RENTAL

Closet Sharing Is Caring

Rental-mageddon seemed inevitable when Covid-19 wiped weddings, music festivals, and corporate conferences from the calendar in 2020. Those IRL events could call for multiple outfit changes—back-to-back Zooms, not so much.

Closet check: Rental services took some tough hits, but they weren’t rendered obsolete. Closet share companies told Retail Brew that over the past year, consumers shifted from renting the runway to renting for their home hallways. 

• At Nuuly, Urban Outfitters’ rental service, 2020’s top performers included sweatshirts, joggers, and waistless dresses. “One of our sister brands, Free People, has an amazing casual assortment, so we were able to react quickly there,” David Hayne, Nuuly president and CTO at URBN, told us. 
• Christine Hunsicker, CEO of rental tech platform CaaStle, told Retail Brew that renters across its services developed the same casual preferences as shoppers. 

Category check: Joshua Luft, CEO of children’s subscription rental platform Everlasting Wardrobe, told Retail Brew requests from parents for comfortable kids' clothing steadily rose across its 300+ brands. 

• Children grow regardless of prevailing trends, Luft said, and parents see rental as a way to dress their changing kids without spending a fortune.
• Last year, brands sent excess inventory to Luft’s platform for free. The goal: to use apparel they couldn't sell to build brand awareness with rental clients. 

Men’s rental also gained momentum in 2020, Hunsicker told us—so much that CaaStle extended its partnership with Express to include menswear in September. “On average, [men] stay with the service longer and are more focused on rotating pieces,” she said.  

Hot rental summer

Rental companies are just like us: After months in the same groutfit, they’re finally ready to dress up again. Memberships at rental services are ticking up alongside formal apparel sales and travel plans. 

• Hayne told us Nuuly has noticed “considerable improvement in subscribers” since the winter. Interest in dressier dresses is trending up. 
• Luft said Everlasting Wardrobe has recorded “continuous growth,” though he declined to provide a specific membership count. 

Driving the trend: “Rental services deliver a real value proposition to consumers looking to get dressed without making commitments to a post-pandemic wardrobe,” Hunsicker told us.

Jessica Ramírez, retail research analyst at Jane Hali & Associates, added that as shoppers are more mindful of sustainability, “we believe rental and resale will continue to gain momentum with brands.”

What retailers gain: “Even throughout the pandemic, we have found that once consumers join a service, they are highly loyal,” Hunsicker said. And more loyalty = more consistent monthly revenue = higher e-comm retention, no matter the category. 

DTC

Not a Harry Situation

Harry’s house of brands might be on its way to becoming a mansion. Last week the company announced a $155 million Series E, which will be used to bring more brands under its umbrella.  

CPG family tree: Most of the cash will go toward buying and integrating omnichannel CPG brands into Harry’s roster, which includes everything from personal care to pet products.    

• Harry’s will also funnel the new capital toward design, marketing, consumer insights, and DTC expertise.
• The round brings Harry’s valuation to $1.7 billion. 

Brands on brands: Harry’s isn’t the only DTC company taking the “house of brands” approach.

• Thirty Madison raised $47 million in new funding last August to expand its DTC offering of consumer products to treat chronic indigestion, migraines, and hair loss. 
• Last May, Helix Sleep launched Allform, which sells custom-made sofas and sectionals. 

Looking ahead: Harry’s is looking to snap up brands that 1) operate in segements with unmet consumer demand and 2) it feels it can support with the branding, design, DTC, and go-to-market infrastructure it has already built, Tehmina Haider, head of Harry’s Labs, told Retail Brew. 

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PHARMACIES

Covid Cashout

As states ramp up their vaccination efforts, drugstore chains like Walgreens are hoping for their own financial shot in the arm. The stores have seen lower-than-usual sales during the pandemic and are hoping vaccination-driven foot traffic helps change that.  

Immunization season

As of March 31, Walgreens had administered 8+ million vaccine doses, and anticipates profiting from the program in the second half of the year.

• Walgreens hopes to administer 26 million–34 million doses this fiscal year.
• CVS Health, which had administered 3 million doses as of February 16, has the capacity to administer 20 million–25 million per month. 

But...but...but: So far, any additional sales Walgreens has rung up via its vax efforts have been offset by other pandemic-driven factors. A combination of fewer cold and flu cases and less foot traffic has stymied sales across the drugstore segment. Rite Aid’s over-the-counter sales during winter’s flu season plummeted 37%, for example. 

• Until the vaccine becomes readily available to more customers, drugstores are unlikely to see the vaccine-driven sales bump they’ve been hoping for.

Zoom out: Walgreens and Co. aren’t banking on increased vaccinations alone to rebound. Other plans include creating an omnichannel tech platform (Walgreens), a new diabetes program (CVS), and ad networks (both, plus Rite Aid). 

WHAT ELSE IS BREWING

• Amazon explored opening a chain of off-price stores, per Bloomberg.
• GameStop said it would sell up to 3.5 million shares to fund its ongoing e-comm overhaul.
• Trader Joe’s developed a shopping app for customers with autism.
• The McDonald's team culture transformation is more extensive than we thought, Fortune reports.

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HOT TOPIC

At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending topic in retail.

H&M’s refusal to source Xinjiang cotton has escalated tensions with China, and the situation is shining a light on retailers' international business practices. 

• After an H&M statement distancing itself from Xinjiang cotton resurfaced, the brand was pulled from a number of Chinese e-comm sites. 
• Chinese consumers have since boycotted companies like Nike and Adidas for similar reasons. 

Our question: Will H&M’s China troubles encourage businesses to rethink their international expansions? Cast your vote here. 

Last week’s question: We asked, “Do you believe retailers will be able to find a single brand to replace Nike?” 70% believe Nike is irreplaceable, while 30% believe another brand will just do it. 

SWAPPING SKUS

Most Retail Brew stories keep developing after we hit “Send.” So consider today's link roundup an episode of "Where Are They Now?": retail headlines edition. 

• "Name a brand, and it would be unusual if they don’t have something impacted by this.” This = the fleet of ships delayed by last month's Suez Canal logjam. (The Goods)
• Mannequins, posters, custom rugs: Post-bankruptcy, Brooks Brothers piled decor from closed stores in a Connecticut warehouse, and the warehouse's owners have to sell their home to foot the storage bill. (NYT)

ICYMI

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

• RSVP for Our Upcoming Social Commerce Event
• GameStop’s E-Comm Push Relies on New Leadership
• Michaels and Instacart Partner for Same-Day Delivery