The Big Bad Wolf and the technocentric retail

MICHELE CAPRINI
12/11/2020
In brief
The match between Europe and American digital giants marks the beginning of a new chapter. The big bad wolf on duty is Amazon, after Apple, Facebook, Google, Microsoft, which are signs of an empire built on “the new oil”: datas. Looking in our home, the technocentric retail proudly claimed and applied on the other side of the Atlantic, is not reflected in the local sleepy distribution, despite the advantage givend by the lockdown results and despite the radical change of scenario of the sector. After years of pounding and superficial declamation of the new era of “customer-driven” retail, investment in the technology essential to create it are still delayed.

Technocentric. Accustomed as we are to neologisms, most often ephemeral and tirelessly coined in our world, you run the risk of losing the concept, all the more important this time. “Technocentric Retail” is an expression used this year (probably not the first, but it doesn’t matter) by Chris Hjelm, Executive Vice President of US retailer Kroger ( approximately 3000 stores for revenue over $120 billion in 2019).

We wrote in October: “Kroger’s digital and technological capability is even claimed as “part of the company’s DNA”, in reference to the excellence of 8451°, the proprietary data analysis structure”.Technology thus understood as strategic tool of distribution and not simply support, more or less developed and important (however not the case of Italy, unfortunately).

THE BIG BAD WOLF

In recent days, the conflict between Europe and the American digital giants has strongly come back to the fore. On the table, the initiation of proceedings against amazon for the infringements of competition rules and possible abuse of dominant position, accused of using to its advantage confidential data of companies operating on its own platform.

The issue of privacy and monopolistic tendencies, supported by the unscrupolous use of data, regularly recurs in the difficult relationship between the protagonists on both sides of the Atlantic. It applies to Amazon, as well as to Google, Microsoft, Facebook and Apple.

The aim of the Competition Commissioner Margrethe Vestager, is to ensure that online platforms do not distort the ntaural competition on the market. In case of Amazon, data relating to the activity of third-party suppliers, therefore, should not be used for its own benefit when operating as a competitor of those suppliers.

DOMINANT POSITIONS

The Commission explains that “Amazon has access to confidential reseller data, such as ordered and shipped product units, each retailer’s earnings, the number of user responses to a retailer’s offers, shippings, a retailer’s performance, and activated warranties.
Much of this information is available to Amazon and contributes to calibrating its offerings and decisions, to the detriment of other retailers.”

Last October, the US Department of Justice has filed an antitrust lawsuit against Google, accused of adopting anticompetitive practices to maintain its monopoly on online search and advertising systems.
Amazon is the Big Bad Wolf (it actually is, in many ways), useful to justify other people’s faults and delays. All in all it has perfectly applied, albeit beyond the limits of ethics, the “technocentric” concepts to its business model, forcing many competitors into the same uncomfortable position of the Three little pigs.

First question: isn’t it time to learn the lesson of bad wolves, from Bezos to Zuckerberg and whatnot, and start building a solid brick house? 

TECHNOCENTRIC RETAIL, BECAUSE…

Because, in retail, the quantity and quality of information is crucial.  They are used to optimize supply chains, improve the supply of products and create the best shopping experiences. They bring to the attention of those who decides which products are sold and where, what individual consumers or groups of consumers are buying and what they are considering of buying and how their decisions are influenced by external factors.

Moreover, data collected by social media, internet browsing and IoT devices are important tools for profiling and defining consumption targets. Advanced analytics tools, process this unstructured data in order to identify what is and what will be, indispensable knowledge to the design of strategies and operational decisions.

Thus, retail must take the data as indispensable measures of its action, the technologies to deal with them, the use and pervasiveness of these in the creation process of business models and in organizations. Investments for this purpose are the most reliable indicator of innovation: If there is a lack of technology, there is a lack of innovation; if innovation is lacking, the business shuts down.

WHAT “CUSTOMER-DRIVEN”…

The “customer-driven” ideology has been inflated and, frankly speaking, it can no longer be done.  But over time the gap between the loud declamation of media and erudite symposia, and the insufficient application of the principles, albeit correct, has become clear.

Second question: if retail is not technocentric, how can it be “customer-driven”?

In the Italian GDO, there are no examples of companies that have the technology at the premise of their action. We cannot think of retailers who, as in the United States, incorporate a data center into the supermarket or start their own IT company. In the most advanced situations, technology represents the improvement of processes, not the premise. This, despite the advantage given by the results collected during the lockdown.

With a knowledge of purchasing behaviors and experimentation with new methods, to retailers is given the opportunity to build or regain customers loyalty, and capitalize on the growing popularity of a product or category. New channels, products and behaviors are constantly emerging: only by using a data-driven strategy, trend opportunities can be identified before they are experienced.

Technocentric retail (apologizing for the possible abuse of this term) is simply a premise and application, at the same time, of the strategic vision. The technology enables the combination of long-term vision and quick adaptability to the needs of the moment, and finds the balance between market opportunities and the capabilities of your organization. It is a simple concept: if not understood and applied accordingly, it’s trouble.