What’s changing retail – Strategic distributor collaboration

By Chris Petersen and Adam Simon

Distributors have been part of the traditional supply chain for decades.   They were often called the “box movers” of the industry because they quite literally performed the essential service of moving mass quantities of products from suppliers to retailers’ warehouses.   While distributors still function in that role, what is rapidly changing retail is the customer demand of fulfilling a single unit to a local point they choose.   The rising expectations of consumers are creating stress points on logistics and profitability for both retailers and brands.   The capabilities for local distribution the last mile are not only a cornerstone of the new retail ecosystem, distributors are emerging as innovation partners creating strategic opportunities for both retailers and brands. Continue reading

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Immersive Technologies in the Arts

At one of Vastari’s Frieze breakfast briefings last week, the panel of leading art world figures discussing the “The Evolving Gallery” seemed almost entirely in agreement that virtual and augmented reality is going to play an enormous role in the future of art.

For the gallery, VR is both a tool and a new platform, enabling them to reach a much wider audience than might be able to visit any given location in person. Beyond the simple novelty of an exciting new technology, parallels with social media’s unexpected prevalence were drawn and VR and AR are seen as a way to fundamentally redefine the relationship between exhibitions and the public. Both Facebook and Snap have announced plans to augment the world with digital public artworks viewable through their respective apps, while DSLcollection has partnered with Ikonospace to curate and market their exhibition in virtual reality in ways not previously possible.

For the artist, VR is particularly exciting as a medium newly open for exploration. It isn’t limited merely to the art programs like Tilt Brush, Medium, Blocks or Quill passed down from on high by tech giants like Google or Facebook, although these tools are themselves immensely popular with artists. Those with more ambition and technical knowledge such as the infamous Android Jones are creating their own tools with a specific aesthetic quality in mind. In the case of his latest work, Microdose, it is the tool itself which almost becomes the work, blurring the line between creator and spectator.

In theatre too, there is a trend towards immersive experiences, of which virtual and augmented reality may well play a part. While some traditionalists will scorn the invasion of new technologies into their craft, there is no doubt that there is significant overlap in the skills required to develop narrative experiences in virtual reality and on stage, which has always had to use creative approaches to direct the audiences attention. As such it may be that “theatre in VR”, such as the National Theatre’s Draw me close turns out to be far more successful than attempts to shoehorn VR into theatre.

While not every artistic endeavour in VR will suit all tastes, and some are very rudimentary in their execution, this is fundamentally a rare new medium for expression, the rules for which have not been written yet. As with the early days of cinema, artists will be instrumental in exploring the language and capabilities of immersive technologies, setting the ground for commercial applications as the industry matures.

by BB

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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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The Rise of the Gaming Monitor

One of the more interesting categories to emerge from CONTEXT’s move into covering more PC Gaming categories is that of the gaming monitor. These tend to contain dynamic refresh rate technology, such as NVIDIA’s proprietary, quality controlled G-Sync or AMD’s royalty free FreeSync. Both of these prevent stuttering and screen tearing by allowing the monitor to render only once a full frame is ready from the GPU, resulting in a much smoother and more enjoyable experience when playing demanding, fast paced games. While initially, G-Sync was the dominant technology, the high costs and stringent requirements imposed by NVIDIA has lead to their technology occupying a relative niche compared to the much more open FreeSync.

As well as adaptive sync, we are also seeing more in the way of UHD (4K) monitors and those with very high refresh rates, although at most affordable price points it is still a case of choosing one or the other. The former now accounts for 14.2% of Q3 monitors while those with more than 144Hz refresh rate now represent 10% of the market, up 81.2% year on year from Q3 2016.

Monitors2

Yesteryear’s darling, “3D ready” support has remained relatively flat at 12% of monitors sold in Q3 and little sign that demand will rise any time soon but curved displays are increasingly popular, with 24.6% of those sold in Q3 2017 having this feature, compared to 19.6% in Q3 2016 and only 1.8% in Q3 2015.

There have been several interesting advances in display technology over the past few years, which are now comfortably seeing mass adoption in the gaming niche. As one of the most important interfaces between gamers and their games, having the right monitor is clearly seen as key, especially for those hoping to gain a competitive edge over their opponents in the rising field of eSports!

by BB

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Filed under gaming, Market Analysis, Monitors

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

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