The Modern Retail Podcast

Correction: At the top of the episode we erroneously say that the cause of the Daily Harvest recall was "manufactured derived bacteria." The actual cause was from the ingredient tara flour, with which customers had adverse reactions.On this week's Modern Retail Rundown, we discuss a report by Bloomberg detailing how Daily Harvest handled its recall last year. Next, a look at Bud Light’s decline as America’s favorite beer in light of the company's latest controversies. Lastly, governments are increasingly cracking down on Amazon's counterfeit and pricing practices -- most recently in light of its secret deal with Apple.News cited:https://www.bloomberg.com/news/features/2023-07-26/daily-harvest-lentil-crumbles-recall-saga-has-rocked-the-companyhttps://www.cnbc.com/2023/06/14/bud-light-beer-sales-trail-modelo-in-may-following-anti-lgbtq-backlash.htmlhttps://www.nytimes.com/2023/07/23/business/modelo-bud-light.htmlhttps://techcrunch.com/2023/07/26/apple-amazon-price-collusion-uk-lawsuit/https://www.politico.com/news/2023/07/25/ftc-lawsuit-break-up-amazon-00108130

For high-end bedding brand Boll & Branch, the secret to growth has been on direct sourcing and keeping profitability always in mind.That's according to founder and CEO Scott Tannen. Boll & Branch first launched in 2014, and is currently bringing in more than $200 million in revenue a year. He chalks up this success to the way he built out his supply chain. While most DTC companies claim to cut out the middleman, Boll & Branch doesn't merely go to the manufacturers to make sheets. Instead, it works directly with cotton growers, which Tannen said made for a more robust business."When you disrupt that supply chain, you have an opportunity to build a margin profile that's really, really strong," he said. "You're not living and dying by only buying your consumers."It also helps that some high-profile people like his products. "Among our fans include pretty much every living president at this point," he said. Jenna Bush, for example, is a brand ambassador for the company. And Tannen added, "I was very lucky that President Clinton invited me to meet him because he loved the product so much."Tannen joined this week's Modern Retail Podcast and spoke about Boll & Branch's growth.Much like other bedding brands in the space, Boll & Branch operated mostly online for many years. Then, shortly before the pandemic, it opened up a few stores. For obvious reasons, the company focused less on retail expansion. It did, however, ink a few wholesale partnerships with the likes of Nordstrom and Bloomingdale's.Now, Tannen is focusing once again on retail growth. The company is opening up three new stores this year, with plans to potentially open more after that. As Tannen described the retail strategy, "I'm thinking about: where are we winning? And where can I win bigger? How can I think about gaining more share where I'm leveraging a strength?"Another major lesson Tannen learned is to make every business decision with a long-term vision in mind."We're always focused on staying above our skis from a profitability standpoint and from a capital standpoint," he said. "I plan to be in this business for a very long time -- we're not on a race to nowhere to either figure out how to get cash in the door, cash in my pocket or anything like that."

On this week's Modern Retail Rundown, we begin with a discussion of a new Wall Street Journal report dissecting how DTC footwear company Allbirds lost its way. Next, we take a look at the latest acquisition headlines. Over the past week, Keurig Dr. Pepper announced a $300 million investment in exchange for 33% equity in coffee company La Colombe. And on the direct-to-consumer side, the 6-year-old intimates brand Cuup has sold to FullBeauty Brands, which also recently bought the plus-size fashion brand Eloquii from Walmart.

For Solo Brands, being DTC represents more of a state of mind than it does an exclusive sales channel."A lot of people have in the last five years equated DTC to e-commerce," said John Merris, CEO of the portfolio company that owns Solo Stove, Oru Kayak and Chubbies, among other brands. "We believe that direct-to-consumer is focused on the relationship… All direct-to-consumer is actually talking about is a brand's ability to connect with its consumers."That thesis has translated to Solo owning a variety of brands that sell both offline and online, but Merris insists that they all are able to connect uniquely well with their target customers. He joined the Modern Retail Podcast this week and spoke about Solo's growth over the last few years, what it's like being a public DTC company as well as why he looks for in potential acquisitions.One of the major focuses for Solo as a company is maintaining profitability. "We do not buy businesses that aren't profitable," he said. And this was one of the reasons his company decided to go public in late 2021."We were just on a tear -- growth was really solid, we were very profitable, we generated free cash flow," he said. While the economy has certainly shifted since 2021, Solo has been able to maintain its profitability -- at its most recent earnings its gross profit increased 11.4% to $54.4 million.Merris considers Solo to be a brand that outperforms competitors. "Our business was pretty sound, it still is," he said. "And I think that you see that now, in this environment, there are very few businesses -- especially [those] that would consider themselves direct-to-consumer businesses -- that are still growing and doing so profitably."Solo represents a small but influential group of companies trying to take a roll-up approach. Merris was clear that Solo doesn't have targets in terms of number of acquisitions each year, but that it's always looking for new companies to join that fold that fit its parameters.With that, Merris has yet to find company that has a business model analogous to what he's trying to build. "There really isn't any sort of conglomerate or aggregator -- or whatever you want to call it -- that we aspire to be like," he said.

On this week’s Modern Retail Rundown, we give a recap of the influencer-led Amazon's Prime Day, which for the first time included deals on travel. Next is a look at the fallout a UPS strike can have, and the impact it can have on online retailers and brands' fulfillment. Lastly, we talk energy drinks backlash in light of Logan Paul's Prime facing an FDA investigation into its caffeine content.

Shein has been around for nearly a decade, but we're just beginning to learn more about the brand now.Over the last two years, the e-commerce platform has taken the world by storm. In 2021, it caught most people by surprise when it became the most downloaded U.S. iPhone shopping app. Today, it is the number three top app on App Store.But with this rise to fame has come a lot of questions. For one, Shein is largely known as a seller of fast-fashion apparel. Its products are cheap, and it sells thousands of them -- which to many, seems like a model that's both wasteful and reliant on cheap labor whenever possible. But after years of seeming silence, Shein is now talking and trying to give a sense of how the company works."We like to call [our model] on-demand production," said Peter Pernot-Day, Shein's global head of strategy and corporate affairs. "The way it works is: we will identify potential products, we'll work with one of our small-batch production partners, and we'll make between 10 to 100 copies of that garment -- we'll then offer it for sale," he said. If the garment resonates, Shein goes back and finds a partner who can manufacture it at scale. "That's allowed us to operate profitably -- it's also allowed us to dramatically reduce excess inventory waste."Pernot-Day joined the Modern Retail Podcast this week and spoke about the company's overall direction, its strategic growth in both the U.S. and countries like Brazil as well as why it's attempting such a big marketing push now after years of relative press silence. He started as Shein's general counsel in 2021 and took this more front-facing role last yearFor the past year, Shein has been facilitating a marketing spree to try and tell its story on its own terms. This has included pop-ups around the U.S., as well as work with influencers. One recent influencer promotion sent TikTok personalities to factories in China, who then posted about their experiences on social media. This was met with criticism far and wide of influencers describing a paid press trip as a journalistic endeavor.But Pernot-Day felt the entire ordeal was misconstrued. "I think that those influencers spoke honestly about what they saw," he said. "And I think it's a shame that they were attacked for it on social media. I don't think that they bear any responsibility for reporting honestly about what they saw on their trip."Despite the perceived blowback, Shein remains a popular e-commerce platform that seems to be growing by the day. One of its big efforts to maintain this growth is a third-party marketplace. The company is trying to find local brands to sell their goods on the platform. The marketplace is currently running in both the U.S. and Brazil.As Pernot-Day described it, this push is part of Shein's focus on localization. "The final piece [of this strategy] is finding both suppliers who make and manufacture Shein clothing, but also third-party sellers who are interested in coming alongside us and reaching our customer base in these local geographies," he said

This week's Modern Retail Rundown starts out with a discussion about brands rushing to Threads. Then, we dive into the state of homeware retail in light of The Christmas Tree Shops going out of business. Finally, the show discusses why Claire's is putting off its IPO after revamping its business for Gen Z.News links:https://techcrunch.com/2023/07/06/threads-wont-be-fun-but-it-will-give-brands-a-home-away-from-twitter/https://www.npr.org/2023/07/03/1185809716/christmas-tree-shops-liquidate-stores-bankrupthttps://www.retaildive.com/news/claires-postpones-ipo/684926/https://www.fastcompany.com/90917315/ipo-market-outlook-stocks-growth-companies-ey-report-2023

For frozen food startups, direct-to-consumer is a difficult channel to make work. But for MìLà, which makes food products like Chinese soup dumplings and noodles, being able to ship directly to customers is a core part of its business strategy."DTC is very important to us because we do have a direct connection to our customers," said Jennifer Liao, co-founder and president of MìLà. She joined this week's Modern Retail Podcast to talk about the brand's growth.MìLà began as a Chinese food restaurant but transformed into an online food business when the pandemic first began. Using a Google Form and messaging apps like WeChat, in 2020 Liao and her husband would take soup dumpling orders and locally deliver them throughout Washington. But the dumplings became more and more popular, and so the couple decided to expand its domain.First, it started shipping to more areas. Then, the company brought on a 3PL to ship frozen dumplings across the country. Today, MìLà has expanded its facilities, employs over 100 people and has grown its product line beyond just dumplings. It's also expanded sales channels with a recent launch in a Bay Area Costco with plans to sell in Central Market in Texas and Wegman's on the East Coast.The company has also caught the eyes of celebrities -- actor Simu Liu recently joined MìLà as chief content officer.Even with the growth, Liao said the brand has remained consistent with its recipe. "We haven't changed the quality of the ingredients," she said. "We haven't changed the way that we do it, but we have obviously scaled much more efficiently."But figuring that out comes with growing pains. For example, when MìLà first began shipping nationwide, it offered a "melt-free guarantee." That is, the dumplings were supposed to arrive at people's doorsteps still in their frozen state. But the brand ran into issues in 2020 with supply chains backed up and deliveries bottlenecked."We had actually about 20% failure rate for our soup dumplings, where they would arrive melted," Liao said. After some trial and error, as well as tweaking its fulfillment strategy, MìLà was able to overcome this issue.And even though DTC presents issues like this -- Liao is insistent that the company will continue to use it as a sales channel. While grocers are increasingly interested -- and the it's easier to ship frozen food to grocery aisles than it is to individual customers -- the brand has a direct line with its biggest fans, and that's helped MìLà grow."I don't think we would stop DTC," Liao said. "I think we would try to figure out what is the right ratio of distribution."

Tattoo care brand Mad Rabbit has a mission to make a growing niche of body care mainstream.The company, which first launched in 2019, makes products for people with tattoos. That includes body washes, balms and other aftercare needed to make sure the ink doesn't fade. And while it's recorded large sales growth year-over-year, seeing over 100% sales growth over the last two years (with the help of an appearance and subsequent deal on the show "Shark Tank"), it believes mass retail is the next arena in which to prove itself."Where do you go [from where we are now]," said co-founder and CEO Oliver Zak, "it's beauty and mass." Zak joined the Modern Retail Podcast this week and spoke about his ambitions for the brand.The mass part of the retail expansion equation is already in the works. Just this week, Mad Rabbit unveiled plans to expand to over 1,800 Walmart locations. But the question is: how do you ensure that people will buy the products on the shelf?According to Zak, it's a question of messaging. "I think a big key is screaming tattoo on the signage opportunity that you do have," he said. "I've never walked down a Walmart and seen anything related to a tattoo before."Another big part of his strategy is gaining acceptance from the tattoo community. "When we first entered the industry, the biggest barrier we had was that we weren't tattoo artists," Zak said. "Many of them have a problem with 'outsiders' coming in and making money off the backs of tattoo artists. And to a certain extent, that is what we're doing."But over the years, Mad Rabbit has tried to partner with all types of tattoo artists and make them know that they aren't mere suit-and-tie interlopers. That has begun paying dividends now, Zak said."This past year at conventions," said Zak, "it's been nothing but love."

This week’s Modern Retail Rundown starts off with a check-in on Daily Harvest and its planned retail launch, following a tumultuous year of lawsuits. Next, a look at TikTok testing a digital store selling its own products. Lastly, we discuss a Wall Street Journal story about the changing return policies among online retailers — and how it’s impacting shoppers’ behaviors.Stories cited:https://www.fastcompany.com/90908456/daily-harvest-food-startup-toxic-tara-flour-recallhttps://www.businessinsider.com/tiktok-could-sell-own-products-us-after-uk-test-trademark-2023-6https://www.wsj.com/articles/online-shopping-clothes-returns-16500969