business news in context, analysis with attitude

Published on: February 16, 2023

A beautiful day for a convertible and a drive in the country.  A funny story about a carjacking that didn't work out.  And, go figure, a business lesson.  Who could ask for anything more?

Published on: February 16, 2023

by Kevin Coupe

I spend very little time on social media, and only will venture over when I get an email notification based on somebody I happen to follow.

But this one grabbed my attention … a graphic from Scott Galloway, the entrepreneur/teacher/podcaster, who thought that is was important to keep the technology layoffs currently taking place in context:

Salesforce, he points out, has laid off 8,000 people … but it hired 30,824 people during the pandemic.  Meta has laid off 11,000, but hired 42,372 people during the pandemic.  At Google, it is 12,000 layoffs, compared to 67,880 pandemic-era hired, and at Microsoft it is 10,000 layoffs compared to 77,000 new hires.

Amazon isn't in the graphic, but on the last "Pivot" podcast, Galloway used it as a prime example of this phenomenon - it has announced 18,000 layoffs, but during the pandemic, Amazon hired 746,000 people.

The lesson is simple.  While there are a lot of people being laid off by tech companies in the past few months, it is a lot fewer people than were hired during the pandemic. 

It doesn't mean that the tech sector isn't going through a rightsizing … but it does have to be kept in perspective.

And that's an Eye-Opener.

Published on: February 16, 2023

Fascinating piece in the New York Times this morning that starts out this way:

"One of the hardest-to-find items in retail right now is a chief executive.

"A number of high-profile companies — including Gap, Diesel, and the parent of the North Face and Vans — are operating without a permanent chief executive officer. And thanks to a contraction of management training throughout the industry and the need for a rare combination of skills to navigate this tumultuous period, filling those leadership roles is perhaps more difficult than it has ever been.

"Given the rockiness that retail companies expect to face in the next few months because of slowing consumer spending, pricing challenges and a possible recession, that’s a problem."

The story notes that "the past few years have required chief executives to adapt to a retail landscape they weren’t trained for and learn a wider array of skills to help their organizations navigate the exhaustive list of disruptions brought on by the pandemic. For decades, retail executives have been expected to be expert sellers — knowing what people wanted, how much of it and how to get them to buy it. Now, top executives are also expected to understand how many resources should go to e-commerce operations compared with brick-and-mortar stores, how to troubleshoot issues in global supply chains and when to invest in emerging technologies like the metaverse."

Experts interviewed by the Times suggest that the decline in comprehensive management training programs has become a real problem:

"For decades, those who climbed the ranks at large retail organizations started in executive training programs run by department stores or big-box chains. Those programs provided both vast infrastructure and operational incentive for companies to bring in young, talented employees and allow them to burrow deep into all parts of its business. The programs would usually last a year to 18 months, and participants cycled through rotations in store operations, buying and product development … Beyond creative minds, these training programs also required participants to have strong math and communication skills. They focused on giving those who went through them the experiences needed to eventually run divisions within brick-and-mortar store operations."

And, from running divisions, these people would, and often would, end up running companies.

Published on: February 16, 2023

From Bloomberg:

"US retail sales rose in January by the most in nearly two years, signaling robust consumer demand that could bolster the Federal Reserve’s resolve to keep raising interest rates in the face of persistent inflation.

"The value of overall retail purchases increased 3% in a broad advance — the most since March 2021 — after a 1.1% drop in the prior month, Commerce Department data showed Wednesday. Excluding gasoline and autos, retail sales rose 2.6%, also the biggest increase in nearly two years. The figures aren’t adjusted for inflation.

"The total retail sales figure matched the highest estimate in a Bloomberg survey of economists, which had a median forecast of 2%.

"All 13 retail categories rose last month, led by motor vehicles, furniture and restaurants. The report showed vehicle sales climbed 5.9% in January, also the most in nearly two years. The value of sales at gasoline stations were essentially unchanged."

Bloomberg goes on to note that "the data follow a report Tuesday that showed US consumer prices rose briskly at the start of the year — including in many goods categories like clothing and household furnishings — prompting several Fed officials to suggest that interest rates may need to go even higher than expected to quash persistent inflationary pressures."

Jack Kleinhenz, chief economist at the National Retail Federation (NRF), released the following statement:  “Consumer spending clearly picked up after the holidays.  Sales were helped along by job and wage growth, slightly lower inflation and unusually warm and dry weather that preceded February’s record cold. A large cost-of-living adjustment gave Social Security beneficiaries more money to spend, and many consumers were still drawing on savings built up during the pandemic. January made up for the softer pattern of spending in December that came after early shopping pulled holiday spending forward this past fall.”

Published on: February 16, 2023

The Wall Street Journal reports that the US Department of Justice is "ramping up" work on an antitrust complaint against Apple Inc., focusing in part on "Apple’s policies governing mobile third-party software on its devices, which has been the focus of much of the criticism targeting Apple’s competitive practices. The department is also looking at whether Apple’s mobile operating system, iOS, operates in an anticompetitive way by favoring its own products over those of outside developers, the people said."

According to the story, "The investigation into whether Apple has monopoly power that it abuses began in 2019, but enforcers have escalated their efforts in recent months, with more litigators now assigned to the case and new requests for documents and consultations with companies involved."

Apple has not commented on the increased scrutiny.  However, the Journal notes that "in the past, Apple has said it doesn’t operate its business in a way that hurts developers. It has said that it embraces competition on the App Store, including when apps compete directly with Apple’s own products."

Published on: February 16, 2023

CNBC reports that Sen. Bernie Sanders (I-Vermont) hinted yesterday that Starbucks CEO Howard Schultz, who turned down an "invitation" from a US Senate labor committee to testify about unionization issues, now could face a subpoena that would require his testimony.

“One way or another, he will be there,” Sanders told a group of reporters yesterday.

Yesterday, it was reported that Schultz, who is scheduled to step down from the CEO role for the third time next month, rejected the invitation because he would no longer be in an operational role at the company, though he will remain on the board.

"Given the timing of the transition, his relinquishment of any operating role in the company going forward and what we understand to be the subject of the hearing, we believe another senior leader with ongoing responsibilities is best suited to address these matters,' Starbucks acting executive vice president and general counsel Zabrina Jenkins said in a letter to the committee.

Published on: February 16, 2023

Food & Wine reports that Chipotle is launching a new bowl-centric foodservice concept:  "Opening in March in Santa Monica, Farmesa will feature the same customizable options Chipotle is loved for. Guests will have the option of building a bowl, which includes a protein, green or grain, two sides, a choice of five sauces, and toppings. There will also be a full menu of curated options to choose from: Everything Space-Crusted Ora King Salmon, Classic Santa Maria-Style Grilled Tri-Tip Steak, and sides like Whipped Potatoes and Sweet Potato Chips."

The twist:  It is a restaurant in which you cannot eat.

Food & Wine goes on:  "The restaurant is located inside the Kitchen United Mix food hall at Santa Monica's Third Street Promenade. However, don't go there if you think you're dining in, as the restaurant is actually a ghost kitchen for takeout or delivery only. Guests will be able to order a curated or custom bowl from kiosks in the food hall, as well as through delivery and pickup apps like DoorDash and Uber Eats."

In a prepared statement, Nate Lawton, Vice President of New Ventures at Chipotle, said that "lunching Farmesa in the Kitchen United Mix food hall in Santa Monica and partnering with third-party partners for pickup or delivery will allow us to reach a large number of consumers, learn quickly, and evolve our concept and menu so that we can deliver on our goals before expanding,” he says. “We believe there’s an opportunity to serve premium, craveable food every day, and we’re eager to bring this new concept to life.” 

KC's View

I continue to be a fan of concepts like ghost kitchens and dark stores - I think that strategically positioned, with the right mix of product, they can be effective ways to get closer to the shopper and test ideas for relevance and resonance.

Published on: February 16, 2023

•  From CNBC:

"Amazon plans to cut ties with many European distributors who supply goods on its site, as it looks for ways to trim costs, the company confirmed.

"Unlike third-party merchants, who handle the selling process themselves, distributors act as a middleman between Amazon and retail brands by buying up inventory from the product manufacturer, then selling it to Amazon."

“As is common for all businesses, we regularly review our approach to product sourcing as we try to control our costs and keep prices low for customers,” Amazon said in a statement. “With this in mind, we’ve decided to focus on sourcing certain products for our European stores directly from brand owners.”

The story says that "Amazon will hold off on implementing the change until April, 'in order to help wholesalers and distributors' prepare'."

•  From TechCrunch:

"Instacart is introducing two new features that are designed to give shoppers on its platform more opportunities to earn. The company is launching 'queued batches,' which gives shoppers the option to accept another batch before completing the batch they are currently shopping. Once shoppers complete the delivery of their current batch, they can begin shopping their next batch. Instacart says the new feature gives shoppers the flexibility to shop on their own schedule and optimize their time whenever they do choose to shop.

"The company is also launching 'multi-store add-on orders,' which gives shoppers the option to add on separate customer orders from nearby retailers, in addition to the one where they’re currently shopping."

“Our goal is to create a platform that is as flexible as shoppers need it to be,” said John Adams, vice president of Shopper and Fulfillment Product at Instacart. “It’s our priority to help shoppers make the most of their time on the Instacart platform, which is why we’re introducing these new features that increase the amount of time that shoppers can spend earning.”

•  Wegmans announced that it now is accepting EBT SNAP payments for online grocery orders that are placed via its website and mobile app.

The company also said that customers who place online orders using EBT SNAP will get three free deliveries.

“Each week, thousands of Wegmans orders are placed on the Wegmans app and website, and we continue to hear from customers that it would be helpful to be able to use their SNAP benefits when placing an order,” said Erica Tickle, Wegmans vice president of e-commerce.

•  From the Financial Times:

"The EU is set to launch an antitrust case against Amazon over its proposed $1.7bn acquisition of Roomba-maker iRobot, in the latest signal that big tech groups will receive greater scrutiny over dealmaking.

"Regulators in Brussels have sent the $1tn tech giant a series of detailed questions over the proposed transaction, according to two people with direct knowledge of the decision, in a move that indicates that they are gearing up for a formal probe. While the US Federal Trade Commission is scrutinising the deal over concerns it would increase Amazon’s market power in the home electronics sector, investigators at the European Commission, the bloc’s executive arm, have privacy concerns.

"According to those with knowledge of their intentions, antitrust regulators are likely to launch a formal probe over how the Roomba operates, in particular, the autonomous vacuum cleaner’s ability to take pictures as it moves around a home."

Published on: February 16, 2023

•  Axios reports that the white gunman convicted of killing 10 Black people at a Buffalo, New York Tops supermarket, has been sentenced to life in prison.  

The 19-year-old man "in November pleaded guilty to state charges, including one count of domestic terrorism motivated by hate, and will have no chance for parole."  He still faces "27 felony charges in federal court, including multiple counts of hate crimes that resulted in death. He has pleaded not guilty" to those charges.

A moment in time captured in the Axios story:

"Simone Crawley, a granddaughter of 86-year-old victim Ruth Whitfield, said in a victim impact statement: 'Our grandmother went to buy seeds for her garden on May 14, 2022.  She may not have been able to plant those seeds, but the seeds she planted throughout her life are abundant … We find strength in knowing that her legacy will outlive you.  Even with all of the heartache you have caused, you have failed to break our family's spirit. You thought you broke us, but you awoke us."

•  From the Austin Business Journal:

"H-E-B on Feb. 15 opened its Lake Austin location, presenting a new concept to local consumers.

"The San Antonio-based retailer, which is the dominant grocery chain in the Austin area and its largest private employer, unveiled its first 'multi-level' location in the Texas capital. The 97,000-square-foot store at 2652 Lake Austin Blvd. also features a two-story porch area, underground parking and three eateries operated by the company.

"Customers enter on the ground floor, where they can find South Flo Pizza and what it's calling Lake Austin’s Coffee Spot, which features specialty coffee, breakfast tacos and pastries and baked goods.

"Up an escalator, customers will find H-E-B's True Texas BBQ restaurant as well as the main sales floor.

"The company said the store incorporates 'several environmental sustainability elements' including energy-efficient refrigeration with condensation capture for landscape irrigation, rooftop solar panels and forthcoming electric vehicle chargers."

Published on: February 16, 2023

•  Raquel Welch, who started out as a sex symbol with roles in movies like Fantastic Voyage and One Million Years B.C., but went on to have a remarkably diverse career in films (The Three Musketeers, The Last of Sheila, Legally Blonde), television (“The Legend of Walks Far Woman,” plus a ton of guest roles in drama and comedy series), and even Broadway (replacing Lauren Bacall in “Woman of the Year” and then Julie Andrews in “Victor/Victoria”), has passed away.  She was 82.

Published on: February 16, 2023

…will return.