Morning Brew - ☕️ The price is right

How Miss A has made $1 beauty a multimillion-dollar biz.
Morning Brew June 14, 2022

Retail Brew

Ziff Media

Hey, hey. A brief public-service announcement: Father’s Day is coming up this Sunday, so, if you’re celebrating, make sure to grab those socks and ties ASAP if you’re scrambling for a last-minute gift.

In today’s edition:

Erin Cabrey, Jeena Sharma, Katishi Maake

BEAUTY

Top dollar

Miss A store Miss A

In a world where $1 pizza now costs more than a buck, Miss A is working to ensure its $1 cosmetics business doesn’t meet the same fate.

While the Dallas-based company sells a slew of products from home organizers to underwear, it’s best known for its dollar cosmetics and beauty tools, which beauty YouTubers first put on the map after it was founded in 2013 by husband-and-wife duo Jean and Kenneth Baik.

It debuted as an e-comm site to test the concept and opened its first stores in Texas malls in 2016. Now, after garnering a boost from a new audience on TikTok and sales of between $25 million and $50 million over the past two years (and which grew 10% YoY in 2021), Jean Baik told Retail Brew that Miss A operates 15 locations throughout Dallas-Fort Worth and Houston, with ~300 employees across its headquarters, warehouse, and stores.

  • It just expanded outside the Lone Star State for the first time with a store in Albuquerque, New Mexico, she said. This summer, it’ll add locations in Austin and San Antonio, plus Arkansas and Oklahoma.

Keeping prices low—even below the typical drugstore threshold—hasn’t been an easy road, Baik, also the company’s chief merchandising officer, told us, especially as competitors like Elf Cosmetics haven’t been able to maintain that $1 price point.

“The beauty industry, we thought, was very saturated, and we wanted to find that blue-ocean market. And we thought that this $1 concept was very niche. Everybody can’t do it because the margins are tight. In the beginning, people were like, ‘How do you even sell these products for $1?’”

Fit the bill

While Miss A began by selling brands like L.A. Colors and Elf, it debuted its own beauty brand, AOA Studio, a few years in, and has since expanded to include skin-care line AOA Skin and accessories line Official Key Items.

  • Still, beauty makes up around 90% of its online sales and about 60% of its in-store sales, Baik said.

Baik said the company wanted to duck below the typical $3–$10 range for drugstore beauty products to avoid that crowded market. And Elf’s decision to raise prices above $1 products gave Miss A “more of an opportunity” to stick it out.

But, uh, how do they sell everything for $1? (Especially since Baik said Miss A is profitable, and it hasn’t taken any outside funding.)

Click here to keep reading.—EC

        

TECH

Tried and tested

Amazon's virtual try-on tool for shoes Amazon

Augmented reality has gained traction over the past few years, alongside online shopping. And Amazon, which has been stepping into the tech, recently debuted its latest virtual try-on feature—for shoes.

  • Available on the company’s iOS app (in the US and Canada), shoppers can point their phone’s camera at their feet to see how the shoe fits. See, the feature doesn’t yet tell users if the shoe fits…we’ll come back to that.

But first, let’s see how Amazon has dabbled in virtual try-on over the years:

  • In 2017, it introduced an AR view to its app for the first time, which allows shoppers to see how items from chairs to tables and more would appear in their spaces.
  • The e-comm giant would follow this up in 2020 with what it called “Room Decorator,” further focusing its AR experiments on the home.
  • That same year, Amazon unveiled Made for You, a custom-clothing service that uses VR to let shoppers see the final product (before they see it IRL). This April, the company added athletic tees to the mix.

A shoe-in? To really elevate its footwear feature, John Harmon, senior analyst at Coresight Research, told Retail Brew that Amazon needs to introduce an actual fit check. “The thing about footwear, my opinion is that the fit is kind of binary: It fits or it doesn’t,” he said.—JS

        

TOGETHER WITH ZIFF MEDIA

Class is (almost) in session

Ziff Media

Back-to-school shopping ain’t what it used to be. There are nuances in timing, in-store vs. online shopping, the infamous influence of inflation, and so much more.

To save brands and retailers the headache, Ziff Media gathered key insights on the highly anticipated back-to-school rush. They captured some pretty interesting info nuggets: Did you know that 54% of back-to-school shoppers say they won’t make a purchase unless they find a deal or sale? Or that 50% of Americans are open to new retailers and brands this season?

There’s a whole lotta opportunity in those insights. And just like a first-day-of-school outfit, a brand’s back-to-school approach sets the tone for the rest of the year (aka Q4 holiday season).

Learn how to make back-to-school szn more profitable and less stressful. Check out Ziff Media’s insights here.

CPG

Cheers to that

Two cans of Coca Cola's Jack and Coke in a can Coca-Cola

Coca-Cola is getting its fix this year: The bev giant will release a new canned cocktail, and this time, it’s joining forces with Jack Daniel’s owner, Brown-Forman.

This is the fourth alcoholic bev that Coca-Cola has introduced in the past two years, following collabs with Constellation Brands and Molson Coors. But it’ll be the first created with the signature Coke brand.

  • The Jack-and-Coke cocktail is slated to debut in Mexico later this year before expanding into other markets.

The big picture: Ready-to-drink cocktails were the fastest-growing spirits category in 2021, according to the Distilled Spirits Council of the US. RTDs took market share from beer and hard seltzers, increasing sales by 42.3% YoY to $1.6 billion in 2021.

  • In the past two years, RTD cocktail sales outperformed spirits and liquor, up 143%, according to SPINS data.
  • Keep in mind, however, that pre-mixed cocktails are still a small portion of the spirits industry—less than 5% of $35.8 billion in revenue, per data cited by CNBC.

Filling up: Plus, the space could get crowded quickly. PepsiCo already linked up with Boston Beer Company to release Hard Mountain Dew earlier this year.—KM

        

WHAT ELSE IS BREWING

  • Wonder Group, Marc Lore’s made-to-order food-delivery startup, brought in $350 million last month from investors, valuing it at about $3.5 billion.
  • Amazon has offered to share marketplace data with third-party sellers in an attempt to “persuade EU antitrust regulators to close their investigations,” sources told Reuters.
  • Wholesale prices shot up 10.8% YoY in May, according to the Bureau of Labor Statistics.
  • Cardenas Markets, a grocery chain, will be acquired by PE firm Apollo Funds for an undisclosed amount.
  • Grubhub, with the help of technology firm Cartkens, plans to deploy autonomous-delivery robots on college campuses.

TOGETHER WITH VERICAST

Vericast

Clipping coupons is cool again . It’s true: Gen Z shoppers love a good deal, especially discounts on products and services that focus on comfort and sustainability. Ready to reach younger shoppers? Vericast’s 2022 Retail TrendWatch report has the full scoop on customer expectations, and it’s available right here.

SWAPPING SKUS

Today’s top retail reads.

Déjà chew: Former McDonald’s restaurant locations began reopening in Russia with a similar menu and a new name that translates to “tasty and that’s it.” (Reuters)

Shopping for solutions: How the grocery industry is working to keep workers and shoppers safe in the wake of the Buffalo tragedy. (Grocery Dive)

Growth serum: Ulta’s Ultamate Rewards loyalty program exploded on TikTok, thanks to influencers sharing tips on how to score massive discounts on products like the $430 Dyson Supersonic blow-dryer. (Glossy)

Build a better audience: Black Crow AI helps brands build predictive audiences with their first-party data. Boost ROAS, reduce CAC, and more. Oh, and FYI: Brands that spend $40k in performance Facebook marketing qualify for a free 30-day trial.*

*This is sponsored advertising content.

TIME MACHINE

Cookie Monster eating cookies Sesame Street/Sesame Workshop via Giphy

What happened in the world of retail this week in 1903 and beyond? Retail Brew takes you way, way, way back.

This week is so rich with food history that even our one non-food milestone has Peanuts in it:

  • On June 14, 1989, groundbreaking began for the Mall of America in Bloomington, Minnesota, with a Snoopy mascot holding a shovel, a nod to Peanuts creator Charles M. Schulz, who was born in nearby Minneapolis.
  • On June 16, 2017, Amazon announced it was buying Whole Foods in a ~$13.7 billion deal, another major move into brick-and-mortar retail following a test run of an Amazon Go store in Seattle the year before.
  • On June 17, 1903, Ruth Wakefield, who made what is believed to be the first chocolate chip cookie in the 1930s, was born in East Walpole, Massachusetts. Wakefield and her husband owned the Toll House Inn, where she concocted this perfection.
  • Also on June 17, but in 2020, Quaker Oats, a PepsiCo subsidiary, announced that it would finally abandon the brand name Aunt Jemima, which had long been criticized for its racist origins; the name was changed the next year to Pearl Milling Company.

EVENTS

A party up in NYC

A party up in NYC

Can I make it? Damn right, I'll be on the next flight. If you got that reference (and like us, went straight to Spotify for Nelly's greatest hits) we're bringing you a must-attend event.

Stay connected to the generations of tomorrow: join us in-person on Wednesday to listen as Danielle Brown, the VP of marketing for cookies and crackers at Campbell Snacks explores Gen Z’s evolving consumer tastes. Claire Tassin, retail and e-commerce analyst at Morning Consult, will also join to unpack shifting Gen Z purchasing habits.

In two sessions, you'll hear:

  • How a new generation of spenders is making their preferences and values known
  • What retailers can do to address the shifts in consumer spending power
  • How a brand can make a statement—and know how to nail the message

Come for the food and drinks, stay for the conversation. We can’t wait to see you there!

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Written by Erin Cabrey, Jeena Sharma, and Katishi Maake

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