David Kearsley
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3 INSIGHTS TO THE DAZED RETAIL GROCERY INDUSTRY

10/25/2017

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Starting a few months ago with Amazon announcing the purchase of Whole Foods, I have been taken by the blood-letting Wall Street has bestowed across the industry.  In fact; the financial punishment for most in the retail space since this announcement.
     My personal disclaimer on this post:  I am not a retail operator, nor an investment banker.  But I am a successful supplier of consumer goods to retail.  Durable goods, not consumable goods (drinks, chips, etc.).  My thoughts are not to claim supreme answers, but more to offer thoughts from a 10,000 foot view with 3 thoughts.
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 1.  Stick To Your Knitting    
     Kroger Co. (KR) has become the poster-child for what Amazon could do to the grocery industry by acquiring Whole Foods.  Kroger could do itself good by focusing on making their business (stores and digital) the top-of-mind consumer destination.  With 2,800 stores, multiple store front brands, spanning 35 states, Kroger has a great platform to do mind-blowing things. Amazon’s Whole Foods has some 470 stores and at some point will leverage the power of the digital platform.  I believe Kroger could make some very progressive moves to not only hold share, but grow dramatically.
   I do not discount the power and prowess in operational and supply chain proficiency Amazon has proven.  They meet the consumer “right where the customer wants to be”.  Amazon will certainly carve out their fair share of the grocery market. 
     About a month ago, Kroger announces they will launch a restaurant business called Kitchen 1883.  Hmmm.  Is it me, or does that seem like a lack of focus?  The first prototype is a stand-alone store.  But even if the thought is to integrate a restaurant into stores, is that what the consumer wants?  Another restaurant, particularly one inside of a Kroger?
     Kroger should stick to grocery and take advantage of building a compelling digital model and enhance the in-store experience to serve the consumer.
 
2.  Meet The Competition Head On    
     Things change.  Consumer likes and dislikes change.  Technology has proven to be a great enabler.  Grocery competitors are making moves to prepare for the future. 
      Walmart buys Jet.com in 2016, and recently Parcel, which has a model for rapid delivery to consumer’s front door.  Both significant in Walmart’s goal to compete with fury in the digital retail space.
  In the pure play grocery space, Albertsons announces the purchase of the meal-kit delivery service, Plated.  This is very logical for grocery to have a hand in the meal kit business.  Experts expect this food home delivery service sector to grow more than 70% in the next 5 years.
   With all of this recent activity, Kroger showing no signs of making a correction in course.
 
3.  And, It’s Not Going To Get Any Easier    
     The slim margins in the grocery business make things tough, no doubt about it.  As competition heats up margins will be under increased pressure.   
     Add to the mix the entry and expansion in the US market of two powerful German grocery retailers - Aldi and Lidl.  The pressure on traditional grocers will be intense.  These are serious competitors and have the balance sheet and competitive will to gain significant market share.
 
The evolution of how the grocery industry is going to take shape will be interesting.  There will be winners and losers.  I am not convinced Amazon will rule the world, but they will put points on the board in grocery.  The losers – some will falter.  I have visions of how Kmart could not shift to compete with Walmart in the early days.  Where is Kmart today?


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​David Kearsley

Business leader and continuous learner in consumer durable products sold through various partner channels; retail, capital goods, infrastructure product.     www.davidkearsley.com

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Holiday Retail 2017 – A season filled with “Clicks” and more

10/7/2017

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​The 2017 holiday season is shaping up to possibly be a real winner for retail in North America.  Consider the much-improved economic climate, stellar stock market performance, low unemployment, and favorable consumer confidence sets a pretty good stage. The battle-lines of where and how the consumer will choose to make holiday purchases is most intriguing. I believe this holiday season will begin to etch a meaningful shift in what retail will look like for years to come.
 
2017 Holiday Expectations
     Predictions, expectations and estimates are all to the upside vs. last year according to numerous organizations that track this information. 
     Generally, there is a consensus that holiday sales (excluding travel and event purchases) will increase in the range of 3.6 to 4.5%.  That is particularly good news, as the last couple of year’s growth has been quite dismal.
     That is the broad swath of retail market predications.  And that should bode well for all.  A rising tide lifts all boats, as the saying goes.
    Not surprising, growth in e-commerce retail sales for the coming holiday season are estimated to be somewhere between 11 and 21% (2016 online sales grew roughly 14% over prior year).  I am in the camp of closer to the 20% growth for 2017. 
     Where there is momentum, there is growth.
 
The e-Play of e-Commerce
     The digital era is in full swing and promises to only gain in momentum.  Amazon is certainly the bell-weather for online shopping and the e-commerce segment in retail.  It will be the focus of the overall direction of e-commerce as we step into the holiday season.
     Consider some of the market analysis published by Fung Global Retail and Technology –
  • 83% of holiday shoppers will buy something from Amazon
  • 77% will shop brick and mortar retailers
    In other research, it is projected that 75% of all holiday shoppers will purchase from Amazon. That is powerful.  It gets better – 9 out of 10 Amazon Prime members will purchase from Amazon over this holiday season.  The power and leverage of the Amazon loyalty program is second to none!  For holiday 2017, considering the online market growth, Amazon will easily add an incremental $5 billion in sales this year.
     At the root, convenience and ease remain the two most significant advantages of e-commerce shopping.  The advancements in smartphones, wearables and other wireless technology will keep us constantly connected.  That brings the essence of convenience and ease within a fingers touch.  In fact; 40% of holiday purchases this year will be made on mobile apps.  That is nearly double from 2016.  The next evolution (and coming quickly) will be the technology of the truly “connected” Smart Home, that will go beyond the Google Home, Apple HomePod and Amazon’s Echo devices we know today.
 
Brick and Mortar Retail Play
     It is important to keep in mind; the e-commerce segment includes the online sales of traditional brick-and-mortar retailers too.  There are exciting initiatives underway. 
     There are many very well managed retailers, and although playing catch-up, great strides are being made for developing the integration of online into their operational platform. 
     The baseline advantages for traditional retailers are quite clear.
  1. The Now Factor.  The truth is (and has been aided by technology), we are a consumer society of wanting it now.  Retail provides that option.  Buy it now, use it now.
  2. The Personal Experience.  This is the single most relative and richest advantage for traditional retail. . . today.  The ability to touch product, evaluate alterative options in style, functionality, price, brand and many other influencers.  Not to be overlooked, the fulfillment of today’s demanding consumer to have it “now” is a powerful advantage. I am convinced that those of us supplying product and services to retailers can have a huge influence on the experience.
     Although not being leveraged with significance today, the personal experience is being redefined and requires brick and mortar retailers must move beyond just price, assortment, and merchandising.
     I am excited for what will come from the traditional retail sector for true deployment of an integrated, omni-channel build out.  The power of what a seamless consumer purchasing platform of the physical store and online experience.  The true merging of the personal touch, convenience and ease.  Here are just a few things that will shape the next advances in retail as we know it.
  • Video – it is all about the message and done properly, the manufacturer can (and is best suited to do so) deliver what that message.  The power of visual and audio is a powerful marketing tool.  This is low hanging fruit and more is needed.
  • Artificial Intelligence – the possibilities of what AI will do is incredible.  The advantages of how it will shape how we purchase, shop, and anticipation of our needs is mind-blowing.
  • Algorithms - not suggesting a “Big Brother” theory, but it is utilization of big data is a game-changer.  Consider the power of harnessing the data from our internet searches, browsing of goods and services, those we “follow”, the “likes”, and of course purchase intent / history.
     There are great things happening and taking shape today for the evolution of retail.  This will be exciting.  The advantage for the supplier community is how we can provide and deliver that value that will be a competitive advantage in our respective categories.

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David Kearsley
Business leader and continuous learner in consumer durable products sold through various partner channels; retail, capital goods, infrastructure product.
   Seeking senior leadership role with a company with a vision to grow, innovate, and create a sustainable value-proposition.      www.davidkearsley.com


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    David Kearsley

    Senior Sales, Marketing & Business Development Executive

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