Commerce chronicles: Mar 11, 2024

DTC brand ThirdLove partners with Neiman Marcus, Target revamps its loyalty program and Ashley Furniture acquires a popular online mattress retailer. Plus, McKinsey Digital explores generative AI in product design, Nuuly opens a second fulfillment center and Cart.com makes America’s Best Startup Employers list.

In this week’s news, we’ll explore whether fit technology is the key to reducing apparel returns, how generative AI fuels product design and how Target plans to achieve same-day delivery. Plus, learn about ThirdLove’s new partnership, more about Urban Outfitter’s rental brand and Ashley Furniture’s new acquisition. Visit our blog every Monday for a roundup of the latest commerce news.

ThirdLove looks to broaden reach, partners with Neiman Marcus

ThirdLove's recently announced collaboration with Neiman Marcus marks a strategic expansion into luxury retail, designed to broaden its reach to upscale customers.¹ Heidi Zak, CEO of ThirdLove, views this partnership as a significant step in enhancing product accessibility while maintaining a commitment to exceptional customer service. Neiman Marcus CEO Geoffroy van Raemdonck also highlighted the trend of direct-to-consumer brands seeking wholesale partnerships to facilitate growth and reach a wider audience.

ThirdLove also ventured into Amazon's platform last summer looking to capitalize on the ecommerce giant's convenience and efficient delivery. This move aligns with the brand's overarching strategy to diversify its distribution channels beyond its own website, which includes establishing a physical retail presence and exploring new apparel categories like swimwear, activewear and loungewear. As ThirdLove continues to widen its presence, its partnership with Neiman Marcus underscores its evolution as a brand catering to diverse consumer needs and preferences.

Target aims for same-day fulfillment with new paid membership program

Target’s March 5 press release² announced plans to focus on improved guest experiences and long-term growth strategies, with plans to offer newness, innovation and value in 2024. Brian Cornell, chair and chief executive officer of Target, said, “We're making strategic investments that expand on our core strengths, further elevate our guest experience and deepen our connection to both current and new guests. Most importantly, these plans provide fuel for our next era of growth.”

On April 7, Target will reintroduce its loyalty membership program. The expanded Target Circle program, which caters to over 100 million members, will include a free membership offering personalized deals and member-exclusive sales, with automatic deal application at checkout. The Target Circle Card, formerly known as Target RedCard, will provide additional savings of 5% daily, extended return times and free two-day shipping. For more benefits, consumers can opt for the paid Target Circle 360 membership, featuring unlimited free same-day delivery for orders over $35, access to preferred shoppers and the Shipt Marketplace and more. Additional perks, such as exclusive partnerships and experiences, will be continually added to enrich the Target Circle experience. In addition to the revamped membership program, Target will offer new and expanded owned brands and further invest in their stores and supply chain, including their store-as-hubs model.

How generative AI fuels product design according to McKinsey Digital

Artificial Intelligence has received a lot of press – and for a good reason: It has created significant changes throughout industries. In a recent article, McKinsey Digital explored how generative AI is leaving its mark "on how physical products and packaging are conceived, innovated and designed."³ Unsurprisingly, generative AI tools can spark innovation and shorten physical product design lifecycles. However, McKinsey stresses that design experts and their knowledge are critical for mitigating potential pitfalls.

The article looks in-depth into how generative AI is best used in the product design process and the benefits and risks it poses. In short, it accelerates concept development and enables visualization of high-fidelity designs early in the process. It's able to generate novel, lifelike images based on expert prompts and facilitates rapid iteration and exploration of new ideas, significantly reducing product development cycle times. However, human expertise remains essential to refine and validate AI-generated outputs, ensuring manufacturability, user-centricity and alignment with business goals. Despite its transformative potential, leaders must carefully manage risks associated with data security, intellectual property and stakeholder expectations while educating teams on the technology's capabilities and limitations. McKinsey thinks that by embracing gen AI and upskilling design teams, organizations can unlock new levels of creativity, efficiency and innovation across the product development lifecycle, ultimately delivering superior products and experiences to consumers.

Cart.com named one of Forbes best startup employers in America

Cart.com was recently named one of America’s Best Startup Employers by Forbes.⁴ Forbes, in partnership with Statista, compiled a list of America’s Best Startup Employers for 2024, assessing 3,000 privately held U.S. companies with over 50 employees founded between 2014 and 2021. Criteria for evaluation included employer reputation, employee satisfaction and growth, analyzed through factors like online reviews, retention rates, diversity policies and website traffic. The final ranking comprised the top 500 startups, determined through comprehensive data analysis without any fees paid by the companies for consideration.

Despite the myriad challenges in starting and scaling a successful startup, such as securing funding and managing growth, founders increasingly recognize the importance of prioritizing elements like team building, company culture and employee benefits. Research consistently demonstrates that businesses focusing on employee happiness tend to have more engaged and productive workers. Cart.com strives for an environment where employees thrive and can think outside the box, collaborate, communicate and be human. 

Ashley furniture announces acquisition of popular digital mattress retailer

Ashley Home, Inc., an affiliate of Ashley Global Retail, LLC, has acquired Resident Home Inc., a prominent digital retailer and wholesaler of mattresses and bedding accessories.⁵ The acquisition, unanimously approved by both companies' boards of directors, aims to expand Resident's home furnishings assortment and global reach. Through Ashley's affiliate, Ashley Furniture Industries, LLC, Resident will benefit from enhanced sourcing and efficiencies to fuel growth in both its direct-to-consumer and wholesale sectors.

Resident, known for its Nectar®, DreamCloud®, Awara™ and Siena™ brands, has become a leading online seller of mattresses and bedding accessories, leveraging its expertise in data science, performance marketing and ecommerce technology. With its products available at over 2,500 retailers in the U.S., Canada and the U.K., Resident has achieved significant success. Co-Founders and Co-CEO's Eric Hutchinson and Ran Reske will retain their positions post-acquisition. Both parties expressed enthusiasm about the partnership, foreseeing opportunities for growth and delivering enhanced value to customers. Todd Wanek, CEO of Ashley, said, “We are incredibly excited about the possibilities that Resident brings to Ashley. In only a few years, Resident has established itself as a premier destination for mattresses, and we believe this merger will strengthen both companies and accelerate our growth trajectories, together bringing more products to more homes.”

Is fit technology the answer to reducing apparel returns: New trials say yes

Last year, a report by Coresight Research outlined the cost of apparel returns and its effect on retailers. The number one reason for returns was size/fit according to 53% of respondents.⁵ The report also talked about the approaches retailers are adopting to counteract 2023’s 24.4% return rate. One method was virtual try-on and fit technologies.

Fit tech isn’t new, but as technology evolves it has improved markedly. A recent article by Vogue Business discussed how new trials highlight how avatar-inspire fit tech helps brands tackle the returns problem.⁶ The article talks about how fashion brands and retailers are embracing new tools that allow customers to create digital twins – true-to-size avatars based on personal measurements. Unlike virtual try-on methods, which overlay clothing onto images, this approach fits digital clothing onto customer avatars, helping visualize how garments will look and aiding in size selection.

Yoox Net-a-Porter (YNAP), Balmain and other brands are testing this technology, leveraging advances in computing power and 3D software for more realistic results. These tools aim to address the costly issue of returns, with over 85% of U.S. apparel brands planning to use virtual try-on tools. Virtual fit predictors have shown promising results, with companies experiencing reduced return rates and increased conversion rates. However, challenges remain, including concerns about privacy and data security. Despite these hurdles, the potential for personalized fit technology to improve customer confidence and reduce returns is driving its adoption, with a focus on gradual implementation and compliance with privacy regulations.

Urban Outfitter’s rental brand, Nuuly, opens second fulfillment center

Urban Outfitters, Inc. opened its new 600,000-square-foot fulfillment center for Nuuly, the company's women's clothing rental brand, in Raymore, Missouri.⁸ The facility, representing a $60 million investment over five years, is Nuuly's second fulfillment and laundry facility. It is expected to create 750 jobs over the next five years and triple the active subscriber base. Governor Mike Parson said, “The opening of URBN's new facility is an exciting moment for the company, the Kansas City region and our state," said Governor Mike Parson. "Missouri's economic strengths are continuing to result in significant investments from world-class employers. We're proud to see URBN beginning operations in Raymore and look forward to the lasting, positive impact it will provide for Missourians.”

David Hayne, URBN's Chief Technology Officer and President of Nuuly, cited the facility’s importance in accommodating the brand’s growth. The cutting-edge center features full laundering and clothing alteration capabilities to enhance service nationwide. Nuuly, launched in 2019, offers over 19,000 styles from 400+ designer brands. It’s parent company, Urban Outfitters, Inc., encompasses a portfolio of global consumer brands, fostering creativity and self-expression since 1970. Nuuly, extends URBN's mission, offering customers a monthly rental subscription for a wide range of clothing styles and brands.