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[advancingretail]

It’s All About Relationships

My family’s store started as a summer farmstand by my great-grandmother in 1934. I can remember as a kid getting up early on Saturday mornings to go to the regional market with my father, looking to buy fresh fruits and vegetables for sale that day, supplementing what we grew on our farm. My favorite part was swinging by a local bakery to pick up donuts and baked goods to sell. Nothing like a donut still warm from the fryer, just dripping with glaze. What I also remember is how my grandfather seemed to know everyone. He knew Alice, and that she shopped on Wednesdays and loved fresh, local strawberries still warm from the field. He knew Ben, and that he liked his strip steaks cut extra thick. And even Mrs. Johnson and her dog Buck, a massive great dane, who loved getting a bone as a special treat from our meat department. I remember we shopped for Mrs. Gardner, delivering her groceries on our way home. And this was years before home delivery was a thing! That was personalized retail. The customer was the most important part of the business. And that was the constant refrain over the ensuing years. ‘The customer is the most important part of our business’ is the pablum I, and many others in the industry, was raised on. Except something happened between then and now. Stores became bigger and busier. Product assortment exploded. Competition developed from every quarter. And food became available anywhere and everywhere. As the industry grew larger we began to lose focus on the customer. How we made money - or at least how we thought we made money - began to shift. Merchandising — deciding what products to put on the shelves and which products to promote  —became an exalted position in our organizations. The increasing focus on products grew hand in hand with a growing focus on obtaining marketing funds from brand manufacturers. One could easily make the case that it was because of marketing funds that products grew to take center stage. Today, many major retailers would not be profitable were it not for those subsidies that support sale prices to the shopper, help offset advertising costs, bolster category margins, and enrich the bottom line. In a very real sense, brand marketing funds have insidiously shifted retailer focus away from the customer to a dependency on products. Retail became product-driven.   But let’s step back for a moment from retail to examine what’s happening in the world around us. As we saw earlier, 3D printing and augmented and virtual reality are transforming the world of mass produced goods. This signals a move from the industrial revolution to a world of customized products and services. The birth of the internet and the world wide web set the stage for the digitization of commerce, removing the personalization penalty for marketers who had to pay a high price for marketing differentiation in the physical world. In short, technology has fundamentally changed the world of one (product or service) to many (consumers) to a world of many (customized, personalized products or services) to one (shopper). Beyond the world wide web, perhaps no technology has fostered consumer expectation of relevancy more than the smartphone. Mobile has brought with it a fast-growing expectation of contextual relevancy, the shopper knowing that merchants have access to technologies providing realtime location in a store or mall. Between the mobile browser and the countless apps available today, each of us has access to the world from the device in our hand, and increasingly that world is tailored to each of us individually. And that brings us back to retail. In the midst of this Age of ‘i’, the retail industry remains largely on the sidelines. Weekly ads, printed and distributed with the newspaper, filled with mass promotions, are simply out of sync with what our customers want today. Sure, some industry marketing vehicles have gone digital, but a digital version of the mass ad is spam and syndicated coupons are only relevant if I go searching for them. But it doesn’t have to be that way. We as retailers can reclaim our customer heritage. We can use new technologies and capabilities to recreate those personal relationships of yesterday and become truly relevant to each of our individual customers today. And that’s what Retail in the Age of ‘i’ is all about. It is about fulfilling the destiny of retail by regaining a focus on the customer. It is about building relationships with each and every one of our individual customers. And it is about returning products to their rightful role in service to each of our customers.

Gary Hawkins, Founder and CEO of CART                                                Leading customer-focused retail innovation                                      #advancingretail

[advancingretail]

Understanding the Age of ‘i’

Look about and you see that the world is becoming increasingly tailored to you, your interests, and your needs. We have come to take for granted the personalization and relevancy in the digital world, no longer thinking about our customized news feeds. We give no thought to the complexity of systems and algorithms driving the process of sorting through nearly 600 million products sold by Amazon, or the thousands of movies available on Netflix. The work behind the scenes provides us with relevant recommendations. We simply see the suggestions put in front of us and, more often than not, make a purchase.

AI Drives Customization

The recent growth of artificial intelligence is powering yet more customization in the digital world. It is AI powering the voice-enabled digital assistants like Amazon’s Alexa, Google’s Assistant, and Apple’s Siri. Amazon is intent on making Alexa ubiquitous in our lives, available not just in our homes but in our cars, offices, libraries, and even hospitals. The digital world is ours for the asking, any time, any place.

Forgot something for the dinner party tonight? Just ask Alexa to order it while you’re driving to work. And Alexa is getting smarter. Amazon recently received a patent tied to Alexa’s ability to recognize a user’s physical and emotional states and respond to how you’re feeling. Alexa can now tell if you’re suffering from a cold and suggest ordering chicken soup from Whole Foods to be delivered in the next couple hours.

If you want to shop by voice, you’re not limited to Amazon; Kroger recently joined Walmart, Walgreens, and other retailers providing consumers the ability to use Google Assistant to place online orders simply by speaking. Growing numbers of retail merchants are integrating to the predominant digital assistants, those provided by Amazon, Google, and Apple.

It is AI-powered voice recognition that is enabling a new world of services. Woebot is your virtual therapist available 24x7 through your smartphone. No need for a couch, no meds, and no dredging up childhood memories. Have a problem? Feeling sad or depressed? Just ask Woebot.

And if exercising is better than going to a therapist, Vi is at your service. Vi is your virtual personal trainer, accessing your workout data from your smartwatch, smartphone, and IoT-enabled equipment in the gym to provide realtime guidance — run faster! lift more! — communicated to you through your wireless headset.

Increasingly, the personalization found in the digital domain is manifesting in our physical world. 3D printing technology is helping drive this as shoes and clothing are created to our own individual specifications. Similar technology is being used to ‘print’ body parts and even organs. Nike’s Configurator enables shoppers to customize their shoes, selecting colors and even materials. BareMinerals Made-2-Fit’s app leverages the iPhone’s camera and processing power to enable a user to scan their skin and get a custom makeup foundation delivered to their home with their name on the bottle, backed by a 100% Shade Match Guarantee.  

And when the makeup is delivered to your home, you’ll know it as you lie on the beach, receiving a notification on your phone. Opening the app, you can see and communicate with the driver through your smart doorbell. Voice-powered digital assistants connected to IoT devices enable you to customize your home to your desires simply by asking. While driving home you can ask Alexa to turn on the lights, warm the oven, and put some music on to greet you upon arrival. A growing number of smart appliances are connected to Amazon’s automated replenishment service so you no longer have to be bothered to remember to reorder laundry detergent; your smart home can take care of that for you.

Kroger is working to make the brick and mortar store personalized to you. The company is deploying a new digital shelf display; one of its features will be lighting up relevant products for you as you walk down the aisle. Kroger is not only calling out relevant products as you shop but also personalizing the price to entice you to buy.

Online shoppers are increasingly able to tailor the delivery of products. You can have products delivered to your home, your office, the trunk of your car, available for pickup at the store on your way home, and more. You can reserve clothing online and find it waiting for you in the store’s fitting room when you arrive. With Amazon’s Key service you can even have the delivery person put your groceries in the refrigerator at home while you’re at work. The world is increasingly your way.

And what is perhaps the ultimate in personalization, medicine and healthcare are rapidly becoming tailored to the individual, using the person’s genome and other bio-markers. The use of technology to gather realtime health data from wearables, combined with a person’s genomic blueprint, can help doctors assess an individual’s disease susceptibility and develop personalized treatment plans.

This movement is already underway. The Isala Hospital in the Netherlands is using 3D food printing to customize meals to ensure that each person receives the nutrition needed to get them better faster.

Retailers Slow to Adapt

So we have a world increasingly customized to each individual, not only in the digital world, but increasingly in the physical world. And yet much of the retail industry goes to market and operates largely as it did fifty years ago with weekly ads filled with mass promotion, the same products, services, and prices for all.

At the core of this tumult is technology-fueled innovation. Retail executives are used to brick and mortar competitors of all types, from low cost, limited assortment stores like Aldi, Save-A-Lot, and Family Dollar, to more highbrow operators like Wegmans and Whole Foods. What retail executives are not accustomed to is competing with some of the world’s largest and most powerful technology companies and a plethora of nimble, young startups gunning to transform a lethargic industry. This is an entirely new playing field where disruption is the new normal.

Retail executives are poorly prepared for this new world, accustomed to a slow-moving industry and a time when retailers dictated industry change and innovation. Today, retail companies are adrift in a world of increasingly fast change across the supply chain as consumers rapidly adopt new technologies and new competitors spring forth at a bewildering pace.

Too many retailers are dealing with the symptoms of innovation rather than addressing the underlying forces. And this approach is dangerous, leading executives to make short-term tactical decisions without benefit of understanding the larger battle being waged.

Consumed with the nuts and bolts tactical execution required to simply stay alive in such an intense, high volume, low margin business, retail leaders are challenged to step back and understand the vast forces at work.

And yet they must.

Welcome to the Age of ‘i’.

This is an excerpt from Retail in the Age of ‘I’. Available on Amazon.com

Gary Hawkins, Founder and CEO of CART. He can be reached at [email protected].                                                              Leading customer-focused retail innovation                               

[advancingretail]

Reclaiming Retail’s Customer Heritage

Today will be the slowest pace of change in your lifetime. Consider that for a moment. The ubiquitous iPhone was introduced just a decade ago, and today we take the app store and all the capabilities we have in our hand for granted. It seems like only yesterday that robots were the realm of science fiction, yet today we find them roaming store aisles, autonomous pods delivering groceries, and automated warehouses fast becoming the norm. Even the production of food itself is being transformed as meat is grown in factories and greens are grown in trailers alongside the store.

The fast moving consumer goods retail industry is in chaos and the shift online is only the tip of the iceberg as disruption sweeps across every part of the supply chain. And this disruption is only just getting started. Technologies are converging, triggering even greater growth in world-changing capabilities. And even industries are converging as new technologies, consumer interest, and economic forces come into play.

Many retailers are being whipsawed by the shift online and the explosive growth of innovation, not knowing where to focus next. Amidst this chaos, some retailers are trying to do everything while others are overwhelmed to the point of paralysis. And all retailers are moving too slowly, often not understanding the underlying forces at work driving this new world.

Five year plans, a staple of management, are obsolete before the save button is clicked as new capabilities, new competitors, and new consumer demands arise almost daily. To bring order to the chaos retailers need to focus on the one constant that is ever-present: The customer.

We have entered the Age of ‘i’. This is a time of quickening innovation; expanding intelligence powered by artificial intelligence feeding off big data, and immersive experiences provided by augmented and virtual reality, with all of it increasingly focused on making the world all about each individual person.

Retail in the Age of ‘i’ reclaims the industry’s heritage of customer focus growing from the days of the corner store. Today, retailers have the ability to leverage vast new technologies to once again focus on the individual customer, partnering with each customer as we journey forward.

And beyond technology, retailers have an opportunity to inject humanness into a shopping experience that is at risk of becoming an automated, people-free process of replenishment. The retail industry is rapidly approaching a crossroads. One path is leading to an efficient, cost-effective, yet sterile, shopping environment ruled by automation. The other is positioning technology in service to customers, taking advantage of automation to redirect human associates to engage with shoppers in either the physical or virtual environments, and fostering the personal relationships between the merchant and the customer that were a part of life decades ago.  

“Throughout history, human beings have inherently been social creatures. For millions of years we’ve genetically evolved to survive and thrive through the “togetherness” of social groups and gatherings. Today, modern communication and technology has forever changed the landscape of our human interaction, and as such, we often decline without this type of meaningful personal contact. Today’s highly individualistic, digitally remote, and material driven culture is now challenging all of this, as we turn to science to unlock the mysteries of human connection and wellness in a digitally connected world.”

I believe there is business opportunity in doing the right thing for people and our communities. That people today, staring into their digital screens for hours at a time, interacting via Facebook or Twitter, and being drawn to every new shiny piece of tech, actually covet human connectedness. Retailers, especially food retailers, are in a unique position to deliver this powerful human experience given that people still need to eat daily and, as we’ll see later in the book, the growing connectedness between food and health and wellbeing.

From a business perspective, every customer interaction, whether in the digital realm or the physical store, is vital to acquiring, growing, and retaining customers. Focusing on each individual customer forces retailers to think beyond generalizations - investing in a health and wellness program is good for my shoppers - to focus on leveraging technology to serve the individual; ‘how can I help Sasha improve her life by providing products and services contextually relevant to her?’. This involves not looking at Sasha as representative of a cohort, but - literally - building a relationship with Sasha as an individual.

Not only is the customer the only constant in today’s world of non-stop disruption, but customers are expecting, even demanding, that the world be made relevant to them. And why not? Consumers take for granted the personalization and relevancy in the digital world, and expect the same from brick & mortar retailers.

An excerpt from Retail in the Age of ‘I’. Available on Amazon.com

Gary Hawkins, Founder and CEO of CART                                                

[advancingretail]

Measuring Innovation

You read every day about the pace of innovation increasing, but how do you actually quantify or measure it? One way is to look at patent filings. And that activity tells a very clear story.

As of March, 2018, Amazon held 7,717 US patents, obtaining 1,963 of them in 2017 alone. Walmart, the most patent-prolific traditional retailer, has 349 patents. That’s nearly 38 patents per week for Amazon in 2017; and it’s a fair bet that the company has not slowed down in the time since. Compare that to Walmart’s 349 patents, which even if all were issued in one year, would have a pace of less than 7 patents per week. At that rate, Amazon is nearly six times more innovative than Walmart if measured by issued patents.

Amazon’s patent filings cover the spectrum, from AR goggles to make order fulfillment more efficient, to more order-picking robots, a realtime accent translation app, to voice-driven drones. In the company’s 2018 Q3 filings, Amazon released 42 major product or service offerings… in one quarter! How many major product or service announcements does the typical traditional retailer make in a year? A fraction of that.

And patents don’t tell the full story. In 2017 Amazon spent $22.6 billion in research and development (up 41% from the prior year). That was more than any other U.S. company, beating Microsoft, Intel, Facebook, and even Apple.

This is what traditional brick & mortar retailers are up against.

The good news? There are countless solution providers, some established, many of them startups, that are helping arm traditional retailers in this innovation arms race. Here again, though, is a challenge for retailers: How do you keep pace with this explosive rate of tech-fueled new capabilities? And just being aware is not enough. Retailers have to actually test, pilot, and deploy new capabilities to keep up with Amazon and Walmart.

We suggest that retailers follow a five step path to getting - and staying - in the innovation game.

The first is understanding your capability gaps. Historically, retailers would focus on competing retailers and their capabilities to identify what to implement next. Today, that competitive set includes Amazon and other tech companies encroaching on the grocery space. Here’s the problem: If you as a retailer are looking at what the competition is doing and using that to guide their innovation focus, you’re already behind. In a world of ever-increasing change you need to look ahead, you need to skate to where the puck is going to be, not where it is.

Identifying the capability gaps between where you are today and where you need to be creates the foundation for a roadmap and prioritizing what capabilities you need to put in place.

With a roadmap in hand, attention can turn to identifying potential solution providers. This is where we strongly urge retailers to put in place a formal innovation process for gaining awareness of new technologies. CART reviews an estimated 1,000 new solutions flowing into the retail industry each year. CART has partnered with GMDC’s Retail Tomorrow group to create an Innovation Program for larger retailers, wholesalers, and brand manufacturers based around curating new capabilities aligned with the retailer’s needs.

Gaining awareness of new tech though isn’t enough. Retail industry companies need to develop a culture of innovation, usually beginning with the executive team and then flowing across the organization. It is an organization’s resistance to change and to new ways of doing things that is oftentimes a larger impediment than actual resources to test and deploy new capabilities.

And lastly, even an innovation culture is not enough to succeed. Increasingly, the Agile philosophy that is used in software development is being applied across organizations. This methodology breaks large projects down into smaller bites, and uses work ‘sprints’ to get things done along with frequent communication and continuous reassessment. Everyone in the retail industry needs to move faster.

Given the importance to retail, innovation must be managed in a more structured process. For retailers to survive, let alone thrive, understanding of where you’re going and how you are going to get there is no longer optional. Nor is reacting to the competition. Retailers must be proactive in how they view and manage innovation, and there is no time to waste.

Gary Hawkins is the founder and CEO of the Center for Advancing Retail & Technology (CART). He can be reached at [email protected].

[advancingretail]

Retail@Risk Innovation Overload Industry Disruption in Realtime                                                                        Gary Hawkins at Georgetown University, April 2017

The growing gap between new innovation and retailer adoption of new technology represents the single largest threat to retailers today...

The exponential growth of computer processing power is fueling an explosion of innovation that is transforming the $1 trillion fast moving consumer goods retail industry in realtime. From conversational commerce to powerful new in-store analytics and from robotics in warehouses to lab-grown meat, disruptive change is occurring across the supply chain. This presentation was delivered to MBA students at Georgetown University’s McDonough School of Business with a goal of helping the students understand the breadth, scope, and complexity of FMCG retail and a view into the innovation flooding into the market. One of the key takeaways is helping understand the power of exponential growth and the speed at which change is happening.