Amazon Go Is A Game Changer

We have seen time and time again that convenience is king. A frictionless shopping experience will allow many customers to get their grocery shopping done quickly, and efficiently. There is no need to wait in line to check out. No need to pay at the register. This is a long overdue break-through innovation that will give Amazon a competitive edge in the grocery space.

 

Not only does the promise of convenience drive a competitive advantage for Amazon in the grocery space, but through technology, Amazon is able to drive efficiencies and, in return, reduce cost of operations in running a grocery store.

 

Business Model Advantage

Amazon is going to have the ability to apply their customer-centric methodology to the grocery space by driving convenience and lowering costs to the consumer.

 

Amazon will save money with their Computer Vision, Algorithm, and sensor fusion technology. Through Amazon’s Computer Vision, a customer will be able to take what they want off of the shelf, and it will be added into their virtual shopping cart. If a customer decides they do not want a certain product, they only have to place the item back on the shelf in order to have it removed from their virtual basket so they do not get charged for the item. This will save Amazon employee costs because they will not need their stores loaded with people restocking all the items that people leave in random spots of the store before checkout.

 

Second, shrinkage due to theft will become a thing of the past. Billions of dollars a year are lost due to theft in the retail space. With Amazon’s technology, theft will be a thing of the past.  Allowing computer to manage the virtual cart eliminates human interaction, which, in this case, eliminates theft.

 

Third, checkout will be an unnecessary expense for Amazon since the checkout process will take place in the shopper’s pocket automatically on their mobile phone. This will also reduce the number of employees, which will result in lower overhead for Amazon Go.

 

Finally, and most importantly, is the Amazon shopping algorithm. Amazon knows more about its customers through shopping behavior than most people can imagine. Amazon has the ability to learn from its customers within a geographic location to ensure that the right type of inventory will actually be available for purchase. What does this mean?  This means that Amazon can expect to see revenues of a football-field sized Walmart with a physical brick and mortar footprint the size of your local convenience store!

 

All in all, this is huge and I am optimistic that this will put pressure on existing grocery chains to “step up their game” in technology and convenience in order to compete with Amazon in this space.

 

The good news for grocery consumers will be that we can all expect huge improvements across the board in multiple chain grocery stores and improved pricing as others shift to compete with Amazon Go.

It’s All In The Delivery

The ways we eat meals continuously evolve as our lifestyles, social dynamics and workloads change. The frozen TV dinner changed the landscape of meals in the 1950s, streamlining meal prep with readily portioned trays that could be popped in the oven for easy weeknight meals. Tupperware enabled make-ahead meal prep possible, as well as proper storage of leftovers for reheating later. The mainstream introduction of the microwave in the 1980s, lead to more adaptations of ready-to-eat meals (and of course, the HotPocket).

Take out and delivery used to only be synonymous with pizza and Chinese food; fast food was burgers and fries (itself an evolution from street food vendors and bar food). Now we have apps that will coordinate pick up and delivery from just about any restaurant you could possibly want, at the touch of your finger tips; we gleefully hunt down specialty food trucks or trek down to the food truck lot, serving as our modern day, anywhere food court. Our busy schedules may not even lend themselves for meals, which has lead to a rise in snacking, a whole different conversation but one that I wanted to at least acknowledge.

So, while all this should beg the question Does anyone really cook anymore? Quite a contrary movement has taken place. Instead, there is appreciation for the home-cooked meal. The traditional route still involves grocery shopping for items needed for recipes, cooking the recipes at home; the routine is broken up by inspiration found on recipe sites, blogs, Pinterest and those droolworthy videos popping up in your feed that make all cooking look easy. According to Joe Scartz, TPN’s Managing Director of Digital Commerce and Integration, “Grocers have seen the trend move toward simple prepared meals now for years and they have tried to fight back with white label brands and grab and go meals.”

Retailers are also offering up opportunities to streamline the traditional process through omni-channel retailing of buy online, pick up in store: Walmart grocery is available in limited areas; CVS is testing CVS Express for a rollout later in 2016; Harris Teeter Express Lane has been around for awhile, also offering home delivery; Ahold’s Peapod is a online grocery service delivering orders and providing them for pickup; Amazon Prime Pantry is gaining speed as well, just to name a few. Inspiration becoming a final product precipitates social sharing of successes or pride in fails.

Meal delivery services, for those who can afford it, offer an alternate route with the modern convenience of having everything you need boxed up for you, ready to assemble/cook, so you can post it to your social media, aka humble brag “I made this.” What was once relegated to weight loss programs like Jenny Craig, these meal services now embolden people to be their own top chefs in the kitchen, with recipes that range from updated American traditions to ethnic fusions with unusual ingredients, previously found only in restaurants. The types of services available seem to only be limited by an entrepreneur’s imagination: local farm-to-table services, gluten-free services, food allergy services, high-end, unique services, etc.

A natural fit for its brand, Weight Watchers has partnered with meal service Chef’d to provide points-approved options that work well with their diet plan. Blue Apron has taken the lead of the services, with a somewhat customize-able recipe offering and subscriptions with meals for 2 and larger families as well; their price range is roughly $60 to $140 per week, depending on the number of meals delivered. Blue Apron also offers wine solutions as well, to partner with the meals. The convenience takes away all guess work and is winning with folks who alternatively, ate out or brought home meals on a regular basis.

We’re seeing how retailers are adapting to our ever changing foodie landscape, what can brands do to adapt? “Brands should be doing more to partner with the home delivery meal services if they want to attract this type of consumer. That being said, while consumers “barely” have to go to the store, 97ish% of all of grocery shopping is still done in-stores of various formats. It’s one of the slower ecommerce categories to catch on but that is changing, slowly,” says Scartz. To that point, “Brands need to worry less about the fresh food meal delivery service and need to worry more about being shut out of impulse purchase as grocery ecommerce does grow. For example, once a consumer creates a list for Amazon.com, they are apt to reorder the same products. Same goes for Instacart or Peapod or whatever. Brands need to market and merchandise on those platforms with an eye toward subscription, especially as omni-channel retailing becomes more the norm.”

It’s Been a Mad March 2015, Baby!

As 2015 March Madness draws to close tonight with the championship game facing off Duke and Wisconsin, we’ve seen pretty much all brackets busted, gametime excitement around the players, the underdogs and the upsets, and more promotions than swooshes of the basketball. With that in mind, let’s take at a look at how some of the NCAA partnership brands got into the action this year.

Burger King’s 2 for $5 with Seth Davis and Kenny Smith

On the heels of its Watch Like A King 2014 campaign, NCAA Corporate Sponsor Burger King is back with a value bundle, two premium sandwiches for $5. Guests can mix and match their favorite premium sandwiches including the new Spicy Big Fish Sandwich, BIG KING Sandwich, Big Fish Sandwich, Original Chicken Sandwich and the YUMBO Hot Ham & Cheese Sandwich all for $5. The value play is getting buzz thanks to supportive TV spots with sports analysts Seth Davis and Kenny Smith. Nothing like bringing in the experts to add some authenticity to the messaging. Word is Burger King will also be part of the experience at the 2015 Final Four by bringing fans autograph opportunities with sports legends, along with free rides in Burger King-branded cars.

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Put REESE’S In Your Starting Lineup

REESE’S is at it again this year, keeping it’s perfect combination of peanut butter and chocolate top of mind with shoppers, with its Put Reese’s In Your Starting Lineup! Facebook promotion. This simple, but engaging promotion, encourages you to create a lineup of your favorite REESE’S candies for a chance to win free product. REESE’S is highly engaged with the NCAA as a corporate sponsor and incredibly visible throughout the tournament with advertising and brand highlights. The brand has also taken to social media to keep engagement going as the excitement of the tournament builds. In addition to presence at the Final Four Friday, REESE’S is a sponsor of the NCAA College All-Star game, which took place Final Four weekend and aired April 5 on CBS. Through its GoReeses.com, REESE’S has created a hub for gameday recipes and its NCAA promotions.

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REESE’S SnackTalk at WalMart

As part of its retailer specific executions this year, REESE’S brought the Snack Talk to Walmart, encouraging REESE’s fans to submit photos of their favorite REESE’s game day recipes during March, with finalists announced at the REESE’S NCAA College All-Star game this past weekend. Viewers were encouraged to vote via Twitter for their favorite to be crowned the winner. Erin @DelightfulEMade was deemed the REESE’s Snack Talk Champion and got to have her recipe featured on air.

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Buffalo Wild Wings #WingWisdom

As the Official Hangout of March Madness, Buffalo Wild Wings debuted its #WingWisdom with a fully-integrated campaign across television, social, digital, in-store and on-site Final Four experiences. From ads starring Steve Rannazzisi (“The League”) to “Basketball Wisdom” studio segments on CBS Sports and TBS Sports to an online Tournament Tracker to engaging in conversations about the tournament and providing shareable invites via social media, Buffalo Wild Wings’s omnichannel approach was keeping its brand top of mind with consumers in a sea of restaurants vying for share. In particular, the brand kept the engagement alive with fans by encouraging them to compete for “B-Dubs Baller” status in restaurant with skill-based games and bracket challenges — guests who participated could compete for over 1000 prizes, including a trip to next year’s Final Four.

Digital Advertising Predicted To Surpass TV

“Forrester Research today prognosticated that interactive spending will achieve a 12 percent compound annual growth rate and total $103 billion by 2019. The development is driven by huge gains for the search, display and social media niches, though mobile is truly spearheading the change. The Cambridge, Mass., researcher found mobile advertising will account for 66 percent of growth across interactive categories in the next half decade” as reported by AdWeek.

Not to be outdone, Magna Global claims that digital spending will outstrip TV spending as soon as 2017: “We are anticipating digital media to become the number one advertising category in 2017 when digital ad sales will reach $72 billion (38 percent market share) compared to TV sales of $70.5 billion,” the report said. Magna Global also estimated that U.S. ad spending will hit 167 billion this year, up 5.1 percent; this is a downgrade from the firm’s previous forecast of 6.1 percent. The firm attributes the downgrade to a slower U.S. economy, which caused advertisers to cut ad spending as well as “freeze” budgets, and lower-than-anticipated spending from political and Olympic advertising budgets.”

Regardless of when it happens, it’s pretty obvious that the writing on the wall for traditional media (especially print) is that they will eventually go the way of the billboard and newspaper ad; still hanging around but definitely taking a backseat to all things digital.  Phones, watches, glasses and other personal devices will be the advertisers dream target, with all content customizable to the end user.  In the meantime, advertisers are already using online outlets like YouTube and Hulu that aren’t limited to just 30 seconds to reach a younger demographic that has cut the TV cord:

P&G Shifting to a Less is More Strategy

Earlier this month Proctor & Gamble (P&G) announced that it would be cutting more than half its brands, a drastic shift  in strategy for the world’s largest consumer-products company. In the past, the company obtained brand after brand, even within the same category to ensure a hefty percentage of shelf space and leverage for consumers’ dollars. But as the retail landscape is shifting, P&G, along with other CPG companies, are having to adjust their paradigms and their portfolios.

From the Wall Street Journal:

P&G didn’t say which brands it will sell or shut down, but it will be a sizable culling of products that bring in around $8 billion a year in revenue. The company owns scores of lesser-known brands including Era and Cheer laundry detergent, Clearblue pregnancy tests and Metamucil laxatives. Dozens could prove attractive to private-equity firms that specialize in orphaned brands or companies in countries like China or Brazil looking for a more global presence.

“I’m not interested in size at all,” Mr. Lafley said in an interview Friday. “I’m interested in whether we are the preferred choice of shoppers.” He said some larger brands may be culled if P&G decides it cannot do well in those segments, and pointed to the company’s recent sale of its pet-food brands, including Iams which had over $1 billion in sales.

So it’s no longer about amassing a chunk of brands, but about keeping and focusing on those brands that are the best fit for the company. Though P&G has not declared which brands it plans to sell, likely some of its smaller, less productive brands will be let go. However, this doesn’t necessarily mean smaller, niche brands are going to be out completely, as long as they are niche market leaders, like Dreft baby clothes detergent or Fixadent denture adhesive.

In looking at this shift in strategy by P&G, it’s crucial to keep consumers in mind at the core of this shift. These days companies must wage battle for consumers’ attention through what seems like a ever-evolving number of channels. There are thousands of TV channels now, satellite radio, social media channels like Facebook, Twitter, Pinterest, with new ones popping up everyday, along with display and search advertising in addition to more traditional advertising, and that’s just a brief summation. While it’s ripe with opportunity to be able to reach consumers on so many levels, the only way to reap the rewards is if brands can break through to be seen and remembered. And when you have too many dogs in the fight for consumers’ attention, you don’t do any of your brands any favors by creating more competing “clutter.”

Additionally, think of the impact of technology has had on the state of retail given the physical store shelves are competing with virtual store shelves. On his blog Stratechery, technology strategist Ben Thompson addresses the P&G announcement within this context:

…Remember, dominating shelf space was a core part of their strategy, and while I’m no mathematician, I’m pretty sure dominating an infinite resource is a losing proposition. What matters now is dominating search… There are two big challenges when it comes to winning search:

  • Because search is initiated by the customer, you want that customer to not just recognize your brand (which is all that is necessary in a physical store), but to recall your brand (and enter it in the search box). This is a much stiffer challenge and makes the amount of time and money you need to spend on a brand that much greater
  • If prospective customers do not search for your brand name but instead search for a generic term like “laundry detergent” then you need to be at the top of the search results. And, the best way to be at the top is to be the best-seller. In other words, having lots of products in the same space can work against you because you are diluting your own sales and thus hurting your search results

The way to deal with both challenges is the same way you break through the noise: you put more focus on fewer brands.

I think Thompson hits the nail on the head, especially for such a large player like P&G in the CPG game. Time will tell if this move helps P&G’s bottom line and if the private equity firms expected to purchase the former P&G brands wind up with deals.

Photo credit: Getty

Amazon Fire Phone Unveiled

Amazon took its first steps into the ever-evoling smart phone battlegrounds last week with its introduction of the Amazon Fire Phone. A natural progression into this field, for sure, as an extension of its Kindle Fire and Fire TV, but is Amazon really going to be the next big contender in the smart phone world? I’m sure it’ll take some time to for the Fire to gain its footing and awareness spreads, but just around the water cooler that is social media, I have yet to hear of any one of my friends, family and/or co-workers rushing to ditch their iPhones or Samsungs to make way for the Fire. Normally, there’s at least a bit of chatter with the release of a new iPhone or Samsung, but I really haven’t heard much other than from reviews from tech outlets. The Amazon Fire Phone does bring several new elements to the table and it’ll be interesting to see how those elements are ultimately viewed by consumers, if they are truly positives in the Fire’s corner. Here are a few:

Unlimited Photo-Sharing

This is pretty much unprecedented and could serve to set a high bar. Every single photo you take with the phone is backed up to a cloud. Period. No going over storage limits ever again. If this phone takes off, this seems like a great selling feature that could become a standard across the board in order for the competition to stay in line.

3-D Display AKA Dynamic Perspective

Well, not truly 3-D, but 3-D-ish. I personally don’t know that I care all that much about this feature, especially when taking battery life into consideration. With a front facing camera to track your head and moves, the phone is watching you to create its 3-D effect. It’s cool for about 5 minutes, kinda like those stereogram posters you had to stare at in the 90s to see the hidden picture, but after seeing it everyday will it still wow?

Flinging to a Second Screen

The Amazon Fire lets you essentially “fling” a video you’re watching on the phone to a second screen via your Amazon Fire TV. This integration seems like a no brainer, but its the first of its kind to truly do that. Anyone that has tried to explain to their parents how to hookup a tablet to a TV for watching videos will be jumping for joy over this feature (I’m just hoping it sets a trend of expectation for other manufacturers!).

Mayday: Instant Tech Support

Much like what already exists for the Kindle Fire, the Amazon Fire Phone will have an integrated Mayday app that allows users to immediately connect to support. Depending on how hard the phone is to use, this feature may be well-used or simply viewed as a nice-to-have.

Firefly

Probably one of the most heavily touted new features of the Amazon Fire Phone, Firefly is a one-button launching pad for getting information. If it hears a song, it’ll not only identify it through Shazam, but also prompt you to buy it on Amazon or look for tickets on Stubhub. If you take a picture of a barcode, Firefly’ll automatically pull it up at Amazon.com for a one-click purchase. It can even identify book covers and art, directing you purchase through Amazon.com. This feature seems like the key reason for Amazon to get into the smart phone business in the first place. Amazon benefits the most from showrooming, so why not essentially endorse it and give consumers a scanner that also happens to be a phone and a camera?

Though these features can be found in various apps, this is the first time it will be innate with a phone and it should be a glaring red light for retailers, who are already concerned with showrooming. So what does this mean for retailers? I think it’s going to require aggressive action to combat showrooming, by offering to match or beat prices, ensuring their stores are stocked properly, educating their salespeople and offering free, quick shipping for when someone wants to purchase a product the store does not have in immediate stock.

For instance, I was in DSW over the weekend and saw POS in several places throughout the store exclaiming “Can’t find your size? We’ll ship it to you for free.” At this particular store, they also had sales associates out in the aisles offering to check you out in addition to the registers, which is a tactic more and more retailers are using to combat showrooming. Your shoppers’ time is valuable and considering they don’t have to wait in line to check out online, in many cases, it’s just one click; retailers should be making every effort to make check out a smooth, easy and personal experience already, but even more so, if your stores are susceptible to showrooming.

So, ultimately, is the Amazon Fire Phone built for consumers with their needs in mind or a product that consumers will use that pushes purchases to Amazon above all else? And that’s the thing. I have yet to read a review that remarked about the Amazon Fire’s actual phone capabilities. Is this device more of a supped-up, easy touch retail scanner that also happens to have camera and phone functions? Consumers will have to be the judge.

Video: PC Mag and YouTube

Photo: Amazon

Valentine’s Day Gets a Facelift

Millennials, described as “confident, connected and open to change” by PewResearch, are living up to their characteristics according to TPN’s Seasonal Pulse New Year 2014 study.

Among all generations, millennials are the most likely group to “change it up” this Valentine’s Day. Thirty percent of millennials are planning to celebrate the romantic holiday differently than last year (see graph below), providing a huge opportunity for marketers to influence their plans – especially if millennials are trying to impress a new special someone.

Further, 21 percent of millennials plan to stay home and cook a special meal this Valentine’s Day. As notorious foodies who are always online, millennials will be hunting down new meal inspirations across social media and the web. Grocery retailers and online brands should be targeting this generation as they plan for their night in.

While 29 percent of millennials do plan on going out for a meal, those staying in, including myself, won’t have to make a last-minute reservation or spend an arm and a leg on food. Maybe it’s me, but I think millennials may be on to something.

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Source: TPN Seasonal Pulse, New Year 2014

For more information regarding TPN and our Seasonal Pulse findings, please visit www.tpnretail.com.

2013: The Year of Deal-Seeking

Google released its top-searched items of 2013, and Kohl’s, JCPenny and Nordstrom graced the top spots on the apparel brands and retailers list.  Following the top three included Forever 21, Old Navy and Macy’s.

What do these retailers have in common?  All were searched along with terms that indicated shoppers were looking for a deal or price reduction.  For example, Nordstrom shoppers were most likely looking for Nordstrom Rack in their searches.

But this trend of looking for good deals is not exclusive to online retailers.  Shoppers are also more likely to negotiate prices in-store, thanks to multiple resources.

Brick and mortar shoppers now have an arsenal of never-ending resources in the form of smartphones.  Price-checking in-store, or showrooming, has quickly become the norm, and retailers have had no choice but to find creative ways to fight back and ensure in-store sales remain strong.

Best Buy is one of those retailers and is offering a price-match guarantee this year.  What does this mean?  Customers can bargain.  Prices are no longer set in stone.  If a shopper finds a cheaper price online, Best Buy will work with them to keep that sale in-store.

The future of retail is changing rapidly and with each new technological advancement, shoppers get smarter about what they are willing to pay for products and services.  Brands and retailers will also have to continue to get smarter, adopting new technologies and policies that will ensure both in-store and online channels thrive.