Here are today’s highlights:
Consumers are once again buying comfy clothes.
Car prices aren’t coming down any time soon.
Further thoughts on value-based pricing.
Businesses are making it more expensive to pay with a credit card: “More small businesses—and even some larger ones—are charging shoppers a fee for credit-card purchases or offering them discounts when they pay with debit cards, cash or checks. The moves are meant to offset the various fees businesses pay on credit-card transactions, costs that have grown alongside generous cash-back and travel rewards.”
“Visa and Mastercard lifted a long-running ban on credit-card surcharging in 2013 as part of a class-action settlement with merchants ...”
“The coronavirus accelerated the shift, sending businesses in search of revenue to make up for sales lost in the pandemic’s early months.”
Westenbroek Mower, which sells lawn mowers, snowblowers and other outdoor power equipment, began surcharging about two years ago.”
“Ms. Timmer said the company is saving tens of thousands of dollars a year as a result. ‘It was single-handedly one of the best decisions that our company has ever made,’ she said.” READ MORE
Being quick to fire and slow to hire doesn’t work any more: “As companies seek to navigate a challenging labor market amid the turnover tsunami, recruiters like [Kristin] Lockhart, vice president of recruiting at payroll, benefits and advisory firm Adams Keegan, say many employers are making a simple but costly mistake: They’re moving too slowly. Depending on your industry and market, moving slowly might have been acceptable five years ago – maybe even in 2019. But at a time when turnover is high and many candidates are fielding multiple offers, experts say companies can no longer afford to draw out the hiring process.”
“‘You can’t have a four-week interview process,’ Lockhart said. ‘It’s not time to play games. It’s time to fill your job, even if it costs a bit more.’”
“[Lucy Lorenzo] said recruiting doesn’t end with a signed offer. The best practice, she said, is to start onboarding at that moment.”
“‘You need to be wooing that candidate, engaging them, even from the day of the offer right up until they’ve started—even after they start,’ Lorenzo said. ‘You have to make sure that you’re giving them the warm and fuzzies. Take them out for lunch. Call them. Just make sure you’re keeping close to them.’” READ MORE
THE COVID ECONOMY
Summer sales have been strong but consumers are pulling back on apparel: “Kimberly Carney, CEO of FashWire, an online marketplace for apparel, jewelry and accessories, said she is starting to notice shoppers revert to habits that were prevalent last year during the height of the pandemic when people were stuck at home. Since June, sales of dresses are down 12 percent, shoes are down 22 percent and denim is down 60 percent on the site. Over the same period, sales of loungewear are up 25 percent.
“‘Consumers had been buying clothes for going out,’ Ms. Carney said. ‘Now, they are going back to buying comfy clothes again.’”
“Kohl’s CEO Michelle Gass said, ‘We’re still in an uncertain environment.’ She noted that in addition to concerns over the Delta variant, retailers are still grappling with supply-chain issues due to factory shutdowns in Asia and congestion at the ports.” READ MORE
Taylor Farms, a produce business near Nashville is trying to convince its employees to get vaccinated: “An impasse over vaccinations is bedeviling the corporate world. On one side are employers and employees eager to see their co-workers be vaccinated, both out of health concerns and to head off the risk of an outbreak that slows production or shutters a workplace. On the other are workers who see it as their right to decide when and if to vaccinate.Some large companies, including Walmart, Microsoft, and Tyson Foods have imposed vaccine mandates. But the balance of power isn’t necessarily with every employer. Taylor’s 14 U.S. plants, which supply restaurants such as Taco Bell and grocers like Whole Foods Market, are already short some 1,500 employees.”
“The tight labor market means that Mr. Taylor and others must be careful not to alienate workers who might go elsewhere.”
“‘As much as I’d like to say it’s 100 percent required, I don’t want to lose 10 percent of my workforce,’ Mr. Taylor said.” READ MORE
Car production isn’t coming back and car prices aren’t coming down: “This quarter was supposed to be when computer chip supply and auto production were returning to normal. Instead, the surge in Covid cases, especially in Southeast Asia, is causing a new round of parts shortages and auto plant shutdowns around the globe. That could keep already astronomical car prices high. Thursday it was Toyota, the world's largest automaker measured by vehicle sales, announcing shutdowns at 14 Japanese plants in September because of Covid's impact on suppliers. That will cut production there by about 40 percent.”
“Toyota is also closing plants elsewhere around the globe, with North American production likely to be reduced 40 percent to 60 percent.”
“No. 2 automaker Volkswagen said Thursday it might be forced to make similar cuts to production soon.” READ MORE
In his latest newsletter, Steven Wilkinson addresses the Geoffrey James column on pricing that we highlighted earlier this week: “It is unhelpful to imagine that every business has the power to implement ‘value-based pricing’ and to condemn everyone who doesn’t to the ‘commodity’ dustbin. There is a highly nuanced spectrum between a commodity (no ability to differentiate due to standardised product features: an ounce of mint-standard gold is the same whoever produces it and costs the same irrespective of how much it cost to produce it) and a unique offering (Geoffrey cites his own case of being able to sell a single email which he copywrote [is that a verb?] for $10,000 to a client for whom the mail brought in an additional $1 million of profit). Most businesses offer products that are neither unique offerings nor commodities, but something more or less of either of those two extremes.”
“Geoffrey says of the question as to whether or not you should raise your prices if your costs go up, ‘Answer: only if you have screwed up already.’ Which seems unnecessarily harsh.”
“If you are in a ‘normal’ business with direct costs involved in producing whatever the business produces (think materials) and then a block of fixed overhead costs (think staffing and building) and variable revenue-related costs (think packaging or affiliate sales fees), then ‘pricing for value’ is the meta discipline and pricing for profit becomes the skill you have to master.”
“ Nobody explains this better than Bruce Nelson in his semi-autobiographical account of the restaurant business ‘Restaurant Management: The Myth, The Magic, The Math.’ In particular, Section III of the book ‘The Math’ should be required reading for every entrepreneur, irrespective of their trade as it explains the relationship between overhead and item pricing beautifully.” READ MORE
Meet the Cisco mafia: “Cisco has employed hundreds of thousands of Silicon Valley's most talented technologists and entrepreneurs in the three decades since its founding. Many have gone on to found their own successful enterprise-tech companies. Some — like Zoom, founded by former Cisco VP of engineering Eric Yuan — have won fame and fortune, while other Cisco alumni are leading startups still in their early stages of fundraising, pursuing rapid growth as they aim to lock down their corner of the market. Insider has compiled a list of 12 Cisco alumni and the relatively young, buzzy startups that they've built in recent years.” For example:
“Bloomreach: Sells software to e-commerce brands to automate marketing, build websites and search engines, and crunch customer and product data.”
“Zingbox: Protects internet-connected smart devices from cyberattacks using machine learning.” READ MORE
THE 21 HATS PODCAST
Episode 73: Get Rid of the Arsonists: It’s the dog days of August, and the only regular available was Jay Goltz. So we reached out to a bunch of loyal listeners who we happen to know have listened to every episode of this podcast, and we asked them if there was more they wanted to know about Jay—or if they’d heard enough. It turned out, they had some great questions, including: What did Jay think of Dana’s “Jay” iImpression? What exactly does Jay do all day? How did he learn to delegate? How does he know when it’s time to fire someone? And which of the other 21 Hats Podcast businesses would he be inclined to invest in?
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