Shownotes
Kroger has named Nate Faust, a former Walmart and Jet.com executive, as its first chief e-commerce officer, creating a new leadership role focused exclusively on its digital business.
Chris Walton and Jenn Hahn debate whether the move signals a smart investment in Kroger’s e-commerce growth or an organizational step backward from the industry’s broader push toward omnichannel retail.
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Transcripts
Kroger is named Nate Foust, a former Walmart and Jet.com executive, as its first ever chief e commerce officer.
Speaker A:Effective September 1, according to grocery Dive, Faust will become Kroger's executive vice president and chief e commerce officer, which is a newly created role for the company.
Speaker A:And he brings more than two decades of e commerce experience, including co founding Jet.com and serving as senior vice president of Walmart's E commerce supply chain.
Speaker A:Faust also helped start Olive, a sustainable e commerce logistics company.
Speaker A: .com which Amazon acquired in: Speaker A:Jen, I thought people were moving towards more of an omnichannel.
Speaker A:Org structure.
Speaker A:So I find this, I find this announcement kind of curious.
Speaker A:Does the move to create an e commerce head at Kroger strike you at all as odd or are you seeing other grocers take this approach?
Speaker B:Hmm.
Speaker B:I think there has definitely been a move towards sort of erasing the distinction between e commerce and stores.
Speaker B:Right.
Speaker B:To organize under that Omnichannel customer, as you're alluding to here.
Speaker B:So you're definitely right there.
Speaker B: e Gugina's role at Walmart in: Speaker B:It was executive vice president and chief e commerce officer for Walmart.
Speaker B:And so that, that's interesting, right, because we've seen where Walmart has gone and the success that they' and the seat he's in today now.
Speaker B:Right.
Speaker B:What is interesting for me as I was reading through this headline and as you're sharing some of the facts here is that this is right for Kroger right now because they just recently, I think I was on your show when we announced that they just recently turned a profit in E commerce for the first time.
Speaker B:Right.
Speaker B:So if they just recently turned a profit, you could read that as, hey, things are going swimmingly.
Speaker B:They finally figured it out.
Speaker B:But in this case, putting this specific role to me says, hey, we're going to lean in here.
Speaker B:Like we may have figured out some things and we know the high margins that are available with retail media and such inside of E commerce, but we actually want to put someone in seat that wakes up every single day focused on E commerce and E commerce only.
Speaker B:And because of his background, I think you mentioned he was part of Olive.
Speaker B:Right?
Speaker A:He was also jet.com and diapers.com.
Speaker B:Yeah, yeah, yeah.
Speaker B:SVP of Walmart supply chain I think in the past as well.
Speaker B:Very supply chain logistics focused background here.
Speaker B:So if I had to make an assumption.
Speaker B:Kroger is saying, hey, we need someone to figure out the fulfillment and the logistics around E Commerce.
Speaker B:And his background sets him up nicely to do that, I would say.
Speaker B:I don't think the entire industry is going this way by any means, but I do think this is an interesting move.
Speaker B:I don't hate it if it's right for them right now to get it right.
Speaker B:I also think, you know, thinking about them compared to the competitors or in the landscape here, it might show that they're a year plus behind Walmart again.
Speaker B:I don't, I don't know.
Speaker B:They could have replaced Dave Guginas, but they've sort of.
Speaker B:Everyone else is sort of moving towards Omnichannel, but it's almost like we're not ready to move towards Omnichannel until we have enough figured out in this E commerce, if that makes sense.
Speaker A:Yeah, it does.
Speaker A:It does.
Speaker A:The David, the Dave Gina example is interesting too.
Speaker A:Like, like, I think that was also partly like, hey, let's have him do this, because we know he's going to CEO here in a few months, you know, in a few, in a year or so.
Speaker A:Let's get him the, let's get him the taste of something outside of supply chain.
Speaker A:So it's a little bit of a different situation than saying, like, and the E commerce business at Walmart was on fire at the time already.
Speaker A:So it's a little bit of a different situation, you know, than what's happening at Kroger.
Speaker A:I think you're right, Jen.
Speaker A:I mean, number one, this is a signal.
Speaker A:And you and I talked about on the podcast, like, despite them touting that, you know, e Grocery was profitable, it didn't seem like it was growing as fast as it probably should have been.
Speaker A:In fact, it looked like they were losing market share when you look inside the data.
Speaker A:But, you know, for me, I.
Speaker A:You said before we got started, you think we're gonna disagree a little bit today?
Speaker A:I think I disagree.
Speaker A:I think this is a really bizarre move.
Speaker A:I think one I.
Speaker A:One, I'm always a little curious of the backgrounds, like someone like Mr. Faust has, like jet.com diapers.com.
Speaker A:You spent two years at Walmart after the acquisition.
Speaker A:How much did you really do?
Speaker A:There's a lot of coattail riding on that and what you could argue was kind of ludicrous VC investment driving those businesses too, because those businesses both don't exist now.
Speaker A:So does he really have the operational chops to run a business as complex as Kroger?
Speaker A:I don't know.
Speaker A:He wouldn't have been my first pick, I'll tell you that much.
Speaker A:But the other thing I don't like about this too, Jen, is like, we.
Speaker A:And it's kind of in the way I asked the question.
Speaker A:The organizational structure is really odd to me.
Speaker A:I mean, I've never, I, I guess, I guess until you just mentioned that one case, I had never heard of a chief E commerce officer.
Speaker A:And then also Kroger currently has a chief digital officer.
Speaker A:So what the heck is going on there?
Speaker A:That's very strange.
Speaker A:And then what happens if there's a disagreement between the merchant and the chief E Comm officer?
Speaker A:Who wins, who should win, who, who, who wins that argument in the boardroom?
Speaker A:Like, is Greg Foreign aligned with this guy?
Speaker A:Because he seems like he's giving him the keys to the kingdom.
Speaker A:So it seems like he's going to hold a lot of sway.
Speaker A:So I don't like it and I don't like the emphasis on E commerce either because I don't think that's where Greg Kroger's necessarily going to win.
Speaker A:It might help them keep up with the Joneses, but it's not going to be the panacea to long term differentiation that Kroger's needs.
Speaker A:So if the chief merchant is going to be fighting and battling it out internally with whatever the E commerce guy wants to do, that's problematic in the long run.
Speaker A:So, yeah, I mean, long way of saying, Jen, I don't like this move, but you get the last word today.
Speaker B:I hear you on some of those points.
Speaker B:I don't know that, that Kroger is set up to really be differentiated in the marketplace on E Commerce.
Speaker B:So I hear you on that.
Speaker B:They must.
Speaker B:I just think Greg Foreign must see enough of an opportunity here where he says, I need someone to fix it because there's, you know, X opportunity.
Speaker B:Right.
Speaker A:Yeah.
Speaker B:I mean, I think, yeah.
Speaker B:I think the last time I was on talking about this headline to Chris, we talked about the fact that their stores are not in great shape.
Speaker B:That was the same headline, am I right?
Speaker A:Yeah, yeah.
Speaker A:Right.
Speaker B:So I definitely think again, this, this move could make sense.
Speaker B:I think it signals a few things, I don't know, again, that I would say, hey, great idea for everyone.
Speaker B:I think it signals a few things about where Kroger's at, but I hope that it's not replacing the work they need to do out in the stores because that's really where you make your connection in the grocery industry.
Speaker B:Right?
Speaker A:Yeah.
Speaker A:And my hunch is Mr. Foreign and Based on how he talked about that.
Speaker A:For those that remember, he.
Speaker A:He's.
Speaker A:He's very focused on the stores, too, so.
Speaker A:So maybe that's what he's thinking is like, I'm gonna be the.
Speaker A:Where the buck stops.
Speaker B:Yes.
Speaker A:Potentially to ameliorate what I was talking about, so.
Speaker A:That's a good point.