Fast Five | Best Buy Gets Small, Amazon Price Matches Tesco, & Zara Blows Our Socks Off

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This is a podcast episode titled, Fast Five | Best Buy Gets Small, Amazon Price Matches Tesco, & Zara Blows Our Socks Off. The summary for this episode is: <p>Chris and Anne discuss Zara’s flagship store, Best Buy’s smaller stores, Glossier &amp; Sephora, Target’s "sortation centers," and Amazon price matching Tesco. Brought to you in association with <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></p><p><br></p><p>Key takeaways: </p><ul><li>[05:40] Discussing Zara's pay and go system, mobile fitting room reservations, and a parcel robot</li><li>[09:27] The biggest examples of surprise and delight in the Zara experience</li><li>[12:56] Best Buy's small format digital-first stores </li><li>[17:45] Glossier to sell its products through Sephora</li><li>[21:29] Target is expanding its fleet of delivery hubs</li><li>[26:03] Amazon plans to price match Tesco in its UK Amazon Fresh stores</li></ul>
Overview, trailer
00:38 MIN
Zara's pay and go system, mobile fitting room reservations, and a parcel robot
03:33 MIN
Biggest examples of surprise and delight in the Zara experience: fitting rooms, RFID, architecture, and security tags
03:08 MIN
Best Buy's small format digital-first stores
04:58 MIN
Glossier to sell its products through Sephora
03:41 MIN
Target is expanding its fleet of delivery hubs
04:31 MIN
Amazon plans to price match Tesco in its UK Amazon Fresh stores
03:30 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 28th, 2022. 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 in this pre- Omni Talk vacation version of the Fast Five. Chris, are you excited for vacation week?

Chris Walton: Yeah, I'm super excited. We're once again, embarking on the Omni Talk tradition of shutting down the office during the first week of August.

Anne Mezzenga: That's right.

Chris Walton: Because no one gives a crap about content during the first week of August, least of all what's happening in retail during this period of time.

Anne Mezzenga: Right.

Chris Walton: I'm excited. You're going someplace cool, I would say, in more ways than one.

Anne Mezzenga: Oh, yes.

Chris Walton: Why don't you tell the listeners?

Anne Mezzenga: I'm doing... You know the movie, The Holiday?

Chris Walton: Of course, I hate that movie with a passion.

Anne Mezzenga: With Cameron Diaz, and Kate Winslet, and Jude Law?

Chris Walton: Bring the hate mail, people. I hate that movie, but...

Anne Mezzenga: I think you might be alone in that.

Chris Walton: I can't stand that movie. It also brings back really bad memories, but anyway.

Anne Mezzenga: Okay, that's for a later podcast, I guess.

Chris Walton: Yes.

Anne Mezzenga: My family and I, we are house swapping with a family in Iceland.

Chris Walton: House swapping. Yes.

Anne Mezzenga: We are going to stay in their house in Reykjavik, and they're going to stay in our house in Minneapolis for a week.

Chris Walton: Wow, wow. How did that all come about? Actually, yes, how does one house swap, Anne?

Anne Mezzenga: Well, there's plenty of jokes here. Everybody go ahead, make your jokes.

Chris Walton: Please do.

Anne Mezzenga: No, you don't swap spouses that we're aware of yet, but maybe.

Chris Walton: I wasn't even thinking that, but yeah.

Anne Mezzenga: No, there's a site called Home Exchange that I found last year.

Chris Walton: Home Exchange, all right.

Anne Mezzenga: It's basically like Airbnb, but instead of swapping money in exchange for staying somewhere, you can open your house up to do a swap. We met the couple, they're already in Minneapolis. We met them this week. I'm super pumped. I think it's going to be really fun.

Chris Walton: What's on the agenda? I think puffins are on the agenda, right?

Anne Mezzenga: Okay.

Chris Walton: You're going to see some puffins.

Anne Mezzenga: Yeah. My five year old wants puffins, so we're driving three hours to go see some puffins and they better be fricking amazing puffins for that drive.

Chris Walton: Hey, any puffins are amazing in my book.

Anne Mezzenga: Yeah. Some snorkeling at the-

Chris Walton: Snorkeling.

Anne Mezzenga: ...Where the continental divide comes together, the tectonic plates come together. I don't know. Lots of exciting stuff. We're packing our own food though. I've been advised to bring our own food because stuff is really expensive and my kids might not like it.

Chris Walton: Yeah. It kind of feels like the cold version of Hawaii to me. It's this cool island, beautiful locale, but you can't get food, so it's really expensive and you got to be thoughtful about that.

Anne Mezzenga: Yeah. I'll report back. We'll see what all of Reykjavik and Iceland's retail wonders have to unfold for me.

Chris Walton: Right, right, right, right. Okay.

Anne Mezzenga: You never know. I could be posting a video of a gas station with checkout free technology in Iceland.

Chris Walton: I have no idea what we're going to see from your trip, but God, I'm going to be tuned in. All right. Well, let's get to this week's show. This week's review comes to us from M. Sheerer. Here is what M. Sheerer had to say." Five stars again, Anne. Highly recommend. Chris and Anne provide terrific insight into a variety of new and innovative technologies impacting retail. Part of my regular listen list every week."

Anne Mezzenga: Aw.

Chris Walton: Aw. Yes. I love that. It's so good. So good. They're rolling in lately.

Anne Mezzenga: Yeah.

Chris Walton: They really are.

Anne Mezzenga: I've been putting a lot of pressure on people like," You like us? You've been listening? Leave us a review."

Chris Walton: Yeah. Right? Come on.

Anne Mezzenga: I'm not even going to be nice.

Chris Walton: How about a little something for the effort?

Anne Mezzenga: I know. I'm not even going to be nice anymore about it. Please leave us review. You guys, just do it please. Tell us what you think.

Chris Walton: But you get your Apple handle in there every week.

Anne Mezzenga: Yes. We want to hear what you think. Heart the podcast on Spotify, on Google, Amazon music. You are on the platform already. Hitting listen, just leave us a review.

Chris Walton: That's right, Anne.

Anne Mezzenga: We love it.

Chris Walton: All right, Anne. Today's Fast Five is brought to you again with the help and support of our good friends at Groceryshop.

Anne Mezzenga: Oh, yeah.

Chris Walton: Are you a retailer brand thinking about attending Groceryshop this year? Well, don't even think about doing so without using our promo code specifically for Omni Talk listeners.

Anne Mezzenga: Yes.

Chris Walton: Just go to groceryshop. com and enter promo code rbot1950. That's R- B- O- T- 1- 9- 5- 0 for your special discounted rate.

Anne Mezzenga: RBOT1950 kind of sounds like one of the things from Stranger Things like," We have to get to the RBOT1950 in order to make sure that Eleven can time travel to the mind."

Chris Walton: Wow, you're full on dorking out in this podcast.

Anne Mezzenga: I know.

Chris Walton: I love it.

Anne Mezzenga: I know.

Chris Walton: I love it. No, it does. It feels like it's perfect for us too.

Anne Mezzenga: Yes.

Chris Walton: I love that they made that code for us, RBOT1950. What the heck? What is it? What's the George Lucas movie THX, whatever thousand? I don't remember.

Anne Mezzenga: You've gone nerd beyond-

Chris Walton: Gone beyond you.

Anne Mezzenga: ...what I can comprehend right now.

Chris Walton: All right. Well let's get back to it. Let's get this back on the rails. In today's Fast Five, we've got news on Best Buy's new 5, 000 square foot store concept.

Anne Mezzenga: Yes.

Chris Walton: Glossier expanding into Sephora, Target's plans to build more sortition centers, Amazon Fresh price matching Tesco in the UK. But first we take off with our very own Omni Talk headline and that is our recap of our trip to Madrid to see Zara's newest flagship store and...

Anne Mezzenga: That's right, Chris. For all you loyal Omni Talk fans up there, the video is now live on YouTube and will be in the show notes as well, which gives you all a step by step look through what is in our opinion one of the best, if not the best-

Chris Walton: 100%.

Anne Mezzenga: ...omnichannel retailing experience is out there. So some important things for you all to watch in the video if you haven't seen it already. We demo Zara's pay and go system. Chris buying the shorts that I think he's got on today. Zara's mobile fitting room reservation system and also something called a parcel robot from Clevron that automates in store pickup in just seconds. But Chris...

Chris Walton: Yes, Anne?

Anne Mezzenga: What are your key takeaways?

Chris Walton: What are my takeaways?

Anne Mezzenga: What are people needing to get out of this video? Because it's been blowing up on social. What are your thoughts?

Chris Walton: Yeah and I think it's important for us to cover this because, in social with the video, you only have so much time to get across the points you want to make, and our job and what we like to do is actually go a little more in depth.

Anne Mezzenga: Yeah.

Chris Walton: Particularly in the podcast format. I think people are a little more apt to listen to that type of thing. For me, the more I'm away from it... God, we were there, what? 10 days ago now? Or something like that?

Anne Mezzenga: Only 10 days. It feels like longer.

Chris Walton: I have no idea. I've lost of track of time, but the more I get away from it, the more I just love it. There's three reasons why for that. I think one, if you look, it's just a faster Zara experience.

Anne Mezzenga: Yep.

Chris Walton: Particularly by way of pay and go, which I love, and the parcel robot. Those are drastic step changes over the Zara experience that requires you to wait in long lines. Second thing I'd say the use of RFID is so palpable throughout the store.

Anne Mezzenga: Absolutely.

Chris Walton: That they've only scratched the surface on all of its capabilities in the long run, particularly it's used in the fitting room too, which I know is something you love. Which I'm anxious to see where they go next with that because I think it could be super cool.

Anne Mezzenga: Me too.

Chris Walton: And then third for me, it really was omnichannel. I particularly call it the parcel robot for that because people should know this. Those orders we placed, we placed from the US.

Anne Mezzenga: Right.

Chris Walton: Via their mobile app.

Anne Mezzenga: Yeah. And there, We were placing them all the... you could place them anywhere. You could be anywhere in the world.

Chris Walton: Right. But their mobile app worked in the United States to coordinate pickup in their flagship store in Madrid, which is something honestly kind of unique and kind of really special. It worked in seconds. We went there and the video is real.

Anne Mezzenga: Right.

Chris Walton: You scan the barcode. That is how quick the package comes out. It's amazing.

Anne Mezzenga: We didn't get to show in that video either, but we ordered shoes, we ordered all sorts of shapes and size packages.

Chris Walton: Yeah, I think you ordered cologne.

Anne Mezzenga: Yeah. Everything can come in and out.

Chris Walton: Maybe a hint to me, Anne. I don't know that I needed something to smell better.

Anne Mezzenga: Perhaps. I really think it's important that you call out the RFID capabilities too, Chris. I'm sorry all of my friends at Lululemon and Nike and all of you I've been sending this video to, because you already have the RFID enabled experiences. This should just be another step in your omnichannel process. I cannot tell you what an improvement on the overall store experience it had, especially the fitting rooms. I think being able to just turn something like this on dramatically improves the experience. I would say, for me, the number one thing was-

Chris Walton: The lines.

Anne Mezzenga: The lines. Yeah. Everybody that I talk to, every single person who's a Zara shopper. When I tell them that we went on this trip, I'm like, what's your number one friction point about shopping at Zara? They're like, it sucks. I don't know my size. I have to order things online. I get to the store, there's an hour long line, or I have to try on stuff in the middle of the store. That stuff is all eliminated and executed perfectly.

Chris Walton: Which is a big deal at Zara. You're talking 10, 20 minutes of time savings, at least.

Anne Mezzenga: Right.

Chris Walton: Because we stayed in one Zara store where we're in line for 30 minutes to take back product and buy some stuff. So, all right, Anne. But we can't just leave it at that because our good friends at the A& M Consumer and Retail Group, and rightly so, want to push us a little bit on our analysis.

Anne Mezzenga: Okay.

Chris Walton: I think this is great and this is why I love working with these guys. So their question, they put you on the spot question this week is as follows. Given A&M CRGers Hemant Kalbag and Chad Lusk were on the fast five in April when this headline first broke and was discussed.

Anne Mezzenga: Oh yes.

Chris Walton: We wanted to follow up given your live shopping experience. What were the biggest examples of" surprise and delight" that exceeded expectations as well as, and this is the part I love, surprise and disappoint that still need work between what you read back in April to what you saw in person recently?

Anne Mezzenga: Okay. Surprise and delight. We kind of covered this already.

Chris Walton: Yep.

Anne Mezzenga: I would say fitting rooms. Seeing just how... I didn't hear about how you could get up to the fitting room. They're using RFID to determine exactly how many things I had and then assign of fitting room right away. Just the fact that the reservation actually worked up there-

Chris Walton: Right.

Anne Mezzenga: ...and the room was ready, was super slick. The only thing that I think I would change about this experience or that I was disappointed about is the returns process for the pickup. They do have an online returns kiosk, but it's in a separate spot. So I guess I'd like to see Zara evolve the concept a little bit around, okay. I'm picking up my parcel here. Do I have two fitting rooms right there? Just curtains reserved for try on? Then can I submit a return right in the same spot? So it's all kind of like one experience, not disjointed throughout the store.

Chris Walton: That's a really good add in.

Anne Mezzenga: That would be my only critique I guess.

Chris Walton: I didn't think about that. Yeah, having the fitting room architecture be part of like the parcel robot pickup experience to help in aid in that, which they're already trying to clue you into taking the stuff out of packages for sustainability reasons.

Anne Mezzenga: Right. What about you though? What would you-

Chris Walton: My take was, I think I've already covered the things I love. Like pay and go and the parcel robot, blown away. The parcel robot too, for those that we've said this on social media, but we couldn't believe how many people were using it.

Anne Mezzenga: Oh yeah.

Chris Walton: We couldn't even shoot video. It was just that much a part of the average Zara customer in Madrid's experience.

Anne Mezzenga: In two months, three months. This has only been live since mid April.

Chris Walton: Well, literally there was somebody coming up to it every few seconds. It was nuts. But for me, the thing that, when I say how could it be better?

Anne Mezzenga: Yeah.

Chris Walton: The thing about the pay and go experience where I still have to take off the security tag, that is still problematic to me. It's almost akin to me of the, Hey missed item in the bagging... skipped item in the bagging cart or whatever the hell the phrase is, which I'm not saying right.

Anne Mezzenga: Remove item from bagging area.

Chris Walton: Yeah. It's the same feeling that I had. So I'm like, this has got to evolve. So for my money, what I would like to see is one of two things, either the way the tag can fall off with the scan. Once I purchase it, the tags just immediately fall off, which I know people are working on that. Or I'd love to see somebody go all in on RFID and say, let's have a controlled entry and exit where I either get in with my app or get in with my credit card. We take those tags out the equation altogether. We use overhead RFID array to monitor the inventory going in and out of the store. All the savings that you're going to get from tagging probably could pay for that to a large degree.

Anne Mezzenga: Totally. Yep.

Chris Walton: That's what I want to see next. I don't understand for the life of me, why no one in apparel in a 2, 000 3,000 foot store... this is 82, 000 square feet, Anne, for perspective.

Anne Mezzenga: Yeah, four floors.

Chris Walton: Why has no one tried this. Gap in your concept stores in San Francisco, try this.

Anne Mezzenga: Right. I agree.

Chris Walton: Just do it.

Anne Mezzenga: I think that's a great idea.

Chris Walton: All right. Let's keep moving. Best Buy has unveiled what it is calling its first ever small format, digital store. Digital first store to be exact.

Anne Mezzenga: Yes.

Chris Walton: According to a Best Buy press release, the store is located in North Carolina and here is what it entails. The store is drastically smaller than a typical Best Buy at only 5, 000 square feet. It features a curated selection of best in category products from home theater and audio computing, headphones, wearables, fitness, cell phones, cameras, smart homes, small appliances and more, the obligatory statement. It has an area for geek squad consultation. It will not carry major appliances and other large products though, but all of those can still be ordered online for pickup at the store, which is an important point. But most notably, it sounds like the store will operate like a scan and go guide shop, whereby items on the floor will be for display only, similar to how Amazon style works.

Anne Mezzenga: Yep.

Chris Walton: When a customer sees something they like, they can use their phone to scan a QR quote on any product price tag and send their orders to be picked up at an order pickup counter.

Anne Mezzenga: Yes.

Chris Walton: What is your take on this latest effort from the blue shirts?

Anne Mezzenga: I love this.

Chris Walton: You do?

Anne Mezzenga: So much. Yeah.

Chris Walton: I kind of think I do too.

Anne Mezzenga: So I think it's super smart. One of the best things about this that I absolutely love is the lockers on the exterior so that you have 24/7.

Chris Walton: Oh I missed that. Is that a-

Anne Mezzenga: They're doing lockers out there. So like the ones we saw at Luxer One at the pilot store, kudos to Best Buy for recognizing that this is 100% providing a 24/ 7 experience for your customers and then shrinking the store footprint. You don't need to have that giant store for people to get what they want. I think that I'm curious. Well, I love that they're scan and go too, so not only do you scan the barcodes on the higher end prices, but they're having chargers and all the quick things. You can scan and go and get in and out.

Chris Walton: Yeah.

Anne Mezzenga: I think that, like Zara, Best Buy with this store has figured out how to truly, I hate this sentiment, but meet the customer where they are.

Chris Walton: Right.

Anne Mezzenga: But they are doing that. They have figured out how to give you every single possible opportunity you want. If you want consultation from geek squad, if you need help, if you just want to go in and learn about what the best headphones are that you should invest in, the computers, whatever, that is the purpose of the store, or I can get in and out and not even have to deal with the store. I love it. Only question I have.

Chris Walton: Yeah.

Anne Mezzenga: How big is the actual store footprint? Is 5, 000 square feet just the front of house and what's going on in back of house?

Chris Walton: How does the back of house work?

Anne Mezzenga: How does back of house work? Because it's not important for the customer necessarily, but if you're going to be able to store and I can ship a refrigerator or a large TV to the store, how much is warehouse, how much is front of store? Just a nerdy retail geek question, but I'm curious because it depends on what size footprint they can go into overall.

Chris Walton: It's an awesome question, which is why it's a really cool experiment too. I give them kudos for it. They're doing it slowly and smartly, like one store, which I'm going to talk about in a second, is a juxtaposition that is in stark contrast to some other retailers out there. But you're bringing up a great question because when you have this model where you're acting like a vending machine, essentially, that puts a big onus on you to get those products from that back room to that customer really damn quickly.

Anne Mezzenga: Yeah, right quick.

Chris Walton: So yeah, the back house probably has to work a little bit different than your average store, but yeah, it'll be fun to watch and check out at some point. We'll have to get out there. The other thing I like about this story though, and I alluded to a little bit, is I like what they're doing in relation to like how Kohl's and Macy's are attacking the small store.

Anne Mezzenga: Okay. Tell me more.

Chris Walton: Because this is truly different. It's not just a scale down version of a Best Buy store.

Anne Mezzenga: Totally.

Chris Walton: That's basically what Kohl's and Macy's are purporting to do, which confirms to me that their strategies are just like a wing and a prayer at this point. They just want people to buy into shopping a smaller box, whereas Best Buy's flipping the script, offering a quite comparable assortment when you get down to what's only carried because you don't need the sales stock on the floor anymore.

Anne Mezzenga: Right.

Chris Walton: So mazletov to them for boldly going where few others would dare and doing it in a stepwise progression, which is always what I give Best Buy credit for. Whereas Coles and Macy's are saying, we're going to open hundreds of new stores, even though we have no data that shows that anyone actually wants that in the world.

Anne Mezzenga: Right.

Chris Walton: I have no idea where any of that data is. So it's just so mind boggling to me, especially in comparison to Zara, like you brought up last week. Why aren't you trying to do anything like what we're talking about?

Anne Mezzenga: I don't know.

Chris Walton: Any of these smaller stores.

Anne Mezzenga: I still don't know.

Chris Walton: Instead of just saying like, oh, you can have 20,000, 10, 000 square feet of a Macy's experience, which generally speaking, no one wants, or less people want more and more every day. So anyway, rant over, but I think it's an important call out.

Anne Mezzenga: All right. Let's move on to headline number three. Glossier is planning to sell its products through Sephora, Chris. Your cloud paint you can now get at Sephora this fall. According to CNBC, beginning next... oh, sorry. I'm wrong already.

Chris Walton: Oh, you are.

Anne Mezzenga: Beginning next year.

Chris Walton: Next year. Yes.

Anne Mezzenga: Customers will be able to find Glossier's famous boy brow and cloud paint makeup products, along with several others at the LVMH owned Sephora. The move marks Glossier's first ever retail partnership and comes shortly after founder, Emily Weiss stepped down as chief executive officer and handed the reins over to Kyle Lee. Chris, are you excited about this?

Chris Walton: I'm curious. You probably thought I was bummed by this, right? I'm curious. I have no idea what your take is actually, but I actually love this move.

Anne Mezzenga: Yeah.

Chris Walton: When I first read it, I was kind of like bummer a little bit, but I think it's the right move. As much as Glossier is a great brand, and we've talked about this a lot on the show. It's been a while since we've talked about it though, so I'll bring it up again, which is Glossier at its core is still a CPG as opposed to being a retailer.

Anne Mezzenga: Yep.

Chris Walton: So it makes sense to go this route. The other thing I like about it, it doesn't prevent them from still opening their own stores, particularly in great locations.

Anne Mezzenga: Right.

Chris Walton: Like where they are now in New York, I think-

Anne Mezzenga: LA.

Chris Walton: LA, Miami.

Anne Mezzenga: Austin.

Chris Walton: Also keeping that great direct relationship with their customers, which is what they're famous for. They're fervent fans. So to me, it's just a smart diversification play with what on the surface looks like the right best partner for that too.

Anne Mezzenga: Totally.

Chris Walton: If I take anything away from this in following Glossier for the last three or four years, like we have, it's that DTCs going forward, especially those that lean more into being a CBG versus our retailer, need to stop buying into the whole air quotes, Joey Tribiani, we don't want to do wholesale BS that's out there that we heard so exhaustively. Honestly, you still hear it too.

Anne Mezzenga: Yeah.

Chris Walton: Every new DTC always says that because they think they're going to be different and they're going to... but no, you're not. So just make this part of your long term strategy from the get go. It's a smart move.

Anne Mezzenga: Totally. Yeah. I completely agree with you. I think Sephora is absolutely the right retail partner to do this with too. It's the higher end experience. I think those Sephora associates will still be able to uphold the Glossier experience. That is another big component of going to the stores is you have the pink jumpsuits that are there helping you, that are passionate about the product.

Chris Walton: Right.

Anne Mezzenga: I think Sephora as a partner makes complete sense. They'll be able to kind of maintain the brand, which is the biggest concern of all these DTCs is, if I go wholesale, I lose the brand. I don't think they will in Sephora. Even with the stores that they've been opening this year, I think like you said, in order to reach the growth that they need for people in middle America to be able to have access to their product for them to continue to grow, to build more stores, to keep doing these very experiential stores that they're interested in doing, they've got to get to more people. More people have to be interested to want to travel to these destinations.

Chris Walton: Right. 100%.

Anne Mezzenga: I think the last point I'll make is Glossier's products are premium products. So if you're going to spend$ 17 on a boy brow, you want to try it. You want to experience it.

Chris Walton: Especially if you want to increase your reach.

Anne Mezzenga: Exactly. Even the best TikTok influencers still make it hard to get over that ledge, to spend that amount of money with having a friction filled returns experience also, having to bring it to somebody else versus being able to now go to Sephora and quickly make that swap out or try before you buy. So I love it.

Chris Walton: 100%. That's a great, great point to close on. All right. Well headline number four is that Target is yet again expanding its fleet of delivery hubs.

Anne Mezzenga: Yes.

Chris Walton: Building on a story that we at Omni Talk-

Anne Mezzenga: I feel like we need the ticker, beep beep beep, breaking news.

Chris Walton: Yes, but we did first break this story nationally last year, and kudos to you for actually keying in on it. But CNBC is now reporting that Target will open three more sortition centers, two in Chicago and one in Denver, to cut delivery costs and get online purchases to customers faster. For those of you that will recall, these sortition centers, again, according to CNBC receive boxed up online orders from storage twice a day. Packages going to the same town or nearby neighborhoods are then batched together to get more of them to customers a day after the order is placed and a growing number of the sorted packages are then delivered by contract workers who drive for Shipt. Some are also sorted and delivered by national carrier partners, such as FedEx, generally to further away addresses like another Metro area or state. Total count of sortition centers will now be at nine, with these locations joining sites in Minneapolis, Atlanta, Philadelphia, Dallas, Austin, Texas, and Houston Anne, you fought really hard for this story this week. Why? Tell the audience why?

Anne Mezzenga: Because Chris, I think it's important for the retailers and brands listening to this to see that Target is doing this differently than all the other retailers in the space. They are keeping this completely homegrown within their Shipt brand. They're not testing with like 10 other third parties. Well, officially. I know we saw that some people are-

Chris Walton: There's a lot of players that play there though. Yeah.

Anne Mezzenga: There's a lot of players that are kind of trying to work around this, but they are constructing. They got this entire old Sears building to allow their whole process and approach to sortition centers to unfold. The Shipt drivers are driving their cars in next to FedEx trucks. Targets talking about investing in their own delivery vehicles now. I think that this is a model-

Chris Walton: Let's be clear, their own delivery vehicles for Shipt drivers.

Anne Mezzenga: For Shipt drivers. Yes.

Chris Walton: The Shipt drivers they'll still contract, but they'll give them the car to drive, the vehicle to drive, right?

Anne Mezzenga: Yes. That's what we assume here based on what the article or the statement from Target released. It's so different than anybody else's approach. We are not seeing anybody else take this on completely in house without another few tests going on in the background. So I also am curious, we don't hear a lot yet about what kind of automation they're going to be using, if they're using automation at all to kind of pack and ship these orders. So I'm curious what that looks like. Or I would love to get a look inside to see exactly how they're going to be able to expand this and scale and to continue to get faster, especially as they build up more deliveries. Right now they're packing those shipped drivers cars as full as they can, but once they start giving them delivery vans, how are they going to continue to do this more quickly?

Chris Walton: Yeah. I agree with you. I would absolutely love to get a look inside these buildings. I think that's something that's just been on my mind and in your mind too, for a while now. The part that I want to just make sure that we expand upon too, I think there's a lot of people peppering the edges with this idea. You know Amazon's doing something similar. Kroger I'd say is doing something similar with their relationship with Ocado and their hubs, which we've talked or their spokes or whatever the hell they call it, which we've talked about ad nauseum. Walmart's been rumored to be testing things around this idea. But the point that you bring up I think is really good, is Target is the only one as of right now that is using their own third party gig delivery service, which they own, which is Shipt, and using this process to make those drivers more efficient in the long run. That's really important. But at the end of the day, the way I summarize this for me is I think it's a smart interim step that retailers are going to start taking between centralized fulfillment, the large centers, and the micro fulfillment idea. I almost want to coin it as medi fulfillment, M- E- D- I, because that's what it is. It's like this middle stage fulfillment center that are bigger.

Anne Mezzenga: Sure.

Chris Walton: Can be properly located, and it just makes sense, especially if you can scale gig drivers to the degree that you're talking about, which you don't even necessarily need to own them to do this.

Anne Mezzenga: Right.

Chris Walton: You could have any of the delivery gig services working with you in this way to help defray the cost and then save money. The other thing, the last point I make is, this has got to be the brainchild of Arthur Valdez, the chief supply chain officer in Target. I love anything that man does. Am I biased? Yes, I am. I just love the guy and would go to the wall for him. But yeah, that's kind of my take, Anne.

Anne Mezzenga: All right. Headline number five, Amazon has said it plans to price match Tesco within its UK Amazon Fresh stores. The news comes by way of the Guardian, which said that Amazon Fresh started its Tesco club card price match campaign this past Monday matching and freezing hundreds of prices in line with discounts by the UK supermarket giant. Russell Jones, the director of Amazon Fresh said he hopes the pricing campaign will show how good our value is when compared with competitors. Chris.

Chris Walton: Yes.

Anne Mezzenga: Are you in support of the story? You were not quite sure when we talked about it earlier.

Chris Walton: Yeah, you're right. You opened my to this story too. Yeah. Kudos to you this week because I was like, eh, what? We talked about Amazon pricing a lot, especially in Fresh stores, but I think you hit on something, which to me there's a new wrinkle that I'd never thought about before. That's price matching actually is a weapon in and of itself from a data standpoint.

Anne Mezzenga: Elaborate.

Chris Walton: So by that, I mean customers come in and essentially they come in and they tell Amazon, I want to price match this product. So by doing that action, Amazon now knows something they didn't know before, which is which items their customers care the most about, which means Amazon can match their prices in the moment. But more importantly, they can catalog that information and then use it to their advantage in the future to go really aggressive on price, on the items that people care about. That's really important when you start thinking about Amazon Fresh across the Atlantic, where electronic shelf labels are not as prevalent in grocers.

Anne Mezzenga: Right.

Chris Walton: So they can pretty much say I'm going to change prices now on you on your items that you care about. Oh, you're a week to two weeks out on price change, because you're still using physical labels. F you, we're done, and that's the way it goes. So the price matching aspect of that is really important. I can't wait to see it come out over here too, because it gives them tremendous advantage.

Anne Mezzenga: Yeah. I think that the key point here for me was that the winner is going to be the consumer here across the board. They already know. It's already natural behavior to us when we're out shopping somewhere. If we see something we like, to go to Amazon and see how much it is, and usually Amazon can beat the price of wherever it is that we're shopping. I think this now tells the consumer that these new Amazon Fresh stores, especially as they start to expand in the US, are going to have the best prices all of the time, because they are matching other competitors prices. I love your point about just the visibility that this is going to give Amazon about what other products their consumers are interested in and what other competitors pricing is. They can then easily change them. I think Amazon Fresh here I imagine is going to continue to use electronic shelf labels across the board to continue to be able to update this in real time.

Chris Walton: Oh yeah, for sure.

Anne Mezzenga: But the key thing here is that Amazon, with this ability, has solved cheap, fast. And now I'm curious to see if they'll be able to do the cheap, fast, good Venn diagram. Will they be able to get up to what consumers expectations of a grocery store are, especially in the US. Will it be good? Will they be satisfied with the products that are on the shelves? I think they are, and I think that is a killer combo for Amazon.

Chris Walton: That's a great point. Lots of grocers have come and tried and it ultimately comes down to the experience of the store itself. More so even in the pricing and the ease of shopping when you talk about groceries, so that's the big thing. But yeah, you're right. They've got two of them essentially figured out.

Anne Mezzenga: Yeah.

Chris Walton: And now the question is how long is it going to take them to make a really good merchandised experience for shopping grocery? All right, Anne. Let's do the lighting round.

Anne Mezzenga: All right, Chris. Question number one. McDonald's has free food deals every day this week. Did you know that?

Chris Walton: I did actually. Yes.

Anne Mezzenga: Have you gone?

Chris Walton: No, I have not.

Anne Mezzenga: They are also, which I don't think you do realize, dropping a new clothing line from Kid Cudi. What is your McDonald's order these days? And can you name a single Kid Cudi song?

Chris Walton: I'll take the latter part of that one first. F no, no way can I.

Anne Mezzenga: I didn't think so.

Chris Walton: I think I was the one who pronounced it cutie a while back.

Anne Mezzenga: Yes.

Chris Walton: Even this morning, I had no idea how to pronounce his name.

Anne Mezzenga: Not kid cutie. That's not as street as Kid Cudi, but whatever.

Chris Walton: It works for me, but my go- to is and will always be the Big Mac.

Anne Mezzenga: Okay.

Chris Walton: Chargers through and through. All right. This weekend, I saw the greatest bumper sticker of all time, which read, honk if you would rather be watching the 1999 cinematic masterpiece, the Mummy starring Brendan Frazier and Rachel Weiss. It got me thinking, in honor of his current Brenaissance, which is a real thing. Look it up.

Anne Mezzenga: No.

Chris Walton: What are your top three movies starring Brendan Frazier in ascending order of importance?

Anne Mezzenga: Well, none of them are that important because I couldn't remember all of the movies that he'd been in.

Chris Walton: He's been in so many good movies.

Anne Mezzenga: But then I looked him up. Okay. So Airheads would be three.

Chris Walton: Okay.

Anne Mezzenga: Crash would be number two. And number one, Encino Man man wheezing the juice forever.

Chris Walton: Oh, I've not seen that. I've got to see that.

Anne Mezzenga: I cannot believe you've never seen and seen Encino Man.

Chris Walton: I've got to watch them this weekend.

Anne Mezzenga: So good.

Chris Walton: I'll report back.

Anne Mezzenga: All right. Chris, SoulCycle started a program they're calling F it, let's ride together, which allows a limited number of new soul cycles to exchange their Peloton bikes for 47 free SoulCycle classes. Chris.

Chris Walton: Yes.

Anne Mezzenga: Would you give up your covid purchased Peloton for this offer?

Chris Walton: Oh God, 100% in a heartbeat. In a New York minute, Anne. I wouldn't even think twice about it, though my wife would probably absolutely murder me because she's full on drinking the Peloton Kool- Aid and she knows what flavor is. It's full on tropical punch too.

Anne Mezzenga: Oh my gosh.

Chris Walton: Yeah. But I would get rid of that thing instantaneously.

Anne Mezzenga: She would murder you.

Chris Walton: Yeah, she would. She would kill me. All right, Anne, last one. It turns out the potentially dangerous chemical compound and Skittles that we discussed last week is also available in many other products as well. Which of the following titanium oxide laced goodies would you least want to go without? Lucerne certain cottage cheese, which is really gross, Chips Ahoy cookies or the always fun on Halloween Ring Pop?

Anne Mezzenga: I almost said Lucerne cottage cheese, actually. I didn't think that would be so gross to you, but it definitely is. I was disappointed to learn about the dairy products.

Chris Walton: It's gross to me that's in cottage cheese. That's disgusting.

Anne Mezzenga: Yes, for sure. But actually the number one thing that I also... because I had to read this list to my children to tell them why I would never allow them to have any of these things ever again. The number one thing that I was sad about, Trolley sour gummy worms.

Chris Walton: Oh God.

Anne Mezzenga: Oh my God.

Chris Walton: You like gummy worms?

Anne Mezzenga: The bright crawlers, like the sour ones. Oh my God. I love those, but no more.

Chris Walton: Gummy worms are my gravy. All right. That wraps us up. Happy birthday today to Sally Struthers, Scott inaudible of 60 Minutes and Jesse Spano turned Nomi Malone herself, Elizabeth Berkeley. Remember, if you can only-

Anne Mezzenga: I'm so excited.

Chris Walton: Oh my God, we've lost it. If you can only read or list the one retail blog in the business, make it Omni Talk. Our Fast Five podcast is the quickest, fastest rundown of all the week's top news. And our twice weekly newsletter tells you the top five things you need to know each day and also features special content exclusive to us and just for you. We try really hard to make it all fit within the preview pane 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 podcast or on YouTube. Remember, if you're planning to attend Groceryshop and you're a brand or a retailer, use our promo code, rbot1950 to register for Groceryshop that's RBOT1950. And of course, as always 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 an 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 beyond the right side of disruption. And Take Off. Take Off 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. Take Off also offers a robust software suite so grocers can seamlessly integrate their robotic solution into their existing businesses to learn more, visit takeoff. com. And finally Sezzle. Sezzle is an innovative buy now pay leader 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 Omni Talk Retail Fast Five Podcast, sponsored by Microsoft, the A&M Consumer and Retail GroupTakeoffSezzle, and Groceryshop, Chris Walton and Mezzenga:

  • Give an in depth review of Zara’s new flagship store in Madrid
  • Laud Best Buy for its new small store concept, especially in comparison to Kohl’s and Macy’s
  • Break down their lessons learned from Glossier’s move into Sephora
  • Shine light on Target’s continued expansion of its “sortation centers”
  • And close with another look at why Amazon Fresh price matching Tesco is another absolutely baller move when it comes to its long-term price positioning

There’s all that, plus Peloton trade-ins, Big Mac Attacks, and the Mount Rushmore of Brendan Fraser movies!