business news in context, analysis with attitude

Published on: December 5, 2022

The title says it all … this morning I want to talk about a few things that I just don't get.

Published on: December 5, 2022

Three interesting stories over the weekend about Amazon's efforts to right-size the company in a post-pandemic, high-inflation environment:

•  From Computer World:

"Amazon plans to lay off as many as 20,000 employees across the company in the coming months, including  distribution center workers, technology staff and corporate executives—about twice as many as previously reported—as the retail and cloud computing giant retrenches after going on a hiring spree during the pandemic.

"Amazon employees are ranked from level 1 to level 7, and staff at all levels will likely be affected, according to sources with direct knowledge of the matter, who requested anonymity. The New York Times first reported in mid-November that Amazon would enact mass layoffs, citing sources that said that as many as 10,000 people would be laid off.

"Company managers over the last few days, however, have been told that they should try to identify work performance problems among employees, as part of an effort to lay off about 20,000 people, according to sources. Twenty thousand employees are the equivalent of about 6% of corporate staff, and about 1.3% of Amazon's total 1.5 million-strong workforce including global distribution center and hourly workers."

•  From The Information:

"Amazon is rescinding job offers made to people in its retail organization, a sign that its cutbacks have extended beyond the devices division where layoffs were concentrated.

The Worldwide Amazon Stores organization includes teams that work on Amazon’s Buy With Prime feature, Amazon Go stores, Whole Foods market and the company’s private label products.

"In a statement, Amazon said: 'As we continue with our annual operating plan review, and in light of the challenging economic conditions, we’ve made the difficult decision to eliminate some roles in particular businesses for which we’ve extended offers but the candidates have not yet joined the company. This decision impacts a very small number of roles, especially compared to the tens of thousands of offers we’ve extended this year alone, and we plan to continuing hiring in 2023'."

•  From CNBC:

"Amazon Web Services has been the biggest growth engine for its parent company over much of the past decade, taking business from some of the largest tech vendors in the world.

But as corporations face the most daunting economic environment since the 2008 financial crisis, those massive checks they’re writing to AWS for their tech infrastructure are getting greater scrutiny … AWS is coming off its slowest period of expansion since at least 2014, the year Amazon started reporting on the group’s finances. It also missed analysts’ estimates. Still, the division recorded growth of 27.5%, outpacing Amazon’s overall growth of 15%. And it generated $5.4 billion in operating income, accounting for more than 100% of profit for its parent company.

"With such a hefty cash balance, AWS can afford to accommodate customers in the short term if it means more business in the future. The company did the same thing during the pandemic in 2020, when Amazon sent some users an email with an offer of financial support."

The story notes that "Amazon knows customers are facing challenges. In some cases, Amazon cloud employees reach out to clients to see how it can help optimize spending, said David Brown, AWS’ vice president responsible for the core EC2 computing service. At other times, customers contact AWS, he said."

One business cited in the story:  the National Football League, "which uses AWS to produce statistics and schedules, is making conservative plans around costs."

Published on: December 5, 2022

The New York Times has two different takes on the current labor market:

•  The New York Times has a story about how "one of the biggest surprises in today’s job market" is that "hundreds of thousands of men in their late 30s and early 40s stopped working during the pandemic and have lingered on the labor market’s sidelines since."  Many men in this age group "seem to be staying out of the work force altogether. They are an anomaly, as employment rates have rebounded more fully for women of the same age and for both younger and older men."

According to the story, "About 87 percent of men ages 35 to 44 were working as of October, down from 88.3 percent before the pandemic struck in 2020. The stubborn decline has spanned racial groups, but it has been most heavily concentrated among men who … do not have a four-year college degree.

"The pullback comes despite the fact that wages are rising and job openings are plentiful, including in fields like truck driving and construction, where college degrees are not required and men tend to dominate.

"Economists have not determined any single factor that is keeping men from returning to work. Instead, they attribute the trend to a cocktail of changing social norms around parenthood and marriage, shifting opportunities, and lingering scars of the 2008 to 2009 downturn - which cost many people in that age group jobs just as they were starting their careers."

•  The Times also reports that Handshake (which describes itself as "a networking platform serving more than 10 million college students) recently surveyed "about 1,400 recent college graduates and current seniors to ask about their top job search priority: 73 percent said stability. Fewer than half, by comparison, said a priority was to work for a known brand."

The Times goes on:

"If stability is what young workers are after, the unquestionably strong job market is in a prime position to comply. The unemployment rate is at nearly a five-decade low. There are more openings across industries than there were before the pandemic, and layoffs across the economy are low by historical standards. Employers added 263,000 jobs last month, the government said on Friday, in the latest show of economic strength.

"But some young people are anxious nonetheless. For the nearly two-thirds of young American adults who didn’t graduate from college, job insecurities are sharpened by inflation, at a 40-year high. Others, who did go to college, are entering their careers after years of school disruptions and rising levels of mental distress. And for the very small subset who graduated from college and planned to seek out especially high-paying, perk-filled jobs, like those in technology, there’s the angst of witnessing layoffs across the companies associated with the most alluring roles."

Published on: December 5, 2022

The Wall Street Journal reports that CVS Health "is testing a system that allows pharmacists to process prescriptions in part remotely, a move it said could improve store working conditions and the experience for customers as the company grapples with a shortage of pharmacists.

"CVS has equipped roughly 8,000 of its more than 9,000 U.S. drugstores with technology that allows pharmacists to review and enter prescription information remotely while still meeting patient-privacy requirements. About 400 of CVS’s 30,000 pharmacists are currently helping prepare prescriptions either at central locations, from their homes or in stores other than where medications will be dispensed."

The new scenario means that "pills would be placed by a pharmacy technician on a specialized tray, which uses weight to register pill count, and that information along with images of the prescription would be beamed to a pharmacist, who could be working at another store or a central location."  

The story says that CVS maintains that the initiative "will lighten the workload for store pharmacists and free them up to provide customers with a wider range of services, such as vaccinations and health screenings."

One roadblock:  state regulations " that require drugstores to have a certain number pharmacists on site or prohibit remote drug verification."

Published on: December 5, 2022

Axios reports that members of the Business Roundtable "have downgraded their view of the economy - though not to recessionary gloom."

According to the story, "When 142 CEOs of major U.S. companies were surveyed in late November, they reported relatively healthy plans for sales growth, hiring and capital spending."  In its most recent survey, however, "those expectations had notably cooled from last year's nosebleed levels. 40% of CEOs expect to increase employment at their firms within the next six months. This time last year, 77% planned to do so."

GM CEO Mary Barra, who chairs the Business Roundtable, tells Axios, "With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months."

Published on: December 5, 2022

•  Parks Associates (which describes itself as "a woman-owned and woman-led internationally recognized market research and consulting company, specializes in emerging technology solutions") is out with its annual list of the top 10 US subscription video services, concluding that for the first time, Amazon Prime Video "has surpassed Netflix in the number of paid subscribers. Also, Peacock entered the top 10 list for the first time in 2022, while Showtime moved off the list."

The full list is scheduled to be released at the Future of Video conference, December 12-14 at the Marina del Rey Marriott in California.

Published on: December 5, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Bloomberg reports on a new IRI study saying that "nearly three-quarters of European consumers are cutting back spending on everyday items, including food, to make ends meet amid a worsening cost-of-living crisis.

"A new survey shows that 71% of consumers across six key markets in Europe have already made significant changes to how they shop as they battle to cope with inflation that is reaching levels not seen in four decades."  The study also suggests that "58% of consumers already report that they have cut down on essentials, with 35% dipping into their personal savings and taking out loans to pay bills."

•  Fox News reports that Starbucks customers are "furious" about "a new tipping system that allows customers who are paying with card to leave the barista a tip … The new tipping feature getting rolled out across North America prompts customers who paid by card to have the option to leave a $1, $2, 'other amount' or 'no tip' after they have inserted their card to pay for their beverage or baked good."

The story suggests that some employees find the new system to be uncomfortable as well.

"Furious?"  Really?

•  Axios reports that "the custom of emptying wallets for a lavish dinner on a first date may be on its way out … The collision of a number of trends - including skyrocketing prices, the pandemic's popularization of outdoor hangouts, and the rise of online dating - is starting to kill the traditional dinner date.

"Today's young people prefer long walks in the park, picnics or sampling street food - especially if it's a first date with a person you've only just met on a dating app."

The story suggests that "the grand gestures we saw in romantic comedies 20 years ago might be going out of style … The new first date is all about keeping it casual."

I just found this interesting because it reminded me that the last time I went out on a first date was on September 10, 1979.  It wasn't a lavish dinner - we just went out to a local Mexican restaurant.  The irony is that it took my date - who almost four years later married me - about six months to tell me she hated Mexican food.  

Published on: December 5, 2022

Bob McGrath, who spent almost five decades portraying Bob Johnson on Sesame Street," from the very first episode helping to teach our children about kindness and tolerance and the strength that comes from diversity - not to mention about letters and numbers - has passed away.  He was 90.

The following clip is typical McGrath and "Sesame Street."  And go figure … one of the Muppets plays a grocer.

Published on: December 5, 2022

Last week we had a conversation about the Robinson-Patman Act, prompted by the proposed Kroger-Albertsons deal, which prompted one MNB reader to write:

For 25 years I was an attorney at a major consumer products manufacturing company.  (Before becoming a lawyer I had some experience at the retail level - independent as well as chain.)  While as an attorney in those 25 years, compliance with R-P was not among my responsibilities, I was familiar with the statute and what was happening at ground zero level.   To begin with, the statute is subject to some interpretation.  The sales people in large measure were reacting to what competitors were offering.  The major chains etc. stretch the limits of the statute in their demands.  They had to do it because their competitors did. It became a sort of race to the bottom in complying on both sides and the lack of federal enforcement is certainly a factor.  Add to that I strongly suspect that more often than not the sales people were making concessions that they never had reviewed.  Brokers get involved.  The higher ups didn't often get into the details - they just told the sales people to make the numbers or else.  R-P covers a lot more than just "pricing".  There are many other "incentives and services" that major accounts get that are not offered to independents.  R-P covers a lot more than just pricing discrimination.  It is not a level playing field out there.  Independents survive largely because they have lower overhead.  

MNB reader Lauren G. D. Redman had a response:

This person clearly didn’t spend too much time with independents OR wasn’t privy to the books.  As a 100% ESOP and independent retailer I can absolutely say our overhead is NOT lower than the majors as we have to attract and retain employees in an over-stored market that has an out of control housing market (median home prices are over $700,000).  How we do that is with company paid benefits and employee discounts that far exceed anything the majors offer along with some of the best pay in the area if not the industry.

I do however agree with this person’s statement that it is not a level playing field.  Spot on.  So instead of bitching about boohoo life isn’t fair, we instead look inward at the things we can do and the things we can control and treat our employees and customers the very best we can.

Let’s get real, this merger if approved isn’t good for the consumer or the employee or the communities that will lose stores.  What is good about it…the opportunity it creates for the independent that chooses to do the best they can for their employees and customers.  When you do that both groups will seek you out as the employer of choice and the grocer that feeds their family.

This is why Lauren - CEO of Newport Avenue Market in bend, Oregon - is both an MNB fave and one of the best independents out there.

MNB reader Rich Heiland had some thoughts about Kroger's Q3 numbers:

I have long felt that the worst thing that ever happened to business in this country was the beginning of quarterly profit and loss estimates, then their reporting. 90 days in the life of a corporation is a split second. I blame this sort of reporting for the death of strategic planning, long-term goals and values establishment and skyrocketing executive wages. After all, what serious executive is going to sign on for being publicly evaluated every 90 days without one hell of a salary and parachute? I would love to go back to annual reports. Let people dream, plan to chase those dreams, then judge them. 

I got some lovely emails about my FaceTime regarding Thanksgiving dinner.

MNB reader Phil Herr wrote:

Thanks for sharing your joy. I could see you were moved as you spoke. I could feel a prickling in my eyes as you described your feelings.

MNB reader Ron Beltramo wrote:

Kevin…I saw your post this morning and I had a very similar Thanksgiving experience.  Our son, daughter, daughter-in-law, three grandsons, sisters-in-law, niece & friend all got together for Thanksgiving dinner at our house.  It was the first time we had been together like that since the pandemic and I savored the moment (just like you).  Felt the same joy you mentioned and have a lot to be thankful for. 

Glad to hear you had a great Thanksgiving and were able to enjoy family & friends time…and have that joyful feeling.  Hope you (and I) have many more holidays just like this Thanksgiving in the future.

And MNB reader Kim Marsh wrote:

It was touching to hear about your thanksgiving and mirrored my own experience this year.  

As background, my family moved to Canada back in 2009 when I was promoted to run sales there for the Kellogg Company.  My oldest son was a junior in high school and, needless to say, I did NOT win 'Mom of the year' that year!  But he found his place in Canada and has since graduated from a Canadian university, found a job he is thriving in, become engaged to a lovely woman and applied for full citizenship.  

The pandemic kept them in Toronto, so close, yet so far.  This thanksgiving, his first “home” in 4 years, was ever so sweet for all of us.  I found myself, like you, grateful for the gathering over a wonderful meal, love and laughs, debates and jokes between the group - my 3 sons, their fiancé and girlfriend and me and my fiancé.  This is what its all about.  We can, and should, sit back and relish these moments, especially after the last 3 years of separation, discontent and discourse. We can, and should, as parents, find moments of contentment in who our kids have become, their talents and their successes as well as acknowledging the obstacles they overcame to get to where they are right now. 

Thank you for speaking about your thanksgiving, it moved me to think about ours as well.  And I have a sneaking suspicion that your kids know you and that somewhere, somehow, you would find a way to use your experience as a lesson for us all.

Published on: December 5, 2022

In Week 13 of the National Football League…

Green Bay Packers 28, Chicago Bears 19

Pittsburgh Steelers 19, Atlanta Falcons 16

New York Jets 22, Minnesota Vikings 27

Jacksonville Jaguars 14, Detroit Lions 40

Tennessee Titans 10, Philadelphia Eagles 35

Cleveland Browns 27, Houston Texans 14

Washington Commanders 20, New York Giants 20

Denver Broncos 9, Baltimore Ravens 10

Miami Dolphins 17, San Francisco 49ers 33

Seattle Seahawks 27, Los Angeles Rams 23

Los Angeles Chargers 20, Las Vegas Raiders 27

Kansas City Chiefs 24, Cincinnati Bengals 27

Indianapolis Colts 19, Dallas Cowboys 54