••• technology research
IT workers opine on the future of disruption
Who’s next?
A report, Digital Disruption: Disrupt or Be Disrupted, based on interviews with more than 300 digital transformation decision makers in the U.S. and the U.K., reveals what industries are most and least likely to be disrupted in 2018. Based on a survey of IT stakeholders from content management firm Alfresco Software, San Mateo, Calif., and Dimensional Research, the report identifies the qualities of companies most likely to be disruptors and concludes that the cloud is key to digital transformation.
When it comes to their own companies, 50 percent of IT stakeholders think they are leaders and will disrupt, while 50 percent feel they are behind and will be disrupted by the competition in 2018. By industry, more telcos (65 percent) and technology (65 percent) companies predict they will be disruptors, while 17 percent of IT stakeholders working for government and non-profit organizations worry they will be disrupted.
One takeaway from this survey is what is most likely to propel a company into the disruptor position. According to IT stakeholders, the top predictors of success are IT vision and ability to implement new technologies: vision of their technology leadership (62 percent); ability of their technology teams to execute (58 percent); and capabilities of new technologies, such as cloud, AI and IoT (57 percent).
On the other hand, companies most likely to be disrupted are those that are lacking the vision and right levels of investment to succeed, specifically: lack of budget and people resource investments (61 percent); lack of vision among business leaders (48 percent); no willingness for company culture to embrace digital transformation (47 percent).
Furthermore, 70 percent of IT stakeholders believe business executives are taking too long to make the digital transformation leap; only 38 percent feel the technology team is holding them back. Another 78 percent feel that people changes are the most difficult, while 22 percent feel the technology changes are the most difficult.
The report also looked at which industries were most and least likely to be impacted by digital transformation this year. Forty percent of IT stakeholders say banking is most likely to be negatively impacted by failing to digitally transform in 2018 and a third (30 percent) say retail is the industry most likely to be improved by embracing digital transformation.
Other industries most likely to be negatively impacted by failing to digitally transform include government (18 percent) and insurance (10 percent) while industries likely to be improved by embracing digital transformation include health care (24 percent), manufacturing (18 percent), airlines (17 percent) and transportation (17 percent).
Infrastructure clouds or infrastructure-as-a-service (IaaS) solutions can help companies innovate and respond to changing business conditions. The vast majority (95 percent) of stakeholders say IaaS is important to their digital transformation and 81 percent say they have achieved value from IaaS but only 11 percent say they are doing everything they can and have maximized its value.
An online survey was sent to an independent database of IT professionals with responsibility for digital transformation. A total of 307 qualified IT professionals completed the survey. All participants lived in the U.S. or U.K. and worked at companies with more than 500 employees. Each had responsibility for digital transformation decision making. Participants included a mix of job levels, company sizes and industries.
••• b2b research
Small businesses bullish on AI
Many already using automation
A research study of small business owners and managers and their views of artificial intelligence (AI) and automation technology by Intuit, Mountain View, Calif., found that small businesses are bullish on the technology and are already leveraging automation tech to manage and grow their businesses.
The study, Small Business in the Age of AI, conducted with Emergent Research, surveyed 550 small business owners and managers and found that small businesses view automation technology positively, with 54 percent saying they view automation technology primarily as an opportunity. While fear of technological innovation is often referenced as the underlying barrier for adoption of machine learning and AI, only 5 percent of respondents said they see automation primarily as a threat. In fact, very few small businesses think that automation technology will lead to job losses, with almost a third (31 percent) saying automation will allow them to grow their employee base, 59 percent saying there will be no difference and just 1 percent saying there will be significant job losses.
The study also found that of those surveyed, 66 percent were already using automation technologies to help them with a variety of functions, including: finance and billing (29 percent); marketing (28 percent); sales (27 percent); customer service (25 percent); operations (15 percent) and production (9 percent).
The study found that small business owners see benefits of automation technology, namely freeing up time to get more work done (79 percent), helping with customer service (77 percent) and boosting innovation (74 percent). These improvements are being driven by leading-edge automation tech, including big data analytics (24 percent), natural language processing (17 percent), machine learning (12 percent) and AI (11 percent).
In the future, small businesses expect automation to have continued benefits. Over the next five years, respondents said that the top five reasons automation will have a positive impact include business efficiency (73 percent), productivity (68 percent), innovation (62 percent), responsiveness to market changes (60 percent) and revenue (59 percent).
••• retail research
Shrink shrinks again
Shoplifting remains the top source of losses
Thefts, fraud and losses from other retail “shrink” decreased to $46.8 billion in 2017 from $48.9 billion the year before as shoplifting and organized retail crime continued to be the leading causes, according to the annual National Retail Security Survey released by the National Retail Federation and the University of Florida.
“Retailers are making progress in combating criminal activity but there are still many challenges,” NRF Vice President of Loss Prevention Bob Moraca says. “Whether the threat is coming from cybersecurity, organized retail crime or employee theft, the job for retail security teams continues to become more difficult every day, especially when resources and staff are limited.”
According to the report, shrink averaged 1.33 percent of sales, down from 1.44 percent the year before. A total of 59 percent of retailers surveyed said shrink was flat or decreasing, up from 51 percent. Only 41 percent said shrink was growing, down from 49 percent. Shoplifting and organized retail crime (ORC) were the most frequent causes, accounting for 36 percent of losses, followed by internal employee theft (33 percent), administrative paperwork errors (19 percent) and vendor fraud or mistake (6 percent).
The most substantial losses per incident came from retail robberies, at an average $4,237.02 each (down from $5,309.72 the year before), followed by employee theft at $1,203.16 (down from $1,922.80) and shoplifting/ORC at $559 (down from $798.48).
For the first time in the survey, retailers were asked about their role in combating cybercrime. Two-thirds of loss-prevention executives said they meet at least quarterly with IT/cybersecurity counterparts to discuss potential threats and 86 percent said their companies have a cybersecurity incident response plan in place.
“Cybersecurity concerns are top-of-mind for retailers today as criminals continue to become more sophisticated in this area,” says Richard Hollinger, a University of Florida criminology professor and the lead author of the report. “This is a growing threat that will require more resources going forward. Retail executives need to invest more in loss prevention to reduce these losses to their bottom line.”
The survey of 63 loss-prevention and asset--protection professionals from a variety of retail sectors was conducted March 14 to April 13. The study is a partnership between Hollinger and NRF and sponsored by The Retail Equation.
••• food research
Convenient, healthy and fresh
Nielsen charts meal-kit growth in Australia
Meal kits, which contain pre-portioned ingredients and recipe instructions for a complete meal that shoppers prepare and cook themselves, are a small category with big potential in Australia, according to a Nielsen report on meal-kit consumption. As reported by Nielsen’s Aline de Sena, associate director, retail industry group, during the past eight months, the number of Australian households who have made a HelloFresh and Marley Spoon purchase was 1.5 percent of total households (around 150,000 households). However, if the Australian market follows the trend of the U.S., this could represent 1 million Australian homes buying meal kits in the next 12 months – significantly impacting the traditional and online grocery retail market.
Understanding who this meal-kit shopper is and their reasons for choosing this emerging consumption model is key to unlocking future opportunities for both retailers and brands. So who are HelloFresh and Marley Spoon shoppers? They tend to be affluent, with nearly eight-in-10 (77 percent) having a higher affluence than other Australian shoppers. They are also more likely to be younger shoppers (primary household shopper aged less than 45 years old). Second, when looking at life stage, they are more likely to be families and young transitionals. More than six-in-10 (64 percent) of HelloFresh and Marley Spoon primary shoppers are less than 45 years old.
What makes HelloFresh and Marley Spoon shoppers so unique? Their customers are very loyal and are willing to spend for the convenience and healthy delivery of their groceries to their front door.
Meal-kit shoppers are also high-spend shoppers. Over the past eight months, HelloFresh and Marley Spoon customers spent on average $78 (AU$) per purchase, which is $28 more than the average supermarket total spend. For retailers, meal kits could be used as a potential to increase basket sizes, as shoppers are demonstrating a willingness to pay more for convenience. For example, in Australia Woolworths recently launched the Ready-to-Create-Bag, a new initiative offering a convenient solution to customers who want to cook from scratch without the hassle of shopping for all the ingredients. And recently, supermarket chain Coles launched a convenient fresh offering, “combo boxes,” which contain a mixture of fruits and vegetables, eliminating the need for shoppers to choose healthy ingredients.
HelloFresh and Marley Spoon customers shop less frequently in bricks-and-mortar supermarkets than the average shopper (-11 percent). If meal kits continue to grow and start to hit supermarket shopping occasions, it has the potential to impact one of the most important retailer success metrics: in-store traffic. Manufacturers should consider partnering with retailers in order to ride the wave of online meal-kit consumer adoption, as they have a large online grocery customer base and are constantly innovating their offering.
HelloFresh and Marley Spoon are attracting heavy shoppers of fresh produce. With a strategy focused on delicious, healthy meals planned for the customer, their offering resonates with this segment. Considering fresh produce is around 40 percent of total grocery spend, manufacturers and retailers should also consider the role of fresh as part of their offering.
“There are clear benefits of scale as the business develops. HelloFresh’s expanding customer base allows us to further invest in our supply chain and technology platform and strike more beneficial arrangements with suppliers,” says Tom Rutledge, CEO and Founder of HelloFresh, Australia. “For example, HelloFresh negotiates directly with local, fresh producers to reduce the time from ground to table. Such investment together with customer feedback and insights allows continuous process and product improvement. And as we grow we see the compounding effect of more customers making more referrals, which means faster growth, more insight lead optimization and greater marketing efficiencies.”
More than 65 percent of HelloFresh and Marley Spoon buyers have made a repeat purchase. These two companies have a lot of loyalty and customer satisfaction, when compared to the benchmark for other grocery product launches, where a 40+ percent repeat purchase rate is considered healthy.
Meal kits tick a lot of boxes for Australian shoppers, as they resonate through their convenience of delivery to the front door, healthy eating through fresh ingredients, reduction of food waste and portion control and thus they are a powerful source of growth for retailers and manufacturers. Tapping into this growing movement will help businesses be on the winning side in the evolving online grocery landscape.
••• shopper insights
Search-terms indicate a shopper’s proximity to purchase
Abstract vs. concrete words
Marketing agency Performics and Northwestern University, in partnership with the Bing Search Network, have released a new study showing how search-query language indicates where a person is in their shopping journey. The study also confirmed that aligning search results with the searcher’s distance to purchase can increase engagement.
The study was conducted by the Intent Lab, a research partnership between Performics and Northwestern University Medill School of Journalism, Media and Integrated Marketing Communications. The Intent Lab collaborated with Microsoft to leverage searcher intent from the scale of the Bing Search network. The study comprised a comprehensive search query review, lab experiments and an ad intervention study on actual click-through rate (CTR) data.
“Our study found that a person’s search query can indicate their psychological distance to an action or goal, like buying a product or service,” says Ashlee Humphreys, associate professor at Northwestern Medill. “We found that search queries that contain fewer concrete words and more abstract words, like ‘why,’ indicate an abstract mind-set, which tends to occur early in the purchase journey. Concrete queries, like ‘shop,’ indicate a shorter distance to action. Study participants with a buying goal used search queries that were 15 percent more concrete [less abstract] than participants with a browsing goal.”
The study also found a match between searcher intent and likelihood to click on an ad. Participants with browsing goals were 20 percent more likely to click on search results that emphasized the word “best” (abstract word). Participants with buying goals were 180 percent more likely to click on search results that emphasize the word “shop” (concrete word). Participants with concrete words in their search query were also 135 percent more likely to click on retailer search results (vs. non-retailer results, where they’re not able to buy immediately).
As part of the study, Performics ran three live ad campaigns in the beauty products category, bidding on keywords with various levels of concreteness: “how” (most abstract), “best” (abstract) and “buy” (concrete). The study found a 17 percent increase in likelihood to click when matching concrete/abstract search keywords with the ad.
As a result of the study, Performics developed an Intent Scoring Algorithm that codes every search keyword in the advertiser’s account based on the level of concreteness/abstractness and then uses this measure to identify the consumer’s place in their buying journey. The alignment of keywords to intent mind-sets allowed for more tailored ad copy, bids and landing page experiences that drove conversions and increased efficiency.