Hartford Business Journal

www.HartfordBusiness.com • November 12, 2018 • Hartford Business Journal 27 SUPPLY SIDE WINDS: 1. Instant Delivering Firms Amazon has been grappling with the 'two day problem' in creative ways. This problem is that the logistics of shipping prevent Amazon, and other online retailers, from tapping the instant gratification and other non-digital aspects of shopping. In spite of convincing 95 million U.S. consumers to become Amazon Prime members, they still have to wait two days to enjoy their purchase. Some of the ways that Amazon has been trying to bridge this gap has been that through setting up its warehouses across the country, for example in Windsor Locks, Conn., and by exploring innova- tive ways of shipping through, for example, the use of drones to bypass the traditional delivery infrastructure, and the move into traditional retail- ing. The last surprising, but logical, strategic move includes the purchase of the Whole Foods chain, the partnership with Kohl's, and the opening of Amazon Go stores which have innovated 'just walk out' technology by eliminating the checkout counter through wireless payment using sensors at the exits. 2. Artificial Intelligence User Firms Technologies such as machine learning and artifi- cial intelligence are being used to bridge the gap between the impersonal nature of earlier gener- ations of computer-aided recommendation systems and the move towards virtual Shopping Assistants, such as Alexa. There is a technological dimension to this innovation as engineers strive to interpret emotions in the vocal commands of consumers, and also to inject emotion into the Assistant's interactions with the consumer. There is also a strategic dimension as these techno- logical developments raise switching costs for consumers, and increase profits through enabling creative cross-selling of higher margin products, including, increasingly, internet store brands such as Amazon Basic and Chrome products. 3. In-store Customer-Converting Firms The age-old saying that 'time is money' is being increasingly implemented using the ubiquitous mobile smartphone. An extreme, some would say egregious, example of this is the 'HIJACK!' promotion used by a shoe store in Guatemala, where consumers in a mall were targeted by a promotion the value of which reduced with every passing second! While it is difficult to conceive of an identical promotion in the United States, online "flash sales'' and other similar promotions that tie the value of a promotion dynamically to the passage of time will be an increasing trend in the future. 4. Geo-Conquesting Firms Retail-beacon technology is being used to target consumers when they are close to a competing store in a mall. This enables firms to take point-of-purchase targeting beyond loyal customers who are visiting their stores currently, to also "poach'' customers who are en route to another competing store that is located close to the focal store. 5. Sharing Economy-focused Firms As large sections of the economy move towards rental, rather than ownership, through the sharing economy (e.g. Uber, AirBnB), ownership of prod- ucts is also becoming an archaic notion in many product categories. Consumers are focusing on their use of products, and where these show a declining trend over time, prefer to rent rather than buy. As the demand-side winds meet its supply-side counterparts, we experience developing storms that sometimes turn into tornados. Results of such wind-shear are apparent as some of the old guard like Sears and Toys R' Us wither away; others like Macy's and Walmart seek to reinvent; while the new guard, led by Amazon, rises on the retail horizon. Thought Leaders in Business Today is a series produced by the UConn School of Business featuring faculty research and expertise on today's business challenges. For additional information on today's subject, or if you have a topic you'd like us to address, please contact Michael J. Deotte at michael.deotte@uconn.edu or 860.486.4478. www.business.uconn.edu Full-time / Part-time / Executive MBA PROGRAMS Accounting (Online) Business Analytics & Project Management Financial Risk Management Human Resource Management SPECIALIZED MASTERS Business Administration Business Data Analytics Financial Management HARTFORD UNDERGRADUATE MAJORS UNLIKE ANY OTHER PLACE

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