business news in context, analysis with attitude

Published on: August 5, 2022

Reporting in from the Retail Tomorrow Immersion event in Northern California, sponsored by the California Grocers Association (CGA) board of directors, I reflect on a presentation by Dave Kaval, the former president of the San Jose Earthquakes and current president of the Oakland Athletics.  Kaval talked about the process of building the new stadium for the Earthquakes, now called PayPal Park, and the importance of creating a consistent customer experience by empowering employees at all levels of the organization.

Published on: August 5, 2022

by Kevin Coupe

The "On Tech" newsletter written by Shira Ovide for the New York Times has a fascinating piece this week about how US regulators are suing to stop the acquisition of publisher Simon & Schuster by Penguin Random House, which would "shrink the number of large American publishers of mass-market books from five to four."

The government's rationale is pretty simple:  the purchase would effectively reduce competition in the book business, hurting authors who will have fewer places to peddle their wares and potentially hurting consumers by raising prices.

But, Ovide writes, it isn't that simple:  "The elephant in the room is Amazon. Book publishers want to become bigger and stronger partly to have more leverage over Amazon, by far the largest seller of books in the United States. One version of Penguin Random House’s strategy boils down to this: Our book publishing monopoly is the best defense against Amazon’s book selling monopoly. 

"As the dominant way Americans find and buy books, Amazon can, in theory, steer people to titles that generate more income for the company. If authors or publishers don’t want their books sold on Amazon, they may disappear into obscurity, or counterfeits may proliferate. But if the publisher is big enough, the theory goes, then it has leverage over Amazon to stock books on the prices and terms the publisher prefers."

Ovide writes that "we know that a few technology companies — including Amazon, Google, Facebook and Apple — have enormous influence over entire industries and our lives. We’re all trying to figure out in which ways their power is good or bad for us, and what, if anything, government policy and law should do about the downsides. This disputed merger of book publishers is one example of the reckoning over these essential issues."

And, she quotes Barry Lynn, the executive director of the Open Markets Institute, as saying that "if Amazon’s dominance is hurting book publishing companies, readers, authors or the American public — and he believes that it is — allowing a book company to grow more muscular to bully Amazon is counterproductive. The best approach, he said, is to restrain Amazon with laws and regulations.

Stephen King, the prolific author, also has come out against the acquisition - and he is published by Simon & Schuster, and it isn't hard to see that he could actually benefit from the merger.  But, as NPR points out, "he has a history of favoring other priorities beyond his material well-being."

That said, King knows something about publishing mergers:  "He has been a published novelist for nearly 50 years," NPR writes, "and knows well how much the industry has changed: Some of his own former publishers were acquired by larger companies. 'Carrie,' for instance, was published by Doubleday, which in 2009 merged with Knopf Publishing Group, and now is part of Penguin Random House. Another former King publisher, Viking Press, was a Penguin imprint that joined Penguin Random House when Penguin and Random House merged in 2013.

"King's affinity for smaller publishers is personal. Even while continuing to publish with the Simon & Schuster imprint Scribner, he has written thrillers for the independent Hard Case Crime. Years ago, the publisher asked him to contribute a blurb, but King instead offered to write a novel for them, 'The Colorado Kid,' released in 2005."

King believes that "the more the publishers consolidate, the harder it is for indie publishers to survive," hence his decision to testify for the government in the case.

It is an interesting case, and the court's decision will be Eye-Opening one way or the other, telling us something about the degree to which regulators will be able to successfully oppose mergers of giants.  It seems to me that this isn't just about book publishing - the resolution of the case will be just one chapter in a complex tome that may well decide the degree to which the small will survive, consumers will be able to protect themselves (if they want to) from big tech, and the shape not just of business but also of society going forward.

Published on: August 5, 2022

The Information reports that 7-Eleven has acquired Skipcart, described as "a four-year-old startup that developed a major network of drivers for fast delivery of restaurant food and other goods in the U.S."  Terms of the deal were not disclosed, though two years ago Skipcart was valued at $65 million; according to the story, "the company says on its website that its network of more than 100,000 drivers serves retailers in 37 states with an average delivery time of 30 minutes."

The move signals a change for 7-Eleven, which to this point has been using DoorDash to make deliveries.  The Information writes that "currently, DoorDash’s contractor-drivers deliver orders to 7-Eleven customers who shop through the DoorDash app or use 7-Eleven’s own apps to order food and alcohol for delivery … 7-Eleven now intends to compete more directly with GoPuff and DoorDash but declined to elaborate."

Published on: August 5, 2022

Business Insider reports that "the Federal Trade Commission has deepened an investigation into Amazon's Prime subscription service and whether the e-commerce giant intentionally dupes consumers into signing up for the membership program.

"The probe focuses on Amazon's use of ambiguous language and design in its Prime sign-up and cancellation process, commonly known as 'dark patterns.'  Internal documents reported by Insider in March showed that Amazon has for years worried about customers feeling tricked into signing up for Prime, and yet the company chose not to use clearer language because it didn't want to slow the growth of its subscription business."

According to the story, "As part of the investigation, the FTC has been recently reaching out to current and former Amazon employees, and has sent out subpoena letters in some cases, according to people familiar with the matter. These people asked not to be identified because they are not authorized to speak publicly about the probe … Typically, the FTC would proceed to file a lawsuit against Amazon in a case like this, according to the people familiar with the matter. The agency could later drop the case or reach a settlement depending on the evidence it gathers. Amazon could also slow down the process by filing a petition with the FTC to quash the subpoena requests."

Published on: August 5, 2022

The Pittsburgh Post-Gazette reports that Hershey now is saying that contrary to recently aired concerns that supply chain issues might create a shortage of candy for Halloween, it expects to have sufficient treats on retailers' shelves for the holiday.

The story says that "yes, there are supply chain issues in candy land, such as a shortage of ingredients including cocoa. The COVID-19 pandemic and the war in Ukraine have had an impact on confectioners like Pennsylvania-based Hershey Co."  But CEO Michele Buck said that while there have been "strains on the business" related to ingredient availability, one of the company's priorities is keeping retailers in-stock on its products at one of its busiest times of the year.

Published on: August 5, 2022

There is a terrific piece in the New York Times this weekend about Scott Galloway, the media personality/business professor./serial entrepreneur-investor, and the unique brand he has established.

The story says that "Galloway serves a heady cocktail of data-driven analysis, bold-to-brash bets, center-left politics, dirty jokes and sudden emotional vulnerability that appeals to his core audience of men, and helps him stand out in a world of bland talking heads. He’s a little like Howard Stern for aspiring M.B.A.s and restless middle managers, offering listeners permission to have feelings and assert mildly politically incorrect opinions. (Fast Company called him a 'progressive Jordan Peterson.')

"His hobbyhorses include the worship of tech founders (we should stop), antitrust regulation (we need more), higher education (costs too much), 'failing young men' (they need role models), physical fitness (he does CrossFit) and the importance of building personal relationships. He is also apt to take off his shirt, as he did in a promo for a doomed Bloomberg TV show, or put on a wig, as he did at a tech conference while lip-syncing to Adele … Mr. Galloway aspires to be 'the most influential thought leader in the history of business,' he said. Sometimes it seems as if by 'most influential' he means 'most frequent'…"

You can read the piece here.

Published on: August 5, 2022

•  The Wall Street Journal reports this morning that "DoorDash Inc.’s revenue rose in the latest quarter, as consumers stuck to ordering food and household essentials despite restaurant and store reopenings … DoorDash’s revenue in the three months through June grew 30% to $1.6 billion from a year earlier … Total orders grew 23% to 426 million, also beating Wall Street’s forecast of 419 million orders. DoorDash said that its order volume would have been even stronger “in a healthier discretionary spending environment … The company’s second-quarter loss widened to $263 million from a loss of $102 million a year earlier; analysts on average were expecting a loss of $149 million.

According to the Journal, "While DoorDash remains unprofitable, executives have been heartened by solid performance based on another measure of operational health, known as adjusted earnings before interest, taxes, depreciation and amortization. That metric strips out certain expenses such as stock-based compensation that executives consider to be outside core operations. DoorDash has had positive earnings on that basis for more than a year, including in the latest quarter."

•  The Puget Sound Business Journal reports that Amazon has closed one of its Amazon Go stores in Seattle because of concerns about the safety of its "store employees, customers, third-party vendors."

The store, near Fourth Avenue and Pike Street, will be reopened if conditions improve, the company said.  The story notes that "crime and safety have been top concerns for downtown businesses, including for retailers in the Pike-Pine corridor, where vacancies remain after businesses shuttered during the pandemic … The move comes less than five months after Amazon said it would temporarily pull workers out of its nearby offices at the former Macy's building at 300 Pine St., citing public safety. The 1,800 employees at the Macy's building had been working remotely since the onset of the pandemic, but were moved to South Lake Union for any in-person work."

Employees at the closed store have been offered work at nearby Amazon Go locations.

Published on: August 5, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  Axios reports that "the Biden administration has declared the monkeypox outbreak a public health emergency — a move that gives officials more flexibility to tackle the virus' spread … Federal health officials can now expedite preventative measures to treat monkeypox without going through a full federal review."

The story notes that "New York, California and Illinois all declared public health emergencies related to monkeypox in the last two weeks. The World Health Organization has already declared monkeypox a global emergency.  Monkeypox has spread to more than 70 countries in the recent outbreak."

•  From the Associated Press:

"More Americans applied for jobless benefits last week as the number of unemployed continues to rise modestly, though the labor market remains one of the strongest parts of the US economy.

"Applications for jobless aid for the week ending July 30 rose by 6,000 to 260,000 from the previous week’s 254,000, the Labor Department reported Thursday … The four-week average for claims, which evens out the weekly ups and downs, also rose from the previous week, to 254,750.

"The total number of Americans collecting jobless benefits for the week ending July 23 rose by 48,000 from the previous week, to 1,416,000. That figure has been near 50-year lows for months."

"On Tuesday, the Labor Department reported that American employers posted fewer job openings in June as the economy contends with persistently high inflation and rising interest rates.  Job openings fell to a still-high 10.7 million in June from 11.3 million in May. Job openings, which never exceeded 8 million in a month before last year, had topped 11 million every month from December through May before dipping in June."

•  Axios Chicago has a piece about how "every quarter, Mariano's top bosses travel downtown from their suburban headquarters to listen to pitches from local businesses trying to get on their shelves … Called 'What's Next at Mariano's,' the reality-TV-like event gives about 20 locals roughly 15 minutes each to pitch their product and field questions from a panel of executives."

The goal, the story says, is to identify local businesses that can help the Kroger-owned retailer maintain local street cred, ax well as giving appropriate local vendors the opportunity to take the next step.

"Shoppers are always looking for local options," Mariano's division president Michael Marx tells Axios, adding, "We have to look at where they are with capacity and the process of production to make sure they can deliver the product.  The pitch is not the end. If we select your product, it's just the beginning."

Lots of retailers do similar things.  Every retailer should.

Published on: August 5, 2022

•  The ADUSA Supply Chain division of Ahold Delhaize USA announced that Sanja Krajnovic as EVP, Distribution and Transportation, joining the company "as Ahold Delhaize USA companies continue to transform the supply chain to an integrated self-distribution model for the future."

Krajnovic is the former senior vice president of store operations at Dollar General, as well as previously served as group vice president for global supply chain and logistics at Target.

Published on: August 5, 2022

We had a story the other day about how the nation's infrastructure is not built for the climate change-related events that we've seen lately, and led me to ask if businesses are any more prepared.  (I am dubious.)

One MNB reader responded:

I’m a Texan by birth, having lived there most of my life.  We’ve resided in Seattle for 2 years now, and I laughed at the recent record Seattle set for most consecutive days over 90 (6 days….seriously).  Seattle weather is fantastic, especially in the summer, and I now welcome the lightly raining days because it means we have water.  People complain about everything, but this Texan will never again complain about the weather in Seattle.

You make me sort of homesick.  I miss the Pacific Northwest.  Desperately.

The other day we reported that "National Retail Federation (NRF) Chief Economist Jack Kleinhenz said … that "despite two consecutive quarters of decline, the U.S. economy still does not appear to be in a recession and remains unlikely to enter one this year."

I commented:

It seems clear that if/when we go into recession, it is likely to be unlike recessions of the past.  Unemployment remains at records lows, and the pandemic has helped to create simultaneous factors that make the current situation an outlier.

So, we'll see.  A recession could be shallow and short.  Or…it could be something else.

One MNB reader wrote:

Don’t know what world you live in but for those of us involved everyday with normal Americans trying to make a living … we are already in one!!

Sometimes, I suppose, you just have to shoot the messenger.

Walmart said this week that it is unveiling "Walmart Restored, our new program created to help customers discover refurbished products at everyday low prices. In a year when customers are looking for ways to save money, like-new refurbished products have become an increasingly popular way to cut down on costs without sacrificing quality."

I commented:

The other day we had an email from a reader complaining that Walmart had lost its way, that it was trying to do too many things and be all things to all people.  I disagreed with that assessment, and think that this story illustrates that the company is testing a lot of different initiatives, which is a good thing, but has its eye on the ball of serving its core constituency.

For me, the only problem with this idea is that Walmart is guaranteeing the refurbished products and putting its name behind the restoration process - I think it should, but just hope that the process lives up to the expectations.

One MNB reader responded:

I found this interesting, but agree with your assessment.  I did check a couple of prices on some of the tools and found the Walmart refurbished tool,  one was a Ryobi jigsaw, was actually $15.00 more than a new one at Home Depot.  Great idea, but it looks like they still might have some work to do on the pricing.  This is not atypical of Walmart though, as I have dealt with them for almost 30 years, as a supplier and as an associate,  launch and then fix and tune.  Hopefully they get the tuning done sooner than later.

MNB reader Andy Casey wrote:

This makes great sense to me not only for Walmart but other retailers. What happens to all the millions of products ordered and quickly returned these days? Judging from my own experience, most of those are in good order and returned only because they weren’t quite what was expected.

And from MNB reader Steven Ritchey:

I think this is a smart move by Wal Mart, if they do it right.

If they refurbish on the cheap, it may not work so well.  But if say Kitchen Aid Mixers get refurbished by Kitchen Aid, then it may work.

I work with my hands a lot, building things, doing home repair.  I've bought reconditioned power tools for years.  Since I'm not a pro and don't use them every day, I don't need the latest and greatest, along with the price they fetch.  If I do it right, I can get quality, reconditioned tools, reconditioned by the manufacturer for half the price of new.

Speaking of Kitchen Aid, I also cook, though no one is going to call me a "foodie", but, several years ago I bought a reconditioned Kitchen Aid stand mixer, from Kitchen Aid at a great price, and it works great.

So, if they do it right, it could be a good thing, if not, well, it will be like the WM employee that delivered groceries to me when I was sick with Covid and put them right in front of my storm door.  I've not used their delivery since.  It only takes one bad experience.

We've also been having a conversation about retail media networks, which led MNB reader Monte Stowell to observe:

Having worked in both retail and for two large manufacturers for over 56 years, I never will forget a bright Orange day glo sign in the offices of every Safeway store here in the Portland, Oregon stores in the District of Ivan Bowes DM. The time era was the late 1960’s. 

“There is no magic in advertising that will overcome the absence of merchandising at the retail level.” My direct sales force and the brokers that represented our products were always aware of this very basic tenet of selling the products they represented. The basics never go out of style, even today.

On the subject of transaction fees charged by banks and proposed legislation that would regulate them to a greater degree, one MNB reader wrote:

As someone that works for a small 4-store chain, our credit card costs are more than $200,000 a year - basically the profit we used to make. We’re now lucky if we break even. 

These so-called financial institutions can go straight to hell.

But tell us how you really feel…

Regarding the decision by Schwan's to rename its delivery service - I thought it was a dopy name - one MNB reader wrote:

I am sure Yelloh! is a play on words. Yellow for the iconic truck and Hello backwards as a hit against Hello Fresh! Several years ago I worked for Schwan and mentioned that if they would work quickly they could beat the new players on home delivery, they already had the system in place. That was over 10 years ago. Not exactly a fast moving truck. A couple of things could present problems. Their prices aren't competitive, their trucks don't go everywhere. Both could be fixed but it may be too late to change the game.

"Now exactly fast moving" may be the understatement of the year when it comes to Schwan's.

On another subject, from an MNB reader:

I think Walmart’s announcement to eliminate 200 corporate jobs is mostly a signal.  Walmart has 2.3 million associates worldwide and over 14,000 in Bentonville.   200 jobs is about 1.4%.  I would bet the attrition rate would be higher than 1.4%.   It may be a signal that the “great resignation”  is behind us or a signal to ignore the anti-work movement. Or it may be no signal at all and they just felt they have 200 too many people working there.   

And from another reader:

Looks like my friends at Hy-Vee could learn a thing or two from how Wal-Mart handles this process.   At least Wal-Mart doesn’t give a clear impression that their ‘restructuring’ involves pushing these people into retail positions that they aren’t prepared for. 

I got a number of emails reacting my story about the passing of Vin Scully.

MNB reader Lance McMillan wrote:

I once heard Vinnie call a game against the Mets. As he often did when in New York, he told us he had taken in a Broadway Matinee – "The Man of La Mancha."  He then managed to  weave the story of Don Quixote and Sancho through the entire game. Tilting at windmills, the barber wearing the shaving basin on his head, are but a few examples of how he connected the game with a novel written in 1605.

It was a fascinating listen and not the only time he had done it.

“The Great Dodger In The Sky,” (Tommy Lasorda’s invention) is celebrating his arrival today.

Another MNB reader wrote:

I had the distinct honor of meeting Vin Scully in 2007. I took my 9 year old son, Chad, to a ceremony inducting Jackie Robinson into the LA Coliseum Hall of Fame. Vinny was the master of ceremonies and spoke so eloquently honoring Jackie. I approached Vinny after the conclusion of the ceremony and introduced myself and my son. I’ll never forget his kindness and humility during our brief but poignant encounter.

I will be forever thankful for that moment.

From another MNB reader:

It was the summer of 1966. I was a Junior in High School and we were living in Arcadia, California, just 18 miles and 30 minutes from Dodger Stadium. In July and August that year, Sandy Koufax started in 7 home games on a 4-day rotation. He went 5-2 at home during that stretch.

My memory is that I went by myself to see at least 5 of those games. I would take the family car, drive to Chavez Ravine, and buy a general admission ticket to sit in the second level behind home plate. It was a perfect place to see the game and watch Koufax. To hear the play-by-play I took my 6-transistor radio that used a 9v battery and held the radio up to my ear during the entire game to listen to Vin Scully and Jerry Doggett (his “second banana”) call the game. I was not alone. So many Dodger fans in the stands were tuned in to Vinnie and Jerry you could hear every word of their game call without having your own radio.

In his final season at age 30, Koufax was 27-9 that year with a 1.73 ERA and 317 SO, winning the Cy Young award. He pitched 27 complete games. A Dodger rally was Maury Wills walking, stealing second, stealing third, and coming home on a sacrifice fly. The Dodgers won 95 games and the pennant that year before falling to Baltimore 4-0. But my most enduring memory of that summer was the voice of Vin Scully echoing through Dodger Stadium as I watched Sandy Koufax pitch his way into history.

In my piece, I took note of something that the LA Times wrote:

"Talking about an opposing player, Scully once said: 'Andre Dawson has a bruised knee and is listed as day-to-day. ... Aren’t we all?'

Prompting MNB reader Tim Callahan to write:

Your remembrance of Vin Scully made me laugh and literally shed a tear because “we are all day to day”.  Thanks from a Phillies fan!

My pleasure.

Published on: August 5, 2022

…will return.

In the meantime, have a great weekend, and I'll see you Monday.

Sláinte!!