Transcript of Fast Five Episode: Meta’s Metaverse Moves, Zara’s High-Tech Flagship, and Target’s “On-Again” With ThredUp

Anne Mezzenga (00:09):

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. Omni Talk’s 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 April 14th. I’m your host Anne Mezzenga. And we are here once again to discuss all the top headlines making waves in the world of omnichannel retailing.

Chris is out today, but in his place, I am joined by the dynamic duo of Chad Lusk and Hemant Kalbag of the Alvarez & Marsal Consumer and Retail Group. Hemant, let’s start with you. It’s been a little while. I think there’s a song that’s like, It’s been awhile. Is that Nickelback? It might be. Anyway, it’s been a while since we’ve had you on the show, tell the listeners a little bit about you and your background.

Hemant Kalbag (01:02):

Thank you for having me on again. It’s nice to see you. My background quickly is I joined the A&M Consumer and Retail Group about two years ago. I’m a partner with the group and I’ve spent about 22, 23 years now consulting to retailers globally. I started my career in the US. I lived in Asia for eight years and have been back now for seven or eight years. Most of the work I do is helping retailers that are on a cusp of transformation. And transformation has been definitely top of mind for the last four or five years with the seismic shifts that are happening in the industry. So it’s great to be here and looking forward to our discussion today.

Anne Mezzenga (01:41):

Yeah, we have a lot to talk to you about. And also joining us again, we have Chad Lusk. Chad, can you correct me on that? Is that a Nickelback reference that I threw? You’re my music guy.

Chad Lusk (01:51):

No. No, that’d be a Staind reference there, Anne.

Anne Mezzenga (01:56):

Staind. Oh, same era. Wrong artist.

Chad Lusk (01:59):

Yeah.

Anne Mezzenga (01:59):

Thank you. See, aside from your vast retail and operator knowledge, Chad, this is why I love having you on the show because I can go to you in moments of need, like trying to remember Staind song lyrics.

Chad Lusk (02:12):

Got the musical reference right. That’s my major value add.

Anne Mezzenga (02:17):

But tell the listeners who might be hearing of you for the first time, a little bit about your background at CRG.

Chad Lusk (02:23):

Sure. So I’ve been with CRG for about 18 months now, but as kind of our distinctive model plays out, deep performer operator. So multi-time Chief Strategy Officer, Chief Marketing Officer across CPG and retail. And I predominantly focus on broad scale commercial transformation. So consumer-led growth strategy, marketing, business model innovation.

Anne Mezzenga (02:48):

Excellent. We’re really excited to have you both here today. I just want to give a quick shout out to our listeners. Those of you who gave us reviews this last week, and a quick plug before we get to the stories, please, if you can, we want to keep making this content possible for all of you. So if you’re listening on Apple Podcasts, we ask that you leave us a quick review. If you’re listening on Spotify, give us a heart, a like. And if you’re on Google or Amazon Music, please follow us and subscribe so that we can keep things coming and people can find the great retail content that we try to bring you guys every week.

All right. Shameless plugs are over. Let’s get to the headlines. You guys ready?

Hemant Kalbag (03:30):

Yeah.

Anne Mezzenga (03:31):

All right. [crosstalk 00:03:32]. In today’s Fast Five, we’ve got news on Meta going full steam ahead on commerce in the metaverse. Zara’s flashy new high tech store in real life. Wakefern rolling out shelf-scanning robots. Santa Monica Place offering one-day leases to local and small businesses. But first we take off with news once again, stealing headline number one, it’s out of Target. So headline number one, while it appears that every retailer and their mother had the same PR plan for Earth Day coming up next week, that is, my friends, expanding or launching a resale program. So there were a plethora of announcements over the course of this week from REI to Lululemon, to Packson all announcing expanded resale programs. But today we are going to shift our focus to Target’s announcement that they are on again with thredUP.

So according to CNBC, Target has a new landing page on thredUP, the resale website, which features items from Target’s private labels and limited time designer collections, along with select items from luxury brands. It includes about 400,000 pieces priced at 90% off. And if you’ll remember, Target did a previous partnership with thredUP back in 2015 via thredUP’s Closet Clean Out Bag where customers would get gift cards for assembling goods at home, sending them into thredUP, and then allowing those items to be sold on thredUP. Hemant, we’re going to go to you first on this one. What are your thoughts on this move from Target and some of the other resale moves that we mentioned in the intro?

Hemant Kalbag (05:08):

It’s a really interesting move, but if I take a little bit of a step back and I think about Target and Walmart and Amazon, which are the big retailers that, dominate the retail news, it’s very interesting to me, how the three of them are taking very different approaches to how they think about innovation and expansion. I think Walmart’s definitely been much more active in just acquiring assets when they see moves. I think Amazon is definitely building on their own. So this is an interesting move. I think Target’s clearly been innovative in the last couple of years. And I think this collaboration is in the string of interesting kind of moves for them.

Anne Mezzenga (05:53):

Right.

Hemant Kalbag (05:53):

I think thredUP plays in this very interesting intersection of two parts of retail that have really grown a lot over the last few years. When you think about off price and the idea of shared assets enabled by technology, think Uber, or think about Airbnb, things like that, this is right in the intersection. So I think the idea itself is explosive and it’s great. And I’m not surprised that instead of trying to do something on their own, Target’s going to someone who is kind of a specialist and has figured out how to do this.

The challenges that I see, and this has always been the case for off price being online is ultimately you have limited number of SKUs. So how are you going to develop digital assets fast enough? And historically that’s why off price has stayed away from online. So if it is resale, do you have the right digital assets in place to be able to market this effectively? So I think this will be an interesting experiment.

Anne Mezzenga (06:58):

Right.

Hemant Kalbag (06:59):

I think all said and done, though, I think this will probably be more PR than a revenue driver for target.

Anne Mezzenga (07:08):

Interesting. Really? Okay.

Hemant Kalbag (07:09):

But that matters, I think, because I think companies are trying to send the right messages and invest in the long term. Do I really think in the next decade, this is going to be a meaningful portion of Target’s revenues? Probably not. Is that going to allow them to talk about something that’s interesting and sustainable? Yeah.

Anne Mezzenga (07:30):

For sure. Yeah. I think that you hit on all the right things there. If I’m hearing what you’re saying, like sustainability being one of the key PR moments that they’re able to produce from this announcement, especially when you think of Target and most of that is fast fashion, affordable fashion that really is kind of coming out of Vogue with the next generation of shopper and this being a way to kind of capture that and still give a purpose to investing that money at Target in the apparel sector, for sure. Chad, what do you think?

Chad Lusk (08:01):

Yeah. As you mentioned, just the plethora of companies that are doing this, the secondhand market’s been gathering a lot of steam recently. Anne, I actually thought you would include the Lululemon trade in and resale program as the headline this week. And I think this is great that retailers are making these moves, especially in a high inflationary environment, because the name of the game is value. And so if this partnership is offering compelling consumer value in a way that’s accretive to overall sales, then it’s a net good. Right?

Anne Mezzenga (08:37):

Right.

Chad Lusk (08:38):

The thing that comes to my mind here and especially thinking about the difference between Target doing this and, say, Lululemon doing this is item durability, right? So Lululemon obviously has it, but are Target items designed to last long enough for a robust secondary resell market?

Anne Mezzenga (08:58):

Right.

Chad Lusk (08:59):

Given this is a test, it’ll be interesting to see because what I picked up from the article, there’s two components of it. So it’ll be interesting to see the difference between Target’s own private label brands on this platform versus the more luxury brands that’ll be on the page that aren’t typically sold by Target in terms of what has the staying power.

Anne Mezzenga (09:17):

Yeah. Chad, that’s exactly why I picked this one over the Lululemon one. I think there’s just so many pieces to this. The fact that, one you call out, which I think is very important to call out, the durability of the Target product and the demand of the Target product. And also, I think, bringing in Target curating on a third-party reselling website is a very interesting position for Target to take. That’s not something typically that we’re seeing from any of the other retailers who are playing in this resale space, where they’re not only putting their products on, but they’re saying, this is the Target collection of items, a mix and match of owned brands and luxury items. That’s what I think is unique about this particular story in Target, stealing the headline.

Now I think what’s becoming abundantly clear to me though, this goes back to what you were saying, Hemant, and that’s that there is no wrong way to do resale right now. I think every retailer should be looking at all of the options available right now. There are a lot of technology companies that are out there that are willing to help you solve the issue of trying to resell single individual skus. And there’s something for every type of customer too. I mean the Lululemon example came out. I read that at first and was like, $5. Lululemon is paying you $5 to bring in a $78 T-shirt and trade that in. The margin that they’re making on that is extraordinary, especially when you look at what that T-shirt could garner somebody on a Poshmark or an eBay. I mean, typically people could get at least 50% of the value of the item on one of those sites.

But then I thought about it more and it’s like, no, you have some people who are going to just want to bring in their bag of Lululemon and just shove it off there. And even if they only get $50 from it, it’s still simpler than them having to go through the motions of creating and developing and monitoring stuff on Poshmark. So just curious, I see you both kind of nodding your heads, are you guys in on, like would you advise apparel clients right now to be considering this? Hemant, maybe go to you for the last word here.

Hemant Kalbag (11:24):

Well, I would say first of all, if you haven’t seen, there’s a TV show called Patriot Acts by Hasan Minhaj. He did a really interesting episode on fast fashion. If you haven’t seen it, I encourage you to go see it because he talks a lot about how so much of fast fashion is ending up in landfills in other countries. So number one, the reason I would always ask clients to think about this, or at least my clients to think about is because you’re fundamentally doing something good for the world.

Anne Mezzenga (11:54):

Right.

Hemant Kalbag (11:55):

If not anything else, there is value in that, being a good corporate citizen. Do I believe this is going to create a fundamental change in business trajectory right now for a company? I don’t think so. I think that’s several years out, but it’s the right thing to do. And it’s the right thing to do because, like both of you said, this is a trend that’s only going to continue to grow. So by doing your testing now, trying different things, when this thing becomes bigger, you know how to do it.

Anne Mezzenga (11:55):

Right.

Hemant Kalbag (12:27):

So that’s why I think it’s important to go after it now, but I will personally not be shopping in this market anytime soon.

Anne Mezzenga (12:36):

Oh, you got to give it a try, Hemant. I got to tell you, it’s been great.

Hemant Kalbag (12:39):

I’m after you, Anne. You let me know how it goes.

Anne Mezzenga (12:41):

Oh, I’ve been doing it for the last couple of years and I’m surprised. Like I’ve converted. I would say the majority of my shopping right now is done through resale sites.

Hemant Kalbag (12:51):

Oh wow.

Anne Mezzenga (12:51):

I couldn’t have said that a couple of years ago, but I’m pretty surprised. And I’m leading more with value, I would say than the sustainability angle. It’s more like, oh, I can get this really nice, well-constructed piece that I wouldn’t be able to buy at full retail, but it’s still in great condition. And to your point earlier, there’s technology and there are ways that shopping this has become easier, because it’s something I can quickly see online and the condition is verified and authenticated too.

Hemant Kalbag (13:24):

What’s your favorite go-to site?

Anne Mezzenga (13:26):

Well, I would say, like Poshmark has been a pretty popular one for me, The RealReal also. I mean, I think there’s a lot of… And there’s even on Instagram, like just buying stuff via Noihsaf. It started on Instagram and it was just one post a day of a cool item that you can buy resale and you just pay via Venmo. I mean, it was like very, very simple, but then that in combination with some of the upscale consignment, you can find some pretty remarkable items in there, I have to say.

Well, speaking of fashion, let’s keep rolling on this one. So Zara is not just leading the charge on dopamine dressing. You guys know what dopamine dressing is?

Hemant Kalbag (13:26):

Yeah.

Anne Mezzenga (14:12):

Yeah. You’re familiar with this trend. So dressing for your feelings and wearing bright-colored items to try to bring our spirits up. But Zara is also providing customers with one of the first high tech apparel shopping experiences to hit the market. According to Euro Weekly, last week, Zara opened an 82,000 square foot store in Madrid’s Plaza de España. Roughly half the store will be warehouse space and the other half will be showroom floor. The store has self-scanning pay-and-go services that allows customers to use their mobile devices to scan and pay for goods either through the Zara App or without the app entirely. It also includes a robotic silo by Cleveron with a capacity of storing up to 1500 orders, a cardboard recycling center for customers, and also an online return order point, a changing room reservation service, and all of this can be booked through the Zara App. Hemant, let’s go to you again first. What are your thoughts on this store? I was surprised. I just kept reading, it was like, and this and this and this. What do you think?

Hemant Kalbag (15:21):

I mean, my god, that’s a large store. I think last time I was on, we, I think talked a little bit about Ikea.

Anne Mezzenga (15:29):

Yeah.

Hemant Kalbag (15:30):

And I have to say, I admire several of these European retailers that are still family owned and so they don’t have the pressures of answering to kind of short-term shareholder asks. So I think they’ve been much more innovative in trying new things. I think this is pretty remarkable, because this is a bold move and I think Zara has proven to be very thoughtful about being disruptive and thinking about big changes. And I think this is kind of in line with that trend, right?

Anne Mezzenga (15:30):

Yeah.

Hemant Kalbag (16:04):

I mean, to think about almost this kind of super Zara showing up and I think they’re planning to roll this out in major cities. So in some ways, I think this is kind of the modern version of a flagship store that retailers have always had.

Anne Mezzenga (16:19):

Right.

Hemant Kalbag (16:20):

Except this is now, kind of the new version because the role of the stores have changed, right? There is the idea of kind of the dark store, which is you’re using your store partly for storage to do delivery from online purchases.

Anne Mezzenga (16:20):

Exactly.

Hemant Kalbag (16:35):

It’s about trial. It’s about technology being a part of the trial ecosystem. It’s about frictionless checkout and they’ve taken all of these best-in-class ideas and it sounds like they’ve put it into this one store. And I think that’s amazing. And it’s a big, big, bold move, right? Because to have a flagship, you have to do it in kind of tier A locations and those are probably the most expensive. They’ve shared, they’re going to roll it out into like five or six other major cities, which are equally expensive. So I think it’s a bold move. I think it’ll be one of those things that’ll play the role of a flagship, which is it is the place you go to experience the brand.

Anne Mezzenga (17:20):

Right.

Hemant Kalbag (17:21):

And to get exposure to the latest things the brand is doing, especially in an environment where I think online adoption for fast fashion continues to grow. So I give them a lot of kudos for trying something new and exciting. And I think, I would not be surprised if this type of a flagship is much more common for other brands in the years ahead because I know several of our clients have toyed with the idea of creating something like this. It’s not entirely surprising because if you remember when Neiman Marcus opened their largest store in Hudson Yards, in New York, maybe two or three years ago, a lot of the language that they used around, what was going to be in the store was very similar things, with the exception of Zara talking openly about warehousing space, which I think is a very interesting play. And it’s really about having a dark store that gets product to consumers faster.

Anne Mezzenga (18:23):

Right. Yeah. I mean, I think that’s a great call out, Hemant. We’ve heard a lot of retailers talking about rolling these things out or conceptually doing these things, but Zara has pulled this off all in one store with one big bang release. So I think you’re right. That’s something that we all should be paying close attention to, especially people in the apparel sector. Chad, what are your thoughts?

Chad Lusk (18:48):

It’s a lot of flash, right? A huge store. I’m curious about the merchandising assortment that would actually fill it. But I don’t know, guys-

Anne Mezzenga (18:59):

When was the last time you were at a Zara, Chad? I mean, that place is bonkers. I mean, you’re just like, how could there be another room? They have added some categories too, like makeup and lingerie and stuff too.

Chad Lusk (19:10):

Fair enough. And maybe a store visit to Madrid needs to be in my future here in order to check this out. But I don’t know, guys. I mean, you got to tell me what I’m missing here. You know what actually got me the most excited about this whole thing, sadly enough? Like the cardboard recycling’s tenure. I mean that’s real ESG practicality.

Anne Mezzenga (19:32):

Yes.

Chad Lusk (19:34):

But I don’t know. I mean, it didn’t feel as tech forward as the magnitude of the list of things really were for me, right?

Anne Mezzenga (19:41):

Wow.

Chad Lusk (19:41):

Like scheduling changing rooms, didn’t see all that impactful. Scan and go, got it. Like, does it actually take it to the next level like the article indicates? The whole replenishment silo, like glorified shoot system that really only works for large kind of stores. I mean, there’s a lot of attempted logistics technology of get in, get out, replenishment. But what was missing for me was any technology related to the actual shopping experience, like the dynamic and interaction between customers and the merchandise. Like where’s fit technology? Where’s digital shelves? Where’s AI-driven smart dressing rooms, right? It felt a lot more like smoke and mirrors to me than anything.

Anne Mezzenga (20:29):

Yeah. Interesting. Okay. I think we have to go. This is on Chris and my list. This news came out last Sunday. Chris and I were like, we are going to Madrid. We have to see this. Because I think, I wanted to take a moment and have all of us who’ve spent their Saturdays trying to buy something from Zara in that line, hold their lighters up in the air and just be like, all right, guys, the moment has come. This is the store for us. It’s not going to do that anymore. See, I saw this and I was like, they’re coming in hard. They’re sweeping Amazon style with a lot of the… I mean, I think just deploying scan-and-go technology alone, letting me get into Zara and see something that I want and buy it and walk out is like, that solved a major pain point for the Zara customers right then and there with just that thing.

I agree with you know, Amazon’s also trying this reserve of fitting room, send things to the fitting room. Zara fitting rooms haven’t been open. They’re impossible to get into. It’s another line you have to get into. It’s clear to me that Zara is really solving pain points for their customers. Now, whether or not it’s going to be as simple as they make it sound quite another thing, but I think that there’s a ton of potential with this. We’ve got to go check it out because, Chad, I think your concerns are valid. We got to see it in person and see what we think about it.

Chad Lusk (21:53):

What I hear you saying, Anne, is happiness is a low base. And so if you can solve those issues, then great, then it looks very future forward.

Anne Mezzenga (22:02):

Right.

Chad Lusk (22:02):

But yeah, let’s book a trip to Madrid. I’m in.

Anne Mezzenga (22:04):

All right. All right. I love it. All right, you guys, let’s go to headline number three. If Zara’s new store isn’t enough for you to get into physical retail, then this next headline is for you because Zuck has said that Meta is ready to test virtual goods in a metaverse. According to CNBC, Mark Zuckerberg said that Meta is testing new tools that allow creators to sell virtual assets and create experiences within the worlds they build on Horizon Worlds. Zuckerberg said, “The ability to sell virtual items and access to things inside the world is a new part of the eCommerce equation overall.” 

Over the course of the next few months, companies and individuals have been snapping up everything from arts to real estate in virtual worlds on platforms like Decentraland and the Sandbox. But it looks now as though Zuckerberg wants to let users do the same thing on Horizon Worlds, which for those listening, that was formerly Facebook Horizon, which is the free VR online video game that allows people to build and explore virtual worlds. Meta published the Horizon game on its Oculus VR headsets in the US and Canada on December 9th, but this is still yet to be rolled out worldwide.

So Chad, virtual products, the metaverse, Meta is all in. I just have to know what are you guys doing? I’m sure your clients are reading these things and coming to you thinking, how the hell do I approach this? What are you telling them?

Chad Lusk (23:28):

First of all, when you first started Omni Talk however many years ago, did you ever think you would read a headline like that? You know the book Ready Player One or watched the Spielberg movie version? For those who don’t know, it’s basically this dystopian sci-fi novel about an immersive virtual reality game. Like, doesn’t this feel eerily similar? I feel like if this ultimately works, Zuckerberg should get like a Best Adapted Screenplay Oscar or something like that. So listen, this will never be me as a participant.

Anne Mezzenga (24:06):

Sure.

Chad Lusk (24:06):

Never say never, but we also, to your point, we don’t advise our clients based on sample size ends at one. Right? So we have had clients and brands come to us asking about NFTs, the metaverse, how it all works, and whether they should get involved. So first just kind of a statement around the metaverse and where it’s going. Meta is clearly playing the long game here. I actually caught your interview earlier this week with Meta’s VP of Commerce.

Anne Mezzenga (24:06):

Emma Rodgers

Chad Lusk (24:35):

Yeah, Emma. She said the same thing, right? Metaverse commerce is super early. And that’s for physical goods, right? But it has an opportunity to serve as she explained this new channel, right? One that’s about discovery, inspiration, some form of exclusivity. So listen, if consumers are drawn in any form to creators and influencers on this platform today for physical goods, as they seem to be, and Emma supported, imagine the bounds without the bounds of physical reality where people can live in these alternate dimensions, be who they want, brand themselves how they want. Like maybe it’s escapism. Maybe it feels more immersive. Maybe there’s some other psychological factor at play. I don’t know.

Anne Mezzenga (24:35):

Right.

Chad Lusk (25:22):

But I watch what my son does with his Fortnite Xbox game or NBA 2K characters. And you can imagine how this would actually take off. And for me, that’s the story here, like what becomes of the metaverse?

Anne Mezzenga (25:36):

Right.

Chad Lusk (25:37):

And so, I don’t think we’re at the point yet that, if you’re a brand and not thinking about the metaverse, that you’re late. We’re not there yet, but if you are thinking about the metaverse, I’d use it as experimentation ground, right? So invest in creators, build these immersive experiences and use this as a mechanism to supplement messages that you’re sending elsewhere. One of the things I’d say is like, as a former CMO, I enjoyed working on big brands that had loyalists that were tapping into a consumer’s desire to share.

Anne Mezzenga (26:16):

Right.

Chad Lusk (26:16):

And what they were doing by sharing brands is it was really acting as a reflection on themselves. And it said something about themselves, right? So they’re your best influencers. And if someone wants to wear a T-shirt with a Twinkie on it, because they love the brand, I wanted to provide them the mechanism to be advocates of the brand.

Anne Mezzenga (26:35):

Right.

Chad Lusk (26:36):

And so I’d think about NFTs and the metaverse in these early stages in that way.

Anne Mezzenga (26:41):

Yeah. I love that. I think I would echo almost everything that you said, Chad, that was my points exactly for this. If you haven’t, listeners, checked out our interview with Meta’s VP of Commerce for business, Emma Rodgers, we just released that yesterday, check out that interview because she does emphasize exactly what Chad said. Somebody from Meta explaining the metaverse and that is continue to develop your partnerships, get with creators. They’re the ones that people are going to be following into these environments.

And I think the other point that she said that I’ll just tag onto that is that you need to maintain your brand’s authenticity in your approach. Just because Nike’s doing it, does not mean that your approach should be the similar one. And I think, Chad, you hit on that really well, talking about exploring NFTs. How are you as a brand providing opportunities for brand advocates to support you in this space? The same way it was when we started mobile too. I mean, I think she used that example as well as like, the metaverse is what mobile was maybe 10, 15 years ago now. Hemant, anything you’d add in closing here?

Hemant Kalbag (27:47):

Oh god. There is a part of me that is just dying to tell all our clients, this is the craziest and the dumbest thing I’ve ever heard. It’s very hard to explain the inherent value of something to a retailer that doesn’t really exist, because we’ve all grown up in an environment where retailers are selling to us as consumers products that we can touch and feel and experience. And what’s changed dramatically over the last two decades is how we buy them, but the end product is still something tangible and that we use. So now think about a revenue stream of business where you are creating something that you are not experiencing as a tangible, but in the virtual is, to me, unbelievable. But I completely agree with Chad. I also have a son and I see how he interacts with the virtual world and the satisfaction it gives him.

Anne Mezzenga (28:52):

Absolutely.

Hemant Kalbag (28:52):

And I think that’s, to me, the inflection point, right? And that inflection point, when that happens and when the group of people who are between the ages of five to 15 today, when they become the primary consuming population, I think this thing is really going to take off. The fact that companies are making investments now to make that more available is in reality, the virtual world is not really that great right now, but I think what Meta is doing is encouraging development [inaudible 00:29:26] 10 years from now when it’s robust enough. Is it possible that at some points, everyone turns around and says, this was the craziest and the dumbest thing we spent time doing? Very possible, but you know, [crosstalk 00:29:41].

Anne Mezzenga (29:40):

It was fun while it lasted.

Hemant Kalbag (29:41):

I remember thinking the same thing when Bitcoin was being talked about five years ago.

Anne Mezzenga (29:46):

Right. Right. For our listeners who are feeling what we are all feeling here and want to be brought back to the real, to the physical, we’ll move on to headline number four. We are talking about Santa Monica Place welcoming small and local businesses to their mall with short-term leases. So according to [Chains2Rage 00:30:08], Santa Monica Place, the luxury mall located next to the highly-trafficked Santa Monica Pier has signed up for Macerich’s quick space program, which allows retailers to rent space from one day to 12 months and offers them tools for managing accounts, making payments, renewing leases, renting storage space, and more. Santa Monica Place is offering up to 15 spaces, totaling just over 5,000 square feet.

Chad, we’re going to go to you first. We spoke to Leap earlier this year, that’s working on offering similar services to D2C brands, but we’re talking one-day leases here. As a former CMO, can a brand really determine what the viability is of running a full store operation in one day or one month? What do you think about this?

Chad Lusk (30:57):

Well, I mean, so as I understand it, one day is a minimum and you can do terms beyond that. Right?

Anne Mezzenga (31:03):

Right.

Chad Lusk (31:04):

I mean, overall, I think this is really cool to see, right?

Anne Mezzenga (31:07):

Yeah.

Chad Lusk (31:07):

So there are many casualties of COVID, like blowing out the candles of a birthday cake that serves everyone, right? I hope the longterm retail mall lease is another one, right? Yeah, it’s going to be a little bit more expensive, but it’s much more retailer friendly to align your physical occupancy time horizon with your scaleup, right?

Anne Mezzenga (31:07):

Yeah.

Chad Lusk (31:33):

And so I like this as a mechanism to not financially cripple a retailer before they get started, that’s kind of on the surface. But the other reason I really like this is because of the nature of what you get with short-term commitments and timing flexibility. So this is great for retailers, testing locations and store concepts, great for popups. Generally good for fueling experimentation, innovation and dynamic offerings in malls where there’s typically a staleness factor. So yeah, I do see the value in it and I hope we see more of it.

Anne Mezzenga (32:07):

Yeah. I agree. I was just walking some mall properties on Monday with some developers and it is pretty bleak. I think at the very minimum here, it does offer something, activating these windows that have been dark for so long during the pandemic. Hemant, what do you think? What are your thoughts here?

Hemant Kalbag (32:25):

I agree with you guys. I mean, A, I’m just glad that real estate developers are driving some innovation into the business because the role of the stores has changed so much. So, that’s good to see. I like the angle that they’re creating opportunities for startup and new businesses that don’t want to sign a 10-year lease to get and establish their brand with a limited retail footprint. And I think that’s a good thing. Outside of that, probably not a big event for me as far as retail news goes.

Anne Mezzenga (32:56):

Right. Yeah. I think the thing that I would caution brands about and really thinking about going into these mall properties is still, when you’re thinking about your strategy of going in as a popup, how much of these short-term leases is really going to inform your longterm go-to-market strategies? Just because a popup is working in three months during the summer, and you’re selling flip-flops and bathing suits does not mean that… Or the cost of that investment, staffing and all these other things, which is why I mentioned Leap earlier. I think that there’s more to the business component of this. So you just really need to be careful about the quick spaces not being the model that you use for building the future store model.

But let’s move on, headline number five. So Wakefern is piloting shelf-scanning robots. According to Supermarket News, Wakefern Food Corporation, which is the nation’s largest grocery retail cooperative plans to test the Tally shelf-scanning robot by Simbe Robotics, which will enable autonomous inventory management. Wakefern will deploy Tally at selected stores throughout its trading area, including some ShopRite locations, joining Hive and Schnucks markets who are already using Tally in their stores. Chad, we’ll go to you on this final one. What are your thoughts on this investment?

Chad Lusk (34:13):

All right. Anne, maybe I’ve become a little too much of a child of Omni Talk here, but Chris isn’t on the show today, but I’m going to make a Chris-like hyperbole. Ready for it?

Anne Mezzenga (34:26):

Oh gosh. Oh man.

Chad Lusk (34:27):

Here we go. So after contactless and just walkout technology, I believe this is, or at least should be the next biggest wave in retail tech. Right?

Anne Mezzenga (34:39):

So specifically the Simbe robots?

Chad Lusk (34:41):

Well, whether it’s robots or not, but on-shelf monitoring, visibility technology.

Anne Mezzenga (34:47):

Shelf-scanning technology.

Chad Lusk (34:48):

Right.

Anne Mezzenga (34:48):

Okay.

Chad Lusk (34:49):

So Dave Ritter from CRG, multiple time podcast attendee here, he and I wrote a paper together almost exactly a year ago at this point about how new computer vision AI technology capturing this real-time shelf data has the ability to finally close the age-old retail problem of on-shelf availability.

Anne Mezzenga (34:49):

Right.

Chad Lusk (35:13):

Right? So let’s talk grocery in particular. So pre COVID, out of stock rates routinely hovered around eight percent, with spikes of 10 to 15% on promoted items. It just became accepted and commonplace and quite frankly, unsolvable in grocery retail. So we and others have referred to it as the trillion dollar black hole because that’s what this eight plus percent gap is worth in lost sales. So flash to COVID, ever since the height of 40 plus percent stock out rates, supply chain disasters that we’ve had, we still haven’t even gotten back to 8% yet. And so the issue has been this huge visibility gap between inventory in and POS monitor sales out to know what’s actually happening on shelf and what’s available for sale. So try to make it brief, because we could do an entire podcast on this.

So Dave and I wrote this paper and we got the benefit of real shelf data and insights from the CEO of another company that does this, they do it with phones and drones, Richard Schwartz from Pensa Systems. We wrote it as a call to action for retailers and CPG brands because these guys can benefit significantly from the data from a series of use cases, right?

Anne Mezzenga (36:33):

Right.

Chad Lusk (36:34):

So think about next-generation demand planning and dynamic allocation by store, alerts to in-store associates for execution and replenishment, accurate on-shelf availability information for pickers and BOPUS, planogram compliance, and just flat out not frustrating customers or losing sales because expected product isn’t there.

Anne Mezzenga (36:34):

Right.

Chad Lusk (36:58):

So this is a big, big unlock to improve both the customer experience and drive more efficient operations. Have I sold you?

Anne Mezzenga (37:07):

Yes. I mean, I was on board. I heard this headline, I was like, everybody watch out for Wakefern because they’re about to blow up. I mean they just signed with Trigo. They’re going to be the first in the US to deploy check-out-free technology. Now with the inventory visibility that they’ll have between those two efforts, I mean that place is going to be one of the like banners, I think in the US from a grocery market.

The other thing too, Chad, that I would add that I know Simbe’s like, it’s not as common that people are aware of this, but also the pricing data, the amount of money, the revenue to be recuperated when you start looking at on-shelf pricing and promotions and what’s there and what’s not. And I believe they have like these printers that can go in on the money, just go in and swap prices with the frequency that those prices are changing. So in addition to having product available and on the shelf, are you getting the right amount of money or is your customer seeing the promotions that you have going on?

Chad Lusk (38:03):

Yeah. I’ll add another one from a CPG perspective, because I first started looking into this technology as a CMO at a CPG company, right? And having the ability to understand store level sales relative to your shelf positions, your adjacencies, what actually happens if I sit on second versus third shelf or if I’m directly next to this competitor, the value of a brand block, like being able to measure all of that with that level of specificity is tremendous.

Anne Mezzenga (38:34):

Absolutely. Hemant, you’re shaking your head. What would you add in closing here?

Hemant Kalbag (38:36):

I’m shaking my head… Well, Chad and I work together a lot and we are good teammates, so I hate to disagree with him in public, but I agree with 50% of what he said, which is, I believe on-shelf availability is the big opportunity for retailers. And the part which maybe I might disagree with a little bit is, is robots walking around the store the right way to address that opportunity? Because most of the on-shelf availability issues that retailers have are not because they don’t know what’s on shelf. The major issues are because supply chain is not working the way it’s supposed to. And stores don’t have the product that they need to put on shelves. It’s not because they don’t know that a shelf is empty. Most of the time a supermarket has empty shelves is because that backroom doesn’t have the product to replace it with. Yeah, you get the tagging wrong sometimes, sometimes you forget to replenish, but the biggest issue is in my mind for sure supply chains. But I agree with Chad, that’s the big opportunity.

Do I like to see robots in retail stores? I kind of do. I think this is kind of a cool thing that’s going to be… You remember, I think they still have them, you go to a hotel and there’s a mini bar and you pick up a drink from the mini bar and there’s a sensor that knows that you’ve taken it and they charge your room. The idea of this technology has existed. You combine them with what’s going on with autonomous cars and you have these cool robots walking around the store that, I saw a picture of it, they actually make them kind of look cute and like [crosstalk 00:40:14].

Anne Mezzenga (38:36):

It’s the googly eyes for you, Hemant.

Hemant Kalbag (38:36):

Yeah.

Anne Mezzenga (40:14):

Right? That’s what did it for you?

Hemant Kalbag (40:17):

Am I excited that we’re trying this? Absolutely. But I think this is the most complicated way to solve the most immediate problems around on-shelf availability. It’s the stuff that you were talking about and that Chad was talking about is the future applications that I’m really excited about. Having a promotion, but that promotion being displayed incorrectly and having the ability for a robot or artificial intelligence to pick that up, I think that’s the big opportunity and that’s the big unlock. It’s not on-shelf availability. Because a robot can tell you that the shelf is empty, but if you don’t have it in your back room, that’s not going to help you do much.

Anne Mezzenga (40:56):

Right. Yeah. The less sexy applications, but definitely those that are imperative for store operations. All right, you guys, thank you. We are going to go to the lightning round. Chad, we’re going to start with you here. Chad, your first question. Dealers were apparently on alert for a green diamond weeks ahead of last week’s big Benefer engagement. The actual engagement ring that they did find holds an estimated value of five to seven million. Now Chad, the most important question of all this is, what is the better JLo song, Jenny from the Block or I’m Real featuring Ja Rule?

Chad Lusk (41:34):

I’m Real is the better song. But I mean, Jenny from the Block, I mean she used to have a little, now she has a lot. And you know it.

Anne Mezzenga (41:41):

She’s got a lot.

Chad Lusk (41:42):

Yeah.

Anne Mezzenga (41:43):

She’s’ got a lot more.

Chad Lusk (41:44):

She has an awful lot now.

Anne Mezzenga (41:46):

Right. All right, Hemant, question number two for you. Panera is the first retailer that is evaluating Miso Robotics’ CookRight Coffee robotic coffee monitoring solutions, say that five times fast, which measures key coffee metrics such as volume, temperature, and time data to ensure that they’re serving properly prepared coffee. Are you for or against robots making you the perfect cup of coffee?

Hemant Kalbag (42:15):

Oh, I already kind of showed my hand about how I feel about [crosstalk 00:42:17].

Anne Mezzenga (42:17):

You did. You did.

Hemant Kalbag (42:18):

I have to say it’s a real pleasure in my life to go to a coffee shop and meet a barista, wearing a beanie, who has a bad attitude, who can’t pronounce my name or spell it. That is the highlight of my day. So I’m going to stick with the baristas over robots.

Anne Mezzenga (42:33):

Even if the coffee machine has googly eyes. What about that?

Hemant Kalbag (42:38):

I’m fine. I’m sticking with my people.

Anne Mezzenga (42:41):

All right. Chad, Etsy sellers are striking over a 30% increase in transaction fees that Etsy will be collecting on goods sold. Which Etsy product would you be most willing to join the picket line for, the Smells like Nicolas Cage Soy candle, or Croccoons, Crocs made out of taxidermied raccoons?

Chad Lusk (43:01):

Oh man. Keep me far away from taxidermy and give me some of the musk. Absolutely.

Anne Mezzenga (43:08):

You want that Nick Cage musk.

Chad Lusk (43:10):

I want that Nick Cage musk.

Anne Mezzenga (43:11):

All right. All right. I’m putting those words down here. All right, Hemant, last question’s for you. Lush has opened its first vending machine popup in London’s Coal Drop’s Yard and King’s Cross serving customers 24 hours a day. If on your next consulting contract, you could provide clients with a rider requiring that you have a 24/7 vending machine, what would you want available to you on a 24/7 basis?

Hemant Kalbag (43:37):

See, I’m going to do a 180 now and I’m going to go back to coffee. Robotic coffee, 24/7. A good cup of espresso anytime I want, that’s what I would put the rider for.

Anne Mezzenga (43:46):

I like that. I think that’s a great use case. Yes. You have the barista option when you want, but if you are working on a project 24/7, I think coffee’s an absolute necessity. Well, thank you guys so much for playing along with us today. If people want to get in touch with you, where’s the best place for them to do that, Chad?

Chad Lusk (44:08):

Yeah. A number of different sources. You can visit us on our website, alvarezandmarsal-crg.com, or visit us on our new LinkedIn business page, Alvarez & Marsal Consumer and Retail Group. And then, of course, you can reach out to either Hemant and I directly on LinkedIn.

Anne Mezzenga (44:26):

Yeah. That shiny new LinkedIn page dropped last week. It was pretty exciting. So we’ll be tagging that in all of our show notes too, and making sure that you guys know how to get in touch with both Hemant and Chad and the teams at Alvarez & Marsal. Want to wish a happy birthday today to Win Butler of the incredible band, Arcade Fire. Loretta Lynn and Da Brat, quite possibly the most strange Lollapalooza that could ever come together.

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 we try really hard to get that all within the preview pane of your inbox. You can sign up today at omnitalk.blog or leave us a review where you’re listening to this podcast. Thanks as always for listening in, please remember to rate us on YouTube and also check out all of our coverage that we have from this past week of Meta’s Emma Rodgers, as we mentioned, Peer Leader’s Laurie Weston. And of course, as always, be careful out there.

The Omni Talk Fast Five is a Microsoft-sponsored podcast. Microsoft Cloud for Retail connects your customers, your people, and your data across the shopper journey, delivering personalized experiences and operational excellence. And is also brought to you in association with the A&M Consumer and Retail Group. The A&M Consumer and Retail Group is a management consulting firm that tackles the most complex challenges and advances its clients, people and communities toward their maximum potential. CRG brings the experience, tools, and operator-like pragmatism to help retailers and consumer products companies be on the right side of disruption.

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