Online Prices for Tools Soar
The Adobe Digital Price Index (DPI) showed online prices rose 3.6% year over year in February and were up 0.1% from January, both new record highs. Tools and home improvement products were up 7.8% from February 2021. With most goods imported by ocean freight, Drewry’s composite World Container Index (WCI) dropped 1.1% to $9,180 per 40-foot container or equivalent unit (FEU) but were still 83% higher than in February 2021.
Builders See Demand Rising Through 2022 in the Southeast
Surging demand for new projects in the busy Southeast has Dodge forecasting a 9% increase in US construction starts this year with much more road-based growth than occurred over the past two years. Multifamily, K-12 and higher education, hospitality, amusement and commercial work are all in high demand, along with booming residential housing.
How Cutting Ties with Russia Impacts Retailers and Manufacturers
The overall response to Russia’s escalating war with Ukraine has been for US companies and European allies to halt business operations in Russia, which can mean a cessation in sales of US goods to Russian customers or exporting goods from Russia to other markets, including the US. Analysts speculate that for most American and European retailers, their business in Russia is not big enough to make a major dent in earnings. However, many companies are worried about the impact halting business operations will have on their Russian employees. Public sentiment outside of Russia clearly favors supporting the people and government of Ukraine.
Tech Giants Sanction Russia
The world’s five leading tech companies have become so influential that Ukraine lobbied them to impose sanctions on Russia and assist Ukraine, much the same way Ukraine lobbied the US, the European Union and NATO. Google (now Alphabet), Apple, Facebook (now Meta), Amazon and Microsoft have taken steps to impose significant sanctions on Russia. Google has limited the use of Google Pay in Russia for customers or merchants using a sanctioned bank and has stopped selling online advertising in Russia. Google also removed the ability of Russian state media outlets Russia Today and Sputnik to monetize content on Google-owned YouTube; these outlets have also been blocked in Europe. Apple suspended all product sales in Russia and limited Apple Pay and other services along with blocking state-owned and controlled media outlets. Meta has removed access to Russia Today and Sputnik on both Facebook and Instagram and has made it impossible for the state media to monetize any content. Amazon does not have facilities in Russia and has a long-standing policy of not doing business with the Russian government. Amazon has stopped shipping products to Russia and has suspended Amazon Prime streaming services and stopped accepting new Russian and Belarus-based customers for AWS and third-party sellers. Amazon is also supporting cybersecurity efforts in Ukraine and offering logistic support. Tech giants also responded to requests for aid and philanthropic help and are contributing to relief efforts in Ukraine.
Covid Lockdown in China Slows the Supply Chain
The Chinese city of Shenzhen, which is responsible for about half of online retail exports, went into lockdown in mid-March after the national Health Commission reported the country was facing its worst outbreak in two years. All businesses outside of essential public services shut down for at least a week. Amazon said they do not expect a significant disruption as they can divert available freight to neighboring warehouses in the region not impacted by lockdowns; Walmart did not immediately respond to requests for comments from Business Insider. However, global freight booking platform Freightos told Insider the shutdown will likely cause serious congestion at nearby ports and could cause already high transportation prices to jump another 21% to 25%. Meanwhile, Russia’s attack on Ukraine is already threatening to triple ocean shipping rates, fuel prices are surging and exporters looking to avoid the Black Sea are buying up cargo planes which may make it more difficult for retailers to divert products.
Managing Cybersecurity Risks
The Counsel for the American Institute of Architects (AIA) reported in ENR that cybercrime incidents have skyrocketed and are affecting all industries. Counsel Sara Bour recommends that companies in the construction sector should take steps to better manage these risks. These include implementing cybersecurity and training protocols. She suggests firms refer to the National Institute for Standards and Technology for a framework. Firms should make sure that employees, contractors and vendors with access to internal systems are all properly trained. Secondly, data sharing protocols should be created to protect confidential and personally identifiable information (PII). Lastly, she recommends firms get a Cyber Insurance policy, which generally covers business liability for data breaches involving PII.
Feds Launch “Buy Clean” Initiative
The White House launched a Buy Clean Task Force in February as part of a slate of initiatives intended to decarbonize manufacturing while also boosting the economy. The effort will identify materials to prioritize for consideration in federally funded projects by looking at impacts across their lifecycle. The federal government is the world’s largest buyer of goods and services, with an annual purchasing power of more than $650 billion. Putting the power of the government behind Buy Clean initiatives can move markets and cause companies to engage, according to ENR. One of the goals is to create national low-carbon concrete and sustainable asphalt standards that will be used for land port-of-entry projects funded by the Infrastructure Investment and Jobs Act.
NRF Retail Sales Forecast
The National Retail Federation (NRF) the nation’s largest retail trade group, forecast that growth in U.S. retail sales this year will slow to between 6% and 8% from the record-breaking 14% annual growth rate in 2021. The group cited surging inflation, tightening of monetary policy and less fiscal stimulus. Last year’s figure marked the highest growth rate in more than 20 years. Still, this year’s projection is well above the 10-year, pre-pandemic growth rate of 3.7%. With the ongoing, widespread adoption of ecommerce, the NRF expects non-store and online sales to grow by between 11% and 13% to a range of $1.17 to $1.19 trillion. Last year, retail sales in the US grew by 14%, which was the highest growth rate in more than 20 years.
Target is expanding their drive-up services to allow customers to make returns and pick up orders from their in-store Starbucks this fall in the Twin Cities and other select markets. Drive-up sales grew more than 80% in the third quarter of last year, building on a sixfold jump that occurred a year earlier when the pandemic changed shopping habits. Customers can start the process of a return on the Target mobile app and complete it once they arrive in the parking lot as either part of a normal order or just as a return. Target will also allow customers who order on the app for curbside pick up to select second-choice items from a wider assortment of categories, including beauty, in case first-choice items are not available. Target is also raising their starting wages from $15 to $24 an hour, which will be some of the highest wages in the retail industry. In October 2020, Target raised their starting wage to $15 an hour. They are also expanding health benefits and reducing the waiting period for eligible hourly team members to enroll in a medical plan and their 401(k) plan.
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