business news in context, analysis with attitude

Published on: September 22, 2022

It was just two weeks ago that Queen Elizabeth II passed away … and in a matter of days, her life and reign and the circumstances of her death were the subject of magazines and premium "bookazines" that could be found in retail stores all over the country.  It struck me as an amazing feat of logistics, as well as a reflection of how print media can be relevant to many consumers.  It was a subject that I wanted to discuss (while my early career was in newspapers and magazines, more recently I have questioned the future of print), so I reached out to Doug Olson, President & Chief Media Officer of a360media, the media division of accelerate360, which is in both the content and distribution business.

Full disclosure:  Yes, I know that accelerate360 is a longtime MNB sponsor.  But this struck me as an interesting story, Doug was the right person to talk about it, and I saw no reason to penalize accelerate360 for having the good taste to sponsor MNB all these years.

If you'd rather download and listen to The Innovation Conversation as an audio podcast, click below.

Published on: September 22, 2022

by Kevin Coupe

This isn't a business story, but it is a demographic Eye-Opener … and I always think that any story about how the nation's population - its beliefs, traditions and behavior - is changing is worth reporting.

Axios has a piece about new Pew Research indicating that "Christians could fall below 50% of the U.S. population by 2070 if recent trends continue."

Over the last three decades, the story says, increasing numbers of Americans have stopped describing themselves as Christians and instead say they are atheists, agnostic, or "nothing in particular … Depending on whether this trend slows, stops or speeds up, Pew projects the number of Christians of all ages will shrink from 64% to between 54% and 35% of all Americans by 2070 … 'Nones' would rise from the current 30% to 34%-52% of the U.S."

This is, the story points out, an enormous shift:  "In 2020, about 64% of Americans, including children, were Christian, Pew says. People who are religiously unaffiliated — sometimes called religious 'nones' — accounted for 30% of the U.S. population."

To be clear, this shift may be more about identity than belief;  just because a person is unaffiliated with an organized religion does not necessarily mean than they do not believe in a specific deity.  This change could reflect a broader skepticism in the nation's population about all institutions, but it also could be accelerated by the behavior of some religious institutions.  (The Catholic Church, for example, has alienated a percentage of its members through its handling of sexual abuse scandals and the priests who committed them.)

Businesses that depend on some level of institutional respect in their communities need to be aware of these Eye-Opening statistics, I think - they are reflective of broad and deep cultural shifts in how people think and how people act.  For retailers who depend on those people for their sales and profits, these things matter.

Published on: September 22, 2022

The New York Times has a piece about political ad targeting that suggests - if you read between the lines - the degree to which the technology could be applied to campaigns for retailers and suppliers.

Here's the set-up:

"Over the last few weeks, tens of thousands of voters in the Detroit area who watch streaming video services were shown different local campaign ads pegged to their political leanings.

"Digital consultants working for Representative Darrin Camilleri, a Democrat in the Michigan House who is running for State Senate, targeted 62,402 moderate, female — and likely pro-choice — voters with an ad promoting reproductive rights.

"The campaign also ran a more general video ad for Mr. Camilleri, a former public-school teacher, directed at 77,836 Democrats and Independents who have voted in past midterm elections. Viewers in Mr. Camilleri’s target audience saw the messages while watching shows on Lifetime, Vice and other channels on ad-supported streaming services like Samsung TV Plus and LG Channels.

"Although millions of American voters may not be aware of it, the powerful data-mining techniques that campaigns routinely use to tailor political ads to consumers on sites and apps are making the leap to streaming video. The targeting has become so precise that next door neighbors streaming the same true crime show on the same streaming service may now be shown different political ads — based on data about their voting record, party affiliation, age, gender, race or ethnicity, estimated home value, shopping habits or views on gun control."

The Times goes on to point out that "the quick proliferation of the streaming political messages has prompted some lawmakers and researchers to warn that the ads are outstripping federal regulation and oversight.

"For example, while political ads running on broadcast and cable TV must disclose their sponsors, federal rules on political ad transparency do not specifically address streaming video services. Unlike broadcast TV stations, streaming platforms are also not required to maintain public files about the political ads they sold.

"The result, experts say, is an unregulated ecosystem in which streaming services take wildly different approaches to political ads."

Published on: September 22, 2022

Interesting piece from Bloomberg about how "Pilipinas Shell Petroleum Corp., the publicly listed Philippine arm of Shell Plc, plans to have retail shops and restaurants in a third of its gasoline refilling stations by 2025 as its seeks to boost revenues beyond fuel.

"That could drive non-fuel retail earnings to grow at least 15% a year and build an income stream that provides a quarter of sales, CEO Lorelie Quiambao Osial said in a Bloomberg interview. Shell wants 550 of its 1,300 to 1,400 stations in the Philippines in 2025 to have retail offerings that range from convenience stores to restaurants and shops like Jollibee, McDonald’s, Starbucks and Adidas."

“We are transforming what you’d normally call petro retail stations into mobility destinations,” said Osial. “Before it’s motorists-driven. Now, it’s something for the passengers to enjoy as well.”

Published on: September 22, 2022

The New York Times reports that "federal labor regulators have moved to force Amazon to scrap a rule that governs employees’ use of nonwork areas, accusing the company of illegally singling out union supporters in enforcing the policy.

"A complaint issued on Tuesday by the National Labor Relations Board’s Brooklyn office said Amazon 'selectively and disparately enforced the rule,' which applied to distributing materials and to solicitation activities, 'by discriminatorily applying it against employees who engaged in union activity.'

"The complaint amounted to a finding of merit in a charge brought by the Amazon Labor Union, which mounted organizing efforts — one successful, one not — at two warehouses on Staten Island this year. The case will be litigated before an administrative law judge unless it is settled beforehand, and Amazon could appeal an adverse ruling to the national labor board in Washington.

"The complaint said the company applied the solicitation policy unlawfully when it prohibited workers from posting a pro-union sign in a nonwork area at one of the Staten Island warehouses, known as LDJ5. The company threatened discipline if the workers posted the sign or did not remove the sign, according to the complaint, which also said at least one worker was disciplined under the solicitation policy.

"The complaint also accuses the company of disciplining two workers to discourage them from engaging in union activity."

According to the Times, "The labor board’s complaint said Amazon could reinstate the policy only if it explicitly stated that the policy did not apply to organizing and related activity by workers, known as protected concerted activity. The complaint also seeks to require that all supervisors, managers, security personnel and outside consultants hired by Amazon receive training on workers’ federally-protected labor rights. It could affect most of the company’s roughly one million employees nationwide."

Amazon replied:  "These allegations are completely without merit, and we look forward to showing that through the process.”

Published on: September 22, 2022

•  CNBC reports that "Walmart announced Wednesday that it will be hiring 40,000 seasonal and full-time associates as the holiday season approaches.

"The company says it is hiring for a variety of positions, including seasonal store associates, customer service associates and 1,500 full-time truck drivers. Walmart has been building its private trucking fleet this year, increasing potential first-year pay up to $110,000 in April."

The story notes that "the seasonal hiring total is smaller than last year when Walmart added 150,000 mostly permanent and full-time associates, as well as 20,000 supply chain workers to help alleviate logistic bottlenecks.  The company says more than 50% of its seasonal U.S. associates will transition to part-time or full-time roles in the new year."

Published on: September 22, 2022

•  The Associated Press reports that "Home Depot workers in Philadelphia have filed a petition with the federal labor board to form what could be the first store-wide union at the world's largest home improvement retailer.

"The petition, filed with the National Labor Relations Board this week, seeks to form a collective bargaining unit for 274 employees who work in merchandising, specialty and operations. The federal agency's database shows no other attempts to form a store-wide union at the company, though a group of Home Depot drivers successfully unionized with the International Brotherhood of Teamsters in 2019.

"Sara Gorman, a Home Depot spokesperson, said the company is aware of the filing and 'we look forward to talking to our associates about their concerns.'

"'While we will of course work through the NLRB process, we do not believe unionization is the best solution for our associates,' Gorman said in an email."

Published on: September 22, 2022

•  From the Wall Street Journal this morning:

"Amazon.com Inc. founder Jeff Bezos and Chief Executive Andy Jassy can’t avoid testifying in an investigation related to the company’s Prime membership program, the Federal Trade Commission said late Wednesday.

"Amazon last month asked the FTC to cancel subpoenas issued to Messrs. Bezos and Jassy, arguing that they aren’t steeped in the details of Prime’s sign-up and cancellation processes, which is the investigation’s focus. The FTC’s staff began the probe in March 2021, examining whether the company deceived customers into signing up for Prime and didn’t provide a simple way to cancel the program’s recurring charges, according to the order issued Wednesday.

"Amazon must largely comply with a June investigative demand that sought information about other Amazon subscription programs, the FTC order said. Amazon had pushed back against that request, saying it was too burdensome and expansive."

•  TechCrunch reports on Temu, a Chinese shopping app that "has quickly gained momentum for its first international endeavor in the U.S."

Temu was developed by Pinduoduo, described as "the Chinese e-commerce giant known for offering hard-to-believe deals."  The app "briefly claimed the top spot of Android shopping apps in the U.S. in mid-September before dipping to No. 15 this week, according to app analytics platform Data.ai. The rankings indicate new downloads, so it’s hard to gauge the app’s user retention and activeness.

"At a glance, Temu doesn’t look much different from other e-commerce platforms exporting affordable goods from China, whether it’s Amazon, Alibaba’s AliExpress, or Wish. Its landing page features a dazzling collection of competitively priced products, from a $2.77 blouse to a $1.39 soap holder."

But what really could give it an advantage is "its extensive connections with factories in China. Founded in 2015, Pinduoduo quickly grew to challenge the dominance of Alibaba, which started out more than a decade before it. The company’s meteoric rise has been credited to a clever strategy of connecting manufacturers directly to consumers, which allows it to trim middlemen costs and eventually price products a lot more competitively than others relying on layers of distributors."

Which is not to say it won't face challenges.  Temu, TechCrunch writes "has been repeatedly slammed for its opaque supply chain practices and accused of infringing on intellectual property. In 2019, the U.S. added Pinduoduo to its notorious blacklist over suspected counterfeits, though the company has pledged to crack down on counterfeits."

•  The Wall Street Journal reports that "Meta Platforms Inc. is planning to cut expenses by at least 10% in the coming months, in part through staff reductions, as the social-media giant confronts stalling growth and increased competition, according to people familiar with the company’s plans.

"The Menlo Park, Calif., company has begun quietly nudging out a significant number of staffers by reorganizing departments and giving affected employees a limited window to apply for other roles within the company, according to current and former managers familiar with the matter, in a move that achieves staffing cuts while forestalling the mass issuance of pink slips.

"The reductions are expected to be a prelude to deeper cuts, according to people informed of the company’s plans. While some savings will come from cuts to overhead and consulting budgets, the people said, much of it is expected to come from reduced employment."

Published on: September 22, 2022

•  Upshop and Itasca Retail have announced a merger of the two companies, saying that they will be "integrating Itasca Retail's merchandise receiving, retail ordering, and inventory optimization and management - most notably the Magic Inventory Intelligence and Computer-Generated Ordering application - into Upshop's total store operations experience," enabling retailers to "access one inventory record and unified demand forecast to order for the entire store in real time."

The goal, the companies said in their announcement, is to "tackle one of the most urgent retail challenges: improving on-shelf availability while reducing labor burden."

Full disclosure:  Itasca is a recent MNB sponsor.

•  The Associated Press reports that "Walmart and CVS Pharmacy have settled with the state of West Virginia for a combined total of $147 million in a lawsuit over the companies’ roles in contributing to the oversupply of prescription drugs that fueled the opioid epidemic in the country’s most impacted state, Attorney General Patrick Morrisey announced Tuesday.

"Walmart and CVS were two lawsuits that were part of a larger trial that was pushed back to June of next year along with Kroger and Walgreens. Morrisey recently announced a settlement with Rite Aid for up to $30 million to resolve similar litigation.

"The lawsuits allege the pharmacies’ contributions to the oversupply of prescription opioids in the state have caused 'significant losses through their past and ongoing medical treatment costs, including for minors born addicted to opioids, rehabilitation costs, naloxone costs, medical examiner expenses, self-funded state insurance costs and other forms of losses to address opioid-related afflictions and loss of lives.'

"It brings the total settlements by the state in opioid lawsuits to $875 million, including $296 million with manufacturers, $400 million with wholesalers and $177.5 million involving pharmacies."

•  Axios reports that Nordstrom "adopted a poison pill after listed Mexican department store chain Liverpool acquired a 9.9% stake for around $295 million."

The story notes that "Nordstrom is a perpetual M&A bridesmaid, but always ends up remaining single. The founding family tried to take it private it 2017, but failed to secure adequate financing. Then it partnered with Leonard Green for an $8 billion buyout, but again the banks balked. Now, in response to outside interest from a retailer with a 2x+ market cap, it's building a brick wall."

Axios writes that "were anyone to acquire 10% or more of Nordstrom's stock without board approval, the Seattle-based retailer could issue new shares at a 50% discount to existing 10% or more holders (i.e., the Nordstrom family, which holds a 15.9% position)."

Published on: September 22, 2022

•  The Fresh Market announced that Peter Mayes, the company's Meat and Seafood Director, has been promoted to Group Vice President, Merchandising.

The company also promoted Wade Yenny, Director of Grocery Merchandising, to the role of Vice President, Center Store.

Published on: September 22, 2022

Got the following email from an MNB reader:

It does not surprise me that chains like Winco, Grocery Outlet, etc. are doing so well dealing with inflationary pressures. IMHO, retailers like these two and others you mentioned in your missive understand what the customer wants today, low prices, good value, clean stores, and making it easy to shop up and down all aisles. Witness, Albertsons, Safeway, Fred Meyer, etc. they advertise certain category skus at a hot price, but in order to get that hot price, you have to buy 3-4-5 of that item to get the ad price. To heck with them, many consumers will go elsewhere to get the same items at a good price and only buys 1 or 2 for their needs.

Wake up major retailers, many customers don’t need 4-5-6 items. The two categories that irk me that the aforementioned retailers use for multiple purchase, to get the hot advertised price  requirements are soft drinks and cereal. My wife and I go to another retailer to buy these aforementioned needs that do not require multiple purchases to get the advertised price. FYI, many of my retired food industry friends have exited Fred Meyer and Safeway as their primary go-to retailers. I have written about my concerns as a long time customer about these multiple purchase requirements to the local Safeway and Fred Meyer division VP’s in the past year, but have not received a reply from either chain VP. 

And responding to the fact that a European private-equity firm is buying a controlling stake in Eataly, one MNB reader wrote:

I lived in Chicago when Eataly opened there. Always meant to stop in, but just never made. I was back in Chicago this summer and finally got there.  Ugh… what a disappointment. Terrible service, prices seemed high, and while the offerings looked interesting, it didn’t seem that special. The upscale Italian deli in my town is a better place to go.

I think that Eataly is an acquired taste - sometimes a little too precious for its own good, and almost always high-priced.

But … I also think that the pandemic was not kind to formats like Eataly, which depend on high local and tourist traffic and high service levels.  That's not an excuse for disappointing customers, but it is an explanation.  But fixing the problems has to be a high priority.

I agree with you on one thing - a really good local Italian deli almost always will be more accessible than an Eataly.