business news in context, analysis with attitude

Published on: May 23, 2023

Yesterday we had a story about SNAP benefits being reduced because of the declared end of the pandemic, and I speculated about further cuts as a result of the debt ceiling negotiations - all of which won't be good for folks on food stamps and the retailers that cater to them.  An MNB reader emailed me to decry the reduced benefits and recall relevant words from Hubert Humphrey, which in turn reminded me of one of my favorite quotes from Robert F. Kennedy.

Published on: May 23, 2023

Amazon this morning released its annual U.S. Small Business Empowerment Report, detailing how more than 60 percent of Amazon's retail sales come from third-party vendors in its Marketplace, the majority of which, it claims, are small and medium-sized businesses.

An excerpt:

"Amazon’s Small Business Empowerment Report shows that in 2022, independent sellers in the U.S. sold more than 4.1 billion products - an average of 7,800 every minute - in Amazon’s store and exported over 260 million products. Sellers in rural areas, including parts of Rhode Island, Illinois, Louisiana, West Virginia, and Wyoming, collectively achieved more than 40% year-over-year sales growth in Amazon’s store, demonstrating the opportunity Amazon unlocks for small businesses across the country. Selling in Amazon’s store has also enabled independent sellers to create an estimated 1.5 million jobs in the U.S., including jobs that are responsible for managing, operating, and supporting sellers’ efforts to sell through Amazon’s store, which continued to fuel economic opportunities in local communities around the country."

Published on: May 23, 2023

The Wall Street Journal has a story about how retailers are working to reduce the number of returns they are getting from shoppes and cut down the costs of these returns, which have become onerous.

But the problem, the story makes clear, is that they may be working against the preferences of their customers.

According to the story, "Return rates surged during the Covid-19 pandemic, as more consumers shifted to online shopping—and frequently bought multiple sizes of the same item because they were unsure of the fit. Return rates in 2022 were roughly 14% higher than in 2019, according to Narvar, a returns-management company.  Shipping, warehousing and labor add up to make returns costly. In addition, many items are out of season by the time they come back to retailers and must be resold at hefty markdowns, which can further eat into profits."

One estimate is that "it costs a company about $27 on average to handle the return for a roughly $100 online order," and that cutting returns by 50 percent could increase profits as much as 25 percent.

"The move to reduce returns is part of a sea change in retailing that is giving priority to profits over growth," the Journal writes.  "Valuations for many digital retailers have declined in recent years and capital has become scarcer amid rising interest rates and concerns about the economy, executives and investors said.

"Many of the largest e-commerce companies took years to turn a profit and a large number still lose money. The high cost of returns is partly to blame, in addition to higher customer acquisition costs following changes made by Apple, Google and other technology companies that restrict how shoppers are tracked as they move around the internet, executives and analysts said.

"Amazon, which set the bar for free and fast returns in e-commerce, is trying to dial back some of that behavior … Several months ago, Amazon began showing which products have above-average return rates for their categories. The online retail giant also charges a $1 fee to shoppers who return items via UPS when an Amazon Fresh, Whole Foods Market or Kohl’s store is nearby. Amazon owns Fresh and Whole Foods, and it has a partnership with the Kohl’s department-store chain to process returns."

Other retailers, the story says, "are also shortening return windows and offering incentives to shoppers who return items to stores. The in-store return rate nearly doubled last year to 16.5% from about 8% in 2021, as more shoppers returned online purchases to stores, goTRG said."

But here's the reality these retailers are facing:  "Some 69% of shoppers said they would stop shopping at retailers who charge for returns and 49% said they would pay more up front for free returns, according to a November poll of 3,000 U.S. and U.K. consumers by Quantum Metric, a digital analytics company."

Published on: May 23, 2023

CNBC reports that Walmart "has inked a deal with veterinary telehealth provider Pawp to offer Walmart+ subscribers access to the startup’s membership for a year."

According to the story, "Unlimited access to veterinary telehealth via video or text will be available to Walmart+ subscribers beginning Tuesday when Walmart is expected to announce the partnership publicly. Remote veterinarian visits are growing industry wide as consumers seek convenience, but some vets say the practice could be risky for pets.

"The offer will be available for a limited time, Walmart said. Walmart+ subscribers will have until Nov. 19 to opt in.  The terms of the deal weren’t disclosed. Pawp’s annual membership starts at $99.

"Walmart’s foray into veterinary telehealth comes as the company looks to deepen loyalty with shoppers, attract and hold on to higher-income customers and better compete with Amazon by making its subscription service more valuable with the addition of perks.  Walmart+ costs $98 annually, or $12.95 a month. Similar to Amazon Prime, the Walmart service gives members access to unlimited free deliveries and a range of other benefits, such as free access to Paramount+ and discounts at the gas pump.

"Amazon Prime, which costs $139 annually or $14.99 monthly, offers its own partnerships, as members currently get free access to GrubHub+ for a year, along with other perks such as photo storage and discounts on prescriptions. By adding Pawp to its subscription, Walmart hopes to keep its membership service competitive with Amazon Prime."

Published on: May 23, 2023

The Save Mart Companies, which operates some 200 stores in California and western Nevada under the Save Mart, Lucky, and FoodMaxx banners, said this morning that it is "broadening its digital footprint by announcing the launch of its retail media network with an expanded strategic partnership with Swiftly,  … retail technology company that delivers omnichannel tools for enterprise retailers. The deepened partnership will accelerate and enhance The Save Mart Companies’ CPG relationships, creating lucrative advertising opportunities for Supplier partners and benefit shoppers with the launch of new, fully integrated Save Mart, Lucky and FoodMaxx websites."

The network, the company says, will "provide advertisers and brands with an enhanced ability to effectively target more Save Mart, Lucky and FoodMaxx customers and provide them with the value, personalization, and the omnichannel experience they are looking for to drive more sales and units. This agreement is an extension of TSMC’s already in play iOS and Android mobile apps."

Swiftly maintains that "nearly 83% of consumers rely on some form of digital coupon, rewards app or loyalty program to help offset higher costs due to rising inflation and other economic challenges. In addition, over 85% of consumers prefer interacting with brands using both digital and physical channels while still enjoying a unified experience."

Published on: May 23, 2023

Amazon said yesterday that it has added age verification its Amazon One palm-based biometric identification system.

The addition means that adult customers ages 21 and over will be able to "purchase alcoholic beverages by simply hovering their palm over an Amazon One device, without digging into their wallets for a physical government-issued ID. Coors Field, home of the Colorado Rockies Major League Baseball (MLB) team, will be the first location to offer Amazon One’s age verification capability."

According to the announcement, "Customers already enrolled in Amazon One

can take advantage of the age verification feature by visiting one.amazon.com and uploading a photo of the front and back of their government-issued ID, such as their driver’s license, and a selfie. Amazon One does not store customers’ government-issued IDs, which are verified by an ISO 27001–certified identity verification provider (ISO 27001 is an international standard for information security). Once signed up for age verification, customers will no longer need to produce an ID when purchasing alcoholic beverages at participating outlets."

Amazon said that "Amazon One is available at more than 100 Whole Foods Market stores, select Amazon Go and Amazon Fresh stores, and multiple third-party locations, including at Panera Bread restaurants, sports stadiums, entertainment venues, convenience stores, travel retailers like Hudson and CREWS at several U.S. airports, and more. The age verification capability … will be rolled out to additional establishments in the coming months."

Published on: May 23, 2023

The Boston Globe reports that a class action lawsuit has been filed in Massachusetts against CVS Health, taking issue with the company's use of AI-assisted technology designed to assess applicants' honesty and integrity during video interviews.

The Globe points out that "it’s illegal for employers in Massachusetts to use a lie detector to screen job applicants," and the question is whether this AI technology falls into the same category as an old-fashioned polygraph.

Some context from the Globe story:

"The use of artificial intelligence is spreading through the employment landscape, fueling questions about the role emerging technology plays in the workplace, and the potential harm it could cause. Calls for more rigorous testing and regulations have begun, and government officials are scrambling to get ahead. The White House and several other federal agencies recently announced their commitment to scrutinizing artificial intelligence at work, and the US Equal Employment Opportunity Commission is urging employers to analyze technology used to make employment decisions to ensure it’s not discriminatory, warning that they may be responsible for actions recommended by those tools, such as who is hired, promoted, or fired."

Published on: May 23, 2023

The Atlantic has a profile of podcaster Chris van Tulleken, who is conducting an ongoing campaign against processed food.

An excerpt:

"He has just published a book identifying ultra-processed food, or UPF, as a great evil in our diets, and has therefore signed up for a lifetime of being portrayed as a joyless, middle-class puritan who wants us to live on mung beans and kombucha. As part of the research for Ultra-processed People, he ate a UPF-heavy diet for a month—a stunt reminiscent of Morgan Spurlock’s Super Size Me, and one open to the same criticism about replacing science with showmanship. 'By the fourth week, it had started to have very noticeable physical effects, forcing me to loosen my belt by two notches,' he writes. 'In just a few weeks, I felt like I’d aged ten years. I was aching, exhausted, miserable and angry.'

"Public-health campaigns against 'junk food' - a shorthand for foods with high fat, sugar, and salt content - are well established and formed one of Michelle Obama’s priorities as first lady. Van Tulleken’s case against UPF is different. The problem isn’t the food’s nutritional profile, per se, but the industrial processes to which it has been subjected, and the artificial chemicals used to improve its flavor and shelf life. He argues that we should be more wary of a diet soda than a cookie baked from scratch at home, because UPF is stuffed full of chemicals that disrupt our body’s ability to regulate appetite and digestion."

You can read the entire story here.

Published on: May 23, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From Bloomberg:

"Amazon.com Inc. repeatedly violated federal labor law by unilaterally changing policies and terminating union supporters at its sole unionized warehouse, US labor board prosecutors alleged in a complaint, which also accuses Chief Executive Officer Andy Jassy of personally making illegal anti-union comments.

"In a Monday filing, a National Labor Relations Board regional director wrote that Amazon illegally restricted employees’ ability to visit their unionized New York City warehouse during their time off, in order to discourage them from engaging in labor activism.

"The agency alleges Amazon changed its policy on off-duty workers’ access to the premises, as well as its practices on announcing and providing paid leave for Covid-19 cases, without negotiating with the union at the Staten Island facility. It also accuses the company of terminating two employees because of their involvement in the Amazon Labor Union. Amazon should be forced, among other measures, to rescind its off-duty access policy for at least three years, the complaint says."

And, the complaint says, Jassy violated federal labor law when he said in a CNBC interview that "union representation would make workers less empowered and would make it harder for them to have direct relationships with managers."

Bloomberg says that "complaints issued by NLRB prosecutors are heard by agency judges, whose rulings can be appealed to the labor board members in Washington, and then to federal court. The agency has the authority to order employers to reinstate workers and change policies, but not to fine them punitive damages or hold executives personally liable for violations."

•  The Seattle Times reports that "some Amazon employees in Seattle plan to walk off the job to show their frustration with recent layoffs, return-to-office mandates and a lack of action to address the company’s impact on climate change, organizers said.

"A group of workers are urging their colleagues to walk out on May 31, a week after Amazon’s annual shareholder meeting and a month after the company’s return-to-office mandate took effect … The action hinges on at least 1,000 Amazon employees from the company’s Seattle headquarters agreeing to participate in the one-day walkout."

The story notes that "the walkout would come after a year of cost-cutting measures that have affected nearly every part of Amazon’s sprawling business and led some employees to question how committed the company is to former CEO Jeff Bezos’ goal of becoming 'Earth’s Best Employer'."

•  From Bloomberg:

"Amazon.com Inc. will face a record 18 shareholder resolutions at its annual meeting this week, with outside groups urging the company to disclose more about its treatment of employees and more closely tie executive compensation to performance.

"Major shareholder advisory firms recommend investors approve calls for assessments of Amazon employees’ working conditions and freedom to organize, as well as the risks posed by the company’s sales of surveillance products. Between them, Institutional Shareholder Services Inc. and Glass Lewis & Co. are urging investors to support five resolutions brought by outside shareholders.

"The two firms say shareholders should block the re-election of director Judith McGrath, chair of the board’s leadership and compensation committee, and recommends a no vote on a symbolic measure to ratify Amazon’s executive pay.

"The company’s annual meeting of shareholders, held virtually since the beginning of the pandemic, is scheduled for Wednesday. The shareholder resolutions and say-on-pay votes are nonbinding."

•  TechCrunch reports that Facebook parent company Meta "is throwing its hat into the ring to build the next major microblogging platform … This text-based app will stand alone, but it will be partially integrated within Instagram. Users will keep their Instagram verification and handle, and all of their followers will receive a notification to follow them on the to-be-named platform. Meta’s text-based platform will be decentralized and interoperable with Mastodon, which is built on the ActivityPub protocol."

The goal is to compete with Twitter, which some folks may sense is vulnerable to competition because of the antics of its owner, who, as I've said here before, seems to have all the impulse control of a 13-year-old on a sugar high.

Published on: May 23, 2023

•  Walmart said yesterday that it has "opened its first high-tech Market Fulfillment Center in Arkansas at Store 100 located at 406 S Walton Blvd in Bentonville on Monday, underlining the retailer’s strategic move toward expanding the use of its stores as fulfillment centers to enhance the shopping experience for customers everywhere.

"The Market Fulfillment Center (MFC) is built within the store and is powered by a proprietary storage and retrieval system – named Alphabot. Walmart believes fulfillment through digitization and connecting its store and supply chain assets end to end will transform fulfillment. And along with it, customer satisfaction and associate opportunity."

Published on: May 23, 2023

•  US Foods Holding Corp. announced that it has agreed to acquire Renzi Foodservice, a broadline distributor located in Watertown, New York, which "has more than $180 million in annual revenue and serves more than 2,300 independent restaurants, healthcare facilities, schools, government organizations, convenience stores and other customers."

Pending regulatory approval, the acquisition is expected to close in the third quarter of 2023. Terms of the transaction were not disclosed.

Published on: May 23, 2023

I mentioned this on FaceTime this morning - two emails that decried the cuts in SNAP payments that will take place as the pandemic comes to an end, affecting both the people who use food stamps and the stores that serve them.

MNB reader Robert Pulda wrote:

Kevin, It is a disgrace that this wealthy country cannot afford to feed our population.

Through no fault of their own, many people had to make choices. Some had to stay home to take care of a sick parent or children at home and they lost their source of income.

The need is still there even though we have declared an “end” to the Covid Pandemic.

For those of us who can afford our groceries, I urge you to support those retailers who are not raising prices due to inflation or targeting this vulnerable population.

My next stops will be: Price Rite and Market Basket.

I also urge us all to support local Food Banks and Food Pantries that are filling the gaps for those in need.

And, from MNB reader Karl Graff:

I work for a state government and supervise a team of social workers who work with SNAP recipients every day- determining eligibility, etc.

The misconceptions about households who receive SNAP benefits astound me- but what bothers me most is what the actions taken towards the least able - the working poor, the disabled and elderly, say about our values as a nation.

Doesn’t every human deserve enough food to maintain health?

When I was a pastor I ran a very small food pantry. I remember family after family who were a little ashamed to need the help, who didn’t want to take too much, and who didn’t want any “treats” (like sugared cereal, a pack of cookies).

Many of the SNAP recipients I have spoken directly with express similar sentiments- they don’t want to be dependent  on the government or their neighbors, they’d rather be in a position to help.

Most of the people who work with me, including me, have received some type of public assistance at some point in their lives- but even with that, it is easy for them to become cynical and give in to the propaganda about the poor.

SNAP takes less than 2% of the federal budget to fund (Center for Economic and Policy Research) - cutting it won’t get anyone very far in trying to “balance the budget” or reduce it in any meaningful way.

“The moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; those who are in the shadows of life, the sick, the needy and the handicapped.”  Hubert Humphrey

Who are we really?

And grocers, pay attention…

Got this email from MNB reader David Spawn, responding to yesterday's FaceTime about not necessarily taking the most direct route:

Completely agree with you on this (and very glad that you make the time to see your siblings!).

From a similar perspective, for the past 6 (give or take a few off years) summers, my husband & I go to Provincetown, MA for a week (or two).  We live in Jackson Heights, NY, but we choose to drive to Cape Cod rather than take the train/ferry or plane/ferry, etc. so that we can have a car while we’re up there.  This is a bit unnecessary given that P’town is very much a walking destination.  But as non-car owners, I find it a “nice-to-have” and it gives us more flexibility getting to the beach or to other locations up and down the cape.

My point (that finally I’m getting to) is that after too many 7+ hour trips slogging it out in I-95 beach/weekend traffic, that just drives me nuts and does not make for a pleasant drive, I figured there had to be a better alternative.  We now avoid I-95 altogether, and while it is out of the way and ends up not saving much time at all, we arrive in P’town in SUCH a better frame of mind and are immediately ready to enjoy a week off at the beach.  We’ve used this new “secret” route for two years and there’s no way I’m getting back on I-95 on a July or August Saturday!  Bonus is that we’ve found new places to stop (Lavender Pond Farm), get a good dose of nostalgia passing towns I last saw when my father was alive, see some far lovelier vistas than I-95’s, and just be able to enjoy the journey.

Here’s to the “less” efficient route and the road less traveled – you never know what you can find if you don’t look!

Next time, stop at Lobster Landing, in Clinton, Connecticut - best lobster roll I've ever had.

Reacting to my comments about retail theft, MNB reader Mark Kramer wrote:

I believe your comment regarding tolerance for retail theft is ‘spot on’.  Always an issue in retail I watched it explode over the last several years.  Senior leaders in many companies took the position that ‘hands off’ was the proper method for dealing with external theft.  In some companies the focus intensified on their associates likely because the leaders did not know how to deal with the escalating external theft.  I can only speculate as to  the motives of senior leaders implementing a ‘stand down’ position but clearly the results have been devastating……hundreds of retail locations already closed and likely many more to follow. The sad irony here is that the folks who needed these stores the most….the truly underserved….are the people hurt the most.

On another subject, one MNB reader wrote:

About certain car manufacturers deciding not to offer AM radio in their electric vehicles – correct me if I’m wrong, but having an AM receiver in the vehicle itself only means that you are able to listen to the AM broadcasts that will exist and travel over the airwaves whether or not you can receive and listen to them. So, if the AM signals affect the cars’ performance, wouldn’t that happen anywhere that an AM signal COULD be received, whether or not it is actually received and heard by the driver?

I have no idea.  Maybe another MNB reader will know.  Folks?

And finally, responding to the story about Walmart's strong e-commerce growth in the last quarter, MNB reader Andy Casey wrote:

Ironically, e-commerce is tailor made for Walmart as it lets me enjoy the lower prices while avoiding the hassle of actually shopping in their stores. Faint praise indeed.