Rundown: NRF highlights, Hello Bello's new direction & December sales figures

0:06Hello, I'm Gabby Barco. This is the Modern Retail Rundown. I'm here today with our managing editor, Anna Hensel. Welcome back to the show, Anna. How are you? I'm good. Thank you for having me, Gabby. It's good to be podcasting with you again. Yeah, of course. Filling in poor Kale while he's on the West Coast. But we do have a lot to cover, including our attendance of the NRF conference this past weekend. We're going to be talking about some of our takeaways and takes, I guess, on what was going on there. And then we're going to talk about Hello Bello. It's the baby care brand that filed for bankruptcy recently and then was just acquired by a private equity firm.

0:52So we're anticipating a relaunch there. And finally, we're going to end on a somewhat bright note with December retail numbers being not as bad as people were expecting. So yeah, let's get into it with NRF first. We can maybe just give a little bit of lay of the land and the atmosphere. This is the busiest one I've been to since, I guess, COVID started or they brought it back. What did you make of, yeah, kind of like this comeback? I think they had 40 ,000 people, which is now on par with pre-COVID numbers. If you're not familiar with NRF, it's a very big overwhelming retail conference. I would say it is probably like the biggest retail conference of the year.

1:42It's always held toward the beginning of January. So I feel like it's still an event that people feel like they need to go to because it kind of like sets the agenda for the year. I mean, I go to catch up with people I haven't seen in a while, see what's new, see what executives are thinking about this year. But it is kind of funny. This is something that I've been thinking about for a couple years now. And I feel like it was really prominent at this year's event, which is basically that NRF has become a tech event. And that's, I mean, I guess it's kind of always been the case. A lot of tech vendors pay to have boosts at NRF.

2:25But also, there's a bunch of panels over the three days, and I feel like they have really been taken over by technology executives. You'll always have the token brand or retail executive on a panel, but there's just so much focus on technology now, all the different ways that retailers can use various tech solutions. So one thing that stood out to me is as we were putting together the preview for NRF that we published on Modern Retail, one thing we found was that on the first day alone, there was over a dozen panels focused on AI and all the different ways that retailers can be using AI. So again, I think that just underscores how this has really become a tech event.

3:16And the biggest boosts at the event are always boosts from technology giants. So Amazon, Amazon, Salesforce, Google. Salesforce booth really stood out to me. It's like they had, I don't know, all these different intricate, it was like names of the different retailers they partnered with and like intricate store and store displays almost showcasing their products. That offers pros and cons then, right? If you are a technology vendor, NRF makes a lot of sense for you. If you're a brand or retail executive, it can feel overwhelming. But Gabby, what did you think of the event? Yeah, I did ask about that because one of the stories I did for day one was the prominence of these vendors and, you know, solution providers.

4:07I believe this year there were over 800 at least official participating ones. You know, I did ask what it costs to be at one of these. And one exec said that you're looking at pretty much starting at around 100 ,000. And that's just the little banner with your table on it. So these aren't cheap investments, but it does seem like these companies feel like they do need to meet with retailers. And now that it's sort of come back, quote unquote, it's, yeah, I think that maybe pushed them even further. It It sounds like that's kind of here to stay. I mean, from what I could tell, it was always an innovation conference.

4:52But I think the idea that it's, you know, mostly focused on just like data-driven AI solutions is what stood out to us this year. I think that with these big events, you can always find like, I don't know, a guerrilla way to get in where hopefully you're not, not every company was spending$100 ,000. But yeah, it's, I think that one thing, again, in this preview piece we published before the event, I feel like one line we had in there is that like the way to get the most of NRF is to go in with kind of like a concrete plan or like, all right, what do I want to get out of this event? And maybe it's just getting business cards.

5:38Maybe it's getting intros to these number of companies. And I think, you know, the hard thing about a technology-focused event when you're a retailer is I feel like on a lot of these panels, you know, companies can talk about how they're implementing technology. And it all sounds great in theory, but maybe it's really expensive for your company to implement or, like, it doesn't work out in practice as magically as these companies say it will. Um, but I also think that if you are a retailer brand executive and you, I don't know, you listen to, I always feel like with big events like these, so long as you listen to, um, a panel that helps you like think about something in a different way or presents an interesting data point for fodder or gives you inspiration about like how to maybe use a tech solution in a way you didn't think of it, hopefully that's good.

6:38I feel like I got some good thought bubbles out of the event. So while it was very overwhelming, I, you know, I feel like it was still good, sets a good tone for the year. Yeah, same. I mean, you know, from our perspective, of course, it's a coverage POV, but I do think it sounds like people got something, whether it was just reconnecting with old colleagues or listening to, you know, sometimes it's just like checking in on what's new. You know, not everybody's checking out all the latest, yeah, tech at all, at any given time. The pizza robot. Pizza robot. Yes, there was a huge line for the pizza robot.

7:18It was a popular one. I think those are some of the booths that stood out. Of course, I was going to be the splashy ones, but overall, it seemed like the floors were pretty busy. Yeah, absolutely. So I guess a couple other notes that we took away. One theme, just listening in on a couple of panels, was that execs did seem to be cautiously optimistic about 2024. Having deja vu, I feel like we heard this about a year ago. Everyone always wants to be cautiously optimistic. I mean, I guess in this case, when we're talking about the economy, I get that there is something to be said about the consumer being resilient.

8:04I think, you know, one panel was like, every time we do these surveys, they say one thing about, you know, cutting back on spending, and then we see something else in, which we'll talk about with the holiday numbers with that. So that seemed like people are like, okay, maybe things are going to stabilize soon, bracing for AI or preparing or checking it out. And then the other thing was an emphasis on inventory management, just streamlining operations, which a lot of these tech vendors were geared for. Yeah, absolutely. I think that that was something that a lot of retailers ran into challenges with in 2023 was inventory management.

8:49Some of the companies that did poorly had too much inventory and had to resort to a lot of steep discounts to get rid of that inventory. So I'm sure there's a lot of tech vendors who say we have a solution to help you better manage your inventory. But just setting that aside, I think that is going to be a big retail theme as well in 2024 is how to better manage your inventory. Any other final thoughts on the weekend, the long weekend that we spent? I am excited to probably not step foot in the Java Center for another year. Yeah, me too. There's something very, I don't know, it's the vibe of Hudson Yards in January.

9:36It's a little dystopian in my opinion, but that's just me. I guess the last thing we could mention also is this was the last day which we got hit with a storm. So attendance was a little bit lower. But we had a few celebrity appearances and panels that seemed to draw a fun crowd. So those were fun. Martha Stewart, Drew Barrymore. I believe her advice was ask people if they're okay and ask them if they want coffee. I'm not sure if she's talking about it. Yeah, always, right? Like, yeah, times are tough. I guess use your empathy sometimes. Yeah, but that's a great segue for our next segment on celebrity brands.

10:18Exactly. Okay, so next up, we're going to talk about Hello Bello. For those unfamiliar with the brand, this is a baby care brand that's clean, plant-based, sustainable, mostly focused on diapers and other personal care. that was founded by Kristen Bell and Dax Shepard. You know, they're married, they have kids. They decided to launch this brand in 2019. And it primarily sold via DTC. It seemed like there was a lot of excitement around it, especially when it struck an exclusive partnership with Walmart. It seemed like it was positioned to, you know, really take off in the mass market. But in October, it did file for bankruptcy.

11:05listing assets and liabilities of at least$100 million each. So with this example specifically, and we'll get to the, you know, sort of rehab plans, but I think it's a sign that not every celebrity brand is a slam dunk. And we hear that a lot, but it is interesting to see things that are on, in theory, on paper should be, you know, really successful and doing well, don't end up panning out, especially in this really noisy market. So what did you make of the bankruptcy and now the new acquisition, which you can go into? Yeah. So like you mentioned, there's been a lot of activity in the celebrity brand space.

11:52And I think that anytime a new one of these brands launches in beauty or skincare or baby care, what have you, I always wonder how it's going to do. And usually it's just a matter of kind of have to wait and see for a few years. So, you know, I'm sure with Hella Bello, like you mentioned, Kristen Bell and Dax Shepard are our parents. I haven't looked into the founding story exactly, but, you know, I'm sure born out of personal experience, the personal problem they experienced and figured that they could, aided with their big followings, use that to build a successful brand. One thing that I thought was really interesting is so looking through the court documents, so it filed for bankruptcy in October, had assets and liabilities of at least$100 million each.

12:48One thing that they mentioned is that Hello Bello had invested in opening its own factory, which ultimately proved to be too expensive and didn't yield positive results fast enough. One of the issues with celebrity brands is that sometimes they don't necessarily pick the right things to invest in as they scale and grow. So in December, Hello Bello was acquired by a firm called Hildred Capital Management. They also own another brand called Highlands Naturals. So kind of have some experience in that category. And so the news is now that they have named Will Righimer, who is the CEO of Highlands Naturals, to also be the new CEO of Hello Bello.

13:41I think we just will kind of have to wait and see what happens with the brand. I'm sure there'll be some kind of maybe rejiggering of the product portfolio, rethinking what areas to invest in. Yeah, I think in these cases, there's usually some kind of refresh or relaunch, rolling it back out type of strategy. But we will, yeah, we will see when that happens. One thing I wanted to note is that Righimer previously led a brand refresh at Highlands Naturals. So he led their expansion into some categories like vitamins, minerals, and supplements. So I'm sure there will be kind of some similar repositioning at Hello Bello.

14:31I mean, one thing I just thought was interesting is I remember I was in Target right after the company announced they had filed for bankruptcy and I knew they were known for diapers. And then I saw their women's multivitamins on the shelves. And I was like, wow, this company is in a lot of categories. So yeah, there might be some that they exit, probably will add some new product categories as maybe they get more data on their customer, what they're interested from a margin perspective, what categories they'll expand into. So yeah, we'll just kind of have to see what their next moves are. All right.

15:10Well, next up, we're going to talk about some bright spots, which there's these December holiday numbers that came in that showed holiday sales were not as bad as some experts or analysts had anticipated. And so it wasn't a huge growth year over year, but it It wasn't terrible either. So yeah, let's go through the numbers and show why the American consumer seems to still be pretty resilient despite cutting back, which is what we keep hearing. Yeah. So there were some numbers that just came out from the Commerce Department that I feel like gives kind of a good indication of where we're at. So retail sales increased 0.6 % in December compared to November, which might not sound like a lot, but economists expected a rise of 0.4%.

16:07So beat expectations. And I also think it was just really important to end the year on growth because there's been so much fear about inflation leading people to cut back on spending. and ultimately in 2023 retail sales ended up growing 5.6 percent compared to 2022. I don't know how much of that is due to higher prices. I imagine some of it but still I think that the through line here is 2023 was better than expected and that was the focus of many talks at NRF as well, that despite fears of inflation leading people to cut back on spending, people still spent more this holiday. One economist said during a panel that the American consumer keeps surprising.

17:00And the holidays was an instant of when budgeting was put on pause for some enjoyment, which I think is a good way to put it. Yeah, we can get into the categories that did well, which I think was much needed this past year. Some of them were not really doing that great throughout the year. Some of them that were surprising for me were apparel and accessories, which were famously down last year. They increased, retailers saw new sales increase by 1.5 % month over month, so over November. Yeah, not too bad. It seems like a lot of people were gifting these types of products. Yeah, when I saw that sales from clothing and accessory stores increased month over month, I felt like that was a positive sign.

17:52I mean, of course, clothing and accessories are a more popular item come December because it's popular for holiday gifts. But still, I think clothing is one of the categories that has been hit apart by inflation. It's an area where people were cutting back in. So just the fact that it increased, I think, is a good sign. But on the flip side, furniture and home furnishings sales fell by 1%. And this is a category that has just been continuously challenged and I feel like will continue to be. There was a panel at NRF that I didn't attend, but it was featuring the CEOs of Casper and Brooklinen. And so just in reading a recap of the panel, they talked about how the home category just has been really challenged.

18:47Brooklyn and named a new CEO last year. So I think very indicative of how challenging it is. And in that category, you really have to have your messaging down and talk about like the value of your products. Additionally, since people did more holiday shopping online, some retailers that were heavily reliant on brick and mortar may have been hurt more. A lot of retailer, like specific retailers haven't released their holiday sales yet. So I'm sure once they do, we'll get more insight into specifically who did well, who had a challenging holiday season. But again, I think the story here could be worse, cautiously optimistic, better than expected.

19:33Yeah. Another thing I thought was interesting was the increase or the growth coming. Yes, there was inflation, a lot of retailers raised their price, but there was pretty heavy discounting too in the last few months. And so the fact that it's still, you know, volume still grew, sounds like, yeah, there was a decent amount of spending. Yeah, absolutely. So we can wrap up by talking about, you know, what does this mean as a tone setter for 2024? I think, as we mentioned at the top, it is kind of letting people know that things are, you know, there's a soft landing that we keep hearing of from economists and analysts.

20:19And so, yeah, what are your thoughts? I mean, I think there will still be some tough times, some tough patches, especially for categories that aren't doing well, but it seems like there's some hope too. One other data point or a couple other data points I saw this morning. So there are a couple retailer or a few retailers that are starting to do layoffs now. So Macy's and Wayfair had layoffs, announced layoffs this morning. We're recording this on Friday morning. And so they probably did not have a great holiday season. I feel like we can make that assumption. But like you said, there are points for optimism.

21:04I also was reading through a survey this morning where consumer sentiment about like, you know, how do you think the next year will be financially was the highest since that survey was done in 2021. So, you know, the past couple years, people have been really concerned about inflation. Will this lead to a recession? Should I cut back on spending? But the worst case scenario hasn't happened yet. And so I feel like now people are, again, finally starting to be cautiously optimistic. Maybe I can start spending a little bit more. The worst case scenario might not happen. One thing that I thought was funny, going back to NRF again, is There were a couple panels I listened into where they were talking about how they anticipate the election could impact spending.

22:00And people sometimes don't like to spend during an election year because they're worried about volatility. And I was like, oh, I hadn't thought about that before, but new fear unlocked. And so I do, again, I think retailers are optimistic, but also just given everything that's happened over the past few years with the pandemic, random supply chain crises, inflation, you still always have to be prepared for the worst. So not to end on a more dour note, but yeah, I think retailers are optimistic, but also we don't know what's going to happen. The idea that jobs are more resilient and growing at a rate that was unexpected.

22:46I know we see a lot of layoff headlines, of course, in the news. Those tend to be at these high-profile companies like Amazon and whatnot. So the fact that they seem to think that people, you know, are assured enough that, you know, they will be able to either find new jobs or keep their jobs. That's usually a huge psychological influence on whether somebody is spending at any given moment, of course, goes without saying. Yeah, absolutely. Here's hoping for the best in 2024. for. All right. Well, that is our show for this week. You can write and review us on Apple Podcasts, Spotify, or wherever you're listening.

23:30Don't forget to subscribe to the Modern Retail Podcast to hear interviews with industry leaders every Thursday and come back on Saturdays for the Modern Retail Rundown. Thank you for listening.

23:58Thank you.