Professional Documents
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Module 1 - Retail Trends
Module 1 - Retail Trends
CONTENTS
NExTT framework 3
NECESSARY
Private Labels 5
Experiential & Destination Retail 7
Small-format Stores 10
Inventory Management 13
Pop-up Stores 15
Personalized Marketing 18
EXPERIMENTAL
Micro-Fulfillment 20
Blockchain for Retail Supply Chain 22
Autonomous Last-Mile Delivery 24
Advanced Manufacturing 26
THREATENING
In-Store Technology & Data Collection 29
Stores as Fulfillment Centers 31
Automated Checkout 33
Localization 36
In-Store Mobile Commerce 39
Visual Search 42
TRANSITORY
Augmented Reality & Visual Reality 44
Chatbots 46
QR Codes 48
Voice Shopping 50
Social Commerce 52
TRANSITORY
TRENDS IN RETAIL
NExTT fra
NECESSARY
High
Product
Experiential &
destination
Private labels retail
AR / VR
Merchandising
Personalized
Chatbots marketing
Pop-up stores
Distribution
INDUSTRY ADOPTION
Inventory
Social
QR Codes management
commerce
Small-format
Voice shopping stores
Localization
Low
EXPERIMENTAL THREATENING
NExTT framework
AIL Low MARKET STRENGTH High
NECESSARY
Product
Experiential &
destination
Private labels retail
Merchandising
Personalized
marketing
es
Inventory
Distribution
management
mall-format
stores
In-store mobile
commerce
Visual search
TRANSITORY NECESSARY
Advanced driver
assistance
Trends seeing adoption but Trends which are seeing wide-
Telematics Vehicle
where there is uncertainty spread industry and customer
connectivity On-demand
about market opportunity. implementation / adoption accessand
Lithium-ion
Next gen HD where market and applications
As Transitory trends becomemapping batteries AI processor
infotainment
more broadly understood, are understood. chips & software
On-board
INDUSTRY ADOPTION
showrooms
Flying robotaxis
termarket EXPERIMENTAL
Blockchain
verification THREATENING
rvices and
hicle use Low MARKET STRENGTH High
quality and
competitive
number of
media attention intensity
investors & capital
PRIVATE LABELS
American grocery retailers are expanding their private label
assortments in the face of razor thin margins.
Walk down an aisle at Aldi and you will quickly notice how few well-known
brand-name products are on store shelves. Why? 90% of Aldi’s products
are private label — a strategy that has put Aldi on track to become the
third largest grocery retailer in the US by 2022, after Walmart and Kroger.
Given the advantages that private labels offer, retailers are going after
them in droves. Brick-and-mortar retailers like Albertsons, Walmart, and
Target have all expanded their private label offerings in the last year;
Albertsons is on track to release 1,400 private label products by the end
of 2018.
Digitally native retailers are also expanding their private label offerings.
Amazon has approximately 7K private label brands across apparel,
electronics, and grocery. The online giant’s private label lines are
expected to bring in $7.5B in sales in 2018.
Going forward, these third-party brands will have to find new distribution
channels to reach consumers outside of traditional retail stores.
These may include leveraging new on-demand or subscription delivery
strategies, smart home technologies, next-generation vending machines,
or even in-office marketplaces, among other solutions.
Source: 6sqft
Even Macy’s, which has struggled to maintain its vast real estate,
has decided to shrink. The retailer is reducing the footprint of its
underperforming stores by as much as a fifth in size by walling off
sections of the store. The company’s goal is to turn its stores into
“vibrant” destinations that are focused on “fulfillment and convenience,”
according to Macy’s CEO Jeff Gennette in an interview.
Source: WSJ
Going forward, we may see smaller format stores leverage their urban
locations to aid in online order fulfillment and delivery. Small format
stores may even be able to partner with micro-fulfillment startups and
autonomous mobility companies to reduce the cost and increase the
speed of last-mile delivery to consumers.
Retailer Zara has helped put the “fast” in “fast fashion.” The retailer can
design, manufacture, ship, and sell new apparel in under 25 days. This
allows Zara to cater to fast-changing consumer tastes, and eliminates
its dependence on shipping apparel from Asia (a process which can take
many months).
“With less inventory in the back of the store, we can dedicate more room
to digital fulfillment” — John Mulligan, COO, Target
An ecosystem of startups are leveraging software, data, AI, IoT, and more
to manage inventory for retailers. These include Relex and Vekia, which
provide inventory and supply chain management software platforms, as
well Happy Returns and Optoro, which help optimize returns logistics.
Pop-up stores are proliferating across the retail sector, and fast.
Source: WWD
Given the vast amounts of data that retailers can capture on their
customers via mobile apps, e-commerce, and in-store technology, many
have an opportunity to target their marketing efforts to customers in a
highly personalized manner.
The retailer’s app goes into “local store mode” when a customer enters
a store. Users are then sent push notifications with advertisements
specific to the inventory of that particular store.
Additionally, the app alerts store associates when customers are on their
way to pick up online orders.
When customers scan their skin in-store, Sephora saves this data to
personalize digital marketing going forward.
MICRO-FULFILLMENT
New micro-fulfillment startups are leveraging robotics to operate
warehouses in confined urban spaces, speed e-commerce fulfillment,
and reduce last-mile delivery costs.
Given the continued rise of small-format stores among retailers like Kohl’s
and Target, these urban micro-fulfillment centers could be co-housed
within small urban stores in the future.
Since 2017, Walmart has worked with IBM’s Food Trust blockchain
platform to improve food tracking and safety. The Food Trust, a
partnership between IBM and major food companies, helps reduce the
time it takes to track the source of food from days, weeks, or months to
only 2.2 seconds via blockchain & distributed ledger technology.
But these benefits depend on the assumption that all retail supply chain
players operate on the same distributed ledger platform (or at least on
interoperable platforms). As a result, fragmentation has been an obstacle
to widespread adoption of blockchain technology in global trade.
But new developments like TradeLens, a joint venture between IBM and
Maersk to integrate global supply chain players on a unified platform,
have gained traction. TradeLens has been able to sign dozens of
major supply chain operators onto its platform — a telling sign that
standardization, while still difficult to achieve globally, may not be as far-
fetched as previously thought.
One strategy that retailers such as Kroger and Domino’s are exploring
is to cut out the cost of drivers by using autonomous vehicles. The
approach has gained increased attention in recent months.
Source: Mashable
In late 2017, OEM Ford and Domino’s conducted similar tests in Ann
Arbor, Michigan. The OEM has partnered with over 70 businesses, and
is primarily piloting autonomous delivery of pizza, groceries, and other
goods in Miami.
Major brands and retailers are investing significant capital in new forms
of manufacturing.
For example, Adidas’ new Speedfactories help bring the entire shoe
manufacturing process under one roof. Adidas typically manufactures
its shoes in Asia in a process that takes several months across multiple
factories — but its Speedfactories can produce shoes in days, primarily
under one roof.
Source: Engadget
“[Adidas] can actually tune the shoe to the customization that the
consumer wants to have. That’s the goal: full customization, but
without compromise on speed.” — Gil Steyaert, an Adidas executive
board member.
Source: Carbon
Source: Sephora
If this type of technology does ever gain traction in the US, it could set a
precedent for the types of data (down to consumers’ facial expressions)
that retailers and other companies may be able to capture. This could
help retailers bring personalization to an entirely new level — tailoring
each consumer interaction based on data (for instance, an individual’s
mood interpreted from a facial expression) to drive consumer interest
and loyalty.
From Walmart and Best Buy to Zara and Brooks Brothers, many prominent
retailers are doubling their existing stores as online fulfillment centers.
In return for providing Ling Shou Tong for free, Alibaba can track in-store
consumer spending habits in the stores, as well as use stores as delivery
and fulfillment centers for goods ordered online.
Source: Amazon
Chinese retail giant Alibaba, for example, has been growing its chain
of cashless Hema grocery stores. It currently operates 65 locations in
Shanghai, Beijing, and other cities in China.
Using the Hema app (which is integrated with Alipay), shoppers can
scan any item in the store to see its origins, order products for 30-minute
delivery, or check out and pay for products.
While internet giants may have the upper hand in implementing this
technology, back in the US, a new crop of startups aims to democratize
cashier-less technology.
This fall, Amazon opened its new Amazon 4-star store in Manhattan.
The store sells Amazon items that are highly rated (4 stars or more)
on its website, and features “trending around NYC” items frequently
purchased by customers in New York.
While the store is a first for Amazon, it’s part of a bigger trend in retail —
product and inventory localization.
There’s a lot to gain from this trend: 63% of consumers are interested in
personalized recommendations from retailers, according to a recent study.
The company’s new AM4 (“Adidas made for”) line of sneakers offers
shoes that are custom-designed for the needs of runners in cities around
the world.
For example, the AM4NYC running shoes are specifically designed for
the sharp turns of New York City’s street grid, and were created using
sport-science data and feedback from local athletes.
For example, Nike’s newly opened stores, Nike by Melrose (in Los
Angeles) and Nike NYC, House of Innovation 000 (in New York), offer a
slew of services for customers that can only be accessed via Nike’s in-
house smartphone app.
Source: Nike
• Instant mobile check out via the Nike App: The store is equipped
with several checkout stations so customers can bag their products.
• In-Store pick up lockers, where customers can reserve items via their
mobile phones to pick up in-store at their convenience.
Source: Nike
While Nike is one of the most recent and colorful examples of mobile
and brick-and-mortar integration, it isn’t alone. Other retailers from
internet giant Alibaba to grocery retailer Kroger have implemented in-
store mobile scanning and payment systems into their physical stores.
Dubbed “See it, Snap it, Shop it,” the feature aims to help customers
search for products they come across in life (on the street, online, or
through a friend). By uploading a photo to the app, customers can find
the same or similar products available on Farfetch.
In fall 2018, Macy’s expanded its partnership with virtual reality startup
Marxent labs. The purpose of the partnership? To help Macy’s reduce
return rates in its furniture department.
At-home voice assistants aren’t the game changer for at-home shopping
that some may have hoped for.
For these reasons, voice shopping might be better suited for replenishing
everyday household goods that require little research on the consumer’s
part before buying.
In the US, tech companies and retailers have not entirely been able to
crack the code on social commerce.
The lukewarm reception to social commerce has not been the case in Asia.