Discover more from The 21 Hats Morning Report
Staffing Is Harder than Ever
“The people who want to work have not come back at the same rate as people who want to buy burgers,” says the president of a Seattle fast food chain.
Here are today’s highlights:
Some businesses are giving up on free samples.
For luxury rentals, co-working spaces are the new amenities war.
Rising home prices aren’t necessarily a good thing for real estate agents.
On Dashboard, Gene Marks reports back from a conference of funeral directors.
Maybe this isn’t going to be the year of social shopping: “Platforms from Instagram to Pinterest revamped and added features like in-app storefronts, native affiliate-marketing tools, and live-shopping tech in the hope of becoming America's new shopping malls. Some industry insiders predicted these bets would pay off, with eMarketer forecasting 24.9 percent year-over-year growth in U.S. social commerce, bringing the market from $36.6 billion to $45.7 billion. But over halfway through the year, platforms have had mixed reactions from creators, marketers, and consumers.”
“But the problem may go beyond any platform and features — creators and consumers in the U.S. may just not be ready for social shopping.”
“‘Consumers are not thinking, I will go on TikTok in order to make a social commerce purchase,’ Ian Whittaker, managing director of the media consultancy Liberty Sky Advisors, said.”
“‘The industry is trying to run before it can walk,’ said Sarah Penny, content and research director at influencer-marketing platform Influencer Intelligence. ‘It's still quite alien to a lot of audiences.’” READ MORE
Some businesses that stopped giving out free samples when the pandemic hit aren’t bringing them back—but do they know how much it’s costing them? “Polish Water Ice — now totaling 15 shops that include four on the Wildwood [N.J.] boardwalk and two on the Ocean City boardwalk — were built on the backs of teenage employees passing out little white spoons with nibbles of water ice that maintain the consistency of soft-serve custard without adding dairy. On any given night, over the course of 12 hours, [Tom] Curyto estimates that somewhere between 2,000 and 5,000 free samples were handed out to passersby, at each store. But then the pandemic hit. And with fears of spreading disease (and potential lawsuits), the shop turned off its iconic recording, and stopped handing out samples for the 2020 season. And they saved on staffing, no longer needing up to two extra people at $15 per hour, over 12 hours.”
“‘That’s $300 or $400 just in labor,’ said Curyto, who owns the company but has franchised out his boardwalk locations, noting that those numbers didn’t account for the cost of production, as well as ‘wear and tear on the machines.’”
“Normally, free sample marketing, in which a retailer gives products or services away to prospective customers, works. Especially for food and drink retailers. It’s straightforward: Give ‘em a taste, leave ‘em wanting more. And when they want more, the register is just a few steps away.”
“But these aren’t normal times. And during a slow season, and with a potential recession looming, some boardwalk businesses are thinking of cutting costs by cutting out the free samples. A decision initially driven by the virus, it has now become a decision based on costs.” READ MORE
For some businesses, staffing is harder now than at any time since the pandemic began: “A rise in Covid-19 absences in recent weeks amid the spread of the BA.5 subvariant, combined with planned time off, has left restaurants, hotel chains, manufacturers and other workplaces struggling to keep operations running this summer. ... For the period from June 29 to July 11, 3.9 million Americans said they didn’t work because they were sick with Covid-19 or were caring for someone with it, according to Census Bureau data. In the comparable period last year, 1.8 million people missed work for those reasons.”
“The Seattle burger chain Dick’s Drive-In Restaurant saw absences begin to tick up about a month ago as some staffers had Covid-19 while others stayed home because they had been exposed or were awaiting test results, said Jasmine Donovan, the company’s president and chief financial officer.”
“The company has responded by occasionally closing some restaurants early, at 10 p.m. instead of the typical 2 a.m. Dick’s also has kept some ordering windows shut, leading to longer lines.”
“The company pays starting wages of $19 or $20 an hour, with benefits including full employer-paid health insurance, but it has 35 open positions at the moment. ‘I do not think we will be able to fill those this summer,’ she said. ‘The people who want to work have not come back at the same rate as people who want to buy burgers.’” READ MORE
Those who change jobs are earning a lot more than those who stay: “Job stayers, or people who stayed in their job for the past three months, increased their wages by about 4.7 percent as of June 2022. Meanwhile, those who switched jobs received a raise of 6.4 percent. The gap is the largest in two decades. Workers are facing fast-rising prices on gas, groceries, rent and other essentials. Even in a tight labor market, many workers aren’t getting a large enough pay increase at their current job to keep up with inflation, say workers and economists who study the labor market. As a result, some Americans are reconsidering expenses they once considered affordable, while many also are looking for a new job with a bigger paycheck to keep up.” READ MORE
Luxury rental buildings are adding co-working spaces for remote workers: “Developers across the nation are doing what they can to make remote work more convenient to lure prospective tenants, setting off an amenities war as luxury rental buildings and condos dangle must-have conveniences like private offices, conference rooms, task lighting, wall-mounted monitors, podcasting booths and high-speed internet. ‘It’s something you have to do today; it’s an amenity, like a pool,’ said Ric Campo, the chief executive and chairman of Camden Property Trust, which included a work space called the Hub in the common area at Camden Harbor View, a residential development in Long Beach, Calif.”
“At most buildings, the cost of the work spaces is included in the rent, but some landlords charge a fee to reserve a room for a large meeting or an extended period.”
“Co-working firms like Industrious and WeWork are beginning to take notice, hoping not to get edged out of what could become a lucrative market.”
“But one of the most overlooked benefits is something an apartment alone cannot provide, one that many workers are seeking after two years of remote work: a social experience. ‘It creates a more communal vibe.’” READ MORE
If the office workers aren’t coming back, maybe cities like Philadelphia have futures as “Bedroom Cities”: “American cities have been organized around downtowns at least since the late 19th century, when rapid urbanization gave cities their now-familiar, concentric form. Business and culture mostly happened in the center. People mostly lived on the periphery. But those lines were blurring even before the pandemic, and now they’re meaningless. Neighborhoods will become places to work, while downtowns will increasingly be places to live, as well as work. The Bedroom City is one way to think about cities where both things happen in a residential setting.”
“What Philadelphia has in spades is housing, much of it still affordable, especially in comparison with high-cost cities like New York, San Francisco, and Washington. It’s also more affordable than many of the suburban counties around Philadelphia, where it is nearly impossible to find what used to be called a ‘starter home.’”
“The flip side of depopulated downtown offices is that more people are home in their neighborhoods during the day. When residents need a morning coffee break, they now head to a local cafe instead of the one in Center City.”
“All those stay-at-home residents have changed the rhythms of East Passyunk Avenue, says Adam Leiter, who runs the business district there. In the past, East Passyunk tended to rack up its biggest pedestrian counts on weekends, but now weekday foot traffic is soaring.” READ MORE
Ecommerce warehouses are no longer the hottest real estate: “Consumers have gone back to buying goods in stores, which is slowing the blistering growth in e-commerce seen during the pandemic. U.S. sales in brick and mortar shops have grown faster than online purchases for four consecutive quarters, real-estate research house Green Street points out. Several European online-only retailers, including fashion website Zalando and furniture brand Made.com, have issued profit warnings in recent weeks, following a sudden drop in demand.”
“Amazon said earlier this year that it over-expanded during the pandemic, almost doubling its U.S. warehouse footprint in two years.”
“Since then, it has closed or canceled the opening of 28 delivery hubs or fulfillment centers in the U.S. and delayed the opening of another 15 to save on labor costs, based on data from supply chain consulting firm MWPVL International, which is tracking the rejig.” READ MORE
Rising home prices aren’t necessarily a good thing for real estate agents: “From January 2020 to January 2022, the number of agents in the United States increased from 1.38m to 1.53m, according to the National Association of Realtors. The gain of ~150k agents was 3x as large as the increase in the prior two-year period and continued a trend of nearly unfettered growth in the profession since the Great Recession. There are now more real estate agents in America than ever — 1.57m, as of June — ~13 percent more than in 2006, when the housing bubble was at its peak. The draw of an expensive housing market was an obvious lure for many new agents.”
“But many who jumped in discovered a surprising truth: The splashy seller’s markets that produce high commission rates don’t lead to greater success for most agents. When housing prices go up, so do the number of real estate agents.”
“‘The nature of the business is just so fiercely competitive,’ Lawrence Yun, chief economist for the National Association of Realtors, told The Hustle. ‘Maybe 20 percent [of agents] do very well while 80 percent [are] maybe just barely getting by.’” READ MORE
A Philadelphia-based tech startup is addressing mental health crises by helping primary care physicians identify and monitor issues: “NeuroFlow says primary care doctors can use its platform and app to track patients' mental health status and refer them to personalized treatment. App users can log their moods, sleep and pain — data that's fed back to providers. They can also find therapists, learn relaxation techniques, and do self-care activities, like journaling. The company, which launched in 2016, says its reach has grown to 14 million people across health systems, payers and its partnership with the Department of Defense.”
“Since the pandemic began, the number of people seeking behavioral health services has skyrocketed. Even with the recent boom in mental health and wellness apps, demand is outpacing supply and resources are strained.”
“‘The need has never been greater,’ Matt Miclette, vice president of clinical operations at NeuroFlow, told Axios. ... Miclette pointed to one study, which found that on average, 45 percent of individuals who took their own life had contact with primary care providers within one month of suicide.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
“I Killed:” This week, Gene Marks reports back from a conference of funeral directors and debunks a silly survey that predicts a bleak future for small businesses. Plus: How the rules defining full-time employees and contractors could be changing, why some business owners are giving up on their CRM systems too soon, and how a relatively new law can help businesses save money administering retirement plans.
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