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KPMG survey: Retail executives embracing omnichannel approach

BY Antoinette Alexander

NEW YORK — Many retail executives said their organizations have adopted an omnichannel strategy to link the consumers' in-store experience with the company's website, mobile device application and social media platforms in an effort to better respond to an increasingly online and mobile customer, according to KMPG’s 2014 Retail Outlook Survey.

"Consumer preferences have evolved, and the omnichannel approach has become an imperative for organizations to provide their customers with the shopping experiences they demand," stated Mark Larson, KPMG's U.S. and global retail sector leader. "Organizations that have adapted well to the rise of e-commerce, customer mobility and other technological disruptions of the last decade are showing some early signs of breaking away while others are still near the starting line. Regardless of where they are in the process, one thing is clear – retailers have acknowledged the shopping habits of today's consumer and they are making transformational changes to embrace them."


According to the survey, which was conducted in the spring and reflects the viewpoints of 100 U.S. senior executives in the retail industry, 70% of retail executives said their organizations have adopted an omnichannel strategy to link the consumer's in-store experience with the company's website, mobile device application and social media platforms. This strategy, according to KPMG, will help create a seamless shopping experience for the consumer.


The survey also found that more than (53%) of executives in the retail sector believe that they are ahead of their peers when it comes to omnichannel adoption. When asked which three channels they have increased spending on in 2014, executives cited their company website (67%), physical/permanent stores (47%) and social media platforms (46%) as the most important areas.



Adopting an omnichannel business strategy may be costly, however. Fifty-three percent of retail executives surveyed stated that the cost and complexity of technology upgrades were one of the main challenges their organizations faced.

Cyber security is also a rising issue. Currently, 77% of executives surveyed said that their companies share customers' personal and payment information across their channels to make for a more seamless shopping experience. In light of the large-scale cyber breaches this year at retailers across the country, executives may need to reevaluate what customer information they share across their channels and determine the appropriate level of security necessary to protect that information.



Revenue Growth and Focus



According to the survey, 70% of executives identify customer retention as the most significant driver of revenue growth over the next one to three years. To assist in retaining customers and executing an omnichannel strategy, retail executives are evaluating their operational efficiencies and technology investments. Forty-two percent of retail executives say that operational efficiencies and applicable technology updates have consumed and will continue to consume the most time for senior leadership in 2014.



Nearly three-quarters of the executives surveyed have increased spending in their technology capabilities and new products or services.



The Challenges Ahead 



An overwhelming majority of executives agree that they are at least on par with risk management in comparison to their peers (87%). Despite this, however, there are many pressing challenges that retail executives have identified as obstacles for the remainder of 2014 and beyond, the survey found.

Forty-one percent of executives cited the Affordable Care Act as a high-priority compliance area that their organization has begun to address and will continue to address in 2014. Thirty-four percent stated payment card industry compliance is the next highest priority, followed by federal and state tax changes (29%).



Forty-one percent of executives surveyed stated that losing share to lower-cost competitors is the top threat to their organization's business model. In relation to lower-cost competition, 36% stated that discounting and other sales incentives have had and will continue to have the greatest negative impact on their company's profit margins during 2014.


 

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Abbott launches wearable glucose sensor in Europe

BY Michael Johnsen

ABBOTT PARK, Ill. — Abbott on Wednesday announced that it has received CE Mark (Conformite Europeenne) for its FreeStyle Libre Flash Glucose Monitoring System, a revolutionary new glucose sensing technology for people with diabetes. The system eliminates the need for routine finger pricks, reading glucose levels through a sensor that can be worn on the back of the upper arm for up to 14 days. In addition, no finger prick calibration is needed, a key differentiator from current continuous glucose monitoring systems. 
 
The system will be available in seven countries across Europe in the coming weeks.
 
Abbott's FreeStyle Libre System consists of a small, round sensor worn on the back of the upper arm, which measures glucose every minute in interstitial fluid through a small filament that is inserted just under the skin and held in place with a small adhesive pad. A reader is scanned over the sensor to get a glucose result painlessly in less than one second. Scanning can take place while the sensor is under clothing, making testing more discreet and convenient. Each scan displays a real-time glucose result, a historical trend and the direction the glucose is heading. The reader holds up to 90 days of data, providing a historical snapshot of glucose levels over time. The FreeStyle Libre System software enables the data to be presented in a visual chart for both healthcare professionals and patients.
 
"The FreeStyle Libre System fulfills a major need for people living with diabetes," stated Robert Ford, SVP Diabetes Care, Abbott. "Our customers told us that the pain, inconvenience and indiscretion of finger pricking were the key reasons they weren't managing their diabetes as well as they should. Addressing these concerns has guided the development of FreeStyle Libre – a transformational product designed to not only remove the pain of finger pricking but also seamlessly integrate into their daily lives." 
 
 

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IRI: Investing in Hispanic outreach to pay significant dividends

BY Michael Johnsen

CHICAGO — IRI on Wednesday released a new “Point of View: Winning with the Hispanic Consumer Today" study to help CPG marketers connect with this diverse, rapidly expanding customer group. According to IRI, the U.S. Hispanic market's purchasing power will total $1.3 trillion by 2015.  IRI analysis found that a $1 billion CPG company can earn an extra $71 million in revenue annually by investing more effectively in the Hispanic consumer.
 
Today, Hispanics account for one in six Americans, or 53 million people. Hispanic families consume more media and are more responsive to media than the general population. Additionally, 70% of Hispanics are under age 40, making investment in this group a wise long-term proposition.
 
"Hispanics are a powerful, growing group, and marketers who make special efforts to satisfy these consumers will certainly reap many rewards," stated Joy Joseph, principal and practice leader, Global Analytics and Consulting, IRI. "Highly targeted, well-executed Hispanic campaigns grounded in a thorough understanding of the Hispanic shopper can directly stimulate revenue increases and market share growth. In fact, our analysis of 10 CPG product portfolios shows that more aggressive spending on Hispanic campaigns can yield outsized results."
 
IRI recommends that CPG companies start with a “total market” strategy when approaching the Hispanic segment. There are many definitions of total market being discussed in the industry today, but Latinum Network, a multicultural research and strategy firm with more than 85 active Fortune 1,000 clients, defines a total market company as having three key traits:
 
  • Upstream integrated planning: total market companies make cultural segments a required input to strategic and financial plans well before a single campaign brief is written;
  • Multiculturally led insights: total market companies make cultural consumers at least equal partners in the insights generation process, with oversampling of Hispanic, African-American and Asian segments, and look for transcending multicultural insights to drive to Total Market ideas; and
  • Integrated execution: multicultural talent both inside and outside the total market organization is given the opportunity to perform “traditional” work, and vice versa; the best talent and the best ideas win, from creative to media to distribution.
 
Given these key traits, it is perhaps not surprising that total market companies spend more on multicultural segments — these segments are made a part of the strategy from the outset.
 
This new point of view is IRI’s most recent strategy piece related to the Hispanic market. In July, the company hosted a webinar also titled, "Winning with the Hispanic Consumer Today," hosted by IRI’s Joseph and Andy Hasselwander, VP Latinum Network.

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