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The CQ: Unexpected Comebacks, and The Biggest CPG Company in the World
The Forerunner Team's Updates and Must-Read of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musings from our investment team. Subscribe now to get the latest edition in your inbox every Saturday.
By Forerunner, @ForerunnerVC
The Forerunner team just wrapped up Think Week, our designated no-meeting week that we carve out to work on big projects that will be formative to our firm and companies. Think: plans for how we’re reinvesting in our ongoing portfolio support and resourcing programs, disseminating the best AI practices and learnings, releasing new research reports, and exploring audacious goals for the future of Forerunner.
We’ll be taking a break next week for the long weekend around Labor Day, but are excited to come back in full force after, including updates on announcements about a handful of new investments we’ve made: two highly anticipated companies in the AI space, and one under-the-radar, incredible business in the legal industry. We’ll also be speaking at a few conferences and events, so if you’re going to HLTH, be sure to stop by Eurie‘s panel — and Jason Bornstein will be keynoting HubSpot Inbound, presenting on our Brand Power Score alongside SurveyMonkey.
Note: some of you mentioned you had issues logging your responses to the CQ reader survey. Please use this link to complete the ~2 minute survey, so we can be sure we’re sending you the most high-value updates and articles. We’d be grateful!
- The Forerunner Team
What We’re Talking About on Slack:
What’s the biggest CPG brand in the world? That’d be Kirkland, Costco’s private label brand. It makes $52B a year, narrowly edging out Nike. The Acquired podcast has an excellent new episode that dives into what makes Costco such a force. It’s Charlie Munger’s favorite business ever, and it’s been growing 10% YoY…for *30* years. On the surface, the learnings seem simple: bulk selling lends to the opportunity to pass savings on to consumers. But really there are 50+ clever innovations that stitch this empire together, and nothing is an accident.
The Wall Street Journal does a deep dive on how American anxiety is big business. Whether it’s tele-therapy, ashwagandha, meditation classes, SSRIs, CBD, life coaches, weighted blankets, or wearables — the uptick in anxiety in America is translating to an uptick in spending. A recent federal survey found that 27% of respondents reported they had symptoms of an anxiety disorder, up from 8% in 2019, according to the National Center for Health Statistics. As with any burgeoning health-related market, there are meaningful benefits and risks: increased access and options for a set of consumer who are scrambling for solutions, deserved scrutiny over emerging products and offerings, and complicated marketing challenges.
Don’t look now, but it seems LinkedIn might suddenly be…cool. Bloomberg details how the 20+ year old, Microsoft-owned professional social network is having a moment by excelling where other social platforms fall short: stability. TikTok and Instagram continue to tamper with their algorithms (and leave creators recalibrating), Threads struggles to find its footing, and X, well... There’s a steadiness of LinkedIn that’s increasingly appealing — particularly the strength and reliability of its algorithm. The enhanced creator features are also proving valuable: tools of newslettering, video, podcasting and more.
Speaking of comebacks, Abercrombie & Fitch is thriving while many other mass market retailers are idling. Abercrombie & Fitch shares soared 23% as the retailer blew past earnings estimates. The quarter came in at $935 million vs. the $842 million expected, rising from $805 million in the year prior (~16% growth). Discussing what’s behind the ongoing success of the company, the CEO told WWD, “We’ve really rebuilt this company. We’ve touched every function and have thought very differently how we run this business.”
According to a new Fortune article, remote work is the reason why Wall Street was wrong about a recession. The US’s GDP rose by 2.4% in the second quarter, mostly driven by consumer spending on vacations, concerts, and restaurants. Analysts in this space chalk it up to lingering post-pandemic desires to get out more coupled with the boosted flexibility of remote and hybrid work, which affords more time, opportunity, and savings to do so. A survey released last fall found that employees who go into the office full-time spent an average of $863 per month in work-related expenses like commuting and lunches, compared to just $423 for full-time remote workers (that’s without taking into account child care). If more offices call employees back to the offices every Monday morning, these same analysts expect spending to dissipate.
Brands are still trying to be funny and chronically online — even in ‘late stage social media’. “As the landscape becomes pay to play, making organic reach less obtainable, brands’ push for engagement has seemingly led to a trend in social: The Funny Brand Voice. It’s internet snark or a chronically online style of humor, mirroring how people talk online and centered around things like the TikTok girl dinner trend, posts that pose a question or catch phrases like IYKYK. That all said, it creates a social media landscape in which many brands sound the same.”
Gen Z is driving — and changing — luxury beauty. They are outspending Millennials in skin care and hair care, while the two are neck-and-neck in makeup. NielsenIQ data shows that 61% of Gen Z shoppers are buying luxury beauty, with that spend growing at the same pace as the mass market. Established luxury brands like Chanel, Dior, Prada and La Mer are gaining Gen Z wallet shares and investing in marketing and talent partnerships accordingly.
The latest issue of Digital Native looks at the remarkable resilience of consumer spending despite current economic uncertainty and interest rates. Even with the S&P 500 dropping -19.64% last year, a Bank of America study found that credit and debit card spending rose +5.9% in 2022. What categories are showing best? A few include housing, the travel & experience economy (with a shout out to Forerunner portfolio company Jump), shopping & apparel, and pet (with a nod to Forerunner portfolio company The Farmer’s Dog).
Millennial and Gen Z couples say they aren’t getting married, because it’s too expensive right now. In a June poll of 900+ Gen Z and millennial respondents (between ages 18 and 42), 83% of respondents said they were hoping to get married someday — although a similar proportion noted that they did not believe marriage was necessary to have a fulfilled and committed relationship. Notably, 73% felt it was simply too expensive to get married in the current economy. The average price of a wedding has swelled to $30,000 nationwide, a ~$2,000+ increase from the past year — and prices in metro areas like SF and NYC are nearly twice as much. Fears of divorce, societal expectations, and evolving views on marriage didn’t help.
TikTok Shop, the social platform’s ambitious new approach to infringing on Amazon’s turf, looks to be on track to lose more than $500M this year. Big swings require big investments, but TikTok’s heavy spending in hiring, building a delivery network, and subsidizing merchants that offer double-digit–percentage discounts and free shipping are taking their toll.
WWD details how Prose is an example of how products can solve heat-related personal care problems with its products that are customized to the customer’s location and environment or pollution-fighting skin care.
Work at Portfolio Company:
SVP of Content | Hims & Hers: Hims & Hers is a multi-specialty telehealth platform building a virtual front door to the healthcare system across sexual health, hair care, mental health, skincare, primary care, and more. This role will be responsible for overseeing all content production across the business, including the blog, YouTube content, organic social media, and email campaigns.
Senior Growth Marketer | Curology: Curology is creating the next generation of skincare through customized treatment plans and formulas with powerful prescription ingredients for acne and anti-aging. This role develop and manage a data-informed product strategy and growth targets that ladder up to the Growth Product’s Group objectives, based on a deep understanding of customers, growth funnels, and product intuition.
Sales Manager | Fora: Fora is reimagining the travel advisor industry by building a travel agency that is modern,, tech-enabled, and based on empowering 100,000 entrepreneurs to transform their passion for travel into revenue. This role support the proactive advisor sales recruitment efforts, maintaining the pipeline through both inbound and outbound efforts to reach individuals who want to become Fora Advisors.
There are ~490 other openings on our jobs site. Check ‘em out.