Walmart’s High Income Demo, Klarna’s Bold Move & Why Costco May Be The New Pepsi

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Today is October 2, 2024.

I'm one of your whole San Mazinga.

And I'm Chris Walton and we are.

Here once again to discuss all the top headlines from the past week making waves in the world of omnichannel retailing.

Chris, we got a big couple weeks coming up.

The countdown is on to grocery shop and shop talk fall.

So joining us today is our special guest, Joe Laheslow, head of us content for Shop Talk.

And Joe will be helping us break down all the week's headlines and share with us a few details of what we can expect at each of these events.

Joe, welcome to the show.

Hey, thank you so much for having me.

It's always a joy to talk to you both.

Yeah.

Joel, how busy are you right now?

I mean, these shows are back to back.

They're two weeks in a row.

Like, are you just.

How did you even make time for us today?

I'm curious.

Yeah, this is my study break.

This is the moment when, I don't know, I get to get my head out of our agenda and speakers for a little while and just, I actually welcome the moment to take a breath and I think about other things.

Yeah, it's great to have you.

I mean, to tell people how the sausage is made.

Joe emailed us on Sunday night.

He was like, hey, I need to reschedule.

I've got a.

I got to coordinate a keynote, a speaking engagement for the stage here.

Can we reschedule this too early in the morning?

And we're like, yes, for sure.

Let's get it done.

And we made it happen, so it's good to have you, Joe.

Yeah, thanks.

I appreciate you being flexible for me, as my calendar has filled unpredictably and quickly over the last five days.

Yeah.

Um, well, this is a good warm up for, because we're going to be on stage with you at grocery shop and shop talk, doing the wrap up, uh, content, presentations, kind of talking about everything, all the highlights from the show.

So just do a really good job here, Joe, and then it'll be no problem when we do it, uh, later on down the road.

Excellent.

No pressure.

Um, all right, well, Chris, before we get to the headlines, we have a little bit of hardware to hand out this week, right?

We do.

And because it's the first week in October, so therefore, it is time to recognize this month's omnistar, our omnistar award, for those maybe unfamiliar or just tuning into the show for the first time, is the award we give out each month in partnership with Corso to recognize the top omnichannel operators out there.

Not the pundits, not the so called experts, but the real life retail operators making a difference in their organizations.

Corso's AI co pilot coaches retailers to optimize store performance at every level, transform retail operations from data overload into data powered.

This month's award goes to Lori Joffe, the chief marketing officer at american freight appliances and furniture.

We are saluting Lori this month because she is one of the most inquisitive and curious retail minds out there.

We ran into her at shop talk in Vegas just this past March.

That's right.

And then ran into her again at another show in New York in June.

And I got to tell you, she knows her stuff.

She's always curious, always inquisitive.

I just love running to her, bumping into her.

And so Lori, this bud, I mean, this omnistar is, does she like Budweiser?

Is she a buddy?

No.

I don't know.

I just like saying this omniscience for you.

So I want to make the allusion to the old Budweiser commercial and to show that I'm a, I'm a full on Gen Xer.

All right, let's get to today's headlines.

Joe, are you ready?

I am as ready as I'm going to be.

All right, let's do it.

Today we've got news on the warehouse club's winning over Gen Z DoorDash's new suite of digital business tools.

Giant Eagles attempt to slash wait times for its delivery drivers.

Klarna bringing buy now, pay later in store via partnership with Addian.

And the A and M, consumer and retail group's Marco Valentini stops by to give us five insightful minutes on how grocers can accelerate their private label brand growth.

But we begin today with more big up market news out of Walmart.

And yes, headline number one, new research from brickmeets, click and Mercatus says that affluent households played a significant role in driving Walmart's online grocery growth during the first half of 2024 as even, sorry.

Even as lower income households remain the retailers core e grocery segment.

According to grocery Dive, the growth stems from Walmart's higher income households spending more online and ordering more frequently than other customer segments.

Walmart's growing popularity with higher income households comes, quote, at the expense, end quote.

Of supermarkets, hard discounters, and target.

Walmart's most affluent customer segment, which makes up more than $200,000 in annual income, now makes up 8% of its average monthly active user base.

That affluent monthly user base has increased five times faster over the past year than its overall average monthly active users have.

The two firms found.

Lower income households, or households that are making less than $50,000 a year, accounted for 41% of Walmart's average active monthly users, compared to 36% for hard discounters, 30% for supermarkets, and 28% for target, per the report.

But while Walmart sales for this customer segment dipped 6%, supermarkets and target saw a drop of 20%.

Joe, this is also our a and M.

Put you on the spot question of the week.

We are going to put you in the hot seat here.

And here is the question that a and M has 1 may have been able to predict this trend, this Walmart affluent customer increase trend per a and M.

CRG's spring customer sentiment survey, where higher income households maintained a 600 basis point higher preference to shop online in general, plus 24% of higher earners, indicated they've switched to less expensive grocers.

Joe, do you suppose the Walmart versus broader grocery results are indicative of that wallet tightening for more affluent online shoppers or because of a superior Walmart delivery customer experience?

What do you make of these new income statistics surrounding Walmart?

That was a lot.

Welcome to the party, Joe.

There's, there's a lot of stats there to parse out.

I kind of wish there were some, some graphs and charts.

You need some infographics.

Yes, working on it.

You know, my head went first to customer experience as opposed to trading down, or affluent customers suddenly watching their grocery budgets more.

It was, the second thing was the one that I thought of, which is when you decide where you want to buy your groceries online from, if you do it at all, it depends on selection, it depends on price, but most importantly, it depends on how fast you get your order and is your order correct and those kinds of things.

And it only takes one or two negative experiences for somebody to sour on whoever they use the first time and try somebody else.

And I kind of think it might be more that experience piece that's driving Walmart's success with affluent customers.

It's probably a little bit of both, but I put my money more on the experience they're able to deliver.

Yeah, I think that makes a lot of sense, Joe.

I mean, you look at number one, and that being convenience, and the majority of the households in the country are, Walmart is the closest option for them.

And if they can order online and have it delivered, or they can have something available for pickup on their schedule, that is a huge impact, regardless of demographic, I think, but especially in this case, and what they're seeing with this more affluent customer.

But Chris, what are your thoughts here?

I think the answer to a and M's question is clearly both things are happening.

You have the higher income shopper trying to be more discerning, but you also have something special in the water at Walmart.

And so I think at the end of the day, this news is massive news.

It really is.

It's a huge headline because the fruits of it are really going to be felt as the economy gets better and the lower income strata starts to reemerge, so to speak, at, you know, and who knows when that is, but it'll happen at some point.

And so, you know, I, there's two things I would key in on with this announcement.

First, and, Joe, you kind of mentioned it, but I'll go into it a little bit further, is grocery shopping is a really sticky behavior.

So once you have high income shoppers shopping for groceries at Walmart, it will become an integrated part of their weekly grocery routines.

And the second point I make is that the data also, this was really interesting to me.

The data also shows that only 17% of Walmart's monthly users bought groceries online from another supermarket format in the first quarter of 2024, which was a 28 basis point drop from the same period in 2023, which means Walmart's getting more shoppers and they're cross shopping less.

So that bodes very well for, for Walmart going forward.

It only puts more tailwind at their back if they can continue this, which, and then they get the lower income strata in the, into the game as well.

So there is growth latent here that's going to come for Walmart at some point in time.

So this is big news to me.

Yeah.

Especially, Chris, I think that's a great point.

But especially when you start to bring in, like, scoop fashion and apparel product and all of the work that their, Walmart's really, really been digging their heels into in the, the higher end apparel and fashion as they're adding those brands to their marketplace, the Stockx partnership.

I mean, I think you're so right.

Like, once you get in there and people are going to Walmart for maybe a pair of sneakers that they wouldn't go to before, and now they can, you know, get Thanksgiving dinner, like we talked about last week, for under $10 a person or $7 a person.

I think it was like all of those things are going to just kind of give people a reason to keep being fueled in that Walmart experience.

And I think the last thing that I would just add to kind of close us out here, Chris, too, is I think that the digital penetration is really important, especially with this more affluent consumer, and especially as you're starting to see Walmart steal more share from, like, a target, for example.

I think Walmart is dominating in their marketing.

They're dominating in, you know, their innovation investments.

They're doing all the things to make this customer experience really good from a digital perspective, from an online perspective.

And so I think that, you know, for me at least, I think Walmart's still lacking in the store experience that will be important to keep and maintain this affluent customer.

So I think seeing their investment here in digital and, you know, in the Walmart that they're kind of putting out into the public is great.

I think they're going to have to, to maintain that affluent customer base.

They're going to have to still make investments in stores if they want to kind of retain that base and continue.

To grow it, which they are doing too, although I push back on that a little bit because I think all this growth is potentially additive.

When you look at the higher income shopper, I think it also plays back the adage we talked about on the show, too, and which what is old is new again.

You know, the super center was the key invention in the, in the eighties, basically, and you, and the grocery was the trip driver.

And now we're seeing online at Walmart, that grocery can be the trip driver for the upper income echelon of the digital shopper.

That then, to your point, gets them into peril, gets them into other things, and that, and their marketplace is fully functioning as well.

So that's all additive growth here at the end of the day.

So you think the store experience is a little bit less important.

It's really more about like just keeping them in the digital and marketplace sphere.

I think so, especially when you look at the tough times the lower income strategy is having because that will come back via the store.

But all this growth is additive in the digital sphere, which is so important here.

So.

All right, headline number two, Costco and Sam's club appear to be winning over the younger generations.

According to Business Insider, during Costco's recent fourth quarter earnings call, CFO Gary Miller Chip.

Honestly, Ann in the running and Joe in the running for my favorite CFO name of all of retail, Gary Miller Chip.

Miller Chip.

I just like saying Miller chip.

It's Miller chip time.

And dropped a bombshell.

Approximately half of the company's new signups over the past year were under 40 years old.

To put that into perspective, we're talking about, this is crazy.

We're talking about two and a half million millennial and Gen Z households willingly paying for the privilege to shop in bulk.

And not to be.

All done, Walmart owned Sam's club is reportedly is reporting, excuse me, equally impressive numbers saying Gen Z membership has skyrocketed by 68% in just the past two years.

And let's go to you first on this one.

Do you think Costco and Sam's are just enjoying the benefits of shifting demographics?

Or is there something also in the water here that is making these two the Pepsi choice of a new generation?

Zachary.

Chris, I feel like you're asking me to explain dad Core and why this has gone beyond, like, new balance sneakers and Kirkland brand clothing.

Like, but somehow this is.

This started a trend and a wave.

And yes, Gen Z wants to save more money.

I mean, I pulled up a couple of stats about Gen Z just to kind of give our audience a little bit of a table set, I guess, for, you know, where Gen Z is, that they spend more on housing and insurance than millennials and other generations.

They have more debt than other generations.

They spend more on travel and experiences, and they are more value driven than loyalty driven, which all adds up to, like, yes, of course.

Why wouldn't they be going to Costco and be going to Sam's club?

So I think when you look at that generation and you know how they're spending money, where they're spending time, they want quality products, too.

And Costco and Sam's club are able to pay this off at a rate that many other retailers cannot do.

They can't have this assortment in this, this product that's really giving them the value for their money.

So I think that this is not a surprise at all.

I think it's going to continue, especially as we see, you know, more Gen Z and millennials spending a greater percentage of their income on, you know, housing, food, apparel, and personal care, all of which Costco and Sam's club are able to provide them.

So, yeah, I'm in.

Joe.

So you think this is kind of just a confluence of factors.

Macroeconomically, what Costco and Sam's club do?

Well, it's just kind of like, yep, you kind of expect this going in.

Joe, do you agree with that?

And Gen Z and millennials are growing up and starting families and kind of moving out of their small starter apartments to larger apartments or to the suburbs as well.

I think partly this is just that cohort is now kind of reaching the stage of their lives where they can buy in bulk, they have space to store 50 rolls of toilet paper, and the desire to be frugal and save money is certainly a contributing factor as well.

But in some ways, this isn't that new.

I was looking around a little bit yesterday.

I found a 2017 Forbes piece that said exactly the same thing, that Costco is winning over millennial and Gen Z shoppers.

But then it was probably mostly millennials, not so much Gen Z.

Now, seven years later, it's the Gen Zers who are kind of doing that, that house and family thing.

Right.

What about the Sam's club angle?

Like, are you surprised that both are picking up share here, or do you think that is just a natural outgrowth of everything that you just both talked about?

What do each of you think about that?

Anne?

I think it's going to be really interesting to watch how this progresses because I think that, well, Costco kind of is like the target in this case, and Sam's club, to me, is kind of like the Walmart.

Like, they're both neck and neck.

But I think that it's going to be interesting to see a big part of this is merchandising and accessibilities to the stores and Costco.

Unless they start to change things, I think Sam's is likely to kind of continue to beat them because of the things that you were talking about last week, Chris, about the supply chain.

Like, convert the supply chains converging at Walmart and Sam's club.

Like, if you have more flexibility, more convenience for consumers than what Costco's offering, like, this could be, Sam's club could be, like, coming in hot here.

And I think really starting to steal some share from Costco the same way that we're seeing, like, Walmart from the last three kind of come in and steal share from Target.

But what, what do you think, Joe?

Well, let's go to Joe first.

Joe's got Joe's chopping at the bid.

Here I am.

So I think I.

There's a couple of factors in terms of Sam's versus Costco, right?

I think partly it's what your parents did, right.

If you're a Gen Z er and you're kind of setting up your own household, do you grew up going to Costco with your parents?

That's probably where you'll go first.

But it's also what's closer to wherever you're setting up your household, whatever's more convenient to you.

But I do think there's an interesting opportunity here.

And my always unscientific way of thinking about who's really trying to appeal to Gen.

Zers is to look at TikTok.

So Costco has an official TikTok.

It's got 101,000 followers.

They haven't posted anything, though.

It's like empty.

Sam's club has 183,000 followers on TikTok and 1.4 million likes on videos that it's posted.

And the control group, Target.

Target has 3 million followers on TikToks and 20.4 million likes so I think either of them could boost their appeal with the youngest demographic that's kind of in that, in that nesting phase, but they both have a ways to go.

Robert?

Yeah, it's interesting.

I'm glad I got the question because I actually did some research yesterday, too.

I just did a quick Google search.

I thought there were less Sam's club stores throughout the US than there were Costco stores, but roughly they're even.

But to both your points, and Joe, I love the TikTok statistics as well.

And I love the points you brought up, too, is if I was to bet on who's going to grow more or return more money to their shareholders here in the next ten or 15 years, and do not take this as financial advice, anyone.

I'm just like, just pontificating here.

I would bet on Sam's club for a couple of reasons.

Like, one, we talked about it last week, but with the supply chain merger, you have the potentially untapped combination of making a Walmart shopper, a digital shopper at Sam's club and vice versa, which is the crux of the, of the decision last week, I think in the long run, and that's a really powerful statement when you think about that, that you can make a digital shopper at Walmart, a shopper at Sam's club.

Think about that for a sec.

And then the second thing is there's so much, you guys hit it.

There's so much more technologically advanced than Costco, for example, like their scan and go application.

What, and what is it?

50% of shoppers use their scanning go application and they're putting retail media through it.

And we had, we had discussions about how Coke can now incent you and path you through the store, through retail media, on your handheld device, you know, in theory.

So that's, that's hugely powerful and, and valuable to this shopper who wants to shop this way.

So I'm, I'm betting on Sam's, like, in the long run, I really am.

I mean, Chris, I think the other thing that you bring up, too, and Joe mentioned this, it does come down to it's kind of like Ikea in this way, where like, this Costco trip is like a trip.

You, if you are an urban dweller, which a lot of these, this young generation is like, you have to figure out how you get a car, how you haul all this stuff back, too.

And I think that's another key to the success, potentially, of Walmart, is that if you are able to go on Walmart, you're starting your grocery trip there and you see like, okay, my kids love these applesauce pouches and I can get a 50 pack of them and have those delivered.

And I don't have to make the trip to Sam's club, but I still get access to that Sam's club, you know, price point, that is huge and that saves a trip and especially for those young families, like Joe said, like, that's a huge savings for them.

And I think to your point, like, just kind of catapult Sam's trajectory as kind of sealing favor for from that demographic.

Yeah.

And then you get me thinking, too.

And does the Sam's club membership merge with Walmart plus in the long run, like, there's so many options here and so much option value in this discussion.

Joe, you're in New York.

How often do you go to Costco?

Once a year when I'm visiting my family out in the more normal parts of the United States.

So there you go.

There you go.

You could become.

Yep.

You could become a Sam's club shopper digitally via Walmart.

Joe's just got to wait for them to bring jet black back, jet.com black service back and have somebody run talk.

To my concierge about bulk ordering my apple.

Yeah, right.

Exactly.

Exactly, Joe.

All right, let's move on to headline number three.

DoorDash has launched a new suite of digital business tools.

According to chain storage, the new products and features include the DoorDash commerce platform, which consists of these five core solutions.

First, a drive on demand solution that offers the ability to offer delivery through a business's own app or website.

Second, online ordering, which is a way to provide commission free digital sales and branding on a retailer's website or own branded app.

Third, phone ordering, which is an AI based call and ordering system with menu recommendations.

Fourth, tableside order and pay, which is the option for customers to scan a QR code with their phone for increased order efficiency.

And fifth, customer support solutions in the form of a dedicated delivery support platform for customer inquiries.

Chris, we're going to go to you first here as both Instacart and DoorDash look to extend their reach into the technological solutions that power a larger range of grocers and restaurants operations beyond just delivery.

Whose approach do you like more?

Oh, wow.

Okay.

Coming in hot for me, too, and I mean hands down.

Hands down is Doordash.

Okay, I would go.

Explain yourself.

Explain yourself.

Big, big foot on the scale at Doordash because the rest, because for a few reasons, restaurant business is more fragmented and in need of solutions like this that work than, say, the grocery, grocery industry is fragmented, but it's not as fragmented as the restaurant business.

And I was also add that the restaurant business is easier to run than a grocery store.

And for all of you detractors out there debate that, and you're like, what are you talking about?

You now know that running a restaurant is easier than running a grocery store, because restaurants are inside of grocery stores.

So it means what Instacart is trying to do is very, very difficult.

You know, it's hard to come up with the technological pieces that make everything work.

And so if I said that another way, what's an easier thing for me to buy into you?

The fact that you can get consumers to scan a QR code on a table, or that you can get them to start using a smart shopping cart.

I think we know the answer to that one.

So restaurants aren't going anywhere yet.

You know, like we discussed tangentially in the first two headlines, the grocers, they've got a tough road row to hoe.

And so who knows?

You know, I think it's a cart.

Just got an uphill battle relative to what Doordash is trying to do here.

That's my take.

Okay.

I like it.

I like it.

Um, I agree with you, Joe.

Like, I'm definitely, definitely not going to pick a favorite.

We love both Doordash and Instacart.

They're both grocery shop next week.

So I don't know that I like one or the other solution better.

But I do think it's really smart on Doordash's part to add to the suite of services that it offers to its retailer and restaurant clients.

Anytime you get somebody buying two or three pieces of your modular solution, they're bound to be more sticky, more loyal to you than somebody who's just doing it for the ordering and delivery piece.

I think maybe the most interesting single component here, the one that had me scratching my head a little bit, is the phone ordering.

Like, pick up and call and talk to a fake person about your order.

Because so much of what we talk about when we talk about technology is clearly geared at, like, younger customers as the early adopters.

And that's gotta be the opposite.

Like, this is one of these rare technology things that if anybody uses it, it would be older shoppers who don't wanna go on an app and like, tap and shop that way.

So interesting to see what kind of traction it gets.

Probably more restaurants than grocery, but either way, it's nice to see a tech solution that isn't entirely visual and app based and, and geared for those younger shoppers.

I mean, I think you're bringing up some really important points, both of you, but you just, you look at all of the efficiencies that this is going to provide.

I mean, think as a restaurant owner, you now, like, you don't have to do anything.

You just, you have online ordering automatically in your app that's coming through.

You're cutting down on staffing because you don't have to have somebody, you know, on the phone lines answering questions.

And especially, especially Doordash is so good at this.

I don't know if either of you have ever encountered.

Have you ever had to come customer support at DoorDash?

Like if you had an order go wrong or anything like that?

No, no, not really.

It always goes pretty well for me, actually.

Well, I have to say, like, I know I'm talking to a robot.

They have handled my, like, order issues so quickly and so efficiently, and it doesn't, like, I, in most cases, I would question the stuff that Joe's talking about.

Like, is the person really going to have a fruitful conversation ordering their dinner with a, with AI generated order taker?

But Doordash has done such a phenomenal job on the customer service side of this that I think that they'll definitely be using those tactics to make sure that that process is as seamless as possible.

The, the other thing, too, is like, I think you look at the stickiness of the Doordash consumer.

You have Doordash.

As of the end of last year, they have 37 million active users, compared to Instacart's 14 million active users at the end of last year.

And so I think that for all these, these restaurants or grocers who are looking for, you know, the go to, to be part of the kind of go to app when it comes to food ordering and grocery ordering.

Like, they've got DoorDash already there.

They've set up this clientele who's used to the functionality of that application.

But, Chris, close us off here point.

Because when you go back to it, because the restaurant delivery, like we've talked about in the show, that's the niche, that's the strategic differentiation point here.

Because a lot of what Instacart's doing, too, like when you look at standing up the website browser for the small local grocers and whatnot, Doordash can potentially do that as well.

That's the easy stuff to do.

And then that just erase the bottom in terms of who can provide it at the lowest cost.

And there's tons of other providers out there besides these two.

But when you get into the operations of a restaurant versus a grocery store, too, that's where I think there's just more growth from this strategy than I think it is, than there is in terms of Instacart, because it's gonna be harder for Instacart to get in there and do all this, but.

And you can order from your table, from the QR code, which I'm just a huge fan of.

I can't wait for that to come.

Oh, my God.

That is still my biggest frustration with restaurant shopping.

Waiting for the check.

It just makes sense.

Oh, my gosh.

I know.

I know.

All right, well, let's say hello to Marco from the A and M consumer and retail group.

Joining us now for five insightful minutes is the managing director at the A and M consumer and retail group, Marco Valentini.

Marco will be discussing with us the results of his company's most recent report on how retailers can successfully build and foster a strong own brand strategy.

Marco, first question for you today.

Why is it important for retailers to invest in private brands?

Yes, we're seeing a strong growth of private brands in the market.

Private brands continue to outgrow national brands and they continue to be a differentiator for many retailers and their offer.

The private brands today represent roughly 20% of food in the US.

And this trend is continued.

This penetration has continued to grow over the last ten years and is expected to achieve 24% by 2030.

We are also seeing private brands continuing to outgrow national brands at roughly the rate of 400 basis points.

That means that think about every year, roughly $1.5 billion are shifting from national brand to private brands.

So there's a clear opportunity in terms of market share there to capture growth that ultimately is not accessible for many retailers.

Marco, I know why I love private brands, part of that reason being the value component of that.

But why do you feel like customers really love those private brand options?

Yeah.

Customers are often loving national brands, private brands even more than their national brands equivalent.

They, in many cases, the customers cannot distinguish whether a brand is owned by a retailer or national brand.

And you have many examples of brand that have highest level of advocacy and love from customers.

Think about the trader Joe's assortment or Kirkland from Costco.

These brands are highly recognized and they not just provide value, but they also provide the highest level of differentiation and innovation for the customers.

I would say that very often the minimum condition is to provide a 30% to 40% price positioning below the national brand equivalent with the same level of quality.

This is kind of the traditional positioning of national brands, but the most successful players have been able to innovate and also add the highest level of differentiation, innovation through, for example, unique product ranges, unique flavors, unique packaging, or capturing specific pocket of demands that are not normally served by national brands.

Think about retailers, for example, that developed organic ranges, for example, 365 from Whole Foods.

Or think about retailers that have been able to develop premium ranges.

Think about private selection of Kroger.

Got it.

All right, Marco, let's get you out of here on this.

So, for the average C suite executive listening to this podcast, what should they do to accelerate their private label brand growth?

Yeah, that's a very good question, Chris.

It requires quite a lot of focus and discipline.

Right.

I think the most important aspect of this is to build the commitment throughout the leadership team within the organization.

You know, firstly, at the chief merchant level, chief merchants have to treat private brands with the same level of attention to detail or even higher that they use.

For national brands, this is not just about setting up targets, but it's also being consistent and having a year round commitment around, for example, product innovation planograms, promotions and so on and so forth.

You need to have strong support from all the other functions.

Think about supply chain to ensure availability of the product, procurement to kind of have the right vendor partnerships, and ultimately the execution in the stores.

Marketing has to be highly engaged to provide focus and investment to the development of the brands.

Ultimately, the commitment to private brands have to start at the CEO and CFO levels because they have to be able to align to the entire leadership team of the organization around the shared goal and also a clear set of KPI's and targets.

The investments have to be measured to the ambition and the private brand teams have to be right sized and at the same time empowered to drive change.

You need the dedicated investments in branding, in marketing, but also in, for example, developing production capabilities with some of your suppliers.

I mean, in essence, private brand development today is more an imperative than an option for many grocers, and you really need strong commitment from your entire organization.

But the good news are that the players that are able to achieve that positioning very often are delivering stronger market results and at the same time, strong shareholder results.

Thanks, Marco.

Great.

Thank you, Marco.

And remember, if you're interested in reading the A and M consumer and retail group's full report on how you can accelerate your private label brand journey, just check out our podcast description where you'll find the link.

Or you can also head to omnitalk.

Dot blog.

Headline number four giant Eagle wants to slash delivery times delivery wait times, to be specific, according to Grocery Dive, Giant Eagle announced Tuesday.

In exchange expanded partnership with omnichannel location platform Flyby to bolster its last mile delivery service and cut avoidable delivery driver wait times by at least half.

The partnership extends the technology company's location based service, which orchestrates product picking in line with the driver's distance from the store to the groceries delivery program.

Flyby's AI powered location technology can pinpoint which driver is arriving for specific orders and send alerts to its main dashboard and picking app.

The technology has reduced wait times to less than two and a half minutes on average.

Joe that's clock.

That's a clock time.

Joe what do you think of giant Eagles investment?

What do you think giant Eagles investment in Flabey says, if anything, about where grocers are willing to invest their money.

I have a couple of thoughts on the Flyby investment.

I think first of all, it underscores that for a lot of grocery retailers, in store fulfillment is still super, super important.

I mean, I think it's always going to be a spectrum.

Some in store fulfillment will be the most economical route, some micro fulfillment centers, some big, big hubs.

I think all three can work depending on the situation, but I think it does underscore that in store pickers and delivery from local stores is a really important piece here.

I also think we're in an era where kind of small incremental improvements can really help with the economics of grocery delivery.

In this case, a small savings of time is definitely, definitely translates into money.

And as we were talking about in the Walmart segment at the top, small improvements in customer experience also probably have a measurable outcome in terms of really cementing that grocery e commerce shoppers loyalty and keeping them coming back.

So I think there's a whole bunch of different benefits that giant eagle potentially stands to gain if the time savings that it's reporting scale and continue.

And what would you add?

Yeah, I mean, Joe knows we've been on these calls at shop talk fall.

I'm going to be doing a panel where we're really talking about how retailers can better unify commerce experiences for their customers, make it more seamless.

And while it seems like the focus then of these technological investments would be on the consumer side of things, maybe on its surface it's actually showed us like giant Eagle and Flyby here, that it's more investments in operational technology.

It's figuring out ways to get things running as efficiently as possible.

And this is for, in this case for delivery drivers.

I mean, you have better store operation visibility then too, if you know where these drivers are and what their load is that they're taking already.

And then in addition to faster delivery speeds, I think it should be able to also provide them with more transparency for the customers too, of like actually here, you know, yes, we're doing a two hour delivery, but this guy is going to be there faster than 2 hours or this might be a little bit longer than 2 hours, but just gives that visibility to the customer so that they know what to expect, which I think that is how you're really paying off a better, more unified commerce experience for customers.

Again, investing in the technology like Giant Eagle is with flyby to make sure that your operations are running smoothly and that's what provides that key customer experience.

Yeah, I agree with both of you and I don't have a ton to add here, but I think this headline is just further proof, especially when we look at the headlines over the last week, how Walmart and Amazon dominated the headlines.

And then this is one that cracks the code here.

To me, when I step back in preparing for grocery shop for my interviews too that I'm doing on stage next week, it just goes back to the adage and show me the money, right?

That seems like grocers are investing in either back end operations or retail media.

Anything else just isn't going to get past the budget committees and smartly so.

And that's why I think the grocery industry has been relatively more innovative.

The more innovative sector of has been the relatively more innovative sector of retail than say other verticals.

And because, you know, sometimes we get so distracted by the shiny penny on the ground that we want to pick it up of all the consumer experiences, bit tech and everything.

But at the end of the day, the smart money is still going to the backend operations and particularly for grocery retail media as well.

All right, let's go on to headline number five.

Klarna is partnering with Adian to bring buy now, pay later into physical stores.

According to CNBC, Klarna said Thursday that it had entered into an agreement with Adyen to add its buy now, pay later products to physical payment terminals.

Klarna will be included as an option across more than 450,000 adyen payment terminals in brick and mortar locations.

As a result of the deal, the partnership will initially launch in Europe, North America and Australia with a wider rollout planned later down the line.

Joe, let's go to you first.

What are your thoughts here on buy now, pay later coming in store?

And what does that mean for the future of retail?

Yeah, it's been a slow roll with by now, pay later, making the transition from the e comm checkout experience to the physical store POS experience.

But I saw a stat recently that said something like, I don't know, 15% to 20% of retailers already do some sort of BNPL in stores.

So again, that's definitely a small percentage overall.

I think what I'm looking for here is it's going to be really interesting to see which retailers take Klarna and Adion up on this offer and just how it gets communicated in stores.

Right.

I mean, I'm used to, we're all maybe used to the department, department store experience with the little thing about save 20% if you sign up for our store credit card at pos.

But will it be giant signs saying pay in for throughout the stores that adopt this?

Or will it be more subtle and kind of if, you know, you know, just a little Karna branding for those shoppers who already are kind of working with the brand?

But I mean, I think payment flexibility for shoppers is a good thing.

I think, you know, it kind of adds to the set of choices that somebody has while they're waiting to pay.

And for some shoppers, that'll probably be a good thing.

And for a lot of shoppers, they'll just keep breaking out their credit card or debit card or maybe even cash as they always did.

Yeah, I mean, Joe, I think that you bring up an important point, and I actually found some research.

So Marnie Shapiro, she's the vice president of global advertising and affiliate partnerships at Afterpay, they did a study, and they found that Gen Z is actually more likely to use buy now, pay later than they are credit cards.

So I think you're right in.

You know, how are they going to message this at checkout?

And how are they going to bring in that next generation of shopper?

Because they're offering something like this, especially as Gen Z is also going to be the highest paid spending power.

They will have the highest paid spending power in human history.

And by 2030.

So just five, a little over five years from now, once that Gen Z generation has really come into the workforce, they will account for almost half of total spending.

So I think when you look at what Adian and Klarna are doing here and how they're setting themselves up for success in the future, you got to follow the money, as Chris would say.

And I think this move is setting retailers up to do just that.

But, Chris, I'll let you.

Oh, go ahead, Joe.

Yeah, jump in.

I think another way of looking at it is that sort of next generation of omnichannel or unified commerce story that everybody is talking about these days, about just making the customer experience when you're in a store as consistent with online as possible.

Great point.

Retailers being excited about this or interested in this, because it is another way to make those two experiences consistent and to be able to say to somebody who shops your brand online, oh, you can now use the same payment method that you like when you come visit us in stores.

So I think it kind of helps with that unification of the two sides.

That's such a great point, Joe.

Yeah.

I mean, I had not even thought about that until you just said that.

But, yeah, it's totally, you're totally, like, leaving consumers, consumers right now in, in kind of the lurch potentially when they're in store, when you want them to have the most seamless shopping experience possible, and, you know, then you're making them go online to order something so that they can get installment financing like that.

That's a very disjointed experience if that's, if that's where these retailers are at.

But, Chris, I'll give you the last word here.

Yeah, I mean, I got a couple thoughts here.

Like, actually, this, one of the reasons I loved one of this is this, this topic is one of the reasons I love doing this show because Joe particularly made me think of something that I never thought about.

Like why haven't we seen a retailer, you know, brand its own BNPL service in partnership with one of these companies?

Like, right.

Why isn't that included in the e commerce checkout?

And why aren't they bringing that in store?

And you have to think that's probably going to happen at some time, at some point, if you look at the history of retail for the past 30 or 40 years, because that's already happened via credit Cardinal.

So that's an interesting topic that I've never, ever given headspace before.

So thank you for that, Joe.

Well done, my friend.

But the other point I'd make is I actually think this headline is in the running for retail headline of the year.

When you think about it in terms of the overall long term impact that this is going to have on changing consumer behavior and how we shop a retail store.

And the number I would, the statistic, I would point out from the article that I think keys into that is 5%.

5% is the number I want people to remember, because that is the percentage of all e commerce transactions that the CNBC article reports comes via Klarna's BNPL service.

5%.

Okay.

5% of all e commerce transactions are coming from Klarna's BMPL service.

That's a pretty big number on its own.

And remember, e commerce, what, 20% of all retail sales?

So 5% of 20% is already pretty big.

But what's bigger is x percent of the 80% that's still out there in physical retail.

And it's going to come at some point, because BNPL expands people's wallets and gives them the ability to pay on interest free installments.

There's no reason not to use it relative to a credit card, if you can.

So therefore, it's a huge, huge move from both Karna and Adian that we're going to see play dividends over time.

Oh, yeah, Chris, like, you got me thinking.

Remember when we talked to Alvier about this kind of concept, too?

About, like, there is so much opportunity here.

Yeah, you're right.

The retailers having their own buy now, pay later program with the.

With a provider like Klarna or somebody else like that.

That in itself is another huge area of opportunity when we're going to see so much growth in this.

Yeah, and I don't understand the payment space that.

Well, that's never a segment of retail that I got that exposed to.

But you have to wonder what.

What's holding that up?

Is it just the traditional, like, retailers are scared to try things new?

Try new things?

Excuse me.

Or, you know, or is there some other, you know, mechanical thing that holds it up with how payments are conducted?

But anyone out there that knows, please, let us chime in and let us know your thoughts.

All right, let's move on to the lightning round, you two.

Joe, you get all the questions today.

Since you're our special guest, we're going to hit you with question number one first.

Meta's Mark Zuckerberg just announced new AR glasses in partnership with Ray ban that will retail at $299.

What are your thoughts on the success of this product, Joe?

Will they make you Runway ready, or should people run away?

That really does put me on the spot if I have to pick one or the other.

But I guess it feels weird to say this about an AR product, but Runway ready would be my take on it.

Cool.

Two problems with augmented reality.

Virtual reality things.

That one, they make you look like a doofus.

And two, there's not really anything to do with them.

And I really think this may be the first product I've seen that solved that first problem.

You don't look like a doofus when you're wearing them.

So the bigger question is, like, once people have them, will there be cool things that they can do or useful things that they can, they can do with them?

The answer on that is maybe, but at least you won't look like a doofus when you wear them.

Thanks for bringing doofus back into our vocabulary, Joe.

Good word for the lexicon, or at least for me.

They'll make me look more like a doofus.

Joe is what I would say, probably.

All right, target released a new sneaker that, that will reportedly grow with you.

Grow, sorry.

Yes, grow with you.

And.

That's right, grow with you as your feet get larger.

Aside from footwear.

Footwear.

Having trouble today?

Aside from footwear, Joe, what other clothing item would you most want to grow with you?

I don't know.

I feel like we live in an era of that.

Right.

I mean, they already make men's trousers with enough elastic in the waistband that those grow with you.

A little bit of hats have adjustable brims.

Not that my head has really changed size.

Great point.

Great point in the last couple of years.

But I think it's such an interesting thing.

I mean, feet are very delicate objects, and who knows how well these growing shoes will actually work.

But the thing in that news piece that really got me was about people whose feet just happen to be two different sizes, so they have to buy two pairs of shoes when they buy shoes.

And even that just feels like it's going to make their lives a lot better if these things work as promised.

So did you give an answer, Joel?

I'm not sure you did.

I may have just skipped over that, because I'm honestly, nothing on me is really changed size.

Thankfully, I'm shrinking, actually.

So maybe my answer is shirts and jackets that can get smaller with me as I get older and therefore shrink.

Oh, my God.

The opposite of, like, the kids.

Jackets that expand, you know, like, Joe just wants them to retract.

We would like to retract.

I was five years ago, and now I'm five eight.

All right, let's go to question number three.

Joe.

United Airlines and Air France are adding Starlink Wi Fi to their fleets.

And according to the airlines, the speed will be so strong that passengers will be able to stream videos and potentially even take Zoom calls.

What would you be willing to give up on a flight for reliable high speed Internet beverage service or legroom.

Beverage.

Service you're fine with, I think I would tend to agree with you.

I feel like you can bring your.

Own drinks, my own water.

You can't pack your own legroom.

I mean, I kind of dread that you're, when somebody next to me in coach on a long flight is on a Zoom call.

I relish the fact that those are currently, like, not technically feasible and or banned, but, but, but, I mean, there was an era when phones, they were, like, super expensive, you know, $5 phones on, on planes, and nobody really used them.

So, I mean, maybe, maybe this is just back to the future, but, but I guess.

I guess we're marching towards that era of Zoom calls on films.

Oh, my God, that's gonna be terrible.

I'm gonna hate that.

All right, last one.

A Bridgerton ball experience in Detroit is being hailed as a scam reminiscent of what transpired with a Willy Wonka event recently in the UK.

What yet untapped entertainment experience would you most want to be turned into retail tainment, Joe.

This one is super challenging.

People are already doing Star Trek, right?

So can I say it?

I love the science fictiony world of the Federation where everybody's happy and things just work, and we have transporters and replicators.

I would love to go to a Star Trek experience.

That'd be probably my first choice.

So you're a Trekkie, Joe.

That's what you're telling us of the various stars like Stargate, Star wars, and Star Trek?

I'm a Star Trek person.

There's Stargate in there.

That's a good, that's the first one you said Stargate, Star Trek, and Star wars.

Very nice.

That, that gives us some keen insight into who you are, Joe, so thank you for that.

All right, well, that closes us out.

Happy birthday today to Lorraine Braco, Avery books of Star, Star Trek fame as well, Joe.

Wow, what a coincidence.

And to the man, deep space nine.

What's that?

Deep space nine, right?

Yeah, right.

Deep space nine.

Yeah.

I don't know.

You told me.

I'm not sure.

And also, to the man who is so one of a kind that he goes by one single word that is both a noun and a verb.

The great Gordon Matthew Thomas Sumner, aka Steve.

I know youre all waiting for it.

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