This Week in Retail #64
Hey Friends,
A big milestone for Amazon…….Amazon Prime, introduced in 2005, initially focused on providing free two-day shipping for books, DVDs, and CDs. Now celebrating its 20th anniversary, Prime offers 300 million items across 35 categories, with tens of millions available for same- or next-day delivery. In 2024, Amazon delivered over 9 billion items within that timeframe, saving global Prime customers nearly $95 billion in shipping costs.
With more than 200 million members across 24 countries, the average U.S. Prime customer placed nearly 100 orders last year. Amazon has expanded its delivery capabilities by regionalizing inventory, ensuring household essentials like diapers are delivered quickly—over 2 billion such items were delivered within a day last year.
Beyond shipping, Prime has evolved into a comprehensive membership with benefits like streaming content, reinforcing customer loyalty. Retail analyst Neil Saunders notes that despite growing competition, Amazon Prime remains unmatched in scale and value.
Two big stories coming out of Walmart this week….Walmart has expanded its same-day pharmacy delivery service to 49 states, aiming to compete with Amazon’s growing prescription business and struggling drugstore chains like CVS and Walgreens.
The retailer initially launched same-day delivery in six states in October and claims to be the first to integrate pharmacy, general merchandise, and grocery into a single online order.
The expansion comes as Walgreens and CVS invest in digital technologies and same-day delivery amid declining foot traffic, while Amazon continues to enhance its prescription services, including drone delivery.
The retailer, which is working with Cypress on mall operations and potential redevelopment, stated that this is its first time acquiring an operating mall of this size. However, details on Walmart’s plans for the site have not been disclosed.
Monroeville Mall, home to over 130 tenants, including Macy’s, JCPenney, Victoria’s Secret, and a Cinemark theater, sits on a 186-acre site.
According to Retail Brew, End-of-year bonuses in the retail sector for 2024 were a mixed bag—higher in value but awarded to fewer workers. The average retail bonus rose 8% to $1,601 (up from $1,487 in 2023), though the percentage of employees receiving them slightly declined from 17.63% to 17.4%. Of those who got bonuses, 71% were hourly workers, while 29% were salaried.
A similar trend was seen in the food and beverage sector, where the average bonus increased by just 2% to $480, but the percentage of workers receiving one dropped from 7.2% to 6.7%.
Meanwhile, communications workers saw a significant 22% bonus increase, jumping from $4,206 in 2023 to $5,134 in 2024, despite a slight decline in the percentage of recipients.
Starbucks continues to implement new policies as part of its rebranding initiative. Starbucks has recently implemented a policy limiting mobile orders to a maximum of 12 items, down from the previous limit of 15. This change aims to improve service efficiency and enhance the customer experience. In addition to this item limit, Starbucks has removed the option to add a splash of milk or cream through the mobile app. This adjustment is part of a broader strategy to streamline mobile ordering and reduce complexities that can slow down service. hese changes are part of a broader initiative by Starbucks to address challenges associated with mobile ordering. The company is piloting an in-store prioritization algorithm at select locations to better manage the flow of orders and ensure timely service for both in-person and mobile customers. The goal is to fulfill in-person orders within four minutes and mobile orders within 12 to 15 minutes.
Chipotle’s hot streak continues……Chipotle reported a strong Q4 and is expanding both domestically and internationally. The company plans to open 315–345 new locations in 2025, with over 80% featuring a drive-thru “Chipotlane” for digital orders.
With a long-term goal of 7,000 North American locations, Chipotle is also accelerating global expansion. It currently operates 85 international locations, including 55 in Canada, 27 in Europe, and three in the Middle East, where it entered in 2023. Growth in Canada and the Middle East will be a key focus in 2025.
Scott Boatwright, appointed CEO in November after serving as interim chief since August, emphasized Chipotle’s success across geographies and its commitment to further expansion.
Estée Lauder Companies has announced plans to reduce its global workforce by up to 7,000 positions, representing approximately 11% of its employees. This decision is part of an expanded restructuring initiative aimed at addressing declining sales and restoring profitability.
The company reported a 6% decrease in net sales for the quarter ending December 31, 2024, totaling $4 billion, down from $4.28 billion in the same period the previous year. This downturn is largely attributed to weakened consumer demand in key Asian markets, particularly in China and Korea, as well as challenges in the travel retail sector. In response, Estée Lauder has expanded its "profit recovery and growth plan," which now includes the elimination of between 5,800 and 7,000 roles. The company anticipates that this restructuring will result in annual pre-tax savings of $800 million to $1 billion, which will be reinvested into consumer-facing activities to drive sustainable sales growth. The restructuring plan also involves a revamp of the executive team, with the company seeking external candidates for key positions such as Chief Digital Marketing Officer and Chief Technology, Data, and Analytics Officer. These changes aim to streamline operations, enhance efficiency, and better align the company's structure with its strategic objectives.
Estée Lauder's new CEO, Stéphane de La Faverie, who assumed the role in January 2025, emphasized the need for agility and innovation to navigate the current challenges. The company plans to focus on its prestige brands, increase consumer-facing investments, simplify processes, and accelerate the introduction of new products to the market.
Liberated Brands has filed for Chapter 11 bankruptcy and plans to close its U.S. retail stores, which sold brands like Quiksilver, Billabong, and Volcom. The company is seeking court approval to shutter about 124 stores while negotiating the status of its nine Hawaii locations.
The bankruptcy filing estimates assets and liabilities between $100 million and $500 million. CEO Todd Hymel cited economic challenges, including rising interest rates, inflation, supply chain delays, and declining consumer demand, as key factors behind the filing.
Liberated lost its licenses for Volcom, RVCA, and Billabong in North America in December 2023 due to defaults, and Authentic Brands Group has since transferred those licenses to new operators. Authentic Brands' EVP David Brooks stated that the store closures will allow the brands to refocus on specialty retailers, department stores, and e-commerce for a more sustainable future.
The liquidation sale of Liberated’s U.S. stores is already underway.
Designer and sneaker collector Sean Wotherspoon has been named Global Vintage Curator at Gap, where he will lead the new GapVintage program. This initiative will feature globally sourced vintage collections released in seasonal drops throughout the year.
Wotherspoon, known for his Nike Air Max 1/97 design, aims to expand Gap’s vintage offerings, tapping into the growing secondhand market, especially among younger consumers. The first GapVintage drop includes ’80s and ’90s Gap essentials like the Striped Pocket T-shirt, Classic Logo Hoodie, Denim Jacket Hoodie, and Nylon Anorak Windbreaker.
The collection launches online in the U.S. on February 4 at 12 p.m. ET, with select pop-ups debuting in Tokyo on February 1 and Osaka on February 8.
On the mergers and acquisitons front……Tempur Sealy has completed its $5 billion acquisition of Mattress Firm, the largest U.S. mattress retailer. The company will rebrand as Somnigroup International Inc. on February 18, 2025, with Mattress Firm, Dreams, and Tempur Sealy operating as decentralized units.
Following the acquisition, Somnigroup generated approximately $8 billion in sales in 2024, with 85% from North America and 65% from direct-to-consumer channels. The move strengthens its U.S. retail footprint and enhances product innovation.
The company also announced the appointment of retail executive Peter Sachse to its Board of Directors and plans to divest 73 Mattress Firm locations and 103 Sleep Outfitters stores by Q2 2025. Shares will trade under the ticker SGI on the NYSE after the name change. A business update call is scheduled for February 6, with financial results to follow on February 20.
Beyond Inc. has announced an acquisition agreement for the global rights to the Buy Buy Baby brand, reuniting it with Bed Bath & Beyond under the same ownership.
Beyond Inc., formerly Overstock.com, rebranded in early 2024 after acquiring Bed Bath & Beyond, which went bankrupt in April 2023. Buy Buy Baby had been sold to Dream On Me Inc. for $21.5 million but relaunched in November 2023, focusing on digital growth. By the end of 2024, it closed its last 10 physical stores, shifting entirely to e-commerce.
That’s all folks……Have a great week.