Episode 222
September 22, 2021

"It's Just Not Who We Are"

Phillip and Brian are live from Groceryshop in Las Vegas and we take back what we said last week...events are coming back! Listen now to hear our thoughts on all things grocery and the future of DTC in grocery.

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this episode sponsored by

DTC Comes of Age in Grocery

  • Grocery is one of the most complicated forms of retail that exists, leading it to be the one of the biggest forms of retail. 
  • “We talk a lot about retail. We talk a lot about CPG. And I mean, we talk a lot about eCommerce just generally, which a lot of focus of the scale of eCommerce has been in the direct to consumer movement over the last couple of years. But grocery is where it's at right now.” -Phillip
  • The pandemic was in many ways a great accelerant for grocery. It’s allowed grocery retailers to evolve in many areas, including eCommerce grocery shopping. Grocery isn’t turning back to the way it was before.
  • Because of this acceleration, grocers are innovating across all aspects of the business from eCommerce (which was virtually nonexistent just 5 years ago for most grocers), to supply chain, to adapting to changes in customer demand and expectations.
  • Grocers are meeting the evolution of customer expectations by providing higher levels of personalization… which is also doubling as advertisement for products. 
  • Why did Albertsons close their marketplace during the pandemic?? Literally no one actually knows and it wasn’t answered adequately in their session. Apparently, according to Chris Rupp it’s “just not who we [Albertsons] are.”
  • Basically the whole world is just run from csv files. 
  • The web marketplace is one of the hardest things to run, in fact it's almost impossible. In order to execute you have to have a product mindset innovation. 
  • “There's been a lot of innovation and not just that at the retail level of grocery, but also at the product CPG sort of level of grocery as well. Over the past 18 months, we've seen a lot of new players in this market, and they’re all trying to get into the physical store.” -Brian

Associated Links:

Phillip: [00:00:00] Yeah. Comma separated value files runs the whole world.

Brian: [00:00:03] Yes. You think APIs, but it's mostly...

Phillip: [00:00:06] It's not. It's all flat file text files. I'm Phillip.

Brian: [00:01:48] I'm Brian.

Phillip: [00:01:49] And we are a Groceryshop, and I'm not really quite sure how this episode is going to shape up, but we've got a quick one for you. We both just walked out of the main opening session at Groceryshop 2021, and first reactions...

Brian: [00:02:05] First reaction was it's standing room only.

Phillip: [00:02:08] It's packed here.

Brian: [00:02:09] This is crazy. Coming off Retail X, I'm like, what? Like sacrificial lamb what?

Phillip: [00:02:17] Yeah, completely negates everything we said in our last episode about events, probably through the end of the year are going to be really rough. Gosh. So we were talking just before we started recording about why that might be. Like, why are 2100 attendees here at Groceryshop right now, right?

Brian: [00:02:38] Yeah. I think.

Phillip: [00:02:38] That's what they said on board.

Brian: [00:02:39] I mean, it felt like it. That's for sure.

Phillip: [00:02:41] I posted a picture to my Twitter, and we need to link that up in the show notes, because it was the Sunday evening opening session.

Brian: [00:02:51] Sunday evening. {laughter}

Phillip: [00:02:54] Which, if you have ever done trade shows, ever, vendors do not attend main sessions generally. And they certainly don't attend the main session the night before the opening of the expo.

Brian: [00:03:09] Right, like they might attend opening keynote the day of Expo. Maybe.

Phillip: [00:03:15] They may. Certainly not everybody.

Brian: [00:03:18] Yeah, certainly not everybody.

Phillip: [00:03:19] And this is standing room only in the Expo. Completely flawed. So this show also, stark contrast to other retail shows so far. They did not shorten this show at all.

Brian: [00:03:33] Nope.

Phillip: [00:03:34] If anything, it feels like it's like one day longer than what Groceryshop was in years past.

Brian: [00:03:39] Yeah.

Phillip: [00:03:41] Groceryshop is usually a three day event, Shoptalk's a three day, maybe four day event if you count like some of the learning sessions on either side. Expo opens tomorrow. But this show is packed.

Brian: [00:03:53] I mean, give me some hypotheses about why you think this might be the case, because I mean, this is night and day.

Phillip: [00:04:00] We were just talking about this. I think a couple of reasons. One, so if you haven't heard our last episode, {laughter} we titled it, "Are Industry Events Ever Coming Back?"

Brian: [00:04:12] They're back, baby. {laughter}

Phillip: [00:04:15] That was the title of the episode. {laughter} I can't. I can't even get over that.

Brian: [00:04:18] This was amazing. I love this.

Phillip: [00:04:21] I can't get over. I really can't get over it. So yes, I guess. Yes, industry events are coming back. Why? Why was Retail X a ghost town, and Groceryshop is a boomtown?

Brian: [00:04:33] I mean, this is what I was just asking you, I'll give you my thoughts very quickly. And one, I think, grocery has a lot of tailwinds right now. I mean, grocery was one of the industries that probably fared the best actually during the pandemic. Grocery stores stay open. People ordered groceries. They actually...

Phillip: [00:04:54] Critical infrastructure, right?

Brian: [00:04:55] A lot of investment in grocery and a lot of sales in grocery. In fact, people were buying a lot of things they probably didn't buy through grocery before, but they're buying them now.

Phillip: [00:05:08] Yeah, exactly. And we heard about some of that just now in the opening session.

Brian: [00:05:12] Right.

Phillip: [00:05:13] Some of the crazy numbers that came out of that opening session... I was kind of floored at the the scale of Kroger and Albertsons in particular, one of the panel speakers whose name I'm like, I'm busking right now because I can't remember. See, I think Rodney McMullen. Is his CEO over at Kroger? I believe so.

Brian: [00:05:38] I'm not sure if he's CEO, but...

Phillip: [00:05:38] Rodney Rodney McMullen had said that five years ago, their digital business was zero dollars, and today it's 10 billion. Ten billion dollars with their eCommerce business, their digital business at Kroger, and their supply chain innovation, too, is like through the pandemic over the last 18 months, they had created a new program to get food to stores faster.

Brian: [00:06:10] Right.

Phillip: [00:06:11] And so most products that are sold in the store, fresh products, are arriving to the store within twenty four hours of harvest, pick, or slaughter.

Brian: [00:06:25] It's amazing because, you know, if you think about it, grocery is actually one of the most complicated forms of retail that exists.

Phillip: [00:06:32] Yeah. And it's one we don't talk about enough.

Brian: [00:06:35] Yeah.

Phillip: [00:06:36]  [00:06:36]We talk a lot about retail. We talk a lot about CPG. And I mean, we talk a lot about eCommerce just generally, which a lot of focus of the scale of eCommerce has been in the direct to consumer movement over the last couple of years. But grocery is where it's at right now. [00:06:53]

Brian: [00:06:53] Yeah, definitely.

Phillip: [00:06:54] Especially when you think about innovation and the amount of investment that has come into what has traditionally been very stodgy business model.

Brian: [00:07:06] Right. This is finally the year. I mean, we've been to many Groceryshops now and all of the technology has sort of been there. And I mean, dare I go back and say this yet again? But like the pandemic was in many ways, the great accelerant for grocery and allowed them...

Phillip: [00:07:21] They said that in the session.

Brian: [00:07:22] Yeah, I know. But to finally make those investments that they wanted to make that Groceryshop has been talking about for years, actually. And finally, like the impetus was there. The reason was there. Everything, everything sort of aligned for grocery. And now, I mean, [00:07:41] I actually don't see grocery turning back. I mean, there will be and has been some return to original behavior, pre-pandemic behavior. But there's also a lot that has changed. And I think that consumers are actually looking for more out of grocery. I feel like. And I think that groceries got a roadmap coming up here that's going to surprise consumers. It's going to get even better. We're going to see a lot more investment in things that are more convenient that are more like Amazon Go and Amazon. [00:08:16]

Phillip: [00:08:16] Well, that's a really great segue. Well, they had showed in the opening remarks a video of Anil Aggarwal from last year, who's the former president, I believe, of Groceryshop? And Shoptalk? Founder...

Brian: [00:08:30] Yeah, correct. He sold it off.

Phillip: [00:08:33] And then I think they launched the digital product and then divested or, you know, they sold off both the other physical property. Anyway. He no longer at the head of Groceryshop, but they featured his remarks of saying like, "It's never been harder than it is right now." This is like 2019. It was the last physical Groceryshop. It was like, "It's never been harder than it is right now. Customers' expectations are higher, their demands are higher. But personnel and the workforce is like exhausted and they're tired." It's like that was before the pandemic?

Brian: [00:09:21] Before the pandemic, yeah.

Phillip: [00:09:22] Setting the stage. It's like innovation kind of needed to happen everywhere. And one of the things I thought was a really interesting take, which I can't remember the name of one of the remarks was there's a vertical farming startup that's based in New York that was mentioned as an aside and I want to say Greens was in the name, I can't remember the name. But they were talking about the inefficiencies of having to meet the demand in the pandemic of produce and folks shopping from grocery where they otherwise would have gone out to eat in a restaurant.

Brian: [00:10:06] Right.

Phillip: [00:10:06] That was another remark is, you know, we think we have it hard in grocery, I definitely wouldn't want to be in restaurant right now.

Brian: [00:10:16] Right.

Phillip: [00:10:16] And but so they had to go out to all these new suppliers during the pandemic to try to meet demand. And you think about at the same time all these meal kit start ups and all these meal delivery at home delivery, they all have, they're all trying to go to the same suppliers, too. So it's providing this growing pie for all of this innovation even in supply chain. It's not supply chain innovation in like the logistics side of supply chain, it's supply chain innovation like literally the growing of things. And they were saying that there is where it would typically take four to six gallons of water to grow a head of lettuce in a traditional like planted in a field, now in these vertical farming startups, it takes, you know, one to two gallons of water. So I like that there's a lot of focus there of innovation isn't just in the technology part of it, it's also in who the suppliers are and getting those into the store. Speaking of which, that kind of takes us to private label, right?

Brian: [00:11:20] Right.

Phillip: [00:11:21] Because that was addressed in this opening session as well. So there was this whole conversation. Chris Rupp of Albertsons mentioned it, and she's ex Amazon. She spent a decade at Amazon. Now she's Chief Digital Officer, I believe, at Albertsons.

Brian: [00:11:38] Yeah.

Phillip: [00:11:39] And she had said their approach to loyalty now it's called For You, which immediately makes me think of the For You page on TikTok, but it's personalization. And so there was like two things that she said in that that like blew my mind. The first was that personalization, as far as Albertsons is concerned, is getting the right offer to the right customer based on their preferences and their shopping behaviors. And what she said was because coupons are basically advertising, not a disconnect.

Brian: [00:12:14] Right. Correct.

Phillip: [00:12:15] It's advertising. And this is seeing that as a platform, which I'm sure every grocer would know and everyone's probably rolling their eyes at me that I'm having this revelation. But it is advertising. And what are all of the innovations in advertising based on in the last 10 years? It's the personalization and that like freaky, personal, like absolute for you page style, algorithmic driving of what is unique to Brian Lange or Phillip Jackson. And that's the kind of advertising innovation that and only an Amazon exec coming into Albertsons would think of is like, oh, let's put this into our loyalty. But the other part of that was the loyalty is how they're giving you, so through the For You app rewards program, it's how they're giving you free delivery and they're also giving five percent off all their private labels. And it's like this unfair advantage. They control the demand by controlling it advertising platform. They're controlling themselves front running it by giving themselves a five percent discount on their own products over manufacturers who are, I'm guessing, paying to also be part of the advertising program in the For You. And they're also unfairly competing in like this incredible way by having, you know, delivery innovation and driving folks into that loyalty program, effectively an advertising program, by offering free delivery.

Brian: [00:13:42] Right. It's insane. Yeah. Kroger's been doing the same thing for years. And honestly, if there's anyone out there that has probably the best set of data on my household, it's Kroger and Costco, those are the two. Because first of all, I've been in the Kroger loyalty program for years, and they have literally years of data.

Phillip: [00:14:01] Is it years worth of data?

Brian: [00:14:04] Years.

Phillip: [00:14:04] Ions worth of data.

Brian: [00:14:07] Ions. Mountains of data. Lakes of data. On me. But they've been personalizing coupons for me for several years now.

Phillip: [00:14:15] Where do you get those coupons?

Brian: [00:14:16] They mail them to me.

Phillip: [00:14:18] They may they mail them to you.

Brian: [00:14:19] They mail them to me.

Phillip: [00:14:20] How do they personalize in the mail?

Brian: [00:14:21] In the mail stuff of yes, based off my purchasing history.

Phillip: [00:14:25] So do you get a point of purchase coupons?

Brian: [00:14:30] They're also personalized as well, not on the receipt, but they print them out in like a separate...

Phillip: [00:14:34] It's a separate thing?

Brian: [00:14:35] Yes. Separate printer.

Phillip: [00:14:35] Oh wow.

Brian: [00:14:35] We get those as well. And we talked about what apps we've downloaded recently.

Phillip: [00:14:40] Oh, we did that in the last one.

Brian: [00:14:41] We did.

Phillip: [00:14:42] You just downloaded the Kroger app?

Brian: [00:14:45] I had just downloaded Kroger app. Like that was one of the few that I actually had recently downloaded simply for the digital coupons because I've noticed that a lot of their coupons opportunities are moving to digital in-store and I'm missing out. I mean, obviously I've got a large household. Everyone that's listening for a while knows that.

Phillip: [00:15:03] It's not just children, it's dogs and cats...

Brian: [00:15:06] Yeah, I've got a lot to buy. My grocery budget is big.

Phillip: [00:15:10] Yeah.

Brian: [00:15:12] And so this type of loyalty program is next level. No other retailer is doing this for me, like no other retailer, not even Costco. We could get to that in a minute, but like not even Costco is personalizing for me at the level that Kroger is.

Phillip: [00:15:31] It's true. It's funny because I was talking about Albertsons, and then you brought it back to cost to Kroger. These are behemoths, right? Like, they're as big as it gets. Kroger, to your point in the session, said that they cover 60 percent of the country. You know, 60 percent of American households are served by Kroger and their mission was... What was it? The mission statement was so good. I think it's in a tweet thread that I just posted. It's basically like to feed the spirit. It's not just feeding the body, it's like feeding the spirit. And so they have all these, you know, zero waste programs. There's all these innovations and all these programs that they want, but they're serving two out of every three Americans. And when asked about what the plan is for the other third, they mentioned like basically outpost delivery and locker.

Brian: [00:16:39] Yeah.

Phillip: [00:16:40] And that... Is there a future where you can have effectively grocery pop up, where the Kroger brand could penetrate into a market that say a Publix... Like Kroger is not in South Florida.

Brian: [00:16:56] Blows my mind, actually.

Phillip: [00:16:59] Well, it's funny because they own Vitacost, and the old Vitacost campus in Boca Raton is now Kroger center of innovation. But they have no physical stores in South Florida. {laughter}

Brian: [00:17:09] Are you sure? Did you double check that?

Phillip: [00:17:12] I'm pretty sure.

Brian: [00:17:12] They own a lot of different side brands. Like QFC and Fred Meyer and such. But in California, it's like Ralph's, right?

Phillip: [00:17:21] Yeah.

Brian: [00:17:21] They're everywhere and you don't even know it, or at least a lot of consumers don't know it.

Phillip: [00:17:25] I am checking as we speak right now. Yeah, there's no such thing. They do have... I do see a press release from June and then again from July is that Kroger is looking to extend, this is exactly what we were just talking about. Kroger is looking to extend operations into heavily populated areas like South Florida, and it will have a hub in those facilities for delivery and locker only.

Brian: [00:17:52] Oh my gosh, it's so good. Like, it's genius. Building out supply centers first and then bringing physical stores after.

Phillip: [00:18:01] Well, I mean, physical stores would need supply and distribution anyway, right? But the idea is that the store is not really... This is the transcendence of my understanding of what retail is, actually not even retail, grocery in particular.

Brian: [00:18:15] Yeah.

Phillip: [00:18:15] Is that the brand doesn't necessarily encompass... Your feelings of the brand aren't necessarily locked up in the physical bricks and mortar. Unlike a Target, which is kind of experiential, of retail. The Target experience isn't had by having their Shipt bring Target to you, as much as the experience that I have with doing Whole Foods delivery is very Whole Foods.

Brian: [00:18:46] Right, right. Yes, totally.

Phillip: [00:18:47] It feels like Whole Foods to me. And I find that if Kroger, what is the power of a brand that serves two thirds of Americans and feeds them on a weekly basis to be able to launch into a new market with no physical retail footprint? And that is bonkers to me, and that actually kind of brings us to this insane proposition of how Albertsons has retreated from web.

Brian: [00:19:15] I was just thinking about the same exact same thing. We got this great contrast because it went from Kroger to Albertsons. But here's Kroger like, "We're absolutely destroying it in digital." And then like the very next session, Albertsons doing incredible things, saying, "Oh, we're not a technology company, we're a food company."

Phillip: [00:19:39] And that's what Chris Rupp said. She said that. Verbatim.

Brian: [00:19:41] She actually said that. Verbatim. Yeah. Or I shouldn't say verbatim, but near verbatim.

Phillip: [00:19:45] Yeah, as according to Brian Lange.

Brian: [00:19:48] Yes.

Phillip: [00:19:49] That's what she said.

Brian: [00:19:50] And what blew my mind and maybe this is old news. But like they retreated, they cut off their marketplace, which...

Phillip: [00:20:01] Famously...

Brian: [00:20:02] Famously like a big Magento/Mirakl implementation.

Phillip: [00:20:07] Mirakl, the Marketplace services Saas offereing.

Brian: [00:20:08] Correct. And Magento, the commerce platform now called Adobe Commerce.

Phillip: [00:20:12] Yeah. Let's role play out a little bit, because we both come from the Magento ecosystem, but maybe not even role play.

Brian: [00:24:56] I mean, that would be kind of fun. I love role play.

Phillip: [00:24:58] We could role play, but I would like to hypothesize a little bit. What Chris Rupp said was, and they addressed it like it was an elephant in the room...

Brian: [00:25:09] Yeah, it was really awkward. It almost felt like the person who was asking the question, it felt like they didn't know that the marketplace had been shut off.

Phillip: [00:25:22] No. It felt like, I don't know. Maybe. It felt like a leading question, if you ask me.

Brian: [00:25:27] I don't know.

Phillip: [00:25:27] Jon Springer from Winsight, who's the Executive Editor for Grocery. I have to assume that he would know.

Brian: [00:25:35] And maybe he did know, but it was like it was awkward.

Phillip: [00:25:41] It seemed like they needed to address... I have done this before.

Brian: [00:25:44] Yeah, yeah.

Phillip: [00:25:45] Yeah, OK. I have been...

Brian: [00:25:48] On a panel.

Phillip: [00:25:49] I've done panels, especially at big, you know, media shows like this. I know how prepped these executive interviews are.

Brian: [00:26:00] Right.

Phillip: [00:26:00] I know how scrutinized the line of questions are and especially when you're a show like this, you definitely don't want to throw curveball questions at an executive who is in your opening remarks, right? We need them at the show, and you don't want to lose them in the future. So this was like, I'm thinking this was labored over and they saved it until the end. And then they came back with like a little pivot question at the end, which is like, "What are the headlines you're going to make in the future?" And she said something that's completely forgettable.

Brian: [00:26:32] But I do, maybe you're right, because actually, now that I think about it.

Phillip: [00:26:37] Multiple comms teams went back and forth on this line of questioning. I'm telling you. I've been in those rooms.

Brian: [00:26:44] Yeah.

Phillip: [00:26:44] Multiple people thought intensely, why does this question need to be in this session, and how are we going to answer that question? Why did you shut off your marketplace?

Brian: [00:26:57] The lead here was we're not a technology company. That was where they were going with that.

Phillip: [00:27:02] I need to rewatch. I don't know if there's a way to rewatch the session. I need to see.

Brian: [00:27:07] I think there are. There will be afterwards.

Phillip: [00:27:08] I need to see it again because I really need to read...

Brian: [00:27:13] Play by play. Slo-Mo replay.

Phillip: [00:27:14] Because I didn't know what was happening. And I'm sure if you're listening to this right now, you don't understand the gravity of what it is. The Magento and Mirakl partnership in the Albertson's marketplace was probably one of the largest case studies and like largest touted use case for giant retail that probably single handedly helped close the Adobe acquisition. It was like the logo. Honestly, it was at a scale and visibility that it was very hard to ignore. And it won awards multiple years in a row.

Brian: [00:27:52] Yeah, there were a few. There are a few big implementations. That was one of the big ones.

Phillip: [00:27:56] Yeah, I'm trying to bring some gravity to this.

Brian: [00:27:58] Yeah.

Phillip: [00:27:59] It's a big deal.

Brian: [00:28:00] And it needs to. It was a big deal for sure.

Phillip: [00:28:02] And I think it's an even bigger deal that they shut it down and the triply as big of a deal, that they then had to address the shutting down of their web marketplace in this session. Now wait...

Brian: [00:28:15] How long ago was it? Actually, I really wish I knew when exactly this happened. Was it during the pandemic? You shut down your digital marketplace during a pandemic?

Phillip: [00:28:24] Keep talking. I'm going to look it up.

Brian: [00:28:29] I really want to get to something we were talking about that earlier before we started podcasting. This is where I'm leading you right now, which is why would you shut down your digital marketplace?

Phillip: [00:28:44] January 7, 2021 was when they made the...

Brian: [00:28:47] Yeah, during the pandemic.

Phillip: [00:28:49] They shifted to third party online grocery delivery in markets, and they ceased its own online grocery delivery operation. And they are moving exclusively to third party delivery partners, meaning for Albertsons, Shipt... Who else, Instacart, right?

Brian: [00:29:12] Yeah, mostly. And then DoorDash.

Phillip: [00:29:16] DoorDash. These are the ones who were doing...

Brian: [00:29:19] That was their big announcement. Double Dash.

Phillip: [00:29:22] Double Dash?

Brian: [00:29:23] Did you not hear that?

Phillip: [00:29:24] No. What was that?

Brian: [00:29:25] It was like they're doing a new partnership with DoorDash, where you can do two stops. That's the Double Dash. That was one of the big announcements.

Phillip: [00:29:37] Pretty soon if you extrapolate these delivery services and Uber and anything else that powers these last mile delivery services and just in time workforce, if you extrapolate it to its logical end, you're just going to have a portion of your income that's like basically a full time butler that you're paying for.

Brian: [00:29:59] Man, I've been saying this for years.

Phillip: [00:29:59] I know you have. I know you have.

Brian: [00:30:02] You might as well just have a butler. Quit paying delivery fees. You know, just hire a personal butler and call it a day.

Phillip: [00:30:10] Chase Sapphire Rewards will subsidize part of it for you.

Brian: [00:30:13] Oh my gosh. That's genius.

Phillip: [00:30:15] The butler reward.

Brian: [00:30:16] I love this, actually.

Phillip: [00:30:17] I know you do. I love it. Because you've been talking about butlers for years.

Brian: [00:30:20] I have.

Phillip: [00:30:21] I feel like it's just further entrenching us in a servant class and like proletariat class, but whatever.

Brian: [00:30:27] I mean, that's already happening. But I mean, it's all fractionalized and it's all really disconnected and people can treat each other like trash. When you have a butler, you have to treat that person well because they're your butler.

Phillip: [00:30:41] And you know what too? You have to pay payroll taxes for that butler as opposed to the 1099 relationship that's disintermediated by, you know, some multi-sided marketplace, you know, technology that's funded by Silicon Valley and venture capital on Sand Hill Road. Long, long story short, coming back to which ultimately, by the way, is all of our pensions. That's how it's all paid for is Boomers. Thank you, Boomers.

Brian: [00:31:08] Is it Boomers, though?

Phillip: [00:31:10] Millennials don't have pensions.

Brian: [00:31:12] That's true.

Phillip: [00:31:12] Who has a pension? Do you know a millennial that has a pension?

Brian: [00:31:15] Like one.

Phillip: [00:31:15] Maybe a teacher? If they'll stay teachers. That's the other problem is all these like pension funds in these states that are, you know, typically go to first responders and educators, it's like, who wants to be a first responder or an educator nowadays? It's crazy.

Brian: [00:31:34] It's so tough. No, the only person that has a pension is in sanitary, and they've got a great pension.

Phillip: [00:31:39] Ok. I mean, that's a yeah, I suppose. That's a whole other... I'm sure there are other industries that have pensions. I can't think of them right now.

Brian: [00:31:48] Yeah, I can't think of them right now, either.

Phillip: [00:31:50] What's venture capital going to do without the liquidity of pensions? It's like, is it all just going to come from like JPEG billionaires now?

Brian: [00:31:56] Yeah. And there's a huge shift in wealth, but we can talk about that in a later episode. I want to get back to...

Phillip: [00:32:00] Yes.

Brian: [00:32:01] This was a huge parenthetical statement here.

Phillip: [00:32:03] Yes, it was. And I loved it.

Brian: [00:32:05] Super fine. I want to go down the rabbit hole again.

Phillip: [00:32:07] The point really is that their abandonment of their web marketplace, Chris Rupp said, and I believe she said this. I'm going to quote her and again, we'll go back and rewatch the tape. I'm pretty sure, she said, "It's just not who we are."

Brian: [00:32:21] Yeah.

Phillip: [00:32:22] That's what I believe she said is like Albertsons Marketplace, web marketplace in particular, it's just not who we are. Third party delivery apps can do it better, and that's where they've put their bet. You contrast that against the Kroger of the world who is doing web marketplace, and they're doing it both right? You have to wonder what happened that they retreated from a web marketplace?

Brian: [00:32:49] Yeah, another parenthetical statement, I swear. We're just getting closer and closer to football here. Like you just said, we need to watch the tape.

Phillip: [00:32:57] Yeah.

Brian: [00:32:58] The playbook has changed. Very soon it's just going to be X's and O's on a white board.

Phillip: [00:33:04] That's really what it is. They are. They're playbooks and they're strategies.

Brian: [00:33:10] But back to what you just said. So you do have to wonder what just happened because as you told me just before we got on this podcast, and I keep trying to get you to say this again.

Phillip: [00:33:21] You say it for me because I apparently can't be set up.

Brian: [00:33:23] The internet is literally just run, all enterprise software is just run on CSVs.

Phillip: [00:33:30] That's right.

Brian: [00:33:31] Like most of the business, is run on CSV files.

Phillip: [00:33:35] Yeah, comma separated value files runs the whole world.

Brian: [00:33:39] Yes, you think its APIs, but it's mostly CSVs.

Phillip: [00:33:42] It's all flat file text files. ACH, famously [00:33:46]... There's a huge Twitter thread I had hundreds of thousands of likes recently that was describing what global payments really is. It's just a giant CSV file. It's like ACHs, you know why it takes two to three days for an ACH to go through? It's because it's a gigantic CSV file that sometimes gets corrupted by a bad quote and a comma. That is how the world works, is that we build civilizations on top of the ruins of other civilizations where, like the Romans and the Greeks, did it before. Yeah, well, we do it digitally now. [00:34:24]

Brian: [00:34:26] Did we talk about why roads are the width they are? Have we talked about this?

Phillip: [00:34:31] No. Tell me.

Brian: [00:34:32] Ok, so the reason why is because it's the width of two horses butts, basically, and you can actually trace it all the way back. Like, Oh, because the cart wheels. It was because the car wheels are so wide apart and it goes all the way back to like Roman chariots. And it's like there's the width of their roads were like two butts wide. And that's why our roads are two butts of a horse wide.

Phillip: [00:34:59] And I'm sure then there's a three line to why we design portrait and landscape mode is why it is like that.

Brian: [00:35:12] Because PDFs.

Phillip: [00:35:15] That aspect ratio also has like a direct line back to...

Brian: [00:35:17] It goes back to paper, which goes back to the printing press.

Phillip: [00:35:19] Exactly right. Like that aspect ratio is exactly that.

Brian: [00:35:22] Yeah.

Phillip: [00:35:22] So why do we bring up CSV files? It's because at the end of the day, the core technologies that you build on, I believe, are kind of inconsequential.

Brian: [00:35:39] Right. I agree with this. I totally agree with that.

Phillip: [00:35:41] There's something to be said of you cannot blame the technology for failure anymore because all technology has basically... That's the law of averages. They've sort of coalesced into similar feature set, similar performance, similar integrations and integrators. They all are kind of the same. And I know, listen, I know firsthand warts and all the challenges with implementing on Magento and specifically Adobe Commerce because I've been in that ecosystem. But the abbots and the AB InBevs of the world somehow seem to make it work. Why not Albertson's? And I think the question to me is why did they retreat from web marketplace commerce? It can't be the technologies. Maybe it's that implemented technology. Like it's not necessarily the platform itself. It was the implementation of the platform or the strategy behind it.

Brian: [00:36:41] Of I think what you're getting at is there's two issues, potentially. One would be the internal team didn't have the expertise or ability to execute.

Phillip: [00:36:48] Or the vision or the resources.

Brian: [00:36:50] Or the vision. Or the resources. Vision is really important. I totally agree with that. Or there are out of house teams that they partnered with that didn't have the expertise...

Phillip: [00:36:57] That's never happened in the history of ever.

Brian: [00:37:01] {laughter} Never, right?

Phillip: [00:37:02] And I don't want to call out anyone who we know because we know the people that worked on this. And I'm sure that everybody tried their best.

Brian: [00:37:09] Right. Totally. Fail implantations happen all the time.

Phillip: [00:37:12] Happen all the time.

Brian: [00:37:12] And it's a combination of like internal, external and whatever. But I think what we're hearing, what we're getting through here is... Dang it.

Phillip: [00:37:21] I think what I'm hearing you say is, Phillip...

Brian: [00:37:23] No. What we're getting to here is that there wasn't the right people involved. That's what it comes down to.

Phillip: [00:37:32] Somewhere.

Brian: [00:37:33] Somewhere in that chain.

Phillip: [00:37:35] Somewhere.

Brian: [00:37:35] The right people were not involved.

Phillip: [00:37:36] And I'll tell you it can... There's so many people, there's human beings required, right?

Brian: [00:37:41] Yes.

Phillip: [00:37:41] Human beings are required to make this work. And it's the people who were establishing the reason why they needed to build a web marketplace to begin with. It could be the people who decided the timing of it, like the timing of 2018 was pretty nascent and early in grocery and like, who was doing home delivery at scale?

Brian: [00:38:05] Right, right.

Phillip: [00:38:06] Not many or even in-store pickup. Who the heck did in-store grocery pickup in 2018? You were a weirdo if you did that.

Brian: [00:38:12] Right.

Phillip: [00:38:13] You were an agoraphobic who is like, you didn't want to be in society. It could be that it was too early and that was a decision that was made. It could be the like you said, the expertise of the...

Brian: [00:38:24] This is where I think they might have struggled.

Phillip: [00:38:27] And we know nothing about this.

Brian: [00:38:29] I know nothing about this.

Phillip: [00:38:29] This is one hundred percent conjecture.

Brian: [00:38:31] This is my conjecture actually. The thing that got shut off was their marketplace, right? Not not their delivery.

Phillip: [00:38:36] Their web marketplace.

Brian: [00:38:37] It was their web marketplace. That is one of the hardest things to execute on as a brand. Building a marketplace where you're like having to control your experience that you create and the experience that other people bring and the logistics. Third party marketplaces are one of the hardest things to run on the entire web.

Phillip: [00:39:00] Yeah, it's almost impossible, especially if you're taking multiple parts of that experience and multiple parts of the operations of it, and you're putting those outside of your direct control.

Brian: [00:39:15] Exactly right. That's exactly right.

Phillip: [00:39:17] You have to have a product innovation, like a product mindset and an innovation, rapid innovation mindset, to be able to execute on that. You have to do that for yourself.

Brian: [00:39:30] Discipline.

Phillip: [00:39:31] I have seen there are really only a handful of marketplace vendors in the ecosystem, one is Mirakl. One is VTEX, right? Another is Unergy. These are all similarly featured. They come up in every RFP for marketplaces, for Big Retail. When you start looking at the feature set, Mirakl as a SaaS product is among probably the most limited and sort of like walled garden approach to this is how it operates, and you kind of buy into the way that it operates. I start wondering is that something that can even serve grocery, maybe? I don't know. It feels like if you need to build that and if you were Albertsons and you needed to build that, it needs to be something that you operate and deliver from an in-house capability.

Brian: [00:40:31] I think so. I think so. That's probably why they abandoned it. But I also want to point out that again, I don't know if technology was the problem. I actually think that the...

Phillip: [00:40:40] Yeah. I'm wondering if I'm undercutting my own point. But maybe the choice of platforms is I just feel like putting all of that control outside the Albertsons in-house, this should be custom software. Could be.

Brian: [00:40:55] Could be. Doesn't necessarily have to be. Again like I think the technology could be custom. Could be Mirakl. Could be something else. I actually think the problem is basically like process and...

Phillip: [00:41:10] And yet we know nothing about this.

Brian: [00:41:12] We don't. We don't. But running a marketplace in general, like looking back at Amazon, looking at Amazon and like they've struggled with, their marketplace is huge, and it's still a huge problem.

Phillip: [00:41:24] They struggled with counting all of the money.

Brian: [00:41:25] Yeah, it's also a huge problem if we look at like how Target rolled out their marketplace, on the other hand, where it was actually curated to begin with. To me, I think that that could have...

Phillip: [00:41:39] The strategy behind it was very different.

Brian: [00:41:40] The strategy behind how Target rolled theirs out.

Phillip: [00:41:43] Right. Not just endless aisle. And like millions of products.

Brian: [00:41:47] Right. If you just treat it like endless aisle and you just think, Oh, this is how we get to endless aisle...

Phillip: [00:41:51] But I think maybe in 2018, that was a perfectly valid strategy because the motivations of a customer shopping in line who you were trying to shift to digital were very different than they are today. It's a different time.

Brian: [00:42:03] It is a different time.

Phillip: [00:42:05] Do you think that Albertson's... This is the next thing.

Brian: [00:42:09] Yeah.

Phillip: [00:42:10] It's just not who we are. That is a fixed point in time, because I think can you see a company... Contrast Albertson's with Kroger. So we just heard Kroger has a digital business now after five years of $10 billion, and they want to double it to 20 billion in the next three years. Ok. How can Albertsons not rise to that challenge of their largest competitor in the marketplace? Wouldn't they need to come back to it to innovate in that area? It's not who they are today. This is going to have to be something. Can you see them five years from now not operating their own web marketplace and letting Instacart and Shipt and DoorDash run their customer experience?

Brian: [00:42:58] I don't know here. Because I look at Albertsons and the markets they're serving versus Kroger and the markets they're serving, and I don't see them as the same markets. The experience that I have when I walk into a Kroger versus when I walk into an Albertsons is pretty different.

Phillip: [00:43:20] I don't have both in my market, so I wouldn't know. I guess next time I go to a delivery locker for a Kroger I'll let you know how I feel.

Brian: [00:43:29] For me, I've been...

Phillip: [00:43:33] This is a trap, by the way, that we often fall prey to, which is our own perspective as consumers.

Brian: [00:43:39] I know. Totally. This is my own perspective as a consumer. But for me in my market, basically, Kroger is sort of a step up from most of the other grocery chains.

Phillip: [00:43:48] Yeah, and a Publix shopper would say it's a step up from Winn-Dixie, and there's always...

Brian: [00:43:55] Albertsons is sort of in that Winn-Dixie market.

Phillip: [00:43:58] I don't think anyone is in the Winn-Dixie market.

Brian: [00:44:04] {laughter} Okay. That's probably true.

Phillip: [00:44:06] Winn-Dixie. Don't get me on my soapbox about Winn-Dixie. When Dixie's slogan for years was...

Brian: [00:44:14] Please tell me it's, "Because of Winn-Dixie."

Phillip: [00:44:18] No. Which is a hilarious movie, by the way.

Brian: [00:44:20] Beloved children's book.

Phillip: [00:44:22] It's a movie. I believe it is not literature.

Brian: [00:44:27] It is. The movie based off of the book.

Phillip: [00:44:32] Winn-Dixie's slogan for years, Brian Lange, was "We're getting better all the time," which just concedes how bad they are.

Brian: [00:44:42] Does it thought?

Phillip: [00:44:44] We are getting better all the time. We are so bad that we need to promise you that we're getting better.

Brian: [00:44:51] I feel like the problem is that it didn't happen. Is it getting better all the time?

Phillip: [00:44:57] I've not been in a Winn-Dixie in a decade. The last time I was in a Winn-Dixie, I'll leave you with this and then I'll leave you the last word. The last time I was in a Winn-Dixie was because Publix was closed on Thanksgiving Day, and we had no cranberry sauce. And we go to this Winn-Dixie right across the street from the Publix.

Brian: [00:45:18] It's a Christmas miracle.

Phillip: [00:45:20] Ok, and I'm walking into the Winn-Dixie. I can't even say Winn-Dixie. I'm walking into it, and the manager is standing at the front door saying, "Welcome Publix shoppers." I swear to God.

Brian: [00:45:34] That is incredible.

Phillip: [00:45:36] Groceryshop, apparently, everything we said in our last episode about retail events being dead... Retail, I think, has some challenges in especially eCommerce, in particular eCommerce centered events. I sense a lot of apathy and fatigue, and I think they're going to have a long time coming back. Grocery is on fire, you guys. Grocery is. This is exciting and this is night one of day one of four, and Groceryshop might be the best event that I've been to in a long time.

Brian: [00:46:11] And here's my last word.

Phillip: [00:46:13] You get the last word.

Brian: [00:46:14] I think the last word is this. [00:46:15] I think there's been a lot of innovation and not just that at the retail level of grocery, but also at the product CPG sort of level of grocery as well. Over the past 18 months, we've seen a lot of new players in this market. They're all probably here and they're all probably trying to get into physical store. [00:46:34]

Phillip: [00:46:37] You're talking about the coming of the DTC brands.

Brian: [00:46:40] This is DTC comes of age.

Phillip: [00:46:43] Oh, which is a great segue. Is that your last word?

Brian: [00:46:47] That is my last word.

Phillip: [00:46:48] DTC comes of age in into grocery because they all need to be omnichannel businesses. That is a key topic. In fact, it's the first section of our nine trends in our new trends report called Nine by Nine, and it's nine brands and nine trends. Nine things that brands are doing to differentiate themselves and win in the marketplace and win with their customers. And these nine things are the ways that brands are rising above to stake a claim on the future. And we want you to get the Nine by Nine report. You can get it at NinebyNine.report when it drops a little later this month. NinebyNine.report. And it's going to be the best 40 pages that you'll have ever read from Future Commerce. And we know you're going to love it. So go get it. NinebyNine.report. That's it. Thank you so much for listening to Future Commerce, and remember we can all create the future and change the future because commerce can change the future. Thanks for listening.

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