Market Trends November 2018
Virtual Design and Construction
Virtual design and construction (VDC) is being used by companies around the world to improve business performance objectives like keeping projects on time and on schedule. VDC enables construction companies to build compelling three-dimensional virtual models and provide early costing and scheduling information, helping them demonstrate competence and win more project bids and proposals. VDC also allows construction companies to more accurately estimate the material quantities and costs associated with completing a project, and it facilitates increased communication and collaboration, which prevents task silos and helps avoid costly reworks. Once the project starts, the benefits of virtual design and construction become even more clear on the job site. The comprehensive planning approach inherent to an integrated virtual design and construction approach helps keep the project on schedule, and the design team can use the virtual model to detect and address safety concerns, communicating those risks to workers to help prevent accidental injuries.
Generational Outlooks Differ
About half of young Americans expect to be financially better off than their parents, according to a new poll by the Associated Press-NORC Center for Public Affairs Research and MTV. About 29% expect to be about as well off as their parents and about 20% don’t expect to do as well as Mom and Dad. Parents surveyed were more optimistic, with 60% thinking their children will be better off and only 12% thinking they will be worse. About half of Americans born in 1984 earned more at age 30 than their parents, down from 92% in 1940.
Integrating Technology into Life
Amazon, Apple and Google all have one underlying goal: making technology essential to everyday life. Apple has turned the smart phone into a device that many people freely admit they would be lost without. Google has become a verb and established a top spot for searching for just about anything, and Amazon has revolutionized how we shop. Amazon Go Stores have already turned stores with no checkouts into a reality. Their next goal is prodding us to create smart homes that integrate technology in hundreds of ways large and small. Amazon recently announced a range of new home devices and services that can be operated through the Alexa virtual assistant tool, including a microwave, an amplifier and a clock. One recent demo showed someone pressing a button on their microwave, commanding Alexa to defrost a chicken or cook a potato. The clock will set alarms and timers through voice commands and automatically syncs the correct time; no more adjusting for daylight savings time. Everything is based on the Alexa Connect Kit, where a chip will be imbedded in all kinds of appliances to make them Alexa compatible. Some industry observers consider the tactic Amazon’s message to manufacturers to incorporate Alexa into their products or risk Amazon entering the market. China’s Xiaomi, a major global player in smart gadgets, has started to incorporate its own digital assistance into select products. With the deployment of 5G mobile networks, IoT will become broadly popular. One day people will be able to control all their appliances at home through a smartphone app or by voice commands.
Shipper’s Supply Chains High Priority
Transportation has long been viewed as the stepchild of the supply chain, according to the Journal of Commerce. But now transportation has moved front and center and is getting lots of attention at the C-suite level. That’s partly because double-digit cost increases this year have shocked corporations, dented balance sheets and trimmed profit margins. Today companies are beginning to view supply chains as opportunities, thanks to Amazon Prime’s business model that delivers millions of types of products within two days, complete with tracking information. Companies are now looking at the supply chain as a very important part of the customer experience, which takes it from a support function to a business center. Today companies can’t keep up with their customers or make them happy without an efficient and forward-thinking supply chain.
Multistory Warehouses and Robots
Multistory warehouses use less real estate and offer more options to build closer to customer bases and workforces. Amazon has plans for four-story, 2.5 million-square-foot warehouses. Industry observers say that the next generation of fulfillment centers will make more efficient use of space and of human resources as well. Amazon has won a patent to automate the loading and unloading of cargo trucks at their massive fulfillment centers. In addition to speeding up fulfillment, robots could be used in supply chain distribution centers, airport luggage systems, mail order warehouses and custom-order manufacturing, according to the patent filing.
Amazon Wage Hike Impacts Retail
Roughly 23% of retailers were not able to hire all of the temporary seasonal workers they wanted to for the holidays in 2017, according to a report from global consulting group Korn Ferry. In July of this year, there were 757,000 open retail jobs across the country, about 100,000 more than in July 2017. Target is adding incentives, including a 10% discount in Target stores and online and an additional 20% off wellness products like produce and workout gear and clothing. In addition, one hourly employee from each Target store will be randomly chosen to receive a $500 holiday gift card and the opportunity to have $500 donated to the community organization of their choice. Kohl’s and Penney’s started hiring seasonal workers in June. FedEx is hoping to hire 55,000 seasonals this year, up from 50,000 last year. Generally, analysts say that Amazon’s move may put pressure on other retailers to catch up and help even out the playing field.
Tech Changes Shopping
Both retailers and manufacturers are working at integrating technology into shopping. Tesco recently demonstrated a virtual reality (VR) headset that simulates a shopping experience at home. You walk the aisles from a first-person perspective and can even virtually touch and manipulate items with your hands before placing them in your virtual cart. Eventually you may be able to go virtual shopping with an online friend. Augmented reality glasses can superimpose information on top of items in a store, from star ratings by customers to price comparisons and nutritional information. High-tech personal assistants in the home will increasingly be used to purchase online items. People will add things to their lists as they think of them, and then eventually tell their assistant to order everything and have it delivered. And both Google and Amazon are testing delivery drones that can bring customers a parcel in 30 minutes or less.
Amazon’s Best Products Store
Amazon is opening a new store concept called Amazon 4-Star. The first store will be in Manhattan’s trendy SoHo neighborhood. The store will only feature items that customers have rated four stars and above as well as products that Amazon’s data shows are trending and on customers’ wishlists. The Manhattan store will also include items that are popular locally. Digital price tags will show both the full price and the Amazon.com price, which can frequently change based on Amazon’s pricing algorithm.
Retailers Push to Reject Rewards Cards
Many large merchants, including Home Depot, Amazon and Target, are pushing for the right to reject some rewards credit cards, which typically carry higher fees for merchants. The retailers are trying to end the credit card networks “honor all cards” rule. If they succeed, cards with the highest merchant fees and most generous rewards would likely be rejected. Merchants typically pay credit card networks a processing fee of 1.2% to 1.7% of the purchase amount.
Malvertisers Target Internet Users
Amazon.com has sued a group of unidentified scammers they say are harming customers and damaging their brand through sophisticated and widespread “malvertising.” The schemes are deceiving customers by putting up fake banner ads. When consumers click on the fake ad they are redirected to landing pages that look like official Amazon websites where they are asked to participate in surveys and provide personal information to win gifts cards or prizes like smart phones. Scammers monetize and use this hijacked traffic in a variety of illegal ways.
Death of an American Icon
Thousands of words have been written since Sears filed for bankruptcy in early October, but the general consensus of analysts is that Walmart and Amazon didn’t kill Sears. The 132-year-old retailer played a huge role in its decline and impending demise. Decades of mismanagement and poor decisions turned what was once America’s largest retailer into a “last resort” place to shop, and Sears exacerbated that by allowing the customer experience in their physical Sears and Kmart stores to decline into the unacceptable. At one point Sears accounted for more than 40% of global appliance sales; by last year that had shrunk to just 3%. Sears tried to shore up the business by cutting costs, and in 1993 shut down the iconic Sears catalogs, just about the same time Walmart began seriously eating into Sears’ business. When Eddie Lampert scooped Kmart out of bankruptcy in 2005 and merged it with Sears the surprise deal was the talk of Wall Street. But Lampert’s background as a successful hedge fund manager and his egocentric decision-making and management style didn’t provide the strategic vision or retail acumen that would have been needed in order to turn Sears around.
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