Anne 0:07
Hello, you are listening to the Omni talk Fast Five brought to you in partnership with Microsoft, The a&m consumer and retail group, takeoff and sezzle. The Omni talk Fast Five podcast is the podcast that we hope makes you feel a little smarter. But most importantly, a little happier each week too. Today is July 13 2022. I’m your host Anne Mezzenga
Chris 0:28
And I’m Chris Walton
Anne 0:29
And we are here once again to discuss all the top headlines making waves in the world of omni channel retailing for this very special Early Edition Chris of the Fast Five
Chris 0:38
yes and *Spanish* today
Anne 0:41
oh my god. You are going to speak any broken Spanish the entire time we’re in Madrid. I’m going to be like walking 20 paces behind the door
Chris 0:50
*Spanish*
Anne 0:50
Oh my god. I am already embarrassed. Yes. We’re heading to Madrid. We got some fun plans there. It’s gonna be exciting. There’s a lot to check out. Especially under 183 Heat
Chris 1:06
It is what I think the word I think especially as balls hot in Madrid Anne
Anne 1:10
Yeah
Chris 1:11
But yeah, we got some fun things. We can’t tell you about them yet. But we’re going to we’re going to hopefully show them to you very shortly after our return, after we return from Madrid. I’m excited last summer I was in Madrid Anne 1995
Anne 1:23
Oh wow.
Chris 1:24
Summer of Love
Anne 1:26
Why were you in Madrid.
Chris 1:27
I was in Madrid I was actually part of ASU’s Spanish programme after high school and they had this like trip the seven week trip the seven week trip to Spain. Time of my life Anne. Ran with the bulls. You know, I didn’t become a man but I you know, it was it was it was a very maturing experience. Yes, I still the beta is still out on whether that’s happened. But um, yeah, it was such a cool city. I loved it. Casa de surveyss um, firstly, I’m looking up when we go when we go there because I’m hitting that place hard.
Anne 1:57
I’ve never been I’ve been to Barcelona, but I’m really excited.
Chris 2:00
I have no idea If it’s still there, either. But
Anne 2:02
I do understand why everybody that we talked to at Shop Talk Europe was like you’re gonna you’re gonna go to Madrid in July. Are you sure you wanna do that?
Chris 2:10
But hey, from Arizona can handle the heat. At least one of us can. The other one. I’m not so sure. But hey, normally this is also the part of the show where we read reviews, but this week, we’re going to shower some love, because we’re probably going to need some quite a few showers when we were in Madrid. But so don’t fret J recruiting Jen and M Thygesen. If I’m saying that right, we will still read your reviews. We see them in the queue. We’ll read them in the weeks ahead.
Anne 2:33
Yeah
Chris 2:33
But today, we are sobering in a big way Anne because Anne
Anne 2:36
What?
Chris 2:37
I bet you didn’t know this, but did you know that last week we surpassed all of 2021 in listens?
Anne 2:42
No,
Chris 2:43
Yeah, pretty sweet
Anne 2:44
It’s only July, we’re at July 13.
Chris 2:46
I know. It’s even just barely the beginning of July. So that basically means in the first six months of the year, we’ve essentially exceeded last year already.
Anne 2:53
Wow.
Chris 2:53
It’s on pace for what they call the double in European parlance Anne.
Anne 2:57
What’s the double?
Chris 2:57
The double the doubling of our listens in less than a calendar year. So huge thanks to all our listeners, and especially to those that have been kind enough to leave us a review. Seriously, guys, every difference really, really does make a difference, at least it does to this show and to Anne and myself. So thank you. Thank you so much. Please keep leaving them for us.
Anne 3:16
Yeah. Wow. That’s, that’s amazing. Thank you so much to everybody. And please do I know we say this every week, but leave a review. We’re talking to you. Again. I feel like I’m doing the like NPR like, you know, getting trying to get people to sponsor and
Chris 3:30
You put too much energy in your voice for NPR
Anne 3:32
I know. I know.
Chris 3:33
Please leave us a review on
Anne 3:35
What do you like about the show? So what is that sweaty balls?
Chris 3:39
Oh the Sweaty ball? Yeah,
Anne 3:41
No, but in all in all seriousness, please leave us a review. If you’re listening on Apple podcasts, heart, the podcasts on Spotify. If you’re on Google Amazon music, you know the drill, but follow and subscribe so that we can keep making the best content possible for all of you. And we will absolutely read it aloud on a future show for our listeners to hear. But
Chris 3:45
Yes, we will.
Anne 4:01
Let’s move on.
Chris 4:01
Anne today’s actually a special show. And now is that a special show, but the next 10 weeks are a special show because today and for the next 10 weeks. Our Fast Five reads are brought to you with the help and support of our good friends at grocery shop.
Anne 4:14
Oh, dang.
Chris 4:14
Dang. Right. Anne we’ll be there. I will be there.
Anne 4:17
Oh Yeah.
Chris 4:18
And we think many of you should be too so don’t delay. Reserve. Reserve your ticket today because prices actually go up on Friday.
Anne 4:26
You got to get that
Chris 4:27
You got about 48 hours to get in there. Get that deal before prices go up. Just go to groceryshop.com to register.
Anne 4:34
Yeah, it’s prime prime day days. And the last week to sign up for groceries. Yep. before it goes.
Chris 4:39
It’s raining savings Anne
Anne 4:41
So many deals.
Chris 4:41
All right.
Anne 4:42
We’re going to talk about that today?
Chris 4:43
Yeah, we are prime is definitely going to be something we talked about. Alright, in today’s Fast Five news. We’ve got stories on Amazon, unveiling a new dash cart for Whole Foods. Walmart again, this time but this time refusing to join in the Prime Day hype. Costco reporting Big June sales numbers go puff laying off more people and closing warehouses. But first we’re going to take off as I mentioned before Walmart again with another story from Walmart.
Anne 5:09
That’s right, Chris Walmart has agreed to buy at least 4500 electric delivery vans from canoe. According to CNBC the vans are slated to go into service in 2023 and are designed specifically for local delivery service. This is Walmart’s third deal for electric delivery vans this year and comes on the heels of deals with General Motors and Ford. Walmart also said they intend to use these vans for their in home delivery service, which it says it plans to expand from as well. Omni tech fans will remember
Chris 5:39
Yes it will
Anne 5:40
6 million to 30 million households by the end of the year. Chris, you’re having some coughing spells?
Chris 5:48
Yeah, I did an Iceman there Yeah. My brother from another mother.
Anne 5:52
Okay. But what do you think
Chris 5:54
What I think?
Anne 5:54
Yeah, are you like all go on canoe.
Chris 5:57
I’m actually
Anne 5:57
Get your paddles on.
Chris 5:58
I love that. I’m actually putting my hands up for those watching on video. Finally, finally, I love this. I think this is a move. I can actually I think I can get behind this. It makes it makes so much more sense than drones.
Anne 6:11
Yes.
Chris 6:12
Because it’s a way more affordable long term way to do one to many delivery than one to one delivery with drones. Like we’ve talked about, like let’s just get that on the table. But I still think I still think the 6 million let alone 30 million people signing up for in home delivery is crack smoking. That would put even bubbles best friend from the wire to shame you remember bubbles best five from the wire?
Anne 6:34
Oh Yeah.
Chris 6:35
And sidenote, I’ve been watching the wire I’m on the on season two. I’ve never seen the show. It’s amazing. So but I mean net net. All in all, I love this move. I like it a lot.
Anne 6:44
I do too. I think it’s amazing. First of all, have you seen the canoe like setup? Have you seen how they like have these? They built these. They call them skateboards so they’ve like built the chassis. Is that the that’s the bottom part of the car, right? I act like I know
Chris 7:00
I’m assuming so
Anne 7:01
Anyway, so like the bottom part of the car. They did this special
Chris 7:04
My skis on Mechanical Engineering
Anne 7:06
For sure. But they like built it in so the base of the whatever the vehicle, they have the battery built into it. It’s like super flexible. I love it. I was very impressed I will say by the Canoo construction, as you can see from the video that they have online. But I think that it means something here that Walmart is putting a big time investment. I mean, we’re talking hundreds of millions of dollars in these can new vehicles, especially when they’ve been dating around like they were talking to Nuro they are talking to Ford to Waymo like all these companies and this is where they’re deciding to invest their money. They might be it might be a slightly more expensive investment than drones. But I am telling you, I think this is way, way better, the much more strategic approach. And yesterday I spent I tried to find out like side by side what’s the comparison of like cost of investing in these vehicles versus drone?
Chris 8:00
Oh, really?
Anne 8:01
Oh, man. Did I go down a rabbit hole I saw like a the drone up investment. They like put together a proposal for Amazon. It was like on this like deep down AWS site. The Drone Up proposal. Oh my gosh, there’s like six spreadsheets of people they need for one drone deployment. And I’m just like, This is crazy. Obviously this is the much smarter moves is just a truck that needs to drive. It can go on the road in 2023 We’re not like doing pilots. It’s ready to go. I’m I’m way into this. But Chris, I’ll give you the final word.
Chris 8:30
Right. No, I mean, I think I think that’s great that you did that because I was I was thinking about that too. But I mean, first of all, because we brought it up like final word on drones. I I have a buddy that flies, aeroplanes,
Anne 8:40
Okay,
Chris 8:41
that is not not a buddy. He’s a dad that goes to my kids karate class with me. And he saw our video and he’s like, what’s the deal with all these drones? Like, is that really a thing? And I was like, I don’t think so. And we got to talking to it. And then it kind of struck me like something that that pointed out to me why drones are so dumb. If you think about the airline infrastructure, the way it’s set up is like there’s hubs, each airport serves as a hub that gets people from place to place. It’s not set up where there’s a hub that then takes all of us to our individual homes
Anne 9:09
Well on the Jetsons it is.
Chris 9:10
Yeah, right, because that’s just completely untenable in the skies. Like there’s no way this ever gets anywhere in my opinion for that, that reason, just philosophically.
Anne 9:20
Yeah.
Chris 9:21
And then another point I raised she was like, I gotta wonder too if you start seeing some in that some some acquisitions here in this space pretty soon too, because can use market cap after even after this announcement was just an array. I think the stock rose like 20-30% Yeah, it’s like a billion dollars and you think they paid $3 billion for Jet. These these types of vehicles. Once they figured out the one they want to use could be used across the industry seems like a much more valuable place to put your investment than say, like, you know, where Walmart has put it in the past. And to your point, it’s probably less expensive than the efforts you’re doing towards drones right now. So let’s
Anne 9:51
And they are so cool.
Chris 9:52
So yeah, I like this, hopefully that Walmart starts to reallocate some capital in this direction. Alright, Anne Amazon. So it’s a big story this week. Amazon has a new version of its dash cart that is bigger and can be brought out to the car.
Anne 10:06
Oh
Chris 10:07
And also it’s ready to roll in Whole Foods. According to our friend, Dilip Kumar in a press release yesterday.
Anne 10:13
Yes
Chris 10:14
One that he wrote personally the new carts weigh less but offer double the capacity, have a lower shelf for oversized items an absolute must for grocery cart and can now handle the weather meaning they can even be brought out to the car. But the most important part of the story to me Anne is that for the first time the dash cart will be available to Whole Foods customers at a store in Westford mass, in the coming month. Your thoughts please.
Anne 10:38
So I think this might have me like starting to believe a little more strongly in the Smart Cart Possibly.
Chris 10:45
Say why Because I might be there too.
Anne 10:48
Okay. Well, I think because, first of all, if Amazon still believes there’s a purpose for the Smart Cart, I believe that there’s some reason that they’re still pushing forward with this. I still deliver I want to check the weather thing. I want to see these the Amazon Fresh stores that are about to open here in Minneapolis come January, just because they can go out to the car doesn’t mean like if it takes 20 minutes for that battery to heat back up once you get inside the store,
Chris 11:10
Or the heat in Arizona.
Anne 11:11
Or, the heat in Arizona. Exactly. But, you know, I like I said, I think it’s important that Amazon believes there’s still a purpose. I wonder why that is. So that’s kind of the the row that I was going down. Like I think
Chris 11:23
I have an answer for that
Anne 11:24
Is it consumer preference. Like I do still believe as we start to get into these larger grocery footprints that there’s still something nice about having a cart versus just like carrying the shopping bags around or just throwing something in your bag like the Amazon Go convenience stores. And especially as those baskets start to get larger as you we start to see more people spending more time
Chris 11:43
We still have a cart. I mean, they just walk out technology stores the same way you still have a cart, right, like just for clarification, okay.
Anne 11:49
Well, you can Yes, you can still have a car. I’m just saying like these smart cards, like whether or not that makes sense for the customer as part of like, graduating them into this or bridging the this experience from you know, like a whole foods as it was before to now a whole fries with just walk out.
Chris 12:05
Right. Yeah. Right. Right.
Anne 12:06
And I guess ultimately my question is for Amazon, like, as these footprints are expanding again, is this giving them better item accuracy,
Chris 12:13
That’s a great point
Anne 12:13
As they’re starting to like, figure out okay, now we’re in a 25,000 square foot store, not the, you know, 1500s square foot Amazon Go store? Is this helping them with some things? And is it consumer preference and Amazon’s preference?
Chris 12:27
Yeah, I think I think those are great points Anne. Yeah, I mean, I’m kind of I’m kind of coming to your side of that a little bit, you are thinking the same thoughts. And for the record, like for those of you guys that maybe are new to the show, Anne like don’t really talk about the stories ahead of time, maybe a little bit, but this is one we didn’t touch on at all to get our thoughts on it. We just knew it was a big one that we want to cover. I think I had a conversation. I think it was with Greg London on social media.
And sorry if, I’m sorry, if it wasn’t Greg, it was somebody else I apologise. But I talked to a lot of people on social media and I tried to look for it. I couldn’t find it, but and the conversation, even though I didn’t agree with him, the conversation was about the smar tcarts versus just walk out technology, computer vision. But it opened my eyes to something and that is that smart carts and just walk out technology are not mutually exclusive. And I think your part is exactly right. Both can coexist as a consumer. But more importantly, for the retailer. I’ll always prefer the benefits of the just walk out technology in total. But I could see the smart cart still being involved in some way. And for that, like exactly why you said it’s another data correlation point. And it’s also another way to talk to the consumer as they’re shopping.
Anne 13:30
Okay
Chris 13:31
So if you’re using those side by side, I think it could work. But if I’m choosing one or the other for the long term, I’m still going in the way of just walk out technology, because it gives you all the benefits of understanding inventory in real time understanding all the activities of the store at all times, but you’re not going to get with a cart. It’s just not going to happen.
Anne 13:46
Right.
Chris 13:47
The Whole Foods angle, though, is interesting to me.
Anne 13:49
Yeah. Why?
Chris 13:49
I’m a little more jaded on that. I think it signals something and I think it’s signals that it’s odd that they’re doing this versus retrofitting a store with the just walk out technology, the only place they’ve deployed, just walk out in Whole Foods is in a like basically a new build.
Anne 14:04
Yep
Chris 14:05
Essentially, they shut that store down, rebuild it from the ground up. So me indicates to me that maybe the tech isn’t ready yet for a retrofit environment.
Anne 14:13
Okay
Chris 14:13
I don’t know. I can’t know for sure. But it at least gives me pause that that could be something at play here. And to your point, they want to acclimate customers to this technology. See how much could also just be like, let’s see how much is really behind the Smart Cart.
Anne 14:26
Right?
Chris 14:27
Because it’s the only thing for me is like you brought up they still are opening all their new Amazon Fresh with just walked out.
Anne 14:32
Right. Right.
Chris 14:32
So that’s what they’re leaning into.
Anne 14:34
Yes.
Chris 14:35
And they’ve got like almost 40 of them now if I’m not mistaken. So that just tells me something.
Anne 14:40
Yeah, no, I think you’re right on. I think the whole foods point is a great one to Chris. I think just the just the smart cards that gets back to like old school to what we were talking about. Were like Kroger’s testing some of the caper cards
Chris 14:54
Right
Anne 14:54
Some of these other things like is that experience going to pay off for a Whole Foods customer without that that whole full just walk out experience and how much more confusion is that going to enter into the equation? Like will they get the data that they want in that test?
Chris 15:07
It’s like kissing your sister a little bit. You know, it’s that expression of kissing your sister like you’re doing it like fine. Yeah. Okay. But you’re not getting the benefits that computer vision can provide you total retail operation.
Anne 15:16
All right, Chris, let’s move on to headline number three. Walmart. They put their flag in the sand. They said we are not joining Prime Day Chris. We are not going to play that game Amazon.
Chris 15:26
No, they don’t wanna be in the Malay
Anne 15:28
No According to CNBC after typically throwing their own overlapping Sales Event. Walmart this year sat on the sidelines, as the big box retailer has already had weeks long, deep discounts on items, including everything from bicycles to air fryers, apparel, and more as it tries to sell through excess merchandise. Chris
Chris 15:47
Yes
Anne 15:47
This is also where a&m would like to put you on the spot this week.
Chris 15:51
Bring it a&m.
Anne 15:52
All right, a&m says we’re observing retailers and manufacturers taking different approaches and strategies to Prime Day from a promotional depth and marketing campaign standpoint, with many taking Amazon head on. What do you think are the implications for those who tried to go toe to toe with Amazon versus sit on the sidelines like Walmart? And how much of that depends on who you are as a retailer.
Chris 16:14
Whoo. That’s another God another fabulous question. These guys are on a roll with these questions. God, let me think about that for a sec. So I think I think the way I’d answered that would be in normal times.
Anne 16:26
Okay.
Chris 16:26
And emphasis on the word norm. Yeah,
Anne 16:27
I was like, when was that last?
Chris 16:29
Yeah, right. Well, yeah. I mean, you’re right. No, that’s a good. That’s a great point. Like it’s probably normal times been for the last few years, but especially not this year.
Anne 16:37
Yeah.
Chris 16:37
And I’ll say why in a minute. But like, I think, in normal times, you have to participate, especially if you sell market available goods. Because if you’re a retailer that’s in that business, these events are going to pull demand in, they’re going to pull demand up from later in the season, like people are going to wait for the sales to buy what they want. And you’re going to be left holding the bag.
Anne 16:55
Yeah
Chris 16:55
So I think you have to participate. Now with that said, like you alluded to, which I thought was great is this year is also really, really unique. I can see why Walmart would do this for a couple of reasons.
Anne 17:05
Okay.
Chris 17:06
All right. One, their demand and supply can be so out of whack. That adding promotions like this, just make forecasting and forecasting their inventory needs going into the back half of the year, even more difficult with just how effed up the supply chain.
Anne 17:21
Right Right.
Chris 17:21
Like why adds so much more variability into what you’re already trying, and probably having a hell of a time trying to figure out how much you’re gonna need for next year. So in some ways, it kind of makes sense. And then two the jaded side of me says that this signals that Walmart already knows the quarter that has in front of them, and I don’t know which way it’s gonna go, I think about at first I was kind of negative, but then I was like, it could just be like, crap we do at big grocery business, inflation is killing it for us, like our, our results are gonna be good. So we don’t need to play in this game.
Or they can be like, our sales are so bad. We’ve already run a Walmart plus day, we’re clear through excess inventory. It’s not going to add anything at this point. Either way, the answer is why put it in our base, John Turner and Doug McMillon are probably saying, why put this in our base. Let’s come back to it next year, when we get the automatic when things kind of return to normal, we get the automatic lift in our sales when we report our earnings next year, this year, we’re just going to take our lumps and roll with it. That’s kind of my take here.
Anne 18:16
Do you think that they get any like, reprieve next year, even if they’re like, Well, I mean, but there was like inflation was at an all time four decade high and whatever. Like there’s all these different factors if they if it does come back to bite them next year for doing this, or do you think that it’s just like,
Chris 18:31
I don’t know, I kind of The other thing I thought about in last night, you know, and think about the story too, is they kind of already did it. They did Walmart plus days
Anne 18:38
Right
Chris 18:39
You know, which is kind of the same damn thing.
Anne 18:41
Right
Chris 18:41
Right? And so like, you’re kind of saying you’re not participating, but you kind of did.
Anne 18:45
Right.
Chris 18:45
So like, I see them still doing something. And we’re gonna have to anniversary that already.
Anne 18:50
Exactly
Chris 18:50
So like, I don’t know, I just I just think I think the I think the story is funny. And it’s just it’s another sign of what’s going on at Walmart, I think.
Anne 18:58
Yeah, I think your points are brilliant. You know,
Chris 19:00
Brilliant. I got a brilliant? Wow
Anne 19:01
I do. I think that that we did discuss this briefly yesterday, but you really got me thinking on this one. I think they clearly have some other some other things going on in the background. And I think that it might be a smart decision for Walmart this year to not like divert more resources, like you said to another prime day just to be in competition. And it sounds like they already have a tonne of like, there’s so much excess inventory, that they’re already seeing deals in the stores too. So I think that, you know, is it going to be worth is the juice worth the squeeze, I guess. And I really am curious to see what’s happening over the course the next few months, especially as we go into a recession, and how these retailers start to play against one another. Because like we did an event with upside yesterday with Tyler Renehan, their VP of Retail and it’s like if you’re just going to race to be the price leader, which isn’t I mean, people are going to make decisions on where they’re going based on price. You’re it’s just gonna be a race to the bottom and like, that’s not providing a better shopping experience. For your customers, your there’s going to be something that that you need to do as a retailer to get your to add the convenience to get people to be coming to you versus price. I just don’t think that’s going to be a good strategy, which is
Chris 20:10
Which is actually, which is actually a great segue into our next story.
Anne 20:13
Yeah
Chris 20:13
Because I think our next headline, even though it’s very different from what we just covered it, there’s a lot of connections that can be made in it, I think. And so I’m curious to hear anything on that. So
Anne 20:21
I agree.
Chris 20:22
Headline number four, according to chain storage. Costco sales were up 20.4%. In June, Holy Hannah,
Anne 20:28
They did get an extra day, I guess. Because of what the July, July 4?
Chris 20:32
Yeah, right. Yeah. 3% 3% of that number. So still 17% Roughly, sales were up. No doubt much of these numbers were buoyed by gas sales. But even excluding gas Costco still posted an overall comparable sales increase of 13%. And also, this was interesting to me, too. An 8.3% rise in comp ecommerce sales.
Yeah.
So Anne my question to you is this, does this performance state to you more about Costco or more about the state of retail given inflation?
Anne 20:59
I think that, you know, like we were talking about with a Walmart story, Chris, I think inflation is a real thing. It will become more real as we start to get closer to the end of the year when people are running out of the reserves that they had during the pandemic. And I think that people are starting to change their shopping behaviours based on price, but also based on what’s more convenient.
And I think that they’re just looking for who can I go to reliably to get the best deal on the best products. And I don’t think people care anymore. If it’s like Kirkland ketchup, or Heinz ketchup, they just want to know, like, I know, if I go to Costco, I’m going to get the best deal on ketchup, and I’ll have it for a while. And I don’t need to go to the store again. And I think this is I believed this. So I then went in and did some digging yesterday on my I was curious, because I wanted to test this theory. Because I was a little, I don’t know,
Chris 21:54
You went to Costco Yesterday?
Anne 21:55
I didn’t go to Costco. But I did an online comparison
Chris 21:58
Oh online comparison. Okay.
Anne 21:59
Um, and what I was curious about is, I was a little disappointed at Prime Day yesterday, I’m not gonna
Chris 22:04
I think a lot of people might’ve been.
Anne 22:06
And so I wanted to see the things I had in my basket for Prime Day and compare them to the price the everyday price at Costco just to see like how things compared and for each of the following items, the Costco price was either the same as the Prime Day Special, or like within a few dollars of each other. That was for a variety of things, including the pickleball.
Chris 22:25
These are all things that were on your shopping list?
Anne 22:27
These are on my shopping, these were in my cart for Amazon Prime, pickleball Set,
Chris 22:31
Okay
Anne 22:31
no, no show women’s socks.
Chris 22:34
Okay
Anne 22:34
A standing fan, like a rotating fan. And an espresso machine.
Chris 22:38
Whoo you’re in the espresso market.
Anne 22:39
I was looking No, it was a Prime Day deal like firesale, Lightning Deal, or whatever they call them. I think that that’s an important thing to pay attention to, like I that makes Prime Day totally irrelevant for me. Like if I know that I’m the socks that I need, like, I’m, I’m buying all these things, because I think it’s going to be a better deal. And maybe some things you’re getting, like super steep discounts on but I know and I think a lot of customers know, and that’s why Costco was, you know, sales went up so significantly, they know that they don’t have to play any games, they just go to Costco, and know they’re gonna get a good deal and good products.
Chris 23:14
Well, I think that’s what it is. I don’t think it makes Prime Day irrelevant. It just means, you know, Prime Day still get your attention, right. Like you still went there first. But I think that’s the that that’s that’s the key that the key thing for me is what is what you just said there at the end, which is like, you know, what you’re getting at Costco, you know, why you’re going there their model is built the way it is. And it’s such a formidable model, like, there is real value to that membership. And they work their asses off to at a margin structure that they don’t change to give you the deals that you can count on that you can take to the bank.
Anne 23:45
Yes.
Chris 23:46
And it doesn’t come in the form of hokey gimmicks.
Anne 23:49
Nope.
Chris 23:49
Like in home delivery. And Walmart plus in prime days.
Anne 23:53
Right.
Chris 23:53
Right. It’s not about it’s not about like, which is kind of when you think about it’s kind of crazy that like Walmart everyday low price leader is doing what Prime Days.
Anne 24:03
Right Since they already,
Chris 24:05
Walmart plus days,
Anne 24:05
yeah.
Chris 24:06
Like
Anne 24:07
Shouldn’t they already be that? Shouldn’t I be able to depend on US Walmart to be having the lowest price as fast?
Chris 24:12
Right. So like we’ve said over and over again, you have to come up with a hook for this programme. Walmart plus, that is outside of that game.
Anne 24:22
Yeah.
Chris 24:22
If this is going to work.
Anne 24:23
Yeah.
Chris 24:23
You know, like, look at Amazon last week. GrubHub.
Anne 24:25
Yeah
Chris 24:26
Great example.
Anne 24:26
Right.
Chris 24:27
You know, like that is an extra value of something that someone actually might use.
Anne 24:30
Right.
Chris 24:31
Versus in home fridge delivery.
Anne 24:32
What? Oh, go ahead.
Chris 24:33
But yeah, I mean, at the end of the day, like I think Costco knows their value proposition. And they’re winning the big stock up, which I think is important now, especially in the time of inflation
Anne 24:43
Totally, when food is going to be the number one thing that you’re going for and that’s what Costco can guarantee every time
Chris 24:48
Yeah you’re getting your your membership value if you’re using Costco for your stock up trip routine.
Anne 24:54
Yes. And we know that if you’re using Costco for dinner for the $1.50 Hotdog and soda deal with that will be there for ever. Did you see that? I have to throw this in this because
Chris 25:03
It was great. Yeah.
Anne 25:04
So they confirm this week on the earnings call that absolutely they will not be changing the price of that. And they were referencing a quote from a couple of years ago where Craig Jelinek the came to Jim Senegal, the co founder of Costco wants and said, Jim, we can’t sell this hot dog for a buck 50 We’re losing our rear ends. And sorry, the co founder, Jim said, If you raise the price of the effing hot dog, I will kill you figure it out.
Chris 25:31
Right? That’s great, though, that tells you what we’re talking about is like they are doing what they do. They’re laser sharp. You think about it, like Costco has even done curbside pickup. They’ve been so recalcitrant on curbside pickup.
Anne 25:42
Yeah, and only like three, three test locations.
Chris 25:45
But you know, when you’re in these times, people are gravitating towards this model. So I think it says I think net net to answer the question I posed to you, I think it really highlights both aspects of Costco, his business model as well as its current state of the economy.
Anne 25:58
All right, let’s go into headline number five, go puff is cutting 10% of its workforce and plans to close warehouses to preserve cash. According to Bloomberg, and specifically a memo to investors that was shared with Bloomberg, the job reductions will affect about 1500 staff members, which will be a mix of corporate and warehouse employees in the US. This marks the second time in four months, the startup has eliminated positions and also cut about 3% of jobs back in March.
In addition, according to the very same memo go puff intends to shutter 76 warehouses, roughly 12% of its network across the US to consolidate its footprint in some cities. Chris, this was a heavy article. It people should definitely check it out. I mean, I know that’s what we were talking about yesterday. But what’s your take?
Chris 26:42
Yeah, I mean, I’m actually for those listening. I’m actually talking to go puff. I think it’s next week. And so if I get more information on this, I’ll let you guys know, in a future podcast, but um, you know, my take is, like you said, I think people should read this article, lots of good insight and reporting here. Bloomberg actually does a pretty good job, I think day in and day out, relatively speaking.
And the piece that stuck out to me the most of anything is where it talks about how goalposts, older locations, are reportedly generating as much as $3 in EBIT, da, and the average cost of stamp of warehouse is $250,000, implying that it is the newer locations and the expansion. They got a little too out of control, which is leading to these cutbacks.
Anne 27:21
Yep.
Chris 27:22
So okay, you take that at face value, fine. But my question is this, if that is true, and all that it takes is a minimal investment, and hiring some of your own drivers to do this?
Anne 27:32
Yep.
Chris 27:33
Why aren’t retailers just trying to do this themselves? Like, that seems like the easiest skunkworks thing to stand up, let’s take a section of a store doesn’t have to be very big in a market and just employ some drivers. You can even take headquarters employees to do this, they probably want to do it for the like, the cool innovation type project, like start doing delivery orders, and just see what happens. Because if the economics are that, then it just makes sense. They already have the warehouses, they’re called stores. So you know, my ultimate take is either the retailers are slow to see the angles here, which maybe if you brought this up to me, like 5-10 years ago,
Anne 28:07
Yeah,
Chris 28:07
I would have bought more. But given everything that’s gone on the pandemic, and how much we’ve talked about digital transformation, and how aware retailers are of, of the impending threats, their business models, I’m a little curious why we haven’t seen any retailer any big retailer tried to do that yet.
Anne 28:22
I’m not really surprised.
Chris 28:23
But like Walmart’s trying everything like why haven’t they tried to do that?
Anne 28:27
It’s big. They know, it’s an unknown, like they have they have a risk to really disappoint customers by doing this the wrong way.
Chris 28:34
Well, the other thing I’m thinking about too, is it’s also the location of the stores, like where these are happening are in the big city centres where like the big grocers and retailers, like Walmart, Target don’t typically have operations. It’s so it kind of makes me still excuse me, the other point is, so it’s either they’re slow to see the angles, or what I’m starting to think is more likely, this is just going to be a really, really difficult model to work at scale, even though the consumer probably does want it to some degree in those certain use cases, like we discovered in NRF. Yeah, especially in the urban cores.
Anne 29:04
Yeah
Chris 29:05
But you know, getting it national through the suburban sprawl of the United States. Seems kind of like a far fetched plan to me at this point in time.
Anne 29:12
Yeah, I completely agree. And I think especially if go puff has to cut back on geographies, and now they’re cutting back on employees, and they’re already at 88 cents that they’re making it per order with the current setup. I don’t know how they afford in investing in further scaling the 15 minute or less delivery, which for me, is their key differentiator right now, if they have to change that because they’re caught they’re calling things back or they you know, have to expand a 30 minute delivery or anything else, then they’re no different than their competitors and they don’t have any other byproducts like Instacart does or you know, even though we have our thoughts about the Instacart byproducts, but like, They’re not investing in anything else that that they can offer retailers to be an added benefit outside of that 15 minute delivery and I think you said it but the pandemic was great for Gopal have like people needed delivery to their homes. I think once we get into this recession, people are not going to pay that much money it’s not going to be it’s going to be about how do I get food? How do I get the necessities? I will drive to Costco to go get those things versus you know paying up $7 to have a delivery driver bring it to my house
Chris 30:19
Stock up, right that’s a good point. That’s why you’re seeing the stock up.
Anne 30:22
Right
Chris 30:22
The other point I’d make two real quick. The 250,000 is also another tale in another way which is that tells me that these these warehouses are bare bones for humans operating them so as much as people want to think these are fully automated and very digitally Ford operations, I’m going to call BS on that. I don’t think that’s the case at all. If that’s what we’re talking about, if those are the numbers that’s not happening.,
Anne 30:45
Right. People are sleeping on couches inside the inside the warehouse. All right, Chris, let’s get to the lightning round question one Bath and Bodyworks is changing their return policy which I know you’re gonna be very disappointed about. You can’t bring anything and everything back anymore.
Chris 30:59
Oh wow, I’m crushed.
Anne 31:00
They are changing it to they will not accept turns returns for any product that has seen excessive use
Chris 31:06
Okay.
Anne 31:07
But Chris, I want to know back in the college days, what Bath and Bodyworks scent was sure to get a lady a second date with you. In college is it country Apple, freesia, cucumber melon SunRype and raspberry.
Chris 31:21
What is freesia first of all?
Anne 31:22
Oh well, freesia was the scent that I kept in my Oldsmobile Achieva so that I could spray myself down after smoking cigarettes.
Chris 31:28
What is it?
Anne 31:28
It’s a flower.
Chris 31:30
It’s a flower. Okay. I’ve no idea. Oh, man,
Anne 31:33
The nostalgia Just coming back to me from reading the names of the senses.
Chris 31:37
I can tell this question means a lot more to you than it probably does to me. Man, I have no idea. I mean, I dated a girl on the lacrosse team in college and I would have been happy that she smelled like any of these said any of them. I mean, boy Well, yeah, that tells you something fans. All right. Anne Philadelphia Cream Cheese plans to open a pop up for three days starting this Thursday and the pop up is called feel Adelphia get it? F E E L
Anne 32:03
Is it in Philadelphia I couldn’t even see where they were doing.
Chris 32:06
I got it. I gotta think it is but I don’t Yeah, I couldn’t find that either. But and I got a I got my question for you. Is this what is your go to bagel with schmear choice. schmear.
Anne 32:15
Oh, everything bagel Organic Valley specifically.
Chris 32:19
Organic Valley.
Anne 32:20
Yeah, organic valley chive schmear and lox.
Chris 32:24
Like they said last nice Valley chive schmear i’ll have to try that.
Anne 32:28
Organic Valley chives schmear. Yeah. Anybody from that company that’s listening. I love your I love
Chris 32:32
Not down with everything bagel. But I’ll try the organic valley chive schmear.
Anne 32:35
All right, Chris athleisure company Jim shark has opened its new barber shop called D load. So many things to say about that. Which will allow men to comfortably open up to a mental health trained barber that is a real thing inside their shop. Chris, what is the topic that you’re surprised you have discussed with your barber?
Chris 32:55
Oh my god. First off D load. That’s the
Anne 32:59
I feel like like, you know, I want to go in some place called D load and talk to some other men and
Chris 33:05
I don’t I don’t think I want to D load anything Anne what WTF but oh God to answer the question. That’s a pretty easy one. Actually. My My stylist has a pretty specific pre vacation ritual with her husband. Whenever she goes somewhere. Let’s just say there’s a built in expectation before she leaves and I’ll leave it at that.
Anne 33:25
Yeah.
Chris 33:26
Like
Anne 33:27
Okay
Chris 33:28
She was pretty pretty blatantly telling me about that. And, and you know how she was like, it was basically like, I gotta go home tonight. You know, I’m leaving tomorrow. And yeah, he’s expecting, so I gotta do you know, I was like, Whoa, hello.
Anne 33:40
I tell I told you
Chris 33:41
She probably listens too I hope not.
Anne 33:43
Oh my God. Well. Oh, yeah. I told you that app that I wanted to build back in my single days where I wanted stylists to put people together.
Chris 33:53
Yeah
Anne 33:53
Because people tell there’s so many details now. Mental Health sessions and psychology sessions while you’re getting your hair cut. I don’t know about that.
Chris 34:02
No thank you. Probably not the best quality counselling you’re gonna get. I’m somebody that’s also trained as a hairstylist.
Anne 34:07
Just stick to one thing. What’s wrong with just being a really good Barber.
Chris 34:09
Oh, these young generations all right, pasta sales, according to r i r i have gone a whopping 11% over their pre pandemic levels. So my question you asked is if you could be a pasta, what shape would you be?
Anne 34:22
Fusilli obviously.
Chris 34:25
Because you’re silly like Jerry.
Anne 34:28
Oh Yeah,
Chris 34:28
Anne just started watching Seinfeld again.
Anne 34:30
I did. It’s it’s, it’s not blowing my mind.
Chris 34:34
Oh, you gotta wait till season two and three. That’s where it gets. All right. Just hold with it. Hold with it. All right, that wraps us up. Happy Birthday today to Patrick Stewart, Louise mandrill. And the world and the man my wife would lead me in a minute for and I would applaud her for doing so Harrison Ford who believe it or not Anne, turns 80 today 80 years old Harrison Ford is 80 oh man that makes me feel really old. And remember if you can only read or listen to one retail blog in the business make it omni talk. Our past five podcasts 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 it’s all just for you and we try really hard to make it fit within the preview pane of your inbox. Sign up today at http://www.Omnitalk.blog. Thanks as always for listening and please remember to like and leave us a review wherever you happen to listen to your podcasts or on YouTube. Remember, go to grocery shop.com to sign up for your grocery shop experience today before prices go up on Friday. And of course finally, as always, be careful out there.
Anne 35:39
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 personalised experiences and operational excellence and is also brought to you in association with the a&m consumer 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 fulfilment small robotic fulfilment centres that can be leveraged at a hyperlocal scale. Takeoff also offers a robust software suite so brochures 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
Omni Talk is the retail blog for retailers, written by retailers. Chris Walton and Anne Mezzenga founded Omni Talk in 2017 and have quickly turned it into one of the fastest growing blogs in retail. 