business news in context, analysis with attitude

Published on: October 18, 2022

Remember how a few weeks ago I told you the story about how, when Mrs. Content Guy went to the local Miele vacuum cleaner store to get our machine repairs, the guy got all annoyed at her because she'd bought the vacuum on Amazon?  Well, yesterday I got an email that illustrated what the real problem is … and how the local Miele guy was getting mad at the wrong person.

Published on: October 18, 2022

From Bloomberg:

"A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections … The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update."

The story ascribes the higher probabilities to "tightening financial conditions, persistent inflation and expectations of a hawkish Federal Reserve pressing ahead with rate hikes are raising the risk of a contraction.

"The model is more certain of a recession than other forecasts. A separate Bloomberg survey of 42 economists predicts the probability of a recession over the next 12 months now stands at 60%, up from 50% a month earlier."

Published on: October 18, 2022

The Dallas Morning News reports that the new H-E-B in Plano, Texas, will open on November 2.  The 118,000 square foot unit, like the recently opened Frisco, Texas, store, "will have an H-E-B’s True Texas BBQ restaurant attached with a drive-through, a home decor and essentials department and a beauty section with makeup and hair care brands that are sold at salons and Sephora and Ulta."

Tye story goes on:

"While H-E-B has operated a few stores around the south and west perimeters of Dallas-Fort Worth for several years, from Waxahachie to Hudson Oaks, the Frisco and Plano stores kick off the Texas grocer’s major expansion plans into D-FW. H-E-B has owned the Plano corner since 2012, and it’s one of several parcels the San Antonio-based grocer has purchased over the past 20 years.

"Like the Frisco store, the Plano H-E-B has several competitors located around it, including H-E-B’s Central Market store in Plano, which is five miles southeast of the new store.

"The company chose Plano and Frisco for its first two stores because they’re in densely populated, fast-growing areas. H-E-B has two more stores under construction in Allen and McKinney that will open next summer and says it will break ground in Mansfield early next year."

The News suggests that November 2 "may not be soon enough for employees at H-E-B’s Frisco store, which opened September 21. That store had 1,500 people waiting to get in at 6 a.m. on its opening day, and there are still lines to get in, particularly on weekends."

Published on: October 18, 2022

DoorDash yesterday announced what it is calling "new self-serve ad solutions designed to give CPGs more flexibility and options to reach nearly every household in America."  The goal, the company says, "is to help CPGs tap into DoorDash’s 25M+ monthly active customers across our broad network of 75,000+ convenience, grocery, and retail stores, at the point of sale to drive incremental purchases."

The platform, the company says, "empowers CPGs to directly activate, manage, and measure Sponsored Product ads on DoorDash. Sponsored Products are item-level placements throughout the Convenience and Grocery marketplace that connect DoorDash consumers with the brands they love. We’re focused on driving incremental revenue for our partners, and on average see that more than 50% of orders generated from ads on DoorDash come from new customers."

DoorDash says that it works with "all of the top 10 CPG manufacturers in the US, and in just one year, we’ve generated more than $3B in sales for merchants through ads and promotions.  For consumers, ads on DoorDash are a trusted way to discover businesses and products that are relevant for every occasion. Ads are transparent in-app and will always be a seamlessly integrated shopping experience for consumers."

Published on: October 18, 2022

The Wall Street Journal this morning has a piece about how "a number of retailers, brands and tech platforms are convinced" that live-streamed shopping can "become a big thing in the US."

What, exactly, is live-streamed shopping?  The Journal writes that it "adapts the QVC model of televised home shopping to the digital era."  The concept "grew popular in the Asia-Pacific region before exploding in China during the pandemic as businesses rushed to connect more directly with homebound consumers … Some U.S. marketers see live shopping as a critical way to build awareness and trust among young consumers, attract new customers and collect data on shoppers, including their behavior online before making a purchase. They also want to be in position if and when live shopping takes off."

The story notes that "many U.S. marketers view the trend with caution because it hasn’t yet delivered significant sales in the U.S. But revenue from U.S. live-stream shopping is predicted to grow to $20 billion this year from $6 billion in 2020, and to $57 billion in 2025, according to research firm Coresight Research Inc."

Retailers seem particularly intrigued:

•  "Walmart recently increased marketing for live-stream events after testing showed that they help the company draw a more direct line between marketing and sales for brands that advertise on its websites and apps, says Chief Revenue Officer Seth Dallaire.

"Walmart is working with tech startups Firework and TalkShopLive LLC to host live-shopping videos on its website and apps, while it develops its own internal live-shopping platform."

•  "Target Corp., meanwhile, collaborated with Ntwrk on a September 'hot drop' event that featured exclusive items from a new collection by fashion designer Houston White. The offerings sold out before the end of the 30-minute event, Mr. White says."

•  "Amazon.com Inc. also has invested heavily in the space, creating a live-stream shopping service in 2016 and featuring it on the Amazon home page in 2018. It also launched two versions of a live-streaming app—one for brands that want to produce their own videos and one for content creators or influencers who are paid to promote products in videos—in 2019 and 2020, respectively.

Not every experiment has lasted: Amazon in 2017 canceled a daily live-stream shopping show on its website and app called 'Style Code Live.' The company declined to comment on why, but some industry insiders say the American public wasn’t ready for it at the time.

"More recently, Amazon has been developing live-shopping events for its Twitch gaming platform, says Walker Jacobs, chief revenue officer at Twitch. In an event sponsored by L’Oréal SA, Twitch users playing a popular game collaborated with each other to collect items that could be activated and turned into coupons for L’Oréal products on Amazon, Mr. Jacobs says."

The Journal writes that "forty-six percent of U.S. consumers who watch live-stream shopping events say they do it because they want to be entertained, according to a 2022 Coresight survey."

Published on: October 18, 2022

The Associated Press reports that "Dollar General is facing another $1.68 million in fines after government safety inspectors found violations at four of the chain's stores in Alabama, Florida and Georgia, the federal regulators announced Monday.

"During inspections in April 2022, the Occupational Safety and Health Administration found dirty and disorderly storage areas and materials stacked unsafely at locations in Mobile and Grove Hill, Alabama; Tampa, Florida; and Dewy Rose, Georgia. OSHA said those conditions put workers at risk of slipping, tripping and getting struck by falling objects.  The company was also cited for fire hazards, including failing to keep exit routes and electrical panels clear and unobstructed, and neglecting to mount and label fire extinguishers."

The story notes that "The announcement came two months after OSHA announced $1.3 million in proposed penalties for similar violations at three of Dollar General stores in Georgia.  OSHA said Dollar General has faced more than $9.6 million in initial penalties after 182 inspections since 2017."

Published on: October 18, 2022

•  The Washington Examiner reports that "Walmart will be closed on Thanksgiving this year, following other stores also closing their doors that holiday.

"The nation's largest grocer similarly closed last Thanksgiving and the one before in light of the coronavirus pandemic, but it is unclear if all its supercenters and neighborhood markets will be permanently closed on the holiday. Walmart still anticipates a busy holiday season, hiring an additional workforce of 40,000 people for the season.

"Kohl's and Best Buy announced that their stores would also close for the holiday, joining Target, which decided last year to close every Thanksgiving. All stores will reopen for the shopping holiday Black Friday."

Published on: October 18, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Bloomberg reports that "Starbucks Corp. employees are suing the company for defamation over its response to a union protest.

"In a lawsuit filed Monday in South Carolina state court, eight Starbucks workers accused the company of falsely and maliciously portraying them as criminals, and accused the company and the manager of making false statements to the police 'for the illegitimate collateral purpose of preventing plaintiffs from publicly protesting Starbucks.'

"The lawsuit stems from an Aug. 1 confrontation in which pro-union employees gathered inside the cafe and presented the manager with a letter asking for improvements such as higher pay.

"According to the lawsuit, the employees peacefully followed the manager to the store’s exit, repeating their request for a raise, and then the manager falsely claimed that the baristas were preventing her from leaving the building. The manager reported the workers to local law enforcement, whom she told that the staff 'would not let her leave until they got a raise,' and that one of them 'assaulted her,' according to a police report cited in the filing. Starbucks then suspended the plaintiffs, who deny they threatened the manager and accuse the company of abusing the legal process."

It is extraordinary how quickly the labor situation at Starbucks has devolved into this kind of stuff.  Sure, only about 250 stores out of 9,000 have voted pro-union, but the whole tenor of discourse and negotiation seems to be at odds with the company's longtime culture.  Keep in mind, this is not a complaint filed with the National Labor Relations Board - this is a court filing that seeks punitive and compensatory damages.

•  From the Associated Press:

"he nascent group that secured the first-ever union victory of an Amazon warehouse in the U.S. is set to face a crucial test on Tuesday, when votes from yet another election are set to be tallied.

Representatives from the National Labor Relations Board will be counting ballots cast by workers at a facility in the town of Schodack, near Albany, New York. Roughly 800 people are employed at the warehouse, according to Amazon.

"This will be the fourth union election at an Amazon warehouse this year, and the third one led by the Amazon Labor Union. The upstart group secured an unexpected win in April at a company warehouse on Staten Island but was stung by a loss shortly thereafter at another facility nearby.

"A union election in Alabama, led by the Retail, Wholesale and Department Store Union at a warehouse in Bessemer, Alabama, remains too close to call."

Published on: October 18, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Amazon announced that it has opened its second Amazon Style store, this one in the Easton Town Center, in Columbus, Ohio.

The 28,000 square foot store - like the original unit in Los Angeles - "features curated and regularly updated 'lookbooks' from Amazon stylists and influencers, and only displays one of each product, with all sizes and styles stored in the back of the house to increase the selection available on the floor.  Amazon has eliminated the process of sifting through racks for a particular size or carrying around several items, said Monica Ravi, director of operations for Amazon Style. Instead, customers scan a QR code using the Amazon Shopping app, select their size and color, and tap to add the item to their fitting room or for pick-up."

I recently had the opportunity to check out the original Amazon Style store, and reported on it for MNB here.

Published on: October 18, 2022

•  The Washington Post reports that "Alaska will cancel the upcoming winter snow crab season in the Bering Sea for the first time, and bar fishers from catching king crabs in the Bristol Bay for a second consecutive year, because of a sharp decline in their estimated population.

"This week’s announcements by the Alaska Department of Fish and Game deal a severe blow to fishers who make a living off the crabs. They also bring back to the forefront questions about the role of climate change in the rapid decline of the snow crab population: The number of juvenile snow crabs was at record highs just a few years ago, before some 90 percent of snow crabs mysteriously disappeared ahead of last season.

"Alaskan officials said they had consulted carefully with stakeholders before canceling the season. They said they were aware of the impact of the closures on “harvesters, industry and communities” but that they had to balance economic needs with conservation."

•  From the Wall Street Journal:

"The Federal Trade Commission is investigating whether Visa Inc. and Mastercard Inc.’s MA security tokens restrict debit-card routing competition on online payments, according to people familiar with the matter. 

"The FTC for the past few years has already been probing whether Visa and Mastercard block merchants from routing payments over other debit-card networks. The networks acknowledged an FTC probe in regulatory filings in recent years. 

"In recent months, the FTC expanded its focus to routing challenges that stem from the networks’ security tokens, the people familiar with the matter said. It couldn’t be determined if the investigation is a new probe or part of the previous one. 

"Visa and Mastercard are by far the two biggest card networks in the U.S., building and maintaining the plumbing that allows Americans to use credit and debit cards at stores and online. Their lion’s share of that market has drawn increasing scrutiny from regulators and fueled tension with merchants, which pay fees set by the networks when a customer pays via card."

•  From Loyalty360:

"Delta Air Lines recently announced a strategic partnership with Starbucks that will offer members of Delta SkyMiles and Starbucks Rewards the ability to unlock more ways to earn rewards. Customers enrolled in both Delta SkyMiles and Starbucks Rewards loyalty programs can link their accounts to begin receiving the new rewards offers.

"Members will earn one mile per $1 spent on eligible purchases at Starbucks, and on days when enrolled members have a scheduled flight with Delta, they will earn double Stars on eligible purchases at participating Starbucks stores. This new benefit is open to currently enrolled members as well as new members of the companies’ loyalty programs."

•  FMI-The Food Industry Association said yesterday that it "is encouraging all Americans to assist in increasing coin circulation this October during 'Get Coin Moving' Month to support their fellow citizens and businesses that rely on coins for everyday cash transactions."

“The COVID-19 pandemic accelerated shifts in consumer habits about how they purchase goods and services, with increases in online shopping and credit or debit card use impacting the circulation of legal tender like coins," said FMI president-CEO Leslie G. Sarasin.  "These shifts have resulted in large quantities of coins sitting idle in the 128 million households across America instead of flowing through commerce. Unfortunately, this means that businesses like grocery stores have a harder time making change for cash transactions, and consumers who rely on cash have difficulty securing the coins they need for everyday food and goods purchases at our stores.

“We cannot mint ourselves out of this situation. It is critical that Americans do our part to get coin moving by returning coins back into circulation. We call on all Americans to spend or donate their idle coins, deposit coins at financial institutions, or redeem them at coin kiosks.”

I guess Leslie wouldn't be very happy with the urn full of coins sitting on my desk…

Published on: October 18, 2022

•  United Natural Foods, Inc. (UNFI) said yesterday that Erin Horvath - most recently the Chief Transformation Officer at AmerisourceBergen - has been hired as the company's Chief Supply Chain Transformation Officer (CSCTO),  described as "a new role which will collaborate across functions to help build UNFI’s transformation agenda and future capabilities, drive value creation for shareholders, and create an improving experience for customers and suppliers."

•  SpartanNash said this week that Masiar Tayebi, the company's executive vice president and Chief Strategy Officer, has added the role of Chief Information Officer to his portfolio.

Published on: October 18, 2022

More reactions to the proposed Kroger-Albertsons merger, one MNB reader wrote:

I’ve worked closely with both chains in the past and spent 14 years working for Kroger.  This acquisition doesn’t make sense to me for the following reason:

Duplication of stores with Kroger in all major Safeway/Albertsons divisions: Seattle, Portland, Southern California, Southwest (PHX), Denver, Southern (DFW and Houston).  Moderate duplication in Chicago.  This leaves new markets for Kroger of Shaw’s and Acme. 

They (Kroger) will surely have to close and/or sell many of the competing Safeway stores (including Tom Thumb and Randall’s).  I guess they could run multiple banners in these markets, like they do in Seattle with Fred Meyer and QFC.  The net gain does not seem that big.  Must be more to this story than first meets the eye.

Another perspective, from another MNB reader:

IMO, this merger makes perfect business sense for A/S & Kroger.  It’s all about battling Walmart.

Historically, of the 64 measured markets by Nielsen & IRI, there are only SIX where Walmart isn’t #1 in ACV: Des Moines, Tampa, San Antonio, Louisville, Cincinnati, and Grand Rapids (I’ll bet you can pick out what those six have in common).  Everywhere else, Walmart reigns supreme.  We saw how Walmart, with its scale and “bargaining power”, largely won the inventory battle that waged between all retailers during the supply chain disruptions of the last two years.  Now, two of the nation’s top grocers that lost out in many of those battles are trying to join forces against a common opponent to insulate their businesses and protect market share.

The business case seems pretty clear to me, however, the motivations of those opposing the merger seem less crystal.

And, from another reader:

Unwieldy strikes me as the operative word. Albertsons/Cerberus neglected chains like Shaw's for years, I can't see Kroger plowing millions of dollars into a company that at best is now 3rd or 4th in the markets they serve. 

One more reader chimed in, challenging several assertions by Kroger leadership:

McMullen pointed to a few examples of where it can drive higher profits and better margins. One of the biggest opportunities is capturing more shopper data across a wider number of banners, which can be turned into lucrative online ads. The combined company would have reach to about 85 million households across the country. 

Ridiculous- Manufacturers who do advertise here are using the retailers' already allotted marketing funds.  This is just “shifting” the dollars around. Additionally – so your telling me this is about GETTING INTO THE AD BUSINESS VERSUS SELLING GROCERIES.

A bigger Kroger would also have cheaper manufacturing costs and better bargaining power, too, McMullen said. Together, the companies would become one of the largest consumer packaged goods companies in the country with a combined portfolio of about 34,000 total private label products across price points. Those include organic items and premium products that often retail for less than name brand national competitors. 

McMullen's comment about being “one of the largest consumer packaged goods companies in the country”  is comical.  Kroger, you make Private Label and a WEAK Private Label to boot!  The Private Label of Kroger/Albertsons is made up of MANY SKUs – a TERRIBLE comparison to a strong consumer packaged goods company.  Additionally, the Private Label Brand of Kroger/Albertsons has very little “equity” with the consumer.  He talks as if the strength of the Brands is like an HEB or Trader Joes Brand.

But tell us how you really feel.

In my FaceTime yesterday, I disagreed with the reader who suggested that my recent experience with Covid should make me more skeptical about vaccine efficacy.  I said it was precisely the contrary - the vaccines and booster shots I received gave me enormous protection for more than two years, and I am extremely grateful to the scientists who developed the them - when I finally got Covid, I was never worried about severe disease, hospitalization, or worse, unlike people who got Covid before vaccines were available.  More than a million people have died from Covid-related causes, and I think it is absurd for people to ignore the likelihood that if there had been no vaccines, the number would've been a lot higher.

MNB reader Katie Rigby wrote:

Thanks for sharing your experience. Appreciate your perspective on vaccinations—we’re on the same page. I got a call from the CDC this past week asking about my vaccination status and how concerned I was about getting Covid. It’s not that I’m unconcerned as a 4-time vaccinated person; I’m just somewhat concerned. Thank goodness for both the vaccination and the treatments.

One MNB reader wrote:

Amen to your thoughts on the vaccine.

When you have car trouble you don’t call your dentist.

And, from another reader:

Nice job not blasting the vax skeptic. I am vaccinated but somewhat skeptical so not sure what camp I fall into. I had covid pre-vax and was sick for a few days. Tired for much longer. Got vaccinated when the prescribed waiting period was over according to the docs.

I do think the doctors all worked in good faith and this is not a giant conspiracy against humanity. Although the politicization of the outbreak was/is sickening.

Certainly, something needed to be done right away but the speed at which they moved to get this done makes me question the current process on getting needed drugs to market affordably.

Emergency circumstances sometimes require extraordinary measures.  I think that was where we found ourselves, and I, for one, am happy - and, as I said, grateful - about how public health officials did their absolute best to keep as many people safe as possible.

Published on: October 18, 2022

•  The final and deciding game of the American League Divisional Series, between the 

New York Yankees and the Cleveland Guardians, was postponed last night because of heavy rains at Yankee Stadium.   It now is scheduled to be played at 4:07 pm today.

•  In Monday Night Football action, the Los Angeles Chargers defeated the Denver Broncos 19-16 in overtime.