It’s been another week with far more retail news than there is time in the day. Below, we break down some things you may have missed during the week, and what we’re still thinking about.
From Old Navy vowing not to raise prices during the back-to-school season to an updated store closure forecast from UBS, here’s our closeout for the week.
What you may have missed
Ulta Beauty invests in precision skincare company Revea
Revea, a precision skincare company, on Thursday announced it secured $6 million in a funding round led by Alpha Edison. Ulta Beauty, WaldenCast Ventures and others also participated in the round, according to a company press release.
“Ulta Beauty was founded to disrupt the status quo and today, we remain focused on doing just that across every touchpoint — with greater personalization than ever before,” Prama Bhatt, chief digital officer of Ulta Beauty, said in a statement. “We are thrilled to support Revea as they continue to disrupt and deliver unique, personalized skincare solutions.”
The company, which was founded in 2019, has run diagnostic imaging consultations from its physical location in San Francisco. The latest round of funding will be used to launch a mobile experience to bring its diagnostic capabilities to users’ smartphones. The funding will also be used to support Revea’s on-demand manufacturing capabilities and expand its team.
Shopify might buy Deliverr
Rumors circulated this week that e-commerce platform Shopify may acquire fulfillment platform Deliverr for between $2.3 billion and $2.7 billion. The news, first reported by Bloomberg and confirmed with more details by Insider, could get inked in the next two weeks, according to reports.
Neither Shopify nor Deliverr immediately responded to requests for comment.
The tie-up could provide the small retailers and brands that use Shopify a level of service closer to what Amazon offers through its Fulfillment by Amazon marketplace program. That’s likely even more important now that Amazon has launched Buy With Prime. That new option, which will roll out throughout the year, opens its FBA services to sellers beyond its marketplace and allows its Prime members to shop on those websites using their Amazon checkout and Prime perks like fast, free delivery and free returns.
Old Navy’s idea of a discount
As policymakers argue over what to do about inflation hitting 40-year highs, and as higher food and fuel prices show up in retail sales numbers, retailers have to formulate pricing strategies that can cover their own higher costs without turning away customers.
One challenge in this environment is how to manage consumer expectations at times like Memorial Day that traditionally mean big sales events. For its part, Old Navy, already known as a value retailer, says it understands its customers’ struggles, though it’s keeping expectations low. Through the back-to-school season this year, the retailer “is committing to not raising prices on kid’s clothes,” according to an emailed press release.
Old Navy is dubbing this “Price ON-Lock,” and applying it to “kids fashion essentials.” This may be one way to remind consumers everyday prices are low at Old Navy. But it’s also just another way of saying they won’t be holding a sale, and that they won’t make the same promise for adult clothes, or children’s clothes outside of these essentials.
Mango ties finance to sustainability
Spanish fashion retailer Mango will pay less on a recently refinanced loan if it hits carbon emission and sustainable fiber targets, the company said in a press release.
The sustainability goals were part of a refinancing deal managed by CaixaBank, and the first sustainability-linked financing package for Mango. Targets, verified by an outside party, include 100% use of sustainable cotton, recycled polyester and cellulose fibers of controlled origin by 2025, as well as reducing certain carbon dioxide emissions by more than 10%.
“With this operation, Mango, which closed 2021 with the highest profits in almost a decade and a healthy financial structure, has extended the repayment calendar of its financial obligations, improved the cost of its debt, doubled the availability of revolving credit lines and introduced sustainability criteria, one of the development vectors of the fashion industry,” the company said in the release.
Farfetch launches beauty
Luxury fashion platform Farfetch on Wednesday announced that it was entering into the beauty category, according to a company press release. The effort will take place across Farfetch’s brands, which include its namesake company, Browns and Off-White. The move follows the company’s acquisition of luxury beauty retailer Violet Grey earlier in the year.
“Together with Violet Grey, Browns and Off-White, Farfetch.com will provide a curated edit of the best luxury beauty products to serve customers across ages, races, cultures and genders in an ‘Only on Farfetch‘ way,” the company said.
Farfetch took a minority stake in Neiman Marcus Group earlier this month.
After ‘historic year,’ REI is expanding run and tackling mental health
It’s been a busy month for REI. The retailer on April 12 reported that its 2021 net sales hit $3.7 billion, up 36% over 2020, in what CEO Eric Artz called a “historic year for the co-op.” REI also added 1.4 million new members and saw growth of more than 80% in its used gear business. On the backs of that growth, the outdoors retailer is expanding its running assortment to reach even more shoppers in the space.
Running in particular has grown more than 65% at REI since 2019, and in addition to expanding its private label and brand name products, REI will also test new store layouts and will deepen training for its staff in the running category. Running footwear fit services will expand online and in stores as a result.
“As interest and demand for run continues to grow, the co-op is uniquely positioned to serve runners of all skill levels,” Fan Zhou, REI general manager for run, said in a statement.
REI also partnered with Hipcamp this week for a mental wellness initiative that starts May 1. The program is focused on “improving mental health outcomes for women across the United States” through activities like guided group hikes and meditations.
MTN DEW FLAMIN’ HOT will meet you in Hell
Hell, Michigan, that is. The soft drink has been named the official beverage of the town for a one-night only event, dubbed “To Hell with MTN Dew Flamin’ Hot,” on April 30, to promote the nationwide rollout.
And who will you find in hell? That would be DJ Pauly D. Because of course the Jersey Shore has representation in Hell.
“When MTN DEW asked me to go to Hell, I thought they were messing with me. But then I realized they wanted my help to make Hell even hotter with my fire beats. There is no one better to bring the heat. Yeaaahhh buddy!” DJ Pauly D said in a statement that truly is one of the best press release quotes on record.
Also joining the fiery action is chef and rapper Action Bronson, who managed to make a four-course spicy-meets-sweet menu out of MTN Dew Flamin’ Hot products.
And while this feels all fun and games, the devil is really in the details. MTN Dew Flamin hot was launched a year ago online in limited supply and sold out in less than an hour. This year the product will be at major retailers and convenience stores.
Skechers signs top-ranked pickleball players
Skechers is heading to the U.S. Open — for pickleball, that is. The footwear brand is the official footwear sponsor of the 2022 Minto U.S. Open Pickleball Championships, and to expand its presence in the sport further, Skechers has signed two of the top-ranked players in the space, Tyson McGuffin and Catherine Parenteau.
The athletes will be repping “The Comfort Technology Company” at the event.
“Skechers may be new to our sport, but their designers delivered with the Skechers Viper Court featuring all the comfort and performance that I need,” Parenteau said in a statement. “I was able to get a few matches in already and they are unparalleled in both traction and stability. This is just the beginning for Skechers and pickleball and I am so excited to be able to partner with my fellow Skechers athlete Tyson at the U.S. Open.”
But Skechers isn’t just providing footwear for the pickleball pros. The Viper Court shoes will be available in select Skechers stores, its website and other retail stores beginning in May, which may bode well with the 2.8 million “casual” pickleball players recorded in 2020, according to data from the Sports & Fitness Industry Association.
What we’re still thinking about
That’s the amount of revenue Lululemon expects to generate by 2026. If successful, that would mean the brand doubled its revenue from 2021 to 2026. The goal is one of many in a five-year strategy that includes doubling its men’s business, doubling its digital revenue and quadrupling its international sales. At the same time, the company expects its women’s business, stores and North America operations to grow by double digits.
That’s how much business Hasbro stands to lose this year as it pauses shipments to Russia. The toy and game giant did not elaborate on the decision, but it comes amid a broad pullback from Russia by U.S. businesses after its unprovoked invasion of Ukraine. “That’s a situation that we’re all continuing to evaluate day-by-day and week-by-week,” Eric Nyman, Hasbro chief operating officer, told analysts.
The company is still forecasting sales and profit growth as it navigates multiple operating challenges, not least among them protracted supply chain delays, which ate into its first-quarter operating profit. Along with those challenges, the company is facing a proxy fight with an activist investor looking to shake up the board and potentially spin off its valuable gaming segment.
What we’re watching
Sunnier estimates for retail’s footprint
UBS has dramatically revised down the number of retail stores it expects to close over the next five years. After predicting around 80,000 closures — or even up to 150,000 at the high end — last year, the figure now is 40,000 to 50,000, assuming steady economic conditions. (A recession or other major disruption could lead to twice that amount of closures.)
Analysts with the investment bank noted the importance of the store both operationally and in meeting consumer needs. “Stores have proven their critical role,” the analysts said in a research note. “They are attractive tools for acquiring & interacting [with] customers. They provide logistics support. They serve as hubs of fulfillment. They are important sources of data. Their importance will persist.”
But not all store locations are equal. The analysts expect continued consolidation in mall-based retail, the main front of last decade’s “retail apocalypse.” The UBS analysts said nearly half of the forecasted store closures could take place in the mall sector.