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Retail Rundown: Prime Sales, Starbucks Closures & Grill Maker Feels the Heat

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An Amazon Prime delivery van drives to Amazon.com Inc. delivery hub in the late evening of Amazon Prime Day, July 12, 2022 in Culver City, California. - What started as a one-day-only event for shopping deals in 2015 has since morphed into a 48-hour event for Amazon Prime members. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Retail Rundown is Cheddar's check of the biggest stories impacting what we buy, how we buy, and who's selling what 
It's still Prime Day in America, and Amazon is rolling out the deals. The two-day sales event, which started on Tuesday, is big business for the e-commerce giant — and for online retailers in general. The event helped drive more than $11 billion in online sales over two days in 2021, according to Adobe Analytics, and is expected to deliver another strong year.  FTI Consulting forecasts that online sales will hit the trillion dollar milestone in the third quarter. That's double the amount from just four years ago. 
Yet shoppers should be wary about spending just because it's Prime Day. Smart shopping expert Trae Bodge told Cheddar News that not all deals are created equally, and shoppers should be on the lookout for the really deep discounts. She also noted that consumers should be mindful of other retailers' offerings, as major competitors such as Walmart and Target are increasingly pushing deals on Prime Day(s). 
Yet all the discounts in the country are likely not enough to make up for higher prices. The latest consumer price index dropped Wednesday, and it showed another round of red-hot inflation. Overall, prices rose 1.3 percent in June and 9.1 percent year-over-year. Higher energy prices continued to be the show-stopper, contributing nearly half of the monthly increase on their own. Energy prices overall rose 7.5 percent, compared to 3.9 percent in June, while energy commodities rose 10.4 percent, and gasoline specifically rose 11.2 percent. 

STOREFRONT

Meanwhile, in brick-and-mortar land, Starbucks is having a decidedly less-than-stellar week. The coffee chain is permanently closing 16 cafes in Seattle, Los Angeles, Portland, Philadelphia, and Washington, DC, due to safety concerns around drug use and crime. The company said it got wind of the behavior from employee reports and noted that all staff members will be relocated to new locations after the closures. Of note, two of the locations were unionized and one is in the process of trying to unionize.

CONSUMER PROTECTION

The right-to-repair movement just got some back-up from Uncle Sam. The Federal Trade Commission has ordered grill maker Weber-Stephen Products to change its warranty so that it recognizes the ability of customers to use third-party parts to make repairs. The agency has pursued similar actions in recent weeks, as the Biden administration puts its weight behind stopping companies from restricting repairs. 
“This is the FTC’s third right-to-repair lawsuit in as many weeks,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Companies that use their warranties to illegally restrict consumers’ right to repair should fix them now.”
The FTC invoked the Magnuson Moss Warranty Act, which prohibits companies from offering warranties that limits how consumers can repair their items. Another recent action targeted motorcycle manufacturer Harley Davidson's warranty policy. 

BUSINESS OF RETAIL

While even mega-corporations are struggling to figure out how best to deal with inflation, the snack and beverage giant PepsiCo has a plan to manage higher costs. After reporting its second-quarter earnings, the company said it would shrink the size of some products and raise prices as needed. Overall, PepsiCo is raising its revenue forecast for the coming quarter — though performance varies across its different product areas. Its snack and beverage units, for instance, saw shrinking volume, but rising revenue (i.e. higher prices were behind the bump, rather than increased demand), while Quaker Foods North America, known for its oatmeal, saw both rise.  
In other corporate boardrooms, the Frontier/Spirit/JetBlue saga continues. Frontier Airlines said on Monday that it lacks the shareholder votes to move ahead with its planned merger with Spirit, while Frontier CEO Barry Biffle said the current bid is its “last, best and final" offer. This lowers the chances that the discount carriers will come together, and bodes well for JetBlue, which has proven determined in trying to gobble up the smaller airline, despite concerns that regulators could knock it down.    
Peloton is also on the cusp of some big changes. The fitness company announced this week that it's getting out of manufacturing its smart workout bikes, expanding its relationship with the third-party, Taiwanese-based Rexon Industrial Corp. Rexon will take the lead in hardware production from Peloton's in-house manufacturing, which was once a point of pride for the upstart firm. The company said the planned outsourcing was part of a "natural progression." As recently as last year it was investing heavily in building out its U.S. manufacturing facilities, but in Q1 this year it announced layoffs, a pause on manufacturing, and scrapped plans for a $400 million production facility in Ohio.
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