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    Published on: December 2, 2022

    Just a few thoughts about how Thanksgiving dinner helped me connect something we talk about intellectually here on MNB to visceral feelings of joy that remain with me now, even a week later.

    Published on: December 2, 2022

    Kroger said yesterday that its Q3 total sales were $34.2 billion, up from $31.9 billion for the same period a year ago, though earnings dropped to $398 million from $483 million a year ago as inflation had an impact on costs and expenses.

    Same store sales, excluding fuel, were up 6.9 percent for the period.

    CNBC reports that CEO Rodney McMullen "said customers are eager to save: they’re downloading digital coupons, choosing items on promotion and buying private-label products more than before, he said.

    "Sales growth for private-label brands, which tend to be cheaper than national name brands, outpaced the company’s overall sales growth in the quarter, McMullen said.

    "One of those brands is Smart Way, Kroger’s least expensive private-label brand, which sells canned food, bread and other staples. The company launched the product line last quarter as customers faced inflation-related sticker shock. McMullen said Kroger plans to add more products to that line in the coming months."

    Meanwhile, the Wall Street Journal writes that "while Kroger is doing well, it isn’t exactly trouncing the competition … its digital-sales growth of 10% last quarter lags behind Walmart’s 16% growth over the comparable period.

    "For the full year, Kroger’s share of U.S. grocery e-commerce sales is expected to fall compared with a year earlier and stay stagnant in the following two years, according to estimates by Insider Intelligence."

    KC's View:

    I suppose that everything Kroger reports these days has to be seen through the prism of its proposed acquisition of Albertsons.

    Higher sales testify to Kroger's existing market power, and challenged profits would suggest that greater buying power would give it the ability to drive down prices.

    Though opponents of the deal will suggest that greater power will mean that Kroger can be less responsive to competitive challenges, I'm not sure this is true.  Or entirely fair.  Kroger would be foolish - and it would be out of character - to simply raise prices because it can.  (This would mean ignoring the lessons of Jurassic Park:  Just because you can do something doesn't mean you should do something.)  Plus, it would concede a large share of stomach to competitors who emphasize low price, and I don't think Kroger is likely to do that.

    But, it could.  Which means the Federal Trade Commission (FTC) has to weigh the possibilities and probabilities, the impact on shareholders and customers, and decide what its responsibilities and mandates are.

    Published on: December 2, 2022

    From Axios:

    "The attorneys general of Illinois, California and the District of Columbia filed a new request … in federal court to immediately stop grocery chain Albertsons from paying out a $4 billion special dividend to its shareholders … This is the AGs' second attempt at stopping the dividend. The same court denied a request for a temporary restraining order in early November."

    According to the story, "The AGs still want the dividend halted until a full review of Albertsons merger with Kroger is completed.  The request includes additional evidence supporting the AGs' concern that the dividend would violate federal antitrust law as well as California, Illinois and D.C. antitrust law, according to an emailed statement.

    "In particular, they claim they are able to more directly tie the dividend to the merger with Kroger rather than it being a separate consideration, noting that Albertsons contemplated a stock buyback as a better way to return capital to shareholders."

    KC's View:

    There are a couple of things at work here.

    First, the opposition is challenging the latter point, that the Albertsons dividend is not part of the merger.  It may be accurate, but the timing of the announcement didn't do Albertsons' any favors.  It is, to be clear, true that Albertsons was looking for ways to enhance shareholder value way before the Kroger negotiations kicked in.

    The larger issue, I think, is about shareholder value vs. stakeholder value … and I think this is going to be part of the broader debate.  But there also will be a debate whether this is even appropriate.

    Published on: December 2, 2022

    The Guardian reports that Trader Joe's "is rolling out new, unofficial policies at stores across the US starting in January 2023 … that will mandate part-time workers work a minimum of three days a week to maintain their employment with the company."

    According to the story, employees - who wanted to remain anonymous because of concerns about retaliation - "claimed management said the changes were being made because of hiring issues, wanting workers to be more engaged and knowledgable on the job, and complaints that part-time and full-time workers received the same wage raises."

    There are also charges that Trader Joe's is making the change as part of its resistance to unionization.

    From the Guardian story:

    "'It’s a concerning change because this policy will unfairly discriminate against parents, students, older crew for whom Trader Joe’s is a ‘retirement job’, crew with disabilities, veteran crew who have cut back their hours due to work injuries, and other crew members that need to work one or two days a week. Flexibility is one of the draws of the job, and a lot of folks have come to depend on this part-time option,' said Maeg Yosef, a longtime Trader Joe’s worker and union organizer in Hadley, Massachusetts.

    "She estimated about 15% of crew members at the unionized stores work one or two days a week."

    Trader Joe's reportedly has not commented on the changes.

    KC's View:

    While I understand the issues regarding parents, students and older workers, and would hope that exceptions could be made in such cases, I think there is a lot to be said for an employment approach that wants employees to be more engaged in the company - spending more time there, with a better appreciation for the culture and understanding of the products and value proposition.  It isn't just enough to be wearing a Hawaiian shirt.

    I've long felt that one of the ways that retailers can differentiate themselves in the marketplace is with a greater percentage of full-time workers with a real investment in the company.   Sure, it changes the economics of running stores, but it also could result in higher sales and greater productivity that could mitigate some of those costs.

    Published on: December 2, 2022

    From Reuters:

    " Inc hopes to interest a wider range of industries in the technology it developed for cashier-less checkout at brick-and-mortar shops, a vice president said.

    In recent years, the e-commerce company has opened stores without cashiers in which cameras and sensors determine what shoppers take and bill them after they exit.

    "Since 2020, it has sold these systems to food and retail markets in airports, professional and university stadiums, and a convention center.

    "Vice President Dilip Kumar said late on Wednesday the company aims to broaden sales of the technology since it moved the team in charge to its cloud-computing division, Amazon Web Services (AWS), in August."

    KC's View:

    Amazon has been talking a lot more about cost-cutting, but part of finding an even economic keel also means selling more … which means that licensing out its checkout-free technology to bricks-and-mortar stores could be a significant way to generate some revenue.

    Published on: December 2, 2022

    •  From the Associated Press:

    "The number of Americans applying for unemployment benefits came back down last week, hovering near levels suggesting the US labor market has been largely unaffected by the Federal Reserve’s aggressive interest rate hikes.

    "Applications for jobless aid fell to 225,000 for the week ending Nov. 26, a decline of 16,000 from the previous week’s 241,000, the Labor Department reported Thursday. The four-week moving average of claims, which evens out week-to-week swings, inched up by 1,750 to 227,000.

    "Applications for unemployment benefits are a proxy for layoffs, and viewed with other employment data, shows that American workers are enjoying extraordinary job security at the moment, despite an economy with some glaring weaknesses."

    •  And, from the Washington Post:

    "The cost of gasoline is falling so fast that it is beginning to put real money back in the pockets of drivers, defying earlier projections and offering an unexpected gift for the holidays.

    "Filling up is now as cheap as it was in February, just before Russia’s invasion of Ukraine touched off a global energy crisis. AAA reported the average nationwide price of a gallon of regular Wednesday was $3.50, and gas price tracking company GasBuddy projected it could drop below $3 by Christmas. And all of that relief probably helped drive robust shopping over Thanksgiving weekend.

    "'People are realizing that they might be back to spending $50 to fill their tank instead of $80,' said Emma Rasiel, a professor of economics at Duke University. 'It is the main signal consumers notice on inflation. It is the one thing they are likely to track, how much it has gone up or down, because every week they need to fill up their car'."

    The Post notes that "Rasiel cautioned that less-expensive gas can also give consumers the wrong idea. Prices of other goods and services are much less volatile, and there is no indication that this moment of more-affordable fuel is pushing the cost of other things down.

    "Even as the plunge in prices at the pump helps fuel a national holiday shopping spree, it is a reflection of the financial strain consumers and businesses are confronting worldwide. Prices are going down because demand for oil and gas is falling as countries brace for recession, coronavirus outbreaks in China threaten major financial disruption and drivers cut back on gas-guzzling as they try to save money to cover skyrocketing mortgage payments and stock market losses."

    • From Axios:

    "The jobs market stayed solid last month: Employers added 263,000 jobs, while the unemployment rate held at 3.7%, near the lowest level in a half-century, the Labor Department said on Friday.

    "Why it matters: The figures are the latest signal of a roaring labor market that continues to defy fears of a recession.

    "November's payroll gains are above the addition of 200,000 jobs that economists had expected."

    KC's View:

    Nice to see, in this holiday season, that the lights at the end of the tunnel may not be an oncoming train.

    There is a lot of chatter out there that the US may be able to avoid a recession, or that there could be a so-called soft landing that will minimize the economic harm to most Americans.  Which would be extraordinary, considering all the "sky is falling" rhetoric that has been dominating the discourse.

    Published on: December 2, 2022

    •  Instacart said this week that it is introducing Community Carts, described as "a new feature that reimagines traditional food drives, making it easy for consumers to donate groceries that food banks need most with the Instacart App … Community Carts gives consumers the opportunity to participate in crowdsourced cart building for good by donating groceries to more than 100 local Feeding America member food banks across the United States, with delivery and service fees waived on every donation order. Starting today through December 4, Instacart will match every dollar spent on Community Cart orders with a donation – up to $100,000 – to Feeding America."

    The app now will give shoppers the ability to "select any participating food bank to support and shop as many items as they’d like from the food bank’s personalized wish list, based on which groceries are needed most for the local community. Instacart shoppers will then deliver the items directly to the food bank according to their local donation guidelines. Whether people donate just a few cans of food or a whole cart, donations will add up quickly as customers come together nationwide between Giving Tuesday and December 31 to contribute to Community Carts."

    Published on: December 2, 2022

    •  Nestlé reportedly is spinning off its Freshly meal delivery service, which it acquired in 2020, in a way that combines it with artisanal food manufacturer Kettle Cuisine, which is owned by private equity company L Catterton.  Nestlé, which said that Freshly has not performed up to expectations, will retain a 41 percent ownership stake in the business.

    Published on: December 2, 2022

    In Thursday Night Football, the Buffalo Bills defeated the New England Patriots 24-10.

    Published on: December 2, 2022

    Just want to say that, when the movie for which this trailer dropped yesterday hits movie screens next summer … I'm all in.

    If you've not seen it, I heartily recommend Howard Stern's two-hour interview with Bruce Springsteen, originally produced by Stern's Sirius XM channel but now available on HBO.  I've never been a big Stern fan, but admire his career pivot over the past few years to serious interviewer, this is just an extraordinary session.  

    Springsteen seems relaxed, candid, in very good voice and willing to both explain and perform his songs as well as describe his process.  I thought it was captivating.

    I wrote here some months ago that I'd finally caught up with the first season of "The White Lotus" on HBO, and wasn't crazy about it … I found it to be "off-putting because I never really care about or empathized with the vast majority of the characters.  I watched the entire first season, but found myself a) being glad that it was only six episodes, and b) having no inclination to watch a second season."

    Well, I've been watching the second season.  Not sure why, other than I keep wondering why its broad appeal seems to escape me.

    And I think I like the second season better.

    The first season was all about class and race, in a series peopled by largely unpleasant, spoiled people working and staying in a lush Hawaiian resort.  In retrospect, it may be that the series just couldn't support all the text and subtext - the class/race thing was more than the construct could handle.  The second season, on the other hand, seems to be just about lust, longing and regret, and so far it sort of works … though the characters remain pretty much unlikeable.

    She ended up going into education, but my daughter long hoped to find a career in the criminal justice system … which meant that rom the time she was pretty young, we watched a lot of police procedurals together.  A particular favorite was "Criminal Minds," which for 15 years portrayed an FBI unit that hunted serial killers.

    Just before the pandemic started, "Criminal Minds" ended its run … but a funny thing happened.  When people stayed home, one of the programs they streamed the most was "Criminal Minds," and so the folks at Paramount+ decided to bring it back as a limited series, with most of the original cast.

    My daughter is older now, with a life and better things to do than watch TV with her dad.  But she's taken pity on the old man, and once again it is appointment television for us.  The new, streaming version of "Criminal Minds" is a little more graphic than the broadcast television version, but we love it.  (Some dads and daughters watch rom-coms.  We like serial killers.)

    Our wine of choice for Thanksgiving last week … the 2019 Signature Cuvée Pinot Noir from Willamette Valley Vineyards, which is a special blend of pinots from the company's Estate, Elton and Tualatin Estate Vineyards.  And it was utterly delicious … smooth and robust and as tasty as a pinot noir can be.

    We also enjoyed a 2018 Roads End Pinot Noir from the late, great Carlton Cellars.  (When the winery ceased doing business, we laid in a supply of its various pinots that will get us through a winter or two … and I may even stash away a couple to be broken out only in case of apocalypse.)

    And, because we can't just drink pinot (somebody told me that), when I made tortellini with a nice spicy meat sauce the other night, we had a 2020 Biagio Chianti, which was rich and wonderful.  (I love chianti!)

    That's it for this week.  Have a great weekend, and I'll see you Monday.