Anne 0:09
Hello, you are listening to the OMNI talk Fast Five brought to you in partnership with Microsoft the a&m consumer and retail group, takeoff, sezzle and silk. The Omni talk Fast Five podcast is a podcast that we hope makes you feel a little smarter. Most importantly, a little happier each week too. Today is October 20 2022. I’m your host Anne mezzinga.
Chris 0:30
And I’m Chris Walton,
Anne 0:31
And we are joined once again back for their regular monthly appearance, our good friends at the Alvarez and Marsal consumer and retail group, Chad Lusk and Patricia Hong are here to give us their thoughts on all the headlines, making waves in the world of omni channel retailing. I want to introduce Patricia.
Chris 0:48
Please do by all means
Anne 0:50
Because loyal listeners will remember Patricia from the Women’s retail collective that we did a few years back, I’m a huge fan of Patricia’s. Patricia, this is your first time on the Omni talk Fast Five, start by giving the audience a little bit of background on who you are and what you do at CRG.
Patricia 1:04
Thank you Anne I’m really excited to be back. The loyal fans that remember my background, play same spot. I am a partner in the CRG team. I do the bulk of my work and top line growth. But within the consumer and retail I do a lot of work in beauty and fashion. I live in New York City. I have an 11 year old I have a dog who I sent out.
Chris 1:31
Yes we always love that.
Patricia 1:33
And I do wanna say happy birthday to my sister because today is her birthday. So first
Anne 1:37
Oh,
Chris 1:38
Wonderful.
Anne 1:39
Well, we got a little birthday shout out.
Chris 1:41
Shout out
Anne 1:41
Happy birthday Patricia’s sister. We’re really excited to have you. Thank you so much, Chad. We’ve had you on the show so many times we can’t even count anymore. But for those who might be listening to you for the first time, how Who are you and tell us about your role at CRG.
Chad 1:57
Yeah absolutely. So Chad Lusk out of Chicago here with with CRG. I often describe myself as a consultant boomerang. I did it for a number of years back in the day leading large scale performance transformations in consumer world that I held a series of roles for over a decade in industry, multi time Chief Strategy Officer Chief Marketing Officer and CPG and retail and now I’ve been here with CRG for two years and I work mostly at the intersection of CPG and growth strategy marketing and commercial excellence
Anne 2:33
So we’ve picked the the perfect two guests for today’s headlines Chris because there are some bangers this week.
Chris 2:40
There are some bangers Anne. Yeah, I think he’s I was sent a chat before the show started like they hit the lottery with this these topics this week. These are like the perfect topics to get them on their regular monthly cadence with us to get their thoughts on. So I think with that said Anne, I think we should get this party started. What do you think we should do this?
Anne 2:42
I think so.
Chris 2:54
All right. No, I cannot Okay, yeah, we can do it. All right. Today’s Fast Five headlines are brought to you with the help and support of manifest. Where can you get unprecedented access to the people and technology is changing the way the world moves Anne
Anne 3:09
At manifest
Chris 3:10
Ofcourse, you can expect that leadership networking and also Nelly Nelly Yes, prices go up this week, but not if you use our special discount link that will be available in our show notes. You can also learn more about the conference at manife.st that’s manife.st. Alright Anne in today’s fast fire, we’ve got news on Amazon announcing it will air a Black Friday NFL game in 2023. I can’t wait to talk about that. Procter and Gamble creating star studded ad campaigns to convince consumers to pay for its price your brand’s. Shein getting into resale. Smart Cart maker Veeve getting a new round of funding and pivoting their business model ever so slightly.
Anne 3:53
Oh, yeah.
Chris 3:53
But first we take off where we kind of have to I think Anne
Anne 3:56
Oh God
Chris 3:56
And that is the big merger news.
Anne 3:58
I mean, you have to give him credit. This was a wow, shocker headline last week, but now I feel like this is it’s everywhere. Everybody’s talking about this
Chris 4:07
Yeah it;s kind of blase at this point. And the analysis to potentially
Anne 4:12
Potentially
Chris 4:12
No pressure guys.
Anne 4:13
We are going to have an excellent analysis today, Chris, because if you didn’t hear if you’ve been living under a rock, Kroger is merging with Albertsons. Last Friday, Kroger announced through a press release that it will acquire all the outstanding shares of Albertsons companies common and preferred stock for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion, including the assumption of approximately 4.7 billion of Albertson company’s net debt. So in addition, albertsen companies will also pay a special cash dividend of up to $4 billion to its shareholders. The resulting purchase price represents a premium of approximately 33% of the unaffected closing price of Albert company’s common stock on October 12 2022. Holy buckets
Chris 5:05
Wow nicely done though.
Anne 5:06
That’s a lot. A lot a lot of bullet points. Chad, we’re gonna go to you first my friend nothing like jet setting across the country and then getting up first thing in the morning to talk about Kroger and Albertsons merger. What do you think of this move Chad?
Chad 5:20
Listen, I getting back from the West Coast is nothing compared to some of the jetlagged fast fives that you guys have done. So that’s, that’s, that’s
Chris 5:29
Fair enough.
Chad 5:30
And I don’t drink coffee. So you guys are like my natural adrenaline. So we’re, we’re all good here.
Anne 5:35
If only you could borrow the Fast Five energy, Chris.
Chris 5:38
Anne I’ve never been someone’s natural adrenaline.
Anne 5:39
No me either. I think Chad’s just like, that’s like fluff. Trying to like kill time about the merger that we got to talk about?
Chad 5:50
Well, yeah, I mean, I’ve only had I’ve only had a week to prepare for this one by the time it actually got released. Right. But yeah, so many angles to go with this. Right. And as you talked about a lot of different perspectives that have that have been out there. So I mean, I guess kind of first blush reaction just on the retail landscape more broadly, right? I mean, by the numbers. It’s interesting, you’re combining these massive entities number two, and number three in the market, really the only two pure play national grocers, but combined, they’re still what less than 15% of the US market,
Chris 6:23
Right
Chad 6:23
This, this deal could actually go through because of two factors, right? The fragmentation of just this sector overall, and the size of Walmart, right, and so, so that’s really interesting. But maybe they take this kind of a different direction. So for me, the one thing that was kind of hard to miss from this was the stated objective and desire to compete better with Walmart, and how this may actually help drive the lower prices versus typical antitrust concerns of rising prices.
Anne 6:56
Right,
Chad 6:56
Right. And so you know, we’re going to look at this from a CPG perspective, right? So what does that imply pressure on suppliers. So actually have the time did a little research as to couple of CPG guys and national account leaders that I that I know kind of what they thought about this. And I’d say the general sentiment was kind of a half dose of nervousness and a half dose of excitement. So kind of what’s exciting. The whole deal was generally thought of as good for the grocery business to kind of give Walmart and Amazon and interestingly enough, Amazon was was thrown in there, kind of a run for their money. And thinking about that through the lenses of investments in the Space Technology, Innovation store updates, data personalization, just generally a more consolidated ecosystem in which you can wrap your products, right, Nick, good.
But the nerves around the pricing pressures on suppliers is very real. And so what I was generally hearing from folks was that it’s becoming more important for CPGs to make investments in their analytics and their revenue and margin management teams and capabilities to be better equipped, kind of for these negotiations, as they’re coming down the pipe in order to provide enhanced ways to provide value for retail customers. So you know, kind of tight, timely plugging away, just in the last 24 hours, we had CRG published a piece that kind of gives a peek under the hood at our approach to sort of this revenue and margin management plan, which is effectively kind of a cross functional approach of driving growth through pricing, promo trade price pack architecture, all of that.
And when done, right, it’s pretty unique and its ability to look at driving a programme through the lens of not only your own financial viability, but the retailer economics and consumer proposition. And, you know, anyway, long story short, I mean, that’s exactly what I’m hearing from the CPG leaders that their organisations need to invest in. So So kind of, you know, a two sided coin in terms of how they’re reacting.
Chris 8:59
Yeah, two cities. Really, Patricia, what do you what do you think here, you want to jump in here you have anything to add to what Chad said,
Patricia 9:04
Chad, stole some of my comments, but I’m gonna take it in a slightly different direction. I am, you know, the one thing I have been curious in the last 24 hours is where the regulators are going to take this. So where is this going to end up? You know, Chad set is less than 15% of market share. So it’s not going to go the way that the Walgreens Rite Aid situation went so like to get approved, but he’s not going to get approved, I think in the way that it’s set up right now. I personally was curious to see what’s going to happen with their idea that they pitched on this thing called the spin call.
So this is where they’re going to put all of the so rather than shutting down stores they’re seeing the future right these like stores and they’re gonna give shares to the shareholders are kind of the separate entity and then creating some kind of they’re pitching it as an adjunct Real. But also, I guess it maintains competitiveness in the marketplace. And there are some specific areas in the US where they are the majority together. Right. And so I’m kind of curious where this is going to end up? And how much is a PR play? And how much is it actually going to be kind of like a business play at the end of the day?
Chris 9:04
Yeah, it makes sense. I mean, the other point I’d bring up and to your to the question, yes, Chad would be. I agree with everything those guys just said, both of you guys just said, but, you know, for me, like the 5000 stores is really compelling, because that puts you on par with Walmart, essentially. And then the other thing is to Ocado tech comes into play here for Albertsons and Safeway for the first time, really, which is interesting for our part, you know, our sponsors takeoff too, because takeoff. So you know, done a lot of work with Albertsons, so it’s curious to see how that’s gonna play out,
Anne 10:49
Right.
Chris 10:49
And then the last point, too, is this gives more scale to the retail Media Network, which is the number one thing grocers are doing to offset the margin loss from the digital penetration that we’re seeing in the marketplace? And that, to me, makes it fundamentally a really compelling move to ultimately at the end of the day, but I don’t know what do you think?
Anne 11:07
Yeah, though, I mean, I agree with what’s been said, I think you can pick any angle here to really dissect there’s so much here. What I I’m really going to be watching closely, though, is there’s been a ton of comparison to Walmart in this deal. I mean, you know, really getting them to the scale, I think it’s interesting to hear that Chad’s CPG friends are considering Amazon in this set too it’s not just about Walmart, but how they’re going to compete against Amazon. And we are not hearing as much about that, in the reporting of this merger. The question that I wonder is, yes, you are the size now of Walmart. But that’s a lot of banners to coordinate.
Even when you’re talking about rolling out tech, when you’re talking about supply chain and distribution and how the Hub and Spoke facilities that Kroger is building come into play here. Retail media, and real estate like in a lot of places you have like an Albertsons and Kroger, like right down the street from one another in some of the markets that they’re into. So I think like, that’s the that’s another thing that I’m interested to see, like, how does all of this consolidation of these brands under one umbrella? How long does that take before you are actually competing the way that Walmart can in that streamline level?
Chris 12:15
Yeah Anne, I think that I think your point about Amazon’s really interesting too, because they are sleeping on the sideline here, which I think gets the point of the next headline too, which I think is really important. But according to Forbes, the NFL and Amazon will stream a first ever Black Friday football game via Amazon in 2023. Keep in mind, this news comes immediately following Amazon’s inaugural 2022 year as the NFL is exclusive Thursday night broadcaster and that while the NFL has never played a game on Black Friday, it’s typical Thanksgiving Day games average more than 19 million viewers, ranking them among the top 50 most watched telecast of the year.
According to Sports Business Journal, Chad, I remember I gave you a tonne of kudos. Last time we talked about Amazon and its growing ad network. I think I even said that was the single best answer in the history of our show. How baller is this headline like to me? I’m I’m pretty close to putting this as retail headline in here. I know you guys are gonna give me crap for that. But honestly, I would. I would. I would take the Pepsi Challenge with this against almost anything when you talk about what’s going to impact the future of retail but what do you think?
Chad 13:20
Wow. Both statement Chris. I mean, I so first I can’t help but react to this just as a football fan. Which I mean listen, Amazon has ruined football. Thursday and why have you watched a Thursday night football game this year? They have been among the worst
Chris 13:38
The bears have ruined the football game the Thursday night football game my friend
Chad 13:43
Fair enough. Fair enough. But everything has been absolutely atrocious
Anne 13:48
What is it why why Chad like from your perspective for somebody for like Patricia and I who are like notably not like huge football watchers like what is Amazon doing that’s ruined the football watching
Chad 13:59
It actually has nothing to do with Amazon
Chris 14:02
It’s nothing to do with Amazon. Somebody said this to me when I was giving a speech they said the same thing and I was like wait, are you talking about Amazon or the quality football is like quality football right so that’s
Anne 14:10
Cos they’re not getting good teams or what?
Chris 14:10
Yeah they’re crappy games.
Anne 14:11
Okay
Chris 14:12
It’s been terrible games and
Chad 14:13
They’ve been terrible games but but but honestly that’s in portion why I don’t I mean, so let’s separate Amazon doing this from the event of it happening on Black Friday. Right which you know is disrupted. Listen, we I love Thanksgiving football. It’s great. You know, a game the next day you know like this is when I’m trying to now actually like get stuff done that you know it’s the wrong timing to have another game introduced in the schedule.
So it’s it’s kind of weird, but you know, anyway, like, I don’t necessarily see this you know, what was quoted in the article is this like synergy between like, hey, Amazon is top of mind for people on Black Friday shopping and so now you’re gonna tune into a football game on that like, again completely irrelevant to me it doesn’t flow. So, you know, in the end, you know, we’ll football on Amazon more broadly drive what they’re trying to do, which is prime? Yeah, maybe I mean, the only reason I still have direct TV today is because I get free NFL Sunday Ticket doesn’t make my experience any better for it.
But that’s where the content is that I want to be. But, you know, going to a bar and then not having prime like, that sucks, like me. And this actually happened to weekend, a Thursday or two ago I was I was out I wanted to stream it on my phone, the prime account is actually connected to my wife, not mine. So I couldn’t watch the game. Like it’s super disruptive. And so I don’t like it as a consumer and as a prime user and as a football fan. But I understand what they’re trying to do.
Chris 15:51
Interesting, the bar thing is something that could be overcome with time, I would think
Anne 15:54
Although the same thing the same thing happened to happened to us, we were at a bar. And obviously I didn’t care to watch the football game, but they only had two smart TVs in the whole bar. And so those were the only two TVs like these tiny TVs that were in this one designated area where people could watch the Thursday night football game. So I think that’ll evolve. But I just think about like, all the sports bars across the country that are like gonna have to make updates but
Chad 16:21
Yes, I’m very short term selfish.
Chris 16:23
Yeah, Patricia, what do you think here? You agree with Chad, you disagree with him? Because I’m about to vehemently disagree with with what both of you guys I think you’re about to say here. But Patricia, what do you think?
Patricia 16:33
I care very little about this topic in the grand scheme of things. I’m not a football fan. And I don’t shop on Black Friday. I do think it’s gonna create a lot of problems for families on Black Friday and be safe. You watch the game, you go out shopping. Yeah, I feel like I don’t understand why Chad is so bothered about the whole thing to be honest.
Chris 16:52
Okay. All right. But and what do you put for future of retail? Like, what does this mean for the future of it’s gonna bring back to that because you’ve been on the live stream the shoppable video conversations with me like, What do you put this?
Anne 17:03
Yeah, I think I just I don’t care about the football game, too. I agree with Chad like, and Patricia, this, I don’t think this is like going to stop people from Black Friday shopping like that stuff in the PR announcement was like, Give me a break. But I do think that this is going to create some really cool opportunities for what Amazon is going to be able to do, especially after what they saw with, you know, the first Thursday night football game and the number of prime memberships that they saw, like, it’s a brilliant move from Amazon, they give you all these opportunities to do special prime discounts, food ordering discounts, one hour delivery deals while you’re watching the game, like there’s so many things that they can put into motion with this.
I think that that’s the really cool thing that we’re gonna see happen with this. But I don’t I’m not headline of the year, though. I mean,
Chris 17:44
I see I actually can’t come up with one that’s better than this. Honestly, I’m not doing this to be hyperbolic in any way. Like, I actually think this is that big, like, it’s totally disruptive. It takes the idea of shoppable video over the long run and puts the idea on steroids. I mean, football games are the number one like hottest commodity live events for advertisers. And this takes that idea and runs with it potentially, you know, down the road, like first, the going rates for instantly shoppable ads during this broadcast are going to be enormous. And second, like shirt Black Friday, but now how long until the Superbowl is broadcast via Amazon, you start thinking about that, then you get into some really important territory. And third, my favourite point of this whole thing too is Walmart, which is a frequent NFL advertiser is left holding the bag in this scenario where you create a shoppable video platform during these events. Because what’s the best Walmart’s got Kevin Costner on Yellowstone versus in via Paramount plus, like he ain’t coming up and saving the day on that horse. I’m sorry, you know, so this is very disruptive long term here in my opinion, but I don’t know. That’s my take any final parting thoughts there A&M folks?
Patricia 18:50
I like Yellowstone. Like Well, little addicted to it right now.
Chris 18:57
Oh, yeah. Kevin,
Chad 18:59
Dig it. Costner was not appreciated by Patricia.
Chris 19:02
Kevin Costner and some Wrangler Jeans always looks good though.
Anne 19:04
Oh my god. Alright, let’s move on to headline number three. According to The Wall Street Journal Procter and Gamble is quote, rolling out star studded ad campaigns and new product features. From drip proof soap bottles to extra absorbent paper towels, hoping to keep cash crunch consumers from switching to cheaper brands end quote, according to Nielsen data, p&g has been underperforming in recent months amid inflation as consumers are going down in price. In one example, commercial wrestler Stone Cold Steve Austin and ICE T demonstrate how tide can be used in cold water, which is cheaper than doing laundry in warm water. Chad, I was really excited to have this one on you being a former CPG CMO.
And Patricia I want to hear your thoughts too as we think about like the broader implications of you know what trading down for CPG companies looks like. But Chad, let’s start with you. First. I want to hear your thoughts.
Chad 19:57
Yeah, I think this is Uh, uh, interesting intersection of what P&G is trying to do here based on, you know, obviously, the macro economic standpoint, people trying to, you know, save money recessionary times, you know, high inflation, price gaps, widening naturally between branded products in sort of, you know, insurgent, private label or cheaper brands. But, but what I’m also seeing is that a lot of CPGs are doing this to themselves, right. So I know a number of companies that have been on a relentless pursuit of passing through price increases three to four meaningful price increases over the last kind of 12 to 18 months.
And they’ve been able to grow top line as a result of that and pass through costs. But what happens when your brand’s price point exceeds the overall value proposition promise to consumers,
Anne 20:54
Right
Chad 20:54
So once you violate that either in absolute terms, so as a consumer, I’m not willing to pay that much for it, or relative to competition, I’m not willing to pay that much more for it. Substitution happens, you know, much more rapidly. So p&g, saying, Hey, we haven’t lost share right now. But the pricing increases are propping up the revenue. So you know, the dam is about to break. So I applaud the effort, I suppose in what they’re trying to do defend their turf. You know, like I picture tide is like, your replays a kid like King of the Hill, right?
And like tides up there, you know, and it was pretty easy when like one or two people climb up the hill to push them back down. But when the swarm of kids keeps running up, like you’ll lose your footing. And that’s what all like these pesky little private label and cheaper brands are starting to do at home. So okay, yeah, they have to act.
Anne 21:41
What? Oh, I was just gonna say, what’s your thought as a marketer, though, of like, spending investing in like, vanilla ice and ice?
Chad 21:49
That’s what I was gonna say, right,
Anne 21:49
Yeah
Chad 21:50
Do this from an ad campaign, like, does that work? I mean, I guess, if you have something to say, but, you know, it’s not really all that compelling to, you know, kind of be like, hey, you know, by us, because, you know, like, some of the examples that they gave, they’re actually trying to change consumer behaviour, as opposed to any, like, clear benefits of the product.
Anne 22:12
Right
Chad 22:13
And it’s sort of like, hey, now wash your stuff in cold water, because that saves you money, as opposed to, you know, like, actually passing value in and your product or, or, you know, doing it with innovation. I mean, ideally, new features benefits, differentiated from the cheaper brands, but also desirable benefits, right? Uniqueness is only good if people care about it, and are willing to pay for it. So things like extra absorbent paper towels. Sure. Cardboard versus plastic packaging. I mean, I guess it depends on if you believe consumers are backing up their sustainability desires with their wallets? I’m not so sure yet. So you know, it seems like a lot of kind of fancy throwing money at the problem, maybe not in the right way to actually sell for it.
Anne 23:00
Well, Chad, one thing I wanted to ask you, and you kind of mentioned it in the first story, but, you know, I’m curious what this means for CPG going forward, because once pricing like, I mean, everything’s going up because of inflation. No, once the market corrects, like, now you have CPGs? Are they going to be bringing the price back down once inflation goes away? Like or, you know, that starts to settle a little bit? And what are they going to do with all that extra margin too like, how does that play into this?
Chad 23:27
Yeah, I mean, so historically, not right, you know, you don’t typically see CPGs back off, price increases, for obvious reasons, right, you stop, and then you hold it, you know, as as things come down, right. But I think it’s really important. And, you know, kind of teed me up again, right? So so as we think about kind of these revenue and margin management programs, thinking about those levers that I was describing in terms of pricing, and then offsetting promotion, right, how you think about trade, how you think about overall price pack architecture, that you can play with the value combination of value equation to consumers in different ways by using multiple levers.
And it’s not just a price game, right? It’s not just about pricing through, you know, list price increases. It’s about how you work those in tandem, again, in order to make sure that yes, your economic equation holds up, that it works for the retailer, from an economic standpoint, that it’s still worthy of the shelf space that you’re holding, right. And you’re increasing all of their important metrics, like Jim ROI, and etc, etc. But then it also works for the consumer value proposition and there was ways to do that beyond just the pure price alone.
And, you know, I think that’s the onus on CPGs today is to look at a more sophisticated kind of revenue and margin management programme, as opposed to just pulling on a single lever time and time again,
Anne 24:45
Right. Yeah. Patricia, what would you throw in here?
Patricia 24:48
I mean, I would throw in. You know, I agree with Chad when it comes to the advertising piece. I don’t like the idea from a consumer standpoint that you’re spending dollars In this economic environment in like big names to do big advertising campaigns, what I do like and I think that they could take this further, but in a less flashy way, it’s the whole education angle of how can you do more with less? Right? How can you use these products for longer? How can it save it in the long run? I think that piece is maybe something that they were trying to do, but it’s getting lost even in the headlines.
I also think that some of the innovation that’s coming out and that you’re talking about, it’s not innovation that was done to save money, right, because these innovations, they have been in the pipeline prior to the inflationary environment. So I think, you know, again, right, you should you should talk about how those innovations can save you money in the long run, but I think it would be less obnoxious. If you did it in a more kind of, you know, you’re doing it grassroots, not big advertising. I think it would, it would bother the consumer. Last you might have an, you know, a negative effect.
Anne 26:13
Right, Chris? What would you throw in here.
Chris 26:15
I mean, I don’t have much to add. I think these guys covered it pretty well. I mean, I actually love Chad’s analogy that King of the Hill, the only thing I would add to it is like the other part of this is that the ground underneath you at top that hill is breaking fundamentally, because of the macroeconomic conditions. It’s lowering it for everyone. So now it’s like a free for all in the space. And the cream is gonna rise to the top on this. And you know, p&g is sat on that perch for a long time. So it’s part of me that’s kind of like, kind of good to see you guys having to work a little bit harder to be successful here going forward, too.
Anne 26:43
All right, let’s go to headline number four, Chris.
Chris 26:45
All right. Shein announce on month Monday that it has launched its own resale platform called Shein exchange, Shein for those that may be unfamiliar is the fast fashion app that has been taking the Apple App Store by storm. Here’s how the new resale platform works. According to retail dive, the app populates a customer’s previous purchases, which can then be listed for sale through the Shein exchange marketplace. Sellers then pay Shein 5% of their proceeds. And she can also set a maximum price that sellers can ask for an item if desired. Patricia, let’s go to you first on this one. What do you think of this move? Do you like this one?
Patricia 27:17
Well, I’m so conflicted on this one.
Chris 27:19
Oh, really Are you?
Anne 27:21
Tell us why?
Patricia 27:23
As a mom of an 11 year old? That puts a lot on her car when she goes to shopping online?
Chris 27:30
Wow Okay,
Patricia 27:32
I decided to be able to potentially get rid of a lot of Shein inventory that’s, you know, stocked up here at my house, I actually think that that idea could take off from a Gen Z perspective, more in terms of the thrill of being part of a community. So there have been times that my my daughter and her friends, they tell each other stuff, right? Oh, this doesn’t fit me. I’m not into this anymore. And they, you know, they’re like, Okay, well, how much do you want to pay me for this? So they’re doing that on their own.
So I could see that working and creating a birth and a height on the other side, it just bothers me so much. Because this is you’re reselling the concept of disposable clothing. Right? The end they’re talking about as being part of the you know, circularity angle, it is they are a big offender to the environment, right? I mean, I, as a consumer and as just as a human being, every time my daughter showed me five different sweatshirts, that and she’s like, but it’s not even like, you know, it’s like $60 altogether. They’re each like, you know, $10-$15 each if you’re like, but that’s not the point. You don’t need five sweaters are creating so much waste,
Anne 28:52
Right
Patricia 28:53
And then you’re gonna go when you’re gonna resell it. So you’re opening up more space or making yourself feel better. And then you’re you’re buying even more sweaters and sweatshirts. So that really bothers me.
Anne 29:06
Yeah.
Chris 29:07
So, so net net. You’re kind of you’re kind of jaded about this one, huh? You’re kind of you’re kind of jaded about why they’re doing it and whether there’s real value there. Anne do you agree with that? Or what angle would you go?
Anne 29:19
I think this is an absolutely brilliant move for Shein. No, good. Oh, I don’t like it. I think it’s, I think it’s ridiculous. Like I’m with Patricia like, I don’t think you need to feed this monster anymore. But they’re they’re super smart. They have the demand. They made an digital investment early on in their platform to have a highly engaged app audience. They’re a digital first retailer, like they have done everything right. And now they’re going to Command 5% of sales. Like when you think about it from somebody who’s a reseller who does this all the time, like, there is going to be nothing left for the seller.
Like if you like Patricia saying if you sell that $10 sweatshirt, you’re only going to get At $8 For that sweatshirt, you’re not going to be getting $10 For like, if it’s a $10 sweatshirt that you bought yourself to resell it, you’re gonna get $8. And then 5% of that sale plus shipping, which that’s the other thing. They think like they’re trying to throw sustainability into this. But then how many times are you shipping that thing back and forth, which also creates a carbon footprint?
Chris 30:21
It kills your margin too as the seller potentially.
Anne 30:23
Yes, exactly. So I think but that’s the smart part here. Is that, am I really going to get $3.15 back for that sweatshirt? No, I’m going to take it, I’m going to re spend it on the Shein platform. So if you’re able to just get money for it in exchange that she can just facilitating this. It’s like, Yeah, this is the most brilliant marketing move that she makes, because you’re just creating more and more, you’re feeding this like lifecycle product. The only thing that I think is challenging is that to Patricia’s point, like this is cheaply made product. So you’re not going to be seeing the second, third, fourth life for these garments like you would be in like no sweat with a Lululemon. Well, yeah, but but those are, you are seeing a lifecycle that’s more than one or two buyers,
Chris 31:08
Which I had never thought about until this point. Okay, so net net, if I recap what you said, you like you like the move for Shein.
Anne 31:15
I don’t like it. I think it’s a brilliant,
Chris 31:18
it’s brilliant business move. So you’d like to move from their perspective, but you’re kind of questioning how it fundamentally would work for the customers and whether it’s kind of taking a So taking advantage of people kind of come in
Anne 31:29
They’re leveraging the community.
Chris 31:30
Yeah. Chad, what do you take here? I know you’re big in the resale market?
Chad 31:34
Huge, huge, yeah, no, I mean, so I’ll be honest, I didn’t know that much about Shein until I saw this article circulating a couple of days ago. So I had to dig into it a little bit. And I, I think I come out where we’re in is here, which is, I mean, listen, it basically seems like a nice way to grab another 5% margin on, you know, a low, you know, price type products. But But here’s, here’s what feels you know, what’s rough about this whole thing is again, I didn’t know these guys. So I started looking into it. And like there is a pretty intense investigative report that just came out about these guys regarding like, questionable labour practices. So you know, you already have this fast fashion mega discount brand being called the task. And so the cheap prices may not have merit after all, because of the unethical nature by which they’re supporting them.
And then you add this resale platform, which, you know, again, as an said, like, doesn’t Patricia as well, like, like, we really kind of degenerated this idea when you’re talking about cheap, cheap clothing for resale. So like, is this sustainability? Is it greenwashing? Is it a smart margin play? Like, it’s just not passing this net? Like, it feels icky? And yes, that’s a technical consulting term that I use in my PowerPoint decks all the time. So it just doesn’t feel right.
Chris 32:57
Okay. Got it. So the one point that I would bring up, though, Anne which I’m surprised you didn’t bring this up to is actually, I think one of the important elements of this story is actually how they’re doing recently.
Anne 33:06
Yes, for sure.
Chris 33:07
Which I want to key in on to because you talked about, they have a highly engaged user base. But as a result of that, and how they communicate with their customers, they know and they understand everything that’s previously been purchased through them. And so they’re using that as the validation point for the buyers and sellers to make the transaction
Anne 33:24
Yes.
Chris 33:25
Which is something we’ve talked about and approach we’ve espoused when we interviewed re curate CEO, Adam
Anne 33:29
Oh yeah
Chris 33:30
So that’s an important point to bring up here is like, not only like you can question you can question till the cows come home, whether or not you like buy into why they’re doing it in the philosophy around Yeah, but how they’re doing it to me is absolutely brilliant. Because it’s so intuitive. And it makes it so easy, right?
Anne 33:47
That’s such a that’s such a great point. Like, yeah, the the methods that they’re doing this, again, it goes back to what I said in the beginning part of my statement, like, they are smart, this is a smart way. They’re doing this in all the right ways. They’re making it so simple for their very connected community to resell the product.
Chris 34:05
And that’s it. That’s my point here. Anne it’s like every retailer should listen to the show should be able to take take this as an example for how you can easily do research are sure you all have that data fundamentally at your fingertips. make this available for your community, your highly engaged community to enable them to do it
Anne 34:21
Right if Shein is doing it with products that are like $5 for initial purchase, like you should be doing this as a retailer
Chris 34:29
The same way.
Anne 34:30
Yes. The exact same way, right.
Chris 34:31
It’s, instantly validating and giving credibility to the seller.
Anne 34:34
100%
Chris 34:35
Yeah, all right let’s keep going.
Anne 34:36
Alright, headline number five smart card maker Veeve last week raised $6.7 million, and in their latest round of funding. According to TechCrunch Veeve plans to use the newfound cash in two ways one by improving their existing full shopping Smart Cart model, and also investing in a new plug and play device that can be clipped onto the existing shopping carts to turn them into smart carts. Patricia, let’s go to you first. What do you make if anything of the ever so slightly announced pivot to turn any cart into a Smart Cart?
Patricia 35:04
So I think the jury’s out for me on this one in terms of Will it work and how much value we bring to, you know, the retailer that’s bringing those smart carts, I was thinking about it from, you know, a couple of different angles will bring more traffic will increase, you know, your overall basket? And will it create more loyalty? And I think, you know, the only area where I think it adds significant value, it’s in the loyalty space, because I think if you see what they’re saying, you can I believe that if you’re shopping over and over in that same store, it’s storing your data, it’s storing your preferences, then it’s giving you advice on new products, or new things that are coming up.
So it’s allowing you to create a more sticky experience with that, with that, you know, with that retailer, with that said, I’m a little curious as to which segment is going to appeal to Okay, right. So in my case, I mean, I liked the technology, but I’d rather spend the least amount of time in a grocery store. Right. And so this is not necessarily as appealing to me as much as it has kind of all the you know, it sounds cool, but I’m not sure it’s actually as sticky. as it looks. I don’t know, Chad, if you had any thoughts on that one?
Chad 36:29
Yeah, I probably would think about it a little bit differently from the standpoint of, so I, I love innovation, I think consumers of innovation, it gets the most traction when it has a touch of the familiar and the newness, right? And so, I’ve stood and watched people try to figure out Amazon Go, whether it’s at an airport, Hudson news or a grocery, right, like, it’s often kind of a difficult leap for people and they get, like, stymied into walking away. And so I think it’s a little more intuitive in terms of like, comfort familiarity with the existing shopping process today, you don’t have to engage with the screen, right. But you know, use it for your, essentially, you know, kind of just walk out type capabilities, right?
So I like this for a few reasons, there’s, there’s that I would assume it’s less capital intensive than going you know, full just walk out store retrofit, probably even full Smart Cart options that makes these guys make, right, yeah, like, like caper dash cart, like, you know, cheaper than that. Right? And, you know, I love you know, I’ll go back and steal your wonderful point earlier, Chris, and a different topic, but like, the retail media networks that you know, kind of this brings to the screen and personalization and all that like that’s super interesting to me, as well. Seems like they’ve also solved some of the operational issues of earlier carts with small, you know, the baskets were too small, you couldn’t take them out in the parking lot because of whether they solved a bunch of those things.
So I actually kind of liked this as a good intermediate step toward, you know, this more frictionless experience that we think you know, we all believe is coming and gotta get here.
Anne 38:28
Well, Chad, you have family experience in the in the shopping cart industry. Did you get any tell the listeners a little bit about your experience? And did you get any insight from Papa Lusk?
Chad 38:41
Yeah, little known lust trivia so my father, Mr. Chuck Lusk himself, the man the myth, the legend. Used to be in the shopping cart business. He was CFO for the company that developed and pioneered the plastic shopping carts. So there you go.
Anne 39:01
Yeah,
Chad 39:02
I’m sure he did not see this technology coming back in the day. Unfortunately with the with the West Coast trip, I did not have an opportunity to check in with him beforehand to get his to get his hot take.
Anne 39:14
This is a yeah, great Thanksgiving topic.
Chad 39:17
Exactly. Right.
Chris 39:18
Although I would bet the Smart Cart definitely passed his like purview at some point because this idea is not new. It’s been in the works for since like, 1980s I can remember seeing like videos for that people have put around on YouTube around this concept, but I don’t know. I mean, I think the pivot smart. You know, and I think ultimately, I mean, it makes, Chad you mentioned it but it makes me one it makes the idea more testable for retailers because you don’t have to spend a god awful amount on the actual card itself, right, which may not hold up to wear and tear given the elements and people beating the hell out of it and all that kind of stuff. So I think just to get it into market it makes sense.
But the other point I would make and I would say this because I actually got to ask this question was presenting at a silk event in Boston this week. I got asked him like how I would steal view this this area of experimentation. And I still said I wouldn’t be rushing to invest here, at least not right away. And what I said to them was, I’d actually be looking if I was a grocer, I’d be looking at how Chinooks is going about this.
Schnucks is taking the right model for the average grocery to get the benefit of computer vision, and particularly operationally, they’re going with robotics computer vision on the robots first. That way, you get the benefits of better inventory, better pricing, get your feet wet with it, understand what it means for your operational dynamics of running a store day in and day out.
Anne 40:29
Right
Chris 40:29
Then and only then do you start investing in this, like, this is the next step in my mind. And so that’s the approach I think you have to take. Because, ultimately, if you don’t you’re asking it goes back to what Chad said before in the CPG conversation with p&g, you’re asking to consumers to adopt something to prove it out. Which that is never the right approach. You should go with what you can do operations on your own, first and foremost. And still the other point I bring up glasses, I don’t know why this is still better than cameras in the ceiling in the long run.
Anne 40:59
Yeah
Chris 40:59
Enabling the shopping experience that we all want as the cost for that come down. Yeah, and people understand how it works.
Anne 41:04
And it doesn’t require like an actual device, like you can do cameras in the ceiling to are able to facilitate the shopping trip that Patricia’s talking about where I just want to run in and grab a couple of things, versus like having to grab a cart and go through the store as that extra mechanism. I do like the clip in though, like now that I know that I’m Pelotonia all the time. I know what clip on clip in means. Like, I mean, yeah, you got to
Chris 41:28
Tie’s clip on.
Anne 41:29
Yeah, it can be a fun experiment.
Chris 41:31
Those are clip ons.
Anne 41:33
Your point about though, like how you’re getting your product set ready. And your training computer vision, like that whole part of it is a huge investment that isn’t just a clip on to the shopping cart right away. Like you got to be making those investments.
Chris 41:45
And you talk to the people that really understand this that are on the forefront of computer vision experimentation. The one thing they’ll say is like, we had no idea how much data is even coming our way. You have to figure that out first, before you actually ask the consumer to like start making all these big changes. Anyway let’s go the lightning round.
Anne 41:59
All right, let’s get you out of here. First question is for Patricia, Patricia Amazon sale just opened their second location in Columbus, Ohio this week. What are you most excited to see when you make your first trip to an Amazon style? If you haven’t been already Patricia?
Patricia 42:14
I have not been my first trip is gonna have to be with my daughter. Okay, can I keep mentioning her just because I feel like this generation just looks at things and experiences things in a very different way than what we do. But I love it. I love it. I love the idea. I was reading up about it and there’s so many things about it that I just think are bringing kind of the virtual world with the offline world. For me, the biggest thing is it’s it’s frictionless. It’s personalised and then you walk out with the item right you don’t have the wait time of ordering something and then waiting for it to get shipped. And there then you can I think the experience can go in many different ways depending on how you interact with with the app and you know how much you want to play around with it and I just love it. I’m super excited.
Anne 43:05
Okay, well report back Patricia.
Chris 43:07
Which is also exactly why Dilip Kumar told us they built the store Yeah, so you can actually walk away with it that day. All right, Chad, a California bakery recently made what it refers to as pawn or pan solo depending on how you want to pronounce it. A six foot replica of Han Solo frozen in carbonite, Chad. What is one other movie memory from your youth that you would like to see forever commemorated by way of baked goods?
Chad 43:32
I, Oh, shoot. bobbleheads not in this room. Okay, so Ghostbusters.
Chris 43:39
Oh, good call.
Chad 43:41
Pete Venkman getting slimed, commemorated in and I’ll tell you why this is important in Twinkie form. Because of obviously the Twinkie reference within Ghostbusters and I used to work at hostess so there you go. The triple connection here.
Chris 43:59
I thought you’re gonna go with like an edible Stay Puff Marshmallow Man. I thought that’s where this is headed. But that was great.
Anne 44:05
Krispie treat
Chris 44:07
Yeah, let’s keep oh Yes Anne.
Anne 44:10
All right. Patricia question number three. Bravo announced that former J Crew president and turnaround icon Jenna Lyons will be joining the cast of Real Housewives of New York. Do you Patricia have a favourite Real Housewives moment or cast member from seasons past?
Patricia 44:25
So I am a huge fan of the Yes. Housewives franchise. I had caught up on the news. And yeah, so for me it’s I play this game with my friends called housewife bingo. I’m trying to collect how many of the New York housewives I’ve actually seen in person. And it generally happens in the Hamptons, but that’s where they summer. I’m almost done with all of them. I have Luanne several times. I’m very excited to say that.
Anne 44:58
So was Luanne like you’ve free space on housewives Bingo.
Patricia 45:02
There is some free space. I have not the new one. Anyways, yeah.
Anne 45:08
So you’re so this is gonna be great. I can’t wait to see Patricia’s Real Housewives bingo card with the seven new cast.
Chris 45:14
Yeah, we might need a picture of that.
Anne 45:15
Yeah,
Chris 45:15
For our show notes.
Anne 45:16
Yes, absolutely.
Chris 45:18
All right, Chad last one data from place or AI suggests that McDonald’s recent adult Happy Meal collaboration with streetwear brand cactus plant free market might be its most successful collaboration yet. Chad what is one adult Happy Meal collab that would undoubtedly get you to stop in at the Golden Arches.
Chad 45:37
My first thought is what should McDonald’s put in adult Happy Meals maybe like Tums or Pepsi? No, let me stick with the theme. So Ghostbusters theme bobbleheads. There we go.
Chris 45:53
All right. I liked that. I liked that. All right. All right. Well, that wraps us up Happy Birthday today to Viggo Mortensen, John Krasinski. And the man my buddy oven. Just got to party with recently. Yeah Anne seriously, he partied all day with Snoop Dogg like a private party. Yeah,
Anne 46:06
Where’s our invite?
Chris 46:07
Yeah. And of course, Patricia’s sister. What’s her name? Give her a shout out. Patricia.
Patricia 46:13
Her name’s Flavia.
Chris 46:15
Flavia. All right Happy Birthday to Flavio. And remember if you can only read or listen to one retail blog in the business make it on me talk our fast five podcasts is the quickest fastest rundown of all the week’s top news. And our twice weekly newsletter tells you the top five things you need to know each day and also features special content exclusive to us and just for you and we try really hard to make it all fit within the preview pane of your inbox can sign up today at http://www.omnitalk.blog. Thanks as always for listening in please remember like and leave us a review wherever you happen to listen to your podcasts or on YouTube reminder we are off next we’ll yeah that’s yeah we’re taking a much needed vacation on account of some travel. Anne and I again have planned because we’re
Anne 46:51
We’re not going on vacation.
Chris 46:53
No
Anne 46:53
We have work travel.
Chris 46:54
We’re taking a Fast Five vacation.
Anne 46:57
Yes,
Chris 46:57
We are still working so rest assured. All right, Chad, Patricia if people want to get in touch with you, learn more about A&M CRG what’s the best way for them to do that Chad.
Chad 47:07
So the easiest place is directly to our website. It’s alvarezandmarsal-crg.com. You can also find us on our LinkedIn page Alvarez and Marsal consumer and retail group, you can reach out to me directly on LinkedIn. And same with Patricia. Patricia also leads all of our CRG recruiting and hiring efforts. So if you’re interested in learning more about us from an employment standpoint and joining an awesome team, reach out to Patricia as well.
Chris 47:38
Nice love that. All right. Well, on behalf of Chad and, Patricia, all of us here at Omni talk as always, be careful out there.
Anne 47:46
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 hyperlocal scale take off also offers a robust software suite. So grocers can seamlessly integrate the robotic solution into their existing businesses. To learn more visit takeoff.com And sezzle, sezzle is an innovative Buy now pay later solution that allows shoppers to split purchases into four interest free payments over six weeks. To learn more visit sezzle.com. And silk, the silk cloud DB virtualization platform is a virtualization layer between your workloads and the Cloud helps you scale your cloud without scaling your cost. 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. 