Retail Channels
16 February 2023
The RealReal will lay off 230 employees, close stores
The resale platform has struggled with profitability.
Photo by Parker Burchfield on Unsplash
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The RealReal is joining the ranks of ecommerce platforms making significant cuts.
The luxury resale marketplace announced in an SEC filing on Thursday that it will lay off 230 people, or 7% of its workforce. The bulk of the job cuts are expected in the first quarter.
The company is also reducing its real estate footprint. It will close flagship stores in San Francisco and Chicago, as well as two neighborhood stores in Atlanta and Austin. Luxury consignment offices will close in Miami and D.C. The company will also exit co-located logistics hubs, and reduce its footprint at offices in New York and San Francisco.
“The company will continue to evaluate its real estate presence as it deems appropriate to create efficiencies and to address trends in the marketplace and macroeconomic factors,” the SEC filing states.
The news comes after a year of change at the 11-year-old RealReal. Founder Julie Wainwright left the company in June, and successor John Koryl was hired in January.
The company has continued to post impressive sales growth, as it helps to power a wave of demand for digitally-powered resale from consumers who are more comfortable with secondhand goods, and seeking out circularity in the face of climate change..
But the company has struggled with profitability. It recorded losses of $151.2 million in the current year, said GlobalData, which was only slightly better than the year before.
“Today’s job cuts and the closure of some physical locations in the form of stores and consignment offices are a recognition of the growing external challenges and that tougher action is needed to balance the books,” said GlobalData Managing Director Neil Saunders. “Riding the wave of high growth in resale is no longer enough to satisfy some investors who want to see that revenue growth will eventually lead to profits.”
Saunders cautioned that these actions alone may not be enough to move the company into the black, and “further steps may need to be taken across the year ahead.”
The RealReal follows a number of ecommerce platforms conducting layoffs to start the year in the midst of a wider pullback in tech, and reports of softer consumer demand. Amazon, BigCommerce, Wayfair and eBay are all among the companies reducing headcount.
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.
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