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    Published on: June 8, 2022

    I spoke the other day about my disappointment at a) not being able to find any Chobani Oat Vanilla Yogurt, and b) not getting any explanation from Chobani or the retailers that used to carry it as to why.  Days went by, and no responses … until yesterday, when I heard from Sandra Frank, Consumer Loyalty Operations Specialist at Chobani.  The good news is that all is forgiven … though there's some bad news, too.  And, of course, a business lesson.

    Published on: June 8, 2022

    by Kevin Coupe

    Here's an equation for you:  670-to-1.

    Fast Company reports that "at the 300 publicly held U.S. corporations with the lowest median wages, the gap between what CEOs and median-wage workers earn has grown to a ratio of 670-to-1, according to a new report—up from 604-to-1 in 2020.

    "That’s just the average gap; the ratio at 49 of those 300 companies is larger than 1,000-to-1, according to the progressive think tank Institute for Policy Studies, which released its annual Executive Excess report on Tuesday."

    The story goes on:  "While CEOs at those 300 corporations saw their pay increase by $2.5 million in 2021 - to an average of $10.6 million - median pay at those companies went up by only $3,556, to an average of $23,968. At more than a third of those firms, median pay didn’t even keep up with the 4.7% average inflation rate in 2021."

    And, "At those 106 companies where worker pay didn’t keep pace with inflation, 67 companies - nearly two-thirds - spent resources buying back their own stocks, a tactic used to inflate the price of shares, and which then inflates executive stock-based pay."

    I don't begrudge CEOs their pay.

    But I have to wonder how many of those CEOs are working furiously to drive down their labor costs, or minimize the amount they spend on their workers.

    I wonder how many of these CEOs favor labor deals that don't even keep up with inflation, much less reward their front line employees to a far lesser degree than they themselves are being rewarded?  (If median pay didn't keep up with 2021's rate of inflation, y'think it'll keep with inflation this year and next?)

    What I don't wonder about is why some people leave their jobs, feeling that they are being disrespected and undervalued.  

    These numbers are the very definition of an Eye-Opener … and I am reminded of a relevant proverb:  "There are none so blind as those who will not see."

    Published on: June 8, 2022

    The Feedback Group is out with a new survey of grocery shoppers in which they were asked "from the money spent at their primary store, how much they think is left for profit, after the store pays all expenses and taxes. On average, shoppers indicated they believe their primary store has a net profit of 33%."

    FMI-The Food Industry Association says that the actual number is close to one percent, though it did get as high as three percent in 2020.

    “Clearly, grocery shoppers believe that the stores they shop are far more profitable than they actually are,” says Doug Madenberg, Chief Listening Officer with The Feedback Group. “This inflated view of profits certainly leads some shoppers to think that food stores simply aren’t doing enough to keep prices down.”

    The study also concluded:

    "Shoppers employ a wide range of strategies to cope, foremost being purchasing more food and groceries at stores with lower prices (46% have used this strategy), eating more often at home instead of restaurants (also 46%), and buying more items on sale (43%). Other common strategies include buying more store brands instead of national brands (38%), purchasing more bulk-pack items to lower the price per serving/unit (25%), buying fewer last-minute or impulse items (25%), substituting similar, less expensive foods (24%), and using a store’s weekly sales flyer to plan their shopping list (23%). Additionally, some shoppers compare prices at multiple stores before buying an item (18%), purchase food for home that is less healthful but also less expensive (15%) and buy fewer organic items and products to cut costs (12%)."

    KC's View:

    That 33 percent profit number is staggering … and retailers have only themselves to blame.

    If they did a good job of telling their own stories - even laying out for shoppers and employees, to some degree, their financials - then people would be disabused of the notion that supermarkets are raking in the cash at shoppers' expense.

    While the number may be staggering, it isn't surprising.  Over the many decades that I've been writing about the industry, I've often had this conversation with people who are surprised about food retailers' net margins.  I cannot image retailers are surprised.

    One question, though.  Profit number are calculated after taking out all expenses.  That includes salaries … which I suppose would include the executive compensation numbers cited in our Eye-Opener, above.  Which might be a reason that the industry has not done a better job of telling its story…?

    Published on: June 8, 2022

    The Washington Post reports that Amazon's lawyers have filed a motion requesting that next Monday's hearing before the National Labor Relations Board (NLRB), at which it will formally object to a unionization victory at one of its warehouses on Staten Island, be closed to the public.

    According to the story, "NLRB hearings are typically held in person and open to the public. But Amazon argues in its motion that because the hearing is being held on Zoom, it makes it difficult to know if witnesses who aren’t supposed to be able to observe the proceedings are in attendance, or if the hearing is being recorded and shared with those witnesses."

    The Post goes on to point out that Amazon "did not immediately respond to questions about whether members of the media would be permitted to attend the hearing if the company’s motion is granted.

    "The motion, which requests that the general public be barred from attending, specifies the parties that Amazon say should be allowed to attend the full proceeding, including witnesses and legal teams, does not explicitly mention members of the media. It describes media coverage of the union election in Staten Island as 'unprecedented'."

    Seth Goldstein, the lawyer representing the Amazon Labor Union, tells the Post, "“I’ve never heard of this happening before. This is fantasy … It again shows that Amazon is out of touch with the importance of transparency so that everybody understands what is happening."

    KC's View:

    The irony, of course, is the the Washington Post is owned by Amazon's founder-chairman Jeff Bezos, and its slogan, displayed prominently on its front page, is "Democracy dies in darkness."

    Now, let's be clear.  Bezos' Post ownership is a private investment, separate from his role at Amazon.  (And, to be fair, Bezos has been hands-off in terms of editorial coverage.)  But I'm amazed that nobody at Amazon or on its legal team realized that their legal position would contradict that of one of the nation's great newspapers, which is owned by the man who remains Amazon's public face.  The disconnect is just too easy to point out.  

    Not being a union organizer nor a labor lawyer, I have no idea how the NLRB might rule on this.  And I'll concede that the use of Zoom technology complicates some of the issues, but it doesn't totally change them.

    For me, I believe in transparency.  I believe that democracy dies in darkness.  I believe that, as Supreme Court Justice Louis Brandeis said, "Sunlight is the best disinfectant."  So I hope that the NLRB is able to keep this hearing public, and let the chips fall where they may.

    Published on: June 8, 2022

    CNBC reports that Target "warned investors Tuesday that its profits will take a short-term hit, as it marks down unwanted items, cancels orders and takes aggressive steps to get rid of extra inventory."

    CEO Brian Cornell tells CNBC, "“We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment."

    "By taking swift action," the story says, "Cornell said Target can fend off further pain and make room for merchandise that customers do want, such as groceries, beauty items, household essentials and seasonal categories like back-to-school supplies."

    KC's View:

    So we can expect that this summer Target will start having the kinds of blowout sales that we're used to seeing on Black Friday … which will be interesting because it could prompt other retailers to do the same thing.  It also will be interesting because this all will be happening as Amazon has its annual Prime Days promotion.

    This could create a lot of consumer spending … and I'm not smart enough to know whether this will be good for the economy or bad because it will create the illusion of  strength where it may not exist.

    Published on: June 8, 2022

    From the New York Times this morning:

    "In a sign that service industry workers continue to have a strong interest in unionizing after successful votes at Starbucks, REI and Amazon, employees at a Trader Joe’s in western Massachusetts have filed for a union election. If they win, they will create the only union at Trader Joe’s, which has more than 500 locations and 50,000 employees nationwide.

    "The filing with the National Labor Relations Board late Tuesday seeks an election involving about 85 employees who would form an independent union, Trader Joe’s United, rather than affiliate with an established labor organization. That echoes the independent union created by Amazon workers on Staten Island and the worker-led organizing at Starbucks.

    "'Over the past however many years, changes have been happening without our consent,' said Maeg Yosef, an 18-year employee of the store who is a leader of the union campaign. 'We wanted to be in charge of the whole process, to be our own union. So we decided to go independent.'

    "Ms. Yosef said the union had support from over 50 percent of workers at the store, known as crew members.

    "'We have always said we welcome a fair vote and are prepared to hold a vote if more than 30 percent of the crew wants one,' said a company spokeswoman, Nakia Rohde, alluding to the N.L.R.B. threshold for an election. 'We are not interested in delaying the process in any way'."

    Published on: June 8, 2022

    Fox Business reports that "Chick-fil-A is testing fully automated delivery with a small army of robots in pilot programs across the country," in markets that include Austin, Texas, California and Florida.  

    The story says that "the food will be delivered via a fleet of box-shaped robots on wheels, which will transport the food in a locked compartment. As the robot arrives at the customer's location, a text message will provide a code to unlock the mechanism and retrieve the goods … The robots are able to travel in most weather conditions, and are outfitted with safety features to ensure they do not collide with hazards en route to their destination."

    The robotic technology is being powered by Refraction AI.

    KC's View:

    The robots are said to be thrilled with the gig because they get Sundays off.

    Published on: June 8, 2022

    Excellent piece in Inc. that analyzes a story from earlier this week, in which Starbucks CEO Howard Schultz, back for his third turn of duty, said that he will remain in the job until next spring rather than leaving in the fall as originally planned.  In addition, Schultz said that the decision has been made to find his replacement outside the company, because Starbucks "needs a different kind of leader."

    The Inc. judgement:  " The Starbucks board has failed to deliver upon its most important corporate governance responsibility: CEO succession planning."

    Here's how this conclusion is framed:

    " Think about that for a second. Of the many thousands of managers and executives in the company -- and the tens of millions of dollars the company proudly spends on leadership development -- the Starbucks board has determined and publicly announced that not one single person in the company is capable of being promoted internally to fill the CEO spot. Leadership development is the opposite side of the same succession planning coin. Starbucks has failed on both sides.

    "That's a major, board-level meltdown. Heads should roll."

    The story goes on:

    "It's not as if Starbucks is creating the next rocket to Mars or artificial intelligence algorithms for Google. It sells coffee, tea, and other delicious beverages, for heaven's sake. Sure, consumer tastes are changing, and the global pandemic has changed business fundamentals. But this stark reality is true for everyone - companies of all shapes and sizes. And many boards have already updated their approach to succession planning, recognized that new leadership skills are needed, and are now helping their internal, high-potential talent master these competencies well ahead of an actual CEO transition."

    And here's the business lesson:

    "Hopefully, the Starbucks CEO succession meltdown is a siren song to other boards of directors. Disruption is happening in industry after industry, and your succession planning process likely needs some fine-tuning, if not a complete overhaul. Start thinking more carefully about the kinds of leadership skills future CEOs will need to not only handle disruption, but also to be the ones doing the actual disruption … boards need to create a pipeline of intentionally disruptive leaders."

    KC's View:

    I think this is an exceptionally perceptive point, and I wish I'd thought of it when writing my original commentary.

    But I still think there could be something else going on here.

    As I pointed out on Monday, Kevin Johnson, who was sent packing so Schultz could return, was an outside hire - he was a technology guy who spent most of his career at Microsoft, and then was CEO at Juniper Networks before moving to Starbucks.

    Before that, Jim Donald was an outside hire - he'd been at Walmart, Safeway and Pathmark - when Schultz stepped away from the CEO role the first time, only to get fired the first time (that we know of) that Schultz indulged his messiah complex.

    It is not hard to imagine that they'll find some outside person to be the new Starbucks CEO, only to have Schultz engineer that person's departure at some point.

    It'll be hard to do with Schultz planning to remain on the Starbucks board, but I think number one on its agenda as to be carving out the company's future without the presence of Howard Schultz.  He cannot be like a security blanket that the company clings to, believing that in the end, he's the only person who can fix its problems.

    Published on: June 8, 2022

    Bloomberg reports that Amazon is ending its Flex program - which pays drivers to deliver packages in their own vehicles - in Germany, the company's second biggest market.

    “We regularly evaluate our various programs and have made the difficult decision to discontinue the Amazon Flex program in Germany at this time,” a spokesperson for the Seattle-based company said in an emailed statement. “We are actively supporting former Amazon Flex delivery partners to find other opportunities across the hundreds of roles and opportunities across Amazon’s operations in Germany.”

    Amazon started the Flex program in the US in 2015, and then expanded it to Germany in 2017.

    KC's View:

    Amazon isn't commenting on the decision beyond its emailed statement, apparently, but it isn't hard to imagine that this is part of its broader effort to deal with overcapacity in its distribution systems.  It has too much warehouse space and probably too many drivers, and this seems like a relatively easy way to deal with the latter problem.

    I'm reminded of the old saw about sculptors - they know what they want the end piece to look like when faced with a hunk of marble, and all they do is chip away the extraneous material.  Think of CEO Andy Jassy as the sculptor.

    Published on: June 8, 2022

    •  Albertsons said this morning that its retail media network - dubbed the Albertsons Media Collective - now is working with marketplace advertising platform Pacvue to drive more sponsored product advertising campaigns to its platform.

    According to the announcement, "Pacvue clients can now expand their advertising to this new retail media network while continuing to rely on Pacvue to holistically manage their campaigns across all retail media networks with consistent performance data, flexible reporting, and smart optimizations."

    “We are continuously looking for ways to grow and enhance our media network so our customers can engage with the food and brands they love. Through this new partnership with Pacvue, we are giving even more brands the opportunity to connect with more customers with relevant and inspiring content,” said Kristi Argyilan, SVP of Retail Media at Albertsons Cos.

    •  Amazon has released its second Brand Protection Report, which it described as highlighting its "commitment to the authenticity of goods sold in its store and to fighting bad actors so that customers can shop with confidence."

    Among the assertions:

    "Amazon stopped more than 2.5 million attempts to create fraudulent selling accounts, preventing these bad actors from publishing a single product for sale. This is down from more than 6 million attempts the prior year, thanks to robust seller and product vetting, along with efforts to hold bad actors accountable that are deterring them from attempting to sell on Amazon."

    Amazon also said that it "filed civil litigation against more than 170 counterfeiters in U.S. courts," and "sued or referred more than 600 criminals for investigation in the U.S., UK, EU, and China, an increase of more than 300% over 2020."

    Amazon said that it "identified, seized, and appropriately disposed of more than 3 million counterfeit products, preventing them from harming customers or being resold elsewhere in the retail supply chain."

    Published on: June 8, 2022

    Yesterday, chiming in on the ongoing discussion here about whether climate change requires that traditional benchmarks of capitalism need to be adjusted to some degree, - which was prompted by a piece that I ran by Tufts University senior Meghan Smith - one MNB reader wrote:

    You are assuming that climate change is completely the result of humans. Read counterpoints to that. I suggest "Inconvenient Facts," by Gregory Wrightstone if you claim to have an open mind that you are espousing.

    I responded:

    Actually, I'm not assuming anything … I am trusting the vast majority of climate scientists who believe that human beings have contributed to the climate crisis, and who argue that it would be foolhardy to do nothing to try to combat it.

    I'm not a scientist … though when I googled the book you mention, I did see an awful lot of entries that debunked the book, citing its willingness to twist data to support its own biases and promote myths that many educated people feel are unsupportable.  (I feel like this is the same argument that took place during the pandemic, when what should've been a public health policy conversation somehow became a political football.)

    That's okay.  We're not going to resolve the argument here, and MNB probably isn't the place to have an extended debate about the source of climate change.  I don't expect to persuade you, and you're probably not going to persuade me.

    Here's my bottom line feeling.  I think it seems utterly reasonable to believe that human beings have contributed to climate change, and that it makes a lot more sense to try to do something about it and then find out it was not necessary, as opposed to assuming that nothing could be done about it and then find out we should have tried.  Especially when there seems to be ample evidence that while this approach may upend some traditional businesses and industries, in the end it will be good for the economy.

    So I'm sorry.  I'm not going to read the book, because I just don't need to go down that rabbit hole.  If I do, I might not find my way out, and then I'll start using MNB to spout QAnon conspiracy theories, and eventually I'll find myself joining the Proud Boys.

    I heard back from this reader:

    Kevin, I don’t expect a response. I have been a faithful reader of your daily column for over 20 years. I don’t always agree with you, but appreciate your insight and the fact that you make me think.

    I wrote about possibly reading a book that would be contrary to popular opinion about climate change. I want to be clear, I believe that the climate is changing, but not all to blame on the human impact. I can understand you not wanting to read the book and I have also read the comments that are opposed to his fact finding.

    What I take issue with is how you went from not wanting to ready the book to linking that to Q-Anon and the Proud Boys, assuming that is where I reside. I am a proud Conservative-Republican. Saying that, I am not a supported of Donald Trump and wish he would just go away. I believe that Biden won the election fair and square. I don’t espouse the beliefs of Q-Anon or the Proud Boys. I was appalled and greatly disappointed in the events of January 6, 2021. Just because I question, as do many scientists, the popular opinion on climate change does not lump me in that group.

    In spite of this, I will continue to read your email daily and listen to your comments because they challenge my thinking.

    P.S. The other area I’m sure we would be at odds is, I’m a lifetime Yankee fan, but am glad to see the Mets having a great season to date.

    Really?  A Yankee fan?  Well, that's just too much.

    Just kidding.

    First of all, of course you get a response … not to mention a posting of your entire email.

    First point.  I did write yesterday, "I think it seems utterly reasonable to believe that human beings have contributed to climate change…" The key word there is contributed.

    When the history of this time is written - assuming, of course, that humanity survives the cluster-muck that the world is right now - I have no idea the degree to which the human impact will be judged to have contributed to it.  I just think it is naïve to think we have nothing to do with it, considering how much crap we spew into the atmosphere and dump into the oceans.  We may actually not disagree all that much on this one.

    As for the QAnon-Proud Boys crack … that was me being a wisenheimer, and sometimes I'm not as funny as I think I am.  (My kids tell me that all the time.). It was not fair to make that linkage, and I did it largely because the line made me laugh.  I apologize for lumping you in with nutcases, insurrectionists and seditionists.  That was not cool of me.

    But a Yankee fan?  Geez…

    By the way, another MNB reader weighed in:

    You might be a touch over the top with the hyper pejorative view of one of your readers opinions; then ending it with an ad hominem assault on the poor Proud Boy, QAnon theorist who probably doesn’t know what that is let alone that you think he is one. You’re becoming a bit like Aunt Eleanor yelling at crazy Uncle Stosh at Thanksgiving dinner. We are uncomfortable with the fireworks but at least the food is good.

    I'm glad you like the food, at least.

    Lots of reactions to Michael Sansolo's PSA (public service announcement) yesterday about another kind of PSA (prostate-specific antigens) that also offered a seat-of-your-pants business lesson.

    Among them, this note from an MNB reader:

    Thank you to Michael for sharing his PSA.  Five years ago my PSA tested high, it fluctuates up and down with every test. I’ve had two biopsies, all which came back negative for cancer.  Something that needs monitoring going forward.  I appreciate his candor on this subject. 

    And from MNB reader Steve Burbridge:

    Thanks for the PSA about PSA's and the impact of cycling on one's nether regions.  As an active cyclist and a guy of a certain age, this really hit home.  I have not thought about the impact of many hours on a bike seat and how that can impact my PSA results.  But I am now and will ensure that my GP is aware of this.

    For anyone else interested in seats that are "prostate-friendly", I would suggest the link below.  Livestrong is a good reference for many things exercise-related and they recommend seats from some very well-known names in cycling.  I am planning to make a purchase and change my seat; for $150 it is worth it.

    Published on: June 8, 2022

    From the Wall Street Journal this morning:

    "A group led by billionaire Walmart heir Rob Walton has agreed to purchase the Denver Broncos for $4.65 billion, a person familiar with the matter said, in a record-breaking transaction that brings one of the world’s wealthiest people into the NFL and ends years of drama surrounding one of the sport’s most iconic franchises.

    "The team announced the agreement late Tuesday without disclosing the price. The sale, which is still pending league approval, is far and away the richest ever for a North American sports team and doubles the high price for sales of NFL teams, which was previously about $2.3 billion … Walton is one of the heirs to the fortune of Walmart, which was founded by his father Sam Walton. The buyers also include Walmart chairman Greg Penner and his wife Carrie Walton Penner, who is also Rob Walton’s daughter.

    "The group gives the Broncos the deepest pockets in the sport—a radical shift after years spent in ownership turmoil."