Retail Ramblings Podcast

Episode #3- VR (Virtual Retail)

Episode Highlights:

  • Retail winners. This week’s retail winners are Owens Corning and Deciem. We explore how these retail brands are growing their footprints and setting themselves apart from the competition.
  • Retail losers. We take a look at this week’s retail losers, which include The Home Depot and Avon. We provide commentary around what this well-known retailer and brand can be doing to bounce back after some disappointing announcements.
  • The retail roadmap. We discuss the latest trends dictating the future of retail.
  • Data dive. We talk about some interesting uses of data, and show how big data can have some unintended consequences.

Listen to Episode 3: VR (Virtual Retail)

Show Notes


Retail Winners & Losers

DIY

Winner: Owens Corning

  • Fortune 500 company
  • From Toledo, Ohio
    • Insulation, roofing, fibreglass composites
  • GAF 
    • Started in 1886
    • Viewmaster fame
    • Also was heavily involved in Film
    • Based in NJ
  • Demand for asphalt shingles to increase in the next 5 years
  • 5.6% pa to 8.5bil in 2021.  
  • Research from the Freedonia Group in Cleveland
  • Residential building construction continues to rise
  • Housing starts rising (see below)
  • People looking at superior products – high performance asphalt shingles provide that
  • Lower quality laminated asphalt shingles will still increase in demand (laminated asphalt shingles command the majority of market share
  • Withstand extremely high winds – great in coastal areas
  • Other natural weather impacts
  • California building codes mandate usage of cool roofing

Loser: Home Depot

  • Home Depot needs to step up security measures!
  • A man has been charged after buying 18 barbeques at the wrong price with fraudulent gift cards from Home Depot stores in the GTA, and selling the grills online.
  • It all began in May, with BBQ season just around the corner.
  • Police allege the man would go into a Home Depot and remove the price tag from a $1,599 BBQ and swap it with the price tag of a $219.99 grill. At that reduced price, the man would allegedly purchase the barbeque with a “fraudulently obtained Home Depot gift card,” police said. He would then sell the grills online, it is alleged.
  • Police are also looking for a second man, believed to have been involved in the heist.
  • Jefferey Wilson, 42, has been charged with 18 counts of fraud under $5,000 and possession of property obtained by crime, over $5,000.
  • BBQ bandit allegedly buys 18 grills from Home Depot at wrong price, resells them at higher price

Cosmetics

Winner: Deciem

    • Founded in 2013
    • The Ordinary label is one of their most successful
    • One of their brands, Grow Gorgeous, sold last year to the hut group with 700% yoy growth
    • vertically integrated multi-brand company, its own laboratory, manufacturing, e-commerce sites, retail stores and marketing infrastructure—that enables the company to rapidly identify opportunities, create and incubate new brands, and deliver quality, much-sought-after products.
    • Driven by a consumer-centric focus that is already impacting the world of beauty.
    • “functional beauty” grounded in science, DECIEM offers a broad range of products across price points through its own multi-brand stores, department stores, e-commerce, TV shopping networks and select retailers
    • Almost like a ‘tiny’ sephora. They have their parent brand (DECIEM) where they retail their own brands in their stores
    • Mostly on millennial beauty users and diverse skin tones
    • About to open first store in US after seeing success in Canada, UK and Australia
  • Estee Lauder invested in Deciem,
  • independent brands have been yanking market share from established multinational corporations like The Estée Lauder Companies
  • Shoppers are shopping more online and curating different pieces from different labels
  • Deciem is located around the world
  • See Too Faced cosmetics
  • See GLAMGLOW
  • See makeup brand Becca
  • Lauder uses its resources to amplify brands’ unique selling points
  • Estee Lauder and failed completely at appealing to an emerging global market of Millennial skincare geeks. These are educated consumers who could also be described, without stretching the truth, as part-time researchers
  • Strong presence in the digital sales channels

Loser: Avon

  • Avon’s CEO, Sheri McCoy, is expected to step down, according to people familiar with the matter, after her effort to turnaround the struggling cosmetics seller faltered.
  • Ms. McCoy is near a decision to retire, according to the people, who cautioned that terms of her departure are still being worked out and no final decisions have been made. Either way, Ms. McCoy, who has run Avon AVP, +1.45%   since 2012, is expected to stay on for several more months. It is not clear who might succeed her.
  • The move comes after Avon in early May posted a surprise loss that sent its stock tumbling. That same day, shareholder activists Barington Capital Group LP and NuOrion Partners AG, which together own more than 3% of the company’s stock, said Avon’s turnaround needs to go faster and it should find a new CEO.
  • Avon in late 2015 agreed to two deals that gave troubled-firm investor Cerberus Capital Management a 17% stake in the company, three board seats and control of its struggling North American business. The business Ms. McCoy runs sells outside the U.S. and is London-based.
  • To make matters worse: New Avon’s latest hire, Tom Conophy, who joined the company as CIO from Staples in September, has quit after just six weeks in the role.
  • Conophy left New Avon for AutoNation, where he is now Chief Technology Officer.
  • Both New Avon and AutoNation declined to comment further on the move, when approached by The Wall Street Journal.

The Retail Roadmap

Virtual Reality Applications For Retail

L’Oreal uses virtual reality to make internal decisions at its New York HQ

  • At L’Oreal’s Manhattan headquarters, a virtual reality room is letting brands use the technology to test product packaging and branding designs faster and more efficiently.
  • The company’s more than 30 cosmetics, hair-care and skin-care brands are encouraged to use the virtual reality room in order to drive efficiency and productivity when making decisions around product merchandising, packaging and overall branding.
  • Dermablend, a dermatologist-created brand of foundations and concealers, is the first L’Oréal property to test the ways the virtual reality room could change how its lean team of 14 people makes decisions.
  • So Dermablend sent its proposed new packaging design and the rebranding for an in-store display unit to the Beauty Lab, where the packages were rendered using 3D modeling and the unit, in the context of a virtual Ulta store, was overlaid in the VR world. Dermablend brought in a focus group, and had them respond to the different branding and packaging.
  • The process of rebranding its Ulta unit took three months. Without the VR demonstration, L’oreal thinks it likely would have taken closer to eight.
  • There is a learning curve involved with working in VR internally and as the beauty world gets increasingly competitive, moving at a faster clip is essential. Since Dermablend’s internal tests, other brands at L’Oréal are using the room for internal projects like retailer presentations and consumer decision trees. This is coordinated by the Future of Retail team, who own the usage of the room and act as a cross-divisional partner at the company.

 

Walmart using VR for training:

  • “Imagine you’re a new Walmart store manager and you’ve never experienced a Black Friday,” according to Walmart’s blog revealing the initiative. “Wouldn’t it be helpful to understand the dynamics of such a busy day before you ever had to actually manage your associates and customers through it?”
  • Walmart wrote, “VR allows associates to experience a lifelike store environment to experiment, learn and handle difficult situations without the need to recreate disruptive incidents or disturb the customers’ shopping experience.”
    • Associates going through VR training were also found to retain what they’ve learned in those situations better than those who hadn’t. VR training is being rolled out to all 200 Academy facilities by the end of 2017, reaching over 140,000 associates who will graduate each year.
  • Will virtual reality become the ultimate retail training tool?

Data dive 

Amazon’s Acquisition of Wholefoods (Data Implications)

  • Amazon has acquired Wholefoods, big reason is in store behaviour measurement
  • It’s natural to think of it as a retailer but in truth, Amazon is a data, technology and innovation company that happens to sell things.
  • Truly the ‘everything store’.
  • One out of seven adults visits a grocery store each day. And: the average American makes 1.6 trips per week to the grocery store.
  • Online grocery, delivery hubs, shop front
  • 300 million customers behaviour tracked online but not off it
  • Data, mixed with online and offline, can create completely tailored store offerings that are amended in real time based on demand
  • Build better private labels that undercut national brands
  • Amazon’s strategy of not chasing revenue is well known, as they operate with very little actual income
  • Primarily, consumers are more likely to browse and make impulse buys in store—driving up the total purchase—whereas shoppers are more targeted online, he said.
  • The data Amazon collects will likely help it decide which of its growing roster of private-label brands to expand and which new ones to launch, especially when it comes to consumables and food.
  • Knowing what a household eats would give Amazon a goldmine of correlations to other products, services and content that fit a consumer’s broader lifestyle.
  • Volume increases significantly
  • What Amazon is buying, more than anything else, is not a customer but rather a place: The physical world, and all the data that goes with it.
  • By buying Whole Foods, Amazon gives itself a fighting chance to bring together deep analytics online and offline. This, in turn, not only should lead to more effective cross-selling, but also to a rich understanding of their users.
  • The only way to survive is to get smart—fast—on how to make physical location, and all the data that comes with it, pay.
  • brick-and-mortar, while wounded, is still overwhelmingly dominant
  • 2019 B&M will still only be 9.8%
  • Real time information
  • Those in store are more prone to impulse purchases
  • The overlap between whole foods and Amazon is enormous, and these consumers are largely affluent