The Labubu craze, retail employment shifts and headwinds in the home goods sector

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0:46Hello everyone and welcome to the Modern Retail Podcast. It is our show that covers the ways the retail industry is changing and modernizing. I am senior reporter Gabby Barco here with co-host Melissa Daniels. Welcome back, Melissa. Thank you so much, Gabby. I spent last week with a few days in Los Angeles at the Future Stores Conference and talked to some really great execs about what they're doing in the world of brick and mortar and really enjoyed listening to the episode with you and Julia and Ana over the past weekend. Yeah, it was so great having them on, but I did miss you. So I'm glad you're back and we have so much to cover.

1:26So later on in the episode, Melissa has a panel discussion with a trio of furniture execs about how they're navigating the sales during this historically bad housing market. Obviously, that really impacts the way people furnish their homes, and it's like a trickle-down effect. So really excited to hear that. But first up, we're going to chat about our rundown stories. First up, we're going to talk about the LaBubu craze. That one is a doozy. I'm excited to hear your thoughts. And then we're going to get into a little bit of meatier, serious news to talk about all of the retail job cuts that have really accrued in the last few months.

2:13Yeah, it's not good right now. So yeah, let's get started. LaBubu. So first up, maybe just describe what LaBubu is. It's basically like a plush little stuffed doll. It's like ugly cute. It's like ugly cute. Yeah. Yeah. I don't want to say, but I guess it is debatable whether you think it's cute or not. But I guess the latest iteration is that they're made into little keychains that people are attaching to their bags and backpacks, which is just going viral on all the platforms right now. But it's not anything new, but it has exploded, at least on the U.S. side, in the last few months. It's obviously pretty big in countries like China, where it really originated.

3:00And we'll talk about why it's so hard to get them and people are paying thousands of dollars for them. But, yeah, I don't know. What are your thoughts? Where do you think it really exploded, I guess, at least on the American side? from what I've sort of seen uh Lisa from Blackpink who's absolutely fabulous and really crushed it on White Lotus uh kind of brought this to some of the American consumer consciousness uh she had posed with one in a photo last year uh she had one clip to her bag that she brought to Coachella and it's something she's talked about in interviews about how much she loves la boo boo so I think there's a bit of like a pop culture you know do as I do following the celebrity trends from from her angle.

3:42But as far as why people are attracted to them, I kind of don't know. But I get it. Characters are cute. You know, this was created by Kessing Lung, who's a Hong Kong-born artist and illustrator that's part of a larger group called the Monsters, who are inspired by Nordic mythology. So the Lububu has this sort of monster mythological appearance to it. You know, it's something not of this world. And, you know, I think those characters in general kind of, you know, do very well. Like, do you remember Furbies? I'm old enough to remember Furbies. Yeah. And the idea that they're collectibles essentially, right?

4:19And everybody wants to show them off. And in this case, because we have social media now, everyone wants to post about their labubu. But let's talk about why the scarcity is actually creating some of this virality. So what's kind of funny about labubus is they're officially sold from Popmart, which is a Chinese company since 2019. And you really can't access that a ton in the U.S. right now. So I think where a lot of people are buying them is on resale markets or trade groups. There's also a lot of knockoffs, which are collectively known as LeFoufus. And so people can find the LeFoufus, they can find the knockoffs, but the originals are really hard to get still.

4:59So it's just kind of interesting. I mean, this week we saw a human-sized LeBoubou sell for over $150 ,000. That's some serious cash on hand to invest in a trend. But I don't know. I think it's just kind of interesting the way virality can drive scarcity, right? Yeah, that and the other thing that I thought was interesting was that it's got like a blind box format, which means that you actually don't know what you're going to get. It's literally like one of those, what is the surprise bags or whatever, where you don't know what character you're getting until you actually open it, which probably fuels the sort of, I guess, hunt for the one you really want.

5:40So all of this is basically a recipe for FOMO. Yeah. Wow. That's a very interesting tidbit. I didn't realize about that, but I think it's something that's worked for other companies too. I know that the Squishmallows do a really good mystery and those little minis that Ulta It was selling, came in mystery packages. There's all kinds of companies that use that format. And yeah, I think it's a real big driver for collectors. So the other thing, of course, naturally, they're now exploding on the resale sites. They're going for, like you said, hundreds, maybe even thousands of dollars in some cases.

6:17So that's the secondary market experiencing this ripple effect. Like you said, there's also the Lafoufous. I think that's a cuter name, personally. I don't know about you. Um, that's, that's also gaining traction. I did ask my 14 year old niece, shout out to Julie, you know, is that the age group, I guess, interested in them? And she said, yes, but they're so expensive and hard to get that. I guess there is a barrier of entry to a certain extent. Uh, so yeah, I, I do wonder whether there's going to be like a bubble that bursts, But the Lefoufous, I guess, are also taking off. But as Julia, our reporter, mentioned, there is a pro tip, which is that real Lefoufous have nine teeth.

7:04I thought this was so funny. So if you're out there looking for a real one, make sure you're counting the teeth. Yes, I guess. But I mean, can you actually do that before you see it in person? I don't know. I don't know. I mean, it looks like they have a big smile, so you probably could. I'm actually just Googling right now to see if Counting the Teeth is a punk band yet or if it's something I can reserve for future. Yeah, like there's kind of an edge there. I sort of like it. But yeah, I mean, I think it's a fun trend. It's always interesting when these things come up. We saw this with Beanie Babies in the 90s, like we saw it with Furbies.

7:43There's always little creatures that come up that people love and adore and want to collect. And I think it's fun. I think people should have fun. Yeah, it is interesting just how virality can really fuel all of this. And as far as novelty items really taking off during these economic moments, I also think is really interesting. But the one thing they do have going for them is unlike Beanie Babies, they're not claiming to have some sort of long-term appreciation value. So we're safe there. Okay, so let's shift gears now to talk about retail layoffs, a little bit of a different tone here, but they have really ramped up in the last few months.

8:23It's been pretty alarming. We're seeing some new numbers now about thousands of job cuts across retail, pretty much across a lot of different departments, thousands of job cuts, pretty much across a bunch of different departments and retailers. So companies of all sizes are being impacted. And basically, this is all just leading to a really, really high unemployment rate in the U.S. in this segment particularly. And I guess it is in line with the overall unemployment rate jumping, but retail in particular is being really hard hit. That's right. Per Challenger Gray and Christmas, a firm that looks at a lot of employment figures and has a lot of great data around retail, almost 11 ,500 retail jobs were cut in May compared to around 7 ,200 jobs in April.

9:15As you said, that's in line with sort of the overall unemployment rate jump we've seen here in the U.S., but specifically with retail, retail job losses are up 274 percent from this time last year. And, you know, we can blame the economic uncertainty that you and I have talked to dozens of brands about over the last few years. You know, companies are freezing hiring plans and in other cases, they're closing stores that's leading to further job loss. Yeah, we'll get into that in a minute. But just to give the listeners some context, just in the first five months of 2025, there's been 76 ,000 retail jobs that were just straight up eliminated.

9:56And then, yeah, hiring is still pretty historically low, according to the firm. I guess the pace is really more in line with 2012 and 2013, which I think that's pretty worrying as opposed to like a couple years ago. So, yeah, that just tells us where we are. Of course, the big elephant in the room is tariffs. When we talk about the economy, we're also baking in all these other factors that a lot of companies are talking about right now as far as why they're downsizing or cutting operations. But yeah, let's talk about some of the retailers. It really runs the gamut. I mean, I actually had to pick and choose which ones we're even going to mention because there's so many, unfortunately.

10:35Yeah, totally. And I think it's additional important context for this is looking at the types of retailers and companies that are being affected right now. You know, in some cases, it's Macy's, JCPenney, Forever 21, who closed hundreds of stores that led to layoffs. And those are more, you know, legacy retailers, mall retailers that we've come to be familiar with who are, you know, getting the same in-store traffic that they once were and maybe can't justify, you know, the leases of their stores in some cases. The stores aren't profitable, so you close them, right? And that leads to job loss. You know, recently Rite Aid, Walgreens, Party City also announced store closures in some cases associated with bankruptcies.

11:19Joanne's closed all its locations when it filed for bankruptcy in February. And even Walmart is downsizing by cutting about 1 ,500 jobs to streamline its operations. So you're just seeing this kind of across the board and particularly with the retailers who have established space because they either are changing their operations company-wide, shutting down altogether, or just trying to streamline and be efficient with what's profitable and what's not in their operations. Yeah, I think the Walmart example is a perfect instance where it's like Walmart is doing relatively well comparably to the industry, but the fact that even they're downsizing across, I think, tech and U.S.

12:05retail operations is very telling. Yeah, I mean, this isn't fun to talk about for us and certainly not for the companies involved. Some of these numbers and job losses that we're talking about encompass both in-store jobs and retail associates who work with customers, as well as jobs on the corporate side or on the headquarters side. And it's really telling how the whole industry is being affected, because this isn't just because one thing happened and it's this particular type of job that they're cutting. There's different layers and effects here. All of these closures, I think, are just pointing to, unfortunately, we'll probably be seeing more cuts throughout the year.

12:44It looks like Q3 and Q4 are also pretty up in the air and people are trying to get ahead of them by streamlining some more. So, yeah, just something we'll be keeping an eye out on. Yeah, absolutely. And I think it's something that, you know, for the talent pool and the retail world, it's going to get competitive, you know, for the job hunters out there. And for the brands who are trying to make hires or who happen to be growing right now, you know, they're likely going to see a lot of interested candidates. okay melissa tell us about the featured segment this week yeah so the furniture industry is traditionally tied into the housing market which has gone through historic slumps so i spoke with lee mayer from havenley nicole chalupinette from paragold and jake liu from outer who are three super sharp furniture execs about what they're experiencing right now we had a ton of great insights from them about just like the different strategies they're doing to tap customers right now and drive sales.

13:47And they also hinted at a couple potential collabs. We had some real brainstorming sessions together. So it was a great conversation. I was thrilled to have them join us and I'm excited for you to hear it. All right. Well, come back after the break to hear that.

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14:52Today we're going to talk about how furniture companies, typically a sector that rises and falls with the real estate market are managing to find growth even as home sales slow. Mortgage rates are at 6.89%, which is not an awesome rate for consumers to borrow money at. The National Association of Retailers says April saw month-over-month transaction losses in all four U.S. regions. And the NAR chief economist Lawrence Yun says that low-age mortgage rates are essential to bring homebuyers back into the housing market. So there's kind of this overarching theme that until we see rates come down, until we see a macro change up, home sales aren't really going to pick up.

15:32So from my perspective as someone who covers this industry, I wanted to bring in some real experts to talk about how the home furnishings industry is still alive and kicking. Because believe it or not, there's still plenty of brands out there making sales and doing big things. Who's buying, if not the new homeowners? How are these brands acquiring customers, managing inventory, and just kind of staying relevant in this world of stalled housing, turnover and costs as shoppers. So let's get into it. The three industry insiders who I have with me today include Nicole Chalupinette. She's the head of category management and business development at Paragolds, which is the high-end luxury and designer furniture retail under the Wayfair umbrella.

16:12I also have Jake Liu with us. He's the co-founder of Outer, a direct-to-consumer outdoor furniture brand. And we have Lee Mayer, the co-founder and CEO of Havenly. That's the interior design platform that also sells furniture directly to consumers and has multiple brands in its umbrella like the Citizen Tree and Interior Define. So knowing that new homebuyers are at a low, who is your customer? Nicole, talk to us about the Paragold customer these days. Sure. So Paragold targets the luxury customer. Our brand is sophisticated, unexpected, and also inviting. Our customers take a lot of pride in their home.

16:53They love beautiful things, high quality, and they really enjoy the treasure hunt of finding that perfect piece. The majority of our customers today are the end customers. So usually someone who doesn't work with a designer, or maybe they do, but they're trying to round out their space, or they're furnishing a second home, which they've chosen not to work with a designer on. And we also have a growing large B2B business as well because we have such a broad selection of products and price points. We're able to really target the full luxury market, which we size at about 25 percent of the home spend in the U.S.

17:31today. Wow, that's a really great stat. And we're going to put a pin in that B2B market because I think that's something we're going to return to later. Jake, can you talk to us a little bit about the outer customer? Our customers tend to be more affluent as well. We are a more premium brand with sustainability and quality at the forefront of the brand values. And, you know, we are really targeting, you know, the homeowners who have a backyard. The name is Outer, so we specialize in outdoor furniture. We aspire to not to, you know, touch anything within the four walls of a home, but anything outside is fair game for us, starting with furniture.

18:13And so, you know, basically there is a huge swath of customers who are underserved by the, I would say, like legacy, you know, furniture brands that have made outdoor furniture kind of like a secondary thought. We are very intentionally designing everything that we do down to every screw. You know, we also jokingly say that we target the second time outdoor furniture buyer because, you know, they've kind of lived through the pain points and the frustrations of owning, you know, outdoor furniture, how to keep it covered, how to make sure that it doesn't deteriorate, etc. So that's kind of like our perfect customer.

18:53That's huge because you don't know what you don't know when you're buying something for outside for the first time. And you may not know how to cover it. You may not know how to care for it. And I say this as someone who has picked up so much wicker off of my brick patio because it turns out that's not a great choice for windy areas. All right, Lee, talk to us about the Haven Lease customers. You have so many different brands under your umbrella. I'm curious if it's also still this sort of affluent luxury customer that you're seeing, or if you've got a little more strata there. We definitely have a little bit more variation amongst all of our brands.

19:30But we definitely tend to stick to kind of like this mass affluent theme. So definitely, you know, a touch above sort of your everyday home consumer. And certainly from a household income perspective, almost all of our consumers sort of sit quite a bit north of what the average household income is in the United States. I can kind of give you a little bit of the breadth of what we see. The one theme that we have in common is almost always because we sell so much digitally and through e-com is our customers tend to be under the age of 50. So they are your millennial customers, your Gen Z customers, folks that are comfortable buying things in a digitally native way.

20:10We do have retail stores across the country, so we have 20-some now, as you know. But I think fundamentally, again, we sort of think about ourselves as serving a customer that is sort of in this rising generation of home consumers. And so really trying to sort of speak to their values and what they look at as they look at buying for their home. That's a great overview. Thanks, Lee. So I'm wondering if we can talk a little bit about how you as business operators feel about the housing market and how you address it. Are you and your teams on there looking at mortgage rates and home sales every week or every day to take the temperature of the business?

20:53Jake, I'd love to hear how you and Outer look at this. Outdoor furniture is a tiny portion of the overall furniture market. In the U.S., I think furniture is, what, like$150 billion, just about that. And then outdoor furniture is really just about$6 billion. Maybe it's gone to$7 billion now. So it's a very small portion. And the customers that we're serving, you know, it's typically the top 10%, kind of like HHI. You know, that's kind of like a cohort, if not even more extreme than that. Some data suggests that we're targeting top 2%. No way to really know. But we basically had the realization that we, you know, doesn't matter how the macro changes.

21:34We can, you know, one, it's not going to, we're not going to serve the mass market. Second, you know, how can we serve our customers better? and typically that customer base is more sheltered from kind of some of these macro swings, whether it's a financial market, equity markets, or real estate market. They're still buying their vacation homes, right? They're still renovating their existing mansion, whatever the case may be. And so, yeah, so that's when we decided to, you know, basically focus on what we do best, which is, you know, our own product. So we've been expanding our assortments, et cetera, instead of fretting over kind of like, you know, obviously, you know, we pay attention to what's going on.

22:10We still do a lot of social media marketing, top of the funnel awareness, press and all that. But, you know, we decided to just hunker down and just focus on our own economics, making sure that customers are happy and innovating on the products. Yeah, that sounds like a great strategy. And what I'm hearing is that even if, you know, people are seeing those indicators that the housing market is slowing down, there's still always going to be that customer who wants to do something new with their existing home. And that's not going to be reflected in a lot of that kind of high-level macro data, right?

22:42And so I think for brands in your position, that's someone you really want to target and get to know. Nicole, you're nodding your head. Talk to me about Paragold's strategy with existing homeowners. Is that also a segment that you've been looking at? Yeah, absolutely. Data would suggest that renovations will be up slightly this year. And we know that customers are staying put for longer. But at the same time, there's just there's a large cohort of customers that are moving online or buying online for the first time. And so in this moment, and I think same thing as we came out of kind of the COVID boom and bust, we stay hyper focused on how do we deliver the best customer experience possible.

23:27So as Jake was talking, I was nodding because you really have to like look inward and say, how do we acquire new customers and deliver kind of the best, again, the best customer experience. So we get super focused on are we in the right categories? Are there categories of the home that we're missing? So an example, throughout the last few years, a lot of people, as you said, have been renovating. There's a huge focus on kitchen and bath. Those are categories that we've really focused on expanding. So as an example, we're moving into large appliances over the next few weeks in conjunction with launching our first store.

24:03We'll launch that category. So trying to meet the customer where they are, get upstream in their home renovation journey. So they think of us when they decide to then furnish their room after the renovation. So I think just focusing on like what we can control has been something that's served us well over the years. Yeah, that's a great point about the category expansions and category adjacency. It's something I see from brands, really in all sectors, where it's like, if you're really good at selling these kind of widgets, are there certain kinds of accessories or doodads that go with those widgets that you can expand upon?

24:40Because you already have a customer who knows and loves you, so can you sell them something else? That seems to be a strategy that can work. You'd also mentioned before, and I wanted to double-click on this, and that's your B2B market. You know, any insights there on just maybe how expanding your customer aperture has kind of been a strategy in this housing market for you? That customer base has been really durable for us, actually, throughout the last few years. So when our B2C business has kind of plateaued or maybe slightly declined, we've seen the B2B business and the trade just stay consistent.

25:17We work with over a thousand brands and they pretty consistently say that that part of their business has been durable as well. And so I think offering back to your original question, offering and we'll always stay focused on home. That's our bread and butter. But offering all of the categories in home helps us kind of expand our share of wallet from that trade customer as well. So they might have furnished a living room for a client, but they can also help a client with a remodel of a bathroom or a kitchen as well and work a one-stop shop for them for all of the best luxury brands. That makes a lot of sense.

25:56Lee, I'm curious, your take on this topic, especially given that you have multiple brands under your umbrella. You know, if there's a certain strategy that's worked for you in expanding your customer base or just serving the existing customer really well. One of the interesting things, and so we've done some specific correlations because we now have historical data from all of these brands, is it seems to be, to the point that was made before, that people are still choosing to stay in place and potentially redecorate or renovate. What we've seen is actually, we can continue to grow even if home sales have slowed.

26:30But we're actually really inversely correlated to the VIX index, if you know what that is. It measures the volatility of the stock market. So in April, when that kind of shot sky high, we saw our sales really slow down. And it also, by the way, it slowed down a little bit in sort of the back half of the year as people were waiting to see if interest rates would go down. Because what people are doing, the decision-making factor there is, oh, maybe I'm not staying. Maybe I will be moving. And so it's when people, and so like if you think you're going to move in the next six, 12 months, you're probably not buying a sofa.