Remodeling your kitchen – rather than granite think smart counter tops

In a report we recently published we looked at how the Internet of Things (IoT) would impact the retail world. One area we focused on was the food and grocery portion of retail. An idea we explored was how IoT could allow grocers and other players within the food supply chain to extend their reach beyond the store shelf and into the shelves in our pantries and refrigerators. Eventually grocers and manufacturers could leverage this connectivity to better understand demand patterns, usage and even correlations between different items. This use case has taken another step closer to becoming a reality.

Companies like Orange Chef have started to market and sell “smart counters.” Granted the one offered by Orange Chef is more of a chopping block sized device for your kitchen, but let us project out into the future. These counter tops aren’t so much about whether or not you want black granite, Azul Macauba or a fine Italian marble, but how many sensors, beacons and connected nodes your new kitchen counter tops will contain. The smart counter top will be able to identify what you are placing on it. For example you may place on it a nice

About to get a whole lot smarter!

salmon steak or some lamb shanks. The smart counter will then be able to offer you ways to prepare the food offering you recipes and other items you may want to include. The counter will also be able to tie back into your wearables as well as other applications. Training to run a marathon and using your smart phone to keep track of your progress – maybe that bacon isn’t what you should be eating this close to race day – your counter top will tell your phone or wearable, which will tell you. Trying to cut back on red meat – the smart counter will keep tabs on what you are preparing for your dinner. This is a great example of the kitchen becoming smarter and more interactive.

It is not a big leap to go from the kitchen and your counter top being proactive in your meal preparation to being tied into a larger network – say in your neighborhood – that would communicate with local grocers and even distributors to better manage what they stock. Maybe the paleo diet is catching on your neighborhood, if the smart kitchens figure this out, the local stores might want to ramp down on some of their processed food orders.

Of course this will also come with the expected questions around privacy and information sharing. Will consumers trust the likes of Tyson Foods, Mondelez, Kraft, Dannon and other large food providers to have access to such data? If these companies or a third party (think Nest for your grocery bill) can demonstrate or help consumers with their spending then consumers will become more at ease with sharing their information. The fact that households in the United States spend on average $166 a month on energy – the target for Nest – yet they spend 30% more a month on their grocery bill (based on U.S. Department of Energy and the U.S. Bureau of Labor Statistics) would indicate that there is an opportunity for enhanced intelligence to be applied to this sector. IoT empowered devices could bridge that last consumer mile for grocers, CPG and food manufacturers.

We wouldn’t just have our mothers and significant others to remind us that late night ice cream isn’t good for us, our smart kitchen will do it as well.

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 wonderful, 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.

Customer loyalty goes beyond a plastic card in your clients’ wallets.

Customer loyalty is the holy grail for retailers, consumer product companies (CPG), airlines, credit cards, media, and so on and so on. Companies across the majority of industries are striving to understand why their consumers are willing to hand over their hard earned income for goods and services. Why or will these consumers continue to purchase from the same source? And how can these companies keep these customers coming back and hopefully spending more and more.

Companies have created and leveraged many creative means to gather and nurture information from their customers – whether it be loyalty cards you have at CVS or Shaws

How many of these are in your wallet or on your key chain?

grocery store or Vineyard Vines or Barnes & Nobles or Starbucks. These vendors know that for the most part they need to give you something for you to give over some information – usually they give you discounts, early views of new product lines, reward points etc. Airlines, of course, were one of the first movers to give you what was a highly sought after reward for your business – miles and status. Hotel chains were quick to follow. Anyone who spends time on the road, knows how vital is it to have “status” on an airline. While it still doesn’t beat flying private…so I have been told…having that status can usually make the drag of travel a little more tolerable.

All this information has added fuel to these supply chains – an insight into the most profitable client and demand. A view into a data source that can potentially drive the most profitable and desirable side of the supply chain. But are our supply chains getting a less than complete picture of what is really happening?

Looking at our consumers’ buying patterns for just our products is far from a complete picture. Grocery chains and drug stores are very aware of this. They work with vendors like IRI, Neilson, Orchestro or RSi to get a more complete view of the consumer basket. These software vendors will aggregate data across a category or across an entire store or region. This allows a more complete view of what is truly happening. But is that enough? No. Not if our supply chains want to be even more finely tuned when it comes to servicing our clients.

The reality is that our supply chains are no linear and they do not exist in a vacuum. They are all intertwined. The way to make sure our customers stays loyal to our supply chains is to understand how the interact with all the supply chains that are connected. This type of visibility cannot occur if we are only looking at that data that comes in from the loyalty program specific to my business. I need to understand how that customer interacts with tangential goods, potential substitute goods, services and even items that might not appear to be in the same cohort.

Companies need to step away from the loyalty card table…okay they still need to take in and leverage that information. But the data that needs to be added to the supply chain is information of how consumers behave when they are not giving you their information – meaning when they are doing other things with their time and money. Credit card companies have a leg up on this, they already have all that data. Smart supply chains will find ways to get access to that information. Just think about how much wiser your supply chain could be with true demand.

Big brother takes on a whole new meaning – collecting data from your kids diaper

I just saw this interesting article in Boston.com about a new product that allows parents to use “smart” diapers for their kids. Click here for article. Really an interesting usage of QR codes and a glimpse into how technology can be leveraged to monitor our current health…and future health. In light of all that has been going on with the NSA snooping on our data, this is another great channel for the NSA to start tracking potential trouble makers. Hahaaa. That was a joke, but only slightly.

Coming to a baby’s bottom near you.

I tend to be an optimist when it comes to technology and how it impacts our day to day lives, this is not exception. But there are some cautions.

The good – being a father myself and remembering how stressful it was at times with a baby in a diaper. Why does his poop look different? Is he peeing enough? Why does he feel hot? And the list of questions a first time parent goes on and on. I can see the value in being able to scan a QR code and get answers to some of these questions. Being able to share, remotely, with the pediatrician data that can either ease ones mind or call for a visit to the doctor. Eventually could that “real time” data allow doctors to anticipate potential issues?

Based on the information your medical provider could anticipate potential issues, send you a text, email or call with a message such as “Bill we noticed that your child was showing early signs of dehydration, we are expecting more of this heat wave make sure you double the liquids your baby intakes.”

Of course there is the potential for less than good. The big brother aspect of this amount of data being shared. What if your medical provider starts trying to predict what diseases that child might get in their 20s or 40s or 70s. And prescribes actions today, which may not work and have many unintended consequences?

On a more business cynical side, how valuable might some of this data be for companies trying to sell you products…I am looking at you large CPG and retailers. P&G might be able to notice that your child’s urine seems to be excessive, and could be leading to greater diaper rash – and poof you get offers for their latest “intense diaper rash cream.” Or maybe they take that data and start building a customer profile…literally from the time you are in diapers.

Overall I am positive that gathering greater data, closer to the consumer, is good. But this reminds us that the data itself isn’t good or bad, it is the way we decide to leverage that data that is what we need to be cautious of.

 

Lululemon’s supply chain gets downward dogged

A recent recall by yoga manufacturer, Lululemon, of a batch of pants that were…gasp…see through. Not really something that you want in yoga class, really in any class not done in the privacy of  your own home. The company and stock suffered due to this recall which effects close to 17% of the inventory they carry in their stores and hit the stock with a 5% drop in value. It will be interesting to see how the Canadian company recovers from this recall. This will impact their in store sales as well as potentially drive clients to competitors such as Under Armor, Nike and the Gap.

It is also a PR nightmare. We are talking about a supply chain and design issue that involves a personal garment. It is one thing if Adidas or Nike were found to have a revealing sweat shirt or tank top. Lululemon has attempted to get ahead of the issue, but there is more they can do – what lessons can we learn?

How many of these pants will be recalled??

• Get ahead of the message. Lululemon has put out a large FAQ that answers many questions, albeit not as detailed as one might want – click here for FAQ. They need to do more. Maybe even have some fun with it. Yoga is all about bettering yourself and your mind. Play off this message. Lululemon is practicing good yoga but constantly reassessing and improving themselves. Their design issues and supply chain is part of that process.
• Get to the bottom of the supply chain issues…ASAP. Clearly there was a break in their supply chain at some point – most likely quality control issues (d’uh). They need to not only resolve the issue, but be transparent about it. Keep your clients aware that you have identified and are taking corrective action. Otherwise we will be left with the thought – you are just going to countries like Vietnam and Taiwan for the low costs and clearly don’t worry as much about quality. Not to be too cynical, but maybe near shore some manufacturing…at least in the short term (sorry I was being cynical there)
• Love your clients. Again another “d’uh” but sometimes companies forget this. When Apple’s iPhone had antenna issues did they really “love” their clients? I would say no. Jobs responded by blaming manufacturing, see FoxConn, or the way one would hold the phone. Where was the love? So don’t do this. Give a discount for shopping at the store, that could also drive more sales (yes I am again being cynical) make sure you send follow up communications with those clients that were impacted. Oh, and…apologize to those clients for any problems this may have created.

Lululemon will recover from this, I think. But it shows once again how vulnerable we are to any supply chain issues. Add to this social media, and that any issues that strike are instantly public. No company is immune to this, so have a plan on how to deal with this if and when it occurs.

Meanwhile, be conscious of your garment when you are asked to do the table or the wheel in yoga class…unfortunately I have not been able to do either yet. Maybe for the best.