Commerce Riff with Sri & PVSB - May 26, 2026

PVSB 0:01

It's May 26th, 2026. And this is the Commerce Rift brought to you by the CPG guys. Ten minutes of the news stories that matter in commerce this week. I'm your co-host, PBSP. I'm joined as always by Pop Baraj, father of Pop Stars, co-founder of Think Blue Consulting.

SPEAKER_00 0:16

Shree, how are you doing? What's news? 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 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 tweet, Peter.

PVSB 0:40

Looking forward to it myself, Shri. Let's get into it. Four stories this week that cut across the full spectrum. It was a huge earnings week across retailers, both Target and Walmart announced. A legacy grocer's experiences getting outdated and losing shoppers, and Kroger announces significant price cuts.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 and 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 U.S. comp sales grew 4.1%. Solid, consistent, and powered 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 US e-commerce was up 26, driven by store-fulfilled delivery, advertising, and marketplace. Sam's Club E-commerce was up 23%. International was 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 U.S. advertising alone was up 36%. Walmart Connect, including Visio, grew 44%. Wow. 44%. That's not a media business in its early innings anymore. This is a scaled, compounding monetization engine attached 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 flux. Takeaway 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 have figured out how to activate across all of these dimensions, not just the 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 C seed series in the month of June. Shree, what's going on in Minneapolis?

SPEAKER_00 3:36

All right. To be noted, Peter, it's been a while since we've had something this upbeat to report on the target. The company also reported Q1 net income of $781 million, $1.71 per share, down from $1.04 billion, or $2.27. 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 software to some of its refresh product assortment, customer service changes. Executives 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 Fitelke, the new CEO says, as we 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 are full on the right path. CNBC writes that notably non-merchandise sales spike 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 Fidelki 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. 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.

PVSB 5:54

Consumers are no longer simply shopping for food, they're shopping for speed, convenience, relevance, meal solutions. Modern grocery shopper wants fewer friction points, astral fulfillment, pressure 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, Sharia, are the CPG guys not cool enough? Do we need a new name like Grosserant Guru? Anyhow, the biggest competitive threat facing traditional grocery stores today is not only inflation, labor costs, or 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. A 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 overstock dials, long checkout lines, locked merchandise cases. Oh God, don't you hate those Shree when you walk into a Target in the city and 90% of the items are locked? Poor mobile apps, out-of-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 groceries unintentionally add layers of complexity. Consumers increasingly compare grocery shopping against the convenience benchmarks established by QuickServe restaurants, convenience stores, and e-commerce companies. Fordering dinner from Uber Eats takes 45 seconds, but grocery shopping requires 75 minutes. Consumers begin 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 Wegman's Shree. 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 HGB continue gaining customer loyalty by emphasizing meal solutions, freshness, operational simplicity, right? Meanwhile, convenience retailers like Wawa, Sheets, and QuickTrip 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 grocery stores often protect their comfort zones. One of the biggest structural problems, I know you agree with me, Shri, 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 at a convenience store, order lunch in a nap, pick up dinner at a 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 Sri, 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, Shree?

SPEAKER_00 10:43

I know it took you four minutes to do that segment, but it kind of sums up the sign over times where you see retailers sitting together. All right, uh let me close it out. Kruger CEO Greg Foreign 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 capital of the first group cars and then ideally pass them. He 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 AD stores in 2027, double that of 2026, and possible acquisitions in markets where they don't have a presence. The Northeast is one and Florida's the other, or sees high growth potential from a recent morning news piece guest column. Kroger has anticipated a 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 your shop as well. Simultaneously, Foreign figures out what Kruger has to look for the mid-21st century. People who know him say that forhand is precisely the right person for this job. But to be clear, it's a big job ahead of him. Peter, close us up.

PVSB 12:30

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 Zoluther. 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.