The Future of Retail: 10 Trends of Tomorrow

22 Jul 2015

Retailing will become more personalised, collaborative and socially-influenced in the future, according to new research by Planet Retail.

The report, titled The Future of Retail: 10 Trends of Tomorrow and featuring case studies from retailers around the globe, warns that retailers should begin preparing themselves for another few years of significant structural change.

Natalie Berg, Retail Insights Director and author of the report, commented:

“Retailing has undergone seismic shifts over the past five years and we believe that further fundamental changes are just around the corner. By 2020, we predict that shoppers will have to pay for home delivery, traditional points-based loyalty cards will become a thing of the past, pure-play retail will largely cease to exist and checkout-less stores will become a reality.

“A key theme across the 10 future trends is the need for collaboration. Retailers are finally beginning to recognise the benefits of working together both in bid for differentiation and providing a better service for the customer. We expect more retailers will join forces by 2020, primarily through instore concessions or collection points for online orders.”

Fulfilment

“When it comes to fulfilment of online orders, we believe there is a growing disconnect between shopper expectations and retailer capabilities. The competitive state of the sector has resulted in a proliferation of retail delivery services with lead times getting shorter and shorter. As a result, shoppers now expect delivery to be fast, reliable and – crucially – free.  This is unsustainable in our view, and we are beginning to see the first signs of cracks in the system. Looking to the future, we expect more retailers to begin charging for services such as home delivery and for low-value click & collect orders.

“Click & collect will continue to bridge the gap between online and offline retailing. Our own research shows that half of global shoppers are now influenced by a retailer’s ability to offer convenient collection points for online purchases. Click & collect is no longer a nice-to-have, it’s now a prerequisite.

“Looking ahead, retailers must follow their own golden rule by putting the customer first. For many, this will require collaboration with some unconventional partners to improve speed and quality of service while providing additional choice for customers. The key will be to collaborate with non-competing chains that share an overlap in customer demographics, thus allowing the retailer to benefit from increased footfall and shopper satisfaction without the risk of sales cannibalisation. It’s for this reason that we are expecting more retailers competing in different sectors - e.g. fashion and beauty - to join forces in the name of providing a best-in-class click & collect service.”

Instore technology

“The store of the future will be heavily influenced by technology. We expect more retailers - particularly the spacious, SKU-heavy hypermarkets - to invest in instore navigation capabilities. In addition to the opportunity to better understand shopping habits, this technology is incredibly powerful as it enables the retailer to engage with shoppers just moments before potentially making a purchase.

“In the not too distant future, we also expect more shoppers to pay for items via their smartphones. The highly publicised launch of Apple Pay has certainly created a buzz around mobile payments, but we believe it will be some time before shopper usage catches up with awareness. In fact, our own research shows that only 20% of shoppers globally have used their mobile phones as a method of payment.

“Concerns over privacy and security must be addressed in order for mobile payments to be accepted beyond those early adaptors. Convenience, ease of use and providing tangible benefits for the shopper are essential.  For example, some retailers have been testing checkout-less stores, allowing shoppers to use their smartphones to scan and pay for items as they add them to their basket.

“Retailers should also consider rewarding shoppers, potentially linking to loyalty schemes, as an incentive to make mobile payments. It’s for this reason that we believe in the long-term success of a more comprehensive mobile wallet as opposed to mobile payments as a standalone option. Although such technologies can help retailers to differentiate today, it’s important to bear in mind that this will also lead to greater customer expectations and in the next five to 10 years such technologies will simply become the norm.”

Loyalty

“We believe the end is nigh for points-based loyalty cards. The rise of shopper promiscuity and general strive for more honest, transparent pricing has had a detrimental impact on traditional loyalty schemes. That said, the notion of rewarding your most loyal, most profitable customers will never go away. The future will revolve around personalisation, digitisation and gamification. We would also encourage retailers to look towards value-added perks – as opposed to money-off vouchers - such as providing VIP checkouts for cardholders or free hot drinks instore.”

Personalisation

“Retailers must be prepared to enter a new phase of mass personalisation. Historically, bricks and mortar players have struggled to replicate the level of personalisation that can be found online. However, recent advances in beacon technology mean that targeted, real-time offers are now a reality. What’s more, Planet Retail research shows that 38% of global shoppers want to opt in to receiving relevant discounts when instore, compared to the 15% of shoppers currently doing this. This combination of shopper enthusiasm and technological capability means that bricks and mortar retailers should be looking to take personalisation to new heights, driving both customer loyalty and spend,” Berg concluded.

The 10 Future Trends:

1. Fewer, but more impactful, stores

2. Working together to stand apart

3. Race for the most convenient store experience

4. Personalisation to reach new heights

5. The end of points-based loyalty cards

6. Power of the peer

7. Cracking the final mile

8. Death of pure-play

9. Click & collect

10. From one-click to no-click

Walmart leads 2015 Top 25 Global Retailers

Jul 29, 2015Julie Gallagher

• Walmart leads 2015 Top 25 Global Retailers
• U.S. invasion

“Walmart remains by far the leading player but will not rest on its laurels. In fact, there are a number of key strategic initiatives it is pursuing at home and abroad.”

—ROBERT GREGORY, Planet Retail

A shifting focus toward smaller retail formats and the strong U.S. dollar influenced Planet Retail’s list of the Top 25 Global Retailers, on which Walmart, Costco and Carrefour took the top three spots, respectively.

The ranking is based on 2015 sales in U.S. dollars, which Planet Retail has forecast for the year while taking into account historic performance, store opening projections (which are reflected in store counts provided) and an estimated comparable store growth rate.

With a projected $527.8 billion in sales, Wal-Mart Stores bests all other international retailers by a wide margin, according to Planet Retail.

“Walmart remains by far the leading player but will not rest on its laurels,” noted Robert Gregory, head of advisory for London-based Planet Retail. “In fact, there are a number of key strategic initiatives it is pursuing at home and abroad.”

These include restoring performance in some faltering international markets and focusing on e-commerce around the world.

“Walmart was initially slow to embrace e-commerce, but is making up ground fast with global e-commerce sales growing at more than 20% per annum,” Gregory said.

While the Bentonville, Ark.-based retailer has online operations in most countries in which it operates, its key markets for digital sales are the U.S., U.K., Brazil and China, according to Gregory. Walmart considers Asda in the U.K. and Yihaodian in China to be best-in-class for e-commerce, he said.

No. 2 retailer, Issaquah, Wash.-based Costco Wholesale Corp., with a projected $127.9 billion in sales, has about 70% of its 687 outlets in the U.S., according to Gregory who said it is scheduled to open 24 new stores by fiscal year 2015.

“While the growth of ancillary businesses and an expanded service offering should boost domestic sales, international club expansion will drive new member growth, which will propel a stronger bottom line,” he said. “The first store in France is scheduled for 2016, following on from entry into Spain in 2014.”

French retailer Carrefour is No. 3, with $119.8 billion in sales when converted to U.S. dollars, and 12,965 outlets.

Gregory noted that despite increasing sales in their local currency, many European and Japanese retailers declined their ranking on the list due to currency exchange rates to the U.S. dollar.

Kroger, with $116.4 billion in sales and 3,750 stores takes the No. 4 spot, followed by Tesco.

The U.K.-based retailer is coming off a “nightmare year, rocked by leadership changes, the accountancy scandal, negative like-for-like sales and a record loss,” according to Gregory. “Further disposals are likely [such as Dunnhumby] and international markets such as South Korea, as it looks to rebuild its balance sheet and generate funds to invest in the U.K.”

While the outlook for Tesco and its 7,990 stores isn’t all doom and gloom, it still has a fair amount of challenges ahead.

“Tesco is currently on a journey and recent trading has actually improved and it is actually performing stronger than rivals such as Walmart’s Asda,” added Gregory. “However, it will be a long journey and with like-for-likes at its hypermarkets continuing to decline and with store openings being scaled back, Tesco is likely to fall further down the global ranking in the coming years.”

7-Eleven parent Seven & I, is the No. 6 retailer with $101.4 billion in sales across 38,009 outlets which include its retail banners and its nonfood offerings such as department stores.

U.S. invasion

It’s followed in the ranking by Lidl parent, Schwarz Group, with $99.7 billion in sales. Earlier this summer, Lidl confirmed plans to expand beyond Europe for the first time, to the U.S., but these stores are not expected to open in the near-term and therefore did not factor into Planet Retail’s projections. Schwarz Group has also announced market entries in Serbia (Kaufland, Lidl) and Lithuania (Lidl), according to Gregory.

With $96.2 billion in sales, U.S.-based Walgreens Boots Alliance is ranked No. 8. Its position was boosted by Walgreen’s acquisition of the remaining 55% of Alliance Boots that it did not own, to form the first global pharmacy-led, health and wellbeing enterprise and the largest purchaser of prescription drugs in the world.

Japanese retailer Aeon is No. 9 on the list with $92.1 billion in sales and 19,171 total outlets. And rounding out the top 10 is Aldi, which, according to Gregory, is among the retailers who’ve slipped down the ranking due to an unfavorable EUR-to-USD exchange rate.

Aldi’s expansion plans include new stores in a range of markets including some in Western and Southern Australia and West Coast and Southern California stores in the U.S. In addition to acquiring the Bottom Dollar chain from Delhaize, it hopes to more than double its stores in the U.K. by 2022, according to Gregory.

Minneapolis-based Target Corp., No. 11 on the list, “will accelerate small-box and urban expansion, via TargetExpress and to a lesser extent CityTarget,” said Gregory. “After having opened its first TargetExpress location last summer in its home market of Minneapolis, Target is set to open eight additional locations in 2015, more than half of its total planned store openings for the year.”

With $79.9 billion in sales, France-based Auchan is the 12th ranked retailer, followed by Metro Group (No. 13) with $77.9 billion in sales.

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No. 14 on the list, CVS, with $70.5 billion in sales and 7,923 stores will continue to expand organically as well as benefit from the store-within-a-store concept that will result from its purchase of Target’s 1,660 in-store pharmacies and 80 in-store clinics, Gregory said.

“A clear trend amongst all players on the ranking is the shifting focus towards smaller formats,” he told SN. “Even the likes of Walmart are trying to decrease the proportion of sales from big-box stores as they look to embrace smaller formats, such as Walmart to Go and Walmart on Campus.

“In addition, investing in stores to make them a more integral part of the online shopping experience has become a priority with all leading players introducing click and collect facilities across their store networks. Clearly, this will be part of their attempts to reinvent the weak performing big-box stores, as well as measures such as improved service, greater use of in-store technology and trying to cater to the mobile shopper in the stores.”

Other notable retailers on the list include No. 19 Albertsons, with $56.8 billion in sales, whose ranking was boosted as a result of its merger with Safeway, and No. 22 Ahold, whose $46.7 billion sales projection does not include its forthcoming merger with Delhaize, according to Gregory. 

Alibaba is investing $1 billion to take on Amazon's cloud computing juggernaut

• JILLIAN D'ONFRO
 
•  

• Jul. 29, 2015, 4:00 AM

REUTERS/Lucy NicholsonJack Ma, founder and executive chairman of Alibaba

Chinese e-commerce giant Alibaba is upping its investment in cloud computing, with a new, $1 billion cash infusion, making it more of a competitor to Amazon, Google, and Microsoft than ever before. 

The funding will be used to expand Aliyun's international presence, extend its alliance-based ecosystem, and to build new products that it can offer at lower costs, the company announced in a press release. 

This is the second of recent signs that Alibaba's getting serious about its cloud business. Just last month, Aliyun signed a series of new partnerships with the likes of Intel and data center company Equinix to localize its cloud offerings without having to build its own new data centers.

Right now, cloud computing only constitutes a small chunk of Alibaba's $2.8 billion in revenue last quarter, but this new investment prove Aliyun doesn't plan to slow down. 

Right now, Amazon leads cloud computing in the US, on track to book more than $7 billion this year from its Amazon Web Services infrastructure business — that's than its four closest competitors (Salesforce, Microsoft, IBM, and Google) combined. 

Senior Citizens May Soon Be Able to Use Food Stamps for Grocery Delivery

The USDA recently proposed that senior citizens be able to use SNAP for grocery delivery, and will launch a pilot program

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July 28, 2015 | 05:29 PM By Joanna Fantozzi, Editor 

Shutterstock

Here’s a new way to help out seniors in need.

The USDA is proposing a new solution for aging Americans across the country. Although many senior citizens are already members of the SNAP program — formerly known as the Food Stamp Program — a significant number of seniors have limited mobility and cannot easily leave the house to shop for groceries.

The new USDA proposal would allow senior citizens to use their SNAPallowance for grocery delivery services like Peapod. The USDA is currently looking for 20 grocery delivery services that would be willing to participate in a one-year pilot program.

The U.S. Secretary of Agriculture, Tom Vilsack,told Time that he believes the new proposal would help seniors become more independent, and talked about his aunt, who cannot shop on her own because of a bad hip.

“Having services delivered to her enabled her to stay in that home with greater dignity for a longer period of time,” Vilsack told Time. “I’m sure that there are a lot of Aunt Jessies out there that will benefit from this program for a multitude of reasons.”

Although Meals on Wheels already has a similar program, with a sliding payment scale based on income, 9.3 million senior citizens are food insecure. SNAP partnering with grocery delivery services could help to lower that number. 

Wal-Mart Eyes Alibaba, Amazon With China Buyout

Jul. 29, 2015 10:46 AM ET  |  2 comments  |  About: Wal-Mart Stores, Inc. (WMT), Includes: AMZN, BABA

Bottom line: Wal-Mart’s Yihaodian could sharply boost its share of China’s e-commerce market in the next 2-3 years, following a buyout that will give the site better access to its parent’s experience, offline stores and global connections.

Just a week after sacking the 2 founders and top executives of its China e-commerce site, global retailing giant Wal-Mart (NYSE:WMT) has taken the next step and bought out its partners in their Yihaodian joint venture. The buyout completes a takeover that began with Wal-Mart’s purchase of a controlling 51 percent of Yihaodian 3 years ago. It also signals that Wal-Mart is preparing to pump major new investment into the site, as it tries to become a major player in a market dominated by local giants Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD).

I have to applaud Wal-Mart for finally taking control and tossing out Yihaodian’s founders, who weren’t doing much to challenge any of the nation’s top e-commerce sites. But that said, foreign companies have a very poor track record competing with homegrown Chinese Internet firms, and it's far from clear if Wal-Mart can succeed where other big names like Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Yahoo (Nasdaq: YHOO), Expedia (Nasdaq: EXPE) and eBay (Nasdaq: EBAY) have failed in the past.

Yihaodian looked like a rising e-commerce star when Wal-Mart took control of the company by buying its 51 percent stake in 2012. It tried to carve out niches in the online grocery space and the market for imported goods, drawing on some of its own connections and areas of expertise. But despite those efforts, Yihaodian remains a bit player in the broader China e-commerce market with less than 1 percent share.

Wal-Mart was clearly running out of patience with Yihaodian founders Yu Gang and Liu Junjun, who were also the chairman and CEO when they suddenly resigned less than 2 weeks ago. (previous post) Now Wal-Mart is saying it has officially taken full control of Yihaodian by buying out the remaining 49 percent of the company from Yu, Liu and another major stakeholder. (company announcement; Chinese article)

Wal-Mart also announced that Wang Lu would take over as head of Yihaodian as part of his broader responsibilities as its Asia head of e-commerce. No terms were given for the buyout, but I would expect Wal-Mart paid around $200-$250 million, which is roughly half the market value of Dangdang (NYSE:DANG), a company of similar size that is also struggling.

Accelerating Investment, Offline Integration Ahead

Wal-Mart didn’t comment in detail on its future plans, but said it will invest in accelerating e-commerce in China and also in integrating Yihaodian with its traditional offline stores. That kind of integration is often referred to as online-to-offline (O2O), and has been a focus recently for Chinese Internet companies that are forging growing alliances with traditional retailers like department and convenience stores.

I would expect Wal-Mart to invest aggressively in Yihaodian following this move, potentially pumping hundreds of millions of dollars into the company as it plays catch-up to more aggressive names like Alibaba and JD.com. US online retailing giant Amazon (NASDAQ:AMZN) has tried a similar strategy in China, but so far has met with limited success and is still a relatively small player.

Part of the problem for names like Wal-Mart and Amazon is their stronger focus on issues like quality control than Chinese rivals. That focus means they rely more on a direct sales model, compared with an open-platform model used by many Chinese rivals who bring together consumers and third-party merchants over open online marketplaces. Such third-party merchants are notoriously difficult to control, which was a big factor behind a scandal at Alibaba early this year when a Beijing regulator accused the firm of tolerating rampant piracy on one of its main e-commerce sites.

All that said, I do have to commend Wal-Mart for finally taking control of Yihaodian after failing to gain much traction under its previous top executives. Other companies like eBay and Yahoo made similar moves by quickly sidelining company founders after making major China acquisitions in the past. Both of those moves ended up relatively disastrous. But in this case, Wal-Mart will have the benefit of a bit more familiarity with Yihaodian, since it waited 3 years before dumping the company’s founders.

Wal-Mart will also benefit from potential synergies with its well-run network of traditional brick-and-mortar stores in China. It could gain as well from growing pressure on companies like Alibaba and JD.com to adopt more global standards for their operations. For all those reasons, I would give this new Yihaodian better chances of success than previous foreign Internet ventures in China, and could see the company quickly double its market share to 2 or even 3 percent of the market in the next 2 years.

Target opens cybersecurity center to fight online threats

July 22, 2015 | By Dan Alaimo

Target (NYSE:TGT) recently opened a state of the art Cyber Fusion Center to protect customer data from online threats. It is part of the $1 billion investment the retailer is making in technology and supply chain this year.
The center is designed for a quick, team-based approach to security events, according to the company's A Bullseye View blog. It is a large, open space with plentiful natural light, designed with collaboration in mind.
The goal of the space is to bring Target's key information security teams together to work faster and with more agility than in the past, reducing the amount of time between the alert and containment of security events. The teams sit in an open format, arranged based on the logical flow of information.
"With no walls between any of the groups, members can connect to share information quickly and make fast and accurate decisions," said Dave Baumgartner, VP of cybersecurity at Target. "The entire team can come together in a moment's notice. And thanks to the open format, everyone always has direct access to leaders, and we're quick to turn failures into measureable improvements."
To help staff the center, Target has posted 54 jobs on its "Target careers" web pages. The titles listed indicate the seriousness and technological sophistication of the undertaking. These include: senior operations analyst, information security; principal engineer, cybersecurity; cyber threat intel senior analyst; lead security architecture, big data analytics information security; incident triage analyst; and senior engineer, IT security engineering threat and vulnerability management.
"Data security is a top priority at Target," said chairman and CEO Brian Cornell. "So we continue to invest heavily in top talent, as well as technology, and focus on continually evaluating and evolving our processes as the landscape changes." Information security leaders from the center will participate in this week's Aspen Security Forum, which Target is sponsoring.
"We've got teams of cybersecurity analysts working round the clock," said Brad Maiorino, Target's chief information security officer. "They use a mix of human intelligence, analytics and state-of-the-art technology to detect, investigate and contain threats to our business."
There are several teams sharing the center's space along with other information security experts. These groups are:
The Cyber Threat Intelligence team monitors and analyzes trends and patterns in cyberspace to help make decisions.
The Cyber Security Incident Response team develops Target-centric detection techniques and keeps watch over systems and networks, ready to respond to any incident in a moment's notice.
Security Testing Services evaluates new and existing technology to identify areas of concern, from proper coding or configuration to necessary patches.
The Red Team simulates real-world attacks on Target's environment to uncover defensive control weaknesses.
Continuous Improvement experts document the teams' learnings, capture metrics and reporting, and prioritize team efforts.
"My team develops content for monitoring the network, so I'm constantly working with the other teams to improve detection," said Lori Murray, security engineer. "Problem-solving requires understanding others' perspectives, which is why I appreciate the open atmosphere within the center."
The teams need a range of talents. Some jobs require the ability to understand coding in different languages, while others rely on analytical skills. Collaboration is essential for all teams, as is the ability to move quickly and make fast decisions. With the teams working so closely, there is a great deal of opportunity for team members to try out new roles, learn skills in different areas and expand their experiences.
"What helps me most on the job is a great sense of curiosity—asking how and why things happen in order to prevent future issues," said Keith Higgins, triage analyst. "It's a challenge because the work is different from day to day, even hour to hour. I'm constantly learning new things, and I love digging into a problem to find the root cause."
"At the end of the day, it's all about keeping our guests' data secure and protecting our company's information," Maiorino said.

Sainsbury's becomes UK's second biggest supermarket as Asda stalls

Sainsbury's last held the title of Britain's second largest supermarket in January but has won back the position from a struggling Asda

Sales at all of the 'big four' grocers declined in the three-month period Photo: PA

By Sophie Jamieson

10:54AM BST 28 Jul 2015

4 Comments

Sainsbury’s has won back the title of the UK’s second largest supermarket,overtaking Asda in market share by a whisker.

The supermarket chain now has a market share of 16.5pc, compared to Asda’s 16.4pc, according to industry figures from Kantar Worldpanel.

Sainsbury’s, which last held the title in January, saw sales decline by 0.3pc, but Asda had a particularly disappointing spell, recording a sales drop of 2.7pc in the 12 weeks to July 19.

Sales at all the ‘big four’ grocers declined in the three month period.

Even the best performer, Morrisons, saw sales fall 0.1pc. At Tesco, sales fell by 0.6pc.

Tesco still has by far the largest share of the UK market at 28.5pc, down only 0.1pc from last month’s figures.

An Asda spokesman said: "We're going through one of the toughest trading periods to face UK supermarkets, so it comes as no surprise that industry figures continue to be volatile from month to month."

Across the groceries sector, sales were up 0.8pc compared to this time last year, for the 12 weeks ending July 19.

The Co-operative supermarket grew sales for the first time in a year, with a new focus on convenience stores seemingly winning customers back.

Sales were up by 1pc at the Co-op, the first growth the Manchester-based grocer has seen since July 2014.

Customer numbers have risen by 133,000, although its market share remains at 6.3pc.

^{Strong sales in its convenience stores helped Co-op (Alamy)}

Smaller and budget retailers like Aldi and Lidl continued to shake up the market, achieving the best growth figures. Aldi grew by 16.6pc while Lidl was up 11.3pc. Iceland sales were up 3pc.

At the other end of the market, growth has accelerated at Waitrose, where sales have gone up by 3pc.

The supermarket recently introduced a headline-grabbing policy of allowing shoppers to choose their own special offers. Waitrose shoppers can now pick 10 products on which they will enjoy a 20pc discount.

Aldi and Lidl now occupy roughly the same amount of space in the market as Waitrose, which has a 5pc share. Aldi's share is up to 5.6pc and Lidl 4pc - both all-time highs for the brands.

^{Waitrose has tried to win shoppers by letting them pick their discounts}

Fraser McKevitt, head of consumer and retail insight at Kantar Worldpanel, said: “The continued slow growth of the overall market can be explained by minimal volume growth and lower like-for-like prices, both as a result of cheaper commodity prices and the fierce competition between supermarkets.

"Comparable groceries are now 1.6% cheaper than a year ago, meaning prices have been falling since September 2014, although they are projected to start rising again by early 2016.”