Friday, April 30, 2010

World Retailing: Retail via eCommerce

In the Financial Times World Retailing this month, "Seamless service from clicks and bricks" talks about the growth of eCommerce driven retail, moving of luxury goods sales to the internet and their success, and a combination of clicks and bricks.

"Deloitte and Forrester, the technology and market research group, found that 40 per cent of retail sales in the US last year were influenced by the internet, with consumers either shopping online or using the internet to gather information on potential purchases."

Now the fun begins!  The five senses to be influenced available to a retailer in the retail store disappear on the web.  How does one create the right experience for the diversified, from the affluent to the lower middle class, to engage and convert them?  This is where pure analysis fails... for example, if a web shopper is recognized as liking red because they bought a red pen, does that imply they would also buy a red car, and a red shirt, and so on.  Insights into behaviors through aggregation can result in misfires and loosing the online shopper all together.  eCommerce retailers will need to move towards personalization - the market does not have but one true personalization player, one that can comprehend astronomically large coincidence points of the shopper and instantly connect the semantics to it, while providing this information at instantaneous speeds.

Current solutions can collect all the dots yet, as the article states, "But joining the dots takes time."  Most of the time the shopper has moved on or has been influenced by a different solution to their need.

eCommerce is also going to enable new entrants in the global market place as the "virtual shopper" can do shopping on the eCommerce "virtual shelf" from anywhere.  Like I said, now the fun begins!  Will the shopper and consumers be the winners in the end?

"As retailers rush to provide even better online shopping experiences for their core customers, they are also using the internet to procure new ones.

The next step for many is to use the internet to give them exposure overseas.

Next, the UK-based clothing chain, said last month that it was pulling back from expanding overseas through its own stores in favour of growth via the internet.

It has expanded its online operation to 36 countries and has been selling into the US via the internet since the middle of last year.

“Internationalising sales is a smart strategy,” says Mr Fitz- gerald. “With the internet, you can go into 20 new countries within a year. It is remarkable and you really can achieve that kind of scale if you prioritise and focus.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: It's all in the Data!

In the Financial Times World Retailing this month, "Good analysis and use of data can make all the difference" highlights the role of information technology from product manufacturing to in-market to consumption.

"“But what has changed since is that there is now a renewed focus on looking at where retailers make money, and that is in the store,” [Andy Park, industry leader for retail and consumer products for northern Europe at IBM] says."

What is interesting to note is "Retailers are still investing to improve the way they handle the last 50 metres of the logistics chain, from the stock room to the shelf."

The article does not fully touch on one of the most important piece, shopper data... data that has been collected for close on a decade, loyalty cards, credit cards, POS, etc.  Coarse grain segmentation with 10% to 90% hit or miss margins and marketing budget wastage may finally begin to be managed through not only statistical analysis, but making "sense" of the shopper decisions, i.e. the semantics of the shoppers actions or not.

"“There is a shift in focus to insight and not just measurement analytics, but to insights into the shoppers themselves,” says Renee Sang, who runs Accenture’s Customer Innovation Network.

“Price transparency is now a given, so retailers want to identify which customers are most likely to convert [to buyers]. Not all customers convert in the same way. For some it’s price, for others assortment, others service.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Consumerism and The West

In the Financial Times World Retailing this month, "Consumption starts to shift to China, India and Brazil" discusses that the average shopper and consumers balance sheets are in better shape than they were a year ago.  Yet, the article states:

"But if the consumer is coming back to malls and high streets, their attitudes are changing, according to recent research.

Consumers around the world are reining back spending on non-essential items, according to Datamonitor.
Half of shoppers say they would cut back on buying new clothes and shoes, while 41 per cent say they will be reducing the amount they spent on cosmetics and fragrances.

Meanwhile, ostentatious consumerism is out, as shoppers are uncomfortable about flaunting wealth in more austere times. As a result, retailers are beginning to replace branded handbags and other high end goods with more subtle items."

I am tempted to ask if this is temporary or here to stay?  The outcome that the article highlights is "...that spending in the US, which currently accounts for 72 per cent of gross domestic product, should move back to its historical level of 66 per cent."

The more likely scenario that is emerging is that the consumerism begun through the design innovation of Raymond Loewy may merge into socially responsible products being the pull from the shopper and consumer.  This seems to be the case as stated multiple times else where in the "World Retailing", specifically in the article "Green moves make savings".  Another one is the growth of eCommerce creating a completely new sector rather than a sales channel.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Circumspect

In the Financial Times World Retailing this month, "More circumspect attitude prevails" provides some intriguing highlights into the GCC market place - "Mirdif’s developers, Majid Al Futtaim Properties, insist the Dh3bn ($820m) project makes sense. Like businesses in other sectors, they are betting on recovery in an oil rich region that has a reputation for rampant consumerism and the emergence of a “mall culture” whereby shopping is a primary source of entertainment."

As an example, here is a list of Malls in Dubai with links to the stores in the malls and shopper comments where the mall culture is alive and thriving

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Indian Shoppers Promise the Highest Growth

In the Financial Times World Retailing this month, "Traditional vendors still dominate" discusses how India remains the "world's most attractive developing country for retail investments."  The article states that "large foreign players such as Wal-Mart, Tesco and Carrefour, have been kept on the margins by New Delhi’s ban on foreign direct investment in so-called “multi-brand retail.”" but believes that it will and has to change in the near future - "“I think all the domestic players have burnt up a lot more cash than they thought they would,” says Mr Mukherjee [an AT Kearney principal in New Delhi]."

Today, Trent (Tata group's retail arm) operates Westside department store.  In groceries, Tata gets technical support from Tesco for their HFS Star Bazaar.  Similarly, Bharti Enterprises has Easy Day with technical support Wal-Mart.

India, a nation whose primary language is English, has a shopper whose behavioral patterns are more desirous of Western culture does seem like the ideal candidate for retail investment.  Question is if it will end up inventing solutions designed specifically for its shopper and consumer and create a new market place for shopping?  For example, the HFS format is an Asian invention adopted and improved upon by the rest of the world.  A version of "dhaba-walas" has always existed throughout the developing coutnries.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: China's Wild West

In the Financial Times World Retailing this month, "The Wild West with razor-thin margins" documents the complications associated with exponential growth opportunities associated with open markets.  Specifically, the case of "Huang Guangyu, founder of the giant Chinese electronics retail chain Gome, was named China's richest man two years ago... But in February, he cele- brated his second Chinese New Year behind bars, awaiting trial on vague charges of bribery and stock manipulation."

Chinese retailers ramped up their growth fast... more importantly, as good friend and colleague Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co. highlights, the Chinese retailers have adopted methods of understanding their shopper and consumer as well.  China is a place where the behavioral change of the shopper and consumer is simply very fast in comparison to the developed markets because "people who were at subsistence level a few years ago are becoming consumers."

The article states:

Retailing in China is still highly regional, highly frac- tured and overpopulated,” says Paul French, manag- ing director of retail consul- tancy Access Asia.

For example, in the western city of Chengdu, half a dozen high-end mega-malls are scheduled to open in the coming months. A giant statue of the late Communist leader Mao Zedong now points towards a Cartier store crowded in next to a Starbucks.

The wild west environment in which Mr Huang carried out his ambitious consolidation and which ultimately saw him toppled has spawned a cut-throat model that has been widely replicated."

Yet, China may also be developing its own in-store shopper engagement and conversion models:

"Companies such as Gome and Suning, its biggest competitor in the electronics sector, rely on product agents instead of inhouse salespeople as a way of con- trolling costs.

This means that when customers enter most Chinese appliance stores, the only people directly employed by the retailer are the cashiers, the security guards and the warehouse staff."

One thing is for certain, China has a ways to go in its experimentation as the shopper and the consumer remain an evolving base from needs vs. desires to affordability vs. affluence.

If you would like to read this and other articles in the World Retailing, download the complete file here.

Thursday, April 29, 2010

World Retailing: Fight for the Shopper and Buyer in the US

In the Financial Times World Retailing this month, "Stores prepare to fight for every last customer" covers the retailers approach in the US to convert their shoppers to buyer and loyal customers.

"Glenn Murphy, chief executive of Gap, ... has a hard-nosed view of what to expect this year from US retailers, as their customers gradually emerge from last year’s slump in spending.

“It is going to be mano a mano,” he told a recent investors meeting. Success will not be “based on square footage and capital. It is based on execution, differentiation, knowing your target customer . . . and fighting for every one of them”."

Interestingly where the square footage was the measure for retailer growth now:

"Most US retailers have slowed or stopped square footage growth. Notable exceptions include those that have benefited from the frugal consumer mood. Dollar General, the discount store, is planning to add 600 out- lets to its 8,700 network, and TJX Companies, the end-of-line retailer, is increasing its square footage growth rate from 3 per cent in 2009 to 5 per cent.

In contrast, Wal-Mart, the largest US retailer, is slowing its square-footage growth rate to less than 2 per cent, compared with more than 7 per cent in 2006."

So how does this conclude?

"“They’re all saying they will win the market share fight. But they can’t all win a bigger slice of the pie,” [Emanuel Weintraub, a veteran retail consultant] says."

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Sustainability

In the Financial Times World Retailing this month, "Green moves make savings" discusses the influence of the shopper on pushing the retailer towards "green".

"Joanne Denney-Finch, chief executive of the IGD, says she is not seeing strong evidence of retailers opting for the schemes that save most money, partly driven by consumers.

“The shopper has been very clear [that] it’s not price at the expense of all the other things on their wishlist,” she says."

Interestingly, during a seminar in Pakistan to some of the top non-profits and philanthropic organizations in the development sector, I put up a slide with three large alphabets only - CSR.  I found a bit of education in the discussion that followed on how the development sector views for-profit organizations of the world using CSR (Corporate Social Responsibility) in marketing and perception value.

I am thrilled to have worked at Procter & Gamble where social responsibility is inherent in all business.  Have a look at a "Sustainability Report" here from nine years ago.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Operations and Retail Staff Matter

In the Financial Times World Retailing this month, "Global view with a local focus" highlights the shift in emphasis on optimization of retail operations and engaging the retail staff to convert the shopper into a buyer/consumer.

"Don Williams, head of retail at BDO, says that if businesses have underlying operational issues, these will be thrown into sharp relief: “Tough operational conditions magnify issues mercilessly. You are going to be exposed if you have an operational flaw,” he says.

But Mr Hyman points out that retailing is not just about strategic vision. Having the right staff in stores will be a key weapon.

“One of the things that is really going to sort the men from the boys is store managers,” he says. “More and more, this battle is going to be fought on the sales floor, not in the boardroom.

“So having a brilliant strategy that is articulated in a compel- ling way in the boardroom is academic, unless it can actually be executed, which means . . your regional and store management, and staff loyalty, never mind cus- tomer loyalty, will play a much bigger part.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

Wednesday, April 28, 2010

Mohamed El-Erian

Mr. Mohamed El-Erian, CEO of PIMCO is someone I have listened to closely when it comes to understanding investments in global markets.

"As a group emerging markets have become stabilizers in the system, old days we thought of them a disruptor."

See the video here.

Economics is not Science

Excerpt from a letter in the Financial Times written by P. A. Stahl of American Astronomical Society, here:

"Sir, I appreciate Katy Delay’s effort (Letters, April 21) to portray economics as a science, but let’s be clear it is not. Economics has never been a science, it only adopts some scientific window dressing, a few of the methods (mostly statistics) and some jargon. But no serious empiricist would regard it as “science”.

For example, economics has no true objects of inquiry, say like physics, nor does it offer any consistent, theoretical models that don’t rely on statistical artefacts. Nor does economics make quality predictions based on said models, like atomic physics. If it had such capabilities, it would have foreseen the 2008 meltdown well in advance and warned everyone!

Even the most rudimentary student of statistics understands that regression models (even multiple) don’t show causality. The quants’ correlation factor (“gamma”) in their Gaussian Copula formula, in fact, helped precipitate the 2008 financial meltdown because they had zero insight into what they were really quantifying! Meanwhile, the illustrious economists – in their naive and incomplete statistical “modelling” – are prepared to ignore an entire raft of variables associated with what they call “externalities”. How very convenient!

Tuesday, April 27, 2010

21st Century Dilemma Management

A report from the Brookings Institution and the Center on International Co-operation at New York University, "Confronting the Long Crisis of Globalization", download here, discusses that the sort of problems governments will face in the 21st century will be unpredictable versus those faced during old great power rivalries.  Concerns related to demography, climate change and shifts in economic power build up quietly for a long time and finally trigger sudden, disruptive shifts.

The authors suggest institutional level changes and changes in the frame of mind in solving the needs or crisis.  They recommend risk mitigation and resilience to shocks - "Resilient systems are those that can absorb disturbance and reorganize while undergoing change, so as to retain or enhance effective function, structure, identity and feedbacks."

The days of narrow focused, blinders on, problem solving are over as the deeply interconnected world continues to grow to be more so.  This is the century of the "butterfly effects".

Carrefour - Turned Around?

The Financial Times reviews Carrefour's CEO Lars Olofsson's progress over the past fifteen months in returning the retail giant to its revenue growth.  "Mr. Olofsson says he has diagnosed the problem, which is basically the underperformance of non-food sales at the hypermarkets..."  See article here.  

Hypermarkets are an interesting retail environment, where the shopper and consumer merge, or can swap roles.  Similar to eCommerce environments.

A French Entrepreneur in Tennessee

The Financial Times profiles Bruno Durant of Silver Bait LLC - "...the owner of what must be the world's only vertically integrated worm factory."  It is a refreshing look at what the USA continues to represent for the willing and hard working entrepreneur.  See article here.

Thursday, April 22, 2010

iPad for superior consumer experience, win for retailer

Good article on Ad Age here, discussing how the brands can now connect directly with their consumers via the iPad. Yet, one comment highlights that smartphones could still be the in-store connection point for the retailer to the consumer for the near future.

Tuesday, April 20, 2010

Ad Age Disappoints - iPhone OS 4 Multi-tasks

Ad Age writes in Apple Brings Multitasking, Skype Support to iPhone Update here, "The new software answers many developers' and consumers' requests, especially with features like some multitasking support, a unified e-mail inbox, better VoIP calling, and a social-gaming network. It's cool that you'll be able to listen to Pandora radio and make Skype calls while reading e-mail and surfing the Web."

The statement in the article "These are fine features, but nothing revolutionary" shows that Ad Age has to go a ways to comprehend technology.  Multi-tasking implies that emergency messaging can get through, automated email updates, superior use of bandwidth when available, continuous consumer engagement solutions, continuous monitoring solutions in healthcare, etc. etc.

I'm disappointed in Ad Age!

Monday, April 19, 2010

CK Prahalad - RIP

CK Prahalad passed away in San Diego recently.  The top fundamental and foundational business trans-formative concepts he developed that any management executive knows are - analysis of how multinationals operate in "The Multinational Mission" - concept of "core competencies" in "Competing for the Future" - co-creation with customers and consumers in an interconnected world in "The Future of Competition" - challenge to businesses to serve billions of people earning a few dollars a day in "The Fortune at the Bottom of the Pyramid".

CK Prahalad was a Global Charter Member of The Indus Entrepreneurs - the world's largest non-profit organization promoting entrepreneurship through mentoring, networking and education.  I am a Charter Member of TIE and President elect (TIE-Carolinas) as well and find the group to be an exceptional wealth of superb minds.

CK Prahalad will be missed.

Best Buy Going for Mobile Technology HFS!

"Brian Dunn, chief executive, told the Financial Times that the retailer expects eventually to have "a number somewhere between here and 1000" of Best Buy Mobile stores in shopping malls across the US, on top of the 77 it has already opened."

Read a related article at The Street here, see current Best Buy Mobile across the NE USA here.

Such stores will end up being similar to gas stations as the iPad driven convergence of internet communication, wireless telecom, content creation and management escalates.  Hence my reason to call them what they really ought to be - High Frequency Stores.  Something to invest in now?

Neuromarketing - Yay or Nay?

Dr. Michael Polster, SVP at National Analysts Worldwide writes in the Financial Times here regarding neuromarketing, "At the moment, then, marketers - not consumers - are at risk of being seduced by a fledgling idea that is neither fully validated nor fully understood, rather than relying on tested market research techniques that have helped launch and sustain virtually every mega-brand in existence today."

Friend and colleague Franz Dill is engaged at Buyology, folks driving neuromarketing based on Martin Lindstorm's book "Buyology: Truth and Lies About Why We Buy".  See company here.  See Franz's blogs on neuromarketing here.

Energy through Nuclear Power in the GCC

Saudi Arabia is planning to develop a civilian nuclear and renewable energy center, see an article in Arabian Business here.  Interesting to note that Saudi Arabia uses 1.25m barrels of oil each day where the price of a barrel is $5, see Financial Times article "Saudi Arabia announces nuclear centre" here.

On the nuclear technology acquisition front, Saudi Arabia is in talks with France, while Kuwait has already signed a deal with France on developing a nuclear energy project, see here.  And UAE recently signed a $20b nuclear deal with South Korea, see here.

Nuclear remains the cheapest (~6c/kwh), green and most available on-demand alternative energy today... yet the technology improvements are going to bring solar down further from (~20c/kwh) in the next few years.

The fun begins when mass energy stores become available!

Update: Areva, the French owned nuclear group, will be doing fund raising of ~$4b through mostly Middle Eastern and Asian investors. 

Digital Life is Permanent

During a seminar titled Digital Life, I stated to the audience that "Digital Life is Permanent" and gave a few examples.  Now I have one more to add:  Mr. Fabrice Tourre, the 31-year old Goldman Sachs vice president at the center of the SEC's case wrote in an email to his girlfriend that he is a "Survivor... of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstruosities [sic]!!!" (quote from

The danger is digital life can be duplicated, tampered with...!  How often can one change the passwords.

Jeremy Grantham on Financial Bubbles - Excellent!

Jeremy Grantham states - "Bernake has happily picked up the mantle, and seems totally unconcerned about creating another bubble.  He has got interest rates so low, banks can't possibly not make a fortune, savers are being penalized, anyone who wants to buy cash faces a painful experience... so we are all tempted into speculating, which is apparently what he wants and we have just had one of the great speculative rallies in history second only to 1932-33."  Watch the complete interview here.

Tuesday, April 6, 2010

US High Tech Areas and Rankings

This is couple of years old but worth having a look at again to see how ll these places have fared in the past two years - see Milken Institute's interactive 2007 rankings here.

Shin-kansen: Japanese High-Speed Trains!

"The oldest and busiest Shinkansen corridor - Central Japan Railway's 550km Tokaido line, which connects Tokyo with the western city of Osaka - carries 400,000 passengers a day and has run since 1964 without a fatal accident. The average delay last year was 36 seconds, with most of that caused by typhoons."

The Financial Times talks about the Japanese Shin-kansen in "Tokyo bites hte bullet on Shinkansen" here becoming available to the world after close to five decades in use.  Great competition for the likes of Chinese and German train manufacturers.

Trend In-Motion: Future of Transportation

Excellent articles in the Financial Times today on high-speed rail. In "China on track to be world's biggest network" here, the newspaper writes about the future being bleak for the Chinese airline industry while China continues to spend on building new and redo existing airports. Yet, the thing the Chinese airline industry has to focus on is the consumer aspects and why they would choose rail over air:

"Flights in China are almost always delayed and passengers must arrive early so that they can pass through rigorous security checks.

Once on the aircraft, the service is perfunctory, the toilets often filthy and the food barely edible.

In contrast, China's shiny new high-speed trains are clean, fast, smooth and almost always on time. There are no excess baggage fees for heavy luggage, security checks are perfunctory and passengers can use their mobile phones.

I believe, if the US ends up being serious about high-speed rail, it will face the same concern as above.