It’s A Wrap-Up: A Collection Of Dynamicaction’s Must Read Musings We Didn’t Want You To Miss
For those in the Northern Hemisphere who are coming from their summer break, getting ready to depart or longingly wishing they had gone, here is the collection of July’s top news stories in Retail and eCommerce to get you up to speed.
Unilever’s Big Strategic Bet on the Dollar Shave Club
This month, Unilever paid $1 billion dollars (around 2% of its assets) for the Dollar Shave Club. The startup, operating since 2012, offers a blades-by-subscription service that has grown to 3.2 million subscribers. Unilever paid five times what Dollar Shave Club was expecting for revenues in 2016. The article by Harvard Business Review suggests three possible reasons why the traditional consumer products company decided to acquire a business that appears to belong more in the tech sector:
- Filling out its brand portfolio. Unilever has worked toward growing its personal care category -- male grooming is Unilever’s largest growth driver, according to their VP of Insight, Personal Care.
- Absorbing a disruptor. Much thanks to Dollar Shave Club, the online market for razorblades has grown from “essentially zero” to $263 million.
- A fundamental shift in the industry. Unilever’s move is a signal of more fundamental changes in the consumer products industry, as traditional brands (read Gillette) and eCommerce players, such as Amazon, try to emulate the success achieved by the startup in its industry.
To read more about Box Subscription businesses, visit our blog: Box Subscription Model: Convenience, Personalization, And A Whole Lot Of Data.
What do the Olympic Games mean to the fashion industry? In addition to billions of dollars through sponsorships and broadcast rights, the sportive spectacle offers around 6,000 hours of logo-filled programming for an expected 3.6 billion viewers across different platforms. Fashion labels designing the Olympic uniforms, as well as opening and closing ceremony ensembles include: Polo Ralph Lauren for the United States; Dsquared2 for Canada; Stella McCartney x Adidas for Great Britain; Lacoste for France; and H&M for Sweden. However, they are not the only brands via for a piece of the Olympics pie to potentially boost Back To School sales! Old Navy, Under Armour and Aeropostale have blurred the lines by blatantly utilizing current logos or carefully crafting messaging surrounding the Olympic hopefuls.
The industry is looking to capitalize on the momentum fostered by the games with as the well-times Athleisure trend has continued to rise throughout seasons. Style expert Anna de Souza states, “As with all fashion, it comes down to how these collections make people feel: Does it instill confidence? Will it convey pride? And will it look cool at the bar during the men’s soccer final?” In the concluding statement from Veronica Hendry, senior editor of WGSN, that we feel rings-true for most purchasing patterns, "the consumer needs to feel impressed."
Retailers Lease Warehouse Space at Record Pace
Retailers are leasing warehouse space at a record-setting pace, as eCommerce pushes companies to be placed closer to population centers and keep more products in-stock to meet customers’ ever-increasing expectations of fast deliveries. As stated by The Wall Street Journal, firms leased 70.1 million square feet of industrial space in the second quarter of 2016, resulting in the decline of warehouse availability for a 25th consecutive quarter to 8.8%.
Naturally, this has driven rent prices up. It is estimated that industrial rents increased in 68 of 79 major U.S. markets, at the rate of 4.1% since 2015.
Back to bricks and mortar: how e-commerce has embraced the real world
The digitally born, eyewear Warby Parker’s brick-and-mortar strategy has emerged after several experiments with pop-up shops, concept stores and a mobile store on a bus. After opening its first flagship store in 2013, the business is now valued at $1.2bn (£908m) -- with 31 stores across the U.S. The recent article by The Guardian explains that physical stores provide a “sticky brand experience.” In the run to tap into the rise of the experience economy, eCommerce businesses understand that customers look for “surprise and spontaneity” in their shopping experience.
However, eCommerce pure-players toying with the concept of physical locations aren’t taking the traditional brick-and-mortar path most traveled. They appear to bet in differentiation by creating a re-imagined retail space, such as a gallery, museum, clubhouse or events space.
What Amazon could learn from Yoox Net-a-Porter, the “world’s biggest luxury fashion store”
This piece from Quartz proposes that in order to succeed in the high-end fashion segment, Amazon should learn from Yoox Net-a-Porter. The company has focused on three different businesses: full-price retailer, off-season discounter (through Yoox.com and TheOutnet), and e-commerce operations for fashion labels.
Amazon, being the “Everything Store”, probably won’t be able to ultimately compete to sell the priciest labels. That said, the article proposes the giant to dedicate a designer section with its own look and feel to attract more high-end brands. It should also take into consideration that discounting hurts a designer label’s exclusive image. Finally, Amazon should consider keeping full-price and discounted goods separate, as has Yoox Net-a-Porter done.
Here's the Latest Way Walmart Is Taking on Amazon and eBay
Walmart.com already offers 11 million different kinds of items. (That compares to and about 260 million on Amazon) and is the 2nd-most-visited e-commerce site in the U.S., with 88 million unique visitors per month, as reported by Fortune.com.
Amongst its efforts to compete against Amazon and eBay, it now plans to add 1 million items per month primarily to the marketplace, which was first launched in 2009. In fact, marketplaces offer many benefits, including higher margins (“third-party sellers pay the retailer a commission for sales made on its website, while Walmart doesn’t have to assume the costs of warehousing and shipping.”)
Although Walmart has made some progress (it is now #3 among marketplaces in the U.S., and is growing swifter than Amazon or eBay), it still struggles to keep up with Amazon, where nearly half of the eCommerce giant’s value of merchandise sold comes from third-party sellers in the first quarter and the unit growth in its marketplace was 36%.
To read more about Walmart’s current steps in competing with Amazon, visit our blog: Two Retail Giants And The IWWIWWIWI Shoppers
This concludes another of our monthly round-ups. Check back next month for a newly curated collection of headlines that will get you up-to-date with the retail industry’s latest buzz… Additionally, we invite you to stay tuned to our blog page and follow us on Twitter and LinkedIn for all of our musings.