SMALL BIZ

When Brands Become Investors

In a new wave of grant and pitch programs, it’s the retailers that are opening their wallets.

In contests: Lowe’s is partnering with Shark Tank investor Daymond John to launch a small business pitch competition. The format will work just like the show, but with an emphasis on 1) home improvement and 2) diverse businesses.

• Earlier this summer, Lowe’s pledged $30 million in grants to small businesses helmed by people of color and women, in addition to $25 million in grants to rural businesses. 

In checks: American Express will distribute $10 million in grants for Black-owned small businesses through a partnership with the U.S. Chamber of Commerce Foundation. 

• The program’s geared at revitalizing businesses devastated this year. Black-owned small businesses were almost twice as likely to close during the pandemic, per Federal Reserve Bank of New York data.
• Up to 25% of businesses selected for grants will also be women-run.

In context: Mass retailers and their payments providers have always written checks to small businesses. But following this summer’s antiracist protests, several retailers and DTC brands introduced new grants for Black-owned businesses, ranging from $5,000 to $50,000.  

Venture this

From haircare to hardware, retail brands are attempting to fill a void created in part by banks and venture capital. Historically, the firms signing checks have excluded founders across several demographics. A sample:

• Only 1% of venture-backed enterprises in the U.S. have Black founders, per RateMyInvestor data.
• VC investments in female-founded teams hit an “all-time high” last year at 2.8% of all capital raised, TechCrunch reported.

Retail grants = essential addition. In the Lowe’s case, a connection to a retailer guarantees both monetary support and shelf space for a small business, minus the pressure to pursue excessive growth. 

But after thousands of businesses were left behind, retailers can only help so many. Lowe’s CEO Marvin Ellison told CNBC that more than 800,000 businesses applied for its updated grant, and it expects over one million applicants for the pitch program.

GROCERY

Where the Price Is Right

Whole Foods CEO John Mackey: People aren’t going back to shopping in stores.

The rest of grocery: People aren’t going back to shopping in your stores.

Placer.ai reports traffic rebounded at most major grocery store chains in August, with one notable exception. Shopper visits increased YoY at Albertsons, Kroger, Publix, and Trader Joe’s last month, but declined 22.5% annually at Whole Foods. 

• Grocery traffic returns followed incremental upticks across retail.
• But Whole Foods isn’t losing traffic just because its customers are more cost-conscious: It’s also making investments to prioritize its e-comm arm, like developing dark stores. 

Driving the cart? Shoppers aren’t returning to select grocery aisles for that fresh sheet cake smell, but for better prices. A survey of ~1,000 consumers by micro-fulfillment firm Takeoff Technologies found shoppers who are loyal to stores prioritize price over speed or convenience. That's incentive for grocers to consider lowering delivery fees and product prices. 

• Sure enough, Whole Foods said yesterday it's prepping for a fresh round of price cuts.

Zoom out: Whether shoppers prefer their bags plastic or pixelated, overall grocery sales have softened since March. The slowdown has chains like Kroger considering additional discounts, per CNN Business.

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DTC

Pet Care Is a Mastiff Business

A new breed of direct to consumer (DTC) brands shares retail’s most loyal customers: Very Good Boys. 

The latest: Subscription DTC darling Public Goods entered the pet care category yesterday with a line of grooming and food products for dogs and cats. It’ll add to the line over time. 

By my count, four DTC brands focused on elevated pet essentials have launched since March: Maev (holistic dog food), Finn (nutritional supplements for dogs), Cat Person (cat food and accessories), and Sundays (more holistic dog food). 

Why now? Premium pet care was having a Moment before lonely millennials cleared out shelters, since owners are increasingly inclined to treat their pets like people. Unlike stiletto lines, pet brands can justify launching now: Pet care is the only retail category that didn’t take a hit during the 2008 recession, and it’s proving its mettle again in 2020.

Zoom out: As new entrants fetch their share of sales, incumbents are also growing. Chewy, the online-only pet line owned by PetSmart, added more customers this year than in all of 2019. And Petco is considering a sale or an IPO as interest in pet care increases, Bloomberg reports.

WHAT ELSE IS BREWING

• Kohl's is cutting 15% of its corporate workforce.
• Oscar de la Renta is the first and only brand to launch on Amazon’s new “luxury” platform. 
• Simon Property Group will close its malls on Thanksgiving Day.
• Klarna is now valued at over $10 billion following a new funding round. 
• H&M's recovery update: “Better than expected.” 
• Walmart hasn’t given up on making a TikTok investment. 

SPONSORED BY SQUARE

There’s a change in the air. Heads up retailers: 66% of shoppers say they plan to increase holiday spending. With online shopping jumping 20% since March, this is a chance for retailers like you to grow your holiday sales. Make the most of the rush with Square’s guide to holiday selling.

FROM THE CREW

We’re only days into PSL season, but many of you are already firming up your holiday sales strategies. And this year, major sales events like Black Friday and Cyber Monday will look a lot different than promotions of yore. 

So I want to hear from you. Retail Brew is running a quick survey to gauge how the retail pros in our audience feel about BFCM in 2020. All responses are 100% anonymous, and will help me help you ~ navigate ~ a challenging holiday season ahead. 

TL;DR: Take our inaugural BFCM survey; make Retail Brew’s coverage better.

SWAPPING SKUS

There isn’t a Retail Brew for your ears yet, so here are the new retail podcasts I’m listening to. But not while I write, because I’m not a psychopath.

In leadership: Want more tips on becoming DTC royalty than 240 characters can provide? Arri Bagah, CEO of Conversmart and DTC Day, dives into e-comm leaders’ proven strategies in The Personal Mastery Podcast. Guests I’m most excited to hear from: Emmett Shine from Pattern Brands and Vivian Kaye from KinkyCurlyYaki. (Apple Podcasts) 

In beauty: L’Oréal, Estée Lauder, and Unilever recently shared initiatives to re-evaluate problematic skin-lightening products. How did the world’s biggest beauty companies let that become a category to begin with? Unfair, a four-part series that premieres on Thursday, will explore. (Glossy) 

ICYMI

The Retail Brew stories you may have missed or want to skim again. 

• When Fashion Month Gets Phygital, Results Are Mixed
• Can 10.10 Become the Next Major Sales Holiday? 
• Away’s Sale Lowkey Broke the Internet