Posted In:

Retail Sales, Spending, US


#442
I Want All Of The (Other) Things

Published:

Jun 18, 2022


Author:

Roxy Horrie

Posted In:

Retail Sales, Spending, US

Published:

Jun 18, 2022


Author:

Roxy Horrie


Share:

A long weekend would usually signal a slew of sales and shoppers - but lately, this is not necessarily the case. Consumers are shifting spending habits, causing businesses to struggle in predicting short term sales. With supply chains stabilizing, retail companies are experiencing dramatic inventory increases, forcing them to rethink how to manage excess stock and current operational structures.

The trend in changing consumer preferences extends far beyond the once-heavily frequented Montauk beachfront boutique, though. In May, retail spending declined and the savings rate fell to the lowest in fourteen years as high inflation persists. This week, Target announced that it will experience a short term hit in profit margins. The company expects to heavily discount unwanted products and cancel orders. Meanwhile, Walmart reported some families are making fewer discretionary purchases as the prices of gas and groceries rise.

Amid the current market volatility, large retailers will continue to struggle to predict consumer behaviors. Ahead of releasing second quarter results, Target lowered its operating margin rate guidance from the 5% estimated three weeks ago to 2%, reporting rising costs in supply chain, wages, and inflation as the main drivers. In terms of inventory management, Abercrombie & Fitch and American Eagle Outfitters reported surging inventory levels, up 45% and 46%, respectively, from a year ago.

Companies are still grappling with how best to shift strategies to predict future demand and fund excess inventory. As individuals move away from pandemic consumption patterns, a new norm has yet to be established that doesn't involve indiscriminate hoarding.

I Want All Of The (Other) Things

Portfolio News


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I Want All Of The (Other) Things


Target expects squeezed profits from aggressive plan to get rid of unwanted inventory - Retailers from Walmart to Gap face a glut of inventory as inflation-pinched shoppers skip over categories that were popular during the first two years of the pandemic. The extreme shift in consumers’ spending habits comes as retailers start to get back to healthy in-stock levels. That means some have an abundance of sweatpants, throw pillows and pajamas just as consumers search for swimsuits and suitcases. Plus, some shoppers are trimming back on spending due to inflation or putting more of their dollars toward experiences like dining out and traveling. Read more

U.S. retail sales declined in May as inflation stings consumers - Consumer spending, buoyed by strong job growth and stimulus measures, was the backbone of the country’s economic recovery since a brief recession occurred in early 2020. That strength is fading in the face of the strongest pace of inflation in four decades. Read more

Stores have too much stuff - here’s where they’re slashing prices - Calling all shoppers: Big discounts are coming. Target, Walmart and Macy’s announced recently that they are starting to receive large shipments of outdoor furniture, loungewear and electronics everyone wanted, but couldn’t find, during the pandemic. The problem for retailers—that these goods are delayed by almost two years—could be a windfall for those in the market for sweatpants or couches. Read more

Industry News


PayPal launches Pay Monthly BNPL offering - The new offering lets customers space payments over a long period of time, giving them “greater flexibility and even more choices to pay for the items they want and need." Customers can make purchases between $199 and $10,000, dividing the cost into payments over a six-month to two-year period, with the first payment due one month after purchase. Read more

U.S. home equity hits highest level on record—$27.8t - The increase is another consequence of a red-hot housing market. Double-digit price gains have driven some would-be homeowners out of the market. At the same time, rising home values are boosting the finances of the Americans who already own them. Read more

Uber and PayU team up to break LatAm's cash habit - Uber Core Payments Lead Maria Jose Cornejo and PayU CEO of Global Payment Mario Shiliashki used Latin America as a case study in how cash is slowly ceding ground to digital in emerging markets, introducing digital ways to pay and be paid. Expanding into new markets in other countries is the way many big companies got big. Yet even after the pandemic and digital shift that it triggered, digital payments are far from ubiquitous in some large markets, like Latin America, where cash still rules and digital has its work cut out. Read more

Circle announces new euro-backed stablecoin - To start, EUROC will be issued as an ERC-20 token on the Ethereum blockchain, the firm said, "with support for additional blockchains expected later this year." Read more

Brex, which started out serving startups, now says it is ‘less suited to meet the needs of smaller customers’ - Three months after announcing it would make a big push into software and enterprise, fintech giant Brex is apparently abandoning the very segment it started out to serve – small and medium-to-sized businesses. Read more

The SEC war on greenwashing has begun - There’s now little doubt that the US Securities and Exchange Commission actually means business in its bid to crack down on misleading claims by managers of ESG funds. Under Chair Gary Gensler, officials have been demanding that money managers explain the standards they supposedly use to classify ESG-labeled funds. When the examination division spots potential misconduct, it typically alerts the agency’s enforcement unit for further investigation. Read more

Starling snaps up £500m mortgage book in shift from Covid loans - Starling Bank is buying the loan portfolio from specialist lender Masthaven. The acquisition will help Starling to diversify lending away from the government-backed Covid loans that constitute most of its assets. Read more

Charles Schwab paying more than $186m in settlement over robo-adviser business - The Securities and Exchange Commission said Schwab’s robo-adviser portfolios kept between 6% and 29.4% of assets in cash, instead of investing the money in stocks or other securities. The practice made money for Schwab’s affiliated bank, which lent out the cash, and the investment adviser made “false and misleading statements” in regulatory brochures about the conflict of interest, the SEC said in a settlement order. Read more

Consumers racking up more debt to pay off BNPL loans - More than two in five buy now, pay later (BNPL) customers borrowed money to make repayments, Citizens Advice has found, fueling fears of a looming credit crisis among cash-strapped consumers. Younger shoppers were most likely to borrow to pay off BNPL purchases. The types of borrowing included overdrafts, borrowing from friends and family, loans and payday loans. Read more

High-net-worth individuals have over half their wealth in IRAs and 401(k)s - The majority of U.S. adults (74%) don’t think they’ll ever become a high-net-worth individual themselves, defined as having at least $1 million in investable, or liquid, assets, but retirement investing — something we all have access to — actually plays a major role in many high net worth individuals' portfolios. Read more

YaaS: A framework for evaluating yield-as-a-service - There are some core questions that are useful to answer when evaluating YaaS propositions: 1.) How does the solution work? 2.) Where does the yield come from? 3.) What types of risks exist vs what risks have been disclosed? 4.) What is the state of the macroeconomic environment? 5.) What is the state of the regulatory environment? Read more

China's central bank accepts Ant's application for financial holding company - The People's Bank of China's (PBOC) expected approval of the plan is the latest sign that Ant, a tech giant with financial businesses stretching from payments to wealth management, is poised to emerge from a regulatory crackdown. Read more

What were all those 6,200 Coinbasers doing anyway? - Coinbase revealed it was firing 1,100 people — about 18% of its staff — on the back of a hiring freeze, retractions of job offers, and an employee revolt. At the same time Crypto competitor FTX crowed about having only ~300 employees prompting the question by the FT - what do all the Coinbasers actually do? Read more

Influencers abandon TikTok Shop in latest blow to UK ecommerce venture - TikTok influencers in the UK are dropping out of the company’s ecommerce programme, complaining of poor pay, long hours and promoting cheap products, in the latest signal that the company’s “livestream shopping” model is struggling to take off worldwide. Read more

Select Financings


Able - San Francisco based loan processing platform for commercial lenders raised $20m in Series A funding led by Canapi Ventures. Read more

Airbank - London based finance management platform raised $20m in Series A funding led by Molten Ventures. Read more

AlphaSense - New York based market intelligence and search platform raised $225m in Series D funding led by Goldman Sachs Asset Management's Growth Equity arm and Viking Global Investors. Read more

Altrio - Toronto based provider of real estate investment software raised C$8m in Series A funding led by Whitecap Venture Partners. Read more

Auxilius - Brooklyn based financial planning and accounting platform for clinical trials raised $10m in new funding led by Renegade Partners. Read more

Benny - Wisconsin based lending employees cash for stock startup raised $1m in pre-Seed funding led by Matchstick Ventures. Read more

Cube - New York based financial planning and analysis startup raised $30m in Series B funding led by Battery Ventures. Read more

DAOLens - Bengaluru based DAO onboarding and management platform raised $5m in pre-Seed funding led by Nexus Venture Partners, Better Ventures and iSeed II. Read more

Destaxa - São Paulo based payments platform raised $3.1m in Seed funding led by Quona Capital. Read more

Flip - Indonesia based consumer payment platform raised $55m in Series B funding led by Tencent. Read more

HomeLight - Arizona based real estate startup raised $60m in Series D extension funding led by Oren Zeev. Read more

KEO World - Miami based B2B BNPL platform raised $20m in growth funding led by Montreux Growth Partners. Read more

Mast Technologies - London based mortgage origination platform raised £1.2m in new funding led by Antler VC. Read more

Metropolis - Los Angeles based developer of payment infrastructure for parking facilities raised $167m in Series B funding led by 3L Capital and Assembly Ventures. Read more

Mewt - Bangalore based banking app raised $4.8m in Seed funding led by Quona Capital. Read more

Molecule - Berlin based DAO platform for funding medical research projects raised $13m in Seed funding led by Northpond Ventures. Read more

Narmi - New York based provider of technology to banks raised $35m in Series B funding led by Greycroft, NEA and Picus Capital. Read more

NFTPort - Estonian based NFT infrastructure for developers raised $26m in Series A funding led by Atomico and Taavet+Sten. Read more

Nume Crypto - San Francisco based crypto payments processing startup raised $2m in pre-Seed funding led by Sequoia Capital India. Read more

Pawlicy Advisor - New York based pet insurance marketplace raised $12m in Series B funding led by StepStone Group. Read more

PayCargo - Florida based fintech company for the freight industry raised $130m in Series C funding led by Blackstone Growth. Read more

Pazcare - Bangalore based employee benefits and insurtech platform raised $8.2m in Series A funding led by Jafco Asia. Read more

Prometheus - Los Angeles-based investing insights platform for investors, family offices, and wealth advisors raised $5m in pre-Series A funding led by Joe Lonsdale. Read more

Protego Trust Bank - Washington based chartered crypto bank raised $70m in Series A funding led by FTX. Read more

ScienceMagic.Studios - London based web3 advisory firm raised $10m in pre-Seed funding led by Coinbase Ventures. Read more

Upvest - Berlin based BaaS provider for the investment industry raised $42m in Series B funding led by Bessemer Venture Partners. Read more

Webio - Ireland based conversation A.I. maker focused on financial services raised $4m in Series A funding led by Finch Capital. Read more


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