The Modern Retail Podcast

This week on the Modern Retail Rundown we discuss the latest reports of Instacart’s approaching IPO, which can come as soon as September. Next is a look at Aldi’s acquisition of Winn-Dixie and Harvey's parent company -- a major expansion in the Southeast for the German grocer. Finally, a new story outlines Everlane’s new goal to shed its image and become a top apparel brand.Stories cited:https://www.bloomberg.com/news/articles/2023-08-17/instacart-said-to-plan-for-september-ipo-in-boost-for-listingshttps://www.wsj.com/articles/instacart-sees-revenue-profit-boost-ahead-of-public-listing-1d7891dhttps://www.cnn.com/2023/08/16/investing/aldi-buys-winn-dixie/index.htmlhttps://www.supermarketnews.com/retail-financial/secretaries-states-want-ftc-block-kroger-albertsons-mergerhttps://www.forbes.com/sites/pamdanziger/2023/08/16/under-new-management-everlane-leans-into-quiet-luxury-with-a--sustainability-edge/https://www.nytimes.com/2020/07/26/fashion/everlane-employees-ethical-clothing.html

The U.K.-based retailer has become synonymous overseas with value-based apparel. But the company has been steadily growing its U.S. fleet with the hopes of becoming a powerhouse retailer in North America, as well. Its first store opened in 2015 and it currently has 20 open. Over the last 12 months alone, the company opened up seven new locations. And, according to Primark's president of U.S., Kevin Tulip, the plan is to get to 60 stores in the region by 2026."The strategy was always about opening up a handful of stores and testing and learning," said Tulip on the Modern Retail Podcast. He joined this week's episode and dove into the retailer's international expansion strategy, as well as its evolving approach to technology and e-commerce.Tulip certainly knows a lot about the Primark brand. He first joined the company when he was 16. "It was a weekend job -- straight out of school, while I was studying, doing four hours on a Saturday, four hours on a Sunday," he said. "And I really fell in love with retail."Two decades later and he's risen the ranks from a store associate to president of an entire area of business.Right now, one of Tulip's main focuses is on finding the right locations for new stores. As he describes it, it's an art and not a science. "We've taken our time and understood the locations we're going into," he said. "This isn't about just opening as many stores as we can."One other big question surrounding Primark is its approach to e-commerce. The retailer has staunchly focused on in-store sales. It recently upgraded its U.S. site to be more accurate with merchandise, while still getting shoppers to go into local stores.Even though Primark is testing some buy-online, pickup in-store options in the U.K., Tulip insisted that stores are still the primary focus. The digital strategy, he said, "isn't focused on creating the website to be transactional."

On this week’s Modern Retail Rundown, we discuss the growing consolidation in the Tapestry’s big acquisition of Michael Kors owner Capri. Next, why brands are reducing the rewards in their rewards program to improve margins. Finally, we talk about Amazon scrapping a majority of its apparel private labels amid growing anti-trust ridicule.Stories referenced:https://www.nytimes.com/2023/08/10/business/tapestry-capri-merger-luxury-fashion.htmlhttps://www.modernretail.co/marketing/ralph-lauren-and-coach-are-resonating-with-younger-digital-first-shoppers/https://www.cnbc.com/2023/08/05/companies-crack-down-on-customer-perks-and-rewards-like-airline-miles.htmlhttps://www.wsj.com/articles/amazon-cuts-dozens-of-house-brands-as-it-battles-costs-regulators-3f6ad56d

U.K.-based fashion brand Kurt Geiger has been around since the 1960s, but has big plans to further expand its U.S. presence.The brand entered the U.S. around six years ago. "The U.S. is our number one market, it's bigger than the U.K.," said CEO Neil Clifford. "It will be north of $200 million this year… I think next year, comfortably, we'll be north [of] $300 million." Meanwhile, this year the brand as a whole is on track to bring in more than $40 million EBITDA on nearly $500 million in total revenue.But what the U.S. currently doesn't have is a Kurt Geiger retail store -- this growth over the last half-decade was thanks to its department store partners like Dillard's and Nordstrom. It was also thanks to e-commerce sales, which came in at $40 million this year in the U.S. -- three times as big as the U.K.'s online DTC sales.Against this backdrop, Kurt Geiger is ready to enter physical retail. Clifford joined this week's Modern Retail Podcast and spoke about the brand's growth and future ambitions. He's been with the company since 1996 and shared some of the biggest lessons he's learned over those decades."I'm a big lover of North America," Clifford said. "So we always talked about [how] surely we will be successful there." But the company didn't enter the U.S. until only a few years ago. "We were a little scared," he said, "because it would be a huge venture."Despite the initial reticence, the venture is working out. Next year, Clifford said, Kurt Geiger plans to open its first U.S. stores. "We will open a new flagship store in London in September… our largest ever store, 3,500 square feet. And that is really the [evolution] of our concept -- it will be the template for the U.S.," he said.Now, Clifford has big plans on the marketing front -- an area Kurt Geiger has never really invested in. "We definitely have been very pleasantly surprised on the level of impact we can make digitally without having any stores," he said. "We definitely have turned our dial to digital marketing in quite an intensive way to support our brand awareness growth."

On this week’s episode of the Modern Retail Rundown, the staff dissects various news coming out of the retail industry.This was a busy week for earnings reports -- and we’ll start out by breaking down Amazon’s blockbuster quarter following mass layoffs. Next, we take a look at E.l.f.'s hyper-growth path, courtesy of Gen Z adoration. And lastly, a look at how Diamond Crystal is trying to position its kosher salt to home cooks.Stories cited:https://www.cnbc.com/2023/08/03/amazon-amzn-q2-earnings-report-2023.htmlhttps://www.modernretail.co/technology/why-amazons-grocery-delivery-efforts-have-fallen-flat/https://www.barrons.com/articles/elf-earnings-stock-price-c475322ehttps://www.glossy.co/beauty/e-l-f-beauty-carves-out-skin-care-as-fourth-portfolio-brand/https://www.nytimes.com/2023/08/01/dining/diamond-crystal-kosher-salt.htmlhttps://www.thekitchn.com/trader-joes-diamond-crystal-kosher-salt-23549559

Coffee shops may have seen a dip during the pandemic, but they’re back and booming.That's especially true for the coffee chain Bluestone Lane. The company is ten years old, but has really kicked business into gear over the last few years. The coffee shop has over 60 locations and has seen its business grow 350% since the pandemic. Its founder and CEO Nick Stone joined the Modern Retail Podcast this week and spoke about Bluestone's strategy and future ambitions.Part of the thesis behind Bluestone is customer service from Down Under. "If you have a coffee shop or a cafe in Australia that has the best coffee, but if they deliver it in a way that is cold and impersonal and obnoxious, Australians will boycott it," Stone said. (It shouldn't come as a shock that he is Australian.)According to Stone, the best way for a business like his to thrive is to provide a good experience. "In hospitality, you really have no intellectual property." Instead, he has tried to build Bluestone as a place people want to spend time in.That means doing one thing and doing it well. While Bluestone has attempted side-hustles like its own line of CPG products, Stone now believes that it's hard to run multiple types of businesses at once. "I think it's incredibly hard to do both at the same time unless you have enormous resources," he said.For him, the focus is on opening more locations -- Bluestone is slated to have 70 locations by the end of this year -- while making sure customers feel comfortable and welcome in them."I think ultimately coffee shops should be about driving community," he said.

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.