Last week’s announcement that Olipop, a low-sugar, functional soda, had raised $30 million of growth equity was the latest funding news for a low/no sugar food & beverage brand. Consumers are increasingly seeking out products that are low in sugar. This rising demand reflects the growing awareness among consumers of the importance of metabolic health.
Metabolic health involves keeping glucose levels in our body in a stable and healthy range, and blood sugar levels are the most common method of tracking our metabolic health. A healthy metabolism regulates our sleep, appetite, weight and energy levels – and optimizing our metabolic health improves longevity and quality of life.
Unfortunately, the Standard American Diet (SAD) results in poor metabolic health, as 60% of calories consumed come from ultra-processed foods. Today, the average American consumes nearly their body weight in sugar each year – over 150 pounds. This addiction to sugar is killing too many of us, as high blood sugar levels has been linked to 8 of the 10 leading causes of death in the US, 74% of Americans are overweight or obese, 34 million Americans have diabetes, and an additional 88 million are at high risk of becoming diabetic.
The case for reducing sugar in our diets is compelling. In August 2021, researchers at Massachusetts General Hospital, Tufts and Harvard noted that “cutting 20% of sugar from packaged foods and 40% from beverages could prevent 2.5 million cardiovascular disease events (strokes, heart attacks and cardiac arrests), 490,000 cardiovascular deaths and 750,000 diabetes cases in the U.S.”
But normal blood sugar levels are just one part of metabolic health. Other elements of being metabolically healthy include normal blood pressure, low abdominal fat, stable energy levels and strong, pain-free joints and muscles. Dietary choices involving consuming higher amounts of protein and vegetables while minimizing sugar and starchy foods can lead to better metabolic health. Consistent exercise, reducing stress and adequate sleep are important components too.
The ultra-low carb keto diet has been at the forefront of the metabolic health movement for the last few years. While the keto diet can be extreme, requiring the virtual elimination of carbs, the low/no sugar aspect of this diet is gaining traction with consumers. Recent surveys show that over 50% of US adults are trying to reduce sugar in their diets, giving rise to the “sugar conscious” consumer with massive spending power. This new type of consumer seeks products with no sugar/no added sugar/low sugar labels, prefers all-natural, sugar-free products and avoids artificial sweeteners.
There are a variety of emerging brands tackling the metabolic health problem. In food, the focus is on reducing or eliminating sugar in categories such as beverages, confectionary and baked goods. Olipop’s funding is the most recent example of innovation in the beverage category. Hershey’s purchase of the low-sugar Lily’s chocolate brand for $425 million last year has enabled Lily’s to expand distribution so that its innovative products are now available nationally. In other consumer areas, Levels recently raised an $11 million seed round from Andreesen Horowitz to develop a line of wearables to monitor metabolic health while Virta Health raised $133 million from Tiger Global to scale a digital diabetes reversal program centered around the keto diet.
These recent transactions provide evidence that the metabolic health wave is commencing, and significant value will accrue to those brands that help consumers improve their metabolic health.
Headlines of the Week
Peloton is replacing its CEO, cutting jobs and reining in ambitious expansion plans after badly misjudging the staying power of the exercise-at-home trend that propelled its sales early in the pandemic. John Foley first pitched the idea for Peloton in 2011, hoping to disrupt the industry. He will give up the CEO position and become executive chair at Peloton Interactive Inc. The company is also cutting almost 3,000 jobs. Barry McCarthy, who served as CFO at Spotify as well as at Netflix, will take over as CEO, the company said. Peloton’s shares surged about 25%, despite the company reducing its annual outlook for sales and subscriptions and reporting a big loss for its fiscal second quarter.
U.S. retailers missed out on $82 billion in CPG sales last year because items customers would have purchased were unavailable, according to data released on Monday by NielsenIQ. Lost revenue opportunities peaked during the fall, when surging COVID-19 rates depressed on-shelf availability and pushed unrealized sales to $1.7 billion per week, up 22% from $1.4 billion per week during the first half of 2021. Sales of fruits and vegetables were especially hard hit by shortages in 2021, with the on-shelf availability rate for those items falling below 90% during the COVID-19 wave that hit between late June and mid-October, according to the data. Beverage sales were also heavily affected during that period because products were unavailable, with the on-shelf availability rate for sports drinks at 82.5% during that same wave of cases.
Apparel & Footwear
Tapestry, parent company of Coach, Kate Spade and Stuart Weitzman, on Thursday reported second quarter net sales of $2.1 billion, a 27% increase year over year, according to a company press release. Revenue increased 18% compared to pre-pandemic levels, primarily driven by the Kate Spade and Coach brands. As a result, the company increased guidance for fiscal 2022, forecasting revenue of $6.75 billion, representing nearly 20% year-over-year growth. It would “mark a record level of sales for the company,” the conglomerate said. “We are a different company than we were just 18 months ago,” Tapestry CEO Joanne Crevoiserat said in a statement regarding the company’s Q2 performance. During that time period, back in August 2020, Tapestry was reevaluating its store footprint, slashing corporate workforce costs by 20%, dealing with falling revenues and facing losses, reporting an operating loss of about $280 million.
Urban Outfitters — whose brands include Anthropologie, Free People, namesake Urban Outfitters and apparel rental site Nuuly — said that Q4 retail sales rose 24.1% year over year, or 15.4% compared to two years ago, to $1.26 billion. Retail comps rose 14% compared to 2019. Wholesale sales fell 22% compared to the period two years ago, mostly because Free People has made a point of reducing sales through promotional partners. The company in a press release warned that gross margin could contract more than expected, largely due to higher freight costs. The company also announced the arrival of former Club Monaco CEO Francis Pierrel as president of the Urban Outfitters brand, reporting to Sheila Harrington, who is global chief executive officer of Urban Outfitters and the Free People Group. He also previously served as the president of stores and e-commerce for Ralph Lauren in North America.
An activist investor is calling for the co-founders of Guess Inc. to be removed from the clothing maker’s board, arguing that sexual-misconduct allegations against one of the men threaten its turnaround efforts. Legion Partners Asset Management LLC has a roughly 2.5% stake in Guess and has been urging it to remove Paul Marciano and his brother, Maurice Marciano, according to a person familiar with the matter and a letter sent to the company’s board Monday that was viewed by The Wall Street Journal. Paul Marciano, who the activist also wants removed from his position as chief creative officer, has been publicly accused of sexual misconduct by multiple women in recent years. Legion argues that Maurice Marciano is also to blame for turning a blind eye to his brother’s behavior.
Genesco has authorized a $100 million share buyback program. The parent company of Journeys and other footwear brands said that its board has authorized a $100 million increase to its existing $100 million share repurchase authorization. Under Genesco’s existing $100 million share repurchase authorization announced in September 2019, the company has repurchased roughly 1.72 million shares at a total cost of approximately $99.0 million, at an average price of $57.49 per share, leaving remaining authorization of $1.0 million under the existing program. In January, Genesco said that its total overall sales increased by 18% and 9% for the quarter-to-date period ended Dec. 25, versus the same period for fiscal 2021 and fiscal 2020, respectively. Total store sales rose 23% over the year-ago period. Genesco operates more than 1,430 stores throughout the U.S., Canada, the United Kingdom and the Republic of Ireland under the names Journeys, Journeys Kidz, Little Burgundy, Schuh, Schuh Kids and Johnston & Murphy. In addition, Genesco sells footwear at wholesale under its Johnston & Murphy brand, the licensed Levi’s brand, the licensed Dockers brand, the licensed Bass brand, and other brands.
PVH Corp. has tapped a former Converse exec as its new finance head. The parent company of Calvin Klein, Tommy Hilfiger, Warner’s, Olga and True & Co., appointed Zac Coughlin as executive VP and CFO, effective April 4. Jim Holmes, currently interim CFO, will continue in his role as executive VP, controller. Coughlin, who will report to PVH CEO Stefan Larsson, joins PVH from DFS Group, the luxury travel retail subsidiary of LVMH Group, where he served as group CFO and COO. Prior to DFS, Coughlin was CFO at Converse, a division of Nike. He started his career with Ford Motor Company where he held multiple global financial leadership roles. Coughlin joins PVH as the company is sharpening its focus on it top brands. In June, the company entered into a deal to sell its Heritage Brands business — which includes the Izod, Van Heusen, Arrow and Geoffrey Beene brand trademarks — to Authentic Brands Group for $220 million.
Athletic & Sporting Goods
Under Armour Inc warned that higher transportation costs would squeeze its earnings in the current quarter, as the sportswear maker wrestles with COVID-19-led disruptions to its supply chain. Product availability has been a concern for Under Armour and its rivals, Lululemon Athletica Inc and Nike Inc , as Asian factories that make their clothing are only just recovering from COVID-19 outbreaks and employee shortages. The pandemic has triggered inflation across the supply chain from labor to raw materials, forcing corporate America to raise prices of everything from burgers to hoodies. However, many companies could still not fully offset the impact and that hit their profits.
Roustan Hockey, the only commercial producer of hockey sticks left in Canada, will acquire Scarborough’s McKenney Custom Sports, a custom hockey and lacrosse equipment manufacturer. The sale is a private transaction and the price was not disclosed. W. Graeme Roustan, executive chairman of Roustan Capital and Roustan Hockey, which also owns The Hockey News, called the acquisition the next step in building Canada’s domestic supply of sports equipment. Trevor McKenney, who co-founded McKenney in 1996, will become Roustan Hockey general manager, protective. He will head up the divisions making protective hockey and lacrosse gear. Roustan Hockey acquired Heritage Hockey Sticks in 2019 and moved it from a 100-year-old factory in Cambridge into a new 65,000 square foot, modern factory in Brantford, Ont.
Cosmetics & Pharmacy
The global beauty market has been “transformed” by the pandemic, according to L’Oréal chief executive officer Nicolas Hieronimus. “Consumers want more health and safety in their products, more transparency, more sustainability and more science in an ever more digitalized market,” the beauty executive said Thursday during the company’s 2021 results conference webcast from its headquarters in the Paris suburb of Clichy – his first time presenting the annual meeting as CEO and a day after the company’s full-year 2021 results were released. “What this year tells us is that the appetite for beauty is huge, universal and that beauty is essential for humans,” he continued. The global beauty market grew by 8 percent last year, according to estimates from L’Oréal. “After a decline of 8 percent in 2020, 2021 was the year of the rebound,” Hieronimus said. As reported, in 2021 the maker of Lancôme, Kiehl’s and L’Oréal Paris products achieved sales of 32.28 billion euros, a 15.3 percent increase on a reported basis and a 16.1 percent rise like-for-like, compared with 2020.
Shiseido moved back into the black last year on the back of double-digit sales growth. The results come as the company intensifies its focus on “skin beauty.” Separately, Henkel is to acquire Shiseido’s Professional hair business in the Asia Pacific region. After the transaction closes, Shiseido is to retain a 20 percent stake in the legal entity based in Japan. For the year ended Dec. 31, Shiseido’s net profit totaled 42.44 billion yen ($367.6 million), compared with a net loss of 11.66 billion yen in the year prior. Its operating profit for the year more than doubled, coming in at 41.59 billion yen, up from 14.96 billion yen in the previous year. Japan’s largest cosmetics company saw its annual net sales grow by 12.4 percent to 1.04 trillion yen.
CVS Health’s fourth-quarter 2021 results brought increased revenue. The Woonsocket, R.I.-based company saw fourth-quarter revenues of $76.6 billion. GAAP diluted earnings per share for the quarter was .98 cents and adjusted EPS was $1.98. The full-year revenue, which increased to $292.1 billion, represents year-over-year growth of 8.7%. For the three months and year ended Dec. 31, 2021, total revenues increased 10.1% and 8.7%, respectively, which CVS Health said was driven by growth across all segments. Net income decreased 11.7% for the quarter and 5.2% for the year, both of which ended Dec. 31, 2021.
Discounters & Department Stores
Macellum Advisors on Thursday said it has nominated a slate of 10 candidates to Kohl’s board of directors, slamming the current board for what it called a hasty rejection of recent sale offers and adoption of a “poison pill” against a hostile takeover. The activist investor also expressed alarm over rumors of Kohl’s leadership “flying to Seattle, Washington, where Amazon is headquartered,” saying, “we hope the incumbents are not losing sight of their fiduciary duties.” “Macellum’s effort to take control of the Board is unjustified and counterproductive,” Kohl’s said in a statement Thursday, noting that last year it already appointed two Macellum candidates, plus another mutually agreed on, and that all board members, except its CEO, are independent. Kohl’s didn’t immediately respond to questions about any meeting with Amazon, nor did it address Amazon in its statement.
J.C. Penney on Tuesday launched a private label men’s apparel brand, Mutual Weave, according to a company press release. The workwear-inspired brand includes denim, tees, button-downs, knits, jackets and shoes, and is available in sizes XS to 5XLT and in adaptive styles. Mutual Weave can be found on the retailer’s website and at 600 of J.C. Penney’s more than 650 stores. The company plans to expand to all its stores this year.
Target is stepping up its head-to-head competition with beauty retailers, saying this week that it had added 40 new beauty brands, including items that are “clean” or are plant-based. The move arrives six months after Target partnered with Ulta on store-within-a-store locations at some Target locations in a much-hyped deal. But that partnership has not stopped the chain from developing its own Ulta-like line of beauty products — and perhaps gaining insight into what sells for their competitor, given that the workers at those Ulta pop-ups are Target employees using Target technology to ring up and track sales trends.
Emerging Consumer Companies
Balance, a New York-based digital fitness platform for seniors, raised $6.5 million in seed funding. The round, which includes financing from an earlier, unannounced pre-seed, was co-led by Founders Fund and Primary Venture Partners, with participation from Lux Capital and Stellation Capital. The company offers live and on-demand fitness classes geared toward older adults. Customers can input information about injuries, health conditions, personal goals and workout preferences, and the platform will suggest different programs and modifications based on their needs. “I used to say ‘fitness for older adults.’ It’s not senior fitness. It’s not about age,” CEO Katie Reed said. “It’s just about the modifications someone needs, because older adults have heterogeneous profiles: They’ve accrued chronic conditions, injuries, surgeries, all just requiring a different type of workout.”
Dawn Health, an insomnia treatment startup founded in 2020, raised $1.8 million in a pre-seed round, led by Kindred Ventures, with Bragiel Brothers, OnDeck’s Runway Fund and individual investors. The investment will be used to expand the team and introduce new products. The company’s mobile app, which is priced at $60 a month, offers evidence-based therapy integrated with a sleep tracker. Users are paired with a sleep coach that is trained by Dawn Health’s therapists and have access to a chat function and personalized daily lesson plans.
Austrian beverage startup Waterdrop, which makes “microdrink” hydrating sugar-free cubes that dissolve in water, has raised $70 million in a Series B funding round. Singapore-based investment firm Temasek led the round. Waterdrop plans to use the new funding on R&D and to continue its expansion in the U.S. and Asia. The company also debuted the Lucy “smart cap” for reusable bottles that filters water through a UV-C system and deactivates up to 100% of potential germs. The cap flashes to remind the consumer when to drink and comes with a mobile app to track water consumption.
Food & Beverage
Molecular spirits maker Endless West has raised $60 million in a Series C funding round, bringing its total investment to $95 million. The round was led by Level One Fund and funds managed by UBS O’Connor, Horizons, SOSV, Casa Verde and Rage Capital. Endless West’s molecular process identifies key flavor and aroma molecules in a spirit, and then extracts them from more available sources such as plants, fruits and yeasts to create what it says is a similar quality, less expensive and less resource-intensive end product. The San Francisco-based firm plans to use this latest investment to expand its Blank Collective B2B platform that provides other spirits brands with access to its technology. Endless West, which offers three varieties of its molecular Glyph whisky as well as a sake-inspired spirit and molecular wine, is striving to scale up and share a technology that it considers a viable answer to creating more sustainable and accessible premium alcoholic beverages.
Direct-to-consumer plant-based meal delivery service Splendid Spoon announced that it raised an additional $12 million to expand its offerings and reach more consumers. The round was led by investment firm Nicoya with Danone Manifesto Ventures, previous investor Torch Capital, Tasty Bite co-founders Ashok and Meera Vasudevan, Reddit co-founder Alexis Ohanian and Rent the Runway co-founder Jennifer Fleiss also taking part. Splendid Spoon’s primary focus is on direct-to-consumer sales on its own e-commerce platform. The brand’s 50 offerings include HPP juices, smoothies and shots as well as grain bowls, soups and noodle bowls. Since inception, Splendid Spoon has served over 210,000 customers and made 11.5M meals in total. This new funding will go towards building out the customer website experience as well as expanding product categories through partnerships.
Nestlé Health Science is adding a brand new brand to its lineup. The company recently shared that it has agreed to acquire a majority stake in Orgain, a plant-based functional nutrition platform. Butterfly Equity and Andrew Abraham, Orgain’s founder and CEO, will retain significant minority ownership positions within the company and Abraham will continue to lead as CEO. Founded in 2009, Orgain’s portfolio currently includes organic protein powder, protein shakes and nutritional shakes among other products.
Grocery & Restaurants
Shares of Chipotle Mexican Grill jumped 8% in extended trading on Tuesday after the company reported quarterly earnings that topped analyst expectations. Menu price hikes helped offset inflation without hurting customer demand. Other chains haven’t had as much luck charging customers more. Fellow restaurant giants McDonald’s and Starbucks both fell short of Wall Street’s earnings expectations for their latest quarters due to higher costs. “We’re pretty fortunate with the pricing power that we have,” Chipotle CEO Brian Niccol said on CNBC’s “Closing Bell.” The company paid more for beef, avocados and freight during the quarter. “Those things continue to stay elevated, and until we start to see some of these things pull back, we probably will have to take some price,” Niccol said. Its workers also earned higher wages. To date, Chipotle has raised menu prices by 6% in 2022, according to Niccol. Compared with a year ago, customers are paying about 10% more for their orders. Niccol told CNBC’s Sara Eisen that the chain hasn’t seen any resistance to higher prices yet from customers.
Reporting strong results for fiscal 2021, Chipotle Mexican Grill on Tuesday upped its target for unit growth, gunning for at least 7,000 units across North America, rather than the previous goal of 6,000. The Newport Beach, Calif.-based chain reported comparable restaurant sales up 15.2% for the Dec. 31-ended fourth quarter, and up 19.3% for the full fiscal year. Chipotle opened 78 new restaurants during the quarter and continued growing digital sales, which increased 3.8% during the quarter to account for 41.6% of sales. For the year, 215 new restaurants opened, and digital sales grew 24.7% to account for 45.6% of sales. Throughout 2021, Niccol said he believed the 2,950-unit Chipotle could roughly double in size to more than 6,000 across North America. The company has developed multiple formats to drive that growth, including the recently launched all-digital unit with a drive-thru and pickup window, dubbed the Chipotlane Digital Kitchen. On Tuesday, Niccol said small-town Chipotle locations have proven to deliver the same or even better unit economics than traditional locations. Now Niccol is pledging to reach at least 7,000 units across North America, saying the company is building a real estate pipeline that will accelerate the pace of growth to between 8% to 10% per year. In 2022, the chain plans to open between 235 and 250 new restaurants.
More than two years after unveiling plans to shift to a wholesale business strategy, discount grocer Save A Lot said the transition is done. St. Louis-based Save A Lot said Thursday that it now operates under a “pure-play wholesale model.” As planned under the business transition, announced in late December 2020, the company has sold almost 300 of its corporate-run stores to independent grocery retailers, which through a relicensing program will operate the supermarkets under the Save A Lot banner. Overall, Save A Lot said it made 34 transactions in selling corporate stores outside the St. Louis market to local retailers. Operators acquiring locations included some existing Save A Lot retailers, such as Fresh Encounter Inc. (51 stores), Janes Group (18 stores), Leevers Supermarkets Inc. (17 stores) and Save Philly Stores (14 stores). The transactions also included 15 new ownership groups, such as Yellow Banana LLC (38 stores in five states) and Ascend Grocery LLC (33 stores in Florida). In its hometown of St. Louis, Save A Lot has retained 18 stores as a test market for new innovations and programs.
Home & Road
Diversified manufacturer and industry supplier Leggett & Platt posted net income of $105.5 million for the fourth quarter ended Dec. 31, a 2% dip from net income of $108 million during the same period in 2020. Net income for the full year was $402.4 million, a 59% jump over income of $253 million during 2020. Leggett & Platt reported sales of nearly $5.1 billion, or $2.94 per share, for the year, a 19% increase over sales of $4.3 billion, or $1.86 per share, in 2020. Company sales for the fourth quarter were $1.3 billion, a 13% increase over sales of $1.2 billion in the same quarter last year. Full-year sales in the company’s bedding segment rose 20% to $2.5 billion. Annual sales for the furniture, flooring and textile segment also jumped 20% to $1.6 billion.
Canadian furniture manufacturer Decor-Rest has acquired the brands, facilities and operations of Superstyle Furniture and Trendline Furniture, increasing Decor-Rest’s manufacturing capacity by 35%. The move will expand the company’s footprint will expand to some 400,000 square feet with a workforce of approximately 450 employees. “We continually strive to eliminate the challenges faced by our valued customers and to uphold our trademark commitment to excellence,” said J.R. Marzilli, president and CEO. “The acquisitions of these two companies with similar histories and corporate cultures provide distinct advantages by being close to our home base. This ensures efficient turnaround and will help us address increased demand.”
Jewelry & Luxury
Pandora enjoyed a record year in 2021, with U.S. sales soaring, but CEO Alexander Lacik foresees an eventual “correction” to its growth in America. “We are expecting that U.S. growth will slow down a little bit further on a year-over-year comparison,” said Pandora executive vice president and chief financial officer Anders Boyer on a conference call following its financial results. The company still expects to outperform the rest of the U.S. jewelry market, which it predicted will shrink by 10%–20% in 2022. Pandora expects its U.S. sales will fall in the “single digits” over the next year.
The much-talked-about “readjustment” in skyrocketing diamond prices is not likely to happen this year, according to a new report from Bain & Co., sponsored by Antwerp World Diamond Centre. Instead, it predicts the diamond market will continue on its current strong trajectory. “The industry is in a much better financial position than it was during previous recessions,” it said. “And inventory levels of diamond jewelry and polished and rough diamonds are also among the lowest and healthiest the industry has seen in the past decade.”
For followers of freestyle skiing and fashion alike, the buzz surrounding Winter Olympian Eileen Gu at this year’s Games has come as little surprise. The 18-year-old’s gold medal performance in the big air competition thrust her into the global spotlight Tuesday, sparking such a furor in China that social media platform Weibo crashed under the weight of interest. But Gu has spent years establishing herself as both a top athlete and a hugely bankable model who appeals to brands in both Asia and the West. In 2021, as she won gold medals at the skiing World Championships and Winter X Games, Gu was also forging lucrative partnerships with fashion houses and luxury labels. Signing for IMG Models, the agency representing Bella Hadid, Kate Moss and Hailey Bieber, she has penned deals with Louis Vuitton, Victoria’s Secret and Tiffany & Co., as well as the luxury Swiss watchmaker IWC and cosmetics brand Estée Lauder, among others. In fact, the California-born athlete is among the most heavily sponsored athletes at these Olympics. She arrived in Beijing with more than 20 commercial partnerships, ranging from Beats by Dre headphones to Cadillac.
Office & Leisure
One of the country’s largest arts-and-crafts retailers had drawn a circle around the United States’ largest market but never entered it. Now it will. Hobby Lobby Stores, the Oklahoma City-based chain of more than 900 stores, will open its first New York City location next year, in Staten Island at The Crossing in Staten Island, according to its real estate broker, Katz & Associates. Hobby Lobby’s presence in other parts of the New York Metro has been expanding for years, with 10 stores in locations such as Paramus and Iselin in New Jersey and Commack and Bay Shore on Long Island. Now the pins in its expansion map are homing in on the Big Apple. “We are actively seeking locations in all of the other boroughs and expect to have more exciting news soon,” said Brian Katz, CEO of Katz & Associates. Hobby Lobby and its inventory of more than 70,000 crafting and home decor products has fashioned itself as an important anchor in power centers nationwide despite the fact that all of its stores are closed on Sundays.
For all its supply chain challenges, toy giant Hasbro posted revenue and profit gains in its consumer products business for the fourth quarter and full year fiscal 2021. Revenue in the company’s consumer products segment rose 9% for both Q4 and the full year, according to a release. In that segment, operating profit rose by a more modest 2.9% for the quarter but was up more than 30% for the fiscal year. Companywide, Hasbro revenue was up 17% for Q4 and the full fiscal year, ending 2021 with $6.4 billion in revenue. While operating profit fell in Q4 by 8%, it was up 52% for the full fiscal year. For the largest companies, the many disruptions of 2021 didn’t spell doom. It helped that much of that disruption was ultimately due to a sharp rebound in consumer demand for the year. With deep pockets, negotiating leverage and scale, big players were able to find ways to move goods across oceans and stock shelves. Back in October, Hasbro said it logged $100 million in lost sales for Q3 because of unfilled orders. By early Q4, though, the majority of those orders had already been filled.
Digital has been extending its cords into daily life since computers became popularized in the late 20th century and the first smartphones fell into shoppers’ hands. The shift to buying products online, in addition to doing everything else digitally, was only accelerated by the pandemic as stores became unviable options for many. The older Gen Z gets, the more the buying population is made up of young shoppers that remember little besides a fluid digital landscape. And yet, paper, one of the earliest human inventions, is still a critical part of society. And to Moleskine, a brand well known for its simply designed notebooks, paper has come to represent something more. “Paper is not going away, it’s not going anywhere,” CEO Daniela Riccardi said, noting that its notebooks operate as companions to digital and hold a special value to creativity. “Handwriting, hand sketching, drafting ideas, doodling is so important to the best expression of the human genius and the human creativity that nobody’s really abandoning it. I think we progressively see that it is used in tandem with digital.”
Bark, known for its Super Chewer and BarkBox subscription boxes, on Thursday announced it formed a new partnership with Walmart where its products will be available for purchase in nearly 2,800 of the mass merchant’s stores and on walmart.com. The company also added REI as a retail partner recently, building on its existing wholesale network, which includes Target, Costco, Petco, PetSmart, Amazon and others. The recent partnerships pushed Bark’s product availability to more than 33,000 physical stores across the U.S., CEO Matt Meeker said on an analyst call Thursday evening.
Technology & Internet
Consumers spent $871.03 billion online with U.S. merchants in 2021, up 14.2% year over year from $762.68 billion the prior year, according to early Digital Commerce 360 estimates. While that’s less than half of the record-breaking growth retailers experienced in a pandemic-fueled 2020, it’s noteworthy that the industry maintained gains—and even grew—compared with the earlier giant surge in ecommerce. 2021’s estimated 14.2% jump in digital revenue pales in comparison to the 31.8% spike in 2020, which currently is still the highest year-over-year increase since the U.S. Department of Commerce began recording ecommerce data two decades ago. But the significant slowdown meant growth normalized to pre-COVID-19 levels. In fact, the median online sales growth for the five years leading up to the pandemic was 14.2%, and 2019’s uptick was 14.3%. Online’s share of total retail sales has steadily been on the rise—with ecommerce penetration hitting 19.2% in 2021, Digital Commerce 360 estimates. That’s essentially flat when compared with 2020—up just 0.03 percentage points from 19.1% the year before.
By 2026, 25% of people will spend at least one hour a day in the metaverse for work, shopping, education, social and/or entertainment, according to Gartner, Inc. “Vendors are already building ways for users to replicate their lives in digital worlds,” said Marty Resnick, research vice president at Gartner. “From attending virtual classrooms to buying digital land and constructing virtual homes, these activities are currently being conducted in separate environments. Eventually, they will take place in a single environment – the metaverse – with multiple destinations across technologies and experiences.” Gartner defines a metaverse as a collective virtual shared space, created by the convergence of virtually enhanced physical and digital reality. It is persistent, providing enhanced immersive experiences, as well as device independent and accessible through any type of device, from tablets to head-mounted displays. Because no single vendor will own the metaverse, Gartner expects it to have a virtual economy enabled by digital currencies and nonfungible tokens (NFTs).
Finance & Economy
Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially. Total debt at the end of the year came to $15.6 trillion, an increase of $333 billion in the fourth quarter and just over $1 trillion for the year, according to data released from the Federal Reserve’s New York district. The quarterly rise was the biggest since 2007, and the annual gain was the largest ever in records going back to 2003. The increases came ahead of a period in which the Fed is expected to start jacking up interest rates as it looks to tamp down inflation running at its fastest pace in nearly 40 years. Markets expect the central bank to start hiking rates in March and to enact at least five increases this year totaling 1.25 percentage points.
As inflation climbs to historic highs, rising gasoline and other consumer prices are among Americans’ top concerns, a survey finds. Yet more than one-third of respondents — 35% — have no investment account or any investments at all, the survey from eMoney Advisor found, even though investing would be a good way to have their money grow faster than inflation. When asked what their biggest concerns were for 2022, the top responses included gas prices, with 43%; followed by paying bills, 42%; and inflation, 40%. Other worries included retirement savings, with 33% of respondents, and taxes, 32%.