2PM - Letter 917: FUTURE PROOFING

Key Memo: Profitability in online retail is no longer a journey, it’s a race. The SVB crash, while minimally impactful on many companies in direct-to-consumer or retail technology, will still accelerate brands’ and software companies’ need to reach a form of sustainable profitability moving forward. The past few years have been a slog for many, personally and professionally. First, the pandemic, then the crypto crash, and now this.

While the SVB contagion has yet to spread like the 2008 meltdown, the assets involved reached near 2008 numbers, with more fallout to come.

The most interesting times inspire the greatest creativity; brands will need to employ that creativity to survive macroeconomic headwinds. Tough times can actually produce tailwinds if handled directly. Here is a rundown of five changes that we foresee and how brands can proof themselves with the hopes of turning a headwind into a tailwind.

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Close to 190 banks could face Silicon Valley Bank's fate

Finance / USA Today: On the heels of Silicon Valley Bank's collapse earlier this month, 186 more banks are at risk of failure even if only half of their depositors decide to withdraw their funds, a new study has found. That is because the Federal Reserve's aggressive interest rate hikes to tamp down inflation have eroded the value of bank assets such as government bonds and mortgage-backed securities.

Close to 190 banks could face Silicon Valley Bank's fate

Finance / USA Today: On the heels of Silicon Valley Bank's collapse earlier this month, 186 more banks are at risk of failure even if only half of their depositors decide to withdraw their funds, a new study has found. That is because the Federal Reserve's aggressive interest rate hikes to tamp down inflation have eroded the value of bank assets such as government bonds and mortgage-backed securities.

Silicon Valley's hubris nearly ruined the U.S. economy

Opinion / Fortune: America has always seen itself as a shining city upon a hill, an exceptional country that doesn't have to follow the old rules. And since the birth of the modern internet in the mid-1990s, tech exceptionalism has made Silicon Valley the economy's city on a hill - a place where the normal rules didn't apply.

The magazine that impacted a generation

Linear Commerce / ESPN: As sneaker culture exploded in the mid-1990s, Eastbay went from an "if you know, you know" niche following, to a pinnacle pillar of the industry. Tucker distinctly remembers the first pair of shoes he purchased from Eastbay -- the white and black Air Jordan IXs. And he will never forget his all-time favorite Eastbay cop, like an adult fondly looking back to his or her No. 1 childhood Christmas gift.

DTC brands prepare for TikTok ban

Advertising / AdAge: As TikTok braces for a possible ban in the U.S., d​​​​​irect-to-consumer brands that have been massively successful on the platform don’t seem to be hitting the panic button—or altering their TikTok strategies—just yet.  

A forgotten extinction event in American retail

Retail Real Estate / The Bulwark: Nobody really mourns this or even thinks about it; when ruminating on this general theme, we usually think about the hollowed-out Main Streets and shuttered mom-and-pop establishments. But the regional discount department store chain that operated 50 or 100 or 200 stores, at 40,000-70,000 square feet each, in two or three or four states, in rural or small-town settings—when we lost those, we lost something important, too.

Updated For March 15: 793 brands covered. This week’s snapshot of brands 21-40 saw quite a bit of movement with Frank Body seeing the greatest week-over-week improvement. All categories of the list have been updated with major movement throughout the list with ButcherBox being noted as a Shopify client.

Sunscreen brand Vacation takes pool party vibe to the suburbs

DTC Brands / BoF: Vacation, the "leisure" beauty brand, likes to be known for one thing: making sun care fun. Since soft-launching direct-to-consumer in April 2021 - first targeting the listeners of always-on internet radio station Poolside FM - the line has committed to that philosophy with sunscreen that looks like Reddi Wip, oils that smell like Chardonnay, retro-inspired collaborations with tennis brand Prince and ads that ooze Club Med.

Temu's ambitions are bigger than beating Shein

eCommerce / BoF: Since its US debut last September, Temu has drawn plenty of comparisons to Shein. Both platforms were launched by Chinese companies (Temu by PDD Holdings, which owns Pinduoduo; Shein has since shifted hits headquarters to Singapore) and seemingly overnight became massively popular with thrifty shoppers drawn to $3 T-shirts and $7 sandals.

Worth a re-read: Where NATSEC meets Commerce 

Great merchandising never goes out of fashion

Retail / McKinsey: Great merchandising, like great value, never goes out of fashion. In a dynamic and increasingly digital apparel, fashion, and luxury market, companies that get merchandising right tend to outperform their peers. One reason is that the umbrella term "merchandising" describes many of the skills associated with excellent retailing.

Circular Fashion and DTC / Member Brief (🔐): Many of us walked Goodwill’s aisles out of necessity. I rocked $3 T-shirts with pride. Today, I could have probably sold a few of the same pieces for 30 times the price that I purchased them. There is a quote from The Status Revolution that applies to the reCommerce boom.

Human beings aren’t born altruists and turned into monsters by money. From the cradle, we’re greedy and needy. We turn to altruism as a result of penury, circumstance, or good breeding.

Today, secondhand goods are not a result of altruism or the like. Rather, it can be marker of the juxtaposition of luxury and sensibility. Gone are the days of being shamed for shopping for previously worn items. This should be a signal to suitable brands that reCommerce can be a marketing solution.

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