00:00:00 Chris
Hello, I’m Chris Walton, and welcome to this Week’s Omni Talk Retail Fast Five, brought to you exclusively by the Omni Talk Retail Podcast network. It is a strange week in retail when the scariest thing in the grocery store isn’t the price of eggs, it’s actually the freezer aisle. Over in France, hackers cranked supermarket fridges up to 122 degrees, which may make this the first time in history a cyber attack has accidentally made a hot pocket. Meanwhile, ChatGPT now lets you try and close with a selfie. TikTok shop wants to make returning those clothes even easier. And Albertsons looked at its own business and said, you know what, we need to try some new things on too, and pulled its guidance entirely. So to help us make sense of a week where retail was equal parts thriller, fashion show and therapy session, we’ve doubled up on the brain power. I’m joined today by not one. Actually, we’ve tripled up on the brain power, now that I think about it. I’m joined today by not one, but two guest hosts from the A&M Consumer and retail group here, Corey Painter and Anshu Prasad. And fair warning, if this episode gets too hot, I have only two words. Sacle bleu.
00:01:07 Anshu
Investors. Startups have really woken up to the idea of the physical AI kind of opportunity. There’s a lot of data trapped in these systems.
00:01:15 Cory
I think you really have to meet the consumer where they are.
00:01:18 Chris
Do you regroup them under the same banner? Do you change the name? Or do you let them still exist the way that they are?
00:01:24 Anshu
We wouldn’t have gotten 8/4 of continued 20% growth without some of these third parties stepping in and actually focusing, focusing on this and specializing.
00:01:31 Cory
And I’m also much more likely to be a repeat consumer if I know that I can return something easily.
00:01:36 Anshu
I think the feature function costs are dropping precipitously.
00:01:43 Chris
All right, the A&M consumer and retail group is here. Corey Painter, let’s first welcome you. How are you doing this morning?
00:01:50 Cory
Hey, I’m doing well. Thanks for having me. I’m excited to be on today.
00:01:53 Chris
Yeah. This is your first time joining us, right? How you. How. How are you? How did you prepare for this?
00:01:58 Cory
Well, it is my first time. I’m excited to be here. I’ve listened to other episodes of the podcast, so I’m familiar with. With how it works. And, you know, obviously being part of the retail community, I try to stay apprised of all the things happening, but I’ve certainly tried to, you know, stay on top of the news and most recent events, many of which you just mentioned. So excited to talk about those things today.
00:02:18 Chris
Yeah. Now, Corey, you’re based out of Atlanta, right?
00:02:21 Cory
That’s correct. I am, yeah.
00:02:22 Chris
So tell the audience a little bit about yourself, like, what’s your background? How did you get into retail? The whole nine yards.
00:02:27 Cory
Sure. Yes. I’m a senior director in Alvarez and Marcel’s consumer and retail group, as you just mentioned, based in Atlanta. I’ve spent the last 16, 17 years helping retail companies, both as a consultant and also on the industry side, lead and execute corporate strategy, mergers and acquisitions, and large scale transformations. So, you know, it’s good to have kind of the operator mindset, being on the industry side, but also being an advisor on the consulting side, so you get both angles.
00:02:56 Chris
Got it. Well, thanks, man. I’m excited for you to be here. I always like breaking in the first timers. 100%. All right, Anshu Prasad, we got to.
00:03:04 Needham
Go to you next.
00:03:04 Chris
This is, this is your first time as well, right?
00:03:07 Anshu
It really is, yeah. Looking forward to it.
00:03:09 Chris
So I’m breaking in two newbies here from the A&M consumer and retail group. All right, so you’re in New York, right? That’s where you’re based. All right, tell the audience about yourself.
00:03:17 Anshu
Yeah, so I am based in New York. I’m a managing director in this consumer and retail group at A&M. I’ve basically toggled back and forth between operating roles and consulting. So I’ve spent about 10, 12 years building and running businesses and also similar amount of time in consulting at Arnie as well as at A&M.
00:03:36 Chris
So what, what’s your specialty? Aren’t you, like, what do you, what do you specialize in on the operations side of things?
00:03:41 Anshu
Well, I ended up doing a lot of work in supply chain and operations, a lot of transportation and logistics, both as an operator and also as a consultant, and typically a lot of where analytics starts to fold in. So obviously, over the course of the 20 odd years, the tools that we’ve had available as practitioners have evolved quite a bit. So these days, it’s a lot of conversation around AI and how we’re going to use AI to try to do our work a little bit more effectively.
00:04:06 Chris
Yeah, no doubt. I feel like that’s all I’m talking about every single day of the week, every single hour of the day, and every minute of the hour, too. Aren’t you?
00:04:14 Needham
Right?
00:04:15 Chris
Yeah, 100%. All right, well, without further ado, let’s get to today’s show. Today’s show is of course brought to you with the help and support of our friends at the A&M Consumer and retail group, Mirakl, Quorso, Ocampo Capital, Veloq and SmartScout. In this week’s Fast Five, we’ve got news on online grocery hitting a record with nearly 2/3 of US households shopping online in a single month. Hackers turning supermarket fridges in France up to 122 degrees. ChatGPT launching virtual triumph for clothing and accessories. UPS is happy returns plus plugging box and label free returns directly into TikTok shop and smart scouts. Scott Needham stops by for five insightful and timely minutes, I might add, to discuss how the E commerce marketplace playbook is being rewritten. But we begin today with Albertsons pulling its guidance. Headline number one is of course brought to you with the help and support of our friends at A&M CRG.
The A&M Consumer and Retail Group is a management consulting firm that tackles the most complex challenges and advances its clients, people and communities toward their maximum potential. CRG brings the experienced tools and operator like pragmatism to help retailers and consumer products companies be on the right side of disruption. All right, here we go. Starting off strong. Headline number one, Albertsons beat Wall street on second quarter profit, but suspended its full year guidance and launched a comprehensive business review promising a full turnaround plan by spring of 2027. According to Chainstore Age, Albertson’s fiscal Q2 net income fell 69% year over year, which was driven by store impairments, higher interest expense and lower identical sales. Identical sales fell 0.8% while digital sales grew 11% and pharmacy and fuel also reportedly grew. Everything at Albertsons is apparently on the table. Customer strategy, cost structure, operating model, its portfolio, banners, markets and even its capital allocation. With a refreshed short and long term framework due on its Q4 call in the spring of 2027. All right, Anshu, I’m going to start you out hot here. There’s no breaks for the newbies, man. No breaks. I want you to rank order the following outcomes in terms of what is most and least likely for Albertsons in the future. 1. Albertsons writes the ship, 2. Albertsons gets broken up or three other.
00:06:38 Anshu
I’m going to go with three other. I think it’s going to be a bit of both. I think less likely. But next in order would be they right the ship but it’s going to look a little bit. The company will look a little different when they have done that, but I think a full breakup is Pretty unlikely. And to start with the full breakup scenario, look, Albertson has, Albertson’s has some real assets. There’s some really good things to be happy about. They’ve built a big store footprint, lots of banners, established distribution center network, real capabilities that they want to leverage. Splitting those things apart is non trivial. A lot of things will break. Right. So a full breakup I think becomes really complicated to undertake. At the same time, I think just going forward with the status quo doesn’t make a ton of sense. And you mentioned the numbers. Leadership has acknowledged the need for a full, full revisit, a reorganization, a cost structure. Look, I think it makes a ton of sense to do that and maybe pair certain parts of the operation. Maybe there’s some banners that need to be looked at, maybe there’s some stores that don’t necessarily fit well.
But you know, leaning on my sort of supply chain bias, anything that you do to this integrated network is going to have knock on effects, right? So you start thinking about a few stores that come out of the system or some of the manufacturing capacity that produces the private label products and you start making some changes there. Well, that will impact the DC footprint, it’ll impact transportation lanes. So having a holistic view and looking at all of the different knock on effects opportunities, but also the cost implications will be really important to do this well and thoughtfully. So management has their work cut out for them. There’s a lot to do between now and the end of Q4 and reporting back out the plan. But. But I have confidence that some sort of a hybrid approach of some measured targeted actions will head in the right direction for these guys.
00:08:31 Chris
Okay. Interesting, interesting. So I’m curious, I want to press you a little bit on that because as I was thinking about this story, the one question that came to my mind is, you know, 22 banners, that’s a lot of banners. Is that a hindrance in your mind or how do you think about that in today’s landscape? I don’t want to lead the witness here. Aren’t you? But like you can, can kind of tell where I’m think what I’m thinking about in regards to the question like is that too much in today’s landscape is, is, is that like a holdover from 20th century retailing? Like you know, should, should Albertsons, should even Kroger in a lot of ways think about breaking that up or thinking about how to get more scale in their brand and to integrate even more overtly than they probably have.
00:09:10 Anshu
I mean look, it is complexity. There’s no denying that having 22 banners and all the stores that come with it is complexity and driver of a huge amount of that complexity. At the same time, you know, I think brands matter a lot right now and we’re talking about, you know, some of the other topics you mentioned with online shopping. Increasing customer loyalty and loyal customers that shop multiple different ways, not just online, but also go into stores. Having the ability to really engage the customer with a strong brand still matters, I think in, in retail and in grocery. And so, you know, I think it’s a double edged sword. I think having the brands and having some established presence in regional markets is an asset and you can’t just look at it as, hey, if I shed these brands, you know, life gets simpler. It doesn’t necessarily because you might lose some of that customer touch.
00:09:58 Chris
Yeah, I think you have to ask the question of which banners are synergistic with each other. Right. And which ones aren’t? Because when you’re going up nationally against Walmart, Costco, even Amazon, you know, it’s, it’s kind of a tough battle because the chances of all those banners being synergistic in terms of their merchandising strategy, their product selection, their price positioning is probably pretty tough to coordinate from the top down. So I think eventually you get to the point where I think we’re kind of saying the same thing. You’re going to have to divest some and regroup them under the banner. And that’s where I think the marketing question then comes into play. Do you regroup them under the same banner? Do you change the name or do you let them still exist the way that they are? I think that’s the big question. But Corey, what do you think here? Like how concerned do you agree with, aren’t you, you know, do you agree with me? Like how, how concerned should we be that Albertsons is now saying that everything from customer strategy, cost, structure, operating model, operating model, etc. Is all up for review?
00:10:56 Cory
Look, I mean, I do agree with what both of you are saying. I think you can’t look at this with a one size kind of fits all approach. I think to, to truly right the ship, so to speak. It’s going to take a combination of how do we transform and turn around the existing business, but then also optimize it going forward, which could be exiting certain markets or certain banners potentially, or just certain stores. So I think it has to be a combination of the two and I don’t think this can be a short term plan. It has to Be more of a long term plan where you take some of the operating improvements that you get in the short term to generate some of the investments back in the business for the long term. So as you mentioned, this is a very competitive environment grocery where you’re competing with Walmart, Costco, Amazon, Aldi, Kroger.
You know, some of these players have significant scale advantages, significant cost and pricing advantages. So in order to remain competitive, they’re going to have to improve the performance of their own business, Albertsons, that is, they’re going to need to look at how do we lower prices, how do we increase our promotions, how do we strengthen our overall value proposition. But obviously that’s going to lead to lower gross profit. So how can we offset that through other reductions in productivity improvements elsewhere in the business. And that’s going to be through reinvesting savings into pricing, fresh offerings, customer experience so that they’re able to compete some of these larger players that you mentioned. So long story short, I do think it’s a combination of the two options that you mentioned.
00:12:30 Chris
Corey the other part of this conversation I want to bring up before we get to the next headline because I think the next headline will probably, will probably delve into this a little bit too. The three of us haven’t really talked about the digital side of this, right? And you know, having that many banners is actually very complicated from a digital, digital perspective. But on by the same token, once you start cutting back banners, you start losing scale in your digital portfolio, particularly around retail media. So, so how should Albertsons be thinking about the digital question in relation to what it is potentially undertaking here? Corey?
00:13:03 Cory
Well, again I think they have to look at this from a kind of take a step back and look at this from a holistic standpoint. Each banner serves different geographies, serves different types of customers and have different, you know, competitive strategies. So I think it, you have to look at obviously delivery is a significant convenience for customers and it’s, it’s certainly important. So you can’t single handedly focus on delivery at the expense of some of these other areas. So I think to your point delivery is important and I certainly don’t want to under stress that. But I think what’s really important here is this is a very low margin business where small changes to an operating model can have an outsized impact on performance.
So if you, if you focus kind of single handedly on how do we optimize delivery and fulfillment across the different portfolio, it’s, it’s likely going to be at the expense of other areas. And that’s going to create, you know, negative impact on financial performance. So, you know, what I want to say is that you have to look at all of these different areas. The what’s really going to move the needle in the overall turnaround strategy versus go kind of all in on certain things like delivery, for example. So I think it’s important and I think there are certainly areas where in certain banners it’s more important than others, but you have to look at kind of all the elements above.
00:14:27 Chris
Yeah, that’s interesting. When I’m listening to you talk, I’m actually thinking like, oh my God, I would consolidate these banners very quickly under one digital halo to get the national scale to continue to compete with the, with the big guys that we mentioned. Otherwise, it’s going to be incredibly challenging as the world continues to evolve, as AI continues to evolve, Agent commerce continues to evolve. But Anshu, you get the last word here.
00:14:47 Anshu
Consumers also want choice, right? And they’re telling us that pretty clearly across multiple segments. So I think the ability to digitally integrate without necessarily unifying things under one banner I think leaves some flexibility and that cost to serve through these different channels and the different types of consumer experiences is really important to consider. Right. So even with the footprint that Albertsons has, there is a geographical bias. Right. So it’s not necessarily that they’re going to be all things to all people. Like Corey said in all geographies, really focusing in on loyalty through the digital channel, figuring out how to get that retention that customer stated within the network. Even if the individual properties that the customer is shopping might be a little bit different as long as they’re integrated from an overall holistic standpoint, that could be a real asset for Albertsons.
00:15:34 Chris
Well said, well said. All right, well, let’s keep rolling. Headline number two. Headline number two is very synergistic to what we just talked about. The headline is brought to you by miracle, the catalyst of commerce. Over 450 retailers are opening new revenue streams with marketplaces, dropship and retail media. And succeeding with Mirakl, you can unlock more products, more partners, and more profits without the heavy lifting. So what’s holding you back? Visit miracle.com to learn more. Headline number two. Online grocery hit a record in Q3 with nearly 64% of US households shopping for groceries online in September. And online sales were up 20.7% year over year, according to Chainstorage.
Citing Brick meets Click. Online grocery has now grown more than 20% year over year for eight straight quarters, fueled by more orders per user and A growing base of monthly users. Delivery drove 3/4 of the gain, growing more than 3 30% while pickup grew only in the mid single digits. Ship to home grew slightly below the 20.7 top line number online captured. And this is an important statistic, everybody online captured a record 20.9% of total grocery spend. As in store sales decline, order frequency rose 14% and 17% of monthly users used all three fulfillment methods in the same month. Corey, based on those statistics I just read delhivery appears to be eating pickup’s lunch as online is now one in every five grocery dollars. So what does it all mean for how grocers should be investing in fulfillment going forward?
00:17:09 Cory
First and foremost, you know, fulfillment strategy is going to be extremely important. But there is no one size fits all fulfillment model that will work for everyone. I think as you mentioned, online grocery, it’s not an emerging channel, it’s now a core channel. I think over almost 2/3 of the US households shopped online for groceries last month. And this is, you know, consumers want convenience. And so both, you know, delivery as well as pickup are important and most shoppers use some sort of combined method where they do different methods in different situations. So I think there again there’s no one size fits all here. I think there are dense urban markets that are more set up for a more kind of automated and dedicated fulfillment infrastructure. But then the suburban and lower density markets are much more set up for say store picking and delivery partnerships and pickup options.
So I think, you know, there is a case where all are important, all are growing. But to your point, delivery is growing at a disproportionate rate compared to pickup. And so I think pickup is still important. It’s still a, a lower cost option for consumers that value convenience, especially for say larger planned pickup grocery orders versus you know, a large delivery order and is really important for price sensitive consumers. So I think you really have to meet the consumer where they are and you have to look at your overall fulfillment strategy to where. And it again varies by market too, but you have to look at them to how you meet the customer, where they, where they are, where they want based off their preferences. So there is no one size fits all.
00:18:51 Chris
Okay, the question I have though is, you know, 20%, the 20% penetration, that’s a huge threshold to cross because I think, I think Scott Galloway famously said that 20% is when retail verticals start to go, start to have trouble. You start to see bankruptcies. You saw it in toys, you saw it in sporting goods, you saw it in Electronics.
00:19:10 Cory
So.
00:19:10 Chris
So we’re at that point. So aren’t you? My question would be then, you know, what do you do? Like, you know, as a grocer, how do you start thinking about that? Because what you’ve been doing doesn’t appear to be working, especially in light of Albert, the story we just read with Albertsons too. Like, how correlated is that to this story, this phenomenon?
00:19:30 Anshu
Yeah, I mean, look, I think it does beg some questions, right? I mean, I think being close to the customer so that you can actually fulfill particularly fresh with as short a delivery distance as possible is actually obviously very important. But that requires a bunch of cascading capabilities that, you know, grocers have been focused on using a brick and mortar kind of construct for a long time now with the increase in online and in delivery in particular, you kind of have to think, rethink the purpose of the store. And folks have been experimenting around this for a while. But how does the fixed cost in a, in a store footprint actually lend itself to the behavior that you’re now observing and probably can expect? This Trend you mentioned, 8/4 of 20% growth. This is not a trend that you can ignore. So assuming that this continues, how should you be thinking about the cost structure and that fixed cost infrastructure and how it really supports probably increasing delivery requirements at the same time? Like Corey said, consumers are telling us very clearly that they’re going to shop these stores in multiple different ways. And you mentioned the statistic of what, 17 odd percent of the customer base that shops in all different methods. They come into the store, they shop online, they also get some, they get delivery and they do some pickup.
Well, so having the flexibility there is also pretty important. So you just evaporate. I mean, we’ve seen this in banking, for example, where some of the customer engagement and the branch experience has completely been eroded. How does that then translate to actual stick of the customer in grocery? That’s not really an option. You really cannot have the, you can’t eliminate the option for somebody to say in last minute, I need these five items to be able to make dinner tonight. Whether I get that as a rush delivery option that gets delivered to my home inside of two hours, or it gives me the flexibility to go stop somewhere, just pick up those five items and I’ll worry about all the scheduled parts of my basket that need to be perhaps delivered or can be picked up in a different kind of cadence. Those types of things are the reality of what we all as consumers really need when it comes to grocery. And the stores have to reconfigure their, their footprint, but also their way of meeting the customer to accommodate that. And that requires a pretty fundamental revisit.
00:21:51 Chris
Yeah. So one of the questions that I’m fundamentally asking myself too is like, are the delivery marketplaces, the Doordash and Instacart, the worst things that could have happened to the grocers because they’re giving away that first party data, they’re giving away the retail media subsidy. So you know, one question, one, and I think you could make the argument for this is like if this is the state of the world and I want to still exist in five to 10 years out, I need to be in control of this experience as much as possible. So should I start pulling, you know, out of these, should I at best be white labeling their delivery services from my own website? Could I be using Instacart as my storefront for example? But you know, starting to pull away from these platforms, do you think we’ll start to see that? Aren’t you?
00:22:30 Anshu
I think there’s going to be definitely some pressure. Being dependent on those platforms is a big risk. I think, you know, that concentration problem is huge. Right. And look, the consumer doesn’t like it either. Right. When you start seeing some of these service fees, etc. It starts to call into question. I mean I know that I’ve sometimes made a decision to say no, no, I think at that price it’s worth actually going around and picking up. Right. And I think people make those types of trade off decisions all the time. But the dependency on some of these delivery platforms and the fact that you’re starting to get constrained and you know, where will the power reside medium term, long term, I think that does beg a set of questions. At the same time we have seen chains and banners try to do online and you know, home delivery with mixed results. Let’s say it’s not for the faint of heart. So I think the, we wouldn’t have gotten the 8/4 of continued 20% growth without some of these third parties stepping in and actually focusing on this and specializing. So you kind of have to balance the usefulness or utility of some of these platforms with do you really want to become entirely dependent?
00:23:37 Chris
Okay, so now let me, Corey, let’s end on this question. So if I’m leading a regional grocer, let’s say, and I just heard Anju talk, the first thing I’m thinking about is like, okay, what is the cost for me to build out these own capabilities? So I’m not as dependent on you know instacarts and doordashes of the world to provide this service for my customer, which invariably they do want, as the data has shown us. If I can’t figure out how to make that pencil, is now the time to harvest and get out?
00:24:06 Cory
Well, I would say no, not necessarily. I think the ongoing demand for delivery is, is obviously there and continues to grow and it’s going to be really important. But I think, you know, if you take a step back and ask a broader question here, you know, should I kind of invest heavily in my own delivery capabilities and automation? I think you should first focus more on investing in the foundational capabilities that you need before you get to focusing heavily on delivery and automation. And what I mean by that is again, this is a low margin business where, you know, meaningful, even small changes in operating performance can create meaningful improvements in financial performance. But in order to be successful on the delivery and automation standpoint, you got to have, you know, things like inventory accuracy, real time availability picking, productivity and optimization in your stores. You got to have ability to batch orders and have routing optimization and an optimized customer return and substitution process. These are all things that you need to have and invest in first before you really focus heavily on optimizing your own delivery and automation capabilities. Those will come, but I think you need to invest in the foundational capabilities first. Yeah, that’s a great point.
00:25:26 Chris
I mean there’s, there’s a lot of differences between, you know, automated last mile options and everything in between the instacart and the doordash solutions of the world. And so yeah, I think it’s about getting real with what do the economics of that look like over the long term for whatever banner you’re running. And then, you know, really thinking about this decision. I think there’s going to be a lot of retailers thinking about this decision, you know, here in the short, in the short term and even in the longer term particularly. All right, headline number three. Headline number three is brought to you by Corso. Your stores are full of data, but are your teams acting on it? Corso turns retail data into personalized daily to dos that drive sales, reduce waste and improve execution. No fluff, just action. Help your managers focus on what matters most. Visit corso.com to see intelligent management in motion. Headline number three. Hackers forced fridges and freezers at hundreds of French supermarkets up to 122 degrees Fahrenheit overnight, causing food losses and even fires in what officials are calling a large scale cyber attack. Anchu, how would you assess the state of readiness across retail to thwart a cyber attack like what happened in France last week.
00:26:32 Anshu
French supermarkets have not had a couple of good weeks now. There have been some real challenges. So I mean, these attacks were pretty, pretty terrible. But just the last few days, the events of, you know, know, the rioting and the looting and the damage to. I think Carrefour talked about over 50 stores that have been damaged and 20 that have been looted. It’s been a tough time. But, you know, to answer your question, readiness is not great. Right. I think when you get out to the actual store footprint, what you saw with these, you know, connected fridges and freezers is they were vulnerable. And those decisions are being made out in the field as to which service provider, which, which third party is going to help us manage the complexity of all of this, you know, store by store footprint. It’s not something that has laddered up to a corporate wide sort of organized, coordinated with the appropriate information security protocols and the guardrails established.
And so now when you get these types of cyber attacks, and of course we’re seeing these types of cyber attacks in other parts of our economy, a lot of vulnerabilities are being exposed. So readiness is not great. At the same time, you know, you’re not going to be able to solve the readiness problem overnight. So really trying to get an understanding of your risks and exposure and trying to figure out at these processes and protocols that folks in the field in the stores are following. So at least there’s some awareness and a building awareness. This reminds me a lot about supply chain risks and vulnerabilities that, you know, lots of CPGs have experienced over decades and then starting to realize that there are data available that could lend themselves to getting a better picture of what’s going on and at least being able to respond more quickly when things happen like this. But that is a, that’s a significant undertaking to start to at least get an understanding of your vulnerabilities and start to compile those data, let alone build some visibility over top of the, of those data sets so that you can actually respond more quickly than your competitors.
00:28:30 Needham
Right?
00:28:30 Chris
Yeah. The other thing that this got me thinking about is like, I think about, okay, what else, you know, what else is a part of this story? The other outgrowth for me, Anshu, was, you know, AI’s impact on this is going to make it even more pronounced here in the future because it just increases the risk of cybersecurity incidents, AI. And when I step back, I say, okay, what does that Mean, Well, I think that’s going to push the build versus buy technology discussion even more so than AI already has because we know from what happened in France, every partner in your network is a node for more threats. Right. It’s a vulnerable point of entry for cyber hackers. Now it gets a little challenging when you start thinking about hardware versus software, particularly in the example that we referenced here with the freezers and the refrigerators. But I think the question is going to be asked, even the remote monitoring of freezers, you could ask the question as an internal organization to say, can we do that better ourselves here over time with AI. And so I think this is just going to push the retailers, who are notoriously an insular industry anyway, into thinking more like that. Audrey, you’re smiling. Do you agree with that?
00:29:44 Anshu
I think the insular point is important. And like what Corey’s mentioned before, I mean, the margin pressures are real, right? So you don’t have this unlimited potential or capacity to just invest in a bunch of capabilities because you think they’re a good idea. You have to place your bets. I think AI does increase the, you know, the, the risk profile here, right, because the, the malicious actors can actually, at a much lower cost, start to do, you know, sort of damaging things or penetration testing and the like. At the same time, AI also expands, as you’re saying, the opportunity as a retailer to be better prepared. So not just can we build our own monitoring capabilities, but actually just test the resilience and the robustness of what we have in place. So the costs for getting tagging are lower, but the cost for being prepared have also dropped. Right. So I think there is an opportunity here for a lot of the retailers to just be better prepared than they were. I mean, this obviously exposed a set of real vulnerabilities, but there’s similar other vulnerabilities kind of lurking under the surface. And to your point, the costs for getting ready have dropped. So what are you doing about it?
00:30:55 Chris
Yeah, it’s two sides of the same coin. All right, Corey, let’s get you in here. What are your thoughts on this headline?
00:30:59 Cory
Well, I agree with a lot of the stuff that you both have said here. I think, you know, if you look at cybersecurity protocols and what retailers have traditionally focused on, they’ve really been focused on their corporate networks. How do you protect customer data, payment information, pii, their e commerce systems, they haven’t looked traditionally beyond that into their stores, their distribution centers, their broader supply chain. So again, I agree this is an eye opening experience. And I think this puts a lot more pressure now on cross functional ownership of cyber security. You know, traditionally we’ve seen companies place the ownership of cyber security within IT and information security domain. So the CIO or CISO is responsible. But I think now you’re going to have to look much closer, broader than that to where it is a cross functional team of people representing store operations, facilities management, supply chain, risk management. So you’re going to have executives across the company that have a say in this. Not only in developing the plan, but also ensuring business continuity.
But I also think to your point about, you know, understanding where the, where the risks lie in the, you know, areas beyond just your corporate infrastructure like your storage and your DCs is really important. So visibility and knowing where these risks are is really going to be a starting point. So assessing your, your inventory of all the different connected assets, all the different softwares that you use, all the different access points throughout the supply chain, all the different vendor relationships you have, and first assessing, you know, where’s my starting point? How do we look at all the different risks and issues throughout the company, first and foremost, before we build a cybersecurity plan? I don’t think that’s traditionally been the focus point. Initially it’s been how do we again focus on protecting our customer data or payment information, etc. So I think the fundamental shift is taking place on what’s most important.
00:32:58 Anshu
Yeah, and look, I think the outside world, outside of the retailer. So investors, startups have really woken up to the idea of the physical AI kind of opportunity. There’s a lot of data trapped in these systems. So knowing that, you know, you can access the data around what’s happening in the fridge and the freezer, so you can do predictive maintenance or frankly you can streamline the sops that you’ve got in your stores to make sure that you go check these things to make sure that you’re not losing inventory because there’s been a mechanical failure. Well, you’ve got these data, are you using them? So the opportunities to leverage some of these data in addition to kind of mitigating some of these risks are significant. And to your point earlier, Chris, I think the cost for building sort of quick hacked out solutions using AI has dropped precipitously. So what are we doing to streamline our operations that drive more bottom line impact? And in the process, because we have to inventory our assets and we’ll have to inventory that physical AI data set, we’ll also expose the risks and vulnerability. So some of the work that we’ve been doing with, with our customers has kind of looked at this as both as risk and opportunity. And I think there’s a lot of potential there.
00:34:08 Chris
Yeah, I think my big takeaway is it’s actually good for the physical retail operation itself. We talk about stores and how they’re struggling in the last headline and overall, you know, taking this mindset and approach that you just advocated for could actually be good for the health and viability of the physical retail footprint going forward. All right, well, great discussion, you two. Let’s welcome Scott onto today’s show. Joining us now for five insightful minutes is Scott Needham, the founder and CEO of Smart Scout. Scott is here to share his thoughts on how the e commerce playbook, particularly at Amazon, is being rewritten and what the data says about who’s winning right now. All right, Scott, let’s start with this. Smart Scout tracks brand revenue and category share across Amazon. So my first question for you is who actually owns the biggest categories right now? Is it the household names, the Amazon private labels, or is it the brands maybe shoppers haven’t even heard of?
00:35:06 Needham
So if you asked me 10 years ago, I would say that, you know, it’s the small private label. Well, it’s 2026. Things have changed and big brands are winning. They know, like they’ve really turned Amazon into a professional environment where they’re bringing in all the tools, they’re bringing all the expertise and they also have the media budget and brand loyalty. So I see the big getting bigger on Amazon and Amazon is growing and I see them taking more of that. And I’ll give one caveat around. We’re seeing the Amazon business, this is the sector of B2B doing really well in what would be like less sexy categories. But like, you know, they just reported that Amazon business has does about 60 billion a year.
00:36:04 Chris
That’s really important to think about though, that it’s been that, that, that the, the big CBG brands are taking up the lion’s share of the category business and they’re doing it by way of really knowing how to tune themselves in, fine tune their, their business processes in and around the Amazon advertising vehicle too. All right, so that’s Amazon. I want to talk TikTok shop too, because eMarketer is projecting that TikTok shop is going to sell more online this year than Target or Costco, which is just absolutely crazy to me. Smart Scout also tracks TikTok Shop and Amazon side by side. So I’m curious, Scott, are the brands that are winning on TikTok shop, the same ones that are winning on Amazon or what’s the differences there?
00:36:43 Needham
We’re tracking about 80% of the top TikTok shop brands. They also have an Amazon presence and they are growing at a faster, their Amazon business, business grows at a faster rate than their peers. So it’s hard to like see TikTok shop as like a standalone marketplace. It is often, I mean, even though it does like real revenue, you know, billions of dollars and has grown a lot, the impact of TikTok shop is, is beyond that, where people are more comfortable, maybe they’re more comfortable buying on Amazon or let’s say they were influenced by an ad and ended up converting in store. So we’re seeing retailers asking their brands, hey, what are you doing about TikTok shop? Are you doing anything there? Because they’re actually seeing on the ground floor that brands that do well on TikTok shop, they’re having more success in other channels.
00:37:39 Chris
Got it. So all boats are rising with the tide. Are you seeing any category differences in terms of what sells on TikTok shop versus Amazon?
00:37:45 Needham
Certainly it comes down to on Amazon, you know, people type in what they’re looking for. On TikTok Shop, you’re being served an ad sometimes from another creator that looks just like you. And so things that are a little bit more impulse buys, you know, like if I saw someone like tell me about a new protein bar, I consider buying it even though I didn’t know about it, if they, if they just sell it really well. So seeing a lot of like consumables, like beauty and grocery and actually like apparel in a, in a unique way where, you know, people see something and they’re like, I want that.
00:38:22 Chris
That doesn’t surprise me at all. All right, Scott, let’s shift now to the agent e commerce side of the discussion. So Amazon recently folded Rufus into its new Alexa for shopping assistant this year and more shoppers are asking it what to buy. So how does this impact the brands that built their business on search, rank and advertising via Amazon?
00:38:43 Needham
Advertising is still loud and strong and if, you know, I don’t feel like that’s going away. They’re actually, they made some announcements this last week. They’re putting more advertising opportunities inside of Alexa for shopping, you know, allowing brands to be more part of the conversation. But you’re correct in that like, you know, it’s high consideration products where people are asking follow up questions, people are turning to Alexa and the difference really comes down to it’s an opportunity for brands to really flesh out their content. Who’s it for? What’s it for? Amazon released a few years ago, 15 questions that they want to understand about every product. Like, where is it used? Who uses it? What products is it used with? And all these, like, contextual things. And the more your content and images answer those questions, the more that Alexa is going to recommend you.
00:39:51 Chris
So the big takeaway then is advertising is not going to change for the brands on Amazon. It’s probably, it’s, it’s probably just going to. It’s hopefully going to convert. The advertising that you do through Alexa is going to convert higher, too.
00:40:02 Needham
Well, I love, like, what’s happening with Alexa, and it’s very interesting. Traditional search still is super strong. You know, you pull up the, the Amazon shopping app right now and it’s generally just like search and ads that you’re seeing. Alexa is like, right now kind of still in the assistant phase and not like the main, you know, entry point.
00:40:26 Chris
Right, right, right. All right, well, let’s get you out of here on this then. So if, if, if I’m a consumer brand and I can only track one number about my competition on Amazon, one number, one metric, what should that metric be in your opinion? Scott?
00:40:41 Needham
It’s hard to argue against revenue. Like, what, what, like what. What are they doing? Are they growing faster than us? There are some categories. There are some categories that are, like, just really exploding. Take creatine. It’s like, you know, third year in a row of, like, doubling. Well, if you’re only growing 50%, if you’re a creatine and you’re growing 50%, you’re actually losing. So, you know, tracking a competitor. And actually, because Amazon really is a marketplace of like, thousands and millions of products, you want to, you have to track a lot of different products. You know, it’s not just one. It’s kind of like seeing the entire category as, you know, creatine alone, there’s probably, say, 75 brands. So it’s a lot of. It’s not just one competitor that you’re going to try. You’re usually going to track a handful that kind of, like, fit more of your competitive profile.
00:41:38 Chris
That’s a great thing to think about. Like, you’ve got to have the category visibility to how your revenue is performing from a share perspective if you’re going to be successful, especially if you’re one of these big CPG brands that’s tied into the advertising platform, as we just discussed. All right, well, Scott, that was great. Thank you very much.
00:41:55 Needham
Thank you Chris.
00:42:01 Chris
Man, I loved having Scott on. Such a great backdrop for the final two headlines we’re going to discuss today. Headline number four Headline number four is brought to you by Ocampo Capital. Ocampo Capital is a venture capital firm founded by retail executives with the aim of helping early stage consumer businesses succeed through investment and operational support. Can learn more@ocampo capital.com headline number four OpenAI has launched a virtual try on feature in ChatGPT, letting shoppers upload a selfie and see themselves wearing clothing and accessories before they buy, according to retail dive. When browsing clothes and accessories in ChatGPT, users can tap a try on button, take or upload a photo and generate images of themselves wearing the product. Shoppers can save items to favorites or organize them into folders in their channel ChatGPT library. The feature is now live on web and mobile. Corey, in light of ChatGPT’s virtual try on news, I’m curious, what would you advise all the retailers do with their own virtual try on features going forward? Should they continue to invest in them? And what, if anything, does this question say more broadly about the state of tech across retail?
00:43:10 Cory
Yeah, no, this is a great question and very interesting one I think. You know, as you mentioned, the the generic functionality is becoming commoditized with the chat GPT’s virtual try on feature. Google has a similar version. There are other AI platforms out there that are creating this virtual try on, but again these are more basic visualization technology platforms. I think the broader question of should companies still invest in their own virtual try on technology? The short answer is yes, but they should only really invest in the types of technology where they get differentiated advantage, where they have differentiated data or customer relationships. So long story short, I think they should partner on the things that are commoditized and invest and own the things that differentiate them.
And one example of that is Chat GPT and some of these other platforms create more of a basic visualization feature. For example, where just say I want to see how an outfit or an item looks on me, determine if I just like it, that’s one thing. But to determine whether it’s the right size, does it fit me properly? That’s a different differentiated technology that if your platform can offer that and give you access to that data, better consumer insights, better kind of ownership of the customer shopping experience, better fit and product recommendations going forward, then you should invest in it. But again, companies tend to and have over time invested in a lot of these technologies that over time become commoditized so to the extent that you can identify where you differentiate your own technology from what’s available in the, you know, the commoditized technologies, that’s where there will be a competitive advantage. So companies should continue to invest in those things.
00:44:56 Chris
Yeah, right, right. And that, and that’s a summary of just ChatGPT’s capabilities. Right. Right now. Right. Like they’re going to.
00:45:01 Cory
Sure, yeah, yeah.
00:45:02 Chris
Too. Right. That’s the other point. Point here. All right, so I would ask you both the pointed question. Want to get your opinions and Corey, let’s go back to you first. Like, if I’m, if I’m the head of product at a retail, at a retailer and I see this announcement, the first thing I was thinking about is like, man, I need to halt all of my front end shopping experience, product development right now and make sure that I understand to your point, Corey, what has an ROI that I, what, what do I think has an ROI today? But what do I think is potentially susceptible to Chachi PT doing it better or as a commodity going forward? Like, should that be the approach? Should we just be like hard stop on all front end development for tools like this? Because these are the fancy things that always get talked about and the ROI is always a little bit iffy on them. Corey. So I’ll go to you first on that and then Achu, I want your opinion into.
00:45:51 Cory
Yeah, well, I think, you know, this technology and the kind of emergence of AI and other platforms that provide it are going to continue to advance. I don’t think you should immediately halt things, but I do think there should be a little bit of. All right, let’s take a step back and reassess our technology landscape, our overall technology roadmap, where we’re, where we’ve planned to make investments and does that still make sense with what we’re seeing? So I don’t think you should immediately stop it, but I do think companies have traditionally been really focused on technology adoption metrics and I don’t think again, that should be the main focus. I think you should look at your technology and look at the metrics that make sense to assess whether or not it’s working. So what sort of incremental conversion rates is your technology creating? What sort of return rates are you getting from your technology? Does your technology help lower the return rate? Does it help, you know, increase the average order value? Does it improve customer retention? Things like that are going to be really important versus hey, is my technology being utilized and is it being adopted? What percentage of my customers you know, are actually using it. And is that growing? That’s been an important metric in the past, but I don’t think that’s necessarily the metric going forward.
00:47:03 Chris
Yeah. Because there could be a lot of activity over accomplishment here if you’re not careful. Achu, how would you think about this from a consulting perspective? If a, if had a product came to you and said like, hey, help me sort this out, what would you tell them?
00:47:15 Anshu
I’d say focus first on the outcome you’re looking to drive. Right. So you know, the product could be thought of as something that has this front end capability that does these cool things that we’ve been talking about for a while. But the product could also be the proprietary data you have that, you know, we’ve got long historical longitudinal data that tells me how my product actually fits, what the sizing recommendations are that are the most appropriate, how, how that then correlates to returns. You know, if I could work with some of these platforms differently from maybe I have in the past and start to get some data back from them around try on behavior and if I could drive more conversion of those customers that have at least engaged with my product, if I could start driving different business outcomes, my product becomes something different. Right. It’s how I use these multiple try on capabilities that are going to get better, as you said, continuously to do more to actually drive the impact for my business rather than compete on feature function. Because as Corey said, I think the feature function costs are dropping precipitously and that’s not really what the customer is most interested in. At the end of the day they want to figure out if they can get the product they want with less pain and less hassle from a full, full life cycle standpoint. And, and frankly that ends up being much more profitable for you as the, as the retailer as well.
00:48:38 Chris
So the degree to which like retailers are having to think about all these different factors like the, the neuroplasticity that you know you have to have to be effective in this job in today’s day and age is just off the charts. Wow. Great discussion. All right, Headline number five. Headline number five is brought to you by Valak. Vlock is a proven e grocery technology built by grocers for grocers. They unite proprietary software with right size automation to make same day delivery profitable. To learn more, visit Veloc.com that’s V E L O Q.com headline number five. UPS’s Happy Returns is now integrated directly into TikTok shop letting sellers offer box free and label free returns at 10,000 drop off locations nationwide according to supply chain dive shoppers. Start the return in TikTok shop, choose Happy Returns and drop the item at one of 10,000. 10,000 Return bars including the UPS store, Ulta Beauty and Staples. Items are consolidated and then shipped back through the UPS network. Everlane Windsor and Pax sun are among the early retailers using it. It’s the first time Happy Returns has integrated directly into a platform rather than through individual retailer sites. And its TikTok shops only box, free label, free option. Aren’t you? Scale of 1 to 10, how important is happy returns to TikTok shops value proposition?
00:50:00 Anshu
I think it’s at least a 7, Chris. I mean it’s, it’s, it’s, it’s, it’s meaningful. You know, in full disclosure, I AM Not a TikTok shopper, but my kid definitely would sign up as one. I think making things convenient for folks that are out there browsing, exploring, investigating, and then to be able to convert one point of friction is going to be, well, how complicated will this be for me if I change my mind to get a return back? And I mean reverse logistics is a huge thing and it’s obviously been growing tremendously over the last several years. But I remember back in the earlier days of Amazon and how you had to navigate the myriad different help kind of options that they had available on their site to even figure out how you would return something. And that is that experience has gotten so much easier, which I think has helped consumers feel a lot more comfortable making purchases through Amazon. I think that’s the same thing here. So making the reverse logistics, the returns process more frictionless, I think will, will be a very significant impact.
00:51:03 Chris
Okay, all right. Corey, do you agree with him?
00:51:06 Cory
Yeah, totally. And I’ll also caveat by saying I’m not a TikTok shop user. But you know, I think just being of the mindset of a consumer here, I think having and knowing that there’s a simple and convenient returns process makes me more willing to shop from an unfamiliar brand or seller through an online platform like TikTok Shop. And I’m also much more likely to be a repeat consumer if I know that I can return something easily if I don’t like it or if it doesn’t fit. Well, I mean, consumers, again, back to the whole theme of consumers expect convenience and want convenience. I think having just a simple return process and obviously the growth of Amazon has kind of led to that, to where having a simple and convenient return process is really not just great. For consumers, but will be great for merchants as well. So I give it about an 8 or so, similar to what Anshu mentioned as well. And I think if you look at TikTok and the merchandise mix of the things that people typically shop for on there, you’re talking apparel, accessories, other types of kind of discretionary on the spot products and purchases. So these are likely going to have higher return rates due to things don’t fit or things don’t look what I expected and you know, I just want to return it. So again, I think this is a great thing and will likely lead to, you know, higher sales and, and growth for these merchants.
00:52:26 Chris
Yeah, there’s one thing I love about this story and one thing I don’t like. I’ll do the don’t like first. The one thing I don’t like is having to say tick tock, shop on a podcast. Every week is the hardest thing to say. I was joking about that with somebody yesterday. But the thing I love about this, I’m with you guys. I think, I think it’s, I think it’s definitely solidly an 8. I’d probably even go 9. I think it’s a big coup for Happy Returns. I’ve told this story before on the program, but I first met Happy Returns founder David Sobey when I was running store of the Future at Target. And I met him when he was basically operating Happy Returns on a card table in a mall in California back in 2000. Must have been 2016. So 10 years ago. And to see where they are now, it’s pretty, pretty compelling. And so I think you’re right. I mean this, it makes online shopping easier. It makes it easier for, easier for TikTok shoppers to return products. So it’s got to be a win. And it’s, it’s just a smart move. Especially when you think about, you know, like you said, Corey, I thought you point was really great.
TikTok shop is about discovery via social media and taking people from discovery to buy as quickly as possible. And one of the points of friction in that process will be how do I return my profile products. And so this is a smart move. All right, let’s go to the lightning round. Let’s finish up today’s show. Today’s lighting round is brought to you with the help and support of Smart Scout. Smart Scout is Amazon and TikTok shop Intelligence. Most tools show you your own account. Smart Scout shows you the market, brand, revenue, category, share and who really owns it. Visit smartscout.com omni Talk to learn more. All right, lightning round. Question number one. Corey, I think this is to you given ChatGPT now lets you try on clothes virtually. What’s the one thing you would never buy without trying it on in person first?
00:54:07 Cory
I would probably have to go with running shoes. I’m an avid runner. I like being able to take my running shoes wherever I go when I travel for work. But one thing that’s really important to me is, you know, running shoes vary significantly and are catered to different types of people, different, different feet structures, et cetera. So I always go into running stores and get my feet scanned for a more custom type of running shoe to prevent knee pain. So that’s something that I, you know, unless I’m buying the same thing I already have, that’s something that I won’t buy without trying out first.
00:54:40 Chris
That’s a really good one. That’s a really good one. Then the next question is, do you buy it in the store? Do you go back and look for it someplace cheaper? But that’s a question for another day because this is a lighting route. All right, Archie, with return season right around the corner, what’s the purchase you most regret not returning?
00:54:53 Anshu
Okay, so this is a confession. I ended up doing some late night shopping ones and you know, a few days later, five foot long stuffed tiger showed up at our, at our home. And I got a lot of grief for that. That was not intentional and I should have just returned it right then and there. But it was, you know, I couldn’t imagine talking about returns like bringing that giant box back somewhere to kind of have it returned. So it stayed and it’s now cycled through my nieces and nephews. It’s found a good home. But. But yeah, I think the right thing would have been first probably not to click buy. But then when it showed up to return it.
00:55:30 Chris
Yeah, a five foot tiger is a great conversational piece at the end of the day. So, you know, hey, maybe, maybe it’s not that big of a regret. All right, Corey. Street Fighter was number one at the box office last week. Rank these video games in order of best to worst. I’m curious how many of them you’ve actually played. Mortal Kombat, Street Fighter or Karate Champ?
00:55:48 Cory
The original at first, I’ll say. Sad that I did not know the Street Fighter was in the box office. But that being said, growing up, I played Mortal Kombat and Street Fighter quite a bit. But Mortal Kombat was one of my favorites. So I have to go with it being number One, followed by Street Fighter and I think Karate Champ. Maybe a little before my time, so I’ll put it third.
00:56:06 Anshu
I’ll confess, I’ve actually played Karate Champ.
00:56:08 Chris
So does that. You put that. I put that one. Number one.
00:56:13 Anshu
I would, too. I would. Yeah. That was, you know, two joysticks. It was very simple, straightforward. Yeah, no, absolutely.
00:56:18 Chris
It’s the original. It’s the OG of those games, really, when you think about it, when you get right down to it. All right, last one, Archie. Tesla unveiled that’s Flying Roadster last week. If you were to purchase one, what is the first mistake you would be afraid of making while driving it?
00:56:31 Anshu
I’m sure we’ve all seen those videos. They are really, really impressive. But I think I would think about that roadster the same way I think about roller coasters.
00:56:39 Chris
Now.
00:56:39 Anshu
In my age, there was a time where I probably would have gone on the crazy, scary roller coaster, but I mean, having seen sort of what that car did up the ramp and the flip and the backflip and everything else, honestly, I’d rather just stand by and watch someone do it. I think. I’m not sure that I would be taking that risk.
00:56:54 Chris
Yeah, no, 100%. I’m pretty sure I would spill my coffee all over my lap if I tried to use. Use a car like that. All right, today’s podcast was produced with the help and support of Ellis. Happy birthday today to Andrew Scott, Kim Kardashian, and to Maverick and rooster savior Glen Powell. And remember, if you can only read or listen to one retail blog in the business, make it Omni Talk. Our Fast five podcast is the quickest, fastest rundown of all the week’s top news and our daily newsletter, the Retail Daily Minute to you all. You need to know each day to stay on top of your game as a retail executive and also regularly feature special content that is exclusive to us. And then we take a ton of pride in doing just for you. And if you’re in the grocery industry, be sure to check out Ben Miller’s weekly podcast, Grocer Talk. 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 omni Talk Retail Corey, if people want to get in touch with you with. Aren’t you with anyone at amcrg, what’s the best way for them to do that?
00:57:52 Cory
Yeah, you can find both of us and others from CRG on LinkedIn. So that’s probably the best way. Or you can go to our website, which is Alvarez and marsal-crg.com.
00:58:04 Chris
All right. Awesome. Well, thank you both.
00:58:06 Anshu
Great.
00:58:06 Chris
First time for both of you on today’s program. It’s great. We’ll have to have you both back. On behalf of Anshu, Corey, everyone at A&M-CRG, on behalf of producer Ella, myself, and everyone at Omni Talk Retail, as always, be careful out there.
Omni Talk® is the retail blog for retailers, written by retailers. Chris Walton founded Omni Talk® in 2017 and have quickly turned it into one of the fastest growing blogs in retail.