Issue #7: PopUp’s Partnership Strategy

Trend of the Week:

PopUp Bagels, a NY and CT-based bagel store, has taken the tri-state area by storm with its hot bagels, fun cream cheese, and strong brand. All bagels are served hot and fresh right out of the oven. Instead of wasting precious time cutting them open, you rip the bagel and dip it directly in the schmear. PopUp Bagels embodies many of the qualities I believe a modern retail brand should have: influencer partnerships, a strong brand, changing the menu frequently to draw in customers, and more! However, one area where they have excelled is partnerships with CPG brands and influencers to create a cream cheese or butter (aka a schmear). Almost weekly they drop a limited edition schmear in partnership with a large CPG brand by adding that flavor to the cream cheese. Past partnerships have included Frank’s Red Hot, Poppi Soda, and WellMadeKylie’s Key Lime Pie Cream Cheese. These partnerships are a great additional revenue stream for PopUp Bagels and a reason to get their customers coming back again. This past week, PopUp did a partnership with the iconic Sun-Maid Raisins and it might be the best one yet. Here is how it went down.

1. July 1st - Announce the return of cinnamon raisin bagels to the menu and tag Sun-Maid in the post

2. July 2nd - Showcase the special schmears for the week, including a cinnamon raisin cream cheese with Sun-Maid raisins in it

3. July 3rd - Launch a giveaway for a Sun-Maid gift basket, Sun-Maid merch, PopUp Bagels merch, a dozen cinnamon raisin bagels and schmears

4. July 3rd - Modify their merch to include raisins to debut the new products and showcase all the products in a separate post

As highlighted in the Issue #6 link of the week, marketing is evolving to be more physical as attention spans get compressed and digital spaces become more competitive/expensive. When done properly, this type of marketing partnership is so beneficial to both sides because it is a natural fit. Sun-Maid gets to leverage the strong, cool brand of PopUp Bagel’s in a way that makes sense and PopUp Bagel’s gives its customers another reason to come back in and try something new. For retail brands, this example is a big reason why you should build a strong brand early, as it attracts advertising dollars. I strongly believe more startup retailers should emphasize building the brand and pursuing partnerships for “drops” as it opens up the revenue streams early on.

News of the Week:

Positive:

1. Saks x Neiman Marcus x Amazon - After years of talks, Saks Fifth Avenue acquired Neiman Marcus to combine those two properties plus Bergdorf Goodman and Saks Off Fifth. Despite the long links, one wild card was Amazon’s involvement in the deal. As part of the deal, Amazon will invest in the new company, while also providing logistics and technology support. Amazon has long seen physical retail as the next frontier, trying both on the grocery side and retail. As consumers continue to demand omnichannel retail, it makes sense to partner with these established brands to grow. Right off the bat, leveraging Amazon’s fulfillment network will reduce costs for Saks/Neiman and help Amazon continue to expand their fulfilment operations, which reduces Amazon’s fixed costs. eCommerce is also clearly a priority for the new combined company as current Saks.com CEO Marc Metrick will become the CEO of the new company. Additionally, it gives Amazon access to two customer segments, high-end luxury with Bergdorf Goodman and off-price, brand name department stores with Saks Off Fifth that aren’t really featured on Amazon right now. This move is a brilliant way to improve for all parties and is a big win for omnichannel retail.

2. eBay Releases 2024 Recommerce Report - eBay defines recommerce as “the buying and selling of pre-loved items“ which is an exploding category for ecommerce. According to one source, in the United States, online second-hand shopping is expected to reach nearly $90 billion in 2024. Customers like the value and positive impact on the environment. Here are some of my favorite takeaways from the report.

   Customers were asked their views on shopping used items and nearly half agreed it was “in” and 86% had bought something used in the past 12 months. Customer purchasing is very much trend driven, in particular in clothing apparel. It will be interesting to see how this purchasing continues to merge the digital and physical, as a lot of this type of purchasing is done online or in unconnected thrift stores or flea markets. For instance, the number of sold clothing, shoes, and accessories with “thrifted” in the description increased by over 400% March YoY. Surprisingly, pre-loved and refurbished makes up 40% of eBay’s sales, which will be interesting to monitor the trend as that is not necessarily in line with the consumer sentiment expressed in the report. Finally, it was interesting to see the data behind people viewing eBay as a supplemental income stream. 58% of Gen Z and 51% of millennials say say generating extra cash is a primary motivator for selling pre-loved goods.

Negative:

1. Walmart Also Getting Out of Healthcare - Last week, Issue #6 covered Walgreen’s decision to get out of healthcare clinics and focus on pharmacy. This week news got out that Walmart is in talks to sell the medical clinics that were abruptly shuttered in April. Once viewed as a promising new channel, Walmart was unable to make it profitable. By the language of the recent news, it seems like Walmart are having trouble finding a buyer. For customers, this delay is bad because there is less access to healthcare. For Walmart, this delay is bad because square footage is going unused and there is an opportunity missed for customers to have a reason to come into the store. Hopefully for all parties involved, a new operator will emerge and be able to succeed.

2. Redbox Parent Company Declares Bankruptcy - Redbox, the vending machine company which was one of the last places you could get a DVD, announced this week it is entering bankruptcy. With mounting debt and a product (DVDs) that is not really used, it was hard to remain in business. Unfortunately, there does not really seem to be a viable pathway forward for Redbox. At a smaller scale, there may be a way to make this work in limited areas. However, on the positive side, a lot of vending machine real estate just opened up for someone to capitalize on. I am bullish on vending machines/smart fridges in general, like Fraiche, which serves fresh food, as a business model going forward. It will be interesting to see if anyone comes into bankruptcy trying to get the real estate.

Startup Feature: Sante

• Summary: Modern POS system for liquor stores bringing off the shelf technology into an industry lacking innovation to improve efficiency

• Founder(s): Darren Fike

• Amount raised & investors: Meridian Ventures, Sunstone Management, Y Combinator

• How this will shape the future of retail: As labor challenges continue to sweep the retail industry, technology is needed to automate as much back office tasks as possible so time can be spent with customers in store, which this offers

• My take: Having spent three years in the industry, this POS system makes tools very much needed available for all

Job Opportunities:

Blank Street Coffee | London, United Kingdom - Supply Chain Coordinator

Feast & Fettle | Providence, RI - Director of People Operations

Vacation | Remote - FP&A Analyst

Additional Links:

1. Bob’s Discount Furniture closing (read more here)

2. Well’s Fargo Analyst determines variance in Chipotle bowls across locations (read more here)

3. Will Ikea finally open a Manhattan location (read more here)

4. Target to stop allowing paper checks (read more here)

5. Hamptons taken over by pop-ups (read more here)

6. FTC blocks Tempur Sealy acquisition (read more here)

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