Retail Sales Down 1.3% in May
Retail sales were down 1.3% in May. This according to a report from the Census Bureau. Retail sales reached $620.2 billion in May. By comparison, sales were $628.7 billion in April. However, on a year-over-year basis, retail sales were up 28.1% for the month. Additionally, total sales from March 2021 to May 2021 were up 36.2% from the same period in 2020. The downward blip is expected to disappear in the coming months.
Pay for factory jobs has grown so slowly in the U.S. that manufacturers are having trouble competing with fast-food restaurants.
Take Western Michigan, home to many office-furniture and car-parts factories as well as a growing tourism industry. Restaurants and hotels along Lake Michigan have been hiring rapidly as people, kept fairly stationary during the pandemic, start traveling again. The shift is making it harder for factories to staff their production lines, and the added demand has increased both openings and the rate at which workers leave their jobs.
Ann Harten, head of human resources at furniture maker Haworth Inc., said her company is looking beyond the unemployment lines and needs to hire applicants away from their current jobs as the economy recovers and the labor market tightens. “We have competition for labor outside of our industry,” she said.
For years, factory jobs paid significantly more than those in many other fields, especially for less-educated workers. That is changing, according to economists, manufacturers and federal data.
A worker at Gentex Corp.’s Zeeland, Mich., factory. The share of U.S. workers employed by manufacturers has declined to under 9%, from more than 20% in the early 1980s
Haworth has raised wages at factories near its Holland, Mich., headquarters to $15 an hour, plus another dollar for the night shift. It has amenities like a 24-hour gym as well as annual Thanksgiving turkey and Christmas gift giveaways. Haworth still isn’t finding enough workers. That could hold back production at a time of red-hot demand for furniture, vehicles and many other consumer goods.
Some workers recently left Haworth’s factory in the nearby town of Ludington for hospitality jobs, Ms. Harten said. Haworth is advertising assembly jobs for $14 at that facility—the same starting pay rate at a nearby Wendy’s restaurant. “Manufacturing can be taxing,” said Ms. Harten, who also believes enhanced Covid-19 unemployment benefits are discouraging some people from taking open jobs.
Dana Hiltunen spent the last two summers working in a Herman Miller Inc. MLHR 5.14% office-furniture factory in Zeeland, Mich., making around $13 an hour through a hiring agency. Ms. Hiltunen said she enjoyed the work—attaching soft bumpers to table tops—but that wearing a mask all day in a fan-cooled facility wasn’t always easy. Sometimes on hot days the company would hand out ice pops, she said.
Recently, she started as a sales assistant in an appliance store where she writes invoices and answers phones for $16 an hour. She hopes to land a job in marketing, a subject in which she holds a college degree.
“It has upward mobility, paywise,” she said of the office work.
Since the start of 2020, jobs in many industries including restaurants and retail have posted their highest-ever hourly wages relative to wages in manufacturing, according to an analysis of federal data by The Wall Street Journal. The $23.41 that hourly factory workers made on average in April is 27% more than average pay for retail workers, according to the Labor Department, down from a 40% premium for factory workers 10 years ago. Factory work pays 56% more than restaurant and fast-food jobs, the data shows, down from 83% a decade ago.
“Workers in some of these low-wage industries are demanding and getting better pay,” said Lawrence Mishel, an economist at the Economic Policy Institute, a left-leaning think tank.
Mr. Mishel said the premium that manufacturers pay has fallen since the 1980s and 1990s. Mr. Mishel attributed the decline to global competition, outsourcing, lower unionization rates and wider use of contractors. Mr. Mishel said jobs in manufacturing in many cases still offer better healthcare and retirement benefits than some other industries.
But the share of U.S. workers employed by manufacturers has declined to under 9% today, from more than 20% in the early 1980s. “There is just more opportunity to work somewhere else than there was in the past if you are looking for a living-wage job,” said Julie Davis, head of workforce development for the Association of Equipment Manufacturers.
Automotive-supplier Gentex Corp. GNTX 2.53% , based near Grand Rapids, said the pool of available workers in the region was small even before the coronavirus pandemic rewired forces of supply and demand throughout the U.S. economy.
“Everybody is fighting for the same people,” Daniel Quintanilla, the company’s director of talent acquisition, said.
For many restaurant and grocery stores, the shortage of workers is the main drag on potential sales gains from customers eager to return to in-person dining and shopping. Executives at those companies say that demand is encouraging them to raise wages. For manufacturers, though, labor shortages are compounded by tight supplies and high prices for materials from steel to lumber to resin. Those added costs are restricting their ability to raise wages, executives said.
Daniel Quintanilla, director of talent acquisition at Gentex, recruits among non-English speakers who work as laborers in landscaping and agriculture.
Because most factories have been fully operational since last summer, hotels and restaurants are doing comparatively more hiring now as patrons return as Covid-19 restrictions lift. Paul Isely, a professor at Grand Valley State University in Allendale, Mich., who studies the region’s economy, said that manufacturers face more pressure to hold down wages than some service employers because they compete with factories around the world rather than restaurants around the corner.
At Gentex, Mr. Quintanilla recently stepped up recruitment among non-English speakers working as laborers in landscaping and agriculture. In those jobs, workers were typically making less than the average Gentex employee—roughly $25,000 a year compared with more than $35,000 a year at the automotive supplier as well as benefits, Mr. Quintanilla said. Gentex established a Spanish-speaking manufacturing line, where workers can speak their first language with peers and managers. Gentex plans to add English-as-a-second-language classes, too, Mr. Quintanilla said.
Home Depot Takes on Supply Chain Frustrations
Consumers are waiting for goods – that is no secret to anyone who has try to buy appliances, or other durable consumer goods. Home Depot, who has relied upon traditional consumer supply chains, has addressed this frustration by contracting its own ship to import supplies and products consumers want. The contracted ship will begin running next month, though the home improvement retailer has taken other unusual steps to bring in supplies during the last year. For example, Home Depot has flown in power tools, faucets, electrical components, fasteners and other “smaller, higher value items” by air freight, while also purchasing items on the spot market despite higher rates according to CNBC.
Home improvement products saw a huge surge in demand during the height of the pandemic. With lockdown measures in place, consumers took time to do home projects that may have been on the back-burner to accommodate a lifestyle with more time spent at home.
Amazon Says Just Walk Out…
Amazon is about to disrupt the American grocery landscape again. Amazon will open a new Marketplace store in Bellevue, Wash., which will feature checklessoutless technology. The store will offer consumers all of the departments of a traditional grocer, including produce, meat, seafood, prepared foods, and bakery, with the option to skip the checkout line. This is the first time that Amazon’s Just Walk Out technology will be available in a full-size grocery store. No other company has launched similar technology in a full-size supermarket.
Pay Bills in Cash at Walmart
Walmart is expanding its growing portfolio of financial services. The retail giant is teaming up with a payments platform and financial technology company to let customers make cash bill payments to utility companies and other billers at select Walmart stores.
Effective August 2021, users of the PayNearMe mobile payments app will be able to complete bill payment transactions using cash at the participating Walmart locations. To use the service, Walmart customers will show an associate at the store’s money services or customer service desk a scannable code on their smartphone, pay with cash, and collect a receipt that confirms the payment is completed. Funds will then transfer to the biller electronically through a single consolidated settlement.
Seemingly, almost a quarter of the U.S. population pays its bills with cash for various reasons.
Chain Store Age
Thanksgiving Day Closures Announced
Target, Walmart, and Best Buy will close on Thanksgiving Day. This in contrast to the closings last year when the pandemic made decisions for stores. This year stores seemly are closing due to allowing employees to enjoy the day with family and friends. No worries, all the stores will still hold Black Friday and have ways for consumers to fulfill their holiday gift lists.
Chain Store Age
Amazon may Overtake Walmart as biggest U.S. retailer in 2022
Amazon is set to overtake Walmart as the largest retailer in the United States in 2022, according to JP Morgan research. Between 2014 and 2020, Amazon’s U.S. gross merchandise volume, or GMV — a closely watched industry metric used to measure the total value of goods sold over a certain time period — has grown “significantly faster” than both U.S. adjusted retail sales and U.S. e-commerce according to the Morgan analysts. Amazon’s U.S. retail business is the “fastest growing at scale,” according to the company’s analysts.
Covid Fades but Is Unlikely to Vanish
The U.S. is entering a new phase of the Covid-19 pandemic as people settle back into normal life, this is mainly due to vaccines, but public-health authorities are preparing for Americans to live with it for some time. Many health professionals believe reaching herd immunity to be a distant goal, due to varied vaccination rates in the U.S. and uncertainty about just how much Covid-19 must be suppressed to effectively stop its spread.
Covid-19 has been suppressed, not vanquished. Epidemiologists are concerned its continued spread globally may spawn dangerous mutations. Low-vaccination areas in the U.S. could create pockets with elevated Covid-19 infection rates for months or years, while highly vaccinated areas may achieve a sort of local herd immunity.
Walmart Provides Secure Digital Record for COVID-19 Vaccinations
Walmart is providing a free, secure digital wallet for customers to use and share their health data – starting with COVID-19 vaccine information. Select Walmart and Sam’s Club locations are enabling customers to securely store their COVID-19 vaccine record in their pharmacy account on Walmart.com or Samsclub.com. The vaccine record can be printed, saved on a device, or shared at the discretion of the consumer.
Amazon Commits $300 Million to Affordable Housing
Amazon is funding the creation of 3,000 new affordable homes near public transit in three metro areas. The company is following up on its $2 billion Housing Equity Fund by pledging more than $300 million to create an estimated 3,000 new affordable housing units on land owned by transit agencies or privately-owned land in close proximity to public transit. Amazon will work closely with public transit agencies to fund development on either surplus land owned by the agencies or privately-owned land near active transit corridors to create new, affordable, and move-in ready homes by as early as 2025.
Kroger’s 1st Quarter Results Top Expectations
Kroger on Thursday reported first-quarter results that beat analysts’ expectations. The retailer also raised its guidance for the year and announced a new $1 billion share repurchase plan. Kroger said that that its identical sales without fuel decreased 4.1% in the first quarter, but increased 14.9% on a two-year stack basis. Digital sales grew 16%; two-year stack grew 108%. Total company sales were $41.3 billion in the first quarter, down from $41.5 billion for the same period last year. Excluding fuel, sales decreased 4.0% compared to the same period last year.
Walgreens Enters Full-fledged Delivery Uber Partnership
Walgreens is expanding its collaboration with Uber to offer products directly on the Uber Eats platform to customers across the U.S. The on demand service is now available at 7,800 stores. More products will be added daily, with a goal to expand to the entire assortment of more than 20,000 items over time.
Walgreens Riding a Covid-19 Wave
Walgreens, like other retailers, felt the effects of the pandemic. Revenue was challenged as many consumers shied away from immediate medical care. However, vaccines have been a revenue driver. Vaccines have become more lucrative. The amount that the U.S. Centers for Medicare and Medicaid Services pay pharmacies and other providers rose this spring to $40 for each dose, up from $28 for a single dose and $45 for two doses. Now for the required two doses for the Pfizer and Moderna vaccines. Shots are free to the public.