Tony D'Onofrio
Retail
Throughout my retail career, I have closely followed the growth and progress of the grocery sector. Partially this is the result of actually having worked in a supermarket for 9+ years across many departments.
The importance of this retail segment is reinforced by Deloitte in their annual 'Global Powers of Retailing Report'. The 2020 edition found that fast moving consumer goods (FMCG) which includes grocery, drug, mass merchants, and convenience represents 66.5% of the total retail sales for the global top 250 retailers. Also interesting from that research, this sector tends to least globalize operations and recorded in 2020 the lowest composite net profit margin at 2% of sales.
The pandemic has become a brutal accelerator of digital transformation trends for all retail and grocery has not been immune from the disruption. Being classified as an essential business was a tremendous advantage for food, drug, convenience, and mass merchandise retailers. During the lockdowns, nearly $300 billion in wealth was transferred from general merchandise / hospitality to FMCG retailers.
As I stated in a recent Rethink Retail podcast, grocery sales which were only up 3% in 2019, jumped 11.5% in 2020. The sector stayed financially positive throughout the pandemic and still has substantial opportunities for additional growth. This podcast, recent grocery news from Amazon, and new research inspired this article.
Walmart versus Amazon: The Grocery Wars are Just Getting Started
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"The world’s most successful companies all have one thing in common: powerful brands ... Branding strategy is one of the foundational pillars of business. Simply presenting a unified brand message can increase profits by nearly 25%." - EU Business School
From multiple sources, this article summarizes key insights from the just published Brand Finance top 500 world's most valuable brands report.
Top 10 Most Valuable Global Brands and Key Insights from Entire Study
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As we continue to make progress emerging out of the COVID-19 health crisis, key trends that I have been following closely are both consumer priorities and retailers' technology focus areas. At the height of the lockdowns in 2020, consumers chased convenience and safety as primary purchasing drivers.
Forty-percent of the time in four countries (USA, UK, France, and Germany), this included switching retailers that were more responsive to their new shopping patterns. This was especially prevalent in the United States where 46% of the consumers made the switch. Subsequent research indicated that 88% plan to stick with their new shopping brand choices.
On the technology front, digital acceleration was the operative challenge that all retailers faced. "By some estimates, we (retail) have vaulted ten years ahead in consumer and business digital penetration in less than three months."
This article highlights technology focus areas that consumers are prioritizing as we enter a disrupted new normal. It also summarizes new research on the top retailer technology priorities to meet the demands of a digitally empowered consumer.
Surprising Consumer Shopping Technology Preferences
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In early 2020, the retail industry was off to a very strong start. Through February USA retail sales grew 7.5%. Then March came in as a pandemic lion with a substantial part of the world hitting the pause button. We all very quickly learned the difference between essential and non-essential retailers. The financial pain for the global retail industry for all of 2020 will total over $1.6 trillion.
The good news is that key major retail markets such as China and the United States have already overall recovered to pre-pandemic levels. Here are three predictions for the new retail year.
Safety Concerns Will Be with Us into 2022
An April 2020 consumer survey found that consumers felt safest in grocery stores, followed by drug stores and big box retailers. Malls ranked lowest with only 33% of respondents saying they would feel safe shopping in these locations. Sixty-five percent of women did not feel safe trying clothes in dressing rooms, 78% felt unsafe testing beauty products, and 66% had similar concerns working with sales associates.
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The Internet, mobile and social media have forever transformed the distribution of viral messaging. No longer the best kept secret, at the center of successful communication is the medium of video. If you still need convincing, here are a few statistics on the future of video.
Six out of ten people would rather watch online videos than television. Mobile video consumption rises by 100% every year. By 2022, online videos will make up more than 82% of all consumer internet traffic - 15 times higher than in 2017.
By platform, EVERY DAY five billion videos are viewed on YouTube, 10 billion on Snapchat, 8 billion on Facebook, and 1 billion on TikTok. Video campaigns on LinkedIn have 50% view rates.
Viewers retain 95% of a message when they watch it in a video, compared to 10% when reading it in text. Seventy-two percent of customers would rather learn about a product or service by way of video. Social media posts with video have 48% more views.
Video increases organic search traffic on a website by 157%. On average, people spend 2.6x more time on pages with video than without. Videos under two minutes long get the most engagement.
Having a passion for powerful visual communications, weekly through my personal website I share multiple new videos focused on retail, emerging technologies, and leadership. As we reach the end of this surreal pandemic year, here are my top 7 amazing innovation leadership videos of 2020.
JD.com and The Future of Retail
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The Five Transformational Strategies
In October, I had the pleasure of delivering my latest updated presentation "The Disruptive Future of Retail" on three continents. The new edition analyzes the state of nearly $30 trillion industry, answers whether ecommerce is eating the retail world, analyzes the recovery trends underway, provides a peak at the surprising early holiday season, explains the trends of what will be the new normal, and concludes with a summary of the technologies moving the retail industry forward.
COVID-19 has become a disruptive accelerator of digital transformation trends that were already underway. It's not only a question of being anointed as an essential retailer that determines success. Companies that were investing in creating harmonious retail channels with digitally enhanced immersive consumer experiences, coupled with strong branding will emerge stronger out of the current health crisis.
The world the virus leaves behind requires immediate focus on five transformational strategies and three foundational technology platforms. At the center of these critical initiatives is a much more intensive focus on creating passionate consumers that become active digital brand ambassadors for retailers.
The Post Pandemic FIVE Transformational Retail Strategies
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Roundup of the Latest Holiday Season Retail Forecasts
With COVID-19 severely impacting retail across the globe, of great interest has been the continuing research and predictions of the 2020 holiday shopping season. For the world's two largest economies, China and the United States, the good news is that after very steep drops at the start of the pandemic, retail sales have already recovered to 2019 pre-pandemic levels.
In China, retail sales rose 3.3% in September, the strongest rise since December 2019. In USA, "total retail and food services sales amounted to $549.3 billion last month, up 1.9% from revised August sales and 5.4% from last year's September total."
Mid-October, Amazon kicked off an early holiday season with the successful Prime Day sale. Initial reports indicate that total sales during the two day shopping event hit $10.40 billion globally, up from $7.16 billion in 2019.
This article summarizes selected holiday predictions from my continuously updated "Disruptive Future of Retail" presentation. Variations of this content with greater focus on digital transformation were delivered on three continents this month.
How are retailers entering the holiday season? What is the latest consumer sentiment? Who will win the season based on the latest forecasts?
The Sectors Leading the Holiday Season
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“We are laser-focused on continuous improvements to customers’ experience across our stores. By leveraging Everseen’s Visual AI and machine-learning technology, we’re not only able to remove friction for the customer, but we can also remove controllable costs from the business and redirect those resources to improving the customer experience even more.” - Mike Lamb, Kroger's VP of Asset Protection
This post was inspired by a recent Kroger article announcing the deployment of visual artificial intelligence (AI) in 2500 stores and new IHL Group edge computing research. Multiple technological trends have been converging for some time and their combination is leading to transformative store operations improving solutions.
By 2021, one billion video cameras will be deployed around the world. Endless possibilities in creating immersive consumer experiences emerge when artificial intelligence and machine learning are coupled with these visual data gathering devices.
COVID-19 has become a disruptive accelerator of digital transformation trends that were already underway. It takes 66 days or approximately two months to form a new permanent habit. New shopping journey habits have emerged during the pandemic that will require intensified analysis of millions of data inputs to both protect transactions and remove negative experience friction.
What are some of the leading Visual AI or computer vision applications today? In retail, what's the Return on Investment (ROI)? What makes these technologies critical to the future of retail?
The Computers Have Eyes
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The latest 2020 IHL Group forecast points to a COVID-19 negative $1.6 trillion global retail economic impact, with USA sales declining 7.6% this year. Fortunate sectors such as grocery and mass merchandisers will achieve double digit growth. Among the worst performers are departments stores (-23%) and specialty soft goods (-33%).
How do these challenged retail sectors, which are not expected to recover to 2019 levels until 2023, return to growth? One potential answer can be found in China, which on multiple levels remains the innovation laboratory for the future of retail.
"Virtually nonexistent three years ago, livestreaming now accounts for 4% of total online retail sales in China and about 1% of total retail sales. The number of products promoted on Taobao (Alibaba) via livestreaming nearly tripled in 2019—before the pandemic—and the number of Taobao livestreaming merchants almost doubled."
What is livestreaming e-commerce? What is making it successful in China?
Key Opinion Leaders (KOL's) Drive Livestreaming
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The Wall Street Journal recently reported a sharp rise in deadly violence in major USA cities. Their analysis of crime statistics among the nation's 50 largest cities found that reported homicides increased 24% so far this year.
"Police, researchers, mayors and community leaders see a confluence of forces at work in the homicide spike. Institutions that keep city communities safe have been destabilized by lockdown and protests against police. Lockdowns and recession also mean tensions are running high and streets have been emptied of eyes and ears on their communities. Some attribute the rise to an increase in gang violence."
This article is a follow up to the very successful July 2020 Global Retail Crime Summit. The Wall Street Journal analysis and the just published D&D Daily retail crime reports are a reminder of the challenges we face. Similar to the urban increase in homicides, retail experienced spikes in violence in the first half of the year.
Summarized in this post are the latest USA retail violence, organized retail crime (ORC) and retail robbery trends. As I pointed out in my Crime Summit presentation and in a recent podcast, data driven industry collaboration, increased best practices communication, and new technologies are critical components to attacking multiple of the surreal challenges taking place in 2020.
Retail Related Fatalities Were Up 45% in Q2/2020
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It is a Small World
“Even monkeys can fall from their trees.” – Japanese Proverb
Continuing our global learning journey, our next stop is Tokyo Japan. Founded, in 1603, this city was once a small fishing village called Edo. In 1890, it became Tokyo which means Eastern Capital in English.
In Tokyo, you will find the world’s busiest intersection, the Shibuya crossing where 2,500 people cross the intersection, every time the lights turn green. This city also holds the record for the most Michelin starred restaurants at 212 places to enjoy amazing food.
Tokyo is the most populous city in the world with 37 million people. Uniqueness is everywhere, even in vending machines, where you can buy hot meals, fresh produce, and even umbrellas. There is one vending machine in the city for every two people.
Have lost count on the many times I visited Tokyo to experience their modern retail industry. This picture is from the New Otani Hotel gardens, a favorite during multiple visits.
As the Japanese proverb that opened this summary reminds us, no matter how accomplished we become, you can always make a mistake. Overconfidence can lead to missteps. Life is one sweet ride and Japan provides many reminders on how to enjoy it.
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Brilliant Research
World Happiness Report 2024
The top 10 countries have remained much the same since before COVID. Finland is still top, with Denmark now very close, and all five Nordic countries in the top 10. But in the next 10, there is more change, with the transition countries of Eastern Europe rising in happiness (especially Czechia, Lithuania and Slovenia). Partly for this reason the United States and Germany have fallen to 23 and 24 in the rankings. - A partnership of Gallup, the Oxford Wellbeing Research Centre, the UN Sustainable Development Solutions Network, and the WHR’s Editorial Board. Read more
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ChatGPT Statistics - Users, Revenue (March 2024)
ChatGPT has over 180.5 million monthly users as of March 2024. Nearly 15% of the ChatGPT users are from the United States. More than 92% of Fortune 500 companies are using ChatGPT. atGPT is forecasted to generate a revenue of $1 billion in 2024. 53% of the readers failed to identify ChatGPT written content as AI-written. – From Demandsage.com
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From the biggest election year in history, to how to control AI and even taxis that fly, The Economist offers its annual look at the world ahead. Read more
