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Same-day delivery is having a moment, but that doesn't mean every retailer should chase it. This week we look at why the fastest option isn't always the smartest one for smaller brands, plus what middle-class shoppers pulling back on spending means for your pricing.
Before we get into it, enjoy a little walk down memory lane. Remember these retailers that used to be household names? RIP Blockbuster and KB Toys.
[ FIRST GLANCE ]
Target’s makeover. How Target revamped its grocery aisles, charting a path that differs from big grocery rivals like Walmart and Kroger.
Retail 🤝 coffee. This article features independent retailers who decided to incorporate coffee shops into their storefronts. The idea: buy a coffee, browse the store and maybe make a purchase.
Off-price shakeup. Off-price retail is typically a drama-free, business-as-usual segment, which is why it was so interesting that Ross managed to grab market share from Marmaxx and increase store comps by 10%.
‘Tis the back-to-school season. College students across America are buying bed-in-a-bag sets and that gooseneck lamp that’s in every dorm room (you can picture it, right?) This podcast interviews an Urban Outfitters merchandising exec on how the retailer has grown its relevance in dorm furnishings.
[ THE TOP LINE ]
Middle-class consumers are tightening the purse strings
Earnings reports from publicly traded retailers reveal a clear trend: middle-class Americans are spending more cautiously. They’re focusing on essentials while putting off big projects, and occasionally making room for affordable treats. Meanwhile, low-income shoppers are hunting for discounts, while the most affluent consumers are still snapping up designer goods.
Why this matters: Tired of hearing about the K-shaped economy? Well, these earnings show
it’s very much still alive, despite what the Treasury Department claims. Whether that divergence is good or bad depends on where your business sits. What matters most is understanding your consumers’ demographics and pricing accordingly to stay competitive. (Reuters)
Same-day shipping, gig delivery may not make sense for smaller brands
Big-box retailers are going all in on same-day delivery. The Home Depot recently launched express delivery in three hours or less. Amazon Air is increasing drone deliveries. Other retailers are partnering with Instacart and Roadie for last-mile shipping. But Aaron Alpeter of Izba Group suggests smaller brands may prefer to stick with standard ground shipping to preserve margins.
Why this matters: Each business owner has to weigh the costs and benefits of higher-cost shipping services vs. faster delivery times, and what matters most to their consumer base. What makes sense for The Home Depot may not be the optimal strategy for an online apparel retailer. (Modern Retail)
[ THE LOWDOWN ]
LOSING VALUE: Shein plans IPO at $27B valuation, down from $100B private market peak 4 years ago
TARIFF REFUNDS: Costco promises to return tariff refunds to members
C-SUITE EXODUS: Two more execs depart Lululemon as brand prepares for new CEO
SUPPLY CHAIN DEMAND: Warehouse leasing hits five-year high
REVOLVING DOOR: Abercrombie & Fitch chief marketing officer to join Vuori
SHOP ONLINE: Walmart U.S. e-commerce sales grow 24% in Q2
[ THE THINK TANK ]
The difference between a loss-making business and a profit-making one
You can't expect a small business owner to act on a number if they don’t have it in the first place.”
Check back next Wednesday for our Q&A with Riikka Söderlund, COO at Katana. We’re digging into the reasons why blind spots around stockouts can disproportionately impact small retail brands, and the risks of being out of stock beyond lost revenue.
Did you read our recent Q&A with Pedro Ramos about 'haul' shoppers?
[ THE DOWNLOAD ]
AI could make the checkout page obsolete
The president of payments company Stripe predicts AI agents are about to shake up how consumers buy online. Instead of adding to cart, going to a checkout page to confirm details and ultimately making a purchase, AI agents would buy directly from the product display page, operating on behalf of consumers.
Why this matters: It’s still really early days for agentic commerce, so there are a lot of open questions about how this technology will work. Quick-pay options reduce friction in e-commerce, but letting “machines … buy from other machines"—as the Stripe president put it—might be more control than consumers are willing to hand over. (Business Insider)
[ POLL ]
What’s the biggest operational challenge you’re facing heading into next quarter?
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The SKUpe is curated and written by Shefali Kapadia and edited by Bianca Prieto.
