Retail CEO Replacement, Buffett Goes Big On Oil, Dollar Surpasses Euro

July 14, 2022
We’re moving through a great week as we talk about broader changes in retail leadership and why we should care. We also cover the reasoning behind Berkshire Hathaway’s push deeper into oil, the Dollar being worth more than the Euro for the first time in 20 years, and maybe a bonus story :)
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Top Retail CEOs are being replaced as the landscape is shifting

  • Gap, Bed Bath and Beyond, Dollar General, Under Armor, Home Depot (to name a few) are replacing their CEOs amidst a changing retail landscape
  • Some companies postponed succession plans during the pandemic however the changes are accelerating due to the necessity of specific skill sets
  • “The landscape of retailing changed during the Covid era,” said Craig Johnson, the president of consulting firm Customer Growth Partners. “The skills necessary for a CEO to succeed today are much broader.
  • Take away: Auto Dealers are retailers. There are peacetime generals and war time generals…strap up.

Buffet’s Berkshire going in big on US Oil

  • They have been ramping their position in Occidental Petroleum Corp since February and bought 12 million more shares over two days this month bringing their total stake to 18.7%. The largest shareholder in the company
  • Once they own 20%, they can report earnings on their P&L, until now, they can just report dividends
  • This confidence indicates a high value being placed on energy independence as Occidental is an exploratory company
  • Take away: EV batteries might be sexy, but oil still does the work. Buffett’s got an ok track record of seeing through the hype.

The Euro has fallen below the Dollar for the first time in 20 years

  • Growing concerns about energy independence amidst Russian aggression have led to devaluation of the Euro
  • Currencies tend to rise when the central bank raises interest rates
  • The dollar has also been strong in recent months, lifted as the US central bank raising interest rates, and investors seeking the safe haven of dollar assets in times of global turmoil
  • This makes imports based on the USD more expensive…like oil
  • Avg gas price from: 7.65 per gallon in Germany to 11.35 in Hong Kong
  • Take away: Yesterday’s average of 4.63 feels just slightly less stinging

Follow up on our story about subscription based car features

  • “Cox Automotive conducted a survey of 217 people who intend to buy a new car over the next two years. Only 25 percent said they’d be willing to pay a monthly or annual fee to unlock a feature in their vehicle. The remaining 75 percent said piss off.”

Paul Daly  00:21

If you if you've ever been to an auto conference, this is the one that started out if you're sick of auto conferences in general, or you just need something a little different. ASOTU CON is the place to be September 11, through 13th. We only have a limited number of tickets, and most of our events have sold out. So Exactly. We're just saying,

Kyle Mountsier  00:39

we're really excited. And we just hope that you'll join us because we want to craft something that is for the whole industry, not just for a substance

Paul Daly  00:47

store was total ASOTUCON.COM Get your tickets now that it's not a way to start out a Thursday. I don't know what is today, we have a lot of fun things to talk about big announcements on speakers. Also retail CEO replacement is hitting hard in the retail industry. And remember will retailers. Retailers.

Kyle Mountsier  01:08

Oh you retailers. You took that one, like threw it out there and then just took a big old grappling hook and ripped it just you pull forward. Just like that. Everyone was like

Paul Daly  01:22

yeah, let's get rid of Taylor's Oh, yeah, that thing that.

Kyle Mountsier  01:28

I don't think they were ready for that. Paul.

Paul Daly  01:30

I got well, I'm feeling extra spicy today because I had a full eight hours of sleep last night. Which is more than totals the sleep I've had in the previous two days. So I feel amazing. I'm living I'm living a good life this morning. The kids all slept the baby slept like we're

Kyle Mountsier  01:46

good. How you doing? Amazing. Amazing. Oh, we got a couple like we're gonna go quick on the announcements today on the on the you know, we do a little like, you know, we we both grew up in church. So we got to do our we got to do our youth pastor every once in a while. Right. Welcome, everybody. Welcome, everybody to the show today. We've got right, so no, we're really excited. The tickets are going quick. We want to make sure that if you are a part of our community, you snag your tickets. Now a few people have been asking us that like so we see the website, and we know that it's got a place. And we know that you there's a timeline and basic timeline, but what's actually going to happen? Well, we are gonna be there. Without a doubt. We're starting to drop that stuff fast and furious. So as the day goes on today, like you could probably check a sudo eight times and see different stuff every single time. So we're announcing speakers and collaborators and sessions and topics and timelines and all that stuff over the next 48 hours is just gonna get blown up on the website. So pay attention. Watch what we've got going on. Paul, tell him about a couple of the people that we've got come in, we're really excited. My gosh. So

Paul Daly  03:01

these are the people if you go to a soda Right now you're going to see some OGS and some new faces. But right now on the site we told you earlier in the week, Jim McKelvey, we're so excited to be our featured speaker, New York Times bestselling author of the innovation second co founder of a little company that's been a little successful, called square. Right, the little payment thing, he founded that company with Jack Dorsey, the CEO of Twitter, a former CEO of Twitter, and it's now called Black he's going to be there, we're gonna have Claude Silver Chief Heart Officer of Vayner. X, she is going to be amazing Darren don't epic music video producer and brand builders got over a billion with a B views on his music videos. Who else is on the screen right now I've just I don't even know I don't have it up in front of me, Brian

Kyle Mountsier  03:41

Benstock. And you better believe more some fire President mixing a

Paul Daly  03:46

little. mixing a little Benstock in with those other people we just mentioned is going to be insanely cool. It's gonna be like a chemical reaction really,

Kyle Mountsier  03:54

really cool. Dr. Nicole Lipkon, we're really excited about her coming, because she's going to set the tone with how to on how to approach some of the thoughts and processes and ideas that you might that you might come across during the conference. So that's going to be a really cool, like opening session to do.

Paul Daly  04:13

She was actually the very first speaker we had on the very first live stream, because

Kyle Mountsier  04:19

she's perfect because I think I think, you know, she is she really understands like the psychology of being in business being even just a person, right? And an approaching business with a site with psychology mindset. And so when you think about just introducing any level of topics in whatever market, whatever's happening in the world, like approaching both with a level mindset, and understanding what you're heading into is really important. So I think back early pandemic, super timely, right, launching a new conference with a whole different way to approach the topic of retail. really timely, so, man, that's gonna be one anymore. I'm gonna be like popcorn at the front row on that one, I think so the

Paul Daly  05:02

coolest thing is gonna be the conversations that happen around these things. And I know we can like we're bringing a lot from outside automotive in. But don't get don't get us wrong, we have a whole list of who's who in retail auto from OEM level all the way through store operators. And I'm excited because I think this is the event where everyone might just snap their head sideways and be like, Oh, these boys are serious about it. So we're excited to release those things today. If you're not on, if you're not following us on LinkedIn, a soda con or a soda as ot you on LinkedIn, we're really going to be releasing a lot of like speaker announcements and all types of things. On Instagram, we have a Soto auto say the Union, we also have an Instagram account just for the event, which is us at a soda con. So we don't have a lot of content up there yet. But if you're going you want to be on that Instagram account. Or if you really wish you could go and you just want to follow tight along to what's going on. Follow us Otakon on Instagram, one more announcement and getting into the news tomorrow. We have our always anticipated Friday, all things use car room with David Long. And we got Steve Greenfield on the show, which is where we talking about the future of automotive retail. That's something to talk about these days. I know it's kind of a generic topic, right? You hear it around. But don't be fooled. We're gonna have 150 dealers and operators in the room that are going to really be talking about legitimate what is going on now. How can you change in your stores? What are the best dealers doing now? And Steve Greenfield is gonna give us a peek over the horizon. I have a feeling.

Kyle Mountsier  06:34

Yeah. And he never misses. I'm telling you what if you saw him on the podcast with us, what was it last week or earlier this week? Last week? He just Yeah, last week. He's just dialed in and level headed. So excited about that conversation and that pinging around the room. All right, let's

Paul Daly  06:49

talk about some news. Wall Street Journal exclusive article this morning, top retail CEOs are being replaced as the retail landscape is shifting. So let's give you the premises this as the situation retail is changing a new type of CEO needs to be at the helm. So little companies you may have heard of like gap Bed Bath and Beyond Dollar General Under Armour Home Depot, are replacing CEOs amidst that changing landscape. You know, some of those companies postponed postponed replacing CEOs during the the pandemic right? It makes sense, right? Things are going crazy. We don't need any more change. But all this is kind of coming to pass now. So I'm gonna give you a quote from the article. The landscape of retailing changed during the COVID , Craig Johnson, the president of consulting firm, consumer Growth Partners, the skills necessary to succeed today are much broader. So

Kyle Mountsier  07:41

are a little bit about the broad skills, though, because that's what that's the question on everyone's mind, what what are these broad skills that maybe someone in the past didn't need?

Paul Daly  07:51

Okay, so in the past to be retailer, like CEOs needed good indistinct to merchandise, right, a great merchant made a great CEO of a retail company. And sometimes another skill set would be just someone that understood trends, and fashion and style, and like what people are really attracted to, and that was enough to make you a great CEO of a retail company. But now, as we know, in the automotive industry, because we are retailers, is that data, technology, sustainability, right? All of these things have become a core part of operating a good retail business, right supply, constraints, understanding, manufacturing, these are all things that are changing. So it makes a lot of sense that the leader necessary to lead these companies you're changing, right, and you're backing, go ahead when

Kyle Mountsier  08:42

I start to hear that, and maybe we aren't seeing that, particularly in the auto industry and like GMs and CEOs and things like that, because there's still that grit that you kind of need. But where I saw this happening already in auto, especially over the last like seven to eight years. You know, it really probably started in the late 2000s or early 2000 10s. But really, in the last seven to eight years is this shift in the used car manager, right? Yeah, typically, the used car manager was the guy that a guy or gal that had been in auto the longest right? knew all the cars backwards and forwards, carried the black book in their back pocket was the

Paul Daly  09:18

only look got it down the body panel and be like, Oh, this car looks really great. It just got a good stance to it. Yeah,

Kyle Mountsier  09:24

but it's interesting because now a lot of used car managers are actually not even they're not they're not writing deals or anything like that. They are almost there. They're leaning data scientist, right. I think of just even the people that are appraising vehicles, right? Is people different understand market dynamics, understand inventory levels, and what inventory plays works best, you know, at you know, sale rates and market day supply and all that type of stuff and, and, you know, at least the stores that I came from, like they went out with OBD twos scanners and paints, you know, paint that many parameters. Yeah, yeah. All of that type of stuff. And then the technology like, I mean, I know that, you know, technologies like VinCue and Accu trade are serving up all of this historic Adeptus historical data in that appraisal screen to give you a real clear picture of like, what might need to be done in service or what has been done in service or all that type of stuff. So that is a whole different role than like, that want to look good on the frontline boss, right? Yeah, with 25, eight on it, and we'll see if it goes, you know, why does Why is there like a weird, it's got to be a cigar. I

Paul Daly  10:38

don't know, because it's old school car business that works. I mean, look, we saw an instance this week, of a 19 year old, with four curved monitors in front of him by 156 vehicles, right at 19, from behind a computer screen,

Kyle  10:53

not from the auction, but like some from the auction, but primarily from customers and local, you know, local purchases and stuff like that. But literally, I mean, we're talking like, when we say curved monitors, we're saying these things are like, like 31 vendors, they're like the monitor equals a 52 inch. I mean, it's unbelievable, it's on.

Paul Daly  11:15

It's like the monitor that people most people buy to replace two monitors on their desk. Alright, for those. It was awesome. All right, we digress. But the bottom line is this is that the skill sets needed. And many of you in this community know this already, the skill sets needed to be a leader, to be a CEO, a GM sales manager today is a different skill set than it was needed 10 years ago, and will be a different skill set very much like in three years from now. And five years from now. So if we're not moving forward, right, if we're not learning, we're not going to be expanding, right, we're going to fall behind because retail is a great indicator. Automotive should be paying attention to broader retail, which is why we include these stories, because they give us indicators of what we should be paying attention to, like there are peacetime generals. And there are wartime generals, and in the auto industry, like we need those wartime generals, and speaking of wartime generals. Okay, you know, his demeanor, his demeanor of may not communicate this if you just had a conversation with him, but Warren Buffett understands what it is to lead in times of uncertainty. In fact, I think that he always comes out ahead when there are times of uncertainty. And Berkshire Hathaway, his company is betting big on oil. They've been ramping up their position in Occidental Petroleum Corp since February. And now they're up to almost 20% ownership in the company, Occidental, they do oil exploration and drilling. And, you know, once they own 20% of the company, they can actually start reporting earnings on their p&l. So there's like a little bit of a dual reason for this one is so that now they can, you know, partake in the good earnings of the oil company. But, you know, the confidence in the future of oil from Warren Buffett, the wartime general who's historically very right on just about everything. He's saying, Oh, no, this is a really big important part of our future. In the midst of all this EV talk, he says, quote, war quote, The Great Mr. Buffett, he says, We should be very happy that we can produce 11 million barrels a day or something of the sort in the United States rather than being able to produce none. And having to find 11 million barrels a day still somewhere else in the world to take care of keeping the American industrial machine

Kyle Mountsier  13:27

working. This is this is so key, because when you think like everybody's talking Evie future and we're talking about vehicles, and I mean, I was reading another article where pollster is has already met their sales record or last year, or last year, right. The current year. We're talking about I think it was like 25,000 vehicles sold. Right? Nobody's like taking over gas with this Evie future now all the manufacturers are going there. But that's just that's honestly like this much segment of how much you think

Paul Daly  14:07

of millions and millions millions industrial, all farming, that stuff isn't

Kyle Mountsier  14:12

going electric. Right. So yeah, that that it's Unbelievable there's so much more out there that still uses oil as an energy source. I mean, even like Texas, basically saying we don't have enough wind to get the turbines going so that we have a natural enough tower to turn an air

Paul Daly  14:35

conditioner on. Unbelievable. Yeah, yeah. Look, Evie batteries. You know very sexy these days. But let's face it, oil does the work, right. Oil still doing the work? Alright, let's go I don't know where we're gonna go. Hey, like vegan

Kyle Mountsier  14:49

of doing the work. Segway. The dollar has just been fighting for 20 years. Just trying to just the dollar like the American dollar has been putting in the well, it's not good. I didn't. That was

Paul Daly  15:06

I was trying, I was wondering where you're going with that. But it was it was I was, it was a fair trade, like you really lead with enthusiasm. So I think we've got that far. But the Euro has fallen below the US dollar for the first time in 20 years. And almost the first time ever, there was a little initial blip in the beginning where it wasn't, or we could say for the first time period, but I remember when the Euro came out, and it was like two euros to every $1. And so the Euro now ranked, I think yesterday at point nine, eight cents on the dollar. So growing concerns about energy independence, amidst the Russian aggression, and all that stuff that's going on, have actually created a lot of tension. And the Euro has been dropping. Also, the European Central Bank has not acted to raise interest rates to curb inflation and uncertainty, therefore, that currency is dropping value in the global sense, especially when it comes to things benchmarked on the US dollar like oil, right? So as far as there's your segue, benchmarked on the US dollar. So meaning anything that is important, including oil or benchmark on the dollar is getting much more expensive. And I had to put this in here, because it just made me feel a little bit better about the price I just paid for guests yesterday morning. So in Europe, you can pay here's the range $7.35 A gallon in Germany. Now in Europe, they charge by liter, but we did the math. $7.65 per gallon in Germany, to $11.35 a gallon in Hong Kong, Norway was right under Hong Kong and a few things. So, you know, I didn't feel too bad took a little bit of the sting out of 435. Right? I mean, European gas is always responsive, but

Kyle Mountsier  16:46

I'm not gonna lie. This might make you mad. I got gas for 389 this week. I know. I don't know how that happened. It was magical 389 a gallon.

Paul Daly  16:56

How did that happen? Because you're in town? I

Kyle Mountsier  16:58

don't know. There's two spots near me that are both like 389 and 393, or something like that most days in that 430s 440s range. But I was like, I felt victorious. Right? I would I'm like driving around my car like I did.

Paul Daly  17:14

It's amazing how the perspective shifts, right. 3d 3d would have been like, mind blowing, mind blowing. But I think this is really something that we can look at, like you look at what our Fed is doing with interest rates of how to try to curb inflation, all the uncertainty and just broadening out the perspective a little bit and realizing like, okay, there are things at play, that are shifting that are moving. And it is kind of a volatile market, but to realize, you know, the rest of the world is dealing with it, too.

Kyle Mountsier  17:39

My perspective is up, though, because we reported just a few weeks ago that the average price in the US was had climbed over $5 We're down almost 40 cents. Yeah, I mean, oil. Oil has a really, really close relationship with our overall with our overall economy. So, you know, my perspective is really strong right now. On the Yes,

Paul Daly  18:02

feeling good this morning. Yeah, wait till tomorrow. I don't know. Do you read the news tomorrow? I don't know. Like these days. We also included one little bonus story today because yesterday, we talked about, you know, a story we had been like behind on about BMW announcing their subscription based heated seats, and saw an article this morning wanted to share it. Uh, but just so you know, the articles we referenced are always in the show notes. So you can go back and link to them, especially on the podcast. If you're listening to the podcasts on any platform, you can hyperlink through the articles. And this one, you really should because I thought it was a great article written on the verge, which is definitely a retail facing mentality. So I like to read it. But so Cox automotive conducted a study of 217 people who intend to buy a new car and they said, Hey, who's who would be into subscription based services and features, and only 25% said they'd be willing to pay a monthly annual fee. And the remaining 75% said, in the verges voice, not ours. Yeah.

Kyle Mountsier  18:59

This is the first thing. This was not the this was not the checkbox in the code, I feel. Yeah.

Paul Daly  19:07

But the other 75% said, first off, gotta have a British accent. This off, right. So automakers are sure that consumers will get used to this. But a guy named Sam not going to pronounce his last name on the show Principal Analyst at guidehouse. Insight said automakers are sure that customers will get used to it, but he is skeptical, it will fly. And he also said look unless automakers lower the purchase price of new vehicles to offset subscriptions customers aren't likely to afford the nickel and diming. So I liked that way of putting it nickel and diming. We talked about affordability nonstop, right over the last six months. And then unless that purchase price is going down, which I don't see that happening, right. Like I think automakers are like the subscription things will be plus plus plus. Right out of that. Yeah. And so it sounds like a great day. Sounds like a great thing to say, as a CEO to your shareholders, and say we're gonna hit $2 billion in subscription services, all that stuff sounds awesome. People like that are invested in your company. And I'm gonna clap, but I don't think the retail public is going to be

Kyle Mountsier  20:12

quiet. I think the problem that we're seeing, especially with the heated seat thing with BMW, is they're talking about hard. They're right now they're selling on hard elements, right? Not soft elements, right? And what most people do when they're purchasing on a subscription is soft elements of their experience, right? Yeah. Whether that be, you know, the GrubHub subscription, or the Netflix subscription, it's not hard usability. Does that make sense? Hi, no, it

Paul Daly  20:44

totally makes sense

Kyle Mountsier  20:45

transition in that frame of mind in your subscription service, you don't typically go to, you know, I'm trying

Paul Daly  20:51

to think of somewhere else where you do that, where there's like, a feature that you know, is like, like, half a centimeter under your seat, like, the heating elements are there, like, give buttons here and it's not working? Right. It's like really frustrating. It just gives me a feeling of frustration. Just knowing I can't do it. Like, I got upset. You know, I've been preaching about this, like, I have a Kia Telluride. And I was so upset when I realized, like, after the one year, like I had to pay to get the auto start to work. And I was also said that it just wasn't

Kyle Mountsier  21:21

on the line. But something like Tesla's doing, which is upgrading horsepower. Yeah, that's, that's a that's a soft element that is an elevated luxury from what you would typically expect. And so I think that a lot of automakers have to have to figure that that matrix out for sure.

Paul Daly  21:39

Yeah, there's no doubt it's just it's unnatural to a retail consumer. It's just unnatural. So there's that hurdle to Well, thanks for hanging with us today. Obviously, we have a lot of work to do. We're going to build a sort of common website, find more news sources, bring more stuff to you, broaden your perspective, all in a day's work. Go out there. It's Thursday. We got some runway to go we'll take off.