Morning Brew - ☕ Home stretch

Four supply chain experts on the challenges of manufacturing in the US
Morning Brew August 16, 2022

Retail Brew

Black Crow AI

Good day. On the brighter side of rising costs, a dinner out might be a better deal than cooking, as prices at grocery stores have increased more than at restaurants. We interpret this as a sign to visit the Cheesecake Factory.

In today’s edition:

—Maeve Allsup, Erin Cabrey, Joseph Abrams

SUPPLY CHAIN

Shore enough

Made in America tag on a container Francis Scialabba

For the last few weeks, we’ve been diving into what it means for a product to be Made in America and talking to companies about the process of stateside manufacturing.

But while many covet shorter lead times, more control and agility, and that stars-and-stripes-adorned Made in USA seal, moving entire supply chains to the US isn’t easy—or even plausible—for a lot of retail brands.

  • Even New Balance, which produces its Made 990v5 running sneaker in Massachusetts, sources 30% of the shoe’s components from abroad.

“It’s very, very naive to expect that 3,000 suppliers are going to come back to the US,” said Ricardo Ernst, professor of operations and global logistics at Georgetown University’s McDonough School of Business. “You have already a very, very widely spread supply chain. You can bring some elements of that supply chain, but to assume, to expect, to dream that all these are going to combine is not realistic.”

Manufacturing in the US is also all about the Benjamins.

  • Labor in the US costs a lot of $$ compared to areas like Asia, and it’s hard to come by. (ICYMI: There’s still a labor shortage in the US.)
  • And building facilities where these products are made takes—you guessed it—$$, too, plus a good chunk of time. “All these factories require huge investments, and there’s a couple of years of planning to open one,” said Felipe Caro, professor of decisions, operations, and technology management at UCLA.

Come a little closer: So, if completely reshoring production isn’t realistic for many, or even most, companies, what is? One way to shorten lead times and eliminate constraints like customs, tariffs, and other regulations when shipping from China is nearshoring, or bringing manufacturing closer to home, but still not on US soil.

Here are more expert views on manufacturing in the US.—EC, MA

        

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MARKETING

Brick, no mortar

Brick, no mortar Ethamphoto/Getty Images

Big liscening deals helped Lego construct its block on Sunset Avenue, writes Morning Brew’s Joseph Abrams on the company’s rise to star power:

Since striking its early licensing deals, Lego has given the colorful block treatment to many pieces of recognizable intellectual property. It’s released a number of themed sets with DC Comics, a collab that’s been in place since 2012. Meanwhile, its partnership with Marvel allows comic book nerds to rebuild Thanos’s gauntlet, or check out Iron Man’s suits with their own designated sets.
Some of the deals are a bit bizarre. A partnership with IKEA allows children to build furniture you’d need a doctorate to pronounce as part of small house sets. Jeans from the Lego and Levi’s partnership come with Lego brick designs stitched in, and The “Geoffrey & Friends” set of Toys R Us provenance is, honestly, terrifying. Still, we love being able to watch (square) Jim and Pam from The Office flirt on top of our coffee tables thanks to the new set released in July.
With revenue exceeding $8 billion in 2021, a jump of 27% above the previous year, Lego’s push into the world of media seems to have paid off—particularly when everyone stayed home during the pandemic.

Where does Lego build its next success? Keep reading.

        

TOGETHER WITH SIMON DATA

Simon Data

Retail’s changed a lot these last 2 years. Wanna know what to expect this holiday season? Simon Data’s Consumer Holiday Shopping in 2022 report offers key insights into shopper POVs on cart abandonment, brand loyalty, preferred comms channels, and more. Adapt your strategies for a new retail world—download your copy today.

        

SWAPPING SKUS

Today’s top retail reads.

End of an era: Eileen Fisher is stepping away from the CEO role of her fashion empire, and thinking about preparing the brand to eventually exist without her. (the New York Times)

Flawed genius: Legendary Topshop founder Ralph Halpern, who died last week, “was a man with an exceptional feel for retailing. He rightly saw that the shops that would be most successful in parting young people from their money needed three ingredients: flair, theater, and value.” (the Guardian)

Game time: How a Los Angeles virtual-reality company is leveraging Snapchat for clients including Adidas, Sephora, and Doordash. (Insider)

Innovation involves more than tech adoption. Understanding your business model and how to evolve are equally important. Accelerate your digital transformation with Learning Brew’s Business Essentials Accelerator. The next cohort starts soon, so apply today!

FROM THE CREW

Become more data-driven in 7 weeks

Become more data-driven in 7 weeks

What if you could anticipate what a customer wants to buy before they even know it? By taking the Brew’s Business Analytics Accelerator starting in September, you’ll learn to use data and analytics to win the day (and the next one). Apply here.

WHAT ELSE IS BREWING

  • Authentic Brands, owner of Reebok, plans to purchase Ted Baker.
  • Bed Bath & Beyond stocks are up nearly 180%, amid a “meme stock trading frenzy.”
  • Walmart reported a better-than-expected Q2, forecasting a smaller decline in earnings.
  • PacSun has a new spokesperson: virtual influencer Lil Miquela.
  • Dollar General must pay nearly $1.3 million for worker safety violations.
  • Home Depot reported record profit and revenue in Q2.

TIME MACHINE

What happened in the world of retail this week in…1872 and beyond? Retail Brew takes you way, way, way back.

  • On August 15, 1899, Henry Ford resigned from his job as chief engineer at Edison to start his own automobile company.
  • On August 18, 1949, Adidas founder Adi Dassler registered the “Adi Dassler adidas Sportschuhfabrik” trademark.
  • On August 18, 1872, Montgomery Ward allegedly published the first mail-order catalog. (In modern times, the day is celebrated as National Mail Order Catalog Day.)
  • On August 19, 1919, William B. Ward registered the “Hostess” trademark for breads, biscuits, and cakes.

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Written by Erin Cabrey, Maeve Allsup, and Joseph Abrams

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