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Latest Retail Shrink Data / Why Do People Steal? / New Technologies

In 2012-2013, global retailers shrink mental trianglelost $112 billion to shrink or 1.4% of retail sales on average. The top 5 countries with the highest shrink as a percent of sales included Mexico, Brazil, Argentina, USA, and China. 

This past week, Jack L. Hayes, published his 26th annual USA Retail Theft Survey. Highlights of this latest report:

 

The Five Future Megatrends Affecting the Region

Regular trips to Asia, retail customer meetings, APAC industry keynotes, and recent business articles confirm that economically China is Chinagoing "Back to the Future".

Before USA surpassed it in 1890, China was the world's largest economy.  By the end of 2014 China is on track to become the world's number one economy once again. This crowning achievement is arriving 5 years earlier than originally projected by the IMF.   

It took 155 years for the UK to double its GDP with about 9 million people in 1870.  The USA and Germany took 30 to 60 years with tens of millions of people.  China and India, with 100 times the number of people than the UK doubled their GDP in one tenth of the time.

Asia Market / Technology Trends

By 2030, the majority of the world’s population will be considered middle class. China and India will have the largest middle class consumption as a share of the world's total population.

 

 Emerging Markets, Technology Welcomes You to Modern Retail

Budapest Conference May14Earlier this month had the pleasure to speak to 100+ business leaders from Central, Eastern Europe, Scandinavia, Russia, and the Middle East at a conference in Budapest Hungary.  This week's post summarizes some of the key insights from my presentation titled "The Future of Retail".

European Market Analysis

In EMEA, only the Middle East and Eastern Europe have 2018 retail growth forecasts that outpace the rest of the world.  The Middle East is the only region in EMEA where 2018 GDP will grow faster than the world aggregate. 

Russia is experiencing some spending slowdown, but it is still an attractive market.  The country has become more mature in modern retail and consumers don't necessary fully cut spending during turbulent times.  Moscow and St. Petersburg are increasingly saturated, but other cities offer opportunities.  42 cities in Russia have more than 500,000 people. Modern retail shopping space for the size of the country is still in short supply.  The food sector is experiencing double digit growth and consumer electronics are growing 30%.  Luxury brands see Russia as a key market with wealth increasing.

 

The brand consultancy agency Interbrand recently published the "Best Retail Brands 2014" report.  Quoting directly from the document, Best Retail Brands 2014following are key ideas from the 136 page report. 

North America

Analysts predict that Amazon will soon carry more than 85% of the products sold at leading retailers, including grocery, at better prices, with more delivery and payment options. A fully functional mobile presence is a given for every brand; the new onmichannel reality has led to a rise in "connected stores for connected customers." While e-commerce sales continue to grow 10% per year, questions about the role of brick and mortar seem to be largely resolved. The store is now a brand experience that drives revenue across all channels.

Europe

 

In an attempt to be closer to one of the global centers of technology innovation, a growing number of retailers are investing in Silicon Valley. Couple examples from the more than a half dozen retail companies making the IT move to California and the innovation gold they are Mind of a Shoppertrying to mine:

In February, Walmart opened its second technology center in Silicon Valley. "These centers are tasked with app development and digital coupon projects as well as creating seamless shopping experiences for consumers using online, mobile, social and stores."   In May 2013, Target opened a tech lab in San Francisco.  In this center, Target is focusing on mobile apps, online search and social media development, all as foundation to ecommerce expansion. 

The growing trend of retailers shaping their own technology development journey is not limited to California:

 

Throughout history, retail technology has evolved in waves.  With the industrial revolution and mass manufacturing, the mom & pop store transitioned to theInternet of Things supermarket.  The massive amount of data on shipping trends, i.e. what's selling, placed the manufacturers at the center of controlling the information to drive retail sales. 

Bar code scanning in the 1970s transitioned the knowledge power base to the retailer.  The planogram, i.e. what to actually place on the shelf for sale, was now a retailer decision.  

As discussed in a previous post, we are currently in the middle of the next major evolutionary technology wave re-shaping the retail industry.  The foundational elements driving the new retail megatrends include: 

 

NRF 2014 Big ShowEvery year, the National Retail Federation (NRF) trade event in New York seems to get bigger and more global.  2014 did not disappoint with over 30,000 retail professionals listening to 300+ industry experts and visiting a record 200,000 square feet of exhibit space showcasing the latest technologies.  Brazil had once again the largest contingent of attendees outside the United States.

NRF is a great stage on which to reflect the " Big Ideas " that are reshaping retail.  The top 10 from NRF 2014 include:

 

 

Product or service differentiation has always been a strategy adopted by the retail industry towards finding that winning formula for differentiationgrowth. Differentiation can take many forms and include price, product quality, store decor, targeted consumer audience, and the business model itself. Two recent examples of successful retail differentiation:

Zara and Fast Fashion

Forbes Magazine recently recapped the successful Zara business model. A team of designers and product managers in Spain oversee design, sourcing and production of specific apparel categories. These individuals monitor closely the sales process of each apparel collection -- from the time the merchandise reaches the stores to the real time customer response.

 

-- How Piggly Wiggly Built Today's Self-Checkout Legacy --

 "An invention acts rather like a trigger, because, once it's there, it changes the way things are, and that change stimulates the Retail Techproduction of another invention, which in turn causes change, and so on. Why those inventions happened between 6,000 years ago and now, where they happened, and when they happened , is a fascinating blend of accident, genius, craftsmanship, geography, religion, money, ambition..." (1) -- James Burke

 

Fortune magazine recently published the 100 fastest growing companies. (1) Analyzing this year's list:Where's Retail? - The 100 Fastest Growing Companies

Revenues for the top 100 global fastest growing companies totaled over $627 Billion, up from $390 Billion a year ago. Apple, which was part of this group, had revenues of $169 Billion and profits of $39.7 Billion.