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Special Report: Digital Disruption Innovation Summit

BY DSN STAFF

In mid-April, Walgreens, Drug Store News and Mack Elevation worked together to convene the Digital Disruption Innovation Summit. The one-day event drew more than 200 suppliers and Walgreens executives, who heard from experts and their peers about what the retail world is doing to keep ahead of trends and deliver on customer needs.

Below, find all of the insights, including a PDF of the special section from DSN’s June issue.

PDF: DSN Special Report: Digital Disruption Innovation Summit

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Kantar’s Bryan Gildenberg forecasts retail world of 2025

BY Seth Mendelson

Capturing the consumer of 2025 — just seven years from now — could be a lot different than capturing the consumer of 2018.

So theorizes Bryan Gildenberg, the chief knowledge officer at Kantar Retail, who spoke at the Digital Disruption Innovation Summit, held in Schaumberg, Ill., in mid-April. The conference, developed by Drug Store News, Mack Elevation and Walgreens, attracted more than 200 retailers and industry officials.

“More than 100% of the growth in the U.S. population now in 2025 is going to come from people over the age of 65,” Gildenberg said during his 30-minute presentation at the event. “One of the ways in which you can tell that story is that from a demographic point of view, the drug channel is very much on the right side of history. Right now, the U.S. has the income polarization of a developing country, not a developed one. And understanding that and being able to merchandise for that scenario is important.”

Gildenberg said that the demographic makeup of the domestic consumer is extremely different based on age. For example, he said that about 78% of Americans over the age of 50 years old are white, while just 52% of consumers under 30 years old are white. “There are neighboring countries in the world that go to war with each other over ethnic differences that are not as ethnically different as under 30 America and over 50 America are.”

“So, if you ever wonder why there is so much confusion around culture in today’s world a lot of it is just simple math,” he said. “But being able to understand and unpack how that math works is a big part of winning retail. This is the growth challenge.”

But while stressing demographics, Gildenberg was quick to point out that American retailers and suppliers live within a global marketplace and they must understand the dynamics of the market, both within U.S. borders and throughout the world.

“Large global brands will have gone from growing two-and-a half times faster than the market in 2012 to two-and-a-half times slower than the market in 2018,” he said. “There are a number of reasons for that. One of which is that, other things being equal, big companies don’t master the digital world as well as small ones do. And, there is no reason for this, save the fact the choices that large companies have made around how they organize the work and how they measure success. That’s it. Moses didn’t come down from the mountain with the tablet saying big companies will suck at the Internet.”

In addition to rethinking their benchmarks, Gildenberg said retailers and suppliers should know the big growth opportunities. “When we look at this, we should try to understand that about 45% of all the growth in the world is going to come from non-store retail. Of the remaining 55%, a big chunk of that is going to come from prescriptions, which are still one of the key growth drivers in the U.S. retail landscape.”

Furthermore, Gildenberg said that much of the growth is coming from club stores, deep discount chains and the convenience store industry. “So when you start to think about where growth is coming from outside of the drug ecosystem, it is not coming from the conveniently measured universe,” he said. “It’s coming from places that are harder to see and harder to understand, and that’s where the wide-angle lens becomes really critical.”

Thinking outside the box is vital for suppliers and retailers. Using Coca-Cola’s new beverage dispensing machines, where the consumer can mix dozens of different flavors into one unique drink, Gildenberg stressed that retailers must understand that they must satisfy the shoppers’ unique tastes. “The machine is brilliant in that it is a commercially viable point of difference — at food service venues,” he said. “It has the ability to personalize, and it’s fun. Kids want to go to the fast-food establishments that have the Coke machine because nothing appeals to a 9-year-old more than putting 37 different flavors of soda in a cup and saying, ‘wow, this tastes great.’”

The key for suppliers is not only coming up with a story, but also backing it up with strong sales and profit figures. “I think that is going to be essential that if you are one of the large brands in categories where growth is coming from other places, you’ve got to get better at telling that genuine category story,” he said. “They have to understand the role that your brand’s story plays, whether with building traffic or profits.”

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IBM Watson’s Stephen Laughlin encourages getting hyper-personal

BY David Salazar

Personalization has become the name of the game. Consumers continue to shop in stores, but they now are looking for an experience, and as Stephen Laughlin, IBM Watson’s general manager of consumer industry highlighted at the recent Digital Disruption Innovation Summit, the new focus of retailers should be de-averaging the trip to the store, and in the process making an impression and a sale.

“In the United States in particular, there’s an awful lot of talk about apocalypse — and there’s some data to support this,” Laughlin said. “However, retail sales are up overall, so more importantly disruptor companies are grabbing share from established companies. We would argue that stores are the battleground — stores matter. But you have to make them matter.”

In this environment, Laughlin said that the imperative for retailers is to personalize the in-store experience — to move past simply knowing a customer’s demographics or even cursory behavioral analytics toward understanding various reasons a customer might step into a store. “Those journeys have different objectives or purposes, and when you understand those purposes, then you can understand how to interact across those journeys more effectively to capture loyalty and share across those journeys” he said. “That’s how you de-average the experience.”

De-averaging the consumer experience requires, at least partially, rethinking the store’s function. Laughlin highlighted such brands as Bonobos, which demonstrated that the store can be used a showroom, and Kohl’s, which fulfilled almost a third of its online orders in-store this past holiday season, fueling additional, ancillary in-store sales. “The reality is that the store is where you deliver the brand promise — one of the key places,” Laughlin said, noting that retailers and suppliers can use several strategies to bring shoppers into the store.

One of the strengths that stores have is their location in relation to other elements — schools, sporting events, churches and foot traffic, among other elements. Laughlin said that these elements, which also include weather and such seasonal events as allergies, present an opportunity for retailers to use proximity marketing to drive store traffic. It also can be used in-store, Laughlin said, pointing to Kroger’s use of its Kroger Edge digital shelf labels, which, in concert with the retailer’s mobile app, can use in-store location to help guide shoppers on their journey, delivering personalized ads and product suggestions.

Laughlin said that, though in the aftermath of Cambridge Analytica, consumers might be wary about using data, what matters is how the data is used. Indeed, he said, “They’re comfortable in general with you using it if you use it in a way that provides value to them. And so there’s tremendous opportunity to use this dark data — dark meaning simply you’ve never turned the lights to it — to further de-average the experience.”

Beyond data, retailers can use other tools to appeal to consumers, including the use of AI chatbots for guided selling — with such companies as L’Oréal in Europe and global hospitality and retail giant Lotte trying out AI-powered chatbots to offer personalized product recommendations.

“These opportunities to do guided selling — they’re right there. I always say, ‘Can you explain things to your mom?’ or ‘Have you taken your mom into a store to see if she can shop it?’ I think sometimes for those of us in the industry and in stores regularly, we don’t always realize the opportunities to simplify.”

And then there are associates, who Laughlin said have the opportunity to be in-store brand ambassadors. He highlighted Boots’ beauty advisors and IBM Watson’s work with City Furniture, whose associates now work off of tablets. “The opportunity exists to allow associates to engage with customers; perhaps it is a novel idea that associates aren’t supposed to do check out or stock shelves, but that they can actually be the brand ambassador again if we put information in their hands.”

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