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Exclusive: The lesson for Main Street from the Walmart, Target inventory failures –



The lesson for Main Street from the Walmart, Target inventory failures

#lesson #Main #Street #Walmart #Target #inventory #failures

Filip Radwanski | Lightrocket | Getty Images

The retail battle narrative over the past few decades has cited one of two wars: Amazon and e-commerce against the big bricks-and-mortar retailers, and everybody big against small Main Street entrepreneurs. But in the current confusing economic environment — marked by inflation, supply chain bottlenecks and a volatile consumer changing spending patterns due to the high prices which followed Covid — small business experts say that Main Street should be more optimistic about the advantages of being small.

The inventory builds and subsequent markdowns from the biggest retailers, including Walmart and Target, show that even the best can get this consumer economy wrong. In fact, small business owners, being closer to relationships on both the supply and customer ends, may be able to more nimbly manage a fast-changing environment.

That’s the advice from Nada Sanders, Northeastern University distinguished professor of supply chain management. She told CNBC’s Small Business Playbook virtual summit on Wednesday that she has been “gloom and doom” in the past, but is now optimistic about Main Street’s chances in the current economy.

“I actually see this as a tremendous opportunity. I really do. Especially for small businesses,” Sanders said.

She cites three areas where entrepreneurs should be focused, and the first is directly related to the big box retailer woes: forecasting.

“The big companies are really struggling with that,” Sanders, who is an academic expert on forecasting, said. “We see it, obviously, with the retailers. Walmart, Target.”

Talk directly to customers to understand shifting consumer demand

Her opinion is that the biggest companies have become too reliant on inventory algorithms to forecast data, but in the current economy, which has defied many historical patterns, “historical data in this space right now isn’t really good data. It’s not clean data, it doesn’t indicate the future that is very volatile,” she said.


This gives small business owners who can connect directly with customers, to understand what their needs are, a potential advantage that can’t be calculated by an algorithm.

Whether a small business is B2B or B2C, Sanders said direct communication is a “real answer” for them right now in dealing with changing consumer behavior.

“What I’m seeing with the big companies, they’re trying to hire futurists and trying to figure out ways to actually predict demand. But every time we look at the numbers, the Consumer Price Index, all of it, we’re looking backwards,” Sanders said. “The fact of the matter is, we’re in a very quickly changing landscape and I think we have to look forward. Small business owners really need to connect and use judgment to forecast and to understand what their customers need.”

“As a small business owner on a tight budget … you don’t even need the really heavy duty AI, which I think a lot of small business owners, they get a little bit nervous. … You can actually make a lot of gains with really simple solutions,” Sanders said, “When you’re a small business, you have an end-to-end control that a large business doesn’t have. I see this as a really big opportunity,” she added.

Main Street already thinks it’s operating in a recession

It will be a leap for many entrepreneurs to come around to this view. Data shows that the current sentiment on Main Street is pessimistic. The latest CNBC|SurveyMonkey Small Business Survey for Q3 2022 showed that small business confidence hit an all-time low, with the largest percentage of small businesses citing inflation as their biggest risk.

In the Q3 survey, an increasing percentage of small businesses forecast a sales decline over the next 12 months as the economy, in their view, is already in a recession. The downbeat sales outlook was the biggest contributor to the all-time low in confidence being hit. And as small businesses face higher costs in inputs, labor, transportation and energy, few (only 13%) say now is a good time to pass along price increases to customers, according to the survey.

How to set pricing during inflation

But pricing is also an area where small businesses can effectively, and directly, communicate with their customers and find solutions.

Jeffrey Robinson, Rutgers Business School provost and executive vice-chancellor, and co-founder of the Center for Urban Entrepreneurship and Economic Development, said at the Small Business Playbook virtual summit that one big mistake business owners make is to not figure out pricing on new products until it is too late. At a time of high inflation, entrepreneurs need to be basing any pricing of new items on a detailed analysis of the costs that go into producing it. A traditional way that businesses set pricing — decide on the product and then once it is available look at what competitors are charging — is not the way to operate in this economy. Inflation requires that small business owners set price by, first and foremost, understanding their costs.

“All those prices along the supply chain have gone up,” Robinson said. “The shipping costs … anything that has any component of transportation involved, those costs have gone up. So assessing and valuing your product or service that you’re providing along those costs, before you set the price, allows you to set the price at the right level,” he said.

And then comes the hard part: explaining it to the customer. Robinson says the direct relationship that small businesses have with their customers should be seen as an advantage, too.

“We have relationships. Talk,” he said. “Explore. You’ve got to explain to them that the costs have gone up for these components. ‘In order for me to do this, I have to change some pricing,’” he said.


Helping customers understand the situation that a business is in related to supply chain inflation is going to help set prices in an appropriate way, he said. In the end, Robinson said it is really no different than a restaurant that has always shown the price of a fish on the menu to be “market price.” That may be a simplified example, but it has reverberated in the current situation.

Some restaurants have put signs out front during the current inflationary period to be transparent with customers about pricing changes. Robinson didn’t weigh in on that method specifically, but did say every business needs to have some form of conversation with customers and potential customers about the fact that the prices of two years ago are not going to be the prices of today. While the survey data shows that small business owners are wary of this conversation, Robinson said they shouldn’t be.

“I believe a lot of consumers understand that, especially if you’re a business-to-consumer type of business,” he said. “It’s about being transparent … helping people understand that pricing is changing.”

Map out the supply chain with key vendors

The conversation with suppliers is no less important, and Sanders said the data shows that, on average, 80% of a company’s spend goes towards about 6% of their suppliers. Those are the business partners to focus on, and where to pick up the phone and call and build a relationship. “As a small company, this is really what it’s going to be about,” Sanders said. “What I think you need to do as a small company is really be able to map your supply chain for your key items, talk to your vendors, really build partnerships,” she said.

Most big companies don’t have great visibility below their tier one suppliers, according to Sanders, so many items become harder to track that are far back in the supply chain, “tier four, tier five,” she said.

A small business can map out its supply chain and work with partners to visualize the entire chain and identify the risks. Right now, the inventory issues in retail might make small business owners more reluctant to stock up — even though it is the start of peak shopping season, with back-to-school and then the holidays. Sanders said she is firm believer in running a “lean” operation, but in the current economy, “we need to implement some caveats to the meaning of lean.”

In certain cases, small businesses are going to have to store extra items, critical items with longer lead times, and where there are expected price increases. All businesses should also be taking a look at their production processes and whether alternatives exist that could lead to more cost-effective operations. Carrying extra inventories “flies in the face of lean,” she said, but she added, “the advantage for a small business is really being able to manage at the same time, upstream and downstream, and coordinate those.”

The biggest problem in the current economy is the mismatch between demand supply, and that’s where Sanders comes back to the issues Walmart and Target have faced and why small businesses should take an opportunistic view of the situation, and be proactive about conversations on both the supply side and end customer side of their operations.

“Large companies are dinosaurs. … They’re very heavy, bureaucratic. As a small business, you’re very limber,” she said.

The key for small business owners is to not only look one way, either downstream (customer) or upstream (supplier). “But look at those at the same time, really marry those, watch them, and connect with customers, connect with all the vendors,” Sanders said. “Large companies can’t do that. They’re stuck because they have huge silos. As a small business, you don’t have that, so leverage that right now.” 




Exclusive: FDA authorizes Covid booster shots that target omicron BA.5 variant –




FDA authorizes Covid booster shots that target omicron BA.5 variant

#FDA #authorizes #Covid #booster #shots #target #omicron #BA5 #variant

A medical staff prepares a booster dose of Pfizer’s coronavirus disease (COVID-19) vaccine are seen at a vaccination centre in Brussels, Belgium, January 5, 2022.

Yves Herman | Reuters

The Food and Drug Administration authorized Covid booster shots Wednesday that target the omicron BA.5 subvariant as the U.S. prepares for another surge of infections this fall and winter.

It is the first time the FDA has authorized an updated vaccine formula since the original shots rolled out in Dec. 2020. Pharmacies are expected to start administering the new boosters after Labor Day weekend.

The U.S. has secured 171 million doses of Pfizer’s and Moderna’s updated shots so far, according to the Health and Human Services Department.

Pfizer’s new booster dose is authorized for people ages 12 and older, while Moderna’s new shots are authorized for adults ages 18 and older. The eligible age groups can receive the boosters two months after completing their primary series or their most recent booster with the old shots.

The U.S. will no longer use the original vaccines as booster doses for individuals ages 12 and older now that the the updated shots have been authorized, according to the FDA.

The Centers for Disease Control and Prevention has to sign off on the boosters before pharmacies can give them to patients. The CDC’s independent advisory committee is scheduled to meet on Thursday and Friday to review the data and issue its recommendations for health-care providers.


Bivalent vaccines

Public health officials believe the redesigned boosters will provide longer lasting protection against the virus and reduce hospitalizations this fall and winter. The new boosters target both the original strain that emerged in China more than two years ago, which scientists refer to as the “wild type,” and omicron BA.4 and BA.5 which are now the dominant variants in the U.S.

Shots that target two different strains are called bivalent vaccines.

The vaccine makers developed the original shots against the strain of Covid that first emerged in Wuhan, China in 2019. But the virus has mutated dramatically since then. Omicron and its subvariants have drifted so much from the original Covid strain that the virus is able to slip past the protective antibodies induced by the vaccines.

As a consequence, the shots’ effectiveness at preventing infection and mild illness has declined substantially as the virus has evolved. Though the vaccines are still generally preventing severe disease, the protection they provide against hospitalization has slipped over time as well.

“There is declining effectiveness against hospitalization and severe illness. The problem has been persuading the American people to get boosted on a regular basis,” said Dr. Peter Hotez, an infectious disease expert at Baylor College of Medicine in Texas. Hotez led a team that developed a Covid vaccine based on protein technology that is authorized in India.

Original vaccines losing effectiveness

About 76% of people ages 12 and older have received their first two vaccine doses in the U.S., according to CDC data. About 50% of those individuals have received their first booster dose.

For adults ages 18 and older, three doses of Pfizer’s or Moderna’s original vaccines were 55% effective at preventing hospitalization from the omicron BA.2 subvariant four months after the third shot, according to CDC data.

Three shots were 19% effective at preventing infection from omicron five months after the third shot, according to CDC data from Aug. 2021 through May 2022. The rapidly spreading BA.4 and BA.5 subvariants have since driven omicron BA.2 out of circulation.

Dr. Peter Marks, head of the FDA office responsible for reviewing vaccines, said the hope is that the updated boosters will restore the high level of protection against disease that vaccines demonstrated when they were first authorized in December 2020.

“We don’t know for a fact yet whether we will get to that same level, but that is the goal here. And that is what we believe the evidence that we’ve seen helps point to,” Marks told reporters during a press conference after the authorization Wednesday.

The Biden administration moved rapidly over the summer to get updated shots ready for the fall. Public health officials are worried that the U.S. is on the verge of another wave of infection as more transmissible omicron variants spread, immunity from the original vaccines wears off, and people head indoors to escape colder weather.


Pfizer and Moderna were originally developing boosters to target omicron BA.1, the variant that caused the massive wave of infection last winter. But the FDA told the vaccine makers in late June to switch gears and target BA.4 and BA.5 instead as those variants quickly gained ground. The sudden change in plans left little time for clinical trials in humans before a fall rollout.

As a consequence, the authorization is based on human clinical trials from the BA.1 shots, which produced a better immune response than the original shots, according to FDA. But it’s unclear how the BA.5 boosters will perform in humans since the data is based on BA.1.

Marks said it will likely be at least another two months before human clinical data on the BA.5 shots is made available to the public.

The most common side effects from the human trials of the BA.1 shots was pain, redness, swelling at the injection site, fatigue, headaches, muscle pain, joint pain, chills, nausea, vomiting and fever, according to the FDA. The Covid vaccines also have a well established safety profile after administration to millions of people over the course of the pandemic, according to FDA.

Mouse data

In addition to human data from the BA.1 shots, the authorization was also based on animal studies from the BA.5 boosters, Marks said. In June, Pfizer also presented data to the FDA’s independent vaccine advisory committee that showed the bivalent omicron BA.5 shots increased antibodies in mice that protect against infection by about 2.6 fold compared with the original vaccine.

Marks said the FDA used the same process for the authorization that it relied on in the past for switching the strains in flu vaccines.

“We’re pretty confident that or what we have is very similar to the situation that we’ve done in the past with influenza changes where we don’t do clinical studies for them in the United States,” Marks said. “We know from the way the vaccine works, and from the data that we have, that we can predict how well the vaccine will be working.”

But some infectious disease and vaccine experts say the FDA should have waited for human data from the BA.5 shots before authorizing them. Dr. Paul Offit, a member of the FDA’s advisory committee, said data based on mice studies is not sufficient to justify authorizing the new boosters.

“You have to show some evidence in people that the immune response that you’re getting with the bivalent vaccine is clearly better, and those data haven’t been presented,” said Offit, an infectious disease and vaccine expert at Children’s Hospital of Philadelphia.

Human trials

“You can’t ask millions of people to get this booster dose without showing some human data that you have a dramatic increase in neutralizing antibodies to the BA.4/BA.5 strains as compared to boosting with the ancestral type,” Offit said, referring to the currently authorized shots based on the version of Covid that emerged in China, more than two years ago.

Michael Osterholm, a leading epidemiologist and director of the Center for Infectious Disease Research and Policy at the University of Minnesota, also said more data needs to be presented on how the BA.5 shots perform in humans.


“It’s not that I don’t think it could work,” Osterholm said. “But I think we need the data first to show that the immune response to this vaccine is equivalent to or better than what we have already.”

But CDC Director Dr. Rochelle Walensky, in a radio interview, said waiting longer for human data from the BA.5 shots could mean the boosters become outdated if a new variant emerges. Walensky said the change in the vaccine formula is small and should not affect safety.

“There’s always a question here of being too slow versus too fast,” Walensky told Conversations on Health Care in a radio interview. “One of the challenges is if we wait for those data to emerge in human data […] we will be using what I would consider to be a potentially outdated vaccine.”

CNBC Health & Science

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Exclusive: The 'Lipstick Effect' Exposes a Surprising Truth About Our Priorities in a Recession. Here's How Businesses Can Cash In. –




The 'Lipstick Effect' Exposes a Surprising Truth About Our Priorities in a Recession. Here's How Businesses Can Cash In.

#039Lipstick #Effect039 #Exposes #Surprising #Truth #Priorities #Recession #Here039s #Businesses #Cash

Brinn Garner is the current chief revenue officer of Orveon, the company that owns major beauty brands like bareMinerals, BUXOM and Laura Mercier, but 15 years ago, she was working for a different company when she took a late-night phone call that would change the trajectory of her life and career.

Garner was talking to a man she was dating, dressed in pajamas with no makeup on, when she experienced a barrage of doubts. “I was feeling weak and vulnerable,” Garner tells Entrepreneur. “What if he doesn’t like me? I don’t know where this is going.”

So Garner decided to take action. She put on bold red lipstick — and regained control.

“Within minutes, the conversation turned,” Garner says. “I had the power. I was confident. And at that moment, the power of beauty dawned on me so much more — because that little red lip gave me power and confidence.”

Garner ended up marrying the man on the phone; the couple will celebrate their 10th anniversary next November. But that moment was a turning point for Garner, opening her eyes to what she’s since dubbed the “lipstick effect”: that powerful phenomenon of contagious positivity that so often starts with just a little bit of extra confidence.

Of course, there’s another “lipstick effect” on the brain these days, as inflation soars and a recession looms. The term refers to the resiliency of cosmetics sales amid an economic downturn, and it can be traced back to the Great Depression of the 1930s. Cosmetics sales increased from 1929 to 1933 despite U.S. industrial production being cut in half. More recently, former Estée Lauder chairman Leonard Lauder popularized the idea when he observed the same trend in 2001, following the 9/11 attacks on the U.S.

Essentially, many people might not be able to swing big-ticket purchases like a new car or tropical vacation in times of economic decline, but they can afford to treat themselves to high-end lipsticks (or other small luxuries) — so they do.

Related: 7 Recession-Proof Industries to Protect Your Money

“It opened up the market share opportunity and increased the potential of how much makeup could be consumed.”

Garner admits that no industry is fully recession-proof, but some, including beauty, are “recession-resilient.” “I’ve been in this industry for 22 years, and it’s wild what has changed and what has yet to change,” she says. “And I talk pretty openly with my retailers and with my team about how I feel it’s evolved and will continue to evolve, even as the world experiences various economic pain points.”


Although “July got scary for a second,” Garner has noticed a strong August bounceback, which she attributes in part to spikes in travel and back-to-school shopping. (After all, consumers might need to buy a new shade of foundation to match their tans). Despite not being worried about the beauty industry’s outlook, Garner emphasizes the need to always stay on top of new developments.

According to Garner, beauty commodities are one of a kind — capable of changing the way a person looks, feels and lives. Today, part of beauty’s success stems from just how much consumer education has changed over the decades. Thirty years ago, if a girl wanted to learn how to apply makeup, her mom would likely take her to the department store beauty counter, where a sales associate would tell her which colors to use and send her home with several products, Garner says.

In the years since, particularly the past 10, the digital revolution has completely revamped that old model, Garner explains. The rise of social media and its influencers ensure that beauty education is just a few swipes away, and the breakdown of that barrier means the possibilities are near-limitless.

“All of a sudden, it became really cool, fun, interesting and exciting to learn how to apply and further the art of makeup,” Garner says. “Then it opened up the doors for education, which meant that people were more knowledgeable, savvier. They wanted to learn more, so it opened up the market share opportunity and increased the potential of how much makeup could be consumed.”

Naturally, that removal of an educational barrier extends beyond beauty, Garner points out. People are generally more aware of the goings-on in the world, she says, including climate and economic crises.

“Now, what I anticipate in the next 10 years is even more openness in the beauty industry, as people become savvier about tech, innovation, ingredients and the importance of all of that transparency,” Garner says. “I call it the ‘sustainnovation moment.’ Because we have to be responsible for showing people how beauty and life can work together.”

Related: How UOMA Beauty’s Founder Merges Activism and Makeup

“Making education easier and more entertaining is only going to help the customer connect more with the product.”

People want to look good and live better, Garner says, and, perhaps more than ever before, they’ve learned that life is short and it’s up to them to make the most of it — that includes being intentional about purchases, especially in a time of economic uncertainty. “So small things matter more,” she explains. “If I’m going to spend $20-$30 somewhere, I’m going to educate myself so I can pick what’s right for me.”

The good news is that even for industries that fall outside the strict scope of beauty, taking a page out of the self-care sellers’ playbook can go a long way toward safeguarding sales in the face of a recession.

Not only should businesses give would-be customers as much access to product education as possible, but they should also be mindful of upping the entertainment value of those resources — an absolute must, according to Garner, who was dismayed to find out just how dry they could be when researching power drills for her father’s Christmas gift.

“Making education easier and more entertaining is only going to help the customer connect more with the product,” Garner says.


Garner also cautions against resting on your laurels, saying, “You can never keep doing more of the same. If we’re not trying to constantly evolve and anticipate where the customer is heading, then we’re going to get stuck in the past. We have to meet the customers where they are now and where they’re going to be in the future.”

Don’t sleep on tech advancements either, Garner advises, as staying up to date on the latest and greatest will keep the customer experience exciting and innovative — “then there’s a ton of potential.”

Along with that, be on the lookout for new trends, especially those cropping up in other markets, so you can plan accordingly. For example, Garner’s noticed an uptick in live selling in Eastern markets; it’s yet to catch on in the U.S., but it’s a strong possibility, as “there’s a lot of trading between Western to Eastern market trends.”

“That’s definitely something we need to anticipate,” Garner explains. “So we’re building a lot of our strategy around being very relevant in the metaverse and finding ways to make live selling easy, digestible and fun for the customer.”

Related: 100 Things You Need to Know to Succeed in the Modern Beauty Industry

Beauty products, like most hot commodities, help consumers feel good (no doubt something everyone wants in these stressful and uncertain times). But standing out in today’s saturated market requires taking things up a notch, no matter the product or service — that starts with education, and never stops with innovation.

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Exclusive: LinkedIn Founder Reid Hoffman on Hiring During a Downturn –




LinkedIn Founder Reid Hoffman on Hiring During a Downturn

#LinkedIn #Founder #Reid #Hoffman #Hiring #Downturn

If you think a recession is a good time to sleep on hiring, you need to wake up. Take it from Reid Hoffman, who started LinkedIn during the dot-com bust and grew it through the 2008 crash. Reid Hoffman knows a few things about hiring. Aside from creating one of the Internet’s most powerful tools for both job creators and job seekers, the LinkedIn co-founder and former CEO has a commanding view of the job market from his current perch as a partner at the powerful venture capital firm Greylock, as well as from his many interviews with entrepreneurs for his podcast Masters of Scale. As he prepares for the inaugural Masters of Scale Summit, this October 18-20 in San Francisco and online, he took time to discuss hiring amid economic volatility, technological change, and the fast-evolving workplace. Now, as the pandemic reshapes markets and another downturn looms, Hoffman, a 2011 Inc. 5000 honoree, returns to Inc. with advice on finding and retaining top talent.

How will hiring change in the next year?

During volatile periods, many businesses mistakenly play defense instead of offense when it comes to hiring. But if you have the capital and revenue, now is the time to hire, because others aren’t doing that. That will put you in a really strong position in two to five years.

People will want to get back to the office once they realize they’re missing opportunities to be creative with one another, build social capital and trust, and be better positioned for promotions. But we’ve also been ­remote for over two years. That’s going to have a lasting effect on hiring patterns. If the best person for a project or team lives in another city, managers will compromise by having them come down to headquarters for a week every six weeks, or something like that. Successful managers will learn how to identify what types of people fit well in this hybrid structure–and get the right ongoing training to lead and retain them.

Where can entre­preneurs make an impact?

How do you foster office culture in a virtual environment? How do you create better spaces for collaboration? There’s a whole stack of hybrid work-process things that either haven’t been created for the hybrid future or are just emerging. Tools like Coda, for example, adapt to your process rather than having you adapt to theirs, but I think we’re still in the first inning of building all that. Technology doesn’t get built in one or two years. It gets built in five or 10.

What about nontech businesses?

Every company needs a digital strategy–even, say, steel manufacturing. Your smelter might look the same as it did 40 years ago, but what about the marketplace? Your supply chain? Your logistics channel? You have to hire with the goal of advancing your technological evolution.


From the September 2022 issue of Inc. Magazine


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