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Melissa Preddy

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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Alibaba’s mega-IPO highlights evolving e-commerce scene

Talk about “party like it’s 1999.”   The upcoming IPO from e-commerce giant Alibaba is going to smash records for initial public offerings at an already sold-out $21.1 billion, according to Reuters, and it brings back memories of the good old days when stock buyers were clamoring for shares of other Internet sellers like Amazon, eBay, Drugstore.com and the hangdog Pets.com.

Alibaba orange shopping bags. The company has almost single-handedly turned China into the world’s second-largest e-commerce market. Photo: Bloomberg

Alibaba has almost single-handedly turned China into the world’s second-largest e-commerce market. Photo: Bloomberg

Yes, there have been mega-IPOs of Internet-based companies since then, like Google, Facebook and Twitter, but they are more ethereal; there’s something about the nitty-gritty trade of shopping sites that is especially captivating.  To investors, anyway — apparently Alibaba’s offering was fully subscribed after only two days on the road and like most offerings, the privilege of buying in goes to influential investors with the chances of individuals purchasing any shares just about zero. 

It’s possible, however, that the company — which controls 80 percent of China’s online commerce, according to most reports, and is serving a growing Chinese middle class with more disposable cash for consumer goods.  Aside from raising practical and philosophical questions about the increasing pace of consumption of just about everything on our planet, the notion of an online seller that can dwarf a company like Amazon is quite intriguing.  I don’t have a huge notebook full of story ideas related to Alibaba, but since we’re all likely to be hearing a lot more about it soon, here are a few ideas and resources:

What’s Alibaba mean to U.S. companies?

What opportunities might a growing Alibaba provide for entrepreneurs in the U.S.?   How will people who make a living selling onEtsy, eBay, Amazon marketplace, Zazzle, CafePress and and the like have to change their game to compete?   Some sellers are finding it a new niche, here’s a piece about one couple taking part in the company’s beta test of “11 Main,” an online mall for American consumers featuring a handpicked set of vendors. 

Here’s an interesting piece from the German publication Deutsche Welle about “What Western rivals can learn from Alibaba IPO,” that cites services Alibaba provides to vendors and practices like pay-on-receipt that appeal to consumers.  How will American e-commerce sites from the giants to small operators adapt to new competition?   And this CNNMoney piece “7 things Alibaba users can do,” highlights the company’s breadth of services. 

Counterfeit goods and copyright infringement have been of concern; according to this OpenSecrets.org report, Alibaba succeeded in getting itself removed from an Office of the U.S. Trade Representative list of sellers “notorious” for those problems, thanks to brisker lobbying.  That might be an angle you can localize, because Alibaba serves as a marketplace for just about any sort of good including consumer products and wholesale or raw materials sold business-to-business.   Here’s an example from an industry trade journal, Healthcare Packaging, about how one sector worries about “knock-off” products.  Try contacting companies and industry trade groups in your area for their take on a a growing Alibaba presence. 

And on the flip side, what businesses in your neck of the woods benefit form access to China’s supply chain through a user-friendly intermediary like Alibaba? Here’s an explainer from Forbes about how the company adds value.


Halloween 2014: There’s no escaping the holiday’s creep

OK, even for a lover of seasonal biz stories, Halloween stories the first week in September are a bit of a stretch.

Or rather, they were.  But this year, Halloween’s orange-and-black is the new … Labor Day story, apparently. If you don’t find an angle and jump on it soon, you might be playing catch-up with competitors when October actually rolls round. 

Frightening Friday

A look at the calendar points out that Halloween falls on a Friday this year, which perhaps bodes well for non-retail industries like restaurants and catering, bars and even getaway tourism.  Check now on bookings for Halloween parties and rental supplies such as costumes, tents and décor — as well as demand for performers from magicians and psychics to bands. 

Walgreen's Elvis was selling for $9.99 at Halloween. Photo: The Adventures of Kristin and Adam on Flickr

Walgreen’s Elvis was selling for $9.99. Photo: The Adventures of Kristin and Adam on Flickr

The three-day weekend possibilities are not lost on the travel industry; special packages like the $349 Halloween Night Ghost Package at the Hotel Galvez in Galveston, Texas already are out there.   That dinner and tour include tips on ghost-hunting and a ghost-detecting meter; those wishing to stay overnight at the reputedly haunted in also can opt for the Ghosts of the Galvez package.  I even found a hotel in Italy offering a Halloween package and “tasty Halloween surprise” to show you how far the marketing power of this goofy holiday has spread.

The operation of large-scale Halloween haunts, either as a season-extender for traditional theme parks or as temporary installations along with apple-orchard tours and corn mazes, is an interesting biz and, as CNBC reported last year, a $300 million industry and growing.  Who’s profiting in your area from indoor and outdoor scare parks?

Haunts even can save a historic property; here’s a piece about how ties to the movie “The Shawshank Redemption” has spurred tourism at an old Ohio prison, which instead of being demolished now is being used for creepy tours at Halloween as well as mystery dinners and ghost-hunting expeditions.  (The latter two are industries you can check out in your neck of the woods, too.  Ghost-hunting in particular seems to be a rising hobby; CNN said last year that reality shows about paranormal activity have spurred interest and upped competition among sleuths.)

A workplace story springs to mind, as well.  How will employers referee Oct. 31 vacation requests, if lots of people want to make a three-day weekend of it or just leave early to start partying.  Do parents of trick-or-treaters get preference over travelers?  Will Hallow-teeism be a problem if revelers just call in sick? 

Halloween by the numbers

Of course, retail is the focus of a lot of All Hallow’s Eve commerce.  Here are the “hair-raising” stats from the National Retail Federation. CNN reports that “Halloween stores come early this year” with pop-ups already appearing in malls and strip centers — in addition to the consumer and marketing angles, I’ve not really seen a good reader-friendly piece on the business model of pop-up stores.   Can online sellers or small retailers benefit from trying out a pop-shop in a more highly-trafficked area?  Here’s a Huffington Post article with some advice and industry statistics.  Talk with center operators and mall developers about what’s working and what’s not for small entrepreneurs.

And here’s a piece from Fortune that notes the pop-up model is being used for more than seasonal shops; it’s a way to test products and services without a huge commitment. 

Other retail-related angles are jobs, hot-selling merchandise, popular costumes for 2014. Grocery stores increasingly seem in on the act, from themed cakes and cupcakes to knickknacks.  Candles shops sell witchy scents and thrift stores tout themselves as one-stop shopping for costume ingredients.

 And, do not forget, in the Hispanic community the day after Halloween, Nov. 1, is Dia de los Muertos with its own traditions and growing appeal to marketers — and not just in communities with Hispanic heritage.  Dia de los Muertos party supplies, sugar skulls and other merchandise is becoming more common — there’s even a popular casino slot machine featuring dancing skeletons and festival music.   And here’s an article about a suburban Detroit taco restaurant using the commemorative day as a fundraiser.


Joan Rivers’ passing spotlights surgical clinics, memorabilia sales

You know you’re a business writer when word of someone’s death spurs you to thinking about the economic impact of that permanent farewell.  

The thought flitted across my mind the other day on word that comedienne Joan Rivers had died at age 81, and apparently I was not alone.  An Examiner.com story says “Ghoulish? Joan Rivers memorabilia value soars following her death,” and notes that items like theater tickets, photos and even a Joan Rivers internet domain have been in hot demand the past few days.  You might want to check with local collectibles and antique shops, and do a ZIP code search on eBay to find online sellers in your area. 

Joan Rivers photo in hands of a fan

A fan asks for a Joan Rivers’ autograph in 2010. Photo: Steve Rhodes

Rivers also was a spokeswoman for a lucrative line of apparel and jewelry; Forbes said she’s sold $1 billion worth of the merchandise over the years at home shopping channel QVC, where she made frequent appearances.  (Numerous QVC hosts reportedly attended her memorial service on Sunday.)  Look for these items to start popping up on Etsy and eBay too. 

Over at QVC’s discussion boards, executives paid tribute in an online and devoted shoppers expressed not only dismay but hopes that a commemorative jewelry piece would be offered and requests to “keep her jewelry line alive and growing.” 

If you have any local companies that depend heavily on a celebrity spokesperson or even well-known local pitchman (around here, appliance and furniture stores seem to rely heavily on goofy ads by their front men) you might talk with marketing experts and the companies themselves about the pros and cons of identifying products or services closely with a single individual. 

Another angle is bookings; on one Detroit-area radio station the other night, the owner of a venerable restaurant said that Rivers frequently played private parties at his bistro and that a couple of upcoming evenings had been sellouts; I wondered what will happen to that venue and many others nationwide that probably had Rivers booked for upcoming public and private events. USA Today said she had over 100 comedy club engagements per year, for example, as well as 2 million Twitter followers.  You might check around with restaurants, clubs and casinos in your neck of the woods — patrons will be wondering about refunds, substitute performers and the like. 

And of course, besides marketing and merchandise, the circumstances of Rivers’ death have raised questions about the safety of outpatient surgical clinics.  It might seem tacky to use a celebrity passing as a news peg for stories about medical safety, and I planned to refrain.  But after seeing public and private reaction over the past several days I do think it’s top of mind and that plenty of people now are wondering what dangers they are running when they get sedation for colonoscopies, endoscopies and even serious dental surgery or other outpatient services.    A  local story about regulation of such clinics (standalone and those operated as concessions on hospital premises) would be of great interest to audiences.  Patients might be surprised at the number of for-profit centers, too.

It’s an especially interesting topic in light of this story from Healthcare Finance News, which notes that price concerns are driving more hospitals to expand outpatient and ambulatory surgical centers even as inpatient surgery facilities shrink.  Bloomberg says “Surgical center used by Rivers part of outpatient push” and notes that doctor ownership of such centers, which is common, raises conflict-of-interest questions.  Again, ask health systems and regulators in your market about shifting patient options and safety concerns.  A recent study of outpatient urology outcomes found, for example, found that more preventable deaths occur as surgeries are shifted from inpatient to outpatient. 

Here’s a Baltimore Sun piece about issues related to uneven oversight of freestanding surgical centers.

Perusing Outpatient Surgery Magazine might be helpful to understand industry issues and trends.    And this piece from California suggests that lower public reporting requirements have been implemented for for-profit surgical centers; something to look into in your region. 


Quicktips: From pampering people and pets to scams and surcharges

Another raft of ideas jotted on scrap paper or e-mailed to myself are in danger of sailing off into the horizon, so welcome to another installment of Quicktips, the place we salvage viable story pegs at risk of becoming forgotten flotsom.

Hotel fees.

In our increasing a la carte economy, hotel fees are the latest buzz — as the L.A. Times reports, a new survey finds that hotels will collect more than $6 billion in tacked-on charges for items ranging from early check-in to chilling your own Coke in the mini-bar.  It’s a story ripe for localizing, as KTAR did here, especially with convention and conference season getting into full swing.  Be sure to talk with event planners for professional and trade groups — how much of a turnoff are these surcharges?

Looking spiffy.

If you haven’t done your mancaping story yet, here’s an example from the Detroit News; they took a peg from Gillette’s introduction of a non-facial shaver “built for male terrain” to generate a story about men’s increased demand for grooming services boosting biz at area salons.  (Iwould be curious to hear local stores’ report on demand for that new male razor, too.)

Building for pets, not just people. 

Not long ago on a charity tour of old houses, I saw one where residents had converted a pantry into a sumptuous suite for their small dog, complete with scrollwork door replacing the solid door, a raised bed, dishes and more.  Beats having a crate in the middle of the den, I thought, and wondered how much that fancy millwork had cost. 

Why me? Pooch wear

Photo: Flickr user Steph Carter

Turns out they were cheapskates compared to what some pet-owners are spending on built-from-scratch amenities for Roxie and Rex:  The Associated Press reported recently that at least one construction company is cashing in on the $55 billion American pet market with animal suites designed into new houses.   The 170 square-foot area (that’s more than a 12’x12′ bedroom, folks) includes tiled wash area, commercial dryer, bunk beds and more — even a washer/dryer and TV set for the pooches.   That builder, Standard Pacific Homes, is offering the pet suites in 190 developments so perhaps there’s one in your market — or check with other builders and remodelers on how animal amenities are being incorporated into houses.  Here’s a Gannett piece about microchip activated pet doors, a converted bath and even simple modifications like a drawer that holds a feeding station.

Another new phishing scam.

They’ve tried messages from funeral parlors and court clerks; now the e-mail trolls are using fake messages from toll collector EZ Pass to scare consumers into clicking on their fraudulent links, as Consumer Reports notes.  Information Week says phishing scams are at an “all-time high” and that hundreds of thousands of attacks in 2013 cost nearly $6 billion; IW warns that worker training is not keeping up with the scams.  We know big employers have IT departments aimed at foiling sophisticated hacks, but what are they doing to keep front-line employees from letting scammers in via innocent-looking e-mails?

Saline shortage. 

A shortage of IV solution continues to plague medical professionals;  I’ve been wanting to suggest localizing it and here’s a neat angle from the Columbus Dispatch about EMT workers now accounting for supplies via a high-tech vending machine.  And here’s a fresh look by the Denver Post at how hospitals are coping.


FDIC report helps you make local sense of record bank profits

A recently released report from the FDIC on quarterly U.S. bank performance contains the nuggets for a variety of stories that reflect your local area’s economy.

As Reuters reports, banks earned more than $40 billion in the second quarter of 2014, according to the Federal Deposit Insurance Corporation’s Quarterly Banking Profile. 

citibank branch in the rain

Screenshot of AP video from HuffPost Live

Financial institutions are setting aside less money to cover bad loans, Reuters says — presumably a sign that borrowers are less likely to default than just about any time since 2006, according to the loss-reserve data.  Bloomberg also reported on the results, noting that those near-record profits are owed in part to the hottest lending environment since before the recession. (Although it is worth noting that according to the ABA Banking Journal, loss reserves for commercial loans – vs. commercial and residential real-estate loans — are actually up.  What does that portend?  Again, fodder for questions for local banking officials.  Is this trend reflected in your market?)

FDIC reports at state level

So, as we head into the home stretch of 2014 and the end of Q3, the time is ripe for a sit-down with some of your region’s banking executives.  Use the FDIC report as a springboard to talk about how your area echoes or bucks national trends, any big or noteworthy deals they’ll disclose, the creditworthiness of borrowers,  small business trends they’ve observed and competition for borrowers. 

The FDIC reports are available at the state level; go to this page and select your state from the drop-down menu; note that you also can run the state report for the  same quarter in 2013 and 2012 for comparative purposes.  You might want to enlist a commercial accountant, bank industry analyst or other pro to help you parse the financial statements, but some year-over-year stats are obvious and great fodder for those executive interviews.  Running the Michigan reports, for example, I see that the number of banks is down by several, employment in the banks reporting to the FDIC is down by several thousand jobs in just a couple of years and that “non-performing assets’ (past-due loans) are down quite a bit. 

I think more than any specific bank’s financials, however, readers and viewers would like to know what this means for them.  Are construction loans up and likely to ripple out through the community with jobs?  Any new developments coming in, or small businesses expanding?  What do these metrics translate into (if anything) relative to momentum, growth and recovery in the local market.

Banking on jobs

And speaking of jobs, I had a very interesting chance conversation with a tradesman servicing my house.  He mentioned that his wife was one of many long-time employees being let go by JPMorgan Chase, which did project 8,000 layoffs earlier this year.   In addition to the worker’s plight — according to this conversation, she, a 25-year employee of the company, was offered a modest buyout package or the chance to take a job at a $20,000-per-year pay cut — the inside view of the situation offered some insight into the new bank branch paradigm.  Again, this is hearsay but if I were on the beat I’d be hotfooting it to some regional bank offices to inquire:  Assistant managers are being eradicated and tellers trained to do some management tasks while working as tellers at peak times of day, and lobby kiosks are being installed to reduce the workload of human bank employees.  

Clearly, banks at record profit levels still see the value in reducing full-time positions and relying instead on a more flexible and lower-paid workforce — a lament of the post-recovery job scene common in today’s business coverage.  Ask all local banks and credit unions about their staffing models today, next year and so on compared to a couple of years ago, and what their rational is for cutting jobs when profits are soaring. 


As large-market casinos fold ‘em, how are local casinos holding up?

When the first slot machines hit Michigan a couple of decades ago in a small tribal casino, the notion of spinning the wheels was enough of an unheard-of novelty that my mother and I drove two and a half  hours to the central part of the state, for the pleasure of pumping our dimes and quarters into the slots in a small, crowded, smoky hall with a no-frills motel about a mile down the road.

Now, fast-forward 20-odd years and the United States sports so many gambling venues that for many consumers they’re a routine neighborhood attraction rather than a destination venue.  And the proliferation of gambling opportunities means the casinos each are getting a slimmer piece of the pie, leading to problems in an apparently over-saturated industry.

For example, as of this month, three major casinos in Atlantic City will  have  shut down their gambling operations and hotels this summer alone, eliminating the jobs of thousands of workers.  That follows the June closure of the Harrah’s casino and hotel in Tunica, Miss., another major U.S. gambling cluster.

The crumbling of Atlantic City is a pretty good news peg for taking a look at your market’s casino operations.  (And if their aren’t any, how about a look at what level of casino tourism your area’s consumers generate for nearby markets?)  For the most part it seems that Americans still are spending heftily on gambling but the pattern of the getaway week or weekend  has given way to shorter drop-ins at the local hall.

Huge Atlantic City Casino Closes Down NPR

Revel Hotel Casino in Atlantic City, N.J. has closed a little over two years after opening.

The University of Nevada at Las Vegas has a Center for Gaming Research that might also be a helpful source of stats and data.  And of course the industry trade group, the American Gaming Association, offers a lot of stats including its State of the State report which gives numbers for individual markets.  If you are including tribal casinos in  your report — more difficult because of less transparent reporting requirements — try IndianGaming.com and this organization, Casino City Press – ask if they’ll share their market research reports free of charge with journalists.

Beyond the casino companies themselves, you can look at the economic impact of gambling in your community.  It s a huge topic that is fraught with different special-interests and views, of course.  The topic isn’t as hot as it was 10 years ago during the proliferation but you might check with your region’s federal reserve bank for any studies and commentary; this 2003 report from the St. Louis Fed might help in understanding some of the issues and metrics to evaluate.  Be sure to track down suppliers from food distributors to construction and cleaning firms about the effect on them of waxing and waning casino attendance.  Many are required to be licensed by the state gaming commission so check for lists of vendors there.

One thing I would recommend for anyone on the casino, real estate/economic development, personal finance or marketing beats: Sign up for the loyalty programs at all of your area’s gambling centers.  I am on the mailing list for several national ones such as the Caesar’s Entertainment Total Rewards program as well as a few for local standalone casino/hotels.  In a highly competitive market, return visits are the lifeblood of a casino.  Here’s a report on “The lowdown on casino loyalty programs” that shows some metrics about how they drive business for gambling parlors.  Here’s a 2010 paper from the University of San Francisco on the effectiveness of casino loyalty programs that makes some interesting differentiations about casino player segments (“Mr. High Roller” vs. “Happy-go-lucky,” for example) and  a blog post from the marketing association Loyalty360 about casino programs.  (Good blog to bookmark for a variety of beats, by the way.)

Tea leaves in casino marketing

The frequency of their direct-mail pitches and the interesting psychology behind the marketing ploys are quite interesting and dissecting them might form the basis for some interesting heads-up for readers.  Obviously, gambling fulfills (or not, for problem gamblers) some emotional needs as well as filling entertainment  hours, and deciphering the ways companies connect emotionally with consumers is fascinating.

For example, one chain with a casino near me is constantly sending “offers” for giveaways of items like coolers, camp chairs, small appliances or housewares like wine glasses and down comforters.  It’s pretty apparent they buy overstock or outlet items for pennies on the dollar and woo consumers with the bait of a “free” electric griddle or spa bathrobe that probably cost the casino $10 or $15.  Odds are the consumer will plop down and spend far more than that at a table or gambling machine, of course.  Other common lures include gift cards for name-brand gas stations, or even gift cards to big-box chains like Best Buy.  Special events like free-car drawings and raffles also are common to get people in the door.

If you don’t want to join the “players clubs” yourself or won’t gamble enough to keep yourself on their active mailing lists, it might be fascinating to enlist some regular patrons and ask them to save up their casino direct-mail pieces for a month, a quarter or even a year.  Of course, players who spend more get more — free concert tickets, private dinners, parking privileges and meal “comps,” etc. — and if you can find some brave consumers who will share their win/loss statements as well as their direct-mail advertising,  you could tote up each and show prospective gamblers what those “free” coolers, buffet dinners and the like are really costing them.  (And I have nothing against gambling but do think everyone should approach it with a realistic view of casino tactics.)

Might be interesting to check with area bankruptcy attorneys, CPAs, debt counselors, etc. to see if they are seeing more or fewer consumers with gambling-related problems.



Stock market records mean little to households with no access to market

Tim Horton's Burger King logos

Traders work on the floor of the New York Stock Exchange (NYSE) in February 2014.

Wall Street chalked up another milestone on Tuesday when the Standard and Poor’s 500 index closed above 2,000 points for the first time ever, buoyed by gains in durable goods orders and higher consumer confidence, as Reuters reports.

Those big round numbers are causing the usual buzz in the financial press — the Wall Street Journal says “The Bull Market’s Strength Is Reaching Epic Proportions,” and notes that “The S&P 500 has rallied 195% since March 2009, the fourth-best bull market since 1928 in terms of both duration and magnitude, according to Bespoke Investment Group.”

The sustained bull market is good news for investors, particularly those who stayed the course.  The Investment Company Institute, an industry trade group, recently issued a release with the catchy headline  “Accounts of Consistent 401(k) Participants Grew 6.8 Percent Annually During the Five Years That Included Financial Crisis.”   People who did not liquidate investments, or tap them in hard times, and who continued to make contributions, now are reaping the benefit of following traditional buy-and-hold advice.  Read the full ICI report here. (PDF)

No doubt many investors are enjoying their quarterly statements more these days.  But one angle you might pursue is flip side of the coin:  Only about half of Americans are invested in the stock market, and many don’t have any practical way to be invested.   Which may explain why the roaring bull market is making so little noise on Main Street:  Gallup just reported that “U.S. Investors Seem Unaware of Bull Market’s Strong Gains,” noting that its polls found low awareness and low optimism about a market which actually is in one of its brightest stretches of the past 85 years.  The market apparently is out of reach of a huge segment of Americans, who already are woefully behind in savings — some 36 percent lack any sort of retirement account, according to this L.A. Times report based on a new Bankrate.com study.

With one of this year’s recurrent stories the low wages and low quality of most newly created jobs, why not talk with a cross-section of workers about what (if anything) these stock market headlines mean to them, and whether they see the stock market as a viable investment for them?  You also could talk with Certified Financial Planners about when and whether households on very limited budgets should invest in stocks, and provide a step-by-step primer on opening, say, a Roth IRA with automatic contributions. (Keeping in mind the monies funneled to a Roth need not necessarily be invested in stocks).

People in your audience who feel shut out of America’s financial markets may appreciate guidance in how to participate, or alternative ideas from the pros.  Sometimes, for example, the savings in tax liability can offset the first few percentage points of income they contribute to a plan, so their pocketbook won’t know the difference but the dollars will be headed to their own coffers rather than the Treasury Department’s.  I don’t think that’s reported widely enough, complete with the math, to refute the notions of those who feel they can’t afford to save.

Another angle is the gender gap in retirement savings:  This Wells Fargo survey says more men than women invest in 401(k) plans and at a greater rate.  Talk with consumers, employer sponsors of plans, financial counselors and advisers about why this is.  Here’s a Reuters story about women’s greater need for retirement security and problems in saving, too.

Another way to localize the S&P 500 milestone is to take a look at how index members in your neck of the woods have performed vis a vis the overall index and their peers.  It’s a decent reason to check in with local companies about their fourth-quarter and 2015 outlook, their take on the coming mid-term elections, sentiment about Fed policy and other economic issues.  Oddly I could not locate a list of S&P 500 members sortable by state, but this list in Wikipedia will serve as a starting point for you; a local brokerage firm probably can use its Bloomberg terminal to create a list for you, as well.


Burger King bid for coffee shops puts fast food evolution in the spotlight

Tim Horton's Burger King logos

A deal to acquire Tim Hortons would move the company’s headquarters to Canada.

Wall Street gobbled up shares of fast-food monarch Burger King on Monday, following word that the 60-year-old chain might be headquartering north following the acquisition of the Tim Horton’s coffee and doughnut shops.

Both chains enjoyed double-digit stock price hikes, with investors licking their chops over the favorable tax situation Burger King would enjoy as a Canadian company, as the Chicago Tribune reports.  (Here’s a primer on corporate tax inversion and why companies do it by Trib reporters; it’s been a buzzword all summer particularly in Chicago, where hometown drugstore company Walgreen’s recently floated the notion of moving itself overseas.)

It’s an interesting phenomenon and one that is interpreted as somewhat disloyal to American patrons — one senator already is calling for a Burger King boycott in favor of hometown favorites Wendy’s and White Castle — and the consumer reaction angle is one you might pursue quickly.  What do franchise owners hear from their patrons about the prospect of BK having it their way, and how are they handling any reaction from restaurant patrons?   Mashable says “Burger King may be in for a whopper of a backlash,” citing comments on social media, while the chain itself is trying to quash the image of itself as a tax dodger.

Good story but I wonder if the local fast-food joint has quite the emotional grip on patrons that it might have had several years or several decades ago.  A look at the evolution of quickie food service and the viability of hamburger chains might be an interesting response to the Burger King headlines.

Fast Casual vs. Just Fast Food

The Wall Street Journal just reported that consumers in their 20s and 30s favor chains like Chipotle over burger & fries fare; the WSJ said “the percentage of people age 19 to 21 in the U.S. who visited McDonald’s monthly has fallen by 12.9 percentage points since the beginning of 2011, according to Technomic, while the percentage of customers age 22 to 37 visiting monthly during that period has been flat. ”  A recent Forbes piece said that diners’ preference for “fast casual” places like Panera is taking a bite out of businesses on either side of the spectrum, from traditional fast-food on one hand to casual sit-down chains like Olive Garden on the other.   Why not head out and talk with store owners, managers and customers — and make your own assessment of who’s eating where, what they’re spending, and why?  I noted recently in a college town near me that an on-campus McDonald’s actually closed, while stores such as Potbelly and Five Guys have proliferated.  What happens to the investment of long-time franchise owners of stores like McDonald’s and Burger King when traffic wanes?

The U.S. Department of Agriculture offers a fascinating data set, the Food Environment Atlas (worth exploring when you have a moment for other ideas) and amid this treasure trove is a map of fast-food establishments, expenditures and more –  by county!  The data is from 2011 but it will certainly get you off to a good start and provide per-capita context for describing the fast-food scene in your market.  And there are comparative figures from 2007 to help you show trends.

Another facet of the issue: This Motley Fool article said increasing food offerings at convenience stores is cutting into traditional fast-food sales, as well.  And I’ve noticed a number of grocery stores touting their deli areas and fresh salad bars as convenient lunch or dinnertime fare; they’ve even moved things around to stock single-serve beverages near the deli.  This Frick’s Market, a rebuilt grocery store in rural Union, Mo., included a pleasant dining area in its recent re-design and its website offers lunch specials such as bratwurst & tater tots for $1.99 — and the company’s Facebook page touts “Simple Supper Solutions” available from the drive-up window at its deli.  Clearly, someone there saw an opportunity to compete with traditional fast food.  What are retailers and other food purveyors in your area doing?

As I often say, you likely can find an angle to this story even if you’re not on the retail, restaurant or Wall Street beat.  Think health care, technology, marketing and advertising, even agricultural sectors that supply the big burger chains — all will be feeling the ripple effect of changing consumer tastes.




Chronicle the changing nature of jobs for a fresh take on Labor Day

Riding on a motor boat

Photo by Christina Rutz

With Labor Day only a week away, you may be pondering ways to commemorate the holiday, which was first observed in September 1882 in New York City, according to an account on the U.S. Department of Labor website.

In the ensuing 132 years, the ebb and flow of the organized labor / collective bargaining movements has followed a fascinating trajectory, and a review of the current state of union representation is always interesting this time of year.

Here’s an interesting roundup of Gallup survey results regarding labor unions; note that last year only 8 percent of respondents said they’re a member of a union and most people surveyed expect labor unions to become weaker as time goes on.   And here’s a link to some Pew research about attitudes toward labor unions; it’s fascinating that despite the deteriorating quality of jobs in the United States, from stagnant wages to the “just in time” worker scheduling that prompted this recent New York Times article “Part time jobs, full time headaches,” that the American public continues to view unions in a mostly unfavorable light.

You might want to talk with labor experts, union officials, corporate management, consumers and workers in your area about the cause of the seeming disconnect, even as worker clout continues to wane.  Are there any local efforts underway to establish collective bargaining?  That’s an angle for any beat, from health care to casinos to office work.

Or you could pursue the part-time jobs angle, which is getting a big buzz lately – this column from Al Jazeera America points out that despite the wane in unemployment, “Since 2007 full-time jobs are actually down by 1.6 million, while part-time jobs have grown by 2.7 million.”  Can you find some local case studies/household situations where people are off the jobless rolls but in lower-quality positions than they previously held?  Or newly minted workers fresh out of high school and college, taking part-time jobs to eke by?

Here also is a U.S. Census Bureau “Facts for Features” reference page of factoids related to Labor Day, from union membership to prevalence of various occupations to wages.  Just about every item is a launching pad for a more in-depth story, from the male/female wage gap to Labor Day weekend travel to the fastest-growing job category: personal care aide.

Other Labor Day stories include, of course, travel & tourism, shopping & retail sales and even a look at the wind-up of summer road work projects and other efforts that have local economic impact.

However, my bid for the most interesting angle for Labor Day 2014 would be a look at the contingent workforce, whether long-term contractors, short-term temporary staffing, freelance service providers or any other cohort that works for 1099 pay instead of W-2 wages and benefits on the beats you cover.

This trends report from software maker Intuit predicts that contingent workers will comprise more than 40 percent of the workforce by 2020, with traditional pay-plus-benefits jobs increasingly harder to find.  (The entire report is chock full of story nuggets for future use, too; it’s worth a thorough read.)

Here’s an eye-opening report from the consulting firm Accenture that’s quite enthusiastic about “Creating a just-in-time workforce,”  and the benefits of such strategies, like using former workers as 1099 contractors.  (“Outperform the competition,” according to Accenture.  It would be interesting to ask the authors or their counterparts at other agencies about how they suggest workers cope with a perpetual short-term approach to jobs.

This report from staffing firm Snelling, Rise of the Contingent Workforce,” (PDF)  is helpful in defining some industry terms and jargon.

Check around with staffing firms about trends in long- and short-term contract work in your area, including the duration of assignments, wages and other conditions.  The Bureau of Labor Statistics doesn’t seem to have any fresh numbers but these “Contingent and Alternative Employment” tables from 2005 should help you formulate lines of inquiry to pursue now.

The following blog post (I’m not vouching for the blogger, whom I don’t know, but his points are worth noting) about a little-remarked-upon penalty to the freelance worker – self-employment taxes – is worth at least a sidebar.  That extra 7.5 percent right off the top of 1099 wages can come as a shock to people doing contingent work   You might want to ask  the IRS if it can parse out any changes over the past decade in reported 1099 vs. W-2 income for your state or region; I’m not finding any analyses online, surprisingly.  (If you do find the data, please share with us!)

Also, what are the implications of a growing class of 1099 workers when it comes to mortgage and auto lending, and other activities like renting that depend on proof of income?  How does it factor into child support arrangements – which of course ripple out economically through a community.  Here is a slightly dated CBS News report, “Temp work raises long-term questions for the economy,” about the shift in relationship between employer and employee.  The secure cradle-to-grave approach that characterized the mid-20th-century relationship between company and worker may have born some relationship to a peak in prosperity; could the current hand-to-mouth nature of participating in the workforce be prolonging economic malaise?  It’s worth asking some of the players and decision makers what they foresee in coming decades.