WHY IT MATTERS: Digital Transformation

WHY IT MATTERS: a look back at the past decade, all signs point to digital transformation to become reality in RETAIL in coming years.

WHY IT MATTERS: its the new year so trend reports are it and this is one of them. 100 pages of future looking prognostics. Enjoy!

WHY IT MATTERS: simply put, make sure than when customer go in store the staff is knowledgeable, products are there, and provide the 5 things they look for (the 5 are from me, the survey just supports that ;-): showroom, service, education, entertainment and immediacy.

WHY IT MATTERS: the trends is clear, technology drives a number of business innovations in Retail. Questions is: is there a business model behind those innovations? Not always unfortunately... Nevertheless, useful insights about what's trending.

WHY IT MATTERS: I've been playing around with retailers for 24 years trying to convince them to sell online via eCommerce. Most push back because of the cost, the tools, the change it requires in processes and people. It is much simpler and more reassuring to apply existing best practices (a coupon here, a discount there) and not change much. Short term, returns are better, profits remain, shareholders are happy and everyone gets their bonus. This short article reminds us that Amazon has not reinvented the wheel, just built it with a new kind of material.

WHY IT MATTERS: anything Amazon does is important because they innovate. That is they try things out until the model works. Grocery appears to be the ground where the profitable model has yet to identified. But the final goal is huge: volume. Grocery is all about weekly repetitive orders. If you solve this then you have effectively solved the delivery problem. Amazon has been trying to crack this nut for more than 10 years with launch of Amazon Fresh. And my attitude remains: if you deliver grocery at scale without loosing money then effectively all other delivery have a marginal cost. Now it looks like Amazon is thinking that in order to win the repetitive products (like peanut butter and canned soup) you need physical stores for fresh products, prepared meals and local spokes for last mile delivery...

WHY IT MATTERS this report presents and categorizes the retail trends in 2019. Some are technology-based (AR, VR, QR codes, ...) but all are technology-driven, even those that improve product or distribution (small stores, popup stores, store as fulfillment centers, localization, ...)

WHY IT MATTERS: I love how these guys have analyzed the market and split the trends into actionable technologies such as "Do it!" and "Quick wins". The report provides a number of additional insights and data points on eCommerce sales, key players, etc.

WHY IT MATTERS: delivery is the last issues that plagues eCommerce because of high costs and delays. Delivery accounts for 14-15% of Amazon revenues. Reducing it will have a huge impact on profit and customer satisfaction.

I argued in the past that grocery retail is for Amazon the way to address delivery costs. Grocery effectively makes delivery a commodity. Having trucks roam the streets delivering groceries (repetitive, predictable, ...), the other order items on the truck can be delivered at marginal cost. 

WHY IT MATTERS: omnichannel is essential as this article shows - 33% of sales are omnichannel and the number is growing. But don't get fooled, omnichannel is difficult to implement because it requires systems to talk to one another, something they weren't often designed to do!

WHY IT MATTERS: there are things you can do at every level of maturity to improve personalization.

WHY IT MATTERS: platforms are all the rage in digital transformations. Companies and executives often bet that their preferred platform will guide and integrate the right tools. If you look at the mess that IBM and Oracle have made with their platforms over the years, one can only hope that Adobe, salesforce and SAP will not do the same. episerver, sitecore save the day for Microsoft which has failed to deliver in recent years.

WHY IT MATTERS: I launched IGA cybermarket August 1996 - 23 years ago soon - so this subject still fascinates me given that penetration remains very low. Reasons are clear: food is such an important item in your budget that price matter and few are ready to pay for the extra cost of online picking. But solutions are around the corner...

WHY IT MATTERS: eCommerce now accounts for 1 in 4 total sales so everyone should use this as a benchmark ie. if you are not selling 25% online then you may be behind the ball (depends on your industry but a good benchmark). Also, if your site is not mobile focussed, you have to take steps to change that.

WHY IT MATTERS: this is a great reference to make part of your weekly reading list.

WHY IT MATTERS: the report is not available for free but the 42 slide summary is a great overview of key trends that are presented with observations and outcome.

WHY IT MATTERS: Amazon is scaring a lot of retailers. This report makes the case that other industries should also be scared of Amazon. Digital disruption is the name of the game

WHY IT MATTERS: you have to sell where people are (location location location). So everyone sells on Amazon. But at the same time, Amazon has access to analytics data about best selling products where they create private labels of best selling products - effectively using the marketplace as a "revenue generating" market research tool. Unsustainable for retailers that compete with Amazon. Alternatives are being discussed in every meeting that I have, from home grown private solutions to local or regional options. But the crocks of the matter remains: people are hanging out on Amazon so if you build a marketplace your solution must absolutely allocate sufficient funding to draw people in. So plan to allocate at least as much in marketing as you do in technology - then repeat every year for the foreseable future.

WHY IT MATTERS: Build-a-Bear was one of the keynote speakers at Shoptalk 2019 where the CEO highlighted an important concept: if we don't change our store format we will go out of business. And clearly the single store format concept of the past no longer applies. Retailers must then scramble to update their internal processes and technologies to support multiple store formats, from store-in-a-store to store-in-a-cruiseship concept (that build a bear shared as being one the best concept they tried).

WHY IT MATTERS: more evidence that stores are transforming and moving away from being mini warehouses - shopping is done by eCommerce today. Store now have become destinations for service. This places huge pressurer on digital systems in store that were designed to deliver efficient transactions (think invoice and payment) rather than service like alterations, returns, product information, personalized products, 3D printed products, etc.

WHY IT MATTERS: retailers are experimenting with new store formats as they struggle to create new store experiences to draw clients in and keep them interested. Technology is essential here to personalize the store assortment and merchandising, as well as offer eCommerce order pickup and member insights.

WHY IT MATTERS: when I ask about what the "store of the future" looks like I often get descriptions of a robot-filled location with huge displays and computer kiosks. In fact the trend is to HIDE the technology to make the store experience more and more about what you had when you visited the general store of the past. Walk in and speak to an employee that is very knowledgeable about you, your needs and the products they have to sell. The only difference is that this knowledge comes from AI, cameras, sensors, and all kind of technologies that support and enhance the retail employee to make you believe they know you and their products. THAT is the magic of the store of the future. Get used to it.

WHY IT MATTERS: we need to look forward and this is one set of insights from a reputable source. Amongst the insights, the low adoption of voice for commerce seems realistic (have you tried any of them? great to set an alarm but too obscure to spend real money IMHO). Also, prediction that there will be 3 major commerce platform behemoths (Amazon + Alibaba + eBay?) also makes sense: small retailers, brace yourself to be heard outside those channels! And large retailers need to update their technologies to target many different marketplaces. Then again, take with a huge grain of salt ;-)

WHY IT MATTERS: always good to hear what leaders in the field of ecommerce identify as key trends to adapt digital strategies accordingly or eliminate digital blind spots.

WHY IT MATTERS: retailers do not need to worry about AI too much: all product vendors will include AI into their products. However retailers need to start collecting and cleanup their data because without it AI will not deliver expected results.