Earlier this month, Drinks sold Wine Insiders for an undisclosed sum to Full Glass Wine Co., which also owns the Winc retail wine ecommerce site. The sale opens the door for Drinks, or Drinks.com, to focus on selling its digital commerce technology stack, designed to enable any online merchant to add alcoholic beverages to product catalogs and such venues as “influencer” web storefronts.

Zac Brandenberg, CEO, Drinks Holdings Inc.

While ecommerce is a fast-growing channel for consumers to discover and purchase beverages, sales of alcoholic beverages through the digital channel are growing even faster, says Drinks chief executive and co-founder Zac Brandenberg.

“Consumers want to engage with brands/merchants at their convenience — where they want to, when they want to. That means from their laptop, their phone, their couch, etc.,” Brandenberg says. “As the alcohol category starts to come online, you’re going to see consumers rapidly adopt a digital shopping modality.”

To capitalize on consumers’ growing preference to purchase alcoholic beverages online, Drinks’s strategy is to focus on bridging the gap between consumers’ growing desire to purchase alcohol online and alcohol companies’ ability to scale online sales. The sale of alcoholic beverages in the United States totals about $250 billion, the company says.

“The growth in the sale of alcoholic beverages online increases the total addressable market opportunity because it expands consumer choice and access, particularly in markets where regulatory restrictions have limited shopping access points or SKUs available to consumers or created other impediments,” says Brandenberg,  adding: “The growth in the sale of alcoholic beverages online is not being fueled exclusively by the shift away from brick-and-mortar shopping.”

At the core of Drinks’s business is its Drinks app for Shopify, which provides Shopify merchants of all sizes with an embedded, real-time alcohol tax and regulatory solution. In addition, the platform helps merchants that want to sell alcoholic beverages manage regulatory compliance, required disclosures, customer messaging, product catalog and inventory management, merchandising optimization, and product fulfillment.

An app for managing online alcoholic beverage sales

“Our vision is to provide an operating system for this industry — that means any business that wants to sell alcohol online,” Brandenberg says. “Our Drinks Shopify App provides the regulatory technology for alcohol producers and merchants to sell alcohol online.”

In addition to its core regulatory tax compliance platform, Drinks offers a wine-as-a-service (WaaS) platform to develop a branded nationwide wine program and offer omnichannel shopping experiences. As a result, ecommerce merchants that don’t carry a liquor license can add alcoholic beverages as a product category in a fully compliant manner directly to their storefront, Drinks says.

Retailers such as Macy’s Wine Shop, Thrive Market and Misfits Market use the Drinks platform.

Other apps offered by Drinks include its Pair platform, which uses data-driven insights with artificial intelligence and machine learning to create personalized shopping experiences. The company also operates a customer experience and retention agency called Electriq, which helps wineries take the tasting room experience online and increase customer loyalty through lifecycle strategies, email/SMS marketing, and web design and development.

“We have a lengthy waitlist of merchants who want to add beverage alcohol products into their storefronts, covering almost any audience,” Brandenberg says. “Drinks is enabling any business that sells something online to now be in the alcohol business. We are able to power online, direct-to-consumer alcohol commerce for bellwether retailers, digital-first commerce brands, and celebrities like Martha Stewart and Geoffrey Zakarian. As we scale our technology footprint, more merchant types, as well as experts, creators and influencers will follow suit.”

One merchant segment that looks especially promising is “creator” and influencer websites, which are not part of the alcohol ecosystem in the traditional sense. Tapping this merchant segment represents new distribution opportunities for alcoholic beverage brands.

“The early innings of creator/influencer-driven marketing have operated similar to an old-school affiliate model, where an endorsement led to a transaction on a brand/merchant site,” Brandenberg says. “That’s obviously evolving, and opportunities abound for the creators themselves to be the conduit for transactions, to maintain that one-to-one relationship they have with their audience. That presents an opportunity for us to enable an ever-increasing number of consumer-facing commerce sites or outlets.”

Peter Lucas is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy.

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It took a significant step in that direction yesterday in announcing several appointments to key positions including vice presidents in ecommerce and omnichannel development, customer and supplier relations, and national retail sales.

“These teams continue to evolve under the National Accounts umbrella, enabling Southern Glazer’s to remain the strategic thought partner to grow these categories and gain market share,” Southern Glazer’s said in statement.

Southern Glazer omnichannel development

Robyne Eldridge, vice president, omnichannel development, Southern Glazer’s Wine & Spirits

Robyne Eldridge is the new vice president for omnichannel development. In addition, she will continue to lead digital B2C operations, development of ecommerce business priorities, and supplier integration.

Included among her duties is leading “B2C deliverables for digital-first eCommerce Business Priorities development,” the company says, adding: “The B2C Omnichannel team creates targeted goals to grow ecommerce sales and share for our suppliers. Digital allows us to support suppliers’ brick-and-mortar program priorities and also amplify support with digital-only opportunities.”

“Robyne oversees a team of B2C omnichannel ecommerce sales directors that work closely with our national accounts teams to find ways to grow sales and share for our suppliers at our most ecommerce enabled national accounts,” a spokeswoman says. “Robyne also oversees a new digital Center of Excellence to provide digital insights in this fast-evolving space and also support the integration of omnichannel capabilities throughout the 100+ person national accounts organization.”

Eldridge joined Southern Glazer’s in December 2019 and most recently served as vice president, B2C ecommerce for national and regional accounts.

Eldridge will report to Chris Williams, executive vice president of national accounts.

Reporting to Eldridge will be:

• Sam Raia, senior director, omnichannel development;
• DarShanna Smith, senior director, Amazon sales;
• Sarah Twitchell, director, liquor channel;
• Brennan Duke, director, mass market, club and drug channels;
• Jennifer Bailein, director, grocery sales.

Customer and trade development

Ryan Saas has been promoted to vice president of customer and trade development for national retail sales and on-premise sales. In his new role, he will drive supplier relations and manage Southern Glazer’s NRS business with support from customer development category experts. Saas will report to Williams.

National retail sales

JR Allen has been promoted to vice president, NRS Commercial Operations. He will work on demand forecasting, inventory and execution.

Nicolle Nottingham has been appointed senior director of GoBrands. She will work on strengthening and fostering national strategy with national retail sales suppliers.

Allen and Nottingham will report to Scott Moore, senior vice president of national accounts off-premise.

Center of Excellence

Adam Byrne has been appointed vice president, customer planning and development for Southern Glazer’s Center of Excellence. His duties will include focusing on the COE’s Elevate program, which recommends branded merchandise to customers. He will report to Williams.

In July, Southern Glazer’s hired ecommerce veteran Alan Wizemann as its chief digital officer. In prior roles, he worked in digital operations for Munchkin Inc., Target.com and Lululemon Athletic.

Southern Glazer’s racked up $3 billion in digital sales last year on its B2B ecommerce platform SGProof.com.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Blue Apron is an online retailer that helped to create the meal planning and ingredients ecommerce market. It has been acquired in a stock deal valued at about $103 million.

Wonder Group acquires Blue Apron

Blue Apron is being sold to Wonder Group, an online food-to-home delivery company, founded by serial ecommerce entrepreneur Marc Lore.

Lore pioneered combining digital community with ecommerce with the launch of Diapers.com in 2005. Amazon.com later bought the ecommerce business for $545 million in 2011. From 2011 until 2016, Lore next launched Jet.com, a general merchandise and shoppers club. Walmart acquired Jet.com for $3.3 billion in 2016 and named Lore as president of Walmart.com.

He worked at Walmart until 2021 and then went on to start Wonder Group. Lore’s Wonder Group is now acquiring Blue Apron to build out its business-to-consumer ecommerce model for home food delivery and meal preparation.

“Wonder is creating the mealtime super app, serving a broad range of occasions that feature cuisines from some of the world’s best chefs and restaurants while leveraging our culinary engineering and vertically integrated model,” Lore says. “At-home meals play a key role in this vision and have been on our strategic roadmap since the beginning.”

Why does Marc Lore want Blue Apron?

With the acquisition of Blue Apron, Wonder Group is purchasing a company that processed more than 8 million orders for more than 350,000 customers in 2022. It will give Wonder Group a bigger base to expand and diversify its online food delivery operation.

“When the opportunity presented itself to unite with Blue Apron, pioneers in the meal kit industry, we knew it would accelerate our strategic position (and) create immediate opportunities for synergy,” Lore says.

Under the terms of the merger agreement, Wonder will acquire all outstanding shares of Blue Apron Class A common stock for $13.00 per share in cash. The companies expected to close the transaction by the end of December.

“The transaction delivers immediate and certain value for Blue Apron stockholders at a significant premium over recent trading prices,” says CEO Linda Findley.

Blue Apron generated revenue in 2022 of $458.5 million. That’s down 3% from $470.4 million in 2021. It had actively been looking for a buyer, according to various industry financial reports.

Blue Apron is No. 195 in the Top 1000. The database ranks the largest online retailers in North America by web sales.

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“We want to meet the consumer where they are, and they prefer digital experiences — but it’s also really good for our business,” Glaser says. “We get so much more data to inform our future plans and marketing choices from a performance marketing perspective.”

General Mills can be more flexible by offering digital promotions, Glaser says. This includes incentivizing the consumer to take action when they’re most likely to convert.

“How do we build those relationships with consumers?” asks Glaser.

One way General Mills is building incentives for customers is through the Fetch rewards mobile app. Consumers download the Fetch app and create an account. They take photos of their grocery shopping receipts from in-store or online shopping and upload them to the app.

Consumers earn points they can redeem for gift cards. Eligible receipts that have at least one participating brand may receive at least 35 points. Each dollar is worth one point. 1,000 Fetch rewards points are worth $1, for example, and consumers need to reach 3,000 points in order to redeem for gift cards at stores including Starbucks, Macy’s, Amazon, Nordstrom Rack and Home Depot as well as for Visa cards. Fetch charges participating retailers like General Mills a referral fee.

Brand loyalty: What it is and how to build it

There is a lot of data exchanged between Fetch and General Mills, Glaser says.

“We get a ton of data from the Fetch partnership — about 62 million lines of data per day,” he says.

That data feeds into the brand’s customer data platform (CDP), which is a software platform that collects first-party data from multiple sources to help brands create targeted and personalized marketing campaigns.

“Loyalty programs are something that the consumer packaged goods (CPG) space isn’t necessarily ubiquitous — it’s something not all CPGs have nailed,” Glaser says. “We wanted to be intentional. What does that look like? How does it come to life?”

In March 2023, General Mills said it had added 2 million customers to its Good Rewards loyalty program with Fetch within the first six months of launch.

Consumer engagement experience

Fetch has about 18 million monthly active users, with 6 million of those using the app every day, says Robin Wheeler, the chief revenue officer at Fetch. In April 2023, the rewards app said it had surpassed $152 billion in annual gross merchandise value (GMV) across U.S. in-store and online retail sales.

“Fetch isn’t your traditional kind of shopping app,” Wheeler says. “It’s a consumer engagement experience.”

A larger portion of consumers are Millennials and Gen Z, Wheeler says.

“The younger generation is definitely coming to Fetch and I think a lot of that is tied to the experiences they’re seeing on social media,” Wheeler says.

Fetch rewards: adding brands

Fetch shares its general merchandise value scanned daily, Wheeler says. Fetch employees also track potential opportunities.

“We’re reading the trades and keeping up to speed on industries,” she says. “If we’re seeing national brands start to compete with a certain brand of deodorant, for example, our primary goal is to focus on where we’re seeing a lot of activity where we’re not currently rewarding consumers. Because that’s low hanging fruit.”

The company uses this information as it attempts to build relationships with other brands.

“There are plenty of big companies we haven’t started working with, and we need to be there,” she says.

This includes providing carousel information displayed at the top of the app that consumers see when they open it. Whether the promotion is about back to school or another busy shopping period, brands also want to include their offers and create more consumer awareness.

Fetch also has daily spin feature where consumers can obtain a daily reward.

Brands use influencers to reach new customers

This includes learning about the app from social media influencers, Wheeler says.

Fetch can share with brands what consumers are spending based on the receipts they upload to the app. Brands can target consumers, whether they’re loyal customers or “competitive buyers, which you have a to work a little bit harder for,” Wheeler says.

Fetch works with influencer agencies to source talent, Wheeler says. The company monitors influencer content and when it finds the right fit, it reaches out with affiliate links.

While the majority of Fetch receipts are in-store, Wheeler says online receipt uploads are growing.

“We have integrations with Amazon and Walmart,” Wheeler says. “We also have emailed receipts. If we have your email integrated and you order from DoorDash, we’re able to scan and pick up that receipt. So emailed receipts are definitely growing.”

Consumers can connect their Fetch account to their email, Amazon and Walmart accounts to earn Fetch rewards.

Fetch social

• 61% of Fetch monthly active users engaged with social features during July, up from 24% in January.
• Daily Reward launched in December 2022. Consumers have played daily rewards over 222 million plays since then.
• People who engage with social features/in-app games are more likely to scan receipts every day and have retention rates around 4-5 points higher than cohorts that don’t engage with these features.

Fetch eReceipts

• On average in 2023, about 10% of all receipts submitted to Fetch were eReceipts.
• About 29% of Fetch users who scan receipts also submit eReceipts.
• Top retailers include Walmart, Target, Sam’s Club, Walgreens, McDonald’s, Starbucks.

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The company is eyeing new growth by providing its buyers and sellers with national logistics services under an expanding arrangement with Flowspace, a fulfillment software and infrastructure provider with more than 150 fulfillment locations across the United States, including temperature-controlled facilities operated by farm produce supplier Fresh Del Monte.

“With our accelerating growth from coast to coast, we need a partner with the best warehousing capabilities in the most sought-after retail grocery markets in the U.S.,” says Peter Gialanztis, senior vice president of sales and operations for Pod Foods.

Nationwide Sprouts Farmers Market joins the Pod marketplace

Pod’s network of participating grocery retailers includes such names as goPuff, Dom’s Kitchen & Market, Plum Market and, most recently, the national chain Sprouts Farmers Market.

Pod’s digital marketplace, PodFoods.co, connects these and other merchants with emerging brands. Those include:

• SANS meal bars
• Blue Elephant Soup Ready to Eat
• Beanitos Bean Chips
• 505 Southwestern Roasted Green Chile
• Sati CBD Soda
• Altitude Functional Beverages’ Functional Oat Milk Lattes.

Pod started rolling out Flowspace logistics services in 2022 for an initial location in Ocala, Florida. It has since expanded the arrangement with Flowspace to cover facilities in:

• Atlanta
• Denver
• Sacramento
• California

Additional locations are in the works, Gialantzis says.

“The opening of the Denver, Atlanta, and Sacramento warehouses this summer are just the beginning,” he says. “With this flexible capacity, we are able to expand our distribution footprint into key new geographies to keep pace with all of the new brands and retailers joining the Pod Foods supply chain.”

Erik Lucas, an executive of LifeAid Beverage Co., a supplier on Pod’s marketplace,  says it has helped to expedite getting products on grocery store shelves.

“We were able to roll out a nationwide promotion from first conversation to the shelf in less than four weeks,” he says in Pod Foods press release.

Analytics data on sales metrics

Pod Foods also provides retailers and suppliers with analytics based on such data as

• Total number of orders
• Cases sold
• Monthly sales by location

In addition, it offers such services as consolidating deliveries and invoices, processing rush orders, and customer service.

Pod Foods asserts that its business model is designed to provide brands with higher profit margins, as detailed in a sample pricing structure on its website, compared with more traditional distributors.

Pod Foods has raised $18.6 million in funding, according to Crunchbase. Larissa Russell, the CEO, and Fiona Lee, the chief product officer, co-founded it after they launched the Green Pea Cookie baking company in 2014.

“Our story is the story of the brands on our catalog,” Russell and Lee say in a blog on the Pod Foods website. “Like so many, we were faced with a common distribution dilemma. We could self-distribute to a limited set of direct retail accounts, or we could attempt to work with the big traditional distributors that were conceived decades ago. We knew they could easily squeeze us out with their high cost and opaque operations.

“Three years later, we decided to stop making cookies and create a tech-enabled grocery supply chain designed for brands first. We needed Pod Foods, so we created it. In nature, a pod creates an environment for peas to grow and thrive, and that’s what we’re doing for brands small and large, near and far.”

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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C&S will pay $1.9 billion in cash for the stores, which are mostly located in the West and middle of the country, the companies said in a Sept. 8 statement. This confirmed a Bloomberg News report from earlier that week. Closely held C&S is a major grocery wholesaler that also operates Grand Union and Piggly Wiggly stores.

The same day, the United Food and Commercial Workers International Union released a statement in response. It said its “team of experts will be analyzing every aspect of this proposed deal and will assess the impact, positive or negative, that it may have on our UFCW members, the customers we serve, and the communities we call home.”

The Kroger Co. is No. 8 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest online retailers by web sales. Albertsons ranks No. 26.

Fighting for (antitrust) approval

Kroger is betting the store sale will help it persuade the U.S. Federal Trade Commission to allow the Albertsons transaction. The transaction is the centerpiece of the retailer’s push to keep up with Walmart Inc. and Amazon.com Inc. The FTC, which has recently challenged high-profile deals in video games, pharmaceuticals and mortgage software under Chairman Lina Khan, is scrutinizing the merger’s impact on grocery competition.

Amazon ranks No. 1 in the Top 1000. Walmart is No. 2.

“This comprehensive divestiture plan marks a key next step toward the completion of the merger by extending a well-capitalized competitor into new geographies,” Kroger and Albertsons said in the statement.

Frontline workers will remain employed and existing collective-bargaining agreements will continue, they said. Kroger may require C&S to buy a further 237 stores in connection with efforts to win regulatory approval of the Albertsons deal, which would bring the total divestitures to 650. That’s the number Kroger had earlier defined as the ceiling for store divestitures.

The Cincinnati-based company also released financial results for its fiscal second quarter. Kroger grew digital sales 12% in the quarter.

The FTC still could sue to block the deal. Labor unions including UCFW and officials from a range of states have urged the regulator to oppose the merger. They say it would hurt wages and competition. Some senators and members of Congress have also criticized the transaction.

Kroger said the Albertsons acquisition remains on track to close in early 2024, with CEO Rodney McMullen having vowed to fight in court if necessary.

Store footprint

The agreement with C&S covers stores in 17 states and Washington, DC, along with eight distribution centers and five private-label brands. The sale also includes the QFC, Mariano’s and Carrs banners, plus exclusive licensing rights to the Albertsons brand name in Arizona, California, Colorado and Wyoming.

On a combined basis, Kroger and Albertsons currently have a footprint of about 5,000 stores. Walmart has roughly 5,200 retail locations in the U.S., including about 600 Sam’s Club warehouse stores. Amazon, which is already a force in categories such as diapers and some packaged goods, recently began the biggest overhaul of its grocery business since it acquired Whole Foods Market six years ago.

When Kroger announced the Albertsons acquisition in October, the companies said they would spin off as many as 375 stores if they couldn’t find buyers. Kroger later suggested in a merger agreement that 650 was the upper limit for divestitures.

For C&S, the deal will further an expansion into retail grocery stores. The Keene, New Hampshire-based company bought 12 stores from Tops Markets in 2021 when the latter grocer merged with the Price Chopper/Market 32 chain. The FTC approved that divestiture.

“C&S recently expanded its retail operations with the acquisition of 11 Piggly Wiggly Midwest retail stores, and hired a former retail grocery executive with significant retail experience to lead retail efforts,” the regulator said at the time.

In its sprawling wholesale business, C&S supplies more than 7,500 independent supermarkets, chain stores, military bases and institutions with over 100,000 different products.

Aldi opens 1,000th UK store

Aldi opened its 1,000th UK store on Sept. 7 and committed to a further 500 outlets in the country as the German discount grocer snatches market share from rivals.

The supermarket had previously aimed to have 1,200 stores by 2025 and is now targeting 1,500 over the long term, Aldi said that day. That’s ambitious growth for a company that opened its first store in Britain in 1990.

“We’re looking for new Aldi stores from Hackney to Harrogate and Bath to Brentwood,” Giles Hurley, chief executive officer of Aldi UK and Ireland, said in a phone interview. “We’ve had an unwavering will to grow in the UK and that’s been backed up by capital.”

U.K. shoppers have been flocking to Aldi as inflation erodes their purchasing power during the cost-of-living crisis. The discounter became Britain’s fourth-largest grocer last year, knocking Morrisons off the spot. Now, £1 in every £10 spent at U.K. supermarkets is at Aldi.

Shoppers are turning more to store-brand goods to tackle rampant food inflation, a trend that favors Aldi. The grocer also stocks fewer big brands than competitors. The grocer has served more than 1.1 million new customers over the past 12 months, said Hurley.

“We’ve seen customers switch their shopping” to Aldi, he said. “Existing customers are consolidating their spend with us and treating us as a first-stop shop.”

The grocer is growing sales at the fastest pace among supermarkets, seeing an increase of 21% in August from a year earlier, according to Kantar data. Sales at fellow discounter Lidl rose by almost 20% in the same period, while revenue at higher-end rivals Waitrose and Co-op rose by 4.4% and 3.4% respectively.

Competitors are watching Aldi’s rise closely. Both Tesco Plc and J Sainsbury Plc have pledged to match Aldi’s prices on hundreds of goods, while grocers are increasingly doing away with in-store food counters and delis in favor of the discounters’ simpler approach.

More reductions

Food inflation has begun to ease in the UK, though remains at a high level, with the Office for National Statistics reporting a rate of 14.9% in July. Supermarkets are keen to demonstrate they are cutting prices where possible.

“I’m quite optimistic that between now and Christmas there will be more price reductions in our stores,” said Hurley. “When it comes to the longer-term picture on inflation it’s definitely more difficult to read. There are a lot of influences on the grocery sector.”

This year, Aldi will open 20 stores as part of its existing £1.3 billion ($1.6 billion) expansion plan. The new one opening in Woking, Surrey, is one of more than 150 that Aldi has in the South East, as it seeks to attract customers in the affluent region.

Aldi also relaunched its website, priming it for ecommerce growth. The grocer is not currently ranked in any Digital Commerce 360 databases.

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But with the new generative artificial intelligence tools available to brands, it could be “10 to 100 times faster than the manual process for image creation,” Perino says.

“That’s a great opportunity to do something quickly versus having to wait for a photoshoot or having to use stock images,” Perino says.

But right now, Perino is not confident generative AI is ready to create images from scratch for its brand. For example, if the brand were to say, “create a Ghirardelli logo,” Perino is doubtful the AI would get the logo exactly right.

And getting it exactly right is critical.

“We have very high expectations for how our images to look,” she says.

Where Ghirardelli Chocolate Co. is currently using generative AI is for editing images on its product detail pages. On a recent photo shoot for its new no-sugar-added baking chips, the brand used generative AI to remove part of a napkin in the image and fill in the background with a part of the product’s bag.

Ghirardelli uses AI to decide how to tweak product images

But editing is as far as Ghirardelli will let the generative AI create. The brand will, however, use artificial intelligence to help guide its decisions about what images should look like.

Since Q2 2023, the brand has used image-scoring software Vizit to evaluate its images. Vizit uses artificial intelligence to analyze how impactful an image is and to catalog the attributes of the image. Based on publicly available metrics, such as likes or shares on a social media website, Vizit can analyze and score an image, and suggest tweaks.

The technology is helpful when deciding which images to use on product detail pages and the changes Ghirardelli might make so the images perform better, Perino says. For example, Vizit’s technology scored many of its closely cropped baking images higher than those that were zoomed out, and so those are the ones Ghirardelli will use on its page, Perino says.

Instead of having a 2D static image of its chocolate chip bag, another tweak Vizit suggested was to have the image on the package “burst” off the package for more of a 3D look. In the same image, Vizit also suggested to make the text larger for “12 oz.” With these tweaks, Vizit scored the image at a 95, meaning it has a high likelihood of converting shoppers, compared with the image without these changes, which it scored at a 6.

Vizit’s AI technology scores Ghirardelli’s package image above lower compared to the one below with the chocolate chips bursting off the package and the 12 oz. bag size in a larger text size.

Perino did not share any data about increases in conversion since using Vizit’s technology. Vizit says its clients typically have a 15%-25% increase in conversion rate when using the images it suggests, says CEO and founder Jehan Hamedi. Hamedi did not share how many clients it has, but in 2021, he told Digital Commerce 360 that Vizit has less than 100 brands that use its technology, including padlock products MasterLock, shoe brand Reebok, and food brands OceanSpray, Tyson, Cliff Bars and Mars Petcare.

Brands jump on using AI technology

While Vizit’s technology doesn’t use generative AI, it uses artificial intelligence to help brands more effectively and more efficiently increase sales, Hamedi says.

“Where the rubber really meets the road for these businesses is how AI and these tool sets actually help drive sales,” Hamedi says. “Because at the end of the day, every brand is in business and exists to sell products and create positive outcomes.”

With the popularization of OpenAI’s ChatGPT generative AI chatbot, Hamedi says many in the ecommerce industry are talking about AI and becoming more educated on how AI can be practical for businesses.

“It’s created urgency among our customers about how to adopt AI because it’s a new arms race,” Hamedi says.

Ghirardelli’s future applications of generative AI

Ghirardelli has plans to use generative AI in other ways in the future, such as  creating product copy on the product detail page and updating product copy with relevant search engine optimization (SEO) words and for creating images, Perino says.

“We are excited about artificial intelligence as a digital technology and how can it help us be faster and more nimble, and how do we update, create and improve our content,” Perino says.

For example, Ghirardelli wants its product detail pages to be updated with seasonal SEO words, such as chocolate for Halloween, Christmas, Mother’s Day and graduation. Today, the brand manually updates this copy to ensure the detail pages can show up high in search results.

Ghirardelli, however, finds that generative AI is not yet refined enough to have mastered brand voice and tone, and it is waiting until it improves before having a tool write copy to go live on its site.

“We’re excited,” Perino says. “It’s such an interesting time with AI right now, but it needs to be tempered with a bit of caution and guardrails.”

Brands should use caution with generative AI right now

That’s particularly true for a food manufacturer like Ghirardelli, given strict government regulations about food and beverages. For example, Ghirardelli can’t call some of its products that might be commonly referred to as “white chocolate,” because they do not contain cocoa and are not technically chocolate. Instead, it labels products as “white baking chips” or “vanilla flavored.” Perino isn’t confident that generative AI would understand this distinction.  

At this early stage of generative AI, brands should have a cautious approach to using the technology, says Kassi Socha, director analyst, retail, at research firm Gartner. If brands are using generative AI today in their business to create content, she suggests still having manual oversight before anything is published.

“Generative AI can suggest copy and suggest opportunities, but there still needs to be a team in place to validate some of the outputs,” Socha says. “With any machine learning or artificial intelligence, it’s only as good as the inputs, and it take time to optimize and learn.” 

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Abercrombie & Fitch Co. (No. 59)

Abercrombie & Fitch reported net sales grew 16% in the fiscal second quarter ended July 29, 2023, to $935 million. Comparable sales grew 13%. Sales were split between Abercrombie brand and Hollister, at $462.7 million and $472.6 million, respectively. Abercrombie brand sales grew 26% year over year, and Hollister grew 8%. About one-third of Hollister sales happen online, the retailer said, with traffic and conversion both increasing year over year. 

Abercrombie is “more tilted toward digital” than Hollister, the retailer said without disclosing more. Online sales have a higher operating margin than in-store sales, it said.

Bath & Body Works Inc. (No. 56)

Bath & Body Works reported net sales declined 3.6% to $1.56 billion in the fiscal second quarter ended July 29, 2023. The retailer did not share how overall online sales compared to previous quarters. 

Bath & Body Works rolled out BOPIS in Q1 2023, and adoption grew 25% in Q2. About 30% of BOPIS customers also made an additional purchase when pickup up their orders, the retailer said.

“Delivering a seamless omnichannel experience will allow us to convert more single channel customers to dual channel customers, which, on average, increase spend threefold,” CEO Gina Boswell told investors.

BJ’s Wholesale Club (No. 68)

BJ’s reported that digitally enabled comparable sales grew 15% in the fiscal second quarter ended July 29, 2023. Comparable sales, meanwhile, grew 1.1% over the same period. Net sales declined 2.9%.

Online sales made up 10% of net sales in the quarter, BJ’s said. BOPIS and curbside orders were responsible for the majority of online growth, CEO Bob Eddy told investors.

“Our digitally enabled members are more loyal, as indicated by higher spending and renewal rates,” Eddy said.

Dick’s Sporting Goods (No. 32)

Dick’s Sporting Goods reported comparable sales grew 1.8% in the fiscal second quarter ended July 29, 2023. Transactions grew 2.8% during that period, and net sales grew 3.6%. The sports retailer did not share any information about how online sales fared in comparison to past quarters. 

“In combination with our stores, our digital experience remains an integral part of our success, and we continue to invest in technology to strengthen our athletes’ omnichannel experience,” CEO Lauren Hobart said.

Dick’s also expanded omnichannel offerings in the quarter to add same-day delivery, Hobart said.

Dollar Tree Inc. (No. 190)

Dollar Tree reported net sales grew 8.2% to $7.3 billion in the fiscal second quarter ended July 29, 2023. Same-store comparable sales increased 7.8% and 5.8% at Dollar Tree and Family Dollar, respectively. Both stores also saw increases in traffic during the quarter, though average ticket declined at Dollar Tree and grew at Family Dollar. 

Sales of discretionary items increased slightly at Dollar Tree, by 3.9%, as consumers trade down to dollar stores. Consumables saw the largest increase, with sales growing 11%.

Foot Locker Inc. (No. 51)

Foot Locker reported total sales declined 9.9% in the fiscal second quarter ended July 29, 2023. Comparable same-store sales declined 9.4% over the same period. 

Online sales accounted for 15.5% of total sales in the quarter, down slightly from 16.3% in Q1.

“Digital comps in our Foot Locker and Kids Foot Locker banners in North America were actually up during the quarter, with strength driven by increases in multiple conversions and new customer growth year over year,” the retailer said.

The Gap Inc. (No. 20)

Gap reported net sales declined 8% to $3.55 billion in the fiscal second quarter ended July 29, 2023. Online sales made up 33% of net sales.

Comparable sales declined 6%, and in-store sales decreased 7%. Online sales saw a larger decrease, down 11% year over year. 

Old Navy in particular is experiencing decreased demand from lower-income consumers, Gap said in a press release. The brand is not benefitting from consumers trading down from more expensive retailers, according to Katherine O’Connell, chief financial officer.

“Some of the brands that are really winning with our consumer are T.J. Maxx, Amazon, Shein,” she said.

Guess Inc. (No. 179)

Guess reported revenue increased 3% to $665 million in the fiscal second quarter ended July 29, 2023. Revenue in the Americas, including ecommerce, declined 6% while Europe and Asia revenue grew 9% and 19%, respectively.

The retailer did not reveal specifics about online sales, but it did say North American ecommerce performed better than store sales.

Kohl’s Corp. (No. 23)

Kohl’s reported net sales declined 4.8% to $3.7 billion in the fiscal second quarter ended July 29, 2023. Comparable sales declined 5.0%.

Online sales declined further, down 17% year over year to make up 25% of total sales. The decline can be attributed to Kohl’s eliminating online-only deals, the retailer said.

La-Z-Boy Inc. (No. 257)

La-Z-Boy reported total sales declined 20% to $482 million in its fiscal first quarter of 2024. Same-store sales grew 2%. Online sales of ecommerce furniture brand Joybird declined 17% year over year due to “more cautious online consumer demand,” the retailer said.

“In general, furniture consumers sort of hit that saturation point of who’s going to want to purchase online and who’s going to want to purchase in-store. And the majority of consumers do more in-store,” CEO Melinda Whittington said, according to a Seeking Alpha transcript.

Lowe’s Cos. Inc. (No. 12)

Lowe’s reported online sales grew 6.9% for the fiscal second quarter ended Aug. 4.

Lowe’s reported $25 billion in total sales for the quarter, declining 8.9% from $27.5 billion in 2022. Net earnings also declined, to $2.7 billion from $3 billion. Comparable sales also decreased 1.6% year over year, Lowe’s said. Read more here.

Macy’s Inc. (No. 17)

Macy’s reported online sales declined 10% in the fiscal second quarter ended July 29, 2023. Net sales declined 8% during the period to $5.13 billion. Brick-and-mortar store sales also declined 8% over the year-ago period. 

Read more here.

Nordstrom Inc. (No. 21)

Nordstrom reported net sales declined 8.3% in the second quarter ended July 29, 2023. Online sales declined 12.9%, making up 36% of total sales in the quarter.

Online sales also accounted for 60% of sales during the annual Anniversary Sale, Nordstrom said. 40% of those sales were either through BOPIS, ship to store or fulfilled by stores, the retailer said.

Petco Health and Wellness Company Inc. (No. 92)

Petco reported net revenue grew 3.4% to $1.53 billion in the fiscal second quarter ended July 29, 2023. Comparable sales grew 3.2%.

Online sales grew faster than in-store sales; they increased 9% and 2%, respectively. Consumable sales grew 7%, while the more discretionary supplies category declined 9%.

Urban Outfitters Inc. (No. 30)

Urban Outfitters reported net sales for the fiscal second quarter ended July 31, 2023, grew 7.5% to $1.27 billion.

Digital sales showed “mid-single-digit positive growth,” the retailer said in a statement. Anthropologie, Free People and FP Movement brands all had double-digits sales growth online. The Urban Outfitters brand recorded a double-digit sales decrease online.

Ulta Beauty (No. 46)

Ulta reported net sales increased 10.1% to $2.5 billion in the fiscal second quarter ended July 29, 2023. Comparable sales, which includes stores open at least 14 months and online sales, grew 8%. The Ulta app continued to drive sales, with 55% of online sales made on mobile.

The retailer is also focused on growing its omnichannel customers, who purchased 2.5 to three times more than single-channel customers. 

Williams-Sonoma Inc. (No. 22)

Williams-Sonoma reported comparable brand revenue declined 11.9% in the fiscal second quarter ended July 31, 2023. Revenue was flat over the comparable 2021 period, the retailer said.

Online sales make up about 66% of total sales, and Williams-Sonoma anticipates online sales eventually making up 70%.

So what does it mean?

• Consumers remain reluctant to spend discretionary income on goods, preferring to save or spend on experiences instead. That’s hitting apparel retailers particularly hard, while Dollar Tree is reaping the rewards. 
• La-Z-Boy CEO Melinda Whittington’s comment that online furniture may have hit a saturation point with retailers might be telling. Wayfair Inc. and Overstock.com Inc. both recently reported declining sales.

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Walmart ranks No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. Target ranks No. 5 in the Top 1000.

Walmart is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of top online marketplaces.

Online sales comparison

Walmart’s online sales were a highlight for the big box retailer in a quarter with already impressive results. U.S. online sales grew 24% for the fiscal 2024 second quarter ended July 28, 2023. International ecommerce sales grew 26%. Growth was particularly strong in comparison to comparable in-store sales, up 6.4%, excluding fuel. That’s still above analyst expectations of 4.1% growth. Total revenue grew, too, by 5.7% to $161.6 billion. 

Walmart did not share what percentage of total sales took place online. 

Target’s digital sales declined 10.5% year over year in the fiscal 2023 second quarter ended July 29. Meanwhile, comparable in-store sales declined 4.3% versus Q2 last year. Target’s total revenue in Q2 reached $24.8 billion. That’s down 4.9% year over year. 

The diverging results are evidence of the same trends impacting consumers, says Neil Saunders, managing director at retail analysis firm GlobalData Retail. Consumers are “cutting back on discretionary spending and prioritizing essentials” at both stores, he says. Walmart, unlike Target, made up the difference by growing grocery sales more than enough to offset discretionary losses.

Digital Commerce 360 analysis: Walmart vs. Target ecommerce sales growth

Target had a “huge early-pandemic advantage,” Digital Commerce 360 senior analyst James Risley said.  “Not only was its Drive-Up program well-advertised (in front of every store), but shoppers, unable to spend on experiences, had more money to spend on goods that Target specializes in like home décor and small appliances. Now that consumers can save for experiences or are just feeling the pressure of inflation and economic uncertainty, they are turning to budget-friendly alternatives.”

Now, Walmart is seeing bigger gains than Target.

“Walmart passed Target in online growth for the quarter in Q4 last year, when the last pandemic worries ended in many consumers’ minds and experience spending picked up. Most ecommerce retailers have experienced slower growth amid changing (and lower) consumer spending,” Risley said.

He also pointed out that some Target customers may be more likely to shop in stores for the types of merchandise that Target specializes in.

Pickup and delivery

Walmart and Target consumers made it clear they still value the convenience of omnichannel offerings.

Walmart credits pickup and delivery sales for the major jump in online orders. 

“Around the world, our customers and members are prioritizing value and convenience. They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving ecommerce,” CEO Doug McMillon said in a statement. 

Customers especially respond to the time-saving advantages of curbside pickup, McMillon said.

Target cited its version of curbside pickup, Drive-Up, for leading digital sales, too. The retailer plans to add to the popularity of the service by adding Starbucks orders and returns to the Drive-Up process, CEO Brian Cornell told investors.

Fulfillment centers

Walmart chief financial officer John David Rainey said the retailer’s automated ecommerce fulfillment centers are improving efficiency. More specifically, they’re achieving efficiencies of 30% higher units per hour than non-automated buildings.

“We’re also seeing increased productivity from the more than 15% of stores now being served by automated regional distribution centers,” Rainey said. 

McMillon said Walmart wants to improve each leg of the fulfillment journey. Walmart plans to “densify our inventory at the first mile, make the middle mile as efficient as possible and then shorten the last mile,” he said. He added that the retailer’s more than 4,700 locations in addition to fulfillment centers enable it to do so.

Comparably, Target has “invested billions of dollars in our existing store base, modernizing their shopping experience while optimizing those facilities to support digital fulfillment,” Cornell said.

Target has been expanding its network of sortation centers to improve this process. Cornell said the centers have “delivered meaningful savings while increasing our speed over the last-mile delivery.”

Up to 70% of the packages these facilities process remain in their local markets, said John Mulligan, chief operating officer at Target. In markets where Target has a sortation center, the average time from when an order is purchased online to when it is delivered is nearly 1.5 days shorter than the network average, Mulligan said. And about a third of the packages arrive in one day, he added.

Target expects the current group of sortation centers to process more than 35 million packages this year. That would be a more than 20% increase from 2022 and more than six times what it was in 2021.

Sales events

Chief growth officer Christina Hennington said Target learned last year that Target Circle members “love exclusive events, so we repurposed last year’s deal base and met our Target Circle Week in July bigger than ever.”

Target enrolled more than 3.5 times as many new guests during Circle Week than it does in an average week, she said. The retailer acquired an additional half a million members, she added.

Walmart’s Rainey said the retailer has been working with suppliers to offer select seasonal baskets “at the same prices as last year, essentially removing the impact of inflation.” 

And customer response has been strong, he said, as sales exceeded Walmart’s expectations during the Memorial Day, July 4 and our Walmart Plus Week Savings events. 

“We’re taking a similar inflation-fighting approach to Back to School, with a basket of 14 of the most popular classroom essentials for under $13,” Rainey said.

He added that the retailer “achieved record member acquisition tied to Walmart Plus Week and continued to enhance the value of the Walmart Plus membership.”

Where do Target and Walmart go from here?

While Walmart had the more successful quarter, things aren’t actually as bleak as they might appear for Target, Saunders says. Target made a lot of gains during the pandemic, even more so than Walmart, he says. 

Through the first fiscal half of 2023, Target’s total revenue was about 39% higher than in 2019, Cornell said. Target total revenue was about $50.1 billion in the first half of this year. It was about $36 billion in 2019’s first half. Long term, Target is “still a real winner,” according to Saunders. In 2023, Target is resetting after a period of sustained sales growth since 2020.

Meanwhile, inflation and consumer focus on essentials make Walmart’s outlook positive in the near term, as reflected in the retailer’s increased guidance for the rest of 2023.

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Over the same period, comparable in-store sales grew more modestly, up 6.4%, excluding fuel. That’s above analyst expectations of 4.1% growth. Total revenue grew too, by 5.7% to $161.6 billion.

Net revenue was up 6.6% for the first half of fiscal 2024 compared to the six month period last year, Walmart said. Revenue for the first half of the year reached $313.9 billion.

Walmart ranks No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. It is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of top online marketplaces.

How much does Walmart make in ecommerce sales?

Online sales remain one of the fastest-growing areas of Walmart’s business. They grew about four times as quickly as comparable in-store sales in the same period. That’s on top of 27% year-over-year growth in Q1. More than 50% of digital orders are fulfilled by stores, Walmart said.

Pickup and delivery services drove the growth, Walmart said, similar to the retailer’s statement in Q1.

“We like the trends we’re seeing in ecommerce,” John David Rainey, chief financial officer, said in the call. “Customers are increasingly counting on us for convenience, and they’re visiting our app and sites more often.

“Around the world, our customers and members are prioritizing value and convenience. They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving ecommerce,” CEO Doug McMillon said in a statement.

Weekly active digital users grew 20% in the quarter, Rainey said.

Walmart is planning further online sales growth, too. The retailer plans to “densify our inventory at the first mile, make the middle mile as efficient as possible and then shorten the last mile,” McMillon said. “And our store locations, over 4,700 locations in addition to the fulfillment centers, enable us to do that.”

Other Walmart ecommerce results

Sam’s Club, Walmart’s membership-based warehouse chain, reported ecommerce sales grew 18% in the quarter driven by curbside orders. Net sales, meanwhile, declined slightly, down 0.3%. Income from memberships grew 7%, Walmart said.

Walmart+, the retailer’s membership program in competition with Amazon Prime, also had “consistent growth,” the retailer said, noting the success of Walmart Plus Week in July without revealing more. The sales event drove record customer acquisition, Walmart said.

More people buying groceries on Walmart.com

“Food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter,” McMillon said in a written statement. Grocery and health and wellness products led sales, the retailer said. Walmart gained market share in grocery, while general merchandise sales declined “modestly.”

Consumers are purchasing more cooking tools like stand mixers to focus on cooking at home, Rainey said. He said grocery sales “continued to outperform” after mentioning domestic sales growth both in stores and online.

“They’re also buying more necessities and focusing on lower-priced items and brands,” he said.

Walmart expectations for holiday season

Following the successful quarter, Walmart announced increases to its outlook for the rest of fiscal 2024. The new guidance is to “reflect Q2 upside, confidence in continued business momentum and ongoing customer response to its value proposition,” Walmart said in a statement. 

The retailer increased its forecast for consolidated net sales, with a forecasted increase of 4.0-4.5% for the full year, compared to 3.5% at the end of Q1 in May. Walmart also raised expectations for its consolidated operating income, from 4.0%-4.5% to 7.0%-7.5%.

Walmart earnings

For the second quarter ended July 28, 2023, Walmart reported:

• Total revenue grew 5.7% to $161.6 billion.

• Walmart U.S. ecommerce sales grew 24%.

• Consolidated net income increased 56.5% to $8.1 billion.

For the first half of the fiscal 2024 ended July 28, Walmart reported:

• Total revenue grew 6.6% to $313.9 billion.

• Consolidated net income grew 37.2% to $9.9 billion.

Check back for more earnings reports. See Walmart’s previous earnings release story here. 

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