College Education - Loosing Ground!
Our Kids Aren’t Doing As Well As We Did!
Lack of Completion
Percent of Utah’s Population, by county, who
hold at least a bachelor’s degree
Salt Lake County
Source: U.S. Bureau of the Census, 2000, Utah
System of Higher Education, Analysis by Janice
Western retailers shift their supply chain
tasks to China
Impact on Freeport?
Impact on Multi-Modal
Impact on DDO?
Retailers and consumer goods companies in the
developed world are increasingly shifting logistics
operations from their home countries to China.
Goods are sorted, labeled and even placed in
displays for direct shipment to individual stores before
leaving Chinese ports.
Shipping lines, logistics companies and
warehouse operators say costs spur customers to
move the sorting process away from consuming
countries, continuing the outsourcing trend to lower
wage economies that began with manufacturing
going to China.
The process is known as "distribution center
bypass" because it cuts out distribution centers in the
Logistics companies and those using the system
tend to be wary of publicity but the UK's Next, a fashion
retailer, is known to do much of its sorting for delivery
at ATL Logistics in Hong Kong, a distribution
warehouse owned by Dubai's DP World. Goods are
packed into containers in the right quantities and right
order to take direct from a UK port to individual shops.
Distribution jobs were once thought least likely to
go overseas because it is complex to arrange
supplies of goods for stores in the right quantities.
Vera Tang, general manager for corporate
development of Hong Kong-based Kerry Logistics,
expects growth in the next few years to be "huge" as
so many companies still run expensive distribution
centers at home.
"You can imagine - in those high-living-standard
countries like Scandinavia - if we can replace what
they are doing at the destination with a similar
operation at origin, the percentage [saving] can be
Among Kerry clients using distribution center
bypass are a New Zealand-based lingerie maker and
department store chains in the US, Spain and Chile.
In Chile's case, she said the company shifted
logistics operations abroad not primarily for cost
reasons but because Chinese workers were more
Companies not phasing out distribution centers at
home are cutting handling costs by paying for
processing in China. Boxes of goods for Tesco's UK
supermarkets from NYK Logistics in Shanghai are
shrink-wrapped in quantities needed by each store to
reduce UK handling.
Source: The Financial Times, London 2007
Building a top consumer goods sales
(Local governments and public entities are in
the “consumer goods” business even though most do
not recognize it, and even fewer think about public
outreach as “sales”!)
(The following article in another that Mayors and
Public Administrators can simply make an appropriate
substitute for “companies” and find some good
Although most of these companies have recently
revamped their sales organizations, only a few
managed to achieve higher sales and lower costs.
Pressured by a smaller, more sophisticated, and
increasingly demanding group of retailers, upward of
three-quarters of North American consumer goods
manufacturers have reorganized their sales forces
since 2002, a survey finds (Exhibit 1). Yet only a
handful of these manufacturers have gained market
share during this period without incurring higher
selling costs. An examination of the sales force
winners highlights three ways in which top
manufacturers distinguish themselves and suggests
that the talent-management approaches many
manufacturers use are not sufficient to achieve
These insights are among the principal findings of
the 2005 McKinsey Customer and Channel
Management Survey of 29 leading North American
consumer goods makers, which together represent
some 30 percent of the industry's sales. This survey,
the seventh in a series begun in 1978, was
undertaken in partnership with AC Nielsen and the
Grocery Manufacturers Association.
We defined sales force winners as companies
with top-quartile market share growth, by revenue,
relative to their peers in the same category. On
average, the eight companies in this group increased
their share by more than 4 percent from 2003 to 2004,
while the others' share fell by nearly 2 percent.
Meanwhile, the winners' selling costs, trade spending,
and marketing costs, taken together, were 20 percent
lower than those of the other manufacturers.
In helping to achieve these results, three practices
stood out. First, the top sales organizations
concentrated more resources on a smaller—and
more thoughtfully selected—pool of retailers than the
typical manufacturer did. They served half as many
customers through key-account teams, on average,
than other manufacturers—yet appointed almost a
third more people to each team (Exhibit 2). That kind
of focus is crucial because the top US national and
regional retailers (such as Wal-Mart Stores) are
growing much faster than their competitors; for
manufacturers, this development means that sales
are now concentrated in the hands of fewer and fewer
customers.4 Indeed, in our experience, the largest US
consumer goods makers commonly rely on just 10 to
15 customers for 50 to 80 percent of their sales,
depending on their mix of categories.
Another way the winners concentrated their
resources was to use third-party sales and
merchandising agents more actively than other
manufacturers did. Many top sales forces, for
example, increased their use of such agents to
undertake lower-value back-office activities such as
order processing (43 percent for the winners versus
12 percent for the others) or in-store merchandising
(71 percent versus 18 percent, respectively).
The second way top consumer goods
manufacturers excelled was in organizing their key-
account teams along cross-functional lines so that
they could better serve the retailers, whose demands
on manufacturers, we find, increasingly extend into
areas such as customized packaging, shopper
marketing (activities, inside and outside stores,
undertaken to influence the way consumers shop),
and even product development. The sales force
winners' teams were more likely than those of other
manufacturers to include not only sales personnel but
also experts in category management, customer
marketing, finance, and supply chain operations. By
contrast, more than half of the other manufacturers
populated their teams exclusively with salespeople
and category managers.
Third, the sales force winners actively customized
their services to meet the needs of individual
retailers—in part by collaborating more intensively
with key accounts than other manufacturers did. The
winners not only called on key retailers more often but
also said that they had taken greater pains than
others to send their most talented sales and
customer service employees to work with these
clients. Further, the collaboration was more likely to
extend to the executive suite: all the best
manufacturers held planning meetings between their
top executives and those of the retailer, compared with
some 70 percent of the others. This point is crucial,
we find, because such collaboration dramatically
raises the likelihood that teams will succeed in
creating the differentiated service offerings retailers
increasingly demand. We also discovered that sales
force winners were more likely to plan—and carry
out—customized in-store research on shoppers, to
collaborate on the development of new products, and
to create customized packaging for key retailers
These findings support the view—confirmed by
our experience—that the level of talent a manufacturer
brings to bear on an account will be more and more
important. Indeed, we find that the role of key-account
managers is shifting. Traditionally, relationship
managers focused solely on sales, but now they are
becoming true general managers, with more wide-
However, the survey's findings also suggest that
many consumer goods executives aren't managing
their talent as rigorously as necessary. Sales force
winners review their salespeople carefully and
regularly—two-thirds hold reviews quarterly or
semiannually, and the rest at least annually. The
others are far less diligent; in fact, one-third of them
conduct no reviews at all. As the relationship between
suppliers and retailers continues to evolve, and the
demands on manufacturers increase, world-class
talent management is one way a top sales force can
differentiate itself from the pack.
Source: McKinsey & Company, 2007
This Weeks Leads:
- Eye Candy, Legends and Sports Fan
- Sports Fan / Legends, Inc. trades as Eye Candy,
Legends and Sports Fan.
- The 14-unit chain
operates locations throughout DE, LA, MD, NC, SC
- The sporting goods stores occupy
spaces of 1,200 sq.ft. to 4,000 sq.ft. in malls.
- Growth opportunities are sought throughout MD,
NC and VA during the coming 18 months.
leases run seven years.
- Mail site submittals to:
- Glenn Ferraro,
- Sports Fan,
- Newport News,
- Hard Rock Café
- Hard Rock Café International, Inc. trades Hard
Rock Café at 125 locations nationwide and
- The restaurants occupy spaces of
6,500 sq.ft. to 8,000 sq.ft. in urban / downtown areas
as well as resort cities.
- Plans call for 15 to 20
openings nationwide and internationally during the
coming 18 months.
- Typical leases run 10 years.
- Send site submittals to:
- Oliver Munday,
- Hard Rock Café International, Inc.,
- 6100 Old
- Orlando, FL 32835;
- Web site:
Corrected - Thanks to Dave in LA! Proof
reading has never been my strength!
April 2nd Monday Report - College
Education - Loosing Ground!
- Lack of Participation
- Lack of Completion
- Our kids aren't doing as well as we did!
- Are we just kidding ourselves about clean, high
Blight? Economic Development? Jobs?
Developers asking for too much?
- Interested in what the Utah Legislature did to
Bonneville Research has prepared a short and
understandable presentation that can answer these
- If you are a city wondering how to “turn a problem
area around” – give us a call!
- If you are wondering how to create an effective “a
public/private partnership” – give us a call!
- If you are a city worried that you're “getting
gouged” by a developer asking for incentives – give us
- If you are a developer wondering how to make a
marginal project work – give us a call!
- If you are a city wondering how much TIF and
sales tax revenues might be available – give us a call!
- If you are a city worried that the newly
proposed "big box" is going to force your local
business to close – give us a call!
Bonneville Research would like to help you with
|Throwing Seniors into the Mix
Mixed-age Mixed-use Projects
With the rising popularity of mixed-use projects,
some developers are betting that the aging of the U.S.
population will create a demand for senior-themed
One company making a big bet on the concept is
Inland Real Estate Development LLC, which is
teaming up with HPD Cambridge, LLC to create a
series of senior-themed mixed-use complexes valued
at $55 million (Inland will be financing the entire
undertaking). The two firms have committed to
building four vertical mixed-use buildings in Illinois
that will target people in their 70s and 80s.
Called “urbanSenior Living” developments, the
properties will feature seniors apartments stacked
atop street-level retail and restaurant space that will
serve outsiders as well as apartment residents. The
idea is to create projects with amenities that will
appeal to seniors, but also connect to the surrounding
neighborhoods by being located in downtown districts
of Chicago suburbs LaGrange, Elmhurst, Clarendon
Hills and Lombard, notes Anthony A. Casaccio,
president of Inland Real Estate Development.
This option will be an additional draw for Inland’s
developments as the Baby Boomer generation comes
of age. Numbering 78.2 million and possessing
collective purchasing power of $2.1 trillion annually,
according to the MetLife Mature Market Institute, these
seniors are expected to maintain an active lifestyle
long after their retirement.
“For a lot of senior housing communities, their
focus is on providing the amenities and recreation
activities,” Casaccio says. “Our projects are designed
to allow [seniors] to leave. They will still get to live
with a variety of people their own age, but they won’t
feel set aside because they will be in a downtown
area and will be able to mingle with people of all
When completed, the complexes will contain a
total of 144 apartment units and 32,000 square feet of
retail and restaurant space. Besides the minor
adjustments in design, all four buildings will feature a
full-service restaurant that will be accessible from the
residential tower and will give preferential treatment to
the seniors living at the development. The first of the
four complexes, the 30-unit La Grange Pointe, will
break ground this spring. Construction on the other
three will start this fall.
Inland has not yet signed any leases for the retail
portion of the development, but according to Casaccio,
the firm is not targeting companies that only cater to
seniors. Part of the plan is to have tenants that will
appeal to both seniors and younger shoppers.
One idea could be lifestyle retailers like apparel or
furniture stores, which are particularly popular with
both retirees and younger consumers, according to
Lydia Tan, executive vice president with Bridge
Housing Corp., a developer of senior housing
communities. Bridge is currently working on a bid to
create a mixed-use senior housing project in Foster
City, Calif. that will include from 400 to 600
independent and assisted living units and up to
90,000 square feet of retail.
“We have an independent living project nearby and
we asked the residents what they wanted in terms of
retail and they mostly wanted lifestyle uses,” Tan
notes. “The most important thing for us is to
encourage seniors to be part of the activity on the
street and encourage the folks who will be using the
retail to linger and stay and become a part of the
Most mixed-use projects aimed at seniors will
provide some services for their residents, including
transportation to and from entertainment events,
doctor’s appointments and help with errands. But
Inland and HPD are not going into care giving. The
venture will stay away from doing assisted living
facilities because of the extensive licensing required
for such projects. Instead, the company will consider
additional opportunities to work on independent living
quarters, where the minimal increases in construction
cost for things like wider entrances and more opulent
common areas are easily offset by the market
demand from aging Baby Boomers.
“I believe that with the trend of people living longer
and seniors representing a much higher percentage
of the buying population, we will continue to do such
developments,” Casaccio says.
In addition, there are several projects around the
country that are creating enclaves for seniors within
larger mixed-use developments, including one
currently being built in Seattle by locally-based Era
Living that will include 143 senior housing units as
part of a broader development by Lorig Associates
involving a 14-screen movie theater, more than 250
market rate apartments, 109 condominiums, 62,000
square feet of ground floor retail and a water park. The
senior community and Lorig’s property will be
connected to each other by a series of walking paths.
Thornton Place, a retirement living community for
people 62 and older, will be the first Era Living
development to be a part of a ground-up mixed-use
“We love the idea of having the mixed-use
environment because our residents are very active, so
clearly having a life outside of the community is very
important,” says Gena L. Owens, vice president of
marketing and sales with the company. “We would
definitely seek this out again."
“We used to do that many years ago, but then we
began to wonder why we were taking people of that
age away from the grocery store and the hair salon
and all the conveniences [they were used to],”
Sanders says. “These projects have to be pedestrian
friendly, that’s ideally suited for seniors because there
are so many things you can do without relying on
Source: Retail Traffic, 2007
|Top Ten States - Housing Price Index & Mortgage Delinquency
Top Ten States by House Price
Qtr 4 2006, annual % change
- Utah +17.55%
- Wyoming +14.29%
- Idaho +13.99%
- Washington +13.70%
- Oregon +13.49%
- New Mexico +13.08%
- Louisiana +10.87%
- Montana +10.72%
- Arizona +9.60%
- Mississippi +9.59%
Top Ten States by Mortgage
% of all loans with installments past
- Mississippi 10.64%
- Louisiana 9.10%
- Michigan 7.87%
- Indiana 7.76%
- Georgia 7.49%
- West Virginia 7.44%
- Texas 7.41%
- Tennessee 7.29%
- Ohio 7.25%
- Alabama 7.14%
We all know about Hurricane Katrina and
Louisiana and Mississippi!
What does this mean for all of the Intermountain
and North West?
Source: Financial Times, 2007
- International Business Confidence
- Business confidence has notably improved in
recent weeks and is currently as high it has been
since early August of last year. Sentiment is now
consistent with global growth that is equal to its
potential. Expectations regarding the economy’s
prospects have improved most significantly, but
respondents are more upbeat with regard to all of the
survey questions. Businesses are reporting that their
fixed investment and hiring has picked up recently and
that the modest manufacturing inventory drawdown is
largely over. Sentiment is strongest in South America
and Asia and among high-tech firms; it is softest in
Europe and among vehicle manufacturers.
- US profits fall
- Profits at US companies were down in the last
three months of 2006, the first quarterly fall since the
third quarter of 2005.
- US economic growth better than
- The US economy grew at faster pace than
previously thought last quarter, according to fresh
government figures, reaching a rate of 2.5% in the
- Annualized real GDP growth in the fourth quarter
saw an upward revision, to 2.5%, from the preliminary
2.2% estimate last month. There was an upward
revision to inventory investment that increased
reported GDP growth, with a smaller offset from a
downward revision to investment in equipment and
software. Profits from current production fell $4.9
billion from the third quarter to the fourth. The
expansion is intact, but growth remains below
- US Durable goods weak
- Orders for U.S.-made big-ticket items were
weaker-than-expected in February as the world’s
richest economy hit hard by troubles in the housing
sector set off the year at a slower pace, a government
report on Wednesday showed. New orders for U.S.-
made durable goods rose a smaller-than-expected
2.5 percent in February and, excluding volatile
transportation, orders for these costlier goods meant
to last more than three years, were down for the fourth
time in the last five months.
- Existing Home Sales
- Existing home sales increased again in February,
according to the Realtor’s data. Sales of existing
homes increased by 3.9%, with the pace of sales up
to 6.69 million units in February. House prices are
down 1.3% from a year ago, and the months of
inventory rose slightly to 6.7 months.
- New Home Sales (C25)
- New home sales are well below expectations for
February. The pace of sales decreased by about 4%
m/m to 848,000 annualized units. Moreover, Census
revised downward sales during the previous three
months. Months of inventory jumped up to 8.1 months.
The median price is down slightly from one year
- MBA Mortgage Applications Survey
- Mortgage demand decreased 0.2% in the week
ending March 23. Purchase applications increased
0.1% and refinance applications decreased 0.5%. The
market is flat and dampening domestic growth. The
unadjusted purchase index also remained at last
- Investor Optimism
- Investor optimism continues to head south. In
March, the UBS Index of Investor Optimism chimed in
at 78, down from 90 the month prior. Although large
month-to-month fluctuations are common, the index
has surrendered 25 points since January and is at its
lowest level since September 2006. The unraveling in
the subprime mortgage market has investors
concerned about conditions in residential real
- Chain Store Sales
- Chain store sales rose a modest 0.2% in the
week ending March 24. The latest gain comes on the
heels of a 0.4% increase the week prior. Year-over-
year growth improved to 4.6%, a two-month high.
Warm weather and Easter promotions reportedly
supported sales and customer traffic in the latest
- Personal Income
- Personal income increased by 6.3% in 2006,
following a 5.2% increase in 2005, according to
preliminary estimates by the U.S. Bureau of Economic
Analysis. All eight BEA regions registered solid
accelerations in personal income growth over the
year. In the fourth quarter of 2006, U.S. personal
income grew by 1.2%, the same rate at which it grew
in the third quarter.
- Oil and Gas Inventories
- Crude oil inventories fell by 0.9 million barrels for
the week ending March 23, according to the Energy
Information Administration, far below expectations of a
1.6 million barrel build. Gasoline stocks declined by
0.3 million barrels, which contrasts with expectations
of a 1.8 million barrel draw. Refinery activity inched
higher. Distillate inventories fell 0.7 million barrels,
which was not as much as the 1.2 million barrel draw
expected. Today's mixed report will not significantly
alter the current bullish sentiment on oil.
- Weekly Natural Gas Storage Report
- Underground storage of natural gas decreased by
22 billion cubic feet during the week ending March 23.
This was slightly more than the expected draw of
about 16 Bcf. Inventories are now 21.5% above the
five-year average. This report will add some bullish
pressure to prices.
- Durable Goods (Advance)
- New orders for durable goods rose 2.5% in
February, following a 9.3% decline in January. Despite
the uptick in the headline number, the report was
weak again. Shipments fell 0.8%—the second
monthly decline. New orders for core capital goods fell
1.2%—the second consecutive monthly decline.
- Agricultural Prices
- The March All Farm Products Index of Prices
Received by Farmers increased 3.9% from February
and is 18% higher than in March 2006. The Crop Index
jumped 4.3% in the past month, while livestock prices
rose a similar 4.2%. Producers received higher prices
for cattle, lettuce, oranges and broilers, while
strawberries, celery, corn and hogs fetched lower
prices. Food commodities were up slightly more than
the all-farm index, rising 4.7% for the month and 19%
over the past year. Prices paid by farmers increased
1.3% in March, with higher prices being paid for feed
concentrates, feeder cattle, diesel fuel and complete
feeds. Farmers paid less for feed grains, trucks,
tractors and autos.
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