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Online pet-health startup Fuzzy makes its first acquisition.
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Morning Brew May 05, 2022

Retail Brew

HSBC

Happy Cinco de Mayo! It looks like Elon Musk is thinking about charging businesses and governments to use Twitter. No word yet on if he will accept Bored Ape NFTs.

In today’s edition:

Katishi Maake, Jeena Sharma

M&A

Pet project

Fuzzy subscription box Fuzzy

Welcome to the family. Fuzzy, an online pet health startup, announced its first acquisition today: Dandy, a DTC company selling supplements for dogs.

  • Terms of the deal were not disclosed, but the move could help Fuzzy start to gain a foothold in stores. It plans to get Dandy—which sells dog treats that claim to alleviate issues like stress, anxiety, and allergies—into retailers next year.

Fine and dandy: “We see Dandy as a great opportunity to be able to get in the hands of pet parents through retail outlets and essentially being on the shelves as well as through the DTC offering,” Fuzzy CEO and co-founder Zubin Bhettay exclusively told Retail Brew.

  • Fuzzy, founded in 2016, has focused its efforts on providing telehealth and chat services for pet owners through a subscription model ($24.99 a month, or $99.99 a year); it also sells prescription pet meds, supplements, and other vet-curated items on its site.

The acquisition comes on the paws of Fuzzy closing a $44 million funding round in November—a crucial time because the asymmetry between pet owners and veterinary services grew dramatically due to the pandemic pet boom.

  • Fuzzy says its telehealth consultations have seen a 533% increase over the past year, while revenue on its e-comm platform has grown 447% YoY (though the company declined to disclose specific figures).
  • Pet retailers like Petco have also bolstered efforts in veterinary services.

Looking ahead…More traditional retailers might want to play fetch, Bhettay noted. He believes some missed the boat on the pet-care wave because of stiff competition from the likes of Chewy and Amazon.

“There are a number of retailers out there that believe that they should have played in kind of capturing some of the annual household spend and share of wallet from a consumer perspective,” Bhettay said. “We believe that we have an opportunity to be able to partner with them in a meaningful way and essentially get distribution into their customer base.”—KM

        

TOGETHER WITH HSBC

Show us those supply-chain receipts

HSBC

In the retail world, sustainability is hot. More customers want to support companies with sustainable products, practices, and values (we see you, millennials and Gen Z). And this discerning consumer base? They want proof.

To offer customers the transparency they crave, turn to HSBC. They’ve helped some of the biggest names in the retail game increase supply-chain transparency and demonstrate sustainable change.

And with the supply-chain issues presented by the COVID-19 pandemic, clarity on how your products are made—and how they get to you—can affect your bottom line in more ways than one.

HSBC’s tools and services can help you map supplier data, understand your ROI, and choose vendors or suppliers whose principles and practices align with yours.

Ready to get transparent? Start right here.

LOGISTICS

No end in sight

A plane passes a packed cargo ship leaving the harbor Songphol Thesakit/Getty Images

Supply-chain chaos continues to drudge on, as retailers contend with complications from lockdowns in China amid the country’s strict zero-Covid policy.

Multiple manufacturing hubs in the country have come to a halt, while ports around the world remain congested. One in five container ships is stuck waiting around ports, noted shipping analytics firm Windward, with China responsible for 30% of the bottleneck.

The long and short of it: Analysts that Retail Brew spoke to said the impact is likely to last six to 12 months for retailers across industries, including fashion, beauty, grocery, and even toys.

  • About 85% of the $3 billion of toys sold in the US are made in China, according to an estimate by Steve Pasierb, CEO of The Toy Association. The country also accounted for nearly 30% of the world’s apparel exports in 2021, per Fibre2Fashion.
  • Just this week, beauty giant Estée Lauder cut its profit forecast for 2022, citing the war in Ukraine, which led to higher costs, and the lockdowns in China, which restricted capacity at distribution centers.

“China still remains to be and will always be the world’s factory,” Sean Maharaj, managing director in the logistics practice at AArete, a management consultancy, told us. “I think [brands have] constantly leveraged China, probably beyond where it needs to be.”

Double trouble: But the damage isn’t limited to exports. Maharaj said that companies like Lululemon, Nike, Starbucks, and H&M—ones that have an outsize presence in China—could be hit even harder. Store closures across the country mean limited access to consumers.

“They’re going to feel a double impact of not only trying to export goods to the US, but also the ability to generate revenue within China is constrained on a consumer level,” he said.

Claire Tassin, retail and e-commerce analyst at Morning Consult, echoed similar sentiments, adding that retailers can minimize losses by adding flexibility to their supply chains and, where they can, shifting manufacturing elsewhere. “It’s hard to do, but that’s where the ability in the short-term should be effective,” she told us.—JS

        

WHAT ELSE IS BREWING

  • Shopify shares slumped after the company missed Wall Street estimates in Q1. It also announced it would acquire logistics firm Deliverr for $2.1 billion.
  • Gucci will start accepting cryptocurrency at select US stores.
  • UberEats is reportedly cutting down on orders for its “delivery walkers.”
  • Savage x Fenty revealed it will be adding six more brick-and-mortar stores across the US.

FROM THE CREW

The Brew’s on the big screen. Well, a screen as big as the size of your monitor or smartphone. Brought to you by our in-house team of creators, our YouTube channel is packed with all kinds of content to help you stay up to date and in the know. Stream the latest vids here.

SWAPPING SKUS

Today’s top retail reads.

Spritz-Carlton: The latest perfume trend? “Escapist” fragrances that evoke exotic vacation destinations. (Business of Fashion)

Prime real estate: Amazon is reportedly eyeing two empty malls outside Pittsburgh for warehouses. (Pittsburgh Post-Gazette)

Things that make you go hmm…No serving bicyclists at the drive-thru, no selfies with celebs, and no preparing your own Big Mac. These are some of the rules that McDonald’s workers must follow. (Eat This, Not That)

Your retail road map: Target Accelerators programs offer unmatched mentorship and insights into supply chains, marketing, buyer communication, and so much more. Is your company ready to grow? Explore 3 Target Accelerators small-business success stories here.*

*This is sponsored advertising content.

NUMBERS GAME

The big number you need to know.

To prep for today’s Cinco de Mayo celebrations, people (unsurprisingly) filled their fridges. Per a Numerator survey, 73% of consumers planned to purchase food, and 62% said they’d grab alcohol.

  • Imported beer—particularly Corona and Modelo—is the drink of choice, followed by spirits (44%) and domestic beer (34%). Hispanic and Latino consumers were more likely than others surveyed to buy RTD cocktails, the survey found.

Party prep: Most shoppers (85%) said they’d head to brick-and-mortar stores to stock up, with 27% shopping online. Grocery stores are the top IRL destination, followed by mass retailers.

  • 51% said they’d spent $26–$75 on the holiday, with 46% of Hispanic consumers planning to spend $75+.
  • 91% of consumers planned to complete their shopping before the holiday.

But inflation might put a damper on the fun. The survey found 67% of consumers expected it to impact their celebrations, with 69% anticipating product shortages. Good luck to the 9% who waited until today to shop.

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Written by Katishi Maake and Jeena Sharma

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