What are the chances that this partnership would have happened if Packed Party was not based in Austin, where Whole Foods is headquartered? This sounds like an idea that couldn't be killed, not an idea borne out of strategic planning.
Dynamic pricing has legs if it is applied to maintaining competitiveness on pricing or helping move excess inventory before it spoils. I also like the idea of using it to create promotional excitement as Bob mentioned.
The way to destroy the benefits is to try to use dynamic pricing to maximize margins, by charging more when and where you can. Once customers get wind of that, trust will be lost.
At first I thought Kroger's reasoning was that the card companies were charging more. Then I read it closer and realized it is because other retailers and banks are charging more! So, they're basically saying they want to charge a fee because they can.
This doesn't just affect customers wanting to get cash back, it affects every customer that hoped that Kroger was a partner in helping them deal with the hassles of managing their money and providing affordable food for their family.
I don't doubt that one day we will see some level of drone delivery but, in the near term, I see this as more of a marketing/PR effort by Amazon to drive home their dominance in delivery. If customers know that Amazon is working on drone delivery, they solidify their position of being the fastest delivery option. Even if other retailers match Amazon's two-day, next-day or even same-day delivery, they will always be considered slower than Amazon.
My initial reaction to this was concern about the business model with the manufacturers getting 100 percent of the sales. I wanted Toys "R" Us to share in the manufacturers' success, so they would have an incentive to advertise and promote the concept to drive traffic to the store.
But then I realized that that's the whole point ... part of the challenge of a store of this type is showrooming while the sale occurs elsewhere. Now I understand why they don't want to be tied to sales from the physical store!
To resurrect the Toys "R" Us brand as a destination to check out toys and yet have the success of the model not tied to retail sales seems brilliant.
It does seem like Walmart can leverage their store count to be the convenient, easy choice for customers looking to shop online for groceries. Walmart is also in a unique position in that with e-commerce, they might actually increase their customer base because customers don't need to enter the store.
Dealing with the big box in-store experience is perceived as a downside of shopping at Walmart that causes some customers to limit their visits to Walmart. If Walmart can connect with those customers by offering a convenient, competitive online grocery experience, they can increase their customer base and visit frequency, both of which will go a long way toward generating profit from their e-commerce activities.
I agree Susan. Publix is one of the few retailers that understands that loyalty programs do not create loyalty. The true loyalty drivers are what Publix has built its business on -- clean stores, checkout lines, friendly associates, etc. Those are the things that make customers feel respected and cared for and you can't replace that with a card.
That said, I absolutely think that some type of loyalty program is crucial to Publix establishing the same kind of customer relationship online as they do in-store.
Publix can create a program that is not about incentive, but all about serving the customer. Instead of requiring a card for discounts, Publix can simply offer additional rewards or services to their better customers. One of those services is using their individual purchase history to make shopping online much easier.
Their existing digital coupons program is a step in the right direction but, from what I can see, the customer utilization is still fairly low. If they can get more customers to self-identify themselves when they shop the physical store, they can leverage that data to make it easier for the customer to shop online. Along the way, they can also use the data to help customers save in their physical stores.
Publix is in a great position because they know how to serve their customers. A loyalty program can help them extend that level of service online.
Experiential stores are about more than just giving you a reason to linger and hopefully buy something. In many instances, they are like a physical form of advertisement. They work best when they convey something about the brand and make you feel better about doing business with them.
The Starbucks Roastery is more about celebrating coffee and showing the quality and sophistication of what they do. It shouldn't be only about generating profit from that specific store. I'm guessing that's why they changed their plans from 1,000 stores to just 10. The idea is that after visiting that store, you are more likely to visit your local Starbucks because you appreciate the brand more.
It's hard not to see the idea of drone delivery as a very cool use of technology. I'm just not sure it is meeting a demonstrated need. My sense is that the focus on drone delivery is more about owning the positioning of being the fastest shipper of goods -- "we even have drones!"
I do have a question about delivery distance. The article says that the drones can fly 15 miles. Is that round trip, meaning they can deliver up to 7.5 miles away? Or can they deliver to customers 15 miles away?
Either way, it seems like a similar delivery speed of within 30 minutes could be achieved through dedicated drivers or an Uber-style service with an added bonus that much larger packages can be delivered. Not high-tech, but effective.
Machine learning and algorithmic approaches are a huge benefit because they enable genuine personalization across a huge customer base.
The potential downside is that technology-based personalization often struggles to connect with and motivate consumers. In addition to getting good, reliable data, it is crucial that personalization algorithms be built based on customer insights and human behavior considerations because the objective is to affect customer behavior. The goal is not simply to modify the experience for each customer, it is optimizing the experience for each customer to make finding and purchasing what they want seem effortless.
The real magic happens when personalization connects on an emotional level with customers, and strategically designed machine learning algorithms can help achieve that objective at scale.
This is evidence that Amazon is still relentlessly investing in staying ahead of their competition.
Instead of waiting until competitors close the gap on delivery timing, they are upping the ante and raising the bar so high that others might stop trying to compete on delivery timing. In the same way that Walmart leveraged their purchasing power and efficiencies to own the low price position, Amazon is leveraging their delivery logistics to own the fast delivery position.
Importantly, this move also helps mitigate the one downside that Amazon still has in competing against brick-and-mortar stores and that's same-day pick up. A key driver of this move is likely Amazon's desire to compete more directly against Walmart and their pickup in-store options.
The fact that it requires a Harvard Business School professor to point out that it is about the customer and not technology is reflective of the problem. In response to all of the disruption that has occurred, retailers and brands now seem to chase the latest technology to avoid being left behind, but they forget about the customer.
The best disruption does not come from crazy new technology ideas, it comes from someone genuinely embracing a customer issue and figuring out a way (often using technology) to make things better for the customer.
In solving a problem for the customer, the disruptor creates an emotional connection that the old provider can't compete with. Even matching the new technology won't win back the customer's business.
Part of the problem with stopping churn is that it focuses the company's efforts on the marginal customers. As the article states, the first step is identifying at-risk customers. That creates a focus on promotional concepts to keep them from leaving.
The opposite of churn is loyalty and I think that might be a good place for subscription retail to focus. I don't mean a loyalty program, but a focus on creating ongoing value and understanding that increasingly builds a connection with the customer in such a way that they become less likely to leave over time. Exactly what that is will vary based on the product/service, but the idea is to learn how to improve your value to the customer over time based on how they use your service. The most obvious example might be Netflix, which becomes more valuable to the customer as they use it more.
I think this can make sense for Dick's, but only if they can achieve something referenced in the first paragraph: a position of competitive advantage over rival retailers. If they believe they understand their business better than the tech vendors and have identified genuinely unique solutions that they want to protect, then I think this can work.
If this is simply to develop in-house capabilities or software that is currently available or that can be developed quickly using a third party, I am less enthusiastic about this approach.