Rundown: Black Friday recap, Shein IPO & Temu's splashy ad strategy

0:05Hello, everyone, and welcome back to the Modern Retail Rundown. I'm senior reporter Gabby Barco, here with Editor-in-Chief Cale Guthrie-Weisman. Hello, Cale, and welcome back. Hey, Gabby, how was your Thanksgiving? It was good. Yeah, it was very chill and quiet. How about yourself? Yeah, about the same, I would say. But good to be back and up to date with all things retail, because, you know, it wasn't a slow news weekend. No, not at all. So, yeah, hopefully everyone had a nice and relaxing week before we dive back in to what's really sort of our busiest period of the year. So this week we will recap actually the weekend by diving into Black Friday and Cyber Monday sales results.

0:51Then we'll look at Shein's IPO announcement. It's finally happening. And finally, speaking of Shein, Timu is potentially coming back to the Super Bowl with another probably very expensive ad that we'll get into. So, yeah, let's let's dive into Black Friday numbers or should I say Black November? Sorry. Yes, exactly. You know, we're already seeing the discounts remain. And so it was last weekend. Does it even have a meeting anymore? I don't know. Yeah, exactly. So it looks like it's been a mix of results. I think every other hour we were getting a different report about record breakings. But then as we are going to be talking about, some of the more traditional big box retailers did not fare as or traditional retailers did not fare as well as they probably had hoped.

1:49So, yeah, let's get into it. You know, unsurprisingly, we could start with Shopify and Amazon doing pretty well, kind of continuing their fall trajectory. Yeah. Do you want to run some of the Adobe analytics data for us, Kale? Sure. So, you know, this is for a journalist, a business journalist. Black Friday, Cyber Monday is an onslaught of data, and it's very hard to decipher what is meaningful, what isn't. And it's also the retailers and the platforms will release their own data. And then you're like, what does this actually mean? Or what are you actually saying? Because it's all couched in many superlatives.

2:27So we'll try and give you some context about it. And pretty much what you said, Gabby, was that it seems like it was kind of a tale of two different Black Fridays. If you talk to the platforms, if you talk to the e-commerce players, they all say it was amazing. Things are going so well. It's up, up, up. You know, and then if you talk to, well, you're not going to talk to many of these brands because they haven't really released numbers yet. But if you look at the data hidden underneath it, it's not as rosy. But Adobe Analytics, which is one of the data providers that often is the first to come out with numbers, said that it was a record holiday season in terms of spending.

3:09Cyber Monday growth was 9.6 % year over year, hitting$12.4 billion. dollars. Cyber Week as a whole, up 7.8 % year over year, hitting$38 billion in total. And then, as you mentioned, the platforms. And these are now sort of the second source that a lot of people turn to. And so Shopify said it was a bonanza of sales. It hit a record$9.3 billion in sales from all of its merchants, which was 24 % growth from last year. And then we have Amazon. And Amazon is the master of giving a press release that says very, very little. And so what we have from Amazon is that Cyber Week was, quote, its biggest ever compared to the same 11-day period ending on Cyber Monday in previous years.

3:57SimilarWeb came out with a few numbers saying that Amazon saw its web traffic grow 3 % on Black Friday compared to 2022. Another interesting number that Amazon gave, which it's hard to really give context to this number. We don't really have much that we can compare it to. But Amazon said that shoppers bought 500 million items from independent sellers on its platform. So that's the overall table setting. And that's the good news, especially on the e-commerce front, I would say. Yeah. But as we'll get into, I think for me, it's a little bit conflicting. like you were mentioning data, because we see per Bloomberg's second measure, the median decline in Black Friday sales was 4 % for a group of 40 companies that generate a higher percentage of year-to-date sales from a shopping holiday than their competitors.

4:56So that's a decline that's not great, especially with inflation. It's Bloomberg's second measure, and they have their own proprietary way of getting this data, but a lot of it was looking at an individual list of brands and retailers and trying to parse out what the sales were. It's a really interesting story just because it's a story in graphs. And so you can sort of touch an interactive graph and see a company and they have the line of was there growth, was there not growth. And you see a bunch of brands that likely are reliant on Q4 sales, specifically Black Friday, Cyber Monday sales that did not produce the growth year over year that they wanted.

5:38And so I think that is a really helpful context to put into place when you see all of the headlines that this was another record setting holiday sales event when for a lot of them, it wasn't. And I think a lot of it had to do with the companies that rely much more on in-store sales than those that were probably paying a lot in advertising, reliant on platforms. People were, you know, one of the big themes of this entire thing is that people were seeking out deals. They were probably going to deal sites. They were trawling Amazon to see what the biggest discounts were. And so for those companies that were maybe not participating as heavily as others, they did not get the intended results, it seems like.

6:24Yeah. And I think before we get into the traditional retailers, we can talk a little bit about some of the factors that contributed to e-commerce continuing to do well. you know, like you mentioned, Amazon, Shopify, Eclipse past years, but there's also a couple of other factors. Like for example, there weren't any really major hiccups or tech outages that usually, you know, really puts a wrench in the checkouts. So, and then, yeah, because last year we saw Amazon's ad console going down, leading to some chaos for sellers. I think we had covered that on modern retail pretty extensively. So there are things like that that always, I think, puts a little bit of a dent in some of the numbers.

7:13Yeah. And I think that, you know, this from the brands and agencies that I spoke with just getting a sense of what was going on, they all said that, you know, it was hectic, it was chaotic, but A, they were more prepared than ever before for whatever might come their way. And B, there weren't as many issues as in years past. And I do think it's really noteworthy that Shopify in its press release about the results actually boasted that it had no tech down, like major tech outages. I think that's just kind of funny where, you know, usually it's about the sales. It's giving data about what consumers bought, all that.

7:48But then Shopify was like, hey, look, our technology worked as it was supposed to work. Isn't that great? Which I just kind of a silly little aside that I guess good for them. You know, glad that their technology is working. Yeah. Yeah. I don't know. Maybe that's Amazon shade. Who knows? So, yeah, I want to talk a little bit about the actual the categories that did do well. You know, I think this is pretty much on theme, but I don't know. You let me know with the rest of the year. So, of course, Toys Electronics, these are classic Black Friday, Cyber Monday winners. winners. But also we keep seeing beauty and skincare, health, wellness, all of these categories doing really well.

8:33I don't really see apparel on this list. So what do you think, do you think apparel is still kind of trying to get back on the horse? I think it depends on the apparel company. So I did some research for a story on Amazon and some apparel saw really big growth. Like I talked with a brand that actually didn't really spend on advertising on Amazon, and it's a mostly Amazon brand. And this founder said, we saw record sales. And so I don't think apparel is down for the count. But if you look at the numbers we'll talk about in a few minutes, a lot of the specifically the retailers and brands that did poorly were apparel retailers, but more traditionally based.

9:13But I do think that apparel is a much more a bumpier sort of game industry category, whatever you want to call it. And I think that it did some did do well, is my understanding. But then there were other categories that just like, were home runs. And supposedly beauty was like, if you were a beauty brand, and you had a semblance of, you know, a Black Friday strategy, you probably saw a pretty big sales bump. I think homewares also did considerably well, according to people that I spoke with. And so it's super interesting to see what's on the trajectory. Someone else told me that CPG, and you actually just wrote a story about this, but it seems like food-affiliated types of deals did very well, which is interesting because you wonder, are they buying them as gifts or are they just stocking up on things because they were cheap?

10:04That's another sign of the times. It's all these less gifty and more personal items that seem to have been really resonating, which is pretty interesting. Yeah. And I think analysts predicted that in the last couple of years is that self-gifting, is it really self-gifting? I just talked about some toiletries, are due pretty well during this because a lot of people already have things in their cards. And then of course, if you see 20 % off, whatever the deal is that day, you're more likely to check out. And so that's pretty expected. But yeah, there was a shift away of, you know, it used to be that you're pretty much shopping for holidays, Christmas, whatever, during that weekend.

10:46And now I think a lot of people kind of go across the board depending on what they're looking for, but including, yeah, food and beverage. So with that said, do you want to talk about some of the apparel companies that did not, or at least saw a drop in sales according to data? We see companies like J.Crew and Capri Holdings seeing a drop, and then also Best Buy and Levi's. Yeah. So it was really interesting that these, and Best Buy was kind of the big surprise for me here. And these are all kind of random, not random, but they're not all the same types of companies and retailers. But it seems like there were quite a few that, at least according to this data, hit some snags in terms of hitting the growth that they needed.

11:39Yeah, it was just really interesting looking at this one specific graph and seeing all. You know, there were others that did really, really well. You know, Amazon, of course, being one of them. Let me see. Nike, according to Bloomberg, did very well. You know, Kirkland, I guess, did well. But anyway. Your fave. Yeah. Anyway, all this to say that, you know, it was definitely a mixed bag for some. Yeah. So I think, you know, because we talk about this weekend as the, I don't know, Thursday through Monday. It's really Monday through Monday at this point. Actually, we'll get into that. But what does this mean for the talent?

12:20because as I'm writing about this week, the Black Friday sales are still continuing. And so I think some brands are expecting there to be, yeah, a little bit more of a continued trickle of sales coming in as opposed to just that big spike that tends to happen the weekend over. Yeah, and I mean, well, one of the big themes we're seeing this year is that it's no longer just a weekend event, but it's a marathon. And we saw this when there were all these early sales, Although there were people that I spoke with that said they're not so sure that, you know, pushing or pulling back the sales, bringing them earlier in the year had the effect that they wanted because they said.

13:01No, people still wait. Yeah, people still wait. And they also the idea that you're going to have an early sale, but there's going to be another sale. You're probably like, well, the other sale is going to be better. Anyway, but all of this to say is that there's, I think people are still waiting and expecting to, you know, maybe see some other discounts or maybe rethink, you know, thinking about what they'll buy down the line. But also, it just shows that, you know, there's a lot of uncertainty about how, what the results this year are going to look like. And even with these numbers that we said, they were mixed.

13:33Some were amazing, some were not amazing. And so I think it's going to be really interesting to see just what the slow trickle of the next, you know, two to three weeks actually brings. Yeah, it'll be interesting because, you know, if you're still planning to shop, good news, I am being told there will be sort of little bursts of sales continuing throughout December. So, you know, watch your inbox, I guess. Yeah, exactly. Yeah, I think actually that is an interesting aside is that this is brands, at least some of the ones I talked to are using the next couple of weeks to sort of repackage some of, you know, beyond just the typical percentage discount to kind of try to maybe convert or bring back some of the customers.

14:20So that'll be, it'll be interesting to see some of those numbers in January and how they, yeah, how they turn out. But overall, yeah, it seems like, you know, it's not maybe as bad as some analysts had predicted it to be. But again, we probably won't know for another few weeks. Yeah. Trey's still out. All right. Well, now we could talk about Sheehan's IPO, which we have spoken about on this very show before. Probably multiple times. Yeah, but apparently it's actually going to happen this time around because Shein filed to go public. So most recent valuation was$66 billion after fundraising in May, after having a huge year.

15:10So yeah, what are your thoughts on this, Cale? Because I think it's coming at a really interesting time, as we've spoke about pretty recently. IPOs, I'm seeing tweets like, IPOs are back, baby. So are they officially back? I don't know if they're officially back. Some say they're back. I think this will be the real test for whether they're back. So the news is that Shein has reportedly confidentially filed to go public. No one or not anyone in the press, as far as I know, has seen these papers yet. You know, a company can do this. And then when they've reached a certain amount of time before they go public, then they'll release them, you know, outward.

15:47But right now, all we have are these reports. And so we don't have too many details about it. And it's similar to pretty much all reporting on Xi 'an, which it is unnamed sources, you know, kind of allusions to what's to come, but very little concrete. tweets uh but i think the the valuation you brought up is super interesting because 66 billion it's a lot of money but it's also a drop in the valuation that it saw a year before and that's because it's been a really really interesting market specifically for fast fashion or you know cheap goods platforms and so she and three years ago was the best it was on the top of the mountain it was selling like crazy all of the young people were using it it was advertising everywhere on you know, like Facebook, on Google.

16:36And then, you know, it got into some competition with other players, specifically someone like Timu, who we'll talk about later. And so supposedly that did make a dent, not necessarily, or I guess it made a dent in the amount that it was growing. And so supposedly Shein has been, you know, able to do a little bit better. There was a report from the information that gave some sense about how it was doing. This was from a few weeks ago, I think. Just saying that it was able to, that its 2023 revenue through September grew 40%, and that was on target to hit as much as$33 billion in sales by the end of this year.

17:18According to the Wall Street Journal in 2022, Shein recorded$23 billion in revenue and$800 million in net profit. So, you know, the company is growing. It has brought in a lot of sales. Of course, you know, 20, 30 billion dollars in sales is a drop, not a drop in the bucket, but a small percentage of what Amazon sales are. But still, clearly the company is, you know, on the up and up. And so there are a lot of questions, you know, we'll have to look into the documents when they come out. But pretty much, Sheehan has been preparing for this for the last year. It was a really secretive hidden company.

17:59It's now been making more public-facing appearances. One of its executives came on the Modern Retail Podcast a few months ago, for example. It's been on this really big PR blitz to show that it is more transparent and it's a very business-friendly company. We'll talk about this in a few minutes, but there's been a lot of reporting about its supply chain, how some of its factories might use forced labor. Xi 'an has come on the defensive on that, saying no, that it has a no-tolerance policy for that. There are all these different things happening, which has shown that Xi 'an has been paving the way so that it can enter the public markets.

18:37And the real question now is, has it done enough? And will Wall Street respond to this? And the jury's still out. I said that in the last section, but I'll say it here. The jury is still out about how it will actually fare. But if it is able to keep the growth that it has had over the last few years, you know, could bode well. Yeah. It's also interesting that it's coming right after, or amid, I guess you could say, a little bit of an acquisition streak for Shein. It acquired a part of Forever 21. So it now has potential brick and mortar presence. It also bought out a British brand Misguided that was pretty troubled.

19:21So I think it and these are, you know, pretty established fast fashion brands of the early aughts, if I say so myself. So I don't know, maybe it has this vision of, yeah, bringing them all under one umbrella. Yeah, I mean, that makes sense. And I think also both of those acquisitions are part of this big PR blitz where it's trying to shed itself of the perception that it is this hidden Chinese company that just makes clothes really cheaply and ships them off into different Western markets. But now it's a part owner in Forever 21. You can go into Forever 21 stores and find Xi in there. You know, it now owns Misguided.

19:59These are all companies that people have perceptions with as being, you know, not as, you know, not as mysterious, not as foreign. And so I think that that is likely a big part of the thought behind those acquisitions is that it's trying to become more ingrained in the popular, you know, commerce culture, I guess you could say. Yeah. And what's what's more popular than having a real housewife as a spokesperson? Exactly. We're getting there. Yeah, so I think it's safe to say everybody's just standing by and watching to see some of the other companies maybe that are waiting in the wings are probably going to watch when this IPO eventually happens and what it will look like.

20:44It will be interesting to see. Yeah, no, I think that this is going to be one of the big IPOs to watch out for. You know, there's been an uptick in more companies going public. Some have gone well, some have not gone well. And so it's been a pretty mixed bag in terms of the results. And I think a lot of brands are just waiting until it's a better market for them to make this move. And so if Shein does do this and is able to make a splash and show that it's a hit with investors, then I bet you that will send signals for other companies to begin making similar moves. And so this is going to be one to really watch.

21:24Well, we can now move on to Shein's maybe fiercest competitor, Timu, at this point, which I'll tell a lot of us felt like it kind of came out of nowhere. So it sounds like they're going to be doing another Super Bowl commercial after the one they did earlier this year that we talked about where suddenly Timu was everywhere after launching, I think, you know, only a couple months before that in 2022. too. These are not cheap. So what are your thoughts about this strategy of just sort of going all in on brand awareness as opposed to I think maybe Sheehan was a little bit more of a an organic, you know, typical sort of DTC play?

22:07Yeah, I think, you know, it's not surprising. I just think Timu's overall strategy is all of it is about gaining buzz and even buzz about the buzz. So, for example, I received an email a couple of days ago saying, here's our official statement about this Super Bowl. We're thinking about running an ad. And clearly, they are trying to gin up. And, you know, the fact that we're talking about this here means that it's working. But, you know, they're trying to make it so that there is buzz about everything that they do that is a splashy thing. I imagine they will spend the, you know, whatever, tens of millions of dollars that it costs to run an ad.

22:45But at the same time, I think that one of Timu's really big strategies is just making their buzz around every big consumer-facing move it does. And it's an interesting one. Just a story about the fact that a company is thinking about running a Super Bowl ad. That doesn't happen every day. You know, like clearly there is there is fascination and interest in how Timu and in by extension, its its owner, the Chinese company PDD Holdings, how how it is trying to enter the U.S. market. So that ultimately my thought is just like it's super fascinating that like not only is Timu thinking about doing this again, there were reports last year that it did work that after its Super Bowl ad, it did see a huge spike in sales.

23:33And so if that's true, then why not do it again? But there's so much thirst for knowledge about what's going on at this company that even the semblance of any thought about strategy creates a chain reaction of interest in news stories and et cetera. Yeah, we had reported that the two spots, which each were 30 seconds and each cost$7 million, resulted in a 45 % increase in downloads and daily active users jumped by about 20%. So again, this is why it felt like this overnight sort of sensation because that commercial really, I remember seeing tweets like, what is Timu? Where did this come from? And so people were curious and downloaded it.

24:22And then, of course, right away, it got comparisons to Shian, even though Timu, you know, really wants to differentiate itself. Yeah, I mean, this has been a big thing between the two of them of they are often set in the same breath, but they are they're pretty different. I mean, I think people think of Timu much more like a wish or like a cheaper Amazon, like you're, you know, buying. You're not necessarily though. Maybe some people are buying apparel on Timu. And I think Shein is fast fashion. And so they have similar business models. I think a lot of it has to do with geography is the fact that they're both Chinese companies, which, you know, you could spend, you know, hours.

25:00talking about sort of why it is that people are putting those into the same buckets, but they are trying to serve different purposes. And I think that that's interesting. Shein has made inroads about trying to launch a third-party marketplace that sells things beyond apparel, but that's still not what people are talking about. People talk about Shein because of its clothing, and that's not the same conversation as Timo. Yeah, and Timo does speak of itself as a marketplace, which I always think is pretty interesting. as opposed to just this homogenous brand. So, yeah, I guess we'll just have to wait for the Super Bowl to see what happens.

25:42I mean, I bet you they will confirm it sometime soon. I think that the real other big story here is just the ad and marketing sort of war that's going on between these two companies and how they're spending it and where they're spending it. because both Shein and both Timu are spending a lot of money and trying to introduce more people to the brand, but also make them have positive associations with the brands. And so, you know, Shein was earlier to this game because it's a company that's been around since 2008, but it has spent the last many years, you know, priming the engines with, you know, Google ads, Facebook ads, Instagram ads, being on TikTok, all that.

26:24And I think Timu is now trying to do that similarly and potentially a little bit more with a little bit more fanfare. And so this is really an ad war between these two platforms that I think will be interesting to watch play out over the next year, specifically as Xi 'an potentially goes public and Timu tries to gain more U.S. market share. Yeah, the Timu ad strategy is really interesting. I think I just read that they're due to spend$1.4 billion on ads. If you ever search anything on Google, I feel like it's pretty apparent. Their products surface pretty heavily up. So yeah, it doesn't seem like it's going to be stopping anytime soon.

27:11Okay, well, that is our show for the week. You can rate and review us on Apple Podcasts, Spotify, or anywhere else you're listening. And don't forget to subscribe to the Modern Retail Podcast for interviews with industry leaders. It drops on Thursday. Cale, do you have a preview for us for next week of who you'll be speaking to? Yes, I'm really excited for next week. I talk with Andrei Zdanov, who is the president of GE Appliances, which in first build, it was just this really interesting conversation about sort of the future of product making. product making, gadget making, and, you know, sort of making new types of appliances and products that people haven't thought about and how that's all part of this whole GE ecosystem.

28:00It was a really interesting company. A really interesting conversation. That does sound interesting. Great. And yeah, we will see you back here next week for the Modern Retail Rundown. Thank you for listening.

28:19Thank you.