Collaboration: A Worldwide Brand Perspective

Adam Simon and Chris Petersen interview Lucas Perraudin, HP

This is part of our series examining a wide range of collaborative ecosystems that are emerging in response to consumer behaviour and expectations. While omnichannel is the new normal for customers, the transformation is still in process for many brands, retailers and distributors.

Few retailers and brands can independently afford to build their own end-to-end solutions. As a result, the next phase of transformation is collaborative commerce:
ecosystems of partners who can deliver what customers want anytime and everywhere.

The culmination of this blog series will be a panel discussion at our CEO Breakfast at CES2018. We have invited three senior executives to share their perspectives from three points of view: Brand/Supplier, Distributor, and the Retailer. Continue reading

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Will the rapidly falling price of VR lead to mass adoption?

One of the biggest stories for VR in 2017 has been the significant reduction in price for VR headsets. Possibly spurred on by Microsoft’s Windows Mixed Reality headsets attempt to undercut the Rift, Oculus dropped the price of its headset with touch controllers from $600 to $400 for its “Summer of Rift” campaign. This is much closer to the initial price point that Oculus’s founder Palmer Luckey suggested the commercial headset would retail for and results so far indicate that units have been flying as a result. With CONTEXT’s 2017 VR Research Group survey indicating that the cost of the headset is still a major deterrent for 45.4% of respondents, 38.1% of gamers would spend $400 or more on a VR headset, compared to only 11% willing to spend over $600.

The other major barriers with regards to cost are those associated with buying a PC powerful enough to run VR games to an acceptable level. Road To VR reports that Wallmart will be selling a comfortably “VR Ready” HP Pavilion Power Desktop with GTX 1060 graphics card for $500 as a part of their Black Friday promotions. For the first time it will be possible to buy a fully VR capable solution with PC and headset for under $1,000 which is considered a sweet spot for gamers and a long way below the $2,500 figure widely acknowledges to be the minimum investment for VR only a couple of short years ago.

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On the console front as well, a PS4 and PSVR was available for $200 from selected retailers on Black Friday, down from $399 normally. Combined with a strong line up of PSVR exclusives, this may enable Sony to maintain or even grow their already substantial lead in the high-end tethered VR headset market.

The question remains as to whether these price drops will be enough to drive mass adoption in Q4. While it is likely that the install base will benefit dramatically from falling prices, which will be encouraging to developers and others with a stake in the industry, there are still a few barriers to VR hitting its inflection point.

Interest in VR among non gamers is growing, but not nearly as quickly as some had hoped. While there are undoubtedly many uses for VR both seriously and as a general entertainment medium, it is clearly gamers who show the strongest interest in the technology for now. Only 4.8% of UK gamers think VR is a gimmick compared to 30.2% of non-gamers (down from 48.3% last year) suggesting that this demographic will be the easiest to target in the short term.

Still, while the potential for gaming in VR is widely acknowledged, many gamers are still waiting for the technology to improve. 61.9% would like to see higher resolution headsets, 74.5% would like to see “better quality content overall” and 51.3% said “one really exciting big budget game” would increase their interest in buying a VR headset.

Will Q4 see the stars align for VR to start seeing significant market penetration and finally create the virtuous cycle required to fuel this exciting new industry? Only time will tell, but here at CONTEXT, we’ll be watching the data come through with bated breath for the first signs of that mythical inflection point.

by BB

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Sleeping with the enemy … or strategic collaboration?

By Chris Petersen and Adam Simon

One of the epic battles in the history of retail is the escalating war between the behemoths Walmart and Amazon. While Amazon’s total sales still lag behind those of Walmart’s, the annual double-digit growth of Amazon puts it on a trajectory to surpass the world’s largest retailer. However, the sleeping giant has awoken! Walmart is now creating new levels of innovation online, with click and collect and automated customer convenience at check out.   The rapid innovation and growth of these giants is certainly not great news for the rest of retail. Have we reached the age of “if you can’t beat them, join them”? Many retailers and brands are seeing opportunities in choosing a side. Are there any other alternatives left?

The retail goliath’s all-out war for customers via “marketplace partners”
In the battle of Amazon versus Walmart, it is no longer a war of ecommerce versus stores. Competing in today’s marketplace for omnichannel consumers requires massive infrastructure, systems, and logistics for the last mile all the way to the customer’s door. It also requires a vast assortment of products, including the most popular brands.

Increasingly, both Amazon and Walmart are searching for unique brands and products that differentiate, and attract customers to their ecosystem. For many brands, and even retailers, the choice seems to be that it is easier to partner with a giant rather than try to beat them.

Will those jumping in bed with Amazon see a “Prime” Future?
Amazon is so much more than a “retailer” – it is become an ecosystem of ecommerce, distribution and even building devices. A huge part of that ecosystem is the “Prime”, which fuels repeat visits and growth from Amazon’s most profitable customers. To attract Prime members, Amazon needs prime brands and offerings.

Best Buy electronics has recently “teamed up” with Amazon for voice shopping via Alexa in order to tap into Amazon prime customers and traffic. Kohl’s department stores has gone even further by opening Amazon product sections in their stores, and new processing for Amazon returns to Kohl’s stores.

From Nike collaborating on curated Amazon assortments, to Calvin Klein collaborating on pop-up stores with Amazon, both brands and retailers are strategically collaborating in new ways to tap into Amazon’s ecosystem and traffic. Amazon wins with prime products and new offerings.

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Walmart is rapidly recruiting its own coalition of brands and retailers
Walmart is no longer just playing catchup. They have leapfrogged Amazon in a number of areas, especially in click and collect. They also recognize the importance of assortment breadth and premier brands. In addition to purchasing millennial appealing brands like Bonobos and Moosejaw, Walmart is also focusing on curating premium brands and products. Who would have imagined that Walmart would now be collaborating with Lord & Taylor! As department stores struggle, Walmart offers a potential for Lord & Taylor to reach the masses, and at the same time, Walmart brings cache products to Walmart.com.

While Amazon may have Alexa, Walmart has aggressively collaborated with Google in voice shopping. Each giant is now literally matching each other blow by blow. Where does that leave the rest of retailers and consumer brands?

The upside of strategic collaboration with one of the giants
Simply put, omnichannel is not rapidly scaling throughout the rest of retail for many reasons.   The retailer conundrum is that if they make the extensive investments to expand online and home delivery, they starve their stores of much needed investment required to differentiate customer experience. Strategic collaboration with Amazon or Walmart offers many benefits: immediate turnkey access to ecosystems with massive traffic, no major capital investments for distribution and home delivery, reduced risk and costs. There are many upsides in reaching the masses to grow revenue by collaborating Amazon or Walmart, at least short term.

What is the downside of sleeping with an elephant?
There is a huge danger of “selling your soul” in order to survive in the short term, especially if you are a retailer. Whether it is collaborating with Amazon or Walmart, both brands and retailers must constantly evaluate:

  • Can we curate a “marketplace assortment” that sells online, without giving away our core value propositions that bring customers to our brand and stores?
  • If Amazon and Walmart own the interface of the sale, how do we engage customers?
  • How can we remain relevant to customers by offering better solutions and services?
  • What can we do better that the giants do not already do for customers?

With their vast infrastructure, systems, data and analytics Amazon and Walmart have the “big data” to leverage the most profitable products and customer segments for their gain. Are there any alternatives for the rest of retail?

Collaborating on data as the new currency for Customer Experience (CX)
The bottom line: retail is not dead. It is mediocre retailing focused on product and price that is dying! If it is only about products at a price, that is the forte of Walmart and Amazon and they are winning hands down.

The future for the rest of retail lies in creating relevance beyond products, price and promotions. Data is the new currency for strategic collaboration to differentiate value. Not just any data. The new strategic currency is “rich data” about how to establish the power of CX – Customer experience.

The most powerful untapped “gold” is the behavior of customers: before, during and after the sale. Beyond the giants, the innovative retailers, brands and distributors are strategically collaborating to create alternatives focused on how to engage customers throughout their journey, and how to deliver “knock your socks off” services that bring them back for more.

The alterative to “sleeping with the “enemy” requires both consumer brands and retailers to change the past paradigms of negotiating solely on products and price. The future of retail success lies in collaborating to create customer relationships, not the products sold.

Chris Petersen and Adam Simon are collaborating on a series of blogs that explore the rise of strategic collaboration and new customer centric ecosystems. This blog series will culminate with a worldwide panel discussion at the ContextWorld CES CEO Breakfast, where a global Brand, Distributor and Retailer will share their perspectives on strategic collaboration.

If you are interested in more information on this CES event, contact tgibbons@contextworld.com.

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If “Content is King” for engagement, how do you get it?

By Chris Petersen and Adam Simon

One of the most misunderstood and missed dynamics of retail today is the critical importance of “content”. Historically, mass marketing drove content creation. Brands provided “air cover content” for launching products and educating customers. Content was the “stuff” of ads, marketing and promotions. So what changed?

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Digital transformation created many new points of access for customers. Customers are now free to interact directly with brands, retailers and between each other. More than 75% of today’s customers begin their journey online. “Digital Content” has become “King” as the point of entry. Consequently, one of the single greatest opportunities in today’s retail ecosystem is to curate the “rich content” that engages customers early, often, and even after the sale.

Why content matters even more in today’s retail ecosystem
Customers have always wanted to “see” the product. They have relied on photos in print and TV ads to get a first glimpse to determine whether they are interested. With the growing migration online, customers not only expect multiple product photos, they are also expecting much richer and in-depth information. They want far more than product features and specs. They want to evaluate as much as they can before clicking the mouse to purchase, or making a trip to the store to see the product first hand.

In the simplest sense, “rich content” is all the collective visuals, information and experiences that help customers answer fundamental questions:

  • What is the product, and what does it do for ME?
  • Why would I want it?
  • Where and when would I use it?
  • Who else do I know that uses this product, or would use it?
  • How many options do I have?

Since a majority of today’s customers begin their journey, online, rich content is critical for engagement. It also increases the potential to “help a customer decide to buy”, or at least make a trip to a store to experience the product in person.

Rapidly emerging, and evolving “Rich Content” opportunities
In terms of rich content optimizing engagement and customer experience, AR is becoming more widely adopted across more categories. There are online experiences that now let you virtually “try on” clothes and cosmetics. IKEA and others let you simulate furniture in your room. DIY retailers like Lowes are even creating VR “holorooms” where you visualize your home and furnishings in store.

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The “rich” aspect of content does not always require innovative visual technology. Content becomes rich when it engages customers. More web sites are implementing simple chat windows to provide interactive feedback and content not found in regular copy. Some customers prefer engagement through “chat bots” to get answers. Who is responsible for all of this rich content? More importantly, how is it produced.

Bridging content gaps through strategic collaboration
In the new ecosystem that spans time and place there are many new opportunities for content collaboration. In fact, the traditional roles of content creation are changing.   New content contributors are emerging. Indeed, if there was a prima fascia case for value and potential of strategic collaboration it would be in the area of rich content which engages customers.

Retailers
Historically, retailers have relied on brands to produce the product images and content required for ads and web pages. While retailers like to enhance the customer experience, resource constraints have limited in-house production for many retailers. Most retailers will continue to collaborate with brands to evolve richer content like videos. Some retailers are investing AR in ways that customers can visualize rooms, wearing clothes or applying cosmetics. Nevertheless, bricks and mortar retailers should never forget or neglect the richest content “source” retailers have to engage customers — their associates on the retail floor. Brands would also do well to find innovative ways to collaborate and support store staff on a real time basis.

Brands
Brands will continue to be a primary source of content about their products and services. Enlightened brands will work with retailers, as well as customers to develop richer content that highlights the value of their products in the customer’s life. Rich content is not only important in the retail space. Major technology brands are increasingly creating rich content and support for installers and resellers, with the focus on improving services that ultimately create a better experience for their customers before and after the sale.

Distributors
Distributors have historically served as the “box movers”. In today’s ecosystem, they certainly become critical collaborators for logistics and the last mile of delivery.   However, the best distributors are also becoming a key line of support for retailers and resellers. Not only do distributors support products, they now serve as a critical content source for customer trends, and how to curate by local markets and demographics.

Customers
Historically, customers have been the primary consumers of content.   Make no mistake about it, today’s customers are rapidly escalating demands for rich content online, via mobile and in store.   However, we have reached a unique tipping point where customers are now in fact major producers of content. In fact, customers trust what they hear from other customers 10X more than what they see in an ad.

Much of Amazon’s success has come from how they have strategically engaged customers. Amazon was one of the first to feature customers as collaborators in their reviews, their videos and Q&A with other customers.   The most successful brands and retailers are rapidly turning to customers as one of the powerful collaborative sources for producing, evaluating and sharing content.

Chris Petersen and Adam Simon are collaborating on a series of blogs that explore the rise of strategic collaboration and new customer centric ecosystems. This blog series will culminate with a worldwide panel discussion at the ContextWorld CES CEO Breakfast, where a global Brand, Distributor and Retailer will share their perspectives on strategic collaboration. If you are interested in more information on this CES event, contact tgibbons@contextworld.com.

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What is your purpose?

By Chris Petersen and Adam Simon

One of the most impressive speakers at the recent Gitex Conference on Digital Marketing, was Christian Eid, the VP of Marketing at Careem, the start-up which has shaken up the Middle East with its model-busting alternative to Uber. Above all, he stated, you have to know what your purpose is. How important is this for strategic collaboration? Continue reading

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Potential, Pitfalls of Strategic Collaboration

By Chris Petersen and Adam Simon

In this recent blog series we have repeatedly used the term “strategic collaboration”.   Collaboration is certainly not new. Business have been working in partnership and alliances for centuries. What is new in the retail marketplace are the rising demands of customers creating unprecedented demands on service levels and resources. Traditional supply chains are inadequate for both selling and delivering products to customers any time and everywhere.

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Beyond product transactions, customers are driving new expectations of choice, convenience and customization. These demands challenge the resources of even the world’s largest retailers. Increasingly, retail is becoming an ecosystem of collaborative partnerships. Future success will increasingly depend upon optimizing the joint strategic potential of collaborating with partners, and avoiding the landmines of misaligned objectives and communication that undermine relationships and results.

What moves a transactional relationship to strategic collaboration?
There are a number of business relationships that are by their nature purely transactional. Retailers do need to purchase distribution and logistics to go the last mile to the customer’s door. What makes these relationships become strategic collaboration is twofold: 1) focus on objectives that create strategic competitive advantage for both partners, and 2) a trust relationship of exchange that focuses on creating results that count for both partners.

Pitfalls of partnering without a strategy
Amazon is particularly adept at innovation. It’s in their DNA to design customer centric services that create lasting, differentiated profitable relationships with customers. They have more collaborative partnerships and retail pilots than anyone in the west.

Amazon has recently created a strategic collaboration with Kohl’s department stores for selling Amazon devices and taking Amazon returns. This is a competitive advantage for Kohl’s stores in the short-term. However, Amazon also competes with Kohl’s the retailer in almost every product category. So what might be strategic now could be cannibalism in the near future.

Amazon is very strategic in structuring its business relationships. But that does not make Amazon a partner that collaborates particularly well. Especially with retailers. Amazon high profile partnerships have turned out badly for a number of retailers, including Barnes & Noble, Toys R Us and mass merchant Target. In these three cases the retailers were essentially outsourcing key elements of their customer strategy.   Lessons learned: if Amazon can ultimately compete with you as a retailer or distributor, they will, and be the stronger for it.   As a brand or retailer they must avoid the landmines by focusing AND managing the critical success factors of collaboration.

5 Critical Success Factors and Requirements for Strategic Collaboration
Volumes have literally been written on the components of partnership and collaboration. Our focus here is the emerging retail ecosystem and the new levels of cross collaboration required to fill gaps and scale services that meet the rising demands of today’s consumers. To thrive, the retail C-Suite must be engaged and focused on these five essentials:

  1. Strategic Alignment

There is nothing wrong with outsourcing, companies do it all of the time. But true collaboration is not “transactional”. To collaborate means to: work jointly on an activity, especially to produce or create something”. Strategic collaboration requires that both parties clearly articulate objectives that matter strategically, and clearly define the joint processes they will employ to create/achieve them.

  1. Specific Objectives

In order to avoid the pitfall of the partnership being one sided, both parties need to clearly identify specific objectives they expect to achieve, individually AND together. The more the collaboration involves innovative transformation, the more important jointly defined objectives become.

  1. Measurable Outcomes

Intentions are NOT enough. To successfully create a win-win scenario there must be more than a mere transactional parameters. There needs to focus on measureable results. In a true collaboration relationship, the measurable outcomes must be jointly owned by both partners. You can’t jointly manage what you can’t measure AND share.   A fundamental requirement of collaboration is joint scoreboard with all the objectives, KPIs and joint outcomes visible for the collaborating partners.

  1. Data is the New Currency for Strategic Collaboration

Strategic collaboration is built upon a foundation of shared information and insights. Case in point is the “last mile of delivery”. In order for distributors to ensure that they have products in stock and the capacity for drop shipment, they need accurate timely data from their retailers. Weekly sales data is no longer sufficient. The retail ecosystem built to serve customer expectations for any time and everywhere. It requires accurately and timely sales and inventory data daily. There can no longer be separate retailer and vendor forecasts – there must be a shared forecast built upon shared, timely data exchange.

  1. Trust built upon open communication and sharing at ALL levels

True collaboration cannot be based upon guesses, hearsay and yesterday’s communication. The foundation of trust begins at the very top and flows all the way down. Trust requires on-going communication of the processes, the insights learned that will benefit both partners, and how to sustain achieving results. Simply, trust is built upon two way communication. Collaboration requires a deeper level of sharing required to align, create, manage and measure joint results.
Every retailer has a choice. They can wait until they are “ready”, or take action now to collaborate strategically to create a niche that makes them relevant. Customers will decide every day who wins by voting with their physical and digital wallet.

Chris Petersen and Adam Simon are collaborating on a series of blogs that explore the rise of strategic collaboration and new customer centric ecosystems. This blog series will culminate with a worldwide panel discussion at the ContextWorld CES CEO Breakfast, where a global Brand, Distributor and Retailer will share their perspectives on strategic collaboration.

If you are interested in more information on this CES event, contact tgibbons@contextworld.com.

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Are these the “best or worst of times” for consumer brands?

By Chris Petersen and Adam Simon

Charles Dickens begins his historical novel with the classic opening: It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity”.

Dickens’ words also accurately describe the paradox facing consumer brands today.   In many ways, brands have unprecedented opportunities to reach consumers.   Yet, the consumer transformation to omnichannel has disrupted historical retail models creating new challenges. Those brands that thrive will be those that collaborate in ways that adapt to the changing dynamics of the retail ecosystem.

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Why these are the BEST of times for consumer brands
Prior to the rise of ecommerce, the route to market for consumer brands was primarily through the retail store.   The supply chain was essentially a linear model from manufactures, to distributors to retailers.   Today’s omnichannel consumers have disrupted that model and now expect to shop, purchase and take delivery anytime and everywhere.   This has created some dynamic new opportunities for brands marketing and selling products to consumers.

Direct Sales to Consumers
As consumers increasingly shop and purchase online, manufactures have an increasing opportunity to sell direct to consumers through their own ecommerce.   Direct channels can increase margin, but more importantly, they enable direct relationships with customers.

New Marketing Opportunities
More than 70% of customers begin their purchase journey online. Brands have an opportunity to engage customers early and often through multiple touch points, in addition to customer experiences in store.

Reach – Products and Supply at More Places
Through the integration of physical and digital retail, brands can effectively spread their supply across more places and use “virtual inventory” to reach more customers.

Long tail – Opportunities for Premium Mix and Revenue
The number of products carried in physical stores were limited by physical space and open to buy capital.   The growth of ecommerce enables means making a full range of products available to many more customers locally and globally.

Why these are the WORST of times for consumer brands
The rise of the omnichannel customer has swung the pendulum to be more customer centric. While the situation today might not constitute the “worst” that can happen, current customer behaviors certainly post major challenges to brands, their previous strategies and program effectiveness.

Commoditization of Products
The power of ecommerce and omnichannel customers is reaching customers anytime and everywhere. The corresponding challenge is the explosion of everyone’s products everywhere. Even if brands go direct, they are still competing with over 400 million products available on just Amazon, not to mention what’s available on Alibaba and Google.

Slippery Slope of Price Erosion
The challenge of ecommerce is transparency and ease of product and price comparison. The ecommerce giants can change pricing dynamically, by market hourly.   Once online, prices become the lowest common denominator. Even major retail stores have now realized that they must match prices online.

The missing 5th P – Personalization
Ecommerce has for the most part been an electronic catalog of what’s available at a price.   Brands have little opportunity to differentiate product or their value add services selling through ecommerce. Brands need to find ways to personalize solutions and services before and after the sale.

Connecting the Brand and User Experience
The experience online has been primarily features, function and price. Brands need more innovative ways to connect at multiple points with the customer, especially early in the journey, and at the critical points of decision to purchase which now occur across channels.

The bottom line: “All of the above” requires strategic collaboration
Brands have more opportunities than ever to reach today’s consumers.   Herein also lies the challenges of having the right media and resources to leverage those points of contact to optimize the brand experience.  The reality today is that few brands have the capacity or resources to able to do it all. Indeed, future success for consumer brands lies in their effectiveness to:

  • Optimize brand value beyond commoditization of product and price
  • Create an engaging brand experience across multiple channels
  • Solve for optimizing supply at the right time and place
  • The ability to solve for the last mile to the customer’s door
  • Personalizing service that meets customer expectations

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Chris Petersen and Adam Simon are collaborating on a series of blogs that explore the rise of strategic collaboration and new customer centric ecosystems. This blog series will culminate with a worldwide panel discussion at the ContextWorld CES CEO Breakfast, where a global Brand, Distributor and Retailer will share their perspectives on strategic collaboration.

If you are interested in more information on this CES event, contact tgibbons@contextworld.com.

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