1) Sunday Riley strikes a partnership with United Airlines, embracing captive retail via wholesale.

WHAT HAPPENED: The skincare brand Sunday Riley will be United Airlines’ exclusive beauty amenities supplier beginning in April 2019.

Why it matters

  • Sunday Riley’s partnership aims to raise awareness for the brand, aided by United Airlines’ pervasive global footprint and at least 158 million passengers. A form of captive retail, the range will include a handful of products that passengers will be more apt to try in the airport lounge and on their flight (an included 20% discount will encourage them to seek out the brand after they reach their destination). Aside from a face cream, all of the SKUs Sunday Riley is providing to United are new, allowing the brand to test uncharted categories before deciding in which direction to expand its assortment. The selection is created with the in-flight environment in mind and will comprise the brand’s forthcoming travel subscription box, set to launch in May.
  • Sunday Riley isn’t the first brand to partner with an airline, but it’s one of the youngest (the legacy brand Kiehl’s, for instance, partnered with Delta in 2016). The digitally-native brand wholesales at Sephora, Net-a-Porter and a handful of other retailers, but the United partnership takes it a step further. All of United’s 88,000 employees will receive a 25% discount on the brand for three years. Sunday Riley could use these employees as brand evangelists—a potentially powerful influencer marketing strategy since passengers (who double as potential customers) interact with the airline staff on all legs of their journey. Compared to what may be Away’s foray into cosmetics, Sunday Riley is in a much better position with United Airlines to disseminate its brand than a suitcase and baggage company is to create wellness products.

2) IKEA follows in the footsteps of Rent the Runway and West Elm’s furniture rental partnership, but with a skeptical product-market fit.

WHAT HAPPENED: In 2020, IKEA will start testing furniture rentals in 30 markets, leasing office pieces to businesses and potentially evolving the offering into a subscription.

Why it matters

  • IKEA’s decision to create a rental program makes sense given the brand’s focus on assembly, as well as the company’s sustainability efforts. But the company is late to the game. Other rental-based companies including Fernish and Feather predicate their businesses on furniture exchanges and in March 2019, Rent the Runway—the frontrunner of the consumer rental economy—announced a partnership with West Elm to lease home items. It’s smart that IKEA is testing the service first before expanding globally, but these other brands have a leg up: Rental services are built into their business models, whereas it will be a steep learning curve for IKEA, although its acquisition of TaskRabbit in 2017 will help the company on the backend.
  • The other question is price point. IKEA is pitching its rental service as a way for younger customers to avoid long-term furniture commitments. But part of the reason why rental models make sense is tied to their aspirationality, and IKEA is arguably a go-to brand for younger, more mobile shoppers because of its affordability and relative simplicity. Rent the Runway’s West Elm partnership, for instance, costs $159 a month for unlimited furniture or $89 a month for a set number of rentals, but many West Elm SKUs are hundreds to thousands of dollars. RTR also benefits from the largest dry cleaning system in the world, which can handle all types of fabric. In the Netherlands, IKEA’s model will cost about $30 a month, which is significantly cheaper than West Elm, but also leasing significantly cheaper items, which consumers might be better off buying outright.

3) Tonal, a home fitness brand, raises $45 million with another unbundled gym concept.

WHAT HAPPENED: Tonal sells weight-lifting machines and accompanying interactive LED screens that use machine learning to track workouts, which it will disseminate to a larger audience with the help of its new round.

Why it matters

  • Tonal is just the latest brand to unbundle a gym service for the home. Its model is reminiscent of Peloton’s, which segmented out cycling and also features streaming for classes (in real time or recorded), as well as music playlists. Tonal’s price point is also similar to Peloton’s: $2,995 for the fitness machine, plus $495 for workout accessories (a mat, rope and bench) and another $49 a month for the streaming subscription. Like Peloton, Tonal offers an installment payment plan at $199 a month for the equipment and a two-year content subscription.
  • Tonal already has a competitor in Mirror, which sells human-sized mirrors that live stream fitness classes in the home (Mirror raised $38 million in 2018). As the number of these companies grows, however, there is somewhat of a winner-take-all. A Pelton customer likely chose to purchase the bike because they prefer cycling as a workout and few Peloton customers will also invest in Tonal Mirror—not only because of price, but also because of interest. This means that there is only so far a brand that sells one type of fitness product can go. Despite the fact that all three of these fitness products also offer live streamed classes, Equinox, as well as its acquisitions SoulCycle (cycling) and Rumble (boxing) continue to concentrate on in-person community-building through their respective gyms, which may prove to be a more successful model in the long term.

4) Supreme remains bombarded by knockoffs, both spurred by and harmful to the brand.

WHAT HAPPENED: The International Brand Firm (IBF) and its affiliated companies are behind a massive counterfeit campaign to sell Supreme lookalike products and made $679,000 in 2017 revenue.

Why it matters

  • IBF and its affiliates operate overseas, largely in markets Supreme does not yet serve such as Spain and China. Much of this counterfeit activity is related to the fact that Supreme still has made trademark applications pending overseas, while foreign counterfeiters have already successfully secured their own trademarked version of the Supreme logo. As Supreme waits, it is racking up legal fees in fighting off IBF as well as losing out on sales. For a business predicated on product and time scarcity, embodied in the company’s weekly, low-inventory product drops, this also has huge implications for Supreme’s perception among consumers as a brand. And despite the $500 million stake that the Carlyle Group bought in 2017, which has helped bolster the company’s legal efforts and supply chain strategy, the investment was also supposed to jumpstart the streetwear brand’s entrance into China, whose success could be offset by IBF’s existing activity there.
  • Supreme already faces a rabid secondhand market that drastically upsells its products—something Supreme founder James Jebbia has openly condemned (Supreme also fails to gain anything monetarily from the resale market). But with an army of companies creating faux, but believable Supreme products and selling them legally in many markets, it’s possible that Supreme’s decision to keep public commentary at a minimum and limit inventory for its product drops is more trouble than it’s worth. If consumers are eager for Supreme products and can’t tell the difference between real and counterfeit items, then it could seriously hurt Supreme over time, especially as it seeks to extend its presence abroad.