Archive for the 'Consumer behavior' Category

Amazon Go…it’s a go!

After a long period of testing, Amazon Go is finally opening its doors to the public. Its first C-store location in Seattle has already received a lot of attention for its technological leap, where the shopper can walk out the door and pay for purchases without stopping at a register. Here’s my comment on RetailWire:

I assume the long gestation period was needed to test not only the technology but also the merchandise content. From the descriptions of Amazon Go, it is more focused on fresh and ready-to-eat food than a typical C-store and devotes less space to categories like candy, chips and so forth. It will be interesting to read some on-the-ground reporting about what the store actually looks and feels like.

I expect Amazon to be patient with the concept, because some customers simply won’t be comfortable right away with a cashier-less environment. At least for now, human interaction in any kind of store (including a C-store) is part of the equation unless you’re an early adapter of the Amazon Go tech experience.

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Online shopping: Mobile or laptop?

Online shopping is migrating rapidly from desktops and laptops to mobile devices. On RetailWire, panelists recently discussed this trend:

The answer to the question depends on which retailer you’re talking about. Amazon (for example) makes the process of buying directly from your smartphone app as simple as possible, so it’s easy to buy without having to reach for your laptop. On the other hand, some transactions are more complex (for example, the dishwasher we bought after Thanksgiving) and really benefit from a bigger keyboard and screen to “close the deal” — even if the initial searches happen on the smartphone screen. (At least that’s true for this troglodyte.)

Lesson learned for all e-commerce and omnichannel retailers: Follow the Amazon model where possible, and make the transaction as easy as you can — from search to selection to checkout. If more retailers follow this example, the smartphone share of wallet will continue to grow at a rapid rate.

Holiday 2017, in several observations

Starting with Black Friday, I’m stringing together a few comments on RetailWire about the holiday 2017 shopping season. By all estimates (and retailers’ reports), sales were better than expected considering the doom-and-gloom early in 2017 about the “death of brick and mortar” at the hands of Amazon. Here’s the thread:

1. Most of the anecdotal evidence and reports from retailers suggests that foot traffic was down, especially on Friday, but overall sales volume was good. This suggests that stores’ omnichannel strategies are working to drive total sales, instead of the “silo” effect of looking at e-commerce and brick-and-mortar as two separate businesses.

There is also a sense of higher discretionary spending, which will tend to benefit department stores along with off-pricers specializing in apparel. Early cold weather doesn’t hurt, either.

2. Several factors came into play, including low unemployment, the “wealth perception” of high stock prices, and a break on the weather that helped drive sales of seasonal goods. But I think there are two other key factors in this holiday season’s apparent success: First, the large number of store closings during the first half “cleared the deck” for those left standing to gain market share. And, even more important, most brick-and-mortar stores finally figured out how to leverage their own e-commerce business into a true “omnichannel” experience for their customers.

Omnichannel: Not just a matter of semantics

As retailers continue to grapple with their own definition of “omnichannel,” I thought this RetailWire comment might offer some clarity:

I ordered razor blades from Amazon a few days ago, and I just ordered some K-cups this morning. (They will be here later today.) Would I describe this as “omnichannel,” because it involves commodity items that I might have found in a physical store? No, I would call this purely an e-commerce transaction.

A true “omnichannel” initiative is one that bridges the divide between e-commerce and brick-and-mortar. If I had bought the K-cups from walmart.com (and picked them up at the store), that would be closer to an omnichannel play. And the more seamless the shopping experience, the better … whether I am buying food, consumables or apparel.

Once we get past the semantic distinctions, there is little doubt that programs like BOPIS, BORIS, ship-from-store and curbside pickup are escalating rapidly. The consumer continues to search for the perfect combination of price and convenience — the “blue-eyed unicorn” of today’s retail.

Diminishing returns for Black Friday

With the release of the NRF’s annual holiday shopping forecast comes a RetailWire discussion about Black Friday. The debate? Whether the event itself is essentially dead as a volume driver. My opinion? Not so fast:

“Killed” is too strong a word, because Black Friday still represents one of the biggest shopping days on the retail calendar. But the day has lost its punch for a number of reasons:

1. Most obviously, the shift from brick-and-mortar to e-commerce. With the growing number of store closings and “zombie malls,” this will be a bigger problem than ever throughout the 2017 holiday season.
2. The Thursday paper stuffed with promotional circulars doesn’t reach the huge number of Gen Y and Z shoppers who don’t even read the paper.
3. As stores have extended Black Friday opening hours into Thanksgiving itself, they have simply cannibalized their own business.

I could go on, and these are tough “macro” challenges for an individual retailer to overcome. Some of the potential solutions involve greater use of targeted social media and other messaging to reach younger customers…and this is true from early November all the way to the last crucial weekend before Christmas.

But the biggest challenge may be to make the sale offerings and merchandise content more compelling. Easier said than done (without months of advance planning), but the recent focus on putting entire assortments on sale — instead of key items at compelling price points — has drained Black Friday of its former sense of urgency.

The impact of “activewear as sportswear”

It seems more apparent than ever that some of the “women’s apparel” problem is actually a long-term lifestyle change. RetailWire panelists discussed this in the context of Gap’s Athleta activewear division:

I was in Madison, Wisconsin last week and walked down the pedestrian mall running from the state capitol to the University. It was impossible to ignore that the vast majority of women were wearing “activewear as streetwear” — in particular, black yoga pants instead of jeans. And these were college students for whom jeans would have been “the uniform” five years ago.

On the last wave of quarterly earnings calls, most retailers complained about the lack of traction in their women’s sportswear businesses — while mentioning the rapid growth of fitness wear. It’s increasingly clear that activewear is cannibalizing more traditional women’s apparel, so Gap ought to push the growth of its Athleta brand as hard as it can for as long as this lifestyle shift continues.

Are social media driving the speed of trends?

The short answer to my own headline question (above) is “yes,” but there is a lot more to this issue. Here’s my comment from a recent RetailWire panel discussion:

Social media may be a factor in fashion trends going Aeand moving faster. But the influence of “fast fashion” retailers (Zara, Forever 21 and others) can’t be understated. They mastered their supply chain in order to bring new goods to the selling floor a lot faster, and in order to react to early test orders in a big way. Most traditional retailers built their logistics around long lead times, especially on private-brand goods, and are scrambling to catch up.

The idea of “speed to market” requires a change in mindset — affecting supply chain management, the willingness to chase big ideas, and the ability of retailers’ vendors to move just as fast.


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