business news in context, analysis with attitude

Published on: February 24, 2023

I'd like to introduce you to Billy and Beethoven, two temporary additions to the Coupe household - we're socializing them for a wonderful organization called Guiding Eyes for the Blind.  The act of socializing these seven-week-old puppies, even just for a few days, is of critical importance as they begin the process of training for their incredibly meaningful lives.

Published on: February 24, 2023

by Kevin Coupe

I continue to be simultaneously amused and appalled by the relentless beatification by Starbucks of its once and current CEO Howard Schultz, who this week unveiled a new product line - various coffee drinks infused with olive oil - that he suggested was the result of an epiphany that he had while traveling in Sicily.

Now, let's put aside - for a moment - the fact that in the initial press release, Schultz's name was mentioned almost as much as Oleato, the name of the new line.

Let's put aside the fact that this is being positioned Schultz's gift to Starbucks as he steps down yet again from the CEO job.  He's being replaced in just a few weeks, but the incoming CEO's name is hardly anywhere to be found in the Oleato materials. (What the hell is his name again?)  As I said here before, Schultz could've allowed the new fellow (what the hell is his name again?) to announce the new line, gain some street cred, and start out strong … but that would've required a level of grace and lack of ego apparently foreign to Howard Schultz.

The Eye-Opener here comes from yesterday's Wall Street Journal about Oleato, which starts out by describing the epiphany:

While vacationing with his family in Sicily last summer, Mr. Schultz said, he was introduced through a mutual friend to Tommaso Asaro, the fourth-generation owner of Sicily-based olive-oil producer Partanna Holdings. Mr. Asaro told Mr. Schultz that Mediterranean countries have a tradition of drinking olive oil for health, and Mr. Schultz started doing the same, and experimenting with adding it to coffee grounds before brewing.

Mr. Schultz said he told Starbucks Chief Marketing Officer Brady Brewer that he believed infusing coffee with olive oil could be transformative for Starbucks. 

Okay.  Nothing wrong with a little myth-making.  I like a good narrative as much as the next person.  But here's the money shot, in which Schultz actually disparages his CMO:

"'There was some skepticism, naturally,” Mr. Schultz said."

Really?  What kind of leader says that about any employee, much less someone with whom he shares the c-suite?

There was "natural" skepticism?  Why?  Because how could anyone expect to keep up with the insights and genius of Howard Schultz?

That may be exactly what he's thinking, because Schultz also has made the point that while remaining on the board of directors, he expects to continue overseeing the Oleato project.  Could this be because he believes that and Schultz-less Starbucks actually lacks the vision, imagination, and operational bench strength necessary to make this rollout work?

Because that's sure as hell what it sounds like.

There's nothing wrong with being an active, engaged board member - but if you do it right, you are supporting the brand and the people in a way that doesn't make it about you.  You are trying to bring out the best in other people, not demonstrate that you are the best of all people.

I hate to say it - because I truly believe that Howard Schultz has been responsible not only for the development and evolution of an iconic American brand, but for the essential creation of a big-growth industry - but every time he opens his mouth these days, Schultz makes himself look smaller, the personification of an id-driven executive who can't let go, can't let anyone else get credit, and can't accept that in the end, his name may not be as important as that of the brand he has led for all these years.

It is an Eye-Opening example of things CEOs should not do, should not say, should not think, and should not feel.

Published on: February 24, 2023

Two stories this morning that suggest that the US economy continues to be doing much better than some folks would like it to:

From the Wall Street Journal:

"The U.S. economy appears to be exhibiting strength early this year, after posting solid, but slightly weaker, growth at the end of 2022.

"Gross domestic product, a broad measure of the goods and services produced across the U.S., rose at a 2.7% annual rate in the fourth quarter, adjusted for seasonality and inflation, the Commerce Department said Thursday. That was down from a previous estimate of 2.9% growth, and slower than the third quarter’s 3.2% growth.

"The downward revision primarily reflected slower consumer spending late last year than previously estimated.

"Entering this year, forecasters had projected the economy to cool, but recent data shows a strong labor market and improved spending."

And, from the Associated Press:

"The number of Americans filing for jobless aid fell last week as the labor market remains resilient in the face of the Federal Reserve’s interest rate increases meant to cool the economy.

"Applications for unemployment benefits in the United States for the week ending Feb. 18 fell by 3,000 last week to 192,000, from 195,000 the previous week, the Labor Department said Thursday. It’s the sixth straight week claims were under 200,000.

"The four-week moving average of claims, which evens out some of the weekly volatility, inched up by 1,500 to 191,250. It’s the fifth straight week that figure has been below 200,000.

"Applications for unemployment benefits are considered a proxy for the number layoffs in the United States."

Published on: February 24, 2023

A new survey suggests that supermarket industry see increasing private label sales as being a high priority for 2023.  Key findings include:

•  "83% of grocery executives said that private label should be a C-level priority," but "only 38% of grocery executives reported satisfaction with their current private label performance."

•  "91% claimed to have a private label strategy and roadmap."

•  "85% intend to increase the quantity of digital assets for private label in 2023, while 83% will expand their private brand digital marketing campaigns."

However, the survey also makes clear that if grocers are dissatisfied with how their private brands perform, they may only have themselves to blame:

•  "97% of grocers deploy emails and 95% use banner ads for name brand marketing, but only 32% and 16%, respectively, do the same for private brands."

•  "At 42%, digital circulars are the most widely used tactic for promoting private brands, but this, too ranks well behind deployment for name brands (86%)."

The survey was conducted by Grocery Doppio, which is described as "a free, independent source of grocery insights and data operated by next-generation industry insights firm Incisiv and digital commerce and fulfillment solutions provider, Wynshop."

Published on: February 24, 2023

The New York Times reports that the federal judge who last week "issued an order blocking Starbucks from firing any U.S. worker because they engaged in collective action, like seeking to form a union," now has modified that order, saying he made unspecified "errors" in his ruling.

Yesterday, the Times writes, Judge Mark A. Goldsmith said that his ruling now would only apply "to a store in Michigan where a worker said she had been fired for her involvement in union organizing. The injunction’s national scope had vanished.

"In a revised opinion accompanying Thursday’s order, Judge Goldsmith said that the key criterion for determining whether to impose a nationwide injunction was whether the company had pursued a general policy of violating labor law. He said that while the National Labor Relations Board had filed about 24 complaints involving roughly 50 workers fired by Starbucks across the country, many of those cases were in their early stages.

"As a result, Judge Goldsmith concluded, the evidence supported an injunction only at a store in Ann Arbor, Mich., where a labor board judge found in October that a worker had illegally been fired."

Starbucks responded to the revised order by saying, “We are pleased that the court rejected the National Labor Relations Board’s overreaching and inappropriate request for a nationwide cease-and-desist order as we pursue a full legal review of the merits of the case.”

The union, Workers United, said it would “continue to fight for a national remedy to address Starbucks’ unprecedented union-busting campaign and hold the company accountable for their actions.”

Published on: February 24, 2023

The Wall Street Journal reports this morning about the battle that farmers are fighting to contain the bird flu that has decimated much of the poultry industry.

An excerpt:

"Since February of last year, the avian flu has led to the death of around 58 million farm-raised birds in the U.S., the deadliest outbreak on record. It sent the price of turkey to record highs for Thanksgiving. Weeks later, egg prices hit their own high.

"Avian flu outbreaks have long been a risk in the chicken, turkey and egg businesses. In the past, though, the outbreaks subsided after a few months, easing price spikes. Some government officials, scientists and poultry industry executives now say the avian flu is likely to stick around, potentially keeping egg and turkey prices elevated for the foreseeable future.

"The loss of poultry flocks to bird flu coincided with a broad rise in the cost of labor, energy and livestock feed, squeezing consumers with higher grocery store prices.

"More than 43 million egg-laying hens have died in the past year, making up about three-quarters of the total number of poultry lost. U.S. egg inventories were 29% lower in the final week of December than at the start of 2022, according to the Agriculture Department. The shortfall sent wholesale prices of Midwest large eggs to a record $5.46 a dozen in December, according to research firm Urner Barry."

The bottom line:  "Bird-flu cases in commercial flocks slowed in January, with fewer than 500,000 bird deaths in January compared with more than 5 million in December, USDA data show. But agency officials have said the virus will likely resurge in spring, when wild birds migrate across the U.S."

You can read the entire story here.

Published on: February 24, 2023

Bloomberg reports that "Japan’s ailing vending machine industry is looking to indulgences like caviar and fresh sashimi to stymie its decades-long decline.

"Aided by the pandemic push for minimizing contact with others, food-dispensing machines have emerged as a rare spark of growth for the sector. The offerings are far more exclusive than packaged snacks like chips and chocolate, though: the high-tech machines, which stand about 6-feet tall, allow customers to buy frozen and chilled versions of their favorite dishes from Michelin Guide-listed soup noodles to sashimi, wagyu steak and even caviar."

Published on: February 24, 2023

•  DoorDash and Aldi this week announced "a new partnership to bring on-demand grocery delivery to nearly all ALDI locations across 38 states.

“By partnering with DoorDash, we can conveniently bring our award-winning, fresh and affordable groceries to even more of our customers’ doors with the click of a button,” said Scott Patton, Vice President of National Buying at Aldi, in a prepared statement.  “Whether shopping for a weekly grocery haul or in need of a few extra ingredients for tonight’s dinner, our customers now have another way to shop ALDI for all their grocery needs.”

Published on: February 24, 2023

Got the following email responding to the story about the Whole Foods employee who didn't do anything about shoplifters because the perpetrators seemed hungry and the company can afford it:

OMG……..reading that story just made me drop my jaw to the floor.

I spent twenty-four years of my life chasing people down without hesitation whenever I or my employees saw someone shoplifting, many times without consideration for my own personal safety.   I can’t imagine that I could be working with a staff of people today who would think that it was okay for someone to leave my store without paying for their order because ‘it was a donation to someone who really needs it.’   Four of those twenty-four years were spent working in a store in a neighborhood that was far from affluent…..but we focused every day on maintaining the basics of being clean, well-stocked, friendly and intolerant of shoplifting.    We were fortunate to also have good cooperation with the local law enforcement authorities.  

Two thoughts on this immediately come to mind:  

1)  This situation requires much more education of employees on the part of the employer.  From the top down, the employer needs to be talking about the slim profit margins in the grocery industry (even if you work for a multibillion dollar business….) and the effects of shrink on that profit margin, whether it’s the result of out-of-date products that are donated to charity, poorly handled product damaged at store level, or items that are shoplifted from the store.    Most of all, employees need to understand that the biggest long-term effect of shrink is unemployment----because no retailer is going to continue operating a location at a loss for very long.   That leads me to…….  

2)  I wonder where this store is located as it immediately brought to mind the discussions being held in cities like Chicago with ‘food deserts’ where retailers won’t maintain locations in impoverished areas because they can’t overcome the amount of shrink they incur and the city is trying to hold retailers’ feet to the fire about having made promises to serve those customers.  If these are the attitudes being held by both the store staff and its customers, it’s no wonder that food stores can’t/won’t stay in business in those neighborhoods.  

There are obviously no easy answers in this discussion, but a whole lot of communication with employees, community leaders, and law enforcement authorities would be a good place to start.  

I also got some pushback on my commentary about this week's observation of National Supermarkets Day.  I wrote:

Because I am by nature a wisenheimer, I'd like to mark the occasion by suggesting that this is way too little.

If retailers don't think about their employees as being essential every day, then having a "day" won't do much, if anything, to create cultures of caring within their organizations.

"Essential" is word that was thrown around a lot  in the early days of the pandemic.  Not so much anymore, I think.

Essential-ness ought to be at the core of every food retailer's vision, strategy, tactics and employee relations efforts.  Every day.  Because the people on the front lines are way more important in terms of the customer experience than the folks at headquarters.

And if you are a retailer, you ought to ask yourself if, within your organization, this is true?

One MNB reader responded:

To heck with Valentine's Day.  Every day should be a day of love!  To heck with Christmas.  Every day should be a day that we see as a gift to be opened and cherished!  To heck with Mother's Day.  Mother's should be honored every day too!  

In reality we go about our days and embrace our routines.  And for a lot of people it's a mindless exercise to live life  day to day.  So I do believe we need the special recognition days and let's not convolute the message here.  Sure we "should" be seeing every day as special and every person and employee as special too.  It's just not realistic.  

We honored our Team Members yesterday at our supermarket and they enjoyed the bagels, cookies, pizza, coffee, and camaraderie too.  Food brings people together, right!   However if this was how it was every day?  It wouldn't be all that special anymore.  It would be part of the routine and especially part of the expectation.  Still we can try to make every day special.  It just isn't as easy as it sounds.  

I get your point, and I'm sure your team members will spend the next year eagerly looking forward to the bagels and coffee you'll be serving on February 22, 2024.  

My point is just that the "these people are essential, and they enable us to be essential to our customers" attitude of the pandemic has subsided a bit … and I think that it should be a cornerstone of every operation.

(By the way ... would making "every day a day of love" be so awful?)

I got the following email responding to my FaceTime video about the "shocking" revelation that grocers are selling shopper data to manufacturers:

This is just too funny ! And you are so correct about old news. How old you ask ? Let’s go back to 1987 when Price Chopper Supermarkets launched the Advantage Card program. We sold it with many benefits for customers - no more clipping coupons to enjoy savings, dollars spent equaled points that could be used to discount groceries, or donated to organizations and schools for their use. Having a card earned you discounts at amusement parks and minor league sporting events.

Later on it tied in with Computers for Education programs (remember them?). Or on Earth Day just show your card and get a free seedling for your kids to plant. The benefits never stopped, only evolved. Later on would come fuel rewards programs.

From day one we publicly emphasized our privacy policy to protect customer data. Reporting back then would seem primitive compared to today but we did measure with things like the decile report or the bathtub report. In 1996 Brian Woolf ( Customer Specific Marketing )  recounted some of the start ups by various companies. The section on the Price Chopper program does capture the basics but in fairness it was adopted from a 1995 presentation at a MasterCharge conference by one of the VP’s from Financial Services. Doesn’t have all the dimensions but that was never the intent of the VP. He did a nice job. So if you do the math that all started over 35 years ago, sort of like looking back to the future.

PS - you are 100% right about baseball!!

You are one of the few folks who agreed with me about baseball.

One MNB reader wrote:

I have the opposite POV than you on extra innings change for MLB.

As a season ticket holder with the Cubs for the past 8 years, I have come to love the 10th inning change with a runner on 2nd for each teams’ at bat.  In my view it has (along with pitching to minimum batters rule)  forced managers to change their game strategy and be more aggressive in the 9th inning.  Also observed that Cubs crowd gets more passionate in the extra inning as we expect runs to be scored quickly.  Overall a good improvement for those of us who love to watch games at the ballpark.

From another reader:

To echo the previous reader regarding the changes to baseball, the game has changed.  And whether we want to hold onto the gold old days of baseball, or embrace that a new audience likes that likes the game differently; it will change.

I don’t like that football has all these special rules for tackling, but CTE studies taught me why they need to be in place.  I don’t like the way basketball has eliminated the pure center and the low post game.  But I know that this is how the game is played internationally.  And I as well did not like the “ghost runner”.  But knowing how MLB values pitchers and what we know about arm rest; I understand it is equally about protecting pitchers as well as reducing 15+ inning games.

I also don’t like that I’m priced out of going to as many games as I used to.  And I am sure I like that streaming services are owning the broadcasts, forcing me to pay for what was once “free”.  But that needed to change too.  Embrace the change; lest you become that person lamenting how much better things were in the “good old days”.

And from another:

The average length of a baseball game in 1950 (when I first fell in love with the game)  was 2 hours, 23 minutes. In 2022 the average length was 3 hours, 5 minutes.  Our local little league has declined from a 1000 to 600 in the last 14 years. Other fast-paced sports like soccer and lacrosse are filling the void. Baseball is losing its audience with young people. If MLB doesn’t make changes to shorten the games, baseball will continue to decline in popularity. Kudos to the new rule changes including the ghost runner. 

I completely agree with the observation that baseball isn't making these changes to appeal to people like me.  I'll be dead soon, and baseball needs sustainable appeal to younger people, and these rule changes are seen as necessary to make that happen.

But I reserve the right to selectively engage in curmudgeonly behavior about certain things.  Manual transmissions in cars.  Movies that don't depend on CGI.  Wine in bottles, not boxes.  And some baseball rules changes.

Doesn't mean I'm always right, or that everybody should think and feel the way I do.  I'm just not going to "go gentle into that good night," but plan to "rage, rage against the dying of the light."  

Published on: February 24, 2023

Content Guy's Note:  Thriller writer Mark Greaney returns to MNB for his third (and now, annual) visit, marking the publication of his 12th "Gray Man" novel, "Burner," out this week.

I've always enjoyed my conversations with Greaney, and was particularly looking forward to this chat because "Burner" - which once again is a total page-turner - hewed closer to real-world, real-time events than his previous books - the backdrop of the novel is Russia's war on Ukraine.  Greaney was writing it a year ago, as the conflict began, and he had to prognosticate a bit about how things would unfold.  

It is amazing how much he got right, and Greaney talks about the research and writing processes and how his characters have developed … including whether the recent Netflix adaptation has affected his approach.

Enjoy!

If you'd like to listen to my conversation with Mark Greaney as an audio podcast, click below.

Mark Greaney's "Burner" is available on Amazon, the iconic Portland independent bookstore Powell's, on Bookshop.org, and wherever books are sold.