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    Published on: April 14, 2023

    From Fox Business:

    "Food and drug retailer Kroger Co on Wednesday asked a U.S. judge to dismiss as 'speculative' a consumer antitrust lawsuit alleging the company's proposed $24.6 billion acquisition of rival Albertsons Companies Inc would lessen grocer competition and drive up prices.

    "Lawyers for Kroger said in a filing in California federal court that the grocery store shoppers who sued over the deal have failed to define the relevant market necessary to evaluate grocery store competition and to identify how the acquisition would hurt consumers. The attorneys said the lawsuit was lacking 'real-world facts'.

    "U.S. competition law 'does not turn every grocery store consumer in the country into a roving antitrust enforcer,' lawyers for Kroger told U.S. District Judge Vince Chhabria.

    The suit was filed by 25 consumers from states that include California, Texas and Florida, and come as the proposed acquisition is being scrutinized by both federal and state regulators.

    KC's View:

    I'm not a lawyer, but aren't most lawsuits "speculative," in that they take a position opposite that of another entity and then go before and judge and jury to attempt to prove that the speculation is factual?

    And since Kroger and Albertsons both maintain that this merger is not anti-competitive and in fact is pro-consumer, shouldn't consumers actually have the most standing, rather than the least, to challenge the deal?  "Roving antitrust enforcer" may sound ominous, but this sounds more like consumers finding and using their voices to influence public policy.  Isn't that a good thing?  And shouldn't, at some level, Kroger and Albertsons welcome the opportunity to prove their case in a public forum?

    I'm not even against the merger.  I'm just asking.

    Published on: April 14, 2023

    Bloomberg reports that Walmart is selling its Bonobos menswear brand for $75 million - $235 million less than it paid for the brand a half-dozen years ago.

    Bonobos is being sold to "WHP, owner of such brands as Anne Klein and Joseph Abboud, will pay $50 million for the Bonobos brand," as well as a part owner of the Express retail brand.

    Bloomberg writes that "the deal adds to a list of fashion flops for Walmart, which has a record of acquiring apparel businesses only to offload or shutter them later. In 2020, the company announced the sale of its footwear website,, and its lingerie brand, Bare Necessities. The previous year, it announced the sale of ModCloth, a women’s fashion apparel business."

    The Information writes that Walmart "once hoped it and other direct-to-consumer brands, including retro clothing brand ModCloth and plus-size fashion line Eloquii, would lure younger shoppers to its e-commerce site. But that strategy, which was led by serial entrepreneur and founder Marc Lore, was initially plagued by heavy losses, and the company shifted its focus to its membership program and online grocery business. Walmart most recently sold outdoor brand Moosejaw, which it purchased in 2017 for around $51 million, to Dick’s Sporting Goods for an undisclosed price in February."

    This could be seen as deja vu all over again for Walmart.  Bloomberg notes that "over the years, Walmart has frequently stumbled in its efforts to sell apparel beyond essential items such as socks and underwear. In 2010, the company vowed it was 'going back to basics' by focusing on customers’ 'everyday needs' after a push to go more upscale failed to gain traction. 

    A year later, Walmart closed its New York apparel office as part of its retrenching. 'We don’t need to be on Broadway to sell socks and underwear and T-shirts,' a spokesman said at the time."

    “Bonobos joined the Walmart family to expand our assortment and expertise in menswear,” Walmart said in an emailed statement to Bloomberg. “Since acquiring Bonobos, has grown from 70 million to hundreds of millions of items. After nearly six years, we’ve decided it’s the right time to sell Bonobos.”

    KC's View:

    I know Walmart likes to talk about "always low prices," but this isn't exactly what it had in mind.

    I remember when Walmart went on that buying spree a half-dozen years ago, acquiring a number of fashion brands that seemed out of step with its core brands.  But rather than criticize Walmart for these moves, almost all of which have been undone, I'd like to suggest that it should be applauded for trying new things and making unconventional moves.  If Walmart learned from the experiences, that's a good thing.  A costly lesson, sure, but Walmart can afford it.

    Published on: April 14, 2023

    Amazon yesterday announced what it is calling Amazon Bedrock, described as "a new service for building and scaling generative AI applications, which are applications that can generate text, images, audio, and synthetic data in response to prompts."

    The Wall Street Journal writes that this makes Amazon "the latest tech giant to try to cash in on generative AI, the technology behind ChatGPT.

    Unlike the offerings from Alphabet and Microsoft, which have been designed for the general public, Amazon's is "targeting corporate customers. In addition to new AI tools, the company is expanding access to custom-made chips that it says can run AI software more efficiently and cheaply than competitors … AWS is forging a different path, so far avoiding a major investment in an outside AI company or consumer-facing tools. It says it wants to act as a neutral platform for businesses that want to incorporate generative AI features. By not being tied to any one AI startup, AWS is marketing itself as the Switzerland of the cloud giants."

    Gizmodo writes that "all this means the online retail giant isn’t putting any multi-billion dollar investments into a separate company like Microsoft has with OpenAI or sinking billions of dollars into generative artificial intelligence like Google and Meta have. The only direct competition is Amazon’s new CodeWhisperer, a generative AI model used to generate code. Microsoft’s similar GitHub CoPilot has already been sued by developers who say Microsoft blatantly ignored their code license."

    KC's View:

    I'm intrigued by the idea that Amazon decided to take a different approach that the other tech giants.  Is this a matter of playing catch-up in an unaccustomed way?  Being more surgical and strategic?  Or not taking the big swing for reasons connected to economics and budgets?

    I have no idea.  I don't even know if this could be characterized as a small swing.

    Maybe this is more about mythology than anything else, but I wonder if Jeff Bezos would've done something bigger and more consequential.

    Published on: April 14, 2023

    Advantage Solutions is out with a new report, “Beyond the Pharmacy,” which concludes:

    "Despite their popularity for prescription filling, drugstores aren’t shoppers’ top choice for over-the-counter medications or other healthcare and personal care items. Nearly six in 10 U.S. adults (58%) who shop at least once a year at drugstores regularly choose a mass merchandiser for these items. About half say they regularly buy these products at drugstores and one-fourth say they typically buy these items at supermarkets."

    "Mass merchandisers are also winning in the beauty category; nearly six in 10 drugstore shoppers regularly buy beauty items at mass merchandiser stores. Almost 30% say they typically buy these items at drugstores and/or beauty stores. About one-fifth frequently buy them at supermarkets and about the same amount frequently purchase them online."

    As more retailers offer low-cost, basic healthcare services, close to half (45%) of adults said they’d be somewhat or very likely to visit a clinic inside a drugstore for non-emergency treatment or healthcare advice. Four in 10 are likely to visit a clinic inside a mass merchandiser and three in 10 say they’re likely to visit a health clinic at a supermarket."

    Published on: April 14, 2023

    •  From the Washington Post:

    "Amazon has requested its first round of economic incentive payments from Virginia for its new Arlington headquarters, a sum that could mean more than $152 million in state money paid to the tech giant by late 2026.

    "The state had committed to give Amazon up to $750 million for these new Northern Virginia offices, the first phase of which is set to open in June.

    "But no money has been paid out yet: The company declined over the past three years to seek out these performance grants amid the coronavirus pandemic, Amazon spokesman Zach Goldsztejn said.

    "The company’s application, which was submitted by an April 1 deadline, comes during a turbulent period for the company. Amazon has laid off tens of thousands of employees and announced last month that it would pause construction on the second part of its campus, including three office towers as well as a futuristic 'Helix' just a stone’s throw from the Pentagon.

    "Virginia’s incentives for Amazon are supposed to reward the company’s progress toward its stated goal of creating 25,000 new jobs in the commonwealth by 2030.  According to the deal, state officials will pay the company $22,000 for each full-time job with an average salary of $150,000. (That salary is supposed to climb slightly each year.)"

    Published on: April 14, 2023

    •  From the Associated Press:

    "US applications for jobless benefits rose to their highest level in more than a year, but remain at relatively low levels despite efforts by the Federal Reserve to cool the economy and job market in its battle against inflation.

    "US jobless claims for the week ending April 8 rose by 11,000 to 239,000 from the previous week, the Labor Department said Thursday. That’s the most since January 2022 when 251,000 people filed for unemployment benefits.

    "The four-week moving average of claims, which evens out some of the week-to-week fluctuations, rose by 2,250 to 240,000. That’s the most since November 2021."

    •  From the Associated Press:

    "US wholesale prices fell in March, a sign that inflationary pressures in the economy are easing more than a year after the Federal Reserve began aggressively raising interest rates.

    "Plunging energy prices pulled the government’s producer price index down 0.5 percent from February to March; it had been unchanged from January to February. Compared with a year ago, wholesale prices were up 2.7 percent in March — the mildest 12-month increase since January 2021 and down significantly from a 4.7 percent annual rise in February."

    •  New Jersey apparently wants to spend $240 million to attract food retailers to its food deserts.

    Here's the gist:

    " The New Jersey Economic Development Authority (NJEDA) Board … approved proposed rules for the $240 million Food Desert Relief Tax Credit Program, which will help address food access challenges by attracting and retaining new supermarkets in the 50 Food Desert Communities (FDCs) designated by the NJEDA last year. Additionally, the Board approved the sale of up to $50 million of the $240 million in tax credits in 2023, the proceeds of which will fund future grant, loan, and technical assistance programs under the Food Desert Relief Act (FDRA). These programs will help increase availability of nutritious foods and develop new approaches to alleviate food insecurity."

    The announcement says that "the Food Desert Relief Tax Credit program establishes two types of tax credits that encourage resiliency of supermarkets for a lasting impact on communities. Both are available to new and rehabilitated supermarkets within the areas designated as FDCs, which span all 21 New Jersey counties and are home to over 1.5 million residents. The Financing Gap Tax Credit will provide up to 40 percent of project’s costs for development of the first new supermarket located in any one FDC, and up to 20 percent for the second new supermarket. The Initial Operating Cost Tax Credit will be available to supermarket operators to help fill a shortfall in initial operating income."

    Published on: April 14, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  Heritage Grocers Group, the parent company of Cardenas Markets and Tony’s Fresh Markets, announced that Darren Karst has been named the company's CFO.  Karst is the former senior executive vice president/CFO/CAO at Rite Aid, as well as former EVP/CFO at Roundy's.

    Published on: April 14, 2023

    Bloomberg reports that "Edwin Artzt, who as chief executive officer of Procter & Gamble Co. doubled profit during the 1990s while eliminating unprofitable brands, closing factories, and expanding business overseas, has died. He was 92.

    "He died on April 6, Procter & Gamble said on its website, without giving details. Mr. Artzt 'had the foresight and competitive spirit to position P&G for success, and he led with conviction and courage,' current CEO Jon Moeller said in a statement."

    Published on: April 14, 2023

    Amazon CEO Andy Jassy posted his annual shareholder letter yesterday, and I wrote:

    In the letter, Jassy concedes that Amazon has not found the grocery format that it believes will drive sales and innovation in that segment, and write that "we must find a mass grocery format that we believe is worth expanding broadly."

    One MNB reader responded:

    To me KC, this means buying a large grocery retailer, which is never going to pass FTC muster. 

    I agree with you about the FTC, but disagree that acquiring a chain will be Amazon's solution.  Maybe, but I don't think so.

    From another reader:

    Maybe Jassy’s shareholder letter will convince the federal regulators that the definition of grocery industry “competition” should include Walmart, Amazon and Costco.    Just a thought – their model of a local, “mom & pop” industry is very outdated.

    Yesterday I pointed to a Wall Street Journal piece about how Uber Technologies CEO Dara Khosrowshahi last year "made dozens of trips as a ride-share driver … ferrying people around the hills of San Francisco."  I commented:

    I bring this up not because of the details of what Khosrowshahi found and how it is impacting Uber, but rather because what he did was so important - getting out from behind the desk and experiencing the company's value proposition on the ground.

    That's what every CEO should do - get out in the stores, push carts, run checkouts, sweep floors, stock shelves.  It gives them not just street cred, but actual street knowledge.

    And it should be both an ongoing and regular effort - I would argue that CEOs also need to do this in stores that aren't in headquarters' back yards, but in stores located far from home that maybe don't get the attention they should. 

    MNB reader Mike Starkey responded:

    KC…I couldn’t agree more!  Back in my Lucky Store days, I worked for a SVP of Merchandising who required all of us to be out in our stores as a reminder that our cash registers were NOT in our offices in Buena Park.  As a result, and based on feedback from our stores, our business decisions were often much, much better than what any spreadsheet was telling us.

    Thanks for all you do, very much appreciate the MorningNewBeat!!

    My pleasure.

    Finally, just to follow up on something:

    The other day, responding to an MNB reader who wrote in about the need for better and more effective gun legislation, I wrote:

    “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?”

    Which led another MNB reader to write:

    I would love to know what % of readers didn’t realize you were being sarcastic.

    I responded:

    Not enough.

    And now, from another reader:

    I really hate weighing in on politically divisive comments, but I certainly understood you were being sarcastic.  And while I agree that there needs to be more common sense gun legislation, there also has to be enforcement.  And at the risk of wading into the divisiveness, gun ownership has not changed drastically over the past five decades but mass casualty events certainly have.  Isn’t it fair to contemplate what societal changes have been occurring and how that might be impacting the destructiveness of this issue?

    Sadly sarcasm is as poor of a solution as thoughts and prayers until we address what are the real issues driving these horrible situations.

    To be honest, sarcasm is all I've got.  (In addition, of course, to my vote.  And a ton of attitude.)

    As long as we live in a society where people cannot go to school, church, the bank, the movies, a concert, or a store without being in danger - and where, as you say, mass casualty events have skyrocketed - I'm willing to entertain a wide range of solutions when it comes to addressing the problem.  That includes greater investment in mental health programs and more stringent requirements to gun ownership.  And, of course, better enforcement of current laws, though I'm open to new laws - how about a national law that says if you commit a crime and are carrying a gun, you get a minimum 10 year sentence?  And if you commit a crime and you fire a gun - regardless of whether anyone is injured or killed - you get a minimum 20 year sentence?

    I don't have school-age kids, but I do have a daughter who is a teacher, and there is something deeply wrong with a society in which I have to worry that she could get shot while protecting her students.

    Published on: April 14, 2023

    We've had some discussion here this week - prompted by Walmart's decision to close half its Chicago fleet of stores and Whole Foods' move to shutter (temporarily?) a San Francisco flagship open only about a year - about the problematic situations in which many American cities find themselves.

    Part of this, I'm afraid, was my fault.  After all, I used the term "urban decay."  That's not really fair, since "decay" suggests neglect, and I'm not sure that's what is happening here.  Rather, there have been a set of circumstances that have affected many American cities.  Some of these factors have been unexpected and could not be prepared for (like a pandemic that emptied out cities' office buildings and sent people scurrying for the suburbs).  And some have been the result of bad choices (distinct from choices being made for bad reasons).

    Now it is up to many of these cities to take seriously the words of Ernest Hemingway, in "A Farewell to Arms:"

    "The world breaks everyone and afterward many are strong at the broken places."

    There are a lot of broken places in a lot of cities.  Now is a time for healing, to make these places stronger and more resilient for the long term.  As I said the other day, cities are America's engines - they drive progress in areas of finance, culture, diversity, and culinary innovation.

    It is this last that I want to write about today, since two weekends ago I had the chance to spend a little time in Chicago, and got a first-hand taste of  the kinds of food that, to be perfectly honest, we just don't get in my little corner of Connecticut.

    We started out on Friday night with great friends of ours at a wonderful tapas restaurant called Mercat a la Planxa, located in the Blackstone Hotel (which looks like something out of The Untouchables, overlooking Michigan Avenue and Grant Park.  The food was extraordinary, featuring things like pan de cristal bread, tomato, arbequina olive oil;  potatoes, salsa brava, garlic aioli, chili oil;  spinach croquette, tomato jam, saffron aioli;  caramelized onion and potato omelet, ensalada, cream;  shrimp, bird's-eye chili, garlic, shrimp jus;  scallion, aleppo pepper, piquillo pepper, jerez sherry, coriander.  My mouth is watering just as I type these words - the various dishes were spicy and flavorful and perfect for what ended up being a rainy Chicago evening.

    The next evening, we ended up at a place called Ramen Wasabi.  Now, my son and his girlfriend picked it out, and to be honest I didn't have high hopes for this "ramen restaurant."  But again, outstanding - I cannot recall ever enjoying ramen as much.

    A quick story.  When we finally got our table (and there was a long line, always a good sign), I perused the menu.  Mrs. Content Guy, my son and his girlfriend all identified the ramen dishes they wanted, but I was hesitant.  So when the waiter came over, I said, "My son has been raving about the ramen, and they're all going to have ramen, but there is this tuna poke rice bowl on the menu that looks really, really good.  Would I be making a mistake if I ordered that instead?"

    Without missing a beat he said, "Get the ramen."  So I did - I'm not afraid to take guidance from experts.  I had the Hakata Red ramen, described on the menu as "Berkshire belly char siu, scallion, marinated bamboo shoots, black mushroom, soft boiled egg, pickled ginger, house numbing spice blend."  It was knock-your-socks off fantastic, and it didn't even bother me when the waiter - with a smile - brought me a fork.  (I can handle a set of chopsticks, but he was having some fun with me.)

    The next morning, we went to a Latin American restaurant for brunch - Crio, where I had some of the best chilaquiles I've ever had in my life.  (And I am a chilaquiles fiend!)  They were made with crispy tortillas, green tomatillo Sauce, black beans, chihuahua cheese, lime cream, avocado, sunny side egg, and homemade chorizo. sausage, and we washed them down with bottomless mimosas.  (I'm not sure they even allow food this spicy in Connecticut.)

    I'm not picking on Connecticut.  Not really.  But I am suggesting that one of the things that make cities magic are these little restaurants, nestled on a corner here or on a back street there (or sometimes in a hotel that opened more than a century ago).  These are restaurants that take us outside ourselves, challenging our taste buds and giving us a sense of the cultures that gave birth to their cuisines.

    It is cities, I would argue, that make such culinary innovations possible, at least more than any other place.  I've been extraordinarily lucky in my life and career, having enjoyed great meals in cities that range from New York to Taipei, Seattle to Sydney, Paris to San Francisco, London to New Orleans, Portland (Oregon) to Portland (Maine) and many more.  And while I'm not in denial about the problems that many of these places face, I believe that for many of them, their sense of place, their welcoming of other cultures and peoples, and their ability to communicate values of inclusiveness through their food and drink, all combine to make them places that will heal and be stronger.  Especially in the broken places.

    I want to recommend three wonderful red wines that we opened for Easter Sunday's dinner of lamb and artichoke stew (which was requested by my wife and kids and my kids' significant others):

    •  The 2018 Megan Anne Pinot Noir, from Oregon's Willamette Valley, which is rich, flavorful and ripe.

    •  The 2017 Concannon Vineyard Captain Joe's Petit Sirah, from California's Livermore Valley, which combines plenty of fruit with lots of structure.

    •  And, the 2017 Hannah Pinot Noir from Willamette Valley Vineyards, a family favorite that was light and crisp.

    All in all, great choices.  (And the stew I made was pretty good, too.)

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