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    Published on: February 6, 2023

    The Wall Street Journal reported on Friday that the Federal Trade Commission "is preparing a potential antitrust lawsuit against Inc. that in the coming months could challenge an array of the tech giant’s business practices as anticompetitive, according to people familiar with the matter.

    "The timing of any case remains in flux, some of the people said. The commission also could opt not to proceed, and doesn’t always bring cases even when it is making preparations to do so."

    The story suggests that the actual filing of the lawsuit could be some time away - none of the meetings between Amazon and FTC that normally would precede a suit, giving Amazon a last-ditch chance to make its case and avoid a suit, have taken place.

    The Journal offers some context:  "The commission in recent years has been examining Amazon practices including whether it favors its own products over competitors’ on its platforms and how it treats outside sellers on, according to some of the people familiar with the matter. The FTC also has been scrutinizing the company’s Amazon Prime subscription service’s bundling practices, some of the people said. Exactly which aspects of the business the FTC would target in a potential Amazon lawsuit couldn’t be learned.

    "Amazon and the FTC declined to comment. The company has said repeatedly that it competes fairly and that its services benefit both customers and sellers on its platform.

    If the commission does sue, it would mark a signature moment in the tenure of FTC Chair Lina Khan, who built her career in part by arguing in a widely read academic paper that Amazon had amassed too much market power and that antitrust law had failed to restrain it."

    In addition, the Journal writes, "The FTC also has been investigating non-antitrust issues related to Amazon, including whether the company might have used misleading practices to sign up subscribers to its Amazon Prime program, and whether it impedes the ability of consumers to cancel their subscriptions.

    "In August, Amazon complained about the FTC’s probe and accused the FTC of making excessive and unreasonable demands on founder Jeff Bezos and company executives. It asked the FTC to quash civil subpoenas issued to Mr. Bezos and Chief Executive Andy Jassy. The FTC largely rejected the request."

    KC's View:

    So much noise has been made about the FTC going after Amazon that it is hard to imagine some sort of lawsuit doesn't get filed;  my guess is that the FTC will take on Amazon on a number of fronts.

    It isn't part of the same probe, but I recommend listening to an interview conducted by Kara Swisher and Scott Galloway on their "Pivot" podcast with Jonathan Kanter, Assistant Attorney General for the Antitrust Division at the US Department of Justice - it is a fascinating conversation that focuses on the general outlines of the government's current approach to antitrust and competition.  I came away from it thinking that lawsuits against the tech giants, brought either of the FTC or DOJ, are more likely than not.

    You can find out where to listen to "Pivot" (one of my favorite podcasts) here.

    Published on: February 6, 2023

    Reuters reports that "25 consumers in states including California, Texas and Florida" have filed a private lawsuit in California that "seeks to stop Kroger Co's planned $25 billion purchase of rival Albertsons Companies Inc, a deal that state attorneys general, consumer groups and some U.S. lawmakers have questioned as harmful to competition in the grocery market."

    The suit charges that the merger "will be used to increase prices for groceries, decrease the quality of food, eliminate jobs, close stores and offer less choice for consumers … The lawsuit also said it seeks to force the disgorgement of a $4 billion dividend that Albertsons paid to shareholders after defeating a Washington state attorney general action challenging the payout. Plaintiffs claim the dividend 'gravely weakens Albertsons' ability to compete'."

    Reuters writes that "the lawsuit appears to be the first private action challenging the deal," which the companies have both defended as being necessary to allow them to compete against the likes of Walmart and Amazon.

    Neither Kroger nor Albertsons reportedly have commented on the suit.

    KC's View:

    Just the beginning, I suspect.  I don't know if a variety of lawsuits objecting to the merger from both private citizens and stakeholder organizations with skin in the game creates greater pressure on the Federal Trade Commission (FTC) to try to stop the deal - after all, political pressure only goes so far, and regulators have to stay within their reading of the law.

    But the betting odds on government intervention have to be improving.

    Published on: February 6, 2023

    The Washington Post has a story following up on the recent piece saying that Whole Foods is pushing suppliers to lower their prices, arguing that this is an appropriate move as manufacturing costs come down.

    "Many retailers are telling their vendor partners they need to make their case for keeping prices high," the Post writes.  "Otherwise, they risk discontinued orders or unfavorable placement on shelves."  And Bobby Gibbs, a partner in the retail and consumer goods division of the marketing consulting firm Oliver Wyman, tells the Post, “In the last few months, we’ve seen the shift away from trying to fight cost increases to pushing for [vendor] cost decreases."

    The rationale for the retailers is simple.  First, they're concerned that consumers are changing their behavior, either buying less or purchasing less expensive products with thinner margins, which puts pressure on the retailers' bottom lines.  Second, they're concerned that shoppers are moving to more price-centric formats - think dollar stores, or the likes of Aldi and Lidl, or Grocery Outlet;  the worry is that this opens the door for these formats to keep the customers even when inflation subsides.

    Either way, retailers worry, consumers will perceive retailers as being the problem, not manufacturers.

    In a related story,  CNBC spells out the degree of the pain:  "Although the consumer price index, an inflation gauge that measures the cost of a broad basket of goods and services, started to ease as of the latest reading, food prices were up yet again, the U.S. Department of Labor reported.

    "Over the past year, food prices overall have risen more than 10%. Egg prices, alone, soared 60%, butter is up more than 31% and lettuce jumped 25%, according to Labor Department data through December.

    "As a result, consumers are looking for any — and all — ways to save. For some, that means shopping at their local dollar store."

    And, the Post writes:

    "Economists and policymakers are closely tracking consumer spending, which makes up more than 70 percent of GDP, for any sign of diminishing demand. Even though the U.S. economy grew by 2.1 percent last year, fears of a recession still linger, especially in tech, which has seen companies announce thousands of layoffs.

    "Although inflation is moderating — it fell to 6.5 percent in December from its peak of 9.1 percent in June — weary American shoppers are changing their habits to adjust to high prices. Many are savvier and more thoughtful — hunting for discounts, clipping coupons, prioritizing kitchen staples and opting for in-house brands, which are cheaper and have improved in quality."

    KC's View:

    What strikes me when I read these stories is the degree to which, while retailers and suppliers may be going back and forth, consumers are relegated to the position where they're learning about whatever negotiations may be taking place from the media.

    To me, retailers need to be directly communicating with their shoppers to explain the pricing landscape, letting them know where the challenges and soft spots are.

    I know I use this retailer as an example a lot, but this weekend I got my regular email from Stew Leonard's "Around the Store with Stew," in which prices were one of the things being addressed.

    Some examples of what I, as a customer, was told:

    •  "Meat prices seem to be easing. Ground beef (80/20) was $3.49/lb. last year and it’s $2.99/lb. this year. Chicken wings last year were $4.99/lb. and this year they’ll be a dollar cheaper. We’re riding the market prices."

    •  "Naked salmon and our Naked Gulf shrimp are the biggest sellers here. Shrimp was $12.99/lb. last year and is $9.99/lb. this year. We left our Bay of Maine Naked Salmon at $9.99 and haven’t changed the price all year. We’re testing a new Naked salmon from Faroe Island (near Norway) starting this week at $12.99/lb. Our fish departments are hosting Real Deal lobster roll events over Super Bowl weekend, which is a hot and fresh buttered lobster roll for $14.99."

    •  "Vegetables are coming from Florida and Arizona. Lettuce is tight due to the weather and prices have jumped. Last year, lettuce was $4.99 and this week we have on sale 3/$5 or $1.99/each. Berries remain stable (be sure to try Driscoll’s Sweetest Batch variety), but strawberries are getting very tight as we get closer to Valentine’s Day. We will have long stem strawberries at a lower price than last year."

    •  "It’s been 8 months since we switched from Boar’s Head to our Stew’s Gold Reserve. Cold cut sales are up but, there are some die hard Boar’s Head customers that quit Stew’s. Why are they up? First of all, you are saving $2-3 a pound. Secondly, we are able to promote Stew’s Gold pre-sliced and shaved (a big trend and Boar’s Head wouldn’t allow us to do that)."

    •  "The cheese markets seem to be easing. Transportation costs are coming down since last year. This especially helps with our brie from France and Parmigiano Reggiano from Italy. Most of our domestic cheeses come from Wisconsin (incredible green grass and the cows produce amazing milk)."

    •  "Record high egg prices, but they are coming down. Our Stew’s Naked Cage Free brown eggs are still a great value at $3.99 a dozen. As our chicken farmers recover from their own form of Covid lock down, they’re raising new flocks of hens. You’ll see prices drop over the next few months. Milk prices have stabilized and so has butter. We had some supply issues with the production of our Stew’s Almond Milk, but we have the issues resolved."

    •  "FLOUR, WATER, YEAST, AND … These are our biggest ingredients, but packaging costs are killing us. Both for the package (we’re 99.9% recyclable in the bakery and kitchen). A package for our cookies used to cost 15 cents and now they are 24 cents per package. Multiply that by 40,000 packages a week and you’re looking at real money."

    In every way, Stew Leonard Jr. is letting me know where the relative bargains are, why some prices may remain high, and where some product innovations may be.  The bottom line is this - the retailer (Stew Leonard's) is involving the customer (me) in the situation, and the end result is that Stew's is positioning itself as an advocate for the shopper, not a sales agent for the manufacturer.  (That's really clear in the Boar’s Head comments.)  I think this is exactly the right way to approach these issues.

    Published on: February 6, 2023

    Kroger last week announced the opening of a new "spoke facility" in the Miami, Florida, area that it says "will work in conjunction with the Groveland, Florida fulfillment center.

    "All orders are picked at the products' peak freshness within the Groveland facility. Associates carefully assemble orders and place them in climate-controlled vehicles to travel to Miami, serving communities between Port St. Lucie in the north to Homestead in the South, on both the east and west sides of I-95. Once the orders arrive, they are checked and placed on refrigerated delivery trucks that deliver directly to customers' doors, ensuring cold and frozen products remain at the perfect temperature from the supplier to the customer's refrigerator."

    The announcement says that "the expansion to South Florida, including Miami represents an extension of a collaboration between Kroger and Ocado Group, a world leader in technology for grocery e-commerce. In 2018, the companies announced a collaboration to establish a delivery network that combines artificial intelligence, advanced robotics and automation in a bold new way, bringing first-of-its-kind technology to America."

    Kroger currently operates customer fulfillment centers in Monroe, OH, Groveland, FL, Forest Park, GA (Atlanta), Pleasant Prairie, WI, Dallas, TX, Romulus, MI (Detroit) and Aurora, CO with additional customer fulfillment centers slated for California, Frederick, MD, Phoenix, AZ, Cleveland, OH, Charlotte, NC, as well as South Florida and the Northeast.

    KC's View:

    I continue to believe that one of the smartest and innovative things that Kroger has done has been to use its Ocado spoke-and-wheel construct to serve markets where it does not have stores.

    Published on: February 6, 2023

    CNet has a story about the RoboBurger, described as "a red box that measures nearly 7 feet tall and 5.4 feet wide, and a giant touchscreen plays animations of what you imagine is happening as you wait … you can hear the sizzle and smell the beef as goes from a 4-ounce frozen patty to char-grilled burger."

    The RoboBurger has been installed at the Newport Centre Mall in Jersey City, New Jersey, and the CNet reporter ordered one to judge the quality.  An excerpt:

    "It takes seven minutes and $7 (plus tax) for RoboBurger to make a pretty simple hamburger. No pickles, no lettuce or tomato. Just condiments. While the burger gets cooked, the potato-bread bun is getting toasted and put inside a box. The bottom half of the bun gets a squirt of ketchup and mustard. The top half gets a big plop of gooey cheese. Within seconds of the patty finishing cooking, the meat lands on the bun, the box travels down a chute and the box's lid gets flipped closed.

    "It is not picture perfect, as cheese slides off the side when the bun is flipped over, but it tastes pretty good and has a light crunch from the char. It reminded me of a basic burger I'd make at home in a hurry, without the frills you get at a restaurant. I could see the steam coming out when I lifted the bun -- and when you bite into it, you'll feel that just-off-the-grill heat that you don't get with fast food."

    Some further details:

    "The robot here handles the cleaning, too. After every order, the machine will self-clean by spraying hot water and scraping the grill. It also can run a more thorough, 15-minute cleaning cycle that involves soapy water and sanitizer. The only time human interaction is needed is to resupply materials and clean out the wastewater. (It holds its own water -- no water line hookup needed.)

    "The RoboBurger team tells me they expect to come by to service it every two or three days -- but can come anytime they need more burgers. The machine holds 50 patties, but no one is ever handling food out in the open at the machine to restock. A facility nearby fills containers of food -- the beef blend is ordered from the famous New York meat supplier Pat LaFrieda, and the buns are Martin's Potato Rolls. Service technicians slide in the containers of food to be dispensed."

    The story also notes that the RoboBurger team is looking to expand into "areas like colleges, airports, hospitals or even office break rooms. The founders tell me they're also looking into machines that offer different options, like breakfast sandwiches or veggie burgers, and adding custom sauces to expand beyond ketchup and mustard."

    KC's View:

    It probably is inevitable that robots are going to take over some food production tasks, and maybe even do better than their human masters counterparts.  People don't combat this trend by doing the same old thing … they have to do better, have to create differential advantages, have to establish brand equity and loyalty in ways that robots either cannot do or will not do.

    Published on: February 6, 2023

    The Los Angeles Times, prompted by the fact that Walmart-owned Sam's Club is now undercutting Costco on the price of a hot dog-and-sodas combo - $1.38 vs. $1.50 - decided to do a taste test.

    Costco:  "The dog, in a soft sesame seed bun, is very good. It’s juicy, salty and has a pleasant snap — it tastes like beef, not bologna, which can be a hallmark of some inferior hot dogs (Dodger dogs, I’m looking at you). The topping selection is limited to mustard, ketchup and relish. Raw onion and sauerkraut were once available but, as with the Polish dog, have sadly fallen by the wayside. The drink selection at this location was limited to Pepsi and Diet Pepsi, Brisk iced tea, Sierra Mist and Tropicana lemonade. Pretty weak, in other words."

    Sam's Club:  "The Sam’s Club combo is similarly advertised — as a ¼-pound all-beef frank — but comes with a 30 oz. soda, compared to a 20 oz. soda at Costco. The dog, in a slightly too-dry bun and which looked just a bit smaller than Costco’s, tasted virtually identical. In the toppings category, however, Sam’s Club made its move. In addition to ketchup, mustard and relish, Sam’s Club also had — hallelujah! — raw onion and sauerkraut. It also outshined Costco in the drinks department: While Sam’s Club also had Pepsi and Diet Pepsi, this location also offered Dr Pepper and unsweetened and sweetened Lipton tea."

    The analysis goes on:

    "The vibe at Costco is better. At the ones I’ve visited, there are more tables and dedicated areas to eat. At the Sam’s Club in Torrance, we struggled to find a place to sit before finally locating a single, lone picnic table a ways off from the cafe.

    One other essential point: You must be a member ($60 per year) to order food at Costco. The cafe at Sam’s Club has no such requirement.

    "But ultimately, the toppings, essential in any emulsified meats game, were superior at Sam’s Club. Slightly dry bun notwithstanding, that and the much better drinks selection helps put Sam’s Club on top.

    "As a longtime Costco member, it almost hurts me to say it, but I’ve seen enough: The hot dog combo at Sam’s Club is a better deal, overall. Costco, if you bring back the Polish dog and sauerkraut, maybe I’ll reevaluate."

    KC's View:

    Can't imagine either can touch Walter's.

    Published on: February 6, 2023

    The New York Times writes about Lhakpa Sherpa, an employee at a West Hartford, Connecticut, Whole Foods, who has climbed Mount Everest 10 times, and plans to go back an 11th - and even sees her physical labors at the store, carrying large boxes of fruits and vegetables, as part of her training.

    You can read the piece here.

    KC's View:

    This is a fascinating story, but the piece that strikes me as most unbelievable is that this woman - who immigrated to the US from Makalu, Nepal, in 2002, was the victim of domestic violence, and yet despite numerous challenges, was just "the second Nepali woman to reach the summit of Mount Everest, and the first to make it back to base camp safely" - isn't being actively used by Whole Foods as an ambassador for the brand.

    Even when she is not working in the store because she's back on Everest, Lhakpa Sherpa ought to be on the payroll, promoted as the symbol of a uniquely American brand (Amazon, which owns Whole Foods, ought to get in on this action, too) and a positive reflection of the great American dream.  Talk about American exceptionalism - that's what she represents, and that ought to be the centerpiece of an Amazon/Whole Foods promotional campaign.  She ought to be on stage at company and industry meetings, and doing the podcast circuit.

    This is a freaking gift - and yet, Amazon/Whole Foods aren't taking advantage of it.  In my view, that's marketing malpractice.

    Published on: February 6, 2023

    •  From Axios:

    "Customers and investors alike are sticking a fork in fake meat … Plant-based meat was sold as a healthier, sustainable high-protein substitute for real meat. But after years of hype, the tide is turning against the first generation of plant-based protein makers."

    The question is whether inflation has limited the category's ability to grow, or whether there was a natural ceiling on the growth prospects for fake meat.

    Either way, "sales are collapsing … Impossible Foods plans to lay off roughly 20% of its workforce amid falling sales … Beyond Meat also cut roughly 20% of its workers, and lost several executives, amid its own stock slump."

    •  From the Washington Post:

    "The Biden administration on Friday announced more stringent nutrition standards for school meals, reviving efforts to improve the health of millions of public school students in the face of a staggering rise in childhood obesity and other diet-related diseases.

    "The new rules, which will be rolled out gradually over the next few years, will limit added sugars, including in flavored milks. Previously, there was no federal standard for how much sugar could be included in school meals. The rules will also further reduce the allowable amounts of sodium, and emphasize whole grains.

    "The new guidelines are part of a broader campaign by the U.S. Agriculture Department to address the persistent and worsening problem of childhood obesity. The agency is responsible for administering nutritional programs that in recent years have fed around 30 million students at nearly 100,000 schools nationally."

    According to the story, "The new guidelines will be rolled out gradually. In the fall of 2024, school offerings will have to include primarily whole-grain foods, with only occasional products containing less healthy refined grains such as those used in white pasta and white breads.  In the fall of 2025, there will be a limit imposed on high-sugar products like sweetened yogurts and cereals, a reduction of weekly sodium limits by 10 percent for school breakfasts and lunches, and limits on added sugars for flavored milks such as chocolate milk. Further reductions in added sugar and sodium are slated for following years."

    Published on: February 6, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  Walmart US announced that it has named Judy Werthauser, most recently the chief experience officer at Five Below, to be its new chief people officer.

    Published on: February 6, 2023

    Last week we had a story about Carmen Quiroga, who immigrated to the US from Mexico 17 years ago, and who was living the American dream, opening up a little breakfast spot in Coventry, Connecticut.  But it has turned into a bit of a nightmare, since she chose for her business a name that seemed in tune with its value proposition, but that, unbeknownst to her, held political connotations:  Woke.

    As might be expected, there are those in Coventry who want nothing to do with the place because of what the name represents, and those who think those people ought to give Carmen Quiroga a break.  My point was simple - unfortunately, we live in a polarized world in which that kind of comity may not be possible.  (Would the folks sympathetic to Carmen go to a bar and grill called MAGA?)

    This story and my commentary solicited a lot of email.

    One MNB reader wrote:

    Listened to your video on “Woke” restaurant issue. Poor lady has been in business 17 years and the cost is prohibitive for her to change the name… signage, menus, etc. Out of curiosity, I looked up MAGA and discovered that a New Orleans restaurant has that name and is rated the #1 New Orleans restaurant by Trip Advisor! Let both of these small businesses serve the public and provide for their families!

    From another reader:

    I read this story, I thought it appropriate that the end story (at least so far) is that they have been serving SRO (standing room only) crowds since the day they opened...people are showing their support with their breakfast dollars.

    MNB reader Ron Beltramo wrote:

    Kevin…As always, I try to review your Face Time message each day I see it.  Your message about “Unfortunate Crosscurrents” with Woke Breakfast & Coffee Company caught my interest.

    If, as you say Carmen & Carlos (founders of Woke) were unaware of the potential controversy naming their restaurant “Woke”, it appears that they are very naïve, and looking at the website, may have gotten some bad advice.  Also see that they are offering WOKE MERCH (hats, tote bags and mugs – coming soon) on the website – which notes “Do you have merch? We want support from afar”.  “We are so grateful for all the support we have received from around the world.  We are currently working on creating merch and will notify you when it is ready”.  Note…I couldn’t help myself and had to sign up to be notified to see what the “merch” looks like.

    I tend to give the founders of WOKE the benefit of the doubt, but wonder if a name change might be a good idea to avoid polarizing their potential customer base.  Perhaps start a “Go Fund Me” page to pay for the cost of name  change and redo of the “merch”.  Perhaps just change the name to “YOKE” (swap the W with a Y).

    And from another reader:

    Kevin, I must say your FaceTime comments this morning are a “bridge too far”. A breakfast place called “Woke” is not only appropriate but accurate. Something that is core to branding i.e. say what you are/do.

    That this has caused any uproar is a sad commentary on the current direction of our country, and is very sad. Just have to shake my head.

    And another:

    Kevin, I could not agree with you more on this issue. I feel bad for this owner who is simply trying to live the American dream. As a conservative, my view on the work woke are obvious, but it would not stop me from going to this restaurant if the food and service were good.

    As another example, I am a music buff and love a wide variety of music. If I were only to buy music from those artists that align with my political views, it would be much more narrow than it is.

    Let’s give this woman a break and give her place a try.

    And from another MNB reader:

    I always enjoy your Face Time...  Your words today, I wish we were a better Country, is interesting because I think we are the greatest Country in the Word – could we be better?  Yes.  That’s my opinion.  And everyone is entitled to their own opinion.  That’s part of why this is such a great Country.  You do you and I’ll do me.  As for Woke, I believe she meant no harm in naming her restaurant… but everyone has a choice.  As consumers we can attend a restaurant or not attend a restaurant based on its name, location, employees, cuisine, price, flavor, etc.  And the owner of a restaurant has the same choices – they can choose their name, location, employees, cuisine, price, flavor, etc.  If I were in Coventry, CT, I would probably try Woke, but others may not.  And that is okay.  You do you and I’ll do me.

    MNB reader Michael Zagrodny wrote:

    Great post, appreciate your prospective on this very difficult subject.

    Perhaps some simple rebranding around a tag line to why Carmen chose this name for her restaurant.  I'm there are ways that would have very little cost or even free through the proper social media platform. 

    On another subject, from another MNB reader:

    Your comment on Amazon, 'Seems to me that Amazon has to get back to its core mission of being resolutely focused on serving customer needs and empowering aspirations.', really struck me. Living your mission as an organization is what grounds it through business cycles and evolution of the business. Walmart has weathered the ups and downs by living their mission. Staying focused and true in both good and bad times is what makes that company successful.

    Finally…the other day I did a FaceTime video about the significant number of people who would skip births, deaths and weddings to attend a Super Bowl game in which their favorite team was playing.  I was chagrined.  When an MNB reader challenged me on that, suggesting that I'd skip such events to watch a World Series game seven in which the New York Mets were playing, I responded:

    In the unlikely event that the New York Mets were in the World Series and one of their games conflicted with a birth, wedding or funeral of a family member or close friend, I would take my cue from Sandy Koufax, who in 1965 decided not to pitch the first game of the World Series against the Minnesota Twins because it fell on the Jewish holiday Yom Kippur.

    It is all about priorities.  I might not be happy about missing the game, but I hope I'd do the right thing.

    Which prompted another MNB reader to make the following observation about Koufax's decision:

    Perhaps the most heinous display of narcissism in the annals of professional sports.  It was “all about me - forget about my teammates, Dodger fans, and the people who are paying me.”

    Wow.  I don't even know how to respond to that, except to say that you and I appear to have different priorities and values.