Archive for the 'E-commerce' Category

“Voice assistants” riding a wave

Two recent RetailWire posts address the growth of Amazon and competing voice recognition devices — with Amazon’s Echo being the most popular:

Anything that makes the Amazon shopping experience even more seamless is a market share opportunity. As the panel discussed recently, it’s no wonder that several national retailers are aligning with Google’s voice assistant instead.

Retailers probably have their own opportunities to apply voice recognition technology to their own mobile apps. (Maybe this has already happened.) Voice activation seems to be the next “smart” thing, so it’s a win for whoever gets there fastest.

The second post concerns the national retailers who are aligning with Google, not Amazon:

If this works, it’s an opportunity for Google to play catch-up on the head start that Amazon has established with Echo, and to establish a stronger beachhead on the “device” front. But it’s also an opportunity — or attempt — for several retailers to marginalize Amazon’s e-commerce business that has eaten into their own market share.

Two comments on omnichannel

Here are a couple of RetailWire posts on the subject of whether e-commerce is eating into brick-and-mortar retail. The first comment was published after stores reported year-end sales:

“Omnichannel” retailers like Macy’s, JCP and Target are still heavily dependent on their physical footprint. Each store reported rapid e-commerce growth (from 17% in Penney’s case to 30% at Target), yet each of them also reported total comparable-sales declines in the low single digits. So it’s clear that the combination of brick-and-mortar and omnichannel isn’t driving sales yet.

All of these stores and others have opportunities to improve their assortments, customer service and overall store experience. Omnichannel initiatives like BOPIS and “ship from store” have put even more strain on retailers’ ability to execute these “Retail 101” issues better. But until they do, their overall sales will continue stuck in neutral.

The second comment was published today:

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

 

 

 

 

NRF’s 2016 fourth-quarter forecast: Blue skies ahead?

I published the following comment on RetailWire after the NRF forecast a 3.6% sales increase for Q4 but before the outcome of this week’s election:

If somebody tracked the annual NRF holiday forecast compared to actual results, I think they would find that this trade organization is consistently too optimistic. I feel the same way about their 2016 number.

And does their number include surging growth by e-commerce retailers, especially Amazon, or strictly brick-and-mortar and multichannel retailers like Macy’s? There isn’t much evidence from the numbers we’ve seen all year (especially from midtier retailers) to expect a sudden surge in demand. Some retailers have especially easy comparisons to 2015 (which will help), but I’d be pleasantly surprised to see numbers beyond the 2-3% range.

And I’m adding a couple of other comments posted just before and just after the election:

Consumer confidence measures are rising, along with the GDP, but the rosy forecasts for 4th quarter sales still feel high. General merchandisers are likely to benefit from soft comparisons and colder weather than last year, but there is nothing in the sales trends so far this year pointing to a huge comeback. There also isn’t much evidence of a big merchandise idea or key item likely to drive customers to stores.

Without tipping my hand, I also believe that next Tuesday’s election results could provide a “relief rally” by providing some closure one way or the other. Of course, I said the same thing before the 2000 election…

Now, a post-election post-mortem:

I’m trying to set aside ideology here, because the split verdict on the election leaves voters uncertain on both sides. Will Mr. Trump live up to his harshest platform promises or try to moderate his views? Today, nobody knows whether the answer to that question will chill 4th quarter sales or stimulate them.

So the only way to answer this over the long haul is to look at the economic impact on consumers. Tax cuts and infrastructure spending are good for businesses and consumers but (on the other hand) protectionism and tariffs will lead to higher prices. And any effort to restrict (or reverse) immigration patterns will stall the population growth that our economy depends on.

Finally, the plans to “repeal and replace” the ACA may have a huge impact. On one hand, lower costs benefit consumers and small businesses; on the other hand, if millions lose insurance coverage they will face an economic threat that will crimp their spending for the foreseeable future.

 

Is Costco neglecting e-commerce opportunity?

RetailWire panelists (including me) weighed in recently on the question of whether Costco is missing “omnichannel” opportunity right now:

Costco is not wrong in “sticking to its knitting,” especially while it continues to have the opportunity to open more of its destination stores around the country. (It started with one store in the Milwaukee area and gradually grew to four.) It’s clear from observing grocery carts at the checkout lane that fresh good and bulk groceries are key drivers of Costco sales. (It’s also apparent that the switch from Amex to Visa was a win.) It would be tough online to duplicate the variety of goods bought on a typical Costco shopping trip if you’re looking online for a single item.

That being said, Costco can do better online — not only in terms of product sales but especially in terms of ancillary services. B2B, insurance, travel, etc. are all big opportunities to leverage the Costco website.

American Girl and Lands’ End: Did they make the right call?

American Girl recently announced its expansion into Toys “R” Us stores, while Lands’ End plans to sell its product on Amazon. These are two very different kinds of products — and distribution decisions. My comments (from RetailWire) suggest that I agree with one of the decisions but not the other….because more distribution is not always better.

First, regarding American Girl:

Yes, Toys “R” Us is the biggest big-box toy chain by far (not counting the huge sales at Walmart and Target) so it’s a tempting decision for American Girl. But I think it cheapens a premium brand, and there may have been other ways to drive broader distribution (and more sales). For example, wouldn’t a traditional department store like Macy’s be a suitable home for American Girl shop concepts?

Next, about Lands’ End:

By 2017, Amazon may outpace Walmart as the biggest seller of apparel in the U.S. It’s hard to argue with its legitimacy and power if you’re a label trying to rebuild your volume base, not just your brand equity. Remember, Lands’ End was tarnished by its years-long association with Sears (including its shops within Sears store), so it’s not nowhere to go but up.

Walmart buys Jet.com

Some observations (about a month late) about Walmart’s announcement in early August that it is acquiring web startup Jet.com. Here’s my comment from a recent RetailWire panel discussion:

The risk isn’t great to Walmart, considering the purchase price vs. Walmart’s scale. But the reward is definitely in favor of Jet.com’s founders and investors, who are about to become very wealthy. The real question is whether Walmart intends to keep the Jet.com brand alive or simply wants to take a competitor off the playing field.Jet.com seems to have followed the typical internet startup path of losing money while aggressively trying to build traffic and market share. But Walmart’s move makes it hard to tell if Jet’s business model is sustainable over the long haul. Let’s face it — nothing about this move changes the reality that Amazon is the alpha dog.

Amazon figures out how to make money

The Amazon momentum continues, with evidence that the company is finally delivering a profit to investors. (Granted, some of it comes from cloud services and membership fees…) Here’s a brief comment from a recent RetailWire discussion:

Four consecutive profitable quarters look good for a company that seemed willing not long ago to keep losing money in order to gain share and invest in infrastructure. Those logistics investments are starting to pay off, and the growth in Prime membership reinforces Amazon’s brand image as the best “execution” retailer in the business.  The growth in Amazon’s overall profit gives the company some breathing room to reach into more and more categories — from grocery delivery to apparel — at the same time that it tests the waters in brick-and-mortar retail too.