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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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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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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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Global Desktop 3D Printer Market Rises +27%

According to our latest figures, worldwide shipments of 3D Printers rose +25% year-to-date (YTD) through the first three quarters of 2016 thanks again to shipments of low priced Personal/Desktop 3D Printers.

Of the total 217,073 3D printers shipped year-to-date, 96% of these were Personal/Desktop printers, carrying an average price of just under $1,000.  This represents a 27% year-on-year growth for this sub-category compared to a decline in shipments of -12% YTD in the Industrial/Professional segment which saw only 7,726 units shipped through the first three quarters of 2016. While the market is still largely defined by the shipment of Industrial/Professional printers – which accounted for 78% of the global revenues – the market is clearly settling into two distinctive segments.

Vendor wise, in the Desktop/Personal 3D Printer segment, Taiwan’s XYZprinting remained the global leader so far in 2016, seeing its share grow to 22% through the first three quarters.  This side of the market saw the exit by the #3 global overall player 3D Systems and the continued repositioning of the #1 global 3D Printer market Stratasys of its MakerBot line away from the lowest end.

The Industrial/Professional segment was marked by the official entrance of HP into the space but printers did not begin shipping until the end of the year. While the Industrial/Professional segment has, in general, cooled off in the past few years, the shipment of additive manufacturing devices capable of printing in metal materials was one major bright spot within this category.  This Metal side was not immune to market changes in recent quarters either however, with a slow-down seen in this sub-segment as well in the 2nd half as General Electric (GE) acquired two of the top five metal making 3D Printer companies (Arcam and Concept Laser).

Projections for the full year 2016 remain reserved for the Industrial/Professional market and bullish for the Desktop/Personal market, largely in-line with trends seen through the first three quarters.  Forecasts turn more bullish in the Industrial/Professional sector in 2017 and beyond as the HP and GE ramp results in a return of growth; the Desktop/Personal market is expected to continue its unfettered growth.

by CC

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