Issue #18: Creators Launch Physical Products

Top creators have been launching physical products for a couple of years now. This week, some of the top creators on YouTube made announcements that I think will have a huge impact on retail.

• Lunchly - A Lunchables competitor featuring a main meal (like pizza or nachos), PRIME hydration drink, and a Feasteables chocolate bar from Mr. Beast, KSI, and Logan Paul

• Made in Network + Babish Culinary Universe - Made In Network, a media company, invested in the Babish holding company to launch a new series and release several new Babish products in brick and mortal

On the Lunchly front, 2 of the 3 products existed prior to this new product. The creators are repackaging the individual products to be more occasion-focused concepts. As discussed in Issue #16, brands should be thinking more about creating pre-packaged experiences for Instagram-able Moments, Gifting, & Occasions. Just like H&H and Acme Smoked Fish did with the Lox Flight, these creators are taking an occasion, a school lunch, and creating a product around it. Lunchables has been around since 1988 and lacks the cache with the current target audience. These creators have more cache with the audience. However, the upstart Lunchly has not been without controversy. A quick perusal of the back of the box shows some very unhealthy ingredients, which to be fair to the creators is exactly the same if you look at their main competitor’s ingredients. Kids may not care, but a lot of their millennial parents do. It will be a battle to see who budges first, the parents allowing their kids to eat or the creators switching up the assortment to a more better for you aproduct in line with current trends.

Separately, Made In Network and Babish have been partnered for seven years, but this new announcement has taken it up to the next level. Babish is using the funds to increase his team by 50%, launch four series, partner with traditional studios, and debut new brick-and-mortar products. As a viewer of his content, I am excited to see the content expansion. However, as a retail/future of commerce nerd, I am very excited to follow his brick-and-mortar expansion. As far as I am aware, Babish would be the first, or one of the first, creators to have cookware in major retailers. It will be exciting to see which products he launches and with what retailers!

Target Ramps Up Hiring For Holiday Season

During the holidays, retail and eCommerce volume tends to ramp up as people are spending more time together and buying presents. To meet this increased demand and foot traffic, retailers bring in extra labor to account for the demand. For instance, Target is planning on hiring 100,000 seasonal employees across the stores working both in-store as well as throughout its supply chain. That new labor will be supplemented by allowing existing employees to work additional shifts (unclear if that means they will be able to work overtime). Target is not alone as many other retailers, carriers, and others involved in commerce will ramp up hiring. These types of announcements will trickle in throughout the next couple of weeks. Regardless of the size of a retailer, you should have a plan to deal with the increased holiday volume. What is your strategy to account for extra holiday demand?

Walgreens Launches Private Label Beauty

Consumers are looking for value, we know that. However, value does not just mean the lowest price. Instead, it is more about bang for your buck. What use is buying a cheap item that doesn’t work? This value trend is showing itself in the beauty space. US premium beauty sales grew 8% in H1 2024, while mass market sales were flat. Retailers are taking notice, like Walgreens, who just launched private label premium skincare. The 13 new products include cleansers, sunscreen, serums, and more. These products are priced 50% less than their competitors. Still, a troubling part of these items seems to be that Walgreens has directly ripped off CPG brands. For instance, it launched a “Super Invisible SPF40” and on the package, it says “Compare to Supergoop! Unseen Sunscreen SPF40.“ A disclaimer indicates that this is not a private-label product manufactured by Supergoop! and instead is just a comparison to that product. This strategy is common in generic medicine, but I have not seen it in other CPG categories. Like many retail developments, this private-label beauty is a mixed bag. It is great that Walgreens is diversifying its selection and providing value to consumers, but very concerning that the products are uncannily similar to emerging brands in the space.

Luxury Retail Thrives

The retail sector has been struggling recently with a lot of vacant space. Still, luxury brands are capitalizing on their strong cash reserves to double down on the in-store experience. According to JLL, the real estate services company, half of new luxury store are opening in malls, snapping up the empty real estate to form better connections and experiences with customers. On the surface, malls are not doing well. Luxury brands leased over 360,000 square feet from July 2023 to July 2024, with a focus on LA and NY (Atlanta was the third largest city though…). The most interesting part of this report is the positive stats that are coming out on malls from JLL. High quality malls are able to succeed with a strong tenant mix and best in class experiences. Luxury brands recognize the benefits of strong malls and reward the most successful malls with their business. To further back that up, according to Bain & Company, the consulting firm, monobrand stores (solo brand store like a Prada store not department stores like Macy’s) saw strong growth in 2023 as the largest distribution channel for these brands, illustrating the benefits of having a distinct point of contact.

Finally, these retailers, especially the ones located in major metropolitan areas, are capitalizing on the travel boon, with 80% of travelers expected to purchase apparel and accessories during their travels in 2024. Beyond that, I am very excited about the diversification of large luxury retail, and mixing it into hotels, hospitality, and apartment buildings. In Issue #13, I covered Sak’s expansion into hotels and apartments. Louis Vuitton is opening a hotel. Some very exciting trends to follow for the future!

Grocery and Restaurant Favorability Drops YoY, Retail Rockets

Each year, Gallup, the polling firm, surveys American consumers on their views of major US industries. They ask if the view of the industry is very positive, somewhat positive, neutral, somewhat negative, or very negative. On the positive side, sports and retail favorability shot up, by 11 percent points and 6 percent points respectively. On the negative side, grocery and restaurant favorability plummeted, by 8 percentage points and 9 percentage points respectively. This poll is the first time grocery industry ratings were more negative than positive. Why the massive drop? There could be a couple of reasons. Food prices are higher, food safety confidence is down, and other factors are driving negative sentiment. Here is one viewpoint from a restaurant.

• Summary: Westock is a tool to help brands acquire more retail shoppers through rebates, digital storefronts, surveys, and shopper request forms to let retailers know what products to stock which boosts revenue and LTV

• Founder(s): Cameron McCarthy and Dmitriy Shumayev

• Amount raised & investors: $2.3M from Aperiam Ventures, Techstars, Brooklyn Bridge Ventures, and Silicon Road Ventures

• How this will shape the future of commerce: The more brands are able to make direct connections with the people who buy their products in retail the better

• Why should you use this technology?: Retail marketing attribution is so hard and anything you can do to build a relationship the better

• Notable Clients: Utz, Athletic Brewing, Jack Link’s, Avaline, and Olipop

• Pricing: Subscription fee

• My take: My favorite feature is the ability to get customers to request your product as it is so difficult to convince retailers to add your product and once you get in a retailer it is so hard to get in touch and let them know the product is available for purchase

• Interested? Book a demo here

Additional Links:

1. Bagel expansion heats up: Apollo Bagels opens in Williamsburg and PopUp Bagels opens in Boston

2. Mr. Beast’s internal culture memo leaks and there is a lot to learn for any business (read more here)

3. Transcendence Coffee partners with Caffe Panna to infuse its syrup into a flavor at Caffe Panna (read more here)

4. HelloFresh, the meal kit company, add Loisa seasoning to its meal kits (read more here)

   • My take: Meal kit partnerships are a great way to expand distribution and drive trial

5. Nike CEO steps down and is replaced by a long time executive (read more here)

   • My take: Nike has been struggling and a move has been needed - I hope he returns to the basics (my thoughts in Issue #11)

6. Momos, a customer engagement platform for multi-location brands, raised a $10M Series A (read more here)

7. Whole Foods opens small format location on UES (read more here)

   • My take: Experiential food and catering to the daily shop is the move

8. Target hires Pepsi’s deputy CFO to be its CFO (read more here)

9. National Retail Federation predicts Halloween spending this year will reach $11.6B and that spending is starting before October (read more here)

10. Gen Z is flocking to TikTok Shop with more than half of them expecting to find gifts on the platform (read more here)

11. Jolie shower filters now available in Nordstrom (read more here)

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