00:00from a fried chicken sandwich and coffee
00:02to beauty and Retail we uncover the
00:06surprising stories behind the world's
00:07most successful companies their profits
00:10how they've expanded and how they've
00:12navigated a changing economic climate
00:14our first story is about America's
00:16favorite chicken fast food company
00:18Chick-fil-A a business based on a secret
00:24this is the Chick-fil-A chicken sandwich
00:26which according to multiple industry
00:28surveys is America's favorite fast food
00:30visit a Chick-fil-A anywhere in the
00:33United States and you're likely to see a
00:34long line of customers patiently waiting
00:36to order the restaurant's Flagship menu
00:38item there you guys go thank you so much
00:40my pleasure y'all have a great rest of
00:42your day in part thanks to its famous
00:44chicken today Chick-fil-A is the third
00:46largest U.S restaurant chain by domestic
00:48sales we're still seeing tremendous
00:51growth in our business so far this year
00:52we're up about 20 percent so how did
00:55this private atlanta-based fast food
00:57chain become one of the most popular
00:58restaurants in America
01:00this is the economics of Chick-fil-A
01:05Chick-fil-A has long had a unique
01:08approach to business that the company
01:09credits with its success from the
01:12beginning Chick-fil-A's business was
01:13built on a recipe after testing hundreds
01:16of methods restaurateur Truett Kathy
01:18developed a faster way to cook boneless
01:20chicken using a pressure cooker and
01:22peanut oil it's perfect and so we've
01:25kept that locked away in a vault and
01:26we'll continue to use that same recipe
01:28none of the employees have access to it
01:31so it is still shrouded in a lot of
01:33mystery there are recipe sites where you
01:35can try to recreate it but they have
01:37never put it out officially the original
01:39chicken sandwich is the same today as in
01:421967. a breaded breast of chicken two
01:45pickles both placed on a buttered
01:55Chick-fil-A has long taken Pride for its
01:58commitment to selling high quality
02:00product in fact Chick-fil-A's name is a
02:03take on chicken filet with a capital A
02:05at the end symbolizing top quality while
02:08other fast food chains tend to expand
02:10their menu offerings over time to
02:12attract new customers Chick-fil-A's
02:13business model has always been to
02:15maintain a small menu focused on chicken
02:17sandwiches they like to say it's simple
02:19so they want to keep customers knowing
02:23what's on that menu to be able to easily
02:25decipher what they want we think about
02:27the way that we serve guests that
02:29consistency is really important that we
02:31get hot sandwiches cold salads and just
02:34tasty products customers seem to agree
02:36since its Creation in 2015 the American
02:39customer satisfaction index has been
02:41dominated by Chick-fil-A Chick-fil-A
02:43often rates very high even though the
02:46service and the drive-through can be
02:47slower people are very happy with the
02:49quality of the service they get in
02:51general today many Chick-fil-A
02:53restaurants use a practice known as
02:55Upstream ordering where an associate
02:57will take a customer's order while
02:58they're still waiting in line to start
03:00before the the pandemic but has really
03:02proved very important to the pandemic
03:04when they closed their dining rooms
03:06which really meant the drive-through is
03:08the major channel of sales so if you go
03:10to a Chick-fil-A now in many locations
03:13you will see workers out in the
03:15drive-through with tablets and so
03:18instead of speaking into a speaker box
03:19and kind of mumbling your order and it
03:21may be getting screwed up you're telling
03:23this person directly next to your car or
03:25what you want to ensure that quality in
03:28every one of its locations Chick-fil-A
03:29uses a different franchise model than
03:31most other fast food chains unlike most
03:34chains where the franchisee covers most
03:36of the costs of opening the restaurant
03:38Chick-fil-A owns every one of its
03:40locations the company also selects the
03:42locations and builds the restaurants we
03:45really think that that's a key
03:46differentiator in the way that we
03:48operate we're not looking for a
03:50financial investor or people that want
03:52to buy a big market and open a bunch of
03:53stores Chick-fil-A States on their
03:55website franchising is not an
03:57opportunity for Passive Financial
03:59investment working from the sideline
04:00lines or adding to a portfolio of
04:02business ventures franchisees are called
04:04operators and each operator is
04:06hand-picked by Chick-fil-A after a
04:08rigorous interview process Chick-fil-A
04:10likes to say it's about like going to
04:14Harvard MBA it can take anywhere from 12
04:17months 24 months so you really have to
04:19want to do this and be willing to go
04:22through the initial paperwork but then
04:24extensive interviews out of the more
04:26than 8 000 applicants Chick-fil-A
04:28receives annually the company only
04:30selects about 130 new operators a year
04:33that's an acceptance rate lower than
04:35Stanford one of the skills that we
04:37really look for is somebody that's
04:39really good at developing people a lot
04:41of the stores have over 100 employees
04:43they've got to be really really good at
04:45pouring in and developing people in
04:47teams and Leadership teams if selected
04:49Chick-Fil-A franchisees need only an
04:51initial investment of ten thousand
04:53dollars which covers the franchise fee
04:54to become an operator that's much lower
04:56than the startup cost for a McDonald's
04:58franchise which requires a 45 five
05:01thousand dollar franchise fee as well as
05:031.3 to 2.3 million dollars of additional
05:06investment if they're paid 10 or 15
05:07locations it's hard to have that market
05:10presence and to really know their team
05:12members and the communities that we
05:13serve and we've got a lot of interest to
05:15become operators and feel like that
05:17model is going to be really important
05:18it's what's gotten us to where we are
05:19Chick-fil-A credits this Hands-On
05:21approach with the success of its
05:23restaurants which on average make far
05:25more off of each location than their
05:27competition for years Chick-fil-A's
05:29footprint was mostly in the Southeast
05:31but today they can be found across the
05:33country they have about 2 600
05:35restaurants throughout the country
05:37they're also located in Canada and they
05:40are opening in Puerto Rico we're opening
05:42about 100 stores a year right now and
05:44we've got a lot of growth potential here
05:46just domestically in the United States
05:47but we're also looking at International
05:49as well since 2007 Chick-fil-A has
05:52nearly doubled its restaurant count to
05:552598. compared to a lot of other chains
05:57that's still slow like a Chipotle is
06:00opening 200 of restaurants a year no
06:02matter which Chick-fil-A location you
06:03eat at the company says its values are
06:06reflected in its day-to-day operations
06:09very close culture they're also invested
06:12in its values which they do say are
06:14based on judeo-christian values which
06:17you don't have to be a Christian to work
06:18there but they do you know take some of
06:21these basic values of humility and
06:24generosity and and if you want to go to
06:26a prayer service while you're there you
06:28certainly can from its Inception founder
06:30Truett Kathy's Christian faith played a
06:32major role in the company's business
06:34strategy it's why Chick-fil-As are never
06:36open on Sunday not just so workers can
06:38attend church but also so they can rest
06:40in general we feel like we make up for
06:42the sales in the Monday through Saturday
06:44and that anticipation of ah I can't get
06:46Chick-fil-A today so I want to make sure
06:48to go first thing Monday morning it's
06:50also the reason the company has never
06:52gone public I don't think we will ever
06:54actually I know we'll never go public
06:55and there's not a real benefit for us to
06:58do that we've grown conservatively and
07:00so we don't need a lot of investors or
07:02extra cash to go and to build new stores
07:04or new businesses part of Kathy's values
07:07are reflected in how employees are
07:09treated and how they're expected to
07:10treat customers thank you pleasure you
07:12have a great day although you won't see
07:14it in restaurants where the employees
07:15are massed up Chick-fil-A has long asked
07:17employees to greet customers warmly with
07:19a smile even if it's just on a very
07:22small interaction you can share a lot by
07:24just the smile that team member has with
07:26guests is just a small little thing that
07:28we can do that makes a difference
07:29occasionally Chick-fil-A's values have
07:31attracted scrutiny especially when the
07:34company's foundation donates to
07:35conservative groups or causes there's
07:37been some groups perceived as anti-gay
07:39and this is a you know attracted
07:41attention from Progressive groups the
07:44company's foundation in the last year
07:46has focused its charitable giving on
07:47three different areas homelessness
07:50hunger and education I think the most
07:53important thing for us being in the
07:55restaurant business is that we serve
07:57everybody my grandfather I love how he
07:59talked about it with politics he would
08:01say I'm not right wing or left-wing I'm
08:03the whole chicken when you go to
08:04headquarters in Atlanta there is this
08:07rock with a quote from Truitt that is
08:11just played prominently that says what
08:14Chick-fil-A's corporate purpose it says
08:16to glorify God by being a faithful
08:19Steward of all that is entrusted to us
08:21to have a positive influence on all who
08:24come in contact with Chick-fil-A I do
08:26think that reflects this very higher
08:29Noble sense of company self they have
08:32they believe they do more than just
08:34serve chicken sandwiches thank you so
08:36much pleasure have a nice one if you've
08:38ever shopped at Costco you may have
08:40noticed that it's a little different
08:44Costco is not engineered for a quick
08:46shopping trip it is exactly the opposite
08:48this is the economics of Costco it's not
08:52a grocery store it's not a small corner
08:55store it's huge it's cavernous the
08:57ceiling is high goods are literally
09:00stacked on pallets up to this almost the
09:02ceiling that's all part of the model and
09:04the experience I gotta cost
09:07okay first thing we got is a five dozen
09:09of eggs then we got salmon for you
09:10unlike most stores there are no aisle
09:13signs or in-store maps to help direct
09:16instead aisles are simply numbered
09:19what's more Costco constantly moves some
09:22of its products and Cycles in new
09:27so what gives why are Costco's stores
09:29designed this way and how has it helped
09:32the company grow into the retail
09:34Behemoth that it is today
09:36Costco is a big fan of using treasure
09:40hunt retail psychology to draw you in
09:42which is basically having items on the
09:45shelf that are at a like wow price
09:48because they're such a good discount or
09:50they're just really interesting and
09:52they're not going to be there forever
09:54the big idea behind Costco's treasure
09:57hunt strategy is that by encouraging
09:59customers to explore and ensuring that
10:02there's always a new batch of
10:03interesting deals customers end up
10:05shopping longer and buying more products
10:08today I went to Costco thinking I'm just
10:10going to get a few items but I ended up
10:12when you go into the store it doesn't
10:13feel the same as the last time you were
10:15there so you have a sense of urgency
10:17about purchasing and also just a sense
10:19of wanting to come back right and check
10:21out what's going on if it was the same
10:22every time you might not come as often
10:24today Costco is one of the world's
10:27largest retailers boasting over 803
10:30locations and 275 000 employees Costco
10:34was part of sort of this early
10:36Warehouse Club concept which was really
10:39about instead of like go to the store
10:41buy a single item come to the store pay
10:43a membership and maybe your small
10:44business and we'll offer you wholesale
10:47prices basically lower prices
10:49most members pay an annual fee of 60 for
10:52the basic plan but customers can upgrade
10:55to the executive membership which is
10:57more perks for 120 dollars a year
11:00membership dues are also how Costco
11:02makes most of its money I think Costco's
11:05Management's main goal is always this
11:08ethos of can we offer more exciting
11:11items at a better price
11:13to keep memberships growing the model is
11:17make money on the membership sell things
11:19as cheaply as possible they can't just
11:21raise the price on something to increase
11:23the profit that's against the internal
11:25code and so that also includes things
11:27like let's save money and how much time
11:30we spend putting products on shelves so
11:32that's part of the reason why you see
11:33these pallets of goods stacked up to the
11:35ceiling is there's not a lot of time
11:37spent taking apart those pellets putting
11:39each individual product on the Shelf if
11:41they eliminate that there's a little bit
11:43of Labor savings there's some time
11:44savings because they're just putting all
11:46that stuff out on a pallet and you take
11:48it Costco says that an average item in
11:51the store is only marked up 11 percent
11:53compared to the 25 to 50 percent often
11:56seen in retail this commitment to low
11:59prices hasn't just kept customers loyal
12:01it has also helped spread the brand
12:03there's a psychology to finding a deal
12:05that's very satisfying for people and
12:08people enjoy the product selection at
12:10Costco they have very skilled Merchants
12:13that usually have been employed there
12:14for a very long time and really know
12:16what a Costco customer likely would want
12:19and they're good at getting good prices
12:22I got your protein flavored vanilla and
12:25that sort of creates a certain frenzy
12:27around finding those things I got the
12:30Kirkland brand microwave popcorn I got
12:32two packs of bottled water most
12:35retailers might assume the Shoppers want
12:37more choices not less they sell a
12:41limited number of items so that means
12:42they have to be pretty precise they
12:44think about like giving space to a
12:46product in their store differently than
12:48a Walmart would and if that product
12:51doesn't sell like it's out of there it's
12:53very Cutthroat if you're a product on
12:55the Shelf you have to earn your place
12:57the average Costco Warehouse stocks
12:59about 3 700 products at any given time
13:02less than one tenth of most supermarkets
13:0540 to 50 000 items but even though
13:08Costco stocks fewer items the items they
13:11do stock have a reputation I see you've
13:14noticed me rolling up the sleeves on my
13:16new Kirkland Signature quarters that my
13:18mother got me for the holidays Kirkland
13:21is Costco's you know private label brand
13:23it's their store brand it's a brand that
13:25when they want to offer something at a
13:27certain price that they don't feel uh
13:28manufacturer A supplier can do it they
13:31build it themselves since it was
13:33launched in 1995 the in-house brand has
13:36built a reputation for quality and low
13:38prices on everyday items today Kirkland
13:42products make up a quarter of Costco's
13:44166 billion dollars in annual sales
13:48but when you talk to customers I think
13:49they generally feel that it doesn't
13:51necessarily need to be fancy because
13:54they've already bought into this Costco
13:56pitch which is this is high quality and
13:58it's a lower price and you don't need to
14:00be afraid of it that Customer Loyalty
14:03helped Costco remain strong during the
14:06pandemic Costco is certainly a model
14:08that has not only survived the pandemic
14:11but has really thrived in the pandemic
14:13despite the increased popularity of
14:16online shopping Costco has leaned into
14:18its strategy of driving members to its
14:20stores it's it's really interesting to
14:22me because for years people have
14:24questioned Costco you know Amazon's
14:26going to get you you got to get bigger
14:27online and that really hasn't played out
14:30yet they've said explicitly we prefer
14:32people to come into the store and Shop
14:33we want impulse buys we want people to
14:35come in and see what we have and buy
14:36more we work better that way and it's
14:43if you've ever ordered something at
14:45Starbucks you've probably loaded one of
14:47these Starbucks between October and
14:49December is set something like three
14:51billion dollars of value is loaded onto
14:54these cards I mean that's a lot of money
14:55so much money in fact that if Starbucks
14:58was a bank it would rank as the 385th
15:01biggest in the country and it's money
15:04that Starbucks gets to use up front as
15:06Revenue before a single product is even
15:08purchased eventually it is a liability
15:11if someone chooses to use it and you
15:14will find that in lots of gift card
15:15programs they're planning people who
15:17never use it so how important is
15:19Starbucks's mobile app and gift cards to
15:22its bottom line and what role does
15:24technology play in its continued
15:28this is the economics of Starbucks
15:32in 1971 the first Starbucks a small
15:36unassuming Cafe opened in Seattle's
15:38downtown fast forward 50 years and that
15:41store is still in operation but
15:43Starbucks is a global coffee giant only
15:46McDonald's is bigger than Starbucks when
15:49it comes to market caps so they are
15:51really a Powerhouse when it comes to
15:53really the whole restaurant industry in
15:56its early years of operation Starbucks
15:58expanded slowly and only within Seattle
16:00it wasn't until 1987 when the original
16:03owners sold the company to its then
16:06marketing director Howard Schultz that
16:08the Starbucks that we know today took
16:10root Schultz began expanding Starbucks
16:12outside of the city and introduced
16:14Americans to what was then a
16:16little-known Italian drink the espresso
16:18they were really founded on this coffee
16:20house culture that they make each
16:23beverage by hand according to order as
16:27Starbucks has grown that has gotten more
16:29complicated today Starbucks says they
16:32make more than 100 170 000 different
16:34varieties of drinks these beverages can
16:36be very complex they can take a while
16:38they can take many different ingredients
16:40and so it's good for Starbucks and that
16:43these tend to be higher priced beverages
16:45but for workers the Baristas they can be
16:49very complicated the company's early
16:51investment in espresso has transformed
16:53to many different signature drinks from
16:55the creation of the Frappuccino to the
16:58launch of the pumpkin spice latte
16:59pumpkin spice latte High private they
17:04really didn't know that it would take
17:05off like it did but clearly it is formed
17:07quite a phenomenon all around the world
17:10really we introduced pumpkin to spice us
17:13here Starbucks one additional thing in
17:16Starbucks evolution is cold beverages
17:18have become much more important to the
17:21company whether it's just an iced coffee
17:22or a Nitro iced coffee or all these cold
17:26foam and cold brewed increasingly this
17:29is so important to their revenue the
17:31company's gone through periods where
17:32Frappuccino sales have softened but
17:34they've come up with more cold drinks to
17:36keep people interested in keep people
17:39in part due to the company's Seattle
17:41founding technology has played a large
17:43role in the change dominance a key
17:46moment of that was the founding of its
17:48mobile app in 2009 which was very early
17:51for one of these kind of apps and they
17:53really saw this as a digital flywheel at
17:56the end of 2021 mobile orders accounted
17:59for nearly a quarter of all Starbucks
18:01transactions in the U.S many of those
18:03purchased through a virtual Starbucks
18:05gift card which was previously the only
18:08way a customer could order on their
18:10phone today a little under one half or
18:1344 percent of all transactions at
18:15Starbucks are done with a Starbucks card
18:17in fact so many Starbucks customers use
18:20a Starbucks card or the Starbucks mobile
18:22app to purchase items that Starbucks
18:24says it holds about 2.4 billion dollars
18:26in cash that was uploaded by customers
18:29to be used later that number exceeds the
18:32deposits at many American Banks
18:34Starbucks also gets a lot of data from
18:36that they own a lot of that data in a
18:39way that many companies don't because
18:41they have created this whole ecosystem
18:43where people are you know using the
18:45Starbucks app their mobile ordering and
18:48they're hooked into that Starbucks
18:49unique proprietary system as mobile
18:52payments rise Starbucks's business
18:54priorities have shifted prior to the
18:57pandemic approximately 80 percent of U.S
19:00Starbucks transactions were on the go
19:02either as drive-through or mobile order
19:05Starbucks starred in cities but really
19:08has spread all around the country
19:09including suburbs and a lot of that is
19:12through drive-throughs these alternate
19:14pickup options are becoming increasingly
19:16important to the company's bottom line
19:18especially during the pandemic I mean
19:21these stores have been a Lifeline to
19:23Starbucks because they kept running and
19:25people could easily queue up and go and
19:27not have to enter an actual Cafe
19:29Starbucks has long said that it remains
19:32committed to a set of values established
19:34early in the company's existence
19:38committed to trying to create a
19:40connection between its Baristas and its
19:42customers even in its drive through they
19:44talk about this on earnings calls that
19:46there are these customer connection
19:48scores they want to make sure that
19:50everyone is feeling good about their
19:52Starbucks experience which is getting
19:54increasingly challenging when you're
19:56ordering through a drive-through or a
19:57mobile app you're trying to get in and
19:59out Starbucks says those values also
20:02appear in the manner in which their
20:03stores are designed the items you will
20:06find in the store they really
20:08choreograph that down to where the
20:10basket of waters is placed into a store
20:12they want this all to feel very similar
20:14Starbucks is long touted its internal
20:17culture which it says is built on a
20:20strong relationship between management
20:21and employees the workers at its stores
20:25are not called workers or Baristas
20:27they're called partners and this is very
20:29Central to the company's ideology part
20:32of that is that all these Partners do
20:35get shares in the company it's called
20:38Beanstalk that relationship may look
20:40different going forward for some
20:42Starbucks locations after two of three
20:45buffalo stores voted in favor of
20:47unionization since then Starbucks has
20:50thrown a huge amount of energy and
20:52resources into this issue and Executives
20:55have traveled to Buffalo extensively to
20:59meet with workers to try to understand
21:00their concerns according to the company
21:04they want to maintain this direct
21:06relationship with their workers they
21:08call unions in intermediary they do not
21:10want that relationship to be severed but
21:13according to these workers they who
21:16support the union they want a more
21:17direct relationship with the company in
21:19a statement to the Wall Street Journal
21:21Starbucks said Starbucks's success past
21:24present and future is built on how we
21:27partner together always with our mission
21:29and values at our core from the
21:31beginning we've been clear in our belief
21:33that we are better together as partners
21:35without a union between us at Starbucks
21:37and that conviction has not changed
21:40they are the world's biggest coffee
21:42chain they are very dominant when it
21:44comes to Coffee sales and they are
21:46really synonymous with coffee house
21:49culture in a lot of ways but they do
21:51face increasing pressures
21:55you know they don't tell you don't lay
21:57you're supposed to lay on the bed
22:00if you've ever visited an Ikea you've
22:03likely encountered their stores
22:04endlessly winding floor plan this layout
22:10that is by Design Ikea may be the
22:13biggest Furniture retailer on the planet
22:15but it's certainly not conventional the
22:18Swedish Furniture giant asks its
22:20customers to build their own products
22:22and its stores and distributes those
22:24products in minimalist flat packed boxes
22:27so how of these retail strategies as
22:31well as their famous Swedish meatballs
22:32contributed to the company's runaway
22:34success this is the economics of Ikea a
22:39look at the innovative business
22:40practices that have transformed Modern
22:45when you step into an Ikea you
22:47immediately sort of are put
22:53IKEA store layout is a fixed path design
22:56which means there's a designated road
22:58that all customers must follow that
23:01guides you through the store in One
23:04it's not a grab a carton of milk and get
23:07out kind of store it's it's the opposite
23:11it's very much set up to spend a day
23:13think about rooms you know dream about
23:17what you really want your bedroom to
23:20a floor plan of most Ikea stores
23:23resembles a maze the curves about every
23:2550 feet to keep customers curious about
23:28what comes next since an average IKEA
23:31store is around 300 000 square feet or
23:34five American football fields that means
23:36a lot of walking an Ikea is to some
23:39frustratingly winding but really it's
23:42laid out as an experience to get you to
23:47Ikea is famous for putting its customers
23:49to work unlike most Furniture retailers
23:52that sell products pre-assembled many of
23:55Ikea's pieces have to be built by their
23:58but why as many couples and their
24:00therapists well know building your own
24:02IKEA cabinet can be challenging the big
24:06idea behind the Ikea effect is consumers
24:09are more attached to have more positive
24:11feelings towards objects or things that
24:14we've put effort into and that we
24:16actually think that they're more
24:18valuable because of that foreign
24:21Ikea effect was first coined in 2011 by
24:25researchers who noticed a similar
24:27phenomena in other products and
24:30when instant cake mixes were first
24:32introduced in the 1950s they didn't sell
24:34well and then they said let's add a
24:37fresh egg it was this idea that we want
24:39to feel like we're just participating
24:41enough to not feel guilty about taking a
24:45when you make a cake from a mix which do
24:48you want a fresh egg cake or a cake made
24:50with dried eggs for higher lighter
24:53tastier cake why fresh eggs of course
24:55the idea that we should love building
24:58products isn't necessarily what Ikea
25:02if you've ever shopped at one of Ikea's
25:04massive warehouse stores you're likely
25:06aware of the unconventional product
25:09but what you may not realize is that in
25:12creating these items Ikea sometimes
25:13comes up with a price tag first sort of
25:16a classic example that they could talk
25:17about all the time is the one one dollar
25:19light bulb if they had this idea that a
25:21one dollar LED light bulb you know this
25:24new type of light bulb would be hard to
25:26achieve but if they could achieve it
25:27lots of people would buy LED light bulbs
25:29so they just sort of designed backward
25:31from the prep with the price point in
25:33mind that obsession with low prices is a
25:36large part of why Ikea is the world's
25:39largest Furniture retailer today Ikea
25:42has 445 stores operating in 52 countries
25:46you know obviously if you go into a
25:48student dorm room you're going to find a
25:49lot of Ikea but you'll also find some
25:51Ikea products in a wealthy person's home
25:54and that's really what they're going for
25:59today Ikea is the very definition of
26:01mass Market appeal but when the company
26:04first began as a Swedish mail order
26:06business in 1943 well-designed Furniture
26:09tended to be expensive and as a result
26:11Out Of Reach for most were seen as a
26:14serious long-term investment
26:16ingvar comprad who founded the company
26:19as a teenager pushed forward the idea
26:21that furniture could be flat packed to
26:24massively reduce the cost of shipping
26:25and transportation so flat packing is
26:28really the largest arguably Ikea
26:31invention that really led to the
26:34company's growth and the idea is that
26:37instead of buying you know a piece of
26:38furniture all put together it's
26:40deconstructed into a flat pack you can
26:42fit more in a truck you can fit more in
26:44the Ikea warehouse and you can also get
26:45it in your car and the trade-off is you
26:48know you put it together at the end flat
26:50packing is a practical aspect of the
26:53philosophy that has long guided Ikea's
26:55success called Democratic design it's
26:58this idea that everything is in Balance
26:59both price form function the aesthetic
27:02the sustainability this Vision to create
27:04a better everyday life for the many
27:06people was sent forth more than 30 years
27:09ago by comprod in a Manifesto now
27:12presented to every Ikea employee and
27:14they talk about it almost religiously
27:16and fundamentally it's this idea that
27:19when designing a product they think
27:22it can't just be really cool looking it
27:24can't just be functional it has to be
27:28so despite the long shopping trips and
27:32customers can't seem to get enough of
27:35perhaps it's as simple as labor leaves
27:38to love they are so cute and they even
27:41smell like the cereal y'all Crocs the
27:43colorful shoe that first became popular
27:45in the early 2000s hit its peak in 2021
27:49the company reported a record annual
27:51revenue of 2.3 billion dollars in 2021
27:54up over 60 percent from the previous
27:57year and its stock reached record highs
28:00the past few years for Crocs has been
28:02this moment of heavy collaboration
28:04constant releases they're really trying
28:07to put themselves in front of people
28:09that might not have considered a Crocs
28:13the company's success coincided with the
28:16pandemic leading some to credit the
28:17shoe's popularity to timing especially
28:20as its stock price has been dropping
28:22since the pandemic boom has waned but
28:24other comfortable Footwear Brands didn't
28:26take off the way Crocs did so how did
28:28Crocs make a name for itself during the
28:30pandemic and how did it find success as
28:33one of Fashion's most divisive shoes
28:35this is the economics of Crocs
28:39the company was founded in 2002 the same
28:42year it debuted its classic clog the
28:44name Crocs was inspired by crocodiles
28:47who live on land and in water when
28:50cracks were first released they were
28:51intended for a consumer that was looking
28:53at them as a functional thing so
28:54probably gardeners people that you know
28:57were on boats people that worked all day
28:59on their feet people that worked on a
29:00line in the kitchen part of what makes
29:02them so functional is the material a
29:04proprietary closed cell resin called
29:06crosslight that's slip resistant
29:08lightweight and easy to clean producing
29:11a molded shoe is certainly simpler in a
29:13lot of ways than assembling a sneaker
29:15the most underrated Advantage they have
29:18over the marketplace is that it's clear
29:19that they're able to kind of do things
29:21that other companies would not be able
29:23to do because of their scale and because
29:25of their production capabilities Crocs
29:27sales took off in the first three
29:29quarters of 2005 it sold 4.4 million
29:32shoes hitting a revenue of 75 million
29:36part of the reason for its initial
29:38success was that the shoe was easy to
29:40get it was available at retail stores
29:41gift shops and mall kiosks in 2006 Crocs
29:45purchased gibbets a company that made
29:48small plastic shoe charms that same year
29:50the company went public and became the
29:52largest ever U.S footwear IPO at the
29:54time but in 2008 in the midst of the
29:57financial crash the company suffered a
29:59net income loss of 185 million dollars
30:02though the initial crates had simmered
30:05the brand still managed to hang on to a
30:07relatively large customer base over the
30:09next few years thanks to its Global
30:11presence in 2014 Crocs started making
30:14major changes to its business model
30:15closing dozens of stores shifting away
30:18from malls and turning to online sellers
30:20like Amazon Crocs announcing today it
30:22will eliminate nearly 200 jobs and close
30:25a number of retail stores as part of a
30:27restructuring effort the company also
30:29cut back on the number of styles it sold
30:31by between 30 and 40 percent and
30:33refocused on the classic clog that made
30:36the following year Crocs invested in a
30:39Global Marketing push to relaunch its
30:44despite its efforts the company's stock
30:46held steady until 2020 when the global
30:49pandemic hit prior to people working
30:50from home and you know not wearing their
30:52dress shoes not wearing their heels
30:53there was already this Rising wave of
30:56comfort-minded comfort first Footwear
30:58that was really becoming more popular of
31:01course that accelerated during the
31:02pandemic the Comfort aspect is what many
31:04call the key to crox's success but
31:06another important factor is how easy it
31:08is to customize the shoe with gibbets
31:10you move them to different Crocs over
31:13time as you've got a green pair a camo
31:15pair or a pink pair that like the
31:17gibbets would stay with you and they
31:18were yours they were almost like uh the
31:20way a keychain on a backpack was at a
31:22certain point this idea of individuality
31:25and self-expression is one that the
31:27brand emphasizes through its marketing
31:31and on social media the uniqueness of
31:33the shoe's design has sparked debate
31:35even going back to Croc's early days
31:37there were two warring factions of Crocs
31:39are ugly and they're a blade on society
31:41and we need to get rid of them I don't
31:43care how comfortable they are they're
31:45ugly and then there were people that
31:46said no they're cute and they're kind of
31:48doughy and they're fun look how freaking
31:51to you these are Crocs leaned into this
31:55polarization partnering with celebrities
31:57and well-known Brands to create limited
31:59edition versions of the classic clog I
32:01think that's probably the biggest shift
32:02within the Fashion World of the past
32:04decade is that people truly seem to
32:06design for Instagram because you want to
32:08stop people from scrolling and certainly
32:10a shoe plastered with fried chicken does
32:12that in 2018 Crocs says it's Balenciaga
32:15clog an 850 4-inch platform shoe sold
32:19out within hours and in 2021 Crocs says
32:23it partnered with more than two dozen
32:24Brands artists and creators through
32:27collaborations and license programs
32:29sometimes it was through gibbets but
32:30sometimes it was like these kind of
32:32crazy revamping of what their clog was
32:36constantly releasing new collaborations
32:38has not only kept Crocs in the Press but
32:41it has also helped it break into new
32:42markets there are like Croc collectors
32:45that go after every model Penny I am
32:48overflowing with Crocs the same way that
32:50Nike's resell on websites like stockx
32:52and eBay Crocs are now reselling Crocs
32:55and other comfortable shoes may have
32:57peaked with the pandemic as people begin
32:58to migrate back into work and consider
33:01more traditionalist Footwear but many
33:03others are still prioritizing Comfort
33:04we're seeing that with a lot of doughy
33:07running sneakers that people are wearing
33:08we're seeing that certainly with the
33:10growth of slides is a huge business in
33:12the luxury Market crox's stock has
33:14dropped around 60 percent since its
33:16November 2021 High I think the Market's
33:19nervous about the short term right so
33:21we're definitely seeing um Supply
33:23constraints um in the first quarter but
33:26the company says its fourth straight
33:27year of Revenue growth was fueled by
33:29continued Global demand and it expects
33:32revenues to grow to over 5 billion
33:34dollars by 2026. I think that the
33:37tow at a certain point you can only
33:39reach so many consumers but I think for
33:42now they have been able to convince
33:45enough consumers that they deserve space
33:46within their closet and they gotta have
33:51Dollar General's business model it's a
33:53retailer that can make a lot of money
33:54selling very cheap Goods to a relatively
33:57small number of people if you've ever
33:59shopped at a Dollar General you might
34:01have found the store on a remote Road
34:03like this one it has every appearance of
34:06being in the middle of nowhere but this
34:07is a meticulously planned very well
34:11thought through strategy a strategy
34:13that's been key to Dollar General
34:15success in Rural America
34:17the company is Bucking current retail
34:19Trends by expanding rapidly and opening
34:22stores away from population centers
34:24Dollar Generals go where Walmarts aren't
34:26but it's not just the Strategic
34:28locations far away from big box stores
34:30Dollar General employs a number of
34:33tactics to keep operating costs down
34:35including leasing stores paying
34:37employees low wages and selling limited
34:39products and yes that includes stuff
34:42that isn't really a dollar dollar
34:44general is almost something unto itself
34:46it kind of takes pieces from a lot of
34:49different retailing models this is the
34:51economics of Dollar General after more
34:54than 30 consecutive years of sales
34:56growth Dollar General has become one of
34:59the most profitable and fastest growing
35:01retailers in the US last year the
35:04company brought in more than 30 billion
35:05dollars in sales so how has a store that
35:08sells products at rock bottom prices
35:10manage such extreme growth they add
35:13about two and a half stores every day in
35:15the United States just for for scope
35:18there's more than four times as many
35:19Dollar Generals as there are Walmarts
35:21there's more Dollar Generals than there
35:23are McDonald's in the United States
35:25there are currently more than seventeen
35:27thousand Dollar Generals in the US but
35:30if you don't live in Rural America you
35:31might not have ever even stepped foot
35:33inside the store where would you
35:35typically find a Dollar General you'd
35:37you'd think of a two-lane road think of
35:40you know places where the houses are far
35:42apart farmlands kind of lower income
35:44communities you might find them by a
35:46post office or a church or at an
35:48important intersection this is often a
35:51deliberate decision the company has
35:52formulas for identifying locations to
35:54open stores often the Dollar General
35:57will be down the road miles away from
35:58the nearest town and Walmart areas with
36:01limited shopping options
36:03three quarters of Dollar General stores
36:05serve communities of twenty thousand
36:06people or less according to the company
36:08it looks for need first and foremost so
36:11it's going to look for a place that we
36:12might call a food desert where there are
36:14not there's not a grocery store there's
36:16not a big box store it's kind of Target
36:18demographic is households uh with people
36:21making forty thousand dollars or less
36:22and it looks for a place where it can
36:24get inexpensive real estate to keep
36:27costs down Dollar General tends to lease
36:29their properties rather than buy them
36:31and inside the stores it has a limited
36:33selection of products that it buys in
36:35bulk which gives the company more buying
36:37power with suppliers most Dollar General
36:40stores don't offer fresh produce and
36:42compared to grocery stores have less
36:44perishable items which have a shorter
36:46shelf life and bring in lower margins
36:48you walk into a Dollar General you're
36:51gonna see metal shelves it's going to be
36:54quite Bare Bones I think linoleum think
36:57you know think bright lighting you won't
36:59see a lot of people working there
37:02by paying low wages to a minimal often
37:04part-time staff the company keeps labor
37:07costs low the median annual income for
37:09employees is just over sixteen thousand
37:12dollars according to Dollar General
37:13Dollar General says they employ more
37:16than a hundred and fifty seven thousand
37:18individuals and that they offer
37:20employees competitive wages and benefits
37:22these stores are staffed at minimum
37:25levels so there's not there aren't many
37:27employees they pay closer to a gas
37:31station attendant than even a Walmart
37:33employee so it's people that much like
37:36their customer base people who live in
37:38an area where there aren't a ton of
37:42despite the name not everything costs a
37:44dollar but prices are extremely cheap
37:46and often significantly lower than
37:48Grocery and drugstores
37:51critics say Dollar General strategies
37:52harm local communities by not providing
37:55healthy food options and potentially
37:57hurting the local small business economy
38:00Dollar General says that they are not a
38:02grocery store and that they are serving
38:04customers that would otherwise not have
38:06access to an affordable retail option
38:07ultimately the low prices and the
38:10convenience for Rural customers is what
38:12keeps people coming back some Shoppers
38:14have even found items for under a dollar
38:16Penny shopping at Dollar General let's
38:19go the first store I found Propel water
38:21for one cent at least is the Dollar
38:22General app scan and verify it's a penny
38:24before heading to the register Dollar
38:25General is on Pace to continue growing
38:27the company grew 16 during the pandemic
38:30a time where other retailers saw growth
38:33in e-commerce not in-person shopping
38:35Dollar General plans to open about a
38:37thousand stores this year and when you
38:39have a business model that involves
38:41small footprint stores without a lot of
38:44embellishments or bells and whistles a
38:47company can do that quickly and they can
38:48do it cheaply Dollar General is also
38:50branching out and going in New
38:52Directions it's been experimenting with
38:54stocking more fresh and refrigerated
38:55food and moving towards Urban centers it
38:58plans to expand pop shelf a new chain
39:00aimed at higher income Suburban
39:02customers pop shelf in addition to being
39:05located in different places it'll aim to
39:08sell things that are more think of more
39:09fun so not not as much Staples that you
39:12need to get by day to day but things
39:14like decorations party supplies a little
39:16bit more fun than necessary Dollar
39:20General says the new expansion isn't
39:22necessarily a shift from their overall
39:24growth strategy they say they can serve
39:26a diverse customer base with stores in
39:28urban Rural and Suburban locations yet
39:32even as Dollar General expands its
39:33offerings and Target demographics the
39:36company expects that its core customers
39:38will continue to be Shoppers in small
39:40towns without other options
39:44there really is a before and after
39:46Sephora when it comes to the makeup
39:48industry until about 20 years ago this
39:51is how most Americans shop for luxury
39:53makeup a sales representative of the
39:55brand would stand behind the makeup
39:58counter and help customers make a
39:59purchase that completely changed with
40:01Sephora now it's a free-for-all people
40:04walk in the stores they test whatever
40:05they want nothing is behind the glass so
40:09how did this French retailer come to
40:11dominate the global personal care and
40:13beauty product industry and what
40:15business practices helped make it the
40:17industry leader that it is today
40:20this is the economics of Sephora
40:25today the beauty retailer employs over
40:2736 000 people in more than 2 700 stores
40:31in over 35 countries those stores carry
40:35over 250 Beauty Brands
40:38at this point Sephora is like kind of my
40:41the Sephora that we know today has its
40:43roots in a small perfume shop that
40:45opened in 1969 in Limoges France at that
40:49time the perfume and cosmetics Market
40:51was dominated by a service-based retail
40:53model in which staff typically received
40:56commissions based on sales instead
40:58Sephora used the assisted self-service
41:01model in which customers are free to
41:03test products in the store we have a
41:05full station where you can just like
41:06literally grab whatever and you can try
41:08on the lipsticks you can try in the
41:10eyeshadows I always leave looking like a
41:11literal different person than I arrived
41:13Sephora customers can still request help
41:15from a sales associate who Sephora calls
41:18a beauty advisor there's a little bit
41:20more trust with the sales
41:21representatives in this Forest store
41:23because they're brand agnostic so they
41:26can tell you maybe you should buy them
41:27mascara from this brand but you should
41:30buy the blush from a different brand
41:32Sephora also bucked convention in the
41:34manner in which it displayed its
41:36products so makeup items are next to
41:38each other whereas from the same brand a
41:42fragrance would be in the fragrance
41:43aisle and the same brand a skin care
41:45product will be in the skincare aisle
41:46then in 1997 founder Dominic Montano
41:49sold Sephora to the large luxury retail
41:52conglomerate lvmh one of the advantages
41:54of being owned by a conglomerate like
41:56lmh is that the company can jump very
42:00quickly on Trends and actually several
42:03of the brands that are sold in Sephora
42:05stores are owned by lvmh one of the
42:07popular brands owned by lvmh is Fenty
42:10Beauty by Rihanna and then Fenty of
42:12course has a huge section the whole row
42:15of Fenty we got the lip glosses up front
42:17Sephora's success also stems from its
42:20exclusive line of products there's a
42:22little bit of attention in the
42:23relationship between a store and a brand
42:25because Sephora is such a hot store for
42:29makeup brands to sell their products in
42:31Sephora ends up having a lot more
42:34leverage in that relationship the
42:35Sephora collection the challenge for
42:38high-end Beauty Brands these days is
42:40that they're really facing a conundrum
42:42they've become increasingly dependent on
42:44Sephora for sales growth but because
42:46alvia Mage also produces Beauty Brands
42:48and there's an element of competition
42:50there and more brands are coming out
42:52constantly the shelves brace is
42:54shrinking five Sephora products you need
42:56to try part 10. in part due to that
42:58product exclusivity Sephora boasts a
43:01loyal customer base here are five
43:03Sephora products you need to buy tonight
43:05sorry I don't make the rules you just
43:06have to so what you'll find oftentimes
43:08on Instagram or Tick Tock is that people
43:10have these haul videos where they're
43:12showing all the products that they
43:13bought on Sephora and they're going one
43:14by one talking about them this is the
43:16closest tinted face oil and it's 42. I
43:19recommend this product to everyone and
43:21they're always like I'm paying 42
43:23dollars for a face oil yes you are many
43:27faithful customers are members of
43:29Sephora's Beauty Insider program which
43:31has three different tiers and more than
43:3325 million members the lowest here is
43:36the beauty Insider later
43:37the next level up is Vib or very
43:40important Beauty Insider which users
43:42must spend 350 dollars in a calendar
43:45year to unlock the top level is called
43:47Rouge which customers can access after
43:50spending at least a thousand dollars in
43:52a calendar year benefits like savings
43:54increase with each tier I'm Rouge don't
43:57judge me I know I spend a lot of money
43:59okay I get it but the real Advantage for
44:01Sephora for the beauty Rewards program
44:03is that every time a customer goes in
44:06there and Sephora knows exactly what
44:08they bought and that is very valuable
44:10information for the company to
44:12understand who the customer is what
44:14they're purchasing and then down the
44:15road to be able to Market in a very
44:17personalized way to that customer yet as
44:19much as the company profits on
44:21exclusivity with its products when it
44:23comes to Sephora's consumer base the
44:26retailer takes inclusivity seriously one
44:29of the ways that Sephora has tried to
44:31become more inclusive is by featuring a
44:33larger number of brands in their stores
44:35they made an effort to include black
44:36owned Brands and then also so by pushing
44:38Brands to expand their product lines and
44:41offer products that appeal to people
44:44from different racial groups different
44:46ethnicities in 2021 Sephora relaunched
44:50color IQ a skin tone matching technology
44:52that the company offers to assist
44:54customers in selecting the most natural
44:56products for their skin tone
45:01and Sephora is still expanding in
45:03December 2020 the company announced a
45:05partnership with the Department chain
45:07Kohl's to install 850 shops inside coal
45:11stores by 2023 since opening 200 Kohl's
45:14locations this summer Sephora has added
45:16200 000 new Beauty insiders in a
45:19statement to the Wall Street Journal a
45:21Sephora spokesperson said we want to be
45:23an unequivocal Global leader in the
45:25prestige Beauty space and a
45:27purpose-driven brand that is a
45:29transformative opportunity for Everyone
45:31We Touch they continued by outlining
45:33three main areas customers Brands and
45:36teams sometimes when customers step out
45:38say the Sephora store they will have
45:40splotches of makeup all over their arms
45:42and that really showcases what they've
45:44been doing in the store
45:46walk into a Target anywhere in the U.S
45:49and you're likely to find Sleek
45:51mannequins elaborate displays and fancy
45:54lighting Target is very focused on the
45:56Aesthetics of their stores their
45:58products that is what they hope makes it
46:00feel like an elevated Discount Store
46:02experience this elevated experience
46:04which has led some to nickname the store
46:06Target is part of the company's strategy
46:08to differentiate itself from competitors
46:11and draw customers through the door but
46:13what's happening in the front of a
46:15Target store is only a portion of the
46:17retailer secret to success
46:19this is the economics of Target Target
46:23to me is so interesting because really
46:26they're a department store that became a
46:29discount store and they were always
46:30going after sort of a higher end
46:32Discount Store image and that's remained
46:35true to today Target positions itself as
46:38the option for cheap yet Chic items and
46:41customers can see the two ideas combined
46:43when walking around the store
46:45in certain areas like apparel home goods
46:48and electronics Target stages items with
46:51lavish lighting and displays but just
46:53across the way you'll still find the
46:56standard merchandise aisles with uniform
46:58fluorescent lights target has always
47:00tried to sort of meld these like visual
47:02expectations that we have from a
47:04department store like the mannequins and
47:05the good lighting and like a display for
47:08Cosmetics with a discount model they
47:10also want you to feel like you're
47:11getting a good deal and I think you see
47:12that as they iterate on store designs
47:14they still strive for that combination
47:16according to a study by hawk incentives
47:18when a customer feels like they're
47:20getting a good deal it can make them
47:22feel smart and in turn increase sales
47:24don't get distracted to Target don't get
47:26distracted at Target don't get this to
47:29oh I need that retailers always are
47:32looking for this balance of things that
47:33bring you to the store that you need
47:34like a gallon of milk and the things
47:36that you might buy in a whim that they
47:38actually make more money off of Target
47:40store design is one of several factors
47:42that have helped the retailer expand in
47:44recent years the business has grown more
47:46than 35 percent in the last two years
47:48Crossing 100 billion dollars in annual
47:50revenue driven in large part by the
47:52pandemic and a decision Target made five
47:54years ago to invest in its stores you
47:56know lots of retailers said hey Amazon
47:58is here let's stop building stores let's
48:00remodel what we have let's develop an
48:02e-commerce model let's invest in other
48:04things target has continued adding
48:06stores some of them tend to be smaller
48:08stores different types of formats while
48:10they've invested in e-commerce but they
48:11haven't completely pulled back on
48:13expanding their store account the
48:15retailer has over 1900 locations in the
48:17U.S which is smaller than Walmart but
48:19bigger than Costco around 75 percent of
48:22the US population lives within 10 miles
48:24of one of these stores so Target like
48:27lots of retailer established retailers
48:29big retailers has this huge benefit
48:31right now which is they have the stores
48:33already and you probably live pretty
48:35close to one and that's enabled them to
48:37say offer things online for pickup in
48:39the store parking lot which has been
48:41wildly successful for them during the
48:42pandemic because they have that store
48:44for you to go and pick up your online
48:45order at the majority of operations like
48:49in-store and curbside pickup and
48:50fulfillment for online orders get
48:52started in the back room of the stores
48:55it's been so interesting because they
48:56started to say like we're going to use
48:58our stores we're not going to build big
49:00you know e-commerce warehouses we're
49:02going to use our stores several years
49:03ago and there was a little bit of
49:05skepticism in the market because it
49:06didn't seem like you could really be
49:07that efficient in that model but in the
49:09end they say they've saved a lot of
49:11money because a they're not building a
49:13huge Warehouse which costs a lot of
49:14money up front and you know they already
49:16have the trucks coming to their stores
49:17with their goods and they're just using
49:19those stores to the maximum possibility
49:22last year Target's brick and mortar
49:24locations handled more than 95 percent
49:26of over 100 billion dollars in sales so
49:29walk around any Target and you're likely
49:31to see this operation in action workers
49:34move carts throughout the store
49:35Gathering and scanning items
49:38While others watch for cars pulling up
49:40and deliver their orders in effect
49:42Target hires workers specifically for
49:45its fulfillment operations
49:47the company calls this role a
49:48fulfillment expert they're either out on
49:50the floor collecting Goods off the
49:52shelves just like a shopper whether in
49:54the back room packing up things into
49:56boxes getting them labeled appropriately
49:58they're really more like warehouse
50:00workers and now the company is taking
50:02this a step further in an effort to
50:03bridge the gap between its stores and
50:05its delivery location doing these things
50:07called certation centers which allow
50:10them to basically have or orders from
50:13stores that are being packed up by
50:14fulfillment workers sent to that more
50:18central location but still kind of close
50:19to stores and then picked up and sent
50:22out from there Target success is also
50:25strongly dependent on the items in its
50:27stores at any given time about one-third
50:30of Target's inventory is exclusive to
50:32the retailer through private labels
50:33similarly designers will often partner
50:36with Target for a limited time capsule
50:39these capsule collections for Target are
50:41sort of marketing right it's a way to
50:43say hey we're High design big designers
50:46are interested in working with us so it
50:48gives them a little bit of that cachet
50:49these collections are nearly as
50:51fundamental to Target as its Bullseye
50:53logo in the late 90s top makeup artist
50:55Sonia kashik partnered with Target to
50:57create a professional makeup line at
50:59affordable prices 16 years later Target
51:01bought the line and today this line is
51:04only one of Target's more than 45
51:05private labels they have become huge
51:08brands for Target and they've added more
51:10and more and now it's a pretty
51:11significant percentage of their sales
51:13and private label like at all companies
51:15can be lower price for the consumer but
51:17more profitable for the retailer so
51:19there's a big interest for any retailer
51:21going in that direction according to a
51:23report by CB insights retailers can earn
51:2625 to 30 percent higher gross margins on
51:28private labels compared to manufacturer
51:30Brands target has yet to share the
51:32precise margin on its private labels but
51:35currently 11 of its brands are worth at
51:37least one billion dollars with four
51:39brand fans crossing the 2 billion mark
51:42while target has transitioned through
51:44many iterations since it got its start
51:45in 1962. changing store designs many
51:48times and acquiring businesses within
51:50its larger brand the company continues
51:52to evolve with the ever-changing
51:54they tend to kind of change
51:57strategy quickly when things aren't
51:58working and I think we see them in the
52:01middle of potentially another version of
52:02that because the consumer is changing so
52:04much right now but even as the company
52:06evolves some aspects remain the same I
52:09think the most consistent thing for
52:11target has been this image this idea
52:13that they're an elevated brand they're
52:15different than their competitors they
52:17have stuck with that since the beginning
52:18and they still really lean on it today
52:22this is a tiny home on Airbnb so far
52:25this year this listing has brought in
52:26over twenty thousand dollars for its
52:28host the typical U.S host in 2021 earned
52:31over thirteen thousand eight hundred
52:33dollars according to the company the
52:35tiny home doesn't cost a lot to build
52:36and yet it could charge hundreds of
52:38dollars a night Airbnb posted a profit
52:40in its second quarter as guests booked a
52:43record number of stays and experiences
52:44and hosts increase prices for rentals
52:47amid High inflation but people didn't
52:49book as much as analysts had projected
52:51and the company's summer bookings
52:53forecast fell short of expectations
52:55obviously it's an incredibly Dynamic
52:57period of time but I'm still expecting
52:59an incredibly strong period of travel
53:01even if people pull back spending some
53:03so how did the largest Home Sharing
53:05platform in the U.S navigate its biggest
53:07crises and could it borrow those lessons
53:09to weather fears of a recession this is
53:12the economics of Airbnb
53:14Airbnb started around the time of the
53:172008 financial crisis this was a time
53:20when people were really hard hit by the
53:23recession and they were looking for a
53:25way to make an extra buck in 2016 the
53:28company launched Airbnb experiences
53:30which led Travelers book classes tours
53:32and outings Airbnb also spent more as it
53:35grew the CEO branched out into all kinds
53:38of things like he wanted to have a media
53:40Studios he wanted to Branch into
53:42transportation and then the pandemic hit
53:44business was down 80 percent forcing
53:47Airbnb to take on two billion dollars in
53:49debt and pause all non-essential
53:51projects I hope I never do a side
53:53project again in my life I learned a
53:55lesson I think the lesson is when you
53:57try to do new things the side things
53:59they don't work summer of 2020 was a
54:01turning point for Airbnb people started
54:04quarantining with their families friends
54:06started taking staycations while they
54:08could work remote so that's something
54:10that definitely benefited Airbnb local
54:13travel became its strong hold and people
54:15started using the platform for longer
54:17stays the company was one of the hottest
54:19public listings of 2020 though its stock
54:21price has fallen since then amid a broad
54:23Market cool off in August Airbnb
54:26projected record third quarter revenue
54:28on the back of higher rental prices and
54:30said it expects to post its first
54:31full-year profit this year
54:34a lot of businesses have lucky moments
54:37but there's something to be said about
54:39getting lucky and also being able to
54:42ride that wave and capitalize on it
54:44that's what Airbnb says it has done from
54:46the start back then in 2008 a lot of
54:49people turned to hosting because they
54:50were losing their homes housing prices
54:52and a lot of people because they didn't
54:54have as much money were looking for more
54:56affordable ways to travel than ever
54:58before that really helped them bring a
55:01lot of people who were looking for ways
55:03to make up for lost income onto the
55:06platform and you can really see them
55:08capitalize on timing during the pandemic
55:10as well Airbnb redesigned its app and
55:12website to focus on local stays during
55:14the pandemic last summer it launched a
55:17flexible search feature which curates
55:18trips for people who don't know where
55:20they want to go the pandemic and remote
55:22work gave us that flexibility you know
55:24we could travel during the week and
55:26still work remote so Airbnb starts
55:28noticing this trend and it says oh my
55:31God we can you know we can sort of
55:34utilize on this and they do in May
55:36Airbnb launched another redesign of its
55:38Search tool that split homes into more
55:40than 50 categories as a way to steer
55:42people to places they wouldn't otherwise
55:44have picked so what they're trying to do
55:46is they're trying to fill existing homes
55:48instead of adding more and more homes
55:50some analysts say this is key to the
55:53company's future growth since Global
55:55occupancy rates are low
55:57when it comes to addressing safety
55:59issues on its platform some cities have
56:01complained that Airbnb has been too
56:03hands off they're not actively
56:05monitoring these properties because
56:06frankly they can't they don't own them
56:08so that's really where a lot of their
56:10problems stem from four people killed
56:13another fur heard all of it happening in
56:15a house rented out on Airbnb after a
56:182019 Halloween shooting the company
56:20announced safety measures including a 24
56:227 neighborhood hotline to field
56:24complaints we've banned all parties
56:27globally on Airbnb we have a risky
56:29reservation queue where we're looking at
56:31any suspicious activity and we have a
56:33pretty Hands-On team that's using some
56:35pretty Advanced like machine learning
56:37technology to essentially identify
56:39anything we think is suspicious if it is
56:41we'll continue to seek more information
56:43the company says the number of Party
56:45complaints have dropped 44 percent in
56:47the last two years Airbnb has also been
56:49trying to reduce that rate further by
56:51doing things like blocking one or two
56:53night stays on New Year's Eve and
56:54Halloween for guests without a history
56:56of positive review use but instance keep
56:59happening earlier this year we had a
57:02shooting in Pittsburgh and again you
57:05know people were injured City officials
57:07have also blamed Airbnb for ruining the
57:10long-term rental market in some small
57:12communities what's happened is a lot of
57:14people are just snapping up properties
57:15and renting them and as a result locals
57:19don't have enough properties to rent
57:21long term Airbnb doesn't think that it's
57:24actually affected the long-term rental
57:27market but you know if you ask uh City
57:30officials they have a different story
57:32for example in 2020 the mayor of Sedona
57:35Arizona a tourist hotspot said that the
57:37demand for Airbnb rentals worsened the
57:40shortage of affordable housing and
57:41demolished the long-term rental market
57:43if we are you know part of the problem
57:46we are going to work with cities we've
57:47that's why we've done numerous
57:49agreements of cities to create
57:51restrictions we actually do want Airbnb
57:53to get more and more into long-term
57:55housing we want people to really feel
57:56invested in Community one of the things
57:59that Airbnb is doing now is it's trying
58:02to direct people to areas where it has
58:06Supply and that sort of also takes the
58:08load off of certain places that that
58:11everyone might go to and that might get
58:14sort of overburdened in April Airbnb
58:17announced that its employees can work
58:19from almost anywhere without a pay cut
58:20so if more businesses do follow airbnb's
58:24Airbnb stands to gain in its home rental
58:27business because that would mean more
58:30digital Nomads more people traveling and
58:33likely booking more airbnbs but some
58:35Travelers are concerned about Rising
58:37nightly rates and some analysts believe
58:39that hotel chains and competitors like
58:41Expedia group stand to gain as business
58:43travel picks up this year so the
58:45question is can Airbnb keep up the
58:47momentum we're an incredibly lean
58:49company we've already been preparing for
58:52a storm that what we thought was
58:53inevitable for years to come Airbnb
58:56dramatically cut costs during the
58:57pandemic and analysts have credited the
58:59company for keeping those down even as
59:01travel rebounded while a potential
59:03economic downturn could decrease demand
59:05Airbnb says it could also bring more
59:08hosts to the platform as the economy is
59:10going to be slowing down I think more
59:11and more people are going to be
59:12interested in saving money and I think
59:14they're also going to be interested in
59:15new ways to make money and unlike hotels
59:21fixed lighting properties that serve
59:22Travelers changing needs like it did
59:24during the switch to local travel I
59:26think even as we're entering recession
59:28people have been kind of isolated for
59:30years and they're yearning to get out
59:31and the one thing I think you're going
59:32to see them spend money on is they're
59:34going to continue to travel
59:36if you've ever seen a commercial for the
59:38Home Depot you might be familiar with
59:40this tune it's a good time to be a doer
59:43Home Depot and its theme song have
59:45inspired a wave of videos on social
59:49revealing its cultural status as the
59:52go-to Home Improvement store for many
59:55Home Depot is the world's largest Home
59:58Improvement retailer with over 2 300
01:00:00stores across North America what we've
01:00:03seen is home price appreciation and
01:00:06housing activity at unprecedented levels
01:00:09and what we know is that when homes
01:00:11become more valuable those homeowners
01:00:13are more willing to spend on them with
01:00:15its 2021 fiscal year sales larger than
01:00:18both Lowe's and Ace Hardware combined
01:00:20one of Home Depot's biggest advantages
01:00:22is its foothold in the professional
01:00:24customer space that is electricians
01:00:26remodelers plumbers and other Home
01:00:28professionals that place more lucrative
01:00:30orders so how exactly has Home Depot
01:00:32attracted more professional customers
01:00:34and what other strategies have helped it
01:00:36become a leader in the Home Improvement
01:00:40this is the economics of Home Depot
01:00:43walk into a Home Depot you'll see a huge
01:00:46floor space dozens of long aisles with
01:00:49everything from screws and other
01:00:51Hardware to tools to major appliances
01:00:53garden supplies doors windows toilets
01:00:56really anything you need for a home
01:00:58improvement project a typical Home Depot
01:01:01store stocks about thirty thousand to
01:01:03forty thousand items throughout the year
01:01:04most locations are around one hundred
01:01:07four thousand square feet the scale of
01:01:09the store gives customers the
01:01:10opportunity to buy raw materials in bulk
01:01:13and pick up items quickly they try to be
01:01:15somewhere that you can go if you're just
01:01:17an individual trying to fix up something
01:01:20in your kitchen they also try to be a
01:01:22place that you can go if you're a
01:01:24contractor trying to buy lumber to help
01:01:27renovate somebody's home or if you're a
01:01:29plumber that needs all kinds of pipe
01:01:31fittings so they really try to be a good
01:01:34source on both sides of that equation
01:01:36Home Depot began when co-founders Bernie
01:01:39Marcus and Arthur Blank were fired from
01:01:41a home improvement company called handy
01:01:43dance they wanted to launch a store that
01:01:45would be significantly bigger and
01:01:47cheaper than competitors in 1979 they
01:01:50opened their first two Home Depot
01:01:52locations in Atlanta the Home Depot the
01:01:55founders had a vision for a home
01:01:56improvement retailer that could be a
01:01:58One-Stop shop for the DIY or do
01:02:00do-it-yourself customer you've never
01:02:02seen anything like it the Home
01:02:04Improvement customer to us is unique
01:02:06they're a doer that's where that word
01:02:07comes from since its founding Home Depot
01:02:10has grown into a multi-billion dollar
01:02:12company that increasingly caters to the
01:02:14professional contractor as well as the
01:02:16DIY consumer while many Industries like
01:02:19service and Hospitality took a hit
01:02:21during the pandemic Home Depot's Revenue
01:02:23continued to grow the pandemic fueled a
01:02:25boom in the Home Improvement industry as
01:02:28people spent more time and money on
01:02:30remodeling projects but between middle
01:02:32of 2020 in the middle of 2021 there were
01:02:35four straight quarters where Home Depot
01:02:37grew its sales by more than 20 percent
01:02:39year over year which is a very fast pace
01:02:41for a large established company Home
01:02:43Depot says they are seeing increasing
01:02:45demand for professional projects as
01:02:47people feel comfortable inviting
01:02:48contractors back into their homes
01:02:50there's been this buildup of projects
01:02:54that require professionals that more
01:02:57recently people have been willing to get
01:02:58to and that's sort of led to a second
01:03:00wind of sales growth what kind of person
01:03:03would come here at 5 45 a.m well there's
01:03:08Carly a carpenter Home Depot has
01:03:11positioned itself to attract more
01:03:13business from these contractors and home
01:03:15professionals particularly ones that
01:03:17place big orders everything we do
01:03:21in the 2021 fiscal year about 50 percent
01:03:24of its sales came from Pro customers
01:03:26even though they made up less than 10
01:03:28percent of its customer base in
01:03:30comparison about 20 to 25 percent of
01:03:33Lowe's total sales come from Pro
01:03:35customers according to the company as a
01:03:37key part of its Pro customer strategy
01:03:39Home Depot has invested 1.2 billion
01:03:42dollars in expanding its supply chain
01:03:44and distribution Network the company
01:03:46says it is building 150 new distribution
01:03:49centers to help speed up the
01:03:50replenishment of store shelves and
01:03:52quickly deliver purchases to customers
01:03:54doors each facility with some as large
01:03:57as about 14 professional football fields
01:03:59can hold a huge amount of inventory and
01:04:01deliver orders directly to a project
01:04:03site one thing we know that's important
01:04:06to our Pros is delivery of product to
01:04:08the job site we've shifted our model to
01:04:11a network of nearly 150 distribution
01:04:13centers that are engineered to deliver
01:04:16those big and bulky products that are
01:04:18unique to the Home Depot and unique to
01:04:19the pro think Lumber think doors think
01:04:22Windows think vanities we're designing a
01:04:24network that will deliver those goods
01:04:27same day or next day to 90 percent of
01:04:30the population in our Market the Home
01:04:32Improvement Giants distribution network
01:04:34works in tandem with their online
01:04:36strategy giving Pro customers more
01:04:38flexible options that better align with
01:04:40busy schedules we're one of the largest
01:04:42e-commerce retailers in the country by
01:04:44volume when people come to pick up
01:04:46orders from our lockers or from our
01:04:48service desk they often shop for more
01:04:51products in the store and so that's an
01:04:53economic flywheel that our website
01:04:55creates for our company these
01:04:57possibilities have really helped the
01:04:58company grow its sales quite a bit over
01:05:00the last two years sales from e-commerce
01:05:03channels have gone up by about a hundred
01:05:05percent so basically doubled though Home
01:05:07Depot has seen a long period of
01:05:09consistent Revenue growth the Home
01:05:10Improvement retail space remains a
01:05:12competitive and fragmented Market this
01:05:15is a space where customers are very
01:05:18sensitive to prices so if one brand is
01:05:22charging a higher price for a certain
01:05:23type of equipment that's something that
01:05:25buyers could pick up on and could easily
01:05:27shift to another retailer so Home Depot
01:05:29is definitely very sensitive to other
01:05:32big chains to smaller mom and pop stores
01:05:34the industry is also sensitive to
01:05:37economic fluctuations especially with
01:05:39spending Trends tied to the housing
01:05:41market going back to the Great Recession
01:05:43and the financial crisis 10 years ago
01:05:45that was a very difficult time for Home
01:05:47Improvement retailers a turbulent period
01:05:50for Home Depot in the last couple years
01:05:51during the pandemic that housing
01:05:53Market's been very strong certainly a
01:05:56company that would be in a very
01:05:58different position if there was some
01:06:00kind of big downturn in the housing
01:06:02market in general
