By Paula Rosenblum, Managing Partner
January 19, 2010
This week, I want to cover two topics: my general observations at NRF’s Big Show in New York, January 10-13, and also to deliver a promised update on dunnhumby’s acquisition of KSS Retail.
First: the general update: at the end of the show, a journalist asked me my impressions. Much to his surprise, there was only one word to say: “Hopeful.” Of course, when pressed, I was able to add a lot of color to that word. If you didn’t attend, here’s a brief synopsis. We saw fewer vendors in attendance but more retailers. Most vendors and retailers were talking turkey about projects being funded, and only a very small number of vendors had obscure over-the-top booth displays. There were fewer parties, but two new traditions emerged: RetailROI’s well attended Super Saturday event and RIS’s Rock and Roll Retail on Sunday. RSR was proud to participate in the former and participate and co-host the latter. I hope both continue in the future: informative and fun are what trade shows are supposed to be all about. Overall, it was one of the best NRF shows I’ve ever attended, and what is usually a somewhat painful experience was genuinely fun.
Next: an update on dunnhumby’s acquisition of KSS Retail. In our January 5 article, we raised a lot of questions and concerns. Fortunately, we were able to schedule some time with Edwina Dunn, co-founder and CEO of dunnhumby, and Lance Jacobs, CEO of KSS Retail to get those questions answered.
What are the synergies?The hope of the two executives is to bring elements of dunnhumby’s capabilities to KSS’s existing clients (and clients-to-be). KSS continues to have passion for the mid-market grocery segment, and has a goal to improve its competitive capabilities and hone its customer focus. The exact scope of those capabilities is still to be defined, and is one of the new entity’s highest priorities over the coming months. We hope dunnhumby and KSS will keep us up to date as that scope is fleshed out.
We were concerned about the reaction of KSS’s existing clients. Mr. Jacobs reported no negative reaction thus far, and in fact, a certainly hopefulness (there’s that word again!) from at least one client. Obviously existing investors Kroger and Tesco don’t seem to mind – after all they had to approve the deal in the first place.
We wondered about the impact on existing dunnhumby clients. Of course, Ms. Dunn expressed the company’s commitment to keep its eye on the ball at existing retail and CPG clients. Another part of her response was fascinating and clear: to paraphrase, dunnhumby’s “secret sauce” isn’t such a deep secret, and is teachable to new associates. She is confident that the team can continue to provide support to critical clients like Macy’s, Home Depot and several CPG companies. She also observed that the companies taking most benefit from the dunnhumby relationship are those who are genuinely willing to listen. This is in line with much of RSR’s research: that which separates winners from also-rans in retail is not lack of information – it is lack of a plan and a willingness and ability to execute that plan in a step-wise fashion.
Where does that leave us? After years of seeing the supermarket industry languish in technology backwaters, our data shows it starting to take a leadership position in technology and in turning its loyalty programs into something more than what my colleague Scott Langdoc calls a “two-tiered pricing system.” If a dunnhumby/KSS partnership can help that along, all the better. With regard to other clients, we can personally testify to improvements in shopability at Home Depot. While we don’t know the part dunnhumby has played to date, we know there are further advances coming. We’ll give you additional updates as the months go by, to help understand what dunnhumby’s continued footprint expansion means for you. For now, we’re left with one word: we’re feeling - all together now - hopeful.
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