Picking Up Steam
Picking Up Steam
Today’s Highlights: Consumers are buying real clothes again. Making big companies pay small companies on time. And how a family business run by cousins who hate each other doubled its sales.
COLLECTING RECEIVABLES
Gene Marks says getting paid by big companies is the hardest part of running a small company—and it’s getting worse: “Sure, most of my clients pay their bills when asked. But there’s always a few that pay well past 30 days. And those few are almost always my largest customers. Ask any small business owner and they’ll tell you how frustrating it is to get money from their biggest clients. Corporations, because of their power, dictate the terms of payment. They often times require onerous paperwork. Their systems are purposely impersonal and bureaucratic.”
“So what to do? Look no further than our friends across the pond. In the UK, there’s something called the ‘prompt payment code.’”
“It’s a rule established by the government that, after recent changes, requires large corporations (those with more than 50 employees) to now pay their smaller suppliers within 30 days.”
“The rule is voluntary, but companies that violate it are subject to public disclosure, a penalty that can be more devastating to a brand than a mere fine ...” READ MORE
THE ECONOMY
As the economy picks up steam, growth projections get more promising: “Restaurant and hotel bookings are up. Airplane tickets are selling fast. Consumers spent more on gyms, salons and spas in recent weeks than they have since the coronavirus pandemic began. The U.S. economic recovery is picking up steam as Americans increase their spending, particularly on in-person services that were battered by the coronavirus pandemic. The rising number of Covid-19 vaccinations, falling business restrictions, ample household savings and injections of federal stimulus funds into the economy are fueling the surge ...”
“Economists surveyed by The Wall Street Journal this month raised their average forecast for 2021 economic growth to 5.95 percent, measured from the fourth quarter of last year to the same period this year, from a 4.87 percent projection in February’s survey.”
”The higher figure would mark the fastest such pace in nearly four decades.” READING MORE
Consumers are starting to buy real clothes again: “Madewell and Anthropologie are seeing a resurgence in dress sales, while Bonobos reports rising demand for suits, dress shirts and tuxedos. Other retailers say they’ve noticed growing interest in trendy tops, wide-leg jeans, even resort wear and swimsuits, as Americans prepare to head back to the office, book summer vacations and make other post-vaccination plans. The revived interest in apparel could be an early hint of the burst of spending that many economists expect to take hold as the country approaches herd immunity more quickly than anticipated and savings rates surge to new highs. President Biden’s administration is ahead of schedule in terms of its vaccine delivery goals, offering new hope of a swift and imminent economic recovery.”
“Many retailers are still struggling to anticipate consumer demand and spending patterns, while dealing with supply chain hiccups and shipping delays.”
“The result, analysts say, has been an ongoing guessing game of what items will be popular, and when.”
“‘Retailers have to be careful that they don’t think this is the total recovery because it’s not,’ said Cohen of NPD. ‘It’s a false positive — there’s going to be a rush to go out, but that doesn’t mean it’s going to sustain at that level.’” READ MORE
SOCIAL MEDIA
With Clubhouse passing 10 million weekly active users, publishers are looking for ways to monetize: “Right now, these publishers are not making money off of their Clubhouse chats, but that does not mean they are not thinking about it. Insider is looking to turn Clubhouse followers into subscribers by offering a free 30-day trial to its club members. Cosmo’s next step is to create a Clubhouse room for its Astrology vertical, which has a devoted following on other social platforms, like Instagram. While the Astrology vertical itself does not have an associated membership, Cosmo’s site and all of its astrology content recently went behind a paywall, and passionate fans have historically been known to convert into subscribers.”
“Insider, which has been experimenting on the platform since January, hosted a day-long event on Wednesday, March 10, with eight hour-long sessions that ran from 9am to 5pm EST. The event drew a total of more than 700 listeners throughout the day, with the largest conversation — ‘Digital Culture: Does cancel culture exist?’ — taking place at 3 pm. That session had 340 listeners, according to Jennifer Polland, Insider’s head of audience.
Yahoo finance reporter and anchor Kristin Myers has become a Clubhouse personality of her own right (with 2,400 followers) and co-created a weekly show called ‘Black Wealth Wednesdays’ with two fellow alumni from the University of Pennsylvania, that on average has between 1,000 and 2,000 people listening every week ...” READ MORE
Here’s how Walmart, an early adopter, is selling on TikTok: “The retailer launched on the platform in October 2019 and has recently made moves to create seamless and engaging shopping experiences for customers, with its dedicated livestream shopping events. On March 11, Walmart hosted its Spring Shop-Along: Beauty Edition, complete with influencers like Gabby Morrison, with 3.5 million followers, demoing beauty products. The TikTok livestream was Walmart’s second shopping event, following its December fashion-focused offering, which was the first time a retailer had hosted a livestream event on TikTok.” READ MORE
Department stores are trying live-streaming, too, but it has yet to catch on: “Nordstrom, for example, announced yesterday that it is launching a new page on its website dedicated to livestream shopping. Nordstrom plans to host several livestream events each week throughout 2021, a spokeswoman told Modern Retail, with the first being a Burberry virtual styling event hosted with stylist José Ramón Reyes. Nordstrom’s announcement comes after Macy’s hosted its first livestream shopping event at the beginning of March, in partnership with buy-now-pay-later app Klarna and Cosmopolitan magazine.”
“While more and more companies — for example, Walmart — have started experimenting with livestream shopping in the past year, most U.S. shoppers still have yet to buy products through livestream events.”
“Coresight Research estimated that the livestream shopping market in the U.S. was valued at $6 billion in 2020. Meanwhile, the firm estimated that in China, livestream sales drive about $63 billion in e-commerce sales.”
“There’s been quite a few new livestream shopping tools for brands that have started to gain traction — or raise more venture capital in the past year — including Popshop Live, ShopShops, and Foot Locker-backed NTWRK.” READ MORE
FAMILY BUSINESS
Last year, when the U.S. government realized it would need a billion nasal swabs to test for Covid, it turned to Puritan Medical Products Co., a family business in Maine owned by cousins who hate each other: “It was Saturday evening when Timothy Templet, the co-owner and executive vice president for global sales, saw a Washington, D.C., number flash across his cellphone. [Admiral Brett Giroir, then an assistant secretary for health at the Department of Health and Human Services] told Templet he needed about 100,000 nasopharyngeal swabs within a week. Templet told the admiral that wouldn’t be possible. Giroir asked him to reconsider. The next morning, Templet told him it would be possible. Never before had Puritan, founded a century ago in the tiny town of Guilford, been more important. And never before had it been so dysfunctional.”
“Three weeks before Giroir’s call, Templet had filed a lawsuit in Cumberland County Superior Court to dissolve their joint ownership of Puritan and its other business, Hardwood Products Co., which had started out making mint-flavored toothpicks, because of ‘major, longstanding and irreconcilable disagreements’ between him and his cousin.”
“The rift had resulted in delayed investments to modernize manufacturing lines, stagnant wages for a dwindling workforce, and an outdated back-office information technology system. ‘The general partners’ deadlock has created a dangerous situation, leaving the companies close to a point where something is going to break,’ the lawsuit read. ‘Cartwright and Templet no longer speak, no longer make joint decisions, and are essentially unable even to be in the same room together.”
“The company used to make about 20 million swabs a month. Soon it will be almost 300 million. Puritan and Hardwood had sales of about $55 million a year in 2019. Government contracts will likely have doubled that.” READ MORE
TECHNOLOGY
BakeryScan, which uses artificial intelligence to automate the checkout process for bakeries, has found a higher use: “At the urging of an attendant, I slid my items onto a glowing rectangle on the counter. A nearby screen displayed an image, shot from above, of my doughnuts and Danish. I watched as a set of jagged, neon-green squiggles appeared around each item, accompanied by its name in Japanese and a price. The system had apparently recognized my pastries by sight. It calculated what I owed, and I paid. ... [In 2013], BakeryScan launched as a real product. Today, it costs about $20,000. Andersen Bakery, one of BRAIN’s biggest customers, has deployed the system in hundreds of bakeries ... At first, BakeryScan’s performance wasn’t perfect. But the BRAIN team included a feedback mechanism: when the system isn’t confident, it draws a yellow or red contour around a pastry instead of a green one; it then asks the operator to choose from a small set of best guesses or to specify the item manually. In this way, BakeryScan learns.”
“In early 2017, a doctor at the Louis Pasteur Center for Medical Research, in Kyoto, saw a television segment about the BakeryScan.”
“He realized that cancer cells, under a microscope, looked kind of like bread. He contacted BRAIN, and the company agreed to begin developing a version of BakeryScan for pathologists.” READ MORE
THE 21 HATS PODCAST
Episode 53: I Hope You’re Not Torturing Yourself: Should Stephanie Stuckey sell pecans on Amazon? Should Laura Zander wholesale yarn to discounters? Should Jay Goltz’s businesses be active on Pinterest (assuming Jay knows what Pinterest is)? This week, we cover those issues, plus whether the owners are ready for an economic boom and how Laura made the painful decision to fire several employees she inherited when she bought her wholesale yarn business in Texas. “You have to do it,” says Jay. “And it doesn't make you a bad person. It makes you a bad boss if you don't do it.”
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