business news in context, analysis with attitude

Published on: May 3, 2019

by Kevin Coupe

Yet another example of how traditional constructs are giving way to new business models…

Variety reports that “YouTube, in its biggest swing yet at the sports-media biz, landed a deal with Major League Baseball to live-stream 13 games during the 2019 season worldwide — free for viewers to watch and available exclusively through YouTube in the U.S., Canada and Puerto Rico.

“YouTube’s first-ever exclusive live game distribution partnership with MLB will cover games during the second half of the 2019 MLB regular season. MLB and YouTube plan to announce a schedule of dates and matchups in the next few weeks … The 13 MLB games on YouTube will each include pre- and post-game shows and contain MLB- and YouTube-themed content — including incorporating popular YouTube creators (yet to be named) as part of the broadcasts. The games will be produced exclusively for the YouTube platform by MLB Network.”

Terms of the deal were not disclosed. The story says that “YouTube’s pact is similar to the one Facebook inked last year to carry 25 MLB games exclusively; this year, Facebook scaled back its baseball rotation, with non-exclusive rights to six of the league’s games on Facebook Watch.”

But here’s the Eye-Opening part:

“The deal isn’t a seismic shakeup to the TV sports landscape, but it’s a signal that Google and YouTube may be set to become more aggressive bidders as more league rights come due. In the past, YouTube has been in the mix for the NFL’s ‘Thursday Night Football’ streaming-rights package. In a pair of smaller deals, YouTube TV inked a deal last year to exclusively carry many home games from two Major League Soccer clubs, Los Angeles Football Club and the Seattle Sounders.”

It may not be a seismic shakeup by itself, but it almost certainly is part of a broader tectonic shift that has implications for everyone.

Published on: May 3, 2019

The Wall Street Journal reports that Walmart is “testing a new store employee structure, in some cases using fewer midlevel, in-store managers to oversee workers while boosting pay and responsibilities for those roles. The shift comes as the country’s largest employer works to control labor costs, keep workers longer and attract talent, while spending more to raise wages.”

According to the story, “Walmart executives say the genesis of the new worker structure wasn’t cost savings, but rather adapting its workforce to shifting shopping habits online and employee demands.

“The changes include giving more decision-making power to people on the floor, while giving good managers elevated roles. For example, test stores let workers help customers with requests such as returning items or changing a price without multiple authorizations - and groups them into teams that communicate and complete tasks across shifts, said Drew Holler, senior vice president associate experience for Walmart U.S.

CNBC writes that “the new structure is already in place at 75 of its stores, and will be expanding to departments across 50 other supercenter locations over the next month.” However, Walmart says the program isn’t monolithic, and is likely to take different forms in different locales going forward, especially in the test phase.

Published on: May 3, 2019

In upstate New York, the Democrat & Chronicle reports that Wegmans has launched a new mobile scanning app, dubbed Wegmans SCAN, in its East Avenue store in Rochester.

According to the story, “Wegmans SCAN is available for download for both iOS and Android devices. To use the app, customers must be connected to the East Avenue store’s Wi-Fi and link the app to their Shoppers Club account. Once connected, customers can scan items and bag them as they shop. Shoppers Club discounts and clipped digital coupons are automatically applied to the order. Customers can also see a running total for their order as they shop. Customers complete payment at any self-checkout register.”

The story says that “the East Avenue location is its first store to offer Wegmans SCAN. If it is successful, the company will roll out the program to additional stores.”

Published on: May 3, 2019

Drugstore chain CVS said yesterday that it plans to close 46 “underperforming” stores in Alabama, Arizona, California, Delaware, Florida, Hawaii, Illinois, New York, Michigan, Minnesota, Missouri, New Mexico, Texas, and Washington, DC.

The move comes as CVS CEO Larry Merlo has said that the company’s long-term plan is to reduce the amount of space devoted to straight retail in its stores and increase the space dedicated to health care services, such as its new focus on teeth alignment with SmileDirectClub shops.

USA Today notes that “CVS remains a solidly profitable business. The company expects to record an operating profit of between $11.8 billion and $12 billion this year.” However, “drugstore chains have not been immune to upheaval roiling the retail industry and the health care sector. CVS is bracing for the likelihood of Amazon's entry into prescription drugs after the online giant acquired startup PillPack.”

Published on: May 3, 2019

CNBC reports on a new innovation facility at Starbucks’ Seattle headquarters, named the Tryer Center, that is designed to create a start-up vibe within a company that is seeing its business model mature.

According to the story, “At Tryer, employees are testing out new combinations for cold beverages, using rapid prototyping via 3D printer and even trying out delivery mechanisms for the company’s new partnership with UberEats for delivery. They’re surrounded by walls filled with sticky notes, and functional mock stores built on wheels, so they can be deconstructed and remodeled quickly. The facility is where new projects, generated by employees — known as ‘partners’ at Starbucks — across the company’s headquarters, are being put to the test, going from idea to action in 100 days.”

CNBC writes that “since launching some six months ago, 133 unique projects have been tested, and more than 1,500 partners have come through to see what is being worked on or to participate themselves.” Some 40 projects have made it to store-level testing in some form.

“We now have 30,000 stores around the world serving 100 million customers a week, and with scale and complexity, it can become the enemy of speed. This is all about how we transform the way we work at Starbucks, so that we can accelerate the velocity of innovation,” says Starbucks CEO Kevin Johnson.

Published on: May 3, 2019

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

• Amazon may have a future. Warren Buffett said this week that his Berkshire Hathaway has been buying Amazon shares (which were trading at $1900 per share yesterday when the markets closed), to the point that its Amazon position will show up in a regulatory filing.

Actually, Bloomberg reports that Buffett has said that he underestimated Amazon and its CEO, Jeff Bezos. “The Amazon stake further cements the relationship between Berkshire and Bezos’s company,” the story says. “Berkshire is a partner with Amazon and Wall Street bank JPMorgan Chase & Co. in a health venture. The firms are setting up an independent company to offer health-care services to their U.S. employees more transparently and at a lower cost.”

Buffett also made an important point this week, attributing the Amazon share purchase to investment managers Todd Combs and Ted Weschler, who he has said give Berkshire Hathaway “younger eyes.” Now, that description could apply to a lot of people - Buffett is, after all, 88 - but not all 88 year old guys are willing to make that concession.


• Reuters reports that Amazon, while investing in a wide range of robotics and automation projects that could revolutionize its distribution systems, is dismissing the idea that machines will replace humans anytime in the near future.

In fact, Scott Anderson, director of Amazon Robotics Fulfillment, says that “technology is at least 10 years away from fully automating the processing of a single order picked by a worker inside a warehouse,” and he cites “the superior cognitive ability of humans and limitations of current technology.”

“In the current form, the technology is very limited. The technology is very far from the fully automated workstation that we would need,” Anderson says.

Published on: May 3, 2019

• Bloomberg reports that Walmart says it has “hired about three-quarters of the participants from a training program for tech professionals returning to the workforce after taking time off, part of an ongoing industry effort to increase diversity and find new sources of talent.” In fact, Walmart Labs says it “will triple the number of slots in the so-called returnship program to accept as many as 100 participants.”

The story notes that the “program is designed for professionals with at least five years of experience who have been out of the workforce taking care of children or elderly parents or for other personal reasons -- a group that typically includes more women than men.”

Published on: May 3, 2019

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

• CNN reports that “PepsiCo has backed down from a controversial fight with Indian farmers it accused of illegally growing its registered potatoes. The company is withdrawing a lawsuit it filed last month against four small Indian farmers for growing a potato variety it had registered for exclusive use in Lays potato chips.:

The story points out that “the lawsuit thrust the giant American food and beverage company into a debate about the rights of India's hundreds of millions of farmers — a political base vital to Prime Minister Narendra Modi's hopes of winning a second term in national elections over the next three weeks.

“Declining rural incomes have prompted mass protests by farmers, and some have been driven to suicide in desperation at their poverty. As part of his election campaign, Modi has promised to double their incomes by 2022 and provide pensions to small farmers over the age of 60.”

In “Henry IV, Part One,” William Shakespeare writes that “the better part of valour is discretion.” In this case, PepsiCo really didn’t have a choice. It was back down, or be painted as an ugly American company, with all the backlash that this likely would create.


• On Long Island, New York,Newsday reports that “discount grocer Lidl’s takeover of the 24 Best Market stores on Long Island will start with the closing of one supermarket, remodeling of two stores and opening of two new locations by early 2020 … The U.S. arm of Germany-based Lidl finalized its purchase of 27 stores, including all 24 on Long Island, that were owned by Bethpage-based Best Market in January for an undisclosed price … The Best Market stores not on Long Island are in Harlem in Manhattan; Astoria, Queens; Holmdel, New Jersey; and Newington, Connecticut.”

The story quotes MNB fave Burt Flickinger III of Strategic Resource Group as saying that this is likely to be “an ongoing competitive nightmare for every food retailer on Long Island.” Who am I to disagree with Burt Flickinger?

Published on: May 3, 2019

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

• CNBC reports that Oreo-maker Mondelez is considering the addition of “CBD-infused snacks to its product line, which includes Chips Ahoy cookies, Cadbury chocolate, Nilla Wafers and Nutter Butter cookies.

“Yes, we’re getting ready, but we obviously want to stay within what is legal and play it the right way,” CEO Dirk Van de Put told CNBC yesterday.

However, the CEO “dashed hopes that consumers would get CBD-infused Oreos, saying that the non-psychoactive compound in cannabis might not be a fit for the company’s family brands, the company could add the ingredient to other products or even create new product lines.”

Yeah, right. I’d be willing to bet real money that CBD-infused Oreos are in our future. Maybe not soon, but it is too good an idea not to happen at some point.

Published on: May 3, 2019

• The other day, I wrote that “UNFI-owned Cub plans to open a new store in Minnehaha this week, which at 46,000 square feet is the smallest of the stores carrying that name.”

I am reliably informed - by an MNB reader who clearly knows Minnesota geography better than I do - that the new Cub Foods Store is in Minneapolis, in the Minnehaha neighborhood.

Mea culpa, mea culpa, mea maxima culpa.

Published on: May 3, 2019

Peter Mayhew, who played one the of the most iconic characters in one of the world’s best-loved series of movies, has passed away at age 74.

Mayhew, in case you are unfamiliar with his name, played Chewbacca in the Star Wars films, though he was forced by physical ailments to hand over the role to Joonas Suotamo, who played Chewie in 2017's The Last Jedi, 2018’s Solo: A Star Wars Story, and the soon-to-be-released Rise of Skywalker.

Published on: May 3, 2019

…will return.

Published on: May 3, 2019

“Bosch,” the Amazon Prime television series based on the books by Michael Connelly, is back with its fifth season, and remains in my view the gold standard for how to adapt a novel for a visual medium. (I hope that Peter Berg and Mark Wahlberg do half as well in their adaptation of Ace Atkins’ “Wonderland,” featuring Robert B. Parker’s iconic detective Spenser, for Netflix.)

The season is largely based on Connelly’s novel “Two Kinds of Truth,” which also provides the title for the premiere episode. Bosch reveals the title’s meaning in this comment to his daughter: “There are two kinds of truth, Mads. The kind that comes from darkness, gets bent, manipulated for someone’s self-interest and the kind you carry inside and know is real.” In this season, Bosch’s sense of truth gets challenged when he is accused of manipulating evidence in an old murder case; villains and allies emerge in unexpected places.

Hieronymus "Harry" Bosch, who by now has populated more than 20 novels in addition to five seasons of television (a sixth season already has been ordered by Amazon), has always served as a kind of moral barometer in his desire to seek justice and know truth (even as he realizes that these are not always the same thing); his code is encapsulated in the line, “Everybody matters, or nobody matters.” In the TV series, Titus Welliver continues to do an outstanding job communicating the character’s burdens and knowledge of the dark state of many people’s souls … he is relentless in his pursuits, and in his single-parent relationship with college-age daughter Maddie (well played by Madison Lintz).

The reason the series is such a good adaptation is that the producers - including Connelly, which matters, I think - know what to keep from the books and what to jettison to make it work visually and dramatically. Some things are updated, but the tone of the books is captured through the dialogue, photography, and the jazz that Bosch plays on his old turntable - driving, mournful, and deeply soulful. Like Bosch.

I said it before and will say it again. Read the books. Watch the series. Do it in order if you can, but know that they are both exceptional pieces of work.



Back Monday. Have a great weekend.

Slàinte!

Published on: May 3, 2019

In this new edition of the Retail Tomorrow Podcast, we discuss the unique partnership between Kroger and Microsoft, developing cutting edge innovations that will take each of them to the next level when it comes to things like digital shelving, video analytics, sensor networks, temperature tags … and beyond. And here’s the thing - the innovations that emerge are not proprietary, but will be available to any retailer looking to leap into the future.

This podcast was recorded at GMDC’s recent Retail Tomorrow Immersion conference in Los Angeles.

Our guests:

• Kevin Fessenden, Senior Product Manager at Sunrise Technology, which is a Kroger company.

• Chris Dieringer, Senior Director of Industry Solutions for the Retail and CPG Industry at Microsoft.

The host: Kevin Coupe, MorningNewsBeat’s “Content Guy.”

You can listen to the podcast here, or on iTunes and Google Play.

Pictured, from left to right:

Kevin Coupe, Chris Dieringer, Kevin Fessenden.