Companies Rethink Their Reopening Plans
The new CDC guidance produces both optimism and confusion.
Good morning!
Today’s highlights: Job search requirements are being reinstated. Digital ads were more effective in 2020. And last year forced snack startups to find new ways to get discovered.
REOPENING
Job search requirements are being reinstated: “A tenet of the American unemployment system has been that anyone collecting benefits, in good times and bad, must look for work. That quid pro quo changed early in the pandemic. Profound fears of contagion and the sudden need for millions of workers to become caregivers led states to lift the requirements for reasons both practical and compassionate. But as vaccinations increase and the economy revs back to life, more than half of all states have revived their work search requirements.”
“President Biden on Monday ordered the Labor Department to ‘work with the remaining states, as health and safety conditions allow,’ to put such requirements in place as the pandemic abates.”
“Employers may welcome the moves as potentially enlarging the pool of job seekers. But for many workers, the search obligation is a premature declaration that the world has returned to normal even as legitimate concerns persist about contracting the virus and about child care constraints.” READ MORE
With the new CDC guidance, some companies are rethinking their office plans: “Parsing the new recommendations falls to communities and businesses, and could be especially difficult to implement for public settings such as workplaces, health researchers said, because there isn’t an easy way to determine who is fully vaccinated. Further complicating the issue is that the CDC guidance contained a raft of caveats, including statements that it is still unknown how effective the vaccines are against multiple variant strains of Covid-19 that are circulating, how long-lasting the vaccines’ efficacy will be in most people, and that people who are immunocompromised, and those who live with or care for them, should continue showing more cautious behavior.”
“Mandating that workers get vaccinated is generally legal in most instances, employment attorneys said, as long as exemptions are made for medical or religious reasons.”
“That hasn’t stopped lawsuits from being filed over the issue in places such as New Mexico and California. Most employers have shied away from making the shots a requirement, but more may be considering mandates.”
“Delta Air Lines said that, beginning Monday, it would require all new hires to be vaccinated, unless they qualify for an accommodation.”
“‘Employers are walking a tightrope,’ Mr. Portnoy said. ‘They want people back but don’t want a plan that will create attrition in the workforce.’” READ MORE
THE ECONOMY
Higher manufacturing costs in China are fueling inflation around the world: “Bryant Chan’s factory in Heyuan, in China’s Guangdong province, turns out Nerf guns, LeapPad toy tablets, and other playthings for major U.S. brands, as well as electronics, such as a gadget that can capture data on golf swings. The president of Hong Kong-based Wynnewood Corp., Chan has seen prices for paint, screws, springs, solvent, metal, batteries, and packaging rise as much as 15 percent this year. Plastic resin has climbed up to 40 percent.”
“To illustrate, Chan breaks down the contents of the company’s trail camera, a device used by hunters and wildlife photographers. The electronics, which make up 40 percent of its production costs, are now about 10 percent more expensive.”
“Packaging, which represents one-tenth of costs, has seen a 10 percent increase. And while plastic accounts for only 2 percent of the production costs, the surge in resin has had a noticeable impact.”
“When the higher input prices are added up, the camera is now 6 percent more expensive to make.” READ MORE
MARKETING
A report says that digital ads on Google, Facebook, and Instagram were increasingly effective in 2020: “ROI for online advertising benefited from the shift to ecommerce in 2020, as well as the increasingly granular targeting capabilities offered by the biggest players in the space, according to the Sidecar 2021 Benchmark Report. Metrics including return on ad spend and cost per click improved significantly across multiple platforms as retailers refined their efforts and drew in new customers. However, marketing is never stagnant, and retailers will need to refine their programs as the nature of online advertising continues to change. Consumer demand for greater privacy is already posing challenges, ...
“Google Paid Ads: This tried-and-true platform offered better returns than ever, but the tech giant’s new emphasis on shopper privacy means retailers will need to rethink how they target shoppers through search.”
“Facebook: Social media has long been a great vehicle for enticing consumers, but Facebook’s potential as a shopping destination has made it increasingly attractive for grabbing shoppers further down the funnel.”
“Instagram: Bigger players on this platform are seeing the best returns from their experiments, but creativity can win the day even if you don’t have the budget to test the more experimental possibilities of social commerce.” READ MORE
STARTUPS
During the pandemic snack startups had to find new ways to reach customers: “Those hoping to be discovered, to find their way into lunchboxes a few years from now or be the next big hit, like the Kind bar or Popchips, found that the paths taken by many other successful snack companies were suddenly shut down. The highly coveted pantries, or micro kitchens, of Google and Facebook went dark. Food fairs around the country, where start-ups vie for the attention of buyers from Whole Foods and other retailers, were canceled. Places that frequently stock new and interesting snacks, like the Equinox gym chain, yoga studios and even airports, closed. And small specialty grocers in places like New York, San Francisco and Los Angeles cleared what were seen as luxury treats from their shelves to make room for essentials like toilet paper and beans.”
“Shoppers, stuck at home and frustrated with limited selections at grocery stores, scrolled through Instagram, Snapchat and other social media accounts to find new snacks, a shift that many experts say is here to stay.”
“Another start-up, SnackMagic, entered to help. ... SnackMagic was allowing companies to send boxes of snacks to people working at home — a treat ahead of a Zoom meeting or simply a thank-you, Mr. Amin said.”
“When the company started, he said, it had 75 brands and 250 unique items. Now it’s up to 300 brands and 850 items, adding about 10 to 15 applications to get onto the platform each day.” READ MORE
John Arensmeyer and Victor Hwang want all levels of government to do more to support startups: “The nation can provide a major boost to job growth — with zero additional funding — by ensuring that young small businesses, which have never secured a government contract before, receive 5 percent of government contracts, workforce training funds, and economic development funds. In particular, we should put a special focus on businesses in underserved communities.”
“In addition, if local Workforce Development Boards and other government workforce programs diversify 5 percent of their spending into entrepreneurial training and support programs, that would drive over $1 billion to help entrepreneurs across the nation.”
“And if economic development agencies allocate 5 percent of their budgets to boost entrepreneurs, that would drive as much as $1 billion to build homegrown businesses across all American communities.” READ MORE
FOOD & BEVERAGE
Goldbelly, which helps restaurants deliver across the country, boomed during the pandemic but what happens now? “When the pandemic started last spring, Di Fara, one of New York City’s storied pizza joints, had the same question as countless restaurants nationwide: How would it make any money when customers weren’t allowed through its doors? One answer quickly emerged: Ship frozen (and slightly smaller) versions of its classic pies across the country in partnership with the eight-year-old e-commerce platform Goldbelly. Sales picked up so much that Di Fara converted its two-year-old second location, in a food hall, to essentially be a Goldbelly production line.”
“More than 400 of the 850 restaurants that sell food on Goldbelly’s platform have joined since the start of the pandemic, an influx that the company says has more than quadrupled sales over the past 12 months.”
“What it offers restaurants is largely logistics: providing the boxes and cold packs for shipping orders, and helping restaurants ship directly from their premises. In return, Goldbelly charges a fee, leading to premium prices. Shipping two Classic Neapolitan Pizzas from Di Fara, for example, costs $89.”
“The question now is whether the trends that Goldbelly and its new investors plan to capitalize on will outlast the pandemic, or whether a surge in at-home dining will abate as more people feel comfortable eating in restaurants again.” READ MORE
LOGISTICS
The closing of a Memphis bridge is wreaking havoc on shipping: “A cracked beam discovered during a routine inspection of the Hernando de Soto Bridge on Tuesday has shut it down indefinitely. The bridge, which spans the Mississippi River and connects Arkansas with Tennessee, will remain closed until a full inspection can be performed. That might take several weeks, according to NPR, and the repairs could keep the bridge closed even longer. Vessels are also temporarily prohibited from traveling beneath the bridge. Shipping and logistics companies throughout the country are already experiencing problems.”
“The consequences of the delays are wide-ranging. Truckers generally get paid by the trip, not per hour, so drivers will have little incentive to accept trips that terminate in or pass through Memphis, Wang says. Shippers will likely have to compensate by paying drivers more for those routes.”
“Trucking rates are already at all-time highs as the economy rebounds from the Covid-19 pandemic. The cost of the Chicago to Memphis route, for example, is up 121 percent year over year.”
“Fifty percent of the country's agricultural water-based exports depart from the Port of New Orleans, according to Spencer. Midwestern crops like soy and corn that get shipped overseas are currently unable to reach the southern end of the Mississippi River.” READ MORE
OBITUARY
Leigh H. Perkins built Orvis from a modest mail-order fishing tackle shop in Manchester, Vt., into a lifestyle brand with stores around the country: “Founded in 1856 by Charles F. Orvis, the company is the oldest mail-order business in the United States. It was sending out catalogs before the Civil War and predated Sears, Roebuck by more than 20 years. When Mr. Perkins bought Orvis for $400,000 in 1965, the company had 20 employees and had $500,000 in annual sales. When he stepped down 27 years later, in 1992 — turning the company over to his sons — Orvis had more than 700 employees and had sales of $90 million a year. Since then, Simon Perkins said, annual sales have quadrupled, and more than 2,000 people work for the company, which has a flagship store on Fifth Avenue in Manhattan.”
“Leigh Perkins was a model of his own ideal customer, hunting and fishing more than 250 days a year, and traveling to places like Iceland, Argentina, Botswana and Wyoming’s Star Valley, where he owned land with a trout stream running through it.”
“Leigh Perkins pioneered the sharing of mail order lists, trading customers’ names with other outdoor brands like L.L. Bean and Eddie Bauer.”
“‘I took over just as credit cards and delivery services like UPS, and a bit later, FedEx, were reshaping the specialty catalog scene,’ he wrote in The New York Times in 2003. ‘I got into the business at exactly the right time.’” READ MORE
THE 21 HATS CONVERSATION
How do we get more customers? Like most business owners, Shawn Busse, CEO of Kinesis, and David Nichols, CEO of Loupe, have asked themselves that question many times. Early on, they tried to answer it, as most businesses do, by focusing on the basic elements of marketing: logos, positioning, platforms, and the like. Over time, however, they came to a very different understanding—basically that before you can create an awesome message for a video or a website, you have to truly understand what’s awesome about the business. That has led them to take a very different approach.”
“It's like, we could hire one more engineer, or we could have a marketing budget. And we would always hire another engineer, right? Because we knew how to hire them.”
“I went from having a kind of mediocre business with an offering that lots of people could do—to be totally candid—to having a business that had something that nobody else was really doing.”
“We’ve worked with plumbers. We've worked with people who build houses. We've worked with very non-sexy businesses, and in fact, I kind of like those businesses, because I find them to be very genuine and earnest. And so helping them uncover what's awesome about them is really rewarding.” READ MORE
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