Monday, June 29, 2015

Philips Develop A In Store Geolocalisation Technology For Carrefour

Philips has released recently a test of a new technology to geolocate customers in store. In Carrefour Euralille, a new system based on the lights of the store allow customers to locate themselves on their smart phone. You will see below a video showing how the system works. Now I clearly understand the reason why a company like Philips try to push this cutting edge technology in the retail world. I also understand why Carrefour is experimenting new technologies to improve shopping experience and thus the CRM.

But I am quite doubting about the real usage of the technology. Obviously, I believe in Ibeacons and I think the technology has more potential in terms of large usage. But also, I would like to question the use of those technologies in terms of store efficiency. A technology should not be developped because we need technology, but technology should rather complete a need. And so far, I don't see clearly how and why customers would use such a localisation system in store, even if it is very accurate. Nevertheless, I appreciate the fact that an industry leader like Carrefour is able to test and innovate in order to improve customer and shopping experience.

Thursday, June 25, 2015

8 Steps To Build Expertise In A New Field

This is a key advice I give to most of the students that come to see me to discuss about my career and how they should embrace one career or another. I have been very fortunate as a student to have great professors that gave me some advices that helped me out achieve what I have achieved so far.

One of the key advice I must give, when they are entering a great master like Paris Dauphine, I always emphasize on learning how to constantly learn rather than on focusing on the courses content of the moment. In our nowadays business world, things evolve fast: technology, sociology, techniques, business trends, countries... That forces the best to always been able to adapt and to seek for the new trends to leverage them in their business.

When I was a student, Myspace was a key component of what we learned, Facebook barely existed, smartphones were impossible to forecast what they become. I have never heard a teacher talking about Alibaba, Uber or the Kindle. What is important is to be able to learn, from people, from news, from your company, what is going on in order to constantly be up to dated.

Wednesday, June 24, 2015

Some Thoughts On Ecommerce and Web to Store

Very interesting article (in French) about the evolution of the Ecommerce landscape and how it will evolve in a near future.

If you are a frequent reader of this blog, you must know I am discussing a lot about how Ecommerce and brick & mortar retailing are actually merging  right now, with emerchants trying to find ways to get concrete locations while brick & mortar businesses are investing a lot on Ecommerce.

The article shows out clear statements which are important to always keep in mind:
  • Ecommerce is maturing, and most of the historical leaders of the market are struggling to deliver 3 to 4% growth on their domestic market. Actually, aside Amazon, most of the growth in the Ecommerce landscape is brought by brick & mortar competitors online.
  • Two trends are making pure players struggling online by lowering their profitability: The low price competition  (which was the core factor of their growth) added to the cost of acquisition (the money spent on online advertizing). If pure players may have cost advantages on the inventory, real estate & workfore, those strengths are actually lower due to those two main factors.
  • The web to store is one of the most important growth lever of the moment: If Internet is clearly one of the main source of information during the decision making process, more and more customers tend to finish up their transaction in store.
  • Even though they invest online, it is difficult for brick & mortar company to buy a pure player: Obviously a company like Carrefour could benefit fast of a purchase of a pure player to develop its market shares. But Ecommerce businesses encounter a lot of speculation which make them difficult pray to get for historical retail tycoons. Especially as traditionnal retailer shares are relatively low compared to their sales. Therefore it is not so obvious to see a retailer like Carrefour or Tesco buying out a Emerchant, even though the strategy could make sense. Nevertheless, why wouldn't they merge? 

Once again, the strategical war that is happening at the moment in the retail business is yet to come, and will be very interesting to watch.

Tuesday, June 23, 2015

Gamestops' Ibeacon Usage: Using Ibeacon To Enhance Salesforce Interractions With Shoppers

It was a while I favorited this tweet of Laurence Faguer: 

Ibeacon's initiatives are blossoming as it brings high expectations in term of customer relationship management and shopping experience. But so far, it looks more like experimentations than actually a game changing technology. Laurence tells us about how Gamestop is testing its beacons in 36 of its stores. Obviously, a great part of the test consist in providing specific deals and content about the video games on the shopper's mobile devices.

 But the beacons actually provide details about the customers' habits and preferences in order to customize their advices.

I really like this example because so far Ibeacons have been aimed to generate traffic by proposing discounts once the customer is nearby a store. But I am not convinced yet by what I have seen it is the most efficient way to use the technology, as it will become aggressive and have privacy issues.

But beacons linked to a good SFA software could give a boost to the interractions in store between the sales people and the shopper, and provide an enhance customer experience.

Monday, June 22, 2015

Amazon's Negociation Case Study: The Dilema Of Putting A Fight With A Supplier

Amazon is one of the larger retailer in the world. Most importantly, it is the most dominant force in the book business. Last year, Amazon has put up a fight with a lot of its main suppliers in its negociation process: Disney, Warner, Hachette were among its largest targets. The fought consisted in mostly taking some of the products off its "shelves".

Here is the picth of the fight:
On one side you have Hachette, the fourth largest trade book publisher.  Hachette earns over 1/3 of its US sales from ebooks.  Hachette wants agency terms for its books.  Hachette wants to control the list price of its books and earn 70% list from each sale.  Smashwords announced agency terms with our retail partners in 2010.On the other side is Amazon, a fierce opponent to agency pricing.  Amazon wants the ability to discount books, and to enable greater discounting Amazon wants a larger percentage of the publisher's pie.  A story out Friday by Jeffrey Trachtenburg of the Wall Street Journal confirms Amazon is seeking to reduce the percentage paid to publishers.  Amazon is seeking to weaken or abolish the agency model.

Now that Amazon has such a size, it seems normal if it tries to leverage its power to get the best purchasing conditions possible. It seems also that it is a dominant position. But if you have a close look to the link I posted above, you can clearly see this is not that easy. Indeed, Amazon has earned its market shares thanks to its large choice, especially in books and the new products it proposes. If it decides not to cooperate with companies like the ones listed herein, they will not satisfy customers, lose sales and may help a competitor to get some revenues out of it. 

Moreover, when Amazon has new projects to propose new streaming services, it needs those leading companies to set up the best platforms and to provide great content to develop the new category. As a matter of facts, these events show well how interconnected both suppliers and retailers are, and that despite fights which occurs during specific times, both entities need to work together to get the best business.

Sunday, June 21, 2015

How Costco Can Thrive In Ecommerce

I love the concept of Costco. Costco is a very specific retailer that have a strong concept, and over the years I stucked to it, and succeed in continuing

I read this very interesting article about online sales for Costco. Costco's Ecommerce activities account for 3%, while most of other brick & mortar retailers are around 7% at the time, targeting soon 10%.

This relatively small share comes from obviously the core concept of Costco: A warehouse with big bulk goods with a membership card to own. Far from a pure player business model. Nevertheless, there is a lot of room for growth for Costco online, there is no doubt about it.

Costco has actually been pretty creative with its online strategy in China, by opening a marketplace on Alibaba whereas they have no warehouses in the country.

But how could Costco make something work online? There is two limits to the two obvious strategy:

  • First it would be to adapt its business model online, with large bulky products with a membership fee. So far it is how it works, and it is unlikely it can earn great market shares this way.
  • To adapt its offer to the other competitors offer. But then, I don't really see the point.

I believe there are two strategies that could work pretty well, and that are some of the strategies that work the most at the time:
  • The flash sales: Costco is great at getting specific deals for a short period of times. That is what they call the "Treasure Hunt". The Internet has experienced tremendous success with such sales, and Costco could benefit from its great pricing to enter this market. 
  • The drive thru: In France, it works great. But by adapting the drive with its concept, with maybe a lot of businesses interested, it could work great. Also, you could get it working with a concept of a subscription concept, in order to ease the order process. Auchan is testing a connected object to order on its online shop, maybe Costco could also have such a service too.

What do you think about it?

Friday, June 19, 2015

Category Management & Lean Retailing: When Cutting Product Range Is Good

Another post dedicated to the option sometimes taken by retailers to cut down product ranges. I have posted recently about the very same topic. Obviously, the past 20 years, the FMCG product ranges have grown largely, making categories more and more complex to deal with. Nevertheless, I must admit that the more products you own in your product range, the more you sell.

Still, owning too many products could hurt your business. As I have said in the past, it hurts profitability as your operational costs rise each time you add a new product (shelving time, warehouse space, pricing and administrative duties...). But I read recently this great article about Tesco's decision not so long ago to shorten their product ranges.

Here are the two main reasons highlighted:
  • It allows the retailer to cut down the prices, and hence be more competitive. As I have said, product range raise the cost, and could either hurt your profitability but also your pricing. Obviously, it would be tough to go to extreme cut downs like discount specialist Ikea or Costco, but for a hypermart chains, having a lean strategy could help competing.
  • It allows to cut down out of stocks. Out of stocks are one of the main reasons of unhappiness in store. By having complex and large ranges, you increase the potential sold out items. Therefore, by limiting the ranges, it is easier to keep your store full and attractive.
I would like to add new ones:
  • It can ease the shopping experience and the merchandizing plan, to give a better lecture of the offer.
  • It could boost the average sales/months per products, and therefore improve the scoring of certain categories with low rotations.
Now the main issues to face while doing such a move:
  • Costco, Ikea, Aldi or other discount stores thrive on low prices with low ranges, but a hypermart or a supermart are meant to provide choice. It is one of their competitive advantage. It is wise to study well where and how to cut off without hurting some key category of services with low sales but a high importance in terms of service to customers.
  • What to do with the extra space? If you have to multiply the facing of products just to fill in the blanks, it would hurt inventory for no reasons. Maybe such a move also should be thought on how you could advertize better, or improve the shopping experience by using the extra space (new technologies, corners with sales people...)

Working better a smaller product range is obviously a risky strategy, but if set up properly for the right reason, it could be very efficient.