Shopping malls and e-commerce—the more things change…

By Steve Simmerman | 11/21/2017 | 2:29 PM

Alibaba to Buy Big Stake in Wal-Mart China Rival

E-commerce giant will pay $2.88 billion for 36% of No. 2 hypermarket operator Sun Art Retail Group

Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy. — Daniel Zhang, Alibaba chief executive officer.

This story, as reported by the Wall Street Journal today, is telling in many ways. As most of us have read over the past year or so that "retail is dead," it's becoming clear that retail is undergoing a fundamental transformation and will clearly play a role in the "customer journey" for the foreseeable future. Many retailers I talk to report e-comm revenues ranging from 5-10% of total revenues which leaves the balance to be store-based purchases. Even with e-comm revenues growing in a double-digit manner, the store will continue to play a crucial role in the customer journey for the time being. This is likely one of the most disruptive times in retail and one of the most magnificent in terms of innovation! 

Sure, the emergence of the shopping mall transformed retail, but nowhere near the scale of the global e-comm phenomenon! The history and development of the mall are well documented in a research paper written in 1991 titled "A Brief History of the Mall" by Richard A. Feinberg, Purdue University and Jennifer Meoli, Indiana University of Pennsylvania (http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=7196). As Feinberg and Meoli cited: 

Shopping malls didn't just happen. They are not the result of wise planners deciding that suburban people, having no social life and stimulation, needed a place to go (Bombeck, 1985). The mall was originally conceived of as a community center where people would converge for shopping, cultural activity, and social interaction (Gruen & Smith, 1960). It is safe to say that the mall has achieved and surpassed those early expectations. In today's consumer culture, the mall is the center of the universe.

As global leaders like Amazon and Alibaba continue to unfold their strategies, including the use of brick & mortar outlets, it will be interesting to read 26 years from now what the retail landscape will look like. Will the architects at Alibaba and Amazon prove to be "wise planners"? Will the digital e-comm experience be the "center of the universe"? Many would argue that the web is already the "community center where people would converge for shopping, cultural activity, and social interaction." The role of the physical store and malls will continue to evolve. It's clear that stores of the future will be nothing like stores of the past. It happened to main street stores with the emergence of the mall, let's see how the digital retail world will help transform the physical retail world. Your thoughts?

Petya Ransomeware Attack and the Impact on Global Supply Chains!

By Steve Simmerman | 06/29/2017 | 7:18 AM

It’s a very painful reality that today’s global supply chains are under incredible stress and cyberattacks are increasing the pressure! The recent “Petya” ransomware attack is costing some organizations a ton of money as they scramble to recover, and the ripple effect across the global supply chain is astounding as ports around the world were forced to close. As we read in the latest Wall Street Journal Logistics Report[1]:

  • Maersk A/S, the world’s biggest container-ship operator, has shuttered many of its ports around the world. French construction giant Saint Gobain resorted to manually operating some factory equipment. Other companies affected include Merck & Co., British advertising giant WPP Group PLC and Russian oil producer PAO Rosneft.
  • Mondelez International Inc. confirmed that it was also a victim. The cause was determined to be a virus, which had been isolated, though the company’s systems remain down as of the release of the WSJ report.
  • Ports in the U.S., Europe and India reported some Maersk-run container terminals weren’t taking ships. APM terminals in New Jersey and Los Angeles were closed Wednesday.
  • The Port of New York and New Jersey said the New Jersey terminal would be closed Thursday as well. The Dutch port of Rotterdam, one of Europe’s biggest, said Wednesday that two container terminals operated by Maersk’s APM had stopped activities. “The port is still running at three quarters of its capacity,” said Martijn Pols, a spokesman with the Port of Rotterdam.

Imagine the impact of something like occurring as companies ramp up for the peak holiday shopping season. The importance of dynamic, intelligent supply chain planning and real-time monitoring has never been more.  Software alone can't solve this problem it also requires tremendous coordination of disaster recovery programs and processes. As we talk about a lot in this blog series, it's all about the people, the processes and technology working in concert and the need for this has never been more acute in today's global and digital supply chain!  Are your disaster recovery programs and processes ready?


[1] https://www.wsj.com/articles/fallout-from-global-cyberattack-extends-into-second-day-1498639146?mod=djemlogistics

Skate to where the puck is headed...Seniors and online shopping

By Steve Simmerman | 12/19/2016 | 7:37 AM

You've all probably heard the famous quote by hockey great Wayne Gretzky - "Skate to where the puck is going to be, not where it has been." While it is unlikely that any of us will predict the future with any degree of certainty or accuracy, we can all take in statistics, data, trends, etc. to make a more educated guess about what the future will hold.

A recent study by the EMEA Retail team at Colliers International shows that 78% of seniors (65+ years old) in the UK are regularly shopping online - the highest percentage in the study, with the US showing only a 43% participation rate.  Germany, Sweden, France and the Netherlands were all ahead of US 'silver surfers' in terms of shopping online. There have been countless stories and research showing how the global population is aging - so appealing to this growing segment of the online buying universe will be an important component of all online e-commerce going forward. 

The Colliers study also pointed out that among the 'silver surfers', China leads with 50% of ALL online purchases being conducted via a mobile device whereas the UK is just 29% and the US is 27%.

The study also went on to state that by 2020, 45% of all online shoppers will buy from other countries and that cross-border online sales will increase from US$230B today to US$1 Trillion! 

With an ever-increasing segment of the global population becoming 'silver surfers' in the coming years, it appears that the puck is indeed headed in this direction.  Appealing to this segment of the market with appropriate mobile technologies and online buying experiences will be a critical component of any e-commerce strategy. In addition, with the growth of cross-border shopping, the demands on delivery and fulfillment infrastructure as well as technology to support this flow of goods will surely continue to evolve in response to this market.

Simple, Practical Innovation

By Steve Simmerman | 11/05/2016 | 5:04 AM

Sometimes it just takes a simple approach to truly innovate.  Taking a look at what is right in front of you and imagining how it can be made better or provide more benefit.

For all you road warriors out there (like myself), I spend a lot of time passing through countless airports all year.  While on a recent trip through ORD (road warriors know this code instantly), I saw a truly simple, practical innovation aimed at making traveler's lives just a bit easier.

HMSHost Mobile Food Cart

Take one extended length service golf cart, remove the seats, add some nice graphics, a simple storage bin on the front, a clean-looking display case on the back, load it with enticing snacks and drinks, add a Wi-Fi enabled Point of Sale device and voila!  You have a mobile food cart!!  As travelers you know how tough it can be waiting for flights, hoping to get a comfortable seat to rest, read or do a bit of work - but you hate to have to give up that seat to go get a drink or something to eat.  This mobile food cart that I saw for the first time last week at ORD is brilliant.  The cart pulled up to a crowded group of gates and was immediately surrounded by people buying drinks, snacks and sandwiches.  The person driving the cart was swiping credit cards faster than I've ever seen and the customers seemed genuinely happy to have such a convenient mobile snack cart!

My hat is off to the team at HMSHost that developed and implemented this concept!  As a road warrior, I applaud your simple, practical innovative approach to providing better service to all travelers!

As it turns out, HMSHost has also launched a series of food trucks for motorway travelers, beer carts and even bicycle food carts (Memphis) and even a made to order food cart (Maui - think BBQ tacos) in what they are calling a "the most seamless dining experience for the traveler".

Bravo HMSHost!!!  Travelers of the world will love these innovations!

Why do we solve the same problems time after time?

By Steve Simmerman | 05/19/2016 | 9:40 AM

Some very exciting technology and supply chain news this week. I firmly believe that these innovative products and strategies are only the beginning of what we will see in the supply chain in the very near future.  Why not use this technology to help address the endless supply chain challenges that we have been addressing with traditional technology and approaches?  Driverless trucks?  Virtual digital assistants?  3D printing across the supply chain?  All awesome possibilities.  Here's a quick recap and I'd encourage you to read more about these news items.....

At the google I/O developers conference, they announced Google Home (think competitor to Amazon Echo).  Google Home is powered by Google Assistant a digital assistant. Google also introduced Allo a new messaging service.  They also announced Duo, a new digital chat service. Are the days of Allo and Duo assisted supply chain apps around the corner? I think the possibilities are endless and just take some thinking about things differently.  All of this is backed up by Google's bet on Artificial Intelligence (AI) and the notion that a virtual digital assistant is ever present and will help consumers (and why not business people) guide their day in real time.  Why do I have to go to my WMS to login, punch up some queries or dashboards when I can just use Allo.  And oh, by the way, if you don't like Allo why not try Alexa or Siri?  As I discussed with many people at the Annual WERC Conference, I believe we are on the cusp of some truly disruptive supply chain applications that will leverage these technologies.

Driverless trucks you say??  A bunch of google technologists and engineers have broken off to form Otto and are well on the way to delivering driverless trucks...sure there will be regulatory and safety issues, but the economics behind this innovation make a lot of sense...perhaps this is just the beginning to addressing the driver shortage and other costs tied to our massive transportation network.  As one article said, 'there used to be elevator operators in every elevator'...

  Otto Driverless Truck

Lastly, UPS announced that it's partnered with SAP to usher in the next century of the supply chain. Yes, it's early and still needs to be proven out, but it's a very innovative approach to disrupting the technology and using existing infrastructure to address real supply chain needs.

All great stuff and all just announced this week....the rate of innovation in supply chain is tremendous and the future looks very bright from my perspective.  I'm interested to hear how your organizations are looking at innovations like these and how they can be applied to your supply chain and overall business needs....let us know!

5% Unemployment = More Leverage for Temp Workers

By Steve Simmerman | 05/04/2016 | 4:03 PM

On the people front in supply chain, the pressures surrounding labor are continuing to mount. With California and New York already enacting $15/hour minimum wage laws and with unemployment hovering at 5% ("perfect employment" according to some economists), companies are starting to see much more pressure on wages and programs designed to attract and retain quality workers.

An article in USA Today talks about the pressure for higher wages, better benefits and even union organizing activities by temporary, part time workers. In speaking with customers around the country, it's not uncommon to hear turnover figures of 25%, 35%, and sometime much, much higher. In addition to that, I often hear about candidate hiring ratios of 6:1 or 8:1—that is only 1 out of 6, or one out of 8, temporary workers actually stay on as employees. The cost of recruiting, hiring, and training can be a huge drain, and these costs often are understated. In addition, productivity takes a huge hit when you consider all of the supervisory time spent on-boarding and training all these temps. The article concludes that many companies are starting to rethink their temporary-worker strategies in favor of going back to full time employees.

We've all heard the stories of a tight labor market, aging population, and more. As these pressures continue to build, we'll see if we reach a tipping point where the cost of having a more well-rounded full-time employee strategy outweighs the pain and costs of constant temporary-worker turnover, lower productivity, and all of the associated costs. Let us know what you see in your operation and in what direction you see the labor strategy heading.

Happy Thanksgiving!

By Steve Simmerman | 11/25/2015 | 6:40 AM

Wishing you, your family and friends a warm and Happy Thanksgiving!

Pending Workforce Crisis 2030

By Steve Simmerman | 11/10/2015 | 3:24 PM

We hear all about the recent declines in unemployment here in the US.  According to the Bureau of Labor Statistics the current US unemployment rate is 5% as of October.

Many economists argue that 5% represents "Full Employment". We're fully aware of how competitive the labor market is today and that's true in distribution, retail, IT and more.  Having a 'people strategy' is critically important and Rainer Strack has done a fantastic job of illustrating the pending global Labor Crisis as we head toward 2030 in his TED Talk.  That may seem like a long way away, but the trend has started and it's frightening in many ways. Having a people strategy today is essential for the long-term health of any business or organization.  Finding ways to become more efficient as well has having carefully orchestrated HR programs aimed at attracting, hiring, training and retaining a good skilled workforce will become an even bigger challenge over time as the workforce demographics shift.  Does your organization have a healthy People Strategy?  If not, the time to start working on it is now.

Tell us what some of your key People Strategies include, we'd love to hear your ideas.

Amazon Flex - shaking up the workforce

By Steve Simmerman | 10/08/2015 | 11:26 AM

Amazon recently announced Amazon Flex and if you have not checked it out - you should!  Think of it as an Uber-like experience for those people that want to work when and where they want as a delivery person for Amazon.  I saw a demo of the Amazon Flex at CSCMP's Annual Conference last week - it was mind-blowing.  With unemployment at 5.1% (some say this is 'full employment') it's getting harder and harder to recruit, hire and retain good skilled workers.  Well, Amazon is attacking this problem very effectively by offering an extremely flexible work option, with good pay (they say $18-25/hour) and backed by exceptional mobile technology.

It will be interesting to see how this develops, but is there any reason in the world that DC, retailers and others should not be attacking the labor shortage in a similar manner?  Amazon has set the bar very, very high.  How are you addressing the difficulty of hiring good, skilled workers for your organization?

Dip please, do not swipe! Part II

By Steve Simmerman | 09/02/2015 | 8:11 PM

Seems many small/medium businesses are falling behind in terms of complying with new chip cards according to a story in the Wall Street Journal

It seems we may be in for a longer journey than anticipated as the new chip cards are helping to reduce fraud at the point of sale, but on-line fraud is on the rise and as e-commerce continues to explode it looks like 'tokenization' will be the buzzword of the future...stay tuned.

An excerpt from the story by the Wall Street Journal:

The switch-over won’t solve all payment fraud. In the U.K., losses due to counterfeit cards fell by 56% between 2005 and 2013, after chip-enabled cards were rolled out, according to Aite Group, but online fraud jumped by 64%.

Payment industry officials say they also are trying to prevent a run up in online fraud with new security measures such as tokenization, in which card numbers are turned into unique digital codes. “There are now more solutions to identify and detect online fraud,” said Stephanie Ericksen, a vice president with Visa Inc.


Dip please, do not swipe!

By Steve Simmerman | 05/13/2015 | 6:25 PM

Many of you have probably started to see these tiny chips appearing on new versions of your debit and credit cards...so what's the big deal?

Chip Card

The big deal is that according to a recent story in the Wall Street Journal www.wsj.com - "Some 575 million of the new cards--representing about three-quarters of U.S. credit cards and about 40% of debit cards--are expected to be in the wallets of American consumers by year-end, making it the biggest rollout of new cards in decades."  While the chip cards have been in use in Europe, Asia and Canada for years, the program is now hitting the US and has an October deadline that has many smaller banks and retailers scrambling to be in compliance.  Retailers must upgrade or replace their payment terminals to accept the new cards. Come October, under certain circumstances, the liability for fraudulent transactions will shift to the retailer from the issuing banks.  With the new payment terminals, the chip cards are dipped into the reader vs being swiped like a traditional mag stripe reader.

One card manufacturer - Oberthur Technologies claims on their website that "The 2013 Federal Reserve Payments Study reported that in 2012, $2.1 billion –  or 57 percent –  of total credit card fraud was committed through card-present transactions like counterfeiting, lost or stolen cards, mail fraud and identity theft. In 2013, the U.S. alone accounted for 51% of worldwide payment card fraud costs."  That's a big deal!

Oberthur is a French company but their plant in Exton, PA is working like crazy to keep up with the demand for new cards - to the tune of a capacity of 20million cards/month being produced!  Employment at the plant is up 68% since 2013 and they are now running round the clock to keep up.

According to the Oberthur website - 95% of payment terminals in Western Europe support the new EMV cards (Europay, MasterCard, Visa - EMV is the global standard for integrated circuit cards or "chip cards") while only 14%, yes 14%, are EMV compliant in the US. That's 14% of 11.8 million terminals!  That's a big deal!  The exposure for continued fraudulent activity is huge.

So with only a fraction of the payment terminals able to support chip cards, tens of thousands of retailers falling behind and many smaller banks already admitting that they can't issue the new cards until next year there are clearly some potential impacts to the supply chain.

As I like to talk about all things related to people, process and technology, this EMV mandate certainly has lots of complexity to it, but at the end of the day, let's not forget about one of the apparently simpler tasks - think of all of the retail associates that have to be trained to help customers with the new terminals and cards and politely remind them to "Dip please, do not swipe".

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Steve Simmerman

Steve Simmerman

Steve Simmerman is a Senior Director with JDA. Simmerman has more than 25 years of experience in the supply chain industry including software, consulting and material handling. He has focused his efforts on working with clients to achieve high performance supply chain results through partnerships and creative solutions. He is a member of CSCMP, WERC, and MHIA and is a regular contributor to several industry publications and events. Simmerman holds his undergraduate and MBA degrees from The University of Notre Dame.


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