Commerce chronicles: May 6, 2024

Nordstrom introducing digital marketplace, Mattel plans to use AI, J.Jill undergoing brand transformation and Lovesac optimizes inventory strategy.

In this week’s news, Toys R Us to expand to the UK, Lovesac achieves $11 million inventory reduction and Mattel plans to us AI for cost-savings. Plus, J.Jill revitalizes brand strategy, Nordstrom launches a new marketplace and Retail TouchPoint’s 2024 conference set to take place in early June. Visit our blog every Monday for a roundup of the latest commerce news.

Nordstrom introducing a new digital marketplace, joining the rise of third-party marketplaces

Nordstrom is launching a new digital marketplace on Nordstrom.com to enhance the shopping experience for customers.¹ The marketplace will offer a greater selection of products, brands and sizes, providing customers with more options without compromising Nordstrom's renowned service. The marketplace aims to make online shopping easier and more enjoyable with personalized recommendations and curated assortments. Nordstrom's marketplace also benefits brand partners by allowing them to showcase their full range of products to Nordstrom customers, expanding the online product assortment. The goal is to improve the shopping experience both online and in-store, with a focus on customer satisfaction and product diversity.

Mattel plans to continue using AI to drive cost-savings

During a Q1 2024 earnings call, Mattel's CEO, Ynon Kreiz, discussed the company's plans to leverage AI across various aspects of its business.² They are pursuing a three-year, $200 million cost-savings target by 2026 and see AI as a significant component of achieving this goal. The company is exploring AI applications to drive efficiencies and cost savings, particularly within its supply chain. This includes plans to eliminate one of their plants in China. They believe AI can help them optimize processes and leverage their global scale more effectively.

AI will also be integrated into different types of analytics within the company. By harnessing AI capabilities, Mattel aims to enhance its analytical capabilities, enabling better decision-making across various business functions. In addition, AI will play a role in product development processes. By implementing AI technologies, Mattel hopes to streamline and enhance the product development cycle, potentially creating innovative and market-leading toys and games. AI will also be used for product integration purposes. This likely involves integrating AI technologies into Mattel's existing products or developing new products that incorporate AI features, catering to evolving consumer preferences and market trends. Overall, Mattel views AI as a versatile tool that can drive efficiencies. They have a dedicated team focused on AI initiatives and are confident in their ability to use technology effectively to achieve their strategic objectives.

Toys “R” Us to expand to the United Kingdom

Toys"R"Us ANZ Limited (ASX: TOY) and WHP Global (WHP) have signed a significant long-term exclusive license agreement for Toys"R"Us to oversee digital and physical retail commerce for Toys"R"Us and Babies"R"Us in the United Kingdom.³ This partnership follows TOY's successful relaunch of the brands in Australia and reflects their commitment to the Toys"R"Us legacy. "We selected Toys"R"Us ANZ as our partner to expand into the United Kingdom because of their proven success in launching with us in Australia under the leadership of their CEO, Dr. Louis Mittoni," said Yehuda Shmidman, WHP Global and Toys"R"Us Chairman and CEO. "Toys"R"Us today is a vibrant business with over 900 stores and e-commerce sites across 25+ countries generating over US$2 billion a year in sales and growing, especially with the new launches underway for both the US and UK markets."

The UK's advanced ecommerce market presents a significant opportunity, with internet sales accounting for a quarter of all retail sales and forecasted to reach one-third by 2025. With a large addressable market for toys and games, TOY plans to establish online sales to UK customers in the coming months while setting up local teams and logistics facilities. TOY's recent investment in a purpose-built warehouse and distribution center in Victoria demonstrates their commitment to supporting growth initiatives. Despite warehouse relocations, TOY delivered strong results in the fourth financial quarter, ending the year with a robust balance sheet and cash self-sufficiency.

Lovesac achieves $11 million inventory reduction through evergreen stock and supply chain optimization

Lovesac successfully reduced inventory by $11 million through strategies such as optimizing evergreen stock and improving supply chain efficiency, as stated in an April 11 earnings call.⁴ Total merchandise inventory as of February 4 decreased to $98.4 million from $119.6 million in January 2023, reflecting an 18% reduction attributed to lower cost of goods sold (COGS), decreased inbound freight expenses and improved warehousing efficiency. The company reported a $12.1 million decrease in freight capitalization due to lower inbound freight expenses in fiscal year 2024, contributing to overall shipping and handling cost reduction. Lovesac has implemented new planning and operational capabilities, including a new order management system, to enhance customer satisfaction and delivery efficiency. Despite inventory reductions, management remains confident in maintaining industry-leading in-stock positions and delivery times, with CFO Keith Siegner highlighting the company's ability to adjust inventory levels according to demand fluctuations. The company plans to continue ongoing efforts to drive inventory efficiencies and speed to market through supply chain investments.

J. Jill to launch comprehensive brand transformation

J.Jill, Inc. launches its campaign "One Wardrobe. No Limits." aiming to celebrate the entirety of a woman's lifestyle and attract new customers to the brand.⁵ The initiative reflects J.Jill's commitment to quality and versatility in women's apparel, offering a fabric-first approach online and in stores. Through intimate customer conversations and data-driven insights, J.Jill has undergone a brand transformation to champion inclusivity and celebrate women's multifaceted lives. “In our ongoing dialogue with customers, we’ve recognized the need for a wardrobe that reflects and supports the totality of a woman’s life,” said Claire Spofford, Chief Executive Officer and President at J.Jill. “We aim to outfit her for all she is and wants to do and believe that a well-curated wardrobe of versatile, fabric-first and high-quality clothing is integral to that pursuit.”

According to a survey conducted by Wakefield Research in partnership with J. Jill, 36% of the clothing currently in women’s closets has been unworn for at least the past two year. The campaign addresses the frustration many women feel with their current wardrobe choices, aiming to provide versatile clothing options that blend style, comfort and functionality. J.Jill's approach includes in-store features, dedicated styling services, and online resources such as QR codes and "Ways to Wear" pages. Nationwide activations will further encourage customers to discover pieces that complement their lifestyles, reflecting J.Jill's customer-centric approach and commitment to supporting women in all aspects of their lives.

Retail TouchPoint’s 2024 Retail Innovation Conference to take place June 4-6

The Retail TouchPoints Retail Innovation Conference & Expo is scheduled for June 4-6, 2024, at McCormick Place in Chicago.⁶ The event is set to feature senior-level executives discussing the evolving customer journey as content, community and commerce converge. Attendees can expect insights into topics such as AI, content marketing, loyalty programs and emerging retail technologies across three tailored tracks. The conference aims to bring together both emerging brands and established omnichannel players to explore trends shaping the future of retail. In addition, the C-Suite Corner has been added to facilitate discussions on foundational issues driving business growth and differentiation, including global expansion, sustainability, operational efficiency and workforce engagement.