Supply Chain, yo.

Hi. We're Vaco Supply Chain Solutions, a consulting firm that helps retailers and manufacturers get the most value and quickest ROI from their JDA, Red Prairie, and Oracle Retail applications. Unsurprisingly, we blog about retail, supply chain, and other equally exciting stuff.

[retailtouchpoints]

Why Supply Chain Visibility Is A Must For Today’s Retailers

By Jett McCandless, project44

As many as 90% of retail executives believe mastering logistics is a critical element in achieving success with today’s on-demand economy. They’re right.

Retail supply chains infused with multimodal visibility have an unrivaled competitive advantage. Supply chain visibility can no longer be considered a “nice to have” feature. It is essential to effectively serve today’s connected, informed consumer. Despite the tremendous value, supply chain visibility is still misunderstood. My goal is to clear up a few of those misunderstandings. Let’s take a closer look:

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[retailtouchpoints]

Retailers Can’t Shrink Their Way to Success Without Fixing the Fundamentals

By Tom Erskine, One Door

The growth of e-Commerce and shifting demographics are requiring every retailer to adapt. Store closings are often the response, but retailers can’t shrink their way to success. Nor can they invest only in e-Commerce silos in an attempt to copy successful online-only models.

Retailers must invest in differentiating their stores and fixing the fundamentals of the in-store experience. Done right, retailers will succeed by creating immersive, memorable in-store experiences that online cannot match.

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[businessinsider]

See which major restaurants serve Coke vs. Pepsi

[retailtouchpoints]

Money Can't Fix What's Broken At Sears Holdings

By Tim Parry, Managing Editor

The end is near, and I believe Q2 2017 will finally be the quarter when Sears Holdings files for bankruptcy and calls it quits. I’m not saying that solely because of its most-recent SEC filings, but also as someone who shops Kmart and Sears stores and e-Commerce sites.

I moved to a small town in Connecticut about a year and a half ago, and quickly became a Kmart shopper. It’s not something I envisioned in life: It’s just that I have two Kmarts conveniently located within about a 15-minute drive of my condo, and the nearest Walmart or Target is at least a half an hour away.

My new surroundings made me see the unwelcoming side of Sears Holdings.

As a reporter who has covered the retail industry for a long time, I’d seen what sort of technology strides Sears Holdings had made, particularly online. In fact, Sears topped Forrester Research’s 2015 Retail Omnichannel Functionality Benchmark of 20 leading retailers.

But as a shopper — one who had previously tested buy online/pick up in-store options for research purposes, but didn’t really check the stores out — it’s been painful to watch the demise of Kmart and Sears.

Seeing Is Disbelieving

There was a time, back in the 1980s, when Kmart was still the King of All Discount Stores. The stores were clean, well-lit places with the latest merchandise and friendly, happy associates waiting to give you a hand.

But when I shop my local Kmart stores now, I see:

An outdated décor and store designs that bring me back to the ‘70s;

Aisles of off-season clearance merchandise (including an aisle filled with one style of snow boots that didn’t sell in the Winter of 2015, either);

An electronics department filled with old-school MP3 players, phone cables and 35mm cameras;

Northwestern University t-shirts and Cincinnati Bengals gloves that seem to be out of place in New England;

POS systems and self-service scanners that could have used updating in 2010; and

Disengaged employees who either have no direction, or seem to be buying time until their store closes.

Where Are The Shoppers?

The bathrooms are clean though, but that’s basically because no one is shopping at Kmart stores: Kmart’s comp-store sales fell 9.3% in 2016. As a whole, Sears Holdings, to put it lightly, is hemorrhaging money. Since 2010, Sears Holdings has lost $10.4 billion.

Let that sink in. $10.4 billion.

Sears Holdings admitted last week it has “substantial doubt” it can stay in business, which shouldn’t come as a surprise to anyone. Instead, the retail community and Wall Street should be asking, “What took so long?”

Every quarter of this decade, business writers and analysts essentially have been writing Sears Holdings’ obituary. But there are three reasons the company has staved off bankruptcy for so long:

CEO Eddie Lampert’s deep pockets (He’s loaned Sears Holdings nearly $2 billion over the past two years);

The company sold off several of its retail investments; and

The iconic Craftsman brand was recently sold to Stanley Black & Decker for $900 million; and Sears also is looking to sell off the venerable DieHard and Kenmore brands.

But these are all finite resources, and Craftsman, DieHard and Kenmore all have higher customer engagement ratings than their parent company, according to research firm Brand Keys. Without these exclusive brands to purchase, the small group of loyal consumers who remain will have no reason to shop at Sears and Kmart stores.

Shop Your Way Loyalty Has Been Over-Emphasized

The Shop Your Way loyalty program, which has been Lampert’s pet project and the focus of every quarterly financial report since 2010, was supposed to be Sears Holdings’ savior. Ironically, it could be a significant reason for Sears Holdings’ downfall.

Instead of focusing on and fine-tuning digital properties for the iconic Sears and Kmart brands, Lampert gambled on having shoppers come in through the Shop Your Way web and mobile portals. The poorly-designed Shop Your Way digital assets are non-intuitive, and they do not feature modern-day search capabilities or filtering. To make matters worse, there is no reference to Kmart or Sears on the Shop Your Way site, giving it a bit of an identity crisis.    

Three-quarters of Sears Holdings’ revenue is driven by registered Shop Your Way members, but they are not frequent shoppers and spend approximately $300 a year. Lampert said his goal was for  those customers to spend 10 times more.

I hate to see people lose jobs, and I hate to see two big slices of Americana — Kmart and Sears — become a bunch of abandoned buildings. But there’s a lesson to be learned as well. If you’re going to do business in the 21st century, you need to make your stores engaging and inviting, you need a solid game plan for e-Commerce and mobile and you need to invest in technologies and strategies that tie your channels together.

[analyticsinretail]

A Fact File on the Internet of Things in Retail

Internet of things in retail is all set to make massive contributions in the years ahead. Here’s how retailers will look to make the best use of IoT in retail.

[businessinsider]

The largest company headquartered in each state

[retailtouchpoints]

3 Lessons From Rent The Runway’s New Futuristic Flagship

By Glenn Taylor, Senior Editor 

With its new flagship store location that opened in Manhattan on Dec. 6, fashion rental retailer Rent the Runway is the latest signal that the “store of the future” is here. With a “Dream Closet,” its own bar-like concierge and a personalized Style Studio, the 5,000-square-foot store is three times the size of any of the retailer’s existing stores and rotates the merchandise that appears on its floor daily.

Last Friday, Dec. 9, I had the opportunity to take a tour of the recently opened store to capture the experience firsthand. Given the constant struggle retailers face in building out omnichannel experiences, the Rent the Runway flagship offers three key lessons for brands seeking to further engage consumers:

Leverage full inventory visibility to extend store experience value;

Cater to on-the-go shoppers via mobile and open communication; and

Emphasize striking visuals within the store.

‘Dream Closet’ Extends In-Store Browsing Experience To Cloud

The beauty — and challenge — of the company’s target market is that the “Rent the Runway Girl” can be any woman, whether she’s a 70-year-old renting a dress for a wedding or a 22-year-old renting for a holiday party at her first job. The potential customer base is there for the taking, but it all hinges on creating a personalized, convenient experience that meets her needs at every step.

Enter the “Dream Closet,” an experience designed to serve as an extension of the shopper’s own closet. The experience includes four Samsung 32-inch endcap displays that highlight various clothing styles and show graphic formations for more than 200,000 fashion choices. The touch overlay on each screen provides users with the ability to check out a large amount of inventory that is not on display within the store.

“While it may look like there are 10 purple dresses, the reality is there are 10,000 purple dresses,” said Maureen Sullivan, President of the Core Fashion Business at Rent the Runway. “We wanted to remind the customer that if she wanted to take something from here today, great. But if she rents tomorrow, a week or two weeks from now, she doesn’t need to be limited to what’s in this Dream Closet. She has access to our entire closet in the cloud.”

Shoppers can make appointments for personal styling sessions, with pricing ranging from $25 to $75 depending on whether they are trying on business casual clothing or a dress for a wedding. The stylist will pick out styles, ask the shoppers about her preferences and build a personal data profile based on this information.

RTR Bar, Mobile Features Cater To On-The-Go Shoppers

As many as 90% of Rent the Runway’s six million Unlimited subscribers work for a living, making this the Rent the Runway Girl’s common characteristic regardless of age, size or color preference. This is important because the retailer has to meet these on-the-go consumers’ needs at all times, and in quick order.

The brand built its “RTR Bar” as its store centerpiece, a place where consumers can engage with iPad-equipped fashion stylists to quickly pick up, drop off, or exchange rented merchandise. Shoppers strapped for time can even check themselves out at a tablet stand by the door, and they will receive a text when one of the 16 fitting rooms is open.

Rent the Runway supplements the in-store experience with its mobile app, and has recently added two new features: RTR Now and RTR Concierge. With RTR Now, consumers can get a real-time view of the store’s inventory on the mobile phone, while RTR Concierge enables shoppers to interact with store associates anywhere.

“In our dream scenario, before she’s even walked through these doors, she’s chatting with us,” Sullivan said during the tour. “She’s in an Uber and she just browsed everything in the store that’s in her size, so she wants to try on three dresses and have them in a dressing room ready to go. Technology is interwoven throughout the entire store. It’s the underpinning of everything we do in the store, from how the associates service our customers to how we want the shopper interacting with the store even before she’s physically here.”

Visuals Set The Store Apart

Although these personalized, convenient experiences drive the Rent the Runway experience as a whole, the visuals inside the store are just as big a factor in making the store relatable.

Immediately upon entering the store, you can turn right to see a 75-inch Samsung digital video wall that highlights Rent the Runway’s exclusive editorial content. The wall is made up of nine displays designed to engage customers and advertise the RTR style at all times.

In the back of the store, shoppers can find Samsung’s 55-inch ML55E Mirror Display screen, which is designed to provide an interactive screen for makeup touchups to accompany shoppers trying on the latest styles and trends.

While both these displays and the Dream Closet experience take shape in various areas of the store, they aren’t overwhelming in the slightest and feel very much appropriate. The store layout is very minimalist, with all the dresses lined up as they normally would be in an average shoppers’ closet, except that they are color coded. The colorful dresses and accessories contrast heavily with the white walls and tan dressers on display, making the products stand out even more.

Seeing how retailers often have cluttered stores where it’s impossible to find a specific style or brand you are looking for, the open space and closet-like atmosphere felt like a breath of fresh air from a consumer perspective.

Although still small in brick-and-mortar scale, Rent the Runway has illustrated that it can extend its shopping experience effectively within its limited space. With more shoppers gravitating toward whatever channel fits them best at the time, brands must discover what value their stores are bringing to the table and find ways to integrate those experiences with these channels.

[retailtouchpoints]

Are Black Friday And Cyber Monday Shifting Roles In Today's Digitally Dominated Environment?

A wild Thanksgiving weekend that saw a sharpened focus on e-Commerce shopping concluded with $3.45 billion in online spending on Cyber Monday, according to data from Adobe Digital Insights. While this total was a 12.1% increase over 2015 totals, it barely edged out the $3.34 billion online sales total for Black Friday.

Considering Black Friday’s historical role as the day shoppers flocked to physical stores, the fact that its online sales numbers are just about equal to those from Cyber Monday may suggest that shoppers are less focused on the “how” and “when,” and more about the convenience.

The RTP team debates how retailers should react to these results, particularly as discounting becomes a major promotional tool and in-store shopping appears to be less of a priority for consumers. The editors also discuss what the weekend means for retailers going forward into the rest of the holiday season, particularly as more last-minute online shopping takes place closer to Christmas.

Debbie Hauss, Editor-in-Chief: I think this year’s results-to-date confirm that more consumers will be shopping online and via mobile moving forward. Retailers must do what they do all year long: Build brand relationships with shoppers and deliver personalized offers and communications. Competing on price and discounting will not be the key to success — it will just lower overall profit potential. Retailers should work throughout the year on optimizing their supply chains and building strong distribution arms coordinated across all shopping channels. They also should continue to improve inventory strategies so they don’t get stuck with out-of-stocks or overstocks. The Cyber Monday results also confirm that one special day is not going to make the difference, especially when Amazon and others are offering special holiday deals days and weeks in advance. You still need to be competitive on Cyber Monday, but don’t focus all online marketing efforts on one day. Additionally, regarding brick-and-mortar, it seems to be a toss-up as to whether to open on Thanksgiving day or night. This is going to have to be a strategic decision made brand-by-brand, based on a retailer’s potential shopper base and impact on employee motivation.

Adam Blair, Executive Editor: Having covered retail for longer than I care to admit, I remember how “Cyber Monday” was first christened. The concept of the first work day after the long holiday weekend becoming an online sales bonanza stemmed from the idea that consumers had faster and better Internet connections at their workplaces than they did at home. While this idea may still have some validity — Cyber Monday 2016 appears to have set records with digital sales topping $3.4 billion — it’s probably a relic of the long-gone days of screechy dial-up modems. As for the rise of digital (and particularly mobile) commerce over the entire weekend, the smartest retailers seem to have stopped viewing this as a lack-of-foot-traffic problem and more as an opportunity. “Doorbuster” sales and segments on the local news about people lining up at 5 a.m. may be good for a bit of publicity, but they also may turn off as many people as they attract. If I were a retailer I’d be worried more about the level of discounting they felt the need to offer this early in the holiday season, and less about slightly less crowded brick-and-mortar stores.

David DeZuzio, Managing Editor: With Adobe predicting nearly $92 billion in sales this holiday season, retailers should be thankful that the industry is, in fact, thriving; there’s money to be made. But, every true omnichannel retailer must temper expectations for individual channels and look at the big picture: Brick-and-mortar isn’t dead, but it isn’t what it used to be; mobile is going to be the preferred channel in the very near future; and those who aren’t prepared for mobile dominance are doomed. My wife was caught up in Macy’s web site issues on Black Friday, but in all reality, it didn’t prevent her from buying anything, it just delayed her for a few hours. Luckily, she’s pretty patient, as I imagine many shoppers might have cancelled their orders, moved on to other retailers and put Macy’s on their Naughty List. Yes, retailers should focus on deep discounts to get shoppers in, but they need to have the bandwidth/associates to handle huge traffic no matter the channel. They need to cover every mile from first to last. Naturally, Amazon seems to have had all of its bases covered and if anyone is going to deliver on December 25 (at some point), it’s going to be Amazon. And in under a decade we will be writing for Amazon TouchPoints in the United States Of Amazon. Any online retailer offering delivery or pick-up on Dec. 24 is certainly a high-risk gambler; the margin for error is absolutely razor-thin, so they will be under the microscope. This will be fun to watch!

Klaudia Tirico, Features Editor: I can’t say I’m surprised to see that Cyber Monday sales weren’t up to par compared with Black Friday and weekend sales in general. I’m sure a majority of people had the day after Thanksgiving off and did their shopping online in the comfort of their own home. Why wait until Cyber Monday if products were discounted online on Black Friday anyway? Personally, I wouldn’t want to risk the items I really wanted selling out by waiting around all weekend. I think retailers are getting smarter about their online offerings during major holiday weekends. I noticed very few making an attempt to offer extra special in-store deals to drive foot traffic. I think it’s because shopping online is much more convenient nowadays — especially with a majority of retailers offering omnichannel experiences where customers can buy online and return in store. And since it is so convenient, consumers are able to avoid the in-store mayhem that Black Friday brings. This also means that retailers need to make sure their shipping capabilities are in perfect condition throughout the holiday season. Consumers need to be able to trust that their deliveries will make it to their doorstep on time. As trustworthy as they may be, I’m not sure if guaranteeing deliveries by 6 pm. on Dec. 24 or even 8 am on Dec. 25 is something all retailers should consider. My advice is to tread carefully when making these kinds of promises. If you can’t deliver, the trust will be gone.

Glenn Taylor, Senior Editor: Retailers haven’t appeared to be caught off-guard despite the major e-Commerce spike on Black Friday, and that’s great news. It shows that brands have caught up to the consumer’s desires and aren’t pushing channels they can’t afford to take a loss in. And as Black Friday has gained more of a stigma for its in-store insanity, retailers started to realize that maybe it’s time to cater to the online shopper who has no desire to set foot in a store. I personally did my weekend shopping from the seat of my bed before going to sleep, without even once considering the idea of going out to a store (although I’m positive I’ll go in the upcoming weeks), and I’m sure many people had the same thoughts in their heads. The discounting throughout the weekend wasn’t exactly the most promising news out of the weekend, contributing to individual shoppers spending less on average this year, so this is likely going to be the next issue retailers must analyze and respond to as big holiday events approach in the near future. If these deals can lure in shoppers to the online category, then great. But if they end up cutting into profit margins, then at some point brands are going to have to consider other ways to make their presence stand out during key spending times.

[retailtouchpoints]

Only Looking At Customer Data? You’re Doing It Wrong

By Hamaad Chippa, Informatica

Over the past 10 years, retail revenues during the holidays have grown at a respectable 2.5% on average. As of 2009, the year the economic recovery began, the average growth was approximately 3.4%. This year, NRF forecasts that retailers can expect a growth of 3.6%, resulting in record revenues of $655.8B. Cha-ching!

From an economic point of view, consumer confidence is strong due to positive employment and wage numbers and any uncertainty from the presidential election will have subsided with votes finally cast and the outcome decided. While retail sales have been slow earlier in the year, these optimistic indicators are pointing to a big holiday season for retailers.

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[kiplinger]

Best Things to Buy on Black Friday

Some of the deals on November 25 are too good to pass up – even if you\'re only shopping for yourself.

[retailtouchpoints]

Are ‘Town Squares’ A Natural Evolution For Brick-And-Mortar Stores?

With Apple’s decision to drop the word “store” from its branding efforts and redesign 95 of its stores into “town squares,” it’s apparent that the tech giant is taking note of the changing brick-and-mortar environment. As opposed to just selling products, Apple will offer classes and workshops for children and adults alike, and bring in local artists and musicians to perform.

Whole Foods is on the same track with its 365 by Whole Foods-branded stores, which will complement its products with those from independent businesses. Even brands such as Bed Bath & Beyond and Barnes & Noble have entered the experiential space, committing to open concept stores that serve alcohol so shoppers can extend their stay.

The RTP team weighs in on what the establishment of these “town squares” signals in the ongoing evolution of the brick-and-mortar store, and whether they will be another nail in the coffin of traditional malls.

Debbie Hauss, Editor-in-Chief: The evolution of this town square concept — also called eat-shop-live — is a reflection of consumer preferences for convenience and experience. Case in point: If you search “eat shop live” on Google you get more than 7 million results. This will likely be the direction malls are headed.  While America’s first shopping mall, in Providence, R.I., went the way of micro-apartments, other malls will likely convert into a combination of living spaces, retail and hospitality. At least one retailer is taking charge of the concept by purchasing land around its store and filling the nearby space with complementary businesses. Dallas-based and Warren Buffett-backed Nebraska Furniture Mart owns an extensive parcel of land next to its immense store and is interviewing potential retail clients that align with the tech-savvy retailer’s strategies. This is definitely a trend to watch and one that is here to stay.

Adam Blair, Executive Editor: The “town square” concept sounded more than a little gimmick-y to me when I first heard about it, but the more I’ve read about it the more it makes sense. In many ways it’s a throwback to a very basic retail concept: the more time people spend in a retail space, the more likely they are to buy something. It’s a kinder, gentler version of placing the milk and eggs the furthest away from the supermarket entrance, which forces shoppers to snake through multiple aisles in search of necessities. In this case, people want to stay in order to explore, relax, take a class or just listen to some music. The Samsung 837 store in New York City’s Meatpacking district — which showcases products but doesn’t sell anything within its four walls — is a perfect example of this type of town square in an urban setting. Retailers should pay attention to the “bonfire effect,” which identifies places that can gather people around their products and services because of a unique kind of emotional purchase they can’t find elsewhere. Brick-and-mortar retailers will need these kinds of sparks to thrive in our increasingly digital economy.

Alicia Fiorletta Esposito, Content Strategist: Brands like Apple and Whole Foods realize that consumers have access to more product and brand options than ever before. If they want low prices, great discounts and an in-and-out type shopping experience, they can go online or to the myriad other big box retailers in their area. By implementing a “town square” environment, Apple is turning its locations into hubs for local, tight-knit communities. I think this will be a trend that spreads across different categories, and what I can’t wait to see is how these types of businesses adapt the town square concept to their own unique businesses and products. I don’t think this will be a rapid transition — I think it will be ongoing, with a few use cases trickling in over the next few years. In addition, I don’t think this will mark the “death” of malls or even traditional stores; I think we’ll just see all of these formats evolve so they revolve around this community or “bonfire” concept. What will be interesting to see, though, is how all these stores will use technology and other tactics to make these experiences more immersive, relevant and memorable.

David DeZuzio, Managing Editor: As brick-and-mortar retail evolves, turning traditional stores into town squares isn’t just a great idea; it is necessary. If consumers are going to go to the trouble of getting out to a physical store and eschew the convenience of online, it has to be an immersive, engaging experience. According to the “Bonfire Effect” there is too much focus on the commonplace drivers — price, variety, convenience, and even service and quality — and every shopper knows they can probably get whatever they’re looking for cheaper on Amazon. So it is essential for retailers to focus on the emotional aspect of the trip. They’re not just selling to a bunch of faceless consumers anymore, they’re selling to “you”.  Strangely, Bed Bath & Beyond’s plans to allow consumers to enjoy a nice adult beverage as they shopped reminded me of being in a casino. The only thing they need to do now is block out the windows, remove all the clocks and people can be there all day and shop the kids’ college funds away. All kidding aside, will this be another nail in the coffin of the traditional mall? In soft markets, yes; almost definitely — but nothing will happen overnight. It will be interesting to see how retailers try to adapt this new model to their own stores and who really nails it. Like anything else, if all retailers offer a town square experience, it’s not that special, is it? So, not only do retailers have to embrace this concept, they have to immediately start thinking how to outdo the other guys. Good luck!

Klaudia Tirico, Features Editor: The “town square” concept being implemented by Apple and Whole Foods seems like a great next step for retailers looking to gain more foot traffic in their stores. Experiential retail has grown in popularity, mainly because consumers — especially Millennials and Gen Z — are always looking for a unique experience that they can share on social media. So why not give the people what they want? Additionally, I think this is a great way to give people a sense of community — especially when the country is so divided. This concept can truly bring people with similar interests (such as food tastes or loyalty to a certain electronics giant) together. Whether this will put another nail in the coffin of traditional malls, I’m not so sure. I don’t see why these two store types can’t coexist. And I also don’t understand why the traditional mall can’t be made into a “town square” of its own. I personally see my local Westfield mall in Northern New Jersey as one already. Between the great restaurant and retail store selection to a variety of events hosted in large common meeting areas (such as fashion shows and virtual reality demonstrations), it’s already providing consumers with an experience they may not find when they’re shopping online or even in stand-alone stores. Either way, I think a retailer or mall that wants to bring people together has already won in my book.

Glenn Taylor, Senior Editor: The ever-changing state of consumer demands has led to a massive change in the role of the retail store, forcing merchants to experiment with different ideas that ironically turn back the clock. Whether through malls or strip malls, brick-and-mortar shopping can convey an impersonal atmosphere, particularly when you walk into one store, then down to the next just to see a whole new batch of products being sold. While admittedly a good portion of individual retailers have done a great job of enhancing the store experience through associate interaction and technology integration, the actual “feel” of a major shopping center doesn’t carry quite the same charm as that of a mom-and-pop “Main Street,” where business owners, employees and shoppers alike largely knew each other. This “town square” idea appears to deliver a similar concept that encourages consumers to not only shop, but hang around to take a class or even meet new people. I don’t think malls will die out any time soon as they still provide an outlet to shop while getting away from everything else in life, but their decreasing foot traffic does show that more mall-based retailers should at least examine where the town square concept may benefit them.

[jessandlen]

[retailtouchpoints]

Making a Difference: How Grocery Retailers Can Reduce Food Waste With Technology

By Andrew Dark, Displaydata

Reducing food waste is a global concern, especially in the grocery industry. On a daily, weekly, monthly and yearly basis, grocery retailers worldwide struggle with how best to control and minimize the amount of food waste coming from their stores. They are consistently plagued with huge write-offs on fruits, vegetables and other fresh produce.

In the U.S., the USDA and EPA have made huge strides in eliminating food waste, calling for a 50% reduction in food waste by 2030. The United States federal government says it will work with charitable and faith-based organizations, private sector and local, state and tribal governments to reduce the 133 billion pounds of food wasted each year. One of the U.K.’s largest grocers recently announced it will begin donating leftover food from its stores to charity with the hope to eradicate all food waste from the organization by the end of 2017.

Keep reading

[introverts-hideaway]

[washingtonpost]

Why ‘basic’ is bad for Starbucks

Starbucks is an everyday stop for millions, and that might be its biggest problem

[buzzfeed]

Here Are 28 Things Millennials Are Killing In Cold Blood

[retailtouchpoints]

What Can We Learn From Best Buy's Embrace Of IoT?

Best Buy surprised analysts with stronger-than-expected financial results in its Q2, spearheaded by a 24% increase in online sales and comparable store sales of 0.8%, beating Wall Street expectations of flat same store sales.

But the most intriguing part of the results may be the company’s positioning toward the future, in which Best Buy stores will further emphasize the sales and services of IoT/connected home devices. The electronics retailer, which recently celebrated its 50th year in business, may have maximized its advantage against Amazon and other e-Commerce sellers by making the IoT a point of differentiation.

The RTP team discusses the factors that have driven Best Buy’s current success with IoT, and debates what steps other omnichannel retailers must take to stand out in their own verticals the way that Best Buy is doing in electronics:

Debbie Hauss, Editor-in-Chief: It is a smart decision on Best Buy’s part to get ahead of the IoT phenomenon. Even though the bulk of consumers are probably not quite ready to convert their current homes to smart homes, Best Buy is positioning itself to be on the forefront of this trend. If the brand markets the products and services effectively, many consumers will think of Best Buy first when they decide to purchase and install IoT devices. Best Buy also can beat some of the competition because it is known for its Geek Squad services; and I’m sure a lot of consumers are going to feel like they need expertise when it comes to installing, understanding and operating IoT solutions. Best Buy will need to keep a sharp eye on the competition — including Target and Amazon — as this segment develops.

Adam Blair, Executive Editor: I agree with Debbie that this seems like an optimal blending of technology with this retailer’s particular niche, brand promise and relationship with its customers. I think a big part of Best Buy’s ongoing task will be to translate the overall concept of the Internet of Things (which can sometimes have a vaguely threatening, Terminator-Rise-of-the-Machines vibe to it) into the practical, everyday ways these networked devices and solutions make consumers’ lives more convenient. Tech-savvy Millennials and Centennials may “get it” right away, but there’s also a big audience of Boomers who would love to use their smartphones to peer inside their refrigerators from miles away. But many of these Boomers will need to be shown these miracles in person, in a store, by someone who doesn’t make them feel like a techno-dullard. Other retailers should be on the lookout for new (and even existing) products that 1) Fit their brand promise like a glove, and 2) Require a personal, in-person touch to make the sale.

Alicia Fiorletta Esposito, Content Strategist: I think what makes Best Buy such an effective source for IoT gadgets is that it’s an all-in-one type retailer. For all your electronics needs — whether it’s smartphones or fridges — consumers know they can turn to Best Buy and get quality prices and access to all types of brands. However, Best Buy can up the ante on its value by empowering Geek Squad team members — and all employees, really — to provide guidance on IoT/connected living and make product recommendations. There are a multitude of devices and apps that can work together to create a more comfortable or secure environment. If Best Buy’s team can be at the forefront of customer conversations and provide advice and solutions to help shoppers get to that level of security and comfort, they will show their expertise and ultimately, Best Buy’s reliability. I don’t know about my colleagues, but I am more than willing to pay a bit more for items as long as I get great advice, expertise and installation services — it makes the whole experience more turnkey and enjoyable!

David DeZuzio, Managing Editor: Best Buy is making a smart move by positioning itself as a potential leader in IoT. My second-to-last visit to a Best Buy store was a rather depressing one. Once-popular sections like music and movies had shrunk to a handful of aisles and the employees looked more worried about Best Buy staying open past the holidays than they did about delivering the best in customer experience. Fast-forward a bit and, just a few weeks ago while at Best Buy, associates approached me about IoT-related devices and had a renewed sense of excitement. True, Amazon may come up with something to thwart Best Buy’s best advances at some point, but as Adam mentioned, Amazon doesn’t have the one-to-one physical interaction with shoppers (at least not yet). Of course, Best Buy taking the first step into bringing IoT into mainstream consciousness can have a huge payoff, but they have to follow through and deliver on every level of the CX before Amazon, Apple (who always has a better buzz in the electronics biz) or someone else beats them. Remember, it’s never about who’s first, it’s about who’s best.

Klaudia Tirico, Associate Editor: Best Buy sells electronics, so it’s expected to be one of the retailers on the forefront of innovation. This includes IoT. As a consumer, I’d rely on Best Buy and its Geek Squad to help me make the move to a connected home. Sure, Amazon has its perks, but like my colleagues and some of the analysts in the RetailWire discussion stated, it doesn’t provide the one-on-one mentoring that Best Buy is capable of. This is where Best Buy will win when leveraging IoT, and it’s great that the retailer is getting a head start. Spotlighting its connected home offerings in the high-traffic Mall of America was a smart choice, too. Even if consumers don’t have plans to purchase IoT devices just yet, they will remember Best Buy’s demo and go there first when they’re ready. The retailer should keep the ball rolling with these types of showcases in more locations to ensure consumers remember their offerings once IoT blows up.

Glenn Taylor, Associate Editor: The IoT offerings were right up Best Buy’s alley, considering the retailer had already been the top electronics retailer for the past decade. Pairing up the interconnected household items made sense for the brand, primarily because it already had its own tech support team built in to teach consumers how to use the devices. Companies such as Staples and Ace Hardware never had the kind of tech support comparable to the Geek Squad to make a significant impact on their IoT programs, and as such these haven’t really stood out for them. At this point, it would make sense for those retailers to dedicate more resources to their own customer service, so that IoT tech could be promoted better within their stores. However, Best Buy’s success here shows that, if anything, more brands need to extend and create their own niches with what they can sell and provide. Best Buy’s revival in the face of Amazon’s online dominance within electronics can be attributed to its ability to build an IoT strategy and make it effective in a way no one else had done before.