What to Ask Yourself Before Investing in Retail
The question: do retail companies treat their workers fairly?
A new report from Brookings, published November 2020 and updated December 2020, shows that most of the major “essential” retailers making record-breaking profits amid the pandemic are not doing much to keep their front line workers for the risks to compensate for who they enter. Are some retailers doing better than others in this area? You may want to consider such questions before investing in commercial real estate.
Not all retailers are in trouble
During the pandemic, many small businesses had to lock down and lay off workers. In some cases, these companies did not (or could not) survive.
But not all retail businesses are facing difficult times. Some large retail companies are making more money today than ever before. Because of the pandemic, these companies are making an estimated additional $ 16.7 billion in profits, according to the Brookings report. But like Scrooge, some of these companies are happily counting their gust of wind without recognizing the frontline workers who helped create that wealth – and potentially risking their lives just showing up for work.
While retailers are not legally required to offer risk payments, the question is whether they are morally obliged to do so. If you want to understand the type of business you are investing in, you want to know what is happening.
The Brookings report analyzed 13 out of 20 of the largest U.S. retailers:
- Walmart (NYSE: WMT)
- Amazon (NASDAQ: AMZN)
- Hook (NYSE: KR)
- Costco (NASDAQ: COST)
- Walgreens (NASDAQ: WBA)
- Home Depot (NYSE: HD)
- CVS Health (NYSE: CVS)
- Destination (NYSE: TGT)
- Lowes (NYSE: LOW)
- Albertsons (NYSE: ACI)
- Ahold Delhaize (Riesenfutter, Food Lion) (OTC: ADRNY)
- Best Buy (NYSE: BBY)
- Dollar General (NYSE: DG)
Of the 13, three were generous to their employees: Home Depot, Target, and Best Buy. All three gave bonuses and raises to workers during the pandemic, though these three companies didn’t make as much as some of their competitors.
The other 10 companies weren’t giving that much even though they were making huge profits. Walmart and Amazon: We look at you especially. Walmart’s profit rose 45% year over year, and Amazon saw a whopping 70% increase. But her employees wouldn’t know much about it; They received below-average COVID-19 pay (6% increase in salary for full-time employees). Meanwhile, the Walton family, which owns more than half of Walmart’s stock, has grown $ 45 billion since the pandemic, and Amazon’s Jeff Bezos is now $ 70 billion richer.
Here you will find statistics on the 13 analyzed companies in terms of profit and compensation of employees, sorted by the least generous companies:
1. (Tie) Best Buy
- COVID-19 Employee Compensation: 28% increase to $ 15 / hour
- Company profit: $ 591 million, up 17% year over year
2nd (tie) goal
- COVID-19 Employee Compensation: 17% increase to $ 15 / hour
- Company profit: $ 3 billion, up 22% year over year
3. Home Depot
- COVID-19 Employee Compensation: 21% increase to $ 11 / hour
- Corporate income: $ 10 billion, up 14% year over year
- COVID-19 Employee Compensation: 12% increase to $ 12 / hour
- Company profit: $ 4.9 billion, up 29% from last year
- COVID-19 Employee Compensation: 5% increase to $ 15 / hour
- Company profit: $ 2.2 billion, up 11% year over year
- COVID-19 Employee Compensation: 8% increase to $ 11 / hour
- Company profit: $ 871 million, up 153% year over year
- COVID-19 Employee Compensation: 9% increase to $ 10 / hour
- Company profit: $ 2 billion, up 90% from last year
8. Ahold Delhaize (USA)
- COVID-19 Employee Compensation: 7% increase to $ 10 / hour
- Company profit: $ 1.6 billion, up 15% year over year
9. Walgreens (USA)
- COVID-19 Employee Compensation: 2% increase to $ 10 / hour
- Company profit: $ 885 million, 48% less than last year
10.Amazon (including whole foods)
- COVID-19 Employee Compensation: 6% increase to $ 15 / hour
- Company profit: $ 14.1 billion, 70% more than last year
11. CVS Health
- Employee COVID-19 compensation: 2% increase to $ 11 / hour
- Company profit: $ 6.2 billion, up 27% from last year
- COVID-19 Employee Compensation: 6% increase to $ 11 / hour
- Company profit: $ 15.6 billion, 45% more than last year
13th dollar general
- COVID-19 Employee Compensation: 3% increase to $ 8 / hour
- Company profit: $ 1.4 billion, up 77% year over year
What is remarkable?
The CEOs of Walmart, CVS, Amazon, Walgreens, Home Depot, Target and Best Buy have signed a Business Roundtable pledge to invest in employees by supporting and fairly compensating them, rather than just serving the interests of shareholders. While Best Buy, Target, and Home Depot kept the promise, Amazon, CVS, Walgreens, and Walmart didn’t.
The bottom line of Millionacres
During COVID-19, some companies were winners – those that were deemed “material” – and some were losers – those that were forced to go out of business. Some of the winners, including big box stores, pharmacies, and grocery stores, didn’t always appreciate their frontline workers, who took the risk of showing up for work during a pandemic.
There is no doubt that profits are essential, but so are workers who enable operations – something to consider when deciding where to invest your real estate.