retail news in context, analysis with attitude

Bloomberg has a story about how digital retail brands, which a year ago seemed to be burdened with "bloated valuations, rising advertising costs and ever more competition" that threatened their existence, enter this new year with a new lease on life.

The pandemic meant that, "with their brick-and-mortar competition shuttered and the virus raging, Americans flocked online and loaded up on home goods, comfy clothes and much more. And this wasn’t just 20-somethings, but pretty much everyone.

"This helped remove a big hurdle to continued growth for direct-to-consumer brands: finding new customers," Bloomberg writes.

Even the advertising expenses that were too high for many digital start-ups went down when the pandemic hit, as many of the companies driving up prices were taken out of the market when the coronavirus shut them down or curtailed their operations and profitability.  Suddenly, marketing expenses were more affordable, and digital companies had the money to invest.

All of which add up to what could be a big moment for these companies:  "Not only do these brands have an opportunity to push into a new demographic or part of the country, but they are luring older customers who are often more loyal. Many have shopped at the same stores for decades and could be as devoted to a digital brand they trust."

KC's View:

One of the points I make here often is that food retailers, many of them having had the best quarters of their lives, cannot afford to be complacent in the new year - they have to be ambitious and aggressive in layout an agenda for the future.  (That's the basis of today's Innovation Conversation with Tom Furphy.  I urge you to watch/listen.)

The same goes for the digital brands referenced in the Bloomberg piece.  History may have given them a winning hand (ironic since it has dealt so many other people a much tougher hand to play), but they can't just sit on their winnings.  They have to continue to reinvent themselves, because the competition will come from everywhere and it will not be an easy future.