Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg P M L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. We
Speaker 1: hear a lot about increasing tensions between some of the
Speaker 1: biggest states with respect to air pollution controls and Washington,
Speaker 1: d C, where President Trump has taken a more lax
Speaker 1: stance with respect to pollution controls. I want to bring
Speaker 1: in Mary Nichols, chair of the California Air Resources Board,
Speaker 1: which is based in Los Angeles, but she joins us
Speaker 1: here in our Bloomberg leven three studios UH and UH.
Speaker 1: Mary was crucial in revealing the Volkswagen's diesel cheating scandal.
Speaker 1: She has talked in Germany about this. She also has
Speaker 1: taken really a hard line with respect to tightening our standards.
Speaker 1: And I'm so glad that you're here. I'm wondering it's
Speaker 1: California headed on a collision course with Washington, d C.
Speaker 1: And sort of how ugly could this get well, I
Speaker 1: hope not. We're trying not to be on a collision course.
Speaker 1: We're trying to continue along a path that began really
Speaker 1: many years ago, where California generally identifies a pollution problem
Speaker 1: and helps to identify the technologies that could could solve
Speaker 1: that problem and do it in a way that's also
Speaker 1: good for the economy, and then usually within a period
Speaker 1: of a few years, the federal government steps up and
Speaker 1: adopts the same standards. That's what happened at the beginning
Speaker 1: of the Obama administration when we locked in a national
Speaker 1: program that combined fuel economy standards a end greenhouse gas
Speaker 1: emission standards at the federal and the state level. So
Speaker 1: we've been on a path working collaboratively with the federal
Speaker 1: government UM for quite a few years now. When President
Speaker 1: Obama came in, he immediately indicated that he wanted to
Speaker 1: put a halt and re examine that program. And so
Speaker 1: we're in the midst of that process right now. It's
Speaker 1: not a foregone conclusion that the standards will change, and actually, UM,
Speaker 1: the auto industry as a whole has indicated that they
Speaker 1: don't want to throw out this whole program. What they're
Speaker 1: hoping to do, in their terms, would be tweak the
Speaker 1: standards and the enforcement provisions a little bit, but not
Speaker 1: really halted. Now. I think part of the rationale there
Speaker 1: is that they know that getting better fuel economy is
Speaker 1: popular with the American public. It may not be the
Speaker 1: most important thing that people look at when they are
Speaker 1: making a purchase decay vision for a car or a
Speaker 1: light truck, but people really like it that the vehicles
Speaker 1: that are out there today are so much more efficient
Speaker 1: than they used to be. But we're going to have
Speaker 1: to see what this administration decides they want to do.
Speaker 1: Mary explain to people perhaps the differences between emissions rules
Speaker 1: and regulations in California and in other states, although there
Speaker 1: are some states that have similar emissions and I'm wondering
Speaker 1: if there is a push to offer a more consistent
Speaker 1: national emissions program because each state has its own. You know,
Speaker 1: you want to register a car, let's say, in California,
Speaker 1: if it's older than I believe, was it sixty five
Speaker 1: or seventy five, you don't have to go through an
Speaker 1: emissions test. So you know, there's so many different differences
Speaker 1: between states. What characterizes California, Well, actually there are only
Speaker 1: two emissions standards federal and there's federal and California. Other
Speaker 1: states can if they want to opt in to the
Speaker 1: California program, and there are thirteen states that have done that.
Speaker 1: So it's basically the northeastern states and the Pacific coast
Speaker 1: states Oregon and Washington with California and then the rest
Speaker 1: of the country having the federal standards. But the good
Speaker 1: news at the moment is that although there are differences
Speaker 1: in some of the features like inspection and maintenance requirements
Speaker 1: and when you have to reregister and all that kind
Speaker 1: of thing, when it comes to the cars that are
Speaker 1: built by the auto manufacturers, UM, they really now build
Speaker 1: them all to one standard. Because we and the federal
Speaker 1: government agreed on the greenhouse gas emission standards UH and
Speaker 1: have been pursuing a common pattern since we thought we
Speaker 1: had locked this in until but now, because of the
Speaker 1: Trump administration's desire to redo the so called mid term
Speaker 1: review that was a part of that program, we're in
Speaker 1: a holding pattern at the moment while they decide what
Speaker 1: they want to do. Another front of this is that
Speaker 1: California has been requiring a higher proportion of electric vehicle
Speaker 1: UH cars sales does anyone want to buy them? Oh yes, Um,
Speaker 1: so we now have three hundred and twenty thousand and
Speaker 1: change electric cars on the roads in California. They're beginning
Speaker 1: to pop up in places, and not just in San
Speaker 1: Francisco or l A where they're very visible. Uh, And
Speaker 1: because of that we are seeing a real increase. It
Speaker 1: still is one of those technologies that many people think
Speaker 1: is somehow pie in the sky. They're not really aware
Speaker 1: of how many different models of electric vehicles are available.
Speaker 1: But this summer we saw proliferation at county fairs of
Speaker 1: ride and drive opportunities where hundreds of thousands of people
Speaker 1: in total came out just to try out some of
Speaker 1: the new electric vehicles. I wonder how much power it
Speaker 1: gives California from a negotiating perspective that China and other
Speaker 1: countries are so aggressively trying to promote electric vehicles, so
Speaker 1: to be able to say, the automakers look from a
Speaker 1: competitive advantage, you need you need to go for this. Well,
Speaker 1: we like to think that our stance as having been
Speaker 1: pioneers with promoting electric vehicles helped to get the companies
Speaker 1: to the point where they made the decisions to build these.
Speaker 1: Now very attractive models that are out there offered for sale.
Speaker 1: But China is on its own course, and obviously a
Speaker 1: mandate from China is going to have an enormous leveraging
Speaker 1: effect because they're such a huge potential market out there,
Speaker 1: and they're saying they're not going to allow any internal
Speaker 1: combustion engines at all after twenty dirty so just a period,
Speaker 1: don't even try that. That certainly gets the car company's
Speaker 1: attention in a way that even California can't do. Mary,
Speaker 1: do you and other members of the California Air Resources
Speaker 1: Board and vision at time when we will have self
Speaker 1: driving trucks and that truck drivers will be more like
Speaker 1: airplane pilots with autopilot features rather than the way they
Speaker 1: operate now. I actually think that trucks could be in
Speaker 1: some ways the ideal place for some of the autonomous
Speaker 1: driving features to be introduced early, because they have so
Speaker 1: many safety features associated with them. Um, I myself least
Speaker 1: a new car just two years ago. I hadn't bought
Speaker 1: a new car in years. I won't bother to justify that,
Speaker 1: but just say I'm cheap. But the fact is that
Speaker 1: cars nowadays, you know, anything above the least expensive car
Speaker 1: already comes with certain features that I had never heard
Speaker 1: of before, like something that beeps at you when you
Speaker 1: cross over the white line, and you know, a light
Speaker 1: that flashes in their rear view mirror that tells you
Speaker 1: when there's somebody coming too close to you. These are
Speaker 1: things that are tremendous safety features, but if you put
Speaker 1: them into a truck, it's going to make a huge
Speaker 1: difference because the trucks do so much more damage. Thank
Speaker 1: you very much. Mary Nichols, chair of the California Air
Speaker 1: Resources Board, speaking to us here at our Bloomberg eleven
Speaker 1: three oh Studios. This is Bloomberg. I want to turn
Speaker 1: our attention now to the world of equal pay for
Speaker 1: equal work. And Bob Morrits is the chairman of Price
Speaker 1: Waterhouse Cooper's International and the Price Waterhouse Cooper's has just
Speaker 1: put together the Heat for She Impact Sport and here
Speaker 1: to tell us more about what it revealed. Bob more,
Speaker 1: it's Bob. Thanks for being with us. Maybe you could
Speaker 1: just give us some of the highlights for the results
Speaker 1: of the annual report. Sure, I love to um first.
Speaker 1: The Heat First SHE initiative is something that the u
Speaker 1: N sponsors, which is a effort to get more men
Speaker 1: uh in the business of supporting women, both at a
Speaker 1: corporate level, at a country level, and at an educational level.
Speaker 1: And we had ten Impact Champions from university, ten country
Speaker 1: leaders as well as ten corporate leaders exemplifying what we're
Speaker 1: looking for individual organizations and individuals themselves to do. So
Speaker 1: what the report focuses on is what progress have women made.
Speaker 1: It provides some insights and hopefully some inspiration for the
Speaker 1: thirty organizations to ten by ten by ten in terms
Speaker 1: of what they've done in their own organizations, countries or institutions,
Speaker 1: and exemplifies the benefit that can come from it. So,
Speaker 1: for example, we heard from the pres is it in
Speaker 1: a Malawi who changed laws to allow for and eliminate
Speaker 1: child marriages, um that put more women in the education
Speaker 1: system that allow for them to have job opportunities. Thereafter,
Speaker 1: we heard from university presidents in terms of what they
Speaker 1: were doing to deal with sexual assault and discrimination. And
Speaker 1: we heard from the corporates both in terms of what
Speaker 1: they're doing to increase the number of women both in
Speaker 1: leadership roles as well as to move forward with pay equity,
Speaker 1: as well as what corporates are doing to help in
Speaker 1: the education system to enable women to bigger opportunities, particularly
Speaker 1: in the STEM research areas that are important to the
Speaker 1: future of work in various countries around the world. Bob
Speaker 1: in the US, what is the major obstacle to women
Speaker 1: having more prominent roles and organizations? From our perspective, what
Speaker 1: we see is it's a combination of the unconscious preferences
Speaker 1: or biases that come out of organizations. UM. If you
Speaker 1: think about roles, for example, UM, there's very few women
Speaker 1: on boards today and those boards are responsible or picking
Speaker 1: the new CEOs UM, So it's not surprising that there's
Speaker 1: a biased um that might come from that. But nonetheless,
Speaker 1: we've got to do more to get more women, um
Speaker 1: at the top of the house in these board rooms.
Speaker 1: So there's a different perspective. And when you have women
Speaker 1: on the boards, our own study has found actually diversity
Speaker 1: becomes an important factor in thinking about leadership succession as
Speaker 1: the men are in the room that it's not the one,
Speaker 1: two or three issue that's top of mind for them. UM.
Speaker 1: The second thing I would say is that we've got
Speaker 1: to make sure that organizations do a much better job
Speaker 1: with their talent management, succession planning and making sure that
Speaker 1: the women have the opportunities because the women are equally
Speaker 1: qualified to do these roles. It's a cruel matter of
Speaker 1: creating the opportunity for success being business unit leaders and
Speaker 1: driving that. And this is where data becomes important. What
Speaker 1: we have found is there's tremendous amount of data now
Speaker 1: demonstrating where policies need to change, where perhaps leaders might
Speaker 1: have those unconscious or conscious preferences or biases. And the
Speaker 1: data can allow for organizations to pinpoint what changes you
Speaker 1: need to make it kind an organization and where the
Speaker 1: efforts should be pinpointed for hopefully turning the actions into
Speaker 1: better results than better outcomes. You know, maybe I'm just
Speaker 1: revealing my bias here, but in my experience, a lot
Speaker 1: of it does come down to childcare and if the
Speaker 1: woman is the primary caretaker, which usually that is the assumption,
Speaker 1: she is going to prefer to have a lighter schedule
Speaker 1: and a less prominent rule in order to take care
Speaker 1: of her family. Sometimes it's not even a preference, it's
Speaker 1: a it's a mandatory kind of reality of life. So,
Speaker 1: I mean, what what what what What did you say
Speaker 1: to that? Yeah, it's it's definitely one of a few
Speaker 1: issues that actually have to be dealt with at the
Speaker 1: corporate level UM. And here's what we see organization is doing. So,
Speaker 1: for example, with us at PwC, we put in a
Speaker 1: number of different policy changes. So give you another stat
Speaker 1: which is when women leave from alternity to leave out
Speaker 1: of side and of mind more than one year and
Speaker 1: they come back into the system because they're out of
Speaker 1: side of the mind, there's automatically a decrease in their
Speaker 1: reading and assessment of their performance. Why is that. It's
Speaker 1: probably because they were out of sight, out of mind
Speaker 1: for a period of time, or there might be some
Speaker 1: unconscious behavior for it. So we as a P two
Speaker 1: BC organization change the way in which we do evaluations
Speaker 1: for women that have left on alternatively UM and giving
Speaker 1: them a two year period where we're saying, hey, listen,
Speaker 1: if they come back into doing good work, their assessments
Speaker 1: should not change. The second thing we've done is provide
Speaker 1: more opportunity for flexibility. We've got more women that are
Speaker 1: being promoted at a senior level that have flexible schedules
Speaker 1: and we need to role model them and put them
Speaker 1: in places more accepting. And third, we're actually putting in
Speaker 1: more support care UM to make sure that there's an
Speaker 1: opportunity for them to leverage tools UM and other methodologies
Speaker 1: as well as other support groups to deal with the
Speaker 1: child care issues. So there's a big opportunity, but it
Speaker 1: causes the management teams to look at that data and
Speaker 1: then take the appropriate actions necessary to address that data.
Speaker 1: What you do with women is much different than what
Speaker 1: you need to do to overcome some of the challenges
Speaker 1: with minorities, for example, men or women. UM, So, I
Speaker 1: think that's where people have got to be very tailored.
Speaker 1: There's no one silver bullet or one size. SIT's all well, well, Bob,
Speaker 1: I mean I understand all these initiatives, programs and you know,
Speaker 1: management training efforts, but why don't you just pay people
Speaker 1: more money? I mean, why do this? What's the incentive?
Speaker 1: I mean it may sound great and it sounds fair,
Speaker 1: but if you're a manager who isn't going to get
Speaker 1: any financial bonus or any financial incentive to, let's say,
Speaker 1: hire women or make women more prominent in the organization,
Speaker 1: why wouldn't you just use the incentive of pay people
Speaker 1: more for doing whatever it is you want them to do.
Speaker 1: So we'll take your your point in sort of flip
Speaker 1: it a little bit um. There's organizations now that are
Speaker 1: much better, and we made a change about three years ago.
Speaker 1: Was one of our commitments to He for She, which
Speaker 1: was to put a diversity index in place. That caused
Speaker 1: us to get very specific with our leadership teams around
Speaker 1: expectations were now there's risk and reward to their compensation model.
Speaker 1: To your point, right, how do they actually lead? By example,
Speaker 1: let'son sent them. But now we can pinpoint with the
Speaker 1: right data where people are not doing what's needed and
Speaker 1: therefore there is a negative or a negative implication of
Speaker 1: their compensation. So you do have the data to say
Speaker 1: who's doing things quantitatively as well as get a sense qualitative.
Speaker 1: With some feedback processes, you can adjust accordingly um compensation
Speaker 1: for your leadership team if you're very specific on accountability
Speaker 1: and you hold them accountable very specifically in terms of
Speaker 1: your assessment on their performance as well as in the
Speaker 1: compensation that they received. Bob Maritz, thank you so much
Speaker 1: for joining us. He's chairman of Price Waterhouse Cooper's International Limited,
Speaker 1: which is based in New York, and they just put
Speaker 1: out this Heat for Sheet Impact Report, a lengthy look
Speaker 1: at what the obstacles are to getting more women and
Speaker 1: UH and a broader diversity of employees into positions of
Speaker 1: power and earning more well. There has been an escalating
Speaker 1: war of words and threats between North Korea and the
Speaker 1: United States. The latest is in North Korea is threatening
Speaker 1: to test a powerful nuclear weapon over the Pacific Ocean
Speaker 1: in response to President Donald Trump's threats and increased sanctions
Speaker 1: on the country. To give us a sense of what's
Speaker 1: at stake here, how much more this exacerbates the tensions here.
Speaker 1: I want to bring in Scott Seeman uh. He is
Speaker 1: the director for Asia at Eurasia Group, which is based
Speaker 1: in Washington, d C. Scott, thank you so much for
Speaker 1: joining us. So this seems alarming. I'm wondering at what
Speaker 1: point does this escalation of words bleed over into escalation
Speaker 1: and actual physical combat. So we still attach a pretty
Speaker 1: low probability to the risk of an actual military conflict UM.
Speaker 1: And that's talking about a wide range of scenarios, everything
Speaker 1: from uh, someone starting intentionally an attack to an accident
Speaker 1: or miscalculation kind of getting out of control and pushing
Speaker 1: in a direction of a larger conflict UM. So we're
Speaker 1: not you know, we're not overly concerned at this point
Speaker 1: that this rhetoric that we're seeing is really escalating the
Speaker 1: chances of something going awry. But certainly the threat to
Speaker 1: send a missile someplace over the Pacific and detonate it UH,
Speaker 1: that adds a new element that the US and other
Speaker 1: countries are going to have to take into consideration. Scott.
Speaker 1: In the past month, North Koreans have launched two missiles
Speaker 1: over Japan. They tested a sixth and powerful nuclear device.
Speaker 1: They described it as a hydrogen bomb, and that follows
Speaker 1: two successful test launches of intercontinental ballistic missiles in July.
Speaker 1: If they try to put both of those technologies together.
Speaker 1: What could the United States or its allies in Asia
Speaker 1: do if indeed they tried to launch and test a
Speaker 1: hydrogen weapon in the atmosphere over the Pacific Ocean. So
Speaker 1: the range of options everything from some sort of a
Speaker 1: surgical strike UH to try to eliminate some of the
Speaker 1: capabilities that preemptively. I don't think preemptively is you know,
Speaker 1: unless there was intelligence that said that the North Koreans
Speaker 1: were fueling up a rocket that was going to threaten
Speaker 1: the United States or an ally with an actual UH
Speaker 1: nuclear weapon. No, I don't think a preemptive strike is
Speaker 1: probably in the cards, but we'll we'll have to be
Speaker 1: watching to see what kind of preparations the satellites give
Speaker 1: us an indication that the North Koreans are doing, and
Speaker 1: certainly there will be a whole range of options that
Speaker 1: military leaders here in the US and elsewhere we'll have
Speaker 1: to sit down and start thinking about. Now. You know,
Speaker 1: I have to wonder what the reaction is within North
Speaker 1: Korea among the common folk, because these increased sanctions are
Speaker 1: only going to exacerbate food shortages that have been brought
Speaker 1: about by the worst drought since two thousand and one
Speaker 1: in the country. Is there any chance of rising political
Speaker 1: tensions within North Korea? I doubt it. I think we've
Speaker 1: been hoping for that for decades and and it hasn't happened.
Speaker 1: I think the normal people, the people who are outside
Speaker 1: of Kongyang, who are not part of the government elite. Uh,
Speaker 1: they're simply trying to get through uh, you know, every day. UM.
Speaker 1: I don't think that the economy is in a state
Speaker 1: right now that we're looking at starvation famine on the
Speaker 1: scale that we saw under Kim Jong UN's father, for example.
Speaker 1: The economy seems to be performing relatively well, so they've
Speaker 1: got quite a bit of a cushion. Uh. So I
Speaker 1: think the chances of some sort of a you know,
Speaker 1: a political crisis or or an uprising, uh would you know,
Speaker 1: it's extremely remote. And again we've been hoping for that
Speaker 1: for decades and it just hasn't materialized, you know, Scott.
Speaker 1: Despite some people's lamenting the increasing war of words between
Speaker 1: Kim Jong un and President Trump, some others say that
Speaker 1: actually this is just highlighting a problem that has been
Speaker 1: going on for a long time, that the situation is
Speaker 1: coming to a head, not because of the words, but
Speaker 1: because of what's been behind it and what's been sort
Speaker 1: of left for future presidents to deal with. Do you
Speaker 1: agree with that or do you think that that there
Speaker 1: has been some kind of material escalation since the beginning
Speaker 1: of the year. So I hate to go into assessing
Speaker 1: whether previous governments in the US or elsewhere could have
Speaker 1: done more, should have done more. Um, I think you
Speaker 1: can always say that probably more effort in time could
Speaker 1: have been put into ensuring that we don't get to
Speaker 1: the point that we're at right now. But that's where
Speaker 1: we are, and certainly the pace of development around these
Speaker 1: weapons that we've been seeing has greatly accelerated. People are
Speaker 1: talking about this being a breakout, meaning that they have
Speaker 1: really moved quickly towards eventually getting the technology that they
Speaker 1: require for a viable I CBM. So, uh, this is
Speaker 1: moving all in the wrong direction. Um. The flip side
Speaker 1: of that, of course, is that one part of the
Speaker 1: strategy to deal with North Korea is to ensure that
Speaker 1: this becomes a bigger crisis for China, hoping that that
Speaker 1: will motivate Beijing to do more as well. Well, we
Speaker 1: know that the Chinese have just forbidden their banks to
Speaker 1: do business transact business with companies in the North Korea.
Speaker 1: That was announced earlier today. But just quickly, Scott, what
Speaker 1: do you think about the the sort of fear that
Speaker 1: people are not expressing. I'm looking at the Korean stock index.
Speaker 1: It is of more than seven in team percent year
Speaker 1: to date, and it doesn't seem as if investors care.
Speaker 1: Give you about seconds, Yeah, no, we we've seen the
Speaker 1: markets really kind of shrug off a lot of this.
Speaker 1: Part of it is probably because this is so this
Speaker 1: is such a common occurrence, But I think the market
Speaker 1: is probably needing to spend a little more time looking
Speaker 1: at this issue. Well, I guess that's a diplomatic way
Speaker 1: saying no one's afraid, but it might not be bad
Speaker 1: to look over your shoulder at least a little bit.
Speaker 1: Thanks very much, Scott Seaman, he is the director of
Speaker 1: Asia for the Eurasia Group, giving us his thoughts on
Speaker 1: the turmoil that exists on the Korean peninsula. As I said,
Speaker 1: the South Korean stock index, the costpy up more than
Speaker 1: seven and a half percent so far. It is a
Speaker 1: bad day for grub hub today. It is a very
Speaker 1: bad day because Amazon is looking at their business model
Speaker 1: and saying we can do that too. To tell us
Speaker 1: more is Craig Giamana. He's consumer reporter for Bloomberg News,
Speaker 1: and he joins us now Amazon dot Com is about
Speaker 1: to get into the or deeper into the food delivery business.
Speaker 1: What's going on here, like give us a label? End? Yeah,
Speaker 1: So they have, um, they've had Amazon restaurants for a while.
Speaker 1: I think they started that in Seattle. You know, it's
Speaker 1: it's still pretty small, and I don't think it's quite
Speaker 1: crossed over into you know, mainstream peel and they haven't
Speaker 1: really attracted many national chains. Is the big thing. So
Speaker 1: the news today is that they're partnering with a company
Speaker 1: called Olo, which provides digital order and pay solutions for
Speaker 1: about two restaurant brands that have forty tho locations, and
Speaker 1: they're going to basically make it easy for all of
Speaker 1: their customers to work with Amazon. So, yes, this is
Speaker 1: Amazon making a big push into the restaurant delivery space,
Speaker 1: which has gotten more and more popular it seems like
Speaker 1: every year. Hey Craig, does this mean that Amazon gets
Speaker 1: an exclusive with those customers, No, it doesn't. What it
Speaker 1: means basically is that if you are an OLO customer,
Speaker 1: you can easily tap into Amazon restaurants. So the feeling
Speaker 1: is that places like shake Shack, Chipotle's catering business that
Speaker 1: sort of they'll flip the switch and turn this on.
Speaker 1: But also what it does this is a little bit
Speaker 1: in the weeds, but you know, there's Grubhub, there's Seamless.
Speaker 1: All of those businesses basically provide these restaurants with a
Speaker 1: tablet that they have to take to the back of
Speaker 1: the house. What all I was saying is sign up
Speaker 1: with us and we'll integrate all that directly into your
Speaker 1: POS system, your sales system. So it's supposed to make
Speaker 1: it much easier for these restaurants to handle these orders
Speaker 1: in connecting it to your point of sales system. Can
Speaker 1: you envision a time when this is also integrated into
Speaker 1: the back end, so it's not just the point of sale,
Speaker 1: but eventually integrated into the inventory control system, your supply chain.
Speaker 1: Because I was noting, for example, that Amazon, you know,
Speaker 1: is looking to get into a lot of other businesses,
Speaker 1: and you know, being in the restaurants supply or the
Speaker 1: food supply business now that you have whole food might
Speaker 1: be something that they're thinking about. I mean, I don't
Speaker 1: think there's any question that they're thinking about that. That's
Speaker 1: what they do, right, There's a supply chain company. And
Speaker 1: the other thing that they do is incredible prowess with
Speaker 1: customer data. So that's why every time there's an Amazon
Speaker 1: press release, we see the stocks of Kroger go down,
Speaker 1: Campbell General Mills. Today we saw grub Hub go down.
Speaker 1: So this is Amazon going hard after the one point
Speaker 1: five trillion dollar market for food. Half of that is grocery,
Speaker 1: half of that is restaurant. Roughly speaking, we know they're
Speaker 1: going after grocery hard with Whole foods now here, they
Speaker 1: come for the restaurants I'm trying to figure out. I mean,
Speaker 1: it's this just from a system's perspective that Amazon is
Speaker 1: trying to streamline things for for restaurants or are they
Speaker 1: also providing the delivery service force they they provide the delivery, so,
Speaker 1: I mean, delivery has become more and more important for
Speaker 1: these restaurants, and McDonald's resisted it for years. There was
Speaker 1: concerns that the fries wouldn't hold up, that the food
Speaker 1: would arrive, it would take twenty minutes, it would be
Speaker 1: too long. McDonald's now is signed up with Uber Eats,
Speaker 1: which has become more and more popular. You can get
Speaker 1: McDonald's delivered and I think thirty stores. This is Amazon
Speaker 1: basically getting access to OL those customers, which is a
Speaker 1: lot of restaurants, and then you'll basically put that order
Speaker 1: through the OLO system and then Amazon will deliver it.
Speaker 1: So you know, Amazon wants frequency, they want they want
Speaker 1: to be wherever customers are and wherever people buy things often,
Speaker 1: so they want you go into that website. You want
Speaker 1: to order Chili's, or you want to order shakeshack or
Speaker 1: something like that, do it on Amazon, and while you're there,
Speaker 1: you know, buy a DVD player, buy some clothes, buy
Speaker 1: some whole foods products, whatever it is. Well, but I'm
Speaker 1: trying to understand what competitive advantage Amazon would have with
Speaker 1: the actual delivery. I mean, I understand from this from
Speaker 1: the computer systems, but but a lot of these restaurants
Speaker 1: have forces and Grubhub and Seamless have entire you know,
Speaker 1: work staffs devoted to this. That's right, that's right, and
Speaker 1: so it's very expensive to hire delivery drivers. You're absolutely right.
Speaker 1: So as far as the economics of sending a driver
Speaker 1: to pick up in order at a restaurant and then
Speaker 1: bringing out to somebody's house, the economics of that are
Speaker 1: not great. I think what Amazon sees here again is
Speaker 1: this is a growing piece of business and they want
Speaker 1: to be in there. So, as we know, they're willing
Speaker 1: to take losses on businesses if they think that that's
Speaker 1: the thing to do. So I think your question is
Speaker 1: right that the economics aren't great, but the frequency and
Speaker 1: sort of the loyalty and the ability to kind of
Speaker 1: just be the place that people go to buy things,
Speaker 1: I think is what they're looking at. Well, just to
Speaker 1: follow up on that, does it become a potential location
Speaker 1: for Amazon? Every restaurant that is part of this olo
Speaker 1: project or family, then they can become a pickup location
Speaker 1: for other Amazon products, right, So we I mean we've
Speaker 1: seen the Amazon lockers pop up in the Whole Foods.
Speaker 1: I mean that happened like the day after the deal closed.
Speaker 1: So you know, they haven't said that. I mean, but
Speaker 1: I don't think that that's a stretch to think that
Speaker 1: that's could be where this is going. Again, this this
Speaker 1: isn't an exclusive arrangement, so it's not like these old
Speaker 1: customers are going to only deal with Amazon. But again,
Speaker 1: that's where all this is headed. I mean, if if
Speaker 1: you're gonna be if you're gonna go to drive to
Speaker 1: the Chilis to pick up your burger and your meal,
Speaker 1: sure there's an Amazon locker there and you grab your package.
Speaker 1: I mean that that's not a stretch, No, but it
Speaker 1: does really kind of highlight how the changing nature of
Speaker 1: the whole supply chain, particularly you're gonna be able to
Speaker 1: save money on gasoline if they're going to do all
Speaker 1: the delivery for you. Thanks very much for coming in.
Speaker 1: Thank you appreciate it. The Craig Giammona. He is our
Speaker 1: consumer reporter for Bloomberg. Thanks for listening. To the Bloomberg
Speaker 1: P and L podcast. You can subscribe and listen to
Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.
Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm
Speaker 1: on Twitter at Lisa Abramo wits one. Before the podcast,
Speaker 1: you can always catch us worldwide on Bloomberg Radio