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Don’t bet against Whole Foods just yet, 365 might just be the ace up their sleeve

(BUSINESS NEWS) After their stock price fell roughly 7% in the last half year, Whole Foods is betting big on 365, their new lower-priced concept store targeted at younger shoppers.

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Declining stock and sales

It’s been a slow year for Whole Foods, but the company has their fingers crossed that things will turn around soon. After their stock price fell roughly 7 percent in the last half year, the Austin-headquartered supermarket chain is betting big on 365, their new lower-priced concept store targeted at younger shoppers.

The appeal of Whole Foods has always been their vast selection of organic, non-GMO or just generally healthy offerings, but they’ve always been hindered by the sometimes high price point. We’ve all heard the regurgitated “Whole Paycheck” joke by now. The 365 stores attempt to overcome that. The fourth 365 store, and the first in the Austin area, is set to open in Cedar Park in April.

Whole Foods has faced stiff competition from both brick-and-mortar retailers and new online rivals. While massive chains like Walmart and Target have invested more in carrying low-price organic options, new online stores like FreshDirect, Thrive Market, and Amazon Fresh have continued to grow.

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The new face of Whole Foods

In addition to lower prices, the 365 stores are also slightly smaller than the typical whole foods and offer slightly less variety. While the stores don’t include cut-to-order delis or on-location bakeries, they do bring a lot of new features to the table like high-tech payment options and iPads that provide product information, as well as a more developed rewards program.

The Cedar Park location will also house two Austin companies, Easy Tiger and JuiceLand, as part of the Friends of 365 program.Click To Tweet

John Mackey, co-founder and CEO Whole Foods said the Cedar Park store will be a “2.0” version of existing 365 stores. “It’s going to have all these new bells and whistles that we’ve learned from our first three stores.”

Sales slump

Still, Whole Foods is facing its worst sales slump in more than a decade, which has led to the first decision to shrink the size of the chain in recent years. On Thursday, it was announced that while Whole Foods plans to open six new stores in the next quarter, there are also plans to close nine. The company, which has about 440 stores in the United States, also has abandoned an ambitious, previously-announced growth target of 1,200 locations as it tries to get expenses under control.

The closing stores are not entirely bad news, as strategies are in place to only close stores that will hopefully lead to growth of nearby stores.

However, six straight quarters of declining same-store sales have forced the company to reconsider several things, and are hardly a good sign.

Leases have been signed to open 365 stores in Oakland and Brooklyn in the future as well, and initial reviews of the open 365 stores are positive.

#365

Brian is a staff writer at The American Genius who lives in Brooklyn, New York. He is a graduate of Washington University in St. Louis, and majored in American Culture Studies and Writing. Originally from California, Brian has a podcast, "Revolves Around Me," and enjoys public transportation, bicycles, the beach.

Business News

So the Labor Department is cool with unpaid internships again

(BUSINESS NEWS) Regulations on unpaid internships continue to wax and wane, and businesses that opt to use unpaid labor should be aware of new regulations.

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Unpaid internships are a deacreasingly common institution in the United States, with help from former regulatory attempts to make them more difficult to create.

That regulatory oversight might become more relaxed after the Department of Labor (DOL) issued new rules under the Fair Labor Standards Act (FLSA) that governs the role of unpaid internships in the modern American workforce.

Last week, the United States’ labor governing body decided to revise its guidelines on unpaid internships using the concept of a “primary beneficiary test.”

The core principle behind the seven statements that comprise the primary beneficiary test revolves around the idea that the reason you are hiring unpaid interns is for work that provides the intern with the primary benefit (educational opportunities, hands on learning, and networking), not because the company isn’t paying someone else to perform the same activities.

So with these guidelines, there’d be no more call for jokes about interns fetching coffee or making copies. Sounds like a win for the intern, right?

Not exactly.

The guidelines stress, however, that there is no magic quota of yes or no answers that yields the unpaid intern in question has job duties that would require payment. That even includes answering “no” to the statement that reads: “the intern and the employer clearly understand that there is no expectation of compensation.”

Of course, if a company were in violation of these guidelines, especially the one regarding compensation, it would be easier for adjudication to be brought against the company into a court of law. These rules start as the groundwork for any legal action interns can bring against an organization.

The first set of six guidelines were developed in 2010. By 2011, a lawsuit brought by unpaid interns against Fox Searchlight while working Darren Aronofsky feature, Black Swan, claiming the interns were performing job duties in need of compensation (read: they weren’t already paying employees to do the same roles, rather using interns as free labor).

The ruling in 2013 was in favor of the interns, but a different federal court reversed that decision in 2015. It is interesting to note that the revised guidelines published by the DOL only a week ago were derived from the Court’s 2015 decision on this case.

The larger trend of lawsuits brought by unpaid interns may cause a company pause if they reverse decisions about payment of employees.

Despite the judicial onslaught, some organizations may still choose to pursue unpaid internships in light of the relaxation of the guidelines by the DOL.

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Business News

Starbucks’ Teavana chain finally settles lawsuit with Simon Property Group

(BUSINESS NEWS) A bitter battle over store closures concludes with private settlement – and Teavana stores are still closing.

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A months-long legal fight between Starbucks’ Teavana and Simon Property Group, the number one mall operator in the U.S., has come to an end with a private settlement that reportedly allows the tea chain to move forward with some of its store closures.

In July 2017, Starbucks unveiled plans to close all 379 retail locations of its floundering Teavana stores.

Shortly thereafter, Simon Property Group got a local judge to bar Starbucks from closing the 77 Teavana locations in its malls, a peculiar legal move for this situation. Starbucks would be breaking its lease agreement with Simon, and Simon wasn’t going to stand for it.

Simon Property Group cited the ongoing financial plights traditional malls have experienced for years as more and more retailers shut their doors as its primary reason for blocking Starbuck’s actions. The difference with Teavana is that Starbucks isn’t under great financial stress and can actually afford to keep the stores open, per court documents.

Starbucks disagreed, but in November, a judge sided with Simon and ordered Starbucks to keep its Teavana stores open and not break dozens of leases nationally. Starbucks fought back with a December appeal, but the case moved up to Indiana’s highest court, bypassing the intermediate Court of Appeals.

And now, before Starbucks’ appeal could be heard, the dueling companies have apparently reached an undisclosed settlement, according to New York Post reports. Exact settlement details have not been revealed, but the Post has found at least two Teavana locations that are closing in just a few days, indicating that settlement may play out in Starbucks’ favor.

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Business News

Zillow sued for concealing Zestimates on certain listings

(BUSINESS NEWS) Zillow being sued for Zestimates is nothing new, but they’re now being accused of concealing Zestimates on “Co-Conspirator Broker” listings, violating federal Antitrust laws.

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From our real estate section, The Real Daily:

The latest Zillow legal troubles again surround their Zestimates; this time they are being sued for their Zestimates violating federal Antitrust laws. The company has allegedly violated and continue to violate Section 1 of the Sherman Act, 15 U.S.C. § 1 and the New Jersey Antitrust Act, N.J.S.A. 56:9-3.

Plaintiff, EJ MGT LLC, based in New Jersey, filed suit again Zillow Group Inc. and Zillow Inc. today. In a 21-point legal brief outlining their specific violations, two things become immediately clear (assuming of course there is truth in these allegations): Zillow is giving preferential treatment to preferred brokerages (labeled ‘co-conspirator Broker[s] in the lawsuit) and Zestimates are wildly inaccurate (as many have adamantly stated since Zestimates’ conception).

The first few points of the brief explain exactly what Zillow is being accused of doing: “this antitrust action arises from Zillow’s conspiracy with certain real-estate brokerage companies to selectively conceal ‘Zestimates.’” Zillow’s estimate of a residential property’s “fair market value” which the lawsuit states they know “to be inaccurate,” have allowed “only select brokers to conceal the display of Zestimates on their listings to the exclusion of the general public.”

The lawsuit goes on to state that “these agreements between Zillow and certain co-conspirator brokers of residential real estate restrain trade (read: the agents/brokers being allowed to conceal unwanted Zestimates, henceforth referred to as ‘Co-conspirator Brokers’) and deprive Plaintiff and the public in general of the benefits of open and robust competition in two markets: the residential real estate market and the residential real estate brokerage market.”

In essence, Zillow and the Co-conspirators Brokers have made an illegal agreement regarding the display of Zestimates on Zillow’s site.

Zillow has long touted their Zestimates as a “user-friendly format to promote transparent real-estate markets and allow people to make informed decisions;” except Zestimates are often believed to be inaccurate and now they’re being concealed at the request of a select group of Co-conspirator Brokers – a far cry from making real estate more transparent.

If the lawsuit’s claims have any validity behind them, it seems as though Zillow may be in for a bumpy ride. Item 10 in the suit states, “Zillow has acknowledged that it conceals Zestimates as a result of agreements with only ‘certain brokers’ who receive ‘certain treatment’” and uses a message screenshotted from Zillow’s Help Center as proof these words were in fact used to explain why some listings had prominent Zestimates while others did not:

You may be wondering what brought about this lawsuit; it seems Plaintiff, EJ MGT LLC, owns and is marketing a property located in Cresskill, New Jersey, through an agent unaffiliated with Zillow (not a Co-Conspirator Broker). Therefore, their listing contains a prominently displayed Zestimate, while a similar listing in nearby Alpine, New Jersey, which is listed through a “Co-conspirator Broker,” conceals the Zestimate:

The above example is not the only one outlined in the case, however. Item 12 of the lawsuit states that further evidence can be seen by comparing a residence page for a property while it was listed with a Co-conspirator Broker versus the same residence page once the property was off the market. One clearly conceals the Zestimate, while the latter displays it clearly underneath the listing price.

For reference, the Co-conspirator Broker listing was screenshot on December 26, 2017 and the screenshot after it was taken off the market with the Zestimate was taken on January 2, 2018. Merely a week in between images, and yet the difference of how the ad is displayed is quite apparent:

In essence, Zillow has violated the very transparency they claimed to create.

Zillow is allegedly promoting misleading and inaccurate information while using their marketing power to charge brokers to hide this information which could negatively impact a sale, and which Zillow itself has acknowledged is sometimes inaccurate.

Also, general members of the public have no way to prevent Zillow from obtaining and posting information in this way, and it cannot be altered without hiring a Co-conspirator Broker, as Zillow has explicitly refused to offer the option to hide information to individual home owners, further deepening the dependency on Co-conspirator Brokers.

Because of their alleged refusal to treat everyone equally and “empower homebuyers with information,” they have potentially restrained trade in connection with the exchange of information regarding home valuation and offered anti-competitive benefits to only those brokers chosen to purchase that ‘special’ service package from Zillow that removes Zestimates from listings.

Therefore, brokers are not on even footing: when a seller attempts to price check; the brokers without it could be losing out to those who have the ‘special’ package and removal of Zestimates alongside listing prices.

So far, each individual Co-conspirator Broker has not been named; they have been named as a group: Sotheby’s International Realty, Inc., Coldwell Banker Real Estate LLC, Century 21 Real Estate LLC, The Corcoran Group ERA, and Weichert Realty, according to court documents. It is unlikely that any action would ever impact the brokerages, rather Zillow Group itself.

Zillow is being sued for five counts: two counts of conspiracy to restrain trade, one count of violating the New Jersey Consumer Fraud Act, one count of slander of title/product disparagement, and one count of interference with prospective economic advantage. A jury trial has been requested.

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