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Will more retailers start charging shoppers for online returns?
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Morning Brew May 19, 2022

Retail Brew

Black Crow AI

Sup. Wait, did someone say snacks? Grab your Milanos and Goldfish because on Wednesday, June 15, we’re sitting down with Danielle Brown, Campbell Snack’s VP of marketing for cookies and crackers (job-title goals), to discuss how one of America’s top food brands is keeping up with Gen Z’s evolving palate and preferences.

We’re not stopping at snacks, though—this is Retail Brew, so count on drinks, too. Join us in NYC, where doors will open at 5:45pm ET. Spots are on a first-come, first-serve basis. Register here.*

*Note: This event has limited capacity.

In today’s edition:

Jeena Sharma, Erin Cabrey

E-COMM

The point of no return?

Retail returns Francis Scialabba

Zara shoppers in the UK might be thinking twice before clicking Add to Cart more than once. Last week, the fast-fashion giant started charging its UK customers a fee of £1.95 to return their online purchases—well, if they drop them off somewhere other than its stores. (There, the only cost is time spent in line.)

Now, Zara isn’t the first retailer to make this move, and, according to analysts we spoke to, it might not be the last. Here are their thoughts on the strategy.

Clothes call: “Apparel is where I see a large portion of brands who are having to start charging for returns. A lot of what we return never gets resold. It either goes into a discount environment or gets tossed—it doesn’t always make it back to the retailer in time to be on the sales floor,” explained Claire Tassin, retail and e-commerce analyst at Morning Consult. “When you’re talking fast fashion, there’s a strong chance they’re not going to be able to resell that item. That also has to play into the economics of when it makes sense to charge customers or when it doesn’t.”

Store run: “It is a good strategic move to get people back into the stores. It probably allows people to impulse buy things that they see in the store itself,” said Michael Olaye, VP and managing director of experience community at R/GA. “But it would be clever to do it as maybe on the third return or second return, rather than everybody who chooses to return gets the charge, since there are people who will buy and might make a mistake—or it doesn’t fit and [they] would like to return it.”

Time will tell: Zara “does have a unique customer base that is pretty loyal to its trendy styles and their limited product runs. They’ve established a great sense of urgency just on how fast they can turn goods,” noted Tyler Higgins, the retail practice lead and managing director at AArete. “But the other side is there are a lot of retailers that just won’t be able to do it immediately. You’re going to see this massive tail who just waits it out to see how customers respond. Ultimately, they either try to increase their customer acquisition by holding the $0 returns or just follow suit to manage what their margins are.”—JS

        

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BEAUTY

Rinse and Z-peat

Hally Hair foam dye Hally Hair

Yesterday, we shared how two hair-care brands, Hally Hair and Insert Name Here, have been capitalizing on what’s going viral on TikTok—and aligning their products with the needs, values, and budgets of Gen Z shoppers to (hopefully) outlast the frenzied trend cycle.

But, trends and TikTok’s For You page don’t always tell the “full story,” explained Kathryn Winokur, founder and CEO of Hally Hair, which sells foam hair dye.

Based on feedback from 2,000 college students and even retail buyers, she found there’s a strong market for more natural looks (plus some fun ones) for its core customer base of women 18–25 years old, 70% of whom are already coloring their hair.

  • Atomic Blonde is its best seller, followed by Purple Avalanche (a collab with influencer Ava Phillippe) and milky-brown Cola Coaster.

“You have to build a business with a core and then also a trend. For us, we look at trends as a way that we can participate in the conversation,” Winokur said. “You also have to focus on your core SKUs and your core business, which no matter what comes and goes on TikTok, will remain true.”

Split ends: Gen Z values—whether it’s diversity and inclusion, mental health, or clean ingredients—have a lot of sway on what they buy. For example, 76% of Gen Z want beauty ads to include more representation of different skin tones, according to YPulse, a youth research firm.

  • Hair-extension brand Insert Name Here works to match all different hair textures and curl patterns, while Winokur ensured Hally didn’t disrupt them. Hally also donates 1% of profits to nonprofits like Sad Girls Club, Active Minds, and Trans Lifeline.

“Gen Z, they have a million and one options,” Winokur said. “It goes into their decision-making set. ‘Is this product good for me? What are their stances on the environment? What are their opinions on mental health?’ All that is very much core to their consideration set.”

Click here to read the full story.—EC

WHAT ELSE IS BREWING

  • Under Armour’s CEO and president will step down from his role in a surprise announcement.
  • Kohl’s earnings followed the trend of the week: After a miss, the company lowered its profit outlook for the year.
  • Bath & Body Works also slashed its outlook, citing inflationary pressures.
  • Wendy’s and McDonald’s are being sued for allegedly misleading customers by overstating their patty sizes in ads.
  • Ulta Beauty debuted its own retail media network.

TOGETHER WITH PATTERN

Pattern

Gather with ecommerce greats. Connect with the brightest minds in the game at Accelerate: the Global Ecommerce Acceleration Summit. Execs, brands, and innovators come together June 15–16 in Salt Lake City to solve problems, gain inspo, and hear from speakers like actress and Hello Bello cofounder Kristen Bell and filmmaker Jimmy Chin. Use discount code SAVE50 to register now.

SWAPPING SKUS

Today’s top retail reads.

More than a grocery store: What Buffalo’s Tops Friendly Market means to its community. (AP)

Page-turner: The story behind New York City’s first Asian American woman-owned bookstore. (CNBC)

20/22—and beyond: Ibrahim Kamara, the new art and image director at Off-White, has much more than a vision. “One of the things that helped me the most is I don’t limit my mind to one space,” Kamara said. “I grew up relying on my imagination because I didn’t have access to many things. So, I had to imagine them.” (Business of Fashion)

Mobile app strategy: After noticing a shift from desktop to mobile traffic, clothing brand Scotch & Soda went all in on a turnkey app solution—which now owns a 23% share of their total e-commerce revenue. Learn how they got there with NewStore.*

*This is sponsored advertising content.

NUMBERS GAME

The numbers that you need to know.

As parents and caregivers in the US grapple with the baby-formula shortage, many are wondering how we even got to this point. Well, NPR’s Planet Money lays out a few figures:

  • 4: The number of companies that control about 90% of the country’s formula market.
  • 20%: The (reported) percentage of formula that Abbott Nutrition’s Michigan plant supplies to the US.
  • 2: How many weeks it’ll take to restart production at said plant. (It should be another six to eight weeks to get it to full capacity.)
  • 17.5%: The tariff on most formula imported from outside the US.
  • 13%: The increase in formula sales overall in April, per IRI.

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Written by Jeena Sharma and Erin Cabrey

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