1) JCPenney banks on shop-in-shops, this time with digitally-native sports manufacturer and retailer Fanatics.

What happened

  • JCPenney launched Fanatics shop-in-shops in 350 of its locations, and plans to open 300 more by the end of the summer. Each shop is between 650 and 1,300 square feet and outfitted with a flat screen television and iPads to give customers access to JCPenney and Fanatics’ online Sports Fan Shop.

Why it matters

  • In the age of struggling department store brands, JCPenney continues to see huge benefits from its Sephora shop-in-shops and The Salon by InStyle. In 2017, the department chain brought its Sephora shop-in-shops to 642 stores and expects to add 30 more in 2018 as it continues to focus on the beauty category.
  • The Fanatics deal further cements JCPenney’s strategy, which continues to avoid solving issues endemic to the department store itself in favor of tacking on more high-performing shop-in-shops. While having Sephora in approximately 75% of its locations is a great way to reel in foot traffic and the presence of Fanatics is likely to bring in a different set of customers, both partnerships leave JCPenney at the mercy of other retailers, which could choose to walk away from the department store in the future. This limits JCPenney’s control of its turnaround efforts, which runs counter to how most companies would approach addressing such grave needs.
  • Fanatics is a rising star in the sports merch sector—it recently solidified a deal with Nike and the NFL, which, beginning in 2020, will license their products to Fanatics to produce and sell. But Fanatics is already available online and will sell the NFL and Nike merch on the NFL’s site and at Dick’s Sporting Goods, raising the question of why a customer would choose to go to JCPenney specifically to buy her sports apparel and accessories as opposed to these other businesses.

2) Honest Company raises another $200 million, a possible down round for the startup.

What happened

  • With the investment from the private equity firm L Catterton, Honest Company—founded by Jessica Alba in 2011 to bring eco-friendly baby and home products to the market—brings its total funding to $503 million. The company says it plans to use the fundraise to expand globally, as well as innovate and produce more products—an estimated 80 new baby and beauty SKUs by the end of 2018.

Why it matters

  • Honest Company fell from a $1.7 billion valuation in 2015 after a series of product recalls tarnished its brand equity. Though it was in acquisition talks with Unilever, it lost out to competitor Seventh Generation—a less overvalued company without a celebrity at helm, which had also grown more sustainably, launching 200 SKUs over the course of 25 years in contrast to Honest Company’s 100 SKUs in less than five years.
  • As Honest Company has struggled to regain its status in the industry, the new investment could breathe new life into the business. It recently announced that it is launching a retail-distribution partnership with the European beauty retailer Douglas, which will bring Honest Company products to more than 2,500 stores. With a new fundraise, the company will have to keep growing, but if it sticks to its word—and focuses on expanding its market internationally and pouring more resources into innovation—it can hopefully chart a more sustainable path forward and avoid product issues to cleanse its name.

3) Wish, a discount ecommerce app, brings the dollar store online, while other mass market retailers pivot to higher-paying customers.

What happened

  • Wish sells heavily discounted products—$3 watches, $2 sunglasses—both online and on its app, mostly from foreign merchants. Like any dollar store, it offers a huge assortment of products—200 million SKUs from 1 million merchants. (In contrast, Amazon works with 2 million merchants.)
  • Though shipping may take weeks, especially as most products are coming from overseas, Wish’s value-conscious customer base continues to grow: The company had 75 million monthly active users in April 2018 and reached $1 billion in revenue in 2017, which it expects to double this year. Founded in 2010, it is now valued at approximately $8 billion.

Why it matters

  • Wish taps into a consumer base that is price conscious and doesn’t care as much about two-day shipping or top-notch customer service, appealing to mass market shoppers. While the vast majority of new companies are catering to the same relatively well-off, urban consumers, Wish connects to a market that is largely underserved. These shoppers have purchasing power, but few ways to spend it, so approaching an ecommerce site like an online dollar store is a way to match their means and interests.
  • Wish isn’t the only discount ecommerce site looking to this market—the online store Hollar also targets the 80 million Americans seeking low-priced products (most prices fall below $5 and no item is more than $10). These companies will only grow in importance as other mass market retailers like Target—which is opening smaller storefronts in affluent suburbs—and Walmart—which has redesigned its site to showcase higher-end brands and launched a personal shopping service called Jetblack—expand their products and services for higher-paying customers.

4) Walmart will open ModCloth stores, taking a page out of recently acquired Bonobos’ playbook.

What happened

  • Walmart, which acquired the apparel company ModCloth in March 2017, will open five brick-and-mortar locations—called FitShops—in Los Angeles, New York, San Francisco and Washington, D.C. in 2018, with plans to add three more in 2019.
  • Shoppers will be able to try on a full range of sizes in-store and then order what they like online to be shipped directly to their door in two to four days. They’ll also have access to stylists and a selection of locally-sourced vintage products that they can buy at the store.

Why it matters

  • ModCloth was founded in 2002 as an online retailer, specializing in indie and vintage dresses—it opened a single brick-and-mortar store in Austin in 2016. But now under Walmart’s umbrella, ModCloth has the funds to expand further into offline retail. The move also points to the input Bonobos has had on Walmart since it was acquired in June 2017. Bonobos operates stores that the brand calls Guideshops, which, similar to the ModCloth concept, allow shoppers to try on menswear in person and then order items online to be shipped home.
  • The offline expansion of ModCloth elaborates more on Walmart’s apparel strategy, which has taken pains to set itself apart from other retailers like Amazon as it expands Prime wardrobe, pursues 3D body scanning to reduce clothing returns and grows the number of apparel brands sold on its platform. In addition to Bonobos and ModCloth, Walmart also struck a deal to feature Lord & Taylor on its site and is growing the number of “premium brands” it sells, including Lucky, Nine West and Miss Selfridge.