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 21. I’m your host Anne Mezzenga.
And I’m Chris Walton.
And we are here once again to discuss all the top headlines making waves in the world of omni channel retailing. Joining us today back for their monthly appearance are two executives from the a&m consumer and retail group, Hemant Kalbag and Jonathan sharp. Hemant, Jonathan, welcome to the show. Tell the audience a little bit about yourselves. Hemant, let’s start with you first.
Hi, everyone. Really happy to be on again. And thank you for having us. I’m Hemant Kalbag. I’m a managing director and partner with a consumer and retail group. And I am the second smartest guy in our practice. And the smartest one is Jonathan, you want to say hi.
I wasn’t sure where that was going. I thought there was someone else joining us. Hello, hi everyone. Thank you for daring to have me back. Jonathan Sharp, also managing director with Alvarez myself consumer retail group thrilled to be a colleague of Hemant. And while that’s actually the highlight of my career,
oh my gosh, Anne, this is gonna be spicy already.
I was warned that these two lights like to throw some Barb’s at each other. But, this is absolutely fantastic. That might be the greatest intro of all time.
They will they will help us post European trip once again to really get energised about the show and to have some some very hot deliberation.
That’s right. For those that follow us closely. We just got back from Madrid and the last time last time we had a European trip we had we didn’t have any time off yesterday had a full day. So I’m raring to go here Anne.
Let’s get I think we should get to it. Let’s start off with this week’s review. This week’s review comes to us from Jay recruiting Jen. Yeah, I like that name. It’s good. No P’s in it either. So it’s nice. Here’s what Jen had to say. She said, a fun way to get the latest retail news. We serve large retail clients in the recruiting space. And it’s important to stay up to date on the industry as a whole to serve them well. Before I found Omni talks Fast Five, we spent a lot of time reading far less fun retail newsletters. And yes, we would agree with that. Thanks to Chris and Anne for keeping it real and engaging while giving us the latest five stars for sure.
Oh, thanks, Jay Recruiting Jen.
I know right? Isn’t that so nice?
I love I love that one too, because it talks about exactly what we tried to do, which is to spice it up, make it more interesting. So yes, please leave us a review. If you’re going to listen, we’re we’re getting really close to the end here like in terms of review, so you give us a really good chance it’s going to be available and read aloud on the show within the next couple of weeks as well.
All right, Chris, Hemant, Jonathan. Are you guys ready to get the show started?
Yes, I am. Anne. Let’s do it. All right. So in today’s Fast Five, today’s fast five is brought to you again Anne again. Second week in a row.
With the help and support of our good friends at grocery shop.
Yeah. Holla. Last week, we told you to act fast because prices were going up. But that is not the case for our loyal army talk listeners by using promo code, RBOT 1950 That’s RBOT 1950 retailers and brands can still get that same great pre increased rate of just 1950. Just go to groceryshop.com To redeem your promo code now. In today’s Fast Five we’ve got news on Macy’s taking Toys R Us to all stores, Kroger taking its new membership programme national, a Google exec suggesting the landscape of digital search is shifting drastically. Reports in the Wall Street Journal that Amazon is thinking of exiting its private label business. But first we take off with the Prime Day recap Anne
Oh yes, it was Prime Day last week, everybody prime days. And it reportedly broke records bringing it in at $11.9 billion in sales, according to Adobe. So here are some fun facts from our friends. reporting on this at chain store age. Prime members purchase more than 300 million items the most in history
Most in history
Prime members saved over $1.7 billion. And overall the growth rate across the two days was roughly eight and a half percent as Adobe had Amazon in at $11 billion last year. Jonathan, we’re gonna go to you first on this what what should listeners and other retailers most specifically take away from this year’s Prime Day extravaganza?
Well, I guess the first thing is, is that the beast isn’t going away. Right. And you know, we see in our consumer sentiment survey the intention to use Amazon intention to use their mobile app continues to be the number one shopping channel amongst consumers. And we’ve not seen that fade in the last 12 months cycle of our survey. I guess the other thing that I was struck by was, I think this is a sign of the supply chain switchback that I think a lot of retailers are going to go on over the next six to 12 months, which is I think we’re at the sort of an inflection point of going from under stock.
To Overstock, it’s kind of inevitable, I would imagine everyone who’s worked in supply chain for their career, kind of knew this was coming 1218 months ago, and must be sort of banging their head against the wall now, but the consumers going to benefit. The other I think, really interesting, innovative thing that we saw was this kind of social participation shopping. So kind of shop whilst a twitch or Twitch whilst they shop and kind of what should I get? What should I buy? What do my friends think? And that raised a question for me around kind of where all the other categories were, that should be really kind of powerful. You would have thought that certainly amongst certain demographics in clothing and makeup and indulging in luxury, it’s kind of the online equivalent of having a glass of champagne with your girlfriend whilst deciding what bag to buy.
I love picturing you Jonathan having a glass of champagne with your girlfriend while thinking about the bags
What bags to buy?
Don’t tell my wife Okay. She’s probably buying a bag.
Right? Probably doing the same thing yourself.
But you know, I do think that kind of it’s kind of the ultimate kind of social commerce that you saw.
It’s gonna come up again later, too. So my big takeaway, too, from what you said, too, is I kind of think you’re kind of going down the road of and you guys put this out in your report, too, that you’re almost reached almost expect to see more of these things as well. Hemant, what do you think?
You know, this is amazing to me. Right? Amazon has created a whole new occasion that it’s not just about Amazon, right? So if Amazon is driving Prime Day, there’s a whole host of other retailers that have to follow, right? So so BestBuy has to promote, Walmart has to promote, I mean, there is just this cascading effect of what they’re doing. And it’s really interesting, because, you know, there was this, all of this lead up to holiday and building up of inventory. I think this is a great, I think asset for retail that they get this opportunity several months before holiday really kicks in, clear out inventory, drive volume. My sense is, I think we’ll be talking about this for the next three years, I think there’s going to be new records every single year,
Because this is just going to continue to grow in size. And it’s going to become almost like the new Black Friday, that everyone will wait for it. And it’s evident in this year’s numbers, right? I mean, this is now something that that we tell retailers with Mark too every year, it’s truly amazing.
The summer liquidation sale, so to speak, that will continue to gain steam. Anne what do you think, though?
Well, I was I agree with what Hemant and Jonathan were saying, I think that what’s important to me here is what retailers are doing to compete with Amazon, they’re not going to beat Amazon on price. I mean, it’s it’s going to be incredibly difficult to do that. Even with you know what Jonathan’s talking about with, you know, Overstock and liquidation happening. But what I do think is important for other retailers to be thinking about is yes, this is the new holiday, but what are the other aspects of your business that you’re putting time and energy and beyond just price cutting, to make that choice easier for a consumer to go to you versus ordering from Amazon?
Like how are you improving your you know, same day pickup within 30 minutes or something so that you can incentivize the consumers to not just you know, get a good deal, maybe it’s $1 more to get it at Best Buy like Kmart suggesting but I can go over there right now and get that same discount. I think those are the kinds of things that as a as a retailer, who’s not Amazon, IBM, kind of focusing on as we go forward with this, this continuing trend
Yeah, that’s a good point, even leveraging buy online, pick up in store curbside could actually make the retailers be very price competitively with Amazon too, because it’s a cheaper way to fulfil, yeah, I don’t know, my takeaways to you or I’ve kind of already alluded to my big takeaway from this is that my thing is, like, I don’t have many hot takes to say on this. I feel like this is just a variant on a theme that we’ve seen for centuries. Like it’s like the Memorial Day sale, but now it’s in the middle of July or it’s like Nordstrom Anniversary Sale. It’s just, it’s cut from the same cloth there, which is what retail is it’s just slight variations on things we’ve all seen in the past.
So I think like with I think John has pointed out right with things like Walmart plus with Kroger boost, things like that, which we’re going to talk about in a second. Like, we’re just gonna see more of these more often and it’s just going to become a regular occurrence. That’s kind of my my last word, I think I’d say, Jonathan, you get the final word though.
I was just gonna say just building on those two points, which is kind of what Amazon is doing with Prime Day is it’s exploiting its availability and kind of price advantage. So it’s kind of taking those off the field and For everyone else, and therefore, what everyone else has to do is find other reasons to shop with them, which actually is going to be the theme. I think of the other things we’re going to talk about today because that’s really what it’s doing to other retailers, which is okay, what other parts of our proposition? Can we be much stronger on because we know that Amazon has got availability, instant fulfilment and price?
It’s a great point. Alright, let’s keep moving. Let’s roll the headline number two.
Anne believe it or not, oh, you’re gonna love this.
Are we gonna sing again?
No, I don’t think we can sing today. I don’t think but our guests can definitely sing should they want to but it looks like we can all be Toys R Us kids again at Macy’s. I know, right? Oh, when do we want to be a Toys R Us kid. According to retail dive Macy’s will begin rolling out toys r us to all Macy’s stores between now and October 15. Just in time for the holidays. The store and store footprints will range between 1000 square feet to 10,000 square feet. And the larger footprints will be reserved for what the two companies together call flagship locations in Macy’s, large metropolitan areas, including New York, Miami, Atlanta and Chicago. Hemant Let’s go to you first on this one. What do you think of this news? Do you like this for Macy’s?
You know, it’s amazing. So first of all, I have to say Toys R Us as a brand. I mean, my God, I think this must be the third or fourth time
It just won’t die.
It said that in the article too.
Like the knight in Holy Grail, it just won’t die.
It’s just got this brand resilience that there’s always people out there that see that equity and they don’t want this brand to go away. I don’t know if it’s nostalgia. I don’t know if it is a core business belief. So I am truly amazed that yet again, Toys R Us is rearing its head. So interesting. Now if I think about this from the Macy’s standpoint, right?
I think there has been a consistent challenge for department stores over the last decade, to think about giving consumers a reason to walk into a store. Right?
It’s most department stores are very careful about sharing traffic numbers. But if you look at Mall numbers in general, and, you know, there has probably been somewhere between a seven to 12% traffic decline year over year, that’s been compounding. And so the reason for existence for department stores has to evolve. And you know, just having everything under one roof and really kind of becoming a barrel lead has not been sufficient. And you know, direct to consumer brands have been taking away, share off price has been taking away traffic share.
So I think this is an interesting experiment. Because really, this is about driving traffic into the stores. Right? This is about giving a new destination that’ll get new consumers coming into a Macy’s store. So I think it makes a lot of sense. And you know, if you remember when Toys R Us the stores were around, they actually did well on traffic, right? I think there was some systemic business problems are on margin, etc. That ultimately got the retailer into trouble. But it was not because of traffic, right? I mean, even I mean, especially the iconic locations that you would go to you know, there were times there was lines outside. So I think this is this is I think a smart move.
So net net, you like this move. That’s your that’s your take net net You liked this move from Macy’s?
I do. I really do.
Okay, interesting. The other point to that I would make to get Jonathan’s thoughts on this is like, the Toys R Us experience was much larger than 1000 or 3000, whatever it was square feet, even 10,000 square feet, which settings important thing to think about. But Jonathan, what do you agree with Hemant on here? What colour would you add?
Yeah, okay, strike this one down. Keep the tape I agree with Hemant.
Oh, my God.
I want a copy of that recording. Yeah, so make that into a meme. Going on our company website.
A tick tock just boomerang of Jonathan. I agree with Hemant
Stuck in my mouth that But anyhow, yeah, look at a few things. The thing that struck me when I read this was the it’s the return of the department store, like the department stores back all the categories that they exited over the last 20 years. I mean, what’s next is furniture coming back is luggage coming back, electronics coming back. Interesting, actually a whole bunch of categories that are challenged on their own big box, Amazon, hollowing them out, actually aggregate them back in a thing called the department store and create more reasons to shop. The I mean, the reason this is important is that you can see it again in our Consumer Sentiment Survey in particular, amongst younger consumers, particularly millennials, who just do not regard mall shopping as a leisure pursuit.
And so you’re going to have to create lots more reasons for them to visit because it’s not instinctively an attractive proposition for them. So I kind of get it the question it raises for me like is you know exactly what’s next? Who the next one’s coming store in store?
Yeah. What what do you think Anne?
I’m sorry. No but I I have to I love that Jonathan gave us that entry point into this conversation because I agree, you have got to get those millennials and Gen Z, this next generation of customers who Toys R Us does not mean squat to these people like these people, they don’t have the nostalgia that we all had of the what that Toys R Us was. And in order to get that that group of people into your Macy’s store, I don’t think it’s with these, you know, with toys or bringing Toys R Us in in a very small footprint. I don’t think it’s the market at Macy’s concepts that they’re expanding. I think I look at what we just experienced Chris at Zara in Madrid. Okay,
Right, that’s a better way to go about it.
I look at how seemless that experience was to shop a traditional I mean, it’s the size of a department store. It’s four floors at8 2000 square feet.
Oh it was 80,000 square feet. Yeah, 100%.
That shopping experience has gotten me in, I can shop a variety ways online offline, I can check out myself like Macy’s, this is where you should be investing your money. It should not be in these one off things trying to save your brand. By bringing in other brands, it’s by creating the better shopping experience that will get that customer in to buy the things that you have the tertiary things, whether it’s what sells pretzels or toys r us like, you need to start with that element first, before you start trying these things. It’s just it’s just wasting money and time and resources at this point.
100 100% agree with you 100% agree with you. And the point I would make against what you guys are saying too, it’d be. Yeah, it’s maybe a rebirth of department store. But the department store went away for a reason, right? Like, why do we suddenly want that version back like so that the history is not on the side of this idea in some ways. And the other point I make too is the devils in the details of how you execute this. Macy’s has shown no ability to execute any of these ideas from story.
I’ve been in the stores that have the first rollout like they rolled it out to three to 400 stores this Toys R Us concept. It looked atrocious. Like it wasn’t even I would argue it wasn’t even shoppable it looked like they hadn’t done anything. And then my other point would be if you’re going to do this, if you believe in this idea of reimagining the department store going back to what it used to be. Why do you need toys r us to do that? Why do you need to pay a licencing fee to Toys R Us to put this in your stores? Why don’t you just put toys into it?
And according to Article like the Macy’s merchants are still very involved in the in the decision making. So like if you’ve got merchants like why do you need to pay Toys R Us for this you want to put toys in your store? Put it in there because to your point, the seven eight year olds that are going to be shopping for this don’t even know what Toys R Us is.
So who cares, right? So like that to me? Doesn’t that to me doesn’t make sense. And so my prediction in is this might get good press in year one.
It’s going to show signs of struggling in year two. And by year three, it’s going to be disastrous. And people are going to be like, What the hell do we do here? But that’s my take. But I gotta imagine you guys have a record on this one. 100%. So who wants it first?
Yeah, I mean, listen, I understand your perspective. And I think you know, there is going to be many experiments that Macy’s and other department stores do that may get a C minus or below on the report card. I don’t think this is one of them. It just the reason I think about what you said, why why do you need toys r us to do it? It is because that brand, still mean something? The it’s the fact that it’s passed on from generations. And in the end, right? Parents have a great amount of decision making influence around where to take their kids for shopping. And that brand for parents still mean something. And as long as that nostalgia exists, I think that is going to have full.
And then the the other part of it is also I think, again, for the record books. I agree with Jonathan too. I think this is about testing concepts. Right? So if this works, it’s about then thinking about what is the next specialty category I can bring into my department store that I don’t have to manage entirely on my own, with merchants that, you know, don’t consistently make good calls. But thinking about category specialists. Can I imagine a better luggage buying experience within a department store? Can I imagine a better electronics buying experience than you get today? So I think that’s kind of where it’s headed. I do think at least for the next year or so I agree with the quiz. This is about creating a little bit of excitement around the narrative. So anyway, we should talk in a couple of years about this and see how it’s going.
Oh, and I’m gonna be checking this one out, too. And no, no, I know, the market by Macy’s too, is coming to St. Louis. And we’re driving down to check that one out as soon as it opens. But Jonathan, I kind of dig your point a little bit. So I feel like I’ve got to give you the last word on this one.
Yeah, I guess my only response is it’s a bit of a counter causal, right, which is a sort of alternative history kind of question which is you want to do toys, if not toys r us who what? You want to reinvent the department store. What else you’re gonna do? I think you’ve got to give them high marks for effort. Now let’s see what their sort of execution is like. But I’m kind of struggling with what else they should be trying. And I think to Hemant’s point, I’m actually I think it was animals who raised it, right, which is, we will know whether this is success if there are two or three that work after this one, right. So I think our view on this is very contingent.
One, I think that’s fine. It just last my last word on this one Anne before we move to headline number three is I think that’s always the point that gets brought up. When we talk about the department stores. It’s like, what else are they gonna do? So therefore we like this, because but in reality, it doesn’t answer the question of this is the right thing to save the department store. And so that’s just my I think that’s an important psychological thing to look at in terms of our commentary on the department store in general.
Let’s see how long you have to wait in line to buy one of the toys or if you can find somebody at Macy’s to buy one of the toys once you buy it. All right, let’s go to headline number three. So Kroger is now offering its boost by Kroger loyalty programme across all of its banners nationwide. According to chain store age, the annual membership gives customers unlimited free grocery delivery on orders of $35 or more fuel discounts of up to $1 per gallon and additional savings on Kroger’s our brands private label products. During the last several months the grocer piloted boost in four divisions and according to Kroger, the results included a growing number of new members and significant increase in delivery sales compared to non boost divisions.
The membership has two levels levels. Each is 59 and $99, respectively. And Kroger estimates that the membership can save customers more than $1,000 per year on fuel and grocery delivery. Jonathan, we’re gonna go to you first on this one. Is there something to this? Is it just an old copycat file? Like is it just some let’s rinse and repeat and do this over again? What do you think about this one?
Yes, so I think there’s something here, right. This is kind of what Amazon had in mind with combining Amazon Prime and Whole Foods. .
Except they didn’t build out the fulfilment centres globally to allow them to do it. And the other thing I was thinking about this was, I think this market is going in a similar direction to the media market, right. Ultimately, how many of these subscriptions a household is going to have? Right? I mean, I don’t know what your house is like. But in a meeting in media, Disney plus peacock Netflix, who knows how many others, right? Eventually I’m not sure we’re going to keep all of them. I would have thought in grocery delivery, it’s even less right. I imagine most households are going to stick with Amazon Prime and potentially a grocery addition. Right,
Amazon got Whole Foods, right? They would have had the whole shootin match stitched up. They didn’t get it right. And so there’s, I think there’s space for one other. And so I think this is quite an aggressive move by Kroger to say we are going to be the one other right. The only thing I’m a bit confused about is this is basic, well, certainly I live in the northeast, right? So I went and had a look at this. And this is basically Kroger boost fulfilled by Instacart. For me,
And so this is kind of an Intel thing, which is would I rather spend $99 to get Instacart plus? or would I rather pay $99 to get Kroger fulfilled by Instacart with all of the other benefits around fuel and private label. Now Kroger obviously betting right that their proposition is strong enough to compete against all of the subsidiary retailers that Instacart could provide A Look, I don’t know. But I think it’s quite an aggressive and strategic play to be the other subscription model in your household.
Yeah, and it’s itching to because the other point you got to bring into this conversation, which someone else think about a lot is reading this too, is cooker is also going into markets where they don’t have stores,
So it’s not necessarily requiring the Instacart connection or even the store to be present. You could actually get to become a booths member and get just the centralised fulfilment through the Akata partnership like they’re doing in like Oklahoma and Florida and stuff like that. Hemant, What do you think?
I listen, I I’m I think this is something this is not really a new idea. It’s not earth shattering. Everyone is in the end, if you’re in retail, everyone will eventually have some version of this right. Amazon Prime has obviously existed for a while but Walmart has Walmart plus Restoration Hardware has membership. Pretty much every retailer now has membership associated that free delivery, some additional member benefits. And so this is in my mind, just the new form of a loyalty programme going forward. And I do not think that you know, Kroger is doing something. I’m surprised it took them this long to get here. They’re a thoughtful company. So I think this is going to be table stakes. And there’s two reasons for retailers to do this. Right? There’s one just a defensive move, right?
They don’t want to lose customers, to other companies, other retailers that are offering this. The second thing is, what does this do, what it does is, it builds loyalty by getting a higher share of your wallet. So if you are paying the $99 to Kroger, there’s a high likelihood something that you may buy at Target or WalMart, you may try and combine into your basket at Kroger. So it makes sense, right that the reason to do this is to increase that bowl. And in my mind, this is while I’m glad they’re doing it. And I’m glad it’s making the news. My prediction is every grocery chain will have an equivalent programme within the next couple of years.
Interesting. See, I’m not as I’m not as I’m not as jaded on it. And I like what Jonathan brought up. I love that point. Because I had not thought about that about like the consolidation, and like Amazon prime plus the grocery thing. I mean, I grew the amount to a degree like I think, like membership programmes like this are just worth doing. And we’re gonna see everyone do it because it costs nothing to implement them. You might see a few front end digital changes, and maybe some marketing folks and ops people behind the scenes like you get people to pay you $100 per year. It’s like duh, why wouldn’t you try this and a lot of ways, but but the thing for me is I think Kroger actually is out in front of this relative to other grocers particularly be in terms of implementing it.
My hunch is they’re doing better with it than Walmart is doing with Walmart plus, because we haven’t seen any statistics on Walmart plus at this point. And going back to what I said before, like what Kroger has been very smart about leveraging the Ocado relationship to get into new markets. And I think boosts gives them marketing handle to that and a way to talk to those markets. From a new point of discussion. I think that’s really important here. And so and those savings are insane, if that’s really true. $1,000 a year on a $99 investment. That’s that’s huge.
Yeah, I mean, Chris, I think that for me, it’s two things. Number one, what you and Jonathan pointed out is that grocery of your guy, your Amazon Prime membership for The Everything Store, but we think about the conditions that we’re about to head into as a nation, and fuel and groceries are going to be the other thing that you invest in when it comes to subscription and where you’re looking for savings, because those are essentials, the rest of those tertiary categories that Instacart is offering, I don’t think are going to be as important of a membership for people to hang on to especially, you know, even at $100 a year. But the thing that I think the second point I’d make with this is that I think that Kroger is also smartly on the backside of this thinking about how they can start to bring in and offer those Hub and Spoke facilities to other brands instead of you know doing it pulling it directly from the store like you look at they did it pilot in store with Bed Bath and Beyond which man you know, who knows if that makes sense.
But if they’re developing those relationships and then they can start to pull now you can get Bed Bath and Beyond products from the centralised fulfilment Centre in addition to your target or to your your grocery order I think that has some real power potentially down the road.
Yeah, I don’t know about that. Because I think you know, you’re potentially in Bed Bath and Beyond is course we can’t have a conversation without talking about Bed Bath and Beyond to but like, you know, centralised fulfilment of groceries, very different than spin centralised, automated fulfilment of home furnishings to so like that that is probably pretty far out.
And not unlike you look at the categories that they had in the store, I guess is what I’m talking about. It’s smaller home goods, it’s plates, its towels, it’s things like that, that are much more along the lines of an essential item instead of like the big furniture.
I mean, you could definitely get there over time. The question of Bed Bath and Beyond would be around to support that. But who knows
Well, or pet food or home improvement things? I think it’s it’s expanded to other categories,
Right, Absolutely. Yeah. The traditional core grocery categories for sure. All right, let’s keep rolling to headline number four. Here, a Google exec made a shocking proclamation at Fortune brainstorm tech conference this past week. According to TechCrunch, Google’s senior vice president Prabhakar Raghavan, who runs Google’s knowledge and information organisation said quote, In our study, something like almost 40% of young people when they’re looking for a place for lunch, don’t go to Google Maps or Google Search anymore, they go to tick tock or Instagram end quote, Raghavan also explained how younger people are generally interested in more quote, visually rich forms end quote, of search and discovery. And that wasn’t just limited to where to eat.
Google confirmed his comments to TechCrunch and said they were based on internal research that involve the survey of us users, ages 18 to 24. Jonathan, how important is this headline? Do you agree with me that it should be in the running for retail headline of the year?
Well, that’s a big ask. I’m not sure about that. Come back to me in December. Right. But I think it’s I think it’s quite a big deal for Google. And effectively, I think what they’re saying is they’re saying content is king. And by the way, I was looking at some other data on this. So in the UK, the UK equivalent As the FCC has now said that tick tock is the fastest growing source of news for the UK population followed by Insta, against the content kind of driving participation. And so I kind of get it. And I think if I was my sort of late teen daughter, I would never consider kind of Google Maps for finding a restaurant. I mean, if I said Yelp to her, she’d be like, What do you view of kind of her view of finding a restaurant review is I’ll kind of go and find out what Berger kept saying about Noah Schnapp.
And then I’ll find a restaurant review on the back of it, you know, the content drives everything for her. And the other thing I think that’s interesting is I don’t think it’s just notional. So we see other evidence of it. Gen Z, in particular, are this really interesting group that in survey responses are the group that combine social commerce with bricks and mortar. So they’ll do a lot of social commerce, they love the bricks and mortar experience, they’ll typically instal it whilst they’re at it. They’ve skipped the kind of website laptop, Google phase of online shopping, they’ve gone retro, and they’ve gone straight to social commerce. So I can kind of see it, why it might be happening with that group? I think there’s a question for retailers, by the way, which is, what’s your content? Like? I mean, how rich is your participation? I think retailers typically still think, website and mobile app. Right? Well, I’m not sure that’s even table stakes anymore. It’s kind of nothing burger for that group.
Right. Anne, Anne what do you think?
Well, I, I read this and was honestly not surprised. I mean, I think that when you think especially when they bring up like restaurants, I think that’s a big component of this. But but especially like Jonathan saying, with a smaller retailers, I mean, we were just in Paris unexpectedly. And one of the ways that I was using and I’m not even millennial and Gen Z, like, I was looking at a restaurant review, and then looking at the Instagram photos of that restaurant to really get a sense of I mean, like Jonathan stained, I think this generation gets a sense of authenticity, of actual experience based on what they’re seeing the from the brand on Tiktok, and Instagram, and the same will be true for shopping.
And I think the other thing that is happening on these social networks is that this is passive consumption of media. It’s not going directly to Amazon or Google and typing in restaurants near me or handbags near me, like they are being inspired. And in the whole consumption pattern is different. And I think going to continue as we as we continue on
So you, you guys both think this is pretty big, then
Like, it’s kind of like I expected it.
I don’t know about headline of the year I think I’m less surprised by it, then maybe you are, but
okay. Yeah, I think headlines of the year can still be unsurprising too. But Hemant what do you think?
I am, I’ll tell you what, I am surprised. But I’m surprised by the boldness of the statement, I mean, meet you, I can’t believe executive to come out and talk and then the company to back it up. Right. So the very fundamental premise of the model that we were built in is becoming rest less relevant. How brave is that? I mean, that is super cool, that they talked about it openly. And you know, it may be something that many of us have thought about intuitively. But you know, I mean, to tie back to our earlier conversation, it wouldn’t be like a department store executive 15 years ago, saying, you know, the whole concept of shopping is changing. And people don’t want to come into department stores anymore.
They want to go online and direct to consumer. Like it’s, I am just floored that they came out and said this openly. And while 100% True. And that’s definitely where it where consumption is going. I was still very impressed by the headline.
Yeah. Hemant, this might surprise you about that to be cynical. That was irony for those who don’t know me. But maybe it’s not a surprising thing to say if you’re an industry that’s facing regulatory scrutiny on monopoly power in search. And so it’s also in Google’s interest. It’s also in Google’s interest to talk up other.
Good layer here, Jonathan. Very nice. We love the cynicism too.
What do you think you you’re saying headline of the year Chris?
Yeah. And by the way, for the records, I know, I’ve dropped you give me crap for dropping that a lot. But I went back and recorded my headlines of the year so far, there’s eight and we’re in the seventh month of the year. So I feel like I’m on a good pace for creating a list for legitimate headlines of the year. But no, I think it I think it’s huge. And I think you guys hit on the points already, because it just it shows you the disruption that’s going to take by way of social commerce. You know, we started talking I started talking about this on stage as much as four years ago and credit to Carter Jensen used to be on the show for pointing this out to me this horizontal line of social commerce idea that he had, you know, you just got more and more eyeballs on social media every day and those platforms are going to become the natural outlays as a result of That for search and for commerce, you know.
And so, ultimately, I think if this is true, maybe you know, if you take the glass half full approach, maybe against Jonathan’s glass half empty approach, you know, it’s going to be calm, at some point terribly disruptive for both Amazon and Google, particularly, because they’re the ones who have the lion’s share of that engagement right now from traditional search, the way people traditionally search for things.
So my other prediction, though, is that if this trend continues, I think you can expect to see snap gobbled up by one of those two players, I think it’s just going to be a natural outgrowth of what’s going to happen because they’re the ones that are just kind of sitting there on the sidelines. Tik Tok’s. very formidable on its own Facebook, two snaps just there for the taking. And I wouldn’t be surprised at some point, if somebody grabs it up.
I was just can I just say one other thing, which is if you’re Google, what’s interesting is, is that you’re sitting there with YouTube. And it’s just not doing it for you. Right, It’s, you know, we think of these as being digital media, but they’re not consumed in such different ways.
That’s a great point. Yes. 100%. I love that.
All right, let’s go to headline number five, Amazon has started reducing the number of items it sells under its own brands, and the company has even discussed the possibility of exiting the private label business entirely to alleviate regulatory pressure, as Jonathan inferred earlier, alright, according to Wall Street Journal, the decision to scale back the house brands resulted partly from disappointing sales for many of those items.
And also comes as Amazon has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site. Executives discussed reducing Amazon private label assortment in the US by well over half a source told the journal at the urging of David Clark, the longtime Amazon executive who took over as head of its global consumer business in January 2021. And who left his role just last month, after a version of The Wall Street Journal article published online, Amazon said in a statement that, quote, We never seriously considered closing our private label business.
And we continue to invest in this area, just as our many retail competitors have done for decades. And continue to do today and quote, Hemant, what’s your take on this one?
It’s surprising. You know, we talked about this earlier on the show about Kroger and then your loyalty programme and how part of the benefits of the loyalty programme and the membership are deeper discounts on their private label, retailers are conditioned to drive volume to private label. And, you know, we all know why it’s a higher gross margin category, you typically depending on the category gain anywhere between 500 to 800 basis points of profit margin by moving from a national brand to a private brand.
So it is surprising that there are moving away from it. It is a very core part of retail, right. And it’s not that the industry as a whole is moving away from private label. In fact, emphasis on private label continues to be high, I think there was a little bit of a shift to national brands that were more trusted during the pandemic, because that was kind of consumer sentiment around that. So I’m surprised you know, I have a feeling this is more driven by poor execution. I don’t know if any of you have shopped any of their private label products. Yeah, I have across a few different categories. And there’s a marked difference in packaging product quality. Yeah. And it was not very deeply discounted in my mind versus national brands either. So I think this is more a scaling back on one of the things that Amazon probably did not execute well, and they execute most things. Well. So I think that’s it’s more that than a industry trend,
right than them really scaling, truly scaling back because they they think that’s what the right move is here. Jonathan, what do you have to say about this one?
So a couple of things. First of all, my cynical side is that they’ve got 240,000 Plus private label skews, they’ve got a bit of scope to play with and say that they’re reducing their SKU count. The other thing I was gonna say is if your supplier to Amazon listening to this, and you’re thinking great, they’re going to accept private label, the only thing I’d say is be very careful what you wish for, because what they’ll then want to do is protect the entry point and the price architecture. And the pressure on MEP will only increase because they will no longer have private label to protect that entry point in the architecture and it will be there other vendors who have to fulfil it, so just be careful what you wish for.
Yeah, Jonathan and Hemant I completely agree with you. I mean, those are the two points that I I saw and reading this too, like is it really truly because, you know, it’s, it’s, they’re trying to reduce private label brands? Is it because the production costs they have in excess products that they’re selling that they don’t really need? And most importantly, they hold The keys to how much they’re going to take from all of the retailers who are selling the same product. So if it’s not worth it for Amazon to produce that product anymore, and they can increase, you know, instead of 45% of the sale, they’re taking 50% of the sale and it has more revenue coming in, then retirement resources going out. It’s so easy for them to just adjust that lever. But, Chris, what do you think?
Yeah, I mean, I agree with everything everyone said, the point I would make though, that I think’s important is I actually I just am, I just think the story is bad. Like, I just think it’s bad journalism on the part of the Wall Street Journal again, which, which we critiqued a few, I think was like a month or two ago, too. Like, if, as a journalist, you know, you look at the language that’s used to tell the story. Amazon considered right, cutting the back to private label as well. Like, I’ve considered many things in my life and like buying a sports car or dating a supermodel, but I’m about as far away from doing either of those things as humanly possible. So like, yeah, maybe they considered it in a boardroom discussion. But that doesn’t mean they’re going to do it.
And so to me, it’s like you guys said they’re just rationalising it, which every retailer does, at every point in time, it’s a continuous process that they’re always doing. So to me, this is a non story, plain and simple, made to look like a story by a journalist that wanted the clicks. And I hate to say it, but it’s true.
All right, you guys. We did it. We got through the five headlines. Let’s get to our lightning round. Hemant, the first question goes to you rebag announced that they’re going beyond bags and that they will start selling shoes and outerwear. Hemant, if you could add one more thing to the list that rebag is now going to be selling to get you to shop resale. What would that item be?
Yeah, I’m not a big fan of like buying clothes and accessories on a platform like that. So my pick would probably be golf clubs. I feel like golf clubs are way overpriced that when the first year they come out, there’s always short supply. But a year later, they’re like being sold for a 50% discount.
Is there a resale site for golf clubs?
Yeah, there’s many.
There probably is. Yeah, I’m sure somebody’s got it now. But Jonathan, I told Jonathan this question in advance of the show. Yeah. And he predicted your answer. Jonathan, did you get it right?
No, I didn’t. I didn’t. Hemant,
I know, what
What was that answer? Jonathan?
Hemant was gonna say watches. I’m sure he was gonna say watches.
Yeah, see? So yeah,
Well, they might actually have those on rebag at some point in time they do on
They do many sites, and then we would have a discussion about watches and it would make me look a certain way that I didn’t want to look, but But yeah, that was to be that would be the honest answer.
Okay, truth and honesty. Very important on this show. But all right, so question number two, a Skittles lawsuit claims that the candy contains a toxin that makes them unfit for human consumption. Jonathan, what candy would you be devastated to find out was unfit for human consumption?
Well, Skittles is up there.
Same ques Chris.
But I am gonna go back to my youth. So I’m going to use a bunch of words that people don’t understand. They’re not candies, they’re sweets, where I come from. And there was this great sweet called curly whirly. I mean, what a brilliant name right? So it’s a curly piece of caramel covered in chocolate. You chew it, it basically extends down to your feet as the caramel stretches. It lasts for hours. I’m sure it’s probably got some kind of rubberized toxin in it. But I didn’t care as a kid. It was fantastic.
Oh my God, that sounds so good. It sounds like an extra long Rolo or something.
That’s exactly what it is.
Let’s get our curly wirly on for the end of this show him
Alright. Hemant CVS Pharmacy has debuted a skincare centre shop within a shop at three pilot locations as the retailer continues to hone its beauty offerings. Hemant what’s a step or product not to be missed in your personal skincare routine?
Be honest this time?
I know you guys may not be able to tell but I’m actually 78 years old. Take note,
Hey, I got my pencils ready? What is it?
This is this is gonna disappoint you but that only skincare product I use is soap. That’s it.
That’s it. That is it. Any kind of like a special
I’m right there with him. Actually, that’s all I use too
So I don’t like liquid soap. Irish Spring is my go to brand but works for me.
No sunscreen, you guys sunscreen.
Sunscreen I’ll put on occasionally but you know
daily daily. All right
Irish spring though man.
I don’t get out enough in life to need sunscreen daily.
He’s thinking and eating retail and every day. He doesn’t need Sunscreen Top of the morning to ya, alright Anne Texas a&m football stadium is licencing Amazon’s just walk out technology for its concession stands this fall. Jonathan. What item is a must have for you at any sporting event.
Oh, this one is simple. It’s one of the things I never understood when I came to this country. Could we have beer in the fourth quarter?
Can we just keep serving beer? Can we just keep the bars open? What Why does stadium do that?
Because we have to cram as much drinking in to the first three categories. It makes complete sense.
Just that’s a straightforward simple one for me,
Jonathan, let’s be honest, it was caviar and champagne.
Yeah. They might have that it just walk out.
You have to be Honest on the show.
Hemant in your private owners box. I don’t know what they serve. You know I am down there.
No offence to anyone down in College Station, Texas. But I doubt caviar and champagne are being served. But I imagine there’s a few stadiums around the country that will do that. All right. Thanks for sticking with us today. Jonathan. If people want to get in touch with you guys learn more about what a&m consumer and retail group does. What’s the best way for them to do that?
They should visit our website which is AlvarezandMarcel-crg.com.
Awesome. All right. Well, that wraps us up today. A big Happy Birthday. Shout out to Juno Temple. Oh, yeah, right. Ted lasso
Ted lasso and the offer which is a great show that people should check out the godfather.
Yeah you’re big into that and of course, Cat Stevens, and one of Anne’s favourite Minneapolis bread crushes the one and only Josh Hartnett. You can see here,
I just saw him on the plane. My husband was watching the movie. I was like,
I don’t understand Josh Hart. I’ve never gotten him. But anyway, I guess no one does anymore either. Because he’s kind of irrelevant. But and remember if you can only read or listen to one retail blog in the business, make it Omni talk. Our Fast Five podcast is the quickest fastest rundown of all the week’s top news. In 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 make it fit within the preview pane of your inbox. You can sign up today at http://www.Omnitalk.blog. Thanks as always for listening in. Please remember to like and leave us a review wherever you happen to listen to your podcasts on YouTube. Chances are there’ll be red here within the next few weeks. So get on that please. And also remember to use your promo code RBOT1950 To register for grocery shop. That’s RBOT 1950. And of course as always, on behalf of everyone, that participant in this podcast, be careful out there.
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