Jan 23, 2019

Axios Future

By Bryan Walsh
Bryan Walsh

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1 big thing: Two Americas, divided by how we shop

Illustration: Aïda Amer/Axios

The phrase "future of retail" conjures images of cashier-less groceries, super-fast drone delivery and interactive shopping. But instead it's set to look very different depending on where you live — some Americans will have an array of choice and convenience while others will live in zones barren of retail.

Why it matters: The future of retail will worsen inequality.

Axios’ Erica Pandey writes: The affluent will stroll through beautifully designed brick-and-mortar shops injected with state-of-the-art tech. Meanwhile, consumers in lower-income areas and in smaller towns face a future of big-box retailers and basic dollar stores as their local malls decay.

“We like to imagine retail of the future, but we’re really imagining high-income retail of the future."
— Kasey Lobaugh, chief innovation officer for retail at Deloitte

The top: Scores of innovative retail companies are using tech and design to get people out of their homes and into stores, says Natalie Bruss of Fifth Wall Ventures, but "the brands we’re talking about are not going to have a store that's not in a top-50 market."

  • Reformation, a clothing store with locations in the glitziest parts of big cities, has created tech-infused dressing rooms that have adjustable lighting to test how outfits look from day to night.
  • Amazon Go has brought cashier-less shopping, the latest buzzphrase in retail, to top U.S. cities, like Chicago and San Francisco.
  • Brands like Away and Warby Parker, which both began online, are building Instagram-friendly storefronts — but only in trendy neighborhoods like Soho and West Hollywood.

The bottom: One of every four malls open today is projected to close in the next five years, according to an analysis by Credit Suisse. The vast majority of those endangered malls are in lower-income, less-densely populated parts of the country and are anchored by failing chains like Sears, says Ellen Dunham-Jones, a scholar at Georgia Tech.

  • As the malls empty out and foot traffic wanes, shoppers outside of large metros will be left with few retail options beyond big box stores and a smattering of dollar stores.
  • The big dollar chains, Dollar Tree and Dollar General, already have 30,000 locations, primarily in lower-income neighborhoods, across the country — and each say they're adding 1,000 per year.

Yes, but: Other big retailers are eager to capitalize on hollowed-out malls. Amazon is reportedly seeking out vacant Sears locations to put new Whole Foods stores. And fewer physical retail choices could mean a greater reliance on e-commerce services in some areas.

Why it's happening: Growing inequality in the U.S. has dramatically impacted retail. The bottom 90% has only 20% of the wealth, while the top 1% has upped its share to 40%.

  • And Americans' discretionary income is shrinking. Income levels aren't substantially increasing, even as more expenses cut into monthly budgets. People are spending their extra money on smartphones, data plans and Netflix subscriptions instead of clothes, toys and books, says Deloitte's Lobaugh.

The bottom line: "If you're living in a neighborhood that's doing well in a prosperous metro area, you're oblivious to what's happening in Tulsa and Dayton," says Stacy Mitchell of the Institute for Local Self-Reliance.

2. The view from Lawrence

Miguel Saldana's shop. Photo: Erica Pandey/Axios

A hundred years ago, Lawrence, Massachusetts, was a booming manufacturing town, with bustling textile mills along the Merrimack River. Today, it is one of the poorest places in New England, with a median income of $36,000.

Here, the retail rout has blown through main street.

Erica writes: Miguel Saldana owns a small menswear shop called D Noche on Lawrence's central shopping street. And on Super Saturday, the big last-minute shopping day before Christmas, Saldana stood with his wife and sons in the store, sprucing up sale displays. But he expected very little foot traffic.

Saldana says he's lost his business to Amazon and the local Walmart.

  • "Of course Amazon is killing everybody," he says. He projects he'll start selling on Amazon's marketplace in the next year, turning a big section of his own shop into a warehouse to store inventory.
  • "Walmart is just so cheap" that small businesses can't possibly compete, he tells me. "They sell this shirt for $5," he says, pointing to a polo that's on sale for $14.99 at D Noche.

The bottom line: Saldana's store is one of the few clothing shops left on the once-busy street. The retailers keep shuttering, but there's some hope. Main streets like Lawrence's are kept alive by gyms, nail salons, barber shops and restaurants — services that can't move online.

Go deeper: How to save Main Street

3. Boeing’s pilotless flight

Photo: Boeing

Imagine a helicopter and a small propeller plane had a baby: That's what Boeing's new autonomous "passenger air vehicle" — apparently they can't settle on a name either — looks like.

Axios' Kaveh Waddell reports: The plane-copter-thing is electric and can fly on its own for 50 miles — including vertical takeoff and landing, Boeing says. It flew for the first time yesterday.

  • Several companies, including Uber, are working on autonomous flying for short in-city hops. Air travel has its own challenges, but in one way, it's easier than autonomous driving: There are far fewer obstacles.

What's next: Boeing's urban mobility division is also working on a version to carry 500 pounds of cargo, which it says it will test outdoors this year.

4. Worthy of your time

Illustration: Sarah Grillo/Axios

A trucker's guide to Brexit (Chris Giles — FT)

For progressives, Amazon is the new Walmart (David McCabe — Axios)

The American health care system and climate change (Julia Belluz, Umair Irfan — Vox)

The former Soviet Republic and bitcoin (Liz Alderman — NYT)

Beer and AI (Sara Castellanos — WSJ)

5. 1 ugly thing: The fruits and vegetables we toss

Would you eat these carrots? Photo: Getty

Every year, Americans throw away nearly 60 million tons of fresh produce, totaling $160 billion. And about one-fifth of those tossed fruits and vegetables are discarded because they're ugly, bruised or misshapen — even if they taste delicious, reports Vox.

Now, a new food upstart wants to make money off of the bad-looking produce, writes Erica.

  • Misfits Market, a Philly company, is hopping on the subscription services bandwagon and delivering boxes of ugly fruits and vegetables to shoppers' homes for as much as 50% off.
  • Their slogan? "A grotesque apple a day keeps the doctor away as well."

But, but, but: Crop scientist Sarah Taber notes on Twitter that the ugly stuff gets used, even if it's not selling in the stores. "Most 'ugly' produce gets turned into soups, sauces, salsa, jam, ice cream, etc. You think that stuff gets made from the pretty fruit & veggies?!"

Bryan Walsh