Chinese New Year : Celebrating the Traditional & the Modern in the Year of the Dog

Chinese New Year Instore theater

Chinese New Year Instore theater

Greetings from Shanghai where the pace of life is slowly returning to normal after the Chinese New Year festivities, which kicked off on February 16th.

I’ve long enjoyed CNY celebrations in cities around the world. However, the experience of my first Spring Festival in Shanghai is one I will not soon forget.

The 15-day festival is the most important holiday on China’s cultural and retail calendars. For reference, it's interesting to know that Chinese families spent close to $100B on CNY shopping and dining in 2014– almost double what was spent during American Thanksgiving.


Among other things, I observed the festival to be a study in contrasts. On the one hand, there is a strong cultural imperative to return home for a traditional celebration with family members. I still have a hard time wrapping my head around the fact that homeward-bound Chinese travelers make almost 3 billion trips annually during the New Year celebration, creating the world’s largest human migration.

However, the idea of duonian, or “escaping” from the Spring Festival is also gaining popularity throughout China. Growing numbers of urban professionals enjoy escaping the mainland for international vacations, while migrant workers are increasingly forgoing trips home to skip the financial burden of the gifts expected to accompany their arrival.

PepsiCo's Quaker Chinese New Year displays

PepsiCo's Quaker Chinese New Year displays

Travel home or escape? Cook a traditional meal or dine out? Shop at customary markets or online?       Give time-honored gifts or foreign goods? Or even an English couplet?

The interplay between 4,000 years of tradition and a decidedly modern lifestyle was at play throughout CNY preparations and celebrations this year.

At many points during the festival, I encountered people expressing aspects of this duality – a deep yearning to honor tradition mixed with a desire to infuse their holiday celebrations with contemporary goods and experiences.


I also observed several companies actively helping Chinese consumers reconcile this cultural tension. They represent great examples of how a brand can deepen their relationship with consumers during moments that matter, by answering unmet needs and desires with delightful solutions.


Image :  Caixin Global

I’d be remiss not to start with WeChat’s reinvention of the hongbao, or cash-filled red envelope customarily exchanged during CNY celebrations. In 2014, the company launched a Red Envelope App, which allowed users to digitally participate in the customary gifting. 

WeChat drew on the traditional iconography of the red packet, so the app felt familiar and rooted in tradition. However, a novel innovation allowed gifters to send a lump sum to a group to be dispersed in random amounts, adding a new element of surprise and luck.

By all accounts the idea was a cultural hit, and exchanging money via the Red Envelope app has become a modern tradition (and a clever way to drive WeChat trial and use). In 2017, approximately 46.6 billion red envelopes were exchanged – an incredible 33 envelopes for every person in China. Aptly, The China Post declared that, “even grandma is ditching hongbao for WeChat’s digital red envelopes.” 

Chinese New Year preparations customarily include family shopping trips to local markets to buy fabric for new clothing, décor items, gifts, candies, and the ingredients for holiday meals.

Today, consumer goods are abundant throughout the year, families live further apart, and shopping trips are rapidly shifting to hypermarkets and online. Yet, many still yearn for the time-honored market experience.

Last year, the eCommerce website Taobao acknowledged this tension with a beautiful redesign of their user interface for the CNY holiday. The seasonal overlay drew inspiration from a famous, Song-dynasty era painting of a traditional Chinese market, Along the River During the Qingming Festival

Image :  Dragon Social  

Image: Dragon Social 

Taobao created an animated, interactive interpretation of the art that became their homepage during the festival. Users could shop the animation, either by clicking parts of the picture corresponding to what they wanted to purchase or by using a search feature. 

This creative website redesign was an insightful solution to help shoppers reconcile a longing for the traditional market trip with the ease and convenience of accomplishing their holiday shopping online. 

During the festival, there is no shortage of nostalgic advertising that explores the increasing difficulty of pausing one’s busy life to return home. 
(See here, here, and here, but have your tissues ready). 

Image:   Nokia China

This year, Nokia did something less expected with their holiday advertising, which launched the Nokia 6 just ahead of the CNY. The campaign features a dutiful son who is a busy actor, unable to return home for the New Year. 

His mother, unsatisfied with a video call, surprises him on the set of his film with a home-cooked meal, and the pair enjoy a warm dinner together.

I love the way that Nokia suggests an unexpected solution to a common consumer dilemma, by reimagining the idea of the “return home” and opening up new paths to family togetherness.


Pepsi’s “Bring Happiness Home” campaign is a fourth and final example of the insightful updating of CNY tradition. Each year, the brand partners with award-winning talent to produce a short film that celebrates CNY and explores the idea of a “happy family.” 

This year’s production, Thunderbolt Parents, is a musical comedy that tells the story of two generations of love and dreams. It sagely reminds “young people” across generations that we will find our parents much cooler (and more complicated) than we imagine if we only make an effort to understand them.

Image : Pepsi, 2018

Image: Pepsi, 2018

Over the past 7 years, Pepsi’s launch of a short film has become a CNY tradition in its own right, signaling to consumers that the Spring Festival is near. 

This year’s project has already garnered over 600 million views, along with a noteworthy amount of social media buzz.

I appreciate the way that Pepsi, true to its fun-loving spirit, uses a star-studded cast and karaoke-worthy tunes to refresh the idea of the traditional reunion dinner. Pepsi joyfully reminds consumers that, with a little heart, celebrating the New Year with family can be a lively, modern affair. 


These examples are four sparks that illuminate how an insightful blend of the customary and the contemporary can result in a delightful updating of tradition. 

Rapid technological innovation and increasing prosperity are contributing to moments of cultural change in cities around the globe. This is certainly true in China during the Spring Festival and at other times throughout the year as well. 

I believe brands, especially multinationals, are at their best when they can help consumers forge new ways forward while also helping them retain what is important from the past. 

The most successful will approach this opportunity with the perfect blend of fresh thinking and humility – a mandate that will be at the core of my work in the year ahead.

Happy Year of the Dog to all. Xin nian da ji! (Have a prosperous New Year.)

Holiday Cheers for Inclusive Advertising

‘Tis the season for holiday ads. I always look forward to the parade of new efforts that dot the marketing landscape this time of year.

I love that the annual holiday “adstravaganza” has been elevated to a cultural event in the UK. (And, I am intrigued by the fact that some British marketers now monetize their holiday ads through the sale of related merchandise!)

These holiday messages surely exist to build brand equity and make the register ring. But taken together, I think they can also serve as a nice mirror that reflects back important themes on our current cultural landscape.

This year, I am heartened to see several ads (and their omnichannel extensions of course) veer beyond the more expected holiday motifs to celebrate moments of connection and inclusivity across differences.

From British grocery retailer Tesco, we see a celebration of the ways families from different walks of life and religious traditions participate in the shared ritual of the turkey roast. The spot, titled “Turkey every which way,” closes with the affirmation “Everyone is Welcome” at Tesco.

From Lego Australia comes a story of what can happen when Santa and the Asian martial arts archetype Sensei Wu team up to save Christmas. In addition to reflecting the spirit of imagination foundational to the brand, the whimsical tale delivers the charming sentiment that we are better when we work across cultural perspectives to “build together.”

Pic group.jpg

From Sonos, the lively message that a shared musical celebration is just what is needed to transform a dull holiday gathering into an epic, multicultural and multigenerational holiday dance party.

And, from Samsung a poignant statement about the universal power of gratitude compliments a diverse group of building tenants who come together to thank the doorman who has gone the extra mile to make each of their holiday celebrations– from Diwali, to Christmas, to Chinese New Year –extra special.

In a year when the news headlines have been dominated by the many issues that divide us, it is refreshing to see marketers choose to hold up a cultural mirror that celebrates the potential for connection across boundaries, be they ethnic, religious, generational or otherwise.

Around the globe, our cities are diverse and becoming more so every day. Millennial consumers are particularly comfortable in this heterogeneous world and deserve credit for encouraging companies to stand up for inclusivity. Cheers to these advertisers who have taken note of this cultural shift and chosen to emphasize what unites rather than what divides this holiday season.

Happy holidays, and may each of you enjoy your own simple moments of simple connection amidst the year-end bustle.

Reflections From Berlin: The 4th Generation of Retail is Coming – Are You Ready?

“The future of retail will be led by sophisticated technology companies who happen to have a retail business.”

This quote lit a fire in me at a recent Consumer Goods Forum Summit presentation in Berlin, where pervasive topic of conversation was the fast-approaching 4th generation of retail (“4G Retail”).

Dan O’Connor, a fellow at Harvard’s Advanced Leadership Institute, spoke about the impending shift. In his conceptualization, the past 100 years saw three iterations of the retail model and the landscape today is being disrupted by a fourth new model.

O’Connor preaches that companies which function between innovation curves are best positioned for success. He cites Netflix as a great example, noting their ability to leverage one declining business model (the DVD) while anticipating and preparing for the next (digital content).

My key takeaway from his impassioned overview: in today’s retail environment, visionary leadership means optimizing for the world we know while preparing for the 4G Retail future.

Thinking about where retail has been helps us see more clearly where we are headed, so let’s dive in at the beginning!

The first wave, 1G Retail, was mediated through small, community-driven trade networks. In 1G Retail – which still accounts for 50% of the global retail pie – proximity, localization, and relationships are everything. This is the domain of the small family-owned shop where everyone knows your name and your buying habits.

Retail consolidation marked the beginning of the 2G Retail era. Starting in the 1960s and 1970s, large retailers (think: Wal-Mart) created new economies of scale by merging fragmented supply chains. These pioneers offered both convenience and cost savings, creating a juggernaut model that comprises 30% of the global retail pie today.

The rise of the online marketplace ushered in the third generation– 3G Retail. In this model, transactions take place on “platforms,” like Amazon or Alibaba’s Taobao. And, through what O’Connor calls “intermediaries” like Facebook, Google, or WeChat. Amazon’s IPO took place less than two decades ago. Yet, 3G Retail already accounts for at least 20% of global retail dollars.

Driven by real-time data analytics and rapid innovation (e.g., subscription pricing, mobile ordering, same-day delivery), the digital store model disrupted almost every aspect of the retail landscape. 3G Retail also prompted a shift in the very pace of the business, from a 52-week planning cycle to an environment that requires near-constant response to real-time developments.

 O’Connor dubs the next era 4G Retail or the age of “Real Time Retail.” In this 4G landscape, he predicts that a significant part of commerce will take place on a small handful of large digital value networks,” or digital platforms that serve a widening variety of functions including commerce, search, and social. Notably, technology companies and not traditional retailers will own these networks. In the U.S., we immediately think of Amazon, but around the globe, other platforms like Alibaba, Flipkart, and JD come to mind.

Tech innovation notoriously empowers consumers, and the Age of “Real Time” Retail will be no different. Imagine the 4G landscape like today’s retail on steroids – with interactions increasingly fast and frictionless. Transactions will take place on a few digital platforms, seamlessly along the spectrum between online and offline.

Same-hour delivery via driverless truck. Check. Personalized offers based on yesterday’s purchase behavior. Yep. A content-rich environment where everything you see is for sale? You got it. The 4G world will push the era of consumer control to its infinite boundaries, fueled by innovations around things like robotics, AI, driverless delivery, and 3D printing.

So now that we know that a 4G world is coming, what should we do about it?

 Here are three implications. In a 4G Retail World: 1. Data is table stakes 2. Retail platforms > media platforms 3. Success requires inventing new moments of consumer discovery.

#1: Data Is Table Stakes

In the 4G Retail future, the companies who control the data will rule the world. Success in the 4G retail world will require “big data collaboration” – both within organizations and across new (unconventional) manufacturer + retailer alliances.

This was illustrated in a recent Financial Times piece about Alibaba, which noted the company’s transformation into a growing “big data conglomerate.” Their massive data stream informs everything they do including merchant strategy, marketing, inventory management and even the layout of physical stores.

Despite the importance of data-driven insights, most traditional retail companies still face significant organizational and technical challenges to integrating and analyzing their own data. These issues compound when companies try to look further afield to think about how to work together with digital platform partners (e.g., Amazon) to optimize.

Getting their data house in order is an urgent matter for current retailers, since even simple data transformation efforts can take many years to launch.

#2: Retail Platforms > Media Platforms

My hypothesis is that in the 4G Retail landscape, the importance of large retail platforms will ultimately dwarf that of traditional media publishers. In fact, I am not sure the traditional standalone media content players survive in this future.

Think this sounds radical? Consider the similar tale of digital consolidation playing out in two very different retail markets, the U.S. and China.

In the U.S., Amazon is steadily reducing the need for online consumers to venture far from their site. They dominate commerce, with over half of shoppers starting every online shopping trip on the site and a full 90% cross-shopping Amazon even if they find what they are looking for on a retailer site. Amazon Prime Video is tripling their production of original content series over the next few years. Amazon Spark – curated retail in a social media format – looks poised to change the way we shop. In a retail future where consumers can shop, view content and socialize all within the Amazon platform, traditional publishers start to look much less relevant. 

That “single platform” future is even one step closer to reality in China. Alibaba-owned Tmall already controls more than 60% of the Chinese eCommerce market. Their multi-faceted Alipay is a true “killer app” that lets users complete a wide variety of tasks (from bill pay, to calling a cab, to getting a loan) right within the app. Like Amazon, Alibaba is aggressively expanding into digital media and entertainment with ventures including Alibaba Music, Alibaba Pictures and video-streaming site Youku. With aspirations far beyond simple retail transactions, Alibaba is building a vast “social commerce” ecosystem that supports almost everything someone needs or wants to do online.

This shift to a world where commerce, content and social life seamlessly merge on a single platform will require marketers to rethink the 4P’s through the lens of ecommerce retail platforms. (These are the future “Digital Value Networks” in O’Connor’s G4 framework).

New alliances between retailers, manufacturers and social platform companies will be critically important. Retailers and manufacturers will succeed by viewing shoppers as more than “trips and baskets” and by understanding their increasingly wide array of behaviors on digital retail platforms. In a G4 world, an Amazon shopper could be binge watching her favorite show via Prime Video, purchasing the outfit the main character is wearing, while conversing with her friends about the plot twist that just happened. How will your product or service get in on the action?

Savvy industry leaders will benefit from thinking now about which partnerships matter and how to develop these.

#3: Success = Imagining New Moments Of Discovery

In a 4G world, the retail storefront will be “everywhere,” and it will be up to brands and retailers to create new times and places to engage shoppers.

Critical questions for retailers and manufacturers will include: Where and when are my consumers that my product could be? How can we bring our product or service experience TO them, as they come to us less frequently? How do we offer a personalized experience to every shopper?

A number of retailers and manufacturers have begun seamlessly integrating the retail and hospitality consumer categories by rolling out “buy what you see” lines available for purchase at boutique hotels. This seamless, arresting experience is a picture-perfect example of the thinking needed to succeed in the G4 Retail world.

The spoils will go to the companies with the vision to imagine and create the retail landscape of the future – where every space and moment of technological interaction with a consumer is a potential storefront. What can you do to create a more seamless, simple connection to your customers today?

At The End Of The Day, So What?

We’re at the early, nascent stage of the 4G Retail Age. Today, promise yourself that you will be one of the leaders with the vision to co-create the new, exciting, ready-to-be-built world of 4G retail that’s coming, whether we like it or not.

Can Amazon be Beaten: How UK Grocery Retailer Ocado Is Holding Its Own

Imagine a retail grocery business run by a deep technology estate. No stores, only online deliveries from automated warehouses. Robots in those warehouses pick most items and send them via high-speed conveyor belt to human attendants for packing.

A human-like robotic hand is capable of handling over 50,000 products of all shapes, including delicate items like produce. This process is all monitored by technology that can alert the human attendants to packing errors. Other “collaborative robots” learn from and assist the human warehouse manager. An artificially intelligent warehouse system collects data and optimizes operations. A computer program even maps the best delivery routes for drivers.

This isn’t the grocery store of the future but a description of the present-day operations at Ocado. Ok, the robotic hand is still in development, but the rest is 100% operational.

I’ve recently returned from a UK market tour where colleagues were buzzing about this unique, online-only grocery retailer. They are the world’s largest and their team of technologists and techies has been working to change the way we shop for groceries for the past 16 years.

Amazon Fresh entered the UK market last summer, and many predicted Ocado’s demise. Yet, the retailer has survived, some might even say thrived. Their 2016 sales beat forecasts, rising 14.8% to £1.3B. This momentum has continued in 2017 with both sales and weekly orders increasing despite a sluggish British retail environment.

I have heard of other similar David vs. Goliath success stories. Earlier this year, I wrote about the fact that Amazon is surviving but not thriving in several other markets including China, India, and Mexico.

This most recent example got me thinking again about how and why homegrown retailers are able to give Amazon a run for their money.

In India, Amazon has struggled to win trial and loyalty in face of rival Flipkart’s entrenched awareness and strong seller relationships.

In Mexico, Amazon has fought to build trust in a market where the cultural defaults are cash payments and brick and mortar shopping. Meanwhile, local competitor Mercado Libre has leveraged a nuanced understanding of local culture to hold their own.

In the UK, Ocado’s impressive tech infrastructure is helping them keep Amazon at bay. The Independent calls the company “superlatively innovative” and they likely embody what the grocery category will look like in the age of the 4th Industrial Revolution.

Yet, Ocado has retained a strong compass for human values too. The company is testing delivery via more sustainable electric vehicles. They are partnering with underground urban farms with lower carbon footprints vs. traditional farming. And, they run a ‘Code for Life’ initiative designed to prepare the next generation of workers for the automated workplace.

I don’t want to overstate Ocado’s success. They still have a long road ahead; one that requires them to sustain their growth and license their tech infrastructure to an international grocery partner soon.

Nevertheless, I am heartened to see an innovative player succeed in the face of a powerful incumbent competitor.

Photo Credits: Business Insider,

The Rebirth of Consumer Curation

Well over a decade ago, savvy retailers started to offer edited assortments to shoppers dealing with a growing number of options. Remember Target’s collaboration with Issac Mizrahi or the growth of retail chain Anthropologie? Analysts dubbed this phenomenon ‘curated consumption,’ and it became a standard retail offering.

To “curate” means to "pull together, sift through, and select for presentation." There is a functional aspect to curation, as it requires the working through a volume of choices. It also requires the creative act of making selections that others see as unique or inspired.

In today's tech-enabled culture, I’ve noticed this editing process happening with a new scope and speed. A growing variety of things are being curated with increasingly sophisticated tools  – a dynamic I’ll call Curation 2.0.

The Dawn of Curation 2.0

Whether we are considering where to work, live, or vacation; how to eat, dress, or style a home; or what to listen to, watch, or read – the options available at our fingertips continue to grow. In this cultural landscape, the more technology offers us, the more we need new tools to curate the vast landscape of what is available.

This struck me while perusing a group of the most upvoted product ideas on the Product Hunt Website. (The site itself being, ironically, a curated selection of startup ideas.)

Entrepreneurs clearly recognize a cultural need for help dealing with option overload. Across the new product ideas, the offer of an edited selection of options was a recurrent theme.

I found products to curate everything under the sun: job postings from around the world, minimalist design objects, local spots for travelers, coffee shops for working, art, or weekend plans.

Many of these start-ups are business models yet to be proven, but they complement a litany of more established applications with curation elements like Netflix, Flipboard, and Apple Music. (And of course Pinterest, perhaps the grandfather of curation apps.)

Curation on the Retail Landscape

Curation 2.0 means you can find a great local dive or unique objet d’art, but it is also playing out on larger scale. Where there are masses of consumers, there are companies to help them navigate through a dizzying number of retail categories by choosing only from an edited assortment.

One only need begin with StitchFix for clothes, then move on to BlueApron for groceries, 99 chairs for furnishings, and Canopy for most everything else.

The fashion category is one particularly interesting example of how an industry can be revolutionized by Curation 2.0.

As the pace and scope of fashion has eclipsed the abilities of the average shopper, many have turned to editors for help.

Subscription services like Trunk Club (and the already-mentioned Stitch Fix) and curation websites like AHA and have become an integral part of the way many consumers shop for and buy clothing.

Some of these applications use tech-powered curation. For example, Stitch Fix employs over 50 data scientists to create selections tailored to individual customer tastes. Others, like AHA, rely on human tastemakers to identify inspired options.

Whether guided by an algorithm or a living, breathing person, curated fashion doesn't seem to be a passing fad. One industry expert predicts that subscription services will become a full-fledged fashion retail channel in the coming years.

What’s Next?

As shoppers enjoy curated shopping experiences in a few pioneering categories, their decision-making muscles will atrophy. It is not a stretch to imagine they will desire – even expect – curated help across all their shopping experiences.

Retailers and brands sold at retail should ask themselves how they can leverage technology to become trusted editors. To start, consider a quick-fire brainstorm:

Q1: What do we sell that my consumers would like to consume in an edited assortment?

Q2: What type of curation do my consumers want? (Consider: Customized Combinations? Inspired suggestions from a tastemaker? Community-generated recommendations?)

Q3: Should my curated selections be generated by an algorithm? A human? Both?

What’s Even Further Afield?

Looking down the road, I predict a need for ‘meta-curators.’

As consumers come to rely on curated collections across many categories, the number of requisite websites and apps will once again explode. As a consumer, I would love to use many of the tools I’ve called out above – but who has the time?

The inevitable next step will be to pare down to a smaller number of broad curation tools that work across traditional categories.

Will the next wave of Silicon Valley darlings be applications that crack the meta-curation code?

Until then, good luck and happy editing!

Tax-Paying Robots May Be the Future of Work: Why Should We Care?

It’s not news that robots will replace large numbers of human workers over the next few years. For context, a 2016 WEF study found that 5 million jobs in 15 countries could go by 2020.

But, Bill Gates recently made headlines by calling for a tax on companies’ use of these new automated workers. His thought-provoking argument:

The shift to automation will leave many out of work and without meaningful re-employment prospects. For example, U.S. retail jobs are identified as one of the most at-risk for robot replacement. This pending disruption is evident in the customer-service robots popping up around the country. For example, Lowe’s LoweBot, Macy’s On-Call assistant, Pepper’s debut in California malls, and of course Amazon's cashier-free grocery store.

The reduction of paid labor will shrink the income and social security tax bases and limit governments' abilities to help those affected – at a time when they need a social safety net the most.

Gates maintains that we should take steps to plan for this automated future by instituting a tax on robot workers. Companies could fund the tax with some of the windfall from their labor reduction. Governments could use the proceeds to support displaced workers and retrain them for positions where human skills are still needed. Gates' examples include healthcare and education, but I also see opportunities for retailers to launch retraining efforts.

The robot tax is not a completely novel suggestion. Last month, European parliament considered and rejected a similar proposal, a decision hailed by the robotics industry.

It's no surprise that some economists and policy makers opposed the idea. The challenges are complex, but the main points are these: 1) slowing tech growth to keep humans in jobs delays the inevitable and will have unintended consequences, 2) automation created jobs throughout history and may do so again, and 3) automation is not happening fast enough, limited by an abundance of cheap human labor.

Net/net, critics argue that while the effect of widespread automation will be negative for some people, the economy will be better off as a result.

With compelling arguments on both sides, how to make sense of this issue?

In my view, Gates’ position is about highlighting the vast inequality created by tech innovation.

Today, the gap between rich and poor is at record levels in most of the developed world, and the U.S. leads the pack. In this country, the richest 10% of workers earn 16.5 times that of the poorest 10%. This ratio has more than doubled (up from 7 times) since 1980.

The impending automation revolution will further deepen the divide between rich and poor. Fortune magazine stated this well:

"Some people will see their jobs become obsolete and will need to acquire new skills in order to obtain well-paying work. Robots and artificial intelligence will exacerbate economic inequality and place a burden on many workers to learn new skills."

It is on behalf of the "some people" that Bill Gates speaks. He argues, I believe correctly, that it is the duty of business and government to plan for the displacement of millions of American workers – even if the net economic effect will be positive.

By extension, I believe it is the duty of business leaders to understand and improve the wide economic inequalities that exist today and will deepen in the years ahead.

Retail leaders, in particular, can be a part of the solution by imagining the future of the automated workforce.

We should explore how human workers might work alongside robot “colleagues” to deliver enhanced customer experiences.

We can identify opportunities to retrain displaced workers for these new roles, perhaps building on programs like Amazon's Career Choice.

And, before we get completely wrapped up in automation, we should identify points of human interaction worth preserving and consider how these might create new opportunities for differentiation or revenue. This might be akin to the way some consumers pay a premium today for artisanal food. (One scholar intriguingly posits that someday the act of getting a manicure from a human might be a service for only the very rich!)

The arrival of the automated workforce is a business issue, since inequality creates social, economic and political tension that does not foster a healthy environment for commerce.

But it is a human issue as well. As tech concentrates wealth, knowledge and power in the hands of a few, it is critical to think about broadening it's positive impact in the lives of the many.

Taking Stock Of Amazon Abroad

E-commerce giant Amazon has experienced soaring profits at home in recent years while consistently losing money internationally. This is counterintuitive, since the smaller business in expansion markets should have more room for growth.

I’ve recently spent time in Mexico and India – two countries where Amazon is surviving but not thriving.

Amazon’s journey in both is a good reminder that while the U.S. sets the pace for retail around much of the globe, companies also have to evolve (sometimes dramatically) to succeed in diverse markets.

Amazon learned this the hard way in China, where efforts to establish American practices did not end successfully. This makes strong performance in growth markets like India and Mexico even more important. India is the largest underdeveloped ecommerce market in the world, and Mexico is not far behind. With mushrooming middle classes and rapidly expanding access to broadband, both countries represent huge potential. However, there are also unique challenges since both are predominantly cash societies, where online commerce is not yet the cultural norm.

Amazon has had to actively customize their business model to survive in both, while contending with the fact that local players sometimes set the agenda.

In India, Amazon’s performance is still second to local player Flipkart (which owns 43% of the market). The Seattle-based giant is still investing heavily, to the tune of $1B per year, to build infrastructure and win trial and loyalty. A big part of their strategy has been finding ways to “localize” by adding cash-on-delivery payment options similar to those of competitors, a “Chai Cart” program to connect with small vendors over cups of tea, and a “seller university” to help small traders learn how to get online and growth their business.

In Mexico, Amazon has grown modestly since their 2015 launch, paralleling slow growth in online retail overall in the country. Here too, they have had to adapt to fit the local market.

Like in India, this has included following the lead of regional players like MercadoLibre and accepting cash-on-delivery payments. And, in a uniquely Mexican modification, Amazon accepting gift cards purchased from Mexico’s network of Oxxo c-stores. No doubt, Amazon would prefer their own offering but shoppers in Mexico’s largely cash economy have thus far preferred the already-trusted Oxxo name.

In both India and Mexico, Amazon has had to invest heavily in infrastructure to support fulfillment. Notably, this has included building warehouse locations to support Prime and same-day delivery. Despite their differences, international consumers across markets share a high level of expectations. All expect the same fast and free delivery now globally ubiquitous with the Amazon brand name.

Amazon has also had to contend in both markets with the fact that the cultural default is still brick-and-mortar shopping. (In Mexico, for example, 98% of retail sales still happen in physical stores).

The Amazon response has been two-pronged. First, the retailer has invested heavily in advertising to assuage concerns about the authenticity and quality of products ordered online. They have also created options that allow shoppers to pick up merchandise at the location of trusted brick and mortar retailers. This has created an interesting hybrid type of commerce, and it will be interesting to see how this might develop.

These modifications, and in fact Amazon’s very assertion that it is going to win new markets through “a lot more local market customization” underscore the magnitude to which cultural nuances still matter.

While it is very possible for global players like Amazon to succeed in international growth markets, they will need to find ways to stay carefully attuned to thinking global while acting local. 

China: Grocery Markets Are Thriving Online and In Real Life

The Chinese grocery retail market is one of contrasts.

Shoppers have flocked online in the past several years, and the $41B Chinese e-grocery market is the world’s largest by a wide margin. Retailers of all sizes have taken note and are making big bets in this arena.

Despite the explosive growth of e-commerce, brick & mortar grocery stores still play an integral role. While over half of Chinese households do buy groceries online, a full two-thirds still say that going to the grocery store is a fun, engaging experience.

I experienced this thriving retail culture during my recent visit to Shenzhen & Hong Kong, and have four insights to share about the dynamic Chinese market.

#1:  Traditional outlets dominate, but global retailers are making strides.

The Chinese grocery market is highly fragmented, with the top ten retailers accounting for less than 7% of the volume. Domestic players have leveraged their nuanced understanding of local consumers to outperform global competitors in recent years, but the multinationals are making strides to catch up.

Larger retailers are succeeding by finding ways to make the western supermarket format uniquely Chinese. They are introducing live food offerings similar to those available in traditional Chinese wet markets.

Store: RT Mart

Store: RT Mart

Store: RT Mart

Store: RT Mart

Many are developing new food and beverage innovations tailored to local palates and events, such as Chinese New Year.

Others are even re-thinking their footprints and building flagship stores in large shopping districts so they can be integrated into the daily retail experience. 

Store: Vanguard Photo Credit: IGD Retail

Store: Vanguard
Photo Credit: IGD Retail

#2:  Hypermarkets are struggling while small formats are flourishing.

Convenience formats are booming in large part due to their ability attract young, middle-class shoppers who are increasingly affluent and time-pressed. Big box retailers who have experienced slow growth in larger formats are testing smaller ones, like Easy Carrefour and Tesco Express.

Store: Tesco Express   Photo Credit: IGD Retail

Store: Tesco Express
Photo Credit: IGD Retail

 Global and regional players alike are succeeding by adding western concepts like ready-to-eat and carryout options to these smaller formats.

Store: Metro My Mart Photo Credit: IGD Retail

Store: Metro My Mart
Photo Credit: IGD Retail

And, in a nod to the multi-channel landscape, some small format stores like Metro’s My Mart are attracting shoppers by serving as collection points for online orders.

Store: Metro My Mart Photo Credit: IGD Retail

Store: Metro My Mart
Photo Credit: IGD Retail

#3:  Retailers are using “store within a store” concepts to expand offerings.

Categories like wine, cheese, bakeries and coffee are relatively new in China. Savvy retailers are building these out as destination areas within larger stores, in the process attracting a growing segment of middle-class shoppers.

Others, like CRV’s Ole, are creating specialized sections of imported products – another relative newcomer on the Chinese grocery landscape – often grouped by country or cuisine type.

#4:  A focus on food safety creates loyal shoppers.

China has been hit by a wave of safety scandals in recent years, and grocery retailers are finding success by reassuring customers about the provenance of their products.

Large players like Carrefour are leveraging their sourcing capabilities to expand private label offerings that carry a safe halo and are marketing that to their advantage.

Startups like Farm Direct are finding success via vertical ownership of farms and retail outlets, which allows confidence in the safety of their products through control of the entire growth/distribution/retail process. 

Store: Farm Direct

Store: Farm Direct

Tech-savvy competitors like previously mentioned MyMarket offer systems like Star Farm, a food traceability system featuring QR codes that allow consumers to track a product’s journey from source to shelf.

Store: Metro My Mart Photo Credit: IGD Retail

Store: Metro My Mart
Photo Credit: IGD Retail

The Takeaway

In my travels, a recurring theme is that a deep understanding of local consumers and their tastes engenders success.

As I’ve written before, brands can be global in their values but need to localize quickly to maintain relevance in a global world.

Michigan: Detroit and Ann Arbor Emerging as Tech Towns

I spent most of my last week in the Midwest taking a market tour of Detroit and speaking at my alma mater, The University of Michigan. I was completely energized by my trip to Michigan after 10 years.  It is one thing to read about the economic resurgence happening in the area but it was another to experience it firsthand.

The Cube at University of Michigan

The Cube at University of Michigan

In their book, “The Smartest Places on Earth,” co-authors Agtmael and Bakker assert that a handful of global cities like Detroit are transitioning from “rustbelts” to “brainbelts.” These locales, most of which are anchored by world-class universities, boast a cohort of innovative, young entrepreneurs who are attracted by affordable living, a burgeoning cultural scene, and the opportunity to collaboratively solve 21st-century problems. I definitely found this to be the environment in greater Detroit – one aptly expressed by a local clothier’s slogan, “Detroit Hustles Harder.”

I was especially intrigued to learn more about how Ann Arbor (Detroit suburb and UM’s hometown) has grown into a formidable tech hub. This makes intuitive sense. Michigan and nearby universities mint thousands of eager young graduates every year and the city has recently taken steps to retain them and support their endeavors. This includes efforts by organizations like Ann Arbor New Tech Meetup, Tech Brewery, Ignite Ann Arbor and A2Geeks. These investments have paid off yielding companies like Mobiata (now an Expedia company), the more fledgling Clinc and even new publications dedicated to reporting on the region’s start-up culture. And of course, where there is tech-generated income, new retail businesses emerge. I was delighted to encounter a mix of classics, like Zingerman’s Deli, and thriving new businesses, like Today and The Session Room, in Ann Arbor’s tree-lined downtown district.

I return to Texas invigorated and eagerly anticipating the next innovations to come out of this bustling Midwestern brainbelt. And I am hoping this serves as a road map to revitalizing towns that had suffered the loss of manufacturing jobs over the last decade. 

Brazil: Exploring Favela Culture

I’m in São Paulo this week, where more than 2 million people, about 11% of the population, live in working-class settlements called favelas. Global media coverage of the estimated 1,643 favela neighborhoods usually focuses on the negatives: gang violence, drug culture, and lack of infrastructure. These are real and pressing issues that residents and community organizers work daily to address.

There is another narrative that needs to be written about the favelas. They are Brazil’s cultural incubators – vibrant spaces that influence the larger city and with growing influence in their own rights.

The favelas are “alive with sound and movement.” They are unique, walkable spaces with a blend of retail and residential property use; something urban planners strive to create in other cities. Gatherings tend to happen outdoors and create a lively street culture. Living in close proximity to neighbors encourages the exchange of ideas, and “incubates” novel blends of culture and commerce. For example, I saw in my visit many an ad hoc musical performance outside a grocery store, where an enterprising entrepreneur was leveraging that to sell drinks and snacks to curious on-lookers.

Not unlike the far-reaching influence of U.S. hip-hop culture, the expressions and ideas that develop in the favelas trickle out to influence tastes in the broader Brazilian culture. They shape music, fashion, food, and language. Samba, Carnival, and more recently funk carioca all emerged from these spaces.

Brands and Retailers looking to connect with the country’s large, relatively young population would do well to take notice. This is especially true for foreign companies that seek to expand into the Brazilian market and need to tailor their offerings to local tastes.

In addition to sending cultural influences out, recent years have seen new occupants flowing in. Students, artists, expatriates, and middle-class Brazilians are taking up residence in favela neighborhoods – seeking affordable housing and cultural diversity. They bring higher expectations about the rights and services they deserve, and favela dwellers are increasingly finding ways to make their voices heard. In the last few years, they have been empowered by the ability to use social media for connecting, organizing, and problem-solving. Taking notice, Google recently launched a mapping project with the goal of giving Rio’s favela communities visibility and, therefore, louder voices in the complicated politics of the country. By the way, one interesting observation on my trip was the very high frequency of use of waze app by Brazilians to navigate their challenging traffic situation.

Amidst this change and growth, new business models are developing in many favela communities, including tour operators, hostels for young foreigners, and community art projects.

One start-up, Friendly Mailman, is taking on the problem of unreliable mail delivery. Because residences and businesses lack street names, much less physical addresses, it is almost impossible for government carriers to reliably deliver mail within the favelas. The company’s founders used algorithms to create a proprietary digital “map,” which their private carriers use to deliver parcels to customers who pay a modest monthly fee. This is surely the tip of the iceberg when it comes to innovative tech platforms that could serve favela residents in meaningful ways.

I do not wish to detract from the complex history that created Brazil’s favela neighborhoods or the often-difficult conditions of daily life within them.

However, I am enthused to think about how they also embody the power of human creativity and ingenuity. Forward-thinking companies have an unprecedented opportunity to consider new ways to meet the needs of Brazil’s growing working- and middle-classes. I’m particularly fascinated about the potential to use technology platforms to cater to emerging consumer needs and aspirations. For example, could a retailer use a click-and-collect model to improve food access within a larger favela neighborhood?

True, there may be missteps and there is no one-size-fits-all model. However, success in this arena represents the dual opportunity to simultaneously create company value while also bringing value to a currently underserved market.

In a Global World, Think Local

Consumers in the global economy have access to a dizzying array of products from around the world. Shoppers find Mexican spring water in Canadian supermarkets and U.S. fashion labels in Kenyan shopping malls. Goods unavailable at brick-and-mortar stores can be ordered online or even virtually via retail ‘teleportation.’

Paradoxically, in this context of unprecedented availability of global brands, many indicators suggest that shoppers increasingly prefer local offerings.

A simple statistic got me thinking about the trending interest in all that is local. According to data from MasterCard Advisors, U.S. small-business retail sales have risen 5.4% this year, outpacing growth in total retail. The trend is more marked in categories like apparel, where small businesses enjoyed significant growth against a declining category.

CNBC reports that property management companies are following the money by actively pursuing locally-owned concepts – reversing a three-decade trend of favoring national tenants. This shift is a win-win for them and their tenants. Shoppers are drawn to the unique merchandise and dining experiences, the easy shopping formats, and more personal service. Local businesses help landlords differentiate their shopping centers from more homogenous big-box-anchored centers and increase foot traffic.

National companies have started to recognize the trend, too. Retailer West Elm now features a curated selection of locally designed merchandise and supports the makers through community events organized by local store managers.

The increased interest in ‘local’ isn’t limited to retailers. In hospitality, Airbnb offers access to quaint, local residences in lieu of the homogeneity of larger chain hotels. And of course, grocery shoppers continue to express strong interest in local food, which is perceived as better quality, better tasting, more sustainable, and commands a price premium. 

The desire to buy local is not limited to the U.S. Here are a few interesting examples from around the globe:

In Asia, observes that “from Asia, by Asia, for Asia” is the region’s hottest consumption story. Regional tech brand Xiami is consistently outperforming global rivals. In China, luxury shoppers are opting for local fashion brands over the
ubiquitous international labels that have dominated the fashion scene for the last decade.

Entrepreneurs throughout Africa are finding ways to use their understanding of local needs and contexts to outperform global competitors in their market sectors. The Ugandan-based service app Yoza connects customers with entrepreneurs who offer laundry and dry cleaning service in their local neighborhood. Kenyan consumers have flocked to the M-Pesa mobile payment system, which has made the Western models of retail banks and credit cards all but irrelevant.

I tweeted several weeks ago about India’s Dabbawalas, a centuries-old food delivery service that has survived – and thrived – in the face of competition from global tech startups.

And, in New Zealand, half of Kiwi consumers recently said they try to buy local brands, both to support the local economy and because these companies better understand their needs and tastes.

These local-focused entrepreneur stories might be interesting, but why do they matter?

The “buy local” movement is driven by consumers’ relentless search for authentic goods and services. In a world where a consumer can have any good, at any time, purchasing a less-available, local item – be that a shirt, a piece of home decor, or street fare from a food truck vendor – becomes a source of pride and distinction. This tendency toward the local is facilitated by technology, which allows small, entrepreneurial players to launch, market, and scale their businesses with speed and success.

In reflecting on all of this, I can’t help but think that the old adage, “think globally, act locally” is as true as ever. Global brands will do well to think hyper-locally in order to maintain relevance with consumers in a glocal world.

UK: New application fills consumers’ baskets while they work, sleep, play…

Couple of weeks ago travels take me across the pond to the UK. While I’ll steer clear of adding my analysis of the Brexit vote, I am felt compelled to reflect on changing retail landscape in the U.K & implications here in the U.S. Specifically what was intriguing was the launch of an innovation aimed at making grocery shoppers’ lives a little easier.

Tesco recently leveraged the power of IFTTT (If This Then That) to create an automated shopping application. While it is powered by sophisticated backend technology, the proposition is simple: shoppers can join Tesco’s IFTTT channel to create “recipes,” or triggers that will automatically add items to their shopping basket at  Yes, bots will do your shopping & take out the mundane tasks.

IFTT, eloquently described by Tesco Labs, is a “platform for joining together all your different online accounts to enable you to do clever things.”

Consumers sign up for a free IFTTT account and connect it to other applications (think: Facebook, Twitter, email, etc.). Registered users can then create “If, Then” recipes that proactively help accomplish a variety of tasks including controlling home appliances, staying healthy, connecting to loved ones, shopping smarter, or staying current. A tech maven can get an email whenever there is breaking news from their favorite publication. A health nut can receive a text anytime they fall short of their Fitbit goal. (Finger-wagging tone free of charge.)

Tesco’s channel offers a few recipes to get shoppers started. You can add milk on a certain day of the week, get an email if a product drops below a certain price, or even add burgers to your basket if it’s unexpectedly sunny.

Further, users are encouraged to create their own unique recipes. I can only imagine that these user-generated recipes will provide Tesco rich new territory for mining consumer insights and identifying unmet needs. 

This proactive technology is an example of the many “butler/bot” applications that are stepping up to manage the mundane and time-consuming aspects of people’s lives even when they are not actively thinking about them. (See: Google Alerts, Amazon Dash, and Brita’s wifi pitcher). Clearly, it has the potential to help consumers save time and money, and even make more satisfying purchases.

In addition to these consumer wins, I can’t help but think about what this application might mean for grocery retailers and their partners.

One innovation expert suggests that automation disrupts the typical shopping process (make a list, go to store, seek and select products) in a powerful way. It creates new imperatives to get a product into a shopper’s consideration set and basket long before they enter the doors of a store – if they ever do.

Conversely, as shoppers offload the job of shopping for weekly staples, they may enter retail grocery environments with more time and mind space to seek and sample novel products, creating new opportunities for brands and retailers to engage them.

Eventually, cart automation could pave the way for a “predictive grocery basket,” wherein algorithms would allow retailers to understand a shopper’s patterns and populate their basket with the items they want. While this may be a few years away, what a game-changer it will be if consumers can accomplish most of their grocery shopping without a single step, swipe or click.

For more on how Tesco is piloting technology to innovate the retail grocery space, read here.

Image Source: The Memo, 2016