Actionable Insights From APT's Retail Practice
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Convenience Stores Becoming Convenience Destinations

April 21st, 2017 | Posted by APT in Retail - (Comments Off on Convenience Stores Becoming Convenience Destinations)

Convenience retailers are increasingly challenging the notion that customers should only visit their stores to fuel up and grab snacks, especially in light of the rise of car-sharing and hyper-efficient cars. Some, like Kum & Go, are adding features like growler stations. Others are investing in services to drive customers into the store, like Amazon Lockers and USPS goposts, which have been popping up in numerous QuikTrip and 7-Eleven locations. These innovations are no longer just nice to have. They are becoming necessities for profitable brick-and-mortar retailing.

Some convenience stores are also emulating restaurants to draw traffic, adding outdoor seating areas, free Wi-Fi, or drive-thru windows. For example, Duchess designed a prototype store concept with a greater focus on foodservice, including made-to-order menu offerings, an in-store dining area, and touch screen ordering options. Similar to kiosk ordering, some convenience retailers are also adding at-the-pump food order screens.

Taking on these types of capital-intensive projects presents both great opportunity and great risk for executives. If managed correctly, they can drive significant profit growth. However, some of these programs may not pay off. With each new initiative comes questions regarding their implications. For example, which categories should retailers downsize to create space for self-service lockers? Will introducing a made-to-order foodservice concept drive enough incremental transactions and add-on purchases to cover the associated costs? And which locations will respond best to at-the-pump ordering screens?

The best way to answer these questions is to first pilot each concept in a subset of representative locations, then closely monitor their performance. This approach allows convenience retailers to ascertain whether the initiative warrants further investment, based on incremental traffic and sales. Overall, there are three key questions executives must answer before making decisions on broader rollout.

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The Channel Migration Challenge

April 20th, 2017 | Posted by APT in Financial Services - (Comments Off on The Channel Migration Challenge)

When asked about future strategies, APT research shows that financial services institutions (FSIs) consistently report a focus on enhancing omnichannel offerings to meet the needs of a rapidly evolving customer base. Specifically, 60 percent of banks surveyed highlighted channel migration as a strategic priority, and 100 percent of those respondents said they are focused on improving digital onboarding processes to accelerate this channel migration.

Based on those findings, it is clear that banks aspire to create a seamless experience across channels and reduce reliance on the branch for transactions. This is a win-win shift for FSIs and customers alike. For banks, there are significant cost savings, and customers gain a more convenient and seamless banking experience. Further, research from Bain indicates that omnichannel customers are more loyal to their primary bank than those that only bank in one channel.

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New Grocery Players and How to React

April 18th, 2017 | Posted by APT in Retail - (Comments Off on New Grocery Players and How to React)

News that limited-assortment grocery chain Lidl plans to open its first U.S. locations this summer has likely already catalyzed grocers’ efforts to refine their strategies in preparation for the competitive incursion. Recent reports show that even fellow European grocer ALDI – which has already established a presence in the U.S. – is also reacting, embarking on a remodel initiative across markets, including those where Lidl is expected to open its first stores.

European discount grocers are not the only disruptors grocery retailers are facing. As other grocers successfully innovate in response to increased competition from online, convenience, and big box players, all grocery chains must evolve to keep pace.

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So Many SKUs, So Little Space

April 14th, 2017 | Posted by APT in Manufacturing - (Comments Off on So Many SKUs, So Little Space)

The number of SKUs in stores has tripled since the 1980s – but sales have not grown at the same pace. Now, many retailers are reducing the vast number of products and pack sizes offered in-store in an effort to create a more streamlined shopping experience, simplify supply chain logistics, and reduce out-of-stocks. As a result, shelf space is increasingly constrained.

This shift creates greater pressure for consumer packaged goods organizations (CPGs) to optimize their in-store assortment. With fewer items on the shelf, CPGs must be as strategic as possible with the products they do offer. Quantifying the impact of each assortment change will help organizations make smarter decisions about which products to prioritize to fuel growth.

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The Importance of Testing in a Post-Merger Environment

April 12th, 2017 | Posted by APT in Retail - (Comments Off on The Importance of Testing in a Post-Merger Environment)

In recent years, there have been many mergers and acquisitions (M&A) in the retail industry. Examples range from Albertsons’ merger with Safeway to Kroger’s acquisitions of Harris Teeter and Roundy’s, to Alimentation Couche-Tarde’s acquisition of CST Brands and Chilean operator COPEC’s acquisition of all MAPCO stores. In a post-merger environment, there are inevitably competing business priorities; this period is one of the most critical times to cross-pollinate ideas from both organizations and identify where there are winning strategies. Failing to evaluate the best ideas across the organization can be a big missed opportunity for many companies.

In post-merger upheaval, it is often unclear which strategies will be most effective moving forward, and implementing any new program or initiative involves both a financial and reputational risk. Merely continuing along the path of the acquiring company can lead organizations to overlook key ways to refine programs across the business. By learning from both companies’ existing programs, successes, and past approaches, the new company can optimize its go-forward strategy and realize the initial investment thesis.

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The Next Level of Localization

April 12th, 2017 | Posted by APT in Retail - (Comments Off on The Next Level of Localization)

“Going local” has been a key ambition for retailers for years now. Recently, some retailers like Target and A.C. Moore have been using new store formats as part of their localization strategy, focusing on smaller-format neighborhood stores. Others are differentiating themselves in more nuanced ways, altering merchandise allocation in each store or group of stores to meet the needs and preferences of local shoppers. Nike, for example, has localized space allocation in some stores – for example, their L.A. store includes a greater assortment of clothing to appeal to soccer fans and a trial zone with fake grass to test out cleats, due to the sport’s popularity locally.

While localization has been front-and-center in the industry for some time, retailers still have a significant opportunity to drive profit with improved strategies to meet local market demands. There are many components of a successful localization strategy, including curating marketing and pricing strategies to a region’s demographics and competitive environment. However, one often-overlooked facet of an effective localization strategy is a connection to the store space planning process. Understanding how to tailor merchandising strategies for local market demands can ultimately lead to significant profit improvement and a better customer shopping experience.

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HelloFresh, Goodbye Grocery and Restaurants?

April 11th, 2017 | Posted by APT in Restaurants | Retail - (Comments Off on HelloFresh, Goodbye Grocery and Restaurants?)

Since 2012, the meal kit industry has grown, with more than 150 companies competing for their share of the growing market. The rise of brands like HelloFresh, Blue Apron, and others is representative of shifting consumer preferences: Meal delivery kits address key demands for convenience and fresh, healthy options. For grocery and restaurant chains to avoid losing market share as this segment grows, they should respond to meal kit players by innovating, with particular emphasis on convenience.

While meal kit companies are disruptors, they have not completely encroached on grocery and restaurant territory – although they are popular among some consumers, they have yet to gain widespread popularity. They also do present some drawbacks for consumers, namely cost. Purchasing the ingredients for a home-cooked meal at a grocery store, or even eating out in some restaurants, is generally less expensive than many meal delivery kit subscription prices. For example, the average HelloFresh box with three meals for two people is $69, which comes out to $11.50 per person per meal – more than they may spend at many fast-casual restaurants, and more than they would spend on grocery store ingredients.

As meal delivery kits become increasingly popular, grocery stores and restaurants should experiment to prevent share erosion from convenience- and fresh-oriented consumers. This approach empowers grocery and restaurant chains to determine which innovations will drive maximum value in maintaining market share.

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The Industry Impact of Amazon Dash

April 4th, 2017 | Posted by APT in Retail - (Comments Off on The Industry Impact of Amazon Dash)

Two years after its launch, Amazon Dash – the Wi-Fi connected device that allows consumers to order their favorite products with the push of a button – has grown to offer products from more than 100 brands. With items in categories ranging from grocery to beauty to baby and pets, consumers can fill their homes with various Dash buttons and never again need to trek to the store.

This automated approach to shopping may only be the beginning. “The real long-term goal is that you never have to worry about hitting that button,” said an Amazon spokesperson, following the product’s 2015 release. With Amazon Dash Replenishment already built into some household appliances – such as Whirlpool washers and dryers that can automatically restock laundry supplies, and Brita pitchers that order new filters as needed – Dash could be a mere stepping stone to an even more automated shopping experience.

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Balancing Hospitality with Technology

April 3rd, 2017 | Posted by APT in Hospitality & Travel - (Comments Off on Balancing Hospitality with Technology)

From mobile check-in apps to beacon technology and virtual reality (VR) headsets, hotels are pushing the envelope with cutting-edge innovations every day. With guest expectations for unique and personalized experiences steadily rising, introducing new gadgets is a key strategy to maintain guest loyalty and drive new business. But as exciting as these new tech tools may be, delivering service with a human touch is critical to overall guest satisfaction and financial growth in the hospitality industry.

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