Plug and Play Reveals Three Trending Retail Technologies
I’m excited to announce a new partnership Chain Store Age is launching with Plug and Play Tech Center, an innovative Silicon Valley tech startup investor whose mission is to connect promising tech startups with retail corporations in an attempt to help retailers transition into the technological age. From time to time, you will be seeing Plug and Play-related content on our site and in our magazine.
To help kick things off, I asked the folks at Plug and Play to name three technologies that are trending in retail right now. The answers I got were mobile, beacons and image recognition. Here are a few of my own thoughts on the significance of these disruptive technologies to the current and future state of retail.
Mobile Gains Mass Appeal
Constant mobile connectivity has become a fact of life for most consumers, starting as young as the tween demographic and even reaching the Greatest Generation. Consumers are living omnichannel lives, using mobile Internet access to enhance and expand physical reality, and retailers should tailor their customer experience accordingly.
Beyond simple steps like using responsive design or native development to create mobile-optimized e-commerce sites, retailers should also employ more advanced mobile technology strategies. These include sending time- and location-based promotional texts, providing mobile self-checkout applications, and enabling access to product information and videos via barcode and QR code scanning.
A Beacon of Information
Beacon technology, which uses low-frequency Bluetooth transmissions to help mobile devices track their position relative to stationary beacons, is getting quite a bit of attention from retailers. Beacons offer retailers the opportunity to obtain immediate location and buying preference data from opt-in customers who visit their stores.
Beacons offer many potential uses to retailers. While the majority of attention has been focused on the applicability of Beacons to targeted, time-sensitive marketing, they offer retailers other possibilities, as well. For example, Beacons can help retailers determine how individual shoppers are traveling their stores, where they are stopping, where they are avoiding, etc. This data can then be amalgamated and used to determine at a higher level what demographic groups are coming into the store and what differences in may exist in where and how they conduct their shopping experiences.
Image is Everything
The advanced image recognition feature on the new Amazon Fire smartphone, called Firefly, which allows users to instantly create shopping lists and make purchases of items, has heightened retailer interest in this still evolving technology. Today’s consumers function on “Internet time,” and the ability to instantly research and purchase an item through image recognition satisfies the customer ‘s need for instant service and the retailer’s need for converting and capturing sales.
Image recognition can also help retailers “retail-enable” the broader consumer environment, and bring customer service and sales functionality to virtually any customer touch-point. Amazon is taking an early lead in using image recognition as a sales and customer experience tool, but other forward-thinking retailers still have time to enter the space before Amazon dominates it.
Dollar General offers $9.7 billion for Family Dollar, outbids Dollar Tree
Goodlettsville, Tenn. — The battle between the extreme discounters is heating up: Dollar General Corp. said Monday it has made an all-cash bid of $9.7 billion for Family Dollar, topping a deal Dollar Tree made last month. Dollar General is bidding $78.50 per Family Dollar share, which includes a $2.26 per share premium over Family Dollar’s closing price on Friday. The offer is $4 higher per share than the $8.5 billion deal with Dollar Tree.
“For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares,” said Dollar General CEO Rick Dreiling in a statement. “For Dollar General shareholders, the proposed combination of Dollar General and Family Dollar would be a significant strategic opportunity to create immediate and lasting shareholder value. For both Dollar General and Family Dollar customers, we would be able to provide better value and greater selection.”
Dreiling said that he would postpone his announced retirement if the deal goes through.
The combined company would have nearly 20,000 stores in 46 states. Dollar General expects revenue would hit $28 billion and for the deal to generate synergies of $550 million to $600 million on an annual run-rate three years after the deal closes.
Dollar General said it has committed financing for the $9.7 billion deal from Goldman Sachs and Citigroup Global Markets, including a $305 million termination fee that would be due to Dollar Tree if Family Dollar accepts another offer. The company also said it is prepared to enter into a definitive merger agreement with Family Dollar that is essentially the same as the agreement the store now has with Dollar Tree altered to adjust for the higher price and the divestment of stores.
In a letter to Howard Levine, chairman of Family Dollar’s board, Dreiling wrote: “As you know, we at Dollar General admire your company and its attractive footprint and business prospects. We have respect for Family Dollar, its employees and its leadership, and both Dollar General and Family Dollar share a commitment to serving customers in the communities in which we operate. As such, we were surprised and disappointed to find out you had entered into a merger agreement with Dollar Tree.”
Dollar General outbids Dollar Tree for Family Dollar
Dollar General bid $78.50 for Family Dollar Monday morning in a $9.7 billion deal that exceeds the $74.50 a share Dollar Tree offered for Family Dollar on July 28.
The deal would create a small format powerhouse with nearly 20,000 stores in 46 states and sales of more than $28 billion.
“For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares,” said Rick Dreiling, Dollar General’s chairman and CEO. “We look forward to expeditiously entering into constructive discussions with Family Dollar in order to sign a definitive merger agreement that provides enhanced value to Family Dollar shareholders and enables Dollar General to realize the benefits of this combination.”
The $78.50 per share Dollar General offer represents a 29.4% premium over the $60.66 closing price of Family Dollar shares the day before Dollar Tree made its offer. The deal Dollar Tree offered Family Dollar is valued at about $8.5 billion and involves Family Dollar shareholders receiving $59.60 in cash and $14.90 in equivalent Dollar Tree shares. The offer has already been unanimously approved by the boards of both companies.
To get the deal done, Dollar General said it had done significant economic and antitrust analysis and was prepared to commit to divesting as many as 700 stores. The company also committed to paying the $305 million termination fee Family Dollar will owe Dollar Tree if the previously announced deal falls through. In addition, Dollar General CEO Dreiling said he would remain in his current role to oversee integration of the companies after previously indicating he would retire in 2015.
Dollar General and Family Dollar operate complementary business — similar size stores with similar product assortments — which is expected to result in operational synergies and annual savings of between $550 and $600 million three years after the proposed merger is complete, according to Dollar General.
“Dollar General has developed extensive integration plans across work streams. The expected synergies would be derived from sales growth driven by an improved merchandise offering and store presentation, purchasing and sourcing efficiencies, distribution and transportation optimization and administrative savings,” according to the company.