Numlock News: December 24, 2019 • Packages, Greeting Cards, Meals
By Walt Hickey
This is the last edition of Numlock until January 2, 2020. Have a wonderful holiday and happy new year, I’m so grateful you’re a reader.
The percentage of Americans who move within the country between states is slipping, and that’s a problem because the quality of life in one state can vary significantly from the quality of life in another. The GDP per capita in New York is twice that of Mississippi, which is greater than the per-capita GDP difference between the United States and Slovakia. One group of people specifically affected by this are those who work in industries with occupational licensing requirements, which make a short move across state lines a career-ender without significant investment in unnecessary new training. It’s understandable when we’re talking about, say, a lawyer, but people with jobs like pest control workers, barbers, or dental hygienists have to undergo onerous and state-specific licensing exams, all to do skills that are functionally the same regardless of which side of the Mason-Dixon or Hudson or Mississippi they’re on. A 2017 study found that people who work in occupations with such licensing requirements moved between states at a rate 36 percent lower than those who work in other fields.
According to Comscore, the final 2019 domestic box office revenue is poised to come in at $11.45 billion, which is down 3.6 percent from the record set in 2018 of $11.88 billion. That’s not great — it’s the largest year-over-year decline since 2014, when the domestic box office dropped 5.1 percent — but it is literally the second-best ever showing, which is a thrilling and encouraging statistic if you pretend that inflation does not exist. The situation’s also better when looking globally, with the 2019 worldwide box office projected to meet or beat the $41.1 billion spent seeing movies last year.
A poll conducted back in October found 70 percent of consumers planned to send holiday greeting cards this year, which is down from 77 percent five years ago. The distribution of personal photography and life updates has gotten a little more routine over the past several years amid the rise of apps like Instagram and Facebook. Still, Christmas cards remain popular for any number of reasons, such as the distribution being handled by a competent, unionized group of mail delivery professionals rather than a myopic algorithm whose sole goal is to increase the number of engagements with your image and — by proxy — the overall time devoted to participation on a network. I almost sent out greeting cards, but in my own defense I send out like 312 written notes a year, so listen if you’re a friend from small times reading this: happy holidays let’s hang out, I’m completely serious just reply to the email, I’m in Queens these days let’s party.
Reinventing the Box
Two companies dominate the overwhelming share of a crucial business pertaining to the inevitable, but there’s a wave of disruption coming to the casket industrial complex. The $550 million per year casket business is a solid chunk of the $20 billion death industry, but it’s dominated by just two companies: Matthews International and Batesville, which is a subsidiary of Hillenbrand Inc. They combine to control 82 percent of the casket industry — a fact that places it as one of the most consolidated sectors in the entire economy. In 1950, there were over 700 casket companies in the U.S., but by the early 2000s that figure collapsed to just 147. That’s the thing about the death business: it’s not like the customer’s complaining.
As we conclude another holiday season, the package delivery infrastructure has hit a point where it’s never been higher in demand, however the amount of slack left in the supply chain is getting low. The amount of space available in warehouses is getting lower — shrinking from a 10.8 percent availability rate in the first quarter of 2014 to just 7.6 percent in the third quarter of 2019 — and what space is left available has increased significantly in price over the same period, rising from $5.03 per warehouse square foot to $6.47 per square foot in net asking rent. People, we’re bleeding Santa dry.
One hilarious story at the global box office has been how the Star Wars sequel trilogy has shattered records around the globe, except in China where nobody really cares about Star Wars even remotely. They just kind of missed the boat on that one, and it’s all good — people like what they like — but it makes for some deeply funny Chinese numbers for Star Wars, such as the fact that The Rise of Skywalker opened to a measly $12 million in the Middle Kingdom, including previews, and just $8.9 million when you narrow it to just the period from Friday to Sunday. That’s well behind both Ip Man 4: The Finale which made $46.7 million, and Sheep Without a Shepherd, which made $23 million in its second weekend. A film series that relies heavily on tapping into a deep well of cinematic nostalgia will struggle in a country with basically none of that nostalgia, as the original movies were never released wide in China.
Direct To Consumer
Lots of companies that started out as direct-to-consumer staples are reconsidering that strategy as the market gets increasingly competitive and the brick-and-mortar stores wise up. Plated, a meal kit maker, announced it’s ending its subscription model in November, and will just become a private label brand for owner Albertsons. Blue Apron, another meal kit company, had 386,000 paying customers in the latest quarter reported of 2019, down from 646,000 in the same quarter of 2018 and from 856,000 in 2017. Dollar Shave Club was bought by Unilever for $1 billion in 2016, but Unilever has since concluded that selling online subscriptions for consumer staples does not actually make financial sense. The insurgent brands attempting to displace the established products will open some 850 physical stores over the next five years, but keep in mind in 2019 alone 9,302 retail stores closed.
Happy New Year!
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