New Realities of the Grocery Experience

The Wall Street Journal: “The challenges for grocers today include a new reality: The days of shoppers filling carts during a big weekly trip to their neighborhood supermarket appear over for now. Consumers are more targeted in their shopping habits. They are less loyal to retailers and more willing to buy groceries online. And they are buying more from stores at two poles: ones with cheap prices, and ones that offer high-quality fresh food, often at a premium.”

Natalie Kotlyar, a consultant, says shoppers expect “convenience, selection and the right price and they want it now. Everyone is trying to meld those concepts to create the perfect shopping experience.”

“Chains that don’t adapt quickly to the changes in consumer behavior and business dynamics won’t survive, say analysts, who, along with some supermarket executives, expect more consolidation in the coming years and predict more grocery stores will close. To compete with Amazon, Wal-Mart is offering curbside pickup and home delivery in test markets. Kroger is expanding its platform for customers to order groceries online and pick them up at the stores. It also said it has invested $3.8 billion in lowering its prices over the past decade.”

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How Best Buy Engages Shoppers

The Wall Street Journal: “Best Buy, the electronics giant left for dead a few years ago, is bucking America’s retail slump by turning its cavernous stores from a potential drag on its business into a way to fend off Amazon.com Inc.”

“To fend off digital competition, Best Buy gave up efforts to charge consumers more in stores than online. It promised in 2013 to match online competitors’ prices and brought its prices in line with Amazon’s—a move that has paid dividends now that shoppers can instantly check prices on their smartphones … The price guarantee made a loyal shopper out of Anton Robinson, a 34-year-old lawyer in New York City. He buys his music equipment from Best Buy because he prefers to test products in person and doesn’t have to compare prices.”

“Best Buy also found a way to get more out of its giant stores. The company eliminated much of the floorspace once dedicated to DVDs and other media and has given it to brands such as Samsung, Verizon and Microsoft , which both pay rent and provide staff with expertise … Best Buy plans a nationwide rollout of in-home advisory services, in which consultants will visit consumers to field technology questions. Says CEO Hubert Joly: “Having these conversations in the home unlocks all sorts of discussions with the customers. There’s some needs that people never talk about in the stores.”

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Kishore Biyani: Quote of the Day

“One has to understand that at the end of the day, e-commerce is also a place where one is buying a product and a brand. In the long term, it’s all about who does it efficiently and what the customer prefers. Even after 20 years of e-commerce in the US, physical is 90% of retail. You can’t get out of physical. You have to use airports, roads, bridges—you can’t have digital or virtual transportation.” – Kishore Biyani, CEO of Future Group, one of India’s largest retailers, quote in Quartz.

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Google Eyes: Watch While You Shop

The Washington Post: “Google executives say they are using complex, patent-pending mathematical formulas to protect the privacy of consumers when they match a Google user with a shopper who makes a purchase in a brick-and-mortar store. The mathematical formulas convert people’s names and other personal information into anonymous strings of numbers.”

“The formulas make it impossible for Google to know the identity of the real-world shoppers, and for the retailers to know the identities of Google’s users, Google executives said. The companies know only that a match has been made. In addition, Google does not get a detailed description of the individual transactions, just the amount spent.”

“Google would not say how merchants had obtained consent from consumers to pass along their credit card information. In the past, both Google and Facebook have obtained purchase data for a more limited set of consumers who participate in loyalty programs. Consumers that participate in loyalty programs are more heavily tracked by retailers, and often give consent to share their data with third parties as a condition of signing up. (Not all consumers may realize they have given such consent, according to the digital privacy advocacy group Electronic Frontier Foundation).”

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Jet.com Tells Fresh Story In Real Life

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Business Insider: “Jet.com — the online retailer that Walmart bought in 2016 for $3 billion — is now selling some of its products IRL. From May 10 to June 18, Jet will have a food-themed concept shop in Manhattan which showcases artisanal accessories, cookbooks, and kitchen appliances. Most of the items are pretty quirky, like face masks made from tomatoes, kale-flavored chocolate bars, socks with ice cream prints, and banana-shaped flasks.”

“The Jet experience comes to life at Story, a 5-year-old retail space that changes its products, decor, and events programming about every month based on its particular sponsor. For the next six weeks, the sponsor is Jet, where people can also find most of the store’s items. The larger goal of the temporary store is to raise awareness around Jet’s grocery delivery service.”

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Greats Sneakers Pop-Ups: All You Need is Wi-Fi

Wall Street Journal: “Greats, an online sneaker brand founded in 2013, plans to open at least 10 locations over the next two years by signing short-term leases ranging from three months to one year … The Brooklyn-based brand, which sells sneakers ranging from $50 to $200, manufactures most products in Italy and markets them directly to consumers online. It has tested three temporary stores since 2014, most recently a location in Williamsburg, Brooklyn, that was open for one year.”

“Greats is targeting locations between 700 to 1,000 square feet—about the size of a coffee shop—primarily in urban areas. One challenge for online brands is to ensure that new locations increase sales, rather than cannibalize existing business.” However: “Online apparel brands are finding that they don’t need much to set up a store. The evolution of point-of-sales technology means that transactions can now be made on phones and tablets. Some newer retailers don’t even keep much inventory.”

“Greats sells eight core styles of shoes in different colors and materials, making its business more mobile than that of a traditional retailer. At its new locations, the company plans to bring its own interior elements such as shelving, greenery and lighting.” Rachel Ulman of Greats comments: “You can do a lot within four walls. All we really need is some Wi-Fi.”

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Who Will Win The Retail Race?

The Wall Street Journal: “Can physical retailers build intimate digital relationships with their customers—and use that data to update their stores—faster than online-first retailers can learn how to lease property, handle inventory and manage retail workers?”

“It isn’t hard to picture today’s e-commerce companies becoming brick-and-mortar retailers. It’s harder to bet on traditional retailers becoming as tech savvy as their e-competition.”

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Facebook Chatbots Test ‘Conversational Commerce’

The Washington Post: Mastercard “has partnered with Subway and two other major merchants to launch ‘chatbots,’ which are robots that simulate human conversation. The Subway iteration allows you to order a custom sandwich for pickup, something of a digital version of walking down the chain’s sandwich assembly line.” Cheesecake Factory “allows shoppers to purchase and send out gift cards.” FreshDirect lets shoppers “place orders for groceries and meal kits. The bots will be found within Facebook’s popular Messenger app, and will be powered by Masterpass, the credit card giant’s digital wallet.”

“The debut of the bots will provide a fresh test of shoppers’ appetite for what the industry has dubbed ‘conversational commerce,’ the idea of making a purchase or other customer service transaction through A.I.-powered messaging … Consumers are spending more time online, and yet they are concentrating those minutes in a very limited number of apps. Retailers … are realizing that the best way to snare your interest online might not be with a killer app of their own, but by creating bots that live in the apps that you already use.”

“Facebook has said that more than 33,000 bots have been created for its Messenger app so far. This latest batch demonstrates how differently businesses are approaching the technology at this early stage of the game.”

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Neiman Markups: Out of Fashion

The Wall Street Journal: “Once upon a time, all Neiman needed to do to lift profits was raise prices. That model has since fallen out of fashion … competition from startups like Farfetch.com and Matchesfashion.com are forcing more discounts. Over a recent 24 hours, Farfetch’s prices averaged 2% lower and Matchesfashion’s 15% lower than Neimanmarcus.com’s prices on 32 identical items, according to price-tracking firm Market Track LLC.”

“While brands still exert control, particularly over the newest and most popular items, it is harder for them to police prices that change rapidly across websites and fluctuate with shifting exchange rates, industry executives said … The explosion of discount chains, led by T.J. Maxx , that sell designer brands at cut-rate prices also made consumers rethink the need to pay full price. To compete, high-end department stores rushed in with their own off-price chains—Neiman’s Last Call, Saks Off 5th and Nordstrom Rack.”

“Neiman’s Chief Executive Karen Katz … championed a line of specialty stores called Cusp, which Neiman opened a decade ago, that feature lower-priced clothing and accessories. Neiman stores also have added relatively less expensive goods, such as $700 Prada handbags … Ms. Katz reduced snob appeal by allowing Neiman shoppers to use Visa and Mastercard … Neiman has invested heavily in e-commerce … Not all the moves have worked. After building six Cusp stores, Neiman closed two and stopped development of the chain in 2012.”

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Farfetch: An Operating System for Retailers

Quartz: Farfetch, the wildly successful e-commerce platform that allows luxury-fashion boutiques around the world to sell online without maintaining their own costly digital operations, is … unveiling a demo of what it has modestly dubbed the Store of the Future.”

“The ‘store’ … isn’t actually a store. Rather, it’s a retail platform with a suite of different technology products the company intends for partner shops to mix and match to create their own unique experience.” These include:
“Clothing racks enabled with RFID that detect what the customer is browsing and can populate a wish list. Digital mirrors that let the customer view their wish list and request the items in the desired sizes or colors. A mobile payment system for easy checkouts.”

“Farfetch, which doesn’t have its own stores, sees its platform as an ‘operating system’ for retailers, and hopes third parties will build their own applications on it the way developers build their own apps for iOS or Android. What Farfetch will maintain control over is the customer data that allows the physical store and any digital product to remain synched up.”

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