Good morning, good afternoon, and good night, wherever you may be. Did you hear the big news? The Girl Scouts are introducing a new brownie cookie for the 2022 season. We’ll be impatiently awaiting their arrival. Until then... 

In today’s edition: 

• DTC apparel companies test new waters 
• US retail spending is up
• 7-Eleven teams up with Minibar Delivery 

—Katishi Maake, Julia Gray

DTC

Fashion forward

The eternal question for DTC companies: Find success as a category killer, à la Warby Parker, or expand product selection beyond your core competency?

Two apparel companies, Cupshe and New York & Company, are taking the latter approach; the former is introducing an athleisure line and the latter has realized that men like clothes, too. And as Holden Bale, group vice president and head of commerce at Huge, told Retail Brew, each company has to make sure their growth doesn’t bloat the product selection and diminish what made them popular in the first place.

“It’s fine to go do more things, but what is the strategy for your business and for your positioning in the market on the other side of that?” Bale said. “The more you focus on a greater diversity of goods, the more you're going to have to scale your merchandising teams and your product capacity.” 

Into the deep end: After six years and success as one of Amazon’s best-selling swimwear brands, Cupshe is dipping its toes in the increasingly competitive athleisure market. The company hopes its “Weekends at the Beach House" collection will tap into what made Cupshe’s swimwear popular—affordable prices, quality, and vibrant designs, Jessie Han, senior marketing director, told Retail Brew. 

• As for pricing, Cupshe’s athleisure collection costs between $18 and $46, while the swimwear goes for $20–$36. 
• Han said Cupshe is able to keep prices affordable because of its strong global supply chain that includes company-owned factories. 
• “We also have more profit margins because we want to add that type of value to customers, not only on the brand or with the company,” she said. 

In 2020, Cupshe hit $150 million in revenue, and has enjoyed nearly 100% YoY growth in 2021—it anticipates reaching $250 million in revenue by year’s end. Han said 70% of sales are DTC, while the remaining 30% come from Amazon. The company closed on a $15.5 million funding round in March, per PitchBook. 

In good company

New York & Company is in a slightly different boat than Cupshe. After going bankrupt and shutting down its IRL stores, the women’s clothing retailer is rebranding after it was picked up by The Saadia Group in 2020, and expanding into men’s apparel. 

Guy time: Last week, the company introduced its first menswear collection, with 150 items in the $30–$130 price range. Later this year, New York & Co. will expand into home goods, another strong pandemic-era product category. 

• “In addition to leveraging our customer database, we are leaning on the expertise of the brands that we have acquired as content creation experts,” Jack Saadia, cofounder of The Saadia Group, told us. 
• New York & Co. is now online-only. It’s the same approach Saadia is taking with Lord & Taylor, which the company also acquired last year. 

The big picture: For new product categories to find success, they need to be somewhat in line with a retailer’s core competency, Bale told us. He pointed to Allbirds’s new venture into athleisure as a good example.

“There's always pressure on brands to capture a greater share of wallet, and the smartest brands in the world know how to restrain that inclination to just do everything, and focus on the things that are core to their business without leaving too much of that money on the table,” Bale said.—KM 

SALES

Charge it

Retail is back, baby. According to Tuesday’s report from the US Department of Commerce, retail sales rose 11.5% year over year, and are up 23.2% from 2019. But don’t get too comfortable. According to industry experts, multiple factors are at play here, and not just because we’re still buying sweatpants from our couches.

“There’s the benefit of people doing less social things like traveling and vacationing. There has been a transfer of spend into retail, and that’s one of the things really helping the numbers,” Neil Saunders, managing director and retail analyst at GlobalData Retail, told Retail Brew.

Dressing up: Apparel sales heated up, increasing 52.8% from last year and 19.4% from 2019. Department store sales rose 25.5% from 2020 and 9.8% from 2019.

“Apparel is a signal of how much society is recovering and how much we’re getting back to normal, because it was so disrupted during the pandemic,” Saunders said. “If it starts to wane significantly and growth comes down, that's a warning signal that we’re going back to pandemic ways of thinking in terms of spending.”

Getting out: Last month, US retail spending fell to $617.7 billion, a drop of 1.1%. But online spending fell by 3.1% (though it was still up 0.21% over last year, and 28.2% over 2019.)

“Some of the gains from online will unwind and unravel as society opens back up. Some of the numbers were artificially inflated by people staying home, shopping online, not going to shops,” Saunders explained. “But by no means will online give back all of the gains it made during the pandemic.”

Looking ahead: The Delta variant might even help the retail sector, Saunders added. “It will restrict consumers from traveling and dining out much more than it will restrict them from shopping. We could actually accelerate that trend as some service-based spending is transferred into retail.”—JG

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DELIVERY

Drink up

The pandemic changed the way we shop (see above), drink, and shop for drinks. The US is now expected to have the largest alcohol e-commerce market in the world by the end of 2021, beating China’s long-standing reign, according to data from IWSR. Earlier this year, Uber chugged alcohol delivery company Drizly for $1.1 billion. 

And now you can add booze to your Slurpee delivery. America’s convenience store, 7-Eleven, has joined Target and Macy’s in the booze-fueled fun, announcing a new partnership with Minibar Delivery. 

• 600 stores across Florida, Texas, and Virginia are participating in the 7-Eleven x Minibar pilot launch. The service will expand to additional markets, including New York and California, later in the year.
• Customers can order from 7-Eleven’s selection of wine and beer via Minibar Delivery's app or website. 

What’s in it for me? The partnership allows Minibar to expand into hundreds of new locations and markets at a rapid pace. For 7-Eleven? “This collaboration with Minibar Delivery helps us broaden our reach even further by adding even more convenience for our customers,” 7-Eleven Digital Senior Vice President Raghu Mahadevan told Retail Brew. “On-demand ordering and delivery has become an expectation from retailers.”

2020 was kind to Minibar. “We saw huge growth last March and April, like nothing we'd ever seen before,” CEO and cofounder Lindsey Andrews told us. The company saw a 500% increase in new customers in those months, while overall business went up 139%.

The online food delivery segment should reach $31.9 million in 2021, per Statista. That’s an annual growth rate of 9.18%, increasing to 12.2% in 2022. The US alcohol e-comm market grew more than 80% from 2019 to 2020. 

One way 7-Eleven and Minibar are setting themselves apart is with their "Auto Refill" scheduled delivery option, but competition is fierce in the growing space. In the US, just three apps handled 86% of online alcohol delivery orders between March and May 2021. 

• Swill and Drizly had the most searches, clicks, and shares, at 38% and 30%, according to ShareThis data. Meanwhile, major players like Instacart and DoorDash took 18% and 3% of the orders. 

“Alcohol delivery is here to stay. The convenience is appreciated by many people. Even if things become really safe, we’ll still see an increase in alcohol delivery [versus pre-pandemic years] because of the availability of the services,” Inna Kuznetsova, CEO of 1010data, told us. “When people start using online delivery, it proves to be very sticky,” she added, pointing to Instacart’s quick growth.  

“It becomes the default, mainstream option. There’s proof that there’s high demand for this service. I can see a world where every wine store has a delivery option.”—JG

WHAT ELSE IS BREWING

• Old Navy will offer more extended women’s sizes. 
• Mastercard will get rid of the magnetic stripe starting in 2024. 
• Kroger is introducing personalized employee training via app.  
• Pandora jewelry sales topped pre-pandemic levels in Q2.
• Apple is increasing Covid testing of its staff. 

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SWAPPING SKUS

Today’s top retail reads. 

Everything and everywhere: Amazon has surpassed Walmart as the largest retailer outside China, fueled by its growth during the pandemic. (The New York Times)

Southern hospitality: Fashion and beauty brands got a big bump, thanks to a viral TikTok trend from the University of Alabama’s sorority rush. (Glossy)

Shortening the gap: Gap’s sales are on the rise for the first time in a long time, and the retailer is trying to appeal to younger customers. (Insider)

COMMUNITY

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

Michelle Grant is Salesforce’s senior manager of strategy and insights for retail and consumer goods. She’s studied the retail industry for almost seven years, but her projects teach her new things every day.  

How would you describe your job to someone who doesn't work in retail? I research trends in the retail industry to help its leaders stay ahead of the curve.

What's your favorite project you've worked on? That would be Becoming Retail, an interview series featuring introspective conversations with retail leaders about digital transformation. It’s like getting an MBA in retail. 

One thing we can’t guess about your job from your LinkedIn profile: I’ve been to all seven continents!

Which emerging retail trend are you most excited about this year, and why? QR codes! I saw them everywhere in Asia, but they didn’t really catch on in the West until recently. They're everywhere now.

ICYMI

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• Walgreens introduces retail health and wellness credit program