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Tools of the trade.
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Morning Brew May 20, 2022

Retail Brew

Recharge

Hey, hey. What a state we’re in. Which one? Any. Single. One. Gas prices are now more than $4 a gallon across the entire US.

In today’s edition:

—Katishi Maake, Andrew Adam Newman

TOUR DE HEADLINES

Price to pay

Dollar bill getting inflated by a bike pump Francis Scialabba

What a week for retailers. So much happened that we thought it worthy of a recap:

Tough times: Inflation is the name of the game, and basically everyone is losing. Walmart and Target missed on their Q1 earnings, both citing increased expenses and excess inventory to explain the stunning numbers.

  • Target saw net profits drop by a staggering 52%, and the company’s stock price sank 25% on Wednesday, its worst day since 1987.
  • Walmart’s net income in Q1 fell to $2.05 billion from $2.73 billion YoY, while revenue growth was only marginal at $141.6 billion, up from $138.3 billion last year.

Walmart CEO Doug McMillian said the company stocked up on inventory to try and get ahead of demand, but that proved to be a double-edged sword.

“We like the fact that our inventory is up because so much of it is needed to be in stock on our side counters, but a 32% increase is higher than we want,” McMillian told analysts Tuesday. “We’ll work through most or all of the excess inventory over the next couple of quarters.”

Kohl’s was in a similar boat. It also missed on earnings and cut its sales and profit outlook for the year while in the midst of a potential sale of the company.

Kind of sweet home: The two major home-improvement retailers tell a slightly different story. While Lowe’s earnings also missed Wall Street’s expectations—reporting a YoY net sales drop from $24.42 billion to $23.66 billion—Home Depot’s net sales jumped 3.8% to $38.91 billion.

  • Lowe’s attributed its results to a chillier spring, leading DIYers (roughly 75% of its biz) to put projects on the back burner.
  • Home Depot, on the other hand, says its customers aren’t shying away because of inflation. While the number of transactions dropped 8.2% in Q1, Home Depot’s average ticket jumped 11.4%.

“With these inflation rates, it’s a very unique year in inflation, and [the] ticket is higher [than] the norm for sure,” COO Ted Decker told analysts Tuesday. “But again, the consumer is hanging in there.”

Shoe now: And, in a surprise move, Under Armour announced that CEO Patrik Frisk would step down. The retailer said it’s taking the opportunity to “start a new chapter of growth.”—KM

        

TOGETHER WITH RECHARGE

Wanna see customer lifetime value skyrocket?

Recharge

Uh, yeah. Well, guess how much customer lifetime value (LTV) can jump when you offer both subscriptions and one-time purchases? A whopping 230%.

Yep, subscriptions are that valuable. And utilizing a premium subscription-management solution like Recharge can take the guesswork out of subscriptions, helping you expand LTV and deliver greater value for your customers—and your e-commerce biz.

In case you need a refresher, LTV is a key metric that measures the health of your e-commerce brand by calculating the $$$ amount your average shopper brings in throughout their customer lifespan.

So, how much more value could you add for your business with a subscription program? Recharge’s LTV calculator helps give you a sense of the impact.

Curious? Give Recharge’s LTV calculator a whirl for free, here.

TOOLS OF THE TRADE

The buck starts here

ornate cash register Bettmann/Getty Images

There are devices in the retail world you take for granted. This new monthly feature will help you stop doing that.

The cash register

  • Patented: 1879
  • Inventors: James and John Ritty

The Incorruptible Cashier: James Ritty owned a saloon in Dayton, Ohio, that always seemed to be busy but wasn’t turning much of a profit. He suspected—in the dubious tradition of scapegoating employees—that his bartenders were putting payments in their pockets instead of the till. But it was just a theory because there was no record of every drink sold.

Working with his brother, John, a mechanic, they invented what would become, by many accounts, the first cash register, securing a patent in 1879. Making its intention to thwart sticky-fingered employees clear, Ritty called it “Ritty’s Incorruptible Cashier.”

It was, in truth, a fairly crude counting machine. It had a dial that resembled a clock face with two arms, for dollars and cents, which tallied cumulative sales. It didn’t calculate how much change customers were owed. This first version didn’t even have a cash drawer. But some reports note it did have a bell, so it was likely to draw a hairy eyeball from the manager when an employee didn’t ring up a sale.

  • Etymology tidbit: The phrase “ring up” likely comes from the tell-tale bell on a cash register, according to Merriam-Webster, which traces the first usage to 1900.

The brothers would barely cash out a couple years later, selling the business (and their patent) for $1,000. The company they sold would eventually become the National Cash Register Company and secure thousands more patents and develop many of the device’s present-day functions, including the ability to print the receipts that never fail to delight and inspire CVS shoppers to this day.

Party like it’s $19.99: Known as “charm pricing,” it’s the notion that charging $19.99 rather than $20 has an inordinate impact on purchasing behavior because…psychology! But what started the practice, according to Bill Bryson’s book, Made in America, is that owners of the first cash registers realized that charging non-round numbers would help compel store clerks to use the register to make change—and thus record the transactions. Again, these babies were invented to get everything on the books, not to tell Tyler working the register at Wendy’s how much change you’re owed on the $5 you just handed over for that medium Frosty.

Yours for a song: “Money, get away / You get a good job with more pay and you’re okay.” That, of course, is the start of “Money,” Pink Floyd’s 1973 single, but it’s not really the start. That would be the 12 glorious seconds of nothing but an old cash register and coins, recordings painstakingly spliced together in a tape loop in that pre-digital epoch by the band’s Roger Waters.

Click here to read what the National Cash Register Company is up to now.AAN

        

WHAT ELSE IS BREWING

  • Nordstrom is growing its partnership with Asos, selling the brand in 10 brick-and-mortar locations.
  • The Restaurant Revitalization Fund, part of the Small Business Covid Relief Act of 2022, failed in the Senate on a 52–43 vote.
  • Tag Heuer has begun accepting cryptocurrency on its US e-commerce site.
  • L’Oréal is reportedly closing in on a deal to acquire luxury fragrance brand Byredo.

FROM THE CREW

The Brew’s on the big screen. Well, a screen as big as the size of your monitor or smartphone. Brought to you by our in-house team of creators, our YouTube channel is packed with all kinds of content to help you stay up to date and in the know. Stream our latest vids here.

SWAPPING SKUS

Today’s top retail reads.

Baby steps: Startup ByHeart is the first new baby-formula manufacturer in the US in 15 years—bringing the country’s total to…five. “It’s the most highly regulated food in the world,” said CEO Ron Belldegrun. (Forbes)

Plane and simple: The three biggest shipping lines in the world want to get more air. (Quartz)

Bite off all that you can chew: Five priorities in grocery this year (nope, not the metaverse). (McKinsey)

Got marketing on the mind? So do we over in Marketing Brew, our newsletter covering the latest news, developments, and ins and outs of the marketing world. Stay up to date on what’s brewing when you subscribe here.

FRIEND OR FAUX?

Three of the stories below are real...and one is most definitely not. Can you spot the fake?

  1. MTV is selling branded catfish to promote its namesake show.
  2. Students at Johns Hopkins developed an edible tape to keep burritos, overstuffed or not, in check.
  3. A limited-edition box of Cheez-It features crackers aged for six and a half months to the tunes of Snoop Dogg, LL Cool J, and the always calming Beastie Boys.
  4. Hot Pockets apparently don’t always need to be “burn the roof of your mouth” hot—its new sandwich doesn’t even need a microwave. You thaw, you conquer eat.

Keep reading for the answer.

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FRIEND OR FAUX? ANSWER

You caught us trying to catfish. But MTV is trying its hand at hard seltzer with Juicy Shore.

 

Written by Katishi Maake and Andrew Adam Newman

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