Target Hits The Q2 Bullseye, Sainsbury’s Anti-Theft Set-Back & Drones, Drones, Drones | GrocerTalk

Few things create boardroom unease like the unrelenting drumbeat of quarterly reporting.

The pressures of meeting the expectations of investors and analysts every 12 weeks is widely acknowledged to drive short term thinking in our largest corporations.

It's why poring over quarterly statements won't be a mainstay of Grocer Talks coverage.

We want to stay focused on the big picture, the long term.

But sometimes a quarterly report has real meaning, has the potential to change an entire narrative.

And we might just have had one of those with all eyes firmly trained on it.

Target just posted Q2 sales up, comps up, Grocery well up and outlook raised.

And say it quietly that it also beat Walmart comps this quarter.

This week we get behind the numbers to ask if this is a blip or a trend along with the rest of the news from a busy week in global grocery.

Welcome to Grocer Talk.

There'll be definitely regulations down the line that we're not predicting right now.

It's the oldest cliche, isn't it, that the best way to get a strong comp is to have a weak comparison.

There is still apprehension, there is still death, there's still violence.

We need to find a way, as an industry, we need to find a way to protect that colleague in that customer.

And it's scarcely believable that I'm saying this in 2026.

I think the reality is AI is in all our lives and we use envision technologies everywhere.

I think there's probably three areas that I've been keeping an eye on target for this turnaround story.

Hello, everyone, I'm your host, Ben Miller and I'm joined this week by a retailer with global retail leadership experience and no shortage of insights and and opinions to share a very warm welcome to Grocery Talk, Martin Bailey.

Hi, Martin.

Hi, how are you?

Great to be on the show and congratulations on your launch.

Absolutely superb.

Oh, that's very kind.

But Martin, look, this bit is about you, not about us.

So come on, before we get into the news this week, please give us an introduction to yourself and share with everybody your experience.

Yeah.

So my name is Martin Bailey.

I've been a grocer all my life.

Last three board roles were CEO for Tesco's and Tatan India.

I was with Primark as group COO and I was then with Lidl.

The longest time with being their CEO for UK and Ireland.

So I've led in three different continents.

I've led through Covid in India, which was a special moment in my career.

Nobody had planned it, but nonetheless, so in terms of grocery, it's in my blood.

In terms of probably discount model and an array of North America, all of Europe and all of India.

Yeah, I'm in three continents leadership, but a grocer all my life.

Amazing.

And look, that's exactly what we love here at Grocer Talk.

Hands on grocery experience.

But you're not in a grocery world at the moment.

Tell us what keeps you busy.

You're one of the busiest, hardest working people I know, Martin.

So what are you doing at the moment?

You're very kind.

So I returned from India, I was separated.

You might see the family behind me.

I was separated, Covid separated from my family for the three years.

But I returned and I started up my advisory so MWB Advisory limited.

So today I've built an ecosystem around global consultancy, esg, retail technology in particular and products.

So I may have left corporate world, but in terms of leaving retail the shop floor, I've never left it.

And you're right, my network is expansive to say the least.

It keeps me busy, but it keeps me grounded as well.

My passion hasn't left.

Even though I've left the boardroom.

I sit with probably 14 different boards in terms of advisory.

So I'm fully in the detail.

I love the way transformation is going.

I love the way technology has taken it.

So yeah, I'm very excited to be here.

But yeah, I'm also very busy at the same time.

Well, well, well, Martin, thank you for taking time out to join us and to talk retail.

So let's, let's get going.

Let's get into this week's Grocer Talk, which is of course brought to you with the help and support of of Instacart Enterprise, Portager and Vuzion.

And in this week's Grocer Talk, we've got news on facial recognition challenges for Sainsbury's drone expansion at Amazon, more drones with Uber strategic partnership with Zipline and Ocado naming its latest European technology customer.

But we begin today with Target's Q2 results.

So headline number one is brought to you by Instacart Enterprise, which gives grocery businesses the technology to grow online and in store with one modular platform built for how grocery actually works and built to scale with you.

Learn more@company.instacart.com GrocerTalk okay, so Target, the eighth biggest retailer in the US according to the NRF, reported its Q2 results last Wednesday with CNBC saying that the retailer has raised its full year guidance.

So net sales increased 5.3% with comp sales up 3.8%, well ahead of Wall Street's estimate of 2.4%.

Target hiked its full year fiscal outlook net sales growth guidance to about 5%.

That's up a whole percentage point.

Earnings and dividend outlook gained a significant boost due to tariff refund impact.

So I think it's better to look a bit more at the traffic numbers to gauge real progress.

And here comp Traffic was up 3.6%.

So a real suggestion that Target investment in store experiences are beginning to pay off.

Digital sales grew 8.7% in Q2.

And as a further piece of the jigsaw that we're building around rapid delivery, same day delivery grew more than 25%.

Okay, we're going heavy on numbers in this intro, so I hope everyone's with us, but there's one big one that I want to wrap with now.

Grocery Diver is reporting that Target's food and beverage sales grew 7.2% at 7.2% in Q2 this year versus under 1% last year.

Phew.

Right?

Martin, is Target starting to regain its target or does one swallow not a summer make?

Look, it's a positive story to be clear and well needed for the target audience as well as the Target board.

It is.

You've mentioned the 7.2 in grocery twice.

It is probably one of the biggest factors that we'll probably talk about.

And Hai has been able to bring that customer back and that loyalty back.

But the comps being 3.8 against.

We mentioned Walmart earlier on against a comp of 2.6.

Yeah, it's the fastest growing in the quarter.

There is a reality check with that.

As you would expect after two pretty brutal years, having some good news is important and let's be honest with you, and if I could be fair, the CEO Michael from Target also said the same two quarters is not the mission, which is the important thing.

So they're not taking anything for granted.

However, it is a positive story.

It is great against Walmart.

Walmart's base is absolutely colossal.

So even 2.6 for Walmart is a massive complement as well.

Even after I bring a bit of light and shade with even Kroger which sits above Target in terms of size, its revenue is pretty much flat when you take away the fuel as well.

So actually when you do look at the two quarters in a row, you do look at the food and beverage up 7.2, the online up as well.

It really does talk about a positive story.

But the reality check is against two brutal years, it shouldn't be that difficult to do a turnaround.

So there's confidence there, the CEO is realistic.

I think there's a better story within.

When you talked about the online, with the day one for day two and the day one for day one delivery, they have their targets got the largest, DC Thornton, where they were able to kind of cut delivery times by two days.

So we can talk about top line.

We should talk about the positivity around that.

But I'm looking as an ops guy, I'm looking at actually where is the, where is the kind of brand moving?

Where is the consistency coming from?

And it has to come from operational excellence.

So actually the story behind the big headline is obviously the operational excellence that is moving in the right direction.

But you've already mentioned, you've already mentioned the bottom line in terms of profitability.

That's key in because of the refund that you mentioned.

That windfall was nearly a billion, it was 994 million.

So when you take that out, it's actually a reasonably flat but still a positive story.

So I'm going to answer it with a positive story, but we're not out of the woods yet is probably the best way of saying it.

And I think it's really fair, Martin, because you're absolutely right.

Michael Videlki, the relatively recently appointed CEO absolutely was on the front foot of saying that this is not a long term, this is just one stage.

And look, it's the easiest.

It's the oldest cliche, isn't it, that the best way to get a strong comp is to have a weak comparison.

And they absolutely had that.

But I think the relativity versus Walmart is one of the most striking things about the numbers with the two retailers reporting back to back each year.

Yeah, and the headline deserves the headline, if I'm honest with you.

If you look at Costco, you look at Walmart, you look at now Target, you wouldn't have put those three in the same 10 sentence over the last couple of years.

So that's a compliment.

So you can see how the likes of Target and Walmart are outgrowing and outpacing the market because it's built everything around so that operational excellence, that online development, that merchandise and so category management reset is bringing customers loyalty back as well.

So it's more, I would say this is more of a success story around talking about the grocery Targets platform than just grocery Target outperforming grocery.

So if I use the likes of Kroger, where it's more flat than anything Else it's probably in line with inflation, in line with performance where the likes of Costco, Target and, and Walmart are outperforming.

So again I'm going to separate between operating model and what I'm going to say excelling on a platform, a grocery platform rather than just talking about stores.

So it's a great, it is a great story when you kind of delve a wee bit deeper into the performance of the others against the big three, which you wouldn't have normally said the big three with Target, but they deserve it.

Yeah.

And it's interesting.

So I dug a little bit into those numbers as well.

So you've got Target with kind of plus seven comps in grocery.

Walmart now they don't give us a specific number but they said it's positive mid single digit for their grocery.

So their grocery business growing ahead.

They said there was about 1.3% inflation in there.

So there's some pretty solid volume growth which is, which is really striking.

We know Amazon's business is flying.

We've got Costco results coming up.

The every indication we've had is strong.

I then had a look at the latest reporting from some of the traditional US supermarkets.

Q2 Publix was down half a percent.

Ex gas alcohol delays was up 0.8 of a percent.

Albertson's Q1 they were down 0.8 of a percent.

Kroger X gas as you said, 1%.

So I think there's a, you know, this is continuing this pattern that trade is being lost from the traditional supermarket format and is going to, he's been going to Walmart and he's been going to Aldine, he's been going to Amazon for a while this quarter.

Targets got in on that game and I think that's really striking.

Yeah.

And I also think it's a compliment.

Back to my point around the this is a success story for a groceries platform and not just the grocery bricks and mortar because there's a lot more to grocery that will win the day.

And again that perfect example of the double digit growth online for Target as well.

So it's pretty tough out there.

You've already mentioned probably two of the biggest, three of the biggest discounters in the US with Walmart mentioned Aldi and obviously Target as well.

So it's playing into tough times for consumer confidence.

It's playing into the ability for you to talk about value, to promote value and to ensure that that trust is there for the consumer.

And I think that's probably where the discounters always Win.

So I know Amazon's in there.

That's a different play, of course.

But in terms of the three that you mentioned, I would add Costco into that, into the fourth.

It's the world of value, it's the world of consistency and a world of operational excellence.

But it's not just bricks and mortar, it's the full platform that I mentioned or that Omni Channel experience.

And it is great news, again from a lower base.

But when you talk about having those four names and four retailers, then you're talking a massive compliment to Target and why shouldn't they kick on?

And that good example of the DC moving from two days earlier in terms of delivery is a great start in terms of the backing yourself, understanding the customer, bringing loyalty in and that value proposition that is winning the day across those four banners that we've just spoken about.

So I'm totally with you.

And the national.

The more national retailers and regional retailers are still going to suffer if they don't fix that.

I think there's probably three areas that I've been keeping an eye on Target for this turnaround story.

And you mentioned Operation Assist.

Excellent.

So, yes, store standards is the number one and I think there's evidence you've got comp traffic up so great and the stores are looking better.

So acknowledgement.

Second is merchandising, and particularly merchandising excitement is discovery and relevancy.

And then the third is the food is storytelling.

Now, I think, I think what we've just seen in this latest results is progress on the merchandising front from a food perspective.

I noticed that their chief merchant for food, John Coleman, is one of the big name speakers of Grocery Shop next month.

So I think that's going to be fascinating to hear what he has to say.

I did really see, and I think this plays into your last point, that not all area of the stores are flying.

So whilst there's good performance out of grocery business and good performance out of what they call their fun 101, so entertainment type categories, apparel and hardware, very little growth.

And it's going to be interesting to see.

Is that a we haven't got the merchandising mix right yet or actually is that those categories are suffering because of the pressures on discretionary spend.

And I think that for me is a question mark and that's.

That's certainly one of the things that I'm going to be watching.

Yeah, I think it's a great point on fashion and general merchandise and it's flat everywhere apart from There is wins online, so your pure play is eaten into a lot of it.

But if you think about the buying cycle and therefore the seasonal cycle of fashion, it takes a while for if you make any change it's probably going to be nine months later anyway.

So there's probably an element of timing behind that.

As you'd already mentioned, they've bolstered both the general merchandise and fashion.

It is very margin positive for retailers.

It is very important to have that mix within there and it also brings that loyalty so that back to school, that coming into Halloween, coming into the likes of Christmas, these are key points.

So I'm going to assume that there's a lag purely because the seasonal lag is kind of nine months by the time they get up and running, especially in grocery fashion rather than fast food session.

Yeah, you're right.

I think back to school is the next big litmus test, isn't it?

And yeah, the other thing, look we mentioned 8.7% growth in online.

Walmart just posted 23% growth in their online business which now represents 24% of their total net sales.

So there is still absolutely a catch up game to play there.

But I think the first thing Target had to do was get people back into their stores and for me that's what we saw evidence of.

I think there's a reality check and I think the good thing is the CEO's feet are firmly on the ground, therefore the teams will be fairly on the ground.

They've set up the stall in terms of what they want to execute.

It's not about execution.

It's kind of this time next year that we'll really judge.

So the reality is there.

But again you mentioned an online play there but 24% out of wall Walmart is just phenomenal and we can we come into stories a little bit later on about online and drones etc but quite, quite phenomenal.

So there's a long way to go for Target.

However, it's a positive story and that's the important thing.

Exactly.

We'll have you back in a year Martin to find out where the recovery went to look.

Okay, onto headline number two which is sponsored by Portager, a groundbreaking purpose built AI platform for retail negotiations and joint business planning.

Helping merchants prepare smarter, negotiate stronger and maximize value.

Visit Portager AI that's P O R T A G E R AI to learn more.

Okay, headline number two this week comes from the Guardian newspaper here in the UK which reports that a Sainsbury supermarket has paused the use of AI facial recognition technology.

After falsely identifying a shopper as a shoplifter and ejecting them from the store.

With all your operations experience, I'm really looking forward to hearing your views on this one, Martin.

But let me, let me give everybody a little bit of context first, if you haven't been following this story.

Last month, UK supermarket Sainsbury's said it was expanding the use of facial recognition to a further 150 stores in an effort to reduce shoplifting and abuse against staff.

Saint Cheese began its trial with AI powered facial recognition partner Face Watch at two stores before rapidly expanding to 55.

And now a further 150 units, or 10% of its entire UK portfolio.

The technology works by identifying individuals who have previously been involved in violence, aggression or theft as they enter the store.

Now, the system then triggers an alert to store colleagues who then review the images and then take action as required.

Sainsbury's and Facewash say the system is operating at a 99.98% identification accuracy rate.

And in the first trial, incidents of theft, harm and aggression and antisocial behaviour fell by 46% across the stores using the technology.

And 92% of identified offenders did not return.

Okay, so far so good.

Until this week, the Guardian reported the first case of a misidentity with the shopper being ejected.

In a statement, Sainsbury's apologized to the customer involved and went on to say that the incident was caused by human error, not the facial recognition technology.

Which is interesting.

Martin, as this story made headline news in the uk, is public opinion just not yet ready for facial recognition to help protect retailers?

Or is the idea just fatally flawed?

First of all, nobody likes being accused of shoplifting.

Definitely.

And as you said, the investigation pulled proved internally that it was human error.

But maybe to step one step away and then we'll come back into the detail most likely around AI and how does this interact and was it the algorithms problem?

The uk, like many countries, but the UK in particular has been going through since COVID and post Covid a huge amount of changes in terms of how violence is coming into shop floors, how our colleagues are being abused.

Higher.

Customers are feeling unsafe.

There's some statistics here just to kind of set the tone and then we'll get into the detail.

In the UK alone, there was 5.5 million detective thefts in the whole.

In the whole thing.

400 Million lost in shop shrink, 100 million loss in parcel theft.

So outside of the store, of course there was.

There is approximately 1600 incidents a day in our retail stores of which 3, of which 2 thirds is violence against colleagues.

There is two thirds that are also done outside the store as well as inside the store.

So, again, this is shoplifters that are taking it too far, if you want to think of it that way.

Organized crime, antisocial behavior or whatever.

Asda, which is the largest union, done a survey of 9,000 workers across all retailers.

78% Have said they've been verbally abused in the last six months, 54% threatened, 11% physically assaulted, and that's double what it was in 2019.

So in London, shoplifters are over 102,000 in Q1 shoplifting incidents just in one city.

So our retailers are under huge pressure.

The stakeholders that are responsible for the welfare of their colleagues and their customers are feeling the pain because it's a daily incident, it's a daily reporting.

So it is pretty brutal out there.

So although we're talking about scenes, reason and AI, all retailers are the vanguards of protecting their customers and their colleagues.

So this was obviously built in order to use technology to not replace the worker, but actually to support the store staff and the security guards.

There's been over 5.5 million billion spent last year on security across all retailers in the uk.

That's the level that we're at.

So it is tough, it's not ideal.

But moving back into the story and a wee bit more detail, it's probably two separate things that we need to discuss.

The algorithm, as you said, 99.98% accuracy is phenomenal, to be clear, but 0.02 of millions of customers that go into retail every day, there's going to be a law of probability that won't work out.

And then the other one is actually more importantly.

And the reason why you said, I'm looking forward to, Martin, you speaking about ops is actually this is the perfect example where technology is introduced, but the process and the system hasn't been advanced to deal with what technology gives the colleague and the customer.

So actually there's a whole story on how we should be supporting the colleague or the security guard in order to identify this, because there was actually two examples in, in Sainsbury's, there was one that we referring to, which was Matt Arnold, and then there was another one previously, also in London as well, where it's obviously in the trial stage.

Yeah, in the trial stage, but there was actually no alerts at all for this gentleman, so he was already picked up by the staff and escorted out.

So although there was a complaint, actually, it wasn't even identified by the vision technology.

So you've got two different separate incidents with two different outcomes.

But ultimately how we integrate with AI and its technology and its huge amount of data is important for us colleagues to get right, to understand training development.

So that's where the synergy and the importance of, of technology with humans.

Because again, it shouldn't be a story about replacing, this is about supporting and this is where it broke down between the algorithm and the process in the system.

And I think that's probably two separate stories we should talk about.

Yeah.

And I thought it was fascinating that the Sainsbury's came out and said actually the tech was right, it was an in store staff challenge and therefore we're pausing it in the store so we can do more training.

I mean, if you are leading a retail ops tv, are you delighted that that's the story being put out by central comms now?

Of course not.

At the end of the day, there's been something that's been done wrong.

So it identifies it, it highlights it.

But in terms of the incidents that happen today on the retailers that don't have this technology, there is still apprehension, there is still theft, there's still violence.

So we need to find a way, as an industry, we need to find a way to protect that colleague and that customer.

Because at the moment it's pretty brutal right there.

So I would be more along the lines of this technology is useful when, when the process in the system is matched.

And I think that's the key point because again, both incidents were totally different.

One wasn't even flagged at all and somebody was apprehended and blamed the AI.

The other one was apprehended the wrong person.

But that was the human process that the time.

So how do we help our colleagues and customers?

And Sainsbury's is right in terms of the due diligence it's done, the training, the development they're doing and the confidence that they still need to support these 200 stores.

They haven't picked these 200 stores because they're in a nice leafy area.

They pick these 200 stores because they have a responsibility to protect the customer and the colleagues.

So I think there is a lot of rights there.

But naturally the ultimate wrong is that customer was embarrassed.

He's obviously semi in the public eye.

So therefore it was escalated quite quickly.

But in terms of using technology to protect the colleague and protect the customer, 100%.

It's the marrying of the two from a process and a system along with the technology is the sweet spot, and this is one small example probably of high digital transformation is happening in retail.

And we have to get used to being able to manage technology, being able to support the colleague or the end users, either the colleague or the customer.

And that's the key, the key message here.

But it is pretty brutal out there.

And these 200 stores were picked for a reason.

So I don't know the 200 stores, but they will have been picked for a reason.

So I understand why sensorys have continued to roll out, because again, they've got bigger responsibilities and they did apologize.

I think it was 150 sterling for voucher.

To apologize.

Not ideal.

However, in the same incident in another store down the road, it probably happened.

It was nothing to do with technology.

So again, it's just reality today as well.

Yeah, I think, Martin, very largely I agree with you.

I think the very least that a retailer can do is to provide a safe environment for their staff.

And that's really hard when you open your doors and you let the public come in every single day.

And I think that's probably why I.

You know what?

I'm quite sad about this story and I'm quite.

It feels inevitable that there'd be a focus on the one case where it went wrong.

And that's not saying that being accused of shoplifting is not.

Isn't very embarrassing.

It happens every.

Every time a security guard gets it wrong.

But step stepping back.

Yeah.

For listeners who came to Shop Talk in Vegas, who came to our Barcelona show, you know, they might have heard me give my predictions for the future of retail.

And one of those that I put forward a few months ago was that anonymous shopping will decline, that there are more reasons that retailers will seek to identify their shoppers at the store entrance.

There's a whole number of reasons for this from activating retail media loyalty plays.

But one of the key reasons was to help counter theft prevention.

So there was some research that we did with Kantar ahead of Shop Talk that showed that just over half of shoppers were annoyed when the product that they were trying to buy was locked away for theft prevention, which is kind of the.

One of the easy responses.

And a third of those started avoiding this retailer altogether.

So I'm all in favor of finding ways that enable us to protect store colleagues and protect stock without having to lock things away and put too much friction into the system.

And you know what?

I've also.

I did the math as well, Martin.

You know that Sainsbury's has about 19 million customers a week.

So at 99.98% accuracy rate means that actually you've got about 2,000 misidentifications every single week.

And that burden out the machine will come completely to the store teams.

So that's where as you said is marriage is so important because it's the store teams that the management and the security who will have to make that judgment of have we got it right?

Are we looking at one of these potential 2,000 errors a week and how do we manage that accordingly?

So it can only work if the two things come together.

But I'm.

Yeah, we have one, never mind 2000 and it's headline news.

So I do think whether we're looking at the fact that actually because there's no active opt in for this process, maybe we just too early and the public aren't ready for it.

Go on, give us your final thoughts.

Martin.

Yeah, look, I suppose my message would be this isn't a technology is being used to remove the customer, as in the wrong customer or the right customer.

Sorry.

It's about technology being used because 2/3 of attacks are on staff the moment that they challenge a shoplifter or challenge somebody that they believe.

And I think if we can get the human layer right, married with the technology advancements, 99.98 is still quite remarkable, if I'm honest with you.

Then I think the message is it's about protecting people, not policing them.

Which is kind of what you're saying at the same time.

But you're right, data protection, the importance of being a well governed and a very responsible retailer is so important.

So don't take anything that away.

But again, I'll guarantee you there's a reason why those 200 stores have been picked compared to the other thousand odd stores that Sainsbury's have and big stores and small stores.

So I agree with you.

Is it too early?

I don't think so.

I think the reality is AI is in all our lives and we use vision technologies everywhere.

It's just probably sensitive at the moment.

But that's okay.

We need to have those conversations.

We need to have this conversation and Sainsbury's needs to have the conversation with their own customers, the 19 million customers as well.

So I think the more the dialogue, the better it will be.

But the reality is it's not going to reverse.

No way.

Okay, on to headline number three, Martin, where we're going to break the rules a little bit.

So for headline number three and number four, we're going to dive into two headlines on one topic.

We're going to talk about drones.

So look, consider this a special buy a buy one, get one free, as we delightfully say in the uk.

A bogoff.

Not a bogo, but a bogoff.

So look, these headlines are brought to you by our proud sponsor Vuzion, the global leader in connected retail solutions, helping grocers improve productivity, execution and customer experience.

From shelf to check out, go to Vuzion.com and we'll start with news from Amazon where Supply Chain Dive is reporting that Amazon is expanding its growing delivery capabilities to nearly 500 cities and towns incremental by the end of 2026.

That this year that is a six fold increase from its current footprint.

Drawing on a press release and a series of LinkedIn posts from senior Amazon colleagues, the article states that it is expected the Prime Air service will launch soon in the metro areas of Atlanta, Chicago, Cleveland and Beaux, Idaho as well as in upstate New York in addition to other communities.

Amazon drones currently deliver in part of seven states including Arizona, Florida, Kansas, Louisiana, Michigan, Nebraska and Texas.

Amazon states that items weighing 5 pounds or less that's just over 2 kilograms and can fit into a large shoebox can be delivered by its drone, which covers over 60% of the most frequently purchased items on Amazon.

Drone delivery is not available at night during heavy winds or unfavorable weather, and most deliveries are made within an hour of an order being placed.

Martin, how significant do you see this latest announcement from Amazon?

Very significant I think when you talk about six fold, I think when you talk about six fold increase and you talk about a million a year, let's not forget Walmart came out with its drone notice not so long ago in terms of its expectations, which are far superior.

So not surprised that Amazon is naturally coming out with something similar.

However, at the moment this stops being a novelty and becomes part of infrastructure.

This is now going to be part of your mix, your delivery mix, your last mile mix.

I think the reality is the technology is good enough, the drones are good enough, the ability to do it within 10 to 30 minutes maximum is doable.

The unit economics you would still question because obviously in the London or in a Manhattan would make sense because of density.

But is it better to get, I don't know, six bags of shopping brought to your door rather than, as you said, five pounds of shopping which is maybe two or three items maximum.

So there's still probably work to be done there.

But in terms of intent, in terms of boldness, I think the significance is there and not a big surprise because of how positive Walmart had been on this and how much that story gained a lot of traction a few weeks later.

I'm not surprised that Amazon's coming out and talking about sixfold and I think that is bold infrastructure, huge capex, a lot of investment because the they're building it themselves.

But yeah, it shows intent.

So I think this is significant.

There's a big change and a big shift that's happening led by Walmart, not led by Amazon, but nonetheless a great story.

Yeah.

And you know what, I agree.

I think that's the key point for me.

There's a bit of catch up in this press release, but there's also intent.

So I think you're absolutely right to call out.

Walmart has already made its million drone delivery.

Amazon is here talking about a six fold increase in the number of communities that he's serving.

It's not all about the six fold increase in the number of deliveries he's making and it hasn't actually shared any numbers on how many deliveries he's making.

So I think there is that dynamic.

But if you step back, I don't think that matters because Amazon's playing catch up to Walmart.

That's the wake up call for everybody else.

Yeah, this is the number one and number two in Progressive Grocer's list of leading US retailers.

And is both of them saying what we know and that we're seeing week in, week out in every set of results that speed matters and speed matters more and more in terms of delivery for groceries in Walmart Q2 they said that over a third, that's over a third of all store filled E com orders at Walmart are now delivered in under three hours.

So they're massively moving the needle.

And I think you're absolutely right, Martin.

Drones are, drones are becoming part of that jigsaw, aren't they?

Becoming part of that infrastructure?

I mean the other bit that struck me as significant is the locations they talk about more metro areas, wider geography, moving away from the southeast.

Although he's still talking about mainly suburban areas.

But yeah, I'm seeing real statement of intent here, Martin.

I agree with that.

And even though just listening to those numbers, even if I know those numbers, but just listening to those numbers that you're talking about, there's no way that this isn't a big bet.

There's no way this isn't.

You can even go globally by the way, in drone delivery, not just the US that we're referring to.

So it's already tested piloted at great levels.

There really is huge amount of experience, business cases and roi.

So this is, this is now going to be part of it.

As you said, one third of all deliveries is delivered within three hours, which now you're talking about quick Commerce being within 30 minutes.

Amazon send 10 to 20 minutes.

So there's maybe a risk to the timing.

I don't think you require to go kind of below 30.

If I'm really honest with you, I would assume the unit economics probably would back me up in saying that.

But in terms of big bold statements, the reality of drone delivery being part of quick commerce and the ability then to satisfy what a consumer and the newer generations are doing, it's perfectly natural to pick up the mobile phone and just order for today's dinner or today's snack in for the game or whatever the case may be.

So I think it's significant.

I think it's the reality of today's consumer and the reality definitely of tomorrow's consumer.

And I think one last point on the Amazon before we go and talk about our second drone story.

It's more value being added into the prime benefits as well to help drive that prime flywheel.

So I looked it up and customers if you you don't have a Prime membership, it's $4.99 for a drone delivery.

If you do have prime, you still got to pay a fee, but it's 299 unless your order is over $50, in which case drone delivery is free.

So it's absolutely adding more value into that flywheel that is prime membership.

Let's roll straight into number four because as if one drone announcement this week wasn't enough and let's hit you with a second.

I'm keen that we bring these two together to look at that bigger picture a little bit and can't wait to hear your views on this because the second announcement is from Uber which has announced a strategic partnership with Zipline.

According to a company press release, the partnership is targeting, Uber says another 1 million drone deliveries, but 1 million million drone deliveries daily by the end of 2029.

With the first Uber Eats deliveries via Zipline drones planned for later this year, drone delivery on Uber Eats will launch across existing Zipline markets such as Houston and DFW in Texas.

With target expansion into dozens of US Cities.

Uber is also making an undisclosed strategic investment in Zipline, reinforcing a long term partnership to accelerate the scale of their drone deliveries.

Martin two header on this one, firstly, do you like the play by Uber?

And then more broadly building on that last story too how bullish are you on the outlook for drone delivery in grocery and food service?

Yeah, so you've got, you've got.

First of all the answer is simple answer is yes, I do.

Because Uber's taken an equity stake, not a commercial deal.

So again that long term commitment because 1 million drones in 2029 is a bold statement.

Full stop.

Zipline itself springs 135 million of autonomous miles, but through medical logistics safety pedigree.

So its partner is so trusted and it also resembles a great JV in order to do the ultimate mission as well.

But it is two models that we're referring to.

I mentioned around the infrastructure with Amazon.

They are wanting to own the fleet, the tech, the airspace and the relationships where Uber is doing exactly what Uber does best.

It plugs into a proven operator that's an existing two sided marketplace rather than building a hardware.

So therefore scale speed.

If you notice Walmart didn't talk about a million a day and if Amazon didn't talk about a million a day, but you've got Uber that's want to talk about a million day and then ziplines medical delivery.

Bearing in mind this is about honesty, life or death sticks.

So the trust in the delivery, the trust in the technology, the trust in Zipline really does come as a strong signal as a very important partner in this.

So can it be achieved?

I actually when you read that and you read the partnership and you read the stats, the answer is yes.

Does this become bullish?

Absolutely, 100% bullish.

I still want to maybe go back to my point around urban density and bring in six bags of shopping rather than five pounds of shopping.

I think there's still going to be an element of real consumer transformation, but the indication says it will be there.

But the generations will probably go as well.

But essentially Amazon is building the airline and Uber has kind of just bought the ticket for somebody on somebody else's plane.

But both sides can be right I think is the important thing.

And I both say, I both think they're big bets.

So back to your original.

Is this big enough in terms of the statement?

Absolutely.

I can't see why it can't be achieved.

Again, the consumer, the generations are changing and the technology will be advanced even more.

So I, I'm 100 behind it, but two different business models, but super interesting nonetheless.

Yeah, and I couldn't agree more.

I think that the difference in the models is the fascinating bit.

I mean look, the analyst skeptic in me kind of looks at a press release that talks about huge numbers in a far off, distant time with a grain of salt.

So I think you take that million a day as a statement of intent rather than anything to go back and look, this isn't Uber's first drone announcement.

So last September it announced a partnership with flytrex, which it hasn't gone back to and told us anything more since the initial trials.

But you made everything.

The most important point is the Zipline isn't flytrx.

Zipline is bigger, it's established and has already got miles under its belt.

So I mean, I think for Uber there's a couple of things.

I think it's fascinating.

Let's not forget Uber Eats really started as a way to maximize utility for, for its drivers and it's now moving away from that driver model to talk to put drones into the mix.

So that's a big strategic change.

Zipline is, rather than relying on its own app, which it has done with other parties, is going to be integrated straight into the ecosystem.

And this is where it looks like a great, as you say, it's a platform, it's a marketplace development for Uber.

And it kind of reminds me of some of the things that they're doing with Waymo where you can, you know, book your Waymo through the Uber platform, you can book trains, video platform.

It's creating this marketplace rather than needing to own and control the distribution assets.

And, and I think there's also a bit of catch up, isn't there?

Because DoorDash has just got FAA approval for DoorDash Air.

It's preparing its drone program now.

It's going down the in house robotics build its own route and I think we should see those flying as early as the fall.

So look, I think there is a, there's a little bit of catch up there.

Martin.

Do we really want millions of drones in our air?

Is there, is there a social aspect to this?

How is the customer going to respond?

Yeah, look, so there'll be a reality to 1 million, by the way.

That's 1 million just from Uber.

That's not even the other 1 million from everybody else.

So the answer is yes, there'll be a capacity element.

There'll be definitely regulations down the line that we're not predicting right now.

In terms of aerospace, I think there will be most likely restrictions if it does get extreme.

But in terms of road ahead, why wouldn't you be the first?

And the biggest is probably the message.

And you've mentioned DoorDash on top of that.

So there's now four that are playing in this Space very quickly.

Exactly.

So it's more about the ability to saturate the market, be number one.

But it adds to the mix of high.

I interact with their, the retail brand.

So let it be Walmart, let it be Uber, let it be Amazon.

And that just means it's more stickiness ultimately today, as confidence goes higher, goes lower.

Fiscal challenges, living crisis in countries.

You've got a consumer that's getting battered left, right and center.

So it's now a play for loyalty and a play for stickiness.

And this just adds to that as well.

So convenience, speed, quick commerce.

It is the future.

There'll be a cap on it.

We'll still want to go to stores.

That's never been lost.

Even in Covid.

It didn't get lost post.

Covid didn't get lost.

As you said, Walmart, biggest retail in the world, 24% online.

If it gets to 54, then there's a.

We'll change our tune, but there'll be many years before that happens.

So I think the reality is it's convenience, it's stickiness, it's loyalty, and it's now being able to cross over within 30 minutes you can have a delivery from that brand to your doorstep.

So that's the biggest play.

All this noise of a million a day and all the rest of it is intent.

And I believe with the partnerships, the big pockets of the four retailers we've just spoken about, they can achieve it.

And I think the reality is you're going to see a lot more drones unless there's regulatory changes.

A lot more drones in our skies.

Yes.

And I think that point is absolutely great.

What a great place to wrap that conversation.

Because the, the regulation will not allow a free for all, but at the moment you've got the big four who are really pushing forward.

All right, cool.

Let's roll straight into headline number five.

Our fifth headline today comes from European supermarket magazine esm, with the confirmation that Ocado's new European partner will be the Danish online pure Play grocer Nemly.

Last month, Ocado teased that it had signed an agreement with an unnamed European grocer.

And we now have confirmation that this unnamed grocer is Nemley.

Nemley, for those of you who aren't familiar with it, is the largest pure Play grocer in Denmark with sales of 440 million euro.

Ocado will build an automated customer fulfilment center near Copenhagen, including all its latest tech, including its on grid robotic pick and a fully automated freezer namely will continue to operate its existing web shop and manage the last mile delivery to its customers.

Martin, we talked a lot about Ecom fulfillment technology on last week's show.

Does this latest announcement tell us anything new?

No.

However there's probably a learning from Ocado which is going to be interesting for their own stocks because obviously this announcement came on the back of obviously Kroger and Sobeys scaling back its Ocado CFCs in North America stock is still down 32% in the last 12 months even though there's this been good news.

It is good news of course but Ocado probably has learned, or we're learning about Ocado that it isn't selling just one model anymore.

More it's probably selling what we call a menu.

The real story is probably hiding under a fairly routine partner announcement.

Again only 400 million revenue.

Not like a Kroger or a Sobeys that we've, we've talked about before.

But you've got the Nemling example.

But you've also got the as the example which they've partnered with only last month the announcement.

So that's in store picking and that's what I mean.

It's no longer selling one stop shop.

It's selling a menu in which people then are going to take and that changes the Ocado model.

If I'm honest with you.

It doesn't keep them relevant.

Yes, it keeps them relevant because nobody can necessarily not everybody can afford the big CFCs and the investment and the tech.

So they've had to pivot to a certain degree.

But I'll be very interested in where this goes.

But the story is not Nemling.

No offense to Nemling Grit Grit retailer in Denmark.

And the story is more about Ocado is now beginning has to flex if you use the as the in store picking with the nemling together and that wouldn't have been done before it was kind of one stop shop.

You come to me, it's about my tech, it's about the CFCs etc.

So that's, that's probably where I see the underlying story here against quite a low announcement if I'm honest with you.

You know what?

I see exactly that same underlying story Martin.

But rather than just seeing it for Ocado, I see it for everybody.

And we talked about it last week and I'm just going to repeat it again.

There is no one solution fits all the answer to how you get the maximum efficiency and cost effectiveness out of your e Com Fulfillment will be a combination of store pick, probably MFC and where the density and the order volume and the efficiencies and the cost of capital labor allow highly automated CFC solutions.

And it's how you get that mix together.

Now, I think one of the other stories that Chris and I talked about last week in some detail, Martin, was a story from Kroger showing what you can do with the right partner.

For them, it's Instacart and Storp Pick model, which is combining pharmacy and grocery into single orders into a single delivery.

That was news that came out from a couple of the Kroger banners who were trialing it and who had started to develop it.

And we got confirmation just yesterday from Kroger and Instacart that that's been rolled out across the whole portfolio.

So that's over 2,200 pharmacies nationwide across the US where you will be able to order through the Kroger app, both your pharmacies, your prescriptions and your groceries at the same time.

So there is so many different nuances to this story about finding the right solution for you.

And I think anybody who looked at the, I mean last year, the news of with Ricardo and Kroger and the things on Sobeys and said, okay, that means that automated econ fulfillment doesn't work.

It's a mystery.

It's about picking the right mix for the right catchments for the right companies and continuing to tweak it as different propositions become available.

Yeah, and you're right, if you use Kruger's perfect example, they didn't walk away from Ocado.

They still have Ocado, they still have CFCs.

Absolutely.

So it's that blend obviously coming from Tesco's 10 years in store picking is highly profitable in the UK specifically where Tesco is most dominant.

They've been profitable for over a decade on online, which is quite remarkable itself.

A lot of people said in store picking was more expensive, adds more pressure to the in store customer, etc, but actually it's proven right.

And if you use Kroger as an example, they didn't walk away, they downscaled it and they went to in store picking used as the Ocado is their in store picking fulfillment app.

So technology.

So again is finding that mix no different to maybe the drones is finding the mix of what makes sense within your business model.

You have a lot of physical stores that cover a lot of area and a lot of catchments.

You have to use it again.

Covid taught us that massively post Covid, even more so.

So I would say that I would fully agree with you.

It's a mix.

It's the blend.

It's not one size fits all.

And I think the message from the announcement with Ocado is clearly that.

Which means there's going to need to be a reasonably big flex within Ocado as well.

Okay, Martin, look, before we let you go, this has been fascinating, but we've got to wrap things up.

But first, it's our time for Grossertalk Grab and Go.

This is where we both get to share a couple of stories quickly that have caught our eye in the.

In the world of grocery retailing and beyond those main headlines.

Things though that we still believe might be on your radar or simply tickled our fancy.

And we haven't got a clue what each other's chosen.

So go on, Martin, what's the first story that you want to share and why?

So private labels are a big passion of mine throughout my career.

So Gopuff's first seasonal private label range was only announced this week.

So cakes, cookies, danishes, cookie dough, all under Krave shop by basically that gives us, I think, quite an interesting space that Gopuff would do this.

First of all, Amazon also was is heavily into own labels.

So an instant delivery player that is maturing in its real merchandising, in its real range, in its real sort of not just convenience, I think is a great, great story.

Not as big as the ones that we've just talked about, but I think that venture into private label, that trend will not stop ever.

And I love the idea that Gopuff was trading into that only this week announced.

Love it, love it.

Okay, go on, Martin.

For you I've got one.

And it's scarcely believable that I'm saying this in 2026.

So here we go.

On Friday, it was shared that Walmart and Stock Sam's Club will finally start accepting Apple Pay.

Yep, you heard that right.

For those of you outside the U.S. until now, Walmart had resisted NFC payment tech like Apple Pay or Google Pay to the extent that it even tried to create its own solution a few years back.

But no, it has now finally relented.

And thank God all stores should be NSC payment compliance by the end of this year.

Go on, Martin, what else have you got for us?

So it's kind of light and shade scenario.

Instacart Q2 up 14%.

So 10.35 billion orders, up 9%.

But yet the net income is down 4%.

So growth bought at cost, which is a quite nice contrast to what we spoke about.

Target, Walmart efficiency, the conversion.

So it's quite a nice contrast that, yeah, everything is up, but actually income is down, so bottle costs.

Yeah, interesting.

Okay, I'm going to go really niche for our last one, but it caught my eyes for very personal reasons, Martin, because earlier this month I had a very, very, very pleasant 10 day away break with my family in the Tyrell in Austria.

And the Tyrell is home to a really great little regional grocer called Emprese.

They've got a portfolio of around 200 stores.

They're still really well designed, so if you're in the area, they're well designed, well operated stores.

I've been on the lookout for some additional investment and this week a story in Labours Mittens Iitung caught my eye because it's reporting that the Raver group is looking to be this partner.

I've done quite a bit of work with Raver before.

I think they're a really interesting group and I love Cologne as a city.

So that was just a story that made me smile all round.

And at that note, I think we're almost out of time, so let's wrap us up.

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So thanks as always for listening in.

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And you can follow us by simply going to YouTube.com omnitalkretail Martin, if people want to get in touch with you after today, what's the best way to do that?

Where can they find you?

Best thing is, Martin Bailey, B A I L I e on LinkedIn is probably the best.

But Martin Bailey, MWB Advisory Ltd. And I would welcome any conversation.

Fantastic, Martin, thank you so much for joining us.

That's been a blast.

And until next week, on behalf of all of us at Grocer Talk and Omnitalk Retail, thanks for tuning in.