Category Archives: Retail

Four demands driving new levels of strategic collaboration

By Chris Petersen and Adam Simon

The transformation from sales transactions to collaborative networks
The traditional supply chain was based upon a sales transaction model of brands selling products to distributors, distributors to resellers and retailers. Once the products arrived at the retailer’s doorstep, it was their responsibility to warehouse it and sell it through to the customer. In this traditional model retailers did work with brands and distributors, but those relationships were primarily transactional negotiations based on product, price and promotions to sell products.

The traditional retail model and the economics have changed. What is driving the change are customers who have “escaped the traditional funnel”. Today’s consumers are not bound by channel, place or time. They expect unprecedented choice of products, where they shop and how they take delivery. Traditional retailers do not have the infrastructure, resources, the inventory required, or enough of their own trucks to deliver to individual customers.

To survive, retailers need more than products and “box movers”. To thrive, retailers need a collaborative network of partners who can help strategically address rising customer demands, enabling a shift from sales transactions to customer relationships.

Customer demands driving the retailer’s need for strategic collaboration
It’s a great time to be a customer. It’s a very challenging time to be a profitable retailer. The simple economic reality is that only the world’s largest retailers can attempt to offer end to end solutions that meet omnichannel customer expectations. Even a retail giant like Walmart cannot afford to carry all of the inventory required for the millions of products now online. And, the ecommerce giants Amazon and Alibaba built their business by collaborating with an ecosystem of partners for overnight delivery and customer services.

Let’s be clear. Collaboration is not “free”. Two-day shipping is not free. Home delivery is not free. Retailers cannot afford to “solve it all”. Retailers must selectively find solutions to remain competitive, and where possible, find partners who will work collaboratively to build solutions that optimize the retailer’s relationships with core customers.

There are four core customer drivers in today’s omnichannel market place where retailers must find collaborative solutions:

  1. Choice – Solutions to deliver on customer expectation for more product range

Almost all retailers are expanding assortments online in order to offer competitive choices. A wider range of products equates to inventory, which is one of the most costly retailer investments. Increasing assortments requires strategic relationships with distributors for both the inventory and warehousing to store it. However, it is the convenience of last mile delivery to the customer’s door which is requiring most retailers to strategically search for collaborative solutions like drop shipments from brands and distributors.

  1. Convenience – Solutions that let customers have it their way

It is one thing to offer the products online, it quite another to be able to offer the convenience of “real time retail”. The majority of customers expect to “see” not only what is on the store shelf, but the delivery time for products not carried in store. This requires strategic collaboration with brands and distributors to share new levels of data, and participation in joint fulfillment. Customers are increasingly purchasing from retailers where the returns process is fast and convenient, creating a growing need for cost effective reverse logistics.

  1. Customized – Customers demand for solutions requires partnerships

Customers are increasingly looking for more than products at a price, they want customized experiences and solutions that fit their lifestyle. Case in point, smart home and IoT products. Customers want and need services that assist in configuring and installing products. Even retailers like Best Buy with a “Geek Squad” are strategically collaborating with services and installers to increase bandwidth required to meet consumer demand for customized services.

  1. Connected Customers expect communication before, during and after

Today’s purchase is a journey, not an event. Customers expect to research online, and have online follow them to the store. They also expect real time information on the status of orders, pickup and delivery. With multiple partners stocking and delivering products, this requires new levels of information that must seamlessly connect and be available to customers. The best of breed not only collaborate with customers during the sale, but connect with customers after the sale on satisfaction and future services.

Replacing the 4Ps with the 4Cs Requires Collaborative Partnerships
The traditional 4Ps of Product, Price, Promotion and Place have been transformed by todays empowered customers. To meet the rising expectations for the 4 Cs of Choice, Convenience, Customized, Connections will require competencies and resources beyond the bandwidth of most retailers. Future success will require more than product sales today. Retailers now must strategically collaborate with partners in ways that will enable them to create, and sustain relationships that transcend the sale of a product.

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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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When ecommerce dominates, do you compete or collaborate?

By Chris Petersen and Adam Simon

There is a tipping point coming where ecommerce will overtake traditional retail sales. That critical mass is not as far off as many might think. Doug Stephens recently published some interesting forecasts on the growth of ecommerce, particularly the top 3 giants. Based upon the recurring annual growth rates of 12 to 35% for the large ecommerce players:

  • Ecommerce will be 25% of total US retail in 6 years, and may exceed 30% of the UK
  • Amazon, Alibaba and eBay will control 40% of global ecommerce within just 3 years
  • Within just 15 years ecommerce will overtake traditional retail sales accounting for more than 50% share of consumer sales

This is highly relevant in the Middle East with the takeover of Souq.com by Amazon, and the recent price-slashing at the beginning of this month. Other than being swept away by the tidal wave of ecommerce giants, what are the choices for brands, distributors and traditional retailers? Continue reading

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The Future of Retail – An ecosystem of strategic collaboration

By Chris Petersen and Adam Simon

Consumer demands are driving a retail renaissance, not an apocalypse
In reviewing world headlines regarding store closings and retailers filing for bankruptcy, it would be easy to conclude that a retail apocalypse is upon us. If you only look through the retail lens of “stores”, many bricks and mortar store formats are struggling. But through the eyes of today’s consumers, it is no longer a question of shopping stores versus online. Customers simply don’t see “channels”, or separate physical from digital shopping.

Customers expect a seamless experience across time and place, with multiple choices of how and where to acquire their purchase. It is these rising consumer expectations for “real time retail” that are outstripping the capacity of individual retailers, distributors and vendors to independently deliver. The future of retail is quite literally becoming a transformation of the traditional linear supply chain into an ecosystem of strategic collaboration.

Innovations are increasingly the product of strategic collaborations
The e-tail giants of Amazon and Alibaba are increasingly viewed as the great innovators and disruptors of retail. Both have driven innovation focused on customer centric choice, convenience and personalized service which has disrupted traditional stores. However, not all of these innovations are internally driven and executed. Both e-tailers collaborate extensively with vendors and resellers in a “marketplace” in order to expand breadth of assortments, without undo inventory exposure and risks. Amazon has even collaborated with the very traditional US Postal Service in order to gain weekend delivery and capacity, and last week announced a collaboration with Kohl’s for the reception of returned goods.

The wave of strategic collaboration is not limited to ecommerce. In its race against Amazon, Walmart is collaborating with a host of partners for assortment breadth, fresh produce and last mile delivery. Walmart’s newest pilot involves partnering with August Home smart devices to enable a Deliv delivery driver to have one time home access to put the groceries in the refrigerator. A unique aspect of this service is the customer can remotely control and watch the delivery real time on the Wi-Fi web cam. It is too early to tell if customers will opt in for this level of in home service. The crucial point is that this level of differentiated, personalized service would be inconceivable without strategically thinking “outside of the box [store]” on how to collaborate with the right combination of partners who can create and deliver it.

Today’s consumer dynamics drive demands that few can solve alone
Today’s omnichannel consumers are quite literally shopping anytime and everywhere. In addition, their purchase has become a journey across both time and place. Regardless of where the purchase takes place (in home, online or on phone), customers now expect a seamless experience with personalized service on how and where they take delivery. Even the very largest retailer, distributor or vendor does not have enough trucks for the “last mile”.

The new dynamics of executing retail dynamically in real time requires technology, systems, expertise and resources beyond the capacity of a single retailer, distributor or a vendor. There are a host of new “retail” issues driving demand for strategic collaboration:

  • Long tail breadth inventory – Who holds the inventory, where and at what cost?
  • Drop shipments – Are forecasts accurate to enable overnight fulfillment?
  • Inventory “everywhere” – Who owns it and who has the risk if it doesn’t sell?
  • Real time availability – What’s required to show store stock plus virtual options?
  • Customer experience – If more SKUs go online, who owns experience and pays for it?

A new partnership and blog series focused on Strategic Collaboration
Chris Petersen and Adam Simon have collaborated on a host of projects and retail events. As they jointly explored omnichannel and digital transformation of retail, clear patterns began to emerge. Omnichannel is the consumer normal, the execution is inherently expensive. Relatively few retailers or vendors can afford all of the infrastructure, systems and costs associated with inventory and fulfillment. They also discovered that many of the innovative retail breakthroughs are in fact a function of strategic collaboration, which in turn is creating a new ecosystem.

As strategic collaboration evolves as a new ecosystem for retail, there are many more questions than there are answers. Over the course of the next 12 weeks Petersen and Simon will share their findings and discussions with leading vendors, distributors and retailers regarding their views of strategic collaboration, including:

  • What are the best practices and pitfalls of strategic collaboration?
  • What are the parameters and guidelines for collaboration?
  • What do you look for in a strategic partner?
  • What are the criteria and requirements for success?
  • How do you measure results?

This blog series will culminate with a worldwide panel at the ContextWorld CES CEO Breakfast where a global Vendor, Distributor and Retailer will share their perspectives. Please contact us for more details on the event or to register!

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Smart Home Summit: Assessing the Routes to Market

Was the panel I was on a fix?

  • Tripling smart home revenues from John Lewis partners, according to Katrina Mills, Audio & Connected Home buyer, and the continued investment in dedicated smart home areas, growing to 5 stores by the end of October
  • Doubling revenues at Lightwave, with acceleration driven by the introduction of voice control in the Echo, and with the latest range of Homekit-enabled products, announced by Andrew Pearson, CEO, about to be launched in Apple stores from 3rd October
  • 500,000 Hive thermostats forecast to be sold in 2017, doubling the installed base to one million in the course of this year, and a new range of innovative customer focused solutions announced by Jo Cox, Commercial Director of Centrica
  • O2 steadily growing its pilot stores, with plans to sell smart home in all stores, as presented by Richard Porter, head of smart home products

Continue reading

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Filed under Connectivity, Home automation, IoT, Retail, Smart Technology

7 Critical retail questions requiring new metrics and collaboration

by Chris Petersen, CEO at IMS

At the most basic level, retail is a simple business about selling products for more than the retailer paid for them. Historically, retailing was based upon selling from shops. And even when retailers opened virtual stores online, the core metrics have been most focused on sales, revenue, margin, growth, and market share. In today’s real-time retail marketplace, the customer is now the new POS – Point of Sale. Customers determine where they purchase, how they pay, and where they collect. Retailer, distributor and even vendor systems were not designed to track “flow” to the consumer. Today’s consumer expectations are creating new business questions that will require new data, metrics and benchmarking. Continue reading

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IFA 2017: The Smart Home Comes of Age

CES and MWC may attract the bigger crowds early in the year, but for many, the original and best consumer electronics show remains IFA. The Internationale Funkausstellung Berlin – to give it its full name – has been around for nearly a century, but it can barely have witnessed technological change on quite this scale before. This year VR headsets vied for attention with the usual smartphones, gaming devices, and laptops.

But perhaps the biggest buzz could be found around the smart home, in the proliferation of connected appliances and voice assistant technology, as well as a new agreement behind the scenes designed to drive forward a global market said to be worth over $14bn.

Gadgets galore
As usual, all the major consumer brands were represented this year, from Samsung and Huawei to Sony, Asus, Acer, Panasonic and many more. Smartphone fans were treated to a first look at LG’s high-end V30 device, while Sony unveiled three new models: the Xperia X71, X71 Compact and XA1 Plus. As far as laptops, the Asus 2-in- 1 ZenBook Flip 14, Lenovo’s Yoga 920 ultra-thin notebook, and Acer’s “slimmest ever all-in- on desktop” the Aspire S24 all caught the eye.

VR fans were treated to a major announcement: the introduction of Microsoft’s Windows Mixed Reality headsets, with partners Acer, Asus, Dell, Lenovo and others all showing off their wares. Elsewhere there were new smart watches from Samsung, plenty to keep gaming fans interested, and even new 360-degree digital cameras from Acer.

But it was in the smart home that arguably the most eye-catching kit could be found, as the battle for consumer hearts and minds really begins to heat up. There were plenty of connected appliances on show, from a new Nest thermostat and Hive smart security camera to the Miele Dialog Oven and even a smart floor cleaner from Neato Botvac.

But notably it was in the virtual assistant space that vendors really vied for consumers’ attention, which isn’t surprising given that these platforms will increasingly sit at the centre of the smart home.

That’s why we saw Amazon’s Alexa, Microsoft’s Cortana, Google’s Voice Assistant and Samsung’s Bixby, built into an increasingly wide range of products on show at IFA. Lenovo’s Alexa-powered Home Assistant for the Tab 4 offers an Echo Show experience for a much smaller price tag, for example. There’s also been signs that some players are prepared to work together: Amazon and Microsoft announced that their voice assistants would integrate to allow users to access Windows and Office through Alexa and Amazon sites via Cortana.

Driving smart home success
Behind the scenes was perhaps where the most significant event at IFA 2017 took place, with the signing of a major agreement between three smart home associations in the UK, Germany and France.

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The UK’s Smart Homes & Buildings Association (SH&BA), Germany’s SmartHome Initiative Deutschland e.V. (SHD) and the Fédération Française de Domotique (FFD) represent over 600 OEMs, retailers, distributors, ISVs, integrators, telcos, and energy suppliers. Under the terms of the new agreement, they’ll form a European committee to better coordinate joint activities.

As Global MD for CONTEXT and Chair of the SH&BA, I believe the deal will help the organisations share key knowledge, develop common standards and drive sales. As smart home technologies become increasingly important to us all, that’s great news for the industry, and ultimately consumers.

by AS

 

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Filed under Home automation, IoT, Market Analysis, Mobile technology, Retail, Smart Home

What to expect in IFA 2017?

For growth in the tech industry it’s all about Internet of Things and of course the Internet of Playthings – this year’s IFA will be an exciting place to witness this. The pre-show announcements point to make or break smart watches from Fitbit, new wearables from Samsung, a new connected toothbrush from Philips, a “behemoth” gaming machine from Acer, and new mixed-reality headsets from Microsoft.

The agenda of the various conference programmes, shows that IFA, just like its sister shows CES and MWC, give most airtime to the new, and hardly any to how technology companies can optimise the vast but legacy categories such as PC’s, printers and displays. So, for example, the keynotes will focus on digital health (Philips & Fitbit), “building the possible” (Microsoft – could this be related to their mixed reality offering?) and an intriguing topic of mobile and AI from Huawei – are they launching their own Siri/Cortana competitive offering? The IFA+ summit is focused on IOT, wearables, integrating tech in smart home, and the latest on immersive computing. It’s all about the next level – nothing stands still, although there is a timeless element about the IFA show, with its long history stretching back to 1925.

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As you wander around the 155,000 square metres of space, and get to meet the 1,805 exhibitors, do not forget to put the innovation areas on your itinerary.

Here are two of them: in hall 6.2 there are 78 companies presenting smart home offerings – covering security, lighting, home automation, cloud platforms and gateways. Look especially for the advances in voice control and the linking of smart home solutions to this technology, which is less than one year old in Europe and has already made an enormous difference to the smart home market. Then, not far away, there is hall 26 – this is the innovation pavilion where IFA Next is housed (it used to be known as IFA Tec Watch). Here you will find start-ups and all those next generation products, the ones to watch.

In pavilion 26, there is also another smart home area, with another 10 vendors, and associations, which is also not to be missed. And especially at 4pm on 4th September, when three smart home associations – the Smart Homes & Buildings Association (UK), Fédération Française de Domotique (France), and Smart Home Initiative (Germany), will sign an international cooperation agreement working together to build the category across Europe. CONTEXT is associated with all three associations, having been a force in bringing them together, and already collaborated on a number of pan-European projects.

Lastly, and not least, CONTEXT is looking forward to hosting its annual IFA dinner with clients and partners – the opportunity to hear the latest CONTEXT research on Smart Home and Immersive technology, will be delivered in a delightful Berlin venue, providing a great opportunity to relax, meet up and network.

by AS

 

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Filed under Connectivity, Home automation, IoT, Market Analysis, Mobile technology, Retail, Smart Home, Smart Technology, Wearables