‘There Was a Revolt’
Retailers may finally be running up against some resistance as they test the limits of their price increases.
Good morning!
Here are today’s highlights:
Walmart wants to be a place where employees can build a career.
Here’s why a high profile non-profit that supported at-risk kids failed.
The SBA is giving EIDL borrowers more time to pay.
The guy who invented the Net Promoter Score talks about what makes companies successful.
PRICING
There may be a limit to how high prices can go: “Apparel retailers and department stores are bumping up against pockets of price resistance, a sign that consumers are curtailing spending as inflation remains at the highest level in four decades. Macy’s tried to raise prices on some mattresses and sofas by $100, but shoppers pushed back, Chief Executive Jeff Gennette said. Clothing brand Bella Dahl raised prices on its T-shirts by about $20, then sales fell and the company rolled back the price increase. ‘There was a revolt,’ said Steven Millman, its chief brand officer. ‘If we go any higher, we’ll do half the sales.’”
“Luxury players have been jacking up prices with no visible collapse in demand. Items that are scarce because of supply-chain shortages also can command higher prices.”
“And shoppers are more willing to pay up for fashion items like spring dresses than basic T-shirts, executives said.”
“Roughly 43 percent of consumers surveyed by NPD in February said that if prices continue to rise, they will delay less-important purchases to stick to a budget.” READ MORE
GOVERNMENT SUPPORT
The SBA is giving disaster-loan borrowers more time to repay: “The new deferment brings to 30 months the amount of time that Covid EIDL borrowers have until they must begin making loan payments. The deferment affects loans made to businesses and nonprofits in 2020, last year and this year due to the coronavirus. ... The loans are from the U.S. Treasury and have a term of up to 30 years and interest rates of 3.75 percent for businesses and 2.75 percent for nonprofits.”
“Marlene Cintron, administrator of SBA’s Region II, which includes New York, said on Tuesday the new deferment ‘will give the smallest of small businesses more flexibility in recovering and returning to their pre-Covid strength…”
“Interest continues to accrue during the deferment period.” READ MORE
HUMAN RESOURCES
Walmart plans to hire 50,000 workers by the end of next month: “Many of those workers will fill store roles, but Walmart also aims to add staff in new business areas such as health and wellness and advertising, said Donna Morris, the company’s chief people officer. Walmart has around 1.6 million U.S. employees and 2.3 million globally. The hiring push comes as Walmart is working to revamp its hiring and human-resources strategy and image to give priority to workers’ mental health and digital skills. The goal is to make Walmart a place where people feel they can build a long-term career, said Ms. Morris.”
“Walmart last summer changed its employee education support program to fully cover tuition and books at some colleges, a move the company said helped increase the number of employees using the benefit by 44 percent.”
“In September it raised minimum starting wages to $12 per hour and now says starting wages have gone up to $30 in some regions for some roles. Its average wage is around $16.40.”
“Walmart also reduced the time it takes an hourly worker to be hired to about 24 hours, down from a few weeks, an increasingly common focus for employers hiring large numbers of workers.” READ MORE
CUSTOMER SERVICE
The inventor of the Net Promoter Score shares what he’s learned about successful companies: “One company succeeding at this is Chewy, the online pet supply retailer with a Net Promoter Score that crushes Amazon's by 24 points in the pet category. The more information owners enter in their Chewy pet profile—things like breed and age--the more precise the offers generated by Chewy's recommendation engine. And the company also understands the special emotional tie between owner and pet, sometimes sending flowers or a note after an owner cancels a standing order following a pet's death. This is what digitally informed customer-centricity looks like.”
“The common tricks many companies employ to build an attractive workplace—free snacks, happy hours, Ping-Pong—will never make them great.”
“What will? Leaders who believe their company's primary purpose is to enrich the lives of customers, who inspire their teams to embrace that mission, and who give employees the tools, systems, and culture to do so.” READ MORE
REAL ESTATE
Developers are moving from sustainability to restoration: “Developers have long used open spaces and nature as selling points for their projects, like planned communities centered on golf courses, developments built in and around nature preserves and a new trend known as agrihoods, which integrate subdivisions with working farms. Increasingly, developers don’t just aim to preserve nature, but also promote their role in restoring it. This shift speaks to changing attitudes about the connection to nature, perceptions about being a sustainable corporate citizen, and the contradiction of posing real estate as a vehicle for restoration.”
“For example, River Ring, a pair of apartment high-rises on the Brooklyn waterfront designed by Bjarke Ingels Group and James Corner Field Operations, will include tidal pools and salt marshes that provide black-crowned night herons and snowy egrets a place to forage.”
“Across the city in the Rockaways, Arverne East will include a 35-acre restored beachfront and nature preserve on the site of a long-abandoned parking lot.”
“A developer in Utah has proposed dredging a lake to create a chain of 34 islands totaling 18,000 acres of land, including some set aside for an animal habitat.” READ MORE
THE RUSSIAN INVASION
From a Ukrainian entrepreneur:
THE 21 HATS CONVERSATION
About 10 years ago, I attended a breakout session that remains one of the most memorable presentations I’ve ever seen: The speaker was the owner of a pool-building business, Marcus Sheridan, who had thought he was going to lose the business during the Great Recession until he tried some unconventional marketing tactics. He started writing blog posts in which he dared to answer the questions that his customers always asked but that he’d been taught to avoid—questions about pricing, about the disadvantages of the fiberglass pools he built, and even about the other pool builders in the area. Those posts generated enough traffic, credibility, and ultimately orders to save the pool business. (In 2013, I assigned an interview with Marcus for The Times.)
Marcus went on to write a book, to launch a second career in marketing, and to become an in-demand keynote speaker.
On Tuesday, March 22, at 3 ET, he’ll join me for a 21 Hats webinar conversation. Bring your own questions!
FINANCE
Alex Ehrlich left his Wall Street career to start a “nonracist” bank called Percapita. It hasn’t been easy: “In early 2020, he outlined his vision for the company he was tentatively calling Inclusion Development Corp. For starters, it would seek to hire hardworking, creative, and self-aware people who look like the rest of the country. ‘If a third of our leadership is White and male, that’s fine,’ he said—that proportion generally tracks with the U.S. population. He thought he could hire Wall Street veterans excited enough by the prospect of creating a new corporate model for finance that they’d ‘walk away from multimillion-dollar jobs’ to try. Their target customers would be low-paid and nonunion American workers with hourly jobs inside corporations, a niche chosen in part for moral reasons: The financial system has been known to ignore or even punish working-class Americans.”
“To meet workers where they are, the startup decided to focus instead on consumer finance.”
“The team began homing in on a concrete product, a credit card that charged two interest rates: a tiny one for necessities and a higher one for inessentials.”
“He seemed to see the trillion-dollar pile of student loans not as a trap but a business opportunity, especially if his team could widen access to debt refinancing.” READ MORE
MANUFACTURING
An entrepreneur in Texas explains why he’s giving up on making masks—even though he believes they could defeat Covid:
FAILURE
A founder reflects on the failure of her nonprofit, Sisu Academy, a tuition-free boarding school for at-risk youth in San Diego: “Our business model initially was based on donations from both large and small donors. We were working toward sustainability by building in revenue streams, mainly through an on-campus incubator. We closed down operations before we could see that phase through.”
“The idea was inspired by my co-founder, my husband. His mom suffered mental health issues, he had an absent father and was raised by his grandparents primarily. We reimagined a school that would offer support for young kids so they had the care and support they needed to succeed.”
“Email marketing, social media, events, galas, media, new stories, speaking and interviews. They all worked and contributed to our success. The most successful thing we did was network our asses off, meeting the right people, getting our story in front of the right people was what made all the difference.”
“Where it was hard was cash flow, this was a major disadvantage. This is the root of the issues with small nonprofits. Paying for operations is a constant battle, from month to month.” READ MORE
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THE 21 HATS PODCAST
We Are Survivors: This week, two years after the pandemic first hit, Shawn Busse, Jay Goltz, and Liz Picarazzi talk about what they’ve learned, what they’re doing differently, and whether their businesses have gotten weaker or stronger. Leading up to the pandemic, Shawn—still carrying scars from the Great Recession—did a series of workshops on how to prepare for the next recession. Plus: public companies are increasing prices aggressively and then bragging on earnings calls about the extra profits those increases are generating. Is there a lesson in this for privately owned businesses?
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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