1) JCPenney continues to leverage Sephora for its turnaround efforts, but the minimal amount of control it has over its biggest growth driver is worrisome.

What happened

  • JCPenney has turned to the beauty world as it tries to keep itself afloat, utilizing Sephora shop-in-shops and The Salon by InStyle to drive shoppers into its stores by providing unique experiences. The idea is that beauty products and these experiences will bring in customers who will then stay in the store and buy many more products from JCPenney’s flagship offerings.

Why it matters

  • These Sephora shops are the best-performing segment of JCPenney stores. While this goes a long way toward making the department store a destination and is a great new customer acquisition tool for Sephora, it’s worrisome that so much growth is coming from a shop-in-shop, and not anything JCPenney is doing itself. This poses serious risk to JCPenney: Sephora could change its mind or stop expanding the program at any moment. What happens if Sephora wants to open its own store in a mall where JCPenney is already located? It seems the two companies are on a collision course that won’t end well for JCPenney.
  • While this partnership also extends online, it’s unclear why someone would buy cosmetics online at JCPenney if she can buy the same thing online from Sephora. While customers can get Beauty Insider points—Sephora’s loyalty program—from in-store JCPenney purchases, this incentive does not exist on JCPenney.com, further complicating these efforts. Generally speaking, companies should base their turnaround efforts on initiatives that they have relative control over.   

2) Stitch Fix allows customers to choose intimates, adapting its subscription model to account for more flexibility.

What happened

  • For the first time since it went public in November 2017, Stitch Fix is adding a new offering it calls “extras”—bras, socks, underwear, tights, camisoles and shapewear—that will accompany the monthly boxes of clothing and accessories a subscriber receives, which are fully curated for them by stylists. Subscribers will be able to select the intimates themselves.

Why it matters

  • Stitch Fix uses personal stylists to curate its boxes based on customer data and reviews, and its entire model is predicated upon giving control to stylists, not consumers. The company’s decision to allow customers to choose “extras” is a move in a new direction.
  • This could eventually lead to Stitch Fix adapting its model to give customers more flexibility. For some subscribers, receiving a box every month filled with clothing they didn’t choose themselves might pose a risk to the company and limit the number of consumers that would use the service, given the rigidity of this model. Allowing customers to have a say in what products they receive is a positive step that might help customers better rationalize why they need the service in their life, which could increase customer acquisition and retention.

3) Best Buy closes standalone mobile stores, missing an opportunity to repurpose them.

What happened

  • Best Buy will close its approximately 250 smaller mobile phone stores by May, due to declining profitability. The stores average just over 1,000 square feet, compared to 40,000 for the company’s big-box stores. The company said that 85% of its existing standalone mobile stores are within three miles of a bigger store, which it thinks means its efforts are duplicated.

Why it matters

  • Closing all of its standalone mobile stores is a counterintuitive move for Best Buy, especially as retail moves toward smaller store formats. Instead, the company is doubling down on stores that are 40X the size, raising the question of how it will continue to innovate in its existing, large-format stores.
  • This move also could be a huge missed opportunity for Best Buy, which has decided to focus on growing its smartphone, smart home—Amazon products like the Echo, etc.—as well as advisory and customer service businesses. The small storefronts where the vast majority of Best Buy’s mobile stores are located would be perfect spots to expand these initiatives. Instead of closing them, the company could have repurposed some of these stores and really pushed the boundaries of its retail experience.

4) BuzzFeed and Walmart launch a massive product collaboration, opening up Tasty to a whole new audience that Walmart is seeking.

What happened

  • Tasty, BuzzFeed’s food video vertical, has been the company’s biggest success to date from an audience growth and brand resonance perspective. Now BuzzFeed is focused on expanding the brand and using the meaning it has with young people to sell more products for itself and its partners.
  • BuzzFeed’s first foray with Tasty was the Tasty Cookbook, which the company produced itself, and then the Tasty One Top, which it made in partnership with GE. Last week, BuzzFeed announced a massive product release with Walmart, which means you can now buy almost an entire Tasty kitchen exclusively from the retailer.

Why it matters

  • While the Tasty Cookbook sold hundreds of thousands of copies, and the first run of the One Top sold out, this latest release with Walmart is the most ambitious extension of the brand so far. Interestingly, Tasty has been linking to Walmart products in its videos for over a year, which is about how long the deal took to come together.
  • BuzzFeed gets to use the retailer’s scale to obtain massive reach with the benefits of a licensing relationship. In return, Walmart gets access to a quickly growing brand among young shoppers, whom it is working very hard to court.
  • BuzzFeed expects over 25% of revenue for its Commerce unit (which runs its product efforts) to come from the Walmart collaboration this year—a significant amount for the first year of a partnership and a high expectation for a collaboration between a retailer and a media company. Most of the group revenue, however, will come from affiliate commissions BuzzFeed earns from linking to products, which has been a precarious or insufficient standalone revenue stream for many media companies.

5) Amazon’s logistics prowess comes from embracing chaos, not order.

What happened

  • While other retailers have attempted to compete with Amazon by building controlled processes for loading inventory into their warehouses, Amazon continues to lean into the chaos of running warehouses that serve all types of products and customers at record speeds. Whereas warehouses generally take a rigid approach to storing, packing and shipping, Amazon has continually optimized for flexibility.

Why it matters

  • Over the years, Amazon has planned its fulfillment centers with uncertainty in mind. The way the warehouses operate reflect potential future needs; they are designed to work for all types of products, independent of size and weight, and for record “click-to-ship” speeds. When you are building infrastructure that needs to work differently and on a larger scale than anything before it, rethinking existing processes is par for the course.
  • Combining its warehouses with new technologies, Amazon has been able to scale unlike any other. It decreased the “click-to-ship” time from about 60-75 minutes with its warehouse employees down to 15 minutes with the help of robots. As it continues to improve the way it fulfills ecommerce orders out of its warehouses, Amazon may be applying similar theories to the way it fulfills different types of orders, like the two-hour delivery service from Whole Foods that it launched in February for Prime members.