Insights from a global innovation perspective

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When James Mullan spoke at the NRF PROTECT conference this summer, he covered a new rubric of retail: changing consumer expectations, an enhanced customer experience and a new paradigm for loss prevention. Retail, as we know it, isn’t what it used to be.

“The traditional role of physical retail as the key mediator has fragmented,” says Mullan, the senior vice president for global innovation at GDR Global Intelligence when he spoke at the event; he has since taken a new role as a strategic client partner at Kantar. Supply and demand are now more disparate, perhaps than ever before. Consumers order and buy products through many channels, from anywhere, anytime. Likewise, products are supplied to consumers in different ways, from different places, by different people and entities. Along with such change comes new concerns of controlling loss.

THE OLD MODEL AND THE NEW DISRUPTORS

To begin with, it’s important to understand the retail past and how it has changed. Traditionally, a customer desires a brand. They are influenced by different things and choose a brand and buy it. They pay with cash or other means and receive their product. If all goes well, they may buy again (and again, and again).

However, Mullan says the flow is changing. Fragmentation is taking hold and it “chips away at a world built for brands,” he says. Over time, omnichannel marketing has made retail much more complex. Brands for large and small customers have taken on a “hyper-fragmented context” — the brand is tried and tested, then disruptors and challenger brands appear, built specifically for the unique demands of the new consumer’s world.

He says the consuming populace is steered out of old comfort zones and into a new complex cloud of possible interactions. Brands are seeking ways to differentiate their offering from their competitors more than ever before; assortment, price and scale are no longer core differentiators. They are all part of an intertwined singular system, designed for efficiency and scale. As futuristic as it sounds, the new generation of retail must be mindful of this and remain consumer driven.

The proverbial supply chain goes from factory to distribution center, to truck to last-mile delivery and into the hands of the consumer. But it is a dwindling model. Brand managers and new innovations are helping products find their way to consumers in new ways.

Take Procter & Gamble’s iconic Tide brand. The product is becoming more than detergent; it’s now part of a service. Tide laundry and dry-cleaning facilities are available where customers may drop laundry into Tide-logoed bags in different colors: one for dry cleaning and another for laundry. What was once just another laundry detergent on the shelf is expanding into a brand consumed through a service. It’s a result of the changing psychographics and demographics of consumers, their busy lives and their search for ways to get laundry done.

The Tide example is emblematic of innovative and disruptive means of acquiring products. Retailers know it well. They are meeting the omnichannel consumer with an “omnipresent” model of retail.

For this term and concept, Mullan credits Richard Kestenbaum, a partner at Triangle Capital LLC, who characterized brands as taking this new posture: “Today’s smartest brands no longer talk about themselves as being omnichannel. Instead, their intention is to be ‘omnipresent.’” So, what does this look like in reality?

MEET THE NEW WALMART

For many years, Walmart had a signature tag line that accurately described the behemoth: “Always low prices.” The Arkansas retailer, known for its “stack ‘em high, sell ‘em cheap” retail brand has shelved the older slogan. Now it’s: “Save money. Live better.” Mullan says this exemplifies the new omnipresent retailer that isn’t in one place anymore; it’s the hyper-fragmentation of retail.

Walmart purchased Bonobos, an ecommerce-driven men’s clothing subsidiary based in New York City. In 2010 it bought Vudu, a video-on-demand service. It also launched Jetblack, a personal shopping service where customers text their orders anytime, day or night.

Then there’s Walmart’s full presence in online shopping. Customers can order from their website account, schedule a pickup, drive in and have their purchases, groceries and all, loaded right into the trunk of their car. Walmart is also testing August Homes’ “smart lock” technology that allows employees to enter customers’ homes to bring food directly to their refrigerators.

It’s all part of the new, perhaps more sophisticated, retail model that is no longer one straight line from order to delivery. Instead, the brand is consumed differently through various services and places: a parking lot, a refrigerator, an entirely new retail site or online.

SHOPPING, VICE-BUYING, WITH LP ADDED

Mullan says there’s a new burden on retailers. The mindset must shift away from buying and toward shopping. In fact, a whole element of shopping has been (and will increasingly become) an emotionally engaging leisure activity.

Retailers are moving fast to keep up with new consumer expectations. For example, Amazon is rolling out its courier services to 37 U.S. cities to keep up with the demand of Prime deliveries. It’s offering $10,000 and three months’ pay to employees to start their own delivery businesses, relying on a new “gig economy” to aid their success.

Such services will eventually enable couriers to gain access to a person’s vehicle and leave package deliveries inside a homeowner’s property as a means of boosting loss prevention from products being stolen or pilfered from the doorstep. Indeed, packages are lost by theft and through pilferage by the couriers themselves, so Amazon is moving forward without the same concerns of loss prevention.

What’s the liability of having unattended employees in customers’ homes? How about the risk of entrusting products to a new fleet of last-mile delivery companies and third-party providers? What does it mean if a product or service is out of the hands of central management and further downstream in the supply chain?

Amazon is taking action to mitigate such risks: It purchased Ring, the smart home and security technology, to aid in the growing concern for loss prevention. It’s finding thieves by placing fake packages in couriers’ vehicles to catch them in the act. It’s looking at smart lockers that can be installed on customers’ porches to mitigate theft, and implementing an app called Route that allows consumers and merchants to have visual control simply by a few swipes of the app. Plus, it’s working with insurers to underwrite any loss from theft.

And as Amazon goes, soon will the rest of retail. Loss prevention will employ new tools and tactics to meet the new and complex matrix of supply and demand surrounding consumer brand strategy.

“The arms race to compete and win in the convenience shipping space has already seen rapid expansion at a rate that not even the biggest retailers can keep pace with,” Mullan says. Now and into the future, it’s all about being omnipresent for omnichannel retail marketing, with loss prevention taking a much more prominent role in the retail equation.

Jim Romeo is a writer with a focus on business and technology topics; his work appears widely in industry publications and includes articles about logistics, supply chain and artificial intelligence.

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