“FIVE Revolutions”, That Will “Shape the Future of Your Company” | Chief Executive

Everyone knows change is coming….But underestimating the speed and impact of these changes will be the downfall of many businesses large and small in the coming years…!!

The press is full of trendy terms—Big Data, the Internet of Things, Digital Natives, Globalization, Social Media, etc.—that attempt to describe the complex technological and social changes that the world is currently experiencing. However, there is a danger in reducing complex social dynamics down to a few catchy buzzwords—trendy terms can act as intellectual shortcuts that fool people into thinking they understand these ideas when they really don’t..

In a world of constant disruption and uncertainty, however, CEOs who truly understand the key forces behind these changes will be in a better position to adapt and survive…Looking ahead, there are several horizon-level revolutions that business leaders should be aware of, because they are about to be felt with a force that is difficult to overstate..

Revolution #1: The End of the Information Age:

Many people think we are still in the Information Age, but the truth is that we are leaving the Information Age behind and entering a new stage of human development fueled by global inter-connectedness and rapidly improving technologies of all kinds. The exponential growth and convergence of so many new technologies—combined with a growing population of tech- and media-savvy consumers—will usher in a revolutionary era of social change, the likes of which humanity has never seen before. In the future, companies will need to find ways to protect themselves from the inevitable disruptions that such changes will bring, while simultaneously recognizing the advantages and opportunities..

Revolution #2: The Shift From Institutional to Individual:

One of the biggest power shifts of the 20th century was the shift from institutional power to individual power, and that isn’t going to stop. The Internet empowered individuals to communicate with anyone in the world, and now populations armed with nothing but cell phones are bringing down entire governments. Furthermore, institutions in all areas of life—education, health care, religion, media, business—are being forced to change simply because people now have more ability than ever to organize, mobilize, innovate, disrupt and demand..

Brands, too, have gone from being purely institutional inventions to personal expressions of almost any kind. For businesses, continuing empowerment of individual customers means that the dynamics of the business/customer relationship are evolving. Customers will continue to demand more transparency, integrity and responsiveness from those they choose to do business with—and businesses will have little choice but to comply. Smart businesses will initiate the inevitable rather than wait to be pushed..

Revolution #3: Artificial Intelligence Becomes Less Artificial:

Creativity and imagination are often thought of as the one realm that computers can never conquer, because the inner workings of the mind are what make humans unique. But it is already possible to control a computer with our thoughts alone, and commercials for IBM’s Watson computer are now touting its ability to generate ideas—helping chefs develop original recipes, for instance—using data to spark creative inspiration.

As artificial intelligence continues to evolve and improve—powered by the combination of Big Data, the Internet of Things, and always-connected devices tied to people’s location and activities (e.g., the Apple Watch)—it will begin to behave more and more like a giant alternative brain, one that rivals and surpasses humans in many ways. Machines already do most jobs that involve repetitive motion. When machines start replacing people who use their imagination for a living—writers, designers, architects, engineers, teachers, etc.—they won’t just be taking better jobs, they’ll be challenging what it means to be human.

This shift will create a great deal of psychological stress, generating a massive need for goods and services that will help them adjust to this strange new reality. Brands that can help people ride the wave of change to a brighter future, or help people cope and adapt, will be in high demand—as will brands that affirm human values and identity..

Revolution #4: Rise of the Digital Natives:

Much has been written about the impact of millennials (those born between 1981 and 1997) on the workforce, but the next wave of workers and consumers entering the workforce will be the digital natives (those born after 1997). Digital Natives are the first generation in human history to be born into the world of hyper-connected information overload…However, since they’ve been connected since birth, digital natives do not experience the flood of information hurling at them as anything more than just “the way things are,” and always have been—for them..

At the moment, millennials are assuming positions of power in all walks of life, and their impact on everything from viral memes, infotainment, social media, spheres of influence and cross-platform content has been profound. But when digital natives start adding their ideas and influence into the mix, the pace of change will accelerate even faster. This acceleration will feel to older generations like constant chaos and disruption, but to digital natives, it will simply be business as usual..

Revolution #5: From Selling to Sharing:

Since millennials and digital natives have been aggressively marketed to their entire lives, they are also extremely savvy about the media they consume. Direct, blatant pitches don’t work on them. They hate being sold to, and to them, commercials are just the things you fast-forward through to get back to the program. Also, since they are wary of institutions, they are much more likely to trust the opinion of a friend than anyone else, hence the rise of social media as a powerful marketing tool.

In the future, selling is going to be less about persuasion and more about participation…Brands that position themselves as a trusted “friend” have a much better chance of succeeding in this environment…

That’s not a new idea; the key is truly being worthy of the customer’s trust. For example, Whole Foods knows that its customers care about the ecological, political, and social impact of the food they consume…To help make that information more readily available to its customers, the company is investing in IT infrastructure to support its vision of total product transparency—a move it hopes will inspire the sort of trust and loyalty all companies are looking for in the 21st century…!!

“The Retail-Revival” : Succeeding with a “Store-Led Strategy” | BCG

A Store-Level Focus Can Transform Retail Chains Faster and Yield real results..!!

A bottom-up approach is entirely appropriate for retailers that find themselves struggling to make meaningful performance gains. Unlike what’s typical in many other industries, symptoms of sub-par performance in retail are readily detectible by both retail experts and customers, and those customers are able to provide immediate feedback..

Of course, #RetailTransformation is not simply a matter of “walking the store floor”…Although the physical demonstration of engagement is important, it is insufficient to effect lasting change…BCG has found that big performance gains are possible when executives are ready and willing to drive an integrated store-first change program that fits within the existing business model: that is, there are no additional capex requirements and no major changes to infrastructure…

Significant Results Within Months :

The results can be impressive. In BCG’s work with retailers worldwide, we have seen noticeable increases in store traffic that have, in just a few months, translated into a 5 percent lift in like-for-like sales and consistent profitability. Customers will almost certainly see cleaner and tidier stores with neat, well-stocked shelves, up-to-date price tags, fresher fruit and vegetables, and cheerier, more helpful employees..

Such results can be seen in a large Asian retail chain that successfully piloted and rolled out new operating practices. Guided by a store-led initiative, the chain boosted sales per square foot by more than 14 percent inside nine months, and it showed a profit for the first time in five years. We have observed comparable results in Europe and North America. One large European grocer gained a full percentage point in market share in its hotly contested market within six months..

The essence of such change initiatives lies in the deliberate, choreographed coordination of three concepts that previously had been used only selectively, in isolation, or outside the framework of a sustainable, system-wide change effort..

Anchoring the effort is the “Transformation SWAT team”—a carefully selected group whose job is to lead and embed sustainable change. Unlike typical change-management teams, these SWAT teams include high-potential middle managers who have a deep understanding of commercial and operational realities..

The second element is “stores of learning”—a small selection of representative stores that serve as centers of excellence. The goal is to rapidly pilot new operational and commercial practices, provide a visual look-and-feel trigger point to improve team culture, and to educate, inform, and excite senior store operators. The third element is fast rollout across the chain, spearheaded by the store operators themselves..

We’ll examine each of those transformation levers after a brief look at the context of retail challenges today…

Inverting the Business Pyramid :

Successful retail leaders are all “fluent in floor.” They can discuss, with authority, stockout rates in each store. They have a good sense of how customers are helped in stores. They’re likely to have ridden in a supplier’s truck, so they’ve seen how products are sorted, packed, and loaded at the distribution center—and how efficiently products are unloaded, unpacked and stocked at the stores..

That kind of store-led approach is needed to resuscitate grocery and mass-retail chains whose performance is sagging and that face tough online competition and upstart specialists. Yes, top-down approaches are entirely appropriate for macrostructure decisions—how many stores are needed in the region, say—but increasingly, executives need to be directly in touch with employees and shoppers. They need to see stockouts and untidy shelves for themselves and to understand the root causes of those problems. Put simply: it’s necessary to turn the traditional business pyramid on its end. (See Exhibit 1.) This inverted model isn’t simply about a change in operation; it involves a new cultural paradigm that motivates employees to deliver results because they want to—not because they’re told to…

exhibit

Why Store-Led Change Is the Way to Go:

Store-led change involves testing and fine-tuning a series of interventions in a selected group of trial stores with an eye toward immediate impact. Senior managers can see the potential of the interventions and be confident that they will work. After that test phase, the interventions with the most impact are rolled out rapidly, in disciplined, systematic ways, to the whole chain. Each performance gain supports the funding of the next stage in the roll-out, funding the transformation through its early stages and eliminating the need to “go back to the well” for financing.

Store-led change also means developing a cross-functional approach, improving and building capabilities for the long term. This approach enlists not only the executives from commercial and operational leadership but also the store managers, along with representatives from support functions such as finance, IT, and human resources..

The THREE Cornerstones of Store-Led Change: Let’s examine what makes this approach work well.

A transformation SWAT team must lead the necessary changes. This group’s primary responsibility is to align the business structurally with the interface to the shopper; the SWAT team’s charter makes it accountable for achieving that objective and for piloting the necessary commercial and operational processes. The team is the spark and the propulsive power behind the store-led transformation effort.

To explain what the SWAT team is and does, it helps to explain what it is not. It’s not a group of “the usual suspects” from the executive team—talented but extremely busy leaders who would have to find time to lead the change initiative as yet another in a long list of projects. Instead, the SWAT team comprises motivated, proactive managers hand-picked for the duration of the change effort. It is critical that they be drawn from many operations and functions. Unlike many conventional top-down change teams, which often splinter quickly into functional hammers seeking nails, the SWAT team assumes and retains a function-agnostic stance that better serves the stores’ needs..

The approach also means that the SWAT team members can bear down fully on the change tasks. It is the perfect crucible for learning and leadership development: top managers soon see which team members are set for stardom..

The team’s members—high-potential middle managers, together with senior managers who are, in most cases, three levels below the CEO and are proxies for each top-management role—are tasked with selecting the test stores and deciding on the duration of the tests. Then, with input from the stores, the team develops a series of operational and commercial interventions that are designed to stimulate and sustain growth in sales and profitability. The team also liaises with the retailer’s regional and central teams to make sure that they are on board and to seek specific technical input and support as required..

It’s the SWAT team’s job to validate and approve the interventions using a proven business case or strong recommendation, and to design, develop, and secure approval of a detailed rollout proposal. The team also oversees the chain-wide implications of the program and remains accountable for the successful implementation of the transformation and for its financial success..

Stores of learning allow for safe experimentation. The stores-of-learning idea is essentially an incubator model in which a select few stores are designated as centers for experimentation and learning. With this approach, the proposed change levers—or interventions—are less likely to be caught in organizational treacle. This type of activity creates short-term value and provides the required funding for the more significant structural changes that will be needed to win in the medium term..

The fundamental concept isn’t brand-new, but it is new for retailers to run individual interventions in specific stores, measure the results, and then aggregate those results back in the stores of learning. And it is novel to ask the store teams to determine the priorities for change and to involve high-potential managers in the effort. Their involvement almost always accelerates the change effort..

We have identified FOUR Main Categories of intervention that collectively make a difference:

A Winning Culture – This intervention involves listening and learning from the store teams, helping them by reducing unnecessary work, communicating clearly with recognition and rewards, clarifying accountability and expectations, and creating values that resonate with the store teams and can become part of their everyday jobs. Little things add up: the more that retailers make job duties and expectations crystal clear and consistent, the better. The more that pointless work is minimized, the better employees like it. And the more that they’re listened to—and their ideas acted upon—the more they’ll be vested in the life of “their” stores..

Customer Focussed Opeartions - This intervention focuses on sales rather than waste, improves visibility of daily and weekly performance, prioritizes product availability, emphasizes cleanliness and queue reduction, and addresses labor scheduling. There is enormous potential here: these are the factors that shoppers notice right away. For instance, one grocery chain reduced the numbers of SKUs in some categories by as much as 30 percent and saw a 20 percent lift in category sales in some cases..

The Right Range at the Right Price – Here, the emphasis is on opportunities to improve merchandising impact; upgrade the quality, freshness, and value of items in departments such as fruit and vegetables and bakery; make progress with price laddering or private-label initiatives; and strengthen and simplify promotions. Another retailer that followed a store-led approach cut its numbers of promotions by almost a third, boosting sales growth and store productivity..

A Differentiated Look and Feel – The goals are for the stores to have open and welcoming entrances, clear sightlines and obvious navigation inside the store, legible communications about value and quality, well-planned category adjacencies, and effective macrospace allocation. At one retailer, a floor-up focus enabled the transformation team to quickly improve sight lines by lowering shelf heights, using large signage to improve customer navigation, and placing categories in more logical sequences..

The stores-of-learning concept turns the whole organization—not just store operations but everything from merchandising, marketing, and supply chain to IT and HR—into a laboratory..

Rapid rollout has an immediate impact. To deliver top-line sales growth fast, the transformation project must transition rapidly from stores-of-learning pilot status to a scalable rollout across the whole chain. (See Exhibit 2.) Many of the interventions can be activated immediately, delivering quick impact on customer and team morale and yielding sales gains that range from 3 to 12 percent..

exhibit

The reason why rapid roll-out works so well is that it is led by the stores. It is common for retailers to feel that the process should be led by the organization’s center. However, we have consistently observed that a regionally dispersed model—in which stores of learning serve as “universities for change”—results in more accurate, consistent, and sustainable results precisely because it is operator led..

Some interventions are immediately scalable: with product availability, for example, simple interventions in store procedures and in accurate measurement give immediate results. In the case of one retailer, we saw a 1.5 percent improvement in shelf availability. Other interventions require more fundamental organization design changes: for instance, promotional execution and supply-chain delivery windows can yield strong returns but only after several central functions have rejiggered their operational procedures..

Roll-out has to be systematic, led by the stores’ operators and guided by a clearly communicated methodology…Two Roll-out techniques work well :

  1. Keeping the stores of learning close together so that results are seen and best practices can be shared and acted on quickly
  2. Enabling the first store of learning to support and train a carefully designated group of other stores—perhaps those served by the same distribution center or that are located in the same metropolitan area—so that the roll-out requires a very light touch from headquarters

In turn, the first groups of stores that take part in the roll-outs train the next groups of stores until the roll-out is complete. Done right, the momentum of the roll-out is palpable and energizing in itself..

Now is the time to get back to the basics of retail—one store at a time. By tapping the energy, courage, and commitment of a transformation SWAT team—first, in the selected stores of learning—and mapping and rapidly implementing rigorous roll-out strategies, retailers can look forward to the kinds of performance gains that their shareholders have been expecting all along..

If they truly understand the business from the Store-Level upward, #Retailers can more easily jump-start their transformations…

A choreographed approach, featuring the coordination of the THREE Store-led Concepts described in this article, is what is needed to deliver quick, positive impact, creating the breathing room—and generating the funding—needed to galvanize other crucial transformation initiatives….!!

“Go Guerrilla !!”; “5 Unorthodox Ways to Market Your Brand” | by: Mike Trigg | Entrepreneur

Before a million pails of cold water brought the disease to global attention, many people had never heard of Amyotrophic Lateral Sclerosis, or #ALS…!!

But after a summer of ice bucket challenges, the devastating motor neuron disorder now has an astonishing level of awareness…Though the campaign didn’t originate as a deliberate marketing strategy, it’s a great case study of the power of guerrilla marketing in the social-media age.

Inexpensive, small scale and non-traditional marketing tactics can be extremely effective ways of promoting your brand if the idea catches the public imagination and goes viral. But so-called “Guerrilla Marketing” covers a huge variety of activities, from PR stunts to viral videos…

To determine if there’s a tactic that will work for your business, consider these five tips for crafting an effective Guerrilla-Marketing campaign that will resonate with your target audience…

 

1. Have a Hook:

If your product or service is something people don’t ordinarily care about, you need to give it an attention-grabbing hook, like the ALS ice bucket challenge.

Dollar Shave Club made the hardly earth-shattering idea of mail-order razor blades really engaging with a hilariously offbeat and low-budget YouTube video. Within two days of launch the commercial went viral, generating 12,000 new orders.

Or try connecting with people in unexpected ways, like this fitness company ad that appeared on German subway trains showing a man hanging out to a weight, rather than a subway railing…

2. Be Provocative:

Controversy sells so if you’re willing to break taboos and speak truths that people usually prefer to ignore, you can turn heads. This is a common tactic for charities and non-profits, like the visually arresting ketchup packs created by Campaign Against Landmines. The packets say, “In 89 countries walking on a mine is still routine” and on the flipside is a pair of legs…When someone opens up the ketchup packets, it depicts blood on the legs…

My company Hightail has indulged in the occasional provocative but fun stunt. We once handed out free cronuts to attendees at a competitor’s annual conference….The pastry packaging came with step-by-step instructions, including “Discard Box”. It was a playful and controversial (we were kicked out of the venue) way of targeting a very specific audience..

3. Sell an Idea, Not a Product:

As a startup, your passion for what you do and vision for changing the world is incredibly powerful. Stating that vision boldly and selling your product based on emotional appeal, not rational argument can give you an advantage.

Salesforce did this brilliantly with its “No Software” logo that evangelized the company’s underlying vision of simple, inexpensive, cloud-based services rather than focusing on what its product actually does. I still remember Marc Benioff’s ad in which a fighter jet shoots down a biplane. Though it was a little cheesy, the image represented a powerful idea that ultimately lived up to the analogy.

Also, you don’t have to be starting out to harness the power of ideas. IKEA celebrated the 30th anniversary of its popular Billy bookcase by filling 30 of them with books and placing them on Bondi Beach in Australia…Beach goers could swap a book for one of their own or donate to a literacy charity. By focusing on the popular beach pastime of reading, the furniture company got people’s attention while still promoting its product..

4. Make it Tangible:

Physical manifestations are great guerrilla marketing. Translating your idea into an object or event can help explain a product, especially digital services…

A Westfield shopping mall in California installed a real-life Pinterest board to act as an interactive store directory. Though Pinterest didn’t initiate the idea, by approving the use of its logo, the company got agreat real-life demonstration of its online service.

Even better, if you can capture your physical-world tactic and share it online, you can get a viral multiplier.  Adobe cleverly achieved this with a bus stop prank in which they Photo-shopped waiting passengers into a fake digital movie poster, as a way to advertise its Adobe Creative Day. The “candid camera” appeal of this stunt has garnered more than 22 million views on YouTube..

5. Take a Risk:

Some of the best ideas sound unbelievably dumb on paper (and may still, in fact, be dumb when you actually do them). They may flop, but you won’t know until you try. Many guerrilla campaigns get attention precisely because they are unusual, outrageous or unconventional. So don’t worry about people laughing at you.

For instance, ride-sharing service Uber has promoted its service by delivering ice cream or puppies to customers. In December 2013, Canadian airline WestJet asked passengers boarding a flight to Calgary what they wanted for Christmas then delivered these gifts when they landed.

Whichever style of #GuerrillaMarketingCampaign, you devise, remember to document and publish everything…Most #GuerrillaMarketing, is by its nature small in scale but it’s the shared links, laughs and likes that will make your campaign a big success…!!

“Ripe for Grocers”; The Local Food Movement | Consumer Products & Retail | A.T Kearney

Grocery shoppers today want local food—and they are willing to pay a premium for it…Our second annual study of local food market examines this growing opportunity for Retailers..!!

Walk through the produce section of Whole Foods and you’ll see on the signs, as prominently placed as any other information, the state of origin for its fruits and vegetables. With its Local Loan Producer Program, which provides roughly $10 million in low-interest loans to independent growers, Whole Foods has made a bet that local foods are not just a passing fad in buying habits but indeed a new reality for grocery..

Our second study of shoppers’ local food buying habits bears out the optimism about the “locavore” movement. The study finds that local food is fast becoming a necessity for attracting and maintaining customers. A growing number of shoppers, seeking more sustainable foods and hoping to help the local economy, say that the availability of local food is an important factor in what they buy and where they buy it. And, importantly, more shoppers say that they think more highly of retailers that carry local food and have even considered switching retailers to find better local selections. For big-box retailers and other national chains, there is plenty of work to be done to incorporate local foods, as the market remains dominated by farmer’s markets and specialty retailers..

We recently surveyed more than 1,000 U.S. shoppers to examine the strengths and weaknesses of large grocery retailers compared to other formats when it comes to local food. This study builds on our first report on the local food market, which was released in 2013..

Local Food: A Necessity to Compete:

Unlike organic food, there is no universally accepted (or legally binding) definition of local food. Although Congress passed an act in 2008 that defined “regional” and “local” food as being transported either less than 400 miles from its origin or within the same state, most definitions are less precise. At a more basic level, local food typically involves smaller farms located close to where their produce is sold.

Local food is quickly transitioning from one small way grocers can stand out to a component of the shopping experience that buyers expect. Sales of local food have increased an estimated 13 percent per year since 2008, and are now worth at least $9 billion.

Our study highlights several major trends:

Local food remains important for shoppers..More than 40 percent of respondents say they purchase local food on a weekly basis, and another 28 percent buy local food at least once a month. Most say that local food helps the local economy (66 percent) and brings a broader and better assortment (60 percent). Another 45 percent say it offers healthy alternatives to customers. It is clear that retailers offering local food can positively influence customer perception..

Local food awareness and price perception have improved..Sixty-eight percent of respondents (up 3 percent from last year) say they are aware that their supermarket of choice offers local food. Seven percent (down from 11 percent) believe their supermarkets do not offer local food; of this group 34 percent are considering grocers because of this.

Similar to last year, shoppers indicate their primary reason for not buying more local groceries is lack of availability at their retailer of choice (see figure 1)…This year, however, only 47 percent of respondents say availability is the primary reason they do not buy local, down 10 percent from last year, which underlines growing awareness of local selections. Dividing our respondents by region, the western United States has the lowest availability concerns (43 percent), compared to 48 percent in the Northeast and South and 50 percent in the Midwest..

Availability is the main reason shoppers do not buy more local food

Price perception has improved as well. Only 31 percent of respondents say that local products are too expensive, down from 37 percent last year, with the West and South reporting the best prices. Only the Mountain region cites price as a more important deterrent than availability..

Leaders are differentiating on “fresh”..Our survey respondents said that when they buy groceries, freshness is far and away the most important purchasing criteria (60 percent), followed by price (30 percent). Local sourcing is a powerful way for retailers to demonstrate their products’ freshness, as 30 percent of respondents do not differentiate between fresh and local..

This is particularly evident in specific categories: Many consumers want both fresh and local in categories such as fruits and vegetables, prepared foods, meat, fish and seafood, dairy and eggs, and bread (see figure 2)…While convenience ranks highly for frozen and canned foods, this is less of a factor for fresh categories (aside from prepared foods). Other factors, such as health impact, organic, and taste are generally consistent across categories..

Freshness is an important decision factor for buyers in many food categories

Shoppers are willing to buy local food—and pay more for it..Seventy percent of consumers say they will pay a premium for local food, the same number as in last year’s survey. However more of those consumers say they are willing to pay a bigger premium—one-third (compared to less than one quarter last year) say they would pay 10 percent more. Our findings indicate that more people are willing to pay extra for local food than they are for organics. Still, buyers don’t have unlimited budgets for local food, which still makes up the minority of their shopping baskets. Thirty-seven percent say high prices are preventing them from choosing more local food options..

To gauge interest in local foods for specific products, in this year’s survey we asked respondents how much more they are willing to pay for locally sourced versions of some specific products. More than half would pay 15 percent more for local strawberries, baguettes, eggs, and chicken. On the other hand, the majority of respondents say they would not pay more for local frozen green beans or lasagne..

Locally sourced food has broad-based appeal, with spikes in key customer segments..

While local food has wide appeal for a host of reasons, some customer segments are more inclined to buy local food and pay more for it. As local food costs more and is often positioned as a premium product, it is not surprising that income level is a strong predictor for buying local. Seventy-five percent of high-income earners in our survey are willing to pay extra for it..Overall, the value of local food has increased in high-, medium-, and low-income segments compared to last year. Thirty percent of low- and medium-income workers will now pay up to 10 percent for local, while almost 20 percent of high-income earners are willing to pay more than 10 percent, twice the number as last year..

Respondents from rural and small communities, which are closest to where food is grown, tend to be willing to pay more for local food than those from larger cities. High-income earners in small towns are, on average, willing to pay 10 percent extra for local food, compared to about 5 percent for residents in large cities. There are some broad regional differences when it comes to buying local food across the country, from a 5 percent premium in the Southeast to a 7 percent premium in the West and in the Northeast. The share of local food purchased in the typical shopping basket is also highest in these regions (particularly on the west coast), compounding the regions’ attractiveness for local food retail. The Pacific Coast region leads the pack with 27 percent local food in a typical basket, followed by the Northeast at 22 percent. The Southeast has the lowest rate, with local food making up 16 percent of a typical basket.

Large supermarkets are still struggling to gain customer trust..Big-box stores and national supermarkets are the most common places our respondents shop for food, yet they (along with online grocers) rank well below farmers markets, specialty supermarkets, and local supermarkets when it comes to customer trust. The correlation between fresh and local is further explained by consumer response to which retailers were most trusted to provide fresh foods. Again, farmers markets and specialty supermarkets are considered most trustworthy, followed by locally owned supermarkets, national supermarkets, big-box and online grocers. As we noted in last year’s report, many customers believe that retailers tailor the term “local” to their advantage with little transparency into how they define it. Fruits and vegetables harvested hundreds of miles away are often still declared local, which has drawn criticism from small farmer organizations—and skepticism from buyers..

Recommendations for Food Retailers:

This year’s survey results reveal that big-box and national retailers still lag in customer perception when it comes to providing high-quality, affordable fresh and local foods. What can these retailers do in the short term to refresh their local food strategies ?

Tap into the market for “fresh”..Freshness is a primary factor in grocery shopping decisions—in fact, in last year’s survey respondents rated this higher than price. Large grocery retailers lag their smaller rivals and farmers markets relative to both price and quality perception when it comes to “local” and “fresh.” Given that our research has found a strong correlation between fresh and local, large retailers can build awareness of their fresh products simply by sourcing and marketing local more effectively—particularly in categories such as produce, meat, bread, and dairy..

Test local autonomy over merchandising and sourcing..The local food leaders we identified in our research have given local managers more autonomy to make local food buying decisions. For example, H-E-B in Texas and Wegmans on the East Coast allow local managers to build their own sourcing relationships with local farmers and merchandise these offerings as they see fit. The local autonomy model optimizes quality, freshness, and availability—three critical elements for success in local we have identified in our consumer research. These factors, combined with customers’ increasing willingness to pay for local offerings, can offset the potentially higher costs from the loss of efficiencies such as standardized processes and centralized buying..

Consider a direct supply chain model..There are three primary supply chain models grocers use to source local food, each with its advantages and disadvantages. Wholesale is perhaps the most difficult model to control for quality and freshness; however, it provides simplicity and access, which is likely why Amazon Fresh uses it. Many large retailers use brokers to source local food on a national level. C.H. Robinson, the largest such broker, continues to build numerous sourcing relationships with local farmers across the country.

A third model—establishing direct relationships with independent growers in the region—is generally the costliest but may prove the most effective. The direct supply chain model optimizes availability, quality, and freshness and provides maximum sourcing transparency to the consumer. As shown in the example of Good Eggs in the sidebar on page 3, some upstarts are using this model to upend the traditional grocery supply chain..

We recommend national retailers begin piloting the direct supply chain model on a region-by-region basis, initially as a complement to broker and wholesale market relationships. As quality and freshness emerge as differentiators in local food, direct supply models will be critical for long-term success..

Going Local:

The local food movement has shifted from talked-about trend to burgeoning opportunity for large grocery retailers. However, the window of opportunity is small—there is little time to waste convincing customers that you can provide high-quality, fresh local food, especially considering how much competition is emerging in this space..

It may take some outside-the-box thinking—in particular giving local stores more autonomy and using a more direct supply chain model—but those moves will help make an immediate impact and build longer-term growth advantage in this highly competitive market..!!

The Glittering “Power of Cities” for “Luxury Growth” | McKinsey

The global economy is experiencing an unprecedented shift toward emerging-market cities. Here’s a road map of where luxury-goods companies should compete in the next decade…!!

An Economic Re-Balancing of Great Scale & Speed is occurring from the West to the East and South…In fact, we are observing one of the most significant economic transformations the world has seen: 21st-century China is urbanizing on a scale 100 times that seen in 19th-century Britain and at TEN Times the speed…This means that the shift currently making Asia—once again—the world’s economic center of gravity is 1,000 times larger than was witnessed during the Industrial Revolution..

One of the most dramatic aspects of this emerging-market economic revolution is the growing power of cities and the extreme growth concentration in a limited number of megacities. The world’s top 600 cities (measured by absolute GDP) are expected to drive nearly two-thirds of global economic growth by 2025..

Massive urbanization will continue across emerging markets, which will envelope three-quarters of these large cities. It is projected that by 2025, there will be 60 megacities—more than double the current number of urban behemoths—where GDP will exceed $250 billion, accounting for a full one-quarter of global GDP…

Out of the 25 largest growth-contributing cities, 21 are located in emerging markets, with a significant number of them in China. This represents a great leap from today’s status quo, in which only 4 of the 25 wealthiest cities are found in the developing world. Yet economic growth does not automatically mean consumption development—or luxury-market growth…Market growth in these cities is indeed conditioned by specific factors that differ from city to city. Variables such as birth rate, wealth distribution, and share of working women correspondingly affect growth in categories such as baby food, beauty products, luxury goods, and women’s fashion. To prioritize their efforts, companies will need to identify the biggest and fastest-growing cities with regard to their particular products and services..

Where Luxury Growth will come from? :

Using the McKinsey Global Institute’s Cityscope—which draws upon broad sets of economic and socio-demographic data for more than 2,600 cities around the world and combines these with deep market understanding to forecast growth at the level of individual cities—we have developed a unique road map for how luxury companies should understand and approach global-growth opportunities. Our LuxuryScope “city guide” of luxury markets organizes granular data and statistical forecasting across luxury categories. For example, several critical, market-level insights emerged from our analysis:

  • Growth is increasingly shifting toward emerging markets across all Luxury Categories

  • Luxury growth is highly concentrated in cities. The world’s top 600 cities will account for 85 percent of growth in the luxury-apparel market in 2025 versus 66 percent for luxury beauty products and only around 40 percent for consumer packaged goods. In fact, the more upscale and less “basic” products that consumers desire, the more growth will be concentrated in cities.
  • Mature cities remain critical given their absolute size
  • Growth is granular and varies by category, price point, and style. Driven by cultural fit with a brand’s value proposition and underlying growth factors by category and price point, the attractiveness of particular cities can differ significantly among luxury players. For instance, luxury women’s apparel is dominated by the traditional fashion capitals, such as Milan, New York, and Paris; spirits are strong in the Americas, while skin-care growth is concentrated in Asia. Mexico City, for instance, ranks 18th in fashion, 8th in spirits, and does not even appear in the top 20 for beauty…But within each of these categories, the attractiveness of any single brand will also vary depending upon its fit with local taste..
  • Emerging countries will drive growth, with China taking the lead.

This extreme growth concentration is great news for #LuxuryBrands and #Retailers…It will allow companies to more easily and completely focus their efforts on higher-growth areas. Analyses conducted on growth concentration by city reveal that extensive growth opportunities still exist in Europe and the United States, even in cities as large as London, Los Angeles, and Paris…The city approach to growth can also serve as a compass for companies seeking to navigate the vast sea of emerging markets, helping players to prioritize cities and focus their resources on targeted market-entry plans, whether in Belo Horizonte, Brazil, or Wuhan, China..

What Companies must do? :

Taking the city-by-city approach can help luxury companies revamp their growth strategies and gain new insights that can be used to adjust their business-development models, resource allocations, and organizational structures. How can these new business insights into potential on the city level be used to accelerate companies’ growth ?

The Right Plan:

It is well understood that having the right strategic plan is the essential starting point for any growth journey. Building this plan requires clear answers about where to go and when. Luxury-goods companies must identify growth opportunities at the city level, generating insights on where to concentrate resources to achieve the greatest impact. In addition, this approach also encourages the development of forward-looking market intelligence, a key enabler for ensuring that strategic decisions will allow companies to stay one step ahead of the competition. The city “attack plan” might look quite different from the traditional market-expansion road map. For instance, rather than discussing Asia or Europe as alternative locations—or even Spain versus France—decision makers may ask, “In what ten key cities should we establish a stronger presence? ”

Outstanding Execution to Achieve Impact:

When companies begin looking at fast-growing emerging-market cities, five key issues need to be tackled to help ensure success:

    1. Identifying the right go-to-market model for each location.
    2. Determining if there is a need for local-offer customization.
    3. Ensuring global customer service.
    4. Gauging a need for organizational changes in the longer term.
    5. Choosing how to deploy or redeploy resources.

The global paradigm shift driven by emerging-market cities is posing similar questions for Western companies for many different industries. For luxury players, cities probably matter more than for any other product category, and as retailers, most have the “luxury” of choosing, at a very granular level, where and when to open or expand a store…

In this context, Luxury Players are uniquely positioned to pioneer this new approach to accelerate their growth…!!

“Avoiding Hidden Margin Erosion” in Mid-Market Supply-Chain Operations | by: Brad Huff | Supply Chain Digital

According to the Middle Market Indicator (MMI), 85 percent of middle market executives cite the ability to maintain margins as a somewhat to highly challenging issue..

This should be no surprise, considering mid-market companies are squeezed between large and small cap businesses: they must streamline product manufacturing and delivery operations as much as larger companies, yet be as nimble as smaller companies. As a result, they have a unique set of challenges that make margin management even more critical..

Today’s combination of increasingly complex supply chain operations and the availability of more accessible/affordable technology means mid-market companies can and should take a deeper look into these areas as a means to maximise margins..

Mid-market supply chain operations explained

Hidden Planning and Forecasting Areas:

Mid-market companies often must focus so tightly on delivering quality products and services to their customers that investing resources into analyzing and fixing what appear to be minor supply chain issues might not seem practical or even feasible. It’s true that each of these less obvious areas does not cause significant margin erosion on its own; however, many mid-market companies can suffer from a number of combinations of these issues. When evaluated in that context, the impact on profitability can be noteworthy…

Evaluating materials based on landed cost instead of the item’s unit cost is a growing trend in planning and procurement. Materials planning based on landed cost allows companies to factor transportation and logistics costs into the contract item cost for more visibility into actual materials expense..

Forecasting is also an area that can impact margins. Without reliable forecasting processes and tools, a company can easily order the wrong quantity of materials. “Projecting heavy” unnecessarily consumes warehouse space, increases the risk of waste or loss, raises taxes, and impacts inventory turns. “Projecting light” drives up procurement and transportation costs, as well as increases the risk of materials run-out. Fortunately, there are a number of low-investment ways to increase accuracy, such as increasing collaboration with customers to gauge future demand, integrating marketing plans and projections to prepare for order spikes or lulls, or increasing forecast sharing and communication with suppliers via a collaboration portal or other automated workflow system..

Hidden Inbound and Receiving Areas:

Ordering and receiving inefficiencies, such as a lack of automation and collaboration in critical areas, play a quiet yet potentially large contribution to reduced profits. Automating workflow tasks between buyers and suppliers such as sending, receiving, acknowledging and approving purchase orders can enhance processing speeds by more than eighty percent while reducing costs by approximately 83 percent..

But the benefits go beyond the initial savings. Automation also increases purchase order throughput and allows you to focus efforts on quickly resolving issues that require human attention. Configurable workflow helps to ensure compliance so what is shipped always matches what is ordered. With simpler implementation and more user-friendly interfaces, these solutions can consolidate product and order communications to help minimize disputes as well as empower planners to better forecast demand..

Carrier and delivery windows:

According to Refrigerated Transporter, “Supply chain compliance is now a vital component of logistics transactions and supplier relationships.” Requiring fixed materials delivery windows from suppliers is a growing trend in supply chain management that impacts margin on both the buyer and supplier side..

In recent years, improvements have been made in receiving dock scheduling systems in an effort to help warehouse managers and supply chain professionals streamline operations and reduce unnecessary cost. As a result, more companies now require dock reservations for inbound orders, including financial penalties for suppliers who deliver off-schedule..

For example, in 2010, Walmart joined other retailers in imposing a penalty on suppliers that failed to deliver products within the company’s prescribed four-day window. Under the policy, suppliers whose products arrive at Walmart before or after that period face a three-percent penalty based on the cost of the goods..

Before the policy went into effect, Walmart requested delivery within the four-day period, but suppliers had no incentive to actually adhere to that schedule. Although it was not the first to adopt this policy, Walmart’s status as the world’s largest retailer prompted a domino effect that continues to affect supply chains to this day…as late/early delivery fees are now the norm for many industries..

Installing a functionally strong shipment collaboration solution can help to reduce and/or eliminate these less obvious/hidden logistics areas that eat into margin. These types of solutions allow order fulfillment thresholds such as delivery windows, order quantity, and carrier selection/mode to be configured and validated prior to shipment release..

Advanced Shipment Notices (ASNs) and package/container traceability are also typically included, along with pre-formatted, compliant labeling to further reduce receiving dock errors…As a result, all stakeholders across the buy side and the supply side have real time visibility for more accurate resource and materials planning through the rest of the supply chain..

“Understanding consumers” in a multi-channel world | by: Jason Nathan | Research

The Evolving behaviour set of #Customers in the world of #MultiChannelRetailing, is well documented and not always easy to follow…It’s easy to conflate the rapidly changing technology with analysis of those behaviours – while they are linked, they can and should also be thought of as apart…Let’s focus on the behavioural side…

How are these behavioural changes manifesting themselves? It makes sense to think back (briefly) to a shopping trip in the pre-internet age…#Shoppers, would take a predictable and linear path to purchase : making a list, looking for (or seeing) offers, going to a store, picking off the shelf, paying at checkout, going home and then consuming the products they had purchased…and then repeating..

In the multi-channel world, TWO Key Dynamics have changed : The path is non-linear…and different steps can and do occur on different channels…!!

If we consider a shopping trip today - a customer might log on to an account with a grocery retailer and add some items to a basket. Then, a couple of days later, receive an email with a set of offers which they activate on their half-built online basket. They might go in to store to have a look at some new products but decide not to buy them…and then buy them online…They may have an offer shared with them on social media….which they then use in a store (perhaps having found the nearest branch to them using their smartphone)…

Where to spend the Money ?

These non-linear paths and the increase in channels used by customers to shop, has commensurately increased both complexity and opportunity for both brands and retailers to divert and influence customers on those paths. The challenge for #Retailers, is that creating seamlessness in those paths costs money…The challenge for brands is that investment in media to influence those paths costs money…What both retailers and brands want to know is where to best spend that money…

More than ever before, the answer lies with an obsessive focus on the customer and the data their behaviours are generating. Retailers and brands are collecting and looking at data – lots of it – but often those data are used for specific ends. For instance, plenty of retailers will use the data for reviews to look at which products are winning, which products are in decline, but few retailers will capture and present this data to understand customers. Knowing, at the level of an individual, a pattern of review posting will be part of a set of indicators which will allow the retailer and brand to understand that customer’s propensity to purchase again and, maybe, when they would do so..

For instance, if we knew that a customer had posted two consecutive bad reviews of a product from a certain brand, could we use that to understand their likelihood to repurchase a product of that brand? And therefore, perhaps the generosity of the offer or the need to present NPD to that customer. And what could a retailer glean from a customer who had steadily posted a review every two months but was not doing so anymore ?

Retail Data :

Similarly, and specifically in the world of grocery and FMCG, retailers will capture the levels of substitutions and rejections in baskets composed of dozens of SKUs (stock keeping units) when they are delivered or collected. This will be done to optimise the supply chain and picking process. Again, how many retailers are looking at the data through the customer lens? Would a customer who had received 20% of their basket as substitutes three times in a row (and rejected half of those on each occasion) as against a customer who had received three consecutive perfect orders, be more or less likely to lapse ?

The challenge for retailers and brands is technical and commercial. Technically, linking their data assets to understand the multi-channel path to purchase is difficult – legacy systems built for specific ends and ambiguous data ownership structures are significant barriers to overcome. Moreover, in many cases the capture of the data at customer level may not even yet exist. Retailers and brands will need to ensure that their technology plans seek to plug these gaps in understanding..

A Greater Challenge :

Despite appearing to be easier, it may yet be that commercially, the challenge will ultimately be greater: customers will be more aware of the value of the data they are generating and expect to be compensated for it. For that compensation to be sensible, attribution of investment (always a challenge in marketing) will need to be tighter than ever. Was it the coupon on Facebook or the free sample at the Click and Collect point or the interrupt media on the app which activated that customer ? The data will exist but how will we cut it to understand the key to orientating the path to purchase ?

The next few years are likely to continue to present opportunity: technological innovation will lead to more data and more opportunities for customers to exhibit non-linear behaviours – some of which may yet prove even more disruptive in some sectors (such as peer-to-peer selling)..

Getting on top of the current behaviours and using existing data assets to do so will be one of the key differentiators which will define the retailers which win in this turbulent period.