Morning Brew - ☕ Shock waves

Thrive Market’s CEO on consumers being electrified about shipping.
Morning Brew July 18, 2022

Retail Brew

Winmark

Hello there. It must be Monday, because you’re looking so fresh and dewy. And we hate to start on a down note, but we just read in Bloomberg that the latest metric of inflation is that those majestic loaves of bread from small bakeries are increasingly hitting the $10 threshold. And that just might be the worst thing since unsliced bread.

In today’s edition:

—Andrew Adam Newman, Katishi Maake, Glenda Toma

DELIVERY

Ship ahoy

packages at a front door Francis Scialabba

Last week, we looked into how the USPS’s decision not to purchase more electric vehicles could collide with some retailers’ sustainability commitments. And one retailer that was happy to talk about shipping is Thrive Market. Since it was founded in 2014, the company has not only purchased carbon offsets for all the orders it ships, but also only ships via ground transportation, which it estimates uses 84% less CO2 than packages that travel by plane.

“When you ship by air, it’s an order of magnitude more carbon impact…there’s just no comparison,” Nick Green, CEO and co-founder of Thrive Market, told Retail Brew. “We made a decision very early in the business similar to the carbon offsets to say, ‘We will never ship anything [by] air. Period. Full stop.’”

As for the USPS, it turns out that Thrive Market ships only via UPS and FedEx, but Green said that’s because he believes those carriers were a better solution for the large parcels his company tends to ship, and was not based on their carbon-reduction actions.

Electrified consumers: Still, Green thinks that consumers are growing more and more aware of the environmental impact of shipping.

“What’s really interesting and exciting today is that conscious-consumer attitudes are going mainstream,” he said. “Back when we first started doing carbon-neutral shipping, most of our members hadn’t even heard of that…because it just was not in the zeitgeist yet. Today, it is.”

Click here to read the full story.—AAN

TOGETHER WITH WINMARK

What’s old is cool again

Winmark

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Talk about a win-win-win.

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SPENDING

(Almost) back in session

Back to school shopping illustrated by a phone with a mobile checkout screen Francis Scialabba

Get your TI-84s ready—not just for back to school, but also to keep track of $$$.

This year, as inflation and prices surge, K-12 spending is predicted to reach a new high—$34.4 billion, or about $661 per student—according to a new report from Deloitte.

  • Back-to-college shoppers are expected to spend $28.3 billion, roughly $1,600 per student.
  • Although more than half (57%) of shoppers are worried about inflation, the need for back-to-school supplies supersedes those concerns given that per-student spending is up 8% YoY.

“Parents…will sacrifice for their kids, and, given how goofy the last couple of years have been in school, I think they all want to make sure they get off to the correct start,” Rod Sides, Global Deloitte Insights leader, told Retail Brew.

Back to normal-ish: Spending on technology for K-12 is expected to slow down as shoppers plan to decrease their spending 8% YoY on tech products.

  • Dollars this year are expected to go to more traditional supplies, as well as apparel and accessories, for K-12 students. One possible reason is that 81% of respondents said schools now provide the tech needed for classroom instruction.
  • College tech spending, however, is predicted to grow 22% YoY—which came as a slight surprise to Sides.

“The K-12 parents were able to kind of peel back their spending,” he said. The “college side being up 22% is a little higher than we would have normally seen, but it’s generally a bringing-your-own-device experience.”

What should retailers do? Rather than start the back-to-school shopping season earlier, which was the case last year because of supply-chain constraints, Sides recommended that companies prepare for customers who are on the hunt for discounts.

  • 77% of respondents said they will trade brands if prices are too high or if their item is out of stock.

“Consumers are going to be a little more patient because there’s a little more supply,” he said. “[They] probably will have to be a little more intentional on pricing and discounting to be able to drive the sales.”—KM

        

MARKETING

You’ve got mail

Steve from 'Blues Clues' holding a letter Blues Clues/Nickelodeon via Giphy

For those of you that miss mail time, don’t be so blue. Marketing Brew’s Katie Hicks recently explored why some marketers are shifting their focus from inboxes to mailboxes. First up…

As a Gen Z/millennial “cusper,” Emily Loof, development and marketing manager at education nonprofit Colorado Youth for a Change (CYC), said she’s pushed for an increased use of direct mail in her current and past roles. Since last year, she said CYC has “about doubled” its direct-mail marketing budget.
In addition to seeing increased donations, Loof said she’s also received feedback that indicates younger people may be itching for more things in their mailbox. One person “tagged our organization on Facebook and said, ‘This is so cool. Like, I never get letters from people that I donate to,’” she told Marketing Brew.
Given growing data-privacy concerns, clutter in online advertising, and demand for brand authenticity, some marketers we spoke to said the best way to reach younger consumers could be through some good ol’ fashioned snail mail.
“What were the last five things someone sent you in the mail?” Lauren Alt-Kishpaugh, VP of marketing at offline marketing automation platform Postal, asked. “I could name the last five brands that have sent me something in the mail. I can’t do it with people who email me.”

Click here to read the full story on Marketing Brew.—GT

        

TOGETHER WITH BOLT

Bolt

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SWAPPING SKUS

Today’s top retail reads.

Leg up: Costco’s $1.50 hot-dog combo might get most of the love, but its $4.99 rotisserie chicken also appears to be “inflation proof.” (Vox)

More perks: How coffee shops are planning to jolt consumers back to their locations. (ModernRetail)

In an instant: The rapid-delivery space grew as fast as it was brought back to reality. Where do the startups that remain go from here? (Grocery Dive)

Tune in: IRL shopping is back, so boost your retail biz’s vibe with Loop TV. Each free player streams hundreds of on-demand channels + gives you the chance to earn $$$ monthly rewards. Sign up here.*

*This is sponsored advertising content.

EVENTS

Come Brew with us

Come Brew with us

Retail Brew is living up to its full name at its next *IRL* event in NYC. What’s on the menu? Networking with retail pros, insights from execs at DSW and VMLY&R Commerce, breakfast, AND—in true Brew style—a made-to-order coffee bar. Don’t miss it.

WHAT ELSE IS BREWING

  • H&M announced it would end operations in Russia, where it has 181 stores.
  • Starbucks’ Russia locations, meanwhile, will reportedly be sold to a local restaurateur. The coffee giant announced its exit back in May.
  • Nike unveiled a new store concept, Nike Style, in Seoul that features gender-neutral sections and content-creation stations.
  • Amazon will begin testing drone delivery in Texas, adding to trials underway in California.
  • Restaurants are still short-staffed, down 6.1% from pre-pandemic levels, according to the National Restaurant Association.

HOT TOPIC

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.

With inflation continuing to rise, CPG companies have to play a delicate game when it comes to packaging. Shoppers can only handle so many price increases, so shrinkflation is the route some are taking to avoid that altogether.

Last week, PepsiCo raised its revenue outlook after a strong earnings report, which saw it raise prices on items like Doritos and Gatorade.

  • But the company also said that it’s seeing success with “small-format” snacks and mini cans of soda.
  • PepsiCo said demand for smaller packages is part of a healthy-eating trend, but it appears it’s also very much a shrinkflation strategy that’s paying off.

“It’s becoming increasingly obvious that smaller pack sizes are really important,” to companies trying to appeal to more customers, Duane Stanford, editor of Beverage Digest, told CNN. “If you do it right, it’s definitely a win.”

You tell us: Why do you believe consumers are gravitating toward smaller packaged snacks and drinks? Cast your vote here.

Circling back: Last week, we asked if you were concerned with consumers using BNPL to pay for everyday goods as opposed to big-ticket items? The overwhelming majority of you (81.7%) said yes, while 12.9% believe that’s not the case if it’s what they need to do. The rest (5.4%) aren’t sure yet.

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Written by Andrew Adam Newman, Katishi Maake, and Glenda Toma

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