Happy Monday. It’s getting hot out there, and surely nothing could make your labradoodle happier, or be more adorable to watch, than seeing the pooch enjoying some ice cream made for dogs—a highlight of our weekend.
In today’s edition:
—Katishi Maake, Jeena Sharma, Glenda Toma
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Francis Scialabba
Inflation is setting records, and there’s little indication it’s going to slow down any time soon. The consumer price index hit a 40-year high in May with an 8.6% YoY increase. Some of the largest increases in prices were in food and energy, but the core CPI, which excludes those categories, still rose 6% YoY, slightly higher than estimated.
This volatile environment is ripe for winners and losers, said Brian Mandelbaum, CEO of Klover, a fintech app with 3+ million users. From May 2021 to May 2022, its data showed an average 13.1% increase in out-of-pocket spending per purchase.
- Klover users are buying 12% fewer items for the same amount of money than they did a year ago, Mandelbaum told Retail Brew.
The winners…include retailers with bargains. Mandelbaum pointed to Costco, Dollar General, Five Below, HEB, and Aldi as companies outpacing spending right now on an index basis, per Klover data.
- He added that beauty—noting Ulta and Sephora—has also been relatively resilient. The average purchase per visit at Ulta is up 4% YoY, according to Klover data.
David Ritter, partner and managing director of Alvarez & Marsal’s consumer and retail group, agreed that value is showing its resilience. “Those formats that try to provide the best value to the customer, even in non-inflationary environments, are more prone to be able to deal with this and are set up to cut costs in a way that preserves their business model but also [makes] them more economically viable,” he told us.
The losers…are mostly the retailers stuck in the middle, some with a surplus of inventory (cough, Target, cough), both Ritter and Mandelbaum said.
- Ritter said cost-cutting isn’t in the DNA of middle-of-the-road retailers, so they will “generally struggle in an inflationary period.”
“They’ve overbought, and now they have to figure out ways to actually liquidate that inventory, which ends up hurting them from a top-line perspective going forward,” Mandelbaum said.
Looking ahead…Retailers will have to reevaluate the pricing of their full assortment because, while they can often pass on small inflationary moves onto the consumer, “we’re at the point now where these are not small inflationary moves,” Ritter noted.
“It’s a zero-sum game,” he said, though he expects more cost-cutting beyond what you’d typically expect—from operations to labor to more “indirect costs.”
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“Think everything from cleaning to shoveling snow in the parking lot.”—KM
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Francis Scialabba
It’s no secret that women are still left behind when it comes to gender equality in the boardroom: In 2022, women occupied only 19.7% of board roles across the world, per a report by Deloitte. And while some retailers like Macy’s are making strides with a board that is 50% women, there are still the number of woman CEOs to consider.
- Only 8.2% of CEOs at Fortune 500 companies were women, according to the 2021 Women CEOs in America report.
A new draft law in the EU aims to tackle that: The proposal, which would apply to publicly listed companies in all 27 EU member countries, says that women must either account for 40% of non-executive board roles or 33% of executive and non-executive seats combined.
Better choices: Beth Sehgal, global director of diversity, equity, and inclusion at Kearney, told Retail Brew that “even without the quotas, we’re seeing that consumers are increasingly expecting companies to lead by example.”
- “They’re going to make that very clear by where and how they’re spending money,” she said. “And they’re going to spend their money with companies committed to diverse representation—companies who create equitable and inclusive work.”
Zoom out: Efforts to address gender equality in boardrooms have been underway across the pond as well, with varying degrees of success. A law in California, similar to what the EU is proposing, mandated that public companies with headquarters in the state appoint women to their boards of directors (the number is dependent on the size of the company).
- The law was struck down in May. Still, by the end of 2021, 31% of board seats were held by women—two times the number in 2018, according to data from the California Partners Project.
Nonprofits, including the Women on Boards Project that we profiled earlier this year, have also been pushing for increased representation. WOB, for example, has already successfully placed 35 women on boards over the last two years.—JS
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You have a flawless social media strategy, your budget is approved, and you even found the *perfect* influencers for your brand. But what happens after your site starts seeing this influx of influencer traffic?
If you don’t have the right digital marketing platform, that traffic might not stay on your site for long, let alone convert. To turn your site traffic into revenue, turn to Listrak. With its Growth Xcelerator Platform (GXP), your social media traffic (thank you, influencers) will do what it should: make you $$$.
Listrak’s GXP will:
- identify more anonymous site visitors
- collect more zero- and first-party data
- personalize their shopping experience
- retarget them with highly relevant messaging
- deliver *guaranteed* results (yes, you read that right!)
That’s how Listrak GXP accelerates the purchase and drives increased conversions for you and your brand. Get a guaranteed revenue estimate here.
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Francis Scialabba
What does it take to live a zero-waste lifestyle? “Doing it took a little bit of relearning but there’s nothing extreme about it, really,” Lauren Singer, an influencer who has cut trash from her life, told Morning Brew. “I still live the same life that anybody else does.” She’s apparently not alone:
Enough people are interested in buying zero-waste products that Singer founded and opened the Package Free Shop in Brooklyn in 2017, where she sells unpackaged and low-waste products. Colorful soap bars are placed meticulously on shelves, and a stainless steel bulk bar holds laundry and dish detergent. Smaller jars line the shelves and a tree stands in the middle of the shop. Her aesthetic doesn’t fit the stereotypical visuals of an environmentalist—it’s more Gwenyth Paltrow and less hippie.
But she wants to show that sustainable living doesn’t have to look one certain way. “First, you just have to make people want to look and pay attention,” Singer said. “And so one great way to do that is just to make things look beautiful.”
That Goop-inspired aesthetic reflects the air of luxury that has attached itself to the lifestyle, because being garbage-free isn’t necessarily cheap. Replacement products in zero-waste stores or advertised on social media are expensive: $13 for toothpaste tablets, $18 for a shampoo bar, another $18 for the conditioner…Despite the exclusivity, sustainability is big business.
Click here to read the full story on Morning Brew.—GT
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Prologis, a major landlord of warehouses and distribution centers used by Amazon, Home Depot, and FedEx, will acquire Duke Realty in a $26 billion deal (including debt).
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Amazon announced that it will introduce drone delivery in Lockeford, California, later this year.
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Revlon is reportedly preparing to file for bankruptcy.
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Magic Spoon, the better-for-you cereal brand, filled up its bowl with $85 million in funding.
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Microsoft Bing wants a retail marketplace of its own to compete with Google Shopping.
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Drive more sales with social. To reach an audience immersed in social media, you need a social commerce strategy that aligns with the platforms they engage with most. In their Guide to Social Commerce: Capabilities by Platform, Mavrck shows how to use social media platforms like TikTok, Instagram, and Snapchat to sell products and build brand loyalty—and which platforms are best for your brand and audience. Download it here.
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Today’s top retail reads.
Total recall: Once upon a time, startups readily lowered product prices to acquire more customers, despite losing money. Now, with rising interest rates and inflation, that trend is ending. (The Atlantic)
Taking stock: From Puma to Fila, BoF assesses how sustainable the biggest sportswear companies really are. (Business of Fashion)
Turning it around: Food startups are trying to reinvent the frozen-food aisle by using healthier and higher-quality ingredients. “People are looking with fresh eyes to a category that was once sort of abandoned,” said Matt Davis, co-founder and CEO of Mosaic Foods. “You’ll see a lot of new companies explore frozen, and a lot of consumers come back.” (ModernRetail)
Keep ’em entertained. With the Loop player, you can stream digital signage and hundreds of music and entertainment channels throughout your business. Perfect for waiting rooms, restaurants, and shops, and all you need is a TV. Oh, did we mention it’s free? Order yours today.*
*This is sponsored advertising content.
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At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending retail topic.
Retailers appear to be going into overdrive: Last week, Sam’s Club announced it was partnering with autonomous-truck company Gatik to make deliveries to its stores in the Dallas-Fort Worth area.
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Meanwhile, grocer Giant Food said it added two new fully electric vehicles to its delivery fleet.
You tell us: But with rising inflation and a potential recession looming, should upgrading delivery fleets be a priority for retailers right now? Cast your vote here.
Circling back: Travel is coming back, but there are still rising costs to contend with. We recently asked if pricier products would impact how you shop while traveling, and close to half (48.5%) said it would probably impact their shopping to some extent, but not drastically. More than a third (36.8%) won’t be shopping (or shopping very little) while traveling this season.
- And 14.7% said rising costs wouldn’t impact their shopping decisions at all.
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Katie Gatti, the author of our Money with Katie newsletter, is obsessed with personal finance—specifically, the loopholes, nuances, and big questions that traditional advice tends to lack. Her weekly newsletter takes a spicy approach to spending habits, investing best practices, and tax strategies.
So, what are you waiting for? It’s time to start manifesting your financial freedom. Subscribe for free today.
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Written by
Katishi Maake, Jeena Sharma, and Glenda Toma
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