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    Published on: April 10, 2023

    A new production of Lerner & Loewe's "Camelot" at Lincoln Center, featuring a new book by Aaron Sorkin, offered - go figure - a business lesson about playing to your strengths and minimizing your weaknesses.

    (I'll have more thoughts about business and life lessons from this production of "Camelot" tomorrow.)

    Published on: April 10, 2023

    by Kevin Coupe

    Good piece in the New York Times about a. ew sports bar in Portland, Oregon, that decided to take a unique approach that would distinguish it from other, similar establishments.

    Walk into it, and almost everything seems typical of a sports bar.  TVs showing various events.  Memorabilia, jerseys, and athlete posters hanging on the walls.  Loud music.

    "Except for one major difference," the Times writes.  "Women comprised approximately three quarters of the people who entered the bar. Only women’s sports were playing on each of the bar’s five TVs. And only pictures of female athletes — Brittney Griner, Allyson Felix and Naomi Osaka — adorned the walls.

    "A cocktail named 'Title IX' appeared on the menu, and coffee mugs read 'Just Women’s Sports.'  The two all-gender bathrooms housed a baby changing table and free organic pads and tampons."

    The establishment's name:  The Sports Bra.

    Its slogan:  “We support women.”

    "The 43-year-old owner, Jenny Nguyen, a longtime chef and former basketball player, said 'the Bra,' as she calls it, is dedicated exclusively to women’s sports," the Times writes.

    According to the story, "Ms. Nguyen opened the women’s sports oasis during last year’s N.C.A.A. basketball tournament, a fitting occasion because it had inspired the idea four years earlier. That was when Ms. Nguyen and her friends were holed up in the corner of a sports bar, watching the 2018 women’s final on a small TV in the corner with the volume off. As they celebrated a nail-biting victory by Notre Dame, they were met with stares and confusion.

    "Ms. Nguyen joked at the time that they would be able to really enjoy a women’s game — with the sound on — only if they had a sports bar of their own. So she opened one."

    It is a timely moment in which to open such an establishment.  The Times notes that "women’s sports and female athletes are revered at the Bra, which many spectators noted isn’t often the case outside. In recent years, U.S. women’s soccer players spent years fighting for equal pay and against systematic abuse and misconduct. And N.C.A.A. women’s basketball players raised awareness about gender disparity, among other battles."

    And, one interesting thing about the Sports Bra is that it "has become as much a haven for the L.G.B.T.Q., feminist and vegan community as it has for women’s sports fans."

    Everybody is seeking community.  It is Eye-Opening, I think, when an entrepreneur finds a new way to do so.

    Published on: April 10, 2023

    Walmart late last week announced plans "to make electric vehicle (EV) ownership more accessible, reliable, convenient and affordable for them across the country."

    Vishal Kapadia, the company's senior vice president or Energy Transformation, said that "by 2030, we intend to build our own EV fast-charging network at thousands of Walmart and Sam’s Club locations coast-to-coast. This would be in addition to the almost 1,300 EV fast-charging stations we already have available at more than 280 U.S. facilities … At the same time, as more drivers transition to EVs, our network growth will help expand domestic EV charging capacity across states."

    Kapadia noted that "with a store or club located within 10 miles of approximately 90% of Americans, we are uniquely positioned to deliver a convenient charging option that will help make EV ownership possible whether people live in rural, suburban or urban areas."

    The Washington Post writes that "electric car sales are rising sharply from a small base. Fully electric vehicles made up 7 percent of new vehicle registrations in the United States in January, compared with 4.1 percent a year earlier, according to S&P Global Mobility. But consumer worries about high prices, sparse charging infrastructure and the risks of road-testing new technology are still obstacles to mainstream acceptance."

    KC's View:

    Walmart is making a bet that we're reaching a tipping point when it comes to EV ownership, and it would seem to be a smart bet.

    Indeed, the US government is doing its best to push the country in that direction;  the Detroit News wrote late last week that "the Biden administration is on track to propose the toughest-ever U.S. curbs on car pollution, while stopping short of an electric-vehicle mandate or ban on gas-powered models.  The proposed standards on cars and light trucks, set to be announced Wednesday in Detroit, are expected to govern tailpipe emissions of carbon dioxide, smog-forming nitrogen oxide and other pollution from vehicles manufactured for model years 2027 through 2032."

    At the same time, the Washington Post writes, "Making electric cars an easier reach for the masses remains a major pillar of the Biden administration’s green energy policy. The White House aims to address the charging gap with funding from the bipartisan infrastructure law, which provides $7.5 billion to subsidize construction of EV charging stations. The federal government has begun distributing that funding to states."

    And, we've already seen companies like 7-Eleven commit to creating substantial charging station networks.  So while Walmart is out in front, it is not entirely alone there.

    One expert tells the Post that EV growth has been inhibited by a "chicken and egg" problem, with not enough chargers available.  Now, it appears, companies like Walmart have decided that they want to own the chicken.

    Published on: April 10, 2023

    The Wall Street Journal reports that Amazon-owned Whole Foods is mulling a return to the use of company-owned centralized commercial kitchens that would make food sold from its food bars and refrigerated cases.

    The story notes that "Whole Foods said in early 2017 it was closing three commercial kitchens, part of a broader effort to streamline operations and cut costs before Amazon acquired the company later that year. One of the kitchens had previously received a warning from the U.S. Food and Drug Administration for potential contamination and microorganism growth. 

    "After the FDA warning, Whole Foods closed the kitchen temporarily for a deep clean and discontinued the processing of meat, poultry and raw seafood in that facility.

    "The company said in 2017 that the decision to shut down the kitchens wasn’t related to food-safety issues. Since the closures, the grocer has used outside suppliers to make most of its prepared foods, a practice common in the grocery industry."

    Now, the Journal  writes, the retailer seems to believe that "operating its own kitchens could help Whole Foods better control the quality of its multibillion-dollar prepared-foods business, and the grocer is also considering buying existing kitchens."

    Some context from the story:

    "Whole Foods’s prepared foods, such as pizza and soups, traditionally have been a draw for shoppers, and the Austin, Texas-based company has a team that formulates recipes for ready-to-eat and prepackaged meals. It sells some region-specific items, and its prepared foods follow the company’s quality standards that prohibit ingredients such as high-fructose corn syrup. 

    Partly by using suppliers, Whole Foods has expanded its prepared-foods business in recent years, launching catering services, expanding its bakeries’ cake lineups and selling meals online. The company also runs in-store eateries such as coffee bars and wine bars … Whole Foods executives have signaled plans in recent months to improve the shopping experience for its customers. The company is expanding in-store demo and sampling programs, according to a memo sent in February to grocery brands. Executives recently told suppliers at a virtual summit that they want to bring back excitement to stores as the company plans to open about 50 locations."

    KC's View:

    I'd be curious to know if this is about quality and availability, or if it is about reining in costs.

    I've never been a big fan of Whole Foods' prepared foods.  I think they're okay, and better than some supermarket prepared foods, but that's not exactly a high bar.  It is like they're just a better version of vanilla, not anything unique and challenging and innovative.

    So mark me down as skeptical.  Willing to be convinced, but not yet persuaded.

    Published on: April 10, 2023

    Interesting interview from CNBC with Nworah Ayogu, chief medical officer and general manager of Amazon Clinic, in which he looks to differentiate the approach that Amazon is taking in its various healthcare initiatives.

    A key precept, Ayogu says, is moving away from medicine's traditionally "paternalistic" positioning in which "care can be a thing that we do to patients rather than with patients or for patients."  Amazon, he says, believes that the patient also needs to be seen as a customer, "the person you’re serving, that’s the person who’s making the decisions, and it’s a different phrase, right? It kind of shifts the power dynamic where the customer is the one who is deciding what happens, they are directing things, and the rest of us are going to serve the customer … It’s a frame that I like because it puts us in kind of a servant mentality and mindset."

    "At the end of the day, all patients, all customers, all people want to be healthy,” Ayogu tells CNBC.  "The reason why they’re not healthy is because the health system has all these barriers, so whether that is cost, confusion … some are societal, some within the health-care system, so that’s really on us to remove those barriers and think through how we do that … We’re only three years into this journey writ large, but when we think about what we’re trying to do, it’s really about making it dramatically easier for customers to find, to choose and to afford the products and services they need to get and stay healthy."

    CNBC reports that "Ayogu noted that Amazon has hundreds of millions of people using its products and services each day, and that’s a good place to begin to disrupt the health-care status quo.  'To me, it was really about thinking through if we can have just a fraction of those people, if we can impact them, that’s such a massive scale to do good, so it’s really being able to zoom in and think through how we can use those resources and point those toward health'."

    KC's View:

    This is very much in line with Amazon's traditional and disruptive approach, though perhaps a little out of the current "cost cutting" lane that Amazon seems to have been prioritizing lately.

    I'm not completely on board with the idea that companies like Amazon, Walmart, CVS and Walgreen are best positioned to offer front-line healthcare services.  They may be best positioned to disrupt traditional healthcare systems, but that is a very different thing.

    I also recognize that I'm not the best person to make these judgements.  I have a general practitioner who is terrific.  While her practice is part of a hospital system (Yale New Haven), she operates like an old fashioned family doctor.  (Think Burt Lancaster in Field of Dreams, except that I have no idea if she can hit major league pitching.). Most importantly, I completely trust her, and am happy to be treated like her patient, not her customer.

    But not everyone is so lucky.

    Published on: April 10, 2023

    WholeFoods magazine (which is not owned by Whole Foods Market) writes about a new YouGov survey saying that "86% of adults in the United States feel the planet is worth saving, and that of those 86%, more than half (51%) agree that protecting the planet is important, but they feel they are unable to help."

    In addition, the survey says, "62% of all U.S. adults agree 'food choices can impact the planet,' while 52% agree that they would be willing to make a switch to an alternative food brand if it could impact climate change."

    Among the possible changes cited in the story are "reducing cows methane output through certain meals," and "planting more vegetation," since "trees and plants are carbon sinks, meaning they absorb more carbon from the atmosphere than they release."

    KC's View:

    So does this mean that 14 percent of the US adult population doesn't think the planet is worth saving?

    Just speaking for myself, I'd like to know who these folks are.

    Also, I'd like to know the percentage of Americans who a) feel the planet is worth saving, and b) are relatively certain that the whole thing is FUBAR.

    Published on: April 10, 2023

    From the Wall Street Journal:

    "Private-equity funds went on a buying binge for food companies before markets crashed in 2022. Now they have indigestion that is contributing to rising prices at the grocery checkout.

    "The funds snapped up a record 786 makers of food and beverages worth $32 billion in 2021, using bundles of debt to pay for their purchases, according to data from S&P Global Market Intelligence. The financiers projected that staple goods would keep making profits no matter how the economy fared. But that forecast changed, with the food industry soon hammered by higher labor costs, supply-chain disruptions and surging inflation.

    "Now food manufacturers are earning less cash to cover their heavy debt loads. The squeeze is heightening pressure to further raise prices that have skyrocketed over the past year. It is another example of how the Federal Reserve’s aggressive rate-raising campaign is shaking up every corner of the economy."

    The story notes that "food prices rose far faster than the 6.5% jump in the consumer-price index last year. Processed-food prices shot 14% higher last year, almost four times the 20-year annual average, while fruits leapt 18% and vegetables soared 51%, according to the U.S. Bureau of Labor Statistics."

    You can read the entire story here.

    KC's View:

    In some ways, this is an old story.  Companies get acquired by investment firms that then load these companies down with debt, which means that prices have to be increased - sometimes putting the brand's equity at risk - in order to service the debt.

    I hadn't thought about the increase in food prices in this context until reading the Journal story, but it is a great point.

    Published on: April 10, 2023

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  From the Washington Post:

    "Tech giant Amazon has been conspicuously absent from the mounting AI wars in Silicon Valley, despite its years-long development of voice assistant Alexa and investment in cloud computing and machine learning.

    "But at a recent all-hands meeting for cloud computing employees, executives assured staffers that the company hasn't fallen behind.

    "'We have a lot happening in the space,' Swami Sivasubramanian, Amazon’s vice president of database, analytics and machine learning, said at the March meeting, according to a recording obtained by the Washington Post. 'We have a lot coming, and I’m very excited to share some of our plans in the future'."

    The story notes that "when generative AI exploded onto the scene with the launch of ChatGPT in November, it was the formerly nonprofit research group OpenAI that won laurels. Tech giants Google and Microsoft (the latter of which invested billions in OpenAI) scrambled to catch up, launching chatbot products Bard and Bing, respectively, not long after.  But Amazon was nowhere in the mix, despite operating a massive cloud computing business, having the most employees and a market valuation of more than a trillion dollars."

    Here's how Sivasubramanian Amazon's position:

    “If you look at our track record on how we innovated in machine learning, we really paved the way for adoption of machine learning among mainstream enterprises and customers.  We are excited to do the same in this space because this space is rapidly evolving, but we will do it in an Amazonian way. We will listen to customers and look at what areas they really need help and how to make them successful in this space."

    I do think Amazon's Alexa-powered systems are well positioned to take advantage of the burgeoning AI segment, largely because Amazon should have a better sense of practical, actionable customer needs.  But the company already has conceded that this segment of its business has been losing money, and it will take further investment to make a splash in the generative AI biz.  So we'll see.

    Published on: April 10, 2023

    •  Women's Wear Daily has a story about how Walmart CEO Doug McMillon told analysts that a core tenet in the retailer's plan to grow sales by $130 billion over the next five years is to connect bricks to clicks with an omnichannel approach that is “about service to our customers and members. We don’t exist if we don’t serve them well across our markets.

    “They can take their phone and shop anywhere, anytime they want,” the CEO said. “They can pick up an order or they can have it delivered in some markets. They can have it delivered all the way into their refrigerator. We’ve now scaled those capabilities and are well-positioned for future growth.” 

    McMillon also said that raising expectations about Walmart's fashion offerings is key to this strategy:

    “As higher income customers come to us, whether that’s in Walmart or Sam’s Club, our opportunity to do good, better, best merchandising is a fantastic opportunity.  We can put fashion apparel out under the Scoop brand or the Free Assembly brand and everybody responds to that in those income levels. I think the apparel business in Sam’s Club…is another example. So one of the things I love about this business is how flexible it is.

    “You can be a merchant with opening price points, you can be a merchant with better goods, you can do that in stores, you can do that in clubs, you can do that online,” he said.

    •  From the Wall Street Journal:

    "Walmart Inc. is suing Capital One Financial Corp., seeking to terminate the companies’ credit-card partnership.

    "Walmart’s lawsuit … alleges that Capital One didn’t meet certain terms of the card partnership contract. The case was filed in the Southern District of New York.

    "Walmart alleged that Capital One didn’t provide the customer service it was obligated to offer, such as replacing lost cards promptly. It also alleged that Capital One didn’t promptly post some transactions and payments to cardholders’ accounts.

    "A Capital One spokesman said Friday: 'These immaterial servicing issues were cured by Capital One pursuant to the terms of the agreement, without harm to customers, the program, or Walmart.'

    "The spokesman said Walmart’s lawsuit 'is an attempt to renegotiate the economic terms of the partnership it agreed to just a few years ago, or end the deal early.'  He said that Capital One 'will vigorously protect our contractual rights in court'."

    Published on: April 10, 2023

    •  From Axios:

    "The U.S. labor market continues to add jobs at a strong pace: Payrolls rose by 236,000 in March, while the unemployment rate ticked down to 3.5%, the lowest level in over a half-century, the Labor Department said on Friday.

    "Why it matters: Employers still have plenty of demand for workers, despite aggressive efforts from the Federal Reserve to cool off the economy."

    The Associated Press adds that "at the same time, some of the details of Friday’s report from the Labor Department raised the possibility that inflationary pressures might be easing and that the Fed might soon decide to pause its rate hikes. Average hourly wages in March were up 4.2% from 12 month earlier, down sharply from a 4.6% year-over-year increase in February."

    And, "In another sign that might reassure the Fed’s inflation fighters, a substantial 480,000 Americans began looking for work in March. Typically, the bigger the supply of job seekers, the less pressure employers feel to raise wages. The result is often an easing of inflation pressures."

    Published on: April 10, 2023

    Last Thursday I posted a FaceTime video that I recorded in Chicago, where I went to the giant Starbucks Roastery on Michigan Avenue  because they are among the first of the company's US stores to be serving Oleato - the coffee-with-olive-oil concoction that former CEO Howard Schultz has described as "transformational."

    MNB reader Phil Smith responded:

    Love the Ode to Oleato and the humility how you presented it given your general tenor towards Howard lately. I’ll have to try it in Seattle’s Reserve next time. 

    I’ll keep you posted on CBD Coffee development here in Portland. No matter the coffee, caffeinated versions have no afternoon business. That Oleato May be great but I doubt it will provide incremental volume. Until coffee figures out how to incorporate a flip side functional benefit to caffeine such as CBD, any innovations are just breathing recycled air.

    And another MNB reader wrote:

    You should change your mantra from MorningNewsBeat to “On the road with Kevin”. These visits are fantastic. Thanks.

    It is my pleasure.

    If I've learned anything in my career, it is that I'm able to find business lessons pretty much anywhere.  If I could figure out how to pivot my business model so that all I do is travel and find lessons and stories in unexpected places, I'd do it.

    Last week we took note of a Business Insider report that an internal memo at Amazon recently informed managers "that employee stock awards - called restricted stock units, or RSUs - for 2025 will be reduced due to the economic climate and company budget. The document also cited a possible change in Amazon's pay model that would give staff more cash, a change that could make up for any potential weakness in its stock price."

    The story noted that "Amazon has historically offered less base cash pay compared to some of its peers. Instead, it has used stock grants - and the potential for massive share price increases - as a means to attract talent. That strategy worked very well when Amazon shares surged from 2009 through most of 2021. But last year, the stock plunged, undermining the value of RSUs as an employee retention tool."

    I commented:

    This makes sense at a time when Amazon's share price has been struggling, and we've even begun to see some headlines questioning whether the company is being overvalued.  To be fair, though, there also have been a lot of stories lately suggesting that Amazon's stock is a great buy at current levels, that a price surge in inevitable.

    I like the idea that the company is responding to employee concerns by giving them what they appear to want.  Though, if I worked for Amazon - and depending on what my financial solution happened to be at the time - I'd like to think that I would prefer lots of stock.  Assuming, of course, that I continued to believe in the company and current management.

    MNB reader Tim Callahan wrote:

    You can’t use your “restricted stock units” to buy this week’s groceries that have dramatically increased in price. Cashing in some stocks two years from now doesn’t solve TODAY’S problems!

    You might be looking at this from the wrong side of the fence!

    Agreed.  But I did say that I'd "prefer lots of stock" depending on the state of my own financial situation at the time.

    Another MNB reader responded:

    The best plan would be one that improved base salary compensation but also offered employees a choice of how much of their performance “bonus” would be paid in cash or stock options.

    Lots of companies offer such a choice…including a premium (2X or 3X value) for choosing stock options.

    We also had a piece last week about how Ahold Delhaize-owned Stop & Shop is closing a Greenwich, Connecticut, store, with the Connecticut Post linking the closure to "the opening a couple of years ago of a Wegmans in Harrison, New York, an 'an easy drive for many in Greenwich'."

    All Stop & Shop said was that the store was not meeting "financial expectations."

    I commented:

    Part of the problem with that store was that it is small and undistinguished - there's no reason that a smartly run store with a strong specialty foods focus can't make it there.  I wouldn't even describe the Stop & Shop as being in the mushy middle;  it is just mushy.

    This may be a problem that Stop & Shop eventually will face in Connecticut, where Wegmans has announced its plans for a new store in Norwalk.  As I've written here before, it will be across the street from a Walmart (not a supercenter), a third of a mile from a Costco, less than a mile west of a Super Stop & Shop and a ShopRite in Norwalk, one mile from the Darien Trader Joe's, less than two miles east of a not-so-super Stop & Shop in Darien, about two miles from the Darien Whole Foods, 3.8 miles from an independent grocer called Palmer's, also in Darien, and 4.5 miles west of Stew Leonard's in Norwalk.

    I know and shop at all of those stores (some more than others).   I live about 2.5 miles from the Norwalk Wegmans site.  And in a lot of ways, I think those two Stop & Shop stores will be most vulnerable when Wegmans opens.

    One MNB reader wrote:

    Living in Stamford, Connecticut, I often wonder about the business validity of some of these supermarkets and their locations.

    If you head to West Stamford, the ShopRite does gang busters, while the very large Stop & Shop across the street is as sleepy as it comes. They simply can’t compete on price, and also assortment to some degree and services (the ShopRite has a pretty darn good butcher, fish monger, prepared foods etc…).

    Finally, last week we reported that "in two weeks, Walmart plans to reopen the store in Chesapeake, Virginia, that was the site of a mass shooting that resulted in the death of six employees.  The store reportedly has undergone a significant remodel, and will include a permanent memorial to the employees who were killed by a team leader at the store, who committed suicide after murdering his colleagues.  The memorial, Business Insider reports, 'will include foliage and six seating structures in honor of the six victims, 'providing a peaceful place for people to pause and remember the permanent impact these associates made on our lives,' according to Walmart."

    I commented:

    It is nice that the store will have a memorial, but the nicest memorial would be an approach to public policy that actually deals with the issue of gun violence.  I'm so sick of people who believe we can't do anything, or that "thoughts and prayers" are an adequate response.

    "A peaceful place for people to pause and remember?"  I think that in some ways, that is precisely the wrong reaction to the epidemic of mass shootings that makes stores and schools and churches unsafe and definitely not peaceful.

    One MNB reader responded:

    Looking at the news in some states you would think parents are most worried about children seeing people dressed in drag or reading uncomfortable history.

    The fact that there are almost weekly school shootings doesn’t seem to register. There are simply too many guns being sold to people that have no business owning them. 

    Oh, come on.

    Are you seriously suggesting that our nation and culture ought to prioritize the banning of some people from owning guns, or banning unqualified or untrained people from owning guns, over the banning of books and drag shows?

    How can you suggest such a thing and consider yourself a serious person?

    Published on: April 10, 2023

    •  Jon Rahm this weekend won the Masters at Augusta National Golf Club with a score of 12-under par.  It was Rahm's second career major victory after his 2021 U.S. Open win.