E-COMM

Retail's Catch-22% Off

With 47,000 chain stores (and counting) closed across the U.S., “nonessential” retailers are checking in for an indefinite staycation at their last resort: online discounting.

• Promotions are sweeping e-comm sites that are still fulfilling orders, from global chains like Nike to D2Cs like Christy Dawn.
• In the 10-day period ended March 18, there were 43% more discounted items available online across several chains than the same time last year, per LovetheSales.com.

The goal? Give stalled sales the defibrillator treatment. “Discounting is the easiest way to try to stimulate activity,” GlobalData retail managing director Neil Saunders told CNBC. 

One exception: Luxury retailers haven’t yet stooped to plebian promotions, Refinitiv and StyleSage data show. Across multi-brand luxury retail in the U.S., U.K., Germany, Italy, and France, discounts are fewer than last year.

Out of season

Like my Mariah Carey impression, discounting is usually a holiday party trick. Retailers plan for discounts in November and December because that’s when demand peaks and price becomes the No. 1 differentiator for customers.

• When there’s not a holiday or special event, mark downs are reserved for clearing out stale inventory. 
• Whip out the BOGO signs too often, and it can cheapen a brand’s image. 

But coronavirus shredded the schedule. E-comm sales for apparel and footwear retailers fell 37% from last year on March 11, per Rakuten Intelligence. So discounts to nudge transactions back up will continue so long as shoppers prioritize a stocked pantry over a new wardrobe. 

Looking ahead...20% off now could be 75% off in June. When stores closed by coronavirus eventually reopen, they’ll likely increase discounts to slough off outdated inventory. 

My takeaway: Slashing prices could convince wary shoppers to spend now, but it’ll hamstring profitability in the long run.

REAL ESTATE

What If We Just...Don't Pay

Rent’s due in seven days. But retailers squeezed by coronavirus store closures have decided not to mail their checks, Bloomberg reports. 

• Mattress Firm sent landlords a letter saying it won’t be able to pay April rent for its roughly 2,400 stores.
• Subway told landlords it's considering cutting or postponing rent payments at its 20,000+ U.S. locations, the Real Deal first reported. 

Down the food chain...small businesses are requesting similar rent waivers. After two customer-free weeks, cash reserves to cover rent are empty. 

Landlords say waiving rent will set them behind on mortgage payments, triggering defaults on loans. But retailers may have the upper hand. Some cities and states have halted commercial evictions. And where evictions are still allowed, there’s a -100% chance landlords find new tenants during a pandemic. 

Some solutions: The National Retail Federation called on the federal government to provide retail loans as part of ongoing relief efforts. The stimulus package awaiting Congressional approval provides loans for small businesses, but it’s not clear whether funds for real estate payments will be provided. 

If aid doesn’t arrive, landlords could defer payments for 90 days, salvaging relationships with tenants who’ve signed 10–15 year leases.

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D2C

I, a Dog Person, Struggled With This One

“Cat Person” is usually shorthand for Angela Martin types or that New Yorker story you never finished reading. Now, it’s a day-old petcare brand that hopes Instagram-friendly packaging will override those associations.

The details: Cat Person sells wet and dry food, beds, bowls, treats, and toys. It received funding from Harry’s Labs, the brand incubator of shaving company Harry’s. You can tell because Cat Person shares the muted color palette and sans serif font Harry’s made famous.

Cat Person’s cofounders say they aim to be the petcare company that doesn't treat cat owners like “second-class citizens.” According to an AYTM survey commissioned by Cat Person…

• 54% of cat owners have bought their felines dog toys.
• 47% believe pet stores don’t offer enough cat products. 

About the timing...applications to foster pets are spiking across the U.S. as the coronavirus forces workers to spend most of their time at home. As for the 42.7 million U.S. households that already own a cat, Cat Person cuts one more trip to a store out of the equation.

WHAT ELSE IS BREWING

• Now hiring: Instacart, Domino’s, Kroger, and more. 
• Canada Goose and Gap are repurposing parts of their supply chains to donate hospital gowns, masks, and scrubs.
• Shopify closed more than 4,500 sites related to coronavirus last week, the NYT reports.
• Nike beat fiscal Q3 earnings expectations on strong e-comm and North American sales.
• Neiman Marcus is reportedly considering bankruptcy.
• Amazon is prioritizing its Prime members amid heightened demand.
• European and U.S. buyers have canceled apparel orders from Bangladesh suppliers worth around $1.5 billion.

SPONSORED BY THE ASCENT

We triple-dog-dare you to find a more rewarding card than this one. In fact, if you find a cash back card better than this one, we’ll eat an entire tub of mayonnaise in one sitting. Yeah, no. Challenge rescinded. But you really would have trouble finding a card that can earn you $1,148 of value, like this one. Check it out.

SWAPPING SKUS

The well of virus-free content ran dry. I’m not apologizing because these stories about the near future for IPOs and influencers are .

• Last year, Morning Brew could tailgate an IPO every day of the week. Amid a pandemic, anticipated public market debuts like Madewell and DoorDash hang in the balance. Should we write them off for good? (Marker).
• Fashion influencers are walking a content tightrope: They need to keep their followers engaged, but no one’s pining for outfit tips. Here’s how they’re adjusting (Fashionista).

FROM THE CREW

The quarantine dashed my dreams of Retail Brew: On Ice! So we found another way to bring the newsletter to life this week. 

Tonight at 6pm ET, I’m joining Morning Brew cofounder Alex Lieberman for an After Hours interview. Follow @retailbrew, and you’ll receive a notification when I’m on the air. 

Tomorrow at 5:15pm ET, Alex and I will join forces again on LinkedIn Live to discuss COVID-19’s impact on retail. RSVP here to tune in.

NOW TRENDING

Novel phrases and products are now regulars in the Retail Brew lexicon due to coronavirus: social distancing, quarantinis, day pajamas. One item in particular has surged from relative anonymity last month to flying off of shelves this month, demonstrated by the spike in Google searches below.

What product is this? Keep scrolling for the answer.

Google Trends

NOW TRENDING ANSWER

Bidets