The debate over the 'death of retail' - Axios

The debate over the 'death of retail'

Rebecca Zisser / Axios

If you ask almost anyone whether the world of retail has utterly changed, they'd probably say, "heck, yes." Since 2007, the share of e-commerce sales has nearly tripled, while several iconic brick-and-mortar stores, like Circuit City and Sports Authority, have disappeared from the landscape. Others, like Sears and Macy's, are conducting massive layoffs.

Economists especially look at retail and see a stagnant industry that has failed to adopt new technologies and become more efficient. In fact, according to an analysis by McKinsey, between 2005 and 2015 there has been no growth whatsoever in retail productivity. And while e-commerce does thrive on technological advances, it has failed, unlike previous waves of innovation, to enrich the nations where it's used.

But what if the data are wrong?

Michael Mandel, an economist and former journalist, argues that the transformation of retail has been so profound that we must adjust how we measure the sector. In the cases of both jobs and productivity, he says, growth has been much stronger than supposed.

"People are worried about e-commerce killing retail employment, Mandel tells Axios. "But at this point, it just isn't true."

What's so important about productivity growth? It measures the monetary value an individual can produce per hour. As businesses develop better processes and provide workers with better technology, productivity rises, which enables workers to demand higher wages. This is an essential ingredient for economic growth, and one that has been conspicuously absent not just in retail, but across the overall economies of the U.S., Japan, and Europe in recent years.

Mandel's assertion is that conventional labor statistics aren't capturing what's happening in the modern retail industry. He says that many e-commerce jobs, specifically in warehouses and fulfillment centers, aren't being counted as retail jobs, even though they are where most e-commerce manpower resides. When you adjust for this, he finds that over the past year the retail sector has added 61,0000 jobs, rather than the 7,000-job decline that's been widely reported. Mandel also argues:

  • Even as retail has been adding jobs, the productivity of the sector has been rising more than we thought. By studying time-use surveys, he has concluded that "what ecommerce seems to be doing is cutting the number of hours that households actually spend shopping."
  • Workers aren't spending fewer hours to produce the same value, but customers are. Those sorts of efficiency gains aren't captured by traditional productivity statistics, but they are important efficiency gains all the same.
  • He also said this means we may have been overestimating productivity gains that occurred during the 1990s, when big box retailing became dominant. "The shift to big box stores meant that customers spent more time walking around, searching for the product they wanted," he says. "It may be that productivity growth was being overestimated in the past."

Not everyone is convinced. Jaana Remes, economist with the McKinsey Global Institute says it's likely that we've always underestimated productivity growth. "Measurement is a huge problem in productivity and always has been," she says. "But it's much less clear that the recent slowdown can be explained by measurement issues."

Remes questions whether ecommerce is much different than previous waves of retail innovation that weren't also time savers. "The success of big-box stores suggests consumers found them convenient," she argues.

Remes thinks it's likely that we are about to see an uptick in retail productivity in the coming years, as traditional retailers streamline their bricks-and-mortar business with ecommerce businesses they built quickly and haphazardly to compete with the likes of Amazon. And she says retail associate jobs aren't going to disappear anytime soon either. 9 out of 10 retail dollars are spent in person, she says, and we should expect the vast majority of shopping to continue to be done in person in years to come.


U.S. diplomats in Cuba suffered brain injuries after sonic attack

Desmond Boyland / AP

American diplomats in Cuba have been diagnosed with mild traumatic brain injury — and central nervous damage — after an apparent attack with a sonic weapon targeted their homes, per a review of medical records by CBS News.

The State Department hasn't explicitly identified the source of the attack or what person or entity might have carried it out. The Cuban government has denied any involvement with the incident.

Why it matters: The severity of the apparent injuries goes far beyond what was originally reported, so it stands to reason that President Trump's administration might choose to respond strongly given his prior rhetoric on Cuba, especially given that the report notes that the attacks on Americans are continuing.


Dolby goes beyond sound for new revenue streams

Ina Fried / Axios

When you think of Dolby, you probably think of technology to make things sound better. And, licensing its technology still accounts for about 80% of the company's roughly $1 billion in annual revenue.

However, Dolby also has been working to ramp up its products and services business, which supplies audio and video technology for cinemas and all manner of consumer devices. On Tuesday, the company invited reporters to check out some of its latest efforts at the Dolby headquarters in San Francisco.

3 things Dolby is working on that caught my eye:

Laptop speakers: Dolby showed its Atmos technology running in a cinema and on fancy home theater products, but I was most impressed by the sound that Dolby managed to cram into a tiny 13-inch Huawei laptop.

Outfitting nightclubs and remixing classic albums: Dolby has a new but growing business adding surround sound to nightclubs, having retrofitted London's Ministry of Sound and Chicago's Sound-Bar.

  • Dolby also has worked with Universal Music Group to bring its Atmos technology to Abbey Road to remix the Beatles' "Sgt. Pepper's Lonely Hearts Club." At the media event, Dolby revealed that it has outfitted a studio in Capitol Records in Hollywood and is using the technology on R.E.M.'s "Automatic for the People."
  • It's unclear how the remix will be distributed. Sgt. Pepper's was played at Dolby Cinemas in the U.S. and Canada so Automatic for the People could get a similar treatment, but in theory Universal could also release it for playback on Atmos-capable TVs via streaming or compatible Blu-Ray players.

Not just sound: Dolby is also pushing Dolby Vision, a technology for improved color and dynamic range in TVs. The technology can be found on high-end TVs, but also on a $650 set from China's TCL.

  • "We think we've made as big an impact there as we have on the audio side," Bob Borchers, Dolby's chief marketing officer, says.

What you need to know about Samsung's Galaxy Note 8


With the Galaxy Note 8, being unveiled in New York today, Samsung is looking to move past all of last year's problems and re-establish its signature phablet. The device closely resembles the Galaxy S8 with its curved edges and infinity display, with the addition of a digital pen and dual rear cameras.

The bottom line: Despite the fiasco with the Note 7 and subsequent recalls, Samsung has bounced back with the well regarded Galaxy S8. Barring any new issues, Samsung seems to have emerged relatively unscathed. The big question is how the Note 8 will stack up against the next iPhone.

Here are some other things to know:

  • It's initially running the Nougat version of Android, not the just-released Oreo.
  • It will be available for pre-order starting Thursday, but won't hit stores until Sept. 15
  • Samsung is giving early buyers (those who purchase before Sept. 24) a free Gear 360 camera or an essentials kit with a 128GB SD card and wireless charging equipment.
  • The company took additional safety measures, including its own procedures and added testing with Underwriters Laboratory (UL)

Former UK ambassador to US compares Trump to 1933 Germany

Peter Westmacott, the former British ambassador to the United States from 2012 to 2016, said on Twitter today that President Trump's leadership has "shades of 1933 Germany," hinting that it might embolden autocrats around the world.

Why it matters: As a former representative in Washington for one of America's strongest allies, Westmacott's words carry serious weight on the world stage — and provide a look into how key European nations might currently feel about dealing with the Trump administration.


Trump attacks “weak” Jeff Flake the day after Phoenix rally

President Trump snuck in a dig at GOP Senator Jeff Flake, calling him "weak" on crime and border security, while thanking Phoenix for the "amazing" crowd that came out to watch his speech last night.

This isn't the first time Trump has gone after Flake on Twitter. Last week, Trump tweeted that he was "toxic" and signaled his support for Flake's opponent in the 2018 Senate race, Dr. Kelli Ward.

The Trump-Flake ongoing feud initially began when Flake openly opposed Trump during his presidential campaign. He also sharply criticized Trump and condemned the Republican Party for enabling Trump's rise to the presidency in his book, "The Conscience of a Conservative." Trump's recent flurry of tweets attacking Flake is the president's way of retaliating.


China bought a third of the world's robots last year

Eugene Hoshiko / AP

China bought 90,000 robots and took a third of the market share in 2016, according to an International Federation of Robotics estimate. By 2019, they'll buy nearly 40% of new robots, the organization projects.

  • Why it matters: China could become an even larger force in the export economy, per Bloomberg's analysts.
  • Robots haven't lowered wages in China yet. Manufacturing workers saw raises of more than 50% between 2010 and 2014. But "the rising use of robots ... threatens to exacerbate domestic income inequality" by shifting gains to the owners of capital, Bloomberg reports.
  • Due to its massive population, China still has a relatively low number of robots per humans. There are about 50 robots for every 10,000 workers, compared to the global average of about 75. Beijing wants 150 robots for every 10,000 workers by 2020, the Federation reports.

"Damned dishonest": Trump calls media un-American

Alex Brandon / AP

Speaking to the American Legion national convention in Reno today, according to prepared remarks provided to Axios AM, President Trump will declare that it's "time to heal the wounds that have divided us."

  • But in Phoenix last night, consumed by grievance, he unleashed some of the most divisive and deceptive attacks against the media in presidential history.
  • He accused the media of fanning the flames of racist protest, being anti-American, trying to erase our heritage, and then turning off cameras during his speech to hide his truth (it was all being carried live).
  • It was as if Trump, who was introduced by Vice President Pence, was taunting the rowdy crowd to turn on reporters.

Blaming "damned dishonest" reporters for the racial tension in America, he dramatically reread his past statements on Charlottesville — but omitted the "many sides" and "both sides" assertions that drew criticism even from top Republicans.

After the rally, police broke up protest crowds with tear gas, pepper spray, stun grenades and rubber bullets. (Video.)

The raucous crowd interrupted him with chants: "USA! USA! USA! ... CNN sucks! CNN sucks! CNN sucks! ... Build that wall! Build that wall! Build that wall!"

Trump said: "CNN does not want its falling viewership to watch what I'm saying tonight, I can tell you." But his remarks were being carried live on both CNN and CNN International (which we get on Fios here at the Axios AM Executive Residence).

Trump made lots of news:

  • "Believe me, if we have to close down our government, we're building that wall."
  • May pardon Sheriff Joe Arpaio: "I'll make a prediction. I think he's going to be just fine, OK (APPLAUSE) ... But I won't do it tonight."
  • "We will renegotiate NAFTA, or we will terminate NAFTA. I personally don't think you can make a deal without a termination, but we're going to see what happens, OK? ... You're in good hands, I can tell you."
  • On the CEOs who left his business councils: "When it got a little heat with the lies from the media, they sort of said, 'Oh, we'll take a pass.' ... I remember the ones that did."
  • "But people are now calling me, people that have been, like, 'we'll take a pass': 'Don, can we get together for lunch? Let's do it privately, instead of through a council.' ... They are calling, and they're saying: 'How about getting together privately?'"
  • "I don't believe that any president has accomplished as much as this president in the first six or seven months. I really don't believe it."

More from Trump's 77-minute speech at a "Make America Great Again" campaign rally, ending at 11:25 p.m. ET:

  • "[V]ery dishonest media, those people right up there with all the cameras." (BOOING)
  • "But they don't report the facts. Just like they don't want to report that I spoke out forcefully against hatred, bigotry and violence and strongly condemned the neo-Nazis, the White Supremacists, and the KKK." (APPLAUSE)
  • "I hope they're showing how many people are in this room, but they won't. They don't even do that. The only time they show the crowds is when there's a disrupter or an anarchist in the room."
  • "All the networks — I mean, CNN is really bad, but ABC this morning — I don't watch it much, but I'm watching in the morning, and they have little George Stephanopoulos talking to Nikki Haley, right? Little George."
  • "[T]hey asked me, ... what about race relations in the United States? Now I have to say they were pretty bad under Barack Obama. That I can tell you."
  • On historic statues being removed: "They're trying to take away our culture. They are trying to take away our history. And our weak leaders, they do it overnight. These things have been there for 150 years, for 100 years. You go back to a university, and it's gone. Weak, weak people."

This fire will keep burning. Sean Hannity said on Fox News at 11 p.m., as he passed the live coverage over to Bret Baier, that his opening monologue tonight "will be directed at the corrupt media."

Be smart: Trump was on Sen. John McCain's turf, and called him out (without mentioning his name) for voting against the health-care bill — but didn't wish the state's most famous politician a speedy recovery from cancer.

Reporters at the rally say the taunting of the press increased as he ratcheted up his remarks. In this fevered environment, some journalist could get beaten, or worse.


There are 3,500 troops in Afghanistan the Pentagon didn't tell you about

U.S. Gen. John Nicholson, top U.S. commander in Afghanistan, left, talks with Col. Khanullah Shuja, commander of the national mission brigade of the Afghan special operations force, and U.S. Gen. Joseph Votel, head of U.S. Central Command, at Camp Morehead in Afghanistan. Lolita Baldor / AP

There are currently more than 12,000 U.S. troops serving in Afghanistan — 3,500 of them the Pentagon failed to publicly disclose, the Wall Street Journal reported. The Pentagon has disclosed the 8,400 military members stationed in Afghanistan long-term, but kept hidden the number of troops that are sent to the area on a temporary status. The number of troops from other groups such as special forces are almost always kept secret.

Why it matters: The real total number of troops is important in deciding how many more troops will be sent to the country after President Trump's announcement on Monday night. The new strategy is expected to include sending about 3,900 troops to Afghanistan within the next few weeks, military officials told WSJ.

Go deeper with an Axios graphic showing the number of U.S. troops and private contractors in Afghanistan since 2007, here.

Google and Walmart in a joint offensive against Amazon

Google's Home device. (Walmart)

Walmart and Google are escalating a fierce battle to own virtual assistant shopping, jointly challenging Amazon's towering dominance over the already-lucrative new space in retail, per the WSJ's Jack Nicas and Laura Stevens.

Google is offering up its Home virtual assistant (photo above) and Walmart its vast inventory. As of next month, they will team up on Google Express, the internet giant's e-commerce marketplace. In doing so, they are going against Amazon's Echo.

  • The mountain is steep: As of July, Amazon raked up 45 cents of every dollar spent on-line, up from 43 at the start of the year. Walmart earns just 2 cents. Google's House personal assistant is 26% of the market; Echo is the rest.
  • But the prize is too large to ignore: Amazon has already decimated whole swaths of brick-and-mortar retail, and now has an early grip on the new voice-activated virtual assistant market. Walmart does not want to end up like Macy's and Barnes & Noble, and Google is not satisfied to be an also-ran in e-commerce.
  • So big players are aligning: Walmart is also doing test runs using Uber and Lyft in an attempt to speed the delivery of fresh produce bought through Google Home.

How it works: Pioneered in China, sophisticated voice-activated devices are one of the next waves of technology. Before you know it, you will use virtual assistants for much of your shopping, household chores and office work.

  • It's easier after you get started: Once you've bought a certain brand of toothpaste or toilet paper, you can simply tell your assistant, "toothpaste," and it will have the same brand shipped to you.
  • Free shipping: Amazon has chalked up much of its gains through its $99-a-year Prime program, which offers free shipping. Against that, Google and Walmart are dropping their annual fee entirely if your order hits a minimum, like $25 or $35. The jury is out whether that will prove more effective than Amazon Prime.

The Twitter hashtag is 10

Rebecca Zisser / Axios

Today is the 10th anniversary of the first Twitter hashtag. It was #barcamp, sent by former Google designer Chris Messina, in reference to a user-generated conferencing group he had helped create called BarCamp.

Why it matters: Hashtags have become a huge part of Internet culture and language. Jimmy Fallon and Justin Timberlake have famously spoofed Internet conversations via hashtag-only banter skits, and viral hashtags like #tbt (throwback Thursday) and #blessed have become integrated into everyday conversations in real life. Studies have suggested that nearly 3/4 of all internet users use hashtags to communicate. And hashtags have also spread to other Internet platforms, like Facebook, which adopted the feature in 2013.

Messina tweeted the hashtag as a recommendation for Twitter to create groups by automatically adding hyperlink metadata to any word that followed the "#" symbol. Twitter initially rejected the idea, saying hashtags were for "nerds," but eventually adopted the hashtag into its code in 2009.

New data from Twitter:

  • 125 million hashtags are Tweeted per day on average.
  • #ThrowbackThursday and #tbt have been Tweeted 120 million times and #ootd has been Tweeted over 2 million times.
  • Five of the most-used hashtags over the past decade originate from fans tweeting during award shows. #MTVHottest, #MTVStars, #KCA, #iHeartAwards and #BestFanArmy have all been used over 3 billion times.
  • The most Tweeted television show hashtag of all time is #TheWalkingDead and the most Tweeted about movie hashtag of all time is #StarWars.
  • The most Tweeted global sporting event hashtag is the #WorldCup and The most Tweeted US sporting event is the #SuperBowl. The most Tweeted about league hashtag is #NFL and the most Tweeted team hashtag is #MUFC.