business news in context, analysis with attitude

Published on: October 10, 2022

Today is Columbus Day as well as Indigenous Peoples Day, which got me thinking about a business lesson about epistemic closure that came out of a 2nd grade class that Mrs. Content Guy taught 22 years ago.

Published on: October 10, 2022

by Kevin Coupe

Once again, I want to bring your attention to the regular email newsletter, "Around The Store With Stew," that I've felt does an excellent job of communicating effectively and frankly with customers at Stew Leonard's stores in Connecticut, New York and New Jersey.

What grabbed my attention this weekend when the email showed up in my in box was the way he talks about prices - specifically, the price of pumpkins, but the lessons can be applied to most of the store's departments:

The pumpkins (we’ll sell 250,000) are the best I’ve seen in years … Look for a hard pumpkin and, try to get a nice stem. Had to raise the price $2 this year but, we’re getting the “cream of the crop.” Our pumpkin farmer said his cardboard (for the bins) has gone up from $9 last year to over $20 this year. He also has to pay his farmer workers $16 an hour, up 30% from last year. Throw fuel for his tractors on top of that. Most customers are buying three (3/$24) and adding the crazy shaped gourds to decorate their houses. Add some corn stalks and you’ll become a Martha Stewart!

In other words, Stew Leonard's didn't just raise prices, but explained why … which i think is a really smart thing to do.

Stew also admits to a setback in the bakery department:

It was good while it lasted but we got a “cease and desist” from Warner Bros. about using the “Ted Lasso” name on our shortbread cookies. I binge watched the Apple TV+ series and even put up a personal endorsement in our stores. We had the sign, the shortbread cookies, and I thought we had one big happy family. Well, not according to copyright law. No more “Ted Lasso” name. We’re just going to call them “OUR SECRET SHORTBREAD COOKIES.” I’m still going to endorse the show. Over 500 million people can’t be wrong. Also, they've won 7 Emmys! To show how excited I am about the show, look at my Halloween picture last year.

That's an unusual level of transparency, I think … though Stew also manages to make a sales pitch for the shortbread cookies.  Which happen to be really good.

The Eye Opening lesson, I think, is the importance of effective, honest communication - in the end, customers will respond, and will respect retailers for being upfront with them.

Published on: October 10, 2022

Axios has a story about how "the traditional holiday shopping season is dead, with retailers no longer waiting to clear out the Halloween leftovers before rolling out Black Friday-like deals …  Inflation and excess inventory are new factors in this year’s earlier push."  The story says that "44% of consumers say it's better to buy gifts and seasonal items now because they believe prices will go up before the end of the year because of inflation, a National Retail Federation survey found."

Amazon's second Prime Day promotion of the year is this week, and "a survey from Klaviyo found 78% of consumers were planning to purchase holiday gifts during the Prime sale instead of waiting for Black Friday."  And "Amazon has played a huge role in getting other retailers, including Walmart, Target and Best Buy, to start their own competing sales earlier in the year."

Published on: October 10, 2022

In Canada, the Financial Post reports that "for about two-and-a-half years, Loblaw has been working with Gatik Inc., an autonomous technology company based in Silicon Valley, to run a fleet of five driverless trucks guided by cameras, laser sensors and sonar.

"In that time, the trucks have completed 150,000 trips without safety issues or accidents, picking up online grocery orders at a fulfillment centre and dropping them off for customers at a handful of pickup points around the Toronto area."

For much of the time, "the trucks always had a human in the driver’s seat who could take control of the vehicle at any point."  But now, "all five trucks are driving around Toronto, 12 hours a day, with an empty driver’s seat, which Loblaw said is a first for autonomous commercial delivery vehicles in Canada … The hope is that by next year, the trucks will run without any humans in them at all, making Loblaw’s e-commerce deliveries more efficient and less reliant on a tightening labour pool. There were 28,210 truck-driving job vacancies in the second quarter, up more than 50 per cent year over year, according to the latest Statistics Canada report."

The story notes that "the new fleet is focused on what’s known as the middle mile in logistics: transporting online orders from a fulfillment centre to stores and pickup locations, as opposed to long-haul trips transporting products from a manufacturer to Loblaw’s larger distribution warehouses, or the so-called last mile, delivering to homes.

"Loblaw and Gatik picked the middle mile because the routes are short and predictable, so the trucks can drive the same roads over and over, collecting data on traffic patterns and weather that can help guide future trips."

Published on: October 10, 2022

CNBC has an interesting interview with Jim Koch, founder of the Boston Beer Company and its flagship Sam Adams beer, noting that 38 years after the company was launched, it "has far outpaced his initial vision of being a small, regional craft brewer with just a handful of employees and around $1.2 million in annual revenue, he says. Yet even now, he’s cautious to acknowledge success."

"Sam Adams is less than 1% of the U.S. beer business,” he tells CNBC.  "So the reality is, after 38 years of being pretty successful, we’ve basically gone from infinitesimal to tiny.”

Some excerpts from the interview, which focused on his leadership style:

•  "I learned early on that I was not a good manager. I’m OK with that. There are people who are good managers. I am not one of them.

"I’m not really great at follow-up, not that great at details. I’m not that organized. And I’m not a real respecter of 'process.'  I don’t try to be a good manager. I try to make sure that I’ve got a good manager as CEO."

•  "I spend a lot of time out of the office, working in either the breweries or the markets. To me, that’s where the action is. That kind of direct contact with the retailers, drinkers, distributors and our own team is invaluable in making good fundamental decisions. Essentially, that’s my job — to make good decisions for the company — and I learned I can’t do that sitting in an office.

"It’s a lot easier to hire good managers than good leaders. My job is to be leading the company, and you’ve got to lead from the front."

Published on: October 10, 2022

The Washington Post had a long piece over the weekend about Starbucks' labor issues, casting it very specifically as a battle between Howard Schultz, who grew the company into a global behemoth and has returned to the CEO job twice after having stepped down, and a country and labor movement that has undergone fundamental changes.

An excerpt:

"The 69-year-old CEO had always seen himself as the good guy of American capitalism, believing that his own wealth and Starbucks’s rise to become one of the most ubiquitous brands on the planet was a direct outgrowth of the company’s concern for its workers and their well-being.

"Only now all of that was being challenged. Across America, workers who had labored through a once-in-a-century pandemic were concluding that they deserved better and were quitting or demanding more from their bosses, or in the case of some Starbucks workers, unionizing … On picket lines outside the stores, pro-union workers were slamming Schultz as a greedy, out-of-touch billionaire with a $130 million yacht. The National Labor Relations Board was accusing Starbucks in court filings of carrying out a 'virulent, widespread and well-orchestrated' anti-union campaign that relied on firings, threat and surveillance. Democratic senators who once praised Schultz as a 'pathbreaking' and humane leader were now castigating him for undermining his workers’ rights.

"To Schultz, the unionization drive felt like an attack on his life’s work. In previous speeches to his employees, he had cast the union as 'a group trying to take our people,' an 'outside force that’s trying desperately to disrupt our company' and 'an adversary that’s threatening the very essence of what [we] believe to be true'."

The Post recounts a speech to some 200 Starbucks' executives:

"'Why is this so personal to me?' he asked the executives in the room. Schultz stared down at the ground, his arms resting on his knees and his shoulders bent.

"'I know what it has taken to build this place. I know what’s at stake right now,' he continued, struggling to get the words out.  'And we have to show — … to show up in a different way.' The room fell silent. Schultz steadied himself.

"'And let me be honest with you,' he told them. 'Time is not on our side'."

You can read the entire piece here.

Published on: October 10, 2022

•  The New York Times reports that "Rivian, the electric-car maker, said on Friday that it was recalling 13,000 vehicles after identifying an issue that could affect drivers’ ability to steer some of its vehicles … the flaw, in rare instances, can impede steering, a company spokesperson said. Noise, vibration and harshness from the front suspension are among the symptoms of the problem.

"The issue affects 1 percent of the vehicles, but an inability to control the steering wheel will occur in a much smaller number, the spokesperson said. Rivian sent an email to customers and promised to make repairs for free, planning to do so within 30 days."

The story notes that Rivian has positioned itself as a Tesla competitor, but "has struggled to meet production goals because of the computer chip shortage and to fulfill its promise to provide Amazon, one of its biggest investors, with delivery vans."

•  Electrek reports that Amazon "will spend €1 billion to electrify its delivery fleet in Europe over the next five years … The company currently has around 3,000 zero-emission last-mile delivery vans in Europe. Amazon doesn’t say what percentage of its vans are electric, but does say that these zero-emission vans delivered 100 million packages last year.

"This investment will allow the company to expand that number to 10,000 vans across Europe by 2025. These 'last-mile' vans are used on local delivery routes, bringing packages to individual homes. Amazon also has 'micro-mobility' delivery hubs in 20 European cities that enable delivery by cargo bike and on foot, and it plans to double this network of hubs.

"Amazon will also buy larger, heavy-duty electric trucks for 'middle-mile' shipments. These are vehicles like the Tesla Semi, Freightliner eCascadia, and Volvo VNR electric that move large amounts of goods from ports to distribution centers.

"Finally, the investment will also cover installation of thousands of chargers at the company’s facilities around the continent.

"Amazon did not specify which brands of vehicles it would buy."

Published on: October 10, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Southeastern Grocers, parent company to Fresco y Más, Harveys, and Winn-Dixie said that it "has reopened nearly all of its Florida stores and has extended its current in-store community donation benefiting the American Red Cross. Winn-Dixie also executed relief efforts this week with distributions of free water, ice, food and cleaning essentials to more than 2,000 families in the highly impacted areas of Englewood, Port Charlotte and Pine Island.

"The grocer activated mobile pharmacies to offer preventive vaccines and essential medications, along with food pantries to provide shelf-stable products, fresh produce, water, ice and essential cleaning supplies in affected areas where stores remain closed."

•  The Columbus Dispatch reports that "Kroger union workers at 82 stores in Ohio have signed off on a new contract with the grocer after rejecting previous ones.

"Members of the Local 1059 of the United Food and Commercial Workers International Union approved the contract by a vote of 3,546 to 3,193 this week … The local has about 12,500 members in a region that extends to 47 counties in central, north-northwest, and south-southeast Ohio including cities such as Mansfield, Zanesville and Portsmouth."

•  The Washington Post has a story about how "alternative meats, which may include plant-derived products and animal meat grown from cells in labs, are becoming increasingly popular with consumers and investors. Market revenue is expected to roughly double, to $12.3 billion by 2029, according to market-research consultants Fortune Business Insights. However, some traditional-meat producers are skeptical that substitutes will continue to see rapid growth. They say alternatives fail to replicate the taste of animal meat and are likely to be eaten regularly only by a small group of consumers."

That said, the Post writes, "In regions such as Southeast Asia that have fast-growing populations and are grappling with food export restrictions, substitutes for traditional meat are emerging as a reliable protein alternative. And it’s not just attracting vegetarians: The meat alternatives industry is becoming a darling of food security experts, venture capitalists and companies trying to protect themselves from supply chain crunches.

"Such alternatives often require less space, water, time and materials to make, according to researchers, making them more resilient to the supply chain shocks that have recently plagued the animal meat industry. In parts of the world, such as Northern Europe, some alternatives are becoming as cheap as traditional meat, a shift investors hope will reach more price-conscious consumers in less wealthy countries that are increasingly consuming meat."

•  The Boston Globe reports that Dunkin' has rolled out a new version of its Dunkin' Rewards loyalty program, with the bottom line being that it "has customers spending $50 to get a free coffee — $10 more than the previous system … And if you want a beverage beyond a standard coffee, you’ll need to spend even more. A free Dunkin’ Refresher, hot or iced espresso, or Cold Brew will run you 700 points, or $70. And while you can now claim a frozen coffee drink as your treat, you’ll need 900 points ($90) to redeem one."

Customers, the Globe writes, are unhappy, and took to social media to voice their frustrations.

However, the story also notes that "unlike before, customers will now be able to use rewards points to unlock free food items, including classic doughnuts, bagels, and various breakfast sandwiches.

"And for true Dunks devotees, there’s even more: an all-new 'Boosted Status,' a special loyalty tier for customers who make 12 purchases in one month. Boosted Status gives customers 12 points for every $1 spent, a 20 percent bump from the standard rewards system."

I read this, and my first thought is that it seems likely that Dunkin' simply did not do a very good job of communicating the rationale behind the changes.  Any change is bound to upset some folks, but a company can mitigate the impact by communicating clearly and effectively.  (See our Monday Eye Opener, above.)

Published on: October 10, 2022

MNB reader Steven Ritchey emailed us about two different Friday stories:

I'm thinking Walmart could take those 1,458 jobs they are cutting in their warehouse and put those people to work in their stores.  The stores I go to desperately need front end help, and store stocking is a joke.  Back when I was retail we used to be told, "The customer can only buy the product that is on the shelf, not what is in the backroom."

Then I get to the front end and only the self check registers are open, with a line of 5-6 customers at each one, not one manned check stand was open.  Now, I'm not someone who dumps on self check stations, I use them, but, they still need some manned checkstands open as some people take seemingly forever to check themselves out.

The story about Wegman's moving to CT to open stores resonates here in Dallas, TX, as HEB has begun opening stores here.  The established stores are all doing resets, freshening up their stores and some are even building new stores for the first time in several years.

It's going to get interesting down here.

Also writing in about our story regarding stores making changes now to compete with a Wegmans scheduled to open several years down the road, MNB reader Mike Sommers wrote:

These stores should have been competing and working hard to earn their customer's dollar's long before Wegman's announced they were coming to town.  They had an opportunity to create an environment that Wegman's would never have dared enter for lack of failing.  However it sounds like these stores took their customers for granted and are now trying to play catchup.  Should have been competing proactively rather than reactively.  Run your business in a way where you are competing every day and force your competitors to think long and hard before entering your market.  

Another MNB reader wrote:

You could save them a lot of money remodeling telling them if they just offer self-checkout self-scan, the customers will flock to the store. Done!

I don't have to.  You just did.

But you may be over-simplifying what need to be done.

On another subject, MNB reader Thomas Parkinson wrote:

Congratulations to John Lert who sold his Alert Innovations automated warehouse technology to Walmart.  I first met John in the late '90s when he presented his vision of an automated grocery store to me at Peapod.  It was a bit of a stretch for Peapod back then.  Since then,  he has reinvented his technology at least three times over the years.  John's vision has become a reality. Way to go John!

Got the following email from an MNB reader about our conversation regarding Major League Baseball:

I unequivocally agree with the reader suggestion that MLB's biggest problem is a lack of a salary cap and floor.  True, not every team that makes the playoffs has a high payroll ... but consider this year where 9 of top 12 payrolls are in the playoffs (75%), while only 3 of the remaining 18 teams qualified (17%).  That's a significant difference.  

But what about the teams noted, Seattle (21st in payroll) and Cleveland (28th)?   Well this is Seattle's first playoff appearance in 21 years.  Thinking that Seattle epitomizes the reader's point  regarding Kansas City of "catching lightning in a bottle every 20 years or so".  As for Cleveland, although they made the playoffs this year and last, they have only been in the playoffs 15 times in their 118 years in major league baseball ... yikes!

I'm not suggesting that the historical correlation coefficient between getting into the playoffs and a high payroll is 1.0, but it is undeniable that the two are highly correlated.  

BTW … kudos to the MNB reader who correctly identified my location based on pictures I posed - Citi Field, where Mrs. Content Guy and I attended the last regular season game. And yes, that was a brick we did for our dad in the Citi Field Fan Walk.  (There's a double meaning in the inscription - my dad was born in the Bronx, and his heart was in Queens - home of the Mets, but also where my mom was from.)

And finally, we posted an email from MNB reader Jeff Gartner on Friday that responded to a critical email posted earlier in the week:

Wow Kevin, I was surprised (but not really) at the negative vehemence of a couple of your commenters in today's MNB. I didn't realize you were forcing them to read MNB. If a person doesn't like what you're  reporting and commenting on, my goodness, just don't read it. And it's free! So no worries about stopping and not getting what you paid for.

BTW, you said you might be getting "older and crankier."  Is that the onset of transitioning into a "curmudgeon" (I always loved that word)?

I wrote back:

Maybe.  Though I'd like to think of myself as a lovable curmudgeon.

But I love it when people disagree with me and express their views. That's what I signed up for.

MNB reader John Kemp chimed in:

Mr. Gartner summed up my thoughts perfectly!

Please tell him thanks from at least one MNB reader and I would guess there are others.

Keep fighting the good fight and I look forward to your update every morning.

I don't have to tell him.  You just did.

Published on: October 10, 2022

Major League Baseball's Wild Card Weekend is in the books, and in three of the four series the winners swept in just two games.

In the National League, the San Diego Padres defeated the New York Mets 7-1 on Friday night, and then the Mets beat the Padres 7-3 on Saturday night.  But the Padres then out-pitched and out-hit the Mets in the Sunday night rubber game, winning 6-0, moving on to play the Los Angeles Dodgers in one NL Divisional Series.  And, the Philadelphia Phillies defeated the St. Louis Cardinals 6-3 and 2-0, and now will play the Atlanta Braves in their NL Divisional Series.

In the American League, the Cleveland Guardians beat the Tampa Bay Rays 2-1 and 1-0, and now will move on to play the New York Yankees in one AL Divisional Series, while the Seattle Mariners beat the Toronto Blue Jays 4-0 and 10-9, and will play the Houston Astros in the other AL Divisional Series.

All four series in the best-of-five divisional round will begin this Tuesday.

One interesting stat - in three of the four wild card series, it was the lower seeded team - the Padres, Phillies, and Mariners - that won and will move on to the next round.

In Week Five of National Football League Play…

New York Giants 27, Green Bay Packers 22

Detroit Lions 0, New England Patriots 29

Los Angeles Chargers 30, Cleveland Browns 28

Houston Texans 13, Jacksonville Jaguars 6

Atlanta Falcons 15, Tampa Bay Buccaneers 21

Pittsburgh Steelers 3, Buffalo Bills 38

Miami Dolphins 17, New York Jets 40 (not a typo)

Chicago Bears 22, Minnesota Vikings 29

Tennessee Titans 21, Washington Commanders 17

Seattle Seahawks 32, New Orleans Saints 39

San Francisco 49ers 37, Carolina Panthers 15

Philadelphia Eagles 20, Arizona Cardinals 17

Dallas Cowboys 22, Los Angeles Rams 10

Cincinnati Bengals 17, Baltimore Ravens 19