All I want for Christmas is a virtual twin

Is anyone happy to predict what might be coming in 2017?  I suspect not. 2016 was full of unexpected surprises and is best epitomized by the new Toblerone, it still has peaks, but the gaps between them are bigger and more divisive, just like our politicians.

The nation is split over which retailer has made the best Christmas TV spot, M&S or Aldi, but it has not stopped shoppers from shopping. John Lewis might not have made the best TV ad for the festive season, but it did have the biggest ever week in its trading history this Black Friday. And the only prediction I can safely make for 2017 is that the retail event will be back next year. Black Friday has usurped the traditional ‘must have toys’ list and is fast becoming the official start of the festive shopping season spree. Next year we will see greater competition for shoppers and greater focus on their three budgets; time, money and frustration.

For the first time this year I received digital calendar invites for Black Friday events. Intrusive yes, but an indication of how far retailers will go to cut through the promotional clutter to get time with the WIGIG conscious shopper.

This Black Friday also saw a 12% rise in online spending according to retail analysts IMRG. Shoppers will always want value, but that is no longer simply price x quality. They want simplicity and convenience and at the moment that is being delivered (literally) by going online.

Of course, there are many retailers who still understand the vital role of physical stores as environments where shoppers can touch, feel and experience their product assortment and many more that will complain that their stores have simply become showrooms. But the online world is changing, today all the talk might be of the ‘internet of things’ but it is rapidly becoming about experience. The Internet of Experience.

VR and AR are two technologies that people are predicting will transform the shopping experience and we have seen many retailers experiment with solutions in 2016. John Lewis is bringing its Christmas TV story to life in store right now with VR, whilst DS Automobiles showcased a solution at the 2016 Geneva Auto Show which could have a more everyday application in the car buying process. I have no doubt that this will continue to evolve and the virtual showroom will become a permanent fixture both online and in-store for many retailers.

img_0057But perhaps the most interesting application of VR for retailers is not in enriching customer experience, but in helping them in their internal process. There are more and more retailers and brand owners that have VR cave solutions to help packaging design and merchandising programs to deliver the perfect shelf and perfect shop. The next generation of technology will mean this no longer has to be a linear process based on an idealised store layout, instead key stakeholders will be able to come together and collaborate around a virtual twin of an actual store and do that in real time by connecting it to digital shelf labels in a physical store, as is possible with the 3DEXPERIENCE Twin. I’m not going to make any predictions for 2017, but if I was a retailer, a virtual twin would be at the top of my list for Father Christmas.

I’m not going to make any predictions for 2017, but if I was a retailer, a virtual twin would be at the top of my list for Father Christmas.

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The secret of retail tech innovation? Never forget the customer

First published by Retail Week on 4th August 2016

While I spend most of my working life looking to the future, I’m not afraid to take inspiration from the past.

I still occasionally dance around to my 1980s alternative singles and remain fond of classic movies such as The Belly of an Architect.

The return of a 1990s phenomenon in the format of Pokémon Go illustrates the point nicely, showing the power of brand affinity, of past associations, to engage a vast audience.

More importantly for retailers, the craze demonstrates that it’s possible to drive engagement very quickly if you get it right with mobile innovation.

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French retailer BUT has already used the popularity of Pokémon Go to drive store Traffic and offer discounts to shoppers.

While the rise of the game is set to benefit retailers greatly, through sponsored locations, promotions and merchandising, what it says more broadly is that consumers crave fantastic and entertaining experiences alongside a sense of community and adventure.

AdTech AdThis was heavily in evidence at the recent Cannes Lions advertising and marketing festival. Many winning campaigns in categories such as mobile provided examples of innovation that deliver a human and interactive customer experience.
They included Burger King’s activity in Argentina, where it created an interactive Snapchat game, Snapking, using an entertainment experience to drive a voucher-based mechanic for participants.

Perhaps the best use of innovation applicable to retail was the Sydney Opera House’s #comeonin, using social platforms and location data to create and then invite people to a personalised experience.

Retailers that understand the need to build human connections into their technology innovation have a greater chance of success.

However, when Cheil spoke recently to more than 150 senior global retailers we revealed a disconnection between the focus of their technology innovation and the delivery of better customer experience.

It is very clear that consumers want innovation in technology to be rooted in delivering customer benefits. Yet the conversations with retailers highlight that innovation budgets are not primarily focused on meeting unfulfilled consumer need.

A majority are confident that they have a world-class innovation culture. And, in many cases, this is driven by new technology. That sounds encouraging.

The issue that emerges, though, is that technology displaces meeting unfulfilled consumer need as the driving factor in innovation.

Meeting consumer need was identified by just 18% of retailers as the main reason for innovation, indicating a danger that retailers are losing sight of the consumer.

Consumer research shows that this is an issue for customers. Amazon emerges as the most innovative retailer because it uses technology to make it quicker to find, pay for and receive products.

Where Amazon is identified as less strong is in providing a ‘human service’, but it has maintained customer perceptions in this area at acceptable levels while more traditional offline rivals struggle to deliver against even this hygiene factor.

Retailers could gain greater competitive advantage by using technology in ways that improve perceptions of human service, with a big opportunity in focusing on the greater personalisation of the shopping experience.

This is where they can learn from the success of experiences such as Pokémon Go and brands that use mobile not only to bombard people with messages and offers but to entertain and delight.

In doing this, retailers shouldn’t lose sight of the need to improve the customer experience by using technology to simplify and accelerate the retail experience.

This should be the main focus of retail innovation budgets, rather than investing in mobile and other tech merely for its own sake.

CES 2016: IOT, VR, AR & groceries  

Try to contain your excitement because the connected fridge is finally here. This future blend of refrigeration and grocery retail was launched at CES in Las Vegas.

MasterCard joined forces with Samsung to unveil their Groceries application for the Family Hub refrigerator, which boasts a 21.5 inch display allowing consumers to view their fridge contents without opening the door and order replacement items with taps and swipes.

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It’s smart too, having the capacity to learn what types of food and drink products consumers’ favour. In time, I suspect the capability will be added to automatically order the items consumed most regularly and bring new meaning to ‘out of stocks’.

The fridge will also tailor product recommendations as it learns. This will bring some solace for the Consumer Packaged Goods (CPG) brands that have fought for attention on supermarket shelves for so long and are now trying to understand how to bring this same fight to eCommerce.

Shopper marketers must now ask the question, how do you win in grocery if your consumer is buying from their fridge? Part of that answer must be in recommendation and the other part will come through shoppable media that connects brand communication seamlessly with ecommerce. Groceries by MasterCard is on to this already and the companion app will work on smartphone, tablet or PC and enable consumers to add items to the household shopping list. It’s surely only a matter of time before we see a Groceries by MasterCard ‘buy now’ button on CPG brand communication.

The cynics out there will be quick to suggest it will be more than five years before the connected fridge poses a real commercial threat to traditional grocery retail models and, given the $5,000 price point for this Samsung model, they have a point.

Transforming shopping and ecommerce with VR and AR

Virtual reality applications are much cheaper to access, making them very big news at CES this year because they promise an experience that has previously been the stuff of science fiction. Gamers will be the big winners in this, but shoppers should expect to see more VR too.

A Google Cardboard headset costs around £5 and a consumer can already enter a far more immersive experience than is provided by a holiday brochure by coupling Cardboard with Google Maps or, as Nestle offered in its partnership with Google, the experience of touring a Brazilian coffee plantation.

VR has the opportunity to transform ecommerce, enabling a near real experience of a product that had only been available in-store until now. But we will also see more retailers using VR in their shops to educate, inspire and sell product benefits. This will provide a reason for new customers to visit stores and, if the experience is good, it will keep them coming back.

Augmented reality is set to enhance shopper experience and the ModiFace Mirror shows just what can be achieved in-store. The mirror allows users to change not only their makeup but also whiten their teeth, alter their eyebrows, reverse the signs of aging, and change eye color while also delivering a 3D makeup tutorial. At an expected $2,000 per unit it’s not cheap, but compared to the salary of additional sales associates it represents value.

I’m not a big fan of removing staff from the shop floor as they make the biggest difference in customer experience, but the idea of being greeted by a Segway advanced robot in aisle seven sounds like fun.

Innovations in cash management

Where retailers do need to manage cost is in cash management and a new addition to CES this year was the Digital Money Forum. Apple, Google and Samsung all see the future as being in smartphone-based payments that deliver fast, seamless and secure transactions for consumers. More exciting is the innovation at the intersection of wearable technology and payments.

MasterCard and fintech firm Coin announced a partnership  that will enable manufacturers to integrate mobile payments into pretty much anything able to accommodate an NFC chip. Fitness tracker-makers Atlas and Moov and smart watch producer Omate have already signed-up to MasterCard’s Digital Enablement Service and I am sure we will see many more products do so very soon.

All this talk of the future makes me feel my age and I’m starting to think those oldies who don’t own connected fridges and still use cash will be the only people left in our stores. Help is at hand though. The Genworth R701 Exoskeleton could become the must have tool to help retailers shape stores for people like me in our old age because wearing the product simulates what it feels like to be an elderly person. That brings to mind an apocryphal story involving a CEO who wore a pregnancy suit to shop his store and then conceived the idea of parent and baby parking.

This anecdote provides a reminder that while CES brings us fantastic insight into technology that might shape retail in the future, we must never forget that the customers who shop our stores are real people and that true transformation in retail experience is always grounded in human truths.

2016: Back to the Future of Retail

This article was first published by Retail Week on 31st December 2015

Star Wars caught the imagination at the close of 2015 but the film franchise that holds greater resonance for retail is surely Back to the Future.

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October 21, 2015, was the date on which Marty McFly and Dr. Emmett “Doc” Brown arrived to the future in the second instalment of trilogy. The film debuted in 1989 and the passing of its most famous date last October prompted reflection on what had altered in 25 years. For retail the changes were seismic. In 1989, Walmart was the world’s third largest retailer with $25.8 billion in sales. Amazon didn’t exist. Neither did Alibaba. On 11th November 2015, Alibaba posted sales of $14.32 billion in a single day. Singles’ Day in China.

Given these significant transformations, just what will 2016 bring for retail?

Rubbish into fuel

The COP21 conference in Paris provided impetus for retailers to bring environmental issues into sharp focus as their customers demand transparency from business and value for their values. The reality in 2016 will be new stores that aim to be self-sufficient in energy, more electric delivery vehicles, and the roll out of charging points in car parks.

Robotic Retail

The movies might suggest plastic characters taking orders but the reality is more profound in the shape of Robotic process automation (RPA) in the supply chain and in-store systems that can provide digitally-led customer experiences.

 Machine-to-machine interfaces have the ability to predict and match a consumer’s needs to real-time availability, location, price and delivery. The customer experience is improved and increasingly personal, while the retailer can improve responsiveness while reducing costs and inefficiency.

Wearable tech

Assuming retailers have not replaced their staff with robots, the simplest way to connect them with the cloud and the rest of the salesforce will be a wearable device. This will simplify regular retail procedures and improve customer experience.

CXO trumps CMO

“We can’t advertise our way out of a problem we behaved our way into”. Tesco CEO, Dave Lewis, talking about the challenges the global retailer faces.

Proactive retailers are looking at their organizational behaviours to ensure they stay connected with their customers. UK retailer Game has taken an innovative approach to customer experience, not only building an award-winning app that brings together all its store tools and loyalty scheme into a very convenient mobile solution for the customer, but also empowering its managers to create a community of gamers around each store.

Everywhere, Instant & personal

People do not care about on-line, bricks and mortar or m-commerce, they want to move seamlessly between environments, platforms and devices to fulfill their shopping missions. They don’t care if something is advertising or design, shopper-marketing or promotion, social or CRM, they simply want the best experience.

Back to the Future of Retail will require brands and retailers to inspire the three human behaviours that drive purchase: search, shop and share. But, in tackling the most modern of shopping behaviours, they must not lose the shop keeping skills of the past. Know your customer and give them what they want, when they want it. Make it easy and convenient to buy and deliver value for their values.

Now what would Marty McFly make of all that?

Black Friday now firmly established as heavyweight champion of UK retail events

This article was first published in Marketing on 30 November 2015

If the £1 billion retail sales forecasts for Black Friday are confirmed, followed by the predicted £3.2bn for the weekend and Cyber Monday being met, we will have another heavyweight champion event in UK retail. And just like the Fury and Klitschko bout, 2015’s Black Friday will have been about going the distance and winning on points. And that’s going to be margin points.

Black Friday is about big discounts and even the most premium brands were in on the action to win a share of that shopper spend. This year it has been very clear that it is not about Friday, but a whole week of shopping hype, with more deals every day. TV ads, social media and a spamtastic amount of email told us all that it was time to buy. 2015 will see Black Friday firmly established in the British psyche as the official start of the Christmas shopping spree.

The import from the US always falls on the Friday after Thanksgiving, when most Americans take a day off. But I’ve struggled to rationalise the reasons for its existence in the UK, when no one is taking holiday and at a time of year when people have traditionally been happy to spend at full price.

Perhaps the US hype is what made its UK counterpart the success it is becoming. ASDA, which played a significant role in bringing it across the pond, was heavily criticised for allowing cameras into its stores last year to capture the shopping frenzy. This year it scaled back its involvement and, like many other retailers, increased its security. So what made Black Friday infamous – a good fight for a bargain – was missing this time around.

I’m certainly not condoning any fisticuffs in the aisles, but inspiring competition amongst shoppers with huge WIGIG (When It’s Gone, It’s Gone) offers is now a mainstay of retail promotion. This year the only knock-out blows involved retailer websites going down as shoppers punched into their keyboards looking for bargains.

The John Lewis site crashed mid-afternoon and Argos shoppers had to endure page load times of more than 10 seconds. Meanwhile, Amazon didn’t pull any punches with 0.5 second page load times and reported that more than 6 million items were ordered on its site, making Black Friday 2015 its biggest-ever sales day in the UK.

However, if the stores I visited are anything to go by, Black Friday was a bit of a non-event on the high street. It could have been any other Friday morning and I suspect all the action was on-line. Certainly my email and social feeds were full of offers, social media mentions of Black Friday rose 20 per cent over last year, according to data from Salesforce Marketing Cloud, and there were interesting Instagram campaigns from Game, JDSports, Liz Earle, New Look, and Victoria’s Secret among others.

I suspect that the final Black Friday sales stats will reveal Black Friday in the UK to not only be the biggest ever, but also the most digital. The big issue though, is how much profit retailers and brands will have made. Despite the critics, the “Buy Nothing Day” campaign included, 2015 has seen Black Friday firmly establish itself in the UK due to the strength of online sales. It is now the heavyweight champion that all other retail events will be measured by.

 

Does Black Friday signal dark days ahead for brands and retailers?

This article was first published by the Guardian on 18th November 2015

Things were much simpler growing up. I still have vivid recollections of the media coverage of the big shopping events: turning on the Oxford Street Christmas lights to herald the start of the festive shopping period; and the people camping outside Harrods the night before the sale.

After the seasonal bargains were snapped up, we experienced a sustained period of normality. There wasn’t much else to distract shoppers from their regular habits and the retail promotional calendar reflected the lives we lived.

Since then we’ve seen the huge commercialisation of key calendar dates. All Hallows’ Eve is now the full-on American Halloween experience and running alongside the more child-centric activities, there’s the increasing popular Día de Muertos, known more commonly as Mexico’s Day of the Dead.

Mothering Sunday, Father’s Day and Valentine’s Day are all key dates in the retail calendar. Singles’ Day in China, originally created by Alibaba for those without valentines, is now the biggest shopping event in the world. This year’s event marked the first time Chinese shoppers could buy global brands and sales topped $14.3bn, a 60% increase on 2014, making it bigger than Black Friday and Cyber Monday combined.

The challenge, now that hardly a month goes by without a big retail event, pre-season, mid-season or end of season sale, is that we’re training shoppers never to pay full price.

Events such as Black Friday involve deep discounts and often include products that are at the premium or luxury end of the market and would never usually be available at less than full price. The cost in margin and brand values is not sustainable, which means that brands and retailers must now reconsider this approach.

In the UK, Asda has done just that and will shun the Black Friday sales this year. My favourite is US outdoor retailer REI’s approach. Its #OptOutside initiative will mean that it closes on Black Friday – the idea being that the American public will be inspired to get outdoors and not go shopping on the day after Thanksgiving.

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There are routes that provide brands and retailers with the opportunity to create value rather than destroy it. Dynamic pricing – big in the travel sector and used by online retailers such as Amazon and Net-a-Porter – will become a larger feature in retail as brands and retailers work towards offering price flexibility based on day part or by targeting offers to distinct groups of people via email campaigns and vouchers for mobile devices.

As the level of personalisation in retail increases, personalised pricing and data-driven offers will create a more rewarding and targeted experience than Black Friday.

Collaborations between brands, or brands and retailers, provide another way of creating interest without recourse to discounting. I call this “the power of X”. However, as was the case of the chaos around the Balmain x H&M launch, these collaborations now carry the risk that the real value isn’t created for the retailer and brands involved, but for profiteering eBay traders.

But it’s still possible to create product ranges based around new and exclusive features that provide resistance to the discounting trend. For example, discounting became such an issue in the electronics sector that when Samsung partnered with designers Ronan and Erwan Bouroullec to launch Serif TV, it decided only to sell them through its own e-commerce platform and in high-end furniture stores.

Serif provides a good example of where brands are working hard to circumvent traditional retail models. Clearly things have changed since my childhood and I’m not suggesting we go back to those times. But retailers and brands need to wean themselves off the addiction of Black Friday discounts and focus instead on reframing value for their customers.

Sainsbury’s results may sound disappointing but the brand is doing all the right things

First published in Marketing on 11th November 2015

These are obviously testing times for the supermarket sector. Sainsbury’s has just announced a fall in both profits, by 17.9%, and like-for-like sales, down by 1.6 per cent, for the six months to 26 September.

Mike Coupe, the Sainsbury’s chief executive, said that “the grocery retail marketplace remains challenging” and cited investment in food price reductions and broader structural issues, such as food deflation, for the decline.

Analysts were expecting the falls to be steeper and my initial reaction is that I’m actually pleasantly surprised at the results. Yes, profits are down but if you look at things closely Sainsbury’s has made a £150 million in price and still delivered a 6 per cent increase in total income. It indicated that its prices “remain as competitive as ever” and claimed that price satisfaction scores have increased this year.

The problem for Sainsbury’s is that it is facing similar challenges to its rivals. Dave Lewis, the chief executive of Tesco, said in his recent CBI Conference speech that his sector faces three big challenges: the growth of digital, the growth in the number of retailers in the grocery sector and in convenience shopping, and structural costs increasing at a time of low profitability. As a result of these challenges, profit margins in the sector have shrunk from 5 per cent to 2 per cent in just five years.

Significantly, Sainsbury’s is facing the prospect of digital transformation. A challenge facing almost every business of scale anywhere in the world, it has to look at how new technologies can remove cost from its operations and how digital will enable it to connect better with their customers, who’s shopping habits are changing. It’s actually doing a pretty decent job on this and its online sales are up slightly.

And like many other big names it is in danger of being “caught in the middle”, it lost out years ago on price to Asda and Tesco, but maintained its brand values and is still a great place to shop. But shoppers are chasing value (price x quality) and are trading up, to Waitrose, and down, to Aldi and Lidl. Sainsbury’s risks being bounced out and that’s why the investment in price, making fresh produce more affordable for its customers, is significant and something I applaud.

In brand terms, Sainsbury’s is doing all the right things. The problems for the grocery retailer are not ones created by their brand positioning or advertising. Sainsbury’s is doing some innovative things with its marketing, the latest being its Halloween campaign, complete with the “Spooky Speaker” voice changing app, which provided some neat digital ideas.

There’s nothing wrong with the Sainsbury’s brand, it has a good heritage and as it prepares to launch its Christmas campaign and readies itself for a busy seasonal period, I’d say that Sainsbury’s is going about things the right way and its investment in price will pay dividends.