NRF’s Big Show got underway in New York City on Sunday, marking the conference’s return to the Javits Center after a virtual version in 2021. We’ll be back with a recap tomorrow, but today: one of the buzziest topics to come up in many sessions—the metaverse.

Don’t believe the hype?  Emma Chiu, global director at Wunderman Thompson Intelligence, led a session on what retailers and brands should know about the multiverse. She opened with a slide showing a Daily Mail headline from December 2000: “Internet ‘may just be a passing fad as millions give up on it.’”

Her point: Yeah, there’s plenty of hype around the metaverse, as there was about the web in those heady Information Superhighway days. But it’s not a flash in the pan(demic). Chiu had the numbers:

• 66% of consumers “prefer to engage with brands digitally.”
• 73% find it “easier to interact with brands with a digital presence.”
• 85% believe “digital presence will be essential for a brand to be successful in the future.”

Real money for virtual goods? Some people can’t fathom why anyone would spend as much on sneakers for an avatar as they would for an IRL pair. But Chiu noted Gen Z’s tendency to attach more value to experiences than material objects—aka NOwnership. Only 26% of Gen Z think owning a home is extremely important, for example, compared to almost 35% of millennials, according to a recent Apartment List survey.

In a session about how to reach Gen Z consumers, Meagan Loyst, an investor at venture capital firm Lerer Hippeau and founder of the group Gen Z VCs, agreed. She said that “the metaverse is creating interesting cultural moments”—and revenue streams.

• Loyst noted that a digital-only Gucci bag sold for more than $4,000 on Roblox.
• Loyst, who’s 24, said she’s not that spendy, but she hangs out in Paris World in Roblox, and is glad that her avatar is well-appointed in case she runs into Paris Hilton’s avatar some day.
• Over the holiday break, Loyst said she immersed herself in the metaverse and wrote a 9,000-word intro for newbies. It explains how fashion brands like Vans, Nike, Ralph Lauren, Balenciaga, Gucci, and Uniqlo are connecting with consumers in the metaverse.
  

“Gen Z is powering a lot of the energy to the metaverse and it’s important for brands to have a presence there,” said Loyst during her session.–AAN

According to some estimates, roughly 11 million pounds of underwear end up in US landfill sites every day. That’s an ugly stat to confront as an intimates business: Your product contributes to nearly 41 blue whales’ worth of waste. It’s why undergarment companies are beginning to take sustainability more seriously.

For instance, Soma rolled out used-bra donation services, Walmart introduced plant-based bra cups, and today, Parade is partnering with recycling company Terracycle on an underwear recycling program. But the sustainability push doubles as a loyalty play, as the company seeks to establish repeat customers with incentivized, action-based discounts.

“We want to make it as easy as possible,” Parade’s head of impact and communications, Kerry Steib, told Retail Brew. “[Underwear] is one of the [textiles] where the least sustainable options really exist for end of life. You can’t thrift it, you really can’t repair it, and [you] can’t resell it.”

The company will send free Second Life by Parade packages, which include a biodegradable bag and a prepaid return shipping label, upon request from the Parade website. From there, consumers are encouraged to pack up clean, gently used pairs of underwear (from any brand) and return them in exchange for 20% off at Parade.

• Second Life by Parade returns will be recycled into new products like insulation, furniture, and bedding.
• Parade already uses recycled fabrics in its garments and recycled materials in its packaging.

Sucharita Kodali, principal analyst at Forrester, is hesitantly optimistic about this kind of sustainability initiative.

“So many brands just give you deep discounts these days. To tie it to some good activity on the part of the consumer is a win-win for both the brand and the shopper,” she said. “What happens to the merchandise after it is returned remains to be seen though. There are so many exposés and RFID investigations into clothing drop boxes, and most of the time, the clothes are destroyed or even sold for fuel in poor countries.”

• A 2014 New York Times investigation found that many collection bins are in fact scams.

+1: As part of today’s new program, Parade also announced a commitment to the Science Based Targets Initiative, a climate action organization that enables private companies to set emission reduction targets. The brand, which says it’s on track to become carbon positive by 2025, will release its targets later this week.

“We are far away from a circular economy, but this is a step in that direction. Hopefully, this is one of many things that brands think about,” Kodali continued. “Chemical-free production [and] sustainable material sourcing are just as important in the future.”–JG

Despite the dining category’s recent swings, consumers are still craving their coffee fix.

Following dips at the pandemic’s onset, coffee-shop foot traffic returned to pre-pandemic levels around April 2021 and has beaten 2019 levels since last May, according to a white paper by Placer.ai.

• The coffee space notched notable two-year growth over 2019 in November (+8.4%) and December 2021 (+7.5%), compared to overall dining, which saw respective 6.4% and 1.8% declines.

Coffee break: While visits are back to pre-pandemic levels, some behaviors have changed. Consumers have shortened their time in coffee chains since Q2 2020, and have also shifted their visits to “late morning,” per Placer.ai. These shifts are both likely to persist, especially with later visits now accounting for 26.2% of all visits in Q4 of 2021.

With the emergence of new Covid variants, smaller players like Caribou Coffee and Peet’s have been more vulnerable to foot-traffic fluctuations, seeing a Yo2Y decrease in 2021’s second half, compared to 2019.

• Meanwhile, Starbucks’ city cafés have recently seen significant growth, Placer.ai found, despite the company’s focus on its suburban footprint.

Brewing tensions: The classic East Coast–West Coast rivalry between Dunkin’ and Starbucks is heating up as they infringe on each other’s territory. Starbucks notched 30.5% Yo2Y foot-traffic growth in New York in Q4 2021, while Dunkin’ saw a 28.8% Yo2Y boost in California.

• Dunkin’ has historically had “mixed success” in the Golden State, R.J. Hottovy, head of analytical research at Placer.ai, told Retail Brew, but its drive-thrus are giving it a boost.

These two have more competition than just each other: Oregon–based Dutch Bros. Coffee, which went public in September, has been a “standout story” with its own strong drive-thru business and peak-hour throughput, Hottovy noted.

• As it grows its footprint in California, it’s seen 170% growth between January 2020 and December 2021. Plus, since Q2 2020, the percentage of Starbucks and Dunkin’ patrons who have visited Dutch Bros. is up ~2 points. Still, customer loyalty to the two main chains has yet to take a hit.
• “What you are going to see is a lot of people trying to emulate what [Dutch Bros. has] done,” Hottovy noted.

Looking ahead…While the coffee category is returning to “a period of more stable growth,” Hottovy said, coffee shops must recognize changing behaviors and balance the grab-and-go nature of coffee chains with their sense of community.

“It really comes down to knowing who your customers are and formatting your locations to best satisfy those different consumer need states,” he said.—EC

Today’s top retail reads.

Electrifying fleet: Amazon is switching to electric vans for its delivery fleet, but can they find manufacturers to build them all? “We are going to need to add a lot of commercial vehicles by 2040, infrastructure willing, of course,” said an Amazon representative. (The New York Times)

Trendy tots: How Abercrombie Kids finally got as fashion-forward as its adult line. (Glossy)

Fancy that: The new era of upscale store brands. (The Wall Street Journal)

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What happened in the world of retail this week in…2002 and beyond? Retail Brew takes you way, way, way back.

Are some things just destined? You’ll understand why we ask by the last bullet point:

• January 16, 2019: Former Sears CEO Eddie Lampert managed to sidestep a Sears liquidation with a $5.3 billion bid that would keep roughly 400 stores open. Now: Some 35 Sears locations are reportedly still up and running.
• January 18, 2011: Starbucks introduced mobile payments nationwide, to cheers from both iPhone and Blackberry users.
• January 20, 2010: Kraft reached a deal to acquire Cadbury for ~$19 billion, a move that led the UK to change its takeover rules.
• January 22, 2002: Kmart filed for Chapter 11 bankruptcy—the largest ever filing for a US retailer at the time.

Catch up on the Retail Brew stories you may have missed.

• Fashion Week executives have declared business as usual, as omicron surges on
• Retail spending slumped in December, but grew YoY: report
• Subway Australia is considering shipping ingredients via planes, but is it sustainable?