This Week in Retail #41
Happy Labor Day Friends,
While I would not describe myself as a content creator, I am in the content space so I typically try to stay up to date with the latest trends and news. While not necessarily retail specific, digital media trends are impacting retail’s use and positioning across the industry. Starting in November 2024, Apple will require Patreon to use their in-app purchasing system for the iOS app, removing all other billing options. This change means that Apple will apply a 30% App Store fee to all new memberships and purchases made in the Patreon iOS app. Creators on first-of-the-month or per-creation billing plans will need to switch to subscription billing to continue earning through the app, as this is the only billing type supported by Apple's system. I believe this causes concern for others who leverage Apple’s app store for their omnichannel and digital strategy.
Patreon assures that existing members will not be affected by this fee, only new memberships starting in November. To help creators avoid earning less due to Apple's fee, Patreon has developed an optional tool to automatically increase prices within the iOS app, ensuring creators maintain their earnings. However, creators can choose to keep their prices the same and absorb the fee themselves, although this is not recommended as it would reduce their earnings from iOS transactions.
Sara Blakely, the founder of Spanx, has introduced "Sneex," a new luxury footwear line combining the comfort of sneakers with the style of high heels. These hybrid three-inch stilettos, or "hy-heels," are designed to alleviate common pain points associated with traditional heels by providing better foot support, even weight distribution, and a toe-friendly design. Blakely aims to fill a gap in the market for comfortable yet stylish footwear, challenging the notion that "beauty is pain." Handmade in Spain, Sneex comes in 10 colors and three styles, offering a blend of luxury and comfort.
Seattle-based e-commerce tech startup Replenium has filed a lawsuit against Albertsons Companies in U.S. District Court, accusing the grocery chain of stealing trade secrets related to Replenium's automated grocery replenishment technology. The lawsuit alleges that after a three-year partnership, Albertsons terminated the relationship and used Replenium's proprietary technology to develop its own version. Replenium claims that Albertsons misled them, causing significant financial losses, and is seeking damages. Replenium's technology is designed to automate grocery purchases, ensuring customers never run out of essential items, which enhances customer loyalty and recurring revenue. Albertsons declined to comment on the allegations.
In some other grocery related news….. a bit of a suprise comign out of Amazon Fresh this week. Amazon Fresh has launched four new stores, including its first in Northern California and others in Illinois, New Jersey, and Pennsylvania. These stores feature Amazon's Dash Cart automated grocery carts and Amazon One palm-recognition technology, enhancing the shopping experience. The stores also offer international foods, ready-to-eat meals, and locally sourced products. Customers can save up to 30% on 4,000 rotating grocery items, with additional discounts for Prime members. This expansion is part of Amazon's broader effort to revitalize its brick-and-mortar grocery business and enhance its Prime membership benefits.
Dolly Parton has launched a new cosmetics line called "Dolly Beauty" in collaboration with Scent Beauty, facilitated by IMG. The initial release includes "Heaven’s Kiss" lipstick in four shades, priced at $20 each, available online in the U.S., with a broader retail rollout planned for 2025. This new line expands on Parton's existing partnership with Scent Beauty, which previously launched her fragrance line in 2021. More products, including lip, eye, and face cosmetics, are expected to be released later this year and in 2025. Scent Beauty also creates fragrances for other musicians and brands.
Following the beauty and cosmetics theme for a moment……Walmart has expanded its Marketplace to include premium beauty products, secondhand items, and collectibles. The Premium Beauty section features over 20 new brands with a focus on skin care, hair care, and tools, promoted through custom storefronts and editorial content. "Resold at Walmart" offers 5 million pre-owned items from various categories like fashion and electronics. Additionally, Walmart's new Collector shop allows sellers to offer pre-orders for upcoming collectibles, with 0% commission fees for eligible sellers until October 31. This expansion positions Walmart to compete in the growing collectibles and secondhand markets, challenging established players like eBay.
Walmart also announced the launch of the Multichannel Solutions program on September 10, allowing third-party sellers to use its supply chain for fulfilling orders and managing returns from any e-commerce site. The service offers expedited (two-day) and standard (three to five-day) shipping options, though these delivery times are not guaranteed during peak seasons and sales events. This initiative intensifies Walmart's competition with Amazon.
Target has implemented a new AI tool across all its stores to assist employees in resolving on-the-job challenges more efficiently, according to COO and CFO Michael Fiddelke during an earnings call. Integrated into handheld devices, the tool has been used over 50,000 times since its rollout earlier this year. It provides quick responses, usually within a minute, to issues like signing up customers for the Target Circle Card or restarting a cash register. Fiddelke noted that while the tool will continue to be refined, it has already improved the work experience for many employees.
Foot Locker is undergoing significant changes as part of a cost-cutting and simplification strategy. The company will exit the markets of South Korea, Denmark, Norway, and Sweden by mid-2025 and transfer its operations in Greece and Romania to Fourlis Group. These actions will close or transfer ownership of 30 stores. Foot Locker is also relocating its headquarters from New York City to St. Petersburg, Florida, by late 2025, aiming to reduce costs while maintaining a presence in New York.
Despite recent positive signs, including a 2% increase in Q2 sales and a 2.6% growth in comparable sales, Foot Locker continues to face challenges. The retailer is investing in its existing stores, with plans to refresh two-thirds of its fleet by 2025 and expand its new store format, which has shown higher conversion rates and larger basket sizes. However, the company's net loss widened from $5 million to $12 million in Q2, attributed to the costs of its turnaround initiatives. Analysts note that these changes, while temporarily costly, are necessary for Foot Locker to advance and strengthen its relationships with key brands like Nike.
Pacsun has appointed Aina Konold as its new Chief Financial Officer. Konold, who started her role earlier this week, previously served as CFO of BowFlex, Inc., and held various financial roles at Gap Inc. and Old Navy over a 20-year period.
Abercrombie & Fitch Co. reported record Q2 net sales of $1.1 billion, a 21% year-over-year increase. The Abercrombie brand grew by 26%, and Hollister brands by 17%. Comparable sales rose 18%, and net income surged over 130% to $135.4 million. The company has raised its full-year sales growth outlook to 12%-13%.
Last week we discussed some updates to NIL and players using QR codes as a “Go Fund Me” if you will, but this week we are seeing another partnership coming out of NCAA retail. The University of Michigan Athletic Department has entered into a 10-year partnership with Legends, a global premium experiences company, to enhance its merchandise retail experience. Legends will manage and operate all Michigan-licensed merchandise, including the "Official Team Store" under the M Den name, both online and at athletic facilities. The partnership aims to provide fans, students, and alumni with a customized shopping experience, offering a wider range of products and an improved customer experience. Additionally, Legends will conduct a premium experiences study for Michigan Stadium, further expanding their collaboration. Legends has extensive experience in retail and merchandising for major sporting events and universities.
Have a great week folks….