Latest / GrocerTalk / US Shoppers Feel The Pinch, BJ’s Trims The Fat And Target's Big Beauty Bet | GrocerTalk

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US Shoppers Feel The Pinch, BJ’s Trims The Fat And Target's Big Beauty Bet | GrocerTalk · GrocerTalk

• 0:00
  Some weeks there's a single news story, that one big headline that stops you in your tracks.
• 0:06
  In other weeks, a picture slowly builds from small pieces and if you pay attention, something much bigger emerges.
• 0:15
  Over the last week I've watched a trickle of news that all suggests that the low US consumer confidence we've seen for a while is finally biting and might now be starting to impact grocery shopping behaviors.
• 0:28
  We've had strong quarterly numbers from Dollar Tree and Dollar General.
• 0:33
  We've had more people saying that they are having trouble affording food.
• 0:36
  And we've seen research suggesting that lower income shoppers are leaving even Walmart this week.
• 0:43
  We dig into this and ask ourselves if there's really something important here or have I just been misreading the tea leaves?
• 0:51
  And we'll unpick the rest of the news in the week of global grocery retailing.
• 0:57
  So welcome to grocertalk.
• 1:01
  I think the US consumer is difficult to talk about.
• 1:04
  As one consumer, what we're seeing is definitely much greater polarization.
• 1:09
  When you link that with the growth in the dollar store numbers and then you see the continuing weakness in customer sentiment, I think there's a real watch out.
• 1:17
  But there's no doubt that lower income households are under pressure.
• 1:21
  I think the story is really clear.
• 1:22
  They just couldn't make the economics work.
• 1:25
  Important not to sort of confuse store weakness with consumer weakness.
• 1:29
  It really, it's competing against platforms like.
• 1:32
  TikTok, a powerful combination that will just make Sam's Club more Sam's Club, less formal.
• 1:39
  Hello everyone.
• 1:39
  I'm your host, Ben Miller and I couldn't be happier to introduce this week's guest host.
• 1:45
  He was the very top of my list of potential co hosts, Grocer Talk and the very first person I invited to come onto the show.
• 1:53
  So a very warm welcome to Stuart Samuel.
• 1:56
  Welcome Stuart.
• 1:58
  Hi Ben.
• 1:59
  Great to be here with you, Stu.
• 2:01
  Look, your career absolutely steeped in global grocery retail.
• 2:05
  So please tell everyone what you do and what's brought you to this point.
• 2:09
  Yeah, so I work with Agiti and our mission really is to unite, inspire everyone to deliver a thriving food system.
• 2:16
  And one of the ways we do this is through our global insights and foresights business.
• 2:20
  So essentially we work with retailers and manufacturers to help them make better sort of strategic decisions, identify growth opportunities, all doing that through our sort of global market intelligence, trend analysis, forecasting and thought leadership.
• 2:36
  I lead sort of Ajiti's retail futures team and our goal really is to look a little bit further out at retail.
• 2:42
  So we spend a lot of Time looking more sort of the next sort of 7 to 10 years.
• 2:47
  Understanding what are those sort of big shifts that are going to shape retail.
• 2:52
  Things like emerging technologies, operational resilience and health and wellness.
• 2:56
  And of course, Stu, you haven't been at IG for your whole career.
• 3:00
  You were in store before then?
• 3:01
  Yeah, prior to joining igd, I spent eight years with Safeway in the UK in operational roles.
• 3:07
  So, yeah, just bringing a sort of retail grounding into the research that we do at igd.
• 3:13
  And you can't keep away from stores, can you?
• 3:15
  I think that's one of the things about IGD's methodology, the amount of time that you're actually out with retailers and manufacturers.
• 3:22
  Yeah, we for sure spend a lot of time on the ground.
• 3:24
  So across the team, we'll get to around 35 markets this year.
• 3:29
  I'll only get to do two of them, but they're two super interesting ones, the US and Canada.
• 3:34
  But, yeah, we're constantly out in store just understanding what's changing on the ground from quite.
• 3:39
  From a practical perspective to understand if things, you know, have the legs to go further within the industry.
• 3:46
  Stuart, look, a career progression that takes you from Safeway to INGD does have quite a.
• 3:52
  Quite a level of overlap with my own.
• 3:54
  So I have had the privilege to have known you and to have worked with Stuart for a very long time.
• 3:58
  And I genuinely mean privilege because not only is Stuart an amazing analyst, he's also one of the absolute nicest people in our industry.
• 4:07
  But I'm sure people can tell from your accent, Stuart, which is quite strongly Welsh, but yet you're joining me today from your home in Vancouver.
• 4:17
  How's that all about?
• 4:18
  Where is home for you now?
• 4:20
  Yeah, home is Vancouver.
• 4:21
  I've been here since 2009.
• 4:23
  So, yeah, just hit 17 years actually last month, so a little while.
• 4:29
  But, yeah, it just gives us a great sort of perspective within IGD just to understand what, you know, what's happening in, you know, essentially what, one of the most important markets in the world.
• 4:38
  That's the us, Right?
• 4:39
  Not.
• 4:40
  Not Canada.
• 4:42
  We're not going there this week.
• 4:44
  Absolutely not from.
• 4:46
  From a.
• 4:47
  From a grocery retail perspective.
• 4:49
  But, yeah, equally, you know, when you have, you know, large players like Loblo s, Walmart, Costco in this market here as well.
• 4:55
  Just so much going on all the time.
• 4:57
  Yeah, Fantastic.
• 4:58
  Stu, you.
• 4:59
  You've been so v man in North America for a long time.
• 5:01
  So I'm sorry.
• 5:02
  Thrilled to have you on.
• 5:02
  All right, let us get into this week's Grocer Talk, which of course is brought to you with the help and support of Instacart Enterprise, Portager and Fusion.
• 5:15
  And in this week's Grocer Talk, we've got news on BJ's Wholesale Club looking to reduce its SKU count, Target unveiling its Beauty Studio concept Aldi ending grocery delivery in Switzerland and Walmart bringing its commerce platform Scintilla to Sam's
• 5:32
  Club.
• 5:33
  But we start by taking a look at US Shopper behaviors.
• 5:38
  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.
• 5:52
  Learn more at company.instacart.com forward/grocertalk and this week headline warning is very much headlines.
• 6:02
  So let's run through a series of bits of news.
• 6:05
  Let's start with News from the Dollar Store segment, Q2s from both Dollar Tree and Dollar General in the last week, Dollar Tree's recovery continues.
• 6:15
  Sales up 7% Comps up 3.7 Comp traffic marginally up and reversing previous declines and its increased full year outlook.
• 6:26
  And a really similar story, dollar general sales at 5.2% comps up 3 1/2 2% traffic growth.
• 6:34
  Dollar General called out strong Demand for its $1 grocery offerings, especially in frozen food, and is really doubling down on expanding cold storage in grocery at the same time.
• 6:48
  Progressive Grocer reports new data from Numerator which shows that lower income shoppers are pulling back their spend.
• 6:56
  At Walmart, it found a 7.8 billion shift away from in store spend in the last year from lower income shoppers and only a $7.3 billion increase in online spend from that same group.
• 7:12
  An E marketer covered a Harris Poll where 51% of of American adults said that they're having trouble affording groceries.
• 7:21
  Right.
• 7:22
  Lots of numbers, lots of news.
• 7:23
  But Stuart, there's been talk of declining US Shopper sentiment for some time now.
• 7:29
  Have we reached a point where we're seeing this change grocery shopping behaviors?
• 7:35
  Yeah, lots of numbers there, Ben.
• 7:37
  And I think what it points to is actually quite a complex read on the market right now in part because I think the US Consumer is difficult to talk about.
• 7:45
  As one consumer.
• 7:47
  What we're seeing is definitely much greater polarization.
• 7:52
  But there's no doubt that lower income households are under pressure and I think we are starting to see that translate into different behaviors in terms of where they shop, how often they shop and what goes in the basket.
• 8:04
  And I think, you know, those results there from the dollar store operators, there was probably a good signal of that.
• 8:10
  You know, Dollar General has gone traffic for five consecutive quarters.
• 8:13
  We've got the turnaround, Dollar Tree is returned to traffic growth.
• 8:18
  But there's also, you know, a lot of internal factors driving that performance as well.
• 8:24
  But overall I think sort of there is a bit of a shift happening in the market.
• 8:30
  I wouldn't necessarily say the consumer is in crisis today, but they are increasingly worried about what's coming down the line and they're probably a bit more pessimistic about future jobs, incomes and business conditions.
• 8:41
  I was just looking at some data from the conference board.
• 8:44
  It didn't shift massively in terms of confidence in August, just down slightly.
• 8:49
  But actually when we looked at the expectations index, it was down six points in one quarter.
• 8:55
  So definitely some concerns about the future.
• 8:59
  And that again could shift that sort of behavior in terms of where, where they're shopping.
• 9:05
  Yeah, and it's really hard, isn't it Stuart, to create a, a causal or a distinct link between confidence and spend.
• 9:11
  But the, there seems to be a series of amounting pieces of evidence.
• 9:17
  What's your take on the dollar stores?
• 9:19
  Do you think that's a consumer confidence story or do you think that's a dollar store turnaround story?
• 9:25
  I think it's a bit of both and I think that's the complexity.
• 9:27
  So Dollar General did talk about the higher fuel prices and that's causing people to shop closer to home, which is benefiting them in a lot of rural markets.
• 9:38
  But then you've got a major turnaround happening at Dollar Tree.
• 9:41
  You've got the multi price position that's sort of being expanded and rolled out, you know, a new team in place there.
• 9:47
  So there's a lot of moving paths to this.
• 9:51
  But you know, we know that those retailers will do well in times of, you know, economic crisis for sure.
• 9:59
  Yeah.
• 9:59
  And I think, look, when I looked into the numbers, they're, they're both comping improved performances in 25.
• 10:06
  So I think that, you know, they, they both potentially reached their low point in 24.
• 10:10
  So the recovery was already underway.
• 10:13
  And you know, Dollar Tree is still recovering from the, the disastrous acquisition of Family Dollar, but they, they're comping on much better numbers.
• 10:21
  And I think, yeah, you think about the competition of the two stores, you know, Dollar General's got much more consumables in its business.
• 10:28
  I think it's almost like 80% share.
• 10:30
  Whereas Dollar Tree has got more discretionary more home.
• 10:34
  The fact it's growing as well is for me a kind of quite a strong sign of the downturn when sort of moving into some of those categories.
• 10:43
  What about the Walmart numbers, Stuart?
• 10:45
  Do you think there'll be concern in Bentonville?
• 10:48
  You know they've had, you know, weaker comps in the last quarter.
• 10:53
  If the, the knowledge that lower income shoppers are not spending quite as much as they were with Walmart, Janelle, have them worried.
• 11:02
  The newer data is interesting.
• 11:04
  I think yeah, there will be, there'll be some concern, but I think it's not that the, the data itself doesn't tell all the picture.
• 11:09
  I don't think it shows that almost 8 billion worth of dollars of sales actually left Walmart.
• 11:15
  I think there's an interesting shift that's happening from store to digital across this lower income base.
• 11:20
  You know, if you look at the Walmart U.S.
• 11:21
  e Comm results, they were up 24% last quarter as well.
• 11:26
  And interesting.
• 11:27
  The data is also showing that Walmart is gaining with higher income households and with Gen Z which are both key targets.
• 11:34
  So I think it's sort of important not to sort of, I guess confuse store weakness with consumer weakness.
• 11:40
  There might be some other reasons why physical trips are changing which go beyond affordability.
• 11:46
  And I've talked to a few people in the industry and I think one issue that's being so underestimated is immigration enforcement.
• 11:55
  There's growing evidence that concern around ICE activity is changing how some Hispanic consumers are shopping, fewer in store trips and greater use of delivery.
• 12:05
  So that's one thing to sort of bear in mind that it may be a shift from in store to online with some of those lower income groups.
• 12:13
  Yeah, I think that's really interesting.
• 12:14
  But I do think that there is as the shift takes place that with a net loss from lower income, I think that'll be a watch out for Bentonville.
• 12:22
  When you, when you link that with the growth in the dollar store numbers and then you see the continuing weakness in customer sentiment, I think there's a real watch out look.
• 12:31
  I think for me, net net, I think we are starting to see some of these trading down behaviors and as GAS continues to increase, it becomes harder to make those slightly longer trips.
• 12:40
  So you go to your local stores which is something that Dollar General is able to play in lots of communities.
• 12:46
  If you're a grocer listening to these numbers, Stuart, what do you think the implications are?
• 12:50
  What would you be doing in your business?
• 12:52
  For sure, many of them will already be sort of dialing up their value strategies and we know that value goes much more beyond price today.
• 12:59
  So you know, work around private label, around loyalty, around personalization, all those things will be dialed up as the retailers look to deliver a stronger total value proposition.
• 13:11
  I think.
• 13:12
  Ben, one more thing to come back on the Walmart numbers is that probably for the last two years Walmart's had an easy time of it against Target.
• 13:20
  I know last week you talked a little bit about Targets recovery as well.
• 13:23
  So that's probably.
• 13:24
  Yeah, you know, that's really helped Walmart's numbers over the last two years in particular.
• 13:30
  So you know, suddenly, you know, Target coming back a little bit more stronger is also going to put a little dent into those, into that warm up performance as well.
• 13:39
  Yeah.
• 13:40
  So a complex story but lots to follow.
• 13:42
  Okay, let's go on to 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.
• 13:58
  Visit Portager AI that's P O R T A G E R AI to learn more.
• 14:07
  Okay, headline number two this week comes from Supply Chain Dive which reports that BJ's Wholesale Club is planning to reduce its SKU count by 20% over the next couple of years.
• 14:19
  The reporting centres on Comments made by BJ's President and CEO Robert Eddy during his Q2 earnings call where Eddy said that it had seen some good results from reductions in SKU counts that he had made during that quarter
• 14:34
  and was planning the next wave of category cuts in September.
• 14:38
  So this month legacy BJ clubs have around 7,500 SKUs and BJ's hopes to cut this assortment to between 6 and 6,500 SKUs.
• 14:51
  With Eddie saying that the retail is over skewed and giving unnecessary choice.
• 14:56
  Stuart, what do you think is leading BJ to take this out action and do you agree with this direction of travel?
• 15:03
  Yeah, for me overall I think the skew reduction makes a lot of sense and I think the important point, you know, that came across in the, in the announcement really is that it's not doing it to take cost
• 15:13
  out, but actually just to make that assortment work a lot harder for the business.
• 15:17
  So the real opportunity for BJ's is to take out duplication, concentrate that volume behind fewer products, improve buying power and availability overall, simplify that shopper or that member journey in the club and also then creating that space for
• 15:33
  the new categories and products because we're seeing a lot of innovation coming through within our sector.
• 15:39
  So I think sort of overall It's a good move.
• 15:42
  And you know, even, even with that sort of 20 cut, it'll still probably have more products than, than, than a Costco, for example.
• 15:50
  Oh yeah, yeah.
• 15:51
  Costco's famously only got around 4,000 SKUs, isn't it?
• 15:55
  So Sam's maybe 6,000 up to 7,000.
• 16:00
  Maybe it maybe a bit less.
• 16:02
  It's still going to have more SKUs than the rest of the club sector.
• 16:08
  You know, it's, it's, it's had more of a, more of the range has led to a supermarket offer as well over time than the, you know, Costco and Sam.
• 16:18
  So you know, definitely a stronger, a stronger grocery offer or a broader grocery offer, a more supermarket type pack sizes as well.
• 16:27
  So I think the challenge is, you know, how far can they cut back before the things that made it quite distinct from Sam's and Costco are eroded from the business.
• 16:37
  So it's about keeping those things that make it different that are going to be sort of important to its future growth.
• 16:45
  Oh, Stu, that's completely hit the nail on the head for me.
• 16:48
  This is my concern about it.
• 16:50
  It's BJ's point of difference that it's got that wider assortment, it's got smaller pack sizes, it's more shoppable on a regular basis, particularly for groceries.
• 17:00
  So I my watch out.
• 17:02
  And this is where, you know, SKU rationalization is always sensible.
• 17:05
  It's like it's good housekeeping, isn't it?
• 17:07
  Really?
• 17:07
  It's good, it's good retailing.
• 17:09
  But you've just got to make sure you don't go too far and keep your point of difference.
• 17:13
  Because I, I also noticed a slight contradiction and I think you hinted at it as well.
• 17:19
  Great.
• 17:19
  You've got better buying economies, you've got incremental sales through the units that you're keeping.
• 17:25
  But Eddie also talked about white space categories.
• 17:29
  Creating space.
• 17:29
  Well, that's not skew reduction, that's changing your assortment to make sure it's meeting current trends.
• 17:36
  So do you sense a bit of a contradiction there?
• 17:40
  I think it's about creating the space for those.
• 17:42
  I'm not sure there's a full contradiction there.
• 17:44
  I think what it's aiming to do because of the way that the offer is set up is to almost be a better weekly grocery destination rather than sort of a more efficient warehouse.
• 17:55
  So what can you do to actually emphasize this point of difference versus Costco and Sam's?
• 18:02
  It was interesting.
• 18:02
  I was just in Dallas last month at one of the new clubs.
• 18:05
  It's one of the new markets that BJ's is targeting.
• 18:11
  A long way from home.
• 18:12
  It's a long way from home.
• 18:13
  And I think for me it's a super interesting test because I almost feel that if it can make it work in Dallas or the broader Texas market, actually, then it has an offer that can travel.
• 18:24
  You know, Dallas is particularly competitive for the clubs.
• 18:28
  Both Costco, hand Sam's, both have a significant presence in that market.
• 18:33
  So actually, if it can make it work there, I almost feel that it can make it anywhere.
• 18:39
  Maybe not New York as well, but.
• 18:42
  That would be straight look at all credit to them.
• 18:44
  In that same Q2 announcement, they announced their 18th consecutive quarter of traffic growth.
• 18:51
  Net sales well up.
• 18:53
  Comp sales well up.
• 18:54
  Although really strongly skewed by gas, only about 3% up, which is okay on comps.
• 19:02
  If you take the gas out, it feels like the market's coming to them.
• 19:05
  They've got a good value prop.
• 19:08
  This story feels like housekeeping to me.
• 19:10
  I just need just want to make sure it doesn't lose what makes BJ special and different, especially from Costco with its much lower SKU count.
• 19:20
  Yeah, I think the challenge of BJ is, and you know, if we think about the Texas test again, it really has to persuade a consumer to either switch from a Sam's or a Costco or actually get an additional
• 19:35
  membership.
• 19:35
  And it's also a market where grocery competition is exceptionally strong.
• 19:41
  So warehouse club is already mature.
• 19:44
  I don't think it could have picked a tougher market for the test.
• 19:47
  So I think sort of understand, I think it'll be keen to retain those points of difference given that, you know, the future for, you know, for growth, for Beaches is to be competing more directly with both clubs in
• 20:00
  areas where it won't have the same density that it has in its.
• 20:02
  In its heartland on the East Coast.
• 20:05
  It's just more reasons to keep going back to the incredible kind of grocery innovation lab that is the Dallas Fort Worth area.
• 20:12
  Go on.
• 20:13
  Let's move on though.
• 20:14
  Headline number three, which is brought to you by our proud sponsor, Fusion, the global leader in connected retail solutions, helping grocers improve productivity, execution and customer experience from shelf to checkout.
• 20:29
  And headline number three comes from a Target press release.
• 20:32
  We've just been talking about them, so let's talk about one of their new initiatives.
• 20:36
  This is the launch of its Beauty studio concept across 600 target locations and online from September 10th.
• 20:45
  Next Thursday, the Beauty Studio will house more than 1600 new products, including rotating product assortments from over 90 beauty brands spanning skincare, health care, bath and body makeup, nails and fragrance.
• 21:03
  And more than 2/3 of the brands are new to Target.
• 21:09
  Central to the department is a showcase table to spotlight new products with editors, picks and most loved products and dedicated specialist employees called Beauty Advisors.
• 21:24
  Amanda Noos, Targets SVP of Merchandising for Essentials and Beauty, said that the idea is to provide a product mix to help shoppers both buy their regular repeat purchases and also explore what's new and trending.
• 21:40
  STUART Recreating its beauty proposition and format has been a key task for the Target team.
• 21:46
  After the ending of the Ulta relationship in Beauty Studio, do you think they will have a successful replacement?
• 21:54
  It's interesting.
• 21:55
  I've seen a lot of people talk about Beauty Studio as a replacement for Ulta.
• 22:00
  I don't always show that I see it as quite as a direct replacement because I'm not quite sure that, you know, a lot of people talk about the failure of the Ulta pathogen.
• 22:08
  I'm not sure it failed.
• 22:08
  I think it may have just done, done the job it was meant to do.
• 22:12
  I think when it started back in five years ago now, right, 2021, target wanted more credibility and that sort of prestige beauty and that.
• 22:21
  So Ulta bought it.
• 22:22
  You know, authority, access to brands and actually became, you know, a more recognized beauty destination.
• 22:28
  And from, you know, Ulta's perspective, Target brought just enormous traffic and reach.
• 22:34
  You know, the partnership was always slightly, a little bit unusual.
• 22:37
  It looked like an Ulta store within Target, but it wasn't really an independent Ulta.
• 22:42
  Target owned inventory, employee staff did, and customers paid through Target.
• 22:47
  And Ulta essentially, you know, provided this brand expertise and access to products and then receive that sort of loyalty payment in return.
• 22:55
  And there's also some complexity that you also had both loyalty programs up and running at the same time.
• 23:02
  So you have to ask, you know, what was Ulta doing for Target that Target now can't do for itself?
• 23:10
  So five years on, you know, beauty is one of the most important categories at Target.
• 23:15
  It understands the prestige customer base, it has relationships with the brands and has established credibility in the category.
• 23:24
  So I think it's now an evolution of that beauty offer rather than a direct one on one replacement.
• 23:29
  What was there before?
• 23:31
  I think the sort of Ulta partnership definitely served Target well.
• 23:36
  It'll probably just move time to move on and do something different with this space that actually operationally as well was perhaps maybe less, less complex and, and it'll, it'll give Target more control to all the ranges that are
• 23:51
  in the, they'll have in that part of the store.
• 23:55
  It's interesting, Stu.
• 23:56
  I mean, the Ulta, strong retailer, well established in the area, good brand reputation, good relationships.
• 24:04
  Do you, from what you've seen of the beauty studio concept, do you think it's a strong enough offer to be able to and build on the strength that they had in the Ultra offer?
• 24:15
  Yeah, it looks really good on paper for sure.
• 24:18
  And you know, Tagus has already spent a lot of or has invested quite a bit into, into that beauty space within these stores outside of the Ulta work as well.
• 24:28
  You know, Ulta is only in about 600 of the Target stores, which are in excess of 2,000.
• 24:34
  So it actually done a great job in improving the sort of install environment beyond those Ultra stores.
• 24:40
  And for me, all those things you mentioned there around the tables, the advisors, I think it brings us back to this idea of Target as a space or as a store for discovery rather than just convenience.
• 24:53
  And you know, something at Target was, you know, probably, you know, you and I have, you know, have looked at Target for probably like the last 15, 20 years.
• 24:59
  It was just known for that being that place where you can go discover new brands.
• 25:04
  And I think sort of this will now give Target the control to do that and build that authority as a discovery space for beauty rather than just a convenience place for beauty.
• 25:16
  I think that's the aim.
• 25:17
  I think the question for me is the can day and this was a real fun one.
• 25:22
  There's often discussions, isn't there, between where consumer packaged goods, the grocery world, where that ends and then where premium beauty begins.
• 25:32
  Because when you get to the other end of each end of the spectrum, they're very different categories of very different behaviors.
• 25:38
  And that question extends to whether grocers and mass merchants like Target really have they got permission to play in premium beauty?
• 25:49
  I think it's really hard to know sometimes distinguish what's mass and what's prestige, particularly in beauty.
• 25:55
  So think about social media and emerging brands.
• 25:59
  I think they've changed what consumers think of as a premium brand, you know, as free and brand might just be a new brand that's gone viral on TikTok.
• 26:07
  It may not be premium for what it does for you in terms of, in terms of beauty.
• 26:12
  So I think that's sort of that part of the store is just becoming very complex and very blurred.
• 26:19
  Yeah.
• 26:19
  And you know what, Stuart?
• 26:21
  It was sort of even debatable if this was a, if this was a grosser talk story at all.
• 26:25
  But I think this conversation for me reflects the importance of covering it because whether it is relevant to grocery or not, it's the exact debate that Target itself is trying to resolve through this initiative.
• 26:37
  As you said, the whole point of Target's tie up with Ulta was to use Ulta's brand and critically its supply relationships to be able to get those more premium beauty products into its stores.
• 26:49
  So the challenge for Target now is to prove that it can do it on its own.
• 26:53
  That it can create a more compelling environment that the brand owners want to get to.
• 26:58
  And I think like you, I like the images that are circulating of this concept.
• 27:06
  I like the showcase table to feature brands.
• 27:08
  I like the fact that they're specialist advisors.
• 27:11
  And I think if we were being really honest, I think it's fair to say that somebody who took concessions was starting to look a bit tired.
• 27:18
  So I think this investment in this area is great.
• 27:20
  It gives as you say, gives Target the full control.
• 27:26
  The big thing for me, whether this is going to be successful or not, it completely lies with the merchants now.
• 27:33
  Buying beauty is so different to buying grocery and cpg.
• 27:37
  And as you said, the world of beauty is completely different now to when the first alter concessions went in just five years ago.
• 27:45
  Trend driven social media driven product cycles are really short.
• 27:49
  It really, it's competing against platforms like TikTok to get those latest trend driven products into consumers hands really quickly which isn't easy for a physical store.
• 28:01
  So I think there's a whole heap of upside for Target to have direct relationships as you say.
• 28:09
  I think getting the range right and constantly evolving that range is going to be really hard.
• 28:14
  And that's, I think that's a new skill set for Target as that's one that Ultra will have done.
• 28:21
  You know what Stu?
• 28:23
  I think if they get this right then it's a huge signal to the market that Target can do fashion forward exciting on trend merchandising which as we said is what when Target is at its best, that's what he's
• 28:41
  famous for.
• 28:42
  I think it could be a real travel driver if they do.
• 28:45
  Yeah, I think just, just listening to there Ben as well, I was just thinking there's another tie back to grocery.
• 28:50
  Every time you mentioned beauty you could just sort of replace the word grocery because I think that's probably the same challenge that it has in the grocery offer as well.
• 29:00
  That it wants to be this place of discovery, following the latest trends and being somewhere that's exciting for grocery rather than just mainstream.
• 29:08
  And I think we've started to see some of that come through within, within, within the grocery business at Target.
• 29:15
  I think some of the numbers were good, were really good, very good off the back of the work that is done to enhance the proposition.
• 29:24
  So maybe you know, what it's doing in beauty actually could be a, a very good model for what it could eventually do in grocery as well.
• 29:32
  Yeah, I think it'd be so interesting to see in six months time how many of those brand owners are still there and still, still supporting Rohan Ultra at the same time.
• 29:40
  I actually think that if you, if you are a beauty buyer for Target, it's got to be one of the most exciting and dynamic jobs in retail because you've got such an exciting proposition to be able to build
• 29:50
  for you there right now.
• 29:52
  Okay, let's cross the Atlantic, Stuart, for headline number four which comes from Labours Mittelseitung which reports that Alti Switzerland is closing its Aldi now that's its home delivery e commerce business.
• 30:09
  Aldi now provided home delivery in the largest Swiss cities and has done for the last four years.
• 30:16
  The service has already stopped in a number of cities including Bern, Geneva and Basel and Zurich is expected to close this month.
• 30:25
  Aldi said it was refocusing on its core discount business and whilst it didn't give the reasons for shuttering Aldi now, it's widely reported that labour costs in Switzerland were just too high to make the delivery economic work for
• 30:40
  Aldi.
• 30:41
  Stuart, is a food discounter failing to make home delivery work in one of the countries with the highest labor costs in the world an outlier?
• 30:50
  Or is there a reality check around all the hype in online grocery growth?
• 30:56
  I think it's a very short answer, Ben.
• 30:58
  I think for me, you know, you sort of essentially you take one of the most efficient retail models in the world and then attach one of the least efficient activities to it.
• 31:08
  So if you think about it, you know, Aldi's entire business model is designed to remove cost.
• 31:13
  Home delivery just puts, puts all that cost back in.
• 31:16
  So I think it's just challenging for discount retailers in the E commerce space.
• 31:21
  You know, the question probably is not whether customers want, you know, home delivery or if they want to pick up, it's whether as a discounter you can provide it without undermining, you know, the cost advantage that gives you
• 31:32
  the, gives customers, I guess, the reasons to shop in the store in the first place.
• 31:38
  So I think it's fairly, you know, straightforward in terms of a headline and a move from Aldi.
• 31:44
  Yeah, look Stuart, I couldn't agree more.
• 31:47
  I actually had a look back to see what they tried to do.
• 31:51
  And, and it's a really interesting example where Aldi had tried to provide almost like a gold standard service for online delivery, which is, which would be what a wealthy Swiss consumer expects, but from a discount proposition.
• 32:07
  So they were offering the same prices, same as in store when it first launched they were saying $60 minimum basket, $6 delivery fee, no pass required and same day was possible and they were adding extra geographies to it.
• 32:28
  Although actually after only two years they cut the numbers of locations by a third, which they called route optimization, which is interesting.
• 32:37
  Then last year they increased prices again up to $15 for delivery and the same surcharge.
• 32:45
  I think the story is really clear.
• 32:46
  They just couldn't make the economics work.
• 32:49
  And I think in Switzerland, with the cost of labor and the cost of operations as they are, it probably shouldn't come as any surprise.
• 32:55
  And yeah, I think there is a, for me there's a really strong read through in terms of focusing on operational efficiencies in your ecom businesses in catchments where competitors mean that you have to go there, you've got to
• 33:10
  invest in scale, you've got to drive that density and automation will play.
• 33:13
  There's no automation in Aldi's program whatsoever.
• 33:17
  So I think there are read throughs.
• 33:18
  But I also at the same time agree with you, Stuart.
• 33:21
  I think this was a particularly Swiss problem.
• 33:24
  Yeah.
• 33:25
  If we look more broadly at what Aldi has been doing in the e commerce space in other markets as well, it has tried Click and Collect in the uk.
• 33:33
  In Germany it's still testing some models, it's closed some other pilots, so it's found it difficult elsewhere as well.
• 33:40
  I think the outlier for me is the US where it is building a decent e commerce business but going down a different route through the sort of third party partnerships that it has, the work that it's doing with
• 33:52
  Instacart in particular, but then also being on the DoorDash and Uber Eats platform.
• 33:56
  So it just takes all that sort of additional cost associated with the model off the sheet for Addalee.
• 34:05
  Yeah, completely agree.
• 34:06
  Finally, headline number five, which comes from Supermarket News, which covered Walmart's announcement to expand its first party commerce intelligence platform Scintilla, to Sam's Club next year.
• 34:20
  Scintilla, known until last year as Walmart Luminate, is an analytics platform that provides sales and transaction details to merchants and suppliers with demographic and shopper analysis.
• 34:34
  A Sam's Club chief merchant Myron Fraser, said it will help merchants and suppliers listen better and act faster, Stuart.
• 34:46
  This is the latest move by Walmart to align a number of back end operations across both Walmart and Sam's Club.
• 34:53
  Do you like this move or do you think it might provide further dilution of Sam's Club's kind of unique individuality?
• 35:01
  No, I actually do like this move.
• 35:02
  I think it's smart.
• 35:04
  I don't think Sam's Club's needs to be different to Walmart behind the scenes.
• 35:08
  It just needs to be different where the member sees and experiences the proposition.
• 35:13
  And I think, you know, in the announcement the business said actually this was one of the most frequent requests from suppliers.
• 35:19
  It brings more consistency, reduces platform fragmentation and offers better visibility of them across the, across the Walmart format.
• 35:27
  So I actually think this will make Sam's Club more like Sam's Club and less, less like Walmart.
• 35:33
  I think, you know, the, the other advantage is other platform.
• 35:37
  Sam's is because they know every member, right?
• 35:40
  They, you know, they have the membership data that, that dovetails with, with this data which you know, is slightly different to how it works at Walmart.
• 35:48
  So I think sort of, it's going to sort of enable those merchants to make better decisions.
• 35:54
  I think the key thing to remember with the club environment that it's not just about growing sales.
• 35:59
  Items have other roles to play as well.
• 36:01
  Items have to support new membership, they have to support renewals and they have to support upgrades as well.
• 36:08
  So I think sort of bringing that sort of scintilla sort of platform into the, into the business, coupling that with the membership data, I think it's just a powerful commercial, a powerful combination that will just sort of, as
• 36:19
  I said, make Sam's Club more Sam's Club and maybe less.
• 36:22
  Less Walmart.
• 36:24
  Yeah, I think in many ways look, Scintilla is the more advanced platform.
• 36:28
  Extending it to Sam's means that both Sam's merchants and CPGs will get more visibility, will get more detailed insights and then coupled with the member profiles it's a little bit of a why not, isn't it?
• 36:40
  And it just reflects what the business has been doing more broadly.
• 36:43
  If we think about combining the supply chains of the business, the Sam's Club retail media program has become Sam's Club Connect.
• 36:51
  So I think the stuff that's kind of sits behind the scenes if they can sort of, you know, it's almost like leveraging the same plumbing.
• 36:59
  Right.
• 36:59
  For different businesses doing that seems just a logical approach from the retailer.
• 37:05
  And I think that retail media conversation is a really important one as well.
• 37:08
  That evolution from, you know, Map and the member access platform to connect.
• 37:13
  Because what that does for Sam's Club as well as with Walmart is it gives especially the CPGs the ability to take action to drive demand based on the data that they're seeing.
• 37:26
  Especially as Sams is over indexing his growth on digital and online.
• 37:32
  It is absolutely the most progressive of the member clubs when it comes to online and digitally influenced sales and numbers are ahead of Costco's in the most recent releases.
• 37:43
  So I think, I mean that's a really important bit because you can join those two together and I think, you know, it comes back to what we're talking about BJ's earlier, doesn't it Stuart that in this, in the
• 37:52
  club, warehouse club environment where it's skew constrained, identifying the right assortment is so important and it's providing another, another tool for that.
• 38:03
  Yeah, I agree and you know, if you make, make a good point about regional media it just makes me think what those sort of broader I guess enterprise capabilities of Walmart is building.
• 38:14
  So you think about it.
• 38:15
  Yeah, it's, it's advertising, it's data, it's AI, it's supply chain, it's tech and then it can deploy all those across the different business areas and increasingly different markets as well.
• 38:27
  So it's really sort of, you know, the core of that business is incredible.
• 38:31
  But there is one bit I think I'm going to pick you up on, you know, quoting back a line from the press release that the CPGs have been banging on the door asking for this.
• 38:39
  I think, I think if you're a supplier, come on, your cost of business with DO to doing business with Sam's has just gone up again.
• 38:47
  It's clearly a monetization opportunity for them.
• 38:49
  But yeah, look, if it makes Sam's a better place to do business, if it gives more visibility of that shopper journey, if you get richer insights with more media activations then you can make your investment work harder.
• 39:03
  There is a win.
• 39:03
  But it's, I'm sure the price tag in the JBPS has just gone up but I think that's.
• 39:09
  Look, it's an interesting question.
• 39:11
  I mentioned Myron Fraser, the Sam's Club chief merchant in the read he was quoted in the press release.
• 39:19
  He's one of the guests, the headline speakers at grocery shop which is later this month.
• 39:24
  I think it's just three weeks.
• 39:25
  Stuart to grocery shop.
• 39:27
  Now Myron's going to be speaking on the Wednesday morning and he is going to be being interviewed one to one by OmniTalk's.
• 39:35
  Very own Chris Walton.
• 39:36
  So I'll certainly be in the audience for that one and interested to hear what Myron has to say.
• 39:43
  Stuart, I think before we move on, I understand you'll be a grocery shop as well.
• 39:48
  What's Rockwell of the team got you doing this year?
• 39:50
  Yeah, I'm there as well.
• 39:51
  Yeah, I'm ordering a session on the, on the Wednesday looking at the store, the future and the capabilities that retailers need to sort of, really sort of enhance their, their proposition.
• 40:02
  We're still finalizing the full lineup for that, but it's going to be a great session.
• 40:06
  Very good.
• 40:06
  Okay, come on, let's get into Grab and Go.
• 40:09
  This is where we both get to share a couple of stories that have caught our eye in the world of grocery retailing this week, but beyond the main headlines, but things that we still should believe are on your
• 40:19
  radar and we don't have a clue what each of us have chosen.
• 40:23
  So Stuart, what is your first story and why?
• 40:27
  Yeah, I thought it was interesting to look at the press coverage of Tesco's trial with Cindy Robotics in store and the expansion of that trial.
• 40:37
  That itself for me is not the headline.
• 40:39
  I think sort of the bigger picture for me is what's happening at Tesco and the changes.
• 40:43
  So if you think, you know, it's announced, it's going to be rolling off ESLs, there's more automation in the business.
• 40:49
  One of the themes we talk a lot about at IGD is the hyper connected store.
• 40:53
  And for us, we stand to see this come to life.
• 40:57
  So I think the real opportunity for Tesco is connecting all those technology bets that it's making and creating that sort of in store ecosystem which is probably more powerful than the individual components themselves.
• 41:11
  So that's pretty a key one for me to watch.
• 41:14
  And Stu, I'm going to give a shout out to your colleague Toby Pickard, who has very much been the man on the ground on this one and has been breaking a lot of the news about the expanded trial
• 41:23
  of Tesco and Simvi.
• 41:24
  So credit to Toby on that one.
• 41:26
  And I think a really interesting development to see the Simvy Robotics and tally live in the uk.
• 41:31
  We opened our show today talking about value and in the US consumer.
• 41:37
  So this story caught my eye as we were preparing because it comes from this completely different perspective and that is that E1 is expanding outside LA county for the first time.
• 41:49
  That's right.
• 41:49
  Everyone's favorite celebrity grocer has made it all the way to Ventura county to a Thousand Oaks.
• 41:56
  So just Inland from Malibu where it's timber and stone lodge style is quite a departure from the usual slick LA design.
• 42:06
  The next opening I understand is going to be outside LA is in September and they're going to make it all the way to Orange County.
• 42:15
  So I think slow and steady expansion, but evidence that the top bit of the K shaped economy I think is going very well right now.
• 42:24
  Stuart, what's your third story?
• 42:26
  Yeah, the next one for me really just plays into this, I guess the conversations we've had about newness and excitement.
• 42:33
  We talked about range enhancement at BJ's and at target.
• 42:37
  Last week I was with Sorbet in Vancouver for the launch of their new Safeway multicultural proposition.
• 42:44
  This is a new flagship supermarket.
• 42:47
  It's been six years in the making.
• 42:49
  There's another story there, but it's at Oak Ridge, one of the most, I think dynamic and interesting mall developments in North America right now.
• 42:58
  And what they've created, something they call an accessible multicultural proposition.
• 43:02
  It's still very much Safeway but really appeals to the Asian consumer who's really had strong inner catchment of that store.
• 43:11
  And I think it's done super well.
• 43:13
  You know, it's beyond, you know, the, the dual language signage in both English and, and traditional Chinese, but bringing in like the dim sum, the hot food, the extended range, the global market, a new health and wellness proposition.
• 43:26
  It's just a, a really smart way of tapping into the, you know, the growth we're seeing not just in Canada, but I think Canada is probably one of the lead markets on multicultural diversity but just in a really
• 43:39
  good way of sort of capturing the spirit of what was Safeway but doing it in a relevant way for that catchment.
• 43:46
  So Stu, you precede that by saying he was in a mole that you think is one of the most kind of interesting or exciting mole developments in North America.
• 43:55
  Why is that?
• 43:56
  Partly because I've been watching it for six years, kind of not quite brick by brick.
• 44:01
  But yeah, it's, it's a mixed use development.
• 44:04
  There's like 10 residential towers, there's nine acres of rooftop parks, there's four stages just becoming a destination.
• 44:13
  It's actually home to the timeout food market in Vancouver which opened up over the summer.
• 44:19
  Right.
• 44:19
  And just a, you know, kind of fairly high end brands from a non food perspective in that mall.
• 44:26
  But yeah, just a great and beautiful space that's being, being created there for the community.
• 44:30
  And I'm assuming that there's probably photos of this on your LinkedIn.
• 44:33
  Is the Stuart for sure?
• 44:36
  Yes.
• 44:37
  Have a dip in for sure.
• 44:38
  Exactly.
• 44:39
  If anybody doesn't follow Stuart already highly recommended for all of the content and especially in store photos that he shares.
• 44:45
  Look okay, my final story is that Costco's popular custom cakes and party platters are now available to order online for the first time for delivery from Costco's warehouses nationwide.
• 45:00
  It's a development powered by Instacart's Foodstorm order management tech, which connects Costco's bakery and deli teams directly to online orders for the first time.
• 45:13
  I mean, it's a little bit of catch up from Costco here.
• 45:17
  Who's the online numbers, as we talked about were good but not as strong as Sam's.
• 45:21
  But I think what it talks to me about is the importance of unlocking unique things that store pickup can do.
• 45:28
  And this is a big business and important business for Costco, so seeing it online for the first time will definitely.
• 45:33
  Be a plus for them.
• 45:34
  Today's podcast was produced with the help and support of lseot, and it's brought to you exclusively as part of the omnitalk Podcast network.
• 45:44
  Omnitalk exists to highlight the trends, technologies and innovations shaping retail, and Gross Talk now does this specifically for the global grocery and CPG industry.
• 45:55
  Thanks as always for listening in and please remember to like and leave us a review wherever you happen to listen to your podcasts or on YouTube.
• 46:03
  And you can follow us today by Simply going to YouTube.com omnitalkretail Stuart, if people want to get in touch with you today, what's the best way for them to do that?
• 46:14
  Yeah, find me at either on LinkedIn or@igd.com so Stuart Samuelgd.com another recommendation to.
• 46:23
  Give Stuart go follow on LinkedIn.
• 46:26
  Okay, so until next week, and on behalf of all of us at Grossertalk Anomny Talk, thanks for tuning in.