business news in context, analysis with attitude

Published on: January 25, 2023

The continuing goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive who led the team that developed Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

Today, Tom and I use my interview earlier this week with Boxed CEO Chieh Huang to talk about how retailers need to be thinking more strategically, connecting the dots in a way that really serves shoppers.  This is one of the opportunities that the Boxed decision to "seek strategic alternatives" actually creates for retailers and wholesalers, if they're able to grasp it.

If you'd like to download the Innovation Conversation as an audio podcast, click below.

Published on: January 25, 2023

Walmart said yesterday that it is raising wages for all hourly workers in the US, a reflection of a continuing reality for retailers - front line staff shortages that are having an operational impact.

In a memo to all US employees, John Furner, president and CEO, Walmart U.S., announced four ways in which he said the company is investing in its employees:

"First, starting next month, we’ll begin investing in higher wages for associates. This includes a mixture of associates’ regular annual increases and targeted investments in starting rates for thousands of stores, to ensure we have attractive pay in the markets we operate. We expect these raises will bring our U.S. average hourly wage to more than $17.50. They’ll be reflected in March 2 paychecks.

"Second, we’re continuing to invest in associates who run our Auto Care Centers (ACC). Last fall we created a higher-paying ACC coach role. Now we’re introducing a higher-paying ACC team lead position and elevating the ACC tech position to a higher pay-band that reflects the special skills needed for the role and its importance to our business.

"Third, we’re adding new college degrees and certificates to our Live Better U (LBU) education program. These new options are focused on where our business is headed and will equip associates with skills to unlock new career opportunities. Both part-time and full-time associates can participate in LBU on their first day and we’ll pay 100% of the tuition and fees.

"Fourth, we’re expanding our Associate-to-Driver Program, which pays for supply chain associates to earn their commercial driver's license and become a Walmart truck driver earning up to $110,000 in their first year. As we announced last week, this development program is now also available to store associates."

The Wall Street Journal writes that "the U.S. job market has been tight, with an unemployment rate of 3.5% in December matching multi-decade lows. There are signs that the labor market is losing momentum as hiring and wage growth has cooled in December, though the number of job openings still far outpaces the number of unemployed people. 

":In November, there were 10.46 million unfilled jobs in the U.S., federal data show. Of those, 887,000 were in the retail sector and 1.52 million were in the leisure and hospitality sector—industries that often compete for the same workers. Nearly a quarter of available jobs in the U.S. were in those two lowest-wage sectors, as of the most recent data."

The Journal also notes that "the federal minimum wage is $7.25 an hour. Twenty states don’t have a minimum wage higher than the federal minimum, which was last raised in 2009, according to the Labor Department."

And CNBC writes:  "About 340,000 store employees will get a raise because of the move … That amounts to a pay increase for roughly 21% of Walmart’s 1.6 million employees.

"The retail giant, which is the country’s largest private employer, is hiking pay at an interesting moment. Weaker retail sales trends have prompted companies, including Macy’s and Lululemon, to recently warn investors about a tougher year ahead. Some economists are calling for a recession amid persistent inflation and shifting consumer habits.  Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of employees and set off alarm bells. Still, the jobs market has remained strong. Nonfarm payroll growth slowed slightly in December, but was better than expected. And the number of Americans filing new claims for unemployment benefits fell last week."

Published on: January 25, 2023

National Public Radio reports that "as the price of eggs continues to rise, U.S. Customs and Border Protection officials are reporting a spike in people attempting to bring eggs into the country illegally from Mexico, where prices are lower.

"The jump in sightings of the contraband product can be best explained by the high price of eggs in the U.S., which soared 60% in December over a year earlier. A combination of the deadliest bird flu outbreak in U.S. history, compounded by inflationary pressure and supply-chain snags, is to blame for the high prices shoppers are seeing at the supermarket."

The story says that "a 30-count carton of eggs in Juárez, Mexico, according to Border Report, sells for $3.40. In some parts of the U.S., such as California, just a dozen eggs are now priced as high as $7.37."  Which is some people are "risking thousands of dollars in fines."

NPR says that in many cases, people show up at the border and are open about the fact that they are trying to b ring eggs into the USA, not realizing that it is prohibited;  in such cases, the eggs are confiscated and the people are allowed to go their way.  When people try to smuggle them into the US, the eggs are confiscated and a $300 fine is assessed, though the fines can go higher for repeat offenders.

Published on: January 25, 2023

The Street has a story about how in the summer of 2022, as the consumer spending that typified the pandemic slammed headfirst into inflation and a post-recession mindset, "Walmart and Target both publicly declared that they had warehouses full of the wrong merchandise for the holiday season.

"To fix that, both chains heavily discounted certain items in the late-summer/early-fall period. That wasn't good news for either company's stock as short-term margins took a hit (but it was certainly a good move to build stronger customer relationships).

"And while this problem almost certainly hit many major retailers, few, if any, were as public about it as Walmart and Target (likely to protect their stock prices heading into the holiday season). Costco, it turns out, dealt with some of the same problems and took a fairly extreme step to solve them."

The Street writes that "because Costco has a heavy discount model, it's actually hard to know when discounts exceed the norm. CFO Richard Galanti made it clear, however, that the company did discount excess large inventory during the holiday season during his remarks in the warehouse club's first-quarter earnings call.

"'If you've been online and saw some things we did during not just the week of Thanksgiving and Cyber Monday but we did some -- anywhere from $100 to $500 off on, I think, a $500 cash card if you bought $3,000 or more of these items,' he said.

"Galanti explained that this was about getting rid of some inventory for the same reasons Walmart and Target had to sell items off … Selling off some of those items at a discount makes sense for a chain built around delivering value for members. He also noted that when one area weakens, Costco has other strengths that make up for it."

Published on: January 25, 2023

FMI-The Food Industry Association announced its annual leadership awards this week:

•  Joe Sheridan, President, Wakefern Food Corp., received the Sidney R. Rabb Award for Statesmanship;  

•  Art Potash, CEO, Potash Markets, received the Robert B. Wegman Award for Entrepreneurial Excellence;

•  Elizabeth Chace-Marino, Manager of Government Affairs at Ahold Delhaize USA, and Gordon Reid, President of Stop & Shop, received the Esther Peterson Award for Consumer Service;

•  Rick Brindle, Vice President, Industry Development, Mondelēz International, received the William H. Albers Award for Industry Relations;

•  Ron Edenfield, Chairman, Wayfield Foods, Inc., received the Glen P. Woodard, Jr. Award for Public Affairs;

• and Bob Obray, CEO, Associated Food Stores, posthumously received the Herbert Hoover Award for Humanitarian Service.

Published on: January 25, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From Axios:

"The Justice Department and eight states on Tuesday filed an antitrust lawsuit against Google's parent company Alphabet, accusing the tech giant of illegally abusing its dominance in digital advertising and violating the Sherman Antitrust Act … It's the second major antitrust lawsuit filed against Google by the Justice Department in the last three years, and if successful it could force Google sell off much of its ad business."

The story notes that "the DOJ and a coalition of state attorneys general sued Google in 2020 for allegedly using anticompetitive tactics to illegally monopolize the online search and search advertising markets. That lawsuit is ongoing."

The Washington Post writes that "the action poses a significant financial threat to the company, which has been slashing jobs amid a pullback in advertising. The suit seeks to force Google to sell off much of its advertising technology products, which enable the buying, selling and placement of ads across Google Search, YouTube and millions of other websites. The company’s advertising “network” brought in $7.9 billion for the company in the third quarter of 2022, about the same as all of Google’s revenue from YouTube."

The new complaint says that "competition in the ad tech space is broken, for reasons that were neither accidental nor inevitable … One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising."

Axios writes that "the suit is seeking a judgment that Google has unlawfully monopolized both the publisher ad server market and advertiser ad network in the U.S. and acted unlawfully by tying products together."

The lawsuit is indicative of a new aggressiveness on the part of the federal government when it comes to antitrust and big tech at a time when "Google is already under heavy antitrust scrutiny around the world and faces anger from U.S. lawmakers on both sides of the aisle."  It also comes as Google's ad business has been softening because of economic pressures and increased competition.

The New York Times writes that "the Biden administration is trying to use uncommon legal theories to clip the wings of some of America’s largest businesses. The F.T.C. recently asked a judge to block Meta from buying a virtual-reality start-up, a rare case that argues a deal could harm potential competition in a nascent market. The agency has also challenged Microsoft’s $69 billion purchase of the video game publisher Activision Blizzard, a notable action because the two companies are not primarily seen as direct competitors.

"These efforts are expected to meet fierce resistance in federal courts. Judges have for decades subscribed to a view that antitrust violations should mostly be determined by whether they increase prices for consumers. But Jonathan Kanter, the chief of the Justice Department’s antitrust division, and Lina Khan, the F.T.C. chair, have said they are willing to lose cases that allow them to stretch the boundaries of the law and that put corporate America on notice."

•  From the BBC:

"Amazon workers are staging the first ever UK strike on Wednesday against the online giant in a protest over pay.

"Around 300 staff walked out at Amazon's Coventry warehouse, the GMB union said, over what they called a 'derisory' 5% pay rise to £10.50 an hour.

"Workers told the BBC about 'severe' conditions, claiming they are constantly monitored and upbraided for 'idle time' lasting just a few minutes.

"Amazon said it has a system 'that recognises great performance'.  A spokesman said it 'also encourages coaching to help employees improve if they are not meeting their performance goals'.

"Two Amazon workers, who are members of the GMB, said the robots in the warehouse 'are treated better than us'."

The fact is that robots never have to pee, don't need to be fed, and at least so far, don't ponder the possible advantages of union representation.   What do you expect?

Published on: January 25, 2023

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From the New York Times:

"The Food and Drug Administration on Tuesday proposed maximum limits for the amount of lead in baby foods like mashed fruits and vegetables and dry cereals, after years of studies revealed that many processed products contained levels known to pose a risk of neurological and developmental impairment.

"The agency issued draft guidance, which would not be mandatory for food manufacturers to abide by. The guidelines, if adopted, would allow the agency to take enforcement action against companies that produced foods that exceeded the new limits … The new limits, aimed at foods for children under 2, do not address grain-based snacks that have also been found to contain high levels of heavy metals. And they do not limit other metals, like cadmium, that the agency and many consumer groups have detected in infant foods in previous years."

•  Kroger Health, the healthcare division of The Kroger Co., yesterday announced "the establishment of its clinical trial site network in conjunction with pharmaceutical industry sponsors, contract research organizations, and health systems. The announcement comes with Kroger's first trial in active recruitment for colorectal cancer gut and immune health observation.

"In collaboration with Persephone Biosciences, Kroger Health is actively recruiting for the ARGONAUT clinical study to identify microbiome-based biomarkers indicative of colorectal cancer. Beginning in the Toledo, Ohio area, select Kroger pharmacies and its affiliate, The Little Clinic LLC, locations will enroll its initial cohort of 55 people with a variety of colorectal cancer risk levels to advance the understanding of gut and immune health. During the next year, Kroger Health plans to enroll additional participants and increase its locations."

•  From the Los Angeles Times:

"A California law seeking to increase wages and improve working conditions for fast-food workers has been set aside for now, after state officials said an effort by major restaurant and business trade groups to overturn the law had qualified as a measure on next year’s ballot.

"The referendum seeking to overturn Assembly Bill 257 gathered sufficient valid voter signatures, the office of California Secretary of State Shirley Weber certified Tuesday. The group of businesses backing the effort, called the Save Local Restaurants, had until Dec. 5 to submit roughly 623,000 California voter signatures. The proponents submitted more than 1 million signatures, of which more than 712,000 were deemed to be valid, according to the secretary of state’s office.

"The announcement means the law, also known as the Fast Recovery Act, approved last year by the Legislature is suspended until California voters decide on the November 2024 ballot whether to repeal the law."

•  From Food & Wine:

"In case you’re still mourning the discontinuation of Ronzoni’s nostalgic star-shaped Pastina pasta shape, we have some carb news that might lift your spirits. Pasta manufacturer Sfoglini is teaming up with The Sporkful Podcast creator and host Dan Pashman to add three likely-new-to-you pasta shapes to your pantry. The two existing shapes hitting the brand’s roster are quattrotini and vesuvio — fun to look at, fun to wrangle on your fork, and fun to eat. The third is a new shape designed by Pashman himself, called cascatelli.

"We say 'likely-new-to-you' because two of the shapes can be found in small regions around Italy. You may have heard of quattrotini, a pasta shape that’s served once a year during Carnival in a small region of Sicily. The original shape — four tubes connected by a four-sided rectangle — was slightly tweaked to include ridges, making it easier to grab sauce.

"The second shape, vesuvio, was named for its likeness to Mount Vesuvius. Short, round, and anchored by a large base that tapers to a thin cone, sauce collects into the spirals promising a perfect bite every time. This shape can be found in towns around the volcano it was named for, though it’s very hard to find in the U.S."

We're big fans of cascatelli in the Coupe household - we bought it direct from Sfoglini when that was the only way to buy it, and have more recently picked it up at Whole Foods.  And I'm all on board for trying quattrotini and vesuvio. Nothing like adding a little excitement to a department than can be somewhat staid.

Published on: January 25, 2023

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•  Dollar Tree, Inc. announced that Mike Witynski, who has been in leadership positions at Dollar Tree since 2010 and served as CEO since 2020, is stepping down from the Board and leaving the Company. Executive Chairman Rick Dreiling will expand his role to assume the position of Chief Executive Officer, effective January 29.

•  From Bloomberg:

" CVS Health Corp. will name a new head for the company’s pharmacy services business and fill a new position, chief product officer for consumer businesses, according to a person familiar with the matter.

"David Joyner, a former CVS executive, will return to the company as head of the pharmacy services segment after leaving three years ago. He’ll replace Alan Lotvin, who is retiring in April. The area he’ll lead includes pharmacy benefit manager Caremark.

"Amy Bricker, former head of Cigna Corp.’s Express Scripts pharmacy benefits unit, will become chief product officer — consumer. She’ll focus on product development for CVS’s consumer health-care businesses."

The story notes that "CVS competes with Cigna in health insurance and pharmacy benefits, among other markets. Under Bricker, Cigna’s Express Scripts recently beat out CVS for a contract to manage about $40 billion of pharmacy spending for Medicaid-focused insurer Centene Corp."

Published on: January 25, 2023

…will return.

Published on: January 25, 2023

Major League Baseball announced last night that the Baseball Writers Association of America (BBWAA) has voted Scott Rolen -into the Hall of Fame, making him the only candidate to make the grade in the BBWAA vote.

Fred McGriff previously was a unanimous choice of the Contemporary Baseball Era Players Committee to join the Hall.  Both Rolen and McGriff will be inducted into the Hall in Cooperstown, New York, in late July.

Rolen, in a 17 year career with the Philadelphia Phillies, St. Louis Cardinals, Toronto Blue Jays and Cincinnati Reds, was an eight-time Gold Glove winner, seven-time All-Star and the 1997 National League Rookie of the Year, with a .281 lifetime batting average, 2,077 hits, 316 home runs, and 1,287 RBIs.

McGriff played for six different teams in his career - the Toronto Blue Jays, San Diego Padres, Atlanta Braves, Tampa Bay Devil Rays, Chicago Cubs and Los Angeles Dodgers - and was a five-time All-Star, twice was the season home run leader (once in each league).  McGriff had a lifetime batting average of .284, and accumulated 2,490 hits, 493 home runs, and 1,550 RBIs.