business news in context, analysis with attitude

Published on: May 29, 2015

by Kevin Coupe

The Washington Post this morning takes note of Chieh Huang, CEO of Boxed, on online retailer of bulk-sized grocery products, and how he has decided to offer his employees an unusual - and unusually generous - benefit.

He is going to pay the college tuition for every one of their children.

Huang says that he will fund the initiative largely with his own money, setting aside a percentage of his stake in the company to do so. No company funds will be spent on the project.

"I actually don't think of it as a perk," he tells the Post, saying that he believes that employees have to believe that he is as willing to invest in them and their families as they are willing to invest their time and energy on his business. "If you're along with us for a ride, you deserve us investing back in you and your family's upward mobility," he says.

He's also asking people who have invested in Boxed to contribute to the initiative: "I tell them I love that you're investing in me and us, but you have to value the employees as much as me."

Wow.

The Post reports that "the program covers four years of tuition (not room and board, say, or books). He says it is designed to help employees who chose to work at Boxed before the company goes public. Huang, whose decision was first reported by Forbes, also says he plans no eligibility requirements in terms of length of tenure, or cap on tuition.

"Huang has started a nonprofit foundation, funded with a chunk of his personal shares in the company currently valued at between $1 million and $2 million, along with some cash to meet short-term obligations, to administer the program. As of now, the company only has 12 children among the families of its roughly 100 employees ... Huang says his goal is to give back to early employees as long as his stake doesn't significantly decrease in value."

That's pretty cool. And, I think, reflective of what businesses may need to do to differentiate themselves in the face of heightened competition for employees.

More on this trend below, in our story entitled "Companies Face Tighter, More Demanding Labor Market."

It is an Eye-Opener.

Published on: May 29, 2015

Published reports today say that Amazon is preparing to unveil a line of private label grocery products that will include categories such as milk, cereal, cookies and baby food, as well as non-edibles such as household cleaners. The move comes as Amazon continues to roll out its Fresh grocery delivery service, as well as expand its capacity for same-day shipping - all of which seem targeted at putting grocery front-and-center of the company's long-term strategy.

According to the Wall Street Journal, "Amazon’s planned expansion in the private-label business mirrors a more traditional retail model where name-brand products are sold beside store-owned goods. Private labels have become a vital business for mass-market retailers, generating stronger margins and building loyalty with consumers who no longer view generic products as lower quality.

"Earlier this month, Amazon sought trademark protection for more than two dozen categories under its Elements brand, including coffee, soup, pasta, water, vitamins, dog food and household items like razors and cleaning products."

Time writes that the move reflects Amazon's desire "to take its fight with the likes of Costco Wholesale, Target and Walmart deeper into the grocery aisles ... The foray into private-label grocery comes as food is becoming ever-bigger business for major retailers. Groceries can bring higher profit margins despite the lower retail prices some retailers charge because the companies save on the marketing costs.

"Such in-house brands are also finding more acceptance with customers, many of whom are increasingly looking for bargains and are more open to buying store brands."

The Journal says that Amazon has spoken with a number of private label purveyors, including TreeHouse Foods, which some reports say has been chosen as its own-label supplier. However, neither Amazon nor TreeHouse are commenting on those reports.

This move has been rumored for a couple of years, but this is the first time that it seems to be anchored in reality.

Published on: May 29, 2015

Just another day in the life of e-commerce giants...

The Washington Post frames the story this way:

"The battle for online shoppers intensified Thursday as several leading tech giants announced moves to lure consumers into their virtual malls.

"In the morning, Amazon said members of its Prime program in select cities will have access to free, same-day delivery on certain items, a move that broadens the subscription service as new players are poised to provide fresh competition online.

"In the afternoon, Google introduced 'Android Pay,' which will allow users to pay for items by waving their smartphones in front of a scanner at cash registers. And at its developer’s conference in San Francisco, the search giant announced it would add a 'buy button' to Web pages that makes it easier to purchase products featured in ads that appear alongside search results.

"Meanwhile, Apple confirmed this week that it would partner with logistics company Postmates to offer same-day delivery of online orders. Apple already offers Apple Pay on its newer iPhones; analysts have said it is the first mobile payment system to gain traction with consumers."

It also was interesting yesterday to see the Fortune story in which Target CEO Brian Cornell "came close" to thanking Amazon for waking up traditional retailers to the fundamental ways in which people's shopping habits are changing. "We almost need to say thank you to Amazon. They have taught the American consumer to shop online, but they don’t own that relationship,” he said at a Re/code conference.

Published on: May 29, 2015

The Washington Post has a story about a new Cisco study suggesting that "in five years, 80 percent of the entire world's Internet consumption will be dominated by video. That number will be even higher in the United States, approaching 85 percent."

Compare that to now, when the combination of services such as Netflix and YouTube consumes roughly half of all internet bandwidth.

The Cisco report "predicts that by 2019, the Internet will have become more or less a big video pipe. Part of the growth will come from adding new people to the Internet — for the first time, over half the world's population will be digitally connected. But individual Internet users are also expected to consume more video over time, and at a higher quality, which will put tremendous new burdens on the world's Internet infrastructure."

The Post goes on to write that "implicit in this idea is that mobile devices will be the primary way users will access all this video. And researchers agree on that point. Five years ago, Americans were spending less than an hour a day on mobile devices. Today, it's more like three hours a day, accounting for more than half of the time we spend consuming digital media in general."

Published on: May 29, 2015

USA Today reports this morning that "companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks ... The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.

"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."

Published on: May 29, 2015

• Internet Retailer reports that Home Depot's online sales "increased 30% in the quarter," to just over a billion dollars in revenue, and that "e-commerce accounted for 5% of total sales."

Published on: May 29, 2015

• The Denver Business Journal reports that Natural Grocers by Vitamin Cottage will open two new stores in the Mile High City later this year. The story notes that Natural Grocers is pushing to increase its store count by about a third, to 120.

Published on: May 29, 2015

• Dollar General Stores yesterday said that its COO, Todd Vasos, will be elevated to the CEO job, succeeding the retiring Rick Dreiling.

Published on: May 29, 2015

...will return.

Published on: May 29, 2015

I've been trying for a week to think about how best to write about Tomorrowland, the new movie from Brad Bird, who has brought us such terrific films as The Iron Giant, The Incredibles, and Mission: Impossible - Ghost Protocol (which was, to my way of thinking, finally a really good Mission: Impossible movie because it was less about Tom Cruise, more about the mission, and actually had a sense of humor).

The thing is, Tomorrowland has gotten only mediocre reviews, wasn't very successful at the box office on its opening weekend, and Mrs. Content Guy wasn't nuts about it. And the problem is that I completely understand why the reviewers and Mrs. Content Guy didn't like it much, and why audiences stayed away more than the folks at Disney expected.

Still, I liked Tomorrowland. A lot. Didn't love it, but respected what it was trying to do, and liked much of what it did.

I remember when I was in college at Loyola Marymount University, one of our teachers was Charles Champlin, who also was the main film critic for the Los Angeles Times. (That's my idea of a dream career.) Champlin was noted for being generous of spirit when he reviewed movies, and sometimes was referred to (by cynical, know-everything college students) as "the Will Rogers of film criticism" - he never met a movie he didn't like. But I don't think that's the case here, especially because as I get older, I find myself less forgiving of films that test my taste and patience.

Without giving away too much, I can tell you that Tomorrowland is about a young woman, played by Britt Robertson, who finds a mysterious pin that seems to transport her to a futuristic land whenever she touches it; that leads her to a grumpy middle aged man (George Clooney) who, she believes, knows what that land is and how to get there.

Among the problems that some people seem to have with Tomorrowland is that a) it takes too long to get going and is too long in general, b) the marketing was misleading, so they didn't know what to expect, c) seems to be much ado about too little, and d) is too preachy.

As I said, I can't really disagree with these points. It is certainly true that the marketing for the movie hasn't given away very much ... which, to be honest, I found to be a nice change from trailers and commercials that seem to give away entire movie plots, leaving me often wondering why I needed to actually see the flick.

But this is where I differ with some of the critics and even Mrs. Content Guy.

At its core, Tomorrowland is a movie about hope ... about whether humanity is capable of innovation and imagination, of greater achievement and higher level thinking. In some ways, it is even a criticism of modern movies that seem to take a kind of perverse pleasure in watching cities come tumbling down because of alien invasions or natural disasters. Preachy? Sure, to some degree. But about one-third of the way through the movie, I decided that I liked the core message, agreed with it, and was willing to go along for the ride on which Bird wanted to take me. And from that moment on, I enjoyed myself immensely. Tomorrowland may have its flaws, but I was perfectly willing to look past them and enjoy the movie for what it is.

There's a moment in the movie when Robertson's character talks about a Native American legend that, in fact, explains the movie in simple terms:


There are two wolves who are always fighting. One is darkness and despair. The other is light and hope. The question is... which wolf wins?

The one you feed.

A good lesson, I think. There are worse concepts around which to build a movie.



I also saw a lovely little movie, Love is Strange, last weekend, and I can recommend it without reservation.

The film concerns two aging homosexual men, played by with great style and delicacy by Alfred Molina and John Lithgow, who after a decades-long relationship are allowed to marry when the law changes in New York. However, when they do so, Molina's character loses his job - he's a longtime chorus director in a Catholic school, and while the diocese has known about his homosexuality, same-sex marriage is more than it can handle. With the loss of his job comes the loss of the apartment they can no longer afford ... and they are forced to split up and live with friends and family members until they can find a place to live.

Love is Strange is like a terrific and heartbreaking little short story ... it does not have any grand ambitions, and it plays out on a small scale. But it is about real people, and these days, few movies seem to be ... so I was happy to spend some time in Molina's and Lithgow's company.



Finally, my daughter convinced me to sit and watch a comedy called The Wedding Ringer last weekend. It was pretty good - it stars comedian Kevin Hart as a fellow who hires out his services as a best man to people who don't have a friend to fill that role. Josh Gad plays the hapless client, and while the movie plays out pretty much as you'd expect it to, there are plenty enough laughs to go around.

My guess is that Hart and Gad will end up reteaming at some point. Maybe they'll get a script that a little less predictable, and it'll be better for all concerned.



I have a new beer to recommend to you this week - the Sierra Nevada Northern Hemisphere Harvest Wet Hop Ale.

"Wet Hop" means that "wet - undried - hops go straight from the fields into our kettles within 24 hours," according to the Sierra Nevada website, creating an intense flavor that I found enormously tasty.



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

Slàinte!