1. Pandemic pet boom in the rear view

2. Ithaca Hummus seeks strategic investor

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3. Rokt to be IPO-ready by year-end

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4. Kroger sees local driving future investment

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5. Klaviyo IPO offers valuation benchmark

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Happy Friday, Retail readers. Research associate Natalie Breymeyer here with your weekly digest.

🧩 Natalie's goal this weekend is to complete the puzzle that's taken over the living room coffee table.

🙏🏻 Thanks for reading and big thanks to copy editor Mickey Meece! Please ask your friends and colleagues to sign up.

Retail Deals

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1 big thing: Klaviyo IPO offers valuation benchmark

2. The BFD: Unilever setting up second effort

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3. Retail transactions

4. It's Personnel

✨ Kim is wrapping up her time at Groceryshop in Las Vegas.

🐶 Situational awareness: The European Commission has approved Apollo Management's investment in PetSmart. BC Partners, GIC and management will retain a majority.

📺 What we're watching: Richard has been weirded out, in a good way, by Apple TV+ horror series "The Changeling."

✏️ Big thanks to editor George Moriarty and copy editor Mickey Meece for today's edits.

🙏 Thank you for reading Retail Deals. See you again tomorrow!

1 big thing: FTC versus Amazon

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2. The BFD: Whipped cream exclusive

Illustration of a whisk with a dollar sign-shaped dollop of whipped cream.

3. Shopify invests in wholesale marketplace Faire

An illustration of a shopping bag with a hand icon, representing the intersection of digital and real-world commerce.

4. Retail transactions

5. It's Personnel

📺 What we're watching: Richard has been enjoying the second season of the fantasy series "The Wheel of Time" on Amazon Prime.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Patricia Guadalupe for today's edits.

🙏 Thank you for reading Retail Deals. See you again tomorrow.

1 big thing: Warehouse planning levels up with AI

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2. The BFD: Ara Labs raising $50M

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3. Retail therapy

illustration of a white plastic shopping bag with the words "retail therapy" printed on it 

🎵 What we're listening to: After seeing R&B artist Ashanti perform at Groceryshop last week, Kim's been listening to more early aughts artists: Aaliyah, Mya, Eve and J Lo.

✏️ Many thanks to newsletter editor Claire Rychlewski and editor Mickey Meece for today's edits.

1 big thing: Snacking shapes grocery aisles

Illustration of a box of popcorn with hundred dollar bills as the sides that is overflowing with popcorn.

2. The BFD: Strategic buyer likely to scoop MaryRuth Organics 

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📦 Situational awareness: The FTC will file an anticipated antitrust lawsuit against Amazon in federal court as soon as tomorrow, Politico reported Friday.

🏈 What we're watching: Richard welcomes Taylor Swift to Chiefs Kingdom as a newly minted fan of the Kansas City Chiefs, who destroyed "Da Bears" yesterday.

✏️ Big thanks to editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

Whipnotic is putting a new spin on whipped cream, and it's getting $2.5 million in funding for it, CEO Lori Gitomer tells Axios exclusively.

Why it matters: The snacks sector is a growing category set to shape grocery aisles as it draws investors and large CPG and food and beverage companies. 

Details: Investors in the seed round include GTM Investments, East Dune Holdings and Crenshaw Ventures.

Whipnotic also raised $850,000 in a family and friends round.

The New York-based company will use the funds to expand its distribution into retail and food service, as well as build brand awareness, Gitomer says.

The funds will also enable the company to move into its next-generation of swirl technology, that will be able to increase its capacity by over 40x.

What we're watching: Depending on customer demand and how fast it wants to grow, the company could set its sights on a Series A in the back half of 2024, Gitomer says.

She declined to say how much Whipnotic would target.

How it works: Launched in July 2022, Whipnotic's whipped creams are made with real cream and natural colors and flavors and designed to be keto-friendly and gluten-free.

According to Gitomer, whipped cream hasn't seen much innovation from a manufacturing and a packaging standpoint. 

That allows the company to reverse engineer the process, starting with the packaging design.

Whipnotic has a patented nozzle technology that sits on top of the can that enables it to combine flavors into a swirl with one squeeze.

By the numbers: The company has generated over $700,000 in retail sales and sold over 100,000 cans, Gitomer says.

Whipnotic, which also has an e-commerce site, can be found in more than 400 stores nationwide, and it plans to be in over 1,000 stores by early next year.

What's next: The company's patented packaging technology could be applied to other cases where there's a need for two ingredients to commingle, such as shaving cream, hairspray, deodorant and even oil and water, Gitomer says.

"As we were developing our patent, we made sure to not just make this exclusive to whipped cream, but to really think about how this pod technology can be adapted to all of these other categories," Gitomer says.

Its technology could complement the pipeline of large brands looking for more innovation in packaging, she says.

1 fun thing: The company is releasing two new flavors, Brownie Batter and Peach Mango, in the coming weeks, to go along with its original flavors, Strawberry Swirl and Vanilla Salted Caramel.

Exclusive: Whipnotic spins $2.5M for whipped cream

Investors in the seed round include GTM Investments, East Dune Holdings and Crenshaw Ventures.

Retail deals

Whipnotic is putting a new spin on whipped cream, and it&#x27;s getting $2.5 million in funding for it, CEO Lori Gitomer tells Axios exclusively.Why it matters: The snacks sector <a class="gtmContentClick" data-vars-link-text="is a growing category" data-vars-click-url="https://www.axios.com/pro/retail-deals/2023/09/25/snacking-shapes-grocery-aisles" data-vars-content-id="1fc8cbbe-a105-4ee5-9ba0-6fa03a7adf85" data-vars-headline="Exclusive: Whipnotic spins $2.5M for whipped cream" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/retail-deals/2023/09/25/snacking-shapes-grocery-aisles" target="_self">is a growing category</a> set to shape grocery aisles as it draws investors and large CPG and food and beverage companies.

As inventory challenges and supply chain woes ease, retailers are looking for ways to make their last mile more efficient.

Why it matters: This is set to drive continued investment in supply chain tech, especially in last-mile delivery, autonomous delivery and fulfillment, and supply chain visibility.

Driving the news: Prologis, the logistics real estate provider, tapped property tech company TestFit's tech to help them figure out where to deploy new warehouse space.

TestFit's AI algorithms can provide real-time insights into an area that has the potential to be a warehouse site and can assist with optimizing design, constructibility, and cost forecasting for early-stage planning.

What they're saying: "Historically, you have these big distribution centers," TestFit CEO Clifton Harness says. "Now we have much smaller distribution centers that are located everywhere."

How it works: TestFit, which got its start using its tech to determine where to build multi-family housing, inputs data like parking demand, trailer demand and topography.

"Companies should use the least amount of space possible," Harness says.

"We want to build the buildings that we need, not to fit the buildings that we built," he adds.

Reality check: As consumers return to stores and curb online spending, the need for warehouse space has shrunk.

Newly leased space declined about 36% in the second quarter, according to Cushman & Wakefield.

Yes, but: Amazon has moved away from big warehouse spaces and focused its efforts on building smaller fulfillment centers in areas like Omaha, Nebraska, and Sioux Falls, South Dakota.

Those centers can carry smaller, more high-flying items and also serve as a middle-mile solution to allow inventory to move strategically across its vast network.

This is all in service of getting packages to customers' doors more quickly, Amazon says.

What's next: Harness says he can see TestFit being used in other applications, like retail and hotels, down the line as well.

"AI is good at figuring out how to squeeze the most amount of value out of the space as possible," he says.

Catch up fast: Dallas-based TestFit raised $20 million in Series A financing led by Parkway Venture Capital in July.

Prologis Ventures also participated in the round.

Warehouse planning levels up with AI

The real estate tech firm uses AI to plot out feasible warehouse sites

Retail tech

As inventory challenges and supply chain woes ease, retailers are looking for ways to make their last mile more efficient.Why it matters: This is set to drive continued investment in supply chain tech, especially in last-mile delivery, autonomous delivery and fulfillment, and supply chain visibility.

Shopify invested in wholesale platform Faire, strengthening a partnership that would see Shopify's merchants connect to a large B2B marketplace.

Why it matters: Wholesale is a lever both retailers and brands are pulling to grow their business, and the integration of the two makes buying and selling on the channel much simpler.

What's happening: Shopify will become a shareholder in the company, though the companies declined to disclose how big the stake was or the size of the investment.

How it (will) work: Faire will become Shopify's recommended wholesale platform.

Faire will enable Shopify merchants to reorder bestselling items through a fully integrated Faire buyer app, and easily connect on its platform, allowing them to source and secure inventory from over 100,000 brands on Faire.

Meanwhile, Shopify gives Faire a dedicated seller channel, and Shopify brands can add Faire features to their own e-commerce websites.

What they're saying: "If we can just make those two platforms talk better together, your life is just so much easier as a small business," Ami Vora, Faire's chief product officer says.

"It just comes back to like really leveling the playing field for small local independent customers who might not have access to all the data and all the tools that the big guys do," she adds.

"Shopify becoming a shareholder in Faire and really aligning their incentives with ours, we view it as an endorsement of us as really the leader in the wholesale space," Faire CEO Max Rhodes tells Axios.

The big picture: Shopify maintains that its overarching goal is to make it easier for its retailers and brands to do business.

"Shopify continues to double down on our B2B offerings by building sophisticated B2B features into the core of Shopify, and by providing new solutions to help merchants connect to buy and sell wholesale," Shopify director of product Aneeqa Khan says in an emailed statement.

Shopify invests in wholesale marketplace Faire

Faire will become Shopify's recommended wholesale platform.

Shopify invested in wholesale platform Faire, strengthening a partnership that would see Shopify&#x27;s merchants connect to a large B2B marketplace.Why it matters: Wholesale is a lever both retailers and brands are pulling to grow their business, and the integration of the two makes buying and selling on the channel much simpler.

As snack brands become a more significant part of shopping lists, grocers are rethinking how to best serve consumers.

Why it matters: The snacking category has grown faster than the total food and beverage market in the U.S., per NielsenIQ.

Meanwhile, increased prices at the grocery aisles have caused consumer behaviors to shift with many consumers valuing price over brand.

What they're saying: "Brand loyalty is weakening," says Lorelei Bergin, NielsenIQ's vice president of North American retail, at a Groceryshop session last week.

Private label's share of the total market was 13.5% and among the mass, value and club retailers, that share was 16.7%, per NielsenIQ.

Around 40% of consumers say that store-branded products are a good alternative to branded items, while 35% believe private labels are higher or equal in quality to name brands.

As a result, retailers must develop good robust segmentation and personalization to compete, Bergin says.

Zoom in: Value retailers, such as mass, dollar and club retailers, are dominating the snack market.

"They've been able to create more assortment on the shelves to make sure that the consumers continue to keep shopping in that space," Bergin says.

Multipacks, for instance, have become more popular than single sizes.

"Because we are a nation of convenience, now we create variety, we create savings, no inconvenience," Bergin says.

The intrigue: Snackers are also finding a home online, with 44% of buyers purchasing online.

That's causing online snack sales to outpace in-store sales, per NielsenIQ's data.

Consumers see online channels as a way to experiment and discover beyond what's available in stores.

State of play: As private label food sales grow, private equity and strategics alike are hungry for tasty snacking deals.

Insignia Capital-backed jerky brand Tillamook Country Smoker is working with Houlihan Lokey on a sale. (More on that below).

The Ontario Teachers' Pension Plan (OTPP) is exploring a sale of Shearer's Foods that could value the salty snacks maker at more than $3 billion.

In March, jerky brand Western Smokehouse was acquired by PE firm AUA Private Equity Partners from Monogram Capital Partners.

Snacking shapes grocery aisles

The snacks category grew faster than food and beverage in the U.S., according to NielsenIQ.

Food

As <a class="gtmContentClick" data-vars-link-text="snack brands" data-vars-click-url="https://www.axios.com/2023/03/21/snacks-new-chips-cereal-spicy-food" data-vars-content-id="ba28b077-5b3c-49a7-94df-053a5b7461f2" data-vars-headline="Snacking shapes grocery aisles" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/03/21/snacks-new-chips-cereal-spicy-food" target="_self">snack brands</a> become a more significant part of shopping lists, grocers are rethinking how to best serve consumers.Why it matters: The snacking category has grown faster than the total food and beverage market in the U.S., per NielsenIQ.

Klaviyo's first-day IPO showing bodes well for companies seeking to tap the public markets in the months ahead.

Why it matters: Consumer-focused IPOs are entering the public fray, and Birkenstock is set to take its stage with its IPO filing last week.

As Axios' Dan Primack notes, there's also a wave of SaaS companies in the IPO pipeline.

Driving the news: Klaviyo jumped as high as $39.47 in its public market debut before closing at $32.76 Wednesday above its $30 IPO price.

The company raised about $576 million from the offering.

What they're saying: "Klaviyo is among the first tranche of VC-backed tech companies to test the IPO market, and could be the beginning of a larger number of lesser-known names to justify their place in public markets," PitchBook's senior emerging-tech analyst Derek Hernandez says.

Zoom out: Industry watchers say that Klaviyo's IPO is a useful benchmark for valuation.

Hernandez says that companies that have gone public so far have taken a "conservative approach," and that has paid off.

"It also shows that the stigma of a financially down round may not be there," Simon Wu, a consumer and software investor at Cathay Innovation, tells Axios.

It gives founders "a North Star they want to achieve, or at least those that have similar financials [can] know where they would price," Wu says.

Its success "will kind of improve things in respect to animal spirits for the investment sector," Hawke Ventures managing partner Clark Landry says.

Zoom in: Shopify invested $100 million in Klaviyo last year and has a nearly 12% stake in the company following the offering.

"That was kind of what helped propel them," Wu says.

Nearly 78% of its annual recurring revenue comes from customers who use Shopify's platform.

"They clearly have a lot of room to grow if you're long on e-commerce, but I think they have some logos that they mentioned that they are moving upmarket," he adds. "And there are other areas where their key technical partners, kind of like Klaviyo, that is just top of mind for other pieces of running your business."

Of note: Klaviyo is trading just above $34 early in its second day, and Instacart is trading just above its $30 IPO price on Day 3.

Klaviyo IPO offers valuation benchmark

Consumer-focused IPOs are entering the public fray, and Birkenstock is set to take its stage.

Initial public offerings (IPO)

Klaviyo&#x27;s first-day IPO showing bodes well for companies seeking to tap the public markets in the months ahead.Why it matters: Consumer-focused IPOs are entering the public fray, and <a class="gtmContentClick" data-vars-link-text="Birkenstock" data-vars-click-url="https://www.axios.com/2023/09/13/birkenstock-files-for-ip" data-vars-content-id="f4c1e324-e763-4a1b-bd60-4faa5a1c85ea" data-vars-headline="Klaviyo IPO offers valuation benchmark" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2023/09/13/birkenstock-files-for-ip" target="_self">Birkenstock</a> is set to take its stage with its IPO filing last week.

Kimberly Chin

Stories

Warehouse planning levels up with AI

Shopify invests in wholesale marketplace Faire

Exclusive: Whipnotic spins $2.5M for whipped cream

Snacking shapes grocery aisles

Klaviyo IPO offers valuation benchmark

Newsletter editions

Retail: FTC v Amazon

Retail: Tech Tuesday

Retail: MaryRuth's auction update

Retail: Chewy's all-time low

Retail: Klaviyo takeaways