business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: August 25, 2022

    Netflix may be going through a rough patch, but it is another report that grabbed my attention - that after years of being a company with a flat hierarchy, transparency, and accountability, Netflix now seems to be experiencing a culture shift to 'fear-based' decision making.  I have some thoughts about that … about how fear is never a good motivator, unless, of course, the thing you're afraid of is complacency.  In which case, I think, it is best to play the game with fear and arrogance.

    Published on: August 25, 2022

    by Kevin Coupe

    Yesterday I received an email from an MNB reader that said:

    I've attached an email that to me exemplifies transparency in a tough situation.  I use a CPAP machine to sleep at night because have a condition known as sleep apnea.  About a year ago Philips identified a problem with several models of their CPAP machines.  Below is an email I received about why the process of repairing the machines is taking so long.  I have received several emails from Philips in the past year, but I think the latest one is a great example of transparency and owning your mistakes.

    I agree … and I want to share parts of the email with the MNB community.  It is from David Ferguson, the Business Leader for Sleep and Respiratory Care with Philips Respironics, and reads as follows:

    I am personally reaching out to those who have been affected by our voluntary recall. Since announcing the voluntary recall in June 2021, our goal has been to replace affected devices as quickly as possible while keeping patients, customers and clinicians up to date. It’s a significant task: we need to remediate 5.5 million devices across more than 100 countries. 

    We recognize that this process may have been challenging at times for our patients and realize how important it is for you to know when your replacement device will arrive. We are striving to do better and sincerely apologize for the frustration this voluntary recall has created. In June, our CEO Frans van Houten and Chief Business Leader Roy Jakobs explained how we’re responding to the recall and some of the issues that impact timelines. I wanted to share some additional information on what makes this voluntary recall different and what we’re changing based on patient feedback. 

    To deliver safe and effective therapy devices as quickly as possible, our plan is guided by patient needs, specifically the prescribed care established between patients and their doctors and fulfilled by Durable Medical Equipment (DME) providers.

    This means that instead of a first-come, first-serve system that you often experience and expect when ordering online, we have a highly personalized order process that depends on: 

    •  Access to patient prescribed settings
    •  Supply availability and manufacturing capacity 

    We need these prescribed settings because a CPAP is a medical device and cannot be sold without a valid prescription (the FDA describes a CPAP as “a prescription non- invasive ventilatory device”). Therefore, if we do not have your prescribed settings, we will be reaching out to you in the coming weeks with information and instructions on how we can obtain them. 

    Working with third party labs, we’ve tested 60,000 devices that have been returned to us by patients and DMEs. The results of these tests are technical, so we’ve created a summary of these studies for patients. You can find all patient updates on our website…

    The email goes on to be more technical, though in a way that I'm guessing would be accessible to people who use and understand CPAP machines.

    What I am impressed with is the clarity of the writing, the transparency of the intent, and the respect that the company seems to be showing for its customers.

    It is an Eye-Opener … and worth emulating whenever retailers and manufacturers find themselves in a similar position.

    Published on: August 25, 2022

    In a surprise move, Amazon will shut down its Amazon Care business, a virtual and in-home healthcare service that it at first designed for its own employees and then marketed to outside companies, by the end of the year.

    It was a surprise, the Washington Post suggests, because Amazon has stated that disrupting the health care business was a high priority - it recently said it plans to acquire concierge healthcare business One Medical for $3.9 billion, and has been reported to be one of the companies in the hunt to acquire Signify Health, a health analytics company with a market capitalization of $6.6 billion.  CEO Andy Jassy has been very specific about the company's commitment to expanding its healthcare footprint.

    The Post writes that in addition to internal employees, Amazon Care "is available to the employees of half a dozen corporate customers including Silicon Labs, Precor, Amazon-owned Whole Foods, and Hilton, its largest partner which only signed on with Amazon Care in December.

    "Workers were told the service was shutting down because those customers did not see the value in the service, one of the people said. Dozens of employees will lose their jobs, with some departing as soon as October, according to the people."

    The Post quotes Amazon senior vice president of health Neil Lindsay as telling employees via email that "this decision wasn’t made lightly and only became clear after many months of careful consideration.  Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”

    Amazon Care, the Post writes, "allows patients to chat with health-care providers virtually, set up video visits and, in some locations, request a health-care provider visit their house to provide services including vaccinations and screenings for common health issues such as urinary tract infections. The convenience of the service was popular with employees."

    Interestingly, Business Insider had a story yesterday about troubles Amazon has been experiencing in its pharmacy business.

    Here's an excerpt:

    "Amazon's pharmacy business has barely registered with the retailer's most loyal shoppers, a recent survey from Morgan Stanley found.

    "In the survey, which asked Amazon Prime users to pick a reason for having a membership, only 2% of the respondents chose Prime's prescriptions benefit.

    "Pharmacy received the least number of votes, with most members picking other perks, like free two-day shipping and its video-streaming service, as the main driver for a subscription. It also lags behind other less successful services, like Prime Gaming and Amazon Fresh, which both received single-digit support.

    "The data suggests Amazon's pharmacy business has largely failed to gain traction among Prime subscribers, who spend more and buy more frequently on the e-commerce site than nonmembers … An Amazon spokesperson said it's unfair to compare Prime's prescription benefit with free delivery and video streaming because the pharmacy service had been available for a shorter period."

    Business Insider notes that "Amazon launched its pharmacy service in 2020, a little over two years after acquiring the online-prescription startup PillPack for about $750 million. The business has gone through several changes over the years and most recently was made one of the four pillars of Amazon's health initiatives, as Insider previously reported."

    KC's View:

    Those pillars seem to be falling.  Not falling, in fact, but being knocked over with a wrecking ball.

    Pretty much everyone I spoke to yesterday after this was announced responded with some version of "WTF?"

    I suppose it is possible that Amazon looked at One Medical and decided that Amazon Care was redundant … but ending the program now, before the acquisition has been approved, seems a little unwise.  (I wouldn't bet serious money that the FTC is going to greenlight the deal, by the way.)

    In some ways, this is typical of Amazon - it tries a thing (like smartphones) and if it doesn't work, Amazon pulls the plug.  But there is something ab out this that seems precipitous.  I look forward to when the story behind the story comes out.

    Published on: August 25, 2022

    Ahold Delhaize USA yesterday issued a press release saying that Nicholas Bertram, president of The Giant Company, is leaving the organization on August 31 "to pursue other opportunities."

    John Ruane, the company's Senior Vice President and Chief Commercial Officer, will serve as interim president until a successor is named.

    Kevin Holt, president, Ahold Delhaize USA, released the following prepared statement:  “We have been fortunate to have Nick lead The GIANT Company during his nine-year tenure.  His leadership has inspired very strong performance by the team. The GIANT Company has achieved a great deal of success, with growth in its local markets, innovation in operations and a strong commitment to diversity, equity and inclusion, as well as health and sustainability. We remain confident in the continued momentum of the brand and wish Nick all the best in the future.” 

    The press release also included a statement from Bertram:  “Leading The GIANT Company to be designed for the way families live now has been a great honor, and I am excited about the growing momentum of our purpose-led teammates. That, along with the strength of our leadership team, makes now the most natural time for me to step away. I have great confidence in John and believe that The GIANT Company’s best days are still to come."

    KC's View:

    To be honest, I don't know what to make of this.

    For one thing, it seems very sudden.

    As an industry insider told me yesterday, when the phrase "to pursue other opportunities" is used in such a press release, it usually means that it wasn't the idea of the person leaving.

    But, when a person is being pushed out, the press release also usually doesn't include a generous quote from that person.

    I only met Nick Bertram once, earlier this summer, when we spent much of a day in Philadelphia looking at Giant stores, finishing up with a terrific cheesesteak sandwich.  (I hope he didn't get canned for hanging out with me.)  I was really impressed with his energy, perspective, and the ways in which he interacted with store personnel, with whom he seemed very familiar.  He certainly didn't seem like someone who would be leaving soon.  But, of course, you never know.

    My guess - actually, my hope - is that shortly after Labor Day, we'll find out where Nick Bertram is going, and why he left Ahold Delhaize will become clear.  But, you never know.

    Published on: August 25, 2022

    FMI-The Food Industry Association yesterday released the fifth edition of the U.S. Grocery Shopper Trends 2022 series focused on Back to School, saying that "90% of shoppers are concerned about some aspect of food accessibility, with 61% concerned about rising prices specifically - an increase of eight percentage points since February 2022. However, even in this inflationary environment, shoppers feel they have at least some degree of control over their finances, particularly when it comes to their grocery budgets (86%)."

    Other findings:

    •  "Shoppers’ worries about rising prices are focused on essential items, including gas (77%), food (72%) and housing (59%) costs. Households with children are particularly concerned about rising prices on school supplies (64%) and clothing (65%). Even though shoppers say they are feeling pinched, they do express control over aspects of their household budget, particularly eating out (91%), grocery shopping (86%) and, for households with children, childcare (87%)."

    •  "Shoppers report weekly grocery spend totals of $136, which is $12 lower than February 2022. This is partially a seasonal effect, with consumers eating out more during summer months, but it also indicates belt-tightening behaviors. Shoppers seem to believe they are succeeding at bringing their grocery spending under control, hitting a lower ongoing weekly total, as they adjust their overall household budgets."

    •  "Shoppers are finding ways to cope with rising food prices by looking for deals (49%), buying more store brands (41%), buying fewer items (37%), buying in bulk (23%) and making increased use of store loyalty programs (22%). Consumers are also seeing different benefits from shopping in-store or online. Customers indicate that while shopping in a physical store, they can make adjustments at the shelf (61%) and save on shipping/delivery (57%). When grocery shopping online, shoppers report they can better monitor basket size (64%) and save on gas (62%)."

    Published on: August 25, 2022

    Coborn's, the Minnesota-based supermarket chain, announced yesterday that its CEO-chairman, Chris Coborn, "has joined the CEO Action for Diversity & Inclusion™ coalition. The organization is the largest CEO-driven business commitment to drive measurable action and meaningful change in advancing diversity, equity, and inclusion in the workplace.

    "In signing this commitment, Coborn’s, Inc. joins a partnership of more than 2,200 CEOs pledging to cultivate a trusting environment where all ideas are welcomed, and employees feel comfortable and empowered to have discussions about diversity and inclusion … As a signatory of the CEO Action for Diversity & Inclusion™, Coborn’s is dedicated to working collaboratively to advance diversity and inclusion in the workplace through conversation, engagement, and collaboration among organizations."

    Other CEOs from the retail space include:

    Albertsons Companies' Vivek Sankaran … Alimentation Couche-Tard/Circle K's Brian Hannasch … The Container Store's Satish Malhotra … Food Lion's Meg Ham … Giant Eagle's Laura Karet … Giant Food's Ira Kress … Hannaford's Mike Vail … Kroger's Rodney McMullen … Meijer's Rick Keyes … Nordstrom's Erik Nordstrom … Peapod Digital Labs' JJ Fleeman … Staples' Sandy Douglas … Stop & Shop's Gordon Reid … Target's Brian Cornell … Walmart's Doug McMillon … and Wegmans Food Markets' Colleen Wegman

    KC's View:

    Pretty good company to be keeping, especially because the stated goals seem so obviously necessary to achieve.

    BTW, you can find out more about the coalition here.

    Published on: August 25, 2022

    Fox Business reports that "Whole Foods Market is being accused in a lawsuit of falsely marketing beef with the slogan 'No Antibiotics, Ever.'

    "The suit was brought by three consumers and an animal welfare nonprofit and filed on Tuesday in the federal court in Santa Ana, California.  According to the proposed class action, recent independent laboratory testing found that Whole Foods' beef contained antibiotic and other pharmaceutical residue, meaning that cattle had been treated with antibiotics or other pharmaceuticals."

    Fox Business points out that "Whole Foods markets sells at least 42 beef products as free of antibiotics, and charges 'substantial' price premiums based on that claim, according to the complaint filed."

    KC's View:

    You'd think this would be one of those things easy to resolve.

    Get an impartial testing lab.  Test a bunch of Whole Foods beef.  See how the results come out.  Make ruling based on those results.

    After all, results are results.  If Whole Foods indeed has been deceptive, it ought to have the book thrown at it.  No question.

    Published on: August 25, 2022

    The California Air Resources Board is expected to issue a new ruling today that will "put in place a sweeping plan to restrict and ultimately ban the sale of gasoline-powered cars, state officials said, a move that the state’s governor described as the beginning of the end for the internal combustion engine."

    According to the New York Times story, the ban will take effect in 2035, and "is widely expected to accelerate the global transition toward electric vehicles. Not only is California the largest auto market in the United States, but more than a dozen other states typically follow California’s lead when setting their own auto emissions standards.

    "If those states follow through, and most are expected to adopt similar rules, the restrictions would apply to about a third of the United States auto market."

    The rule, the Times writes, "will require that all new cars sold in the state by 2035 be free of greenhouse gas emissions like carbon dioxide. The rule also sets interim targets, requiring that 35 percent of new passenger vehicles sold by 2026 produce zero emissions. That requirement climbs to 68 percent by 2030."

    The Times points out that California now has to send the proposed rule to the US Environmental Protection Agency (EPA) for a needed waive that will allow it to take effect, though the Clean Air Act gives California the authority to set its own pollution-oriented rules.  The Biden administration is not expected to have any objection, but the Times points out that President Trump had fought to deny California that right, and "there remains the possibility that a future president might fight full implementation of the new rules. In addition, a group of attorneys general from Republican states have filed a lawsuit challenging California’s ability to set its own pollution rules."

    KC's View:

    Border states that do allow for the sale of gas-powered cars after 2035, plus an inevitable boom in online gas car retailers, will mean that it will be very difficult for California to totally end the use of new gas-powered cars in the state.

    And, one of the objections from automakers is that it will be very difficult for them to meet the benchmarks and goal laid out by the state's regulators, and that almost certainly will be the case if electric vehicles remain as expensive as they seem to be now.

    But I think that it always is possible to say "we can't do that."  Be a lot more productive, I think, to get working on it … especially because we're talking about helping to preserve the human species.

    One other thing.  It doesn't seem like a great time to be investing in gas stations.  It isn't like all these cars are going away, but the general direction seems clear.  And we certainly know what the finish line is, at least in California.

    Published on: August 25, 2022

    •  From the Washington Post:

    "Starbucks illegally withheld wages and benefits from unionized baristas, the National Labor Relations Board alleged in a complaint Wednesday.

    "The complaint arrives during a campaign by the coffee chain and its interim CEO, Howard Schultz, to tamp down unionization efforts at its stores around the United States. More than 230 locations have voted to join the Starbucks Workers United union since late 2021, driving a surge in unionization nationwide … The NLRB seeks back payments and benefits for unionized workers since May and to require Schultz to read a statement to workers about their union rights."

    Published on: August 25, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Engadget reports that Instacart is introducing a new service, "Big & Bulky," designed to allow consumers to order large items.  The program "promises same-day and scheduled delivery of products like outdoor furniture, office supplies and home electronics. As of today, a handful of retailers, including Mastermind Toys, Office Depot and Staples, are participating in the program nationally."

    •  Peloton Interactive yesterday announced that "the Peloton Bike, Guide, and select accessories and apparel are now available for purchase in Amazon's U.S. stores, with Bike delivery available to most of the United States."

    Until now, the company said, its "new products and accessories were sold, exclusively, through the brand's e-commerce site, inside sales channels and global showrooms. This collaboration allows Peloton to expand its distribution and more immediately engage millions of Peloton Members and prospective Members in a new channel for the brand, making products and accessories more readily accessible in Amazon stores.

    "Customers can search for the products in Amazon stores to see if they are available for purchase and delivery in their area.

    "The initiative is the latest move by Peloton to innovate and drive growth by collaborating with the world's best-in-class e-commerce retailer to expand access to its highly sought-after suite of connected fitness products."

    Peleton may want to innovate and drive growth, but it mostly is trying to reverse slowing sales trends and a plunging of its stock price.  The move also comes as the company deals with rumors that it could be acquired - perhaps by Amazon.  (Nike and Apple also have been mentioned as potential suitors.)

    I have no idea if this makes sense.  It could generate new sales, but it also could reduce the brand's cachet, and have the opposite effect.  We'll see.

    Published on: August 25, 2022

    •  The Dallas Morning News has a piece about how "H-E-B is about to kick off a new era in Dallas-Fort Worth grocery shopping after spending billions of dollars in Houston over the past 20 years.

    "Not since Walmart blanketed D-FW with its Supercenters has North Texas seen a new competitor that builds stores to sell similarly huge volumes of groceries.

    "Does that mean the D-FW grocery market is heading into some kind of grocery Paleozoic era of extinction? No, but the Houston experience offers some clues to how H-E-B will expand into D-FW.  In Houston, in the fifth largest U.S. metro area, H-E-B proved that it could succeed in any size market."

    One certainty:  H-E-B won't be entering the market with cookie-cutter stores, but rather will be constantly "rethinking, tweaking, very much always evolving … They’re never done, and that’s part of their big success."

    Published on: August 25, 2022

    We took note yesterday of a Fast Company piece about Ben & Jerry's dispute with its owner, Unilever, over differing interpretations about what it means to be a "brand purpose" business. 

    I commented, in part:

    I think it is fair to say that Unilever has shown more forbearance than one might have expected with Ben & Jerry's over the past two decades, but as far as I'm concerned, the reason for buying Ben & Jerry's ice cream - at least for a lot of people - will instantly vanish.  A significant piece of the value proposition will have been diluted, and I think Unilever would be taking a big gamble with the brand's equity and core values.

    MNB reader Nathan Tully wrote:

    This is an incredibly interesting story to me and I have been following it from the start.

    I think consumer activism in the form of speaking with your wallet has two sides that seem to get lost in the discussion around brands. I believe that B+J really stepped on a landmine with this boycott in Israel. Using a brand and its voice for causes has many risks. It seems that B+J had tunnel vision on making their statement and possibly felt that they were invincible. For everyone who supports a cause there is someone who does not and just because a person likes the brand they may not walk in lock step with the values of the organization producing it. True, some consumers may leave the brand due to the latest fight about B+J not being able to stand up for what they believe in but what about the those who had already left the brand because of their previous years of activism?

    I am one of those folks. Personally I loved B+J ice cream and ate it for many years. When they really ramped up their social/political activism I personally could no longer fund their efforts through my purchase so I pivoted to other premium brands.  It was that easy. I am sure that my little $200 a year support of the brand going away did not impress anyone at B+J but multiply that by the millions of consumers with different opinions and now you have a brand in jeopardy.

    I think it is time for these companies to focus on the basics and just churn out good products. I know what the data says about “feel good” consumerism but data is always subjective to the lens being used to look at it. Every single thing does not have to be made into a cause. It seems that the leaders at Unilever understand the danger associated with B+J’s radical stance to try not to sell to a certain segment of consumers – money is always green.

    With all due respect, I disagree with you in this sense.  I have no problem with companies that want to engage in cultural/social/political activism, and structure their brands to reflect those beliefs.  They believe that in doing so, they will attract like-minded consumers and can grow in what they feel is an ethical way.

    But I also have no problem with companies that do not want to take this approach.

    Consumers get to choose.  Investors get to choose.  And we see what happens.

    I find it interesting when some to suggest that it is wrong for companies or investor groups to focus on issues like environmental, social and corporate governance, as well as diversity, inclusion and equity.  Again, this is a choice - you can or you can't (actually, you will or you won't).  But to suggest that nobody should … that seems anti-free market to me.

    But, for the record, I believe the data - I think many people, especially many young people, would rather support companies that they feel reflect their values.  I like that about them.

    You may be right that Ben & Jerry's may have gone a bridge too far with its Israel position.  The real mistake may have been accepting the acquisition pitch from Unilever … though it did work out for 20 years, such deals may have expiration dates, like it or not.

    Responding to yesterday's FaceTime video about streaming exceeding cable television in terms of viewing time in America, one MNB reader wrote:

    I agree with the assessment that streaming has changed how our viewing habits. However I am becoming increasingly frustrated with the business model. As more and more steaming services add exclusive content, I need to add more streaming services to view shows I have interest in. The combined costs are rapidly adding up to the expense I tried to eliminate by leaving cable. I also have come to realize that as I grow my streaming services that much of the content beyond what I was interested in, is either duplication of some of my existing services or just crap. I now am moving to a model where I am going to join a service, binge what I want, disconnect when done, and reconnect later if there is something I’m interested in. I feel like the current model is as bad as the cable model. And now the streaming services think offering lower fees by adding commercials, is going to make customers happy?   Not this one. 

    Maybe we should bundle all of the streaming services together for a reduced price!  Oh wait that feels like cable! 

    Regarding Starbuck's closure of stores for "safety reasons," which some say is more about unionization activity, one MNB reader wrote:

    Safety may be the stated reason but, that most likely is not the issue.  The company will not continue with marginal locations that now are facing increased operational expenses.  Most likely, they are not seen as profitable It stinks for the workers, but their name is not on the door.  The union's name is not on the door.  If the company wants to close stores as a means to maintaining profitability, then they can.  End of story.  The unions can cry and whine all they want.  Maybe the workers should have foreseen this prior to going down this road.  Hopefully the workers can find other employment.  If they even want to.

    All of which would work … except that I have a feeling it runs contrary to US labor law.

    On another subject, one MNB reader wrote:

    So Walmart is finally going to take the plunge into the loyalty program business.

    We'll see what sort of program they have, one thing you can bet on though, it will be largely funded by their vendors.

    The Walmart I used to deal with isn't going to spend a dime they don't absolutely have to spend.

    Another MNB reader wrote:

    It’s not that it took so long, it’s just their age old strategy of passing discount directly to the shopper is dated, not as exciting as a loyalty program.  At the end of the day, there is just so much spending and perception is reality even when it is not.  At the end of the day, getting a carton of milk free will convince many that Kroger is cheaper.

    We pointed out yesterday in pandemic coverage that "federal health officials say they are eager to offer …  updated boosters as quickly as possible, pointing to a death toll that now averages about 450 Americans per day and could rise in the coming months as people spend more time indoors."

    I commented:

    I'm ready to sign up right now.  That number - 450 Americans are dying every day from Covid-19 - certainly gets my attention.  Nothing is perfect, and there are no guarantees … but I want to do whatever I can to improve my odds.  Which I believe will not just help me stay healthy, but is the responsible thing to do to try to keep people around me healthy.

    Prompting one MNB reader to write:

    Or maybe they’re responsible for keeping themselves healthy.

    So you don't subscribe to the philosophy that being part of a community means that we should all try to be responsible in our behavior?  That part of being human is looking out for others?  That we should care enough for each other than we should modify our behavior if not doing so means we could harm others?

    How many people got sick or even died during the pandemic because there were others who decided that they did not need to wear masks, and didn't need to get vaccinated or boosted, and ended up getting sick and then infected other people?

    Glad you're not my neighbor.  Or a member of my family.  And I sure as hell hope that I've raised my kids to be better than that.

    Published on: August 25, 2022

    We're into the final weeks of summer, so … yup, I'm going to take an extended weekend.  

    I hope we've put to bed the question of whether this means I am "losing interest."  I just want to enjoy a couple of extra days off.  

    I hope you also get some time to relax this weekend.  I'll see you next week.