Quarterly Retail Insights You Want to Know: Q4'18

It’s hard to believe that the year is wrapping up!  Just one year ago, I was formulating my ideas on how to start this company and the first year has been a lot of fun.  I’ve learned a lot. I’m proud to see customers launching products and new experiences.  I can only wonder what 2019 will bring!  Certainly more transformation as the new world of retail continues to unfold. 


What’s new in Retail Tech

The best way to summarize the holiday season would be to look at it from two lenses.  So, this quarter I’m going to focus on the tale of two shopping seasons- Singles Day (or now known as 11/11) and the Christmas Holiday shopping season.

The biggest shopping event you’ve probably never heard of…

The biggest shopping event you’ve probably never heard of…

11/11- This holiday started just 10 years ago in China.  It was invented by Alibaba as “Singles day” – the one day a year you could spoil yourself and get the gift you always wanted.  The holiday has become so popular it has spread to all (hence the re-branding to 11/11 – the date it occurs) and now countries in the surrounding area are participating in the custom as well. It is billed as a “Global Shopping Festival,” so plan on the event getting bigger each year.  This year’s event started with Entertainment and speeches in an ‘arena’ format for all the shoppers.  Jack Ma made an appearance, but left the speeches to his leadership team.  Entertainers featured Melinda Kerr and Mariah Carey live on stage to get the audience pumped up.  Most shoppers had pre-selected their favorites and when the clock struck midnight the audience hit “BUY!” Within the first 100 seconds the platform had registered over $1B in USD equivalent sales.  By the end of the 24 hour period, the platform had recorded $30.8B.

This year global brands like Starbucks offered specials as a part of the 11/11 event and ensured their brands were present with TMall promotions.  What I find interesting- consider the infrastructure that lets this type of “global shopping festival” happen without glitches!  The Alibaba cloud infrastructure is certainly world class (if not the best).  Then consider the logistics infrastructure that enables all the deliveries- Cainiao is the logistics arm of Alibaba and they managed to ship 1 Billion packages in one day.  That is 1000X the capacity of other eCommerce platforms (Amazon, EBay, JD.Com etc).  Hence, the future of retail is being invented in China- and it will be interesting to see how this continues to evolve!

2018 Holiday shopping sets new records!

2018 Holiday shopping sets new records!


This year’s Christmas shopping season started on Thanksgiving with many retailers opting to offer online deals and get a jump on “Black Friday” shopping.  This year, according to a report from Deloitte -Americans will spend $1T on Christmas.  That includes the gifts, entertainment and decorations that make the season come together.  The holiday season represents 25% of the entire retail shopping for the year.  A new stat this year- 19% of shoppers plan to use new technology while making their purchases- VR, AR, voice assisted or Self checkout shopping.   How did the US holiday weekend fare?

Pre-Black Friday (Thanksgiving and the weeks leading up to..) were up 17% year over year which is no small feat given 2017 set all new records.  Black Friday revenues were up 26% online- hitting $6B according to Reuters.  Combining the in-store sales, Black Friday revenues hit $23B.  Small business Saturday, also had a great year setting records with $17.8B in revenues this year.  Cyber Monday also saw nice gains year over year with a record $6.6B in sales.  Retailers overall expect to see a 4.4-4.8% growth this holiday season over 2017 according to the NRF.  Over the holiday weekend, 165M Americans shopped either online or in-store topping the estimated 164M. 

So, with all this good news what are the lowlights?   According to Retail Next data- in store traffic on Black Friday was down. And 30% of shoppers perpetually don’t shop in store on that day due to the perceived “Crowded Stores”.   Of note this year were many technical glitches on Cyber Monday that resulted in quick thinking retailers offering the same deals all week. 

The new experiences rolled out this year did not disappoint!  Wal-Mart rolled out a new concept- CheckOut with Me!  Where Sales associates are given a solution to take instant payment via credit card for large items like TVs.  This experience is to combat cart abandonment during busy rush periods.  This solution also gives the sales associates access to Walmart.com so they can order any item for a customer that may be out of stock in store.  eCommerce experiences are getting better also, with many enabling free shipping on larger basket sizes and live help (via chatbots) on the websites.  81.5% of merchants now offer this service.  This drives up the conversion rates for the online baskets. 


What is the overall summary?  11/11 in one day surpassed the entire holiday weekend shopping retail sales.  The infrastructure in China is ready and able to fulfill spike demands- and new experiences are coming at a weekly clip.  I can’t wait to see what 2019 will bring to fruition as retailers look to integrate the consumer experience across channels and reduce friction.     


New in Payments and FinTech

The word of the season is “Fraud.” As breaches in data and money laundering are still happening on a too frequent basis.  On December 3rd the US regulatory bodies (FDIC, Fed Reserve) urged the banking industry to move quickly to deploy technology to combat money laundering and comply with banking secrecy laws.   The latest “mega breach” was announced by Marriott corporation- and exposed over 500M customer records over a four-year period of time.  This incident is just one in the many strings of data breaches, and won’t be the last as many companies don’t invest in data security tools.  The scope of this breach is so large it is likely to eclipse the Equifax breach a year ago.  The worst part about the Marriott breach is that the notification to consumers went out from a third party site, so the email comes across as potentially “Fake” and not taken seriously by the consumers impacted.  Now a few days into the crisis Marriott is offering to pay for new passports (as those numbers were compromised) only if the consumer can prove that it led to fraud.


New in Hospitality

Are bunk beds and apps the new way to create a hotel experience?  A new company Life House is banking on that concept.  The company is taking a vertical approach to their hotel concept by providing denser accommodations (think four to a room) but with shared lounge and bathroom areas.  The experience with the property starts with hearing the story behind it online, then booking your reservation in their app.  The Life House company controls the experience from hotel development, through construction and into operations.  The accommodations feature high end linens and toiletries.  Lastly the app features the ability to meet virtually the other guests at the location.  Each property will have its own color themes and story – hence the full experience is designed end to end.  The adoption rates will tell whether this is a winning combination.  The firm has raised $40M in Silicon Valley investment so keep this one on your radar!


New in Event Venues


There’s no doubt about it- one of the least exciting parts of attending an event at a stadium or arena is the wait to get in.  With security concerns needing to be met- the lines can turn into a lengthy process for all attendees.  CLEAR- the solution that has made headway into airports to speed up the secure entry process is now rolling out their technology into stadiums as well.  CLEAR is already installed at Yankee stadium in NYC and the Colorado Rockies.  This summer they now rolled out to two Major League Soccer stadiums as well.  By focusing the speed on using a biometric they can maintain security and get attendees through quickly.  CLEAR customers pay $179 per year to speed through airport lines.  Now they will get instant access at the stadiums as part of their subscription.  The Seattle Mariners and Seahawks are also evaluating a deployment.  Clear customers already have a driver’s license and credit card on file so the solution is also able to drive age verification and purchase at the POS locations within the stadium.   This certainly differentiates their service beyond “TSA Pre-Check” – so maybe worth another look to join CLEAR?