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    Published on: December 22, 2022

    This month, a number of Dollar General vendors reportedly have received an email from Emily Taylor, the retailer's executive vice president and chief merchandising officer.  This is what the email says:

    Dear Dollar General Vendor:

    We are very excited to share with you that we are opening our nineteenth dry goods distribution center (DC) in Blair, NE. Our timeline and plan for product flow roll-out are being communicated to you separately. The new be will be located at the following main address:

    Dollar General Distribution Center (#96540)

    1200 South 10th Street

    Blair, NE 68008

    The Blair DC, like all of our DCs, will be instrumental in our continued business expansion.  Each new DC represents a considerable investment, especially in inventory.

    As in the past, as we grow so do opportunities for you. Therefore, we will be charging a one-time new DC allowance to help offset the start-up costs of the Blair DC. We will calculate the allowance as follows:

    Ten percent (10%) of the estimated cost of purchases required to fully stock the new

    DC to support regular shipments to the assigned store base.

    As we begin DC operations, we will calculate the initial allowance and deduct it by the planned date of January 23, 2023.  Supporting calculations will be provided at that time.  As we complete the rollout of the assigned store base, we will deduct the remainder of the allowance in 2023.

    Our partnership with you is important, and we look forward to continued success together. Thank you.

    KC's View:

    I wanted to make sure I had this straight, so I reached out to a vendor that received the letter to be sure.  The vendor confirmed my understanding of the email:  Dollar General is going to charge all their vendors basically 10 percent of expected/projected  2023 purchases by the warehouse, and then deduct that amount from whatever invoices the vendors submit.

    The vendor also told me that to his knowledge, this is a unique construct.

    I'd go farther than that.  I'd suggest that Emily Taylor's definition of the word "partnership" is a little different from mine.

    Dollar General may be celebrating its "considerable investment," but it is laying off some of that investment on companies that want to sell product through its stores.  This is sort of the ultimate slotting allowance - you have to pay to play.    I was curious, so I looked up the word "extortion" … and it is defined as "the practice of obtaining something, especially money, through force or threats."  What Dollar General is doing may be legal, but it strikes me as not very collaborative.

    Emily Taylor may be writing the letter, but it sounds like Dollar General got negotiating lessons from the Corleone family.  She is making vendors an offer they can't refuse.

    Published on: December 22, 2022

    As part of an analysis of how legacy linear media networks are likely to fare in 2023 as the ways in which people consume media evolves, The Information offers this prognostication:

    "The consensus view is that ad spending on linear inventory will fall 6% to 7% next year, while spending on digital inventory (including Connected TV) will rise by a similar amount or more. That’s the easiest prediction. It seems like a fool’s errand to guess any other outcome.

    "Instead, focus on two key moving pieces in the ad picture for 2023. First, there is Procter & Gamble’s October announcement that it is 'actively shifting our spending from linear, non-targeted TV into programmatic and into digital spend that is a lot more targeted and a lot more precise in terms of delivering reach.'

    "In 2022, P&G spent about $8 billion globally on marketing, about $5 billion of that in the U.S. Marketers value linear ad inventory to drive brand awareness. Brand ads are largely sold to linear networks during the upfronts. Linear networks make as much as 80% of their revenue in upfronts, and they are both behind the curve technologically and lack the scale of competitors like Google, Amazon and Roku. So it hurts those networks when major advertisers shift spend to ads delivered in real time to highly specific target demographics.

    "It’s not yet clear whether other major advertisers will follow P&G’s lead, but the 200 or so 'media-retail cartel' advertisers that supply nearly 90% of U.S. network television revenue often think alike…

    "The second moving piece is the effort by ad-supported streaming models to extract more revenue from each user … The assumption is that digital channels can charge more for targeted ads than for indiscriminate blasts from linear programmers. So far that’s been true in the sense that advertisers will buy some inventory for higher cost per mille (CPM) than for linear. But they won’t buy all inventory for higher CPM than linear.

    "The two questions for 2023 focus on buyer preferences and inventory value. First, if advertisers increasingly prefer programmatic real-time buying, how will legacy media compete with the likes of Amazon, Google and even Roku? So far, few legacy media companies have shown they can. Even if they can compete, how will they prove the value of their inventory with smaller scale and less sophisticated technology?"

    KC's View:

    The fragmenting of the media landscape, and the trend toward marginalization of traditional linear networks that focus on mass audiences, is something that will benefit streaming services that are turning to ad-supported versions that can create revenue streams, as well as the retail media networks that seem to be popping up all over the place.  The ability to target people more precisely and appropriately is huge.

    However, I do think that fairly quickly we'll see consolidation among many of these alternative networks and services - the ability to target won't be affected, but they'll be able to reduce some of the costs and achieve stronger ROI.

    Published on: December 22, 2022

    Reuters reports that the Washington State Supreme Court "will review on Feb. 9 the state attorney general's appeal to permanently stop the company's blocked $4 billion special dividend ahead of its acquisition by Kroger Co."

    Albertsons responded to the scheduling that it "continues to maintain that the claim brought by the Attorney General of the State of Washington, and the similar lawsuit brought by the Attorneys General of California, Illinois, and the District of Columbia, are meritless and provide no legal basis for preventing the payment of the Special Dividend. Albertsons’ position has been supported by favorable rulings in both Circuit and District courts in the District of Columbia and a Washington State court."

    The dividend was announced at the same time as Kroger, the country's second largest food retailer, said that it wanted to acquire fourth-ranked Albertsons for $24.6 billion, a move that would leave the newly combined company still at number two behind Walmart, but with some 5,000 stores around the US.  The deal is subject to regulatory approval by the Federal Trade Commission (FTC), with the divestiture of a number of stores in select markets expected.  However, the proposed deal has been roundly criticized by some lawmakers, labor groups and consumer advocates as being bad for competition and likely to result in higher prices for shoppers.

    KC's View:

    I know all the shareholders were hoping for a Christmas present from Albertsons, but this isn't as bad as getting a lump of coal - it is just a delay.  At least for the moment.

    Published on: December 22, 2022

    From the Los Angeles Times:

    "Since February, Amazon has been playing Santa Claus to Ukraine, delivering planeloads of goods, including blankets, hygiene kits, diapers, food and toys, for the war-torn nation and refugees in Poland and other parts of Europe.

    "But long term, what’s more important to Ukrainians than the gifts coming in is what’s going out: massive amounts of government, tax, banking and property data vulnerable to destruction and abuse should Russian invaders get their hands on it.

    "Since the day Russia launched its invasion Feb. 24, Amazon has been working closely with the Ukrainian government to download essential data and ferry it out of the country in suitcase-sized solid-state computer storage units called Snowball Edge, then funneling the data into Amazon’s cloud computing system.

    "'This is the most technologically advanced war in human history,' said Mykhailo Fedorov, Ukraine’s 31-year-old vice prime minister and minister of digital transformation, referring not just to weapons but data too. Amazon Web Services’ 'leadership made a decision that saved the Ukrainian government and economy.'

    "Amazon has invested $75 million so far in its Ukraine effort, which includes the data transfer via the Snowballs. Fedorov, speaking at a tech conference in Las Vegas this month, called it 'priceless'."

    KC's View:

    To take a page from Ukrainian President Volodymyr Zelenskyy's marvelous speech to the US Congress last night, this is not charity from Amazon - it is an investment.

    I'm sure that Amazon figures that if Ukraine is able to survive the horrendous onslaught by Russia and maintain its status as a free nation and a young democracy, it can be a thriving market for its retail and other services.  At the same time, Amazon must know that stopping Russia in its tracks, preventing further war crimes and Putin's expansionist impulses, is one way of maintaining a world in which capitalism can thrive.

    It is great when one can do deeds that are at once self-serving and that put one on the side of the angels.

    Published on: December 22, 2022

    Axios has a story saying that "the last two years have brought scores of new hires, new ideas and new funding to corporate diversity, equity and inclusion," and that appears to be "a clear business case for prioritizing DEI at work beyond lip service. Workforces with a variety of experiences and perspectives can make better-informed decisions and generate more creative strategies, experts say.

    "A McKinsey study found that the most diverse companies were a whopping 36% more profitable in 2019 than their least diverse counterparts."

    However, Axios writes, challenges remain:  "Many companies hire people of color and then can't retain them because they haven't addressed issues of workplace racism, so employees face microaggressions or hurdles to advancement and end up quitting, according to Dee C. Marshall, CEO of Diverse & Engaged, a consulting and talent recruitment firm."

    In addition, DEI budgets also are "the first to go in an economic downturn, Marshall says. And if companies make commitments to change for one year, some drop those obligations the following year.

    "Another problem is that 'DEI' as a term is too broad … Companies can't make progress until they get specific about what exactly they want to address."

    This creates problems for DEI officers, the story says - there may be more of them in corporate America, "but the turnover rate for those positions is averaging just three years, per LinkedIn data."

    KC's View:

    Companies where both management the front lines look like America are intellectually and emotionally richer for their diversity - they have a better understanding of the marketplace, and can provide answers to questions that the older versions of these companies didn't even know to ask.  But, go figure, it requires a sustained commitment.

    Published on: December 22, 2022 reports that "Wegmans is investing $3 million into Perry’s Ice Cream’s planned $18 million project that will add 20,000 square feet to its 120,000-square-foot facility in Akron, N.Y. The expansion will focus on producing ice cream bars on a stick, a 'fast-growing segment' of the industry."

    According to the story, "Wegmans said it contributed to the project for 'future benefits related to a new product offering and preferential production scheduling and pricing' … Wegmans brand ice cream is made by Perry’s, which also sells its own branded products in stores across Upstate New York."

    KC's View:

    I read this story and thought about Wegmans' decision to invest in its vendor within the context of Dollar General's decision, detailed above, to mandate that vendors invest in it.  I think one approach is enlightened, and the other is unfortunate.

    Published on: December 22, 2022

    •  Yahoo Finance reports that Instacart is aiming "to connect even more low-income households to its service with the announcement of a new, discounted Instacart+ membership for SNAP participants nationwide. The program is part of the company’s Instacart Health initiative, which is designed to promote healthier food and living.

    "SNAP, formerly known as food stamps, is a U.S. Department of Agriculture program that provides financial assistance to help low-income Americans buy food. The benefits are processed through the Electronic Benefits Transfer (EBT) card system … Instacart said that beginning on Dec. 20, 2022, anyone who has used an EBT card to purchase groceries on Instacart in the past six months can get an Instacart+ membership at $4.99 a month for 12 months — a 50% savings off the regular price. Instacart+ lets households access free delivery and pickup on orders over $35. It also offers 5% credit back on pickup orders and reduced service fees on every order."

    Published on: December 22, 2022


    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Conference Board said that its "Consumer Confidence Index increased in December following back-to-back monthly declines. The Index now stands at 108.3 (1985=100), up sharply from 101.4 in November. The Present Situation Index - based on consumers’ assessment of current business and labor market conditions - increased to 147.2 from 138.3 last month. The Expectations Index - based on consumers’ short-term outlook for income, business, and labor market conditions - improved to 82.4 from 76.7. However, Expectations are still lingering around 80 - a level associated with recession."

    •  Once again, Blockbuster has been cancelled by Netflix.

    In this case, it is the situation comedy "Blockbuster," which has been streaming on the service, portraying a fictional version of the actual last Blockbuster store in the US, which is located in Bend, Oregon.  The first season, Variety reports, also will be its last, as the show never seemed to get traction with viewers.

    It also was a crappy show.  (I said so when I reviewed it here a few weeks ago.)  Content quality matters … and I find that Netflix has a mixed record when it comes to product quality and integrity.  I'm a huge fan of the idea that private label - whether at a retailer or on a streaming service - can serve as a powerful and compelling differentiator.  But when the quality stinks, it sends the wrong message, not the right one.

    Published on: December 22, 2022

    …will return.  Next year.

    Published on: December 22, 2022

    This is the last MNB of the year.  (Thoughts about that in my FaceTime, above.)  We're going to be off for the holiday, though, of course, the archives are open.  As always.  Enjoy!

    As usual at this time of year, I'm looking forward to hanging out at home with my family, having time to read (I have a stack of books, including an advance copy of the new Gray Man novel by Mark Greaney, "Burner," to work my way through), watching movies (can't wait for Glass Onion: A Knives Out Mystery, plus my annual screening of Love, Actually is on the agenda), cooking and eating and drinking and taking long walks with the dogs and even do some jogging (albeit a little more slowly than a year ago).

    I like the holidays, at least the parts that have less to do with shopping and more to do with connecting to the people and places that are important.  I always like to cite "Silent Night," the last novel by Robert B. Parker;  some of the last words he wrote before his untimely death pretty much capture how I feel about it:

    "I liked the myth elements of Christmas. The way in which its origins reach back far beyond Jesus, to the rituals of people unknown to us. The celebration of the winter solstice. The coming of light in the darkest time. And with it the promise of spring to come and beginning again. I liked it better than Rudolph the Red-Nosed Reindeer."

    Plus, I figure at some point in the next 10 days, the Mets are going to sign yet another premier player who will make the days seem warmer and brighter.

    I was delinquent in getting a Christmas card together this year;  here's the pic I would've used if I had been more on the ball:

    I hope you have a wonderful holiday, and safe and happy New Year … stay healthy … stay warm ... and I'll see you on Tuesday, January 3, 2022, with a fresh supply of news and hand-crafted commentary.

    Sláinte!  And, Nollaig shona dhuit!