Discover more from The 21 Hats Morning Report
Why Supermarkets Sell Flowers
Yes, the gross margins are good, but there’s a more important psychological reason.
Here are today’s highlights:
How one manufacturer plans to hire a thousand workers.
Remote work is upending local retail.
Private equity is taking over the New England fishing industry.
With funding falling, will startups have to try to make money?
GE Appliances plans to hire 1,000 people at its Louisville factories by next year, many of them refugees and immigrants: “GE Appliances is just the latest company to set up a program to hire refugees, who studies show stay at jobs longer than their native-born counterparts. The company, which is owned by Chinese consumer electronics conglomerate Haier, has hired 40 refugees from Afghanistan for manufacturing jobs in its Louisville plant, among a total of 90 people who speak English as a second language, since the program began in February. The company provides interpreters, and has translated more than 100 documents related to health, safety and employment into multiple languages. On the plant floor, a total of 42 languages are spoken, a company spokeswoman says.”
“GE Appliances plans to host nine more ESL employee orientations before the end of the year in an effort to ramp up its hiring efforts of refugees, immigrants and those for whom English is a second language.”
“Louisville (with a population around 620,000) is a competitive market for blue-collar workers because it is both a logistics hub and home to a large Ford plant.”
“Chobani’s billionaire founder Hamdi Ulukaya, a Kurd raised in eastern Turkey, has been one of the loudest and longest-standing proponents of hiring refugees.”
“He started hiring refugees at his yogurt company and subsequently founded non-profit Tent to help businesses support refugees.” READ MORE
There aren’t enough people to take care of our animals: “Veterinary medicine has dealt with staffing problems for years, but the pandemic made everything worse. After Covid hit, demand for vet appointments went up—for newly adopted pets and for older pets in whom owners observed new health issues after being at home all day. Covid precautions like curbside service also meant offices were operating less efficiently. Everything just took longer. Meanwhile, vets and vet techs started leaving the field. ‘All of my friends who were at retirement age—that were in their early 60s—just retired immediately,’ Carrie Jurney, a veterinary neurologist in the Bay Area, told me.”
“Staying in the job wasn’t worth the risk of getting Covid. The veterinary field also skews quite female, and mothers without child care quit or switched to more flexible remote work.”
“Over the course of the pandemic, those who remained saw their jobs get worse. Owners stressed by lockdowns became angrier and more unruly toward veterinary staff.”
“‘In the pandemic, people forgot how to be a person,’ says Melena McClure, an emergency vet who lives in Austin.” READ MORE
There’s a reason supermarkets sell flowers: “Big, bright bouquets of fresh-cut blooms greet shoppers inside just about every major grocer, from Whole Foods to Kroger to innumerable New York City bodegas. That's no coincidence — there's a strategic decision behind those flowers' placement. ‘It is very, very simple,’ says Paco Underhill, the founder and CEO of behavioral research and consulting firm Envirosell. ‘If you can get someone's nose and saliva glands working, they become a much less disciplined shopper.’ That's right: Flowers fire up the senses, getting you ready to spend. Sure, they're aesthetically pleasing. And as you get closer, your nose picks up on their aroma, which tells your brain ‘this place has good stuff.’”
“‘You're signaling freshness, you're signaling natural... all the good things that make food good,’ said Ashwani Monga, a professor of marketing at Rutgers Business School.”
“‘If I'm a grocery store then that's how I want you to see my store — logistically, if this person can manage fresh flowers and sell them, this person isn't going to sell stale food.’”
“They may account for only 1 percent to 3 percent of total sales, but in 2019 stores reported an average gross margin of 47 percent on cut flowers, according to a report from the International Fresh Produce Association.” READ MORE
Remote work has turned a Brooklyn neighborhood into a shopping mecca: “Williamsburg landlords filled 123,000 square feet of net retail space during the first quarter of this year, according to data firm CoStar Group, the highest level since the third quarter of 2016. Asking rents, which fell when Covid-19 hit, climbed to $64 a square foot last quarter from $54 a square foot a year earlier, according to CoStar. It became apparent fairly early on in the pandemic, as remote workers shifted their shopping to local stores, that businesses in New York’s residential neighborhoods were faring better than the city’s office and tourist-dependent districts.”
“But the recent increase in demand for Williamsburg retail space shows companies are betting that working from home—and these new shopping habits—are permanent, brokers and landlords said.”
“Brandon Singer, chief executive of retail leasing and advisory firm Mona Retail Holdings, said retail space on North 6th was renting for $100 a square foot before the pandemic. Now, asking rents are closer to $300 a square foot.”
“‘Before, it was a little more direct-to-consumer brands that were signing leases there,’ Mr. Singer said. ‘Now luxury and more traditional retail concepts are also flocking to the market.’” READ MORE
Startup funding posts its biggest decline since 2019: “The numbers are stark. Investments in U.S. tech start-ups plunged 23 percent over the last three months, to $62.3 billion, the steepest fall since 2019, according to figures released on Thursday by PitchBook, which tracks young companies. Even worse, in the first six months of the year, start-up sales and initial public offerings — the primary ways these companies return cash to investors — plummeted 88 percent, to $49 billion, from a year ago.”
“Start-ups are also accustomed to the boy who cried wolf. Over the last decade, various blips in the market have led to predictions that tech was in a bubble that would soon burst. Each time, tech bounced back even stronger, and more money poured in.”
“‘Pretty much every VC is sounding alarm bells,’ said [David Spreng, an investor at Runway Growth Capital, a venture debt investment firm].”
“But, he added, ‘the management teams we’re talking to, they all seem to think: We’ll be fine, no worries.’” READ MORE
Here’s how New England’s fishing industry got hooked on private equity: “In recent years, the port of New Bedford has thrived, generating $11.1 billion in business revenue, jobs, taxes and personal income in 2018, according to one study. But a quiet shift is remaking the city and the industry that sustains it, realizing local fishermen’s deepest fears of losing control over their livelihood. Blue Harvest and other companies linked to private equity firms and foreign investors have taken over much of New England’s fishing industry. As already harsh working conditions have deteriorated, the new group of owners has depressed income by pushing expenses onto fishermen, an investigation by ProPublica and The New Bedford Light has found.”
“In the first half of 2021, private equity firms, which often invest in privately held companies with the goal of ultimately selling them for a profit, accounted for 34 percent of mergers and acquisitions in the fishing industry, nearly double the 2017 percentage, according to trade publication Undercurrent News.”
“‘What we’re seeing is a fundamental transformation of the fishing industry,’ said Seth Macinko, a former fisherman who’s now an associate professor of marine affairs at the University of Rhode Island. ‘Labor is getting squeezed and coastal communities are paying the price.’”
“‘It’s a nickel-and-dime game,’ said the 40-year-old [Jerry] Leeman, who wore a flannel shirt beneath foul weather gear and a necklace strung with a compass, a cross, and three pieces of jade — one piece for each of his three children. ‘Tell me how I can catch 50,000 pounds of fish yet I don’t know what my kids are going to have for dinner.’” READ MORE
Kelly’s Roast Beef is rebranding before franchising: “For more than 70 years, Kelly’s Roast Beef has been a staple of the North Shore, renowned for its thinly sliced, rare meat sandwiches and its generous platters of fried seafood. The Revere Beach-based brand appeared in the movie ‘Good Will Hunting’ and was most recently name-dropped in a March episode of Jimmy Kimmel Live. But for all the acclaim, the family-owned business has just four corporate locations, all in a narrow slice of turf north of Boston. Now that’s about to change: The 71-year-old business is starting to franchise for the first time in its history, based on the family’s belief that it can compete with the most well-known food chains in the country.”
“Kelly’s hired Marlo Marketing, a marketing agency based in Boston, to refresh the dated brand. Marlo Fogelman, founder of the firm, said her team did an ‘audit’ of Kelly’s starting last fall — they visited the stores, sampled the food, and inspected the menu.”
“Ultimately, Kelly’s decided to present itself as a Boston company, though locals will know that’s not technically true. Kelly’s new slogan reads ‘Kelly’s: Boston’s Legendary Roast Beef & Seafood,’ instead of ‘Kelly’s: Roast Beef, Seafood, Sandwiches.’”
“Perhaps the most controversial decision was Fogelman’s suggestion that the brand go big promoting the ‘three-way’ on its website and across social media. (The Kelly’s three-way is a roast beef sandwich with James River BBQ sauce, mayonnaise, and a slice of Land O’Lakes white American cheese.)”
“[CEO of Kelly’s Roast Beef Franchise Neil] Newcomb originally resisted, insisting that Kelly’s is a family brand. But since the company wants to widen its audience, Fogelman said it made sense to lean into whatever innuendo people might imagine.” READ MORE
Willie Lee Morrow created the Afro pick: “Willie Lee Morrow, a son of Alabama sharecroppers who built a business empire around hair care products aimed at African American consumers, among them a comb designed to work with the natural styles that exploded in popularity in the 1960s — a tool he called the Afro Tease, but which came to be known as the Afro pick — died on June 22 at his home in San Diego. He was 82.”
“‘The Afro caught everybody off guard,’ he told Ebony magazine in 1970. ‘Even Black barbers and beauticians in America were caught lacking the knowledge as well as the desire to style a decent Afro.’”
“An inveterate innovator, Mr. Morrow spent years working on his pick design, at first making wooden picks in the back of his shop before he landed on a plastic version that could be mass produced.”
“Based on his growing reputation, the Department of Defense contracted with him in 1969 to train its thousands of barbers and beauticians to work with Black hair.”
“He made most of his products next door to his salon, having expanded to take over almost the entire block, and he employed some 200 people. A 10-foot Afro pick stood out front.” READ MORE
THE 21 HATS PODCAST
This week, in a special bonus episode, Kurt Wilkin talks about his new book. It’s called “Who’s Your Mike?” and it features chapters on the kinds of hiring and management challenges all entrepreneurs confront, including situations involving employees like Mike. Who exactly is this guy Mike? Oh, you know. He’s the incredibly loyal and hard-working employee who’s been with you from day one but who isn’t growing with the business. Says Kurt, “We all have, or have had, or will have a Mike.”
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