business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: November 22, 2022

    I was reading an op-ed piece in The Guardian about Elon Musk that not only put many of his travails into context, but also focused on a management approach that I think deserves nothing but reproach.  It also is a cautionary note for every business leader.

    Published on: November 22, 2022

    by Kevin Coupe

    I have no idea how I got onto this email list.  (My recent birthday?  I hope not.  I'm counting on at least another 20 productive years.)

    But I did.  And I thought I'd share it with you…

    Hi Kevin,

    Most people don't plan their own funerals.

    I think that should change.

    So my Direct-to-Consumer startup Titan Casket is offering a first-of-its-kind deal this Black Friday: Buy a casket for your future funeral, get a $50 discount now, and save your family from spending thousands of dollars more at the time of need (hopefully) many, many years from now.

    I call this our "Pre-Plan-Your-Casket" Program. The $50 Black Friday discount can be unlocked on our website with the code FUNERALRULE - in reference to the FTC law requiring funeral homes to accept our cost-effective caskets.

    I can talk to MorningNewsBeat about my pre-planning program.

    I'm also happy to chat about the crazy experience two weeks ago of having Taylor Swift pop out of our casket in her Anti-Hero music video.

    Cheers,


    Joshua Siegel
    Co-Founder & COO
    Titan Casket

    Yikes.

    The email did prompt me to do a couple of things.

    First, I checked out the Taylor Swift "Anti-Hero" video, and she indeed does pop out of a casket at one point.  Don't think I would've known the casket brand if not for the email, but if nothing else, it is a good talking point.


    Second, I went to the Titan site (probably messing up my search history in the process), and found easily navigated web pages that do something really important - they position Titan as being advocates for the consumer, sensitive to the idea that people likely are dealing with difficult issues at the moment they visit.  That's really smart, I think - from offering a wide range of options to answering questions like, how do I give a eulogy?


    We live in a world where consumers are more empowered than ever.  I think it makes sense for businesses to embrace this as an opportunity, not a problem.

    Glen Terbeek said it in the title of his book, "Agentry Agenda" - retailers need to be agents for the consumers, not sales agents for manufacturers.

    That's what Titan Casket is doing.  And it is an Eye-Opener.

    Published on: November 22, 2022

    The Wall Street Journal reports that "for nearly three decades, Amazon.com Inc. has been defined by its obsession over customers. Recent information, however, suggests that consumer enthusiasm about the country’s largest online retailer has slipped.

    "The number of Amazon customers who said they were 'extremely' or 'very satisfied' with the company in a recent survey has fallen, measuring at 79% in 2022, according to investment firm Evercore ISI. The number reached a low of 65% in 2020 during the pandemic but remains down from a peak of 88% almost a decade ago, the research shows.

    "Last year, customer satisfaction at Amazon declined to a record low on the American Customer Satisfaction Index, which tracks shopper approval at more than 400 of the largest companies in the U.S."

    Here's the money (no pun intended) quote from Guru Hariharan, described as "a former Amazon manager who is chief executive of e-commerce service provider CommerceIQ:"

    “For 20 years, it was customer obsession at any cost.  Now, it’s customer obsession at the right cost.”

    The Journal writes:  "The slip in the surveys could reflect a number of issues, including customer service concerns and frustration over search results, analysts and former employees said. Amazon has boosted profit by expanding the pool of third-party sellers that use its platform and by embracing advertising whereby sellers pay to appear at the top of searches for certain products."

    The Journal goes on to point out that Amazon "has remained the country’s biggest online retailer by a wide margin, with a loyal base of more than 200 million users globally who pay for Prime memberships, which offer subscribers fast shipping and access to Amazon’s Prime Video streaming service as well as discounts at Whole Foods Market and other perks.

    "Amazon is also still a standard setter in shipping times and holds on to about 98% of Prime customers who have subscribed for at least two years, according to Consumer Intelligence Research Partners. The survey results come as the company has seen growth and profit decline and has announced plans to cut jobs ahead of the holiday season, the company’s most important period for sales."

    KC's View:

    I read this story, and my first thought is that, if there are concerns within Amazon about slipping customer service scores, it suggests that it is a good time to start placing bets on the return of Jeff Bezos to the CEO job.

    I've argued here that there's nothing wrong with some job cutbacks and some internal recalibration.  The warp speed propulsion that was prompted by the pandemic, followed by significant headwinds created by inflation and a recessionary mindset, pretty much mandated some rightsizing.  Plus, Amazon always has worked aggressively against a "we've always done it this way" mindset, and that applies when times are tough as well as when things are going well.

    But … Amazon also always has had a big picture, long-game approach to business.  Damn the stock price, to hell with the analysts … just focus on the customer.

    If that has changed, then it could be like changing a much loved recipe so the dish is very similar to what we've always loved, but not quite the same because the ingredients have been downgraded just a bit.  "Nobody will notice," the folks with the eyeshades often say, but the truth is that everybody notices, and the best customers care.  Deeply.

    Published on: November 22, 2022

    The Hill reports that convenience store chain Sheetz is reducing the price of regular gas to $1.99 per gallon, effective now through next Monday, November 28.

    The national average price per gallon currently is $3.66.

    “Sheetz is a family owned and operated company and at the heart of everything we do is giving back to our customers and the communities we reside in,” said Travis Sheetz, president and CEO of the company, in a press release. “We hope this price reduction provides much-needed relief at the pump for our customers as they travel for the Thanksgiving holiday.”

    KC's View:

    I suspect the biggest problems that Sheetz will have are going to be a) maintaining supply, and b) dealing with lines.  

    Smart promotion.  Smart for Sheetz for aligning itself with beleaguered consumers.

    Published on: November 22, 2022

    Yesterday we referenced a story about how Beyond Meat "has lost some of its sizzle," as management and investors try to figure out where there are inherent limitations in the category.

    Now comes this piece from Bloomberg:

    "Photos and internal documents from a Beyond Meat Inc. plant in Pennsylvania show apparent mold, Listeria and other food-safety issues, compounding problems at a factory the company had expected to play a major role in its future.

    "Products from the plant tested positive for Listeria, a harmful bacteria, on at least 11 occasions during the second half of last year and the first half of 2022, according to an internal document provided by a former employee concerned about conditions at the plant. The occurrence of the bacteria at the facility was confirmed by two former employees, who asked not to be named discussing private information about the company. While Listeria is frequently present at food plants, it’s more unusual for it to be found in the products themselves. 

    "Photos taken by a former employee from inside the plant in January and April show what appear to be spills, unsafe use of equipment, and mold on walls and ingredient containers, while spreadsheets, photos and internally prepared reports reveal that foreign materials such as string, metal, wood and plastic have been found in food from the plant at least as recently as last December."

    A Beyond Meat spokesman said that the plant passed inspections by the Pennsylvania Department of Agriculture, and that the company’s food-safety protocols “go above and beyond industry and regulatory standards."

    However, Bloomberg writes, "The company didn’t comment on its internal documents or specific details about the conditions in its plant, such as the apparent presence of mold and references to safety violations."

    “Mold growth takes a while — that underscores a lack of cleanliness,” food safety attorney Bill Marler told Bloomberg after viewing some of the photos.  "If neat and tidy is 1 and filthy is 10, I’d put this at an 8.”

    KC's View:

    This is the kind of crap that can severely hurt a company.  If the problems are systemic, and the company is guilty of any kind of deception, then it ought to bring the company down.

    I don't know about you, but one line from the story - "While Listeria is frequently present at food plants, it’s more unusual for it to be found in the products themselves." - was enough to bring me up short.

    Published on: November 22, 2022

    From the Wall Street Journal:

    "It is the $1.7 trillion question for the U.S. economy: How long can the savings consumers built up during the pandemic keep their spending going?

    "The answer: about nine to 12 more months.

    "Consumers built up unprecedented savings buffers during the Covid-19 pandemic, thanks to government stimulus and fewer opportunities to spend. The extra cash helped households pay down debt, buy goods like new appliances and furniture during lockdowns and take vacations once restrictions lifted. It gave businesses leeway to raise prices and hire more workers to meet stronger demand.

    "Economists estimate that headed into the third quarter of this year, households still had about $1.2 trillion to $1.8 trillion in 'excess savings' - the amount above what they would have saved had there been no pandemic.

    "That buffer, combined with a strong labor market and rising wages, has helped consumers continue spending in recent months, even with inflation and mortgage rates at multi-decade highs. U.S. retail sales posted their strongest gain in eight months in October.

    "Nonetheless, there are also signs they are working their way through that buffer, and an end is in sight."

    Published on: November 22, 2022

    The Washington Post has a fascinating story about how The Netherlands "has used advances in vertical farming, seed technology and robotics to become a global model" for how to become a major food exporter fighting way above its weight class.

    An excerpt:

    "The rallying cry in the Netherlands started two decades ago, as concern mounted about its ability to feed its 17 million people: Produce twice as much food using half as many resources.

    "The country, which is a bit bigger than Maryland, not only accomplished this feat but also has become the world’s second largest exporter of agricultural products by value behind the United States. Perhaps even more significant in the face of a warming planet: It is among the largest exporters of agricultural and food technology. The Dutch have pioneered cell-cultured meat, vertical farming, seed technology and robotics in milking and harvesting — spearheading innovations that focus on decreased water usage as well as reduced carbon and methane emissions."

    You can read the entire story here.

    Published on: November 22, 2022

    •  From the Seattle Times:

    "Amazon is locking some laid-off employees out of its offices and their company-issued laptops on Wednesday, about a week after the company started notifying workers that their positions were being cut.

    "Amazon told laid-off employees from the division that works on the Alexa virtual assistant to collect their belongings, pack up company-issued laptops and prototypes, and download Amazon’s email and messaging service on their personal devices by 5 p.m. Wednesday, according to an email viewed by the Seattle Times.

    "Amazon began notifying employees they had lost their jobs last Tuesday, the first round in a string of layoffs that Amazon expects will last into 2023 and affect around 10,000 jobs. That number is fluid, as team leaders continue to make decisions, CEO Andy Jassy told employees last week."


    •  Rite Aid announced that it is partnering with Grubhub "to deliver thousands of Rite Aid's drugstore products right to customers' doorsteps. More than 2,000 locations in 16 states are available on the Grubhub Marketplace for delivery … Rite Aid is Grubhub's first national drugstore chain partner, and in addition to health and wellness products, customers can order their everyday essentials, from personal care products, beauty and household items, pre-packaged grocery items and more from the Grubhub Marketplace."

    "Our partnership with Grubhub is another way that we are offering the convenience and access that our customers want and need to keep them and their families healthy and happy," said Dustin Humphreys, senior vice president of digital and e-commerce at Rite Aid. "We also look forward to expanding our reach to Grubhub's loyal customer base and becoming a go-to option for their everyday health and wellness needs."

    Published on: November 22, 2022

    •  H-E-B announced the launch of an H-E-B Brand Shop in its Kerrville, Texas, store, designed to sell merchandise - including T-shirts, socks and baby clothes to hats, coffee mugs, shoes, and stickers - commemorating the retailer's 117th anniversary next year.

    H-E-B said that it "plans to bring H-E-B Brand Shop to more stores across the state, starting early next year," including stores in every region where it operates.

    Published on: November 22, 2022

    The other day we took note of an Associated Press report that "a coalition of consumer groups is asking grocery chains to rethink their digital-only coupons, saying the deals discriminate against people who don’t have smartphones or reliable internet access."

    The argument, as advanced by Edgar Dworsky, a consumer advocate and former assistant attorney general in Massachusetts who runs the website Consumer World, is that some stores offer refunds to customers who ask for the digital price, but that requires the customer to make an extra effort. He wants stores to ensure cashiers will honor digital deals upon request, or even go to the lengths of Texas-based H-E-B, which puts physical coupons in its stores next to advertised deals.  Dworsky said older adults are the most likely to lack smartphone or internet access or the technical savvy to figure out how digital-only coupons work.

    I commented:

    I must admit to being conflicted about this.  On the one hand, I get the consumer complaint … but I am a big fan of retailers offering their best deals to the most loyal customers.  I actually think that retailers ought to go granular on their digital data so they can offer the best deals to their best customers.  Reward the cherry buyers, not the cherry pickers.

    I understand that there is a gap between people who interact digitally with retailers and those who do not, but that gap is going to get smaller with every passing day.  

    One MNB reader responded:

    I’m capable of downloading the coupons. But half the time they do not show up at checkout. The new GM at our Seattle area QFC said you can take a picture of the code of the item in store and it will download to your app. But I can’t get access to the internet at the store. The store manager agreed this was a problem but so far nothing has changed. The clerk will ask me what the price was and I do my best to remember but if I have several items it can be an issue. So far every clerk that I have dealt with at the Kroger stores absolutely hate the digital coupons. In addition it states you can use it 5 times in one transaction. But if I buy 1 milk and 4 other items I can’t buy any more milk during the deal period the next time I shop. Very misleading to say the least. I’ve tried calling the local headquarters but I get someone out of the area or country who is absolutely no help. Good program if they are more transparent and get it to work. 


    Yesterday, we cited a Business Insider report 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 said 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."

    I commented:

    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.

    One MNB reader responded:

    Gee, I can’t imagine why any employee would consider the process opaque. I am put on a performance management plan which, I assume, means I have things I need to work on. But my manager hasn’t told me what those things are because he or she has been advised not let me know that my performance needs management.  Sounds like a promising program, one some management consultant was paid a bundle of money to design.  How about an honest discussion with the employee?

    Another MNB reader wrote:

    The Stack ranking has been used at Walmart for years.  I had an issue with it when it was ranking people that did similar jobs on same teams.  Another manager would rank their person a 1,  I would say mine is a 1 and then we would have to argue.  In small groups, this might work but in a large setting with multiple teams doing the same work, not the best.  Then putting someone on a PIP – those would always be worded to force a person out the door.  You are right on in your comments.  I never aligned fully with it, but managers should easily know who their best performers and lower performers are, if they don’t maybe you need a new manager.

    And, from yet another reader:

    My company (which will be anonymous) used to stack rank.  Its not a very objective process.   Managers were forced to identify a certain percentage of tope performers and bottom performers of their workforce.  We did for several years before HR decided it wasn't beneficial.   Some mediocre performers were put on performance plans which weren't necessary.  Conversely a few good performers were over compensated when they shouldn't have been.   It sounds like Amazon is taking this too far and you correctly point out that managers should be giving performance feedback ongoing to their employees.   Further Amazon isn't being transparent about this program which only creates an unhealthy and unfair work environment.   Just my 2 cents.

    MNB reader Andy Casey chimed in:

    “Amazon instructs managers not to tell their employees if they are on Focus, generating complaints that the process is opaque.” Sounds like Dean Wormer’s double secret probation of the Deltas. And Amazon wonders why their people are voting union.


    Axios reported yesterday 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 bottom line 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."

    MNB reader Dale Tillotson responded:

    The article does not pertain to some produce/fresh items. No overstock noticed lately on lettuce, strawberries, cauliflower  and today even sweet potatoes  I did see plenty of eggs and turkeys though and limit of 2 turkeys needs to be enforced and all customers able to celebrate Thursday with no issue. But sadly hoarders remain for turkeys, and obviously limits need be enforced.

    But MNB reader Daniel Taber wrote:

    This article aligns with what I saw this weekend as I was at Lowes to buy some things for a project and I was surprised to see Clearance signs up in the Holiday/Christmas decoration sections.

    It isn’t even Thanksgiving yet and Lowes has already put 25% off clearance deals on 10-20% of the items in the section, which I don’t recall ever happening before.

    Looks like it won’t be a good season for those companies, like Lowes, that didn’t foresee an economic downturn when they placed their seasonal orders 8-10 months ago.

    Though it will be good for shoppers who wait for the clearances to heat up and can get some good deals to off set the inflation of the last year.


    We also took note yesterday of some of the sizzle that has gone out of Beyond Meat's business, and one MNB reader responded:

    Beyond, Impossible, and many other plant based meat companies all seemed to push to have their products sold in the meat market section of grocery stores beginning in about 2018-19.  The industry trotted out sales decks indicating that this is where consumers wish to find their products and were able to convince some grocers to make the move. There was a concerted effort among current brands and new brands to be where meat shoppers spend in an effort to grab some of their purchasing power. 

    Trouble is the plant based meat simply does not perform as well as natural meats.  At the same time plant based costs much more than natural meat. Why would meat consumers move to something that costs more and doesn't taste as good? This also doesn't take into consideration the false assumption that plant based products are better for the environment. Frankly the plant based industry seems intent on alienating vegans by placing plant based adjacent to natural meats. I have met vegans who will not even venture into the meat market. 

    When the price of natural meat is higher than plant based, then people will change but until then good luck. 


    And finally, from another MNB reader about Mark Cuban's newest venture, Cost Plus Drugs, which is an effort to build a business by attacking the high cost of pharmaceuticals.

    I would speculate that Mr. Cuban is doing a lot of marketing around his new drug business, but also knows full well that the cost for prescription drugs are, in the aggregate, not high. In fact, net drug costs have been increasing only low single digits for most of the past 10 years, and remain at that rate even as inflation has surged for every other category. Though there are still problems with those cancer, or specialty drugs often dispensed by hospitals, and not your local drug store.

    Generic penetration has grown and third party payers continue to pursue narrow network arrangements, and lower reimbursement rates. The problem is the so called gross to net bubble,,,the difference between the MFG gross and net price, or price after all the discounts/rebates that flow through the complex supply chain. Cash paying customers pay the gross price, and not the net price after all the manufacturer rebates/discounts. Cuban may have an opportunity to capture a piece of this much smaller market, but there is already lots of competition…and with a GoodRx card, doubtful this type of competition is even necessary.

    Published on: November 22, 2022

    In Monday Night Football, the San Francisco 49ers defeated the Arizona Cardinals 38-10.