Issue #1: Costco's Endless Aisle

Happy Memorial Day Weekend! Memorial Day tends to be a large booster to small business sales as people are out and about with their families spending money - what a great time to kick off a newsletter focused on the rise of retail. If you have any thoughts on this week’s issue or just want to chat in general, please don’t hesitate to reach out!

Trend of the Week:

Costco continues to roll out its third-party marketplace, Costco Next, which features 70 brands and will have around 90 brands live by the end of the year. Unlike the main Costco site, you need to be a member to order and the orders are placed on the brands site, not through Costco’s website. The brands are handling shipping, customer service, and returns. The site is powered by Livechannel, a company that connects brands and marketplaces. Unlike many of the major marketplaces (Walmart, Amazon, etc.), Costco doesn’t allow third party vendors. As highlighted in the Retail Is Not Dead? kick off piece, customers are increasingly demanding endless aisles and the ability to consolidate their spend. To avoid the Costco membership being put on the chopping block by consumers, Costco needed to find a way to grow the amount of products available to order. Costco Next is the solution to still have a curated selection, and bring in more opportunities for ad revenue, but also expand product selection. It will be exciting to monitor and see how fast they expand their selection!

News of the Week:

Positive:

1. Popups - This week several popups launched as temporary or semi-permanent store fronts. This trend continues to gain traction as brands are seizing the opportunity to capitalize on retail marketing, but not commit to a long term lease. PopUp Bagels just launched their latest location on the Upper West Side and continues to utilize pop-up/drop to bring in customers (check out this blueberry pancake cinnamon roll cream cheese they just dropped). Cheez-It opened a diner for one week only in Woodstock. Finally, Anthropologie launched their popup, a fruit stand, at Union Square Market. These are just some of many recent examples. Brands continue to see this as an efficient way to go to market. What has been your favorite popup recently?

2. Out: Drive People to Your Website, In: Drive People to the Store: Liquid Death made headlines announcing that one lucky customer will receive a Liquid Death jet and 6 months of free hangar space. This promotion is based on a botched Pepsi promotion from the 90s. The key goal of this advertisement for Liquid Death was gathering consumer data since when someone purchases it in store, they don’t necessarily know anything about the customer without paying lots of money. Since people are texting the receipt, they are able to build a relationship with the customer and gain valuable data (phone number, where they purchased, what else is in the basket, etc). Liquid Death has a phenomenal marketing team, it will be interesting how this stunt comes across from an ROI perspective and if anyone will try to copy it.

Negative:

1. Continued Struggle of Verticalized Big Box Stores: As online and physical purchasing continues to consolidate, it becomes harder for large-format, verticalized stores to succeed. Bed Bath & Beyond and Foot Locker are some of the many stores that have had this challenge recently. Last week, The Container Store was added to the list. The NYSE is threatening to delist them because its stock has traded at less than $1 for more than 30 consecutive days. Additionally, in the post Q1 earnings call, it was announced comparable-store sales decreased 19.7%. However, there is a silver lining: their custom spaces product offering, which is modular private label storage (aka something you can’t find elsewhere) is growing.

2. Foxtrot Re-Emerges: After being booted from the company he founded in April 2023, less than a year later, Foxtrot went into bankruptcy. Recently, in the bankruptcy auction, Further Point Enterprises paid $2.2M for the assets and is rumored to be working with Michael LaVitola. Unfortunately, many creditors and small brands will never receive payment for the goods and it seems like the DC stores are shut for good. Hopefully, Foxtrot is able to make a comeback and become the future of third-place convenience stores, but it has a long road to get there.

Startup Feature: Max Retail

• Summary: B2B excess inventory marketplace for brands and retailers

• Founder(s): Melodie van der Baan, Damon Ciarelli, Morgan Hatin Bodström

• Amount raised & investors: $21M from M13, Nosara Capital, Rethink Impact, StandUp Ventures, Techstars, and The Artemis Fund

• How this will shape the future of retail: Excess inventory is a hundreds of billion dollar problem that causes retailers to lose hundreds of thousands of dollars and cause significant damage the environment through all the products thrown out

• Noah’s take: Customers want value and excess inventory arbitrage when done right can satisfy these customers, but when done wrong can lead to more waste

Jobs:

Leap | New York, NY - Store Development Project Manager (Construction)

Sweetgreen | Los Angeles, CA - Senior Consumer Insights Analyst

Olo | New York, NY - Chief of Staff to the CEO

Additional Links:

1. CVS joins Target and Walmart in launching a friendly branded, better for you private label snacks brand (read more here)

2. Wayfair to open first store outside Chicago (read more here)

3. Digital-first newsletter Air Mail launched a brick-and-mortar location in the West Village (here is a great interview Anjali Lewis, their GM)

4. A great piece on what BJ Novak’s Chain is building

5. Home Depot launches on Instacart utilizing Big & Bulky delivery (read more here)

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