Discover more from The 21 Hats Morning Report
The Mattress Metric
A slowdown in mattress sales may foreshadow a shift in big-ticket consumer spending.
Here are today’s highlights:
The economy shrank in the first quarter.
Case study: a business gives up on its digital marketing agency.
A good onboarding process is more essential than ever.
Shopping malls are transitioning to medical facilities: “The hulking Hickory Hollow Mall — a full 1.1 million square feet of retail space in southeastern Nashville — was once the largest shopping center in Tennessee. But like many malls, it’s been in a downward death spiral for more than a decade. Now the mammoth complex surrounded by acres of parking is on track to join the ranks of malls making a transition into a booming economic sector: medicine. Vanderbilt University Medical Center has had such success reviving a different mall that its health system, Vanderbilt Health, plans to add medical clinics at the former Hickory Hollow Mall, rebranded a decade ago as the Global Mall at the Crossings.”
“What big-city health systems need most is something shopping malls have plenty of: space and parking.”
“Nationwide, 32 enclosed malls house health care services in at least part of their footprint, according to a database kept by Ellen Dunham-Jones, a Georgia Tech urban design professor.”
“In 2017, [Trademark Properties in Charleston, South Carolina] started redeveloping the Citadel Mall, whose anchor tenant is now the Medical University of South Carolina. The clinics and surgery centers are housed in the old J.C. Penney department store.”
“‘Right now they’re doing surgery where people used to buy sheets and towels,’ [Ginger] Davis said.” READ MORE
Case Study: How one business found an alternative to its digital agency: “Like so many fledglings, [QB Sleeves] hired a digital media agency in 2021 to place display ads on Facebook, Instagram, and Google. The goal: to accumulate data on travelers for market research and convert click-throughs into new product sales. In theory, the strategy made sense, but in practice the return on investment was abysmal. ‘Looking back we think the investment was a complete waste of money,’ says Barbara Booth, co-CEO of QB Sleeves, noting the company spent $50,000 on the five-month campaign and made $17,000 in revenue.”
“Through trial and error, QB Sleeves’ founders learned that marketing success on social media can be done more effectively with their own organic ads shot on a smartphone and posting them on the company’s Facebook and Instagram accounts.”
“It allowed them to control the narrative, build brand awareness and study insights in real-time rather than waiting for an agency to produce a weekly or monthly report.”
“And the cost is minimal: as little as $1 a day. No more contracts. The more they spend, the wider the reach.” READ MORE
The economy shrank in the first quarter: “Gross domestic product was down sharply from a 6.9 percent annual growth rate in the fourth quarter, the Commerce Department said Thursday. The decline in first-quarter gross domestic product marked the weakest quarter since spring 2020, when the Covid-19 pandemic and related shutdowns drove the U.S. economy into a deep—albeit short—recession. The decline in GDP stemmed from a slower pace of inventory investment by businesses in the first quarter, compared with a rapid buildup of inventories at the end of last year. A widening trade deficit—with the U.S. importing far more than it exports—also pushed growth lower. Fading government stimulus spending related to the pandemic also weighed on GDP.”
“Despite the slip, many economists think that overall the economy remains on track to resume modest growth in the second quarter and beyond, in part because consumers and businesses are continuing to spend.”
“‘It’s really hard for the economy to grow rapidly once you’ve recovered to a substantial degree,’ said David Berson, chief economist for Nationwide Mutual Insurance Co.” READ MORE
Mattress makers are cutting costs and delaying product launches as demand for big-ticket items falls: “Companies including Sleep Number and Tempur Sealy International have said in recent weeks that demand for their products has started to decline. Executives and analysts said consumers are likely pulling back on home-goods spending due to a mix of factors, including rising inflation and the economic impact of Russia’s invasion of Ukraine. The pullback, analysts said, could mark the beginning of a more sustained drop in spending on durable discretionary items, a category that includes goods that sold well during the pandemic, such as grills and patio furniture.”
“The slowdown marks a shift from the past two years, when sales of mattresses and other furniture surged as consumers spent more time at home due to the Covid-19 pandemic.”
“‘I think mattresses are an early tell on a spending slowdown,’ said Peter Keith, an analyst at financial-services company Piper Sandler.”
“A mattress is a relatively easy purchase to defer because they wear out rather than break and consumers don’t look at them daily, Mr. Keith said.” READ MORE
Now more than ever, a good onboarding process is essential: “Unfortunately, many employers may feel like they are done as soon as a job is accepted or an employee has access to the right tools and systems. ‘It’s almost like a set it and forget it approach,’ says [Lindsay] Chim. Instead, companies should realize that getting someone in the door is not the finish line. And that’s where a fast start comes in. ‘The first days and weeks in a new job is when an employee is most open to learning, but also most concerned about whether or not they made the right decision on the role and company to begin with,’ says Chim. ‘A fast start can make the new hire feel like they are set up for success.’”
“The single biggest onboarding error can happen before the offer is made. ‘Whether it is because a role has not been defined properly up front, that circumstances have changed or because a hiring team wants to get a candidate to accept a role by telling them what they want to hear, the real job may not match expectations set during recruiting,’ warns Chim.”
“While it may be obvious to the hiring manager why the offer was made, the new hire may be less clear on why they won the role. ‘The more you leave a new hire guessing, the more likely imposter syndrome will emerge,’ says Chim.”
“When an employee moves from one team or department to another, it’s especially easy to shortchange their onboarding experience.” READ MORE
The rise of college-educated workers is fueling the move toward unionization: “Over the past decade-and-a-half, many young, college-educated workers have faced a disturbing reality: that it was harder for them to reach the middle class than for previous generations. The change has had profound effects — driving shifts in the country’s politics and mobilizing employees to demand fairer treatment at work. It may also be giving the labor movement its biggest lift in decades.”
“Members of this college-educated working class typically earn less money than they envisioned when they went off to school.”
“Support for labor unions among college graduates has increased from 55 percent in the late 1990s to around 70 percent in the last few years, and is even higher among younger college graduates, according to data provided by Gallup.”
“Though a minority at most nonprofessional workplaces, college-educated workers are playing a key role in propelling them toward unionization, experts say, because the college-educated often feel empowered in ways that others don’t.” READ MORE
A startup thinks transparent hiring data can help companies solve their hiring problems: “Ravio aims to give companies access to market benchmarks and compensation analytics to help them offer fair packages. Its platform offers data on salary, equity and benefits. The startup has been operating in stealth since January but today announced a $10 million seed round led by Northzone, which has backed unicorns such as HR tech Personio and mobility giant Tier, with participation from Cherry Ventures and Spark Capital.”
“To have a big impact, Ravio needs to add users to its platform quickly so it’s got enough data to benchmark — something Wulfert describes as a ‘cold-start problem.’”
“To use Ravio’s platform, companies contribute their data and in return get access to the aggregated data of all participating companies. ‘It’s kind of like a give to get,’ explains Wulfert.” READ MORE
THE 21 HATS PODCAST
Setting an Anchor Price: This week, Shawn Busse, Paul Downs, and Liz Picarazzi talk pricing, specifically how they use an anchor price—the first number they offer prospective customers. Do they anchor low to avoid scaring anyone away? Or do they anchor high to disqualify unlikely buyers and to make the actual sale price feel more comfortable? Plus: Liz explains the remarkable, dream-come-true, my-product-in-Times Square PR gift she just received. Of course, this is entrepreneurship, so even when dreams come true, there tend to be complications. Liz’s business is getting a wave of publicity at a time when her fabricator in Shanghai has been locked down for almost four weeks. She’s talking to domestic fabricators as well, but they, too, will be dependent on raw materials that have to come from China. It’s a problem, she tells us.
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