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Spyce Brings Culinary Excellence Rooted by Technology

Spyce via Boston Globe

Spyce is the one of the first restaurants to feature a completely robotic kitchen cooking complex, nutritious, tasty meals. Located in Boston, the restaurant is the brainchild of four M.I.T. graduates based on a vision of cooking affordable, healthy food, robotically, delivering at the intersection of technology and hospitality as more restaurants and retailers move to automate many of their practices.

The restaurant offers meal bowls at low prices, starting at $7.50, using fresh ingredients. Every step of the process, from mixing ingredients to cooking and serving, is automated. This allows for quick cooking, with meals prepared in under three minutes.

Customers wait as their automatically prepared food is dropped from a cooking pot into a bowl at Spyce, a restaurant which uses a robotic cooking process in Boston, Thursday, May 3, 2018. Robots can’t yet bake a souffle or fold a burrito, but the new restaurant in Boston is employing what it calls a “never-before-seen robotic kitchen” to cook up ingredients and spout them into a bowl. (AP Photo/Charles Krupa)

The restaurant brings culinary inspiration with leadership from Michelin Star Chef, Daniel Boulud. Boulud provides menu direction along with Sam Benson, executive chef; and together they choose the menu and train staff on the customer experience.

In an age when labor wages are rising, companies are investing in automated enhancements to improve the customer experience, while reducing labor costs. Robots and AI are entering every industry to bring more efficiency to the process. Spyce is one of the leaders in benchmarking industry standards. Balancing robotics with culinary excellence can be tough, but the enterprise is succeeding in every way.

Spyce is featured in the Smart Shopping trends section of our book. Read more on Spyce and other innovations in our newest book, available for download here.

By Alex Kaufmann

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Omniexperience is Driving Change in Retail

Retail is changing at a rapid rate, and to no surprise, much of that change is being driven by new technologies and digital innovations that put consumers in the drivers seat and bring the idea of omnichannel to new heights. Omniexperience is the first trend highlighted in this year’s version of Retail Innovations. Consumers can now shop anywhere, at any time, and in any way. The retail universe is so connected, and it has significantly influenced our shopping behaviors and the way retailers are behaving to adapt to this change.

To win at retail in today’s environment, the digital and physical experiences must be intertwined.  Retailers must create smooth, integrated and seamless experiences that consistently deliver across platforms. Customers no longer distinguish between digital and physical, so why should you?

An Omniexperience melds online and physical universes for the convenience of the customer. Click & collect is the classic example, where customers can order online and pick up in-store at the preferred location and time, as well as order online and return or exchange products in-store. It can also mean interacting digitally in-store, e.g., via augmented-reality assistants that lead you to the product, ordering out-of-stock items for home delivery, seeing customer reviews in-store, etc. In the case of one of our retailers included in the book, Brandless, omniexperience is relevant in how this digitally native company entered into bricks and mortar to elevate the experience.

Brandless launched in 2017 as an online store selling everything from organic and specialty goods to dish soap and other cleaning supplies. They’ve cut out the middle-man bringing added value to the consumer by selling quality merchandise without a so-called “brand tax” and removes all the hidden markups that come from many national brands. In efforts to reach consumers in new ways and develop an experience, Brandless experimented with their pop-up store, an opportunity for them to educate customers on why their products were different, bring a hands-on experience to the forefront, and a chance to emphasize their value and values, while making the point the products are not a ‘generic’. The range was impressive and Brandless has broadened its reach into beauty products, at a $3 price point.

To read more on Brandless, and other omniexperience cases, download a copy of our book here.

By Alex Kaufmann

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HEMA defines New Retail: Retail Innovation of the Year

Hema, the next generation retail experience and brainchild of Alibaba, is a supermarket hybrid that operates on cutting-edge innovations. Serving as both a retail store and fulfillment center for online shopping, Hema brings convenience to new heights by offering in-store picking for online purchases, with delivery in 30 minutes for customers within a three-kilometer radius of the store.

Hema uses its mobile app to track everything customers do in the store. Where they are shopping, what they are picking, what they are buying and how they are paying. They use this data to create and deliver customized shopping experiences.

Why is it innovative?

  • Integrated retail store and fulfillment center – streamlined operations while maintaining, and improving, the overall customer experience within the supermarket
  • Redefining convenience and the term “one-stop” shop. Not only can customers buy fresh produce and seafood, they can also dine-in at the store and have their meals cooked after shopping is complete. This concept brings customers back into the store repeatedly, creating stickiness in customer loyalty.
  • Active customer engagement and mobile integration with the shopping experience. Customers can use their mobile devices and scan the items they want to buy when they are in-store. Via the mobile apps, the store can provide recommendations and suggestions to the customer to guide selection among other similar options. Each of these selections can be placed in the virtual shopping cart and e-payment and delivery of their groceries to a consumer’s home within 30 minutes can be arranged.

To learn more about HEMA and other innovative concepts around the world, download a copy of this year’s book here.

By Alex Kaufmann

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Amazon Go: Confessions of a Habitual User

Amazon Go is now up to six stores in three cities: their home market in Seattle, two in Chicago and the latest to open in downtown San Francisco. Two more are planned for Chicago, as well as another in San Francisco.  As a nomadic business traveler, I’ve had the chance to make multiple stops in four of these locations totaling 10 trips to date. Besides the data telling me that I buy way too many Diet Cokes and cookies, what have I learned to date?

  • The app is remarkably easy to use. The QR code pops up immediately and shopping requires almost no explanation. Amazon employees are consistently present to help customers through the process. I have also been able to scan through 5-6 people at one time with no problem.
  • It has been extremely accurate. While everyone plays around a little to try and hack the system (take two items at once, put items on and off a shelf, etc.), I have had no issues with order accuracy.
  • It is truly a eerie sensation to “just walk out” with no checks at the door. But, you get used to it. I have done a trip in less than 1 minute now that I am out of the gawker phase.
  • There is a surprising mix of products—sandwiches, salads, desserts, meal kits, localized assortments, etc. It is, in some ways, closer to a Pret A Manger than it is to a convenience store. The assortment is urban appropriate and seems to be evolving as Amazon experiments with new locations. The initial Seattle location has wine (which requires ID check) and the San Francisco store has a much larger assortment of grocery. I suspect Amazon is both tailoring by location as well as simply doing a lot of test and learn.
  • Pricing seemed quite low initially in Seattle. San Francisco prices seem closer to market. Perhaps there is an evolution with regard to margin?
  • While there is a lot of talk about being “cashierless”, it is hardly employee-less. There has always been at least 3-4 associates in the store at any given time.
  • Revenue seems very strong—a reported $2700/ft by Bricks Meets Clicks which is impressive no matter what the store size is.

 

The big questions remain:

  • There have been rumors floated about having 3,000 stores in the coming years. It seems highly unlikely—not because Amazon doesn’t have the capital but because it would take a tremendous real estate effort—and I have yet to see evidence of this. It is also A LOT of stores, particularly when they have a very urban focus. Those kinds of numbers will be difficult to reach.
  • Can it scale to a bigger size? There are a tremendous amount of technology game changers if it moves to a Whole Foods or 365 Format.  Take a look at the ceilings and there are banks of cameras—scaling to a large format seems exponentially difficult. But, I suspect that larger versions continue to open, or perhaps a scaled down Whole Foods with a more manageable number of SKU’s. Or, will other formats appear, like Amazon Books or 4 Star?

I am a believer in Amazon Go as a potential retail game changer. The more I shop, the more I enjoy the frictionless experience.

By Neil Stern

Neil Stern for Forbes

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Amazon Go meets Chicago

A new standard for customer service has arrived in Chicago.  Amazon opened their fourth Amazon Go store in the Chicago Loop business district, exporting the  “Just walk out” model beyond Seattle for the first time.

Like the other Amazon Go stores, the layout is compact and the offer is tightly curated:  ready to eat foods, meal kits, beverages, snacks, grab and go bakery items and a small selection of fresh produce, household products and health care items.  They’ve added selections here from popular local food providers like Farmer’s Fridge that are familiar to the Chicago consumer base.   Everything is packaged, prepared off site and delivered daily to the store.  Pricing is attractive compared to competitor offerings – A Meal kit that serves 2 for $15.99, a bottle of Kombucha for $3.49.   Customers we talked to seemed pleased with the food offering overall but were surprised that there were no items from Whole Foods (guacamole was a big personal miss for me!)

Plenty of staff is on hand to guide customers, answer questions and restock shelves.  There is a handy condiment station by the exit where you can microwave your food, wash your hands, grab a glass of water, utensils and napkins before you head back to the office or off to catch a train.    A solid, well executed store overall.

But it’s the  “Just Walk Out” experience that is the true differentiator here:  once you download the Amazon Go app the shopping process is simple.   Scan the barcode in the app to enter the shop, grab a bag, shop your items and leave.  It’s very quick.  There is no line!  The technology tracking the customer journey and purchases is invisible but somehow extremely accurate, able to support typical shopping behaviors where customers continuously pick up product, return some to the shelf and put other products in their bag or just carry them out of the store.   Upon exiting, a notification is sent to your phone reminding you of the short time actually spent in the store – under 3 minutes for our visit. A receipt shows up in your app. 

Amazon has again set a new bar for service expectations.   No line is a compelling alternative to a clunky and confusing self-checkout terminal or a long line at competing pharmacies, convenience stores or take-out restaurants in the area.  For a quick meal or necessity, why would a time-pressed consumer go anywhere else?

By Mara Devitt

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Walmart, Continuing To Court A New Kind Of Customer, Paints It Jetblack

As the excitement of Walmart’s annual meeting dies down this week, it is pretty clear that the company is making a concerted attempt to court a more upscale consumer. The new website delivers a more lifestyle-driven experience that simplifies navigation and significantly declutters the homepage. But it may also signal less of a focus on low prices.

Much, of course, has also been made about acquisitions of more premium-focused brands and websites like ModCloth, Moosejaw and Bonobos. The central question (and one difficult to answer) is whether Walmart’s ownership is a positive or a negative. There are indications from third-party analytics provider ComScore that traffic at all of these sites has declined. It remains to be seen as to whether that’s an indication of ownership or other marketing strategies being deployed.

The largest acquisition, of course, has been Jet.com, which was purchased for $3.3 billion. Jet’s traffic is also reported down, but Jet is playing an even more critical role in the world of Walmart, as Jet’s founder Marc Lore has now taken a much more prominent position in Walmart’s overall digital strategy.

Walmart WMT +2.02% just announced the launch of a new service, Jetblack, a $50-per-month personal-shopping service. The service gives customers access to personal shoppers through text message. Customers can send a text requesting a specific product, and Jetblack’s couriers will deliver the product as soon as the same day. Customers can also make more general requests, like a birthday or anniversary present, and Jetblack’s personal shoppers will send recommendations.

The service, as described in a press release, is targeted at “time-strapped urban parents” and uses “a combination of artificial intelligence practices and expertise from professional buyers across the home, health, parenting, fashion and wellness categories, as well as parents themselves.” The service will fulfill products from Walmart and Jet.com but also reach out to third-party retailers to complete orders.

While this is a fascinating idea, it also leaves perhaps more questions than answers:

  • Will customers pay $600 a year for a service? It is difficult to find comparable examples, but popular subscription services like Netflix and Amazon Prime cost considerably less.
  • Does the Walmart connection matter? Although marketed under Jet, will it suffer from any stigma of being associated with the parent brand, which does not exactly resonate with the target customer?

As always, I applaud Walmart for thinking outside the box. As the acquisition of Flipkart indicates, this is no longer the lumbering Bentonville giant, but a company that is not afraid to make some big bets. This service is an interesting one, both to understand if a company can monetize personalized service on a larger scale and to see if Walmart can successfully court a new customer base.

By Neil Stern

Neil Stern for Forbes

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Amazon Primes the Pump at Whole Foods

Amazon’s acquisition of Whole Foods has been far from a smooth transition to date. Between culture clashes (the data driven approach at Amazon versus the emotional and experiential approach of Whole Foods), changes of policies to small vendors and systems integration with widely reported out of stocks, Whole Foods seems to have lost some of its retail mojo. To be fair to Amazon, Whole Foods was struggling to re-position itself prior to the acquisition.

I have been watching closely to see how Amazon would be working to make changes.  To date, I have seen the following:

  • Some very hyped (over-hyped) price cuts on a few hundred items within the store, mostly in perishables
  • The installation of Amazon pick-up lockers in many stores, which leverages convenience and presumably drives traffic
  • Amazon taking over delivery from Instacart in several markets, which replicates the rapid (1-2 hour) delivery model
  • Some “spot” price offerings linking discounts to Prime membership including a recent Mother’s Day special on tulips

Now, the long awaited integration appears to be happening.  Whole Foods announced the roll-out of a rewards program in Florida, where Amazon Prime members will receive 10% off hundreds of items initially and also have access to rotating weekly specials. Whole Foods believes this will be a significant off-set to its high priced reputation.

The move is one that I have been expecting since the onset of the announcement. There is extremely high overlap between the customer bases. CEO John Mackey estimates that there are 8 million Whole Foods shoppers who are also Prime members. According to Consumer Intelligence Research Partners (CIRP), it is estimated that there is a 40% overlap between Amazon and Whole Foods shopper base, with 80% of those customers having shopped recently. At the same time, Amazon has just raised the annual prime membership to $119 and needs to demonstrate that Prime will continue to add value beyond the most valued perk of free two day shipping.

And of course, ideally, this may spur further Prime membership for Whole Foods shoppers who are not part of the program.

I expect this to create a short term sales lift for Whole Foods. Long term, it provides Amazon with further data to understand omnichannel shopper behavior which can only benefit them more as Amazon continues to attack the retail food business on all fronts.  Another tidbit from CIRP is that grocery is now the second most shopped category (after electronics) on Amazon. Food will only continue to grow off a very small base.

By Neil Stern

Neil Stern for Forbes

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Asda/Sainsbury’s Merger Sends Shockwaves Across The Retail World

The news of a pending merger between Sainsbury’s and Walmart owned Asda is sending shockwaves across the British retail world. It should also be doing the same on a global scale, as it speaks to both an intense concentration of market share and the continued shift in thinking of the world’s largest retailer from a physical to a digital point of view.

The deal is expected to be announced shortly but must pass regulatory approval from the Competition and Markets Authority (CMA). If approved, the combined chain would have 2800 stores and a 31% market share, which would vault the prior number 1 and 2 chains slightly ahead of market leader Tesco.

I believe that a deal like this would have been unheard of in the U.K. as early as ten years ago for a multitude of reasons. From a market positioning standpoint, Sainsbury’s had been the historic “upmarket” chain, focused on higher income markets like London whereas Asda focused on large, out of city locations with a focus on price. Now, Waitrose has supplanted Sainsbury’s on the premium end and the two large German discounters, Aldi and Lidl, have gobbled up market share in the value sector. The result has been increased pressure on profitability in the sector for some time.

Perhaps more critically for the future, the U.K. has a rapidly evolving grocery e-commerce business, with pure play retailers like Ocado shaking up the market, the traditional players like Tesco heavily invested and Amazon teaming up with number four Morrisons on a distribution agreement.  Combined, these factors should underscore the shifting market and likely lead to this deal’s approval.

On a global basis, this merger is even more remarkable:

  • It is a merger, at least as it is understood today. This is not simply Walmart gobbling up another competitor but actually signifies them taking a backseat in the combined company. Asda had been Walmart’s single biggest deal to date but does seem to represent a significant drawback from brick and mortar retail.
  • Walmart is simultaneously looking at a $20 billion acquisition of India e-tailer Flipkart. They have been in a battle of sorts with Amazon over the company but look to emerge as the “winner” (if paying $20 billion for a market leading but money losing company is a win). This would catapult them ahead of Amazon in the rapidly growing Indian e-commerce market and perhaps make up for what appears to be a missed opportunity in China.

If I needed any more evidence that retail is undergoing an historic sea change, these two headlines in tandem help dispel any doubts. And, of course, with any massive deal like this, the repercussions could be equally as enormous and unleash a set of equally significant moves.

Neil Stern for Forbes

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Instacart, Aldi and Everyone…Versus Amazon

Instacart has been on a roller coaster ride since its inception back in 2012.  The company has continued their rapid expansion, with service offered to nearly 70 million US households from over 200 retail partners based on location. Recent additions to the platform include Sam’s Club and Aldi.  The addition of Aldi is particularly powerful because it adds a clear low price option to their arsenal. With several divisions of Kroger also participating, Instacart now serves as a partner to the top eight largest grocers in the U.S.  Instacart has also added several prominent regional chains like HEB and Wegmans, following the prevailing wisdom of, if you can’t beat them, join them. Even retailers who maintain their own e-commerce platform like Ahold (which has e-commerce pioneer Peapod), has added Instacart in select markets to offer more immediate service. Instacart offers both a one-hour and two-hour delivery option.

The company is also continuing to invest heavily in technology, with a patent filed to allow self-checkout for their in-store shoppers which could significantly speed the picking and payment processing part of the business. At the same time, the company has also continued to raise capital. The latest $200 million Series E financing round now places the company’s value at a whopping $4.2 billion. Everything sounds great, right?  The current wrinkle in the business model is, you guessed it, Amazon. Whole Foods was both an early partner and equity investor in Instacart, with an estimate that 10% of Instacart’s sales were coming through the Whole Foods partnership. With Amazon’s acquisition, sales figures have begun to change with strong influence and a new offering. Amazon recently announced free two hour delivery through Whole Foods, with the service starting initially in four markets: Dallas, Austin, Cincinnati and Virginia Beach. The service has since expanded into San Francisco and Atlanta. Amazon provides a formidable challenge as Instacart still seeks to perfect its business model even among its rapid growth. The business model is not without its challenges, the least of which is a lack of transparency on the end prices to a consumer:
  • There is a delivery fee, of course. Raised from $5.99 for two hour delivery and $7.99 for one hour. Reasonable enough considering the speed of service. For a $149 annual fee, Express subscribers can get free delivery on orders over $35.
  • There is a “service” fee of 10% added to an order that is a bit murky. It is not a tip (which is still encouraged) but was designed to provide higher pay to their contract workers. Customers can opt out of this fee but requires an extra step.
  • There is a “mark-up” associated with shopping at some retailers. This is quoted at 15% but can be higher and retailers are not always transparent with how the pricing differs in the app versus prices in-store
  • And finally, there is tipping. While optional, it leaves another open question on what to tip and how much a consumer pays over in-store pricing.
Adding all of that up, there is a price for convenience and an acknowledgement that delivering groceries, fast, to a consumer’s home, comes at a cost.  Yet, the battle is on for what is now the promise of same day or even same hour delivery. Target recently acquired Shipt, an Instacart competitor, in order to have the ability to match fast delivery. For retailers, there is certainly a risk/reward to aligning with Instacart. Yes, it gets them in the game quickly and with little to no capital, but the process allows a third party to control. Many are offering their own services along with click and collect as a way to provide  consumers with multiple options. But, as always, it will be Amazon as the key player to watch. Whole Foods provided badly needed local infrastructure to their model. Whole Foods will need to sort through the myriad of options currently available (Prime Now, Amazon Subscribe & Save, Amazon Fresh) to create a coherent and profitable retail strategy. Neil Stern for Forbes
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Aldi and Kohl’s: Strange Bedfellows or a New Era of Retail Partnerships?

Aldi and Kohl’s announced a partnership where Aldi will open in up to 10 Kohl’s stores around the country. While this is hardly the first pairing of food and fashion, it is certainly a departure from the norm. And while the two must iron out a number of issues concerning logistics, it could be a signal for a new kind of partnership where retailers (most of whom have excess space) get creative in finding ways to boost productivity and traffic.

For Kohl’s, the motivation is fairly obvious. Kohl’s has over 1100 stores, many in strip or power center locations. Like most retailers, the move to a growing e-commerce business has left these existing stores over-spaced for the traffic Kohl’s now serves. Kohl’s has already begun the process of clearing space in nearly 300 of their stores and the addition of Aldi should add a much-needed traffic boost. Kohl’s has also begun partnering with Amazon with in-store kiosks and taking returns in their stores. And while this is a bit more of a head scratcher (the camel is now very much in the tent…), it does express an admirable willingness for experimentation for Kohl’s. As a side note for old time retail watchers like myself, it’s a fascinating historical footnote that Kohls, of course, began as a grocery store chain in 1946 before opening up their first department store in 1962. What’s old becomes new again.

Aldi is taking advantage of the fact being one of the few retailers who are hitting on all cylinders right now. While Aldi is steaming towards a path of having 2500 stores by 2022, the retailer is also substantially remodeling all of their stores, adding more space and more focus on perishables and a slightly expanded product line.

The “fresh forward” Aldi prototype should strike additional fear in the hearts of traditional grocers as it positions Aldi to grab a greater share of the food shopping basket, and are  even playing around with in-store bakeries as an aim to gain a larger basket and more shopping frequency.

The partnership with Kohl’s is a relatively minor one from a company who will open well over 100 stores a year over the next four to five years. This is a particularly telling number when most retailers are closing locations and their key German counterpart, Lidl, is still floundering in their U.S. expansion to date. But, it also shows Aldi’s increasing flexibility in terms of growth and partnerships leveraging their strengths.

I expect to see more of the above partnerships as the world of retail adjusts to new realities.

Neil Stern for Forbes

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