benefits — including a tripling of Amazon Studios original TV shows and movies and its exclusive offering of the NFL’s 'Thursday Night Football' starting with the 2022-23 season — as well as the rise in wages and transportation costs for the move."

    Amazon was given a certain amount of cover for its price increase when Netflix last month announced its own price increase.

    Variety also reports this morning that "Amazon’s costs for video and music content last year hit $13 billion, up around 18%, representing a slowdown from its spending binge in 2020.  The ecommerce giant disclosed total video and music expense for 2021 in its annual SEC filing Friday. That total is compared with $11 billion the year prior, which was up roughly 40% versus 2019."

    And the Washington Post offers this analysis:

    "Amazon has clearly made the calculation that the price increase will make up for any subscriber losses. That’s not guaranteed, however. While the company held on to subscribers after its past increases four and eight years ago, there is a chance people will balk at the latest jump. That’s especially true now that consumers have better alternatives: The e-commerce operations of its main competitors, including Walmart Inc., Target Corp. and software provider Shopify Inc., are all more robust now than they were a few years ago.

    "The latest results underscored Amazon’s other challenges. One reason the company said it was boosting the cost of Prime was to counter the rise in labor and transportation costs. As one of the largest employers in the world with 1.6 million workers, Amazon feels wage pressures acutely."

    KC's View:

    Whither retail?

    That's what I find myself thinking as I read about Amazon's results.  

    It does seem sometimes as if the retail portion of Amazon's business, the foundation on which everything else has been built, becomes less and ls important.  I haven't seen the specific numbers yet, but it won't be a surprise if Amazon's Marketplace sales continue to grow, especially when seen in comparison to its own retail sales.  The company seems to more and more become a platform and lifestyle brand, and less the purveyor of goods.

    I'm not sure we should expect anything different.  I've long argued here that the central difference between Walmart and Amazon is that Walmart's core goal is to sell more stuff to more people, and Amazon's is to be intertwined inextricably with everybody's lives.  I don't think that one approach is right and one is wrong - I just think that they are fundamentally different, and that this insight ought to shape how every traditional retailer comes to market.

    Is the Prime price increase worth it?  For me, sure.  I have to imagine I'll generate at least that much in savings and pleasure from Amazon.  But that may not be everybody's take.

    By the way, I know one thing has nothing to do with the other, but it is worth noting that Amazon's chairman and founder, Jeff Bezos, is getting another kind of attention this morning.  From the New York Times:

    "The Dutch city of Rotterdam on Thursday walked back plans to dismantle part of the historic Koningshaven Bridge so that a superyacht built for Amazon’s founder, Jeff Bezos, could pass through the city’s river, saying that a decision had not yet been made.

    "This week, city officials had told the news media that Rotterdam had agreed to briefly dismantle the middle section of the 95-year-old bridge for the yacht’s passage this summer.

    "But on Thursday evening, officials said in another statement that the city had not yet approved the plan, though it had received a request from the shipbuilder to temporarily lift the middle part of bridge.

    "The city’s statement said the full cost of the dismantling, if approved, would be covered by the shipbuilder. The bridge, known locally as 'De Hef,' would be restored immediately afterward.

    "A city spokeswoman had said that she did not have an estimate of how much the deconstruction would cost. The city statement said that officials would assess the environmental and economic effects of the plans."

    I loved the headline in the New York Post:  "Pier Pressure?"

    Me, I would've made a movie reference:  "A Bridge Too Far?"

    I have nothing against money, nor rich people.  But there is something rankling about American oligarchs who build $500 million yachts and then ask cities to dismantle bridges so they can get through.  And, to be honest, I find myself wondering if Bezos and Amazon are asking for consumer concessions, like in terms of privacy and access, that we may regret giving in the long run.

    Published on: February 4, 2022

    Good piece in the Washington Post that goes beyond the operational problems created by supply chain issues, looking at the specific impact these issues are having on a small but much-loved brand - a Maine chocolate milk so good that even some people who are lactose-intolerant are willing to drink it.

    The chocolate milk is made by Houlton Farms Dairy in northern Maine, which was founded in 1938.  Here's the problem, as described by the Post:

    "There was no problem with the cows. A farm near the town of Houlton in Aroostook County, pressed up against the Canadian border, continued to supply fresh milk seven days a week, just as it had for as long as anyone could remember.

    "The issue was a custom-made chocolate powder, normally delivered four times a year from a factory in Illinois. When Eric Lincoln, the co-owner of the dairy, spoke to his supplier in December, he learned it might take 12 weeks — triple the normal time — to receive the crucial ingredient. That’s when Lincoln knew he’d have to curtail production.

    "The story of the disappearing chocolate milk is a microcosm of a much larger struggle. Businesses are grappling with historic transportation delays and shifts in behavior as Americans buy more goods than they did before the pandemic. That has produced abrupt and sometimes baffling shortages affecting anything from baby formula to semiconductors, while also spurring rising prices.

    "After two years of adapting and improvising, companies understand there are no quick fixes. What’s more, no one really knows when the disruptions will end."

    According to the story, "the delay in getting Houlton Farms its chocolate powder — a mix of cocoa, a stabilizer called carrageenan and several other ingredients — was caused by a tangle of factors, not a shortage of one particular item. All of Tate & Lyle’s imported raw materials are being impacted by continuing logjams at ports … where wait times remain far longer than they were before the pandemic."

    You can read the entire piece here.

    KC's View:

    It may not happen with the Houlton Farms chocolate milk, but I think it is important for retailers and CPG companies to take into consideration the degree to which all these disruptions may affect brand loyalties.  When certain things are not available, people may be willing to try alternatives.  When certain stores are found to be lacking, customers may be willing to try other stores.

    All of which, to sing from a hymnal from which I've been warbling a lot lately, emphasizes the importance of constant, detailed and nuanced communication with shoppers, always positioning the business as the consumer's advocate.

    Published on: February 4, 2022

    Avram Goldberg, who spent some three decades with Stop & Shop in a wide variety of roles - including COO, CEO, and chairman - while also become well known in the Boston area for his civic and philanthropic activities, has passed away bacterial pneumonia.  He was 92.

    From the Boston Globe this morning:

    "At one point in the dual rise of Avram and Carol Goldberg through the Stop & Shop ranks — when he was president and chief executive and she was named vice president and chief operating officer — he tried to downplay their unusual situation.

    "The career of Mr. Goldberg … was unique in many ways, not least the newsworthiness of being half of a spouse-spouse team that worked well together while leading a major corporation through years of growth.

    "'Carol and I have learned a lot from each other and have grown in the business,” he said in a 1974 Globe interview.  'When we first started out, she was always more courageous than I, more willing to jump in and do battle right away. I was the cautious one, probably too much so. I’d be more calculating and wait for the right time to bring out my ideas.”

    You can read the entire obit here.

    KC's View:

    Avram Goldberg is part of a generation of a retail leaders who helped to drive the supermarket industry forward at a critical time in its development.  There are few members of that generation left, and so I recommend that you read the obit, if only to get a sense of the industry's past, which we'll never see again.

    Published on: February 4, 2022

    Chicory is out with its third annual Online Grocery Usership survey, concluding:

    "72% of consumers reported ordering groceries online in the past 90 days. The top driver of these orders was convenience and/or time constraints, at 46%. Only 10% of shoppers reported that health and safety concerns were the top driver of online orders, signaling that online grocery is not merely a byproduct of the pandemic."

    "Online grocery shoppers place orders frequently. Over 52% of survey respondents reported placing online grocery orders at least once a week. Of shoppers who reported adding groceries to their cart daily, 90% reported placing an online order at least weekly.

    "Online grocery shoppers are willing to spend too. Over one third of respondents reported spending over $100 on an online order, up almost 16% from 2021."

    "Instacart trails Walmart and Amazon as the most preferred online grocery retailer among Chicory's survey respondents. The digital first-retailer is most popular among 18-29 year olds, while Walmart is most popular among 45-60 year olds according to the study."

    Published on: February 4, 2022

    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…

    •  Here are the US Covid-19 coronavirus numbers:  77,150,412 total cases … 920,829 deaths … and 47,313,736 reported recoveries.

    The global numbers:  389,242,368 total cases … 5,733,709 fatalities … and 308,474,766 reported recoveries.  (Source.)



    •  The Centers for Disease Control and Prevention (CDC) says that 75.5 percent of the total US population has received at least one dose of vaccine … 64 percent is fully vaccinated … and 41.9 percent has received a vaccine booster dose.



    •  The Wall Street Journal this morning reports that "the biggest U.S. drugstore chains are shutting some pharmacies on weekends as the spread of Covid-19 and the Omicron variant exacerbates already severe staffing shortages.

    "CVS Health Corp. and Walgreens Boots Alliance Inc. said weekend shutdowns are unusual but become a reality when locations lack enough pharmacists and technicians to remain open.

    "Supermarkets and U.S. retailers such as Macy’s Inc. and Walmart Inc. are also shortening hours as throngs of American workers stay home because they are sick, awaiting test results or caring for others with the virus."



    •  From the New York Times this morning:

    "Last January, a team of researchers searching for the coronavirus in New York City’s wastewater spotted something strange in their samples. The viral fragments they found had a unique constellation of mutations that had never been reported before in human patients — a potential sign of a new, previously undetected variant.

    "For the past year, these oddball sequences, or what the scientists call 'cryptic lineages,' have continued to pop up in the city’s wastewater.

    "There is no evidence that the lineages, which have been circulating for at least a year without overtaking Delta or Omicron, pose an elevated health risk to humans. But the researchers, whose findings were published in Nature Communications on Thursday, still have no idea where they came from."

    Anybody ever seen "Invasion of the Body Snatchers?"  Especially the 1978 Philip Kaufman version?  Because that's exactly what this sounds like.

    Published on: February 4, 2022

    •  From the Wall Street Journal:

    "A Senate panel advanced bipartisan legislation Thursday that would limit the ability of Apple Inc. and Alphabet Inc.’s Google to impose rules and fees on developers using their consumer-app stores.

    "The vote by the Senate Judiciary Committee with strong support from Democrats and Republicans sends the bill to the Senate floor, and came over the objections of Apple and Google which say they need to control content on their app stores to ensure the security and privacy of users.

    "It was a win for app developers, content creators and others who say Apple’s App Store and Google Play limit innovation through their fees and controls … Central to lawmakers’ concerns are transaction fees as high as 30% charged by app stores when consumers make in-app purchases or buy subscriptions. Technology companies, content creators, and others say this raises their costs, holding back their ability to launch new products or expand their businesses."

    Published on: February 4, 2022

    •  From the Wall Street Journal:

    "U.S. payrolls grew sharply by 467,000 in January and the jobless rate rose to 4% as the economy weathered the Omicron wave and staffing shortages, the Labor Department said Friday.

    "The Labor Department separately revised payrolls totals upward for late last year, showing more than 700,000 jobs were created in November and December than previously reported. Last month’s jump in employment left the economy with 2.9 million fewer jobs than in February 2020, the month before the pandemic hit the U.S. labor market.

    "Employers in leisure and hospitality, retail and transportation and warehousing added jobs last month. The automotive industry shed jobs."



    •  From the New York Times:

    "Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.

    "The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertilizer and fuel, and pandemic-related labor shortages and supply chain disruptions that make it difficult to get products to market.

    "A global index released on Thursday by the United Nations Food and Agriculture Organization showed food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya. The price of meat, dairy and cereals trended upward from December, while the price of oils reached the highest level since the index’s tracking began in 1990.

    "Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50 or 60 percent of their income on food.

    "He said that it wasn’t 'much of an exaggeration' to say the world was approaching a global food crisis, and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created 'a perfect storm of adverse circumstances.'

    "'There’s a lot of cause for worry about social unrest on a widespread scale,' he added."



    •  From the Los Angeles Times:

    "Los Angeles’ hourly minimum wage will rise from $15 to $16.04 on July 1, officials said Thursday.

    "The city’s wage is tied to the consumer price index as published by the Bureau of Labor Statistics and has risen steadily over the last seven years following a push by city leaders to boost the hourly rate and curb poverty.

    "The wage will apply to businesses of all sizes, according to the city’s website.

    "On Jan. 1, California’s minimum wage rose to $15 for employers with 26 or more employees and to $14 for those with 25 or fewer. But cities and counties can set higher floors."

    Published on: February 4, 2022

    •  The Irish Times reports that Tesco has named its chief people officer, Natasha Adams, to be the new CEO of Tesco Ireland.  The Kerry-born Adams succeeds Kari Daniels, who will be stepping down from the job in April and "is planning to take time out before moving on to her next project."

    Published on: February 4, 2022

    I did a piece yesterday about the Rooney Rule controversy enveloping the National Football League, and business lessons that can be learned from it.

    One MNB reader responded:

    First, the speed with which the NFL responded with the "Without Merit" language.  I'm not sure why that raises suspicion on your part, as it quite likely was limited only to the components of Flores' suit against the league, not the Giants, Dolphins, etc. 

    And as it relates to the Giants specifically,  having been in hiring roles myself, it is not uncommon to favor one candidate,  even  to the extent of making that candidate an offer,  and continue to interview others who have already been identified as potential fits, and may have already had their interview scheduled.  As we all know, a deal is only a deal when all i's are dotted and t's crossed.  Daboll may not have, at the time of Flores' interview, actually accepted -or even received- an offer from the Giants.  And if he had been made and accepted an offer generally,  it's quite likely it had not been formalized with signatures, and likely had not gone through the inevitable back and forth with revisions, redlines, etc. In my experience, continuing to interview is more or less standard operating procedure until done is actually done.

    And so, if this is the only thing Flores is hanging his hat on, (Again, related strictly to the Giants) it would seem to be a slim case.  And given the Giants' sterling reputation in the League, (Recall their GM Jerry Reese was one of the few black GM's), I'd be very surprised if their actions were as cynical as Flores contends.  We shall see.

    What is most concerning though, are the reports which seem to hold water, of some teams offering bonuses to coaches to tank games at the end of a season.

    I can think of some Giants fans who might question your "sterling reputation" reference.



    Referring to another story, an MNB reader wrote:

    As a native Texan, I can tell you that the least interesting thing about a Buc-ee's is the gas.  I imagine they will need to add charging stations to accommodate electric cars, sure.   But the store is the draw, not the pumps. 

    Gotcha.



    And, on another subject, from an MNB reader:

    There is no question that Unions had a positive impact on safer working conditions and fair wages over time. My question is do they really bring that same value today?  Companies (including Amazon) already offer competitive wages, Industry standard benefits and safe working conditions – the very tenets that Unions were built on and historically fought to provide. However, the Union model does not support benefits that enrich employee work experiences such as opportunity for advancement, role mobility or merit based compensation. At the same time, workers are leaving their companies voluntarily at a historical pace due to a lack of job satisfaction. When you add the required cost of Union membership dues into the equation, I’m not sure that the Amazon employees are really looking through a wide enough lens when considering this opportunity.



    MNB reader Gary Breissinger had a thought about my FaceTime video in which I talked about the grand ambitions of Amazon and Google for their personal voice assistant technologies, compared with those of Apple, which seems to have more modest, and yet maybe more acceptable aspirations:

    I think it comes down to a matter of corporate vision, capability and strategy.

    These are very different when comparing Apple to Google and Amazon.

    Allocation of resources in line with strategic priorities makes all the sense in the world. In this case, it appears that Apple has a more limited/focused strategy for what it aspires to be in this area than either Google or Amazon.

    There is certainly nothing wrong with that…and deciding where and how you play the game is really important.

    But in this case, it seems to be more of a case of deciding where to compete rather than a difference in how to compete.

    Published on: February 4, 2022

    "As We See It," a new eight-part series on Amazon Prime Video, is a fascinating and illuminating portrayal of three young people, all in their mid-twenties, who are at various places on the autism spectrum and are endeavoring to navigate adulthood.   Autism, as portrayed on the show, is not a single thing;  each of these people have unique issues with which they have to deal and specific challenges that make their lives difficult.

    And what gives "As We See It" enormous veracity is the fact that the creators had experience with family members who were autistic, the three main characters (as well as a number of supporting characters) are played by people who are on the spectrum, and probably the best known person in the cast, Joe Mantegna, has been open about having an autistic adult daughter.

    The fascinating thing about Jack, Harrison and Violet - played by Rick Glassman, Albert Rutecki, and Sue Ann Pien - is the way they yearn for some level of normality in their lives.  They know they're different, but to varying degrees they're hoping that they're "passing," that people don't realize that they're autistic.  This is particularly hard when it comes to their emotional lives - Violet yearns to have a romantic and sexual element in her life, Harrison just wants to have a friend, and Jack is dealing with the fact that his father (Mantegna) has cancer, which has thrown into sharp relief the issues of dependence and autonomy.  Sosie Bacon is wonderful as Mandy, who is the caregiver in the apartment that they share, and is torn between her devotion to the young people and her plan to leave and go to medical school.

    "As We See It" has moments of great insight, leavened by humor and sharpened by heartbreak.  It seems to me that it does a wonderful job of not just showing us what autism is like, but also letting us feel it, to some small degree.  It is excellent work, illuminating and uplifting and surprising in its nuance.



    I don't know about you, but sometimes I feel like there is way too much stuff to watch on television.  While I used to love going out to the movies, there's not much reason anymore;  with few exceptions, there's plenty of of stuff I want to watch and can watch at home, and few things for which I would venture into a theater these days.

    For example, these days I've been watching "Star Trek: Prodigy" (which just finished up the first half of its first season) and am looking forward to the final episodes of the current season of "Star Trek: Discovery," as well as the second season of "Star Trek: Picard" and the first season of "Star Trek: Strange New Worlds."  I've also been watching "The Book of Boba Fett," and am looking forward to bingeing the first season of "Reacher" this season.  I'm also intrigued by "Pam & Tommy," which has gotten unexpectedly good reviews.  And the list goes on.

    This is not likely to change anytime soon.  Netflix yesterday released a "first look" video at the more than 60 films that it plans to debut on its service during the coming year, reflecting a $17 billion commitment to proprietary - or, as it would be known in the retail business, private label -  content that it believes will give it a differential advantage.

    I don't know if the movies will be any good, but the trailer is impressive:



    That's it for this week … Have a good weekend, and I'll see you Monday.

    Sláinte!