Archive for the 'Retail technology' Category

About that “whole paycheck” perception…

Some of my earlier comments about the Amazon-Whole Foods deal touch on the expected benefits of better e-commerce execution and predictive data science. But let’s not forget that Whole Foods has a price perception problem that Amazon needs to fix. Here’s a recent comment from RetailWire:

I teach a college-level class in retail management. When I surveyed the class about where they shopped, most answered Aldi, or Trader Joe’s, or Metro Market (the Milwaukee brand of Kroger-owned Mariano’s). None of them shops at Whole Foods even though the store is in the neighborhood where most of them live.

There is no doubt that Whole Foods’ “premium price” reputation has kept many shoppers away, as they face more competition in the “organic” arena. I believe the first round of price cuts is just the start, and it simply moved some overpriced key items to the “market price.” Expect more of this from Amazon in the future, but also expect Amazon to build Whole Foods’ base on its potential e-commerce and home delivery upsides.

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Amazon pushes Whole Foods toward centralization

There has been plenty of comment — most of it critical — about Amazon’s intention to centralize its merchandising of the Whole Foods stores. Most of the critics are concerned that the lack of local brand advocacy will turn Whole Foods into something very different. Here’s my RetailWire comment on that topic, followed by a comment about what Kroger is doing in response:

Centralized buying will bring economies of scale that allow Whole Foods to compete more effectively on price and on execution. But competitors (Kroger, I believe, is one example) are already opening the door to local vendors in response to the Whole Foods move.

Let’s not forget, however, that Amazon is the master of data science when it comes to retail management. Just because they are tightening the screws on the buying process doesn’t mean that they will ignore local preferences. In fact, they are likely to do a better job of allocating space and replenishing goods to meet individual stores’ tastes than Whole Foods ever dreamed of.

And now my comment about Kroger’s announcement that it is encouraging more local vendors:

Whether this was a pre-existing strategy or a reaction to the Whole Foods “centralization” news, it’s a good idea especially for grocers with national scale to pay attention to local preferences. As I said last week, however, don’t assume that Amazon will ignore this issue just because it is trying to find cost savings in the Whole Foods model in order to compete.

Amazon is the leader in using data science to determine consumer preferences, and I expect this to extend to their assortment planning in individual Whole Foods stores. If Kroger intends to compete, it will want to support its “local” initiative with great execution of in-stock levels.

 

And now, a Google/Walmart tie-up

To expand on my last post (about Kohl’s and Amazon), now comes word of a stronger alliance between Walmart and Google. Here’s my comment from RetailWire, in which I comment that each company brings specific strengths and weaknesses to the partnership:

When the majority of product searches start at Amazon, that’s a huge advantage — it combines the predictive intelligence of an SEO company with the execution skill of a best-in-class e-tailer. But is Amazon invulnerable? Of course not, and that’s part of the reason why the company is filling in its portfolio with brick-and-mortar acquisitions (Whole Foods) or alliances (Kohl’s).

So an expanded partnership between Walmart and Google has potential: It provides Walmart with more robust search capacity and web traffic, and it offers Google a stronger e-commerce platform. But unless Walmart adds more second-party retailers (and their goods) to its site, it’s not going to catch up to Amazon’s head start for awhile.

Is there a market for “ultra-fast” fashion?

RetailWire panelists weighed in on the growing trend toward “ultra-fast” fashion. If the short lead times of fast fashion retailers (think Zara) aren’t short enough, how about two to four weeks from concept to delivery? And what sacrifices need to happen as a result? Here’s my comment:

Retailers have been too slow reacting to the fast-fashion capability of companies like Zara and Forever 21. These two companies (and a few others) have brought great supply chain management and data science to the art of getting relevant product to their customers quickly. But the key word here is “relevant”: Does a two-week lead time offer enough chance to test and reorder in depth?

Cost is another factor: Ultra-fast retailers will probably have to pay a premium for manufacturing labor close to their stores (especially in the U.S.), even if there is some offsetting saving on transportation. Fast turnaround makes sense if your store needs Stanley Cup championship jerseys tomorrow, but for the majority of goods a little extra time is worth the investment.

In praise of Amazon (again)

As the biggest “disrupter” in retail, Amazon is always a hot topic on RetailWire. Here’s a recent comment:

There may be more innovative retailers who are not as visible as Amazon, but it’s hard to think of a company with such scale that is less willing to rest on its laurels. I know that some panelists view Amazon’s push into new businesses and logistics methods as not much more than a well-oiled PR machine (see yesterday’s discussion of intimate apparel as an example). But it’s hard to deny that the company is anything but complacent when it comes to extending its reach and improving its execution promise.

The real test for Amazon will be its success in rolling out innovative brick-and-mortar retailing models. The bookstore and especially the C-store tests will be telling, because most other stores with “omnichannel” strategies have not succeeded in offering an innovative approach to the business of shopping.

And more thoughts from another post:

Amazon’s competitors have it all wrong if they think it’s all about low prices. (And this is the fundamental error behind Walmart’s “brand promise” over the years.) Amazon has always been focused on breadth of assortment and great execution. As the company has entered more categories (starting all the way back when when they were in the business of shipping books), it has never lost sight of these key competitive advantages. Customers’ expectations have been scrambled as a result, and everybody else (whether pure play e-commerce or omnichannel) is just trying to keep up.

“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.

Department stores’ search for relevance

From a recent RetailWire blog post, I have some comments about the continuing struggles in the department store segment. Some of my concerns are based on the relevance of their merchandise content, and some are based on the “sameness” of the shopping experience:

There are two key “relevance” issues, especially pertaining to traditional department stores: First, are retailers using all of the technological tools at their disposal to enhance their brands? Are they leveraging today’s tools (mobile payment, RFID, and so forth) to improve customer service or simply to cut costs? And how has “omnichannel” (especially BOPIS) actually eroded the shopping experience? There is very little difference between shopping at Macy’s or Dillards today compared to 30 years ago, other than UPC scanning and more sophisticated POS terminals.

Second — and it always comes down to this — is merchandise content. I’ve shopped a lot of traditional department stores over the last few weeks, and I’m struck by how much inventory and square footage continues to be devoted to dressy career apparel for men and women. This may be the retailers’ sweet spot (as they see it), but the lack of adaptation to change is concerning. Do these stores not recognize that Boomers are retiring — and leaving the workforce — in droves? Do they not see that most Millennials are working in more casual environments and are shopping elsewhere for their wardrobe needs? (Add to this the slow reaction to the movement toward activewear-as-sportswear.)

Sometimes achieving “relevance” costs money — whether through new tech tools, more payroll or a fresh coat of paint. But mostly it’s about the products, brands and trends that stores choose to put forward.