1) Walmart is incubating an Everlane-like private-label brand—should Everlane worry?

What happened

  • Walmart’s new brand is allegedly inspired by Everlane—the minimalist “essentials” brand for women’s apparel and accessories—but will aim to reel in younger, Gen-Z customers while offering items at a lower price point. The venture stems from Walmart’s brand incubator, Store No. 8, and will retail on Walmart.com—not in stores.

Why it matters

  • The new apparel brand is the latest in Walmart’s growing collection of private labels, including the direct-to-consumer mattress brand Allswell, which launched in February 2018, and the soon-to-come beauty brand CO Squared. These private-label ventures are meant to help Walmart stand out against other mass retailers, but they also raise sophistication for the brand and reach younger, trend-driven consumers. Specifically in the apparel space, Walmart maintains its position as top U.S. apparel retailer, but is facing rising competition from Amazon and Target, both of which are pouring massive resources into growing their own private-label apparel brands.
  • Allswell was in part a response to the rise of digitally-native basics vendors like Casper, which attracted younger ecommerce-savvy consumers with modern aesthetics and marketing. But as the mass retailer revs up its ecommerce efforts—it also redesigned its site in April 2018 to feature higher-end brands—it could expose what companies like Casper really sell: commodities with magnified prices, especially relative to Walmart. In the same vein, Everlane is already an abstraction of a private-label basics brand—meaning that Walmart’s copycat would be an abstraction of an abstraction. Still, it would rightly steer Walmart back to what it’s meant to peddle in the first place: basics. Even if recursive, as long as Walmart’s brand is high-enough quality at a low-enough price, the Everlane-inspired brand will influence the mass retailer positively.

2) CVS embraces an exclusive K-beauty line as competition continues to rise in the beauty space.

What happened

  • Since K-beauty first entered U.S. markets back in 2015, its profile has grown as a vibrant and whimsical counterpart to the European cosmetics brands that have traditionally dominated. Surpassing what many believed to be a passing fad, retailers like Sephora and Urban Outfitters started selling K-beauty products, which then expanded to department stores like Nordstrom and Barneys. In turn, Korean cosmetics have trickled down to mass market retailers like Costco and Target, as well as CVS, which first partnered with the K-beauty brand Peach & Lily in March 2017, selling its products in 2,100 stores.
  • Now CVS is partnering with the Korean-American beauty brand Kiss Products to develop Joah, an exclusive line of K-beauty products—and the first K-beauty brand created specifically for the U.S. mass market. Joah, which will offer 158 SKUs from eyeshadow to face products at an average price of $16, will begin retailing on CVS.com in August 2018 and come to 4,000 physical CVS stores in September.

Why it matters

  • CVS is dealing with declining prominence in the age of Amazon at the same time that other mass retailers that are updating their beauty aisles. Target, for example, added new AR and concierge services to its growing beauty department, launched a private-label fragrance line called Good Chemistry, and began selling $7 beauty boxes earlier this year. At the same time, Amazon is bolstering its beauty selection, redesigning the navigation bar on its site and growing its range of indie brands.
  • But in its dedicated “K-Beauty HQ” section, CVS now has the largest assortment of Korean cosmetics, and will bring Joah to thousands of stores. Notably, the new venture is specifically aimed at millennials, whose purchasing power is only growing, and who will be more likely swayed to shop at CVS with on-trend, price conscious products. The fact that Joah is an exclusive line also gives customers a reason to go to CVS as opposed to other mass market retailers. Clearly K-beauty is in the U.S. to stay—and staying abreast of consumer interests—not just with K-beauty, but with other trends—will serve CVS in the long run. It could also mean competition for mass beauty retailers like Ulta.

3) Equinox turns to employees—and away from influencers—for brand promotion.

What happened

  • Equinox Fitness, which includes Equinox gyms, Pure Yoga, Blink Fitness and SoulCycle, has formed an internal talent management agency, which will look to employees to act as influencers on social media. The company, which is currently piloting the program, plans to provide New York- and Los Angeles-based employees the resources necessary to create content and establish brand endorsements on Instagram, before expanding to more locations and social platforms in 2019.
  • The clearest predecessor to Equinox’s new initiative is Macy’s, whose Macy’s Style Crew program launched as a pilot in 2017. In the program, employees create short videos around their personal interests, matched with Macy’s products (videos are produced in partnership with Macy’s and the video company Tongal). Everlane and Kate Spade also feature employees on their social media accounts, but in a less formal capacity.

Why it matters

  • Sales associates, stylists and other members of a company can be powerful evangelists for brands. In analog times, Avon’s distributed sales consultants acted equally as employees and influencers, just as Girl Scouts continue to do today with cookies. Especially for Equinox’s companies, tapping into a network of fitness instructors who experience the core product on a frequent basis—and who are hired for their charisma and energy—is likely to provide an authentic and knowledgeable take on what joining the Equinox ecosystem is all about. It could lead to sponsorship deals with activewear brands and other relevant companies. Plus, any given instructor already has a number of “followers”—everyone who signs up for her classes—so why not expand these fans on Instagram, where there is already a burgeoning fitness influencer community?
  • Optimizing a pre-existing community around a brand comes at a much lower price for brands as influencer marketing costs continue to rise. But ideally, asking employees to be influencers should come with definitive expectations—and compensation. It’s unknown whether Everlane or Kate Spade provide payment; Macy’s gives commission to participants in its Style Crew program. It’s not clear how Equinox’s talent agency will operate—talent agencies typically take a 10% fee, and advertising agencies take more. But particularly for a company like Equinox, which is notorious for its low wages and minimal employee benefits, acting as an influencer may actually lock employees into a company not interested in cultivating a healthy relationship with its staff.

4) Ice cream brand Van Leeuwen raises minority investment, but will need to balance tending to a niche and devoted fan base with growing its national and international profile.

What happened

  • Van Leeuwen, the Brooklyn-based ice cream company, plans to use the investment from Strand Equity to raise its brand profile on the national and international level, as well as streamline operations to lower prices for consumers. Prided on growing awareness for its artisanal ice cream via word-of-mouth, the company now operates a retail business—16 stores in New York, and trucks in New York and Los Angeles—as well as wholesales across 25 states and 700 retailers. It expects revenue to hit $15 million in 2018.

Why it matters

  • While far from the top-selling ice cream brand, Van Leeuwen has made a name for itself in the indie world by growing slowly but steadily. Because it manages two channels—wholesale and retail—the investment will be able to fuel growth in both, freeing up more cash flow to fund wholesale inventory and opening more brick-and-mortar stores. Though wholesale may require the bulk of the financing, the company’s focus on physical storefronts—which come with small buildout costs, but high customer traffic—has set Van Leeuwen apart, as have its vintage-inspired ice cream trucks.
  • Pricing isn’t as low as Ben & Jerry’s or Breyers, but since the brand cropped up in 2008, it has amassed a devoted—albeit niche—fan base for what the company calls “an affordable indulgence.” As it continues to expand in wholesale and retail, Van Leeuwen can use its cult-like following as a jumping off point to move into more mass markets. Especially if the brand continues improve and evolve its products, catering to its current audience with vegan products, high-end and trending ingredients like activated charcoal, and unusual flavors, it will retain a devoted base while spreading beyond this initial audience. So far, Van Leeuwen hasn’t been overfunded, so as long as it can grow without diluting its product offering, it should be able to balance the economics of scaling a business with fortifying a strong brand.