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    Published on: March 10, 2023

    There's a piece from Seeking Alpha in which it considers the possibility that Amazon's Alexa-based system is a failure, that "it's fine to run these low-margin (or no-margin) programs during the 'good times,' but when investors are demanding profitability, these programs are more intensely scrutinized."  That's all fine and good, but I profoundly disagree.  Jeff Bezos' Amazon was founded on the notion of making "bold bets" and the Alexa system was critical to the strategy of being inextricably intertwined in people's lives.  To step away from that strategy now - especially when AI is becoming more viable and accessible - would be to walk away from the foundational premise of the business.

    Published on: March 10, 2023

    by Kevin Coupe

    The Recording Industry Association of America yesterday said that for the first time since 1987, vinyl records are outselling CDs.

    There were 41 million vinyl records sold in 2022, compared to about 33 million CDs.

    The Wall Street Journal reports that "revenue from vinyl records rose 17% to over $1.2 billion last year, the 16th straight year of growth for the format and nearly double what it was two years ago. Vinyl albums accounted for 71% of physical format revenue, which includes items like CDs, cassettes and DVDs, and 7.7% of overall revenue, RIAA said. 

    CD revenue fell 18% last year to $483 million, RIAA said. 

    "Vinyl’s resurgence is coinciding with continued growth in streaming, a category which includes Spotify Technology S.A., Alphabet Inc.’s YouTube and others. Streaming, which includes paid subscriptions, ad-supported services and on-demand apps, among others, made up 84% of the industry’s revenue, RIAA said."

    The Journal also writes that "vinyl’s resurgence has been years in the making, fueled mainly in the U.S. by indie-rock fans convinced of LP’s superior sound quality and young people attracted to the nostalgia of playing records. 

    "The consistent demand has turned record making into a largely artisanal industry, with some buyers asking for novelty LPs - multicolored, scented, glow-in-the-dark - that add to the cachet of owning vinyl."

    I think there's a lesson for every retailer here - that even in toughening economic times, quality has a role to play.

    Vinyl records certainly are more expensive than CDs, and streaming can give one access to a lot more music for a lot less money.  But because there is a broad perception, backed up by audiophiles, that vinyl offers a better listening experience, the format is growing.

    Why?  Because a percentage of music lovers see value in that.

    Value is not always the same as low price.  And retailers have the opportunity - even the responsibility - to communicate this message to their shoppers.  It is a way of competing with those formats that only focus on lower prices and bring business models with lower costs to the battle.

    The current competitive battle, even in these economic circumstances, does not have to be a constant drive to the bottom.  Savvy retailers can find ways to inspire, especially among consumers hungry and thirsty for an Eye-Opening aspirational message.

    Published on: March 10, 2023

    From Bloomberg:

    "Walmart Inc.’s online subscription service is narrowing the gap with Inc. in a key demographic: affluent shoppers.

    "Launched in 2020 as a competitor to Amazon Prime, Walmart+ is resonating with higher-income households eager to fend off inflation. At $98 a year, Walmart+ costs $41 less than Prime and offers many of the same perks, such as shipping discounts and video streaming. Walmart’s subscription service also has benefits Amazon can’t match, including discounted fuel at gas stations around the US.

    "In February, 28% of US households with annual income of at least $150,000 were members of Walmart+, up from 13% a year earlier, according to Prosper Insights & Analytics, which conducts monthly consumer surveys. Amazon Prime still has a commanding lead with 77% of those households, up 7 percentage points from the previous year.

    "Walmart’s inroads with this cohort mirror what’s been happening in its stores as the company gradually sheds its reputation as a destination for lower- and middle-income shoppers. Attracting and hanging onto wealthier customers is now a key priority for the company, and executives see e-commerce as a big selling point."

    KC's View:

    This last paragraph is particularly interesting, since it implies that it is at least possible that Walmart, in broadening its appeal and trying to integrate its offline and online businesses, runs the risk of distancing itself from its core shoppers.  I'm not saying this is a foregone conclusion.  Walmart has enormous reach, lots of ambition, and the resources to keep prices low even as it expands its footprint.

    Bloomberg notes that there is a predicate for all this:   "Walmart+ is benefiting from the same 'flywheel' effect Amazon experienced when it launched Prime in 2005: As Walmart attracts more shoppers, it lures more brands, which in turn bring in even more shoppers."  In addition, "besides borrowing Amazon’s online playbook, Walmart is capitalizing on a network of stores located within 10 miles of 90% of Americans."  And, Walmart is looking to exploit alternative revenue sources through its retail media network advertising business, which is still smaller than Amazon's but growing.

    It is a potent combination.  I still think Amazon Prime, even if more expensive, seems like a more useful service.  And while at least one expert Bloomberg speaks to suggests that the fact that Walmart's online marketplace is just a fraction the size of Amazon's ends up being an advantage because it is easier to navigate, I'm not sure that's true.  (Amazon's problem isn't the plethora of choices, but rather the way in which it all seems cluttered and ad-centric, which is a relatively new problem.)

    No surprise.  This is going to be an ongoing and fascinating battle, probably with a fair amount of collateral damage.

    Published on: March 10, 2023

    Kroger said yesterday that it has hired John Boehner - the former Congressman from Ohio who served as Speaker of the House of Representatives from 2011 to 2015 - to help its lobbying effort aimed at federal approval of its proposed $24.6 billion acquisition of Albertsons.

    The Hill reports that "Boehner, who works for law and lobbying firm Squire Patton Boggs, will 'provide strategic counsel' to Kroger executives and won’t register to lobby."

    Boehner may have some work ahead of him.  The Hill notes that "unions representing more than 100,000 Kroger and Albertsons workers are rallying against the merger, arguing that it would lead to job losses and price hikes.

    "Sens. Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah), the top lawmakers on the Senate’s antitrust panel, grilled the CEOs of Kroger and Albertsons in November, expressing doubts about the companies’ promises to keep jobs intact and lower prices."

    And, "The Federal Trade Commission (FTC), which is led by Lina Khan, a fierce opponent of corporate consolidation, is reviewing the merger and is widely expected to sue to block it."

    KC's View:

    I wonder if Boehner gets a special bonus in the form of a couple of cases of merlot if the deal ands up being approved.

    Published on: March 10, 2023

    Western New York-based Tops Friendly Markets said yesterday that it will expand "its program with Flashfood, a digital marketplace that provides shoppers with access to heavily discounted food nearing its best-by date, to 18 additional Rochester-Area stores. The latest expansion of the Flashfood program brings the total number of Tops stores offering Flashfood to 68 across Western New York."

    Tops says that its initial rollout of the program has saved its shoppers some $2.4 million on groceries and "diverted 985,358 pounds of food from reaching landfill. The food saved amounts to over 350,000 family meals, and the equivalent emissions saved from diverting the food from landfill are of over 1 million miles driven by the average passenger vehicle. With this latest expansion, Tops and Flashfood expect to hit 1 million pounds of food waste saved in the coming weeks."

    Flashfood says that "more than 2.5 million users" have used its program "as a way to save up to 60% off high-quality items nearing their best-by date, such as meats, dairy, seafood, fresh fruits and vegetables."

    KC's View:

    I really like this program - the savings are demonstrable, and the sustainability factor is compelling.  

    Published on: March 10, 2023

    Fast Company reports on Patagonia's first acquisition in more than 20 years - a snack company called Moonshot, described as "a startup that makes snacks with a low-carbon footprint."

    Moonshot, the story says, "launched two years ago with climate change in mind. The company works with wheat farmers in Washington State who grow organically - avoiding the carbon footprint of petroleum-based fertilizer and chemical pesticides - and use 'regenerative' farming practices like planting cover crops, reducing tillage, and rotating crops, which can build up healthy microbes in the soil and potentially sequester more carbon. (While the climate impacts of regenerative farming still aren’t fully proven, the techniques have multiple other benefits, including protecting biodiversity and preventing water pollution.) The wheat goes to a mill a couple of miles away to avoid long-distance shipping, and the resulting flour goes to a factory that runs on renewable energy."

    Fast Company writes that this is just the latest move by Patagonia Provisions, which currently sells more than two dozen items - like smoked mackerel, dried mango, and kelp salsa - both on its own website and in Whole Foods.

    Paul Lightfoot, general manager of Patagonia Provisions, explains the strategy this way:

    “We are, at heart, still a gear and apparel company. But the mission of the company is really simple and clear—to save our own planet. And [founder] Yvon Chouinard and the rest of the leadership team and I believe that if that’s our mission, food could and perhaps should be the most important lever that we can pull toward fulfilling that mission … We think that the food business should eventually rival the apparel business.  And we think that anywhere there are parts of the food system that are extractive and destructive, we have a role to play in creating a counterbalancing set of food products that are regenerative. . . . We don’t seek growth for its own sake. But we recognize that to have an impact, we have to scale. So this probably will be a part of the company that grows a lot over the next 5 to 10 years."

    KC's View:

    Seems perfectly on brand to me.  And a very smart line extension by one of the planet's most interesting and responsible companies.

    Published on: March 10, 2023

    •  From the Associated Press:

    "The number of Americans applying for unemployment benefits last week jumped by the most in five months, but layoffs remain historically low as the labor market continues to be largely unaffected by the Federal Reserve’s interest rate hikes.

    "Applications for jobless claims in the US for the week ending March 4 rose by 21,000 to 211,000 from 190,000 the previous week, the Labor Department said Thursday. It’s the first time in eight weeks that claims came in above 200,000.

    "The four-week moving average of claims, which flattens out some of the weekly ups and downs, rose by 4,000 to 197,000, remaining below the 200,000 threshold for the seventh straight week.

    "Applications for unemployment benefits are considered a proxy for layoffs."

    •  From the Wall Street Journal:

    "U.S. hiring grew solidly in February as employers added 311,000 jobs. Unemployment rose to 3.6%.

    "Last month’s job growth, reported by the Labor Department on Friday, aligned with other evidence of resilient economic growth in the face of high inflation and rising interest rates. Payrolls advanced last month on a seasonally adjusted basis at a slightly cooler pace than in January, when employers added a robust 504,000 jobs.

    "Employers in leisure and hospitality, retail and health care snapped up workers last month, the Labor Department said. Transportation and warehousing, finance and manufacturing companies cut employees, while the tech-heavy information sector also shed jobs again, it said.

    "Average hourly earnings grew 4.6% in February from a year earlier, a slowdown from last year but still above the prepandemic pace, the department added."

    Published on: March 10, 2023

    Creed III is the third film in the Adonis Creed series, following the life and career of the son of Apollo Creed, who was part of the Rocky series, which itself had six film iterations.  Just considering that film universe is a little exhausting, and those of us who saw the original Rocky in 1976 could hardly have imagined that 47 years later, we'd still be engaged in the series.

    The first two Creed films were co-written and directed by Ryan Coogler (who also did the two Black Panther films), but in this case he has stepped back and let Michael B. Jordan, who plays Adonis Creed, to direct.  (Sylvester Stallone, who gave birth to the whole schmegegge, isn't in this one, though he's credited as a producer.)

    So here's what I'll say about Creed III.  The movie is well acted and directed, and as entertaining as one would expect.  (It also is under two hours, which adds a star to its rating in my book.). But it hits exactly the beats one would expect.

    I do think there is an undercurrent to Creed III that didn't exist in the Rocky films.  The plot concerns how one of Adonis's friends from his youth, Damien Anderson, re-enters Creed's life after almost two decades in prison.  Naturally, he wants a shot at the heavyweight title;  this is, after all, a movie with Rocky DNA.  But the underlying plot point is about young Black men faced with choices that more advantaged people never have to make, and whose choices are fewer than those of other people.

    Creed III is what it is, and maybe a little bit more.  It doesn't break new ground, but it does demonstrate that Jordan may be a director with whom to be reckoned.

    "Poker Face" has ended its 10-episode, first season run, and while it has been uneven at moments, I've enjoyed almost every moment.  As I wrote here when it started, "Poker Face" is a kind of callback to the mystery movies of the seventies, created by Rian Johnson (Knives Out) as a showcase for Natasha Lyonne as Charlie Cale, a young woman who can tell if a person is lying just by looking at them.  That puts her in the position of solving crimes as she is on the run for her life, and the series - which is meticulously plotted like an intricate puzzle - has been utterly charming.  Can't wait for season two.

    Meanwhile, "Perry Mason" is back on HBO for a second season, with Matthew Rhys playing the famed defense attorney made famous by Raymond Burr in the original series more than 50 years ago.  The scenario is entirely different - it takes place in Los Angeles in the early 1930s, and Mason is a far less finished character at this point in his existence.  But the production design is gorgeous, the writing seems even more solid this time around, and Rhys is terrific.

    I am conflicted about the new Chris Rock comedy special on Netflix, "Selective Outrage."  Rock gets it right when he says early on that none of the jokes he tells will be able to be repeated at the office, and there's a lot of anticipation for when he addresses the moment a year ago at the Oscars when he was slapped by Will Smith.

    All of which is fine.  But I have to admit that the standup set was a little bit much for me - a little too profane and irreverent, going places and saying things with which I just was not comfortable.  But I suspect that's me, not Rock.  But be cautious when you watch it, and make sure there are no children in the room.

    Two wines to recommend to you this week…

    •  The 2019 Blackboard Red Wine from Washington State, a lovely combination of Cabernet Sauvignon, Merlot, and Cabernet Franc, is really, really good - it has hints of vanilla and jam, and was terrific with a nice petite filet and roasted potatoes.

    •  And, the 2020 Tagua Tagua Carmenere from Chile, which is has a a bit of spiciness to it and went great with shrimp and scallop cakes that I served with sautéed spinach.

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