business news in context, analysis with attitude

Published on: March 22, 2023

The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive who led the team that developed Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

Today, Tom and KC look at the implications of the latest layoffs at Amazon,  the growing perception that as the company has grown in size it also is exhibiting some degree of lethargy, possible shifts in the company's long-term strategy, and - most important - the opening that the current scenario offers to smaller retailers looking to connect with shoppers and establish a sustainable connection to them.

If you'd like to download the Innovation Conversation as an audio podcast, click below.

Published on: March 22, 2023

by Kevin Coupe

The United Nations Intergovernmental Panel on Climate Change (IPCC) said this week that the window is closing for humanity to effectively address the threat of climate change.

“Humanity is on thin ice — and that ice is melting fast,” United Nations Secretary-General Antonio Guterres said. “Our world needs climate action on all fronts — everything, everywhere, all at once.”

The Associated Press writes that if humanity has a chance "to prevent the worst of climate change’s future harms," it will require "quickly slashing nearly two-thirds of carbon pollution by 2035."

According to the story, "Guterres called for rich countries to accelerate their target for achieving net zero emissions to as early as 2040, and developing nations to aim for 2050 — about a decade earlier than most current targets.

"He also called for them to stop using coal by 2030 and 2040, respectively, and ensure carbon-free electricity generation in the developed world by 2035, meaning no gas-fired power plants either.

"That date is key because nations soon have to come up with goals for pollution reduction by 2035, according to the Paris climate agreement. After contentious debate, the U.N. science report approved Sunday concluded that to stay under the warming limit set in Paris the world needs to cut 60% of its greenhouse gas emissions by 2035, compared with 2019, adding a new target not previously mentioned in six previous reports issued since 2018."

The AP notes that "with the world only a few tenths of a degree away from the globally accepted goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) since preindustrial times, scientists stressed a sense of urgency … This is likely the last warning the Nobel Peace Prize-winning collection of scientists will be able to make about the 1.5 mark because their next set of reports may well come after Earth has either passed the mark or is locked into exceeding it soon, several scientists, including report authors, told the Associated Press."

Axios characterizes the report as including "a litany of indications that climate change is already severe and causing human suffering.  Not only are deadly extreme weather events, bleaching coral reefs, rising sea levels and other risks a present-day problem, but multiple lines of evidence now indicate that dangerous climate impacts are worsening faster than previously known."

Axios also writes that the report "calls for reforming the financial system to direct more money to climate-resilient development and low-carbon energy sources.

"Yes, but: Major oil and gas companies have no plans to move more aggressively on their fossil fuel transition plans."

Now, I'm sure that there will be those who will suggest that if every country does not adopt these goals and then work aggressively to meet them, then it does not make sense for any country to do so.  The argument will be that if we do it unilaterally, we handicap ourselves from competing effectively in the global economy.

And there will be those who will question the science behind these warnings.

I cannot help but think, though, that if we do not heed these warnings, there won't be a global economy in which our grandchildren can thrive.  

The warning is an Eye-Opener.  Whether or not we actually keep our eyes open is up to us.

Published on: March 22, 2023

Market analytics company Jungle Scout is out with a new study saying that "32% of Generation Z consumers shop online once a day or more, compared to just 7% of Baby Boomers who do the same."

While the majority of US consumers shopping online "still pick Amazon," the study finds, "among Gen Z, 43% start on TikTok — higher than those who start on Google."  Gen X favors search engines, the study says.

"As a generation who grew up with their fingers on the pulse of digital technology, Gen Z consumers are rewriting the rules of consumerism and setting a new standard for the future of retail with their shopping habits and preferences," the study says.  "Consideration of just the frequency with which this group shops online compared to other generations forms a foundation on which many of their other differences — outlined in detail in our full report — are built."

Published on: March 22, 2023

Amazon announced this morning that Panera Bread will begin using Amazon One, its palm identity and payments service, to enable guests to pay for their orders and access MyPanera, the restaurant’s loyalty program.

According to the announcement, "The technology is launching today at select bakery-cafes in Panera’s hometown of St. Louis with additional locations rolling out in the coming months, making Panera the first national restaurant to use Amazon One for both loyalty and payments. This new service provides Panera guests with a frictionless experience that includes fast palm-based payments, personalized interactions, and tailored meal recommendations."

Amazon this morning also announced what it called "a new online pre-enrollment capability, which allows customers to begin Amazon One enrollment from anywhere, at their convenience," via an online platform.  "With an Amazon account, mobile number, and a credit or debit card, consumers can create their Amazon One profile online. Customers can then complete the enrollment process at any location that offers Amazon One by scanning their palm and using the code they received during pre-enrollment."

Published on: March 22, 2023

•  Walmart yesterday announced a partnership with the independent advertising platform Innovid "to power more personalized ad creative for Walmart DSP, the demand-side platform" for Walmart Connect, its omnichannel retail media business.

The announcement says that "in addition to creative personalization, optimization and interactive experiences for placements like connected TV (CTV), Innovid will also offer ad delivery services to ensure the highest-quality video experience for the end consumer."

Some context from the announcement:

"US digital retail media ad spending is projected to increase by 25.8% and reach $51.36 billion this year, according to eMarketer. By 2024, it will make up almost 20% of total digital ad spending as advertisers look to combat addressability depreciation by investing in media environments powered by first-party data. The partnership between Innovid and Walmart DSP empowers brands with data-driven precision and powerful ad management, allowing them to reach and engage their target audience and measure performance, ultimately closing the gap between spending and sales."

Published on: March 22, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Coborn’s yesterday announced "that it will now accept Electronic Benefits Transfer (EBT) Supplemental Nutrition and Assistance Program (SNAP) payments online for same-day delivery via Instacart. With this program, EBT SNAP participants will now be able to use their benefits to access fresh food and pantry staples from Coborn’s, Cash Wise and Marketplace Foods when shopping via the Instacart website and mobile app. 

"This launch follows the United States Department of Agriculture Food and Nutrition Service’s most recent approval of Coborn’s, Cash Wise and Marketplace Foods locations to accept EBT SNAP payments online in the locations where Instacart is available."

•  From the Washington Post:

"Google made a version of its new Bard artificial intelligence chatbot available to the public on Tuesday, a major test of the tech giant’s ability to stay atop the AI heap amid a flurry of new competition.

"The bot, which is based on technology that has been under development by the company for eight years, will have a separate website and won’t immediately be prominently promoted through Google Search."

The story notes that "the company is months behind some competitors in rolling out the first version of its chatbot to the public. OpenAI, a start-up that developed ChatGPT, has allowed users to test its version since November. Microsoft rolled out a similar tool in its Bing search engine in February.

"That has sparked frustration among some Google employees, who say the company has dropped the ball on generative artificial intelligence, a technology that uses powerful algorithms trained on huge portions of the internet to produce original content, from eerily humanlike text to vivid artwork."

It is worth pointing out that Bill Gates has called OpenAI’s GPT AI model the "most important advance in technology since the graphical user interface.”

CNBC quotes him as saying that "the development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.,"

CNBC writes that "Gates is the latest big name technologist to take a position on recent advancements in AI as a major shift in the technology industry. He joins former Google CEO Eric Schmidt and former Amazon CEO Jeff Bezos who have predicted that data-based machine learning could change entire industries.

Published on: March 22, 2023

•  Associated Wholesale Grocers, Inc. (AWG) this week "reported record consolidated company sales of $12.3 billion, an increase of 13.65% on a comparable basis over 2021, and distributed $273 million of year-end patronage immediately following its Annual Shareholders Meeting … AWG’s cooperative net sales were $10.7 billion, up 10.08%. The total distribution of cooperative benefits returned to shareholders, including interest, allowances, and patronage, was $543.6 million."

The company said that it "invested $6.41 million in temporary fuel surcharge relief, which will now become permanent in 2023, and significant investments in supply chain infrastructure, technology platform upgrades, and continuing implementation of the ambitious Convergence project to reduce cost-of-goods to member stores. The company counteracted declining off-invoice vendor allowances by investing $41.2 million incrementally in cooperative- funded product price reductions of national and store brands."

Full disclosure:  AWG is a valued and longtime MNB sponsor.

•  Circana - the analytics firm made up of the companies formerly known as IRI and The NPD Group - released a report saying that "annual spending per consumer has increased to $10,471, up $440 versus a year ago."

However, "While most consumers are making trade-offs to offset rising costs, priorities and shopping habits vary widely across different demographic groups … consumers are spending less on products that were popular during the height of the pandemic, such as technology, liquor and home care, and more on dining out and necessities like in-home food and beverage and pet care. However, trade-offs vary widely among consumer segments as shoppers prioritize their unique needs."

A snapshot:  "Millennials are spending more on food, dining out, tobacco and e-cigarettes, and less on technology, home textiles and office supplies … Gen Z consumers are leading the pack when it comes to ordering foodservice online … 

Hispanic shoppers spend 17% more than average on foodservice … High-income households are driving growth for the health and vitamin channels … Low-income SNAP shoppers have pulled back on discretionary spending, reducing spend on non-food items at over 3x the rate of food and beverage."

•  From the Wall Street Journal:

Federal health regulators are nearing a decision on whether to authorize a second round of the Omicron-targeted booster shots for the elderly and other people at high-risk of severe Covid-19, people familiar with the agency’s deliberations said.

"Food and Drug Administration officials could make the decision within a few weeks, the people said.

"The officials are moving toward authorizing the second jabs of the Omicron-targeted shots for people who are 65 years and older or who have weakened immune systems, though the officials haven’t reached a final decision and could change their mind, one of the people said.

"The Centers for Disease Control and Prevention would then have to recommend the shots for them to become widely available. 

"The deliberations come as some people especially vulnerable to infection have asked their doctors to give them a second round of the updated booster, even though the FDA hasn’t signed off on such a use to date.  At the same time, some infectious-disease experts have called on federal health officials to permit another round of boosting to better safeguard people with comparatively weaker immune defenses, as the United Kingdom and Canada have done."

Published on: March 22, 2023

Executive Suite is sponsored by Robin Russell Executive Search.

•  The Pittsburgh Post Gazette reports that "Laura Shapira Karet, who has served as the chief executive officer of Giant Eagle Inc. for 11 years, is no longer with the company, ending a decadeslong string of her family’s leadership of the grocer … The company appointed Bill Artman, formerly president of supermarkets, as interim CEO. Mr. Artman has been with the company in various roles for 40 years."

The story notes that "Giant Eagle was founded by five families in 1931 and was led by Ms. Karet’s father, David Shapira, from 1980 until 2011, and her grandfather, Saul Shapira, from 1968 until 1980. With Mr. Friedman replacing Ms. Karet as chairman of the board, this marks the first time that the company will have a non-family chair.

"No reason was given for the abrupt changes voted on by the board on Tuesday, and the new leaders were not immediately available for an interview."  The only thing the board said was that it “determined to separate [Ms. Karet] pursuant to her contract."

However, in a prepared statement, Karet wrote:

""After much consideration, I've decided to move on to the next chapter of my life and leave Giant Eagle.

"My tenure at Giant Eagle has been incredibly rewarding, and I have been privileged to guide the organization through intricate challenges and unprecedented achievements. I am immensely proud of my colleagues and our collective efforts, which, thanks to our talent and tenacity, have allowed Giant Eagle to not only persevere but also flourish in recent years. Today, Giant Eagle boasts $11.5 billion in sales and operates nearly 500 stores.

"Our team consistently works to provide top-quality products and services to our customers and endeavors to make a positive impact on our communities. It has been an honor to contribute to this mission, and as I look ahead to my next chapter, I will be taking some much-needed time with my family.

"I would like to express my gratitude to all our Team Members for your unwavering commitment to our communities and for embodying the spirit of teamwork. I take great pride in what we have accomplished together.""

Published on: March 22, 2023

We took note yesterday of some of the new snack/junk foods coming on the market, including 'Grilled Cheesies,' described as "a grilled-cheese sandwich made with Kraft Singles that kids (or adults) can microwave for 60 seconds."

I commented:

The idea that making a grilled cheese sandwich is "too tough" is yet more evidence of the decline of western civilization.

I'm not saying that everybody ought to be able and/or willing to make a grilled cheese sandwich like in the movie "Chef."  But it ain't that tough.

The idea that making a grilled cheese sandwich is "too tough" is yet more evidence of the decline of western civilization.

I'm not saying that everybody ought to be able and/or willing to make a grilled cheese sandwich like in the movie Chef.  But it ain't that tough.

MNB reader Brian Blank wrote:

A little *ahem* food for thought (sorry) about the microwavable grilled cheese sandwich.  While there may be a further slight decline in Western Civilization or whatever, my feeling is that the core customers for this product will likely be 1) college students in dorms, with no access to an actual stove and 2) younger children, old enough to look after themselves for a period but perhaps not yet trusted to use the stove unsupervised. 

Fair point.  I just think that we're all getting terminally lazy.

Of course, it may also be that I'm just getting more curmudgeonly.

Yesterday we ran an email from an MNB reader who argued that the Kroger-Albertsons deal ought to be allowed to go through, and that in pretty much every case when Kroger made an acquisition, the stores all were better afterwards.

I responded:

I think that for the most part you're right, but I know people in Chicago who would argue that Mariano's there has not improved under Kroger ownership.  

Another MNB reader chimed in:

Mariano’s has definitely declined with Kroger  stores and employees are lackluster to say the best ! Used to love to shop there!!

MNB reader Rich Heiland had some thoughts about the Howard Schultz saga:

I remember thinking when I read his book years ago "wow, what a creative leader."

Now when I see a headline about Howard Schultz I generally skip the story.

At which point in the comeback sequence do you become irrelevant? Is it three, four, five? 

Kind of ties with your commentary on (Whole Foods co-founder John) Mackey. When you leave, leave. Quietly and with class. 

Back in my newspaper CEO days I moved around a lot, fixing up broken papers. When I would leave and a new CEO was appointed and they'd ask my advice, I would give them none. "It's your newspaper now. Anything I say will either prejudice you or get in your way." 

Published on: March 22, 2023

Japan beat the United States 3-2 in the final game of the World Baseball Classic (WBC), with the consensus being that the tournament delivered two weeks of thrilling action with the kind of global appeal that baseball often has lacked.

In the final at-bat of the game, two Los Angeles Angels teammates faced off, with Shohei Ohtani pitching to Mike Trout, who could've tied the game with a single swing or at least kept it going.  Ohtani threw Trout an 88 mph slider, three straight 100 mph fastballs, and then a 102 mph fastball to get to a full count, and then threw Trout an 87 mph slider to strike him out and win the game and WBC.

Ohtani was named the series MVP, hitting .435 with 4 doubles, 1 home run and 8 RBI, and as a pitcher went 2-0 with a 1.86 ERA, 11 strikeouts and a save in 9.2 innings.

Opening Day for the 2023 season will be next Thursday, March 30.

Thank goodness.