Weekly reading – 17th December 2022

Business

How Walmart is pursuing omnichannel profitability. Automation can indeed help retailers like Walmart pursue profitability. Increased productivity and lower labor costs are the key main drivers, However, it should be pointed out that Amazon has been using automation in their fulfillment centers for years and look at what happened to their eCommerce site. Last quarter, their profitability mostly came from AWS and their US operations suffered a loss. Walmart may have a few short-term wins, but in the long run, will the gains from automation persist?

The global microchip race: Europe’s bid to catch up. Even though the US and Taiwan are the two prominent names when it comes to chip design and manufacturing, Europe has the potential to catch up. It is home to a handful of companies that are indispensable to the industry such as Carl Zeiss SMT, ASML or Trumpf. Without them, ASML would not be able to produce extreme ultraviolet lithography (EUV) machines; TSMC would not have the equipment to manufacture cutting-edge chips; the likes of Apple would be constrained technologically and consumers would be deprived of the latest advances. However, Europe doesn’t own other pieces of the chip value chain nor does it set aside enough capital to compete with other countries. Most importantly, there is a shortage of skilled labor. Europe can address that problem by aggressively wooing talent and taking advantage of the terrible immigration policies of the US that don’t seem to get better any time soon. The question is: will they?

What the Kroger-Albertsons merger means for their private label portfolio. Putting Kroger’s private labels in Albertsons stores and vice versa is an interesting idea, but it would also come at a cost. What makes private labels valuable to retailers is the exclusivity. Breaking that exclusivity may lead to cannibalization of store revenue and perhaps some unintended and unforeseen consequences. What I am interested in is the bargaining power that the combined company would have over suppliers for their private labels. A roster of private labels worth $40 billion in annual revenue must command a lot of respect.

Bob Iger vs. Bob Chapek: Inside the Disney Coup. Great reporting into the frayed relationship between Chapek and the CFO as well as that between Chapek and Iger. Hiring is hard. The fact that Chapek was Iger’s pick and he personally wrote a public recommendation for him just for Iger to be disappointed at his successor is high-profile evidence of that. Moreover, Christine took a lot of risks by pitching Iger on the prospect of returning to the CEO spot and taking the idea to the board. But she did so reportedly from the place of love. You have to love the place you work for enough to rush to a return from a battle with cancer while caring for a sick spouse. Last but not least, I do think the board and Iger himself have to take responsibility for the mess that Disney has been through.

Visa to invest $5 billion in Africa in the next 5 years. There are half a billion people that are unbanked in the continent. Africa is also home to the youngest population on Earth. The growth prospect is limitless. And that’s why Visa commits this amount to tap into that growth. Apparently, their rival Mastercard shares the same feeling

Other stuff I find interesting

($) California Long Ruled U.S. Shipping. Importers Are Drifting East. “The hierarchy of U.S. ports is getting shaken up. Companies across many industries are rethinking how and where they ship goods after years of relying heavily on the western U.S. as an entry point, betting that ports in the East and the South can save them time and money while reducing risk. The share of all U.S. containerized cargo handled by Los Angeles and a neighboring port in Long Beach fell through the first 10 months of the year to a combined 25% as measured by weight, according to census data analyzed by Jason Miller, interim chair of Michigan State University’s supply chain management department. That was their lowest level in nearly two decades, down from a height of 33%

New Zealand bans young people from buying cigarettes for life. I honestly cannot think of a good reason to smoke cigarettes. The argument that small convenience stores would go bankrupt due to lost cigarette revenue should not stop a government from looking out for its citizens.

TikTok’s Secret Sauce. An interesting theory but there doesn’t seem to be a lot of evidence to back up.

Stats

US Vegetable Prices Soar Nearly 40%

Only a quarter of US iPhones are sold through Apple

Nov. ’22 U.S. eGrocery Sales Total $7.7 Billion, a 10% Drop Versus Year Ago

Source: unctad.org

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