Monday, September 18, 2017

"Innovate and adapt to thrive in the age of Amazon"/ Evelyn Ernst

Jun. 26, 2017 "Innovate and adapt to thrive in the age of Amazon": Today I found this article by Harvey Schachter in the Globe and Mail:

Wal-mart has been the colossus of retail for many decades. But in some ways, it’s small potatoes these days.

In 2015, retail expert Doug Stephens pinned’s inventory at 11 million products, a mere 4 per cent of the 260 million products he found available on even before it purchased Whole Foods. And Amazon, of course, offers ease of purchase and delivery that is shaking up the retail world.

It wasn’t so long ago that many retailers were putting up their first websites. For a decade, they have scoffed at Amazon’s inability to make a significant profit. But Mr. Stephens, author of Reengineering Retail, says in an interview we have “crossed the Rubicon” and in the last few years “retailers have awakened to the fact that Amazon and other online players are an existential threat to retailing,” leaving the industry in chaos.

Silicon Valley powerhouse Marc Andreessen said a few years ago that “software eats retail.” And while there is truth in that phrase, Mr. Stephens does not believe we are seeing the death of retail. But we will need to see retail’s reinvention, and soon. At the core will have to be the understanding that we don’t need physical stores for distribution of goods, as Amazon has shown. But we will need them for experiences.

To his mind, Amazon is actually not a retailer. It’s a data technology and innovation company that succeeds by ignoring the conventional wisdom of retailing and following its own ways.

He notes that last year Macy’s CEO Terry Lundgren said that while Amazon might pose some threat in apparel sales it would suffer because it was not prepared to handle complexities such as returns of items. But to Amazon, that’s just another challenge to be handled by data and technology, as it is showing. When Amazon opened a physical store, it looked at retail through its own eyes and, in an age of mobile devices, eliminated cash registers, checkouts and lineups.

“But Amazon does not want to play in the physical experiences arena. They want to take the friction out of the equation. So if retailers can make the experiences in their stores rich, they can gain an edge,” says Mr. Stephens.

But most, of course, aren’t all that effective for now, even at a basic level of romancing the customer, let alone the redesigned future he is calling for, where stores are redesigned around experiencing the product under consideration.

He asks: In the past 30 days, how many consumer experiences have you had that were mind blowing? He suspects none, nearly 20 years after we were told by consultants Joseph Pine II and James Gilmore we were entering the “experience economy.” Toys “R” Us had a flagship store in New York’s Times Square where children could play with the products. “But that doesn’t help a consumer in Winnetka, Illinois, going into a store in a mall. Every store needs a flagship experience,” he insists. “It’s not easy to do. It takes patience, design and creativity.”

Pirch is an excellent example. In its U.S. stores, which specialize in kitchen, bath and outdoor equipment, you can have a totally immersive experience. That’s literal, if you bring a bathing suit, since you can try out the shower heads in their store.

You can also make coffee on the coffee maker you are eyeing, test all the other appliances and cook alongside a professional chef in a kitchen to understand those products. “They have made every inch of that store experiential,” Mr. Stephens says. And it’s paying off:

Sales for every square foot exceed the Apple Store, long considered the gold standard. Along with experiences, employees need to be super-knowledgeable in the product line, able to tell shoppers more than they can learn from Google.

These days, he says, the store is media. In the past, retailers and manufacturers broadcast messages to consumers and hoped they would shop. These days it’s instantaneous, as shoppers, at their desktop or with mobiles, react to messages and information, purchasing.

“There is no difference between the message and the ability to buy on the spot. So the store is media. Amazon does that millions of times a day,” he says.

In an Amazon world, retailers must adapt. We don’t go on for fun. We don’t sit around with friends and a glass of wine discussing purchases. It’s purely a functional activity, although virtual reality could change that. For now, experiences are the way to counter the new data-innovation-retail colossus. Companies must explore ideas and innovate themselves to thrive.

The Ladder: Evelyn Ernst: Today I found this article in the Globe and Mail

Evelyn Ernst, 48, with her husband David, is co-founder of Terra Beata Farms Ltd. in Lunenburg, N.S., grower and processor of specialty products and cranberries sold worldwide.

I never expected to be a cranberry farmer – it was not on the list, at all. I started university in chemical engineering, switched to biology, then music and education, starting out as a high-school music teacher. I’m so thankful I took a biochemistry course at Mount Allison. It’s amazing how that one course made so much difference – I’m sure [Professor] Jack Stewart never realized how much help his course would be to me.

I was born in Lunenburg, grew up near Chester. We spent the requisite few years living in Ontario after university but I’m an ocean person and it was hard to be that far away in the summer – on a hot day, I need to know I can run down the hill and go for a swim.

This land, 40 acres, was up for mortgage foreclosure in 1998. David wanted to buy it and plant a cranberry farm [initially with a partner]. David was an engineer – he wasn’t sure about the stability of the fishing industry because one task was to tear down a fresh-fish processing facility.

At that time, the price for cranberries was high; they grow well and wild here and it was a chance for him to buy an excavator and play in the dirt. The idea was to sell to one of the two packing houses, about 2,000 pounds that first year, but both [buyers] said no. We bought deep freezers out of the newspaper and sold those cranberries locally.

The next year, I went to markets and the fall fair – our now 15-year old in a car seat on the floor by the table. I made jars of cranberry sauce and recipe cards. The idea was people would sample food, pick up a recipe and buy cranberries. I got, “I don’t want to buy cranberries – how much a jar?” That caused us to change direction to be processors because one big farm was very strong in the fresh market, the other significant farm in the frozen market.

Nova Scotia’s a small province – we didn’t want to go head-to-head with neighbours. Customers kept asking for other products, like dried cranberries with less sugar than other brands. We developed a process to dry cranberries, a tricky thing because the skin is waxy, designed to hold water and protect the cranberry. Our process keeps vitamins and the juice, with 40-per-cent less sugar.

We started with used equipment – a colour sorter [was] the first major item we bought new in 2008. It cost more than our house. We harvested 250,000 pounds last year and receive cranberries from a dozen Atlantic Canada farms. We handled about 5 million pounds with $4-million in sales last year. Our community still doesn’t have high-speed internet or three-phase power, so we adapt.

Atlantic Canada has only 10 per cent of Canada’s population – we can’t eat that many cranberries – so we looked to Ontario early. We’re better known in Europe than Ontario, about 90 per cent of fruit now sold internationally for 80 per cent of revenue. Our audacious goal is to grow our branded business until half our fruit goes into retail products and half to international sales in the commodity market.

A market not being met was pure cranberry juice, no added water or sugar, but grocery stores don’t like when a producer only has one product, especially a small bottle lost on shelves. We made pure blueberry juice, then a sour-cherry farmer came to us and we made dried cherries – they were delicious.

But, their pitting machine is old, doesn’t get every pit. “May contain pits,” means “Guaranteed to contain pits,” so we paid for the tooth of the lady from Prince Edward Island and only make cherry juice. The market’s grown so we’ll take whatever Atlantic cherries we can, but we also buy from an Ontario farm.

Part of my philosophy for our u-pick is being accessible for people to learn about cranberries. After I put a newspaper ad in the first year, our insurance company called to increase insurance because we’d have the public in. I had to complete a form, one question “What type of ladders do you use to pick your cranberries?” It was hysterical. I sent a photo saying “these are cranberry plants.”

As told to Cynthia Martin. This interview has been edited and condensed.

Lamont Cranston
2 days ago

Outstanding, and best wishes for success.
It is good to see this type of business sprout up in an area of Canada that needs many more stories like this..
One thing though : "Atlantic Canada has only 10 per cent of Canada’s population"
Actually, it is more like 6% - and falling.

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