Day two of the Pitney Bowes Retail (R)Evolution got underway with an illuminating and data-driven presentation from Kelly Ungerman, Partner in the Retail and CPG practice at McKinsey & Company. Congruently, being data-led is critical for all retailers.
Some doom and gloom, but not all
Kelly declares that the debate over “how close are we to a tipping point” is essentially moot. She continues, that in nearly all areas, “it has tipped.”
- Recognition that most consumers are starting search online and disproportionately weighted to mobile”.
- Amazon is now the “first screen for product search”.
- Voice assisted search has moved from 30% to 61% with Alexa being a big win for Amazon
While the physical store still does matter – 50% of online consumers have used ship to store – loyalty programs work hard to drive consumers through the “loyalty loop”, but low adoption rates plague retailers.
The road ahead looks a bit grey with profitability projections for non-grocery and non-DIY retailers is continued loss.
Echoing Marc Lautenbach from Day 1’s ‘State of the Retail Union’, this trend is not a surprise, it’s cyclical.
Strategy under disruption
Kelly counsels clients to “place their bets” – focusing on growth strategies that have worked for outperformers in the past. Look closely at markets and segments.
“Picking the markets with real tailwinds is really fundamental,” Kelly reminds.
70% of US growth over the next few years will come from 10 city clusters and a 62% of global growth will come from the top 600 cities.
Millennials are the future and they are changing shopping paradigm – preferring small boutique to large stores and leading a digitally-centric existence for media consumption.
“Digital Disruptors” bring new customer expectations, confirming Steven Howard’s discussion yesterday; Kelly adds that “industries are being reshaped by the power of design,” citing the NEST thermostat, Tesla, Apple and Disney.
Kelly highlights the efforts of key brands – Sephora’s use of ‘innovation labs’, UK retailer, Tyrers, brings digital in-store through racks that display likes, shares and comments on social media.
Advances analytics deliver more personalized experiences
Etsy feeds 500 customer signals into machine learning algorithms so each shopper sees an online experience unique to him or her. StichFix uses quizzes to personalize the interaction with a customer.
Innovation for the “Last Mile”
Walmart curbside pickup, Amazon beta-testing grocery drive through, Amazon lockers – all to provide consumers with a frictionless physical retail experience fueled by digital. This requires retailers to have a real-time view of inventory levels, expiration dates and resource capacity.
Data-driven insight drives success
Kelly is decidedly not a “retail pundit talking about the demise of retail,” she says – and I agree, she’s not. The data tells the story, but reading, understanding and applying the data separates the best from the pack.
Follow the action on the (R)evolution Live site.