Retail by MarketScale

E-commerce has rippled through the retail industry from the legacy brands to family-owned businesses. Delivery times have never been quicker, and orders have never been easier to complete. 

Efficiency is the name of the game in retail as it is across industries, and advancements in artificial intelligence is at the core of this boom. 

While data and customizable shopping experiences began to take form with online giants like Amazon, brick-and-mortar legacy stores like Target have increased AI usage to succeed recently as well. 

In its recent quarterly earnings report, Target smashed analyst expectations off the back of its ability to deliver products to customers within 24 hours. 

Rival Walmart also saw a 2.8% bump in same-store sales in the second quarter using a similar AI-based approach to physical retail. The company automated shipment unloading, used robots to clean and restock shelves and increased self-checkout stations. All the while, Walmart collects data from these processes to further refine their shopping experience. 

It is clear that the industry is taking note. According to a study conducted by Juniper Research, global spending on AI is set to reach $7.3 billion by 2022.

Tune in to Business Casual, MarketScale’s live radio broadcast, every Wednesday and Friday at 8 a.m. CST.

Target beat its target in its earnings report this week and that could signal good news for retailers nationwide. Largely driving this success is Shipt, the same-day-delivery company that Target acquired in late 2017.

Here’s what Target COO John Mulligan said in the company’s Q2 earnings conference call this week:

“Our same-day options are growing much faster than our digital sales. Specifically, combined sales for in-store pickup, drive-up and Shipt have more than doubled over the last year, accounting for nearly three quarters of Target's 34% digital comp in the second quarter.”

Target rolled out a dedicated section of its website for same-day delivery orders this summer, making it more accessible for customers.

Tech is also coming to the financial sector, but it isn’t bringing you a Target gift card. Automation stands to move workers into different roles in the near future.

Bloomberg reporter Shelly Hagan broke down which roles might be more in-demand for humans going forward:

"There are optimists that are saying there will be many finance jobs added due to automation and this technology. LinkedIn says that job postings in the finance industry that list skillsets with data science have jumped 60% in the last 12 months. So, there's a lot of demand for people that can do both finance and tech."

In a report last year, PriceWaterhouseCoopers said as many as one-third of financial services jobs could be automated in the next fifteen years.

JC Penney and Macy's have entered the world of used clothing by way of their new partnership with ThredUP. Hoping to latch onto a trend that is expected to swell to $51 billion by 2023, the retailers will allow customers to sell clothes back in the hopes that the process encourages more customers to visit brick and mortar locations. 

Hear what Daniel Litwin and Tyler Kern have to say about this trend on this excerpt from Business Casual.

Tune in to Business Casual, MarketScale’s live radio broadcast, every Wednesday and Friday at 8 a.m. CST.

This week, Business Roundtable, a coalition of hundreds of the U.S.' major CEOs, issued a statement redefining the “Purpose of a Corporation." 181 CEOs, including Jeff Bezos, Tim Cook, Jamie Dimon, signed on to the statement, which updates language to make shareholder value no longer the prime target for a corporation's existence. In summation, the 2019 version says that corporations need to commit to "...delivering value to our customers… investing in our employees… dealing fairly and ethically with our suppliers… supporting the communities in which we work… [and] generating long-term value for shareholders.”

On this snippet from Business Casual, MarketScale's B2B morning radio show, hosts Daniel Litwin and Ben Thomas offer differing perspectives on the impact of this language change, how effective it will really be, and whether or not it was a wise move.

Tune in to Business Casual, MarketScale’s live radio broadcast, every Wednesday and Friday at 8 a.m. CST.

This week's edition of The Short List highlights Nike's latest play in the shoe subscription service, and the impact of Hong Kong's airport cancelling all of its flights due to protests.
67% of retailers report higher revenue after launching subscription services, and Retail giant Nike looks to follow that trend. Nike announced its first jump into the shoe subscription service with a program called the Nike Adventure Club. The program is geared specifically for parents with kids ages 2-10, to accommodate the constant need for purchasing new shoes in different sizes. The company hopes this move will capture a larger share of the $10 billion dollar kids shoe market. As delivery woes with Amazon continue to grow, look for shipping providers like FedEx capitalize on this program.

Authorities in Hong Kong cancelled hundreds of flights in response to large scale protests inside the city’s international airport this week. This is the latest blow to the region’s travel and hospitality industries. The airport alone currently contributes approximately 5% to Hong Kong’s GDP.

The public has grown accustom to Amazon’s private label products over the last several years. The company’s Alexa line of smart devices and other Amazon-branded items have become ubiquitous across American homes. Now, businesses are getting in on the action as well.

Amazon recently announced its first private label brand for businesses, under its B2B arm AmazonCommercial. However, this does not necessarily mean the retailer plans on taking over the office supply space entirely.

“My personal hypothesis is that Amazon doesn’t want to become a house of brands or a manufacturer. My viewpoint is that they are across all of these private labels that they’ve created, they are simply filling in their assortment,” Kiri Masters, Founder of Bobsled Marketing and Forbes contributor said.

Masters’ company helps retailers bring products to Amazon to reach more consumers.

The business-to-business marketplace is significantly larger than the business-to-consumer market, and Amazon is keen on increasing its presence there. Its first product roll out is an assortment of paper items like tissues and paper towels.

“Amazon is always scanning their environment, looking at their assortment and figuring out, ‘we don’t really have a middle of the road option in this category’. That’s why they looked at this specific paper products category and recognized that people are interested in value of course, but they also want to be buying from a brand they trust,” Masters noted.

Amazon recently announced a split with Fed Ex’s Ground services. Instead, it will rely more on its own fleet of delivery vehicles moving forward. Deliveries to offices offer higher margins per stop, something that may be yet another growth opportunity for the company.

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Anytime tragedies the nature of this weekend’s mass shootings at a Walmart in El Paso, Texas and at bars in Dayton, Ohio occur, a reassessment of safety needs to take place. But where is the logical starting point?

Each shooting tragedy has its own unique set of circumstances that lead to its origin and its end, but can businesses play a larger role in ensuring customer safety, and if so, to what extent?

Dr. Alex del Carmen, Executive Director and Professor at the School of Criminology, Criminal Justice and Strategic Studies at Tarleton State University has spent his career examining public safety protocol.

“There has to be a line between the extreme and what is expected by the community,” del Carmen said.

While it can be difficult to stop something as daunting as a mass shooter, del Carmen says there are actionable items retailers and restaurants can do to increase customer safety. These include increasing lighting, limiting points of entry and adding security detail.

Crime prevention strategy is not always top of mind for retailers, and cost-effectiveness certainly plays a role in this, but del Carmen says stores have the tools to be more proactive than reactive.

“Technology has been used, but it’s mostly reactive. For instance, people say ‘I’ve got cameras’. Well that’s great but you’re going to have a video or still shot of the guy who killed a whole bunch of people. But what use is that except to tell the story the day after,” del Carmen explained. “There needs to be a monitory component to those cameras.”

Time will tell if the lessons from these incidents are learned, and if those teachings are put into action.

The House of Representatives recently passed a bill to raise the minimum wage to $15 an hour by 2025, phase out low wages for tipped workers, and make further minimum wage hikes indexed to median wage growth. Though the general public has a plurality (in some polls an overwhelming majority) opinion in favor of a raise to $15, economists are split on the issue. Some see it as an opportunity to boost worker productivity, others believe it'd only increase poverty.

What about businesses, though? What do they think of the potential raise, and how might it affect their bottom line? On this segment of American Made, a conversational corner on American policy affecting American business, we break down the differing perspectives and try to draw some conclusions on how the current fair wage movement will change the world of business.

American Made is a segment on Business Casual with Daniel Litwin & Tyler Kern, MarketScale's B2B live radio show. Business Casual airs every Friday at 8 AM CST on the Simple Radio app and on our website. You can also find episodes after the fact on Apple Podcasts & Spotify.

Home renters and businesses of all sizes are feeling the squeeze of soaring rents across the United States’ largest metropolitan areas.

Ecommerce has long been ascribed as the killer of brick-and-mortar retail, but the price of staying in business is also contributing to closures across the country. Menswear retailer Barneys recently had annual rent raised by more than $11 million on its Manhattan flagship location and has been forced to consider several options to cut back costs.

Steven Kalifowitz, President of Localize.City, a software technology startup that uses AI to give prospective home renters and buyers a wealth of high-level data insights, has followed the volatile New York City real estate scene.

“A place like Barneys can get really squeezed because a landlord wants high rent and because so many of these landlords have been here for so long, they don’t mind keeping a store empty for a certain time until they can get the right price.” Kalifowitz said. “The landlords in New York City are less concerned about month-to-month income when they can get such a big jump from someone else. And they have the cashflow to wait.”

Also contributing to the increase in rent prices is an imbalance of access to information on properties between landlords and renters.

“Until now, there’s been a large asymmetry of information. The people who own properties know a lot more than those who don’t. With that asymmetry going away, it’s changing how people are able to find properties and negotiate them,” Kalifowitz said.

Technology may be giving power back to buyers, but retailers are still at the moment fighting a two-front war against ecommerce competitors and leverage-holding landlords.