1/16/20 - Los Angeles Taxis Try To Get With The Ride-Hailing Times

From the Simplr studios in San Francisco, this is your daily briefing.  

Introduction

This is Today in Five, for today, Thursday, January 16th. Here are today’s headlines in digital disruption.

Ride-hailing companies like Uber and Lyft have waged a not so silent war on taxis. The effect can especially be felt in Los Angeles, but now the city and taxis are trying to evolve to compete with the ride-hailing services.  

First, here are the latest headlines.

Retailers Rediscovering Importance of Physical Stores

After the National Retail Federation’s Big Show, one thing was clear. Many retailers have a newfound appreciation for the value of their physical stores, but also many are struggling with the limits of the online channel. A principal at venture capital firm Comcast Ventures said, “The pendulum has swung.” He noted it has become easier to launch a direct-to-consumer company than to sustain or grow one. While some companies are seeking further investment on the public market, like Casper who recently filed for an IPO, other brands like Billie and Dollar Shave Club were acquired by consumer product goods conglomerates. The store experience is valuable for not only providing in-person, touch-and-feel experiences for shoppers, it also provides marketing that so far online search or sites have not been able to match. The trend seems to indicate that just as e-commerce has become a given for traditional retailers, it now seems like a must to maximize and measure the value of connections and discovery possible only in-store.  

Target Sales Fall Short

Target, who has posted strong quarters and been considered a standout in retail, fell short over the holidays. Target revealed its same-store sales during November and December were up just 1.4 percent, compared with growth of 5.7 percent the year before. Target said it found strength in apparel and beauty, while electronics, toys, and parts of its home business didn’t perform as well as they’d hoped. CEO Brian Cornell said in a blog post, “While we knew this season was going to be challenging, it was even more challenging than we expected.” Cornell also said that while Target faced challenges in November and December in key categories, they were maintaining their guidance for fourth-quarter earnings per share because of the durability of the company’s business model.

Secondhand Beauty Industry Growing

You’ve no doubt heard all about the secondhand apparel craze that has become a booming industry, but what about the secondhand beauty industry? Online platforms like Poshmark and Glambot are normalizing makeup and skincare reselling by using technology that authenticates, sanitizes, and repackages products. The process is just like clothing resale platforms where customers send in lightly used items and, if approved, sell them to other shoppers. Beauty resale allows fast beauty consumers to remain on-trend while solving the consumption problem that fast beauty created.  

Los Angeles Taxis Try To Get With The Ride-Hailing Times

Ride-hailing companies like Uber and Lyft have waged a not so silent war on taxis. The effect can especially be felt in Los Angeles. According to Los Angeles World Airports, which operates LAX, taxis handled just 22 percent of pickups at the airport for the first three quarters of 2019, with ride hails claiming the rest. The divide in numbers was similar throughout the rest of the city, with the Los Angeles Department of Transportation estimating taxi business was down 75 percent since 2012, the year Uber first rolled into town. Now, the taxis of Los Angeles are fighting back. Instead of calling an individual company to request a cab, passengers will be assigned rides through a centralized dispatch that connects all the cabs in the city. The taxis can be requested with an app or phone call and passengers will know the cost of their rides before getting into the car. Meters will be modernized and cabs’ typical garish colors will be optional. Jarvis Murray, an administrator with the city Transportation Department said, “We want to give them an opportunity to be able to retain and add customers, to be innovative and nimble.”  

Dr. Anne Brown compared taxis and ride-hail services when she was a researcher with the Institute of Transporation Studies at the University of California, Los Angeles in 2018. She found the average cost for an Uber or Lyft was less than when using a taxi. She also found that in 10 percent of the trips, taxi drivers traveled twice as many miles as necessary. After interviewing students who had assisted with the research, most said the unreliability of taxis didn’t end once they were in the car. They didn’t know how much the trip would be and there wasn’t always a recourse if they were unsatisfied with the driver. With Uber and Lyft, they could complain and get their money back.

It’s these issues that Los Angeles is trying to address with its new taxi permit system. Dr. Brown said taxis have tried to innovate. Many companies have developed their own apps, but they work only for that individual fleet and may not operate in the area where a customer needs a ride. At least one developer has tried to bring all the cabs’ apps under the same umbrella to operate more like Uber or Lyft, but the app doesn’t work well, she said. The findings bring up the question: why not let the taxi system fail if Ubers and Lyfts are superior options?

Dr. Brown said, “Taxis are this legacy service...They’re a really important mode for so many travelers.” They’re important for travelers without cars or don’t have the necessary smartphone or debit or credit card to use a ride-hail app. Dr. Brown noted that taxis were used most often by the city’s lowest-income people, who pay with cash.  

It remains to be seen how the city’s attempt to modernize the taxi industry will stack up against services like Uber and Lyft who have successfully disrupted the industry.  

Closing

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Thanks for listening to this latest episode of Today In Five. We’ll see you tomorrow.