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- [00:00]
A
Foreign. It's May 26, 2026 and this is the Commerce Rift brought to you by the CPG guys. 10 minutes of the new stories that matter in commerce this week. I'm your co host, pvsp. I'm joined as always by Pop Barrage, father of pop stars, co founder of Think Blue Consulting, Sree, how you doing? What's news?
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We got a busy June coming up, Peter. Exciting stuff. You know, we're going to Cannes Lions. Busy, busy, busy schedule. Lots of people want to see us. We're hosting can everything from speaker sessions, networking events, breakfasts, happy hours and then Cornell is right on the heels of that retail media program that we created last year, we got some great partners, sponsors, brands attending. I can't wait, Peter.
- [00:40]
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Looking forward to it myself, Sree. Let's get into it. Four stories this week that cut across the full spectrum. It was a huge earnings week across retail as both Target and Walmart announced a legacy grocer's experience is getting outdated and losing shoppers. And Kroger announces significant price cuts. So I'll kick it off. Walmart released its Q1 2027 earnings this week. And for anyone operating in the commerce or retail media space, there's a lot to unpack. Let's start at the top. Revenues came in at $177.8 billion, up 7.3% year over year. That's not a rounding error. That's a company the size of a small nation continuing to grow at a pace that would make most retailers envious. Walmart US comp sales grew 4.1%. Solid, consistent and power in no small part by traffic. Transactions were up 3%. People are choosing Walmart with their feet and their phones. Now, here's a number I want every brand listening to. This really sit with. E commerce grew 26% globally. 26%. And it wasn't just one business unit. It was strength across segments. Walmart U.S. e commerce was up 26, driven by store, fulfilled delivery, advertising and marketplace. Sam's Club. E Commerce was up 23%. International is up 27%. This is a flywheel firing on all cylinders. But here's what's really caught our eye straight from the morning newsbeat. And it should catch yours too, if you're a brand partner or a retail media practitioner. Walmart's global advertising business grew 37% in the quarter. Walmart US advertising alone was up 36%. And Walmart Connect, including Vizio, grew 44%. Wow. That's not a media business in its early innings anymore. This is a scaled compounding monetization engine attached to the world's largest retailer. And then there's Walmart Plus Membership fee revenue grew double digits with net ads reflecting a record first quarter high. Deepak Mani and his team at Walmart plus are building something real here, a loyalty layer that's improving E commerce economics and creating a more valuable customer relationship for both Walmart and its brand partners. Deepak's going to speak with the CPG guys in a couple of episodes, so stay tuned. No, it wasn't all Perfect. Operating income grew 5% was negatively affected by 250 basis points from higher fuel cost shocker in distribution, fulfillment and the full year outlook unchanged in this tariff environment, unchanged is actually a quiet flex to take away for CPG brands. Walmart is not just winning on price anymore, it's winning on speed and data, on media and on membership. The brand, the brands to figure out how to activate across all of these dimensions, not just a trade lever, the ones who are going to build durable share on this platform. Great news. As we said, we will feature Deepak, Manny, SVP and GM of Walmart plus as part of our CSEED series in the month of June. Sree, what's going on in Minneapolis?
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All right, Target also reported this past week and it said that its Q1 net sales grew 6.7% to $25.4 billion with comparable sales up 5.6%, which the company said reflected a comparable store sales increase of 4.7% and comparable digital sales growth of 8.9% to be noted. Peter, it's been a while since we've had something this upbeat to report on Target. The company also reported Q1 net income of $781 million $1.71 per share, down from $1.04 Billion or $2.27.7 the year of Wpedia. The Wall Street Journal wrote that the numbers are the first sign that new strategies to attract shoppers are starting to bear fruit indeed. But company executives under noted caution about the challenges still ahead. According to the Journal, the results are up against a big sales dip in the same quarter last year. But Target also sees shopper gravitating to some of its refreshed product assortment customer service changes, executive said on a call with reporters. New products and store layouts and its baby toy and health departments led to big sales gains in those categories. Michael Fidelke, the new CEO, says as we've made changes in categories, we've seen the guests respond well in those changes and are coming back. So that's early evidence to us that we have full on the right path. CNBC writes that notably non merchandise sales spiked nearly 25%, including from what the company identifies as strong growth in its membership, revenue and the Target plus Marketplace. Target, like Walmart and Amazon, has tried to grow those business units both to offer more convenience to customers and boost its profits. The company said it saw net sales increase across all six of its core merchandising categories, with particularly strong responses from consumers in its health and wellness, toys and baby segments. It opened seven new stores in the fiscal quarter, with more than 100 remodel projects in progress. CNBC quotes Fidelke as saying, even with this early progress, we know our work is just barely beginning and we have confidence we're on the right path because guests are responding in areas where we are leaning in and giving change. Indeed, the these are areas where we bring style, design and value to not only the products we sell, but how we sell them, creating a distinctly Target experience. As I turn it over back to you Peter, I would love for you to talk to us about what's happening with legacy retailers.
- [05:54]
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Consumers are no longer simply shopping for food. They're shopping for speed, convenience, relevance, meal solutions. The modern grocery shopper wants fewer friction points, faster fulfillment, extra prepared foods and personalized digital engagement. Yet legacy grocery retailers continue operating with business models designed for 1995 instead of 2026 as I kind of referred to in my opening, according to Tacoma, Washington based Food Service Solutions and Steven Johnson, the Grocerant Guru man shree, are the CPG guys not cool enough? Do we need a new name like Grocerant Guru? Anyhow, the biggest competitive threat facing traditional grocery stores today is not only inflation. Labor costs are competition from discount retailers. It is their own resistance to change. You and I have talked about this. Consumers increasingly believe grocery shopping takes too long, requires too much effort and delivers too little value relative to the time invested. The perception is fundamentally reshaping the food retail ecosystem. Today's consumers live on an on demand economy shaped by companies like Amazon, Doordash, Instacart and Walmart. Consumers expect immediacy in every aspect of commerce, including food shopping. 2025 survey from Instacart found that convenience and time savings remain the top reason consumers use online grocery services. Meanwhile, research from Numerator shows that younger consumers increasingly define value not simply by price, but by time saved. This is a big shift. Historical legacy grocery retailers tend to focus heavily on large store footprints, expensive center store assortments, promotional circulars, brand driven merchandise, weekly stock up Shopping behavior right now, consumers today increasingly prioritize fresh prepared foods meal components grab and go solutions Frictionless checkout Digital ordering, delivery and pickup Fast trip missions the weekly big grocery trip is fragmenting into multiple smaller food access occasions. Ironically, many grocery retailers continue creating operational roadblocks that frustrate customers and slow shopping trips. Consumers routinely complain about overstocked aisles, long checkout lines, locked merchandise cases. Oh God, don't you hate those SRI when you walk into a Target in the city and 90% of the items are locked Poor mobile apps how to stock fresh food Slow checkout systems Inefficient store layouts Digital coupons that are hard to use Parking lot congestion oh my God. Trader Joe's Limited prepared meals availability during peak period Instead of reducing friction, many legacy grocers unintentionally intentionally add layers of complexity. Consumers increasingly compare grocery shopping against the convenience benchmarks established by quick serve restaurants, convenience stores and e commerce companies. Ordering dinner from UberEats takes 45 seconds, but grocery shopping requires 75 minutes. Consumers being questioning the value proposition of traditional supermarkets altogether. For decades, center store packaged goods drove grocery profitability. Today, fresh fruits and prepared meals increasingly drive store traffic. Consumers want fresh cut fruit ready to cook proteins. They want meal kits. They want prepared entrees, restaurant quality takeout, fresh bakery and hot grab and go. Right? Retailers that execute well in fresh fruits are outperforming traditional competitors. I'm thinking about Wegmans, Sree. Ever been one of those? I know you have. Those guys are just the master of prepared foods. Right? Because they align with evolving consumer expectations. Companies such as Trader Joe's, Whole Foods, Publix and H E B continue gaining customer loyalty by emphasizing meal solutions, freshness, operational simplicity. Right? Meanwhile, convenience retailers like Wawa, Sheets and Quick Trip are increasingly stealing meal occasions from traditional grocery stores. Love getting me a hoagie at Sheets and Wawa. Why? Because they understand speed matters. Legacy grocer grocery stores often protect their comfort zones. One of the biggest structural problems. I know you agree with me SRI on this is traditional grocery retail is about its institutional inertia. Too many legacy grocery operators continue defending outdated operational models because those models are familiar and historically, historically profitable. Right? The result is a widening disconnect between how consumers want to shop and how grocery retailers still want to operate. Some retailers continue allocating massive floor space to declining center store categories. Consumers no longer separate food service from food retail the way that industry traditionally has. Shopper may buy breakfast to convenience store, order lunch in an app, pick up dinner at grocery deli subscribe to meal kits, use warehouse clubs for bulk items and even replenish staples through delivery. The modern consumer is ready for the sree, an omni shopper. Retailers that fail to integrate digital convenience, fresh foods and fast fulfillment into one ecosystem risk losing relevance. What do you think sri?
- [10:43]
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I know it took you four minutes to do that segment, but it kind of sums up the sign of a times where the retail is sitting together. All right, let me close it out. Kroger CEO Greg Foran told Bloomberg in an interview this week that the company is planning significant price reductions across all its banners as the company looks for ways to compete more effectively against Walmart, Amazon and Costco, in addition to Trader Joe's and Aldi. I think about our business a bit like Formula one race, he says. There's a lead group of cars that are doing a very good job. Our objective is to get out in the midfield and start lapping faster, make up the gap on the first group cars and then ideally pass them. Orion, who became Kroger CEO last February, said that the company currently is developing plans for the cuts and they'll implement them. These plans reportedly include importing merchandise directly so that lower costs can be passed along and using technology to make the company more efficient. The focus, he said, is on fresh, fast, affordable, lay and for you, referring to increased personalization and local marketing. Kroger also reportedly is looking for growth opportunities, both the opening of as many as 80 stores in 2027, double that at 2026 and possible acquisitions in markets where they don't have a presence. The Northeast is one and Florida is the other or sees high growth potential. From a recent Morning News guest column, Kroger's anticipated shift from a strategy focused, complexity driven approach to a source centric, execution oriented operating system. In our opinion, instead of attempting to out innovate the market within the next year, Kruger aims to outperform it through superior execution. Things have to take place on parallel tracks. There has to be an effort to make current operations more effective, efficient, relevant to the moment and better communicate to shoppers while simultaneously Forum figures out what Kroger has to look for the mid 21st century. People who know him say that Foran is precisely the right person for this job, but to be clear, it's a big job ahead of him.
- [12:29]
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Peter closes up that's a wrap on this week's Commerce Riff. Reminder to check out our recent conversations with Wendy Liebman from WSL Strategic and on AI and of course with Kroger Precision Marketing's Andrew Butts along with Halion's Pete Fox and Sammy Zoleft there. Anything we cover this week sparks a thought. Drop it in the comments. Send us an email. We read it all. And if you're not following us on LinkedIn, Instagram, TikTok, Facebook and YouTube yet, now's the time. We'll see you next week.
- [12:55]
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