Rundown: Amazon's Buy With Prime updates, Tupperware's bankruptcy and Red Lobster's future

0:03Hello, everyone, and welcome to the Modern Retail Rundown. I'm Cale Guthrie-Weissman, the editor-in-chief here at Modern Retail, filling in for Gabby Barko, who's on vacation this week. Lucky her. I'm joined this week with our managing editor, Anna Hensel. How's it going, Anna? Good. I feel like I've had a pretty good week, probably a better week than the soon former CEO of Nike. Yeah. Although probably he'll take some time off and rest. That's true. We're not going to talk about that today, but expect more coverage of that on modernretail.co. Yeah. Anyway, this is what we are going to talk about today.

0:38We have some updates about Amazon. Amazon had a big conference and they rolled out and talked about a lot of stuff. We'll go into that. Then as with the world of retail, we have bankruptcy news. First, we talk about Tupperware and then we talk about Red Lobster. Both, I guess you could say legacy companies in a certain sense, but we'll go into that in a second. But let's start with Amazon. It hosted its big conference for sellers called Amazon Accelerate, and it announced just a bunch of things. Anna, what were the highlights? So I think the thing that seemed to generate the most excitement was the debut of Project Amelia, which was an AI bot for sellers.

1:16That's kind of par for the course these days. Like every Amazon, not just any Amazon conference, but any major conference hosted by a tech company or a big retailer is going to have some AI announcements. So that's what generated a lot of the headlines. We published kind of a reaction piece to that on Modern Retail. But also what I wanted to talk about, Amazon made a few other announcements. And what I was most interested in were the announcements they made around Buy With Prime, which is its service that essentially allows people to use their Prime shopping benefits on other participating merchants' websites.

1:58so shoppers using buy with prime can now pay via paypal and next year members will also be able to connect their paypal account to their prime membership amazon also said that buy with prime merchants will be able to show estimated delivery dates on their google shopping ads and tiktok ads later this month so basically it was um i think a few announcements geared toward maybe getting more shoppers to use Buy With Prime, and then also adding on more features for merchants that in theory will, I think, help with conversion, which is kind of the whole selling point around Buy With Prime, which we can get into later.

2:42Yeah, it's actually kind of funny. I was at a dinner last night where we were talking about all things retail media and talking about retail media publishers. And one thing we were talking about was how it's always about where are you linking out to what is the retailer you're working with. And most people will always choose Amazon because it's easiest. It usually has a higher conversion rate. And there was a conversation about what if you were able to show estimated delivery as part of your retail media rollout, would that increase your conversion rate? Pretty much everyone said they thought it would.

3:12And that makes a lot of sense. Yeah. Unless you have a bad or really long estimated delivery date. But that's interesting. Yeah. Anyway, but let's just back up a little bit. So what would you say has been Amazon's goal with Buy With Prime and why does this specific PayPal tie in matter? So Amazon launched Buy With Prime back in 2022, and its aim in PR speak was all about helping DTC merchants overcome challenges. Really, it's a way to get DTC brands more reliant on Amazon. Yes. How can you argue with helping merchants overcome challenges? But really, again, this is a way to get DTC brands more reliant on Amazon.

3:54and Amazon has tried to court DTC brands a bunch of times over the years. And I can't remember all of the exhaustive things they've done, but they've had an emerging brands group, which I know a lot of the pitch, especially like say five years ago, centered around, hey, here's the volume of people searching for your product on Amazon. You're missing out on all these sales on Amazon. You should be on Amazon. We have seen just generally more DTC brands come around to selling on Amazon. They're less reticent about it because they know that people are shopping on Amazon and they will get a lot of volume on Amazon.

4:40The other ways Amazon has tried to court DTC brands, a lot of it previously centered around protecting the brand. So I know some startups maybe worked out a deal with Amazon where they could ship their products in like branded packaging or included some like branded inserts. But with Buy With Prime, it seems that like the pitch is purely centered around improving conversion. And there are some stats showing Buy With Prime is gaining traction. So like if you're not familiar with how this all works, again, it's basically a way for you to use your Prime shopping benefits on other websites. And if you go to Dollar Shave Club, which is one of the participating brands, you might click around on the website and you see, oh, again, buy with Prime, I think pretty ubiquitous.

5:33And so the whole idea is that especially if it's a brand you've never heard of or you're like, you know, do I really need this? That you might kind of be pushed over the line by the fact that you can use your Prime benefits. You know you'll get it in a couple days. It kind of has the trust of Prime. So anyways, there are some stats showing Buy With Prime is gaining traction. Amazon said the number of Buy With Prime orders are up 45 % year over year, with merchants generating an average 16 % increase in revenue per shopper from offering Buy With Prime. So, you know, we don't have a full look behind the scenes, but these are the stats Amazon's pointing to to say that it's working.

6:21Yeah. And I think part of it is just seeing when you see Prime and you see the Amazon logo, the idea is just that it's a very seamless way to check out and you have an idea of what's going to happen as opposed to, you know, people can probably automatically put in their credit cards and all that jazz. But, you know, I think people shop on Amazon with Prime with a different type of mentality where it's kind of mindless. And the idea is like, we can bring that to your DTC site there. So the story goes. So we get we get these stats from Amazon a lot or not a lot of stats, but a few stats pretty much saying it's working.

6:55But in your honest opinion, do you think buy with Prime is gaining traction? So my thing is, is like, yes, it seems to be gaining traction. If you are adding more merchants, if you have more orders going through buy with Prime, then like, yes, generally, of course, you're gaining traction. But my question is, is it gaining traction with a significant number of DTC brands? And the answer seems to be no. It just seems to me like a very random smattering of brands that are using it right now. I've seen like some celebrity founded brands using it. Some of the new brands that have started using buy with Prime this year range from Elizabeth Arden to Dollar Shave Club.

7:37I do wonder if we're going to see more traction with it among kind of the startups that now sell through a lot of retailers and maybe in certain categories like food and beverage or like soap who don't need as strong of a D2C site. Maybe this will be something they will use. I think one thing that's kind of working in Amazon's favor right now is like, it's, as we've talked about many, many times before, like, it's just a very tough environment for consumer startups right now. The sentiment we seem to be hearing a lot is that, like, people are being very picky about where they spend their dollars.

8:16They're taking a long time to decide, do I actually need this thing? So I think the pitch that, like, you know, this can help with conversion, this can help people pull the trigger on purchases more, I do think that that is a very compelling argument right now. And I wonder if that's also part of the reason why we're seeing more brands adopt this. But what else do you think about this, Cale? What are your final thoughts? I mean, my final thoughts are that Amazon really wants to have the perception that every brand is using it or should be using it. But I think that there is a lot of reticence for companies to work with Amazon.

8:53And there's a lot of questions about data sharing and stuff like that. And so, you know, I think it's definitely gaining more traction. It is not ubiquitous. And I think that that is what Amazon really wants. And it essentially wants this to be kind of like a shop pay killer would be my guess. But maybe maybe I'm wrong. Yeah. And the other thing I'd add is like, there are so many tools out there, of course, that get brands get pitched on every day that like, this will help increase your conversion. And like, I don't see this as being like the go to thing that like, all right, if we're going to pick like three things we need to adopt to improve conversion.

9:26I don't see this being one of those three things yet. Exactly. And I think the checkout page has become so cluttered and there are so many different options. Like there's credit cards, there's PayPal, there's buy with prime, there is bolt, there is shop pay, like you name it. And it's there. And I honestly don't know. I, a, I don't like customers don't know a lot of them prime. They do know. So that is an Amazon's favorite, but also it's just a pretty fragmented area right now. And so it's interesting to see how Amazon is trying to position itself as one of the winners in the space and whether or not that's true.

10:01Right. Amazon still has a way to go to convince a wide swath of DTC brands that buy with Prime is a must adopt tool. And we'll be watching this. And the fact that Amazon was talking about this at the Accelerate conference just shows that this is clearly a priority. But let's go on to some other news. After months of speculation, after layoffs and closures, et cetera, Tupperware has finally filed for bankruptcy. So Ana, what is the news here? Yes. So this is something that we thought I think maybe would have happened for a while. There was talk last year that Tupperware would file for bankruptcy.

10:38It didn't happen, but now the company officially filed for Chapter 11 bankruptcy on Tuesday. I have a quintessential quote in here about kind of how Tupperware is positioning this. So this process is meant to provide us with essential flexibility as we pursue strategic alternatives to support our transformation into a digital-first, technology-led company. Tupperware will be a tech company. You heard it here first. I love that. Yeah. I mean, like the most analog thing in the world and what made Tupperware Tupperware was that it wasn't tech. It was just good plastic. But, you know, you got to be a tech company now in order to emerge well from bankruptcy.

11:18Yeah, but that quote came from the company's president and CEO, Laurie Ann Goldman. And Tupperware had initially warned in a filing back in 2023 that it could go out of business, but essentially kept getting lifelines. It would get new financing or reach a deal with creditors to reduce certain payment obligations. But finally, those lifelines ran out and it has$812 million in debt. So I think that's why I filed bankruptcy. That's always the killer. Yeah, that's always the question whenever there's this, like, how much debt did they have, which we'll talk about big debt in the next section as well.

11:54I guess my question is because Tupperware is ubiquitous. People still use Tupperware. So like what actually went wrong here? How did they mess this up so royally? This is such an interesting case because you're right, Tupperware is still so ubiquitous, but it's a case where now people use the term Tupperware to refer to any food storage container, not necessarily the product from Tupperware itself. So I think essentially what happened is this was a very easy to recreate product. Tupperware did not adapt to kind of shifting its business model to align with the places people are buying today. And that created a space where a bunch of other companies, you know, are finding success with food storage containers, but Tupperware was not able to like ride that success that well.

12:51So to drill into that more, Tupperware is roughly a 78-year-old company. It operated primarily through a direct selling model where people would host Tupperware parties and try to get their friends and family to buy Tupperware products. And this worked for a certain period of time, but not in today's world where people are used to buying products on Amazon. Tupperware did see a burst of digital sales during the pandemic, but that was short-lived. And they were very slow to expand to new sales channels. So the company only launched on Amazon and Target in 2022. There was also talk about how maybe the anti-plastic movement may have contributed to declining sales.

13:36So in recent years, they tried to launch more products with other materials. But to me, the biggest issue is just that they failed to adapt quickly enough and maybe invest enough in new sales channels. Because again, it's just a very easy to create, ubiquitous product. We've seen this story so many times. If you are not in Amazon and Target, all of your competitors are going to go there. And I think this quote really sums it up. One of their restructuring officers wrote in a court filing, nearly everyone now knows what Tupperware is, but fewer people know where to find it. To me, again, to me, that sums up everything.

14:17And I think your point that people call everything Tupperware, but also Rubbermaid makes plastic containers that you can get really, really easily. the fact that it relied so long specifically on direct selling and, you know, it wasn't in Target or Amazon until 2022 is just kind of mind blowing when you think about it. Like, right. You really want to know what those meetings for the last decade have been. What were they saying? How were they able to say to themselves, this is the correct thing. We need to just keep going with direct selling. It seems like a real strategic fail. What happens next?

14:51Have they given some sense about what the process is going to look like? Yeah. So, you know, once you file for bankruptcy, there are some protections that come into place that kind of organize the process a bit. Tupperware has said it plans to conduct a 30 day bidding process to find a buyer for the entire company. However, there seem to be some lenders who are fighting over assets. According to Bloomberg, some firms such as Stonehill Institutional Partners and Alden Global Capital, which are familiar names in the distressed lending space, they urged Tupperware to avoid bankruptcy and accept a simple foreclosure instead, court documents show.

15:34And it's complicated. And like, I don't, you know, I'm not a lawyer. But basically, my understanding is that this would have ensured that the lenders would get some of Tupperware's best assets versus, you know, going through a chapter 11 and, you know, selling to someone else. And I think that that shows like the Tupperware name clearly has still cachet, still some staying power. So I'll be very curious to see who ends up buying the business or the assets. And it will be interesting. I think there could be a tussle because again, I think there is the Tupperware name is still so ubiquitous. Yeah, I'm just excited to see what the digital transformation plan is for Tupperware when push comes to shove, when they find their buyer.

16:22I know. Is Tupperware going to have an AI strategy? Oh, it already probably does. It'll probably have a Tupperware app. It'll just be all tech first. All right. Well, historic brands always seem to find some way to get another life under new ownership. So I doubt this is the end of the Tupperware story. We'll know more soon, but let's move on. Now we have another bankruptcy, but the end of one, not the beginning. So Red Lobster earlier this week proclaimed, today is a great day for Red Lobster. Wrote that on Twitter. It was a good tweet. I highly recommend you find it. It's because it emerged from bankruptcy.

16:56So what's the news, Anna? As you mentioned, today is a great day for Red Lobster. They exited bankruptcy. And I think that this bankruptcy got a lot of attention just because of the intricacies of how they ended up in bankruptcy, which we'll get into later. and like I love reading about chain restaurants um I don't think I've been to a Red Lobster since middle school but it's just everyone like has some people know these brands um and I think I love reading how they got into trouble honestly the restaurant filed for bankruptcy in May it said it had over 1 billion in debt and only about 30 million in cash on hand it also lost 73 million in 2023.

17:42So again, math wasn't adding up there. That's why I had to file for bankruptcy. Before this, the company had closed around 90 locations. And in 2023, its domestic business brought in 2.2 billion down 8 % compared to a year earlier. So what led to its bankruptcy, there were a few elements at play. For one, casual dining has gone down over the years. This stat is really interesting, which I think you found. Casual dining has slipped from 36 % of total restaurant industry sales in 2013 to 31 % in 2023, according to Technomic, a restaurant research firm. Yeah, I mean, I think that people are just being very picky with how they, again, spend their money.

18:32But Red Lobster also changed hands and fell into many organizational issues. So So it was an independent restaurant, but was scooped up by General Mills in 1970. Isn't that crazy? Like when I was doing the research, the changing of the hands for Red Lobster is one of the wildest like stories. Anyway, sorry. I feel like Red Lobster has lived nine lives at this point. They also launched other restaurants like Olive Garden and made an entire standalone business of these sit down joints called Darden Restaurants. But Red Lobster itself was sold to the PE firm Golden Gate Capital in 2014. And then since 2020, seafood distributor Thai Union Group, based in Thailand, has been the largest Red Lobster shareholder, holding 49 % of the company.

19:19and since the pandemic sales have slipped again I think you saw of course people eating out less during the pandemic but with inflation remaining high people just cutting back in general so customer numbers have dropped nearly 30 percent since 2019 as a result Thai Union Group said earlier this year it would divest so a lot a lot to digest there um Kale what what's been your experience with Red Lobster? I'm curious. I love restaurants and I love I've gone to many an Olive Garden throughout my entire life. I've gone to Applebee's. I've never been to a Red Lobster from what I can remember. It's always been there.

20:02It's always been ubiquitous. You'd always drive by it and be close to a mall. But it was always one that most people in my general familial circle would avoid for whatever reason, maybe just because the idea of a casual chain that is focused on seafood never really sounded that interesting. And it's always seemed run down. Do you know what I mean? Like the it always had an air of age to it, even when it was supposedly doing well. So this is the fun part or not the fun part. But I saw a lot of headlines. I saw a lot of headlines about this. And I did a lot of research because you usually when you hear a story that there is one specific thing that led to its downfall, it's not true.

20:37And the headlines were that endless shrimp led to Red Lobster's downfall. And it turns out it kind of is true. Like there are many issues specifically with its recent owner, Thai Union Group, where they cut a lot of costs and people were really unhappy. There were a lot of things going on there. But also Thai Union Group was like in a last ditch effort. We're going to make this limited promotion we've had for a little bit called Endless Shrimp, a permanent deal. And this ended up costing Red Lobster$11 million. That's crazy. I still can't get over it. Yeah. And, you know, pretty much there would be lines out the door because everyone wanted endless shrimp.

21:14No one would leave their seats. The restaurant could not hire enough people. And this was when the parent company was trying to cut costs. So the restaurants would have fewer servers. It just cascaded into all of these things. And then there's another kind of wild thing, which is that so Thai Union Group is a seafood distributor, but Red Lobster used to use many different distributors to make sure there was enough demand. And during the endless shrimp debacle, Thai Union was like, you're only using our shrimp. And this led to an increase in costs, but they were all going to its parent company.

21:44I don't know. There's a New York Times article. I highly recommend you reading it. That just gives all of this. But pretty much Endless Shrimp, which was seen as a big promotion to, you know, gross sales. It did lead to a lot of like going viral on TikTok. It led to people talking about it. But it is what was one of the major like nails in the coffin for what led to the bankruptcy, which is wild. Ana, do you know what the plan is now? Do we have any sense? We know a little bit about what the plan is. So as part of this restructuring, Red Lobster has changed hands once again. So it has been acquired by RL Investors Holdings, which is a lender group created by, it's led by Fortress Investment Group, along with a couple co-investors.

22:30so leading the business is a former pf chang's executive which i feel like is a smart i actually i haven't caught up on the latest with pf chains but it's a bit maybe not as ubiquitous as red lobster but like smart to have someone who has maybe come from the field of like how do we reinvent this ubiquitous uh chain leading the business as pf chang's former chief executive Damola Adamalakin. So in the press release, Adamalakin said, as part of our new ownership structure, we have backers who have a history of making successful investments in restaurants. Our comprehensive and long-term investment plan for Red Lobster includes a commitment of more than$60 million in new funding, which will help us to deliver improvements across every aspect of our company.

23:22Bold claim their improvements across every aspect of our company. But so, yeah, they don't really give a lot of details as to, you know, what the plan is going forward. But again, I think it's a positive sign that they have brought in, of course, someone with restaurant experience to leave the company and someone who has likely seen a company go through similar shifts. So what you're saying is today is a great day for Red Lobster. It is. If there's one takeaway from this segment. I mean, there are a few interesting things, which Damola Adomalekin is pretty front and center. He's been interviewed on CNBC.

24:02He's a very, very charismatic guy. And I think it's really smart to have someone who can be front facing to lead this. And also, P.F. Chang's, I keep tags on all of these restaurants, but P.F. Chang's has done some digital innovation, for lack of a better word. They've opened small format restaurants in Manhattan, for example. And so I do think this gives it an inkling of hope that maybe there is a path forward and there is a new type of strategy that Red Lobster can use. So we'll have to see what the actual plan is, whether$60 million in new funding, which is a lot, but also not that much, whether or not that will be enough to help write the course.

24:39We'll be keeping an eye on that. Well, that's our show for this week. As always, please rate and review us on Apple Podcasts, Spotify, or anywhere else you're listening to us. As always, listen to the Modern Retail Podcast, which comes out every Thursday, to hear interviews with industry executives. This week, this coming Thursday, I talk with the CEO of Soccer.com, and we go into the world of soccer, which was really fun. Also, don't forget to follow us on social. We're at Modern Retail on anywhere you can find social media. And, of course, come back every Saturday for the Modern Retail Rundown.

25:10Thanks so much. Thank you.