business news in context, analysis with attitude

Published on: August 22, 2022

It is an article of faith here on MNB that to be successful, retailers have to identify and implement something that differentiates them from all their competitors.  Well, go figure…I found a tasty example of that in the community of Susanville, California, a community of less than 17,000 people about 90 miles north of Reno, Nevada.

Here, BTW, is how the store's doughnut department is portrayed on Facebook:

And here's what I found at 9:30 am … a department that was picked over by people who line up as early as 5 am to buy its doughnuts.  That's what I call a differential advantage.

Published on: August 22, 2022

by Kevin Coupe

There have been a couple of pieces in the media over the last few days that have raised some significant questions that may be asked - in fact, ought to be asked - as regulators consider the move by Amazon to acquire One Medical for $3.9 billion, a move designed to give the e-commerce behemoth a footprint in the primary healthcare space.

Ironically, the questions are being posed as the Wall Street Journal reports that Amazon "is among the bidders for healthcare company Signify Health Inc., joining other heavy hitters vying in an auction for the home-health-services provider."  The other heavy hitters include CVS - which was beaten out in the race to acquire One medical by Amazon - and UnitedHealth, as well as "another corporate buyer."

At the same time, as the Washington Post writes, Amazon has been expanding its internal Amazon Care primary- and urgent-care initiative, with telehealth services now "available in all 50 states and in-person services in at least seven cities, including Dallas, D.C. and Baltimore. It also has signed up a half-dozen other companies, including Hilton and Amazon-owned Whole Foods Market, becoming a major piece of Amazon’s aggressive ambitions for health care."

The Post writes, however, that some medical professionals who have dealt with Amazon on various health-related initiatives suggest that "Amazon sometimes prioritized pleasing patients over providing the best standard of care. Six former employees and managers said the company’s efforts to rapidly build Amazon Care led to clashes with some medical staffers, who felt the company sometimes ignored their concerns about its approach to health care. All six spoke on the condition of anonymity, either because they are subject to nondisclosure agreements or because they still do business with Amazon.

"Amazon has come to dominate industries from logistics to cloud computing to entertainment by being fast, frugal and obsessed with delighting customers. The early tensions within Amazon Care underscore the challenges inherent in bringing the Amazon mentality to medicine."

To be fair, there are medical professionals who argue that Amazon is making healthcare more accessible, helping to disrupt what can be an impenetrable bureaucracy.  And, the Post writes, "patients who have used Amazon Care largely have loved the convenience, reviews, ratings and interviews with employees suggest."

You can read the Washington Post piece here.

Meanwhile, the Los Angeles Times has a column by Michael Hiltzik that raises a different issue:

"In announcing its newest foray into the healthcare field last month — the $3.9-billion acquisition of the primary care firm One Medical — Amazon explained its interest in the industry this way:

'We think health care is high on the list of experiences that need reinvention.'

"There are two ways to think about that statement. For one thing, it’s indisputable. For another, when you hear Amazon talking about reinventing how you get medical treatment, you should be afraid. Very afraid.

"That’s because of what we know about Amazon’s corporate expertise. The giant company doesn’t know much about delivering healthcare — that’s obvious from the checkered record of its previous healthcare ventures.

"What Amazon does know about is how to snarf up personal data from its customers and exploit it for profit."

Hiltzik notes that "Amazon has issued assurances that it will adhere to the privacy mandates set forth in the federal Health Insurance Portability and Accountability Act, or HIPAA, which prohibits healthcare providers from sharing personal medical information without a patient’s permission … But pledging to comply with the law is not much of a concession, as the consumer advocacy group Public Citizen observed in a letter urging the Federal Trade Commission and other agencies to closely scrutinize the proposed deal, which is subject to regulatory approval."

You can read the entire Hiltzik column here.

It is an interesting and Eye-Opening debate to which every American - and every company competes with Amazon, which rapidly is becoming every company - ought to pay attention.

I don't think many people would argue with the notion that healthcare in this country, for many people, is a hard-to-navigate bureaucracy … and that a little disruption would do it good.  Amazon has a history of that, but it also may be that an expertise in which the Post called "frugality and speed" may not necessarily be the values that one always wants in the healthcare system.  Sometimes the fastest and cheapest solution isn't the best solution, and algorithms don't make for a good bedside manner.

Interestingly, the way that the Journal describes Signify makes it sound like a neat fit for Amazon, saying that it "uses analytics and technology to help employers, health plans, physician groups and health systems with in-home care. It offers in-home health evaluations for Medicare Advantage and other government-run managed care plans."

At the same time, I think the privacy concerns that are being raised have to be taken seriously - the moment may come when Amazon simply has so much power and information and capacity that regulators simply won't have the tools and resources to rein it in.  And at the same time, we're going to see competitive companies like Walmart, Walgreen and CVS work hard to blunt whatever advantages Amazon may have, creating their own systems that, in order to survive, need to be fast and frugal and algorithm-based.

Some of this may work.  Much of it may be necessary to address the holes in our healthcare system - a study by the University of California Los Angeles (UCLA) concluded that "the United States healthcare system ranks 22nd out of 27 high-income nations when analyzed for its efficiency of turning dollars spent into extending lives."

It may be that Amazon's traditional long-term focus - making innovation and investment higher priorities than short-term profit and investor satisfaction - may work in favor of its healthcare play.  But in the end, people's lives are what are being gambled with here, not corporate philosophy or shareholder gratification.  

Attention must be paid.  Questions must be asked.  And priorities must be examined.

Published on: August 22, 2022

TechCrunch  reports that delivery service DoorDash has decided to end its business relationship with Walmart, effective the end of September, saying that the arrangement no longer was "mutually beneficial" and that it wanted to focus instead on "long-term customer relationships."

The story notes that "the termination will end a partnership that began in April 2018 as a pilot to deliver Walmart groceries to customers in the Atlanta metro area. Since then, the partnership expanded to states across the country.

"Although Walmart has partnered with third-party delivery services like DoorDash, the retail giant has also been focused on building out its own delivery efforts."

For example, Walmart said last week that it plans to purchase Delivery Drivers, described as "the company behind Walmart’s Spark platform that sees gig workers deliver orders to customers. A Walmart spokesperson told Insider that the Spark platform has grown to become the company’s largest delivery service provider and that it accounts for 75% of Walmart deliveries."

Delivery Drivers reportedly has informed its non-Walmart customers that it will end its relationship with them, effective in 30 days.

At the same time, TechCrunch reports, DoorDash "has geared up to collaborate with another notable brand, Facebook parent Meta. DoorDash confirmed earlier this week that DoorDash Drive is now in the early stages of testing a service that will allow DoorDash drivers to pick up and drop off Facebook Marketplace items to customers.

"DoorDash and Meta are currently offering the test service in several cities in the United States."

As for Walmart and DoorDash, the breakup, on the surface at least, seems amicable.

“We’d like to thank Walmart for their partnership and are looking forward to continuing to build and provide support for merchants in the years ahead with our leading Marketplace and Platform offerings,” a spokesperson from DoorDash told TechCrunch.

"We’d like to thank DoorDash for their partnership and support of our customers the past several years,” a spokesperson for Walmart told TechCrunch in an email.

Published on: August 22, 2022

Business Insider reports that Amazon, having "struggled to open physical stores amid high costs and tension with Whole Foods," has decided to pause "the rollout of self-checkout Amazon Fresh stores following disappointing sales and economic headwinds."

Planned store openings will proceed if leases have been signed and construction has begun, but new stores and leases are, for the moment at least, on hold.

Previous reports have said that Amazon is reorganizing its food retail team, with an eye toward correcting some of the internal dysfunction that has characterized it.

Published on: August 22, 2022

Gordon Reid, president of Ahold Delhaize-owned Stop & Shop, points out to the Boston Globe that health inequities endure at a time when the pandemic still is taking as toll on the state of Massachusetts, a place where close to one-third of adults are struggling to get enough to eat.

“As an organization," he says, "we have a role to play in fighting that.”

The Globe reports that Stop & Shop's latest initiative takes the form of "a 'Community Wellness Space' at its Grove Hall store in an effort to help lower rates of food insecurity and chronic illness in the neighborhood at the intersection of Dorchester and Roxbury.

"The Quincy-based grocer opened the space on Friday, saying it will act as home base for consultations with an in-house nutritionist and a hub for free classes on healthy eating, exercise, and financial planning. The exterior of the space features a 25-foot display of 'better-for-you foods' chosen by a team of registered dietitians. The store also has added 350 new products from Middle Eastern, West Indian, and Caribbean cuisine to cater to the community.

"A new 'Flashfood' program - tested at several Stop & Shop locations outside of Boston - is up and running, too. Through the Stop & Shop app, it offers discounts of up to 50 percent on produce, meat, and dairy nearing its expiration date."

The Globe notes that Stop & Shop also "has spearheaded the creation of in-school pantries at Jeremiah E. Burke High School in April and The Rev. Dr. Michael E. Haynes Early Education Center, opening this month."

Published on: August 22, 2022

Interesting piece in the Los Angeles Times this weekend positing that grocery stores may end up being a lifeline for troubled shopping malls that have been losing tenants and customers over the past few years;  it was a trend that predated the pandemic, but that gained traction as Covid-19 caused dramatic shifts in shopper behavior.

Case in point:

"When the Westfield Oakridge mall in San Jose opened the popular Asian grocery store chain 99 Ranch Market in March, its debut saw lines snaking out the door. Since then, the mall’s foot traffic has jumped, with customer visits up more than 10% in July compared with pre-pandemic levels, according to traffic analytics firm Placer.ai.

"In addition to grocery store staples such as produce and meat, the supermarket has also attracted shoppers with its dining hall and tea bar. What’s surprising is 99 Ranch took up residence in one of the mall’s anchor spots, which had typically gone to massive chains like Target Corp. or Macy’s Inc. It’s the supermarket’s first location inside a megamall."

The test, the Times writes, isn't just attracting traffic to food stores.  It also is attracting new tenants to these malls, and providing them with sufficient traffic and sales to make their business viable.

Ethan Chernofsky, Placer.ai’s vice president of marketing, says that based on the numbers he is seeing, this seems to be happening, albeit on a small sample:  “The result has been a rise in other tenant types that could have a waterfall effect, driving even more mall tenant diversity and new opportunities for less traditional mall tenants.  While they are still not an indoor mall staple, there is ample reason to believe that their role within this segment will increase."

Published on: August 22, 2022

The New York Times has a story about what are called "salvage food stores," which are gaining new relevance and popularity as inflation continues to weigh on many US consumers.

An excerpt:

"A new batch of customers has discovered the joys and pitfalls of shopping at salvage food stores, where a crushed box is never a problem, package dates are mere suggestions and questionable marketing attempts (Hostess SnoBall-flavored coffee pods?) go to die.

"The stores, which traffic in what mainstream food retailers call 'unsellables,' operate in a gray zone between food banks and big discount chains like the German import Aldi or Dollar General, which has grown to more than 18,000 stores.

"With names like Sharp Shopper, the Dented Can and Stretch-a-Buck, salvage stores have long been a salvation for families on tight food budgets and the naturally thrifty. Adventurous shoppers looking for bargains use them for culinary treasure hunts. Now, the inflation-weary are joining their ranks."

The Times notes that "many of the stores are small, and some don’t use checkout scanners or take credit cards, so getting a complete picture of nationwide sales is a challenge. An analysis of 405,101 receipts submitted by consumers to the consumer rewards app Fetch showed the number of households shopping at salvage stores in the first half of this year was more than 8 percent higher than a year earlier."

You can read the en tire story here.

Published on: August 22, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Walmart on Friday told employees via internal memo that it will expand abortion coverage "when there is a health risk to the mother, rape or incest, ectopic pregnancy, miscarriage or lack of fetal viability" - regardless of whether they live in a state where abortions under those circumstances are legal.  If they do not, Walmart said, it will cover travel costs for employees and family members insured through the company.

CNBC points out that this includes the state of Arkansas, where Walmart is headquartered, and where a near-total abortion ban is in effect, with no exception for cases of rape or incest.

CNBC writes that "the company’s health-care expansion comes months after Target, Apple and others broadened or reaffirmed abortion coverage. Still, Walmart’s policy decision is symbolic: The retailer’s more than 4,700 stores are located in small towns and larger cities alike, with about 90% of Americans living within 10 miles of a location … 

The retailer previously offered more limited abortion coverage. According to the company’s employee handbook, charges for 'procedures, services, drugs and supplies related to abortions or termination of pregnancy are not covered, except when the health of the mother would be in danger if the fetus were carried to term, the fetus could not survive the birthing process, or death would be imminent after birth'."

The fact is that Walmart wants to attract talented people from all around the country who may be unwilling to move to Arkansas because of the current abortion laws in effect.  Which is the same problem that many businesses may face if they have facilities in states where some people find the laws to be onerous.    And, to be fair, there are people out there who would be unwilling to move to states with more liberal laws in this area because they find them to be an affront to their personal beliefs.  Welcome to America, 2022.

Published on: August 22, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Here's a scary one from the New York Times:

"The web browser used within the TikTok app can track every keystroke made by its users, according to new research that is surfacing as the Chinese-owned video app grapples with U.S. lawmakers’ concerns over its data practices.

"The research from Felix Krause, a privacy researcher and former Google engineer, did not show how TikTok used the capability, which is embedded within the in-app browser that pops up when someone clicks an outside link. But Mr. Krause said the development was concerning because it showed TikTok had built in functionality to track users’ online habits if it chose to do so.

"Collecting information on what people type on their phones while visiting outside websites, which can reveal credit card numbers and passwords, is often a feature of malware and other hacking tools. While major technology companies might use such trackers as they test new software, it is not common for them to release a major commercial app with the feature, whether or not it is enabled, researchers said."

The Times reports that "in a statement, TikTok, which is owned by the Chinese internet firm ByteDance, said Mr. Krause’s report was 'incorrect and misleading' and that the feature was used for 'debugging, troubleshooting and performance monitoring.'  'Contrary to the report’s claims, we do not collect keystroke or text inputs through this code,' TikTok said.

Okay, can I get a show of hands - how many of you are willing to believe TikTok on this one?

Published on: August 22, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  The Washington Post has a piece about how Trader Joe's, which it describes as " the idiosyncratic chain for its eccentric snacks and peppy cashiers," as well as its festive approach to interior design:  "Each of the 500-plus outposts has custom, handmade signage, all created by staff artists. Your grocery store is their art gallery."

The artists perform other tasks within the store, but they are usually recruited as "crew member with sign making talent" …  for the artists, the work isn’t just about selling produce or marketing the latest peppermint-coated, jalapeno-infused, almond-butter-filled whatever. It’s a way to channel their artistic energy in a world that doesn’t make being creative easy. While job postings list pay for sign artists starting as low as $14 an hour, for many, it’s the stable art job they never thought they’d have."

While so much commercial art has been digitized," the story says, "it might seem absurd that Trader Joe’s still pays people to hand-draw cartoons of dancing potatoes to sell a new type of chips. But Trader Joe’s didn’t woo its loyal fan base by being ordinary."

•  Variety reports that "debt-laden exhibition giant Cineworld … which owns Regal Cinemas in the U.S., has hired lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process."

The reason is simple:  the world changed, driven by the pandemic and the ways in which technology changed the ways in which consumers accessed entertainment content.  Despite the fact that move theaters have seen a resurgence of sorts, driven by high-profile hits such as "Top Gun: Maverick" and "Thor: Love & Thunder," there just weren't enough tickets sold and high enough prices to be able to make up for the company's extensive and expensive infrastructure.

There also was little sign that things were likely to get better anytime soon.  Numerous stories have detailed how, while there are some how profile movies expected to do well during the holidays - "Black Panther: Wakanda Forever" and a long-awaited sequel to "Avatar" - the fall looks to be short of guaranteed hits.

Just another example, I think, of trends to which retailers need to pay attention.  Circumstances change.  Technologies improve.  Consumer behavior shifts.  And suddenly, the basic premises upon which business are built are called into question, and you're talking to bankruptcy lawyers.  I'm not saying this is going to happen to all traditional retail, but I am saying that one has to be awake to the notion that there is no such thing as an unassailable business model.

•  From the New York Times:

"The online furniture retailer Wayfair, which has struggled to maintain momentum after experiencing a surge in sales in the early months of the pandemic, said on Friday that it was laying off about 870 employees, about 5 percent of its global work force and 10 percent of its corporate team.

"The job cuts are part of the company’s 'plans to manage operating expenses and realign investment priorities,' Wayfair said in a regulatory filing.

"A spokeswoman for Wayfair said the layoffs primarily affected corporate roles in North America and Europe."

Published on: August 22, 2022

On Friday's FaceTime, I addressed a question raised by an MNB reader about some vacation days I've taken this summer - "Another vacation?  Losing interest?" he asked.

I wanted to talk about it because I am most assuredly not losing interest, enthusiasm for energy for what I do .. but after almost 21 years of doing MNB almost completely on my own, I thought it was appropriate to take a little more time off than in the past so I don't burn out.  I just wanted to be transparent about it, and very much appreciate the emails I got back almost instantly.

One MNB reader wrote:

Kevin, quick response to your video this morning. Just for the record, am amazed each day at the time effort and energy it takes to get your newsletter out first thing in the AM. In my mind, I see you toiling to all hours of the early morning every day sifting through the news.

Take all the time you want and need. I look forward to starting my day with you.

From another reader:

My first reaction, had I been you, to your fan critical of the time you have taken off would be "ef you." But, your reasoned response was obviously the adult and correct one.

Like you, I have my own business. No staff. I never have explained nor apologized for the time I took off. Good friends of mine, Gary and Cathy Hawk, have a process called "Clarity" which includes a practice called "sacred selfishness." They explain that "You must serve yourself first before focusing on others...you cannot give (to others) if your personal energy is drained and you have become an empty vessel." They compare it to the airplane drill about putting on your own oxygen mask before you help others with theirs. 

This concept at first seems to fly in the face of all we have been taught about doing for others, of being of service. But the more you think about it, the more sense it makes. A drained, exhausted and over-worked me in the end is of no use to anyone. So, I am selfish - I take the time I need to re-charge me, to smell the roses, so that when you need me I am there. And, no apologies for doing so.

And another:

As a long time reader & listener, I say the naysayers can go pound sand. Go enjoy yourself every minute that you can as we have all learned from the years of pandemic and we will all be looking forward to your industry insight when you return.

And yet another:

Your video this morning was annoying.  Annoying in the fact that you feel ANY need to justify your time off.  To the person with the snarky comment about your time off....Shut the hell up!  In actuality, I felt a little uncomfortable seeing your videos when you were on vacation....like I was intruding on your time off. You do what makes you happy!

One more:

How different perspectives can be.

When you take time off from the pressure of assembling MNB my sense is “Good; everyone needs to take some time off.” My concern would be if you NEVER took time off which might lead a burnout thus the end of MNB (which I think should be required reading by everyone in the food/retail business).

A slightly different perspective:

I am, kind of, in the camp of the person who wrote in.  Perhaps for a different reason, I look forward to your emails and enjoy reading your comments.  However, your days off are well deserved!  Take them as you see fit.  Me, I’ll be patiently waiting. 

One more MNB reader wrote:

I’ve been listening to you for about 8 years.

DON’T LET ANYONE TELL YOU NOT TO TAKE A VACATION!  None of us are getting any younger- and it seems time is passing by faster every day.  If I’ve learned anything over the past 2 years- is that life is short and I need to enjoy it.  I’m 66 and work full time from my home- but damn saving for retirement. 

My husband & I were on a cruise last May and had a great time!  But we both tested covid positive the day after we returned.  Will that stop us from vacationing again?  NO!  I have already planned a week in November 2022, 10 days in late January 2023, and another week in May 2023.  Unless we are sick- we are going. 

Keep planning those vacations- take care of yourself.

MNB reader Steve Burbridge wrote:

Interesting comment about taking a few days off.  Obviously not a regular reader as we know you still have the passion for what you do.  

I for one don't resent you taking vacation especially when you are a one man (person?) operation.  I do miss MorningNewsbeat on those days as it is a "go to" for me.  But, I never thought, "boy, is he slacking off."  

Life is too short.  I know it is not truly a Latin phrase, but my Dad always said "illegimtimi non carborundum".  I'll let you translate.

I did.  And I never do.

From another MNB reader:

So glad you are not losing interest! Don’t always agree but always enjoy. I get 6 to 7 daily industry e-newsletters and this one is the best.

Informative, thought provoking, fun and with you, Sansolo and the other guest speakers feels like family.  Enjoy your times off!

That "feels like family" comment makes me very happy, because that's the way it feels to me, too.

Another MNB reader chimed in:

No greater compliment than for you to missed by followers…..you need to be able to unwind however and enjoy life. Everyone will get used to a shorter schedule….or they won’t.

And one last one:

Well said KC, you have to take care of yourself first and foremost. I don't think you take much time off at all, considering most people at a job over 20 years generally get 4 weeks paid vacation, besides sick days and holidays. 

(Sick day?  What's a sick day?)

I'm gratified by these responses.  I've always felt like we're all in this together - many MNB readers have been with me for almost the entire run, and remember when my hair wasn't gray and when I talked about my kids playing Little League and the like.  (Now, they're 28, 33, and my oldest son turns 36 on Wednesday.)

As I said on Friday, I'm a lucky guy - I love what I do, and I love you all for being part of it.