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.”

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.

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, http://read.bi/2qJuvwE

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. 

Welcome 2017: Looking Forward & Back

It’s been unusually cold in Dallas and a great time to be introspective. Below I share a pair of insights I have percolating about the year ahead. Cheers to seeing these and other themes unfold in 2017.

 #1: Retail Brands Will Think So Consumers Don’t Have To

 In 2016:  I wrote about how Tesco’s IFTTT channel automates grocery shopping, paving the way for the ‘predictive grocery basket’ of the future.

In The Year Ahead:

To identify emerging trends, follow the money. AI applications are at a tipping point this year, with AI-generated retail revenue expected to skyrocket from $643.7 million in 2016 to $36.8 billion by 2025 according to Tractica.

Innovative retailers are already embracing their new AI-driven world. 2016 saw The North Face’s ‘expert shopper’ Lowe’s Pinterest-scraping interior decorator, and a Starbucks app that offers customized promotions by knowing when and where someone drives.

This march to AI-powered retail will fundamentally shift the role of brands and retailers in consumers’ lives from responsive to predictive.

Today, a brand (retail or otherwise) is a helper that makes it possible to fulfill my needs and wants. The best brands use data to offer curated selections or to delight with new, personalized suggestions.

As increasingly sophisticated bots and apps are launched in the year ahead, the role of retailer/brand will morph into that of a butler, which can proactively anticipate what I need and deliver. The most innovative will find ways to identify and fulfill needs and wants I didn’t even know I had yet.

This will shift the retail paradigm in diverse categories–from grocery to fashion, electronics and anything in between. Just ask Tesco’s grocery shoppers, whose carts are filled with items they are going to want–tomorrow.

There will be benefits for consumers, who will be able to shop more efficiently while offloading repetitive decisions. The upside for retailers and brands will be the ability to add true value to consumers while also driving frequency and desired purchase behaviors.

So, let’s look forward to a not-so-distant future in which we will all sit back while the bots do our shopping.

#2: Communities Will Find New Ways to Flourish

 In 2016:  Last year’s travels revealed that, even in our tech-driven culture, person-to-person communities are thriving around the globe. This is reflected in South Africa’s spazas, Brazil’s favelas, Shenzhen’s maker culture, and the social nature of global shopping days.

In The Year Ahead:

I will look for the ways in which the fundamental human need to connect and collaborate sparks new platforms and innovations.

Some suggest it will be the ‘year of the group chat,’ as people leave the increasingly corporate and drama-wrought spheres of Facebook and Twitter for smaller circles of virtual connections.

Because workers are people too, we will see the continued growth of enterprise-based communities like Slack. (Incredibly, the average user already spends 10 hours per day in app). While 2016 saw the office party go virtual, I wonder what other communal rituals might find online expressions in the year ahead?

The e-commerce sphere will continue to birth new commerce-based communities, like Amazon’s small-seller platforms, Handmade and Launchpad, and ShopClues, an Indian tech unicorn succeeding with a model that connects small-time sellers to rural communities.

And, I expect to see passion communities move from desktop to mobile, following so many other facets of daily life. This is something developer Amino Apps is banking on and investors are betting on their success.

Last year, seeing firsthand Detroit’s transformation from post-war auto hub to thriving tech town inspired me to think about how the digital world creates opportunities to reinvent community.

As we turn the page to 2017, retailers and brands – both established and emerging – will do well to think about how they can reimagine and facilitate communities for consumers craving authentic connections.

Best wishes for a healthy and happy new year to all. I’m off to get Alexa started on my to-do list…

International Discount Days: A View From Mexico City

I recently traveled to Mexico City, where the retail scene was just slowing down after a busy El Buen Fin.

The 3-day shopping holiday–loosely translating to ‘the good weekend’–was launched in 2011 by the Mexican government and the Council of Business Coordination in an effort to stimulate the national economy. Retailers throughout Mexico are encouraged to offer discounts and special payment plans during this late-November retail push.

By all accounts El Buen Fin has been a success. It has become the world’s third-largest shopping event (after American Black Friday and Chinese Single’s Day). In 2015 El Buen Fin sales grew more than 10% over the previous year, to over $10B USD. This year 11 retail centers and more than 6,000 businesses, double the number from last year, participated. These included not just retailers, but also service providers like restaurants, spas, travel agents, and pet hospitals.

While El Buen Fin is inspired by Black Friday, several characteristics make the Mexican holiday unique.

 It takes place over a long weekend vs. a single day like Black Friday. Typically falling just before U.S. Thanksgiving, it is pegged to Mexico’s Revolution Day.

This Mexican shopping holiday receives ongoing government backing. El Buen Fin is promoted as the “cheapest weekend of the year,” and it is supported by a dedicated website, Twitter account (#ElBuenFin2016) and Facebook page. During 2016, SHCP (Mexico’s tax collection agency) offered $27 million in cash prizes to shoppers who made purchases with a Mexican-issued credit or debit card.

While the number of participants continues to grow annually, the discounts tend to be smaller than those in the U.S. And, retailers often discount items that are not moving vs. the U.S. custom of offering hot, new merchandise.

Some Mexican retailers use El Buen Fin to preemptively capture sales from Mexican shoppers that might otherwise shop stateside during Black Friday or Cyber Monday. However, traffic flows the other way as well. Some businesses, especially those in border towns, seek to attract U.S. shoppers during the weekend–a feat made easier this year by the strong value of the dollar against the peso.

From a global perspective, El Buen Fin is one of many “discount days” now crowding the retail calendar. It joins Single’s Day, the Dubai Shopping Festival, Australia’s Boxing Day, and India’s Diwali Shopping Festival. Not to mention a litany of new contenders like Amazon Prime Day, Small Business Saturday, Green Monday, and Free Shipping Day, all driven largely by e-commerce.

These manufactured shopping days clearly play into shopper Psychology 101, combining the power of a deal with time scarcity to spur purchasing.

The rise of the “Discount Day” also provides an interesting view into the inherently social nature of the retail endeavor.

The proliferation of national shopping days comes at a time when myriad factors such as media fragmentation, waning civic engagement, and a growing economic divide–to name a few–have decreased the occurrence of truly ‘shared’ events in countries around the globe.

The strong collective interest in Discount Days reminds us that shopping remains a shared cultural event. Whether people come together around traditional shopping days or newly invented ones, in a physical or online environment, shoppers are ultimately social creatures that thrive on the ability to browse, select, and decide in the company of others. Retailers could gain insight from recognizing and furthering this dynamic when developing Discount Day programs and offerings.

The Discount Day dynamic also has implications for the future of global retail. Will these shopping days remain largely concentrated within their countries of origin? Or will they leap across political borders, as social phenomena are wont to do?

In recent years, we’ve seen the Black Friday tradition cross the Atlantic, prompted largely by Amazon’s introduction of online deals in the UK. For their part, British shoppers and brands are increasingly cashing in on Single’s Day deals. As shoppers become more aware of and open to shopping other country’s deal days, could this dynamic feed borderless trade and perhaps drive increased price transparency on a global scale?

These consequences would require retailers to do some focused analysis and soul-searching. Are discount days a profitable and sustainable long-term strategy? Or, do they merely compress demand, cannibalizing from other time periods and training consumers to buy only on deal?

The one certainty is that Discount Days continue to proliferate and thrive, making strategic calendar planning a must-have for manufacturers and retailers and lending additional dynamism to the complex global retailscape.

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

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

#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

 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

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

#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

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

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.

E-commerce: The Great Mall of China?

There’s nothing like starting a new year with a fresh perspective. For me, this came in the form of a trip to China over the holidays. While I fell in love with the sights, people and culture, one image from this experience lingers as the most impactful:

Those are e-commerce packages waiting to be delivered. If this was one random storefront, what would it look like if we scaled this by thousands? Is this pace indicative of the nation as a whole? Naturally, I did a little digging on the numbers behind e-commerce in China, and here is what I found.

I don’t think anyone would be surprised that China is an e-commerce titan; however, the degree of the nation’s dominance in this arena is staggering. In 2014, China had already hit US$458 billion, dwarfing the US total of US$297 billion. They've rapidly overtaken the U.S. and other developed nations, becoming the world's largest e-commerce market. Domestically, e-commerce is becoming a shaping force of China's economy, contributing 19.4% of China's GDP growth and 33.5% of China's retail growth (per Kantar Retail 7.28.15).
 
What’s driving this growth? One likely factor may be Chinese consumers’ devotion to mobile, and more recently, their increasing interest in mobile shopping. Alibaba reported that in Q1 of 2015, 83% of all active buyers were mobile buyers, ultimately contributing 51% of Alibaba's total GMV (per Kantar Retail 7.28.15).

And this is just the beginning. As companies are able to expand their distribution to rural areas, they will surely unlock a new level of growth. Companies like Taobao.com are already taking steps to set up rural service centers to handle orders and fulfillment.

Finally, as you know from everything I share on this blog, you never want to leave the human element out of the equation. Beyond the widespread adoption of mobile web browsing, it’s important to consider that e-commerce has been so widely embraced because it is also a natural fit for a savvy consumer base of natural bargain hunters who equally value pre-purchase research done online with in-store experiences.

When we step back and look at the Chinese e-commerce phenomenon as a whole, I am optimistic. Not only because this represents potential and opportunity on this side of the globe, but also because it exemplifies the perfect manifestation of technology enhancing, not replacing, real human dynamics. This is what being a marketing technologist is all about.