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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Takeaways from SXSW 2017—Day 2 and RetailLoco Highlights
1) TheFungGlobalRetail&TechnologyteamisattendingtheSXSWConferencein
Austin,Texas,thisweek.
2) Communitybuildingbothonlineandofflineiscriticalforbrandstodriveloyalty.Influencermarketinginthebeautyindustryisaprominentexampleofbuildingauthenticcontentandacommunityoffollowers.
3) Chinaistransitioningfromlow-value-addedmanufacturingtodesign-basedhardwareinnovation.TheChinainnovationdelegationatSXSWshowcasedsomeemergingChinesestartupsthathavecreatedstate-of-the-artsmarthardware,includingsmartwatches,selfiedrones,on-demandcitybikesandVRheadsets.
4) Wegeneratealongtrailoflocationdatathroughoutourdailyjourney,fromcheckingoursmartphonesinthemorningtowatchingTVatnight,whichprovidesawealthofdataforretailerstoanalyzetounderstandtheircustomersbetter.
5) Followingtheinitialhypephase,beaconshavefinallyhittheirstride,andretailerscanuseothertechnologiessuchasgamificationandthetargeteduseofchatbotstoboostsales.
6) TheFungGlobalRetail&Technologyteamwillcontinuetoreportonkeypointsandinformationduringtherestoftheconference.
DAY 2
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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TakeawaysfromSXSWDay2
1.CommunityBuildingIsCriticalforBrandstoDriveLoyaltyConsumerloyaltyishighlycorrelatedwiththesenseofcommunitythatabrandbuildsarounditself,socreatingthatsense,bothonlineandoffline,hasbecomeapriorityforretailers.UnderArmoursharedanexampleofhowthebrandhelpedgetsnowclearedfromthesidewalksinChicagosorunnersinthecitycouldrunsafely.Theeffortsentatargetedmessagetothebrand’scustomersthatUnderArmouriscontributingtotheircommunity.Pinterestsharedhowthecompanyenablescommunitybuildingoversharedinterestsbasedonusers’postings
2.InfluencerMarketingIsDemocratizingMarketingintheBeautyIndustryTheriseofinfluencershastransformedhowbeautybrandsmarketthemselves.Beautyshoppersnowpreferauthenticcontentcreatedbypeersandinfluencersoverdirectcommercialappealsfrombrands.YouTubehasbecometheprimarychannelforbeautyshopperstoobtaininspiration,mostlythroughbeautyinfluencers.Consumersalsonowdemandmorepracticalcontentfrombeautybrands,suchasmakeuptutorials.Tomeetthesedemands,beautycompaniesareworkingwithinfluencerstotargetspecificaudiences.SwanSit,VPofGlobalDigitalatRevlon/ElizabethArden,sharedhercompany’seffortstoworkwithmicroinfluencers,orinfluencerswhohaveonlyafewthousandfollowersonsocialmediaplatforms,butwhosecontentisperceivedasbeinghighlyauthenticratherthancommercial.Microinfluencers’followerstendtohaveaveryspecificinterestincommon,sobrandscaneffectivelytargetnicheaudiencesthroughthem.
3.ChinaIsExperiencingaSmartHardwareStartupBoom
Source:FungGlobalRetail&Technology
Thecountryistransitioningfromlow-value-addedmanufacturingtodesign-basedhardwareinnovation.TheChinainnovationdelegationatSXSWshowcasedsomeemergingChinesestartupsthathavecreatedstate-of-the-artsmarthardware,includingsmartwatches,selfiedrones,on-demandcitybikesandVRheadsets.Thesestartups’proximitytomajormanufacturingbasessuchasShenzhenhasenabledthemtoquickly
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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
developgenerationsofproducts.Mobvoiisanartificialintelligence(AI)companythathasdevelopedChineselanguage–recognitiontechnologyandhasbuiltitsownsmartconsumerproductswithsmartassistants.ZeroZeroRoboticshasdevelopedasmartdronecamerathathelpscapturemeaningfulmomentsforconsumers.Mobike,theworld’slargestsmartbike-sharingcompany,hasdesignedbikesequippedwithGPSandsmart-locktechnology.
4.AI-BasedMarketingWillMakeAdvertising“Invisible”forConsumersintheFutureInthefuture,productmarketingwillhavetoseamlesslyintegratewithAIassistants’recommendations,whichwillbebasedonsearchesofcustomers’personallifestylebehaviorsandpreferences.Asaresult,advertisingwillappearlesscommercial,andwillsometimesevenbeinvisibletotheconsumer.AI-poweredpersonalassistantswillenablemoreconsumerstoshopviavoicecommand,andmanywillmoveawayfromtoday’sscreen-basedshopping.By2020,30%ofwebbrowsingwillbedonewithoutascreen,saidChristianWard,HeadofMediaandMarketingatresearchfirmStylus.
ThechallengeofAI-basedmarketingisthatmarketerswillhavetodemonstratethataproductoffersrealvaluetoconsumersintheirday-to-daylivesinordertoranknearthetopinsmartassistants’listsofrecommendations.Anotherpopularmarketingchannelwillbechatbots,whichbrandswillusetogenerateconversationswithcustomersandtelltheirbrandstories.Facebookhasbeenaleaderincreatingbrandstoriesviachatbots.
5.TinyHousesPresentOneSolutiontoIncreasingHousingCostsintheUS
Source:FungGlobalRetail&Technology
Tinyhouses,thoseunder400squarefeet,couldprovideasolutiontoincreasinghousingcostsintheUS,allowingyoungpeopletoliveinawell-designedhousethattheycanafford.Only60%ofAmericanscanaffordtopurchaseahouseover$250,000,andmosthousesinurbanareasfarexceedthatprice.Tinyhousestypicallycost$15,000–$90,000,andlivinginonelowersahomeowner’scarbonfootprint—whichisimportanttomanymillennials,whotendtobeenvironmentallyconscious.DavisRichardson,agraduatestudentattheUniversityofTexasatAustinSchoolofArchitecture,showcasedhisowntinyhouseatSXSW.Hesaidthehousecostabout$25,000andtookhimabout12weekstobuild.
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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TakeawaysfromRetailLoco2017
6.RetailersCanGreatlyBenefitfromWeatherandLocationDataMalloperatorshaveshowninterestinlinkingdatasuchasweatherinformationandtimestampstoconsumerpurchases.Forexample,ifconsumersaremorelikelytoshopwhentheweatherisbad,thenretailerswouldbewisetoofferpromotionsbasedonanegativeweatherforecast.Inoneexample,aconveniencestoreoperatorwasabletoanalyzelocationdatatofindoutwhereitscustomersatelunch.Theconveniencestorethentargetedthoselunchlocations,resultinginan83%increaseinvisitstotheconveniencestore.
7.DatafromtheGlobalPositioningSystem(GPS)HasitsLimitations
Source:FungGlobalRetail&Technology
Therearelimitationstoourglobalpositioningsystem(GPS),whichisunabletotrackactivitywithinastoreaswellastoresolveverticalheight,i.e.,whichfloorofabuildingapersonison.Brandsarenotyetsavvyaboutthetechnicalissuessurroundingtheplacementoflocationdevices.
8.RetailersFaceaComplexArenaofMedia,TechnologyPlatformsandFormatsThedifficultyofreachingconsumersisamplifiedbythefactthattheyviewadvertisingonavarietyofdevices,suchasphonesandtablets,TVsandbillboards.Theyviewavarietyofmedia,too,suchastextandvideo,anddifferentmediaofferavarietyofformats,furthercomplicatingbothadvertisinganddatacollection.
9.LoyaltyProgramsNeedtoOfferMorethanJustDiscountsRetailultimatelydealswithhumans,soretailersseektobuildconsumerprofiles.Historically,retailershavenotbeengoodaboutcollectingdata,onepanelistsaid,citingthefollowingstatistics:50%ofpeopleleavealoyaltyprogrambecauseitistoohardtoparticipate;80%willpickaloyaltyprogramthattheythinkbenefitsthem;and65%saythemostimportanttimetoofferaloyaltyprogramiswhenacustomermakeshisorherfirstpurchase.Justofferingdiscountsaspartofaloyaltyprogramisnotenough,asmillennials,inparticular,valueuniqueexperiences.
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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
10.WalmartIsUsingGamificationtoKeepitsCustomersHealthyWalmartispartneringwithinsuranceproviderHumanatoofferpromotionsforWalmartcustomerswhoundergobiometrictesting(suchasblood-pressuremeasurement)anddiscountsatcheckoutforcustomerswhopurchasehealthyfoods.Inanefforttoincreaseloyaltyandlockcustomersintotheirprograms,bothWalmartandAmazonhavealsobeenincreasingthenumberofservicesofferedtocustomers,especiallyAmazonPrimecustomers.
11.BeaconsHavePassedtheHypePhaseandBecomeUseful
Source:FungGlobalRetail&Technology
AlthoughbeaconshavehitatroughfollowingthehypephaseonGartner’shypecycle,nearly500newbeaconsarestillbeingturnedoneveryday.Therehavebeenrecentadvancesinbeaconsandsensors,though.Beaconscannowbehiddeninlightbulbsandsensorscanmonitortemperatureandairquality,whichareusefulindocumentingquality-controlfactors.Forexample,sensordatacanhelpensurethatcertaincoldfoodshavebeenmaintainedatspecifictemperaturesthroughouttheirjourneytothestoreshelf.
12.ChatbotsCanDriveTrafficWhenUsedProperlyInoneexamplecitedbyapanelist,BudLightjudiciouslyusedchatbotsinthetimeleadingtoabigsportseventandachieveda76%conversionrate.Althoughchatbotshaveseensuccessinapplicationssuchasinthecreditapplicationprocess,theyarestillunabletoconversefreelywithhumans.Themostsuccessfulonesstructurequestionswithmultiplechoiceanswers,ratherthanrequiringconsumerstotypeintextanswers.
13.OurAppsAreConstantlyLeakingValuableLocationDataTheconceptof“dataexhaust”reflectsthatmanyofoursmartphoneappshavethelocationfunctionsturnedonallthetimeandarethusconstantlyleakingdatatotheappservers.Itistechnicallypossibleforanappmakertoaddsoftwarethatdrainsofflocationdata—andthensellthatdatatoareseller.Datais“thenewoil,”however,althougheveryretaileriscollectingdata,notallofthemknowwhattodowithit.
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March14,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected],CFASeniorAnalyst
JingWangResearchAssociate
HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017
FungGlobalRetailTech.com