The Best One Yet - Walmart’s secret “store of the future” unveiled, Starbucks’ loyalty-powered record high, and 3M’s worst day since ‘87

Episode Date: April 26, 2019

Starbucks announced the return of the S’mores Frappuccino, but we’re focused on what its new loyalty program change means to your daily routine. Walmart has been cooking up a “store of the future” out of its Long Island-based lab, so we checked it out. And post-it note creator 3M’s worst day in 32 years highlights what’s wrong with the Dow Jones Industrial Average.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. This is snacks daily. It's Friday. April 26th. And what did you think of this one? This is the best one yet. A TBOY, we really worked hard to find things because it was another just wild day. A negative day overall. Like a Wheaties though infused earnings worth day. The Dow dropped by quite a bit because of one company. We're going to talk about that company. But the S&P 500 barely bunched. Right. That's like most stocks and they were doing okay. It's more representative of the market in general. Because basically every company you've ever heard of felt like, I don't know, reporting its earnings yesterday, including the city of Seattle. True. So three big stories? The first one is 3M. This is a company you probably never heard of. They make post-its, and investors suffered the worst day on markets since the worst day on markets in

1987. This is the third time we've mentioned 1987 this week. It's true. We'll get to that in a bit. A good year. Second story, Starbucks, one of those Seattle companies. It hit a record high because it's new loyalty program. The upgrade, it didn't piss people off.

No, sometimes it's about the little things, like just not annoying people. Third and final story, Long Island Strong Island classic here. Walmart. It's top secret artificial intelligence lab in Long Island is open to the public. It's on Long Island, but we can talk about that later, Jack. Now, before we jump into those stories, we got to talk about a couple life hacks here. We love a good life hack. Like, you know, picking up broken glass with a nice spongy piece of bread. I only have one thing to contribute. I learned it studying abroad in Germany. How to open a beer with another beer. Jack's transition. Now he's opening LeCroys with other Lecroy's, Pumplemoose-flavored Seltzer over here. But we got to thank one guy in particular.

His name is Rudy Antito. Yesterday, we asked how can you watch Avengers Endgame without having to watch 22 other movies first? Right. We want to know you want to do the 21 movies, but you don't have time for that. Rudy hit us up on Twitter. He said you only need to watch the top five. Captain America.

Yep. Black Panther. Thor. Avengers Infinity War. And finally, Captain Marvel. And then you're ready. We just saved you about 12,000 hours. By the way, this makes me realize how much Disney's just taking.

advantage of us. Yeah, I have to watch five Disney movies this weekend to catch up. Before we jump into those wonderful stories, listen to these keywords. You're tuned in to snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks are about to hear rain food. It's air candy. They don't reflect the views of the robberhood family. It's all informational just so. You know, we're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. For our financial, LLC, member FINRA slash SIPC.

For our first story, we're talking about a big company, the inventor of the Post-It, and yet we've never talked about them on Snacks Day. The owner of Scotch tape. We're talking about 3M here, people. 3M-M-M. Now, this is a company that when you try to think of it, what do you think of? You think of mystery. That's not what one of the M stands.

What is 3M? It's so big. It's right there, but there they do. It matters. It's a mystery to most people. It's like daylight savings time. Right. It's like ethereal.

And you know it's going to affect your life, but you don't know how or why it's a daily basis. So 3M stock. It fell by 13% yesterday. Big drop. That is its biggest drop since the worst day in stock market history. We're talking Black Monday, 1987, which is before us. Again. Now, when you think of 3M, you might think of like a Dunder-Mifflin type company.

Totally. You're kind of on point. Right. It's got the Midwestern values. And they sell paper supplies, but they're much bigger and much more important. So we got the Post-its. They're doing scotch tape. They're doing like air filter masks for like apocalypse.

They make hoses. They make plastic things like the hanging hooks you hung on your college dorm. Everyone has like a junk drawer in their home with just stuff. They pretend that they can like do housework with. It's all 3M. All of it. We take the stuff for granted, but it matters. It sells to medical construction automotive offices.

Now the big news yesterday was that they are laying off unfortunately 2,000 workers, a serious number. Because its earnings were really bad. It had a bad day. It had a bad day. To quote like legendary singer or songwriter Daniel Powder. Yes. Thank you. It's about time we quote him. He's not the CEO, but he basically speaks for what happened. So 3M, it had earnings. They were really rough. Things were okay in the United States, its biggest market, but China, Japan, Europe, sales were all down on all those comments.

And this is why 3M is so important right now, because companies that make and manufacture things that are used in offices or for factories, they're a reflection of raw economic growth typically. This is like unsexy stuff that is involved in most industries. And this is a reminder to all of us that global economic growth is slowing down. But what Jack and I loved about this story is that the CEO is just classic Midwestern American values. St. Paul, Minnesota-based 3M, the CEO was representing them real proud. He didn't try to put a spin on this. No. He took it. He owned the loss. Yeah. He knows that they lost investors' trust. And he said, quote unquote, we know we have to rebuild credibility. Humble. Well played. So Jack, what's the takeaway for

adhesive buddies over at 3M. 3M shows everything that's wrong with the Dow. The Dow Jones Industrial Average. Now, the Dow, the index you've seen at the top of our Snacks newsletter, is made up of 30 companies, 30 components, and they're weighted based on the stock price of each of those companies. And that makes no sense. It's like, it's basically giving these companies a certain number of votes based on the letters in their name. Which sounds crazy. That doesn't have anything to do with it. That's basically what it is. So 3M has the third biggest stock price. And so it moved. the Dow a ton yesterday. Now, on the other hand, you've got the S&P 500 index, which you've also seen in our newsletter, which is a wider group of companies, and it's a lot more rational.

It's weighted based on the company's total market value. Not the stock price. Jinks. Okay. So 3M is not even close to the largest company overall, so it barely budged the S&P 500. But it crushed the Dow yesterday. And that's why the Dow makes no sense. For our second story, Starbucks just hit a record high, basically on a trick loyalty situation thing. It started off its earnings report with like a pat yourself on the back series of brags. It wasn't even a humble brag. It was a straight up bragging situation. Treat yourself to a mocha vanilla something because this is impressive. Well, they're bringing back the Samores for Apocino.

Finally. That's actually just a win for you and me. That's big. And then second, they announced their 30,000th store. They have 30,000 stores. And the last one was opened in Shenzhen, China, which is like the Silicon Valley of China. Then they popped open like their fifth roastery store, which is in Tokyo. We've seen pictures of a roastery. I've not. never been there, but it's like a willy wanka of coffee beans. It's like Narnia. You have to believe it to see it. There's pipes everywhere. There's like half and half water fountains. It's freaky. I think the pipes make your coffee. It's out of control. And then they invested a hundred million

dollars into a venture capital fund that's focused on food and retail startups. So it's thinking about the future. Now, for the earnings report. Yeah. The real stuff eventually. Sales rose by 3% at every one of its stores on average and shares jumped to an all-time high. Not too shabby. Now, we were focused here at snacks on one particular storyline we noticed, which is the loyalty program drama. It's tweaked its little like loyalty program algorithm. It announced it earlier this year, and now it just happened. So here's the situation. The loyalty program. What's the change? It requires you to spend a little bit more money to get your first free drink. Yeah, you need like 150 stars now instead of 125. I am not happy about this. No, this means in order to get your free drink, you're dropping like $75 instead of $60.

Give me a break, Starbucks. Are you kidding? But they're saying, hey, Jack, don't worry. You can get your orange mocha mac frappuccino if you just wait because they're giving you more flexibility they're giving me tiny little freebies if i'd get just a few stars right so it's harder to get to that one big cup but along the way you can get like a free shot of vanilla or like a bean or i could negotiate for one you could that's like a one off situation so harder to get the big rewards but easier to get the smaller now the reason we were so focused on this is the last time there was a major change was 2016 to starbucks i remember this everyone at my office was fear Who doesn't remember this? Because in the past, you got a point for every transaction. So instead of ordering

three coffees for your buddies, you'd order three separate times. It really slowed up the line. It was brutal. People were angry. Turns out this year, not only no drama, but we find out the loyalty program jumped 13% from last year. Yeah. And now there are 17 million Starbucks loyalty members, which is a little bit lower than Domino's, which recovered yesterday, and drama-free. So, Jack, What's the takeaway for our buddies over at Starbucks? The future of rewards is smaller perks, but more often. We're already seeing this with airlines. You're not getting that free flight to Hawaii or the business class upgrade,

but hey, they're throwing your free Wi-Fi every now and again, which is decent. So instead of like six sandwiches for a free sub, a half a sandwich and you get a piece of salami. Starbucks is doing the same thing. They just want you to, you know, don't worry about the big coffee, but along the way, enjoy the vanilla. Now, this is behavioral economics. They're preying on our vulnerabilities. and we like to get rewarded really quickly and really frequent. Right.

So now you're getting smaller perks, but you're a little more delighted a little more often. I'm pretty sure it's a net loss for consumers overall, but probably a net win for Starbucks. Right. It's probably costing them a little less, and it makes you feel a little bit happier a little bit more often. For our third and final story, this one, I love jumping into this one. Walmart just unveiled. It's store the future, their quote not ours, and it's out of their secret of Long Island Lab.

Yeah, it's a really interesting story. This is the only thing that's a secret on Long Island Island. Everyone knows everything happening on Long Island. Well, it's in Levittown, New York, which is the birthplace of the modern American suburb. And your dad. Post-World War II. Yeah, birthplace. Full disclosure.

I'm surprised you didn't lead with Papa Kramer on that one. Good call. Now, what is this creation jack that they're calling so innovative? It's called the Intelligent Retail Lab, which they're abbreviating IRL. Oh, my God. Shocker, that IRA, yeah, stands for in real life, too. Now, this is a modern futuristic Walmart store. There are cameras everywhere.

Freakishly everywhere. It is, they actually say they've got 1.6 terabytes of data per second coming through these things. Yeah. Seems like a big number. And then they told us that that is three years worth of music streaming per second. Again, we don't think in terabytes, I didn't even know that existed. It could even be made up.

Then they go on to brag about the amount of wiring at the store. This is such a Walmart move. Classic. Like a tech company would never brag about these things. Right. But they're like, we've enough wiring literally to scale Mount Everest five times. Wow. Oh my God.

They definitely came up with a number. and told some intern to go find something relevant there. Find some like vaguely relatable and gargantuan. Joey, go Google this. So now what this came out of was this fascinating secret of lab called store number eight that Walmart owns. We've covered this before on snacks. This is where they're experimenting with artificial intelligence. It's called their incubation arm.

And basically they've got like virtual reality stuff going on there to test, you know, you shopping for things maybe with your eyes closed. Now, this store of the future that we're describing that Walmart's doing sounds a lot like Amazon Go. It smells like Amazon Go. It does. Amazon Go has cashierless stores. You walk in, you flash your app, and then you take whatever you want and leave. Done. It's like stealing, but it's cool and it's totally legal. But this is actually different. First of all, the Walmart store is huge. We're talking 50,000 square feet and 30,000 items. And it's also employed by humans. That's a big difference from Amazon. You got 100 workers from Walmart walking around here. So Walmart is trying to tell us that cameras and artificial intelligence, it's not replacing humans and

cashiers. No, they're saying there's like a kumbaya harmony kind of thing here straight out of Lion King. Now, the cameras don't actually replace cashiers. The cameras are trained to look at the products and see what's missing. It'll look at the meat aisle, aisle six, and the cameras will detect that, you know, the ribby steak is empty. It's empty. And then some Walmart worker, his phone will buzz, and he'll be instructed to go restock that aisle. Or it could say, hey, the ribby steak over in the aisle six, it's not looking that good. It hasn't been touched in two weeks. We need to replace it. Get some fresh cow in there. Now, another angle here is transparency. Yeah, Walmart's really focusing on this. There's cameras everywhere, and that might freak you out. So Walmart

claims their data from the cameras, it's only stored for a week, and then it's like thrown away. And then in kind of like a marketing move, they're highlighting their servers. So at the back of the store, you can like go and look at their servers at all. So they're trying to make this a little artificial intelligence like museum to get people comfortable with technology. Lighting up the blue hardware in blue. So Jack, what's the takeaway for our buddies over at Walmart? This strikes to the heart of the question of our lifetime. Will artificial intelligence replace workers or make workers better? You've got two fascinating bets going on here. You got Walmart, which says we want to keep unions and super power them with technology. And then you got Amazon, which is saying,

seems to be thinking they should replace workers as soon as possible. The whole Amazon Go concept is there's no humans there. Now, Walmart took a jab when it announced this news at Amazon by saying, what was the quote? They didn't mention Amazon specifically, but we know how they're talking about. Yeah, they said you can't be overly enamored with the shiny object element of AI. But that sounds like an Amazon jabredge. Yeah. But Walmart's pro worker rhetoric is the kind of thing you got to take with like a, I don't know, a bucket of salt. Yeah. Walmart does not have a great history of treating workers super well. And they're claiming here like, we care about human workers. We'll see. Right. They haven't replaced the human workers yet, but there's no reason why they could. You never know. So only time will tell.

Jack, can you whip up the takeaways for us before the weekend? Minnesota's finest. 3M. It dented the Dow on Thursday, showing what's wrong with the Dow. The Dow's got 30 problems, and 3M is one big problem for them. Second, Starbucks new loyalty reward program. More perks, more frequent, less overall value. And then, how about that they're bringing back the Smoors for Apecino?

Third and final story, Walmart. Its new store has AI that does not replace workers. It makes them more efficient. We just want to highlight again how cool it is that they're. They have a secretive lab on Long Island doing all this stuff. We really do. So, Jack, can you tell us the fact of the day? Yes.

Snack fact of the day. According to the Pew Research Center, 80% of all American tweets come from just 10% of Twitter users. So 10% of Americans have a lot more time on their hands than we realize. Yeah. If you think you're the only one who uses Twitter but never tweets, you're not. No. Most people don't.

You're pretty much all of Twitter. Now, a couple other big stories happened yesterday on the Snacks Daily newsletter. Check it out. Right. We got a big day for Seattle. at Starbucks headquarters in Seattle reporting earnings. Amazon. Double profits. We'll get to that more in the newsletter. And T-Mobile, which is based outside of Seattle. Impressive. So a big thank you to all our snackers, because yesterday we said if you're enjoying the Snacks Daily podcast, drop us five stars.

And you did. You did. Apple. An insane number. Apple almost broke. We got so much activity on that review board. It was a lot of love. We really, Jack and I were getting emotional. We want to ask for one more thing. We love these snack facts of the day. We hope you do too. And we want to source them from you directly. We want to give you a shout out when you send us a good one. So if you have a snack fact of the day, hashtag snack fact of the day at Robin Hood Snacks, give us the fact, your name, your hometown, and we might feature you on the pod. We can't wait to do that. In the meantime, have an awesome weekend. Jack and I are going to be at Jack's Bachelor Party. It's going to be amazing. At some point, we're going to do another podcast

during the Bachelor Party. Maybe straight out of Key West. Get ready for it. We'll keep you guys updated. The Robin Hood Snacks podcast you just heard reflects the opinions of only the host who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc, or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA SIPC.