San Fran Targets

Follow-up to this post

"We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all."

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Target, Inc. recently issued this statement, which must be self-evident to every one of us. If it's not safe to work/shop in a store, the store can't stay open. So three Targets are closing in San Francisco, California.

Retail stores come and go in different localities, so that's not unusual. But this is different because the reason being given is a lack of safety and security.

Sound familiar? "Security" is why Whole Foods left. Seven Starbucks are going to close in San Francisco this month.

Note to readers in other countries: rampant, business-destroying crime is new and  alarming here. The state of California seems uninterested in prosecuting it.

from MPR News

Tipping beyond

Follow up to this post

Apparently, many of us are being asked for tips whenever we purchase a service, not just when eating a meal at a restaurant. And the tip percentages at restaurants have climbed in recent years. It can give you "tip fatigue."

There was a tipping uptick from the 1950's (10%) to the '70's and 80's (15%) to 2023 levels which range from 15-25%, now averaging around 21%.

Why the recent uptick? The pandemic closings may have been a factor. During that time many ordered takeout (which enabled some restaurants to just stay in business) and felt increasingly sympathetic, to the point that in 2023 the average tip is 73% on remote transactions.

Some restaurants started asking for bigger tips on that ordering/paying tablet right at the table. About 22% of respondents to a survey said that makes them feel pressured to give more than they normally would. So restaurant technology successfully squeezes more out of its customers.

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from CNBC

Day after

 Hopefully, this isn't you today!😉

Wishing you a happy holiday weekend!

Shipping cost 2

(cont'd from yesterday's post)

Container ships along the West Coast still back up at our big seaports, and the turmoil is still related to the pandemic. About 800 dock workers in Los Angeles and Long Beach CA couldn't work in January for Covid-related reasons. 

On New Year's Day there were a record 106 vessels waiting to unload. Compare that to the typical pre-pandemic number waiting: one. This is the heart of the supply chain crisis you've heard about. The system got way behind because of lockdowns and sick workers, all coming at the same time as a big increase in imported goods.

Maybe the whole complicated system (raw materials/manufacturing/distribution) will have to be tweaked to reduce vulnerability to the shipping sector. Some factories could be placed nearer either the source of raw materials or the distribution end points. But moving factories is neither cheap nor easy. Our system must run efficiently again as soon as possible.

Meanwhile, ships divert to East Coast ports to avoid that West Coast gridlock - resulting in eastern gridlock.

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from WSJ

Shipping cost 1

Follow-up to this post

One consequence of the pandemic still in force today is shipping industry turmoil. It's big in the news because it affects prices that we all pay (the cost of shipping a product from its overseas factory must be covered by the retail price that your store charges you for the product).

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Here's how much retailers paid in overseas shipping cost to get these eight common products for you, an increase factor of about ten:

• Couch - $50 in 2020, $516 in 2022
• Fridge - $58 in 2020, $596 in 2022
• Air fryer - $0.48 in 2020, $5 in 2022
• 49" TV - $4 in 2020, $45 in 2022
• 8x10 rug - $5 in 2020, $56 in 2022
• Coffee maker - $0.50 in 2020, $5 in 2022
• Wooden desk - $2 in 2020, $21 in 2022
• Crib - $5 in 2020, $60 in 2022

from Forbes, February-March 2022, p. 94

(cont'd tomorrow)

Macy's going

Retail stores were struggling before 2020, and lockdowns aggravated that decline. Big department store Macy's has announced more closures and layoffs.

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Over the next three years, 125 stores will close. About 2,000 jobs will also have to go, in addition to the 3,900 cuts last summer. It doesn't make sense to keep underperforming stores going.

Shopping malls are going to look different when anchor stores like Macy's can't justify their presence. You probably remember that JC Penney, another anchor, filed for Chapter 11 a few years ag0. Will big malls continue to exist when anchors pull out?

from Good Housekeeping

Top brands

Coca-Cola, Microsoft and IBM led the way for a long time. Watch what happens when Google appears on this list in 2008, Apple appears in 2011, and Amazon in 2014.

Macy's decline

Macy's has a great retail history, but this author now calls it "the poster child for everything that is wrong with mall-based retail."

Same-store sales were down in the third quarter compared with a year ago, in contrast to  Target stores which were up for the same period. It looks like Macy's is losing sales to T.J. Maxx and Marshall's, and their stock is just half of what it was last January.

Retail stores in general have been declining for years. So how is Target increasing? By tweaking their strategies, trying ideas. They get "shoppers in the door to pick up groceries and household items and convince them to shop for apparel while they are there."

When the former chairman and CEO of Macy's was recently "asked which retail stocks he liked, he spoke enthusiastically about buying Walmart, Target and Home Depot."

Sears

Sears, Roebuck & Co. used to be the biggest employer in the U.S. and the biggest retailer in the world. Railroad man Richard Sears in 1886 started the mail-order catalog that made elite goods available anywhere that railroads and the postal service could go.

In 1925, Sears' second wave of retail innovation came from a vice president who saw that cars were going to drive commerce. He bought land at the crossroads outside of cities and towns - which became suburbs - and Sears stores began popping up.

Today Sears is bankrupt. What happened?

Retailers quit

(cont'd from yesterday's post)

Nine retailers have filed for bankruptcy in the first three months of 2017: Payless, RadioShack, The Limited, and more. If filings continue at this rate, the year 2017 could surpass 2008 (year that the great recession started) for retail bankruptcies. That year there were twenty.

JCPenney is closing 138 stores, KMart is closing 108, and CVS is closing 70 (none of these have filed so far). Check here for the other 3300 stores scheduled to close in the U.S.

JCPenney has been having less success with women's apparel, so home goods and beauty products are going to get more space while women's shoes will go to an "open sell" arrangement. They know they'll have to make changes in the stores that are still open after the 138 closings.

Hopefully the company can adjust to changing times. For a couple of years, rumor has linked it to possible bankruptcy.

Closing stores

Giant retailer Macy's will close 68 stores this year. Thousands of other retail stores will also close. Nine retailers have already filed for bankruptcy in 2017, an "alarming rate."

Customer visits to shopping malls have "declined by 50% between 2010 and 2013," and not every retail business can survive that kind of cut. It's not that these stores can be tweaked into success, according to this article, but that shoppers are "fundamentally changing" their habits, i.e. they're shopping online.

About 89,000 retail workers have lost their jobs since last October, including many low-skilled entry-level workers or those who need flexible hours. It's a niche in the job market where there are now fewer opportunities.

(cont'd tomorrow)

Walmart response to critic

As an observer of the retail industry, Walter Loeb has credentials:  20 years at department stores and then 16 years as a senior retail analyst at Morgan Stanley.  So when he roundly criticizes a Walmart store, it's with authority.  But from the description, anyone could have criticized it.

He reports that the store in Pittsfield MA was "in total disarray," with merchandise on the floor, empty shelf space, filthy restrooms.  All of this was disrespectful to customers and out of line with standards of the founder, Sam Walton, whom he knew.

Walmart's response to the criticism is so good.  Senior VP of New England, Julie Murphy, affirms that the store doesn't adhere to their standards, affirms Mr. Loeb and his report, lists their prompt corrective actions, and re-affirms that they are committed to high standards.