The Perfect Storm Is Brewing

What is your feeling on inflation over the next 12 months?

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What is the first I thing I do everyday after I wake up? Check the weather forecast. I want to know if it will be sunny or rainy or perhaps a combination of both. Isn’t it amazing how sunny days are good mood days and rainy days are blah days? We are happiest when it is sunny, no wonder we love going to sunny places on vacation.

Unfortunately the way of the world is not sunny right now (actually it hasn’t been sunny since the start of COVID and lockdown March 12, 2020). Sure we have had sunny days, like after the vaccine was introduced (months of May and June were especially nice) but now the perfect storm is brewing.

In all my years in business, I have yet to witness this particular storm. In fact it could be we worse than Carter’s 20% inflation years in the 70’s because not only are we going to have inflation greater than 5%, we still have COVID and all the political tension (next year is the mid-term elections and already I have seen more Trump news in the past week than the past six months).

The perfect storm is the one no one sees coming. You look at the weather forecast and it says today is going to be sunny. Then suddenly in the afternoon, thunder and lightning come out of nowhere and you have to run for shelter. I hope that I am wrong, but we will all be running for shelter and the shit could hit the fan as early as winter 2022.

Let’s talk about inflation because that has to do with business and things that have to do with business are still “safe” to talk about, at least for now. Consumers are the last to know about cost increases taking place and for good reason: Companies have nothing to gain to tell consumers in advance about price increases because they know consumers will hoard goods and make matters worse.

Here is an example of what I am referring to. We have the #1 selling foil sheet on Amazon. Amazon has been selling our 5” 500-ct box for $8.39 since God knows when. That was before price tariffs of 25%, before the cost of aluminum hit a 15-year high and before the cost of a single shipping container went from $4500 to $25000. There are 23,500 foil boxes in a container. Figure the math. At $4500, that comes to about $.20 per box for freight. At $25,000, that comes to about $1.15 per box for freight. Then add $.75 for tariffs and then add $.65 for increased cost of aluminum and you can see the perfect storm. Our new selling price for the foil sheets will be $13.99 per box but we are going to offer a 12-ct case for only $9.99 a box and absorb a lot of the price increase…..for now. But what happens when costs go up even more? Our best-selling 9” foil sheet box just went to $19.99, up from $11.99 ($14.99 each when buying a case of 6). So much for inflation running at 5%.

The same situation is true for just about everything imported. We are now paying more freight than the cost of the product for items like hot towel warmers, pedi liners and other bulky products. I easily see prices going up 20-30% for imported goods. Unless you are Apple of course who can sell a tiny phone for $1300 and can put tens of thousands in a single container.

But the perfect storm cannot take place just because of imports. Domestic price increases are taking place at a record clip too as employment, delivery and raw material costs are soaring. I buy Prime filets at my local Nino’s. Last year I paid $29.99 lb. This year the price went to $34.99, then $39.99, then $44.99 and last week $54.99 lb. Even non-prime filets were $39.99 lb. No wonder the likes of Aldi and Costco are doing well, food prices are at the highest in more than 50 years.

However this is what makes this time period worse than the 1970’s: At least in the 1970’s, even with crazy inflation, you still could at least buy the goods you wanted. Today, not only do you have to pay higher costs, you can’t even get the items you want no matter the cost. Waits up to six months or longer for items like bikes, washing machines, cabinets, flooring and so much more are normal. A shipping container that used to take 4 weeks to get here from China now takes anywhere from 7-14 weeks. We are still waiting for goods that we ordered in March/April.

And here is the caveat to all this. We are sick of being out of stock (although we have the highest in-stock percentage compared to our competition) so we are ordering more. But that is the issue, most companies are ordering more too, which means more demand and more strain on the logistics industry (more than 30 ships stranded at the Long Beach port daily, railroads not taking new containers, truckers can’t find truck drivers, etc.). It also means more inventory and less turns for businesses along with lower margins. That is the perfect storm.

The all important holiday season is fast approaching. This will be the worst holiday season ever for selection of goods. Already toy manufacturers have warned buy now or be sorry.  December will be a key month and give us the best read on the market. With the Chinese New Year (Year of the Tiger) just around the corner in January, the peak of the perfect storm should take place. And then it’s only a matter of time to see what happens in its aftermath. Perhaps sunglasses will go on sale.

Happy Tuesday!

Out Of My Mind On A Thursday Mornin’

What type of ice cream is your favorite?

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Inflation? You have no idea what is coming down the pipeline. The Fed says it is temporary, Biden is clueless as he keeps Trumps Chinese tariffs in place and companies such as ZIM report record earnings due to the highest container prices in history. Let me give you a quick example of what we are dealing with. We sell the #1 selling pre-formed pedi liners. There are about 1300 boxes of 100-ct. in a full container. We normally pay $3 freight for each box. The current freight cost was $13 or more than 4x regular cost. It is no wonder we had to raise the sell price from $59.99 to $69.99 and we aren’t making a penny more.

Supply Chain Issues? With the third biggest port in China still virtually shutdown, LA/Long Beach port with more than 35 containers sitting in the water waiting to be unloaded and the rails not taking on new containers, supply chain is a mess and will continue to be so through 2022. It is going to be a very interesting holiday season. Gift cards will be in stock and the most sought after item.

Delta Variant? Never have we seen such a stance on an issue like being vaccinated. Surely the government is the root cause of this and no one has an answer. Same thing with masks. Looks like the only outcome of all this will be “wait and see” but at what cost?

Afghanistan? This is one for the history books. We will learn the fallout from this perhaps weeks, months and years later. Not only are we living through COVID, now we have to live with this too.

Having fun yet? I was reminiscing with the BUB about how much fun we had back in the day. I know I am showing my age, but WTF. When disco was hot and the Bee Gee’s were at their loudest, what was more fun that shaking your booty on the dance floor? Heck now if you even want to go dancing, where would you go? Back at Michigan State, every Friday from 4PM to 7PM was fun times at the Alley Eye & Dooley’s; pitchers were $.50 and Manhattan’s were $.50 and the music was blaring and the dance floor was hopping. Dorm parties and college events were so much fun. Now at MSU, you have to not only be vaccinated but you have to wear masks indoors.  Truly the most fun times were without cell phones and social media. Just think about it.

Clinton’s golden decade of the 90’s was free of cell phones and social media. That was the last fun decade in America and most likely will not be repeated in our lifetime unless we elect a President that understands what America stands for and what makes it the greatest democracy on the planet. It surely wasn’t any of the past five presidents and it certainly isn’t Biden although Obama does know how to throw a party.

Love ice cream? Sales of ice cream are off the charts. Always the best-selling dessert, now the rush is on between manufacturers who can make the most decadent pint. According to the WSJ, $10 pints are the new hot thing and some manufacturers are willing to pay $40,000 for a single slotting fee per flavor. Everyone wants to be the next Halo or Talenti. But hey, we all know what goes in a $10 pint: A lot of cream, high fat chocolate and other terrible ingredients for you even though they are natural. Perhaps in the world we live in today, calories don’t matter. Then again, Levi’s and Old Navy are trying to figure out ways of introducing more plus sizes…..

Jimmy Buffett time? You bet, he is coming to DTE September 21 and expanding his concert tour dates even has some musicians are canceling due to COVID. Summer still has more than four weeks of life and I plan on enjoying each and every day while it lasts. Jimmy’s music is summertime year round and it’s now wonder his empire keeps on expanding. Be sure to visit the Lah De Dah and escape all the bullshit!

Happy Thursday!

Pro Beauty Trade Shows R.I.P.

Are you vaccinated?

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It was only a matter of time.

When Amazon decided to get into pro beauty, that was the first kiss of death for pro beauty trade shows. Virtually every big brand signed up much to the dismay of salons who for more than 40 years supported entrepreneurs by retailing their goods to their clients. The business was too big to pass up and they decided that the salon business wasn’t important enough.

As Amazon continued to expand its offerings, pro beauty offshoots started struggling. Now the brands were focused on advertising on Amazon, who needed magazines anymore? All the nail magazines folded; Modern Salon is down to 48 pages if that; and even the “blue” newsletter disappeared. The big brands that put the magazines in business all left.

Now the big brands that put the trade shows in business are gone as well. They no longer need to exhibit at a trade show to try to win over a salon, a distributor or a retailer. They have Amazon and most likely, Sephora and/or Ulta. Gone are the days that Paul Mitchell, L’Oreal (Matrix, Redken and such), OPI, and so many others will ever exhibit again.

Cosmoprof North America is being held next month in Vegas. The question you have to ask is, why? COVID didn’t go away and with the Delta variant, it is getting worse. In fact, Vegas is already asking everyone to wear masks. International travel still isn’t happening so forget international visitors which made up so much of the show. Who is going to exhibit that is newsworthy for an attendee? And bottom line, what information can’t an attendee get these days? All trade shows advertise the list of exhibitors so do you really need to attend? It’s no wonder why the Cosmoprof show floor is less than half filled and most likely, will be their last show.

Premier and ABS are in the same predicament. Who is going to exhibit and those companies that do, the question is again, why? The main attendees are booth renters looking to snatch up bargains but with inflation roaring and the supply chain gutted, attendees will be sorely disappointed when they don’t find bargains. There just isn’t any reason for these shows anymore.

The only show that matters today is amazon.com. We went to a mattress store and asked the sales person if they had the best price. “Yes of course” was the standard answer. “You can check online and we guarantee the best prices for at least 30 days after your purchase.” Jokingly I mentioned Amazon and he said they don’t offer the same services as we do. Just for shits and giggles I went to amazon.com and sure enough, they sold every bed Mattress Firm had on their floor at the same price with all the same services. Today, it doesn’t matter what the category is. Amazon is the show that matters.

Truthfully I am not going to miss any of the beauty trade shows. At one time when the real entrepreneurs of the business were exhibiting, threw parties and real innovation took place, they were a blast. But that excitement left more than ten years ago and beauty trade shows have been ghosts of their past ever since. COVID will finally put them to rest, R.I.P.

Out Of My Mind On A Monday Mornin’

What are you most excited about the post-COVID economy?

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Here is an acronym for you to remember: MOAR, Mother Of All Recoveries. The post pandemic recovery is going to be the greatest on record, even greater than the post World War II recovery that ran from 1950 to 1966. While the stock market has been at new highs during 2021, we have only seen the beginning. MOAR will soar through 2022 and could last until 2030. How is that for a prediction? Mind you, not from me, but one of my services that I subscribe to which has been spot on for more than twenty years.

So if MOAR is true, this should be the best news for business, right? Large cap tech businesses, absolutely. The latest generation of technology in world history is just starting to make it to market and will work its way through 2035-2050. We will see more change during this period than ever before and will make the computer generation of 1980-1995 seem like peanuts. But if you are a small business, it could be a flip of a coin.

How many restaurants are turning customers away? Cedar Point is not open on Tuesday or Wednesdays. Try getting service anywhere. The reason: More than 9 million job openings and yet, millions of Americans still do not want to work. Also more people than ever are quitting the workplace and either retiring or starting their own business from home. Let’s take the hospitality industry, all the tech is in the world won’t replace customer service. MGM Resorts app now allows you to use your phone as a room key, check in, check out, make reservations and check out all the activities. But if you can’t get a drink at a bar or dinner take 45 minutes to be served and it’s lousy, what good is it?

When it comes to gallons of personal care products, no one does it better than Ginger Lily Farms. Already the best-selling gallons in America, now I am very excited to launch new sizes and new categories. First up is our fragrance-free hand soap in a convenient 6-ct 12 oz. package. 

Ginger Lily Farms Botanicals Liquid Hand Soap

Next month comes the new Dog & Pet category which will feature a very amazing 2-in-1 shampoo and conditioner and odor eliminator. And coming in August, look for the new Salon category featuring hair regrowth shampoo and perhaps one of my favorite product launches to come, the perfect competitive product to Moroccanoil! Soon you will be able to buy a gallon for the same price as 8 oz. Hmmm, which will be the better value?

One thing about MOAR that is not good, is that we are back to heavy traffic, long lines at airports, high priced just about everything and BTW, have you tried renting from AVIS or Hertz lately? YIKES!

The ongoing battles with China and the USA will continue for a very long time. However, regardless of what Trump and now Biden are doing with tariffs, it’s not working. Demand for goods is so high, the wait for containers from China is more than two weeks, costs for containers have doubled and tripled and there is no way U.S. factories can still compete. But one thing to keep in mind in this trade war is the value of brand names. You can think of many brand names made in the USA and sold worldwide including China. But how many brand names made in China can you think of that are sold worldwide? Fact is, there are NONE. If you look at all the China brands that are sold on Amazon, none of them are are a brand name, just a name to list on Amazon and take advantage of the marketplace. The only Chinese brand that has traction is not a product but a service, TikTok.

The $100 question going into the peak of summer: Will the Delta variant make its way into the USA in a meaningful way? Most people are so over COVID, any return to it at this time will bring a lot of nothing good.

Have a great 4th of July weekend, hard to believe the year is half over.

Happy Monday!

Out Of My Mind On A Thursday Mornin’

Are you vaccinated?

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One Margarita, Two Margaritas, Three Margaritas, SHOT!  Luke Bryan won a CMA for that song. And now more than 100 million Americans can cheer with that song since they got at least one shot. One shot (Moderna or Pfizer) is 86% effective and getting both shots is around 95%. I got my first shot a couple weeks ago and next one coming up soon. The process is simple (I signed up at riteaid.com). The shot is quick and painless although some have reactions like a sore arm for a day or two. The second shot, especially for women, can have unpleasant side effects that last up to three days. But hey, it’s better than getting COVID and 95% is a whole lot better than 86%. If you aren’t vaccinated, now is the time. Eventually all travel, concerts and even large social events will require it.

Who would have thought that the hottest fragrance in personal care products is ZERO. That’s right. Perhaps Old Spice has sickened too many consumers with their odd fragrances or consumers are just tired of smelling like something they don’t want to smell like. Or perhaps it’s the new wave for the new generation of consumers that don’t want anything extra added to their products. Ginger Lily Farms already has the best-selling gallon fragrance-free soap and now our new line of ZeroDerm products is in huge demand. All ZeroDerm products are free of just about everything, amazing for people with allergies, and the lotion is dermatologist approved and lasts up to 24 hours. The best-seller so far is body wash and already the #1 gallon seller on Amazon. The line also includes shampoo, conditioner and hand soap. I recommend it for all hair salons, less than half the price of branded gallons and better performing.

ZeroDerm 24 Hour Advanced Therapy Daily Moisture Lotion Gallon benefits

Broadway is opening back up to 100% capacity middle of September. Are things moving too quickly and are we setting ourselves up for another disaster?

Biden’s latest $1.9T stimulus gift is just the beginning of what he is proposing to spend and to create the biggest government economy since WWII. While I am not going to get into the politics of this, the key point is that all this spending is creating incredible demand. But Biden never took this into consideration and consumers will pay handsomely. For one, prices are going up quicker than ever. Supply shortages are nearing records and this will continue for months and well into 2022. Already chip shortages are affecting many industries, commodity prices have soared and now freight costs have more than doubled. All this while Biden keeps Trumps China tariffs in place. $3.00 and even $3.50 gas will be commonplace. And with all this demand for goods and unemployment benefits still extended, who is going to make all this stuff and provide the services we all desperately crave?

EMMA Beauty is surging in popularity for many reasons. Everyone loves the polish, the colors, the price and the innovation. The newest product, Spectrum, is totally awesome. Consumers can now have gel-like nails using regular nail polish and Spectrum. As they say, the proof is in the pudding!

TNG Worldwide remains one of the very few companies to maintain nitrile gloves in-stock throughout the pandemic. We just received fresh shipments of blue in all sizes except XS. And I am sorry to say, that size will no longer be available. One thing that is for certain, many items will be eliminated due to the pandemic and supply side issues. We also have all size in clear and black vinyl in stock.

My last blog I mentioned Etherum (ETH) and how it was going to change finance as we know it today. It was priced at $2200 and now it is soaring past $3500. Some experts are saying it will go to $8-$10K by July. The entire crypto category is very exciting and I love to keep learning more about it. You should too.

Are drivers today more obnoxious, rude and crazy than ever before? They are either going too slow while texting or going too fast.

Sorry to say I have not watched anything on TV worth reporting. Movies seem to be blah. Could it be people are just bored with content and little excites us anymore? Hobbies are much more interesting and fun. I do miss Texas Hold’em, haven’t been to a casino since last February. I’m waiting for the locker rooms, spas, gyms and amenities to open up first.

Peace & love!

Larry