business news in context, analysis with attitude

Published on: October 6, 2022

Last weekend I went to "The Big E," otherwise known as The Eastern States Exposition, where six New England states come together each year for what struck me as a state fair on steroids.  While the food offerings ran the gamut from funnel cakes to deep fried everything, it was on the long baked potato line that an essential truth - and, of course, a business lesson - of such events occurred to me.

Published on: October 6, 2022

"Bricks-and-mortar store owners are emerging from the pandemic with surprising strength, posting some of their best numbers in years and plotting expansions as more Americans venture out to buy things again," the Wall Street Journal reports.

"U.S. retail vacancy fell to 6.1% in the second quarter, the lowest level in at least 15 years, while asking rents for U.S. shopping centers in the quarter were 16% higher than five years ago."

And, some context from the Journal:

"The retail real-estate industry’s turnaround reflects a wrenching, decadeslong adjustment that included hundreds of retailer bankruptcies, widespread vacant storefronts and plummeting demand for enclosed malls. Over the past dozen years, construction of new retail has slowed significantly after many years of overbuilding.

"Instead, most developers are opting to renovate outdated properties rather than building new ones. Those that do embark on new projects are more cautious, usually securing leases from tenants before breaking ground. More and more companies that started as online only retailers, like Warby Parker Inc., are also turning to real estate to attract customers and boost growth."

Published on: October 6, 2022

TechCrunch reports that "Walmart is holding a 'Rollbacks and More' sale event from October 10 to 13 to counter Amazon’s Prime Early Access Sale. Last week, Amazon announced that it’s holding a Prime Day-like sales event on October 11 and 12, marking the first time that the online retail giant will host two sales events exclusively for Prime members in the same year. Walmart is now looking to counter Amazon’s sale with its own savings event.

"The company’s sales event will include discounts on top gifts and electronics, home, toys, fashion and more. Discounted items will include TVs, Apple Watches, air fryers, robot vacuums, heaters and more. Amazon has also said it will offer deals across all top categories, including electronics, fashion, home, kitchen, pets, toys and Amazon devices."

Published on: October 6, 2022

The Wall Street Journal has a story about Instacart, suggesting that as it plans/envisions an upcoming IPO, one of its real long-term advantages will be "advertising - the kind Instacart sells, rather than pays for … Ads, which DoorDash and Uber Technologies’ Uber Eats are also pushing into, will boost Instacart’s bottom line as a comparatively higher margin segment."

The story notes that "Instacart’s ad ambitions aren’t modest: The company generated roughly $300 million from ads in 2020 and had been looking to expand the business to $1 billion this year, according to a person familiar with the matter. Annualizing Instacart’s second-quarter revenue means ads could comprise something like 40% of Instacart’s total top line by the end of this year."

But the company does face a balancing act, the Journal suggests, because "it is possible a heavy ads business could eventually cause Instacart to compete with the very grocers it has set out to empower."

Published on: October 6, 2022

The Information has a fascinating piece illustrating why, while building a business around e-commerce is seen as attractive by some tech moguls, it is easier said than done.

An excerpt:

"It was 2020 and Mark Zuckerberg’s focus on his latest project began to intensify.

Online shopping was booming, and the CEO of Facebook - now called Meta Platforms - wanted to transform Facebook and Instagram into shopping destinations. Zuckerberg threw himself into the effort, hosting daily meetings and taking a hands-on approach far beyond what was typical for a CEO of a huge public company. He showered the commerce team with capital and engineers so it could accelerate its progress - more money than the group had asked for, according to a person with direct knowledge of the matter. He even talked about wanting to eventually drive Amazon-like levels of commerce through Meta’s properties, this person said.

"The shopping push made sense: Facebook and Instagram have billions of users, and Meta’s recommendation and ranking technology, which the company has spent years honing to tailor its feeds and ads to users’ tastes, could in theory be effective at showing people products they were likely to buy. And a significant portion of Meta’s huge ad business was already promoting products that people were buying elsewhere on the internet. But employees worried that Zuckerberg’s expectations were exceedingly high, and some were concerned his lieutenants were unwilling to tell him so.

"Now Meta’s dreams of making Facebook and Instagram into shopping destinations are in tatters. In the two years since Meta launched Shops on Facebook and Instagram, sales have fallen short of Zuckerberg’s expectations, according to multiple former employees. The commerce team has also struggled with high turnover and persistent debates over strategy, triggering disagreements among leaders about what work to prioritize.

You can read the entire story here.

Published on: October 6, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Amazon yesterday announced the creation of what it is calling Amazon Catalytic Capital, described as "a new initiative to invest $150 million in venture capital (VC) funds, accelerators, incubators, and venture studios that provide funding to entrepreneurs from underrepresented backgrounds, primarily at the pre-seed/seed stage of venture capital funding. The company will invest in funds that focus on Black, Latino, Indigenous, women, and LGBTQIA+ founders. Amazon expects to support more than 10 funds and over 200 companies through the next year … In addition to capital, the companies in the funds’ portfolios will receive mentorship from Amazon executives and gain access to resources to support their business and technical strategy. Amazon teams will also work with the startups to identify partnership and product collaboration opportunities that could accelerate their growth."

Excellent idea, which has the advantage of being good for "entrepreneurs from underrepresented backgrounds" who often don't have access to capital, as well as being positive for Amazon's image, which is important at a time when the company is under fire from legislators and regulators.

•  Amazon has announced "that it is hiring 150,000 employees throughout the U.S. in full-time, seasonal, and part-time roles across its operations network. A diverse range of roles—from packing and picking to sorting and shipping—are available to applicants from all backgrounds and experience levels. Employees can earn, on average, more than $19 per hour based on position and location in the US … Jobs in Amazon’s operations network include stowing, picking, packing, sorting, shipping customer orders, and more, and are available in hundreds of cities and towns across America. These roles can be the start of a long-term career inside or outside the company. The flexibility of the jobs available come with a wide range of hours—full- and part-time—and excellent pay and benefits. Sign-on bonuses ranging from $1,000 to $3,000 are available in select locations."

Published on: October 6, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From CNBC:

"Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than half of the business leaders polled expect the slowdown to be 'mild and short.'

"A majority of the 1,300 chief executives polled by KPMG between July and August warned, however, that increased disruptions - such as a recession - could make it difficult for their businesses to rebound from the pandemic.

"That said, the CEOs expressed more optimism compared to the start of the year, and said there would be growth prospects in the next three years."

•  It apparently rates coverage in the Los Angeles Times:

"Trader Joe’s stores have brought back the company’s beloved free samples after a years-long hiatus due to the pandemic.

"In the company’s podcast released Monday, hosts shared that 'demo is back,' the term the California-based grocery chain uses to describe its in-store offerings for shoppers to taste its often rotating and seasonal inventory.

"'It hasn’t been possible to offer a lot of product samples in our stores over the past few years, but we are bringing it back with a new approach,' Tara Miller, Trader Joe’s director of words and phrases and clauses, said in the podcast. Her co-host said that would mean a greater focus on new products."

Two things.  First, Trader Joe's has its own podcast.  (How many retailers can claim that?). And second, the company has a "director of words and phrases and clauses," which is a very cool title.  As a "Content Guy," I can appreciate that.

•  Recreational Equipment Inc. (REI), which since 2015 has closed its physical stores on Black Friday - the day after Thanksgiving and traditionally one of the busiest holiday shopping days of the year - as a way of encouraging employees (and customers) to spend the day outdoors, not shopping, has decided to make the practice permanent.

Fox News quotes president-CEO Eric Artz:  "Opt Outside has always been about prioritizing the experience of our employees – choosing the benefits of time outside over a day of consumption and sales.  Making Opt Outside an annual observance will serve as a yearly remind of this commitment to doing the right thing for the co-op community."

REI employs more than 16,000 people.

The policy impacts all stores, distribution facilities, activity centers and call centers, though customers still will be able to shop online.

Published on: October 6, 2022

•  Bashas’ Family of Stores announced that Jayson Mead, the company's senior director of fresh, has been named vice president of AJ’s Fine Foods.

Bashas' also said that Gabe Flores, who has worked for the company in Produce Procurement, Operations, Marketing & Sales, has been named director of produce for AJ's.  

And, Jorge Alvarez, the company's director of deli/foodservice at Bashas, has been named director of tortilleria at the company's Food City chain.

Published on: October 6, 2022

Little bit of hostility out in the MNB community this week…

Yesterday we noted that the latest dunnhumby Consumer Trends Tracker (CTT) is out, and underlines the fact that "Americans believe that food-at-home inflation has hit 22.8%, 9.7 points higher than the 13.1% annual rate reported by the U.S. Bureau of Labor Statistics."

One MNB reader responded:

Well - I give you credit. as Snoop Dog says in his commercial... You are incredible…ly bad.

Headline "Americans overstate inflation". You and Jean Pierre have gone to the same school. 

Defer, deflect, deny. So blame the American public for inflation.. Good onya. What a clown.

For the record … I didn't come up with this statistic out of thin air.  It was a dunnhumby number, based on research.

Besides, I commented:

The fact that Americans' perceptions of food inflation are dramatically inflated - sorry - compared to reality is interesting but, in some ways, irrelevant - marketers can't get into an argument about this, and have to address perceptions when talking to shoppers.

So you may think I am a clown, and you may want to disparage the White House press secretary.

But if the actual number is at odds with perception, don't you think that;'s worth noting … especially in the context of a commentary that suggests the perception needs to be dealt with.

Responding to this same story, another MNB reader wrote:

Perhaps the consultants and analysts should visit mainstream supermarkets more often. What do you expect consumers to think when a loaf of bread at Walmart goes from $1 to $1.49 in the space of a week or a gallon of milk doubles in price?

Time to deal with the realities and not try to lull consumers into a sense of security with signage and a few online deals.

Certainly not what I was suggesting.

We also had a story yesterday about how ""U.S. employers pulled back sharply on job openings, while layoffs rose in August, adding to signs the labor market and overall economy are cooling."

I commented:

This is a good thing, especially in the broad economic sense.  But if the pendulum shifts back in employers' direction, they need to remember who the essential people were when things got tough.  Everybody's goal should to stop the pendulum from swinging wildly, but rather come to a resting place in the middle, where everybody is valued and feels invested in the business's success.

One MNB reader took exception to my suggestion:

Maybe it’s time to change the name of your newsletter to “morningnewslecture.”

Have you ever read MorningNewsBeat?  (Actually, I know you have.)

I don't think I'm lecturing.  I like to think of myself as gently nudging, and expressing a point of view with a certain degree of passion.

Nothing's changed.

(Okay, maybe I'm a little older and crankier.)

We also had a story yesterday about how "Schnucks announced that a select number of its St. Louis-area stores now are offering what it is calling a 'flex assignment option," which it said would allow employees to be "able to optimize their work schedules by selecting shifts and store locations that best fit their personal schedules while creating opportunities for growth and learning at a pace determined by the teammate."

Sounded good to me.  But to an MNB reader, not so much:

Interesting… I have a different take. Instead of guaranteeing entry level employees a schedule, they are offering “open shifts” selection – thus limiting the workforce to only shifts the company deems necessary at any particular time. They're not even guaranteeing a location for the employee to work at!

Very clever marketing, though - points for that! 

And finally, on another subject, one MNB reader wrote:

In 1975, Loretta Lynn was one of the biggest stars in country music when she released a song that was quickly banned by many country radio stations. The song, “The Pill,” was an ode to birth control and sexual freedom that shocked the industry and many of the genre’s more conservative listeners with lyrics like:

“This old maternity dress I’ve got is going in the garbage

The clothes I’m wearing from now on won’t take up so much yardage

Miniskirts, hot pants, and a few little fancy frills

Yeah, I’m making up for all those years since I’ve got the pill.”

My, how times change with the rapidity.

Not all that rapidly.  That was almost a half-century ago.

But things certainly have changed.

I have to be honest here.  I have no memory of having ever heard this song before….but I love it … especially the subversiveness of it, when you think about the context.

Published on: October 6, 2022

The Major League Baseball season came to an end last night…each team's final game of the season was scheduled to begin at 4 pm EDT, so that nobody would be at a disadvantage once the playoffs begin on Friday.  (It didn't quite work out - the Mets-Nationals game had a two-hour rain delay.)

But here are the end-of-season standings:

In the National League East, the Atlanta Braves and the New York Mets tied with 101 wins each, but the defending World Champion Braves took the division championship by virtue of having won the season series with the Mets.  The St. Louis Cardinals won the National League Central, and the Los Angeles Dodgers (by winning 111 games!) took the National League West.  The NL Wild Card teams are the Mets, Philadelphia Phillies and San Diego Padres.

The American League East champs are the New York Yankees, the Cleveland Guardians took the AL Central, and the Houston Astros won the AL West.   The AL Wild Card teams:  the Toronto Blue Jays, Tampa Bay Rays, and the Seattle Mariners.

The playoffs begin this Friday, with the best-of-three Wild Card series - in the National League, the Mets play the Padres and the Phillies play the Cardinals.  (The Braves and Dodgers get a first round bye.)

In the American League, the Mariners play the Blue Jays, and the Rays play the Guardians.  (The Yankees and Astros get a first round bye.)