In first : my apologies for this first post in English ... thince a long time, many faithful readers ask me, and so with good wishes i give you this post in English "not perfect" but sincere. Enjoy Retail.
So Apocalypse or Paradise ... In the war between digital and physical which has been shaking up the business for over 15 years, my conclusion is that ultimately there are not really any winners and there will not be never. Each one finally having to go on the ground of the other by finding a right balance against the only driver to take into account: the customer with this new notion of '' digital layer ''.
Provocative? yes, but who would have said, for example, that Amazon would need Whole Foods to learn retail, especially fresh products. That Walmart would need jet.com and Marc Lore its founder to learn online business. And that Alibaba would need to create the ''new retail'' concept and decide to go down heavily on the streets and villages, aware that '' selling online only accounted for 10% of retail trade in China'' (Daniel Zhiang Nov 2016). Originally Pure player or brick and mortar, but before everyone agree to take a big step in the direction of the other under penalty of non-viability in the medium term.
By cons attention '' no winners '' does not mean '' no losers ''! And in my opinion these will be very numerous and this year 2019 will probably be fatal. Why be so affirmative? Because the acceleration of the acceleration will make the reversals of situation (a fortiori exangue of finances) impossible.
Acceleration: January 2018 / January 2019 only 12 months ago that Amazon Go and its cashless concept '' just walk out '' is open to the general public, but 3000 are already programmed by 2022 including 1 in London very soon. It was time for Walmart to recover because soon Amazon could prance in the world of US physical trade as in the virtual world, and join him will become impossible.
And the battle is also now at another level: impossible to overcome Amazon? Except in India where in the last straight in June 2018 there is Walmart who thanks to its partnership with Google and know-how for store management, won the takeover of FlipKart, leader market place but also need to exist physically. An essential transaction for the global retail business, to Amazon's finally destabilized in this part of the world. Because without India or China (where Walmart is a partner of JDCom and Tencent) that makes a lot of points in the course of the world leader Walmart in 2018. Finally to the latest news Amazon would also launch in the distribution of fuel on the mode cashless like Alibaba in Shanghai. And you have noticed that since Amazon launched the principle of "cashless" (a term hitherto unknown except for the Chinese side with Hema and Walmart who tested the scan & go in 2012), this word has become central in the world. the world of retail in 2018.
Another example if needed: 18 months after its acquisition by Amazon, Whole Foods generalizes the delivery Prime Now to the entire network and Amazon has announced the development of the brand with the upcoming opening of new stores WF in US second-tier cities ... So when will a Whole Foods Go ??? (this is one of my favorite bet for 2019) which can only be done technologically in an adapted shell (the JWO techno not being applicable to an existing shell environment) and if the current tests proved concluding on larger surfaces.
Lastly, it took Alibaba just 18 months to equip all the RTmart and Auchan networks in China (more than 800 stores) of Hema logistics ... and to transform 100 000 independent ''mum and pop stores'' with TMall tehc & brand. And when we know that 60% of the volume made by a Hema store comes from online orders (and therefore 80% of the mobile ...) and that everything is on the operating account of the store ... interesting.
And I am not contradictory in this notion of '' no winner '' because all have had to make huge concessions: even Amazon, this supercompensitive giant who has nothing to do with a looser, could accelerate his development and profitability only at the cost of opening up to the physical world by buying Whole Food to '' learn '' the fresh, and financing this development with Amazon AWS and its cloud. Because if Amazon had relied only on its only native concept of pure player of the online sale it is likely that we would not be there: the e-commerce branch is deficit on all the countries except USA for the giant from Seattle. So yes it's also a looser when we see the Amazon Fresh model which has never found the economic equation and replaced by Prime Now ... Finally let us remember that Amazon is not a trader but a logistician barded of engineers.
A "brick & mobile" business adapted to our "human digital layer" dear to Elon Musk.
2018 allowed to have an alignment of the planets which are finally presented to draw the lines of a hybrid trade and at the crossroads of the worlds. And integrating what Elon Musk calls "the digital human layer" (to justify that one day it would connect directly to our brain) and which we are now endowed with: a smartphone hanging on our fingers, a terminal connected to our brain, and endowed with artificial intelligence and connected to the whole world. And even if we continue to push the cart, it is with this tool in hand. Never in the history of humanity has man in his prolongation a tool so adapted to its evolution ... A real personal ecosystem increased. Darwin will not have denied him ...
So when we talk about '' reinventing '' the business of tomorrow, I first say that it has been more than five years since we said so, '' tomorrow is today '', that the advent mobile as a central platform in human relations and therefore naturally between a customer and his ''commerc'' is now a fact, that it is urgent to make a technological leap - forget the computer and think mobile - and the trade to build around. Finally we must not go far to see this retail of tomorrow "reinvented" because everything already exists, proven models, and ultimately gives a more rational and factual trade that might have been thought. Just travel in time and space because it is within our reach when many have not seen or do not want to see it by continuing to think that only they can reinvent it. And finally accepting to mourn a step back or wait for a stabilization phase, gross error. The 'No parking no business'' theory is dead' ... (except for Costco but that's another story).
All that is to have the financial means to adapt and this is where the problem lies: late distributors are bloodless while the entry ticket to '' new retail '' increases significantly. Walmart spent $ 3.3 billion on the Jet.com buyout in 2017, and Sears has distributed $ 2.5 billion to its shareholders over the past 5 years, and during that same period spent only $ 300 million on its R & D the mistake ... So actually more ways to disrupt, and it is the announcement in 2018 of its 'bankruptcy' leaving 125 years of history and 70 000 employees on the carpet.
Those there die or will die because the gap between '' those who look ahead '' and '' those who continue to look behind or wait to see how it all evolves '' will become insurmountable in 2019. And the entry ticket will not be paid by those who are in trouble. Now the deal is counted in billions.
New business? Everything is now on the carpet and the solution is Brick and Mobile.
Because, subject to having the will, today all the bricks are there. We have the most successful model of the hybrid trade with Hema and its New Retail, we see Walmart who is allied with Google (even if the risk is to see his data escape him) to JDCom and Tencent or Auchan Retail Sunart who combines with Alibaba and go for it on its Auchan Minute concept.
And in 2018 we began to see also more confidential concepts and closer to us, as 4.Casino is for me currently the best synthesis of what can be done in hybridization in France, Franprix Madeleine Paris or Delhaize Studio in Belgium, Waitrose in UK, Monoprix Easy in France or other Carrefour Halles Clichy in paris, Carrefour Arkadia in Warsaw, or the beautiful Carrefour Market in Shanghai. Mixing techno and places of pleasure especially with the development of food courts.
And it took too much time and a new generation of managers like Regis Shultz Hubert Joly, Doug Million Mc, or Alexandre Bompard for the trade finally agrees to leave his comfort zone and denial understanding that the outcome is not not necessarily by the top '' big is not beautifull in new retail '', nor by a price war that has become ridiculous and devastating for 4 years in France (to say a century ... and that does not mean to do no more price a central element of the customer's decision) and aggressive advertising campaigns with yellow and red promo at -70% to win the fight tomorrow. Those who have understood and adopted it, under conditions that it is not already too late, will leave more and more ahead, the others will remain behind and disappear. Because who "too much embraces hugged" said our grandmothers ...
And it is necessary to remain confident, for example, by looking at Bestbuy, which went bankrupt in 2013, and came out of the rut thanks to the ecommerce panoply and the vision of Hubert Joly, its French CEO.
Saturday morning 11/12/18 11h ... This trade is no longer possible ... the lack of respect to the customer is obvious.
Survive or be reborn? 2019 will be the year of consolidations and disappearances.
Because the question is no longer '' hold '' to survive while waiting for better days, and asking the question to know what will be its trade in 5 years when it is better to ask the question of knowing ' 'if we will still be here in 5 years' '... but to' '' reborn '' with great cruel concessions simply ... SIC.
Any other question will lead in 2019 to the abyss because it is now too late and useless to spend energy and money just to "survive". The real question is whether to continue fighting to survive without disruption for legitimate reasons of debt, shareholder pressure, or social ... which is more commendable ... or to agree to '' do it differently ''. On the social level I already hear the cries of storms at the announcement of these decisions and closures without remembering that the price war has had a social blow that no one has ever spoken and catastrophic.
Because if we do not have the means of this rebirth, then we will have to accept to make huge sacrifices. The dilemma is cruel and if we take the food sector in France, the subject is not even more to know if there are one or two historical signs in excess, but to accept that there is now too much stores of more than 7500 m2 (the current breaking point for the profitability of the HM and this should still fall in my opinion up to 5000 m2 cf Nielsen Study 2018 '' the hyper victim of the defragmentation of the trade) and which does not are more suited in terms of formats and locations. So closing to better bounce will quickly become a news check. Casino group understands it and assumes, maybe too late.
America is certainly more brutal but the process is launched, we close or move shops past the dead point because hold them at arm's length to the detriment of the top performers has become a serious fault management. And for that, good news, retail today has a formidable weapon on the condition to control it: the direct insights that bring their sales on line and which offers a fantastic opportunity to better know its zones, its assortments and the profile of the customers in this area. Ex in France with the Boulanger brand, which with its Boulanger Countertops has proved its capacity to know how to adapt in concentrated mode the best offer in relation to the zone where they are located. Offer customers "what they want, where they want it and in the way that suits them best".
For me, Boulanger and its Comptoirs is the best example in France of a brand that proves a real ability to analyze its sales data online (not proven but in my opinion; °), to draw all the lessons to create muscular outlets and totally in tune with the local, cultural, economic and environmental specificity, even if positioning itself in an existing location eg the Grands Magasin in Paris. And signs like William Sonoma in the US have found a few miles they were no longer in the square ... close to better move sometimes 20 or 30 km were decided in view of the lessons of online sales.
Enemies yesterday and allies for tomorrow: because to be good in the physical trade must be excellent in online sales.
Finally, wars are rarely will won alone. The same is true for trade so that it can adapt and move forward at a speed that is currently needed to make up for lost time and win the New Retail battle. Often only alliances and skill acquisitions have been able to save some, and this remains, and will remain for many, the only safe bet. Walmart, the world's leading retailer, proved it in 2016 by acquiring the market place and the Jet.com algorithm, but especially by putting Marc Lore, its founder, pioneer and e-commerce genius. This retailer passed a cap the day she understood that to exist in the physical world it was from now on to be excellent in online sales, and mourning for having for 15 years tried to do yourself his '' own sale in line '' without success, that finally it was a job, and that she decided to acquire the competence: this decision there saved it. Being excellent online is the sine qua non for people to come back to the store, Walmart understands it and owes much of its development to the 2018 pick-up station development. '' Sell online to see more people in store ... ''. To Tell that to a distributor a few years ago (I speak knowingly ...) has earned me to be immediately cataloged in the crazy category.
But the United States gives us today another beautiful teaching. Currently everything is done to promote click and collect in grocery vs home delivery, to '' pass customers in store ''. And delivery leaders such as Amazon Prime Now or Instacart have developed in 2018 a pick-up service online ordering on the site of the third party '' deliveryman '' become by the fact a third party '' personal shopper '' . Instacart Pick-up providing "order pickers" stores for customers who do not want to collect their run in the store but simply take them when the order is ready. Picking but organized not by the sign but by a partner delivery platform. The advantage? Winning winner for the store and for the customer and especially the coming in store to '' collect his order '' from the customer, who sometimes prefers this option to a classic delivery. 4 out of 10 Americans already adhere to this principle of click and collect by a delivery platform. And to do this allied to collaborative platforms in addition to its own services is smart and socially interesting.
In conclusion: who will win ?
# Pure players? No because they either did not win ...!
Alibaba, Amazon, Away, Warby Parker, Bonobos, Zalando, Delivroo ... the '' so-called '' pure wave winners of the first wave are coming down to the physical world convinced that their salvation will not be to live in a dematerialized relationship indefinitely. Because yes since 2018 we can say that 80% of retail trade will stay in touch with its customers via the physical world but connected to him. Simply because human nature will never allow, even in the long term, to stay in a 100% '' distance '' relationship. And it is not a day in 2018 without a leader having announced a descent into the real world, an opening '' to test '' a store or a pop-up, an alliance or a redemption of network ... But without shouting victory, they have for them to have been able to impose their diagram coming from another world but answering to real expectations of '' society '' more than trade. But these leaders will take off and catch a glimpse of paradise (for them) ... and the little ones die and see the abyss. 172,000 online sales sites in France .... I leave you thinking about the outcome for 95% of them. The reason is also simply that the cost of recruiting an online customer will become prohibitive and random fidelity. While going to meet its customers in a trading platform - formerly called a '' store '' - in the real world all the more so in an 'industrialized' (but locally adapted) concept like Auchan minute or Amazon Go will be more profitable.
# The Brick and Mortar? Not won either but they have for them that 80% of the trade will go through the physical world ... connected.
Walmart, Target, Best Buy, Big Fresh, Whole Foods, Hema, Leclerc ... the physical trade is not dead either displeasing to many opportunists of the controversy. The business that has understood is the one that came out of the zone of denial and comfort early enough to understand that the only insight of the trade to have in horizon is simply the "society" and the evolution of its individuals. .. the evolution of global expectations facing a societal environment, economic, cultural, and especially mood and commitment. All behind his cart? The panurgism in some way is dead.
Another unavoidable societal sign: the need to adapt to the migrations of the "inhabitants" of an area, a megacity, or a deserted area and to follow it in terms of retail formats. Provocative in the soul, I say so since 2015: the shopping journey is dead, let's look at the life course, and let us put at the right time, in the right place and with a suitable offer and not standardized (except technologically). Whoever adapts his formats to the new deal but especially to the means (financial or by alliances) to do so will begin to glimpse the end of the tunnel ... Walmart buys parking in the city centers of the US to launch its new concept urban ...
# And the brand will you say? Yes, without them, commerce is nothing. But beware of '' Brandless '' and other private label like Amazon element.
And this other reflection excites me: for me after the distributors, the next to suffer violently the pangs of current developments will be the marks. They must navigate between pleasure and purchase constraints, think '' consumer '' before '' customer ''.
Two main reasons:
- Actors like '' Brandless '', Ulta Beauty, Kiko, or '' Harrys '' direct competitor of Gillette (which for the first time in its history to nen 2018 lower prices ...) sold at Target and Walmart and who begin to be acclaimed by appearing especially as more ethical and committed. And the advent of '' voice shopping '' should not fix things: "I'm looking for a razor and not a Gilette". Brands will therefore evolve into '' brand names '' because they begin to distribute themselves. L'Oréal, Nike (35% of its direct sales turnover), Adidas, Mondelez, Procter & Gamble (to see here) ... decide to emerge to continue to subsist ... And this fight will be an essential driver of the '' new trade ''. And it is in China that these brands are learning how to regain control, learn direct selling via marketplaces, and conversational mode.
Apocalypse retail is not a myth but a reality.
Abyss or Paradise ...? this does not mean that one should not be hyper optimistic for a '' new trade ''. And that we stop saying that everything is the fault of Amazon. Amazon to take advantage of a gaping hole of dissatisfaction of customers who are always '' up to date '' and who were tired of being '' captive '' for so many years. The freedom found and the denial of the distributors to think that it would be irreversible in the processes of purchases
Apocalypse retail is not a myth but a reality.
Abyss or Paradise ...? this does not mean that one should not be hyper optimistic for a '' new trade ''. And that we stop saying that everything is the fault of Amazon. Amazon to take advantage of a gaping hole of dissatisfaction of customers who are always '' up to date '' and who were tired of being '' captive '' for so many years. The newfound freedom and the denial of the distributors to think that it would be irreversible in the processes of purchases are the real cause of this retail apocalypse. The eyes of the Internet cyclone advance sector by sector, and none have been spared.
Needed, for example, to look at the textile and fashion accessories trade, one of the most concentrated in terms of tension currently (1 out of 2 stores that are currently closing in the US is a clothing or footwear store NRF Study 2018) and which appeared one of the most "safe and secure" sectors a few years ago and who has abused all the tricks to condition its customers, thinking that its sales could never be dematerialized and that the multiplication of Physical sales would still be sufficient to grow sales ... Amazon, which sells mainly '' brands '' of clothing brands, Gap Levis, Zara and others Celio ... took the lead. On the China side, it's enough to see policies like Pull & Bear's Inditex group to understand that they too understood that their salvation would go through a hybridization of their distribution. See what I wrote in 2013 about this brand having '' on the web '' '' on Tmall Alibaba.
So yes the choice is not easy in vision and lines to hold, and I do not hold any truth, but 2019 will be the year of all danger ... plunge into abysses or begin to glimpse paradise.
Happy New Year everyone. And sorry for my poor english language... i do my best... Enjoy retail.