Modern Retail Rundown: Brands flock to Threads, Christmas Tree Shops shutters & Claire's postpones IPO

0:06Hello and welcome to the Modern Retail Rundown. I'm your host, senior reporter, Gabby Barco, and I'm here with editor-in-chief, Kale Guthrie-Weissman. Good morning, Kale. Hey, how are you doing, Gabby? Did you have a good break? I did, yes. It was rain-filled here, but otherwise very relaxing. How about yourself? Yeah, when I was in New York, it was rain-filled, but then I did, I will admit, go down to the Dominican Republic where there was less rain, so that was nice. Very jealous. Yeah, so let's get to it. Today, we'll start out by discussing all the brands that flocked to Threads, a lot going on there.

0:44And then we will get to the state of homeware retail in light of the Christmas tree shops going out of business. It's the latest retailer there struggling. And then finally, we will analyze Claire's putting its IPO on hold, which is, you know, probably happening for obvious reasons that we'll get into. But yeah, let's start out talking about Meta's Twitter clone, as it's being called. Threads. Have you created an account? Oh, I created an account the first second I could. As I do with any platform as a former tech journalist, I will always join and then stop using it anywhere from a day to a few weeks later.

1:27So I'm currently still on it. And as you mentioned in your intro, there are already so many brands on there. Yeah. Yeah. And I was just reading that this was, of course, a lot of the brands, especially some of the ones we talked to, created the accounts seemingly overnight, even though none of us really know what this looks like. There's no following list or real homepage. So it's not necessarily exactly like Twitter. But of course, given the climate that we're in and the fact that there's an exodus happening on Twitter, this is sort of prime opportunity for Meta to step in with its own version.

2:12And of course, as we all know, they do have a history of copying other platforms and taking away usership. But in this case, I think it's really interesting because it's being called sort of a safe haven for brands because obviously Twitter, even advertising on there, was becoming very hostile. So what do you think of the idea that they want to get there first? And the fact that so much of Threads is tied to Instagram, which has become as, quote unquote, the Internet small. So this feels like a very natural addition to a lot of retail brands' online presence. Yeah, there's a lot of stuff going on.

2:51One thing that I think is important to know is that, as you mentioned, it's tied to Instagram. And so signing up for threads is disturbingly easy. It's pressing a button. And so I think with new platforms, this is a new type of playbook that Meta is doing that is very different from a lot of the other platforms out there that wanted to have an air of exclusivity and an air of maybe you'll get the chance to try it, maybe you won't. We want there to only be people, no brands just yet. Like I'm thinking of Blue Sky. I'm thinking even of Be Real where, you know, there were all of these things that came about that had a lot of press simply because it was word of mouth.

3:35And Meta did the exact opposite thing where it just put it on the app store and said, hey, you want this? Here you go. Press a button and you can join. And as a result, the growth has been huge. I think they said in the first day that 30 million accounts joined within 24 hours or something like that. But also, it means that there are a lot of official accounts that are on there, quote unquote, official accounts. But it's interesting to see blue check marks on a brand new platform because Instagram has blue check marks. So I think that the idea that it's a safe haven for brands in the wake of Twitter is kind of exactly right.

4:10We'll see how long people last on it, what the engagement is, what they do with it. But if you, I mean, are you on it, Gabby? I have not created an account, but it's for philosophical reasons that we will discuss off air. That's totally fine. And like the feed, the feed is annoyingly branded. I saw a lot of cringe screenshots and I was like, okay, I don't need to do that. It's all cringe and it's all brands. It's McDonald's talking in the voice of Grimace. It's, you know, I don't know. It feels deja vu. Yeah, yeah. It's like 2013 Twitter and I'm like, oh, okay, we're doing this again. Yeah, it's 2013 Twitter with a much bigger marketing budget and like the idea that this will actually drive things.

4:55And so it's very interesting to see it happen so fast. And there clearly was a demand on the brand side for this for something where they can quote unquote be silly and do their irreverence without having to have the shadow of an Elon Musk owned Twitter behind it. But it's also who knows how long it'll last. And the big question that I'm asking is what is the end game? Because we don't know what threads is going to become, you know, with Instagram, it's this little internet, as you said, people are there. They've tried to make it into a commerce platform with Twitter. That was where a lot of brands quote unquote connected with people where a lot of people go with customer service issues or a brand can do a thread about something or do some educational component there.

5:36I don't know what the value prop for threads is other than just being similar to Twitter's sort of and seemingly ideologically better. But, you know, you can, you know, we won't go into the that rabbit hole, but you know what I mean? Right. I mean, yeah, we if you want to get into like community guidelines, it's like, well, you know, you are still going to be having to follow a lot of the policies that Meta imposes on brands, which, you know, we hear about all the time, especially from certain brands. So it's not like you can suddenly start talking about how, you know, you're an alcohol or cannabis brand.

6:11So it's kind of treading this line between the two. But regardless, I think the big elephant in the room is that we're all just waiting to hear about ads, which took a really long time for Instagram to move into. It's almost like they conditioned. I mean, Zuckerberg has really spoken about, you know, wanting to really thread them in very slowly over a decade really after the acquisition. And now you can't even open the app without getting slapped with an ad. So with that said, I think the state, what I'm really interested in is the fact that post iOS, Meta has really struggled with, you know, especially because their costs have gone up a lot.

6:48It's become like such a default advertising platform that, you know, it's a lot of industry watchers are like, well, this is just going to be, and this isn't really a, you know, an engagement platform. It's more, it's really primed to be an ad platform, which to be fair, a lot of social media has become. Yeah. And I think that that's right. But I think there are a lot of questions with what, what are the user behaviors going to be like on threads? And that's the big for what remains to be seen. And, you know, you also need a certain scale. And 30 million people is nothing to sneeze at for threads, but are they going to be able to keep that growth going such that it can compete with the likes of the smaller platforms out there?

7:34You know what I mean? Like, so I right now we're in this big right now it's the shiny new object where everybody's playing around with it. Everyone's being silly. And if I, you know, if I'm being honest, whenever you're on threads, it already feels like you're having a million and one ads thrown at you. Like every other post is from some brand that I don't follow. It's all algorithmically like not even a brand, some hype beast, some Gary V shows up a lot. And it's clear that they are trying to make something that looks similar to Twitter, but is also opaquely surfaces content that I think is specifically made so that it could serve people ads.

8:13But also, we don't have a sense for what the cadences of usage are going to be like on it and why people will be on it, what types of content they'll share. And that's going to be what will dictate how it works as an ad platform and whether or not it could, you know, be added to the arsenal of Meta's platforms for advertising. So it's a really good question. And I want to know and I want to see. But, you know, we're in day whatever two of it right now. And people are still just like posting whatever comes to their brain and making it a joke. And so let's talk in, I mean, I would say a month, but like, who knows?

8:50Like, I feel like we'll see. It'll be really interesting to watch. Yeah, I thought it was interesting that Meta specifically, I guess, invited the big accounts really to be on there before launch because, of course, you don't want to open it and have this dystopian empty app, which, you know, some would argue the organic signups is really what made, you know, things like, yeah, Twitter, Tumblr previously more quote unquote fun. But, you know, this is trying to kind of quickly build on something or fill a hole that's. And it's really smart. Like, that's what I have to give Meta credit for was that there has been a playbook followed by new apps that.

9:32And I said this in the beginning, but I've been thinking about this a lot where, you know, usually there's a wait list. Usually there's a beta. Usually there's this. Usually there's that. And usually the idea is that they slowly try to lure in big names so that it feels more authentic and more community. And Meta was like, screw that. No, all the big names are already here. Join, click a button, and you'll be with millions of other people. And I feel like we haven't seen a launch like that in a very long time. And I think that is what made it stand out. But I think it's also really important, and you said this at the start, but I'll sort of really, really put an emphasis on this.

10:09Because Meta has cloned so many different apps over the years or so many different programs, and their success rate is not great. Like, remember their Snap thing? What was it called? I can't even remember what it was called. But, like, they've tried to come out with new apps that go against other social media platforms for years. And one could argue that the only two real successes are when they bought Instagram and when they bought WhatsApp. But maybe I'm wrong. Well, you know, stories really was created by Snapchat. I think maybe people forget. Yeah, that's true. Right, because these features become so synonymous with Instagram because it is the mainstream platform.

10:51And so I am kind of going back and forth. I'm like, well, you know, maybe this could work because even just the name threads, which Elon Musk is already threatening to sue over, is literally, you know, that's a concept that was invented and, you know, kind of coined on Twitter. So it's just, yeah, there's a lot going on. But we don't need to. We're trying to look at it from the retail brand perspective, but it's very hard not to, yeah, go down rabbit holes. Like you said, 24 hours might look different. We'll see how that pans out over the weekend. Next up, we will be talking about the latest, you know, Saturday news, the latest bankruptcy by another retailer.

11:37In this case, it's Christmas Shoe Shops. For those of you who don't know, the Christmas Shoe Shops is a New England institution that was founded in the 1950s and has a pretty big cult following. this is where I come out and say, I worked at a Christmas tree shop. Yeah, I was going to bring this up. Like, are you going to talk about your past? I mean, I think looking back, my past, yes, my past experiences. Looking back, I'm like, yeah, okay, I totally understand why this retailer does not really thrive in the current environment. Because in 2008, I mean, it's all about discovery. They have no online presence, really.

12:14You go to their website and it just has photos of stuff that you have to go to the store to find. And the whole idea is that there's newness. It's all seasonal stuff. And it's more than just Christmas stuff. We get this a lot. We got this a lot. But it really had this cult following, right? It was almost like an off-price retailer where a lot of it was about, yeah, kind of finding treasures. It was very, very cheap stuff. Yeah. It was a huge cult place. And my mom was obsessed with it. But it was for very specific things. And I think the treasure hunt is right because it was a pretty, like, not messy store, but like very, they were just throwing things against the wall.

12:54No, it was messy because I had to clean it up at Tempe. That's how I know. But like, I think it was like the TJ Maxx or the Marshalls, but with much, much less apparel. Like, I think the reason why my mom always went there was because they had cheap frames. She would buy all of her frames from Christmas tree shops. And that fit a very specific need. And it did have a cult following and was very big for a while. But also, they clearly were not able to update their value proposition or how they operated in a way that remained relevant to newer shoppers. Like, I imagine their core demographic, and I don't know this, you know, I don't have those numbers off the top of my head.

13:32But I imagine it was the same people when they were so popular in the 90s and early 2000s, right? Mm-hmm. Yeah. And because they're so concentrated on the East Coast, they never obviously really grew an e-commerce or national presence. It was sort of this contained, like we said, call. But they were, I think all roads lead back to Bed Bath & Beyond. But yes, at the time, I did work there. They were under the Bed Bath umbrella, and that seemed to work pretty well. It fit pretty well in their portfolio. But it was sold in 2020 to, I believe, a private equity firm. So, you know, and of course, during COVID, not being able to sell online, it seems like the foot traffic never really rebounded.

14:17And they have defaulted on a$45 million loan. It just seems way too hard to recoup, given that it's only 70 stores. Yeah, exactly. And I think that this is a story that isn't new, but is, you know, this comes in waves where there are all these retailers that have had to grow their debt over the many decades. And then that comes to a head specifically in really more difficult economic times. And so, you know, you can think of Toys R Us back in what, 2000, I think it was 2016 or, you know, this was a similar story. And then there are a bunch of other players like, well, Bed Bath & Beyond is a good one, Christmas Tree Shops, Party City, Tuesday Morning.

15:00It's a very similar story of like they once were popular, they once were good, and maybe they could have continued. But because of what they needed to do to stay afloat, to raise the debt, then they all pretty much nearly defaulted on the money that they owed. Yeah. And, you know, speaking of, I guess, leaving these really big vacant spots in the industry, I was just thinking this morning, I'm like, well, where do I mean, yeah, you know, go Saturday morning, you hit up Bed Bath and Target and things. And now it's like, well, where do you go for homeware or decor or, you know, Halloween decorations or whatnot?

15:37So it does seem like is everything just basically dominated by Amazon and Target? That's what we keep hearing. Or is there room for somebody to step in and who would that even be? Yeah, well, I think looking at Bed Bath & Beyond is an interesting thing because I think it is dominated by Amazon and Target and Walmart. But what Overstock is doing in buying Bed Bath & Beyond is trying to make Bed Bath into much more of an e-commerce player. And so it's trying to make it into a quote unquote Amazon, but for that homeware space, which I think is kind of smart. Like that makes sense because that is where, you know, yes, you do go to Amazon to, I don't know, buy towels or toilet planters.

16:23But maybe if Overstock plays its cards correctly, it can be thought of as an online destination for that instead of Amazon. And that is where a lot of these companies have faltered is that they are either set in a certain region, like with Christmas Tree Shop, where they're focused solely on the Northeast and they haven't been able to grow beyond that. Or Bed Bath & Beyond had so many huge footprint stores that cost so much money and was not able to become a good online player and was probably bled dry because of all of the real estate it had to pay for. Yeah, so we will see whether there is a knight in shining armor that can step in and save the Christmas tree shops because we are at the 11th hour.

17:08So yeah, if they don't have a buyer, anytime soon they will be liquidating the stores. Yeah. And unfortunately, I think the people who are buying these companies now or the entities that are buying these companies are looking for very well-known name brands that people have an affinity towards. And while maybe you and me, you and I, we might know Christmas tree shops. I don't know if everyone does. But like, you know, I think about Pier One a lot where Pier One, you know, went bankrupt and then was sold and still supposedly exists as an online brand, part of this very interesting portfolio group.

17:43But the reason it was bought was specifically for the IP tied to its name. And I don't know if Christmas Tree Shop is able to, has that much cultural cachet that it would be able to get someone to pick it up. But also, you never know. We'll see what happens. Well, speaking of these legacy retailers that some of them have been successful at reinventing themselves, let's talk about Claire's, which has had a pretty interesting few years that we have been very fascinated with. And I constantly credit it to Gen Z being obsessed with the early 2000s and the era that we grew up in where Claire's was a destination also for young people.

18:24And now it's kind of trying to reinvent that for the younger people. But of course, with the markets being what they are, they are putting their IPO on hold. So, yeah, it's been an interesting few years starting with the bankruptcy, actually, in 2018. Yeah, it's very interesting. So just for a timeline for listeners, 2018, Claire's emerged from bankruptcy, saying that they were going to reimagine, reinvent their image. and kind of surprisingly, Claire's did. It really focused more on e-commerce. It focused more on hitting Gen Z. I think you're completely right that it was in the right space at the right time with this early 2000s nostalgia.

19:06And it focused a lot on opening non-mall stores over the last three years. And that led it to say, okay, well, we're going to go public once again. And they had some good numbers that they shared about a year ago in the first quarter of 2021, they nearly doubled their revenue. They swung to a profit, which is pretty shocking when you think about it. And so all of that led Claire's to say, well, now is the time to go public. But it's also really important to remember that this was 2021 when the economy was booming and the IPO market was flourishing and money was much cheaper. And so things have changed dramatically over the last two years.

19:47Yes, money was much cheaper, these interest rates, man. But yeah, actually, it is, like you said, it's 2021, which was not that long ago, we were in a completely different place. And now we're looking at and actually, one thing I did want to bring up was that Claire's did something that I didn't really think was possible for this type of company, which is that they were able to make subscriptions work for tweens. So, you know, you can get these all these like little tchotchke, you know, bracelet making and, you know, all these fun little things in a box. And that was a pretty big piece, as they told us, of their comeback, because, you know, it's kind of like a gift that grandparents give their kids.

20:31So they kind of had all these little pieces, partnerships with Macy's and Walmart, opening new stores. They're pretty big internationally, too. I think a lot of people may not realize. So they were able to modernize pretty quickly over maybe a three-year timeline. And they did announce this IPO. But unfortunately, right now is just not the time for anybody. It's funny you say 2021 because I remember that being sort of the headline was that it was the biggest year ever for IPOs. I think the biggest number of retail IPOs happening. And now we're just kind of at the other end of the spectrum. Yeah, exactly.

21:10And now I looked up and there's, you know, some pretty dire numbers with the current IPO market. In 2022, the IPO activity was cut to nearly half. So I mean, still, as you said, it was coming from 2021, which was a banner year. But also already this year, and this is from a report that was released, I think a few days ago by EY. Globally, there were 310 IPOs during the first quarter of 2023, which was a decline of 3 % year over year with proceeds totaling$39 billion, which was a decline of 5%. So everything is in the red. It's not looking good. And so it makes sense why Claire's wouldn't think now is the good time.

21:55And they probably had to make a decision because I think they submitted their paperwork. I want to say August. I don't know. They said it in 2021 that they were going to go public. I think that we saw a filing in August of 2022, which had some of those statistics of revenue growth and things in there. And so I think they probably needed to act or figure out or say they needed to get off. Yeah. Yeah. And we were seeing a similar thing with Shein, which is also, So I don't know, going back and forth on going public. So who knows? On hold doesn't necessarily mean forever with the way things are. That could be a few months, could be a few years.

22:36But yeah, we shall see. And one question I have, I just want one last question is, why was Claire's able to ride this wave and not Hot Topic? Okay, great question. because the Hot Topic, I'm coming out and saying, I think the Hot Topic Barbie collab is one of the best ones I've seen. I kind of need the pajamas. And a lot of it has to do with, I think they just never really were able to just even, I mean, I know some young people who know about Hot Topic because it's in local malls still somehow, but I don't know if they ever were able to kind of like be like, hey, we are an actual Y2K brand. come here.

23:22And I don't know, free idea for Hot Topics. Yeah, it just really seemed like Hot Topics time to bounce. And I've yet to see it. And I see it every once in a while in a mall. I'm like, oh, yeah, there they are. Anyway, I digress. I'll stop talking now. Yes, we're showing our age. Well, that's our show for this week. Please rate and review us on Apple Podcasts, Spotify, or anywhere else you're listening to us. Don't forget to subscribe to the Modern Retail Podcast to hear interviews with industry leaders that Kale hosts every week. Kale, who do you have on for us next week? Well, Fanny, you mentioned Shein in this last segment because I am the head of strategy of Shein on the show.

23:59Ooh, okay. Very exciting. Looking forward to that one. And of course, come back on Saturdays for the Modern Retail Rundown. And as always, thank you for listening.

24:20Thank you.