A weekly podcast with the latest e-commerce news and events. Episode 210 is a recap of the weeks news, including eTailWest recap, Amazon Go Grocery, Walmart new programs, impact of Coronavirus, and retailer earnings reports.
eTail West recap
- Amazon Go Grocery
- Amazon Grocery Micro Fulfillment
- Amazon Basics Bedding Pop-Up
- Jason’s Forbes article on digital grocery: The Race To Reinvent Grocery: How Amazon, Walmart And More Are Trying To Conquer The Space
- Saks – CEO Helena Foulkes to step down
- Nordstrom – Erik Nordstrom named sole CEO
- L Brands – Sells Victoria Secret, Les Wexler steps down
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 210 of the Jason & Scot show was recorded on Wednesday, March 4th, 2020.
Google Automated Transcription of the show
[0:24] Welcome to the Jason and Scot show this episode being recorded on Wednesday March 4th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:37] Hey Jason and welcome back Jason Scott show listeners there has been a ton going on in the world of retail.
Amazon and e-commerce so tonight we are going to focus on the news for we do that Jason you before coronavirus hit you had done a little bit of traveling and now I think your wings are probably clipped a little bit.
But you were a Tito West.
[1:01] I was it was a tough duty to go to Palm Desert in the middle of a Chicago Street snow storm.
[1:08] Toughen did you bring the family or you left them back there to deal with that while you were your sunbathing.
[1:15] I did the the family did stay at home they they were certainly welcome to attend
but I think they chose are my four and a half year old certainly did not choose to stay home but my wife chose to stay in Chicago,
for her work in life apparently are kind of a big deal.
[1:38] Yeah cool how is this.
[1:38] I have some big news for you with my son those God I’m kind of depressed.
I feel like my son my four and a half year old son is turning to the dark side of the force.
[1:51] Everyone goes through a face there’s a the the dark side is there’s a big draw there.
[1:59] That yeah I he’s begging for like Darth Vader and kylo ren action figures and I drove him to school this morning and we had to sing Imperial March theme song over and over again.
[2:13] Nice that’s some quality parenting.
[2:15] Yeah he totally has it down.
[2:17] As long as he’s in the universe and not you’re not talking All-Star Trekkie then he can be on the dark side.
[2:22] To my knowledge he does not know that Star Trek exist yet.
[2:26] Good good.
[2:27] But so yeah so that aside I did get to go to e-tail West last week which was a pleasure listeners may already know that because we already published one of the shows from e-tail
I got to do an interview with Owen Comerford who’s the CEO of Moose Jaw.
Smooth jazz a great outdoor apparel retailer that was oddly purchased by Walmart a couple years ago.
[2:56] Cool and he’s stayed on to run de.
[2:58] Yeah it’s Moosa is famous for their clever and quirky marketing and oh and is actually the,
the owner of that marketing so for a long time Owen was the CMO and was responsible for a lot of the campaign’s that made him famous and then Owens boss the the CEO of left to go.
Run Blue Nile and Owen was promoted to CEO so.
Doing a good job there a Moose Jaw and then he has a side hustle Walmart also made him the sort of general merchandise manager for outdoor for all of Walmart.
Yeah so that was a good conversation and they do clever marketing campaigns like if you’re afraid to break up with your boyfriend or girlfriend call us and we’ll break up with him for you.
[3:51] Yeah never rabid kind of audience that rates things and is really into the outdoor stuff and and really engaged right.
[4:02] Yeah yeah they’re super smart about engaging their customers and they behind the scenes they have a really powerful 360 degree view of the customer and all that all that good stuff so.
They definitely have a bunch of best practices.
Somewhat aided by the fact that they’re relatively small prior to other Walmart acquisition yeah so that was a.
Great conversation he gave one of the Keynotes and then we got him in a conversation and then probably next week we’ll publish a conversation I had with Dave Spector who’s one of the cofounders of third love which is a.
Highly successful direct to consumer or women’s lingerie primarily bra.
Manufacturer and reseller and we’ll probably talk a little bit more about third love in part of the new segment later but so that’s a,
a teaser for now.
[4:55] And then you know there’s a lot of content a t-tail there’s actually multiple tracks going on so you kind of can’t go to everything.
And I did have some duties.
To record some podcasts and some other things while we’re there so I didn’t get to see everything but a couple of the just quick standouts for me,
there was a guy who I hadn’t seen before who I’m I’m afraid I’m gonna mispronounce his name Robert petrich.
Who’s in Industry the retail industry manager for Facebook.
[5:28] And so he was talking a lot about Instagram check out which is a topic of interest to me so he kind of had this interesting framework he said hey Facebook,
we think about these three main phases of the customer Journey the discovery phase the purchase phase and the post-purchase phase.
And essentially between Facebook and Instagram we feel like we dominate it Discovery and we’re doing well and have a lot of good products in there,
but we really think I were deficient in the purchase phase and the post-purchase phase and so that’s a major focus of.
His effort and so like through that framework Instagram check out is.
There you know biggest but still early initiative in purchase,
and so he kind of gave a Nike case study of Instagram check out where Nike partnered with this,
fear of God brand and they launched a new shoe for Cyber Monday and they sold completely sold out of the shoe and in one minute,
um and he sort of highlighted that that a number of primarily Street Wear Brands women’s fashion brands and Beauty Brands are having a very high degree of success using Instagram check out and he announced that,
in the process of expanding that program which was.
[6:47] Interesting to me because they’ve been in this beta for a long time and they haven’t allowed new new brands into the program so it was good to hear that there.
Expanding that program and then he also pitched something I guess I’m a little more skeptical of but you know he had at least one good case study using Facebook Messenger as a post purchase tool.
So the case study there with Sephora has sort of natural language appointment booking through Facebook Messenger so if you want to,
book an appointment with a beauty consultant you can kind of do it using natural language on Facebook messenger and he in his case study he was saying that
they have an 11% higher booking rate on Facebook Messenger than they do the Sephora website or any other support of touch points.
So he was kind of pitching it for that I to me like.
There’s so many Communication channel channels now that they’re sort of a signal to noise problem across all these channels but.
[7:52] That that was kind of interesting I got to host a couple panels so I did a direct-to-consumer panel on how brands are.
Able to capture customer data and improve their products and services and so there were three kind of interesting execs on that panel Megan Whitman who’s the chief digital officer Campari Beauty,
Kyle Hoff who is the CEO of a direct-to-consumer furniture company called Floyd which is kind of the
the online Akia if you will and on kit Patel who’s the VP of merchandising at boxed and I was super sad that you weren’t there because I know
boxed plays a major role In Stocking The get spiffy snack Shelf.
[8:38] Absolutely yeah.
[8:39] And so they had some sort of interesting insights on cat talked a lot about,
boxed own private label and how they’re able to leverage the other customer data they get and feedback they get to sort of shape the the offering for.
For their private label products so that was interesting and then I did kind of a.
Predict the future panel with with two guys Mike apostille who’s a co-founder and CEO of a.
Emil company called factor which is surprisingly big much bigger than I realize they sell a hundred thousand meals a week so these are.
Just reheat any meals at home for whatever whatever your nutritional information you know interest or Diet is.
And they it’s super interesting because they do a bunch of post-meal surveys,
they get a really high response rate and so they do a lot of like Micro Data about which meals customers who liked and what they liked and didn’t like and they really use that to shape there.
Their future meal planning and then Bob Bennett who’s the VP and General Merchandise general manager of consumer engagement at Petco.
and Bob had some interesting insights but I’m also super nice to Bob because Petco’s based in San Diego and so have an eye towards my retirement job being some kind of e-commerce gig in San Diego.
[10:08] Yes hopefully Bob’s listening.
[10:11] Yeah exactly and then I got to give a keynote on direct-to-consumer on the third day and so I took the opportunity to totally poo poo the direct-to-consumer channel.
So I want I want I want recap the whole thing it was a short presentation
but you know they’re all these these direct to Consumer presenters and there’s all these case studies about these direct consumer companies so I kind of highlighted the fact that hey,
there are all these different companies that track direct-to-consumer companies so I picked one the interactive advertising Bureau so it’s a,
Trade Organization of digital advertisers called,
usually they go by IAB and IAB publishes this list called the IAB 250 which is.
Their opinion in the 250 most important direct to Consumer companies to watch so I pulled all 250 companies and said hey how many of those companies have sold at least a hundred million dollars a year,
ever and how many of the 250 would you guess are over a hundred million in sales.
[11:22] I warned you in rehearsal that you’d have to guess 25 toy reasonable guess but way too high seven of the 250 companies have sold over a hundred million dollars a year.
[11:30] Holy cow.
[11:31] Yeah and only two have sold a billion dollars a year and those two by the way are Stitch fix and chewy,
both of whom primarily sell other people’s stuff so they are technically direct-to-consumer and they do both have their own brand but they mostly are,
and online wholesaler not a vertically integrated direct-to-consumer company and one of them chewy is.
Hugely successful on the revenue side but while the unprofitable so of these hundred and fifty companies one company that sells a billion dollars a year profitably and you know a bunch of these companies are,
unicorns from the private Equity valuation standpoint but but
very few of them have have meaningful market share at the moment not to say they won’t ever but it like it’s sometimes easy to get caught up in the in the hype and sort of overvalue where they’re at right now.
[12:27] Did you know that chewy and Stitch fix sell other people’s stuff direct-to-consumer.
[12:34] I did know that but so does Walmart.
[12:36] It’s right there it’s right there it is still direct-to-consumer.
[12:40] Yeah I mean isn’t every retailer direct-to-consumer.
[12:42] Yeah Staples has a B2B piece.
[12:48] This is true but director business.
[12:52] Cool seems like you were kind of running the show over there you’re going to be like the you’re going to be on putting together the whole thing here before we know it.
[13:00] Yeah if they’re listening winter events in Palm Desert I’m in.
[13:04] Said the Chicago.
Cool sounds like it was a fun trip and you get to flex the old speaking muscles which is always good it wouldn’t be adjacent Scotch oh if we didn’t kick off with a little bit of Amazon news.
[13:25] Design news your margin is their opportunity.
[13:34] So let’s start with your favorite topic Jason which is grocery there’s been I’ve seen a lot of interesting topics around Grocery and I saw you actually wrote an article about this in Forbes so
give us an update on what’s going on in the Amazon grocery line.
[13:49] Yeah yeah this is awesome week for grocery so a couple of things came out,
last week right before e-tail Amazon opened a new Amazon go format in Seattle this called Amazon GO Grocery and so.
Traditional Amazon go stores are these just walk out stores,
you go in you take your products you walk out and Amazon uses cameras to track you and charge you for what you took I’ve always said that well well their disguises convenience stores that Amazon ghost orders are really,
restaurants because they’re primarily selling Ready-to-Eat food for business people to have for lunch
and in fact secretly if you dive in all of Amazon’s propaganda for go like they call them restaurants so this is a new format that uses that same just walk out technology
for an actual grocery store so it’s quite a bit larger it’s five times larger than a ghost or so it goes stores about
five is exaggeration a ghost or is about 1,500 to 2,000 square foot this is a 5,000 square foot store this this store has about 10,000 skews so five times as many skus as a
a ghost or had and the skus include things like,
a butcher shop with with meats and organic produce.
[15:19] The go didn’t have and that you know potentially are harder for the camera to recognize.
So a big evolution in the Amazon Go technology and a new grocery concept for Amazon so that alone would have been super exciting
and I would put just one caveat on that while it’s a lot bigger than a traditional ghost or it actually still is small by grocery store standards
so that’s not a huge amount of skus and that’s not a big footprint for an American grocery store that’s about the size of it the typical European Grocery Store.
And I was super curious how they were going to do things like sell bulk items like how do you sell Apples by the pound.
Um using the just walk out technology in the answer is you don’t they’re they’re selling everything by the Aegis so,
yeah so you pay per apple or / banana rather than by weight so it’s so interesting.
Like a shift they obviously did for their convenience not the customers but it’ll be interesting to see if customers like that alternative model or not.
[16:26] Some chatter were some guy said he defeated the camera did you see that.
[16:30] Yeah and I almost wondered if he’s a podcast listener so a ton of journalists got invited to the grand opening,
and one of the things that I always pointed out about a one of the problems in scaling Amazon go is there’s things you can’t do in this camera-based or like have a public restroom.
And the reason you can’t is because you can’t put cameras in the restroom and so then you have a problem someone scans their way into the store
using the mobile app and so you know who they are and then you’re tracking them around the store with a cameras and you keep track of what they bought and then you know when they walk out you charge them for those purchases will if you let them walk into a public restroom in the middle of that shopping trip,
you lose that your identification Mark for that customer and so
you know one of the problems you have is go to a bigger store and it’s more a higher expectation that you’re going to a restroom
so turns out this Amazon go store does have a restroom and so this clever journalist figured out yeah I’ll walk into the restroom I’ll see I’ll carry two jackets with me and so I’ll change jackets in the restroom so I come out with a different color jacket and sure enough by doing that he was able to steal all his items and wasn’t charged for them.
[17:45] Was he arrested.
[17:46] No no I mean oh well at least not at the time of publishing his article.
I always thought that I always assume the solution would be that you have to leave the store to use the restroom and then you have to scan your way back in with your phone.
Yeah but so that’s an interesting little little Edge case another Edge case that seems like they’re trying to solve is in a ghost or you can only shop alone,
so if you walk in with your family they each have to have a.
Their own app or have a separate cart and now with this go grocery store you can actually scan in multiple people and then any items taken by any of those people.
You get charged for and group shopping actually is a big deal so it makes sense.
[18:35] So the jacket thing can’t they use eventually face recognition would do that or is there a reason they’re not doing faces for for privacy reasons.
[18:44] The real answer is I don’t know they’re you know,
you could imagine that like I imagine they are using face and then they’re like hashing it and you know just using it for that that session so they’re not storing it or doing anything with it but.
They just don’t force you to give like a face profile like you know what I mean like you’re naturally walking through the store so they have to be able to track you from multiple angles and so I imagine they use a lot of attributes of your appearance to track you and obviously
if your back is to all the cameras the facial recognition wouldn’t work so they can’t exclusively rely on facial recognition.
[19:22] But you scan your app it’s logged in so they know if let’s say they do scan your face they knew who Jason is and your kind of assuming they don’t store it but maybe they do and I don’t know.
[19:35] Yeah I don’t know these are all educated again you can imagine ways they could solve it right so it’s
it’s not a deal-breaker it’s just harder but so Props on Amazon they’re moving the concept for further when they originally invented the idea of just walk out store they had a grocery store in mind and with the technology available at the time it was too hard,
so now it’s become easier they also said that they’ve,
significantly reduce the cost I imagine it still super expensive but I believe them that the cost is going down
but I was almost more excited about a much lower profile.
Revelation that came out this last week at Amazon we’ve been talking about Amazon opening a.
A alternative grocery store that’s not a Whole Foods grocery store that’s a full-size grocery store in Los Angeles and it’s been under construction for a while people have walked by and then.
Um I want to say Bloomberg got access to the store and got to visit the store before it opened and the big surprise to everyone is oh there’s not a lot of digital Innovations and it mostly is a very traditional grocery store layout.
[20:53] Um so this is a 33,000 square foot store so that’s a legitimate Us full supermarket.
And it was kind of interesting that it was you know didn’t have a lot of digital shopping Innovations in it,
I have assumed for a long time that it was going to be lower price point groceries and targeted it more value oriented customers than.
Then Whole Foods but a clever blog called Hungry TV h n gr y TV,
um sort of track down the architectural plans for this store and they uncovered something super interesting that 7,200 square feet of this 33,000 square foot store.
Are dedicated to a micro fulfillment center so what this is is.
[21:50] Robotic grocery picking machine and like the brand name is even on the floor plan so this is a Michigan company called de mantequilla.
Which which make micro fulfillment centers for grocery stores and so very clearly this new Amazon concept is going to have a lot of groceries stored in this robotic system that then automatically picks them for the customer,
and so we don’t know exactly how this will work yet but one model is customers go to the grocery store do their own shopping and take home their groceries.
[22:24] For deliveries they use this automated picking system to more cost effectively pick the orders and deliver them to you.
And that alone would be interesting that that is a huge Trend in grocery but another alternative would be.
You shop for certain items yourself in the grocery store where like individual selections important so you want to pick your own,
pork chops and you want to pick your own fresh produce,
but you really just want a bag of Oreos and all the bags Oreos are the same so there’s no reason to push a cart by Oreo Island grab Oreos,
when you can just like build a list on your phone and have the robot fill the cart for you so,
the fact that this this micro fulfillment center is built into this new Amazon store is very interesting and that to me does make it.
Much more revolutionary grocery store than maybe the Bloomberg journalists realized when they they got the walkthrough so I’m,
and that sort is likely going to open imminently so I’m super excited about that,
and that kind of prompted me to write this article in Forbes about the the great grocery Wars and how Amazon Walmart and Kroger are sort of battling for the hearts and mind of,
digital grocery Shoppers in the US so I’ll put a link to my article in the show notes of anyone wants to Deep dive into what’s going on in digital grocery right now.
[23:49] Very cool and another Amazon news we’re going to talk about coronavirus but since we’re talking about Amazon they did have a big travel freeze which was which was interesting and then a lot of companies have
pre announced that they’re going to have a rough q1 due to the virus so for example apple and
Microsoft both pre announced that they probably would miss their numbers due to supply chain issues and then I don’t know why Microsoft would.
That was kind of weird when I guess how about any other Amazon news that you’ve been tracking.
[24:24] Yeah a few things
so there’s a lot of Buzz yesterday about another new store format that at Amazon opened journalists found a pop-up store in Seattle that was focused on Amazon Basics bedding.
So this is like their version of the Casper mattress.
And like that is interesting to me I actually think the journalist kind of misinterpreted what they were seeing so there actually have been I want to say.
Five Amazon pop-up stores that have opened in the last three months and Amazon used to have hundreds of pop-up stores.
They famously closed them all and then they quietly reopen six of them and five or six of them and they all have these rotating themes so one month the popups might have been about,
audible books and the next month they might have been about,
mama bear food and the current month’s theme for these pop-up stores is amazonbasics bedding and so what I think is new is they added a seventh.
Location for the pop-up which is.
[25:37] So that’s kind of interesting one that is more interesting to me and I know you being a fulfillment geek would be excited about is,
they also announced that they had opened a new kind of fulfillment center and I want to say they’ve opened four of these,
and this is Kyle call it a tweener fulfillment center.
This is a fulfillment center that holds a hundred thousand items,
closer to population centers so a true Amazon fulfillment center is like a million square feet and holds,
millions of products this is a hundred thousand square foot store that holds a hundred thousand items and as a result of these things they’re able to guarantee 5 hour delivery on a bunch of product so it’s kind of like.
Amazon Prime now on steroids and they’ve opened them in Phoenix Philadelphia Dallas in Orlando.
[26:36] Very cool yeah Prime now are very small so that I have.
[26:40] Like 20 thousand items.
[26:41] Yeah 5,000 square feet interesting so you know.
It almost feels like the next phase of prime one day is prime same day so feels like they’re they’re laying the groundwork for that under the guise of it that’d be the ultimate kind of a head fake is you know.
Tell Wall Street they’re continuing with prime one day and then at becomes Prime same day without a huge amount of new investment that would be interesting.
[27:08] Yeah and part of me and I may have this wrong but I sort of imagined there that those two things are almost synergistic that essentially they said like hey.
To honor our one day we need to stay you know it’s more cost-effective to Stage the most popular items closer to the customer and so they they sort of design these new fulfillment centers to too,
increase profitability and service level for the,
Amazon Prime one day and then as they did that they go oh and by the way there’s a subset of customers that we can have an even better service level now that we’ve done this right and so why wouldn’t we offer,
you know faster same day delivery to customers whom we.
[27:52] Yeah very cool.
[27:54] So yeah those are I guess where my last little Amazon tidbits.
[27:59] I brought up the coronavirus let’s let’s kind of talk about that because it’s an unpleasant topic but we need to kind of think about how is this going to impact everything for our listeners here so first of all kind of this is kind of
coming in waves if you will so when we first heard about this
the main concern was supply chain so and you know that Apple pronouncements when it really kind of caught onto my radar it was pretty early there
and that’s because the virus initiated in China and if you have a lot of Chinese components than it’s going to impact you
my initial thought was there’s a lot of Chinese stuff sold on Amazon I wonder how they’re going to get impacted one of my
one of my favorite analyst con Sebastian he actually kind of said you know because they have this Marketplace there’s always multiple offers from those products so it’s almost kind of like,
yeah you don’t really have a single source so so by having the marketplace model Amazon in an interesting way is almost kind of,
D single point of failure did supply chain whereas an apple conversely has because of
the components and controlling complete vertical ization of everything they have a lot of single points of failure in China so that was interesting and then he also mentioned.
[29:20] You actually kind of came out and came out with a list of companies who would be hit the most from this but then what I want to talk about is the ones that would do best in Amazon was on that list it was very
counterintuitive to what I was thinking
and his argument was also on there was like Peloton Netflix obviously Zoom some of those you kind of thought about but his whole idea is that based on what we’ve seen in other countries when there is a large outbreak,
people go into he calls it cocoon mode so that’s an interesting theory is you know if people are having to kind of self quarantine on their houses to avoid being in crowds what does that mean,
and his whole point is real you’re going to still need stuff you’re not going to want to go to the grocery store where presumably,
people have been in there touching all the products and things you’re going to want a cleaner supply chain to your house which means or e-commerce which is benefits Amazon so I thought that was an interesting take.
[30:14] Yeah no for sure and I feel like the the most like,
direct example is yeah so it’s great for Peloton and it’s bad for SoulCycle right like you don’t want to go to a physical place and take a class with 30 other people but you’d rather
workout at home and in that case once you buy a Peloton you’re locked into the Peloton so it’s not like,
you just for God you know you skip something for a month and then you’re going to go back to it after the,
the the virus updates,
you know if you’re you you in many cases go through a one-way door to make some purchase decision to do something at home versus out in public and so like it could have some long-term impacts,
and they’re just all these angles to this but like I’m with you the the first announcements
coronavirus started showing up in a bunch of earnings reports and it wasn’t retailers it was manufacturers and the interesting thing was it was ones that obviously have supply chain dependencies like
like apple that makes a lot of the product in in China,
but it was also like companies that make their product in the US are still dependent on ingredients from China so I want it was like Coca-Cola has made in the US but it uses aspartame that’s made in China and so,
you know not surprising in the global economy.
[31:44] We the the world supply chain is very dependent on China so potentially impact there and uh you know just a ton of factories.
Shut down they’re actually starting to open up again but I think the interesting thing is this kind of juxtaposition that,
some business like in some ways this benefits businesses right so in the u.s. right now,
um where the the fear probably outpaces the real risk you have a lot of quote aggressive shopping unquote and all these retailers are selling four times as much
paper towels and disinfecting wipes and hand sanitizer is they ever had before in some retailers have now said that the,
the sales increases there will be material.
[32:34] Which is interesting, they all have lean Supply chains and they’re all running out of that stuff and so I kind of feel like like.
[32:43] There’s a pro and a con to that.
But then our friends at coresight did a survey and ask a bunch of customers if their shopping behaviors might change as a result of.
Concerns over coronavirus and not shockingly a significant percentage of customers
said like 25% said they already are avoiding going to public places and fifty percent said that they definitely would have things got worse and so you know the premise is,
if you’re a mall owner you know this this is certainly bad for you a bunch of retards that said they’ve already started to see,
um persistent traffic declines if you’re a retailer at an airport you’ve already been decimated because air travels way down and so the traffic to those airport stores.
[33:40] Is way down but then again the cocooning could potentially be an upside for some businesses so if you’re launching a digital grocery service,
and your biggest problem is that a significant portion of the US consumers haven’t tried ordering their groceries online yet.
You know it probably is pretty appealing if you’re afraid to go to the supermarket because of all the people there it’s probably pretty appealing to try your first delivery order and if that is a good experience for you.
You you might be inclined to use that service regularly and Scot I don’t know if you knew this but there’s kind of a precedent for that.
[34:23] Um so.
The second largest e-commerce site in China is of course JD.com JD.com basically exists because of the SARS epidemic in China so,
so prior to SARS.
Jingdong Trading Company is selling CD-ROM drives at electronics bazaars and Shanghai and when SARS hit,
all these bazaars closed and the founder of jingdong trading had a bunch of inventory of the CD-ROM drives it couldn’t sell and so because there was this kind of prolonged quarantine,
he started trying to sell the CD-ROM drives on bulletin boards and was so successful in doing that that he launched a website JD.com,
and they of course become one of the biggest e-commerce players in the world.
[35:16] I did not know that.
[35:17] Yeah so who knows potentially there will be some new.
Businesses emerging from this sort of temporary cocooning and the the other category that I feel like is gonna like potentially be decimated by this.
The on-premise restaurant business because they’ve already been under a lot of stress consumers are consuming a lot more restaurant meals off-premise they’re mostly getting delivered by these.
These delivery marketplaces and the the economics for the restaurants themselves are horrible when this happens.
But now if people are cocooning more and going out less they’re likely to order even more meals for home delivery and that’s that’s going to be a disaster for the on-prem restaurant business.
[36:04] Cool how about I know you were bummed that some of the events were canceled too.
[36:09] Yeah there’s a little controversy there so like that.
For those of us in the industry like this is a busy event time of the year and so there you know a number of big events have been canceled Google and Facebook both canceled their developer conferences,
Adobe just canceled their big customer conference in Las Vegas,
and we’re about two weeks away from shoptalk which is a you know one of the best shows in our industry,
is still scheduled to go on in Las Vegas and I’ll be honest I’m grateful I’m not one of the event organizers and I’m super curious what they’re going to do because.
It’s increasingly looking like it’s not going to be viable to have this show like tons of attendees and speakers work for companies that are that are limiting you know non-essential travel.
And I’m sure a lot of people just have concerns over you know traveling to a big event in Las Vegas so it’s going to be.
Interesting to see whether we have a shop talk this year or not.
[37:11] Yeah we will see are you going.
[37:16] If they have it I probably will go you know we have to see like.
It is funny if you remember shoptalk sold this year so.
The fact the founder of shop talk already seemed super smart right like he had flipped a couple trade shows he sold shop talk for a particularly good valuation.
And you know he built a great show they did a really good job they grew rapidly for three years and then he sold it and that already looked brilliant now it looks.
[37:51] Because the new owner that paid like a pretty rich premium for the show is now stuck in this position like.
Do we give all of our exhibitors their money back or do we try to have a show that you know potentially is going to be the worst year ever for the show as you may remember
they’re doing a novel thing for the show they’re having only female speakers and so from my perspective,
it will be a tragedy to have only female speakers than have no one show up because everyone’s afraid of the coronavirus so I just I just think there’s a lot of.
Issues Tangled Up In whether or not not they at whether or not they have the show and I’m glad it’s not my call.
[38:30] Yeah wonder how so you know a channel visor we do a show and you commit you know,
years in advance and you you spend a lot on the show and you have to guarantee hotel room so I wonder I wonder if a viral outbreak is kind of a reason to be able to get out of that.
[38:48] Yet so I don’t know if they’re contractually obligated to but from a Goodwill standpoint most companies are having to let customers out of their commitment so
the I mean I had a non-refundable room for for Adobe and they refunded that like
Adobe basically sells out the Venetian and the Palazzo and so I imagine those hotels are going to be empty now,
because they you know they weren’t marketing rooms to other people for that week and I’m sure shoptalk would be the same problem at Mandalay Bay,
United Airlines just announced that you know they’re waiving all change and cancellation fees and they’re actually cutting back their schedule so all these travel and hospitality companies
you know are really bearing the brunt of the cost for this so it’s a it’s a mess.
[39:38] Yeah yeah it’s can be interesting the we don’t really talk about travel on the show but it will kind of
Ripple to our world because Google has pretty high concentration of travel advertisers social media guys I think are pretty small at I would guess I think Google is like the 15 to 20% range they have kind of four or five verticals that are each 20%,
retail being one of them maybe politics there’s kind of a weird thing that it actually could be okay that it’s a political year maybe that’ll help them.
It’s gonna be interesting to see how these things were blowout and other places.
[40:15] Yeah yeah for sure and obviously not not something that people plant or budgeted for.
[40:20] Cool another news item I wanted to get your opinion this our resident Walmart guy is this Walmart plus kind of Amazon Prime killer
I can’t tell feels underwhelming but I wanted to see if there’s something on this there.
[40:36] Yeah so side now you’re calling me the Walmart guy but you’re the one that camps out overnight to get the new Star Wars toys at Walmart.
[40:45] Yeah but I’ve been to Bentonville once how many times have you been.
[40:49] Yeah more than once Fair Point yeah so Walmart had a number of interesting announcements in the last two weeks so you’re right
Walmart did not announce a new
Amazon Prime competitor but some news apparently leaked and so I think originally Vox recode had an article and now a bunch of other people at articles and Walmart kind of confirmed that the,
the basic details of the article where accurate,
but the news was that Walmart was adding a monthly subscription program that sounds somewhat like.
Amazon Prime and in fact it’s called Amazon or Walmart plus and so,
again one more didn’t do a real announcements we don’t really know what’s in Walmart plus yet the speculation was at a minimum that they had sort of free home grocery delivery.
[41:51] And there was like some speculation that there are a bunch of other potential Services Walmart could be bundling in that in a separate announcement Walmart opened a number of health clinics.
Which is a new major Initiative for Walmart and so there is some speculation that Health Services could be bundled in this we don’t know yet so it’ll be interesting like I guess I’m on the bubble.
I think it’s really smart for a retailer to evolve into an echo system and have a sticky membership program and obviously Prime is the,
the most economically successful membership program in the history of Earth,
but another retailer Costco has you know pretty close to the second most successful,
membership program so you know it’s smart for Walmart to want to have a really successful program so in that sense like I’m encouraged that they’re doing something.
[42:46] It’s hard to imagine what it could be that that’s going to stack up favorably to Amazon Prime so I guess that’s my fear like I’m going to reserve judgment until I see what’s in it,
but I hope what they do is something very different than Prime instead of just trying to do a me to version of prime because I kind of feel like that would.
But they did bundle in that same week some other news came out so I thought you might be more excited Walmart a t-tail Walmart officially launched Walmart fulfillment service so they call that a wfs,
which is their version of Amazon’s FBA,
and this very much sounds like a me to offering compared to Amazon but I would argue here it’s a smart unnecessary one Walmart has.
You know pretty open about its aspirations to to develop a serious successful Marketplace,
and to me it feels like like table Stakes for a really successful Marketplace is.
You have to help all those sellers with fulfillment so that you can have a high service level and you can kind of match Amazon Prime one day and and the only way you’re going to do that is if you fulfill the goods for.
For the sellers and so this this was not shocking news but but like a pretty important evolution in the marketplace at Walmart do you.
[44:15] You sort of agrees God or you think it’s not necessary the this point.
[44:20] I do you know when you don’t have when you have kind of a what I call hybrid marketplace with one p n 3p
and the 1p experience is just typically so much better than the 3p experience because
third parties generally are smaller businesses they don’t have the same shipping infrastructure so
so having that fulfillment by or the this example Walmart fulfillment Services as this Middle Ground
you know I’d say it brings the customer experience that much closer and that’s what you want to have a vibrant Marketplace you want it
you want it so similar that the customer doesn’t pause and say oh this is from a third party that’s going to take a lot longer or come in a weird box or.
The last one I got was all destroyed or came to a carrier I don’t like whatever it is that there’s those things kind of chew away at the overall customer experience so I think it’ll be good.
[45:11] Ya know and then you know Walmart has already accepts returns for 3p sales in their stores and so I don’t think they announced anything but you could imagine
Walmart leveraging their network of stores like they could potentially stage some popular 3p products they’re like there’s all kinds of interesting.
Twists on the Walmart fulfillment Services if you if you layer in the 5000 super centers as well as the the Walmart’s fulfillment centers.
So that’s interesting and then they did also announced kind of the next step in a reorganization,
like over the last couple months they had merged several departments between walmart.com and Walmart so instead of having separate teams and Bentonville and San Bruno
they had shared responsibilities but one big function that was still separate was
there are separate Merchants buying stuff for the web site in San Bruno and Merchants buying stuff for the stores and Bentonville and so this month they announced that they’re merging the merchandising organizations and having one so this is all
to me like positive steps in breaking down the silos and having a single omni-channel organization.
[46:27] Very cool speaking of omni-channel a lot going on in the world of Mulligan so
you know it seems like there’s a lot of chaos out there you mentioned so malls are shaky just kind of coming out of queue for still
and then here we are in q1 with this this whole thing the traffic’s gonna be down to grown up due to coronavirus what are you seeing going on in some of the mall retailers.
[46:54] Yeah well I think there’s a bunch of news like obviously it’s retail earning season and so like you can look at all the mall retailers there but some sort of stand adds to me
Hudson Bay Company which owns Saks Fifth Avenue didn’t have a very good earnings call and
word came out this week that the CEO Helena falx is stepping down she was a highly regarded CEO she was
like the CMO of a CVS I think it was if I’m remembering right before she stepped into this role and she she fixed a lot of
sort of institutional problems that sex and frankly got rid of a lot of the,
the ancillary businesses that they were in a really you know put the focus on sex so now she’s leaving and,
like one of the investors whose primarily a real estate guy who’s been sitting on the board is taking over as CEO and you know from.
Retail practitioner standpoint.
[47:59] That doesn’t feel like a very forward-looking move that you have the successful retail operator leaving and you’re replacing them with an investor real estate type.
Type person you know usually those aren’t the people that.
Grow traffic and and profitability and Retail organizations so I liked that potentially a bad sign for force.
[48:27] And then in other leadership shakeups Nordstrom which I sometimes call the the best of the bad performing department stores,
they were actually up in terms of same-store sales so they were up 1% if the full at the Nordstrom stores and they were up 1.8 percent at the rack stores.
Which was below their guidance and is not very exciting growth and it’s below and you know the retail industry average for growth,
but compared to most department stores which are shrinking being up you know is better.
[49:05] A standout thing for me and their earnings is their digital was up nine percent which is way below the industry average so like you don’t see that very often.
We joked that the industry average has to be wrong because it seems like every retail on the planet claims to have bigger growth than the,
14% that US Department of Commerce says so in order from case they’re saying hey we only grew nine percent that’s pretty surprising for someone that we think of is a,
kind of best-in-class digital department store and I don’t know what the full story is but part of it I’m sure is.
That Nordstrom is more digitally mature and they do you know have 35% of all their sales are digital so you know it’s maybe it’s a little bit of a lot of big numbers that it’s.
Hard to grow as fast when you already have significant digital sales
but out of that earnings call they announced a little bit of a leadership change they had two CEOs a co-ceo thing they had the to Nordstrom Brothers Pete and Eric and and they announced this week that Eric would be this the sole CEO and
Pete would act as president and chief brand officer so you know apparently someone pick their favorite child.
[50:18] Interesting yeah I’m sure those complicated behind the scenes to figure that out and you know they had tried to go private for a while and just couldn’t get it done it.
[50:30] Yeah yeah the family tried to bring it private and they yeah you’re right they couldn’t come up with a sweet enough deal apparently.
And then the one that was like the I would call the biggest news is Victoria Secret which is their parent company is L brands.
The they have a storied CEO less wax where who’s like arguably responsible for
the success of Abercrombie & Fitch
Express for a long time and he’s been the CEO of Victoria’s Secret for 50 year or of L brands for 50 years
they announced that they were selling Victoria’s Secret,
to a private Equity Firm or 55% of the equity to Sycamore Partners at a surprisingly low valuation so 1.1 billion dollars.
And you know so based on Revenue there was a.
[51:37] You know in expectation that the valuation might be considerably higher you know Victoria Secrets really struggled lately because they you know their whole marketing stick is this,
aspirational perfect image of beauty and they mostly were selling like discount bras in stores that were really designed to cater to men,
and increasingly they’re all these new you know bra companies and direct-to-consumer companies that were like way more focused on.
Meeting the needs of the women that actually use the products and it had more sort of inclusive marketing strategies and you know that they had a particularly dumb CMO it,
Victoria Secret that you know famously said they would never have any models that weren’t perfect because.
[52:21] That’s not what women want to think of themselves as and so the whole like Victoria Secret Beauty show and.
Fashion show and all those things kind of once we’re strong marketing tactics had really sort of started to work against them,
and so you know the it’s interesting they had to sell at a pretty low valuation there was probably a period in the,
mm when they would have you know valued Victoria Secret at like 6 or 10 billion dollars somewhere in that range to only sell it one.
Is a pretty big admission of defeat,
and I mentioned that next week we’ll have an interview with Dave Spector was one of the founders of third love,
like arguably third love is one of the accelerators of this Victoria Secret decline,
and they accidentally got in a fight with Victoria Secret so they’re the small direct-to-consumer company that no one had ever heard of and that same stupid CMO at Victoria Secret that
you know mentioned that they would never have any flawed models also said that they were they were never going to be anybody’s third love they were always going to be everyone’s first love.
[53:35] And and that kind of you know prompt this this public spat and you know third was continuing to do really well and and Victoria Secret just,
sold in a fire sale in the last week’s or had to step down so kind of interesting that kind of the whole female image thing mask the fact that they also had a bunch of stores in bad malls,
that are just dying and they’re primarily sold everything at thirty to forty percent off so just a bunch of traditional model based apparel challenges in addition to their.
Positioning Challenge and I guess the one thing I would point out is well,
you know it sucks to have a company that was super valuable in you only sold it for 1.1 billion dollars I will point out that albanians bought Victoria’s Secret for 1 million dollars in 1982 so
if you just look at where you started and where you ended it’s actually a pretty good story.
[54:29] Low basis if all kind of tie it all together with a little bow here if Neil from shoptalk head owned Victoria Secret he would have sold at the top.
[54:41] And congratulations to an eel / let me know if you need any help carrying your bags to your vacation home.
[54:48] In San Diego.
[54:48] Exactly I bet you he’s vacationing at even cooler places.
But Scott that’s gonna be an awkward and perfect place to end it because it’s happened again we’ve used up all our listeners time but as always if we struck a chord or you want to continue the conversation we encourage you to jump on our Facebook page
or hit us up on Twitter and as always we really would appreciate that five star review on iTunes a ton of listeners have been super generous and written great reviews but most of you have been listening for so long that we don’t get as many new reviews as we used to and
part of Apple’s algorithm is freshness so we need we need some of you longtime listeners to give us the 30 seconds in jump over to iTunes and write that review.
[55:34] Yeah thanks for listening and also longtime listeners recruit a new listener and have them leave a review.
[55:40] Even better and until next time happy commercing.
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