Expect to see fewer handbags in Kohl's stores in the future, and more laundry detergent and yoga pants. On Monday, Kohl's announced that it would be testing out a new shop-in-shop called the Wellness Market, which will carry products like vitamins, dish soap, baby wipes from brands including Seventh Generation and the Honest Company. It's part of the new strategic framework Kohl's announced last week, in which the department store chain said its focus going forward is to be the leading retailer for shoppers looking for products to support an active and casual lifestyle.
As more food and beverage sales move online, e-commerce is becoming a bigger part of food startups' strategy. Take Siete Family Foods, which makes grain-free versions of Mexican-American staples, like tortillas and chips. The six-year-old company is now using its website to test out new products before selling them in physical stores. Through a new section of its site called Small Batch, Siete Family Foods plans to launch ten new products within the next year, selling anywhere from roughly 100 to 1,000 units of each. The goal is to gather data on what types of Siete's most loyal customers are most interested in, and use that data to pitch retailers on carrying that product in stores.
There's a new most-talked about acronym in the DTC world these days: SPAC, which stands for special purpose acquisition company. SPACs give startups an alternative way to go public, without going through the traditional IPO. In a SPAC, a group of individuals raise money in order to acquire a company with the purpose of taking it public. At least one direct-to-consumer startup, Hims has already opted to go the SPAC route. But investors caution that SPACs won't entirely replace the traditional IPO process.
This year, as fewer people do their holiday shopping at stores, more toy sales are expected to move online. That means retailers like Walmart and Target also have to shift more of their marketing efforts for toys online, as do top toy brands like Mattel and Hasbro. This was a trend that was already underway before the start of the coronavirus outbreak, but has since been accelerated. According to eMarketer, e-commerce sales of toys are projected to grow 34.9% year-over-year, compared to 1.5.5% the year prior.
Lowe's has been one of the few brick-and-mortar retailers to see a consistent sales increase during the pandemic, after being declared essential in the spring. Now, the company is hoping to use the momentum to get more people to think of Lowe's as a place to buy their holiday gifts. Lowe's executives say that the home improvement retailer's website will be carrying more cookware, toys, and fitness products on its website this year, as they seek to market Lowe's as a gift-giving destination.
Last year, New York' Soho neighborhood was filled to the brim with holiday pop-ups, both from more established retailers and brands like Ugg and Kohl's, as well as up-and-coming startups like East Fork Pottery and Stuart & Lau. But this year, the coronavirus has put a damper on holiday pop-ups. Few retailers are opening pop-ups this year with the goal of getting shoppers to spend hours checking out their winter wonderlands. Rather, they're opening pop-ups in order to ease capacity limits at existing stores, or to test out a new market while they can find a good deal on rent.
Many direct-to-consumer brands have long held off on selling through Amazon. But they can't completely ignore its orbit, as Amazon still sets the conversation in e-commerce. There's a laundry list of DTC brands that have still held off on selling through Amazon -- Glossier, Warby Parker, Allbirds and Away to name a few. But, a few trends emerge among the digitally-native brands that have taken the leap to selling through Amazon.
Ikea is testing out a new way to incentivize customers to come to its stores during the holiday season. The Swedish furniture retailer announced on Tuesday that over Black Friday, it will be hosting an event called Buy Back in 27 countries, where it will encourage customers to bring in old furniture for Ikea to resell. Between November 23 and December 24, customers who bring in furniture previously bought at Ikea will get store credit. Ikea's efforts to build out a resale business -- the company will also be opening a secondhand shop in Sweden next year -- coincide with its efforts to find new customer acquisition channels.
Despite e-commerce’s rise, retailers are still betting that there's one transaction people will prefer to do in person: returns. Last week, Staples announced that it was partnering with Optoro, a returns processing startup. These types of partnerships were already becoming more common before the coronavirus outbreak. But it’s unclear if they’ll actually lead to more sales.
In conversations with a handful of direct-to-consumer startup executives about their holiday marketing plans, the biggest concern cited was figuring out when was the right time to run holiday ads. Both to ensure that customers order far enough in advance so that they get their products by Christmas, and to ensure that they are spending their holiday marketing dollars most efficiently. The executives Modern Retail spoke with said that for the most part, they weren't that concerned about rising digital advertising costs, either because they've been able to further diversify their ad spend away from digital this year, or customer acquisition costs are still lower than they are last year.
On Thursday, Dollar General announced that it is launching a new chain called Popshelf, which is targeted towards wealthier shoppers and will carry crafting items, home decor, health beauty products. Ninety-five percent of items will be priced at $5 or less, according to a press release. It's part of Dollar General's play to increase average order value, and attract new shoppers, in order to increase its profits.
As online sales soar, it's also been a boon for the companies interested in providing funding to these e-commerce businesses. Toronto-based Clearbanc said it's invested more than $1 billion into 3,300 companies, up from roughly 2,000 at the end of last year. Shopify, which has an alternative lending arm called Shopify Capital, reported that it doled out $153 million in financing to e-commerce businesses in the U.S, U.K. and Canada during its second quarter, a 65% increase from the same period last year. As studies project that e-commerce will continue to make up a growing portion of total retail sales even after the pandemic ends, these alternative lenders are betting that the amount of funding e-commerce businesses will need will also only grow.
Big-box retailers are starting to announce their holiday hiring plans, and among those that are still hiring, most of them have a singular focus: to hire more people to help them fulfill online orders. Target, Walmart, Kohl's, Gap, Michael's and Dollar General are among the retailers who have announced within the past two weeks plans to start hiring in preparation for the holidays, with an emphasis on hiring for roles to fulfill online orders. "We know customers will be shopping online more than ever this year and we’re staffing accordingly to support increased digital fulfillment efforts," Kohl's chief people officer Marc Chini said in a press release.
Before the coronavirus, Bed Bath & Beyond had reported nearly four more years of same-store sales declines, culminating in CEO Steve Temares stepping down and being replaced with former Target executive Mark Tritton in December. But now, the home-goods retailer may have found new life, as home goods sales have increased during the pandemic. And Bed Bath & Beyond isn't the only retailer encouraging people to spend more money on their home as they are stuck inside.
Despite experiencing record e-commerce sales during the coronavirus, DTC CEOs are trying to prepare for how to handle some worst-case scenarios over the holidays. Specifically, fears over shipping delays and how to compete with deep discounts are keeping them up at night. As they've had to do throughout the coronavirus outbreak, they're trying to figure out what unexpected scenarios to plan for.
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