Business Stories of the Week: June 9

by June 9, 2017
Seattle-based retailer Nordstrom said on Thursday it is considering taking the department store private in an effort to shore up the store in the amid a struggling retail industry, reported Reuters. ("Nordstrom" by Flickr user Mike Mozart, CC BY 2.0)

Seattle-based Nordstrom said on Thursday it is considering taking itself private in an effort to shore up the business amid a struggling retail industry, reported Reuters. (“Nordstrom” by Flickr user Mike Mozart, CC BY 2.0)

Companies stick with Paris

While President Trump announced he will withdraw from the Paris climate agreement, some American companies decided they will pursue clean energy on their own, this weekend’s edition of The Economist will report. American executives at firms including Amazon, Twitter, Target and Nike signed a “We are still in” open letter to the UN. The signatories have promised to reduce U.S. carbon emissions by 26 percent by 2025, keeping with the original Paris pledge. American IT firms, including Amazon and Google, already use clean energy to power their servers. Anheuser-Busch InBev, the world’s biggest brewer, is also working to increase its reliance on renewables, going  from 7 percent of power production today to 100 percent by 2025. One key reason: The brewer’s younger customers’ focus on environmental issues.

NYT reveals infrastructure’s cost

The Trump administration unveiled its plan to revive America’s aging infrastructure this week, using $200 billion in federal monies to leverage another $800 billion from the private sector. While the government can benefit from such partnerships, they also carry risks that cost the public dearly. On Tuesday, The New York Times dug into the true cost of public-private partnerships and found the public pays for private infrastructure just as they pay for public infrastructure. Sometimes, revenue is raised through fees like parking meters and toll roads or through government payments to contractors. But all projects are ultimately funded by the public. Public-private deals are lucrative for Wall Street, but are rarely efficient for the taxpayer.

Amazon lures low-income shoppers

NPR on Wednesday reported on retail giant Amazon.com Inc.’s attempt to steal marketshare from Wal-Mart Stores Inc. by going after low-income customers. Already, more than 70 percent of upper-income households (defined as earning more than $112,000 a year) use Amazon’s Prime membership two-day free shipping service. On Tuesday, Amazon announced it would cut the cost of its Prime membership to $5.99 per month for people who have a valid electronic benefits transfer card used for programs such as the Supplemental Nutrition Assistance Program (formerly known as food stamps). A typical Prime membership is $99 per year. The move most threatens Wal-Mart, where at least one in five customers pays using food stamps.

Malls appear anemic

These are hard times for America’s malls. Mall anchor tenants like Macy’s, Sears and J.C. Penney are shuttering hundreds of stores to compete with online-only retailers and online shopping in general, reported USA Today on Tuesday. By some estimates, up to 25 percent of the nation’s malls could close by 2022. At the same time, discounted and fast-fashion stores are expected to grow from about 20 percent of apparel industry sales today, to about 30 percent in the next decade. As traditional malls fade and lose tenants, shoppers are more likely to visit top-notch malls with enhanced shopping experiences. While customers are willing to drive further to go to these”A-center” locations, they visit them less frequently, an analyst told USA Today.

Nordstrom looks inward

Speaking of retailers, on Thursday, Seattle-based Nordstrom Inc. announced that some members of the Nordstrom family were considering taking the company private as it struggles with the market forces re-shaping the retail industry. Reuters reported that going private, which would require taking on debt, could be risky. But there’s a considerable upside if the company can reshape itself and recover from sliding sales. In May, Nordstrom reported same-store sales (a key measure of the health of a retail store) fell short of estimates, triggering a decline in shares. Analysts and consultants were divided on whether the strategy might work.

Teaching hospitals score points

As the U.S. Senate weighs new health care legislation that would replace the Affordable Care Act, the nation is again examining the rising costs of health care and how to pay for it. The New York Times dug into the differences between teaching and non-teaching hospitals, and the debate about which is better. The New York Times explained on Monday that teaching hospitals, affiliated with medical schools, cost more. They also cost taxpayers more because Medicare pays them extra as compensation for training the next generation of physicians. To drive down costs, insurers have begun establishing networks that steer patients away from teaching hospitals. This may save money, reports The New York Times, but will affect the quality of care. In a new study of over 21 million hospital visits paid for by Medicare in 2012 and 2013, elderly patients seen by a teaching hospital fared better after discharge than if those same patients had been treated at a nonteaching hospital.

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