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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

Ample supplies expected for July 4th

Talk of freezes in the East and blustery rain in the West will be well in the past as volumes kick into gear for the Fourth of July.

Avocado prices remain high, and will likely remain so through July 4th, but supplies will remain healthy from California and Peru, even as Mexico’s season winds down, marketers say.

“Just kind of looking forward with what we expect supplies to be, it’s going to be fairly steady but not an overwhelming amount of fruit available,” said Robb Bertels, vice president of marketing with Oxnard, Calif.-based Mission Produce Inc.

Volume across the U.S. will continue to trend in the low- to mid-40 million-pound a week range, Bertels said.

“I don’t see any big peaks coming,” he said. “Demand will pick up and supply doesn’t have horsepower to keep up. Expect prices to strengthen as we get closer to the Fourth.”

Avocado prices have remained “relatively high,” and likely will stay so through the holiday, said Phil Henry, president of Escondido, Calif.-based Henry Avocado Corp.

“It doesn’t seem like there will be any major changes,” he said.

Rob Wedin, vice president of sales and marketing with Santa Paula, Calif.-based avocado gower-shipper Calavo Growers Inc., said prices could rise as the holiday approaches.

“We could see a relaxation in next couple of weeks, but as we get closer to Fourth of July, we’ll see some minor strengthening of prices, which is pretty normal,” he said.

Homestead, Fla.-based Brooks Tropicals is seeing increased volumes of Florida avocados, said Bill Brindle, vice president of sales.

“This year’s crop Is sizing up heavier than the last two years,” he said.

Berry supplies look strong

July 4th arrives just as New Jersey’s blueberry season is peaking, so supplies should be no problem, said Bob Von Rohr, marketing and customer relations manager at Glassboro, N.J.-based Sunny Valley International Inc.

“It will be a peak week,  no problem with quantity, Von Rohr said. “It’s one of our bigger weeks for promoting blueberries, with retailers looking for red, white and blue (for displays).”

A plentiful supply of strawberries will be available to cover the “red” part, said Cindy Jewell, marketing director with Watsonville, Calif.-based berry grower-shipper California Giant Inc.

“You can expect plenty of fruit. It’s one of those years that everything’s going to be in alignment with weather, quality and flavor,” she said.

Cal Giant’s blueberry, raspberry and blackberry crops should be ready for the Fourth, as well, she said.

“Strawberries coming into peak the last two weeks in June and will stay that way through mid-July, but you’ve also got blackberries and raspberries coming in, with blueberries and cherries coming in around July 4,” she said.

Watermelon crop shapes up

Quality and quantity won’t be a problem in the watermelon market for the Fourth of July, said Mark Arney, executive director of the Winter Springs, Fla.-based National Watermelon Promotion Board.

“I’d say if you called me a month ago, I’d be a little more concerned because there had been some cold weather in central Florida to further north and colder into Georgia, and some guys there had to replant,” he said. “But it doesn’t appear now that it’s as bad as people thought. I was in a field last Friday in Lakeland, Fla., and things were looking really good. We tested some, and the brix was great.”

Volume should be adequate as the holiday approaches, Arney said.

“Of course, we just don’t know; weather is always a wild card,” he said.

Sweet corn supplies build

Sweet corn growers said they’d be ready for the holiday.

“Should be standard issue, with good supplies out of Georgia,” said Jason Bedsole, sales manager with Duda Farm Fresh Foods Inc. in Wellington, Fla.

Calvert Cullen, owner of Cheriton, Va.-based Northampton Growers Produce Sales, said his crews will be harvesting sweet corn in Moultrie, Ga., until around July 4 and was getting set to start in North Carolina.

“We expect good supplies, as long as the weather doesn’t (interfere),” he said.

Northampton also was harvesting squash, cabbage and green beans in Moultrie, as well as bell peppers, hot peppers and eggplant in North Carolina.

Gilroy, Calif.-based Uesugi Farms is expecting promotable volumes of sweet corn in time for the July 4th holiday, said Pete Aiello, general manager.

“It’s a little far out there to anticipate what kind of markets we’re going to see, but the Fourth is always a popular pull for sweet corn, obviously, so the demand will be there and we will definitely have supply,” he said.

The crop was looking good June 1, he said.

“A couple of early plantings got a little messed up due to our (wet) weather in late winter and early spring, but we did need it. Certainly, by the Fourth we’re going to have some nice fields and good harvests.”

Oak Grove, Va.-based Parker Farms will actively promote its sweet corn coming out of Georgia for the holiday and will have enough of its Virginia crop to help supplement supplies, said Sean McFadden, business development director there.

“We have a lot of corn in Georgia that we will be supporting ads with,” he said.

Story by Jim Offner

Exactly What Does Congestion Cost The Trucking Industry

Arlington, VA – Traffic congestion on the U.S. National Highway System (NHS) added over $63.4 billion in operational costs to the trucking industry in 2015, according to research released today by the American Transportation Research Institute (ATRI).  Utilizing a variety of data sources including its unique truck GPS database, ATRI calculated delay on the NHS totaling more than 996 million hours of lost productivity, which equates to 362,243 commercial truck drivers sitting idle for a working year.

ATRI’s analysis also documented the states, metropolitan areas, and counties that were most impacted by these delays and subsequent cost increases.  The top 10 states experienced costs of over $2 billion each, with Florida and Texas leading with over $5 billion each.

As expected, traffic congestion tended to be most severe in urban areas, with 88 percent of the congestion costs concentrated on only 17 percent of the network mileage, and 91 percent of the total congestion cost occurring in metropolitan areas.  This concentration of congestion has been well-documented in ongoing work by ATRI which annually identifies the worst truck bottlenecks in the U.S.

The analysis also demonstrates the impact of congestion costs on a per-truck basis, with an average increased cost of $22,676 for trucks that travel 100,000 miles annually.

As part of this analysis, ATRI has updated its congestion cost database with 2015 data to provide granular cost information to transportation planning officials on the hours of delay and associated cost by major jurisdiction type and road level.

“Congestion-related costs continue to rise and impact our supply chains. A five minute delay for each UPS vehicle, every day, costs UPS $105 million annually in additional operating costs. ATRI’s report quantifies this drain on the economy which must be addressed through targeted infrastructure investments,” said Rich McArdle, President of UPS Freight.

Click here to request the full report.

Image result for congestion trucking

Article By ATRI a non for profit Research Organization

McDonald’s Launches Unbranded Campaign

McDonald’s has launched a US campaign fronted by actress Mindy Kaling omitting any mention of its brand name. Instead, Kaling encourages viewers to simply do a Google search of “that place where Coke tastes so good”.

The fast food chain has created a new YouTube page to launch the ads titled ‘That place where Coke tastes so good’.The page has absolutely no reference to the brand either.

Mindy Kaling, who donned a yellow dress and stood in front of a red backdrop in the ad to embody the brand’s colours, posted a cryptic tweet to celebrate the launch of the campaign

McDonald’s previously dabbled in unbranded advertising with an Instagram campaign featuring closeups of its products sans logos.

It is the first time the brand leveraged Google to push its products.

It come less than a week after rival Burger King triggered Google Homes throughout America by prompting the device to describe the Whopper Burger. The ad forced Google to reprogram the devices, which have now been reactivated to respond to the prompt.

It also follows the controversial Pepsi ad featuring Kendall Jenner which was saturated with brand references and logos before being axed.

McDonald’s recently used Snapchat to recruit the youth of Australia in a long stream of digital innovations.

The campaign was developed by Omnicom.

Check out the ad here:

Story By Adnews

Walmart and Target could beat Amazon on drone delivery

Among big retailers, Amazon has pushed the potential of drone delivery the hardest. But, according to BI Intelligence’s exclusive analysis of data from The Weather Company, the e-commerce giant isn’t the best positioned to take advantage of drones’ promise. Instead, its brick-and-mortar rivals, Walmart and Target, may be poised to reap the biggest gains.

That’s important because drone delivery is a key part of Amazon’s strategy to extend its massive lead in e-commerce. Fast and free shipping are the top services that attract US consumers to shop online more frequently, and drones could help Amazon slash delivery costs to less than $1 a package by eliminating fuel and labor costs, according to a 2015 analysis by ARK Investment Management. It could also bring same-day (or faster) delivery to more customers.

US Customer incentives to shop onlineBI Intelligence

Walmart and Target are nowhere near Amazon when it comes to e-commerce. In fact, while both have posted respectable growth, there’s little indication they are gaining ground:

  • Amazon’s total online sales last year topped $96 billion.
  • Target reported $3.1 billion in online sales last year, only about 4% of its overall sales.
  • Walmart doesn’t report total online sales anymore, but they totaled $13.7 billion in 2015, accounting for just 3% of revenue, according to Internet Retailer estimates.

This has translated to sluggish overall growth for both retailers. Walmart’s total revenue grew just 0.8% during its last fiscal year ending January 2017, and Target’s grew 0.9% from 2015 to 2016. Meanwhile, Amazon’s retail revenue increased nearly 25% last year.

Online Sales for Amazon Target WalmartBI Intelligence

Anything that could help widen (or shrink) that gap has huge potential ramifications for retail. Fortunately for Walmart and Target, the key to cashing in on the disruptive potential of drones and checking Amazon’s advantage in cutting-edge technology is something they have: lots and lots of stores.

These legacy retailers’ extensive networks of stores put them in a better position than Amazon to go all in on drone delivery, according to data from The Weather Company that covers more than 3 million Walmart and Target visitors.

walmart drone deliveryBI Intelligence

That’s because a drone’s effective range is pretty small. And a big share of Walmart and Target customers live close to one of their stores — especially compared to the percentage of Americans who live within such range of Amazon’s fulfillment centers. That’s crucial to drone delivery’s prospects for success.

  • About 49% of Weather Company app users who visited a US Walmart location during Q1 2017 live within six miles of a Walmart store, a deliverable range for a drone. And 15.1% of purchases at Walmart are under $10, according to Perfect Price. Most of these purchases are likely light enough to deliver by drone.
  • Meanwhile, 47% of Weather Company app users who visited a US Target location during Q1 2017 live within a deliverable range, and 14.6% of purchases at Target are similarly under $10.
  • Amazon reports that 44% of Americans live within 20 miles of one of its fulfillment centers — but that’s too far for today’s drones. In fact, the drones Amazon is testing in the UK only have a range of 15 miles round-trip. So Amazon will need to either build more fulfillment centers, or come up with another strategy, in order to fully embrace drone delivery.

target drone deliveryBI Intelligence

To be sure, store-launched drone deliveries could prove a powerful tool in helping Walmart and Target boost online sales and close the gap with Amazon. But significant challenges remain — for example, stores will likely have to be redesigned to accommodate drones and new staff hired to manage them. As part of its UK testing, Amazon had to overhaul one of its own fulfillment centers by building an automated track to transport drones through the facility so employees could load them up with packages for delivery.

What’s more, the retail chains will have to figure out how to track and manage inventory in new ways to account for drone deliveries. Many retailers already have issues with inventory management when implementing in-store fulfillment options for e-commerce purchases, which often deplete stocks when retailers need to take items off shelves to fulfill online orders.

There are plenty of unanswered questions about drone delivery. How much will it cost to implement? Will consumers embrace it? And the big one — what about regulation? But if these can be resolved, it could be an opportunity for Walmart and Target to radically boost online revenue. Because of their massive store networks, they might even beat Amazon to the punch and keep their online rival from soaring out of sight.

Story by : Business Insider

The Next Industry for Silicon Valley to Disrupt: Logistics

SKOREA-SHIPBUILDING-MAERSKVenture capital pushes entrepreneurs to think big. So big, that often, startup pitchdecks can border on parody, advertising ridiculous-sounding numbers like a “trillion-dollar market opportunity.”

“Imagine if we took just 1% market share,” the startup CEO declares at demo day.

Then again, as software moves into every industry, the opportunities are indeed getting bigger. A press release issued this morning made that clear: Turvo, a Sunnyvale-based startup, announced it is DISRUPTING THE $8 TRILLION LOGISTICS INDUSTRY. Commensurate with the size of the opportunity, Turvo has raised a giant Series A round of funding to the tune of $25 million. Activant Capital led the round alongside existing investors Felicis Ventures, Upside Partnership, Slow Ventures and Tony Fadell.

The company launches Tuesday with several customers on board:

Oberto Brands, the nation’s leading all-natural jerky manufacturer; cosmetics company Le Metier De Beaute, beer brewery Anchor Brewing, and logistics provider Service First Logistics.

Felicis Ventures, which led the company’s seed round, was also an early investor in Flexport, the “Uber of oceans.” The firm has also backed several companies working on hardware for the trucking industry.

Given the conversations swirling this week about AI, and Elon Musk’s fear of it, and Steve Mnuchin’s dismissal of it (which kicked the AI hype machine into overdrive), and the trucking industry’s cautious embrace of it, I asked Felicis partner Wesley Chan whether this is another company designed to displace blue-collar jobs. Chan said no: “The company isn’t replacing or displacing any jobs, but rather making booking, dispatching, and tracking shipments on trucks way more efficient. Trucking is a paper and pencil business, so adding technology will be huge. No robots in this one.”

CEO Eric Gilmore echoed the sentiment: “Our approach is to give people superpowers through AI-powered software and eliminate or automate all of the countless hours spent on redundant manual tasks.”

Valuation was not disclosed but Chan said it is “proportional to the round size.” “This is a big, huge play so we wanted to make sure Eric and the company was well capitalized,” he added.

Story By: Fortune.com