business news in context, analysis with attitude

We had a piece yesterday about Walmart investing more than $9 billion in a store upgrade and modernization program.

I commented:

That's a lot of money and a lot of stores.  I hope that a lot of the effort is being put into stores far away from Bentonville - it sometimes seems that the further you get from Walmart's headquarters, the less impressive its stores are.

A good mantra would be to make sure every store in the chain should look like Doug McMillon, John Furner and their families are likely to shop there every day.

One MNB reader responded:

I couldn’t agree more!  Few places to shop in Northwest Arkansas besides Walmart, which are like Starbucks in Seattle with one on every corner, and a few lone grocery stores that have snuck in but Walmart stores are very nice here (for the most part).  However, if I go anywhere outside of the immediate area, you will have to drag my cold dead body into a Walmart.  I sometimes wonder if WM leadership realizes this.

Another MNB reader wrote:

My local Walmart store in Howell NJ is one of the stores that’s been remodeled.  The exterior façade looks modern and they’ve created a separate section for customer pickup out of what used to be the outside nursery section.  Having read Sam Walton’s book, one thing that is noticeable is the elimination of front end space between the checkouts and the merchandising departments.  No longer will they be able to merchandise product in the front-end aisle, which is where Sam Walton liked to promote special offers.

And another:

I live in southern Idaho. Walmart is currently remodeling their store in Jerome, Idaho, and recently completed a remodel in Twin Falls, Idaho. That store turned out real nice (for a Walmart)!

Good to know.

Yesterday we referenced a piece in The Atlantic about the stunning growth of private equity and the slow death of the public company (down from 8,000 to 4,000 in the US since 1996).  

The Atlantic wrote that "private equity has matured into a multitrillion-dollar industry, devoted to making short-term profits from highly leveraged transactions, operating with almost no regulatory or public scrutiny. Not all private-equity deals end in calamity, of course, and not all public companies are paragons of civic virtue. But the secrecy in which private-equity firms operate emboldens them to act more recklessly—and makes it much harder to hold them accountable when they do … Across the economy, private-equity firms are known for laying off workers, evading regulations, reducing the quality of services, and bankrupting companies while ensuring that their own partners are paid handsomely. The veil of secrecy makes all of this easier to execute and harder to stop."

I commented:

It isn't an absolute, but I think it is fair to say that when private equity has invested in the supermarket industry, it hasn't always gone well - their short-term priorities can be at odds with those of a retailer trying to serve its customers.  Private equity often builds up debt as a way of creating short-term rewards, and then looks to drive down costs (even necessary costs, like on customer service, in some cases) so that the long-term rewards from a sale of the company can be maximized.  Some folks see big rewards, but some retail brands are severely damaged, and the dominoes continue to fall, affecting a lot of people, but rarely the private equity folks.

MNB reader Howard Schneider responded:

The rise of Private Equity can be seen as the triumph of Milton Friedman’s “profit is the only purpose” view of the corporation. Fewer investors, focused only on shorter-term profits, means fewer pesky stakeholders making noise about frills like transparency, sustainability, and inclusivity.

On another subject, one MNB reader wrote:

Thanks for all you do, and especially in this case calling attention to food insecurity in America.

I've always been proud of how our industry partners with various organizations, particularly manufacturers, agencies, and retailers supporting local food banks. I hope as many of us as possible are also supporting our local food banks as individuals with our time, food donations, and/or money. Feeding America is a great way to donate money, as they are a national organization that sends your donation back out to local food banks across the country.

And, on yet another subject, one MNB reader wrote:

Regarding Amazon's potential use of AI and creating "deceptive" images to be used in advertising.  For as long as there has been advertising, products have been presented in deceptive ways potentially misrepresenting their quality without AI.  Doesn't every commercial for a car include very small print claiming "Closed course. Professional driver. Do not attempt"?  Some auto commercials also include small print explaining the vehicle is a "prototype" and "options may not be available" all while the car is doing donuts in a desert.  How is this not deceptive?  How is this not presenting a product in an enhanced, more interesting way?  Most of the driving I do is pretty boring - but boring doesn't sell.  AI is just the latest path of least resistance for the seller.  For the consumer? Caveat emptor!