Friday Business No. 11: Lululemon Dupes + DTC Boots?

Welcome to Friday again, everybody. We made it.

📰 headline roundup: let's look at the news in retail.

📍Best Buy launches AI-powered delivery tracking

Best Buy has launched the capability for detailed, street-level tracking of a shopper's delivery. The most interesting part of this is in bold:

"Today we’re excited to announce a new live tracking feature, leveraging AI solutions, that will make the Best Buy delivery or installation experience more convenient than ever."

I look at this and think, this is great they're doing it, I really like having that feature when I order something on Amazon. But what about this is using AI? Isn't this just a map with GPS tracking? If it's not clear to me, it may not be clear to others, and I think we're going to keep seeing companies shoehorn AI into press releases, because it generates attention. Borrowed a chart from Scott Galloway's excellent newsletter. Said another way, if the headline instead was "Best Buy App Now Has a Map" it likely doesn't as much attention. Keep an eye on this. “AI” is an eye-catching coat of paint.

🪞Meet the company brokering partnerships between celebs and brands

Celebrity endorsements are changing, and a company called Parallel is one of the drivers. Parallel has built a business on being able to "act as a 'bridge' between entertainment and entrepreneurship." Some examples:

• Low-sugar candy brand Behave & actor Busy Phillips
• Venus Williams & Happy Viking protein drink

What appears to be happening is that equity is becoming a more realistic method for compensating celebrities for their endorsement. Parallel says that its deals fall in the 0.5% to 15% range for talent, and it also works to foster ways the talent could potentially support the brand. I think we'll continue to see more of this for two reasons.

1. Smaller, very nimble brands that started out digitally native continue to outperform in many traditional CPG categories.
2. Celebrities continue to show a propensity to want to take on new challenges beyond what got them where they are - Russell Westbrook launched a clothing line, Gwyneth has Goop. Leave it to Dennis Smith Jr. to sum up why really well.

📱Gen Z more likely to buy holiday gifts via social media

Not a surprising headline, but one interesting thing it indicates in here: Buying products directly from social platforms is not going away, it's becoming increasingly mainstream. 42% of Gen Z shoppers said they're likely to buy their holiday gifts via social media, compared to 26% of millennials, 15% of Gen Xers, and 6% of baby boomers. I think we'll continue to see this expand, and we'll see the social platforms work hard to improve their capabilities in this area so they can win this future consumer. TikTok Shop is a clear example, Youtube and Shopify's partnership is another.

📈Walmart beefs up its third-party marketplace to further take on Amazon

A few interesting things from Walmart here, namely they're adding some high-end beauty brands like Beachwaver and T3, and they're expanding the list of categories they offer pre-owned and collectible via Walmart Restored. These two retailers will continue to look for creative solutions to earn hearts, minds, wallets, and stomachs too.

👖Lululemon ‘Dupes’ Are Just as Cool With the TikTok Crowd

Private label leggings? Maybe bigger than you think. Trends like "dupes" (short for duplicates) and "underconsumption core" (a pushback among youths against fast fashion and overspending) mean that more young people are less enchanted than ever with a brand logo. There's some echoes of the "normcore" movement from the 2010's here, and I think this is going to vary brand-by-brand, because ultimately the question is - is a household that makes $50,000 a year still going to have the same purchase patterns if and when it makes $100,000? Some, but not all. Here's an example of how it's showing up in social feeds.

🛵H-E-B Introduces Rapid Delivery Through Its Favor App

Back in 2018, beloved Texas grocer H-E-B made an interesting bet: They bought an on-demand delivery service called Favor. I'm a fan of this strategy, and here's why: The shopping patterns for services like Favor tend to skew younger, ie Millenial and Gen Z. So this is an opportunity for H-E-B to reach new households as they're venturing into adulthood. Without knowing the financials, looks like a smart move paying off six years later.

👢‘It’s been a matter of when, not if’: Cowboy boot brand Tecovas enters wholesale

Another example of a highly successful DTC brand entering the world of retail here. My experience with Tecovas is that they’re good boots and have great customer service, but their main draw is that they're accessible Lucchese, 70% of the quality at 50% of the price. So I'll be curious to see, when they inevitably trade some profitability in return for growth by going into retail, will product quality stay where it's at?

🍫 an andes mint: something nice on the way out

A short form video from a creator named Tatum Brandt is our andes mint today, because I really enjoyed getting to learn more about the logos for the 2028 Olympics in Los Angeles. Good storytelling, good visuals, and just a super interesting topic.

I'm out. Y'all have a good weekend. Let's see if we can keep ourselves above ground and do this same dang thing again next Friday.