May 2020 Monthly News Roundup
By TRAUB On June 03, 2020
We are pleased to share with you our roundup for May 2020. This month we highlight big tech's aid to small businesses, the lasting effects on luxury fashion, and the continued effort to establish a sense of togetherness via digital communities.
The consumer reentering the world today is very different from a few months ago. As states begin the re-opening process, brands reevaluate their turnaround strategies in order to best position themselves for a successful reemergence.
Within the public and private markets, activity continued to be much slower than usual. Department stores as a whole remain challenged. Nordstrom announced closures of its three high-end Jeffrey fashion boutiques amid a luxury spending slump. Home goods retailer, Pier 1 Imports sought bankruptcy court approval to wind down its business after it was not able to find a buyer due to the pandemic. In the coming months, it plans to sell its inventory and remaining assets, including intellectual property and online operations. JCPenney is in talks to secure a $450M loan during its bankrupcty process. It also announced a new home goods private label with Linden Street brand which is now available for purchase online.
M&A was minimal in May with the exception of Zoom's acquisition of Keybase as part of its 90-day plan to enhance the system's security, and Target's acquisition of Deliv to enhance it's same-day-delivery capabilities. Notable investments this month included: spin-off from Alphabet’s Sidewalk Labs Sidewalk Infrastructure Partners (SIP) ($400M), electric scooter and bike rentals company Lime ($170M), celebrity "edutainment" platform Masterclass ($100M), fantasy league builder Sleeper ($20M), luxury secondary market retailer Rebag ($15M), and homeschooling startup Primer ($4M). Unsurprisingly, a handful of investments this month focused on companies reinventing how and where we work; the digital staffing service Zenjob ($30M), the visitor check-in startup Envoy ($20), and the deskless work promoter Workstream ($10M).
Tech Giants' Aid to Small Businesses
Throughout the pandemic, online sales have been a bright spot for large and small businesses alike. Tech giants are bolstering their online retail capabilities which includes bringing more local businesses online. This month, Facebook launched "Shops", a new feature that enables businesses to create a full-fledged Facebook Shop which allows consumers to buy and browse products directly from a business’ Facebook or Instagram profile. Although shops are free to create, they provide lucrative opportunities for Facebook in payments, advertising, and perhaps the integration of loyalty programs in the future. Google, on the other hand, focused its efforts on the launch of a new consumer behavior insights tool. The trend-focused data team, Think With Google, released an interactive tool named "Rising Retail Categories" to rank the most searched categories and products throughout the pandemic to help retailers make data-driven business decisions. Shopify announced several new products and features, including Shopify Balance, a new merchant debit card with payment plans, as well as a Buy Now Pay Later feature.
Lasting Effects on Luxury Fashion
The big names in luxury are expected to rebound, just as they have after previous recessions; however, a lot is left uncertain about the inevitable long-term changes for the industry. This month, the headline with perhaps the most attention was Amazon partnering with Vogue and the CFDA to launch a digital store that allows consumers to purchase luxury items from independent designers. Although this announcement came as a shock to many in the fashion world, it now solidifies Amazon's presence in the luxury fashion industry, an aspect of their business that it tried to build for the past couple of years. As the industry looks inward, many luxury labels have signaled a need to rethink the stale ritual of fashion seasons. Saint Laurent announced its intention to reshape the fashion calendar's schedule and Gucci's creative director, Alessandro Michele, announced that the brand will reduce the number of shows it stages to two per year. Tommy Hilfiger has experimented with live-streams to sell spring lines and bring his collections directly to the consumer. The brand broadcasted its first live-stream shopping event with a "see-now, buy-now" approach. In order to stay relevant with how consumers experience fashion, the brand hopes its new initiative of live-stream shopping will build the next generation's desire for more interactive digital shopping experiences.
Establish a Sense of Connection Via Digital Communities
Throughout the quarantine, brands have experimented with various ways to establish a sense of connection and togetherness that we all yearn. Facebook's most recent app launch was a TikTok-inspired music-making platform called 'Collab'. The app aims to allow people to create short-form videos so people can perform a single song by stitching the videos together or by collaborating with friends. Similarly, Pinterest also announced its integration with Shopify that turns member catalogs into shoppable product pins. This allows individuals and local businesses to better reach shoppers, and allows consumers to discover more local products. In the music industry, Spotify launched a new site called "Listening Together", which helps people feel less alone by allowing them to see the songs others are streaming at the same time. Similarly, streaming platforms are helping viewers watch content together even while being physically remote. “Netflix Party” feature gained popularity in the last two months, Hulu recently launched “Watch Party” and HBO recently partnered with Scener to offer a “virtual theater” experience supporting up to twenty people.
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