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    Published on: March 16, 2022

    Is Amazon evil?  Bad for the economy?  Bad for the culture?  KC considers the options, and argues that there is more to consider than algorithms … and, in fact, it is complicated.

    Published on: March 16, 2022

    The Wall Street Journal this morning reports that Starbucks CEO Kevin Johnson, whose tenure lately has been battered by a declining stock price and a nascent unionization effort, is stepping down, effective April 4.  He will be replaced - the company says on an interim basis - by the company's longtime CEO, Howard Schultz, who built the company into the nation's preeminent and ubiquitous coffee brand.

    The Journal writes that the decision to leave was Johnson's, and that he was not pushed out;  Starbucks says that the 61-year-old Johnson, who took over from Schultz about seven years ago, " first signaled to company directors around a year ago that he was thinking about retiring, and hoped to do so when the pandemic wound down."  The story says that "Starbucks’s board hired executive search firm Russell Reynolds Associates last year to help plan for Mr. Johnson’s possible departure, the company said. Starbucks said it hopes to choose a new CEO by the fall."

    The story goes on:  "Now Mr. Schultz, 68 years old, is returning for his third stint heading Starbucks. He stepped down as Starbucks CEO in 2000, and returned in 2008 as the company sought to improve its performance. Mr. Schultz, who flirted with a run for U.S. president as an independent in 2019, currently heads his family’s foundation and is involved in philanthropy."

    KC's View:

    Do I get to take a victory lap on this one?

    Because I've been saying for months - pretty much from the beginning of the unionization efforts at Starbucks - that this would play into Schultz's messiah complex, and that somewhere in Seattle he was rehearsing his "I have returned" speech.

    I'm not saying that this is a bad move.  Schultz is a force and an estimable business personality.  I'd expect the stock price to get at least a temporary bump, and Schultz will be all over the media talking about getting back to the fundamentals of Starbucks' vision and mission.

    But … seven years is a long time, and Schultz is returning to a company that is different from the one he left, and to a business and labor climate that has changed significantly.  I would also expect that he may be frustrated by what he finds when he returns to the c-suite atop Starbucks' Seattle headquarters.

    I wouldn't be surprised, though, if Schultz stays longer than is currently being projected.  If he's enjoying himself and moves the stock price and labor needles in positive directions, it might make sense to stay in the CEO job for a little longer just to stabilize the place.

    Think of Howard Schultz as the Tom Brady of business executives.

    Published on: March 16, 2022

    Ahold Delhaize-owned Giant Food announced this morning that "its Giant Pickup service is now free and available same-day within four hours of purchase at all 159 Giant Pickup locations."

    The announcement notes that "last year Giant eliminated minimum order requirements for all Giant Pickup orders. Minimum order requirements for Giant Delivers were halved and delivery fees were eliminated for midweek orders and reduced significantly for popular Friday-Monday dates."

    “Ecommerce demand continues to escalate as more customers discover the time-saving benefits of online shopping at Giant,” said Gregg Dorazio, Director of eCommerce for the Landover, Maryland-based Giant Food, in a prepared statement.  “Free pickup on all orders makes this personalized service even more accessible."

    KC's View:

    He's right.  This does make e-grocery more accessible.  It also is a competitive move as Giant looks to grab and keep e-commerce market share in an environment that only is going to get tougher and more cutthroat.

    Published on: March 16, 2022

    The New York Times this morning has a story about how the e-commerce boom has turned the New York City metropolitan area into a magnet for a wide variety of warehouses and logistics operations.

    Here's how the Times frames the story:

    "In just two years, Amazon has acquired more than 50 warehouses across the city and its surrounding suburbs. UPS is building a logistics facility larger than Madison Square Garden on the New Jersey waterfront near Lower Manhattan.

    "In Brooklyn, Queens and the Bronx, 14 huge warehouses to help facilitate e-commerce operations are rising, including multistory centers previously found only in Asia.

    "Fueled by the soaring growth of e-commerce while so many Americans have been working from home, online retailers, manufacturers and delivery companies are racing to secure warehouses in the country’s most competitive real estate market for them.

    Every day, more than 2.4 million packages are delivered just in New York City, an online-buying mecca in a region of 20.1 million people.

    "The feverish activity has already transformed the landscape of city neighborhoods and rural towns, transforming Red Hook in Brooklyn into a bustling logistics hub and replacing farmland in southern New Jersey with sprawling warehouses where packages are sorted, packed and delivered, often within hours of being ordered."

    The Times writes that "the soaring demand for warehouses, once the ugly duckling of the real estate industry, underscores their pivotal role in a complex global supply chain. Nationwide, developers are pouring billions of dollars into the construction of new facilities, helping lift the commercial real estate sector, which has been battered by the emptying of offices during the pandemic … While Amazon, major retailers and logistics operators such as UPS, FedEx and DHL dominated the initial wave of warehouse deals at the start of the pandemic, interest is now coming from smaller businesses seeking greater control of their supply chain amid a global bottleneck in the movement of goods."

    However, the growth is not being welcomed in all quarters:  "The rise of warehouses has also sparked significant opposition. While they provide jobs and can lower residential property taxes by contributing to the local tax base, people across the region say the large hubs will lead to constant flows of semi-trucks and delivery vans that will worsen pollution and traffic congestion."

    KC's View:

    It was just a few weeks ago that we had a story about how dark stores and delivery hubs were having an impact on Boston's neighborhoods … and it all is a reflection of how the e-conomy is reshaping not just customer behavior, but also the broader landscape and neighborhoods.

    Opponents are not wrong in worrying about the impact.  It is up to private enterprise and those responsible for public policy to not just blunder ahead blindly, but to take a nuanced and long-term approach to permitting and building.

    Published on: March 16, 2022

    The Washington Post this morning reports that "the Securities and Exchange Commission plans to require all publicly traded companies to disclose their greenhouse gas emissions and the climate risks their businesses face … Under a groundbreaking new rule the SEC is expected to propose Monday, hundreds of businesses would be required to measure and disclose greenhouse gas emissions in a standardized way for the first time, according to two people briefed on the agency’s discussions who spoke on the condition of anonymity to describe internal deliberations.

    "The move could mark the most sweeping overhaul of corporate disclosure rules in more than a decade, and could put the United States on closer footing with other countries set to begin mandated emissions reporting over the next three years."

    The Post notes that "shareholders of public companies are increasingly demanding more information about the risks that climate change could pose to their investments, arguing that mounting climate disasters and environmental regulations could limit the growth of businesses that do not prepare for them … While many firms already voluntarily share some details about their environmental impact, there are sometimes wide discrepancies in how companies calculate carbon emissions, said Danielle Fugere, president and chief counsel of shareholder advocacy group As You Sow.

    "For example, Coca-Cola counts up total emissions generated by its facilities, suppliers and customers in making and consuming its products. Tesla, which touts its zero-emission electric vehicles, shares only the emissions generated in creating a single line of cars, the Model 3, explaining in its most recent impact report that this is 'a good proxy for understanding the emissions impact of our vehicle business'."

    The story points out that "business groups have opposed the federal government mandating any environmental disclosures. The U.S. Chamber of Commerce, the nation’s largest business lobbying group, has argued that because environmental data is 'inherently uncertain,' businesses should not be forced to include it in their annual updates to investors — for which they can be held legally liable."

    However, "Randy Hargrove, a spokesman for Walmart, said the retailer is 'supportive of more robust ESG disclosures,' although he added that the company is waiting to see the text of the proposed rule before taking a formal position on it."

    The Post writes that "the new rule could transform the SEC into one of the country’s leading enforcers of climate-related disclosures, a role in which some critics say the Wall Street regulator lacks expertise and authority."

    KC's View:

    I'm a big apples-to-apples guy, and I believe in transparency.  I think that public companies should be required to provide information like this so that potential investors can make informed decisions, and I think that it makes the most sense for there to be a consistent reporting structure.

    Published on: March 16, 2022

    From the Boston Globe:

    Oil soared 34 percent to nearly $124 a barrel from Feb. 23, the day before Russia launched its attack, to March 8. Prices have retreated since, and futures contracts for the US benchmark, known as West Texas Intermediate, closed at about $96 a barrel on Tuesday, or 5 percent above the pre-invasion price.

    "As we’ve seen so often in the past, gasoline takes longer to reverse a price spike than crude. But at least prices at the pump have stopped climbing, and they should begin to fall gradually, barring any unpleasant surprises.

    "'The drop in #gasprices should accelerate and if oil stays in double digits the national average could decline under $4/gal in the weeks ahead. Stations lost their shirt on the way up, but now margins are improving and they will start passing the discounts on to you,' Patrick De Haan, head of petroleum analysis at GasBuddy, tweeted Monday evening."

    KC's View:

    I hope that gas retailers won't be tempted to keep prices high so they can grab more margin for some period of time.  Though I suppose that market forces won't allow it - all you need is one gas station to lower its prices, and that sort of forces most stations to lower theirs.

    Published on: March 16, 2022

    The US Senate yesterday voted unanimously to end the twice-a-year clock changing that has taken place in the country for about a century, making Daylight Savings Time permanent in November 2023.

    The bill now goes to the House of Representatives, where experts have judged its prospects "uncertain."

    The New York Times writes that "retail and leisure industries have argued that more light in the evenings would give consumers more time to spend money, and proponents also argue that lighter evenings would translate to fewer robberies and safer roads."

    In addition, the Times writes, "There is some research to support the senators’ claims that year-round daylight saving time will make people more productive, well rested and happier.  In one 2017 study from Denmark, scientists analyzed a psychiatric database of more than 185,000 people from 1995 to 2012. They found that the fall transition to standard time was associated with an 11 percent increase in depressive episodes, an effect that took 10 weeks to dissipate. The spring switch, by contrast, had no similar effect."

    However, the Times also reports that "sleep scientists, including the American Academy of Sleep Medicine, hate the idea of choosing daylight saving time over standard time. While no study has definitively proved that standard time is best for human health, they argue that a permanent switch to daylight saving time could have long-term, dangerous effects on public health … Sleep scientists point out that standard time — winter time — is more closely aligned with the sun’s progression. They say that bright mornings help people wake up and stay alert, while dark nights allow for the production of melatonin, the hormone that triggers sleep. When it is too light at night, it can be hard to fall asleep. When it is too dark in the morning, it can be hard to wake up.

    "Together, that could lead to chronic sleep deprivation, which has been linked to a range of health conditions, like obesity, heart disease and diabetes. Light cues from the sun also regulate metabolism, insulin production, blood pressure and hormones."

    Published on: March 16, 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 a total of 81,244,936 cases of the Covid-19 coronavirus, resulting in 992,302 deaths and 56,456,450 reported recoveries.

    Globally, there have been 462,285,189 total cases, with 6,075,377 resultant fatalities and 395,491,941 reported recoveries.   (Source.)



    •  The Centers for Disease Control and Prevention (CDC) says that 76.7 percent of the total US population has received at least one dose of vaccine … 65.3 percent is fully vaccinated … and 44.4 percent has received a vaccine booster dose.

    •  The Washington Post reports that "pharmaceutical giant Pfizer and its partner, BioNTech, will seek emergency authorization for a second booster shot of their coronavirus vaccine for people 65 and older, an effort to bolster waning immunity that occurs several months after the first booster, according to three people familiar with the situation.

    "The submission to the Food and Drug Administration … is expected to include 'real world data' collected in Israel, one of the few countries that has authorized a second booster for older people, said the individuals, who spoke on the condition of anonymity because they were not authorized to discuss the issue. The decision from the FDA could come relatively quickly, especially if officials conclude the data is straightforward and does not have to be reviewed by a panel of outside vaccine experts.

    "In a separate move aimed at answering longer-term questions about booster strategies, the FDA plans to hold a meeting of its outside advisers in early April to consider whether there should be an effort in October or November, perhaps in conjunction with the annual influenza vaccine campaign, to encourage some or all adults to get additional boosters. The panel could also discuss whether the shots should be the same formula as the current vaccine or retooled to counter new variants, according to a federal official who spoke on the condition of anonymity to discuss the plans."



    •  From the New York Times this morning:

    "Roughly 17 million Americans received the Johnson & Johnson Covid vaccine, only to be told later that it was the least protective of the options available in the United States.

    "But new data suggest that the vaccine is now preventing infections, hospitalizations and deaths at least as well as the Pfizer-BioNTech and Moderna vaccines.

    "The reasons aren’t clear, and not all experts are convinced that the vaccine has vindicated itself. But the accumulating data nonetheless offer considerable reassurance to recipients of the vaccine and, if confirmed, have broad implications for its deployment in parts of the world."

    Published on: March 16, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Seattle Times reports that Amazon is partnering with Sound Transit there "to build 318 affordable-housing units near light-rail stations in Bellevue and SeaTac.

    "The new apartments, funded through $42.5 million in low-rate loans and grants from Amazon, are slated for the Spring District/120th Station in Bellevue and the Angle Lake Station in SeaTac. The units are targeting residents who earn 30-80% area median income. In Seattle, that ranges from $24,300 to $63,300 for a single-earner household, according to the Seattle Housing Authority."

    According to the Times, "These are the first projects announced since Amazon committed $100 million in June to build 1,200 affordable-housing units on Sound Transit properties. That funding comes from an even larger commitment Amazon made in January 2021 to launch its Housing Equity Fund, a $2 billion initiative to preserve and create 20,000 affordable homes … Since launching the Housing Equity Fund, Amazon has committed $344 million in loans and grants in the Puget Sound region to create 2,870 affordable homes, the company said in its Tuesday announcement."

    The Times story points out that " some Seattleites see tech giants like Amazon as one of the reasons the region needs help with affordable housing," which seems like a fair criticism.  Except that some of this is inevitable when one of the world's most innovative, fast-growing companies headquarters itself in a specific place;  would these Seattleites have preferred that companies like Amazon go elsewhere?  (Maybe.). Give Amazon credit for investing in potential solutions to a problem it helped create.



    •  CNBC reports that "Amazon on Tuesday launched an online role-playing game designed to make it easier for people to pick up cloud-computing skills.

    "The game, AWS Cloud Quest: Cloud Practitioner, has users create their own avatar who moves through a virtual city, helping its denizens solve technology-related cloud issues. Users earn points for completing Amazon Web Services simulations and puzzles that will unlock such things as new character styles, pet companions, city themes and virtual items like a hoverboard and a unicorn pool float … Amazon said Cloud Quest was launched to help explain 'core AWS services and categories,' including computing, storage, database and security services, as well as to guide the building of basic cloud solutions."



    •  Engadget reports that "European Union officials have unconditionally rubber stamped Amazon's $8.45 billion bid to buy famed movie and TV studio MGM. The European Commission's antitrust regulators determined there was limited overlap between the companies and said the merger wouldn't severely reduce competition in the theatrical film and audio-visual content markets … Amazon still requires the green light from the Federal Trade Commission before it can close the deal, which was announced last May. Recent reports suggested the FTC was planning to challenge the merger with an antitrust lawsuit. However, that requires a majority vote by commissioners."

    Published on: March 16, 2022

    •  High gas prices have led the  Arkansas Department of Agriculture Bureau of Standards to allow retailers in the state to price and sell fuel in half-gallon increments.  The change will be in effect until July 1, and experts speculate that the move could be adopted by other states.



    •  The Associated Press reports that the US Department of Agriculture (USDA) has confirmed that bird flu has been found "in a commercial chicken operation in Wisconsin … Samples from the flock were tested at the Wisconsin Veterinary Diagnostic Laboratory and confirmed at the National Veterinary Services Laboratories in Ames, Iowa, the agency said in a statement."

    The story goes on:  State animal health officials have quarantined the property in southern Wisconsin’s Jefferson County, about 50 miles (80 kilometers) west of Milwaukee. All chickens in the flock will be destroyed and will not enter the food system, the USDA said.

    "Farms that raise turkeys and chickens for consumption have been on high alert and taking steps to increase biosecurity since avian influenza was recently discovered in a handful of states, including Indiana and Iowa. Producers fear a repeat of a widespread bird flu outbreak in 2015 that killed 50 million birds across 15 states and cost the federal government nearly $1 billion.

    "Avian influenza is an airborne respiratory virus that spreads easily among chickens through nasal and eye secretions, as well as manure. The virus can spread from flock to flock by wild birds, through contact with infected poultry, by equipment and on the clothing and shoes of caretakers."

    Published on: March 16, 2022

    •  The Long Island Business News reports that "James A. Cullen Jr. has been appointed the new chairman of the board of King Kullen Grocery Co. 

    "The appointment comes following the retirement of the previous board chairman Ronald Conklin, who will remain a member of the company’s board of directors with the title of chairman emeritus.

    "King Kullen’s newest chairman of the board is the grandson of the Hauppauge-based grocery chain’s founder Michael J. Cullen and the son of James A. Cullen, who served as King Kullen chairman until his death in 1974."

    Published on: March 16, 2022

    Yesterday we took note of a Wall Street Journal report that "phased retirement programs - which allow workers nearing retirement age to cut back on their hours while keeping some pay and benefits - are growing in popularity."

    And this was before Howard Schultz returned to Starbucks!

    One MNB reader responded:

    Is this Tom Brady’s new retirement plan?

    And, from MNB reader Steve Anvik:

    I’ve been doing a phased retirement for 20 months, and it’s wonderful. What a blessing my company figured it out, and made it work - with an equal input from myself.  I’ve even flex up during busiest times, which is a win for all. 

    I've never been able to achieve it, but I always liked the Travis McGee approach, as written by John D. MacDonald - he takes his retirement "in installments," not working until he finds himself running out of money.



    On another subject, from MNB reader Mackenzie Anderson:

    I think you are absolutely right about meal kit companies not planning for a post-pandemic downturn. I imagine some of these companies thought that once people tried them they would stick with them, but I've always felt that meal kits have a critical flaw in that eventually people realize that they know how to cook. Once people get to that point the price difference really stands out for a kit vs. groceries.

    I also wonder how many of these meal kit companies consider grocery delivery/pickup services to be a competitor? One of the main value propositions of these kits is not having to go and grocery shop, but delivery and pickup offer that same benefit and still provide better value per meal. I actually did a market research project about grocery delivery/pickup usage over the pandemic for a class last semester and quite a few people tried these services for the first time or increased their usage over the pandemic and plan to continue using them more going forward.



    Regarding Target's inclusivity efforts, one MNB reader wrote:

    I think it’s great that Target has given priority to African American vendors, but if I am him I would have expanded it to all minorities.  Maybe they have, but reading these quotes it seems like Hispanic, Asian, Female owned and others haven’t gotten the same emphasis.  Second ( this goes back pre pandemic). I hope he also focuses on in stock conditions.  I personally and others have found that sale items are out of stock on a frequent basis.  Part of the issue is caused at store level because sometimes when you ask an associate they can go find it in the back room. Again, this existed pre pandemic and has gotten worse since.  Execution through their internal supply chain needs to improve.   



    Responding to our piece about growth in compact disc sales, MNB reader Rich Heiland wrote:

    When we downsized into an apartment I bought a turntable that included not just a CD player but a cassette player - not to buy more but to continue to enjoy what I already have. I think one thing that killed CDs was when car manufacturers quit putting them in cars. I bought a CD player I keep in the glove box so I can continue to check out books on CD from our library for long trips. But, I won't be a new vinyl or CD customer. I do like the instant gratification and selectivity of streaming.....and I have to keep in mind we moved into an apartment to downsize and get rid of stuff!