Touchland gets acquired, what's gone wrong with Target & the secret sauce behind brand pop culture collaborations

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0:40Hello and welcome to the Modern Retail Podcast, the show all about the ways the retail industry is changing and modernizing. I am Gabby Barco, senior reporter at Modern Retail, and I'm here with fellow senior reporter Melissa Daniels. Hello, Melissa. Welcome to the show. Hi, Gabby. Thank you so much for having me today. Excited to dive in. So much retail news this week. Later on in the show, we'll be speaking with Michelle Gabe, who's the Director of Marketing and Partnerships at IFG. We're going to be talking about IP and pop culture brand collaborations. They've been everywhere in the last couple of years.

1:20So Michelle, who has a lot of experience in this space, is going to join us to talk about it in a roundtable. But first up, we're going to discuss the rundown portion of this episode. So we'll start with a couple of stories, including a pretty big beauty acquisition, Touchland. The sanitizer brand has been acquired. And then there is a pretty good and interesting story that came out from Fast Company this week that kind of just looked at Target's year. It's had a lot of ups and downs in the last couple of years. So we'll go over that and just kind of discuss what's gone wrong at Target. it. But yeah, first up, we've had a lot of acquisition news, I feel like just in the last couple of weeks that we spoke about, including on the show.

2:05But this time, yeah, sanitizer brand Touchland, which was acquired by Church and Dwight this week in basically an up to$880 million deal pending performance. Melissa, what are your thoughts on this? I mean, you know, it's a lot for a sanitizer brand? It's a lot for a sanitizer brand. And it makes me think, you know, a few weeks back when we were talking about M &A and activity in the consumer brand space, you know, that it was going to be, you know, some of these bigger conglomerates that maybe had the muscle and the will and the capital to get these kind of deals done. I mean, Church and Dwight is a big player in this area.

2:45You know, they've got Nair, they've got Batiste, they've got Arm & Hammer. I I mean, this is not a company that's going anywhere anytime soon on their own. So I think it makes sense to see them do this deal. But I have to be perfectly honest with you. Never heard of Touchland until I saw the news about it being acquired. Okay, that's really interesting. I think this is the divide line between people that shop at Sephora and Alta versus not. Because to me, I feel like they're just everywhere. Every time I go to check out at a retailer I shop at. And give me give us the rundown of Touchland. This is a good time to describe it.

3:21I feel like at this point, if you took out your phone and Google Touchland, I'm sure you've probably seen it. It was founded in 2018. So it's relatively young, but it saw a lot of major growth during the pandemic. Surprise, surprise. Everybody was like trying to find the best or the most, I guess, unique sanitizer for their needs. But really what it is, is that it's just like elevated brand that, you know, it's a far cry from your Purell squeeze bottles, right? It comes in these really sleek little bottles that missed out the sanitizer. Like the fragrances include like rose water and wild watermelon.

4:00And surprise, Gen Z is really obsessed with them. They're very colorful. But yeah, just basically like a really high end version of like your purse sanitizer. They've kind of expanded a little bit into more like body fragrance recently. But this is really what they're known for is these like little$10 sanitizer bottles. It's very cool. I'm looking at it and it's making me just think about, hey, this is how little treat culture has affected so many portions of our lives. and how aesthetic and scent and things feeling really sumptuous on everyday essentials is this trend we're seeing in so many different aisles right now.

4:41You know, I write a lot about the cleaning space and I'm starting to think of brands like Safely or Blue Land that do a really good job making their products have scents that appeal to customers, whether that's for hand soap or cleaner. And here we are with hand sanitizer. I got to say the form is cool. You know, it's in this funky spray bottle. And I think that's something that feels really like just kind of discreet and trendy to use where you're not getting like gloppy hand sanitizer all over your hands from a pump bottle. It's definitely an elevated product and I can see why it resonates. Yeah.

5:16So basically it's really closer to a fragrance that sanitizes your hands versus the other way around. But yeah, maybe this is a good time to get into their performance and why they were scooped up for such a big figure. So Touchland's net sales for the year that ended on March 31st were$130 million. Their EBITDA was$55 million. So pretty profitable, pretty healthy business. And they expect to continue to grow in double digits this year and next year. But yeah, why don't we, I guess, talk a little bit about, sometimes this is a perfect example of what I call like brands that make hundreds of millions of dollars a year that maybe some people haven't heard of just because they started out like digitally native and then like slowly went into retail.

6:05But yeah, it's an also it's an interesting move for Church and Dwight's, right? I mean, you can kind of see them trying to modernize their own portfolio with these types of acquisitions. Their last big purchase was Hero Cosmetics, also another Gen Z favorite in 2022. That was$630 million. And they're offloading some brands we grew up with. What are your thoughts on that? I'd love to know. Yeah. Last week, they announced plans to sell or close down the hair removal brand Flawless, the toothbrush brand Spin Brush, and the dental brand Waterpik, which I feel like I saw in my grandparents' bathroom growing up endlessly.

6:46So to me, you know, the acquisition of Hero Cosmetics, the acquisition of Touchland, that tells me they still want to play in this essential space. But with brands that are sort of already done the hard work of reaching the customer and becoming profitable and becoming, you know, generative engines that they can then bring into their conglomerate. And, you know, the benefit for the brands is probably a lot to do with distribution and supply chain and contacts in that realm. Yeah, just for context, those businesses we just named, they generate about$150 million of net sales with below average profitability.

7:24So they're struggling. So yeah, I think bringing in modern brands and then having kind of plans to either sell or shut down these these underperforming ones. Makes sense. But yeah, I mean, there's, you know, I do think even though M &A is a little slow, and, you know, obviously, it's a crazy time right now. So some deals are maybe being put on hold. Beauty seems to be maybe the one bright spot, which I think a deal like this kind of points to, right? Yeah, I totally agree with you. I think that's a category where there's always trend and there's always evolution. You know, right now we are in this elevated skincare forward moment.

8:01People want products that feel really luxe, but that they can justify because they're just picking them up during their regular target run or on an Ulta run to replace their shampoo or foundation or what have you. So then adding something like a really lovely hand sanitizer becomes like a justifiable buy in some way. So I think if we look at what M &A might look like in the rest of the year, you know, I keep your eye on companies that seem to be doing pretty well from a sales and profitability margin, but have something, you know, that's really trendy to kind of up level some of these bigger players.

8:36Yeah, modernized brands, if you will. There you go. Yeah. Almost as if they're modern retail brands. Is that something you can say? Wow, it's all in the name. Yeah, yeah. If it fits. Yeah. So I guess with that, speaking of Target, which you just touched on, yeah, why don't we tee up this next story that we're going to be talking about, which is like Target's had a really interesting year. Honestly, I did not think we would be here at this point, but let's get into it. So, yeah, as you mentioned, there was a Fast Company article that came out this week by Elizabeth Seagren. It's called Inside Target's Horrible, No Good, Very Bad Year.

9:14Play on the children's book, I believe. And the piece looks at how the recent knocks against Target, you know, not just the consumer boycott that started earlier this year with the pullback of its DEI initiatives, but also some of the things that sort of led to this moment, other struggles that it's had, you know, that really kind of started back in COVID. and the big question then is can it bounce back from that in this moment? So, you know, Gabby, from your perspective, when you look at Target in the last few years and you start to think about what went wrong, you know, what jumps out at you?

9:45I think the big one is probably inventory issues just coming out of the pandemic. I mean, obviously that first year or so felt like every retailer that was playing in the essential space was doing really well, including Target. But one thing that always differentiates it from the other big box stores. And of course, Amazon is that Target has always built itself as again, like more of an elevated big box store that carries things like touch land, like these sort of, you know, DTC or digitally native products. I mean, they pioneered that model, right. But not over 10 years ago at this point. So they've always been really good at assortment.

10:24But I think as people spending shifted as you know, more people, I think we're just looking for more value. And I think we used an example the other day where I'm like, do I really need like more throw pillows? I mean, you know, I love walking around Target, but you can kind of see why a lot of people right now are trying to prioritize things they actually need. And so Target kind of fell through the cracks, I think. But that's not the only thing, right? I mean, there's a lot of factors at play here. Yeah, I mean, I think in the in-store experience, you know, you think about people needing to find an associate to get something that's behind plexiglass.

11:00You think about people wanting to check out or not being able to find something. You know, the Fast Company article talked about how dressing rooms were locked when Target did its recent Cade Spade drop. And that, you know, isn't necessarily great planning on a storefront because you know you're going to have people in the store shopping for this drop and that, hey, maybe they're going to want to try things on while they're at the store. And then, you know, speaking to a different channel, I think online has always been something that Target hasn't done as well as some of its competitors. Right now, Target's digital sales make up nearly 20 % of its overall business or around$20 billion a year in revenue.

11:35But compare that to Walmart, where e-commerce sales reached$100 billion in 2024. So they're just not as big in that market either. And I think that's something that when you start to just think about the overall performance of the company has got to be part of this equation. And then, And, you know, you think about just assortment. You know, Walmart does have more grocery. And so you mentioned people thinking more about practical buys. And I think, you know, probably nine times out of 10, Walmart's going to have more for the certain product you're looking for simply because their aisles in that grocery section are much larger.

12:09Yes. And I should also mention, I think Walmart just being maybe quadruple the amount of store locations as Target has. I mean, it is a lot bigger to begin with. So we should mention, but, you know, Target's always kind of been like a little bit more curated, I guess. But, you know, this week there was also some developments in just the perception of the brand. I think this is what I was surprised at, what I was alluding to at the beginning is that it was always seen as like the bougie big box store and a couple of things happened over the last few years that kind of dethroned it, right? One thing that really stood out to me in the Kantar Brands report is just how much some of the brand valuation has changed for some of Target's competitors.

12:56Walmart was up 72 % compared to last year. Costco up 76%. Sam's Club up 57%. Amazon up 50%. And Target, which was not in the top 100 but was in top 20 for retail, grew just 4%. And that was really shocking to me because I've always associated Target as this elevated brand that always was a little more aspirational than your average big box in the plaza. And, you know, it's not even on the list. You also just think about Target's role in pop culture, the many memes of moms on their Target run or going in for one thing and leaving with a shopping cart full of$300 of decor and apparel and merchandise, right?

13:36You know, there's been a lot of sort of pop culture nostalgia around Target. And it's just weird for me to not see that listed. Yeah. And then, you know, last but not least, we have boycotts and just PR nightmares to throw in into the mix. Yeah. Why don't we just kind of, you know, quickly go over what some of those are? I think the beginning of this year, we saw, you know, the DEI pullback get a lot of negative response from more liberal shoppers, more progressive people just generally that watch the space. The company, I feel like, used to be positioned as more progressive, which is kind of funny, especially compared to Walmart.

14:17I don't know how that swap happened, but Target, I think the Pride merch stuff and then, you know, the Black History positioning. We talk a lot about whether boycotts and consumer perception makes a big difference in the bottom line for big retailers. But in this case, you know, it's not everything. These things did not contribute to all of Target's struggles. But I do think the proof is in the foot traffic falling consistently the last few months. Like, I think maybe this is getting some traction. What are your thoughts? Yeah, I mean, Placer.ai's data shows that Target's first quarter visits were down 4.1 % year over year and visits per location were down 4.8%.

15:05So that's not nothing, especially, you know, we're in this era where companies really still want to eke out some growth, right? So seeing that even before we've entered a potential recession or moment of severe price hikes has got to be something they're concerned by. And even just anecdotally, I feel like I've seen people pull back from Target. I've seen a lot of conversations on threads and in Facebook groups saying, hey, I'm no longer shopping at Target. Where can I get great deals on diapers? Or I used to really love this lingerie brand from Target. where is a really good swap that's affordable for it.

15:42And you see people starting to just really think more consciously about where they're directing their dollars. And yeah, it's something that's definitely happening. You know, I agree that, you know, it's not going to be the end of them as a company because some people are boycotting right now. I think that's exaggerating. But I think it's definitely making its effect heard. Yeah. And then now we can probably get into what target I mean, they do have a plan in action. We've spoken about it on this very show in the past. They've had a few initiatives announced in the last few months alone that say this is going to be our ticket to, you know, getting back to growth.

16:23There's a$15 billion sales growth plan that they have in place by 2030. They've lowered prices on thousands of items after increasing them for a while during coming out of the pandemic. They have summer deals like they try to compete with Amazon Prime Day. I think they call it deals day. So there's a lot. And then, of course, they're known for their private label. So they're really doubling down on that and trying to really course correct the assortment for, I guess, the shopper today who is very different than maybe four or five years ago. Yeah, we've seen so much already, you know, five months through the year here from Target.

17:04You know, they're doing more shop and shops with Warby Parker. They have collections with Champion and Disney. You know, they're not just looking at what they have internally, but they're looking out to see what they can tap into. And I think that's really smart. They're also putting some more investments into their third party marketplace, which is kind of an interesting, you know, invite only operation from what I've learned about it. It's kind of a black box to me in some ways, actually. I don't know how you get into it. But I did speak with ButcherBox this year, who put their frozen meat onto Target's marketplace and was really excited about that opportunity.

17:40They've done a ton with Baby, both on the private label and brand partner side. They're doing a ton in the cleaning space. And I don't know about you, but when I talk to brands right now who are putting out their target launch or thinking about putting out their target launch, they're still really excited about being in target. So it's like, even though we have all this sort of challenges and history of things being a little rougher on the edges for them the last few years, people still recognize it for what it is from a footprint and consumer demand perspective. Yeah, I mean, just recently, I spoke to a hair care brand called Jupiter.

18:18They specialize in like dandruff scalp care and hair care. But, you know, they basically they launched in Target about a month or two ago, and they essentially just rejigged their entire supply chain in order to cater to this launch by literally dropping their prices. You know, this is a little bit more of a a high end product that's now like under$20 per product. And obviously, that's very bullish from a brand. But at this time of supply chain uncertainty to invest in that, yes, I think it's safe to say brands still really want to be on that shelf. So I don't think that pipeline is going away anytime soon.

18:56I think it's just going to be a matter of Target plugging away at turning around this perception. Yeah, absolutely. I mean, it's still a massive retail player with nearly 2 ,000 stores and did over$100 billion in revenue last year. But I'm excited to hear more. Their earnings are scheduled for next week. So I'm really curious to see what they're going to have to say about their performance and plans ahead. Well, next up, we're going to be speaking with our guest today, Michelle Gabe, who's the Director of Marketing and Partnerships at IFG. We are going to be talking about all things IP and pop culture, brand collabs.

19:33Melissa, sign out. You're excited for this one. I am too. It's a topic I've written a lot about. So I'm excited to have Michelle. Yeah, I think this is going to be a really great conversation for folks to dive into because she really brings us behind the scenes on how deals get done between brands and studios when there are big pop culture moments or movies or TV shows happening. One thing that's really interesting to me is how much of this isn't just putting a logo on an existing product, right? It's really maybe thinking more about how the brand can really tell a story around the movie or TV characters.

20:07But I'm excited for people to hear it.

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21:06You only pay when the capital is used. ClearCo has deployed over$2.5 billion into over 10 ,000 e-commerce brands in apparel, beauty, health, and beyond. Ready to fund what's next? Learn more at clear.co. That's C-L-E-A-R dot C-O. Okay, well, it is time to bring in our guest, Michelle Gabe, who's the marketing director at Irresistible Foods Group. She's formerly of Truff, the sauce brand, and she has a lot of experience with these types of IP-based partnerships. So yeah, let's get into it. So today we're going to be talking about why brand collaborations with film and TV have become such a major part of building a brand playbook.

21:57I feel like it's just been everywhere in the last couple of years. So we'll be discussing really getting into the nitty gritty of how these partnerships come about and what goes into coordinating a product tie in, especially with a big studio that has probably a lot of red tape involved. So our guest Michelle is basically going to be taking us behind the scenes on how a marketing team execute these types of deals. Yeah, this is such a fun topic, and I'm really excited to get into it. You know, we've seen so many collabs these days. Barbie really kicked these into overdrive. I remember during the summer of Barbie, Mattel's releases, I think, mentioned that like over 100 brands had partnerships leading up to the movie's release.

22:41And, you know, then we saw that happen again with Wicked. You know, I remember last week, I was looking to buy press on nails, don't judge. And you know, half the inventory was was Wicked. Gabby shaking your head at me. Did you get it? So I've never seen Wicked. So I felt like an imposter, but they were really pretty. And I just went with my basic boring sparkly pink. But it's more than just the big blockbusters that are doing brand collabs these days and product collabs. Even TV shows like White Lotus are getting in on the action. You know, we saw partnerships with Away, Abercrombie, Supergoop.

23:17I've talked to Apothecary about their partnerships with Disney for TV series like The Acolyte and Agatha all along. And, you know, for successful collabs, especially from some of these smaller brands, it's just about way more than slapping a logo on a product. It's really about using that moment of popularity of that IP to do storytelling to a mass audience. Yeah. And they do not show any signs of stopping. There is Wicked 2 for Good coming down. So maybe you can still get your press on nails in good faith if you watch the movie by then. It's not because I don't want to watch it. It's because I don't have time.

23:55But I do want to see Wicked very much. I watched that Oscar clip of them performing like 1700 times. But you know, you've talked to Michelle before. I haven't talked to Michelle very much. So Michelle, tell us a little bit about your role and your experience working on collaborations with emerging brands. Yeah, well, first, thank you so much for having me, Gabby and Melissa. I always love chatting with you guys. I feel like we've talked about IP collabs and just different partnerships over and over again. So glad we're getting it pen to paper. But yeah, I am Michelle Gabe. I am the director of marketing and partnerships at Irresistible Foods Group, which includes brands like King's Hawaiian, Grillo's Pickles, and Killer Brownie.

24:34And before my role here, I spent the majority of my career at Truff, where I built what I like to call an Aim for the Stars partnership program, where we eventually partnered with some of the most notable IP in the game. So that included a Sauce on Sauce collaboration with Hidden Valley Ranch that sold out in less than a minute, a collectible item with NBCUniversal, Illumination, and Nintendo for the launch of the Super Mario Brothers movie and a limited edition collaboration with Star Wars. Yeah. And if you've read Modern Retail, I'm sure you've read some of the coverage on these collaborations.

25:07But today we're going to walk you through, you know, how Michelle just tackled them, starting with sliding in the DMs, classic millennial move. Michelle, tell us tell us how you I think this shooting for the stars approach is definitely, you've mentioned before, all about, you know, not feeling intimidated and just kind of going after reaching out to somebody, even if it's just through LinkedIn. Yeah, I mean, there's no right or wrong way to approach a partnership, big or small. And personally, I always love the super casual route, talking to someone like they're your friend. So whether that is sliding into someone's DMs or just asking a friend of a friend of a friend for an introduction.