Gartner’s Predictions For Retailers Show More Change Ahead

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From WHICH-50:

Customers are demanding greater levels of contextualisation of products and services. Retail CIOs can leverage intelligence to capture deeper insights, anticipate customer needs and proactively deliver across every touchpoint. Retailers must reinforce their store’s position as an integral part of delivering unified commerce. Gartner’s recent research Predicts 2020: Consumers Determine Retail Success Well Before the Sale expands on the five predictions from our Gartner team on the future of retail.

. . . .

The retail industry continues to transform through a period of unprecedented changes, with customer experience fast becoming the new currency. The digital disruption caused by new technologies and a shift in customer expectations continues to challenge traditional retail models.

. . . .

Robots

Tight labor markets and disruptive technologies have caused retailers to investigate new human-machine hybrid operational models. These models are built on the foundation of AI and automation technologies to assist human workers in streamlining and optimising efficiency and accuracy in tasks such as warehouse picking, inventory management and customer services to boost productivity.

Inventory

The level of investment for digital transformation efforts continues to rise, forcing retailers to find alternate sources of funding beyond cost optimisation efforts. Inventory reduction provides a clear opportunity for funding if “dead” inventory can be reduced. This will require a delicate balance of inventory management, particularly in the store, as buy online, pick up in store (BOPIS) remains a popular choice for consumers. Many retailers are now leveraging their existing store estate as local fulfillment hubs to mitigate the rising costs of last-mile delivery. Furthermore, retailers now have the challenge of predicting demand and aligning inventory at a localized level to support customer expectations for same-day in-store pickup or same-day delivery option. Retailers must also further investigate new models to profitably deliver against the growing needs of online shoppers and make their networks of stores less of a financial constraint.

Digital Workplace

This will require a focus on associate training and development, including upskilling in-store associates to perform a wider variety of specialised tasks. At the same time, retailers continue to have challenges in retaining skilled and productive staff, as well as a continuing increase in employee turnover. To mitigate labor constraints, retailers can collaborate to enable a shared workforce.

Alternate labor models are part of the “future of work,” which will include more freelance, part-time and limited-term employment. This is the expectation of the millennial and Gen Z cohort as they become the mainstay of both consumer and labor markets.

. . . .

Artificial Intelligence

Ever-changing consumer expectations and the addition of new business models mean retailers must operate more efficiently, preemptively and at scale. Through the application of AI across a retailer’s ecosystem, retailers are applying data analytics into every touchpoint of their business. Including sales predictions, consumer personalisation, store optimisation and product recommendations.

Link to the rest at WHICH-50

As many perceptive visitors to TPV will have already concluded, PG posted this item with Barnes & Noble in mind.

In 2018, Barnes & Noble reported revenues of $3.7 billion for the full year. It presently reports that it has 627 retail bookstores, including stores in all 50 states in the US.

Barnes & Noble is by far the largest operator of physical bookstores in the United States.

The second-largest retail bookstore in the US is Books-A-Million: 260 retail book stores in 32 states with an estimated annual revenue of $472 million.

PG Notes on Books-A-Million:

1. Books-A-Million went public in 1992 at an initial price of $3.00 and its share price reached a high of $39 per share in 1998. In December, 2015, the stock’s final closing price on a public market was $2.64 per share. During 33 years as a public company, the company had declined in value.
2. At that time, all shares of Books-A-Million were acquired by its chairman and it became a privately-owned company once again.
3. In 2014, Books-A-Million was identified by 24/7 Wall Street as America’s worst company to work for, citing low satisfaction among employees due to “high stress and low pay… low chance of promotion, [and] hours are based on magazine and discount card sales.”
4. Doing a bit of math – always a dangerous thing – PG determined that it would take almost 8 booksellers the size of Books-A-Million to equal the annual sales of Barnes & Noble.

The third-largest retail bookstore in the US is Half Price Books: 127 stores in 18 states with an estimated annual revenue of “about” $230 million. (Some third-party sources say sales are lower – $208 million is one estimate.)

PG Notes on Half Price Books:

1. 45 of the company’s 127 stores are located in the state of Texas.
2. Many (All?) of the stores also sell used books.
3. Per PG’s still-impaired math, it would take about 16 booksellers the size of Half Price Books to equal the annual sales of Barnes & Noble.

PG’s bottom lines from this mish-mash of facts and statistics:

1. Barnes & Noble’s new CEO, James Daunt, doesn’t strike PG as the kind of guy who will embrace and expand the BN online bookstore. He seems to be a B&M sort of retail guy who only grudgingly tolerates ecommerce.
2. Based on what PG has read about Mr. Daunt, he also doesn’t seem to be the kind of guy who will, per the OP, develop “human-machine hybrid operational models,”  position BN’s retail stores “as an integral part of delivering unified commerce” or “investigate new models to profitably deliver against the growing needs of online shoppers.”
3. In contrast to PG’s impression of Mr. Daunt, PG believes Jeff Bezos would hire the Borg to staff Amazon warehouses if only to silence major media bleating about the poor oppressed and exploited Amazon warehouse employees who really need to unionize, etc., etc., etc.
4. As far as either artificial intelligence or the old-fashioned kind of intelligence that resides between an employee’s ears, Amazon is already so far ahead of anyone else with respect to selling its customers exactly what they want at a great price at the precise time they want it that no traditional retailer of fungible products like books has much of a chance.
5. Are serious readers and book-purchasers really pining for a better retail bookstore so they don’t have to go to Amazon to buy a book right away?
6. In an era where everybody seems to be pulling a device out of their pocket to look at a screen, are ebooks really going to give way to dead-tree products sold in physical bookstores?
7. If Barnes & Noble continues to sink into the commercial sunset, closing stores to lower costs, downsizing, trimming, cutting, etc., etc., what’s the future of Big Publishing?
8. Does “Only an established publisher with a good reputation can get your book into the bookstore” carry much weight when that bookstore is called Half Price Books? What about, “We can only publish one book per year for any author other than James Patterson?” or, “We don’t accept manuscripts other than those presented to us by a literary agent?”