Anne 0:09
Hello, you are listening to the Omni talk fast five brought to you in partnership with Microsoft, a&m consumer and retail group, takeoff, sezzle and silk. 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 September 15 2022. I’m your host, Anne Mezzenga
Chris 0:32
And I’m Chris Walton.
Anne 0:33
And we are here once again to discuss all the top headlines making waves in the world of omni channel retailing. Chris, we’re getting right to it today. This is a no nonsense podcast. We’ve got some big plans coming up.
Chris 0:46
Big Plans next week Anne. Grocery shop.
Anne 0:48
Yes no reviews today. We are going right into grocery shop next week where we will be broadcasting from the conference for your next week’s Fast Five. So to help us get in right into the flow of the show today.
Chris 1:00
The trade show mindset going we’re gonna get thoughtful, insightful when we get up on stage.
Anne 1:05
That’s right. We have guest today on the show the a&m consumer and retail groups, David Ritter, and Mohit Mohal back for their regular scheduled monthly appearance. You guys, I’m really excited to have you here today. We need your support today more than ever.
Chris 1:22
We need your insight.
Anne 1:23
Yes, we need your insights. We need your support. We need your guidance. We’ve got a hell of a list of topics today. But how are you guys doing Dave? It’s good to have you back.
David 1:32
Thank you very much, doing fantastic.
Anne 1:34
Yeah, Mohit you and I go way back. I’m actually disappointed not to see Mohit’s art behind him. He’s a he’s also quite an artist, in addition to his extraordinary insights.
Chris 1:44
I did not know that.
Anne 1:46
Yes, Mohit. How’s it going today? Welcome back to the show.
Mohit 1:49
Glad to be back Anne. I’m doing great. Right. Maybe I’m taking some inspiration from the art here. I mean,
Anne 1:56
Okay. Fine, Fair enough. Fair enough.
Chris 1:58
Fair enough. So Dave, why don’t you start to like what first of all, how many times, have you lost track of how many times you’ve been on the show? I think I have.
David 2:05
I honestly don’t think I can’t tell you exactly how many? Six I believe
Chris 2:08
Yes, six. Okay, I think
David 2:10
I got the green jacket last time.
Chris 2:11
You did. You did. So tell us remind the audience who you are. You’ve been on a lot, but remind the audience who you are what you do.
David 2:17
I am a longtime consultant in the retail sector. I help my clients with big transformations, often kind of at the intersection of operations, strategy and technology. Very happy to be here.
Chris 2:29
Yeah, awesome. It’s great to have you back man. We always love when you’re on. Mohit, how about you?
Mohit 2:33
Large scale turnaround and transformation expert, really focused on specialty retail with a lot of work on apparel on a broad broad variety of topics ranging from top line profitability and growth. Glad to be here.
Chris 2:48
Awesome. Well, we’ve got some definite topics on those subjects today. So there’s some there’s some good meaty topics in here so let’s get right to it. Today’s Fast Five is brought to you with the help and support of our good friends at grocery shop. Are you a retailer brands still thinking about attending grocery shop just three days before the event?
Anne 3:06
Heck, yeah.
Chris 3:07
You better be right
Anne 3:09
You better have a plane
Chris 3:09
There’s still time.
Anne 3:11
Probably still doing pool parties in Vegas. Like
Chris 3:13
Is that a movie there’s still time or something? But anyway, well book your flights and register using your promo code specifically for Omni talk 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 a new material Nike has invented that it thinks could quote change the apparel industry. Wegmans calling it quits on scan and go shopping. I’m really excited about that one Anne. Tuesday morning getting a fresh injection of capital from retail e commerce ventures. Target’s new partnership with FAO Schwarz but we first take off today with news out of Starbucks. Anne would you have the honours please?
Anne 3:55
I would and I was surprised I even got a personal experience with this this morning.
Chris 4:00
You did Yes, I heard all about it.
Anne 4:02
So Chris. According to Yahoo Finance, Starbucks is exploring developing technology to prevent us cafes from becoming overwhelmed by too many orders. The company is exploring load balancing technology. I know. See, it still reminds me a PC load letter. I get away from it. Load Balancing technology that can send orders to stores that have the capacity to actually fulfil them instead of sending it to stores your same store that’s already been slammed by drive thru customers. Chief Technology Officer Deb Hall lift Verve said in an interview with Reuters ahead of investor day on Tuesday, such technology will help distribute the demand more evenly across multiple stores, especially during peak hours.
The firm also said and she also added that the company is also focused on automating tasks and streamlining jobs so that employees can prioritise customer service. Mohit we’re gonna go to you first on this one. What do you think of the ideas surrounding this Load Balancing technology? Are you? Are you in it? Are you asking questions about it? Where are you at with it?
Mohit 5:09
I’m in listen, I think about this as a trillion dollar disruption, right? With a T. And to me, this just continues to highlight how technology especially AI, will continue to disrupt retail at a breakneck pace. I mean, we’ve been seeing this with multiple clients, when online demand went up during the pandemic, retailers either cap the number of stores where they were taking copious orders, you know, we’ve all seen the crowded parking, lots converted into like, buy online, pick it and store, many kept the number of online orders, they will process in a store not to break the system.
Chris 5:52
Right
Mohit 5:52
What Starbucks is now doing is a step in how do you capitalise on that new demand and the new normal in the most efficient manner. And AI is gonna play a big component. Frankly, I mean, I think of it as just one use case, based on work we’ve been doing with our clients, we see AI being increasingly deployed in demand and deployment as it relates to inventory, merchandising, planning, customer service, pricing and promotion, you just name it, right. So to me, this is just one use case, the way I think about this is, you know, just the US alone retailer is a $6 trillion plus opportunity.
And I think it is not far fetched to say the kind of impact we’re going to see on retail, just over the next two or three years, with all the different kinds of AI use cases, is gonna be in at least a trillion dollar plus range, significantly higher over the next five or 10 years or so, you know, really exciting. I personally love Starbucks. So you know, can’t be more happier about it.
Anne 6:55
Well, Mohit, I have to agree with you. And there’s also a story that came out this week that said, you know, we Starbucks is also going to be opening 2000 new stores investing $450 million dollars in modernising stores with the type of automation and AI that you’re talking about. I’m curious, though specifically, like, AI aside, like of this specific thing, like being able to move orders from one Starbucks to another. What about the consumer side of this? Because that’s what I’m thinking about here?
And I would question like, Do you have any thoughts about what that’s going to mean for, you know, my, my best friend who I ran into this morning, who got rerouted to another Starbucks, because the her Starbucks had stopped taking mobile orders because they were, there was too much load there at that Starbucks? I mean, where does that come into play with the addition of the new technology?
Mohit 7:42
I think there’s gonna be an element to it around, how do you think about what, what is gonna be the consumer feedback, and really taking that to the core, at the end of the day, this is not a technology play, right? Anything and everything, which we need to do has to create exponentially better customer experience, which is what they’re trying to do. So I’m quite sure they’ll they’ll learn a lot. And they’ve probably done a fair bit of testing already around the kind of things where they might see a negative or adverse consumer impact.
But I think you’re spot on, right? Like there would be adjustments, which they probably need to make down the road. You know, in Starbucks, and its history this is probably just the first salvo. There’s more to come. And I think it’s really exciting time.
Anne 8:25
Yeah. Dave, you’re the transformation expert, and tech expert here, like, what do you think about, you know, marrying the customer experience with these new Starbucks stores and then, you know, this technology in particular?
David 8:39
I couldn’t agree more with you. Frankly, I think this is quite different than both of us. So I think for delivery orders, this makes perfect sense. And they should immediately reroute it.
Anne 8:49
Right
David 8:49
It doesn’t impact the customer. I actually think Starbucks is plays a different role in a in the retail ecosystem in a traditional kind of bogus retailer. Starbucks is a is a point on a path, on your morning commute. Starbucks is a point on a path to pick up your kids and being redirected, I think could actually have really potential potentially negative adverse customer impacts in a pretty significant way. As I read it. I’m like, what if they rerouted me five miles out of the way like,
Anne 9:14
Exactly.
Chris 9:16
Or force you into the store itself? You know that’s the other thing. Yeah.
Anne 9:19
Right. Chris, You have you have similar feelings.
Chris 9:22
Yeah 100%. When I read this, I think it’s so misguided. You can’t load balance between stores for pickup for the reasons Dave saying, because you’re a point in the route that’s routine for you. And you can’t that can’t be happening sporadically. So I hate this idea. But I think it goes back what what it tells me though, is that the real problem here is really that the stores aren’t designed for how people want to consume coffee or buy coffee anymore.
Anne 9:44
Right
Chris 9:45
Which goes back to the point you made about the architectural overhauls and the stores, the new stores, they have planned that hopefully they’ll create that capacity through that. And the idea is then you need to put better automation and add technology into those operations to make them make the coffee more efficiently over time
Anne 10:01
Yes
Chris 10:01
Load balancing is probably not the right way to go. So I don’t actually even know why they’re out there talking about it. I would say,
Anne 10:07
I completely agree. I think that if I was going to put any effort into something right now, it would be how do I start to deploy more automation in the stores Versus load balancing and transferring the around. How do I, you know, focus on what we’re seeing in Amazon Go where you have a full on, I mean, that cup of that latte, that you are programming in any way when you’re doing a mobile order and picking up like, I don’t know if that’s being made by a person or by a machine at this point in time?
And if and I think that that’s going to be important for them to think about, as you’re talking about as they’re building out these 2000 stores, you know, do they create a delivery or pickup only store delivery pickup only stores in these like interim areas where they’re seeing such high load, but I just I do not like that we are not focusing Starbucks being we is not focusing on how you make that coffee making process simpler. It does not need to be made by a person
Chris 11:02
Right, which is a whole nother offshoot to this topic to is does this whole process make Starbucks even more mass commoditized and more of just a cheaper product over time? Are we going down that road, which you know, could have brand consequences? But Dave, it looks like you want to have the last word here, go for it.
David 11:17
Yeah, one thing I thought, I agree, the article focused on something that was the smallest of all the things that were mentioned in the press release. Three things that weren’t mentioned that I think are really important is they’ve got a new cold brew system that’s automated. They’ve got the clover machines, which is automated kind of single serve, and then they’ve got the just walk out technology, which those three things are so much of a bigger, bigger deal and frankly, more impactful ideas than the load balancing. That’s just I think it was kind of a focused on a small topic.
Chris 11:47
Yeah, it’s it’s always a good time when you use the word phrase like load balancing and quotes to get your thing you know, like, it’s just, there’s probably not much there. Alright, let’s keep rolling here. So headline number two, Nike unveiled a new material that again, thinks it could quote, change the apparel industry. According to a Tuesday press release, Nike has introduced a material that is calling forward, which is created by quote, hacking punch needle machines, and quote, which I have no idea what that means
Anne 12:12
Oh I looked it up
Chris 12:13
Oh you did,
Anne 12:13
It’s impressive.
Chris 12:14
Oh, I can’t wait to hear about it. Nike says the production process for forward results in a carbon footprint that is about 75% lower than that for producing a standard knit fleece. According to retail diet, the first product with the material, which is comprised of 70% recycled content by weight will be a grey hoodie, and crewneck. No surprise there. And the products will be available globally on September 15. Mohit, let’s go back to you on this one, since they’ve closed out the last one. What are your thoughts? Well, this move this sustainability effort forward, pun intended in apparel? Or is this Is this not that much to write home about at this stage?
Mohit 12:51
You know, I mean, listen, I’m not very close to the technology. But if you think about the concept, the headline here is a small step in the right direction, right, irrespective of whichever we want to think about climate climate change. And I know people might not agree on the pace and the magnitude of change. This is something which is increasingly important for for consumers, and the next generation of consumers. I think I was reading on this the fashion industry is responsible for more global carbon emissions than all international flights and maritime shipping combined, right? That’s a fairly big number. Right?
Anne 13:26
Right.
Mohit 13:26
And you see examples of this, be it like the recycled raw materials, which you know, different companies have adopted, or the recycling programme in Denim, you know, Levi’s, and after Dodger, a bunch of others, which followed suit, you know, that there is gonna be new ways where every single fashion and apparel company will have a version of their sustainability programme. And we are increasingly seeing it with clients in the last, I would say, three to five years where they’re starting to do things, which is again, I say, a small step in the right direction.
But I think where the market is, as it relates to the consumers and their buying behaviour, it is still not materially raise itself to a threshold where for your entire consumer behaviour, it becomes one of the key purchasing prioritisation criteria, right? But the market will eventually move there. Would it get there in the next five years or 10 years? I don’t know, right? But this is everything. This is everything which will become super more important where if you think through what really matters for a consumer, in their purchasing intent, price value, is it sustainability, and it’s a question of time before sustainability starts becoming, you know, the top priority criterias if not the most important but you know, maybe in top three, and that’s where you know, every single fashion brand around the globe has been taking their version of it.
So, you know, definitely a step in the right direction. I’m personally very excited with the new goes around 75% reduction, motivation, that’s great. I have worked with a lot of Denim companies. And you know, I remember this was like a decade back, but you end up going through like 4000 litres of water to make one denim. So that is a huge impact on the environment. So, you know, I’m personally very excited with it. But I think there’s a lot more which needs to be done in this space.
Chris 15:23
Yeah. Well, Anne I’m sure you went down a rabbit hole, I’m guessing based on how you respond when I did that, read on the punch needle machine, or whatever it was. So what’s what’s your take? Are you kind of where more it is or what are you thinking?
Anne 15:34
Well, I just wanted to learn about like, I guess my question is always when you put out a product that’s 75% more sustainable, that’s a that’s a significant increase. And so I’m always
Chris 15:45
I think that’s the definition of step change.
Anne 15:46
Yeah, I’m always wondering, like, okay, that’s fine. If you make like two products, like how does that look at scale? Like what is how realistic are we going to be about going from like, zero to 75% When you look at the just the scale and quantity of product that Mike Nike puts out? So I think that for me, the question is really going to come down to what what does this look like, like if you look at the I don’t mind the looks of these two products, but there’s some key things about them that are different, like there’s you don’t know how it feels there. You don’t know how long it lasts.
Like you can’t put this in the dryer which I’m sorry but every single mom of kids who are buying Nike things are throwing stuff in the dryer I don’t know that they’re gonna be hanging, hang drying and whatever all of the special care maybe they will but then there’s like no reinforcement of the seems like all the finishes it’s raw, like this is a raw garment. And so I think it’s going to take some time to see if like fashion and the the look and wear of this ends up being appealing or if Nike has to scale back and maybe we started you know, it’s 50% more sustainable or 30% more sustainable and then like Mohit is talking about work our way to like really make this a product that’s, that’s going forward at scale.
But I think I think Mohit is right, it’s a step in the right direction.
Chris 17:01
So step in the right direction, kudos for that. But still a little a lot of questions about how this works long term and has an actual impact for the average consumer. Dave, what’s your take here?
David 17:12
We just released a report on sustainability. And the term that kept coming up was greenwashing where it’s, you know, retailers that say they’re going green, but the things that they’re doing are so minor, that they’re actually not really having a big impact. I agree with an 75% feels like a real impact. And I’d love that if dissemination really is that big. And this might be one of the first kind of step out things that it isn’t greenwashing that is really moving the needle and I love that. The second thing is I agree with Mohit in that I think Gen Z and millennials care more about this then then I think some executives that aren’t Gen Z and millennials understand. So activating Nikes marketing machine to tell this story might be a big unlock in terms of getting a ball rolling that other retailers would be forced to follow.
Chris 17:57
Yeah, I think that’s a good point. Like I think I’m where you guys are too. I mean, I’m in real quick, I want to tell an anecdote here. Because this reminded me of something that that I knew very well 10 or 15 years ago, but I’m a little sceptical of it too. I want to buy into it. Like, it’s like you said, it’s a good move in the right direction. And kudos for trying it. But I can remember when I was a towel buyer at Target, and all the target executives demanded that I put organic towels into my assortment, right. And I basically was like, You’re gonna do it kind of thing. Like, you can’t say no. And I did it and it sucked.
They didn’t sell they came in like three crappy colours, because you can only to your point, and you can only get so many different colours on the material. And they didn’t sell and honestly, they probably still don’t, I don’t even know if you can’t even get organic towels anymore. Like you probably can’t, or there’s probably not very many options of them. They didn’t proliferate like you’d expect. So I feel like that’s the same thing that ultimately could happen here, which gets me a little bit depressed about it, quite honestly, when you’re looking at how people want to consume things.
But I think Dave, to your point that come back to saving graces Gen Z still seems a little more conscious than the average towel consumer probably is circa 2007 When I was making these decisions, but anyway, let’s keep rolling.
Anne 19:02
All right, headline number three, our favourite headline of the week I think Wegmans is pulling the plug on scanning go mobile shopping in its stores. According to grocery dive Wegmans is ending the use of scan and go shopping in its app as of September 18. Users of the apple receive a $20 digital coupon to compensate for the service being shut off. A Wegmans spokesperson also had this to say quote unfortunately, the losses we are experiencing from this programme prevent us from continuing to make it available in its current state end quote, what the losses were were not clarified despite requests for commentary from Wegmans buy grocery dive. Dave, let’s go to you first on this one. What are your thoughts on this move? It’s a it’s a big big shift in in where Wegmans was going before and I know a lot of their clients and customers are have a lot of feedback here. What do you what are your thoughts?
David 19:52
I think is 100% a mistake from a company that I really respect
Chris 19:57
Really, okay, we’re gonna have some debate here. Okay.
David 20:00
I mean, first off, I think we can all acknowledge that frictionless checkout completely aligns with customer preferences in a world where millennials and Gen Z’s are starting to become the primary shopper in growth. So I think this goes against customer trends in a pretty significant way. And while I’m sure there is a bump, and in shrink, a slight bump and shrink, it’s also important to note that, that 30% of the labour in the store tends to be cashier and grocery. So I’m really wondering if they’ve done the proper math to say every one of those transactions now has to go through a till. And you know, that’s whatever three to five minutes per transaction at that adds up fast, right.
So that the the economics around strength, get interesting when compared to the economics of labour in a store. I also think that the shrink issue tends to be organised crime, like the average person that’s using this isn’t, I think they’re using this as an excuse for their strength problems. And I’m sure maybe, perhaps organised crime is using it. But it’s not, it’s not peanut butter spread. This is one or two or three or four bad apples that are using it over and over again, rather than a failure of the programme abroad.
Anne 21:10
Yeah, I’m really glad that you brought the labour into the perspective into this, Dave, one of the many things we appreciate about having you invited on the show, because I hadn’t even thought about that. And that’s such a such a great point. Mohit, what would you add here? Is there any any thoughts that you have before Chris and I give our
Chris 21:30
Do you agree with Dave or disagree?
Mohit 21:32
You know, generally I try to disagree with Dave. But on this one fortunately seems like I have to. I was having a discussion with a small regional grocer, probably three or four weeks back, which were, you know, and they’re evaluating these kinds of technologies. And they’re one of their biggest questions as part of the meeting was around shrink, right? But you think in the broad scheme of things around, store labour in any kind of retail, especially in grocery is one of your biggest p&l line items. There are ways to get around it. And I think about the Costco experience, where if you’re standing in a long line, and if there was a shopping experience, but eventually you have someone checking the receipts, there are ways to get around it. So I’m kind of like little little bumps on on this one.
And the fact that, you know, there isn’t a lot of commentary around why they are letting it there is not enough detail. And I wonder whether it’s really shrink or if it’s something else, which which is kind of driving it, maybe it’s capital deployment, maybe it’s around, you know, problems they’re having in terms of recruiting for the store, right? I mean, this is becoming increasingly difficult to recruit in retail, especially after the pandemic. And as you kind of start thinking about automation, are they running into issues with their existing staff? That could potentially be another hypothesis. You know, why, why they pulled the plug on this?
Anne 22:57
Well, Chris, what I mean, you and I read this headline, were started going back and forth. What are your thoughts here?
Chris 23:04
I think I disagree with Dave. But I’m gonna say this with a caveat. I say, I think I disagree with you guys a little bit. I mean, I think. And the other part of this, that wasn’t the headline that we didn’t mention is they actually said that they’re still reformulating how they potentially want to do it. And I think So in essence, I actually agree with the move, because like we’ve talked about on the show a lot. If you’re going to do scanning go without a controlled exit point, particularly, it becomes really difficult, right, and it probably does leave to shrink, probably shrink more, so even then theft to Dave’s point. And then it also has implications on your inventory accuracy as well, in terms of you know, is everything scanned, did they do it right, and then with all the buy online, pick up in store capabilities, that becomes problematic, too. So it just but and so it doesn’t.
And to give you an idea, too, I think it’s important like when I say controlled exit points, that doesn’t necessarily mean receipt checks at the door or law, a Costco or Sam’s, which are already set up for that. So that’s normal for their customer. It just means that everyone has to still exit through a check lane, scan a barcode with some system of control, like which is being deployed at Walmart. Otherwise, you’re letting people walk out the door on their own volition as others are shopping normally. And yes, that’s confusing to the customers, it’s confusing to your employees to track that and therefore you’re going to have a lot of theft and shrink. So as an aside from this, I think the right approach is let’s regroup, look at our stores architecture or design or user experience of them.
And let’s also look at other technologies that I think can provide now the same functionality of scan and go, like scanning go was like cool, like five years ago, but there’s new technologies that can do the same thing like computer vision assisted self checkout, can be a lot faster, like what they’re doing heb where the computer is looking at the cart, right? And you just roll the cart through and that basically, you know, approximates the same idea or you go the full kit and caboodle just walk out technology, Amazon, and that’s a better path. So I think, given all of those hiccups, that’s why I actually kind of liked this move, which when I first read I was like, Wow, I’m surprised they’re doing that.
Anne 24:58
Yeah, I think you I I agree with all the points that you’re bringing up, Chris. I think the the key thing is that this tech does not need to be scrapped. It’s just it needs to be reevaluated so that they can solve for this shrink problem. And all the other things that they’ve probably learned, because we’re talking about Wegmans here, like this is one of the most beloved grocers in the country, and the feedback from their customers like, I mean, if you read there’s like threads and threads on Twitter of like, why are you doing this, this is the reason I come to shop at your store. And I love this, like they’re so frustrated by losing this component of their shopping experience.
And so I think that Wegmans just is going to need to communicate very quickly to those customers, like we are adapting, we are evolving, they will bring this back, this isn’t gonna, here’s your $20 will not cut it. Because as we’ve seen, like this is causing a shift in where people are deciding to go and do their grocery shopping. And if they want to maintain that brand love and advocacy that they have, they’re going to have to figure out like Dave, and Mohit are saying how they’re going to bring this back and how they’re going to serve that next generation of customer.
Chris 26:04
Dave, any final word here?
David 26:06
No, I actually I think we all agree I
Chris 26:09
Yeah, I think so too.
David 26:10
Simply saying I believe in that, that the future of that type of technology. I think it’s an implementation problem, frankly, or an operational implementation problem more so than a than a technology problem. I just I’d hate to see them fully. Pull the plug on a, you know, a forward leaning technology because they aren’t executing it. Well.
Chris 26:30
Yeah. Awesome. Awesome. I always like to give the final word to the person that we disagree with or find out we agree with ultimately at the end. Funny how that works sometimes, but it’s good. That’s why we do this show. All right. headline number four. According to retail dive Tuesday morning is getting a $35 million injection of capital from an investor group led by retail e commerce ventures the owner of pure one RadioShack dress barn and other retail brands brands who was right right right. With the deal retail e commerce ventures and co-investor AON capital will control a majority of Tuesday mornings bored. Tuesday morning, will get access to retail e commerce ventures a distribution system as well as rights to sell products from the pier one brand, which as loyal Omni talk fans will remember, retail e commerce ventures acquired out of bankruptcy in 2020. David, make sense of this for us? How can How can two wrong retail brands ever make a right?
David 27:29
So this one is tough. A model from 50 years ago, I guess seriously How many times can you try to save a dying brand? I feels like a zombie brand at this point. You know, discounters have better offers Target and Walmart have improved their offers. And we’re not even talking about Amazon. I mean, at this point, my my take is let it go. Don’t burn more capital attempting to save these zombie brands. It’s like The Walking Dead.
Chris 27:53
Yeah, I’m curious. Like, I’m curious. What do you think? What do you guys what do you guys call Mohit or Dave? Like, what do you think? Why is retail e commerce ventures even going down this direction? Like why do they think they can save it? What are the synergies there that they’re trying to tap into?
Mohit 28:09
I mean, the way I think about it is, you know, especially like, if you look at the off price model, right? It has come a long way in the last five decades. But one has to remember, in the last recession, we saw both luxury and off price grow four to 5x versus broader retail. So you have you have a scenario where you can strategically place the right bet on a segment and in that segment your the question though, is you know, to today’s point, right, like you know, TJ Maxx was and others have really kind of taken off so how do you kind of steer this alien ship? And to me the question is, you know, has the ship really sunk to the point where it is point of no return? I think time will only only tell whether you know, they can kind of bring it out but it’s it’s this this is a confusing one right?
Like it’s difficult to kind of really take a brand which has lost its way quite significantly and bring it back so you know, we can we can wait and watch and but if I were to if I was a betting man, I think this is at a point of no return.
Chris 29:19
Yeah, the merchant in me too has questions about the pricing differences between these two brands too. But Anne I’m curious what are you can you make sense of this?
Anne 29:27
No, I cannot so the only thing I could think of like one of these things is not like the other when you look at Tuesday morning and all of the other brands that retail e commerce Ventures has purchased Tuesday morning is the only one that still has stores right what I can ascertain like it may they may there may be a couple of others in there. But all the other brands Pier One dress barn like those stores are shut down, right? So could they be injecting this $35 million investment in something with the physical locations like could they eventually be taking it and making it this like how hodgepodge of all the brands where it’s like a return centre discounting centre, like I don’t know, that’s like the only thing I could think of as I was researching the story.
Chris 30:10
That’s where I went to it’s like a risk free way to try to get physical distribution
Anne 30:14
Right
Chris 30:14
for your brands because I mean, essentially making a loan so you’re gonna get a theory get that paid back, but I agree with you. It’s still it seems like a little bit of a Hail Mary, for me, in terms of pure one and what he did with Pier One, because the other thing I don’t get, and I brought this up in a minute ago is like, pure ones, prices are pretty were always pretty damn expensive, right home furnishings place. Now, you’re going to just suddenly put them into Tuesday morning. How disjointed is that? How does the economics of that even work? Because you can’t bring them down to that level?
And the world to your point? I think, David, I think you mentioned it. We don’t need more cheap furniture products available out in the world. Yeah, in any way, shape, or form. So I so I guess net net, none of us can wrap our heads around this. Is that Is that what I’m saying I’m hearing from all of us.
Anne 30:57
Mohit, there’s no transformation story here.
Mohit 31:03
It’s gonna be a very difficult one, you know,
Chris 31:07
The greatest line of all time,
Mohit 31:09
I’d like to believe companies could be transformed. But this one is gonna be a really difficult one.
Anne 31:15
Mohit’s not touching this with a 10 foot. What are those geeky chores from from Pier One? All right, headline number five target will soon be offering FAO Schwarz toys via dedicated space in its stores as well as online. According to chain storage. The discount giant is entering an exclusive multi year agreement with toy brand FAO Schwarz starting mid October this year, FAO Schwarz toys will be available exclusively at Target stores target.com and FAO Schwarz stores.
The FAO Schwarz assortment will include more than 120 items across all toy categories. products will range in price from 999 to 149.99, including 50 toys that we priced less than $20. All Target store toy departments will feature dedicated space for FAO Schwarz including store displays, and select Target stores and the target.com website will also feature hands on interactive toy demonstrations throughout the holiday season with target toy experts. Mohit, I’m gonna go to you first. What are your thoughts here on FAO and target teaming up for the holiday?
Mohit 32:23
I mean, the way I think about this, we had a publication last year which which was a $5 trillion opportunity. And in essence, it was the growth in digital and marketplaces which has been quite phenomenal after the pandemic, right. The problem every single major retailer is facing today is footfalls today in the US, Amazon sells more toys online than Walmart and Target combined. Target is the number three buy is way behind in this segment. So this is again, clearly their attempt to see how do we kind of use the space and the box we have with more shopping shop concepts to drive traffic right there.
I think they were in the news earlier where they’re gonna pilot Minneapolis stores in 17 or 20 stores. We’ve all seen Sephora and Kohl’s. So every single major big box is thinking about well, how do I drive traffic in the store? I think for me, there are two really think two things which are really important. And that is number one. How do you kind of use deep data and analytics on your existing consumer base and make sure any kind of, you know, sharp and sharp concepts is a creative as it relates to traffic, and then you can really maximise the basket size, and you know, all the other good stuff which follows, but also rapid piloting and testing. He likes an accelerated manner.
So you know, it seems they’re doing the same thing with Apple. In this case, I’m not sure if this is a full blown rollout or if it’s a pilot, but again, you know, a step in the right direction. Everyone’s vying for traffic traffic patterns continue to be depressed irrespective of what type of macroeconomic environment and headwinds we are facing five years out 10 years out, you will continue to see depressed traffic environment. So good for you know, FAO Schwarz that it gives them the physical retail scale, which they can never have by themselves. I’m personally very excited by the price point. I think I heard you say Anne
Anne 34:24
$10 to 150 Yep.
Mohit 34:26
Yeah $10 to 150. So it gives a good spread from a merchandising assortment, price architecture perspective, but it can really, you know, play to the value segment around you know, the $10 and $20 Mark, you know, it could be could be a really good bump for target and make them a serious contender in this space while having, you know, broader halo effect as it relates to traffic and growth in store.
Anne 34:54
Yeah, I think bringing more people into the stores is always a benefit and having more more variety is definitely a way to do that. Chris is like stewing over here. So I’m gonna go to you before we let him light this up because he’s he’s like, I can feel the energy coming off of him. But Dave, you have young kids I mean, is that feel Schwartz gonna get here? Yeah. Are they gonna get you is that going to get you into a Target store?
David 35:20
So first I was in Target store last week and their, their loved Buzz Lightyear the new movie came out that assortment, I got baited into buying a $50 toy I have a bit of a beef with target right now.
Chris 35:34
They’re good at that.
David 35:36
I did notice is their toy section isn’t the most shoppable it is a sea of toys.
Chris 35:41
Yeah
David 35:42
The Disney section is pretty shoppable. But the rest kind of it’s just wave of wave of toys. So I think from shopmobility perspective, having another kind of module or you know, FAO Schwarz section should could help from a shop ability perspective. Because right now it is it is a bit overwhelming. Yeah. So But overall, I like the concept. I think it makes a lot of sense. I don’t have a lot more to add.
Anne 36:07
Okay, Chris. The floor is yours.
Chris 36:08
All right. So I you know, I like to say retail headlines of the year. This to me is the most overblown headline of the year. I could not believe this was like the lead on every email.
Anne 36:18
I can. Yeah
Chris 36:18
for the first few days it came out here, because because first of all, like I have a lot of things that well, first of all, brand wise, no one cares. Like kids don’t care. Kids don’t know FAO Schwarz, they might know Toys R Us at this point, which we’ve talked about on the show, they don’t know this brand fair. second year in a multi year deal. Okay, that’s what they said. Which means these items will be locked into planograms, which will become the bane of every buyer at targets existence as they underperform and cannot be replaced because of that deal.
Anne 36:45
Debatable, okay,
Chris 36:47
No. And as a result of that, I would argue when you look at what is it play here, and how many toys they actually have, and the amount of toys here, it’s not going to drive a stitch of COP. The other inside baseball thing I would point out is who’s talking about this in the media and it’s Jil Sander, the chief merchant, whose background by the way is home and apparel were partnerships like this matter. In toys they don’t and toys, it’s about what’s hot. What are the items people want to get for the year? It’s not about FAO Schwarz partnership, or a Toys R Us partnership. It’s about what toys you have on your shelf? How many of them? And can you get them to the consumers the way they want?
Which tells me something because normally, Nick and I are the head of hardlines, the guy who runs toys is usually the one talking about all the announcements related to toys for some reason he’s not on this one. So I find that curious, which means to me, it’s a hill of beans that ultimately is not going to amount to anything and isn’t going to drive the business at all.
Anne 37:34
I think. Okay, great points. I think that one thing that from your merchant that I challenge you as a merchant, like you mentioned it, like, it’s about the toys that you have on your shelves, yes, you’re gonna have to prioritise the Buzz Lightyear that’s kind of toys that are coming out with a movie and those kinds of things that are going to be hot that are going to be selling fast, and making sure that you have those on your shelves. But is there harm in having exclusive toys in your assortment? Like as a merchant? Like, no, that’s fine. Is that really a bad thing? And if they do this the right way? I think especially, there’s there’s a lot of ifs to be determined here. Like they said, they’re going to be doing toy demos and stuff in select Target stores, like what does that actually look like once it’s on unfold?
Because if they do, that could be cool, Chris, like that could be a really exciting thing that target has not had before. And if it takes the FAO Schwarz i agree like no kids care about I asked my kids like, you know what, FAO? Schwarz is like, we have no idea. I don’t care. But it’s still another it’s an exclusive toy that you can only get at Target. So if it does hit and these toys are a success, and they’re at all the price points that Mohit springing up, that could be a value.
And no matter what like the bet the best part of this of all the things is that target now has 150 or however many more toys in their assortment in the same place that I’m going to the holidays to get my wrapping paper to get my essentials and my food and booze for holiday parties. So like net net. I’m good with adding this and we’ll play some wagers on whether or not it’s going to move the needle enough for you, I think.
Chris 39:04
Yeah, I think it’s I think it’s a marketing story built for the analysts. But Dave, you said you have raise your hand. Let’s give you the final word here.
David 39:09
Yeah, so I think this is a grandparent gifting play. Grandparents reminiscing too big that wants to relive their childhood and give gifts to their grandchildren that they aspired for. I think it’s much less about the children and it’s much more about the buyer, and this is about grandparents.
Anne 39:26
So we’re gonna be seeing grandpa Dave riding the FAO Schwarz train around this holiday you think Dave?
David 39:33
Yeah, exactly.
Chris 39:34
In fairness, we have no idea how desperate FAO Schwarz is in this deal, either, which could be a part of this too. So it could actually work out in other ways, too, besides sales, but alright, let’s go to the lightning round.
Anne 39:43
All right, Dave. First question goes to you. A new Alexa feature was announced yesterday at Amazon’s accelerate conference that they’re calling customers ask Alexa, which now will allow brands to submit answers to common questions like how can I remove pet hair From my carpet, basically turning Alexa responses into full blown ads for pain and set, and pain and set?
Chris 40:08
I have no idea what you are trying to say there Anne.
Anne 40:10
Pet and stain carpet remover.
Chris 40:12
That’s what you’re trying to say.
Anne 40:13
Yes.
Chris 40:14
I never would have gotten
Anne 40:15
I know. I know. It’s been a long week. Dave, what is the most random thing that you’ve asked Alexa for?
David 40:23
This is a strange one, I guess. How to remove gum from children’s hair?
Anne 40:28
Oh my gosh
Chris 40:29
What’s the answer?
Anne 40:31
Googan. You can do you want the 1.5 ounce bottle or the 3.3 ounce bottle Dave? What was the answer?
David 40:40
I think it was baby oil.
Anne 40:42
Oh, okay. You probably don’t want to put Googong on like a person.
Chris 40:47
I have no idea. All right. *Unintelligible* has decided will no longer sponsor this year’s halftime show. Mohit what was your favourite Super Bowl halftime extravaganza?
Mohit 41:03
I was waiting for this one. It has to be more epic every year. So I’m a little bummed.
Chris 41:10
You’re a little bummed.
Mohit 41:12
Yeah.
Chris 41:12
So you think they raise the bar every year And so like now they’re gonna miss that opportunity. Okay,
Anne 41:17
Who is answering it?
Chris 41:18
I don’t know.
Anne 41:19
Like they’re doing still doing a halftime show. Right?
Chris 41:21
Yeah. Mine’s Michael Jackson, for sure. What was yours?
Anne 41:25
Beyonce was amazing. I loved that one.
Chris 41:27
Dave You have a vote?
Anne 41:28
Actually last year, too.
Chris 41:29
That was good. I like to.
David 41:31
Justin Timberlake
Chris 41:31
I like that one. I like the first Justin Timberlake Britney Spears. But anyway, let’s keep rolling.
Anne 41:36
All right. Question three. For Dave. Again, IKEA has sweetened the perks for its loyalty programme members of the Ikea family programme, which include 5% savings on eligible in store purchases and offering special pricing on select delivery options online. According to a company press release. Dave, what perk would it take for you to happily shop at IKEA. Happily being the key word there?
David 42:00
I think insurance every time I bought from IKEA it breaks really fast.
Anne 42:05
Oh, that’s a good idea.
Chris 42:07
Do they not have a warranty? They?
Anne 42:09
I don’t know.
David 42:12
I just say that. There may have some kind of warranty in place.
Chris 42:15
Yeah. You just think you need to buy it that would make you happy?
Anne 42:18
Yeah, right. Yeah, exactly. Yeah, they probably do. But like it’s probably as much as the product itself. So people are like, meh I’ll just take my blanken jar back home and put it together.
Chris 42:32
I don’t know if that was a mis pronunciation or what?
Anne 42:35
No, that’s a shelving unit.
Chris 42:37
Alright, according to a new survey from personal finance membership groups, so phi a majority. 53% of respondents admit they haven’t been sober when making an online purchase. Men are more likely to shop while intoxicated than women Mohit Gosh, see it’s contagious Anne. Have you ever purchased anything online while under the influence? And if so, what was it? Inquiring minds want to know?
Mohit 43:01
iPhone 14 waiting for it.
Anne 43:04
That’s amazing.
Chris 43:05
That is awesome.
Anne 43:06
I was surprised that it’s men. I kind of didn’t know.
Chris 43:10
I don’t know. I guess so. Yeah, I bet men are more like women are always you know, in the stereotype are always shopping men are probably like, oh, yeah, throw back a few. I need this iPhone 14. Right. Is that what happened Mohit?
Mohit 43:23
They need a little bit of courage to you know,
Anne 43:26
To pull the trigger. Yeah, I see. I see.
Chris 43:29
All right. Well, that wraps us up Happy Birthday today to Prince Harry. Tom Hardy. And the man I would let do a hard target search on my outhouse and dog house a day he wants Mr. Tommy Lee Jones. Yeah. Fugitive. You don’t remember that quote? It’s coming back now. Right? All right, David. If people want to get in touch with you learn more about what you guys do at a&m CRG. What’s the best way for them to do that?
David 43:54
The best way for them to do that is to go to our website, which is alvarezandmarsal-crg.com. They can also check us out on LinkedIn, the Alvarez and Marsal consumer and retail group, or email us directly, you can reach me at dritter@alvarezandmarsal.com.
Chris 44:12
Awesome. And remember, if you can only read or listen to one retail blog in the business make it Omni talk. Our Fast Five podcast is the quickest fastest rundown of all the week’s top news. And our twice weekly newsletter tells you the top five things you need to know each day and also features special content exclusive to us and just for you and we try really hard to make it fit all within the preview pane of your inbox. You can sign up today at www dot onmy talk dot blog. Thanks as always for listening and please remember like and leave us a review wherever you happen to listen to your podcasts or on YouTube.
Remember as well you still have two or three days basically left to use your promo code RBOT1950 To register for grocery shop that’s RBOT1950. And on behalf of Mohitand David and Anne and all of us at Omni talk retail as always be careful out there.
Anne 44:58
The Omni talk Fast Five is a microsoft sponsored podcast. Microsoft Cloud for retail connects your customers, your people and your data across the shopper journey delivering personalised experiences and operational excellence. And is also brought to you in association with the a&m consumer and retail group. The a&m consumer and retail group is a management consulting firm that tackles the most complex challenges and advances its clients, people and communities toward their maximum potential. CRG brings the experience tools and operator like pragmatism to help retailers and consumer products companies be on the right side of disruption. And Takeoff, Takeoff is transforming grocery by empowering grocers to thrive online. The key is micro fulfilment, small robotic fulfilment centres that can be leveraged at a hyperlocal scale. Takeoff also offers a robust software suite so brochures can seamlessly integrate the robotic solution into their existing businesses. To learn more visit takeoff.com And Sezzle, Sezzle is an innovative Buy now pay later solutions that allow shoppers to split purchases into four interest free payments over six weeks. To learn more, visit sezzle.com. Finally, silk. The silk cloud DB virtualization platform is a virtualization layer between your workload and the cloud. It helps you scale your cloud without scaling your costs. Visit silk.us to learn more
Omni Talk is the retail blog for retailers, written by retailers. Chris Walton and Anne Mezzenga founded Omni Talk in 2017 and have quickly turned it into one of the fastest growing blogs in retail. 