1) Ulta Beauty will begin selling Chanel Beauté—a coveted and surprising addition to the beauty retailer that mixes high and low.

What happened

  • Ulta Beauty, which beat out Sephora in 2015 as the biggest beauty retailer in the U.S., is growing its share of Chanel products beyond fragrances to include Chanel Beauté, the companies flagship beauty line. It will be available online and in-store at Chanel makeup stations.

Why it matters

  • This move benefits both companies. Ulta mixes higher-brow and mass-market brands, but has increased its prestige inventory, which the retailer has seen stimulate more sales in the last few years. With Chanel, Ulta will introduce a fresh brand to its inventory, which boosts its ability to compete with Sephora, known for its higher-priced offerings.
  • Chanel—whose recently upgraded Instagram strategy, influencer marketing and pop-ups are targeting a younger, Millennial and Gen Z audience—will have increased access to Ulta’s relatively younger customer base. With 77% of Ulta shoppers buying both high- and low-end products, the retailer provides a channel for customers to move up the ladder to prestige—and an iconic brand like Chanel at the top will attract more shoppers to the top. M.A.C., which began selling at Ulta in May 2017, was the retailer’s most successful ecommerce launch to date, showcasing the promise of this strategy.
  • Ulta, which lacked a definitive identity until a few years ago—has successfully crafted a holistic omnichannel experience that integrates what consumers are talking about online and offline, as it tries to fight back against the more digitally-savvy Sephora.

2) Nordstrom family ends its buyout effort, which was meant to take the retailer private and focus on long-term growth.

What happened

  • The termination of the Nordstrom family’s buyout effort puts to rest two years of deliberations with the department store’s board. The two parties could not reach an agreement on the price: In February 2018, the board rejected the family’s $8 billion offer—the buyout group had offered $50 a share, which at the time was under Nordstrom’s closing price. The group planned to buy 21% of the family’s current stake, which would have yielded the family $550 million.

Why it matters

  • Nordstrom, founded in 1901, is one of the only department stores that remains under family management—the family owns almost one-third of the stock. Even so, the company is still public, subjecting it to significant pressure as it looks to reimagine its identity. The buyout group sought to take the company private, believing it would give Nordstrom more flexibility to “navigate a challenging retail landscape.”
  • Though Nordstrom shares have grown 16% in the past year—linked to Nordstrom’s integration of digital tools and expansion of its ecommerce operations—the family’s decision to end its buyout negotiations means the company will be relegated to answering to investors instead of freeing the department store up to transform the Nordstrom retail experience in the long term. Given that most other department stores are public, buying out Nordstrom would have given it a leg up at a time when department store retail is struggling against falling foot traffic and the resulting lower sales.
  • Additionally, as Nordstrom continues expanding its off-price Rack brand, which is driving sales but lowering margins and attracting cheaper customers, the continued public pressure might force the company to continue pushing this strategy forward, which is problematic long-term.

3) Consignment retailer ThredUp wants to open more than 100 stores and is building out its ecosystem, but larger industry problems remain.

What happened

  • ThredUp made its name as an online-first consignment retailer of convenience: it sends sellers a garment bag that they can fill with items they want to sell, sorts through to decide what to sell and what to donate, and pays sellers when their items are sold.
  • The company already has two brick-and-mortar stores—a number that will grow to ten by the end of 2018. Its long-term vision is bold: ThredUp wants to create an entire secondary market ecosystem, so that sellers can drop-off and pick-up garment bags in its stores and at third-party locations like dry cleaners and other retail stores.
  • Still, CEO James Reinhart expects the majority of the business to remain online and wants its offline locations to compliment ecommerce. At the existing ThredUp stores, fitting rooms are outfitted with iPads to allow shoppers to search for similar styles online—the technology is scalable at $1,000 a room.

Why it matters

  • ThredUp’s products and price points sit between the luxury retailer TheRealReal and the mass retailer Tradesy, positioning ThredUp to attract a wider seller and buyer base as it enhances its omnichannel strategy. The company’s offline vision emerges at a time when other consignment brick-and-mortar stores like Second Time Around are folding, but resale is growing.
  • However, ThredUp’s revamped business model also exposes the apparel industry’s problem of production surplus. There are rumors that some of ThredUp’s warehouses are at capacity, no longer able to take in new clothing because there is simply too much it cannot get rid of. It’s very possible that the company sees an expanding retail footprint as a viable way to accelerate its sell-through rate.
  • Still, the retailer’s offline strategy will be built on flexible leases where its seller and buyer base already exists, and with a data-infused supply chain built to eventually swap in new inventory on a daily basis that reflects fast-changing trends. Because a main feature of off-price and thrift shopping has always been the “treasure hunt” aspect—even consignment stores that are disorderly and overloaded with products provide a shopping adventure—the stores’ cleaner design, organization of inventory, and emphasis on technology is an interesting departure, not least given that 87% percent of shoppers who buy used clothing online are former customers of off-price and discount retailers, according to a ThredUp report.

4) Google launches a new advertising program online and with its AI assistant that allows shoppers to buy products without leaving the search engine, bolstering its commerce capabilities to compete with Amazon.

What happened

  • With Shopping Actions, companies can list their products and integrate their loyalty programs with Google Search, Google Express (its shopping service), and Google Assistant (its AI service available on smartphones and voice devices). The tech giant is partnering with retailers including Target, Walmart, Home Depot and Ulta Beauty, and will get a cut of the revenue from sales actualized from links that appear in Google search results. Purchases will be made through a checkout interface hosted by Google.

Why it matters

  • Google’s new program enters the marketplace at a time when searches like “Where can I buy X product?” and “How can I buy X product?” are growing rapidly—they skyrocketed 85% on mobile devices since 2016. Despite Google’s concerns about Amazon, Facebook and Google continue to dominate the U.S. digital ads space: The two companies will make a predicted $107 billion in 2018 versus the meager $1.7 billion Amazon made in ad revenue in 2017.
  • Google’s new program adds an additional conversion layer to its advertising experience for brands and retailers, and keeps consumers on Google for the entire shopping process. It also ushers in a more discovery-oriented and shoppable framework on Google, which wants to keep shoppers away from starting searches and checking out on Amazon.
  • As Google hones in on keeping shoppers on its site for longer and growing its ad revenue, other platforms, such as Facebook-owned Instagram, are also refining their services. This March, Instagram extended its U.S. shopping service to the UK, allowing retailers to tag physical products in posts with information like price and sell directly to customers—sellers also have access to user data from Facebook to engineer their ads. Brands like Adidas are also cultivating products to be Instagrammable.