Leading brands and retailers are already innovating to strategically respond to the 9 drivers of change in industry, like delivery intermediaries, predictive commerce, D2C models and more, which will not only determine the future of retail, but their leadership in that future.
- CHANNEL SHIFTS: The shrinking need for smaller households to do weekly bulk trips threatens the long-term relevance of big-box formats, to the benefit of residential small-box stores.
- SUPPLY CHAIN FLEXIBILITY: As retailers build out delivery capacities, consumers will increasingly see fast and flexible delivery as a table stake.
- DELIVERY INTERMEDIARIES AS A NEW CHANNEL: Delivery intermediaries will make grocery ecommerce more ubiquitous, raising shopper expectations around service availability and fast fulfillment.
- BUYING GROUP PROFESSIONALIZATION: Shoppers will initially benefit from downward pressure mainly on A brand CPG ranges. Longer term, reduced competition in the marketplace might lead to a growing shopper preference of discounters.
- ACCELERATING INNOVATION CYCLES: Consumers will expect brands to tailor products to new trends faster, including in niche categories.
- SOCIAL COMMERCE: Consumers will benefit from new and more interactive ways to discover, engage with, purchase and recommend products.
- DIRECT-TO-COMMERCE MODELS: D2C will empower consumers to directly engage with brands, providing rich data for CPGs from their most loyal shoppers for future innovation.
- CROSS-BORDER ECOMMERCE: Shoppers are set to benefit from more international competition, with new brands being introduced and downward pressure on prices in many categories.
- PREDICTIVE COMMERCE: Consumers giving away personal data for the promise of progressively relevant shopping experiences will have browsing and decision-making empowered by retailers.
Channel Shifts
Responding to the need to reposition the big box and provide in-store experiences, Kraft Heinz partnered with Carrefour to create an 11-foot ketchup tower, constructed from „Edchup“ bottles, designed with Ed Sheeran.
Delivery Intermediaries as a New Channel
Mondeléz brand Cadbury Creme Egg teamed up with Deliveroo to launch a delivery service for Creme Egg recipes. Called "Delivergoo", the service was available to UK consumers in major cities for a limited time.
D2C
Snack brand Graze is expanding from the UK into Ireland through a direct-to-consumer rollout. Graze is using the D2C model to build engagement without having to invest in offline, and to test as it goes to guage consumer feedback and refine its product offering.
Supply Chain Flexibility
LG introduced new technology to drive supply chain responsiveness, with self-driving robots assembling products and an intelligent platform, Factova, collecting data, controlling manufacturing and optimizing productivity.
Accelerating Innovation Cycles
L‘Oréal launched its first tech incubator, "MYT", to help identify and develop new ideas and agile methods. The incubator is designed to be a collaborative space for employees and partners to test and learn about new ideas.
Cross-Border Ecommerce
Italy‘s Campari Group opened a flagship store on Tmall‘s global platform. The store is Campari‘s only flagship store on a third-party marketplace, where it hopes to tap into the rising popularity of fine spirits in China.
Channel Shifts
To benefit from the growth of online channels and diversify its store-dominated operations, Walmart is increasing investment in ecommerce, technology & supply chain, up 79.3% to USD5.2B annually since 2012.
Delivery Intermediaries as a New Channel
Convenience retailer Lawson entered into a delivery partnership with Uber Eats in central Tokyo. The partnership offers around 100 food products to users within a 3km radius.
Innovation Cycles
Asia‘s largest health & beauty retailer, AS Watson, runs a Technology Partnership program to broaden its internal innovation capabilities and accelerate digital innovation.
D2C
US retailer Target is expanding its brand assortment through partnering with digital native D2C brands including Casper, Barkbox, Quip and Native. Target sees D2C brands as a way to build its appeal amongst digitally-savvy millennials and Gen Z‘s, locking in shoppers through subscription models.
Supply Chain Flexibility
Ahold‘s Stop & Shop banner in the US opened a micro-fulfillment center in Connecticut to support and speed up ecommerce fulfillment from Peapod and Stop & Shop, with plans to open additional facilities in the future.
Buying Group Professionalization
Auchan, Casino, Metro and DIA launched their Horizon International Services alliance, pooling resources to aid supplier relations, negotiations and logistics.
Cross-Border Commerce
Alibaba is set to acquire China‘s second-largest cross-border ecommerce platform Kaola, taking its share of the cross-border market in China to over 55%.
Social Ecommerce
Kroger partnered with social media app TikTok to promote videos on its back-to-college products through social media influencers, using the hastag #TransformUrDorm and seeking conversion through in-app purchase feature.
DIGITAL COMMERCE, DECODED.
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