Holiday Cheers for Inclusive Advertising

‘Tis the season for holiday ads. I always look forward to the parade of new efforts that dot the marketing landscape this time of year.

I love that the annual holiday “adstravaganza” has been elevated to a cultural event in the UK. (And, I am intrigued by the fact that some British marketers now monetize their holiday ads through the sale of related merchandise!)

These holiday messages surely exist to build brand equity and make the register ring. But taken together, I think they can also serve as a nice mirror that reflects back important themes on our current cultural landscape.

This year, I am heartened to see several ads (and their omnichannel extensions of course) veer beyond the more expected holiday motifs to celebrate moments of connection and inclusivity across differences.

From British grocery retailer Tesco, we see a celebration of the ways families from different walks of life and religious traditions participate in the shared ritual of the turkey roast. The spot, titled “Turkey every which way,” closes with the affirmation “Everyone is Welcome” at Tesco.

From Lego Australia comes a story of what can happen when Santa and the Asian martial arts archetype Sensei Wu team up to save Christmas. In addition to reflecting the spirit of imagination foundational to the brand, the whimsical tale delivers the charming sentiment that we are better when we work across cultural perspectives to “build together.”

From Sonos, the lively message that a shared musical celebration is just what is needed to transform a dull holiday gathering into an epic, multicultural and multigenerational holiday dance party.

And, from Samsung a poignant statement about the universal power of gratitude compliments a diverse group of building tenants who come together to thank the doorman who has gone the extra mile to make each of their holiday celebrations– from Diwali, to Christmas, to Chinese New Year –extra special.

In a year when the news headlines have been dominated by the many issues that divide us, it is refreshing to see marketers choose to hold up a cultural mirror that celebrates the potential for connection across boundaries, be they ethnic, religious, generational or otherwise.

Around the globe, our cities are diverse and becoming more so every day. Millennial consumers are particularly comfortable in this heterogeneous world and deserve credit for encouraging companies to stand up for inclusivity. Cheers to these advertisers who have taken note of this cultural shift and chosen to emphasize what unites rather than what divides this holiday season.

Happy holidays, and may each of you enjoy your own simple moments of simple connection amidst the year-end bustle.

Beyond Cryptocurrency: What’s the promise of blockchain for marketers & their consumers?

BLOCKCHAIN & BITCOIN: WHY ALL THE HYPE?

If your news feed is anything like mine, you’ve seen a lot of buzz about blockchain and the cryptocurrencies it supports over the last few months.

I am fascinated by this technology, and the predictions that it could transform life, as we know it. For a provocative glimpse of the blockchain-supported future, I recommend Taylor Pearson’s Ribbonfarm piece. In it, Pearson explores how blockchain technology could disrupt not only the internet, but just about every facet of life as we know it, changing: the capacity of nation-states to govern, how and why we choose to pay attention to things, the concept of a career, how we are compensated, and even how we get where we need to go.

Taking a more practical view, it is interesting to think about how blockchain is poised to revolutionize the nature of transactions in industries like finance, healthcare, and shipping – making them faster, cheaper, and more secure.

And of course, I am following the currently exploding investor interest in cryptocurrency. Revolutionary idea or bubble bound to burst? Financial leaders around the world say it’s too early to tell.

Yet, all the emphasis on these faceless transactions has me wondering – what about the people? What will the rapid expansion of blockchain technology mean in the life of the average consumer over the next few years?

THE TRUTH ABOUT BLOCKCHAIN: POWER TO THE PEOPLE

At it’s heart, blockchain technology has the power to transfer information from the hands of large organizations back to average people, and that is what I find most interesting about it.

For purposes of tracking with my thinking, it is helpful to conceptualize blockchain in its simplest terms, as a decentralized database that keeps a ledger of digital exchanges. Transactions are lumped into time-stamped “blocks,” locked into a chain of complex algorithms and then verified by a global network of independent ‘miners’ (working for digital payments, of course).

Once a block is added to the chain, it is almost impossible to change. As one expert describes, “meddling with a blockchain would be like trying to tamper with a fraction of a tapestry – “for the full picture to remain plausible you’d have to rewrite the whole thing.”

Thus, what “happens on the blockchain stays on the blockchain,” prompting The Economist to deem it a “trust machine.”

It’s not a stretch to see why someone in an industry like finance might wax poetic about this tech-enabled transparency. It has the potential to revolutionize currently time- and cost-consuming transactions like buying a home, notarizing a document, crowd-funding a company, or maintaining medical records. Banks, for example, could save $20B a year by 2022, simply by using blockchain technology to reduce the need for expensive and time-consuming audits and record-keeping processes.

Further afield, the blockchain will bring transaction costs down an “order of magnitude” to enable business models (particularly outside of large corporations) that haven’t even been imagined yet.

But, there are non-financial applications too, and this is where the technologist and marketer in me get most excited.

Consider the fact that the internet, despite all its democratic promise, has actually become a tool to consolidate control. As Pearson notes, “instead of a decentralized, open network, the Internet today is made up of a handful of applications that have leveraged their network effects to re-centralize information through the creation of walled gardens. Facebook, Google, and Amazon lead the pack.” Power, in the form of “data” and “information” is increasingly consolidated in the hands of a few, which become more omnipotent everyday. This is not lost on everyday people, who have growing concerns about protection of their personal information as well as the transparency of the tech giants, but few avenues for recourse.

The simple human truth about blockchain is that it could rebalance the scales, by transferring the control of information from companies back to consumers.

(An interesting side note here: Bitcoin’s anonymous creator, Satoshi Nakamoto, was purportedly inspired by a 1997 book called The Sovereign Individual, which forecast that a new technology of money would decentralize and dis-intermediate society in the way many originally hoped the internet would.)

SOUNDS GOOD, BUT HOW WOULD THAT WORK?

Because blockchain enables the rapid transfer of verifiable, incorruptible information, it has the potential to give everyday people greater control over information – their own data as well as what they receive from the companies with which they do business.

In the future, blockchain could be a valuable “trust machine” – or way for companies to deliver the accountability and responsibility that consumers increasingly demand.

To illustrate, here are three examples of companies experimenting with the transparency-enabling power of blockchain.

#1: London-based startup Provenance designed a tool to track a product through every part of its journey, including where it starts, where it goes, who has it, and for how long. Their current applications focus on food and clothing. For example, tracking tuna fish from hook to grocery store shelf. Ultimately, the company offers a “mind-boggling” amount of provenance information all tied together in one package that can be universally accessed via smart phone. It differs from the dozens of existing applications because the information is transparently recorded in the immutable blockchain. Founder and CEO Jessi Baker told Wired it is a “much-needed mechanism to broker brand trust,” and I have to agree.

#2: Everledger offers a product similar to that of Provenance, but one that creates a global ledger for diamonds and other high-value assets. The application tracks diamonds to confirm their authenticity and also ensure they are not conflict diamonds. It is unique because origins and shipping information belongs not to a certification house that consumers need to “trust” but is encrypted onto the immutable blockchain.

#3: Entrepreneur Mark Cuban recently unveiled a new project called Mercury Protocol, which seeks to create a next-generation social networking site, built atop the Ethereum blockchain. The team hopes that messaging apps like Facebook and WhatsApp will adopt the software, which showcases two innovations: 1) users can sign in without turning over any of their personal information, and 2) the platform generates tokens for constructive behavior, hopefully deterring the behavior of fake-news creators and trolls.

#4: Furthest afield but perhaps most interesting is Lotus, a global Buddhist community employing blockchain technology to ensure temples around the world use funds transparently. A ledger, visible to a global community of members, records and displays how funds are allocated and then spent. It is not hard to imagine how a for-profit company could apply this same technology to add a similar layer of transparency to their philanthropic giving or sustainability efforts.

Each of these ventures is leaning into the budding promise of blockchain technology to be a tool with which to offer transparent information. I can imagine a future where marketers of all shapes and sizes employ blockchain to help their customers know more about the things they buy.

Want to claim your product is handcrafted? From a unique or single source? Made of only sustainable or recycled materials? In the blockchain future, marketers will not just claim these attributes but be able to offer buyers verifiable proof.

Consumers are hungry for transparency, and the blockchain will help companies provide information it in its most unadulterated form. This makes it an incredibly powerful tool for brokering brand trust. That – cryptocurrency trading boom aside – will be blockchain’s true promise for marketers in the years ahead.

IN AN ERA OF NATIONALISM, WHAT’S A GLOBAL BRAND TO DO?

THE ERA OF THE LOCAL BRAND

One of my favorite things about my current job role is seeing firsthand the unique ways that global brands come to life around the world.

Take Quaker Oats, for example. The brand emanates from a universal product core but is expressed very differently in Dallas versus Shenzhen.

In my recent travels, I have seen thriving national and regional brands everywhere. There is Paper Boat Beverages in India, Oppo in China, and Casas Bahia in Brazil. The list could go on.

These aren’t just one-hit-wonders but part of a well-documented trend. Across countries and categories, global brands face increased pressure as domestic options give them a run for their money.

In China, foreign FMCG brands lost share in 16 out of 23 measured categories last year, facing pressure from nimble domestic companies. In India, domestic brands grew by 32%, while brands with global presence grew by only half that amount. A similar dynamic played out in Indonesia.

This trend is marked in growth economies but it affects mature consumer markets like the U.S. and U.K. too. In these locales, consumers increasingly trust smaller ‘craft’ brands, which command a price premium and garner intense loyalty based on the perception that they are more authentic or unique.

I can’t help but think that this growing ‘buy local’ sentiment is fueled – or at the very least enhanced – by the rise and growth of nationalist political movements around the globe.

In the United States, American Apparel will soon offer shoppers the option to pick a U.S.-produced version of their iconic t-shirts – a move the company says will cater to the segments of shoppers for which ‘buy American’ is critically important. China recently declared May 10 “Chinese Brand Day,” in an effort to help companies build strong domestic brands that will reinforce China’s status on the global stage.

The implications are clear for stewards of these regional and national challengers. The cultural wind is behind your sails and there is undoubtedly an opportunity to flourish and grow.

WHAT’S A GLOBAL BRAND TO DO?

The path is less clear for the larger global players. In an age of nationalism – what is a multinational brand to do?

I am intrigued by the idea that, in a world that feels increasingly divided, global brands are singularly positioned to connect.

The McCann Worldgroup conducted a global brand study that revealed two fascinating data points. First, 85% of respondents said they believe global brands have a role to play in making the world a better place. And, a full 81% said they believe global brands have more power to make change than governments. Wow.

I believe this view of global brand as positive change maker points to an opportunity for brand leaders to dig deep to consider what unique value they bring to the table.

As the mere value of being ‘international’ means less and less, what specific values can you bring to consumers’ lives? This is a two way street and companies have an opportunity to think both from the top down and bottom up. The most important thing for Global brands is not to blindly hinge their brands around western values. The value system might not cross boundaries in the turbulent geo-political world we live in.  

 ADDITIVE VALUE

Taking it from the top – what can you add to a local or national culture? Can you bring an idea, an offering, or an innovation that wasn’t there before?

Around the globe, retailer Ikea does an excellent job of communicating their unique Swedishness across consumer touchpoints. The brand’s value-add particularly shines through in the food space, where they offer authentic Scandinavian fare as a destination within retail stores and a category incremental to their core homegoods competency. An “astounding” 30% of Ikea shoppers head to the stores just for food and the company is considering expanding into standalone restaurants.

In a similar vein, consider retailer Muji’s offering of smartly and simply designed home and office goods. Their vast assortment of products shares a unique, Japanese design aesthetic that has created cult followings in cities around the world.

TRANSFORMATIVE VALUE

Working from the bottom, global brands and retailers need also to think about how the local context can enrich and transform their offerings.

For example, the Lay’s brand has done a great job adapting to local taste palates, introducing successful flavors like Magic Masala in India, Hot & Sour Fish Soup in China, Thai Sambal in Thailand, and Fish & Chips in the U.K.

Canadian athletic retailer Lululemon also understands that global success means thinking locally. The company chooses to sponsor not famous athletes but local community influencers through their local ambassadors program. The ambassadors receive skills training and business promotion (not to mention hefty merchandise discounts) in exchange for teaching classes in Lululemon retail locations and generally evangelizing the brand.

Fast-fashion retailer Uniqlo has also focused recently on making sure flagship stores express global ideas in local ways. This is achieved through the WearHouse program, which reserves significant floorspace in otherwise globally homogenous stores for local products and cultural events. Company leaders note that this is an important way to stay relevant while also delivering on the mandate to bring something back to local communities.

BRAND VALUE FOR GOOD

Finally, at the macro level, global brands should consider how they can leverage their scale for good. In this age of transparency, there is no hiding from one’s size or sweeping it under the rug. So, why not transform the elephant in the room to your largest asset?

Two great examples come to mind here:

First, PepsiCo’s Performance with Purpose Initiative, which aims to affect positive change on three fronts: product, planet, and people. The global organization has ambitious goals to re-engineer products to reduce less healthy ingredients, reduce their environmental impact and advance an agenda about respect for human rights and diversity. All of these efforts are driven by PepsiCo CEO’s belief that, in the 21st century, a good company must also be a good citizen.

Second is Dove’s Global Self Esteem Project. This initiative, activated in 100+ countries around the world, develops educational tools and programs to help young people build confidence and a healthy body image. Recently, the company has begun localizing content to understand and react to how body-image issues are different across countries.

THE BOTTOM LINE

In the retail category, there is much talk about today’s omni-channel consumer. As shoppers move seamlessly between retail environments, they expect brands to keep up by delivering a frictionless shopping experience.

Omni-channel consumers don’t distinguish between a brand’s website, storefront or mobile app. Technology has trained them to simply want it all. In consumer speak, ‘I want to purchase exactly what I want, when and where I want it.”

The reality is that today’s consumers are omni-cultural as well. They don’t see the retail world in the discrete categories of local vs. national vs. global brands. Rather, they are accustomed to a diverse range of options, and they move seamlessly between them choosing different brands to fill different needs.

At a Walmart in China, a shopper might choose several multinational food brands for their provenance, then add a national cosmetic brand appreciated for its use of traditional ingredients, then stop by their neighborhood wet market to pick up turtle meat for dinner. In India, shoppers have no problem ordering Paper Boat juice via Amazon and might throw in a pair of Nike’s while they are at it.

While large, international brands retain a role in this omni-cultural world, the new nationalism challenges the orthodoxy that global brands are always best. In increasingly competitive markets, global players are under new pressure to articulate and differentiate their offerings. Easily said but, how to do it?

At the end of the day, global brands have an opportunity – possibly even a mandate – to build bridges in an era of divisiveness. As a steward of a proudly international portfolio, I look forward to forging new paths in the name of omni-cultural consumption.

Can Amazon be Beaten: How UK Grocery Retailer Ocado Is Holding Its Own

Imagine a retail grocery business run by a deep technology estate. No stores, only online deliveries from automated warehouses. Robots in those warehouses pick most items and send them via high-speed conveyor belt to human attendants for packing.

A human-like robotic hand is capable of handling over 50,000 products of all shapes, including delicate items like produce. This process is all monitored by technology that can alert the human attendants to packing errors. Other “collaborative robots” learn from and assist the human warehouse manager. An artificially intelligent warehouse system collects data and optimizes operations. A computer program even maps the best delivery routes for drivers.

This isn’t the grocery store of the future but a description of the present-day operations at Ocado. Ok, the robotic hand is still in development, but the rest is 100% operational.

I’ve recently returned from a UK market tour where colleagues were buzzing about this unique, online-only grocery retailer. They are the world’s largest and their team of technologists and techies has been working to change the way we shop for groceries for the past 16 years.

Amazon Fresh entered the UK market last summer, and many predicted Ocado’s demise. Yet, the retailer has survived, some might even say thrived. Their 2016 sales beat forecasts, rising 14.8% to £1.3B. This momentum has continued in 2017 with both sales and weekly orders increasing despite a sluggish British retail environment.

I have heard of other similar David vs. Goliath success stories. Earlier this year, I wrote about the fact that Amazon is surviving but not thriving in several other markets including China, India, and Mexico.

This most recent example got me thinking again about how and why homegrown retailers are able to give Amazon a run for their money.

In India, Amazon has struggled to win trial and loyalty in face of rival Flipkart’s entrenched awareness and strong seller relationships.

In Mexico, Amazon has fought to build trust in a market where the cultural defaults are cash payments and brick and mortar shopping. Meanwhile, local competitor Mercado Libre has leveraged a nuanced understanding of local culture to hold their own.

In the UK, Ocado’s impressive tech infrastructure is helping them keep Amazon at bay. The Independent calls the company “superlatively innovative” and they likely embody what the grocery category will look like in the age of the 4th Industrial Revolution.

Yet, Ocado has retained a strong compass for human values too. The company is testing delivery via more sustainable electric vehicles. They are partnering with underground urban farms with lower carbon footprints vs. traditional farming. And, they run a ‘Code for Life’ initiative designed to prepare the next generation of workers for the automated workplace.

I don’t want to overstate Ocado’s success. They still have a long road ahead; one that requires them to sustain their growth and license their tech infrastructure to an international grocery partner soon.

Nevertheless, I am heartened to see an innovative player succeed in the face of a powerful incumbent competitor.

Photo Credits: Business Insider, http://read.bi/2qJuvwE

Tax-Paying Robots May Be the Future of Work: Why Should We Care?

It’s not news that robots will replace large numbers of human workers over the next few years. For context, a 2016 WEF study found that 5 million jobs in 15 countries could go by 2020.

But, Bill Gates recently made headlines by calling for a tax on companies’ use of these new automated workers. His thought-provoking argument:

The shift to automation will leave many out of work and without meaningful re-employment prospects. For example, U.S. retail jobs are identified as one of the most at-risk for robot replacement. This pending disruption is evident in the customer-service robots popping up around the country. For example, Lowe’s LoweBot, Macy’s On-Call assistant, Pepper’s debut in California malls, and of course Amazon's cashier-free grocery store.

The reduction of paid labor will shrink the income and social security tax bases and limit governments' abilities to help those affected – at a time when they need a social safety net the most.

Gates maintains that we should take steps to plan for this automated future by instituting a tax on robot workers. Companies could fund the tax with some of the windfall from their labor reduction. Governments could use the proceeds to support displaced workers and retrain them for positions where human skills are still needed. Gates' examples include healthcare and education, but I also see opportunities for retailers to launch retraining efforts.

The robot tax is not a completely novel suggestion. Last month, European parliament considered and rejected a similar proposal, a decision hailed by the robotics industry.

It's no surprise that some economists and policy makers opposed the idea. The challenges are complex, but the main points are these: 1) slowing tech growth to keep humans in jobs delays the inevitable and will have unintended consequences, 2) automation created jobs throughout history and may do so again, and 3) automation is not happening fast enough, limited by an abundance of cheap human labor.

Net/net, critics argue that while the effect of widespread automation will be negative for some people, the economy will be better off as a result.

With compelling arguments on both sides, how to make sense of this issue?

In my view, Gates’ position is about highlighting the vast inequality created by tech innovation.

Today, the gap between rich and poor is at record levels in most of the developed world, and the U.S. leads the pack. In this country, the richest 10% of workers earn 16.5 times that of the poorest 10%. This ratio has more than doubled (up from 7 times) since 1980.

The impending automation revolution will further deepen the divide between rich and poor. Fortune magazine stated this well:

"Some people will see their jobs become obsolete and will need to acquire new skills in order to obtain well-paying work. Robots and artificial intelligence will exacerbate economic inequality and place a burden on many workers to learn new skills."

It is on behalf of the "some people" that Bill Gates speaks. He argues, I believe correctly, that it is the duty of business and government to plan for the displacement of millions of American workers – even if the net economic effect will be positive.

By extension, I believe it is the duty of business leaders to understand and improve the wide economic inequalities that exist today and will deepen in the years ahead.

Retail leaders, in particular, can be a part of the solution by imagining the future of the automated workforce.

We should explore how human workers might work alongside robot “colleagues” to deliver enhanced customer experiences.

We can identify opportunities to retrain displaced workers for these new roles, perhaps building on programs like Amazon's Career Choice.

And, before we get completely wrapped up in automation, we should identify points of human interaction worth preserving and consider how these might create new opportunities for differentiation or revenue. This might be akin to the way some consumers pay a premium today for artisanal food. (One scholar intriguingly posits that someday the act of getting a manicure from a human might be a service for only the very rich!)

The arrival of the automated workforce is a business issue, since inequality creates social, economic and political tension that does not foster a healthy environment for commerce.

But it is a human issue as well. As tech concentrates wealth, knowledge and power in the hands of a few, it is critical to think about broadening it's positive impact in the lives of the many.

What can we learn from Spider-Man at the Dawn of the 4th Industrial Revolution?

Members of the World Economic Forum meet in Davos, Switzerland in late January every year. I have always enjoyed the thought-provoking panels, specifically those that inspire us to consider implications for business leaders and marketers.

In 2016, I noted on the blog that much of the Davos agenda that year had focused on the 4th Industrial Revolution (4IR) and the complex ways it will transform lives and livelihoods.

At this year’s meeting, talk about the 4IR continued.  This year’s focus evolved to include broader discussions of the ethical implications of 4IR’s ubiquitous connectivity and fast-paced fusion of physical, digital, and biological worlds. This emphasis on ethical values was both compelling and reassuring. It is a subject that business leaders will do well to contemplate.

Unprecedented Power for Companies:

The need to think about ethics at all springs from the unique position of today's companies. Many lead private-sector R&D teams instead of partnering with academic institutions. Their rapid development of 4IR technology (think: cognitive computing, AI, blockchain) gives them unprecedented powers uncircumscribed by academic protocols and the rigors of peer review.

For-profit entities now have the ability to decide what news we see, track our movements, direct where we go, and even predict how we will think.

These abilities could be problematic because most companies exist to maximize profit and have little formal incentive to consider their impact on human life and society or the health of the planet.

Enter the B-Corp, or “benefit corporation”. This is a hybrid structure that requires a company to state a purpose beyond profit and creates accountability to comply.

The idea, of course, is to go beyond pithy corporate mission statements (like Google’s ‘Do the Right Thing’ mantra) to engineer ethics into the DNA of a business.

Imagine a company contemplating the algorithm for a self-driving vehicle. If an accident is unavoidable, does the car take the course with the fewest potential casualties even if this puts the driver at risk? This is an ethical quandary. Most would favor saving the greatest number of lives but few would buy a vehicle that puts a driver at risk.

There is no easy answer. Yet, we can imagine how a company with accountability for both ethics and the bottom line will be better positioned to work through the issues.

Some forward-thinking tech firms, like Singularity University, have already organized themselves as B-corps. In a world where technology invisibly shapes much of life, the move from profit-driven to benefit-driven corporations could be transformative.

Unprecedented Power for Consumers:

If companies need to reengineer themselves around ethical values, the great news is that citizens are already there.

The 4IR world offers consumers myriad ways to influence businesses and they are using their clout for good.

On issues ranging from sourcing and sustainable packaging to fair treatment of employees, consumers prefer – I'll venture to say demand – to do business with companies that make ethical choices.

Walmart CEO Doug McMillon wrote that, in the 4IR future, retailers will survive only if their business creates value for both shareholders and society. The most successful will build social and environmental sustainability into their systems because it is the right thing to do and because it is what consumers reward with their dollars.

It is exciting to see companies like Patagonia and eBay lead the charge. And, to know that firms like Facebook and Airbnb are grappling with ethics issues in real, visible ways.

 An Unprecedented Opportunity to Do More Good:

The dawn of the 4IR presents many more questions than answers: Will robots take our jobs? Will omnipresent tech somehow make us less human? Will AI-driven technology someday threaten our very existence? These questions are equal parts dystopian nightmare and sobering meditations on the fast-paced evolution of technology.

In light of the weighty issues, a recommitment to values – one of the things that make our endeavors most human – will be our best shot at navigating the 4IR world.

As I look toward the uncertain future, I’ll remember that Spider-Man's oft-repeated mantra isn't only for superheroes. The "great power" of the coming 4IR revolution does indeed bring "great responsibility".

Taking Stock Of Amazon Abroad

E-commerce giant Amazon has experienced soaring profits at home in recent years while consistently losing money internationally. This is counterintuitive, since the smaller business in expansion markets should have more room for growth.

I’ve recently spent time in Mexico and India – two countries where Amazon is surviving but not thriving.

Amazon’s journey in both is a good reminder that while the U.S. sets the pace for retail around much of the globe, companies also have to evolve (sometimes dramatically) to succeed in diverse markets.

Amazon learned this the hard way in China, where efforts to establish American practices did not end successfully. This makes strong performance in growth markets like India and Mexico even more important. India is the largest underdeveloped ecommerce market in the world, and Mexico is not far behind. With mushrooming middle classes and rapidly expanding access to broadband, both countries represent huge potential. However, there are also unique challenges since both are predominantly cash societies, where online commerce is not yet the cultural norm.

Amazon has had to actively customize their business model to survive in both, while contending with the fact that local players sometimes set the agenda.

In India, Amazon’s performance is still second to local player Flipkart (which owns 43% of the market). The Seattle-based giant is still investing heavily, to the tune of $1B per year, to build infrastructure and win trial and loyalty. A big part of their strategy has been finding ways to “localize” by adding cash-on-delivery payment options similar to those of competitors, a “Chai Cart” program to connect with small vendors over cups of tea, and a “seller university” to help small traders learn how to get online and growth their business.

In Mexico, Amazon has grown modestly since their 2015 launch, paralleling slow growth in online retail overall in the country. Here too, they have had to adapt to fit the local market.

Like in India, this has included following the lead of regional players like MercadoLibre and accepting cash-on-delivery payments. And, in a uniquely Mexican modification, Amazon accepting gift cards purchased from Mexico’s network of Oxxo c-stores. No doubt, Amazon would prefer their own offering but shoppers in Mexico’s largely cash economy have thus far preferred the already-trusted Oxxo name.

In both India and Mexico, Amazon has had to invest heavily in infrastructure to support fulfillment. Notably, this has included building warehouse locations to support Prime and same-day delivery. Despite their differences, international consumers across markets share a high level of expectations. All expect the same fast and free delivery now globally ubiquitous with the Amazon brand name.

Amazon has also had to contend in both markets with the fact that the cultural default is still brick-and-mortar shopping. (In Mexico, for example, 98% of retail sales still happen in physical stores).

The Amazon response has been two-pronged. First, the retailer has invested heavily in advertising to assuage concerns about the authenticity and quality of products ordered online. They have also created options that allow shoppers to pick up merchandise at the location of trusted brick and mortar retailers. This has created an interesting hybrid type of commerce, and it will be interesting to see how this might develop.

These modifications, and in fact Amazon’s very assertion that it is going to win new markets through “a lot more local market customization” underscore the magnitude to which cultural nuances still matter.

While it is very possible for global players like Amazon to succeed in international growth markets, they will need to find ways to stay carefully attuned to thinking global while acting local. 

Welcome 2017: Looking Forward & Back

It’s been unusually cold in Dallas and a great time to be introspective. Below I share a pair of insights I have percolating about the year ahead. Cheers to seeing these and other themes unfold in 2017.

 #1: Retail Brands Will Think So Consumers Don’t Have To

 In 2016:  I wrote about how Tesco’s IFTTT channel automates grocery shopping, paving the way for the ‘predictive grocery basket’ of the future.

In The Year Ahead:

To identify emerging trends, follow the money. AI applications are at a tipping point this year, with AI-generated retail revenue expected to skyrocket from $643.7 million in 2016 to $36.8 billion by 2025 according to Tractica.

Innovative retailers are already embracing their new AI-driven world. 2016 saw The North Face’s ‘expert shopper’ Lowe’s Pinterest-scraping interior decorator, and a Starbucks app that offers customized promotions by knowing when and where someone drives.

This march to AI-powered retail will fundamentally shift the role of brands and retailers in consumers’ lives from responsive to predictive.

Today, a brand (retail or otherwise) is a helper that makes it possible to fulfill my needs and wants. The best brands use data to offer curated selections or to delight with new, personalized suggestions.

As increasingly sophisticated bots and apps are launched in the year ahead, the role of retailer/brand will morph into that of a butler, which can proactively anticipate what I need and deliver. The most innovative will find ways to identify and fulfill needs and wants I didn’t even know I had yet.

This will shift the retail paradigm in diverse categories–from grocery to fashion, electronics and anything in between. Just ask Tesco’s grocery shoppers, whose carts are filled with items they are going to want–tomorrow.

There will be benefits for consumers, who will be able to shop more efficiently while offloading repetitive decisions. The upside for retailers and brands will be the ability to add true value to consumers while also driving frequency and desired purchase behaviors.

So, let’s look forward to a not-so-distant future in which we will all sit back while the bots do our shopping.

#2: Communities Will Find New Ways to Flourish

 In 2016:  Last year’s travels revealed that, even in our tech-driven culture, person-to-person communities are thriving around the globe. This is reflected in South Africa’s spazas, Brazil’s favelas, Shenzhen’s maker culture, and the social nature of global shopping days.

In The Year Ahead:

I will look for the ways in which the fundamental human need to connect and collaborate sparks new platforms and innovations.

Some suggest it will be the ‘year of the group chat,’ as people leave the increasingly corporate and drama-wrought spheres of Facebook and Twitter for smaller circles of virtual connections.

Because workers are people too, we will see the continued growth of enterprise-based communities like Slack. (Incredibly, the average user already spends 10 hours per day in app). While 2016 saw the office party go virtual, I wonder what other communal rituals might find online expressions in the year ahead?

The e-commerce sphere will continue to birth new commerce-based communities, like Amazon’s small-seller platforms, Handmade and Launchpad, and ShopClues, an Indian tech unicorn succeeding with a model that connects small-time sellers to rural communities.

And, I expect to see passion communities move from desktop to mobile, following so many other facets of daily life. This is something developer Amino Apps is banking on and investors are betting on their success.

Last year, seeing firsthand Detroit’s transformation from post-war auto hub to thriving tech town inspired me to think about how the digital world creates opportunities to reinvent community.

As we turn the page to 2017, retailers and brands – both established and emerging – will do well to think about how they can reimagine and facilitate communities for consumers craving authentic connections.

Best wishes for a healthy and happy new year to all. I’m off to get Alexa started on my to-do list…

International Discount Days: A View From Mexico City

I recently traveled to Mexico City, where the retail scene was just slowing down after a busy El Buen Fin.

The 3-day shopping holiday–loosely translating to ‘the good weekend’–was launched in 2011 by the Mexican government and the Council of Business Coordination in an effort to stimulate the national economy. Retailers throughout Mexico are encouraged to offer discounts and special payment plans during this late-November retail push.

By all accounts El Buen Fin has been a success. It has become the world’s third-largest shopping event (after American Black Friday and Chinese Single’s Day). In 2015 El Buen Fin sales grew more than 10% over the previous year, to over $10B USD. This year 11 retail centers and more than 6,000 businesses, double the number from last year, participated. These included not just retailers, but also service providers like restaurants, spas, travel agents, and pet hospitals.

While El Buen Fin is inspired by Black Friday, several characteristics make the Mexican holiday unique.

 It takes place over a long weekend vs. a single day like Black Friday. Typically falling just before U.S. Thanksgiving, it is pegged to Mexico’s Revolution Day.

This Mexican shopping holiday receives ongoing government backing. El Buen Fin is promoted as the “cheapest weekend of the year,” and it is supported by a dedicated website, Twitter account (#ElBuenFin2016) and Facebook page. During 2016, SHCP (Mexico’s tax collection agency) offered $27 million in cash prizes to shoppers who made purchases with a Mexican-issued credit or debit card.

While the number of participants continues to grow annually, the discounts tend to be smaller than those in the U.S. And, retailers often discount items that are not moving vs. the U.S. custom of offering hot, new merchandise.

Some Mexican retailers use El Buen Fin to preemptively capture sales from Mexican shoppers that might otherwise shop stateside during Black Friday or Cyber Monday. However, traffic flows the other way as well. Some businesses, especially those in border towns, seek to attract U.S. shoppers during the weekend–a feat made easier this year by the strong value of the dollar against the peso.

From a global perspective, El Buen Fin is one of many “discount days” now crowding the retail calendar. It joins Single’s Day, the Dubai Shopping Festival, Australia’s Boxing Day, and India’s Diwali Shopping Festival. Not to mention a litany of new contenders like Amazon Prime Day, Small Business Saturday, Green Monday, and Free Shipping Day, all driven largely by e-commerce.

These manufactured shopping days clearly play into shopper Psychology 101, combining the power of a deal with time scarcity to spur purchasing.

The rise of the “Discount Day” also provides an interesting view into the inherently social nature of the retail endeavor.

The proliferation of national shopping days comes at a time when myriad factors such as media fragmentation, waning civic engagement, and a growing economic divide–to name a few–have decreased the occurrence of truly ‘shared’ events in countries around the globe.

The strong collective interest in Discount Days reminds us that shopping remains a shared cultural event. Whether people come together around traditional shopping days or newly invented ones, in a physical or online environment, shoppers are ultimately social creatures that thrive on the ability to browse, select, and decide in the company of others. Retailers could gain insight from recognizing and furthering this dynamic when developing Discount Day programs and offerings.

The Discount Day dynamic also has implications for the future of global retail. Will these shopping days remain largely concentrated within their countries of origin? Or will they leap across political borders, as social phenomena are wont to do?

In recent years, we’ve seen the Black Friday tradition cross the Atlantic, prompted largely by Amazon’s introduction of online deals in the UK. For their part, British shoppers and brands are increasingly cashing in on Single’s Day deals. As shoppers become more aware of and open to shopping other country’s deal days, could this dynamic feed borderless trade and perhaps drive increased price transparency on a global scale?

These consequences would require retailers to do some focused analysis and soul-searching. Are discount days a profitable and sustainable long-term strategy? Or, do they merely compress demand, cannibalizing from other time periods and training consumers to buy only on deal?

The one certainty is that Discount Days continue to proliferate and thrive, making strategic calendar planning a must-have for manufacturers and retailers and lending additional dynamism to the complex global retailscape.

China: Grocery Markets Are Thriving Online and In Real Life

The Chinese grocery retail market is one of contrasts.

Shoppers have flocked online in the past several years, and the $41B Chinese e-grocery market is the world’s largest by a wide margin. Retailers of all sizes have taken note and are making big bets in this arena.

Despite the explosive growth of e-commerce, brick & mortar grocery stores still play an integral role. While over half of Chinese households do buy groceries online, a full two-thirds still say that going to the grocery store is a fun, engaging experience.

I experienced this thriving retail culture during my recent visit to Shenzhen & Hong Kong, and have four insights to share about the dynamic Chinese market.

#1:  Traditional outlets dominate, but global retailers are making strides.

The Chinese grocery market is highly fragmented, with the top ten retailers accounting for less than 7% of the volume. Domestic players have leveraged their nuanced understanding of local consumers to outperform global competitors in recent years, but the multinationals are making strides to catch up.

Larger retailers are succeeding by finding ways to make the western supermarket format uniquely Chinese. They are introducing live food offerings similar to those available in traditional Chinese wet markets.

Store: RT Mart

Store: RT Mart

Many are developing new food and beverage innovations tailored to local palates and events, such as Chinese New Year.

Others are even re-thinking their footprints and building flagship stores in large shopping districts so they can be integrated into the daily retail experience. 

Store: Vanguard
Photo Credit: IGD Retail

#2:  Hypermarkets are struggling while small formats are flourishing.

Convenience formats are booming in large part due to their ability attract young, middle-class shoppers who are increasingly affluent and time-pressed. Big box retailers who have experienced slow growth in larger formats are testing smaller ones, like Easy Carrefour and Tesco Express.

Store: Tesco Express
Photo Credit: IGD Retail

 Global and regional players alike are succeeding by adding western concepts like ready-to-eat and carryout options to these smaller formats.

Store: Metro My Mart
Photo Credit: IGD Retail

And, in a nod to the multi-channel landscape, some small format stores like Metro’s My Mart are attracting shoppers by serving as collection points for online orders.

Store: Metro My Mart
Photo Credit: IGD Retail

#3:  Retailers are using “store within a store” concepts to expand offerings.

Categories like wine, cheese, bakeries and coffee are relatively new in China. Savvy retailers are building these out as destination areas within larger stores, in the process attracting a growing segment of middle-class shoppers.

Others, like CRV’s Ole, are creating specialized sections of imported products – another relative newcomer on the Chinese grocery landscape – often grouped by country or cuisine type.

#4:  A focus on food safety creates loyal shoppers.

China has been hit by a wave of safety scandals in recent years, and grocery retailers are finding success by reassuring customers about the provenance of their products.

Large players like Carrefour are leveraging their sourcing capabilities to expand private label offerings that carry a safe halo and are marketing that to their advantage.

Startups like Farm Direct are finding success via vertical ownership of farms and retail outlets, which allows confidence in the safety of their products through control of the entire growth/distribution/retail process. 

Store: Farm Direct

Tech-savvy competitors like previously mentioned MyMarket offer systems like Star Farm, a food traceability system featuring QR codes that allow consumers to track a product’s journey from source to shelf.

Store: Metro My Mart
Photo Credit: IGD Retail

The Takeaway

In my travels, a recurring theme is that a deep understanding of local consumers and their tastes engenders success.

As I’ve written before, brands can be global in their values but need to localize quickly to maintain relevance in a global world.

Michigan: Detroit and Ann Arbor Emerging as Tech Towns

I spent most of my last week in the Midwest taking a market tour of Detroit and speaking at my alma mater, The University of Michigan. I was completely energized by my trip to Michigan after 10 years.  It is one thing to read about the economic resurgence happening in the area but it was another to experience it firsthand.

The Cube at University of Michigan

In their book, “The Smartest Places on Earth,” co-authors Agtmael and Bakker assert that a handful of global cities like Detroit are transitioning from “rustbelts” to “brainbelts.” These locales, most of which are anchored by world-class universities, boast a cohort of innovative, young entrepreneurs who are attracted by affordable living, a burgeoning cultural scene, and the opportunity to collaboratively solve 21st-century problems. I definitely found this to be the environment in greater Detroit – one aptly expressed by a local clothier’s slogan, “Detroit Hustles Harder.”

I was especially intrigued to learn more about how Ann Arbor (Detroit suburb and UM’s hometown) has grown into a formidable tech hub. This makes intuitive sense. Michigan and nearby universities mint thousands of eager young graduates every year and the city has recently taken steps to retain them and support their endeavors. This includes efforts by organizations like Ann Arbor New Tech Meetup, Tech Brewery, Ignite Ann Arbor and A2Geeks. These investments have paid off yielding companies like Mobiata (now an Expedia company), the more fledgling Clinc and even new publications dedicated to reporting on the region’s start-up culture. And of course, where there is tech-generated income, new retail businesses emerge. I was delighted to encounter a mix of classics, like Zingerman’s Deli, and thriving new businesses, like Today and The Session Room, in Ann Arbor’s tree-lined downtown district.

I return to Texas invigorated and eagerly anticipating the next innovations to come out of this bustling Midwestern brainbelt. And I am hoping this serves as a road map to revitalizing towns that had suffered the loss of manufacturing jobs over the last decade.