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Period: December 1, 2016 to December 15, 2016
Comment & Opinion or Companies, Organizations or Consumers or Controversies & Disputes or Deals, M&A, JVs, Licensing or Earnings Release or Finance, Economics, Tax or Innovation & New Ideas or Legal, Legislation, Regulation, Policy or Market News or Marketing & Advertising or Other or People & Personalities or Press Release or Products & Brands or Research, Studies, Advice or Supply Chain or Trends

In-Person Shopping Way More Important Than Online For Cosmetics And Grooming Products

A recent Harris Poll found that in-person purchases remain dominant for cosmetic and grooming products, and especially so for trialing and first time purchases.  The research underlined the importance of in-person channels, finding that around 90% of purchasers shop in-person for a range of personal care items, including hair styling products, shampoos and conditioners, cosmetics, non-sunscreen products with SPF protection, and sunscreen.  “Big box” retailers continue to be the preferred purchase location. Online channels are more popular for smaller items, with 40% of purchasers shopping online for cosmetics and 34% for facial/skin care products. They are less likely to shop online for bulkier items, likely reflecting shipping costs: just 17% shop online for shampoo/conditioner and 22% for sunscreen.  In all this, price remains the most important determinant of where consumers will purchase: 87% say they’ll buy a product wherever they can get the best deal.

"Brick and Mortar Merchants Remain Top Purchasing Location for Cosmetic & Grooming Product Consumers", Harris Poll, December 01, 2016

Walgreens CEO Sees Positives In Consolidation Of US Drug Store Market, Seeks Geographic Expansion

Stefano Pessina, Walgreens CEO, sees large benefits from market consolidation, arguing that unified control brings efficiencies and the chance to deliver affordable care: “If there are many services are under the same head it’s easier to coordinate the dynamics and lead in an efficient way.” Walgreens Boots Alliance is currently working to close a $17 billion merger with Rite Aid, a combination that would bring together the world’s largest drugstore operator, Walgreens Boots Alliance, with its 13,000 stores in 11 countries, and Rite Aid that operates about 4,600 stores around the US, mainly on the East and West Coasts. Pessina seeks to expand geographically to become a truly national player with “an even presence everywhere in the U.S.”

"Walgreens CEO Stefano Pessina: 'Consolidation Is A Good Thing For This Market'", Forbes, December 01, 2016

Machine-Learning Offers Significant Benefits For Grocery Retailers

Fresh foods account for about 40 percent of a grocery retailer’s revenue, and 33 percent of cost-of-goods sold. So it is imperative that stores have neither an excess or shortage of fresh food in stock. It’s a complex problem for a variety of reasons. But it can be mostly solved – with significant financial and logistical benefits – using machine-learning. The technology is based on algorithms that allow computers to “learn” from data while significantly boosting forecast and order accuracy. Some retailers using machine-learning have reduced out-of-stock rates by as much as 80 percent and cut write-offs and days of inventory on hand by 10 percent. They have also seen gross-margin increases of up to nine percent.

"The Secret to Smarter Fresh-Food Replenishment? Machine Learning", McKinsey & Company, December 01, 2016

Marketers Must Rethink Their Approach For Gen-Z Consumers

As the end of the year approaches, it’s time for predictions for the coming year, and Kantar Millward Brown have weighed in with their thoughts on how companies  will have to market to Generation-Z, the post-Millennials group. This group wants creative content led by mobile, and marketers will have to create strong brand experiences for them, including sophisticated and brand-centric programmatic targeting, rather than more intrusive media that risks ad blocking. Kantar Millward Brown provides six takeaways: brands will re-think for the digital space, emphasizing issues such as authenticity and transparency; brand experience is increasingly key; content marketing will gain momentum, particularly on mobile, with marketers innovating and experimenting in content and formats; advertisers and their agencies will need more sophisticated and blended targeting approaches to drive brand effectiveness; the advertising industry will be forced to respond to ad blocking; and advertisers and ...  More

"Media & Digital Predictions 2017", Kantar Milward Brown, December 01, 2016

Ulta Target Millennials With AR App, Seeking To Make Buying Fun And Interactive

Online sales for Ulta Beauty continue to grow strongly –Q3 online sales rose 59.3% from $46.2 million to $73.6 million, and now comprise 6.5% of total sales, up from 5.0% last year.  Some two-thirds of traffic is coming via mobile and the company is seeking to play to this with the launch of Glam Lab, an iOS and Android app that lets shoppers virtually try out products before buying them. Users upload a selfie or choose a model with a similar complexion then choose the products and shades to test.  “It’s a great thing for millennials who wanted to have a more interactive experience,” said CEO Mary Dillon.  Hints of the company’s intent came clear in October when it filed a trademark for Glam Lab that would be a multi-platform application that would include augmented reality.      

"Ulta Goes Glam on Mobile", Internet Retailer, December 02, 2016

Snack Maker Goes Direct-To-Consumer With Holiday Cookie Website

The maker of Oreo cookies hopes to take advantage of the growing number of U.S. consumers buying food and beverages online. Mondelez launched a website this month to sell holiday Oreo tins for $19.99. The site lets customers send cookies to friends using only a mobile number or e-mail address. The technology was developed by a 60-person in-house e-commerce team – tasked with generating $1 billion in e-tail sales by 2020 – after Mondelez found last year that the cost of outsourced e-commerce development and management cut into profits. The company’s new technology will be used to sell other products online in the U.S. and abroad. Whether food manufacturers can succeed at online direct-to-consumer brand marketing without Amazon’s logistical clout remains to be seen.

"With Amazon Looming, Oreo Maker Dives Deeper Into Online Retail", Bloomberg Technology, December 05, 2016

In LatAm, Direct Sales Struggles In Face Of Multiple Challenges

Reach of direct selling in LatAm, traditionally its strongest market, is falling and now stands at a three-year low. Today, over 62 million households in the region buy from door-to-door reps but this is down from a high of about 64 million. Its popularity has been hit by the rise of convenience stores but especially drugstores that are proving the preferred channel for many consumers, notably 70% in Peru and 55% in Columbia. Investment in and reinvention of drugstores is capturing consumers – they can test and compare products in the store, pay by more options and get advice from instore advisors. Online is also taking share with consumers attracted by its range of products, price and convenience. Mary Kay is one player that is managing to buck the trend. Its investments to modernize, better reward reps and an online support channel have enabled it to grow penetration over 80% in the last three years.

"LatAms' favorite channel faces new challenges", Kantar Worldpanel, December 05, 2016

McDonald’s Plans To Get A Bigger Share Of The Upscale Coffee Market

The coffee business is flourishing in the U.S., but not so much at fast-food eateries. While coffee sales at café-style outlets rose 10 percent in 2015, sales went up only 3.3 percent at burger restaurants. McCafe generates $4 billion a year in U.S. sales, but McDonald’s wants to crack the upscale espresso, latte and mocha market. It will revitalize the eight-year-old McCafe offering with more special deals, a variety of seasonal beverages and increased marketing of the coffee rewards program. In addition, following in the footsteps of rival Starbucks, McDonald’s will make greater efforts to source its coffee beans from sustainable growers.

"McDonald’s Revamps Its $4 Billion McCafe Brand", Bloomberg, December 05, 2016

Mintel Report Highlights Four North American Consumer Trends

Mintel’s new report on North America consumer trends highlights four topics. The first, which the author calls “The Echo Chamber of Secrets”, suggests that the rush to personalization means consumers are only being shown ideas and services they already identify with and brands need more disruption to help reach inside consumers’ “bubbles” to encourage them to extend beyond their comfort zones. “Reality 2.0” reflects the growing demand for novel experiences that enable the consumer to become more immersed in their chosen worlds, through technology like virtual and augmented reality, and live streaming. Mintel says consumers are becoming frustrated with inaction by “the system” and encourages brands to “Be the Change”. The fourth trend, “Life in Sync”, suggests that the strides being made by artificial intelligence are making life smarter and more seamless.

"Trend Tracker: North America Consumer Trends 2017 (1/2)", Mintel, December 07, 2016

Costco Finally Getting Serious About Ecommerce

Costco acknowledges that it’s lagging in ecommerce. As competitors built out their offerings – in the last year Target has invested in IT and improving its search function while Walmart tripled its online range and now offers grocery pickup at hundreds of stores – Costco remains largely a bystander.  Its online sales of around $4 billion (about 3% of sales) are lower than those of much smaller stores such as Best Buy or Macy’s.  Chief Financial Officer, Richard Galanti, recognizes that the company doesn’t meet industry standards but says that this will change. Improvements include increasing the number of high-end brands available online, improving search and streamlining checkout. It will also rollout better order tracking and simplify returns. In all this, Costco must balance its desire to offer a limited number of items (the average store carries about 8,000 against some 150,000 at a Walmart) and its desire to remain a physical destination where it feels it can better differentiate.

"Costco's Battle Plan for the E-Commerce Wars", Fortune, December 08, 2016

India's E-commerce Market Expected To Expand 200 Percent In 2015-2025

India's e-commerce market, valued at $19.2 billion in 2015, is forecast to expand more than 200 percent by 2025. Growth in the online retail sector is driven by many factors, including rising penetration of the internet and smartphone ownership, expanding online consumer base, changing lifestyles among Indian consumers, and advances in payment technology. Also, the market is expected to see an increase in merger and acquisition activity, driven by international retailers, such as Alibaba, Amazon, and Walmart, seeking to acquire or merge with the country's leading e-commerce companies.

"Anticipated E-Commerce Boom will Drive Logistics Industry in India", Euromonitor, December 11, 2016

Aldi UK To Launch New Anti-Ageing Skin Line For A Limited Period

Aldi, the German discount supermarket, is launching a new anti-ageing skincare line in the UK, called Lacura VITACELL. It’s aimed at competing with premium skincare products, and contains Complex TCR3® to prolong the life of skin cells, as well as stem cells from sea plants to promote skin elasticity and structure. The products will be on the shelves as a Specialbuy in early February 2017 with limited supply.

"Aldi Launches Premium Anti-Ageing Skincare Range", International Supermarket News, December 12, 2016

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