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Hello, You are listening to the Omni talk Retail Fast 5 brought to you in partnership with the A&M consumer and retail group Avalara, Wiliot, TGW and Sezzle. Ranked in the top 10% of all podcasts globally and currently ranked the number one podcast in all retail by feed spot. The Retail Fast 5 is the podcast that we hope makes you feel a little smarter, but more importantly a little happier each week too. Today it’s March 27, 2024. I’m one of your hosts, Anne Mezzenga
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And I’m one of your other hosts, 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. Chris, we’re back from. From home.
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From our home base to our home base, right? Not from our home base, but we’re back to our home base, right? Yeah. And it’s. We arrived back from a three week whirlwind tour of conferences galore and to.
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Only to find, like, roughly a foot of snow on our. In our front yards. Right.
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Anne, it was perfect. It’s perfect. You know, we’re ready. We’re, you know, we’re ready to talk, talk retail and content when we start with the weather. So, yes, thankfully, thankfully, we have two, two very special guests who are going to be joining us today for their regular monthly appearance.
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Chris? Today we have A&M CRG’s Abhinav Chandra and Ben Lowden. Welcome you to. Let’s get the audience first. Let’s give them a little bit of your backgrounds quickly, uh, and then we’ll dive into the headlines.
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Ben, I will start with you. You’ve been on once before, uh, I think with Chad Lusk, if we, if I remember correctly, the last time, tell the audience a little bit about you and your background.
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Awesome. Thanks, Chris. Thanks, Anne. It’s great to be back. Surprised you had me back after that performance alongside Chad.
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Oh, what are you talking about? You did great. You did great. It was fun. It was fun.
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And I’ll take up that opportunity to talk about the weather anytime. But nice, nice to see you all today. Ben Lowden. I’m a senior director with A&M CRG. Been with the group now over two years, and I focus primarily on all things.org, design and operating model process improvements.
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So excited to be back today and talk about some exciting topics.
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Excellent. Abhinav, you’ve been on more than a few times. Welcome back. Give the audience, who may not have caught your segments before, a little bit of your background as well.
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First of all, it’s great to be back. Looking forward to a fun discussion today. My name is Abhinav Chandra. I’m a managing director at A&M. Most of the work I do is in retail and consumer, and the area of specialty is digital.
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I do a lot of work on digital. So looking forward to the questions and discussion today.
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Yeah. Abhinav, how many times have you been on this show?
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Have you.
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Have you lost count or do you. Do you know the accurate number of times you have appeared with us?
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I think this is my fourth. It’s very difficult for me to lose count.
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Yeah, I thought I was going to say. Yeah. Right, right. Yeah. So you’re almost in the five Timers club, which is rare air, my friend.
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Rare. Rare air. All right, Ann, but, you know, before we get started, I think. I think you got to tell the audience what we have in store for them from a content perspective, because we got a hot podcast we’re going to drop here as soon as we get it edited and ready for them.
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Yes. So just yesterday, we were out at retail spaces in Austin, Texas, and we recorded a conversation live with schnucks VP of design, construction and maintenance, David Carey, and also Dan Gavin, Aldi’s VP of national real estate, two individuals. I mean, obviously, you know that we’re huge fans of what schnucks has been doing. But then, Chris, we also got to talk to Dan Gavin, who was giving us some insight into the 800 stores they’re about to, uh, about to bark on.
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It was great. Yeah, 100%. I mean, yeah, we love schnucks. We love schnucks. Shout out to them, as always.
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But, yeah, for me, it was a real treat to talk to Dan Gavin at Aldi to talk about how he’s. They’re expanding their store base as well as reconstructing or reconfiguring the stores that they’ve acquired from southeastern grocers, too. So you’re going to want to listen to that. It was a really rare treat for us to get that opportunity to do a live podcast in front of the audience with what are two just absolutely hitter guys? You know, when you think about the knowledge and experience they bring, I think they both have, like, 30 plus years of experience in designing construction of retail stores, too.
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So anyone interested in that side of the business is definitely going to want to listen to this podcast.
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Yes. So we’ll have that coming up for you shortly. But then, Chris, I think it’s time we get to the headlines.
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All right, let’s do it. We got our friends with us today. It’s always my favorite show of the month. And so today we’ve got news on Walmart opening up self checkout lanes just for Walmart plus subscribers. Nike addressing reported flaws in its DTC strategy.
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Sheehan offering quote supply chain as a service to us retailers. Amazon launching same day prescription delivery in LA and New York. But we begin today with what could be huge news in the search commerce landscape from TikTok.
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And yes, Chris, headline number one, I know you’re a big fan of this one in particular, but TikTok is paying creators to up its search game. According to the Verge, creators making money on the platform will now be paid based in part on how well their content meets what other users on the platform are searching for. Tick Tock calls this metric quote search value, end quote, and it’s one of the four core elements in determining creator payouts. TikTok announced the change as part of its new monetization program called Creator Rewards. Ben, we’re going to go to you first on this one.
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How scared should Google and Amazon be from this announcement from TikTok?
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Well, thanks, Anne. And it’s interesting as the bit of a younger millennial here, this question actually got me to download TikTok for the first time, which may be a surprise.
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Some, yeah, I’m shocked to hear that. What was it about it? Elaborate on that a bit, I think.
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I took off Instagram a few months ago trying to refocus and get away from my phone, but now I’ve got those back on the phone along with TikTok. So, yeah, I’ll be searching differently.
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So there go your 4 hours tonight. Then they’re just gone, right?
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They’re gone now away from the tv into searching for the next trend to purchase. I think. I think this is TikTok capitalizing on a trend of how the younger users, myself included, like to search for things we want, reliable, personal, trustworthy, and honestly, search becoming a bit more of an experience, a more frictionless experience. Searching on Google or Amazon can take time, a lot of clicks, less swipes, but clicks are harder, I think, and you’ve got to read through either articles, things like that, to find what you need. Whereas whether it’s TikTok or YouTube videos or I go to Reddit a lot for a search, it feels a lot more organic to, I think, the user, and that’s what TikTok here is trying to capitalize on.
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It’ll be interesting to see with this new algorithm, though, how the search functionality improves. In my quick scanning through this morning, it was. I was getting a few weird responses just based on the hashtags users or creators put with their videos. So we’ll see if this new algorithm can incentivize some of these creators to make it a bit more searchable.
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Yeah, right. I mean, it’s definitely true that the consumers are going to get much better answers, hopefully once this gets loaded and gets in the process a little bit further down the road to the queries that they’re putting into TikTok. I agree it’s a hard thing for people to search, but very in demand right now for search from that next generation. Abhinav, how about you here? What are your thoughts?
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I think from my perspective, I think Amazon probably is safer off the two if you think about Google and Amazon.
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Why is that?
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Yeah, here is the reason. I think people go and search for things on Amazon when they are looking for products. Like when they know what they want, they go and search Amazon. I mean, that’s where they start, right? I think I remember a statistic that one in five or one in six products bought in the USA have us have Amazon involved in some shape or form, whether it is being bought there or searched there, because the information is so specific to what you are trying to buy.
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When you think about Google, a lot of searches don’t start on Google for products. If you are looking for information, a large portion of searches start on Google. If you are looking for products, it starts on Amazon because that’s where most of the relevant information is for you to make a purchase. With TikTok, it’s more for people who are looking for advice, don’t know exactly what they want to buy or in that case, are looking for information. It’s not about a product, but they’re looking for information.
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In that case, I think TikTok content and search and advertising, I think makes more of a sense. Makes more of a sense. And that’s why I say it may impact Google a little bit more. Is my perspective, though. For Google, I think the bigger challenge is the advent of AI based large language that are changing the game in search, where people are talking to AI and AI is giving them the information in a more relevant.
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I think that’s the bigger challenge for Google, but that’s my perspective.
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Yes.
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Interesting. Chris, I’m going to give you the floor here to kind of talk about why you think this is so important, because I know you were posting like this is in your running, right for headline of the year.
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It is. Yeah, I love the little wrinkle that Abunov threw in there at the end. Yeah, it is. I actually can’t think of another headline that I put in front of this right now. I think we had one a few months back.
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I can’t remember what it was, but this one is definitely up there already. I mean, the point of perspective I would put on this, I said it at shop talk, actually, in the closing podcast we did on stage with everyone is there are two forces that are essentially converging to reshape digital commerce right now. And one is this, one is what we’re talking about here, which is blatant in the headline, which is the growing importance of social media platforms on where and how people are searching for what they want to consume. That’s converging factor number one. But the other one is what Abhinav brought up, which is generative AI and the language processing.
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And at some point we’re going to have this cataclysm, for lack of a better way to put it, where there’s going to be a new UI for how all of this works together. And it’s going to, one, either be incredibly disruptive and, or two, and particularly, and or two, the biggest platforms are going to start to join up to figure out what to do in this space. Like, that’s what I think will happen here. Like, and we saw it already last week, if you remember, we didn’t cover this headline, but meta and Amazon are now partnering up to make commerce much more quicker on that platform. That has to be somewhat driven by the convergence of these factors in this space.
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I think this headline is big for that reason. And we’re just going to see it continue to impact retail and how commerce is done and what people as consumers get acclimated to more and more over time, both in how we search and ultimately how we buy. So, yeah, I think it’s a huge headline, Ann.
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Yeah, I mean, I, I agree with you, Chris. I think we continue to hear, we heard it again from members of the Z suite during a panel at shop talk, that they are going to tick tock, they are going to Instagram to get information and to gain confidence in their purchase because of what Abanoff said. They’re looking for influencers, for people that are kind of taking reviews and kicking them up a notch, to quote our emeril, I can’t believe I’m quoting, quoting Emeril Lagasse in this, uh, conversation, but they are really using that as the driver to where they’re going to purchase who they’re going to purchase from and being able to. I think, again, going back to what Ben said, know that the way that you’re asking that question, you’re getting the search results right away just is a win for everybody. Consumers get better answers.
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Tick tock continues to be that destination for product search because it’s serving up content that this next generation is interested in viewing. And, and brands get more return on investment because they’re showing up at the right time, in the right place for the right audience. So I, I think this is great. I, I don’t know if it’s my headline of the year. I think, like, the drone delivery from Walmart was a big one that we’re probably going to see take on, but, but I do agree with you.
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I think there’s a lot here that is, that is really going to shape how search is happening, how purchases are happening for generations to come. So let’s move on to headline.
00:13:48
Abhidhav has the last word he wants to get.
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Yeah.
00:13:51
Well, Abhinav, what’s your final take?
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My final take is, my final thought here is, what if TikTok is shut down in us?
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Right? Right. Yeah, that’s the point.
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I don’t think it’s going to be. I would not put my money on that. But yes, that’s true.
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I would agree.
00:14:06
Somebody will figure that out because there’s too much money at stake. But, yeah, I mean, that’s a great point. The point you brought up, though, Abnov, too, is like, who stands to have more at risk, Google or Amazon? I think that’s a really interesting thing. And I think as you, as you were talking, I think I would probably say Google has more risk there, too, although I think it could impact both of them.
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All right, headline number two. What is Walmart opening lanes for just Walmart plus holders? The answer, according to supermarket News, is, quote, yes, but the grocery news outlet reported Walmart is letting store managers tailor their check, tailor their checkout needs, and it could lead to a dedicated lien for Walmart plus shoppers and spark delivery drivers. The checkout flexibility went viral on TikTok last week when a user claimed. There’s tick tock again.
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When a user claimed that the move to open a lane for premium shoppers was an attempt by the retailer to get more people to sign up for Walmart Plus. Walmart, however, refutes this claim. Quote, from time to time, our stores adjust the use of staff checkouts and self checkouts. For example, a store might start or end the day with staff checkouts. As the number of shoppers and associates staffing increases, these stores open self checkout registers to manage the increased customer flow.
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This process isn’t new, end quote, Walmart said in a statement to supermarket News. But then they added, during these times of limited access, some stores are designating self checkout stations for Walmart plus customers using our scan and go service and for spark drivers for quicker access and delivery services. This decision is intended to better manage checkout availability. End quote. Wow, a lot going on in this story, Ben.
00:15:43
A lot of what do you believe? What are you not? So regardless of this headline was meant to be salacious to a degree. So whether it’s true or not, and with so many retailers cutting back on self checkout, could Walmart and the grocery industry for that matter, be onto something here? With Walmart plus dedicated self checkout, I.
00:16:03
Think they might be onto something, but I don’t think it’s about pushing any of their consumers to subscribe to Walmart Plus. I think this is a unique initiative to test how they can combat shrink and theft in stores. The managers get to determine how many lanes and when the lanes are open, which may at times become counterintuitive to traffic in store. But as a store manager, you know, knows when shrink may occur and on what items and on how many items. Such a problem we’ve seen with self checkout.
00:16:40
I think this is really a unique way that probably caused maybe one or two too many hot button headlines, but it’s a unique way to control that shrink and see if gross margin can improve during certain hours, certain days of the week. I think that’s really what it is. You see Target doing not the same initiative, but ten items or less is now their rule for self checkout. That’s just another initiative to try and combat this. So I think they’re onto it, but something they’re not saying.
00:17:13
So your take is really, it’s very much an extension of what we heard last week from Target dollar general, that they’re just trying to figure out the right balance of how much self checkout they want in the stores when it should operate. Abhinav, I’m going to go to you in a second, but I think Anne probably wants to jump in here because I’m curious if you agree with Ben or if you actually think this is a brilliant move to incent new Walmart plus subscriptions.
00:17:34
I absolutely do. I think that this is a great move from Walmart and does actually inspire more people to sign up for Walmart plus number one, if you’ve used scan and go at Walmart right now, even as a Walmart plus member with scan and go, you still have to wait in the same line as all the people who are doing self checkout. So I do think that this number one solves a friction point for the Walmart plus members. It gets you the ability to get in and out of there quicker. And to Ben’s point, like you are identifying now who I am.
00:18:06
I’m giving you information before I go into that checkout line. So there it does reduce shrink, I would imagine, because you know exactly who I am, what I’m purchasing. And, and so it, I should get that benefit, I think, of having a quicker checkout. But I also think that this is whether you’re going in for Walmart plus or not, I think other retailers are probably going to follow suit here because it gets you, if you, I’m giving you loyalty information, I’m signing up for your loyalty program so that I can use the self checkout, something that is now ingrained in me, that I’m comfortable using, that I, you know, allows me to get in and out and get my shopping trip done more conveniently. I will do that.
00:18:45
And I think that that’s going to be a case that is a win for the retailer because they are identifying customers, getting more loyalty members, but then also for their consumers, too. So I, I am all in on this move. I think it’s, it’s amazing.
00:18:57
Awesome. Awesome. Abhinav, what do you think? Do you agree with ad or two thoughts?
00:19:02
First hundred percent agree with that.
00:19:05
Maybe 110%.
00:19:06
110?
00:19:08
Wow.
00:19:08
Yeah. As Ben and I, both consultants and I guess as the both of you, over the last three weeks spending a lot of time in airports, you see this, I play out correctly at the TSA line and then while boarding the airplane. I mean, that is exactly what this is. Even though Walmart is not saying it, I think it’s a brilliant move. I honestly think it’s a brilliant idea, is one.
00:19:35
And then the second thing is, if this takes off, the problem that they are going to have is the problem that TSA Precheck has on San Francisco airport. There are too many of them.
00:19:50
99, whatever, $98 a year, though, right?
00:19:52
Yeah.
00:19:53
Yeah.
00:19:54
So that’s one thing. And then the second thing on the self checkout itself, self checkout, as you guys rightly call out, has been a mixed bag, like the technology itself in the store. But I’m sure when you guys were at NRF, I was at NRF, like there was a huge amount of number of boots and sort of options in technology for self checkout that was on display, which was a little bit surprising that it’s a mixed bag, but maybe, maybe we are missing something. Or maybe investors have too much money investing in these startup companies. Still pouring money into the self checkout technology.
00:20:37
Right.
00:20:38
Interesting.
00:20:39
Yeah, I got to tell you guys, I’m, I’m, I’m both in your camps. Like, if enough is 110, I’m like 125 if that’s calculable. But, uh, but I think, you know, it’s better to be lucky than good. A lot of times in retail, serendipitous discovery leads to innovation. I think that’s what we have here.
00:20:53
You know, it’s just the confluence of streams of what’s all going on in the industry and the fact that Walmart has Walmart plus and they can experiment with this. But I think you got to love it. There’s a lot of reasons you like it and you talked a little bit about it. One is self identification. You know who these people are.
00:21:06
This setup is already in place at Sam’s club. Honestly, you know, and 30% of Sam’s club shoppers regularly use scan and go. The third thing we know is that Sam’s club is also able to control the exit process and do receipt checks through AI and computer vision. So that could be in play here in the long run. And then fourth, and this is, I think this is a linchpin, right?
00:21:29
You have to imagine Walmart plus members are less likely to steal and less likely to miss scan items as well, because they’re potentially more technically affluent than the average Walmart shopper. Now, if none of that’s true, and they started doing this, then Walmart could have an even bigger problem on its hand. Right? Because you’re still just doing self checkout, you’re still getting the pains from shrink and theft unknowingly. So that’s one thing that has to be proven here.
00:21:52
But assuming that is true and it’s at a level that is palatable for Walmart, God, you gotta love this idea. I mean, I imagine hopefully the target listeners are like, hey, we just rolled out Target 360, circle 360, right? And like, should we start evaluating this? Especially since you’ve got big in your larger targets? You’ve got these on both ends of the store of the checkout laser, right?
00:22:16
I was just going to say that, chris, like, I think before everybody starts pulling out these very expensive machines, like, why wouldn’t you test this as part of a loyalty program? While they’re still in the stores. Like can you get your, can you just like have some way of accessing loyalty members only being able to use these? Because you’re totally right, Chris. Like you, you, you are identified.
00:22:39
Yeah. Like they know you. Even if you are miss scanning items, they can still track that to the individual. I mean you’re still entering in your, your target plus membership, you’re scanning that at the end or your Walmart plus membership. So like there, there’s a way to more easily track that if you have a recurring offender here of, of missed scans and that kind of thing.
00:23:00
So. Yeah, and Abinoff’s airport analogy is great. Like you think about Precheck, which is the single best thing I’ve ever spent money on in my life. Would I spend some amount of money to still use cell checkout as one of the values of my membership? 100% I would.
00:23:14
And I’ve never actually thought about that until this week, until this story broke. Right.
00:23:19
Yeah, that’s so, such a great point, Ivanov. Um, all right, well, let’s move on to headline number three. Nike CEO John Donoho said that the sportswear brand is, quote, not performing at our potential end quote and that it needs to lean back into wholesale and product innovation. According to retail dive with Q three revenue relatively flat at $12.4 billion, Nike is pivoting on its consumer direct strategy. Nike direct revenues last quarter were 5.4 billion, slightly up year over year while digital sales fell 3%.
00:23:52
Wholesale grew 3% to 6.6 billion and net income for the year was down 5% to 1.2 billion. Donahoe outlined four priorities to right the ship. An increased focus on sport, a better flow of product innovation, a bolder brand marketing and reinvestment in wholesale partners. Abhinav, we’re going to go to you first on this one. Do you think this is a blip in the road as Nike is trying to lever up and down its d to c wholesale balance?
00:24:23
Or do you think it’s symptomatic of some bigger concerns over at Nike?
00:24:28
I am in the camp that this is slightly more than a bib, but it is not like a huge concern for me. Here are the reasons why. First of all, first of all, I think in the apparel space, the apparel and footwear space, digital was roughly flat across the board. There were a few retailers who saw declines, there were a few retailers who saw an increase but roughly was flat. So I’m not shocked by their digital being down.
00:25:03
I think the second part is, I mean, Nike is a very strong brand and I don’t think the brand has been damaged by this. I think they tried an idea. The thing that I’m surprised by, it took them this long to realize this. I think they’ve been seeing effects of this over the last year or so. Yeah.
00:25:27
And it took them so long to sort of say, okay, this is not working, we need to change it. They sort of took a drip approach to, yes, bringing back slowly the wholesale partners rather than saying, hey, okay, we’ve tested it, it didn’t work. Let’s pivot and let’s go, go for it. And the third thing is, I was also surprised by the fact that if you go DTC, the whole idea is that you are going to make more margin and your profitability is going to increase, which didn’t happen here. Maybe the reason was because they had to make a bunch of investments because they were not set up that way and they were probably a little bit more inefficient than they would have been if they had had 30 years of experience of selling directly to customers.
00:26:13
So because of all these reasons, I think it’s blip, but a slightly bigger, bigger play, I would say. Why? Because the initiatives that Donna Hugh is talking about, they don’t come start having full impact like this.
00:26:28
Yeah.
00:26:28
Now you are going to have, okay, innovation, you are going to bring back the partners. Now you have to produce the inventory, you have to get it to them. This will probably, this is for full effect to take place. This is probably an 18 to 24 month cycle is what I’m looking at. Am I concerned about Nike in the long run?
00:26:46
No, but it will have impact, lingering impacts over the next 18 to 24 months. But that’s part of life. You experiment with something doesn’t work, but if it doesn’t kill you, it makes you stronger.
00:26:57
Right.
00:26:57
It’s interesting, right, to think about like if d two c isn’t working for Nike, that. What does that say about the rest of the d to c companies too? Like are you going to have to start really going back to considering wholesale as, as an opportunity which a lot of d two c companies have? Um, ben, you’re shaking your head. What are you thinking about here?
00:27:17
Are you in agreement with what Abhinav was saying or do you have a few other points you’d like to throw out?
00:27:24
Yeah, I think generally agree with you, Abhinav. I will be, I think the next, as you state 12, 18, 24 months will be interesting to watch Nike as they’re trying to build back up some of these retail partnerships and get on the shelves. Retailers cutting down on inventory to help on costs. And we’ve seen brands like on and Hoka take up shelf space as Nike has pulled away from some of these retailers. So they’ve got a very strong brand.
00:27:55
But will they face some challenges getting back onto the shelves in some of these stores? Will they see the same amount of shelf space? Be interested to see that as they get back to it.
00:28:06
Ben, I was wondering the same thing. How. How is this. What’s this relationship like now between the retailers? Like, on again, off again?
00:28:14
I mean, foot lockers, shares stored, like, are we looking at, is this an issue or is it just like, look, we’re Nike. It doesn’t matter. We’ll do whatever you want. Well, you know, if we get you back in, we’ll take you. We don’t care.
00:28:25
Like just a jilted lover. We’ll take you back again and again and again. Chris, you’re laughing at me.
00:28:31
Yes. Yeah. Because that’s exactly what it is. I think. Yeah.
00:28:34
Abhinav, I think. Abhinav, what do you want to say?
00:28:36
Different point of view. Nike brand is so strong in every retailer. They are a tier one brand.
00:28:43
Yeah.
00:28:44
Whether you are mass, whether you are footwear specialty, whether you are discounted everywhere, the brand is just so strong. You are number one. We will take whatever you give the moment they turn it back on. And that’s why I have worked with a lot of these retailers for whom Nike is a supplier. I just don’t think the brand is so strong.
00:29:05
I think they will get back in, but it’s just a question of the cycle will take 18 months, 24 months.
00:29:11
Right. And it’s like, thank you, sir. May I have another? Thank you, sir.
00:29:15
Well, that’s what I wonder.
00:29:16
Yeah, exactly.
00:29:18
Do you think, though, that, like, they’re going to ask for, like, more like, to solidify the relationship a little bit if we keep. We continue using this analogy. Like, I look at, like, what Nike and dicks did where they’re merging their loyalty programs. Like, do you think that the retailers will be like, all right, look, Nike, were you, like, we got to do something to, like, hang on, or, like, make this official, Chris. No, you don’t.
00:29:40
They have no power. I mean, this goes back to Michael Porter’s five forces of, you know, how business works. Like, the supplier powers all with Nike in this one, they’re the brand. They can control everything. They can get anyone to do whatever they want.
00:29:53
The interesting thing to me, though, I don’t have much to add on this. But the interesting thing to me, though, is I think there is potentially a little bit more here because, Abhinav, your points, right. You can’t just turn wholesale on again overnight. Right. And DTC, of course, is going to be a profit drain.
00:30:09
It is for everyone that tries to do it. I mean, I remember living through that at Target. Like, I think it’s a joke that, that ever came about and we’ve spent all this time talking about it. But, but the other thing to me is I, and, you know, being the jaded person I am when I read earnings announcements, I’m wondering if this isn’t a little bit of an obfuscation tactic to also hint at the fact that the consumer is softening. Because just a few days ago we also heard Lululemon come out and say the consumer is softening.
00:30:33
So we are starting to project our sales for 2024 downward from where they have been. And so is this Nike not putting all the cards on the table potentially as well in regards to what theyre seeing from the consumer and is there more to come? So when I put that lens on it, in addition to what Abhinav said, im like things could actually get worse before they get better. If it takes that long to turn the wholesale channel back on, man, I don’t know.
00:30:58
I feel like, it seems like, like Nike is not in the same court as Lululemon. I think you have, you’re, you’re serving so much larger an audience that it, it feels like that can’t be the case. But I guess we’ll see, Chris. I guess we’ll see.
00:31:14
All right. Well, let’s take now a quick break to remind you all to join Ann and me at the 2024 Commerce Next Growth show on June 11 to 13th in New York City, where we will be live streaming once again, interviews from your favorite brands from the show this year. Speakers include execs from Estee Lauder, Lowe’s, Sheehan, Patagonia, Sephora and more. Connect with us at the show while learning from over 150 industry leading speakers across more than 75 sessions. And I think I called this the C conference last year, if I’m not mistaken.
00:31:49
Oh, yeah, because everyone there was like a C suite executive. Everyone we interviewed was in the C suite. It’s a banger conference, too. I think that’s the second, no, I didn’t say banger before. I said big hitter.
00:31:59
But that’s becoming my signature go to word on this show every week.
00:32:02
Apparently.
00:32:03
Yes, it is. Scaled retailers and brands can register for a free ticket today or use code fast five to get 10% off your general admission ticket. Go to commercenext.com conference to secure your spot today. We hope to see you there. You can also check out the link in our podcast description to learn more.
00:32:22
Again, that’s commercenextrous.com conference. And use code fast five. All one word to register. All right, headline number four. Shein is planning to market its unique supply chain technology to global brands.
00:32:40
According to the Wall Street Journal, Sheehan’s executive chairman, Donald Tang, announced the plan in a letter to investors, calling the new initiative, quote, supply chain as a service, or as I like to call it. And Scas, under the plan, we’re trying.
00:32:56
To make scats happen. Chris, trying to make.
00:32:58
It’s just so funny. It’s even funnier when you read it written out. Scaz supply chain as a service with the lowercase A’s. Under the plan, Sheehan would make its supply chain infrastructure and technology available to outside brands and designers, allowing them to leverage Shein’s system for testing out new fashion items in small batches and to track how popular they are with consumers. Abhinav, I’m still trying to figure this out in my head, so I imagine I’m going to come up with my opinion.
00:33:25
Listening to all of you all talk about this, what do you think of this move from Shein? And what, if any, us retailers do you believe could be interested in or benefit from Shein’s supply chain as a service?
00:33:40
So there are two questions, and both are the most relevant questions here because you have to ask both questions together.
00:33:46
Yeah.
00:33:47
From Sheen’s perspective, it’s a brilliant idea. Okay. And I’ll cut. I’ll get into why I think it’s a brilliant idea. The second question is more important, who’s going to.
00:33:58
I think very few. Right. So on why this is a brilliant idea for Sheen. So just a little bit of background on what actually they’re selling from a supply chain as a service. So they have these small batch productions.
00:34:15
The way they do it is they have their in house design setup, which designs and can do small production. And then they have information and partnerships with a lot of different factories within China, and they have a system that if you input what you are looking for, it can allocate based on real time availability in different factories on where it goes. Okay, so that’s. That’s what they’re trying to sell to customers. Now.
00:34:44
I think it’s a brilliant idea because what it gives them is it gives them scale to negotiate with all the other factories, get better rates for themselves, get better rates for everyone else, all that stuff. From a user perspective, there are two hindrances here. The first one is, I think, when I’m going to go back to an analogy at Amazon, Amazon has AWS. Correct. I mean, when there was no other option in the world, retailers were building their infrastructure on AWS.
00:35:16
Moment, Azure and Google Cloud became real alternatives. All the retailers started switching from AWS to their platforms.
00:35:25
Why?
00:35:25
Because they don’t want to fund their competitor. So here with Sheen, with $31 billion worth of sales annually in us, that would be the first strategic question that anyone would ask. And I think that will be the challenge. The second thing is the way these other retailers work in the apparel industry. First of all, they work on a completely different calendar and cycle, which does not work with what these guys are offering.
00:35:58
So it would require a complete transformation of how they think about product design, how they think about implementation of that. And so those are the two reasons I think maybe not a whole lot of people are going to use it. But on the flip side, I think why they are saying this is, I’m guessing this is a total guess that they have a partnership with Forever 21. Correct. Maybe forever 21 is starting to use their supply chain to put something up and they are seeing success there.
00:36:34
And that is what is sort of telling them, okay, maybe there might be some takers, but I am skeptical. Yeah, the idea is brilliant, but on.
00:36:43
Usage, big ifs there in that statement, too. So you like the idea, but you’re skeptical if retailers will come on board? Yep, that totally makes sense. Ben, what do you, what do you think?
00:36:53
Yeah, I think, I mean, I agree, especially on the skepticism of who will use it. And maybe to add a third reason, I think, as Shein has, they want to be publicly listed in the United States, but they’ve not gotten that yet due to quite a decent amount of backlash that they’ve pushed back on. But it’s backlash all tied to environmental and social practices that they deny. But thats out there. And so beyond the operating difficulties that companies may face by trying to use this new service, theres another hurdle.
00:37:31
That decision that it would have to be made. Well, theres all this pushback. Where is the cotton sourced from? And what are the factory practices on human capital? So if you can get past the creation cycles and innovation cycles and production cycles, could you also get past that?
00:37:50
I think will be another hindrance on some us retailers using this right away.
00:37:55
Yeah. And I imagine the retailers with a good sourcing team could actually go in and figure out and approve the factories and the sourcing from which Sheen is pulling this product from, too. So I imagine that one, I think, is at least something that I think retailers could get over. But, Anne, what do you think? I’m curious where your head is with this one.
00:38:12
Yeah, I think this is huge. I mean, I agree with Avanov. That’s, that’s the same place that I went right away was like, was it comparing this to Amazon early on? Like, whoever thought that somebody would, another retailer would start deploying Amazon’s just walk out technology or, you know, working with AWS? But there are some that are doing it, and I think this is especially.
00:38:34
Their logistics capabilities, too. Right? Yeah, that’s a good example. That’s probably a good example here, actually.
00:38:38
Exactly, exactly. But I think that you really have to think about these legacy retailers who are just holding on. Everybody from J. Crew to the Limited and express and all these brands that, you know, they’re still, they’re still turning around trends that we’re seeing on runways weeks and even months later. They aren’t able to compete.
00:39:00
And she is really, I think, the one that’s giving them a run for their money, because you can get on trend wears faster from Shein than you can from any other retailer. And by the time that those trends are hitting the stores, they’re just not as appealing, they’re not as differentiated anymore. So I think those retailers, those legacy brands that are still trying to remain relevant, especially in the eyes of that 18 to 20, 518 to 35 audience, I think this could really supercharge their business if you, you know, just imagine getting, you know, a J. Crew version of, you know, something that I saw on the Runway at Paris Fashion Week, faster at a little bit higher quality and a lower price point. Like, I think this could save those specialty apparel retailers.
00:39:44
Yeah, I don’t. I don’t know if I’d go that far for that reason. But I think, you know, and I’m processing this all in real time. This is a great conversation. This is why I love doing this show, too, because you get to talk to three really smart people about where, what, what we should all think about these topics.
00:40:01
And, like, for me, like, going back to what Abhinav said, I think the Amazon analogy is really good, and you extended it, too. I mean, I think, like, for me, and I’ve always been one that’s a little less gun shy about going into new partnerships because I think that’s how entrepreneurship happens. I think that’s how innovation happens. And so for me, I’m like, I’m a little less scared of this as a traditional merchant. And for that reason, I kind of, I’m with you and I kind of like the idea if I’m a retailer and it goes back to what Abhinav said, too, like, you get rapid prototyping.
00:40:31
And the reason rapid prototyping isn’t as much from the merchant side things isn’t as much about getting the products to my customers as quickly as possible because you’re going to get a little bit of extra revenue from that, but it’s not going to move the needle significantly because what you really need to get right are the buys that you’re putting in your hundreds and hundreds of stores. That’s where the value comes in. But Abnaz. Right, too. It’s hard to re engineer your process to design your product around a rapid prototyping platform through Shein to then get it into full scale production.
00:41:02
But there is tremendous value there if you think about it in that way. And it’s really not a competitive situation when you think about it in that dynamic, unless I’m missing something, I don’t, I don’t really feel like I’m competing with Shein. Shein’s just making me better at what I do. And so I’m fine partnering with people if I know my business and what I need to do to get the best product on the shelf. That’s where my head is right now.
00:41:25
Anyone have any final thoughts on this, though? Abhinav?
00:41:31
Two things. One is there will be skepticism in the sense that if you are producing through them, they may steal your design. I mean, they’re competing with you.
00:41:39
Yeah, but they’re going to do that anyway. They’re going to do that. That’s going to happen probably. I thought about that. That’s going to happen anyway, though, right?
00:41:44
Probably. Probably. And then the second, which has nothing to do with the discussion here, but how do you, how, like a fun fact. How did she in, become. She in, like, where did the name come from?
00:41:56
Do you guys know?
00:41:58
No.
00:41:59
So they started off as, as a wedding gown slash bridesmaid dress brand way back, and they were called she’s inside. When they started getting big, they shortened it to Sheen. Go figure.
00:42:15
Yeah, I don’t know. I think, I think this is, I think what else do the, what else do legacy special specialty apparel retailers have to continue to differentiate them and to continue to make them relevant?
00:42:29
Yeah. Your point is? Why, why should they be scared of this? Right. And that’s the point.
00:42:32
I think this is like a Hail Mary.
00:42:34
It’s like. Yeah, or not a Hail Mary. It’s a gift. You’re saying it’s a gift. It’s kind of a gift to think about for that Hail Mary.
00:42:41
Be like our last. You think it’s also their last?
00:42:43
I do.
00:42:44
Gasp.
00:42:45
I mean, the gap. Like the gap using this. Brilliant. Brilliant. Will they do it?
00:42:51
Do. Are they too legacy and are they too, like, set in their ways to do it? Maybe. Maybe. But I think that this could be like a last ditch effort at, at relevancy for them.
00:43:03
All right, let’s go on to headline number five. Amazon launching is launching same day prescription delivery in New York and Los Angeles. This is a big one, you guys. According to CNBC, the prescriptions are offered via Amazon’s online pharmacy service, which launched in 2020. Amazon Pharmacy, born out of the company’s 2018 acquisition of online pharmacy pill pack.
00:43:25
It was 2018 that they acquired that. That’s so long ago, man. It allows customers to order prescription medications for home delivery with free shipping for prime members to speed up deliveries. Amazon said it’s using new, smaller facilities stocked with the most common prescription medications for acute conditions. The locations are equipped to process a prescription in, quote, within a matter of minutes rather than hours or days, end quote, according to Amazon.
00:43:51
Abhinav, we’re going to go to you again on this one. To what extent? Similar to our first question. Do you think that Walgreens and CV’s should be quaking in their boots hearing.
00:44:01
This news a lot.
00:44:05
Me too.
00:44:06
Hello, my friend.
00:44:09
Yeah, a lot is the answer here. So they acquired, Amazon acquired Pillpack in 20. I’m surprised that it took them, what, close to six years to get to the point that they are. But finally they’re here after sort of, I read this headline yesterday. I went on Amazon and sort of played around with their experience of buying the product and sort of tested it down on one of the medications that I take.
00:44:40
I think it’s a game changer. Same day delivery. Because earlier, when it is a two day delivery, okay, for refills, it works. But you visit a doctor and they give you prescription and they tell you, hey, you have to eat it in the evening. You can’t plan that with them.
00:44:57
And so now you got same day delivery. And for whatever reason, CV’s, my local CV’s hates me. Every time I go to them, there is some sort of a snafu that happens. They hate me. I mean, literally every time I go there, first of all, I hate spending time in stores.
00:45:16
I walk in and I have to wait for some reason or the other, something goes wrong. Anyway. That all aside from an experience perspective, I played around with the medication, my medication, and slightly cheaper on Amazon pharmacy than what I paid last month I checked up on. And so it was slightly cheaper. It wasn’t significantly cheaper, but it was slightly cheaper from what I paid.
00:45:46
So that’s one thing. The second is like, for example, when you look online, CV’s and Walgreens do not provide any information on prescription pricing or drugs or whatever else it is. You go to Amazon and you search for it.
00:46:01
Yeah.
00:46:01
You see everything they told. They tell you everything. This is where the industry is going to go. They are rolling out their playbook that they have rolled out in every other category. I’m going to increase price transparency.
00:46:14
I’m going to make it very, very easy for you to shop online and I’m going to just deliver this product to you as fast as I can. Yeah, as fast as you, not I can. Eventually I’ll figure out a way to deliver it to you as soon as you need it. And that’s the playbook that they’re rolling out. So CV’s and Walgreens should be quaking in their boots and any other PBM pharmacy benefits managers should be quaking in express scripts should be shaking in their boots.
00:46:41
Yeah, that’s true. It’s bigger than just the brick and mortar retailers. Ben, what are your thoughts? Do you agree with what Abhinav’s saying, especially from a younger millennial perspective? Like, are you going to move all your prescriptions now to, to Amazon online.
00:46:57
Pharmacy and search for them via TikTok too, right? Yes.
00:47:00
Yes.
00:47:01
That’s what I did this morning. I searched for my prescription on TikTok. It didn’t quite work as I had hoped. I completely agree. This is huge deal for CV’s and Walgreens.
00:47:15
It hinges on the adoption 2018 purchase 2020 rollout for 2024. It’s been a slow burn and it’s going to require pulling me out of my routine. I know my routine. I go to Duane Reed here in Brooklyn and I know I have to wait for 20 minutes and for some reason I’m okay with it, but now I don’t have to be okay with it anymore. I think that’s the click that’ll happen.
00:47:42
I think also be really interesting if I’m shopping for a shirt on Amazon. I got another suggested shirt. As Amazon learns about customers medical profiles. How old are you?
00:47:57
Think about that.
00:47:59
AI and machine learning to preemptively provide additional prescriptions that you don’t know you need or haven’t been prescribed. I think that could be a huge unlock here in the future as well.
00:48:13
So many opportunities there. I didn’t even think about that, Ben. It’s so smart. Like all of the other things, like you have a prescription for strep throat, like you’re start serving up cough medicine or other things like surrounding that. It’s an all delivered in that timeframe that Abhinav was talking about.
00:48:29
Chris, where do you land?
00:48:31
Yeah, I mean, I think I don’t have much to add here. I mean, I think the interesting point to me is that we all think the pill, pill pack acquisition was too long ago. I mean, that shows you where our minds are. It goes back to that quote of, we overestimate the change that will happen in the short term and underestimate the change that will happen in the long term. Because as I’m listening to Ben talk, I’m like, oh, my God, there’s still so much more change coming here in the long term.
00:48:54
What I go back to, too, is what Abhinav said compared to Walgreens. For me, I love Walgreens online offering and through their app. But a lot of times the prescriptions are five days at five business days. And so when you travel as much as I do, that’s a big risk to take. And so I end up having to go in the store.
00:49:10
I don’t want to. And so hopefully, this galvanizes the entire industry to start meeting the expectations that Amazon is going to require that they meet because the customers are going to start to demand it. So, yeah, I think it’s big news. The last point I’d make is even before this story broke in all of our travels, a lot of people are talking about Amazon’s impact on pharmacy. It’s just starting to be talked about pretty regularly.
00:49:37
So, yeah, this is, this is big, too. This is a big headline, too. And question will be how quickly they roll it out. Right, right. How quickly does it come to Minneapolis?
00:49:46
I think the last thing, too, Chris, that I’ll throw in here is we talked about this with Andrea Lee back at shop talk. We were talking, she was asking us that same question, like, what do you think this does to drug? But the other key component here is what Ben was saying about all of the items around that trip that you’re waiting 20 minutes, Lazar Binance was saying, in line for your prescription, it’s all locked up. You have to wait for every single thing that you’re ordering. And now again, you’re pushing all of this stuff to a much more simple, frictionless experience.
00:50:17
And now that I can, I don’t have to wait two days for that stuff. I can get all the things I need in one trip. And they’re recommended to me without me even thinking about it. Like this is brilliant. And drone delivery is also part of this too.
00:50:29
So you think about that. You, those use cases of being able, but they’re also testing with drone delivery of these prescriptions and accompanying goods. Like that’s going to be another huge impact. Like you’re saying, Chris, that we haven’t even come across.
00:50:41
That’s a great point. And yeah, if I had to go into the store and things are also behind glass, which wasn’t even in my consideration set like a hundred, a hundred percent, that’s going to make, make a huge, huge difference for me.
00:50:53
All right, well, let’s go to the lightning round, you guys. First question goes to you, Abhinav. Film crews in Burbank, California have converted an old Kmart into a 1980s looking toys r us for a Michael Jackson biopic. If there were 119 eighties retailer that you’d love to see remade, which one would it be?
00:51:11
Well, in 1980 I was, I was still in India and my local store, mom and pop store was a 300 sqft local store. I would absolutely want to see that remade.
00:51:22
All right. I love it.
00:51:25
All right. All right, next one, Ben Lego has finally unveiled its 3745 piece dungeon and dungeons and dragon set. Be honest, how big into D& D were you as a kid, Ben? Come on, tell the truth.
00:51:41
I unfortunately wasn’t big into D&D at all.
00:51:45
Just you, Chris.
00:51:45
Legos, huge.
00:51:47
I wasn’t either, believe it or not. I wasn’t either. You were huge into legos, though. Okay.
00:51:50
Yeah, the star, you know, the Millennium Falcon, the X wing had all those.
00:51:55
Good man, good man.
00:51:57
All right, Ben, you get the next question as well. DoorDash and ship just added Lowe’s home improvement to their marketplaces this past week. What is the last home improvement emergency that you could have used a 30 minutes delivery for?
00:52:11
Yeah, the last emergency, I think it was eight months or so ago. We have a bit of a porch here and the drain was, was blocked over, who knows how and started to sort of flood and the water was almost coming inside. With some curious digging through, the drain was able to fix it. But that 30 minutes delivery probably would have come in handy at that point.
00:52:33
Oh, I’ll bet. Yeah.
00:52:35
Great ad all right, last one, Abhinav. Vermont State University plans to offer a course on the music of “Weird Al” Yankovic. The class’s name is “Weird Al and his Polkas.”If you could teach any class on pop culture, what would be the name of that course?
00:52:52
The name of that course would be how to rock it like Metallica by Abhinav, who doesn’t even know how to play a guitar.
00:52:59
Yes. Perfect. You just need to know air guitar. All you need is air guitar. Abhinav.
00:53:04
Wow. I was not expecting the Metallica drop from Abhinav. Wow. That is a jaw dropper. All right, well, happy birthday today to Mariah Carey, Quentin Tarantino, and to Kids Incorporated and Fergilicious herself, Fergie, who turns one year older than I am today. And I can’t believe it.
00:53:23
She’s. I hope I don’t see her in my HBO. The kids are not all right, or whatever this series is that I’m.
00:53:30
No. And we don’t, we don’t need to because kids incorporate is such a good memory.
00:53:34
For me.
00:53:35
It was like my adolescent dreams coming true. And it was such, such a great show. All right. And remember, if you can only read or listen to one retail blog in the business, make it omnitalk, the only retail media outlet run by two former executives from a current top ten Us retailer. Our fast five podcast is the quickest, fastest rundown of all the week’s top news and our daily newsletter, the retail daily Minute, tells you all you need to know each day to stay on top of your game as a retail executive and also regularly features special content that is exclusive to us and that Anna and I take a ton of pride in doing just for you.
00:54:09
Thanks as always for listening in. Please remember to like and leave us a review wherever you happen to listen to your podcast or on YouTube. You can follow us today by simply going to YouTube.com omnitalk retail. Ben, if people enjoyed this conversation, want to pick your brains at the A&M consumer and retail group, get in touch with you all? What’s the best way for them to do that?
00:54:29
Yeah, definitely. And thanks, Chris and Anne. You know, you can find both Ivanov and I on LinkedIn. We’ve got our Alvarez and Marcel consumer retail group page on LinkedIn as well, as well as our website, which is http://www.Alvarez and Marcel Dash crg.com.
00:54:47
Awesome. Awesome. Well, it’s great having you both, as always. Thank you so much for joining us today. It was a great discussion.
00:54:54
Really, really insightful. We covered a lot of ground so thank you to both of you and on behalf of all of us at omnitalk. From Anne, from myself, on behalf of Ben and Abhinav. As always, be careful out there.
00:55:08
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