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Foreign.
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It's March 17, 2026 and this is the commerce riff brought to you by the CPG guys. 10 minutes of the stories that matter most in commerce this week. I'm your co host, pvsb. I'm joined by Paparaj, father of pop stars, co founder and CRO of Think Brew Consulting. Sree, how you doing?
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Good man. How about you? It was a busy week. Past weekend in the raj has all. Lots of social commitments on the music side, entertainment side, Oscars, parties, things of that nature. But what's going on with Nadia? What have you been up to this weekend?
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Well, this weekend Nadia had photographs for her dance recital. So she had all these costumes and she was adorned in makeup. It made her very happy. It made her parents a little uncomfortable, but nonetheless. Oh yeah, absolutely.
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But yep, I remember those moments. Fondly cherish them. Take pictures. That's all I'm going to say.
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There we go. Sri. All right, today we're breaking down the McKinsey AI data breach story. What happened, what it can mean for you and how to think about it in your own organization. McKinsey disclosed a data breach tied to its cloud based data analytics and AI work. Unauthorized access occurred to a subset of its cloud environments and collaboration tools. Importantly, McKinsey said the breach did not compromise its core proprietary AI models, but data linked to client engagements in some internal documents were affected. They've said they took steps to contain the breach, engage third party forensics and notified affected clients and stakeholders where required. What data are we talking about? Publicly shared details indicate that client materials, project dashboards, metrics and potentially some internal documents could have been accessed. It's not.
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Wait a minute, wait a minute. Peter. Are we saying the McKinsey database for like years of history with projects they've done guy act.
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That's exactly what we're talking about. Isn't that like pretty shocking?
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Their lifeline and everything like their blood. Holy cow man. Keep going, keep going. I just like my head just got alerted right there but keep going.
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Well, it's not that McKinsey gained control of their crown jewels, but it is sensitive business information. Think project plans, right? Dashboards, performance data and non public guidance tied to client engagements. Why this matters for commerce and AI ecosystems is pretty poignant. Clients trust in government first. When a top tier consulting firm that advises on AI incidents a data breach, clients naturally question data handling, governance and risk controls across vendor ecosystems to data provenance and security posture. AI projects often stitch together data from multiple sources. This event underscores the need for strict access controls data lineage and encryption Everywhere data rests and travels right? Again supply chain risk in practice consulting firms are nodes in the broader tech and data ecosystem. Client data touches third party tools or cloud services. You need continuous vendor risk scrutiny and posture monitoring.
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Right?
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And lastly, incident readiness for clients. Right? Enterprises should refine breach notification timelines, comms and remediation playbooks to minimize disruption and regulatory exposure. Right? So the takeaways that brands listening to this should be acting upon is one Audit data access for client projects. Recheck who has access client dashboards and project files. Revoke anything unnecessary right? Then with mapping data flows, create a lightweight data lineage for your critical AI workflows to know where data travels and who touches it. Make it a little bit harder on your collaboration stack. Enable per file or per project permission. Enable encryption and transit and enforce strong company wide security baselines. Don't make it easy by granting comprehensive access right? Build your own incident playbook. Define the steps you'll take within 24 hours of a breach. Notifies whom and how you communicate both internally into clients. In the entry breaches and AI adjacent workflows happen, but the difference lies in how you respond. McKinsey's disclosure reinforces the ongoing imperative for mature data governments, especially when client data is involved. If you're building AI features that rely on client data, privacy by design should be the default. Minimize retention, strengthen access controls and ensure robust logging across the data pipeline. Over to you sri so I'm going
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to jump over into an earnings report and who else but in the beauty sector Ulta Beauty reported EPS Thursday that missed expectations but revenue that topped Wall street was expecting Shares of The company sank roughly 8% in extended trading, which I'm actually quite surprised. Peter here's how they performed for the fiscal fourth quarter into January 31 compared with what Wall street expected. According to estimates from LSEG EPS $8.01 vs $8.03 Revenue 3.9 billion vs 3.8 billion so they actually exceeded the company's net sales actually grew 11.8% in the fourth quarter holiday sales compared with the year ago period. For the full fiscal 2025 year, Alta reported a 9.7% increase in net sales to 12.4 billion. Peter I compare that with food and Bev and grocery retail. I mean these are like the numbers are crazy good growth. The company said its gross profit as a percentage of net sales decreased slightly due in part to a deleveraging of fixed expenses and revenue. So that was offset by lower inventory shrink and supply chain efficiencies for fiscal 26. Alka said it expects net sales growth of 6 to 7% and diluted EPS of between 2805 and 2855. The midpoint of the DPS guidance at 2830 was slightly less than the 2840 at the midpoint and what analysts had expected for 2026. I understand every stock and sector has a role to play in an analyst investment. I compare this to the grocery sector. The growth is just I would take 7 and 8% growth any day year over year. It also projected 26 same store sales of 2.5 to 3.5%. My case in point, Peter compared with an estimated up to 3.5%. Analysts had high expectations for the company earnings report. Oppenheimer analysts wrote in a Wednesday note that they expected Alta Q4 results to be solid. Our better than planned financial performance reflects our continued focus on serving our guests consistently, delivering great experiences through better execution, compelling newness, more seamless and convenient experiences, and bold new merchandising and marketing strategies, CEO Keshia Steelman said in a statement. Of course to be noted, it's the company's first earnings report since Christopher Dell Orifice became Alta's chief financial officer in early December. SRI and Kristel Orfis have worked together Johnson and Johnson Consumer 4 years 2015 and 2019. A true gentleman thoroughly enjoyed working with him. Early adopters of E commerce pushed it all the way. Now here's a quick CPG guys take on why we feel these results are actually great. Digital and omnichannel strength they continue to push a seamless shopping experience. Beauty category resilience was clearly demonstrated. Core categories like skin care, hair care, prestige, beauty remain resilient. Margin dynamics of gross margin improvements or pressures were driven by mix shifts towards higher margin categories. Store network innovation show ongoing investments in store experience, staffing, digitally enabled features such as tablets, kiosks and in the fragrance and intimate sections too, where choice is hard, Wellness and prestige positioning Ulta strategy to blend mass appeal with premium offerings continued to differentiate it from some peers. I believe you're going to tell us about Target now.
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I am sree. You know, I was in a Target today and I noticed that the Ulta signage is still up and running even though the relationship has dissolved. I think there are some at retail changes that still need to take place. But in any event, Sri, you and I often describe Target as a mass merchant that sells groceries and we describe Walmart as a grocer that sells mass merchandise. That's been to the detriment of Target during these down economic times. In order to try and recapture some of that audience, Target has reduced prices on 3,000 products, hoping to draw in busy families, lowering prices on about 3,000 items for spring, per a company press release this past Wednesday. The price cuts range from 5 to 20% off the original price starting in March and continuing throughout the spring season on select items, including merchandise, span, select apparel offerings, bedding, footwear and everyday essentials ranging from pantry staples to baby products. Target's latest price drop announcement is aimed at the customers it believes will power growth. Busy families Busy families are thinking about value as they begin to update their homes and wardrobes for the spring, kara Sylvester, chief merchandising officer at Target, said in a statement. We're delivering by lowering prices on 3,000 spring favorites across apparel, essentials and home. We're committed to making it easier than ever for guests to have the fresh style and incredible value they love with lower prices on the items we know they want. The mass retailer CEO Michael Fidelke emphasized the role busy families will play in Target's turnaround plan during a financial meeting earlier this month. Quote, we're getting crisper on the guests who power our growth, its CEO said during the meeting, which coincided with the release of Q4 earnings. These guests are united by mindset. They value style and design, seek ease and simplicity, and they don't want to settle for anything that feels ordinary or joyless. They move fast, they're digitally fluent, and they gravitate towards brands that mix practicality with fun and personal expression. We refer to this group as busy families, and it's one where we see outsized strength in sales and loyalty. Target lost the clarity and discipline that made it a destination for busy families, Sylvester noted during the financial meeting. Baby products, which play a role in Target's spring price reductions, are a key focus for the retailer as it aims to win back this customer group. The family welcomes a new child. Where they choose to shop really matters, sylvester said during the company call. And they pick Target not just for the products that we sell, but for our experience. This is a category that's gone untouched for years and there's so much potential in front of us. Target will expand its private label Cloud Island Baby brand and roll out new baby boutique section for about 200 stores in March. Expanded concierge service for baby products will feature in person appointments with experts in store. How about that Shri?
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That should be pretty exciting actually, because you know, in our generation, Peter Moms, the first kind of store visit, first place to go, would always be known as Target. And for the longest time while the kids grew up, we'd hear in the industry, target, Target, Target. That's where they wanted to shop. The concierge one should be significant. So we'll see how that plays out and we'll be keeping a watch here on the CPG guys, let me jump to Kroger so Kroger's new permanent CEO, now Greg Foreign, gave investors a detailed account of the grocer's standing during the company's earnings call last week and outlined the five areas it needs to address in order to improve its sales growth. He took on the top spot at Kroger last month and most recently serving as CEO of Air New Zealand, made an aviation analogy when describing how he views Kroger's prospects. We got to think about how we gradually take this Boeing 787 at 42,000ft and glide path it and keep everyone on even keel and land this plane safely, he said. But the objective is to do that and to win. We didn't come and invest in all this so that we can come in second. Here are some of those top takeaways, which is Forums first in the top role of the nation's largest supermarket chains I'm going to give you two Lock in on price perception Forum said he's intent on accelerating Kroger's growth by ensuring that shoppers feel the company's focus on helping them save money. I certainly, when I go to my local Ralphs and shop, do not feel like I'm saving money so I'm going to Trader Joe's very often swapping. We need to grow sales faster and my experience that comes down to giving customers a compelling reason to shop with you by offering great value, great products and a great experience, he said. Price is an important part of that equation and customers need to trust that they get in a fair deal every time they walk into our stores. Ralph can use some help, Peter, I'll tell you that. Number two Deliver on E Commerce momentum Forum said during the call that he's pleased with the progress Kroger has made over the past year on its digital operations, which have turned in seven straight quarters of double digit growth en route to becoming a $16 billion business, quite a sizable portion of Kroger's overall business. Their growing efforts to use its stores to handle order fulfillment are especially promising, in part because E Commerce is closely linked to retail media, he said. Our media business is closely tied to this E Commerce momentum, he said. We have the data, we have the customer relationships and we have the platform. E Commerce grows and our digital capabilities expand. We see a long Runway to accelerate growth. Peter I'm pleased the CPG guys wanted to hear this. There's tremendous growth still left there. We really, really bet in Kroger. We know they're going to do better than the Omnichannel. Focus as necessary says my goal is to do all of this while protecting our margins. And so here are the other three steps. I debated heavily which two we'd cover. We just did. So the other three are step up in private label. No surprise. Establish a new team, focus on speed. Really looking forward to that. And then the third Invest back in the store.
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Wrap this up Peter Reminder to catch up with our recently released episode featuring Ox Sana Sobel from the Clorox Company. That's a wrap on this week's Commerce riff. If any of this sparked a thought, drop it in the comments we read them. And if you're not already following us on LinkedIn, Instagram, TikTok, Facebook, and YouTube, now is the time. We'll see you next week.
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