business news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: March 13, 2023

    Starbucks CEO Howard Schultz claims that his newest innovation - olive oil in coffee, is the most transformational thing to happen to coffee since cream and sugar.  So I decided not to wait for the new line, dubbed "Oleato," to hit stores.  I tried making it myself, and had two reactions.  One had to do with taste, the other to do with how Schultz has given other retailers a gift.

    Published on: March 13, 2023

    by Kevin Coupe

    The Wall Street Journal has a long piece postulating that the merger of Kroger and Albertsons - assuming it is approved by the Federal Trade Commission (FTC) - will help to shape the future of the supermarket industry.

    "As the country’s two biggest supermarket chains envision the future of their planned megamerger, you’ll be able to purchase groceries, a coffee, patio furniture, and your allergy medicine prescription," the Journal writes.  "The store deduces you might also like a humidifier to help the sneezes and some local honey, all of which it has ready for you. At dinnertime, order in sushi, which was made by a kitchen owned by the supermarket … Just what this new emporium will look like is at the center of the Federal Trade Commission’s antitrust review, and central to any potential battle will be the shape-shifting definition of the markets in which Kroger and Albertsons are competing. Regulators are examining the possible combined company’s impact on grocery markets around the country as well as specific areas like online delivery, digital advertising and pharmacy operations, said people familiar with the matter."

    The story points out that both companies maintain that the merger is necessary so that they can better compete with Walmart and Amazon, but here is the money quote, from Kroger CEO Rodney McMullen:

    “You used to make money selling a can of corn,” but now “you have to figure out other ways of creating value for the customer.”

    This merger, both companies say, will give them the muscle to do so.  For example:

    "Stretching the definition of a grocery store has helped both supermarket chains tap into faster-growing businesses and help fund operations. Kroger’s digital advertising business is one of its fastest-growing areas, and Albertsons’ sales and gross profit rose during the pandemic partly because it administered Covid-19 vaccines at its stores, executives at both companies have said.

    "Kroger uses consumer data to build loyalty programs and sell advertising to brands, putting it in emails, coupons and on its website. This brings it into competition with tech giants’ data-driven advertising arms at Facebook parent Meta Platforms Inc. and Alphabet Inc.’s Google. The supermarket is also staking out a presence on platforms such as Snapchat and smart TVs, another venue where the company can sell ads for products. 

    "Albertsons in late 2021 started its digital advertising business, and the company is using data to offer coupons and rewards through its loyalty programs, which have grown to 33 million users. Albertsons’s digital offerings now include recipes and health-related content."

    I think this is all legitimate business, and I completely understand Kroger and Albertsons, as well as a lot of other retailers, are seeking alternative sources of revenue.  Beyond the idea that more money to the bottom line can serve as a reward to shareholders and a way to keep prices lower (the ratio of one to the other almost certainly is a focus for the FTC as it probes this proposed merger), these new business offshoots are ways to compete for shopper eyeballs in a very competitive environment.

    The Eye-Opening point that Kroger's McMullen makes is a good one, and ought to be at the core of any FTC probe:  Why can't you make money selling a can of corn?  And how will allowing this merger make it easier for you top compensate for what would appear to be a basic flaw in the food retailing business construct?

    Published on: March 13, 2023

    The Wall Street Journal had a piece over the weekend about how, as people return to physical stores, retail theft is rising, cutting into companies' profits.  

    “Theft is growing at a faster rate than sales,” Dean Rosenblum, a senior U.S. retail analyst at Bernstein Research, tells the Journal, which quotes Rosenblum as saying that "theft is becoming a big enough problem that it’s starting to affect margins, which is why retailers are talking about it more frequently."

    There are, the story notes, two kinds of theft - shoplifting and organized retail theft, which is a much bigger problem.

    The story points out that while shrink in 2021 fell back to 2018 levels, "external theft, which includes organized retail crime in addition to regular shoplifting, has become a bigger piece of the pie. Organized retail crime, involving rings that steal from stores in bulk and then peddle the goods online, cost retailers nearly $720,000 for every $1 billion in sales in 2019, the most recent year the NRF published such figures. That was an increase of 50% from 2015, it said."

    KC's View:

    The Journal story says that there are some legislative responses in play:  "New legislation signed into law by President Biden last year, called the Inform Consumers Act, will make it harder for criminals to resell stolen goods online. The Combating Organized Retail Crime Act of 2023 currently making its way through Congress seeks to pool expertise and provide more tools to prosecute criminals and recover stolen goods."

    But I do think this falls into the broader category of the fabric of society unraveling, and people - for a wide variety of reasons - stop adhering to the social compacts that used to bind us together.  Or at least most of us together.

    This is easier said than done, but I've always subscribed to the William Bratton (who ran police departments in Boston, New York City and Los Angeles) approach to this issue - one of the most important ways one stops major crime is to stop the small crimes.  That approach is out of favor at the moment, and we see the result.  Retailers have to increase their own security measures to make sure their stores are safe and secure, but they deserve the support of law enforcement when attempting to protect their businesses.

    Published on: March 13, 2023

    CNBC reports that Amazon's Prime Air drone program continues to be stalled by a variety of factors, including test clearances from the Federal Aviation Administration (FAA) that didn't come until last December, and the requirement that "Prime Air must complete several hundred hours of flying without any incidents and then submit that data to the FAA."

    This all "stands in the way of Prime Air’s expansion and its efforts to achieve Amazon’s wildly ambitious goal of whisking food, medicine and household products to shoppers’ doorsteps in 30 minutes or less."

    CNBC writes:

    "Bezos predicted a decade ago that a fleet of Amazon drones would take to the skies in about five years. But as of now, drone delivery is restricted to two test markets — College Station, Texas, and Lockeford, California, a town of about 3,500 people located south of Sacramento.

    "Even in those hand-picked areas, operations have been hamstrung by FAA restrictions that prohibit the service from flying over people or roads, according to government records. That comes after years of challenges with crashes, missed deadlines and high turnover.

    "So, while Prime Air has signed up about 1,400 customers for the service between the two sites, it can only deliver to a handful of homes, three former employees said. In all, CNBC spoke to seven current and former Prime Air employees who said continued friction between Amazon and the FAA has slowed progress in getting drone delivery off the ground. They asked to remain anonymous because they weren’t authorized to speak on the matter.

    "Amazon told CNBC that thousands of residents have expressed interest in its drone-delivery service. The company said it’s making deliveries to a limited number of customers, with plans to expand over time."

    KC's View:

    This is another area in which Walmart seems to be delivering while Amazon only is making promises.

    The idea that thousands of people have expressed interest in having drone deliveries really isn't such a big deal.  I've expressed interest, but that doesn't mean that I'll be putting a landing pad on my front lawn anytime soon.

    The real question at this moment is whether Amazon, at this point in time, is really committed to the drone delivery program, or whether it is one of the concepts that will be back-burnered until further notice.

    Published on: March 13, 2023

    The BBC reports that "Tesco suppliers have been told they will have to pay a new charge when the supermarket sells their products online.

    "An email, seen by the BBC, warns suppliers could be penalised if they do not agree to the new 'fulfilment fee'.

    "The retail giant said the new charges were essential to help it "shoulder the costs" of serving more customers shopping online … Tesco did not specify the fees in its email but it is understood suppliers could face costs of 12p per item on branded goods and 5p for own-label products, irrespective of price point.

    "Small businesses with a turnover of less than £250,000 would not have to pay the fee, but online sales through the company's wholesale Booker business would be included."

    KC's View:

    Unfortunately, this is standard operating procedure in the US, and a practice that erodes trust and collaboration between retailers and suppliers, even if there are more than a few rationalizations for why it is a legitimate way to do business.

    I'd refer you back to a conversation I had here on MNB with David Friedler, president and managing partner of Simpactful, who spent a quarter century in the CPG business, about this subject.  We talked about the extent of the problem and whether there is a fix for it (or even should be).

    Published on: March 13, 2023

    The Washington Post reports that for the third year in a row, the Girl Scouts are facing a problem with their annual cookie season.

    "Blame the coronavirus pandemic for the wildly vacillating supply and demand over the past two years: a surplus of unsold cookies in 2021 and supply chain issues in 2022," the Post writes. "This year is seeing similar problems. Last month, the Girl Scouts’s hotly anticipated new cookie sold out faster than Beyoncé tickets, and wound up on eBay for four times the price.

    "Louisville-based Little Brownie Bakers this week blamed the familiar forces of supply chain and labor shortages, with extreme weather thrown into the mix, for production delays that have disrupted this season’s cookie fulfillment efforts. Little Brownie Bakers is one of only two companies licensed to make the cookies — and it bakes for the vast majority of Girl Scout needs."

    Little Brownier Bakers says that it "has produced more Girl Scout cookies at this time than last year, and our teams at the bakery are working hard to ensure initial orders are filled."  But after that, it is hard to know.  And, as the Post writes, "As the 2023 cookie season winds down, it’s unclear how the Girl Scouts might mitigate the persistent supply issues — but they aren’t alone in facing these challenges or scrambling for answers."

    KC's View:

    I never had a kid in Girl Scouts, so I had to go online to find out if the Girl Scouts have merit badges like the Boy Scouts. The answer, of course, was yes.  The list of topics for which Girl Scouts can earn them is extensive.  It does not, alas, include Economics or Supply Chain.  But I suspect those two might be included in the future, as kids have to learn about the hard realities that affect even the Girl Scout cookies business.

    Published on: March 13, 2023

    The Washington Post has a piece about the lab-grown dairy industry, which frames the story this way:

    "The rapid advancement in this area has sparked hope for a revolution in the dairy industry, and not just because it’s kinder to the cows. Precision dairy doesn’t have cholesterol, lactose, growth hormones or antibiotics (though those with dairy allergies should beware). And cattle, for beef or dairy, is said to be the No. 1 agricultural source of greenhouse gases worldwide. Consumers concerned about climate change or animal welfare have been anticipating the U.S. launch of cultivated meat, which is grown in labs from animal cells, but cultivated dairy could have just as much of an impact on the environment — with fewer regulatory hurdles to clear."

    You can read the entire piece here.

    KC's View:

    One of the interesting things about the piece is the assertion that within the industry, the belief is that brands will make the difference, that brands will bring a degree of equity to the segment.  Consumers focus on brands, not ingredients, experts say, and so acceptance will be pegged to the degree that brands invest in the segment.

    Published on: March 13, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  GoodE-Reader.comm reports that Amazon is "abandoning the Kindle for Periodicals or the Kindle Newsstand, which will completely shutter on September 2023. Digital editions for magazines and newspapers are going to be shuttered. Amazon is trying to convince publishers to submit their newspapers and magazines to Prime Reading or Kindle Unlimited, but it remains to be seen if this will happen.

    "Amazon has just sent an email to customers who currently subscribe to the Kindle editions of magazines. It stated, 'Thank you for being a valued Amazon Kindle Newsstand subscriber. We are writing to inform you that we have decided to stop selling Kindle magazines and newspaper subscriptions on Amazon.' It then lists all active subscriptions to confirm the email is legit."

    The story points out that "one of the significant advantages of magazines and newspapers on the Kindle is that they were optimized for the Kindle. They read like ebooks, where you can increase the text size or change the font type. Some pictures were in black and white to separate all of the text. This was the significant advantage of a Kindle.

    "The closure of the Amazon Newsstand will hit hard all genre magazines like Clarkesworld, Uncanny Valley, Asimov’s or Fantasy & Science Fiction. They have many subscribers on Kindle, and it is the only viable option for many international subscribers. Kindle Unlimited is not available worldwide and only in select countries.

    "Some magazines and newspapers will decide it is not worth including their content in Amazon’s Unlimited program. Users will have to subscribe to each digital magazine separately and either read it in the web browser or install apps on their smartphone or tablet instead of an eye-friendly Kindle e-reader that is easy on the eyes."

    What Amazon doesn't say is that it is ending the program because not many people were using it, which certainly is possible.  But the optics are that Amazon is making a move that is all about streamlining its own business as opposed to maintaining a program that is good for its customers.  Not to overreact to what probably is a small decision about a minor matter, but it does sometimes seem as if we're seeing Amazon's shift from being "the everything store" to being "the stuff that is good for our business store."  There's nothing wrong with being that, but it isn't the entrepreneurial engine that has driven Amazon during its first three decades of business.

    Published on: March 13, 2023

    •  BJ's Wholesale Club announced that "it is adding five clubs to its growing portfolio across the United States. The expansion includes plans for a new club in Madison, Alabama, increasing BJ’s retail footprint to 20 states.

    "BJ’s will also open clubs in Mt. Juliet, Tennessee, Johnson City, New York, Lewis Center, Ohio, and North Jacksonville, Florida. These clubs add to BJ’s 2023 roster of openings, following the retailer’s newest locations in Davenport, Florida, and McDonough, Georgia, as well as the recent announcement of BJ’s first-ever club in the state of Tennessee slated to open this summer in LaVergne."

    Published on: March 13, 2023

    Last week we had a story about Kroger saying it would make "a more than $770 million incremental investment in its associates during 2023 … to raise average hourly rates, improve healthcare options, build new training and development opportunities, and more."

    One MNB reader - obviously someone better at math than I am -  wrote:

    $770 million sounds like a big number but if you spread that across about 420,000 employees that is $1,833/yr at 2,000 hours worked in a year that is 91 cents/hour.

    Another MNB reader chimed in:

    Regarding Kroger, I would gladly take the 91 cents per hour! I'll get 47 cents this April at the large east coast chain I work for, and that's for exceeding expectations, otherwise it would have been 31 cents.


    There was a story last week about how Walmart+ seems to be making inroads against Amazon with affluent shoppers, which prompted this email:

    This will be very interesting. Wal-Mart at one time was not considered a threat to Sears and Kmart, but we know how that ended up.

    One thing about Wal-Mart I have always respected is their desire to always learn and grow. Add that to the culture of simply working harder than their competition. If I were Amazon, I would be concerned. Maybe not in the near future, but don’t get complacent and don’t become too cautious.


    On another subject - the new version of Fat Tire beer - MNB reader Jerome Schindler wrote:

    I tried a couple of Fat Tire pale ale beers at our Parish fish fry last night - not sure it is the “new” formula.  I was not impressed.  A couple years ago I discovered Narragansett Lager and have been a regular buyer ever since.  It is brewed in Providence, RI.   It was featured in the movie “JAWS” .  The brand goes back over 100 years according to their website.  I see it is widely available In Darian.  You should try it if you haven’t already.  

    Lager is the only one of their offerings I can find in Columbus, OH.  I wish their IPA was available here.


    Kroger said last week 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.

    I commented:

    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.

    Several other readers had comments about Boehner's proclivity for crying.

    One MNB reader wrote:

    I assume the former Speaker will just tear up when the FTC finally issues its ruling sometime in 2030.

    And from another reader:

    …or a couple cases of Kleenex for him to cry into if it doesn’t.

    One obviously an optimist.   The other not so much.

    From another reader, a political comment:

    I’m a strong conservative, and Boehner was never one of my favorites. I don’t think he’s the best choice to help negotiate this deal!  Time will tell!

    Whether he is or not remains to be seen.  But one part of your comment intrigued me.  I checked, and if my sources are accurate, in 2010, Boehner received a 100 percent conservative score from the American Conservative Union, and has a lifetime score from that organization of 94.  In 2010, Boehner had a 100 percent rating from the conservative Club for Growth, and a 83 percent lifetime rating.

    Which makes me wonder, what the hell does one have to do to be a strong conservative these days?

    Or, is it possible that what passes for a strong conservative in 2023 isn't what was considered conservative in 2010 … or at any time before that?

    Just asking.

    Published on: March 13, 2023

    Last night was the 95th annual Academy Awards, and the winners were:

    Best Picture:  Everything Everywhere All at Once

    Best Actress:  Michelle Yeoh, Everything Everywhere All at Once

    Best Actor:  Brendan Fraser, The Whale

    Best Supporting Actress: Jamie Lee Curtis, Everything Everywhere All At Once

    Best Supporting Actor:  Ke Huy Quan, Everything Everywhere All At Once

    Best Director:  Daniel Kwan, Daniel Scheinert, Everything Everywhere All at Once

    Best Adapted Screenplay:  Women Talking

    Best Original Screenplay:  Everything Everywhere All At Once

    Best Animated Feature:  Guillermo del Toro’s Pinocchio

    Best International Feature:  All Quiet On The Western Front

    Published on: March 13, 2023

    MNB has initiated a new sponsorship tier that, as I've pointed out here in the past, reflects what I think is a new approach to the topic - I've decided that I really want to forge sustained relationships with companies that have value propositions and missions in which I believe and that, in turn, believe in MNB's value proposition and mission.  My goal is to not just provide a forum for these "charter sponsors," but also commit to helping them grow their businesses in a variety of ways.  In other words, it ain't just about banner and tile ads.  It is about moving the needle forward in terms of innovation and, ultimately, service to the shopper.

    I'm happy to announce this morning that Hyer has joined the MNB family as a charter sponsor.

    You may remember Hyer from a conversation that I had with its founder and CEO, Dave Dempsey, about three years ago - I was fascinated about the company's business proposition, which is to enable businesses to tap into a pool of on-demand labor.  Dave talked about the company's basic premise, which is allow businesses to identify and hire people when and where they want them to do the jobs you need them to do, and allowing individuals to find jobs that suit their work-life needs and desires.

    Fascinating stuff.  Hyer has evolved a lot since then, and I was thinking that at some point a follow-up conversation with Dave would be a good idea.  But before I could get to it, the folks at Hyer came to me about becoming an MNB sponsor.  (I'm still going to do that conversation at some point.) 

    I'm thrilled that Hyer has become part of the MNB family, and will be bringing you the MNB Wake Up Call each morning.