Morning Brew - ☕ The other side

How Target chases non-sales revenue.
March 13, 2024

Retail Brew

Hello, hello. After years of internet debate over whether the Fruit of the Loom logo ever actually featured a cornucopia, fact-checking site Snopes finally confirmed it hadn’t and that the cornucopia seems to be an example of the phenomenon of collective misremembering, aka the Mandela Effect. Now, the real question: Why hasn’t the brand released limited-edition cornucopia logo merch?

In today’s edition:

—Alex Vuocolo, Andrew Adam Newman, Erin Cabrey

STORES

Choosing ‘other’

Target storefront Scott Olson/Getty Images

Last week, Target reported its first full-year sales decline since 2016, closing out a 2023 that marked a difficult period for the general merchandise retailer. Straddling the line between discounter and department store, the company has struggled to attract customers who have cut back on discretionary spending and traded down to less expensive options when possible.

In response to these macroeconomic trends, Target has made a concerted effort in recent months to promote its affordable offerings, including relaunching one of its low-cost private-label brands and introducing a new product line of essential items—some priced lower than $1.

But selling merchandise isn’t the only way Target brings in revenue. The catch-all “other” category in its Q4 earnings report saw gains that helped offset the decline in sales, increasing 5.1% in 2024, while full-year sales dropped 1.7% from the previous year.

Now, this somewhat ambiguous category could be headed for a shakeup: Target is launching a paid membership program, along the lines of Amazon Prime or Walmart+, while also expanding an in-house advertising business that could bolster non-sales revenue in the years to come.

“Over the next decade, we expect to continue seeing outsized growth in other revenue,” CFO Michael Fiddelketold shareholders during an earnings call.

Target isn’t alone in trying to expand non-sales revenue.

Keep reading here.—AV

     

FROM THE CREW

The financial podcast you’ve been looking for

The Crew

You’re crushing it at work, but can you say the same for your finances? This weekly podcast from Katie Gatti Tassin breaks down topics relevant to millennial and Gen Z money, like the rent vs. buy equation, the perfect save rate, and the most rewarding luxuries worth splurging on. (And yes, she covers how to invest, set up a 401(k), and retire early, too.)

See why this illuminating podcast has 7m+ downloads. Tune in now.

OPERATIONS

Fast and furieux

Shein shopping bag. Yuichi Yamazaki/Getty Images

What all the TikTok haul videos of Shein shopping sprees generally don’t mention is hauling of another sort, namely the likelihood that the fast-fashion items will be worn only a few times before they get hauled to a landfill. Add the environmental impact of producing that clothing and allegations of human rights abuses in fast-fashion manufacturing facilities, and it’s no wonder that brands like Shein draw the ire of critics.

Now French officials are going after what they call ultra-fast fashion brands, and lawmakers have targeted Shein by name in a proposed law that would slap a fee on fast-fashion purchases of up to 10 euros ($10.93 at this writing), or 50% of the price, by 2030.

“L’ultra fast-fashion est une catastrophe écologique,” French Environment Minister Christophe Béchu wrote on X, in one of those sentences that give the false impression that you can be understood in Paris just by speaking English with a French accent.

In response, Shein provided a statement to AFP, the French news agency, stating that it adheres to the “best international practices in terms of sustainable development and social commitment.”

Keep reading here.—AAN

     

COMMUNITY

Coworking with Bill Thayer

Bill Thayer headshot Bill Thayer

On Wednesdays, we wear pink spotlight Retail Brew’s readers. Want to be featured in an upcoming edition? Click here to introduce yourself.

Bill Thayer is founder and CEO at Fillogic, a logistics as a service platform that has partnered with retail real estate companies like Simon, Brookfield Properties, and Tanger Outlets.

How would you describe your job to someone who doesn’t work in retail? We take underutilized spaces in shopping malls and deploy logistics technologies and operations to make them more efficient.

One thing we can’t guess about your job from your LinkedIn profile? I wear multiple hats: leader, parent, referee, disciplinarian.

What’s your favorite project you’ve worked on? In the past six months, the area that I have enjoyed the most is building out our reverse logistics platform. The Fillogic team solved an operational problem with technology, productized it, and rolled it out to multiple customers.

Which emerging retail trend are you most excited about right now, and why? Middle-mile optimization. This is an area where lots of retailers and brands need help, specifically in efficiency, cost-savings, and sustainability, and we’re uniquely positioned to solve these issues for them.

What’s your go-to coffee order? A Monster Energy drink.

Worst piece of advice you’ve received? “You should be more active on social media.”

Keep reading here.—EC

     

TOGETHER WITH FIREWORK

Firework

Video has become the gold standard. Did you know consumers are 51% more likely to make a purchase after watching a brand video? Based on a survey of 750 US consumers, Firework’s playbook is filled with critical statistics and actionable insights to help you understand consumer behaviors regarding video commerce. Give it a read.

SWAPPING SKUS

Today’s top retail reads.

Stealing away: Following a CNBC investigation into a group of professional thieves that police say were selling Ulta goods on Amazon, Ulta CEO Dave Kimbell said he believes e-commerce sites “give more scale and more opportunity” for those involved in organized theft. (CNBC)

Water mark: With its $67 million funding round announced this week, canned water maker Liquid Death doubled its valuation to $1.4 billion. (Inc.)

Record records: The UK has been seeing a “vinyl renaissance” as vinyl records reach the highest sales levels since 1990, thanks in part to Taylor Swift’s 1989: Taylor’s Version released last year. (Fortune)

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