APPAREL

A New Fit

Lids isn’t capping when it comes to its aggressive growth strategy. Lawrence Berger, cofounder of Lids parent company Ames Watson, told Retail Brew in an exclusive that the hat and sports apparel retailer is entering an in-store partnership with DSW. 

Starting May 15, 45 Canadian DSW stores will carry Lids. A US expansion is on the horizon, Berger said, but he didn’t disclose when.

Headwear footwear 

A mall staple, Lids is experimenting with more retail partnerships and standalone stores to diversify its footprint. DSW’s massive, off-mall locations provide exactly that. 

• Lids will get its own dedicated space to sell officially licensed hats, jerseys, T-shirts, and more.

Does the shoe fit? Designer Brands Canada President Mary Turner told us that Lids’s merchandise complements DSW’s athletic products, and will help reach younger customers. Berger and his cofounder, Tom Ripley, pointed to Lids’s exclusivity as another motivator. 

“They don’t just want to be able to sell a plain Toronto Blue Jays hat,” Berger said, but instead “something that’s got a cool design, is interesting, and that people can’t find in other places.”  

Taking off the lid: Since Ames Watson purchased Lids via a 2019 joint venture with Fanatics, Inc., it signed on rapper Meek Mill as an investor, expanded its partnership with Macy’s, and started managing sports merchandising at Barnes and Noble’s 775 US university stores.

• Their efforts translated to $1+ billion in 2020 sales, roughly 80% of which came from brick and mortar stores. Ames Watson wouldn’t confirm if this is up from its 2019 revenue.  

Hat resurgence?

Though Lids had a steady year, the pandemic kneecapped US hat sales overall. Between 2016 and 2021, industry revenue shrank at an annual rate of 0.6% to $2.5 billion, mostly due to pandemic-driven declines in 2020, according to IBISWorld analyst Claire O’Connor. Growth is expected to pick up over the next five years, but barely, at just 0.2% annually. 

But Berger and Ripley aren’t worried, because they believe hats are evolving into an asset class like sneakers, which has energetic sub-markets and services. 

• “We put ourselves right in the same area as the various shoe retailers,” Ripley told us. “When those companies do a new shoe drop...there will be a line outside our store to buy the hat that matches that shoe.” 

Looking ahead: O’Connor is not as bullish about hats becoming an asset class comparable to sneakers, she told us. And she believes Lids, which IBISWorld estimates to hold 22.4% of the US hat market, needs to further diversify its store inventory to compete with niche hat brands. — KM

REAL ESTATE

Piercing a New Market

Ear-piercing startup Studs is following Google, Amazon, and DTC Twitter to set up shop in Austin, TX. Its new studio is the first of several 2021 Studs openings beyond NYC.  

Why Texas: From apparel to beauty to piercings, Austin’s becoming a brand magnet. In Studs’s case...

• Cofounder Anna Harman told Retail Brew that Texas is Studs’s third-biggest online market for earring purchases. From March to December 2020, online sales increased 20x at Studs YoY (but the brand declined to disclose its revenue). 
• Lisa Bubbers, Studs CMO, told us Austin’s combo of colleges, tech companies, and general coolness combine for a high population of target customers. 

Why today: Masks cover faces, but not earlobes. Piercings have surged in popularity during the pandemic—including at Studs, whose NYC stores remained profitable despite a four-month closure last year.

• Ahead of today’s Austin store opening, Studs racked up an appointment waitlist of 1,200+ shoppers...at a location that handles 35 appointments/day. 

Where next? “I think we'll go to some of the major cities, and I think we'll go to some cities that’ll be [less common for] direct to consumer companies, in part because [Studs] is a service business,” Harman told us. 

Since ear piercings aren’t limited to the HENRY (high earner, not rich yet) set like $400 carry-ons, “there's an opportunity that normal DTC businesses don't necessarily have.” — HL

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DTC

To Disrupt Bodycare, Just Add Water

Plus, a bodycare brand from the makers of Starface, arrived yesterday with a simple directive: Lather, rinse, reduce packaging. The DTC brand sells single-use sheets that, when wet, become a body wash. Its pouches dissolve, too.

Dissolution solution? Empties from the Unilevers and P&Gs of the world pile up: According to the Plus team, one in three items in landfills comes from personal care product waste. 

• Meanwhile, Plus’s sheets use 38% less water than bottled body wash. Without single-use plastics, the brand said it releases 80% less carbon emissions in shipping compared to bottled brands. 

“We set out to reinvent a category that hasn't changed in probably over two decades,” Plus (and Starface) cofounder Julie Schott told us. “Often the huge personal care conglomerates need to be challenged in order to make a change.”

• Plus’s challenge comes with undisclosed backing from angel and institutional investors, a Plus rep told Retail Brew.

Looking ahead...Plus isn't immediately planning a retail rollout (I asked.) But it could follow Starface into brick and mortar eventually. “When we think about our vision, retail shelves have way fewer single-use plastic bottles,” cofounder and CEO Cathryn Woodruff said.

And despite sharing a founding team, Plus and Starface aren’t yet deploying cross-merchandising or other “house of brand” ventures in the style of larger DTCs. — HL

WHAT ELSE IS BREWING

• Starbucks and Amazon are among the companies that signed an open letter demanding voting reform. 
• Walmart grew its third-party marketplace to roughly 70,000 sellers last year.
• Lowe’s released a suite of services catering to home improvement professionals. 
• Dollar General will hire up to 20,000 employees this spring. 
• Stitch Fix CEO Katrina Lake is stepping down.  

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COMMUNITY

On Wednesdays, we wear pink spotlight Retail Brew's readers. Want to be featured in an upcoming edition? Click here to introduce yourself.

Terence Reilly is taking a break from a new product launch at Stanley to give us a sip of his work schedule as the drinkware brand’s global president. 

What does your day-to-day look like? I oversee the ways our brand comes to life, whether online or in-store, and work with all of our teams to continue to achieve significant growth year over year. We’re constantly extending our footprint to have a presence on store shelves in retail channels that allow Stanley to reach new audiences.

Favorite project you’ve worked on: Our Titanium Series, a premium product series, for those who want top performing gear and are always on the go.

Favorite retailer to follow: Starbucks does retail right.

An emerging retail trend you’re bullish on: I’m blown away by digital strategies rapidly being implemented by brick and mortar retailers since early 2020. Digitization of commerce is here to stay and growing at a rapid pace. There is so much that a brand can do in this space—everything from AI to gaming, from personalization to creating NFTs.

This is where we usually ask about your favorite fast food spot. But you’ve got an interesting story...Prior to joining Stanley, I was the CMO at Crocs. One of my favorite brand collabs was our Kentucky Fried Chicken x Crocs footwear line, inspired during my travels to Asia. It was there that I saw firsthand how popular the KFC brand was with Chinese consumers. A collab was imminent, and thanks to Kevin Hochman and his team at KFC, we made some fun footwear history.

SWAPPING SKUS

A lot goes into getting that e-commerce order—whether it’s a six-month supply of TP or a horse mask—to your doorstep. Retailers needed to reimagine their supply chain on the fly as e-comm took off last year. 

• E-comm marketplace Wish leaned into its miniature warehouse offering to reduce shipping costs during the pandemic. (NYT)
• On-demand, contracted warehouses saw an uptick in the past year, but traditional supply chain management might still be the best bet. (Retail Dive)

ICYMI

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

• The Checkout: Our Candid Social Commerce Discussion
• Nike Starts Shoe Resale Business
• Camille Rose Caps Decade in Retail with Ulta Deal