Morning Brew - ☕️ With flying colors

Madison Reed wants to paint the town with new funding.
Morning Brew April 28, 2022

Retail Brew

Attest

Hello there. Are you ready for prime time today? You know, when Amazon reports earnings.

In today’s edition:

Jeena Sharma, Katishi Maake

FUNDING

Head first

Madison Reed color bar Madison Reed

Amy Errett, founder and CEO of Madison Reed, operates her business with one leading philosophy: People will always want to get their hair colored.

Another round of funding continues to make her case. Today, the San Francisco-based hair-care company announced it’s raised $33 million, bringing its total funding to date to ~$250 million.

  • The round was led by Sandbridge Capital, and included participation from Jay-Z’s Marcy Venture Partners.

Madison Reed plans to use the $$ to grow its brick-and-mortar presence, hire 850 new colorists this year, and expand its product offerings.

“Covid taught us very clearly that no matter what happens, [women] can color their hair,” Errett told Retail Brew.

Building it out: The company has added 50 color bars over the last two years, up from just 12 in March 2020.

  • Its products are also available across Ulta stores and through Ulta Beauty at Target, alongside Madison Reed’s website and Amazon.

One learning since doubling down on brick and mortar: “When we have more than either three or four stores—it depends on the per capita region in a region—[but] our hair color bars work. Our online business explodes and Ulta explodes. It floats every single boat,” Errett explained.

  • To capitalize on growth, Madison Reed plans to open 20 more this year and operate ~80 locations by the end of 2022.

Starting as a DTC company in 2013, Madison Reed’s online biz is still key. During Covid, it was selling a box of hair color online every five seconds, Errett said; today, e-comm sales make up 50% of the business.

Growing pains: But the company’s growth has not come without its challenges. Madison Reed eventually had to hike prices by 10% as operational costs went up, Errett said. The company, which produces its hair color in Lombardy, Italy, also had to tackle supply-chain disruptions, which has led to delayed deliveries.

  • Errett, however, said she’s been able to handle issues by having a “heavy inventory” in place.

“This is an unlikely category that a lot of people doubt,” Errett said. “Pandemic or not, we’re going to power through this. And we’re going to do it in a way that just is steadfast.”—JS

        

TOGETHER WITH ATTEST

Turns out, consumers care about … a lot

Attest

People are *not* shopping the way they used to. The economy, the pandemic, and the prevailing issue of climate change have today’s consumers feeling a little, should we say,  uncertain.

So Attest rounded up the data on what’s top of mind for consumers right now and how they want brands to respond.

Their 2022 US Consumer Trends Report includes little nuggets of info on things like the shift in the type of messaging consumers want to hear, the top issues consumers want brands to take a stand on, and which social media platforms consumers use to interact with brands.

Wanna see success for your brand this year? Download your copy of Attest’s 2022 US Consumer Trends Report here.

CONSUMERS

Value-add

Inditex Hopes It’s Easy Being Green Francis Scialabba

The results are in: Shoppers have higher standards than ever. According to a new 1,000-person Harris Poll survey commissioned by Google Cloud, 82% of consumers say they want to buy from brands with values that align with their own.

What those values are can vary by category, explained Giusy Buonfantino, VP of consumer packaged goods at Google Cloud. “Apparel could have an element of sourcing of the cotton,” she told Retail Brew. “Food may have a totally different value proposition that they need to meet and know.”

Green light: A major theme is—you guessed it—sustainability. Just over half (52%) of those surveyed said they want to support sustainable brands, while 66% seek out eco-friendly businesses and 55% say they would pay more to shop from them.

  • But that’s not to say consumers aren’t skeptical: 72% believe that companies and brands overstate their sustainability efforts.

“Transparency on their goals and the sustainability messages for the consumer is, of course, in demand,” Buonfantino said. “That’s why sometimes this value proposition, these marriages with consumers and brands is not there.”

The only thing that can overcome brand values is brand availability. A staggering 98% of shoppers said they’d either buy from a different brand or search another channel if the one they preferred wasn’t in stock—an issue plaguing many retailers.

The big picture: Overcoming these hurdles, Buonfantino said, will involve personalizing outreach to consumers through data collection, clearly and transparently communicating values and sustainability goals, and rewarding shoppers for their loyalty in the face of supply-chain woes.—KM

        

WHAT ELSE IS BREWING

  • McDonald’s saw earnings that beat estimates, in part because US consumers ate up higher prices.
  • Unilever, meanwhile, after already upping prices by 8.3% on average in Q1, will boost them again.
  • Reliance Industries, the Indian conglomerate, and PE firm Apollo Global expect to bid for Boots, the UK pharmacy chain put up for sale by Walgreens Boots Alliance.
  • Rebag, the luxury resale platform, is adding a new feature that will let shoppers bid on high-end stuff.

TOGETHER WITH CONTENTSQUARE

Contentsquare

Your buyer-behavior cheat sheet. Wanna see how your company’s digital experience stacks up against other major players in your industry? It’s all here in Contentsquare’s new 2022 Digital Experience Benchmark Report. With 100 KPIs on the latest online buyer behavior, you’ll get data-backed tips to help you revamp your digital strategy—and deliver exceptional, more human digital experiences. Start here.

SWAPPING SKUS

Today’s top retail reads.

Capital gains: A self-funded DTC brand decides it is time for outside financing. The question is: Where does it turn? (Thingtesting)

Act fast: New York’s proposed Fashion Act hopes to hold fashion businesses in the US accountable for their environmental and social impact. But turning an act into law is a lengthy process. (Fashionista)

Closed doors: Subscription box firm Alltrue is shutting down—quietly—according to internal documents. (Forbes)

Turn registrations into new revenue: With Clyde’s Registration product, you can lead third-party customers (and their dollars and data) from every channel back to your website to register their products and reconnect with your brand experience. Get started here.*

*This is sponsored advertising content.

NUMBERS GAME

The numbers you need to know.

Up, up, and…up. Nearly 40% of small businesses in the US plan on raising their prices by more than 10%, according to a survey by the National Federation of Independent Business.

  • The survey, conducted between April 14 and April 17, included responses from 540 small-business owners.
  • 68% of the respondents said they were planning on hiking average selling prices over the next three months.

Blame game: The reason for rising prices is—you guessed it—inflation, which, according to the survey, substantially impacted more than 62% of business owners.

  • 77% of small businesses said “inventory, supplies, and materials” were a significant factor behind higher costs, while 18% saw it as a moderate contributor to them. Only 4% reported it as mild, and 1% said the factors did not impact their biz.

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Written by Jeena Sharma and Katishi Maake

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