business news in context, analysis with attitude

Got a number of emails responding to this story from yesterday's MNB:

The Economic Policy Institute (EPI) - which describes itself as "an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States" - is out with a study saying that if the Federal Trade Commission (FTC) allows the $24.6 billion acquisition of Albertsons by Kroger, it will "reduce the number of outside employment options available to workers, lowering grocery store workers’ annual wages by a total of $334 million—about a $450 loss in annual wages per worker."

One MNB reader responded:

EPI may be non-partisan as self-described but if you look at the members of the board, most are union executives and presumably they receive funding from various unions as well.  This is not to say the presentation is faulty; but you have to consider the source.  The same as you would from the Business Roundtable.

It is assumed that the Merger will eventually go through and some reports of 300+ stores being spun off is not likely to result of all the employees losing their job as many are likely to be picked up by some regional operators wishing to expand their footprints. Many of those operators hinted at picking up these “orphan” stores are already unionized so no loss of employment generally and the wages are likely the same as well in various markets.  And, Walmart is not going anyplace, so the competition will still be there, and Walmart is going to have to pay the going labor rate.

It is not clear how the study was organized and the assumptions but the conclusions seem less likely to occur.

So the FTC may try the old scheme of competition and consumer peril but they have been nearly winless in court with the antiquated thinking.

And from another reader:

According to your story, the firm only examined grocery retailers and not the entire retail market which sells food/ beverages etc. So their assumption is that grocery employees only alternative employment choice is another grocery store. We should ask why the firm chose to not include Walmart, Target, convenience chains that have advanced food capabilities (i.e., Kwik trip, Sheetz), and I expect they did not include specialty retail. 

To make this an insightful analysis, they should have started with the consumer, where does the consumer buy/consume their food/beverage and that becomes the market for retailers and their employees. 

I’m also aware that more retailers are adding foodservice to their definition of potential market size and retailers share of market. 

I have to ask why the firm narrowly defined a market that does not reflect how/where consumers shop? 

And, on another subject, one MNB reader wrote:

As a native Portland Mainer, I was so excited to tune in this morning and see a hometown favorite highlighted. I now living in San Antonio, but when I go home each year, Micucci’s is a must visit!

In January 1986, as this Northern European descendant married into an Italian family, it was to Micucci’s we went to get platters of Italian cookies for the wedding reception to impress the new ‘famiglia”. They ordered from a bakery in the North End of Boston and brought the cookies up the day of the wedding. This was the value of ”connections” that made them unique decades ago. Today, the assortment in the Portland store of cheese, wines, oil, desserts… all very, very good and specialty things that are hard to find elsewhere.

Congrats on your excellent find! Thanks for making my day and getting me excited for planning my summer trip home!

My pleasure.  And more below.