CPG

Booster shot

All those vaccines (266+ million doses in the US and counting) are making people thirsty. 

Drink up: Beverages have been leading IRI’s CPG demand index, which tracks changes in consumer purchases by dollar sales, for the last six weeks running. The segment clocked a 7% increase YoY for the week ending May 2—the most recent data available. 

• Water and sports drinks are driving the surge, Katie Thomas, lead at the Kearney Consumer Institute, told Retail Brew. “Consumers are replenishing and hydrating...to address tough vaccine side effects, particularly with the second dose,” she said. 
• And since only ~35% of the country is fully vaccinated, she expects the $$ to keep coming.

Pour one out: Alcohol—which has seen retail sales fall from pandemic highs—performed the worst among beverages during the week ending May 2. 

Healthy competition

Gatorade commands the US sports drink industry, with a market share Euromonitor pegs at 72.1% of retail sales. Still, that figure has been slipping—as noted by Jefferies analyst Kevin Grundy in a PepsiCo earnings call last month.

• One “under the radar” competitor, according to Thomas: Pedialyte. Long intended for kids, it has shifted perceptions to appeal to adults as a hangover (and now post-vax) fix, she said. 

Zoom out: We might be on the cusp of summer, but Thomas is already thinking ahead. She believes health- and wellness-related sectors will continue to gain after the pandemic. 

“As people re-enter the workplace, increase social gatherings, and ditch the masks, it’s likely that cold and flu numbers—and the OTC medication needs that go along with them—will begin to tick up again,” Thomas said. — KM 

STORES

Taking the pledge

A 350-year-old retailer can learn new merchandising tactics: Hudson’s Bay Company, Canada’s largest department store, has joined the 15 Percent Pledge. 

• Starting with the fall 2021 season, 15% of new brands added to Hudson’s Bay will be Black-, indigenous-, or people of color-owned or designed. 
• The same benchmark applies to the design talent behind Hudson’s Bay’s private labels.

The backstory: Aurora James, founder and creative director at Brother Vellies, started the 15 Percent Pledge nearly a year ago. It calls on retailers to increase the shelf space allotted to Black-owned brands to at least 15%, roughly the percentage of the Black population in the US. Participating brands receive consulting services and quarterly audits to ensure they reach the benchmark. 

• Sephora was the first to take the Pledge last June. 21 more companies across the US and Canada have joined since, from home goods purveyors (West Elm and Crate & Barrel) to apparel brands (Gap and J.Crew). 

Other commitments: Some retailers have gone the DIY route, increasing their assortment of Black-owned brands through individual initiatives.

• Ulta promised to double the Black-owned brands it carries by the end of this year as part of a $25 million investment in diversity and inclusion initiatives.
• Nordstrom said it would generate $500 million in sales from brands with Black or Latinx owners or designers. — HL

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TECH

If the service fits...

If Walmart’s latest acquisition goes as planned, apparel shoppers can send their return receipts to the paper shredder. Yesterday, Walmart said it will purchase virtual fitting room tech firm Zeekit for an undisclosed amount.

The details: Zeekit’s tech lets shoppers upload a photo of themselves to see how an item fits, or choose from a range of models with different body types. Once Zeekit is available at Walmart...

• Shoppers can virtually try on items from Walmart’s national partners and private label brands.
• A social plug-in will allow shoppers to ask for friends’ opinions on a ’fit. 

The rationale: “Virtual try-on...solves what has historically been one of the most difficult things to replicate online: understanding fit and how an item will actually look on you,” Denise Incandela, Walmart EVP of apparel and private brands, said in a statement. 

• Better fits for customers = reduced return costs for retailers. Last year, US shoppers sent back $102 billion worth of stuff bought online, according to NRF.
• Pre-acquisition, Zeekit told Insider its virtual fitting rooms slashed return rates across its clients by 36%. 

Retailers from ASOS to Farfetch have jumped on virtual fitting tech for this exact reason. Even Snap snapped up Fit Analytics, a Zeekit rival, in March for $124 million as part of its push into e-commerce.

Fit check: Retailers see VR’s benefits, but shoppers may need convincing. In an April Bizrates Insights survey, only 2% of US adults said they “regularly” used virtual reality while shopping. 44% said they hadn’t used it, and weren’t interested. — HL

WHAT ELSE IS BREWING

• US retail sales stalled in April, changing ~0.0%. 
• Several retailers are reevaluating their store mask policies. 
• Whole Foods is planning layoffs amid a corporate restructuring.
• Ralph Lauren is selling Club Monaco to a private equity firm for an undisclosed amount.
• PayPal acquired Happy Returns, a reverse logistics provider.

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SWAPPING SKUS

Today’s top longreads in retail. 

Carbon contour: Beauty brands can sell shoppers an eyeshadow for every Zoom call. But can they sell us on the efficacy of their carbon offset programs? (Beauty Independent)

Amateur hour: You don’t need to be an expert to build an industry-leading brand. Just ask the amateurs-turned-tastemakers behind revivals at Gucci, Air Jordan, and more. (Sociology of Business)

Special customer service: Trader Joe’s employees past and present address the rumors that they’re trained to—wait for it—flirt with customers. (Glamour)

FRIEND OR FAUX?

Here’s a hint: In our opinion, this week’s faux really isn’t as strange as the friends. Can you spot the fake below? 

1. A fight over trading cards outside a Wisconsin Target store led to the retailer pulling all its Pokémon and sports cards. 
2. Prada has repurposed its famed nylon raincoat for dogs. It has a $550 price tag. 
3. Chick-fil-A sauce is now auctioning at more than $100 per packet on eBay due to a recent shortage.
4. Balenciaga is courting sneakerheads with a handbag constructed to look like a pair of shoes. 

Keep reading for the answer.

ICYMI

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

• How two leading DTC brands define sustainability
• Target adds plant-based foods to private label lineup
• Barnes & Noble owner will purchase Paper Source from bankruptcy

FRIEND OR FAUX? ANSWER

No, Chick-fil-A sauce isn’t auctioning at $100 a packet, but you can get two for $50.