Marks blog: Top Dogs and Ankle Biters

The big get bigger. The rich get richer. To the victor go the spoils. Those enduring aphorisms certainly reflect how the retail landscape has been morphed by the pandemic.

There’s no question that Amazon, Walmart, Target and Costco have cemented their leadership positions and captured enormous market share. They have it all, literally, from bedding to broccoli to baby formula. And they have the ability to keep on getting it, being massive enough to call first dibs on vendor wares even when goods are in short supply. One retail forecaster I spoke with recently refers to them as “The Big Four.” I’m going to call them “Top Dogs.”

There is a furious scramble in the middle of the retail pack for market share goodies. A few of the traditional mid-tier retailers have gained new customers and are working mightily to hang onto them. Kohl’s added 2 million in 2020 and reported that 25% of customers coming in to see the new Sephora shop-in-shops are new. Macy’s reeled in more than 4 million new shoppers in the third quarter, up 28% year-over-year. TJX in November heralded an influx of new customers and greater market share, although the company didn’t put a number on it.

You’ve got to credit Bed Bath & Beyond for looking at what the Top Dogs have that those in the middle lack – grocery – and making a move on it. One of the most intriguing launches in 2022 will be BBB’s partnership with Kroger. A curated selection of home and baby products from Bed Bath & Beyond and its buybuy Baby nameplate will be made available on Kroger’s website. In addition, an unknown number of Kroger grocery formats will pilot small-scale assortments in physical stores.

Look, too, at activity among the ankle biters – the plethora of narrowly defined, digitally native brands whose ranks seem to swell relentlessly. By themselves, their home textiles volume amounts to a mere flesh wound on the hide of a big volume husky. Brooklinen and Boll & Branch – by HTT’s estimates the soft home leaders in this space – each generate about as much home textiles sales annually as 15 Walmart stores.

But in the aggregate, the small dogs are energetic and have proven adept at customer engagement. They are very much pushing their snouts into the bowl for a bigger serving of Alpo. Digitally native mattress brands have added bedding. Bedding brands are moving into bath and soft accessories. Pure-plays are heading into the physical realm through shop-in-shops with the Alphas and on their own.

In some cases, their bark may turn out to be worse than their bite. But it is sobering to recall how quickly a big dog can lose stature or fade into oblivion. Ten years ago, JCPenney was doing over $1 billion in home textiles sales – more than double the volume of the soft home business at HomeGoods and Amazon at the time. Kmart was a top-tier retail account and Wayfair wasn’t even on the radar. In. Just. Ten. Years.

More proof that no matter what changes, it’s still a dog eat dog world.