Frito-Lay exec joins IDC as retail analyst
Framingham, Mass. – A six-sigma green belt, Victoria Brown joins IDC Retail Insights as senior research analyst, retail supply chain. In this new role, Brown will spearhead the supply chain research program.
She will be covering topics such as inventory management, warehouse management, logistics and omnichannel distributed order orchestration. Most recently, Brown served as a supply chain leader, overseeing load balance and tracking distribution channels for the third-largest plant in Frito Lay North America.
4 things every retailer needs to know about mobile
The rapid changes in the digital and mobile world are radically affecting consumer behavior, disrupting traditional means of retailer/consumer interaction and influencing buying behavior and payment options in an unprecendented way.
Capitalizing on these technological innovations means keeping a close eye on the ways in which innovations in technology are turning the retail world upside down. There is no better way to do this than attend Mobile World Congress.
The mega-event held in March draws 90,000 attendees to Barcelona, Spain who are eager to discover and hear from some of the world’s top innovators and thought leaders in digital media, technology and mobile, including Facebook Founder Mark Zuckerberg. Retailers should care about who attends and what happens at Mobile World Congress because changes and innovations in technology are quickly affecting the retail landscape globally and will have a far-reaching impact on consumer behavior and the way brands and retailers engage their customers. There was an abundance of information shared at the event, but three things that stood out with significant implications for the retail industry were as follows:
1. The changing digital landscape is redefining ‘content’
While traditional software and device companies alike are vying for the eye and consumption dollar of the cutting-edge consumer, the question on everyone’s mind is that of content. With technology capabilities increasing exponentially and the application of tech across product platforms exploding, prevailing thought leadership is focused on how to change content to accommodate a rapidly evolving consumer. In his keynote speech, Facebook founder and CEO Mark Zuckerberg discussed his vision of getting the Internet into underserved parts of the world through Internet.org, a collaborative initiative between Facebook, major mobile companies and governments. Internet.org’s purpose is to connect people, empower businesses in new regions, and connect governments and individuals in order to build the Internet worldwide. Large corporations are using Facebook to ease barrier of entry for new Internet users, and investing time and resources in developing a population that was previously outside the reach of merchandisers.
These firms are focusing on the value of data that can be procured from these new Internet users, apps’ ability to drive data and the usage of that data as the future of business. One of Internet.org’s partners, Mario Zanotti, Senior EVP of Latin America for Millicom, spoke of the success of Internet.org’s quick adoption in Africa and South America, while Christian de Faria, CEO of Airtel Africa, referred to Facebook as “a good, easy access point…for introducing people” to the Internet. Jon Fredrik Baksaas, GSMA Chairman and CEO of Telenor, said the team had seen a 30% increase in Internet use in Paraguay, and a growing penetration of data in their customer base.
The launch of Internet.org in Colombia spurred a 50% increase in new data users in the first few weeks. And in Tanzania, sales of smartphones have increased by a factor of 10 since campaign launch. While there’s still a need for increased infrastructure development and for region-specific soutions for issues such as payment and delivery, the effects of putting Internet and mobile access into the hands of a new consumer database are significant for retailers, especially considering the rise of omnichannel and pure online retail sales.
2. Financial transactions and social interactions
Niklas Adalberth, co-founder of Klarna, discussed how mobile payment systems are reflecting a change in the consumer-purchasing ecosystem. In an effort to reduce conversion loss, Klarna has created a payment solution that separates the “buying” from the “paying” in the checkout process. With more than 50% of payment transactions from Klarna-affiliated companies coming from mobile e-commerce traffic, those companies need to ensure that consumers encounter as little friction as possible during the mobile payment process.
Klarna allows its soon-to-be customers to pay without registering for a mobile wallet or downloading an app. At the checkout page of a retailer’s website, the customer simply enters his or her e-mail, zip code and top-line data such as first and last name, and then Klarna populates the rest of the form, even if it’s the customer’s first visit to that site. The customer is given a “Buy now” button, and the order is done. No banking or credit card information is exchanged. The order is instantly placed, and fulfillment is immediate.
Klarna assumes all risk to the retailer and gives the customer 14 days to settle payment with Klarna. In return, the merchant gives Klarna a onetime percentage fee for the purchased items. Klarna is able to do this by employing 80 analysts and 400 engineers to run an extremely sophisticated algorithm for assessing risk in real time and providing a real-time payment option for the customer. For high-risk customers, Klarna provides a prepay option. What Klarna appears to be solving is the very real problem of conversion rates. The normal conversion rate for shoppers using desktops is between 2% and 4%, but that drops down to 0.2% to 0.4% on mobile devices. Klarna’s conversion rate on mobile is an astounding 4%—the same as the top average percentage on desktop—and it boasts an even higher conversion rate on desktop.
3. Keys to the connected lifestyle
The idea of a connected lifestyle has garnered a lot of buzz across industries. But what exactly does that mean to product developers, brands, retailers and consumers? One major component of the connected lifestyle is advancements in automotives and the increasing popularity of electric cars. However, those cars still represent a relatively small percentage of the market, and the industry faces challenges, including the need for longer autonomy and battery life, a stronger infrastructure and more competitive pricing.
While we are a good 10 years away from driverless cars—according to Carlos Ghosn, chairman and CEO of Renault-Nissan Alliance—there are advances in autonomous driving we can expect over the next one to five years that will impact the way we commute, shop and “live” via our cars. With changes impacting new vehicles as early as 2016, all carmakers will be adopting autonomous solutions that resonate with their consumers and reduce human error.
Ghosn anticipates that by 2016, autonomous-driving components, such as automatic vehicle response during trafic jams, will have cleared regulatory requirements and start to be talked about. As early as 2018, new cars will be capable of further automation, including highway driving and lane changing. By 2020, autonomous city driving will be almost expected, and cars will be able to recognize and intelligently act upon objects they drive by or “see,” making decisions between contradictory options. In areas of the country where consumers’ relationship with their cars is both personal and dependent, how will this change in interaction affect what they want to do in their cars and with their cars? Will it take away some of the stress of traffic or the tediousness of longer-distance driving? Will relaxed travel make it more exciting to visit outlet malls as a day excursion, or will the automation just make it even harder to take a break from smartphones and work e-mail? 4. Mobile – the remote control of life Ralph de la Vega, President & CEO of AT&T Mobile & Business Solutions, predicted that the smartphone is well on its way to becoming “the remote control of your life.” By 2020, he said, 20 to 50 billion devices will be connected and controlled from personal data devices.
The key challenges will continue to be safety, privacy and seamless integration. Advancements and adoption will also be heavily influenced by regulation. This indicates that a massive shift in consumer behavior will take place. Retailers have already seen a sizable advancement in purchasing activity via mobile devices. With the increased use of mobile comes a proliferation of data. Bill McDermott, CEO of SAP, predicted that new business models will be formed based on networked businesses leveraging devices across business platforms, in real time. Currently, almost 90% of big data is under-analyzed, but as investment continues to be made in innovation, companies will create seamless value chains by connecting personal and business networks.
This phenomenon also extends to the home where major changes are underway. Karsten Ottenberg, CEO of BSH, expects all home appliances to be connected to consumers by 2016, allowing consumers to not only control them remotely, but also adapt them for convenience and simplification solutions. How long will it be until connectivity within the home fundamentally changes? That will depend on the application of technology, which is most quickly adopted when applied in a utilitarian way. The most eager early adopters in this space are customers in the U.K. and the U.S., but the fastest adoption is taking place in China.
Deborah Weinswig is executive director of the Fung Business Intelligence Centre where she heads the firm’s Global Retail and Technology research team, a think tank focused on emerging retail and tech trends. Weinswig is a former top Wall Street and retail technology analyst viewed as a leading authority on emerging technologies.
Omnichannel inversion: When clicks meet bricks
Digital-first doesn’t mean digital-only. At least not anymore. Some brands have already embraced that lesson in a bold way, and many others are taking notice.
After all, the customers have spoken, and what they want is an experience that allows them to showroom, or browse in store and buy online. In fact, according to a recent report from MIT, up to 80 percent of shoppers make purchases in this way. Forrester’s “The State of the Digital Store” report further solidifies this fact: when online retailers open physical locations, they often see a spike in web sales from local browsers.
Even Amazon—a brand so synonymous with digital retail many of us couldn’t imagine our lives without it—recently opened an outpost on Purdue’s campus run by staffers from the ecommerce giant. This first-of-its-kind shopping experience is far more convenient than traditional in-store or online purchasing could bring. In addition to its streamlined textbook-ordering process, many other items are available for next-day shipping and students are pinged when their purchases have arrived. It’s a big move that shows Amazon’s awareness of the changing retail environment, and odds are, their physical strategy is just getting started.
In the past few years, we’ve seen digital-to-physical moves by Bonobos, Warby Parker and Birchbox as more brands embrace the idea of showrooming with great success. And if this trend feels like history is repeating itself, well, there’s some truth to that feeling. Before digital ruled the day, there were mail-order catalogs, with Montgomery Ward and Sears Roebuck leading the paper charge.
Even then, brands discovered the connection between opening physical stores and a growth in sales. The more things change, the more they stay the same. But succeeding in the physical world takes more than hiring a top-notch realtor: from pop-ups to permanent locations, the truly successful digital-to-physical moves are all about innovation. Thankfully, being well-versed in the digital world is the perfect jumping-off point. Here’s how digital-first brands can use their existing expertise and succeed in the brick and mortar world.
Use Digital Data for Smarter Physical Store Decisions (and Vice Versa)
Online retailers have a wealth of shopper data at their fingertips, and that information can help make more informed brick and mortar decisions about everything from the best locations to set up shop to the ideal inventory to put on the racks. And once a retailer opens its physical doors, in-store shopper behavior will inform online decisions as well, bridging the gap between the two worlds and creating a more holistic brand experience. Retailers can also use their digital savvy to implement web-style analytics in physical locations to track shopper behavior. From here, that data can be used to optimize store operations and merchandising layouts, and even inform loss-prevention strategies. Looking at online and offline commerce as one cohesive ecosystem will allow retailers to make smart decisions that result in brand advocacy and—ultimately—more sales.
Experiment with Pop-Ups to Achieve the Perfect Experience
When Birchbox was in the early stages of opening a New York City retail store, the company experimented with pop-up locations first. With each shop, they were able to refine their approach before committing to a full-blown retail store. The result was a dynamic shopping and lifestyle experience that complimented the brand’s online identity perfectly with classes, beauty services and rows of stations for product testing. All digital-first brands can learn a valuable lesson from Birchbox: while it may be tempting, don’t jump the gun when opening a physical store. Having an existing online following creates a dedicated focus group, eager to engage with your products beyond the screen. Use that to your advantage by taking the time to test and learn before diving in. That dedication to creating the most memorable experience possible will certainly pay off.
Master the “Wow Factor”
Successful digital-first brands are already well-versed in technology. Thankfully, those skills create an advantage in the physical world, too. Putting an existing knowledge of customer behavior and preferences to work in-store creates an experience that keeps customers coming back. From interactive product displays that help customers explore products further to RFID-enabled dressing rooms that show videos of runway shows and make additional product suggestions, as technology advances, so do retailers’ options for staking their claim in the physical world. Many shoppers still expect standard interactions with merchandise when stepping into a physical store. Online-first retailers have the opportunity to bring things full-circle, combining their new brick and mortar presence with digital features that add another dimension to shoppers’ interactions with static displays. The lines are blurring, and in this new landscape, both the retailer and the shopper wins.
Making it in the Physical World: A Final Word
Make no mistake: from choosing the perfect inventory to implementing technology that informs and doesn’t overwhelm, transitioning from the digital to the physical world is as valuable to a brand as it is complex. The best strategy isn’t one pulled from brands who’ve already paved the way—it’s an experience inspired by the very things that already make your brand stand out online. Stay true to that identity while embarking in the physical world, and shoppers will take notice. The best digital-to-physical transitions create a lasting impression that’s far stronger than either medium could achieve alone.
Amanda McCreary is senior product marketing manager at Acquia.