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.

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.

Has H&M lost control of its fashion collaborations?

This article was first published by Marketing on 6th November 2015

I’m a big fan of H&M’s collaborations with the famous designers of the world, writes Simon Hathaway, global chief retail officer at Cheil.

They are collaborations that result in one-off clothing ranges each year that bring high fashion to the high street.H&M’s initiative is a brilliant example of what I term “The Power of X, because collaboration between brands, or between retailers and brands, on new product lines has become one of the most powerful ideas today in retail.

The high street retailer was one of the first in fashion to understand the power of collaboration, its designer partnerships dating back to 2004 (when Karl Lagerfeld created his limited edition range for H&M).

But the scenes of chaos that met the launch of the Balmain x H&M limited edition range yesterday threaten to undermine much of its good work.

H&M hit trouble after the doors of its Regent Street store opened.

The police were called following reports of scuffles between people desperate to get their hands on some affordable Balmain gear. H&M was forced to close the store while its website also crashed due to high demand for the new range.

Enthusiasm and an element of chaos is not unusual at these H&M launches but this time around the situation seemed more extreme.

There’s no doubt that Balmain x H&M is a strong brand collaboration that drives value for H&M and also for French fashion label Balmain.

It’s a relatively small but desirable fashion house when compared to the Versaces of this world, getting a presence on the high street and free advertising in return for its designs.

As expected with this type of launch, where PR and generating word of mouth is an important factor, there’s an element of deliberate scarcity at play from H&M here, heavily advertising and publicising the product range then under-stocking it to create a buzz.

But I’d say the scenes outside H&M tip over from cleverly engineered scarcity into not understanding the amount of stock required to fulfil even basic levels of initial demand.

There’s a fine line between success and failure in these things: it’s great PR when people are camping outside the store the night before, but I’d argue your stock control is out of kilter when you’re forced to close the store with unhappy shoppers outside.

I wonder on this occasion if H&M totally understood the demand for the products.

It’s not as if the clues weren’t there. Balmain designer Olivier Rousteing has 1.6m Instagram followers and his friendship with the Kardashians and Kendall Jenner (pictured above), who have modelled his clothes, has made the Balmain brand highly desirable among high street fashionistas.

There is another significant concern for me in the way the stock management has been handled.

I’d suggest that a range like this fails to benefit retailer, brand and shoppers when it begins to look like a profiteering opportunity for the kings and queens of eBay rather than providing a genuinely exciting product experience for the dedicated followers of fashion.

When a H&M item is going for £650 on eBay within hours you have to start questioning who is really profiting here.

The situation is not irredeemable for H&M. If this happens consistently, though, then people will lose interest.

But it’s now all about resetting things for the next promotion. To focus on better planning, stock availability and making sure the web servers are up to the task. That way H&M will make money and boost its brand rather than provoking anger on the streets.

How many retailers will it take to change a lightbulb?

This article was was first published in Marketing Magazine on 11th June 2015 

“To beacon or not to beacon?” is a question on the lips of many retailers and brand owners.

Talk of how beacons, small Bluetooth-enabled transmitters in stores, will revolutionise proximity-based targeting of promotions has been in the air for at least two years now.

We’ve even seen some action. Tesco began a beacon trial in April 2014 at its Chelmsford store, integrating the trial with its MyStore app. A month later, Waitrose started a similar test at its concept store in Swindon. When Asda and John Lewis launched tentative trials towards the end of 2014, it seemed we were on the cusp of something big. Unless, of course, as was the case with QR and Foursquare, technology superseded instore beacons before they hit critical mass.

Now that just might be happening. In France, supermarket giant Carrefour has invested in an alternative approach. While beacons use Bluetooth LE (low energy) to determine the distance of a shopper (but not their precise location), Philips has developed an LED lighting system that transmits promotional codes to smartphones via light waves.

The Carrefour trial in a Lille store uses this Philips system and functions in a similar way to GPS-based maps. Each LED transmits a distinct location code, which can be picked up by a shopper with a compatible app using their smartphone camera. From this, special offers and location data are sent to the shopper, enabling them to search and locate their preferred promotions or discover promotions and products around them.

It’s a technology that Cheil Worldwide has experience of using, building a similar LED system to support emart’s Sales Navigation work in Korea. The goal was to provide promotions and product location detail direct to smart phones and the technology enabled precision delivery of this promise.

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The advantages, however, are offset by the relative high cost of the LED approach. The Carrefour/Philips approach involves replacing a store’s entire lighting system with the LED alternative. Beacons are relatively low cost and, therefore, could provide a good option for trial for smaller stores or those just testing the water.

Nonetheless, the LED systems offer a viable alternative because they provide a one-off, long-term solution. Even should the current iteration of proximity-based targeting fail to take-off, at least stores that have fitted the LEDs will be left with an entirely serviceable lighting system rather than a bunch of obsolete beacons attached to shelving.

However, don’t get blinded by the sake of technology for technology’s sake. The big questions brands should be asking don’t revolve around whether “to beacon or not to beacon”. Or even “to beacon or to LED”. What’s essential is to consider what you are doing with new technologies to solve customer problems and to enrich their overall experience.

When deciding on whether to invest in new ways of delivering in-store promotions, I’ve learnt that it’s important for retailers and brands to ask whether this activity will enrich the shopper experience, deliver convenience and value.

Don’t forget that people are on a mission when they shop. The best marketers understand that mindset, alongside the retail context, and so remove barriers to purchase. Most retail environments are already jam-packed with price messaging, discounts, and promotion. The last thing that shoppers want is more clutter, they demand clarity and simplicity.

This technology has the ability to deliver all of that and more. The opportunity to deliver personalized experience and dynamic value is there and with that shoppers will adopt this new technology because it will be contextually integrated into their buying habits enriching their retail experience, delivering convenience and value.

To make that happen I find myself asking a new question… how many retailers does it take to change a light bulb?

How subscription models could revolutionise retail

This article was first published in Retail Week on the 13th May 2015

“I wish someone would invent something just like Spotify but a bit more expensive,” said Alex Kapranos, the frontman of rock band Franz Ferdinand recently on Twitter. Kapranos was reflecting, perhaps, on Spotify’s payment structure that sees rights holders receive a maximum of $0.0084 per stream.

Other musicians have also raised objections to their share of the spoils from Spotify’s mixed advertising and subscription-based model. Last year Taylor Swift announced her decision to remove her music from Spotify.

As subscription models extend beyond music to other categories such complaints could become common from stores and the brands stocked in them. The evolution of subscription is likely to raise fundamental questions including “what is a retailer?” and “how do people shop?” as the ‘internet of things’, connected technology in the household and beyond, transforms shopping.

Spotify and equivalents such as Deezer have already placed great pressure on definitions of retail in a category where traditional ‘bricks and mortar’ retailers such as HMV have already had to face the disruptional industry challenges created by downloads, iTunes and piracy. Other sectors are seeing subscription-based services cutting out the retailer to go direct. Subscribers to the Dollar Shave Club in the US get all they need to shave delivered each month. Meanwhile HP’s ‘Instant Ink’ service uses technology in connected printers to arrange delivery of ink direct to people’s doors when they are running low.

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As IOT (Internet of Things) becomes a reality, such services are likely to move to a more sophisticated subscription model that doesn’t necessarily include the supermarket or local retailer. Home and appliances will become truly connected and automation will lead to category management based on subscription.

There’s something of a ‘back to the future’ element operating because, decades ago, most UK homes received their daily milk via subscription in the form of the milkman. However, the issue for retailers and brand owners with the new model is that tech companies, appliance manufacturers and online platforms are blurring traditional boundaries.

Retailers and brands have already been disrupted by the rise of Aldi and Lidl showing they don’t need famous brands and extensive shopper marketing campaigns to grow. Now retailers and brand owners like Procter & Gamble and Unilever should fear an internet of things that manages our shopping for us.Dash-Button

P&G has reacted and Gillette now offers shaving subscription from its website in partnership with Amazon. P&G was also quick to jump in with Amazon Dash and its branded buttons that enables a consumer to order a product when it runs out automatically through Amazon Prime.

The likes of Amazon Dash might look good for brand owners now – providing another route direct to consumers in the home – but no-one worried about what brand the milkman delivered. Convenience was everything, so what can we do when full machine to machine automation of shopping begins to put brands and traditional retailers at risk?

Those retailers with data and logistical muscle will evolve into subscription as Amazon is already doing and we will see business models akin to the mobile phone category, with monthly subscriptions that bundle durable device and consumable. Ikea’s latest prediction is that we won’t have fridges by 2025 and our food will be delivered fresh each day by Amazon’s drones. But 10 years is a lifetime for technology companies and retailers, so by then our fridges might just be so smart that they’ve become convenience stores in our connected homes.

Forget Charlotte Street and look to the High Street – What politics can learn from retail

First published in Brand Republic on May 6th 2015

As we pull into the last few days of the 2015 General Election, I’m reminded of the main political parties’ lack of finesse when it comes to campaign communications. They only get to flex their marketing muscles every five years, so it’s not an area of expertise and their reflex action is to reach for a big blunt message and hammer it home repeatedly in traditional channels.

This time the approach is further exposed by voter cynicism and the rise of social media. So rather than looking to Charlotte Street for inspiration, maybe politicians should focus on the techniques of the High Street. It’s not as far fetched as you might think. There are plenty of similarities where retail techniques have worked in politics.

Politics is all about connecting emotionally with voters, which is something that the two main parties have failed singularly to do as their mid-30 per cent poll ratings show. The same has happened in retail where immovable monoliths like Tesco and Sainsbury have been outflanked by new consumer champions like Aldi and Lidl, who adopted a distinct tone of voice that spoke directly to the concerns of people.

Just as consumers have responded to this approach, so Nigel Farage and Boris Johnson have used humour and ‘telling it like it is’ to refresh the parts that other politicians can’t reach. Nobody is saying that you can laugh your way to electoral success, but a joshing aside disarms and opens doors to help your poke your real message through.

An area where retail really can teach politicians a thing or two is its attitude to ‘new’. It’s the most powerful word in marketing and supermarkets and brands apply it liberally. Yet in political marketing, the emphasis can be on defending the core vote, so ‘new’ is sparingly used. It’s worth remembering that one of the most potent political forces of the past two decades was ‘New’ Labour, which won three majorities before its sheen started to come off.

Reacting in real time is another area that retailers have taken up as their own. Aldi’s reactive adverts that poked fun at Morrison’s and Sainsbury’s were two great examples of how swift action can leave competitors leaden footed. In some ways political operators are starting to notice this too. Look at the Tories attack ads with Ed Miliband as a puppet controlled by Nicola Sturgeon.

In a tight election with little room for elaborate promises, making the most of the smallest differences is a strength. With price wars entrenched, stores thank shoppers on their till receipts reminding them how much they’ve saved by shopping with them. Could politicians do something similar to show how their policies would make a difference?

There is an ongoing trend in the retail sector of decentralising powers to local stores. You need only look at local supermarket stores on Facebook, or the fact that GAME hands over all Twitter power to their store managers. Local engagement gets people’s attention because it shows you understand what matters to them. This is the complete opposite to how political parties work where the powerful central hand makes local communications weak.

If humble retailers teaching our political masters a few lessons seems a bit far-fetched, it is worth remembering that one of our most successful Prime Ministers was a grocer’s daughter. Retail is detail which means leaving no stone unturned in the search for advantage. That’s something that Mrs T understood instinctively.

How the Super Bowl turns views into purchases

First published in Retail Week 11th February 2015

As well as being the first major US sporting event of the year, the Super Bowl is a red letter day in the US retail calendar and is estimated to be worth $14.3bn (£9.4bn).

It’s a big day for advertising too – arguably the biggest in the world.

Last year’s ad spend topped $330m (£216m). That’s just over a dollar for every US citizen.

But what relevance does it have for UK retailers? American football may be a minority interest here but the issues the Super Bowl exposes are pertinent this side of the pond.

As retailers know, turning viewers into buyers is a challenge.

Last year H&M tried to close the gap by airing the first ‘shoppable’ TV commercial using Delivery Agent’s ShopTV platform to sell David Beckham’s underwear range.

This year Katy Perry’s half-time show was shoppable. Viewers were able to purchase exclusive products promoted by Universal Music and half-time show sponsor Pepsi. Meanwhile, Twitter’s ‘buy now’ button enabled tweets to be shopped using Visa Checkout.

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It is further proof that the traditional boundaries of brand communications and retail are becoming blurred.

Retailers, especially fashion retailers such as Asos, are already pointing the way to a future when everything that can be shoppable will be shoppable.

That will create a new dimension to what it means to be truly omnichannel.

But the battle for the Super Bowl dollar does not take place on TV – it is won or lost on the shopfloor.

The elaborate Super Bowl-themed displays and promotions in US big-box grocers dwarf anything you would see in a UK store.

While viewers see Super Bowl advertising as part of the entertainment, for retailers ad spend and money spent on property rights are all wrapped up in supplier negotiation for off-shelf display.

AB Inbev, which owns Budweiser, set up 150,000 displays in advance of the event, supported by ad spend and sponsorship of the NFL.

That will be very familiar to retailers and brand owners in the UK,where we are also seeing money from traditional advertising budgets move to digital media and shopper marketing.

Increasingly that shopper marketing spend is digital, reflecting changing shopping habits. Consumers are as likely to find inspiration through Pinterest as through traditional media.

Many retailers understand this and are changing how they approach creative work. For example, Walmart claims to vet every creative idea on how well it will play out in social media.

The relationship between retailers and brand owners is constantly evolving and has always been a negotiation, but the news last week that Tesco is to face investigation for breach of the Groceries Supply Code of Practice highlights how tense that has become.

As we see changes in shopping behaviour brought about by the rise of shoppable media and consumer empowerment through mobile technology, a genuine shift to partnership between brands and retailers will be required.