On today's podcast episode, we discuss the unofficial list of the most interesting retailers for the month of August. Each month, our analysts Arielle Feger, Becky Schilling, and Sara Lebow (aka The Committee) put together a very unofficial list of the top eight retailers they're watching based on which are making the most interesting moves: Who's launching new initiatives? Which partnerships are moving the needle? Which standout marketing campaigns are being created? In this month's episode, Committee members Arielle Feger and Sara Lebow will defend their list against analysts Blake Droesch and Sarah Marzano, who will dispute the power rankings by attempting to move retailers up, down, on, or off the list.

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Episode Transcript:

Sara Lebow (00:00):

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(00:23):

Hello, listeners. Today is Wednesday, August 28. Welcome to Behind the Numbers, Reimagining Retail, an eMarketer podcast. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sara Lebow. Today's episode topic is our August unofficial most interesting retailers of the month list.

(00:49):

Before we jump into our monthly list, let's meet today's guests. Joining me for today's episode. We have committee member, regular senior analyst Arielle Feger. Hey Arielle.

Arielle Feger (01:00):

Hi. Thanks for having me.

Sara Lebow (01:02):

Thanks for being here. Also with us, senior analyst Blake Drosch.

Blake Droesch (01:07):

Hey everyone. Good to be here.

Sara Lebow (01:08):

Good to have you. And last but not least, it's principal analyst, Sarah Marzano. Hey, Sarah.

Sarah Marzano (01:15):

Hi there. Thanks for having me.

Sara Lebow (01:16):

Thanks for being here. Okay, let's jump into this month's list, our unofficial most interesting retailers of the month list.

(01:30):

This list as always is hyper subjective, but it's supported with objective analysis. Arielle and I will present our list in the first half of this episode, and in the second half, Blake and Sarah will have the opportunity to edit our list.

(01:43):

First, let's start with our top eight, starting with number eight, Victoria's Secret. Arielle, tell us why.

Arielle Feger (01:50):

So I think that Victoria's Secret's making the list this month because it has hired Hillary Super as their CEO and Hillary was the former CEO of Savage X Fenty. And I think Victoria's Secret has really been struggling to connect with consumers. It's really struggling to bring itself into kind of the "modern age." And I think hiring someone from Savage x Fenty, which is super modern, super popular with consumers, I think it's just a really smart move and I would love to see Victoria's Secret figure out where it's going as a retailer.

Sara Lebow (02:28):

Yeah, Victoria's Secret was founded on every 2000s trend that's gauche now, like ultra-thin models, no diversity, and they're also being undercut by D2Cs.

Sarah Marzano (02:40):

Yeah, I think it's an interesting move to bring on Super. Savage Fenty famously has been one of the brands that's taken market share away from Victoria's Secret. But I do think it's worth noting that her tenure at Savage was pretty short. She was there for less than a year. I still feel pretty bullish about her appointment because she's got a lot of experience working as a merchant at vertically integrated retailers. So I still think it can be an exciting move, but I'm not sure if her experience at Savage Fenty is why.

Arielle Feger (03:08):

Good point.

Sara Lebow (03:09):

Okay. At number seven, we have Walmart. Arielle, why is Walmart on here?

Arielle Feger (03:14):

I mean, Walmart's just doing pretty well, which it's not necessarily surprising, but I think it is something that a lot of retailers are struggling. It's capitalizing on consumers looking for value. It grew comparable sales 4.2% in Q2, online sales grew 22%, and it's retail media business Walmart Connect grew 26%, outpacing Amazon's retail media growth. So I think it's just kind of, its flywheel is working, it's doing really well, and I think that's just particularly exciting in a time where consumers are so focused on value.

Sara Lebow (03:55):

Yeah, couldn't agree more. I think that it's retail media business doing well is a great sign. Keep in mind though, Amazon's retail media business is still way bigger than Walmart's, but the growth is definitely good.

Sarah Marzano (04:08):

Yeah, I think it's interesting to watch Walmart iterate and grow on its ad business. They recently announced bringing non-endemic advertising into their stores. Their brick and mortar store footprint is a great point of differentiation. We know retail media in stores is still pretty small, but has a lot of potential for growth. And I like the move of bringing in the non-endemic advertising. It feels like a really good fit for that environment.

Sara Lebow (04:32):

Let's keep moving. Number six, Nordstrom. We're bringing up Savage X Fenty again because Nordstrom just became the first retail to partner with the brand. Before this Rihanna's intimates brand had not partnered with a retailer. This to me feels like a reason for people to go into Nordstrom stores to try on things that are often sold online. It gives people a reason to shop with Nordstrom online, they can compare Savage X Fenty to other legacy intimates brands. It is a good differentiator for Nordstrom.

Arielle Feger (05:03):

Yeah, I definitely agree. I can see people going into Nordstrom solely for the Savage X Fenty product and then browsing, buying more stuff. So I think it's just a great value add for Nordstrom.

Blake Droesch (05:16):

Yeah, it's a pretty big win for Nordstrom. I don't think Savage X Fenty was going around knocking on every department store's doors in order to get someone to sell their wares. So the fact that Nordstrom was able to create that partnership speaks to the fact that they're clearly making an effort to get more popular brands into their stores, which is what all department stores really need to be doing now in order to keep relevant.

Sara Lebow (05:43):

That's a great point. Savage X Fenty definitely has a cool factor that Nordstrom will do well adopting. Number five, e.l.f Beauty. Arielle, this one's to you.

Arielle Feger (05:54):

This is another example of a company doing really, really well in a tough economic climate. Net sales for e.l.f increased 50% in their latest quarter, which I think is pretty great. And this is after a 70-something percent increase a year ago in the same quarter. So it's just doing really well. It saw growth across color cosmetics, skincare, and I think particularly something it's really winning with obviously is dupes. It launched something called their Bronzing Drops within this quarter, which is a dupe of a Drunk Elephant product, and according to the CEO became one of its bestsellers very very quickly. And then e.l.f also used Olympics momentum to kind of put some campaigns out there. It worked with gold medal gymnast Gabby Douglas and it worked with swimmer Anastasia Pagonis. So I just think it really kept momentum up in the month and I think it's doing really well.

Sara Lebow (06:52):

So smart is a beauty brand to partner with Olympians because no one's makeup is staying put better than those Olympians.

Sarah Marzano (06:58):

That's such a good point.

Arielle Feger (06:59):

Absolutely.

Sara Lebow (07:00):

Number four, Olipop. Olipop is one of these new soda brands. Well, it's six years old. It's sort of comparable to Poppi. It just announced a deal with the LA Clippers Intuit Dome in Inglewood, California, which is the 6th stadium it will sell in. This is fascinating because so many stadiums in the US have deals, exclusivity deals, with either Coca-Cola or PepsiCo, so it's interesting to see any other soda in that space. It also shows how Olipop is diversifying its strategy across retailers. It's already wholesale. But now it's expanded to these event spaces and that can be pretty hard for younger brands to do.

Blake Droesch (07:39):

Yeah, even if it is the Clippers. You got to start somewhere. But no, seriously, it is, you're right, I mean, just for a young brand to get in front of such a large audience in an environment where the options are very few, you're almost guaranteed to get new customers trying your products basically just out of it being the only option.

Sara Lebow (08:02):

Number three, MARS which is buying Kellanova. The MARS-Kellanova deal is a vote of confidence for brand names during a time where a lot of people are trading down to private label. Wondering what your guys' thoughts on this one are.

Sarah Marzano (08:16):

Yeah, I mean I think it's a move that makes a lot of sense given MARS portfolio. They're very focused on pet and confectionary. Kellanova brings in that salty kind of snack foods aspect. And reportedly, as far as what MARS is saying the deal will enable them to do is bring on some structural efficiencies that will enable them to hold prices steady so they're able to round out their portfolio and hopefully at least protect the consumer in terms of not raising prices even more. And then I was reading about just the possibility for some interesting collaborations from a salty sweet standpoint that apparently folks are excited about.

Arielle Feger (08:51):

Yeah, I think keeping prices steady is so key, especially for CPGs at the moment. So any chance they have to do that is smart.

Sara Lebow (09:00):

I'll be looking out to see if MARS and Kellanova create a new Extra Extra Toasty Cheez-It product. They already have Extra Toasty, but those could be toastier. Okay, number two, Amazon. Arielle, tell us why.

Arielle Feger (09:14):

So Amazon has partnered with TikTok and Pinterest to enable shoppers to buy items from Amazon ads without leaving the social platforms. And I think anytime a retailer can make the point of discovery and point of conversion closer, I think that's a win. It's also, I think a huge play for Gen Z. We know Gen Z love TikTok and Pinterest I think is gaining a huge recognition among Gen Zers.

Sara Lebow (09:42):

Yeah.

Arielle Feger (09:43):

They said 42% of their global monthly user base is Gen Z. So I think it's just a really good way to stay relevant among Gen Z and to be everywhere all at once, which is what Amazon I think is good at.

Sarah Marzano (09:55):

Yeah, I think Amazon is such a giant within the retail media space. They command over three-quarters of total ad spend. But they're owned and operated properties are really well monetized at this point so for someone like Amazon, growth within the retail media business is increasingly going to come from offsite. So this move gives the ad buyers who are working with Amazon access to inventory on TikTok and Pinterest. It's a continuation of a strategy. I think it was November last year that Amazon announced similar partnerships with Meta, Instagram and Facebook as well as Snapchat. But I agree with you, Arielle, in terms of streamlining the path to purchase, bringing that arena that's so famously good for product discovery and making it easier to move through to conversion.

Sara Lebow (10:41):

Yeah, it'll be interesting to see how much more Amazon and TikTok work together. They're obviously rivals, so both of them are going to be really picky about what sorts of businesses interact and which ones don't.

Sarah Marzano (10:51):

I think they're frenemies.

Sara Lebow (10:53):

That's a better way of putting it.

Arielle Feger (10:53):

That's a good way to describe it.

Sara Lebow (10:56):

They're like two different industries, but they overlap pretty much everywhere. Number one, Neutrogena, which launched a new collagen bank product line marketed toward Gen Z. The goal there is to win back market share that's been lost to L'Oreal-owned brands like La Roche Posay and CeraVe. It chose to debut this line on TikTok shop, which was interesting, that was a first for the company, and once again shows how clear it is that Neutrogena wants to get this product in front of Gen Z. We were talking about this before and someone mentioned that Neutrogena used to be the young hip brand. It's lost that sheen. Now it's trying to win that back.

Sarah Marzano (11:34):

So there's definitely nostalgia around Neutrogena as a brand. For me, I feel like I grew up in Neutrogena's heyday, so there was a sentimental part of me that was sort of like, "Oh, look at them. Look what they're trying to do." I would argue a little bit that Neutrogena launching a new product line on TikTok is a little bit like a tree falling in the forest and potentially no one being around to hear it. Obviously follower counts on TikTok only mean so much, but I looked it up and I think they have 170,000 followers on their TikTok account, and you compare that to someone like e.l.f, 1.7 million followers. I do think it means something.

Blake Droesch (12:07):

It seems a little bit like the sort of hello fellow kids meme.

Sara Lebow (12:13):

Do you want to explain what that meme is for our listeners? Do you want me to? Blake is referencing a green shot from an old 30 Rock episode where a very adult Steve Buscemi is trying to fit in with high schoolers.

Sarah Marzano (12:26):

The way you said hello fellow, I was like, "Is that a brand?"

Arielle Feger (12:32):

I'd like to think that it could be a if you build it, they will come kind of thing.

Sarah Marzano (12:38):

I think Neutrogena wants to think that too.

Arielle Feger (12:40):

Listen, I got to be positive.

Sara Lebow (12:43):

Yet another reference that Gen Z will not know.

Arielle Feger (12:46):

No.

Blake Droesch (12:47):

Gen Z loves Costner. I don't know what you're talking about.

Sara Lebow (12:51):

Okay, so on that note, our list as of this point before Blake and Sarah make their arguments and edits is number eight, Victoria's Secret. Number seven, Walmart. Number six, Nordstrom. Number five, e.l.f. Number four, Olipop. Number three, MARS. Number two, Amazon. And number one, Neutrogena. Number nine and 10 get honorable mentions on our list. Number nine, we have eBay for relaunching search and number 10, honorable mention, we have ThredUp for launching at peer-to-peer marketplace. Okay, now is the part of the episode where Sarah and Blake get to tell us where we went wrong.

(13:30):

Each of them will have a chance to move a brand up or down on our rankings list and to add a new brand entirely. So Blake make a move.

Blake Droesch (13:42):

I want to swap Amazon and Walmart on the list.

Sara Lebow (13:47):

Okay, so just for visuals, Amazon is at the top of the list at number two, Walmart's toward the bottom at number seven.

Blake Droesch (13:53):

Right. I think that those are sort of perfectly misplaced on the list because Amazon sort of always deserves a nod and the expanding partnerships with TikTok and other social platforms is definitely a good step forward, plus other things that they've been doing with investing in AI, but they kind of flopped on their earnings. Whereas Walmart kind of continued to perform really well like they have been doing over the past several quarters. Amazon really, rang the alarms a little bit by saying that their consumers are being more cautious in their spending. And all of the subsequent, or many of the subsequent retail releases that we've seen since, have not shown that to be part of a larger trend. So I'm thinking that this might be a little bit of a hit on Amazon's core business that they've taken, maybe softer Prime Day sales, just people opting to go to other retailers, whether it be in store or online to buy more products. So I think they deserve to be dinged a little bit for that and Walmart is sort of the perfect retailer to be taking its place right now.

Sara Lebow (15:03):

Is Walmart continuing to do well interesting?

Blake Droesch (15:06):

Well, I mean, yeah, it's interesting. The economy is in turmoil right now. There's so much speculation as to what the current financial health of the consumer is. So the fact that Walmart's doing well is interesting and impressive.

Sarah Marzano (15:22):

I support that. I think what I've been impressed by from Walmart, just to take it back to my safe space of retail media, is that it's been very interesting to see them take this a test and learn approach where they see something working, they expand on it. They're not just sort of flipping the on switch into everything they could possibly be doing. But back in April, they announced that they were seeing positive growth from marketplace sellers within sponsored search ads so they opened up sponsored display ads to marketplace sellers and they pointed to that as being one of the key drivers of their growth. So they're innovating, they're iterating. They're not just sort of resting on the strength of their value positioning that they've done such a good job building.

Blake Droesch (16:03):

Plus Neutrogena, which is number one on your list, is making an attempt to appeal to a demographic that they can't reach. Walmart has successfully done that in reaching higher income consumers.

Sara Lebow (16:15):

Okay, so Walmart's retail media business is winning. That's interesting to me. I don't know if winning is the right word, but it is playing a good game. But isn't it interesting that Amazon is partnering with TikTok?

Arielle Feger (16:26):

So I'm going to push back here. Sorry, guys, because you have to look at it within a timeframe, as we do.

Sara Lebow (16:27):

That's a good point.

Arielle Feger (16:35):

This is our episode.

Sara Lebow (16:37):

She got you on a technicality

Arielle Feger (16:38):

And I think Walmart has been very high on our list several times for its innovation in retail media and whatever. I legitimately the other day, or this morning maybe, said "Walmart's been really quiet lately." And granted a big earning season, a good successful earning season is great, but I think that it's more interesting for someone to be doing something actively than just having something currently existing do well. Again, thinking about it through the lens of this month's most interesting retailers.

Sara Lebow (17:15):

So you're keeping it where it is?

Arielle Feger (17:17):

I prefer to keep it where it is.

Sara Lebow (17:19):

I think I'm doing the same. I'm sorry, Blake.

Arielle Feger (17:22):

Sorry Blake.

Blake Droesch (17:23):

Yeah, that's fine. I guess, yeah, making money is not interesting in retail. Who knew?

Arielle Feger (17:31):

It's expected in retail.

Sara Lebow (17:33):

All right. Sarah, what is your move?

Sarah Marzano (17:36):

I'm getting rid of Neutrogena. I'm knocking them off the list entirely. I think that launching a couple new products aimed at a demographic they should have been focusing on for a long time now on a platform that they haven't put a lot of work into cultivating any momentum on does not warrant space on this list. I hope the best for them, but I just don't think this is a super interesting move.

Sara Lebow (18:03):

I'm actually fine with this. Arielle might disagree. We put this list together and I was really convinced of Neutrogena at the time, but then as I was doing some more research into each of these, I was like, "Man, I don't actually know if we should have put Neutrogena at the top." I'm fine with moving them to the bottom.

Sarah Marzano (18:19):

Number one. Bold move

Sara Lebow (18:20):

You knocking Neutrogena off would give eBay that number eight spot.

Sarah Marzano (18:25):

I feel comfortable with that.

Arielle Feger (18:26):

I'll allow it.

Sarah Marzano (18:27):

Yes.

Sara Lebow (18:27):

Okay, so Neutrogena has moved down to number nine in the honorable mention spot. eBay for updating its search or relaunching its search is now in number eight. Okay, so you each have made your move. We've added eBay to the list, we've kicked Neutrogena off. Now is your chance to add a wildcard brand, a new brand to the list entirely. Sarah, what is your wildcard?

Sarah Marzano (18:53):

So I want to add Abercrombie & Fitch. They announced a deal with Haddad brands to distribute and develop their children's line. So Haddad will work on opening up wholesale distribution for Abercrombie & Fitch Kids and the licensor will also be developing an infant and toddler line. And this is where Haddad's expertise lies. They do licensing for Nike among other brands. And I think this feels like a very smart move for a brand like Abercrombie & Fitch that has shown a lot of strength within its product merchandising and has just done a really great job with its turnaround. As they look for the next phase of growth, I think branching into wholesale distribution makes a lot of sense.

Sara Lebow (19:38):

I actually, yeah, I could see putting Abercrombie & Fitch on this list, especially because so much of what they've been doing has been trying to regain popularity with young people. I don't think this is that interesting. First of all I don't know how well it'll work, but that's not what we're making this list out of. I don't think it's more interesting than Blake's push for Walmart. So if we were to add it to the list, I would maybe put it at seven, which would move Victoria's Secret down and kick eBay back off the list.

Arielle Feger (20:07):

I agree with that move. I think it certainly is interesting. I am also on the I don't know if it's going to work train, but again, that's not why we compile this list. We compile this list to see who's doing interesting things and I think making a play for children's apparel is a pretty interesting move.

Sara Lebow (20:24):

Okay, welcome to the list, Abercrombie & Fitch. Blake, what is your wild card?

Blake Droesch (20:31):

My wild card was an honorable mention, so I think we're going to have to just readjust the rules because I had ThredUp to propose to go onto the list, so if I can just rearrange twice, will the committee allow that?

Sara Lebow (20:44):

I'm allowing it.

Arielle Feger (20:45):

Yeah.

Blake Droesch (20:46):

Okay. Yeah, so ThredUp, I'm researching a report right now on AI search in retail and I've gone through a lot of the launched, a lot of them are still in beta, but ThredUp is one of the few that I've come across that are really sort of front and center rolled out on the website right now. And I got to say that that they've rolled it out is pretty great and it's a pretty good template for how a retailer can roll out AI search.

(21:17):

So it's got the image-based search, which works really well. And particularly for secondhand clothing image-based search I think is really valuable. And it offers different types of prompts kind of in a gray scale lettering in the search bar. So it's getting its customers used to using the tool but it also advertises basically how the AI on the backend is improving just the regular run-of-the-mill search that you can still perform in the search bar if you so choose. I do think that they're not doing anything, I think super innovative in terms of having an AI functionality that other retailers don't have, but I think that the way that they've rolled it out is really clean and a really good template for how other retailers can access this technology.

Sara Lebow (22:06):

I'm sold on that argument, but where would you put them on the list?

Blake Droesch (22:09):

Oh, that's a good question. I would put them above Nordstrom. That's where I would vote.

Sara Lebow (22:16):

Okay, so you would put them at number five.

Blake Droesch (22:19):

Number five, yeah. I think this is top five worthy.

Arielle Feger (22:22):

I think between the AI search as you just said, and the peer-to-peer marketplace that they just launched, which I think is really interesting, a great way to keep returns down, which is a big problem for retailers, I would say number five works for me.

Sarah Marzano (22:38):

Yeah, I think peer-to-peer is a genius move if they can get enough folks using it because it removes so many of the operational expenses that make resale online very difficult to be profitable. Everything from photographing, writing product copy, shipping products out, just getting them listed on the site, they're passing all of that work onto the sellers who are going to be using the marketplace.

Sara Lebow (23:01):

Yeah, and I didn't actually know about the AI search, but I think that you've made a great point there. I think image search is really valuable. And I also think this is just like we hear so many uses of AI and some of them are really cool and some of them are really not. Some of them are just AI for AI's sake. And this one's a good one. So yeah, I'll give it number five.

Arielle Feger (23:21):

Yeah, I think you get points for execution in terms of when we're talking about AI. Like ideas are great, but if you can make it work so that it's presenting a good customer experience, that to me is the win.

Sara Lebow (23:34):

Okay, I like that final version. So just to read that off, we have in our nine and 10 honorable mention spots, number 10, eBay, number nine, Victoria's Secret. Then on our list we have number eight, Abercrombie & Fitch. Number seven, Walmart. Number six, Nordstrom. Number five, ThredUp. Number four, e.l.f. Number three, Olipop. Number two, MARS. And number one, Amazon. Amazon made it to the top. Wow.

Arielle Feger (24:04):

Sorry, Blake.

Sara Lebow (24:05):

Sorry, Blake.

Blake Droesch (24:06):

It's a flawed list, but it is what is.

Sara Lebow (24:09):

Well, despite helping us make a flawed list, thank you for being here, Blake,

Blake Droesch (24:15):

Always a pleasure.

Sara Lebow (24:16):

Thanks for being here, Sarah.

Sarah Marzano (24:17):

Thanks for having me.

Sara Lebow (24:19):

And thank you, Arielle.

Arielle Feger (24:21):

This was a lot of fun.

Sara Lebow (24:22):

Thank you to our listeners and to Victoria who edits the podcast. I feel like I always call you number one on our list, but you are. Please give this a rating and review wherever you listen to podcasts. We'll be back next Wednesday with another episode of Reimagining Retail, an eMarketer podcast. And tomorrow join Marcus for another episode of the Behind the Numbers Daily.