The Modern Retail Podcast Digiday

This week's Modern Retail Rundown starts out with an analysis on why digital fast fashion players like Shein and Temu lose money on orders despite their popularity. Next, recent earnings reports show that dollar store chains like Dollar General and Dollar Tree are struggling as customers cut back on spending. Finally, we take a look at big companies like PepsiCo. continuously raising prices to increase profits, even as product demand declines.
Stories cited:

https://www.wsj.com/articles/fast-fashions-curious-comeback-8a5516c5

https://www.wired.com/story/temu-is-losing-millions-of-dollars-to-send-you-cheap-socks/

https://www.cnbc.com/2023/06/01/dollar-general-dg-q1-earnings-report-2023.html

https://www.cnbc.com/2023/05/25/dollar-tree-dltr-earnings-q1-2023.html

https://www.nytimes.com/2023/05/30/business/economy/inflation-companies-profits-higher-prices.html

Collars & Co is trying to create a new category that's one part casual and one part dressy.
The two-year-old apparel startup makes a collared polo shirt, along with other items, and targets predominately well-to-do males. It first got its start on TikTok, but an appearance and subsequent deal on Shark Tank led to a huge increase in sales.
"We saw about a 400% increase in the number of visitors," the night after the episode aired, said Justin Baer, founder and CEO of Collars & Co. "I think I attached about $200,000 to $250,000 in revenue that week." Baer joined the Modern Retail Podcast and dove into how he's growing his clothing brand.
Despite the sales spike, Shark Tank was just one helpful marketing moment. Baer, now, is focused on the long game. That includes investing in digital media as best as possible and even launching new retail concepts. For example, Collars & Co is going to open its first store in Chicago this month.
One of the big reasons the company is opening a store is because physical retail speaks directly to the customer Collars & Co targets. Our customer tends to be slightly older -- it's an older gentleman that's 35 to 65," said Baer. "And not all of them are on Instagram buying clothes online."
With that, the Chicago store is a test to see if the model can work. "We definitely want the store to be profitable. It doesn't have to be that profitable, because it's not the main driver," he said. "And it's going to be a fraction of the revenue that we're doing DTC."
Another big focus for the brand is on finding more customers. While it's seen huge growth, Baer thinks there's more digital marketing to be done. "Facebook is still the best, but we try a lot of different things," he said. "We're trying a lot of different angles, newsletters, a lot of different online platforms." That being said, Baer said he initially got the company off the ground by showing off his first product on TikTok.
And while other brands test out new types of advertising like TV, Baer is still bullish on digital being a primary driver for his brand. "I think digital is still going to be 95% of our ad budget this year," he said.

This week's Modern Retail Rundown begins with a discussion about why retailers like URBN and Kohl's are thriving while other apparel players are struggling at the moment. Next is an overview of Meta’s record $1.3 billion privacy lawsuit filed by European Union regulators, as a means to crack down on Facebook's user data sharing. Lastly, we talk about how TikTok Shop is generating buzz among live commerce audiences in Southeast Asia.

Parachute doesn't look or feel anything like a Bed Bath & Beyond, but founder and CEO Ariel Kaye thinks her brand represents the next wave of home goods retailers.
The stores are certainly smaller and more curated -- and they are focused much more on the experiential than pure conversion. But Parachute is focused on utilizing its growing store base as a way to bring in more customers and become a household name.
Kaye joined Modern Retail to speak about her company's ambitions and strategies. Physical retail plays a big role in this. She spoke live at an event hosted at Parachute's new flagship store in Manhattan.
"Last year, we doubled our store footprint," she said. "We went from 12 stores to 24 stores -- this is our 27th that opened last week. And, we just see retail as, like, this is the eyes and ears for the customer."
Parachute launched in 2014 with the idea that bedding shouldn't be considered a mindless purchase. "These are aesthetic products that can completely transform a space, and they were they were [treated as] upsell opportunities -- they weren't actual products that any brand was focusing on," Kaye said.
The bet seemed to work -- Parachute has grown from its California roots over the last nine years. While the pandemic put a stop to any store openings, the last year was when the company began to put retail expansion into overdrive. But Parachute's stores are as much about community as they are about sales, according to Kaye.
"We really do want to just educate people and get people excited about the product," she said. But that does lead to better loyalty; Kaye said, "people that shop in-store first are our best-performing customers."
Now is an especially interesting time to be in home goods. With Bed Bath & Beyond's bankruptcy, it leaves other players an opportunity to pounce. But Kaye also sees legacy retailer's demise as a lesson for other founders.
"This happens in almost every category and industry," she said. "It's part of the reason why it's so important to continue evolving and growing with your customer and keeping your eye on what the next version of what you're building looks like."

Earnings season has arrived — and the Modern Retail Rundown dove into all the details. On this week's show, in which the Modern Retail staff discuss the week's biggest industry headlines, we looked at the results of Home Depot, Target and Walmart -- and what they mean for the year ahead. Then, we talk about some new numbers revealed about Instacart's advertising business. Lastly, we discuss Shein's most recent funding.

Spritz Society rose to fame because of its influencer founder, but the sparkling wine brand is now trying to transcend that.
Ben Soffer, perhaps best known on Instagram as the Boy With No Job, ironically does have a job -- he's an alcohol entrepreneur selling canned drinks both online and in over 400 stores in eight states. Soffer is now focused on expanding Spritz Society's wholesale presence and making his company a brand beyond its social media roots.
"If you have a community, then you can get people to try a product online without ever experiencing it in-person," Soffer said on the Modern Retail Podcast. "If you don't have that community, there's no level of credibility that's going to educate you on why you should give this product to chance -- unless you're dumping money into paid media."
Indeed, it was his community that first launched the brand. Sofer asked his followers via a Google Form in 2020 about what they wanted to see in the brand. "The name of the brand, Spritz Society, comes from the empathetic approach," he said.
But now the company is much more than a few thousand survey responses. The brand is expanding to 70 Walmart locations and in 200 H-E-B stores. "The main driver is grocery and will continue to be. Grocery is where you're looking for this product," Soffer said.
Even though Spritz Society first launched online, Soffer believes that wholesale is the only real way for a startup alcohol brand to truly grow. "It's completely impossible to launch a direct-to-consumer alcohol business without a community behind it," he said.
And community is something he's thinking about a lot. For example, he is very stringent about the types of partnerships he forges with Spritz Society. It may seem like a good idea for a brand to find a celebrity, but it may not be easy to actually sell products. "There are so many celebrities and influencers that have millions of followers that can't sell a damn thing," he said.
With this, the focus is on growing Spritz Society's footprint. While other companies may think about expanding into new products, Soffer says he wants to own the category he knows well. "The goal, first and foremost today, is being laser-focused on building the Spritz Society brand to be a household name amongst sparkling wine cocktails," he said.