1) Target is the number one swimwear retailer in the U.S.—proof that legacy retailers and their private labels scale faster and further than digitally-native brands.

WHAT HAPPENED: Thanks to Target’s private label swimwear brands, the company has been the top-selling swimwear retailer for both men and women since 2015. Target launched its latest private label swimwear collection last week with over 1,800 styles, its biggest collection to date.

WHY IT MATTERS

  • Target can rely on its existing audience, diverse product assortment and far-reaching store locations to drive its private-label sales. While digitally-native competitors want to take a piece of Target’s market share, many Instagram-famous brands feature higher price-points (Target’s average swimsuit is $40) and only attract niche audiences. Target’s all-encompassing brick and mortar presence also allows customers to try on products IRL—a luxury many nascent digitally-native brands can’t offer. Target’s private labels and famous designer collaborations will be enough for the retailer to continue to thrive in this category for the foreseeable future.
  • However, Target’s abundance of cheap and cheerful products won’t fare well with increasing consumer concern about environmental sustainability. Despite its fleet of 1,844 stores nationwide, such a broad product assortment will naturally result in excess inventory, which means waste. While customers are currently excited by Target’s variety, a surplus of inventory could become overwhelming and unappealing. Ongoing criticism around the retailer’s sustainability practices could prompt customers to buy swimwear from a more ethically-conscious brand.

2) Hundreds of pharmacies in grocery stores will close across the U.S. as consumers signal that they prefer holistic healthcare solutions over fragmented ones.

WHAT HAPPENED: Regional pharmacies are too small to compete with national drugstore chains like CVS and Walgreens, which offer benefits like walk-in healthcare services and competitive reimbursement rates.

WHY IT MATTERS

  • These pharmacy closures reflect consumer preference for an all-encompassing “healthcare hub.” While the traditional pharmacy format allows customers to interact with pharmacists and ask medication-related questions, consumers now expect more. Walk-in clinics and CVS HealthHUBs allow customers to gain access to various healthcare services and get quick advice on non-threatening issues without needing an appointment. CVS announced this week it would open 600 HealthHUBS as it aims for 1,500 hubs by the end of 2021. Grocery stores don’t have the resources to enhance their pharmacies and compete with national chains or telemedicine services, giving them no choice but to exit healthcare altogether.
  • Since shoppers that rely on grocery store pharmacies are more loyal, the absence of these amenities will further hurt grocery store foot traffic. While grocery store pharmacy counters no longer attract new customers to stores, they keep old ones from shopping elsewhere. Grocery store pharmacies tend to make up less than 20% of the stores’ total business. However, Kroger says its pharmacy shoppers spend three times more than its non-pharmacy customers. Local grocery stores will need to look for new streams of revenue to make up for this decline and ensure they are still cultivating a loyal customer base.

3) Louis Vuitton will open its first restaurant amid a shift in consumer spending habits towards experiences over shopping, underscoring the urgency for it to partake in the experience economy.

WHAT HAPPENED: Le Café V will open in Louis Vuitton’s flagship store in Osaka, Japan next month. Occupying the top floor of the store, it will offer a menu by acclaimed Japanese chef Yosuke Suga.

WHY IT MATTERS

  • The luxury market is moving towards holistic branded experiences that serve both existing clientele and new generations of luxury shoppers. As wholesale outlets continue to shutter, brands need to find inventive ways to reach current and future clients, which means offering both attainable and exclusive experiences. Louis Vuitton’s Le Café V comes as Prada launched its pop-up club and Tiffany & Co. (also owned by LVMH) announced it would open its first European Blue Box Cafe in Harrods—proof that brands need to go beyond traditional store formats. The Fondazione Prada in Milan and Louis Vuitton Foundation and Maison Chloé (owned by Richemont) in Paris each feature curated, one-of-a-kind art expositions that invite consumers of varied demographics to interact with the brand over and over again.
  • Brands can no longer rely on ad campaigns and clothing to communicate their message or ethos. With the majority of consumers relying on social media, influencers and celebrities to dictate their buying choices, it’s increasingly difficult for brands to stand out. With trends constantly changing and copy-cats everywhere, brands need to give consumers a reason to interact with them offline and while doing something they already enjoy. While dining in a Louis Vuitton restaurant or having coffee in a Tiffany cafe doesn’t guarantee a high-ticket purchase, their desire to provide luxurious and specialized experiences allows them to build affinity with multiple generations and types of shoppers.

4) Colgate acquired the oral care brand Hello—one of two approaches CPG conglomerates are taking to either buy up new brands or pair back their legacy brand portfolios.

WHAT HAPPENED: Hello is one of the fastest-growing premium oral care brands in the U.S. It sells adult and kids toothpaste, mouth rinse, toothbrushes and floss at major retailers and online.

WHY IT MATTERS

  • Some CPG holding companies are buying up smaller brands to squash competition and diversify their portfolios. Colgate purchased Hello to expand its natural products offering. But it plans to keep Hello’s founder and current CEO in place, proof that it will invest in the brand itself. Proctor & Gamble’s 2018 purchase of Walker and Company relied on a similar formula—fueling Walker & Company’s brands to give the holding company a foothold in personal care products for people of color. While Hello hasn’t had a problem growing independent of a CPG conglomerate, Colgate’s presence in over 200 countries will take the brand from a startup to a mainstream brand, giving Hello the reach that would otherwise take much longer to obtain.
  • Other holding companies are focusing on simplifying their brand portfolio versus adding more brands. Kraft Heinz is now streamlining its product offerings to focus on defining category winners after too much internal competition among brands selling the same products led to excess inventory and confused consumers. While this is a good step in the short term, Kraft Heinz’s brands still came from the previous century and will always have the stigma from highly-processed foods, which may lead it to buy up younger and healthier brands in the near future.