There's a Reason Businesses Can't Find Workers
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There's a Reason Businesses Can't Find Workers
THE 21 HATS PODCAST
Meet us in Seattle! Do you ever stop to ask why you are so focused on growing your business? Do you ever wonder how much growth is enough? Or just what you are willing to sacrifice to achieve that growth? Is it worth taking outside capital and having to answer to someone else? Is it worth the stress and the time away from your family? Do you remember why you went into business in the first place? If these kinds of questions speak to you, join us at Blink’s Seattle studio on Thursday, February 13 for a live recording of the 21 Hats Podcast, our weekly conversation about what it really takes to build a business. RSVP HERE
If you can’t join us in Seattle, keep your eye out for the podcast version (we’ll let you know here when we publish it).
Meanwhile, check out our latest episode: “What Do I Have to Lose, Right?” Jay Goltz, Dana White, and Laura Zander talk about risking it all, figuring out digital marketing, and connecting with their target audiences. LISTEN HERE (Or wherever you find podcasts.)
And coming tomorrow: Episode 5: Does Culture Really Eat Strategy for Lunch?
THE ECONOMY
Employment at businesses with fewer than 20 employees stalled last year: “Companies with 500 or more employees, by contrast, increased their workforces by 2.3 percent. January showed the same patterns, according to data released Wednesday. The sluggishness in small-business hiring is particularly striking because it is the first time small companies haven’t added to their payrolls since 2010, when businesses of all sizes were recovering from the financial crisis. More than 5.3 million businesses have fewer than 20 employees, based on the latest data available from the Small Business Administration.”
“‘Their ‘problems are symptomatic of what all businesses will be struggling with in the not-so-distant future,’ said Moody’s chief economist Mark Zandi, who analyzed the ADP data.”
“‘The demographics are overwhelming. Unless we change immigration laws significantly, all businesses will be struggling to find workers,’ Mr. Zandi added. ‘This will become a significant brake on economic growth.’”
“Hiring at the smallest firms was especially weak in the manufacturing, natural-resources, transportation, construction and retail sectors, he said.” READ MORE
The coronavirus has resulted in shopping capitals getting less foot traffic, especially for luxury retailers: “Chinese tourists are disappearing from major shopping capitals across the US and Europe as a result of the new coronavirus, and their absence is hurting some of the world’s highest-profile luxury brands. The outbreak has exposed how dependent high-end retailers in places such as New York, Paris and Milan have become on visitors from China, who often spend more than the typical tourist. Estée Lauder Cos. and Capri Holdings Ltd., which owns the Versace and Jimmy Choo brands, warned investors this week their financial results could suffer due to lower sales to Chinese travelers.” READ MORE
MARKETING
With advertisers finding alternatives to Google Search, one of the most profitable businesses ever created is losing steam: “Some of the most valuable search ads—those for specific products that people can buy—face competition, especially from Amazon.com. About half of product searches start on Amazon now, Bernstein’s Shmulik wrote in a research note earlier this year. That’s spurred Google to build new kinds of shopping ads, but it hasn’t reversed the growth slowdown. Searches for decorating ideas and clothing are also increasingly happening on social networks such as Pinterest and Instagram. And millions of people look for music on Spotify’s mobile app, not Google.”
“‘This hollowing out of search has been underway for many years and is not well understood,’ Shmulik wrote.” READ MORE
Is Popeyes becoming a fashion icon? “Popeyes Louisiana Kitchen last week began selling clothing from an online shop called That Look From Popeyes. Most of the items sold out within a day. Popeyes says it is restocking. ... How Popeyes maroon-and-orange polos, jackets and crew-neck sweatshirts—worn to make and sell food at the fried-chicken chain—suddenly became in vogue is a tale of life imitating fashion imitating life. Pop star Beyoncé’s Ivy Park clothing line recently launched an activewear collection with Adidas. The social-media world immediately lighted up over the line’s striking similarities to Popeyes uniforms. (An Ivy Park representative didn’t respond to requests for comment.)”
“Miami-based advertising agency GUT, which began working with Popeyes during last year’s craze over its new chicken sandwich, caught wind of it.”
“Juan Javier Peña Plaza, the agency’s executive creative director, says his team saw side-by-side visuals of Beyoncé’s line and Popeyes uniforms and food packaging popping up on Instagram and Twitter. They flagged it during a meeting with Popeyes on Jan. 22.”
“GUT held a casting call for Popeyes employees in South Florida to appear as models. On Jan. 27, photos were shot that echoed images in the Ivy Park ads. Two days later, the site and online shop went live.” READ MORE
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RETAIL
After spending 13 years building Flore Vegan in Los Angeles’ Silver Lake neighborhood, Miranda Megill learned that another company had purchased the building housing her restaurant and another business she owned: “She looked up the buyer, and on its website, found the developer touted a mission of ‘gentrifying’ communities with ‘underutilized properties in the hottest neighborhoods of LA.’ And so what she feared she had been doing to others more than a decade ago was suddenly happening to her. ‘It’s like buying a house, getting it exactly how you want it and having someone say Thanks, we’ll have that,’ Megill said.”
“Then she made a tough choice, she said tearfully. She depleted [her daughter’s] college fund to put a down payment on a new restaurant space.”
“The restaurant space Megill is eyeing has a larger patio space and can seat almost double what her current space does. She expects to move in late February.” READ MORE
How did organic grocery chain Lucky’s Market go under? “Kroger, America's largest supermarket chain, took a majority stake in Lucky's Market, a Boulder, Colorado, grocer known for its farmers-market-style stores that aimed to make natural foods more affordable. Lucky's tagline: ‘Organic for the 99 percent.’ … But less than four years into the deal, the partnership is over. Lucky's, a grocer with a loyal base of shoppers has collapsed, thousands of workers' jobs are up in the air and suppliers have been bruised by the loss of a valuable customer. Kroger announced in December it was pulling its investment in Lucky's. Weeks later, Lucky's said it planned to shutter 32 of its 39 stores.”
“Lucky's struggles are a symptom of growing pressure on smaller grocery chains in an industry with wafer-thin margins, rising competition and consolidation from big chains. Supermarket bankruptcies have spread, claiming Tops Market, Southeastern Grocers, A&P, Fairway, and just this week, Earth Fare, a natural foods chain with 50-plus stores in the Midwest and Southeast.”
“Lucky's has a more expensive labor model than Kroger because it focuses on prepared foods and highly specialized departments, which are costlier to run. That may be sustainable for a handful of stores, but it piled on losses as Lucky's expanded.”
“In Lucky's latest fiscal year ending in early January, the company had an approximately $100 million net loss and a 10.6 percent drop in sales at stores open for at least one year, a key metric of a grocer's health. Steep competition and new Lucky's stores cannibalizing sales at older stores contributed to the drop, according to experts.” READ MORE
7-Eleven is testing cashierless stores: “7-Eleven announced it’s piloting its own take on the cashierless concept with a 700-square-foot store at its corporate HQ in Irving, Texas, open only to company employees. The store stocks 7-Eleven’s most popular products, including beverages, snacks, food, groceries, over-the-counter drugs and non-food items. This product mix may be refined over the course of the testing. Similar to Amazon Go, the 7-Eleven pilot store will involve a mobile app that customers use to check into the store, pay for items and view their receipts.”
“Walmart and Walmart-owned Sam’s Club and supermarket chain Giant Eagle are testing AI technology similar to Amazon Go, among others.”
“And several companies sell cashierless technology to retailers, including Standard Cognition, Zippin, Grabango, AiFi and Trigo, to name a few.” READ MORE
STARTUPS
The Information is an independent news site that’s found an audience in Silicon Valley: “[Founder Jessica Lessin] has focused her site on the larger picture, pursuing industry scoops and keeping the publication ad-free, instead charging $399 a year for complete access. The Information achieved profitability in 2016, Ms. Lessin said, three years after she left The Wall Street Journal to start it. She added that she expected $20 million in sales by the end of 2020 ...”
“As other online organs have bloated and intermittently fasted, The Information’s reporters have become known in Silicon Valley for sniffing out the industry’s misdeeds and tweaking its powerful. A 2017 story revealed sexual harassment allegations against a venture capitalist that led to the shutdown of his firm.”
“Subscribers include Amazon’s founder, Jeff Bezos, and the media investor James Murdoch (‘Please write nice things about her,’ he said of Ms. Lessin), corporate clients like Google and Goldman Sachs, and most of startup royalty.”
“She pays competitive salaries (albeit without equity)—as much as $180,000 or more for some top reporters.” READ MORE
Boulder is a digital rehab program meant to help treat patients with opioid addiction: “Boulder uses both medication like buprenorphine and peer support to help people recover from opioid addiction. It has raised $10.5 million in venture funding, led by Tusk Venture Partners, and signed a deal with the insurer Premera. The payer plans to give its members in Alaska access to Boulder in April and eventually expand to all two million members across the Northwest. Premera will pay Boulder a monthly flat rate for each patient, so the company can tailor each treatment program to the individual and keep it going for as long as they need.”
“In an initial pilot in Southern Oregon, 85 percent of 100 patients stuck with the treatment program for eight months…” READ MORE
In a workshop in Humble, Texas, Stephen Wynne is trying to revive the DeLorean: “When you drive by, you might see a parking lot filled with DeLoreans. At any one time, he has 40 or so DeLoreans on the premises, and most days some dazzled passer-by will wander into the shop and start asking questions ('I unfortunately don't have a tour guide on staff,' he says). Inside you’ll find floor-to-ceiling shelving units filled with the 2,650 parts needed to construct a DeLorean from scratch; Wynne estimates he still has somewhere around 4m original parts in stock, from filters and flanges to engines and steering wheels. He also has DeLorean's blueprints, so they can manufacture whatever parts they need. It's more like a mini-factory than a fix-it shop.”
“While Wynne’s business is servicing the older cars, what he really wants is to crank out an upgraded model and take the DeLorean to the next level. ... What he does want to do is improve on all the ways the original fell short.”
“Wynne plans to more than double the horsepower. He’ll also jazz up the spartan interior and iron out all the other kinks that DeLorean and his engineers never got around to.”
“There are plenty of customers who want nothing more than to drive a new DeLorean off the lot. Several thousand of them, in fact.” READ MORE
Please send comments and suggestions to lfeldman@21hats.com and mgillick@21hats.com
-- Loren Feldman and Matt Gillick
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