💄 Ulta moves into Target

Wednesday, November 11, 2020 by Robinhood Snacks | Disclosures

When they move you from Aisle 5 Bread to the Ulta store

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Hey Snackers,

A big Veterans Day shoutout to the men and women who have sacrificed to serve and defend the United States. Thank you for your service.

The tech stock-filled Nasdaq index kept sliding yesterday as investors digested promising vaccine news.

1. Ulta Beauty stores move into Target with the "Inception Retail" model

Tired of living in Sephora's (eye)shadow... Ulta Beauty needs a place to crash this pandemic cuffing season — so it's moving in with Target. But Target's offering more than a blow-up mattress: it'll set aside 1K square-foot sections in over 100 Target stores for Ulta mini-shops starting in 2021. Tarjay's planning to expand the beauty chain to hundreds more stores over time. Ulta stock got a 7% glow-up on the partnership.

"In the red"... every company's lipstick shade nightmare. Ulta narrowly avoided a loss last quarter as profit plunged nearly 95%. Most of its sales come from its 1K+ stores, which were forced to close for most of the quarter. But the tide could turn with this key partnership:

  • Ulta's getting an "Essential Shield." Even if lockdowns get reimposed, grocery-slinging Target will get to stay open.
  • Ulta's getting unintentional exposure. You’re not likely to hit up Ulta for lipliner (masks and Zoom killed that). But you might pick up face serum on your way to buy hummus.
  • It's getting featured on Target’s website and app — prime real-estate for a company that badly needs to up its digital game.

Inception Retail could be the future... This store-within-a-store model sounds a lot like department stores. But malls and department stores are filing for bankruptcy and shuttering in droves. Meanwhile, Amazon is toying with the idea of turning bankrupt JC Penney and Sears into fulfillment centers. To fill this void, pandemic winners Target and Walmart have expanded their clothes and cosmetics offerings. Inception Retail is the next push into malls' territory.


Serious pod head... Spotify is majorly pod addicted. In the past few years, the Swedish streamer has sealed deals for shows from big names like Joe Rogan, Michelle Obama, and Kim K. Spotify also shelled out over $500M to buy companies like The Ringer (pod network), Gimlet (pod producer), Parcast (original shows), and Anchor (pod recording software). Now...

  • Spotify is buying Megaphone for $235M. The pod-tech firm helps podcasters with production, ads, and audience metrics. But its real selling point is...
  • "Targeted Marketplace" — this service lets advertisers target listeners by interest, demographics, and buying history. Like Facebook, for your ears.

You're special... Not everyone got the same Function of Beauty ad mid-pod — Megaphone knows you're worried about split hairs. Advertisers buy slots targeting different audiences across the 5.5K+ shows that use Megaphone, instead of specific pods. With this acquisition, Spotify gains all of Megaphone's customers. It can also use Megaphone's tech to improve/expand its own ad tech.


Podcasting is still going through puberty... It grew three feet over the past two years, and now its old basketball shorts look like Speedos (awkward). Podcasting now has over 100M monthly listeners, but less than $1B/year is spent on pod ads. Targeting/measurement on pods is way less precise than social media targeting, so advertisers aren't shelling out as much $$$. Spotify's hoping to change that with this deal.

What else we’re Snackin’
  • AUX: Lyft's earnings showed a slight recovery in ride-sharing — active riders jumped 44% from the previous (horrible) quarter.
  • Future: Walmart teams up with GM's self-driving electric car company Cruise to test driverless grocery delivery.
  • Stay: Airbnb creates an endowment to support hosts ahead of its IPO. It's planning to go public on the Nasdaq this month.
  • Channel: Nielsen works to make targeted ads widespread on network TV — just like Facebook knows your interests, your cable might too.
  • Eurozoned: The EU hits Amazon with antitrust charges for allegedly anti-competitive policies towards European sellers.

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Snacks Daily Podcast

Nothing like turning up the torque to "Crazy In Love"... or "Formation," or "Countdown," or any Beyoncé song for that matter.

Beyoncé is (unsurprisingly) the most requested artist by Peloton’s 3.6M members. Now Peloton's partnering with Queen Bey to benefit historically Black colleges and universities (HBCUs).

Tune into our snackable 15-minute-pod to hear why Peloton is following Netflix's lead.

  • Earnings expected from Vroom

Disclosure: Authors of this Snacks own shares of Walmart and Amazon

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