1) Goop expands and diversifies G. Label merchandise, but questions of scalability loom

What happened

  • Goop, which launched in 2008 as Gwyneth Paltrow’s lifestyle newsletter, began selling apparel from its G. Label brand in late 2016 with limited monthly releases. Now G. Label is expanding the size of its monthly collections and diversifying its merchandise to offer jeans, athletic wear and home goods.

Why it matters

  • Goop started as a newsletter in 2008 and soon began creating products that reflected its ethos and aesthetic. (Glossier similarly started with the media site Into The Gloss in 2008, which turned into the consumer brand in 2014.) Goop had an estimated $15-20 million in revenue for 2016, which tripled in 2017. However, its highly-specific and often unscientific products, not to mention its luxury products at inaccessibly high price points, continue to alienate potential customers. Though the company raised $10 million in venture capital last year, Goop must figure out how to remain relevant to its initial audience without driving away the potential customer base it needs to make investors their money back.
  • Goop’s products are highly inaccessible compared to Glossier, throwing its potential scale into question. Paltrow’s celebrity may continue to attract a large number of potential followers, especially for Goop’s free-to-consume media, but that is vastly different than potential customers who will spend significant amounts of money with the brand over time. Glossier, with its more affordable price points and more welcoming ethos, will resonate with a wider audience, even without a celebrity face at the forefront. Sometimes building an “aspirational” business, as Paltrow called Goop, is exactly that: a dream.

2) Whole Foods raises rates for coveted shelf space as Amazon’s business model gains influence  

What happened

  • Whole Foods is raising the rates suppliers must pay for the most visible, high-traffic shelf space, while asking them to discount their products in return. This is the first pricing update in nine years and the average sellers’ fee of $25,000 will increase beginning in April. For its biggest vendors, Whole Foods is offering prime displays and promotions in-store for a price tag of $300,000.
  • In a rare departure for an Amazon company, which prefers to handle as much work in-house as possible, Whole Foods is also outsourcing its shelf merchandising to a third-party contractor.

Why it matters

  • Amazon’s entire business model is predicated on making money off of suppliers, not consumers, and offering the widest selection possible. This strategy means Amazon sells products to customers at or below cost, allowing it to sell many more products because of its lower prices. Amazon instead takes its margin on the back-end from suppliers, whereas most companies make their money off of consumer sales.
  • Though these new initiatives were allegedly brewing before Amazon acquired Whole Foods in August 2017, it’s possible that Amazon accelerated a consumer-first philosophy in the supermarket chain. It is simply too much of an Amazon strategy to have happened without the company’s influence. More changes on Whole Foods’ horizon will be something to watch, now that the grocery chain is using data to analyze competitors and enhance its flow of consumers to the grocery store.

3) L. L. Bean reforms its freewheeling refund policy, but might alienate customers

What happened

  • L. L. Bean issued changes to its return policy amid evidence of heightened abuse. The policy, which has been in place for decades, has allowed unsatisfied customers to trade in products for refund or replacement at any time. Now customers have one year to return items and must have a receipt in-hand.

Why it matters

  • For years, L. L. Bean’s brand was synonymous with its generous return policy—customers flocked to L. L. Bean to invest in high-quality goods and were promised replacement or refund if these items did not meet expectations. The mixed reactions to the change in L. L. Bean’s long-standing return policy raise questions about what kind of brand the company identifies itself as and if it will maintain its product quality going forward. The change could either drive away value-conscious shoppers or bring in higher-tier customers.
  • The old return policy was preserved, in part, to retain L. L. Bean customers as ecommerce took off. Presumably, the losses incurred from an abusive minority were enough to terminate the program. It remains to be seen whether this will be a smart move or not in the long term. All companies lose money on fraud—often called shrink—but rarely does it drive a brand to eradicate a value proposition that is so core to its mission.

4) Secondary sneaker market heats up, both online and offline, as legacy retailers seek help

What happened

  • Following last week’s merger between digital sneaker marketplace GOAT and sneaker consignment retailer Flight Club, LVMH Luxury Ventures, the investment branch of LVMH, invested in sneaker and apparel marketplace Stadium Goods.

Why it matters

  • As sportswear sales are shrinking, LVMH’s investment and the GOAT-Flight Club merger shine a light on a growing secondary market, in this case with sneakers.
  • These partnerships have the potential to be successful because they’re truly symbiotic. The Flight Club-GOAT merger will keep the two as independent brands, but GOAT will provide the mobile footprint and technology that Flight Club missed out on and Flight Club will bring its retailing expertise to GOAT. Merging a smart physical store with a smart digital one could be the first step to building an omnichannel strategy that fills the gaps in both company’s abilities and helps them grow.

5) Macy’s launches new pop-up experience, The Market @ Macy’s, but it’s unclear if it will stand out from the rest

What happened

  • Macy’s new in-store pop-up experience, The Market @ Macy’s, launched this week. The pop-up has a dual purpose: to give new brands a path into the brick-and-mortar space with concession-like stands and to enhance the department store’s foot traffic and in-store experience.

Why it matters

  • Macy’s pop-up is different than others because it functions as a concession. However, the department store has more control than is typical for a concession—it’s run by Macy’s employees, brands sign up for a minimum of one month and pay a fixed fee, but take all profits.
  • But The Market @ Macy’s enters a landscape where pop-ups are increasingly common—even the name mimics Pop-In@Nordstrom. It is one of many new strategies Macy’s is putting into action as part of its North Star Strategy to reinvent itself in the fast-changing consumer landscape, alongside other ventures like its in-store off-price option, Backstage.
  • Pop-ups can be worthwhile if they reflect a retailer’s culture, featuring brands that align with the types of customers that come into the store. Part of the success of Pop-In@Nordstrom were brands like Everlane that managed to bring in younger clientele who still could afford Nordstrom-quality products. Macy’s is a less-elevated retailer than Nordstrom, so it will have to execute The Market in its own way, while still attracting desirable brands.