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Tech Bytes: Three tips to make the grade this back-to-school season

BY Deena M. Amato-McCoy

It may only be mid-June, but retailers nationwide are already eyeing their share of almost $800 billion in estimated back-to-school sales.

Store shelves — both physical and virtual — are already being stocked with this year’s hottest apparel, school supplies, electronics and dorm essentials, all in hopes of luring early bird shoppers. However, beefing up inventory isn’t enough to guarantee a successful back-to-school shopping season.

With a mere two-month window available to grab customers’ attention, retailers must improve an array of operations from poor mobile experiences to ineffective marketing messages. If they don’t, not only will brands drive shoppers into the arms of competitors, these shoppers may not return later.

The following tips can get chains back-to-school ready:

Don’t ignore the value of customer reviews. There is no doubt that savvy parents are doing their share of back-to-school research online before heading into a store. And when making purchase decisions, they are foregoing email and search engines in favor of online ratings and reviews.

In fact, 90% of shoppers said user-generated content is the top source influencing their purchase decisions, according to “Hearing the Voice of the Consumer: UCG and the Commerce Experience,” a report from TurnTo and executed by Ipsos.

Retailers that monitor what merchandise customers are talking — and reading — about online will give them insight into what is worth stocking up on. Ratings and reviews are also a good indicator of any concerns related to specific merchandise or the shopping experience, overall. Use this information to connect with customers and meet their back-to-school needs.

Adopt location-based marketing technology. While school has ended in the south, Midwest and parts of the west coast, those of us here on the east coast are limping to the finish line — and refuse to look at another lunchbox, backpack or other school supplies for at least two more months. So imagine the frustration a group of us “Mom” felt when the first back-to-school catalog arrived last week.

This is proof that retailers still rely way too heavily on mass marketing. Not only are these blanket messages ineffective in spurring impulse sales, they often fail to drive conversion, and sustain customer loyalty.

By employing location-based marketing tools, retailers merge geographic location data and regional shopping behavior to gain insight into when to effectively target shoppers. These tools will keep marketing messages on top of the shopper’s mind at the optimal time — and keep promotions out of the circular file.

Make experiences mobile-ready. As retailers prepare for more online traffic, they can’t forget how important their mobile channel will be for back-to-school shoppers. With almost 60% of page views and browsing happening through mobile devices, according to BazaarVoice, brands need to step up their mobile game.

It is time for mobile platforms to become more “guest-centric,” and drive more personalized experiences, from the way merchandise is presented to mobile promotions. Retailers also need the capacity to manage increasing traffic volume levels, support navigation and securely process mobile payments.

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Amazon Rocks Food Retail: Four things the industry needs to do

BY Randy Burt

Amazon’s acquisition of Whole Foods Market is sending shock waves through the world of grocery retail. This striking move introduces more disruption into the grocery wars. As the c-suites form their war rooms and build their responses, the industry faces an array of significant challenges.

1. Food retailers must think bigger and faster

The acquisition of Whole Foods invigorates and improves the credibility of Amazon’s grocery and fresh offerings. Combining Whole Food’s brand trust and food expertise with Amazon’s financial resources and relentless focus on customer experience creates a substantial threat to traditional grocers. Whole Foods’ store footprint also gives Amazon a new platform to integrate in-store and online sales.

The urgency level just went way up for grocers. Food retailers will need to move quickly to reevaluate their strategies, determine what needs to change in their priorities and focus, and ensure that they are building organizations and operating models that can move at the speed of digital.

2. The middle ground is uncomfortable

Amazon’s move magnifies the challenge of surviving in the middle. One battle is occurring online, with Amazon leading the way to create a digital shopping experience that provides both choice and operational excellence, particularly for premium customers. The other battle is in brick-and-mortar stores, where hard discounters such as Lidl and Aldi are entering or accelerating expansion in the U.S. market, poised to capture more of the low-income shopper wallet.

For most traditional food retailers, attempting to go head to head with Amazon is not an option, given the capital and scale at which Amazon operates. Competing with Aldi and Lidl may also be unrealistic without matching their operational leanness and asset structure.

Traditional grocers will need to accelerate their efforts to create a shopping experience that integrates the physical and digital worlds, deepen relationships with their customers, and dramatically step up efforts to reduce costs to enable investments in pricing, digital offerings, and in-store experiences.

3. M&A strategy should be broadened

Amazon’s purchase is likely to trigger a domino effect of consolidations. The U.S. grocery industry has already been consolidating in recent years. (Think Ahold and Delhaize, Albertsons and Safeway, Kroger and Harris Teeter.) A.T. Kearney’s 2017 Consumer and Retail M&A study, Off to New Peaks in Uncertain Times https://www.atkearney.com/consumer-products-retail/cirp-ma-executive-report reveals that most executives believe acquisitions will accelerate beyond the 2016 post-recession peak. Format innovators such as Sprouts, Fresh Market, and Fresh Thyme will remain interesting consolidation targets, but grocers will need to look beyond conventional targets to consider innovative players with digital, e-commerce and logistics capabilities. M&A strategies should be retooled to ensure a broad lens that considers firms that enable deeper engagement and loyalty from existing customers through improved in-store and online shopping experiences.

4. New partners are needed to win this fight

Grocery retailers will need to think more broadly and urgently about the ecosystem of partners needed to win both in-store and online. Because of capital constraints, most grocers will not be able to buy all required capabilities. They will need to find the right mix of partners across multiple areas, including digital shopper engagement, digitally augmented store and supply chain operations, e-commerce fulfillment (such as Instacart and Shipt), and both local and international food producers and farms. Reinvigorated partnership strategies will be vital for traditional players to remain competitive — and even differentiate — from both an experience and offering standpoint.

Food retail was already at a fever pitch in the U.S., but Amazon’s acquisition of Whole Foods turns up the heat. Conventional players need to act quickly to shore up their positions and accelerate efforts to differentiate and grow in a world that just got even more perilous.


Randy Burt is a partner in the consumer and retail practice of A.T. Kearney, a global strategy and management consulting firm, and an expert in food retail, merchandising and supply chain. He can be reached at [email protected]

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Amazon and Whole Foods: 5 things to know about the blockbuster deal

BY DAVID ORGEL

The food retail industry has been flush with big mergers lately, but today’s stunner has no precedent.

The announcement that Amazon plans to buy Whole Foods Market for $13.7 billion heralds the coming together of two retail icons with vastly different cultures — one a mainstay of the brick-and-mortar world and the other a master of online shopping. It also creates big challenges for competitors in the wider retail landscape, especially those focusing on groceries, beauty and health. The deal is subject to shareholder and regulatory approvals and is expected to close during the second half of 2017. Whole Foods’ CEO John Mackey will remain in his role. Here are five key points about the developments:

1. Marriage of Needs

This combination will serve important purposes for each side. Amazon desperately wants a bigger grocery presence to boost its already growing online grocery sales, and this gives the company a bigger beachhead.

Whole Foods needs the extensive financial resources of a giant like Amazon, especially at a time when it’s under pressure from investors frustrated over a lagging stock performance.

2. Heightened Competition

This deal signals a new level of competition in the retail space. That’s the message of the falling stock prices that immediately followed the announcement, impacting retailers such as Target, Walmart, Kroger, Costco, and Supervalu. The entire retail industry is now on notice that disruption is going to reach new levels, which shouldn’t be surprising any time Amazon gets into the picture. This deal will create new urgencies for competitors to get their e-commerce strategies in shape, from home delivery to click-and-collect.

3. Physical vs. Virtual

The word omnichannel was created for a situation like this. Amazon has been gradually backtracking into the physical stores business, including strategies to open grocery and convenience stores. The acquisition of more than 460 Whole Foods units would be the latest and biggest example of its embrace of physical stores. This will likely enhance Amazon’s ability to speed home deliveries to consumers by leveraging Whole Foods’ physical store base.

The merger announcement said, “Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.” That means Whole Foods is being valued for its brand, even as the combination would enable new omnichannel synergies, including the ability to market Whole Foods’ brands through Amazon’s numerous channels.

4. Health, Wellness and Beauty Evolves

Whole Foods has been challenged because mainstream retailers have adopted many of its pioneering wellness strategies. That has pressured Whole Foods to keep moving the needle to differentiate and boost sales. Amazon isn’t uniquely qualified to solve this challenge, but it has a wide range of online distribution outlets and platforms that could help address this problem by making Whole Foods’ natural, organic and better-for-you items more accessible to consumers.

On beauty: Amazon already has a huge impact on beauty, with a wide-ranging online store that includes luxury, skin care and fragrance. Given that it already draws a large beauty audience, the merger provides a new, highly unique beauty product set from Whole Foods to showcase in front of that audience. So while most of this merger is about grocery, beauty also provides an upside.

5. Value Equation

Whole Foods has been long plagued by its “Whole Paycheck” image of being very expensive. After years of trying to offer more in-store values, the retailer opened a new format last year called 365, which is smaller and offers lower prices. Amazon, on the other hand, is the master of value, and its involvement presumably will help bring Whole Foods more in line with consumer price expectations, while hopefully maintaining quality. If Amazon can’t do it, who can?

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