Tag Archives: Market intelligence

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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Filed under Market Analysis, omnichannel, Retail, Uncategorized

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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Filed under IT Distribution, omnichannel, Retail, Supply Chain

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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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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