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| Hello Insiders!! Today's Business newsletter covers: - 🚗 Tesla, Saudi Arabia discuss EV factory
- 🛒 Deep Dive: Shopping in person: Worse than ever
- 🛍️ Survey: Luxury shoppers want deals
If you enjoy reading this newsletter, please share it with your friends and colleagues. If there's a topic you want to see discussed in the newsletter, let us know! Thank you!! Shriram
p/Shriram | |
| 1 | | According to the WSJ, Saudi Arabia and Tesla are now having early conversations about developing an EV production facility in the country. These negotiations, which aim to diversify Saudi Arabia's economy by securing metals for the construction of electric vehicles, are still in the early stages and may run into obstacles given Elon Musk's tense relationship with the Saudis and their current affiliation with a Tesla rival, Lucid Group. More: - A cobalt and copper project in the Congo that may supply a Tesla factory in Saudi Arabia is one proposal that calls for providing funds for commodities trading giant Trafigura.
- Tesla hopes to sell 20 million vehicles annually by 2030, so a partnership with Saudi Arabia would be beneficial.
- The Saudi Public Investment Fund, which owns most of Lucid, is beginning small-scale vehicle reassembly at its Saudi facility to produce 150,000 cars annually.
- Tesla has ambitions to increase the size of its manufacturing footprint, and new factories may be announced soon.
Zoom Out: - According to the nation's communications directorate, Turkish President Tayyip Erdogan requested Tesla CEO Elon Musk establish a Tesla factory in Turkey.
Q: Do you think Tesla can achieve its ambitious goal of selling 20 million vehicles annually by 2030? Join the conversation here. |     | |
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What the numbers say: The retail sector, which experienced pandemic-related layoffs, is still struggling. From 2019 to 2022, employees per store decreased in major stores like Macy's, Kohl's, Abercrombie & Fitch, Gap, and Best Buy. Despite a 12% reduction in retail sales workers overall, TJX grew employees per store by 8%, and Costco and Target increased their workforces by 32% and 15%, respectively. Self-checkout systems, smaller shop designs, and anti-theft precautions, including locked cases and item relocation, contribute to this transition. Relevance: Retail is impacted by a reduced workforce and rising wages, which could result in less effective product security measures like locked items and worse customer service standards. Although companies are looking toward more intelligent staffing, diminishing profitability and bad in-store experiences may push customers to rival stores or online retailers like Amazon. More data: Retail wages for nonsupervisory employees increased by 24% since July 2019 to $20.54 per hour, but locking up goods can reduce sales by 15–25% depending on the purchase, according to data from AlixPartners, which shows tripled e-commerce penetration along with 50% lower listed retailer margins amid headcount cuts that could cause sales to shift online. | | | |
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| 3 | | According to a Saks Fifth Avenue survey, 58% of respondents, up slightly from the previous study, want to spend the same amount or more on luxury products in the upcoming months. This outlook for spending is nevertheless lower than the 68% of respondents in September of the previous year who anticipated keeping or increasing their luxury expenditures. More: - The survey revealed the holiday season will likely be busier than in recent months but less active than the post-pandemic surge from 2020 to 2022.
- According to Marc Metrick, CEO of Saks Fifth Avenue's online operations, Luxury customers are becoming more value-driven, with 75% of respondents ready to wait for a luxury item they like to go on sale.
- Saks will exercise caution when running online sales because some premium goods are rarely discounted to uphold the brand's reputation.
- Metrick remarked, "The current trend is probably not that different from five years ago, but it's different from about two years ago."
- In late July, Saks conducted a study with 1,836 U.S. residents over 18.
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| 4 | | Morgan Stanley has introduced AI@Morgan Stanley Assistant, powered by OpenAI's GPT-4, to aid financial advisors and their teams, ushering in the era of generative AI in the finance industry. This AI assistant grants advisors swift access to a vast repository of around 100,000 research reports and documents, streamlining their operations and enabling more efficient client service, reflecting Morgan Stanley's belief in the transformative potential of generative AI in client interactions and advisory practice efficiency. More: - Competitors like Goldman Sachs and JPMorgan Chase have also revealed projects based on generative AI technology, but Morgan Stanley is the first significant Wall Street company to adopt a customized solution employing GPT-4.
- Instead of relying on keywords, the AI assistant expects users to formulate their requests in whole phrases that mimic human discourse.
- In the future, Morgan Stanley intends to roll out more generative AI-based products, such as the Debrief tool, which automatically records client meetings and creates follow-up emails.
- OpenAI's ChatGPT, a large language model, enables responses and reasoning that seem human, signaling a change in the bank's technology strategy.
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| 5 | | Magna, a prominent advertising forecaster, has upgraded its 2023 U.S. advertising spending forecast to a 5.2% growth rate, reaching $337B, citing a better economic outlook and sustained investment in digital ad formats by marketers. While brands in the automotive and entertainment industries remained unchanged in Q2, spending in the financial and technology sectors decreased YoY, while industries including travel, pharmaceuticals, retail, and consumer packaged goods showed strong spending. More: - During the second quarter, food and beverage marketers like Kraft Heinz and Molson Coors increased their marketing expenditures, with Molson Coors intending to increase its advertising budget by $100M in the year's second half.
- Digital media, especially retail media from companies like Walmart using their shopper data, is the main engine of the 9.6% projected ad spending increase in 2023.
- Conversely, it is anticipated that 2023 advertising spending will decrease by 3.6% for traditional media.
- Magna anticipates a continued decline in ad sales for traditional national and local TV in 2024, with drops of 3% and 5%, driven by advertisers reallocating budgets to digital platforms.
- The current writers' strike in the entertainment industry may lead to a need for fresh material in early 2024 and may be a factor in the long-term losses in traditional TV viewership.
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| 6 | | Toyota is fusing cutting-edge technology with its tried-and-true lean production techniques to catch up to rivals like Tesla in the electric vehicle (EV) market. The company recently highlighted its latest innovations, which encompass self-propelled assembly lines, die-casting processes, and manual polishing techniques, all built upon the foundation of Toyota's renowned lean production system, the Toyota Production System (TPS), during a factory tour in Japan. More: - Goldman Sachs estimates that Toyota will only represent 0.3% of the worldwide EV market in 2022 despite being the automaker with the highest global sales.
- Koji Sato, Toyota's new CEO, acknowledged the necessity of adopting completely electric technology when he announced a goal to increase battery EV production.
- The business strongly emphasizes technological advancements like sensor-guided, self-propelled production lines that eliminate the need for standard conveyor equipment.
- Toyota has also created quick-change molds to increase efficiency and is investigating gigacasting technology to create more significant aluminum components for EVs.
- According to Toyota, this shortens the typically 24-hour process of changing the mold to just 20 minutes and predicts a 20% increase in productivity.
- Toyota has installed self-driving transport robots to transfer new automobiles across a 40,000 square meter parking lot at its Motomachi plant to replace truck drivers who presently walk 8 km daily before shipping and lessen physical strain in a position with a high turnover rate.
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- The U.S. Department of Defense has reportedly increased a framework agreement, according to Saab, and placed a new $104.9M order for its AT4 and Carl-Gustaf weaponry, with delivery set to begin in 2024.
- The Bill & Melinda Gates Foundation has awarded GE HealthCare Technologies Inc. a grant worth more than $44M to further the development of AI-assisted ultrasound technology, the company reported on Monday.
- Germany is pushing for exemptions from the EU's sustainability reporting rules for small and medium-sized firms (SMEs), hoping to shield these companies from further regulatory responsibilities.
- In order to support Cuban entrepreneurs in the face of the nation's economic difficulties, the Biden administration plans to announce new legislation that would strengthen financial support for small, privately owned firms in Cuba.
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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