With brief, occasional, italicized and sometimes gratuitous commentary…
• Competition For Summer Online Retail Sales Dollars Greater Than Ever
This is a big week for summer online retail sales, with Amazon, Walmart, Target and Costco all rolling out promotions of various lengths designed to boost mid-July sales.
Axios writes that “billions of dollars are projected to be spent at Amazon and other retailers that are running competing sales. The summer sales period kicks off back-to-school shopping, and some bargain-conscious consumers are expected to get a jump on holiday shopping.”
AdWeek writes that there are four consumer trends that these retailers can expect to play a role in exactly how robust this week’s sales numbers are: shopper anxiety about the economy, which continues to be largely pessimistic … the role of AI in helping consumer search for products, which one would think could end up diverting sales away from Amazon and to a competitor that may have better prices … a desire to spend big now to avoid spending big later, when prices will be higher and could be affected by tariffs … and the willingness of consumers to borrow (via buy-now-pay-later programs) and put their purchases on credit cards to be e=dealt with later.
All of which, I think, adds up to an uncertain moment. This could be a big week for all the players, or it could be a week in which the landscape shifts a bit. And the long-term implications for the economy could be troubling.
• Tariff Pain Already Being Felt By US Businesses
Axios reports on a KPMG Tariff Pulse Survey of executives at 300 companies with annual revenue of $1 billion or more, indicating that “many companies are already feeling tariff pain … 57% of companies were already experiencing a tariff-driven decline in gross margins as of May.”
In addition, the story says, “A quarter of respondents said their margins had already fallen by 6% or more … 77% of respondents said their companies are considering price increases of at least 5% in the next six months.”
CNBC reports that “at U.S. department store chains including Macy’s, Nordstrom, and Dillard’s, the evidence of sticker price inflation is starting to show up across more items. Recent price increases in apparel, footwear, and bags across major U.S. department-store websites tracked by DataWeave indicate a turning point in May, when prices started their ascent.”
One thing seems clear in the Axios story: “Businesses can only eat trade costs for so long before raising prices, fueling the tariff-driven inflation many economists fear … : If higher prices haven’t shown up for customers yet, the survey makes clear they’re coming.”
The headlines are focusing on the delays in many tariffs, as negotiations continue. But this survey makes clear that the impact already is being felt in some areas, and that in the end, consumers are going to bear the brunt of tariff-related price hikes.
• Tomato Tariff Likely To Increase Prices
From Food & Wine:
“The United States will withdraw from a trade deal with Mexico on July 14, reinstating a 20.91% tariff on most fresh tomato imports.
“Mexico supplies 93% of U.S. tomato imports; prices could rise by up to 50% due to reduced supply and added costs.
“Mexican growers are already cutting back on planting, which may worsen supply shortages in the autumn–winter season.
“Tomato prices usually drop in mid-summer, but this July, they might rise instead. A 2019 trade agreement that exempted fresh tomatoes from Mexico from a 20.91% tariff is set to expire on July 14, raising concerns about potential price increases in grocery stores and restaurants.”
The story points out that “93% of U.S. tomato imports come from Mexico. The same report notes that growers are already scaling back planting for the autumn–winter season — Mexico’s peak export window.”
The original agreement was designed to address concerns about Mexico dumping chap tomatoes in the US market, hurting domestic growers.
• Amazon Teams With Gopuff For UK Grocery Sales
From The Information:
“Amazon is teaming up with delivery startup Gopuff to offer same-hour deliveries of groceries and other household goods to U.K. shoppers … Shoppers will be able to order products from Gopuff through Amazon’s website and app, and Gopuff will fulfill the orders from its own warehouses, the statement said. Amazon launched the Gopuff service in two U.K. cities in May, and is expanding to 14 additional cities, including London.”
The story notes that “Amazon has been pulling back from its own Amazon Fresh grocery service in many markets outside the U.S., and teaming up with other grocers to list their goods on Amazon instead. It already offers same-day delivery through U.K. grocers including Morrisons and Co-op.”
I continue to believe that Amazon eventually will get out of the bricks-and-mortar Amazon Fresh business, and focus on a) online sales, which is its core expertise, and b) developing, leasing and selling technology and service programs to retailers better positioned to succeed in physical retail.
• Family Dollar Sale Completed
Dollar Tree reportedly has completed the $1.01 billion sale of Family Dollar to private equity firms Macellum Capital Management and Brigade Capital Management. Duncan MacNaughton, the former Chief Merchandising/Marketing Officer at Walmart, is the company’s new chairman/CEO.
• SQFI Gets New VP-Business Development
FMI-The Food Industry Association announced that Rachel Anderson has been hired as vice president of Business Development for its Safe Quality Food Institute (SQFI) division. Anderson formerly was executive director of strategy at Gamer Packaging, where FMI says she “led a business development team that introduced strategic partnerships that strengthened supply networks, even amid global disruptions.”
• So Much For No-Additive Meals For Sick & Older Americans
From the Associated Press:
“HHS secretary Robert F. Kennedy Jr. on Monday praised a company that makes $7-a-pop meals that are delivered directly to the homes of Medicaid and Medicare enrollees.
“He even thanked the company, Mom’s Meals, for sending taxpayer-funded meals “without additives” to the homes of sick or elderly Americans. The spreads include chicken bacon ranch pasta for dinner and French toast sticks with fruit or ham patties.
“‘This is really one of the solutions for making our country healthy again,’ Kennedy said in the video … But an Associated Press review of Mom’s Meals menu, including the ingredients and nutrition labels, shows that the company’s offerings are the type of heat-and-eat, ultra-processed foods that Kennedy routinely criticizes for making people sick.
“The meals contain chemical additives that would render them impossible to recreate at home in your kitchen, said Marion Nestle, PhD, MPH, a nutritionist at New York University and food policy expert, who reviewed the menu for the AP. Many menu items are high in sodium, and some are high in sugar or saturated fats, she said.”
Nestle conceded, however, that “Mom’s Meals do not have the artificial, petroleum dyes that Kennedy has pressured companies to remove from products.”
Maybe its just me, but “chicken bacon ranch pasta” was an immediate red flag. And maybe not the kind of stuff that taxpayers should be funding, especially since the story points out that Mom’s Meals is one of a number of programs “covered by Medicaid for some enrollees, including people who are sick with cancer or diabetes, as well as some older Americans who are enrolled in certain Medicare health insurance plans.”
I don’t have cancer or diabetes, but I do qualify as “older,” and my health insurance is through Medicare. I’m pretty sure that my doctor would steer me away from things like “chicken bacon ranch pasta” And I trust my doctor more than RFK Jr.
One other note – this story is getting a lot of play in the media. It has popped up everywhere. Which undermines the credibility of a federal department in which we should have trust.
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