Tony D'Onofrio
Retail
This past week I had the opportunity to spend quality time with a leading computer vision company headquartered in Ireland. As an advisor to this company, I have been lucky enough to see their transformation from a single application to a portfolio of retail visual innovative disruptive solutions that will enter the marketplace in the balance of this year.
Concurrently, I remembered where Gartner placed computer vision in the Hype Cycle of Artificial Intelligence, 2020.
As you can see, Gartner has Computer Vision in the ‘Trough of Disillusionment’ reaching the ‘Plateau of Productivity’ in 2 to 5 years. Based on my retail industry observations over the last several months and this past week, powerful computer vision solutions are arriving much sooner to a store near you.
In 2021, the major milestone of over 1 billion CCTV cameras installed around the world will be reached. What started as a security technology to prevent crime, the video camera is now a major visual data gathering device that will transform all industries including retail.
All Those Cameras Have Data Eyes
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On many fronts, 2020 was a challenging year for the retail industry. During the early days of strict lockdowns to slow the spread of the coronavirus, governments around the world categorized some retailers as “essential” and others as “nonessential,” leading to a $285 billion transfer of wealth from nonessential retailers to essential retailers and a $250 billion transfer of wealth from small retailers to larger companies. This created a massive shock to the worldwide economy with GDP levels initially dropping 30% or more.
Even with widespread store closures, the United States saw an increase in retail fatalities and violent incidents in brick-and-mortar retail stores. In 2020, 485 violent incidents, up 14% from the previous year, led to 523 fatalities, up 5% from 2019. Customers, store associates, and security personnel made up 76% of the victims with the remaining 24% being suspects.
Managing new health and safety policies to fight the pandemic and violent incidents in retail stores elevated the importance of physical security in the retail industry. As with all other sectors, security was also impacted by the acceleration of digital trends that were already underway prior to COVID-19. The security “new normal” will include these top 5 physical security trends in retail to watch in 2021 and beyond.
Innovative Uses for Existing Security Technologies
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Despite the coronavirus pandemic’s impact on how we work, shop, and entertain ourselves, the retail industry has managed to adapt in the face of these challenges. Although e-commerce has played a bigger role in retail sales than before the pandemic, the “retail apocalypse” has been largely overstated. In fact, with brick-and-mortar sales generating over $18.5 trillion in the United States in 2020, I anticipate that the physical store will continue to act as the epicenter of the post–COVID-19 retail experience.
The Retail Store in 2021 and Beyond
For nearly a decade, e-commerce has been seen as a threat to traditional retailers, positioning online retailers as more capable of meeting growing consumer expectations for convenience and affordability. But the retail industry is nothing if not resilient. Faced with reduced in-store shopping due to widespread social distancing and stay-at-home orders, retailers turned to newer solutions like curbside pickup and buy-online-pickup-in-store (BOPIS).
One-third of retailers also reported investing in solutions to facilitate in-store pickup and returns for online purchases, offering customers the speed of brick-and-mortar retail with the convenience of online shopping.
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A Wall Street Journal article this weekend on robotics coming to a garden near you brought back memories of my office in Neuhausen am Rheinfall in Switzerland. Every afternoon, while doing the continuous string of international conference calls, I would observe a robot mower in the yard outside my window. The autonomous roamer would emerge from its electrically protected doghouse, run Swiss precision patterns across the lawn, and when finished return to its home to recharge.
This memory, plus the long string of articles below published in the last week on retail robotics inspired this article.
>> Domino's testing pizza delivery by self-driving robot car in Houston'
>> Chick-fil-A tests robot delivery in Southern California
>> Kroger is Amassing a Robot Army to Battle Amazon, Walmart
>> Save Mart kicks off pilot of shelf-scanning robots
>> Gap rushes in more robots to warehouses to solve virus disruption
>> Alibaba Group Xiomanlv delivery robots hit Chinese Universities
>> Your Drone-Delivered Coffee is (Almost) Here
Above seems to be counter to Walmart's announcement late last year that it was stopping its deployment of aisle scanning robots after installing them in hundreds of stores. Was the Walmart decision an anomaly in the growth of robots in retail? What role are robots playing in E-commerce? How has the pandemic impacted the trajectory of robotics? What's in-store for retail robotics?
Lessons from the Walmart Aisle Computer Vision Experiment
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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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It is a Small World
"To succeed in life, you need three things: a wishbone, a backbone and a funnybone." – Reba McEntire
Continuing our global journey to learn something new, our next stop is the Trevi Fountain in Rome. The name "Trevi" comes from the Italian words tre, meaning "three", and vie, meaning "roads". The fountain is located where three roads meet.
A fountain has been located at the Trevi Fountain site for over 2,000 years. The current fountain was designed by Nicola Salvi and built between 1732 and 1762. It's the largest Baroque fountain in Rome.
The Trevi Fountain's water comes from the Acqua Virgo aqueduct, the only functioning aqueduct from ancient Rome. Local lore says that throwing a coin into the fountain will ensure you return to Rome. Other lore says that throwing two coins will lead to love, and throwing three coins will lead to marriage.
Wishes aside, since 2006, a Roman Catholic charity called Caritas has collected the roughly €3,000 a day thrown into the fountain and used it to provide food and social programs worldwide.
Life is one sweet ride. Time flies way too fast. Take a moment. Sit at your favorite place. Imagine the history before you. Live each moment as it was your last. One day, it will be.
Categories
Brilliant Research
Unlocking Shopper Reactions to Secured Products
60% of shoppers report seeing locked-up merchandise on a regular basis. More than a quarter of shoppers say a retailer loses their purchase when items are locked up. 62% of shoppers say they typically wait for assistance when they encounter locked up merchandise, and 9% say they order the item online from that same retailer. - From Numerator.com Read more
Smart Infographic
Retail Media: An Evolving Growth Opportunity that Won't Wait
Retail media is still surging. Ad spending with US retailers is growing 9X faster than traditional point-of-sale shopper marketing. - From Bain & Company
Insightful Videos
Why EV Leases Are So Cheap Right Now In The U.S. -CNBC
Automakers are offering steep discounts on electric vehicles, and especially on leases. In the first three months of 2024, less than a quarter of car buyers leased vehicles, but more than a third of EV buyers did. Read more
