Since the 1980s, retailers have been investing in private brands – brands owned by and thus sold exclusively at a particular retailer. Once considered second-tier products offering cheaper versions of basic merchandise, today’s private brands sit side-by-side with national brands and are merchandized so customers may not realize they are store brands. In some cases, retailers dedicate internal teams to design, develop and source products. In other cases, retailers contract with industry suppliers to do all the work but package the products under a private brand instead of the vendor’s brand. The motivation for the retailer is two-fold. First, private brands offer differentiation because these products are not available elsewhere. Second, the retailer captures expanded margin; while private brand products typically sell at a lower price than equivalent nationally branded products, the retailer’s costs are reduced even more – mostly through minimal marketing expenses – so it keeps a higher percentage of the item’s price. Because customers cannot find the private brands anywhere else, the retailer can set and maintain pricing. In theory, private brands are a holy grail of merchandising and finance.
However, in the past couple of weeks, two key retailers — Amazon and Bed Bath & Beyond — have reversed course to downsize what had been large private brand initiatives. While CEO of Amazon, Jeff Bezos had aspired for 10% of Amazon sales to come from private brands by 2022. Amazon worked diligently to broaden and diversify its private brand offerings. A frequent target of political ire, Amazon’s private brand initiative drew Congressional interest due to a potential conflict of interest with its community of vendors and brands that were now competing against Amazon’s own brands on Amazon’s marketplace. In March, the House of Representatives’ Judiciary Committee referred to the Department of Justice questions about whether Amazon illegally uses data it receives from third-party brands and whether Amazon favors its own brands in its search algorithms.
For all the media and political hype, Amazon’s hundreds of thousands of products across dozens of private brands have not proven potent with consumers. E-commerce market research firm Marketplace Pulse found that Amazon’s private brand sales are close to 1% of its total, with apparel garnering the largest penetration but still below 10%. Last week, the Wall Street Journal reported that Amazon is “drastically” scaling back its private brand business due to underperformance and to alleviate regulatory pressure.
In 2019, Bed Bath & Beyond believed it had a solution to recent challenges. Same-store sales had been flat for a few years, and activist investors were clamoring for change. The board replaced its veteran CEO and, after a multi-month search, hired Mark Tritton. Mr. Tritton had been responsible for success with private brands at Nordstrom and Target and was tasked with doing the same for Bed Bath & Beyond. The cornerstone of Mr. Tritton’s strategy was the introduction of at least ten new private brands to triple sales penetration from 10% to 30%. From March 2021 to May 2022, the company debuted nine new private brands; meanwhile sales fell over 25% during his tenure. Two weeks ago, Mr. Tritton was replaced as CEO on an interim basis by Sue Gove “to focus on reversing recent results”. One of Ms. Gove’s first communications was announcing an upcoming vendor day so the company can begin to reintroduce more national brands. Surely Bed Bath & Beyond has faced additional challenges over the past 30 months, but the rollout and response to its private brands strategy was disastrous.
Both Amazon and Bed Bath & Beyond overplayed private brand strategies and executed them poorly. Both believed their retail organizations could hastily create brands with design, quality and value attributes to compete with well-known national brands supported by advertising campaigns and promoted by celebrities and influencers. However, when making their purchasing decisions, customers are not holding Amazon and Bed Bath & Beyond’s private brands as sufficiently unique, engaging and trustworthy to pledge their loyalty and wallets. Despite recent stumbles in their pursuits of the private brands ideal, Amazon will continue refining its approach and hopefully Bed Bath & Beyond will have enough runway to do so too.
Apparel & Footwear
Gap Inc. president and CEO Sonia Syngal is leaving the apparel retailer effective immediately after just a little over two years at the helm. Bob Martin, Gap Inc. executive chairman and former president and CEO of Walmart International, will serve as interim president and CEO until a replacement is found, according to an announcement from the company. The company also announced that Horacio Barbeito, former president and CEO of Walmart Canada, will join the company as CEO of its Old Navy brand starting Aug. 1. In the last year, things soured at the parent company, which also oversees the Gap, Banana Republic, and Athleta brands. Battered by declining sales and supply chain struggles, the company’s stock saw a steady decline following a nearly $36-per-share peak in May 2021. These problems were only exacerbated at Old Navy, the company’s top revenue generator. The failed expansion of the brand’s plus-size offerings led to excessive inventories in extra small and extra large sizes and the departure of CEO Nancy Green in April. In the same announcement, Gap said it expects net sales to decline in the high-single-digit range and to incur $50 million in air freight expenses in the second quarter. The company also said it is taking an “aggressive approach” to promotional activities, which it expects will negatively impact its gross margin.
Months after Crocs acquired it, the casual shoe brand Heydude launched what it called a “fully revamped brand identity to reach new and existing fans.” The refresh includes new logos, fonts and color schemes, along with messaging and marketing meant to infuse “quirkiness and levity as relief from an all-too-often heavy world” that includes the new tagline “Good to Go-To.” Crocs said the updates to the brand came after a dozen focus groups in the U.S., a consumer study and online forums that engaged “hundreds” of people. Crocs announced the $2.5 billion acquisition of Heydude last December and closed the deal in February. The clog giant framed the merger as a way to greatly expand its addressable market, after years of designing every sort of clog imaginable, from ranch dressing and fried chicken themed Crocs to stiletto-heeled Crocs. With Heydude in the fold, Crocs ratcheted up its revenue expectations for the coming years. The company expects Heydude to become a $1 billion brand by 2024.
Designer Brands Inc. is making progress with its plan to lean into private and owned brands to drive growth. The DSW parent company announced an investment in Le Tigre 360 Global, an American apparel brand known for its classic polo shirt. Via the investment, DBI has also entered licensing agreement to exclusively design and produce Le Tigre footwear that will be sold through DSW and The Shoe Company sales channels and through some wholesale accounts. The announcement comes after DBI announced in April a goal for sales from owned brands and Camuto national owned and licensed brands to double from 19% of the company’s revenue to almost one-third by 2026. In 2018, DBI acquired Camuto Group, which designs and develops the Vince Camuto brand and licenses footwear for Jessica Simpson and Lucky Brand. DBI’s current portfolio of brands with licensing deals also includes Reebok, Hush Puppies, Crown Vintage, JLO Jennifer Lopez, Mix No. 6 and Kelly & Katie. Infinity Brands and Hilco Inc. have owned and managed the Le Tigre in a joint venture since 2017, when it acquired the brand from Kenneth Cole.
Victoria’s Secret & Co said on Tuesday it had cut about 160 management roles, or 5% of its home office staff, and hired a former Amazon executive as part of a reorganization following its separation from L Brands Inc last year. The company also named executives to three key leadership roles reporting to Chief Executive Officer Martin Waters. Amy Hauk, who has been heading the company’s PINK brand since 2018, will take on the additional role of chief executive of the Victoria’s Secret division, the company said. The lingerie brand’s Beauty business will be integrated into Hauk’s organization, the company said in an emailed statement. Greg Unis has been named chief growth officer after leading the Victoria’s Secret and PINK Beauty businesses since 2016. The company also appointed Christine Rupp as chief customer officer. She joins from Albertsons Cos Inc and has previously worked at Microsoft Corp and Amazon.com Inc, where she led Fulfillment by Amazon and launched Amazon Prime Day, Victoria’s Secret said. The company said it expected to record a charge of about $30 million in the second quarter as part of the initiative, and estimated $40 million in cost reductions on an annualized basis from the third quarter. As part of the reorganization, L Brands changed its name to Bath & Body Works.
First Eagle Alternative Credit, the alternative credit platform of First Eagle Investments, provided a $20 million term loan to Nicole Miller, a global fashion and lifestyle brand. The term loan will help finance the company’s initiatives to partner with its licensees to build the brand’s e-commerce presence and develop strategic relationships. The global, eponymous fashion and lifestyle brand was founded by Nicole Miller in 1982 and has become one of the premier names in American fashion. In addition to its womenswear collections, the company has partnered with leading licensees in numerous categories, including handbags, shoes, jewelry, fragrance and beauty, and home. Gordon Brothers made a majority investment in Nicole Miller earlier this year to help the already highly successful enterprise drive further growth.
Athletic & Sporting Goods
JDH Capital Company (“JDH Capital”) announced its acquisition of Pure Archery Group, a leading manufacturer of premium archery products. Pure Archery Group, known as Bowtech until 2020, owns and operates several leading archery brands including Bowtech, Diamond, Excalibur, Black Gold, TightSpot, RipCord, and Octane. Headquartered in Eugene, Oregon, the company is focused on the design and manufacturing of durable, accurate, high-performance bows, crossbows and archery accessories distributed worldwide. Current production locations span prominent sporting goods hubs, including Oregon, Montana, Michigan and Ontario (Canada). JDH Capital is a private investment firm based in Houston, Texas and was established in 2017.
Fanatics is entering into a long-term partnership with Nike to manufacture college sports fan apparel. Starting mid-2024, Fanatics will begin manufacturing most of Nike’s fan apparel for many of its most prominent college partners. Fanatics will manufacture fan apparel, replica jerseys, sideline apparel, headwear, and women’s fan gear, among other items. The deal includes a select group of Nike’s college and university partners, including Ohio State, Georgia, Clemson, Oregon, Oklahoma, and Penn State, among likely participants, sources told CNBC.
Cosmetics & Pharmacy
Over the past year, 88% of Americans have practiced self-care, and one-third have increased their self-care behaviors. To investigate these growth patterns in the health, fitness, and wellness market, StyleSeat, the online destination for beauty and wellness professionals and clients, surveyed 1,421 Americans based on their personal care buying habits to fulfill said personal care routines. Across the survey, 46% of respondents identified as women, 46% as men, and 8% as non-binary, with the average age of respondents being 37. Here’s what the study found: Americans spend an average of $110 monthly on beauty, fitness, and wellness. Americans spend the most on three things: vitamins and supplements, haircuts, and skincare. 60% of respondents said they know someone who spends more money on beauty, fitness, and wellness than they can afford. 71% of respondents do not plan to cut back on wellness spending despite inflation. 38% said hair services were most valuable to them, 34% chose gym or studio memberships, and 28% chose mental health services.
Smashbox, the Los Angeles-born cosmetics brand best known for its primers, is pulling out of the U.K. and Ireland, a key beauty market. “An accumulation of challenges has sadly been more than our business can withstand and we’ve had to make the heart-breaking decision to no longer accept orders in the U.K. and Ireland beginning September 29, 2022. We’ve loved being a part of your creativity and expression and we’re forever grateful,” it posted on Twitter Wednesday. A spokesperson for owner The Estée Lauder Cos. added that over recent years, Smashbox’s UK sales have been “impacted by changes in the brand’s retail space and location, combined with competitive challenges,” but stressed that it will continue to sell in various other markets around the world. Over the course of the pandemic, Lauder has scaled back or closed multiple brands, including Deciem, which narrowed its brand assortment, and Becca and Rodin Olio Lusso, which were both shut down.
Discounters & Department Stores
Walmart will purchase 4,500 all-electric delivery vehicles from electric vehicle manufacturer Canoo to fulfill e-commerce orders in 2023, the companies announced Tuesday. Walmart has the option to purchase up to 10,000 units from Canoo and will be the first company to receive Canoo’s Lifestyle Delivery Vehicle. The Lifestyle Delivery Vehicles will be driven by Walmart employees, will deliver online orders such as groceries and could potentially be used for Walmart’s white-label delivery service GoLocal. Walmart and Canoo said some “advanced deliveries” will begin in the coming weeks in the Dallas-Fort Worth area to refine and finalize vehicle configuration. Canoo expects to start production on the Lifestyle Delivery Vehicles in Q4 of this year.
Dollar General CEO Todd Vasos plans to retire from his role on Nov. 1 after roughly 14 years with the retailer, according to a press release issued Tuesday. The discounter is tapping Chief Operations Officer Jeffery Owen to succeed Vasos as Dollar General’s chief on the latter’s retirement date and take on a board seat. Vasos will stay on as a senior adviser through April 1 next year, when he is set to retire from the company. Dollar General expects Vasos to sign a two-year consulting agreement after retirement.
Excess inventory has racked up in many retailers’ warehouses and stores. But shoppers are still paying more as they refresh the closet. Apparel prices rose 0.8% in June compared to May, and 5.2% year over year, according to the Bureau of Labor Statistics’ consumer price index Wednesday. Overall, the inflation gauge, which includes everyday items such as food and gas, rose a higher-than-expected 9.1% from a year earlier. Apparel trends are another mixed metric as economists and industry-watchers try to gauge the strength of the consumer and U.S. economy. In recent weeks, many prominent companies and investors have warned of a recession. Retailers, including Target, Gap and Walmart, announced plans for more markdowns to get rid of unwanted merchandise. The moves were expected to be deflationary.
Emerging Consumer Companies
Sustainability conscious and budget minded brides have begun to consider alternatives to traditional fresh wedding florals, which are not only costly, but also wilt quickly. For these brides, Something Borrowed Blooms offers rentals on reusable silk floral bouquets. Since its founding in 2015, Something Borrowed Blooms has provided silk flower collections for more than 15,000 weddings. The Louisiana-based company grew 90% in 2021 and is on track to grow 120% in 2022. “We founded this company on the foundation of cost savings, offering our couples savings upwards of 70% compared to fresh flowers,” said Lauren Bercier, the CEO and co-founder of the company. “In doing so, we’ve created a business model that’s truly unique and providing more value than ever before in this new world we’re living in.”
Hoping to capitalize on the rise of social commerce, the luxury shopping platform Verishop raised $40 million in a Series B funding round led by Lion Capital. The round also included participation from existing investors. The company plans to use the financing to improve its products and platform capabilities with a focus on supporting independent and up-and-coming brands with their online businesses. The company is rolling out a data program that gives brands a detailed analysis of product performance to improve their sales figures. The platform is also developing AI image retouching tools and a streamlined system for returns
Food & Beverage
Flowers Foods invested an undisclosed amount in gluten-free and grain-free bread company Base Culture. The investment will help Base Culture increase its distribution, scale and marketing, as well as bolster its manufacturing capabilities. Flowers joins an existing investor group led by Emil Capital Partners. Base Culture was started in 2012 by Jordann Windschauer who was looking for snacks that aligned with a paleo lifestyle. The company’s manufacturing facility opened in 2017, and its products are available in nearly 15,000 retail locations today. Base Culture makes seven varieties of gluten-and-grain free, paleo and keto-certified sliced bread, as well as buns, brownies, sweet bread, almond butter and baked breakfast squares.
Tyson invests $90M to expand Mississippi plant
Tyson Foods completed a $90 million expansion of its Forest, Mississippi, plant that will increase its chicken processing capacity amid heightened demand for protein. The company said the project will add more than 320 jobs to its workforce. The expansion adds automation technology and manufacturing capacity, specifically designed to process more chicken for food service and retailers. Tyson said it will improve the labor conditions at its Forest plant, which employed 1,250 workers during its 2021 fiscal year.
Wholesale distributor Sysco filed a lawsuit in Texas against the four largest beef providers — Cargill, JBS, Tyson Foods and National Beef Packing — for working together to drive up the price of beef. In the lawsuit, Sysco charged that the companies, which control up to 85% of the beef market, enacted a “scheme to artificially constrain the supply of beef entering the domestic supply chain” since at least 2015. Sysco, the largest distributor of wholesale food in the U.S., said the beef giants colluded to limit the number of cattle slaughtered in an effort to pay ranchers less while simultaneously boosting their own profits as a result of “artificially” inflated prices.
Grocery & Restaurants
McDonald’s Corp. has agreed to buy out one of its longtime franchise groups, the Caspers Company of Tampa, Fla., the companies confirmed Tuesday. Blake Casper and his brother-in-law, Robert “Robby” Adams, the third generation of the company that has operated McDonald’s since 1958, plan to retire after the sale of 60 restaurants in the Tampa and Jacksonville, Fla., markets on Oct. 1, the Chicago-based parent company said in a field office message viewed by Nation’s Restaurant News. “Fritz Casper opened the first McDonald’s in Florida on South Dale Mabry Highway after meeting Ray Kroc in a men’s clothing store outside of Chicago,” the Caspers Company said in a statement. “Three generations of Caspers have ‘Shined the Arches,’ serving millions of happy meals along the way.”
Specialty grocer The Fresh Market is canceling its initial public offering a year after submitting its IPO filing. The Fresh Market Holdings Inc. on Wednesday requested that the Securities and Exchange Commission withdraw its registration statements and amendments for an IPO. In the July 13 SEC filing, the Greensboro, N.C.-based retailer also indicated the request effectively scraps its IPO effort. The IPO withdrawal, first reported by Reuters, comes two months after Cencosud, a leading retail group based in Chile, said it had purchased 67% of The Fresh Market in a $676 million deal with Apollo Global Management, whose affiliates manage the grocery chain’s controlling fund. Overall, The Fresh Market operates 160 stores in 22 states, with the majority in Florida. The retailer generated revenue of $1.93 billion in 2021.
Meritage Hospitality Group Inc. has acquired six Wendy’s restaurants in the Jacksonville, Fla., as it works to expand portfolio, the company said Thursday. The Grand Rapids, Mich.-based franchise group said it would fund the acquisition with cash on hand and expected the six restaurants to add $11 million in annual sales. Terms were not disclosed. “The acquisition of the six additional Jacksonville area restaurants is consistent with the company’s five-year growth plan to expand its operating base to 400 Wendy’s restaurants,” said Robert Schermer Jr., Meritage’s CEO, in a statement. “Currently operating 54 Wendy’s restaurants in northern Florida, we will immediately integrate the acquired restaurants into our operating and accounting platforms,” Schermer said. “The newly acquired restaurants will be added to our Wendy’s remodeling schedule, which is designed to modernize the restaurants and enhance the overall guest experience.”
Home & Road
Pattern Brands is continuing to build out its portfolio of home brands with its latest acquisitions of Yield and Poketo. The acquisition follows a $60 million funding round last year, which the company said would be used exclusively to purchase DTC brands in the home space. At the time of the announced funding last year, Pattern acquired GIR (“Get it Right”) and on Tuesday said it has been able to increase the brand’s profits by over 100% since then. The company has experience in growing brands within the DTC space, operating as branding agency Gin Lane prior to Pattern’s launch. Gin Lane helped launch several retailers, including Harry’s, Hims, AYR and Stadium Goods. But the company’s model of scaling brands under one operating umbrella is becoming increasingly popular. Very Great, for example, operates brands like W&P, Wild One and Courant under it. Win Brands Group operates Homesick, QALO, Gravity and Love Your Melon. And Harry’s Inc. has been adding to its portfolio of brands, most recently with the acquisition of Lumē. DTC holding companies have become attractive to brands looking to scale because they provide access to shared resources around operations, technology and marketing.
Whether due to higher prices or a few more customers coming into stores, furniture and home furnishings bounced back in June, according to advance estimates from the Department of Commerce. It’s a reversal for the category, and retail as a whole, after May’s report saw declines across several categories. For the month, the home furnishings retail category posted adjusted sales of $12.382 billion, up 1.4% from May’s adjusted $12.209 billion. Year-over-year, furniture and home furnishings sales were up 4.6% against June 2021’s $11.837 billion. Over the past six months, unadjusted sales for furniture and home furnishings came in at $70.318 billion, up 2.9% compared with the same six-month span from red-hot 2021. The complete retail snapshot shows adjusted June sales at $680.591 billion, up a point from May’s $673.852 billion and up sharply, 8.4% to be exact, from June 2021’s $627.756 in adjusted sales.
Jewelry & Luxury
Confounding the naysayers, the jewelry industry’s hot streak kept up in June—at least according to the latest data compiled by Mastercard SpendingPulse. The sales-measurement service found jewelry sales grew 16.2% in June 2022 over the year before—a healthy double-digit increase, if less than the 22% gain the service recorded in May. Overall jewelry sales for June 2022 rose a whopping 86% over pre-pandemic June 2019—the biggest three-year leap of any category measured by SpendingPulse. Once again, jewelry sales outpaced sales in the larger luxury category (excluding jewelry), which posted a 4% increase, as well as overall retail sales, which showed a still-healthy 9.5% gain for the month. Overall e-commerce sales grew 1.1%, while in-store sales rose 11.7%.
Rocksbox, the jewelry subscription business Signet acquired last spring, just launched a bridal jewelry membership. Called Bridal by Rocksbox, it offers boxes of slightly more expensive jewelry curated for brides and members of the bridal party to wear at the wedding and associated events, like wedding showers and bachelorette parties. Brands like Kendra Scott, Kate Spade New York, Lele Sadoughi, and Perry Street are included in the bridal boxes. The new service works just like Rocksbox’s regular subscription model.
Luxury handbag companies have been making several important mergers and acquisitions to expand their operations in both international and domestic market. Exposure to social media, urbanization, and increasing preference toward investments on personal luxury goods, which include bags as well, are some of the factors that have propelled the market growth. According to a new report published by Allied Market Research titled, “Luxury Handbag Market by Type and Distribution Channel: Global Opportunity Analysis and Industry Forecast, 2019-2026,” the luxury handbag market size was valued at $58.3 billion in 2018 and is expected to reach $89.9 billion by 2026, registering a CAGR of 5.6% from 2019 to 2026.
Porsche is pitching its initial public offering as a chance to invest in a company that combines the best of carmaking rivals like Ferrari NV and luxury brands such as Louis Vuitton. The problem is, not all investors are buying it. In early meetings with portfolio managers, the Volkswagen AG unit compared itself to the French handbag maker and Cartier owner Richemont as businesses that generate healthy profits and significant sales volumes, according to people familiar with the matter. It also cited Ferrari, which boasts industry-leading margins but ships only a fraction of the more than 300,000 cars Porsche makes every year.
Office & Leisure
It’s been a busy summer so far for Leslie’s. The nation’s largest pool and spa care retailer said it opened 11 stores this summer and expanded its retail presence into new markets. The new locations, bring Leslie’s total store count to more than 970 stores across 39 states. “Pool care is complex, but no matter a customer’s need or location, we deliver a solution,” said Leslie’s CEO Mike Egeck. “Our growing network of physical stores and digital properties are fully integrated, providing customers with maximum flexibility to shop however, wherever and whenever they want.” Leslie’s stores offer an extensive curated product assortment, as well as free in-store AccuBlue water testing, free in-store pool cleaner inspections and labor and a free Pool Perks rewards program and nationwide service.
Dufry AG, the world’s largest duty-free operator, has agreed to acquire Autogrill SpA, the motorway and airport catering company, from the Benetton family. According to Dufry, in a statement released Monday, the Benetton family holding company Edizione Srl will transfer its 50.3 percent share in Autogrill to Dufry, with an exchange ratio that’s set at 0.158 new Dufry shares for every Autogrill share. Following the transfer, Edizione will hold a 20 percent to 25 percent stake in Dufry. Dufry will then initiate a mandatory tender offer for the outstanding shares. It is to offer 0.158 new Dufry shares for every Autogrill share to shareholders, or a cash alternative that is equal to 6.33 euros per Autogrill share. The merged group will have sales of 13.6 billion Swiss francs, or $13.86 billion, and earnings before interests, taxes, depreciation amortization of 1.4 billion Swiss francs, Dufry said. Duty-free operators were the hardest-hit retailers during the coronavirus pandemic, as travel ground to a halt.
Unity today announced that it’s entered into an agreement with IronSource. The all-stock transaction values IronSource at about $4.4 billion and is expected to close on Q4 2022. Unity shareholders will own 73.5% of the combined company, while IronSource shareholders will own 26.5%. Following the merger, Unity’s game engine, ad platform and gaming services will merge with IronSource’s mediation, publishing and monetization solutions. According to Unity, this will “[give] developers a seamless and interoperable way to create, grow, and monetize their creations across their lifecycle.” In more immediate terms, IronSource’s mediation will “leverage the combined strength of the two companies’ ad networks to deliver increased user reach and data scale and provide an increased return on ad spend to advertisers.”
Animoca Brands said it completed the second phase of a $75.3 million funding round from earlier this year that valued the company at $5.9 billion. The blockchain game company will use the funds to invest in more games and advance the vision for the “open metaverse.” The current raise is the second tranche of the funding previously announced in January. That round was extended to accommodate due diligence processes. Investors in the current tranche included Liberty City Ventures, Kingsway Capital, Alpha Wave Ventures, 10T, SG Spring Limited Partnership Fund, Generation Highway Ltd, Cosmic Summit Investments Limited, and others.
Technology & Internet
Pinterest shares jumped over 20% in extended trading on Thursday after The Wall Street Journal reported that Elliott Management has accumulated a stake of over 9% in the company. Elliott, known for its activist investments, has been discussing unspecified matters with Pinterest for the past several weeks and told the company it’s now the largest shareholder, the Journal reported, citing unnamed sources. Prior to the after-hours pop, Pinterest shares plummeted 75% in the past year as the social media company struggled to retain users. While revenue grew 52% in 2021 to over $2.5 billion, the number of global monthly active users fell 6% to 431 million, a worrying sign for investors concerned that the app’s popularity is dwindling. Co-founder Ben Silbermann stepped down from the CEO role in late June. His replacement, Bill Ready, is a former Google commerce executive, a sign the company is poised to step up investments in developing its e-commerce business.
Amazon shoppers bought more than 300 million items during this year’s Prime Day sale, up from roughly 250 million in 2021, making it the biggest Prime Day event in Amazon’s history, the company announced Thursday. The company, which didn’t disclose total sales from the two-day event, said Prime members worldwide purchased more than 100,000 items per minute during the discount bonanza. The top-selling categories in the U.S. were consumer electronics, home goods and Amazon-branded devices. The event, which ran Tuesday and Wednesday, comes at a time when consumers’ wallets are being squeezed by soaring inflation. This year, shoppers appeared to reach for necessities over indulgences. Still, the prospect of higher prices didn’t seem to dampen consumer enthusiasm around Prime Day and other discount events run by competing retailers such as Best Buy and Target. Total online retail sales in the U.S. during Amazon’s Prime Day event surpassed $11.9 billion. That’s 8.5% higher than overall e-commerce transactions generated during last year’s event, according to Adobe Analytics data.
Finance & Economy
Consumer spending held up during June’s inflation surge, with retail sales rising slightly more than expected for the month amid rising prices across most categories, the Commerce Department reported. Unlike many other government numbers, the retail figures are not adjusted for inflation, which rose 1.3% during the month, indicating that real sales were slightly negative. Rising costs for food and gasoline in particular helped propel the increase, which was nonetheless broad-based against the various metrics in the report. The retail report shows that consumers have been mostly resilient in the face of the highest inflation rate since November 1981.
Inflation hit hard at the wholesale level in June, as producer prices surged a near-record amount from a year ago due to a big jump in energy costs, the Bureau of Labor Statistics reported. The producer price index, a measure of the prices received for final demand products, increased 11.3% from a year ago, the highest reading since the record 11.6% in March. Of that gain, almost 90% came from a 10% increase in final demand energy costs as prices for oil, natural gas and other products soared during the month. Excluding energy, as well as food and trade service prices, so-called core PPI rose 6.4% on a 12-month basis, a deceleration from the 6.8% gain in May.
In-store retail spend was up 11.7% in June, compared to a year ago, and overall U.S. consumer retail spend, not counting auto sales, increased 9.5% year-over-year in June. Those are top findings from a Mastercard SpendingPulse report that measures in-store and online retail sales across all forms of payment, according to a press release. The June retail sales reflect increasing prices for essentials, such as food and fuel, as well as continued spend on leisure, such as travel. Meanwhile, discretionary spend drove growth across fashion forward sections in June. Jewelry saw a 16.2% jump in sales.