How Netflix Is Becoming a Retailer

This is what agility looks like: Netflix launched Squid Game globally on September 17. By October 4, Netflix was selling official Squid Game merchandise on Netflix.shop, Netflix’s e-commerce site. By October 11, Netflix and Walmart had launched a Netflix Hub on Walmart.com, where shoppers could find merch based on Netflix shows, including Squid Game. Netflix has always had a knack for creating culturally relevant shows that connect with people through their beliefs and behaviors. Now Netflix is reading the pulse of culture and cashing in through retail.

Netflix.shop Launches a New Revenue Stream

Netflix launched Netflix.shop on June 10 to sell merchandise based on Netflix shows (as Disney has done so well with entertainment since the dawn of time). With the help of Shopify, Netflix uses artificial intelligence to quickly spot trends in consumer tastes and sell culturally relevant merchandise — which is exactly what is happening with Squid Game, the most popular debut show ever on Netflix.

Netflix.shop is an important foray into e-commerce for Netflix. The existence of the store represents a shift in thinking for the company that has define New Hollywood success. Netflix’s stock continues to eclipse previous all-time highs, but the company is spending $13.6 billion on content in 2021. Rising costs, coupled with a decline in subscriber growth, has led to ongoing speculation that the company will adopt advertising in some form. But so far Netflix has resisted an ad-supported tier as its competitors have done.

Selling licensed products is a revenue opportunity too big for a content creator to ignore. Sales of licensed products tied to shows, films and characters were about $49 billion in the United States in 2019, and $128 billion globally, according tothe most recent study of the industry by Licensing International, a trade group.

In fact, Netflix actually been in the merchandising business for a few years now. In 2019, Netflix and bike maker Mongoose agreed to offer a limited edition Mongoose based on a fictional bicycle used in Stranger Things, which was followed by the licensing of more Stranger Things-inspired bikes. Netflix also launched 75 co-brands, including those with Burger KingCoca-ColaH&M, and Nike.

These relationships — hybrid in-show product placements plus real-world merchandising — offered a glimpse of how Netflix would monetize its titles more broadly. Notably, the tie-in capitalized on the growing popularity of Stranger Things, which was a turning point for Netflix’s commitment to merchandising.

But even then, Netflix viewed merchandising and co-brands as a way to gain exposure Netflix shows as opposed to being a serious revenue stream. CEO Reed Hastings said that Netflix did not want to “get distracted with alternative revenue sources,” because its subscriber engine is what drives revenue, Hastings said in the earnings interview.

“The core focus is, create all these merchandising opportunities, tie-ins, touch points, so that you feel the ‘Stranger Things’ energy so that more people join,” Hastings said. “We do monetize all that. It’s just we’re monetizing it through our giant engine rather than through little sidecar vehicles.

A Change in Strategy

That’s not the case now. In 2020, Netflix hired Nike and Disney veteran Josh Simon to lead its Consumer Products division. Since he came aboard, Simon has tripled the size of the Consumer Products team. In addition to the partnering with Walmart, he’s been behind Netflix arranging distribution deals with Targetand Amazon to sell Netflix-inspired clothes, toys, beauty supplies and housewares.

Simon told The New York Times that Netflix.shop operates as a boutique, with Netflix instead focusing its efforts on more deals with store chains and fashion brands. “Practically speaking, the revenue will come more from those partners around the world in terms of sheer footprint and number of locations and magnitude,” he said.

And this is where Walmart comes into play. The online hub is Netflix’s first such site on another retailer’s site. A dedicated hub makes it easier for shoppers to find Netflix merchandise and also raises Netflix’s profile with customers of the world’s largest retailer. In addition, Walmart said that an initiative known as Netflix Fan Select will make it possible for fans to vote for the merchandise they would like to see from favored Netflix shows. Steven Mallas of Seeking Alpha says the relationship gives Netflix two pricing tiers:

First, the Netflix shop destination at its own site could focus on higher-priced items, including limited editions and other collectibles. Higher price points allow the company to more efficiently sell its items: i.e., take more money per unit and carry less units, which reduces risk compared to a mass-merchandise production plan.

The other side of the coin, the Walmart deal, will presumably focus on the latter merchandise model. These will be items that are priced to sell for a wider swath of the Netflix fandom.

Indeed, for Squid Game, Netflix and Shopify have unveiled merchandise ranging from $50 hoodies to $35 custom tees.

The products capture some of the iconic moments and characters in the violent show about people playing for their lives in a deadly series of games. The Netflix Hub on Walmart sells similar Squid Game merchandise, including tees and caps, but at a lower price.

Mallas also says that Netflix Fan Select opens up some intriguing possibilities:

Crowd-funding is something I always believed Amazon (AMZN) would have pursued to an effective degree/scale by now, but Netflix/Walmart easily could exploit this form of funding. It would reduce risk of production by collecting capital upfront from the very consumers who want to buy the product. And if both companies are serious about taking this website beyond online shopping carts and search engines, perhaps special exclusive filmed entertainment content could be crowd-funded and sold.

Imagine a short film based on the Stranger Things universe brought into existence by the fans, and then sold as a digital download, or even as an NFT… it just depends on how far the two partners want to go. It would be an easy way to create brand extensions at attractive economics; consider a toy company such as Hasbro (HAS), which has a history of seeking financing from fans for crowd-funded projects. Why simply vote for a product when you can also pay for it too? There does exist a consumer willingness to help corporations out in this regard, so long as there is sufficient demand for a certain concept.

Meanwhile Netflix has now engineered a way to stoke the fires of cultural relevance with its content and brand. If Netflix sees a show trending on social media, it can move nimbly — an approach Nike is taking by building its Nothing But Gold site. The need for speed influenced Netflix’s decision to work with Shopify to run Netflix.shop. Shopify President Harley Finkelstein told The New York Times that Shopify understand how to handle big merchandise drops ranging Taylor Swift albums to sneaker releases, “We’ve been battle-hardened around some of the largest flash sales on the planet,” he said.

Well Positioned to Grow

That Netflix could launch Squid Game merchandise so quickly is remarkable. Squid Game seemingly emerged from out of nowhere to take the world by storm, with its popularity based on word-of-mouth marketing.

Netflix is well positioned to grow its e-commerce business. But the company also as challenge: it’s one thing to cash in on a show such as Squid Game that builds enormous buzz early on. But other shows can take time to build the kind of fan loyalty that translates to a steady stream of merchandise sales. And lately Netflix has been quick to cancel shows in their infancy. In 2020 alone, Netflix canceled 18 original series, prompting Ken Renfro of Insider.com to note that “Netflix has a TV-show problem.” The company may need to be more patient to allow shows to become merchandise-friendly brands.

How Businesses Thrive during Dangerous Times

The Covid-19 pandemic unleashed suffering on a global scale not seen in our lifetimes. As if waves of sicknesses and death were not bad enough, businesses everywhere were rocked to the core, resulting in job loss and economic hardship. And it’s not over. But amid the turmoil, some businesses are as strong or even stronger than they were before the pandemic changed everything. Here are their stories, and the lessons we may learn from them.

1 Take Care of Your People: Raising Cane’s Chicken Fingers Rallies through a Hard Times

Todd Graves saw the storm coming. Graves, the co-founder and CEO of fast-food chain Raising Caine’s Chicken Fingers, followed the spread of Covid-19 in China before the virus was news in the United States. He read about lockdowns happening to contain the virus. He quickly grasped the potential impact of Covid-19 on his business. So he and his management team went into crisis mode even though there was no crisis to react to yet.

The executive team canceled a scheduled management retreat to celebrate its five-year plan and started to change how the chain operated. Raising Caine’s quickly implemented CDC guidelines for social distancing and placed an “uber-intense focus” on sanitizing every location, as discussed in QSR magazine. Managers were trained on how to conduct team meetings in socially distanced fashioned so that operations would not be disrupted. Fortunately, most Raising Caine’s locations have drive-through service. So the company changed the focus of its marketing to put a full-court press on its enhanced safety measures and its drive-through service.

Almost all Raising Cane’s 500 locations stayed open and did a thriving business. Thirty-three non-drive-thru locations temporarily closed, but Graves kept employees in closed locations busy sewing masks and supplying local hospitals amid a mask shortage.

Raising Cane’s purchased sewing machines and supplies for the group. Two teams worked in shifts to comply with the company’s social distancing procedures. They created more than 600 masks in their first week and upped production to 100 a day. The mask sewing initiative gave employees in closed restaurants a sense of purpose as they gave back to the community. And beyond those efforts, Raising Cane’s launched fund raisers to help frontline workers in hospitals putting their lives on the line to fight the pandemic.

All the while, Graves refused to furlough or lay off any of the 23,000 workers.

“Our mantra then was no crew member left behind,” Graves told QSR. “I wanted the team that went into this pandemic to be the team we come out with. And so we’re going to work like heck to get through it.”

Initially, the chain suffered a hit as the pandemic upended our lives. Sales were down as much as 30 percent. But by late April, they had returned to pre-pandemic levels even as other restaurants struggled — a stunning turnaround.

This was a story we all needed to hear in the early days. Raising Cane’s gave us hope and put its people first.

2. Sense and Respond: Amazon, Target, and Walmart Ascend to Greater Heights

Some businesses prospered during the pandemic. You know three of their names: Amazon, Target, Walmart. All of them crushed their quarterly earnings announcements throughout 2020 and enjoyed all-time valuations on the stock market.

Why?

All three of them benefitted from the rise of the stay-at-home economy, in which people increasingly bought what they wanted from their sofas. Amazon already had a lock on ecommerce, and both Target and Walmart wielded an advantage with their curbside pick-up capabilities. People who preferred to order groceries, clothing, and housewares from their homes, then pick them up without leaving their cars, chose Target and Walmart. As a result:

  • Target’s curbside pickup service sales jumped by more than 700% during its fiscal second quarter.
  • Walmart’s eCommerce business jumped 97 percent year over year, partly because the popularity of curbside pick-up services.
  • Amazon just kept powering through, showing 37% year-over-year growth for the third quarter ended September 30, 2020.

Were they in the right place at the right time? No. They prospered because they know how to sense and respond.

Target and Walmart had been steadily building ecommerce services and curbside pickup over the past few years. They both saw the rise of a mobile consumer who preferred the immediacy of driving to the store but didn’t have time to go inside to make their purchase. When the pandemic made many people frightened to shop inside stores, curbside pickup served Target and Walmart well.

Amazon, building off its already strong ecommerce operation, had made a major investment in its own delivery capability, including its own air cargo fleet. The move triggered a war with FedEx and raised questions about whether Amazon had overreached. But as retailers struggle with maxed out supply chains in the 2020, Amazon seizing control of its own destiny now looks smart and forward-thinking.

In addition, by building out its cloud computing service, Amazon Web Services, Amazon positioned itself well when stay-at-home living in 2020 caused a surged in online usage. Amazon Web Services is the backbone for digital platforms ranging from Facebook to Netflix — a $10 billion business.

Amazon, Target, and Walmart aren’t standing still. Amazon continues to expand in to industries as diverse as advertising and healthcare — both leveraging Amazon’s ability to mine its own customer data to deliver personalized services and products. Target is doubling down on its in-store experience by opening Ulta beauty stores within a number of Target locations, anticipating a return to more in-store shopping in 2021. Walmart is also stepping up its own healthcare services and recently announced the launch of a fintech startup.

Leaders always think ahead — during good times and hard times.

3 Act with Purpose: Netflix Invests in Racial Justice

Netflix put its money where its mouth is.

As the world erupted with protest over racial inequality in 2020, businesses sought to have a voice. Many responded with gestures of support on social media. Others took action, and Netflix was one of them. In early June, Netflix CEO Reed Hastings announced that he was donating $120 million to support scholarships at Black colleges and universities. On June 30, Netflix announced it was allocating up to $100 million of its cash holdings into financial institutions and organizations that directly support Black communities in the United States. As reported in The New York Times, the action would help Black-owned lenders inject more capital into Black-owned businesses.

It turns out Netflix had been planning the capital reallocation since April. The New York Times reports that the company’s decision makers were influenced by book “The Color of Money: Black Banks and the Racial Wealth Gap,” by Mehrsa Baradaran, a law professor at the University of California, Irvine.

Netflix’s financial commitment reflects the company’s culture in other ways. For example, Netflix’s marketing arm Strong Black Lead, is committed to hiring people of color and supporting their voices. (Read more about Strong Black Lead here.)

Netflix’s actions point to a bigger role that businesses have to be purposeful, a major news theme of 2020. Corporate accountability to society really took hold as the Covid-19 pandemic spread. In March, According to a recent Kantar study of the public’s attitudes about COVID-19, more than three-quarters (77 percent) of people surveyed said they wanted to see brands talk about how they’re helpful in the new everyday life. And 77 percent wanted to see brands to inform consumers about their efforts to face the situation. Meanwhile 62 percent of people around the world surveyed by Edelman said that their country would not make it through this crisis without brands playing a critical role in addressing the challenges. Then, in June, the conversation turned toward race. An Edelman survey revealed a widespread public outcry for businesses to take a lead tackling racial inequality. Sixty percent of Americans surveyed by Edelman said that businesses must speak out publicly against racial injustice. Sixty percent said that brands need to use their marketing dollars to advocate for racial equality and to educate the public on the issue.

But businesses were not always sure how to take a stand. After Nike published an ad condemning racism, economist Scott Galloway took the company to task for over-emphasizing a message over taking action. He called on more businesses to focus on deeds, not words. Netflix was all about both words and actions.

4 Be Nimble: Airbnb Rebounds

Airbnb was on the brink of collapse. Under CEO Brian Chesky, the company had built one of the most storied brands in the digital age by creating a network of property owners willing to rent homes to travelers. Airbnb had become so successful that it was threatening the established lodging industry without owning a single hotel. It’s no exaggeration to say that Airbnb helped invent the modern-day sharing economy, in which people profit by sharing their assets for a fee. But Airbnb was like traditional lodging industry in one important aspect: Airbnb and its network of entrepreneurs needed people to travel and book lodging. And as the pandemic took hold, travel had practically ground to a halt. Overnight, bookings plunged. By mid-March, Airbnb saw $1.5 billion in bookings vanish.

Airbnb’s stellar trajectory was halted. A planned initial public offering was out of the question. Chesky laid off a quarter of his staff, slashed expenses, and sought capital to keep the business afloat. Things did not look good as the weeks went by. Even as people emerged from lockdowns, traveling was not popular.

Or was it?

In fact, Airbnb’s data scientists noticed something happening: people emerging from lockdowns were traveling. But their preferences had changed. Instead of looking to fly to cities and stay in tony urban locations — a mainstay of Airbnb’s revenue — travelers were looking to rent homes in smaller locations within 200 miles of their homes. People were ready to get out of their homes and travel. But they wanted to rent entire homes instead of sharing them with other people (and risk contracting the Covid-19 virus), and they wanted to drive, not fly. So as reported in The Wall Street Journal, the company quickly changed. Airbnb redesigned its website and app so that its algorithm would showcase travelers interesting locations such as cabins.

Incredibly enough, by July guests were booked stays at the rate they were just before the pandemic crushed the travel industry. By December, Airbnb had recovered so fully that it launched a successful IPO after all.

“People are now discovering small towns, small communities,” Chesky said. “They’re discovering national parks, falling in love with the outdoors, and realizing they can go to all sorts of other places. This is an irreversible trend.”

And Airbnb was ready to capitalize on that trend.

Airbnb needed to do a lot more than reposition itself to short term travelers in order to survive the tumult of 2020, but listening to its customer data and adapting were essential. In 2021, Airbnb says it appeals to a new type of traveler — people redefining their staycations, traveling in small pods of families and friends, or visiting different towns with an intent to relocate permanently. You can be sure Airbnb is adapting to them, too.

5 Be Bold: Disney Saves Its Future

It’s quite possible that “pivot” is the most overused word in 2020, used to any business that adapted during the pandemic. But Disney really did pivot its business, and may well have saved it.

It has been painful to watch the COVID-19 pandemic crush Disney’s fabled parks and resorts. In September, Disney announced it would lay off 28,000 employees across its parks, experiences and consumer products segments. Disney blamed prolonged closures and capacity limits at open parks for the layoffs.

On November 12, Disney reported its first annual loss in 40 years, and declining attendance at its parks had a lot to do with that decline. Disney said that the pandemic cost it $7.4 billion in operating income in the fiscal year, and $6.9 billion of that loss came from theme parks and experiences division.

But by November, Disney had already made a very important move to change course. On October 12, Disney reorganized its media and entertainment divisions in order to focus on streaming content, namely its wildly successful Disney+ platform. Kareem Daniel, the former president of consumer products, games and publishing, would now oversee the new media and entertainment distribution group, responsible for content distribution, ad sales, and Disney+.

In an announcement, Disney said that its “creative engines will focus on developing and producing original content for the Company’s streaming services” — meaning that Disney’s creative teams, ranging from Pixar to Lucasfilm, will be all-in to support streaming, focusing on Disney+, Hulu, and ESPN+, all streaming brands owned by Disney. Meanwhile, a newly created Media and Entertainment Distribution group under Daniel would be responsible for monetizing and distributing that content.

Disney didn’t wait for its restructuring to change the way it operates, either. In September, Disney bypassed movie theaters in the United States and released its feature film Mulan on Disney+ (while distributing the movie in theaters internationally). Mulan received mixed reviews and lackluster box office receipts globally. But as Kay McGuire of Screen Rant discussed in an analysis of Mulan’s financial results, Disney+ was a lifeline for Mulan.

And on December 25, Disney skipped theaters and released Pixar’s animated movie Soul on Disney+.

These were big-time moves, but they did not emerge from left field. In 2019, Disney had already laid the groundwork for its newfound focus on digital content — first, by taking ownership of the popular Hulu streaming service, and then by launching Disney+. Hulu gave Disney an instant streaming audience of 28 million (at the time) and a prestigious content library with popular titles including The Handmaid’s Tale. Disney+ gave Disney an arm to unleash its powerful library of content, including the coveted Marvel franchise, as well as new titles such as the wildly popular The Mandalorian, which tapped into the eternal appeal of Star Wars.

Little did Disney know that a global pandemic would trigger a massive shift in people’s entertainment options, from going to the movies to streaming them. By the end of the 2020, Disney+ subscribers had grown to 86.8 million, and Hulu paid subscribers had grown to 36.6 million.

And the financial results reflect the increase in subscribers. In its earnings announcement, Disney said that its Direct-to-Consumer and International division, which includes streaming, had generated $4.85 billion in revenue, up 41 percent year over year.

Disney knows where its near-term future is: streaming. And so it doubled down. And its stock value, incredibly enough, increased even as its theme parks continued to struggle.

Disney demonstrated an eternal truth about industry leaders: when times are tough, the make bold moves. Disney’s digital-content first approach was reflected elsewhere in the entertainment world, too, most notably when Warner Brothers said it would release its entire slate of movies on the HBO Max streaming platform as well as in movie theaters.

These are hard times. Businesses that want to survive them can learn from Disney.

Hope in 2021

Weeks into 2021, we see glimmers of hope for a sustained rebound from the ravages of the pandemic. The travel industry as a whole is showing some signs of life. The live events business, crushed by the pandemic, could return as early as the fall of 2021. Initial public offerings area actually booming. Much uncertainty and hardship remains. But new stories will be told and lessons learned. Stay tuned.

Photo by Jake Ingle on Unsplash

Target and Walmart Succeed by Delivering on Retail’s New Brand Promise of Health and Safety

Target and Walmart are selling safety. And they’re succeeding.

Both retailers surprised analysts by reporting strong quarterly earnings in August, sending their stock prices to all-time highs. It turns out that as the COVID-19 pandemic rages on, people are choosing to visit Target and Walmart even at a time when going to the store means putting our lives on the line.

Why?

Because the brand promise of retailers has changed from “Save money and enjoy our store” to “Shop with us, and we’ll protect you from yourselves.” And both Target and Walmart have delivered on this promise big time.

Target and Walmart Make It Easy to Shop without Stepping into the Store

They offer services such as curbside pickup that limit a shopper’s exposure to the risks of being inside a store. Walmart began rolling out curbside in 2016 (the service was called Pickup and Fuel then). Target responded a few years later. Both companies are benefitting from the surging interest in curbside. Target said that sales through Target’s curbside pickup service grew by more than 700% in the second quarter from a year earlier. Walmart said U.S. eCommerce sales grew 97 percent, as more customers shipped packages to their homes and used same-day delivery and curbside pickup.

Target and Walmart Have Changed the Rules of Shopping

Early on, both Target and Walmart aggressively enacted health and safety protocols such as using floor stickers to help shoppers keep their social distance, installing plastic guards to protect employees and shoppers from each other in the check-out lane, and mandating that shoppers wear masks to enter their stores. These protocols have not worked perfectly.

Unfortunately, some selfish shoppers have chosen to recklessly endanger everyone else by not wearing a mask. And yet, Target and Walmart are convincing people to visit their stores. Target reported that in-store comparable sales climbed by 10.9 percent during its second quarter. Walmart’s U.S. same-store sales were up 9.3 percent.

The Golden Arches of Retail

Retailers such as Target Walmart have, in effect, become the new Golden Arches. Decades ago, McDonald’s famously made the Golden Arches a symbol of consistency and predictability for restaurants. Especially as Americans began to travel more in their cars in the 20th Century, seeing those Golden Arches by roads provided some measure of assurance that you knew exactly what you were getting when you stopped for a meal. Today seeing that Target logo by a highway provides some degree of predictability and comfort in the hostile land of the maskless.

This truth resonates as shaken families across the United States have tried to reclaim some semblance of normalcy by embracing the time-honored tradition of the American road trip. According to Airbnb co-founder and CEO Brian Chesky, Americans are getting in their cars again and taking 200-mile road trips to smaller communities and outdoor parks. That’s because congested cities are more dangerous than state parks and hotels in the country. Air travel is more dangerous than a leisurely drive in your car. But even so, when you hop in your car and hit the road, you take on new risks, and if you travel with a family, you put them at risk, too. Depending on your destination and where you live, your drive may take you through multiple cities and states, each with their own customs for managing coronavirus health and safety. You’re literally leaving your comfort zone when you go on a road trip. Even familiar places now seem like unexplored territory.

Short road trips will continue to define the American vacation experience especially with national holidays that make it possible for people to travel for long weekends all year-round. If you took a road trip this summer, you know the drill by now: you probably planned for your trip carefully in ways you did not need to only months ago. Perhaps you investigated a motel or an Airbnb’s COVID-19 hygiene practices and protocols ahead of time. You might have packed a cleaning kit to wipe down your room when you arrived. Maybe you packed snacks to minimize having to stop at restaurants, especially if your drive took you to places where you were not sure how well people followed mask-wearing or social distancing protocols. But at some point you, needed to stop somewhere. You were low on gasoline. Your kids needed to go to the bathroom. You forgot to pack enough socks and need to buy an extra pair.

But as we know by now, a routine stop elevates your stress level. You stop at a gas station or a store by a highway exit, and you go into self-preservation mode, assessing the danger levels by using your own internal survival rules, just like Jesse Eisenberg did when he was trying to avoid encounters with zombies in Zombieland. How small or big does the location look? (Tiny aisles in roadside gas station convenient marts seem deadly.) How crowded is the place? Do they post a sign with ground rules for maintaining social distance? And are customers wearing masks?

Fortunately, at gas stations, you refill the tank outside and can manage your social distancing. But when it comes to getting a cup of Starbucks, a bottle of water, or those extra socks, it’s time to pull out your mobile phone and search for the nearest Target or Walmart. That’s because you know they have a national policy of requiring people to wear masks when they enter the store, and they offer services such as curbside. You’ve probably been to a Target or Walmart near your home and seen firsthand the policy in place. You’ve noticed the employees wearing masks and red shirts wiping down the self-checkout lanes at Target or processing your purchase from behind the relative safety of a plastic shield. Those details mean everything.

Maybe you’d like to support local businesses, and the closest big-box retailer is a bit farther than you’d like to drive. But people are getting sick and dying, and idiots who refuse to wear masks are making things worse. At least Target and Walmart, no matter where you go, require masks. It’s not a fool-proof approach — belligerent people who refuse to wear masks still slip through. But it’s something. And those wide aisles sure make it easier to avoid getting too close to some careless shopper who isn’t paying attention to where they are pushing their shopping cart. That predictability of service and safety could save your life.

My Own Road Trip Experience with Retail

I have learned these new rules of the road firsthand. My wife Jan and I have taken three road trips since the pandemic hit, two out of necessity and one for leisure. The first road trip, several hundred miles to Massachusetts in early June to see my seriously ill father, was stressful at first. When we stopped at a rest area for a bathroom break, I was anxious. But seeing chairs in public spaces put away and signs announcing social distancing procedures made me feel just a bit more comfortable. At least someone in the rest stop was taking some measures. Just about everyone wore masks, too, but not all travelers did. So we kept our stops to a minimum. As we drove east and entered New York state, the drive became more relaxing. That’s because New York state residents were uniformly compliant with their mask wearing and social distancing, whether we were visiting a rest stop or staying in a motel. The entire state felt like an advertisement for how to respect each other during the pandemic.

The drive to Massachusetts was important. Not only did we see my dad, under hospice care at home, but we also overcame our fear of traveling during the pandemic. We eventually worked up the courage to take a 280-mile drive to La Crosse, Wisconsin, for a long weekend of hiking and biking. Like everyone I know, we had hit a point where we just needed to get away — to drive somewhere and escape. We knew this trip might be like visiting the wild west. The state of Wisconsin has been more aggressive than many other states about opening its economy, and we’d heard of local Wisconsin businesses being lenient with their protocols. Halfway into our drive, we stopped to rest in Madison, Wisconsin. It was an uneventful stop. We found a shopping mall we knew about. Masks were mandatory to enter, and compliance was nearly uniform. Like the survivors in The Walking Dead, we kept our eyes peeled for mask-less mall wanderers and easily avoided being near them. When we arrived at La Crosse, we immediately visited a somewhat remote trail for a glorious late afternoon hike up a steep trail with challenging switchbacks — just the kind of experience we’d been hoping for and, frankly, one I needed to work off my COVID-19 flab. Fortunately we encountered few people on the trail, and when we did, we held our breath and kept our masks on.

After the hike, we both wanted cold water and Gatorade. So we stopped at a local gas station with a shopping mart inside. Right away, we went into self-preservation mode. And the place failed, miserably. Lots of people without masks came and went through the narrow doorway. And apparently no attempt was made to monitor the number of people in the cramped store. After sizing up the place, we aborted the mission. Unfortunately, the gas station was not the only place in La Crosse where apparently no one cared about masks. But, undeterred, we decided it was time to adopt the Target Strategy. We found a large, welcoming Target nearby, which looked like a beacon of safety in the distance. Sure enough, just like the Target near our house, the one in La Crosse mandated that all customers wear masks — which they did. And just as we’d experienced at our own Target near our home, the mask-wearing employees had the spray bottles out to keep the place clean. At the check-out lane, a good-natured employee asked us how our day was going as she wiped down the counter and rang up our purchases. We mentioned how much we appreciated the visible safety protocols. Seeing employees so diligent about keeping the place clean was comforting. She admitted that other employees sometimes grumbled about how tiresome the constant cleaning was, but she was a new employee and therefore did not have any other frame of reference. Always wearing a mask and keeping a spray bottle and paper towel at her side seemed a natural part of the experience.

The New Retail Customer Experience

A great customer experience now comes down to how quickly and safely you can get out of the store, and how well a store can assure you with visual cues that they really do take your personal health and safety as seriously as they say on their website and in their official emails. During the pandemic, Target and Walmart have sensed and responded, and there’s no turning back. 

Walmart Promotes a Kinder Black Friday – and a Possible Future for Retail

After treating Black Friday like a cattle round-up for years, Walmart is finally injecting a little humanity into the year’s worst shopping tradition. On November 8, the retailer announced measures intended to make Black Friday shopping just a bit more pleasant:

  • Walmart is serving four million cups of complimentary coffee (courtesy of Keurig) and a few million free Christmas cookies from the Walmart Bakery.
  • Walmart will make it easier for shoppers to find top deals in-store via the Walmart app.
  • Check Out with Me store associates stationed throughout the stores and equipped with mobile check-out devices will make it possible for shoppers to purchase items on the spot, thus avoiding long lines.

These changes are long overdue. But why aren’t more retailers improving the Black Friday experience? For years, as part of my first-hand research into Black Friday, I’ve stood in long lines with shoppers in the cold pre-dawn of this massive shopping day. I have waited Continue reading

How Walmart Is Shaping the Future of Virtual Reality

To understand the future of virtual reality (VR), take a close look at Walmart. On September 20, Walmart announced it will ship 17,000 Oculus Go VR headsets to all its North American stores to give more than 1 million employees access to virtual reality training.

The news marks an expansion of a training program in which Walmart has used VR headsets at its U.S. Academies to help new employees learn what it’s like to work in a Walmart store, including how to handle surging Black Friday crowds. Walmart has worked with training company STRIVR to develop the curriculum using STRIVR’s VR training platform and will continue to do so.

Andy Trainor, Walmart’s senior director of Walmart U.S. Academies, said, “The great thing about VR is its ability to make learning experiential. When you watch a module through the headset, your brain feels like you actually experienced a situation. We’ve also seen that VR training boosts confidence and retention while improving test scores 10 to 15 percent – even those associates who simply watched others experience the training saw the same retention boosts.”

Walmart’s use of VR meets four essential requirements for VR to take hold, namely:

1) An Addressable Market

Corporate training is a priority. According to separate research from Deloitte and Gallup, 84 percent of executives and 87 percent of millennials believe that learning and development is important. In 2017, corporations spent an estimated $360 billion on employee training around the world. On average, companies spent $1,075 per learner in 2017, with manufacturers spending $1,217 per learner, followed by services organizations ($1,157), according to the 2017 Training Industry Report. Employees received 47.6 hours of training per year, nearly 4 hours more than in 2016. It behooves corporations to maximize the efficiency of that spend.

2) A Compelling Reason to Use VR

Corporate training also leaves a lot to be desired. According to the Deloitte 2016 Global Human Capital Trends Report, only 37 percent of executives believe learning and development is effective; and 40 percent of employees believe they are not trained to do Continue reading

Virtual Reality Helps U.S. Athletes Train to Win Olympic Gold

When U.S. Alpine skier Mikaela Shiffrin won a Winter Olympics gold medal in the giant slalom race February 15, she also achieved a victory for virtual reality.

She is among the members of the U.S. Ski & Snowboard team who have used a virtual reality (VR) training regime from STRIVR Labs to prepare for the 2018 Winter Olympics in Pyeongchang County, South Korea, according to the team.

The team’s deployment of VR training, reported widely, also shines the spotlight on VR’s potential to improve performance in sectors ranging from sports to retail. Continue reading

Blessed Are the Change Agents

Years ago, an agency asked me to define its target buyer as part of a brand repositioning. My client wanted to do business with companies eager to innovate. I recommended that my client stop thinking of its buyer in terms of a formal title such as CMO and instead seek out a persona I referred to as the change agent — which I described as a leader who is in a position to effect behavioral change needed for a business to grow and innovate. Find the change agents, I reasoned, and you find the wellsprings of innovation inside a company.

So I read with interest a new report from Brian Solis, The Digital Change Agent’s Manifesto. It turns out that over the past few years, Brian has been interviewing about 30 change agents (with a focus on digital change agents) to better understand them – and to provide a road map for change agents to flourish.

A Revelation

Brian’s report is a revelation. Here is a report that helps businesses identify change agents inside their own organization and set them up for success. His report is also a rallying cry for people who believe they are change agents or on the path to becoming one. Brian maps out the attributes of a change agents, calls out stumbling blocks to success, and identifies 10 mandates for change agents to prosper. Although he focuses on digital change agents — because of the distinct challenges and opportunities digital presents — the report is a manifesto for change agents of any type.

Why You Should Read Brian’s Report

Business leaders should read Brian’s report for one simple reason: at a time when digital disruption has become the norm, companies that can find and support change agents more quickly than their competitors will possess a distinct advantage. Companies that fail to nurture and support change agents will lose these visionaries to someone else who can. And change agents don’t exactly walk around wearing “Ask Me about Change” buttons.  In fact, they might be flying beneath the radar screen, by choice. Brian’s report will help a C-level executive find and uplift them.

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How Virtual Reality Transforms Training and Improves Performance

Minnesota Vikings Quarterback Case Keenum will always be known as the guy who passed the football to Wide Receiver Stefon Diggs to pull off the stunning Minnesota Miracle last-second victory over the New Orleans Saints in the NFL playoffs on January 14. Case Keenum also symbolizes the future of virtual reality (VR) as a training tool to improve performance.

During the 2017-18 NFL season, Keenum stepped up his game dramatically en route to leading the Vikings to a 13-3 record. As reported in ESPN, he used a VR tool developed by training company STRIVR to improve. The Vikings are among six NFL teams that use VR to help players sharpen their mental abilities as they react to the many moving parts that affect the outcome of a single play. Keenum has practiced thousands of plays with VR throughout the course of the season – just as professionals in other industries, including doctors, van drivers, and retailers, use VR to train themselves.

Helping Quarterbacks Escape Blitzes

Although VR has been around for years, the technology has yet to catch on among consumers. The cost of the equipment required, lack of available content, and clunky user interface remain impediments. But the enterprise sector is a different story. VR, which immerses the user in a different world through the use of special headsets, is an ideal tool to train people for complex, high-risk situations that leave little margin for error.

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How and Why Businesses Are Adopting Augmented Reality and Virtual Reality

At the 2018 Consumer Electronics show, robots, voice assistants, connected cars, and even connected cities created buzz. Augmented reality and virtual reality – not so much, with the exception of augmented reality applications in the automotive industry.

But proponents of augmented reality (AR) and virtual reality (VR) should take heart: the real action with AR and VR isn’t happening with consumer products, anyway. The compelling stories about AR and VR are happening on the enterprise side.

Throughout 2017, companies such as Audi, Ford, IKEA, Sephora, and Walmart shared examples of how they’re using AR and VR to run their businesses more effectively. For example:

  • Augmented reality simplifies the purchase decision for IKEA customers: IKEA released Place, an app that makes it possible for shoppers to see how IKEA furniture might look in their living spaces.

With augmented reality, users overlay simpler forms of content on to their physical spaces, usually by using their mobile phones. Niantic’s Pokémon GO and forthcoming Harry Potter games are examples. With Place, users overlay 3D models of furniture into their physical spaces to test for fit, which takes reduces the risk of buying a sofa or bookshelf before carting it home. Continue reading

Why Amazon Bought Whole Foods: To Beat Walmart

Why did Amazon buy Whole Foods? To beat Walmart in the war for the on-demand grocery shopper.

As announced June 16, Amazon and Whole Foods have agreed that Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion. Whole Foods will operate under its own name. The acquisition will give Amazon ownership of 460 stores in the United States, Canada, and the United Kingdom as well as Whole Food’s built-in ecosystems of customers and suppliers.

Amazon’s expansion into brick-and-mortar grocery industry is well known (as is the company’s general encroachment into offline retail.) To date, Amazon’s strategy has been to build and pilot its own stores. So why would Amazon buy a chain of grocery stores rather than develop its own? I believe Walmart is forcing Amazon to accelerate its expansion.

Chronology of a Retail War

As I have blogged, Amazon and Walmart are in an intense fight to own the future of retail, including the $600 billion grocery industry. Both businesses are racing to win loyalty from the on-demand consumer who expects a frictionless buying experience both online and in the store:

  • Amazon has been piloting its own models for using physical stores to provide on-demand grocery services, examples being the launch of Amazon Go and Amazon Fresh Pickup. Amazon Go is supposed to provide a completely frictionless buying experience via physical self-service grocery stores where anyone with an Amazon account, a supported smartphone, and the Amazon Go app can simply take what they want from the store and leave with no check-out required. With AmazonFresh Pickup, customers can order groceries online and have their orders ready for pick-up at designated AmazonFresh Pickup physical locations — in as little as 15 minutes.
  • Walmart has been making moves of its own, some of which are aimed directly at the grocery-buying experience. In 2015 the company launched Walmart Pay, which shoppers use on their mobile devices to purchase goods in-store. In 2016, Walmart’s began piloting Pickup and Fuel concept stores, where customers order online and then drive to Walmart to have their groceries loaded into their cars by employees. These developments have occurred in context of Walmart developing a stronger way to battle Amazon by developing its own ecommerce business and to gain more efficiency through its offline infrastructure. For instance, in 2016, Walmart purchased hot ecommerce company Jet.com. In 2017, Walmart announced it has been testing a service whereby Walmart employees deliver packages to customers on their way home, which raises the possibility that employees could also deliver groceries.

Both Amazon and Walmart are in a strong position to win the war for the future of Continue reading