The Goods (U.S. Edition) – Super Bluesday
Welcome back to The Goods! This week we’re discussing the end of the traditional retail calendar, an election shopping slump, and the push for accessible packaging in the beauty industry.
The first woman and person of color to ever land on the moon will wear Prada.[1] Developed in collaboration with NASA and Axiom Space, the designer space suit combines aesthetic design with advanced engineering to ensure astronaut safety in extreme conditions while “visually inspiring future space exploration.” Stay tuned for the moon/catwalk in 2026!
Expert Insights: Shoptalk 2024
Last week, Retail and Consumer Managing Director Katie Bestenlehner attended ShopTalk Fall in Chicago. The conference was jam packed with insights and learnings about the latest in retail including unified commerce, product and merchandising capabilities, operational and supply chain trends and observations on new retail growth opportunities. And of course, AI was a hot topic across everything. Keep your eyes on our LinkedIn for more insights!
What’s in: this week’s trends
- Birkin Through the Courts: An ongoing lawsuit against luxury brand Hermes alleges the company is violating U.S. antitrust laws by only selling Birkin bags to customers with substantial purchase history.[2] A revised lawsuit filed earlier this month added allegations of false advertising and fraud, stating that the brand knows many consumers will not get a Birkin even if they buy other Hermes products. However, the judge in the case has suggested that Hermes’ alleged conduct may actually increase competition – not stifle it.
- It’s Never Too Early: The traditional retail calendar may be a thing of the past. Retailers are releasing seasonal products weeks before the traditional time to accommodate growing consumer demand and boost sales.[3] Whole Foods released autumnal items like pumpkin spice pancake mix and apple pear ginger Italian soda in the first two weeks of September, Bath & Body Works rolled out festive scents in October, and Walmart announced Thanksgiving meal savings two weeks earlier this year. But for consumers who wait year-round for their balsam fir this and apple crisp that, it’s never too early.
- Free the Udder! Coffee consumers are frustrated over Starbucks’ decision to keep milk and sugar behind the counter, a practice implemented during the pandemic.[4] Patrons report that baristas often struggle with specific customization requests, leading to incorrect drink orders and wasted ingredients. Despite some cafes restoring self-service condiment bars, Starbucks believes the newer system is less wasteful and allows baristas to more effectively manage orders.
Cash or card: consumer behavior
What’s going on with the consumer these days? This week we’re discussing swicy foods, a tale of two consumers, and the election shopping slump.
- Super Bluesday: Uncertainty caused by the election is making consumers reluctant to make big-ticket purchases. Every four years, car dealers, real estate agents, wedding planners and financial planners endure what is known as the election shopping slump.[5] Not all spending is off the table, though. According to one behavioral scientist, consumers often make more discretionary purchases on less costly items (like $8 lattes) in stressful times in an attempt to regain control…or at least the illusion of it.
- Sweet on Heat: The emergence of “swicy” (sweet and spicy) is heating and sweeting up palettes everywhere. Nearly 10% of restaurants have something “swicy” on the menu, and this is expected to grow 9.6% over the next four years. From Shake Shack to Burger King, brands are blending fruity flavors with chili powder, or using sauces like hot honey and gochujang to entice adventurous eaters.[6] Gen Z is an especially swicy generation, with an appreciation for bolder, hotter flavors and diverse cuisines.
- A Tale of Two Consumers: Driven by rising incomes, home equity, and stock market gains, wealthier consumers are driving retail spending – marking a shift from pre-pandemic spending patterns.[7] While retail sales have continued to grow, discretionary spending for lower-income groups has declined as they feel the squeeze of inflation. These disparities help explain the gap between gloomy consumer sentiment and widespread evidence of a healthy U.S. economy.
Making moves: industry transformations & innovation
ICYMI, even industry icons need to reinvigorate their brand presence through unique and creative ways. Here are some new brand moves that you should know about:
- Shrinkflation Sensation: It seems “shrinkflation” is the term du jour in retail these days.[8] Approximately one-third of everyday items such as toilet paper have shrunk in size since the pandemic, while costing the same. Now, it seems some companies are hearing consumers’ cries. In response to viral posts on social media, PepsiCo announced it will increase chip counts in Tostitos and Ruffles “bonus” bags by 20% without raising prices.[9]
- Easy Application: Some beauty brands are redesigning their packaging to accommodate those with disabilities such as dexterity challenges or low vision. E.l.f. Beauty now features QR codes for visually impaired customers to scan for a description of the product and application tips, and Rare Beauty has partnered with the Casa Colina Research Institute to make its product designs more accessible.[10] What’s good for consumers is good for business: according to Arthritis Foundation surveys, over 70% of consumers would switch brands for Ease of Use Certified products.
- Aisle of Dreams: Amazon opened its flagship ‘Amazon Grocery’ store in Chicago’s upscale Near North Side neighborhood last week.[11] The store features six aisles of packages goods, a coffee bar, ready-made sandwiches, sushi, and a baked goods case. The store aims to complement Whole Foods’ natural products with favorite national grocery brands and household essentials like Coca-Cola, Fritos, and Folgers coffee.
Capital Markets Corner
What consumer news is moving the market this week? Our investor relations experts break down this week’s trends and headlines.
- Acting Out: Investor activism has been ramping up across the consumer sector, agitating for change at french-fry maker Lamb Weston and consumer health company Kenvue. These moves follow activist activity at other well-known names like Starbucks, Disney, Gildan, and Cheesecake Factory.
- Jana Partners now owns roughly 5% of potato products maker Lamb Weston and plans to push the company to improve its operations and capital allocation strategy, as well as explore a potential sale. Lamb Weston’s stock is down roughly 30% YTD.[12]
- Kenvue – owner of Band-Aid, Neutrogena and Tylenol – is also facing pressure from Starboard Value.[13] Starboard believes that Kenvue has underperformed its peers despite owning “some of the best consumer brands.” The company’s share price has changed little this year, compared with the S&P 500 index’s rise of about 23% over the same period.
- Crunch Time: In his first big move as CEO, Nestlé’s Laurent Freixe cut the company’s full-year sales growth outlook to 2%.[14] Disappointing sales and a number of operational issues have weighed heavily on Nestlé’s stock, which tumbled roughly 15% this year. While Freixe has sought to allay investor concerns, Vontobel analyst Jean-Philippe Bertschy has described the new outlook as a “very painful reset” and unprecedented in the world’s largest food & beverage operators’ 158-year history.
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[1] Luke Leitch, “The First Woman on the Moon Will Wear This Prada Spacesuit,” Vogue Magazine (October 16, 2024), https://www.vogue.com/article/the-first-woman-on-the-moon-will-wear-this-prada-spacesuit
[2] Mike Scarcella, “Hermes shoppers try again in Birkin bag antitrust lawsuit,” Reuters (October 14, 2024), https://www.reuters.com/legal/government/hermes-shoppers-try-again-birkin-bag-antitrust-lawsuit-2024-10-14/
[3] Anne D’Innocenzio, “Why stores are throwing out the traditional retail calendar,” AP News (October 13, 2024), https://apnews.com/article/seasonal-trends-holiday-halloween-thanksgiving-christmas-335a4baeb03a8afb37206e74bfcbbf28
[4] Heather Haddon, “Hope Stirs in the Fight to Free the Milk and Sugar at Starbucks,” The Wall Street Journal (October 16, 2024), https://www.wsj.com/lifestyle/starbucks-milk-sugar-barista-coffee-condiments-b8d1268f?mod=e2fb&fbclid=IwY2xjawF-BXNleHRuA2FlbQIxMQABHZFqv1K6hNU5phLoCjkfdEiGuVpjKeWWgGCCGWdSKUllA-vnJp_1xNTekw_aem_ZkpC9X9Tp6TY7qE-0CGJrw
[5] Dana Smith, “How Elections Affect Our Shopping,” The New York Times (October 20, 2024), https://www.nytimes.com/2024/10/20/briefing/election-shopping-habits.html
[6] Amelia Lucas, “‘Swicy’ items take over restaurant menus as Gen Z seeks heat,” CNBC (October 22, 2024), https://www.cnbc.com/2024/10/22/swicy-items-take-over-restaurant-menus-as-gen-z-seeks-heat.html
[7] Christopher Rugaber, “Wealthier Americans are driving retail spending and powering US economy,” AP News (October 18, 2024), https://apnews.com/article/economy-consumers-inflation-retail-spending-growth-wealth-be68f97bba5970ed4ce4fc8b8c7333af
[8] Aimee Picchi, “Shrinkflation has affected one-third of grocery items, analysis finds. Here are the worst offenders,” CBS News (October 16, 2024), https://www.cbsnews.com/news/inflation-shrinkflation-skimpflation-toilet-paper-candy-cereal-lendingtree/
[9] Gina Vivinetto, “Tostitos and Ruffles add more chips to bags following ‘shrinkflation’ accusations,” Today (October 17, 2024), https://www.today.com/food/news/pepsico-shrinkflation-tostitos-ruffles-rcna175958
[10] Caroline Jansen, “‘Everybody benefits’: Why the beauty industry needs to get serious about accessible packaging,” CXDive (October16, 2024), https://www.customerexperiencedive.com/news/beauty-packaging-accessibility-rare-beauty-target-elf-beauty/729724/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20CX%20Dive:%20Daily%20Dive%2010-19-2024&utm_term=CX%20Dive%20Weekender
[11] Timothy Inklebarger, “Amazon launches Amazon Grocery, its newest grocery concept,” Supermarket News (October 18, 2024), https://www.supermarketnews.com/new-stores/amazon-launches-new-small-format-concept-amazon-grocery
[12] Lauren Thomas, “Activist Investor to Push French-Fry Maker Lamb Weston to Explore a Sale,” The Wall Street Journal (October 18, 2024), https://www.wsj.com/business/retail/activist-investor-to-push-french-fry-maker-lamb-weston-to-explore-a-sale-5191086e?mod=business_feat2_retail_pos4
[13] Lauren Thomas, “Activist Starboard Value Takes Stake in Tylenol-Maker Kenvue,” The Wall Street Journal (October 20, 2024), https://www.wsj.com/business/deals/activist-starboard-value-takes-stake-in-tylenol-maker-kenvue-cc3175bb
[14] Madeline Speed, “Nestlé ‘not broken’ says new chief as he announces restructuring,” Financial Times (October 17, 2024), https://www.ft.com/content/71e0971f-932c-4e88-bf2a-b16c018b2a49
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