FOOD & BEVERAGE

Eat up

When Jessica and Ian Saultz moved with their toddlers from Germany to the US in 2018, they were disappointed in the supermarket snack options for young kids. “There’s a halfway decent amount of good quality stuff for [babies] and older kids,” Ian told Retail Brew. But “a lot of the bars out there are full of refined sugars. They’re mass produced.” 

The pair spent months testing recipes and packaging for an all-natural snack bar (Ian had worked in business development previously), and they rolled out Dino Bars in May 2020. 

• The company racked up $200,000 in B2C revenue last year, and expects to hit $800,000 in 2021. 

The days of Dunkaroos and Gushers are memories of the past. Enter: the modern lunch box. 

Millennials are parents to 50% of the kids in the US, per the National Retail Federation in 2018—and they’re choosing CPG brands that mirror their own values and aesthetics: better-for-you versions of cafeteria classics, Andrea Hernández, founder of the Snaxshot newsletter, explained to us. “Gen Alpha can’t feed themselves.” 

New kids on the block

When young parents are sussing out snacks, they’re thinking about health, convenience, and nostalgia, Hernández said. 

“Millennial parents are trying to go for healthier alternatives...while letting kids be indulgent in a measured way,” Hernández explained. This mentality has given rise to CPG companies re-creating products like Pringles, Almond Joy, and Drumstick ice cream cones with healthier ingredients. (See: Good Crisps, Unreal, and Muddy Bites.) 

• According to NielsenIQ data, the top five most important food attributes for US households are “heart-healthy” (62%), “low sugar” (60%), “high protein” (56%), “low sodium” (55%), and “high fiber” (54%).

Better than you remember? “There are brands that are really trying to reinvent the snacks the millennials are familiar with. Because, if you think about who’s building these brands, it’s the ’80s and ’90s kids who grew up with Lunchables and Cheetos,” Hernández said.

Data from the CPG research firm Catalina shows nutritional bars and variety snack packs are the top categories for the 2021 back-to-school season. Sales are up 24% and 26%, respectively, for the period ending August 21 over the same time last year. Meanwhile, low and reduced fat snack sales are up 17%.

• Brian Moore, Catalina’s sales director of media and data services, said the numbers reflect an interest in convenience and wellness. “Compared to last year, it suggests a trend toward healthier items.”

Click here to read more about what millennials crave for their kids’ modern lunch boxes.—JG

STORES

Setting up shop

Coming soon to a store near you...another store. 

Just this week, Target announced it’s nearly tripling the number of Disney shops in its stores by the end of the year. Plus, the big-box retailer’s new Ulta shops have started to open. Macy’s and Toys “R” Us also unveiled a partnership that will put the toy retailer in 400 department stores and on the Macy’s website. 

• Not to mention Kohl’s and Sephora, Casper and Bed Bath & Beyond, DSW and Lids—you get the idea. 

But what does it take for these partnerships to be successful? For one, brands and retailers need to have a clear understanding of the customer they’re targeting, Denz Ibrahim, head of retail and futuring at LGIM Real Assets, explained to Retail Brew. 

“The customer has to have a commonality between the relationship they have with the umbrella brand and the relationship they have with the brand itself,” Ibrahim told us. 

• Target has mastered symbiotic partnerships, James Zahn, senior editor of Toy Insider, told Retail Brew. And he’s cautiously optimistic about Macy’s x Toys “R” Us, given that the latter “needs to get back in front of families, while Macy’s desperately needs to attract foot traffic back into its stores.”  

Back up: Shop-in-shops are often about luring new customers, Ibrahim said, likening the former to billboards. Digital is what’s driving sales, but brands always need more eyeballs. 

• “More and more brands are seeing online as their flagship store...and much smaller iterative [brick and mortar] versions of their brand as the satellite physical manifestation of their product to get in front of their audiences,” he said. 

And, and, and: The same thinking applies to food concepts in stores (like Starbucks in Target), according to Ibrahim. 

“If you think about the successful retailers that have done very, very well, it’s often those concept stores, those department stores, that are highly curated and extremely agile,” Ibrahim said. “They’re able to evolve their environment to respond to the fast-changing consumer environment.”

• Just like with people, some retail relationships don’t last forever. Walmart and McDonald’s broke up earlier this year, and the retail giant plans to team up with Domino’s and Taco Bell instead.—KM

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EARNINGS

A dollar short

At the height of the pandemic, dollar stores were flying high, and that carried over into the start of 2021.  

But Dollar General and Dollar Tree’s Q2 earnings yesterday show that maintaining that pace is a challenge. 

• Dollar General reported a YoY decline in net sales of 0.4% to $8.7 billion, and same-store sales fell 4.7%. Dollar Tree’s net sales increased 1% to $6.34 billion, but enterprise same-store sales dropped 1.2%. 

What’s going on? Dollar Tree President and CEO Michael Witynski mentioned challenges with the global supply chain, increased freight costs, and “other inflationary pressures.” 

• “Like other retailers, our business is seeing the effects of higher cost due to transit and port delays as well as elevated demand for services at third-party carriers,” echoed Dollar General EVP and CFO John Garratt during a call with investors.  

Some perspective: Both chains are experiencing healthy sales increases compared with 2019. Dollar General and Dollar Tree’s same-store sales were up 14.1% and 6%, respectively, on a two-year basis. 

And despite less-than-ideal earnings reports, both companies expressed optimism for the future. Dollar General, for one, appears to be cooking up a new healthcare strategy after hiring a chief medical officer last month.  

• “Our plans include further expansion of our health offering, with the goal of increasing access to affordable healthcare products and services, particularly in rural America,” CEO Todd Vasos said during the call.—KM

WHAT ELSE IS BREWING…

• Consumer spending in the US increased only 0.3% in July.
• Ace Hardware will open 170+ stores this year. 
• Peloton has dropped the price of its Bike by 20%. 
• Lululemon will raise its hourly pay to at least $15 ahead of a hiring spree.
• Apparel brands and unions agreed to extend a two-year safety pact with garment workers in Bangladesh. 

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SWAPPING SKUS

Today’s top retail reads. 

History lesson: The pandemic wiped out plenty of London’s retailers, but some of the city’s stores have survived for hundreds of years. (BBC)

Rollup roundup: These companies are building businesses on the backs of Amazon’s third-party sellers. (Insider)

Behind the scenes: Shein’s new design competition show is its biggest marketing effort yet, but it can’t hide the fast fashion company’s shady practices. (Business of Fashion)

ICYMI

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

• Inside two companies making the shift to the hybrid work model
• Chrono24 is cornering the luxury watch resale market
• Foot Locker plans to expand its “off mall” customer base 

FRIEND OR FAUX?

Three of the stories below are real...and one is most definitely not. Can you spot the fake? 

1. Mountain Dew’s new flavor? “Flamin’ Hot.”
2. An Alabama pizzeria will “literally hire anyone,” according to a job posting. 
3. Harry Styles’s rumored beauty line will include nail polish infused with his own tears.
4. Meanwhile, Tony Hawk sold 100 skateboards painted with his own blood.

Keep reading for the answer.

FRIEND OR FAUX? ANSWER

Sorry, Harry Styles isn’t crying for your mani-pedis.