When we ask U.S. retailers why they haven't kept pace with Chinese rivals, they say the countries can't be compared. China is dominated by small specialty shops, not malls, they point out, and its people are accustomed to ubiquitous surveillance — which Americans reject as creepy.
- But that defense may not be valid: Rod Sides, a retail expert at Deloitte, says he's advising his clients to follow China on digitalization, Axios' Erica Pandey reports.
- "If you convince the users that it's about convenience for them," they'll get on board, he tells Axios. "There're a lot of things I can buy, but I can't buy more time."
Why it matters: The digital sluggishness of U.S. retail has victimized Main Street — the mom and pop shops that have been left behind in the Amazon revolution, one culprit in the blight of American downtowns.
Abroad, the trend is to save Main Street.
China's Alibaba and Israel's Trax are following the digitalization-in-a-box model: selling their tech know-how in the form of off-the-shelf software and equipment that make it easy to upgrade mom and pop stores in one fell swoop.
- As of September, Alibaba had installed heat sensors, digital payment systems, and inventory tracking in some 1 million mom and pop stores across China.
- In a dispatch last July from Shanghai, a convenience store owner told us that his profits jumped 30% after Alibaba installed its tech.
- Trax's image recognition tech tracks what is and isn't flying off the shelves and feeds storekeepers data on how to most profitably restock aisles. The company said it has already modernized four supermarket chains in Israel, Singapore and the U.K., along with a number of mom and pops.
"A lot of the things we talk about here, like frictionless checkout, they've had in China for a few years already."— Rod Sides, Deloitte
Now, there are the first inklings of the revolution reaching U.S. shores.
Last year, Kroger spun out Sunrise Technologies, its in-house innovation lab, which debuted wireless shelves and sensors at two Kroger stores this month. Now, Sunrise — partnering with Microsoft — has plans to sell its tech to other stores, including mom and pops.
- Although it is the second-largest grocery chain in the country, Kroger is a tiny slice of retail and does not amount to a digital revolution in the U.S.
- But Sunrise's tech can be installed in any store, regardless of size, and controlled by someone with zero tech chops, says product manager Kevin Fessenden, who was showing the designs at the National Retail Federation conference in New York this week. And the company has intentions of shaking up the industry.
The bottom line: Brick and mortar is not going anywhere — it still commands 90 cents of every dollar spent in retail. But stores are being turned into hybrids that include a heavy e-commerce element.
- "It's about giving a brick and mortar store the kind of data that an e-commerce company might have," says Mark Cook, VP of product at Trax, an Israeli company that makes retail tech.