Events – Fuel, A McKinsey Company https://get.fuelbymckinsey.com Sun, 01 Dec 2019 17:56:38 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.2 The New Rules of Food and Beverage Innovation https://get.fuelbymckinsey.com/article/the-new-rules-of-food-and-beverage-innovation/ https://get.fuelbymckinsey.com/article/the-new-rules-of-food-and-beverage-innovation/#respond Tue, 27 Mar 2018 19:20:36 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ Venture capital firms poured over $1.1 billion last year into food and beverage startups.[1]  I recently moderated a panel at Shoptalk with two investors in the space, Lauren Jupiter from AccelFoods and Andrew Bridge from BrandProject, along with Marisa Bertha from 7-Eleven. We discussed the emerging trends and business models that are disrupting the industry.  […]

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Venture capital firms poured over $1.1 billion last year into food and beverage startups.[1]  I recently moderated a panel at Shoptalk with two investors in the space, Lauren Jupiter from AccelFoods and Andrew Bridge from BrandProject, along with Marisa Bertha from 7-Eleven. We discussed the emerging trends and business models that are disrupting the industry.  Here are some of the key takeaways:

The old rules of CPG don’t work with younger shoppers. 

Millennial and Gen Z shoppers are looking for authentic brands that fit with their lifestyles, something they don’t see their “parents’ brands” delivering.  Some of the trends that are important to these younger shoppers include:

  • What is the story behind the brand and its founders?  Younger shoppers shy away from the manufactured marketing of traditional CPG products.
  • Younger shoppers want “real” ingredients and expect labels to be clear and easy to understand.
  • Overall, younger shoppers are seeking out products that deliver health benefits in addition to flavor, such as plant-based proteins and foods with functional health benefits (pickle juice anyone?).
  • The Internet has changed expectations not only online but also in the store. Increasingly, consumers want to be able to use their mobile phones to order ahead, pay, capture loyalty rewards, and more. When they do go into the store, they expect to find the item on the shelf.
  • Younger consumers want on-the-go nutrition such as portable proteins, whether they be plant- or animal-based.  Retailers see the breakfast category as ripe for re-invention with new, portable offerings.

D2C is a powerful launching pad for new brands

Many food and beverage startups start out selling directly to consumers online.

  • D2C brands are able to capture deep data on their consumers—unavailable in brick and mortar settings—which they can use to deliver a personalized consumer experience, refine product strategy, and build long-term loyalty.
  • By selling directly, food and beverage brands can also experiment with new business models, in particular subscriptions (Blue Apron, Freshly, and NatureBox are examples of innovators in the space). In recently published research, we showed that subscriptions can provide a strong base of recurring revenue although churn rates are high and companies must deliver a superior end-to-end experience to succeed.
  • Going direct to consumer first can dramatically enhance the chance of success when these brands expand into brick and mortar retail. For example, by analyzing customer data, these brands can determine which retailers are the best fit, identify the most likely SKUs to sell in-store, target the optimal geographies, and refine their messaging.

 “Always be in beta”

  • Food and beverage startups need to be “culturally obsessed” with the consumer and continuously refine their products and experiences to meet consumer needs. E-commerce provides an immediate feedback loop that can allow startups quickly to course correct missteps or capitalize on opportunities.  To build loyalty and word of mouth, startups should also work closely with their most passionate and valuable customers, gathering feedback on existing products and testing new ideas.
  • Established CPG companies need to take a page out of the startup playbook and look for ways to speed innovation. Despite heavy investments in customer insights, too many CPGs seems out of step with younger shoppers, leading to calcified product portfolios and slow to no growth.

The challenge isn’t getting on the shelf.  It’s staying there. 

Food retailers are looking to meet consumer demand by adding emerging brands, making it easier than ever for startup companies to get on the shelf.  However, with so many new brands to choose from, retailers are quick to pull products that don’t deliver quick sales or pull in new customers.

  • Startup food and beverage brands need to focus on “smart growth.” It is better to start small when entering brick and mortar (say by focusing on a single retailer in a single geography) to manage the complexities of retail distribution.  Brands that expand too rapidly can run into crippling cash flow, manufacturing, or supply chain problems.
  • Startup companies are often skilled at digital marketing, leveraging Facebook, Instagram, Google, and other media to create awareness and word of mouth. In-store requires a very different set of skills.  To standout, brands need to communicate their stories at the shelf via packaging, promotions, shelf-edge marketing, and the other tried and true tools of retail marketing.  They also need to tap digital shopper marketing, such as mobile, location-based offers to drive traffic to the store.

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Retailers and CPGs need to focus on “strategic value above the check.”

  • Retailers and CPGs need to more actively partner with startups to accelerate growth. While many established players have set up corporate venture arms to invest in relevant startups, these investments often don’t deliver significant value to the business (to say nothing of financial returns).  Retailers and CPGs should focus on helping their startup partners establish commercial success first before thinking about any potential equity investments.
  • Retailers and CPGs need to develop clear strategies to take advantage of startup innovation. While corporate VCs or Silicon Valley offices can surface opportunities, startup innovation ultimately needs to be owned by the operating executives responsible for delivering results.
  • CPGs in particular should explore acquiring startup food and beverage brands to refill their innovation pipelines and bring in new talent. For better or worse, it’s often easier for established players to buy new innovation than to develop it in house.

[1] Source: Pitchbook.

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GCVI 2018 Roundup: The Next Generation of Corporate Venturing https://get.fuelbymckinsey.com/article/gcvi-2018-roundup-next-generation-corporate-venturing/ https://get.fuelbymckinsey.com/article/gcvi-2018-roundup-next-generation-corporate-venturing/#respond Fri, 23 Feb 2018 20:29:37 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ The 2018 Global Corporate Venturing and Innovation (GCVI) Summit welcomed over 700 participants to Monterrey early this month. My biggest take-a-way: there has been a paradigm shift in corporate venturing, in which corporate venture capital (CVC) is a key strategic lever for capturing value from external innovation. CVC’s historic reputation is based on clichés. It […]

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The 2018 Global Corporate Venturing and Innovation (GCVI) Summit welcomed over 700 participants to Monterrey early this month. My biggest take-a-way: there has been a paradigm shift in corporate venturing, in which corporate venture capital (CVC) is a key strategic lever for capturing value from external innovation.

CVC’s historic reputation is based on clichés. It is “here today, gone tomorrow;” “all about the corporate;” “full of empty, strategic, promises;” or “corp dev executives trying to play venture capitalists.”. But a new generation of mature CVCs have busted these stereotypes.

Successful CVC programs now look very different from their predecessors. They are firmly integrated into the corporate structure, adding value both within the company and to the external innovators in whom they invest. Like traditional VCs, they also are embedded in the larger ecosystem, inviting other CVC programs to collaborate, sharing best practices, and even sharing deal flow. For these mature CVC programs, it is clear that the common questions of the past about whether they could provide tangible value to startups and to the corporation and take their place within the financial VC-driven ecosystem have been put to rest.

Presentations from Wendell Brooks of Intel Capital and Sue Siegel from GE suggested a strong feeling at the conference that CVCs are no longer playing second fiddle to financial VCs – not in concept and not in practice. CVCs are increasingly seen as preferred syndicate partners and are expanding innovation ecosystems around the world by anchoring new innovation communities. Brooks articulated some of the “tremendous advantages over pure financial investors” that CVC had, noting that as a community, CVC investors can make “1+1=5” and that “financial investors are no match.”  Because corporates can offer startups deep technology expertise, deep industry acumen and connections, access to large customers, and many other benefits, CVCs can and should contribute more to their ecosystems and outperform their financial VC counterparts.

Siegel similarly explained that CVCs have matured from being a novel concept within the company to a catalyst for both new growth and cultural change within the corporation itself.  In this regard, Siegel inspired the audience by declaring CVC practitioners as “heroes of impact” for any corporation.

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That said, there are probably ten to twenty corporates new to CVC for every corporate that has achieved the maturity level of a GE or an Intel. Indeed, over 50% of the attendees at GCVI represented new CVC programs. Achieving success in corporate venturing is a long-term proposition. Intel Capital, for example, has been around for 25 years. We believe that success can be accelerated significantly by following best practices. In a series of posts, we will articulate our vision for the next generation of corporate venturing and explain what, in our experience, are the key determinants of success.

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Take a Tour of Key Issues Facing Tech CEOs: TechTour 2017 Roundup https://get.fuelbymckinsey.com/article/take-a-tour-of-key-issues-facing-tech-ceos-techtour-2017-roundup/ https://get.fuelbymckinsey.com/article/take-a-tour-of-key-issues-facing-tech-ceos-techtour-2017-roundup/#respond Mon, 08 May 2017 20:52:31 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ TechTour and the European Venture Capital Association held their annual TechTour Growth Forum in Geneva and Lausanne, Switzerland, on March 30-31, 2017.  This event brings together leading European, American, and Asian tech CEOs and investors for in-depth discussion of key business strategy topics.  Members of McKinsey’s Fast Growth Tech practice moderated several CEO-only roundtables at […]

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TechTour and the European Venture Capital Association held their annual TechTour Growth Forum in Geneva and Lausanne, Switzerland, on March 30-31, 2017.  This event brings together leading European, American, and Asian tech CEOs and investors for in-depth discussion of key business strategy topics.  Members of McKinsey’s Fast Growth Tech practice moderated several CEO-only roundtables at which CEOs were encouraged to share their experiences, problems, and best practices with each other in a setting without investors present.  Several key themes emerged about the direction of consumer-facing and Internet of Things (IoT)-based business models:

Consumer

The sheer variety of B2C business models makes it difficult to draw out common challenges, but a few themes emerged from the discussion.

  • Managing online and offline journeys.  Several CEOs explored the challenges of integrating online and offline aspects of the retail business model.  An online retailer of home appliances, for example, was pondering an offline journey to complement the exclusively online journey that his customers currently engage.  Should he open flagship stores?  Recent American successes like Bonobos demonstrate how a physical retail presence can help boost online sales.  But one challenge with this approach was expressed by an online furniture retailer, who used online mobile only as an ordering mechanism, relying on leads from his chain of offline stores.  As a result, he was not positioned to grow fast as demand boomed.
  • Big is beautiful?  Two CEOs of ride sharing and dispatch services debated the pros and cons of being part of a larger company.  One was working from within a large corporate; the other was growing his substantial business independently.  Working within a company has its benefits, but also brings significant struggles in the growth stage: how to secure the right level of funding and support from the parent company.  While independent operators lack this challenge, their financial stability on a day to day basis is more open to question.

IoT

The IoT workshop was filled with CEOs from across the increasingly diverse and complicated IoT landscape.  Some companies in this space are concerned solely with the technology stack—the various services and software products that enable IoT-based businesses, while others focused on providing services to consumers and businesses.

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  • Winner take all?  One question that emerged across the spectrum of IoT companies in attendance was whether IoT markets are prone to network effects.  While this world is plainly different from the traditional hardware and software companies that achieved great scale through vertical integration (e.g. Apple) or widespread adoption network effects (e.g. Microsoft), there was debate among the attendees about whether similar sources of competitive advantage could be found in the IoT ecosystem.  One possibility is a network effect that emerges from having the best data collection from connected hardware.  Another may arise from serving as a marketplace within the technology stack.
  • Managing successful partnerships.  Partnerships are critical in the IoT space because whether you are a user of the technology stack or a provider within it, there are many pieces that have to come together to deliver a connected hardware experience to businesses or consumers.  Managing these relationships can be difficult—many CEOs expressed dissatisfaction at the time it took to locate good partners and then to manage the relationship moving forward.
  • Trust is critical.  Data privacy issues loom large in connected hardware.  Several CEOs explained that sales depended critically on their ability to convince customers that their data was safe.  This will be a CEO-level issue for many years to come.

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Loyalty In the Age of Disruption https://get.fuelbymckinsey.com/article/loyalty-in-the-age-of-disruption/ https://get.fuelbymckinsey.com/article/loyalty-in-the-age-of-disruption/#respond Fri, 21 Apr 2017 19:39:27 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ The retail industry is facing unprecedented disruption as new technologies and competitors upend established ways of doing business.  Paradoxically, these trends make it critically important to retain and grow loyal shoppers, but at the same time they make it harder than ever to build strong and lasting customer relationships. I recently moderated a panel on […]

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The retail industry is facing unprecedented disruption as new technologies and competitors upend established ways of doing business.  Paradoxically, these trends make it critically important to retain and grow loyal shoppers, but at the same time they make it harder than ever to build strong and lasting customer relationships.

I recently moderated a panel on loyalty at Shoptalk where we discussed the trends shaping loyalty in this age of disruption, as well as the strategies and tactics leading retailers and e-commerce providers are using to build loyalty for the long-term.

Shoptalk is a nextgen retail and ecommerce event.  Now in its second year, the event brings together senior leaders from both brick and mortar retailers and e-commerce and retail tech startups to discuss the trends shaping the consumer and retail landscape and to share ideas.  Shoptalk is a must-attend event for anyone in the retail space.

For my panel, I was joined on stage by Karen Chiarucci, VP of Marketing & Customer Engagement for Payments, Gap, Inc.; Whit Goodrich, CMO, Retail Cards, Synchrony Financial; Jabob King, CMO, Plenti, American Express; and Aarthi Ramamurthy, Founder & CEO of Lumoid, an innovative e-commerce startup focusing on consumer electronics.

We had a wide-ranging conversation on how to build successful loyalty programs followed by Q&A from the audience.  Below are some of the key takeaways from the panel:

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  • Customer first. Regardless of program type, loyalty programs must begin and end with the customer.  While almost every company says they put the customer first, few actually make the investments in people, technology, data analytics, personalized marketing programs, etc. required to truly run the business from the customer out.
  • Creating differentiation. With so many loyalty programs out there, it can be hard to differentiate your program.  One key is to make sure any loyalty program is consistent with, and builds on, a company’s brand.  By tailoring the program to the most important needs of your shoppers, whether it be lower prices, or exclusive experiences, or faster services, retailers can ensure their programs provide the right incentives and rewards for loyal behavior.  While loyalty programs can be differentiated, loyalty schemes – gimmicky and over-complicated programs focused on driving short-term sales – cannot.
  • Hone in on key customer pain points. For both online and offline retailers, successful loyalty programs solve customer pain points.  One reason that Amazon Prime has been so successful, for example, is that it removes its customers’ biggest pain point, shipping costs, from the purchase decision.
  • Rewards and incentives need to be easy, relevant, and attainable. To influence customer behavior, retailers need to create programs that are easy to understand and easy to use.  If you can’t explain your program with a simple graphic or few paragraphs of text, it’s probably too complicated.  Rewards and incentives also need to be relevant, understanding that what matters to one shopper (say updates on the latest in fashion) can be vastly different from another shopper (who just cares about deals).  Finally, benefits need to be attainable.  Customers will lose interest in a program quickly if they have to spend too much or it takes too long to earn a reward.
  • Don’t forget to surprise and delight. Great loyalty programs find occasions to surprise and delight customers outside of formal program mechanics.  We sometimes forget the power of a small gift that simply says “thanks for being a loyal shopper.” At Kroger, for example, we used to include a coupon for a free item in our quarterly loyalty mailers for something the customer bought regularly, say a free pint of ice cream or frozen food entrée.
  • Avoid unnecessary roadblocks. Signing up for a loyalty program needs to be as easy as using Amazon or PayPal.  People don’t come to a store or site to sign up for a loyalty program – they are there to buy your products – so the process needs to be a natural extension of the shopping process.  In addition, it’s important to train associates on the program and how to sign up and use it so that they can become advocates (and to keep training – with turnover and other pressures, I’ve seen cases where within a few months, almost no store employee can answer even basic programs about how a loyalty program works or how to sign up).
  • Digital is not a nice to have. Retailers should leverage digital and mobile technology to provide an enhanced experience to customers.  For brick and mortar retailers, the key is providing an integrated experience that brings the digital and physical together.  One big advantage of mobile is that it is much easier and cheaper to deliver personalized offers and content digitally than in store.  Mobile apps in particular can offer significant value to customers by making it easy to find coupons they’ve downloaded, build shopping lists, check point balances, and even pay.  Retailers can also leverage digital to provide store employees with updates on in-store promotions or provide direct access to CRM systems to deliver better service to customers.
  • My app or yours? To borrow a tech term, most retailers’ apps are closed platforms – they only let consumers use their apps and their technology when they are in the store.  While some retailers are large enough to make this strategy work, most retailers struggle to get sufficient mobile downloads and engagement.  One option is to partner with one or more of the top consumer mobile apps.  The Gap, for example, is starting to accept Apple Pay and is exploring ways to getting their rewards into Apple’s Wallet app.  The goal is to create a seamless experience for the customer regardless of whose app the customer wants to use.  As one panel member said, “It’s hard to fight your customers if they want to use popular apps.”
  • Data drives everything. Data is the lifeblood of a successful loyalty program.  For most companies, the challenge is not capturing the data, it’s figuring out how to use it effectively.  By integrating transaction, channel, interaction and other data, retailers can understand the customer and what her day looks like at increasingly granular levels.  Moreover, digitally-enabled data collection can provide a fuller picture of customer interests and preferences that are nearly impossible to discern in a brick and mortar setting – for example, what do customers look at but not buy, what do they add to their wish list, and what do they share on Facebook or Pinterest?   These insights can be used to deliver relevant offers and content when and how the customer wants.  Perhaps more importantly, they can be used to make better business decisions; for example, what items to carry and what pricing and promotions will optimize sales and profits.
  • Focus on the right metrics. Customer engagement is the best measure of loyalty program success because it drives everything else.  Retailers thinking about adding loyalty programs should test a variety of program elements to evaluate what resonates with customers and what doesn’t.  Panel members cautioned against being overly focused on transaction counts or making money from the program in the early days.  It can take time to build momentum.  While economics are important, it has to come in the context of customer lifetime value.  In too many cases, retailers count on breakage (the amount of reward checks that don’t get redeemed) to make their numbers.  If customers aren’t redeeming their rewards, however, it means the retailer isn’t engaging them and is missing the upside opportunity to enhance those relationships.
  • Is a coalition program right for you? Many retailers with low shopping frequency can struggle to make a loyalty program pay off.  If your customers shop only a few times a year, a coalition program could be worth exploring.  In a coalition such a Plenti, customers can earn in one place and burn in another (Plenti’s partners include Macy’s, Rite Aid, Southeastern Grocers, Hulu, and Expedia).  As a result, customers have more opportunities to earn rewards which leads to more usage which leads to more value for all the coalition partners.  The risk with a coalition program is that the retailer’s brand can get lost in the noise so retailers need to carefully weigh the pros and cons before proceeding.
  • Actively explore partnerships. Retailers can leverage other partners without necessarily joining a coalition program.  For example, Safeway has long partnered with Chevron as part of its fuel rewards program.  Digital technologies make it much easier to integrate with partners.  For example, at Shoptalk, Visa highlighted wallet technology that lets a retailer or restaurant provide rides on Uber in return for in-store purchases.  Previously a program like that would have required the retailer to print and mail a paper certificate which the customer would then have to remember to redeem.

I’d like to thank Shoptalk for inviting me to moderate the panel.  We had a great time discussing what’s new in loyalty and what it takes to create a successful program.  I’m already looking forward to next year’s show!

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Connecting at Mobile World Congress https://get.fuelbymckinsey.com/article/connecting-at-mobile-world-congress/ https://get.fuelbymckinsey.com/article/connecting-at-mobile-world-congress/#respond Mon, 13 Mar 2017 19:45:27 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ This year’s Mobile World Congress was the largest ever, and it is evident that companies around the world approach the event as a crucial marketplace for their products and services, from the highest tech new solutions in artificial intelligence or IOT, to the low-tech but high-profile re-release of a classic Nokia phone, the event is […]

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This year’s Mobile World Congress was the largest ever, and it is evident that companies around the world approach the event as a crucial marketplace for their products and services, from the highest tech new solutions in artificial intelligence or IOT, to the low-tech but high-profile re-release of a classic Nokia phone, the event is a window into the future of product and experience design across the mobile space.

McKinsey has a full roundup of the conference available here:

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During the workshop, Ken Fenyo and Peter Weed presented FGT’s work on Customer Success for SaaS businesses, highlighting some particular challenges for companies at the earlier stages in their development, as well as companies in the mobile enterprise space

Customer acquisition and retention is top of mind for every SaaS business, but there is no one-size-fits-all solution. Our research found that companies in different market spaces face different challenges in the way they attract and retain customers, and that keeping this in mind could have important effects on a company’s top-line revenue.

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The Boom in Retail Tech https://get.fuelbymckinsey.com/article/the-boom-in-retail-tech/ https://get.fuelbymckinsey.com/article/the-boom-in-retail-tech/#respond Fri, 24 Feb 2017 20:48:09 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ I attended the annual National Retail Federation (NRF) show in New York City last month.  After spending two days meeting with retailers and exhibitors (and walking what felt like 10 miles, uphill, in the snow), one thing at least was clear to me: These are boom times for retail technology, with a wide range of […]

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I attended the annual National Retail Federation (NRF) show in New York City last month.  After spending two days meeting with retailers and exhibitors (and walking what felt like 10 miles, uphill, in the snow), one thing at least was clear to me: These are boom times for retail technology, with a wide range of new technologies and new vendors competing to power the next generation of retail innovation.

The NRF show offers a smorgasbord of technology with over 500 exhibitors spread across the Javits Center’s 84,000 square feet of exhibition space.  Over 30,000 people attended, with a strong international contingent in addition to most major U.S. retailers.

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All the largest retail technology providers had big presences, including IBM, Oracle, SAP, Microsoft, Intel, and others.  But the show increasingly attracts startup companies hoping to close deals or at least build some buzz.  Below I discuss a few technologies and companies I saw – it’s not an exhaustive list by any means, but it highlights some of the innovative retail technology that is emerging:

  • Virtual Reality. Marxent provides VR solutions to retailers, including Lowe’s and Ashley Furniture, that let consumers design and interact with virtual home improvement projects.  After putting on a VR headset, I was able to walk around a virtual living room, leaning over to see the details of the fabric texture, changing colors of the sofa, switching out an end table for a chair, and viewing the room from all angles.  I was surprised how immersive the experience was – I even walked into a real-world wall when I forgot I wasn’t actually in the virtual room (don’t tell anyone).  VR technology also has a range of B2B applications.  InContext, for example, is using VR to help CPGs and retailers co-design better in-store displays and promotions in less time and for less money.
  • AI/advanced analytics. Machine learning and Artificial Intelligence were all the buzz at NRF, with vendors large and small touting new solutions.  Several startups are using the AI to more deeply personalize the shopping experience.  Findmine, for example, uses artificial intelligence to create complete outfits around every product in a fashion retailer’s catalog in real time.  Startups such as SwiftIQ, Boomerang Commerce, and ciValue are also leveraging AI and Big Data technologies to provide retailers and CPGs with lightning fast and deep insights to drive CRM, pricing, merchandising, and supply chain decisions by linking and mining POS, CRM, mobile, web and other data sets.
  • Employee tools. A number of startups are providing tools to retail employees to streamline staffing, provide training, and deliver real-time data on store performance.  ShiftMessenger, for example, offers a simple text-based application that lets store managers post works shifts and also lets employees trade shifts directly in line with staffing requirements.  In early pilots, the technology can deliver significant increases in sales and employee satisfaction.
  • In-store analytics. For all the advances in retail analytics over the past decade, the store has largely remained a data black hole: even where retailers have detailed purchase data, they rarely know how shoppers shop the store.  A number of startup companies are trying to bring cutting edge technologies to capture and analyze in-store traffic flows, shopping behavior, employee activity, and more.  RetailNext, which had a large presence at the show, provides an integrated set of video and WiFi/sensor analytics to analyze shopper in-store behavior while Euclid Analytics emphasizes opt-in Wifi-based analytics.  ShelfBucks offers a more specialized system, analyzing the performance of in-store merchandising displays as well as offering the opportunity for marketers to use beacons to deliver offers and other content to shoppers.  Another set of startups, including Trax Retail, Bossa Nova, and Simbe Robots, is using image recognition and robotics to automate the ability to analyze the shelf to identify out of stocks, items that are mispriced, and areas that are not in planogram compliance.
  • Many of the larger tech vendors were touting their Internet of Things solutions.  One interesting innovation came from Kroger, which is commercializing its digital shelf-edge marketing platform.  Developed by Kroger’s head of R&D Brett Bonner and his team, the 4-inch color display strips integrate with the shelf to deliver electronic price tags as well as ads and coupons.  The system combines sensors and analytics to detect individual shoppers through their mobile devices and can offer personalized pricing on specific items and highlight products on the customer’s mobile shopping list.  The devices are in 14 Kroger stores with more planned.
  • Mass customization. In the future, retailers may be able to use 3D printing and other technologies to deliver customized products in real-time.  Intel, which is making a big push into retail IoT, is powering a 3D printer made by Shima Seiki that can knit an entire sweater based on a customer’s unique demands in around 45 minutes.  As these machines get cheaper and faster, they could have a big impact on product manufacturing in apparel and other retail categories.

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6 Key Takeaways From This Year’s Consumer Electronics Show https://get.fuelbymckinsey.com/article/six-key-takeaways-from-this-years-consumer-electronics-show/ https://get.fuelbymckinsey.com/article/six-key-takeaways-from-this-years-consumer-electronics-show/#respond Fri, 27 Jan 2017 21:26:46 +0000 https://get.fuelbymckinsey.com/article/auto-draft/ Autonomous Vehicles (AV): We are still in the early days of self-driving cars revolution. Original equipment manufacturers (OEMs) generated excitement with flashy prototype vehicles at CES.  But the underlying technologies need to mature for mass market production to be economically viable.  Companies addressing three key technological issues stood out to us: Autonomous vehicle software.  The […]

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Autonomous Vehicles (AV):

We are still in the early days of self-driving cars revolution. Original equipment manufacturers (OEMs) generated excitement with flashy prototype vehicles at CES.  But the underlying technologies need to mature for mass market production to be economically viable.  Companies addressing three key technological issues stood out to us:

  • Autonomous vehicle software.  The software that powers autonomous vehicles is one of the next great computing platforms, and a number of companies are competing for dominance and the network effects that come with it, just as Intel achieved for desktop computing.  Nvidia is a key example.  The company is working on an end-to-end self-driving vehicle platform utilizing GPUs, deep learning algorithms, cameras and every sensor data available (LiDAR, radar, audio etc.) to enable Level 4 AV by 2020. Nvidia also announced partnerships with Audi, Mercedes-Benz, Tesla, ZF, and Bosch.
  • Blockchain technology.  Several startups are utilizing the blockchain to enable autonomous vehicles to transact with infrastructure. Estimated time frame for early applications is around 2021.
  • Cybersecurity.  A critical area for protecting autonomous vehicles, with several companies investing in innovative solutions.

Smart Homes:

Smart Home or Connected Home was one of the more mature markets highlighted at CES with several established products in family security, energy monitoring, and connectivity. However, the space is incredibly fragmented with many hardware providers that lack the ability to differentiate. Overall, there are several trends we identified:

  • Companies are creating smart devices for every part of the house (e.g., bedroom, garage, living room, kitchen, backyard, front door), but most products with traction remain linked to family security (e.g., RingCanary)  and connectivity (e.g., LumaEeroGoogle) pain-points.
  • Artificial Intelligence is finding its way into smart home products in three ways: intelligent assistants (e.g., AmazonGoogle), home automation (e.g., HoneywellControl 4) and data analytics & personalization through IoT.
  • Intelligent assistants with natural language interfaces continue to be marketed as technologies that will drive further adoption of the smart home. Amazon’s has struck deals to integrate its Alexa service into several products in various categories, such as cars (VW and Ford), refrigerators (LG), televisions, humanoid robots and other smart home devices. This resembles a land grab strategy as Amazon has to win every connected device other than a smartphone which is dominated by Google Assistant and Siri.

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Virtual Reality/Augmented reality:

Companies across industries created VR and AR experiences (primarily on Samsung Gear, Oculus Rift, PlayStation VR, Microsoft HoloLens) to draw crowds but many big name players, such as Oculus, Microsoft, and Magic Leap did not attend. Overall there were couple trends that continue to be reinforced:

  • Gaming clearly continues to be the primary use-case for VR with majority of working demos focusing on different types of gaming applications.
  • There was a clear emphasis on AR technology for enterprise applications as well as for gaming and niche consumer applications.

Digital Health:

  • Sleep and well-being products are on the rise especially for vendors looking to link digital health and connected home portfolios (e.g., using sleep monitors to control lights, mattresses, pillows, temperature).
  • To differentiate from the large number of vendors, companies will need to develop clear themes for their products (e.g., mother and baby care, oral care, sleep monitoring), clear target segments (e.g., aging) and start to prove clinical value (e.g., improved medication adherence).

Digital Health solutions at CES 2017 looked very similar to previous shows which reinforced several trends in the industry:

Robotics:

There were two main trends related to robotics at CES this year:

  • First trend was educational robots. Several “teach your child to code by programming a robot” companies show cased their products.
  • Second trend was personal assistant robots. Both consumer (e.g., home assistant) and enterprise (e.g., assistance inside shopping malls, hospitals, retail banks) use cases were highlighted. Most products were in prototype phase and included limited implementations of artificial intelligence. 

Drones:

A number of notable drone companies presented at CES.  On the low-end consumer segment, there are limited differentiation opportunities. On the high-end consumer and enterprise segments, differentiation opportunities reside in software (e.g. better computer vision capabilities such as obstacle avoidance and object tracking) and in add-on services. On the enterprise side, we identified two trends:

  • Enterprise applications of drones are on the rise. We are going to see more drones assisting humans in inspection (building, base station), law enforcement, surveillance, firefighting, and agriculture.
  • Fixed-wing drones with vertical take-off capability (as opposed to quadcopters) are emerging for enterprise use. Autel showed cased their prototype. DJI is rumored to be working on a similar product as well.

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