business news in context, analysis with attitude

Published on: August 19, 2022

I'm faced with a decision that everybody who runs a business faces from time to time.  You get one emailed complaint, and you have to decide - is this an outlier, the opinion of just one person?   Or is it the opinion of a thousand people who just didn't write in?

In the end, I've decided it doesn't matter … and I am going to take a moment to answer the question just because I believe in transparency.  Plus, I think we know each other well enough to be honest with one another…

Published on: August 19, 2022

Bloomberg Second Measure is out with an analysis of how consumer spending has changed during a time of high inflation and supply chain issues, concluding that "average transaction values increased the most year-over-year at H-E-B and The Kroger Company, but Ahold Delhaize saw the most growth in year-over-year sales.

"H-E-B and Kroger saw the most growth in average transaction values year-over-year."

The analysis goes on:

"Most of the grocery companies in our analysis experienced year-over-year growth in average transaction values in July 2022. Between July 2021 and July 2022, the average transaction value at H-E-B grew 12 percent, the largest increase among the companies. The average transaction value also increased 10 percent year-over-year at The Kroger Company.

"In the same time frame, average transaction values grew 8 percent at Aldi, 7 percent at Ahold Delhaize (which includes Giant, Stop & Shop, FreshDirect, Martin’s, Hannaford, Bfresh, and Food Lion), 4 percent at Albertsons Companies, Inc (which includes Pavilions, Haggen Food & Pharmacy, Albertsons, Safeway Supermarket, Tom Thumb Fuel, Safeway Fuel, Star Market, Acme, Albertsons Market, Shaws, Vons Supermarket, Market Street, Vons Fuel, United Supermarkets, United Express, Jewel-Osco, Tom Thumb Supermarket, Randalls Fuel, and Randalls Supermarket), and 3 percent at Publix.

"Trader Joe’s was the only grocery company in our analysis that did not experience an increase in average transaction value, instead remaining consistent year-over-year.

"In July 2022, shoppers at H-E-B spent $64 on average, the highest average transaction value in our analysis. By contrast, customers at Albertsons Companies, Inc spent $44 on average per visit, the lowest among these grocery competitors."

Published on: August 19, 2022

Modern Shipper reports that Walmart is canceling "billions of dollars in orders" as it works "to align inventory levels with projected demand and to reduce its exposure to certain products that have fallen out of favor with budget-conscious consumers."

According to the story, "Walmart executives said the company has cleared out most of its summer seasonal inventory ahead of the back-to-school season - which has begun in large parts of the South - and the upcoming holiday period. Executives said the company is making progress right-sizing its inventories, but that it will take at least a couple more quarters to wring the imbalances out of its network."

Modern Shipper goes on to point out that "Walmart’s seasonally adjusted days to turn inventory declined to 44 days in the second quarter from 46 in the prior quarter, according to data from Michigan State University. That signals that sales are starting to outpace order arrivals, according to Jason Miller, associate professor of logistics at the university’s Eli Broad College of Business."

Published on: August 19, 2022

The Washington Post has a story about food items that are in short supply in eight countries, for reasons that include "a growing cost of living crisis, lingering impacts of the coronavirus pandemic, the nearly six-month war in Ukraine and battered global supply chains."

In the US, the item the Post notes that supplies of Sriracha sauce are "running low. Maker Huy Fong Foods explained to die-hard fans that the condiment would be missing from shelves due to drought and ongoing extreme weather impacting chile pepper crops. The California-based company said it hopes supplies can resume in the fall."

The other products in short supply include butter (!) in the UK, because of a “chronic shortage of suitably-qualified farmworkers" … mustard in France because of "extreme weather and drought (that) have crushed the mustard seed supply inside and outside France … bread in Lebanon because of a lack of wheat exports from Ukraine … tea in Pakistan ("low foreign currency reserves needed to pay for imported tea") … eggs in Australia ("lingering impacts of the coronavirus pandemic, which disrupted supply chains, and winter weather that means fewer eggs are being laid by free range chickens") … grain in Somalia (Ukraine export shortages)  … and soba noodles in Japan (Ukraine again).

Published on: August 19, 2022

WABI-TV News reports that Ahold Delhaize-owned Hannaford Supermarkets has created a "Groceries to Grades tuition reimbursement program that "offers associates more than $5,000 dollars in tuition funds annually.  Full time workers are eligible for up to $5,250 dollars.  Part-time associates can receive up to $2,000 based on average hours worked."

According to the story, "The money can be used at any accredited college or university, with additional tuition discounts available at partner universities within Hannaford’s network, including Husson University, the Roux Institute at Northeastern University, Thomas College and the University of Southern Maine."

The announcement says that "as part of the new program, Hannaford has partnered with the education benefits online platform Workforce Edge to streamline and simplify the process for submitting tuition reimbursement requests."

Published on: August 19, 2022

•  From the New York Times:

"A federal judge on Thursday ordered Starbucks to reinstate seven employees who were fired in February after they spearheaded efforts to unionize the branch in Memphis where they worked.

"The workers, who refer to themselves as the Memphis Seven, were fired after the company said they violated safety and security policies. Judge Sheryl H. Lipman of the U.S. District Court for the Western District of Tennessee gave Starbucks five days to rehire the employees in response to the lawsuit filed by M. Kathleen McKinney, the regional director of the National Labor Relations Board.

"Jennifer Abruzzo, the labor board’s general counsel, described the decision as “a crucial step in ensuring that these workers, and all Starbucks workers, can freely exercise their right to join together to improve their working conditions and form a union.”

Starbucks promised to appeal the ruling, saying in a statement, "“These individuals violated numerous policies and failed to maintain a secure work environment and safety standards. Interest in a union does not exempt partners from following policies that are in place to protect partners, our customers and the communities we serve.”

Published on: August 19, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From the Associated Press:

"Slightly fewer Americans filed for unemployment benefits last week as the labor market continues to stand out as one of the strongest segments of the US economy.

"Applications for jobless aid for the week ending August 13 fell by 2,000 to 250,000, the Labor Department reported Thursday. Last week’s number, which raised some eyebrows, was revised down by 10,000.

"The four-week average for claims, which evens out some of the week-to-week volatility, fell by 2,750 to 246,750.

"The number of Americans collecting traditional unemployment benefits increased by 7,000 the week that ended August 6, to 1.43 million. That’s the most since early April."

•  The Philadelphia Inquirer has a story about a new Grocery Outlet franchise opening in North Philadelphia, serving as "one of the linchpins of a neighborhood’s revival."

The owner of the store is a man named Donta Rose, who was working for Grocery Outlet in store design.  "He saw the list of future stores and noticed that one would open at 21st Street and Ridge Avenue in the Sharswood section of North Philadelphia."

“That’s where we’re from,” he tells the Inquirer.  “I know the neighborhood. I know how unique this neighborhood is, because if you go four blocks over, you’re on Temple’s campus, and if you go five blocks down, you’re in Brewerytown. It became really important for me to be in a community that we’re familiar with.”

The story says that "Rose scraped together savings and obtained what he called 'a nice, hefty loan' to buy in. On July 26, he helped cut the ribbon of a $5 million Grocery Outlet store, one of the linchpins of a neighborhood’s revival. The store has a parking garage, but it will be a boon to residents who need to walk or rely on rides of more than a mile to shop for groceries, beyond corner stores and produce vendors … Grocery Outlet, which has more than 400 stores nationwide, is providing support. And Rose is counting on help from his extended network of family and friends, including his sister Toni and friend Nafis Muhammad, who will manage the store, which has hired many of the 30-person staff from the neighborhood."

•  The New York Times reports that department store Kohl's plans "to open Sephora shops in all of its 1,165 stores, positioning its beauty unit for growth.  By the end of the year, Sephoras will be in place at 600 Kohl’s locations. In 2023, the plan is to open 250 more. The Sephora spaces are 2,500-square-feet shop-in-shops stocked with the products one would find at a full-line Sephora store. Kohl’s sees the partnership generating $2 billion in annual sales by 2025."

The move comes as Kohl's comes out of what has ben a tough year, including a proxy fight and a failed attempt to sell the company.  A Wall Street Journal headline says it all - "Kohl’s Should Focus on Shoppers Over Shareholders."  If it does that, maybe it has a chance of reclaiming some level of relevance … and clearly, an expanded partnership with Sephora is seen as part of that.

Published on: August 19, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From CNBC:

"Starbucks Chief Operating Officer John Culver is departing the company after two decades with the coffee chain, as part of a restructuring that will eliminate his role.

"His exit comes in the middle of a broader executive reshuffling at Starbucks. Former CEO Kevin Johnson retired earlier this year, leading Howard Schultz to return to the helm of the company as interim chief executive until long-term successor is named.

"Effective Oct. 3, Culver will step down from his current role and become an executive advisor until he leaves the company at the end of the year.

"Starbucks said it will eliminate the role of chief operating officer, with many of Culver’s direct reports being managed by Schultz. Frank Britt, the company’s chief strategy and transformation officer, will supervise the rest, including the global supply chain and technology divisions."

The CNBC story points out that as COO, Culver was seen by some as a likely contender for the CEO job, but that Schultz has said the company is looking for his eventual successor on the outside.  Which may mean that Culver was happy to move on.  What's the over-under on how quickly he becomes a CEO elsewhere?

Though, as Schultz consolidates his power, it is hard to imagine that he's going to be leaving the company anytime soon - no matter what he says.

For some reason, this is the scene that came to mind as I was reading this story:

Published on: August 19, 2022

This question from MNB reader Monte Stowell:

Simple question. Why should an EV Owner get a prime parking spot over any other customer? What about the elderly customers who have probably been a long time good customer?  What about the handicap parking spots? What about the soccer mom who has 3-4 kids and spends big dollars weekly?  With all due respect, an owner of an EV should not deserve a better parking spot than any other customer. 

I'm okay with it.  I'm happy to give an EV owner - or a carpooler, or a pregnant mom, or whatever - priority.  That's not just good public policy, in my view, but also just the right thing to do.  (I think handicapped people get spaces.  As for soccer moms … well, c'est la vie.  I've been a baseball dad, and I never asked for nor needed special treatment.

More email about manual transmissions.   MNB reader Steven Ritchey wrote:

Speaking of driving a manual transmission.  If they become more widespread again, a lot more mechanics will need to learn how to drive them.

I have a 1991 ford F150 I use when I need a truck.  It's a manual 5 speed.  To me it's no big deal, I learned to drive on a 3 on a tree.  In fact, I like the idea that whatever you toss me the keys to, I can drive it.

The stories I can tell about times I've taken this one in for routine service, or for a state safety inspection only for the shop to struggle to find someone that could drive it.

My brother used to have a Jeep with a six speed manual.  For a time he was doing physical therapy at a hospital that had only valet parking.  They had one valet parker that could drive his Jeep.

There's also a meme floating around with a picture of a shift knob with a shift pattern on it with the caption, "Millenial Anti Theft Device."

Ands MNB reader Rich Heiland wrote:

I share your sense of loss over stick shifts. I learned on one and have owned several. You probably noticed pieces on the passing of muscle cars, most notably the death of the Dodge Challenger. That quickly was followed by news that Dodge will create an electric version of it. What? Seriously? As a former owner of a 1968 GTO I cannot imagine an electric Challenger with an automatic transmission. What are they thinking?

Published on: August 19, 2022

The HBO version of "Westworld" - based, loosely, on a 1973 film written and directed by Michael Crichton - has been frustrating and maddening.  The first season, which adhered to some degree to the original concept (albeit with superior special effects), was strong, but seasons two and three devolved into what I felt was a narrative morass - ambitious, but inaccessible.  And yet, I couldn't stop watching - the world/worlds being created by Jonathan Nolan and Lisa Joy, who have developed and enlarged Crichton's vision, just fascinated me.  Even though, to be fair, I sometimes couldn't figure out what the hell was going on.  (Credit some terrific performances for this, especially by the likes of Evan Rachel Wood, Thandiwe Newton, Jeffrey Wright, James Marsden, Luke Hemsworth, and especially Ed Harris (who brings malevolence to all-new levels).

(To those unfamiliar with the concept:  "Westworld" is the name of an adult amusement park in the not-too-distant future, where rich patrons are able to indulge all their desires by engaging with sophisticated robots.  Where things go wrong - both in the movie and the TV series, though to varying degrees - is when the robots start to achieve sentience and realize that they are, in essence, slaves.)

Season four, however, has seen the show regain its traction and get hold of its narrative.  I don't want to go much further than that, because to explain much more would spoil the twists and turns of the plots and performances.  But let me just say that "Westworld" on HBO strikes me as an example of great science fiction - there is a cold calculation about it, but an energy and level of aspiration that makes it, at least to me, irresistible.

"Only Murders In The Building," on Hulu, isn't particularly ambitious, and rather than working in a maximalist mode, it works in miniature, as it follows three unlikely amateur sleuths as the they investigate murders in their ancient apartment building on Manhattan's Upper West Side.

But it works.  Really well.  In part because of excellent performances by leads Steve Martin, Martin Short and Selena Gomez, but also because of a gallery of supporting actors who etch compelling portraits in just moments.  Think Nathan Lane.  Tina Fey.  Da'Vine Joy Randolph.  Amy Ryan.  Michael Rapaport.  Jane Lynch.  And even Shirley MacLaine, who has shown up in a recurring role in season two, which will have its final episode next Tuesday.

"Only Murders In The Building" is like a New Yorker article come to life - arch, funny, tightly observed, and using minute details to illustrate both plot and character.  If you haven't watched it, catch up with season one and now, season two … and wait, like me, expectantly for season three next year.

That's it for this week ...have a great weekend...and I'll see you Monday.

Sláinte!!