1) Nordstrom strengthens its long-standing relationship with Ted Baker and begins selling Outdoor Voices, as it attempts to remain an ideal wholesale partner.

What happened

  • Nordstrom has partnered with NuORDER, a software that lets brands upload their product catalogs to wholesale customers, facilitating the decision-making process behind inventory buys and merchandising with a two-way interface. Ted Baker, which has a long-standing wholesale partnership with Nordstrom, will use NuORDER to streamline and strengthen its relationship with the department store.

Why it matters

  • Efforts like these on the part of Nordstrom make the department store an ideal wholesale customer for legacy brands and digitally-native brands alike. Though many brands (Michael Kors and Rimowa, for instance) are honing in on direct sales channels in order to achieve higher margins—and, in doing so, fleeing struggling department stores to avoid brand dilution—Nordstrom still appeals to its brand partners, helping it stay competitive. This is especially important as more digitally-native brands flock to department stores, entering third-party doors. NuORDER will help brands at Nordstrom facilitate a multi-channel strategy, which more are embracing in order to expand their presence and tap into a variety of markets simultaneously.
  • Beyond legacy players, Nordstrom has become a favorite wholesale customer for digitally-native brands. In 2017, Everlane was featured at PopIn@Nordstrom. Then, Reformation partnered with the department store in June 2018, followed by Outdoor Voices this November. These deals have helped infuse fresh inventory and personality into the department store while many of its peers struggle, and also bring new audiences to digital brands at a lower price than if they opened storefronts of their own.

2) Goop and Universal Standard launch a collab, but inclusive sizing won’t minimize Goop’s price exclusivity.

What happened

  • Goop, the “aspirational” brand founded by Gwyneth Paltrow, launched an apparel collaboration with Universal Standard, the size-inclusive brand founded in 2015. The selection, offered in sizes 00 to 40, includes a dress, a jumpsuit, a peacoat, a tuxedo jacket and pants—all of which will be sold at Goop.com, as well as the company’s two physical locations in New York and Los Angeles. (Paltrow is also an investor in Universal Standard and contributed to the brand’s $7 million fundraise in February 2018.

Why it matters

  • Like other collaborations, Goop x Universal Standard is a way for each brand to gain more visibility. It’s also a learning experience for Goop as it ramps up its apparel efforts—though it started as Paltrow’s newsletter in 2008, Goop began selling products in 2012 and has recently zoomed in on private-label offerings across apparel and cosmetics. The collab will be particularly insightful if Goop seeks to attack extended sizing in the future—a fast-growing market that was worth $23.1 billion in the U.S. alone last year.
  • However, the collab raises skepticism about the brands’ shared values. It’s not that Goop is opposed to inclusive sizing (though up until now, it has offered only up to size 12). Rather, Universal Standard represents what Goop does not: inclusivity and approachability across the board—sizing, price, style—which is manifested in the brand’s assortment of mid-priced, seasonless, direct-to-consumer SKUs. Meanwhile, Goop is predicated on exclusivity; in response to criticism of Goop’s high price point, Paltrow has acknowledged that her brand is aspirational in nature. Because the collab is a limited-edition capsule collection, its low supply actually more closely aligns with Goop’s exclusivity-minded identity than Universal Standard’s inclusivity-minded one, despite the extended sizing.
  • When it comes to price, the Goop x Universal Standard dress is $295—a fraction of many of the other dresses sold by Goop, which can reach as high as $1,157, but higher than the typical $160 Universal Standard dress. While it’s possible that the collaboration and its prices will help Goop become more approachable to shoppers, Goop isn’t likely to gain long-term Universal Standard shoppers with this collab—a problem for Paltrow’s brand, which needs to continue attracting new customers if it wants to sustain high price points.

3) Coca Cola may invest in beverage startup Dirty Lemon as it looks to sustain and expand its empire.

What happened

  • Coca Cola will potentially invest in Dirty Lemon, a direct-to-consumer beverage brand that sells and communicates with customers via text message. It’s the most recent move in Coca Cola’s flurry of investment and acquisition activity as it works to retain dominance in an increasingly consolidated industry.

Why it matters

  • Coca Cola owns a variety of beverage brands, including smartwater, Dasani, Minute Maid and Sprite, but its interest in Dirty Lemon solidifies the $213 billion company’s intention to pivot to younger, promising brands in the quest for industry preeminence. Through talks with the brand, Coca Cola is demonstrating its desire to diversify, folding both young and established brands into its portfolio to account for all types of products and experiences—Dirty Lemon, for example, opened its first cashierless store in September and sells drinks with ingredients like activated charcoal and matcha.
  • A possible Dirty Lemon deal is even more telling in the context of Coca Cola’s fast-growing list of investments and mergers, which has incentivized the company to establish a new department called Global Ventures. In Q3 alone, Coca Cola invested in the sportswear brand BODYARMOUR and Made Group, a beverage company. It also purchased Organic & Raw Trading Company, an Australian kombucha brand; Tropico, a juice brand; and Costa, a coffee chain with nearly 4,000 locations. This path is largely informed by competition from companies like JAB Holding Company—which has sought to keep up with industry trends by acquiring established and emerging brands from Peet’s Coffee & Tea and Krispy Kreme to Pret a Manger and Dr Pepper Snapple—and Nestle, which still retains the title of largest food company in the world.

4) Kering sheds Yoox Net-a-Porter, but is it ready to take on ecommerce solo?

What happened

  • Kering, the global luxury conglomerate, ended its six-year partnership with Yoox Net-a-Porter, which launched in 2012 to manage the holding company’s ecommerce business, aside from Gucci, its star brand. Though ecommerce is the fastest-growing channel for Kering’s portfolio, it only comprised 6% of H1 2018 revenue, and 10% of revenue in 2017—something Kering must work to improve as it brings the channel fully in house (a process that likely won’t be completed until 2020).
  • Kering is not alone—luxury brands and holding companies have largely floundered in the shift online. At LVMH, for instance, ecommerce revenue rose 30% in 2017, but accounted for only 5% of sales—the conglomerate effectively acknowledged the challenge when it launched La Maison des Startups, its luxury startup accelerator, in 2018. The accelerator arguably benefits the holding company more than it does the brand partners, which are helping to infuse greater digital knowhow into LVMH—a similar reason behind Kering’s outsourcing of ecommerce operations to Yoox in 2012.

Why it matters

  • However, after the Kering-Yoox joint venture launched, Yoox merged with the luxury ecommerce retailer Net-A-Porter—then, Yoox Net-a-Porter was acquired by Richemont, a Kering competitor, in 2018. This complicated Yoox’s partnership with Kering, though the end of the partnership might be a blessing in disguise, Kering was already handling ecommerce for Gucci and the brand was excelling. While legacy brands and luxury conglomerates are keen to outsource major aspects of their businesses—Rimowa, for instance, launched a new site created by R/GA, as well as collabs—looking to external actors to rejuvenate a company can only last for so long until the vision becomes scattered and the company can no longer wield control over its own evolution. But Kering is poised to roll out its ecommerce platform and operations to the entire holding company, owning the channel in the future instead of relying on third parties.
  • According to Bain, ecommerce will account for 25% of luxury sales by 2025, pushing companies like Kering to improve its performance in the channel—ecommerce is also a way for these companies to reduce dependence on their wholesale footprints, which come with lower margins. In Kering’s decision to ditch Yoox, the conglomerate risks losing online revenue in the short term, but will be in a better position in the long run, once it gains its ecomm sea legs. Kering’s new partnership with Apple is a solid start—together, they will develop apps to support Kering’s sales staff across all brands, embracing digital tools to uncover a more sustainable path forward.