Hello, you are listening to the Omni talk Fast Five brought to you in partnership with Microsoft, the a&m consumer and retail group, takeoff and sezzle. The omni talk Fast Five podcast is the podcast that we hope makes you feel a little smarter. But most importantly, a little happier each week too. Today is August 18 2022. I’m your host Anne Mezzenga.
And I’m Chris Walton.
And we are just back from a trip to the Fleet Feet store in the South Loop of Chicago ready to discuss all the top headlines that made waves in the world of omni channel retailing this week. Chris, did you notice how seamlessly I said Fleet Feet store?
Yes, I mean, that was amazing like you. And believe me that is not easy to do.
No, I’ve had a lot of struggles over saying that the last 48 hours.
You had. You’re so you’re so energised this morning too like I couldn’t believe it.
Well, I’m surprised but I’m gonna roll with it.
I’m gonna press Yeah, but we went to the Fleet Feet store we shot some video we’re gonna have that for you shortly shot some video of Amazon’s new just walk out technology at Hudson news in the Chicago Midway Airport too.
Yeah. Checked out the Lululemon experiential store and made Chris take class up there. But it was amazing. I loved it.
Yeah. That was like your Mecca. That was like your Mecca
Oh I’ll hang out, I’ll hang out in that store all day.
But yeah, but we’re a little road weary. But we’re ready to rock and roll. And actually, we have two also road weary guests today. Because back for the regular monthly appearance on the Fast Five our guest hosts from the a&m consumer and retail group. I’m pleased to introduce you again today Abhinav Chandra and David Brown. How are you guys both this morning?
Doing great looking forward to it, Chris.
Yeah, you guys are troopers. I mean, this is going to be quite a primo show today with all of us, like, just so still so passionate about talking about all the retail headlines, but also very tired from our jobs, helping and intersecting with other retailers in this area.
That’s right. David David. David’s flight was cancelled last night. Abhinav’s just back from Australia. So we’re all we’re all we’re all world travellers, wherever ready to go. But why don’t you guys why don’t you guys start off by telling the audience a little bit about yourselves given your background.
Abhinav let’s start with you.
Hi, my name is Abhinav. I’m a managing directors at Alvarez and Marcel’s consumer and retail group. Have 15 years experience in retail. Started at McKinsey’s retail group, worked at Amazon. And now I’m a managing director at an EMS crg group.
Excellent. David, tell us about yourself.
Yeah Thanks. And very similar to Abhinav, I grew up at Kearney in McKinsey, a little bit of retail banking. Before that. I do almost all of my work in in luxury and beauty. Really working across the retail value chain.
Exciting. Well, we’ve got some topics to cover with both of you today. We’re gonna get we’re gonna need your your most insightful opinions.
Yeah, exactly. Right. And I gotta say this to you. I gotta give credit where credit’s due. David has the best flow of anyone in the a&m consumer and retail group. He’s got the best maine. He does.
Yes. And skin david. I feel like you definitely work in luxury beauty. I can tell. I was like, I see where this is going. Abhinav you have that Australian look.
They’re just laid back Abhinav.
All right. We’re all right. Yeah, no, but no, I had to do it because it’s fun. That’s why we do on the show. Now normally, this is where we read our reviews, but given the headlines, because they’re pretty awesome this week and the fact we’ve got guests on the show. We’re gonna get right to today’s headlines. But stay tuned. Erica retail junkie because we see your review, and we plan to read yours next week. Today’s Fast Five is brought to you with the help and support of our good friends at groceryshop.
Are you a retailer or a brand thinking about attending groceryshop this year? Well don’t even think about it without using our promo code specifically for Omni talks, loyal listeners. Just go to grocery shop.com and enter promo code RBOT1950. That’s RBOT1950 for your special discounted rate. In today’s Fast Five we’ve got news on Walmart picking Paramount plus for its streaming plan partner, rumours that Ahold Delhaize, may be acquiring Albertsons. Facebook and DoorDash teaming up for marketplace deliveries. A headline so good, We saved the best for last, which is QuikTrip licencing Amazon’s just walk out tech down in Tulsa. But first we take off with a bevvy of quarterly earnings announcements Anne
Alright for headline number one Chris, we’re going to talk about earnings season is upon us once again this week as a number of retailers reported their quarterly figures. Here are a few of the highlights
Yes please indulge me
Alright. Walmart beat analysts expectations citing a 6.5% comp store sales growth last quarter, home depot also beat expectations seeing a 5.8% comp store sales growth while warning that it does not expect to see a slowdown
It does expect to see
Oh, sorry. Yes warning it does does expect to see a slowdown in the back half
A big warning.
Well, it would be weird if they did not, they would that was like their announcement, we do not expect to see a slowdown.
Oh, no one ever says that right. That’s good point.
And finally, target reported a quarterly profit drop of 90% Year over year as a clean through inventory and stock comp store sales growth of 2.6%. Abhinav let’s go to you first, what are you going to take away from this week’s earnings reports?
First of all, I want to put it in a little bit of context context is that inflation has been running 8-9%, around 8-9%. So if anyone is growing less than eight or 9%,
Year over year, that means either unit sales are down, or people are buying items that are lower priced or a combination of both. And that’s what’s going on here across the board. In case of target, I think it’s a good decision for them to clean out the inventory and take the profit hit in this counter, especially because the mix of sales are changing. They’re changing away from apparel to more a non discretionary and they were heavy on apparel, and apparel, having run an apparel business myself, I know how difficult it is to get rid of inventory. products go out of season.
I mean, you cannot sell your summer items in winter. I mean, it’s not going to sell. So you have to take the hit, they have taken the hit, I think they have done made the right decision. Even though it was super painful, or in terms of Walmart, they have held on to inventory, which is interesting.
I was gonna ask you about that. Yeah,
They’ve held on to inventory, which is interesting 40% of it, they claim excess inventories because the price of the inventory has gone up. They are 15% bloated, according to them. It’ll be interesting to see I think they they will have to take the hit may they be maybe they will choose to take it over a period of time. But I think it will be more painful for them in case of Home Depot. I think if you look at it, their transactions were down. So the inflation is helping them to get to that 5.8%.
And they will see I think they are right in saying that they will see a hit in the second quarter because they had a second half of the year because last year they had a blockbuster here. And then this year with home sales dropping interest rate at whatever 5% I think they are going to see a little bit of a hit. And they are right in calling it off.
So Abhinav if I got to ask you then because I you know, there are a lot of Walmart execs in Walmart, the Walmart execs on social media are going to be a topic later on too. But there are a lot of Walmart execs taking credit for their strategy working based on the results that they’re seeing here. If I read the between the lines of what you said, though, I would be a little more cautious, cautious if I was them based on the fact that heavy grocery business high inflation sales aren’t really at the level that you just said. Would you agree with my statement there? It seems like
Yes, I would agree that I would be a little bit more cautious. They have done okay, on the top line, I think, but it’s the profitability where I would be a little bit more cautious as they move forward, because they will have to get rid of that inventory eventually.
Yeah. David, what do you think?
Yeah, I’ll take a bit of a contrary view, at least in the Walmart.
Ooh I love it.
Because I think Walmart if, if anybody benefits from the trade down effect, more than others, so you know, I think their whole part of the, their whole inventory strategy is is waiting to see that play out. You know, it’s not people trading all the way down to a 99 cents or something like that, or $1 General but, you know, if you were shopping at kind of the Safeway and Albertsons and and target to the world, and you do have a natural trade down. It is Walmart, so I think there might be a bit of a bump that they get there that they’re counting on. If the economy continues to vacillate over the next 6 to 12 months, but we’ll see if they’re right or not, right so.
Yeah, I agree with David I was actually wondering like if we start to see a shift now like if people are going to Walmart because of of lower price groceries if they do have that excess inventory, are they picking up other things while they’re on that trip that they previously may have gone to target for something and like how does you know we look at targets offering targets not been known for like grocery especially produce being like one affordable or to you know, have good quality and so I’m kind of curious to see how this customer how these results are impacted by changing customer behaviours and where the where they’re going for those stores. But what do you what are your Oh, go ahead.
I know gas has come down a little bit and everything like recently, but if you think about making one stop instead of two or three, right, it plays what you’re talking about.
No, I think I 100% agree with you guys, too. I mean, I think I probably, I mean, I guess I don’t know how contrary that position was too David, and a lot of ways, I think a lot of it makes sense. I think, you know, the point that I think I was trying to make more, so it was just like, you know, you had a decent quarter, but let’s not, you know, you know, ring the bell that you know, everything’s rosy, you know, in general, but, I mean, they also just laid off a bunch of people, too, we can’t forget, but I don’t know. I mean, the takeaways for me are really simple to me. It was Target’s inventory position, as we surmise, I think, David, you might have been on the show the last time, we said it was going to be much worse than people thought, or at least that they were leading us to believe at that time.
So I want to take a victory lap on that. And then I think inflation, you know, is, you know, particularly danger for target because of the particularly a danger for target because of their product mix as well. Which is why, you know, shouldn’t be surprised that Walmart had the results it has because it’s such heavy grocery, but I don’t know, last words on anything you two
The only thing I would say the trade down effect is also like, even though they make a sale on grocery grocery is lower margin.
Right. 100% Yeah, yeah. Right. Exactly. So but you know, they’ve got a lot of room to go there too, in terms of, you know, what they mean for the marketplace in general and can probably withstand the inflation pressures better than than many others out there, too, which I think underappreciated point too. All right, let’s keep rolling.
Last point really quick, Chris, on on the home improvement category, right that the reckoning was coming. They’ve had two great years and during the pandemic, where everybody did everything in their home and right now that there’s a natural cycle at effect here that hard to avoid.
Yeah, absolutely. All right, let’s keep moving. Let’s go to headline number two. After reports tease the link up last week it is now officially Walmart has picked up Paramount plus to be the official streaming partner for its Walmart Plus subscription service, Walmart will begin offering Paramont plus to all Walmart plus subscribers, at no additional cost. A service which on its own, costs at least $4.99 a month. Numerous Walmart execs, as I alluded to before took to social media this week, most notably Chief Marketing Officer William White, and friend and former colleague had this to say on LinkedIn, quote, one of the most requested perks for Walmart plus is coming in September exclamation point, in addition to free delivery from walmart.com and discounts on gas members now also get the Paramount plus essential plan a $59 value End quote, David, are you sharing the Walmart execs enthusiasm for this new partnership?
Yeah, I haven’t often said this on this on this show. But I absolutely love this one. I’m
Oh my gosh,
tell us more.
I’m I’m a huge fan of this move.
Oh, my God. Okay. Why?
Well, a couple of things. Right. So like, you know, if you think about the two dominant players that are racing to, you know, build a complete bundle, right, Amazon’s well ahead.
You know, they had to have a video response, you know, since they sold Vudu to Comcast, which was never going to work out. This now gives them you know, content. It’s a content that I think matches up pretty well with their demographics. They got, you know, the CBS version of football, they got a lot of kids stuff. You know, it’s a broad Middle America content. Right.
I think Paw Patrol is the real
You know, they got a bunch of great stuff. The, you know, the other streaming services that looked at right, Disney was never going to do a deal with it, they don’t need. Walmart was never going to build it. Right. They are not driven by an ego fueled desire to own a studio that, you know, kind of the way I think Amazon started. So I think it’s a great place to keep some, you know, makes them more competitive with Amazon Prime plots. And you know, Walmart plus is becoming a viable alternative. Well, I can’t wait to see what’s what’s the next piece of that they add to Walmart plus.
Wow, I can’t wait to talk about this. Abhinav, You gotta go next. What are your thoughts? Or do you agree with David?
I mean, I wouldn’t go as far as David went to say, I love it. I don’t I would say they had no other option. They had to put something together to compete with prime if that’s their goal.
And this is that their goal? Yeah. Right. Okay.
If that is their goal of that should be their goal. That is a different question altogether. And so I think that if they had to do it, I think this was the most viable option. I guess that was on the table. This the more interesting piece to me was when they report they have I mean, they’ve never publicly said what are their Walmart per subscriber growth numbers.
They’ve never publicly publish those. Yeah.
Which which is same in line with Amazon when it was going through with the prime it never published it. I think they started publishing six years ago. The bigger thing is, as I read between the lines, I think they say yeah, Our subscriber price is growing monthly every month it continues to grow. But the language is so soft, that it makes me believe that the growth is not what they were expecting. And they have to do something to energise it. And I think this is probably a move that will help them, now how far? I will wait to see.
So Anne I don’t know what you think on this. We haven’t talked about this. So do you think this is the move that’s going to energise the growth or not?
I agree with Abhinav, I think we have to wait and see how much this impacts because honestly, for me, it still isn’t enough to get me to do a Walmart Plus subscription. And like, there’s, there’s a key missing component here. With Amazon Prime video, you have no ads. Okay. And this platform is for the $4.99 version, you still have ads, like at least Walmart, get the ad free version, like that’s a big I don’t think it’s a big deal. When you’re looking at like $5 a month, I don’t think it’s enough of an ad to get the needle pushed the way that they think they’re going to get it from this.
Yeah, well, I Okay. Okay, go ahead. Abhinav
No, I would say, in case of Amazon with Amazon Prime, the Amazon Prime subscription stood in on itself, even before Amazon Prime came along. And it was doing really, really well when Prime came along. And then as prime came along, it brought more customers in so it was helpful, for sure. And as you called out, it was always ad free with the Prime subscription. So Walmart plus, I think this is a sweetener, but Walmart plus core offering has to stand by itself.
For it can be Yeah, before this is creating the value. I see what you’re saying.
But I think that’s I think what you guys are talking about is really important in this because like and it goes back I thought when we talked about what is the goal of this, I think that’s really important is like, why in our minds do we mentally say like, Oh, it’s a subscription programme, it needs to be bundled, and it needs to be like Amazon’s when in reality, the beauty of what Amazon does is they created the flywheel around the Prime membership. And it fuels everything that Amazon is doing. So it’s Amazon owns its own content studio. Walmart doesn’t Walmart is basically buying the content studio from Paramount. So it’s not going to get that same flywheel effect. So that’s my point is like, I don’t think it’s going to do anything. I actually, I coined the phrase last night, I think, I think this is a paramount over a molehill. Like honestly, like that’s what’s going on.
I don’t know that I’m gonna give you credit for that. It’s pretty,
It’s pretty weak. But hey, points for trying Anne. Come on.
Guess so I guess
But like, I just don’t get it. Because even in the statement that William White said, like, if your customers or if your current Walmart plus customers are asking for it, I mean, it’s not going to get you incremental Subscribers, most likely, because they’re already with you, you know, they, to your point, they saw some value in it that you’re not seeing they sign up for it. So they got it anyway, that’s great. But I come back to it. It’s like, it’s, it’s not the same thing from the viral approach that Amazon takes with it. And so the two things from a business model perspective to me, could not be more different.
And the real advantage is Walmart has to find is where are those synergies? Like, like the gas discounts? Yes, that makes sense. You know, walmart or amazon can’t do that. Right. Scan and go services in store. Yes, that makes sense. You can advertise off that platform, which is yours. You don’t get that with Paramount Plus, David, last word here, though, because I pretty much just disagreed with you.
Yeah, I think the big piece you’re missing though, Chris is the the draw of the NFL. And just how popular NFL is, you know, now I know. You know, all of the streaming services have a little piece of it. CBS is still and Fox are still the two biggest pieces of it. So having access to that and not having to pay for an NFL red zone or something along those lines, I think is going to be really key to this deal.
Setting us up for the future of how the NFL streaming battles Get one.
Okay. Well, that’s interesting point. Yeah, I mean, okay, I don’t know, I think that’s maybe over attributing a little bit to them. But in terms of NFL in terms of how it’ll play out,
I mean, but I mean, it’s NFL plus other content, right. Still established content in the Paramount network. I mean, you can talk all you want about the flywheel of Amazon and Amazon Prime, they’ve bought a lot of content, all of their produce content is, is still not taken hold the way some of the content that exists on the other platforms as right they, you know, you it’s hard to argue that they have two or three shows, let alone 10 or 20. That you know, that they have produced that people are clamouring to see.
I don’t know I think that was debatable as as I’m watching boys religiously right now, but uh, but yeah no, it’s good and well noted. Alright, and let’s keep moving.
All right, headline number three Ahold Delhaize is rumoured to be evaluating an Albertsons acquisition, according to European media out Retail detail one of my favourite named retail retail detail to Albertsons planes were spotted last week at Bedford airport next to a whole Dell Hayes’s, US based in Massachusetts, neither side at this point has confirmed or denied the rumours. Abhinav, David, who wants to take this one? Because I got to hear what your thoughts are on this potential the the rumoured relationship between
Let me start on the, on the point you just said, because I think that, you know, sums up the deal. And that’s why the hell is are two planes here.
I mean, if I’m an Ahold executive, I’m like, Okay, this is places so poorly run, that cost structure is so bloated, that they show up with two planes. I see immediate goal from a cost standpoint, but then, you know,
Also, I agree. I agree. David I thought about that. It’s so funny. David and I are on the same wavelength this week, too. Because I was like, if you’re gonna send execs and you don’t want people to know, why are you sending a branded plane to this location?
Two of them.
Yeah, exactly. Exactly. Okay. Keep going, though. David, keep going.
Beyond that. I do think there’s potential synergies, right. The geographic footprint fits very well. Ahold primarily East Coast base, you know, Albertsons with Safeway, and there are other properties are primarily West Coast base. So, you know, if they do want to be a national player, and you know, there’s a lot of benefits to being natural, a national player in terms of leverage in terms of synergies and all of those type of things, then, then this is a natural play for them. Unless they’re gonna buy a Super Regional like or a rerelease or something like that. Which is probably a better run grosser than this is, I think, the logical option.
Now you’re okay with this move. Yeah. Yeah.
Abhinav. Where do you land?
Yeah, I 100% agree with what David just said, my local grocery store is safeway. And I do not like going there. But the next grocery store is 10 miles away. So I have no other option but to go there. But since the pandemic started, I only ordered online, I don’t like going in the store. It’s old. It’s creepy. It’s not a pleasant experience to shop.
Right. That’s what they’re talking about. With this merger that could be helpful is that a lot of those Safeway stores, they you know, the Albertsons stores need those improvements, and hopefullyAhold could come in and help do that. But, Chris
No I feel the same way. I did this one David and I 100% agree on I thought the point about the Jets was amazing. Actually, that was that was such a candy pickup. They’re like, why not? You know, Ahold gets grocery they don’t have a presence on the West Coast. The grocery game is getting more and more about scale by the minute here, too. I think you know, as you look to compete in the US, so I’m like, yeah, why not go for it makes sense.
Yeah, I think that’s a great point. I mean, especially as we’re looking at who the major players are setting themselves up to be you look at Kroger and Ocado moving across different geographies with their fulfilment centres. And I think that if you start to think about a whole picking up more of the West Coast, grocers, like David and Abhinav are talking about I think, that allows them to kind of invest more heavily in those centralised fulfilment centres that could allow them to really start to compete with a Kroger and Amazon Fresh and other grocers that are starting to look at this massive expansion.
All right, headline number four Facebook marketplace and DoorDash are teaming up on local Facebook marketplace deliveries. According to The Wall Street Journal, the deal is an attempt to get more people especially younger ones to use meta owned Facebook. While for DoorDash. The partnership boosts its ambition to expand into delivery more than food. The service has been tested in several US cities in recent months, and lets Facebook users purchase and receive items from marketplace without ever leaving their homes.
The service will deliver items that fit in a car trunk, and deliveries will be made to addresses up to 15 miles away and are usually made within 48 hours. The Wall Street Journal reported Terms of the deal for either side have not been disclosed at this point. David, what do you think of this move for both parties?
This one made me laugh.
Oh, really? Okay.
For a couple reasons. One is like, you know, I love the comment about trying to get younger. So you know, I guess that my mom, if she was still alive would have been 100. Today, she’s just approaching, you know, to be old enough to be a Facebook user.
David bringing it today. I love it.
Yeah, so I guess you know, like from a delivery standpoint, that would be beneficial from our but I don’t to me this this harkens back to something we talked about last year on an episode I think it was 7-eleven and DoorDash. That it seems a little bit of desperation on on both their points right? You know if Facebook, the driving way to get younger users is to try to get DoorDash users through marketplace? I don’t think that’s the answer.
And I think you know, I get DoorDash is play of trying to get away from anything, grocery and other items. And that was the same play with. I think it was 7-eleven. So this is another play on that. But yeah, this is a splashy announcement that is going to have very little practical impact on on either company.
Wow. All right Abhinav and if you’re going to agree with David, I think I feel like you’re what you’ve agreed with him so far, in one disputed on another, we’re kind of half disagreeing on the first headline, where do you come down on this one? So I’m pretty sure Anne’s going to disagree pretty wholeheartedly.
Yeah, so I am actually going to disagree David with you.
Yeah alright. Here we go.
And here’s the thing, I think it’s a play for the future. And I think the announcement or the partnership has an asymmetrical benefit, I think from from both sides. First of all, I’m a huge fan of DoorDash. They are a very nimble and innovative company that is coming up with new business models. And they are working with all different kinds of retailers to try to figure out how to deliver fast in an in an E commerce, environment. And part of success on of E commerce part of it, not all of it part of it depends on fast delivery.
And so if you have the selection, if your experience of selling the product online is good, then delivery is the third piece that needs to fit in. And so DoorDash has done that really, really well for a bunch of retailers, and they continue to expand. So that’s and so this is another sort of feather in their cap. In from Facebook perspective, I think the jury’s still out. I’m on the Facebook side I’m with David. Facebook is not known as a place where you would go and shop. I mean, they are not the destination that you would think that they are currently however they could get there in the future.
There could be a world in the future where you can think of as the launch meta as the metaverse their platform. You are playing game in the metaverse and you see something that you want to buy in the metaverse, you buy it and then DoorDash delivers it. You are playing like for example, you are playing a game in Metaverse, and you see something that you like, you order it and DoorDash delivers it to you. I mean, it’s much further ahead in the future. But the point is that Facebook needs to improve its shopping experience when it does and is able to compete in the E commerce space.
They have the delivery part figured out. So that’s the thing. That’s the jury’s out on the Facebook side. But I think from a DoorDash perspective, they continue to expand, they continue to add more things and independent of who succeeds if they have everyone. They will succeed. From a delivery perspective
They’re taking a portfolio bet, right.
I agree with you on the DoorDash I just don’t have any confidence Facebook, or
Interesting. Yeah. The the short term, long term Facebook, the part I think that’s missing in this conversation, which I’m pretty sure Anne’s gonna bring up because I know her and she’s a religious Facebook marketplace shopper.
Is the Facebook marketplace angle, which is very different than say the Facebook feed and shopping from that or the metaverse eventuality too, but Anne what do you say.
Exactly what I was going to say I think that there’s an important distinction to be made. That is exactly that were, you know, shopping at my local retailer on Facebook and using that for DoorDash. That’s fine. But that’s not enough to get me to get a dashpass for example, and then have a subscription, but Facebook marketplace and having DoorDash fulfil Facebook marketplace transaction is a 100% going to get me to get a dashpass without question.
I mean, Facebook marketplace in a lot of communities has pretty much overtaken Craigslist. And the worst part of that transaction is having to drive it whenever it works for that individual to meet somebody you don’t know is is having to like go through that part of it and I think keeps a lot of people from doing Facebook marketplace type transactions. But allowing peer to peer commerce to take place in a much more convenient way.
For little to no fee on top of whatever it is you’re already getting a deal on because it’s a resold item is brilliant. I think that this is great for you know DoorDash should be able to say look, we’re everybody Instacart whoever we can give you your beauty store your drugstore, whatever on top of your subscription, but we are going to eliminate that friction and the unpleasant experience of having to buy something from a complete stranger and having that transaction be one and done.
Anything that will fit into a trunk gives you access to a large variety of items that you can have this this transaction and I think that you we this is such an untapped market as we’re thinking about what the possibility for enhancing this peer to peer transaction looks like we just talked to clever on, they’ve been doing peer to peer locker transactions so that you can even eliminate these experiences and point it forever in Estonia. And I think that, you know, we’re going to start to see more facilitation of these transactions as resale as a concept becomes more important. I love this
Damn, you go girl. Go. David, what do you think.
I want it for today. Because I don’t want to drive to
I have a table full of stuff sitting in my office that I’ve made to sell. Try it on Facebook marketplace. And I’ll report back to you how many what happens I reserve the right to change my opinion, but I’m not changing. It.
You Just mic drop David. I think that was awesome. That was awesome. I don’t have anything to add? Like I agree with you, I think my thing would just be it’s a it’s a real pain point in the marketplace experience that this potentially solves right. I think there also is the element longer term of how Facebook does commerce. And I’ve long posited to I think I wrote in Forbes back in the end of 2020 where there is a link up for Facebook and these third party delivery services to get together whereas and create a world where you’re shopping from your feed and behind the scenes that delivery operators just source it for you wherever is most economically viable for you and give you the option of where you want to choose to purchase it from.
So I think that could come later but I think you’re 100% right? This is about the marketplace and that is big volume. There are billions of dollars running through the marketplace
And I wonder like
Atleast until the Tick Tock Amazon stream comes out
Potentially today Yes, but I also wonder like what information Facebook is going to be able to gather and DoorDash for that matter that they could also potentially sell to the retailers a product so like if somebody’s searching Restoration Hardware sofa like can you start to say like Restoration Hardware This is what the second life of your products looks like. These are these are what people are searching for. This is the potential value
You’re all in
Chips on the table
You’re gonna need a bigger trunk is right David? All right, let’s go to headline number five. According to CSP magazine Quiktrip is opening a non gasoline convenience store with Amazon’s no checkout just walk out technology in Tulsa, Oklahoma. Tulsa customers can enjoy Quiktrip snacks, including the Nitro coffee station with freshly brewed coffee, as well as its complete menu of grab and go items like fresh donuts, salads, wraps and Quiktrip’s pizza by the slice. For perspective, Quiktrip that’s Quiktrip with a Q is number 10.
On the queue SPS top 200 convenience store chains and has over 900 stores with an estimated annual volume of $11 billion per year according to win sight. Abhinav What do you think of this decision by Quiktrip to sleep with the enemy?
I think it’s a good one. Yeah, I think it’s a good one. So when Amazon started AWS, it all started. Similarly they were they had their own infrastructure of computers, they built their own services, then they decided that it’s a good idea to sell it to others, let’s see if others buy it. And if they buy it, and now we have a huge AWS business on Amazon. It’s in the same vein from Amazon’s perspective, from Quiktrip’s perspective, they are not going to build this technology, they have to sort of if they want it, they will have to buy it from somewhere. Amazon has the best technology at the moment.
And that’s the path that they are going down. I think Quiktrip is a convenience store. They want convenience. And this provides convenience to help customers. So I think it’s a good partnership. Now, going back to the analogy that I was making earlier around AWS. As the evolution of AWS has happened, a lot of retailers have stopped using AWS and have moved to Google Cloud.
Because they feel even though the two businesses are separate, the profit that they are making on AWS is subsidising the retail business, which is their competition. Now, this may play out in the same way in the future. But as of now there are limited set of options and the quality of technology that Amazon has is way way far ahead than anyone elses got it. Walmart I think is trying to build it, but they are nowhere even close.
And so if this is the only play that you have, then that’s the one you’ve got to take and you have to think customer first and if you think customer first you have to provide more convenience, you have an option. Why not?
Interesting. So you’d like to move because you think Quiktrip’s the customer first that this is a real threat or a real new way to shop convenience stores. We have to understand it and make sense of it. So we’re gonna partner with Amazon. That’s that’s your basic point. Okay. David, what do you think?
Yeah, I think we’re gonna end on a little Kumbaya. I actually really like it too, for all of the reasons that Abhinav just said. The other thing that I think is interesting in this is it If you notice in the announcement, it’s it’s one of their net non gas locations. So I actually think this speaks to a future strategy around how are they going to think about the transition to electric vehicles and all of their gas locations and actually convert them into true convenience stores. And so in some ways, to me, this is a customer first pilot on what could be the strategy to eliminate gas stations long term.
What do you think?
I don’t like it. I don’t I don’t, I don’t think that the checkout free technology race is happening that quickly, that you need to cite, you need to saddle up with Amazon, you need to put this out on the horse of Amazon right now. I don’t because, you know, there’s plenty of players in the marketplace that have are showing an ability to do what Amazon is doing and waiting another year or two years to take a partnership with them.
I don’t think really disadvantages you that much. But you start getting embedded with Amazon and building these stores, you know, first in Tulsa and then they said they’re gonna build more of them throughout the region. If you do that with Amazon, that’s going to put you in a it’s kind of we’re back in the E commerce mousetrap that Toys R Us and target and everybody else fell into back in the late 90s and early 2000s. So I don’t know. But I mean, what I take away from it is I think the threat is real number one, then Quiktrip thinks the threat of checkout free retail as a shopping experience is real.
The second thing is probably that the convenience store players in the space for tech checkout free technology are probably not ready for primetime yet. I think that’s an important point here that I’ve been I was bringing up too. But and you have to remember like Treego, who these what we’ve spotlighted on the show has deliberately tried to stay away from the convenience store market because they believe in scaling to grocery right and proving that out. But that we’ve seen 3000, store checkout free spaces from them that work right.
So like the technology can’t be that far away with somebody else. So I don’t know, I just, I don’t I just don’t like it for those reasons.
I think that’s what’s puzzling to me here is that these are all new stores that they’re going to have to build with Amazon, Amazon’s not retrofitting spaces yet. And I think that’s where when you’re Quiktrip, the size of Quiktrip, like we talked about, and you can’t retrofit yet any of your old stores, you’re only going to be able to build these new stores. And I think David’s bringing up a good point about like the future of what the convenience store and gas station looks like. I do think though, to that point, there’s some advantages of bringing Amazon in.
If there’s a if there’s something we don’t know, like, what do we not know about this relationship that’s happening? Where you’re starting to think about if Amazon does want to build the future gas station, you know, is this a player that gives them suddenly access throughout the middle of the country like all along 35 That goes north to south, they suddenly have access to all of those gas stations with Quiktrip. Could be a play here that we don’t we just don’t have visibility to
The other point I
Yeah that could be a huge assortment play that could be an access by there’s Yeah, I agree with you on that one. Yeah,
But the interesting if you start thinking about it, the other point I would make too that I think’s really important here is it shows you that Amazon’s tech is really licensable at this point,
Like quicktrip, Hudson, Hudson news in the airports, all the airports stores, the sporting events, like they’ve got that thing dialled in now, if people are signing up to it to the degree that they are Abhinav.
Yeah, well, my question is, this is a question not an answer yet. Back to you guys. Like what’s the competitive threat that you think exists from amazon for them? Like licencing This technology They’re only licencing the technology, they’re not licencing anything else
Well, I think it’s the same way. I mean, you know, I think I mean, I don’t think it’s that dissimilar than what they did with E commerce, you know, like they built everyone else’s e commerce websites, that gave them the revenue to build theirs better and do it better over time, they kept the best technology for themselves, in theory relative to what they were giving to their provider to who they were providing it to. It’s the same thing here with convenience, store retailing, ultimately, at the end of the day, they can learn to do the convenience store business, they have a competitive threat in Amazon Go that’s growing fairly rapidly. You know, that that’s kind of my thought there Abhinav. What do you think, though?
My thought is, I mean, they this is like AWS, they are the point that you make, that this may be funding some other parts of their business from a profit perspective, that I can totally 100% that I agree with. If that’s the only angle then that’s fine. But in terms of licencing, the technology, yes, they will teach them something but they will make the technology better for them. And for for Quiktrip as well as for themselves and both sides are going to benefit as the technology evolves. It’s not like they’re using different services. From that perspective, so yeah,
I would buy that if they weren’t doing Amazon Go. Like if they’re like we’re just licencing this technology. We have no interest in a physical store play. I would buy that argument. But David, last word here. And then we’ll get to the lightning round.
I think that was Spoken like a true Amazon alum.
And by that you mean what Abhinav said, right?
All right, you guys, let’s get to the lightning round. First question is for you, David. Airbnb is rolling out new anti party technology that can automatically detect the types of bookings that might result in an unauthorised party. David, what party trick or topic is your go to at an authorised or unauthorised party?
Yeah, it’s probably more unauthorised. But when I was when I left Carney years ago and went to McKinsey, I made the announcement at a at a holiday party. And there was a karaoke thing. So I spent like three months perfecting a couple Eminem tunes.
Oh my God
So that I could actually have a mic drop moment. So I’ve kept that up. So like, you know, if you see me, like get some karaoke event, I’ll break out a pretty good Eminem.
You have to wait and see that one.
We can get a Freestyle taste. Gonna hold you to that you’d be ready for another one next time. Alright, Abhinav a one in 2 million Bright Blue Lobster was found by a father and son in Maine recently. Who is your retail lobster Other than Amazon, who you just absolutely cannot live without?
I would have to say Google. I don’t go to malls anymore. I shop online and if I cannot if I cannot pick Amazon, then I’m searching on Google.
Are you wow okay, you’re that committed. Wow. Dedicated.
All right, let’s go back to you David. Snoop Dogg is coming out with a line of lookalike Froot Loops called Snoop loops. And if you were going to create your favourite cereal what cereal would it be?
Yeah, I’m I’m super boring on this one. Like I love oatmeal so it’d be some kind of mash up of oatmeal with all my other favourite flavours so I’d have to have you know a lot of nuts and berries and probably little bit of brown sugar or honey or something like that. So nothing creative on this one. I can’t really
You can make your own you can take your own spin on oatmeal.
I do love how like like the market the oatmeal market has expanded and now there’s all of these craft oatmeal players out there that I think are doing some really cool stuff whether it’s protein based
That might give me to get back into it I guess but
Oh go go into a good retailer and take a look at the oatmeal shelf it’s they’re killing it these days.
All right. That’s a big hurdle for me to climb. Alright in a move to increase its freshness perception. Subway now plans to slice its own meat right in store. Abhinav What was the last sandwich you ordered at Subway?
I think it was Italian sub Italian carbonara sub. Yep.
He knows the exact sub. I don’t even know it will be like a turkey one. I don’t know what it’s called. It’s got the turkey and whatever.
I think I got the BLT one in like 2012 in Casper, Wyoming. That was the last time I was in a subway Anne that’s yeah, not my
All right, that wraps us up Happy Birthday today to Andy Samberg. Christian Slater and one of my all time favourites Mr. Roy Hobbs himself Robert Redford. And remember, if you can only read or listen to one retail blog in the business make it Amitabh our best 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 feature special content exclusive to us and just for you and try really hard to make it all fit within the preview pane of your inbox. You can sign up today at 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 or on YouTube. And remember to use your promo code RBOT1950 To register for grocery shop. That’s RBOT1950. Finally, David, if people want to get in touch with you and the a&m consumer and retail group for a little consulting services and advice, what’s the best way for them to do that?
Yeah, thanks, Chris. Easiest way is either through our website, alvarezandmarsal-crg.com Or find Abhinav myself or any of us on LinkedIn.
Awesome. Well, thanks so much for being with us today you too. Again, it’s David Brown and Abhinav Chandra of the a&m consumer and retail group on their behalf and from all of us at Omni talk retail. As always, be careful out there.
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