Latest / GrocerTalk / Costco Keeps on Growing, Kroger’s Loyalty Driver & Morrisons Locks It Up | GrocerTalk

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Costco Keeps on Growing, Kroger’s Loyalty Driver & Morrisons Locks It Up | GrocerTalk · GrocerTalk

• 0:00
  When we launched Grocer Talk back in August, my aim was to identify the stories each week that were both interesting in isolation, but also those that ladder up to help us understand where some of the biggest topics in
• 0:12
  our industry are headed.
• 0:14
  I also wanted to highlight developments in individual grocery markets that have potential global read throughs.
• 0:22
  And over the last two months we've already discussed the implications of agentic commerce for grocery, the pendulum of automation in E commerce fulfilment, the impact of GLP1s and the economic pressures on shoppers, to name but a few.
• 0:38
  And this week we're going to talk about another big trend, how communally our thinking on shopper loyalty needs to evolve.
• 0:46
  It's the thin line weaving through some of our stories this week.
• 0:50
  Plus, to build depth, I've also phoned a friend to bring in some expert loyalty practitioner perspectives.
• 0:57
  So welcome to Grocertalk.
• 1:01
  I like working environments where the organizations are trying to limit the psychological stress that I have to endure day to day in my job.
• 1:10
  What I really like here is the direct link straight into the loyalty program.
• 1:15
  Don't you want to incent the store purchases?
• 1:17
  Above all, in the future you have to think beyond point based schemes for loyalty.
• 1:23
  We've got to continue to celebrate library and support testing and learning.
• 1:28
  They're probably doing this because those shoppers are potentially leaving.
• 1:32
  Chris, are you ready to talk store ops again?
• 1:34
  Oh yeah.
• 1:35
  Bring it Ben.
• 1:35
  Yes.
• 1:36
  Store apps.
• 1:36
  Love it.
• 1:38
  Hello everyone, I'm your host Ben Miller and I'm delighted to welcome back as our guest for this week's show.
• 1:44
  A little earlier than expected, OMnitor President and CEO Chris Walton.
• 1:49
  Welcome Chris.
• 1:50
  Hey Ben, how you doing?
• 1:51
  It's good to be here.
• 1:53
  Love to be back on this show.
• 1:55
  I'm very good though to fill everybody in.
• 1:57
  Our fantastic scheduled guest for this week took it ill yesterday, had to drop out.
• 2:04
  So Chris is very, very kindly stepped in to do this week's guest host duties with me.
• 2:10
  So Chris, thank you so much for being here today.
• 2:13
  Oh yeah, absolutely.
• 2:14
  Wouldn't miss it.
• 2:14
  Although I think I've got some tough shoes to fill in for Ben because knowing who your guest was and hopefully we'll keep him on the download for when he comes back the next time.
• 2:23
  But then also coming off the heels of Jordan, tomorrow's Jordan Burke last week, this is tough.
• 2:30
  This is a tough spot for me.
• 2:31
  I mean that dude, Jordan Burke is wicked smart.
• 2:33
  So I feel like I've got some big shoes to fill here.
• 2:36
  Ben.
• 2:37
  Do you know what Chris?
• 2:38
  You know, two months in.
• 2:39
  We've had some fantastic guests that have come on.
• 2:41
  You really have real insight.
• 2:43
  Yeah.
• 2:44
  So he's been, you know, and of course you're very, very welcome back, but you are in the middle of the biggest marathon of conference trips I've known.
• 2:54
  How, how is, how is life on the road?
• 2:56
  Are you, are you remembering where home is?
• 2:58
  Yeah, I, I'm not, Ben.
• 3:00
  I have no idea what time zone it is.
• 3:01
  I have no idea where I am.
• 3:02
  You're right.
• 3:03
  I'm.
• 3:03
  Today.
• 3:04
  Tonight I leave for Vegas, which is my second trip to Vegas in 10 days for the national association of Convenience Stores conference.
• 3:10
  I'm going in for a day and that's coming off Paris versus Vegas and then Nashville last week for shop talk fall.
• 3:17
  So, yep, one more trip and then I'm shutting it down.
• 3:19
  I'm not going anywhere, Ben.
• 3:21
  I'm not going anywhere.
• 3:22
  But it's been a ton of fun.
• 3:23
  Like, I've absolutely had a blast.
• 3:25
  It, it's been so rewarding and so interesting to see just how retail is changing from the front lines of all the retailers and all the people we've gotten a chance to interview over these past four weeks.
• 3:34
  So, so, yeah, so I'm, I'm, I'm bittersweetly, hopefully this is my last trip here, Ben.
• 3:40
  It's just an amazing chance, isn't it, to talk to so many retailers in quick succession just to hear the things we've been speaking about.
• 3:47
  The trends have been playing out.
• 3:48
  Just to hear how they're experiencing firsthand.
• 3:50
  It's been super interesting.
• 3:52
  Okay, well, good luck at nax.
• 3:55
  I look forward to hearing what the convenience world has to say for itself and look forward to your dispatches.
• 4:00
  But first, come on, let's get into this week's grocer Talk, which is of course brought to you with the help and support of of Instacart Enterprise, Portager Vusion and Sifter.
• 4:13
  And in this week's Grossertalk, we've got news on Morrison's testing.
• 4:17
  Click and collect lockers.
• 4:19
  Kroger introducing a new co branded credit card that links directly into his loyalty program.
• 4:26
  And a second part of a Kroger double bill where we'll talk about the grocer reporting to be tested.
• 4:31
  Testing 24 hour opening again.
• 4:35
  Plus TCC Global's Seb Hill stops by for five insightful minutes on loyalty in the age of agentic commerce.
• 4:43
  That's my phone.
• 4:44
  A friend.
• 4:44
  It's not you, Chris.
• 4:45
  You're off the hook on that one.
• 4:46
  But before we take God but we start today, Chris, with Q4 numbers from Costco.
• 4:54
  All right.
• 4:55
  Yes, Ben, Yes.
• 4:56
  And thank God you called in a real loyalty expert because I am not one of those.
• 4:59
  But anyway, 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.
• 5:12
  You can Learn more at company.instacart.com Grocery Talk headline number one is from Grocery Dive, which covered the widely reported Costco Q4 results.
• 5:22
  And no, we haven't all jumped forward in time after Q2 season having just ended.
• 5:27
  But Costco operates a very different financial year.
• 5:30
  Ending August 30, Costco saw comp sales, excluding fuel, jump 7.2% in the three months to end August with US sales up a whopping 10.7% and total company sales for the quarter just shy of $96 billion in one quarter.
• 5:47
  That's insane.
• 5:48
  Ben.
• 5:49
  Food categories all reported healthy comps, though a little lower than total store Fresh comps were up in the quote mid single digits led by bakery and meat, said CFO Gary Miller Shipp, the greatest last name in the history
• 6:02
  of CFOs.
• 6:02
  Costco opened 10 new locations in the US during Q4 and now runs 647 clubs across the country.
• 6:09
  Ben, our question to start off today, the Costco growth story just keeps on trucking.
• 6:14
  What did you learn from this quarter's latest numbers?
• 6:18
  You know what, Chris, in an episode where we're going to keep coming back to loyalty on or off for the whole of the episode, I was really interested to start on these because just look, the club model fascinates
• 6:30
  me.
• 6:31
  I think at this very core, here's a retailer that you've got to pay just to be allowed to enter.
• 6:38
  So that member relationship defines how Costco thinks about so much.
• 6:44
  And loyalty just baked into that.
• 6:46
  So we need to come back to that.
• 6:47
  But let's get into the numbers.
• 6:49
  And I think that first thing that jumped out to me, that Costco is nearly doing $100 billion a quarter and that's incredible volume on a per SKU basis.
• 7:01
  Okay, that's a global number and ranges will differ between geographies.
• 7:05
  But Costco warehouses only have about 4,000 SKUs.
• 7:09
  So it's building phenomenal buying scale which is pushing through those low prices.
• 7:16
  And I think that connects to a conversation that we were having a couple of weeks ago that we've covered on the port, which is around price transparency.
• 7:26
  Costco long been on Instacart, it's now on Doordash, it's now on UberEats.
• 7:30
  So that price transparency of the very low prices it's able to deliver on an item basis I think is really interesting.
• 7:38
  So I think that was the first one that jumped out to me.
• 7:44
  Go back to the numbers.
• 7:46
  Costco beat market consensus in revenue and eps.
• 7:49
  So the headline looked good.
• 7:52
  The those all important membership numbers though there's a couple of things going on.
• 7:55
  I mean they reported 90% worldwide renewal rates.
• 7:59
  Great.
• 7:59
  92% US and Canada.
• 8:01
  Great.
• 8:03
  Nearly $2 billion of membership income alone.
• 8:08
  That was up 7.2% which is a bit less in revenue.
• 8:11
  And actually total paid members only grew 3.8%.
• 8:17
  So look, Chris, I want to call that one out because this is a really key number to watch.
• 8:22
  You know that growth in membership has actually really decelerated from prior periods.
• 8:29
  So there's a big watch out there.
• 8:32
  That slowdown spooked Wall street and that's because.
• 8:36
  And this is where your retailer performance and stock performance often differ.
• 8:40
  But the Wall street guys are looking at future earnings potential.
• 8:43
  So the slowdown in membership has definitely spooked them.
• 8:46
  And we've seen some valuation declines which they may have been overcooked in places go down.
• 8:52
  So that's kind of, that's one and then another one and you know, let's hear your thoughts.
• 8:57
  I feel like I've been talking for a while just transactions.
• 9:00
  Worldwide Transactions are up 3.3%.
• 9:02
  So it's continuing as a retailer to gain shopping visits that we don't know what the split is between increased frequency and growth in new members.
• 9:10
  They don't share that but you know, we're seeing it continue to gain shocking visits.
• 9:16
  And that number is an uptick on something that's been declining.
• 9:20
  So that's the highest number they posted this year in terms of transaction growth.
• 9:25
  But it's still well down on the numbers they were delivering last year.
• 9:28
  So they were kind of like, you know, between 5 and 6% last year and yeah, they've just got it back above 3% transaction growth.
• 9:35
  So there's a few different dynamics going on.
• 9:38
  But look, I would love to hear your thoughts because I'd love.
• 9:42
  Yeah, I've spoken for quite a while there.
• 9:45
  That's okay.
• 9:45
  Bad.
• 9:45
  No, you gave a lot of good points.
• 9:47
  Like I think, I thought, I actually thought your, your first point was.
• 9:50
  I mean all the points were good but like especially the membership data and the impact that that's had on the Street.
• 9:56
  But like actually I think the first point was what was most salient to me in terms of, you know, just thinking here in the moment is, is, yeah, it actually makes it became much more clear to me listening
• 10:07
  to you, why Costco is now available across all the delivery platforms because of its low prices.
• 10:14
  And those low prices are incredibly hard to match.
• 10:17
  I can remember back in my Target days in merchandising, we were having legitimate conversations of like, should we match Costco on a per unit basis?
• 10:26
  And I'm sure Walmart's having those too.
• 10:28
  And it's a very tricky game because you don't have the membership revenue built into your business model at a Walmart or a Target.
• 10:35
  Now Walmart probably does more so now than Target does per se to combat that.
• 10:40
  But that gives Costco a lot of power in the e commerce sphere to grab share by being on those marketplace platforms.
• 10:48
  So that's a really interesting point that I'd never thought about, Ben.
• 10:51
  But my general take on Costco is you can take Costco to the bank.
• 10:54
  Like I don't start looking at Costco's numbers and getting worried about them until they're below 6%.
• 10:59
  I can remember, I can remember being on a trip with the head of stores for Target and Costco's numbers came out and he was like, Damn, they're at 6% again.
• 11:06
  I was like, yeah dude, they get 6% all the time.
• 11:09
  Like that's just, it's just the way their model works.
• 11:11
  And, and so if it goes below that, then I start ringing the alarm bells.
• 11:15
  But for me, I'm not there yet.
• 11:17
  Despite, you know, some of the numbers that you pulled out.
• 11:20
  The more telling component to the story to me is what's behind the numbers.
• 11:25
  And there was a recent study that similarly just got published this past week from numerator Ben and I want to get my numbers here right, but they said Costco gained two and a half billion dollars in CPG spending
• 11:37
  share of wallet among its shoppers.
• 11:40
  So that's a huge amount, $2.5 billion in a quarter.
• 11:44
  And a billion of that, no surprise came from Walmart, Kroger and Albertsons.
• 11:49
  And then another, roughly 600 million of that came from grocery, gas and convenience stores.
• 11:55
  And so the other point I'd make is as numerator looked at that, they also said that that growth is skewed towards Gen Z and lower income households, two cohorts that haven't traditionally been Costco's strong point.
• 12:10
  So, so on the membership number I'm starting to just wonder just how much room more room is there to grow the memberships just given how strong they've been positioned here since all the macroeconomic issues started happening.
• 12:21
  So the gas savings, the price discounts, they're clearly defraying the cost of membership given the share performance.
• 12:28
  So I don't know, I'm not reading too much into the numbers here from my perspective Ben, but you take the last word on this one.
• 12:36
  Yeah, I think the last thing that I want to look at and I think it's really interesting you showing the numerator data because one of the things that I noticed in the reporting was the CFO saying that food
• 12:49
  overall was only up in the low to mid season single digits and it's already called out that Fresh performed strongly.
• 12:58
  So what I think that says is that they're seeing pretty limited growth in the classic center of the store ambient and CPG categories.
• 13:05
  So they're seeing limited growth but yet they're taking phenomenal amounts of share from some of their competitors, which I think helps explain that picture of where some of the weakness in the numbers from some of the other kind
• 13:16
  of traditional supermarket operators are that we've seen.
• 13:19
  And that's look, that's a continual watch out as the economic environment continues to hit and the pressures on gas, etc.
• 13:26
  So yeah, I agree Chris.
• 13:27
  Another very strong quarter from Costco.
• 13:30
  Okay, come on 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 value.
• 13:46
  Visit Portager AI to learn more.
• 13:50
  And headline number two comes from Retail Tech Innovation Hub which reports that Morrisons has launched a pilot of click and collect lockers at one of his supermarkets.
• 14:01
  So a slight change in direction for this story.
• 14:04
  Just to keep us all fresh, Morrisons has installed strongpoint ALS lockers.
• 14:11
  This is a multi temperature installation so it accommodates ambient chilled and frozen orders.
• 14:19
  Orders are pre packed and loaded into the lockers in advance and shoppers then access them using a unique six digit code.
• 14:27
  Morrisons has also extended pickup times by two hours versus what it had previously had available through in store collection to provide live colleague support and to enable any ID checks to be completed.
• 14:41
  Morrisons has also integrated the lockers with their vocovo headsets to be able to talk to colleagues.
• 14:50
  Chris Last week on the podcast with Jordan Berg we discussed the pressures that E Commerce growth is having on store operations and this is the first of two stories that I get to pull on your store ops experience.
• 15:04
  So I guess question is quite simple.
• 15:07
  Can you see this trial scaling?
• 15:10
  Yeah, I know it's funny.
• 15:11
  I just watched that discussion with you and Jordan before I got on this podcast.
• 15:14
  So yeah, very familiar with what he had to share and totally agree with all his points too.
• 15:19
  Yes, I think I can see this scaling and the reason for that is because the beauty of the concept is that it creates slack in the store operations.
• 15:27
  It gives the store employees longer windows of time with which to pick and stage products for pickup, which is important.
• 15:34
  As you look at the number of people in the aisles, which is what you covered last week, the number of people in the aisles having to pick on demand, it just becomes very demanding.
• 15:43
  And the model, the other point about the model, Ben, which I think is really important, it has strong roots, strong point comes from Scandinavia which I interviewed their CEO at NRF last year, Jake, their CEO, Jacob, and he
• 15:56
  told me at NRF that which this is no surprise to anyone but I think I made the joke like look to Sweden or something because Sweden is going to give you the answers of where grocery is going to
• 16:06
  go in the long run.
• 16:07
  Or I said Finland or something, I don't remember.
• 16:09
  But look to Scandinavia in general, everybody for the answers of where grocery is going to go because the rage rates are so high.
• 16:15
  And so if it's working there as an element to make E groceries profitable, one has to think the model can extend to other places like the uk.
• 16:25
  So, so I just think it's not a question of if, it's just a question of when do we cross the inflection points where models like this start to become necessary.
• 16:34
  Right, that's really interesting.
• 16:36
  It's almost the same argument as a whopping automation kicks in.
• 16:39
  At what point is it cheaper to to build and spend that capex than it is to just put more hours into a store?
• 16:45
  100%.
• 16:47
  Yeah.
• 16:48
  And I think look, yeah, these strong point lockers, as you say, they're in ica, they're in Coop, Sweden, there's a few in AX Food.
• 16:56
  So they are operational, they're tested.
• 16:58
  So Morrisons isn't buying a brand new product.
• 17:02
  And look, fair play to Morrisons.
• 17:04
  This is the second story in three weeks where I've talked about Morrisons who, who saw that one coming.
• 17:10
  So all credit to the, to the team in Bradford for that one.
• 17:14
  I think, look, I completely agree.
• 17:16
  The opportunity to release some operational pressures from the store I think the builder on I would get and I think one of the things that could also really help the in store experience is if it's not just shoppers
• 17:29
  picking up.
• 17:30
  It's actually the delivery couriers picking up from these lockers as well.
• 17:34
  Because that's going to take pressure off the front of stores.
• 17:36
  It's going to take pressure off, you know, depending on the retailer.
• 17:40
  Sometimes it's from the customer service desk, sometimes it's from a side door and it's taking the space in the, in the car park, the parking lot.
• 17:48
  I think if they can incorporate that into that's, that's, that's, I think is a big use case that would be really valuable and to help the in store, to help any pressure on the in store experience.
• 17:58
  The other thing that I like about this model too, Ben, is from putting my store manager hat on.
• 18:03
  It takes the operational stress of having to handle all this psychologically off the employees.
• 18:09
  Like there's a different psychological feeling of saying, hey, I need to get this order ready and staged in a locker versus somebody just pulled up into the parking lot and I got to get this order out to them.
• 18:22
  And, and, and that's what I fundamentally like.
• 18:24
  I like working environments where the organizations are trying to limit the psychological stress that I have to endure day to day in my job.
• 18:33
  And I think that's an important thing that people have to factor in as they make these decisions.
• 18:39
  Yeah, I think that's a great point.
• 18:41
  Wrap that one up on.
• 18:42
  So at this point, Chris, I want to take us from the shop floor back to the show floor and back to grocery shop where Seb Hill, CMO at global loyalty company TCC Global.
• 18:53
  Join us for five insightful minutes.
• 19:01
  And joining us now for five insightful minutes is Seb Hill, chief marketing officer at TC TTC Global, a global loyalty company recorded live on the show floor here at Grocery Shop 2026.
• 19:15
  Seb is here to share some brand new research the TTC has published on the grocery sector.
• 19:22
  Look, first question.
• 19:23
  Seb, retailers have had to adapt to enormous disruption in recent years.
• 19:27
  What do you see is the next big challenge they need to prepare for?
• 19:32
  So good to be here, Ben.
• 19:33
  Price is going to be a huge thing, goes without saying.
• 19:36
  But what we're really interested in is the impact of agentic AI.
• 19:40
  So we're exploring the impact it will have on the grocery sector.
• 19:43
  You know, and our view being it's.
• 19:45
  Going to be significant if I do start making more of the shopping decisions.
• 19:51
  What breaks in the traditional grocery model?
• 19:54
  You know, broadly, grocery has been pretty well insulated from, from, you know, the previous sort of digital transformations and revolutions.
• 20:02
  Right.
• 20:02
  I think agentic has the opportunity to disrupt grocery in Some pretty specific ways and actually earlier than other sectors.
• 20:11
  You know, one as an example, impulse is going to be hugely affected if it disrupts store traffic, if it starts taking decision making out of the shopping process or impulse land, decision making impulse starts to collapse.
• 20:26
  Retail media, I imagine having sort of blown up so much is going to be hugely disrupted because you know, all of a sudden the shopper is starting to think in terms of, you know, purely mission.
• 20:37
  They're not necessarily naming particular products or brands, they're not even open and receptive to, to those promotions from, from the brands and from the retailer.
• 20:47
  The agent is in the way and I think finally is the impact on brand.
• 20:52
  Right.
• 20:52
  You know, will shoppers in an agentic world think about CPG brands?
• 20:57
  I would imagine much less so will they think about retail brand?
• 21:02
  Almost definitely a lot less so.
• 21:04
  Okay, interesting.
• 21:06
  So one of the things we've seen retailers heavily investing in is loyalty programs, apps, personalized offers.
• 21:12
  What happens to that model if AI agents start making more of the shopping decisions?
• 21:18
  So broadly speaking, the challenge that that part of the loyalty industry faces is they don't necessarily drive what we think of as shopper loyalty.
• 21:27
  So they're great for a number of reasons.
• 21:28
  You know, they, they harvest a lot of data on the shopper, they become the, the gateway, the vehicle for that retail media play.
• 21:37
  What they don't do is generate any actual loyalty.
• 21:40
  So in the US the average shopper has, I think it's 15 loyalty cards for different stores.
• 21:46
  So you know, in a nutshell, shoppers aren't very loyal regardless of the number of cards they have.
• 21:52
  When you enter an agentic world, the emotional aspect of loyalty starts to matter a huge amount.
• 21:59
  Because again, going back to that point around mission as a shopper, I'm saying to my agent, look, I want to make healthy dinner tonight.
• 22:07
  I want to replenish the stuff in my kids lunchboxes for the week.
• 22:11
  What I'm not necessarily saying is, and I want you to fulfill all of my basket with this particular merchant because I'm getting some points as an example.
• 22:22
  Okay, interesting.
• 22:22
  So in which case then how do you know if a shopper is genuinely loyal?
• 22:27
  So if traditional program metrics don't necessarily tell you whether a shift shopper is genuinely loyal, how can retailers understand the strength of their relationships?
• 22:37
  I think the question is how do you combine that transactional loyalty, that hard loyalty metric around trips around frequency, etc.
• 22:47
  With the emotional side of loyalty, you know, the head, which is, you know, how loyal does the shopper feel towards me?
• 22:56
  Have I given, given them a compelling reason to come back and choose me versus going across the street to that competitor.
• 23:02
  How insulated am I from a purely price led equation?
• 23:08
  And I think it's the combination of those two things, the hard loyalty, the soft loyalty, emotional transactional that retailers really need to lean into.
• 23:16
  Okay, so which is probably the big question then, if AI will potentially optimize things like price and convenience, how does the whole concept of grocery loyalty itself need to evolve?
• 23:29
  Yeah, absolutely.
• 23:30
  So we've just put out a paper on the age of agentic AI and it explores these two particular questions.
• 23:36
  So what happens uniquely in a grocery environment and what is the role of loyalty?
• 23:43
  So it sets out two 18 month tracks.
• 23:46
  The first one is all around how you get agentiq ready.
• 23:49
  You know, let's think of this in terms of hard loyalty metrics.
• 23:53
  All of a sudden the agent has inserted itself between the shopper, the consumer and you as the merchant, especially as the retailer.
• 24:02
  So how does that impact your technology, your pricing, your ability to welcome agentic bots into your digital environments, etc.
• 24:12
  Big questions and lots of questions.
• 24:13
  Research in there for people to explore.
• 24:16
  And then I think, you know, really interestingly, this is an opportunity and it's the second track to bake loyalty and loyalty thinking in at a foundational level.
• 24:26
  So how do grocers get shoppers to start thinking in some of those ways?
• 24:32
  Maybe we would think about 20 years ago, the importance of brand becomes really important.
• 24:37
  The importance of emotional pressure, preference and the role of, I think real tangible rewards that give a shopper a reason to also have, you know, retailer and retail brand as part of their decision making criteria.
• 24:52
  Okay, so Seb, if people want to know more, if they want to read the research, how could they contact you?
• 24:57
  Yeah, head over to tccglobal.com, you'll see a link where you can sign up and get a copy of that report and get into touch.
• 25:05
  We'd love to talk to you about agentic shopping, about loyalty and about the future of the grocery industry.
• 25:10
  Thank you for joining us, Seb.
• 25:17
  Oh look, thanks again for that, Seb.
• 25:19
  Super timely and super relevant.
• 25:21
  All right Ben, let's keep rolling.
• 25:22
  Headline number three is brought to you by our proud sponsor, Fusion, the global leader in connected retail solutions, helping grow, improve productivity, execution and customer experience.
• 25:32
  From shelf to check out, visit www.fusion.com.
• 25:37
  Headline number three this week comes from Progressive Grocer which shared that Kroger is introducing a new co branded credit card that integrates directly with the grocer's expanded rewards program, the new Kroger Rewards World Elite MasterCard allows users to
• 25:52
  earn points based on the everyday spending which connect directly to a shopper's loyalty account in a similar way that say many airline credit cards work.
• 26:01
  There's a wide range of point bonuses available, including 5 times points on purchases from Kroger's digital properties 4x at Kroger fuel pumps and 3x in Kroger stores.
• 26:12
  Cardholders also get complimentary Kroger Boost memberships which include free next day, not same day delivery with minimum purchase levels plus other welcome and lifestyle benefits.
• 26:24
  And it comes with no annual fee.
• 26:25
  In Kroger Rewards, shoppers convert points for either cash off groceries or off fuel prices, 100 points giving $1 off groceries with a $10 per day savings limit.
• 26:37
  And points earned each month generally expire at the end of the following month.
• 26:41
  The new credit card dramatically changes this, removing this expiration period if the credit card account remains active and increasing the redemption ceiling to $500 per day.
• 26:52
  Ben, we just heard from Seb Hill from TCC Global talking about the imperative for grocers to improve their loyalty propositions in what is an ever evolving agentic world.
• 27:02
  So what do you make of this new credit card launch from Kroger?
• 27:06
  I like it, Chris, I really do.
• 27:09
  I do, I do.
• 27:09
  I mean it's first, whenever there is a credit card story from a retailer, I kind of take a deep breath.
• 27:17
  You know, the wasteland, the graveyard of such initiatives is long and illustrious.
• 27:26
  But look, I think there's a number of things.
• 27:28
  First, it's a partnership.
• 27:30
  You know, Kroger isn't the bank here.
• 27:33
  It doesn't have the customer debt on the balance sheet.
• 27:36
  The problems that we saw in the 80s and 90s and 2000s for kind of credit cards.
• 27:41
  Kroger's partnered with fintech company Imprint who operates the card.
• 27:47
  And then first bank and Trust is the actual issuing bank.
• 27:51
  Now I guess that's my first watch out.
• 27:53
  That feels a little complex having a three way relationship.
• 27:56
  And we've seen retailer credit card relationships fail where that element has broken down before.
• 28:02
  So that's a little bit of a watch out.
• 28:05
  But in general, what I really like here is the direct link straight into the loyalty program.
• 28:11
  And as Seb just talked about the need for innovative thinking within loyalty mechanics.
• 28:18
  And look, that, that direct link, that, that direct spend money and points link is relatively unusual in US Grocery.
• 28:27
  I think Maya have got probably the closest match to that, but it's got huge similarities with how Tesco Banks, club card, credit card works here in the uk.
• 28:37
  So if anybody wants to see a really established credit card running off these systems, it's out there, it works and it's very widely used.
• 28:47
  So I think that's great.
• 28:49
  I think it's a couple of watch outs, I think.
• 28:52
  Oh, you do one?
• 28:53
  Yeah, I think one is.
• 28:55
  It's incredibly compelling compared to the standard Kroger rewards.
• 29:00
  And it just, it just makes me think, have they been a little too restrictive on the original scheme?
• 29:06
  So you're moving from the, the minimum, the minimum spend being $10 a day to 500 from points expiring at the end of a month to no expiration date.
• 29:17
  That's incredibly compelling.
• 29:18
  I just wonder if you would look in comparison and think, wow, that jumps huge.
• 29:24
  Has the, has the previous system been a little light and the other one.
• 29:30
  I'd love to get your thoughts on this one, Chris.
• 29:32
  I find it really interesting that they are overly incentivizing online.
• 29:39
  So, you know, including boost higher multipliers if you shop online@kroger versus to install.
• 29:45
  They're really trying to drive online behavior, which is not what I've seen other people do.
• 29:49
  And I don't know what do you think drives that one, Chris?
• 29:54
  Yeah, I, I don't.
• 29:55
  I, I think what drives it is, is performance.
• 29:58
  And where you're seeing the market heading, I think is what's driving that.
• 30:01
  But that was what stood out to me as I was reading the headline in real time too.
• 30:05
  I was like, wow, you only get 3x for shopping in stores, but 5x for shopping online and 4x for shopping with.
• 30:14
  For gas.
• 30:14
  I was like, don't you want to incent the store purchases above all?
• 30:17
  Like I, that seems like kind of inverted to me, but there must be a rationale for it.
• 30:22
  They must think it builds more loyalty by getting the conversion as a, as a, as a, as a digital shopper, I guess, Ben.
• 30:29
  Which I think, you know, if you, if you step back and think about that, that makes sense.
• 30:33
  And the way, you know, credit card purchases are automatically loaded or our credit cards are automatically loaded into our phones too.
• 30:39
  So you just kind of get that repeat behavior.
• 30:41
  That's, that's my hunch.
• 30:42
  On, on.
• 30:43
  On what?
• 30:43
  Why that is.
• 30:45
  I don't, I, I kind of.
• 30:47
  This one, I kind of, I'm going to.
• 30:48
  Yes.
• 30:48
  And this one.
• 30:49
  Ben.
• 30:50
  I think, you know, I think, I think, I think it's just a good move, you know, I think it's a good move.
• 30:53
  But my question for Kroger is.
• 30:56
  Yeah, Smart move.
• 30:57
  But how do you make it better?
• 30:58
  And the reason I say that is because last week at Shop Talk Fall, I had the chance to sit in on a loyalty session.
• 31:04
  It was like a small roundtable discussion, like 50 to 70 people.
• 31:09
  And I was listening to one of the, one of the, one of the experts on the panel of loyalty.
• 31:14
  Her name is Regan Jane Picken Pole, one of my new favorite names in retail.
• 31:18
  And she's also one of the Forbes 30 under 30.
• 31:20
  So she's, she's an up and comer.
• 31:22
  She's a whippersnapper, Ben.
• 31:23
  And she said something that was really interesting me.
• 31:25
  She said, in the future you have to think beyond point based schemes for loyalty.
• 31:32
  The best of the best are already doing that.
• 31:35
  And so points appears to be what this is all about, which as you said, like, maybe there's some opportunity in the US landscape to go with points.
• 31:42
  But so my question now to Kroger is, okay, let's say this works, but then what, what's icing on the cake?
• 31:48
  How do you make your customers feel even more special beyond points?
• 31:51
  Like, it's a product.
• 31:52
  This loyalty is a product.
• 31:54
  Your loyalty program is a product that you offer your offer to your consumers.
• 31:58
  So how do you constantly iterate on it and make it better for them?
• 32:01
  So that's what I'm excited to, to think about and explore and watch to see what Kroger does here over the long run.
• 32:09
  Yeah, I agree.
• 32:10
  And I wonder at that point around incentivizing digital purchasers, it is likely that the first people to take up this card will already be those who are quite loyal to Kroger.
• 32:22
  And what you're trying to do is go the extra mile to lock them in even further into that full omnichannel.
• 32:29
  And in that context, that makes sense.
• 32:31
  Yeah.
• 32:32
  And actually now that you're saying that they're probably doing this because those shoppers are potentially leaving.
• 32:37
  Right.
• 32:37
  Like that's who's drifting out to, like we talked about Costco, that's who's drifting out to Walmart.
• 32:42
  Plus that's who's drifting out to other spots potentially.
• 32:45
  So I don't know, it's a, the rationale is there to at least ask the question.
• 32:50
  But I love that this gives Kroger the levers to be able to do things like that.
• 32:55
  Yeah.
• 32:55
  And that's great.
• 32:56
  And then the other thing, and this is, you know, this is, I think this is the conversation I'm going to come back to with, with a future guest very soon.
• 33:05
  But in many scenarios as agentic commerce is growing, people are expecting retail media incomes or potentially profits to decline.
• 33:17
  So the alternative revenue streams, some of the profit streams, has helped, I was not going to say prop up, but has helped supplement a number of retail operation bottom lines, particularly E Com.
• 33:29
  Yet if you're starting to worry about is that a line that's going to go down in the future, you've got to build some other lines and this, you know, there'll be a look.
• 33:37
  We don't know what the financial structure of this agreement is, but Kroger will be making money out of this.
• 33:42
  So I think again, that could be a wise hedge, future hedge as well.
• 33:45
  Let's move on to headline number four, which is bright brought to you by Sifter.
• 33:50
  Sifter Solutions powerful API seamlessly integrates advanced medically tailored dietary and nutritional filtering into virtually any grocery or wellness platform.
• 34:02
  Sifter makes healthy outcomes possible.
• 34:05
  So learn more@siftersolutions.com all right, Chris, are you ready to talk store ops again?
• 34:12
  Oh yeah, bring it, Ben.
• 34:13
  Yes, Store apps.
• 34:14
  Love it.
• 34:15
  Here we go.
• 34:15
  Headline number four.
• 34:16
  This is from Supermarket News which reports that Kroger again is testing 24 hour opening.
• 34:24
  Again it covers reporting from the Cincinnati Inquirer, which is genuinely essential reading for all Kroger watchers out there.
• 34:33
  That one Cincinnati store and five Indiana locations are in the 24 outing pilot program.
• 34:42
  Kroger previously operated several 24 hour locations before COVID which also marked the end of 24 hour operations at many other retailers, most probably notably Walmart.
• 34:55
  Kroger stores currently operate 6am through 10 or 11pm A Kroger spokesperson was quoted in saying that it constantly looks to provide customers with fast and convenient shopping options.
• 35:11
  Right, Chris, the quote doesn't tell us a great deal, so let's break the story down.
• 35:17
  Firstly, do you why do you think Kroger is trying this at this point in time?
• 35:22
  And secondly, with your operator hat on, would you have liked to have shoppers in your stores 24 hours a day?
• 35:30
  Oh, wow.
• 35:30
  Oh, okay.
• 35:31
  The two parter to end the show here, Ben.
• 35:34
  I love it.
• 35:35
  First of all, I like this move.
• 35:36
  I do.
• 35:37
  I'm just going to go on record and say I like it.
• 35:39
  So the answer to your first.
• 35:40
  Yeah, I know it probably surprised you, right?
• 35:42
  Yeah, it does.
• 35:43
  It does.
• 35:44
  Okay, so the answer to your first question is the rationale to me is pure and simple.
• 35:49
  It's comp.
• 35:49
  It's 100% comp.
• 35:51
  Kroger needs it.
• 35:52
  And there are probably locations based on history as you alluded to where Kroger is estimating that that comp can be acquired profitably.
• 36:02
  So net net, I like this.
• 36:03
  It's a smart test because you've even got history in your, in your background that says this could work.
• 36:08
  Okay, so that's one reason I like it.
• 36:10
  Your second question, you know, would I as a store manager like having to do this?
• 36:15
  That's a, that's a tougher call, right?
• 36:17
  I mean, I think that's probably why you're like, wait, what's Chris saying?
• 36:19
  Because running a store is hard.
• 36:21
  We all know that adding the element of overnight operations is 100% complex.
• 36:26
  You've got security concerns, your staffing is more difficult.
• 36:29
  I don't have to go through it all.
• 36:32
  And the other point about it that I think is important, which I mentioned at the, in the, in the second headline, is it actually takes some of the slack out of your operations because the store is no longer
• 36:41
  closed to the public for any period of time, which also has its benefits because that's when you can like reset the store.
• 36:46
  You can process, you know, anything that you need to get done that needs to get fixed or remodeled or whatever you can do.
• 36:52
  Right.
• 36:52
  And so that's gone.
• 36:54
  But the test is to see if all of those potential drawbacks are negated by the benefits of getting more shoppers in there.
• 37:03
  So, and I'm guessing in some places that probably can happen.
• 37:08
  So I think, why not, why not try this?
• 37:09
  I think it's a smart move.
• 37:11
  Yeah.
• 37:12
  And I think it's really interesting, Chris.
• 37:14
  My gut doesn't like it because of all the complexity and the pressures it puts on store teams and, and, and the security element as well.
• 37:25
  But that is countered by the fact that we're talking about six stores out of Kroger's portfolio of thousands of stores.
• 37:31
  Right.
• 37:32
  The way you've said that, if they've crunched the numbers, if they've identified the profitable opportunity and it's treated as a trial, you know, I think we've got to continue to celebrate and support testing and learning.
• 37:45
  And if it doesn't work, you know, it's one thing having pulled it in 2020, it's one thing you're working on not working in 2019.
• 37:52
  Does it work in 2026?
• 37:55
  What are the opportunities for late night top up deliveries?
• 37:59
  If people putting in their late night doordashes, their late night ubereats and being able to fulfill them, there might be opportunities that weren't there, that weren't there six years ago that are there Now, So let's find it out.
• 38:11
  And for that, no problems for me at all.
• 38:14
  Yeah.
• 38:14
  And the other point I'd make too is Greg Foreign has done a good job of signaling that he is very concerned about store level, store level performance.
• 38:23
  And I hope with that comes, and I'm guessing it does, a concern for the managers and the workers in these stores.
• 38:30
  And so, yes, you have to lever up the Reese's resources you're going to give to these six pilot stores to combat the issues they're going to face.
• 38:38
  But you can do that in a way where they feel confident and secure in the fact of like, yeah, we can get this job done.
• 38:44
  And the thing I know about store team members, the best ones are going to want this challenge.
• 38:48
  They are going to want this challenge, they're going to rise to this challenge and they're going to say, yep, we're going to make this test work and we're going to show you that we can be a comp driver
• 38:56
  for this company.
• 38:57
  At least that's what you want your store employees to say.
• 38:59
  And so I'm guessing Greg Ford is using this as a litmus test to be like, can I get the right store managers in there that buy into me culturally to make that happen for us?
• 39:10
  So I think for that reason, I like it even more.
• 39:14
  I was going to give you the final word, but I'm going to come back because I want to build on that.
• 39:18
  Because you're absolutely right.
• 39:19
  In calling out Greg Foran, let's add Mark Ibbotson into the mix.
• 39:24
  They forgot the CEO and the chief store officer are the two people who ran Walmart through the 20 teens when Walmart was 24 hour operation.
• 39:35
  So you've got that knowledge and that capability to build on in the leadership team.
• 39:41
  Yeah, I mean, it's a pretty easy conversation when you're talking about it at a pilot stage.
• 39:44
  You basically say to the store leadership, you say, okay, what do you need to make this successful?
• 39:48
  Here's the financial parameters we're operating in.
• 39:51
  Let's go.
• 39:52
  Let's concoct the way to make this work together.
• 39:55
  And that's a really inspirational story when you get right down to it.
• 39:58
  It's an inspirational way of working, I think, Ben, at the end of the day.
• 40:02
  Yeah, I like that.
• 40:03
  I like that.
• 40:04
  Okay, Chris, come on, let's wrap us up.
• 40:06
  Let's go for our grocer talk Grab and go.
• 40:09
  So just a reminder for any new listeners, this is where both Chris and I get to share a couple of stories that have caught our eye in the world of grocery retailing.
• 40:17
  Stories beyond these med high, beyond these main highlights, but ones we think you should still be on your radar.
• 40:25
  So go on, Chris.
• 40:26
  What is your first story for me?
• 40:29
  You're gonna love this bed.
• 40:31
  So I figured, you know, we've already had two Kroger headlines, so what's, what's one more third one's a charm, right?
• 40:36
  Ben?
• 40:37
  Yeah, right.
• 40:38
  So I'm going, I'm going back to the Kroger.
• 40:40
  Well, I mean, Kroger's in the news a lot lately.
• 40:42
  The Kroger hat trick.
• 40:44
  Unprecedented.
• 40:45
  The.
• 40:46
  The Kroger hat trick.
• 40:47
  Yes.
• 40:47
  So here's the news.
• 40:48
  So Kroger in partnership with data firm VidMob and trade association MMA Global has found that it can forecast.
• 40:57
  It is reporting that it can forecast even E commerce purchase conversion by using predictive creative scoring before campaigns are launched and media is activated.
• 41:06
  Ben?
• 41:06
  Yes, sounds kind of cool.
• 41:08
  The results find a strong toy.
• 41:11
  A strong toy.
• 41:12
  Ben?
• 41:12
  No, not a strong toy, but a strong tie between creative decisions and business outcomes with predictive creative scoring able to forecast.
• 41:21
  Here's the number.
• 41:22
  E Commerce conversion with 81% accuracy.
• 41:26
  Okay, so why did I select this?
• 41:27
  Ben?
• 41:28
  Well, yeah, I selected this because of the old saying, every difference makes a difference.
• 41:33
  And nowhere is that adage more true than in the battle for those lucrative CPG advertising dollars across the retail media battleground.
• 41:43
  And so if Kroger can promise this to their CPG advertisers, I think it's a big win and it's a potentially a separator.
• 41:50
  Now how long before everyone else starts to do it too?
• 41:53
  Probably like yesterday.
• 41:54
  But you know, that's the implications here.
• 41:57
  I think that's, I think it's really interesting.
• 41:59
  Especially it's not a story we've covered on Grocer Talk yet, but many people will have seen the announcements a couple of weeks ago at Grocery Shop from Sam's Club Connect for some of their new products.
• 42:10
  One of those was better predictive analytics.
• 42:13
  So modeling and to be able to predict who's going to buy, but particularly predicting with claimed 90 plus percent accuracy 1 year equivalent lifetime value of people at Switch.
• 42:26
  So this battle for predictive I think is really interesting in retail media.
• 42:32
  Love it.
• 42:32
  Love it.
• 42:33
  Chris.
• 42:33
  Okay, here we go.
• 42:34
  I'm going to give you a Walmart story, which is the Walmart is planning to roll out shop to light functionality for its customers across the US before the holidays.
• 42:46
  Now, Chris, this, this builds on two things we've covered in grocer Talk over the past couple of weeks.
• 42:53
  So two weeks ago with Lauren, Lauren Levat Gilbert, we discussed Shop to Light with the news that Morrisons was planning to do it in the uk.
• 43:01
  That was our first Morrison story.
• 43:03
  And then last week Jordan Burke and I talked about John Furner's letter about pricing principles amongst all the talk of surveillance, surveillance, so called surveillance pricing.
• 43:15
  So look, we've given this kind of broader theme some good air in recent weeks.
• 43:19
  So I didn't make it one of our main stories this week.
• 43:21
  But I think, I think, Chris, I think you're hoping to talk about in much more detail on the OmniTalk Fast 5 tomorrow.
• 43:27
  But you know, from my side, Walmart US is the biggest and most visible user of ESL technologies and, and this for me really feels like part of their work to feel they need to advocate for that investment against
• 43:45
  all the political pressures that we've seen.
• 43:48
  It has been really noteworthy seeing Greg Caffeine.
• 43:50
  Walmart has been out in the media discussing this.
• 43:53
  So I look forward to hearing your discussion tomorrow about whether you think moving isolation is good for me.
• 44:00
  I think it absolutely fit into this broader and larger political conversation is happening right now.
• 44:06
  Yeah, 100% it does.
• 44:08
  I think you have to look at it from that perspective too.
• 44:10
  But at the end of the day you still have to look at it operationally too.
• 44:12
  Like the light up functionalities of electronic shelf labels have a lot of benefits.
• 44:16
  All of which I'm going to go through tomorrow on the, on the Retail Fast Five with my guest Richard McKenzie.
• 44:22
  So you know, if you want to give that a listen everyone, please do.
• 44:25
  But yeah, 100%.
• 44:26
  And the thing I don't know Ben, is I don't know how much consumers are going to enjoy this benefit.
• 44:32
  That's what I'm really interested to see because the videos of people doing it have been blowing up virally.
• 44:39
  So I think and it's, it's the one use case you always hear people talking about.
• 44:43
  But as a merchant in me, I'm always kind of like how many people are really going to do that?
• 44:47
  So you know, but hey, been surprised by a lot, by a lot less potentially impactful things over the years too.
• 44:55
  All right, so the next one, Ben.
• 44:57
  Walmart, we're going back to Walmart.
• 44:59
  Wow.
• 44:59
  Walmart said it's now going to offer 30 minute drone delivery service in Seattle and Denver with Wing the Wing, which is the partnership that started in Texas originally.
• 45:11
  This is now in addition because I know Ben, you're always tracking the states in which Walmart is operating drones.
• 45:17
  This is now in addition to.
• 45:18
  For those keeping score at home, Arkansas, Florida, Georgia, North Carolina, and the aforementioned Texas.
• 45:25
  I keep saying to people, don't sleep on this.
• 45:28
  This concept works better for Walmart than it does anyone else.
• 45:32
  And I think they're.
• 45:33
  They got the first mover here and I think it could be impactful.
• 45:36
  I really, really do.
• 45:37
  And I'm just waiting to see it take hold.
• 45:40
  That's.
• 45:41
  And I think the biggest signal for me that they're feeling confident about this is the word Seattle.
• 45:48
  I mean, that's a shot across the bows and you would only do that in literally into the backyard of the Amazon team if you were feeling confident about it.
• 45:58
  Great point.
• 45:59
  Look, I was really tempted to go for M S and Sephora for this one, but I think though it's probably not really grocery.
• 46:05
  And I know you're covering on the Fast 5, so I'm gonna end with some lighter relief, Chris, because this week we have seen the launch of the latest Trader Joe's tote bag.
• 46:18
  And what, what a route this has been for.
• 46:23
  For people to show their affiliation with the brand.
• 46:25
  I'm not sure if this is true loyalty because I'm not sure how many of these people are actually Traded Joe shoppers, but wow.
• 46:31
  These, these tote bag is a phenomenon.
• 46:33
  So look, Trader Joe's is Bringing back its 2025 Trick or Treat mini canvas tote bags for Halloween.
• 46:40
  And social media has been predictably excited.
• 46:45
  Trader Joe totes, they are a merchandising phenomenon.
• 46:49
  And Chris, are unbelievably popular here on the streets of London where we are.
• 46:55
  And I calculated this three and a half thousand miles from the nearest Trader Joe's store.
• 47:01
  Yeah, but I just, I don't get Trader Joe's.
• 47:03
  Like, I.
• 47:05
  That is the one store that.
• 47:07
  I just don't get the phenomenon of it.
• 47:10
  And I've talked about it a lot on the, on my weekly Fast5 podcast over the years, but I just do not understand the fanaticism that people put on that retailer.
• 47:22
  But I don't know, Ben, I mean, maybe you understand it better than I do because it just baffles me.
• 47:27
  At Costco.
• 47:28
  Costco I can understand.
• 47:30
  I hate shopping there.
• 47:31
  But like, I.
• 47:32
  It's not my thing.
• 47:33
  But like, but like, I get it, but Trader Joe's, I just don't get it.
• 47:38
  I solve the riddle for me bad, because it blows my mind.
• 47:41
  Chris, I'm sorry, you're talking to.
• 47:43
  You are talking to the wrong person on this one.
• 47:45
  So look, I can't shop at Trader Joe's frequently, but I do visit them whenever I can.
• 47:53
  It's not my favorite format.
• 47:55
  I don't, I don't get excited, but so many people do.
• 47:59
  So good job, varieties, spice of life and all that.
• 48:03
  CHRIS and on that note, I'm going to close this down because today's podcast was produced and we've given her a lot to do today.
• 48:09
  CHRIS but it's been produced with the health support we have of Ella SEOs.
• 48:13
  Ella thank you again.
• 48:15
  And it's brought to you exclusively as part of the Omnitalk Podcast network.
• 48:20
  Omnitalk exists to highlight the trends, technology and innovation shaping retail and grocertalk does this specifically for the global grocery and CPG industry.
• 48:31
  Thanks as always for listening in.
• 48:33
  Please remember to like and leave us a review wherever you happen to listen to your podcast or on YouTube where you can follow us today by simply going to forward slash Omnitalk.
• 48:45
  So until next week, on behalf of myself and Chris and all of us at Grossertalk at Omnitalk, thanks for tuning in.