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    Published on: May 26, 2022

    Today, I engage with David Katz, the founder-president of Plastic Bank, an organization that uses blockchain and some high-level plastic regeneration (which is different from recycling) to create a business  - and a compelling narrative - around making maximum use of resources, and building economic independence in places and for people who desperately need it.  In our extended conversation, Katz takes me - and the MNB audience - on what he calls a "paradigm journey," laying out his transformative idea.

    FYI … we chatted in advance of Katz's scheduled keynote at this summer Organic Produce Summit (OPS), where he will lay out this challenge and opportunity for both retailers and suppliers.

    For more information, click here.

    If you'd like to listen to this conversation as an audio podcast, click below.

    Published on: May 26, 2022

    During my conversation with Plastic Bank's David Katz, above, I reference a piece I read in the Tufts Observer, a student magazine at Tufts University.  Written by an impressive young writer named Meghan Smith, it essentially argues that the benchmarks traditionally used in a capitalist society may not be appropriate when grappling with climate change.

    An excerpt:

    "With calamity incoming, our existing solutions - modifying consumer behavior, trading carbon, and gradually transitioning to renewable energy - seem inadequate. If we want to solve the climate crisis, we have to target its root causes. Increasing evidence suggests that there are limits to what we can achieve in an economic system that is fundamentally structured around continued economic growth, increased consumption, commodification of the natural world, and extraction of profit. Climate change and ecological collapse are inextricably linked to the capitalist mode of production and the incentives which structure its outcomes."

    It is provocative stuff … indicative of how many young people think and are able to challenge traditional models … and is worth reading here.

    I cannot decide if I want Meghan Smith to be a professional writer or to find a career dealing with the climate crisis.  Maybe both?

    Published on: May 26, 2022

    Kroger said yesterday that it is opening a new "spoke facility," powered by Ocado, in Central Ohio, that it says "will extend the grocer's reach and ability to provide fresh and friendly services to its customers … The 61,000-square-foot facility located on Shook Rd in Lockbourne will collaborate with the fulfillment hub in Monroe, Ohio and serve as a last-mile cross-dock location that efficiently extends the fulfillment network reach to customers up to 200 miles away from the hub. At full capacity, customers in more than 250 Central Ohio ZIP codes can experience Kroger Delivery. The facility will employ up to 200 associates."

    Gabriel Arreaga, Kroger's senior vice president and chief supply chain officer, says that "the new service is an innovative addition to the expanding digital shopping experience available to Kroger customers. Our delivery business continues to accelerate with the growth of fulfillment and spoke facilities."

    Kroger describes the network this way:

    "The delivery network relies on highly automated fulfillment centers. At the 'hub' sites, more than 1,000 bots whizz around giant 3D grids, orchestrated by proprietary air-traffic control systems in the unlicensed spectrum. The grid, known as The Hive, contains totes with products and ready-to-deliver customer orders.

    "As customers' orders near their delivery times, the bots retrieve products from The Hive and are presented at pick stations for items to be sorted for delivery, a process governed by algorithms that ensures items are intelligently packed. For example, fragile items are placed on top, bags are evenly weighted, and each order is optimized to fit into the lowest number of bags, reducing plastic use.

    "After being packed, groceries are loaded into a refrigerated delivery van, which can store up to 20 orders. Powerful machine learning algorithms optimize delivery routes, considering factors such as road conditions and optimal fuel efficiency. Vans may travel up to 90 miles with orders from the hub and spoke facilities to make deliveries.

    "Associates at the spoke facility will deliver orders within their service area, adding ZIP codes as demand grows."

    Kroger currently operates customer fulfillment centers in Monroe, OH, Groveland, FL, Forest Park, GA (Atlanta) and Dallas, TX with additional customer fulfillment centers slated for California, Frederick, MD, Phoenix, AZ, Pleasant Prairie, WI, Romulus, MI (Detroit), Cleveland, OH, Charlotte, NC as well as South Florida and a still unannounced market in the Northeast.

    KC's View:

    It is fascinating to watch Kroger move these distribution pieces around the board … this is a high-stakes game, and these kinds of technology and real estate investments are expensive.  But that's the only way to do something like this … you push your chips to the middle of the table.

    Published on: May 26, 2022

    dot.LA reports that Amazon has opened its first clothing store - Amazon Style, located in the The Americana at Brand mall in Glendale, California, about 10 miles north of downtown Los Angeles.

    Here's how the story describes the store:

    "The floor is massive - laying out original products from Amazon’s own apparel lines alongside name brands like Theory, Adidas and Calvin Klein, as well as several other lines that have up until now only existed online. But the actual store is much larger than the two floors that most customers will only ever see.

    "Amazon Style is just the front - the homepage, if you will - behind which a large warehouse facility keeps a gigantic surplus of inventory. A floor-to-ceiling glass window on the main floor gives shoppers just a peak behind the scenes, as employees help load industrial-sized elevators with racks of goods to send upstairs to the dressing rooms."

    dot.LA reports that "one doesn’t just pick an item off the rack and take it with you while you shop. Instead, each rack has a barcode that you can scan via the Amazon Shopping app, which has your sizes pre-loaded from previous purchases. (You can opt for a different size if you choose.) That cues an AI-enabled algorithm to start searching through the store’s warehoused catalog and zip the desired item over to the second floor, where the dressing room provides its own glimpse into the future of shopping … Your phone also acts as your keycard to get into your personal dressing room. To prevent waiting, you are put in a virtual cue the moment you scan your first item; should your screen prompt that your room is ready while you’re still shopping, a press of a button allows you to hold your spot in the queue while freeing up the room for someone else."

    The story goes on:  "The changing room is like its own parlor trick. Designed to look like a walk-in closet, one wall has a full-length mirror and a giant touchscreen while another has all the clothes you scanned in your style and size preference. Expect to see a few surprises in there, as Amazon’s algorithm picks out other stuff you might want to try on based on your picks. It would be spooky if it wasn’t so convenient - an IRL mashup of the online retailer’s 'Recommended Based on Your Purchases' and 'Frequently Bought Together' features.

    "If an item doesn’t fit quite right or you want to see how a skirt looks in blue instead of black, just tap the touchscreen to request a variant. Or an entirely new outfit, as the screen makes available everything in the facility. Then just bring it down to checkout—perhaps the wildest part of this ride."

    USA Today writes about the checkout process:  "To check out, customers can scan a QR code to directly charge their account, use an Amazon One hand scanner, or traditional methods like cash or credit card.  But what if you don't buy something then change your mind later? Any scans from the store are saved to the shopping app, and customers can choose to purchase items at a later time online."

    TechCrunch offers some context:

    "Amazon has spent years experimenting with technology in the fashion space, notably with Echo Look, a since-discontinued connected camera that combined human and machine intelligence to recommend styles, color-filter clothes and keep track of what’s in customers’ wardrobes. The Echo Look tied into Prime Wardrobe, a program akin to those offered by Stitch Fix and Trunk Club that let users try on clothes and send back what they don’t want to buy.

    "In March 2021, Amazon passed Walmart as the top apparel retailer in the U.S. partly due to the pandemic-linked boom in online ordering, Wells Fargo reported. Analysts at the bank estimated that domestic sales of apparel and footwear on Amazon last year exceeded $41 billion, including sales through third-party sellers."

    And, from Gizmodo:  "This isn’t Amazon’s first brick-and-mortar store, though not all have been a success. The company recently announced the closure of dozens of physical bookstores (you know, the things Amazon helped kill), 4-star stores, and mall pop-up kiosks. Overall, though, building physical locations has been a success, with Amazon reporting $4.68 billion generated from physical stores in Q4 2021, up from $4.02 billion a year prior."

    KC's View:

    The coverage all seems rather breathless, and I might feel the same way if I hadn't seen Hointer back in 2013, which was created by entrepreneur and former executive Nadia Shouraboura.   Hointer was a lot smaller than Amazon Style, and basically just sold men's jeans, but the bones of the idea are pretty much the same, with Amazon Style's advantage being that technology has come a long way in the past decade.

    It is hard to get a sense whether Amazon Style is scalable in a way that will give the company a physical fashion footprint around the country, though it is a pretty good bet that Amazon has some real estate picked out for where it can open additional units.  (Maybe it could convert some of the warehouse space that it overbuilt to really big clothing stores?  Too soon?)

    The Bloomberg story makes the point that Amazon "has pledged to open stores only when it has something original to offer customers."  This may not be entirely original, but it certainly seems differentiated and could be successful.  But at the very least, Amazon is going to learn something about how to sell fashion, which will inform its future moves.

    Published on: May 26, 2022

    Axios reports that "dozens of Sears Hometown stores are closing and holding liquidation sales, according to Facebook posts from the shuttering locations … Sears Hometown was touted in a November 2019 news release as a 'network of more than 400 independently-owned and operated, dealer-managed smaller-format stores' selling 'a range of home products, including appliances, lawn & garden, tools and sporting goods'."

    The story notes that Transformco, which acquired Sears and Kmart out of bankruptcy in 2018, has not provided a list of the closing stores.  "Sears and Kmart have closed thousands of stores and cut around 250,000 jobs over the last 17 years," Axios writes, and "store locator websites for Sears and Kmart were not accurate as of Wednesday and listed locations that previously closed."

    KC's View:

    I always want to write "the ironically named Transformco" whenever that name comes up, because the only thing it seems good at is transforming stores into empty real estate and employed people into folks without jobs.

    But I suppose this is what happens when people who have no idea what retailing is, or at the very least have no vision or strategy for what their retailer should be, end up running a retail business.  This company is, and long has been, FUBAR.

    Published on: May 26, 2022

    The Wall Street Journal reports that "regulators proposed new disclosure and naming requirements for investment funds that tap into public angst regarding climate change or social justice, in an effort to address concerns about 'greenwashing' by asset managers seeking higher fees.

    "The Securities and Exchange Commission voted Wednesday to issue two proposals that aim to give investors more information about mutual funds, exchange-traded funds and similar vehicles that take into account ESG - or environmental, social and corporate-governance - factors. One of the proposed rules, if adopted, would broaden the SEC’s rules governing fund names, while the other would increase disclosure requirements for funds with an ESG focus.

    "The financial industry is split - between asset managers and those who buy their products - on the need for more SEC oversight of ESG funds. The Investment Company Institute, which lobbies Washington on behalf of asset managers, said it planned to review the proposals with its members closely but had a number of concerns, including about costs that it said investors will ultimately bear."

    The Journal goes on:  "The boom in what advocates call green, or sustainable, investing has posed a growing challenge to regulators in recent years. Assets in funds that claim to focus on sustainability or ESG factors reached $2.78 trillion in the first quarter, up from less than $1 trillion two years earlier."

    KC's View:

    I think that if companies or funds claim an ESG focus, they ought to be held toi account … and the best way is to require them to be utterly transparent about what they're doing.  And, even more importantly, not doing.

    Frankly, the system would be better off if there were some sort of common monitoring system that could lay everything out in an apples-to-apples way, so one could compare what companies are doing in an effective, easy to understand way.  

    But stronger regulation is a good first step.  

    Published on: May 26, 2022

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  The current US Covid-19 coronavirus numbers:  85,440,340 total cases … 1,030,415 deaths … and 81,851,405 reported recoveries.

    The global numbers:  529,736,730 total cases … 6,306,249 fatalities … and 500,248,139 reported recoveries.  (Source.)

    •  The Centers for Disease Control and Prevention (CDC) says that 77.8 percent of the total US population has received at least one dose of vaccine … 66.6 percent are fully vaccinated … 46.6 percent of fully vaccinated people have received a first vaccine booster dose … and 26.7 percent of the US population age 65 and older has received a second vaccine booster dose, while 20.7 percent of the US population age 50 and older has received the second booster shot.

    Published on: May 26, 2022

    •  Amazon shareholders yesterday approved a 20:1 stock split, meaning that, according to the company's regulatory finding, "each company shareholder of record at the close of business on May 27, 2022, will have 19 additional shares for every one share held as of such date reflected in their accounts on or about June 3, 2022. Trading is expected to begin on a split-adjusted basis on June 6, 2022.”

    It is the company's first stock split since a 2:1 split in 1999.  The Puget Sound Business Journal writes that "the 20:1 split was approved by the board of directors in March and recommended at the annual shareholder meeting. The goal of the split was to make it more affordable for individuals to invest in the company, as it anticipates long-term growth. Before it dropped this quarter, Amazon share prices had crested $3,500 per share."  It closed yesterday at $2135.50.

    Geekwire writes that "faced with a barrage of proposals on issues ranging from unionization to the environment, a majority of Amazon shareholders followed the board’s lead and rejected an unprecedented slate of issues up for consideration Wednesday morning … All nominated board members were approved by a majority of shareholders."

    The story notes that "Amazon warehouse workers spoke in support of proposals seeking to affirm their right to unionize, and seeking the consideration of hourly workers as candidates for openings on the board."  In addition, "Brad Lander, the New York City comptroller, asked shareholders to vote against board members Judith McGrath and Daniel Huttenlocher, chair and member, respectively, of the board’s Leadership Development and Compensation committee. He asserted that they 'failed to provide independent oversight of human capital management on behalf of the shareholders.'

    "Lander made the pitch as he presented a proposal seeking to examine the impact of Amazon’s health and safety practices on racial and gender disparities in workplace injury rates."

    But shareholders sides with Amazon management, which "detailed the company’s existing initiatives across a range of issues raised by the shareholder proposals."

    In addition, CNBC reports, "Amazon CEO Andy Jassy said the company is focused on returning to a 'healthy level of profitability' after slowing retail sales and rising costs ate into its latest quarterly earnings.  'We have effectively lowered our cost structure before and I have high confidence that we’ll get back on track as we work through these incredibly unusual past two years,'" Jassy told the annual shareholder meeting.

    Published on: May 26, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The New York Times this morning reports that "the Abbott Nutrition plant in Michigan that was shut down in February, sparking a widespread baby formula shortage crisis, had a leaking roof, water pooled on the floor and cracks in key production equipment that allowed bacteria to get in and persist, Dr. Robert Califf, the head of the Food and Drug Administration, told a House panel on Wednesday.

    "He detailed 'egregiously unsanitary' conditions in the Sturgis, Mich., plant to lawmakers during a hearing, but he also acknowledged that his agency’s response was too slow in addressing problems at the plant."

    The company is working to turn the facility around, with expectations that this could happen by June 6, "with some formula expected to begin rolling out June 20. Officials hope new shipments will reach store shelves within six to eight weeks, although resumption of full production at the plant will take longer."

    The story goes on:  "Dr. Califf also acknowledged several ways that the F.D.A. had erred in addressing this problem: Its follow-up inspection in January should have started sooner, he said, adding that the agency took too long to circulate a whistleblower report that arrived in October but did not reach top officials until February … He told lawmakers that the agency did not receive an immediate notice when a formula plant found the deadly Cronobacter bacteria. Nor does the agency have access to the supply chain information that each of the three main U.S. baby formula manufacturers have in-house."

    There will be more than enough questions to go around, but my first concern would be about a company culture that would let this facility degrade to this point.  Not to make assumptions, but the first thing I tend to think is that the emphasis was on margins and profits .. not on the investments that would've kept the business up to standards.  But I'm sure there will be assorted probes, by legislators and regulators and journalists, that will let us know who is to blame and why.

    •  Bloomberg reports that Elon Musk is planning to get into the restaurant business.

    The story says that "Tesla Inc and its CEO … submitted documents to the City of Los Angeles for a Tesla diner that would be open 24 hours a day on 7001 W. Santa Monica Blvd. in Hollywood … the 9,300-square-foot space includes plans for a drive-in movie theater and a 28 stall supercharging station. Architectural plans show a two-story diner with over 200 seats, both indoors and outside. The outdoor seats will have a direct view to two tall LED movie screens. Food will also reportedly be delivered to cars."

    Bloomberg notes that "almost a year ago, Tesla filed applications with the U.S. Patent and Trademark Office to trademark a ‘T’ logo for an array of restaurant concepts, from self service to take out … There are no further details on opening date or menus, and Tesla did not immediately respond to a request for comment."

    Published on: May 26, 2022

    Monday is Memorial Day here in the US, which means that we're all about to enjoy a three-day weekend.  I'm going to start it a day early and make it a four-day weekend.

    MNB will be back on Tuesday, May 31, with, as always, fresh and hand-crafted news and commentary.

    I hope you have a great weekend … Stay safe … Be healthy.