Christmas in September
With retailers and consumers acutely aware that the supply-chain snafus won’t end any time soon, holiday shopping season has already begun.
Here are today’s highlights:
The market, not the government, has delivered a $15-an-hour wage.
Gene Marks tells his clients to shut up.
Are you ready for a taco subscription?
THE COVID ECONOMY
Retail sales take an unexpected leap: “The value of overall retail purchases climbed 0.7 percent last month following a downwardly revised 1.8 percent decrease in July, Commerce Department figures showed Thursday. Excluding autos, sales advanced 1.8 percent in August, the largest gain in five months. The median estimate in a Bloomberg survey of economists called for a 0.7 percent decline in overall retail sales, with forecasts ranging from a 3.3 percent drop to a 1.1 percent gain.” READ MORE
And expectations for the holiday season remain strong: “New forecasts from Deloitte, Bain & Company and Mastercard predict a huge sales boom in the coming months, the most important time of the year for retailers. Deloitte estimates that holiday sales will increase between 7 percent and 9 percent in 2021 as vaccinations help shoppers feel more comfortable venturing out to spend some of the cash they've been hoarding.”
“‘A steady decline in the savings rate to pre-pandemic levels will support consumer spending and keep retail sales elevated this season,’ said Daniel Bachman, Deloitte's U.S. economic forecaster. ‘Further, e-commerce sales will continue to grow as consumers demonstrate an ongoing and steady movement toward buying online across all categories.’”
“The consulting firm expects online sales to jump between 11 percent and 15 percent year-over-year, reaching up to $218 billion.” READ MORE
Actually, the holiday shopping season has already begun: “The owner of the Velvet Goose gift shop in the Central Massachusetts town of Gardner, [Patti] Bergstrom placed most of her holiday orders for items like etched glasses and paper goods in January, far earlier than usual to avoid getting caught short by pandemic-induced shipping delays. It didn’t work. After extensive disruptions last year, the Delta variant has thrown the global movement of goods further into disarray. Bergstrom’s vendors are backlogged and tacking on huge fees to their shipments. Glass and paper shortages are delaying her deliveries. She’s far from alone.”
“Bergstrom is laying out tens of thousands of dollars on merchandise for holiday shopping season but isn’t really sure what will arrive in time.”
“So last month, she asked all of her manufacturers to ship the rest of the year’s orders ASAP rather than over the coming months.”
“‘Send me everything,’ Bergstrom said she told them. ‘I want it now.’”
“In August, she began showcasing glitter trees, snow globes, and ornaments prominently in her store. In the Before Times, she wouldn’t have flipped the holiday switch until October.” READ MORE
This is what it’s like to be a logistics manager right now: “Two years ago, a 40-foot container cost less than $2,000 to transport goods from Asia to the U.S. Today the service fetches as much as $25,000 if an importer pays a premium for on-time delivery, which is a luxury. That’s translated into big money for container carriers, with the industry on track to post $100 billion in net profit this year, up from about $15 billion in 2020, says John McCown, an industry veteran and founder of Blue Alpha Capital. With the scales so tipped against them, many shippers of cargo are balking, hoping rates go down or praying that they won’t run out of things. That’s provided openings for [RoxAnne] Thomas to stretch her budget when possible and snap up the few containers that become available.”
“‘There are companies that just don’t have the finances to withstand this, and they have contracted space that they’re just not using anymore,’ she says.”
”’The beginning of the supply chain in China—I don’t think that’s going to get better for a year.’”
“And the outlook more broadly? ‘A year and a half before things are truly back to normal.’” READ MORE
Gene Marks has changed his mind and now says businesses should stop complaining about the vaccine and testing mandate: “Businesses are awaiting forthcoming rules from the Occupational Safety and Health Administration that will supposedly clarify all of this. But even when those rules appear, we can expect low grumblings, loud complaints and – of course – numerous lawsuits from companies, associations and business groups. Others will seek exemptions. More than a few will simply ignore the regulations and dare their employees to report them. Now that I've had time to think about this, I've come to a conclusion: These people are wrong.”
“To all of my clients and other business owners who will be affected by these new orders and who are upset by them, I say this: Please just shut up. That's right. Shut up. Stop complaining. You're better than that. Do your part. Comply.”
Gene will join me Monday morning on The 21 Hats Podcast to discuss this story and others that business owners should be watching.” READ MORE
Some owners would like the vaccine mandate to apply to companies with fewer than 100 employees: “Bob Szuter, who with his father owns Wolf's Ridge Brewing in Columbus, Ohio, only has 80 employees so technically isn't required to comply with the Biden plan. Szuter believes at least 90 percent of his employees are fully vaccinated. ‘There are still a few we know are not. We worry about their health and what can happen to the business,’ he said. He has been worried that if he mandated the vaccine he'd risk losing workers. And he was already understaffed and having a hard time hiring. But in the wake of the announcement, and due to a situation that arose over the weekend at his restaurant, he felt emboldened to do so. A vaccinated staff member tested positive.”
“‘With where we are in the pandemic and dealing with staffing issues, it's more important to make sure our entire staff is [as] healthy as can be and to limit any down time due to illness or isolation and quarantine measures,’ Szuter said.”
“He's not making testing an option for his unvaccinated workers, either, he added. ‘It wouldn't fix the issues for us.’” READ MORE
L.A. County will require vaccines at bars, nightclubs, breweries, wineries: “The mandate, which will be issued by Friday, will require patrons and employees to have at least one vaccine dose by Oct. 7 and be fully vaccinated by Nov. 4, according to Public Health Director Barbara Ferrer. ... Under the new order, participants and workers at outdoor “mega events” with more than 10,000 attendees will also need to provide proof of vaccination or show that they’ve recently tested negative for the coronavirus, starting Oct. 7. That requirement is already in place for indoor events of at least 1,000 people.”
“L.A. County is the most populous jurisdiction in California to announce a Covid-19 vaccination requirement to enter certain types of businesses.”
“The order would affect all areas of L.A. County except Long Beach and Pasadena, which have their own public health departments.” READ MORE
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Remember when $15 an hour was a rallying cry? “Fifty miles northeast of Atlanta, John Culpepper keeps boosting the average wage at his Braselton, Ga., staffing agency, which caters to the area’s big crop of distribution centers and manufacturers. It was $13.39 in the summer of 2020 and has since climbed 25 percent, to $16.80. Chalk it up in part to aggressive recruiting tactics by employers in the area. For instance, deep-discount retailer Ollie’s Bargain Outlet has taken to emailing its customers and offering $1,000 bonuses and jobs paying up to $20 an hour for warehouse work in nearby Commerce.”
“Employers that balk at the new pay rates are losing out, according to Culpepper, who owns four Express Employment Professionals offices in north Georgia.”
“‘A lot of them can’t do it, and so therefore they’re having labor shortages, which is affecting them getting product out the door,’ he says.” READ MORE
U.S. employers continue to add employees (if they can find them): “Despite not being able to find enough workers, nearly two-thirds of employers in the U.S. are planning to add people heading into the final quarter of 2021, according to ManpowerGroup's latest employment outlook survey. Roughly 6,000 employers in the U.S. were surveyed about their hiring outlook in the fourth quarter of 2021 and nearly 60 percent of respondents said they plan on adding workers in the next three months, while 24 percent said they plan on keeping staffing at the current level and 13 percent said they planned on cutting staff.”
“In the Midwest, 54 percent of businesses surveyed expect to hire employees with 13 percent expecting a decrease and 28 percent anticipating no change.”
“Manpower officials said the survey reflects the strongest hiring sentiment in the region since 1982.” READ MORE
Taco Bell is selling taco subscriptions: “In about 20 participating restaurants across Tucson, Arizona, customers can pay between $5 to $10 per month for a Taco Lover's Pass, which gives subscribers one taco a day for 30 days. The app-based program is currently active until November 24. A variety of tacos are included in the subscription, including a soft taco, spicy potato soft taco, crunchy tacos and its Doritos tacos. Once a customer subscribes to it, a special section within the app is unlocked and customers can add a taco to their cart during the checkout process.”
“Subscription services are more common for streaming, but restaurants have also experimented with them. Panera has an $8.99 monthly program that lets customers get a free hot or iced cup of coffee every day.”
“Burger King had a similar coffee subscription but has since scrapped it.” READ MORE
THE 21 HATS PODCAST
Episode 76: Our Best New Accounts Are Coming Through LinkedIn: This week, Stephanie Stuckey talks about how she’s been winning her biggest retail accounts for Stuckey’s candies without a sales pitch. She also explains her latest manufacturing snafu, which she calls, “the case of the squishy pecan log rolls.” Laura Zander, meanwhile, tells us about the supply chain challenges she’s faced getting products from China, Vietnam, and South Africa. Plus, she talks us through how her latest price increases have resulted in a doubling of orders.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
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