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‘We’re Never Going Back to Normal’
With omicron looming, companies are once again rethinking their return-to-office plans.
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Here are today’s highlights:
The battle for truck drivers is especially fierce.
A mother-daughter team turned a thrift shop into a $100 million chain.
‘Dark’ stores are filling vacant retail spaces in cities across the country.
And in today’s Dashboard: a tax break just for business owners.
THE COVID ECONOMY
Economist Mark Zandi says omicron is not going to wreck the economy: “Covid-19 continues to call the shots in our economy. This past summer, the Delta variant slowed growth and juiced up inflation. After Delta receded, growth rebounded. With the Omicron variant now spreading across the globe, the next few weeks will give us a sense of how much economic peril lies ahead. While [Friday’s] Consumer Price Index report showed inflation rose in November to 6.8 percent for the previous 12 months, there’s compelling evidence that inflation has peaked. Even with the risks of Omicron and other variants to come, there’s reason for optimism that the economy will return to full employment with comfortably low inflation by this time next year.”
“Booming holiday sales are a clear sign of the economy’s resilience. So far, sales couldn’t be better.”
“If this pace holds, by this time next year, the economy will have regained all the jobs lost during the pandemic, plus those that would have been created if there never had been one.”
“Given the near-record number of open job positions, there is good reason to think that businesses will continue to add aggressively to their payrolls.” READ MORE
Meanwhile, Prime Minister Boris Johnson says the U.K. faces a “tidal wave” of omicron cases: “In a televised statement, Johnson said everyone age 18 and older will be offered a third shot of vaccine by the end of this month in response to the omicron ‘emergency.’ The previous target was the end of January. He said cases of the highly transmissible variant are doubling every two to three days in Britain, and ‘there is a tidal wave of omicron coming.’”
“‘And I’m afraid it is now clear that two doses of vaccine are simply not enough to give the level of protection we all need,’ Johnson said. ‘But the good news is that our scientists are confident that with a third dose – a booster dose – we can all bring our level of protection back up.’” READ MORE
There is a fierce battle for truck drivers underway: “Dawn hasn’t broken when Jerrett Sellers spots a promising target in the mostly deserted streets of South Carolina’s capital: a lone truck driver climbing down from his cab at a gas station. Sellers looks for encouraging signs. Shoulders slumped with fatigue? A clean and tidy appearance? Liking what he sees, Sellers moves quickly, approaching the driver with a piece of paper in his hand. ‘You got a quick sec to talk?’ he calls to the man. ‘We’re looking to hire.’ Sellers, 32, is a front-line soldier in the nationwide battle to combat a shortage of truck drivers that has become a serious problem for the U.S. economy as it struggles against the seemingly endless assaults of the Covid-19 pandemic.”
“As transportation manager for Merchants Foodservice, a regional trucking and delivery firm based in Hattiesburg, Miss., Sellers hunts service stations, convenience stores, truck stops, driving schools, and wherever else he might find potential recruits, even as his competitors are doing the same to lure away his firm’s drivers.”
“Sellers’ pitch includes $2,000 signing bonuses, medical and dental coverage, and even an extra $125 a week just for showing up on time.”
“The driver, sporting a new Apple watch and Bluetooth earbuds, said he’d already gotten fat raises this year, the equivalent of $4 an hour. ‘I’m comfortable,’ the driver said.” READ MORE
Companies are once again rethinking their plans to return to the office: “In recent days, companies as varied as Facebook parent Meta Platforms, Ford Motor, and Alphabet’s Google have delayed return-to-office dates or given employees the option to stay home longer. Ride-hailing company Lyft told its corporate employees last week they wouldn’t be required back in its offices until 2023.”
“Some executives got ahead of themselves in thinking the pandemic had been easing, only to then need to pause or adjust some back-to-office or international travel plans, said Pat Gelsinger, chief executive officer of Intel Corp.”
“‘Frankly, we’re never going to be back to normal,’ Mr. Gelsinger said at the Journal event. ‘We’re going to be in a state of play where we’re living with some level of Covid for many, many years to come.’” READ MORE
A mother and daughter turned a thrift store into a $100 million business: “In the 1970s, thrift shopping was far from the favored Gen Z weekend activity that it is today. Back then, secondhand clothing carried a stigma as a lower-class necessity, said Kerstin Block, the president and co-owner of Buffalo Exchange. ‘Resale was not popular then,’ she said. ‘We have worked to change that perception over the years.’ And they did: Her company grew from one family-run store in 1974 to a chain of 43 family-owned and -operated stores across the US. In 2019, Buffalo Exchange's revenue hit $100 million, which Insider verified with documentation.”
“Today the ‘buy, sell, trade’ model is widely used in resale, from local stores such as Beacon's Closet in New York to national chains such as Plato's Closet.”
“Kerstin was the artistic one who handled the fashion and marketing. As a former decorator for a furniture retailer, she had an eye for what people wanted. Meanwhile, Spencer took care of the business operations, including bookkeeping and advertising. They stuck to what they were good at and didn't attempt to fill the other's role.”
“When customers walk into Buffalo Exchange with a tote bag full of clothing, store associates known as buyers are the ones who sort every piece to find the gems. They check for brand names, garment condition, and overall appeal to stock the store with items from brands like Levi's, Free People, and Nike. You can find gently used luxury goods like leather jackets and designer bags for a fraction of their original prices.
"’We call it an art, not a science, because it really does take this innate interest in it,’ Rebecca said.” READ MORE
A 15-year-old Philadelphian with a clothing line is on pace to surpass $2 million in sales this year: “Top Young Bosses Barbershop & Hair Salon in North Philadelphia was one of Trey Brown’s first stops selling T-shirts with a lion logo. Taken with the 12-year-old’s poise, shop co-owner Nell Moore recorded him on his phone. ‘My name is Trey Brown. I started my own clothing line,’ the youngster says on the video. ‘The name of my clothing line is Spergo, and Spergo is a catchy name that I came up with. I got a lion right here because it’s the king of the jungle and I’m a young kid.’ Hip hop-influenced streetwear is having a resurgence and Trey, now 15 years old and the CEO of start-up clothing brand Spergo, is cashing in.
“Spergo opened two mall stores this year, including one at King of Prussia, operates an e-commerce site, and struck a $300,000 investment deal on ABC’s Shark Tank in November.”
“Daymond John, the founder of the apparel company FUBU, agreed to put up the money for a 20-percent stake in the brand, valuing Spergo at $1.5 million.”
“Spergo’s line of brightly colored clothing includes $80 sweatshirts, $98 hoodies, $90 track pants and $68 women’s body dresses.” READ MORE
THE 21 HATS CONVERSATION
Who's Running the Business? In 2009, Steve Krull and Dan Golden founded a digital marketing agency called Be Found Online. Based in Chicago, the agency now produces $5 million a year in revenue serving mid-market and enterprise clients. Building and managing a business can be challenging under the best of circumstances, but in 2020, the wives of both Steve and Dan were diagnosed with Stage IV cancer. Tomorrow at 3 ET, Steve and Dan will join me for a webinar conversation. We'll talk about how both families have coped and what it has meant for the business. REGISTER HERE
‘Dark stores’ are filling vacant retail spaces in cities across the country: “Walk around Boston, and you’ll find storefronts that emptied during the pandemic taking on new lives. Former sleep stores or diet clinics are being converted to mini-warehouses for a wave of ‘instant delivery’ startups aiming to dominate the ‘last mile’ of delivery, and fueled by deep pockets of cash to do so. Promising to shuttle bananas or ice cream to your apartment in 15 minutes, these companies are renting storefronts and turning them into packing centers, then employing couriers on e-bike or scooter to make deliveries within a mile or two. They’re wildly popular in Europe, South America, and Asia. Scores have opened in New York City.”
“Now they’re coming to Boston, where a half-dozen of these companies — with names like Getir, BUYK (pronounced ‘bike’), and JOKR — have opened or announced plans to in recent months, taking storefronts in Downtown Crossing, the South End, and Cambridge.”
“Amazon primed us to expect deliveries within two days, or faster. Early-pandemic isolation trained consumers to order groceries online. Takeout became essential, sparking a wave of ‘ghost kitchens’ that only serve meals for delivery. And many traditional retailers vanished — especially in downtown areas — leaving a glut of empty stores that landlords are eager to fill.”
“But some worry about what these companies might mean for Boston, and the streets they occupy. There’s a big difference between a traditional store you can walk into and a warehouse with covered-over windows and a stream of e-bikes coming out the door.” READ MORE
This Twitter thread about what it really takes to build a business could have been written only by someone who’s done it:
The cream cheese shortage isn’t just about supply-chain issues. It’s also about a cyberattack on the biggest U.S. cheesemaker: “Schreiber Foods in Wisconsin, which makes cheese slices for most of the top burger chains in America and has a cream cheese business rivaling Kraft’s, closed for days in October after hackers compromised its plants and distribution centers. While that may not sound like a long time, the company is big enough that the lost production shook U.S. markets.”
“For the first time in 71 years of business, Junior’s Cheesecake in New York City ran out of cream cheese. The business closed down its baking for a day and a half to drive from the New York area to Philadelphia to pick up cream cheese, rather than wait for delivery.”
“‘Without it we can’t make a cheesecake,’ owner Alan Rosen said in a phone interview. ‘There’s no substitute.’” READ MORE
There’s a Welshman who threw away the key to his stash of half a billion in Bitcoin: “In a cluttered desk drawer, he found two small hard drives. One, he knew, was blank. The other held files from an old Dell gaming laptop, including e-mails, music that he’d downloaded, and duplicates of family photographs. He’d removed the drive a few years earlier, after he’d spilled lemonade on the computer’s keyboard. Howells grabbed the unwanted hard drive and threw it into a black garbage bag. Later, when the couple slid into bed, Howells asked Hafina, who dropped off their kids at daycare each morning, if she would mind taking the trash to the dump also.”
“He remembers her declining, saying, ‘It’s not my f---ing job—it’s your job.’ Howells conceded the point. As his head hit the pillow, he recalls, he made a mental note to remove the hard drive from the bag. ‘I’m a systems engineer,’ he said. ‘I’ve never thrown a hard drive in the bin. It’s just a bad idea.’”
“The next day, Hafina got up early and took the garbage to the landfill after all. Howells remembers waking upon her return, at around nine. ‘Ah, did you take the bag to the tip?’ he asked. He told himself, ‘Oh, f---. She’s chucked it,” but he was still groggy, and he soon fell back asleep.” READ MORE
21 HATS DASHBOARD
Dashboard: A Tax Break Just for Business Owners This week, Gene Marks and I talk about how some 20 states are giving business owners a special workaround that helps them sidestep the federal cap on state and local taxes. If you live in one of these states and have a pass-through corporate structure, it could be worth a lot of money. They also talk about reports that businesses are budgeting to give their employees big raises next year and why industrial space in some places is now worth more than office space. Plus: the latest Consumer Price Index inflation report is not looking very transitory.
You can find Dashboard in your 21 Hats Podcast feed.
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