Morning Brew - ☕ Diversion history

How can beauty brands deal with product diversion?
June 13, 2023

Retail Brew

Bluecore

Welcome to Tuesday. McDonald’s has announced that viral stuffed-animal brand Squishmallows will make an appearance in its Happy Meals this year. As a wise Steve Buscemi once said, “How do you do, fellow kids?”

In today’s edition:

—Erin Cabrey, Katishi Maake, Kristen Parisi

BEAUTY

Creating a diversion

Closeup of a person’s hands placing a beauty product into a shopping basket. Freshsplash/Getty Images

When you see salon-grade or premium beauty and personal care products being sold at not-so-premium locations, like mass retailers, drugstores, or grocers, it’s possible they’re not really supposed to be there.

This is often the result of product diversion—when third-party distributors sell products to retailers they weren’t authorized to—which is an issue that’s plagued the category for decades. Paul Mitchell, L’Oréal, and Unilever are among many who have dealt with it over the years.

The latest victim is Olaplex, whose products are currently listed online at retailers like Walmart at discounted prices despite Olaplex stating in its first-quarter earnings call that it doesn’t sell in grocery or mass retail.

  • A combo pack of its 8.5-fluid-ounce No.4 Bond Maintenance Shampoo and No.5 Bond Maintenance Conditioner is currently being sold on Walmart’s website for $49.99—about $10 less than the price on the brand’s website. Walmart did not return Retail Brew’s request for comment.

When asked about whether the brand was sold at Walmart at the Goldman Sachs Global Staples Forum last month, Olaplex CFO Eric Tiziani confirmed that, “What you’re seeing there is a diverted product into those customers.”

“This is very common in the professional hair care category; you’ll see other brands in those channels through diversion as well,” he said. “We have levers that we do seek to pull legally, operationally…and we intend to root that out. It’s not easy to do overnight.”

So how does this happen, and what can brands do to stop it? With lots of changing of hands during the distribution process, it’s tough to keep track of, but there are a few things brands should keep in mind.

Keep reading here.—EC

     

TOGETHER WITH BLUECORE

One! more! time!

Bluecore

Wanna keep customers comin’ back for more? Then you need to create an encore-worthy shopping experience—and Bluecore has the secrets of the trade.

They partnered with Lula and Georgia to help them scale their digital marketing efforts. Let’s just say, the results speak for themselves.

During their first year of working with Bluecore, Lulu and Georgia increased opted-in customers by 5%, boosted first-time buyers by 133%, and ramped up repeat purchases by 229%. Huge numbers.

How’d they do it? Bluecore focused on 3 main priorities:

  • transforming casual visitors into subscribers
  • inspiring new subscribers to make first purchases
  • reducing the time it takes for customers to buy again

Start crushing your numbers. Read Bluecore’s press release.

PAYMENTS

Run it back

hand swiping credit card in visa machine Francis Scialabba

All right, let’s do this one last time.

Congress has reintroduced legislation that could lower fees merchants pay when customers swipe their credit cards. Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Ks.) introduced the bill, the Credit Card Competition Act, last year, but it ultimately died in committee.

  • The newly proposed legislation has additional bipartisan support from cosponsors Sen. J.D. Vance (R-Ohio) and Sen. Peter Welch (D-Vt.).

If the bill passes and is signed into law, merchants would have the option of routing credit card payments through an unaffiliated network, as opposed to having to go through Visa or Mastercard’s networks.

  • The National Retail Federation (NRF) said this change “could save consumers and merchants $11 billion annually.”

“Currently, retailers are burdened with exorbitant and non-negotiable ‘swipe’ fees imposed by Visa and Mastercard, which control 80% of the market,” NRF said in a statement. “These fees hinder growth and make it challenging for retailers to invest in their future.”

Last Wednesday, a version of the bill was introduced in the House with additional support from Republicans. As with the Senate bill, last year’s bill wasn’t voted on in the House after it was sent to committee.

Keep reading here.—KM

     

LABOR

U life

Smiling young female teacher helping a student working on a laptop during a lesson in a school classroom Goodboy Picture Company/Getty Images

“Five years ago, Walmart, one of the country’s largest employers, rolled out Live Better U (LBU) in partnership with Guild Education to empower employees to expand their education,” writes HR Brew’s Kristen Parisi:

Walmart said the US-based initiative was so successful, that it’s now expanding to include associates in Canada.
Walmart isn’t alone in its efforts to educate its workforce. Its partner Guild Education also works with Hilton, Lowe’s, and Target all have education programs.

Read the whole story here on HR Brew.

     

SPONSORED BY MARIGOLD

Marigold

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SWAPPING SKUS

Today’s top retail reads.

Crunch the numbers: TreeHouse Foods—which makes private-label snacks for companies including Amazon, Trader Joe’s, and Costco—looks a little different today than it did 10 months ago. (Barron’s)

Energy brink: The caffeine levels of energy drinks are surging, with some cans having as much as a six-pack of Coca-Cola. (the New York Times)

Cash flow: FreeWater gives water away but still makes money, thanks to advertising on the packaging. (PYMTS)

Decision time: The era of flying blind with business decisions is over. The Brew’s Quarterly Planning Sprint will change how you plan strategically and ensure your business runs smoother than ever. Sign up now.

Decrease drop-off: A 5-star customer experience makes the difference between a completed sale…and a complete flail. Tune in to Retail Brew’s virtual event for retail’s latest and greatest do’s and don’ts, sponsored by Cloudinary.*

*This is sponsored advertising content.

WHAT ELSE IS BREWING

  • Consumer prices rose only slightly in May, the slowest pace in more than two years.
  • The Westfield San Francisco Centre mall’s owners, struggling after Nordstrom announced it would close its store there a month ago, are surrendering the property to its lenders.
  • Instant Brands, the maker of the Instant Pot cooker, filed for bankruptcy protection.
  • DoorDash said it might pursue legal action over a New York City minimum hourly wage of $17.96 for food delivery workers set to take effect on July 12.
  • Grubhub is laying off 400 corporate workers, about 15% of its staff.
  • Retail media advertising revenue worldwide will surpass TV advertising revenue by 2028, according to a report by media buyer GroupM.

SOCIAL GATHERING

A roundup of our favorite retail multimedia content from across platforms this week—from TikTok to Twitter. We’re keeping you hip, and you’re welcome.

Sneer goggles: Why Scott Galloway thinks the new Apple Vision Pro headset is “likely to fail.” (Prof G Markets podcast on Spotify)

Kicks starter: Pete Davidson shops for sneakers at Concepts in New York. (Complex on YouTube.)

High art: Gotham, the New York cannabis store, sends someone who’s sampled their products to the Frieze New York art fair for her impressions of the artwork…while under the influence. (Gotham on Instagram)

Jolly good: The most refined and British Kmart store-closing announcement ever. (@liamgildea_ on TikTok)

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Written by Erin Cabrey, Katishi Maake, and Kristen Parisi

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