Coming to Terms with Retail Change

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Coming to Terms with Retail Change

By Peter Breen - 02/20/2019

During his opening keynote session at the NRF Big Show in January, as he described his company’s upcoming initiatives, Kroger chief executive officer Rodney McMullen said the supermarket giant’s Simple Truth private label “recently launched” on Amazon, then apologized and corrected the comment to “on Alibaba’s Tmall.”

The retail world already knew that Kroger would be offering products from the healthy eating-focused Simple Truth line through the Tmall business-to-consumer platform of Alibaba, China’s leading online retailer. It probably wouldn’t have been ready for McMullen’s misstatement to be true – although it probably should be.

During the session, McMullen also noted that an “exciting and cool” aspect of the company’s private label portfolio is that “you can only get it at Kroger.” A more accurate way to phrase that, however, would be that you can only get it from Kroger since, in addition to Alibaba, Simple Truth is now available in a handful of Walgreens stores as part of a cross-merchandising pilot with the drugstore giant.

Kroger has built Simple Truth into a $2 billion brand in just five years. Now that it’s going to be available beyond Kroger’s own 2,779 stores, who knows how much more market share this “retailer” “private label” will be able to steal from the “national brands” of “consumer product manufacturers.” 

I put those four terms in quotes because, with all the changes taking place these days, I’m not quite sure how accurately they represent what’s going on anymore. (For more on where the concept of private label is heading, check out our feature story in the March issue of Shopper Marketing.)

Exactly who qualifies as a retailer or a manufacturer certainly seemed like a legitimate question during the NRF show, where it was clear that the industry’s fear of an impending “Retail Apocalypse” for brick-and-mortar stores has subsided. Now, everyone just needs to figure out exactly how to turn all those traditional stores into the technology-fueled experiential destinations/product showcases/fulfillment hubs/community centers that will keep them in step with evolving shopper demand.

Based on the buzziest of the technologies on display at the show, one key goal for the industry will be to follow Amazon Go into the realm of cashier-less stores. Or, if a fully automated store is too much to manage right now, there were more than a few exhibitors offering more contained payment-free beverage coolers and product displays.

Another objective will be to continue making physical retail as ubiquitous as possible by mobilizing the store via airport-friendly vending machines and kiosks. One noteworthy example was the Dollar Shave Club vending machine that has already rolled out to some airports and the Mall of America in Minnesota.

The fact that DSC, long viewed as the prime example of market share-stealing digital native brands (at least until it was acquired by Unilever), now has a physical presence exemplifies the notion that “pure play is kind of done,” as was noted by Andrew Valkin, a partner at venture capital firm General Catalyst, during a panel discussion. Omnichannel retailing is no longer optional.

Enhancements for existing stores were plentiful as well, of course, with most seeking to make the experience more convenient by enabling shoppers, employees, or both groups. A critical element in this arena continues to be tools that unify the online/offline shopping experience.

To that end, a number of featured technologies were designed to improve the process of buying online for in-store pickup or ordering in-store for home delivery. 

The changing nature of retail as a business was also readily evident, especially through announcements at the Microsoft booth. Pre-show news that Microsoft and Kroger were joining forces not just to drive the retailer’s own digital shelf initiative but for a wider-ranging “retail as a service” offering for the industry created a lot of buzz. On the show’s final day, Microsoft and Walgreens unveiled a partnership that will put “digital health corners” in stores, among other initiatives. (Shortly after, Albertsons announced plans to adopt Microsoft Azure as its cloud platform.)

McMullen underscored even more of these changes in his talk, during which his answer to the obligatory “future of retail” question included Kroger’s plans to take on the advertising industry by using its digital shelves and other tools to “partner with CPGs to better spend” their marketing dollars. Fair to say, then, that retailers are redefining themselves. Consumer product manufacturers better be taking note – and following suit.

For the record, you can already buy Simple Truth products on Amazon. They’re sold by a variety of third-party resellers, but they’re fulfilled by Amazon in some cases. Some are even eligible for Prime shipping.

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