Latest / GrocerTalk / Kroger’s Strategy, Walmart’s Membership Play, and Is Instacart for Sale? US Grocery Ecommerce Hits a Tipping Point | GrocerTalk

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Kroger’s Strategy, Walmart’s Membership Play, and Is Instacart for Sale? US Grocery Ecommerce Hits a Tipping Point | GrocerTalk · GrocerTalk

0:01
Conventional wisdom says that only South Korea and China have achieved grocery E Commerce penetration over 20%.
0:09
But this week the long running Brick Meets Click survey claimed the grocery E Comm in the US has now also crossed this key threshold.
0:18
Retailers have managed to move penetration more than the pandemic achieved.
0:22
So what happens next and what can retailers in other countries learned from this?
0:27
The impacts are already being felt and this week we'll cover news on physical store formats, membership programs and agent protocols that all ladder back up to this bigger story.
0:39
Welcome to Grocer Talk.
0:43
John.
0:43
This was too good a topic not to cover with you.
0:46
Over 50% of their EBITDA is coming from ad sales and data sales.
0:52
My reflection on it is why is it taking them so long to do this?
0:55
This is the age old debate between the KRO strategy and the Walmart strategy.
1:00
I feel slightly worried.
1:02
It's the 2021 metaverse debate.
1:05
Do we allow agents to crawl our site and understand our inventory?
1:09
We're going to see additional fragmentation in the overall shopping basket.
1:13
You know, nice light topics for us to cover Tuesday morning.
1:20
Hello everyone, I'm your host Ben Miller and I'm delighted to welcome our guest for this week's show, co founder and CEO of Empower Insights, Shawn Ranzenberg.
1:30
Welcome, Shaun.
1:31
Ben, it's great to see you.
1:32
Happy almost Halloween.
1:33
Yeah, happy very almost Halloween.
1:35
So Sean, before I ask you about your Halloween plans, let's just do the introductions.
1:40
Many of our listeners will be familiar with you.
1:42
You had a long stint as Managing Director and General Manager of HBS Retail Media and Brand Services.
1:49
So look, can you introduce yourself more fully for people who are meeting you for the first time, please, Sean?
1:54
Yeah, absolutely.
1:55
Shawn Ranciberg, CEO and co Founder of Empower Insights.
1:59
Prior to this, I was leading retail media at HEB and have spent the last decade in and around retailers and manufacturing products and honestly just really excited for the conversation today.
2:09
Fantastic.
2:10
And go on then.
2:11
I know you were very eager to talk Halloween.
2:13
What, what, what does Halloween look like in the random household?
2:16
Oh, it's one of the best times of the year.
2:18
You know, we have a big Halloween party for all of our neighbors and friends.
2:23
You know, I just love candy.
2:24
I think it's just an exciting time of the year, right.
2:26
We have Thanksgiving right around the corner, obviously, you know, then the holidays and actually I got a fun fact for to share with you, Ben.
2:33
Did you know in the U.S.
2:34
96% of consumers say they're planning to buy Halloween candy this year?
2:39
I just, you know, to me it's like I can't think of another occasion in the US or maybe even globally where you see that kind of participation.
2:46
So anyway, just excited about the event and what's, what's going on here in the US this weekend.
2:51
And tell me about the Halloween party.
2:53
Is that, is that fancy dress?
2:54
Is the games?
2:55
What's going to be going on?
2:57
Our big Halloween costume is a big surprise this year, but we have friends and family over to celebrate.
3:04
Kids playing around, you know, everybody's trading their Halloween candies.
3:08
I'm much more of a fan of sour candy myself, but everybody likes, you know, their different indulgences and so just excited for the weekend.
3:16
Do you celebrate Halloween in England?
3:19
I think there is a tradition which is the trick or treating.
3:22
So knocking on the neighbor's door, it's done in small numbers by kids.
3:30
Most adults try and ignore it, try and pretend it's not going on and hide in their houses.
3:34
So, yeah, it's not a big thing unless you've got small kids, in which case it's a lot of fun.
3:41
It's a lot of fun.
3:42
My teenagers will be mostly ignoring it.
3:45
Very fair.
3:45
Guys, we have got a lot to talk about.
3:47
We've got a great set of stories this week.
3:50
So let's get into this week's Grocer Talk, which is of course brought to you with the help and support of Instacart Enterprise, Portager Vusion and Sifter.
4:02
And in this week's Grocer Talk, we've got news on Walmart and Sam's Club offering a new joint plus membership.
4:09
We're going to reflect on our learnings from Kroger's Investor Day.
4:12
We'll go to Walmart again, setting its protocols for how agents can shop its digital properties.
4:19
And we're going to talk about bookies back on the expansion trail.
4:23
But we'll start today with the reports that US grocery econ penetration has passed the 20% mark.
4:30
And headline number one is brought to you by Instacart Enterprise, which gives grocery businesses the technology to grow online and in store for from one modular platform built for how grocery actually works and built to scale with you.
4:44
Learn more@company.instacart.com GroCertalk and we'll be coming back to them.
4:51
Okay.
4:52
Headline number one this week comes from Chainstore Age, which reports that in the latest brickmet clicks data online grocery market share in the US has passed the 20% mark.
5:03
Data covering Q3 2026 recorded online sales penetration of 20.9, meaning that 1 in $5 now spent on groceries in the US is spent on E Com.
5:16
Diving into the September numbers and the driver is clear.
5:19
Overall E com grocery grew 16% with order value and active users up around 3% and order frequency has grown 9%.
5:30
They're all year on year numbers and now nearly two thirds of all US shoppers have bought something online for grocery during Q3 this year according to Brick Meets Click.
5:44
Furthermore, in Q3 it was delivery via first or third party providers that drove most of the growth compared to say, pickup options.
5:54
Now Brick Meets Click data is based on a weighted sample of U.S.
5:58
adult grocery shoppers and has conducted the survey in the final days of each month.
6:04
Right.
6:04
John, 20% e com penetration has historically been viewed in many industries as a tipping point.
6:12
How do you see the US Grocery ecom market evolving next?
6:18
Yeah, what a perfect article to start with today.
6:20
And it's such an interesting time in the E commerce and grocery space.
6:26
I think 20% is a really interesting milestone.
6:29
But to me, I think the bigger story isn't necessarily the number itself, it's what it tells us about how customer behavior has changed.
6:37
And if you think about it, you know, you said it well, right?
6:39
We're at a point where roughly 60% of American households are buying groceries online in any given quarter and more than 80% have at least tried it at some point in time.
6:50
So to me, I think largely past the question of like whether consumers are going to adopt online.
6:56
Right.
6:57
They're obviously already adopted it.
6:58
And you said that.
6:59
Well, in kind of the intro, I think the question now is like how frequently are customers going to use online shopping and how much of their grocery spending can retailers really capture online?
7:10
To me that's like the really interesting question.
7:12
And you said this in your intro, but if you look at other markets, particularly in China and South Korea, E commerce has become an even bigger part of grocery shopping.
7:22
There's a fundamental difference between obviously those markets and particularly the economics of fulfillment in the US and so I'll talk a little bit about two, I think important parts of the delivery delivery aspect that could drive E commerce
7:36
penetration even higher.
7:37
But before we get into that, I think like really the to me the 20% mark is the start of this tipping point.
7:44
But I do think there's potentially a ceiling in that high 20s, maybe even 30% penetration if there's not major unlocks.
7:52
And to me, I think there's two big unlocks that potentially could happen in the industry.
7:57
And I'm curious to get your perspective on These, Ben, I think number one is really the final delivery cost and logistics.
8:05
One of the biggest constraints in grocery e commerce today is simply the costs to get the groceries to my family's doorstep.
8:13
In those Asian markets we were talking about, delivery is less than a dollar here in the US to get your groceries picked and delivered, it's over 8 to $12.
8:23
And that's assuming there's no markup on the actual goods or the cost of those goods.
8:28
And so, you know, to me, this is where things like, you know, drone delivery and companies like Zipline start to get really exciting.
8:36
If we can start to reduce the cost of delivery, I think we could see penetration even continue to go higher.
8:43
And then the second big one obviously is agentic commerce.
8:46
And you talk a lot with different hosts on, on the show, guests on the show about, you know, agentic commerce.
8:54
And to me, we don't need to go super into it, but this is one of the potential big unlocks for driving ecom penetration.
9:01
If we can take a customer shopping experience from 20 to 30 minutes down to less than 30 seconds because agents are doing all the shopping, it gets a lot easier for customers to adopt and start shopping online.
9:14
And so to me, the 20% is just, just really the start.
9:18
If we look at markets that are further ahead, I think we get some signals in terms of where we're headed in the US Market, a really interesting shot.
9:24
So look, let me pick up.
9:26
You've made the point there that driving down the costs of delivery and is the unlock to adoption and also the unlock to profitability.
9:35
You mentioned investment insurance.
9:37
What we've been seeing and we've been coming back to this week after week after week on the show is Walmart and Amazon building out their fulfillment networks of scale to enable them to do that.
9:49
So yeah, we know that it's Amazon and then move to same day that's driven this real uptick in the numbers.
9:57
Kind of as you sit there as a grocer who isn't Walmart or Amazon kind of, how do you, how do you respond to it?
10:04
How do you try and tackle that distribution economic challenge?
10:10
Yeah, I think it's one of the biggest challenges retailers are facing in the industry today.
10:16
And I don't think there's honestly one size fits all solution.
10:19
Right.
10:20
You have different retailers in the US approaching this differently and I think a lot of them need third parties like an Instacart or Doordash and Uber to be able to solve some of these challenges.
10:32
But I think as we look at, you know, Inspiration from other markets such as the Asian markets.
10:38
I think one of the biggest variables that helps bring down the cost is if you have the density of volume of orders.
10:46
And I think retailers thinking about their future strategies are starting to think about, you know, how do I increase the density of orders and the number of orders so that I can make the economics continue to work.
10:58
So, you know, I think it's one of the biggest challenges, you know, the retail industry is facing today.
11:04
And Sean, you spent a long time in the retail media business.
11:09
You've just talked about kind of like an opportunity and a threat at the same time.
11:14
Growing penetration.
11:14
So more people on the site, Fantastic agenda.
11:18
Commerce, plenty automating some of that.
11:20
So therefore removing eyeballs.
11:22
How would you think about that balance?
11:26
I think it depends on which perspective you're looking at it.
11:29
Retailers are massive organizations, right.
11:32
And so I think there's opportunities on multiple sides for benefits from like an agentic shop ring and a high increase in order velocity.
11:45
And so I think it's just depending on the objectives of the different teams, you're looking at what those teams are trying to solve.
11:51
Obviously you talked about retail media.
11:53
It's one of my biggest passions for the last decade of my career.
11:57
And, you know, if you think about retail media, I think retail media is facing an inherent threat and challenge with the rise of agents and agentic commerce.
12:06
And I think there's opportunities for retailers to start thinking differently about their e commerce experiences, but also the ways to introduce those ads into that experience.
12:17
You see a lot of retailers shifting their focus to in store.
12:21
Right.
12:21
And starting to create these incredible experiences in store so that it's more than just a, you know, e commerce experience, but finding new ways to introduce ads that ultimately increase the overall shopping experience.
12:34
And I think retailers are going to have to continue to innovate in this space to be able to drive those alternate revenue streams.
12:40
Yeah.
12:41
And John, one last question on this one from me.
12:44
If we stand back, the brick meets click Data.
12:49
It's a sample survey, but the story it's telling us is we kind of hit that $1.05, that 20% market share.
12:59
It's been driven through delivery.
13:01
It's saying penetration is high and the basket sizes are increasing.
13:06
So from your experience, is that a pattern?
13:09
Is that a shift shape that you would recognize or, or do you see different dynamics in the industry?
13:14
I think, you know, those economics that, you know, Brick Mixclick shared those.
13:20
Those data points are very similar, honestly, to how my wife and I and our family shops.
13:25
Right.
13:25
Like we do one big bulk order a week.
13:28
But then we see, you know, during the week maybe I'll run to the quick store for a dinner or I'll place a quick curbside order.
13:36
Or if we're planning our Halloween party this weekend, right, and we're running out of candy, I'll place a quick order for delivery because I don't want to leave in the middle of a party.
13:45
And so I think those data points, Brittany Click shared, honestly, kind of reflect what I'm seeing and what I've seen in the past in the industry.
13:54
I think what's interesting as you start to think about the grocery space is it feels like the shop just continues to get more fragmented.
14:03
Right.
14:03
So if you think about like the evolution of like, let's just take Chewy as an example.
14:08
Historically, you know, you'd buy your pet food with your weekly grocery shop.
14:12
But now our pet food for our two dogs is on regular order subscription every month.
14:18
Right.
14:18
If you think about beauty products and our beauty regimen in our household, we have a regular shipment of beauty products showing up at our front doorstep.
14:28
And it feels like that that shop is just continuing to get, you know, additional continues to get fragmented.
14:35
And I think we're seeing that honestly, like I was mentioning, you know, in Asia as well where, you know, leading markets in E commerce and as we bring the cost delivery down, obviously those drones aren't going to deliver
14:46
your entire groceries for the week, but they can deliver those one and two item baskets very quickly, very efficiently.
14:55
And so I think as those technologies continue to develop, going to see additional fragmentation in the overall shopping basket.
15:03
The weekly shop for customers.
15:05
Yeah, I think that's right and I think that leads really nicely onto the conversation we're going to have about Kroger shortly.
15:10
But before that we talk about delivery and I think it's really important just to cover that, you know.
15:18
Multiple sources over the weekend, including the Wall Street Journal and Bloomberg, have reported that our sponsor for this story, Instacart, is assessing its strategic options.
15:29
So up for sale.
15:31
Look, we're recording on Tuesday morning.
15:34
Last night, Monday, Bloomberg reported that whilst discussions with Uber have ceased, the conversations with Doordash or well progressed and you know, there could be a potential acquisition announcement anytime soon.
15:47
However, this is clearly a live, fast moving story.
15:51
So I'm not going to jump any guns here with speculation and until we know an awful lot more, I did of course reach out to the Instacart team yesterday, but as they don't comment on rumors or speculation, an
16:05
Instacart spokesperson declined to comment.
16:08
So therefore we will wait and see.
16:11
The Instacart team did confirm that they are winding down their capercart business to quote, because, quote, the business realities that retailer adoption has not scaled quickly enough.
16:23
Maybe, maybe not a huge surprise that one.
16:26
I think these are all topics that we'll come back to, but I think it would be remiss if we didn't at least acknowledge that this is all being discussed in the industry this week.
16:35
Okay, on that note, I'm going to move us 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
16:52
value.
16:52
Visit Portager AI to learn more.
16:56
And headline number two this week comes from Supermarket News with the news that Walmart is offering a new combined Walmart plus and Sam's Club plus membership for just $120 a year.
17:10
Currently one more plus alone is $98.
17:13
Sam's Club plus membership, $110.
17:16
So this new combined offer is a significant saving for households currently holding both or a pretty low price upgrade for existing Walmart plus members.
17:27
Benefits of the package include access to Sam's Club, free delivery options above certain thresholds, gas discounts of 10 cents a gallon at 17,000 gas stations across the US member only prices, choice of streaming services and more.
17:44
So, Sean, if you were sat on the leadership teams of either Walmart US or Sam's Club, would you have supported this move?
17:52
You know, the first thing it, you know, it's easy to sit here and talk about this, but first thing obviously would be exciting to see all this data, you know, without, you know, having access to understanding like the
18:04
overlap between Walmart and Sam's Club customers.
18:06
To me, I think it's a really smart move.
18:09
It makes a ton of sense and it goes back to the early days when Jeff Bezos and Amazon were launching Prime.
18:16
They started with one very clear goal which was to make prime almost impossible to live without.
18:24
And today I think most Americans, most people across developed countries have some sort of prime account.
18:33
Do you have a Prime account, Ben?
18:35
I do, yeah.
18:36
We've got a household prime account here in the uk certainly have.
18:40
And so, you know, I think this is a step in that direction.
18:43
I think, you know, Walmart plus has been working to kind of continue to compete with, you know, Amazon and Amazon prime.
18:49
And I think this is a very smart integration.
18:52
You know, obviously you look at the entire, you know, subscription opportunity for Walmart now they've obviously, you Know, continue to grow that and grow the benefits gives customer, really the customer has a pretty compelling set of benefits and
19:08
now a Sam's Club in that equation.
19:11
Yeah.
19:11
So you see it's an extra salvo.
19:14
It's a, it's a layering up in the value prop of a Walmart plus membership versus Amazon and it's the two competing once again.
19:25
I think we're going to continue to see that competition evolve.
19:29
To me it's an opportunity for Walmart plus and Sam's Club together to come together to recognize the benefits and the overlap and shop and be able to bring that story together to tell a more comprehensive value prop for
19:48
customers so that now you can, you know, recognize the benefits for both Walmart and Sam's Club.
19:55
So you know, for me, if I was just as an example, a Costco shopper, but I also have Walmart plus, this is an extra benefit, an extra reason for me to join potentially, you know, the Walmart plus, you
20:08
know, environment.
20:09
Yeah, I agree, agree.
20:11
So I, I did some back of a fat packet calculations on this one Sean and Walmart doesn't disclose exact numbers.
20:20
It's estimated it's got around 25 million Walmart plus members.
20:25
Sam's Club has about 30 million members.
20:30
Now again, don't know the exact penetration of plus within that membership.
20:34
There's two tiers of Sam's membership but it's been growing and it's considered maybe to be around 60%.
20:43
Now the estimated overlap is actually said to be really small.
20:49
The overlap of people that hold both plus memberships may be as low as 10%.
20:55
So that's fewer than 2 million households with both Walmart plus and Sam's Club plus currently.
21:02
So if you, if you kind of extrapolate that there's $98 from each of those households that they're not getting, this is a $200 million investment.
21:13
Now these numbers are rough, so don't hold me to these but you know, would, would a 200 million pound marketing investment in order to open up Sam's club estimated 20 million new members be a worthwhile thing to do?
21:33
Absolutely.
21:34
I mean Walmart has specifically said that this change won't materially affect his Q3 numbers or his full year guidance.
21:42
So it thinks he can take the numbers, take that 200 million hit and turn that.
21:48
And if that's the case, I guess my reflection on it is why is it taking them so long to do this?
21:54
It's, it's going to be there in time for the holidays.
21:56
It helps embed the membership.
21:59
I think that there's not much that happens that makes the good people of Costco feel worried, but I think they've probably been dreading this day.
22:06
What's, what's your final take on this, Sean?
22:08
You know, I've spent a lot of time in my past life evaluating subscription programs like this.
22:14
You know, I think the key is you talk a lot about all the costs tied to it.
22:20
But these subscription programs aren't just loyalty programs.
22:24
This is truly an incremental revenue stream, high margin incremental revenue stream.
22:29
But then there's all the ancillary benefits of this as well.
22:32
And the opportunity to drive cross shop seems like one of those, the biggest potential upsides to this.
22:39
And so I think you're spot on as you're evaluating this and I agree with you, it is as a potential competitor to the Sam's Club Walmart environment, this is something that could drive substantial share towards Walmart.
22:55
Well done again.
22:56
Walmart.
22:56
Okay, here we go.
22:57
Headline, headline number three.
22:58
And this is brought to you by our proud sponsor, Fusion, the global leader in connected retail solutions, helping grocers improve productivity, execution and customer experience.
23:10
From shelf to checkout, visit viewsion.com Headline number three comes from grocery dive Reporting on Kroger's investor update day held in New York City last week.
23:22
Now, at this much anticipated strategic update, CEO Greg Foran delivered two main headlines.
23:29
Firstly, updated three year growth forecasts and secondly, announcing three new store formats.
23:37
So growth forecast first, Kroger is expecting 3% comp growth in 2029.
23:44
So that's a real uptick from the guidance of 0.2 to 0.8 in the current financial year.
23:52
It's a number that's well ahead of what listed supermarket format retailers are currently delivering in the US but still quite some way behind the numbers the likes of Amazon, Walmart and Costco are currently publishing.
24:06
This is expected to be delivered through more focus on fresh, more focus on private label products.
24:12
E com growth +110 new stores by 2029 that will start feeding in time into that number.
24:20
Now these new stores will be one of three fresh formats.
24:25
Fresh format is going to focus on food at the expense of general merchandise and provide more meal solutions and be better built for what it calls omnichannel fulfillment.
24:36
And this is all part of a $5 billion investment in stores, operations and as we've talked about previously on the podcast, pricing.
24:44
Okay, Sean, so during your recent time at heb, you were, you were head to head with Kroger in a number of Your markets, Houston and dfw, you and I water stores.
24:54
They're together especially.
24:55
So I'm super keen on your views here.
24:59
So do you think that Greg Foreign and the Kroger team are focused on the right things over the next few years?
25:06
So, Ben, you know, I actually, I grew up in Cincinnati, and I started my career at Kroger, and like you said.
25:12
Yeah.
25:12
Now I live in Austin, Texas, and I've worked, you know, for H E B for six years.
25:17
So this is one that's right up my alley.
25:20
You know, what's.
25:21
What's funny is actually my summer after.
25:24
My summer, the summer after my internship at Kroger, I promised myself I would actually, I would never work at another retailer again.
25:32
And sure enough, 10 years later, I found myself at H E B helping them launch their retail media business.
25:38
And, you know, I think I.
25:39
What I realized is I just, I love it.
25:41
Love the retail environment, love the CPG world.
25:45
It's such an interesting area where it's integrated into our everyday lives.
25:52
As I was reviewing and thinking through Kroger's investment day and thinking about my time at HEB when we competed directly with Kroger in markets like Houston, Dallas, I probably look at their strategy through a slightly different lens.
26:10
I think my biggest takeaway was that Kroger seems to be getting back to the fundamentals.
26:15
Right.
26:15
And they made that very clear.
26:17
Right.
26:18
I think that's exactly the right place to start.
26:21
You know, if you look at, like, what they've laid out, there's a renewed emphasis on clear things like value fresh, private label, and investing back into their physical stores.
26:32
And to me, you know, that's really encouraging because when I look at, you know, what makes a great grocery retailer, I mean, you talked about our store walks when you were in Texas.
26:42
And, you know, it starts with that customer experience inside those four walls.
26:47
And, you know, are the shells stocked?
26:49
Is the produce fresh?
26:51
Is the store clean?
26:52
Do customers feel like they're getting a good value?
26:55
And those sound like really basic things.
26:57
Right.
26:58
But they're incredibly difficult.
27:00
I've Learned this for 6 years working in retail.
27:02
It's really, really hard to make sure that's consistent across hundreds, if not thousands of stores.
27:08
And having competed against Kroger, I can tell you that's one of the things that hebs historically done really well.
27:15
And it reminds me of, you know, time when, you know, I was doing store visits with leaders in Houston, and we were talking with.
27:23
We were actually at the intersection where there's an HEB and a Kroger and I was talking to the, the butcher at the, the Kroger and obviously, you know, was just, you know, dressed as a normal customer.
27:35
And I asked him for the butcher, like, what kind of cut of meat would you recommend?
27:39
We're talking about different cuts.
27:40
And at a certain point his response was honestly like, I would just go to HEB for that.
27:45
And so HEB's competitive advantage wasn't just like they had better technology than everyone else.
27:51
It was incredibly focused on understanding the core customers and delivering a great shopper experience.
27:58
You know, the last several years the grocery industry has invested an enormous amount of money into E commerce, into automation, personalized shopping, AI, retail media.
28:10
And so to me it was very encouraging to read this and hear from Kroger CEO saying we're going to get back to the fundamentals, right?
28:20
Because nothing ultimately replaces the need for those fundamentals, right.
28:26
And in many ways the quality of the E commerce experience is directly tied to the quality of the stores, right?
28:32
If, if I order something online and it's not available on the shelf, I now have to get my, you know, a substitution or I get shorted an item that just creates, you know, less than ideal experiences.
28:46
And so when I see, you know, Greg for and putting a renewed emphasis on store operations and execution, I think it's a really positive sign for Kroger.
28:54
And if you look back, obviously there's a background at Walmart.
28:58
Big, a big part of what he's known for.
29:00
And so now I think the strategy gets a little bit more interesting when you think beyond fixing the fundamentals and start asking Kroger how are they going to differentiate themselves?
29:11
And so excited to kind of dive into that with you.
29:14
Yeah, definitely.
29:15
And I think I completely agree with everything you said.
29:18
I love that anecdote from Houston.
29:21
I mean I found it really interesting they talked about focusing on this fresh film about maybe moving away from the Marketplace stores.
29:30
Some Kroger Marketplace stores I've experienced have felt overspaced and over ranged.
29:36
So I, I see that as, as a positive.
29:39
I thought it was quite interesting having last week we heard from Albertsons where they basically said everything is on the table, everything is up for grabs, we're reviewing everything.
29:51
Forens seems to be saying actually we're just going to fix the basics and that will turn us to 3% comp.
29:55
But 3% comp is still going to be losing share.
30:00
So I guess like Sean, you say great fix to basics.
30:03
I completely agree and I'm really excited to see what Foran and Ibbotson and the new team can do on that.
30:10
But what's the next.
30:12
What's the.
30:13
And then we're going to.
30:15
That you'd love to see from Kroger.
30:17
This is where we start to like talk about, you know, what is going to differentiate them.
30:22
Obviously you said this, getting the stores right is absolutely necessary, but I don't think that's going to be sufficient to win in the long term.
30:30
And that's where I'd really like to see Kroger leaning into one of their biggest competitive advantages.
30:35
And that's the sheer amount of customer data and insight they have through its loyalty ecosystems and 8451.
30:42
I mean, if you think about it, you know, I think in recent earnings reports Kroger shared that over 50% of their EBITDA is coming from ad sales and data sales.
30:53
And so how are they leveraging that as part of their fundamentals?
30:57
And so Kroger has decades of customer purchase data across millions of households.
31:02
They have this just an enormous opportunity to use that information to understand customers better, improve assortment, personalize shopping experiences with agentic shopping, think about all that wealth of data from an agent's perspective and then helping make better brand
31:19
and branding decisions.
31:21
Frankly, I think that's an advantage a lot of competitors would love to have.
31:26
I know talking with many grocery stores in the US that, you know, it's just a huge competitive advantage and real opportunity is turning all that information is something that the customers actually feel when they shop.
31:40
Better products, more relevant promotions, a more personalized experience, more compelling private brands.
31:47
Because ultimately customers don't care about how sophisticated your data programs and capabilities are.
31:54
They care really ultimately about whether you're making their lives easier and deliver a better shopping experience.
32:01
Kind of building on that.
32:02
You talked about leaving marketing, you talked about maximizing private brand.
32:09
Do you think Kroger are making it hard for themselves running so many different banners and so many regional names?
32:17
Do you think we're at the point where some level of master brand would help that storytelling and help that private label?
32:24
Or actually is that going to do them a disservice in the communities they serve?
32:27
It's such a good question.
32:29
I mean this is the age old debate between the Kroger strategy and the Walmart strategy.
32:33
Right?
32:34
Walmart, when they've made acquisitions, turned any of those stores into actual Walmart branded experiences and obviously Kroger took a very different approach where they kept the local brand and the local banner tied to those local communities.
32:51
I think the question is how much do those Local communities feel a connection to that overarching banner.
32:58
Especially when a lot of the private brands in those local banner stores have a Kroger look and feel.
33:05
A Kroger national brand look and feel.
33:08
I think it's a challenging question for, you know, Greg and the team to kind of take on over the next couple years.
33:15
Yeah, I'd love to see them tackle that.
33:17
I'm also, I'm really interested to see what this Omnichannel fulfillment actually looks like for them.
33:24
You know, we've got Greg Foreign, you've got Mark Ibbotson running stores, working on it.
33:30
The two of them worked on Walmart US stores, getting them ready for Omnichannel.
33:35
So they've gone through this cycle, obviously, Kroger what, what I hope is that we're not going to see them throwing out automation with the bath water.
33:45
Obviously the, the.
33:46
Not all of their investment with Ocado was successful.
33:49
I think it has to be very well documented now, but that doesn't necessarily mean that automation is bad.
33:55
So I'm really interested to see what the next gen of Omnichannel fulfillment looks like for Kroger to be able to deliver at the efficiency that's required.
34:08
Sean.
34:08
What?
34:09
Last word on that one?
34:10
No, completely agree with you.
34:11
I mean, it gets back to what we were talking about earlier.
34:13
You know, if you look at the markets that Kroger did well with Ocado, it's the areas in the markets where they had density and volume of orders.
34:21
If you look at the areas where it didn't go well, you know, trying to roll out, you know, automated fulfillment in Florida where you don't have a high density of volume orders or, or in Texas, I think that
34:33
was a huge challenge for them.
34:35
And so obviously they're going to continue to learn and continue to invest in the space and continue to ramp up their e commerce capabilities as they continue to grow.
34:42
So headline number four is brought to you by Sifter.
34:45
Sifter Solutions Powerful API seamlessly integrates advanced medically tailored dietary and nutritional filtering into virtually any grocery or wellness platform.
34:58
Sifter makes healthy outcomes possible.
35:00
So learn more@siftersolutions.com okay, our fourth headline this week comes from Retail Dive, which is reporting how Walmart will allow access to AI agents onto its digital properties.
35:14
We are, we are hitting all the big topics this week, Sean.
35:17
We really are.
35:18
Okay.
35:19
Walmart is going to be doing this in two ways.
35:22
Firstly, by allowing shoppers to create what it calls a agent profiles.
35:27
This means customers will have dedicated profiles within their Walmart accounts for their agents with pre agreed permissions and even giving them the ability to transact within agreed spending limits.
35:43
Secondly, it's building an agent gateway using the open standard model context protocol, allowing AI agents to shop for a user without needing to share personal information or purchase history with that agent.
36:00
So this is Walmart opening the door to agents whilst maintaining transparency for shoppers and seeking to protect personal information.
36:10
And it comes in real contrast to Amazon which is sought to stop agents from perplexity and meta shopping through Amazon on behalf of customers.
36:21
So Sean, we're looking at two opposing strategies here from these two big retailers we've mentioned a few times already.
36:28
What would you recommend to grocers around the world?
36:31
Let the agents in or keep the drawbridges up.
36:35
Nice light topics for us to cover on this Tuesday morning.
36:40
I think this is one of the most interesting and strategic questions facing retailers right now.
36:46
And I don't think there's, you know, one simple or right way or wrong answer.
36:51
Like it's a very challenging problem to tackle because if you look at Amazon and Walmart, they're obviously coming at this from two completely different positions.
37:02
Amazon has spent decades building an ecosystem where consumers start and finish their shopping journeys.
37:10
On Amazon, they own the interface, they own the customer relationship.
37:14
They've built an enormous business and ecosystem around that.
37:18
So to understand why they might be more proactive of, you know, protective of that experience, you know, it makes complete sense.
37:25
Walmart on the other hand, has an enormous opportunity to reach customers wherever they happen to be shopping.
37:31
And if that means making assortment available through third party AI agents, I think it could be a really smart strategy because here's how, you know, I think about it.
37:41
If I were running, you know, let's just say a grocery retailer as an example, I don't think the question is whether, you know, you should let AI agents shop your store.
37:50
I think that question, I think the question more is how should you participate in the ecosystem without losing your relationship with the customer?
37:58
I think that's one of the most important things for retailers to tackle today.
38:03
And obviously we've seen different strategies around this.
38:05
But I think if, if you assume if you know over time more and more customers are going to be using AI and we're going to see agentic shopping adoption continue to increase and then we get to a place
38:16
where AI is making those purchase decisions.
38:19
If that's where customers are going, retailers absolutely have to figure out how they show up.
38:25
Now that doesn't mean giving away all your customer data or allowing third parties to completely control the shopping experience.
38:33
I think the big thing retailers are trying to answer is like, how do they protect their products, their pricing, their availability, fulfillment capabilities, but also being where customers want to shop.
38:45
So, you know, I think we're going to see obviously an evolution here over the next decade.
38:50
But more and more it seems like retailers have to be where obviously the customers want to shop.
38:56
So the crux for you is making sure you continue to own the customer, however that comes.
39:03
And I think that's what Walmart is trying to achieve in these protocols calls.
39:07
Do I kind of interpret you correctly there?
39:10
I think that's exactly it.
39:11
And obviously there's been different evolutions of Walmart strategy.
39:16
It was only six months ago, I think Walmart announced a big partnership with OpenAI and a month later that came down.
39:23
And so obviously strategies and things are continuing to change and pivot at an incredible pace in this space.
39:29
But to me it's how do retailers maintain that customer relationship?
39:34
Is that the, the crux of this debate?
39:36
And John, let me, let me check Mike's thinking with you.
39:40
The more I think about it, unless you are Walmart or Amazon, the more I'm increasingly tempted to just go for a wait and see strategy.
39:49
I think that right now we've still got very, very, very tiny numbers of people who are actually shopping or trying to shop through agents.
39:57
There is, there's so many unknowns and so much plumbing that needs to be put in place.
40:03
Yeah, I think if I'm anybody other than those two, I focus elsewhere.
40:07
I keep a really close eye on it and then respond when it looks like something, if it looks like something that is sizable.
40:15
But am I, am I being a laggard in that thinking?
40:18
Sean?
40:18
You know, I think there's a lot of parallels of the agentic shopping debates in grocery boardroom convers, you know, boardrooms versus like, compared to the debates and discussions that were happening in 2016, 2017 around whether retailers will get
40:37
into E commerce, it's a very similar debate and discussion in terms of is this a strategic path for us and if so, how are we going to pursue it?
40:50
So to your point, you're saying if it was up to you, you would say we would just wait and see.
40:56
But even within the wait and see, there's different discussions that have to happen.
41:00
Like for example, are we going to allow agents to even crawl our site?
41:04
Maybe we don't allow agents to fully manage the experience or purchase products on our site, but do we allow agents to crawl our site and understand our inventory and what are the pros and cons of that?
41:14
Of what access to data are our competitors are going to get just from allowing agents to do that?
41:20
And what opportunities for a shopping experience are we going to miss out on?
41:23
What trips and trip types are we going to miss out on if we don't do it?
41:27
So these are active debates and discussions that are happening within almost every retail boardroom today.
41:33
Yeah, it's interesting.
41:34
I, I feel slightly worried that rather than it being the 201627 Ecom debate, it's the 2021 Metaverse debate.
41:44
I think, I think maybe the truth is probably somewhere in between the two.
41:48
I think that's fair.
41:51
Yeah.
41:52
So I think that's a fair, fair comment.
41:55
I, you know, do you.
41:56
So you don't use agents at all to, to research or put together your grocery list?
42:02
I'm just curious, like, you know, how do you think about agents today in your weekly shopping?
42:07
Really good question.
42:08
So personally, I'm not, and I think I'm, I'm one of the, the stats, when you look at it, that people are say, do you use AI?
42:15
Yes.
42:16
Are you using AI frequently?
42:17
Yes.
42:18
Are you at a personal level using agents?
42:21
Not yet.
42:21
And I think for all of the trust conversations and barriers that are being performed, also being domiciled in the uk, quite a lot of it isn't available here yet.
42:34
A lot of these products, so Muse, for example, is only available in North America.
42:39
So I can't get my hands and try some of this yet, despite the techie in me really wanting to.
42:44
But are you, are you using it?
42:45
Is it, is it part of the, the behavior in your household?
42:49
Yeah.
42:49
I mean, so every week when my wife and I are putting together kind of a plan for the week, we're in cloud or we're in chat, gbt, kind of looking for inspiration meals for the week and putting together
42:59
kind of that, you know, overarching plan for the week.
43:02
What within.
43:03
Within Claude.
43:05
And you know, we're not yet to the point where we're placing the order, making the actual purchase.
43:11
So much of the planning and the inspiration is happening within Claude.
43:15
And I think that the next natural step is once Claude has an understanding of what products we already have in our house, I would be more than willing to give it full control to be able to place the
43:27
actual order.
43:28
I think the challenge is, you know, if we have like all these recipes, for example, as our meals for the week, and it requires this much olive oil, this much salt and pepper, these herbs, I Don't want Claude
43:39
placing an order for an entire new bottle of olive oil for every night of the week or all, you know, new spice cabinet every night of the week.
43:47
And so getting an understanding of the inventory in our house, then, you know, I think it makes complete sense for, for agents to start taking over this.
43:58
I still think I'll go to the store, just to be clear, because I do love the actual in store shopping experiences, but you know, from like a planning perspective, it's, it's invaluable and it's helped us save so much
44:08
time.
44:09
Really interesting.
44:10
Okay, so on the subject of enjoying going to stores, our last headline picks up a pretty unique retail operation.
44:17
So headline number five this week I have picked just for you, Sean.
44:20
And it comes from C Store Dive, which reports that documents filled with the Oklahoma city government suggest that bookies could soon be working on his first store in the state.
44:34
This would be the latest in bookies expansion beyond its Texan home, having recently opened stores in Arizona, Virginia and Ohio, with sites in Indiana and Utah underway.
44:47
Oklahoma travellers will need to be patient though, as a spokesperson from the Oklahoma Department of Transportation said the construction of the required roadway improvements won't start until 2028 at the latest.
45:01
Okay, Sean, this was too good a topic not to cover with you as I've got a Texan resident for a guest.
45:08
Let's give a bigger picture, especially for our global audience.
45:12
Sean, what on earth is a bookies and what makes them such a remarkable retailer?
45:18
Oh, then you know, I, I love Buc EE's, and I think anybody who spent time in Texas probably has a pretty strong opinion about BUC EE's, but, but to your point, on the broader audience, global audience, for any
45:28
of you who are not familiar, imagine it's like a gas station the size of a grocery store.
45:36
You have an enormous amount of fuel pumps, a massive convenience store.
45:41
You can get fresh barbecue, fresh food, snacks, clothing, souvenirs.
45:47
It's honestly probably one of the cleanest shopping experiences you've ever seen.
45:52
And so the whole thing is built around this cartoon beaver.
45:56
And it's just a pretty incredible concept.
46:00
But I think what's really remarkable is Buc EE's has managed to turn one of the most commoditized experiences in retail into a destination.
46:10
And if you think about it for just a second, most people stop at a gas station because they have to, right?
46:17
They need fuel, they maybe need a drink.
46:19
Kids need to use the restroom.
46:20
Typically, the goal is to get in and out as quickly as possible.
46:25
Bucky has completely flipped that model.
46:27
People actually plan their road trips.
46:29
I know we do in our house, around stopping At a Buc Ees, people actually drive out of their way miles to stop at a Buc EE's.
46:37
So it's just.
46:37
It's a.
46:38
It's a different experience.
46:39
And, you know, this is like, I think, just such an incredible opportunity.
46:43
And, Ben, I appreciate you kind of bringing this up.
46:46
Yeah.
46:47
I think if you've not been here, Sean, you just mentioned there's clothing, there's general merchandise.
46:52
There is a phenomenal range.
46:54
It's themed, it's seasonal, and it is all Bucky's branded.
46:59
And this beaver gopher creature appears everywhere on everything.
47:07
Sean, I think what I'd love to get your view on is how exportable do you think this market is?
47:12
I think when people think about bookies, they think about Texas, they think about the south, they think about the nuts that are being roasted, they think about the barbecue, the brisket.
47:22
What Runway do you think they have to expand beyond that Texan heartland?
47:29
Preparing for this, I was actually looking, you know, I was thinking BUC EE's would start to like, as they expand outside of Texas, they would customize their assortments.
47:38
The reality is 98% of the assortment in Buc EE's stores is roughly the same.
47:44
They do have a little bit of, like, you know, the beaver, to your point, will have, you know, a Georgia Bulldogs jersey on, and they'll have local, you know, attire.
47:53
But the vast majority is the same experience.
47:56
And I think a lot of it is just the energy that comes from being in a Bucky's.
48:02
I mean, you got people slicing brisket right in front of you.
48:05
You got fresh food being prepared.
48:07
You got the beaver nuggets.
48:09
I don't know about you, but I love those beaver nuggets.
48:11
And it's just like this experience that to me, I think there's just a lot of room for growth in this.
48:17
And it honestly, it kind of goes back to, like, the fundamentals of retail.
48:21
I think Buc EE's has nailed the fundamentals of retail, and they can scale that across the country.
48:27
Yeah.
48:27
And I think it's just a great way to wrap up the conversations we've been having today because we focus so much on E.
48:33
Com, but actually a thread that's run through all of our conversations, being the importance of in store experience and what bookie shows is within.
48:41
Yeah.
48:42
Within convenience stores, which is a highly commoditized, low margin bit of the business, there is scope to do something very different and very special and get success and get success from it.
48:54
So look, that that wraps us up, but we do want to include our grab and go a chance to kind of throw in a last story, something that's taken your eye or caught your interest in the last week
49:05
that we haven't already spoken about.
49:07
So Sean, what do you think we should have all on our radars from this last week in Global Grocery?
49:13
You know, Ben, last week's episode with Christian Beckner really caught my attention.
49:18
He was fantastic on the AI agent attacks, you know, going on in known vulnerabilities in grocery store refrigerating and freezer systems.
49:28
And one thing I don't think that was talked about that just kind of came up was here in the US the leadership team at Ajo delhe's actually decided to shut off their website and their app for almost an
49:40
entire week in response to a cyber attack.
49:42
And so I think we would be remiss going through all these topics this week without talking about how important grocery stores are to just the fundamentals of the US and to the world to.
49:55
And you know, I think it was Covid that reminded the world that grocery store employees are, you know, essential workers.
50:02
And but you know, when we say that we usually picture the people like in the physical stores and it's incidents like these that I think are going to be more and more relevant in our day to day, that
50:14
it's a good reminder that the people behind every one of those stores there's an entire digital and a technical organization, people sometimes who have to get up in the middle of the night to respond to these virtual attacks.
50:24
And so to wrap us up today as we head into Halloween, we head into the holidays, really just wanted to say thank you to you Ben, for getting this story out into the wild, to make it the norm
50:38
for us to be able to talk about these important topics, but also then to thank all of the grocery store employees across the US for making it and being able to feed the American population.
50:52
So Ben, thank you for the time today.
50:53
I really enjoyed the conversation.
50:56
What a fantastic way to end.
50:58
We've sort of got an early, early Thanksgiving ahead of Halloween.
51:01
So like really appreciate, really appreciate your thoughts and feedback and all the insights you brought today.
51:06
So today's podcast was produced with the help and support of Ellis Hiod and it's brought to you exclusively as part of the Omnitor podcast network.
51:16
Omnitalk exists to highlight the trends, technologies and innovations shaping retail.
51:21
And Grossertalk does this specifically for the global Grocery and CPG Industries.
51:27
Thanks as always for listening in.
51:29
Please remember to like and leave us a review wherever you happen to listen to your podcasts or on YouTube.
51:34
And you can follow us today simply by going to YouTube.com omnication talk retail so Sean, if people want to get in touch with you, want to find out more about your new business, what's the best way for them
51:48
to be able to do that?
51:49
You can reach out via email SeanPowerInsights AI or reach out to me on LinkedIn.
51:55
Sean Ransoberg would be happy to get in touch and talk more.
51:59
Amazing.
52:00
Thank you for coming on this week and until next week, on behalf of all of us at Grocery Talk, Anomaly Talk Retail, thanks for tuning in.