The world of retail was a simpler place in the year 1900. According to Bureau of Labor Statistics (BLS) “100 Years of U.S. Consumer Spending,” the average U.S. household earned about $750 a year (or about $21,000 a year adjusted for inflation). With small reserves of cash, the vast majority of consumer spending — about 80 percent — fell into one of three buckets: food (43 percent), housing (23 percent) and clothing (14 percent).
The early 20th century world had its limits — according to the BLS, only a quarter of households had running water, less than 15 percent had flush toilets, about 8 percent had electricity, 5 percent had phones and 1 percent had a car. It was a limited world. But, on the upside for retail strategists, the race to capture the consumer’s whole paycheck was a simple one. If consumers couldn’t eat it, live in it or wear it — it was likely an unaffordable niche product.
Today things are somewhat more complex. Household income is up 160 percent and the average American household spends closer to 10 percent of their annual income on food and less than 5 percent on clothes. Housing remains a leading cost, and healthcare has crept up — but the largest spending category for consumers these days is “other.”
And racing particularly hard to fill in that “other” category this week — while also hitting food, clothing and pretty much everything that isn’t housing — were retail giants Walmart and Amazon. Prices are dropping, new services are launching, shade is being thrown and there is even a space-age cable offering. This is a concept that itself would have been almost impossible to explain to a customer in the year 1900.
But lucky for all of us it is 2019 instead — which means not only do we get it, we can look forward to it.
Amazon
Big Play of the Week: Alexa Gets HIPAA-Compliant
Alexa has jumped into a whole new world this week, with the announcement from Amazon via blog post that its voice assistant is HIPAA-compliant and thus now able to handle sensitive patient data.
With the new compliance, Amazon is opening an invitation-only program for developers looking to create healthcare skills for Alexa that can transmit and receive protected health information. According to Rachel Jiang, head of health and wellness for Amazon Alexa, the goal of the program is to make it easier for consumers to manage their healthcare via voice.
Amazon also announced six new Alexa healthcare skills from healthcare providers, payors, pharmacy benefit managers and digital health coaching companies that are now operating in Amazon’s HIPAA-eligible environment. The new healthcare skills include Express Scripts, which allows members to track medication orders and shipments; Cigna Health Today, which enables members to manage health improvement goals; My Children’s Enhanced Recovery After Surgery, which lets parents update caregivers about recovery progress; Swedish Health Control and Atrium Health, which enables customers to find urgent care centers; and Livongo, which helps people manage chronic conditions.
“Every day, developers are inventing with voice to build helpful and convenient experiences for their customers,” wrote Jiang. “These new skills are designed to help customers manage a variety of healthcare needs at home simply using voice — whether it’s booking a medical appointment, accessing hospital post-discharge instructions, checking on the status of a prescription delivery and more.”
Jiang said the new skills are just the beginning, and that future skills will focus on making it easier for customers to manage healthcare using voice.
Amazon to Offer Broadband … In Space
Amazon is going to space.
No, life has not been discovered on another world that Amazon has already signed up for Prime Membership. Instead, Amazon is hoping to provide the world better broadband access to the world by using satellites orbiting in space.
According to a report in GeekWire citing three sets of filings made to the International Telecommunications Union in March, Amazon’s initiative — code-named Project Kuiper — will cost billions of dollars, but will generate billions of dollars if the technology is deployed commercially.
The plan described in the filings involves Amazon sending 3,236 satellites into low Earth orbit to provide broadband internet access that it claims would cover about 95 percent of the population. As of today, there are about 4 billion people worldwide who lack internet access.
“Project Kuiper is a new initiative to launch a constellation of low Earth orbit satellites that will provide low-latency, high-speed broadband connectivity to unserved and underserved communities around the world,” an Amazon spokesperson said in an emailed statement to the news outlet. “This is a long-term project that envisions serving tens of millions of people who lack basic access to broadband internet. We look forward to partnering on this initiative with companies that share this common vision.”
There are no specifics attached to the news — when the satellites go up, when the internet goes on or how much Amazon plans to charge are unknown.
Amazon’s next step is to submit its filings to the Federal Communications Commission (FCC) and other regulators. In order to get regulatory approval, Amazon will have to show that its satellites will not interfere with others expected to orbit in low Earth. It will also need a plan to dispose of the satellites without adding debris to space.
If only they knew someone who owned a company that specializes in spaceships.
The Big Whole Foods Price Drop
It’s been a good week for savings for Whole Foods shoppers who are also Prime members, as Amazon has lowered prices on hundreds of items in its latest move to battle the grocery chain’s “Whole Paycheck” stigma.
New lower price signs filled the produce section and Whole Foods location, with average price drops in the 20 percent range according to Amazon. The eCommerce giant further announced it will be doubling the number of deal available for Prime members.
“When I saw the price drop on organic carrots in there, I was kind of thinking: How? How?” she said. “$3.99 to $1.99 — that’s a big price drop,” Caitlyn Austin, a college student and part-time urban farmer told Recode.
The discounts, however, did not excite everyone. Manhattanite Bianca Peachey told the news outlet she actually steered clear of the discount items, as is the custom of her neighborhood. “In TriBeCa … no one really wants reduced stuff,” she said with a laugh. “[We] don’t really search out the discounted stuff.”
But while Peachey isn’t all that interested in the discounts, she did get her groceries delivered via Whole Foods free delivery for Prime Members — calling the deal a no brainer.
Amazon certainly hopes most customers are a little more discount-motivated than Peachey, as it is working to build the Prime customer base into Whole Foods shoppers. Just 11 percent of Prime members shop at Whole Foods several times a month, according to a recent survey by Wolfe Research.
With better deals on carrots it seems, the retailer hopes to up that ratio.
Walmart
Big Play of the Week: Walmart Welcomes Voice to the Grocery Game
Walmart is getting into the voice game this week with the rollout of an offering called Walmart Voice Order that will let consumer make their grocery lists for Walmart with an assist from the Google Assistant.
Starting this month, users will be able to add items directly to their Walmart shopping carts with the command “Google, talk to Walmart.” From there the assistant can add products directly to their cart — though users can also continue to manage those carts from a host of other devices with the Walmart app.
The new voice app is also designed to make the shopping process easier by remembering the consumer’s past choices. If a consumer says “add milk” for example, the program will pick their customer’s normal brand, size and type of milk unless otherwise instructed.
“We know when using voice technology, customers like to add items to their cart one at a time over a few days — not complete their shopping for the week all at once. So, this capability aligns with the way customers shop,” noted Walmart Senior Vice President of Digital Operations Tom Ward in a blog post.
Ward went on to suggest that other voice options will be available in the not-too-distant future. “We’re kicking off the work with Google, adding others to the mix as time goes on,” he said, adding that the service would be available to more customers in the weeks to come.
Baby Registry On Board
Walmart this week made a move on the fast growing and big spending parents and parents-to-be market with the launch of its newly-revamped baby registry.
The new registry comes with personalization features and various mobile management tools in an effort to make it easier for customers to register for baby gifts, accessories and supplies.
“When talking with customers, we kept hearing one key theme — that starting a baby registry is incredibly overwhelming and they’d like a more filtered list to begin their planning. So, we’ve made it easier for parents to create, manage and add items to their registry, all while adding a personal touch,” Walmart U.S. eCommerce Vice President and General Manager of Baby Lauren Uppington wrote in an online post.
To ease the user experience, visitors to the registry can interact with “Hoo the Owl, a chatbot designed to ask questions such as the preferred nursery theme, due date and gender. With that data, Hoo pre-populates the registry with a customized selection.
The new registry comes as Walmart is offering Hello Bello products exclusively at its stores and on its website. Hello Bello comes care of celebrity couple and co-founders Dax Shepard and Kristen Bell. The brand planned to roll out 10 items with a price range starting at just under $2 to approximately $24.
And speaking of value — an ex-Walmart CEO had an idea or two about that to share this week.
Throwing Shade at Amazon: Whole Foods Price Cuts Edition
Customers outside Manhattan’s pricier neighborhoods were impressed by the Prime price cuts this week — but former Walmart CEO Bill Simon wasn’t.
Simon said on Wednesday he doesn’t think Amazon’s move to cut prices at Whole Foods will boost sales at the grocery store, according to CNBC. Amazon cut prices at the grocery chain in the fall of 2017 shortly after the acquisition and the newest round indicates that Amazon’s strategy in grocery “hasn’t worked the way they expected it to,” he told the news outlet.
Amazon, through a spokesperson, refuted that, saying, “That’s simply not true. Price reductions at Whole Foods Market have been successful and feedback from customers has been overwhelmingly positive — in fact customers have already saved hundreds of millions of dollars through lower prices and Prime member deals.”
Simon, who led Walmart from 2010 to 2014, said groceries are a very difficult market, particularly in the area of produce. He went on to say Amazon should have gone after a Walgreens or Target if it wanted to make its physical footprint bigger. When it began, he said, the store was selective about where it built locations. So customers who live within range of a Whole Foods, he said, won’t be lured by price cuts, and those who could be lured by such cuts don’t live close enough to a Whole Foods.
However, Simon conceded that the move was good for Amazon insofar as it got attention. “[Amazon] got the lift they’re looking for from this price action, because it’s been covered in the press.”
Of course, if all Amazon wanted was press coverage, there were probably cheaper ways to go about it. Presumably it wants to drive more Prime members to the stores.
And if not — well there is always handling their medical care, or selling them a cable package.
That’s the wonderful thing about living in 2019 — there are a lot of routes to the consumer’s paycheck. And Walmart and Amazon seem strongly committed to trying all of them.
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