Are gun stores and pot shops really essential?

Everybody can probably agree that it’s important for some businesses to stay open in the age of lockdowns — groceries, pharmacies, big-box stores.

But unless you’re into stockpiling yarn and googly eyes, arts-and-crafts retailers wouldn’t make the cut. 

Even so, that hasn’t stopped chains like Michaels, Joann Fabric and Craft Stores, and Hobby Lobby from trying to keep their doors open in large swaths of the US.

Their efforts highlight a weird side effect of COVID-19-related shutdowns: When government guidance is unclear, businesses get crafty to show that they’re essential.

Even the government can’t agree on what essential means

The Department of Homeland Security finally published guidance on essential business last week, but its list is merely “advisory in nature.” That has opened the door for cities and states to make their own rules about what “essential” means. 

The Washington Post found that their choices usually fit with stereotypes: Big biking cities like New Orleans, Philadelphia, and San Francisco have all designated bike shops as essential. In pot havens like Denver, Chicago, and the state of California, marijuana dispensaries are open.

But when local guidance isn’t explicit, individual stores get to decide for themselves — at least until officials step in: 

• The luxury department store Dillard’s is staying open even as its competitors close. 
• Guitar Center is keeping open about 25% of its locations.
• In Ohio, mattress stores and golf courses have claimed their customers need them. 
• GameStop initially tried to convince legislators that it served an essential purpose — then switched to delivery only last week after backlash.

In response to the Joann Fabric hijinks, some municipalities have issued follow-up orders clarifying that craft stores are not essential.  

Vague guidelines have created some strange patchworks: While the Los Angeles sheriff is shutting down gun shops, his colleague in nearby San Diego has insisted that firearms retailers should stay open. 

It all comes down to the Benjamins

As The New York Times noted, many of the stores stretching the word “essential” to its breaking point have something in common: crippling debt. 

Guitar Center and Joann Fabric and Craft Stores were in the red before the pandemic. That makes the idea of shuttering for months especially precarious — and the incentive to ordain yourself essential that much stronger.

A theatrical throwback is making a comeback.

The coronavirus pandemic threw the business of blockbusters into chaos. Traditional movie theaters have gone dark, studios are sending fresh films to streaming services early, and pictures still in production are pushing back their release dates.

And as CNBC discovered, some drive-ins are experiencing a renaissance.

Bring your popcorn and put it in park

There are ~300 drive-in theaters left in the US, and ~30% of them operate in states that have been shut down by the pandemic. Among those that are still open, some are seeing a sharp rise in business:

• One drive-in owner in Texas saw revenue increase 40% and then 95% in the past 2 weeks.
• A company that specializes in outdoor screen rentals is refocusing on LED screens, to allow movies to be shown at all times of day.

Social distancing remains a challenge: A Utah theater that opened a drive-in on Friday let patrons use the restrooms “one carload at a time.”

And drive-ins aren’t just for movies

In states that haven’t yet issued shelter-in-place orders, some churches are pivoting to drive-in worship — and their parishioners are honking to say amen.

Kids are bored at home. Finding ways to keep them entertained is about to be big business. 

US parents already spend $22B/yr on after-school activities like sports or dance classes, not to mention $36.2B/yr on child care. But as schools across the country shutter, kids are stuck in self-quarantine 24/7. 

Meanwhile, parents (either WFH or applying for new jobs) are sleuthing out ways to keep their kids active. 

Kid-tainment is taking off

Companies from across several industries have pivoted to meet the rising demand:

• Instagram fitness stars like Joe Wicks are picking up 1m+ viewers by streaming morning exercise routines for kids from their YouTube channels. 
• Delish.com is hosting virtual cooking classes for parents and kids. 
• Other parents are turning to free, ad-supported classes like Cosmic Yoga, Art Hub for Kids, and GoNoodle. 

Your kid is now a virtual camper

Many kids’ programs run on a freemium model — with profits coming from a volatile ad market. But some are selling subscriptions, or “bunks,” in virtual camps.

• MarcoPolo World School is an education program that teaches STEAM curriculum  through videos ($9.99/month).
• Brain Chase offers tutorials in art, computer science, and zoology styled like a virtual treasure hunt. It’s offering a Spring 2020 Quarantine Challenge ($99 to $219/season).

If your kid hates their piano lessons, they may be out of luck, even in isolation. Searches for terms like “online music lessons” and “online art classes” have boomed in the last week.

In 2011, Aaron Hinde and Orion Melehan pooled their life savings and launched a sports beverage company called LIFEAID. 

Neither co-founder had a background in the beverage business. Against recommendations from industry veterans, the 2 co-founders decided to focus not on selling their drinks in grocery stores, but instead to sell them directly to consumers online and directly to gyms.

The strategy worked: In its first 5 years, the company grew between 30% and 40% annually.

And, after initially skipping over traditional sellers, LIFEAID eventually partnered with large retailers like Whole Foods and Walmart.

At the start of this year, the independently owned company was on track to do $50m in sales.

The pandemic led to the closure of most of the company’s partner gyms — which bring in between 35% and 40% of its revenue.

The company has so far absorbed the disruption because online sales on Amazon and at big partners like Walmart have exploded, leading some flavors of LIFEAID to sell out.

Now, LIFEAID is focused on using that money to support its smaller partners. A new program gives gyms $15 every time one of their members orders LIFEAID online and enters their gym’s unique code.

LIFEAID will lose money on the partnership program. But the company’s co-founders want to support the people who teamed up with them at the beginning. 

“Those are the people who got us here,” co-founder Aaron Hinde told The Hustle. “How do we support them?… When we get past this, people are going to remember who did what during this time.”

• Founders: Aaron Hinde and Orion Melehan
• Years in Business: 9
• Annual Growth: 30% to 40% YoY
• Projected Annual Revenue: $50m

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