1) Lululemon wants to double its revenue from yoga pants by 2023—and it won’t do so with discounts.

WHAT HAPPENED: Lululemon, known for its $100 yoga pants, wants to keep growing without discounts or wholesale, but its imminent debut of skincare and footwear suggests that the company needs new products to achieve its goal, even as it expands to new markets.

Why it matters

  • Aside from doubling its yoga pants sales, Lululemon seeks to grow its menswear business twofold by 2023, as well as quadruple international sales, and the company is moving in a variety of directions to do so. For one, it plans to open in more Asian markets (it currently operates in China, Hong Kong, Japan, Singapore and South Korea), as well as Europe, where it sells in Germany, Ireland, the Netherlands, Switzerland and the UK. It is also launching footwear and a selection of products specifically aimed at post-workout self-care, including deodorant and dry shampoo both online and at 50 of its 440 stores starting in June 2019. In 2018, the company also tested a loyalty program and this July, it will open a new Chicago store complete with a juice and food bar, three yoga studios and a meditation studio.
  • In 2018, Lululemon made $3.3 billion in revenue, placing it second only to Nike in the women’s activewear category, according to NPD Group. This is significant in a fast-growing market where Lululemon is seeing lots of competition, albeit mostly at a lower price. As you read in September, Gap is expanding Athleta and its menswear brand Hill City while Nike attempts to deepen its relationship with female shoppers, though the brand remains highly athletic in contrast to Lululemon’s “athleisure.” At the same time, Lululemon wants to grow out of that label, as its forthcoming product lines suggest. The main obstacle to Lululemon’s growth is its high price point, which will remain an issue even though its self-care products will be a much more accessible $12-25. On the one hand, it’s smart for the company to reject discounting and wholesale in order to retain high margins and a premium feel for the brand. But on the other, Lululemon’s push to foreign markets and interest in other higher-margin SKUs like footwear will be necessary to get new higher-paying customers to buy its more expensive products if it wants growth.

2) SmileDirectClub and CVS strike a mutually-beneficial partnership that expands the digitally-native company’s footprint and aims to keep the drugstore relevant.

WHAT HAPPENED: CVS will work with SmileDirectClub to debut SmileShops at more than 1,000 of its drugstores by 2021, allowing CVS customers to receive a 3D scan of their teeth and buy a pair of invisible braces.

Why it matters

  • CVS and SmileDirectClub both have a lot to gain from this partnership. The drugstore is attempting to fight the rise in ecommerce, particularly as other retailers enter the healthcare market. Amazon, for instance, just announced it will sell prescription medication on its site through PillPack, which it acquired in June 2018, and after a new round of funding, Ro, a digitally-native company that sells products for smoking cessation, erectile dysfunction and menopause, is valued at $500 million. Because CVS has focused its efforts on developing beauty and healthcare, the SmileShops will give consumers another reason to visit the drugstores in person for a local, affordable service. The pilot program found that 32% of visitors to the SmileShop pilot locations in three stores weren’t CVS customers, according to the company. CVS is also debuting healthcare-centric stores called HealthHUBs this year where SmileDirectClub will play an integral role.
  • For SmileDirectClub, which launched online in 2014, the CVS deal can help the company scale on a massive level. Today, the company operates 250 stores, but entering more than 1,000 CVS locations puts the company in front of many more potential customers. SmileDirectClub’s online shoppers receive an impression kit in the mail which they can use at home and send back for custom braces, but operating at CVS is an opportunity for the brand to interact with its shoppers in person—and get them closer to making a purchase. Though SmileDirectClub will receive lower margins through its business with CVS, its penetration of the market may be worth it.

3) GLP, a warehouse real estate company, plans to go public—a reflection of the rising importance of industrial real estate in the era of ecommerce.

WHAT HAPPENED: With a potential $20 billion valuation, an IPO for GLP’s U.S. business would be the largest ever from a real estate company, and higher than both Levi’s or Pinterest, which went public earlier this year.

Why it matters

  • GLP is now the second-largest industrial warehouse owner globally. The company owns 785 million square feet worldwide, including almost 200 million square feet on U.S. territory. As a logistics company, GLP leases warehouses to companies such as Amazon—a business that has grown increasingly important as ecommerce grows—and is currently profitable. In fact, demand for warehouse space surpassed supply by 29 million square feet in 2018, according to the real estate market research firm CBRE and only 4.3% of industrial real estate was available in Q4 2018.
  • In turn, more consumer companies are vertically integrating their logistics and fulfillment needs. As you read about in March, Related, the real estate company behind Hudson Yards, acquired Quiet Logistics, which has worked with majority digitally-native brands. The private equity firm Blackstone Group also purchased Gramercy Property Trust in 2018 for $4.4 billion. But other companies like Amazon have such a massive and fast-growing ecommerce business that the flexibility of leasing warehouses is a more efficient way to operate their supply chains, making GLP and its competitors all the more necessary. This will likely offset GLP’s lack of brand recognition as it prepares to go public. The company may operate in the background, but its real estate footprint is vital to the growth of an increasing number of digital brands.

4) Professional baseball is turning to the subscription economy to bolster sales and fill stadiums.

WHAT HAPPENED: Both MLB and NBA franchises are facing smaller attendance at games, which they’re attempting to offset with new services aimed at a younger crowd.

Why it matters

  • A decrease in attendance has led some franchises such as the Marlins and the Yankees to downsize their stadiums; The Rays, for instance, will remove more than 6,000 seats at Tropicana Field to just 25,000. But other franchises are instead choosing to reconceptualize their real estate. Some stadiums are renovating their upper decks to replace seats with lounge areas and other ways for attendees to socialize. In addition, the New York Mets is now offering season tickets at $39 a month, which provides ticket holders with standing room at Citi Field in front of the concession stands for 78 games. The service also allows subscribers to upgrade to seats on weekday games.
  • Recently, sports venues have strived to improve the in-stadium viewing experience by broadcasting replays, providing direct-to-seat and on-demand food and beverage delivery from concessions and updating bathroom wait times on apps like VenueNext. Low-cost ticket subscriptions and stadium renovations are another way for sports franchises to attract fans, aiming to solve multiple problems simultaneously. For the Mets, it’s not just about filling up Citi Field, but also about winning over younger demographics who are more prone to view a game at home on TV with instant replay or even on social media where they can respond to the game and other viewers in real time. By providing new spaces for attendees to interact, the Mets are hoping that people will choose to watch the game with other fans in real life rather than on a screen.