Updates On Boundless Retail: From Omni-Channel To Customer-Centric

In this first entry of our “Updates on Boundless Retail” series, we take a closer look at Amazon’s and Walmart’s recent acquisitions, how they are becoming more alike than ever in terms of the shopping experience they provide, and why a customer-centric approach is what will define the next stage of Boundless Retail.

On June 16, the retail world was shaken up by two major acquisitions. Amazon announced its $13.7 billion acquisition of Whole Foods while Walmart announced it is buying premium menswear brand Bonobos for $141 million. For us, these two announcements offer a rather intriguing juxtaposition to re-examine the current state of retail and the way an emerging convergence of online/offline retail channels is shaping the sector’s future.

On one side, the Whole Foods acquisition solidifies Amazon’s entry into brick-and-mortar retail, as the deal bought Amazon “431 upper-income, prime-location distribution nodes” that will further boost its logistical prowess, particularly in the food and grocery categories. On the other, Walmart, the biggest physical retailer in the world, is buying a fashion retailer that uses its physical stores strictly as showrooms and sells everything through its website. As a result, both companies are racing against each other to become more like each other, as they blur the line between physical and online retail.

In our 2016 Outlook trend report,we observed:

“As ecommerce, physical, and on-demand retail become tightly integrated, our smartphones are becoming our passports, connecting our online preferences, profiles, and activities to our offline shopping experiences, and vice versa. Boundless Retail allows consumers continuous access to sellers who build relationships through multiple touchpoints and channels.”

Now, halfway into 2017, it is becoming clear that the concept of Boundless Retail is evolving into an even more seamless and customer-centric stage. The omni-channel approach that most traditional brick-and-mortar retailers have started to adopt is certainly helpful in meeting the increasing demand in ecommerce. However, it lacks the fluidity that exemplifies the reality of shopping today, where the customer journey no longer follows through one particular sales channel but rather would jump between various channels as they wish. For instance, they may discover your product on a social channel during commute, order it on a desktop device when they are at work later, and then decide to pick up the item in store on their way home. Or they may discover your product when they are window shopping and later decide to make an impulse purchase on their mobile device.

This kind of random and mutable shopper behavior enabled by the abundance of retail channels renders the previous channel-defined strategies no longer efficient, since the siloed way of thinking prevents retailers from truly embracing a customer-centric approach that prioritizes consistently optimized customer experience over driving customers down particular sales channels. Amazon and Walmart, as the biggest retailers in ecommerce and brick-and-mortar respectively, understand this new retail reality. On a closer look at these two acquisitions, it is clear that both companies are actively implementing a more seamless shopping experience that is not so much as omni-channel but rather channel-agnostic.

Amazon has been trying to get into the grocery business for a couple of years now, first with private-label food products sold on Amazon.com and later with AmazonFresh slowly rolling out to select markets. In fact, one could say that Amazon has been eyeing the grocery market since 2012 with the acquisition of Kiva system, which span out from Webvan, the first ever on-demand grocery platform. Buying Whole Foods instantly gives Amazon access to the premium grocery customers they have been chasing after and, more importantly, the mass scale it needs to make the grocery business operational as a modularized service.

As analyst Ben Thompson pointed out in his Stratechery post, buying Whole Foods sets up the infrastructure that Amazon would need to launch Amazon Grocery Service, where the ecommerce behemoth would leverage its distribution scale to take over the perishable goods market and disrupt all food-related businesses. Amazon chose to commoditize its cloud platform and made Amazon Web Services (AWS) a white-label product that all businesses can use and build upon, which ended up dominating the web service market with it unparalleled scale and cloud computing power. Now it is aiming to do the same with perishable goods.

Amazon could care less if a rival online retailer wants to host their website on Amazon Web Services, as it will only feed into their cloud business. (Walmart, understandably, aims to undermine Amazon by ordering its vendors to use AWS competitors instead.) Similarly, the perishable goods that Amazon holds under its grocery operations now gain a high-volume brick-and-mortar channel, and vendors could care less about whether their products are being sold via Amazon Fresh or Whole Foods stores. Buying Whole Foods provides Amazon with a guaranteed, large-volume customer of the perishable goods in its network so as to justify scaling up its wholesale grocery operations and better compete with other grocery retailers.

Make no mistake, Amazon still has a long way to go in its quest to conquer offline grocery business the way they did with their cloud service. At the moment, Walmart still controls the biggest share of the U.S. food and grocery market (about 14.5%), followed by Kroger (7.2%), according to estimates by GlobalData Retail. In comparison, Whole Foods currently sits a 1.2% market share and Amazon with a 0.2% share. But with Whole Foods now under its control, Amazon can start pushing for a grocery shopping experience for its Prime members that is totally fluid and channel-agnostic, using the Prime account as the cross-channel identification key, and convert more grocery shoppers into its ecosystem with the combined appeal of Whole Food’s high-end brand and an optimized shopping experience.

Of course, Walmart is not going down without a fight. The decision to acquire Bonobo’s shows the supermarket chain is determined to work towards building a more fluid, customer-centric shopping experience. Already, the company has been steadily rolling out curbside grocery pickup services in select U.S. markets. Last month, it took that concept one step further with a trial run of automated pickup grocery pickup kiosks at an Oklahoma City store.

The sustained success of Bonobo’s unique ecommerce-led, showroom-supporting strategy will provide Walmart with some much-needed insights into how to develop a flexible online/offline shopping experience to take on Amazon’s advances in online apparels, evidenced by the new fashion-minded Echo Look and Prime Wardrobe service, which brings the “try-before-you-buy” model to Prime shoppers. It will be fascinating over the next few years to watch the two retail giants battle it out over grocery and fashion retail.

So, given the current state of the retail market and the way its future is shaping up to be, what’s a U.S. retailer whose name is neither Amazon nor Walmart to do? Well, the first step is to recognize the fact that there is no way you will be able to compete with those two behemoths in terms of scale. Amazon has pretty much dominated ecommerce traffic and will continue to buy its way into the brick-and-mortar market, whereas Walmart will still have the largest physical retail store count in the world as it continues to grow and improve its ecommerce operations. There is simply no viable way to compete with their massive scale and the operational advantages that come with it.

That being said, retailers can still carve out a sustainable and profitable business by focusing on differentiation and perfecting the shopping experience they provide. As Andy Dunn, CEO of Bonobo’s, astutely pointed out, retailers need to focus on developing a unique brand identity with proprietary differentiation points that will offer customers a good reason, be it low cost, exclusive selections, personalized recommendations, or a unique shopping experience, to choose you over their default retail choices. As the kind of purposeful shopping, where the shoppers already know what they want to buy, becomes increasingly expedited and even automated by digital tools, the experience is becoming the ultimate differentiation point that retailers need to focus on.

Not every retailer can afford to be omni-channel, but every one can find a way to make their products, services, customer experience, and ultimately your brand, different enough to attract a loyal customer base. In the next stage of Boundless Retail, the end goal is not simply to be present on every sales channel, but to build a retail brand that is so distinguished and beloved by your customers that it won’t matter which channel you are on.

Walmart Trials Automated Grocery Pickup Kiosk At Oklahoma City Store

What Happened
Walmart is testing a new way for shoppers to pick up their online orders with a 24/7 automated kiosk, the brick-and-mortar giant announced on Tuesday. It unveiled a pick-up kiosk outside the Walmart Super Center in Oklahoma City. More than 30,000 grocery items, including fresh produce, meats,and dairy products, can be ordered online for the same price they cost in the store and can be picked up free. Barring a minimum purchase of $30, the online grocery ordering process for customers will be the same.

What Brands Need To Do
Walmart has been taking measures to modernize its online retail experience in order to effectively compete with Amazon, including launching a mobile payment app and rolling out an online order pickup program. This new move marks a significant step in Walmart’s continuous experiments to improve its customer experience and streamline the offline shopping process. More retailers should be leveraging new digital tools to improve their customer experience to meet the growing consumer demand for convenience and instant gratification.

 

 


Source: NewsOK

 

Google Starts Tracking Retail Purchases For Online-To-Offline Attribution

What Happened
Earlier this week, Google rolled out a new measurement tool to help advertisers measure the offline impact of their digital ads by tracking offline purchases people make in merchants’ brick-and-mortar stores after clicking on their digital ads. Through partnerships with consumer data and credit card companies, Google has access to roughly 70% of U.S. credit and debit card transactions, which it now matches with ad clicks to automatically inform merchants when their digital ads translate into sales at a physical store.

What Brands Need To Do
In October, Google launched a Conversions API for its display ad network DoubleClick, which enables advertisers to connect offline activities like in-store purchases and phone bookings to their online campaigns. Measuring offline sales and store visits driven by digital ads is especially important for retailers and CPG brands, as those metrics are the typical KPIs for measuring their campaigns. As Google builds out their attribution tools, brands should learn to leverage the data these tools provide to better inform their campaigns.

 


Source: Fortune

 

Facebook Let Users Unlock Discounts Via QR Codes For Offline Purchases

What Happened
Facebook has quietly added a feature in its flagship app that enables users to unlock digital discounts for offline purchases at partnered stores. With the Rewards feature nested under the More tab in Facebook’s main app, users can scan a personalized QR code to score discounts or bonuses when they make a purchase at a participating store.

Different from the Offers feature that Facebook launched in 2012, which gears towards coupon collecting and redeeming, this Rewards feature works more like a Facebook-operated loyalty program, allowing customers to scan their personalized QR codes every time they visit a store and rack up the “stamps” for certain rewards.

Facebook says this is a test feature that is currently only available to select users. There is no word on when or if this feature will become widely available.

What Brands Need To Do
For retailers and QSR brands, this Rewards feature gives them a new promotional channel to reach customers via Facebook and incentivize store visits. Other brands can also use this feature for customer acquisition and fostering repeat customers. For brand marketers, this feature could also give Facebook more behavioral data on shopping history and habits, allowing brands to improve the relevance of ad targeting and News Feed content. Down the road, brands should also be able to advertise their Rewards on Facebook to drive store traffic and promote sales event.

 


Source: TechCrunch

Google Aids Fashion Discovery With New “Style Ideas” In Image Search

What Happened
Following the addition of “Similar Items” in image search earlier this week, Google is doubling down on surfacing related fashion products with a new “Style Ideas” feature. For fashion search results in the Google Android app and on mobile browsers, this feature will present a set of visually similar items, outfit montages, as well as real-life images featuring that item. The end result is somewhat akin to a Pinterest board created around that specific fashion products. Google says the “Style Idea” images are algorithmically selected without human involvement, using Google’s machine learning capabilities to identify the images featuring the product in question.

What Brands Need To Do
As the follow-up to “Similar Items,” this new feature indicates Google’s ambition in turning image search into a fashion shopping tool. While “Similar Items” only covers fashion accessories and shoes, “Style Ideas” will show up in the image search results for apparels. Together, these two features revitalize image search as a viable product discovery channel that fashion brands will need to pay attention to. While this feature currently runs on machine learning algorithms and is not monetized in any way, it is not hard to imagine how this could easily become a new ad product where fashion retailers selling the same items can bid to appear first.

 


Source: The Verge

 

Snapchat Rolls Out “Snap To Store” Tools For Tracking Offline Attribution

What Happened
Snapchat has launched a new location-based ad measurement product that lets brands see if their ad campaigns on Snapchat is successful at driving people to visit their stores in the real world. The way this new measurement product works is by comparing the visits of people who saw a Snapchat ad, which includes things like a Snap that their friends took with a branded Geofilter, to visits of those who didn’t see one but went anyway during a week’s timeframe, therefore determining if there is a lift in foot traffic. Snap has been testing its Snap to Store product since last year with a handful of marketers, including Paramount Pictures and 7-Eleven.

What Brands Need To Do
This ad measurement product comes at a time when Snapchat is starting feel the mounting pressure from Instagram, which just announced that its Snapchat clone feature Instagram Stories have amassed over 200 million daily active users, surpassing the last count of 161 million that Snapchat announced alongside its IPO in February. As Snapchat tries to hold onto its lead in monetizing its messaging platform by updating their ad products and creating original content, brands should be aware of all the options they have and properly utilize the measurement tools available to more effectively measure their campaign performances.

 


Source: AdWeek

 

Mode.ai’s Messenger Bot Can Suggest Similar-Looking Fashion Items That You Can Buy

What Happened
On Friday, retail recommendation engine and chatbot maker Mode.ai launches a bot on Facebook Messenger that can find similar-looking fashion apparel items for users based on photos they submit. Mode.ai trained the bot’s AI engine with millions of pictures of products from online retailers, and if you like what it suggests, the bot also lets you shop directly from a number of fashion retailers like Levi’s, Louis Vuitton, Ann Taylor, as well as Amazon. In addition to its own bot, Mode.ai plans to offer computer vision services to several retailers and fashion publishers to be announced during F8, the upcoming annual conference for Facebook developers.

What Brands Need To Do
This new Mode.ai bot is a good example of how product discovery may work in the near future where AI-powered smart assistants are able to use the camera of your mobile devices to see what you are seeing. The surging prominence of visual input is set to bring a new set of opportunities and challenges that brands will need to learn to navigate in order to adapt to the shifting consumer behaviors. As computer vision technology continues to mature, it opens up new use cases for brands to create new user experiences supercharged by cognitive ecommerce engines like Mode.ai.

How We Can Help
The Lab has extensive experience in building Alexa Skills and chatbots to reach consumers on conversational interfaces. So much so that we’ve built a dedicated conversational practice called Dialogue. The NiroBot we built in collaboration with Ansible for Kia is a good example of how Dialogue can help brands build a conversational customer experience, supercharged by our stack of technology partners with best-in-class solutions and an insights engine that extracts business intelligence from conversational data.

If you’d like to learn more about how to effectively reach consumers on conversational interfaces, or to leverage the Lab’s expertise to take on related client opportunities within the IPG Mediabrands, please contact our Client Services Director Samantha Barrett (samantha@ipglab.com) to schedule a visit to the Lab.

 


Source: VentureBeat

 

Starbucks Tests New Concept Store That Only Takes Mobile Orders

What Happened
Starbucks is reportedly planning to open a concept store at its Seattle headquarters as it tests how to best serve mobile-oriented customers. This new Reserve store will be dedicated to mobile orders, meaning customers will place their orders and pay in advance via the Starbucks app and then pick up their purchases at the store. A second Reserve store is set to open in Chicago later this year.

What Brands Need To Do
This new store concept makes perfect sense for Starbucks given the success of its mobile app. In 2016, an average 7 million Starbucks customers ordered through the mobile app every month. Its massive popularity can be largely attributed to the seamless integration of Starbucks loyalty program in the mobile order and payment app. This new store format should help alleviate the long queues at certain stores at peak hours by routing the mobile orders to a Reserve pickup station nearby, therefore serving the convenience-focused customers without compromising the in-store experience. More QSR and retail brands need to learn a thing or two from this Starbucks initiative and consider how to design a mobile-first store experience.

 


Source: TechCrunch

Amazon Plans More Brick-And-Mortar Stores To Sell Electronics And Furniture

What Happened
As reported by the New York Times, Amazon is “exploring” the possibility of opening more tech-powered brick-and-mortar stores to sell furniture, home appliances, and consumer electronics. Augmented reality-powered tools will be installed in the furniture store for a virtual preview, whereas the planned electronics store that would be similar to the concept of Apple Store, but with a “heavy emphasis” on hardware and services like Echo speakers and Prime Video.

Amazon has already opened five physical bookstores across the country, with more planned to open later this year, including one in Manhattan. In addition, the ecommerce giant is also nearing the opening of its cashier-less grocery store concept of Amazon Go.

What Brands Need To Do
Make no mistake, Amazon is determined to make major inroads into the brick-and-mortar retail market after dominating the ecommerce market for years, and it has all the customer data and retail technologies to back it up. This imminent grand entry should sound the alarm for all retailers and CPG brands who rely on traditional retail distributions, who should have started preparing to compete with Amazon in the offline world yesterday. Walmart, for example, announced the launch of a tech incubator focused on virtual reality and artificial intelligence to boost its retail smarts. More retailers need to start equipping themselves with new technologies in order to deliver a digitally enhanced retail experience and fight off Amazon’s advances.


Source: New York Times

Sephora Partners With ModiFace To Break Down Makeup Looks In AR

What Happened
Sephora is betting big on augmented realities. The beauty retailer is working with AR technology provider ModiFace to perfect facial recognition technology for virtual makeup features in its mobile apps for customers to digitally try on products. According to Bridget Dolan, VP of the Sephora Innovation Lab, the technology can break down one virtual makeup application into a step-by-step layering process, while maintaining critical accuracy and reaching mass scale.

In its mobile app, Sephora has fleshed out its augmented reality offerings with a newly launched Virtual Artist tutorial feature that aims to drive purchases via virtual sampling and step-by-step tutorials. Once they are done with the AR-enabled tutorials, an “add to cart” button allows the testers to add products featured in the tutorials into their shopping carts.

What Beauty Brands Need To Do
Increasingly we are seeing beauty brands incorporating AR technologies into their products and services. L’Oreal’s Makeup Genius app and the BeautyU app from Covergirl are good examples of how beauty brands can leverage the advanced capabilities of smartphones to provide extra utility throughout the consumer journey. Beyond driving sales, those digital tutorials also help brands to collect behavioral data on individual user’s beauty needs and interests so as to better serve their customers with personalized offers.

How We Can Help
The Lab has extensive experience working with beauty clients to create and implement digitally enhanced retail experiences. The recently-opened NYX Cosmetics store at Union Square is a proud showcase of our team’s work in this space and elevated NYX as one of the most innovative digital beauty brands of 2016 named by WWD. If you’d like to learn more about how your brand can develop and implement digital-driven solutions to modernize your beauty retail experience, please contact our Client Services Director Samantha Holland (samantha@ipglab.com) to schedule a visit to the Lab.

 


Source: Glossy