APPAREL

What's Better Than a Billion Dollars?

Two billion dollars. That’s the ambitious sales target Aerie yesterday told investors it’ll hit by 2023. Given recent performance, doubling its total revenue in three years looks doable.

• Sales at Aerie have grown by double digits for 24 consecutive quarters. 
• Its share of the US intimates market grew to 6.7% in 2020 from less than 2% in 2015, per Euromonitor data. 

To hit $2 billion...Aerie’s relying on much more than TikTok’s favorite leggings. Jen Foyle, Aerie global brand president and American Eagle Outfitters chief creative officer, told Retail Brew via email that it has big IRL expansion plans. 

• “Aerie has meaningful runway to expand to large consumer markets where we currently have a limited presence,’” Foyle said. “Today, we operate 342 stores and expect our footprint to reach approximately 550 stores by 2023.”
• Those markets = regions west of the Mississippi, including large metro areas like Dallas, Houston, Los Angeles, and San Diego.

What about the competition? Aerie’s gained attention, and market share, in the intimates category through its emphasis on inclusivity. Now several upstart brands are also finding success with anti-supermodel approaches. 

• One example is Parade, which launched in 2019 and sold 700,000 pairs of underwear in 2020.

Foyle told Retail Brew that Aerie’s “engaged and loyal customers” will make the difference. They embraced Aerie’s early empowerment messaging years ago, and they encouraged it to expand to athletic wear via its Offline collection in 2020. 

• While 60% of Aerie’s sales came from intimates in 2015, only 31% originated there last year. Meanwhile, “soft apparel” grew from 21% to 33%, and athletic apparel increased from 5% to 20% of sales in the same period. 
• Soon, Aerie plans to open more standalone Offline by Aerie stores to complement its online biz, Foyle said. 

“A tale of two brands”

Dickensian references are a minor flex from former English majors and a cautionary sign from retail execs like American Eagle CFO Mike Mathias. While it’s the best of times at Aerie, it’s less so at parent brand American Eagle.

• The denim-focused retailer projected revenue overall and at its flagship brand to fall by single digits in Q4 2020.
• AEO’s huge fleet of mall stores hampered it in 2020. As a result, it plans to cut up to 250 stores from its roster of 880 over the next few years.  

Bottom line: Aerie isn’t the first sister brand to outpace its originator’s growth—just look at Madewell and J.Crew or Old Navy and Gap. But if Aerie can meet its flashy goal while gaining share over competitors, it could be the first to sustain its breakout success long term.

IPO

Live From the NYSE

I was disappointed that this week’s headline IPO didn’t come with special pet stars. Otherwise, the latest retailer’s public debut exceeded expectations.

The details: Mytheresa was valued at $2.2 billion in its US initial offering after raising $406.8 million. Investors agree the site’s pulled off a feat Amazon Luxury hasn’t (yet): building an online experience that’s attracted 250+ top-tier brands.

• Mytheresa will allocate some funds raised toward international expansion and paying down debt tied to its former owner, Neiman Marcus.

CEO Michael Kliger noted that only 12% of all luxury purchases are made online. Mytheresa wants to gain digital share, but so do competitors old and new. Hudson’s Bay Company, for example, is reportedly exploring an IPO for its Saks.com banner as online luxury grows. 

Speaking of, execs anticipate sales will jump up to 25% in the year ahead. Mytheresa may need to come down from its high heels to outcompete rivals. While Mytheresa is profitable, it also owns its inventory, a strategy that’s sent IRL department stores to the retail graveyard before. 

Zoom out: On the same day, Hims & Hers officially went public via a merger with Oaktree Acquisition Corp. in a deal valued at $1.6 billion. The telehealth provider x digital pharmacy isn’t yet profitable, but it’s exploring international expansion and new services.

SPONSORED BY BAZAARVOICE

Everyone Else Is Online Shopping Too

We’ve spent a lot of time online shopping during lockdown. (Our pet chinchilla isn’t going to buy itself fuzzy winter sweaters, ok?) 

But it turns out everyone else has turned their attention online, too. And where shoppers go, brands must follow. In this case, that means a digital pivot, one that demands a full rethink of shopping experiences and user-generated content (UGC) strategies.

With the help of their network of more than 11,500 brands and nearly 7 million community members, Bazaarvoice has gathered intel your brand needs to thrive this year, and is ready to share it with you. 

Tune in to their next webinar and discover:

• The most engaging types of UGC
• Why social commerce should be on your radar
• How visual content can help you innovate

Plus, all attendees will receive a copy of their e-book, “A Picture’s Worth a Thousand Purchases,” which dishes on all Bazaarvoice’s UGC learnings.

RSVP to the webinar on 1/26 @ 1pm CST here.

TRENDS

2021 Vision

Whether they write it as e-commerce, eCommerce, or ecommerce, retail pros know the future is at least somewhat online. In Retail Brew’s first Overlooked vs. Overhyped trends report, our readers overwhelmingly ranked digital acceleration as the most important trend of the year ahead.  

Francis Scialabba

 *Record scratch* *freeze frame*

What’s making retailers so enthusiastic about their online stores to begin with?

Ask our guides to the trends that shaped 2020. In the spirit of the legendary Bed Bath & Beyond coupon, they’re a two for one deal.

For all retail pros: Social shopping and supply chain automation were ranked as overlooked forces driving digital innovation. New collections started by social media celebrities? Not so much, in your humble opinions.

For retail marketers: Marketing Brew unpacked the 2020 trends specific to the architects of #spon, from micro-influencers (overlooked) to advertising platform boycotts (overhyped). 

WHAT ELSE IS BREWING

• Away is searching for a new CEO again, Axios reports. 
• Walmart is expanding the states where it'll administer Covid-19 vaccines.
• Instacart will cut ~1,900 in-store shopper jobs this year.
• Imperfect Foods is valued at $700 million after its latest funding round.
• Saks Fifth Avenue CEO says luxury fashion is “comfort food” for wealthy shoppers.
• The NRF said its June conference will go virtual after all.

SPONSORED BY ORACLE NETSUITE

You realize you can optimize your supply chain, right, guys? Oracle NetSuite’s new e-book breaks down best practices for how your biz can use inventory management to optimize operations. Whether it’s demand planning to ensure you have enough stock, managing multiple vendors, or orchestrating the seamless production of goods, this e-book’s got you covered from cover to cover. Download it right here.

SWAPPING SKUS

Retail execs say they know their customers. But if anyone out there needs a reintroduction, the shopping behavior studies below should help. 

• We talk about e-commerce like it’s ruled by the ring light generation. But boomers are getting more comfortable with online options. (WaPo)
• It wasn’t just the pandemic that reshaped consumer spending. Many households that retailers relied on pre-lockdowns have faced financial stress for years. The consequences are now compounding. (Retail Dive)

FRIEND OR FAUX?

A reader recently told me acing our quiz was as satisfying as completing a NYT Crossword. Let’s see if you can achieve sweet, sweet victory by ID-ing the one fake headline among the stories below. 

1. Former Glossier execs are forming an anti-blanding branding agency.
2. There’s an Etsy economy for guillotine-themed jewelry.
3. Baseball autographed by Babe Ruth lists for $64,000...on Costco.com.
4. American Airlines starts wine delivery business with unused in-flight libations.

Keep reading for the answer. 

ICYMI

Catch up on the Retail Brew stories you may have missed. 

• Kroger Partners with Caper on Smart Cart Pilot
• The Fascination Blends Content and Commerce for DTC Brands
• Petco’s CEO Doesn’t Expect the 2020 Adoption Wave Will End

FRIEND OR FAUX? ANSWER

1. Nope, an anti-blanding agency doesn’t exist, to my knowledge.