“TALK” ABOUT A BUSY HOLIDAY SHOPPING SEASON— V-COMMERCE JUST GETTING STARTED. ARE YOU READY?

Author: Joe Scartz

We are already anticipating the largest digital commerce holiday shopping season of all time this year. Digital Commerce is set to account for $123.73 million out of the roughly $1 trillion dollars that will spend this holiday season at retail, according to eMarketer.

Voice, while a fractional amount of that total currently, is accounted for in the digital commerce number. The question is…how big can voice commerce (v-commerce) grow in the years to come and what should brands and manufacturers do about it?

 

The Landscape Today

Today, voice commerce is benefitting from broad adoption of software and hardware platforms and tools that enable voice shopping. At VELOCITY., we divide this software and hardware into four primary categories: The voice assistant powering the experience (distributed through various devices), the pervasive smart phone, smart speakers, and IOT as a category.

The Voice Assistant

The four major AI players are Google Assistant, Alexa, Siri and Cortana. Nearly half of U.S. adults use voice assistants on their smartphones, but also through IOT, laptops, tablets, cars and various other devices. Siri is the most widely used due to the iPhone followed by Alexa, Google Assistant and then Cortana. However, Amazon and Google clearly lead in proliferation and usage of smart speakers (Echo and Google Home specifically).  More on that  in a moment..

The Smartphone

We all know that the smartphone has reached critical mass (particularly in developed countries). What is important for v-commerce is that AI and voice assistants are being embedded into the user experience on these phones more seamlessly. Siri integration was a major component of ios 12. Earlier in 2018, Google announced that 95% of Android phones will  be reached by Google Assistant. Clearly the two biggest players in the smartphone world want their assistant to be the center of your relationship with their hardware and software.

The Smart Speaker

It is anticipated that the Google Home and Amazon Echo (all variations) will be two of the hottest selling items this holiday season and throughout 2019. As of June, 2018 20% of U.S. households own a smart speaker and Deloitte expects 63% growth next year globally.

 

The Prospects for Growth

As we have seen, the technology and the platforms for continued growth in voice are established. So, what are the commerce opportunities for voice?

Some firms have predicted that voice will grow to $40 billion dollars in the U.S. and U.K. by 2022. This is significant, when you consider that those two countries are leading nations in adoption of voice globally. Therefore, brands need to be prepared. In a world where one or a firm search results on Amazon or Google, or even Siri could limit your brand exposure, optimizing for voice today; not tomorrow, is your best bet. Measure your voice readiness on a brand-by-brand and product-by-product basis now. The future of search and brand engagement via voice has arrived.

Celebrating another Year

I have always loved being a 4th of July baby — guaranteed fireworks! But with each passing year, I’m more aware of our cultural obsession with aging. Anti-aging, literally speaking, is synonymous with dying. My dad used to say when asked about getting older, “It beats the alternative.” I reflect on this topic today, both as a marketer and as one being marketed to, on the cusp of turning another year older.

 

Fearing death is natural. So is not being thrilled with a gray hair or a new line around your eyes. What’s different now than in the past is the sheer volume of products and industries that are literally banking on our collective fear of getting old.

 

The billion-dollar Beauty industry leads the pack with its lotions and potions, tonics, serums, oils, ‘injectables,’ and scads of surgeries that all carry with them promises of looking younger and regaining what you have most certainly lost. Women’s magazines peddle exaggerated before-and-after makeovers, and several times a year, the infamous “Beauty at Any Age” issue — which I remember not so long ago stopped at the 40’s…. Vanity is one thing (and it’s healthy to have some), but the way we market and are marketed to with beauty products plays less on our vanity and much more on a fear of getting old and irrelevant.

 

The Health & Wellness world is cashing in, as well. Vitamins and elixirs, IVs, diets, smoothies, fasts, workout plans and machines and gadgets — all of it practically guarantees you will stay exactly as you are, right now, if you just sign on! Truly healthy lifestyles that include eating well and exercising regularly are the only real “fountains of youth,” and should be embraced for making us look and feel good and for protecting the quality of our lives. But even good health won’t make you a year younger on your next birthday.

 

The Fashion industry also capitalizes on the body shame and loathing that can accompany getting older, especially for women. There are garments that hold you in here, or make you look more round there. Designs and styles meant to make you look and feel more like your younger self … or your younger daughter.

 

So what? All of those things make people feel better, so what’s the problem? To me, the problem is that there needs to be some grace and sensibility to the whole aging game and it needs to be reflected in the products, promises, and marketing of the things geared to the aging public. And right now, not only is a lot of the messaging off-key, there isn’t a lot of it geared toward the 50+ market, in the first place. There is a real opportunity to reframe the offerings and messages to ones that empower this incredible 50+ demographic, which accounts for 50% of all consumer expenditures and spends $3.2 trillion annually! https://www.huffingtonpost.com/mark-bradbury/the-7-incredible-facts-about-boomers-spending_b_6815876.html

 

And along with better products and messages, we need to keep our own healthy perspective. I am lucky to have around me healthy, personal role models who bring grace to aging, starting with my beautiful mother, an octogenarian who takes incredible care of herself and is very young at heart. Same goes for my older friends, in their 60s and 70s, who are living exciting, healthy lives that honor growing older vs. disparaging it (you know who you are and thank you!).

 

Don’t get me wrong — I’m not giving up my gym membership, fancy eye creams, or vitamins. But I want to shift my focus away from what you lose as you age to what you gain — more wisdom, self-acceptance, and gratitude for what you have. I want products and services to appeal to the active, involved, healthy person I am and continue to be, and not to a 50-something relic who needs constant improvements!

 

Living past our youthful prime is a privilege. There must be a way to do it that isn’t full of fear and the rather ungrateful desire to anti-age.

Using AI to Provide Shoppers With Guidance & Personalization

Artificial Intelligence is now being used by B&M retailers for everything from supply chain management to personalized apparel recommendations. Knowing that shoppers want guidance and personalization, smart retailers are using AI engines to create style pairings for shoppers, while also factoring things in like inventory levels and seasons. Then, these pairings can easily be applied to every shopper touchpoint. The result: sales. And, resulting analytics can then be used to refine the strategy and product mix.

TechDMC – February 5, 2018 from TPN on Vimeo.

What We Expect to See From Amazon in 2018

At this point, its clear that Amazon has become more than just another e-commerce company that we all shop from. They are also a digital content provider, research destination and marketing channel. And, with their first brick and mortar opening to the public earlier this week, their bigger step into grocery last year and other recent innovations, everyone seems to be watching and wondering what’s next. Based on what we know and are seeing, here’s what we expect from Amazon in 2018: Sensor Replenishment, Voice and Camera-Enabled Machine Learning.

Continued Alexa Growth

Amazon Alexa is growing at a faster rate than any other voice platform. Today Alexa is used mostly for Setting timers, playing songs, reading the news, and shopping.  Shoppers that utilize Alexa purchase 30% more than Prime members that do not utilize alexa, and 70% more than non-Prime members. With this much potential growth, Amazon looks to be doubling down on voice. We expect to see continued aggressive discounting on the device to get the Amazon Echo into more homes and continued improvements and skills.

Amazon Dash Replenishment Program – More Automatic Reordering

Early 2018 Amazon announced that several manufacturers are producing smart products that integrate with Amazon to automatically reorder for consumables when supply runs low. 3M, Blustream, Epson, HP, and Kenmore are some of the key players in this program. It is expected that several more devices will follow suit.

Amazon’s Dash Replenishment leverages multiple sensors to analyze when a consumable is running low inducing a buy order to replenish the product before it runs out.  Printing paper, ink, laundry detergent, and coffee are some of the products that will be available through Amazon’s Dash Replenishment.

Machine Learning Video Camera

Amazon is capturing voice. So, what’s next? View. Amazon has technology that they are releasing to developers to utilize Machine Learning-enabled video cameras. We know Amazon is obsessed with tracking through sensors, and now they will continue to develop on their camera tracking. The next step from here is to follow a similar path to Alexa, where amazon will offer the technology to be included in the manufacturers’ end so they can continue to dominate auto-replenishment and more.

 

Written by: Rami Odeh, TPN VP, Digital Commerce

Why I don’t believe in “The Retail Apocalypse”

So much is being written about a “retail apocalypse” and many spent 2017 talking about the death of brick and mortar.

However, despite what pessimists might say, shoppers and data are telling us a slightly different story and the stats just don’t support such a doom and gloom situation…

  • 4,080 net new stores opened in 2017 (more than the number of stores that closed)
  • 71% of US shoppers still prefer to buy in-store (even if the product is available on-line)
  • 85% of US shoppers want to shop in-store because they want to “touch and feel” before they buy
  • 66% of millennial find store associates “extremely important to their shopping experience”

Sure, certain categories like Fast Fashion and Beauty have taken a hit in-store, but 2017 saw significant store count growth for the Dollars (General and Tree), value brands like T.J. Maxx, Grocers; Lidl and Aldi and beauty brands Sally Beauty and Ulta are demonstrating that brick and mortar retailers are still essential in today’s shopping ecosystem.

An evolution is taking place and brick and mortar retail is at the core.

What is changing are shoppers expectations and what they are looking for when they walk into a store. The right assortment at a good price is no longer enough. Today’s shoppers want more AND they want what they want immediately and they want to have an enjoyable experience. The “currency” of shopper satisfaction is now comprised of Value, Convenience, Discovery and Experience tightly wrapped in Personalization and topped with a shiny bow that is Technology.

While this may sound complex, it represents an opportunity that brick and mortar stores are uniquely positioned to deliver if they take advantage of all of their assets and ensure they are working together toward a common goal of delivering on what the shopper wants. By leveraging an entire store environment, associates on the floor, internal systems/operations and the right technology, retailers can create a “surround sound” affect to ensure the shopper walks out satisfied.

To do this, brick and mortar retailers have to abandon the “one size fits all” approach and move towards having a variety of store footprints that can deliver different brand and shopping experiences. Showrooms, express, pop-up, shop in shops (and a few that have yet to be revealed) all have a purpose and are here to stay. Within those store types, successful retailers can define the role of their associates and provide them with the proper tools and tech to support all shopper needs from basic fulfillment to expert advice. Systems and operations must move beyond self-check-in and inventory-control to be truly connected and assist in the delivery of a seam-less, frictionless, even channel-less shopping experience. That is what shoppers want and expect today – even if retailers aren’t structured to deliver it that way. Connecting on-line to off-line is a retailer problem, not a shopper’s, and connecting all of their systems and operations is the way to do it and make it personalized.

Brick and mortar retailers must become more agile and nimble, accept that partnerships and acquisitions are necessary to remain relevant and succeed. And most importantly, retailers must understand that piloting, testing, measuring and learning are essential and critical to continued success.

Written By: Tracy Faloon, TPN Chief of Client Integration

 

Sources: IHL Group, TimeTrade survey, ChargeItSpot Study, Fortune, ChargeItSpot Study

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.

Maybe The Best Brand You Haven’t Heard Of… Yet.

I wouldn’t be surprised if you have never heard of KITH, and in the likelihood that you haven’t, consider this a short introduction to one of the most innovative and hottest streetwear brands that is redefining the sneaker industry.

It’s founder, Ronnie Fieg, is transcending the industry by carefully crafting his products and retail landscape to be indicative of what consumers find relatable, exciting, and motivating to be apart of. He has disposed of the typical seasonal calendar and rather created a 365-day invitation to product offerings and rotating retail format that keeps consumers engaged, surprised and delighted.

Specifically, his store format, located in New York City, is of particular intrigue as it includes one-third product offering while functioning as one-third art gallery and one-third ice cream/cereal bar (awesome). The use of purposeful digital integration, experiential components, and an ever-changing product offering to limit complacency and drive continual store visits makes this a must-study for innovative store formats of the future. Ronnie certainly has my interest and I promise that next time I’m in New York I’ll be taking a visit to KITH, as should you.

Written by: Brad Sauchak, TPN Associate Planner

TPN Shopper Safari: Back-to-School

In the latest TPN Shopper Safari Trek Report, TPN highlights four key themes for the Back-to-School 2017 Shopping Season.

TPN’s Shopper Safari encourages immersion in retail and commerce by leveraging our employee network. This effort helps foster continuous analysis and conversation of the retail landscape.

Back-To-School

Back-to-School Shoppers Plan to Purchase

As the new school year kicks into high gear for most of the country, parents and students will find a changing shopping landscape. No longer are they racing to retail stores without a plan for braving the crowd days before the school year starts. Digitally-driven brick and mortar purchases are changing the way consumers shop.

Shopping at brick-and-mortar retail stores without being prepared is less popular with back-to-school shoppers. Digitally driven shopping now guides the shopping habits of consumers looking to grab better deals and avoid long lines. Digital is also helping them plan their back-to-school shopping strategy throughout the calendar year. Consumers are using apps to research products on their mobile phones. The statistics help explain the behavior shift:

  • According to Deloitte, last year nearly half of every dollar spent on apparel in brick-and-mortar stores was digitally-influenced, a number that jumped to 62 cents of every dollar in the electronics category.
  • Nearly 4 in 10 of surveyed parents shopping for children in grades K-12 said the back to school shopping season is less important to their families because they replenish school supplies throughout the year and feel less need to stock up.
  • And 31% of consumers complete their shopping after the school year begins.

 

 

As part of our back-to-school Shopper Safari retail audit, we saw four key themes: 1) Battle for the best prices, 2) Impactful point-of-sale displays, 3) Charitable and caused-based program overlays, and 4) Selling solutions. Click here to view our Shopper Safari recap.

 

 

 

 

Retailers should be targeting a window larger than the traditional back-to-school shopping period for their marketing efforts. Back-to-school shopping is now a year round endeavor, so opportunities exist for brands and retailers to capitalize on that. By focusing on consumers and their reliance on digital, retailers can drive in-store purchases more successfully. Digitally fluent shoppers have a plan before they walk through the doors, and in-store purchases of items like apparel are easily planned for. According to Bazaar Voice, 61% of back-to-school shoppers research online before purchasing in-store.

As consumers continue to look for more convenient shopping experiences for their students, digital allows them opportunities to plan and to purchase when it’s convenient for them. As retailers look to future shopping seasons such as Black Friday and the Christmas shopping season, the goal should be to stay on top of this shift in consumer behavior and take advantage of the digital movement to boost their in-store sales.

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.”