1) Le Tote plans to buy Lord & Taylor—a risky move to adopt the dwindling department store in exchange for a brick and mortar footprint.

WHAT HAPPENED: Le Tote, a seven year old subscription rental service, could take the department store chain off of Hudson’s Bay’s hands as Lord & Taylor’s parent company sheds assets. Lord & Taylor also sold its New York City flagship store to WeWork in June 2018 and has 45 remaining stores across the U.S.

WHY IT MATTERS

  • At first glance, Le Tote’s plans to acquire Lord & Taylor are a smart move for the rental service to expand its audience. But Le Tote has never operated a single physical store before and reviving a struggling department store chain is a huge task that comes with an immense amount of operational complexity and risk. While Le Tote has just under 500 employees in the U.S., Lord & Taylor has over 3,000, according to LinkedIn, proof that it’s taking on an operation many times bigger than itself.
  • Outside of the significant but yet-to-be-determined cost to purchase Lord & Taylor’s business—it generated $1 billion in 2018 sales compared to Le Tote’s estimated $200-300 million—Le Tote is adding more to its plate. This comes after the service’s failed China expansion in 2018 that caused it to lay off one-third of its employees.
  • Competitors such as Rent the Runway have launched partnerships with Nordstrom and WeWork to expand its user base and offer more points of distribution. Le Tote is looking to reach women based in more suburban areas, making Lord & Taylor the ideal department store to acquire, while Rent the Runway focuses on a more urban and fashion-forward demographic. But now Le Tote needs to creatively transition its rental concept into the physical world while also stopping the bleeding at Lord & Taylor—two tasks that will fully determine its future.

2) Dick’s Sporting Goods launched an activewear private label, but risks playing in an overcrowded space versus differentiating with what it’s known for.

WHAT HAPPENED: Following the announcement of a $2.6 million decrease in first quarter net income, Dick’s Sporting Goods introduced the new private label for men, women and kids. One percent of the proceeds will go to Dick’s Sporting Goods Foundation, which supports youth sports.

WHY IT MATTERS

  • As a trusted retailer in the sporting goods and outdoor space, Dick’s has the data and scale to build a successful private label. But it’s questionable if the retailer’s brand will be strong enough to shift consumer focus from athletic giants like Nike, Adidas or Reebok, which shoppers flock to Dick’s to buy in the first place.
  • The move comes as Dick’s needs to increase its profit and margins for the coming quarters, and the private label’s $15 to $40 price point enables the retailer to offer customers an attractive value proposition to compete with Walmart and Amazon’s low prices. However, when it comes to athleticwear, consumers often place more importance on brand name and quality, which could make price point less of a priority.
  • Dick’s should instead focus on its expertise in the outdoor world. While this category might be in less demand than athletic wear, the benefit of private labels is how they can tackle specific categories versus being broadly appealing, which Dick’s should capitalize on.

3) Birkenstock opened its second U.S. retail store as a response to rapid growth, but is struggling to address its oversaturated wholesale business.

WHAT HAPPENED: The German shoe brand’s new LA store follows its first U.S. retail store, which opened in New York City in October 2018. The brand now has 55 stores worldwide.

WHY IT MATTERS

  • The new store launch signals that the brand is trying to rebalance its wholesale dominance with an eye towards longevity as U.S. department stores continue to suffer. But with over one thousand points of sale across the U.S., not including ecommerce or Amazon, standalone Birkenstock stores may prove to be more redundant than useful in the short term without shedding more wholesale accounts.
  • Birkenstock’s U.S. sales tripled between 2012 and 2018 due to a heightened consumer demand for its products and the category along with a rapid wholesale expansion that fueled growth. However, this omnipresence risks contributing to brand fatigue, which can lead to a sales slump and large amounts of on-hand inventory.
  • Now, Birkenstock needs to significantly cannibalize its wholesale business and consider how owned and operated stores will generate long-term staying power and control. Wholesale should play a smaller and more strategic role in Birkenstock’s future.

4) Cosmopolitan launched a fragrance line as it veers into commerce, but will need to do more to make an impact.

WHAT HAPPENED: Cosmopolitan magazine launched its Eau de Juice collection made up of four perfumes, available exclusively at Ulta.

WHY IT MATTERS

  • Cosmopolitan’s fragrance launch marks the print magazine’s most direct attempt to infuse content and commerce, especially in the beauty space. As print continues down the path toward extinction, magazines that are geared toward beauty need to position themselves to compete with e-commerce platforms like Goop and Glossier.
  • The fragrance line opens the dialogue with readers, but it’s only a preliminary step in establishing Cosmopolitan as a commerce brand. This is especially true since Ulta is exclusively selling the line, instead of Cosmopolitan marketing and owning the transaction through its own platform.
  • Cosmopolitan now needs to go beyond beauty advice to provide its audience with direct access to the products that coincide with its editorial focus. For the magazine to attract new readers, retain its current following, and diversify its business, it needs a more robust product assortment, along with its own shopping destination, that will continue turning it from a magazine into a shoppable brand.