business news in context, analysis with attitude

Published on: May 25, 2022

I'm not sure if you saw "60 Minutes" the other evening, but one of the stories was about Hope Chicago, funded by a billionaire, which is doing extraordinary work sending kids attending high school on the city's South Side to college.  (Watch the story.  It is amazing.) I was thinking about it because it makes the point that if you want to solve problems like poverty, homelessness, and violence, one of the best ways to do it is by expanding access to education, and improving the odds of the people who attend college.  When my dad died a few years ago, that's one of the things he wanted to do, albeit on a much smaller scale … but last night I got a reminder of how hopeful and powerful that can be.

Published on: May 25, 2022

There are a number of Amazon stories this morning…

•  The Information gets specific about how Amazon is dealing with an admitted surplus of warehouse square footage overbuilt during the pandemic:

"Over the last three months, Amazon has canceled plans for nearly 10 million square feet of warehouse space, shelving plans for more than a dozen fulfillment centers and delivery facilities around the U.S. as the company wrestles with a costly space glut on the heels of the pandemic.

"The scope of the pullback, which is previously unreported, shows how quickly Amazon has reversed course on an aggressive build-out. Amazon shuttered a former Cadillac dealership in Manhattan that it had turned into a hub for last-mile delivery outfitted with e-cargo bikes. And it’s working to find new tenants to sublease two sprawling fulfillment centers built to its specifications, among many others.

"The moves mark a notable departure from Amazon’s historical expansion strategy, in which the company typically was more comfortable having excess capacity that it could grow into, one former senior Amazon fulfillment executive told The Information."

The story goes on:

"This is likely just the beginning of a significant retrenchment for Amazon, which recently told investors that warehouse overcapacity added $2 billion in costs last quarter, compared with the same period a year earlier. MWPVL president Marc Wulfraat, who has been tracking Amazon’s physical footprint for more than a decade, describes the 8.3 million square feet as 'just a drop in the bucket.'  He predicts that by the year’s end, Amazon will have abandoned plans to open 30 million more square feet of warehouse space, effectively cutting its estimated expansion goals for 2022 in half."

The bottom line, according to one analyst:  "If the shovel is not in the ground, they’re going to cancel."

•  From the Seattle Times:

"One in 5 delivery drivers working for Amazon was injured on the job in 2021, a new report says.

"The same report, released Tuesday by a coalition of labor unions, found 1 in 7 was injured so severely they had to either change their job or take time off following an injury … Injuries for workers in Amazon’s delivery system — including delivery drivers as well as employees at delivery stations and sortation centers — jumped by 38% in the past year, according to the organizing center, which has pushed Amazon to changes workplace policies previously. The same group released a report in April that found injuries at Amazon warehouses increased about 20% from 2020 to 2021.

The rate of serious injuries for drivers jumped 47% in the past year, according to the most recent report."

“Amazon’s delivery quotas and production pressure are contributing to an escalating injury crisis among workers in every segment of Amazon’s delivery system,” the Strategic Organizing Center’s report read.

Amazon spokesperson Kelly Nantel said the report used a small sample of workers and drivers to “intentionally misrepresent the facts.”

“Safety is a priority across our network, which is why we’ve rolled out technology like innovative camera systems that have helped lead to an overall reduction in accident rates of nearly 50%,” Nantel said. “We’ll keep investing in new safety tools to try and get better every day.”

•  From the New York Times, an OnTech newsletter from writer Shira Ovide that focuses on an intriguing shift in Amazon's sales mix:

"One essential ingredient for Amazon’s success is the explosion of businesses based in China that sell products through its vast digital mall.

"But starting more than a year ago, Chinese businesses have steadily been selling a smaller share of stuff that Americans buy on Amazon. Merchants based in the U.S. are gaining ground.

"Experts told me that they didn’t have a satisfying explanation for this shifting balance of Amazon merchants in the U.S. and China. Nor could they say whether it’s a blip or a lasting reversal of what had been a long trend of growing market share for Chinese merchants.

"At the moment, most shoppers wouldn’t notice that Chinese merchants are selling relatively less stuff on Amazon. And the change may be another example of unpredictable shifts in shopping prompted by the pandemic.

"But Amazon’s aggressive effort to court Chinese merchants over the past half decade led to a profound and trendsetting change in online retail and the global economy. If that phenomenon has lost steam, it is worth watching for what it might mean for shoppers, international trade and the millions of businesses that earn their livelihood from selling on Amazon and elsewhere online."

The story goes on:

"Chinese merchants have been a source of Amazon’s power and among the company’s biggest headaches. They are a big reason you can find almost any product on Amazon, and they have probably helped lower prices for shoppers. But Amazon’s critics also say that the company hasn’t done enough to protect shoppers from dangerous or subpar products and from manipulated customer reviews from Chinese sellers that may be out of the reach of U.S. consumer protection laws.

"Over the past few years, Chinese merchants sold a growing percentage of what Americans bought on Amazon until there was a roughly 50-50 split between sellers based in the U.S. and China. The percentage sold by Chinese merchants, however, has declined to about 42 percent in May from about 48 percent in late 2020, according to the e-commerce research firm Marketplace Pulse … Merchants based in the U.S. are capturing a bigger chunk of sales instead."

It isn't just happening in the US, the story says:  "Domestic Amazon merchants have also been selling more relative to Chinese merchants in Britain and Germany."

Published on: May 25, 2022

In a number of unrelated stories this morning, there seems to be a consensus that while inflation will be a continuing problem, the economy is in generally good shape, with some level of confidence that there will not be a recession anytime soon.

• From CNBC:

"U.S. consumers are 'in good shape' and will keep spending at an elevated clip, at least in the near term, according to Bank of America CEO Brian Moynihan.

"'Consumers are in good shape, not over-leveraged,' Moynihan, CEO of the second biggest U.S. bank by assets, told Bloomberg Television from Davos, Switzerland.

The bank’s customers have checking and savings accounts that are still larger than before the pandemic and are spending 10% more so far in May than the year-earlier period, he said.

"'What’s going to slow them down? Nothing right now,' Moynihan said."

•  From Bloomberg:

"Jamie Dimon said the U.S. economy remains strong, and potential obstacles to growth are not set in stone.

"'Strong economy, big storm clouds,' the JPMorgan Chase & Co. chief executive officer said at the firm’s investor day Monday. 'I’m calling it storm clouds because they’re storm clouds. They may dissipate'."

The story goes on:  "Monetary and fiscal stimulus have been fueling strength in the economy, but countervailing forces including high inflation and quantitative tightening by the Federal Reserve are creating a combination that’s not been seen before, Dimon said. A recession is possible, but it would be unlike past downturns because of the unique blend of economic conditions acting on the economy, he said."

•  From CNBC:

"Best Buy reported lower sales for its fiscal first-quarter and the retailer cut its outlook for the year, citing softer demand that doesn’t appear to be letting up.

"'That trend has continued into the beginning of Q2 and it does not appear that it will abate in the near term,' Best Buy CEO Corie Barry said on an analyst call Tuesday.

The economic landscape has worsened since the company provided guidance at an investor day earlier this year. But while Best Buy is factoring that into its outlook, Barry said the company isn’t 'planning for a full recession.'

"Even as consumers watch their budgets, she said, Best Buy is selling merchandise that has become more central to their lives. Sales in the company’s fiscal first quarter didn’t decline as sharply as Wall Street had expected.

"'Consumer electronics over time is a stable industry,' Barry said. 'The last two years have clearly underscored the importance of tech in people’s lives, so I think it’s important for us to have that as a backdrop."

Published on: May 25, 2022

Axios and the Harris Poll are out with a new survey in which they identify the most visible brands in America and gauge their reputations, ranking them from "excellent to "very poor."

The top nine, all rated as "excellent," are, in order … Trader Joe's, H-E-B, Patagonia, Hershey, Wegmans, Samsung, Toyota, Amazon, and Honda.

Among the retail brands rated as "very good" are Publix (#19), Kroger (#25), Costco (#26), Walgreens (#30), Target (#32), CVS (#36), Starbucks (#43), Dollar Tree (#74), and Walmart (#77).

Other notables on the list:  Nordstrom (#54), Disney (#65), DoorDash (#68), Dollar Tree (#74), and GrubHub (#75).

In the "poor" category, the "visible" companies include Sears, at #93.

The worst brand reputation of the 100 most visible companies: The Trump Organization.

You can check out the full rankings and methodology here.

Published on: May 25, 2022

Starbucks announced yesterday that it is selling its Evolution Fresh business to Bolthouse Farms.  Terms of the deal were not disclosed.

The announcement said that "Evolution Fresh is a leading producer of primarily organic, cold-pressed, premium juice products. By joining forces with Bolthouse Farms - the No. 1 super premium refrigerated beverage brand and largest carrot supplier to North American retailers1 - Evolution Fresh will have the opportunity to accelerate its growth trajectory while Starbucks focuses its efforts on the growth of the core Starbucks business and its partner and customer experience."

The Wall Street Journal writes that "or Starbucks, the deal comes as (CEO Howard) Schultz directs more investment toward the coffee giant’s cafes and baristas. Mr. Schultz, the longtime Starbucks leader who returned in April for his third stint leading the chain, said the company needs to better handle increased demand, improve the cafe experience for customers and baristas, and increase communication between workers and executives."

Published on: May 25, 2022

Nordstrom announced yesterday via email to members of its Trunk Club shopping service that it is closing the service down, effective the end of the month.

On its website and in an email, the retailer said:

"As a valued Nordstrom Trunk Club customer, we thank you and appreciate your loyalty.

"While we will no longer serve customers through Trunks, we're still ready to take care of all your styling needs at your convenience.

"We offer everything from outfit inspiration to online chat with a stylist, to one-on-one appointments both in stores and online. We look forward to serving you! Get started here."

The company emphasized that this is more a shifting of priorities than an abandonment of styling services.

Business of Fashion quotes CEO Erik Nordstrom:  "”I want to be clear. This move reflects our belief and commitment to styling and we are dedicated to growing and investing in these services.  We have a range of styling services from low-touch outfit inspiration through our digital channels to a high-touch and personalized relationship with a stylist, all of which achieved high customer satisfaction scores. We are directing our investment towards these programs to ensure that we are well-positioned to serve customer needs and drive growth."

According to the Business of Fashion, "Nordstrom acquired Trunk Club back in 2014, for a reported $350 million. The startup was created during the initial wave of subscription box services, where stylists would ship clothing to customers once they had fashion consultations.  Nordstrom bought the business in an effort to update its personal styling, but failed to make Trunk Club profitable … Over the years, Nordstrom expanded Trunk Club into womenswear and also opened retail locations, but shuttered Trunk Club stores back in 2020."

Published on: May 25, 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…

•  The current US Covid-19 coronavirus numbers:  85,241,016 total cases … 1,029,524 deaths … and 81,764,911 reported recoveries.

The global numbers:  529,174,295 total cases … 6,304,150 fatalities … and 499,694,572 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 77.8 percent of the total US population has received at least one dose of vaccine … 66.6 percent are fully vaccinated … 46.6 percent of fully vaccinated people have received a first vaccine booster dose … and 26.3 percent of the US population age 65 and older has received a second vaccine booster dose, while 20.5 percent of the US population age 50 and older has received the second booster shot.

•  From the New York Times this morning:

"One in five adult Covid survivors under the age of 65 in the United States has experienced at least one health condition that could be considered long Covid, according to a large new study by the Centers for Disease Control and Prevention.

"Among patients 65 and older, the number is even higher: one in four.

"In an indication of how seriously the federal health agency views the problem of long Covid, the authors of the study — members of the C.D.C.’s Covid-19 Emergency Response Team — recommended 'routine assess­ment for post-Covid conditions among persons who survive Covid-19.'

"Long Covid is the term used to describe an array of symptoms that can last for months or longer after the initial coronavirus infection. The researchers identified post-Covid health problems in many different organ systems, including the heart, lungs and kidneys. Other issues involved blood circulation, the musculoskeletal system and the endocrine system; gastrointestinal conditions, neurological problems and psychiatric symptoms were also identified in the study.

"In both age groups, Covid patients had twice the risk of uninfected people of developing respiratory symptoms and lung problems, including pulmonary embolism, the study found. Post-Covid patients aged 65 and older were at greater risk than the younger group of developing kidney failure, neurological conditions and most mental health conditions."

It seems to me that this CDC study ought to be enough to create greater momentum for vaccinations and booster shots.  And yet, the numbers hardly move from day to day, as we become complacent about the continuing threat of Covid-19, or tired of hearing or reading about it, or continuing to deny its seriousness and the need for aggressive public health policy to deal with it.  

Published on: May 25, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From The Verge:

"Grocery app Gorillas, which promises to deliver goods in as quickly as 10 minutes, is laying off half of its office staff. In a press release, the company said it was letting go of roughly 300 employees from a “global office workforce” of 600. (This workforce also includes roughly 14,400 staff working in warehouse and as delivery drivers.)

"The company is also planning to tighten its focus on five markets that account for 90 percent of its revenue: the UK, US, Germany, France, and the Netherlands. The company also operates in four other European markets — Spain, Denmark, Italy, and Belgium — where it says it is “looking at all possible strategic options for the Gorillas brand.” That might mean pulling out of these markets, but Gorillas tells The Verge nothing has been decided yet.

"The news suggests trouble for the fast-growing 'instant' grocery sector."

Y'think?

Food delivery is a perfectly sensible business model.  But until they invest Star Trek-style transporters and food replicators, "instant" is a word that ought to be used with caution.

Published on: May 25, 2022

•  The New York Times reports that "a severe shortage of baby formula has prompted the Federal Trade Commission to begin an inquiry into the industry’s consolidation and whether online resellers have taken advantage of desperate families struggling to find formula.

"'The F.T.C. is launching a public inquiry to identify the factors that contributed to the shortage or hampered our ability to respond to it,' Lina M. Khan, the agency’s chair, said in a statement on Tuesday. 'Learning from this experience can help determine how we can minimize the risk of similar shortages in the markets for other life-sustaining products.'

"The agency said it would examine patterns of mergers and acquisitions to better understand how the industry - which is now dominated by four manufacturers - became so concentrated and how that consolidation should inform future merger reviews. The F.T.C. will also examine federal regulations and trade barriers that prevent foreign companies from entering the infant formula market.

"Federal officials are also seeking public input about instances in which families believe they have been scammed when trying to buy formula or been forced to pay exorbitant prices from online resellers."

Published on: May 25, 2022

Yesterday's FaceTime video offered some thoughts about the Mitigate Racial Bias in Retail Charter, described as a coalition of major retailers that is pledging to create a more welcoming environment for Black, Indigenous and People of Color.  I wondered, a week after the shooting in a Buffalo, New York, Tops store, if it is enough.  If it is too little, too late … since we seem to live in a world where white supremacists no longer feel the need to wear white hoods, but rather brag about their predilections on social media.

MNB reader Mike Springer responded:

Kevin, I’m normally in agreement with most of your thoughts but cannot get behind this one. Not really picking on you as this thought seems to be the prominent thought in media now a days.  No doubt that racism and bigotry is unfortunately still alive today (in all races BTW).  I am white but have many friends of color.  In my group of friends, we all know who was born Black, Hispanic and White but our ethnicity or skin color never really comes up… nor is it ever used as an excuse or reason to give one of us an advantage over another.  Instead, we focus on what we have in common, how to help each other and how we can get the most out of life.  Life is so much more enjoyable when we choose to focus on what brings us together and not what might divide us.

I'm happy for you, but I honestly do not think that is the country in which we live.  I think we live in a country where, unfortunately, Black people - in some communities, at least - must feel like they have targets on their backs.  How could they not?

Of course, apparently that's the way elementary school students and teachers must feel, too.  I cannot even process what happened yesterday in Texas, except to remember what Robert F. Kennedy said after the assassination of Dr. Martin Luther King Jr:

"What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence or lawlessness, but is love and wisdom, and compassion toward one another, and a feeling of justice towards those who still suffer within our country, whether they be white or whether they be black."

He said it in 1968.  Doesn't feel at the moment that we've come very far.

The Buffalo commentary in some ways connected to a commentary I wrote about Walmart's decision to pull from its stores a new special edition ice cream that commemorated the new Juneteenth federal holiday that observes June 19, 1865, the day on which Union soldiers informed enslaved Black people in Galveston, Texas, that the Emancipation proclamation - two and a half years earlier - had freed the slaves.

I wrote:

If I'd been in the room, I'm not sure that I would've flagged this as a bad idea … but I do think that I would've looked around the room to make sure that there were people there with a better sense of it than I would.  I don't think Walmart had anything but the best intentions (and certainly the hope that it was going to sell more ice cream).  But we all have to recognize that there are thing that we do not know, and cannot know.  Once one accepts the idea that there is a hole in one's frame of reference - and we all have them - it becomes a lot easier to ask questions and listen to the answers.

At the very least, people have to be sensitive to the idea that while Juneteenth is celebrated as Black Independence Day, the day it recognizes, in 1865, came 89 years after what I suppose could be called White Independence Day.  

I got this note from MNB reader Sydnie Coleman Morales:

I have been reading your publication for a couple years now, referred to me by one of my former managers. I just wanted to say that your perspective on this topic and commentary was spot on and tasteful for a subject that is difficult to articulate.

The larger issue, (which you alluded to with the comment on ice cream sales) is society's constant capitalization of Black pain and Black struggle without true attempts at resolution from a systemic level. Walmart took the easy route by hopping on the holiday/drive time bandwagon, when they could have done something meaningful. We see performative marketing for what it is and we live in an era where we will call it out and hold entities accountable. Hopefully they can learn from this in a meaningful way.

The other day I took a verbal swipe at an MNB reader who was negative about New York State Gov. Kathy Hochul, referring to her as "the governess."  I though that was totally inappropriate, and this MNB reader agreed:

As a resident of one of the states with a female Governor, your comments brought back a flood of memories.  

My mother was one of the first female postmasters hired in the Chicago area in the early 1970s and the first women’s liberation advocate I knew in my life.   One of her earlier roles was that of the person who had to maintain the fleet of 20 vehicles used by her Post Office to deliver mail.   By the time she retired from the Postal Service in 1987, her entire staff in her post office was made up entirely of well-qualified women, right down to the office custodian.

Several of those women, including my mom, were military veterans who were able to use that experience to help them advance within the Postal Service.   Needless to say, she always referred to herself as the Postmaster at her office and that the title of “Postmistress” did not exist.   If someone addressed her as “Postmistress”, (usually a man) she would gently correct them and explain that her title was Postmaster.     If they made the mistake of continuing to do so, she knew they were patronizing her.  As a youth, I saw numerous instances where a man who was trying to schmooze or bully my mother with their words failed spectacularly.  It greatly shaped who I am as a person today.

Your mom sounds wonderful.

I got this email yesterday in response to my stories about the SEC taking a hard look at companies to insure the validity of their ESG claims … the rethinking of Jack Welch's real legacy … and the suing of H-E-B and a nutritional supplement manufacturer for deceptive marketing:

The stories …  triggered some thoughts about honesty and ethics in Business…

The government should and must set limits or define what a word or series of words mean because dishonest and greedy people have proven otherwise. 

Should you really be able to claim a "low carbon footprint" if you add some solar panels to the rooftop but only generate a fraction of your power requirements? There needs to be an integrity and honesty streak from the top to the bottom of the company which is seen and felt throughout the entire supply chain and in it's products and services for healthy capitalism to thrive. Healthy capitalism is where honest pay and honest work meet. It's also where sustainability, charity, integrity, and accountability thrive. Where wages are fair, from the bottom to the top. Where ethics, honesty, and inclusiveness grow and flourish …  It's also where egos, greed, dishonesty, destructive behavior, environmental recklessness, lies, backdoor deals, payoffs, discrimination, bribes, power trips, and dirty practices die. 

We need to hold companies, businesses, owners, their leaders and their stakeholders accountable for the damage done. Think of all the poor business leaders you've mentioned over the years in MNB who have driven companies into the ground, but didn't face any hardships themselves. I worked in the grocery industry for 21 years and saw what happened when hedge funds and equity firms purchased grocery chains. Those which survived were saddled with debt for years afterwards but you better believe those funds and firms made their money tenfold. They would bring in their own leaders, drain the company dry financially with high compensation packages and payouts, have an IPO and then move on to the next company. 

CEOs across the nation are receiving record salaries, benefits, compensation packages, and are making connections with other powerful influential people which further allows them to sustain this toxic "all about me" model while normal Americans are struggling with savings, repairs, education costs and medical costs. I think it may be safe to say for some CEOs, their compensation package can't keep up with their ego.

If the government steps in to help protect people, even if a product's or company's downside is grossly understated/hidden or even deadly, (like lead in gasoline), these dishonest people scream overreach and try to hide behind "the rights of the people" and "capitalism" or any other method they can find to deflect focus so the damage is seen as non existent or minimal. People can die from a product but instead of allowing the government to beef up scrutiny and proof of testing, we instead worry about the rights of the person who is trying to use capitalism to live the "American dream". I don't know about you, but my American dream is not to be killed off by some food, supplement, or device which is suppose to make my life better. Jaqueline Galloway (who filed the deceptive marketing lawsuit) should never had ended up in this situation where she was disqualified because of something not listed in her vitamins. How is this even remotely legal for a company to "sometimes" have vitamins contaminated with a pain killer? If it's not on the bottle, it should not be in there, period. But I think we (as a nation) would be horrified if we saw the honest truth about what is really in what we consume. We would also be just as horrified by the sketch science and outright lies used to sell us products meant to better our health or lives. (Think supplements, weight loss, beauty aids, hair loss prevention, etc.) 

My American dream is not to be crushed by egomaniacs who run Companies, Businesses, and Organizations into the ground, don't give a flying leap about the environmental destruction caused by their products and whose only goal is to bilk as much money as they can from their customers and milk as much work/effort/brain power from their employees while paying them the least amount possible and then take sole create for any positive business outcomes. Yet this is exactly the corporate American so many of us live with today. 

With all that doom and gloom, I'm still optimistic that there are good people out there running good businesses and are treating their people well. It's just hard to see the tree in the forest.

Plenty of doom and gloom to go around, I'm afraid.