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A Store with No Inventory, A Free Trial Offer Gets Out of Hand, and A Manufacturer Can't Find Workers
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A Store With No Inventory, A Free Trial Offer Gets Out of Hand, and a Manufacturer Can't Find Workers
MARKETING
Customers are abusing the free trial offers of online mattress companies: “Over the course of 15 months, Mr. Bir slept on five different mattresses, each one purchased and returned consecutively using the free-trial policies of dozens of bed-in-a-box startups. It all began in 2016, when Mr. Bir, a new arrival to New York City, was uncertain about how long he would stay, and in need of a cheap short-term sleeping surface. ‘I didn’t have the intention of churning through so many,’ said Mr. Bir, 31, a technical architect at Slack Technologies. What began as a makeshift solution soon grew into an elaborate scheme, calculated to stretch the trials as far as they would go. ‘You could literally do this and never pay for a mattress,’ he realized.
“Online mattress sales are booming in the US. The success of direct-to-consumer services like Casper Sleep and Tuft & Needle, which deliver neatly boxed mattresses to consumers’ doors, has spawned hundreds of copycats. To entice shoppers who would otherwise prefer to test the firmness of the mattress in the showroom, many of these online upstarts offer free home trials that can run for as long as a year. The customer typically pays for the mattress upfront and gets a full refund if the mattress is returned before the cutoff. For consumers like Mr. Bir, the implications were obvious: a virtually limitless supply of brand-new mattresses that, other than one’s dignity, cost nothing—that is, as long as they remember to return the mattresses in time.” Read more.
THE ECONOMY
The private sector added just 67,000 jobs in November: “Economists polled by The Wall Street Journal were expecting the ADP National Employment Report to show an addition of 150,000 jobs. Large and midsize businesses reported the largest increase in new jobs, adding 27,000 and 29,000 jobs, respectively. Small businesses, with 49 or less employees, added 11,000 jobs. ‘The job market is losing its shine,’ said Mark Zandi, chief economist at Moody’s Analytics, in prepared remarks. ‘Job openings are declining and if job growth slows any further unemployment will increase.’ Read more.
But furniture makers can’t find enough skilled workers: “Manufacturers across the country are struggling to fill open slots in a tight US labor market. Furniture companies, which for decades have been hit by competition from China, face special challenges after years of shrinking. A generation of prospective sewers and upholsterers have steered clear of the industry, leaving it heavily reliant on an aging workforce. At Century Furniture, based in Hickory, NC, delivery times have stretched to nearly nine weeks because of the worker shortage, which has caused the company to lose orders. ‘I walk around our factories every other day and am spooked by what I see,’ said Alex Shuford III, chief executive of RHF Investments Inc., owner of Century and several other furniture brands. ‘The retirements are coming and I can’t find enough people.’” Read more.
RETAIL
Canada Goose’s new Toronto store has everything but inventory: “The entrance to the concept store is called ‘The Crevasse.’ There are digital displays of rock faces on both entryway walls and OLED panels under glass flooring that simulate cracking ice as consumers walk forward. There’s an accompanying soundtrack pumping out the sounds of the Arctic. ... The ‘Gear Room’ is where consumers will store their personal belongings and select a Canada Goose coat and accessories to try out in the ‘Cold Room.’ There’s a quick explanation by brand ambassadors of the cold room and Canada Goose’s ‘Thermal Experience Index,’ which is a rating scale for its outerwear based on the temperature range for which it’s best suited.
“After leaving the ‘Cold Room’ consumers will head to the retail area, where brand ambassadors are available to answer questions and help navigate through the product inventory, digitally on kiosks. If ‘The Journey’ did its job, shoppers will leave empty-handed, but filled with the anticipation that a new coat or accessory will arrive at their home that night ...” Read more.
TAXES
Here’s someone using an Opportunity Zone the way it’s supposed to be used: “The founder and managing partner of SoLa Impact, [Martin] Muoto, and his Los Angeles-based social impact fund has raised over $165 million to provide mainly multi-family housing to largely low-income African American and Hispanic residents in Watts, Compton, and South Central since 2014. The fund acquired and rehabbed 1,500 units into those communities and plans to build another 1,500 during the next two years using private capital. Community groups have committed to offering social services like financial literacy, drug rehab, and career counseling to tenants. ...
“Now, Muoto hopes to make a big social impact in Los Angeles with the Beehive, an ambitious project he calls the nation’s first business campus for opportunity zone companies. It will allow minority and women-owned businesses to work and network with other entrepreneurs and investors on the four-acre campus in South Los Angeles, about 10 minutes from downtown Los Angeles, that is being revitalized. In 2020, the company plans to raise another $50 million to $75 million to expand the Beehive. The firm has invested about $20 million into the project, including $14 million to acquire six warehouses that house the Beehive. It will be the first venture for Muoto’s firm beyond affordable housing. Its facilities will allow tech entrepreneurs, local businesses, and startups to launch enterprises. The Beehive aims to draw established companies that want to invest in the community. ‘We’re open to attracting the likes of Google and Apple as well as minority companies,’ Muoto says.” Read more.
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HUMAN RESOURCES
Concerned about its bro culture, a coffee startup hired a philosopher: “The atmosphere [at Kitu Life] was super competitive and there were a few incidents where team members commented on a woman’s appearance or made an anti-Semitic joke. Mr. DeCicco was determined to stop the nonsense while the company was still small. His solution? He hired a philosopher. … Typically working with the company several days a month, [Richard] Blackman started by drafting a two-page ethics statement, working first with the three brothers and then the entire Kitu team. Some material got the ax as the employees thought through its values. …
“What remained: A commitment to expanding and diversifying the hiring pool. The statement includes action items such as: ‘Advertise in places where nonwhite guys are.’ The company says it has since grown from a dozen employees, including two women and two minorities, to 66 workers, including 22 women and 11 minorities. Women comprise two-thirds of the leadership team and the average salary of a female employee is $75,000 compared with $64,000 for men. ... But creating an ethical culture entails more than setting policy. Mr. Blackman guides workshops where Kitu employees logically analyze topics such as what constitutes an offensive statement, and what it means to be a jerk.” Read more.
Study finds male employees of companies offering gender-neutral paid leave are less likely to use the full amount of time: “When the difficulties come to a head, both men and women tend to resort to traditional roles, even if it’s not what they’d planned or hoped to do: Women take a step back at work to prioritize family needs, and men do less at home to prioritize work. … The New America report, released Wednesday, found no gender differences in the need to take leave. A third of working adults said they expected to need it to care for a baby, and half expected to need it to care for old, sick or disabled family members. The data came from a nationally representative survey of 2,966 Americans by NORC at the University of Chicago.” Read more.
SUSTAINABILITY
In expanding its corporate campus, LinkedIn will use environmentally friendly concrete: “For its new 245,000-square-foot building and accompanying parking garage at its Mountain View, California headquarters, LinkedIn is working with Canadian startup CarbonCure, a company which traps carbon emissions into concrete. The company injects captured carbon dioxide into concrete during the mixing phase, causing it to react with the concrete and turn into a mineral. Once the concrete hardens, the carbon becomes permanently embedded. This is significant because even if the building is torn down, the carbon remains sequestered. CarbonCure said the end product is as durable as regular concrete.” Read more.
AGRICULTURE
While there was a scare for the fast-food industry after a weak potato harvest, the United States apparently won’t have a shortage of French fries: “It’s true that this has been a difficult year for some farmers. Winter came early for many in Canada and the United States, said Kevin MacIsaac, the general manager of the United Potato Growers of Canada. Acres of crops froze underground and were ruined. He said that about 18,000 acres of Canadian potato farmland would not be harvested this year, adding that he had spent more than three decades in the potato industry and could recall only one year similar to this one: 2018. … Mr. Muir said that the companies that process French fries had sophisticated, temperature-controlled supply chains and could use inventory to meet consumer demand if some harvests fail. ‘They can hold those potatoes once they’re processed for a pretty long period of time,’ he said.” Read more.
MANAGEMENT
For independent movie theaters like the one owned by Craig Smith, it’s all about the popcorn: “Mr. Smith, 65, is still paying off the projectors he bought a decade ago. Rent and labor costs eat up most of his revenue each month. To cut overhead, he works alone for most weekday matinees, as he did that Friday, and for later showings he relies on film-buff volunteers to help out his paid employees. For all those efforts, Mr. Smith comes away with slim margins. He says he sells about 2,000 tickets a month—in a town of roughly 2,000 people—and he grossed $300,000 last year, throwing off about $18,000 in net profit, or six percent. He pays himself a $1,000 bi-weekly salary, but only cashes his checks when the business can afford it—he’s been holding back a lot lately—so he leans on his wife’s income as a teacher and his own pay as a soccer coach to cover the household bills. … Mr. Smith says that if he sells $1,000 of tickets for ‘Captain Marvel,’ $650 or $700 goes to Disney. The rest gets eaten up by labor and utilities. ‘I am really a concessionaire,’ he says. ‘I make my money on popcorn, not on the movie.’” Read more.
INSPIRATION
Here are the 10 best business movies of the year, at least according to one writer: “If the business films of 2019 are remembered for one thing, it will probably be fraud. Theranos founder Elizabeth Holmes and Fyre Festival creator Billy McFarland were both the subjects of fascinating documentaries in 2019, which is natural given the scale of their business scams. Filmmakers this year also tackled uplifting business stories, including the true tale of a teenager in Africa who built a wind turbine to help save his village from famine. While not every film on this list has made its way to theaters, all have earned high praise from critics, some of whom had to travel to film festivals to get an early look.” Read more.
-- Loren Feldman and Matt Gillick
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