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Hello, you are listening to the Omni talk Fast 5 brought to you. In partnership with the A and M consumer and retail group Firework, SPS Commerce and Sezzle ranked in the top 10 of all podcasts globally. The Omni Talk Fast 5 is the podcast that we hope. Makes you feel a little smarter, but most importantly a little happier each week too. Today is June 22nd, 2023. I’m your host Anne Mezzenga.
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And I’m Chris Walton.
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And we are here once again to discuss the most important headlines from the past week that highlight how the physical, digital and human elements of retail are coming together to shape the future. Now joining us today, Chris, for their regular monthly appearance are the A and M consumer retail groups, Chad Lusk, AKA the Lusker.
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The Luskger back in town.
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And Dave Schneidman, Chad and Dave, welcome back. We’re so thrilled to have you with us. Lusker, you want to go 1st and tell the audience a little bit about who you are if they haven’t caught one of your many appearances on The Fast 5.
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This Lusker thing is really starting to stick, isn’t it?
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I tried everything I could to get him to stop, but he wouldn’t. So now.
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Oh, it’s all good. It’s all good.
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I’m contractually obligated to Omni talk to call you the Lusker.
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In fairness, I have not called him that since I first called him that. You just keep bringing it up. But that’s cool. All right? It’s actually not true. You referred. Oh, it’s not. Oh, OK 5 like a week or two ago. You know what? That’s all right. I’m fine. I’m finding it rather endearing, Chris. You know it is it’s a term of affection, yes. So hey guys, welcome, welcome back to me. I’m a partner and Managing Director with with Alvarez and Marcel consumer and retail group. Been with the firm nearly three years now at this point for my clients, I work mostly on broad scale transformation with a specific focus on.
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Growth marketing, commercial strategy and as Omni talk loyal listeners hopefully know about our firm at this point. But we at A and MCRG we have a big operator slant. So in true A and M fashion prior to being here I led similar transformations inside organizations as multi time Chief Strategy Officer, Chief Marketing Officer at a few CPG’s and retailers.
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Good to be back. It’s so good to have you back, Dave. Welcome back to you. Tell the audience a little bit. It’s been a while. So tell. Tell us a little bit. That’s a stain song, right? It’s been a while. Remember that one from the 90s?
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Oh yeah, that’s a good job.
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OK, it’s been a while since we had you on the show. Sorry for that terrible 90s little. But tell the audience a little bit about you and what you do specifically at A and M.
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Well, first and foremost, you know, this is unfair. Why don’t I have a nickname? I think I I mean, why does only Deloster get 10? You’ll get one by the end of the show. Yeah. We’ll.
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Figure something out?
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OK, nicknames are not earned or earned not just. Yes. They’re not just handed out Willy nilly, Dave. No, I I know that this is your first time on the show, right. You’ve never been on the Fast Five before. I have, right. I just Oh, my gosh, that’s right. Hopefully my Rep. The mutation precedes me and by the end I’ve won you guys over where I deserve a nickname.
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Yes, yes.
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Perfect. All right. So David Schneidman, I’m a Senior Director here at A and M been with the company for almost 2 years. Similar to Chad, also focus on transformation with skew towards more growth, sales, marketing, channel strategy, operating model. To really double down on what Chad mentioned about the operator mentality, my background is more on the operator side. So I was in industry in CPG for almost a decade and then transitioned to financial services and private equity and venture capital. On the operating side, again in consumer goods and looking forward to the banter today. This should be fun.
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Yeah, we’re really excited to have you both. We’ve been so pumped for this episode. We’ve been traveling all over the world, it seems like the last few weeks. And yeah, this is going to be great. I’m excited.
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I’d say this every month, but it’s totally true. Like it’s my favorite favorite fast five episode every month. Because I love when you guys are on, because you just bring such a unique perspective to everything. But Ann, before we get to the headlines, I have to. You have to comment on the, you know you’re you’re we’re fully remote as everyone knows. We talked about that a few weeks ago. You got that you’re holding the mic today you’re kind of doing your Arlo White Ted Lasso impression, you know looking good though, looking good.
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Something like that, yeah. I mean, we’re doing a house swap right now. So we’re I’m at my, I’m in my mother’s massage room right now. She has a massage right after this. So we are booking this room. We got to get through this podcast because we are booking this room and I’m yes, I’m holding a mic in my hand.
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She’s got massage clients coming in next. All right, let’s get let’s let’s get to it then. All right. And today’s Fast 5. We’ve got headlines on sweet green going what is called full robot. Yeah, I like the sound of that She and broadening out its marketplace. REI expanding its new store concept dedicated to used gear and apparel. Mercedes-Benz installing ChatGPT in its cars. But we begin today with more retail media news out of Walmart, and I can’t think of two better people to have on the show to discuss this topic. And.
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Yes, that’s right, Chris, headline 1. Walmart and NBC Universal have inked a new partnership. So according to the website payments, Walmart and NBC Universal have teamed up to test retail media powered ads within live sports streaming, marking the first time, according to a Walmart press release, the NBC Universal’s live sports streaming. Inventory will be available through a retail media network. Walmart says it will combine NBC Universal’s premium inventory with its measurement capabilities as part of its premium CTV bundle, the bundle that helps brands connect with Walmart shoppers via streaming platforms. Chad, we kind of picked this one exactly for you because we knew you were going to be on the show. You’re the CPG expert amongst the four of us.
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How big is this move, this partnership between Walmart and ABC Universal? And is it? Is it that big or is it just another overblown retail media headline? What are your thoughts?
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Yeah, I appreciate you picking it for me. I appreciate obviously Walmart waiting to release this ahead of me being on the show. So it’s all.
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And and your and your. That’s the kind of.
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Pool we have Chad.
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Yes, exactly. And your soccer uniform that you’re wearing today in full support of live streaming on NBC Universal.
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I don’t even know if they stream. Congrats to the US Men’s National Team on their CONCACAF victory this past weekend. We got Women’s World Cup coming up in the in a month. It’s a very exciting time to be a soccer fan. But OK, so the headline. So on the surface, right? Yeah, so listen. Ads are great. I’m a marketer. Love ads. Frictionless, clickable commerce like thumbs up. When I hear a story like this, though, like here’s what I’m actually looking at. So the the power of retail media comes and having the knowledge, the analytics engine, and the ability to create highly personalized shopping experiences, right? So to do that, you need a lot of data.
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And my question on this is as is in these partnerships, how much data is Walmart getting from these partners because if it’s a lot in turn from you know about this consumers participating in the platform that this whole platform of which NBC Universal is a piece, it’s not the the be all end, all right. But but all these things combined could really tip the scales on a really important question in ecommerce which is who actually knows the most about me. Right. And so if you kind of dial it back a little bit like it used to be Google, right? Of course, they didn’t really do anything with that information based on search history, but but they had it. Then Amazon actually eclipsed Google as the most popular ecommerce search engine. So Amazon became that retailer that knew me best. If they ever got Alexa to work in a meaningful way, like that probably would have been the lynch pit.
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The way things are shaping up, like, will it actually eventually be Walmart? Like, it’s interesting. They’re already 3 in terms of where consumers start their search online shopping, right? And look at Amazon, 56% search engines, about 42% of consumers use it. Walmart’s at 37 and they’re the only one of the three that’s grown in 2023. So you have that and then that this whole program, right, it’s, it’s NBC Universal now, but Walmart Connect. Already has Roku. It’s tapped into TikTok. Now this live sports streaming, like, it’s all going to bring up, you know, come to this headline for the ad potential, sure. But like stay for the ability for Walmart to ultimately become the most knowledgeable entity about a consumer’s interest, entertainment, curiosity, shopping behavior among these heavy hitters. And so that, to me, that’s what’s really interesting about what they’re putting together. If they’re doing it right, drop the mic in, drop the mic.
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That’s, yeah.
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Man 11 take Chad. OK. So Dave you you had some some thoughts as Chad was talking what what are your like additions?
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Besides data, you know, throw my marketer hat on me. You want to be where your consumer is. And now what Walmart has is you have Roku, which focuses on television, your traditional binging of Netflix and. Amazon Prime and so on and so forth. You have TikTok and Snapchat. So you have all the social channels where you’re, you know you’re, you’re wasting time. Now you also have live sports. And so when you look at those three together, you are really at the forefront of every consumer touch point outside of like restaurants and and eating and so anything where they are leveraging media, they’re there and I think that will also help with not only the data and.
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Consumer behavior, but also being top of mind with the consumers where you’re truly having that Omni channel approach I think is potentially game changer. And so they’re really building this great ecosystem across every single behavior and trend of a consumer and potential target.
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Right, absolutely. Yeah, Chris.
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Yeah, I mean, I I think these two guys nailed it. I mean, there’s two points I would emphasize and what they said just to bring them out a little more fully. One is 1 is the streaming aspect, right? That’s the difference here. Is that the streaming nature of this and what Walmart is building here to connect to the streaming platforms. Gives them the ability to really capture Roy in the long run differently than has ever been done traditionally in broadcast media, right. And that’s really valuable to the CPG’s, especially when you consider what Chad said in terms of the power of the data that they can bring to the table. That’s what’s really important here is that kind of end to end omnichannel experience of knowing where your customer is and what they’re buying and that’s just going to come more over time. And Walmart’s the only one out there actively talking about this too. That’s another interesting thing of this. And the second point which Dave mentioned was?
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The live rights, like the live rights, are just icing on the cake because that’s where the eyeballs are consistently in the moment. There’s only so many of those events that are available in the marketplace, and so that’s a big cue too, in my opinion.
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Yeah, I think, I think the the only thing I would add here is like. To me it reminded me of you know we see so much action happening here in you know consumer facing platforms to try to get consumers to go to Prime, to go to Walmart plus. This to me feels like Walmart is almost doing the same but for their advertisers. Like how do I figure out how to be the most differentiated, the most unique when you’re look and and then as a CPG, you know you’re looking at all of the options for all the retail media networks that you can be a part of and where to really heavily.
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We invest and I think this is just again, another reason why Walmart is where you’re going to put the majority of your budget because of all the reasons that you guys were talking about eyeballs. You know differentiated demographics that you’re able to bring to the platform because of the variety of connection points that Walmart Connect has And I think that’s that’s it’s almost like we’re we’re seeing this like behind the scenes war going on now between Amazon and Walmart not for the customer, the customer facing, but now it’s the the CPG customers on this side. So I’m really excited to see where this goes.
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Absolutely. And and also let’s not forget they also have Instore radio, you know to they’re bringing to the table.
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Too. I will forget that. I think it’s okay to forget that.
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Which we won’t go into, we won’t go into. We’ll keep the show rolling here, but nice to get a chuckle out of everyone on that comment. All right, Headline number two, in a phrase I never thought I would say this early, a successful fast casual restaurant says it will now go Full robot, Full robot and. According to the Spoon, Sweet Green CEO Jonathan New Nieman told investors this week at the William Blair Growth Stock Conference Yes, get your tickets now that the company plans to have its Infinite Kitchen Robotic make line system installed at all new locations within a fiveyear time frame. An analyst’s note about Nieman’s disclosures at the conference also indicates that the early results from The Infinite Kitchen have been extremely positive. Here is what the analyst had to say, quote.
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Sweet Greens First Infinite Kitchen has proven that the technology works with 0 downtime so far and significant benefits related to faster throughput and improve portioning and order accuracy with with less labor intensity and greater job satisfaction. So far goes without saying, we believe the Infinite Kitchen has the potential to structurally change Sweet Greens labor model as roughly half a variable labor stems from assembly. End Quote David. It’s kind of A2 parter. What do you think of this move? And even if you like it, would you have said it publicly? As a consumer I am a fan of it for a few reasons, not only the accuracy, which I’ve actually never had issues with accuracy, but I’m sure there’s some pretty complex custom orders out there and portion size but during lunchtime.
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You can wait 45 minutes for your Sweet green and you know I have moments I will not actually go to sweet green because I know the line is so long during lunchtime. So I’m actually really curious to see how this will impact foot traffic and actually how many more people will go now knowing that during lunchtime it can be the line can be super, super long. So from a consumer aspect, I think now if the line is cut down in half because throughputs got so much faster. I think that’s super interesting. And so there’s a top line piece to this also. Yeah. You were excited about this topic, right? Like you were like, yeah, I’m a sweet green guy. Like, I’m actually, I get my salads there a lot, right? Yeah. Sweet green Call me. I want to be an influencer. I want. I want to be an ambassador. I’m actually, after this, going to go to a sweet green reconsulting. Sweet green. Yeah, That’s how much you like it. Bring me on. You know, forget about the business side. I just want to help. I just love you guys. You can pay me in free salads.
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So I I’m really, I’m, I’m really intrigued that way because if it can mitigate the the the the tie, the weight, then I think you’re going to start seeing a lot more people go. Because I remember as a consumer I would go and be like oh this line’s way too long. I’m like I don’t have this time. So that would be really interesting in terms of you know, when I put my financial hat on, I’m really curious to see how this will actually. Play in the long run in terms of CapEx. And yeah, it might have a huge impact on variable labor costs, but also what is the actual investment needed to scale something like this? And then what happens if there are issues and you need to fix that? Think about do they have the amount of Labor to actually fulfill the orders? And so there’s a lot of nuances that they’ll have to figure out once like this pilot goes live.
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But you know Innovate Sweet Cream has always been innovative Their their app is one of the best apps in the market. I know they initially went all credit card which they had to back out for certain reasons, but they are really at the forefront of this. I know Chipotle has chippy with making some tortillas, but they’ve I don’t think they’ve ever. Publicize it the same way that Sweet Green is doubling down. I’m really curious. So I I I think if if it’s done correctly it could be, it could be a huge game changer as it relates to more people going so. So let me push you though because you you kind of didn’t answer the second question. Would you have made this announcement? No, not yet, not yet. I would have, you know, I don’t know enough. I don’t think we know enough about the pilot.
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And so I think it would have been interesting to understand how the pilot works in different geographies, the difference between a lunch and a dinner time because dinner time, you go there, there you don’t need this level of output. And so it really is a lunchtime focus. And once they have more data and learnings and they’re going to potentially scale it nationally, then I think I probably would have doubled down on it. Yeah, it’s hard to understand the value from doing that, I think to Chad. What do you think though? So first of all, I got a call. Schneids out. I’m being a complete liar. I’ve, I’ve, I’ve sat next to him when he’s gotten like his sweet green order wrong or something like that. And like you know, I’ve witnessed his extreme prima Donna customization and what happens when it goes, you know what it is? It’s the double chicken. That’s the double chicken. And like I.
00:18:33
Think that is your new nickname, Dave Double?
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Chicken. Which like which? Which the flustering double.
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Chicken back here for a fast.
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Yeah, which cilantro vinaigrette he gets. So anyway, don’t be a hater, that’s not all good, all good. So, so I think it’s, so I think it’s interesting, Chris, your question on like whether to announce this or not and and I looked at it in terms of like what they were saying in the announcement as well. It’s like it’s important to recognize why retailers make tech investments, right. I mean it’s number one to create some sort of operational official. Agency and enhanced margin 2 to improve customer experience and differentiate as a retailer and three of course to sell more goods, right. And stock price, it’s the stock price. Yeah, that’s what I’m wondering is the key here. Yeah, yeah, right. I mean so you know Dave is kind of hitting on the the customer experience angle and I think that’s great. I don’t think you make this investment for you know order accuracy, you know kind of as the primary, I think you have to have a line of sight to labor reductions.
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Or you know like electronic shelf labels and grocery like at least free labor up to do other things if not save labor dollars completely. And you know it might be hard to go out and publicly and say like hey we’re going to be able to reduce workforce and stuff like that. But ultimately I I think it has to in order to to generate the the returns. And so if that works then you know yeah the investor the the the consultant in me says it’s a great example of. Strategically using technology to create kind of a sustained operational improvement, reduce labor and increase margin at a time when these labor shortages are very real and and hindering retailers operations. Well, I think it’s the payback Chad, it’s you know the CapEx, the investment versus you know the ongoing labor improvement and and potential for traffic.
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Right. Against how much investment you can get from the market to to build this out based on the idea and the concept that you’ve now put out there that people are going to potentially get excited about? That’s the part I hadn’t thought about to you guys just started talking about this. But Anne, what’s your take?
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I I 100%. Them in support of this.
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You are 100% you are a.
00:20:42
100% I think this future proof sweet green for across multitudes of reasons like what we’re talking about 1 with the labor shortage like yes, you’re saying that we’re we’re eliminating humans from the production process here but. They can’t find the workforce to do that and is that going to change? I don’t know. I I think this allows sweet green to keep things consistent, allows them to keep price consistent, allows them the opportunity to be open more hours. I mean if in theory, you know, this should allow a sweet green to be open 24 hours a day at some point in time without having to worry about, you know, whose shifts are available and and when people want stuff. If Dave wants his double chicken salad.
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At.
00:21:25
Five in the.
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Morning. A boy like him.
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It should be available. So I think it makes a lot of strategic sense. The other thing that I think we didn’t hit on that I’m I think that they’ll be able to now gather from this potentially is. When you go and order Sweet Green in person, they’re not collecting the data from the app that they’re getting when you order ahead. So what are they able to glean from the like the multiple orders in store where you’re you’re not collecting the information about Dave’s Double Chicken, you’re just fulfilling the order, fulfilling the order over and over again. And now you’ll be able to, through a mobile process, understand like, what are people’s preferences? Do they like a mixture of the cilantro vinaigrette and the Italian vinaigrette? Like how do we come up with new recipe concepts or new?
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Creations like as a result of this larger collection of data. So I think, I think this is going to be a great move for Sweet Green. I think somebody’s got to do it in the QSR space and they’re going to be the ones to go to go for it. And I I would be happy if I was a shareholder right now.
00:22:27
Wow. I, I, I’m going to go in a different direction here. Like first of all those points are great and but I think you could do that without going full robotic. You could get that same thing just by forcing a mobile interaction with your restaurant too if you wanted to like they could still make the order from that point. And I’ll say this to you, I one thing I’ve never wanted at 2:00 AM is spinach leaves. You know like that’s just not not my thing. But the the the thing I worry about with this is and I’m going to say this kind of ingest but when you make this announcement nationally and you’re trying to roll out your brand nationally. I think there’s going to be some calls to boycott Sweet Green, particularly by the younger generations, because you’re like, hey, we’re just not going to use labor to the full extent here. We’re going robots. And so, yeah, what’s that?
00:23:07
No, that that was, yeah, my point. I agree with you. Yeah, if it’s going to happen, right, Chad, I mean so that’s the thing. So like I don’t understand. There’s nothing that good that comes out of saying this publicly, especially when it’s like a five year horizon. You could just roll this out quietly and get the same benefit, which makes me think that’s why I was saying the thing about the investors before, like they’re trying to gin this up. It makes me wonder and then I go, well, why are you doing that? If you’re a good brand, why do you need to do that? Why do you need that extra judge to your investors at this point? That makes no sense to me, but. You know from the benefits are probably there like right. The biggest thing right now is employees aren’t showing up. So you don’t have that risk. You don’t have to worry about employees showing up to their their shift. So I I agree with you and it like over time we’re going to see this like if you can make a sow with robots you can wrap a burrito you can probably make a pizza too. I just wouldn’t have taken this approach with it because it feels more risky than it ultimately needs to be. But time will tell so I don’t know. I’m just not.
00:24:06
I’m not a fan of it from that perspective, but I do think we’re gonna see more and more of it for sure, 100. It’s a public market.
00:24:12
Yeah.
00:24:13
Play here. Yeah, it’s to juice up the stock price potentially, right? Yeah. And that’s strange to me for a brand that’s doing supposedly so well.
00:24:23
Yeah. All right. Let’s go to headline 3. Sheehan has added home appliances to its marketplace. According again to payments.com, the extended product categories now include items such as portable washing machines, remote control lighting, and a selection of home improvement products like bathroom fixtures and wallpaper. The move also comes, according to payments.com after a declaration and growth within she and primary segment of affordable and trendy fashion.
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And that is consistent with the overall trend observed in the fast fashion industry. Also, a funding round last month just lowered the company’s $100 billion valuation by a third. Chad, we’re going to go to you first on this one. Would you be advising Sheehan to take this approach?
00:25:08
Yeah, there’s a lot going on here. I think this is the second time I’ve had a a she and Topic on the show this this company tends to be so polarizing. I’m curious what it does, Yeah. It really does, right. I mean, here’s what I’ll say. It’s been, it hasn’t been that long since they announced they were doing a marketplace. Right. It was like six months ago, right. And at the time, here’s why I think that made sense, right. Two reasons. So first, and this is crazy to me like.
00:25:37
Sheen has overtaken Amazon as the most number, the number one most downloaded shopping app like in the US like that’s crazy to me. And so they have kind of the fundamental component of what anyone who wants to be an aggregator or marketplace, you know, kind of player around like they have the audience and scale. So like great check. Two, how they had initially announced it, they had category credibility, right. So companies will go to she and for fashion and apparel makes complete sense and in fact an area where Amazon tends to struggle in, right. So strategically you want to anchor where you have the right to win. That was a bull’s eye for Sheen. So the flip side of this expansion is kind of curious to me. Again, I get that Sheen has the size and audience.
00:26:27
But you don’t have the category breadth for the Amazon. And so I kind of think well why Sheen for household goods like appliances and smart home products like Sheen became successful by undercutting others on price and trained consumers to be okay with long delivery times, low quality goods. I don’t think you can do that here in these categories. So I don’t know I I have a tough time with it, but I’m, I’m curious do you guys see it here? I I mean I haven’t decided yet either. I think the products and and the categories that they went after I think is unique and kind of like a question mark to me. I actually like the marketplace play. I think it it’s it’s a huge win for them given their sheer mass and they can continue to drive market share and more and more people will start going to them over in Amazon or a Walmart and I and and I think.
00:27:26
Just given their scale, a marketplace inherently had to happen. It’s a question of what they’re choosing around those products. To your point, Chad that I’m kind of like, well, that I’m not sure if that makes sense. That’s not part of your core competency. So I’m part of me, you’re in, I’m like 1 foot in, one foot out at the moment.
00:27:45
Yeah.
00:27:46
Yeah, Chris. Yeah. No.
00:27:49
What are you thinking?
00:27:50
Well, I’m thinking like. You know on the one hand I think you know it’s it’s for lack of a better way to put it’s a cheap growth move, right. Like Chad, like Chad said, like they’ve got the eyeballs, they want to build a marketplace, they’re getting more categories, they’re casting a wider net with their marketplace for the traffic, they’re getting to their their properties, right. That’s that’s essentially why you’re doing this. But the point I hadn’t thought about until Chad and Dave just discussed this is that isn’t why you’re going to she in as a consumer you’re going there for fast fashion.
00:28:21
So I wonder if like the connections are going to be made from the marketplace even though the eyeballs are there and it’s a different browse experience, you know, it’s a different search experience. So it’s good. It’s not like you can just stand up the marketplace and they’re going to come. It’s not the Field of Dreams in Dyersville, IA as an example. So that’s the part where I’m kind of like, you know, and everyone has this marketplace now too, like Macy’s, Walmart, everyone’s doing the same thing. So like, is this really going to work? Net Net, as I’m talking this out loud, I think it’s kind of desperate and kind of just an expected move at this point.
00:28:56
Yeah, I mean, I think the thing that we haven’t talked about too is like what’s the customer expectation going to be? I mean you go to she in because. You know that you know you’re going to get a good value on something they are making clothing to the trends like at a remarkable turn around time like so that you’re getting on trend things that are you know you see on TikTok and you’re going to be able to purchase that product for a fraction of the price and it’s constantly changing. There’s constantly apparel that you can go there to buy and can you do that in these other categories in home electronics and in you know some of the other marketplace items.
00:29:30
To the extent that you’re going to satisfy how that she and customer has been shopping that platform and I think you know another great thing that she and does is the kind of gamification of that shopping. But you also have that on platforms like Timu that have been around for a longer time and have that breadth of assortment. And there you’re like you the points that you guys were saying earlier like you’re used to going to Timu to shop for everything across that category from you know a tshirt all the way down to you know this portable washing machine and getting. That low price and gameifying that experience. So I I think like you said, Chris is a desperate move from Sheehan to try to compete against other large players in that space. But will it work? I I think we’ll have to wait and see if that if that strategy is successful.
00:30:15
Yeah, that’s a great point too, Aaron, because you can’t fast fashion appliances, right? There’s too many Product Safety requirements that come into play, right? The worst thing that happens with a bad tshirt is you get a rash. You know, you you you do. Is that?
00:30:26
The worst.
00:30:26
Thing, I mean, I, I don’t know, depends who’s wearing it like me, but but you know, like, but that’s an issue, right? Like, you know, you can’t do that in appliances because there’s too much, too much thought that has to go into that process. So yeah, I’m kind of more on this negative camp on this side this week. Yeah, even the shipping and just the route to market is fundamental.
00:30:47
Absolutely.
00:30:48
So, all right, well, let’s keep rolling the headline 4. According to chain store age, REI will open a standalone rei re slash supply store dedicated to used gear and apparel in my favorite town name in America, Clackamas OR and it’s expected to open in late August. The roughly 16,000 square foot store is REI second store devoted to the resupply concept. The first being launched in Manhattan Beach in 2020, the store is meant to provide REI members with access to high quality used outdoor gear and apparel at great prices with frequently changing selection composed of used products REI receives through its returns process and via trade in. Dave, let’s go back to you, the Double Chicken.
00:31:33
Double chicken, let’s go back to you. Let’s see if this sticks. Is this doubling down on this? Doubling down on this? All right, cool. I can’t wait to hear. So here’s my question to you on the spot as we like to do. Is this story unique to REI, or will we see other retailers start to devote entire store concepts to resale? Your thoughts, please. I think it won’t be unique to only REI, but I think there are only certain. Brands, retailers who can really do this and do this well and so REI potentially Patagonia where it’s part of their core principles and ethos, I think it fundamentally makes sense. You know was it fashion resale is, is is over almost $20 billion. And so if you think about just the resale market is trending up, it’s up 15% versus a year ago.
00:32:29
There really isn’t a place where you can focus on non, I’ll call it fashion or apparel. And so if you think about it as like all of us, we probably have different gear that you’re just like I don’t use it anymore. Gear is expensive. It takes up a lot of space. People need it. People don’t need it. And with RE I’s approach and their and their coop, it just fundamentally makes sense. And especially in a place probably like Oregon where there’s a lot more camping, there’s a lot more hiking, you’re going to need gadgets and gear at at A at a whim. But also at the same moment you’re like, I don’t use this anymore. For instance, I have a Yeti cooler. Haven’t used it in two years. Yeti, I love you, but I like I can. I’d be happy to.
00:33:17
Kind of resell that, but where do you do that? And so I think it fits with what they’re doing, it fits with their mission, it fits with the geography, the products itself. It’s a unique path to remarket and I just don’t see that out there that often. And so I I, I think REI is one of the only retailers that can that can start doing this and I think the first mover status will be huge for them. Yeah, I’m curious about that. I want to double clean that Chad like and Chad will go to you next like and Dave jump back in here too if you want. But you know you guys are in a lot of boardrooms discussions. I got to think this topic’s coming up. Like how do we attack this market? You know, do we open a store? Do we put up an online storefront? Do we just, you know, disavow it completely and not go after it? Like what? How do you help the executives through that type of conversation?
00:34:07
Yeah. Because the, the question you’re really getting at is like what is the, what is the mechanism to to have this kind of resale marketplace, right. I mean, I think what would would they’ve hit on really well and like for REI, these categories lend themselves really well to this, right? I mean, how many tents do you think are sitting in garages and storage spaces right now that were used once, right. And these things are pretty durable, but but I think what you’re getting at is like do I open a storefront or do I have more of an online exchange? You know, it’s interesting. I was, I was part of a company a number of years ago that was experimenting with this kind of concept but in more of a rental capacity. So think about it is like rent, you know we tinkered with the idea of like renting out tools and equipment and kind of creating that online exchange. So like most of the time your power saw or your wet dry back or left idle right, getting only a couple usages and ultimately we couldn’t at the time. This goes back a little bit, but like we couldn’t.
00:35:07
Map around like the logistics of the exchanges of how we would kind of make that work. And so in a way, the storefront is having a dedicated store or a portion of a store or whatever. It’s kind of the easiest way to do it like REI already has. Exchange programs in place and opportunities to sell goods back. I believe DSW had done the same thing with sports equipment not that long ago, right. And so it’s a very I’ll say quote easy way and mechanism of getting that back out to the consumer basis somewhere to go. So I don’t, I don’t mind doing it as a as a storefront concept. You know we’ll see how this, we’ll see how this goes and whether it’s actually.
00:35:50
Profit generating my lien is, is that ultimately it will be but you know if nothing else it’s a it’s a great example of an initiative that aligns to kind of this company mission as Dave was talking about and so so yeah I’d be I’d be good with this with this mechanism of doing it. I disagreed though I’m not sure if it’s going to be profit generating right that’s the issue but but but here’s The thing is I don’t I’m not sure if you need to be and and so bear with me. Yeah, something like this, if you break even or or around break even, that is a big win on something like this. But what you’re doing is driving so much more loyalty and you’re doubling down on what you stand for that I think it’s going to have a huge Halo effect on REI, both ecommerce and their traditional brick and mortar stores. So I think it fits exactly with what they’re doing.
00:36:43
And it may be not the perfect example, but you even think about drugstores removing cigarettes. They’re supposed to be healthy. You’re supposed to be Wellness. Why would you have cigarettes there? And so there are some things that are counterintuitive from a financial aspect, but longterm, it drives it’s fits within their strategy and it drives more sustainability and loyalty, which I think will have a huge impact with with REI. Yeah. And that plays right along with with Rei’s ethos too, like you know and but that’s that’s the important point here is like how many people can play to that ethos and how many people need that ethos ultimately at the end of the day to keep their customer coming back. And I guess I’m guessing Ann’s going to sing the same similar tune to what you just said, Dave, but and what do you think?
00:37:30
So I I think the thing that we need to talk about here is that. When especially when we’re talking about is this profitable, like there’s a lot of logistics that are going to go into making a successful resale platform. Like Chad said Aria has been doing this for a long time. So they’re they’ve they’ve been doing this. So can every brand do this and be have it be a profitable entity for them? No. But I think the most important thing we need to think about is what Chris Spire, the chief merchant at Aria. I told us at the Sea Otter classic Summit. Chris it would feel remember where he said that the biggest problem that Aria has right now is that all of my consumer.
00:38:04
Consumers look like me, Chris Spire, who is, you know, a middle-aged man and he’s, you know, they’re trying to bring in a more diverse, a more a younger audience and customer into REI and this is a way to do that. I was at the Commerce Next conference on a Gen. Z panel. And the the people that were representing Gen. Z for a granted, you know focus group of four here, but they were talking about the the times that they do invest are when they’re getting things. The guy specifically mentioned getting a pair of hiking boots that’s when they’re looking for a place like what REI is doing here. And I think that is very smart for REI to be investing in to bring that new customer in and to get them in at a price point that’s much more affordable and then build them into that brand.
00:38:53
Loyalty like David’s talking.
00:38:54
About well I think the price point is the most unique piece. It’s like I don’t, I don’t do a lot of camping so I don’t have any camping gear, but should I go camping, I’ll need the gear but I don’t want to pay full price. And so this is a way where it’s like it’s it’s much more, it’s almost below opening price point. It’s more like a one time opening price point that I could use at this product. So I think there’s there’s a huge benefit. This is a very symbiotic I think. Environment for everyone here, right. Well, and when you look at it the way you 2 just said it, then, Dave, like you could even, you could even make the argument that maybe you don’t need to be profitable. Like maybe it’s somewhat of a marketing investment in the areas that you’re putting these stores and you’re evaluating your market economics then by growing your customer base and keeping them in the brand too. That’s another way to look at it.
00:39:43
I don’t know. My only thing here is like, I don’t feel like every brand can do this. Every retailer can do this. Like I don’t think Target and Walmart should start opening resale stores, as an example.
00:39:51
They’re not selling the quality goods though like that. I think that’s exactly it, Chris. Like their products, Walmart and Target are not meant to sustain 3 to 4 to 5 owners throughout the product’s life.
00:40:02
Right. But I do think that the interesting tilt on this argument or this discussion to me is I do think every retailer gets returns, right? Every retailer wants to be closer to the consumer. We just read Jason Delray’s book too on winter sales on Amazon and they talked about Amazon and their short station centers and putting those in the right locations throughout the country was a really important part of their strategy and other retailers are starting to do that. So do you start seeing like small urban warehouses meant for fulfillment also return hubs that can also be turned into like front facing? Hey, you want to shut up? Our returns come in.
00:40:37
These places are relatively close to you. You can do it helps us clear through our inventory, keeps us out of the brand and the operational mock that comes with having to process online returns in a store. When those things aren’t on the shelf to begin with, they don’t have a place to go. Like I wonder if we start to see that as a way for this to happen and take off in a different way with different economics. That’s just my, I don’t know, it’s just kind of fun to think about from my perspective.
00:41:00
All right, let’s roll on to headline 5. Mercedes-Benz car and sport utility vehicle owners are now able to use ChatGPT artificial intelligence in their vehicles. According to Newsweek, the company began installing the technology in 900,000 cars this past Friday. The AI using Mercedes vehicles is verbally triggered by uttering a hey Mercedes verbal command and is built off of Microsoft’s Azure Open AI service. Chad. Commerce from the car. Hey Mercedes. Hey girl, can you find me some eggs? Are you in or out?
00:41:40
Well, you know, thank goodness. I was wondering when I was going to be able to draft a cover letter for a job application or create a marketing. Campaign. Or write a lovely ballad for my wife about butterflies and rainbows from the comforts of my Mercedes drivers. Yeah, whatever.
00:42:00
You want to talk about on that hour and a half drive back from O’Hare to your house, Chad, you, that’s that. You keep that to you and Mercedes, that’s, but that’s a bond that cannot be broken.
00:42:11
We have. We’ve gotten there. You know, I’m going to I’m going to hold my my horsepowered horses on this one. Call me jaded from from past experience so. So I used to work for a company called Chamberlain Group which was leading manufacturer of garage door openers and we had a smart garage.
00:42:30
Control technology called Myq and and so we explore this automotive connectivity space pretty intently. Now I’ll admit the chat GB T runs circles around Alexa in terms of its a I sophistication and capabilities. Got it. But you know what the number one consumer use case for having voice controls in the car was? Like being able to check on and control your garage door, right? Like something very functional, like couldn’t actually develop meaningful Alexa use cases outside of that that that made any sense. And as a result, I’ve not had, you know, deep penetration.
00:43:08
So, you know, maybe I’m just the old stodgy guy who worked on this stuff 5-6 years ago and you know, therefore makes me completely antiquated in this technology, but I can’t wrap my head around the real use cases for ChatGPT in a driving environment, the voice activation on your phone can’t solve. But I’m interested whether you know I’m completely missing the boat on this and guys and and whether you, whether you’re all geeked up on it is this. Deadline of the year for you, Chris. You know, 12. Wow, wow, subtle. Dig their chat. I like it. That’s interesting point, though. Like, you know, is this just voice commerce or voice, you know, activation under a different guise, You know, that’s a really interesting question that you’re raising.
00:43:48
Yeah. Or were you just too early ahead of your time with my Q, Chad and and the resources that were available to you at that time? But, Dave, are are you in agreements? Where do you sit on this?
00:43:59
Yes, first of all I have my Q and it’s fantastic. So well done to Chad. I I just don’t, I just don’t get it like I think it’s it could be a cool marketing ploy and play. Where it’s like we are moving forward, we’re innovative, We’re always thinking about the future and I think that is unique. But I have so many gadgets and gizmos in my car and I don’t use any of them. I just want CarPlay, I want my music. I put in Google Maps and I Drive. And so the last thing I’m using or wanting to do is having these really intense conversations with myself with ChatGPT.
00:44:42
In the car. And Even so, let’s say I have it, what would I use it for? Is there gonna be a printer in the car that I could then print out the answer or can I e-mail the answer to myself? So I think conceptually it’s cool. Or Mercedes is trying to be really innovative, but until they put the printer in the car too. I’m not sure how I’m going to. I think. I think you lost the.
00:45:05
Audience at printer.
00:45:06
Yeah, I was going to say I thought I was the old guy. You’re talking about needing to send it out. I don’t know. I said e-mail. I said e-mail. Also, little chicken.
00:45:15
Dave, we are moving on with you. I’m sorry Chris, how do you feel? Is this a don’t knock it till you try it situation or do you think are you do agree with Chad and Dave?
00:45:27
I think inherently I do. And the point that it that’s bring up in my head is like, is commerce inherently a visual experience to some degree, right? Like, you know, the Alexa analogy is really good that Chad brought up. I think like, you know, the only thing I could consume on voice commerce with Alexa was Starbucks because it’s something I knew I was getting over and over again. So I think in that regard, when you think about like I’m in my car, I’m stopping by the grocery store, I want the things that I know I want. Yeah, okay. Great. But then how much of it aspect is there, you know? And yeah, I can make the use case of like, okay. I’m at the grocery store. I want these items. Get them ready for me. Do you have flowers? Pick up some chrysanthemums for my wife. You know, whatever it is, you know, I could make that use case. But am I doing it in the car or am I? Is that the best place to do that, to have that conversation or am I facilitating that conversation? Could still be through voice, but is it through another mechanism like my phone or a computer?
00:46:22
To make that happen. I don’t know the other funny part about this and is like we’re joking, like it’s going to be like a I story of the week here. Now, I mean that’s just how crazy this is getting because there are commerce angles here. But right, it’s like what’s the right platform for this And that’s why I’m wondering like I’ve never thought about that before like how visual is our. How visual are we as consumers to be able to need to see things and interact with them as we’re doing this new type of search, which is a question that I don’t have the answer to?
00:46:49
Yeah, I don’t think any of us can really talk about this because we aren’t doing it yet. I think we are not shopping in this way. We have not engaged with ChatGPT in the in a way that I think we will be as this technology becomes more pervasive in our daytoday lives. I’m giving you the the multitasking mom perspective here from the Mercedes that I don’t have. But if I did, I think like when I’m driving to and from sporting events and I have an hour here and there and I’m like, I need to get kids food for dinner before we get to this practice. And I’m going to that field next. And then I got to figure this out. What, you know, glutenfree choices are available for me in this area. Can you map out my route for tonight so that I can make sure that I’m getting people to the right spots at the right time?
00:47:37
And you know, picking up groceries if I want to on the way home. I think the idea that we can really have a conversation with this back and forth has never existed before. So until we start to have those experiences, I don’t know that we can say like this is a success or failure. I think we really need to give it some time because to me this, this will redefine the the. Give me the play on words here. The shopper journey that we’re going to be going on, whether we’re in the car, we’re at home, we’re at work and we’re we’re changing the way that we interact. I do think there’s some visual components to it, but if I’m able to get some things done and we think about ChatGPT is more of an assistant instead of like.
00:48:16
Direct like placing an order on a on a retailer’s website. I think that’s where this starts to get really interesting and brings up an entirely new way of shopping.
00:48:26
Man, I have so many thoughts. But I know I’m going to give the final word here to the A and M folks. What do you guys think? Chad, you’re smiling. I mean I in the end I I I agree with Ann right. I I can I can be snarky and upfront and and you know and and kind of say hey I don’t see it but but I I agree like I think that the use cases and the utility of it is is still continuing to manifest and get get explored every every time. I Chris you know you said hey we’re going to see the A I topic of the week like yeah it’s like that going to be this year’s like where we saw like the Uber fast delivery agent of the week you know.
00:49:05
Every you know every time over the last two weeks, yeah, we’re going to see more and more of this coming to fruition. I think it is a it, it is a full steam and freight train of of opportunity in terms of what it can become. And so you know, I guess we’ll, I guess we’ll see over time. Dave, any final words and is making me a believer ow. And so.
00:49:32
I knew I loved you, double chicken.
00:49:34
The use cases are more about questions not questions in to make life easier for business cases so on and so forth. And so really leveraging it in your day-to-day I think is still unknown And so whether that is this is the type of food that I’m interested in where like what should I find that’s local or. Give me a route that’s more scenic. I think like, I don’t even think about that like where I’m in a new area. Give me a cool route that that takes me around the city, something like that. So I think as time goes on and we potentially use it and it’s democratized, we’ll have a better understanding of of doesn’t make sense and then how it’s integrates into our lives.
00:50:23
I I I hope it’s. I hope it’s more than that. You know what I mean?
00:50:27
You can have a conversation about the meaning of life chat. I mean, this is this is something that we’ve we just have no concept of the possibility.
00:50:35
I agree with that.
00:50:36
OK, let’s get to the lightning round finally guys. First question goes to you. Chad Modelo just became the number one beer in America. When was the last time, if ever, that you peeled that golden foil wrapper and took a cool drink?
00:50:52
If ever. I mean, yeah, I I’ve plenty. In fact, I this this this past weekend I was sitting in a Dave and Buster’s outside of Saint Louis. With a couple other soccer dads that we were down there for our son’s ODP series of games representing the state of Illinois. And in fairness, they didn’t have the beer that I asked for. I believe it was some Lagunitas little something something they were out of that And so she said, but we have some Modelo on tap, which is not exactly a substance but you know what I was like? That sounds refreshing and delicious and the sounds of Dave and Buster’s video games in my.
00:51:36
The background like is leading me to that place, so I enjoyed a couple talls and it was wonderful.
00:51:41
Amazing.
00:51:43
Nicely done. All right, Dave, Next question. Jansport, best known for backpacks, has launched a Of hats and tshirts. David, what backpack were you slinging across your shoulders in high school? And the better question were you 2 strapping it or one strapping it? LL being through and through? With the initials on the back and it had the all the extra pockets at the you know the rule if the more pockets you had and more zippers you had in your in your back box, the cooler you were. I thought it was the last chance you had to treat your pants too, right. Yeah, right. You know you had the zippers like the zipper shorts and I was once trapping. I thought I was a lot cooler than I was So that this is.
00:52:27
You know, as I got older, I’ve learned from like a back standpoint. I got a you got a two strap ages catching up. But in my cool middle school days, I was definitely one strapping nice.
00:52:39
All right, Dave, I’m gonna go to you again for the next question. Apparel retailer S Moon Under just launched a new program where it will give online shoppers 15% off full price items when they use the code Keep it. Which also makes that purchase final and ineligible for returns. What was the last final sale item that you got stuck with?
00:53:05
A pair of Lululemon running shorts. So you’re you’re laughing? Why? How’d I get stuck with them? So I thought, yeah, I was going.
00:53:13
To say you got to join the Sweat Collective program so that you can return final sale, that’s like the benefit of joining.
00:53:19
No the problem was is, is that after I got them I actually I’m not a member of that and I also I was 6 inches. I wanted a four inch pair of shorts and so after taking the tag off and running with them and not being a member I was like I’m I’m kind of stuck with them. So I’m thinking if I have to do anything I have to poshmark or keep them.
00:53:38
So you got to posh him right now. You got.
00:53:40
To posh him. Okay, I got it. I almost did a spit take on that one. All right, Chad, final one. Let’s get out of here. On this WCW Saturday night, Nitro is set to return to the Mall of America on September 9th. Chad, who is your favorite pro wrestler of your youth? And no, you cannot say Hulk Hogan or the Iron Sheik.
00:54:02
No, no, I’ve been RIP Iron Chic, but no, I was a big, I was a big WWF guy when I was a kid. I had the action figures. Oh yeah, I remember those. And they watch the Saturday morning cartoon and all of it, right. And you.
00:54:16
Guys are really cool. Has anyone told you?
00:54:18
Right. Oh, I feel bad for all the guys that I’ll leave behind on this one, like Rowdy, Roddy Piper and the Junkyard Dog and.
00:54:28
Jesse, the body.
00:54:29
Macho man. Jesse, the body. But you know who I’m going to go with? I’m going to. To go with Jimmy, super fly Snooka with his top turn buckle just like a laid out and was the most glorious move in all of wrestling. And Chris, sounds like I’m pulling on your heartstrings.
00:54:46
Too.
00:54:47
Super Fly Snooka is the greatest name ever. Like it’s such good alliteration, such good alleration.
00:54:52
People could only see how both of you were like throwing your arms up in the air when you were.
00:54:57
Oh, watch, watch, watch the YouTube for this one. Yeah, absolutely. Oh man, oh man. All right, well, happy birthday today To Clyde the Glide Drexler, Cindy Lauper, and to a woman that is that it is okay to Judge Ann Amy Brenneman. And remember, if you can only read or listen to 1 Retail Blog in the Business, Make it Omni Talk, the only retail media outlet run by two former executives from a current top ten US retailer, our Fast 5 podcast is the quickest, fastest rundown of all the week’s top news.
00:55:25
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 we do it all just for you. And we try really hard to make it all fit within the preview pane of your inbox. You can Sign up today at http://www.omnitalk.blog. Thanks as always for listening in. Please remember to like and leave us a review wherever you happen to listen to your podcasts or on YouTube. And Chad, before we let you go, if people want to get in touch with you or the A and M Consumer and Retail Group, what’s the best way for them to do that? Yes, thanks for having us So blast today. So you can learn more about A and M CRG at our website alvarezandmarsalcrg.com. Look us up on our LinkedIn page, Alvarez and Marsal consumer and retail group. And of course you can reach out to either Schneid’s aka Double Chicken or Luster directly on LinkedIn.
00:56:17
Awesome. Well, on behalf of Chad and Dave again, thanks for being with us. But on behalf of them and Ann and all of a sudden Omni talk retail, as always, be careful out there.
00:56:27
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