Until late 2020, the most Mike Winkleman – the digital artist known as Beeple – had ever sold a print for was $100. Last year, he sold a non-fungible token, or “NFT,” piece of work for $69 million at Christie’s.
Consumer brands are also entering the world of NFTs and the digital, virtual realm in which NFTs are so important, the metaverse. While atmospheric economic gains such as Beeple’s may not be the expectation, brands are positioning themselves to capitalize on what may prove to be a paradigm shift. Last week, companies as divergent as Proctor & Gamble and the UK’s Selfridges launched programs geared for the metaverse. They have joined the likes of Nike, Adidas, Gucci, Louis Vuitton, Burberry, Forever 21, Coca-Cola, McDonald’s and NASCAR. Perhaps most notably, Facebook has changed its name to Meta.
Sounding otherworldly, the metaverse (or at least the idea of it) has been around for years. In the 1992 science fiction novel Snow Crash, author Neal Stephenson imagined a virtual world called Metaverse: an internet-connected, immersive world that served as an alternate shared reality for its users. As the internet grew, the metaverse reference in that novel became the definitional word of a large-scale continual virtual environment in the online space.
The video gaming world is largely credited for being the first metaverse platform. However, these games to date are considered primeval because they are limited in scope and self-contained. The metaverse of the future is much more ambitious.
Technologies associated with the metaverse include virtual reality (characterized by ongoing virtual worlds even when one is not engaged) and augmented reality (characterized by combining aspects of the physical and the virtual world). This virtual world can simply be accessed through computers, game consoles and smart phones.
Further, the ambition of the metaverse is to provide a greater overlap of the physical and digital worlds, including entertainment, socialization and shopping. Consequently, it can serve as a digital economy, where users can create, buy and sell goods.
Critically, the metaverse of the future will be “inter-operable”, meaning it will allow one to take virtual items like clothes or cars from one platform to another. For instance, a consumer in the real world can buy a shirt at the mall and then wear it to a restaurant that evening. However, virtual platforms today do not interact. Thus, a user may be able to create an identity (or an avatar) on one virtual platform (and use or purchase items offered therein), but they cannot take that persona nor possessions to another platform.
The promise of the metaverse is to allow interchange among virtual platforms, which holds high appeal to brands because of the potential for greater exposure. This is coupled with the ability to transfer digital ownership of a branded good through the use of an NFT. NFTs are exchangeable and each one has its own unique identity so it can’t be claimed by more than one owner (thanks to another modern concept, blockchain).
A virtual product may be a representation of a real product (acting as a digital twin), or it may be a product that only exists in the virtual realm (such as Beeple’s artwork). While these products may not be “real” in a physical way, they are digitally real enough for real people to spend real money on them.
Understatedly, the demand for NFTs has grown exponentially. The total market volume of sold/traded NFTs in 2020 was $100 million. Last year, it grew to $23 billion. Some forecasters expect the metaverse market size to reach $800 billion in 2024.
Seemingly, luxury brands are well suited for the metaverse due to their touted provenance and perceived permanence. In other words, their values are expected to hold. Gucci recently sold digital handbags at prices far exceeding their physical bags. Dolce & Gabbana sold a 9 piece NFT collection featuring gems that “can’t be found on earth” for nearly $6 million. At the other end of the spectrum, Gap will launch an NFT collection later this month offering digital assets across four price points (“common”, “rare”, “epic” and “one-of-a-kind”) ranging from $8 to $415.
Beyond selling digital goods, there is the opportunity to massively increase brand exposure and brand equity in the metaverse. Just considering video games, this market itself is larger than the sports and film industries combined when considered at the global level (this may be hard for Americans to believe).
However, naysayers exist. Is paying hundreds or thousands of dollars for a digital file today’s version of Tulip Mania? As Rod Sterling famously intoned on the Twilight Zone, we are about to enter another dimension. How real will it prove to be?
Apparel & Footwear
Nike veteran Nicole Otto has been appointed global brand president at The North Face, brand parent VF Corp announced Tuesday. Otto succeeds Steve Murray, who is retiring and returning to the U.K. in June, according to a company press release. She reports to VF Chairman and CEO Steve Rendle and serves on VF’s executive leadership team. Otto spent 16 years at Nike, most recently as vice president of Nike Direct North America, a position she left in May last year. In that job she “oversaw Nike’s digital experiences” and North American store fleet and “was responsible for integrating the company’s physical and digital retail ecosystem,” per the release. Rendle called her “the right leader who brings the right capabilities,” saying her work melding digital and physical retail makes “her ideally suited to take the helm of this iconic brand and accelerate growth through even more compelling direct connections with consumers worldwide.”
As previously reported by Drapers, Hotter’s parent company Electra Private Equity will delist from the main London Stock Exchange and be admitted to the Aim junior stock market on 31 January, when it will be renamed Unbound Group. Under the new listing, Unbound Group plans to become a multi-brand retail platform aimed at the 55-plus demographic. It will expand its offering beyond footwear, to include clothing, wellness and lifestyle products. It will also sell third-party brands on Unboundgroup.com, as part of its plans to provide “under-served” customers in the targeted 55-plus demographic “not only with relevant and lifestyle enhancing products and services but ultimately also a community platform”. The company intends to leverage the existing customer database and the digital infrastructure of Hotter Shoes to support sales on the new Unbound platform.
Tecovas, the Austin-based company that started as an online seller of handmade cowboy boots, has raised $56 million to expand its brand. The company, which currently makes about 60% of its sales online, is betting on growth from new retail stores, said Paul Hedrick, founder and CEO of Tecovas. With the new funding, the company plans to open five to seven stores in 2022. In addition to new stores, Tecovas plans to offer additional footwear, apparel and accessories, Hedrick said. The investment was led by Elephant, a venture capital firm founded by eyewear retailer Warby Parker co-founder Andy Hunt. Investors Access Capital, Seamless Capital and Kemmons Wilson Companies also participated. Tecovas company has raised $120 million to date.
Athletic & Sporting Goods
Planet Fitness said it plans to acquire Sunshine Fitness, an operator of more than 100 Planet Fitness clubs in the U.S., in a cash-and-stock deal valued at $800 million. The transaction is expected to close in the first quarter of 2022, the company said in a press release. Planet Fitness said the deal is projected to add to its adjusted earnings at a low-double-digit percent this year. Sunshine Fitness operates primarily in the Southeast, with locations in South Carolina, North Carolina and Florida. Planet Fitness said it ended 2021 with 15.2 million members, an increase of 1.7 million over the past 12 months. It opened 132 locations during the year, exceeding its own expectations and bringing its total gym count globally to 2,254.
Lululemon Athletica Inc. is accelerating its at-home fitness business with the appointment of a new executive. The company named Michael Aragon as CEO of Mirror and Lululemon Digital Fitness, effective Jan. 17. He will oversee the development and expansion of the Mirror in-home digital platform, and will report directly to Lululemon CEO Calvin McDonald. Aragon joins Lululemon from Amazon, where he has served for five years as chief content officer at Twitch, a live-streaming service that creates multi-player entertainment experiences. He also spent more than a decade with the Sony Group, where he expanded the PlayStation network beyond gaming, and managed the digital, music and original content services in more than 30 countries. Lululemon bought Mirror for about $500 million in 2020.
Simms Fishing Products, manufacturer of waders, outerwear, footwear, and technical apparel in fishing, announced it has acquired Bozeman, MT-based specialty retailer, The River’s Edge Fly Shop. Established in 1983, The River’s Edge has two locations in Bozeman, offering full-service experiences, including guided Montana fly fishing trips, fly tying and casting instruction, to product and fishing advice. In October 2019, Simms announced an initial investment in the specialty retail, and with increased interest in fishing seen over the course of the past two years due to the pandemic, Simms said the time was right for it and The River’s Edge to finalize a plan that had been in place following initial conversations.
Cosmetics & Pharmacy
Walgreens Boots Alliance confirmed that the company is reviewing its U.K. business. Speaking during a virtual presentation at the J.P. Morgan Healthcare Conference, Walgreens CEO Rosalind Brewer said that the company has begun a strategic review of its Boots business as it considers how to proceed with the U.K. chain, reported CNBC. “While the process is at an exploratory stage, we do expect to move quickly,” she said, according to the report. In early December, the Financial Times reported that Walgreens was putting advisors in place, including Goldman Sachs, to explore options for Boots. Walgreens acquired the U.K.-based pharmacy chain in a two-step process that began in 2012, with a 45% equity ownership in Alliance Boots. It completed the process in 2014, acquiring the remainder of the company to form Walgreens Boots Alliance. According to its website, Boots has more than 2,200 stores. It also has hundreds of optical practices and hearing care locations.
Oddity, the parent company behind DTC makeup brand Il Makiage, has secured a $130 million secondary-market private round at a valuation of $1.5 billion as it seeks to diversify its investors and expand its business model. Oddity announced billionaire entrepreneur Thomas Tull, investment firm Franklin Templeton, Fidelity Management and First Light Capital Group as new investors. Up until now, private equity group L Catterton has been the only outside investor in the business, investing $44 million since 2017. Oddity is not issuing new shares as a secondary fundraise; instead, L Catterton and its founders sold 8% of their ownership of the company. L Catterton had a 35.8% stake in the business. Il Makiage reported $260 million in 2021 revenue and is profitable. Oddity plans to launch a new brand every 18 months, starting with the launch of a second brand called SpoiledChild in the wellness space in February, followed by an undisclosed telemedicine brand in 2023.
Discounters & Department Stores
J.C. Penney appointed two technology executives to its C-suite in a bid to accelerate digital transformation, the company announced. Sharmeelee Bala will serve as J.C. Penney’s chief information officer, building on past leadership positions at Gap Inc. and Walmart. Bala will be responsible for the IT that supports stores, operational centers, supply chain, and corporate functions. Katie Mullen, a former C-suite executive at Neiman Marcus Group, is joining J.C. Penney as the company’s chief digital and transformation officer. Mullen will oversee the growth of the e-commerce business and transformation.
Detailing its long-term ambitions, discounter Big Lots said that it could open 500 net new stores, or more, in the coming years. The retailer plans to add more than 50 net new stores in 2022 and more than 80 per year after that, according to an investor presentation. The openings, together with initiatives to boost merchandise sales productivity and grow e-commerce, are aimed at bringing the retailer’s sales to $8 billion to $10 billion in the long term.
Walmart has expanded its digital commerce arsenal with a 24/7 home delivery “smart” receptacle from HomeValet and an e-shopping tool from Sifter SP that enables customers to find foods matching their dietary needs. This month, Walmart is slated to begin offering the HomeValet Smart Box to users of its Walmart InHome delivery service, in which groceries ordered online can be delivered directly to refrigerators in customers’ homes or garages. The HomeValet rollout follows a pilot of the technology with Walmart that launched last spring in its hometown of Bentonville, Ark.
Emerging Consumer Companies
SEC filings show that Harry’s has raised $139.9 million in a new financing event. Harry’s has been quite active over the past year. Early in 2021, it launched its Headquarters hair care line. It recently acquired Lumē, a direct-to-consumer brand created to help control all-over body odor, in an undisclosed deal. “The idea about M&A for Harry’s is we want to be a multi-category CPG company and build a family of CPG brands… We want to create more and better things for consumers, and we are looking for brands aligned with that mission, are positioned in a way we can be helpful and are brands serving unmet needs.”
Jaanuu is ready for the next step with Eurazeo and Jill Granoff. The private equity giant made a $75 million minority investment in the direct-to-consumer premium scrubs brand, setting it up to continue disrupting a market on the move. Jaanuu — which draws its name from the Hindi word for life — was founded in 2013 by pediatrician Dr. Neela Sethi and her brother, private equity and banking veteran Shaan Sethi, who serves as chief executive officer. The investment is a big shot in the arm for a company that seems to be coming into its own just as the coronavirus pandemic puts the medical community front and center. Jaanuu previously raised about $25 million, including an early check from Shaan Sethi’s former boss, Ron Burkle, and plans to use its backing to keep expanding the product range and move into new geographies. The investment will sit in Eurazeo Brands division, led by CEO Jill Granoff, who is joining the Jaanuu board.
In a move to expand its experiential offerings, 1-800-Flowers has acquired Alice’s Table, a lifestyle business offering fully digital and highly curated livestreaming floral, culinary, and other unique experiences. The acquisition reflects 1-800-Flowers’ strategy to develop immersive experiences, provide engaging content and deepen the customer relationship. Launched in 2015, Alice’s Table began by hosting in-person floral arranging events in homes and venues throughout the U.S. It pivoted to a pure digital model in 2020, when it began collaborating with 1-800-Flowers and Harry & David.
Food & Beverage
Monster Beverage will acquire Canarchy Craft Brewery Collective, a craft beer and hard seltzer company, for $330 million in cash, the company said in a statement. The energy drink maker said the deal will provide Monster with a “springboard” to enter the alcoholic beverage space. The transaction is expected to close before April. Canarchy, which owns craft beer brands such as Cigar City, Oskar Blues, Deep Ellum and Perrin Brewing, will function independently and retain its own organizational structure and team, led by its current CEO Tony Short. The news that Monster is entering the beer and hard seltzer market comes as more nonalcoholic beverage companies enter the category in an effort to cover more drinking occasions and spur growth.
Bowery Farming, the largest vertical farming company in the United States, announced it has secured a $150 million credit facility led by private credit accounts managed by KKR, a leading global investment firm. This funding will accelerate the expansion of Bowery’s network of smart indoor farms beyond the East Coast and brings its total debt and equity capital raised to more than $647 million — representing the strongest institutional backing in the Controlled Environmental Agriculture industry. KKR’s credit investment follows Bowery’s $325 million Series C funding in 2021 led by Fidelity Management & Research Company LLC. The Company also announced that it is building two new state-of-the-art farms serving the Atlanta, Georgia and Dallas-Fort Worth, Texas metro areas.
Grocery & Restaurants
After a successful period of significant growth during the pandemic, Papa Johns has an eye toward international expansion as its next target. The pizza chain announced Friday its largest-ever franchise deal (and CEO Rob Lynch believes one of the largest franchise deals in the restaurant industry) with Chinese private equity firm FountainVest Partners to open 1,350 new stores across South China over the next two decades. FountainVest is one of the largest private equity firms in China, and as part of the deal, has also purchased a majority stake in current Papa Johns franchisee CFB Group, which owns and operates approximately 160 restaurants in Shanghai and across southern China. Currently, Lynch said, Papa Johns is in 50 countries, whereas their pizza industry competitors are in 100+. Pizza Hut particularly has a massive presence in China and has become a part of mainstream culture in multiple Asian countries. He thinks Papa Johns could take advantage of its relative whitespace in Asia to gain traction in places where the company has zero presence and also in markets where it the Papa Johns brand is under-penetrated.
Hopdoddy Burger Bar has agreed to acquire the Texas-based Grub Burger Bar to create a combined HiBar Hospitality Group, the companies announced Thursday. Austin, Texas-based Hopdoddy, with 32 restaurants in five states, and Bryan, Texas-based Grub Burger Bar, with 19 restaurants in five states, will broaden the footprint of both better-burger concepts under the new HiBar banner. Terms of the deal, which was backed by Hopdoddy private-equity investor L Catterton, were not disclosed. L Catterton invested in Hopdoddy in 2014 and helped fund the brand’s expansion. Hopdoddy, which was founded in 2010, owns and operates 32 restaurants, with the majority in Texas and four other states to the west, including California and Colorado. Grub Burger Bar, founded in 2012, is also in five states, with most in Texas and states to the east as far as Florida and Georgia.
Albertsons Cos. topped the high end of Wall Street’s earnings-per-share forecast for its fiscal 2021 third quarter as the supermarket giant tallied robust gains in net and identical sales. For the 12-week quarter ended Dec. 4, net sales and other revenue climbed 8.6% to $16.73 billion from $15.41 billion a year earlier, Albertsons reported Tuesday. The Boise, Idaho-based food and drug retailer said the growth reflects a 5.2% year-over-year uptick in identical sales, as well as higher fuel sales, sales from new and acquired stores, retail price inflation and incremental sales from administering COVID-19 vaccines. E-commerce remained a catalyst in the third quarter. Digital sales advanced 9% — exceeding the second quarter’s 5% increase — and were up 234% over two years, including 225% growth in the 2020 third quarter. Adjusted net income came in at $457.2 million, or 79 cents per diluted Class A common share, versus $386.6 million, or 66 cents per diluted Class A common share, in the prior-year period.
Home & Road
A new report from Baird finds there’s been a shake-up in the wedding registry pecking order. Amazon accounted for 45% of wedding registry penetration in the fourth quarter while Bed Bath & Beyond fell to 30%, the chain’s lowest share in the six years that Baird has tracked registration activity on The Knot. The results were first reported by CNBC. Bed Bath & Beyond’s penetration was already on the decline, coming in at 34% in July and 33% in October. Target’s penetration ranked third at 26%. Crate & Barrel and Williams-Sonoma tied with 15% penetration. Couples registering for cash and/or travel funds accounted for 16% of listings. The CNBC report noted that 2022 is expected to be a record year for weddings since many couples delayed their ceremonies because of the Covid-19 pandemic. The Wedding Report is forecasting 2.47 million weddings this year – the highest number in 40 years. Baird retail analyst Justin Kleber told CNBC that registries play an important role in long-term consumer loyalty.
In the latest documents filed with the U.S. Securities and Exchange Commission, sleep retailer Mattress Firm said it plans to sell $100 million worth of shares in an upcoming initial public offering. The filing outlines the company’s current debt load and a look at its balance sheet. That $100 million figure could change as the yet-to-be-determined date of the offering gets closer. The filing follows the retailer’s confidential draft registration statement indicating it was seeking to go public with regulators in September. In its late Friday evening filing totaling more than 200 pages, Mattress Firm listed 2021 revenues for the year ended Sept. 28 of just shy of $4.4 billion and a net loss of $165.1 million. In fiscal 2020, the company said its revenue was $3.3 billion and net income of $126 million. The company attributed much of the loss last year to increased expenses.
Jewelry & Luxury
If you’ve ever shopped in midtown Manhattan, you know that you can buy a Louis Vuitton bag for $2,000 in Neiman Marcus or $20 from the guy across the street with a blanket full of “Louis Vuitton” bags. And without a close inspection, they often look basically the same. That’s why Louis Vuitton’s owner, the LVMH Moët Hennessy Louis Vuitton luxury goods group is a founding member of the Aura Blockchain Consortium, a private, permissioned blockchain piggybacked on Ethereum that is designed to provide proof of provenance, allowing consumers to trace the history of their LV-logoed bag — or Hublot watch, Prada gown and Bulgari perfume — from the design studio to the French tannery producing the leather to the artisans who sew it together to the warehouses, shipping lines and distribution centers that deliver it to Neiman Marcus.
The resale marketplace, particularly for luxury goods including fine jewelry, proved hugely popular in 2021, and that trend will continue with demographics from Gen Z to baby boomers gravitating to online resale retailers to create unique looks and focus on sustainable shopping habits. In the 2022 Luxury Consignment Report released Thursday, resale luxury goods experts at The RealReal in San Francisco say “conscious consumers” across a wide spectrum of age ranges are looking to resale as a way to create one-of-a-kind style while also shopping their values. Jewelers who specialize in vintage or estate jewelry, as well as designers who bring recycled gems and metals into their work, could look at this report as a way to guide what to buy and how to sell it in 2022.
Robbins Brothers, the 15-store jeweler that specializes in engagement rings, has new owners: a coalition of its current management, investment firm Main Street Capital, and unnamed coinvestors. Comvest Partners, which purchased the Azusa, Calif.–based retailer in 2014, is no longer involved in the company. Marc Friedant, Robbins Brothers’ president and CEO, calls Main Street Capital a respected financer for the middle market, noting it owns a portion of Jensen Jewelers, another 15-store jewelry chain.
Ben Bridge Jeweler is returning ownership of its 37 Pandora stores to the Danish jewelry company, effectively cutting its store count in half as it looks to concentrate on its core business. The stores will be returned to Pandora in early March, according to a press release about the change of ownership. “The cornerstone of our business is building customers for life, and that is why we first fell in love with Pandora,” said Ben Bridge CEO Lisa Bridge. “This has been an important and successful chapter in our history, and we know our team will be in excellent hands as a part of the broader Pandora organization. This pivot will give us greater focus and enable us to innovate and grow in new ways.”
Office & Leisure
ODP Corp. moved to delay plans to spin off its consumer business, which includes the Office Depot and OfficeMax retail banners. The delay will give the company’s board time to contemplate a $1 billion acquisition offer for the consumer unit from rival Staples, owned by private equity firm Sycamore Partners, as well as another offer made in December by an unnamed party. The decision follows months of pursuit by Staples and public demurring by ODP, which, after receiving an offer from Staples in early 2021, announced plans to break itself up. ODP previously signaled the separation would be complete in the first half of 2022. ODP CEO Gerry Smith said in the release that if the company doesn’t ultimately sell its consumer business, the board will “reevaluate the advisability and timing of the public company separation.”
The video game publisher Take-Two Interactive agreed to buy Zynga, a mobile game maker, for more than $11 billion, in a deal that unites the makers of Grand Theft Auto and FarmVille. With the deal, Take-Two — known for producing games like Grand Theft Auto and NBA 2K for traditional platforms like the Sony PlayStation console and personal computers — is acquiring a specialist in mobile and social gaming, with Zynga’s best-known titles including Words With Friends and other apps. Adding Zynga’s stable of app developers is meant to help Take-Two roll out more smartphone versions of its popular titles. Zynga will also help Take-Two expand its revenue from so-called recurrent consumer spending, in which players pay for new content and upgrades within games. The deal values Zynga at about $12.7 billion, making it one of the largest in the history of the video game industry, topping the purchase of Supercell by the Chinese internet giant Tencent in 2016 for $10 billion and Microsoft’s acquisition of ZeniMax Media for $7.5 billion in 2020.
LEGO has decided to delay a new Overwatch 2 LEGO set, as the company continues to review its relationship with Activision Blizzard due to misconduct and harassment allegations against the game developer. First reported by The Brick Fan, the Overwatch 2 Titan set was supposed to be released on February 1. Now, LEGO says it will update fans on the partnership once the company comes to a decision. “We are currently reviewing our partnership with Activision Blizzard, given concerns about the progress being made to address continuing allegations regarding workplace culture, especially the treatment of female colleagues and creating a diverse and inclusive environment,” LEGO said in a statement. “While we complete the review, we will pause the release of a LEGO Overwatch 2 product which was due to go on sale on February 1, 2022.”
Technology & Internet
Social media giant Facebook, now known as Meta Platforms, faces a 2.3 billion pound plus ($3.2 billion plus) class action in Britain over allegations it abused its market dominance by exploiting the personal data of 44 million users. Liza Lovdahl Gormsen, a senior adviser to Britain’s Financial Conduct Authority (FCA) watchdog and a competition law academic, said she was bringing the case on behalf of people in Britain who had used Facebook between 2015 and 2019. The lawsuit, which will be heard by London’s Competition Appeal Tribunal, alleges Facebook made billions of pounds by imposing unfair terms and conditions that demanded consumers surrender valuable personal data to access the network. The case comes days after Facebook lost an attempt to strike out an antitrust lawsuit by the Federal Trade Commission (FTC), one of the biggest challenges by the U.S. government against a tech company in decades as Washington attempts to tackle Big Tech’s extensive market power.
Apple is weighing whether to push back the debut of its hotly anticipated virtual reality headset until late 2022 at the earliest, according to Bloomberg. Although Apple has never publicly confirmed work on a headset, investors and analysts increasingly believe such a device will become a big new product category for the tech giant. A large team, called the Technology Development Group, is reportedly working on the headset. Apple was previously planning to debut the product at its developer’s conference, according to the report, but could delay it because of challenges related to overheating, cameras and software. A delay would threaten to chill enthusiasm for the metaverse, a collection of technologies related to augmented and virtual reality, often publicly championed by rivals. Analysts in the sector were expecting Apple’s product introduction to provide a bolt of energy for the industry.
Finance & Economy
The Labor Department said that its producer price index, which measures inflation at the wholesale level before it reaches consumers, surged 9.7% in December from the year-ago period. It marked the highest figure on record since the government began tracking the data in 2010. Still, there are some signs that inflation could be decelerating: On a monthly basis, prices rose just 0.2% in December following a revised gain of 1% in November. Economists surveyed by Refinitiv expected producer inflation to rise by 9.8% on an annual basis and 0.4% from the previous month. Food prices declined 0.6% in December after climbing 1.2% in November, while energy prices dropped 3.3%, following a 2% gain the previous month.
Visa announced that the U.S. Spending Momentum Index (SMI) was 108.4 in December (seasonally adjusted), its strongest reading for the month since the start of the index. For the last three months of the year, the SMI was 110.3, also a high for the fourth quarter of the year. The Visa SMI is an economic indicator of the health of consumer spending. When the Visa SMI rises above 100, the consumer spending momentum is strengthening and when it falls below 100, the spending momentum is weakening as fewer consumers are spending more relative to the previous year. By category, the SMI for discretionary purchases fell 4.9 points from the previous month to 103. The SMI for non-discretionary purchases rose 0.1 points to 99.9. On a regional basis, the SMI fell the most in the Midwest and South, with both declining 4 points for the month. The Northeast reading fell 2.5 points and the West slid 1.8 points.