business news in context, analysis with attitude

Published on: November 3, 2014

Sunday's "Last Week Tonight" on HBO, with John Oliver, featured a very funny piece that postulated how Home Depot should compete with the new customer service robots being tested by Lowe's.

You can watch it by clicking on the screen at left. Be warned - some of the language is profane, and you should be careful if you are in an open office or at home with your kids within earshot.

But it's an Eye-Opener … as "Last Week Tonight" almost always is.

Published on: November 3, 2014

Fortune reports that Amazon CTO Tom Szkutak has conceded that not only has his company taken a $170 million charge, mostly associated with the Fire phone and related supplier costs, but it also has "a huge surplus of $83 million unsold phones collecting dust somewhere."

But that doesn't mean that Amazon is giving up.

According to the story, "Amazon Senior Vice President of Devices David Limp acknowledged Amazon bumbled the phone’s pricing. Traditionally, Amazon undercuts the competition on hardware, pairing lower prices and solid features. But with the Fire phone, Amazon stuck to standard industry pricing, asking $199 for the 32 gigabyte model and $299 for the 64 gigabyte. On that front, Amazon, well, misfired. 'We didn’t get the price right,' Limp admitted. 'I think people come to expect a great value, and we sort of mismatched expectations. We thought we had it right. But we’re also willing to say, ‘we missed.’ And so we corrected'."

Correct is right. Amazon reduced the price from $199 to 99 cents.

Fortune writes, "In September, the company slashed the Fire phone’s price from $199 to 99 cents, a steep discount Limp said yielded significantly better sales. He also pointed out that two software updates since the Fire Phone’s launch ironed out some problems customers were having with the device … Limp pointed out other Amazon devices, like its Fire tablet line and Fire TV streaming box, that he described as being 'very successful' with customers, but he declined to discuss sales numbers.

"With the Fire phone, Amazon plans to stay the course, as it has with its Kindle readers. As CEO Jeff Bezos likes to point out, critics panned the first Kindle e-reader in 2007, but it evolved into a widely-used family of products. Likewise, Amazon seems intent on taking the same long-term approach with the Fire phone, despite a competitive smartphone market."

Published on: November 3, 2014

MorningNewsUSA reports that as the debate unfolds about the benefits of Apple Pay vs. CurrentC, two rival mobile payment systems, the reality is that Starbucks - which has a payment system that resembles CurrentC - "already handling about 7 million mobile payment transactions each week in all its locations across the US.

"That accounts for about 16% of overall transactions at its nationwide stores. It also accounts for up to 90% of total mobile payments in the country in 2013 … Starbucks expects growth of mobile payments to further grow by up to 50% per year."

The story goes on to say that "Starbucks CEO Howard Schultz said that consumers should expect rapid acceleration of mobile payments and transactions in the coming years. He added that mobile customers now represent a significant market portion for both retailers and financial service providers.

"Schultz reiterated that financial services and technology companies are now chasing after mobile payment opportunities. Even if Starbucks does not hold hardware as well as software expertise unlike many of its rivals, the company has been continuously enjoying success when it comes to changing consumer behavior, which is something that the competition is yet to accomplish."

Published on: November 3, 2014

CBS News reports that advocacy group Oceana is out with a new study saying that 30 percent of shrimp products tested were mislabeled.

According to the story, "The most common error was labeling farmed whiteleg shrimp as 'wild' shrimp or 'Gulf' shrimp. In one case, a bag of salad-sized shrimp purchased in the Gulf had a branded coral shrimp, an aquarium fish not meant for consumption … The biggest misrepresentations occurred in New York, where 43 percent of the shrimp tested were inaccurately labeled. Products tested from Washington, DC and the Gulf of Mexico were improperly labeled around 30 percent of the time, while in Portland the rate was much lower at 5 percent."

Oceana said that it "tested a total of 143 shrimp products from 111 grocery stores and restaurants in New York, Washington, D.C., the Gulf of Mexico and Portland, Oregon." It is using the results of the study to press its case for expanded labeling regulatory efforts and implementation of greater supply chain transparency.

Published on: November 3, 2014

Good piece in the Los Angeles Times about the growth of healthier fast food.

An excerpt:

"Some of the fastest-growing fast-food chains aren't slinging artery-clogging cheeseburgers or cooking up calorie-packed fried chicken.

"Instead, diners can order Brussels sprouts salads and kale smoothies, served with the same speed as In-N-Out or Burger King.

"America's interest in locally sourced and healthy foods has spurred a boom in farmers markets and farm-to-table restaurants and has expanded organic produce at the supermarket. Now, a number of upstart chains trying to tap that interest are taking aim at traditional fast food by moving leafy greens and fruits to the center of the plate.

"These rapidly expanding restaurants want to revolutionize the fast-food industry, bringing healthy fare to the masses who typically don't shop at Whole Foods. At the same time, they are stealing customers from stalwarts such as McDonald's.

"The most bankable word in food service is fresh."

It is a small segment of the fast food industry, to be sure, but the suggestion is that the seeds are being sown for some profound changes in the fast food business.

You can read the entire story here.

Published on: November 3, 2014

Reuters reports that Dollar General Corp. has "extended its tender offer for shares of Family Dollar Stores Inc to Dec. 31, until after a shareholder vote that will decide the fate of a rival bid by Dollar Tree Inc. Dollar General had received offers for only about 4 million Family Dollar shares of a total 114 million outstanding shares as of Oct. 30, a day before the offer was to expire.

"Dollar General's perseverance to close a deal highlights its struggles in a weak economy where penny-pinching customers look for more discounts and deals," the story says.

The move is a repeat of what happened a month ago, when Dollar General extended its $9.1 billion offer for Family Dollar to the end of October, even as Family Dollar has said it prefers an $8.5 billion offer from Dollar Tree that it believes will pass muster more easily with antitrust regulators.

Published on: November 3, 2014

Amazon late last week released a diversity report saying that its global work force is 63 percent male and 37 percent female, and that its managers are 75 percent male and 25 percent female.

According to the New York Times story, "In the United States, Amazon’s work force is 60 percent white, 15 percent black, 13 percent Asian and 9 percent Hispanic. Its managers are 75 percent white and 18 percent Asian. Black, Hispanic and 'other' more or less equally split the rest."

The Times goes on to report that "diversity at tech companies has been a public issue for some time. The questions have accelerated since March, when the Rainbow PUSH Coalition challenged the companies to reveal their racial and gender data. By the end of the summer, many did so. But Amazon never likes revealing data about anything to do with Amazon, and so it took some special urging by the Rev. Jesse L. Jackson Sr., the coalition’s founder and president.

"Rainbow PUSH said Amazon’s numbers were not as good as they appeared, and criticized the company for a lack of candor."

You can read the entire report here.

Published on: November 3, 2014

• Interesting piece in Advertising Age about the Coca-Cola Freestyle soft drink dispensing machine, which allows for the customization of more than 100 different drink flavors.

Jennifer Mann, VP-general manager of Coke Freestyle, said last week at the Advertising Age Data Conference that "Freestyle machines have poured more than 5 billion servings and thousands of flavor permutations … A related mobile app that allows people to name and save their favorite combinations and then have Freestyle machines automatically pour them has had more than a million downloads."

And, she said, old brands are getting new juice. "Before Freestyle, Caffeine-Free Diet Coke was available in less than 1% of our dispensers in the U.S.," Mann said. "Now with Freestyle it's available in every dispenser, and it's become a top-five brand in the afternoon daypart. So there was a huge unmet demand we were able to fill."


• The Milwaukie Business Journal reports that Crumbs Bake Shop is going to open a test store in a Mariano's Fine Foods unit in Westchester, Illinois, tomorrow, which will "include a sweet and snack bar featuring 25 flavors of Crumbs branded cupcakes and 15 varieties of brownies."

The story notes that Crumbs "shut down all of its stores this past October after going bankrupt in August, " and then "was bought for $6.5 million in a joint investment by Marcus Lemonis, star of CNBC's 'The Profit,' and Fischer Enterprises."


• Tops Friendly Markets, which serves upstate New York, northern Pennsylvania and western Vermont, announced that it will roll out a new list of hundreds of regularly purchased items included in “Tops’ Price Lock Guarantee” beginning November 2, and running through January 3, 2015.

The company says that its Price Lock Guarantee "is one of the company’s first major initiatives since it returned to local ownership less than a year ago and is part of a comprehensive value package aimed at helping Tops’ shoppers stretch their dollars even further on every day items while continuing to save on popular weekly promotions."

Published on: November 3, 2014

Got the following email from MNB reader Rich Heiland:

I have been following all the back and forth on your site about Amazon and whether it has reached too far, revealed itself to be less of an ideal than many of us might have thought. 

It occurs to me that all the companies that have been pioneering have come under that criticism. Starbucks went outside its brand for many when it started showing up in grocery stores and airports and opening on every corner. It heard the talk and listened. I worked with Apple as a consultant while Steve Jobs was in the wilderness and everyone pronounced it dead. But, Apple responded. 

I think in the end I prefer the mistakes of aggressiveness, maybe even arrogance, over the behaviors of outfits like Radio Shack, of whatever it's called these days, - companies that just sat and prayed the market would somehow come home to them without any effort on their part.

I think trials such as Amazon is facing could be, if responded to wisely, the opportunities to move itself in new and positive directions. Or not. We shall see…..

Amen, brother.

I think that's a really valid point.

Is it better to make missteps while moving forward? Or to stand still, ignoring or becoming paralyzed by the fact that you are being passed?

I'll go with moving forward.

Published on: November 3, 2014

In Week Nine of National Football League action…

Jacksonville 23
Cincinnati 33

Tampa Bay 17
Cleveland 22

Arizona 28
Dallas 17

Philadelphia 31
Houston 21

NY Jets 10
Kansas City 24

San Diego 0
Miami 37

Washington 26
Minnesota 29

St. Louis 13
San Francisco 10

Denver 21
New England 43

Oakland 24
Seattle 30

Baltimore 23
Pittsburgh 43

Published on: November 3, 2014

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Published on: November 3, 2014

Published on: November 3, 2014

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