Whole Foods’ Existential Threat?
by John McNellis • Apr 12, 2019 • 22 Comments • Email to a friend

John McNellisApr 12, 2019
“Amazon’s plunge into the $800 billion US grocery industry posed an existential threat to rivals”: CNN, August 2018. So let’s see.

By John E. McNellis, Principal at McNellis Partners, for The Registry:

A couple questions remained in the wake of Whole Foods’ announcement last week that it was dropping prices on over five hundred items by twenty percent. Is this Amazon’s long-awaited spring offensive or is the grocer playing defense, treading water, simply trying to keep its market share? Stretched over a broader canvas: Is Amazon truly the existential threat to the grocery business the click-baiters would have you believe?

Before we get to existentialism, let’s consider a smaller question. Was it really a price reduction at all? Maybe not. The New York Times sent a couple reporters to shop their local Whole Foods for a basket of identical items before and after the ballyhooed price reduction. The total post price-cut savings was five cents on a fifty-five dollar purchase. The paper also used a Morgan Stanley study to report that Whole Foods prices are fifteen percent higher than those at a typical supermarket.

Even the kale and quinoa crowd can add, eventually. To keep paying a fifteen percent premium, they need to feel special about themselves and their supermarket. They need to know that their market is buying sustainably, doing business with the little guy, choosing only pesticide-free truck farm vegetables, wild salmon that have never seen a hatchery—let alone a fish farm—and so on.

That is not Whole Foods’ compass setting today. According to one grocery industry expert, Amazon is “in danger of breaking its shiny toy,” of destroying the Whole Foods brand, of dissolving its organic mystique. He pointed out that the company has cut ties with smaller, more esoteric suppliers in favor of focusing on bigger, national brands. In a word, this competitor says Whole Foods is becoming generic.

To this homogenization point, Amazon announced on March 1st that it would build or acquire about 2,000 brick & mortar supermarkets, averaging 35,000 square feet in size (full-sized markets run about 60,000 feet), selling at a lower price point than Whole Foods and with a different, as yet undisclosed name. This makes logistical sense for Amazon’s e-commerce business.

A nationwide chain of stores would both solve its last-mile dilemma and acknowledge the latest group-think about on-line grocery sales, namely that click and collect (ordering on-line but picking it up yourself) is more convenient than waiting at home for the delivery guy who availed himself of his state’s liberalized marijuana laws. 2,000 markets could put 90 percent of the US population within a mile or two of an Amazon pick-up spot. This would be brilliant for the company’s e-commerce business, but perhaps less so for Whole Foods. Running a supermarket chain is the hardest act in retail; ice cream gets freezer burn, books don’t. Running two different market concepts—one highbrow and one that deigns to sell Diet Coke — is exponentially more difficult.

And while the generic epithet may be sour grapes, the fact is Whole Foods hasn’t been knocking the cover off the ball since its sale to Amazon. Its in-store sales are flat, its more expensive home delivery sales are up a few percent, but its Prime members aren’t flocking to the stores in the hoped-for numbers, despite the company’s promotions and discounts.

Despite all this, the retail experts I quizzed are so in awe of Amazon (talk about mystique) that they believe the Whole Foods price cutting is an offensive move, intended to break the company away from the peloton, certain to cause the whole industry pain. One went so far as to say, “Since they don’t understand the business, they might as well take a meat-ax to it.”

I don’t understand the grocery business either, but having worked with grocers for the past forty years and built our share of supermarkets, I have a few thoughts. Service helps at the margin, but if you’re delivering the same quality, the business boils down to pricing and convenience. If Whole Foods is fifteen percent higher and noticeably less convenient than its competitors (we would have to drive past Safeway to shop at our local Whole Foods) then it better hang on to its mystique for dear life and sell stuff no other market carries.

And should click and collect truly prove out as the American consumer’s shopping pattern of the future, then Amazon better start building fast. With Whole Foods weighing in at 479 stores, the company would have to build or acquire every one of those 2,000 additional stores to achieve rough convenience parity with Wal-Mart (about 4,360 stores), Kroger (2,800) and Safeway/Albertsons (2,320).

Back to pricing. The bunker buster in the supermarket wars is automation. Amazon isn’t dwarfing the rest of the world for nothing. Put aside the morality, but if the company can replace everyone from the stockers to the cashiers with robots while its competitors are stuck with costly humans, especially unionized humans, it will win the pricing war and the consumers’ wallets, if not their hearts and minds.

The existential threat Amazon posed by its acquisition of Whole Foods was to Whole Foods itself. Whether the company will one day subjugate the grocery business with AI and robots or, like Fortunato in Poe’s Cask of Amontillado, be buried itself behind a wall of bricks and mortar, remains to be seen. By John E. McNellis, for The Registry.

This is how the Brick & Mortar Meltdown works for commercial mortgage-backed securities after America’s largest mall landlord defaults on a mortgage and walks away from the mall. Read… A Simon Property Group Mall Generates Largest Loss Ever for Retail CMBS

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Mohammed Safi is reported to have lost his eyesight while being held in a Hamas prison. His crime: participation in demonstrations calling for an end to the economic crisis in the Gaza Strip and protesting new taxes imposed by the Hamas rulers. ‘The

Source: What Happens to Palestinians Who Demand a Better Life?

Illegal Aliens Get Demo Money — Veterans, Not So Much
New York lawmakers reject a tuition-aid program to children of veterans killed in action.

New York lawmakers reject a tuition-aid program to children of veterans killed in action.

Leftists and their policies have increasingly favored noncitizens over citizens, but Democrats in New York may well have set a new low. New York’s Higher Education Committee this week voted against advancing a bipartisan bill that would have provided free college tuition to the families of veterans killed in the line of duty. That’s bad enough, but this was after state lawmakers just last week passed a $175 billion budget that included $27 million in tuition aid to children of illegal aliens. By contrast, a few hundred thousand dollars will not be added to the existing program for 145 vets’ kids, which currently costs just $2.7 million — a mere tenth of the tuition aid that the state’s illegals will receive.

Several Republican lawmakers weren’t happy, and they blasted their Democrat counterparts. Assemblyman Gary Finch may have said it best: “It’s disgraceful. Soldiers who lay down their lives and make the ultimate sacrifice represent the best of us. The children they love so dearly deserve access to the opportunity and promise that is the hallmark of this country. I can’t imagine what’s in your heart when you vote ‘no’ on a bill like this.”

Republican Assemblyman Will Barclay, one of the bill’s cosponsors, surmised that partisanship was the real reason behind the Democrats’ “no” vote. “We get so caught up in majority and minority issues here, we can’t see the forest through the trees,” he said, adding, “I don’t know how they don’t justify this.”

Assemblywoman Deborah Glick (D), who chairs the committee and voted against the bill, claimed that concerns over the budget weighed against expanding the veteran tuition-aid program. But state Sen. Robert Ortt (R) wasn’t buying it: “Assemblywoman Glick should be ashamed of herself. We set aside $27 million for college for people that are here illegally. … Apparently $2.7 million is all that the families of soldiers who are killed get. If you’re a child of a fallen soldier, you do not rank as high and you know that by the money.”

Indeed, “Show me your budget and I’ll tell you what you value” is a common refrain used by Joe Biden and other free-spending leftists, and it tells us all we need to know about “progressive” values. It would’ve been one thing if Democrats had refused to fund either program, as their fiscal concerns would’ve at least been believable. But giving handouts to those who aren’t even here legally while stiffing the children of Patriots who’ve given their lives for this great nation is simply despicable.

Busted: Thousands Of Amazon Employees Listening To Alexa Conversations
Amazon employs thousands of people to listen in on what people around the world are saying to their Alexa digital assistant, according to what is sure to be a Congressional hearing-inspiring report by Bloomberg, which cites seven people who have worked on the program.

While their job is to “help improve” NSAlexa – which powers the company’s line of Echo speakers – the team “listens to voice recordings captured in Echo owners’ homes and offices,” which are then transcribed, annotated and fed back into the software in order to try and improve Alexa’s understanding of human speech for more successful interactions. In other words, humans are effectively helping to train Amazon’s algorithm.

In marketing materials Amazon says Alexa “lives in the cloud and is always getting smarter.” But like many software tools built to learn from experience, humans are doing some of the teaching. -Bloomberg

The listening team is comprised of part-time contractors and full-time Amazon employees based all over the world; including India, Romania, Boston and Costa Rica.

Listeners work nine hour shifts, with each reviewing as many as 1,000 audio clips per shift according to two employees from Amazon’s Bucharest office – located in the top three floors of the Romanian capital’s Globalworth building. The location “stands out amid the crumbling infrastructure” of the Pipera district and “bears no exterior sign advertising Amazon’s presence.”

While much of the work is boring (one worker said his job was to mine for accumulated voice data for specific phrases such as “Taylor Swift” – letting the system know that the searcher was looking for the artist), reviewers are also listening on people’s most personal moments.

Occasionally the listeners pick up things Echo owners likely would rather stay private: a woman singing badly off key in the shower, say, or a child screaming for help. The teams use internal chat rooms to share files when they need help parsing a muddled word—or come across an amusing recording. -Bloomberg

Occasionally Amazon listeners come across upsetting or possibly criminal recordings – such as two workers who say they listened in on what sounded like a sexual assault.

According to the report, when things like this happen the workers will mention it in the internal chat room to “relieve stress.”

And while Amazon says that it has procedures to follow when workers hear distressing things, two of the Romania-based employees say they were told “it wasn’t Amazon’s job to interfere” when they requested guidance for such instances.

“We take the security and privacy of our customers’ personal information seriously,” said an Amazon spokesman in a statement provided to Bloomberg.

“We only annotate an extremely small sample of Alexa voice recordings in order improve the customer experience. For example, this information helps us train our speech recognition and natural language understanding systems, so Alexa can better understand your requests, and ensure the service works well for everyone,” the statement continues. “We have strict technical and operational safeguards, and have a zero tolerance policy for the abuse of our system. Employees do not have direct access to information that can identify the person or account as part of this workflow. All information is treated with high confidentiality and we use multi-factor authentication to restrict access, service encryption and audits of our control environment to protect it.”

That said, Amazon does not mention the fact that humans are listening to recordings of some of the conversations picked up by Alexa. Instead, they have a generic disclaimer in their FAQ that says “We use your requests to Alexa to train our speech recognition and natural language understanding systems.”

What Amazon records

According to Amazon’s Alexa terms of use, the company collects and stores most of what you say to Alexa – including the geolocation of the product along with your voice instructions, reported CNBC’s Todd Haselton last November.

Your messages, communication requests (e.g., “Alexa, call Mom”), and related instructions are “Alexa interactions,” as described in the Alexa Terms of Use. Amazon processes and retains your Alexa Interactions and related information in the cloud in order to respond to your requests (e.g., “Send a message to Mom”), to provide additional functionality (e.g., speech to text transcription and vice versa), and to improve our services. -Amazon Terms of Use

Wrong, Brian
@leonidasmoderus
Alexa, are you spying on me?

Alexa: *coughs* No, of course not.

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1:47 PM – May 25, 2018
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Last May, an Amazon Echo recorded a conversation between a husband and wife, then sent it to one of the husband’s phone contacts. Amazon claims that during the conversation someone used a word that sounded like “Alexa,” which caused the device to begin recording.

“Echo woke up due to a word in background conversation sounding like ‘Alexa,’” said Amazon in a statement. “Then, the subsequent conversation was heard as a ‘send message’ request. At which point, Alexa said out loud ‘To whom?’ At which point, the background conversation was interpreted as a name in the customer’s contact list. Alexa then asked out loud, ‘[contact name], right?’ Alexa then interpreted background conversation as ‘right’. As unlikely as this string of events is, we are evaluating options to make this case even less likely.”

The wife, Danielle, however said that the Echo never requested her permission to send the audio. “At first, my husband was like, ‘No, you didn’t,’” Danielle told KIRO7. “And he’s like, ‘You sat there talking about hardwood floors.’ And we said, ‘Oh gosh, you really did!’”

Can you disable?

Alexa does allow people to stop sharing their voice recordings for the development of new features, while a screenshot reviewed by Bloomberg reveals that the recordings provided to Alexa’s listeners do not provide the full name or address of a user. It does, however, link the recording to an account number, the user’s first name, and the device’s serial number.

“You don’t necessarily think of another human listening to what you’re telling your smart speaker in the intimacy of your home,” said UMich professor Florian Schaub, who has researched privacy issues related to smart speakers. “I think we’ve been conditioned to the [assumption] that these machines are just doing magic machine learning. But the fact is there is still manual processing involved.”

“Whether that’s a privacy concern or not depends on how cautious Amazon and other companies are in what type of information they have manually annotated, and how they present that information to someone,” added Schaub.

PHOENIX, ARIZONA — An armed citizen is credited with stopping the attempted kidnapping of an 11-year-old girl in Phoenix while she was on her way to school.

The suspect, who police are still searching for, is said to have grabbed the girl’s arm and put it behind her back, and then put his arm over her face.

An alert man in the area noticed what was happening, and he knocked the suspect down and away from the girl. He then drew a gun on the suspect, telling him to leave the girl alone.

Police say the suspect is a black man with a very dark complexion, green eyes and has a stud-style nose ring in his left nostril. He was wearing a black hoodie.

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Let’s hope that police are able to catch up with the suspect, so that he’s not able to be successful in any future attempts that he may be pondering.

Meanwhile, the school principal sent out a letter to the parents of children at the school, letting them know about what happened and ways to keep everyone safe;

Dear Parents & Guardians,

The safety of your child is a priority of Village Meadows Elementary School and the Deer Valley Unified School District. With that in mind, there is some information that we feel is important to share with you as we work together to maintain a secure campus and safe community for our students.

A student reported to a Village Meadows teacher that on Wednesday, April 3, while walking to school, she was grabbed by a man from behind. A witness knocked the man down and told him to leave the student alone. The student was able to safely and quickly get away from the man. The suspect was last seen running westbound on Morningside Drive. Phoenix Police are investigating this incident and describe the suspect as a black male with a dark complexion, green eyes, and a stud style nose ring in his left nostril. He was wearing a black hoody.

This incident reminds how important it is to talk to children about what to do if a stranger approaches or if they witness suspicious behavior. Please take a moment to share these safety tips with your child:

*Always walk or ride in groups

*Pay attention to your surroundings

*Do not talk to strangers, if approached

*If approached, run away immediately, and tell a parent, school staff member or call 911

*Do not wait for parent pick-up/rides home in areas outside of campus that are not supervised

Phoenix Police has issued a media advisory and will be monitoring the area around the school where students walk to and from school. We will continue to watch for strangers near campus and report them to police. If you have any information or see suspicious activity, contact the Phoenix Police immediately at 602-534-2121.

Thank you for your support towards creating a safe, orderly, and caring environment at Village Meadows Elementary School.

Sincerely,
Melissa Weinman
Principal

Trump is the zen master of creating irony. We will now find out who is about open borders and diversity and who is a poseur.

POLIZETTE
Barack Obama’s Former White House Counsel Is Indicted
He’s charged in Mueller-related case with making false statements to investigators and concealing information about his work with Ukrainian government
By Wayne Dupree | April 11, 2019
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Gregory Craig, former White House counsel for Barack Obama, was indicted on Thursday by a grand jury for lying to FBI agents and for failing to register as a foreign agent.
Doesn’t it feel grand when bad people on the other side get caught?

He allegedly failed to disclose that he worked on behalf of the Ukrainian government.
Related: Obama: Our Country Needs to ‘Train a Million Baracks and Michelles’
Obama’s statement: “I never knew I had a White House counsel. I just heard about this on the news.”
Craig, 74, of Washington, D.C., was indicted by a grand jury in the U.S. District Court for the District of Columbia for willfully falsifying and concealing material facts from the FARA Unit, in violation of Title 18, United States Code, Section 1001(a)(1), and for making false and misleading statements to the FARA Unit, in violation Title 22, United States Code, Section 618(a)(2).
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt.
Every defendant is presumed innocent until, and unless, proven guilty.
The maximum penalties for the charged offenses are, respectively, five years’ imprisonment and a $250,000 fine, and five years’ imprisonment and a $10,000 fine. The maximum statutory sentence for federal offenses is prescribed by Congress and is provided here for informational purposes. The sentencing will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. (source: Department of Justice)

The Washington Post
✔
@washingtonpost
Gregory Craig, ex-Obama White House counsel, expects to be charged in relation to Ukrainian work with Manafort, his lawyers say https://wapo.st/2P4I3iO

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7:04 PM – Apr 10, 2019
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Gregory Craig, ex-Obama White House counsel, expects to be charged in relation to Ukrainian work…
The expected indictment — which his attorneys called “a misguided abuse of prosecutorial discretion” — stems from work Craig did with GOP lobbyist Paul Manafort on behalf of the Ukrainian government…
washingtonpost.com

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More blue states will follow closely behind.