Category Archives: Business and Economy

Birkenstock has 9 US stores. Here is how many are in the suburbs.

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Birkenstock announced the opening of their newest US store in Naperville:

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Birkenstock is continuing its U.S. retail expansion with its first Midwestern store in the Chicago suburb of Naperville, Ill.

According to the German footwear brand, the new store is located at 20 W. Jefferson Avenue and offers Birkenstock’s full footwear collection for men, woman and kids, along with the Care Essentials line of premium, all-natural foot care products.

David Kahan, president of Birkenstock Americas, told FN that the company decided to open this location after hosting a pop-up at local retailer Naperville Running Company a few years ago.

“[The pop-up] gave us our first glimpse into just how special the local community is,” Kahan said. “The passion and dedication of our fans, particularly around the post-run sport world was truly inspiring. It highlighted the opportunity to connect in a bigger way throughout the year, and we’re excited to return with a dedicated space to share the full Birkenstock collection with Naperville.”

Naperville has a vibrant suburban downtown with a mix of national and local stores and restaurants. It is also a wealthy suburb.

According to the Birkenstock store locator, they have many resellers: nearly 4,700 locations. But they operate only 9 of their own stores. Here are these locations and their urban/suburban status:

  1. Naperville, IL – suburban (outside Chicago)
  2. Nashville, TN – urban
  3. Sevierville, TN – suburban (smaller suburb outside Knoxville)
  4. New York, NY – urban (Soho neighborhood)
  5. Brooklyn, NY – urban
  6. Deer Park, NY – suburban (outside New York City)
  7. Larkspur, CA – suburban (outside San Francisco)
  8. Venice, CA – suburban (outside Los Angeles)
  9. Glendale, AZ – suburban (outside Phoenix)

From this list, six of the nine locations are suburban. Birkenstock stores are in the suburbs of the country’s three largest metropolitan areas – New York, LA, Chicago – and are also outside several other sizable cities – Phoenix, San Francisco, and Phoenix. Can we expect new locations outside Dallas, Miami, Washington, D.C., Atlanta, and Philadelphia soon (the remaining top 10 metropolitan areas by population)?

Additionally, Birkenstock has stores in two cities: two locations in New York City and one in Nashville.

Residents from all over the United States can access Birkenstock products online or through thousands of retailers. But the company has picked these largely suburban locations to put a company store and that tells us something about their intended market and their brand.

The inefficiency of the construction industry

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One issue that affects American housing is the lack of efficiency in the construction industry:

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Companies like Reframe are trying to solve a conundrum scholars call the construction crisis. Although most sectors of the economy have gotten more efficient over time, construction has moved in the opposite direction—construction sites are less productive today than they were 50 years ago. It’s a genuine mystery, and everyone has their own pet theory about what’s to blame.

Efficiency is the answer to numerous perceived social issues in the United States. Make government more efficient. Make the distribution of resources or services more efficient. Get things done faster and at lower cost. And in the business world, who would be opposed to more efficiency?

I also recall some of the concerns expressed by critics about efficient home building operations. Take the Levitts mentioned in this article. Amid the various concerns expressed by many was a concern about the quality and character of homes that were mass produced. Would such homes stand for a long time? What does it do to community life when there are so few models available?

The example given in the article of efficient housing is modular housing. Part of this involves logistics; can it be produced at particular quantities and price points that makes it viable. But there will also be architectural and community questions. Will neighbors want to live next to it? Do early residents find it comparable to housing built by other methods? How does it stand up over time?

It would be interesting to ask Americans if they want “an efficient house.” Is the opposite of this “an inefficient house”? I’m not sure many think about in terms of efficiency when thinking about their residence.

The rise in LLC property owners in Chicago

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A new analysis shows that LLCs now own more properties in Chicago compared to two decades ago:

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In the last two decades, LLCs have become an increasingly common way to own real estate in Chicago, according to a first-of-its-kind analysis of 26 million property records by WBEZ, Injustice Watch and the Mansueto Institute for Urban Innovation at the University of Chicago.

The share of multifamily rentals owned by LLCs increased from 3% in 2006 to 16% in 2022, the analysis shows. Their share of ownership among larger apartment buildings with seven or more units, like the one where Carter resides, increased from 9% in 2006 to 34% in 2022.

Why the increase?

But LLCs gained traction with real estate investors in the 1990s when they realized LLCs had very minimal disclosure requirements, Hamill said. In Illinois, for example, only the manager and agent of an LLC — neither of whom are necessarily owners — are required to be publicly disclosed…

“There’s two big advantages with LLCs. One is the tax advantage that you’re not taxed as a corporation. The other big one is the ability to isolate liability and isolate financial assets,” Immergluck said…

But experts say the issue with LLCs isn’t their protection against legal liability. They say the problem with LLCs is the lack of transparency.

This could be told as a story of how a change in bureaucratic structures – the ways a corporation could incorporate – led to unintended outcomes. A new option from the 1970s eventually proved useful for property owners. But that could prove problematic for renters who cannot easily find people who can address important property issues.

This is a similar but different concern that those expressed in recent years about institutional investors buying up housing. What is similar is that some hard to find or hidden or presumed-to-be self-motivated actor is buying up housing and not acting in the best interests of residents or the broader good. What is different is that the concerns in the article above are primarily about the lack of having a person to contact and hold responsible, not about the numbers of units that are less affordable or less accessible because an LLC or corporation is acting rather than an individual owner. So this may not be a question of whether corporations can buy residential properties; it is about whether residents can know who these corporations are and whether they can be counted on to fulfill the landlord’s duties.

It would be interesting to hear from landlords what they would think of changes that would reveal their ownership. Would landlords who want to do the right thing object to this? Would some still want to not have their ownership public but would respond to residents well through property managers?

Measuring Walmart’s reach by its geographic proximity to 90% of Americans

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How much does Walmart matter in the United States? The company uses this statistic to get at this:

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Walmart operates more than 5,200 stores across the country, and 90% of Americans live within 10 miles of a Walmart or Sam’s Club, the company estimates. 

In this story, this figure is cited regarding the rollout of electronic vehicle chargers. The implication is that many potential drivers could then access Walmart’s network.

Part of the Walmart percentage could be the sheer number of stores and it could also be about corporate decisions about where to locate. The company grew from its first store in Rogers, Arkansas to being in many communities across the United States. Do all retailers go for the same sort of locations as Walmart?

It would be interesting to compare to other kinds of business. Take fast food chains that have thousands of locations; would 90% of Americans live within 10 miles of a McDonald’s or a Domino’s? Or what about distances from dollar stores? (Or were once within 10 miles of a Blockbusters?)

Or we could consider other important places. How many Americans live within 10 miles of a park? A school? A police or fire department?

All that said, being close to roughly 300 million people in the United States is an achievement. This likely contributes to figures I’ve seen that suggest roughly 90% of Americans shop at a Walmart at least once a year. And a story from several months ago suggested 95% of Americans were within a 3 hour delivery of Walmart. Proximity has to help even if Walmart cannot be everywhere.

Pizza, place, and local character

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A recent study looked at what helped some local pizza places thrive:

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I think another hugely important part about pizzerias is the atmosphere they offer. There’s a sentence you wrote in the article: “Rather than focusing only on speed or price, they compete by offering character, inventive toppings, personal service and a sense of place that chains just can’t replicate.” What does that sense of place feel like to you when you enter these pizzerias?

De la Cruz-Fernández: That’s an important sentence and a good question, because I would go a little beyond pizzerias to say that businesses themselves, exploring the idea of a business becoming part of our life, is one of the goals of this project. Usually, when you think about culture, you think about people reading books or people watching TV. And in this case, it’s how the businesses that you patronize every day are also part of your own growth. But everything goes back to that organization, that business that someone has managed and allowed to become your space. So someone has put labor, has put thinking, has put finances into it. And that makes business part of the history of humanity, to put it too broadly, maybe. But for business historians, that is how we think; what we want is to understand that business also is part of social life and culture.

We recently gathered with family at such a place. It had been there for decades. Through different features inside, it showed that it was part of the community. On this weekend night, the tables were full of families and larger groups gathering for pizza and conversation.

People like to gather around food. A McDonald’s or a Starbucks can act like a third place in certain situations. But these are chains that promise more predictability than they do local character. Local restaurants have an opportunity to do something different; it can be both a distinctive compared to the national chains and it can be part of the business model to be a place for the local community.

On the community side, how many American communities have a restaurant like this? How many or what percentage of residents have to visit regularly to make it a community place? A restaurant could claim this status for themselves. Or a small group of residents might have a place in mind.

It would also be interesting to know how many pizza places make it over the years compared to those who do not. Is that local character there from the beginning – and this is what helps them get through the start or difficult years? – or does it develop over time as the business and the community interact?

A vast majority of Americans within range for a 3 hour or less delivery from Walmart

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If Walmart’s rise in the decades at the end of the twentieth century included logistical prowess, their CEO recently discussed how many Americans can get quick deliveries:

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CEO Douglas McMillon announced that Walmart is close to reaching 95% of the U.S. population with three-hour or less delivery, with a 91% increase year-over-year in deliveries under three hours in Q1.

This is remarkable to consider: 95% of over 340 million Americans can be reached by a Walmart delivery within 3 hours. Need something from Walmart? It can get to the vast majority of Americans within 180 minutes.

What is required to make this happen? Numerous locations, including warehouses and stores. Lots of employees and equipment. A strong inventory system. And more.

With this level of delivery possible, how does this change the calculus regarding all of the Walmart stores? Will fewer people visit them in the future because they prefer delivery? Will more of these stores be about deliveries rather than in-person shopping? Could Walmart significantly reduce its store footprint while continuing to extend its reach?

The number of people needed to collect important inflation survey data

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How many people participate in collecting data for a key inflation survey from the Bureau of Labor Statistics?

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The Bureau of Labor Statistics, the office that publishes the inflation rate, told outside economists this week that a hiring freeze at the agency was forcing the survey to cut back on the number of businesses where it checks prices. In last month’s inflation report, which examined prices in April, government statisticians had to use a less precise method for guessing price changes more extensively than they did in the past…

To calculate the inflation rate, hundreds of government workers called enumerators fan out across cities each month to check how much businesses are charging for products like blue jeans and services like accounting, largely by visiting brick-and-mortar stores. Statisticians in Washington, D.C. roll those figures together into the consumer-price index, a data stream that shows how the cost of living is changing for typical Americans.

If the government’s enumerators can’t track down a specific price in a given city, they try to make an educated guess based on a close substitute: say, cargo pants instead of slacks. But in April, with fewer workers on hand to check prices, statisticians had to base their guesses on less comparable products or other regions of the country—a process called “different-cell imputation”—much more often than usual, according to the BLS…

The inflation rate determines how much social-security benefits go up each year, and where federal tax brackets are set. Private-sector contracts such as wage agreements between companies and unions routinely reference the inflation rate. Payments on $2 trillion of inflation-protected federal bonds hinge on the inflation rate, as do yields on standard Treasury bonds. Businesses, investors and policymakers rely on the reading to guide their decisions. The Federal Reserve is laser focused on inflation data when it sets interest rates for the country.

Surveys require a lot of work to put together. Questions and methods need to be thought through and tested. Data needs to be collected. Analysis requires skill. Sharing results and interpretations is important.

The particular issues outlined above seem to have to do with (1) collecting data, which relies on going out and finding prices, and (2) dealing with missing data, which is related to #1 but is an issue for many surveys. If the survey is utilized by a large number of people, the choices made in the survey process can then affect decisions and policies.

It will be interesting to see what happens here. At what point do academics, policymakers, and others decide that the survey data may not be trustworthy? Which government surveys – and there are many – get priority for funding and having enough employees?

What’s left of Sears

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A few stores and some valuable retail properties are most of what remains of Sears in the United States:

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The primary mission of Transformco is to monetize Sears’ real estate. This can occur through either selling or leasing it, according to John C. Melaniphy, president of the Chicago-based retail consulting firm Melaniphy & Associates…

“In my opinion, it will take years to unwind all of the properties that are encumbered through either Sears/Kmart leases or ownership,” he added. “Transformco leadership will determine their short-term and long-term success. However, the company has experienced talent losses with fairly significant employee turnover. The current mall redevelopment environment, with rising store closings and greater e-commerce market share, is a serious threat to their long-term success. Transformco leadership will be challenged in their effort to navigate the peaks and valleys in development cycles. In my opinion, they will sell off the remaining assets as quickly as possible.”

But Melaniphy sees Transformco’s recent sales of two former Sears stores in Texas for their redevelopment into Dick’s Sporting Goods House of Sports locations as signs of success in its mission…

As of early spring, the remaining Sears stores were in Burbank, Concord and Whittier in California; Orlando and Miami in Florida; Braintree, Massachusetts; El Paso, Texas; and San Juan, Puerto Rico…

A quarter of the way through the 21st century, other lingering evidence of Sears’ long and proud history in the Chicago area include the third-tallest building in North America and the call letters of radio station WLS, which stands for “World’s Largest Store” for the four years Sears owned the station in the 1920s.

From leading company to holding some potentially valuable real estate. This is quite a fall over decades. It also has the potential to turn into something else if the real estate becomes something important down the road. While it probably will not lead to the rise of the next great retail company (and can that even happen in brick and mortar settings?), the reused or redeveloped properties could still benefit communities.

This does lead to a bigger question about any mass market retailer or restaurant. Yes, they generate revenue – or hope to – at each location. But what if the real estate portfolio is ultimately the biggest asset? What happens to that asset long-term if the company is no longer there?

Imagine 50 years into the future. Will there be any physical locations that remind people of Sears? The former Sears Tower will presumably still be there. Will any of the former Sears retail stores or warehouses or offices have any markers that talk about the once-large company?

More data centers and AI, higher utility bills

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With more AI and cloud-based activity in daily life, it may have one clear effect for people: higher prices for electricity.

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As the Sun-Times reported in November, the demand for power from big data centers and a delay connecting new power sources, such as solar and wind, to the electric grid is resulting in ComEd customers seeing their monthly bills go up $10.60 a month on average…

Power demand across the country has skyrocketed as big data centers and artificial intelligence operations have created huge demand. Meanwhile, new sources of “renewable” energy, including wind and solar power, have been slow to get connected to an electric grid that spans from Northern Illinois to the East Coast, said Jim Chilsen, a spokesman for the consumer watchdog Citizens Utility Board.

How much will this register with Illinois customers – will they have no problem paying roughly $10 more a month to help support what they expect on their smartphone and online activity? Technology tends to have costs, even if people tend to think the benefits outweigh the downsides, but it can be hard to pin down. While all of the increased rates may not be due to computing activity, at least some is.

Considering indirect costs may just be difficult to do. Having direct feedback with technology probably elicits different reactions than these more indirect costs. Imagine the new AI feature on your phone comes with a $5 a month surcharge on your phone bill to cover its costs. Or each time you do an AI search you incur a charge. Contrast that with the costs of driving. Automobiles opened up all kinds of new opportunities but driving comes with numerous costs, some direct (like paying for gas, insurance, and maintenance) and some more indirect (taxes for infrastructure, changes in land use, pollution).

If asked how much they would be willing to directly pay for AI, what would Americans say?

Comparing neighborhood partisan segregation to workplace partisan segregation

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The findings of a new study regarding political sorting in American workplaces can be compared to findings about political sorting in neighborhoods:

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Demsas: How does this compare to the level of partisan segregation that we observe in other places? We know, for instance, that there’s partisan segregation happening in schools or in dating markets and churches and stuff like that. Is the workplace the most segregated based on party in America, or is this in line with other places?

Chinoy: Yeah, so it’s hard to answer this directly for every other social environment or every other group of people. I can tell you a couple things. So one is: I think a natural comparison is residential partisan segregation. This is something that people study a lot, right—the extent to which Democrats live on the same block as Democrats, and Republicans live next to other Republicans. And so we can sort of compare what I told you—that 10 percent number, that overexposure ratio—against partisan segregation across neighborhoods.

And you can define neighborhoods in different ways. One way to do it is a zip code. And when we do that, we find that partisan segregation at work is pretty similar. So, like, a little bit less than but overall pretty similar to partisan segregation across zip codes. We can go one step further and say, you know, maybe the zip code is a little bit bigger than what you have in mind when you think of neighborhood-level sorting. And so we have individual addresses in our data, and so we can say, you know, You have 15 co-workers. Let me figure out how many of them share your party affiliation, and let me look at our sample of the 15 people who live closest to you and figure out how many of those people share your party affiliation.

And when we do that, we find that workplace-level segregation, workplace-level overexposure ratio is a little bit less pronounced than that sort of nearest neighbor level of segregation, but still pretty similar, not so different. It’s not orders of magnitude different. So that’s kind of why we say that it’s a little less pronounced than residential segregation as a whole but still pretty sizable.

It sounds like the levels of political sorting are similar: what people tend to experience where they live is similar to what they experience at work.

I wonder how much it is experienced differently at work compared to a neighborhood. Where are politics more visible? In a neighborhood, a resident may have different indicators of political affiliation. It could come through conversation or yard signs or particular behaviors. At work, people might interact with each other or be in physical proximity more. Would political ties then be more apparent through conversation? Or are people sharing other signs of political leanings (things at a desk/cubicle/office, etc.)? Across both settings, are political views most visible on social media or online activity? Are people more comfortable with partisan sorting with neighbors or coworkers?