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    Published on: November 28, 2022

    Two New York Times pieces over the weekend - one dealing with "one of the country’s fastest-growing demographic groups: people 50 and older who live alone," and the other focusing on the realities (often hidden) of widowhood - made me think about ways in which retailers can serve as part of critically important support systems.

    Published on: November 28, 2022

    The Wall Street Journal has a story about how "restaurants and supermarkets are ramping up competition for Americans’ mealtimes, as consumers gird for a souring economy while food bills continue to rise.

    "Many restaurants are promoting deals they said are aimed at giving consumers more value for their dollars, while raising menu prices. Supermarkets are stocking more low-price staples and offering specials on prepared food that companies said are targeted toward shoppers who are rethinking how many times they eat out each week.

    "Eating at home generally remains cheaper than dining out, with the typical restaurant meal costing 3.4 times as much as meals made using groceries, according to market research firm NPD Group. Inflationary forces that this year have driven up the cost of food, fuel and other necessities have pushed up price tags on grocery-store shelves at a faster clip than those on restaurant menus … Both restaurants and supermarkets have raised prices this year, though grocery stores have logged bigger increases, federal data shows.

    "Grocery prices were up 12.4% on an annual basis in October, the eighth straight month of double-digit percentage increases recorded at supermarkets, according to the Labor Department. Year-over-year restaurant prices were up 8.6% in October, the federal agency said. The inflationary gap between restaurants and grocers peaked in July and August but is starting to narrow, an analysis of federal data shows."

    KC's View:

    Supermarkets ought to paraphrase that WSJ line in big letters for people walking in their front doors:

    The typical restaurant meal costs 3.4 times as much as meals made using groceries.

    I'm glad the Journal is resisting the press releases sent out by restaurant industry flacks, claiming that restaurant meals are much cheaper than food bought in supermarkets.

    At the same time, food retailers ought to aggressively emphasize that they are focused on value in addition to price.  They ought to change the debate so that it favors them, turning what restaurants argue is a liability into an advantage.

    Published on: November 28, 2022

    A compendium of some of the major media coverage of Black Friday sales…

    •  From CNBC:

    "Consumers spent a record $9.12 billion online shopping during Black Friday this year, according to Adobe, which tracks sales on retailers’ websites.

    "Overall online sales for the day after Thanksgiving were up 2.3% year over year, and electronics were a major contributor, as online sales surged 221% over an average day in October, Adobe said. Toys were another popular category for shoppers, up 285%, as was exercise equipment, up 218%.

    "Many consumers embraced flexible payment plans on Black Friday as they continue to grapple with high prices and inflation. Buy Now Pay Later payments increased by 78% compared with the past week, beginning Nov. 19, and Buy Now Pay Later revenue is up 81% for the same period … Black Friday shoppers also broke a record for mobile orders, as 48% of online sales were made on smartphones, an increase from 44% last year.

    "The record-breaking spending comes on the heels of a strong day of Thanksgiving shopping, in which consumers shelled out an all-time high of $5.29 billion online, up 2.9% year-over-year. Typically, shoppers spend about $2 billion to $3 billion online in a day, according to Adobe."

    •  From the Wall Street Journal:

    "Americans returned to their prepandemic habits on Black Friday as they spent more time and money in stores than last year, but some data show they were also cautious with spending as inflation weighs on their pocketbooks. 

    "The boost in store traffic over Black Friday comes after a surge last year from 2020, the first year of the Covid-19 pandemic when many shoppers favored buying online.

    "Shoppers still bought items online this year, but many browsed in stores, reveling in a holiday tradition, according to early data. Some consultants and industry groups have predicted slower sales growth for the overall holiday season compared with last year."

    According to the story, "Store traffic rose 7% this Black Friday compared with last, said RetailNext, a firm that tracks shopper counts in thousands of stores with cameras and sensors. In-store sales rose 0.1% and the average shopper spent less per visit than last year, according to the firm. Sensormatic Solutions, another firm that analyzes store traffic, said Black Friday traffic rose 2.9% compared with 2021 … Sales on Black Friday rose 12% from last year, according to Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment. The report excludes auto sales and isn’t adjusted for inflation, meaning that it could reflect people paying higher prices for goods than they did in 2021."

    •  From the New York Times:

    "After two years of pandemic improvisation and in-store restrictions, this year’s Black Friday felt like a return to normalcy.

    "Shoppers who ventured out on Friday, and even those who didn’t, saw a deluge of deals that had been missing the past couple of years. Many retailers pushed lower prices both in stores and online in response to Americans having recently shown they were more than willing to wait for a discount before making a purchase … Many well-off consumers remain stable financially and appear ready to spend, but others face far more economic uncertainty. That isn’t expected to change anytime soon. Analysts, economists and retail executives are monitoring a potential economic slowdown in the first few months of 2023 that could worsen consumers’ wariness.

    "That makes the holiday season — always the most important time for retailers — even more crucial this year."

    “I think we’re going back to what we had before the pandemic with what we’re offering on Black Friday,” Stephen Lebovitz, the chief executive officer of CBL Properties, which owns about 95 properties, including shopping centers and malls across the United States, tells the Times.  “There are changes, but it’s going to feel a lot more like 2019 Black Friday than anything in the interim years.”

    •  From the Los Angeles Times:

    "Black Friday is no longer the mall mob scene and bellwether of the gift-buying season it once was, knocked off its pedestal in the last decade by the torrid growth of e-commerce and ever-earlier discounting. The pandemic led to lackluster mall shopping and booming online sales in 2020 and 2021, when waves of the Delta and Omicron strains of COVID-19 kept holiday shoppers at home.

    "But in-person purchasing staged a comeback this Black Friday, a trend expected to continue during the rest of the winter spending season. For some people, hitting the stores — particularly after they’ve digested their turkey — is a family tradition they are embracing anew, consumer surveys show.

    "And financial hardship from months of wild inflation pushed shoppers to get out early, looking for bargains … Despite busier stores on Friday, retail experts are predicting a slower overall holiday sales season, with shoppers tapping into savings, credit cards and home-equity loans to fund their annual spree.

    "All this matters because how freely shoppers spend is key not just to retailers’ profits but to the entire U.S. economy. Consumer spending on goods and services accounts for about two-thirds of U.S. economic activity.

    "And Americans are feeling squeezed by the soaring cost of nearly everything they buy as well as sharply higher interest rates."

    The Times writes that "on Thanksgiving Day, consumers spent a record $5.29  billion online, up by 2.9% from last year, according to Adobe Analytics data. By 6 p.m. Eastern time Friday, consumers had spent $7.28 billion on Black Friday, with the final tally predicted to reach as high as $9.2 billion, which would set a record, Adobe said.

    "Most shopping still happens in brick-and-mortar stores, but that information trickles out more slowly. The National Retail Federation predicts holiday spending could reach $960.4 billion, with nearly three-quarters of the total at physical stores."

    •  From the Washington Post:

    "Though consumers have been more savvy and strategic about how they spend their money, showing remarkable resilience this year in light of stubbornly high inflation, cracks are forming. Prices jumped 7.7 percent in October from the year-ago period, according to federal data released earlier this month. Though still far above normal levels, it qualified as an improvement based on the year’s trajectory. Even wealthier Americans are feeling pinched, polls show. They’re still buying, but showing more restraint.

    "Inflation could steal Christmas, but shoppers are finding ways around it."

    •  From Bloomberg:

    "Longer wait times at some US stores on Black Friday are probably due to the ongoing shortage of retail workers — one slice of the larger labor-supply issues that have been hitting the country since the pandemic, said Shannon Warner of consulting firm Kearney.

    "There are many more open positions in retail this holiday season than in past years, she said. As a result, some retailers have opened their stores for fewer hours each day through the year. While some retailers have extended their store hours for Black Friday, they will likely return to those shortened hours.

    "Retailers just 'don’t have enough people to staff the full hours that they have historically had,' Warner said. She said she is encouraging retail clients to consider automation and other efficiency moves, rather than waiting for the possibility of a solution to the retail labor shortage."

    KC's View:

    One of the storylines that seems to be emerging is that the end-of-year holiday season may be very different for affluent Americans and those who are not as lucky.  But there are still a lot of moving parts.  For example, many of the layoffs that we're reading about are taking place in the tech industry, not among blue collar and retail workers (who continue to be in high demand).  And we have no idea what events could transpire in the coming weeks that could either propel or derail holiday expectations.

    Maybe what we really need to do is get out of the expectations game.  We're in weird times, and it is hard to know how things will play out.

    Published on: November 28, 2022

    The Associated Press reports that among the six people killed last week in a mass shooting at a Chesapeake, Virginia, Walmart included "a 16-year-old helping his family. A custodian and father of two. A mother with wedding plans. A happy-go-lucky guy. A longtime employee."

    CNN provides more context for the shooting:

    " The gunman in this week’s deadly Walmart shooting in Chesapeake, Virginia, purchased the handgun he used the morning of the attack and left a 'death note,' outlining grievances against people in his life, city officials said Friday.

    "The note – found on his phone – talks about God, the holy spirit, and how the author felt his 'associates' were mocking him. Walmart uses the term associates for some of its employees.

    "'The associates gave me evil twisted grins, mocked me and celebrated my down fall the last day. That’s why they suffer the same fate as me,' the note says … The city released the note in a series of tweets, redacting the names of those mentioned by the shooter, who fatally turned the gun on himself after killing six people Tuesday at the store where he worked as an overnight supervisor. None of the victims in the shooting were among the redacted names, police said.

    "The gunman had no criminal history, the city said, adding the 9 mm weapon he used in the killings was legally purchased Tuesday. A search of his home yielded a box of ammunition and 'various items in reference to the 9 mm handgun (box, receipt, other paperwork),' the city tweeted."

    Meanwhile, from Fox News:

    "One person was shot Friday at a Walmart in North Carolina and authorities were trying to find the suspected gunman. 

    "Lumberton police officers responded to the big-box retail store just before 11:30 a.m. amid reports of gunshots inside. When officers arrived, the store was being evacuated, but they did not find the shooter or that anybody was injured. 

    "Surveillance video shows the shooter fleeing the store as it was being evacuated, police said."

    And, Fox News also reports:

    "Sheriff’s deputies in New York state are investigating a Sunday afternoon shooting in a Walmart parking lot that left a man hospitalized. 

    "Deputies with the Warren County Sheriff’s Office were called to a Walmart located off Route 9 in Queensbury, N.Y., around 3:45 p.m. The deputies were told a man had been shot in the hip.

    "The store was evacuated and closed out of an abundance of caution, deputies said in a press release. The shooting took place entirely in the parking lot and no part of the incident occurred inside, deputies said.  EMS transported the male victim to an area hospital where he is currently undergoing medical treatment. 

    "The sheriff’s office and the New York State Police are working to identify a suspect and a possible vehicle in connection with the incident."

    KC's View:

    Three Walmart shooting in less than a week?  Jeez.

    In September 2019, responding to a series of recent mass shootings - including one in an El Paso Walmart store that resulted in 22 deaths - CEO Doug McMillon wrote, "We want what’s best for our customers, our associates and our communities. In a complex situation lacking a simple solution, we are trying to take constructive steps to reduce the risk that events like these will happen again. The status quo is unacceptable."

    I have no doubt of McMillon's sincerity.  But I also have no doubt that the status quo remains firmly in place, that people continue to die, that politics and culture seem unwilling and unable to deal with current realities, and that one of the hallmarks of American exceptionalism seems to be that America can be an exceptionally brutal place to live, to be educated, to worship, and to shop.

    Published on: November 28, 2022

    The Portland Press Herald reports that Whole Foods said it "won't offer Gulf of Maine lobster until it again has an eco-friendly certification or is removed from the Seafood Watch 'red list' … Last week, the Marine Stewardship Council announced that it is suspending the certification of sustainability for the fishery, citing its failure to comply with laws designed to protect the endangered North Atlantic right whale. The suspension from the London-based watchdog is effective Dec. 15."

    “As part of our commitment to responsible sourcing, we only sell wild-caught seafood from fisheries that are certified by the Marine Stewardship Council (MSC) or rated either ‘Green’ or ‘Yellow’ by the MBA Seafood Watch program,” a Whole Foods Market spokesperson said in a statement. “These third-party verifications and ratings are critical to maintaining the integrity of our standards for all wild-caught seafood found in our seafood department. … We are closely monitoring this situation and are committed to working with suppliers, fisheries, and environmental advocacy groups as it develops.”

    According to the story, "Marianne LaCroix, executive director of the Maine Lobster Marketing Collaborative said it was disappointing to know that Whole Foods will no longer carry Maine lobster, despite the fishery’s long history of sustainability and commitment to protecting the whales.   'The MSC certification was suspended due to flaws with the National Marine Fisheries Service regulatory plan, so there is nothing that the fishermen themselves can do to rectify the problem,' she said, adding that the collaborative is working to educate buyers on the fishery’s sustainability efforts."

    Published on: November 28, 2022

    Axios reports on how "Amazon offered a sneak peek at a small, quiet drone that will be ready in 2024 - and could be making regular deliveries in major cities by the end of the decade … The 80-pound drone could deliver stuff in as little as 30 minutes, while taking CO2-emitting trucks off the street.

    "Thousands of items could be eligible. They'll have to fit in one box, and weigh less than 5 pounds."

    Axios writes that "the next-gen drone is less intrusive than a bigger model Amazon will use for Prime Air, which begins in two markets — Lockeford, Calif. (San Joaquin County), and College Station, Texas — in coming weeks."

    Amazon's stated goal is to be a half-billion packages a year by drone by the end of the decade.

    KC's View:

    We've heard this before … not that I'm skeptical of the broader concept of drone delivery, but this is one of those areas in which Amazon seems to over-promise and under-deliver.

    When then-CEO Jeff Bezos appeared on "60 Minutes" about a decade ago, he implied that the usage of drones on a regular basis to make deliveries could happen by the end of that decade.  It certainly hasn't happened - not entirely the fault of Amazon, to be sure - but other companies seem to have been more successful in their tests.

    Published on: November 28, 2022

    •  Bloomberg reports that while Amazon "spooked investors last month when it predicted the slowest holiday season growth in its history," there are some signs, "albeit tentative … that the world’s largest e-commerce company could have a somewhat merrier Christmas than anticipated."

    According to the story, "Inflation has eased in recent weeks and, according to survey results released Sunday by Jefferies Financial Group, US consumers see prices moderating in all categories except rent and groceries. Americans continue to spend despite rising interest rates, with October retail sales increasing the most in eight months. Analysts, meanwhile, expect Amazon to hit the higher end of its fourth-quarter forecast, with revenue growing 6.7% to $146.6 billion, according to data compiled by Bloomberg. That’s still a slowdown from last year’s 9.4% growth but hardly a disaster."

    •  TechCrunch reports that "Amazon will shut down its food delivery business in India by the end of the year, the retailer said Friday, retreating from a $20 billion vertical it entered less than three years ago.

    "The retailer will shut down the food delivery business, called Amazon Food, on December 29 in India. It launched Food in India in May 2020 in parts of Bengaluru. The company later expanded the service across the city, tying up with additional restaurants, but it never heavily promoted or marketed the platform … The announcement is part of Amazon’s broader restructuring in India. It announced earlier this week that it will be shutting down its edtech service Academy in the country next year.

    "India is a key overseas market for Amazon, which has deployed over $6.5 billion in its local business in the country. But the company is lagging Walmart’s Flipkart and struggling to make inroads in smaller Indian cities and towns, according to a recent report by Sanford C. Bernstein."

     “We don’t take these decisions lightly," Amazon said in a prepared statement.  "We are discontinuing these programs in a phased manner to take care of current customers and partners and we are supporting our affected employees during this transition. Amazon remains focused on providing our growing customer base the best online shopping experience with the largest selection of products at great value and convenience.”

    •  From Bloomberg:

    "Amazon plans to spend more than $1 billion a year to produce movies that it will release in theaters, according to people familiar with the company’s plans, the largest commitment to cinemas by an internet company.

    "The world’s largest online retailer aims to make between 12 and 15 movies annually that will get a theatrical release, said the people, who asked not to be identified because the company is sorting through its strategy. Amazon will release a smaller number of films in theaters next year and increase its output over time. That number of releases puts it on par with major studios such as Paramount Pictures.

    "Streaming services have eschewed theaters with most of their original movies, or released the titles for less time and on fewer screens than traditional movie studios. Netflix in particular has aggravated cinema chains by releasing more than a movie a week for viewers at home. The streaming giant released a sequel to 'Knives Out' in theaters on Wednesday. It will stay there for just one week, however, before heading to streaming next month. The original film grossed $312.9 million theatrically in 2019.

    "Amazon has been more open to theaters than Netflix, but has yet to invest as much money in original movies. While Netflix releases close to 100 movies a year, Amazon puts out just a couple dozen, many in languages other than English."

    Published on: November 28, 2022

    This is an issue we don't often deal with on MNB, but stories last week that referenced the return of Bob Iger as the Disney CEO - much like Howard Schultz returned as Starbucks' CEO - raised some questions in the mind of MNB reader Mike Bach about accountability and succession:

    You often indicate you want to hear what’s on our mind.  Please accept this musing in that spirit. 

    By Monday, we’ll all be wondering about the Holiday weekend sale and what it says about consumer spending, retailer inventories and possible discounts retailers will need to add in order to achieve 4Q results.  All good topics which your community will look to MNB for reporting and guidance.  And, certainly more important to most of your readers than the succession topic.  I get that.

    What’s on my mind relates to failures by Board of Directors on Succession Planning at some pretty iconic brands.  Because I mentor companies (both CEO’s and Board Chairs) on this topic, it's more than a passing interest.  The most recent example is Disney.  Anyone following the storyline is aware how quickly the Board replaced Chapek by returning Iger to the role.  My sense is that Board Chair Arnold perceptively recognized that questions would be asked about succession and they did gave minimal air cover to this topic by indicating that Iger has as his to-do to ensure a successor is in place during his second CEO tenure.

    But, that doesn’t address why this had to occur in the first place.  Chapek was Iger’s nominated successor.  The Board approved the recommendation.  And, Chapek failed.  Failed early and often, it seems.  Excuses will be written around the storyline that he encountered issues that couldn’t be foreseen.   That said, character matters.  The stripes on a zebra don’t change very quickly.

    And, this isn’t a one-off story.  CEO roles are some of the shortest tenure executive roles today.   Not for Igor, though, having spent a decade and a half at the helm.

    Not that long ago, P&G promoted Bob McDonald to replace AG Lafley as CEO.  For those of us old enough to remember, AG executed a wonderful, wide-reaching marketing campaign touting his role in mentoring McDonald as his successor.  The P&G Board of Directors approved that recommendation.  McDonald served in the role for 4 years, but when McDonald failed, the Board asked AG to step back in as CEO.  In fairness, it seems that Lafley got his succession right the second time. P&G is a company that is iconic in promotion from within. 

    In my mind, several questions emerge that provide a good learning environment for Boards everywhere to not be embarrassed in making a similar mistake:

    •  What were the characteristics on which the successor failed and how are those learnings being incorporated into CEO Succession Plans?

    •  How are possible CEO successors being road tested during their mentorship period?

    •  What role is the Board (and more specifically the Nominating Committee) playing in “double checking” the CEO’s report-outs on possible CEO successors?  

    Boards play in a precarious place, one which is often labelled as “eyes in, fingers out”.  CEO’s often get testy when they feel Boards meddle in operational matters.  However, when Board of Directors are being paid at or above $100,000 annually for meetings and subcommittee meeting leadership and attendance, it's fair to say that more due diligence should be expected of them on CEO leadership.  It is one of the most important tasks Boards own. 

    Based on the information in the press, it feels to me that Chairwoman Arnold leads a Board that has failed on its obligation to Disney shareholders.  But, it takes an interesting reader to come to this conclusion because the press, and it seems the institutional investor shareholders, aren’t asking questions that can keep Boards focused on a key outcome expected of them.

    I have a few thoughts about this, though I should point out for transparency's sake that I've never been a board member … it actually is something I would've liked to have done in my career, in the right role for the right company.

    My reading about the Disney situation hasn't been exhaustive, but I have read quite a bit, and it seems to me that there is general agreement that Iger failed in his choice of successor;  I think your point, that the board should've done more due diligence and should take more responsibility, is a fair one.

    I also think there are different kinds of board members;  I'm sure there are some out there who, while they don't get involved in operations, spend a lot of time getting a granular feel for the company so they can ask good, informed questions in every situation.

    There is a new book out by William D. Cohan entitled, “Power Failure: The Rise and Fall of an American Icon," about GE and Jack Welch.  I haven't read it yet, but an excerpt in the New York Times is relevant to our discussion:

    "Jack Welch, one of the most celebrated corporate chieftains of his time, spent the last few years of his life profoundly regretting what he believed was the most important decision of his career: his choice of successor.

    "This angry admission came flying at me before I could even sit down to join Mr. Welch, who was the chairman and C.E.O. of General Electric from 1981 to 2001, for lunch at a Nantucket golf club in August 2018. For all of his much-celebrated prowess, he believed he had made what may be one of the most common management mistakes around: falling for a candidate’s charm and political skills rather than choosing the person who was likeliest to do the best job. Choosing the wrong C.E.O. was a theme Mr. Welch returned to often during our many conversations before his death in March 2020, at 84.

    "He felt responsible. He felt guilty. He wanted me to know that he made a major mistake."

    It also is important to understand that there are different kinds of scenarios that lead to succession issues.  Take Apple, where the board actually threw one of the greatest - and most successful corporate Hail Mary passes in history when it brought back Steve Jobs more than a decade after he was forced out in favor of John Sculley, who was unable to transfer his success in selling soft drinks to the personal computer business.

    I also think that it is important to remember - painful as it may be - that boards are made up of human beings, in these cases hiring/promoting other human beings to run companies made up of other human beings.  And circumstances do change - in Disney's case, it is a company where much of its revenue is generated from businesses that bring people together, and an unexpected pandemic hit it hard.

    For me, I'd argue that in the current climate, it is critical to have a CEO who has an strong EQ as well as IQ, who is capable of creating s culture of caring within the organization that will help people get through hard times as well as celebrate the good times.  Chapek did not seem like that guy, but maybe Disney felt that it needed someone who would be completely different from the charismatic, EQ/IQ-rich Iger.  (I suspect the board will not make that mistake again.). I also think that they went with an operations guy who did not appreciate the fact that creative people require a different sort of leadership than other people - this became a liability as Chapek was tone-deaf in. a number of his decisions.

    In the end, I think your points are valid, and worthy of thought in any organization where succession is an issue.Which is to say, pretty much any organization.

    Published on: November 28, 2022

    The Washington Post featured an obituary over the weekend that I just found fascinating - it was for a big band singer named Louise Tobin, who died the other day at age 104.

    I don't have an encyclopedic knowledge of big band singers, but I was interested because I'd never heard of her before and wondered what rated her a fairly prominent Post obituary.

    Well, it ends up that Louise Tobin played a prominent role in America's cultural life, albeit one that few remember.

    In 1939, she was married to trumpet player and band leader Harry James.  (Him, I've heard of.)  According to the story, "One day in June 1939, Tobin was in a Manhattan hotel room, listening to a radio hookup from an Englewood Cliffs, N.J., roadhouse called the Rustic Cabin. She roused her husband from his nap" after she heard a young singer who sounded "pretty good."

    James ended up going out to the roadhouse and meeting with the young man, who also was waiting tables at the time.  He signed him to a year-long contract at $75 a week.

    The singer's name was Frank Sinatra.  Ends up, he actually was pretty good.  And it was Louise Tobin who started him on his way.

    Published on: November 28, 2022

    In Week Twelve of National Football League action…

    Buffalo Bills 28, Detroit Lions 25

    New York Giants 20, Dallas Cowboys 28

    New England Patriots 26, Minnesota Vikings 33

    Houston Texans 15, Miami Dolphins 30

    Cincinnati Bengals 20, Tennessee Titans 16

    Denver Broncos 10, Carolina Panthers 23

    Chicago Bears 10, New York Jets 31

    Atlanta Falcons 13, Washington Commanders 19

    Tampa Bay Buccaneers 17, Cleveland Browns 23

    Baltimore Ravens 27, Jacksonville Jaguars 28

    Las Vegas Raiders 40, Seattle Seahawks 34

    Los Angeles Chargers 25, Arizona Cardinals 24

    New Orleans Saints 0, San Francisco 49ers 13

    Los Angeles Rams 10, Kansas City Chiefs 26

    Green Bay Packers 33, Philadelphia Eagles 40