‘There is No Going Back’

The longer businesses stay out, the harder it will be to convince employees to return to the office.

Good morning!

Here are today’s highlights:

  • California’s gig-worker law has been ruled unconstitutional.

  • Microsoft is raising Office 365 prices as much as 25 percent.

  • More than 50 businesses are suing ‘The Profit’s’ Marcus Lemonis.

HUMAN RESOURCES

It’s going to get harder to bring employees back to the office: “With the latest wave of return-to-office delays from Covid-19, some companies are considering a new possibility: Offices may be closed for nearly two years. That is raising concerns among executives that the longer people stay at home, the harder or more disruptive it could be to eventually bring them back. Many employees developed new routines during the pandemic, swapping commuting for exercise or blocking hours for uninterrupted work.”

  • “Surveys have shown that enthusiasm for remote work has only increased as the pandemic has stretched on.”

  • “‘If you have a little blip, people go back to the old way. Well, this ain’t a blip,’ said Pat Gelsinger, chief executive officer of Intel Corp., whose company has benefited from the work-from-home boom. He predicts hybrid and remote work will remain the norm for months and years to come. ‘There is no going back.’” READ MORE

Recent studies indicate that the supplemental federal unemployment payments have played only a small role in this year’s labor shortages: “They found at most a modest increase in employment in states that abandoned the programs — most of them in June — even as millions of jobless workers have had to cut spending, potentially hurting local economies. ... Data released Friday by the Labor Department provided the latest evidence. It showed that the states that cut benefits have experienced job growth similar to — and perhaps slightly slower than — growth in states that retained the benefits. That was true even in the leisure and hospitality sector, where businesses have been particularly vocal in their complaints about the benefits.”

  • “The five states experiencing the fastest job growth in July — Vermont, Hawaii, North Carolina, Rhode Island and Alaska — have all retained at least some of the federal benefits.”

  • “All those programs are set to expire next month unless Congress extends them, which appears unlikely.” READ MORE

A California judge has ruled the state’s gig worker law unconstitutional and unenforceable: “The decision is not likely to immediately affect the new law and is certain to face appeals from Uber and other so-called gig economy companies. It reopened the debate about whether drivers for ride-hailing services and delivery couriers are employees who deserve full benefits, or independent contractors who are responsible for their own businesses and benefits. Last year’s Proposition 22, a ballot initiative backed by Uber, Lyft, DoorDash and other gig economy platforms, carved out a third classification for workers, granting gig workers limited benefits while preventing them from being considered employees of the tech giants.” READ MORE

PRICING

Microsoft is raising Office 365 prices by as much as 25 percent: “Who knew the supply chain crisis would affect cloud applications? It hasn’t, of course. It’s just that Microsoft hasn’t raised prices in a number of years and – like all other companies in these inflationary times—feels that now is the best time to take advantage. And what are you going doing to do, migrate your entire office collaboration system to something else? Nope, you’ll pay. We all will.” READ MORE

RETAIL

Businesses are trying desperately to prepare for the holidays: “A year after many retailers ran out of stock by Thanksgiving; post offices filled with panicked shoppers mailing gifts to loved ones; and worker shortages due to COVID-19 caused severe delays, 2021 is already shaping up to be a repeat of Christmas past. In July, UPS announced it expects peak demand this holiday season to exceed capacity by five million packages daily. Now in the midst of sweltering summer days, retailers are already stocking up on holiday inventory, preparing gift sets, and planning seasonal email campaigns.”

  • “‘I'm purchasing Christmas stuff in summer which is crazy,’ [said Cindy Cortez, owner of Newtown HQ, in Queens, New York]. ‘Usually I purchase in early October and it's just a lot to put in advance when I have to sit on this product until after Halloween.’”

  • “Eduardo Silva owns Incasa, a home goods shop where he used to sell couches. But since customers don't want to wait six months for manufacturer delays, he says, he's stopped ordering. Instead, he's stocked smaller items like honey and candles with shorter lead times, many of them locally made. ‘I cannot depend on one item,’ he said.”

  • “The downside to ordering inventory early is that it's money out of your pocket that you may not recoup for months.” READ MORE

For grocery stores, the supply challenges are as tough as they were in spring 2020: “Donny Rouse, chief executive of Louisiana-based Rouses Markets, said he is struggling to fill shelves as his company runs low on everything from pet food to canned goods. The chain of more than 60 supermarkets is sometimes receiving as little as 40 percent of what it orders, prompting Mr. Rouse and his staff to try to secure products earlier and more often. Before the pandemic, Rouses received well over 90 percent of its orders.”

  • “Demand is higher than expected by retailers, with monthly sales up about 14 percent from two years ago and 3 percent from a year ago, according to data from research firm IRI.”

  • “To keep stores stocked, retailers are rethinking when and how to procure products they sell. Some are carrying fewer flavors or sizes, selling different brands and gathering inventory whenever possible.”

  • “‘Every day, overall, stores are ordering 10 percent  more than what we can get for them,’ said David Smith, CEO of Associated Wholesale Grocers Inc., which supplies food for Rouses and other regional and independent grocers across the country.” READ MORE

FROM OUR SPONSOR: APPLIED ECONOMICS

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THE COVID ECONOMY

September will not bring the comeback New York City was expecting: “For New York City and its trillion-dollar economy, September was supposed to mark a return to normal, a moment when Broadway theaters reopened, stores and restaurants hummed, and tourists and office workers again filled the streets. But that long-awaited milestone has been upended by the Delta variant of the coronavirus. One big company after another has postponed plans to come back to Manhattan’s soaring towers. Trade shows have been canceled. Some small businesses have had orders evaporate.”

  • “It is a setback for a city that has lagged behind the rest of the country in its economic recovery, with a 10.5 percent unemployment rate that is nearly twice the national average.”

  • “‘The Delta variant is a meaningful threat to the city’s recovery,’ said Mark Zandi, the chief economist at Moody’s Analytics. ‘This is not going to be easy. It’s going to be a long time before New York City gets its economic groove back.’” READ MORE

LITIGATION

A group of more than 50 businesses has sued Marcus Lemonis, star of The Profit, accusing him of destroying their businesses: “A proposed amended complaint filed on Saturday with the United States District Court for the Southern District of New York alleges that Lemonis, NBCUniversal, and production company Machete employed mob-like tactics against companies that have appeared on The Profit to defraud business owners and take their companies. ‘Marcus Lemonis is a wolf in sheep’s clothing, and a false prophet who uses his fame and fortune to steal small businesses from everyday Americans,’ states the proposed amended complaint. ‘Through NBC’s television show, The Profit, Lemonis presents himself as a savior of struggling small business owners, all the while preying on the business he purports to be saving.’”

  • “The filing says that an eight-month investigation revealed that at least 51 companies that have appeared on the show suffered a similar ‘hellish nightmare’ and pattern of humiliation, fraud, extortion and other charges.”

  • “‘Lemonis strategically and deliberately drowns these businesses in debt to him and his entities in order to foreclose on them and take their assets and intellectual property to expand his own empire,’ the filing states.”

  • “Lemonis has denied any wrongdoing and suggested any companies that are unhappy with their company’s performance should look in the mirror.” READ MORE

STARTUPS

A slew of startups are trying to disrupt the funeral business: “Titan Casket, for example, can’t take away the pain of losing a loved one. But it can certainly help take away some of the financial pain of laying that loved one to rest. And it’s using technology to do it. The company, which is based in Seattle, is helping consumers to buy caskets online – right from its own website and even from Amazon. The idea is to release the bereaved from the grip of the funeral home and allow more choices and cost savings.” READ MORE

OBITUARY

In a posthumous memoir, the founder of Trader Joe’s explains how he targeted the overeducated and underpaid: “To determine what products to sell in his stores when he began his business a half-century ago, Joe Coulombe applied what he calls the Four Tests: ‘high value per cubic inch; high rate of consumption; easily handled; and something in which we could be outstanding in terms of price or assortment.’ That’s how Trader Joe’s ended up selling bullets. Granted, it was California in the 1960s, a time before gun-control laws took hold in the state. Following the assassination of Robert F. Kennedy, however, and a slew of regulations limiting the sale of ammunition, Coulombe decided to pull bullets from his shelves. Besides, there were other deals to be made—in wine, maple syrup, even Brie. The key was adaptability.” 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?

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