Discover more from The 21 Hats Morning Report
Can Impulse Buys Work Online?
Companies that make candy and snack bars are looking for answers.
Today’s highlights: The Biden administration makes it harder to hire contractors. The shortage of factory workers is expected to last. And if you adopt a hybrid model, should your employees get a raise?
The pandemic has been tough on impulse buys: “Standing in line to pay at a grocery store, you’re in an optimized selling environment, carefully fashioned by marketers and retailers. That’s where the pushers put the ‘impulse buys’: gum, mints, chocolate bars, gummy bears, sodas, snack bars. They’re the kinds of products that, when you walk into the store, you’re not planning to buy. But stand in line for a few minutes and you feel that familiar twinge of want. Suddenly, you’re heading out with a few sticks of spearmint gum and a Baby Ruth. But over the past year, fewer people have been standing in line to pay at the grocery store—or anywhere, really.”
“North American sales of gum fell 14 percent by volume last year, and mints by 15 percent, compared with 2019.”
“Hershey is experimenting with an Add a Hershey’s button at the end of the ordering experience. “
“Some have paid for promotions that, for example, tell shoppers they're just a few dollars away from free delivery—would they like to add a bag of chips or a pack of gum?” READ MORE
The lumber shortage means new homes will cost an additional $36,000: “As the pandemic crushed the US economy last spring, sawmills shut down lumber production to brace for a housing slump. The slump never arrived and now there isn't enough lumber to feed the red-hot housing market. The shortage is delaying construction of badly needed new homes, complicating renovations of existing ones and causing sticker shock for buyers in what was already a scorching market. Random-length lumber futures hit a record high of $1,615 on Tuesday, a staggering sevenfold gain from the low in early April 2020.”
“‘I've never seen anything quite like this,’ said Brant Chesson, the president and CEO of Homes By Dickerson, a Raleigh, North Carolina-based home builder.”
“Chesson said his company would love to build more homes to meet surging demand but currently it can't find the materials, or labor, to do so.”
“‘While lumber prices have gone up, we have been able to pass it on to the consumer with higher prices for homes,’ Jeffrey Mezger, the CEO of KB Home, told CNN Business. ‘And there is still far more demand than there is supply.’” READ MORE
With tourists returning and businesses recovering, California expects a boom: “Los Angeles County is seeing new signs of a resurgent economy, with plummeting coronavirus cases allowing for a faster-than-expected reopening of bars and expanded capacity for restaurants and other businesses. In progressing Tuesday to the least restrictive yellow tier of California’s color-coded reopening system, the nation’s most populous county can now unshackle its economy to the widest extent possible, sparking hope for significant recovery in sectors long battered by the pandemic.”
“A swath of businesses and venues — including restaurants, gyms, movie theaters, amusement parks, stadiums and museums — will be able to operate at higher capacity starting later this week. Indoor bars will be able to reopen without being required to serve food.”
“California now has the lowest coronavirus case rate of any state and, if the growing crowds in business districts, malls and restaurants are any indication, residents long locked down are feeling safer about going out.” READ MORE
If you adopt a hybrid model, should your employees get a raise? “Say that you own OK Concepts Incorporated, a business employing 250 people. Everyone does nearly all their work sitting at desks and tables, and until a year ago they (and you) did that in the expensive office space you lease downtown, three floors of a building. Since then, they and you have all worked exclusively from home. It hasn’t been ideal, but everybody adapted, and there were some silver linings. Happily, the company’s revenues and profits have been steady. You’re planning to open up the offices again this summer. ... So you’ve decided that from now on you’ll be hybrid — people splitting their time about half and half, on average, between their homes and the office.”
“And because you therefore won’t need all of your 60,000 square feet of space, you’re going to sublease one of your three floors to another firm, saving your business $1 million a year.”
“You could pocket that, increasing your annual profit ...”
“Or you could decide, because your employees are now effectively paying for much of their own office space by working from home, that it’s only fair to share a large chunk of the savings with them.” READ MORE
The Biden administration is blocking a Trump rule that would have made it easier to hire gig workers: “The Labor Department said Wednesday it is nullifying a rule it completed in early January that sought to make it more difficult for a gig worker, such as an Uber or DoorDash driver, and other workers to be counted as an employee under federal law. Having status as an employee, rather than a contractor, means those workers are covered by federal minimum-wage and overtime laws. Jessica Looman, principal deputy administrator for the Labor Department’s Wage and Hour Division, said the Trump rule would have narrowed which workers were counted as employees across the economy, not only gig workers, allowing more employees to be classified as contractors.”
“The department recently took action against a restaurant classifying its dishwashers as contractors and found 70 home-health aides who were misclassified as contractors, Ms. Looman added.”
“She said the department will look for opportunities to enforce existing laws, especially as they apply to lower-wage workers.” READ MORE
American factories are desperate for workers and that’s not going to change any time soon: “Demand for goods is skyrocketing as the U.S. economy reopens from the pandemic. But there's a big problem: American factories can't find enough people to do the work. Even though U.S. manufacturing activity surged to a 37-year high in March, the industry has more than half a million job openings. Factories are struggling to find skilled workers for specialized roles such as welders and machinists. Manufacturers are even having trouble hiring entry-level positions that do not require expertise. The talent shortage is not new — but it's getting worse and could have far-reaching consequences beyond the manufacturing industry itself.”
“As many as 2.1 million manufacturing jobs will be unfilled through 2030, according to a study published Tuesday by Deloitte and The Manufacturing Institute.”
“The report warns the worker shortage will hurt revenue, production and could ultimately cost the U.S. economy up to $1 trillion by 2030.” READ MORE
Adults are rushing to straighten their teeth while working from home and masks still provide cover: “Both a pandemic—and its possible end—are ripe conditions for driving scores of adults back into the orthodontist’s chair, it turns out. For many people working remotely, video meetings have become opportunities to parse their cosmetic shortcomings on screen, real or perceived. And having to wear a mask in many public places can render even full-on braces a secret. “
“Align Technology, which makes Invisalign clear aligners, says the number of adults starting treatment in the first quarter jumped 69 percent from a year earlier, as its revenues climbed 60 percent.”
“The company recommends wearing the devices—which fit over the teeth—20 to 22 hours a day to get the best results.” READ MORE
Republic, a crowdfunding platform, lets small investors buy small pieces of startups: “Republic’s model resembles that of the popular entrepreneurial crowdfunding site Kickstarter, but instead of buying a product on spec, users are scooping up a very small share of a company itself. (Republic takes about a 6 percent cut of each investment on its site.) Each company on Republic builds out a pitch page that reveals current financial reports and a future growth plan and includes customer testimonials.”
“Season Three is just the fourth footwear company to be opened up for equity crowdfunding on Republic, the most successful of which was Glyph, a knit-loafer brand that raised $135,190 from 353 investors in late 2020.”
“Since opening the fundraising round in mid April, Season Three has raised $40,220 via 83 investors. The minimum investment for Season Three is $100, a tiny piece of the company, which is valued on Republic at $6,000,000.” READ MORE
THE 21 HATS PODCAST
Episode 60: Did It Have to Get Crazy at Basecamp? This week, Jay Goltz, William Vanderbloemen, and Dana White discuss whether Jason Fried, the embattled co-founder and CEO of Basecamp, has displayed courageous leadership or lost his you-know-what.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren