Retail Data News: Peloton, Metaverse, Glamping, and Fast Fashion
Peloton takes a spin through the news cycle. Reality moves to the metaverse. And our retail industry expert Nick Antoniades learns a new word—glamping.
Our last Retail Data News update of the year is jam-packed with the latest from Peloton, Instacart, Shein, Harry’s, L’Oreal, P.F. Chang, Zara, H&M, Made.com, Sheetz, Lowe’s, Chico’s, Nike, Foot Locker, Forever21, Costco, Purple, and Heinz.
We’ll be back in January with a full look at the holiday 2021 results and the latest trends in retail, direct-to-consumer (DTC), and data-intensive marketing news.
Newsmaker of the Week
Peloton Fires Back at Its Portrayal in ‘Sex and the City’ Reboot with Own Parody Ad: ‘He’s alive’
If you somehow missed it, Peloton experienced a bit of negative publicity in a far-detached-from-reality TV show because of a non-real event. After “And Just Like That…,” the sequel to “Sex and the City” aired, Peloton’s stock price took a very real hit with a 11% drop. Smartly, Peloton responded in 48 hours with a “really people?” response. The fitness company’s parody ad featured Ryan Reynolds—best choice ever. Unfortunately, in a real-life plot twist, Peloton opted to take down the ad when allegations against Chris Noth surfaced. Talk about taking a spin through the news cycle. Read the full story.
Reality Moves to the Metaverse
Heinz, Activision Help Gamers Take a Snack Break
Kraft Heinz is entering the gaming world. Starting with Call of Duty, Heinz is working with Activision to create “break spots” inside games so gamers can take bio breaks (eat, drink, use the bathroom) without risking their game state (i.e. die in the game).
This is a solid branding move for Heinz, and it addresses a big issue for gamers. My suggestion to said gamers, for argument’s sake, have you considered getting out of the house for a bit? And if you just threw your controller across the room, screaming in disdain that I don’t understand gaming culture, PLEASE, I spent my last year of college playing Civ I and I still had time to see David Bowie and The Cure live. As more retail and CPG brands test their presence in gaming and the metaverse, my forecast is that the metaverse will become a mirror universe with a full customer journey. We will have the metaverse version of advertising, product placement, awareness, retention, loyalty, etc. All designed specifically for that world. And yes, I couldn’t resist the Star Trek reference. Read the full story.
Nike Acquires Virtual Sneaker Company Rtfkt
Nike buys tech company Rtfkt, which specializes in AR, NFT, and “game engines.” Nike continues to push toward its goal of becoming 50% digital. Nike is clearly seeing an opportunity in gaming and NFT, and it wants to make sure it’s done in house. Nike has a good track record of developing digital capabilities, and I would expect this would be no exception. Read the full story.
Delivery Services, Groceries, Restaurants and More
Chipotle to Open First Digital-only Chipotlane Restaurant
Chipotle is opening a Chipotlane digital kitchen concept—no inside seating, digital-orders only, drive through and walk up options for pick up, limited patio seating. Unless I am mistaken, this is essentially a Chipotle dark kitchen—which is a great idea. Read the full story.
Instacart President Carolyn Everson Announces Departure Just Three Months After She Started
Another C-level executive is leaving Instacart, this time only three months after starting. Carolyn Everson, who spent more than 10 years at Facebook, is leaving her post as Instacart’s president. In October, Seth Dallaire, Instacart’s head of advertising, left for Walmart. Both of these departures come after Instacart’s new CEO (its first, post founder) joined the company. A leadership shakeup is not uncommon following the arrival of a new CEO. However, three months is a very short tenure and maybe cause for concern. The company’s plans for an IPO have already been pushed back. Read the full story.
P.F. Chang’s Launches Online Retail Store with Apparel and Cookware
P.F. Chang says its new online retail store featuring apparel, cookware, and accessories is a move to connect with consumers experientially and integrate into their lifestyle. I am not sure launching an online store qualifies as experiential. Experiential retailing and selling generic products with your logo on them are two very different things. No question the chain is a great concept restaurant and an experiential component is already embedded in the business. But at the end of the day, it’s a Chinese food chain. It will take a lot more than an online store to truly build a connection. Will offerings include cooking classes, perhaps featuring wok techniques? That’s the kind of experiential retailing that would turn up the heat. Read the full story.
Sheetz Partners With DoorDash
Convenience store chain Sheetz is partnering with DoorDash to offer delivery of its made-to-order menu items, coffee drinks, and convenience essentials like bottled drinks, energy drinks, candy, snack bars, chips, and over-the-counter medicine. In addition to being available through the DoorDash app, Sheetz plans to add the DoorDash delivery option to its site and app in January 2022. Read the full story.
Albertsons Launches Online Auto-replenishment
Albertsons is launching an auto replenishment service for its loyalty members. Taking a cue from the subscription industry, Albertsons is offering automatic refills, available via pickup or delivery, on common grocery items. This is a great retention play for the company and builds on service and convenience. My first thought is it may decrease impulse buys and shrink the basket. However, Albertsons is planning to use machine learning for recommendations on auto replenishment and timing. I think they should also use recommendation engines (especially ones incorporating surprise-and-delight components) for last-minute add-ons to each auto delivery. In addition, they are creating shoppable recipes and meal planning in direct competition with the meal delivery services. This auto replenishment service is one component of what I foresee grocery shopping down the road will be with IoT. My fridge will send a notification of what I am running low on to be added to my grocery list, along with all the other items I told my home assistant (Alexa or otherwise) to add, which will then get fulfilled and delivered. I won’t even know which grocery fulfilled it or which delivery service left it on my front door. The bigger question will be, how will companies like Albertsons compete in this new status quo? Read the full story.
Costco Is Adding Pickup Lockers to More Stores
Costco has been testing different ways to merge its stores with digital. Based on the article, it appears the lockers gained traction. Costco has been a consistent performer with a clear value proposition. The article mentions limited product lines, which is true. However, anyone who shops consistently at Costco knows the company continuously does small runs of new items. Which gives it a good read on new products and adds an element of treasure hunting to the store. The size of the stores also makes it a destination. The only achilles’ heel Costco has is its low penetration in ecomm, which is expected for its business model. Costco has been very smart in finding ways to merge the channels, including this one. Read the full story.
Chico’s to Offer Same-day Delivery Through Walmart GoLocal
Chico’s is joining Walmart’s delivery service. Although not as big as the Home Depot announcement a while back, this is the first fashion brand to join, broadening Walmart’s delivery service. I wonder who owns the end customer data for this? Does Walmart get to keep some of the knowledge and use it to build its own capabilities further? I’d be surprised if it doesn’t. Read the full story.
Fast Fashion and Other Retail News
How Shein Beat Amazon at Its Own Game—and Reinvented Fast Fashion
Shein has redesigned the supply chain in fashion—for both good and bad—and is effectively identifying, testing, and chasing microtrends. Anyone with any knowledge of apparel manufacturing will tell you (myself included—why yes, I did work in an apparel factory) the most costly and disruptive part in the manufacturing operation is the migration of one style to another.
The transition is generally sequential as the new item flows through the manufacturing line from optimizing panel layout, cutting and sewing to trimming, replacing the operations of the previous one in each successive step of the process (usually involving production lines and time and motions studies). Which means that factories have to continuously adapt to style changes and micro productions from Shein. The article mentions that Shein’s software is its competitive advantage but few details are given. What is clear is that Shein is onboarding new products faster than anyone else and appears to be optimizing inventory as well. The impact on factories, workers, and the environment is the negative part of the equation. How far will this go? How short will each new product fad be, and how much effort will brands put into chasing them before they fizzle out?! Eventually, microtrends will be so small that they won’t be viable in traditional manufacturing. Maybe we’ll go all in on customization where each person designs their own clothes? There’s a thought. Read the full story.
Fashion Giants Inditex and H&M Broke Free from Covid
Zara and H&M posted good growth compared to 2019. Both companies are proclaiming they are back to pre-covid performance. The article also mentions this declaration may be premature as omicron increases. The overall holiday season will tell more about their performance. And it looks like it will be similar to last year with limited travel and human interaction. Read the full story.
Forever 21 Launches at JCPenney
Forever 21 will be sold inside JCPenney stores, but that partnership is not the most interesting part of the news. The companies that took both of them out of bankruptcy in 2019 and 2020—Authentic Brands Group and mall developers Simon Property Group and Brookfield Property Partners—own a fairly large consortium of retailers as well as apparel and lifestyle brands. As mall owners, Simon and Brookfield would suffer if companies like Penney, F21, Eddie Bauer, Aeropostale, Brooks Brothers, the list goes on, shut their doors. Now that they own all these brands and retailers, how do they salvage them? Cross branding is one way. Penney’s has the largest size stores so it can provide the floor for these brands to expand.
Whether the combined cross branding will be enough to revamp these retailers remains to be seen. Each retailer in the portfolio has to define its vision, customers, and answer the fundamental question—why would customers go out of their proverbial digital way to shop your brand? What motivation do customers have or, put differently, what reasons have brands given customers to shop there? This is especially true as it becomes easier to add an item on Instacart, shout orders at Alexa, pick something up at Costco, get something from a live streaming event, click on an ML-driven recommendation or ad on an obscure content piece I happen to read, the list goes on. This is where the company’s ethos, the experiences it offers and its ability to create a frictionless journey come in. What is there beyond products that will attract key customers to your properties, digital or otherwise? Once again, apologies if I sound like a broken record. However, this is a key component of the future of DTC. So far, brands that have embraced it are realizing the benefits. Read the full story.
In Its First M&A Move, Harry’s Labs Acquires All-over-deodorant Brand Lumē
Harry’s makes its first acquisition. The acquisition is Lume, a DTC deodorant. Fairly in line with Harry’s positioning, the acquisition will make a good addition to the product portfolio. Harry’s, though, needs to continue innovating in as many ways as possible. It is in one of the most competitive spaces around, competing with some of the smartest CPGs out there. Its days of being new and different, the true underdog, are long gone. Harry’s needs to fight like it’s mainstream. The company may not be the size of P&G and Unilever, but it is swimming in the same pond now. Read the full story.
L’Oreal Buys U.S. Vegan Brand Youth to the People
L’Oreal makes a niche acquisition, buying Youth to the People, a vegan skincare brand. This is a great move and L’Oreal can learn a lot from this company’s approach to cosmetics (and I am sure L’Oreal has a lot to teach too). Can L’Oreal avoid overpowering this young brand, help it flourish, and get the best of it to permeate through its organization? L’Oreal certainly needs the infusion. Read the full story.
Does Personalized Advertising Work as Well as Tech Companies Claim?
This HBR article looks at how big tech platforms measure ad results and how those results are presented. The article touches on the bias nature of A/B tests within an optimization algorithm. And it touches on the prediction versus causation hypothesis, for example, “will this person buy” versus “will this action make the person buy.” The article doesn’t touch on approaches or solutions though, just “buyer beware.”
My two cents, prediction versus causation is a very old problem, with one of the oldest solutions, control groups and incrementality analysis (i.e. one group gets the treatment and one doesn’t and then you compare the total activity, not just within a channel). Implementation does tend to be difficult, especially with overlapping campaigns, which takes us down the path of attribution analysis—a whole other discussion.
Regarding the bias nature of A/B, platforms and tech companies should be able to offer in-depth response analysis on both universes to allow for proper comparison. They most certainly have the metadata on the universe to do so. The idea of A/B test with “everything else unchanged” is very hard to deliver today. Rather, it’s more about understanding how optimization systems impact similar groups with different treatments. This is a very complex and fascinating topic and one summary can not do it justice. If interested, there are far better experts out there than me, and I urge you to seek them out. Read the full story.
Made.com Cuts Revenue Forecast as Furniture Is Held Up by Shipping Delays
Made.com lowered its guidance due to supply chain issues. The company is expecting to realize the revenue in the new year, presuming delayed shipping (and no cancellations). I don’t know what Made’s plan is to appease consumers who will get their furniture late. I hope the company goes out of its way or these delays will impact its longer-term retention rate a lot more than a deferment of revenue into the new year. Read the full story.
Looking Back at the 2021 Collaborations Where East Meets West
This article has a good list (too long to copy here) of 2021 collaborations in fashion and cosmetics between western and Asian brands. In summary, the collaborations vary and focus a lot on the rise of the Asian consumer as the dominant luxury buyer. As varied as the list and products are, the common theme for all of them should be, how do I use the insights from these limited runs to develop my global presence? I would expect brands to look at these as experiments for their strategic planning, product expansion and global reach, not just a short-term opportunity. Otherwise, it’s a lot of fancy photography and fashion glitter (proverbially speaking). Read the full story.
Glamping Is Trending in China
My new word of the week: Glamping. I am sure I am late to the party here. Combination of glam and camping, it’s essentially camping with luxuries. It appears to be trending in China with an influx of players in the space. Not sure what to make out of it, to be honest. This may be a new niche for “enjoying” the great outdoors? We’ll track and see. Personally, I find it hard to separate glamping from going to a hotel situated and catering to the outdoors. I get the coziness of the hotel and I enjoy the outdoors when I go out. What am I missing here?! Read the full story.
Related, Wild Turkey has created a camping tent that plays stories narrated by Matthew McConaughey. Umm, that’s a hard pass for me. You can read that story here.
Lowe’s Warns Comps Could Fall by as Much as 3% in 2022
Lowe’s guidance for next year is gloomy. Lowe’s is projecting negative low single digit comp growth. Lowe’s and most of its competitors have been benefiting from the pandemic as consumers began investing more in their homes. Lowe’s posted impressive growth to 2019 (34%) and 2% to last year for the quarter. The article notes how repair and maintenance is two-thirds of Lowe’s volume and Lowe’s anticipates this will continue. There may be a tipping point between what work can be done, should be done, and lastly can be afforded. It appears that it may come in 2022. It will then change to a game of market share and growing the pie across segments (including professionals as the article alludes to). Read the full story.
Foot Locker Launches Women’s Apparel Brand
Foot Locker is launching its first womenswear line. This is the latest in a series of product lines by Foot Locker. No doubt, part of the strategy is to lower its dependency on Nike, which is the majority of its volume. Foot Locker needs to continue its product expansion, however, so far, there hasn’t been any “beyond product” investments, like Dick’s concept stores. Neither is there a strong positioning strategy, similar to Dick’s. Foot Locker needs to do all these in order to remain competitive. Nike is not the only athletic CPG to go DTC, and they all have much deeper pockets and marketing know-how than Foot Locker. Read the full story.
Purple Brings on Former New Balance Chief as Acting CEO
Purple is getting a new CEO. The DTC mattress brand had a disappointing quarter with sales dropping YoY by 9% to $171ml. The new CEO comes from USA Cycling and New Balance. And I would expect the new CEO will further revamp the executive suite. Competition in the sector has increased in the last few years, ever since mattresses became a DTC favorite with Casper. Unlike Casper, Purple is profitable for the 9 months to the end of September. Yet, I can’t help thinking, the overall market size for mattresses hasn’t changed that much. We are all replacing our mattresses as infrequently as before, so why is this sector such a darling, especially for DTC? Am I missing something really dramatic or is everyone just throwing money at anything with “digitally native” in its prospectus? See later down for at least one hypothesis. Read the full story.
SKU’d: The Best Comedy Writing of 2021 Was Retail’s S-1s
What an interesting article to end the year. This column, which includes a sample of sections of S-1 filings from DTC brands, illustrates why investors should run away. Essentially, the message from these companies (and many others) is “we are not making money, we will not make money soon, we don’t know when and if ever we will make money, we are facing extraordinary challenges that may buckle us without warning and we are an amazing investment.” And yet, these brands warrant strong valuation and massive investments.
I am challenging the valuation of a lot of these companies from a strategic and positioning perspective. Having said all this, I do think some of them make good investments, especially if they have the following: 1. A powerful position on issues (political, ethical, environmental, etc.). 2. A true purpose to fulfill a specific need, experience, or emotion (like the joy of being in your house for home goods and the love of your pet for pet companies).
These are factors that could eventually translate to low- or no-cost traffic to a brand’s property, low- or no-cost retention, high return rate and low lapsing. Even if the brand is losing money now and its S-1 is filled with these doom and gloom disclaimers, I would consider it a potential future success and worth taking a risk on. But then again, I am not a futurist or an angel investor. Read the full story.
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