Morning Brew - ☕️ Easy there

Online inflation numbers for May.
Morning Brew June 09, 2022

Retail Brew

Black Crow AI

Oh hey. What do TikTok, Crocs, and Retail Brew all have in common? Aside from being *extremely* trendy, decision-makers from all three will be speaking at our inaugural Retail Brew Summit, taking place October 25 in NYC. Can you imagine a better way to spend a Tuesday? Neither can we. Spots are going fast—be sure to snag yours here.

In today’s edition:

Katishi Maake, Erin Cabrey

E-COMM

At a premium

Balloons holding up money Francis Scialabba

We still have to wait a day for the latest CPI numbers to drop, but we do have some insight into online inflation in May. According to Adobe’s Digital Price Index, released today, online inflation fell 0.7% from April, decreasing for the second straight month—but consumers are still paying more for most products compared to last year.

  • Prices for electronics and apparel, which made up a third of online spend in 2021, fell 1.4% and 1.5%, respectively, on a month-over-month basis.
  • Looking at the categories YoY, apparel is up 9%, while electronics, among the outliers, are actually down 6.5%.

Food for thought: Grocery prices continue to surge on a month-to-month (1.3%) and a YoY (11.7%) basis, according to the report. In fact, May’s 11.7% increase sets a new record high—and it overtook apparel as the top category for increased prices—following April and March, when inflation rose 10.3% and 9%, respectively.

  • It is the only category that continues to move in lockstep with the CPI, noted Vivek Pandya, lead analyst at Adobe Digital Insights.

“Some [shoppers] might shift to lower-cost grocery items if they have flexibility to do that,” Pandya told Retail Brew. “They might prefer the cheaper variant of a particular pasta or something…[But] because the prices are increasing kind of across the board, availability for some of those cheaper options also becomes a little more limited.”

  • Walmart US CEO John Furner said during a recent Q1 earnings call that customers are opting for more private-label products as “inflation pressures” persist.

Looking ahead…Consumers spent $78.8 billion online in May, a 7.1% YoY bump, per Adobe. But Pandya said that it’ll be worth watching if inflation continues to increase at a slower pace across categories in the coming months, while doing so at a level that doesn’t scale down demand too heavily.—KM

        

DE&I

At first blush

Ulta Beauty store entrance sign at a mall, northern Idaho. (Photo by: Do... Ulta

Ulta Beauty is hoping to bolster early-stage, BIPOC-owned brands with its new MUSE Accelerator announced this week. The 10-week program, kicking off in September, will offer eight brands $50,000 grants, along with resources for retail success across supply chain, merchandising, legal, and marketing.

“It’s about amplifying underrepresented voices,” Monica Arnaudo, Ulta’s chief merchandising officer, told WWD. “It’s about us curating and nurturing a diverse assortment, and bringing in a diverse assortment that is meeting the needs of our community.”

  • In February, Ulta said it was investing $50 million in DE&I, in part to support BIPOC founders and broaden its offerings. Last September, Ulta also announced its MUSE 100 grant program, offering $10,000 grants to 100 Black beauty creatives.

In addition to being BIPOC-owned, brands must be “shelf-ready” and have more than one product (preferably in the same category) to be eligible. They also can’t be currently sold in a major retailer.

  • At the end of the program, participants will have the opportunity to pitch Ulta merchants (and investors), but they’re not guaranteed to hit the retailer’s shelves.

Strong foundation: The hybrid in-person and virtual curriculum pairs participants with mentors like Black Girl Sunscreen creator and founder Shontay Lundy, BeautyStat Cosmetics founder and CEO Ron Robinson, and Mented Cosmetics co-founder and CEO KJ Miller.

“Having built and launched a brand from concept to aisle, I understand the critical importance of mentors as guides along the way—especially as a minority navigating new territories,” Lundy said in a statement.

  • Robinson told WWD these mentorships will help brands with opportunities for marketing and securing capital.

+1: Sephora has also turned to an accelerator as a way to support BIPOC entrepreneurs. Its six-month Accelerate, which first debuted in 2016, was revamped, starting with its 2021 class, to focus on BIPOC-founded brands; we recently spoke to two participants about how the program helped them prep for retail shelves.—EC

        

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WHAT ELSE IS BREWING

  • Amazon introduced a virtual shopping tool that employs augmented reality to let users try on shoes before buying.
  • Trader Joe’s workers in Massachusetts have filed to hold a union election.
  • Hasbro shareholders reelected the company’s 13 directors, according to a preliminary tally, rejecting a push for a shake-up by activist investor Alta Fox Capital Management.
  • ThredUp and The RealReal are among the founding members of the new American Circular Textiles policy group, which will focus on promoting circular initiatives.

FROM THE CREW

Get smarter about your money. Check out Money Scoop, the Brew’s personal finance newsletter. It’s got everything you want to know about student loans, mortgages, portfolio management, retirement planning, and more. We’re not concerned with meme stocks and the latest crypto trends—we focus on building habits and strategies for long-term wealth. Subscribe to Money Scoop here.

SWAPPING SKUS

Today’s top retail reads.

New horizons: We now know where Dave Clark, the former head of Amazon’s consumer biz, is going. He’s jumped ship to Flexport, the supply-chain software startup, as co-CEO—and talks about the move. (Forbes)

En route: Mapping Google’s last-mile play. “One failure on that package basically means that it’s unprofitable for the fleet operator,” said Shalin Mantri, group product manager at Google Maps Platform. (Supply Chain Dive)

Thinking ahead: Six ways retailers can deal with inflation, including taking a more focused approach to pricing and promotions. (McKinsey)

What’s new in tech: Want more of the latest news at the intersection of tech and retail? Emerging Tech Brew covers all the latest happenings, trends, and changes hitting the tech world, all in one place. Sign up here.

NUMBERS GAME

The numbers you need to know.

Summer is almost here, which means it’s time to crack open a cold one—with alcohol or without. If the latter piques your curiosity, join the pack: Non-alcoholic beer sales grew 21% over the past year in conventional channels (and increased 70% in the natural enhanced channels over the same period), according to SPINS data.

  • Sales for the craft varieties from Athletic Brewing and Lagunitas are up 250% and 618%, respectively.

Ready-to-drink cocktails, which took off during the pandemic, have seen sales outperform spirits and liquor over the past two years, rising 143% since 2020.

  • Hard-seltzer consumption is also continuing its streak, outpacing beer for the second year in a row with an 11% YoY bump in multioutlet channel stores.

“Gone are the days of beer and a few ‘hard’ options like soda or lemonade. Now hard seltzers, kombuchas, and pre-made cocktails have made the alcoholic-beverage scene much more exciting,” Scott Dicker, senior market insights analyst at SPINS, told us in an email. “Our data shows no signs of this marketplace slowing down and consumers can expect to see new innovations throughout the summer, as this trend is here to stay.”

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Written by Katishi Maake and Erin Cabrey

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