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    Published on: January 6, 2023

    I'm excited by the opportunity that the National Grocers Association has given me to curate/program the technology innovation track at its annual show in Las Vegas next month.  Today, I offer a small preview of what we'll be doing there (including one session that will have you wondering if pigs are flying).  I hope you'll join us.

    If you want more information about the NGA Show, click here.

    Published on: January 6, 2023

    Columnist Martin Peers in The Information has a piece that is very tough on Amazon, suggesting that its current problems - low stock price, mounting layoffs among them - are largely self-inflicted.

    An excerpt:

    "Just three years ago, Amazon was flush, thanks to the pandemic boom in online shopping. In 2020, for instance, the company generated $66 billion in cash from its operations, up 71% over 2019. That strengthened its balance sheet enormously: Amazon finished 2020 with $84 billion in cash, offset by nearly $32 billion in debt. Managed prudently, that net cash position of $52 billion should have positioned it to comfortably ride out any downturn. But Jeff Bezos, then the company’s CEO, never got anywhere by being cautious. So he embarked on an expansion that used much of Amazon’s cash reserves, weakening the company just as the e-commerce market tanked.

    "By last Sept. 30, Amazon’s balance sheet showed it had more debt than cash for the first time since 2004, according to S&P Global Market Intelligence. That means $52 billion evaporated in just seven quarters! The major reason is that cash produced from operations shrank to just under $40 billion in the 12 months to September, while spending on capital expenditures and acquisitions soared.

    "Amazon last year took steps to cut back: It slowed its warehouse expansion, while it held off on opening some newly built Amazon Fresh stores. But in hindsight, perhaps Andy Jassy, who succeeded Bezos as CEO in 2021, should have backed out of the MGM acquisition, which cost $8.6 billion in cash and assumption of debt last March, as well as other deals struck since then but not completed, such as those of Roomba’s maker, iRobot, and One Medical. Such a retreat would not only save Amazon money but also reduce the pressure the company faces from antitrust regulators."

    Peers concludes that Amazon "is not in good shape if you set aside Amazon Web Services. Excluding the results from the cloud business, it lost $8.1 billion in the first nine months of 2022. And that’s despite the fact that Amazon generated $26 billion in high-margin ad revenue in the same period. Imagine how much money Amazon would be losing if it weren’t for that … After nearly 30 years in operation, Amazon should be in better shape. It’s time for the wild spending to stop."

    KC's View:

    Hard to argue with Peers' assessment.  (He always is incisive … his columns are favorites of mine, and alone make The Information indispensable.)

    In reading it, I thought about the observation that I've made here ad nauseam - that while Walmart (and, in fact, most retailers) is in the business of selling more stuff, Amazon always has wanted to be inextricably intertwined in every element of our lives.  I've always suggested that neither approach was right or wrong, just different … and Peers' analysis suggests to me that at the very least, Amazon's approach was a) more capital intensive, and b) more risky during a downturn.

    It has been my observation that Amazon has been right-sizing rather than retreating, and that I wouldn't panic, though I also think that while Jassy is doing the tough work of making cuts, he has not been as inspirational as I think he needs to be.  The CEO message should be, "This is addition by subtraction.  In fact, if we do this right, it will be multiplication by subtraction."  I'm not sure that message is coming across, which is why I think we're going to see Jeff Bezos returning as CEO at some point.

    Let's be clear:  Amazon has a vision of the world and its role in it.  It has seen tough times before, and not just survived, but thrived.  The stakes are bigger now, and the aircraft carrier that is Amazon's business harder to move.  But it is hard for me to accept the notion that, in tough times, Amazon should abandon its core business propositions and become Walmart.

    Tom Furphy has made the point numerous times in our Innovation Conversations - Amazon has to continue to grow, find new areas into which it can expand, and innovate.  The entire culture and infrastructure depends on it.

    But it may be that we're seeing the limits of that approach.  (No doubt we'll talk about that in next week's Innovation Conversation.)  

    Published on: January 6, 2023

    Boxed, which gained attention when it launched as a e-commerce site offering club-style SKUs without requiring a membership in the style of Costco or Sam's Club, yesterday said it "has launched a process to explore strategic alternatives, including, among other alternatives, a possible sale of the Company. In addition, the Company is, in parallel, actively exploring capital raising initiatives, and is targeting the announcement of additional funding within the next 45 days."

    The company said that it "does not intend to make further announcements about the strategic alternatives or capital raising processes unless and until the Board has approved a specific transaction or otherwise determines that further disclosure is appropriate or necessary."

    Scott Moses of Solomon Partners is serving as a financial advisor to Boxed's management as the company explores its options.

    Published on: January 6, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  In Chicago, WGN reports that three people were shot in a Walmart parking lot on the city's South Side:

    "According to police, the shooting was reported around 7:20 p.m. in the 10900 block of South Doty Avenue when a dark colored sedan pulled up and occupants inside opened fire, hitting three people who were loading groceries into a vehicle after shopping at a retail store.  Police said one victim was a 25-year-old male who was taken to Advocate Christ Medical Center in critical condition after being shot in the chest and back. Two other victims, a 27-year-old male and a 19-year-old female, were also shot and taken to local hospitals in good condition."

    Walmart's ubiquity around the US means that it is on the front lines of the issue raised in our Tuesday story, "Some Retailers Caught Between A Gun & A Hard Place," which described the disconnect that exists in specific markets between retailers' desire to keep their customers safe - and feeling safe - and the realities of permissive gun laws that sometimes threaten shoppers' security.

    Published on: January 6, 2023

    •  Fast Company reports that DoorDash rolled out its new package pickup system this week, "allowing consumers to get up to five prepaid packages picked up and dropped off to major shippers for a flat fee in one fell swoop … The feature will cost a flat fee of $5 for up to five total packages. For people who subscribe to DashPass, the company’s subscription service, the price is reduced to $3 per service."

    According to the story, "Customers can select the 'Packages' hub on top of the DoorDash homepage and select between UPS, USPS, and FedEx. Users then attach a prepaid shipping label to their packages, or can send a shipping QR code directly to their 'Dashers' in the DoorDash app, so no printer is required. After requesting a pickup, a gig worker will be able to accept the job and grab the package. Once it’s at the store, the Dasher will send a confirmation photo."


    •  CNBC reports that "Stitch Fix founder Katrina Lake on Thursday told employees the company will be cutting 20% of its salaried workforce and she will reassume her post as CEO as the fledgling apparel company continues to grapple with low sales, a dwindling customer base and a reduced market cap.  The brand’s current CEO, Elizabeth Spaulding, who joined the company as president in 2020 and took over as CEO in August 2021, will be stepping down effective immediately, Lake said."

    The story notes that "Stitch Fix, which sells curated boxes of clothing on a subscription basis, won big during the Covid pandemic after stuck-at-home consumers, newly flush with cash, took advantage of the service to update their wardrobes. But as shoppers ventured back out into the world, sales dropped and new strategies led by Spaulding failed."  The company laid off 15 percent of its then-salaried workforce last June.

    Published on: January 6, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  Thrillist reports that when Wegmans opens its first store in the New York City borough of Manhattan laster this year, it will include a 2,637-square-foot high-end seafood restaurant.

    According to the story, "Serving both lunch and dinner, the restaurant will delight guests with sushi and sashimi as well as seafood platters and raw oysters. A variety of appetizers and side dishes will also be available, including dim sum, poke bowls, and many others. Those looking for a fancy meal will also be able to sit at the sushi bar, which accommodates up to 10 guests, and enjoy a wonderful omakase experience. There will also be an oyster bar, which sits up to 8 people."

    I'm already hungry, just reading that description.  The new Wegmans is in one of my favorite parts of New York City - Greenwich Village's Astor Place neighborhood, in what used to be a Kmart store, just a couple of blocks away from McSorley's.  Road trip!


    •  SpartanNash announced that it has acquired Great Lakes Foods, an independent grocery wholesaler, including its 300,000-square-foot distribution center in Menominee, Michigan, which it said serves approximately 100 independent grocery customers across the Midwest and employs 125 Associates. SpartanNash said it will be will be "investing in capital and IT updates to the facility and expanding service offerings to customers."

    Terms of the deal were not disclosed.


    •  Specialty food retailer Plum Market said that it will open its first South Florida store, a 24,000 sq. ft. unit in Ventura, next Friday, January 13.

    In the announcement, Plum Market said that it "has a strong commitment to the local communities they serve. Plum Market makes a tremendous effort to support local growers, artisans, and makers and displays signage that highlights how many miles each local product has traveled to reach the store. This not only helps to support local brands but also ensures that the freshest and best quality products are offered, including seasonal produce, artisan breads and pastries, and dock-fresh seafood."

    Plum operates "more than 25 multiple format locations throughout Michigan, Indiana, Ohio, Texas and Florida with new full-service locations announced in California and Washington, DC."


    •  The National Grocers Association Foundation (NGAF) announced that it "has been awarded a $5 million grant by the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) to establish a technical assistance center that will guide grocers through the process of implementing online Supplemental Nutrition Assistance Program (SNAP) grocery purchasing … These funds will facilitate creation of the SNAP EBT Modernization Technical Assistance Center (SEMTAC), which will guide grocers through the process of establishing an online purchasing program, including required technology, as well as support for the Mobile Payments Pilot. SEMTAC will teach retailers the federal requirements for SNAP EBT modernization, including the online purchasing and mobile payment programs."

    “Independent community grocers have been actively pursuing expansion of their online purchasing platforms, including online SNAP and mobile payment capabilities, to meet the ever-growing consumer demand for online shopping, but obstacles and a lack of resources have hindered the ability of many smaller retailers to pursue innovative solutions, resulting in reduced access for customers to needed essential food products and services,” said Chelsea Matzen, NGAF director. “This grant will pave the way for more smaller grocery operators to offer SNAP online purchasing, making them more competitive in their respective market areas and better able to provide service to food-insecure Americans.”


    •  The Wall Street Journal reports that "Bed Bath & Beyond Inc. is preparing to file for bankruptcy within weeks after the home-goods retailer came up short on sales during the critical holiday season, according to people with knowledge of the matter. 

    "The retailer is in the early stages of planning for a chapter 11 bankruptcy filing and the discussions could extend into February, these people said. Bed Bath & Beyond warned earlier Thursday that it might file for bankruptcy protection and that it has substantial doubt it can stay in business after enduring another quarter of deep losses and slumping sales."

    To me, Bed Bath & Beyond is a textbook example when a retailer doesn't really stand for anything distinctive other than discounts - for years, it seemed, its customers wouldn't patronize the retailer if they didn't have one of those blue-and-white discount cards that would show up in the mail.  That put the company in a tenuous position made even more difficult because very little that it sold was differentiated or unique.  They can reorganize until the cows come home, but it probably won't matter - this is a retail entity that is way past its expiration date.


    •  The Puget Sound Business Journal reports that Bloomingdale's is coming to Seattle, opening the third of its small-format Bloomie's stores in the University Village shopping center.  The format offered a more curated clothing selection than the retailer's traditional stores.

    According to the story, "Bloomingdale's opened its first smaller-store Bloomie’s in 2021 in Fairfax, Virginia followed by a second location in Skokie, Illinois. The brand, owned by Macy's Inc., operates 34 stores and 20 outlets nationwide."

    Published on: January 6, 2023

    •  KeHE Distributors announced that Deb Conklin, a company board member who most recently was president-CEO of the Reddy Ice company, has been named KeHE’s President & CEO.  The company said it was part of an ongoing succession process and that Brandon Barnholt, who has been KeHE's president-CEO for 15 years, will move into the Executive Chairman role.

    Published on: January 6, 2023

    We referenced a New York Times piece the other day that spoke about the disconnect that exists in specific markets between retailers' desire to keep their customers safe - and feeling safe - and the realities of permissive gun laws that sometimes threaten shoppers' security.

    MNB reader Kelly Wiseman responded:

    Regarding guns, even in open-carry counties and states, the property owner still decides. So, in order to reduce the threat of gun violence, retailers should see it as an obligation to post "No Firearms Allowed" signs on their doors. Every time I've had to confront a second amendment activist trying to make a point by walking into one of our stores with a gun, the argument that private property rights supersede second amendment rights always wins. After all, we've had private property far longer than we've had guns. Retailers need to just find the courage to take a stand.

    Agreed.  If I were a retailer, I'd do exactly what you are suggesting … but I'm not persuaded that every retailer feels that way.  In part, that's because a sizable percentage of customers would find it problematic.


    On the subject of the Federal Trade Commission (FTC) taking aim at non-compete clauses, MNB reader Bob Thomas wrote:

    I’ve always thought that non-compete clauses were stupid.  If employees is fired why would a company NOT want them to work for the competition?  And say an employee gets an offer of a similar job with a 30% increase but cannot take it because of the NCC.  How will the work product be then?

    The FTC is saying that "30 million people, or one in five workers, would be impacted" by the banning of non-compete clauses, "and the rule could increase wages by nearly $300 billion a year."  That's a lot of economic power being unleashed.


    We had a piece yesterday about all the talent now available because of layoffs in the tech sector, which prompted one MNB reader to write:

    Maybe SouthWest Airlines should hire some of the tech being laid off. It seems they need an infusion of tech talent and updates to move forward.


    And, on the subject of Amazon's decision to lay off 18,000 people, not just the 10,000 previously announced, one MNB reader wrote:

    This is the tip of the iceberg! The push by groups to increase the minimum wage for all level jobs past the point that businesses can afford. It all leads back to costs that can’t be sustained. Plus the fact, AI machines/ robots/ etc…are showing up everyday and everywhere not only to save money but reduce the workforce. There are jobs now that can’t be filled that will eventually go away. We are creating our own problems.

    I'm not sure how many of the Amazon folks being laid off are working for minimum wage…


    And, this email from MNB reader Donna Brockway:

    Enjoyed seeing the clip of the song about United breaking the band's guitar and the resulting video.  It reminds me of the powerpoint presentation done in 2001 about bad service at the Doubletree Hotel in Houston.  The group of people that arrived at the hotel late with guaranteed reservations created this hilarious Powerpoint, including charts and graphs, that went viral and is still on the internet today - just google "yours is a very bad hotel".  This is how long these stories last when companies try to ignore complaints!  

    Donna is absolutely right … and you can access the Powerpoint here.

    Published on: January 6, 2023

    I was an enormous fan of the original Knives Out, and am pleased to be able to say that the sequel - Glass Onion: A Knives Out Mystery - is completely up to the task of satisfying those of us who love a good murder mystery written, directed and performed with style and panache.

    In some ways, Glass Onion is very different from the original;  Knives Out was a classic whodunit, set in a New England mansion, with a Southern detective, Benoit Blanc (Daniel Craig, having a ball), charged with figuring out which family member may have killed a rich, famous mystery novelist.  Glass Onion, on the other hand, is a sort of whodunit/whydunit/howdunit, set on a Green island where a group of old friends has been brought together by a tech billionaire to play a murder game.  Naturally, things go awry - Blanc is there for seemingly unexplainable reasons, and as the plot goes forward and backward (and occasionally sideways), we get different perspectives on ther characters' past and present, which leads to varying revelations about motives and opportunity.

    Craig, once again, is stylish as Blanc, and the rest of cast - including Edward Norton, Janelle Monáe, Kathryn Hahn, Kate Hudson, Dave Bautista and Leslie Odom Jr. - matches him with enthusiasm and highly specific characterizations.  The writing and directing, by Rian Johnson, are both diverting and satisfying, offering a fabulously effective piece of entertainment.

    Two additional pieces of good news:  Glass Onion is available on Netflix.  And, Johnson and Craig have signed a deal that will bring at least one more Benoit Blanc mystery to the streaming service in the not too distant future.

    Enjoy.

    I loved the first season of "Tom Clancy's Jack Ryan" on Amazon Prime Video, because I thought it did a terrific job of portraying Ryan as an everyman CIA analyst thrust reluctantly into field work by geopolitical circumstances.  I was less enthralled by the second season, because it seemed to leap frog character development to turn Ryan into a James Bondian action hero.

    Season three, out now, seems to split the difference a little more effectively.  Ryan - played by John Krasinski with elements of the guys who previously played the character (Alec Baldwin, Harrison Ford, Ben Affleck, Chris Pine) - is an effective field agent who still relies on his ability to analyze obscure information and reach critical conclusions.  Wendell Pierce brings gravitas and a bit of insolence to the role of James Greer, Ryan's boss (played in the movies by James Earl Jones), and Michael Kelly bring some world weary comic relief to the role of as former CIA agent who ends up helping Ryan.

    What's really interesting is the plot.  The movie was written and shot before Russia invaded Ukraine, and yet there are many plot points that echo the sad reality we've seen unfold there.

    Spend some time with "Jack Ryan."  I think you'll find it a satisfying streaming experience.

    I found a terrific Italian wine during the holidays - the 2020 Nespolino, a blend of Sangiovese and Merlot, which is easy-drinking and smooth, and goes with pretty much anything (though I particularly liked it with my lasagne).


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

    Sláinte!!