Fast Five | Prime Day Hot Takes, Google Search Revelations, & A Big Kroger ‘Boost’

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This is a podcast episode titled, Fast Five | Prime Day Hot Takes, Google Search Revelations, & A Big Kroger ‘Boost’. The summary for this episode is: <p>In today’s Omni Talk Retail Fast Five Podcast, sponsored by&nbsp;<a href="https://www.microsoft.com/en-us/industry/retail/microsoft-cloud-for-retail" rel="noopener noreferrer" target="_blank">Microsoft</a>, the&nbsp;<a href="https://alvarezandmarsal-crg.com/" rel="noopener noreferrer" target="_blank">A&amp;M Consumer and Retail Group</a>,&nbsp;<a href="https://www.takeoff.com/" rel="noopener noreferrer" target="_blank">Takeoff</a>,&nbsp;<a href="https://sezzle.com/" rel="noopener noreferrer" target="_blank">Sezzle</a>, and&nbsp;<a href="https://groceryshop.com/" rel="noopener noreferrer" target="_blank">Groceryshop</a>, A&amp;M’s Hemant Kalbag and Jonathan Sharp joined Anne and Chris to discuss Prime Day, Macy’s expanding Toys R Us, Kroger’s national rollout of its Boost membership program, the big reveal from a Google executive about search, and the WSJ’s report that Amazon has considered exiting its private label business.</p><p>Music by hooksounds.com</p>
Intro to Hemant and Jonathan
01:10 MIN
Prime Day Recap: Prime members saved $1.7 billion
02:11 MIN
Amazon's new Black Friday that's all about Amazon
01:03 MIN
Companies competing with Amazon are not going to beat them on price
00:55 MIN
Slight variations on holiday sales days and oncoming reoccurrences
00:40 MIN
Exploiting availability and price advantage
00:29 MIN
Toys R Us at Macy's
01:07 MIN
Giving consumers a reason to walk into a store
01:28 MIN
If the department store is coming back, what else is too?
01:32 MIN
Chris and Anne's feelings on Macy's plan with Toys R Us
02:43 MIN
Testing concepts in retail
01:38 MIN
If not Toys R Us, who?
00:40 MIN
Kroger expanding it's Boost by Kroger loyalty program
02:08 MIN
$99 for Instacart Plus, or $99 for Kroger fulfilled by Instacart
05:01 MIN
40% of young people use social media to search restaurants instead of Google Search or Maps
06:53 MIN
Amazon potentially exiting the private label business
05:08 MIN

Anne Mezzenga: Hello. You are listening to the Omni Talk Fast Five, brought to you in partnership with Microsoft, the A& M Consumer and Retail Group, Takeoff, and Sezzle. The Omni Talk Fast Five podcast is the podcast that we hope makes you feel a little smarter, but most importantly, a little happier each week too. Today is July 21st. I'm your host, Anne Mezzenga.

Chris Walton: And I'm Chris Walton.

Anne Mezzenga: We are here once again to discuss all the top headlines making waves in the world of omnichannel retailing. Joining us today, back for their monthly appearance, are two executives from the A& M Consumer and Retail Group, Hemant Kalbag and Jonathan Sharp. Hemant, Jonathan, welcome to the show. Tell the audience a little bit about yourselves. Hemant, let's start with you first.

Hemant Kalbag: Hi, everyone. Really happy to be on again, and thank you for having us. I'm Hemant Kalbag, I'm a managing director and partner with A&M Consumer and Retail Group, and I am the second- smartest guy in our practice. The smartest one is... Jonathan, you want to say hi?

Jonathan Sharp: I wasn't sure where that was going, but I inaudible. Thank you very much.

Chris Walton: Neither was I.

Jonathan Sharp: I thought there was someone else joining us. Hello. Hi, everyone. Thank you for daring to have me back. Jonathan Sharp here, also managing director with Alvarez& Marsal Consumer and Retail Group. Thrilled to be a colleague of Hemant's. Well, that's actually the highlight of my career.

Chris Walton: Oh my gosh. Anne, this is going to be spicy already.

Anne Mezzenga: I know.

Chris Walton: I was warned that these two liked to throw some barbs at each other, but-

Anne Mezzenga: Yes.

Chris Walton: ...this is absolutely fantastic. That might be the greatest intro of all time that we've had.

Anne Mezzenga: They will help us post- European trip once again to really get energized about the show and to have some very hot deliberations today on topics.

Chris Walton: That's right. For those that follow us closely, we just got back from Madrid. The last time we had a European trip, we didn't have any time off. Yesterday, we had a full day. So I'm raring to go here, Anne.

Anne Mezzenga: Oh, yes.

Chris Walton: I think we should get to it. Let's start off with this week's review. This week's review comes to us from Jay Recruiting Jen.

Anne Mezzenga: Ooh.

Chris Walton: Yeah, I like that name. It's good. No Ps in it either, so it's nice. Here's what Jen had to say. She said," A fun way to get the latest retail news. We serve large retail clients in the recruiting space, and it's important to stay up to date on the industry as a whole to serve them well. Before I found Omni Talk Fast Five, we spent a lot of time reading far less fun retail newsletters." And yes, we would agree with that." Thanks to Chris and Anne for keeping it real and engaging, while giving us the latest. Five stars for sure."

Anne Mezzenga: Oh thanks, Jay Recruiting Jen.

Chris Walton: I know, right? Isn't that so nice?

Anne Mezzenga: Yeah. Of course.

Chris Walton: I love that one too, because it talks about exactly what we try to do, which is to spice it up. Make it more interesting. So yes, please leave us a review. If you're going to listen, we're getting really close to the end here, like in terms of review. So you leave us review. A good chance it's going to be available and read aloud on the show within the next couple weeks as well.

Anne Mezzenga: All right. Chris, Hemant, Jonathan, are you guys ready to get the show started?

Chris Walton: Yes I am, Anne. Let's do it. All right. So in today's Fast Five... Today's Fast Five is brought to you again and again, second week in a row.

Anne Mezzenga: Yes.

Chris Walton: With the help and support of our good friends at Groceryshop.

Anne Mezzenga: Oh.

Chris Walton: Yeah. Holla! Last week we told you to act fast because prices were going up, but that is not the case for our loyal Omni Talk listeners by using promo code RBOT1950. That's R- B- O- T 1950. Retailers and brands can still get that same great pre- increased rate of just$ 19.50. Just go to groceryshop.com to redeem your promo code now. In today's Fast Five, we've got news on Macy's taking Toys R Us to all stores. Kroger taking its new membership program national. A Google exec suggesting the landscape of digital search is shifting drastically. Reports in the Wall Street Journal that Amazon is thinking of exiting its private label business. But first, we take off with the Prime Day recap and-

Anne Mezzenga: Oh yes, it was Prime Day last week, everybody Prime Days. And it reportedly broke records bringing it in at 11. 9 billion in sales, according to Adobe. So here are some fun facts from our friends reporting on this at chain storage. Prime members purchased more than 300 million items, the most in history.

Chris Walton: Most in history.

Anne Mezzenga: Prime members saved over$ 1.7 billion and overall, the growth rate across the two days was roughly 8. 5% as Adobe had Amazon in at$ 11 billion last year. Jonathan, we're going to go to you first on this. What should listeners and other retailers most specifically take away from this year's Prime Day extravaganza?

Jonathan Sharp: Well, I guess the first thing is that the beast isn't going away, right? And we see it in our consumer sentiment survey that intention to use Amazon, intention to use their mobile app continues to be the number one shopping channel amongst consumers. And we've not seen that fade in the last 12 months cycle of our survey. I guess the other thing that I was struck by was I think this is a sign of the supply chain switch back that I think a lot of retailers are going to go on over the next six to 12 months, which is I think we're at the sort of an inflection point of going from under stock to overstock. It's kind of inevitable. I would imagine everyone who's worked in supply chain for their career kind of knew this was coming 12, 18 months ago, and must be sort of banging their head against the wall now, but the consumer's going to benefit. The other I think really interesting, innovative thing that we saw was this kind of social participation shopping. So kind of shop whilst I Twitch or Twitch whilst I shop and kind of," What should I get? What should I buy? What do my friends think?" And that raised a question for me around, kind of, where are all the other categories where that should be really kind of powerful? You would've thought that certainly amongst certain demographics in clothing, in makeup, in indulging, in luxury, it's kind of the online equivalent of having a glass of champagne with your girlfriend whilst deciding what bag to buy.

Anne Mezzenga: I'd love picturing you. Jonathan's having a glass of champagne with your girlfriend while thinking about the bag to buy.

Jonathan Sharp: Don't tell my wife, okay?

Hemant Kalbag: inaudible right now.

Anne Mezzenga: Yeah, yeah.

Jonathan Sharp: Yeah. She's probably buying a bag right now.

Chris Walton: Right. She's probably doing the same thing herself.

Anne Mezzenga: Yeah.

Jonathan Sharp: It's kind of the ultimate kind of social comments that you saw.

Anne Mezzenga: Right.

Chris Walton: This is going to come up again later too. So my big takeaway too, from what you said too, is I kind of think you're kind of going down the road of, and you guys put this out in your report too, that you're almost... We should almost expect to see more of these things as well. Hemant, what do you think?

Hemant Kalbag: This is amazing to me. Right? Amazon has created a whole new occasion that it's not just about Amazon, right? So if Amazon is driving Prime Day, there is a whole host of other retailers that have to follow. Right? So Best Buy has to promote. Walmart has to promote. I mean, there is just this cascading effect of what they're doing. And it's really interesting because all of this lead up to holiday and building up of inventory. I think this is a great, I think, asset for retail that they get this opportunity several months before holiday really kicks in. Clear out inventory. Drive volume. My sense is, I think we'll be talking about this for the next three years. I think there's going to be new records every single year.

Chris Walton: Right.

Hemant Kalbag: Because this is just going to continue to grow in size, and it's going to become almost like the new Black Friday that everyone will wait for. And it's evident in this year's numbers, right? I mean, this is now something that retailers will mark to every year. It's truly amazing.

Chris Walton: The summer liquidation sale, so to speak, that will continue to gain scene. And what you think though?

Anne Mezzenga: Well, I agree with what Hemant and Jonathan were saying. I think that what's important to me here is what retailers are doing to compete with Amazon. They're not going to beat Amazon on price. I mean, it's going to be incredibly difficult to do that, even with what Jonathan's talking about with overstock and liquidation happening. But what I do think is important for other retailers to be thinking about is, yes, this is the new holiday, but what are the other aspects of your business that you're putting time and energy in beyond just price cutting to make that choice easier for a consumer to go to you versus ordering from Amazon? Like, how are you improving your same- day pickup within 30 minutes or something so that you can incentivize the consumers to not just get a good deal? Maybe it's a dollar more to get it at Best Buy, like Hemant's suggesting, but I can go over there right now and get that same discount.

Chris Walton: Right.

Anne Mezzenga: I think those are the kinds of things that as a retailer who's not Amazon, I'd be kind of focusing on as we go forward with this continuing trend.

Chris Walton: Yeah. That's a good point. Even leveraging buy online pickup and store curbside could actually make the retailers be very price competitive-

Anne Mezzenga: Hopefully.

Chris Walton: ...with Amazon too, because it's a cheaper way to fulfill. Yeah. I don't know, my takeaways too. I kind of already alluded to my big takeaway from this is... My thing is like I don't have many hot takes to say on this. I feel like this is just a variant on a theme that we've seen for centuries. It's like the Memorial Day sale, but now it's in the middle of July, or it's like Nordstrom's Anniversary Sale. It's just, it's cut from the same cloth there, which is what retail is. It's just slight variations on things we've all seen in the past. I think Jonathan's points said right. With things like Walmart Plus, with Kroger Boost, things like that which we're going to talk about in a second, we're just going to see more of these more often.

Anne Mezzenga: Right.

Chris Walton: And it's just going to become a regular occurrence. That's kind of my last word, I think I'd say. Jonathan, you get the final word though.

Jonathan Sharp: Hey. I was just going to say, just building on those two points, which is kind of what Amazon's doing with Prime Day is it's exploiting its availability and kind of price advantage. So it's kind of taking those off the field for everyone else, and therefore what everyone else has to do is find other reasons to shop with them, which actually is going to be the theme, I think, of the other things we're going to talk about today. Because that's really what it's doing to other retailers, which is okay. What other parts of our proposition can we be much stronger on? Because we know that Amazon's got availability, instant fulfillment, and price.

Anne Mezzenga: Right.

Chris Walton: Yeah. Right. It's a great point by, Anne. All right. Let's keep moving. Let's roll the headline number two.

Anne Mezzenga: Oh yeah.

Chris Walton: And believe it or not. I know you're going to love this.

Anne Mezzenga: Are we going to sing again?

Chris Walton: No, I don't think we can sing today. I don't think but our guests can definitely sing, should they want to. It looks like we can all be Toys R Us kids again at Macy's.

Anne Mezzenga: Aw.

Chris Walton: I know, right? Oh, when do we want to be a Toys R Us kid? According to Retail Dive, Macy's will begin rolling out Toys R Us to all Macy's stores between now and October 15th. Just in time for the holidays. The store in store footprints will range between 1, 000 square feet to 10, 000 square feet. And the larger footprints will be reserved for what the two companies together call flagship locations in Macy's large metropolitan areas, including New York, Miami, Atlanta, and Chicago. Hemant, let's go to you first on this one. What do you think of this news? Did you like this for Macy's?

Hemant Kalbag: It's amazing. So first of all, I have to say Toys R Us as a brand, I mean, my God, I think this must be the third or fourth time it's making a comeback.

Chris Walton: Don't die. Right?

Anne Mezzenga: It said that in the article too, like-

Chris Walton: It's like the knight in the Holy Grail, it just won't die.

Hemant Kalbag: It's just got this brand resilience that there is always people out there that see that equity, and they don't want this brand to go away. I don't know if it's nostalgia. I don't know if it is a core business belief. So I am truly amazed that yet again, Toys R Us is rearing its head. So interesting. Now if I think about this from the Macy's standpoint, right?

Anne Mezzenga: Yeah.

Hemant Kalbag: I think there has been a consistent challenge for department stores over the last decade to think about giving consumers a reason to walk into a store.

Chris Walton: Right.

Hemant Kalbag: Right. Most department stores are very careful about sharing traffic numbers. But if you look at mall numbers in general and there has probably been somewhere between a 7% to 12% traffic decline year over year, that's been compounding. And so the reason for existence for department stores has to evolve. And just having everything under one roof and really kind of becoming apparel led has not been sufficient. And direct to consumer brands have been taking away, share off- price, has been taking away traffic share. So I think this is an interesting experiment because really this is about driving traffic into the stores, right? This is about giving a new destination, that'll get new consumers coming into a Macy's store. So I think it makes a lot of sense. And if you remember, when Toys R Us, the stores were around, they actually did well on traffic. Right?

Chris Walton: Yeah.

Hemant Kalbag: I think there was some systemic business problems around margin, et cetera, that ultimately got the retailer into trouble. But it was not because of traffic, right? I mean, especially the iconic locations that you would go to, there were times there was lines outside. So I think this is I think a smart move.

Chris Walton: So net- net, you like this move. That's your take. Net- net, you like this move for Macy?

Hemant Kalbag: I do. I really do.

Chris Walton: Okay. Interesting. Yeah, interesting. The other point too, that I would make too, I want to get Jonathan's thought on. This is like, the Toys R Us experience was much larger than 1,000 or 3, 000, whatever it was square feet, even 10,000 square feet, which things that are important thing to think about. But Jonathan, do you agree with Hemant here? Or what color would you add?

Jonathan Sharp: Yeah. Okay. Strike this one and keep the tape. I agree with Hemant.

Chris Walton: Oh my God.

Hemant Kalbag: I want a copy of that recording, please.

Anne Mezzenga: Yes.

Chris Walton: Yes.

Anne Mezzenga: Yes.

Chris Walton: This will be-

Hemant Kalbag: I'm going to make that into a meme. I'm going on our company website.

Anne Mezzenga: A TikTok, just boomeranging of Jonathan."I agree with Hemant. I agree with Hemant."

Jonathan Sharp: Well, stuck in my mouth that, but anyhow, yeah, look a few things. The thing that struck me when I read this was it's the return of the department store. Like the department store is back, all the categories that they exited over the last 20 years.

Anne Mezzenga: Sure.

Jonathan Sharp: I mean, what's next? Is furniture coming back? Is luggage coming back? Electronics coming back? Interesting. Actually, a whole bunch of categories that are challenged on their own. Big- box Amazon hollowing them out, actually aggregate them back in a thing called the department store and create more reasons to shop. I mean, the reason this is important is that you can see it again in our consumer sentiment survey in particular, amongst younger consumers, particularly millennials who just do not regard mall shopping as a leisure pursuit. And so you're going to have to create lots more reasons for them to visit because it's not instinctively an attractive proposition for them. So I kind of get it. The question it raises for me, like is, you know exactly what's next. Who are the next ones coming store in store?

Chris Walton: Yeah. What do you think, Anne?

Anne Mezzenga: I'm sorry to both of you. No. But I-

Chris Walton: Am I the only one who's jaded on this? Yes, but thank God.

Anne Mezzenga: I love that Jonathan gave us that entry point into this conversation because I agree, you have got to get those millennial and Gen Z, this next generation of customers who Toys R Us does not mean squat to these people. Like these people, they don't have the nostalgia that we all had of what that Toys R Us was. And in order to get that group of people into your Macy's store, I don't think it's with toys... They're bringing Toys R Us in a very small footprint. I don't think it's the market at Macy's concepts that they're expanding. I think, I look at what we just experienced Chris at Zara in Madrid.

Chris Walton: Yeah. Right. That's a better way to go about it.

Anne Mezzenga: I look at how seamless that experience was to shop a traditional... I mean, it's the size of a department store. It's four floors, 82,000 square feet.

Chris Walton: Oh, it's 80, 000 square feet. Yeah. 100%.

Anne Mezzenga: That shopping experience has got me in. I can shop a variety of ways, online and offline. I can check out myself. Like Macy's, this is where you should be investing your money. It should not be in these one- off things, trying to save your brand by bringing in other brands. It's by creating the better shopping experience that will get that customer in to buy the things that you have, the tertiary things, whether it's Wetzel's Pretzels or Toys R Us.

Chris Walton: Right.

Anne Mezzenga: You need to start with that element first, before you start trying these things. It's just wasting money and time and resources at this point.

Chris Walton: Oh, 100% agree with you. 100% agree with you. And the point I would make against what you guys were saying too, would be, yeah, it's maybe a rebirth the department store, but the department store went away for a reason. Right? Like, why do we suddenly want that version back? The history is not on the side of this idea in some ways. And the other point I make too, is the devil's in the details of how you execute this.

Anne Mezzenga: Right.

Chris Walton: Macy's has shown no ability to execute any of these ideas from story. I've been in the stores that have the first rollout, like they rolled it out to 300 to 400 stores, this Toys R Us concept. It looked atrocious. I would argue, it wasn't even shoppable. It looked like they hadn't done anything. And then my other point would be, if you're going to do this, if you believe in this idea of reimagining the department store, and going back to what it used to be, why do you need Toys R Us to do that? Why do you need to pay a licensing fee to Toys R Us to put this in your stores? Why don't you just put toys into it?

Anne Mezzenga: Right.

Chris Walton: And according to the article, the Macy's merchants are still very involved in the decision making. So if you've got merch, it's like why do you need to pay Toys R Us for this? Why don't you just put toys in your store, put it in there? Because to your point, the seven, eight year olds that are going to be shopping for this don't even know what Toys R Us is.

Anne Mezzenga: Or Macy's.

Chris Walton: So who cares? Right. So that, to me, doesn't make sense. And so my prediction, Anne, is this might get good press in year one. It's going to show signs of struggling in year two. And by year three, it's going to be disastrous and people are going to be like," What the hell did we do here?" But that's my take. But I got to imagine you guys have a retort on this one, 100%. So who wants it first?

Hemant Kalbag: Yeah. I mean, listen, I understand your perspective. And I think there is going to be many experiments that Macy's and other department stores do that may get a C minus or below in the report card. I don't think this is one of them. The reason, and I think about what you said, right? Why do you need Toys R Us to do it? It is because that brand still means something. The fact that it's passed on from generations. And in the end, right, parents have a great amount of decision making influence around where to take that kids for shopping. And that brand for parents still means something. And as long as that nostalgia exists, I think that is going to have pull. And then the other part of it is also, I think, again, for the record books, I agree with Jonathan too.

Chris Walton: Wow.

Hemant Kalbag: I think this is about testing concepts, right? So if this works, it's about them thinking about what is the next specialty category I can bring into my department store that I don't have to manage entirely on my own, with merchants that don't consistently make good calls, but thinking about category specialists. Can I imagine a better luggage buying experience within a department store? Can I imagine a better electronics buying experience than you get today? So I think that's kind of where it's headed. I do think at least for the next year or so, I agree with you, Chris, this is about creating a little bit of excitement around the narrative. So anyway, we should talk in a couple of years about this and see how it's going.

Chris Walton: Oh, and I'm going to be checking this one out too. And I know the market by Macy's too is coming to St. Louis and we're driving down to check that one out as soon as it opens. But Jonathan, I kind of digged your point a little bit. So I feel like I've got to give you the last word on this one.

Jonathan Sharp: Yeah. I guess my only response is it's a bit of a counter causal, right? Which is a sort of alternative history kind of question, which is, you want to do toys? If not Toys R Us, who? What? You want to reinvent the department store, what else are you going to do? I think you've got to give them high marks for effort. Now let's see what their sort of execution is like, but I'm kind of struggling with what else they should be trying. And I think to Hemant's point, and actually I think it was Anne who also raised it. Right? Which is, we will know whether this is a success if there are two or three that work after this one. Right?

Chris Walton: Yeah.

Jonathan Sharp: So I think our view on this is very contingent.

Chris Walton: Well, I think that's funny. My last word on this one, Anne, before we move to headline number three is I think that's always the point that gets brought up when we talk about the department stores. It's like, what else are they going to do? So therefore we like this because... But in reality, it doesn't answer the question of this is the right thing to save the department store. And so that's just my... I think that's an important psychological thing to look at in terms of our commentary on the department store industry in general.

Anne Mezzenga: Yeah. Let's see how long you have to wait in line to buy one of the toys, or if you can find somebody at Macy's to buy one of the toys once you buy it. All right, let's go to headline number three. So Kroger is now offering its Boost by Kroger loyalty program across all of its banners nationwide. According to Chain Stor Age, the annual membership gives customers unlimited free grocery delivery on orders of$ 35 or more, fuel discounts of up to$1 per gallon, and additional savings on Kroger's Our Brands, private label products. During the last several months, the grocery piloted Boost in four divisions. And according to Kroger, the results included a growing number of new members and significant increase in delivery sales compared to non- Boost divisions. The membership has two levels, two levels. Each is$ 59 and$ 99 respectively. And Kroger estimates that the membership can save customers more than$1, 000 per year on fuel and grocery delivery. Jonathan, we're going to go to you first on this one. Is there something to this? Is it just an old copycat file? Is it just some let's rinse and repeat and do this over again? What do you think about this one?

Jonathan Sharp: Yeah. So I think there's something here, right? This is kind of what Amazon had in mind with combining Amazon Prime and Whole Foods. Except they didn't build out the fulfillment centers globally to allow them to do it. And the other thing I was thinking about this was I think this market is going in a similar direction to the media market. Right? Ultimately, how many of these subscriptions a household's going to have? Right?

Anne Mezzenga: Agreed.

Jonathan Sharp: I mean, I don't know what your house is like, but in media, Disney Plus, Peacock, Netflix... Who knows how many others? Right? Eventually, I'm not sure we're going to keep all of them. I would've thought in grocery delivery, it's even less. Right? I would imagine most households are going to stick with Amazon Prime and potentially a grocery edition. Right?

Anne Mezzenga: Right. Right.

Jonathan Sharp: Had Amazon got Whole Foods, right, they would've had the whole shooting match stitched up. They didn't get it. Right? And so there, I think there's space for one other. And so I think this is quite an aggressive move by Kroger to say we are going to be the one other, right? The only thing I'm bit confused about is this is basic... Well, certainly I live in the Northeast. Right? So I went and have a look at this and this is basically Kroger Boost fulfilled by Instacart for me.

Anne Mezzenga: Okay. Explain.

Jonathan Sharp: And so this is kind of an intel thing, which is, would I rather spend$ 99 to get Instacart Plus or would I rather pay$ 99 to get Kroger fulfilled by Instacart, with all of the other benefits around fuel and private label? Now Kroger are obviously betting, right? That their proposition is strong enough to compete against all of the subsidiary retailers that Instacart could provide. Look, I don't know. But I think it's quite an aggressive and strategic play to be the other subscription model in your household.

Chris Walton: Yeah. And that's interesting too, because the other point you got to bring into this conversation, which is something I was thinking about a lot is reading this too, is Kroger's also going into markets where they don't have stores.

Anne Mezzenga: Right.

Chris Walton: So it's not necessarily requiring the Instacart connection or even the store to be present. You could actually get, become a Boost member and get just the centralized fulfillment through the Ocado partnership, like they're doing in like Oklahoma and Florida and stuff like that. Hemant, what do you think?

Hemant Kalbag: Listen, I think this is something this is not really a new idea. It's not bird shattering. In the end, if you're in retail, everyone will eventually have some version of this. Right? Amazon Prime has obviously existed for a while, but Walmart has Walmart Plus. Restoration Hardware has membership. Pretty much every retailer now has membership associated with free delivery, some additional member benefits. And so this is in my mind, just the new form of a loyalty program going forward. And I do not think that Kroger is doing something... I'm surprised it took them this long to get here. They're a thoughtful company. But I think this is going to be table stakes. And there's two reasons for retailers to do this, right? There's one, just a defensive move, right? They don't want to lose customers to other companies, other retailers that are offering this. The second thing is, what does this do? What it does is it builds loyalty by getting a higher share of your wallet. So if you are paying the$ 99 to Kroger, there's a high likelihood, something that you may buy at Target or Walmart, you may try and combine into your basket at Kroger. So it makes sense, right? The reason to do this is to increase that pull. And in my mind, this is... While I'm glad they're doing it, and I'm glad it's making the news, my prediction is every grocery chain will have its equivalent program within the next couple of years.

Chris Walton: Interesting. See, I'm not as jaded on it. And I like what Jonathan brought up. I love that point because I had not thought about that about like the consolidation and like Amazon Prime plus the grocery thing. I mean, I grew them on to a degree. I think membership programs like this are just worth doing and we're going to see everyone do it, because it costs nothing to implement them. You might have few front- end digital changes and maybe some marketing folks and ops people behind the scenes. You get people that pay you$ 100 per year. It's like," Duh, why wouldn't you try this in a lot of ways?" But the thing for me is I think Kroger actually is out in front of this relative to other grocers, particularly in terms of implementing it. My hunch is they're doing better with it than Walmart is doing with Walmart Plus, because we haven't seen any statistics on Walmart Plus at this point. And going back to what we said before, Kroger has been very smart about leveraging the Ocado relationship to get into new markets. And I think Boost gives a marketing handle to that and a way to talk to those markets from a new point of discussion. I think that's really important here. And those savings are insane, if that's really true.$1, 000 a year on a$ 99 investment, that's huge.

Anne Mezzenga: Yeah. I mean, Chris, I think that for me, it's two things. Number one, what you and Jonathan pointed out is that grocery, you got your Amazon Prime membership for the everything store. But we think about the conditions that we're about to head into as a nation, and fuel and groceries are going to be the other thing that you invest in when it comes to subscription and where you're looking for savings, because those are essentials. The rest of those tertiary categories that Instacart's offering, I don't think are going to be as important of a membership for people to hang onto, especially even at$ 100 a year. The second point I'd make with this is that I think that Kroger is also smartly on the backside of this, thinking about how they can start to bring in and offer those hub and spoke facilities to other brands, instead of doing it, pulling it directly from the store. Like you look at... They did a pilot in store with Bed Bath& Beyond, which man, who knows if that makes sense? But if they're developing those relationships and then they can start to pull, now you can get Bed Bath& Beyond products from the centralized fulfillment center, in addition to your grocery order. I think that has some real power potentially down the road.

Chris Walton: Yeah. I don't know about that because I think potentially, Bed Bath& Beyond is the... Of course, we can't have a conversation without talking about Bed Bath& Beyond too.

Anne Mezzenga: Why not?

Chris Walton: But centralized fulfillment of grocery is very different than centralized automated fulfillment of home furnishings too. So that is probably pretty far inaudible there.

Anne Mezzenga: You look at the categories that they had in the store, I guess is what I'm talking about. It's smaller home goods. It's plates. It's towels. It's things like that, that are much more along the lines of an essential item instead of the big furniture.

Chris Walton: Yeah. I mean, you could definitely get there over time. The question of Bed Bath& Beyond would be around to support that, but who knows?

Anne Mezzenga: Well, or pet food or home improvement things, I think it's it expands to other categories.

Chris Walton: Right. Absolutely. Yeah. The traditional core grocery categories, for sure. All right. Let's keep rolling to headline number four here. A Google exec made a shocking proclamation at Fortune's Brainstorm Tech conference this past week. According to TechCrunch, Google Senior Vice President, Prabhakar Raghavan, who runs Google's knowledge and information organization said," In our study, something like almost 40% of young people, when they're looking for a place for lunch, don't go to Google Maps or Google search anymore. They go to TikTok or Instagram." Raghavan also explained how younger people were generally interested in" more visually rich forms" of search and discovery. And that wasn't just limited to where to eat. Google confirmed his comments to TechCrunch and said they were based on internal research that involved a survey of US users ages 18 to 24. Jonathan, how important is this headline? Do you agree with me that it should be in the running for retail headline of the year?

Jonathan Sharp: Well, that's a big ask. I'm not sure about that. Come back to me in December, right? I think it's quite a big deal for Google. And effectively, I think what they're saying is they're saying content is king. And by the way, I was looking at some other data on this. So in the UK, the UK equivalent of the FCC has now said that TikTok is the fastest growing source of news for the UK population followed by Insta. Again, so content kind of driving participation. And so I kind of get it. And I think if I was my sort of late teen daughter, I would never consider kind of Google Maps for finding a restaurant. I mean, if I said Yelp to her, she'd be like," What the heck are you talking about?" Her view of finding a restaurant review is I'll kind of go and find out what Doja Cat's saying about a snack and then I'll find a restaurant review on the back of it. The content drives everything for her. And the other thing I think that's interesting is, is I don't think it's just notional. So we see other evidence of it. Gen Z in particular, are this really interesting group that in survey responses are the group that combine social commerce with bricks and mortar. So they'll do a lot of social commerce. They love the bricks and mortar experience. They'll typically inaudible it whilst they're at it. They've skipped the kind of website, laptop, Google phase of online shopping. They've gone retro and they've gone straight to social commerce. So I can kind of see it, why it might be happening with that group. I think there's a question for retailers by the way, which is what's your content like? I mean, how rich is your participation? I think retailers typically still think website and mobile app.

Anne Mezzenga: Right.

Jonathan Sharp: Well, I'm not sure that's even table stakes anymore. It's kind of a nothing burger for that group.

Chris Walton: Right. Anne, what do you think?

Anne Mezzenga: Well, I read this and was honestly not surprised. I mean, I think that when you think, especially when they bring up like restaurants, I think that's a big component of this. But especially like Jonathan staying with the smaller retailers. I mean, we were just in Paris unexpectedly and one of the ways that I was using, and I'm not even millennial and Gen Z.

Chris Walton: No, you're not.

Anne Mezzenga: I was looking at a restaurant review and then looking at the Instagram photos of that restaurant to really get a sense of... I mean, like Jonathan's saying, I think this generation gets a sense of authenticity, of actual experience based on what they're seeing from the brand on TikTok and Instagram. And the same will be true for shopping. And I think the other thing that is happening on these social networks is that this is passive consumption of media. It's not going directly to Amazon or Google and typing in restaurants near me or handbags near me. They are being inspired and the whole consumption pattern is different, and I think going to continue as we continue on.

Chris Walton: So you guys both think this is pretty big then?

Anne Mezzenga: Yes.

Chris Walton: It's kind of like, I expected it. But it's pretty big.

Anne Mezzenga: I don't know about headline of the year. I think I'm less surprised by it than maybe you are.

Chris Walton: Okay. Yeah. I think headlines of the year can still be unsurprising too. But Hemant, what do you think?

Hemant Kalbag: I'll tell you what. I am surprised, but I'm surprised by the boldness of the statement. I mean-

Chris Walton: Me too. I can't believe he did that.

Hemant Kalbag: For an executive to come out and talk and then the company to back it up to say, the very fundamental premise of the model that we were built in is becoming less relevant. How brave is that? I mean, that is super cool that they talked about it openly. And it may be something that many of us have thought about intuitively, but I mean to tie it back to our earlier conversation, it would be like a department story executive 15 years ago saying, the whole concept of shopping is changing and people don't want to come into department stores anymore. They want to go online and direct to consumer. I am just, I'm floored that they came out and said this openly. And while 100% true, and that's definitely where consumption is going, I was still very impressed by the headline.

Chris Walton: Yeah. Jonathan?

Jonathan Sharp: Yeah. Yeah. Hemant, this might surprise you on my back to be cynical. That was irony, those who don't know me, but maybe it's not a surprising thing to say if you are an industry that's facing regulatory scrutiny on monopoly, power in search. And so it's also in Google's interests. It's also in Google's interest to talk up other search inaudible-

Anne Mezzenga: Sure. Good point.

Chris Walton: Good layer here, Jonathan. Very nice. We love the cynicism too.

Anne Mezzenga: What do you think? You're saying headline of the year, Chris.

Chris Walton: Yeah. And by the way for the record, because I know I've dropped... You give me crap for dropping that a lot, but I went back and recorded my headlines of the year. So far, there's eight and we're in the seventh month of the year. So I feel like I'm on a good pace for-

Anne Mezzenga: Oh my God.

Chris Walton: ...creating a list for legitimate headlines of the year. But no, I think it's huge. And I think you guys hit on the points already because it shows you the disruption that's going to take by way of social commerce. I started talking about this on stage as much as four years ago. And credit to Carter Jensen who used to be on the show for pointing this out to me, this horizontal line of social commerce idea that he had. You've just got more and more eyeballs on social media every day, and those platforms are going to become the natural outlays as a result of that for search and for commerce. And so ultimately I think if this is true, maybe, if you take the glass half full approach maybe, and against Jonathan's glass half empty approach, it's going to become at some point terribly disruptive for both Amazon and Google particularly, because they're the ones who have the line share of that engagement right now from traditional search, the way people traditionally search for things. So my other prediction though, is that if this trend continues, I think you can expect to see Snap gobbled up by one of those two players. I think it's just going to be a natural outgrowth of what's going to happen because they're the ones that are just kind of sitting there on the sidelines. TikTok is very formable on its own. Facebook, too. Snap's just there for the taking. And I wouldn't be surprised at some point if somebody grabs it up.

Jonathan Sharp: Can I just say one other thing, which is, if you're Google what's interesting is that you're sitting there with YouTube and it's just not doing it for you. Right?

Anne Mezzenga: Right.

Jonathan Sharp: We think of these as being digital media, but they're not consumed in such different ways.

Chris Walton: That's a great point. Yes.

Anne Mezzenga: Right.

Chris Walton: 100%. I love that.

Anne Mezzenga: All right, let's go to headline number five. Amazon has started reducing the number of items sells under its own brands. And the company has even discussed the possibility of exiting the private label business entirely to alleviate regulatory pressure, as Jonathan inferred earlier. All right. According to Wall Street Journal, the decision to scale back the house brands resulted partly from disappointing sales for many of those items. And also comes as Amazon has faced criticism in recent years from lawmakers and others, that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site. Executives discuss reducing Amazon private label assortment in the US by well over half, a source told the journal, at the urging of Dave Clark, the longtime Amazon executive who took over as head of its global consumer business in January 2021, and who left his role just last month. After a version of the Wall Street Journal article published online, Amazon said in a statement that" We never seriously considered closing our private label business. And we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today." Hemant, what's your take on this one?

Hemant Kalbag: It's surprising. We talked about this earlier on the show about Kroger and then new loyalty program and how part of the benefits of the loyalty program and the membership are deeper discounts on their private label. Retailers are conditioned to drive volume to private label, and we all know why. It's a higher gross margin category. You typically, depending on the category, gain anywhere between 500 to 800 basis points off profit margin by moving from a national brand to a private brand. So it is surprising that they are moving away from it. It is a very core part of retail, right? And it's not that the industry as a whole is moving away from private label. In fact, emphasis on private label continues to be high. I think there was a little bit of a shift to national brands that were more trusted during the pandemic, because there was kind of consumer sentiment around that. So I'm surprised. I have a feeling this is more driven by poor execution. I don't know if any of you have shopped any of their private label products. I have crossed a few different categories and there's a marked difference in packaging, product, quality. And it was not very deeply discounted in my mind versus national brands either. So I think this is more a scaling back on one of the things that Amazon probably did not execute well, and they execute most things well. So I think that it's more that than a industry trend.

Anne Mezzenga: Right. Than them really scaling, truly scaling back, because they think that's what the right move is here. Jonathan, what do you have to say about this one?

Jonathan Sharp: So a couple of things. First of all, my cynical side is that they've got 240, 000 plus private label skews. They've got a bit of scope to play with and say that they're reducing their SKU camp. The other thing I was going to say is if you are a supplier to Amazon listening to this and you're thinking," Great, they're going to exit private label." The only thing I'd say is be very careful what you wish for because-

Anne Mezzenga: Right. Exactly.

Jonathan Sharp: ...that they'll then want to do is protect the entry point in the price architecture. And the pressure on MAP will only increase because they will no longer have private label to protect that entry point in the architecture. And it will be there other vendors who have to fulfill it. So just be careful what you wish for.

Anne Mezzenga: Yeah. Jonathan and Hemant, I completely agree with you. I mean, those are the two points that I saw in reading this too. Like, is it really truly because they're trying to reduce private label brands? Is it because the production costs they have in excess products that they're selling that they don't really need? And most importantly, they hold the keys to how much they're going to take from all of the retailers who are selling the same product. So if it's not worth it for Amazon to produce that product anymore and they can increase... Instead of 45% of the sale, they're taking 50% of the sale and it has more revenue coming in than time and resources going out. It's so easy for them to just adjust that lever. But Chris, what do you think?

Chris Walton: Yeah. I mean, I agree with everything everyone said. The point I would make though, that I think's important is I actually, I just am... I just think the story's bad. I just think it's bad journalism on the part of the Wall Street Journal again, which we critiqued a few... I think it was like a month or two ago too. Like if, as a journalist, you look at the language that's used to tell this story," Amazon considered cutting back their private labels." Well, I've considered many things in my life, Anne, like buying a sports car or dating a supermodel. But I'm about as far away from doing either of those things as humanly possible.

Anne Mezzenga: Right.

Chris Walton: So yeah, maybe they considered it in a boardroom discussion, but that doesn't mean they're going to do it. And so to me, it's like you guys said, they're just rationalizing it, which every retailer does at every point in time. It's a continuous process that they're always doing. So to me, this is a non- story, plain and simple, made to look like a story by a journalist that wanted the clicks. And I hate to say it, but it's true.

Anne Mezzenga: All right, you guys, we did it. We got through the five headlines. Let's get to our lightning round.

Chris Walton: Lightning round.

Anne Mezzenga: Hemant, the first question goes to you. Rebag announced that they're going beyond bags and that they will start selling shoes and outerwear. Hemant, if you could add one more thing to the list that Rebag is now going to be selling to get you to shop resale, what would that item be?

Hemant Kalbag: Yeah. I'm not a big fan of buying clothes and accessories on a platform like that.

Anne Mezzenga: Okay.

Hemant Kalbag: So my pick would probably be golf clubs. I feel like golf clubs are way overpriced. When the first year they come out, there's always short supply, but a year later they're like being sold for a 50% discount.

Anne Mezzenga: Is there a resale site for golf clubs?

Hemant Kalbag: Yeah. There's many.

Anne Mezzenga: Well.

Chris Walton: There probably is. Yeah. I'm sure somebody's got it. No, but Jonathan... I told Jonathan this question in advance of the show. And he predicted your answer. Jonathan, did you get it right?

Jonathan Sharp: No, I did not. I did not. Hemant, inaudible-

Hemant Kalbag: I know what.

Chris Walton: And what was that answer, Jonathan?

Jonathan Sharp: Maybe we should answer at the same time. Hemant was going to say watches. I'm sure he was going to say watches.

Chris Walton: Oh yeah. See. So yeah, yeah.

Anne Mezzenga: Well, they might actually have those on Rebag at some point in time. They do on the inaudible.

Hemant Kalbag: Well, they do on many sites and then we would have a discussion about watches, and it would make me look a certain way that I didn't want to look. But yeah, that was, to me, that would be the honest answer.

Chris Walton: Okay. Truth or not, it's very important on this show, Hemant. All right. So question number two, a Skittles lawsuit claims that the candy contains a toxin that makes them unfit for human consumption. Jonathan, what candy would you be devastated to find out was unfit for human consumption?

Jonathan Sharp: Well, Skittles is up there when inaudible sugar rush.

Anne Mezzenga: Same with Chris.

Chris Walton: Oh, inaudible.

Jonathan Sharp: But I'm going to go back to my youth. So I'm going to use a bunch of words that people won't understand. They're not candies, they're sweets where I come from. And there was this great sweet called Curly Wurly. I mean, what a brilliant name. Right? So it's a curly piece of caramel covered in chocolate.

Anne Mezzenga: Oh, yum.

Jonathan Sharp: When you chew it, it basically extends down to your feet as the caramel stretches. It lasts for hours. I'm sure it's probably got some kind of rubberized toxin in it, but I didn't care as a kid. It was fantastic.

Anne Mezzenga: Oh my God. That sounds so good. It sounds like an extra long Rolo or something.

Chris Walton: Yeah. Yeah.

Jonathan Sharp: That's exactly what it is.

Anne Mezzenga: Oh.

Jonathan Sharp: Covered in chocolate and you can inaudible. Right?

Chris Walton: You can stretch it. All right.

Anne Mezzenga: Curly Wurly.

Chris Walton: All right. Let's get some Curly. Let's get our Curly Wurly after the end of this show, Anne.

Anne Mezzenga: All right. Hemant, CVS Pharmacy has debuted a skincare center shop within a shop at three pilot locations, as the retailer continues to hone its beauty offerings. Hemant, what's a step or product not to be missed in your personal skincare routine?

Chris Walton: Be honest this time.

Hemant Kalbag: I know you guys may not be able to tell, but I'm actually 78 years old. So take note.

Anne Mezzenga: Hey, I got my pencils ready. What is it?

Hemant Kalbag: This is going to disappoint you, but the only skincare product I use is soap. That's it.

Anne Mezzenga: That's it?

Hemant Kalbag: That's it.

Anne Mezzenga: That's it. Any kind of like a special soap?

Chris Walton: I'm right there with him, actually. That's all I used, too.

Anne Mezzenga: You guys got to-

Hemant Kalbag: I like bar soaps. I don't like liquid soap. Irish Spring is my go- to brand, but works for me.

Anne Mezzenga: No sunscreen, you guys? Sunscreen?

Chris Walton: Well, sunscreen, I'll put on occasionally, but you know.

Anne Mezzenga: Daily. Daily.

Chris Walton: Well, yeah, inaudible-

Anne Mezzenga: Oh my goodness. All right.

Chris Walton: Irish Spring though, man.

Hemant Kalbag: I don't get out enough in life to need sunscreen daily. I'm glad inaudible.

Chris Walton: He's thinking and eating retail, Anne, every day. He doesn't need sunscreen. Top of the morning to you, Hemant. All right. In Texas, A& M's football stadium is licensing Amazon's Just Walk Out technology for its concession stands this fall. Jonathan, what item is a must have for you at any sporting event?

Jonathan Sharp: Oh, this one is simple. It's one of the things I never understood when I came to this country. Could we have beer in the fourth quarter?

Chris Walton: All right.

Jonathan Sharp: Can we just keep serving beer? Can we just keep the bars open? Why does stadium do that? Why would they close?

Anne Mezzenga: Because we have to cram as much drinking into the first three categories. It makes complete sense.

Jonathan Sharp: That's a straightforward, simple one for me.

Hemant Kalbag: Jonathan, let's be honest. It was caviar and champagne.

Anne Mezzenga: Yeah.

Hemant Kalbag: Come on.

Anne Mezzenga: They might have that at Just Walk Out. I don't know about Texas-

Hemant Kalbag: I was told, you have to be honest on this show.

Anne Mezzenga: That's right.

Jonathan Sharp: Well, look, Hemant, in your private owner's box, I don't know what they serve. I'm inaudible in my NASCAR races.

Anne Mezzenga: He's in the non-hole seats.

Chris Walton: Yeah. No offense to anyone down in College Station, Texas, but I doubt caviar and champagne are being served. But I imagine there's a few stadiums around the country that will do that. All right. Thanks for sticking with us today. Jonathan, if people want to get in touch with you guys, learn more about what A& M Consumer and Retail Group does. What's the best way for them to do that?

Jonathan Sharp: They should visit our website, which is alvarezandmarsal- crg.com.

Chris Walton: Awesome.

Anne Mezzenga: Excellent.

Chris Walton: All right. Well, that wraps us up today. A big happy birthday shoutout to Juno Temple of-

Anne Mezzenga: Oh, yes.

Chris Walton: Yeah, right. Ted Lasso.

Anne Mezzenga: Ted Lasso and The Offer, which is a great show that people should check out. About the making of the Godfather.

Chris Walton: Yeah. You're big into that.

Anne Mezzenga: Yeah.

Chris Walton: And of course, Cat Stevens. And one of Anne's favorite Minneapolis bread crushes, the one and only Josh Hartnett. You can see her inaudible.

Anne Mezzenga: I just saw him on the plane. My husband was watching a movie. I was like, is that Josh Hartnett?

Chris Walton: I don't understand Josh Hartnett. I've never gotten him. But anyway, I guess no one does anymore either because he's kind of irrelevant. But, and remember if you can only read or listen to one retail blog in the business, make it Omni Talk. Our Fast Five podcasts is the quickest, fastest rundown of all the week's top news. And our twice weekly news letter tells you the top five things you need to know each day and also feature special content exclusive to us and just for you. And we try really hard to make it fit within the preview paint of your inbox. You can sign up today at www. omnitalk. blog. Thanks as always for listening in. Please remember to like, and leave us a review wherever you happen to listen to your podcasts on YouTube. Chances are it'll be read here within the next few weeks. So get on that please. And also remember to use your promo code RBOT1950 to register for Groceryshop. That's R- B- O- T- 1- 9- 5- 0. And of course, as always, on behalf of everyone that participated in this podcast, be careful out there.

Anne Mezzenga: The Omni Talk Fast Five is a Microsoft sponsored podcast. Microsoft Cloud for Retail connects your customers, your people and your data across the shopper journey, delivering personalized experiences and operational excellence, and is also brought to you in association with the A& M Consumer and Retail Group. The A& M Consumer and Retail Group is a management consulting firm that tackles the most complex challenges and advances its clients, people and communities toward their maximum potential. CRG brings the experience, tools, and operator like pragmatism to help retailers and consumer products companies be on the right side of disruption. And Takeoff. Takeoff is transforming grocery by empowering grocers to thrive online. The key is micro fulfillment, small robotic fulfillment centers that can be leveraged at a hyper- local scale. Takeoff also offers a robust software suite, so grocers can seamlessly integrate the robotic solution into their existing businesses. To learn more, visit takeoff. com. And Sezzle. Sezzle is an innovative buy now, pay later solution that allows shoppers to split purchases into four interest- free payments over six weeks. To learn more, visit sezzle. com.

DESCRIPTION

In today’s Fast Five Podcast, A&M’s Hemant Kalbag and Jonathan Sharp joined Anne and Chris to discuss:

  • All the stats and figures from Prime Day
  • Whether Macy’s taking Toys R Us to all stores will have any real long-term significance
  • Kroger’s plans to expand its Boost membership program nationwide
  • The big (some might say massive) revelation from a Google exec that 40% of young people are using social media apps over Google to search for restaurants
  • And closed with a thoughtful critique of the WSJ’s report that Amazon has been “considering” exiting its private label business

There’s all that, plus male beauty routines, sporting event must-haves, and contaminated Skittles.

To learn more about Microsoft, visit: www.microsoft.com/en-us/industry/r…cloud-for-retail

To learn more about the A&M Consumer & Retail Group, visit: www.alvarezandmarsal-crg.com/

To learn more about Takeoff, visit: www.takeoff.com/

To learn more about Sezzle, visit: www.sezzle.com/

To register for Groceryshop, head to www.groceryshop.com

Plus, check out our Top 10 ranking in Feedspot’s 60 Top Retail Podcasts: blog.feedspot.com/retail_podcasts/

Music by hooksounds.com