1) FaceGym and other experience-based beauty brands grow their footprints while others shut their doors.

WHAT HAPPENED: Between 1990-2017, the number of nail salon storefronts in the U.S. rose 247%, cosmetics stores increased by 95% and gyms grew by 46%—and brands like FaceGym, a facial workout massage brand, are reaping the benefits.

Why it matters

  • As experience-minded storefronts retain the most promise in the retail industry, newer companies are inserting themselves into the landscape as offline-only destinations. Founded in 2016, FaceGym operates six “studios” in London, one at the Saks Fifth Avenue flagship in New York, and now has plans to open two standalone studios in New York and LA in 2019. These studios independently curate monthly events—a joint yoga class and facial with the women’s workout apparel brand Sweaty Betty, for example—growing a community based on exclusive experiences that continue drawing customers into stores.
  • While cosmetics boutiques and nail salons thrive, supermarkets, sporting goods stores, furniture stores, book stores, hardware stores and shoe stores have faced decline since 1990, their products increasingly convenient to purchase online. Ironically, FaceGym is facing the opposite issue: How to enhance its ecommerce arm, which currently amounts to only 35% of sales. In an effort to establish a more balanced channel strategy with a 50-50 split between ecommerce and in-store sales, the company is launching an app in 2020 that, similar to the in-home cycling brand Peloton, will offer workouts to those living too far from FaceGym studios to visit in person.

2) Nike takes on Lululemon, pitching yoga as a core tenet of athleticism.

WHAT HAPPENED: Nike is releasing new lines of yoga-wear for both men and women, taking pains to align the category with its athleticism with quotes from WNBA, NFL players and skateboarders that highlight yoga’s impact on performance in other high-intensity sports.

Why it matters

  • Nike avoided athleisure for years while Lululemon and Athleta capitalized on the popular trend. Now that the company is inaugurating its own yoga line, it’s rightly attempting to differentiate from competitors, positioning the apparel as a way for Nike consumer-athletes to improve their flexibility and core strength, which will ultimately bring them more success in other sports and activities. Though athleisure has a more passive connotation, Nike is seeking to activate it, likely to appeal to core customers, while also broadening the company’s relevance to yogis. In contrast, Hill City, the men’s athleisure brand that Athleta debuted in October 2018 pitches itself as versatile, everyday apparel—not necessarily for sports.
  • Developments like these are attempts to capitalize on the growing activewear category, which comprised 22% of total apparel sales in 2017, and which will continue to expand as consumer perspectives increasingly uphold fitness as part of a broader wellness regimen. Between 2015-2017, for example, the Global Wellness Economy Monitor found that the fitness, mind and body market grew 4.8%, amounting to $595.4 billion. Even if Nike’s version is marketed as “athletic” in a more traditional sense, it can still reap benefits—as long as its messaging doesn’t confuse customers and as long as it’s not too late to jump on the trend.

3) Venture capital reaches its zenith in U.S., but more entrepreneurs are proceeding with caution.

WHAT HAPPENED: A whopping $99.5 billion in venture capital fueled U.S.-based companies in 2018—peak levels since 2000, according to CB Insights.

Why it matters

  • Since the tech boom, a highly competitive startup landscape and a good dose of FOMO has continuously encouraged 21st-century entrepreneurs to fundraise, sometimes at alarming rates. While much of the capital is centralized in tech, consumer brands are just as prone to the business model proposed by VCs: raise money, grow big fast, raise more money, file for IPO or sell, pay returns to investors. Within this unforgiving landscape, promising companies requiring capital to get off the ground may be overlooked by investors who don’t understand their value prop (Bevel, a men’s shaving brand for people of color, met this challenge), while others are overfed, grow recklessly and lose autonomy over their timeline and optionality (when Jessica Alba’s Honest Company wanted to sell, talks with Unilever fell through because of the brand’s sky-high valuation).
  • Armed with lessons from those that came before them, entrepreneurs can avoid venture capital by turning to firms that offer equity investments (which companies will repay in their profits), credit or other loans. The co-founders of mattress brand Tuft & Needle, for example, were able to bootstrap the company with $6,000 out of pocket, followed by a $500,000 loan—it was profitable within three years, making the company an appealing acquisition for when the co-founders desired to sell in 2018 to Serta Simmons. Nascent brands will do well to follow in Tuft & Needle’s example, decrying excessive funding in favor of durability and a long life span.

4) Netflix will raise prices, seeking greater cash flow to fuel original content.

WHAT HAPPENED: Netflix’s approximately 58 million U.S. subscribers will see price increases from 13-18% as the company looks to increase revenue to create more original content.

Why it matters

  • This is the biggest and most wide-reaching price jump Netflix has enacted since launch—and the fourth time it has increased subscription fees (the latest hike occurred in late 2017). Up until now, the company kept a $8/month basic plan, raising rates only for premium subscriptions that offered higher-quality video and simultaneous streaming across numerous devices. Now the basic plan will be $9/month and the premium plan will increase from $14/month to $16/month. The mid-range and most popular plan—allowing users to stream on two devices concurrently—will rise from $11/month to $13/month. But this is still cheaper than HBO ($15/month), and on par with Amazon Prime ($13/month) and Hulu’s ad-free service ($12/month).
  • However, a quick survey of the landscape shows that competition isn’t going anywhere, especially with AT&T’s forthcoming streaming service featuring HBO and Disney’s, which is set to launch in 2019. More of these platforms are amplifying their original content offering—for Netflix’s part, the company is aiming for half of its offering to be original content sometime in the next few years. To do so, it is accumulating significant debt (now more than $12 billion). As of September 2018, Netflix had $18.6 billion in content-spending obligations—by the end of the year, it also had $2 billion in negative free cash flow. Still, fuller ownership of its content and greater vertical integration (the company purchased a studio in October 2018), may make Netflix’s current spending worth it in the long run, even if it hurts consumers a little bit right now.