Morning Brew - ☕ Don’t shrink twice

The Home Depot’s investment in theft prevention.
May 23, 2024

Retail Brew

NICE

Hello, it’s Thursday, and Target reported weak quarterly earnings yesterday, missing Wall Street estimates. Meanwhile, Walmart posted a more upbeat outlook last week. This got us wondering: Which is the bigger rivalry—Target vs. Walmart, or anybody vs. anybody else still in the running in the NBA or NHL playoffs?

In today’s edition:

—Alex Vuocolo, Erin Cabrey

STORES

The price of crime

Cameras keeping surveillance over products Francis Scialabba

In 2023, The Home Depot was one of several major retailers to call attention to the growing cost of retail theft. In the first and second quarters, the home improvement chain highlighted that elevated levels of shrink were squeezing margins and driving up operational expenses.

But the second part of the equation—the higher operational costs that come with mitigating retail theft—is arguably a less-picked-over topic than the cost of shrink itself.

As Home Depot pointed out in its recent annual report, “While we have a number of initiatives underway to address shrink, minimize theft, and maintain safety in and around our stores, these efforts require operational changes that may increase costs and reduce margins…”

  • Operating expenses already increased 2.7% year over year in 2023, and they were up around 5% from 2021.

Home Depot’s public financial documents do not provide a breakdown of how much shrink contributes to that increase, but Scott Glenn, VP of asset protection for Home Depot, told Retail Brew that the problem has changed the firm’s thinking around the financial cost and investment needs of theft prevention.

Keep reading here.—AV

   

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Retail revolution

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Multi-channel and CPG retailers are using every tool they can to gain a competitive advantage. Right now, generative AI and machine learning are unmatched in their power to transform retail—meaning they could be that competitive advantage.

Join Retail Brew on June 6 for Revolutionizing Retail: Leveraging AI for Authentic Customer Experiences to discuss how AI can glean deep customer insights, improve decision-making, and drive operational efficiencies.

Learn how AI is utilized in CX funnels, its capacity for never-before-seen levels of personalization + automation, and more. PS: Don’t miss our event sponsor, NICE, on how they leverage AI for enhanced automation and analytics across the entire CX journey.

Save your spot.

E-COMMERCE

A second bite

Misfits Market new brands Misfits Market

Online grocer Misfits Market said this week it’s now selling products that were intended to be sold at Foxtrot before the retailer abruptly ceased operations last month.

The shutdown left not only extra food and beverage inventory on shelves, but more in warehouses, and Misfits tapped into its recent partnership with Pod Foods, a distributor that connects small emerging food brands with retailers, to give 35 products across 15 brands (virtual) shelf space.

Jessie Kimsey, Misfits Market’s senior category manager for snacks and beverages, told Retail Brew the retailer scooped up 95% of the ex-Foxtrot inventory available via Pod Foods.

Keep reading here.—EC

   

TECH

Searchable

Google HQ Anadolu/Getty Images

Google unveiled a suite of new tools for retailers on Tuesday with the goal of making online marketing materials and search queries for products more compelling for shoppers.

More than 40% of shopping-related searches include the name of a brand or retailer, according to Google. So the tech giant is offering new generative AI-powered tools to improve how those companies appear in search results.

One new feature, which will roll out in the coming months, allows brands to create a search profile that showcases their products, customer reviews, and store imagery. Inspired by Google Maps, the business profiles will appear in search results alongside ads.

Keep reading here.—AV

   

TOGETHER WITH BAZAARVOICE

Bazaarvoice

Reel ’em in . New, unknown, or anonymous visitors make up 98% of e-commerce traffic. Wanna hook all those potential customers? Check out Bazaarvoice’s e-book on delivering tailored shopping experiences, even as cookies crumble and privacy regulations tighten. You’ll be providing next-level personalization to customers and driving rev in no time. Give it a read.

VIRTUAL EVENT

Operations unplugged

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Learn how to stay on top of the supply chain, company operations, and expenses more seamlessly (and stress-free) in a virtual session with Retail Brew. Morning Brew Executive Chairman Alex Lieberman is sitting down with Walmart SVP and General Manager Ashley Hubka to discuss everything, including strategic B2B purchasing decisions. Register now!

SWAPPING SKUS

Today’s top retail reads.

Hair me out: L’Oréal is working with Snapchat to bring virtual try-on for hair color to US consumers. (Business of Fashion)

Complete insight: Inside the life of Bruce Nordstrom, the face behind the multi-billion dollar US luxury department store business. (the New York Times)

Two for one: From big box retailers like Target to fast food chains like McDonald’s, companies are slashing their prices and discounting products to lure customers. (CNBC)

Retail’s new BFF: From deeper customer insights to efficient ops + decision-making, bringing AI into your CX strategy is a no-brainer. Join Retail Brew on June 6 to learn how AI is transforming the retail space. RSVP here.*

*A message from our sponsor.

JOBS

Forget generic job searches. CollabWORK leverages the power of community to connect you with relevant opportunities in Slack channels, Discord servers, and newsletters like Retail Brew. Land your dream job through the power of your network with CollabWORK.

NUMBERS GAME

The numbers you need to know.

Trader Joe’s may be tops for many consumers, but when it comes affluent households—aka those earning over $100,000 a year—Walmart is the grocery store of choice.

According to YouGov’s BrandIndex, both Walmart and Whole Foods have ticked up in affluent shopper consideration, while Trader Joe’s has seen a drop in interest among the wealthier sect of consumers.

  • Consideration for Walmart was up to 54% in 2024 compared to 50.6% in 2023, while Whole Foods saw ~3 percentage-point rise from 23.3% in 2023 to 26.8% in 2024.
  • Meanwhile, shopper interest in Trader Joe’s dipped from 33.3% to 30.3% in the same period.

For wealthier consumers looking for more premium items when shopping for groceries, their go-to destination is Whole Foods, which accounts for 54% shoppers, compared to Trader Joe’s (39%) and Walmart (31%).

But when it comes to customers’ desire to eat healthier, they surprisingly don't look to the usual suspects.

  • Walmart wins as the grocery store of choice when it comes to the health conscious—64% of those surveyed said they’d consider purchasing from Walmart when looking for healthier options, followed by Target (41%), and Costco and Aldi (33% each).

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