1) Target is the latest mass retailer to open small-format stores, whose focus on private label could help it provide even more differentiated products.

What happened

  • Target will open 30 small-format stores—about 26,000 square feet, compared to typical Target stores which are roughly 135,000 square feet—by the end of 2018, and increase that number to 130 by the end of 2019. The stores are meant to target urban, suburban and college markets—notably, the same target consumer as Amazon Prime.

Why it matters

  • Despite Walmart Express, Walmart’s smaller-format store that was shuttered after five years, smaller format continues growing as larger retailers look to embed themselves in communities as the “local market.” In addition to Target, other mass retailers like Meijer, a chain that sells groceries, electronics, pharmaceuticals and other essentials is following suit, opening six small-format stores by 2021. They join other small-format stores that continue to grow across the U.S., including the German grocery chains Lidl and Aldi—the latter plans to open 900 more 12,000-square-foot stores in the U.S. in the next five years.  
  • What differentiates Target from the Walmart fiasco and Meijer, however, is its huge focus on private label. The active small-format stores illuminate Target’s ties to Casper, as well as many of the 12 private labels Target rolled out last year. This highlights a shift as retailers become brands and brands enter retailer territory; while Target hones in on its private labels and other brands, the brands it works with—which are often digitally native and direct-to-consumer—are gaining from their wholesale relationships.

2) BuzzFeed adds a new beauty and style vertical, as it seeks to build on the success of Tasty.

What happened

  • BuzzFeed’s new vertical, As/Is, centers on positive body image, mixing featured content with experiences and products for the millennial market. The vertical is the latest in BuzzFeed’s growing roster—including Tasty, a food brand, Nifty, for DIY, Bring Me, for travel, and Goodful, for wellness—as it continues to merge and base business on editorial content.   

Why it matters

  • Given that affiliate fees are huge percent of BuzzFeed’s revenue, the company has proved that it can successfully reverse engineer verticals where it finds a steady stream of traffic. The prime example is BuzzFeed’s food brand, Tasty, which started out as a video vertical in 2015. After becoming Facebook’s most-followed page in less than two years, the vertical naturally lent itself to productification—BuzzFeed built a line of successful products from a customizable cookbook to a hot plate and began selling Tasty brand cooking products at Walmart this March. This year, BuzzFeed’s commerce arm predicts that Tasty kitchen products will comprise 25% of the group’s revenue and that Tasty as a whole will be the largest source of non-advertising revenue for BuzzFeed.
  • Similarly, As/Is stemmed from the company’s data on highly rated posts and videos about makeup and style, appealing to shifts in the industry like the increasing focus on diversity and inclusivity. While entering a competitive market, As/Is has Tasty’s template under its arm, as well as a robust product development lab. Already, BuzzFeed Commerce created the Glamspin in partnership with the manufacturer Taste Beauty, which became a bestseller at Sephora, uniting the virality of a fidget spinner with the undying demand for lip gloss. If As/Is follows this trajectory, it has a lot of potential.

3) JAB Holding Company is conquering the coffee world, acquiring established brands and investing in emerging ones.

What happened

  • Since 2012, the European holding company JAB quietly acquired Peet’s, Panera Bread, Krispy Kreme, Dr Pepper, Stumptown and Intelligentsia and began distributing brands including Dunkin’ Donuts and Starbucks in K-cups for its Keurig coffee maker.

Why it matters

  • From JAB’s origins as a company that made chemicals for swimming pools, its acquisitions—particularly that of Dr Pepper Snapple Group Inc. in January 2018—has made it clear that the private company is focused on long-term growth. With its coffee company acquisitions, JAB has more than doubled its equity value, now at $20 billion.
  • This puts the holding company on par with Nestlé, the largest coffee company in the world, which saw its slowest sales growth from 2016-2017 at 0.4% ($96.9 billion). Nestlé has reacted to JAB by building up its own roster of acquisitions including Chameleon Cold-Brew and buying stake in other companies like Blue Bottle Coffee.
  • Notably, these companies specialize in cold brew and pre-prepared caffeinated beverages that are growing in popularity among younger generations—the same kinds of companies that JAB’s acquisitions continue to target. In 2012, JAB acquired the once-struggling Peet’s Coffee, which allowed Peet’s to control both its cold-brew brands and their distribution, circumventing the complicated supply chain that comes with cold brew.
  • This investment in emerging brands has also trickled down—after its acquisition, Peet’s freed up money to create its own K-cups and bought Stumptown, Intelligentsia and Mighty Leaf, a tea company. Four years after the acquisition, Peet’s annual sales grew from $385 million to $850 million. And with big buys like Dr Pepper Snapple, JAB absorbs larger distribution systems helping Peet’s and all of its other companies get their products into more—and more varied—stores.

4) Glossier launches a new pop-up, expanding its retail footprint in a San Francisco cafe.  

What happened

  • The month-long pop-up will celebrate Glossier’s new color palette and give its home, Rhea’s Cafe, a makeover to match. All of Glossier’s product lines will be available for sampling and purchasing and all to-go purchases—whether food, beverage, or makeup—will receive custom branded packaging.

Why it matters

  • The pop-up is another way for the direct-to-consumer brand to experiment with expanding its non-traditional retail footprint. Up until now, Glossier has kept its brick-and-mortar quotient to its own showrooms and a few concept shops and pop-ups. At Rhea’s Cafe, the brand continues to realize the unique experience it wants customers to associate with Glossier, which differentiates it from other beauty retailers—CEO and Founder Emily Weiss has said that shoppers should be able to “feel the energy in the room” as they interact with products and speak with “showroom editors.”
  • Repainting a cafe in millennial pink and refurbishing it to compliment the brand’s new shades is another avenue for the brand to invite customers into the world of Glossier. This methodology also aligns with Glossier’s billboards (a new crop of which emerged this month) which transform entire landscapes—Weiss compares them to “moodboards” for the brand.