Our guests this week are Cara Keating, Chief Customer Officer, Frito Lay-North America and Chad Matthews, Chief Commercial Officer, Pepsico Beverages-North America. In a fast-paced conversation recorded live at the National Association of Convenience Stores' annual conference in Las Vegas. we dig into what makes Pepsico unique on both the food and beverage side before delving into how customer-centric innovation is brought to life using tools like Pepviz.
Our guests this week are Cara Keating, Chief Customer Officer, Frito Lay-North America and Chad Matthews, Chief Commercial Officer, Pepsico Beverages-North America.
In a fast-paced conversation recorded live at the National Association of Convenience Stores' annual conference in Las Vegas. we dig into what makes Pepsico unique on both the food and beverage side before delving into how customer-centric innovation is brought to life using tools like Pepviz. We also learn how the convenience channel is evolving, how the lines are blurring, and how Pepsi thinks about its own direct-to-consumer efforts. We also discover how both Cara and Chad's groups work with their retail partners to drive collaborative value, before wrapping up with a discussion of Pepsi's social impact efforts.
But first we dissect the week's most important retail news, kicking off with Lowe's decision to "pull a Target" and bail on the Canadian market. Then we move on to some big picture news, including the National Retail Federation's holiday forecast and profit warnings from brands like Canada Goose and Under Armour. We also revisit the "wobbly unicorn corner," unpacking what to make of dismal quarterly earnings reports from Peloton and Wayfair, before sharing some uncharacteristically good news as AdoreMe gets scooped up by Victoria's Secret for a cool $400 million. We close with news from Steve's field trip to JC Penney's new inclusive beauty concept.
Cara Keating, an 18-year PepsiCo veteran, is the Chief Customer Officer for Frito Lay North America. Since joining PepsiCo in 2004, Cara’s ability to consistently deliver results has led to progressively senior roles in general management, customer development and field leadership across Canada.
Cara began her PepsiCo career in the Western Canada market with Frito Lay Canada (FLC). She then moved to Toronto with PepsiCo Foods Canada (PFC) in 2010 for sales roles with both FLC and Quaker responsibilities including leading the national convenience & gas business, large grocery customers, and foodservice sales. In 2014, Cara was promoted to Senior Director of Sales Strategy, Planning, and Insights. After her promotion to Ontario Area Vice President in 2015, Cara led the team to back-to-back Pingel Award wins in 2015 and 2016 for the top-performing FLC region. In 2016, Cara was promoted to Vice President Customer Development, where she led PFC’s national sales team to deliver against PepsiCo’s promise of providing world-class service to our customers and innovative programs to our consumers. Most recently, Cara was President of PFC, a role she held for three years. In this role Cara navigated the organization through the COVID-19 pandemic in addition to many other transformational changes, all while delivering sustained growth for the company and its customers.
Cara is a talented people leader and passionate supporter of PepsiCo’s Diversity, Engagement & Inclusion agenda. As a former lead and recent executive sponsor for the Women’s Inclusion Network (WIN), her efforts to expand WIN across PepsiCo Canada were recognized with the prestigious PepsiCo Global Harvey Russell award for her contributions to diversity and women’s development across PepsiCo.
Cara has also helped to position PepsiCo Canada as an industry leader in advancing women through her involvement on the Board of Directors for the annual Forward Together women’s development conference. In recognition of these efforts, Cara was honoured with a 2017 Star Women in Grocery award from Canadian Grocer Magazine.
Cara is also very active in the food industry and sits on the Board of Directors for the Food, Health & Consumer Products of Canada (FHCP), the FHCP Industry Affairs Management Committee, the Golden Pencil Committee and was a former Advisory Council Member to the Canadian Federation of Independent Grocers (CFIG).
Prior to PepsiCo, Cara worked at Procter & Gamble for four years in Account Management. Cara holds a Bachelor’s degree in Business from the University of Saskatchewan. She is an avid traveler and enjoys experiencing new destinations, cuisines and adventures with her husband, Eddie.
Chad Matthews is Chief Commercial Officer of PepsiCo Beverages North America. He assumed this role February 2022 and is a 24-year veteran of PepsiCo with strong leadership across the company’s North America food and beverage businesses.
In his current role leading the commercial function, Chad is responsible for enterprise customer development, commercialization, revenue growth management, our allied partner development, national go-to-market, and industry relations.
Previously, Chad served as Senior Vice President and General Manager leading overall business and performance management for PepsiCo’s beverage business in 13 states across the Central United States.
Since joining PepsiCo in 1998, Chad has held several leadership roles, including Senior Vice President of Frito Lay’s national accounts, Vice President of Frito-Lay’s commercial organization and Vice President of Frito Lay North America’s Mountain Region.
Chad has deep experience and a proven track record of delivering strong business and people results, holding numerous roles across sales, operations, commercial, customer marketing, transformation, and go-to-market.
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks , The Food Professor with Dr. Sylvain Charlebois and now in its second season, Conversations with CommerceNext! You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:06
Welcome to Remarkable Retail podcast Season 5, Episode 18. Presented by MarketDial. I'm Michael LeBlanc.
Steve Dennis 00:13
And I'm Steve Dennis.
Michael LeBlanc 00:14
Well, Steve, greetings from the Muskoka cottage region. It's a couple of hours north of Toronto where it is freakishly warm, 19 today, that's about 66 for my American friends. I was worried I didn't have time to put my snow tires on yet. So, A) I sound a bit different on the mic and B) You know, global warming.
Steve Dennis 00:33
Yeah, well, I don't know if it's global warming related, but we may be dodging some tornadoes here in North Texas shortly. So, hopefully we'll, we'll get the episode in before I need to head down into the bunker.
Michael LeBlanc 00:44
Well, if I hear you clicking your heels, I'll know that the tornado was near. So, we'll just, (crossover talk),
Steve Dennis 04:48
I will try not to call you Aunty Em.
Michael LeBlanc 04:51
And on this episode, we're back in Vegas at the NACS Show in the MarketDial podcasting studio with an exclusive interview with Cara Keating, Chief Customer Officer, Frito Lay North America and her counterpart on the beverage side Chad Matthews, Chief Customer Officer at PepsiCo Beverages North America.
Steve Dennis 01:09
Yeah, it was fun to talk to them both because of the content. Well, maybe three things really, because it's always three things. The content, I thought, was super, super interesting and they were great guests. Secondarily, we don't talk too much to CPG brands on the podcast. So, that's a little bit of a twist still within the broader context of retail, obviously. And we did this with kind of an audience because we were there in the MarketDial studio on the floor. And we had quite a lot of people staring at us. So, the pressure was on. I think we pretty much nailed you know; we stuck the landing but listeners will have to decide for themselves.
Michael LeBlanc 01:46
Well, we'll get to that in a little bit, it's a very busy news of the week. We're going to start here in Canada with breaking news. Lowe's exits Canada, they're selling their business for $400 million, and a player to be named later to Sycamore Partners. Do, you know, Sycamore Partners, they've got a whole (crossover talk), roster,
Steve Dennis 02:09
Yes, they've been quite active in retail investing over the years.
Michael LeBlanc 02:12
Well, they've got good experience in Canada because one of their, one of their portfolio companies is Staples, and they've done an actually a really good job here in Canada. And I think in the US as well of investing in the brand and you know, not just squeezing the lemons to get some juice out, right. They, they, they've really put money into it. Anyway, the Lowe's story is pretty epic. I mean, they first came to Canada, they tried to buy a company called about 83-year-old Quebec-based company called Rona and Reno-Depot. But they were left at the altar by the Quebec government the first time around and the Quebec Pension funds who did not want a US company buying a Quebec business. So, they opened their own. They opened up about 14 locations, including, by the way, a few that Target abandoned and they actually bought the (crossover talk),
Steve Dennis 02:33
A bit of irony, there.
Michael LeBlanc 02:36
Well, there is a bit of irony, they bought Target, the newly abandoned Target DC. They built a state-of-the-art DC. So, Lowe's just came in and bought it. It was, you know, hard to, hard to kind of pass up. And then they took another run at Rona, and they bought them for about 2.4 billion in 2016.
Steve Dennis 03:13
What is it about US companies that can't, can't get the Canadian market right though.
Michael LeBlanc 03:17
On the whole the markets are very much more similar than different. I mean, you can, I can name you know, Home Depot, Walmart, Costco, many, many companies that are very successful here and a few that haven't been. Target there's no, Sam's was here briefly but exited the market. Sometimes I think they underestimate the complexity of the market, you know, two languages, a vast nation. It was very complex buying Rona because of their Quebec roots. And they're, you know, it's a multifaceted business with you know, I have a little Rona right near me. It's a little small store. I mean, it's a very complex business. And listen, Home Depot, it's been here for a long time. It's very entrenched, and also very entrenched with the, with the contractor. So, I don't know, maybe I don't know, maybe a bit of hubris thinking, hey, we're Lowe's, we, we can figure this out. And it's just across the border. And how hard can this be? I think, I think sometimes that prevails a little bit, a little bit in their thinking. Let's talk about, let's get, talk about economics. Again, we're not an economics podcast, but there's so much economics news coming out. And of course, it's so relevant. Where do we start, the Fed raises interest rates, and we also have some good job numbers.
Steve Dennis 04:21
We've also got this week, just quickly, the NRFs holiday forecast. So, they predict that holiday sales, so the month of November and December will grow between six and 8% compared to last year. Now last year, people may remember it was an all-time record year. It was up, holiday sales were up 13.5% over the year before now. That was a pretty easy comparison to be fair.
Michael LeBlanc 04:39
Steve Dennis 04:40
So, you know, that still looks pretty strong, of course, a lot of inflation built into those, those numbers as well. So, it's always hard to (crossover talk), the particulars.
Michael LeBlanc 04:58
That's a super interesting point. because it's six to 8%. I mean, overall inflation in the US is closer to 10%. Now, that's very category specific, there's lots more inflation and grocery than there is apparel, (crossover talk),
Steve Dennis 05:11
Michael LeBlanc 05:13
You know, parsing that six to 8% number to me feels like one to 2% of real growth if that, but you know, (crossover talk), it's not going backwards.
Steve Dennis 05:17
Best case. The other thing that was a bit concerning was that we keep seeing a lot of profit warnings, even from some companies that posted objectively some pretty good numbers. So, Canada Goose, Under Armour, Etsy, Airbnb, all pretty much had decent quarters. But they all said, you know, the party's over here for us, and we don't expect things to be very good going into, into the next quarter in the next year.
Michael LeBlanc 05:43
And of course, I'd pay a little more attention to Canada Goose. And what was interesting is they called their numbers down based on China, not based on North American sales, like they were expecting bigger,
Steve Dennnis 05:48
Michael LeBlanc 05:49
Things in the Chinese market that, that are not happening. You know what, I had an interesting conversation with a retail CEO yesterday. And he made the point that it's actually getting a little easier to hire tech people, retail for their, his retail tech, his very tech-oriented business because of all these layoffs. So, the VC funded the private equity funded businesses, you know, they seem to be laying off people. But there's still, to a point you made, the 1.7. There's plenty of jobs waiting, great jobs waiting. So, it actually may benefit in a round-a-bout way, you know, traditional or, you know, forward thinking retail players who can actually go find the people to fill those jobs, because there's plenty of them out there. All right, let's take a quick walk over to the wobbly unicorn segment. What's happening?
Steve Dennis 06:38
It was a pretty ugly week, I have to say not, not too surprisingly, but two of the biggest disruptor retail brands, I guess you could say reported earnings this week. Peloton once again continues to struggle; their sales were down a lot year-over-year. Their users were down year, down year-over-year, though up a little bit compared to the last quarter. A bit of good news, their margins are improving. And they managed to lose quote unquote, only $409 million in the quarter. I guess you'd say it's, "only" because it's a lot less than they lost the quarter before. The CEO, who I guess you have to be pretty, glass, is half full guy I guess, to be running that company he said that their turn-a-round is ahead of schedule.
Michael LeBlanc 06:58
Steve Dennis 06:59
Yeah. And you know, and to be fair, they've got a lot going on with their new wholesale partnerships. And they're doing this thing with Hilton where they're going to have Peloton bikes, so there's a lot of changes going on. And you got to pull out of the dive obviously,
Michael LeBlanc 07:18
Steve Dennnis 07:19
Before you can start to turn things around. So, some positive signs, but they are very big (inaudible) the stocks are down like 90% year-over-year, so that's not, not too exciting. And then my favorite whipping horse, Wayfair.
Michael LeBlanc 08:00
Yeah, you're a big Way-.
Steve Dennis 08:02
They're (crossover talk) reported earnings. I have to say that their ability to obfuscate that's a hard word to say I think, (crossover talk),
Michael LeBlanc 08:09
Don't hurt yourself.
Steve Dennis 08:10
And their investor presentation is very remarkable. I have followed them very closely. Because I've always thought their business model is pretty, pretty questionable. And they managed to report in a quarter where they reported sales down, where they lost $283 million in the quarter, that's a negative 10% operating margin. They lost a million customers, they managed to talk for pretty much their whole investor presentation with only the most optimistic take on everything. And because I am a bullshit spelling enthusiast. This was like, wow, this is impressive. And then the appendix they mentioned basically, yeah, we lost $280 and a million customers. So, yeah, chutzpah, I think is sort of the word that I associate it,
Michael LeBlanc 09:03
Now on the positive side, cuz I'm a glass half full, kind of wobbly unicorn section, (crossover talk), positive guy.
Steve Dennis 09:07
Michael LeBlanc 09:09
AdoreMe gets acquired by Victoria's Secret for $400 million. That's good news, right?
Steve Dennis 09:16
Yeah, that was a pretty good exit. I think particularly given some of the headwinds we see in this space. So AdoreMe, which is this lingerie brand that's really focused on being more inclusive and diverse, as well as they've employed a lot of technology, which I think is part of the appeal as well, for Victoria's Secret. Yeah, they got bought for about $400 million. I don't think we know too much about how big a brand they are, other than they've been growing pretty nicely. I think they have maybe 10 stores as well. So, you know, we talked about this sometime earlier. I think what we are going to see, because of what's going on in the investor markets, is because some of these brands continue to lose a lot of money. I think we will continue to see consolidation. So, some of these bigger brands are picking up,
Michael LeBlanc 09:52
Steve Dennis 09:54
These, these, you know, powerful, but relatively small, fast-growing brands at pretty attractive prices.
Michael LeBlanc 10:08
You've been visiting some new formats. Let's talk about that JCP Beauty JCPenney Beauty that's an JCP. They're based in Dallas, right?
Steve Dennis 10:16
They are based in Dallas, (crossover talk) and I went up to the Stonebriar mall in Frisco, Texas, which is close to their headquarters. And they are rolling out. People may remember that Sephora is largely but continuing to exit JCPenney stores in favor of the Kohl's stores. They, they have just rolled out in a few stores and will be expanding it, I think pretty much chain wide, their own concept, kind of a private brand space, similar to Sephora, but with their own brands that they've created. And so it's maybe 1000 square feet, and I went to check it out. And I would say that it's very attractively done, the product design looks good, this particular store because it is basically their flagship store close to their headquarters always looks much better than the other stores, I've been in. So, I think it's a great presentation.
Steve Dennis 10:45
The only thing I would say about it is there's not a lot of sizzle there, you know, there's no, you know, just kind of slapping the JCPenney, JCP name on a section with a bunch of brands, to me, is not really creating a lot of kind of an emotional connection for the products they sell. And beauty, of course, is a pretty emotional category. So, well executed in many respects in terms of, you know, presentation and whatnot, but I'm not sure from a branding standpoint, it's got, it's got a lot that's really remarkable. But anyway, that is a new initiative from them and something certainly to, to watch because they've got a lot of work to do. You know, it's an important category for any department store. And they're certainly lost some of the differentiation they had there with the Sephora brand.
Michael LeBlanc 11:56
Hey, Steve, are you a Frank Sinatra fan by any chance?
Steve Dennis 11:59
Well, it turns out I am.
Michael LeBlanc 12:01
Well start spreading the news. We're coming to town strapping on Vagabond shoes. I want to wake up in a city that never sleeps, king of the hill, top of the heap.
Steve Dennis 12:09
Well, that's right. We're actually heading to the NRF Big Show in New York, in January. In addition to meeting with and interviewing our top retail leaders in the industry, in the MarketDial booth, podcasting studio, we will be onstage with Gretchen Ganc, Senior VP of Strategy & Analytics from the most remarkable The Container Store. So, see us live in-person. Monday, January 16th at 12:30 on Expo Level 3, Expo Stage 3 for Shift Happens. Choose remarkable or irrelevance brought to you by MarketDial.
Michael LeBlanc 12:45
All right, well, welcome to the Remarkable Retail podcast. Chad, Cara, Cara, you and I have talked before on The Food Professor podcast. It's great to meet you in-person, Chad, you as well. Thanks for joining us here.
Chad Matthews `12:53
Yeah, (crossover talk), thank you.
Cara Keating 12:56
It's great to be here, thank you.
Michael LeBlanc 12:59
Well, it's exciting, I don't know about you two. My head is on a swivel at this conference. Like it's so, like It's a bit of a sensory overload. I visited your fantastic presentation. There's so much going on all the time. Thanks so much for taking the time to sit down and chit and chat with us. So, let's dive right in and we're going to ask you two, a little bit about what your role is and describe your role. As I understand it, it's kind of two sides of the same coin. Cara, why don't you kick us off. Tell us what you do for a living.
Cara Keating 13:17
Sure. So, my name is Cara Keating and I'm the Chief Customer Officer for Frito Lay US. I am new in the role in the last couple of months previously, where I knew Michael was in Canada where I led the Canadian foods business. Frito Lay and Quaker. So, I've been with PepsiCo for 18 years. And if you think about my role as the food side, that is the other side of the coin with Chad in the beverage side. Right. Right and Chad, so talk about the beverage side. It's (inaudible), lots of different brands tell, tell us more.
Chad Matthews 13:50
Yeah, that's great now I'm, so I'm the Chief Commercial Officer for Pepsi Beverages North America. And I've been in the company 24 years, I've actually been in roles, leadership roles across both foods and beverages. And in my current role, I lead our commercial and our national customers along with our go-to-market revenue management and industry relations.
Michael LeBlanc 14:08
So, 18 and 24. So, long serving, right, is that typical for the organization? Or do people come and stay and, and it's a great place to work, clearly, you've both been there, you've spent a great career there. So, Cara what do you think?
Cara Keating 14:20
It is difficult. We do have a lot of employees with a lot of tenure. And because of the size and scale of our business, and we have the foods and the beverages it creates a lot of growth opportunities for people in their careers.
Michael LeBlanc 14:31
Right. And that growth opportunity was presented to you recently. Was that something? I'm just curious, was that something you sought out or something presented? How does it work at PepsiCo, like you say, listen, you're on for the next step. And here's a menu of opportunities, how did that transpire?
Cara Keating 14:44
It's always a little bit of the capabilities and experiences that you're looking for, timed with the opportunity of those roles coming up.
Michael LeBlanc 14:51
Cara Keating 14:52
And so, for myself, I was open to an experience outside of Canada, and this came up and so it's been an exciting journey so far.
Steve Dennis 14:59
Now I heard it was your childhood dream to be in Plano, Texas. That's not true? (Crossover talk), I got bad information from, let me get through our first winter, and then I'll let you know. Well, having, having moved from Chicago to Dallas, I can tell you the first winter was a different ex-, a different and better experience. But anyway, well, so obviously, PepsiCo is a huge company, I continue to be surprised by which brands I learned that you guys actually own or have launched or whatever, but maybe, I don't know, Cara, maybe you can just give us kind of a good, a quick flavor of the scale and scope of PepsiCo, but maybe more in particular, what you think makes PepsiCo as a company, unique in the food and beverage world?
Cara Keating 15:41
You bet. So, PepsiCo has one of the largest food and beverage portfolios in the industry. And one of the things that makes us unique is the amount that we invest into innovation. And we see that as a growth driver and fuel for retailers to help drive growth together. So, we invest a lot in innovation.
Steve Dennis 16:00
And Chad, do you have a perspective on how you think about, and I don't know if it's different across the divisions, but when you think about innovation, you know, what does that mean? What's the process? What informs the kind of innovation choices you're making? Yeah, for
Chad Matthews 16:14
Yeah, for sure. So, innovation is always consumer centric. So, we always start with the consumer in mind to develop our innovation to meet those consumer demands. And, you know, like Cara said, innovation is a core tenet to our growth. And what we want to do is delight our consumers every day and grow our categories for our retailers. And, you know, we feel very proud of how we bring innovation to life. That's a core tenant, when you think about, you know, the most successful retailers usually bring our portfolio of innovation to life. And we use a lot of analytics to help our retailers as well with the assortment to complement that innovation as well. So, we have a lot of data and analytics that we use to, you know, segment shoppers, and make sure that we have our portfolio in the right places of where the consumers would expect to find it.
Steve Dennis 17:01
And has that changed over the years I worked in CPG, a million years ago. And you know, the results for the standard research techniques. But obviously, a lot has changed over time. I'm just kind of curious how and if the innovation processes, how it's evolved, I guess is a better question over the last few years?
Chad Matthews 17:19
Yeah, absolutely, absolutely more consumer centric. And we actually use a lot more data and analytics. So, we have a data engine, backed by data science called Pepviz. And that actually helps us inform what innovation that we helped launch and where we launch it, and how we launch it. And so,
Steve Dennis 17:39
So, can you give us a little color about how that, how that works?
Chad Matthews 17:40
Yeah, sure. So, Pepviz, it's once again, data science, we also have experts in the industry that leverage this with our retail partners to bring innovation to life. And what I mean by that is, we really look at how we bring innovation life on shelf, how it complements the current portfolio and how it stands out to the consumer to bring new and excitement into the category? And do you, Cara maybe for you and if there's some differences across, I guess the person (inaudible) the division, that would be interesting, but is that are you doing a lot of prototyping is there, you know, what, what does that look like in, in practice?
Cara Keating 18:17
Yeah, you bet. If you want to start with a piece of innovation, you'll probably start with 100 plus ideas, and then figure out how you're going to take that to get some consumer research behind it and scale your ideas down until you get to those 10. And then you'd start to really prototype virtually, to get that again in front of consumers and get some really great feedback before we decide what we're actually going to launch.
Steve Dennis 18:39
Yeah, and I imagine it is much more, like what you can do visually, today is quite a bit, you know, before you had to like you know, set up the whole thing in store. Now you can do a lot more through renderings, and that sort of technique. Yeah, interesting,
Michael LeBlanc 18:51
So, I'm enjoying a very nice new fresh flavored Doritos here today. Tell me about this chip. And tell me about how something like this comes to be a grapefruit flavor profile. But, you know, as Steve is saying, as an organization, you basically have unlimited resources relative to many that doesn't mean you throw money around. So, you know, what's the journey of a product like this? Is it a year? Is it two years? Where does this start?
Cara Keating 19:15
Well, I see you've been at our PepsiCo booth, you got some snacks,
Steve Dennis 19:18
Bite and smile Michael, bite and smile,
Michael LeBlanc 19:20
Cara Keating 19:22
I mean that's one of the great things about this show is its connection with people and the product. And so, we've hosted a lot of people who've got to try the innovation. So, what you're trying is part of our, (crossover talk), glad you like it,
Michael LeBlanc 19:33
We're going to take a pause for a snack right here, (crossover talk),
Steve Dennis 19:35
Now a word from our sponsor.
Cara Keating 19:37
Yes, yes. So, what you are tasting is some of the new flavor trends. So, we know that consumers like spicy foods, but this is adding a bit of a tanginess to it. So, with Dor-, Doritos barbecue, you'll taste as sweet and tanginess to it. And that's coming to life for you in that chip.
Michael LeBlanc 19:57
Chad let's talk about the convenience store industry. I mean, it's a massive conference here. I imagine it's a very important segment of segments, kind of lay out in your world, both of your worlds, talk about what excites you about what's happening in the convenience store category?
Chad Matthews 20:10
Well, in the convenience channel, it's dynamic right now. And a lot of things are shifting, the shopper behavior is shifting. When you think about it, you know, probably we had a lot of retailers that I would talk to early in the year that were very nervous about the economy, with gas prices going up historically, that would equate to traffic going down in the convenience channel. But what I tell you, what's exciting about it is it didn't actually grow throughout the summer. And this channel is dynamic right now, because there's a lot of kind of channel blurring that's happening. So, you know, you have a convenience channel competing for food service with the quick serves of the world,
Michael LeBlanc 20:30
Chad Matthews 20:31
Omni-channel is really pre-, prevalent in grocery, but now becoming really prevalent, with the convenience channel,
Michael LeBlanc 20:37
Say, say more about that. What do you mean?
Chad Matthews 20:40
So, ordering online, where, you know, on a convenien-, convenience channel, there's a lot of now new technology that enables people to order online and get deliveries within, you know, an hour or two and, and so those platforms are really getting built out right now and starting to scale across the channel, which is exciting.
Michael LeBlanc 21:15
Is it an opportunity that you both see for your products, that kind of omni-channel? Or is this through the vendor partners? I mean, you know, 10 years ago, if we're sitting here, maybe even 20, we're talking about going direct, you know, that was a big talk amongst, well, if I can, I should, but we all know, that's much, much easier said than done. And it's not always the right thing to do, particularly in products like yours. Talk about how you think about it, Cara, talk about how you think about that? Yeah, absolutely.
Cara Keating 21:36
Yeah absolutely. We want to be where the consumer wants to purchase the product, when they want to purchase it and how they want to purchase it. And so we are much more versed in that pre-shop, and they might be doing that part online.
Michael LeBlanc 21:55
Cara Keating 21:56
And they may have a combination of being in store or purchasing products online. And then their push up, they may be doing different things and interacting with social media in different ways with brands. So, it's really evolved, and we want to be and partner with our retailers in all of those locations. We also have our own direct consumer business called snacks.com. That we've also dabbled in, I would say,
Michael LeBlanc 22:09
Cara Keating 22:11
And but it is, you know, it's not easy to create a scale,
Michael LeBlanc 22:16
Even for a business of your size, right? Even, even for a business of your size. And I guess the objective is one plus one equals three, right? You, what you're trying to do is you have both let's call it wholesale or distribution plus whatever direct looks like, right?
Cara Keating 22:28
We're really trying to build those capabilities across the entire omni-channel. So, that's how we talk and interact with consumers and also how we go to market and deliver our products at the end of the day, whether it's to a retail store or a location.
Michael LeBlanc 22:41
And Chad, you talked about the changing nature of consumption, like we were all a little bit surprised to how it didn't change in the same direction it would have historically, we've been talking to some folks here, and they've been telling us that, well, maybe the convenience store lost off in a bit of the breakfast day part because people are working from home, but they're making it up as people want to go for a break or they are having dinner, is that what you're seeing as well in coordinating your efforts against different day parts that you wouldn't conventionally of thought for, for the, (inaudible).
Chad Matthews 23:08
Absolutely, dayparts are critical. And we didn't see a drop off in the dayparts on the breakfast occasion. But I think those are getting made up and the other parts of day, of the day, occurred in lunch and after kind of, the dinner.
Michael LeBlanc 23:24
Chad Matthews 23:25
So, ya know, we have a portfolio that has a wide range that plays across breakfast past dinner, and we haven't seen a whole, a big slowdown in, in our portfolio across those dayparts which is exciting.
Michael LeBlanc 23:35
And when the convenience store folks are sitting in front of you, what are their key issues that they need help with? Like as I understand you've got a convenience store, you've got some very big, large players and you got a lot of very small players, you need to be there for both of them, right? Cara, what do you think about that?
Cara Keating 23:50
Retailers are trying to win the trip. So, get the consumer into their store. And then once they're in their store satisfy the needs that they're looking for. So, whether it's the daypart, and you know, really make it a, you know, one-stop shop for them, whether it's a fill in, whether it's grabbing lunch, whether it's in the morning, getting your coffee, and a cookie, for example, whatever it is,
Michael LeBlanc 24:02
A break from the home office, right?
Cara Keating 24:07
Chad Matthews 24:10
I would also add, you know, with the inflation that's occurred. You know, retailers are very and so are we passionate about growing units. So, we really need to continue to find ways as the basket is bigger, and it's still driving growth. But we really need to get back to driving units, which is a core tenet to be growing your business to make sure it's healthy.
Michael LeBlanc 24:31
And that's kind of the idea that more volume solves a few sins of profitability, you raise the volume up and everything stays, you can get (crossover talk) your profitability for you and the channel, right?
Steve Dennis 24:44
So, let's look forward to the future a little bit, I would like both of you to just maybe weigh in on this. As you think about what you need to understand, what you need to make sense of, whether that's from the consumer standpoint, whether it's from your partner standpoint, technology standpoint, how do you go about doing that? I think our audience would love to hear a little bit about what that pro-, because you guys are so good at it. Obviously, you've got this machine. It's been creating innovation for, for decades, I guess, at this point, how do you go about doing that? Kind of paint a picture for, for those inputs in that process.
Chad Matthews 25:18
Yeah, so there's probably a couple things that come to mind. It's a collaboration between us and our retail partners on the problems to solve. And I think we always go about it with a framework of, you know, product innovation, getting it faster to the market, we also look at stronger data and insights, to inform, you know, the next, next best action. And then I think we also have a commitment to sustainability and social responsibility that is playing a much bigger part in the retail landscape to help drive growth.
Cara Keating 25:49
So, we call that pep positive. And that's really our end-to-end journey for positive action for the planet and people. And we want to partner with our retailers to bring that to life in different ways. So, for example, we have a Cheetos program called Deja tu Huella, which focuses essentially, that translates to make your mark. And how can we help Hispanic communities with the donation of money and funds and install programs to amplify voices? So, that would be an example of where we're trying to partner with our retailers to bring things that help our planet and communities to life?
Steve Dennis 26:24
And how do you, you know, we, this has come up a bunch of times on the podcast, you know, lots of, I mean, most companies now are talking about being good, and have been in some cases for a long time talking about being good corporate partners. But a lot of times, you know, the healthier choice, the more sustainable choice, whatever it is, is more expensive, either the consumer has to pay a higher price, or there's the profit impact. How do you weigh, weigh that is a ROI calculation, is it good business, is it a, is it just the right thing to do? I mean, it just seems like there's a lot, you know, if we are being honest, there's just a lot of pressure to, to, to balance those things. Is there any kind of inkling you can give us to how you, how you guys are solving for that?
Cara Keating 27:02
Yeah, I think we've put a stake in the ground that it is the right thing to do. And our pep positive brings that to life. And there will be a cost component. So, we have to find other ways to offset those costs. Some of it isn't necessarily a cost component. So, as we reduce sodium in products, for example, it takes a lot to innovate, and make sure that we get the right flavor because people (crossover talk) still want snacks that taste good.
Steve Dennis 27:21
Cara Keating 27:22
But otherwise, that'd be fairly cost neutral, versus other things that are huge investments in terms of finding new and different packaging solutions for the future, offsetting, you know, carbon emissions in different ways. So, it is a big investment, and we are committed to it.
Michael LeBlanc 27:42
All right. Well, listen, it's been so fascinating. Thank you both so much. I imagine you're like, super busy. You've been running off your feet, meeting with all kinds of important people. We want to thank you so much for joining us on the Remarkable Retail podcast. Cara it is such a treat to meet you in-person,
Cara Keating 27:56
Yeah, great to see you again.
Michael LeBlanc 28:00
I had to go to Las Vegas to do it. But maybe we'll connect again. And Chad and both of you. Congratulations on your success, continued success. And once again, thanks for being on the podcast.
Chad Matthews 28:05
Yeah. Thanks for having us. It was really great.
Cara Keating 28:07
Thank you. Great to be here.
Michael LeBlanc 28:10
If you like what you heard, please follow us on Apple, Spotify, your favorite podcast platform so you can catch up with all our great interviews, including Hal Lawton talking about Tractor Supply's remarkable ‘Life Out Here’ growth story. New episodes of Season 5 presented by MarketDial will show up each and every Tuesday. And be sure to tell your friends and colleagues in the retail industry, all about us.
Steve Dennis 28:30
And I'm Steve Dennis, author of the bestselling book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. You can learn more about me, my consulting and keynote speaking at stevenpdennis.com.
Michael LeBlanc 28:44
And I am Michael LeBlanc, Consumer Retail Growth Consultant, keynote speaker and producer and host of a series of retail trade podcasts including this one. You can learn even more about me on LinkedIn and you can catch up with Steve and I in-person at the NRF Big Show in New York, January 16 on the stage, talking about what it takes to be remarkable with The Container Store, SVP, Gretchen Ganc.
See you in New York, everyone.
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