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Amazon Robots Poised to Revamp How Whole Foods Runs Warehouses

Fetch-Warehouse-Robot

When Amazon.com’s $13.7 billion bid to buy Whole Foods was announced, John Mackey, the grocer’s CEO, addressed employees, gushing about Amazon’s technological innovation.

“We will be joining a company that’s visionary,” Mackey said, according to a transcript of the meeting. “I think we’re gonna get a lot of those innovations in our stores. I think we’re gonna see a lot of technology. I think you’re gonna see Whole Foods Market evolve in leaps and bounds.”

In negotiations, Amazon spent a lot of time analyzing Whole Foods’ distribution technology, pointing to a possible way in which the company sees the most immediate opportunities to reduce costs, said a person familiar with the matter who asked not to be identified because the issue was private. Amazon, through a spokesman, declined to comment, as did Whole Foods.

Experts say the most immediate changes would likely be in warehouses that customers never see. That suggests the jobs that could be affected the earliest would be in the warehouses, where products from suppliers await transport to store shelves, said Gary Hawkins, CEO of the Center for Advancing Retail and Technology, a Los Angeles nonprofit that helps retailers and brands innovate. As Amazon looks to automate distribution, cashiers will be safe — for now.

“The easiest place for Amazon to bring its expertise to bear is in the warehouses, because that’s where Amazon really excels,” Hawkins said. “If they can reduce costs, they can show that on the store shelves and move Whole Foods away from the Whole Paycheck image.”

Amazon sees automation as a key strategic advantage in its overall grocery strategy, according to company documents reviewed by Bloomberg before the Whole Foods acquisition was announced. Whole Foods has 11 distribution centers specializing in perishable foods that serve its stores. It also has seafood processing plants, kitchens and bakeries that supply prepared food to each location. Those are the places where Amazon could initially focus, according to experts.

Amazon has not had the fresh food sales volume to justify big investment in refrigerated warehouses. Whole Foods gives them an incentive to reinvent how groceries get to your store and doorstep.

Brittain Ladd, a supply chain consultant who spent two years working on Amazon’s grocery push, said Amazon may be considering building a network of automated warehouses designed for the grocery business. These would likely be 1 million square feet — large enough to serve Whole Foods and Amazon’s various other grocery initiatives like Amazon Fresh and Prime Pantry — and would utilize robots and automation to reduce labor costs, he said.

“The goal will be to create as advanced a distribution capability as possible to provide customers with exceptional service and the freshest of fresh produce, vegetables, and meat,” Ladd said.

“Amazon will win the battle against Wal-Mart by winning with fresh food. A big challenge for Amazon will be applying its logistics know-how regarding durable, long-lasting products like books, toys and tablets to delicate perishables like strawberries and steaks that have to be handled gingerly, stored at different temperatures and inspected frequently for signs of spoiling.

After automating warehouses, Amazon may bring the robots to the stores. But don’t expect them to replace cashiers immediately. The first ones will likely navigate aisles to check inventory and alert employees when items run low, said Austin Bohlig, an adviser at Loup Ventures, which invests in robotics startups. “These robots can operate alongside people inside a store, but Amazon will want to make absolutely sure they are safe,” he said.

“These robots can operate alongside people inside a store, but Amazon will want to make absolutely sure they are safe,” he said.

Amazon is experimenting with a smaller urban convenience store concept in Seattle called AmazonGo that lets shoppers check in with smartphones, grab what they want and leave without going to a cash register. They are billed automatically based on what they pluck from shelves.

Amazon said it has no plans to introduce that technology to Whole Foods, though a person familiar with the matter said the company is considering eliminating cashiers as part of its long-term grocery strategy. The person asked not to be identified because they were not authorized to speak on private matters.

Amazon has good reason to move slowly with automating tasks now done by people. The United Food and Commercial Workers Union, whose 1.3 million members mostly work in supermarkets, has had its eye on Whole Foods for years, said David Pryzbylski, an employment lawyer with Barnes & Thornburg, who has represented supermarkets in union-related cases. Whole Foods has kept unions at bay by paying good wages and avoiding mass layoffs, he said.

“If there’s an environment of uncertainty, like layoffs due to automation, unions can play on that fear,” Pryzbylski said, and make inroads in unionizing the workforce.

Story by Spender Soper and Alex Sherman at Bloomberg News

From Aldi to Publix to Whole Foods, here’s how Tampa Bay’s grocery market share breaks down

With Amazon.com’s purchase of Whole Foods Market Inc., the online giant will control 1.2 percent of the grocery market in the Tampa Bay region.

That was Whole Foods’ market share in Hillsborough, Pinellas, Hernando and Pasco counties in 2016, according to Chain Store Guide. Whole Foods has three stores here, with two in Tampa and one in Clearwater.

Amazon is planning to buy the specialty grocer for $13.7 billion, but the implications of the deal go far beyond the more than 400 Whole Foods stores it will own. It will mean a new level of competition for Publix Super Markets Inc., which is based in Lakeland. Publix employs more than 36,000 people in the Bay area, including corporate workers at the Lakeland headquarters.

Publix, the hometown grocer, controls 39.3 percent of the grocery market with 117 stores here, according to Chain Store Guide. Use the interactive graphic below to see grocers’ market share versus number of stores.

Tampa Bay grocery market share

Winn-Dixie and Winn-Dixie Marketplace, which are owned by Jacksonville-based Southeastern Grocers, has nearly as many stores in that same area — 100, according to Chain Store Guide. But it controls only 16.1 percent of the market. Wal-Mart Stores Inc. controls 16.4 percent of the market with just 32 stores. (That figure doesn’t include Walmart Neighborhood Markets, which account for 3.2 percent of the market with 17 stores.)

The market share numbers will likely look different in the coming years. Amazon’s digital savvy has the potential to increase Whole Foods’ market share, and there are new competitors to consider. Sprouts Farmers Market Inc. is just entering the Florida market, with three stores open so far this year (in Carrollwood, South Tampa and Sarasota).

German discount grocer Aldi, which controls 1 percent of the market with 15 stores, recently announced it will ramp up its U.S. expansion plans. Lidl, another German discount grocer, appears to be laying the groundwork to enter Florida in the coming years.

Market share versus number of stores

tampa_cbsa_2017-4src=embed

Story by Ashley Gurbal Kritzer at the Tampa Bay Business Journal

Supreme Court Wants Quick Response On Citrus Veto

The Florida Supreme Court on Wednesday gave Gov. Rick Scott’s administration until noon Monday to respond to a lawsuit challenging the governor’s veto of $37.4 million intended to go to residents whose healthy citrus trees were cut down as the state tried to eradicate citrus-canker disease.

The Supreme Court set the deadline after the lawsuit was filed Tuesday on behalf of homeowners in Broward and Lee counties and their attorneys. Lawmakers included the money in the 2017-2018 budget after years of litigation about the state’s removal of trees in those counties and other parts of the state.

The money would satisfy judgments against the state, which destroyed healthy trees from 2000 to 2006 as officials fought citrus canker.

The filing Tuesday at the Supreme Court contended that Scott’s veto of the money was unconstitutional and asked justices to address the issue before the July 1 start of the fiscal year. In vetoing the money June 2, Scott cited “ongoing litigation” as the reason.

Story by Health News Florida.

Uber’s CEO is out: Here’s everything that went wrong with Uber this year

As of early this morning, Uber CEO Travis Kalanick is out.

It’s the latest chapter in what has become perhaps the most enticing tech story of the year that, many might argue, begins with the bombshell blog by former Uber engineer Susan Fowler that reveals systemic sexism at Uber.

Things started to sour earlier this year, however. Here’s how it all went down:

Kalanick a lightning rod for Trump criticism

  • December 14: Reports reveal Kalanick is joining Trump’s business advisory board.

If that was a spark, what followed was a forest fire

  • February 19: Former Uber engineer Susan Fowler posts her now-famous blog post detailing sexism within the company.
  • February 20: Uber calls for an internal investigation, known as the “Holder investigation” after former U.S. Attorney General Eric Holder, who’s leading it.
  • February 23: Alphabet’s Waymo unit files a lawsuit against Uber claiming that a former Waymo employee, Anthony Levandowski, stole secrets related to autonomous vehicle technology.
  • February 27: Uber SVP of engineering Amit Singhal leaves the company after it was revealed that he had left Google a year earlier due to a “credible” sexual harassment complaint.
  • February 28: Travis Kalanick apologizes after he’s caught on film arguing with an Uber driver, Fawzi Kamel, about Uber’s new plans to lower fares. “Some people don’t like to take responsibility for their own s—. They blame everything in their life on somebody else. Good luck,” Kalanick told his driver.
  • March 3: The New York Times reveals that Uber has been using a feature named “Greyball” that showed people it suspected to be government officials a fake version of the app that would deny them a ride. This was used by Uber to operate in areas where its service was deemed illegal without being caught.

Exodus followed by more scandal

  • March 3: On the same day, Charlie Miller, Uber vice president of product and growth and self-driving senior engineer, leaves the company.
  • March 8: Artificial intelligence labs director Gary Marcus leaves the company.
  • March 16: Self-driving director Raffi Krikorian leaves.
  • March 19: Uber president Jeff Jones departs the company.
  • March 20: Uber’s vice president of maps and business platforms, Brian McClendon, leaves.
  • March 24: Gabi Holzwarth, who dated Kalanick for several years, revealed to The Information that she, Kalanick, and five Uber executives who had traveled to Seoul in 2014 visited an escort bar while there. A female marketing executive who was in the group told Holzwarth later that she felt Uber tried to silence her complaints.
  • May 15: Judge blocks Levandowski from working on any technology related to LIDAR, which is key to the development of Uber’s autonomous vehicles.
  • May 30: Uber fires Levandowski, stating that he didn’t fully cooperate with the court or with helping Uber to prove its case.
  • June 8: Bombshell letter reveals the type of boss Kalanick was. In the letter, dated 2013, Kalanick discusses a company trip to Miami and lays out ground rules for consensual employee sex practices. “Have a great f–king time,” he says.
  • June 1: Uber board meets to begin discussing the findings of the Holder report before it is released to the company. During the meeting, David Bonderman makes sexist remarks about women.

The Holder Investigation report is released

  • June 6: Uber says more than 20 staff members have been fired as part of the internal investigation.
  • June 13: The Holder report is released, and it makes 47 recommendations to help Uber improve its values and workplace environment. Kalanick, who recently lost his mother, decides to step away from the company temporarily. Uber says his duties will be replaced by an independent chair.
  • June 14: The Federal Trade Commission begins looking into Uber’s privacy practices, possibly digging deeper into the company’s “god view” tool and other concerns, according to Recode.
  • June 15: A rape victim filed a lawsuit against Uber after she found out that executives had taken her medical records. The 26-year-old woman was raped by an Uber driver in India in 2014, and the driver was convicted of the crime.

Travis Kalanick resigns

  • June 21: Founder and former CEO Travis Kalanick resigns. “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight,” Kalanick said in a statement obtained by The New York Times.

Story by : Todd Haselton at Cnbc.com

Whole Foods stock rockets 28% on $13.7 billion Amazon takeover deal

Shares of Whole Foods Market rocketed 28 percent on Friday after Amazon said it plans to acquire the grocery store chain for $42 a share, in a deal valued at $13.7 billion.

Amazon’s offer represents a 27 percent premium to Whole Foods’ closing price on Thursday. With Whole Foods shares trading around Amazon’s offer price, investors appear to be speculating that another suitor could make a play for the grocery chain.

Whole Foods has been under pressure from activist investor Jana Partners and money manager Neuberger Berman, which have called on Whole Foods to sell itself. The investors have criticized Whole Foods for its poor performance, and have suggested the chain could be merged with another grocer.

“This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” John Mackey, Whole Foods’ CEO, said in a statement.

Mackey will remain CEO of the grocery store chain after the deal closes, and the store will continue to operate under the Whole Foods brand.

Amazon has long been pushing to expand its online grocery business, seeing it as an emerging opportunity. Currently, very few people purchase their groceries online even as more shoppers switch to buying other goods that way.

Some analysts had seen Wal-Mart being best positioned to compete in the next phase of growth in online shopping because it was going to be able to use its vast footprint of stores to help distribute products ordered online. Also, Wal-Mart has been successful with its so-called click-and-collect model, where shoppers order online but stop by the store to pickup their orders.

Meanwhile, Whole Foods has been seen as a laggard in the online shift. Their stores tend to be in urban markets where there was an overlap with Amazon Fresh and Prime Now.

News that the e-commerce giants buying grocery store Whole Foods sent grocery stocks reeling on Friday.

Kroger sank nearly 16 percent before the bell. Supervalu dropped 11.5 percent while Costco dropped 6.5 percent. Sprouts Farmers sank 9.2 percent.

“This is an earthquake rattling through the grocery sector as well as the retail world,” Mark Hamrick, senior economic analyst at Bankrate.com, told CNBC in an email. “We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer. Now, we can see in hindsight that its recent dithering around the brick-and-mortar experience, as an experiment, was only a rumbling of the seismic event in the offing.”

Shares of Amazon were up about 3 percent following the news. The deal is expected to close in the second half year.

Jana Partners did not immediately respond to CNBC’s request for comment.

Story by Sarah Whitten at Cnbc.com

Aldi’s expansion puts grocery retailers on notice

Discount grocery retailer Aldi announced June 11 that it would invest $3.4 billion to expand its U.S. store base to 2,500 by the year 2022.

The German grocer currently operates 1,600 stores in the United States and said earlier this year it would expand to 2,000 by the end of 2018 at a cost of $1.6 billion.

The $5 billion move would have Aldi as the third-largest U.S. food retailer by store count behind Walmart and Kroger.

“It should absolutely be more than scary to traditional grocers and retailers,” Mikey Vu of the consulting firm Bain & Co., was quoted as saying in a June 12 article in The Wall Street Journal. Vu said Aldi has improved its stores and products in recent years, and is attracting a larger mix of shoppers.

A point of differentiation by Aldi and other discounters, such as Lidl, which is set to open its first U.S. locations this week, is their longstanding use of store brands to keep prices down, a common practice in Europe. U.S. consumers have traditionally been more brand loyal, but that is beginning to erode, especially with the millennial generation.

Millennials “are value-oriented and don’t hold the same stigmas about private-label items that older generations do,” Mike Paglia, director of the research firm Kantar Retail, was quoted as saying in the WSJ article.

“As we continue to expand and grow, our purchasing power continues to increase and allows us to bring products at better prices for consumers,” Scott Patton, Aldi’s head of corporate buying, said in an interview with CNBC.

Aldi said the new store openings would create 25,000 jobs over the next five years.

Story By Producenews