Amazon Drones and Holiday Sales
By Leslie Hand, research director, IDC Retail Insights
Leslie Hand comments on Jeff Bezos’ announcement (on Sunday night’s “60 Minutes") that Amazon is developing a drone-based package-delivery service, and on Black Friday weekend sales.
First, on the topic of the Amazon drone: The FAA and other regulators is not likely to let armies of drones loose over the United States anytime soon. Bezos said the FAA is ruling on this in 2015, but I would expect it to be a non-starter in the short term.
Think about the processes required, the places the drones would land, the security of packages, the security of drones, and where the real value-add is – it’s probably not within the 10 mile radius Bezos mentioned. While the notion of Amazon drones is very scintillating, this was a marketing tactic, pure and simple.
Now, on the topic of retail sales. The battle that raged this past weekend among retailers was an all out fight for share of wallet. Competitive pricing was evaluated continually in retail "war rooms", and teams adjusted offers in response to the opposing forces. This obviously leads to profit erosion for retailers, so I will be very curious to see post-period close data, and what these tactics did to profit margins. I believe these tactics simply aren’t sustainable, and that in the end the consumer ends up playing the role of price analyst, waiting for the perfect deal, and that ultimately this leads to a lack of spontaneity and decision fatigue, which reduces basket size.
The numbers seem to bear this out, as we see large declines in physical store spending and huge increases in online shopping, as shoppers scanned emails and websites for best price and shipping terms. Retailers have given consumers what they want — ultimate control. Two can play this game, but who wins — not the retailer?
Opening stores on Thursday got shoppers out early, but in the end it didn’t increase total weekend sales. Did it increase sales for retailers that won the war for foot traffic — maybe, but what happened to margins? How many extra items were put in baskets — my guess not enough? Was opening stores on Thursday worth the overhead — employee payroll, lights, heat, and security? Don’t forget the erosion of employee satisfaction in the evaluation.
Shoppers will shop online more and more, because it is convenient, and when they have a good idea of what they are looking for (as they usually do, in the case of gifts), they have the most control and responsiveness if they stay put, and let the deals come to them. Shopping in stores is experiential and social; it fills a need to touch, smell and compare goods, or find goods not clearly defined (not on the shopping list yet). This is a fact retailers need to accept. A greater portion of holiday sales will go online than regular day to day sales — it just makes sense.
Retailers also need to reevaluate the notion of growing overall consumer spending in the current economic climate. Yes, they need to attract greater share of wallet, but how far can they stretch wallet size, or the consumer’s ability to spend more. I would argue further that consumers have a fixed budget for holiday shopping — yes, it often gets stretched, but there is a limit to over budget spending.
Consumers have a list, sometimes not clearly defined. The consumer challenge is catching the best deal. Retailers created the battlefield, and I am sure some will lose more ground this year, and some will be winners. The winners will likely keep it simple for consumers, so that there isn’t any reason to wait for further discounts, or give up margin on loss leaders, knowing that consumers will add more items to their baskets. If all spontaneity is lost — retailers are doomed. Then you might as well sell consumers a mobile price analyst that times the buy for certain "market price" conditions — what fun is that?
Five Ways Big Data is Changing CRM for Retailers
By Connor Marsden, U.S. Lead for Microsoft Dynamics CRM
The Retail industry is in the midst of unprecedented change, with multiple innovations in technology transforming the way business is conducted. Retail companies that are unable to keep pace will face diminished prospects for growth. But for those companies that can successfully navigate this changing landscape, there is enormous potential and the opportunity to create a sustainable competitive advantage within their business.
Many of these changes result from the emergence of the “Big Data” phenomenon — the ability to gather and analyze every piece of data from every customer to spot preferences and affinities that allow the retailer to sell smarter, anticipating the consumer’s next request. Accumulating from many sources and expressed in a number of channels, Big Data is responsible for the generation of five key Customer Relationship Management (CRM) trends that retailers must recognize and manage if they expect to remain competitive:
1. Omni-channel contacts. Consumers expect to be able to interact with retailers day or night from any location. Due to the growth of smartphones, consumers have access to large amounts of data right at their fingertips. Retailers need to ensure their CRM technology keeps them in contact with customers on any platform, meeting their expectations. They also need to be prepared to stay in touch with customers by phone, email, website self-service, real-time online chat, moderated product-centered online communities, and social media (Twitter, Facebook), all supported and accessed through smartphones and tablet computers.
2. Mobile devices. Consumers have become increasingly comfortable using their smartphone or tablet to browse retailer offerings, looking for discounts and comparing products whether they are on the go or on the couch. As consumers investigate, select, pay for, and take possession of their purchases, they typically use more than one “channel” to make a single purchase decision. The mobile channel is a powerful tool in providing content and community opinions to consumers while making their purchase decisions, even when they are in the store. Increasingly, in-store consumers know more than the sales staff about the store’s products, price points and competing offers. Therefore, retailers need to address the pressing need to help empower their employees to be at least as knowledgeable as consumers are about products, price, and availability. As retailers struggle to meet the demands of increasingly smarter shoppers, they are weighing the benefits of making a host of changes to the store and the role of the store associate. These changes include increasing education and training and adding technology tools like CRM to level the playing field. This is important because more informed store associates can influence a shoppers buying decisions.
3. Social Networks. Today’s retailers have recognized the need to integrate social networks into their CRM strategy. The wealth of information about consumer shopping behavior in social networks is currently untapped gold for many retailers. By using the right analytics tools within CRM technology, retailers can effectively mine this data to gain insights into what consumers want to buy and channel these insights into more effective merchandising plans. Conversely, retailers can leverage social networks to build relationships and influence what and how consumers buy.
4. Personalization. Personalizing the individual shopping experience has been complex and difficult to execute well. With today’s personalization CRM technologies, research shows that recommendation tools and omni-channel personalization positively drive key metrics including revenue, conversion, average transaction value, and time-on-site. Personalization makes it possible for retailers to measure and reward the behaviors of shoppers in a way that drives loyalty, builds trust, and enforces brand differentiation.
5. Gamification. Increasingly businesses are discovering that framing their marketing and customer relationship efforts in the form of online games — quizzes, sweepstakes, hunts and other entertaining ways to engage — keeps customers coming back to their websites and their stores. Gamification capitalizes on the individual’s natural competitive nature and can reward players with points, levels, achievement badges or virtual currency, any of which can be converted to discounts on the retailer’s products or entries in a drawing to win valuable prizes. At the same time, consumers entering these competitions provide the retailer with their email address and progressively more data that can be used to further personalize the retailer’s relationship with them.
With CRM technology that is both comprehensive and flexible, retailers can rely on this technology to turn insight into action, ultimately driving sales. From reducing the cost of dealing with customer issues to automating business processes that bolster customer satisfaction and loyalty, CRM technology is a key component of creating advocates out of customers who appreciate the retailer’s insight into the shopping experience they expect
P&G appointment latest brand building move at Chobani
Greek Yogurt leader Chobani hired 18-year Procter & Gamble finance executive Dipak Golechha to serve at its CFO reporting to founder and CEO Hamdi Ulukaya.
Golechha replaces former Chobani CFO James McConeghy who stepped down in November, the company said. His successor Golechha spent the past 18 years in finance roles at P&G including CFO of the company’s global snacks division.
"Dipak’s vast leadership and management experience, combined with our shared vision for Chobani, will support our continued growth and our future plans for expansion," said Ulukaya said. “Dipak joins a strong leadership team and will play a critical role in ensuring Chobani maintains the financial strength and flexibility it needs to build on our momentum as we prepare for an even stronger year ahead."
Golechha is the latest of several executive appointments in recent months including the appointment of David Denholm as COO and Peter McGuinness as chief marketing and brand officer. Chobani also recently announced some additional key appointments in core areas such as Andreas Sokollek, who brings more than 24 years of operations excellence and project management experience as SVP of supply chain and operations and in October the company named Alejandro Mazzotta as vp of global quality, food safety and regulatory affairs.