Less warehouse space is being rented but rates still high | June's 2.3% jump in factory orders driven by transportation | Ferguson expands services with 3 acquisitions
Industrial vacancy rates have increased from 3% in late 2022 to 4.1% in the second quarter of 2023, per Cushman & Wakefield, but that hasn't precluded rental rates across the US to increase 16.1% between the second quarter of 2022 and the same period this year to average $9.59 per square foot. Experts say the gap between demand and rates is the product of numerous factors such as ongoing tight space availability, the rising number of manufacturers using warehouses and new space that's being offered at premium rates.
Factory orders increased 2.3% in June following a 0.4% increase in May, with total orders jumping 0.9% year over year, according to the Commerce Department. Durable goods orders increased 4.6%, fueled by a 12% increase in transportation equipment, and shipments of manufactured goods ticked upward by 0.1% last month while inventories were unchanged.
Ferguson announced the acquisition of plumbing distributor Bruce Supply, HVAC distributor S.G. Torrice and waterworks distributor Kennedy Cos. this week, with the trio adding roughly $450 million in aggregate annual revenue. "All three companies have great reputations and associates with strong local customer relationships that will help fuel our future organic growth," said Ferguson CEO Kevin Murphy.
Initial US jobless claims ticked upward slightly last week, increasing by 6,000 to 227,000, according to the Labor Department. Layoffs in July hit an 11-month low and unemployment remains near its lowest levels this year.
SpartanNash is leaning into its Our Family and OwnBrands lineup as consumers search for high-quality, lower-priced groceries, according to CEO Tony Sarsam. "If it's a good value and it's a great product, then you're more likely to go back," Sarsam said, adding "We think we'll hold onto those gains." Although average weekly grocery spend shrank to $155 in June compared to $164 February, 70% of shoppers are very or extremely concerned about rising supermarket prices, according to a recent report from FMI -- The Food Industry Association.
United Natural Foods has partnered with Crisp to create UNFI Insights, which offers suppliers merchandising and marketing insights based on sales and inventory data. The platform, "includes a suite of new, exclusive data sets and dashboards, which include distribution expansion, category analysis and spoilage risk," said John Raiche, UNFI's executive vice president of supplier services.
A dramatic increase in technology and partnerships will help advance supply chain efforts, especially in retail, writes Jonathan Finch of Daymon, who notes that "the process of placing purchase orders followed by scheduling the pickup and delivery ... is largely a manual process for many." Finch adds that "[d]igitization is a necessary evolution to not only generate efficiencies, but to streamline communication and reduce errors."
To increase resilience and competitiveness, mid-size consumer packaged goods companies should diversify their sourcing, bring it closer to growth areas and look into third-party services that can "allow companies to explore new-to-world ideas without making massive capital investments or experiencing high depreciation," OpsB Consulting President Arturo Murakami writes. Murakami details five checkpoints to consider, including strategic alignment and capacity planning.
Lumen research commissioned by Dentsu found that audio ads generated 41% correct brand recall, compared to Dentsu data of 38% for other ad types (mostly video), and spurred more than 50% higher attention, versus the Dentsu data. Additionally, audio ads generated a 10% positive impact on brand choice metrics, compared to 6% for other formats.
Leaders need to have a clear vision and be a competitive, high performer, but they also can't neglect the skills of self-awareness and empathy, says John Schlifske, CEO of Northwestern Mutual, who admits he struggles with those latter traits. "You have to balance the notion of empathy with the notion of the greater good and what you're trying to accomplish," Schlifske says.
Real GDP growth is expected to decelerate to 0.7% in 2023 before increasing to 0.9% in 2024, according to a new forecast by The Conference Board. The US economy will enter a recession in 2023 and experience three straight quarters of contraction, The Conference Board writes.
