Market Trends February 2019
Supply Chain and Logistics Programs More Popular
Reports from universities and colleges around the country note that logistics and supply chain coursework and career pathways are figuring more prominently in curriculum, driven by interest from both students and employers. Some supply chain professors noted that students don’t really understand logistics; they get them excited by telling them “we’re like Amazon.” A survey by the National Association of Colleges and Employers (NACE) showed that supply chain graduates are in demand by employers, with more than 40% of those responding planning to hire supply chain graduates in the next year. The University of Washington has several programs, and launched a Master’s program for Supply Chain Management in 2016. Until recently it was more common for students to take a few classes as part of a larger marketing or business degree, but now in the age of seamless omnichannel fulfilment there is growing demand for well-trained specialists. Business schools also see it as a way to combat declining enrollment; enrollment in MBA programs dropped 7% last year, the fourth consecutive year the number of students enrolled in Master’s programs has declined. Employers today are looking for different skill sets than they were looking for even five years ago. Today they want people with analytical and data skills and experience with artificial intelligence.
Life at Work Trends
The Washington Post recently published a broad-ranging look at workplace trends. Among those covered: bridging the growing wage gap between old and new workers, safeguarding privacy, the office phone booth and the demise of email.
Issues with the wage gap are being traced to the fact that it is a highly competitive job market in which companies have to offer attractive salary and benefits packages to attract talent. The issues arise when it becomes apparent to long-time employees that newer employees are making more for the same work than employees who are already with the company. Experts say that employers will need to do more to keep employees happy and ensure that people don’t need to find another job to get paid what they’re worth.
Privacy issues are becoming very important to employees, with growing concern about what employers do with the personal information employees are required to disclose, and what steps are being taken to protect and safeguard that information. Experts say that safeguarding data will become part of their marketing pitch to prospective new employees.
The office phone booth, or privacy pod, is a small enclosed space where someone can have a private conversation without taking up an entire meeting room designed for a larger group. The Wall Street Journal reported that in 2015 there was only one phone booth design on display at an industry trade show; in 2018 there were more than a dozen. The phone booth is a response to ever-shrinking offices and individual workspaces which make it difficult for employees to have private conversations without the whole office listening in.
Perhaps the most habit-changing trend is the demise of email, with experts predicting that 2019 will be the year that email moves past its peak in the workplace. Analysts say that companies with fewer than 200 employees don’t really need email, and people are turning increasingly to messaging tools such as Slack. In addition, Microsoft is integrating a group messaging app into Office 365 that will reportedly be a game changer. Additional workplace tech tools that nudge managers or employees via texts or other alerts could eventually replace email as well. From reminding managers that an employee in a competitive field has not had a raise to urging people to use their remaining days of paid time off, artificial intelligence will assume a more integral role in day to day management as well as long-term planning.
Shippers Push for Lighter Packaging
Amazon and other online stores, as well as omnichannel retailers, are pushing manufacturers to reduce the size and weight of packaging in order to cut down on shipping costs. Packaging is also being re-designed to do a better job of protecting the product from the rigors of shipping. For example, Tide is putting detergent into a cardboard box, delivering the same 96 loads of cleaning power in a container that is four pounds lighter. One of the issues seems to be convincing consumers that the product is the same; it’s just the packaging that has changed. However, many consumers are demanding less packaging as well as packaging that is more eco-friendly.
Air Cargo Capacity Building
Online giants are busy beefing up their air cargo capacity. Amazon added the 40th Boeing 767-300 freighter to their US network in mid-November. Amazon is planning a $1.49 billion freight hub at Cincinnati-Northern Kentucky International Airport. China’s ecommerce retail giants have also been building internal air logistics and partnering with airlines for international shipments. The International Air Transport Association says that ecommerce is a future growth driver for the air cargo industry worldwide.
Tech Predictions for 2019
2018 was a tough year for some big tech companies. Facebook faced a real crisis of faith as 21 major scandals caused people to lose trust in the social media giant. COO Sheryl Sandberg is stepping down, but most industry observers blame CEO Mark Zuckerberg for Facebook’s ongoing blunders. Google, Microsoft and Amazon all faced revolts from their own employees over ethical lapses. YouTube’s “Rewind 2018” video is already the most-disliked video in history. With iPhone sales lagging, Apple is pushing into more and more subscription services like Apple Music, iCloud for storage and AppleCare+ for repairs. 5G cellular networks have arrived but thus far have not penetrated many markets. This year AT&T and Verizon are expected to introduce them in major cities. However, the blazing-fast 5G networks are currently very neighborhood-specific, and it will be years before they are as widespread as 4G is today. According to well-regarded industry sources, Apple will wait until at least 2020 to put 5G into iPhones. Samsung is reportedly debuting a folding smartphone that unfolds like a book to reveal a 7.3” screen that is powerful enough for working, watching video and still being a pocket-sized phone. Industry observers say people can expect to pay north of $2,000 for this totally modern take on a flip-phone.
New Home Sales in 2019
Freddie Mac expects final numbers will show that total home sales dropped 1.6% to 6.02 million in 2018. Freddie Mac believes sales will slowly regain momentum and increase 1% to 6 million in 2019 and 2% to 6.2 million in 2020. The growth in home sales will be entirely driven by a modest expansion in new home sales. Existing home sales are expected to remain close to current levels. Freddie Mac reports that if new home sales are going to resume growth in 2019, builders may have to shift their focus to more modestly priced homes and smaller sized homes in order to help combat the rising prices that are shutting too many buyers out of the market. However, cost pressures are already pinching profitability, so delivering for less is a real challenge. There has been some expansion in modular housing and other housing built off-site which could help make single-family housing more affordable.
The median existing home’s sale price will rise 3.1% to $266,800, according to the National Association of Realtors. Freddie Mac expects home prices to increase 4.3% this year after zooming up 5.1% in 2018; price growth will moderate to 2.9% in 2020. Inventory is expected to increase about 7%, but most of the growth will be in the upper-end price range, while most of the demand is at the lower-end.
The Mortgage Bankers Association (MBA) expects housing starts to increase to 1.3 million units this year, up nearly 3.5% from 1.26 million in 2018. Realtor.com believes starts will rise a robust 8%.
Mortgage Rate Forecast
Most economists expect mortgage rates will continue to rise during 2019. Housing research company Zillow projects that by the end of the year, rates will reach 5.8%. The National Association of Realtors is forecasting 5.3%. And Freddie Mac and the Mortgage Bankers Association both say the 30-year fixed-rate mortgage will average 5.1% this year. The higher rates rise, the less consumers can spend on a home in order to stay within mortgage to income guidelines of around 30%. Rising mortgage rates can also have a ripple effect, delaying home purchases and causing some homeowners to stay put and renters to give up their search for a home. Both of these outcomes ultimately reduce the number of homes on the market, creating inventory shortages and forcing people to scale down their expectations.
Amazon Rolls Out Virtual Showroom
Amazon quietly rolled out Amazon Showroom, a tool that lets shoppers place furniture in a virtual living rom, making online furniture shopping more visual. Shoppers can swap out different pieces of furniture to see how they look in the virtual room, but the room itself is not very flexible. People can change the color of the walls and floor, but not pick different rooms or arrange where the furniture goes. The program does show each piece to scale and lets someone see how all the pieces will look together.
New Year’s Goals
About half of Americans make a New Year’s resolution, according to a new survey by Swagbucks. The top goals are losing weight and saving money. More than half of those surveyed expect that they will keep their resolutions, at least for a while, with 25% anticipating they will stick with it for the whole year and a third hoping to stay on track beyond 2019. When asked if they kept the resolutions they made for 2018, 42% said yes. Of those, 74% stuck with it for at least six months and 39% made it all year. Approximately 53% of Americans make three or fewer resolutions; 29% make only one. For 25% of Americans, saving money was their top goal. A full 25% want to build up an emergency fund, 22% are saving for retirement, 21% want to save up for a vacation and 12% are saving for a house. Among the tactics employed are using a cash-back shopping site online and cutting back more on eating out and entertainment.
Inside Sam’s Club Now
MediaPost recently took an inside look at the Sam’s Club Now, a test store in Dallas, Texas. The store is smaller than a traditional Sam’s Club, at just 32,000 square feet compared to 100,000 for a typical Sam’s. It stocks about 30,000 items and is targeted at a young audience; even the employees are young. There are no cashiers. The store does not accept cash, just credit cards. Payment is connected to the member’s Sam’s Club Now card app, which only works at the test location. The store offers sushi and to-go items near the door, along with a huge beer and wine display. Shoppers get a tablet when they come in to help them navigate. In addition, some areas of the store are interactive and price tags are digital, so they can be updated in real time. The reviewer felt the tablet was cumbersome and thought that everything should be optimized so only a phone is needed. Employees are specially trained, and the experience was likened to visiting an Apple store. Aisles were clean, uncluttered and wider than the traditional store. There was no music playing. The store is located in Lower Greenville, a part of Dallas that attracts millennials with young families. There are many townhouses and condos within easy walking distance.
Who’s Responsible When Pets Go Shopping?
In December 2018 an African grey parrot named Rocco living in Blewbury, England started ordering goods through his owner’s voice-activated Alexa device, which was enabled to charge purchases to the owner’s linked Amazon account. The African grey is renowned for its ability to mimic human speech. Rocco successfully ordered fruit, vegetables, ice cream, a kettle and a kite. Alexa does not have individual voice recognition capability, so theoretically anyone could place an order. Legally, it’s complicated. Strictly speaking, the account owner is responsible for keeping their account secure. But the courts might be more lenient since the ordering was done by an animal and animals lack the capacity to enter into contracts. In any case, it would be up to the owner to prove the transaction was not legal. Recent US court decisions would indicate that the owner would probably not be held liable if a criminal placed the order, but probably would be liable if a friend or relative did the ordering.
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