'Pivot This'
A Retailer Shows It Sometimes Makes More Sense to Stick to What You Do.
In today’s newsletter: The vaccines are coming. Even with vaccines, much business travel is not coming back. And there’s a reason scented products have been getting poor reviews this year.
SOME GOOD NEWS
Help is on the way. The U.K. became the first Western nation to grant emergency-use authorization for a Covid-19 vaccine, clearing a shot developed by Pfizer of the U.S. and BioNTech of Germany: “The two-shot vaccine is also being reviewed by the Food and Drug Administration in the U.S., where a similar authorization could come later this month and a rollout before the end of the year.”
“The U.K. has ordered 40 million doses, enough to vaccinate 20 million people. Health Secretary Matt Hancock said Wednesday the country is expecting an initial 800,000 doses to arrive in Britain next week.”
“He said the speed at which vaccinations will take place will depend on how quickly the shot can be manufactured at a plant in Belgium, but the government is expecting ‘many millions’ of doses by the end of the year.” READ MORE
RETAIL
After this brick-and-mortar retailer had to close her Brooklyn fashion boutique in the spring, Jill Lindsey considered her options and decided not to pivot: “She reopened in July. Since then, sales have been better than before the pandemic, even though the store is operating on reduced hours, says Lindsey. October revenue, for example, was about $10,000 more than the same month drew last year. ‘When the pandemic really hit, everyone was like, Pivot, pivot, pivot. Pivot this, pivot that. The more I kept listening to that, the more I thought, I love what I do. I don't want to pivot.’”
“In mid-November, she opened a second location in Manhattan’s iconic Rockefeller Center.”
“While it doesn’t have a cafe or a wellness space as the Brooklyn location does, Lindsey became the first woman to open her own independent retail shop at the famous complex.”
“The deal for the 1,500 square-foot street-level space is for six months. Instead of paying a fixed rent, Lindsey shares a portion of her sales with Tishman Speyer, the real estate company that owns and manages Rockefeller Center.” READ MORE
MARKETING
Here’s how Gymshark became a billion-dollar sportswear brand: “In the crowded and well-capitalized sportswear market, Gymshark has become a $1.4 billion–plus (valuation) brand by paying 80 ripped fitness influencers like Lévesque anywhere from $6,000 to more than $100,000 per year to live—and sell—the Gymshark lifestyle on social media. Founder Ben Francis, 28, has one rule for his athletes: Do you, but do it in Gymshark. ‘Young people only want to buy community-led brands that align with their values,’ Francis says. ‘We are a community that also happens to sell things.’”
“By marrying influencer marketing with high-quality $25 athletic shorts, Francis has built the Nike of Gen Z—without spending billions on Jordan-style endorsements or glitzy storefronts.”
“Over the last year, Gymshark’s revenue soared 40 percent, to $330 million. In August, private equity firm General Atlantic bought 21 percent of the brand for nearly $300 million.” READ MORE
For the first, more than half of all advertising dollars have been spent on digital platforms this year: “The milestone is just the latest proof of digital advertising’s meteoric rise, a development that has concentrated ad spending with several tech giants at the expense of other platforms, including newspapers, local television and magazines. Online ads can be cheaper than those placed on other media platforms and they allow marketers to better target and measure the performance of their ads. These advantages have become ever more important during the pandemic as businesses cut ad budgets and consumers spend more of their time and dollars online.”
“Three years ago, digital advertising accounted for just one-third of all U.S. ad spending, GroupM said—about the same size as newspapers, radio, magazines and local TV combined.”
“As of 2020, these four categories’ combined share of the U.S. advertising market has shrunk to 21 percent.”
“‘The biggest beneficiaries are Google, Facebook and Amazon,’ Christian Juhl, GroupM’s global chief executive, said in an interview. ‘They have done a good job of showing ad performance—and when they show performance marketers shift dollars.’” READ MORE
THE COVID ECONOMY
The post-Labor Day return of office workers to offices has stalled: “The recent surge in Covid-19 cases across the country has led to an uptick in Americans resuming work at home after some momentum had been building for returning to the workplace, property analysts said. Floor after floor of empty office space is a source of great frustration for landlords and companies, which have invested millions of dollars in adapting building plans and developing new health protocols to make employees comfortable with a shared location.”
“Despite the success of work from home at a number of companies, many employers would like to see more workers back in the office where they can collaborate more easily. Instead, companies are extending their work-from-home policies well into next year as infection rates reach new highs.”
“The low level of employees at their desks is intensifying the pain for cities geared toward office life. Cities’ populations are falling as people working from home move to the suburbs or other less dense locations where they can find more living space for less money.” READ MORE
Even with vaccines, more than a third of business travel may not come back: “Travel budgets have been slashed and some meetings will remain virtual; conferences and conventions may be crimped. But by how much? It matters not only to airlines and their employees but also their customers—travelers. That’s because higher fares paid by corporate customers actually subsidize cheap fares for vacationers. What’s more, less business travel means that airlines schedule fewer flights on business routes, like trips to New York, Chicago, London and Tokyo. That means fewer seats for leisure travelers.” READ MORE
A research assistant, Kate Petrova, decided to test the hypothesis that Covid-19 has affected the sale of scented products by scraping roughly 20,000 reviews of the most popular scented and unscented candles on Amazon: “The results were surprisingly clear: Before 2020, reviews of the top scented candles hovered between 4 and 4½ stars, year after year. Since January, however, those grades have fallen roughly one full star. Unscented candle reviews, meanwhile, don’t show the same pattern. To further strengthen the coronavirus correlation, Petrova analyzed the reviews to see if they contained terms like ‘no scent,’ ‘no smell’ and ‘can’t smell,’ indicating complaints about a perceived lack of scent. She found that the proportion of scented candle reviews containing these terms nearly tripled from January to November, from roughly 2 percent to 6 percent.” READ MORE
HUMAN RESOURCES
A federal judge has struck down the Trump administration rules on H-1B visas: “The departments of Labor and Homeland Security each issued visa rules in early October as part of a long-awaited tightening of the H-1B visa program, which the Trump administration argues undercuts American workers by allowing employers to hire foreign counterparts for coveted positions, sometimes at lower salaries. The ruling comes in a lawsuit filed by the U.S. Chamber of Commerce, one of three legal challenges filed against the policy changes.”
“‘This ruling has many companies across various industries breathing a huge sigh of relief today,’ said Jon Baselice, director of immigration policy for the Chamber of Commerce.”
Though the two agency policies were issued together in October, only one of them, issued by the Labor Department, took immediate effect. That rule significantly raised the minimum salaries companies were required to pay their H-1B employees.”
“A second policy, issued by DHS, was set to take effect within days. That rule would have narrowed who qualifies for H-1B visas based on their specific higher-education degrees and would have shortened the length of visas issued to some contract workers, a change targeted at the information-technology industry.” READ MORE
THE 21 HATS SURVEY
Would You Risk Your Home to Build Your Business? Some business owners say borrowing against their home is simply the uncomfortable but necessary cost of doing business. Others say it’s a line they would never cross (especially if they want to stay married). Which stance is more common? If you haven’t already done so, please complete our survey on business owners and debt, which will take less than a minute. We will all learn something about what entrepreneurs are willing to do to build a business when we report back on the results later this week.
GOVERNMENT SUPPORT
The SBA has released detailed information about PPP and EIDL recipients: “What this means in English is that if your business received one of these loans or an EIDL grant, this information is now public knowledge, and your friends and enemies can see precisely what you got. It’s likely smart to check the data to make sure that your information is accurate. Many websites popped out of thin air yesterday, providing quick and easy ways to search the PPP data, including Search PPP.” READ MORE
STARTUPS
Two tech startups are challenging traditional life insurers: “Bestow and Dayforward are making the leap to become life-insurance carriers, a move away from a model where startups only sell traditional insurers’ policies. The companies are banking on their versions of online technology for sizing up the risk of insurance applicants to provide cost efficiencies for expanding profit margins beyond those of traditional insurers. Each company said it would maintain competitive premium rates and typically issue policies within minutes.”
“[Bestow CEO Melbourne] O’Banion said that all applicants will be assessed online, with no additional medical details to be sought.”
“For a small percentage with health complications, Dayforward CEO Aaron Shapiro said the company may dispatch at-home medical kits that could add a day or two to the process.” READ MORE
THE 21 HATS PODCAST
Episode 41: She Was a Hiring Goddess: Back in 1996, Jay Goltz had no real hiring process -- and the results to prove it. “My hiring success rate,” Jay tells us, “was probably, I don't know, 30 or 40 percent, which isn't much better than whoever walks in you hire.” And then he asked Ivy Garfield to take over his hiring. As Jay explains, Ivy brought an instinct, an understanding of how to assess people. “She profoundly changed my business,” he tells us. “She was here six years. Most of my key people she hired. They’re with me 25 years later.”
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--Loren Feldman