business news in context, analysis with attitude

Published on: June 16, 2015

by Kevin Coupe

Interesting story in USA Today, suggesting that Amazon may be "looking to expand into daily, live video shows." The company reportedly has been advertising "for an experienced television producer who could help run the new initiative, cast as a way to entice customers to shop more on Amazon, particularly video-loving millennials."

Fashion would appear to be the subject of the proposed program.

The ad said that "the producer will be in charge of approving scripts, pitching segments, as well as 'promoting interaction' between hosts and audiences through social media. He or she will also be in charge of booking celebrity guests for in-studio segments, marking a potential differentiator from some of the other online fashion-focused shows that are popular on Google's YouTube."

This is an Eye-Opening move, largely because the one category in which traditional broadcast and cable networks have largely been seen as having an advantage has been live events ... but even that could be changing.

Is it possible that someday we could be watching the NFL or presidential debates on Amazon or Netflix?

I wouldn't bet against it.

Published on: June 16, 2015

Target Corp. announced yesterday that it will sell its drugstore, pharmacy and Minute Clinic operations to CVS Health for $1.9 billion, creating a potentially game-changing partnership in the health care segment.

The Wall Street Journal writes this morning that "CVS, already the country’s dominant provider of prescription drugs, will grow even larger under the deal. The 1,660 drugstores inside Target locations will be rebranded as CVS/pharmacy, while Target’s nearly 80 medical clinics will be changed over to CVS’s MinuteClinic banner. The companies said they would co-develop smaller format TargetExpress stores.

"Target in turn will hand off a business it has used to lure shoppers, but one that it hasn’t had the scale to operate profitably. The deal will let Target focus on its core strengths—specifically baby, kids and style— and will broaden the company’s health-care services at a time when rival Wal-Mart Stores Inc. is expanding in the sector."

The story quotes CVS Chief Executive Larry Merlo, as saying that he is "agnostic in terms of how the consumer defines convenience," and that he has no problem potentially sending CVS customers into a Target store.

The Journal goes on to report that "CVS views itself less as a retailer and more of a wide-ranging health-care company, helping manage prescription-drug plans as well as provide pricey, specialty drugs. Last month, it agreed to pay $10.4 billion to acquire Omnicare Inc., which provides prescription drugs to nursing homes and operates a specialty-drug fulfillment business.

"For Target, the deal lets the retailer step out of a business that isn’t a profit generator and put it in the hands of CVS, which could offer a broader range of drugs and services at a lower cost than Target had."

Partnering with Target also allows CVS to enter markets where it does not have stores (like Seattle, Washington, and Portland, Oregon) and expand in markets where it feels it is underrepresented (like Minneapolis and St. Louis).

The Target-CVS deal requires regulatory approvals, and it is unclear how long it will take to close.

Published on: June 16, 2015

The Washington Post reports that Walmart is being accused of using its charitable foundation to grease the wheels of growth in certain urban US markets, saying that the foundation "appears to target its donations and influence its grantees primarily to assist Walmart to achieve those expansion goals, ultimately providing Walmart more than an incidental benefit."

According to the story, "More than a dozen community groups filed a complaint with the Internal Revenue Service Monday alleging that the Walmart Foundation violated its tax-exempt status by using charitable funds to advance the retailer’s entrance into urban markets including Washington. The 22-page complaint, addressed to IRS Commissioner John Koskinen, details the retailer’s marketing and lobbying activities as it sought approval to open stores in New York City, Boston, Chicago, Los Angeles and other cities."

The New York Times reports that "the Walmart Foundation’s contributions in some cities rose steadily as Walmart tried to curry local support and gain access in those markets, according to the complaint. The foundation donated just over $200,000 to organizations in Los Angeles in 2008 and 2009, the complaint said, but raised that amount to $1.4 million in 2011, just as plans to open a store were getting underway. In 2013, the year that store opened, donations dropped to about $230,000."

The Walmart Foundation's total charitable contributions totaled $1.4 billion during the last fiscal year.

The Times goes on to say that "nonprofit foundations are prohibited from extracting services on behalf of a company, or diverting funds away from the public to private interests. But they offer corporations undeniable benefits, including good publicity and lucrative tax advantages. And while a pattern of spikes in donations may raise eyebrows, some nonprofit experts say, it may not be enough to prove that the Walmart Foundation ran afoul of I.R.S. rules."

Tricia Moriarty, director of global responsibility communications for Wal-Mart, tells the Post, “We provide support for these and other important causes in communities across the U.S. and around the world, not just to particular areas or cities, and it’s unfortunate to see criticism of the Foundation’s charitable giving. The Walmart Foundation takes the Internal Revenue Code and regulations very seriously and the allegations made have no merit."

Published on: June 16, 2015

The city of Baltimore, Maryland has announced an initiative designed to attract more food retailers to areas of the municipality under-served by this category, in the hopes that a greater number of residents will have access to fresh, healthy food.

According to the Baltimore Business Journal, "Financial incentives for grocery stores that agree to set up shop in areas that lack access to food, a longer distribution period for food stamps and improving inventory at corner stores and public markets are among the city’s plans for ensuring more Baltimore residents have access to fresh, healthy food. The city also wants to expand farmers markets and look into transportation options to get residents to grocery stores beyond walking distance."

A new report, issued by the by the Baltimore Food Policy Initiative and the Johns Hopkins Center for a Livable Future, has concluded that "one in four Baltimore residents lives in a so-called food desert, or a geographic area that is more than a quarter mile from a grocery store. The household median income in food deserts is at or below 185 percent the poverty line and at least a third of the households do not have a car. Children and minorities are disproportionately affected by food access problems, the report found.

"City officials plan to use the report, which maps out every grocery store, convenience store and farmers market by council district, to drive new policy that will improve access to food," the Business Journal writes.

Published on: June 16, 2015

The Australian is reporting that in addition to Lidl's plans to enter the US market, the German discounter also is laying the groundwork for stores to be opened down under.

According to the story, Lidl "been in discussions with logistics providers and has applied for a wide range of home brand trade marks" and is "seeking to protect its name and distinctive blue, red and yellow logo for a range of goods and services including food, coffee, alcohol, furniture, utensils and cleaning equipment."

The story also notes that Lidl's chief discount competitor, Aldi, "came to Australia in 2001 and now holds nearly 11 per cent market share on the east coast, with 370 stores across the country."

Published on: June 16, 2015

USA Today reports this morning that Gap Inc. has announced the planned closure this year of 25 percent of its North American fleet or 175 stores, saying that the move will be based on store performance. When the closures have been completed, it will leave Gap with about 500 stores, plus 300 outlet stores.

The company said that it also will close some European stores and will eliminate about 250 corporate jobs. The moves will not affect outlet and factory units.

According to the story, "Gap has been struggling to entice customers amid competition from fast fashion brands. Same-store sales fell 10% in the first quarter, compared with a 5% drop in the year-ago quarter."

Jeff Kirwan, global president for Gap, said in a statement that the company is "focused on offering consistent, on-brand product collections and enhancing the customer experience across all of our channels, including a smaller, more vibrant fleet of stores."

Published on: June 16, 2015

• The Wall Street Journal reports that Amazon "has quietly begun rolling out a program that could dramatically increase the number of items eligible for two-day shipping through its Prime membership.

"The e-commerce giant is now listing items in Prime that ship directly from independent merchants’ warehouses to customer doorsteps. Until now, merchants have had to ship merchandise to an Amazon warehouse for it to be eligible for Prime."

As has been well-documented, "The $99-per-year Prime unlimited-shipping program has become central to Amazon’s sales growth, with Prime members spending twice as much as non-Prime customers, by some estimates. Bulking up the number of Prime-eligible items could entice more customers to join the program and make current members more likely to renew."

Published on: June 16, 2015

...with brief, occasional, italicized and sometimes gratuitous commentary…

• Reports out of the UK has launched a trial of Bluetooth beacons in partnership with Unilever that will have the technology installed in 270 UK stores, using them to target customers with special offers about certain ice cream brands.

However, while the pilot program will last three weeks, the announcement also says that “no customer data will be collected or provided by Tesco as part of the trial."

I'm a huge fan of targeting technology enabled by beacons. But for the life of me, I can't understand the whole "we're not going to collect any data" thing. Isn;t that the point?


• United Fresh announced that it "donated 39,019 lbs. of produce and 207 lbs. of assorted dry food to the Greater Chicago Food Depository at the conclusion of the United Fresh 2015 annual convention and expo in Chicago last week. Volunteers helped collect donations from the convention floor to benefit those in need serviced by Greater Chicago Food Depository partner agencies such as food pantries, soup kitchens, and other emergency feeding centers.

"The Greater Chicago Food Depository is a member of the Feeding America network of food banks. This year’s total donation of 39,226 lbs. continues a United Fresh tradition of supporting the Feeding America network after the annual convention."

Published on: June 16, 2015

...will appear on Wednesday this week.

Published on: June 16, 2015

...will return.

Published on: June 16, 2015

In the National Hockey League, the Chicago Blackhawks defeated the Tampa Bay Lightning 2-0 in game six of the Stanley Cup championship series, winning the best-of-seven series 4-2. It was the Blackhawks' third Stanley Cup championship in six years, and the first time they won at home since 1938.