00:00:00 Chris
Hello, I am Chris Waltman. Welcome to this week’s Omni Talk Retail Fast five, which is brought to you by the Omni Talk retail podcast network. Some weeks the news trickles in, but this week it came in by the truckload. Or should I say by the dasher. This week’s guest host from the A&M consumer and retail group, Kelly Carey and I discussed everything from DoorDash’s $17 billion Instacart grab to whether we’ve all been sleeping on Amazon’s retail business. This is the Omni Talk Retail Fast Five.
00:00:29 Kelly
Grocery delivery is alive and well.
00:00:31 Chris
For type of purchase they get. That means there’s a local grocer who isn’t getting that purchase.
00:00:36 Kelly
What are they actually doing to get people back in the store?
00:00:40 Chris
You got to invest in making your store run smarter. First.
00:00:45 Kelly
Big statement here. I think this is the end of the smart cart.
00:00:48 Chris
I think if you’re a smart grocer, you’re like, oh my God, I got to get in front of this. I can’t let a third party necessarily run my platform.
00:00:55 Kelly
I think QSRs in general are seeing slower traffic right now as people are being more price conscious.
00:01:00 Chris
Trader Joe’s, really? Why, Kelly Carey, always a pleasure. How are you keeping this morning?
00:01:09 Kelly
Hey, Chris. Doing well. How are you?
00:01:11 Chris
I’m doing great, man. This is, this is the. We were talking before we got started this. We’ve been working with the A&M consumer and retail group, I think for five or six years, give or take. And this is the first time in history, in history of the Omni Talk Retail Fast Five that we’ve had one guest host from the A&M consumer and retail group. So. So, Kelly, I think first of all, that shows the esteem that your colleagues must have for you, does it not?
00:01:34 Kelly
I guess so. I gu. So, yeah, this is our first time having someone solo on a fast five, so we’ve done some five minute bits. But you know, they’ve sent me here 45 minutes with you. I hope I serve them well.
00:01:49 Chris
Or, or, or they just want, or they, they just secure the biggest glutton for punishment in the entire organization, willing to stand in here and go and go toe to toe as we debate the topics from the past week. But man, there’s some good headlines this week. I’m really excited to get to them, especially the DoorDash one. I mean, the doordash and Instacart thing is big, big news. Which we’ll get to, right? But Kelly, for those new to the show, maybe because we do get a lot of first time listeners as well. Give some background on what it is. What’s the 411 on the A&M CRG.
00:02:19 Kelly
So Kelly carry was senior director with Alvarez and Marcel’s Consumer and Retail Group. So our group’s been around for about six, seven years now. And what we really do is aim to bring operator experience, expertise paired with kind of that consulting magic to consumer and retail clients. So, you know, this is really the perfect partnership with you, Chris, to talk about what’s going on in the industry, but whether you are looking to address operational challenges, whether you’re thinking about the next frontier of growth, we really kind of serve consumer and retailers end to end in whatever their unique problem sets are. So really love to talk to people who are interested in learning more about us. Can talk a little bit more about that at the end.
00:03:07 Chris
Yeah. And tell us about yourself too, Kelly, before we get going.
00:03:10 Kelly
So I have been with the Consumer Retail Group since its origin story original. Yes. So I’ve been working with the team for about seven years. I personally have worked across the industry, spent a lot of my time in beauty, food and beverage and I do a lot of work on kind of the end to end planning, operating model and growth space. So excited about the headlines today. We’re going to touch on.
00:03:38 Chris
Some.
00:03:39 Kelly
Of those industries.
00:03:40 Chris
Right? Right. Yeah, we’re gonna get a wide swath of things today. You know, it’s funny when just before we get started, I was telling Ella producer Ella, who many of you listeners know before we got started that, you know, today we’re going to do the solo A and M show. And she’s like, who’s it going to be? And I was like, kelly, Carrie. And she’s like, oh, awesome. I love her. She’s great. She’s so fun. So we’re gonna have a blast. So let’s get right to it on this week’s Fast Five, which is of course brought to you with the help and support of the A&M consumer and retail group Mirakl, Quorso, Ocampo Capital Manhattan and Smart Scout in this week’s Fast Five. Kelly, we’ve got news on Instacart pulling the plug on its caper smart cart business. Starbucks posting a 7.7% US comp as back to Starbucks keeps on brewing. Walmart. Plus heading south of the border with a big launch in Mexico and Andy Jassy telling Wall street it’s sleeping on Amazon’s retail business. But we begin today, as I alluded to at the outset, with doordash agreeing to buy Instacart for $17 billion headline number one is of course brought to you with the help and support of our friends at the A and M Consumer and Retail Group.
The A&M Consumer and Retail Group is a management consulting firm that tackles the most complex challenges and advances its clients, people and communities toward their maximum potential. CRG brings the experience, tools and operator like pragmatism to help retailers and consumer products companies be on the right side of disruption. All right, Kelly, here it is. Headline number one. It’s a big one. DoorDash has agreed to acquire Instacart for $65 a share, an equity value of roughly $17 billion, combining the country’s biggest restaurant delivery app with its biggest grocery delivery platform. According to DoorDash’s announcement on October 29, the $65 price per share price is a 26% premium to Instacart’s October 22 close, the last trading day before deal reports surfaced. At least 75% of the consideration will be cash backed by up to a $13 billion J.P. morgan Bridge loan. And don’t hold your breath on closing either. The deal isn’t expected to close until the end of 2027 or even into the first half of 2028, pending antitrust review plus approvals in both Canada and Israel. Kelly, I can’t wait to talk about this. What do you think of DoorDash acquiring Instacart? Number one. And number two, what are the different scenarios you envision playing out between now and the possible possible closing date?
00:06:07 Kelly
To start off with your first question, I think this is a great idea on DoorDash’s part. You know, they on their own, independently have for many, you know, I think years now, been trying to get into the grocery space. I would say they’re there. It’s not something they’re trying to do anymore. But to fully take advantage of that, get all the partnerships, all the retailers on board, that’s a lot of effort. So to bring in Instacart, I think, can one help them with their own app grocery expansion, getting more partners on board and getting more kind of data in the way that Instacart has really kind of created this data ecosystem with those partners. But also I do think, and I would imagine the DoorDash team thinks this as well, that there’s a really different audience on these two apps. I think the person who’s going to get groceries on DoorDash is very likely a different shopper than who’s on Instacart. Doordash has that, like, I need it now. Oh, I forgot something. Small cart. Whereas Instacart, you have more of this routine shopper who’s doing their, their big batches, their weekly shopping. So I think it really opens not only the capability suite for them in grocery, but also is likely increasing the consumers that they’re getting access to. So I think it’s a great idea for those two reasons.
00:07:33 Chris
Yeah, right. Okay. So you brought up some good points I hadn’t thought about too. Like, you know, the one thing that’s interesting in what you described too is, you know, DoorDash is essentially buying Instacart’s media capabilities too, you know, where.
00:07:44 Kelly
Yeah,.
00:07:44 Chris
I would say Instacart is probably better equipped at handling the retail media side of the business than DoorDash. So they’re getting that as well, which is something I hadn’t really fully thought of until you just articulated what you said and then. Yeah, I think you’re right, Kelly. Like, it essentially is two different use cases for the average consumer out there. Like, they’re probably going to both. And so there probably is a nice synergy if you can round that into the DoorDash, the, into the DoorDash offering as well. How do you think. How do you think, if at all? Kelly, I’m curious before I give you my thoughts, because I’m going to get kind of Machiavellian on this one. How do you think. How do you think about the Instacart like, side of, like, what the business that it does outside the consumer facing things like, you know, running the websites for grocers, running the pick and pick and pack for grocers, the delivery for grocers, all the white label services that they do for them. How do you think that factors into Door Dash’s plans here and how do you think DoorDash is thinking about that?
00:08:40 Kelly
I would hope that they are thinking about it just in terms that that is a very different side of the business than they’re used to today. So that’s going to be challenging, I think, to take on and just start to operate in that ecosystem. But the benefits that it will have for them, I think are significant. They’re going to get access to all of that kind of platform information and be able to deploy that into even more targeted work on their own platform, but then also on the Instacart app. But I think that will be like a big operating model challenge. And, you know, how do they actually want to.
00:09:16 Chris
Run.
00:09:16 Kelly
This? It’ll be curious to see what that looks like down the road. But they have said in the article that they plan to continue operating the two banners at the moment. Not kind of combining it on your DoorDash, which again, I think is smart. I think you have truly different consumers on the apps in terms of how they shop. But also, even like, I personally didn’t have Instacart until yesterday when I was thinking about this headline. So I.
00:09:43 Chris
Think.
00:09:44 Kelly
Totally different populations, even on the apps so benefit there. I’d be curious, that side of the business specifically, does that fold under DoorDash or do they also continue to operate that as Instacart?
00:09:58 Chris
Right, right. And with the closing, with the length of closing, you know, there’s a lot of time to learn that. And to your point, I think that’s a really good point too. It gives gives DoorDash the chance to kind of learn the muscle memory required for that side of the business as well, which I imagine it has some experience with to a degree, although it’s not publicly talked about nearly as much as Instacarts is. All right, so I want to get a little Machiavellian on this one too. Kelly.
00:10:21 Kelly
Yeah,.
00:10:21 Chris
I want to ask the question, like, how much do you think DoorDash really care if this deal goes through? So I start thinking.
00:10:27 Kelly
Like,.
00:10:28 Chris
Like, what is the cost to DoorDash if it doesn’t go through? Because the mere fact that the deal is happening, in my opinion, devalues Instacart in the long term. You know, grocers, grocers, you know what they’re seeing. This deal, they’re going to be like, okay, to, to the question, to the, to the, the conversation we’re just having. I think if you’re a smart grocer, you’re like, oh, my God, I got to get in front of this. I can’t let a third party necessarily run my platform like this because it’s getting the first party data relationship of my customer. I’ve got to get a hold of that. So some, some grocers are going to start pulling out, if they haven’t already, which is going to cause further devaluation for Instacart. And if the regulatory agencies also back it from happening, or, sorry, block it from happening. Not back it, block it from happening, Kelly. Like, DoorDash is stronger as a net result of that too, over time. So basically it’s a call option somewhere between like 0 and $17 billion to kill your competition in a lot of ways. So, like, I think it’s a shrewd move. Like they Know what they’re mo at most gonna pay. And it could become a lot less than that over time. Of course, it depends on the stipulations contractually, if you know, who pulls out or what happens if it gets regulatory blocked or whatever. But, like, I’m getting kind of Machiavellian on this one. And I’m curious, Kelly, like, do you think. Do you think I’m at all sniffing in the right direction on it?
00:11:47 Kelly
I think you could be. That was just another reaction of me mine to the headline is this is a bit of a. An ultimate chess move. They’re making the first move on the board, and it’s a pretty big one because another player in the mix here is Uber. Yeah.
00:12:04 Chris
Right.
00:12:04 Kelly
So back in 2024, Uber and Instacart entered a strategic partnership. When I did now open my new Instacart app yesterday, it literally pops up, you know, powered by Uber. So they are still kind of operating on that Uber ecosystem, is my understanding. So. So kind of knocks out some Instacart car competition. It would be a huge hit to Uber as well. Who’s kind of competing in this on the go food space. So, yeah, I mean, even if they’re not getting all those benefits I talked about, which I think are real benefits, they’re forcing some major shifts in this market and creating disruption that I think is going to net benefit them.
00:12:49 Chris
Right? Yeah. And DoorDash, as we’ve talked about on this show many times with you, with others, DoorDash is one of the shrewdest retail operators out there. You know, and I. The other thing too, about DoorDash, like, they are thinking like. Like a bona fide retailer right now. I mean, they’re. They’re going after Black Friday for the first time this week. Just yesterday, they announced Black Friday deals on DoorDash. Like, that’s crazy to me. So, like, they are shrewd. So I don’t know. There’s going to be a lot more to this story, you know, in the coming months and even the coming years ahead. So. And to that point, like, there’s a whole nother angle to this story, which I want to get to. So let’s get to the next headline. The next headline is brought to you, of course, by Miracle, the catalyst of Commerce. Over 450 retailers are opening new revenue streams with marketplaces, dropship and retail media.
And succeeding with Miracle, 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, if you thought we were done with Instacart, No, I got news for you. Think again. In a move announced the same day the doordash deal talks went public, Instacart said it’s winding down its capercart smart cart business five years after buying Caper AI for $350 million. Man, the guy that sold out, sold. That was so smart. According to Grocery Dive, Instacart said, quote, retailer adoption has not scaled quickly enough to justify our continued investment. End quote. The retreat reverses half a decade of work. Instacart’s former CEO once called the carts the future of grocery shopping. And recent deployments included schnooks, a story we have covered many, many times. Weiss Markets and a UK debut with Morrisons. Kelly, here’s my question for you on this one. Does the death of the caper cart signal the end of the smart cart in grocery, or just the end of Instacart’s version of it?
00:14:37 Kelly
I actually am going to go, big statement here. I think this is the end of the smart cart. I don’t think it’s the end of the intent of the smart cart. But why invest a lot of money in a physical cart when.
00:14:52 Chris
You could.
00:14:53 Kelly
Get the same benefits from your cell phone? It’s free. Your customers are already on it, they’re using it before they get to the store to make their lists. Why. Why spend on a physical cart when you could integrate it all into their app at zero physical cost to you? So I think there’s still huge opportunity. It’s just, it’s not going to be in a cart format.
00:15:17 Chris
Okay. Okay. So you think, you think this will, you will kill all investments on smart cards in the near term? For sure.
00:15:23 Kelly
I, I would kill all investments on smart carts in the near term.
00:15:27 Chris
I would, too. And I’ve said that many, many times. What about in the longer term, like five to 10 years out? Do you think we’re gonna start to see this pop back up?
00:15:34 Kelly
I don’t know. I. I think that my gut reaction is no. I think that just like technology is just becoming increasingly. There’s so much more you can do on your phone every day with AI. Like what? The only added feature that I was seeing of these carts is, you know, navigation of the store tips. Why can’t you do that? Mobili.
00:15:55 Chris
There.
00:15:55 Kelly
Was the deeply expensive weighing of your products in.
00:15:59 Chris
The.
00:15:59 Kelly
Physical cart. I guess you lose that. But I feel like even the idea of accelerated checkout, which was so hot a few years ago, and they.
00:16:09 Chris
Were.
00:16:09 Kelly
Thinking about how can we use this physical cart to also allow you to check out in the car? You don’t even need to go to the line. That slowed down a bit. Like, that’s not really something people are talking about as much this, like, demand to get out of the store as fast as possible. And we have these other options. So I’d say even in five to 10 years, like, I don’t see this coming back. It’s so expensive.
00:16:32 Chris
I hope you’re right. But sadly, the retail historian in me thinks, I don’t think they’re dead. I think Instacart’s version is dead. But I think we’re going to still see it because there are two use cases that I think became very palpable from the cart now. And I think to your point, there are many, many other ways to do them. One is the real time budgeting that you can see as you’re shopping, that’s valuable. But yeah, you could do that with your smartphone or you could do that in other ways, shapes or forms. And then of course, the one that always got people excited, which is what, you know, Instacart and others have been, you know, stumping for a while, is the retail media angle being able to serve up ads. But again, you can serve up people, you can serve up ads on the phone, you can serve up ads on digital screens, you can serve up ads on In Store via In store audio. There’s lots of ways to do that. So I hope you’re right. Kelly. The thing I would say too is like, and I’ve argued this for since the cows come home, since the dawn of time, is like, you don’t put the smart cart before the store. Like, you’ve got it. You should. You gotta invest in making your store run smarter first before you actually make the carts run smarter. And that’s why I hope, to your point, that in the short term particularly, and maybe hopefully even in the long term, that’s where the investment goes, that’s where the funnel goes. But what you get the last word here. What do you think?
00:17:50 Kelly
Yeah, I totally agree. And I think also just pause on the complexity of the physical cart and get the technology right of what do you want to be serving up to them? What information do you need from them? How are you getting them to integrate your app into their day to day? It’s honestly a benefit if you’re getting them on Instacart or your app rather than just the physical hardware in store, which they’re going to then leave when they go home. So how can they really think about making that mobile experience as well as the physical store experience top notch? Then we can play with an add on cart technology. The one thing I would love to see out of this is carts that have a holder for your cell phone because today I go to normal car and I kind of just tilt the cell phone on the baby seat. So that’s what I believe the future of smart card is. Just give me a little holder for my iPhone.
00:18:47 Chris
And I can you probably remember this too. I can remember in business school, this is back in 2003, looking at IDO trying to reimagine the shopping cart. Not even the smart cart, the shopping cart. And that didn’t even work. So like this stuff, they’ve been trying to redesign the shopping cart for years and years and years and it just, it just never takes. The funny thing too, Kelly, as I’m closing this out is, you know, I think I feel like Walmart has been giving us the roadmap on how to think about this conceptually. Like, you know, they’ve invested in the store, they’ve invested in understanding the data flows that are happening in the store at every level. They’re using that to improve the lives of their, their, their associates. They’re using that to improve the experiences of their customers both in store and online via their mobile interactions. Like you said, Kelly, so the roadmaps there, like why are we, why are we dilly dallying around with things like smart cards at this point? So in a lot of ways I think this is a good announcement for the industry. 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. God, we are just rolling here with these great headlines. Starbucks closed out fiscal 2026 with global comparable coffee house sales up 7.2% and US comps up 7.7% in Q4, according to Starbucks October 29 earnings release. US comps were driven by a 5.2% increase in average ticket and a 2.4% increase in transactions, topping the company’s own guidance of 6.5% or better. For context, one year ago, US comps at Starbucks were flat. And last quarter traffic was doing more of the heavy lifting than ticket was this quarter. That mix, as I just Recanted has flipped Kelly. Starbucks CEO Brian Nichols back to Starbucks. Strategy appears to be working. But with ticket now driving more of the growth than traffic, is that a sign of strength or the first yellow flag in his turnaround plans? And what does Starbucks also need to do differently to keep the momentum going?
00:21:01 Kelly
I do think that this is a cautionary signal for Starbucks. There’s.
00:21:06 Chris
A.
00:21:06 Kelly
Lot of. I do, yes, I think a lot of great progress. The ticket improvement is really favorable. They’ve been taking so many calculated, smart actions around the menu to prioritize margin, you know, get interesting products in people’s carts. So I think there’s a lot of things moving in the right direction. But QSRs really need to pay attention to that traffic because ticket value is something that can easily turn around as consumers get more price conscious as they think about, you know, managing what they’re buying. So really paying close attention to that traffic is going to be really important. It also feels a little counter even to the name of the turnaround back to Starbucks. People aren’t going back as much. It’s slowing down a little. So I think it’ll be important for them to think about what are they actually doing to get people back in a store. And I think there has been a push around this about making it feel like a coffee house again, some of the kind of physical elements of the location. So I think the plan is there. I wouldn’t say there’s dramatically different things that they need to be doing, but it is something that they should watch cautiously.
00:22:20 Chris
Okay, that’s interesting. So I see things a little bit differently on this one. Yeah. So we’ll have a little bit of a debate here. I actually think that the difference between traffic and ticket is actually a really good sign because the fact that traffic is still up year over year when your ticket is pushed up that high. And. And we know that, you know, you know, coming off the election yesterday, we know how pressed the average consumer is, too. So the fact that Starbucks is getting people in and they’re actually paying more money for their coffee, that’s a really good sign that things, I think, are potentially working out to a larger degree than I think I would have anticipated. And so, like, and I. I say that too, if this is, of course, a sample size of 1.
But my local Starbucks got the refresh, and it looks better, it feels better. It’s got the digital menu board, which helps the customers understand where their order is in the queue. It helps the employees, you know, deal with all the angry customers, because instead of them asking, where’s my drink? They can see on the board that it hasn’t even gotten through the first stage of production, which is valuable. But, but I think here’s the caveat though is I think, like, I don’t think Starbucks is out of the woods yet though, Kelly, because, you know, I go into Starbucks on a Saturday or Sunday, there’s like a hundred orders on the digital menu board. And I tried to meet somebody for a coffee in the store and it took us so long to get our coffee that it ended up killing our meeting. And so I think it’s going to become a hassle for people to have meetings there if they can’t operationalize the coffee production in a way that keeps up with the demand. So if the traffic’s coming, that’s great, but it’s also going to cause another problem down the road.
And so that’s where I started wondering, like, and I told the guy I was with, I was like, go order your coffee in line. Don’t order it via mobile because it’s counterintuitive. You think I’d order it ahead, I’d be ready, be ready there when I get my, when I have my, Be ready for me when I have my meeting. It’s not. You go and you go up to the counter, it actually gets ready for you faster because they got the four minute promise and all that kind of thing. At least that’s what I think. So I’d actually, if I’m Starbucks, I would actually potentially lean into that from a marketing perspective to be like, hey, you know, come into our store, we’re gonna, we’re gonna give you your coffee as quickly as possible. You’re gonna get priority. And because we want you to enjoy, I mean, that’s something I’d at least be experimenting with. I don’t know though, Kelly, call me crazy.
00:24:36 Kelly
No, I really like where you’re going with that last idea. Just because as Starbucks started to get ahead of the mobile, ordering so many of the stores again, sample size of one that I walked into became a very stale experience from, as a consumer, you go in all the cups on the counter, they’re just sitting there. Yours takes forever. It’s exactly what you described. I’ve seen it in so many locations. So I do think they need to figure out how to incent people to go in and enjoy their time there. Again, totally agree. Great that the, the ticket is up. That’s progress for them and from a performance standpoint. But there’s still work to be done to actually get people to want to spend time in those stores. And I think the operational point is spot on. You can bring people in, get that traffic up, but if you’re not going to also deliver from an op standpoint, it’s not going to hold. It will go back down.
00:25:33 Chris
Yeah. The other point too, like you brought up, you brought up the mobile interactions on the last headline. I think that’s a valuable asset for Starbucks in this conversation too. You know, I’m a frequent Starbucks shopper. Like I, I’m buying, I’m buying Starbucks three or four times a week. I know producer Ella is too. And they’ve got all that data on me from the mobile app. So why not incent me to purchase my, you know, when I go on the app, if they know the demand is high, why don’t they incent me to go into the store and, and purchase it that way or you know, try to get me into the store more often with different incentives. Like I think there’s things they can do from a loyalty perspective here that have never been tapped into before via the connection that they do have with the mobile app. What do you think about that, Kelly?
00:26:13 Kelly
Yeah, I think that could be interesting. And another avenue that I, I know they’ve played with before and I think could further explore is each individual store, what purpose does it serve? Like not all of their doors are going to be these coffee house experiences. So where can you use some of that data of where people are primarily doing pickup today versus not where’s your kind of strong footprint area where you can really optimize the purpose of each store and then to your point, use the app, funnel them from there, especially your really loyal customers.
00:26:49 Chris
Yeah, that’s the other point, you know, and I think I’ve mentioned this on the past show too. I got into a very vociferous argument with the PR team when I, when I basically wrote an article in Forbes saying like that’s what they still need to do because so many people don’t care about the in store experience. I think it’s obvious that, that a lot of customers don’t care. Like they just don’t because they will willingly wait in line for pickup and then take their coffee and leave. And so yeah, to your point, like then how do you create stores that are just that which they tried to do but went away from. But I think you have to bring that element back to some degree. But maybe, maybe, maybe Nichol’s right, maybe you do that as like the next order condition. Like first you try to figure out how to segment your volume and give incentives to smooth out your demand. You go back to traditional operations planning in business school and you try to go there first before you have to start investing in new if because it is expensive to do that. It’s new infrastructure, you got to design it, you got to figure it out. And maybe there are simpler ways and maybe that, maybe he smartly is trying to do that. I’ll give him credit because he seems like he knows what he’s doing. Maybe that, maybe that is the first, the first order condition of what you want to solve before you take that bite of the apple.
00:27:55 Kelly
Yeah, definitely. I mean, they’ve already invested a lot in stores as they’re doing this back to Starbucks, but they’ve done the lower investment part relative to what else they could do, just in terms of really reformatting, revisiting location, how you’re going to drive traffic. So, you know, like I said, I think the slowing of traffic is a little bit of a cautionary flag. I think QSRs in general are seeing slower traffic right now as people are being more price conscious. So it might just be a sign of the times. But as they’re really thinking about weighing the back to Starbucks, you know, what’s the next step on traffic? I think will be really important. They’ve had great ticket progress. Like, let’s focus on traffic now.
00:28:41 Chris
Yeah. And then the one thing we forgot to mention is they could also just buy a burrito chain. You know, why not? You know, Right, Kelly,.
00:28:47 Kelly
I will say their breakfast burrito, pound for pound, like, does a pretty good job against some of the others.
00:28:54 Chris
Right. That was the funniest headline a few weeks ago when there was rumored to be, like, talking about a merger between Starbucks and Chipotle. I just had to bring.
00:28:59 Kelly
Oh, I haven’t even seen that one.
00:29:01 Chris
Yeah, and see that? Oh, my God. Yeah. No, that was a rumor that. Because he ran both things, there was a rumor that Starbucks was looking to acquire Chipotle. So I was like, yeah, let’s just fuse those together. That’ll solve all the problems. Headline number four is brought to you by Accapo Capital. Ocapo 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. Learn more@ocampo capital.com headline number four. Walmart plus has officially launched in Mexico, bundling free shipping and delivery with streaming mobile data and healthcare benefits into a single membership. According to Walmart, the membership costs 89 pesos per month or 890 pesos per year. And Walmart says the bundled benefits are worth more than than 260 pesos per month. Wow. Nearly three times the fee. Mexico follows Walmart Plus’s Canada launch in June, part of what Walmart Plus’s general manager Deepak Maney calls a quote build once skill globally strategy, end quote. In the U.S. walmart says members shop three times more often and spend four times as much as non members. No surprise there. Kelly, with Canada and now Mexico in the books, how far do you think Walmart can take the potential of Walmart plus globally?
00:30:13 Kelly
I think it’s gonna be really interesting to see what adoption looks like in Mexico. So they have a really different cost structure here in Mexico than we have in the US it’s when you annualize it, it’s about half the price of the US model. So they seem to be testing something a little bit new in Mexico which is can we bank a little bit less on that membership fee and kind of the income that we’re getting from having members and focus on really driving the habitual visiting a Walmart using Walmart as your go to because it’s not free or cheap to run these membership programs. So if they’re able to see that hey, this lower cost model in Mexico works and we’re getting the benefit we need just from traffic expanded occasion of that consumer, I think they have a strong case to expand that more into Central America’s other markets. But if that doesn’t work it becomes an expensive approach to roll out in other countries. So I’ll be really curious to see how it goes.
00:31:24 Chris
Yeah, I think, I think that’s, I think that’s right. You know to me I was, I was actually doing, I did a, did a little research on this one too and I said like okay, you know, now that you know Walmart’s in, Walmart’s taking Walmart plus to Canada and now Mexico, like where else are the big opportunities? And like to me the logical next step is Chile, you know, for sure. Like I think if it, if it works in Mexico or even if it doesn’t, I think we’ll see it go down there too because you know the one benefit of it, you know, is you are getting paid, your, your customers are paying you to shop with you which is hugely valuable. So any amount of money you can command to do that is super relevant. And then also you get the retail media side of it too because you get the people interacting with you more and all that. So it, it, it fuels the flywheel, which is what you know, Amazon discovered a while ago. So you know, but you know, I think when I go back to my question globally, I think, you know, beyond what we said in terms of Latin America, I don’t think there’s much more juice that Walmart can squeeze out of this. But there’s still probably a lot of juice that it can squeeze in Canada, in Mexico and even here in the U.S. right. I think it’s still, you know, when you look at it compared to prime, it’s still relatively under penetrated to the population. At least that’s my assumption. And so, and, and I’ve always said on this show too, my go to now for quick deliveries is Walmart. Like that’s where I’m going. I don’t even look at prime anymore and I even question the value of prime at the end of the day because I have purchased things without prime and I don’t feel like there’s any really big difference. But hey, who am I to judge, right Kelly?
00:32:52 Kelly
Yeah, yeah, no, it would be really interesting. I agree with you. I do not know what their penetration is in the US But I think expanding further in the current markets will be a great opportunity where we know, especially in the US like grocery delivery is alive and well. It’s just who’s gonna win out on the order,.
00:33:12 Chris
Right?
00:33:12 Kelly
Is the doordash instacart merger, is it fresh? So I think that that’s really still going to be the core focus. But again, once we see how Mexico develops, South America, Central America I think become the next natural places for them to try it out. But we’ll see.
00:33:31 Chris
Yeah, it’s like the domino theory of Walmart. Plus, where’s it going to go next? All right, well, headline number five is brought to you by Manhattan Associates. Yes, you heard that right. We have a new sponsor this week on the Omni Talk Retail Fast Five. Manhattan Associates is the global leader in cloud native and AI empowered supply chain commerce solutions. Manhattan has spent more than three decades helping the world’s leading brands manage their warehouses, transportation, inventory and fulfillment operations to efficiently and effectively deliver on their promise to their customers. For more details you can visit http://www.manh.com. Headline number five saved a good one for last. Kelly. Amazon CEO Andy Jassy used the company’s Q3 earnings call to argue Wall street is underrating its retail business. According to Amazon’s October 29 release, net sales rose 12% to $201.9 billion. Operating margin hit 13.9%, its highest ever. And AWS grew 39% to $46 billion. But on the retail side, per retail dive, online store sales grew just 2% to $68.5 billion, and physical stores grew 2% to $5.7 billion. With Prime Day’s move from Q3 into Q2 making the comparison, albeit tougher. Jassy, however, said, quote, some folks are sleeping a bit, end quote, on Amazon’s store’s progress, noting fresh groceries and everyday essentials are growing three times faster than the rest of the store business. And that same day, perishable customers buy nearly seven times more essential units. Kelly, what do you make of Amazon CEO Andy Jassy out stumping for Amazon’s retail business? Is he right or is this possibly the first sign of a crack in the foundation?
00:35:14 Kelly
This is the tough one for me. It.
00:35:16 Chris
Is. This is so hard.
00:35:19 Kelly
I don’t know if it’s a sign of a crack in the foundation. You know, when you have that many good things going for you on the headline, it feels a little bit like, okay, are we, are we reaching? Do we need to cheer on every single person on the team? But you know, I do think that what he has stated are signs of progress for the retail business at least, seeing that they’re, they’re having this pickup in traffic on Fresh. It’s really interesting, especially given all the other things we just talked about today. Instacart DoorDash. There’s so many players in this online grocery delivery space, so I think it’s important for them to be able to show they’re still a relevant player in this market. Almost feels like a bit of a competitive move to kind of keep relevant on this very hot topic right now.
00:36:11 Chris
100.
00:36:12 Kelly
Yeah, like, I don’t think it’s a crack in the foundation. I don’t think they’re doing poorly. But I would say we’re, we’re forcing some press and attention to this to make sure that they’re staying relevant. Top of mind, as there are a lot of movers and shakers in the space right now.
00:36:29 Chris
Are you buying the don’t sleep on us argument or do you think that’s just a sound bite?
00:36:34 Kelly
That feels like a bit of a sound bite to me. It.
00:36:36 Chris
Feels like a sound bite. I 100 agree with you. Yeah, like I’m, I’m not buying the don’t sleep on it at all. I think it’s, I think this, I think the, the sales performance is a little, and you know, there’s only so much you can glean from an earnings Announcement. But it seems a little bit like kissing your sister. You know, overall sales are up 2%, which it isn’t that much. You know, it’s just not, it’s not especially given the macroeconomic conditions. It tells me people are adding on perishables and essentials. Which essentials is a whole nother conversation. Like how much of that is actually true grocery, which is another thing. But, but they might be adding on, but it’s not moving the top line, you know, so like they’re getting the unit movement potentially, but it’s not moving the top line at all. Which means that Amazon, this is the kissing your sister argument, which to me means that Amazon is still at best, you know, the top up grocery option because they’re blasting, you know, do you want a perishable with your order? With every order that I make on Amazon. Right. I mean that’s just what they’re doing. So of course they’re going to grab some people with that. It’s smart. But here’s what, here’s the thing. At the end of the day, Kelly, it still matters. It still matters. It’s death by a thousand cuts like I’ve talked about. Because for every type of purchase that Amazon gets. He’s right. The grocery industry particularly, not Wall street, but the grocery industry particularly shouldn’t sleep on them because for every type of purchase they get, that means there’s a local grocer who isn’t getting that purchase and that purchase matters to their longevity. So yeah, it sounds like something a CEO, CEO says to get the sound bite out there. But you know, I, I, it still matters. That’s what’s crazy about it.
00:38:08 Kelly
It does. And it would be really interesting to your point actually to see how much of their fresh volume are those top up ads versus a full fresh cart that I’m, I’m going into the fresh tab. I’m putting the order together. That would be super interesting to see because that’s where we’ll really understand where is it habitual? And again even. Or where is it really like habitual. I’m going to do a grocery shopping trip. We’re replacing the instacart, replacing the trip to the store versus the top offs which will damage the local market in terms of getting that quick trip. But I would love to see that information.
00:38:49 Chris
Yeah. Although I think, I think it’s rational to assume and somebody out there can disagree with me and if they know more than we do, please, please disagree with me on social media and point me in the right direction. But like I think if that were happening, the top line numbers would be bigger. They just would. Especially given the push that they put towards grocery and putting that interstitial in the checkout every single time. Like the numbers would be bigger. They, they particularly would be, especially given the inflationary pressures that we’re seeing, you know, in some of those categories as well. So, yeah, I, I don’t, I’m just, I’m not, I’m not buying that it’s as strong as he’s making it out to be. But then again, the point that I make is it doesn’t matter. That’s what’s crazy.
00:39:33 Kelly
Every, every order counts.
00:39:35 Chris
All right, let’s go. The lightning round. Today’s lightning 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 omnitalk to learn more today. All right, Kelly, first one. The Milwaukee brewers just won their first World Series in franchise history, beating the Rays in five games. I’ve got four questions for you today too, Kelly, since you’re seat on your own. All right. Which retailer is the Milwaukee brewers of retail that is the longest suffering and finally due for its championship moment?
00:40:15 Kelly
I. Trader Joe’s on this one.
00:40:18 Chris
Trader Joe’s? Really? Why, why are they in need of their championship moment?
00:40:24 Kelly
I feel like in the, in the age of all of these conglomerates coming together, we have a lot of big headlines around retailers. Trader Joe’s are just not in the headlines as much. And they are always, they’re always reliable, strong loyalty. I’d like to see them talked about more.
00:40:41 Chris
They’ve been playing at a championship level, but they don’t get the recognition they deserve. I can buy that. All right, next one. Clocks fell back this weekend. If you got one extra hour to spend inside any single store, which store are you picking.
00:40:53 Kelly
On this one? I’m in a grocery mood today. After all our topics, I’d go Whole Foods. It takes me so.
00:41:00 Chris
Long.
00:41:01 Kelly
Shop Whole Foods. There’s a lot of discovery, fun things, sampling. I could wander a grocery aisle for hours.
00:41:09 Chris
Wow. Maybe there is a little something in what Mr. Jassy’s saying. Yeah. Given that Instacart just pulled the plug on caper carts. What’s the. This is great. What’s the next most overhyped piece of in store tech in the market today?
00:41:22 Kelly
I have to say next most overhype. It’s kind of a similar theme we talked about with the carts, but in general, it in store screens. If we already have the screen on our phone, that’s what we’re looking at. Not looking around at the screens. That might be a little overhyped in space to optimize the phone screen more.
00:41:42 Chris
Yeah, right. Yeah, I’m. I’m with you. I’ve been big on that one, too. Like, I feel like they’re just billboards inside a store. They’re not going to do what we’re all thinking they’re going to do. But I know people think I’m wrong about that one. So Halloween just wrapped you, Kelly. Last one. What’s the one leftover candy you’re hoarding and the one you’re re gifting to the office?
00:41:58 Kelly
Oh, hoarding. Reese’s Peanut Butter Cups, no doubt. Handing out at the office. Tootsie Pops and Tootsie Rolls.
00:42:06 Chris
Not. Not a. Not what? Tootsie Roll. A Tootsie Pop. That’s a big difference, too. You don’t like either one?
00:42:11 Kelly
Don’t like either 1. No one. When I see the big Tootsie Bag, I’m like, oh.
00:42:16 Chris
Oh, wow. Oh, I could get it. I could eat it. I used to eat Tootsie Pops every day in college. You.
00:42:20 Kelly
Can.
00:42:20 Chris
Have my.
00:42:21 Kelly
Tootsie Bag then.
00:42:22 Chris
Yeah, right. Yeah, yeah. Set it my way. All right, well, today’s podcast was produced with the help and support of producer Ella Seward. Happy birthday Today to Matthew McConaughey, Bethany Frankel, and to the real villain of the Karate Kid, Ralph Macchio. 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 in 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 feature special content that is exclusive to us and we take a ton of pressure pride in doing just for you. Thanks as always for listening and 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 or by searching Omnitock Retail on Tick Tock. Kelly. If people want to get in touch with you, anyone at the A M Consumer and Retail group, what’s the best way for them to do that?
00:43:14 Kelly
Yes, you can find us on LinkedIn, Alvarez and Marcel Consumer Retail Group, or visit us at our website, Alvarez and marsal-crg.com we’d love to hear from you.
00:43:26 Chris
All right. Well, Kelly, thanks for stepping in today, taking the guest hosting chair solo. Well, well done. And on behalf of all of us at Omni Talk Retail, to all our loyal listeners out there, 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.