The Modern Retail Podcast Digiday

On this week’s Modern Retail Rundown: The Information reported that Gopuff lost $400 million last year in its quest to grow revenue. Equinox launched a new health and wellness program that costs $40,000 a year and promises members lifelong health. Meanwhile, Sweetgreen has upset fans by getting rid of arugula the same week it introduced steak to its menu.

"Everyone said that millennials were never going to buy watches," said Margot Grinberg, president of the Movado Brand and svp of e-commerce at its parent company Movado Group. The going theory was: "They don't need them to tell time, they had a phone; watches were dead after the cell phone came out."
But that didn't happen. In fact, timepieces have never been more popular. According to a recent survey from the Boston Consulting Group, between 2021 and 2023, 54% of Gen Z and younger millennials increased their spending on luxury watches.
Grinberg joined the Modern Retail Podcast and spoke about the state of higher-end watches, as well as its evolving marketing playbook. For her, it's a family affair as her grandfather founded the company.
But even with its long history, Movado has been intently focused on attracting younger shoppers. Despite being over a century old, the watch brand -- which also works with top names like Coach, Tommy Hilfiger and Hugo Boss -- has been figuring out ways to introduce itself to younger shoppers. This has included a revamped logo, soon-to-be redesigned packaging as well as updated messaging.
While the products have remained relatively consistent, Grinberg said what makes shoppers -- especially younger shoppers -- more amenable to higher-end brands is in messaging. "I think in today's world, a lot of it is about marketing and how you're communicating to customers," she said.
The other part of the equation is being available on multiple channels. Movado's watches are sold in most any store that sells time pieces, but it's also available on marketplaces like Amazon as well as its own website.
"There are so many new elements that you can offer consumers from an e-commerce experience that we didn't even have five, 10 years ago," Grinberg said.

 On this week's Modern Retail Rundown: The show kicks off with a recap of Starbucks' latest earnings. The coffee shop chain cited bad weather, out-of-stock products and long wait times on app purchases as factors for a slight sales decline. Meanwhile, this week Walmart rolled out a new in-house brand called Bettergoods which features products like plant-based cheese, pistachio nut butter and trendy condiments. Meanwhile, arcade games destination Dave & Buster's said it's launching an in-app experience that will allow adults 18 years and older to place bets with real money.

John Foley may be best known as the founder and former CEO of Peloton, but it turns out interior design is his real passion.
"I've been passionate about rugs for decades," he said on the Modern Retail Podcast. "I love design, I love spaces."
This was all said to explain why he launched a rug company. Ernesta is a direct-to-consumer brand selling higher-end rugs. It launched in September of last year and just opened its first showroom in Manhattan last month.
"Now I'm addicted to you know those super high-end custom rugs," he said. "And we're trying to bring them now to both interior designers and to consumers at a price point that most people can't afford."
Ernesta is still in its early days, but Foley said the business is growing and gaining a name for itself. As he described it, the hope is for Ernesta to do for rugs what The Shade Store did for curtains. He even sees Ernesta's business model looking similar to it. "[The Shade store is] right around 50/50, selling to consumers and selling to trade. So we believe we're going to be right in that zone," he said.
Still, the company is very young and still has a lot of learning to do. The biggest lesson thus far is figuring out how best to tap the vast and opaque world of interior design. While customers can buy their rugs directly from its site or store, Foley is also hoping to becoming a trusted partner to designers and firms.
"My team and I come from the consumer world, and so we understand consumers a lot more than we understand interior designers and the trade," he said. "So we're learning our way into it."
Now, with the first store open, Ernesta is hoping to see how well it helps grow sales -- and eventually continue building the business from there. The company is also planning on launching an online platform for customers to share their own designs and interior layouts in the hopes of inspiring others.
"We're building this scaffolding -- this product experience community -- onto Ernesta, he said. "And I think in the next six to 12 months, that's going to come to life and be a really special part of the shopping experience."

On this week's Modern Retail Rundown: President Biden signed a bill that requires TikTok to either sell itself or face a U.S. ban. Next, the team discusses Saks' newly announced retail media network — and why it's a growing trend among retailers. Lastly, we dive into a new Amazon grocery subscription service that caters to low-income families.

Every brand talks about paths to profitability, but few actually reach it.
Customizable beauty brand Prose is one company that has bucked the trend and reached meaningful profitability. The company has made nearly $500 million since launching in 2018 and estimates it will bring in $160 million this year. What's more, this year the company is on track to be profitable, after hitting profitability last May as well for the entire third quarter of 2023.
At the Modern Retail Commerce Summit, held last week in New Orleans, Prose co-founder and CEO Arnaud Plas spoke about how he's been leading the company to reach these major milestones. "That has been a journey," Plas said.
Prose hasn't sacrificed growth in order to hit its profitability targets. For example, the company has expanded into new areas. "A major step with a spirit of reaching profitability [was] we launched skin care in 2023," Plas said.
While expanding into new categories is expensive, the thesis behind Prose was to build a vertically integrated and automated production system and then add more products to grow revenue. "The key was really: How do we automate production and customization?" Plas said.
By building out its own New York-based manufacturing, and figuring out how to automate parts of it, Prose was able to lower its production cost over the years while also charging a premium for offering customized products. It took many years, but Plas believed that if the brand could streamline its production enough while launching into new areas, the financials would work out.
"If we were able to execute this, there would be a pretty high and significant value creation for the company," he said.
But brands can't go all in on growth at once. And perhaps that's the biggest lesson from Prose's evolution so far. "The reality is that when you want to be profitable, you have to sequence your efforts," said Plas.