Fast Five | Target’s Earnings, Amazon’s QuikTrip, & Walmart’s Paramount Out Of A Molehill
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 August 18th, 2022. I'm your host Anne Mezzenga.
Chris Walton: And I'm Chris Walton.
Anne Mezzenga: And we are just back from a trip to the Fleet Feet store in the south loop of Chicago, ready to discuss all the top headlines that made waves in the world of omnichannel retailing this week. Chris, did you notice how seamlessly I said Fleet Feet store?
Chris Walton: Fleet Feet, yes. I mean, that was amazing. And believe me, that is not easy to do.
Anne Mezzenga: No, I've had a lot of struggles over saying that the last 48 hours.
Chris Walton: And that read, you're so energized this morning too. I couldn't believe it.
Anne Mezzenga: Well, I'm surprised, but I'm going to roll with it.
Chris Walton: I'm impressed. Yeah, but we went to the Fleet Feet store, we shot some video, we're going to have that for you shortly. Shot some video of Amazon's new just walkout technology at Hudson news in the Chicago midway airport too.
Anne Mezzenga: Yeah. Checked out the Lululemon experiential store. I made Chris take a class up there. But it was amazing. I loved it.
Chris Walton: Yeah you did, that was like your Mecca, that was like your Mecca pilgrimage.
Anne Mezzenga: Oh, I'll hang out in that store all day.
Chris Walton: But yeah, we're a little road weary, but we're ready to rock and roll. And actually we have two also road weary guests today, because back for their regular monthly appearance on the Fast Five are our guest host from the A&M Consumer and Retail Group. I'm pleased. Introduce you again today, Abhinav Chandra and David Brown. How are you guys both this morning?
David Brown: Doing great. Looking forward to it Chris.
Abhinav Chandra: Same here.
Anne Mezzenga: Yeah, you guys are troopers. I mean, this is going to be quite a primo show today with all of us just still so passionate about talking about all the retail headlines, but also very tired from our jobs, helping and intersecting with other retailers in the industry
Chris Walton: That's right, David's flight was canceled last night, Abhinav is just back from Australia. So we're all world travelers here where we're ready to go. But why don't you guys start off by telling the audience a little bit about yourselves, giving your background.
Anne Mezzenga: Abhinav, let's start with you.
Abhinav Chandra: Hi, my name is Abhinav. I'm a managing director at Alvarez and Marsal's Consumer and Retail Group. Have 15 years experience in retail, started at McKinsey's retail group worked at Amazon and now I'm a managing director at A& M's CR Group
Anne Mezzenga: Excellent. David, tell us about you.
David Brown: Yeah. Thanks Anne, very similar to Abhinav, grew up at Kearney and McKinsey, a little bit of retail banking before that. Do almost all of my work in luxury, in beauty, really working across the retail value chain.
Anne Mezzenga: Exciting. We've got some topics to cover with both of you today. We're going to need your most insightful opinions on today.
Chris Walton: Yeah, exactly right. And I got to say this to you, I got to give credit where credits due. David has the best flow of anyone in the A&M Consumer Retail.
Anne Mezzenga: I was going to say,
Chris Walton: He's got the best mane, he does, he really does.
Anne Mezzenga: And skin David, I feel like you definitely work in luxury beauty. I can tell. I was like," Mm- hmm, I see where this is going." Abhinav, you have that Australian glow.
David Brown: Keep my wife happy too.
Chris Walton: Just laid back Abhinav.
Anne Mezzenga: All right. We're embarrassing the guests.
Chris Walton: All right, yeah, no. But no, I had to do it because it's fun, that's what we do it on the show. Now, normally this is where we read our reviews, but given the headlines because they're pretty awesome this week and the fact we've got guests on the show, we're going to get right to today's headlines. But stay tuned Erica retail junkie, because we see your review and we plan to read yours next week. Today's Fast Five is brought to you with the help and support of our good friends at Grocery Shop. Are you a retailer or a brand thinking about attending Grocery Shop this year? Well, don't even think about it without using our promo codes specifically for Omni Talk's loyal listeners. Just go to groceryshop. com and enter promo code RBOT1950. That's R- B- O- T 1950 for your special discounted rate. In today's Fast Five, we've got news on Walmart picking Paramount Plus for its streaming plan partner, rumors that Ahold Delhaize may be acquiring Albertson's, Facebook and DoorDash teaming up for marketplace deliveries. A headline so good, we save the best for last, which is QuikTrip licensing Amazon's just walkout tech down in Tulsa. But first we take off with a bevy of quarterly earnings announcements, Anne.
Anne Mezzenga: All right for headline number one, Chris, we're going to talk about earning season is upon us once again this week as a number of retailers reported their quarterly figures. Here are a few of the highlights.
Chris Walton: Yes, please indulge me.
Anne Mezzenga: All right. Walmart beat analyst expectations citing a 6.5% comp store sales growth last quarter. Home Depot also beat expectations seeing a 5. 8% comp store sales growth while warning that it does not expect to see a slow down in-
Chris Walton: It does expect to see a slowdown.
Anne Mezzenga: Oh sorry, yes, warning it does expect to see a slow down in the back half of the year.
Chris Walton: Big warning, ominous.
Anne Mezzenga: Okay. Well it would be weird if they did not. That was like their announcement. We do not expect to see a slow down.
Chris Walton: No one ever says that, right? Yeah. Right. That's a good point.
Anne Mezzenga: And finally Target reported a quarterly profit drop of 90% year over year, as it clean through inventory and saw comp store sales growth of 2. 6%. Abhinav, let's go to you first. What are you going to take away from this week's earnings reports?
Abhinav Chandra: First of all, I want to put it in a little bit of context. Context is that inflation has been running 8, 9% around 8, 9%. So if anyone is growing less than 8 or 9% year over year, that means either unit sales are down or people are buying items that are lower priced or a combination of both. And that's what's going on here across the board. In case of Target, I think it's a good decision for them to clean out the inventory and take the profit hit in this counter especially, because the mix of sales are changing. They're changing away from apparel to more non- discretionary. And they were heavy on apparel. And having run an apparel business myself, I know how difficult it is to get rid of inventory. Products go out of season. I mean, you cannot sell your summer items in Winter. I mean, it's not going to sell. So you have to take the hit, they have taken the hit. I think they have made the right decision, even though it was super painful. In terms of Walmart, they have held onto inventory, which is interesting.
Chris Walton: Yeah, it is. I was going to ask you about that. Yeah.
Abhinav Chandra: They have held onto inventory, which is interesting. 40% of it they claim excess inventories because the price of the inventory has gone up. They're 15% bloated according to them. It'll be interesting to see. I think they will have to take the hit. Maybe they will choose to take it over a period of time, but I think it'll be more painful for them. In case of Home Depot. I think if you look at it, their transactions were down. So the inflation is helping them to get to that 5. 8% and I think they're right in saying that they will see a hit in the second quarter because they had a second half of the year because last year they had a blockbuster year. And then this year with home sales dropping interest rate at whatever, 5%, I think they're going to see a little bit of a hit. And they're right in calling it out.
Chris Walton: So Abhinav, I got to ask you then, because there are a lot of Walmart execs and the Walmart execs on social media are going to be a topic later on too. But there are a lot of Walmart execs taking credit for their strategy working based on the results that they're seeing here. If I read the between the lines of what you said though, I would be a little more cautious if I was them based on the fact that heavy grocery business, high inflation, sales aren't really at the level that you just said, would you agree with my statement there? It seems like you're shaking your head yes.
Abhinav Chandra: Yes. I would agree there that I would be a little bit more cautious. They have done okay on the top line I think, but it's the profitability where I would be a little bit more cautious as they move forward because they will have to get rid of that inventory eventually.
Chris Walton: Yeah. David, what do you think?
David Brown: Yeah, I'll take a bit of a country view, at least in the Walmart piece.
Chris Walton: Oh, I love it, okay.
David Brown: Because I think Walmart, if anybody benefits from the trade down effect more than others. So I think part of their whole inventory strategy is waiting to see that play out. And it's not people trading all the way down to a 99 cents or something like that or a Dollar General. But if you were shopping at kind of the Safeways and Albertsons and Targets of the world and you do have a natural trade down, it is Walmart. So I think there might be a bit of a bump that they get there that they're counting on. If the economy continues to vacillate over the next six to 12 months, but we'll see if they're right or not, right?
Anne Mezzenga: Yeah I agree with David. I was actually wondering, if we start to see a shift now, if people are going to Walmart because of lower price groceries, if they do have that access inventory, are they picking up other things while they're on that trip that they previously may have gone to Target for or something? And we look at Target's offering. Target's not been known for grocery, especially produce being one, affordable or two, of good quality. And so I'm kind of curious to see how these results are impacted by changing customer behaviors and where they're going for those stores. But what are your... oh go ahead David.
David Brown: I know gas has come down a little bit and everything recently, but if you think about making one stop instead of two or three, inaudible what you're talking about, yeah.
Chris Walton: Yeah. No, I think I 100% agree with you guys too. I mean, I guess I don't know how contrary that position was too David, in a lot of ways, I think a lot of it makes sense. I think the point that I think I was trying to make more so was just you had a decent quarter, but let's not ring the bell that everything's rosy in general. But I mean, they also just laid off a bunch of people too, we can't forget. But I don't know. I mean, the takeaways for me are really simple to me. It was Target's inventory position, as we surmised, I think David, you might have been on the show the last time. We said it was going to be much worse than people thought, or at least that they were leading us to believe at that time. So I want to take a victory lap on that. And then yeah, I think inflation is particularly a danger for Target because of their product mix as well. Which is why it shouldn't be a surprise that Walmart had the results it has because it's such heavy grocery. But I don't know last words on anything you two?
Abhinav Chandra: The only thing I would say the trade down effect is also, even though they may make the sale on grocery, grocery is lower margin.
Chris Walton: Right. 100%, yep. Yeah. Right, exactly. But they've got a lot of room to go there too in terms of what they mean for the marketplace in general and can probably withstand the inflation pressures better than many others out there too. Which I think inaudible your point too. All right, let's keep rolling.
David Brown: Just last point really quick, Chris, on the home improvement category, right? The reckoning was coming. They've had two great years during the pandemic where everybody did everything in their home and there's a natural cycle, an effect here that hard to avoid.
Chris Walton: Yeah, absolutely. All right let's keep moving, let's go to headline number two. After reports tease the link up last week, it is now official, Walmart has picked up Paramount Plus to be the official streaming partner for its Walmar + subscription service. Walmart will begin offering Paramount plus to all Walmart + subscribers at no additional cost. A service, which on its own costs, at least$ 4. 99 a month. Numerous Walmart execs, as I alluded to before it took to social media this week, most notably chief marketing officer William White and friend and former colleague had this to say on LinkedIn," One of the most requested perks for Walmart + is coming in September! In addition to free delivery from walmart. com and discounts on gas, members now also get the Paramount Plus essential plan of$ 59 value." David, are you sharing the Walmart exec's enthusiasm for this new partnership?
David Brown: Yeah. I haven't often said this on this show, but I absolutely love this one.
Chris Walton: Really?
David Brown: I think-
Anne Mezzenga: Oh my gosh, tell us more.
David Brown: I'm a huge fan of this move.
Chris Walton: Oh my God. Okay, why?
David Brown: Well, a couple things, right? So if you think about the two dominant players that are racing to build a complete bundle, right? Amazon's well ahead. And they had to have a video response since they sold Vudu to Comcast, which was never going to work out, this now gives them content. It's a content that I think matches up pretty well with their demographics. They got the CBS version of football, they got a lot of kid stuff, it's a broad spot.
Chris Walton: Yellowstone,
David Brown: Middle America content, right?
Anne Mezzenga: I think Paw Patrol is the real inaudible
David Brown: Paw Patrol. I mean they got a bunch of great stuff. The other streaming services they looked at, Disney was never going to do a deal, they don't need them. Walmart was never going to build it, right? They're not driven by an ego fueled desire to own a studio kind of the way I think Amazon started. So I think it's a great play, it makes it more competitive with Amazon Prime Plus and Walmart + is becoming a viable alternative. Well, I can't wait to see what's the next piece that they add to Walmart +.
Chris Walton: Wow. I can't wait to talk about this. All right. But Abhinav you got to go next. What are your thoughts or do you agree with David?
Abhinav Chandra: I mean, I wouldn't go as far as David went to say I love it. I would say they had no other option. They had to put something together to compete with Prime, if that's their goal and this-
Chris Walton: Is that their goal? Yeah, right, okay.
Abhinav Chandra: If that is their goal or that should be their goal, that is a different question all together. And so I think if they had to do it, I think this was the most viable option, I guess, that was on the table. The more interesting piece to me was when they report their, I mean, they've never publicly said what are their Walmart per subscriber growth numbers. They've never publicly said it.
Chris Walton: Never published those, yeah.
Abhinav Chandra: Yeah. Which is same in line with Amazon when it was going through with the Prime, it never published it, I think they started publishing six years ago. The bigger thing is, as I read between the lines, I think they say," Yeah, our subscriber price is growing monthly, every month it continues to grow." But the language is so soft that it makes me believe that the growth is not what they were expecting. And they have to do something to energize it. And I think this is probably a move that will help them. Now how far? I will wait to see.
Chris Walton: Yeah. So Anne, I don't know what you think on this we haven't talked about this. So do you think this is the move that's going to energize the growth or not?
Anne Mezzenga: I agree with Abhinav. I think we have to wait and see how much this impacts. Because honestly, for me, it still isn't enough to get me to do a Walmart + subscription. And there's a key missing component here. With Amazon Prime video, you have no ads. Okay? And this platform the 4. 99 version, you still have ads. At least Walmart get the ad free version. I don't think it's a big deal when you're looking at like$5 a month. I don't think it's enough of an ad to get the needle pushed the way that they think they're going to get it from this.
Chris Walton: Yeah well... go ahead Abhinav.
Abhinav Chandra: No, I would say-
Chris Walton: inaudible get in here.
Abhinav Chandra: In case of Amazon with Amazon Prime, the Amazon Prime subscription stood in on itself even before Amazon Prime came along. And it was doing really, really well when Prime came along and then as Prime came along, it brought more customers in. So it was helpful for sure. And as you called out, it was always ad free with the Prime subscription. So Walmart + I think this is a sweetener, but Walmart + core offering has to stand by itself.
Anne Mezzenga: Yeah, before this is creating the value. I see what you're saying.
Chris Walton: But yeah, but I think what you guys are talking about is really important in this. And it goes back, I thought when we talked about what is the goal of this, I think that's really important is why in our minds do we mentally say like," Oh, it's a subscription program. It needs to be bundled and it needs to be like, Amazon's." When in reality, the beauty of what Amazon does is they've created the flywheel around the Prime membership. And it fuels everything that Amazon is doing. So Amazon owns its own content studio. Walmart doesn't, Walmart is basically buying the content studio right from Paramount. So it's not going to get that same flywheel effect. So that's my point is like, I don't think it's going to do anything. I coined the phrase last night. I think this is a Pramount over a mole hill. Like honestly, like that's what's going on here.
Anne Mezzenga: I don't know that I'm going to give you credit for that. It's pretty..
Chris Walton: Pretty weak, but hey, hey, points for trying Anne, come on.
Anne Mezzenga: I guess so, I guess so.
Chris Walton: I just don't get it because even in the statement that William White said, if your current Walmart + customers are asking for it, that means it's not going to get you incremental subscribers, most likely, because they're already with you. To your point, they saw some value in it that you're not seeing and they signed up for it. So they got it anyway, that's great. But I come back to it, it's not the same thing from the flywheel approach that Amazon takes with it. And so the two things from a business model perspective to me could not be more different. And the real advantages Walmart has to find is where are those synergies? Like the gas discounts. Yes, that makes sense. Amazon can't do that, scan and go services in store. Yes, that makes sense. You can advertise off that platform, which is yours. You don't get that with Paramount Plus. David, last word here though, because I pretty much just disagreed with you.
David Brown: Yeah. I think the big piece you're missing though, Chris is the draw of NFL and just how popular NFL is. Now I know all of the streaming services have a little piece of it. CBS and Fox are still the two biggest pieces of it. So having access to that and not having to pay for an NFL Redzone or something along those lines, I think is going to be really key to this deal. So I think that was actually the inaudible
Chris Walton: So you think they're setting us up for the future of how this NFL streaming battles get won?
David Brown: Exactly.
Chris Walton: Well that's an interesting point, yeah. I mean, okay. I don't know. I think that's a maybe over attributing a little bit to them. But in terms of NFL, in terms of how it'll play out.
David Brown: But I mean it's NFL plus other content, right. You know?
Chris Walton: Yeah.
David Brown: There's still established content in the Paramount network. I mean, you can talk all you want about the flywheel of Amazon and Amazon Prime. They've bought a lot of content, all of their produced content has still not taken hold the way some of the content that exists on the other platforms is right? It's hard to argue that they have two or three shows, let alone 10 or 20 that they have produced, that people are clamoring to see.
Chris Walton: I don't know. I think that one's debatable as I'm watching Boys religiously right now. But yeah, no, it's good and well noted. All right Anne, let's keep moving.
Anne Mezzenga: All right, headline number three, Ahold Delhaize is rumored to be evaluating an Albertson's acquisition. According to European media outlet, Retail Detail, one of my favorite named retail outlets by the way, the Retail Detail. Two Albertson's planes were spotted last week at Bedford airport next to Ahold Delhaize's US base in Massachusetts. Neither side at this point has confirmed or denied the rumors. Abhinav, David, who wants to take this one? Because I've got to hear what your thoughts are on this potential, the rumored relationship between-
David Brown: Well let me start on the point you just said, because I think that sums up the deal in this thing. Why the hell is there two planes here, right?
Chris Walton: Right.
David Brown: I mean, if I'm an executive, I'm like," Okay, this place is so poorly run, the cost structure is so bloated that they show up with two planes." I see immediate fear. Both from a cost standpoint, but then
Anne Mezzenga: Also I agree. David, I thought about that. It's so funny, David and I are on the same wavelength this week too, because I was like-
Chris Walton: Harmonizing.
Anne Mezzenga: If you're going to send execs and you don't want people to know, why are you sending a branded plane to this location?
David Brown: Let alone two of them.
Anne Mezzenga: Yeah, exactly, exactly. Okay. Keep going though David, keep going.
David Brown: Yeah. But beyond that, I do think there's potential synergies, right?
Anne Mezzenga: Yeah.
David Brown: The geographic footprint fits very well. Ahold primarily East Coast based, Albertsons with Safeway and their other properties are primarily West Coast base. So if they do want to be a national player, and there's a lot of benefits to being a national player in terms of leverage in terms of synergies and all of those type of things. Then this is a natural play for them. I mean unless they're going to buy a super regional, like a Raley's or something like that, which is probably a better run grocery, then this is I think the logical option.
Chris Walton: So now you're okay with this move?
Anne Mezzenga: Yeah.
David Brown: Yeah.
Chris Walton: Yeah, yeah.
Anne Mezzenga: Abhinav, where do you land?
Abhinav Chandra: Yeah. I 100% agree with what David just said. My local grocery store is Safeway and I do not like going there, but the next grocery store is 10 miles away, so I have no other option, but to go there. But since the pandemic started, I only order online. I don't like going in the store. It's old, it's creaky, it's not a pleasant experience to shop.
Anne Mezzenga: Right. That's what they're talking about with this merger that could be helpful is that a lot of those Safeway stores, the Albertsons stores need those improvements and hopefully Ahold could come in and help do that. But Chris.
Chris Walton: No, I feel the same way. This one David and I 100% agree on, I thought the point about the jets was amazing, actually. That was such a canny pickup there. Like why not? Ahold gets grocery, they don't have a presence on the West Coast. The grocery game is getting more and more about scale by the minute here too, I think, as you look to compete in the US, so I'm like," Yeah, why not? Go for it." Makes sense to me.
Anne Mezzenga: Yeah, I think that's a great point. I mean, especially as we're looking at who the major players are setting themselves up to be, you look at Kroger and Ocado moving across different geographies, with their fulfillment centers. And I think that if you start to think about Ahold picking up more of the west coast grocers like David and Abhinav are talking about, I think that allows them to invest more heavily in those centralized fulfillment centers that could allow them to really start to compete with Kroger and Amazon Fresh and other grocers that are starting to look at this mass expansion.
Chris Walton: All right. Headline number four, Facebook Marketplace and DoorDash are teaming up on local Facebook Marketplace deliveries. According to the Wall Street Journal, the deal is an attempt to get more people, especially younger ones to use Meta owned Facebook while for DoorDash, the partnership boosts its ambition to expand into delivering more than food. The service has been tested in several US cities in recent months and lets Facebook users purchase and receive items from marketplace without ever leaving their homes. The service will deliver items that fit in a car trunk and deliveries will be made to addresses up to 15 miles away and are usually made within 48 hours, the Wall Street Journal reported. Terms of the deal for either side have not been disclosed at this point. David, what do you think of this move for both parties?
David Brown: This one made me laugh.
Chris Walton: Oh really? Okay.
David Brown: For a couple reasons. One is I love the comment about trying to get younger. So I guess that my mom, if she was still alive, would've been 100 today. She's just approaching to be old enough to be a Facebook user.
Chris Walton: David bringing it today, I love it.
David Brown: So yeah. So I guess from a delivery standpoint, that would be beneficial. But I don't know, to me this hearkens back to something we talked about last year on an episode, I think it was 7/11 and DoorDash. That it seemed a little bit of desperation on both their points, right? If Facebook, the driving way to get younger users is to try to get DoorDash users through Marketplace, I don't think that's the answer. And I think I get DoorDash's play of trying to get away from anything grocery into other items. And that was the same play with, I think it was 7/ 11. So this is another play on that. But yeah, this is a splash announcement that is going to have very little practical impact on either company.
Chris Walton: Wow. All right. Abhinav are you going to agree with David? I feel like you're one, you've agreed with him so far on one disagreed on another we're kind of half disagreeing on the first headline. Where do you come down on this one? Because I'm pretty sure Anne's going to disagree pretty wholeheartedly.
Abhinav Chandra: Yeah. So I am actually going to disagree here, David with you.
Chris Walton: All right. There we go.
Abhinav Chandra: And here is the thing, I think it's a play for the future and I think the announcement or the partnership has an asymmetrical benefit I think, from both sides. First of all, I'm a huge fan of DoorDash. They are a very nimble and innovative company that is coming up with new business models and they're working with all different kinds of retailers to try to figure out how to deliver fast in an e- commerce environment. And part of success of e- commerce, part of it, not all of it, part of it depends on fast delivery. And so if you have the selection, if your experience of selling the product online is good, then delivery is the third piece that needs to fit in. And so DoorDash has done that really, really well for a bunch of retailers and they continue to expand. And so this is another sort of feather in their cap. From Facebook perspective, I think the jury is still out. On the Facebook side, I'm with David. Facebook is not known as a place where you would go and shop. I mean, they are not the destination that you would think that they are currently, however they could get there in the future. There could be a world in the future where you can think of as they launch Meta as the Metaverse, their platform, you are playing game in the Metaverse and you see something that you want to buy in the Metaverse, you buy it and then DoorDash delivers it. For example, you are playing a game in Metaverse and you see something that you like. You order it and DoorDash delivers it to you. I mean, it's much further ahead in the future, but the point is that Facebook needs to improve its shopping experience. When it does and is able to compete in the e- commerce space, they have the delivery part figured out. So that's the thing, the jury's out on the Facebook side, but I think from a DoorDash perspective, they continue to expand, they continue to add more things. And independent of who succeeds,. If they have everyone, they will succeed from a delivery perspective.
David Brown: Yeah, they're taking a portfolio back, right?
Abhinav Chandra: Exactly.
David Brown: I agree with you on the DoorDash. I just don't have any confidence Facebook ever inaudible
Abhinav Chandra: Yeah, that part.
Chris Walton: Interesting. Okay. Yeah. The short term, long term Facebook. The part I think that's missing in this conversation, which I'm pretty sure Anne's going to bring up because I know her and she's a religious Facebook Marketplace shopper. Is the Facebook Marketplace angle, which is very different than say the Facebook feed and shopping from that or the Metaverse eventuality too. But Anne, what do you think?
Anne Mezzenga: Exactly what I was going to say. I think that there's an important distinction to be made that is exactly that, where shopping at my local retailer on Facebook and using that for DoorDash, that's fine, but that's not enough to get me to get a Dash Pass for example, and have a subscription. But Facebook Marketplace and having DoorDash fulfill Facebook marketplace transaction is 100% going to get me to get a Dash Pass, without question. I mean, Facebook marketplace in a lot of communities has pretty much overtaken Craigslist. And the worst part of that transaction is having to drive. whenever it works for that particular-
Chris Walton: Or to meet somebody you don't know.
Anne Mezzenga: inaudible individual, to meet somebody you don't know is having to go through that part of it. And I think keeps a lot of people from doing Facebook Marketplace type transactions. But allowing peer- to- peer commerce to take place in a much more convenient way for a little to no fee on top of whatever it is you're already getting a deal on because it's a resold item is brilliant. I think that this is great for DoorDash to be able to say," Look, everybody Instacart, whoever, we can give you your beauty store, your drug store, whatever on top of your subscription. But we are going to eliminate that friction and the unpleasant experience of having to buy something from a complete stranger." And having that transaction be one and done. Anything that will fit into a trunk gives you access to a large variety of items that you can have this transaction. And I think that this is such an untapped market, as we're thinking about what the possibility for enhancing this peer to peer transaction looks like. We just talked to Cleveron, they've been doing peer- to- peer locker transactions so that you can eliminate these experiences forever in Estonia. And I think that we're going to start to see more facilitation of these transactions as resale as a concept becomes more important. I love this.
Chris Walton: Damn, you go girl, go inaudible yeah. David, what do you think?
Anne Mezzenga: I want it for today. Because I don't want to drive to two locations.
David Brown: I have a table full of stuff sitting in my office that I need to sell. I'm going to actually try it on Facebook Marketplace and we'll see what happens. I reserve the right to change my opinion, but I'm not changing it yet.
Chris Walton: Damn, you just mic dropped David I think man. That was awesome, that was awesome. I don't even have anything to add. I agree with you. I think my thing would just be it's a real pain point in the marketplace experience that this potentially solves. I think there also is the element longer term of how Facebook does commerce and I've long posited too, I think I wrote in Forbes back in the end of 2020, where there is a link up for Facebook and these third party delivery services to get together and create a world where you're shopping from your feed and behind the scenes, the delivery operators just source it for you wherever's most economically viable for you and give you the option of where you want to choose to purchase it from. So I think that could come later, but I think you're 100% right, this is about the marketplace and that is big volume. There are billions of dollars running through the marketplace, from my inaudible
Anne Mezzenga: And I wonder-
David Brown: At least until the TikTok, Amazon stream comes out right?
Anne Mezzenga: Potentially inaudible I also wonder what information Facebook is going to be able to gather and DoorDash for that matter, that they could also potentially sell to the retailers of product. So if somebody's searching restoration hardware sofa, can you start to say," Restoration hardware, this is what the second life of your products looks like." These are what people are searching for, this is the potential value.
Chris Walton: So you're all in?
Anne Mezzenga: Oh yeah.
Chris Walton: All in.
Anne Mezzenga: I know.
Chris Walton: Ships inaudible
David Brown: Going to need a bigger trunk.
Anne Mezzenga: You're going to need a bigger trunk is right David. All right, let's go to headline number five. According to CSP magazine, QuikTrip is opening a non gasoline convenience store with Amazon's no checkout, just walkout technology in Tulsa, Oklahoma. Tulsa customers can enjoy QuikTrip snacks, including the Nitro coffee station with freshly brewed coffee, as well as its complete menu of grab and go items like fresh donuts, salads, wraps and QuikTrips pizza by the slice. For perspective, Quick trip that's Quick trip with a Q, is number 10 on the QSP' top 200 convenience store chains and has over 900 stores with an estimated annual volume of$ 11 billion per year according to win site. Abhinav, what do you think of this decision by QuikTrip to sleep with the enemy?
Abhinav Chandra: I think it's a good one.
Chris Walton: Really? Okay.
Abhinav Chandra: Yeah, I think it's a good one. So when Amazon started AWS, it all started similarly. They had their own infrastructure of computers, they built their own services. Then they decided," Oh, it's a good idea to sell it to others. Let's see if others buy it and if they buy it." And now we have a huge AWS business on Amazon. It's in the same way from Amazon's perspective. From QuikTrip's perspective, they're not going to build this technology. If they want it, they will have to buy it from somewhere. Amazon has the best technology at the moment. And that's the part that they're going down on. I think QuikTrip is a convenience store, they want convenience and this provides convenience to their customers. So I think it's a good partnership. Now, going back to the analogy that I was making earlier around AWS, as the evolution of AWS has happened, a lot of retailers have stopped using AWS and have moved to Google Cloud. Because they feel even though the two businesses are separate, the profit that they are making on AWS is subsidizing the retail business, which is their competition. Now this may play out in the same way in the future. But as of now, there are limited set of options. And the quality of technology that Amazon has is way, way far ahead than anyone else has got it. Walmart, I think is trying to build it, but they're nowhere even close. And so if this is the only play that you have, then that's the one you've got to take and you have to think customer first. And if you think customer first, you have to provide more convenience, you have an option, why not?
Chris Walton: Interesting, so you like the move because you think QuikTrip's thinking customer first, that this is a real threat or a real new way to shop convenience stores, we have to understand it and make sense of it. So we're going to partner with Amazon. That's your basic point. Okay.
Abhinav Chandra: Yeah.
Chris Walton: David, what do you think?
David Brown: Yeah, I think we're going to end on a little kumbaya. I actually really like it too, for all of the reasons that Abhinav just said. The other thing that I think is interesting in this is as you noticed in the announcement, it's one of their non gas locations. So I actually think this speaks to a future strategy around how are they going to think about the transition to electric vehicles and all of their gas locations and actually convert them into true convenience stores. And so in some ways, to me, this is a customer first pilot on what could be the strategy to eliminate gas stations long term.
Chris Walton: Interesting.
Anne Mezzenga: What do you think?
Chris Walton: I don't like it. I don't think that the checkout free technology race is happening that quickly that you need to saddle up with Amazon, that you need to put the saddle on the horse of Amazon right now.
Anne Mezzenga: Really?
Chris Walton: I don't, because there's plenty of players in the marketplace that are showing an ability to do what Amazon is doing and waiting another year or two years to take a partnership with them I don't think really disadvantages you that much. When you start getting in bed with Amazon and building these stores first in Tulsa, and then they said they're going to build more of them throughout the region. If you do that with Amazon, that's kind of we're back in the e- commerce mouse trap that Toys" R" Us and Target, and everybody else fell into back in the late 90s and early 2000s. So I don't know, but I mean, what I take away from it is I think the threat is real, number one. That QuikTrip thinks the threat of checkout free retail as a shopping experience is real. The second thing is probably that the convenience store players in the space for checkout free technology are probably not ready for prime time yet. I think that's an important point here that Abhinav's bringing up too. And you have to remember like Trigo, who we've spotlighted on the show, has deliberately tried to stay away from the convenience store market. Because they believe in scaling to grocery and proving that out. But we've seen 3000 store checkout free spaces from them that work too. So the technology can't be that far away with somebody else. So I don't know, I just don't like it for those reasons.
Anne Mezzenga: I think that's what's puzzling to me here is that these are all new stores that they're going to have to build with Amazon. Amazon's not retrofitting spaces yet. And I think that's where, when you're QuikTrip, the size of QuikTrip, like we talked about, and you can't retrofit yet any of your old stores, you're only going to be able to build these new stores. And I think David's bringing up a good point about like the future of what the convenience store and gas station looks like. I do think though, to that point, there's some advantages of bringing Amazon in. If there's something we don't know. What do we not know about this relationship that's happening where you're starting to think about if Amazon does want to build the future gas station, is this a player that gives them suddenly access throughout the middle of the country? Like all along 35 that goes north to south, they suddenly have access to all of those gas stations with QuikTrip. Could be a play here that we just don't have visibility to.
Chris Walton: The other point I would have too.
David Brown: Yeah, that could be a huge assortment play, that could be an access play. Yeah, I agree with you on that one.
Chris Walton: Yeah, the technicals always get really interesting if you start thinking about it. The other point I would make too, that I think is really important here is it shows you that Amazon's tech is really licensable at this point. Like QuikTrip, Hudson News in the airports, all the airport stores or the sporting events. They've got that thing dialed in now, if people are signing up to it to the degree they are Abhinav.
Abhinav Chandra: Yeah. My question, this is a question, not an answer here back to you guys. What's the competitive threat that you think exists from Amazon for them, by licensing this technology, they're only licensing the technology, they're not licensing anything else.
Chris Walton: Well, I think it's the same way. I mean I don't think it's that dissimilar than what they did with e- commerce. They built everyone else's e- commerce websites, that gave them the revenue to build theirs better and do it better over time. They kept the best technology for themselves in theory, relative to what they were giving to who they were providing it to. It's the same thing here with convenience store retailing ultimately at the end of the day. They could learn to do the convenience store business, they have a competitive threat in Amazon Go that's growing fairly rapidly. That's kind of my thought there Abhinav, what do you think though?
Abhinav Chandra: My thought is, I mean, this is like AWS there. The point that you make that this may be funding some other parts of their business from a profit perspective that I can totally-
Chris Walton: Oh 100%, yeah, that's-
Abhinav Chandra: That I agree with. If that's the only angle, then that's fine. But in terms of licensing the technology, yes, they will teach them something, but they will make the technology better for them and for QuikTrip as well as for themselves, and both sides are going to benefit as the technology evolves. It's not like they're using different services from that perspective. So yeah.
Chris Walton: I would buy that if they weren't doing Amazon Go. If they were like," We're just licensing this technology, we have no interest in a physical store play." I would buy that argument, but David, last word here, and then we'll get to the lightning round.
David Brown: I think that was spoken like a true Amazon alum.
Chris Walton: And by that you mean what Abhinav said, right?
David Brown: Exactly.
Anne Mezzenga: Yes. All right. You guys let's get to the lightning round. First question is for you, David. Airbnb is rolling out new anti- party technology that can automatically detect the types of bookings that might result in an unauthorized party. David, what party trick or topic is your go- to at an authorized or unauthorized party?
David Brown: Yeah, it's probably more unauthorized, but when I left Kearney years ago and went to McKinsey, I made the announcement at a holiday party and there was a karaoke thing. So I spent like three months perfecting a couple Eminem tunes.
Anne Mezzenga: Oh my gosh.
David Brown: So that I could actually have a mic drop moment. So I've kept that up. So if you see me at some karaoke event, I'll break out a pretty good Eminem inaudible.
Anne Mezzenga: What song?
David Brown: You have to wait and see that one.
Chris Walton: Can't get a freestyle taste, huh? Aw man, all right, we're going to hold you to that, you be ready.
David Brown: Maybe save that for another podcast.
Chris Walton: No, we're going to get you an Eminem one next time. All right. Abhinav, a one in 2 million bright blue lobster was found by a father and son in Maine recently, who is your retail lobster, other than Amazon, who you just absolutely cannot live without?
Abhinav Chandra: I would have to say Google. I don't go to malls anymore. I shop online and if I cannot pick Amazon, then I'm searching on Google.
Chris Walton: Wow, okay, you're that committed, wow. Dedicated.
Anne Mezzenga: All right. Let's go back to you David. Snoop Dog is coming out with a line of lookalike Froot Loops called Snoop Loops. And if you were going to create your favorite cereal, what cereal would it be?
David Brown: Yeah, I'm super boring on this one. I love oatmeal so it would be some kind of mashup of oatmeal with all my other favorite flavors. So I'd have to have a lot of nuts and berries and probably a little bit of brown sugar, honey or something like that. So nothing creative about this one. I inaudible
Anne Mezzenga: Oatmeal's great, you could take your own spin on oatmeal.
David Brown: I do love how the oatmeal market has expanded and now there's all of these craft oatmeal players out there that I think are doing some really cool stuff. Whether it's protein based or inaudible.
Chris Walton: Are there really?
Anne Mezzenga: Oh yeah.
Chris Walton: Yeah, that might get me back inaudible that might get me to get back into it I guess.
David Brown: Go into a good retailer and take a look at the oatmeal shelf, they're killing it these days.
Chris Walton: All right, yeah. All right. That's a big hurdle for me to climb. All right. In a move to increase its freshness perception, Subway. Now plants to slice its own meat right in store. Abhinav, what was the last sandwich you ordered at Subway?
Abhinav Chandra: I think it was Italian sub, Italian carbonara, sub. Yep.
Chris Walton: Nice.
Anne Mezzenga: He knows the exact sub. I don't even know, I would be like," A Turkey one." I don't know what it's called. It's got the Turkey and the, whatever.
Chris Walton: I think I got the BLT one in like 2012 in Casper, Wyoming. That was the last time I was in a Subway, not my favorite.
David Brown: inaudible bacon ranch.
Chris Walton: All right. That wraps us up, happy birthday today to Andy Sandberg, Christian Slater, and one of my all time favorites, Mr. Roy Hobbs himself, Robert Redford. And remember if you can only read or listen to 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. And 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. And remember to use your promo code RBOT1950 to register for grocery shop that's R- B- O- T 1950. Finally, David, if people want to get in touch with you and the A&M Consumer and Retail Group for a little consulting services and advice, what's the best way for them to do that?
David Brown: Yeah. Thanks, Chris. Easiest way is either through our website, alvarezandmarsal- crg or you can find Abhinav, myself or any of us on LinkedIn.
Chris Walton: Awesome. Well, thanks so much for being with us today you two. Again, that's David Brown and Abhinav Chandra of the A&M Consumer and Retail Group on their behalf. And from all of us at Omni Talk retail, 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 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 that 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.
In today’s Omni Talk Retail Fast Five Podcast, sponsored by Microsoft, the A&M Consumer and Retail Group, Takeoff, Sezzle, and Groceryshop, A&M’s David Brown and Abhinav Chandra joined Anne and Chris to discuss:
- Their big takeaways from this week’s earnings announcements
- Whether Walmart executives were boasting way too much about their new Paramount+ streaming partnership
- The rumors of Ahold Delhaize acquiring Albertsons and its two private jets
- Facebook partnering up with DoorDash for Marketplace deliveries
- And closed with a debate on whether QuikTrip should be partnering with Amazon for its latest checkout-free store in Tulsa
There’s all that, plus retail lobsters, Eminem freestyling, and their last Subway sandwich orders.
Music by hooksounds.com