business news in context, analysis with attitude

Published on: April 4, 2023

During a visit to Chicago over the weekend, I had a chance to visit the newest Dom's Kitchen & Market, a 27,000 square foot unit opened late last year.  It is the second opened by the company led by industry icon Bob Mariano, with as many as 15 expected to be open by the end of 2025.  I was interested to see this store because the hype has suggested that it is a transformational format (I'm not sure I'm buying that), but I think the new store - a small, urban unit that is food-focused and with apparent strong appeal to young, hip shoppers - suggests that some lessons were learned from the Mariano's stores that he launched while CEO of Roundy's.  

Some pictures below:

Published on: April 4, 2023

Boxed, which describes itself as "an e-commerce technology company that provides bulk pantry consumables to business and household customers," said yesterday that it will wind down its retail business and sell its Spresso software business to its first lien secured lenders as it "initiated voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code."

Spresso business customers are not anticipated to see any disruption of service throughout the sale process, the company said.

Earlier this year, Boxed was able to secure what essentially was a $10 million bridge loan in order to keep its business going while seeking a sale of the company.  However, the company said, "in line with its efforts to counter the challenging business environment, the Company made the difficult yet necessary decision to wind down its retail e-commerce operations over the next several weeks. The Company’s Board of Directors has unanimously determined that seeking Chapter 11 protection is the most appropriate path forward."

“This was an incredibly difficult decision, and one that we reached only after carefully evaluating and exhausting all available options. Although this outcome is not what we worked so hard for, we are thankful to everyone, including our customers, who have supported us along the way," said Chieh Huang, co-founder/CEO of Boxed.

Axios notes in its coverage that Boxed is just the latest company - there have been at least nine to this point - "that's gone public via merging with a special purpose acquisition company to file for bankruptcy."  The story points out that "while the SPAC mania attempted to reverse the two-decade-long trend of companies taking longer to go public, it's now shown that not all companies are fit to be public.

"In addition to bankruptcies, a number of companies that merged with SPACs have since been taken private, often at prices smaller than what they were worth when first listed."

The Information writes that "it’s the latest sign of pain among grocery delivery companies. Rapid delivery startups including Fridge No More shuttered last year as venture funding dried up, and grocery delivery startup Good Eggs recently cut its valuation 94% in an emergency round of funding. Larger players like Instacart and DoorDash have come to dominate much of the online grocery market, and Instacart recently raised its internal stock price on the heels of a rally in publicly traded competitors."

Published on: April 4, 2023

It was just over a week ago that reports emerged that Walmart planned to lay off "hundreds of people" in its e-commerce business, but now Bloomberg reports that the company's "job cuts at five US e-commerce fulfillment centers will affect more than 2,000 positions, according to regulatory filings, though impacted employees may find other roles at the company.

"The losses include more than 1,000 positions at a warehouse in Fort Worth, Texas, the state’s workforce commission said Monday. The retail giant is also anticipating a reduction of almost 600 jobs at a Pennsylvania fulfillment center, 400 in Florida and about 200 in New Jersey. An additional reduction is planned in California."

Walmart says that as it rationalizes its various business units and adjusts head counts to meet current needs, it may be able to "shuffle" some workers as opposed to just laying them off.

Bloomberg notes that to this point, Walmart has been able to avoid the kinds of mass layoffs - 27,000 announced to this point - in which rival Amazon has been engaging, as well as those being imposed on their workforces by many tech companies.

Published on: April 4, 2023

The Wall Street Journal reports that "big retailers are rolling out machines in their e-commerce distribution operations that make packages sized specifically to fit the items being shipped, potentially reining in some of the big volumes of cardboard generated as online shopping has grown."

The fact is that the traditional method of using standard-sized cardboard boxes for shipping e-commerce orders, regardless of the size of the items being shipped, has proven to be expensive and wasteful.  "The accumulation of cardboard in households, trash heaps and recycling centers has been one visible result of the surge in online shopping in recent years," the Journal writes.  "E-commerce accounted for 14.7% of overall U.S. retail sales in the second quarter of 2022, the latest period for which figures were available, up from 5.8% a decade earlier, according to the U.S. Census Bureau."

Companies like Walmart and Amazon are expanding their use of customized packaging technology, available from various suppliers, as a way of taking a more thoughtful approach to a process that generally has prioritized speed over anything else.  The result, they expect, could be millions of dollars in savings.

Published on: April 4, 2023

The New York Times has a story about what it calls the "Not Milk generation, teenagers and young adults who grew up ordering milk alternatives at coffee shops and toting water bottles everywhere. Turned off by the no-fat and low-fat milks served at school, worried about climate change and steeped in the increasing skepticism toward the dairy industry on social media, many of them have never embraced milk. Last year, members of Generation Z bought 20 percent less milk than the national average, according to the consumer market research company Circana."

The story says that "the dairy industry isn’t banking on nostalgia to save the day. It has embarked on a full-frontal marketing assault intended to do what the 'Got Milk?' mustaches on celebrities like Taylor Swift and Dennis Rodman did for previous generations."  It is targeting the gaming demographic, positioning dairy milk as a "performance beverage" and signing high-profile gamers to promote the product.

And, it is going after women by hiring female athletes as spokespeople.  The Times writes, "Although the science about the health benefits and drawbacks of milk isn’t settled, some studies have shown that chocolate milk contains basic electrolytes and a precise ratio of carbohydrates to protein that can help muscles recover after workouts … Milk processors are betting that supporting women and girls who run, and promoting gender equity in sports — with plenty of post-race chocolate milk — will change some minds."

Published on: April 4, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From Business Insider:

"Walmart is making yet another play at trying to capture some of Amazon's e-commerce market share.

"This time, the Bentonville, Arkansas-based retail giant unveiled a sleek new redesign of its website and app Monday, implementing a similar interface to its Seattle, Washington-based rival.

"The website and app feature bigger, glossier photos, and snappy names for product categories and promotions, such as 'spring for Easter must-haves' and 'fun decor under $20.'

"Tom Ward, Walmart's chief e-commerce officer, wrote in a blog post Monday that the redesign 'offers a more engaging way to browse and discover our incredible assortment.'

"'The new homepage offers a product-focused experience that better mirrors the way our customers love to shop, highlighting the items that matter most to them at any given moment,' Ward said."

CNBC writes that "the big-box retailer’s online makeover comes as consumers become more reluctant to buy discretionary merchandise, such as clothing and consumer electronics, while paying higher prices for necessities like food and housing. Sales of discretionary general merchandise in the U.S. have fallen 4% in dollars and 5% in units year over year as of February, according to Circana."

Ironic, since one of the criticisms that Amazon has been getting lately is that its site is too cluttered, and that there is so much advertising that it is sometimes hard to find the items one actually wants.  There's only one reason for this - advertising generates revenue.  But it doesn't always generate customer satisfaction.

•  Advertising Age reports that "Walmart is advertising its partnership with Paramount+ for the first time on national TV in a new push for its Walmart+ membership program.  The campaign … highlights the retailer's subscription program’s membership benefits, including free delivery on orders $35 and over, free shipping on all site-to-home orders and discounts on gasoline."

According to the story, "Walmart and Paramount's partnership gives Walmart+ members free membership in the ad-supported version of Paramount+. The duo announced the plan in August and implemented it in September. It puts Walmart+ on a more even footing with rival Amazon Prime in combining free shipping with video streaming, but at less cost. Amazon Prime membership costs $139 annually, compared to $98 for Walmart+."

It is, AdAge notes, the first national ad push in this direction for Walmart, but the motivation is clear:  "Just getting all existing Paramount+ households to join Walmart+ could more than double the latter's membership. CivicScience research late last year showed 7% of people in the U.S. reported being Walmart+ members vs. 61% for Amazon Prime."

Published on: April 4, 2023

•  From the Washington Post:

"Amazon has branded itself as a climate crusader, touting its commitment to renewable energy and sustainable practices. But in Oregon, it helped quietly quash a climate bill that would have regulated its data centers.

"The bill would have set a 100 percent carbon emissions reduction deadline of 2040 for high energy users. Its goal was to rein in industries with outsize carbon footprints, like cryptocurrency mines and data centers, of which Amazon is planning three more in the state that would be powered by fossil fuels.

"Though the bill would have matched the timeline of Amazon’s own 'Climate Pledge,' which promises net-zero carbon emissions by 2040, the company helped kill it, said Oregon state Rep. Pam Marsh … Though Amazon did not testify publicly, Marsh said the company’s lobbyists helped organize the opposition and 'successfully nurtured fear that our energy requirements would drive away the development of data centers'."

According to the story, "Amazon spokesperson David Ward said in a statement that 'a number of organizations, including Amazon, oppose HB2816 because the bill does not address the build-out of electric infrastructure that is needed to bring more clean energy to the grid'."

The Post writes that the bottom line seems to be that while Amazon has said it wants to lead a transition to renewable energy and "has invested heavily in creating the perception that it’s an environmental leader," the reality is that "its dealings in Oregon show that, behind the scenes, it wants to call the shots on how that transition happens."

•  The Information reports that "after slashing its private stock price four times last year, Instacart is feeling better about itself.

"The grocery delivery firm, whose business skyrocketed during the pandemic but later cooled off, in late February raised its internal stock price 18% compared to December, according to a person with direct knowledge. While the company’s private share price for employees is likely still down roughly 70% from two years ago, the move could presage a bump-up in stock prices of other mature startups, which typically map their valuations to publicly traded peers."

The story notes that "Instacart has been preparing for more than a year to go public but paused plans as stock market investors lost interest in initial public offerings from companies that haven’t proven themselves. The company has been poised to go public as soon as it spots a window, as it is one of the few high-profile tech firms that has been keeping its IPO paperwork updated with regulators."

Published on: April 4, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From Bloomberg:

"The Michigan attorney general’s office is telling Kroger Co. to be more direct with its shoppers about which of its eggs are cage-free.

"'On behalf of Michigan consumers, I urge you to add clear signage to your stores to help consumers understand which eggs, exactly, came from caged chickens and which did not,' Jason Evans, chief of the law-enforcement agency’s corporate oversight division, said in a March 23 letter to Kroger Chief Executive Officer Rodney McMullen.

"The letter cited a February report by Data for Progress, a think tank and polling firm that found that 'Kroger consumers seem confused and often misled by the marketing of eggs.' In the firm’s survey of 646 Kroger customers, 53% said they would like to see signs differentiating between eggs from caged and cage-free hens.

"Kroger didn’t immediately respond to a request for comment."

•  From the Wall Street Journal:

"McDonald’s Corp. has temporarily closed its U.S. offices this week and has started informing corporate employees about layoffs being made by the burger giant as part of a broader company restructuring.

"Some McDonald’s workers began to hear about the fate of their jobs Monday. The company’s corporate vice president of insurance said he was informed Monday that his position was being eliminated and he was leaving the company after 20 years."

The story notes that "the Chicago-based fast-food chain said in an internal email last week to U.S. employees and some international staff that they should work from home from Monday through Wednesday so it can deliver staffing decisions virtually. The company, in the message, asked employees to cancel all in-person meetings with vendors and other outside parties at its headquarters."

McDonald's is just one of many companies engaged in what is called a "workforce reassessment" as executives consider the implications of a global economic slowdown.

Am I wrong, or is it kind of gutless to tell everybody not to come into the office so these meetings can be held virtually?  McDonald's says it is doing it this way "to ensure the comfort and confidentiality of our people during the notification period."  But is sounds to me like it really is trying to ensure the comfort of the folks delivering the bad news.

Reminds me of "Up In The Air," the great George Clooney movie, in which a company that handles layoffs for corporations decides that it is more efficient to do so via video.  (If you've never seen "Up In The Air," you should - it is a terrific piece of filmmaking.)

•  Albertsons announced that it "has partnered with global financial services technology leader FIS, which represents supplemental health benefits administrators including Fresh Connect, PayForward and WEX that utilize its technology payment platform. Additionally, Albertsons Cos. is entering into a partnership to accept benefit cards from Soda Health, which works to improve health equity by tailoring benefits based on individual needs. Customers with FIS and Soda Health-integrated benefit cards will now be able to make purchases on eligible food and health items at Albertsons Cos. banner stores including Safeway, Albertsons, Jewel-Osco, Vons, Shaw’s, Tom Thumb and ACME."

"Soda Health" sounds like an oxymoron.

Published on: April 4, 2023

Ron Sarasin, a former US Congressman from Connecticut, chief lobbyist for the National Restaurant Association, president-CEO of the National Beer Wholesalers Association, and president-CEO of the U.S. Capitol Historical Society - and for 35 years husband to Leslie Sarasin, the president-CEO of FMI-The Food Industry Association - has passed away.  He was 88.

Published on: April 4, 2023

…will return.

Published on: April 4, 2023

In the NCAA Men's College basketball finals, the University of Connecticut Huskies defeated the San Diego State Aztecs 76-59, giving UConn its fifth championship in the last quarter century.

This followed Sunday's NCAA Women's College Basketball final, in which the Louisiana State University Tigers defeated the University of Iowa Hawkeyes 102-85.