Commerce chronicles: Jan 29, 2024

Temu sees explosive growth, Kering purchases Manahattan retail building and NRF 2024 features cutting-edge retail tech

In this week’s news, Gucci’s parent company, Kering, purchases a Manhattan building for almost $1 billion. Robots and smart carts made an appearance at NRF 2024. Chinese ecommerce giant sees explosive growth in the US, and Utah State University offers an ecommerce program to help small rural businesses. Plus, are shopping malls the fulfillment centers of the future? Visit our blog every Monday for a roundup of the latest commerce news.

Temu sees explosive 700% ecommerce growth in US

It’s not uncommon for US consumers to see online ads for the Chinese ecommerce company Temu. The products featured range from t-shirts and bags to jewelry and shoes. And evidently, it’s working. The ecommerce platform has had 700% growth in the US over the past year.¹

Still, mystery shrouds the company. Is it legit? Is it safe? What do they mean, shop like a billionaire? Periodicals like Time Magazine,² PC Magazine³ and others have worked to demystify the ecommerce giant.

Temu describes itself as “Temu is an e-commerce company that connects consumers with millions of merchandise partners, manufacturers and brands with the mission to empower them to live their best lives. Temu is committed to offering the most affordable quality products to enable consumers and merchandise partners to fulfill their dreams in an inclusive environment.” Since its launch in the US market in September 2022, the company has seen unprecedented growth. The ecommerce platform went from zero to 44.5 million unique users in just four months.⁴ Last year, they saw another 700% growth. The etailer also reported that its most loyal shoppers were 59 and older.⁵

According to various sources, Temu has placed itself front and center to consumers by investing in TikTok strategies, Super Bowl ads, heavy paid media ads and targeting price-sensitive shoppers during a time of economic inflation. The questions become, where does Temu go from here, will they disrupt the retail industry, and will they challenge mega ecommerce giant Amazon?

Utah State University Extension program launches ecommerce accelerator program to bolster small rural businesses

Recently, Utah State University announced a new offering to its extension program. The Ecommerce Accelerator (ECA) program⁶ aims to empower small businesses in rural Utah through the Rural Online Initiative (ROI). The program will be free to select small businesses and looks to drive economic growth by teaching remote work skills.

ECA is a comprehensive six-week program designed to help small businesses gain the skills and strategies needed to succeed in the online marketplace. Students will learn about building an online presence, a website, digital marketing search engine optimization (SEO) and customer relationship management.

The program offers personalized support to help businesses thrive digitally and increase ecommerce sales. During the pilot phase, the ECA program worked with two businesses to expand their impact and strategize how to grow in markets throughout the state, nation and globe.⁷ Rural entrepreneurship is crucial to strengthening community, employment, income and economic growth in rural areas and preventing migration.⁸

Gucci’s parent company, Kering, spent almost $1 billion on Manhattan retail property

Kering, the French luxury goods giant, continues its strategy of buying highly desirable locations. They recently acquired a multi-level luxury retail space that is 115,000 square feet and located on the southeast corner of 56^th Street and Fifth Avenue. Jeff Sutton and SL Green Realty sold the prime property for $963 million.⁹ Gucci’s parent company isn’t the only retailer interested in New York real estate. The city has seen recent property purchases by Prada, Hyundai and Geshary,¹⁰ a Japanese specialty coffee company – signifying a retail rebound from the pandemic.

With the retail real estate industry heating up, institutional buyers are investing in grocery stores, pharmacies and other retail properties. Retail’s strong performance increases property appeal. The demand has resulted in an added 35 million square feet of new retail space over the past 18 months.¹¹ Industry experts are forecasting an important year for commercial real estate – and there’s an opportunity to rebuild as long as the industry evolves to shifting expectations.¹²

Are shopping malls the fulfillment centers of the future?

The rise in ecommerce is creating a need for more innovative fulfillment solutions. With steady growth, online shopping is set to take 41% of global retail business.¹³ Meaning brands must find ways to get packages to customers affordably and fast. 3PLs and carriers have already worked to innovate their processes. Retailers have looked to alternative solutions like using stores as fulfillment hubs. Now, industry experts are looking toward turning shopping malls into hybrid, middle-mile fulfillment and reverse logistics center.¹⁴ The thought is that from there, merchants can figure out how to handle the last mile. But is it a good idea?

Between 2016 and 2019, Amazon bought 25 shopping malls and turned them into fulfillment centers.¹⁵ Even as recently as 2021, they’ve acquired more malls. Buying these spaces allowed them to better meet 1-day, and even 1-hour, delivery. However, they didn’t create a hybrid space in Amazon’s scenario. On the other hand, Walmart, Walgreens and Target have turned some of their store space into mini fulfillment centers. The thought for these hybrid malls is to meld the two ideas together. Only time will tell if malls are destined to become the fulfillment centers of the future.

Smart shopping carts and replenishment robots: NFR 2024 featured cutting-edge retail tech

Futuristic technology was a prominent feature at this year’s National Retail Federation’s Big Show. Robots, carts and anti-theft innovations took center stage. The common theme for each product: To automate, simplify and overcome common retail challenges. Here is a list of four favorites:

The EASY Shopper

With the EASY Shopper¹⁶ – a smart cart – groceries go directly from bag to car, minus the checkout. Think of it as an all-in-one tool. Customers download an app or have a customer loyalty card, use it to scan your EASY Shopper and then shop. The shopper scans each item as they put it in the cart. Once they’re done finding what they need, they complete the purchase at the easy register, which lets them check out without the need to remove and bag each item.

Vici robots

Vici robots¹⁷ wants to take over dull, repetitive tasks. This retail automation takes over tasks like stocking shelves, facing and fulfilling online orders. No more midnight inventory replenishment – let the robot take the night shift and come back to stocked shelves.

Apptronik

Apprtronik is another robot – this one is designed to support fulfillment. With online orders on the rise and fluctuating fulfillment needs, Apollo¹⁸ (the humanoid robot) is ready to step in and save the day.

Auror

In 2023, retail crime surged in some cities, creating massive losses for brands¹⁹. At NRF 2024, Auror²⁰ unveiled retail crime intelligence. Auror’s solution does things like reporting incidents. It can even alert you when a recurring offender has entered your parking lot. Auror aims to help brands understand who and what is driving loss and strategize how to prevent it.

References:

1. https://www.businessinsider.com/temu-us-e-commerce-700-percent-growth-2024-1
2. https://time.com/6243738/temu-app-complaints/
3. https://www.pcmag.com/how-to/what-is-temu-read-before-you-shop-like-a-billionaire
4. https://www.bloomberg.com/news/articles/2024-01-23/temu-s-most-loyal-shoppers-are-actually-boomers-and-gen-xers?srnd=technology-vp
5. https://www.bloomberg.com/news/articles/2024-01-23/temu-s-most-loyal-shoppers-are-actually-boomers-and-gen-xers?srnd=technology-vp
6. https://extension.usu.edu/remoteworkcertificate/ecommerce/
7. https://www.cachevalleydaily.com/news/archive/2024/01/21/usu-extension-launches-e-commerce-accelerator-program-to-boost-rural-utah-small-businesses/
8. https://advocacy.sba.gov/2023/08/22/small-businesses-in-rural-areas/
9. https://www.kering.com/en/news/acquisition-of-prestigious-fifth-avenue-property-in-new-york-city/
10. https://www.costar.com/article/804279514/gucci-parent-kering-buys-fifth-avenue-retail-property-in-manhattan-for-963-million
11. https://www.nar.realtor/magazine/real-estate-news/commercial/will-the-commercial-market-hit-the-reset-button-in-2024
12. https://www2.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html
13. https://www.bcg.com/press/31october2023-ecommerce-global-retail-sales
14. https://www.supplychainbrain.com/articles/38838-remember-the-mall-now-its-a-fulfillment-center-and-more
15. https://www.nbcnews.com/business/business-news/amazon-snapping-disused-shopping-malls-turning-them-fulfillment-centers-n1262914
16. https://www.youtube.com/watch?v=3SGrhQj9i24
17. https://vicirobotics.com
18. https://apptronik.com/news-collection/meet-apollo-the-iphone-of-humanoid-robots
19. https://www.nytimes.com/2023/11/29/briefing/shoplifting-data.html#:~:text=Average%20Monthly%20Shoplifting%20Rates%20in%20the%20U.S.&text=As%20of%20June%202023%2C%20the,per%20100%2C000%20in%20June%202019.&text=Note%3A%20Data%20is%20based%20on%2024%20cities.&text=Other%20data%20also%20indicates%20that,in%20most%20cities%20since%202019.
20. https://www.auror.co/role/loss-prevention