
English: 
(upbeat music)
- Welcome ladies and gentlemen
to Mercatus's podcast
and I guess now the video
series, Digital Grocer.
It's episode 37, season four
and this is really exciting.
And I am as usual joined
by my faithful host.
I'm not sure why I use the word faithful,
but anyway (laughs) Mark Fairhurst.
- Have I given you a reason
to think I'm not faithful--
- No, I don't know, I don't
know anyways I apologize
for using that word, but you
are Mercatus's VP of marketing
and you are,
I think stashed in the safety of your
home bunker is that right?
- I am, but I'm disguising
it through electronic means.
(laughing)

English: 
Welcome ladies and gentlemen to Mercatus' podcast, and I guess now a video series, Digital Grocer. It's episode 37, season 4, and this is really exciting. And I am as usual joined by my faithful host, I'm not sure why I use the word faithful, but anyway, Mark Fairhurst.
Am I giving you a reason to think I'm not?
No, I don't know what it was, I apologize for using that word. But you are Mercatus' VP of marketing and you are, I think, stashed in the safety of your home bunker, is that right?
I am, but I'm disguising it through electronic means.

English: 
I think we... I don't... My home office isn't ever a brick wall behind me. Let's be-
No, but it's cool, I like the effect.
Yeah, this is new. So Mark, I want you to kind of let people know all this crazy new stuff that we're doing, I think this is amazing.
8
00:01:17,00 -->00:02:01,00
Yeah. The response to what we originally started out as an experiment has been huge, to put it mildly. And I'd like to think that we really kicked off a trend in the grocery space, because it seems like everybody now has a podcast. So, knowing how competitive we are, we decided to amp it up a little bit, take it to 11, and add in video. And as part of that, we decided to build on the brand of the Digital Grocer, so we developed a new website, digitalgrocer.com. So, our content is a little easier to find.

English: 
- I think we, networked my home office
is an ever a brick wall behind me.
(laughs)
- But it's cool, I like the effect.
- Yeah, this is new, so
Mark I want you to kinda
let people know all this crazy
new stuff that we're doing.
I think this is amazing.
- Yeah, you know the response
to what we originally
started out as an experiment,
has been huge to put it mildly.
And I'd like to think that
we really kicked off a trend,
in the grocery space, 'cause
it seems like everybody now
has a podcast.
So knowing how competitive we are,
we decided to amp it up a little bit,
take it to 11 and add in video.
And as part of that, you know,
we decided to build on the
brand of the Digital Grocer.
So we developed a new
website, digitalgrocer.com.

English: 
So our content is a little easier to find
and we've developed our
own YouTube channel.
So we love it for people
who are listening,
our audience to subscribe, like, review.
Hit the bell for notifications
for when you know,
there's a new show posted
and provide us comments,
you know, thumbs up, thumbs
down, what you don't like,
what you do like.
We wanna hear your feedback.
- You guys did it in record time.
- Yeah this was a little project over
the last few summer months and you know,
a little more difficult
'cause we're all working
from home still, so
it's a yeah but we had,
I have a great team and some
great external resources
we can tap, so it's,
we're excited, this is gonna be fun.
- Yeah, this is really great.
So since the last time where we recorded,
a lot has happened in the industry.
And we, you know I think you
and I, know we did a webinar
for our friends over at Brick Meets Click.

English: 
Yeah.
And now we've developed our own YouTube channel, so we'd love it for people who are listening, our audience to subscribe, like, review, hit the bell for notifications for when you know there's a new show posted, and provide us comments, thumbs up, thumbs down, what you don't like or what you do like.
Yeah, that's exciting.
And we want to hear your feedback.
And we... You guys did it in record time.
Yeah. This was a little project over the last few summer months and a little more difficult because we're all working from homes, so it's... But we had... I have a great team and some great external resources we can tap, so it's... We're excited, this is going to be fun.

English: 
And the results that we
co-published out in the industry,
for the month of June were just amazing.
So grocery eCommerce sales hit 7.2 billion
and that's in US dollars.
That's 600 million more
than the previous month.
Mark any sense what the
prediction may be for,
the month of July?
- Yeah that's a great question.
Actually, I was talking to
our friend David Bishop over
at Brick Meets Click yesterday.
And they're producing
another research report
with our help, which will
be coming out next week
actually, David has been
seeing what he's calling
normalization, basically
the dawn of the new normal.
Monthly sales are off a
little bit from the high,
but still very much up from pre-COVID,

English: 
Yeah, this is really great. So, since the last time that we recorded a lot has happened in the industry and we... I think you and I know we did a webinar for our friends over at Brick Meets Click, and the results that we co-published out in the industry for the month of June were just amazing. So, grocery e-commerce sales hit 7.2 billion, and that's in US dollars. That's 600 million more than the previous month. Mark, any sense what the prediction may be for the month of July?
Yes, that's a great question. Actually, I was talking to our friend, David Bishop, over at Brick Meets Click yesterday, and they're producing another research report with our help, which will be coming out next week actually. David has been seeing what he's calling normalization, basically the dawn of the new normal.
Right.

English: 
which is showing two things,
I think the you know,
the regional effect of shelter
in place or people feeling
they need to shelter in place.
And therefore you know use,
approach online grocery.
But also built there's
building in of that habit.
You know, once you try
something, three times
you sort of start to
develop that experience
and a preference for it.
- Yeah, it's interesting that you say
that because, one of the things
that I was pouring through
our data yesterday and I think,
most people don't know this.
We actually pull in a
lot of transactional data
in our Tableau infrastructure.
So that gives us this really
interesting opportunity
to kind of slice and dice the data.
And we are seeing in some
cases in less effective coastal
areas, where a sales have on a
weekly basis probably started
to decline two to 5%.
But they're still much
higher than they were,
you know call it pre-March 11th.

English: 
Monthly sales are off a little bit from the high, but still very much up from pre-COVID. Which is showing two things, I think, the regional effect of shelter-in-place or people feeling they need to shelter-in-place and therefore you use online grocery, but also there's building in of that habit, once you try something three times you sort of start to develop that experience and a preference for it.

English: 
Yeah. It's interesting that you say that because one of the things that I was pouring through our data yesterday and I think most people don't know this, we actually pull in a lot of transactional data in our Tableau infrastructure, so that gives us kind of this really interesting opportunity to kind of slice and dice the data. And we are seeing in some cases in less effective coastal areas where sales have on a weekly basis probably started to decline 2-5%, but they are still much higher than they were call it pre-March 11th. There are certain areas in the country though, that in fact what's interesting is the numbers have remained consistently high and we're not seeing a decline. And part of me wonders if this is an opportunity for us to take some of this data and overlay it against the net new COVID cases on a state by state basis. I mean, food for thought, I think that'd be kind of interesting to look at.
Yeah. I mean, the great thing we do have through the benefit of our retail clients, we do have that national view in the US.
That's right.
So, that's a great exercise and something that I'll definitely look into.
Now Mark, we're launching mid-September a really important report [inaudible 00:00:05:47], is it okay to talk about this report now or?

English: 
There are certain areas
in the country though,
that in fact, what's
interesting is the numbers
have remained consistently high
and we're not seeing a decline.
And part of me wonders,
this is an opportunity
for us to take some of this
data and overlay it against,
the net new COVID cases,
on a state-by-state basis.
I mean, food for thought.
I think that'd be kind of
interesting to look at.
- Yeah, I mean the great
thing we do have through
the benefit of our retail clients.
We do have, that national view in the US.
- That's right.
- That's a great exercise
and something that I'll
definitely look into.
- We're launching mid September
a really important report
is it okay to talk about
this report now or?
- Yeah, let's do it.
You've seen some of the
preliminary analysis.

English: 
Yeah, let's do it. You've seen some of the preliminary analysis. Just to give the audience some context, we engaged with a research firm, [Incisive 00:06:03], led by some great guys, former team over at [EKN 00:06:08], which used to be owned by [Ensemble Group 00:06:10]. We commissioned them to do a research report through our retailers' shoppers, we need to understand the preferences and behavior compared to pre-COVID, during COVID, and then post shelter-in-place orders.
Mm-hmm (affirmative).
And what we're seeing... First of all, the response rate, we had over 60,000 responses from across the US, we developed over 48 million data points.
Wow.

English: 
Just to give the audience some context,
we engaged with a research firm,
Incisiv led by some great
guys, former team over at EKN,
which used to be owned by Ensemble group.
We commissioned them to do
a research report through
our retailers shoppers.
Really to understand the preferences
and behavior compared to
pre-COVID, during COVID
and then post shelter and place orders.
And what we're seeing.
First of all, the response
rate we had over 60,000
responses from across the US.
We developed over 48 million data points.
- Wow.
- So this and I asked the folks I said,
is this on a scale that
you've seen before?
And their feedback is, to their knowledge,
they have never seen a survey
of this size and magnitude
and statistical significance as a result.

English: 
So, this... And I asked the folks, I said, "Is this on a scale that you've seen before?" And their feedback is, to their knowledge, they have never seen a survey of this size and magnitude and statistical significance as a result. So the insights coming from it will be, dare I say, definitive, I'm sure someone's always going to find an angle to take that as covariant, but it's going to be significant in terms of gauging where the US grocery shopping public is currently and where they're going.
Yeah. The aggregate report that was prepared is, that I had the chance to kind of go through and provide some thoughts and ideas on how we can leverage some of the findings, is just amazing because you're now able to contrast what's happening on the West Coast, what's happening in the South of the United States or in the East Coast or in the Midwest.
The Midwest, yeah.
And that's interesting when you're, A, if you're a retailer and you're trying to make a business decision, at least it's an informed decision more than anything.
A hundred percent. Yeah. And it's coming out the week of September 15th.

English: 
So the insights coming from it will be,
dare I say, definitive.
I'm sure someone is
always gonna find an angle
to take that is, can vary in,
but it's going to be
significant in terms of gauging
where the US grocery
shopping public is currently
and where they're going.
- Yeah, the aggregate
report that was prepared,
is that I had the chance
to kinda go through
and provide some thoughts and ideas,
on how we can leverage
some of the findings.
It's just amazing because
you're now able to contrast,
what's happening on the West coast,
what's happening in the
South of the United States
or in the East coasts or in the Midwest.
And that's you know
interesting when you're,
a, if you're a retailer or
you're trying to make a business
decision, at least it's
an informed decision,
more than anything.
- 100%.
Yeah and it's coming out
the week of September 15th.
- That's great, well.

English: 
That's great work to the team at Incisiv
and certainly to your team Mark.
So big news DoorDash,
jumped in to on demand grocery delivery
and Mark I'm curious for
your thoughts on that.
- Yeah, they did it in a big way.
So they're not only did
they jump into grocery,
but they also announced
their own direct to consumer
grocery convenience option as well.
I think it's from our perspective,
it's good to have choice in the market
and good to have another grocery last mile
delivery provider, is a
good thing for retailers.
You know, DoorDash has
a very different model,
than Instacart.
- That's right.
- DoorDash doesn't mind
being the white label
delivery platform.
And they're flexible in that regard.
Whereas, you know Instacart's
been a little more
focused on the marketplace

English: 
That's great. Well, that's great work to the team at Incisive and certainly to your team, Mark.
[crosstalk]
... To the team at Incisive and certainly to your team, Mark. So big news DoorDash jumped into on demand grocery delivery. And Mark, I'm curious your thoughts on that.
Yeah, they did it in a big way. Not only did they jump into grocery, but they also announced their own direct to consumer grocery convenience option as well. I think from our perspective, it's good to have choice in the market.
Yep.
To have another grocery, last mile delivery provider is a good thing for retailers.
Mm-hmm (affirmative).
DoorDash has a very different model than Instacart.
That's right.

English: 
and keeping their relationship primary
between them and the shopper.
- Yeah, it's I find it interesting,
like it's really ballsy
of DoorDash to open up
kind of a virtual, you
know convenience store
and for consumers to take advantage to,
because and I'm sure retailers,
grocery retailers don't really
care because they don't want
their customers anyways,
using their stores as convenience
stores because you know,
the margins aren't,
margins are tight enough
you don't want people just
cherry picking you know,
low margin items off the shelf.
But I got to think for
some of the other customers
DoorDash could be going after it.
I'm sure they must think
it's a bit of a conflict.
- Yeah like the 7-Eleven to the world,
you know, the world was you know,
those types of convenience chains,
I think they gotta be concerned.
- Yeah, well we're excited
at Mercatus to be doing
an integration with the
team over at DoorDash
and I think that you
know, the more choices

English: 
DoorDash doesn't mind being the white label delivery platform. And they're flexible in that regard. Whereas, Instacart has been a little more focused on the marketplace and keeping their relationship primary between them and the shopper.
Yeah, I find it interesting, like it's really ballsy of DoorDash to open up kind of a virtual convenience store for consumers to take advantage too and I'm sure retailers, grocery retailers don't really care because they don't want their customers anyways using their stores as convenience stores, because the margins are tight enough. You don't want people just cherry picking low margin items off the shelf. But I got to think for some of the other customers DoorDash could be going after. I'm sure they must think it's a bit of a conflict.
Yeah. Like the 7-Elevens of the world.
Yeah.
The Wawas, those types of convenience chains, I think they got to be concerned.

English: 
Yeah. Well, we're excited at Mercatus to be doing an integration with the team over at DoorDash. And I think that the more choices that we can bring into our network of retailers in terms of last mile delivery just makes a tremendous amount of sense in any case. So we're really excited to be doing that. So also in Canada, when we never talk about our home country, this is some big news. So at the ... I know, we're laughing and chuckling. We are patriotic don't get me wrong. I celebrate both holidays, right? What's that Mark?
Which holidays, Christmas and New Years?
Christmas. And I've been to the Macy's Thanksgiving Parade in New York.
Yep.
And I celebrate the Independence Day. I celebrate Canada Day, which only lasts an hour, anyways. Sorry. So in Canada at the end of June, Sobeys launched the Voila, their eCommerce solution with home delivery, and that was done in partnership with Ocado.
Yep.

English: 
that we can bring into
our network of retailers,
in terms of last mile delivery,
just makes a tremendous
amount of sense in any case.
So, you know we're really
excited to be doing that.
So also in Canada when can we never talk
about our home country?
This is some big news.
So at the and we're laughing and chuckling
and you know, we are
patriotic don't get me wrong.
I celebrate both holidays.
What's that Mark?
- Which holidays?
Christmas and New year's?
- Christmas and I've been
to the Macy's Thanksgiving
parade in New York.
And I celebrate the independence day.
I used celebrate Canada day,
which only last an hour anyways, sorry.
So in Canada at the end of June,
Sobey's launched the voila,
their eCommerce solution
with home delivery
and that was done in
partnership with Ocado.
And this and I gotta tell you,

English: 
Listen, I got to tell you, we wrote about this, there was a piece that was just recently published in Winsight magazine. I took the opportunity to really step back research what they were doing, how they did it, and then bought a bunch of ... Probably bought too many groceries, had them delivered, got into the delivery truck. They let me in, I couldn't take pictures. It's kind of interesting. Reality is, is the investment Sobeys is making and most people may not know this. They are building for CFCs. So what they call customer fulfillment centers. The first one is in Vaughan, Ontario, it's just North of Toronto proper. That first CFC is 396,000 square feet, probably around ... It has 1,500 employees, roughly maybe 1,100 robots, 39,000 SKUs being sold online.

English: 
you know, we wrote about this,
there was a piece that was
just recently published
in Winsight magazine.
I took the opportunity
to really step back,
research what they were
doing, how they did it?
And then bought a bunch of
probably bought too many
groceries, had them delivered,
got into the delivery truck.
They let me in, I couldn't take pictures,
but and it's kind of interesting.
It's reality is the
investments Sobey's making
and most people may not know this.
They are building for CFCs.
What they call customer
fulfillment centers.
The first one is in Vaughan, Ontario.
it's just North of Toronto Proper.
That first CFC is 396,000 square feet,
probably around, it has
1500 employees roughly,
maybe 1100 robots, 39,000
SKUs being sold online.
The total of these four CFCs.

English: 
And the second one is being built
on the West Island of Montreal.
And the other two are gonna
be Calgary and Vancouver.
will give Sobey's the capability,
of actually servicing 75%
of the Canadian population.
It's impressive.
- Yeah, it's brilliant,
I mean after you told me
your experience, I tried
it and I got the customer
experience angle of this.
These guys they've won it hands down.
- Yeah and I think that the
thing that they're doing
differently sobeys.com is it
different digital property
versus voila.ca and the
experience on voila.ca
whether it's you go on the
mobile app or on the website,
it's very utilitarian.
In the sense that it's
not a Swiss army knife,
like there isn't a blade or a tool to do,
you know, 75 different things.

English: 
The total of these four CFCs. And the second one is being built on the West Island of Montreal. And the other two are going to be Calgary and Vancouver will give Sobeys the capability of actually servicing 75% of the Canadian population. That's impressive.
Yeah. It's brilliant. I mean, after you told me your experience, I tried it and I liked the customer experience angle of this.
Yeah.
These guys, they've won it hands down.
Yeah. And I think that the thing that they're doing differently, Sobeys.com is a different digital property versus Voila.ca.
Mm-hmm (affirmative).

English: 
This only does eCommerce
and it does it really well.
There's a couple of things
that are nagging, you know,
I didn't write about them in the article,
but they do auto-correct
inside the search.
So if you write baby bok choy,
first of all your browser
and I use a Safari on a Mac,
it kind of overrides everything.
And it's now it's
searching for baby bok boy,
which is, now I'm sure
groceries don't sell that stuff.
(laughing)
Right, but it's just kind
of those little things,
I know they're kind of, they're tweaking,
I built an order of 21
items under six minutes
and it wasn't just random items.
I had them written down
on a piece of paper.
So, you know kudos to them.
I think this is going to fire up,
other Canadian grocery eCommerce wars.
And we've not yet seen here.

English: 
And the experience on Voila.ca, whether it's you go on the mobile app or on the website, it's very utilitarian. In the sense that it's not a Swiss Army knife. There isn't a blade or a tool to do 75 different things. This only does eCommerce and it does it really well. There's a couple of things that are nagging and I didn't write about them in the article, but they do auto correct inside the search. So if you write baby bok choy, first of all your browser, and I use a Safari on a Mac. It kind of overrides everything and now it's searching for baby bok boy, which I'm sure grocer's don't sell that stuff.
Ugh.
Right.
No.

English: 
But it's just kind of those little things. I know they're tweaking, but I built an order of 21 items under six minutes and it wasn't just random items. I had them written down on a piece of paper. So kudos to them. I think this is going to fire up the Canadian grocery eCommerce wars. And we've not yet seen here, what Amazon's going to do.
Right.
You can order some items on Amazon.ca, but not like you can ... Amazon Fresh isn't available to us yet. So it'll be interesting to see if Amazon thinks there's an opportunity to enter this space. My only feedback to Sobeys was I think that they built this experience that's all about the CFC. So delivery trucks, I think they have to start thinking other parts of Canada where they're not servicing and I know they're going to do this in Nova Scotia. How do you jam in and click and collect? How do you jam in curbside?
And to your point, we've always been advocating, it's experiment and don't close the door on one solution at the expense of another.

English: 
I mean, what Amazon's going to do?
- All right.
- That you can't,
you can order some items on amazon.ca,
but not like you can, you know,
Amazon Fresh isn't available to us yet.
So it'd be interesting
to see if Amazon thinks
there's an opportunity
to enter this space.
I think my only feedback to Sobey's was,
I think that the built this experience,
that's all about the CFC.
So delivery trucks,
I think they have to start
thinking other parts of Canada
where they're not servicing.
And I know they're gonna
do this and what Scotia,
you jam in and click and collect.
How do you jam in curbside?
- To your point, I mean,
we've always been
advocating it's experiment
and don't close the door on one solution,
at the expense of another.
- Well, it's not a one size fits all.
And we think our research has proven.
I mean, if you look in LA, for example,

English: 
you know, versus the rest
of the parts of the other,
I would say other States,
I wouldn't say it's not,
ubiquitous across the country,
but delivery far out
ranks, click and collect
by least 10 basis points.
- In our data, in the report
that we will be sharing shows that.
- Yeah, first is if you
go into parts of the South
where people are more
predisposed to actually wanting
to use curbside.
And even at the height of
the pandemic in the US,
the increase in wanting to use delivery
was marginal at best.
So I think if you're a
retailer and even not only
you have to worry about operationalizing
so many different things, I
think you you just can't put
all your eggs in that one basket.
I think that's the reality of it.

English: 
Well, it's not a one size fits all. And we think our research has proven. I mean, if you look in LA for example, versus parts of the other, I would say other states, and I wouldn't say it's not ubiquitous across the country, but delivery far out ranks click and collect by least 10 basis points.
In our data, in the report that we'll be sharing shows that.

English: 
And also in the news, Walmart
pronounced on August 18th,
their Q2 numbers.
And the one standout,
was their eCommerce sales
grew by 97%.
That is astonishing to say the least
specifically for Walmart.
And I had my guts telling me,
you know, they're crushing it.
And they recently announced
Walmart Plus, which is their,
you know, you can call
it their membership,
which a competitor to
Amazon Prime and so on.
I think the biggest
news that also came out,
was the partnership with Instacart.
- Yeah, that certainly
got a lot of attention.
Not necessarily in the best way.
- No and not amongst the
community retailers, for sure.
Now they ended up, they're piloting,
I think in four areas over in California.

English: 
Yeah. Versus if you go into parts of the South where people are more predisposed to actually wanting to use curbside, and even at the height of the pandemic in the US, the increase in wanting to use delivery was marginal at best. So I think, if you're a retailer and not only do you have to worry about operationalizing so many different things. I think you just can't put all your eggs in that one basket. I think, that's the reality of it. And also in the news, Walmart announced on August 18th, they're Q2 numbers.
... announced on August 18th their Q2 numbers. And the one standout was their eCommerce sales grew by 97%. That is astonishing to say the least, specifically for Walmart. And my gut's telling me they're crushing it. And they recently announced Walmart Plus, which you can call it their membership, which a competitor to Amazon Prime and so on. I think the biggest news that also came out was the partnership with Instacart where they-
That certainly got a lot of attention.
Yeah, it did.
Not necessarily in the best way.

English: 
And I think they're doing
somewhere in the Midwest.
- Yeah, I think it was Tulsa.
- Tulsa, yeah and Oklahoma.
And so this should be quite
interesting in terms of where,
where could this partnership lead?
And we just don't know, now you know
the thing that we do so well
on this video series podcast,
video ca, I'm not sure what to call it,
or I'll just say what we do
so well on Digital Grocer.
- That's right digitalgrocer.com.
- Yes, it's okay.
I'm showing the social channels right now,
just below you and I.
- Excellent.
- And what we do so well
here on a Digital Grocer
is we bring the experts
to the table, right.
- And we've been fortunate to
have some great, great guests.
- Yeah and we haven't spoken
to this guest since we recorded
with him in studio, in Manhattan.
He is a very smart individual.
And I think you guys will recognize

English: 
No, not amongst the community retailers, for sure. Now they ended up they're piloting, I think, in four areas over in California. And I think they're doing somewhere in the Midwest.
Yeah. I think it was Tulsa.
Tulsa and Oklahoma. And so this should be quite interesting in terms of where could this partnership lead? And we just don't know. Now, the thing that we do so well on this video series podcast ... I'm not sure what to call it. I'll just say what we do so well on Digital Grocer.
That's right. Digitalgrocer.com.
Yes, I'm showing the social channels right now, just below you and I. And what we do so well here on Digital Grocer is we bring the experts to the table.
And we've been fortunate to have some great guests.

English: 
Yeah. And we haven't spoken to this gas since we recorded with him in studio, in Manhattan. He is a very smart individual and I think you guys will recognize just by the description. He says strategic eCommerce consultant, CEO, and founder of RMW Commerce. And by far an extremely brilliant strategist. And I want to welcome to the show, Rick Watson.
Thanks so much Sylvain and Mark. I appreciate you having me back on. I'm wondering if the expert guest will join us soon?
Oh, you're too modest. You're too modest. So-
You're on LinkedIn all the time, great thoughts. Great insights. Appreciate it, guys.
Yeah. You certainly know how to leverage the power of LinkedIn versus me who just gets people wanting to sell me consulting time and cheap labor overseas. I'm not sure what to do anymore. Rick, I'm really curious, what are your thoughts on this whole pilot between Walmart and Instacart?

English: 
this part of the description.
He's a strategic eCommerce consultant CEO,
and the founder of RMW Commerce.
And by far an extremely
brilliant strategist.
And I wanna welcome to
the show, Rick Watson.
- Thanks so much Sylvain and Mark.
I appreciate you having me back on.
I'm wondering if the expert
guests, will join us soon.
(laughing)
- Oh, you're too modest.
- So you're on LinkedIn all
the time and great thoughts.
Great insights.
- I appreciate it.
- Yeah I know, you certainly
know how to leverage
the power of LinkedIn versus
me who just gets people
wanting to sell me consulting
time and cheap labor overseas.
I'm not sure what to do anymore.
So hey Rick, I'm really curious.
What are your thoughts on this whole pilot
between Walmart and Instacart?

English: 
Yeah. I have two thoughts regarding this pilot. The first, my gut reaction is to feel bad for Walmart a little bit. And if you look at, even if you do some preliminary research, Instacart has pulled ahead of Walmart in online grocery just in the last few months. And so you can't help but wonder if this is a response to that. In some way that they feel like they're losing ground and they need to get more exposure, especially if they feel Amazon on their heels.

English: 
- Yeah, I have two thoughts
regarding this pilot.
The first, my gut reaction
is to feel bad for Walmart
a little bit.
And if you look at,
even if you do some preliminary research,
Instacart has pulled ahead
of Walmart in online grocery.
Just in the last few months.
And so you can't help but wonder,
if this is a response to that.
In some way that they feel
like they're losing ground
and they need to get more exposure,
especially if they feel
Amazon on their heels.
So that's kind of one, second is I think,
the other thing that could be happening
is that Walmart feels it can't keep up
with Amazon's digital investments.
You know, if you look at sort of okay,
what would Amazon do in this situation?
First of all, never go on Instacart.
You're never gonna see them in
a million years on Instacart,

English: 
but what about Walmart would
make them want to go on,
that would make Amazon not want to go on?
And what does that say about
their longterm position
in the space?
Generally, it doesn't say good things.
And I think, probably the
only other final point
I would have about this
is, is there an angle,
where Walmart is testing it to gain data?
- Right.
- And just using it for their
own competitive intelligence?
It's not something they plan to continue,
but Instacart can't say no.
And Walmart learns something.
And which case Walmart actually
has the upper hand here.
So that's the other scenario
we can probably dive into.
- Yeah, I think that, so you
touched on something for sure.
I mean, Mark and I have
been discussing two things.

English: 
So that's kind of one. Second is, I think the other thing that could be happening is that Walmart feels they can't keep up with Amazon's digital investments. If you look at, what would Amazon do in this situation? First of all, never go on Instacart. You're never going to see them in a million years on Instacart. But what about Walmart would make them want to go on that would make Amazon not want to go on? And what does that say about their longterm position in the space?
Generally, it doesn't say good things. And I think probably the only other final point I would have about this is, is there an angle where Walmart is testing it to gain data? And just using it for their own competitive intelligence, it's not something they plan to continue, but Instacart can't say no. And Walmart learns something, in which case Walmart actually has the upper hand here. So, that's the other scenario we can probably dive into.

English: 
One, could Walmart leverage
the Instacart marketplace
to its advantage?
To further, you know look at it this way,
the prices that they upload
to the Instacart marketplace
could be considerably
lower than everyone else.
So that's a significant advantage.
So that could be stealing
market share through
the marketplace.
That's number one.
Number two, I think the reality is,
right now, Instacart
is the only opportunity
for Walmart to scale its
delivery service immediately.
And I think Instacart is the
backbone for Walmart Plus,
in the long run.
- That's a bold statement.
- It's a density issue, right.
They can't--
- It is a density issue.
- They can't compete with Amazon on,

English: 
Yeah. I think you touched on something for sure. I mean, Mark and I have been discussing two things. One, could Walmart leverage the Instacart marketplace to its advantage to further ... look at it this way, the prices that they upload to the Instacart marketplace could be considerably lower than everyone else. So that's a significant advantage. So that could be stealing market share through the marketplace. That's that's number one.
Number two, I think the reality is right now, Instacart is the only opportunity for Walmart to scale its delivery service immediately. And I think Instacart is the backbone for Walmart Plus in the long run. Go ahead, Mark.
It's a bold statement.
It's a density issue. 
It is a density issue.

English: 
You can't compete with Amazon especially if you look at the markets that they're in, in Southern California. They can't compete with Amazon on OOP density. So if they're going to make a play for that market, who better than Instacart?
Yeah. And I've seen the speculation in the market about, well, could Walmart acquire Instacart? But what are you acquiring? Yeah, you're acquiring the technology, the base of gig workers and so on. But the reality is evaluation based on what? Because I think what's going to happen is the retailers that are currently on Instacart would start delisting. So you're losing revenue right now. And maybe Walmart doesn't care about that if they were to contemplate an acquisition.

English: 
especially if you look at
the markets that they're in,
in Southern California.
They can't compete with
Amazon on route density.
So if they're gonna make
a play for that market,
who better than Instacart?
- Yeah and I've heard,
I've seen the speculation
in the market about well,
could Walmart acquire
Instacart but what are you,
acquiring like yeah, you're
acquiring the technology,
the base of gig workers and so on.
But the reality is
evaluation based on what?
Because the reality that I think what's
going to happen is, the
retailers that are currently
on Instacart would start delisting.
So you're losing revenue right now.
And maybe Walmart doesn't
care about that if they were
to contemplate an acquisition.
But I get concerned for the retailers
that compete against Walmart.
That suddenly you're on a platform,
you have zero control,
zero differentiation
and price becomes the key
differentiator potentially.

English: 
But I get concerned for the further retailers that compete against Walmart. That suddenly you're on a platform you have zero control, zero differentiation and price becomes the key differentiator potentially. And we've seen the studies that were published by Barclays, I think this was in 2018, 2019. And the brand loyalty from the consumer to the retailer doesn't exist in the marketplace. It's really all fundamentally about the Instacart brand. What are your thoughts, Rick, on Walmart, Plus I'm kind of curious. Is this a competitor to Amazon Prime?

English: 
And we've seen the studies that
were published by Barclays.
I think this was in 2018, 2019.
And the brand loyalty from
the consumer to the retailer,
doesn't exist in the marketplace.
It's really all fundamentally
about the Instacart brand.
What are your thoughts,
Rick, on Walmart Plus,
I'm kinda curious.
Is this a competitor to Amazon Prime?
- I think look, there are a lot of people
that are Walmart shoppers
that aren't going anywhere.
They are not gonna do most
of their shopping online.
They are target has shown,
that you can definitely
have people pick up on the store.
They fulfill about 90%
of their online orders
from their stores.
I don't know what Walmart's numbers
is for those same effects.
So it's kind of a no brainer,
like how do we get to 2020

English: 
and Walmart not have a
unified a loyalty program?
And the biggest retailer in
the world, it makes no sense.
So, that's kind of where I start from.
As, two weeks ago, I knew
the numbers of how many
Amazon Prime households
are the top, you know,
percentage of Walmart families.
And the number is increasing quite a bit.
It's you know, it's like
30, 40% of the top Walmart
spending families are
also Amazon Prime members.
So they definitely feel that threat.
I'm not sure it's a replacement,
I think you're gonna have both,
particularly in the affluent
shoppers which is the ones
that everyone's shopping for.
No, one's gonna balk over
spending another $80 a year,
if you're a frequent Walmart shopper,
but you're probably also
gonna buy on Amazon.
So that's kind of where
I start from on this.
- Yeah, I think the big
hook for Walmart Plus
is the fact that they're kicking any fuel

English: 
I think there are a lot of people that are Walmart shoppers that aren't going anywhere. They aren't going to do most of their shopping online. Target has shown that you can definitely have people pick up in the store. They fulfill about 90% of their online orders from their stores. I don't know what Walmart's numbers is for those same effects. So it's kind of a no brainer, how do we get to 2020, and Walmart not have a unified loyalty program? And the biggest reason-
... Walmart not have a unified loyalty program, they're the biggest retailer in the world, it makes no sense. So that's where I start from. As two weeks ago, I knew the numbers of how many Amazon Prime households are the top percentage of Walmart families. The number's increasing quite a bit.
Wow!
It's like 30, 40% of the top Walmart spending families are also Amazon Prime members. So they definitely feel that threat. I'm not sure it's a replacement. I think you're going to have both, particularly in the affluent shoppers, which is the ones that everyone's shopping for. No one's going to balk over spending another $80 a year if you're a frequent Walmart shopper. But you're probably also going to buy on Amazon. So that where I start from on this.

English: 
rewards program where you
get 5 cents off every gallon.
I mean, I did a quick
calculation yesterday evening.
So if your car has a 16 gallon
tank and the average cost
of the gallons, $3.85 cents
and say you save 5 cents.
And if you gas up once a week,
you'll pay for half of your
membership in one year.
I think the economics
kind of just make sense.
- Yeah, I don't know their
gas rates similar to I mean,
Sam's club and BJ's and all
these other warehouse clubs
also have gas, as programs as well.
So it'll be interesting to
see if that changes usage
there or not.
- So Rick what are you
hearing from retailers
through the pandemic right now?
I mean, to me it seems
like a hodgepodge of people
are not doubling down on strategy.
It's just like, you know,
let's just keep the doors
open and no one's taking

English: 
Yeah. I think the big hook for Walmart Plus is the fact that they're kicking in a fuel rewards program where you get five cents off every gallon. I mean, I did a quick calculation yesterday evening. So if your car has a 16 gallon tank and the average cost of a gallon is $3.85 cents and say, you save five cents. If you gas up once a week, you'll pay for half of your membership in one year. I think the economics just make sense. Yeah.
I don't know their gas rates similar to... I mean, Sam's Club and BJ's, and all these other warehouse clubs also have gas programs as well. So it'll be interesting to see if that changes usage there or not.

English: 
Rick, what are you hearing from retailers through the pandemic right now? I mean, to me, it seems like a hodgepodge of people are not doubling down on strategy. It's just like, "Let's just keep the doors open." No one's taking the opportunity to reinvent themselves. What are you seeing out there?
I do see some signs that some retailers are looking to leverage online channels, not necessarily make it core to what they're doing. For instance, there are a lot of brands that drop ship for major department stores everywhere, but there are many that don't, drop shipping is a foreign concept. When you can't sell... And the wholesale is really their business, that's the mindset of the CEO on everyone on down, everyone in the merchandising team, wholesale, wholesale, wholesale, because online, is what? Maybe 5% of their sales, or 8% of their sales. All of these people suddenly had 12 drop ship projects on their roadmap overnight.
Wow!

English: 
the opportunity to reinvent themselves.
What are you seeing out there?
- I do see, some signs that
some retailers are looking
to leverage online channels,
not necessarily make it core
to what they're doing.
For instance, there are a
lot of brands that drop ship
for major department stores everywhere.
Or and then, but there
are many that don't,
drop shipping is a foreign concept.
And when you can't sell
and the wholesale is really
their business, that's
the mindset of the CEO
on everyone on down, everyone
in the merchandising team,
wholesale, wholesale, wholesale, you know,
because online is what
maybe 5% of their sales
or 8% their sales.
All of these people suddenly
had like 12 drop ship projects
on their roadmap overnight (laughs).
And so a lot of these brands
are scrambling to keep up,
with that roadmap and
to get good at something

English: 
So a lot of these brands are scrambling to keep up with that roadmap and to get good at something that they've never had to get good at before, which is fulfilling directly to consumers in eaches. So I wouldn't call that digital transformation by any stretch. In fact, you might call it the opposite. They were forced to do something while revenue was zero, literally zero for at least a month in retail for wholesale buys. What else are they going to do? But it doesn't change fundamentally the organization. You're not going to redo any IT systems in three months, particularly the older ones.
No.
So we definitely do see the importance of direct-to-consumer increasing, but it's still slower than you would think, even with the acceleration in the pandemic of buyer behavior.

English: 
that they've never had
to get good at before,
which is fulfilling directly
to consumers, in eaches.
And so I wouldn't call that
digital transformation,
by any stretch.
And in fact, you might
call it the opposite.
Like they were forced
to do something while,
revenue was zero, literally
zero for at least a month
in retail for wholesale buys.
And what else are they gonna do?
But it doesn't change
fundamentally the organization.
You're not gonna redo any
IT systems in three months,
particularly the older ones.
And so, we definitely do see,
the importance of direct
consumer increasing.
But it's still slower
than you would think.
Even with the acceleration in the pandemic
of buyer behavior.

English: 
- Yeah and I think in the
next, six to 12 months
are gonna be even more interesting.
And I think we're gonna continue seeing
dynamic changes in the marketplace.
I think players that are
there today are no longer
going be and we're now
seeing that in the grocery,
retail industry with, I
think it was Stein Mart
filed for bankruptcy.
I think we're gonna continue
seeing those as well.
And I think there's,
this is an opportunity for
those retailers to really
kind of, I think it's
not just doing, I mean,
that's what's happening today,
but I think an opportunity
to kinda think longterm,
really, where do they wanna
be with their business?
And when we're still seeing
some retailers struggle
operationally to kinda handle the volume.
And you know, there is
this underlying fear.
If a second wave comes in,
that's much stronger than the first,
will grocery stores be asked to shut down
and only service their
consumers through curbside,
click and collect or delivery.

English: 
Yeah. Yeah. I think the next six to 12 months are going to be even more interesting. I think we're going to continue seeing dynamic changes in the marketplace. I think players that are there today are no longer going to be. I mean, we're seeing that in the grocery retail industry, I think it was Steinmart filed for bankruptcy. I think we're going to continue seeing those as well. I think this is an opportunity for those retailers to really... I think is not just doing, I mean, that's what's happening today, but I think an opportunity to think longterm really where they want to be with their business. I mean, we're still seeing some retailers struggle operationally to handle the volume and there is this underlying fear, if a second wave comes in, that's much, much stronger than the first, will grocery stores be asked to shut down and only service their consumers through curbside, click-and-collect, or delivery? I mean, we had that discussion on our webinar yesterday with one of the vice presidents from FMI. So it's certainly on top of mind. Rick, I want to say thank you so much for joining us. How do people get ahold of you?
Yeah, so obviously you can find me on LinkedIn, search for Rick Watson. You'll find me, the one with all the eCommerce there. My email address is rick@RMWcommerce. com. Or you can reach me on the web, RMWcommerce.com, the website.
Perfect. Thank you so much. Mark, always amazing to record another episode with you.
First one in the can.

English: 
I mean, we had that discussion
on a webinar yesterday
with one of the vice
presidents for an FMI.
So it's thrilling on top of mind.
Rick, I want to say thank
you so much for joining us
and how do people get ahold of you?
- Yeah, so obviously you
can find me on LinkedIn,
search for Rick Watson.
You'll find me the one
without the eCommerce, there.
My email address is rick@rmwcommerce.com.
or you can reach me on the web,
rwmcommerce.com the website.
- Perfect, thank you so much.
Mark always amazing to record
another episode with you.
- First one in the kend.
- First one in the kend,
ladies and gentlemen,
thank you for tuning in really
appreciate and do not forget
to go ahead and visit our website,
at digitalgrocer.com
and like and subscribe
on the social channels

English: 
and this will be available on YouTube,
but also on your favorite podcast player.
Thank you everyone.
(upbeat music)

English: 
First one in the can. Ladies and gentlemen, thank you for tuning in, really appreciate and do not forget to go ahead and visit our website, digitalgrocer.com and like and subscribe on the social channels. This will be available on YouTube and also on your favorite podcast player. Thank you everyone.
