Hey guys – thanks for the comments! You’re all completely spot on, you all raised some really valid points:
1) Tracking shoppers; I didn’t get the chance to talk much about it in the post but collecting data on how shoppers move through your stores is incredibly valuable. Typically this looks like a “heat map” to understand where the most trafficked part of the store is, but beacons can also follow a shopper’s actual movement through the store. If you remember the La Pliage case, Longchamps put the La Pliage bags at the back of the store to draw shoppers past their other products, in hopes that shoppers would see something they like & pick it up. It’s a simple example, but that’s one really powerful application of understanding shopper movements.
2) Absolutely correct Surbhi, technology cannot be the central theme of the shopper experience. My concern is that if shoppers have a poor experience with a beacon-based campaign, they’ll simply refuse to engage with the technology any further. So the cost of a poorly executed campaign isn’t just a short-term flat sales result, but also a long-term sabotage of future beacon campaigns. I think there’s onus on retailers to ensure that shoppers get the best experience they can to ensure that the technology continues to be viable down the line.
3) BM I did read your post and really enjoyed it, the RFID technology on inventory is such a critical component of ensuring that shoppers get the product they want, where they want it, when they want it. To your point about a unified customer view, I’d love to see how beacon technology could combine with great inventory management to anticipate and forecast the likelihood of a customer purchase – that way Macy’s could anticipate inventory movements and ensure that products are available in store just-in-time for the shopper. But this will only work if Macy’s gets the shopper data, which requires shoppers to engage with beacons, which requires great marketing to provide the valuable experience that shoppers seek!
I am still bullish on the potential for beacons too, it’s the best way to drive a true omni-channel retail strategy. But we’ll need a step-change in personalised marketing to realise that potential.
I saw one of these the other day and was wondering how they worked – thanks for the update!
You raised some great points, your one comment about elderly people getting sick from eating expired food really resonated. That was a particular challenge that we had to manage with my grandparents, unfortunately they would often lose track of how long things had been in the fridge and would get really sick as a result.
You did a great job articulating the functional benefits of the fridge, but I wonder whether items like this are truly bought for rational, functional purposes or – to use the Patented Donald Concentric Circle Framework – whether there’s some ego-expressive conspicuous consumption going on here. I think appliances like this make for great talking points for guests on top of all the other benefits they provide.
The network effects seemed really pertinent – do you know if the fridge has any additional functionality with the Samsung smartphone platform? Are Samsung working on developing other appliances in the same “smart” vein?
Your point about security is well taken and will no doubt play a bigger role as penetration of these appliances increases. Although I do wonder whether malefactors wouldn’t be better off going through household garbage to find personal information that they could leverage – or using social media to get an idea of when you might be out of town. It seems to me that there’s lower hanging fruit for identity thieves and other troublemakers.
Loved the post. There’s an ongoing theme in this & in recent cases that Chinese tech firms not only understand the local culture better than Western firms, but are also highly adept at executing against these insights. 800m “shakes per minute” is a staggering amount of engagement. To compare, I note that the Superbowl had 112m viewers this year. To that end, I noticed that you referred to many of the firms as “China’s” Amazon, Google, Facebook etc. With your cross cultural perspective, do you think there’s onus on the West to take better effort to understand and appreciate these firms for what they are, and potentially look to consider whether any of their platforms would work in our own culture?
The Economist landed this point fairly recently: http://www.economist.com/news/leaders/21703371-western-caricature-chinese-internet-firms-needs-reboot-chinau2019s-tech-trailblazers
To the points raised above about monetising – perhaps the solution lies not in monetising the actual Hongbao payments, but in co-partnerships with branded sponsors. If Weibo are already partnering with corporate sponsors for giveaways during the New Year TV marathon, it doesn’t seem to be a stretch of the imagination to think that these branded partnerships can be auctioned off to the highest bidder.
Finally – can I just add that I loved the visuals, this was a really fun post to read!
http://www.npr.org/sections/money/2015/02/25/389027988/episode-606-spreadsheets if you were interested
I’d never heard of this before! What a great premise – I think everyone can relate to wasting hours arranging people’s schedules for dubious-value-add meetings.
That was a poignant paragraph about the potential employment implications of automating an entire function. The good folk at Planet Money often do podcasts about digital disruption & the effect on employment. One of my favourites was their episode about spreadsheets: before Excel was invented, there’d be analysts who’d spend all day in an office manually calculating through a paper spreadsheet to work out the total impact of a change in one number. After Excel was invented, their work didn’t become redundant – they just ended up running hundreds more models with the time saved & conducted more value-add functions such as analysing trends and providing recommendations.
The same might happen here. Admin assistants might be able to take on substitute tasks such as touching base with clients. Or perhaps the roles might become part-time and would therefore open up more employment opportunities for individuals with children.
Great post; of all the retailers facing digital disruption, video game retailers don’t seem to get as much attention as others. Interesting point about the double-whammy that they’re facing. Not only is their core customer drifting onto digital platforms, but video game sales are in decline – so there’s less content going through their stores.
I agreed with your point around securing exclusive content, but I question whether GameStop could reasonably generate more sales from add-ons. If customers are already drifting towards digital platforms to buy the core game, would they head into store to buy DLC and season passes? They seem to be even more of a low-commitment purchase (smaller file size, quicker download time, lower dollar cost, potentially more of an “impulse” buy).
Completely agree with your final point about e-Sports, I couldn’t think of a better way for them to try and drive a “community” vibe in their stores than capitalising on this trend.
Finally, it seems to me that their days are numbered for console games too. I was surprised that the PS4 and Xbox One didn’t shift more towards digital platforms for content delivery. I imagine the next generation will improve storage space on the consoles & really drive digital downloads as the main channel for game purchases.
An interesting post about the system equity of the new “sharing” economy and how we might consider the distribution of utility through this new value chain.
To build on your final paragraph, I thought I’d crunch some numbers to get a sense of the earnings that drivers get in one evening’s work:
Assume that – people order dinner around a 3-hour window from 6-9pm
Deliveroo Drivers can complete one delivery every 20 minutes
2/3 of people will tip £3, the other 1/3 stiff them.
Deliveries made: 9
Base wage: £21
Per Delivery Wage: £9
Hourly Rate: £16
Typical minimum wage is £7/hour, so they earn an extra £27 working for Deliveroo, pending luck with the tips.
From a remuneration perspective, looks to me like the Deliveroo rider would in theory be better off working in a bar (better tips!) or driving an Uber (more certainty around the income – not tip-dependent)
Given that they have over 20,000 delivery riders, though, the riders must derive utility beyond remuneration. So the main benefit from being a Deliveroo driver must be the flexible hours (no minimum shifts, unlike bar work) and the low overhead requirement (bike/scooter vs a car) which – to your point – should be taken into account when deciding on the benefits that each worker should be entitled to.
Hey team! Wanted to reply to your thoughtful comments, thanks for discussing my blog post:
– Regarding supplier negotiation strategy, the trouble with “collective action” is that it’s collusion/cartel behaviour! The overarching perspective is that the consumer benefits from low prices so suppliers have to be really careful about how they behave when taking cost increases. That gives the retailers a lot of power.
– Completely agree with the difficulties of measuring one’s carbon emissions in a voluntary system. But the majority of the cost would have been incurred at the electricity & utilities end, much easier to measure there.
– Interesting point about the RECs, I’m not sure how that would play out in the industry. The sad legacy of the carbon tax is that it’s left a bad taste in everyone’s mouth about market solutions to pollution. Any kind of new initiative would just trigger an allergic reaction from corporations – and make it too easy for the Opposition to level accusations of the government “killing Australian jobs” etc etc.
– Some of you raised some other great points about whether the tax is more effective in reducing emissions if it’s felt at one end of the supply chain vs the other. I suppose if it hits the consumer, it reduces demand & therefore output/emissions go down. If suppliers end up eating it, then it’s in their best interests to invest in low-carbon technology and efficiencies in their plants or end up taking a margin hit (to Peter’s point). There are also government assistance packages to invest in cleaner technology which ultimately end up being funded by the taxpayer. So I guess the consumer ends up paying for it one way or another.
There were other areas where the execution of the carbon tax really fell down. There were hugely generous industry assistance packages which – ironically – shielded some of the worst polluters from the impact of the tax. Of course, the whole point of the tax was to provide a pecuniary incentive to change polluting behaviour!
To that end, if you can’t get enough of that carbon tax goodness, here’s more light reading: “Perry, N. ‘A Post Keynesian Perspective on Industry Assistance and the Effectiveness of Australia’s Carbon Pricing Scheme’. The Economic and Labour Relations Review, Vol 23. No 1. pp 47-66”
Great perspective, I enjoyed reading your post.
– One thing that stuck out at me when reading your blog post was the dissonance between the armed forces and the nation’s political parties. On the one hand, the US is a relative sceptic regarding climate change, partly fuelled by rhetoric from major political figureheads. On the other hand, the armed forces are actively making plans to address climate change and witness its effects in their day to day operations. Do you think there’s any role for USACE to influence the national debate? As part of their work to mitigate the effects of climate change, is it incumbent on them to use their prestige to lend support to the scientific consensus that climate change is anthropogenic? In other words: is prevention better than cure?
– I was also wondering about the linkages between USACE’s research and the private sector. As they complete studies into woodland leases and water resource management, can USACE proactively bring their findings to affected firms? Are firms even aware that USACE could assist them with their long-term resource management?
– Finally: the Economist had a great briefing on Water Scarcity in this week’s issue (11/5/16), and how the problem will become exacerbated with climate change. They identified infrastructure deficiencies as being a major cause of poor water use: eg leaky pipes, lack of reservoirs and purification facilities. Unsurprisingly, they advocated a market-based pricing mechanism to assist in allocating capital towards these investment projects. But I wonder whether partnerships with USACE could potentially be a solution as well?
– On a side note, great work linking your in-body references to your bibliography – nice touch!
Hey Archer. Really enjoyed your blog post, a very different perspective on the climate change challenge.
– I was blown away with some of the stats: $4.2trn dollars, with a discount rate applied, is an astronomical sum. I’d love to understand the modelling of the discount rate. It seems to me that current stakeholders should have an extremely high discount rate simply because they won’t be around in 2100 to experience the climate change downside. I always figured that was the reason behind the relative inaction we’ve seen versus the catastrophic outcome on the horizon.
– I enjoyed your analysis into divestment actions. Sydney University took similar steps with its own endowment: http://sydney.edu.au/news/84.html?newsstoryid=14575 . There was a lot of debate about this at the time. What happens when principles of sustainability become divergent with value creation? I can see the value of Aviva making these decisions; as you articulated, they are highly exposed to climate change. But do you think it’s incumbent on less-exposed institutions to make sustainability statements, even at the expense of their shareholders?
– Totally agree with your conclusion. There’s more to do when Aviva consider the full end-to-end carbon footprint of their investments. As Alison pointed out in her blog post, firms like Apple can reduce their manufacturing carbon emissions but their products, by their very nature of planned obsolescence, can create more emissions than is necessary. Aviva could bear this in mind when it considers its investment decisions.
– Well written, I did enjoy your pithy humour. As you may have predicted, I was indeed working through my third Nespresso of the day as I read your paper.
– I did find some extra studies which might have bolstered your post. You mentioned the causal link between humans/carbon emissions and long-term global warming – there are some irrefutable facts behind this. Recent meta-analyses have indicated that over 97% of peer-reviewed scientific literature agree that humans & carbon emissions are responsible for global warming. Take a look at these two papers: http://iopscience.iop.org/article/10.1088/1748-9326/11/4/048002/meta (2016) and http://iopscience.iop.org/article/10.1088/1748-9326/8/2/024024/meta (2013)
– One perspective that you might consider is where Starbucks fall short in their sustainability efforts. Another post from a classmate in section D “Starbucks: Practicing what it preaches when it comes to climate change?” concluded that Starbucks’ overall carbon emissions had gone up in 2015 as they introduced more stores and heated food (the latter requires far more energy to store and prepare). Do you think Starbucks should hold itself more accountable to sustainability in terms of overall strategic decisions like this? Where do you think the trade-off lies between sustainability and profitability?
Great piece, Mdel!
– I thought a bit about your premise that airlines would hit negative margins if regulators decided to impose a carbon tax/ETS on them. Do you think LATAM would be able to pass these costs onto the end-customer? Could their margins remain stable if so? And finally, would this dampen customer demand or would it simply capture some value from a customer that they’d be prepared to pay anyway?
– I was interested in your “managing the chain” point as it was similar to what I wrote about in my blog post “Our Problem Is Not My Problem” (it’s good, you should read it!) By establishing supplier standards, looks like LATAM was able to pass some of the costs of carbon-mitigation onto supply chain partners. You also argue a similar point in your conclusion that Airbus/Boeing need to pick up their share of carbon mitigation. It’s a good idea; a low-cost way to reduce LATAM’s overall exposure to a carbon tax/ETS.
– I liked your point about “relations with strategic stakeholders”. I think there’s a lot to be said for firms actively working with regulators, even from a self-interest perspective. If firms dig their heels in and refuse to engage, there’s a risk that regulators will simply impose poorly planned regulation on the industry. So a firm has a choice: to push hard and risk having no influence over the regulation, or accept the situation and minimise the impact to their business.
– Your conclusion was interesting too. My understanding is that Boeing and Airbus source their parts eg engines, from third party suppliers like GE and Pratt & Whitney. Did you consider their role in the supply chain? Do these suppliers have any alternative fuel technology? Is it undeveloped or is the technology simply too expensive?
– Really well researched! Loved the perspective on “product usage” carbon emissions – I hadn’t thought of carbon emissions in terms of the full end-to-end carbon footprint of a product. This aspect plays out in a topical debate in Australia: whilst we can reduce site carbon emissions of our coal mines, the simple fact is that selling fossil fuels contributes to climate change.
– One aspect of Apple that interests me came to light when I visited their campus in 2014. Their head office had a huge focus on sustainability in terms of solar panels, recycled water etc. You indicated in your blog that the carbon emissions of a head office pale in comparison to manufacturing sites, but I think you’d agree that there’s a lot to be said for a firm that’s prepared to live its sustainability principles end to end. It gets embedded in the culture of innovation in the firm.
– I thought your conclusion was interesting and I would like to read more into that. Apple products seem to have planned obsolescence so by their very nature, the phones get disposed after 2 years. This might maximise revenue by shortening the replacement cycle (as you found out!!!) but it’s at odds with a sustainable future. Do you think there’s any way that Apple can reconcile those two divergent goals?