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    Published on: November 21, 2022

    I recently made a prediction - it was wild speculation, to be honest - about a possible change in Amazon's c-suite.  Well, last Friday, on his "Pivot" podcast with Kara Swisher, Scott Galloway made the same prediction. And then, just last night, news broke that seemed to make the prediction seem a lot more viable…

    Published on: November 21, 2022

    Southeastern Grocers (SEG), which operates the Winn-Dixie, Fresco y Más and Harveys supermarket chains, is exploring a possible sale of the company, the Wall Street Journal reports.

    The contemplation comes about a year after SEG canceled a planned initial public offering, and in the context of a proposed acquisition of Albertsons, the country's fourth largest grocer, by second-ranked Kroger.  If approved by regulators, a merger of the two companies' operations almost certainly would require the divestment of hundreds of stores.

    According to the Journal, "A Southeastern spokeswoman said that the company is always reviewing ways to enhance shareholder value and that it has an obligation to consider transactions that do so. She said the company will remain focused on its strategy."

    KC's View:

    It seems pretty clear that under the circumstances, Kroger and Albertsons are not going to be making a play for SEG, which probably leaves Ahold Delhaize as a prime possibility - an acquisition would extend its reach to the south, but not west, and would seem to be more consistent with past behavior.  I tend to think that we'll see a private equity group make a play for SEG, on the theory that it could be flipped in a few years once the Kroger-Albertsons deal is concluded.

    But I always leave open the possibility for some surprise entrant in the SEG sweepstakes.

    Published on: November 21, 2022

    Business Insider reports that "Amazon has been pressuring managers to identify low-performing workers to push out of the company using performance-improvement plans, according to a series of leaked Slack messages obtained by Insider … The messages were between managers from numerous divisions, including Amazon Web Services, Pricing, and Compliance. The communications reveal a company where stack ranking - the practice of pitting employees' performance against each other and trying to force out the lowest-ranked workers - is a common topic of conversation among managers. And they suggest that Amazon is using performance-improvement plans, or PIPs, to further drive head-count reduction before the end of the year."

    The story notes that "Amazon employees have long railed against the company's performance-management process. Amazon sets a 6% target for unregretted attrition, Insider has previously reported. Employees labeled 'least effective' are placed in a performance-management program called Focus. Amazon expects roughly one-third of the employees on Focus to end up leaving the company. Amazon instructs managers not to tell their employees if they are on Focus, generating complaints that the process is opaque."

    Business Insider does offer some context for the Amazon moves:  "As fears of a recession have prompted tech giants to tighten their belts, some companies have turned to so-called 'quiet layoffs' to reduce head count by increasing the number of workers on some form of PIP. Employees who fail such plans are usually asked to leave. Meta, Facebook's parent company, asked managers to identify a certain percentage of workers as underperforming, putting them on track to be potentially managed out. Meta laid off about 11,000 employees in early November."

    Amazon is in the process of eliminating as many as 10,000 jobs, an effort likely to continue into 2023, it also continues to hire season workers for distribution centers that require increased head counts for the end-of-year holiday shopping season.  Amazon has some 1.5 million employees globally, and Amazon increased its total labor headcount by five percent over the past year.

    KC's View:

    I know that these are formal headcount reduction programs, but in the end, shouldn't every manager be evaluating the staff, knowing - based on both tangible and intangible measurements - who the high performers are and who the low performers are?  It seems to me that as leaders build effective and sustainable teams, this should be an ongoing process, and one that is a high priority within any organization.

    Published on: November 21, 2022

    Time has an excellent piece about Mark Cuban, the "tech titan, Dallas Mavericks owner, and star of ABC’s Shark Tank," whose newest venture, Cost Plus Drugs, is an effort to build a business by attacking the high cost of pharmaceuticals.

    An excerpt:

    "Cost Plus Drugs, which launched in January, is Cuban’s attempt to prove that disruption can be a form of benevolence. The for-profit online pharmacy aims to undercut the health care industry by selling generic drugs for everything from asthma to glaucoma to rheumatoid arthritis for a fraction of the typical price. Cuban likes to say that the company’s real product is transparency: in an industry where hospitals can sell cancer drugs at a 600% markup, Cost Plus sells generic medications for the cost of manufacturing them, plus a 15% markup and shipping fees. The goal, says Cuban, is to become the biggest low-cost provider of medication in America.

    "Though Cuban won’t say exactly how much of the company he owns, he calls the new online pharmacy a win-win. If established pharmacies keep charging patients artificially high prices, Cost Plus may emerge as a popular low-cost alternative. If the industry slashes consumer prices to compete, he’ll have almost single-­handedly brought reform to an industry that stubbornly resists it. 'The incumbents could come along and copy us, get a heart, get a conscience,' Cuban says. 'That would be OK'."

    Time goes on:

    "Cost Plus Drugs represents a billionaire’s search for meaning in a world that’s increasingly skeptical of the power of the über-rich. Cuban’s counterparts in the 0.01% have become political mega­donors, started global foundations, become patrons of the arts and humanities. He prefers to build his legacy the way he’s built his fortune: through entrepreneurship. Cost Plus Drugs is a kind of middle path between progressive reform and philanthropic giving, one that aims to disrupt predatory markets as a way of regulating them."

    You can read the entire story here.

    Published on: November 21, 2022

    Axios reports that "the supply-chain woes that thwarted holiday shoppers last year are mostly resolved … Now Walmart, Target, Kohl's and other major chains report surging inventory levels. People have stopped shopping for stay-at-home items like pajamas and electronics.

    "The glut has led to huge markdowns and sales, including rare discounts at Target and 'aggressive' markdowns at Kohl's."

    The bottom line, Axios writes, is that "consumers were flush with cash last year. That turned into higher demand, putting more pressure on companies to buy.

    "But rising inflation, plus the post-pandemic rebound in spending on travel and entertainment, have left stores with fewer eager customers — and with overstocked shelves."

    Published on: November 21, 2022

    The New York Times reports that "Penguin Random House’s deal to buy Simon & Schuster, a rival publisher, is close to collapsing after Simon & Schuster’s parent company decided to allow the purchase agreement to expire, according to a person familiar with the decision who spoke anonymously to discuss confidential deliberations.

    The deal was already in peril after a federal judge last month blocked the sale from going forward on antitrust grounds. Penguin Random House had said it planned to appeal the decision. But it can only do so if Paramount Global, Simon & Schuster’s parent company, agrees to extend the deal, which expires on Tuesday.

    "The collapse of the $2.175 billion sale is a major blow to Penguin Random House’s ambitions to expand its enormous market share, and an enormously expensive one. In addition to the significant legal cost of fighting the Justice Department in court, Penguin Random House will have to pay Paramount a termination fee of about $200 million once the deal falls through.

    "Paramount has decided not to proceed with the merger after concluding that it wasn’t worth challenging the Justice Department in court, according to a person familiar with the company’s strategy. Simon & Schuster’s improved financial performance gives Paramount options should it choose to put it back on the market."

    KC's View:

    This is relevant, I think, because in the end it was regulatory pushback on the idea that these two publishing companies should merge, based largely on concerns about reduced competition, that scuttled this deal.  The question is whether this is a harbinger of the kind of resistance that Kroger and Albertsons will find to their deal.

    I'm sure that the folks at Kroger and Albertsons would argue that their deal is an entirely different animal and actually will be good for competition because it will enable lower consumer prices.  But there will be a lot of debate about how "competition" is and should be defined, and I wouldn't want to place a bet either way at this point.

    Published on: November 21, 2022

    •  From the New York Times:

    "Beyond Meat has lost some of its sizzle.

    "Its stock has slumped nearly 83 percent in the past year. Sales, which the company had expected to rise as much as 33 percent this year, are now likely to show only minor growth. McDonald’s concluded a pilot of the McPlant burger — made with a Beyond Meat patty — this year with no plans to put it on the menu permanently.

    "In late October, the company said it was laying off 200 people, or 19 percent of its work force. And four top executives have departed in recent months, including the chief financial officer, the chief supply chain officer and the chief operating officer, whom Beyond Meat had suspended after his arrest on allegations that he bit another man’s nose in a parking garage altercation.

    "What investors and others are debating now is whether Beyond Meat’s struggles are specific to the company or a harbinger of deeper issues in the plant-based meat industry … Some say the slowdown in sales is a product of food inflation, as consumers trade pricier plant-based meat for less-expensive animal meat. But others wonder if the companies have simply reached the maximum number of consumers willing to try or repeatedly purchase faux burgers and sausages."

    •  In the UK, the Nottingham Post reports that "Tesco has announced a new way to help colleagues in the UK with unexpected or large expenses by offering them access to a low cost advance on their pay. The UK grocer has introduced a new colleague benefit that will enable around 280,000 colleagues to get up to 25% of their contractual pay early.

    "The advance, which costs just a single set fee of £1.49 per advance to financial employee benefits partner Salary Finance, is to help colleagues avoid having to take on expensive debt with high interest payments, such as pay day loans. Colleagues will be able to apply online for an agreed percentage of their earned pay following a simple process and the money will be paid to them within 24 hours and can often arrive within minutes. The amount will be automatically repaid at the next pay day, and they will be allowed to take one advance per pay period."

    The Post says that "Tesco successfully trialled Pay Advance with more than 6,000 colleagues working at large and convenience stores in Liverpool over the past year, with 51% saying they used an advance to deal with an unexpected expense. A figure of 77% of colleagues said the new benefit made them feel more positively about Tesco as an employer. The average size of the advance was £99."

    Published on: November 21, 2022

    We took note on Friday of a Chicago Tribune report that Chicago Mayor Lori Lightfoot has described Amazon-owned Whole Foods as "not a good partner, period" for its closure of a once highly touted store in the city's Englewood neighborhood.  The store was originally opened six year ago, subsidized with $10.7 million in city money, and lauded for being part of Chicago's South Side, serving one of the city's most economically depressed areas.

    I commented, in part:

    At some level, everybody is doing their jobs here.  Lightfoot's job is to find ways to bring food stores to Chicago's food deserts.  Whole Foods' job is to position the company for the highest levels of growth and profitability (and do so at the moment in an internal climate of cost cutting).

    One MNB reader responded:

    I don’t really know  but maybe retailers that have been victimized over and over have thrown in the towel I believe some of the drug chains have left that area also.

    They would never say it was crime, but maybe!!

    MNB reader Daniel McQuade wrote:

    A little bit of research would perhaps inform you of the underlying issues that are plaguing the South Side of Chicago, notably the Englewood Area.  Look at the crime/murder rates in this district.  And you are wondering why Whole Foods closed???

    As an employer, is the safety of your customers and employees a first priority or changing the lives of people who need better food shopping experiences?

    What about theft, shoplifting, and shrink? Target just announced it has lost a whopping $400 million in profits this year thanks to organized gangs of shoplifters who have been systematically stealing merchandise from its discount stores.

    Perhaps Mayor Lightfoot should reflect on the real issues affecting the "reasons" for food deserts in her city and not deflect by threatening retailers for not showing up.

    From another reader:

    Would be interesting to talk with the store manager that managed the store that closed in Chicago.  Would provide a better picture of a day in the life and the challenges in profitability operating the store.  If the Chicago Mayor would go work a week and walk in the shoes of the store manager they would quickly learn how dangerous and significant the challenges are.    

    And another MNB reader wrote:

    I suspect crime and other factors that are similar are embedded in the criteria as well. Something Lightfoot refuses to acknowledge.

    I'm aware of the crime issue.  I repeat - everybody is doing their jobs here.  Whole Foods is pulling out because the store wasn't making it, and Chicago is decrying that departure and looking for companies more able to stick it out.  (Though it is a fair argument to suggest that Chicago's leadership has not done its job in fighting the city's crime problem.)

    I would suggest that while there is a crime issue to be considered, neighborhoods don't get safer if you pull out all the infrastructure that engenders a sense of community.  Now, that may mean coming up with some sort of new format - and new levels of security - that makes a store viable there.  And I'm not at all sure that there's been the kind of conversation that makes this possible.  After all, blame and recriminations are so much easier.

    But I still think there is an opportunity, through food and retail, to to find a way to change the lives of people who need better options.  If we agree that stores are essential … aren't they even more essential to people of lesser means, who live in troubled communities?

    On the subject of possibilities created by cows fed with THC-infused hemp, MNB reader Craig Espelien wrote:

    I was fortunate enough to spend time at this past week’s PLMA meeting in Chicago with some leaders in the emerging hemp market (Hemp Brand Builders and their affiliated manufacturers). To say that excitements was palpable would be an understatement. There are hurdles - but none that can’t be overcome.

    Hemp in and of itself has some great possibilities - protein can be extracted as can Omegas (3 and 6) to enhance multiple types of food and the “bio-mass” make an exceptional product for cleaning up liquid spills (what amazed me most was that compared to current cat litter style solutions, the OrganaDry product left zero oily residue) that makes just about everything else in this space look completely inadequate.

    The key is to make hemp “Sexy” again (perhaps Justin Timberlake can do a riff on Bring Sexy Back???) as this downtrodden crop suffered at the hands of both the paper and the cotton industries and is painted unfairly with the CBD and THC brush (we could talk, however, about the 170+ variations of CBD - two of which, CBG and CBN have pretty cool medicinal potential for all natural remedies).

    The future will be interesting - and folks who do not want to engage may get run over by the potential this market can bring.

    Have an amazing holiday - a quick recommendation for Turkey Day is a Rose Prosecco from Costco (Kirkland Signature) bright, fruity and completely enjoyable across the Thanksgiving food spectrum.

    Sounds good … except that I live in a state where Costco cannot sell wine.

    MNB reader John Kemp wrote:

    With regards to the "baked" cows, I'm sure you will be getting a LOT of comments on that.

    My question is this, since the study staff noted a "lack of proclivity for binge eating" I am wondering what they offered the cows...just more plain old hay or Cheeto's?

    I'm guessing that if it was the latter, the study may have gone differently.

    Published on: November 21, 2022

    Week Eleven in the National Football League…

    Chicago Bears 24, Atlanta Falcons 27

    Philadelphia Eagles 17, Indianapolis Colts 16
    New York Jets 3, New England Patriots 10

    Washington Commanders 23, Houston Texans 10

    Los Angeles Rams 20, New Orleans Saints 27

    Cleveland Browns 23, Buffalo Bills 31

    Carolina Panthers 3, Baltimore Ravens 13

    Detroit Lions 31, New York Giants 18

    Las Vegas Raiders 22, Denver Broncos 16

    Dallas Cowboys 40, Minnesota Vikings 3

    Cincinnati Bengals 37, Pittsburgh Steelers 30

    Kansas City Chiefs 30, Los Angeles Chargers 27

    Published on: November 21, 2022

    I just want to thank all the MNB readers who sent me congratulatory emails on Friday as MorningNewsBeat celebrated its 21st birthday.  As I said in my FaceTime video, I couldn't do it without you.

    Nobody has any right to expect the kind of approbation that I get every day from the MNB community, and I'm not going to share all the lovely emails I got on Friday.  But there are a couple that I did want to post, because they illustrate how lucky I have been, not just in my work, but in the opportunities MNB has afforded me.

    One was from Brian Dowling, formerly the VP-Public Affairs at Safeway, who was kind enough to write:

    Congrats on 21 years of MNB.  Thanks for creating an important source of information and commentary on the retail food industry. It’s been five years since I retired and it’s the first thing I still read in the morning—because it’s interesting, thought provoking and fun. 

    I appreciate that … especially because one of the best MNB-related days I've had in the last 21 years was one that I spent with Brian and Larree Renda, who then was EVP of Safeway and chair of The Safeway Foundation.  They took me to a San Francisco Giants home game at what then was AT&T Park (which gets my vote as the best modern baseball stadium in the country).  Not only that, we sat in the owners' seats, where folks like Billy Crystal and Robin Williams had sat.  Just a wonderful day.

    Not only that, I got a video piece out of it … because Larree and Brian informed me that there was a hydroponic garden being cultivated just beyond the outdoor fence.  Here's the video I shot that day:

    The other email was from Henry Stein, a longtime and loyal MNB reader who has a special place in my heart.  In the summer of 2012, I got an email from Henry (who I'd never met to that point), telling me that he would like to give Mrs. Content Guy and me a pair of tickets to a concert that Bruce Springsteen and the E Street Band would be doing at Wrigley Field in Chicago … all we had to do was find our way to Chicago.  Which, of course, we did … enjoying the best concert we've ever been to … and earning Henry a hallowed place in the MNB community.

    Anyway, this is the email I got from Henry on Friday:

    Congrats on 21 years, Kevin. You share that day, 11/19/2001, with the signing of the newly adopted Transportation Service Agreement, or TSA, which paved the way for long security lines, removal of shoes, emptying of pockets, handing over laptops, and being touched from head to toe by gloved strangers who never smile. Compared to TSA, MNB is a welcome morning pick-me-up.  (That benchmark is VERY low though…)

    Thanks for making me laugh out loud, Henry … and as I said before, thanks to all of you for the great memories and, I hope, a great future together.  These are just two of the great people and the great stories, from a 21-year run that, at least if I have anything to say about it, ain't over yet.