Happy Friday!
Welcome back to This Week in Retail. And a big welcome to all of my new subscribers this week!
I am SO excited to share out this week’s newsletter & podcast episode. This interview has been one of my favorite pieces I’ve put out so far.
If you know someone who would love this newsletter, please share it out! I also always love to hear your feedback so feel free to respond to this email with any topics you’d like me to cover.
I am getting married next weekend so I will be taking a break for the next two weeks but will return on Friday, October 2nd.
Stay safe everyone!
Special Edition: This Week in Retail x Doug Stephens
Last week, I was able to connect with one of the best minds in the retail space, Doug Stephens, to chat about what the future of the industry could look like.
He was incredibly insightful and I learned so much from this conversation so I wanted to pull out some key themes from our talk to share out in this week’s newsletter.
Spoiler alert– the retail industry will never look the same again.
A Window of Opportunity
How will this pandemic change the retail industry? The most common answer is that we will see an acceleration of everything.
While this is true, Stephens asserts that when you dig a little deeper, you find that COVID is actually providing a unique window of opportunity for certain companies to grow to a scale that would have been previously unimaginable and branch into industries that no one would have ever expected. Think Amazon takes on healthcare, Walmart branches into banking, etc.
COVID has given major retail companies the opportunity to grow at an unprecedented pace, and as a result, they will be able to utilize their massive customer base to branch into sleepy, aged industries.
The future of Amazon?
Amazon has become one of the biggest winners of the pandemic and it seems as though everyone is curious about their future. One interesting topic we discussed was the early misevaluation of Amazon. Doug claims that the reason no one was able to accurately value Amazon in their early days is that they were viewing Amazon as a retailer, not as a technology company.
Amazon has made it clear that they are a powerful data information and technology company that happens to have a marketplace of products.
“You have to view Amazon not as a company, but as an operating model.”
Amazon asks: “What is the central problem in a given industry? They then attack that problem head-on with technology, data, and information. And they solve it.”
Because of their massive balance sheet and their high margin AWS business, Amazon is able to try and fail, and try and fail, until they get it right. It’s a dangerously successful approach and one that has overtaken eCommerce, grocery shopping, and could eventually dominate industries like Health Care, Banking, Insurance, etc.
Too Big to be Dismantled…
Tech has been the lifeline for our country during this crisis of isolation. Amazon has delivered our necessities, Google & Twitter have been our sources for information, and Facebook has been our social outlet.
As digital adoption continues and consumers become more and more reliant on big tech, these tech companies become too important for society to dismantle.
We also discussed the widespread retail bankruptcies, the future of physical stores, and what it takes for brands to be successful in a post-pandemic world. I would highly encourage you to listen to the whole podcast here, I had so much fun making this!
Recommended Podcasts This Week
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Business Casual: How Netflix Won The Streaming Wars
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NPR: J Screwed
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Invest Like The Best: The Next Wave of eCommerce
Retail x Tech News
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Background: Tiktok has been exploring ways for creators to monetize their followings. They launched their creator fund which compensates creators for their video views, and most recently they have partnered with the startup Teespring, which allows users to easily create and sell branded merchandise.
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Details: Eventually the goal is for the app to include a full shopping experience for users based on the creators in their feed. According to TikTok, the type of merchandise to be sold in this new shopping experience will not be exclusively apparel but will include a lot of non-apparel items, such as skateboards. This new feature will be another way for creators to make a living off of TikTok, in addition to the $200 million creator fund that the app recently rolled out to support their top users.
Inside Amazon’s New Grocery Stores
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Background: Fresh off its 2017 acquisition of Whole Foods, Amazon is looking to reinvent the grocery store with a new concept called…Amazon Fresh. Grocery is big business, with a market size of nearly $700 billion per year in the U.S. alone. Amazon is differentiating itself from sleepy grocery giants like Albertsons and Kroger by integrating a range of technology solutions that are designed for the modern shopping experience.
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Details: Amazon’s newest grocery concept officially launched this week in Woodland Hills, California. One customer compared the experience to Willy Wonka’s candy factory, with a number of grocery innovations including a smart shopping cart that allows you to check out without ever visiting the cash register. The concept also places a strong emphasis on streamlining the grocery delivery process, with additional features and parking for Amazon Flex drivers.
Traditional Retail News
Walmart joins the bid for TikTok in the US alongside Microsoft
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Background: Walmart looks to be joining Microsoft on a bid for Tik Tok, and it’s 100 million U.S. users. For clues on why the retail giant may want to enter the social media game, look at China’s more mature e-commerce market. In China, live-streaming is an extremely popular way to sell goods online in a format that is a mix of a product review and sales pitch.
Details: It seems Walmart wants exclusive control over TikTok’s e-commerce, as the company says it is particularly interested in the way the app has integrated e-commerce and advertising into its platform. TikTok’s live stream feature in particular holds the potential for a new form of advertising products in the U.S., similar to China’s current “social commerce” market which largely promotes goods through influencers’ live streams. The acquisition could be hugely profitable for Walmart since with TikTok would come control over the introduction of “social commerce” to the American market.
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Background: Macy’s sees a big opportunity to expand its presence in the luxury fashion space through the companies Bloomingdale’s brand. There has been a huge shift in spending from “experiences” to luxury fashion, and Macy’s is going all-in at a time when others such as Nordstrom are closing stores. Given the economic environment and Amazon’s entry into the luxury market, this seems like a pretty big gamble.
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Details: Macy’s CEO Jeff Gennette believes there is $10 Billion in market share up for grabs as many competitors in the luxury space file for bankruptcy and shutter stores. Coming off a stronger than expected quarter from an earnings standpoint, Macy’s is taking advantage of the competitive shift. In addition to investing in the operations at their current stores, Gennette is looking to the future by developing smaller, non-mall Bloomingdale’s locations.
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-Jackie
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