Feature

The 2016 Dive Awards for the retail industry

From in-store innovations to digital disruptions, we recognize the people, technologies and trends that defined (and redefined) retail.

These are trying times for retail. Store traffic is declining, merchants are struggling to deploy omnichannel technologies, fast fashion keeps stealing attention and market share from establishment apparel brands, and millennials are spending on seemingly everything but merchandise. But retailers keep pushing forward, rethinking in-store experiences and online interactions alike in an effort to meet and even exceed the expectations of today’s tech-savvy consumers.

In that spirit of innovation and disruption, we present the 2016 Dive Awards for the retail industry. These honors are the end result of months of work, research and dialogue: We began planning in January, solicited suggestions for nominees from readers in August, then consulted industry insiders to help us narrow down the pool of candidates. Retail Dive’s editors ultimately selected the winners in each category.

And the winners are…

Company of the year

Winner: Amazon

No brand better defines — and, more importantly, continues to redefine — the shape and scope of 21st century retail quite like Amazon, and in 2016, the company further established its dominance in e-commerce while also setting the stage for the next phase of its evolution.

Amazon has now logged six consecutive profitable quarters, defying critics who warned it would never achieve profitability. Amazon owes its momentum to its Prime subscribers, who pay $99 per year for a growing array of shipping options and multimedia services. Amazon continues rewarding their loyalty with new services and innovations, perhaps none more notable in 2016 than the voice-controlled Echo speaker, powered by company’s Alexa artificial intelligence technology. There's also the now-annual midsummer Prime Day shopping event.

Amazon is now moving its next frontier: Physical retail. In addition to its growing footprint of big-city bookstores, Amazon is developing plans for convenience stores, about 100 pop-ups in malls nationwide and as many as 2,000 U.S. grocery stores. Some question the wisdom of moving into brick-and-mortar, but Amazon has been proving doubters wrong for more than two decades, and it remains the retailer against which others are judged heading into 2017 — and, probably, beyond.

Other nominees: H&M, J.C. Penney, Macy’s, Wal-Mart

 

Executive of the year

Winner: Jeff Bezos, Amazon founder and CEO

 

More than two decades after Bezos founded Amazon, he remains the most innovative, ambitious figure in global retail. No other executive thinks bigger or pushes the boundaries further — so much so that labeling Amazon “just” a retailer ignores its massive achievements in other verticals.

Consider Amazon Web Services. The public cloud computing infrastructure division effectively finances the company’s unprofitable businesses and Bezos pet projects until they can start fending for themselves. “They were prescient enough to realize they were building extra capacity for their own growth and that they could monetize that capacity,” Mark Cohen, professor of retail studies at Columbia University, told Retail Dive earlier this year.

Bezos has also emerged as a Hollywood mogul of sorts as the Amazon Prime subscriber program has expanded past free shipping to encompass a multitude of services, most notably Amazon Prime Video, home to an expanding slate of award-winning original programming.

These seemingly disparate initiatives (and there are many more) align to make Amazon’s core retail business that much stronger and stickier. Prime membership increased to 63 million by mid-2016, representing 52% of Amazon's total American customer base. Prime subscriber annual spending now accounts for close to 60% of Amazon’s gross merchandise value, and subscribers spend an estimated $1,200 per year versus $500 for non-Prime members.

In the end, it doesn’t matter if it’s two-day free shipping or all-day Prime Video binges that’s keeping Prime members around; Bezos figured out how to bring them to Amazon, and now that he’s got them, he’s not letting them go.

Other nominees: Brian Cornell (Target CEO), Marvin Ellison (J.C. Penney CEO), Jack Ma (Alibaba founder), Doug McMillon (Wal-Mart CEO)

 

Startup of the year

Winner: Starship Technologies

 

Drones are stuck in a holding pattern. Sure, there’s enormous promise in the concept of deploying unmanned quadcopters to cheaply and efficiently fly packages directly to customers’ doors, but standards and technical guidelines plans outlined by federal officials and their technical advisors suggest that commercial drones optimized for package delivery are more than three years away at best.

Enter Starship Technologies. The London-based startup, launched in 2014 by Skype co-founders Janus Friis and Ahti Heinla, eschews drones in favor of droids — small, self-driving robotic delivery vehicles that motor along city sidewalks at pedestrian speeds. Each six-wheeled Starship robot is capable of carrying the equivalent of two grocery bags and can complete local deliveries from the nearest hub or retail outlet within five to 30 minutes. Shoppers can track the robot’s progress in real time via mobile app; the same app guarantees that only authorized customers are allowed to unlock the cargo upon arrival. 

Starship claims that autonomous robotic vehicles reduce delivery costs as much as 10 to 15 times per shipment compared to other methods, and because each bot is battery-powered, there are no direct CO2 emissions. Forget drones — these are the droids you’re looking for.

Other nominees: Casper, Enjoy, Instacart, Story

 

Most intriguing investment of the year

Winner: Wal-Mart/Jet acquisition

Wal-Mart’s $3.3 billion acquisition of online retailer Jet represents the biggest deal in U.S. e-commerce startup history — and not just in terms of its record price tag, either. The merger redefined the e-commerce landscape virtually overnight, transforming Wal-Mart from a lumbering brick-and-mortar behemoth into an imposing digital threat.

Wal-Mart not only landed Jet co-founder and CEO Marc Lore, who previously helmed Quidsi (the parent of websites including Diapers.com and Soap.com, sold five years ago to Amazon for $545 million), who brings with him estimable insights into the endlessly complex e-commerce business. It also scored Jet’s cutting-edge technology, in particular a signature pricing algorithm that rewards shoppers in real time with savings on items purchased and shipped together. Perhaps most significant, Jet delivers Wal-Mart the younger, upmarket customer base it has long coveted — and which has always eluded its grasp.

But what ultimately makes the Wal-Mart/Jet deal so intriguing is the strong possibility it will crash and burn. Some observers have expressed concerns about Jet’s stickiness. Others contend Wal-Mart’s corporate culture will stifle Jet’s flexibility and spirit of innovation. Howard Davidowitz, chairman of retail consulting and investment banking firm Davidowitz & Associates, also cites Wal-Mart’s history of poor returns on web commerce investments, telling Retail Dive "What makes anyone think that for Wal-Mart — a company that has failed miserably in the challenge of the retail market online — this is going to work?" It’s still far too early to declare the Jet acquisition a success or failure, but regardless of which direction it trends, the repercussions will be felt across the e-commerce ecosystem. 

Other nominees: Amazon’s cargo/logistics investments, Bed Bath & Beyond's acquisition of One Kings Lane, Honeywell's acquisition of Intelligrated, Unilever's acquisition of Dollar Shave Club

 

Most disruptive idea of the year

Winner: Automated commerce

At first blush, it seemed like a premature April Fools’ Day prank. On Mar. 31, 2015, Amazon unveiled Dash, a lozenge-shaped, WiFi-enabled device allowing Prime subscribers to replenish everyday household goods with a single push of a button. No one’s laughing now. In fact, some believe that Amazon Dash and other so-called automated commerce technologies are the future of retail.

“[Dash is] the next step in commerce,” Piper Jaffray Senior Research Analyst Gene Munster proclaimed at this summer’s Internet Retailer Conference + Exposition. “Dash will allow consumers to focus less on buying things you don’t really get excited to buy. That ability to free us from thinking about those things is something Amazon is trying to do.”

There are now more than 200 different Dash Buttons encompassing everything from Airheads candy to ZonePerfect nutrition bars, and Amazon claims sales have increased by 5x over the last year. Dash is just the start of Amazon’s automated commerce ambitions: As of last month, customers can now use devices running its Alexa virtual assistant software to shop for toys using simple voice commands.

Nor is Dash replenishment technology limited exclusively to Amazon gadgets. For example, GE Appliances introduced washing machines and dishwashers integrating Dash reordering capability. The machines measure how many detergent pods are used by counting wash cycles, and automatically reorder more when supplies run low. This is digital commerce made as simple and as seamless as a Ron Popeil invention — just set it and forget it.

Other nominees: Augmented Reality/Virtual Reality, driverless delivery, machine learning, warehouse automation/robotics

 

Obsession of the year

Winner: Pokemon Go

Pokemon Go is the obsession that just won’t quit. Maybe Nintendo’s location-based augmented reality mobile game isn’t quite the phenomenon it was at its summertime peak, when it seemed the collective focus of the global population shifted to “collecting” monsters in real-world destinations, but consumer demand for the application and its accessories remains stronger than Mewtwo, Dragonite and Mew combined.

 

Pokemon Go exploded into the mainstream in July 2016. The game leverages GPS capabilities built into the gamer’s smartphone or smart watch to locate, capture, battle and train virtual Pokemon creatures who appear on the device screen overlaid atop real-world settings, as if the characters occupy the same physical space as the player. Within a matter of weeks, Pokemon Go eclipsed the 100 million download milestone, generating $10 million in daily revenue from sales of in-app goods and enhancements.

App stores weren’t the only beneficiaries: The frenzy to collect more Pokemon drove a deluge of foot traffic to brick-and-mortar stores and restaurants. And ultimately, that’s Pokemon Go’s legacy — opening physical retail’s eyes to the possibilities of augmented reality and mobile devices to bridge the divide between the online and offline worlds, and to create experiences capable of bringing back customers lost to e-commerce.

Other nominees: Amazon Prime Day, Brexit, chatbots, reverse logistics

 

Turnaround of the year

Winner: Best Buy

Not long ago, Best Buy was good as dead. Think back to 2012: Former CEO Brian Dunn was forced to step down over an inappropriate relationship with a subordinate, the electronics retailer was hemorrhaging market share to Amazon, and Best Buy’s own e-commerce efforts were stuck in neutral. Then Hubert Joly stepped in as CEO, emphasizing cost-cutting, customer care, product selection and signature services. Four years later, the turnaround continues.

 

With sales of mobile phones down as the category reaches saturation and gaming slowing as purchase activity shifts to digital streaming, Best Buy continues focusing on its in-store experience, highlighted by shop-in-shop partnerships with Samsung and Intel. The retailer also unveiled a new program called Ignite, dedicating space in stores for products and services from startups. Ahead of this year's holiday season, Best Buy additionally announced it would dramatically expand live demos of the Facebook-owned Oculus Rift virtual reality headset from 48 stores to 500, and will further appeal to holiday shoppers via ship-from-store fulfillment and free shipping.

The Amazon threat still looms, however. Consumer electronics sales grew 28% at Amazon in 2015, compared to same-store sales increases of 3.8% at Best Buy. Even more daunting, Amazon accounted for a whopping 90% of consumer electronics sales growth nationwide last year, and now it's moving into physical retail to market its own devices. Best Buy isn’t backing down, but its path forward is more treacherous than ever.

Other nominees: Adidas, Amazon-branded devices, Coach, J.C. Penney

 

Disappointment of the year

Winner: Nordstrom

Nordstrom occupies a singular place in the retail pantheon. Its customer service is the stuff of legend, and experts also celebrate its design thinking and spirit of innovation as critical differentiators giving the company a compelling chance of not only surviving but thriving within the embattled department store sector.

But in recent years the wheels have come off, with e-commerce eating away at Nordstrom's sales and store traffic.  After reporting disappointing Q1 2016 earnings, Nordstrom pledged to cut some $150 million in expenses, and in April, the retailer eliminated about 400 jobs. From there executives announced they would be more selective about what the company sells online and would take steps to make its supply chain more efficient.

Some contend those moves threaten to undermine Nordstrom’s core identity and appeal. "Cost-cutting and luxury department store experiences don’t often mix very well," retail futurist Doug Stephens told Retail Dive earlier this year. "Nordstrom has this old fashioned, very personalized, great level of service for which they’ve become notorious. The moment you start cutting into that, and you have one salesperson working in two departments, it becomes a horrible downward spiral."

While Nordstrom was a disappointment in 2016, it’s shaping up as a comeback contender in the year ahead. This month the company beat Wall Street expectations for the second consecutive quarter. E-commerce is also on the upswing. But put away the confetti and streamers. Nordstrom additionally announced a $197 million non-cash goodwill impairment on its Trunk Club online apparel concierge service, a little over two years after forking over $350 million to acquire the startup.

Other nominees: Aeropostale, Jet's early exit, Staples' ill-fated merger with Office Depot, Sports Authority

 

Controversy of the year

Winner: Alibaba counterfeit merchandise

 

Fake merchandise is a very real problem across the global retail landscape, and no brand causes more counterfeit consternation than Chinese e-commerce goliath Alibaba. Incendiary comments made this summer by founder Jack Ma ratcheted tensions even higher.

Counterfeits have long plagued Alibaba, and the company continued hammering at the problem in 2016, holding its first Rights Holders Collaboration Summit in July and rolling out its IP Joint-Force System, an online platform designed to streamline intellectual property-related communications. But manufacturers contend that Alibaba is still not doing nearly enough, and trade groups from North America, Europe and Asia contend that counterfeit sales are at “crisis levels."

Then Ma claimed that many knockoffs available on Alibaba’s marketplaces are of better quality than the authentic products they mimic, and all hell broke loose. Ma later sought to clarify his comments in an editorial in The Wall Street Journal and last month Alibaba President Michael Evans published a blog post calling trade groups’ “uninformed and misleading accusations” counterproductive, but until it’s certain that counterfeits are going away from Alibaba’s platform, the tensions aren’t going away, either.

Other nominees: Amazon sues supply chain exec Valdez for defecting to Target, Costco/Citi’s credit card rollout glitches, EMV’s rocky rollout, Target’s support for transgender restrooms

 

Social media fail of the year

Winner: Stephen Curry's "Chef" shoe

Stephen Curry is one of the greatest players in basketball. The Golden State Warriors point guard is a two-time winner of the NBA’s Most Valuable Player award and arguably the finest pure shooter the sport has ever known.

 

Curry's shoes are an unintentional joke, though. In fact, his Under Armour Two Low “Chef” basketball shoes became the subject of many jokes this summer. Social media roasted the all-white sneakers with uncommon intensity and creativity, declaring them devoid of not just color but also personality and flair — in short, a wildly inappropriate design given Curry’s on-court energy and swagger. “I bet these are going to be very popular in nursing homes this year,” cracked one Twitter user, while another called the Chef “a mall walker shoe” and still another dubbed it “UA x Hellman's Lite Mayo.”

Other nominees: Cher slams Fabletics on Twitter, GapKids’ “racist” ad, J.C. Penney’s “period skirt,” Zara charged with plagiarizing indie artist

The 2016 Dive Awards were distributed across our twelve vertical markets: BioPharma, CIO, Construction, Education, Food, Healthcare, HR, Marketing, Retail, Supply Chain, Utility, and Waste. Click here to see all of the Dive Awards winners.

Follow on Twitter

Filed Under: E-commerce
Top image credit: Getty Images