Amazon’s 150% Churn, Gen Z Drips, An Old Ford Factory Goes Boom

October 18, 2022
This Tuesday we’re talking about Amazon's impressive employee churn rates. We also cover a new report indicating big differences between Millennial and Gen Z buying habits, as well as an iconic former Ford Factory going down in Jacksonville.
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According to leaked internal documents, Amazon is experiencing attrition rates as high as 81% across the entire company spanning positions from warehouse workers all the way to vice presidents

  • The documents, which include several internal research papers, slide decks and spreadsheets, indicate that only one third of new hires stay past 90 days with the vast majority of them willfully quitting vs being laid off or fired
  • A New York Times investigation revealed an annual turnover rate of 150% among hourly employees
  • Wall Street Journal and National Employment Law Project have both found turnover to be around 100 percent in warehouses , twice the industry average
  • A major issue cited is the lack of tracking training and promotion data
  • $8B is the estimated cost of the turnover
  • Ironically, saw a huge Amazon ad offering free technical training with no college debt featuring a smiling Gen Z’er
  • Tili: People need purpose

A new study by Advantage Unified Commerce indicates a major shift in buying behavior between Millennials and Gen Z when it comes to indulgent premium products

  • Indicates that brands must deliver an elevated ‘premium’ experience that creates indulgent moments in the midst of ordinary life
  • Millennials = aspirational  Gen Z = intentionally premium
  • Consumers report no intent to walk away from premiumization in the face of inflation, with 65% planning to purchase premium over the next 12 months
  • “premium” defined as:  worth the purchase with "added value, proof of value, performance, inclusion and shareability."
  • Gen Z indicates being willing to work more as opposed to scaling back purchases

A piece of auto manufacturing history is slated to be demolished as a Jacksonville City Council unanimously agreed Tuesday with the owner of the Ford factory which was built 100 years ago

  • The plant made Model Ts for about 8 years before Ford closed operations as a result of the great depression
  • At one point the factory boasted 200 cars per day and was one of the highest producing sites in the southeast (modern factories produce over 1,000 per day)
  • It was then turned into a parts warehouse, and later a pallet factory
  • The prime waterfront real estate will be redeveloped after the buildings removal
  • A city-hired photographer will document the building's legacy before it's torn down


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SUMMARY KEYWORDS

people, amazon, gen z, factory, churn rate, millennials, retail environment, brand, hourly employees, talking, warehouse, expectation, moving, extravagance, employees, premium, day, status, creative, brick

SPEAKERS

Kyle Mountsier, Paul Daly


Paul Daly  00:23

That's the wrong sound paddle.


Kyle Mountsier  00:24

It is. It's Tuesday. I don't even know what just happened.


Paul Daly  00:29

Oh, we're all messed up on a Tuesday. Hey, yo, thank you. Thank you. That's what happens boys back back with the intro music today we're talking about Amazon's get this 150% churn rate 150% churn rate.


Kyle Mountsier  00:42

If there's any HR managers right now they want everyone listening to this.


Paul Daly  00:49

It's like everything when you when you have a situation that's bad, right? And automotive historically has had a pretty bad churn rate. You're always kind of looking for the other person that has it worse. And you're like, Yeah,


Kyle Mountsier  01:04

I got some contract. Can't wait to I haven't even told you my context for that story. But it's good stuff. It's good stuff.


Paul Daly  01:10

So what's the ominous beeping noise? Yeah, that's from another thing that we did that was loaded up on the road caster, we got a lot of stuff going on today. That's why you can hear them on the podcast. You know what that sound is? That's a rattle can we're gonna spray paint some stuff in a social world today we'll show you what that is all about. You stay tuned to our social stuff. You'll see why would spray paint going straight Philly on us I am we're just rattle cannon the heck out of stuff. And by the way, you'll probably most likely see that on Instagram, LinkedIn or Tik Tok, which if you don't follow us, we have a lot of fun on LinkedIn, Instagram, and Tiktok. Every single day, our social team does an amazing job of keeping it fun and engaging. So check us out join that community. It's more of a conversation. It's great. Also, Kyle and I are going to be on a live stream today at 10am. Eastern Standard Time, with the one and only Brian Pash talking about the creative track that we're putting on at the modern retail conference in November, we're going to invite some other creatives. And if you're a creative or a marketing manager, or a general manager, that's always like, I don't know what to do to get my creators fired up to make better content that drives ROI. come spend a little time with us at 10. We'll tell you what we're up to, and give you some tips, tricks, and kitchen a little bit scattered.


Kyle Mountsier  02:20

Big announcement a little big. And so I don't


Paul Daly  02:23

know, again, I don't know what the Little Big announcement is. But it seems like you do so well just just go with that good. But okay, we'll take that. Well, in an effort to get into the show. And not to belabor it anymore. We're gonna talk about our first story. So here we go. According to leaked internal documents, Amazon is experiencing attrition rates as high as 81%. across the entire company spanning positions, such as the warehouse workers from warehouse workers all the way through vice presidents the documents, which includes several several internal research papers, slide deck spreadsheets, indicate that only a third of new hires are still there after 90 days. That's that deserves a double Record scratch, a double Record scratch. So a couple other new sources actually did some more research New York Times investigation revealed an annual turnover rate of 150% among hourly employees. So once you take that all employees, which is 81% and just, you know, separate out the hourly employees, it's actually 150%. It's one and a half turns. Yeah. I've never heard anything like that in my life.


Kyle Mountsier  03:35

That's just on. How do you even manage that? Like I got a


Paul Daly  03:40

real question. Well, you spend $8 billion, which is the estimated cost that Amazon incurs for such a high turnover rate. I have no idea how you manage it. But strangely enough, okay,


Kyle Mountsier  03:53

so I'll tell you this, I know a good amount of Amazon workers or people that have worked at Amazon, just because we have some major hubs, we have some, like some corporation type level people here. And there is like, the way in which they press their people is very intense. Like I know some some people with VP titles that are consistently kind of like fearful of whether or not their job will make it to the next quarter. Like they have that much like the way that they are pushing buttons and stressing for like innovative ideas or new things is at the VP level is that high intensity. And then you go down and you talk to like these warehouse employees. And some of these people are buying new shoes every two months. And then I was just I was just in Miami and track with me here. This guy


Paul Daly  04:50

had new shoes every two months. Yeah, different reasons.


Kyle Mountsier  04:58

Are we right now? Yeah. Yeah. But when we were in Miami, I was in with my Lyft driver on the way to the to the airport. And I was like, hey, is this your full time gig? And he was like, Oh no, I do this when I'm not working the floor at an Amazon warehouse, right. So he's picking, he's a picker. And they've just recently moved, they used to like, everyone would get like high end running shoes, because that's how much they were on their feet moving through the day, like every warehouse worker that I know that Amazon does, that. They're now required to wear steel


Paul Daly  05:31

toed boots. OSHA got involved. So


Kyle Mountsier  05:35

now you're running around a warehouse floor, on your feet. And you're looking at every other, you're looking at, like a Chipotle employee making the same dollars as you getting free food. And like the movement is four to five feet a day. And you have to wear steel


05:53

toed boots instead of craftable. Shoes. So comfortable shoes. Yeah, I can understand


Kyle Mountsier  05:59

why there's a high level of turnover because the you know, the pressure they put on their executive employees. And the the physical demand of their hourly employees is that's an intense work environment.


Paul Daly  06:11

And some people in the comments Jim Elliot, saying he's heard local instances, and you know, a number of people left local businesses for Amazon and came back within six months. That's a pretty common tale. I don't know if we reported on this a little while ago, but I read something probably a year or two ago that talks about Amazon's internal system actually incentivizes their people to tell basically, or make it known when one of their co workers is doing a subpar job is really created this dog eat dog, right. It's a performance minded mentality performance at all costs. Ironically, as I was putting this part of the story together, I got big full page or half page display ads on some of the sites I was visiting that were Amazon employment, or Amazon employment ads. Offering with a with a smiling Gen Z are like quite obviously 24 year old. Oh, yeah. Yeah, saying free technical training with no college debt. I was like, what a night literally, I'm on the page with this Amazon story. Yeah. And that comes up. And I think this highlights a few things. Number one in automotive, right, we've traditionally had a turnover issue. Right. And we're seeing that improve, especially in dealerships that have embraced a more progressive business model. You know, a lot of you know, work schedule changes, a lot of you know, like, low pressure sales or no pressure sales, single point of contact that stores that develop that the data all shows their churn is way, way lower. Right. So we're making great progress. But I think this just highlights the very human element of working anywhere. And it's that people need purpose. Yeah, and when you because one of the one of the main issues that cited is the fact that ironically, again, that Amazon has doesn't do a good job of tracking promotion status, or reviews or any packet all promotion right as to promotion big ones. So you have people in this machine that is really geared towards moving up levels like everybody has a level like the military actually the employments so like it's they get you in, they say, this is how you succeed in this company, you move up these ranks, and then they put you in very mundane, a little bit combative work experiences or work environment. And then they still don't tell you how, how close you are to that next level by talking about feeling no sense of purpose. 150%


Kyle Mountsier  08:31

I'm not we're out here mad we got our stuff in two days instead of one day.


Paul Daly  08:35

Of course, why not? Because they set that expectation at the


Kyle Mountsier  08:39

station. So setting expectations, smiling Gen Z are setting expectation to data one day, hey, look, the higher level your expectations, the higher level your your execution has to be. And we know that when creating brand, well speaking


Paul Daly  08:55

of Gen Z expectations, that's a natural


Kyle Mountsier  09:01

supranet I'm proud of that one. And that was like that was like I like I loved it, you took the softball, defense, it was good.


Paul Daly  09:10

new study by advantage Unified Commerce indicates a major shift in buying behavior between Millennials and Gen Zers. When it comes to indulgent premium products, I'm a part of a company called gauge which vets some basically people to fill out surveys and give responses and video responses to companies is they want more information. And that's how I found out about this because it gives you a little summary. And basically this is indicating that Gen Z is value. premium products they want the swag they want the drip, they want to feel exclusive and it's no surprise one of the things I gave him my video feedback it's no surprise when they're really being coming up in this environment when all these YouTubers all these social media influencers are doing extravagant things, right like even Mr. Beast you look at Mr. Beast and you're gonna find him and his crew around like hey, this one He ate a $200,000 ice cream sundae, right? And the dudes like this karma came from 100 year old apple tree, right right there. And he's part of the karma is like, that's gonna set you back 30 grand. Right. So there's this element of indulgence and exclusivity. And this is indicating basically in a facing recession, that brands have to deliver an elevated experience that creates these indulgent moments. And that's the way it can actually, you know, kind of get through a recession. So I painted a few of the things in here, but what do you think about this?


Kyle Mountsier  10:29

Well, so I think that this is like, I would say that the prevailing social media environment is what drives retail experience across the board. So like, when millennials were kind of coming through the new buying power, right? It was like, What are millennials doing? How are they perceiving? How are they interacting with retail environments, and that starts to explode and extrapolate into the rest of the generations, right? Because that's the new, that's where all the attention is now. So now the attention is all on Gen Z, what they're paying attention to how they're interacting socially. And that starting to extrapolate itself out into other generations. And so I'm even sensing some of this, like you, you enter any retail environment with this expectation of extravagance, right. I mean, even just like you look at the, the f1 moves in Miami, and Las Vegas, and the way that and the way that like brands are pressing into experience and extravagance because of everything that's happening on social media, and in even in branding and advertising. And so you know, that that mentality of like, and what's interesting here is, this, this is very parallel to me to this, like re birth of the retail environment, the brick and mortar store, because it's right in line with like, creating an exam, an extravagant experience like that can only be done really well in person. And so when you think about that shift, actually lend this type of like premium experience shifts, lending itself to brick and mortar retail experiences. I think there's a lot of parallels there.


Paul Daly  12:13

I think I think I don't I don't think it only be done in brick and mortar. But I think it is very, like effectively done in brick and mortar. We talked about pop up shops yesterday, right? And I talked about a brand that you interact with maybe online, but then you have a chance to touch and feel. Take some selfies right? Let people know you were there. It's about that exclusivity there we got some more stuff in the show notes if you want to read it. But basically talking about millennials, your tend to be driven by the pursuit of authenticity and truth. We just went through that whole thing, right, long emotional commercials, right, that are tugging at your heartstrings, right? Because there was like this search, right? The pendulum always swings watch throughout history. People always like oh, kids these days, but just watch it, it goes back and forth. So we've swung authentic, right, it has to mean something Gen Z, however, they're more open minded mentality for exploration, and they want to be out loud, right? They want to like it. So there's like a twinge of authenticity. But it's like I want to live out loud. But I want other people to see me living out loud. Right? And that's the thing. They see themselves as creators. Right? They grew up native to posting about themselves. Yeah, sharing creative economy, like that's how they that's how they perceive the world. Yeah. So you look at millennials, they're aspirational in their brand intentions and their product intentions, Gen Z are intentionally premium, like I want you to see that I have going on and this last piece, this last piece, but why millennials would kind of lean back from working more to live their more authentic life. Gen Z is like, Oh, I'm not going to scale back. I'm just going to work harder to get that stuff. So you again, pendulum swinging back and forth. So we'll see what this means for the workplace, what it means for retail, certainly, we're going to find out what it means for the social consequence of living everyone lives with the social consequences of mindset, we see


Kyle Mountsier  14:02

like the next great generation of the salesperson reborn with the Gen Z are like


Paul Daly  14:07

your communicators, man. Yeah, it's like, I bet we do. Right? Because you're gonna find that, look, you watch YouTube, and you watch influencers and all they're doing honestly is selling things or selling things, but they're selling things in a way that brings status and not in a way that just seems forceful. I mean, it's, it's pretty brilliant. I think it's kind of the natural state, right? Everything is sales, everything is convincing somebody of this for position and status and self fulfillment. So yeah, well, we'll just see how that how that breaks down over the next years. But what an amazing trend to be observing and we're watching the transition from you know, Gen X to millennials to Gen Z. It is happening. I have some in my home.


Kyle Mountsier  14:50

Well, speaking of things getting broken down.


Paul Daly  14:56

My turn to love it. That was a total bump set.


Kyle Mountsier  14:59

So a piece of all auto manufacturing history is setting to go down in Jacksonville city. The council there unanimously unanimously agreed Tuesday with the owner of the Ford factory, which was built in 100 years ago that it's coming down. Interestingly enough Model T's were built here eight years before Ford close operations as a result of the Great Depression. At one point, the factory was outputting 200 cars a day, which if it sounds small, actually is but it was a big lift back then, most modern manufacturing facilities are putting out over 1000 cars right now. It's been in recent history, a parts warehouse than a pallet factory. And if you if you kind of take a little look at the article, you can see that it's just a rundown factory, but it's a part of like, the deep history. If I was Ford, I would like send a whole crew there right now right time, not city, right? We'd be telling stories. They're like crazy. Yeah, we're not we're not leaning on the city photographer. No offense, any


Paul Daly  16:00

city photographers.


Kyle Mountsier  16:03

Right? Well, I think that this is, you know, this is indicative of like, just as we look at some, there's, there's so many of these factories that have been the legacy that the ground root of so much of manufacturing at even inside and outside of auto. And so for a historical place like this to kind of be, you know, hey, look, we got to put up retail, we got to put up, you know, new industry in the place. And we're seeing things like the giga, giga factories that Tesla's building, replacing that just because of the speed and efficiency needed, so, but hey, look, we got to bring the nostalgic stories


Paul Daly  16:39

every once I think you do. And actually, if you have a minute to go into the show notes and click on the link, when you click through there, some amazing pictures. I mean, they're just staggering. Of like, like, probably 1000s of factory workers. And at that time, they were all men in like, suits lined up at these, like, I don't know what they're like lunch tables or whatever. And now it's just like, dang, it's easy to forget what it took to get this industry to where it is today. And it looks vastly different. But it's easy to forget, like the shoulders we stand on, on a day in day out basis. And it just it's kind of brought me back like wow, I mean, like goes back to Dave melters episode of auto clubs yesterday. I mean, not all clubs, a soda concessions, one of our podcasts he was talking about there's just no industry that has affected culture quality of life more than the automotive industry. So we're glad to be part of that industry. with you today. Go out care for your people. Make sure that your churn rate gets below 80% We're gonna shoot for like 30% and we're gonna call it a day