High inflation, soaring gas prices, rising interest rates, and a bear market correction in the stock market are among several factors that currently have consumers (and economists) on edge. These concerns are starting to manifest themselves in the economic data: retail spending posted a surprise 0.3% decline in May, and the University of Michigan’s consumer sentiment index plummeted to levels not seen in 40 years in early June. While unemployment remains low and the housing market’s surge over the last two years leaves many consumers with strong personal balance sheets, many economists believe that the risk of a recession has increased substantially. Every economic report will be watched even more closely than usual over the next several months, but indications of where we are headed may also be gleaned from how people and companies are preparing for one of the most important consumption events of the year: Amazon Prime Day.
Amazon’s 2022 Prime Day shopping event will take place July 12th and 13th, marking the largest online shopping event of the year in the U.S. (Adobe Analytics estimates that Prime Day sales generated $11 billion in ecommerce sales last year). Prime Day will be held in 20 countries this year (and for the first time in Poland and Sweden), and Amazon has special marketing plans in place to support small business sellers. Over the coming days and weeks, other major retailers are also likely to announce and hold their own Prime Day sales (as they have in recent years), including Walmart, Target, Best Buy, Home Depot, Lowe’s, Kohl’s, and more.
But how might the event be different this year given the increasingly anxious economic picture? First, Amazon is likely to find that shoppers are more frugal and deal-driven this year. A May survey issued by the NPD group found that consumers bought 6% fewer items at retail in the first three months of 2022 than they did in 2021, reflecting less impulse shopping and the sting of higher prices for like goods. Further, eight in ten of those surveyed said they plan to pull back further on spending in the near future. Similarly, a recent survey by JungleScout, a platform for Amazon sellers and buyers, reported that nearly 40% of respondents are reducing their overall spending in 2022.
At the same time, Amazon, third party sellers and other retailers holding their own sales may be more motivated than usual to offer deep discounts – not only to lure increasingly skittish shoppers, but because inventories are swollen. Many retailers have seen their inventories go from too lean to too full as orders have arrived late thanks to supply chain snarls at the same time that consumers have pulled back and changed the kinds of products that they are buying. As consumption patterns revert toward pre-COVID behaviors, people are spending again on dining, travel, and entertainment, and less on products that surged in popularity during the pandemic. According to research by Citi, 11 of 18 major public retailers analyzed saw inventory growth outpace sales growth by more than 10 percentage points in the first quarter. A number of retailers have acknowledged this build up, including Gap, Abercrombie & Fitch, and Kohl’s. Most notably, Target cut its earnings outlook twice in three weeks in late May and June to reflect needed clearance and order cancelations.
Heightened anxiety among both consumers and retailers could lead to deeper and broader discounts than ever this Prime Day. In a normal economic environment, a phrase like “deeper and broader discounts than ever this Prime Day,” would just sound like a slogan from Amazon’s marketing department. This year, that phrase and what actually happens on Prime Day carries more significance. As financial journalist Dana Blankenhorn wrote last week for Yahoo!Finance, “If merchandise flies away [on Prime Day], that’s a good sign for [Amazon] stock and the American economy.” If not, the opposite may be true.
Headlines of the Week
Mondelēz to buy Clif Bar for at least $2.9B
Mondelēz International is buying Clif Bar & Company for $2.9 billion with the potential for additional payments, the company said in a statement. The acquisition of the bar maker includes the Clif, Luna and Clif Kid brands and will expand Mondelēz’s global snack bar business to more than $1 billion. The transaction is expected to close in the third quarter. The purchase by the CPG giant further expands its reach into fast-growing snacking categories while giving it a major presence in the high-growth bar business.
Franchise Group considers lowering Kohl’s bid closer to $50 a share from about $60, source says
Retail holding company Franchise Group is weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, according to a person familiar with the deal talks. Kohl’s shares closed down nearly 9% on Wednesday at $38.61 per share. They traded as low as $34.64 in late May. Franchise Group shares ended the day up about 1% at $36.08 per share. Franchise Group, owner of The Vitamin Shoppe and other retailers, is actively considering whether buying Kohl’s is the best use case of Franchise Group’s capital, said the person, who asked to remain anonymous since the conversations are private and ongoing. The company is growing concerned that the environment for certain retailers could become bleaker from here, particularly if the U.S. were to enter a recession, the person said.
Apparel & Footwear
Beyond Yoga Launching First Retail Store
Since it was founded in 2005, Beyond Yoga has only been sold online or in multibrand retail stores. Now the seven-year-old Los Angeles company is laying the groundwork to open its own Beyond Yoga stores across the country. But first, it’s starting out small. On Saturday, the athleisure company will open a tiny pop-up store in the popular shopping center The Grove in L.A. to get an idea of what products are selling well and how consumers respond to them. Later this year, Beyond Yoga will open its first full-size store in Santa Monica, with more doors to follow in California and beyond. Beyond Yoga’s expansion was made possible by Levi Strauss & Co. acquiring the brand last year for $400 million in cash. It was Levi’s first acquisition under the leadership of CEO Chip Bergh, who has been with the San Francisco-based company for 10 years.
A ‘Brand-friendly’ Marketplace at Off-price
Some brands hesitate to post on digital marketplaces, concerned their images and products aren’t properly portrayed online and get lost in a sea of other brands of inferior quality, affecting perceptions. But the Simon Property Group contends it’s created a better way. “We have taken the marketplace concept to a place where it’s much more brand-friendly,” said Neel Grover, chief executive officer of Shop Premium Outlets. “We’re more of a shop-in-shop experience rather than a pure marketplace because we really collaborate with brands.” Shop Premium Outlets, a joint venture of the Simon Property Group and the Rue Gilt Group, is an online marketplace where consumers can shop for fashion, footwear, home and other merchandise advertised at up to 70 percent off regular prices. Launched in 2019, Shop Premium Outlets can be considered an offshoot of the Simon Premium Outlets division, providing another channel for the brands and retailers in Simon’s 70 premium outlet centers to generate sales, and for Simon to capture another revenue stream.
Platinum Equity to Acquire Majority Interest in Global Intimate Apparel Company Hop Lun
Platinum Equity announced the signing of a definitive agreement to acquire a controlling stake in international fashion lingerie and swimwear company Hop Lun from company founder Erik Ryd. Financial terms were not disclosed. Founded by Mr. Ryd in 1992 and headquartered in Hong Kong, Hop Lun is one of the world’s largest designers and manufacturers of intimate apparel and is a top provider of bra solutions in the US, UK and EU. The Hop Lun investment is being led by Platinum Equity’s Singapore office. Hop Lun employs more than 30,000 people and has manufacturing operations in Bangladesh, China, Ethiopia and Indonesia. The company produces products for many of the world’s largest global retailers as well as for its own in-house brands. Mr. Ryd will retain a significant stake in Hop Lun and will continue to help lead the business going forward.
Paulette Garafalo to Become Executive Chairman of Paul Stuart
There’s a changing of the guard in the offing at Paul Stuart. Paulette Garafalo, who has been chief executive officer and president of the upscale specialty store since 2016, will relinquish that post to Trevor Shimpfky on July 1. At that time, she will assume the post of executive chairman, a role previously held by Masatoshi Nakano, an executive with Mitsui, the store’s Japan-based owner. Garafalo, a long-tenured industry executive whose past positions included CEO of both Hickey Freeman and Bally’s America, recruited Shimpfky to Paul Stuart four years ago as vice president of omni, where he was in charge of overseeing the company’s retail operations.
Athletic & Sporting Goods
Nike is the latest Western brand to leave Russia. In a statement, the clothing manufacturer said that it has “made the decision to leave the Russian marketplace” and that its “priority is to ensure we are fully supporting our employees while we responsibly scale down our operations over the coming months.” Nike also posted a note on its official Russian website telling visitors its website and mobile app will “no longer be available in this region” and that its stores “will not reopen.” It had about 100 stores in the country. Shortly after Russia’s invasion of Ukraine in March, Nike suspended online and franchised store sales in Russia. However, its non-franchised stores continued to operate. Nike said in a recent earnings call that its business in both Russia and Ukraine represents less than 1% of its total revenue. The company joins McDonald’s and Starbucks exiting Russia.
JD Sports acquires 60% stake in Rebecca Adlington’s Total Swimming Group
JD Sports has acquired a 60% share in Total Swimming Group, a company founded by former Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner in a deal that could be worth up to £15m. The acquisition was unveiled in JD Sports’ full year results, in which it confirmed profits more than double against pre-pandemic levels in a record year. JD Sports said that due to the proximity of the date of the acquisition, May 27th, and the publication of its results, it could not reveal the deal until now. The business was founded in a bid to make swimming more accessible and includes Swim!, the first multi-site operator of dedicated children’s learn to swim centres in the UK. Total Swimming generated revenue of £8.6 million in its 2021 financial year.
Cosmetics & Pharmacy
Rite Aid reports decrease in Q1 results
Driven by a reduction in COVID-19 vaccines and testing revenue, as well as store closures, Rite Aid’s retail pharmacy segment revenues decreased over the prior-year quarter. For the first quarter, the chain retailer reported a net loss of $110.2 million, or $2.03 loss per share. Adjusted net loss was $32.8 million, or 60 cents loss per share, and adjusted EBITDA of $100.1 million, or 1.7% of revenues. Revenues for the quarter were $6.01 billion compared with revenues of $6.16 billion in the prior year’s quarter. “We continue to make strides on our journey to transform Rite Aid and define the modern pharmacy. In the first quarter, we increased our non-COVID prescriptions, reduced SG&A, built momentum at Elixir and delivered solid results across the business,” said Heyward Donigan, president and CEO. “The entire Rite Aid team looks forward to advancing our pharmacists’ role in improving health outcomes.”
Walgreens partners with Buckeye Health for in-store health care
Walgreens is bringing in-store health care spaces to select stores in Ohio. The drugstore giant is expanding its “Health Corner” concept to five stores in northeast Ohio. The Walgreens division of Walgreens Boots Alliance Inc. is collaborating with Ohio-based managed health insurance company Buckeye Health Plan to bring health and wellness services to Medicaid members at the Ohio stores, beginning in summer 2022. Buckeye Health Plan is the third payer to partner with Walgreens Health to launch Walgreens Health Corner locations. With additional partners in California and New Jersey across commercial and Medicare plan patient populations respectively, Walgreens Health is now contracted to serve more than 2.27 million patients. By the end of 2022, the number of current Walgreens Health Corners will expand from 55 to approximately 100 locations, which include the additional five in Ohio.
Discounters & Department Stores
Nordstrom leans on off-price Rack for growth and profit
After reportedly mulling a spinoff of its off-price Rack business, Nordstrom is now pinning its growth ambitions on it, CEO Erik Nordstrom said during the Telsey Advisory Group fireside chat on Tuesday. That will entail a brick-and-mortar expansion at the off-price banner, which he said is more dependent on physical locations than the full-line business. In recent years, Nordstrom took steps to enlarge its Rack fleet, then hit the brakes. But after internal research showed that off-price shoppers aren’t likely to drive more than about 15 to 20 minutes to access a Rack store, the company decided to resume that effort, Nordstrom said. The company, which runs about 250 Rack stores, will open four new Rack locations next year, with plans for more, he also said.
Macy’s takes July Fourth bonanza to Web3 with free NFT drop
Macy’s is tying a nonfungible token (NFT) component into its Fourth of July celebration this year as it recognizes the growing prevalence of a new version of the internet based on blockchain known as Web3, according to a press release. The retailer is releasing 10,000 free Macy’s Fireworks NFTs in three tiers. Each showcases elements from the annual fireworks bonanza and opens access to augmented reality (AR) wearables that can be used on select social media and video platforms. The NFTs were developed on the Polygon blockchain and are available on a first-come, first-serve basis to those who register through Macy’s new Discord server. They are expected to drop on or around June 27. While the NFTs are themed for a specific holiday, Macy’s driving more users to the chat app could be a bid at fostering loyalty.
Simon tests digital search tool for mall shoppers
Simon Property Group is testing a search platform that allows shoppers to find in-stock items at participating stores within the mall before or during their visit. The digital tool, “Simon Search,” can be used via the Simon app, a mall’s website or the interactive directory located on the property, according to a company press release. The pilot involves 29 Simon properties. Participating retailers include Anthropologie, Athleta, Banana Republic, Gap, Old Navy and J.Crew, as well as Simon-owned JCPenney and Aéropostale.
Walmart, Roku partner to evolve shoppable streaming ads ‘beyond the QR code’
Walmart and Roku are piloting a new feature that aims to make shopping from TV ads more seamless, according to a press release. Roku viewers who are served Walmart ads via the streaming service can press the “OK” button on their remotes to be sent directly to a checkout screen. Orders can be purchased using Roku Pay and completed by pressing “OK” again. Walmart then sends the customer an email with their information and fulfills the order. Walmart is the exclusive retailer using the technology, which leverages Roku’s OneView ad-buying platform. Roku is also pushing its Roku Brand Studio to help marketers design and execute their campaigns. The partnership builds on Walmart’s ongoing efforts to link video and commerce together and shows Roku ramping up its own advertising bets in a tightly competitive streaming market.
Emerging Consumer Companies
Away expands into outdoor travel
Looking for growth outside of its core suitcases, Away on Wednesday introduced F.A.R — For All Routes, a new line of outdoor travel products. The line includes duffle bags, backpacks, tote bags, messenger bags, organizational cubes and pouches. The products are made of recycled materials, including nylon and polyester. The line will be available Tuesday online and in Away’s 13 stores in the U.S., the U.K. and Canada. With F.A.R, Away said it aims to refresh a “traditionally utilitarian category.” Jen Rubio, CEO and co-founder of Away, said in a statement that the brand is trying to meet evolving consumer tastes. “During the pandemic, the trend of increasing interest in outdoor travel significantly accelerated,” Rubio said. “With the insight that over half of travelers expect their post-pandemic trips to be different — including a strong desire to reconnect with nature, adventure, and the outside — we developed F.A.R to enable our customers, both new and existing, to take more types of trips with Away.”
Daily Harvest, the popular meal delivery service, has recalled a lentil-based food product after days of customers posting online about gastrointestinal issues following the French Lentil + Leek Crumbles meal. The brand is known for its influencer sponsorships and is comparable to services like Blue Apron and Hello Fresh. Daily Harvest posted a recall statement on its website and sent emails to customers asking them to throw away the lentils “out of an abundance of caution” and offering a $10 credit for every bag of the product that was purchased. “A small number of customers have reported gastrointestinal discomfort after consuming our French Lentil + Leek Crumbles,” the email said. “As included in our cooking instructions, lentils must be thoroughly cooked to an internal temperature of 165°F.”
Food & Beverage
Kellogg splitting into 3 companies
Kellogg plans to split the company into three separate, publicly traded businesses, the CPG company said in a statement. The separation is expected to be completed by the end of 2023. The company will spin off its North American cereal operation and plant-based division. The remaining business will house its snacks, international cereal, noodles and North American frozen breakfast brands. No names of the new companies have been determined. Steve Cahillane, the current CEO of Kellogg, will lead the snacking business, which was responsible for about 80% of the company’s net sales in 2021. In addition to a possible spinoff, Kellogg said it is exploring other strategic alternatives for its plant-based business anchored by the MorningStar Farms brand, including a possible sale.
Hydroponic lettuce grower raises $300 million
Little Leaf Farms, a brand of packaged lettuce grown through controlled environment agriculture, has raised $300 million in new capital, with equity financing led by The Rise Funds and debt funding from Bank of America. Founded in 2015, Little Leaf Farms uses advanced greenhouse technologies, including data analytics and hands-free automated grow systems to produce baby greens that are never treated with chemical pesticides, herbicides or fungicides. The funding will support Little Leaf Farms’ expansion of farms and distribution to increase access of its local lettuces to more than half of the nation’s population by 2026. In July, the company plans to open a new hydroponic greenhouse on 180 acres in McAdoo, Pa., expanding the brand’s retail presence by 50%, with products sold in more than 3,500 grocery stores. Little Leaf Farms said it plans to open additional greenhouses in Pennsylvania and North Carolina to serve its growing customer base.
Grocery & Restaurants
The Greene Turtle shifts to holding company and makes first acquisition
The Greene Turtle sports restaurant and bar has been recapitalized and reorganized under a new holding company that has also made its first acquisition, the company said Wednesday. The new ITA Group Holdings LLC has become the parent of The Greene Turtle Franchising Corp. and has also acquired Oklahoma City-based Clark Crew BBQ, an award-winning barbecue concept founded by pitmaster Travis Clark, who will serve as president of the brand. The full-service Clark Crew BBQ was initially developed by BBQ Holdings, the parent of Famous Dave’s, though Clark was the majority owner. As a result of the transaction, Columbia, Md.-based ITA will own The Greene Turtle and the one-unit Clark Crew BBQ, along with Founder Growth Platform, or FGP, which invests in and supports promising founders and concepts.
The first Chipotle store just filed for union recognition
The first Chipotle Mexican Grill store has filed for unionization with the National Labor Relations Board, the Maine chapter of the American Federation of Labor and Congress of Industrial Organizations announced via Twitter on Wednesday. The workers are looking to be recognized formally as an independent union, Chipotle United. This Chipotle, located in Augusta, Maine filed for a union election on the heels of employees at several other major companies, including Starbucks, Amazon, and Apple, ramping up union activity this year. According to an emailed statement from Chipotle’s chief corporate affairs officer, Laurie Schalow, the workers filed for unionization the week after raising concerns regarding workload, staffing and leadership, and the company immediately, “deployed additional resources such as hiring and training additional staff, retraining existing employees and providing new leadership.” Chipotle seems to be the first major national restaurant chain to begin unionizing in the wake of the wave of Starbucks union elections over the past six months (160+ “yes” union elections and counting).
Home & Road
Wayfair all in on omnichannel; the new AllModern store sets pace for new strategy
With Wayfair’s first physical AllModern brand store in Lynnefield, Mass., the e-commerce giant plans to use its physical retail locations as a gateway into the broader Wayfair ecosystem. According to the company, it is building on and complementing the online shopping experience with the company’s logistics infrastructure underlying both. Wayfair plans to “test and learn” from these locations and to continue to refine its offering and strategy going forward. The new AllModern store offers 10,000 square feet of space in which a 7,500-square-foot front of house features approximately 10% of AllModern’s online offerings for customers to see and experience in real life. With AllModern’s manifesto “Good design is the standard for all, not a luxury for the few,” the company is seeking to be the provider of modern design through an integrated system of sales channels, to meet the customer on their purchasing and design journey.
Lowe’s releases free metaverse assets
Lowe’s Companies Inc. is taking a slightly different approach to metaverse commerce. The home improvement giant is debuting in the metaverse by making more than 500 3D product assets available for download for free via Lowe’s Open Builder, a new asset hub designed to be available to all Web 3.0 creators. Lowe’s will also release a limited NFT wearable collection for builders in the Decentraland metaverse environment to the first 1,000 Lowe’s Open Builder hub participants who link to their MetaMask cryptocurrency wallet. The NFTs will be accessible via a free airdrop. 3D assets that will be available include such items as lighting, patio furniture, area rugs, kitchen and bath accessories, and décor accents. Assets will be usable across metaverse and non-metaverse environments, such as gaming, augmented reality, and creative design. Meanwhile, custom, wearable NFTs will focus on the outfitting of metaverse builders.
La-Z-Boy beats analyst estimates with record sales of $2.4B for fiscal 2022
In results for its fourth quarter and fiscal year ended April 30, La-Z-Boy Inc. reported total sales for the quarter increased 32% to a record $685 million (up 22% adjusting for an additional week in fiscal 2022). For fiscal year 2022, total sales increased 36% to a record $2.4 billion (up 33% adjusting for an additional week in fiscal 2022). “In what was a dynamic and volatile year marked by strong consumer demand for home furnishings, significant global supply chain challenges, and now macroeconomic and geopolitical uncertainty, La-Z-Boy Incorporated delivered record sales and operating income driven by powerful consumer brands, vast distribution, and the hard work of our passionate team,” said Melinda D. Whittington, president and CEO. For the quarter, consolidated sales increased 32% (up 22% adjusting for the additional week) to a record $685 million, driven by realized pricing and surcharge actions as well as increased volume. Retail sales increased 20% to $233 million. Joybird (online) sales increased 40% to a record $53 million. Consolidated operating margin equaled 11.5% vs. 9.6%.
Franchise Group completes sale of Badcock’s DCs
Franchise Group, Inc., owner of Top 100 retailers American Freight and Badcock Home Furniture & more, completed the sale-leaseback of all three W.S. Badcock Corp. distribution centers. Affiliates of Oak Street Real Estate Capital, a division of Blue Owl Capital, purchased the DCs for approximately $150 million. “Oak Street has proven to be a trustworthy partner throughout our sale leaseback process,” said Brian Kahn, president and CEO of Franchise Group. “We are pleased to close the sale of the Badcock distribution centers and retire the balance of our acquisition term loan with the cash proceeds.” FRG expects to complete the sale-leaseback of the corporate headquarters by the end of the second quarter.
Jewelry & Luxury
Lab-Grown Diamonds Can’t Fill Melee Shortage, Panel Says
While the natural diamond business is currently having issues sourcing melee, a JCK Las Vegas panel said the industry shouldn’t expect lab-created diamond producers to fill the gap. That’s because growers that use chemical vapor deposition (CVD) technology have found it more economical to produce larger stones than smaller ones, participants said during the seminar, “The State of the Lab-Grown Diamond Industry,” held June 9 at The Venetian. “If you grow [rough to] 3 millimeters in depth, it can yield [several] half-carat round brilliant diamonds,” said John Pollard, senior director of education for International Gemological Institute (IGI). “But if you grow it to 6 millimeters in depth, you can yield a 4 ct. diamond. And it takes less than twice as long to get it to 6 millimeters.
Swarovski’s New CEO Comes From Outside Family
Swarovski has named Alexis Nasard as the company’s first external CEO, part of its transition from a family-managed to a family-owned business. Nasard, who will take over on July 4, is the first person from outside the Swarovski family to hold this role in the company’s 127-year history. His predecessor, Michele Molon, was also a nonfamily member, though Molon held the CEO title only on an interim basis. Molon will continue at the company in the newly created role of chief commercial officer. Since January 2022, Nasard has served as a consultant for McKinsey & Co. From December 2020 to June 2021, he was CEO of Kantar, the London-based data and analytics company. Prior to that, he served for six years as CEO of Bata Group, the Lucerne, Switzerland–based shoe company,
Jewelry Sales Rose 22% In May, Mastercard Says
Don’t put away that cake; the party may not be over yet. U.S. jewelry sales in May leapt 22% over the prior year, according to Mastercard’s SpendingPulse, its sales measurement service. Overall jewelry sales in May grew 65% over pre-pandemic May 2019, it said. Both jewelry and luxury “outperform[ed]” other categories in May, Mastercard said. In fact, in terms of annual sales growth, jewelry was the best-performing category tracked by SpendingPulse in May. The service found that, overall, U.S. retail sales rose 10.5% in May. The luxury category (excluding jewelry) posted a healthy 20% increase, it said. As good as those numbers are, they weren’t as strong as SpendingPulse’s jewelry numbers for April, when it found that sales rose 33%, but it beat those for March, which showed an 11.9% increase.
Rough Diamond Sales Rise Again for De Beers
De Beers Group’s rough diamond sales jumped 36 percent year-over-year in June, with the company attributing the increase to continued demand for diamond jewelry in the U.S. market. De Beers reported Wednesday that sales of rough diamonds to sightholders and auction clients totaled $650 million in its fifth sales cycle of the year (June 6-21), compared with $477 million in roughly the same period last year. Month-over-month, sales are up 8 percent from $604 million. Year-to-date, De Beers’ rough diamond sales have totaled $3.13 billion and are now pacing 24 percent ahead of last year ($2.53 billion), up from 21 percent last month.
Office & Leisure
Woof Gang Bakery & Grooming Acquired by Investment Firm
Garnett Station Partners, a New York-based principal investment firm, has acquired Woof Gang Bakery & Grooming. Founded in 2007, by Paul and Cara Allen, Woof Gang is the leading pet services and specialty retail franchisor with more than 200 locations open or under development across 18 states. “With a $50,000 loan, Cara and I opened our first store in 2007. Over the next 15 years, we grew Woof Gang with our team members, franchise owners and no outside capital,” said Paul Allen, co-owner of Woof Gang. “Today, with over 200 stores open or under development and $125-plus million of run rate system sales, Woof Gang is ready for new and exciting leadership,” Allen added. Financial terms of the deal were not disclosed. “We believe a remarkable opportunity exists to grow the brand and we are extremely excited to provide both growth capital and operational resources necessary to turbo charge the Company’s growth,” added Alex Macedo, partner at Garnett Station.
After much mulling, Office Depot owner rejects both sale and split
Nearly a year and a half of talks, plans and exploring its options, ODP Corp. has decided to keep itself whole and independent. The company, who owns the Office Depot and OfficeMax retail banners, rejected acquisition bids, which included offers from rival Staples as well as an unnamed suitor. ODP also rejected a spinoff of its consumer business, which would include its retail arm. It had been working toward a separation for more than a year, but board chair Joseph Vassalluzzo cited macroeconomic factors in saying “now is not the right time to further pursue separating the Company.” ODP seemed to leave open the possibility for a separation down the road, saying that it opted not to continue the process “at this time.” Moreover, the company has restructured under a holding company structure, with its operations cordoned off into four separate LLCs for its retail, B2B sales, distribution and digital platform technology units.
Why limited-time brand activations rule in Roblox — for now
Brands have flooded into Roblox over the past year, working with both the metaverse platform and its creator community to launch custom-built branded spaces. So far, the Roblox brand activations that have garnered the most press are persistent, always-on experiences such as Vans World and Gucci Town. But while this type of activation is gradually picking up steam, limited-time, event-based Roblox activations are currently far more popular among both users and brands. For brands looking to burnish their metaverse credentials, always-on spaces are perhaps the best expression of a true metaverse. But persistent Roblox worlds are also a much heavier lift for brands, requiring them to work with Roblox creators on an ongoing basis and dedicate internal resources to consistently refreshing the space with updated content. Limited time activations are a much lighter lift from the brand side. They allow for experimentation and quick pivots, and they offer a point of entry that can transition to always-on at a later time.
Technology & Internet
Meta and other tech giants form metaverse standards body, without Apple
Meta, Microsoft and other tech giants racing to build the emerging metaverse concept have formed a group to foster development of industry standards that would make the companies’ nascent digital worlds compatible with each other. Participants in the Metaverse Standards Forum include many of the biggest companies working in the space, from chip makers to gaming companies, as well as established standards-setting bodies like the World Wide Web Consortium (W3C), the group said in a statement announcing its creation on Tuesday. Conspicuously missing from the member list for now however is Apple, which analysts expect to become a dominant player in the metaverse race once it introduces a mixed reality headset this year or next. Gaming companies Roblox and Niantic also were not included among the forum’s participants, nor were emerging crypto-based metaverse platforms like The Sandbox or Decentraland. Neil Trevett, an executive at chip maker Nvidia who is chairing the Metaverse Standards Forum, said in a statement to Reuters that any company is welcome to join the group, including participants from the crypto world.
EBay Acquires NFT Marketplace, KnownOrigin
EBay, Inc. has acquired KnownOrigin, the non-fungible token (NFT) marketplace. The company said the acquisition is an important step in its “tech-led reimagination.” KnownOrigin, founded in 2018 in Manchester, UK, enables artists and collectors to create, buy and resell NFTs via blockchain-support transactions. “EBay is the first stop for people across the globe who are searching for that perfect, hard-to-find or a unique addition to their collection and, with this acquisition, we will remain a leading site as our community is increasingly adding digital collectibles,” said Jamie Iannone, CEO, eBay. “KnownOrigin has built up an impressive, passionate and loyal group of artists and collectors, making them a perfect addition to our community of sellers and buyers. We look forward to welcoming these innovators as they join the eBay community.” EBay began allowing the buying and selling of NFTs in May 2021.
Finance & Economy
Retailers Nudge Consumers With Cash to Try Pickup Instead of Delivery
In a trend that resembles the popular 1970s “Try it, You’ll Like It” ad for Alka Seltzer, U.S. retailers are starting to incentivize customers with cash to get them to try digital shopping features like curbside pickup and buy online, pickup in store (BOPIS). It’s a move that’s not only aimed at nurturing new consumer habits and loyalty through convenience but one that is also designed to save retailers money on spiraling delivery costs at a time of record fuel prices and rising labor costs.
Mortgage rates rise again, pricing more buyers out of the housing market
Mortgage rates continue to climb as the Federal Reserve seeks to tame unwieldy inflation. The 30-year fixed-rate mortgage averaged 5.81% in the week ending June 23, edging up from 5.78% the week before, according to Freddie Mac. This time last year, rates averaged 3.02%, and the last time rates were this high was in the winter of 2008. “Fixed mortgage rates have increased by more than two full percentage points since the beginning of the year,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “The combination of rising rates and high home prices is the likely driver of recent declines in existing home sales. However, in reality, many potential homebuyers are still interested in purchasing a home, keeping the market competitive but leveling off the last two years of red-hot activity.” Despite the jumps, mortgage rates remain well below historical highs notched during the past 40 years — notably the record 18.63% average rate in October 1981.
