Going to the store may be your smartest bet to navigate the supply chain crisis this holiday

Today I was happy to share my thoughts on retailing, supply chain, and Holiday Shopping (in-store vs. online) with Nathaniel Meyersohn and Neil Saunders on CNN..

First, when style, color, brand assortments are limited due to inventory availability consumers face greater frustration online than they experience in-store. 

In-store a consumer can simply view, touch, try on whatever assortment is available during their visit. Online shopping tends to be more surgical and more difficult to browse for precise colors and fits. 

Next, as we and our brand and retail partners have learned over the past few years, the marginal net profit contribution is greater for an in-store sale than for an online sale, for the same item sold at the same price. 

Although brick-and-mortar sales require high “four wall” costs (real estate, personnel, utilities, etc.) online sales require substantial costs of “pick and packing” of inventory, boxing, handling, outbound freight to consumers, and large reverse logistics costs due to high return rates (returned freight from consumers, inspection, repacking or refurbishing, etc.). We’ve paid the tuition for this education, and it was an expensive lesson to learn.

Finally, when consumers shop in stores the average basket size is greater. When consumers walk through a store, they make “impulse” purchases (“oh, look at that…”) and “radiant” purchases (related items displayed adjacent to key items, for instance, belts presented near pants).

Therefore, when inventory is limited, we prefer to drive consumers to in-store purchases over online purchases. 

At Randa Apparel & Accessories, our in-store marketing includes increased visual merchandising via our dedicated sellers and in-store merchants, store signage and point-of-sale fixtures, print advertising, co-op ads with our retail partners, and even social media encouraging consumers to “buy now” at a store near them.

Happy and safe Thanksgiving holiday to all.

At Walmart, Deliveries are Going Driverless

Through months of testing in Bentonville, Walmart has determined that self-driving autonomous box trucks offer an “efficient, safe and sustainable solution” for transporting goods.

The retail giant has begun using driverless trucks in Bentonville, Ark., to move groceries ordered online by shoppers from a Walmart “dark store,” which is a store that stocks items for fulfillment but isn’t open to the public, to one of the company’s Neighborhood Market stores for customer pickups. 

The truck operates without a safety driver behind the wheel.

Walmart is also testing the technology in a handful of markets in Texas and Louisiana, though in those cases, there is a safety driver on board as a back up.

Walmart’s driverless trucks are supplied by Gatik, a relatively new company for automated, self-driving trucks handling short-haul, middle-mile logistics. 

The theory behind utilizing the autonomous trucks is that they will help meet the increasing demand to fulfill online orders, keep delivery times short, and will compensate for driver shortages. 

Gatik also contends that eliminating the human factor reduces the chances for incidents on the roads. “Through our work with Gatik, we’ve identified that autonomous box trucks offer an efficient, safe and sustainable solution for transporting goods on repeatable routes between our stores,” said Tom Ward, senior vice president of last mile at Walmart U.S.

Ward characterized using driverless delivery trucks as an “industry milestone,” marking the first time that an autonomous trucking company has removed the safety driver from a commercial delivery route on the middle mile anywhere in the world.

Walmart, said Ward, “looks forward to continuing to use this technology to serve Walmart customers with speed.”

Since July 2019, Walmart has been testing Gatik’s driverless truck with a safety driver in the vehicle. Last August, the safety driver was removed from the vehicle. The driverless trucks have been making repeated delivery runs per day, seven days a week on public roads.

“Arkansas and Gatik have shifted into the future with Gatik’s self-driving delivery truck,” Arkansas Gov. Asa Hutchinson said in a statement. “It is fitting that Arkansas, which is home to the greatest retail companies in the world, is the launching pad for this innovation in retail delivery.”

  • David Main, WWD

The Broken Department Store Model

Four of the five worst-per­form­ing S&P 500 stocks in the first half of the year were department stores. A few days into the sec­ond half of 2019, there is no in­di­ca­tion that trend is changing.

Nordstrom, which fin­ished June with the du­bi­ous dis­tinc­tion of the S&P 500’s worst per­former, lost 2.3% Tues­day af­ter UBS be­came the lat­est in a string of firms to lower its rat­ing for the stock.

The sell­ing pres­sure spilled over more broadly in the re­tail sec­tor: Macy’s and Kohl’s were also among the five big­gest S&P 500 de­clin­ers in the first half of the year, fell 1.3% and 1.1% respec­tively. Gap Inc.. fills out the roster. And, JCPenney is down 55% for the 12 month period.

The disruption is not about retail in general: Walmart, Target, Costco, Marshall’s, Ross Stores, Home Depot, Lowes and others are showing growth in sales and earnings.

And then there is Amazon

The business model for department stores has been disrupted. And, disruption is the mother of invention. Stay tuned…

From Akane Otani for the Wall Street Journal

The Emperor Has No Clothes

“Inside Walmart, tensions are rising. The company is projecting losses of more than $1 billion for its US e-commerce business this year, on revenue of $22 billion. Walmart does not disclose these figures publicly and declines to comment.”

“That size loss is an eye-popping figure for a company that is used to printing cash and which prides itself on its profitable operations.”

The Rise of Cause Marketing – Podcast

A great pleasure to speak with Ronny Sage of “Shopping Gives” on the important topic of Cause Marketing.

On this episode of The Impact Exchange we welcome David Katz, Executive Vice President & Chief Marketing Officer of Randa Accessories, one of the world’s largest international apparel and accessories companies. David is a thought leader in the retail industry with over 30 years experience. His education in neuroscience lends a unique, scientific approach to understanding the interactions of physiology, psychology, behavioral economics and consumer response.”
“As David transitioned from the clinical field of behavior and response, he realized much of what he learned was also applicable to the understanding of consumer needs. Understanding and leveraging consumers’ response and behavior is literally a $71 Billion industry, under the simple term: Marketing. As the world evolves, consumers’ wants and needs change, causing their purchasing behaviors to shift constantly. In turn, every business attempts to respond in ways that lead to consumer purchase, loyalty and success a.k.a profit.”

The Future of Retail Discovered in a Galaxy Far, Far Away…

“Retail as theater” has been redefined. The new shopping, entertainment, immersive experience ecosystem will completely transform the roles of retailers, retail workers, brands, products, services and especially “customers.”

In the 1960s, before the term “retail experience” existed, CEO and industry icon, Marvin Traub, created “retail as theater” at Bloomingdale’s on 59th Street.

Traub explained, “We developed the idea that a store should be entertainment, not just a place to buy a suit and a shirt or a tie.”

Under Traub, Bloomingdale’s staged stunning and immersive product presentations, curated from around the globe, as must-see events, attracting media and celebrity visitors, including Queen Elizabeth.

Hudson Yards. The Next Miracle on 34th Street?

Courtesy of Related Companies and Oxford Properties Group

Where can you go to work, jump on a treadmill, watch a movie, see an art exhibit, and buy a $10 latte, a $4,000 Louis Vuitton bag, and a $32 million condo – all at the same location?

Hudson Yards, New York City.

The 28-acre mixed-use Manhattan real estate development will open nearly one million square feet of retail space on Friday, March 15.

With 18 million square feet of residential and commercial development, five office towers, including a 1,100-foot tall skyscraper with the city’s highest outdoor observation deck. The complex will ultimately include 4,000 condominiums, a hotel, and an art and music venue. Dining options include tapas and hot dogs, as well as foodie bait from David Chang and Thomas Keller. When completed and fully occupied, the mega-project will be home to 40,000 office workers, 4,000 residents, and a currently unspecified number of retail employees.

A Lot of Clams

“One of the best innovation stories I’ve ever heard came from a senior executive at a leading tech firm. His company had won a million-dollar contract to design a sensor that could detect pollutants at very small concentrations underwater.

It was an unusually complex problem, so the firm set up a team of crack microchip designers, & they started putting their heads together.

About 45 minutes into their first working session, the marine biologist assigned to their team walked in with a bag of clams and set them on the table. Seeing the confused looks of the chip designers, he explained that clams can detect pollutants at just a few parts per million, and when that happens, they open their shells.

As it turned out, they didn’t really need a fancy chip to detect pollutants — just a simple one that could alert the system to clams opening their shells. “They saved $999,000 and ate the clams for dinner.”

Greg Satell, Harvard Business Review June, 2017

That, in essence, is the value of open innovation. When you have a really tough problem it helps to expand skill domains beyond specialists in a single field. Many believe it is these kinds of unlikely combinations that are key to coming up with breakthroughs.

If a newsstand and a vending machine had a baby…

If a newsstand and a vending machine had a baby… It might be the “NanoStore,” created by store automation vendor, AiFi Inc.

Essentially an automated self-service convenience store in a small footprint, NanoStore can be dropped into an indoor or outdoor space. Swipe a credit card to enter, and once inside it is “grab and go” cashier-less tech observed by sensors, cameras, and other tech.

Amazon Go in a box? A reduction in consumer friction? A good example of retail evolution popping up everywhere? Or, another “S.O.S,” victim of Shiny Object Syndrome? Just because we can build something doesn’t mean we should build it.

Your thoughts are welcome, as always.