2PM - No. 372: The Great Restructuring

The other digital divide

Part One: The Great Restructuring / Margin: For better or worse, the virus has accelerated The Great Restructuring of our economy. Almost overnight, we decided that we are going to do even more things online (hence software eating the world) and those who are better poised to take a bite out of that are seen as the potential winners. When you couple that with the fact that the overall pie seems to be shrinking, you can see where things are going. There are fewer holes to stuff your money in, and even a smaller number of those holes are guaranteed to not burn it. 

Here's what 2PM forecasted in August 2019. But for many hard working, middle Americans, something is lost in translation. With inflation, under-employment, rises in college tuition, mounting consumer debt, and healthcare costs – typical consumption has fallen. And families who earn a comfortable wage are living closer to the lower end of the middle-class range or below. In short, levels of wealth are polarizing and retail’s bifurcation is following suit. Read the rest.

2PM Data: Quarterly growth of the real GDP, the market is undeterred | Source: BEA

The rise of the upper middle class

Part Two: The Great Restructuring / Washington Post: Surely, it’s no secret that the middle class (as we once knew it) is a fleeting socioeconomic stronghold. The narrative of what has happened to those middle class families has become at times polarized, and heavily politicized. The friction here is not in a debate over the shrinking traditional middle, but rather, in regards to the direction that the migration away from it is occurring.

How Gymshark became a $1.3bn brand

DTC Brands / Forbes: Sports apparel brand Gymshark has just hit a $1.3bn valuation after securing investment from General Atlantic. Started by Ben Francis in 2012, the company plans to expand further internationally. Here's how they grew so fast and here's what entrepreneurs can learn from their approach.

Editor's Note: Francis has said he wants Gymshark to be to the UK what Nike is to the US and Adidas is to Germany. Whether that level of growth or influence is possible for upstart brands has been a long-standing question in DTC circles. Whether or not mass, billion-dollar brands could still be built in a relatively short span of years is still up in the air. But setting the groundwork for that growth in the first 10 could make all the difference. From here on out, General Atlantic has said it’s looking at Gymshark’s social media marketing prowess, which involves representation from both social media stars and athletes, rapid eCommerce growth and the continuing focus on health and wellness as the brand’s next growth drivers.

The month old Hollywood finally, actually died

Streaming Economy / New York Times: Indeed, the studio bosses seem to have lost their central place in the American power structure and become simply the well-compensated employees of ordinary companies, with ordinary attention to the bottom line. There is one exception, Disney, which also proves the rule: Bob Iger’s Disney+ started just in time to catch the streaming wave and provide a business that met the coronavirus moment.

Re-read the closing of The Hundred Year Titan. Before Walt Disney Studios’ 100th anniversary, you will be able to rent a blockbuster premiere through your Disney app. With respect to the overturning of the Paramount Decrees of 1948, this is Walt Disney’s end game. Read the rest. 

Second-hand luxury still shines at The RealReal

eCommerce / WSJ: With website traffic up despite lower ad spend, luxury consignment company, The RealReal, sees heightened potential of new repeat customers. This coming as a dose of optimism, at a time when many metrics of success for the luxury consignment market are down.

Fashion brands are banding together to reduce packaging waste

Logistics / Refinery29: The fashion industry has come to grips with their long-standing collective impact on the environment (hint, it’s not great). Many companies have been innovating for less waste and greater sustainability. Now, they’re looking to do it together.

Meet the next-normal consumer

Consumer Psychology / McKinsey: Companies must rethink how and where they connect with consumers. They should expect to encounter structural challenges and upheaval across multiple dimensions. Overall consumption is shrinking, the shopping basket is undergoing a significant change in mix, and consumers are changing the ways they get their information.

Premium drink startups go DTC to rival Pepsi & Coke

DTC Brands / Modern Retail: Companies like Swoon, Sanzo, Sunwink and Olipop have built out robust e-commerce channels, and, as a result, they’re seeing renewed interest from wholesale distributors and grocery partners. It makes sense, since consumer packaged goods (CPG) sales have had historical spikes, with Procter & Gamble recording its biggest annual gains since 2006 this month.

With excess inventory, brands are seeking out ways to move product

Logistics / Glossy: Brands have begun seeking out alternative channels to offload inventory. They include quietly shipping products to resale platforms, striking deals with marketplaces that don’t require big inventory orders and linking with one of the new platforms that have cropped up with the sole intention of making use of the unsold inventory.

MLS, U.S. Soccer score content distribution deal with bleacher report

New Media / Front Office Sports: “This agreement doubles down on our commitment to U.S. soccer and growing a consequential fanbase here domestically where we see the biggest opportunity in capturing the hearts and minds of a new generation of soccer fans,” said Raphael Poplock, Bleacher Report senior vice president of new business development.

How Ralph Lauren does diversity

Brand Equity / Vogue Business: The company called its employees in 64 countries, including workers furloughed in the pandemic, into remote roundtables, using phone lines for unscripted, confidential discussions. Each roundtable was facilitated by a certified social worker or psychologist — though the person’s qualifications weren’t always announced — and managers were guided with training sessions in advance to respond empathetically and to listen rather than speak.

Born in 1818, Brooks Brothers is the oldest living retail brand in American history. It should be honored for its contributions to American lore, politics, and tradition. Its story has long been of fascination to me. To my dismay, and for a short time, the company viewed my work in menswear as competition. I’ll explain. The retailer had been around for so long that it felt a part of the country’s fabric. What anyone in brand retail understands is that fabric preferences change with the times, even if it takes 200 years.

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