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A Big Jobs Report
Today’s Highlights: Stephanie Stuckey finds a lost Stuckey’s. A smart suggestion about Dana White’s expansion plans. And how a maker of office apparel is surviving.
Stephanie Stuckey, above, discovered an old Stuckey’s this week off I-10 in Arizona.
THE 21 HATS PODCAST
In our latest episode, Stephanie Stuckey explains her team’s recent three-hour marketing debate: Should Stuckey’s sell the road trip or the pecan? (She’s currently on a road trip herself.) Meanwhile, should Dana expand into Chicago, New York, or Atlanta? And is Clubhouse, the new social media platform, just a time suck, or does it offer real value to business owners?
The current episode brought an interesting response from John Stiles, a lifelong retailer whose company, Underground Clothing, is based in Rocky View, Alberta: “The subject of the expansion plans for Paralee Boyd were interesting. I was surprised that a question that wasn’t asked was how expansion outside of the Detroit area would provide operating synergies to her existing location(s). It would seem logical to me that building out Detroit would allow her management team to focus on a single geographic area. Things become much more complex when your operations are spread out over multiple cities and possibly time zones. Sticking to one market and having better marketing and operational synergies would make things easier to run and probably more profitable. The next step after building a solid base in Detroit would be to step out into new markets.”
You can hear Dana’s response to John’s suggestion when we publish the next episode Tuesday.
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THE COVID ECONOMY
The U.S. just added more jobs than economists expected: “Employers added 379,000 jobs in February, adding fuel to renewed growth as the pandemic eases. The unemployment rate edged down to 6.2 percent. Economists had expected U.S. employers to add a seasonally adjusted 210,000 jobs in February and the unemployment rate to hold at 6.3 percent, according to a Wall Street Journal survey.”
For grocers, especially smaller ones, this year will be harder than 2020: “Overall, grocery sales grew 11 percent last year but will drop 5 percent this year, UBS analyst Michael Lasser estimated in a January research report. That would be the first annual decline in 20 years, he noted. Such a drop will force changes across the industry, analysts predict. In particular, independent and smaller chains got a boost from Covid-19 shopping changes, but store closures may be on the horizon for them once that trend ends.”
“‘Smaller, less differentiated retailers remain at a disadvantage compared to retailers with scale and greater buying power,’ such as Walmart, Costco and Aldi, Lasser said. ‘They also have fewer resources to invest in their online offerings.’” READ MORE
Small Business Majority, an advocacy group, is calling on the SBA to reopen PPP for self-employed businesses: “Today, Small Business Majority submitted a letter calling on the Small Business Administration to reopen the Paycheck Protection Program for all self-employed individuals and sole proprietors who previously received PPP loan funds based on their net profits. PPP loans were originally calculated using net profits, which resulted in very low amounts after accounting for business deductions. While the Administration’s changes to the loan calculation based on gross income is a critical step forward, it does not benefit the businesses who already took out PPP loans under the previous rules.” READ THE LETTER
Before the pandemic, Ministry of Supply, a startup, was doing well: “Ministry of Supply is one of millions of small businesses that were blindsided by the pandemic, though it was hit especially hard as a company that sold work clothing at a time when almost everyone stopped going to the office. What it has faced in the past year mirrors the existential questions that retailers nationwide have been dealing with: How do you plan during a pandemic for a business that typically orders products six months in advance? What do you do when your merchandise becomes virtually irrelevant overnight and your stores become ghost towns? And how long can you survive in these conditions?”
The company edited items that were already in production, inserting elastic waistbands where there were once stitched waists and tapering hems on suit pants to give them ‘sneaker cuts,’ while pausing orders of suits, blazers and dress shirts.”
“Ministry of Supply also started selling some products on Amazon in January, which [a retail analyst] said could be a sign of ‘desperate times.’ Digitally native brands typically want to control their customer data and shopping experience.” READ MORE
Dinette Wilder’s manufacturing company exemplifies the existential threat faced by Black-owned businesses: “Of all the products made at Danette Wilder’s small manufacturing plant near the University of Kentucky in Lexington, the products she depended on most for sales were the O-rings cranked out by her vintage presses. Each month, Wilder’s crew of six people, working at long tables as they listened to a soundtrack of funk and R&B, made thousands of the rubber loops, cut from spools into precise strips and spliced into uniform perfect circles. The work distinguished Wilder’s company, SealingLife Technology, as one of the vanishingly few rubber products suppliers owned by a female engineer — not to mention one who is also Black. It hasn’t been an easy path ... But eventually, Wilder built SealingLife into a reliable vendor for all manner of aerospace, medical and other industrial businesses.”
“Now, SealingLife is struggling to survive as orders for its O-rings have dried up over the past year, plunging the company into hundreds of thousands of dollars in debt.”
“Wilder faces obstacles that are disproportionately common among Black-owned companies, which on average had fewer resources to draw upon going into last year, were hit particularly hard by the downturn and were less well-served by the relief programs set up to help.”
“‘We’re in a purgatory state,’ Wilder said. ‘The long term is, if we can’t get our foot in the door with people who understand what we do and how we do it and provide us opportunities to grow, then the outcome is very bleak.’” READ MORE
THE MORNING REPORT PODCAST
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OSHA has left workers vulnerable to Covid throughout the pandemic: “Instead of thoroughly investigating complaints of unsafe practices at workplaces, the federal agency and state OSHA agencies it oversees often took limited steps, OSHA records and state health data show, leaving workers more vulnerable to workplace outbreaks. When Kentucky warehouse employees complained that masks weren’t being worn at their site, when a group representing Illinois packaging workers asked if OSHA would enforce social distancing and when workers at a poultry plant said it wasn’t responding to a disease outbreak, the federal agency or a state counterpart took little action as infections at the sites increased, according to interviews, OSHA documents and health department records.”
“The Wall Street Journal identified more than 1,000 worker deaths from Covid-19 that circumstances suggest were linked to workplace transmission of the virus but that were never investigated by an OSHA agency, as of early February. Many hadn’t been reported by employers.”
“The difficulty of determining when a Covid-19 death should be deemed work-related was one of the challenges facing OSHA during the pandemic.” READ MORE
When Amazon raises wages, local companies do the same: “In the areas where Amazon operates, though, low-wage workers at other businesses have seen significant wage growth since 2018, beyond what they otherwise might have expected, and not because of new minimum-wage laws. The gains are a direct result of Amazon’s corporate decision to increase starting pay to $15 an hour three years ago, which appears to have lifted pay for low-wage workers in other local companies as well, according to new research from economists at the University of California, Berkeley, and Brandeis University. The findings have broad implications for the battle over the federal minimum wage, which has stayed at $7.25 an hour for more than a decade, and which Democrats are trying to raise to $15 by 2025.”
“For one, the research illustrates how difficult it can be for low-wage workers to command higher pay in the modern American economy — until a powerful outside actor, like a large employer or a government, intervenes.”
“Most directly, there is little evidence in the paper that raising the minimum wage would lead to significant job loss, even in low-cost rural areas, a finding consistent with several recent studies.”
“Other research, including a recent report from the Congressional Budget Office, has found a larger negative effect on jobs, although still smaller than many economists believed in the past.” READ MORE
Assessing the impact on advertisers of Google’s bombshell decision to stop tracking personal users: “Google's move is expected to significantly push advertisers toward contextual-based targeting that zaps ads at groups of people based on their behavior, demographics, and interests. The search giant has an alternative to third-party cookies it calls FLoC (short for federated learning of cohorts), which are audiences of people who share traits like an interest in buying cars or red dresses. Google says these cohorts are 95 percent as effective as third-party cookies in driving conversions for advertisers. But several advertisers said it was unclear how much they would be able to mix in first-party data and other types of data that they use, like Nielsen panel data with Google's data.”
“Madan Bharadwaj, the chief technology officer of Measured, said cohorts had big implications for adtech companies that have long pitched aggregated publisher audiences.”
“According to experts, the bottom line is: Google's move will likely make its already massive ad business more powerful, and brands will need to prioritize collecting information directly from people, such as email addresses and shopping data.” READ MORE
THE 21 HATS CONVERSATION
Will restaurants ever be the same? Should they? On Tuesday at 3 ET, I’ll host a webinar conversation on the future of restaurants. Even in good times, restaurants are a tough business. Margins are thin, and the pay structure is challenging at best. And these have not been good times. Is this an opportunity to re-think the business model? The conversation will feature Ari Weinzweig of Zingerman's in Ann Arbor, Michigan; Brian Canlis of Canlis in Seattle; and Carol Downs who founded and ran Bella Luna & the Milky Way for more than 25 years in Boston -- until the pandemic forced it to close permanently.”