business news in context, analysis with attitude

Published on: September 15, 2022

A new New Seasons - dubbed internally as New Seasons 2.0 - opened a couple of months ago in the Palisades section of Lake Oswego, Oregon, and I think this beautiful store shows both the evolution of the format as well as what is possible with the greater resources available from its parent company, Good Food Holdings, and its ownership, South Korean conglomerate E-mart.  (There's also a new division CEO, Nancy Lebold - formerly of WinCo and Kroger's Food4Less - bringing a nice new energy to the company.). At the same time, the 19-store retailer is maintaining its traditional commitment to the communities it serves, local vendors that it supports with things like micro-loans, and products that serve its broader sustainability goals.

Published on: September 15, 2022

The state of California yesterday filed a lawsuit against Amazon on antitrust grounds, charging that the online retailer stifles competition by penalizing sellers for offering products elsewhere for lower prices.

“For years, California consumers have paid more for their online purchases because of Amazon’s anticompetitive contracting practices,” state Attorney General Rob Bonta (D) said in a statement.

From the Washington Post coverage:

"California’s suit alleges that Amazon’s actions have harmed the state’s consumers and economy. The complaint alleges that Amazon has previously misled other regulators who have scrutinized its effect on pricing.

"'Amazon makes consumers think they are getting the lowest prices possible, when in fact, they cannot get the low prices that would prevail in a freely competitive market because Amazon has coerced and induced its third-party sellers and wholesale suppliers to enter into anticompetitive agreements on price,' the suit alleges.

"The suit refers to contracts that Amazon signs with third-party merchants who sell items on its site. These agreements, the suit says, forbid sellers from listing items for less money on competitor sites such as Walmart, Target or even on their own websites.

"'Amazon has misled consumers into believing they are getting the low prices that would prevail in a competitive market when, in fact, it has deliberately caused prices to be generally higher everywhere else than they would be absent price parity,' the complaint alleges."

The New York Times writes that "the lawsuit largely focuses on the way Amazon penalizes sellers for listing products at lower prices on other websites. If Amazon spots a product listed cheaper on a competitor’s website, it often will remove important buttons like 'Buy Now' and 'Add to Cart' from a product listing page.

"Those buttons are a major driver of sales for companies selling through Amazon, and losing them can quickly hurt their businesses.

"That creates a dilemma for marketplace sellers. At times, they can offer products for lower prices on sites other than Amazon because the cost of using those sites can be lower. But because Amazon is by far the largest online retailer, the sellers would rather raise their prices on other sites than risk losing their sales on Amazon, the complaint said, citing interviews with sellers, competitors and industry consultants."

The Post story notes that "Amazon’s third-party seller business is a significant source of money for the company — earning it $27.4 billion in revenue in the last quarter alone. Third-party sellers have long accounted for more than half of all items sold on Amazon."

Amazon's response is that the California attorney general “has it exactly backwards” and that “sellers set their own prices/"

The Post writes that Amazon spokesman Alex Haurek said that "Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively … The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law."

The lawsuit is being filed as legislators and regulators - in states, the federal government, and abroad - all are paying more attention to Amazon's policies.  

The Post writes that "some of these efforts have faced roadblocks in the courts, including a very similar lawsuit brought by D.C. Attorney General Karl A. Racine (D) last year. That suit was thrown out by a judge this year, but Racine in August filed a notice that he would appeal the decision.

"The California suit could foreshadow antitrust challenges against Amazon in Washington. The Federal Trade Commission has been investigating the company for years, and its chair, Lina Khan, is widely expected to take action against the company, following years of criticizing its allegedly monopolistic practices as an academic and congressional staffer."

Published on: September 15, 2022

Bloomberg reports that Walmart this month plans to announce a new fintech venture that will make digital bank accounts available to some of its employees and customers. first as a beta test and later, if things work out, as a broader offering.

According to the story, "The move heralds the arrival of Walmart’s fintech push after years of fitful efforts to expand its financial-services offerings. Eventually, One -- the financial-technology startup Walmart is leaning on for the effort -- is hoping to offer a bevy of other products, from loans to investing, in an effort to become a one-stop shop for consumers’ financial needs, the people said. Watching closely will be lawmakers, regulators and Wall Street titans."

Bloomberg writes that "Walmart’s interest in financial services is nothing new. The company’s MoneyCenter locations already allow customers to cash checks, access tax-preparation services and send money overseas through partners such as MoneyGram International Inc. and Euronet Worldwide Inc.’s Ria. The retail giant also already offers a bevy of credit and prepaid debit cards through lenders including Capital One Financial Corp., Synchrony Financial and Green Dot Corp.

'But the company hasn’t been shy about setting more ambitious goals."

“We’ve got a pretty big financial services business, but I would characterize it as being analog, and the opportunity to make it digital is right there in front of us,” Walmart Chief Executive Officer Doug McMillon said last year at an investor conference. “There are so many digital products that we can go build that will help people with managing their family’s expenses and their accounts and ultimately, hopefully, build wealth.”

Published on: September 15, 2022

Bloomberg reports that Amazon "will let brands and merchants send marketing emails to shoppers, a risky bid to boost sales that could inundate inboxes with spam.

"The company announced the initiative Wednesday at the Amazon Accelerate conference in Seattle, where it demonstrates new features to the independent businesses that sell more than half of the products on Amazon.com. 

"Merchants will be able to send free emails to recent shoppers, repeat customers and their biggest spenders through a 'Tailored Audiences' tool, which will also let sellers monitor the results. The tool has been in testing this year and will be available to all US sellers in early 2023.

"The move marks a break with Amazon’s historic reluctance to let independent merchants connect directly with customers for fear of alienating them. But online sales have slowed from their pandemic highs, and antitrust investigators are probing the power Amazon holds over millions of third-party vendors. Some merchants also say Amazon makes it hard to create a relationship with even their most loyal buyers."

Published on: September 15, 2022

The Wall Street Journal has an analysis of a report issued by FMI-The Food Industry Association indicating that "self-checkout is nearly twice as widespread as it was before the pandemic, representing 30% of all grocery store transactions in 2021, according to an FMI-The Food Industry Association report released last week. That is up from 18% in 2018. The machines are now at 96% of the 38,000 retail stores (across 96 companies) the group surveyed."

The Journal continues:

"Chains including Walmart Inc., the Kroger Co., Dollar General Corp. and Albertsons Cos. are piloting stores that offer only self-checkout lanes. Costco Wholesale Corp. recently brought the technology back to some of its locations after removing it in 2013.

"Target Corp. has ramped up its self-checkout offerings in recent years and now offers the tech in nearly all of its stores nationwide 'to give more guests a fast and autonomous alternative,' a Target spokeswoman says. The company says it has increased staff at the same time.

"Southeastern Grocers, which owns Fresco y Más, Harveys Supermarket and Winn-Dixie, has the machines in more than half of its stores. 'Including self-checkouts in our stores is not due to labor concerns, but as an added benefit for our customers. Due to their positive response, we will continue to install them,' a spokeswoman says.

"With the turnover rate for grocery store employees in 2021 at 48%, down slightly from a record high in the prior year, according to FMI, industry experts believe grocers may have no choice but to expand their use in the coming months."

At this point, the Journal writes, "Smart carts that tally each item as you shop are now available at 3% of stores, FMI reports, and 19% of stores say they are planning to roll out the technology in 2022."

Published on: September 15, 2022

Business Insider reports on a National Bureau of Economic Research working paper suggesting that "COVID-related illness made the US labor force shrink by around 500,000 people."

According to the story, the paper says that during the pandemic, "after calling out sick from work, workers are much less likely to participate in the labor force - which means they're not actively working or looking for work. In fact workers who were out sick due to likely COVID-19 were 7% less likely to be in the labor force a year later compared to peers who didn't call out sick.

"A lot of the drop may be due to workers being pushed from illness into retirement. Workers under the age of 65 weren't as likely to drop out of the labor force after having to call out sick - although their labor force participation did go down."

It is, the story says, "another data point that reinforces why labor shortages may be here to stay, and what's at their root cause: An economy (and life) altering pandemic. Labor force participation is still about 1% below its February 2020 levels, according to the latest data from the Bureau of Labor Statistics, and it's remained persistently lower than pre-pandemic levels even as the country regains all of the jobs it lost during the pandemic."

Published on: September 15, 2022

Wired has a story about a new bio-engineered purple tomato that has been approved by the United States Department of Agriculture (USDA) for growth and cultivation in the US, saying that it is “unlikely to pose an increased plant pest risk compared to other cultivated tomatoes” - the standard used by USDA for approving such things.

According to the story, the "purple tomato isn’t the first genetically modified fruit to be approved in the US. It’s not even the first genetically modified tomato - that designation goes to the Flavr Savr, introduced back in 1994 as the first genetically modified crop commercialized for human consumption. The Flavr Savr was created to have a longer shelf life than conventionally bred tomatoes. But because of its high production and distribution costs, it was pulled from the market just a few years later. The industry instead turned toward more profitable engineered crops, such as corn and soy, designed with the grower or producer in mind: to resist pests, tolerate herbicides, or produce higher yields.

"The purple tomato may mark a turning point for genetically modified foods in the US: Its engineered trait is meant to entice the shopper, not the farmer - specifically one interested in potential health benefits … While purple-skinned tomatoes have been developed through conventional breeding, they don’t accumulate high levels of anthocyanins in the flesh. There’s evidence from other researchers that these compounds may help prevent cancer, reduce inflammation, and protect against type 2 diabetes."

Wired goes on:

"Other purple produce is popping up in grocery stores everywhere: There are purple potatoes, purple cauliflower, purple carrots, and purple yams. But these vegetables are produced using conventional breeding, in which parent plants with certain attributes are crossed to create a desirable combination. The purple tomato, on the other hand, is considered a genetically-modified organism (GMO) because it’s made with recombinant DNA technology, in which genes from another organism are added.

"It’s not yet clear whether these characteristics will be enough to win over consumers who are wary of GMOs."

Published on: September 15, 2022

The New York Times reports that "American lobster may be a beloved and delicious splurge, but it is no longer a sustainable seafood choice and consumers should avoid eating it, according to Seafood Watch, a group that monitors how fish and other seafood are harvested from the world’s oceans.

"The organization made the announcement last week, motivated by concerns that the ropes used to fish for lobsters and some other seafoods often entangle critically endangered North Atlantic right whales. The marine mammal’s population has fallen to the low hundreds, and federal wildlife authorities say it faces extinction in the near future … Seafood Watch put American lobster, as well as some species of crab and fish, on its red list because of the effect fishing for the species has on North Atlantic right whales.

"The organization hopes that telling people to avoid American lobster, which is harvested off Maine, Canada’s maritime provinces and in other parts of the Northwest Atlantic, will raise awareness about the right whale’s condition and put pressure on fishery managers and lawmakers to do more to protect the imperiled mammals."

According to the story, "Lobster fishers and their allies in Congress say that Seafood Watch’s decision is unfair given the industry’s consistent compliance with state and federal laws aimed at protecting the whales. It is unclear whether Seafood Watch’s actions will have the intended effect because major sellers and distributors of American lobster may be hesitant to halt sales of the beloved seafood."

Published on: September 15, 2022

The New York Times this morning has the story of Yvon Chouinard, founder and owner of Patagonia, and how, "rather than selling the company or taking it public, Mr. Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits - some $100 million a year - are used to combat climate change and protect undeveloped land around the globe.

"The unusual move comes at a moment of growing scrutiny for billionaires and corporations, whose rhetoric about making the world a better place is often overshadowed by their contributions to the very problems they claim to want to solve.

"At the same time, Mr. Chouinard’s relinquishment of the family fortune is in keeping with his longstanding disregard for business norms, and his lifelong love for the environment.

"'Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,' Mr. Chouinard, 83, said in an exclusive interview. 'We are going to give away the maximum amount of money to people who are actively working on saving this planet'."

In August, the Times writes, "the family irrevocably transferred all the company’s voting stock, equivalent to 2 percent of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.

"The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits. Because the Chouinards donated their shares to a trust, the family will pay about $17.5 million in taxes on the gift.

"The Chouinards then donated the other 98 percent of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation."

Published on: September 15, 2022

•  CNBC reports that Walmart is rolling out a new tool that it hopes will move the needle on clothing sales:  "Starting this week, customers can use a virtual try-on tool to see how a shirt or another clothing item would look on their own bodies. It is the latest feature the company has added to its website because of the acquisition of Zeekit, a virtual fitting room startup.

"The retailer launched its first iteration of the tool in March, which allowed shoppers to choose a model that resembles them in body type, skin tone and hair color. It later expanded from 50 to 120 models. Other retailers have experimented with virtual try-on, too, including Amazon, which has a tool that uses augmented reality to allow shoppers to see how a shoe would look on their feet.

"The newest feature for Walmart, 'Be Your Own Model,' uses algorithms and machine learning technology that was originally used to develop more accurate topographic maps. Shoppers can use it to virtually try on more than 270,000 items across Walmart’s private brands, select items from national brands, such as Champion, Levi’s and Hanes and some sold on its third-party marketplace."

Published on: September 15, 2022

•  Social MediaToday reports that "while the metaverse and Web3 are the cool tech trends of the moment, capturing the attention of many of the key proponents in the digital space, AR may actually be a far more significant, practical innovation, with immediate use cases that can provide direct value and enhancement to your everyday life.

"And with AR glasses in development at several of the tech giants, it does seem like AR is going to become a far more significant element at some stage - likely before the VR-led metaverse becomes a real thing."

The story notes that "the capacity to use advancing AR tools to complement the shopping journey is significant, especially amid the rise of online shopping, and the role that AR can play in providing more buying context.

"But it’s more than that – AR can also serve a range of educational and inspirational purposes, and provide expanded engagement in a range of ways."

Published on: September 15, 2022

•  From the Wall Street Journal:

More than 1,600 merchants including Walmart Inc. and Target Corp. are urging U.S. lawmakers to pass legislation that aims to break the hold that Visa Inc. and Mastercard Inc. have over the credit-card market.

"The bill, which Sen. Richard Durbin (D., Ill.) and Sen. Roger Marshall (R., Kan.) introduced in July, would give merchants the right to route many credit-card payments over networks other than Visa and Mastercard. In a letter this week to all members of Congress, the merchants said the proposed legislation would increase competition, leading to a reduction in the fees they pay when they accept credit cards.

"The merchants said the fees are passed along to consumers in the form of higher prices."  The card networks, however, "have said card fees help cover costs for things like innovation and preventing fraud. Credit cards can also encourage consumers to buy more, networks say."

Published on: September 15, 2022

USA Today reports that Fred Franzia, the California winemaker who created the Charles Shaw wine brand, which became known as 'Two Buck Chuck,' which became an enormous sales driver for Trader Joe's, has died.  He was 79.

Published on: September 15, 2022

…will return.