business news in context, analysis with attitude

Published on: May 7, 2018

by Kevin Coupe

The Los Aneles Times had a piece the other day about how Sen Kirsten Gillibrand (D-New York) has introduced a bill that would create a Postal Bank, essentially allowing the US Postal Service to offer checking and savings accounts, as well as low-interest, short-term loans.

The three advantages of such an entity:

• “It would be cool having an alternative to private banks that all too often prove themselves no friend of customers (hi, Wells Fargo!).”

• “Banking services would be a financial lifeline for the U.S. Postal Service, which has been defenestrated by email and digital communications.”

• “This could spell doom for bottom-feeding payday lenders.”

According to the story, “Gillibrand isn't proposing injecting the U.S. Postal Service with steroids and making it a rival for Bank of America or Citibank. Her bill, S. 2755, envisions a modest financial component for a delivery service that's required by law to pay its own way. The Postal Service isn't funded by taxpayers.”

However, the Postal Service isn’t solvent, largely because of how the US Congress requires it to recognize pension and healthcare obligations. The irony is that a move into financial services is being posited as a way for the Postal Service to itself become financially viable.

The Times concedes that Gillibrand’s bill is unlikely to become law, at least in part because it “is a direct assault on industries with plenty of political muscle. Payday lenders certainly won't welcome the prospect of a government-affiliated, low-cost competitor.”

I must admit that I’m a little skeptical about the Eye-Opening notion that the USPS should get into the banking business, but I’m also trying not to be guilty of epistemic closure - which is when you are so hemmed in by your own belief system that you can’t consider other possibilities.

Published on: May 7, 2018

Fast Company has a story about Walmart’s newly redesigned website, which it says is “ anything but an Amazon clone.

“Whereas Amazon feels like a digital warehouse stacked to the brim with seemingly random recommendations on its home page and an endless, searchable list of products, the new Walmart.com aims to be warm and approachable, with imagery that evokes a lifestyle brand rather than a place to just get good deals. Walmart plans to balance algorithmic recommendations with human curation. And most of all, it wants to leverage its greatest asset–those 4,700 physical stores–to take on the competition.”

The story goes on: “The redesigned site features photography heavily - a pointed choice that tips the scale against the kind of information density you’ll find on Amazon or other e-commerce sites. The images feel like that of a ‘lifestyle’ brand, though the company disagrees with me on that word, insisting they’re still focused on ‘everyday low prices.’ But on the new site, even Walmart mainstays like Tide and Swiffer Wet Jets are photographed in situ, as if they’re the stars of a perfectly orderly home.

“Contrast this to Amazon, which lists products shot (or Photoshopped) in front of soulless white backdrops. Walmart.com may be going for deal shoppers, but its vibe is borderline aspirational.”

Check out the Fast Company analysis here.

Published on: May 7, 2018

The Wall Street Journal reports that Blue Apron “has started selling meal kits at Costco Wholesale Corp. stores” at it seeks a revival of its fortunes after a time when, even though it helped to pioneer the segment, rival meal kit companies superseded it with more niche and popular offerings.

According to the story, “Executives say the kits to make beef stir-fry and chicken tacos that Blue Apron started selling at 17 Costco stores around San Francisco and the Pacific Northwest on Saturday will spur sales and entice people to sign up for subscriptions.”

The Journal writes that “Blue Apron is charging less for the Costco kits than for the meals it ships to customers’ homes through subscriptions. Blue Apron meals are $24.99 at the retailer this week, or about $6.25 a serving. Blue Apron’s subscription meals start at around $8.75 a serving. Officials are in talks with other national and regional grocery chains, and hope to announce other retailer deals later this year.”

Published on: May 7, 2018

Quartz has a worth-reading and provocative story entitled “White People’s Unseasoned Food Isn’t Just an Internet Meme, It’s A Centuries-long Obsession,” that looks at the existence of and people’s affinity for bland food.

Less-than-spicy food, author Annaliese Griffin writes, has largely been embraced by the white power structure - though her argument is not so much about the “white” as it is about the “power structure”; it just so happens that white people have largely held more power in the history of the planet.

“There’s no denying it,” she writes. “ The food of white America, whether you’re talking poached halibut on massaged kale or Kraft singles on Wonder bread with mayo, is bland compared with South Asian curries, Korean kimchi, or African peanut stews. If you can have any food, and in modern America, many of us can have pretty much any food we choose, why does blandness ever win?”

Griffin believes she has an answer: “One might predict that the rich and powerful would prize deeply flavorful, complexly seasoned food—more money, more flavor. That’s not always how it works, though. Our seemingly innate human preference for flavorful food has battled with our powerful human tendency to create and reinforce class, racial, and aesthetic hierarchies—and those have often coalesced around the rejection of easily accessible pleasures such as food augmented with spices and flavorings. Meanwhile, moral movements from Christian crusaders to modern ‘clean eating’ advocates have associated unadorned and ‘simple’ food with good taste and a kind of moral purity. This push and pull has profoundly shaped the way people around the globe eat.”

Bland food has achieved a certain momentum in post-World War II America, Griffin writes, as “American food was coalescing into a middlebrow mess of perfect squares of white bread fried in margarine with melty processed cheese inside, instant potatoes, casseroles, and fish sticks. Baked chicken breasts, not to mention nuggets, weren’t far behind.”

Published on: May 7, 2018

Bloomberg is reporting that the board of India’s Flipkart Online Services has approved Walmart’s bid to acquire about 75 percent of the company for roughly $15 billion.

The story says that “Google-parent Alphabet Inc. is likely to participate in the investment with Walmart, said one of the people. A final close is expected within 10 days, though terms could still change and a deal isn’t certain, they said.”

According to Bloomberg, “That would seal a Walmart triumph over Amazon.com Inc., which has been trying to take control of Flipkart with a competing offer. Flipkart’s board ultimately decided a deal with Walmart is more likely to win regulatory approval because Amazon is the No. 2 e-commerce operator in India behind Flipkart and its primary competitor. Amazon is out of the running unless Walmart hits unforeseen trouble.”

Published on: May 7, 2018

Opinion writer Michael Gerson has a piece in the Washington Post in which he argues that people who are anti-GMO are, essentially, being anti-science.

An excerpt:

“There is more than a hint of cultural imperialism when Westerners — grown fat on the success of modern farming — lecture subsistence farmers on the benefits of heirloom breeds and organic methods. The greatest need among farmers who spend part of the year hungry is increased productivity. Plant varieties engineered to resist cassava brown streak, banana bacterial wilt or maize lethal necrosis can be a matter of life or death. New, drought-resistant crops will be essential as the climate continues to change. And crops designed to resist insects require the use of far less insecticide — which reduces the risk of pesticide poisoning.

“As with the anti-vaccination movement, a contempt for science can have a human cost. The risks are very real when societies become detached from reality.”

It is worth reading here.

Published on: May 7, 2018

Cooking Light has a story about how some of the nation’s top supermarkets are dealing with the nationwide E. coli outbreak that has been traced to romaine lettuce grown in the Yuma, Arizona, region, with health officials recommending that consumers avoid pretty much all romaine until more is known about the outbreak.

The Centers for Disease Control and Prevention (CDC) have said that 121 people in 25 states have been affected, with 52 hospitalizations and one fatality.

Here’s what Cooking Light has determined:

• “In response to the April 13 warning, Albertsons-owned stores removed chopped romaine lettuce products grown in Yuma and the company changed its supplier source for all romaine lettuce and products containing it, per a company spokesperson. In response to the expanded warning on April 20, stores also removed products with full-leaf romaine sourced from Yuma.”

• “‘We pulled romaine lettuce potentially originating from Yuma,’ Kristal Howard, head of corporate communications and media relations at The Kroger Co., told Cooking Light via email. ‘The products being sold in our stores are no longer from the Yuma region and we are communicating this message to our customers primarily through in-store signage.’ Kroger stores include King Soopers, Ralphs, City Market, Harris Teeter, Food 4 Less, Owen’s Market and other regional chains.”

• At Trader Joe’s “all the romaine carried in stores today—and since April 14, the day after the CDC’s first warning—is not being sourced from Yuma.” A spokesperson told the magazine, “While we are not aware of any confirmed illnesses related to our romaine, and no Trader Joe's products have been implicated in the matter, we took the precautionary step of promptly removing any product from sale upon notification from the CDC of the potential to be affected.”

• At Aldi, a spokesperson said, “We’ve confirmed that all ALDI products with romaine lettuce that are currently for sale are not from the Yuma region and are therefore not part of the current CDC advisement.”

• And, at Wegmans, a spokesperson said, “On Sunday, April 15, all of the chopped, whole and romaine hearts sold in our stores comes from growing areas other than Yuma, AZ. When the CDC/FDA issued the advisory about chopped romaine grown in Yuma on Friday, April 13, we removed any remaining product from our stores … We also have point-of-sale signs posted in our stores explaining that all our romaine is from growing areas other than Yuma.”

Published on: May 7, 2018

• Forbes has a piece in which it reports on a Cadent Consulting Group prediction “that private labels will ‘steal’ as much as $64b from the nationally advertised brands in the next ten years, rising from 17.7% of the CPG/food market in 2017 to 25.7% in 2027. The group further predicts that Amazon, including its Whole Foods 365 Everyday Value brand, with an estimated $2b in sales added to Amazon’s $2b grocery private label sales in 2017, will grow to $20b by 2027.”

In addition, the story says, “A recent study by Gartner L2 delves more deeply into Amazon’s ambitious private label brand strategy across all its offerings, which in sheer numbers is led by its home-grown clothing, shoes and jewelry brands, accounting for 86% of Amazon’s private label brands. In that study, the authors ask the provocative question, ‘Do first-party and third-party sellers have any hope in competing against Amazon’s private label brands?’”


• Reuters reports that Amazon made an unsuccessful informal attempt to buy upmarket British supermarket chain Waitrose late last year.” This was after Amazon bought Whole Foods in the US for $13.4 billion, and before Walmart announced that it was selling about 60 percent of its UK-based Asda Group to Sainsbury.

While Waitrose has denied the discussions, sources characterized the conversations as “enormously informal.”

Published on: May 7, 2018

• The Virginian-Pilot reports that Supervalu has completed its sale of 21 Fram Fresh stores to Kroger, Harris Teeter and Food Lion, for $43 million.

According to the story, “The company, which is abandoning the Farm Fresh brand, said it’s still trying to sell several remaining locations to its current or potential wholesale customers.”


• The Wall Street Journal this morning reports that Mondelez International is acquiring cookie maker Tate’s Bake Shop for about $500 million.

The story notes that “Americans’ appetite for fresher food with simpler ingredients has challenged some of the company’s iconic brands in recent years.
Tate’s cookies are made with ingredients such as brown cane sugar and butter, rather than high fructose corn syrup and vegetable oil, making them more in sync with current eating habits.”

Mondelez is expected to expand Tate’s distribution, after a five-year period in which Tate’s sales have quadrupled.


• The Wall Street Journal reports that Starbucks has struck a deal with Nestlé SA that will have the Swiss company selling its consumer and foodservice products around the world in retail stores not owned by Starbucks.

According to the story, “Nestlé said Starbucks will receive an upfront cash payment of $7.15 billion plus royalties as part of a global perpetual license. The business in question has annual sales of $2 billion. The transaction doesn’t include any fixed assets and excludes Starbucks’ ready-to-drink products … About 500 Starbucks employees will join Nestlé; operations will be located in Seattle, the company said. Nestlé will work jointly with Starbucks on new offerings under a brand board that will meet regularly. Starbucks must approve of new products to be sold under the label.”

Published on: May 7, 2018

We had a story last week about why Trader Joe’s sells bananas by the piece, instead of in bunched by the pound - it was because an elderly consumer told the CEO, “I may not live until the fourth banana.” It prompted MNB reader Katherine Dykes to write:

"I may not live til the fourth banana!" needs to replace FOMO in the popular lexicon!  It's my new life's motto!



On another subject, MNB reader John Watt wrote:

 Respectfully, I don’t necessarily agree that all companies should figure out their own proprietary approach to e-commerce.  For companies of various sizes, investing in infrastructure and workers to have feet on the ground and trucks on the road, doesn’t seem plausible or even necessary.

I believe companies should focus on their core missions (and if they don’t have one that matters, they could be in trouble).   Rather, in my opinion -  leave it to the experts such as Instacart and make the draw of your products that you sell as a retailer make the customer purchase your items online.   I believe that it’s ironic that in the case of e-commerce the differentiator is the products, not so much the experience or the service (all Amazon is doing is leaving a box on your front steps).   It’s a very impersonal experience.   That’s contradictory thinking to how a lot of companies gain life-long customers with great customer service, which is why I think there will always be a place for brick and mortar.   But, I do agree with you that the e-commerce partner needs to be interested in serving the brands they work with and be prideful in how they represent the brands (retailers). 

Instacart is acting on the retailer’s behalf and is the face of the company when someone answers their door, no different than a pleasant cashier.

Point taken.

I have no problem with outsourcing e-commerce functionality - but I think it is critical that it be outsourced to companies that are interested primarily in serving the retailer’s brand, as opposed to establishing its own. I also think that it is dangerous to do business with companies that could end up competing with you.

And finally, I would argue that if retailers are going to have e-commerce services that compete with Amazon, they need to find ways to personalize the delivery function and make it reflect the instore retail brand experience.



MNB took note last week of a USA Today report that Perdue Farms is challenging a recommendation from the advertising business’s self-regulating National Advertising Division that it “modify or discontinue” commercials it is using for organic chicken; Perdue says it will appeal the decision to the National Advertising Review Board. At issue is whether the ads' attribute claims - "free range," "organic," "non-GMO," "100 percent vegetarian fed," and "no antibiotics ever” - apply to the way Perdue raises all of its chickens or solely those bearing its Harvestland Organic label.

I agree with Perdue on this one, and one MNB reader wrote:

Oddly enough, my wife and I have discussed these ads many times.  She sees them exactly the way the advertising review board suggests and I see them just like you described in your comments. According to her most people don’t think like I do - so I can appreciate you and I see this one the same way.



Got the following email from MNB reader Brian Blank:

I agree with your thoughts on the EEOC suit against Albertson’s.  That it was one store certainly sounds like a (hopefully) misguided manager and not a widespread (again, hopefully) issue.  The directive against speaking Spanish with Spanish-speaking customers is not only bad business, but is in direct opposition to what was expressed in the statement issued from Corporate.  I can see the point of discouraging exclusionary conversations between employees when others are around—in fact, it should be banned outright—whether in Spanish, English, Croatian, or Klingon.  There is little I hate worse than being rung up by a cashier who never once acknowledges my presence (except to curtly tell me how much money I owe) while carrying on a conversation with the cashier at the next lane.
 
OK, one thing I hate worse:  when that cashier has no one in the next lane to talk to because there aren’t enough checkouts open.  (Stop & Shop, Target…I’m looking at you!)

I’d just like to say for the record that if any two cashiers at a store where I shop want to converse in Klingon, I’m completely down with it. tlhIngan maH!



And, on another subject, one MNB reader wrote:

You are 100% correct. Saying Ahold can withstand Amazon due to the store experience is a joke. I was a category manager for Giant Landover before Ahold moved all the back offices to S&S and they have really taken them downhill. And to read that article made me laugh.



Last Friday I told you a bit about my experience officiating at a wedding; I am an ordained minister in the Universal Life Church, which cost me a few minutes on the Internet and a couple of dollars. I wrote:

It all went well. Nobody backed out, the serious rain held off until the outdoor ceremony was over, and my attempt at a sermon seemed to work - I’ve just celebrated my 35th wedding anniversary, so I had a few bits of wisdom to share about marriage. (Mostly, it is about having the right spouse who will put up with all your nonsense.)

In fact, I enjoyed myself so much that I’ve decided to offer this service to MNB readers - if anybody is looking for someone to officiate at their wedding, just let me know. If I can do it I will, and I’ll only charge you for my travel expenses. (If it is someplace fun, I may ask you if I can bring Mrs. Content Guy. But she’s fun to have at a wedding.)

MNB reader John Rand wrote:

There is something askew in the world when a person I value in part for his irreverence becomes an official Reverend.

I promise you, the “sermon” was irreverent.

Of course, that probably won’t make another MNB reader any happier:

I’m really disappointed to learn that you take the institution of marriage so lightly and that you think that an internet certificate qualifies you to perform a marriage ceremony.

I don’t know what upsets me more the fact that you think you qualify as a “Minister” or the fact that you perform wedding ceremonies?

At a time in our history where over 50% of marriages end in divorce, you should be encouraging counseling and spiritual guidance instead of mocking the very institution that should be taken far more seriously than most people do today.  If you don’t want to dive into the religious component of marriage than call it what it really is, a “Civil Ceremony” recognized by the state.

Staying in a committed relationship can be a challenge but the relationship stands a much better chance of surviving the “tests” that life will invariably throw your way, if the couple is properly prepared.

Call me old fashion, but too many important aspects of our culture are going the way of the Model T, we don’t need you to contribute to the decline.

Yikes. It never occurred to me that I was contributing to the decline of the culture.

If I may respond, respectfully…

First of all, I don’t think I’m a qualified minister. I would much rather have done it as a civil ceremony, but that’s not how the rules are written. The state won’t let people like me call it that.

Second, I did a little checking, and it appears to me that divorce rates actually are falling a bit, and have been for some time. I would never suggest that this is because non-ministers like me are conducting wedding ceremonies - this is, after all, a relatively new phenomenon. But it is an interesting trend line.

Third, I must admit that I’ve been to a lot of weddings - and I suspect I am not alone in this experience - that were conducted by priests and ministers who seemed to have done little research about the couple, and who did services that seemed largely generic, not personal, in tone and substance. I tried to be personal, and give the moment meaning to the people standing in front of me.

(Quick anecdote. One fellow came up to me during the reception and told me that I was “the best pastor he’d ever heard,” because I’d spoken in ways that seemed relevant and personal. I didn’t have the heart to tell him that I’m not a pastor, so I just thanked him.)

Fourth, I’m not minimizing the importance of spiritual guidance to people who want it and seek it out. Far from it. But not everybody feels that way. (Of course, some would probably argue that this is another sign of the culture’s decline…)

Finally, I do not take marriage lightly. I’ve been married for 35 years, and so I have enough experience to know that a marriage taken lightly cannot possibly survive. And I have, from time to time, been accused of a certain uxoriousness.

That said, I like to recall what the great Robert B. Parker once told the Wall Street Journal about marriage:

I've been married 52 years, and I like it a lot. I think it's the quintessential way to live, but not the only way. It's valuable to have a partner, regardless of gender or legal nature. It's good to have someone to love in addition to the dog.

Was I the ideal, perfect person to officiate at a wedding? Probably not. But they asked me to do it, and I hope I sent them off into the world with a bit of wisdom, a bit of humor, and a bit of perspective.