Monthly Archives: January 2015

The State of Retail in 2015 – trends and technologies affecting retail

Constellation recently published our “State of Enterprise Technology” series of research reports. These reports assess the state of enterprise technologies Constellation identified as essential to digital transformation. These reports also describe the future usage and evolution of these technologies. Constellation will continue to publish reports in our State of Enterprise Technology series throughout Q1.

My contributions to “State of Enterprise Technology” series focus on Matrix Commerce (retail and commerce technologies). In my report, The State of Retail in 2015 and Beyond  I identified seven trends impacting retail. This report is designed to help you set benchmarks and prepare for your retail future.

Here’s an excerpt from the report:
The Customer–Retailer Relationship Becomes More Cooperative

From conversations with clients, prospective buyers, systems integrators, partners, and vendors, Constellation sees a number of retail themes. These trends all revolve around the continuing amplification of the consumer voice in the retail supply chain. As consumers gain more influence within the retail supply chain, retailers will continue to focus on areas that allow for greater cooperation among all entities. Savvy retailers realize they can no longer expect to dominate the relationship but instead should allow for an atmosphere of cooperation.

State of retail graphic[1]

About Matrix Commerce

Matrix Commerce Addresses the Buyer in Digital Transformation

The theme of Matrix CommerceTM analyzes the disruptive pressures influencing the commerce paradigm. Commerce faces rapidly changing business models and new payment options that are often misunderstood and poorly integrated.

Matrix Commerce means the fusing of demand signals and supply chains in an increasingly complex world of buyers seeking frictionless buying experiences. Friction in this new world originates from new regulatory requirements such as sustainability, taxation, and privacy.

As the world revolves around the buyer, channels, demand signals, supply chains, payment options, enablers, and Big Data will converge to create what Constellation coined in 2011 as Matrix Commerce. Matrix Commerce spans across disciplines as people, process, and technologies continue to transform today’s commerce models.

Download the report snapshot and table of contents on the Constellation website.

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Filed under Retail, Supply Chain

For retailers and CPG, it is all about the edges.

A common thread I heard last week at the NRF Big Show, was the importance of the edges of the network. I wrote in my #NRF15 recap about the importance of pushing data, insights and decision making to the edges of the network, click here for post. There is another aspect of the network edge that wasn’t prevalent last week in New York, but probably isn’t ready for prime time yet, and that is an enhanced ability to execute at the networks edge. When it comes to that extended level of execution, think 3d printing, better usage of hardware and software to better service customers…at the edges of the retail network.

The one advantage brick and mortar retailers have over the likes of Amazon and Alibaba is also what has been seen as their weakness – their physical stores. Stores offer a host of issues that are well documented – inventory carrying cost, limited SKUs due to the physical constraints of a store, overhead associated with labor as well as having real estate. However this disadvantage may have a silver lining – face to face interaction. The challenge for retailers is how to make that face to face more attractive to consumers than their laptops or mobile devices to transact. That is where being able to offer greater personalized and flexible solutions is paramount for retailers. How can retailers address this?

  • Greater personalization…kind of like your online experience! We all know that the power of transaction online, other than being able to do so in your pajamas, is how customized the experience is tailored for us.  One reason Amazon is so entrenched in our consumer life is that they know what we want…sometimes before we are even aware of it! The power of Google is that they will place those banner ads based on what they know we have been looking at and interested in. Online experiences with the likes of Nordstrom or Banana Republic are littered with suggestions on what else we need. Looking for a a new Peacoat? May we suggest these styles and brands. Oh and if you like that item…you might like this other item that compliments it. Of course this is possible because in the eCommerce world our digital finger prints are everywhere and can be captured with much more ease than in the physical world. This is starting to change. Slowly. As more service providers are focused on helping retailers capture, analyze and provide insights on all the consumer related data sources, physical retail stores will have the potential to be “smarter” in their customer interactions. Companies like Oracle look to offer their retail customers the ability to empower the edges of their network, with the data and consumer persona necessary to transform the in-store experience more on par with the online world. Oracle, like other service providers, realizes for retailers to protect their brand must understand how customers want to research – interact – transact. This can only be achieved with a more complete view of the customer. There is also the need to perform greater levels of analytics at the edge of the network – brick and mortar retailers cannot afford the potential latency associated with having to push data back to a centralized location. For example, Cisco is working on providing the communication hardware, platform and necessary analytics at the edge of the network. Don’t move the data unless you have to. That ensures that the data, and the analytics, are done as close to the customer and execution point as possible. Again, when we transact online there is not much latency when it comes to our profiles and what is being suggested. Retailers are striving to bring some online shopping experience to the store front. But what about getting your product?
  • Fulfillment moved out of the traditional channels and pushed to the edges of the network. Having greater understanding of your customer and more insights at the edges of the network is 3d Key Shows Three Dimensional Printer Or Fontwonderful, but if you cannot offer the inventory diversity or fulfill at that node, what have you gained? If retailers cannot fulfill better their stores not only become showrooms, but your store associates also become pitchmen. Not what you want in the brick and mortar world! I expect retailers to continue to focus on more flexible and intelligent manners to fulfill their customers’ demand. The first step for better fulfillment is being more savvy about your inventory. I was speaking with a former P&G executive while I was at NRF and the one issue he stated is still a headache is understanding inventory positions within a store – what is on the shelf, what is in the stock room and what item is about to have a stock out? All classic issues CPG and retailers struggle with. But to fulfill better, these need to be solved, and they cannot be solved by just looking at inventory data from your POS or warehouse system. Retailers must have greater and more reliable view of their inventory. That means being more digital with the in store management of the inventory. Service providers like Panasonic are bring such shelf level visibility to the market, something I wrote about in my last post. But it is not just about greater visibility of what is available to your customer – what about greater flexibility on delivering the customized product your customer wants? The story of how Coca Cola has rolled out their Freestyle machines, that puts a tremendous amount of control at the edge of the network, with the consumer. Other CPG companies like Maille mustard and vinegar has stores that allow you to come in and fulfill your mustard and vinegar condiments in the store. These are examples of more flexible inventory and product mix being provided at the edge. There is also the infusion of digital technologies such as 3d printing. Confectionery companies like Hersheys are rolling out 3d printing – need a special chocolate for your kid’s birthday party, have it printed in the store. Luxury retailers, such as jewelry stores, can offer on site 3d printed pieces – for customized jewelery. American Pearl is offering consumers the ability to have customized pieces created via their 3d printers. Granted they are doing this via their online channel, but brick and mortar channels could offer consumers the ability to have a design rapidly prototyped in the store and then produced. That would certainly make events like purchasing a wedding ring less stressful…well maybe not.

Whether it is better visibility and greater analytics or being more savvy in product delivery at the edges, retailers must focus here to maintain relevance for their physical stores. Simple truth – at the edges is where you find the customer. Retailers must make sure that they meet customers needs: eliminate the friction between demand, relationship, fulfillment and after sales.

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Filed under Consumer Product Goods, Retail, Supply Chain

NRF 15 retail looks to streamline customer experience

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The NRF Big Show once again did not disappoint in terms of the sheer volume of attendees as well velocity of ideas being exchanged. The 104th edition of Retail’s Big Show, saw 33,000 attendees descend on the west side of Manhattan. It seems every January after NRF my head is spinning from 48 hours of back to back meetings, hoofing around the Javits Center and meeting a number of fantastic and interesting people and companies. It felt like the last two years The Big Show was picking up momentum again after hitting some slow downs due to the general economic malaise of a few years ago.

Once again I was impressed with the number of companies on the main floor as well as the lower floors. I recall being at NRF events were the lower levels would be hosting a different conference – no longer. The big idea talks I was able to attend focused on the next generation for retail – many high lighted the new touch points that will be truly customer centric. Of course where I gained the most insights were from my numerous meetings and hallway conversations. Here are the take aways from my time spent in the Big Apple:

  • Push data to the edge of the network. How refreshing it was to not be inundated with Big Data messaging and marketing, okay it did seep its way into some conversations, but fortunately it did not dominate. What was discussed was the ability to push the relevant and actionable data closer to the customer touch points – to the edges of the retailer’s network. Companies like Infosys and Zebra, showcased how they were leveraging a number of devices from handhelds to smart phones to Google glass to bring a higher degree of intelligence and insight at the store level (during the show it was announced that Google glass was being mothballed, whether it is Google glass or another wearable the concept is out of the genies bottle). Think about using an item such as Google glass, or a similar device, to allow your store associates to better service the store shelf. By simply looking and speaking in front of the shelf, the device can give you instant access to see if you have inventory in the backroom or when it will be replenished. Other service providers such as Epicor spoke at length about how they are working to provide a robust front end platform to provide the most complete retailer view, at the edges of the network. By leveraging their platform that ties in all the solutions retailers need to run their commerce, those sitting at the edges of the network have greater intelligence in their hands, or in their tablets and smartphones. Which is crucial for better customer service. Retailers are aware that in order to compete with the online channels, they must empower their brick and mortar presences with the data, analytics and insight to provide the best customer experience. This needs to have information and analytics at the edge of the network – on the ground of the retailer.
  • Hardware is cool again. Think smart mirrors, intelligent store shelves, wearables, RFID and IoT. I was impressed with the hardware Panasonic had on display. From smarter cash registers which employed front facing cameras with facial recognition to sophisticated store cameras and audio devices. What I was really excited about was what they have to transform your store shelves from dumb to smart. Panasonic demonstrated a full turn key solution to bring beacons, shelf sensors, smarter pricing tags and video displays. The solution offers retailers the ability to have a view of what is happening at the store shelf based on a digital signal, not relying on constant human monitoring (which we know is not necessarily accurate or timely). With a smarter store shelf, the retailer and their CPG partners will get closer to a real time view of what is really happening at the shelf. Service provider Checkpoint also displayed their RFID technology, which comes from their OATsystems acquisition. The ability to leverage RFID for better monitoring of shipments is one use case. However, the potential use case for retailers is in more accurate order assembly. As an ever increasing number of consumers are looking to order online and pick up in the store, the need for accurately assembled orders by the store takes on greater degree of importance. There was also the smart mirror that Zebra demonstrated. The mirror brings some online retail functionality to the brick and mortar store. Not only will the mirror allow you to “see” merchandise on the patron, but based on what merchandise you are trying on, the mirror is smart enough to start suggesting other products. Just like the experience when we are online and get suggestions based on what we have on our basket. Talk about cross sell and up sell…and impulse buys! These are a few examples of how hardware is becoming cool again. The evolution in hardware is bringing more flexibility, intelligence and online experience functionality to the brick and mortar stores.
  • Better servicing of the customer life cycle. With customers wanting to engage anywhere and from any devices, the need for a more complete understanding of the customer is paramount. Whether this is from the fulfillment, marketing or personalization point of view. I met with many service providers that were all tackling the customer life cycle from these angles. One of the key impacts of the JDA – IBM partnership is to have a more complete view of how to manage customer fulfillment. The offering from the partnership is tackling more efficient retail fulfillment – ensuring greater customer life cycle management from the fulfillment angle. Other service providers such a Engage.cx tackle the customer life cycle needs from the CRM perspective. I think that the term CRM does not properly describe what the service provider is offering. The basic premise of pulling customer data from the wide source of available information (regardless of where it was created) and offering a richer customer profile – like what we try to do in our legacy CRM systems – is vital for next generation retail. There are also service providers such as MomentFeed that are tackling the customer life cycle from the focused marketing angle. Retailers strive to have a better profile of their customers, but also to have a more precise way in which to target these customers with their marketing efforts. Focusing on targeted campaigns and leveraging mobility, the offering is addressing a key component of the customer life cycle: making it actionable at the most precise touch point. These are just some examples of solutions that address the growing need for richer and more complete view of the entire customer life cycle. Retailers need to be savvy about how the better fulfill, manage and target their consumers. We are truly driving to personalized retail.

These observations and trends I was able to experience during my time at NRF is all driving at the same goal – reduce the friction between demand, fulfillment, relationship and after sales. Retailers must strive to this seamless relationship between themselves and their consumers. The importance is of paramount importance when it comes to competing with online merchants, who, as we all know, have created massive digital disruption in retail. Retail channels with brick and mortar presences are looking to find solutions that will allow them to compete with the eCommerce players but more importantly pivot their position in the retail landscape and dare I say recapture some of their mojo vis-a-vis the likes of Amazon and Alibaba.

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Filed under Current Events, IOT, Retail

NRF15 – Retail’s Big Show, so what will we see?

Next week I will be deep in the heart of the Javits Center for the 2015 Retail Big Show, running between meetings and navigating the ever growing maze of companies. Every year I go into these meetings wondering what the “big theme” will be for the show. In the past we have had Big Data, omni-channel retail, store level replenishment, eCommerce to name a few. This year it feels like a continuation of omni-channel and analytics. But the underlying theme I have picked up from the pre-briefings and press releases that have flooded my inbox is the rise of the Internet of Things (IoT) in retail. Good. Well good because we just published a piece on the evolution of IoT within supply chains, retail and CPG being part of that study. Click here to see the report.

One finding from the research is that retail’s readiness for IoT lags behind other industries such as A&D or industrial. In part because these industries have already being practicing IoT for asset management or monitoring of inventory – they just did not have a cool name to label what they were doing. An airplane engine  or locomotive manufactured by GE is a large piece of machinery that warrants having some connectivity, as opposed to a pair of Diesel denim jeans. However, retailers and their supply chains are ripe for adoption of certain uses of IoT. Especially when it comes to the connected home, connected warehouse, connected truck

Any wood behind that arrow?

Any wood behind that arrow?

or even connected store shelf. The question becomes what are the near term business cases for retailers. Where will they be able to create the business cases for IoT that will be funded and return a favorable ROI for their businesses? Retail and CPG supply chains have already tried their hands in what we are calling IoT 0.0 and 1.0 – bar codes and RFID. Will the third time be the charm?

What I will be looking for during my time at NRF is what are the business initiatives for retailers and CPG companies that can leverage the potential influx of new data that IoT will be throwing off. Many retailers and CPG companies I meet with are already speaking of struggling with the data they already have and how to handle it and make it actionable. IoT has the potential of adding another massive amount of data on top of that existing information. We have advocated that companies in any industry need to ask themselves the simple question – why do I need this information and what business aspect will it impact? This is even more important in the retail space, as many have narrow margins and let’s be honest, have been burned by the promises RFID held out but were never achieved.

I am an optimist with regards to IoT  there will, like every technology evolution, be growing pains. I will be keen to learn where retailers are going with their IoT strategies, are they just trying to ride the hype wave or do some have real tangible business initiatives that will put some real wood behind the IoT arrow. Stay tuned!

Will I see you at NRF15?

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Filed under Current Events, IoT, Retail