E-COMM

The Whole(sale) Picture

Fashion retailers and their wholesale-loyal clients have overflowing closets in common. But one retailer    designer duo is cutting back: Net-a-Porter and Prada, in a new dropship deal, Business of Fashion reports. 

How it works: Prada will own and handle its inventory, which includes products from sister brand Miu Miu. Now, instead of charging a sizable markup, Net-a-Porter earns commission on each Prada sale. 

• Financial terms of the partnership aren’t available, but retailers commonly receive 20% to 30% commission under similar deals, per BoF. 

Straight from the source 

Until now, Prada has prioritized direct sales over stocking its bags and stilettos in outside retailers. DTC accounts for 90% of its sales. 

Why the dropship shift? It’ll provide Prada with more flexibility to swap in new products and, for Net-a-Porter, reduce financial risk from carrying inventory that might not sell. 

Potential downsides for Net-a-Porter include 1) decreased margins from relying on commission and 2) increased logistics and shipping costs.  

Retail remodels

As traditional wholesale costs rise with brands’ interest in selling DTC, rival luxury retailers are exploring new models.  

Another approach: Nordstrom is deploying e-concession to “grow its partner and shared revenue streams from 5% of the business to 30%,” Glossy reports.  

• Under an e-concession model, brands are responsible for designing a section on Nordstrom's website, setting prices, and shipping the products. 
• Unlike with dropshipping, Nordstrom collects a commission, and the brand makes more money from the sale. 
• Nordstrom also wants to reduce its reliance on wholesale from 85% to 50% of sales. 

Big picture: Farfetch baked dropshipping and e-concession into its business from its inception—and the format’s allowed it to reach profitability. But reverse engineering and scaling the model will be more complicated for the Net-a-Porters and Nordstroms of the world. 

STORES

All According to Floorplan

Ulta cut the ribbon on a second NYC flagship this morning. Judging by our phone tour with COO Kecia Steelman, this store’s a 3D model of beauty retail’s biggest pandemic shifts.

Aisle spreading: Display tables fronting most Ulta stores are out, registers at the back of the store are in. Steelman said this layout frees up space for more merchandising; it also happens to aid social distancing. 

Swatch parties: For a hands-off world, shelves include QR codes redirecting shoppers to Ulta’s GlamLab try-on app. The tech’s already caught on without shelf call-outs...  

• Shoppers tested 171+ million shades across 7,400 products via GlamLab last year, Steelman told Retail Brew. 
• The service sticks to customers like MAC glitter: 88% of GlamLab shoppers were repeat users. 

Looking ahead…“We're continuing to look at building out more locations in 2021,” Steelman told us. “There's this perception that brick and mortar is going away. We don’t ever see that as being the case because it’s a key to our success.”

Zoom out: In another vote for in-person eyeshadow tutorials, Sephora said it plans to open ~60+ new standalone stores this year. Unclear if they’re also adding 2050 tech finishes.

SPONSORED BY ASANA

Your Work Management Tools Need a Chiropractor

We align on a lot of things at work: ideas, next steps, budgets. While “aligned” may be one of our favorite buzzwords to throw around, what really needs alignment is tech usage in the workplace. 

Our days are full of chats and apps and calendars and inboxes. But swapping between them in order to align on goals only leads to duplicate work. 

The average employee switches between 10 apps around 25 times per day. It may give the illusion of fancy multitasking, but it really just means you need a work management tool realignment.

Call Asana the chiropractor for your workplace. They did their research and compiled their super smart Anatomy of Work Index so you can pinpoint those multitask pain points.

Get to the bottom of where management tech misalignment is occurring and how you can adjust it in a distributed working world.

Read the full report right here.

SUSTAINABILITY

A Rule of Green Thumb

Retail news trended green this week, but no two brands picked the same shade. 

In renewable energy: At least two retailers think it’s solar panels’ time to shine. 

• Ikea installed solar panels above a Baltimore store's parking lot. It’s one step in a plan to use 100% renewable energy by 2025. Ikea plans to build seven more solar parking lots at stores in Maryland and California. 
• Starting in 2023, Abercrombie & Fitch plans to convert its New Albany, Ohio, HQ and its distribution centers to renewable energy. 

In carbon pledges: Etsy already powers its marketplace with 100% renewable energy, but it’s now aiming to reach net zero emissions by 2030. Sustainable vendors and suppliers are key to that mission. 

• Sweetgreen is aiming for the same goal, but with a 2027 deadline. 

In food for thought: New Coupon Follow research suggests consumers’ sustainability expectations ≠ market realities. In the past year, 79% of consumers made more e-comm purchases, but more than half thought it was just as green as IRL shopping. (it isn’t.) 

WHAT ELSE IS BREWING

• Outdoor Voices named its new CEO: Gabrielle Conforti, former president of Urban Outfitters. 
• Affirm will launch a buy now, pay later debit card.
• Apple is Target’s newest shop-in-shop partner. 
• Costco will raise its minimum wage to $16/hour.
• Madison Reed raised $52 million to fund expansion efforts.
• It's official: L Catterton bought Birkenstock.

SPONSORED BY ORACLE NETSUITE

Hello, this is the future of retail speaking, telling you to future-proof your store with Oracle NetSuite’s white paper. It covers everything from improving the buying experience with the right technology to blending physical and digital shopping with omnichannel servicing. Learn how to make a next generation store and ensure future retail success here. 

SWAPPING SKUS

We haven’t dropped the b-word in a few newsletters. So today, we’re passing the mic to our Delaware bankruptcy court correspondents. 

• With few pages between some retailers and Chapter 11, last year’s wave of filings holds essential restructuring lessons. (WWD)
• Nick Woodhouse, president and CMO at the notorious ABG, shares how he decides which bankrupt brands deserve a second chance. (Business Casual) 

FRIEND OR FAUX?

We’re back at it again. Which of the three retail stories below is the fake?

1. Haribo’s friendship ring candy inspired a Taylor & Hart luxury ring worth 1.2 million gummy gummy candies. 
2. First came burgers, then seltzers, now toys. Travis Scott is teaming up with Hasbro to release his own line of action action figures. 
3. Acne Studio released a sneaker-sandal hybrid for $500. 
4. Popeyes instructed Taco Bell customers how to make their own tacos from Popeye’s chicken sandwiches. 

Keep reading for the answer.

ICYMI

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

• Skincare Brands See New Opportunities to Tap into US Beauty Market
• Inside Loeffler Randall’s Leap from Wholesale to First Solo Store
• DTC Hair-Loss Brand Keeps Tripled Its Revenue in 2020

FRIEND OR FAUX? ANSWER

Hasbro hasn’t signed Travis Scott, but you can still get his action figure in an auction.