TECH

Look Malls, No Hands

Why start one revolution when you can start two? Lexington, MA-based Berkshire Grey, a robotics and AI company that specializes in retail fulfillment automation, raised $263 million in a Series B announced yesterday. 

• The round was led by SoftBank, with assists by Khosla Ventures, New Enterprise Associates, and Canaan.

The details: Berkshire Grey’s robots automatically pick and place warehouse inventory for retail and e-comm clients. Since they’re powered by autonomous learning, they become more efficient as they go.

The results: Berkshire Grey says its robots have helped Fortune 100 customers optimize labor costs by 70%–80% and increase throughput by 25%–35%. 

Looking ahead...CEO Tom Wagner says the fresh funds will help Berkshire Grey expand its team and geographic footprint. Acquisitions to boost its fulfillment tech are also on the table.

The robots are coming

Amazon’s $775 million acquisition of warehouse robotics maker Kiva Systems in 2012 gave it the lead in automated fulfillment. But as U.S. retail e-comm speeds toward $600 billion in annual revenue this year, more companies are developing warehouse tech solutions to meet growing demand.

• DHL invested $300 million to quadruple its fulfillment robotics fleet in 2018. 
• Walmart unveiled automated picking robots for online grocery orders earlier this year.

More are on the way. 80% of supply chain executives at retailers and consumer products companies expect to use automation by 2021, according to a 2019 joint study by the NRF and IBM.

What about jobs? Logistics robots are ideal employees for picking and sorting online orders because they never need breaks and they’re injury-proof. With the U.S. unemployment rate hovering at a historically low 3.5%, companies hoping to increase fulfillment efficiency are more likely to spend on automation than to fight for scarce human workers. 

My prediction: In 10 years, most online orders will go from an automated distribution warehouse to your doorstep without touching human hands.

REAL ESTATE

A Luxury Capital's Emptying Out

High-profile tenants are exiting Hong Kong’s luxury fashion hubs, including Russell Street, in droves—sending retail rents into a nosedive, the WSJ reports. 

• Prada, La Perla, Louis Vuitton, and Chow Tai Fook are among the luxury retailers closing some of their Hong Kong stores later this year. 

As recently as Q2 2019, storefront leases on Russell Street cost an average of $2,745 per sq. ft. per year. But in the second half of 2019, retail rents dropped 15% to $2,338, per Kevin Lam, head of Hong Kong retail at Cushman & Wakefield. 

• Rents are expected to decline another 10%–15% in 2020. 
• For context, it’s the opposite in the Brew’s backyard. NYC retail rents rose 22% on average between 2007 and 2017.  

What’s behind the drop? It’s complicated. Due to ongoing political unrest and a weak yuan, visitors from mainland China fell by 58% last November. (Last year, shoppers from mainland China made up 78% of Hong Kong’s visitors.) Fewer tourists = a 23.6% decline in Hong Kong retail sales.

SPONSORED BY SAILTHRU

We’re Going to Tell You a Success Story

Lately, it seems most tales are ones of woe. And in the era of Peak TV that’s mostly a good thing. In business, not so much. 

So let us regale you with the incredibly fruitful partnership between Sailthru and Raise Marketplace. As a mobile payments platform that makes it easy to save money, Raise looked to Sailthru to develop and implement a cross-channel personalized strategy with the goal of growing and retaining its membership base.

That’s a mouthful, but basically it means Sailthru helped Raise engage customers and create an important foundation for long-term financial health. 

Raise’s Director of Email Marketing & CRM had this to say, “My Customer Success Manager truly looks out for the company’s best interest.” We have a hunch Sailthru is blushing. 

Bottom line: Raise Marketplace has increased overall conversions by 10X with help from Sailthru. 

Want the nitty-gritty of how they did it? Check out this handy-dandy case study. 

PAYMENTS

Halie Paid Morning Brew $50 For [Dancing Ikea Cart]

Venmo has partnered with digital content creator Holler to release animated stickers for naming transactions. 

• Venmo will now suggest a custom sticker to replace user generated descriptions like “.”
• Select retail partners including Subway and Ikea will receive customized stickers in the app.

The retail angle: Venmo’s hoping customized stickers will remind its users that the app is for more than splitting birthday dinner bills. Over 2 million retailers process mobile payments through Venmo, but the sticker rollout suggests shoppers aren’t fully aware of its point-of-sale function.

Why it could work: Venmo’s users prefer pictures to text. The company says over 90% of transactions in the app are described with emoji. 

Zoom out: Venmo has already tried to leverage retail relationships to boost its status as a payments provider. When Venmo’s debit card didn’t take off after launching in 2018, it partnered with retailers including Target, Sephora, and Dunkin’ on a cash-back program.

BANKRUPTCY

This Is What Happens Without a Signature Chicken Sandwich

It’s hard out here for a burger joint; it’s harder for one with debt between $50 million and $100 million. Krystal, the second oldest fast food chain in the U.S., has filed for Chapter 11 bankruptcy. It said its 320 stores will remain open through bankruptcy proceedings.

How we got here: Krystal’s chief restructuring officer Jonathan Tibus said his chain was on the wrong side of surging industry trends (aka behind them).

• Unlike its competitors, Krystal never branched out from freeway adjacent drive-thrus to online delivery and fast-casual concepts.
• A tight labor market narrowed the supply of workers who’d choose to flip burgers. Tibus said it’s not “uncommon” for the employee turnover rate in quick service restaurants to reach 200%.

We saw this coming. Last year, Krystal introduced a new COO and CFO, both with restructuring experience. It also closed about 44 stores to cut costs.

The aluminum lining: Renovations at nine Krystal stores last year contributed to double-digit comparable sales growth. Krystal may want to consider revamping more stores...if and when Krystal can afford it.

WHAT ELSE IS BREWING

• Fairway Market is planning to file for Chapter 7 bankruptcy and close all of its stores, the NY Post reports.
• Starbucks pledged to work toward storing more carbon than it emits in an updated sustainability commitment.
• Express plans to close 100 stores by 2022.
• Papyrus's parent company plans to close its 260+ stores throughout the U.S.
• Hugo Boss beat Q4 expectations after renovating several stores.
• VF Corp. is exploring options, including potential divestitures, for nine of its workwear brands.

SPONSORED BY CARIUMA

No fewer than 12 of us are wearing these shoes today. That’s 24 immaculately-styled feet thanks to CARIUMA. Made with all-natural premium materials that are sustainably sourced, CARIUMA keeps us equal parts cool, comfy, and ethically-minded. And now you can get an exclusive 15% off, because we know it’s always been your dream to dress like your favorite newsletter. Get them here.

SWAPPING SKUS

I’ve been sharing my favorite stories here and there for months, so let’s make it official. Introducing “Swapping Skus,” the place where I’ll tip my hat to excellent articles at other retail news outlets. 

• They know when you’re sleeping, when you’re awake, and when you’re browsing: They’re Asos, Net-a-Porter, Farfetch, and other fashion retailers, and Vogue Business reports they’re collecting heaps of personal data.
• Some of the aforementioned personal data comes from third-party cookies. Google’s plan to phase them out could give big box retailers even more advantages in e-comm, according to Modern Retail.

BOT DOT COM

Over the three-day weekend, I went down a Twitter hole populated by grocery store fan accounts. It led me to two bot accounts I never knew I needed. First, there’s @PubSubs_on_sale, which alerts over 30,000 followers when...Pub Subs are on sale. Then there’s @TraderJoesBot, which generates imaginary TJ’s products. To my readers who work at Trader Joe’s HQ: Please make “Instant macadamia cupcake stroopwafel” a thing.

What’s the retail social media account you wish existed? Hit reply and let me know. I’ll share the best ideas in a future newsletter—Halie.