CONSTRUCTION TECH TRENDS
Collecting and monitoring data that tracks equipment and employees on job sites is a major goal of construction companies. Companies made progress in 2016, from wearable devices that keep track of workers’ locations and functions such as body temperature and heart rate to machine and equipment telematics designed to help manage use and upgrades. Advances promise to improve workflow and safety as well as deliver cost savings.
Bringing construction documents and project schedules off the desktop and into the cloud is a common goal for construction-tech startups. Some recent successes include Procore Technologies, a project management software that recently reached a $1 billion valuation, Fieldwire, a mobile and desktop-based plan-viewing app and the Caterpillar-backed data capture platform Uptake, named Forbes’ hottest startup of 2015.
Aerial photography is one of the most common uses of drones in construction, but now they’ve expanded to a host of tasks associated with site surveillance, grading, excavation and comparing 3-D models with as-built design. A recent NAHB survey showed that 66% of respondents were aware of drones, but only 22% had actually used them.
3D printing has been used for some big jobs, but is getting more use for things like rapid prototyping and model making and fabricating custom components for application. The addition of 3-D printing capabilities requires project teams with a greater degree of tech-savvy and increases the difficulty of the already tough job of recruiting people into construction.
Virtual Reality (VR) is being used to train workers to deal with job site hazards without exposing themselves to harm, to show project stakeholders the results of design decisions before they are actually implemented and even to solicit direct feedback from individuals and groups who will use a space but are not involved in project decisions.
What’s coming? In addition to advancements in all the above categories, experts are watching research to make concrete more resilient, the growing influence of smart home technology and the expansion of Building Information Modeling (BIM).
TECH SKILLS SHORTAGE
Competing for scarce technology talent is resulting in some creative and occasionally ruthless tactics from chief information officers (CIOs) looking to bolster their teams and get ahead of today’s tech-savvy and demanding customers. Demand for IT professionals is expected to grow by more than 12% by 2024 to more than 4.4 million jobs, compared with 3.9 million in 2014. Some of the more clever hiring tactics of late have included UBS Group tweeting encrypted messages to attract cryptographers, Target collaborating with Cargill to persuade IT professionals to move to the Midwest and Sysco creating a “university program” in which they recruit five to 10 college grads a year to rotate through key IT groups. Execs worry that President Trump’s actions to curb immigration and tighten the H-1B visa program could shrink the labor pool at a time when it really needs to expand.
BOOMER SPENDING SLOWDOWN
Spending typically follows a predictable pattern as consumers age. As earnings rise and families grow, spending increases through middle age until falling as the kids (supposedly) move out of the house and the mortgage is paid off. Over the past two decades this slowdown in spending among older households has been masked by the rising earning and spending power of Boomers entering their prime working years, according to a recent report from Wells Fargo. The percentage of adults age 65+ is expected to rise from 20% of the population today to more than 25% over the next ten years, with no offset to the slowdown in senior spending. More than three quarters of Boomers are already over the age of 55, when household spending typically begins to decline. Retirement age households spend 25% less than younger households. Housing is taking up a higher share of senior spending now as more households reach age 65 without having paid off their home or are renting, leaving them exposed to future price increases.
INSIDE GEN Z
Generation Z, the mobile-first generation, actually prefers to shop in physical stores, according to a new report from Euclid Analytics. The study found that 66% of Gen Z prefers to shop in stores because they like to see, hold and try on products before buying. Also, 28% want to engage with store associates before buying anything, the largest percentage of any generation surveyed. Gen Z, born between the late 1990s and the mid-2000s, is expected to number 2.6 billion by 2020. Even though they are motivated by the convenience found online, a full 53% shop in a retail store at least once a week. They visit stores to find merchandise but not necessarily to browse. Only 47% of Gen Z likes to browse, tied with Baby Boomers for the lowest spot. Gen Z has the highest expectations of retailers, with 26% expecting the retailer to offer a more personalized experience based on their shopping habits and preferences. Euclid Analytics says that retailers should reach out to Gen Z, introduce their brands and forge enduring relationships as soon as possible, while they are still interested in meaningful store experiences.
THE GENDER GAP
Women still earn just 80 cents for every dollar earned by their male counterparts despite labor market participation, experience and education that more closely mirrors that of men than in any previous time period, according to a special research report from Wells Fargo. Career choice, hours worked and some other factors account for some, but not all, of the difference. Research shows that bias also plays a role and that companies have work to do to ensure that women are compensated fairly. Closing the gender pay gap is more than just a social goal, according to the report. It is a way to boost profits and tap a deeper pool of talent. Narrowing the pay gap could draw more women into the workforce and increase labor force participation, an oft-cited factor for below-trend GDP growth. Raising female participation would support income and spending, particularly for lower income households. Women’s labor force participation topped out about 15 years ago and remains 12 points below men’s. Women spend 50% more time than men on housework and family care, a factor that depresses their workforce participation rates and wages. However, women are now outachieving men educationally, which could be good news for future earnings and participation. The full report, The Girl with the Draggin’ W-2, is available on wellsfargo.com/economics.
Target is planning to invest in lowering prices, remodeling hundreds of stores and introducing more than a dozen exclusive brands this year in an effort to jump-start falling sales and adjust to what CEO Brian Cornell
called the “seismic shifts” taking place across the retail landscape. Target will take a $1 billion hit to operating margins as they readjust their business model, and will invest more than $7 billion over the next three years in these new initiatives. Their radically revised growth plans call for a low single-digit decline in comp sales. Target is apparently going to take an everyday low price approach similar to Walmart. They are projecting more than $10 billion in sales over the next two years from the exclusive brands they are launching. Store remodels will be stepped up, taking advantage of changes they’ve been testing in Los Angeles and Minneapolis. They plan to do 100 stores this year, 250 next year and hope to have 650 stores “reimagined” by 2019. Cornell says it will look and feel like an entirely new Target. They are also accelerating the pace of the smaller stores they’ve been building in cities over the past couple of years. Those stores have double the sales productivity of Target’s larger suburban stores. Target will continue to close 10 to 15 underperforming stores each year, but said they see their stores as a key asset as they double as fulfilment centers for online orders. Target’s online sales have doubled in the last three years. They will also rollout ship-from-store capabilities to the 800 stores that currently don’t have that capability. Cornell is also very focused on improving Target’s grocery business.
TWO TARGETS IN ONE
Target is going to redesign 600 stores to offer two separate entrances. One entrance will be designed for the time-crunched customer, with groceries, self-checkout aisles and a counter for online orders all near the front. The other entrance will be built for the browser, with curved center aisles filled with home, apparel and beauty products. Target plans to spend billions of dollars on this ambitious redesign in hopes of keeping pace with changing consumer demand. Roughly 30 million people shop in a Target store each week. The first Target to feature this redesign will be in the Houston suburb of Richmond and is scheduled to open in October. Shoppers using the “express” entrance can park in 10-minute parking spaces; they can even order and pay ahead of time online. Customers who want to linger can use the “inspiration” entrance which will be designed to encourage browsing and exploring. Target expects the redesign to increase sales 2% to 4%. Retail analysts say Target may have a tough time in cities where Amazon Prime Now is available, but might have a good chance in suburban areas where it’s not.
AMAZON CREATES OPPORTUNITIES
Branding Brand surveyed 1,000 adults who shop on Amazon and make the majority of purchases for their households. They found that 60% of Amazon shoppers buy using their mobile devices. Having a Prime membership is the top reason they buy from Amazon (31%), followed by low prices (29%). Of those surveyed, 58% were Amazon Prime members. Of non-Prime members, the main reason 45% buy on Amazon is to find lower prices; 37% of non-Prime members think Walmart is less expensive. The survey analysts concluded that major opportunities for retailers exist with younger shoppers. 76% of Digitally Native 18—24 year olds make less than half of their purchases on Amazon. This group actually prefers in-store shopping and a seamless buying experience. Mobile app is the leading way they buy on Amazon (35%); the rest buy on desktop (34%) or mobile site (24%). Only 1% of those surveyed use Amazon Dash buttons or Alexa to shop. Shoppers say they would buy from other retailers if they offered lower prices (60%), free 2-day shipping (60%) and loyalty rewards (37%).
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