June Monthly News Roundup

We are pleased to share with you our news roundup from June 2019. The RealReal and Chewy both had successful IPOs, sustainability continues to be rewarded by investors and customers alike, competition heats up in the beauty space with new offerings from Target and Amazon and more!

In June we continued to see high activity across the public and private markets. Fitness startup, Mirror reportedly closed a $36M funding round, valuing the company at $300M. Resale companies had a big month as online sneaker exchange platform, Stockx closed a $110M round, bringing its valuation to more than $1B and European luxury resale platform Vestiaire Collective raised $45M. Depop, a social shopping app that’s been described as a mix of eBay and Instagram that targets Gen Z shoppers raised $62M. Entertainment related platform and retail companies proved popular with investors with investments in Drone Racing League ($50M), kids experiential retailer Camp ($10.5M) and Zyper, a platform that finds super fans ($6.5M). Other notable raises in the DTC space included shoe brand Tamara Mellon ($50M),  jewelry brand AUrate ($13M), natural fragrance company Phlur ($7M) and accessories brand Baboon ($2.9M).

On the acquisition front, Chanel acquired a minority stake in green chemistry company Evolved by Nature and invested in Icelandic Outerwear brand 66°North. Delta Galil announced the acquisition of intimates company Bogart, SMCP acquired French men’s label De Fursac, Crate & Barrel acquired home decor brand Hudson x Grace and Patrick Drahi acquired Sotheby’s. Oreo-owner Mondelez took a majority stake in Perfect Snacks. The public markets continued to be quite active in the consumer retail space as well. The RealReal went public on the Nasdaq, raising $300M and valuing the company at $1.6B. Chewy went public on the NYSE to great investor enthusiasm, valuing the company at $1B. Global Fashion Group had a less successful public debut, raising less than half the sum it had originally targeted due to weak investor demand and Peloton filed confidentially for IPO.

Sustainability continues to be the cause de jour of consumer and retail brands across the landscape. While much has been written about whether consumers actually care whether a product is sustainable when it comes time to actually make a purchase, new research from the Harvard Business Review has shown that consumers are indeed voting with their wallets - against unsustainable brands. According to the research, products marketed as sustainable grew 5.6 times faster than their conventional counterparts.

In light of this, it comes as no surprise that several brands launched new initiatives geared towards sustainability efforts and investors continued to reward these plays. Resale and rental continue to pave the way as the most popular path for companies to promote sustainability. As noted above, The RealReal, a luxury resale platform IPOd successfully this month while sneaker exchange platform StockX and European luxury resale platform Vestiaire Collective both announced large funding rounds. Nordstrom announced a partnership with Rent the Runway to provide in-store “drop-off boxes” for subscribers to scan and return rented items. Scotch & Soda announced that it will launch a men’s rental subscription service in September, joining women’s brands like Ann Taylor, Vince and New York & Co. on the CaaStle platform. Already a leader in sustainability, Patagonia launched a mail-in trade-in incentive program for its used clothes. Not to be outdone, outdoor clothing and sporting goods company Arc’teryx announced its own re-commerce program for gently used gear. While eBay was a pioneer in the resale space, it has recently taken a more active role in the fashion industry. The Company announced a partnership with online luxury boutique What Goes Around Comes Around to release a curated capsule collection. Cotton Inc announced a partnership with Zappos for Good (the community outreach arm of Zappos) to collaborate on its Blue Jeans Go Green recycling program in an attempt to reduce textile waste. Finally, following in the footsteps of Farfetch’s Conscious Edit, Net-a-Porter launched Net Sustain on its homepage which focuses on sustainability with more than 500 environmentally friendly pieces from 26 brands. We expect to see this trend continue with more companies launching sustainability initiatives as well as bigger companies using strategic acquisitions and investments to get in on the trend like Neiman Marcus did with its investment in Fashionphile in April.

Additionally, competition is heating up in the beauty world as Target and Amazon take on the incumbents both on the specialty side (Sephora, Ulta) and the value side (Walmart). Target is in the midst of the largest revamp of its beauty department in years. The overhaul includes a new, more beauty friendly layout that mimics the format of an Ulta store as well as an increased focus on showcasing DTC brands like Harry’s and Target’s own hit private label brands like Good Fellow & Co. While Target doesn’t have exclusives with cult brands like Sephora and Ulta do, it hopes that its hybrid strategy of selling both new and exciting brands along with traditional value beauty brands like Maybelline will draw customers from both Sephora and Walmart. To put it into perspective, Target sold $18 billion worth of beauty products last year, more than Ulta and Sephora combined. To add insult to injury, Amazon unveiled its new online professional beauty store to sell supplies to licensed professionals. The store is meant to go head to head with Ulta and Sally Beauty as a one-stop-shop for stylists to be able to stock up on everything they need at a single, online, store for low prices. While neither Target nor Amazon will likely be able to eat away at the cult, high-end beauty market, these moves highlight increasing competition in the space for the high-low consumer who enjoys discovering new brands but is also happy to continue to wear the same Neutrogena moisturizer they have worn for the past ten years. We will see how this phenomenon progresses as more DTC brands decide whether to use Target's large retail footprint to expand their national reach. 

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