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 and, most importantly, a little happier each week too. Today is August 24th, 2023. I’m your host, Ann Mezzenga. And I’m Chris Walton, 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.
Today we are back from vacation. We are sort of back. Yes, one of us is more back to the other, but yes, we are. We are in London. We’re in London, in your hotel room, on location on in the hotel room. But we are also where is it the Marriott what, Regency Park, Regency Park or Regent Regent Park. Regent Park, yes, we’re getting our London on here. And your Hampstead, which I guess is the posh area of London at. Yeah, it is very posh. I want to move here and he’s out immediately. Oh my God. Well, today we are joined for their regular monthly appearance our by our good friends at the Alvarez and Marcel Consumer and Retail group. We have a newbie today, yes, dressed up at the equation for the occasion. And the equation, equation we have Ben Loden and Chad Lusk. Guys, welcome to the Omni Talk Retail Fast 5. How are you doing? We’re doing great. And for those watching the video version of this, I think we’re setting new ground here. I think this is the first time that we have two A and M CRG Ers doing the podcast together in the same room at the same time. So it’s, you know, it’s so it’s new ground for us. But we’re excited. We’re like, we’re like Olympic correspondents right here, like Katie and Matt going to the other two. Who are they? Like, I don’t want to be Katie. I don’t want to be Matt.
I don’t. I don’t. I don’t. Like maybe you’re Katie, maybe I’m maybe Brian Gumble. OK, That’s better. He’s better. He hasn’t been cancelled, right? I don’t think. I don’t. I don’t know. But let’s take a second and have each of you guys introduce yourselves. Ben, you’re the newbie. Let’s start with you. Tell us a little bit about you and your background.
Yes, no, thank you so much for having me today. I’m really excited to be on this podcast today. And to me, this is normal at being in the same room. So my first time this is day today. Well, as I said, Ben Lauten, I’m a Senior Director here at CRG. Been working alongside Chad and the rest of the group for about a year and a half now. Always been a career consultant, so no operator experience there, but I’ve always focused on kind of cost takeout programs on both the CPG and retail side with a heavy focus. Household care, most recently food at theme park. So if you got any chicken tender questions today, I can answer anything about a chicken tender.
You know what about Nuggets in? We might have some questions for you, Ben. Well.
I’m happy to answer, but yeah, it’s been about me. I’m excited to be here.
Well, welcome to the show Chad. You’re a long time long time fast Fiber 5 and several minutes. In fact I just, I have to say, when I was my favorite, we used to call Chad the Lusker on here Lusker. But I’m still calling you. Well you do you do but instead of the Lusker Chad have you ever had your name auto correct to Chad lust because I was I was just working on an edit of our last five insightful minutes which everyone should check out with you and it kept auto correcting to Chad lust and I was like maybe the luster is a better it made it kind of steamy and made for a steamy fun like very Danielle Steel. But Chad tell us a little bit about you and first and foremost have you ever been called first and foremost on the on the nickname of the fantastic. I you know I have had I’ve received mail address to me for now literally decades with Chad lust lust yes lush lush right all of that so you know I guess I’m ready and willing to accept all versions and and variants of of nicknames. So Chad Lust Lusk managing Director with A and M CRG out of out of Chicago. So Prior to joining A and M multi time chief strategy officer Chief marketing officer across CPG and retail. I spend most of my time here at CRG working with clients on large scale commercial transformations usually kind of front end commercial aspects of growth strategy marketing sales effectiveness excellent. Welcome back Chad it’s good to have you Chad. Lust, Lush. Whatever it is, whatever works, whatever works today.
All right. We’ll be new for May.
Going to take this that team. Right. We got. We got to get a new name for you. We got. Yeah, don’t worry. We’ll find one by one for you by the time this is over. So all right. Well, should we do the show in? Let’s do it. All right, let’s do it. Before we get to the headlines, I want to say that excitement is in the air as our friends at grocery shop gear up for the highly anticipated meet up selections. Week on Monday, meet up Selection Week kicks off and thousands of retailer and brand execs from across the global grocery ecosystem are going to start reviewing other attendees profiles and selecting the people with whom they want to meet at grocery shop. Half of all attendees will pick who they want to meet on Monday. So if you want eyes on your profile and who doesn’t, you got to grab a ticket. Now don’t get to put those like pictures of you on top of a mountain or withholding a fish. You know like they do it on Tinder like you got to got your profile. Has to stand out on it though. Is that what the kids are doing these days? Put fish in their profile pictures? But by the way, also the action doesn’t stop with just networking. Grocery shop is also finalized their impressive keynote lineup with the recent editions of the presidents of Hy Vee who will deliver a joint keynote, and the President of Mars Pet Care, a key player in pet nutrition. They’ll be joining chief execs from Fidel, a Kroger, Unilever, Tropicana, a whole delays and more. And let me emphasize, Ann, the event is what I would call unmissable. Without a doubt, you can grab your ticket at groceryshop.com/omnitox. So my advice is hit pause right now. If you’re listening, grab your ticket like and I did a long time ago. We’ve been planning this for like 9 months. I planned for a year. Basically go after year, then come back and get. And then let’s do the headlines after you hit pause and get your ticket at groceryshop.com/omni talk. All right, in this week’s Fast 5, we’ve got news on ALDI acquiring winn-dixie and Harvey’s Supermarkets.
Etsy debuting its very own baby registry. Trader Joe’s executives saying they will never, ever, ever, ever, ever put self checkout machines in there. Of course. Ever. Ever, Ever. It was fun. Yeah. Yeah, sorry, sorry. It quits on a number of its inhouse brand. Hey, we’re in London. It’s all good. But we begin today with big earnings news. And particularly the news coming out of Dick’s. And news coming out of Dick’s. Yes, that’s what we’re going to start with. Headline number one. That’s right, Dick’s Sporting Goods stock dropped precipitously this week, according to CNBC. For the first time in three years, Dick’s fell short of Wall Street’s estimates. On the top and bottom lines, Dick’s Sporting has reported a profit drop and cutting and cut its earnings back. Earnings outlook for the year. After seeing an uptick in retail theft and slow sales in its outdoor category over the last quarter, Chief Financial Officer Navdeep Gupta said that shrink hurt gross margins by about 85 basis points. This, it should also be noted, also marked the very first time Dick’s has referenced shrink in a press release in almost 20 years, said Gupta quote. The biggest impact in terms of the surprise for Q2 primarily came from shrink we thought we had adequately reserved for it. However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated and that impacted our Q2 results as well. And quote Chad, we’re going to you first. Here it is again what we’re talking about theft. What should Dicks and others in the retail industry be doing about this problem? Yeah. Let me take a step back at first just to talk about the the dynamics of of how how they’re talking about it as a consequence of financials, right. So you know, first of all, organized retail theft is real, it’s happening, there’s, there’s no doubt about it and it’s and it’s increasing. But overall perspective like this feels like a bit of an easy out on an earnings mess, right. So is looking at the numbers a little bit like from a quarterly result standpoint, like revenue is actually up 3.6%, net income was down 23%, right.
Even if you look, OK, quarter to quarter, look at the last 26 weeks, sales are up 4.4, net income was down 5%. So those spreads are pretty wide and they were saying shrink was .85 percentage points for the CFO statements, right. So it’s a portion of something that’s larger at play going on with with the exporting goods right now, you know, it’s 1/4. Let’s not overreact to it, right. But it does call into question kind of, I don’t know the sustainability of Dick’s, you know, business model right now. Maybe I, you know, I’m not sure. You know, I I love Dick’s Sporting Goods. My kids love walking it, looking at shoes, looking all the things. You know, I equate it to walking to Circuit City to look for C D’s back in the day. Not a good comparison, right? I don’t know. It’s pretty fun. So I don’t. So I don’t know what’s happening, but it’s clearly something more than theft okay. So now what are retailers doing about theft? You know, at right now retailers are going a lot of kind of classic tactics here. So you’re talking guards at high theft stores limiting on shelf availability for high shrink Sku’s through boxing or other kind of physical means and and deterrence from from associates considering centralized services and security operations centers. Still TBD. You know I would encourage as we’re encouraging our our retail clients to do is like let’s make sure that first and foremost we’re doing the more important thing which is how we focus on keeping associates safe in the stores. Because you know what I’m seeing from a Dick’s financial results standpoint is you know that’s not what tanked the stock price 24%, right. There’s more at play. So make sure the business models right, keep your employees safe and you know let’s like continue to to work on some of those physical deterrence. Yeah. Chris, what are your thoughts here? Yeah, I mean I think that Chad always are tickets everything really, really well, I mean to me, I mean the only other answers I would put in here I think you know at in terms of combating the shrink issue and the theft issue too because they kind of go hand in hand in a lot of ways. One, I’d be looking at RFID like across the board, especially if you’re in apparel retailer like Dicks and maybe they have already, but if they haven’t they should be. But then you know then from there that at least gives you more confidence in the theft number versus the loss number because you can understand in real time where your inventory is. You don’t have to wait. There’s there’s talk in the article about you know they doing the inventory count once a year, them trying to do that more often. Well RFID would help help with that to some degree. And so then you know from there, I think then you have to look at other creative things like Chad mentioned, like no one loves the experience of putting everything behind glass. Like I was in the Walmart in San Clemente, CA the other day.
I could even shop it because everything was under glass. There was no one around to help me, which is another problem in retail too because so much of the store labor has been pulled out of the operation. There’s no one to help to get those products for you when you find that. So. So I think you got to start looking at other models like I think Costco’s a great model. You have the map, the club membership where they know who you are. It requires you to can identify yourself to come in, identify yourself kind of when you’re going out to. I wonder if we don’t start to see that play out more often throughout retail, especially because with loyalty programs being so much more problem than they ever have been in the past. I think there’s a natural proclivity for consumers to be willing to adopt that from their retailers, especially in light of of what’s going on. So that would be my take. Yeah, Ben, anything you jump in and and out here?
Yeah, definitely. I think there’s also, you know, a messaging play here with the. Typically been talked about it shrink and now we see Dicks, you see Footlocker and others using the word theft and we’ve seen it in the headlines. And it’s I think there is this element of speaking to the local municipalities where they’re trying to get that word out there a bit more. You know low impact right now. But instead of having to change anything, can they you know start talking about it more and you know get to the local municipalities to do something like we’re seeing in New York?
Yeah, I mean I I think you guys all bring up good points, one being you know there I think this shrink problem is definitely been like the new weather excuse for companies and earnings reports because it doesn’t place blame on necessarily anybody in the organization. And I think to Chris’s point to there, there are so many ways that companies for a multitude of reasons should be making more investments in inventory visibility to understand where things are to really cross that line to make sure you know what’s actually just you know being put out in a curbside pickup order in duplicate on accident like what’s actually happening to each of the items within your store. And then I think lastly you know the the impact that and the outdoor industry did have like that was this pretty significant thing. We have people revenge traveling right now and they’re going on big trips and flights and I think it’s just like everybody looking at digital grocery last year and this year like the pandemic made people have to do outdoor things they couldn’t travel on airplanes. And I think that that probably did have a bigger impact on the Dick’s outdoor business particular that particularly that they also mentioned in the earnings report. So lots to lots to get your head around here, but again shrink being being top of mind for a lot of retailers as we get these earning reports back. Yes, lot of talk in the media about shrinkage and all right headline 2. All these acquired approximately 400 stores in Alabama, Florida, Georgia, Louisiana and Mississippi through its acquisition of the winn-dixie and Harvey supermarkets banners. According to chain storage, all the plans to evaluate which Harvey’s and winn-dixie locations will be converted to the ALDI format. It’s not clear how many will actually convert. But all these US CEO Jason Hart said quote for those stores we do not convert. Our attention is that these continue to operate as winn-dixie and Harvey’s supermarket stores End Quote. And he also went on to add that the transaction supports our longterm growth strategy across the United States, including plans to add 120 new stores nationwide this year to reach a total of more than wow 2400 stores by year end. That was a quote. Chad, let’s go back to you for this. How big is this announcement and what does it mean for the grocery landscape? All right, I’m going to put on my best Chris Walton hyperbolic statement. Yeah, let’s do it. The biggest headline in grocery in 2023. Wow. And I I just did the insightful minutes of you guys and we talked about how you know Walmart’s expansion of ESL’s and Kroger screens and digital tech like I think all the expansion here and in particular being on an acquisition path is, is bigger, right. So if you’re if you’re publics like is there anything scarier to your market supremacy in the Southeast than all the right one of the fastest growing retail grocers making inroads in the Southeast like no one’s been able to do it. Even Kroger’s approach has been to do you know through Acado doing like only type perspective like they have had it right. And so now ALDI gets this physical footprint, you know down in the Southeast and an offering for a value conscious consumer which has not really been there in a material in a strong way. And you know, as far as public’s nerves, right, like you know, any loss in kind of the segment here will impact their own expansion plans because you know their cash cow of the Florida market is effectively what has the ability to, you know, kind of, you know, fund them going forward and that could be tough to stomach. I think there’s some probably real issues happening in the in the public boardroom. I think this is enormous. Wow, fascinating. I was not. I was expecting you to say it was big, but I didn’t expect you to say it was going to be that big. That’s really interesting. And what’s your take on this?
Yeah, I mean, I agree with Chad. I think this is a bold move by ALDI. I just was walking through one of the, like urban shopping centers here and ALDI just went in and put a gigantic brand new store right next door to the Sainsbury’s here on one of the high streets. Like I. And I was talking with somebody yesterday who said ALDI is actually a real estate company that also happens to sell food. So they’re like going hard on acquiring stores. They’re they’re really trying to make sure that they have coverage anywhere and everywhere possible. And I think that it makes a lot of sense. I mean I don’t know if you guys have been in a winn-dixie, I’ve been to the ones in Florida. But let me tell you there is nothing lacking there or nothing that you will lose by losing those butcher departments, the seafood, the bakery departments and converting to a full on ALDI stores and you’re just getting that in prepackaged goods. And I think that like taking over, I mean, I know they’re not taking over all the Winn Dixie’s and converting them, but I think converting those two Aldi’s makes a ton of sense. Plus I think then you have the option as ALDI to expand some of the other pilots. You would do it in the US with curbside pickup even with delivery, with partners like Instacart and using those stores, those larger Harvey’s and winn-dixie stores as microfillment stores so that you can do more shit from store. Like. I think that there’s a lot of potential once they get into these markets. So not I didn’t think it was going to be a big pad, but I do think there’s a ton of opportunity. Yeah. No, that’s interesting too. I mean it’s kind of crazy like you think you think of ALDI and like there’s all these all the the interesting about the grocery landscape too, which this could be a harbinger more to come chat which when you put it, when you put that hyperbole around, it’s really fascinating like there’s all these regional like gentlemen’s agreements that are in in in throughout that landscape. And now you’re saying, OK, well we’re going to let all the come into Florida. Now we’re just going to give over to these, you know, these these these existing brands, we’re going to let you acquire them and see what happens. And like dude, as the rest of the regional grocer start to feel the pressure of doing grocery in the 2023, do we start to see more of those regional dynamics start to break down? Does ALDI become the benefactor in that breakdown later on? Who knows. But Ben, what’s your thoughts?
Yeah, I see it as a really exciting experiment for ALDI as well by winn-dixie, double, if not more of the footprint And I, you know, same with Harvey, right. So. They are now entering and you know growing in this new market. What are we going to do with double the space? That’s that’s a humongous question. Are you going to sublease some of that? And then what is private label? So if you’re 90% private label, they’re 20% private label. I think it’s a bit of a playing ground for them to say we’re going to do this, we’re, you know, we’re seeing the opportunities. This is the next one. There’s going to be more. Let’s figure it out now and then similarly on the back end. You know, smart to not convert them all right away. And you know my assumption is it’s figuring out the logistics, is it going to go to their own distribution to something that brand, you know, gigantic distribution center, figure that out slowly and then perfect this model and then you know go after some more. So I think it’s, I think it’s fun for both those elements.
Yeah that’s one that’s one of my questions. You do you guys do you guys edit NMC this as kind of just the political thing you say right now we’re we are evaluating how many to turn over to the banner but to the Audi banner. But ultimately the goal here is to turn as many of them as possible under the and turn them into the Audi brand is do you think that’s the player How do you guys look at that I I I would be surprised if it’s not personally OK like I said do you really need winn-dixie around still I I want somebody to argue the pro winn-dixie point because carefully and I had Wawa fans coming at me last time you might find I would have been Dixie That’s the good point is that’s the good point And so you know I grew up in the Northeast. I’ve worked in the sea store industry. Wawa is a great example. There is such an emotional connection to, you know, Philadelphians and now they’ve expanded all the way down to Florida as well to the Wawa brand. And it’s, you know, I, I and the data to back it up. But I can’t imagine that the consumer emotional connection to winn-dixie is what it is for ALDI. Because the all the emotional connection is very high. Yes. They’re people are buying all the clothes to wear around. My grandfather 96 year old still talks about all. Yeah. Every time I see him, I’ma see him next weekend. He’s probably going to talk about ALDI. I swear to God, all these, I think they call him all these, the olds, the olds call it all these. They do. Actually. He does. He does. You’re right. All right. Let’s keep moving. Let’s go to headline 3. Etsy has debuted its very own baby registry, Chris. Yes, retail dive. Etsy unveiled the registry service after discovering that shoppers on its website have searched for a baby item every second. It’s kind of crazy for the past six months. With the registry current and expecting, parents can list the personalized infant children and nursery items that they desire from Etsy’s International artisans. Ben, what are you first on this one? No brainer. Move here or is there anything Etsy in its custom should be watching out for with this move?
Definitely. And as a person with no children, feel like the expert here.
But you definitely should lead on this one, yes, but it’s good that we ask you to go first.
Step back and think of right the customer journey here.
I mean, Ben, you’re purchasing so many like newborn pacifier knits crocheted things, right?
My my Etsy purchase has been large tables. You know furnishing, furnishing my home. But I’ll I’ll step into this one as well. I think you know for them right now where they are, it feels very no brainer. You know they’re struggling this year because they had such a boom during the pandemic, right? Everyone shall be online wanting personalized items but all the. Everyone’s shopping by by category at that time, right. And I think you know you see their wedding registry and now that the baby registry they’re taking moments rather than you know things you just may need. You don’t really know where they fit into as they shopper. So taking wedding registry that the logical next step I guess is is baby registry right in that journey and it’s getting more people on the site, not just for customized. You know, items, but for experiences that are, you know, big impacts to their lives. So I think it makes sense to them. It’ll be interesting. What’s next? You know, the registry might be tapped out now. So what are those next, you know, moments they’re going to be able to kind of include in this, you know, this new shopper journey? They’re they’re they’re laying out.
So net. Net. You like to move. You like to move. Yes. Chad. Chad looks puzzled. Yeah. Quizzical. Yes. What are you, Are you in agreement or are you just so blown away by someone who doesn’t yet have children who is able to so beautifully articulate why this is a great move, Nazi? I think you just captured the dynamic of having two of us on the screen at the same. Time and it was like, what do I do with my hands? But then it’s talking, you know, I don’t, I don’t know. Well, no. It’s funny that they have been said that, right? Because I’m on the opposite end and and you know my kids are 15 and about to be 13 and so much to the chagrin of my wife years ago, I’m I’m not in the you know I got out of the baby market a long time ago. So I’m no more of a consumer of this than than Ben is. You know, I mean yeah, I guess I’m in the no brainer camp as well because I don’t understand necessarily the downside risk of doing it right. It’s actually kind of good timing because legacy players like, you know, bye bye baby and you know, babies are like, you know, they’re kind of in states of transition, so hey, you know, come to us. Like over 50% of expecting parents actually visit brick and mortar stores to research or test products before putting it on their online registries, right. So I don’t think it hurts. You know what’s interesting though, right is you know, my only watch out is more from an expectation perspective than you know, some business model risk like you know, I was looking up some numbers last night because again I’m out of the market. That’s the obviously doesn’t have that. You know, you’re talking car seats and strollers and you know, all that kind of stuff, plus younger demos, so Gen. Z and whatnot, You know, approaching these these ages, right, are registering for fewer items and they’re more likely to create just one registry than multiple for the fear of appearing to be asking for too much, right? So, you know, when we did this back in the day and you’d go to, you know, Bed Bath and Beyond and crate&barrel and Macy’s and all of that. If you’re going to consolidate to one place, are you going to consolidate at a place where you have these more like customized goods, which is kind of, you know, more of the assortment of Etsy? So I’d be cautious, I guess of the upside, but I guess where’s the risk? I I love what Chad’s saying there though, because I I agree. I think this is giving you the opportunity though to ask for the things that you actually want, like what costs the most for people who are new parents who are investing in the baby. It’s the nursery.
It’s all the stuff like the customized art that you’re getting. It’s the bedding, it’s the rugs, it’s all the decor, the stick things you’re sticking on the while, like those are things that you can get now from Etsy as a gift. Which to me is like right up there with getting diapers and formula right up there. Huh? It is like, I I can’t believe it took Etsy this long. Yeah, I know. I mean, I I think it’s a good move. I think I agree with you guys 100%. I agree with you. I think it’s. I think it’s kind. I do think it’s a no brainer move. But I do think you also have to be careful if you’re Etsy too. Because as you guys know, I think I’ve said this on the podcast before. Baby was my favorite business I ever ran at Target. I loved it. I would get back into it in a heartbeat if the opportunity ever came back because I just love it that much. But I think it’s a, it’s a no brainer because people like you said and they want that one-of-a-kind item, you know, and you can get that at Etsy. But you have to be careful, if you’re Etsy, about how large you let this registry universe become. Yes, because you don’t want to be buying a crib from Harry the artisanal handyman either. You know, like there’s a lot of product risk and Product Safety risk that comes from that. So you got to be very careful with how large you let that registry item universe become, or else you could be in a world of hurt from lawsuits down the line if you’re not careful. And it’s hard to keep a tat. It’s hard to keep tabs on that type of stuff. And the average consumer might not be aware of the fact that you don’t want to be buying your crib from the guy down the street. Yeah, I wonder what the regulations are like. Do you, do you sign a waiver when you purchase that stuff? Like, I I won’t hold very responsible. Yeah, I don’t know. There’s a lot of, I doubt it. Like, there’s a lot of potential legal issues that could come into play here if they’re not smart about this. So hopefully they are.
The thing about it, cuz they’ve probably been selling these items on their site for a while, but selling them on your site versus selling them through a baby registry has a different attachment to it as well. So who knows, boy. All right, all right. So I just ran on that parade a little bit. All right, headline 4, I’m in London, It’s raining. You know I’m raining. All right, two headline 4. Two. Trader Joe’s executives confirmed this past week that it’s store will never include self checkout machines. This is my favorite headline of the weekend, according to Retail Diet CEO Brian Paulbaum and president John Basilone made the statement in a recently recorded company podcast called Inside Trader Joe’s Catchy Title. Both are very new to the roles. Paulbaum just took over the role last month after replacing Dan Bain, who had led the company for 22 years. And here are some snippets of what they had to say on the podcast on self checkout president Basilone said quote we’re not trying to get rid of our crew members for efficiency sake or whatever. The I don’t know what the reasons are. People put self checkout in End Quote and and this is my favorite they also even managed to take a shot at robots why not while discussing product innovation. Basilon also said quote that’s where excitement comes from. You know it’s not crazy new ideas like the robot in the aisle that answers questions and it helps to clean up spills. End Quote. So Chad, my question for you is why would executives make a statement like this and would you have advised them to do so? Yeah. I mean I knew we’d have this headline. I was. I’m glad. But I was this is blown up on social media. Yeah. And it was. I know it’s kind of hoping it didn’t come up but but no I’m glad it. It’s a, it’s a, it’s a it’s a really good conversation because here we have well so and we’re actually having a conversation at dinner the other night about Trader Joe’s, right, which which was interesting like and how maniacal they are about their value proposition. Like they know how they make money. They’re very intentional about it. They operationalize that through every aspect of the of the shopping experience. And you know we’re talking about emotional connections to retailers like that’s great.
You you you want to have a very clear value prop that’s successful and that’s admirable. And so I get caveat, but like I get the point of view right and because their business model like like service is a key component of their value proposition, right. They’re huge on customer engagement. Their cashiers unlike checking out at a Kroger or Safeway, right? Like they engage, they discuss and upsell products where you know they’re pushing their uniqueness around innovation and a move to self checkout hardens that value proposition. I get it. However, your question of why would you say this and would we encourage it, does this not reek of like Kodak talking about we’re never going to go to digital photography? Like that’s the only thing I could think of as I’m watching the, you know, listening to these quotes and and reading this right, which is like man, it just sounds out of touch. And it it is, it’s interesting because it’s a dynamic of consumer interests conflicting with the a really successful value proposition. At what point do you, you know, lean into the future even though it’s the way that we’ve always done it. So no, I wouldn’t have advised the statements, but you know that that’s where I’m at on it. Yeah, it seems a little chest bumping too, you know I think the way the way it was said too. But and like what do you and my and my question for you too is, is the things that Chad just described there and what and what Bacelone and the CEO are talking about too, is that, is that really real too like you go in there and does that differentiate Trader Joe’s for you at the end of the day or is it really the products that are differentiating Trader Joe’s for you? I think it does. I mean I think that’s what they’re, they’re standing on, right. They have owned all own brand products, but now that you have way more grocers that are investing in this, I don’t think that’s a key differentiator for them as much as it was before. And you have like I don’t think that everybody wants people to talk to them about the quinoa stuffed grape leaves and how good they are. I would say it’s more conversation than it is upsell and most experiences, they’re just like I noticed it personally. Really. No, I mean like I just go check out. I’ve never like been like, oh, this is a great checkout experience. I really love talking to Fran at the checkout. I thought you meant nobody’s like talked to you about the product that you’re putting in your bag. It’s like almost annoying to me that when it happens, I guess I’ve just never noticed it. But I think, I think the the issue that I I have is that you’re talking about you want to expand locations 1 and expand product innovation. And you’re like, you don’t consider that self checkout might be a way to still guarantee a good store experience when you’re trying to blow up to so many stores in the next year. And I think you should never say never when especially when it comes to something that’s as efficient as self checkout especially with labor issues. You know product innovation being only as much as as is humanly possible at some point. Yeah, you’re right. There’s no good from ever saying never. And and my other part that was funny in the story, I didn’t bring it up the quote but he also like slam self checkout machines like he tried to use when he’s like I’m in the industry. I couldn’t figure out how to use it.
I was like, dude, it’s like the supers easiest thing possible right now. They’ve improved it so much. But then you got to get in here too, man.
Yeah, I think as a as an advisor, I would agree I wouldn’t. Say someone to say you know this, this hard line however, and this might tear the room apart as a consumer and a Trader Joe’s lover. I I absolutely love this statement. It’s Trader Joe’s. It’s a very different story. I mean, I’m in, I’m in Brooklyn, I have a Whole Foods, I have Trader Joe’s and they are completely different. I have self checkout, availability of my Whole Foods. Trader Joe’s I have. I know exactly what it is and and I’m coming from the experience that the food’s going to be different in each but. You they’ve got this consumer that loves that, that knows that that’s used to that that’ll wait in these crazy long lines that wrap around the store in in in the middle of cities and you know this is just all a part of that. So I think it’s a statement for their consumers to say, hey, we’re not going to change, we’re going to keep having this different differentiated look. I think it’s also a really nice statement for the employees at a time where you know there’s a problem in the labor force, it’s hard to hireright right now in retail and so. Think about that. Maybe they don’t really mean it for 10 years from now, but in the five years 2-3, I mean, you now work there. You’ve got that assurance from the CEO, President of your organization, which I think is a huge piece.
I buy the employee statement. It’s actually a really good point the the consumer like really like as a consumer you’re like I love the fact that like what am is describing like they’re hassling me on product and I love standing in lines. It just it just seems like like that model is good for Trader Joe’s is not necessarily as good for the consumer. But I I mean, I guess you you you shot more than more than me.
Yeah, it’s a lot of hey, right. Y’all are in the UK at the moment, Marmite, right? Their their website back in the day with you marmite.com. Do you love my mind or do you hate Marmite? If you click You hate, it kicks you out and and it’s a play on this this yes, no. And so we can debate about it as much as you want. We’re going to probably stay on our sides of the day.
But the other, the employee side is interesting though just there’s also a lot of union trouble at Trader Joe’s right now too, which we hadn’t talked about. So I think that that’s important. I think the universality of the comment is interesting and of itself like to never still to say never, we’re never going to do this. It sounds like a move that the CEO’s trying to make to make a statement out of the get go probably for the employees more than anybody. I agree with that. But you got to be careful, those statements because like I I made one on the last show and about Wawa and kiosks and I I mentioned while I got, I got flooded with emails and comments from that like, dude, you didn’t don’t know what you’re talking about. They work great in that environment. Yeah, use them all the time. I was like, OK, you’re right, I should never make such a grand claim about anything. You’ve always got to qualify it. And then the other point though that bothers me is the robot thing. Like why take the time to demean robots? Like what does that have to do with anything? Like there’s a reason people are using them. They work for some people. They do not be right for you. But that doesn’t mean you need to like throw shade at them. In my doubling down that that seemed like that seemed like a bridge too far for me. But anyway. Well he doubled down. He he’s saying that and he means that he is going to go to his grave talking about Baslow or Basiloni. I don’t. I don’t actually know. I says his name. So hopefully I got it right in one of those two pronunciations. All right. Let’s go to headline 5. Amazon is reportedly cutting dozens of its private private label brands from its assortment. According to the Wall Street Journal, Amazon has decided to eliminate 27 of its 30 clothing brands such as Larkin Row, Daily Ritual, and Good Threads, leaving only three brands, Amazon Essentials, Amazon Collection, and Amazon Aware. Amazon insiders also told the Journal that Amazon also plans to drop some of its private label furniture plant brands Facing Out Rivet and Stone Rivet. Sorry, that’s one. And Stone and Beam another one.
Land is also a good name for that man, actually, honestly, when you get them, once it’s stock of those items is gone, the changes are in line with a broader effort by Amazon over the past two years to curtail unprofitable, unprofitable businesses and products getting tongue packed. And the Wall Street Journal also added that the private label moves also address the scrutiny of the competitive practices around Amazon in house brands that has vexed Amazon for years. Then we’re going to go to you. Is regular scrutiny the real issue here, or is it just a window dressing excuse?
I I I do think it’s it’s window dressing. I think it’s you know leveraging the scrutiny they under you know using that as the guys to you know skirt by admitting they made a mistake. You know they don’t make that admission often you know if ever if we look back to 2014 and they they launched private label with essentials quite some time ago when we saw Target introduced in 2014. Very methodical, you know, an all in store and Target today. Great. Private label, you know brand shoppers know it. Shoppers can feel it. Shoppers can, you know, we’ll continuously buy it. They were at Amazon ran into trouble, right. Was setting this, this huge target. I think it was 10% of net sales by 22 then you’ve got that that’s that’s quite ambitious. But then expanding too far 45 brands, you know, no one being able to find it on the website inventory issues can’t sell it. Now you go to they’re just running through all this inventory. Who knows how long that’s going to take? So you know they’re admitting defeat here on this, on this play. And interestingly I think this is going through the headlines a bit. They are reentry or introducing some of their Whole Foods private label brands to the marketplace though. So for products that you can test in store, right, because that’s how private label really works for consumers. And now I can go get my, you know, my whole oil that I use every day through Amazon, that that’s how it should work and so. Throwing the white flag, but continuing down their path.
Yeah, Chris, what are your thoughts here? 100% agree, I think, yeah, I think that’s just a smokescreen. Yeah, without a doubt. It’s got to come down to sales more than anything because if it was regulatory, how would you keep any of the brands, right. Like if you’re going to, if that’s going to be an excuse you get out of everything, yeah, it makes no sense. And you wouldn’t get it. You wouldn’t keep the things that you’re selling the most stuff because that just makes the regulatory case that much stronger in my opinion. So, yeah, And with the highest margins. Yeah, So, yeah, right. And and it allows you to pit yourself against everyone and you have all that data behind you, which is also a whole another topic. But, but and the other thing it’s, it’s so it’s very concentrated in apparel. Yeah, which you know goes align with that long with that line of thinking too because Amazon continues to struggle in apparel. Like yeah, I’ve not heard it. I mean I don’t, I don’t shop Amazon apparel that often. But had any one of us heard of any of those brands that you mentioned and to Ben’s point, how would I know about them because I’m not marketing them in any way. I can see them like I am a Whole Foods private label brand when I’m walking the store or through an advertising campaign or something like that. So yeah, it’s got to be that. Yeah. The problem, though it gets to what Ben was saying earlier, is that apparel shopping on Amazon still sucks. Like it’s not. It’s a terrible experience. There’s no discovery. That’s easy to happen. It is not the hyper ball. It is seek and destroy. I need white undershirts which is where why they’re keeping Amazon essential because that’s the white undershirt I need. I need gold hoop earrings. That’s what I’m going to look at Amazon for. That’s Amazon collection. Their jewelry that like competition and then I need sustainable fill in the blank here whether it’s tshirts or baby towels or whatever it is. And that’s Amazon aware like they are keeping the brands that you are going to comp shop that you are going to go to Amazon for to find and you don’t care about like Discover. Free a product or inspiration in an outfit.
It’s just I need white undershirts. I know I can go. I’m getting Amazon Essentials also. What happened to Amazon style and is this going to impact that at all? Like, what’s that built to, like support all of these thirty different clothing brands? I don’t know. I was an attempt to do what Ben was talking about. Right. Yeah. I mean, we haven’t heard word one about that in like a year. I know. OK, well, Chad, I’m going to give you the last word here. What do you think about this? Are you, are you all about window dressing or do you think there’s something more to it? No, no, no, it’s a complete red herring, right. I think if if they were doing well from a sales perspective then there’d probably be a little bit more of a struggle in terms of how to balance the scrutiny with what to do with the portfolio. It’s really easy. Legal scrutiny plus sagging portfolio bag it no brainer, right. You know, I, I would the final point I would make though just for all my CPG brethren out there is, is I think this is an indication reinforces the point that like Amazon is not a place to build brands, right. So when you’re actually thinking about your you know, kind of marketing brand building type portfolio like like for them you couldn’t even do it themselves, right? Or or other CPG brands like it works really well. If you have a pricing advantage and you want to create incremental incremental conversion and places to search, right. We’ve talked about that’s on the podcast before where Amazon is now the number one search engine for you know for product search, right. So great go there for known goods price advantage, but it’s not, it’s not a brand building mechanism. Yeah, absolutely. It’s a great last point. All right, let’s go to the lightning round. Chad, first question goes to you. Publix recently placed large signs in their stores reminding customers that only service dogs, not emotional support dogs and pets, are allowed in stores. Is there another place that you’ve been lately where you think these signs should be posted? It’s going to unfortunately reveal a lot about me. It’s going to be polarizing.
Like I’m not. I’m not a dog person. They don’t do anything for me. And you thought I was going to get comments about making like, your wow comments. I know, I know. And more and more of my family, not my household and bringing dogs into my life. Right. But like, so for me, man. I I mean, I’d be good with no dog signs everywhere, quite honestly. And let the hate mail begin. Yes, all dogs. You just go to heaven for chat. The Petco Petco listeners are going to be ready to go again. Oh, that was classic. Thanks for making me do that. Yeah. No, hey, it’s all it’s your rumor, it’s your doubt it all right. A recent study by Mintel concluded, quote, while a substantial portion of retail pizza consumers express interest in premium toppings and unique varieties, those concepts are likely to fall flat if the crust isn’t right. So Ben, my question for you is how do you most like to eat your pizza crust?
It’s a pretty easy one for me, living in Brooklyn, you know, you’ve got, I’ve got five pizza shops, you know, within a stone’s throw of my of my home. So the Brooklyn style, not thin, crispy, but definitely not Chicago deep dish, nowhere near that. The perfect New York slice is, you know.
Everything for me. The hand toss. Yeah. Pizza. That’s what. That’s what Shawan’s is going for in that whole study. The Commission to that hand toss feel. Yeah. All right, Ben, you get question 3 as well. Target has now expanded their good and gather line into baby and toddler food. What is one baby or toddler food that you think? Someone who doesn’t buy much baby and toddler food. What do you think is also appropriate? Appropriate for adults to eat?
Do you guys have a crystal ball in my future or something? Because why am I getting, I don’t know. Any questions here? I use them actually for running and I love them. It’s the baby. Toddler squeeze food like squeeze packets.
Yeah, yeah, yeah.
Easy to eat and digest and get on with, get on with the go squeeze. Yeah.
But yeah, it’s all just good answer, good answer, good answer. Yeah, the energy quick energy hype. That’s. Yeah. All right. This next and last question is kind of in that same vein. So RX bars new ad campaign is focused on removing the BS in the Wellness industry and features actors who look like real people working out in spaces that aren’t overly stylized or art directed. So Chad, if you were a campaign spokesperson for RX Bar, what would you be doing in your exercise video and what would you look like after working out? I’ll be a temporary campaign spokesperson for my workout studio so I do F45 training. Have you ever heard of that? I guess what I would pick in my studio posted a video of me recently doing a burpee into a pull up. Oh yeah, we’re familiar. Yeah, but what do I look like afterward? I am a complete sweaty mess. I have actually had to have trainers follow me around and wipe the floor following me. Oh my God, you’re like Chris. Yeah, yeah, really bad. I just did my first F 45 like 2 weeks ago. 3 weeks ago. Oh yeah, that’s right. It was a good time. I like it. It was good.
Time. How many burpees in the pull ups did you get?
Not not a one, actually, no. That that’s too advanced of a move for me right now. So maybe back in the day, but good to know, Chad. Good to know. All right, well that wraps us up. Happy birthday today to Ava Duvernay Chad Michael Murray and to the man I saw hit a home run live in Oakland during his final season in the big leagues, Mr. Cal Ripken Junior. 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 or twice. A weekly newsletter tells you the top five things you need to know each day and also features special content, exclusive dust, 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. Yes we do. And I try really hard. I’m going to go back into my hotel room and do that right after we get off this podcast. You can Sign up today at http://www.imwetalk.block. Thanks is 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, if people want to get in touch with you, pick the brains of other consultants like you at the A and M Consumer and Retail group. What’s the best way for them to do that? A couple different ways. You can go to our website alvarezandmarcelcrg.com. Also find us at Alvarez and Marcel consumer and Retail group on LinkedIn. You can reach out to either Ben or. I appreciate having us on and doing the format this way. Nice doing it. The same rhythm. Maybe one of these times will be with you guys live. Although if we’re in a bedroom, we’ll blur the background. Yeah, right. Exactly. That would be fun to do this in person. Blur the background, Chad, is that and you don’t. We have, we have an elephant in the room in the back.
There’s a literal elephant in the room. That’s sad. An orange elephant in our room. Did you notice it? Yeah, it’s kind of crazy, but didn’t notice it. All right, well, on that note, on behalf of Chad and Ben and on behalf of all of us at Omni Talk Retail, as always, be careful out there.
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