2PM - The Argument for Food CPG Investing

Memo / Must Read: In the evolving industry of global commerce, third-party logistics providers have emerged as pivotal architects of retailer success, crafting the backbone of supply chain management for entities ranging from nascent startups to colossal conglomerates. No, 3PL is no longer just a service sector; it’s an ecosystem – indistinguishable from other elements of a retailer’s brand awareness – where economics, customer-centric strategies, and cutting-edge technology converge to propel businesses forward.

This new 2PM resource delves deep into the fabric of 3PLs, the economic underpinnings, customer acquisition intricacies, and operational nuances that define their success, with a special spotlight on one 3PL who seems to be mastering their niche in this competitive landscape. Continue...

Memo: the argument for CPG investing

Avoid or Pursue / 2PM: The tailwinds are with CPG, grocery, and meal delivery. Invest accordingly. By 2027 21.5% of eCommerce will be food and beverage (Statista). This number is currently sitting at sub 14%. That's some acceleration. A discernible shift has emerged. 

Lessons from 1,000+ eCommerce pricing tests

Pricing Data / Harvard: At most small and medium-sized eCommerce retailers, prices are typically set and updated in an ad hoc fashion without one clear owner. The process often starts by using a gross margin target, followed by some comparison with competitors, and then some adjustments from there.

Americans are suddenly obsessed with Stanley drinking cups

Consumer Obsession / BI: Trader Joe's mini tote bags have gone viral, just like the Stanley cups, thanks to a new era of fast-paced consumer obsessions.

Why many middle-tier retailers are struggling

Bifurcation Revisited / MR: "In this new economic epoch, the retail sector is reshaping itself to cater to the diverging fortunes of its consumers. The affluent are increasingly courted by high-end retailers and luxury brands, creating a market that thrives on exclusivity and opulence. In contrast, the financially constrained find solace in the burgeoning discount and off-price sectors, where value and affordability reign supreme." [2PM] // Modern Retail Excerpt: "Joann is the latest middle-tier retailer to suffer from slipping sales and lack of demand -- a phenomenon that has ramped up in recent years."

It’s Upper Middle Class Fashion

Bifurcation / WSJ: "Snyder’s business is best looked at as an upper-middle-class version of J.Crew. It’s the sort of boutiquey, but far from exclusive retailer that has become rarer and rarer in the American fashion landscape. "

Dollar stores devalued as low-income consumers struggle

Bifurcation / WSJ: Low-income consumers’ challenged wallets could mask the effect of the companies’ improvements in the first half of the year. J.P. Morgan estimates that U.S. consumers face a $2 billion headwind in the first half of this year compared with the last one after accounting for on-year changes in tax refunds, Social Security benefits, SNAP benefits, gas spending and student-debt repayment

Third Update to the DTC Power List, presented by Bold Metrics. All brands are updated with the secondary interest poll. The third update of 2024 sees some major movers: Scentbird (+22), Lovevery (+25), Adore Me (+83), Black Rifle (+48), Misfits Market (+63), ButcherBox (+50), Ghost (+50), Caraa Sport (+437).

800+ Brands Measured

How Temu is shaking up the world of online shopping

NATSEC / BBC: Despite controversy China's Temu is becoming a global online shopping force. According to Mr Rein, who is based in Shanghai, the firm has become a great source of pride and patriotism. "They're proud that Chinese companies can slay the e-commerce dragons from the United States like Amazon," he adds.

Red Sea shipping delays persist at Adidas, Gap Inc., Zara

Red Sea Logistics Revisited / Sourcing Journal: "The strategic significance of this historic waterway, connecting the Indian Ocean to the Mediterranean Sea via the Red Sea, cannot be overstated." [2PM] // Excerpt:  As more drama develops in the Red Sea, brands like Adidas, Inditex, Gap Inc. and John Lewis are still feeling the impacts from shipping delays.

Who Is the TikTokshopper?

NATSEC / BoF: TikTok Shop’s retention rate is surprisingly high, said Maloof: 50 percent of shoppers came back for another purchase in the six to nine month period following their first. For comparison, in the same period Temu saw a 41 percent retention rate, while Shein’s was around 20 percent. But sales growth has plateaued since November, according to Earnest Analytics.

CNBC: The U.S. Wants Bytedance to Sell TikTok

Member Intel: The Great Mall Resurgence / Excerpt: This shift is emblematic of a broader trend across the United States, where malls of various sizes and conditions are beginning to embrace Gruen’s integrated community concept. The success of such projects lies in their ability to offer a blend of retail, residential, and recreational facilities, thereby creating self-sustaining ecosystems that attract a diverse range of visitors and residents. The transformation of Southdale Center serves as a poignant example of how malls can evolve to meet the changing demands of the modern consumer, proving Gruen’s theory that malls should serve as central community spaces. If Southdale can do it, just six miles away from the Mall of America – any “B” class or “C” class property can do the same.

The billion-dollar unraveling of The 'King' Of Silicon Valley

Bolt's Gutsy Strategy Revisited / Fortune: "The $11 billion valuation is hefty, especially given that Shopify competitor BigCommerce is trading at below a $2 billion market capitalization. According to filings, Bolt’s total revenue for 2021 was expected to be between $216.2 million and $216.6 million with a Non-GAAP operating loss of $19-20 million." [2PM] // Excerpt: The Silicon Valley wunderkind rode his fintech unicorn Bolt to the bank. Then came the lawsuits and money squabbles - and a brutal valuation crash that wiped out much of his fortune.

Google debuts retail media solution with Lowe's in beta

Retail Media / Retail Touchpoints: Google has launched a new offsite retail media solution in closed beta and Lowe's will be one of the first retailers to test the solution.