business news in context, analysis with attitude

Published on: March 10, 2022

Barnes & Noble has decided that its response to the book bans occurring around the country will be to create a section in its stores specifically for banned books, plus a page on its website with an even more extensive selection.  While some have asked whether this is good business, KC argues that it is more important for a retailer to be true to its core values … and that the banning of books is antithetical to selling them.

An example of a Barnes & Noble display dedicated to banned books:

(Yes, the titles include "Twilight," "Harry Potter and the Sorcerer's Stone," "The Color Purple," and "A Wrinkle in Time."  Go figure.)

Published on: March 10, 2022

by Kevin Coupe

This Axios story grabbed my attention - pointing out that "the US now has more self-storage facilities than McDonald's, Wendy's, Burger Kings, Starbucks and Walmarts combined."

Wow.

The point of the story is that, to put it simply, people are buying too much stuff.

"We're overstuffed," Axios writes.  "And all that stuff often brings a lot more stress than joy … Never in history have so many things been affordable for so many. Never in history has it been easier to swipe a card or click a button, and wait for the Amazon truck to arrive. And never in history have Americans had bigger houses, or storage sheds, to keep it all."

Anthony Graesch, an anthropologist at Connecticut College who studies why we have so much stuff, tells Axios:  "I see the proliferation of self-storage in the United States as the materialization of excessive, unchecked and unsustainable levels of consumption."  It is also, he says, a reflection of the fact that many people have "difficulty … easily severing relationships with many of our possessions."

I know that retailers essentially are in the business of selling people more stuff … but in so many ways, this all is an Eye-Opener.

Published on: March 10, 2022

CNBC reports that Amazon has informed the gig workers who were selecting items at local Whole Foods stores for delivery to customers that they soon will become Whole Foods employees.

"According to a job description recently posted by Whole Foods, schedules will be made up to three weeks in advance and cover two-week periods," CNBC reports.  "That contrasts with a recent job post for an Amazon shopper that counts 'shift flexibility' and the ability to 'work as little as four hours per week' as perks.

"The change marks Amazon’s latest effort to simplify its sprawling grocery and physical retail operations, which have grown to include two supermarket chains, convenience stores and apparel stores. The e-commerce giant’s biggest expansion came in 2017 with the $13.7 billion purchase of Whole Foods."

Published on: March 10, 2022

Fox Business reports that "membership-only warehouse rivals Costco and Sam's Club are trying to dominate the gas business as prices of fuel nationwide continue to skyrocket.  The national average for a gallon of regular gasoline reached $4.173 as of Tuesday, climbing 50 cents from a week earlier, according to AAA data."

Walmart's position is that at Sam's Club, "its members pay less at the pump than the average consumer due to 'member-exclusive prices.'

"Additionally, the company said its members can earn Sam’s Cash on eligible purchases at gas stations with their Sam’s Club Mastercard."

Costco's argument is simpler - it price checks all its competitors to make sure it has the lowest prices in the markets it serves.

Fox Business makes the point that the gas competition is unlikely to end anytime soon:  "Crude prices will likely continue to soar as the war between Russia and Ukraine escalates, according to AAA. Since the price of oil accounts for 50% of what consumers pay at the pump, consumers will continue to feel the pain."

Published on: March 10, 2022

Dollar General yesterday announced what it called "a series of new financial services aimed at increasing access to banking options and providing additional customer payment alternatives."

Among the offerings introduced is the "spendwell Financial Service," described as "an innovative, new bank account that provides customers with additional convenience to access and manage personal finances … Through a partnership with InComm Payments, and issued by MetaBank, the spendwell Bank Account and Visa debit card is now available at Dollar General’s 18,000+ stores, as well as through a dedicated online platform and easy-to-use mobile banking app. spendwell will provide customers with two financial account options including one with no monthly fees and another that allows customers to earn 1% unlimited cash back to be redeemed on purchases at Dollar General. Both account options include an accompanying Visa debit card, which can be used everywhere Visa debit cards are accepted, and spendwell app-access to manage everyday expenses, pay bills and more."

There's also something called "Subaccounts," designed to "support customers through gift card programs, bill pay solutions and payment processing technology."  

And, there's "DG Buy Now Pay Later powered by Sezzle," which will be a "test of a buy-now, pay-later purchase option through a new partnership with Sezzle at more than 1,700 stores in Texas. The DG Buy Now Pay Later program will provide customers with zero-interest payments on purchases, allowing them to pay for their purchases in four installments and giving them additional flexibility when purchasing items."

Published on: March 10, 2022

The Wall Street Journal this morning reports that the Amazon board of directors has approved a 20-1 stock split, as well as a $10 billion repurchase of the company's stock.

According to the story, "An Amazon spokeswoman said the split will make the split-adjusted share price more accessible for potential investors and will allow employees more flexibility in how they manage stock-based compensation.

":The stock split and authorized share increase are subject to shareholder approval at its annual shareholder meeting, which is scheduled for May 25."

What this means, the Journal writes, is that "the total value of an investor’s Amazon holding won’t change. Shareholders as of May 27 will get 19 new shares for each share they own; after the split takes effect the market price for each share will be one-twentieth of the presplit price. Amazon shares are roughly $2,800 each now; at that level, shares would be around $140 each after the split."

The story notes that "Amazon has previously split its stock several times, though it hasn’t done so since 1999, a year in which the company had net sales of $1.6 billion. Last year, the company had net sales of $469 billion and a market value more than 100 times higher than in early 1999."

Published on: March 10, 2022

From the Washington Post this morning:

"Russia has effectively legalized patent theft from anyone affiliated with countries 'unfriendly' to it, declaring that unauthorized use will not be compensated.

"The decree, issued this week, illustrates the economic war waged around Russia’s invasion of Ukraine, as the West levies sanctions and pulls away from Russia’s huge oil and gas industry. Russian officials have also raised the possibility of lifting restrictions on some trademarks, according to state media, which could allow continued use of brands such as McDonald’s that are withdrawing from Russia in droves.

"The effect of losing patent protections will vary by company, experts say, depending on whether they have a valuable patent in Russia. The U.S. government has long warned of intellectual property rights violations in the country; last year Russia was among nine nations on a 'priority watch list' for alleged failures to protect intellectual property. Now Russian entities could not be sued for damages if they use certain patents without permission."

According to the story, "The Kremlin has not issued any decree lifting protections on trademarks. But Russia’s Ministry of Economic Development said last week that authorities are considering 'removing restrictions on the use of intellectual property contained in certain goods whose supply to Russia is restricted,' according to Russian state news outlet Tass, and that potential measures could affect inventions, computer programs and trademarks."

Published on: March 10, 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…

•  In the United States, there now have been 81,064,103 total cases of the Covid-19 coronavirus, resulting in 989,473 deaths and 55,429,994 reported recoveries.

Globally, there have been 451,981,258 total cases, with 6,045,608 resultant fatalities and  386,419,622 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 76.6 percent of the total US population has received at least one dosed of vaccine … 65.2 percent is fully vaccinated … and 44.1 percent has received a vaccine booster dose.

In addition, the CDC says that less than half - 49.9 percent - of the eligible members of the total US population have received a vaccine booster shot.

•  From Axios this morning:

"Daily COVID deaths fell by 24% over the last two weeks, from an average of more than 1,900 the week of Feb. 23 to 1,451 over the past week … Deaths, a lagging metric, fall only after the number of cases and hospitalizations do. So a drop in the number of deaths is the truest sign that the Omicron wave is almost over."

Published on: March 10, 2022

•  Variety reports that "Amazon has joined the growing number of businesses suspending commercial activities in Russia in the wake of the country’s unprovoked attack on Ukraine.

"The e-commerce giant said in a statement that it is cutting off access to Prime Video for customers based in Russia, given 'the ongoing situation in Russia and Ukraine.'  Amazon said it also has ceased shipment of retail products to customers in Russia and Belarus and said it will no longer be taking orders from Russian customers for its video game 'New World,' the only game the company sells directly in the country."

Why do I think that some Russian customers may think 'New World" is about something different than most people in other countries think?

Published on: March 10, 2022

•  From CNBC:

A federal judge has ordered Walmart to immediately rehire a woman with Down syndrome and give her more than $50,000 in back pay after she prevailed in a disability discrimination lawsuit related to her firing from a Wisconsin store.

"But the judge denied a request to force Walmart to take other actions for the next five years in light of how it treated the woman, Marlo Spaeth.

"Walmart told CNBC on Wednesday that it would comply with the order to give Spaeth her job back.  But a spokesman said the company has not decided whether to appeal the ruling on back pay, along with $300,000 in jury damages."

The story says that "the judge’s order is the latest development in a more than five-year court battle between the U.S. Equal Employment Opportunity Commission and Walmart, the nation’s largest private employer. The federal agency sued Walmart on Spaeth’s behalf, after the retailer refused to accommodate her disability and fired her after nearly 16 years of working at one of its Supercenters."

Published on: March 10, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Washington Post reports that "some 4.3 million Americans quit or changed jobs in January, edging down a bit compared with December but still in record-high territory in yet another sign that workers continue to have the upper hand in a tight labor market."

At the same time, the story points out, "employers reported 11.3 million job openings at the end of January."

In this game of employment musical chairs, it seems like there are a lot more chairs than there are players.  Which isn't the way it is supposed to work, at least not as far as employers are concerned.  As the story notes, this "has led to a situation where workers increasingly have the upper hand, forcing companies to raise wages and offer a range of new perks to attract and keep employees."

•  From the New York Times this morning:

"Employees at three more Buffalo-area Starbucks have voted to unionize, bringing the total number of company-owned stores with a union to six, out of roughly 9,000 nationwide.

"The results, announced Wednesday by the National Labor Relations Board, were the latest development in one of the most formidable challenges to a major corporation by organized labor in years. Workers at two Buffalo-area stores voted to unionize in December, while a third store voted to unionize in Mesa, Ariz., last month, dealing a blow to the union-free model that prevailed at the coffee-retailing giant for decades.

"Since the December votes, workers at more than 100 Starbucks stores in more than 25 states have filed for union elections, in which they are seeking to join Workers United, an affiliate of the Service Employees International Union.

"Workers in cities including Seattle, Boston, Rochester, N.Y., and Knoxville, Tenn., have begun voting or will do so this month."

•  It apparently is a good time to be in the fashion business, at least according to the monthly Mastercard SpendingPulse survey, which says that "apparel (+37.6% YOY / +34.3% pre-pandemic) and department store (+26.3% YOY / +3.4% pre-pandemic) growth rates remained elevated for the month as consumers prepare to return to physical offices, updating their wardrobes after nearly two years of working remotely."

This was part of a broader growth trend:  "Overall retail sales excluding auto increased 8.7% year-over-year (YOY) and were up 17.3% compared pre-pandemic spending (2019). This is slightly above January growth levels."

The survey also notes that "when looking across channels, in-store grew 10% in February compared to the same month last year and 8.0% vs. pre-pandemic as consumers resume in-person activity. E-commerce sales in February were up 4.4% year-over-year and 85.9% vs. pre-pandemic as the shift to digital remains a persistent yet slowing trend."

Inflation also is part of the elevated sales numbers.

And, of course, Amazon is getting ready to open its first fashion-centric physical store.  Coincidence?  I think not.

Published on: March 10, 2022

Published reports say that Charles Entenmann, who grew his family's New York bakery business into a national brand, selling it in 1978 to pharmaceutical company Warner-Lambert purchased Entenmann's for $233 million, passed away n February 24 in Miami, Florida.  He was 92.

The Entenmann's brand, which was founded in 1898 in Brooklyn, New York, currently is owned by Mexican conglomerate Grupo Bimbo, which acquired it in 2008.

Published on: March 10, 2022

On the subject of inflation, one MNB reader wrote:

I have been tracking wholesale list and deals  costs for 20 years plus. The costs of goods are even higher than the industry reports . Because they track Every Day Costs and not deals. Deals are not available now because there is no reason to discount.

Fair point.  Inflation may not begin to cover it.

MNB reader Bob McGehee had some thoughts about a likely rise in credit card fees:

I had my first encounter with credit card fees in 1992.  The cost per transaction was $0.16 (using dial-up) and Visa/MC fee was about 1.25%.   Fast forward 30 years and the cost per transaction is <$0.01 via internet and the AVERAGE Visa/MC fee is 2%+.  For a lot of stores now the electronic payment costs exceed labor costs.  Consumers are mostly unaware of these costs.  Any store that doesn’t factor these costs in their pricing is doomed, foolish and/or living is a dream world.

On the good side, I invested in both Visa and MC when they went public.  Worked out well.

MNB reader  Stacy McCoy chimed in:

Hmmm… this might explain the increase in signs at local businesses offering a (pretty good!) discount for cash payments vs credit card. I might have to go try to find my checkbook at start carrying that with me again. (hello 1987!)

On another subject, one MNB reader wrote:

KC, I do not have the answer here, but I have not seen anyone talk about the pre pandemic resignation/job mobility numbers. In an economy as large as the US, “The Great Resignation” statistics, while higher, may not be all that unusual as the economy churns job seekers to look for new employment opportunities. Comparing the pre-pandemic numbers might lend more credence to the narrative or calm down everyone if the rise in job transition is only moderately higher. Some perspective might be nice to see to see the degree to which we have a problem or if there is one at all.  It may be out there but I have not seen it yet.

I have not seen one, either … but I would be really surprised if the resignation rates were as high before the pandemic as they have been recently.

We reported yesterday about how Walmart is offering Walmart+ membership free to associates, which prompted one MNB reader to write:

One unmentioned benefit of doing this is to try to help keep and attract labor in areas that see higher turnover.  It should be noted they are not extending this to Home Office associates.  Not too worried about that labor pool.  You brought out good points and time will tell.

We had a piece yesterday about Walgreens  CEO Roz Brewer in which she talked about the company's increased focus on healthcare as a growth driver going forward.

One MNB reader responded:

If Walgreens truly wants to “increase focus on healthcare as a growth driver going forward” they should stop selling tobacco!

I would agree with that.  Completely.

We had a piece the other day about gene-edited beef that has been cleared by the FDA for eventual sale - without being labeled - which led me to comment that while I'm agnostic about the technology, I'd prefer transparency.

One MNB reader challenged me on that, suggesting:

This is an interesting take coming from you considering your stance on the vaccines over the last year… wouldn’t you like to see the same transparency coming from Pfizer and Moderna? Informed consent regarding vaccines? Pfizer submitted to hide the data from their clinical trials for 75 years because “you don’t need to know something.” 

Luckily the motion was denied, but I find it difficult for you to take two different stances on the same issue of transparency to the consumer.

I responded that I'm in favor of transparency by the pharmaceutical companies.  Never said anything else.  Plus, I think this seems like a case of "what-about-ism." 

Another MNB reader decided to enlighten me:

I think the reader who is accusing you of double standards on transparency is referencing the fact that there was a FOIA submitted to the FDA for ALL documentation related to the approval of the vaccine. The FDA stated it could only process 500 pages of documentation per month and there are up to 450,000 pages of documentation. Therefore, it would take up to 75 years to process all of that information. The judge in the case has ordered the FDA to process at 55,000 pages/month.

Not sure how the agency will do that and answer all the other 400 FOIAs with only 10 people in that department…and how that might lead to other serious repercussions.

The agency must redact confidential business and trade secret information from Pfizer and BioNTech, as well as any private information on patients in the clinical trial.

So, you can imagine how much time it takes to do all of that.

BTW, I’m wondering - what group of qualified people are going to read through 55,000 pages of scientific reports each month. Highly trained medical experts aren’t exactly working for minimum wage, are they? So, who (specifically) is paying for that…and what are their motivations?

Or is the group that made the request just going to continue to post these online and let folks with no credentials read the documents and comment as if they are experts? Heaven help us all.

Agreed.  I think there have been way too many people with no credentials and commenting as if they are experts.