Q&A

Third Brand's the Charm

Bed Bath & Beyond is midway through a plan to release eight new private labels—sorry, owned brands, in B-cubed parlance—this year. In the next three years, Bed Bath & Beyond aims to triple sales generated from owned brands to 30% of its total revenue. 

Two brands, Nestwell (for the bedroom) and Haven (for the bathroom) arrived earlier this spring. Today, we meet the third: Simply Essentials, a line of basic goods spanning kitchen, bed, bath, and storage categories. 

• “Line” may be an understatement: Simply Essential includes roughly 1,200 products. Prices are at an “opening” level (starting at $1, never more than $200). 

Broad essentials city  

Why flood stores with $5 spatulas? After an internal review, “We discovered we're probably not benchmarking the right competitors,” Chief Merchandising Officer Joe Hartsig told Retail Brew. “That really left big holes in the assortment, across many different rooms, for opening price point products, where there are mass competitors or online leaders that had a great amount of presence.” 

• “Consumers love us for bed and bath and kitchen authority and that association, but they also perceived us to be expensive,” Hartsig added.
• “Many rooms had the same problem—or, I would say, an opportunity, across opening price points, and that's where this was born.”

Rearranging the furniture: When shoppers stop by stores, Hartsig told us they’ll find Simply Essentials items throughout each “room,” as well as in special seasonal displays. This way, Bed Bath & Beyond will integrate all price points within a given category into the same area.

What’s next? Hartsig told us which categories are left on Bed Bath & Beyond’s private label roster, and why he’s bullish on an extended home goods surge. Click here to read the full conversation. — HL

PHARMACIES

Rounding the Corner?

As vaccinations continue to roll out, drugstores are optimistic their sales will normalize after a less than ideal 2020. 

Walgreens and CVS Health have expressed optimism for the second half of the year, and there are some early signs of recovery.

• CVS administered 17 million vaccine doses through the end of April, up from three million as of Feb. 16. Alongside Covid testing, that’s helped CVS bring in customers, CEO Karen Lynch said during a recent earnings call.  
• Q1 revenue outpaced analysts’ expectations at $69.1 billion, up from $66.8 billion in 2020. 
• Walgreens’ total US retail sales fell 6.6% YoY during its most recent quarter. Revenue rose 4.8% to $32.8 billion, though it missed analysts’ estimates. 

Retail revival: Sucharita Kodali, Forrester principal analyst, believes drugstore retail sales should improve as customers return to regular shopping habits. 

• “These companies are essential retailers and what is baffling is they were not one of the sectors that had a huge lift in the way grocery stores did, so that’s a little bit strange,” Kodali told Retail Brew. “They should be up from 2020, because all of 2020 was down in comparison to 2019.” 

Zoom out: Drugstores aren’t just sitting on their hands waiting for customers to return. Last week, Walgreens rolled out nationwide contactless delivery, and Rite Aid, CVS, and Walgreens now offer walk-up vaccinations. — KM

SPONSORED BY ATTENTIVE

Texting Is Terrific

You use text messages for all kinds of things—dinner planning, life updates, and of course, gauging reactions to impulse purchases. How about juicing your brand marketing? 

Attentive’s upcoming webinar featuring Forrester on May 20 will teach you how to do just that. Attentive SVP of Marketing Brooke Burdge and Forrester Analyst Stephanie Liu will explain why 60% of brands have adopted SMS as a way to engage their audience and drive revenue. 

You’ll learn about: 

• E-commerce trends driving the appetite for SMS marketing 
• Why 87% of brands say SMS marketing is important to their future marketing plans 
• How to get started with SMS marketing 

Like your grocery list and 700 dog photos, the future of marketing is on your phone. These folks can show you the way to that future. 

Learn to unlock SMS marketing—join Attentive’s webinar on May 20 at 1pm ET. 

RESTAURANTS

Wonderful Ghosts

Restaurants may be welcoming back diners, but ghost kitchens aren’t going away. The global ghost kitchen market was worth $43 billion in 2019 and could reach $71 billion by 2027, according to an Allied Market Research report. Ghost kitchens operate without a storefront, providing delivery through an app.    

Latest entrant: Former Walmart exec Marc Lore and his brother Chad are backing a food truck/ghost kitchen company called Wonder, which is being piloted in Westfield, NJ, sources told CNBC. 

Wonder sources its entrées from top-tier restaurants and celebrity chefs, including Bobby Flay Steak, Jonathan Waxman’s JBird, and Marc Murphy’s The Mainstay. 

• Why a NYC suburb like Westfield? Because residents still want high-end dining options without the urban hustle and bustle. 
• There are mixed reactions from the community, however, as CNBC notes. 

Not going ghost

A March 2021 Retail Brew-Harris Poll survey data found that 60% of Americans are at least somewhat likely to continue ordering directly from restaurants or ghost kitchens once Covid-19 restrictions are lifted. 

Restaurateurs are taking notice. A Five Guys franchisee opened the chain’s first US ghost kitchen in Garland, TX, on May 1. And popular YouTuber MrBeast has cracked the ghost kitchen algorithm with 300+ delivery-only restaurants across the country, all of which have opened since December 2020.  

Our takeaway: The spread of ghost kitchens is, in part, a reflection of the broader demand for contactless and delivery options across all food and retail segments. — KM

WHAT ELSE IS BREWING

• Chipotle is raising wages and introducing employee referral bonuses. 
• Mattel wants customers to return toys as part of a new takeback program. 
• An Amazon employee died at the Bessemer, AL, warehouse, the site of the failed unionization push. 
• Simon Property Group and Authentic Brands have agreed to acquire Eddie Bauer. 

SPONSORED BY BYZZER (POWERED BY NIELSENIQ)

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HOT TOPIC

Livestream shopping is having a renaissance, and QVC is still top dog. Qurate, QVC’s parent company, had its best quarter since its creation in 2018. 

• Retailers including Bloomingdale’s, Nordstrom, and even Petco are attempting to make their mark in livestream shopping. 
• While Alibaba subsidiary TaoBao Live is blowing up in China, Amazon and Facebook may try to cash in on the ~$11 billion US livestreaming market. 

Survey says: Does livestream shopping have a future in the US post-pandemic? Cast your vote here. 

To revisit...In the last Hot Topic, we asked you if social media influencers are the best ambassadors for retailers. 41% said “No way,” but 37% were all in on influencers. The rest of you needed more time to think. 

SWAPPING SKUS

Today’s top longreads in retail.

Survival of the fittest: To survive the pandemic, German shopkeepers improvised in creative ways, including making TikToks to sell comic books and selling ukuleles instead of violins. (NYT) 

Demand signals: Supply chain bottlenecks are reaching a boiling point, fueling tensions between food retailers and suppliers. (WSJ)

Normalcy nostalgia: IRL shopping hubs are turning to events and live music to lure back online shoppers. (Forbes)

ICYMI

Catch up on the Retail Brew stories you may have missed.

• Retailers Weigh Passing on Price Hikes to Consumers
• Office Depot Splits Retail and B2B Divisions
• New Brands (and Products) for Retailers to Watch in May