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Sponsor: As Adweek recently noted, brands are having a difficult time using AI to create campaigns. There isn't a better argument for you to demo Optiversal. It helps retailers generate landing pages, product copy, and evergreen marketing content to attract customers primed to buy.
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Seven Eras and Durable Brands (Read Here): Consider this essay a scaffolding for future writings, discussions, and forecasts on pre-DTC and post. Eras are determined by the methods upon which the majority of brands begin, scale, and – if successful – become durable.
The three pillars of a durable brand are a superior management team, sustainable acquisition and distribution models, and proper unit economics. The retail landscape has been a canvas of continuous change, reflecting the evolving needs, technologies, and cultural shifts of society. Each era represents modernity vis a vis a brand’s path to durability.
Through research, I identified seven distinct eras, each marked by its unique approach to selling and customer engagement. From the early days of production-centric strategies to the modern era of personality-driven branding, these phases collectively narrate the story of how retail has become an integral part of our daily lives and cultural fabric.
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Durable Brands / Vogue Business: The retail industry has seen a significant shift towards leveraging influencers for product promotion, driven by the merging of fashion and entertainment. High-profile events and destination shows, often featuring celebrities and influencers, have become vital in creating buzz and generating media impact value (MIV), as seen in events like Pharrell Williams' debut for Louis Vuitton and the Barbie film premiere.
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Durable Brands / TBP: Specialty retailers are increasingly focusing on omnichannel strategies, integrating digital and physical commerce to enhance the customer experience, a transition still underway in the traditional grocery sector. Key elements of this unified shopping experience include data integration, inventory visibility, seamless checkout, user-friendly digital platforms, flexible fulfillment options, and analytics.
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New Update to the DTC Power List, presented by Bold Metrics. All brands are updated with the secondary interest poll. For the new feature on polled secondaries interest, we combined a poll (n=97) with internal data to assess whether those polled and others would pursue an interest in secondary stock sales. We weighted the poll as 90% of the the assessment. We believe that interest in purchasing secondaries is a positive indicator for the current brand equity, potential brand equity, and current financial health of the retailers mentioned.
800+ Brands Measured
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eCommerce Business / BoF: This holiday season, retailers expect $173 billion worth of goods to be returned, a significant rise from last year's $135 billion. To combat the rising costs of processing these returns, brands are adopting strategies such as introducing fees for online returns, encouraging exchanges over refunds, and improving warehouse restocking processes.
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eCommerce Business / RetailDive: The suit alleges that the company uses anti-competitive tactics and price-fixing algorithms that harm marketplace sellers and consumers. The trial is not expected to start until 2026, with both the FTC and Amazon acknowledging the complexity and the need for extensive discovery, leading to differing opinions on the appropriate timeline for trial readiness.
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eCommerce Business / WAPO: A trend of "bin stores" is emerging, where shoppers can find bargains on returned items from major retailers like Kohl's, Target, Walmart, and Amazon, often starting at just $1. These stores attract crowds who enjoy the thrill of treasure hunting through bins of miscellaneous goods, with prices varying based on the day and stock availability. The popularity of these stores is growing, as they offer a second life to returned merchandise and an exciting shopping experience for customers looking for unique finds and deep discounts.
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DTC Brands / Fanatics: Michael Rubin, the CEO of Fanatics, leads a dynamic, fast-paced lifestyle, focusing on expanding his company into a dominant force in the sports collectibles and apparel industry. He actively engages in business growth strategies, including acquisitions and new ventures like online sports betting, while maintaining a down-to-earth approach. Despite facing challenges such as antitrust allegations and product quality issues, Rubin's vision for Fanatics is to transform it into a sports industry powerhouse, akin to Amazon in retail.
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DTC Brands / NYT: The acquisition comes after Farfetch's value plummeted from over $23 billion in 2021 to around $200 million due to spiraling costs, debt, and a slowdown in the global luxury market. This move will delist Farfetch shares, wipe out its existing shareholders, and offer the company a chance to refocus and grow as a private entity under Coupang's experienced e-commerce leadership.
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DTC Brands / Retail Brew: Uniqlo, known for its focus on "elevated basics," contrasts with Gap's declining market presence and plans to open 20 new stores in the US and Canada in 2024, with a longer-term goal of 200 locations by 2027. This expansion comes as Uniqlo's international business, particularly in North America, shows strong profitability and growth, appealing to consumers with its value-oriented approach amidst challenging market conditions in other regions like China.
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DTC Brands / Glossy: Oddity successfully debuted in the public market this year, with significant revenue growth driven by its brands Il Makiage and Spoiled Child. CEO Oran Holtzman emphasizes the importance of separate brand leadership and the efficient use of consumer data and technology in driving growth and profitability, asserting that a move into physical stores is currently unnecessary for Oddity's continued success.
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Wearables Woes: This data from IDC's report on wearables was eye-opening. As of Q3 2023, Apple owned 20% of the market. This number was down compared to Q3 2022 however. This could be attributable to the continued growth of smaller wearable companies like Whoop. Apple can afford to lose the watch business while it re-develops its oxygen-sensing software but they likely won't enjoy the hardware sales losses in the meantime. You can learn more about this below. 👇🏽
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Wearables / Verge 👇🏽: Apple, facing the tangible consequences of this legal dispute, preemptively pulled the affected watches from its online store and plans to appeal, but the process is lengthy and complex. The ban highlights the legal challenges big tech companies can face and the potential for significant impact on their products and business strategies.
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Wearables / SBJ 👇🏽: Jaime Waydo joined Whoop as its CTO in 2022. At Whoop, she leveraged her expertise in artificial intelligence to develop the Whoop Coach, a product that combines Whoop's data and performance science with OpenAI's generative AI to provide personalized health and performance recommendations to users. The technology, first of its kind in the market, represents a significant advancement in applying AI to personal wellness, offering precise, tailored advice based on individual biometric data.
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Apple vs. Masimo: Here's everything that I have learned from this rare case of patent law derailing a hardware manufacturer at this stage of their product launch and scale.
The Background and Current Situation: The dispute originated around ten years ago when Apple reportedly approached Masimo for a partnership involving blood oxygen features on wearables, eventually leading to Apple poaching several of Masimo's engineers. This culminated in the release of the Apple Watch Series 6 with an SpO2 sensor in 2020, sparking the legal battle. In January 2023, the International Trade Commission (ITC) sided with Masimo, ruling that Apple Watches infringed on Masimo patents. An import ban was issued in October, to be effective post the 60-day presidential review period ending December 25. As a result, Apple preemptively halted sales of Apple Watch Series 9 and Ultra 2 models starting December 21 online and December 24 in stores.
Impact on Apple: Apple's wearables business, which includes the Apple Watch, generated $13.48 billion in Q1 2023. The ban could significantly impact both Apple and its supply chain. Apple emphasizes the health benefits of its watches, supported by endorsements from a number of health organizations. The ban could affect ongoing and future clinical studies that rely on Apple Watch data. Apple contended that Masimo used litigation to support its entry into the smartwatch market and argued that the Masimo smartwatch is not a direct substitute for the Apple Watch.
Legal, Technical, Presidential Options: Apple plans to appeal the ITC's decision and may consider a settlement or licensing agreement with Masimo. Designing around the patents, possibly through firmware changes, is another option. President Biden does possess the power to veto decisions made by the ITC during a specified 60-day review period. The current review period concerning the Apple Watch dispute is set to conclude on December 25th. While presidential vetoes of ITC decisions are not common occurrences, they are within the realm of possibility.
In 2012, an import ban on certain iPhone and iPad models was vetoed by then-President Barack Obama. This action was taken amidst a lengthy confrontation between Apple and Samsung. In the present situation, Apple might be hoping for a similar intervention from President Biden.
Looking forward for Q1 2204: Given Apple's overwhelming position in the fitness wearable market, the temporary absence of its flagship models could open opportunities for competitors. However, Apple's strong market presence and customer loyalty may limit the long-term impact. I expect Apple to address the problem before then. But in theory, consumers might temporarily shift to other models like the Apple Watch SE or explore offerings from other brands.
As you can see above, the brand's strong reputation in health and fitness could sustain consumer interest until the resolution of the dispute. This situation underscores the delicate balance between innovation and intellectual property rights . It highlights the potential for legal disputes to disrupt market dynamics, even for tech giants like Apple.
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More in commerce: These All-American brands aren't American (CNN). Alcohol eCom Growth Slows (BD). Zulily's website is still down (Retail Dive). The Suez Canal attacks can upend global trade (NYT). Alexander Wang recommits to DTC (WWD). Vuori has a new CMO (WWD).
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