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Facebook, in a shift that has evolved slowly over time, now sees itself as a channel between traditional financial institutions and their customers, particularly considering the prevalence of mobile channels in people’s lives. Nine in 10 U.S. checking account customers already use mobile devices for at least some retail banking activities, according to Facebook’s recently …Read More
Cloud technology is relatively old, considering the pace of innovation in the back office. However, that doesn’t mean every business has taken this seemingly basic first step in digital transformation. The healthcare sector is particularly challenged when it comes to upgrading back-office systems, yet cloud-based enterprise resource planning (ERP) systems are an increasingly attractive target for digitization efforts among hospitals.
According to experts, the digitization of patient health records opened the door for broader digitization in hospitals’ back offices, but their strategies for taking on this initiative differ. The latest research from KLAS in its “ERP 2019: Performance in the Cloud” report found that decision-makers at healthcare providers, including directors and managers, agree that migrating ERPs to the cloud yields convenience, system reliability, enhanced security and broader efficiencies.
“In the traditionally stagnant market of ERP (HR, finance and/or supply chain), aging, on-premise solutions are giving way to several cloud options now on the table,” KLAS stated, according to RevCycleIntelligence this week. “Given the significant lift required to move to a new ERP system, many organizations contemplating the cloud are taking the opportunity to consider all vendors, not just their incumbent.”
That conclusion presents a market opportunity for ERP providers that can address the unique requirements of healthcare industry solutions. Indeed, KLAS noted that the success of a hospital’s ERP cloud migration is significantly related to the vendor it chooses, and that supplier’s ability to support integration and migration efforts, as well as support internal staff and limit ERP downtime.
“Product success is often heavily influenced by implementation quality,” the report said. “While the vast majority of interviewed organizations … used third-party implementation services, they still expected a certain level of support from their software vendor.”
Research as recent as March 2018 has suggested that fewer than 5 percent of businesses across industries have fully migrated their ERPs to the cloud. However, hospital experts have agreed that solution providers are beginning to focus on providing that customer support that companies need.
“The vendor community is moving that way,” said Children’s Mercy Kansas City Chief Information and Digital Officer David Chou in an interview last year with HealthTech Magazine about ERP providers’ support of shifting hospital clients “out of the data center business and … into the public cloud — and then into the private cloud.”
Earlier research from 2016 found that significant hurdles remain for the hospital sector, as companies struggle to decide where to play crucial funding available. According to Black Book’s report, fewer than 29 percent of hospitals in the U.S. at the time had implemented an ERP product, with the healthcare ERP market growing less than 2 percent in 2015.
Today, that’s changing.
“The back office has been neglected, but it’ come to the forefront now, and there’s a big influx of investment,” said Chou.
Yet, as hospitals ponder which vendors can support a frictionless migration of their ERPs to the cloud, and provide the on-site support that companies require, there is an increase in hospitals that are considering entirely outsourcing ERP. Recent Black Book analysis, published last year, found that 94 percent of hospitals are considering ERP outsourcing in 2019, an 85 percent increase from 2015 levels, pointing to pressure to boost cost efficiencies as a key factor behind this trend.
At the same time, other analysts are looking at high-tech solutions to promote cost efficiencies for hospitals via their ERP systems, with Evans Data Corporation finding in its own recent analysis that the majority of healthcare ERP developers are working with artificial intelligence (AI) technologies, and 80 percent expect AI or machine learning to eventually replace the ERP outright. According to Healthcare IT News, hospitals should keep a close eye on the technological development of ERP solutions as they move forward in the digitization process.
“Now that electronic health records have, for the most part, been universally adopted in the U.S., enterprise resource planning is the next top to-do for many hospitals, and artificial intelligence is likely to be a big part of it,” the publication stated.
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Latest Insights:
Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report.
Zoom has surpassed Lyft as the most valuable of all the tech companies to go public this year. The milestone comes after just three days of trading for Zoom, which surged 5 percent on Tuesday (April 23) to close trading with a market capitalization of $17.7 billion. The stock increased 72 percent in its debut last week, then jumped another 6 percent on Monday (April 22), according to CNBC.
For its part, Lyft fell 1.1 percent on Tuesday, and is now valued at $17.2 billion. Pinterest, which also hit the market last week, is now worth $13.7 billion.
Zoom’s rise might be a surprise to some, especially since Pinterest and Lyft raised money at much higher valuations in the private market, and are bigger when it comes to revenue. Yet, it’s important to note that Zoom has been growing more rapidly than its rivals. In fact, it more than doubled its sales last year, and, unlike many of the other companies that have gone public, is already profitable.
The news comes as it has been a bumpy ride for Lyft, as Uber approaches its own IPO. Since its debut on March 29, Lyft’s stock price has fallen 16 percent from its $72 IPO price. However, the reasons for the drop are not immediately clear. As PYMNTS reported, there is confusion about how to measure and compare the two ridesharing companies, each of which use differing metrics for certain important financials, including gross bookings.
The reasons are not impossible to discern, though. According to a new PYMNTS column from Karen Webster, pundits have attributed the drop to overzealous investors who may have since sobered up, perhaps even more quickly after taking a good look at the financial performance of the global ridesharing Goliath that defined the space. That look has many of those same pundits now worrying about how to value both adequately.
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Latest Insights:
Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report.
A look at the companies demoing live at FinovateSpring on May 8 through 10, 2019 in San Francisco, California. Register today and save your spot.
AlignMoney from Digital Align is the world’s first digital Banking-as-a -Benefit platform for employees offered by employers to enable financial success at the workplace.
Features
Why it’s great
AlignMoney is a Banking-as-a-Benefit platform that provides easy access to banking products and services at the workplace to assure employee financial inclusion and financial success.
Presenters
Rajeesh Patil, Founder and President
Patil is a leader and solution architect with expertise in building strategy and execution plans for transforming all banking business functions in the areas of customer and employee experience.
LinkedIn
Praveen Shekar, Head of Sales
Shekar is a passionate sales leader with experience in selling software to enterprise customers. He has extensive experience working in banking and technology with a focus on digital transformation.
LinkedIn
Over the past few weeks, MEDICI has brought you a series of articles, exploring FinTech in the ASEAN region. These articles, each focused on a different ASEAN country, have provided comprehensive insights into the FinTech investment landscape in the region. MEDICI now brings you the concluding article in the series.
ASEAN in Figures
ASEAN (the Association of Southeast Asian Nations) is the third-largest region in Asia. It is home to more than 630 million people with one-fourth of the population living in urban areas. ASEAN has an annual growth rate of 4.7% and has $119.97 billion in FDIs; it is also one of the fastest-growing regions as well as the seventh-largest economy globally.
Its population is young, and educated with a literacy rate of over 80%, phone-savvy with more than 0.5 phones per person, and enjoys a low-to-mid unemployment rate of 0.5–6.9%. ASEAN members also have an average to a high life expectancy of 69–82.7 years, and a gender parity of 49.9% males to 50.1% females.
It has been interesting, so far, to explore and review ASEAN countries’ FinTech landscapes such as those of Thailand, Singapore, Vietnam, Indonesia, and the Philippines. Bringing the series on countries in this region to a conclusion is this fascinating look at Malaysia through the lens of FinTech investments in the country.
Malaysia has a population of 30.5 million inhabitants, with more than 74% of them living in urban areas, and no more than 1.7% living below the national poverty line. The country also has one of the highest phone and internet penetration rates with 1.44 phones per person and 71% respectively. The literacy rate is also quite high at 94%, and the unemployment rate is relatively low at 3.2%.
In terms of ease of doing business, the country is ranked 23rd worldwide, but foreign ownership is capped at 30%. Malaysia’s corporate tax rate is at 24% – and increases gradually if income is MYR 500K or less (starts at 19%).
Macroeconomic Overview
Following a decade of impressive +6% real GDP growth, the Malaysian economy reported a growth deceleration during 2015, mainly influenced by external factors including a drop in crude oil prices, weak global economy (particularly the slowdown in Chinese economy), slowing private consumption, and a threat of rate hike in the US.
In January 2016, Moody’s lowered Malaysia’s outlook to stable from positive, driven by (i) the deterioration in Malaysia’s growth and external credit metrics; (ii) the weakening ringgit; (iii) political tension & higher prices; and (iv) rising macro-financial risks posed by system-wide leverage. Analysts expect that the Malaysian economy will stabilize in late 2016 if the oil prices could rebound.
The size and strength of the middle class in Malaysia are driving the country’s economic growth and is expected to double by 2020 to 10 million.
Trends
Malaysia’s AUM is projected to reach RM 1.6 trillion by 2020. The Securities Commission’s (SC) projection is supported by Malaysia’s position in the high-growth ASEAN market, liberalized regulations, and a rapidly growing economy with an expanding young workforce.
Malaysia’s Islamic funds’ AUM YoY growth has been in the double-digits in the past five years. This trend is likely to continue with planned government initiatives to further develop this segment; and emerging Muslim economies. Malaysia’s Islamic funds have achieved a CAGR of 17% over the past five years.
Funds investing in ESG-driven (Environment, Social, Governance) assets are gaining popularity. Currently, ESG investments are mainly made by institutional investors. Both conventional and Sharia ESG funds are performing well, boosting investor confidence. Uptake of sharia funds is expected to help ESG investments grow as they share commonalities.
Challenges
Active managers in Malaysia are facing pressure to lower their front-end fees as they face difficulties outperforming their indices in the current environment. With expected returns remaining low for an extended period, investors may be discouraged by their experience if it takes too long for them to recover their initial investments.
Another notable challenge is the low participation of the ASEAN Collective Investment Scheme. Six Malaysian funds have applied for cross-border sales, and only four have received approval. A Cerulli survey reported that 85% of asset managers from the scheme’s participating countries said they were not planning to offer products via the scheme in the near future. They preferred a master-feeder route instead.
Islamic funds are not very attractive to institutional and foreign investors. Investors tend to invest directly into Islamic bonds or ‘sukuk.’
Opportunities
Greater internationalization of Islamic funds is expected to offer growth opportunities. The Securities Commission plans to establish Malaysia as a leading international hub for Islamic funds and wealth management by enhancing cross-border capabilities and connectivity.
The funding industry is buoyed by positive economic metrics and increasing demand for investment products. Rapid economic growth, a young workforce with higher incomes, and a high saving rate have led to a sustained increase in the demand for investment products – this offers opportunities for existing and new fund companies looking to launch new products.
Finally, the Securities Commission’s initiatives could boost the number of ETFs in Malaysia, which is a market still fledgling and with low demand, but this could change following the announcement that the Securities Commission is looking to develop the market. The Commission proposes to reduce the cost of issuance, among other initiatives in a bid to drive market growth and provide more opportunities for issuers.
Regulatory Developments
Regulatory initiatives to further develop and strengthen key market segments include:
Launch of the Islamic Fund and Wealth Management Blueprint in January 2017, including introduction of the framework for Socially Responsible Investment (SRI) funds and establishing Malaysia as a global hub for an Islamic Funds.
Implementation of key recommendations to drive growth for ETFs, mid-cap public limited companies and VC/PE segments.
Revised Malaysian Code on Corporate Governance and establishment of the Institute of Corporate Directors Malaysia.
Revised Principal Adviser Guidelines and a new Licensing & Conduct Handbook.
Introduction of the Digital Investment Management Framework will permit approved licensees to offer robo-advice and the deployment of blockchain infrastructure to provide more effective clearing, settlement, and depository functions.
Key Themes of the Malaysian Banking Sector
Malaysia has been attracting global businesses due to its sound fundamentals and healthy financial environment. Its aggressive government reforms are strengthening the banking sector, giving it enhanced international status. Also, Malaysia’s banking sector is facing headwinds due to slowing loan growth, low net interest margin, and subdued non-interest income. Despite the headwinds, there are also several positive drivers which analysts believe would at least partly offset the headwinds. In December 2015, Fitch Ratings revised the banking sector outlook to negative due to higher pressure on earnings and asset quality.
The Malaysian banking system remains well capitalized with an average CAR of 16% in tandem with healthy loans growth. Total loan CAGR has stood at 11% since 2007. Large banks, including Public Bank and RHB Bank, are planning to raise capital to repay external debts and fund future growth opportunities.
Asset quality has improved in the last decade, and no alarming trends were noted during 2015 despite a macroeconomic slowdown. Gross NPL ratio improved to 1.60% (from 1.7% in 2014) and is expected to hold on. Despite stable asset quality, banks are monitoring the situation for signs of trouble including credit card balances, household delinquency levels, and corporate/SME asset quality trends.
Digital banking is expected to grow strongly in Malaysia as increased usage of smartphones, tablets, and the internet allows banks to offer more value-added services online to meet the diverse and distinct financial needs of consumers, including the underserved. Banks such as RHB are also active in accessing the underbanked population outside of branches. E.g., via ATMs.
MaGIC
MaGIC aims to build a sustainable entrepreneurship ecosystem and to catalyze creativity & innovation for long-term national impact. Launched in 2014 by President Barack Obama and Prime Minister YAB Dato’ Sri Mohd Najib Tun Abdul Razak, MaGIC signed an MoU with Stanford University and UP Global to further foster and develop a vibrant startup ecosystem in Malaysia and beyond.
With the mission of helping entrepreneurs, MaGIC has 10 programs available for startups focusing on learning, growing, initiating and inspiring. MaGIC is a resource tool acting as a virtual platform for information and referrals with 700 products & services from over 180 organizations available for entrepreneurs.
CER for Entrepreneurs: CER for Entrepreneurs is a platform for corporations, SMEs, and startup communities to capitalize on disruptive technologies and build a continuous innovation pipeline through partnerships.
MaGIC Academy Symposium: The symposium offers fours day of immersion into the latest innovations and disruptive business models across multiple industries, delivered by the successful entrepreneurs and leading experts in the field.
MaGIC Activate: MaGIC Activate connects large corporate, SMEs, and startups at scale around market opportunities.
MaGIC Global Accelerator: MaGIC Global Accelerator is a program that accelerates 80 global startups to be investment-ready in four months and to build a strong startup community.
Social Enterprise Ventures: Social Enterprise Ventures is a fund for scalable and sustainable youth-driven social projects. It is a collaboration between MaGIC and MyHarapan.
MaGIC’s Impact Driven Enterprise Accreditation (IDEA) Program: MaGIC IDEA Accelerator aims to create a systemic shift by involving private and public sectors to drive social procurement as part of their activities.
MaGIC Academy: This is MaGIC’s list of events for entrepreneurs and innovators to attend on all topics and markets of interest.
MaGIC @ Stanford: This is an immersive innovation & entrepreneurship program at Stanford University and networking in Silicon Valley.
FinTech Investors – Malaysia
Interestingly, this is where Malaysia differs from its ASEAN counterparts. As opposed to other ASEAN countries such as the Philippines, Indonesia, Vietnam, Singapore, and Thailand, there are no FinTech-focused venture capital funds among the most active investors in Malaysia. FinTech-Focused Funds
With three investments each, 500 Startups, Cradle, and Mavcap are market leaders when it comes to investments in the financial services industry. Outside of SBI holdings, which participated in the $8 million Jirnexu fundraising (one of the top three FinTech fundraises in the country), no FinTech-focused players are leading the market in terms of value.
Strong Local Investors
Along with foreign companies, 500 Startups & Gobi Partners, local players Mavcap, Cradle, and 1337 Ventures are present in more than half of cross-industry and FinTech investments. In terms of values, the largest deals are mainly made by foreign players along with some local investors such as Mavcap, OSK, and Cradle. The government seems to be quite involved through its different initiatives.
Government Accelerators
MaGIC Accelerator Program: This program is open to startups from all ASEAN to startups that are ideally less than three years old. The goal is to accelerate startups to be investment-ready within the span of the four-month program. Notable alumni include BloomThis, Ombre, and Happy Bunch. The MaGIC Accelerator Program is an initiative by the Government of Malaysia.
RAVE Accelerator: This is another government initiative that runs over three months and provides RM20K for a certain percentage of equity.
Private & Corporate Accelerators
NEXEA Accelerator: NEXEA provides RM 50K for 8% of equity and up to RM 500K at program completion, consulting from early-life startup experts, a dedicated tech team to take care of the MVP or IT development, mentoring from successful entrepreneurs, and introduction to investors. The program lasts for four months.
Cyberlab (run by FinNext): This is a five-month program.
Khazanah NEO Accelerator: Khazanah has gathered three accelerators called 1337 Ventures, CodeAr.my, and WatchTower & Friends to create Khazanah NEO. The program is three months long and offers RM20k for 2% in equity.
Finnext Accelerator: This is a 10-month program with mentorship & support and includes access to a regional network of investors and entrepreneurs. It targets FinTech and IoT, which are sectors said to be the result of the fourth industrial revolution.
FinTech Supercharger: FinTech Supercharger is a FinTech-only program which is three months long. No equity is taken. FinTech Supercharger offers workspace, investor network access, mentors, workshops, publicity, and also organizes events. Notable startups include Pand.ai, MyFinB, Chekk, and Neosurance.
District Dojo: District Dojo targets startups that have raised at least $150K. About $50K worth of equity is to be given to 500 Startups.
Other Corporate Accelerators: Sunway iLabs, Tunelabs, Hong Leong Bank Startup Accelerator, DiGi, Founder Institute, and Maybank Innovation Centre.
Associations & Angel Networks
Malaysian Business Angel Network: The Malaysian Business Angel Network (MBAN) is the official trade association and governing body for angel investors and angel clubs in Malaysia. MBAN is responsible for the accreditation of angel investors, creating awareness, education, and the development of the angel investing ecosystem in Malaysia.
Key Individuals:
Dr. Sivapalan Vivekarajah (Proficeo Ventures)
En Azra’i Shu’ib (TPM)
Mr. Alan Lim (NEXEA Angels)
Lok Choon Hoong (Pintas IP Group)
Dato’ Sri Dr. Vincent Tiew (MD, Andaman Properties)
En. Shamsul Shafie (pitchIN/WTF)
Mr. Matt Van Leeuwen (Platcom Ventures)
Datin Samantha Tee (Wealth Mastery Academy)
Angels Den: The organization matches growing businesses and entrepreneurs with experienced angel investors to provide the funds and mentorship they need to grow further. The organization runs an angel-led crowdfunding platform where investors and experienced business people put money into pre-vetted small/medium-sized enterprises. Angels Den also offers business funding clinics for entrepreneurs and offline pitch events, where founders present short one-to-one elevator pitches to a variety of investors.
NEXEA Angels: NEXEA Angels is an accelerator, a venture builder, and also an angel investor network. NEXEA helps angel investors to invest based on their requirements and preferences.
Key Individuals:
B. Lim, N. Fessler
D. Lee, A. Lim
TJ Quah
A. Lim
M. Sum
J. ting
D. Tan
AngelList’s Most Active Individuals
K. Ng (500 Startups)
M. Pui (PWC)
P. Santos (Wavemaker)
B. Mason (angel investor)
N. Lim (8capita)
V. Lauria (Golden Gate Ventures)
K.Y. Lim (Monk’s Hill)
H. Loke (pitchIN)
B. Joffe (angel investor)
R. Wee (IncuVest)
R. Salesas (Medra Capital)
B. T. Lim (NEXEA)
Top Investors
500 Startups: 500 Startups is a Silicon Valley-based incubator, venture capital firm, and accelerator specialized in seed investments in small/medium-sized startups, early-stage, post-seed, pre-Series A, and late-stage FinTechs. It prefers to invest $0.05–$1 million for a 5–10% equity stake. 500 Startups has raised more than half a billion from its limited partners (LPs). The fund has participated in three FinTech funding rounds in Malaysia, which have raised over $7 million from their investors. With 3 FinTech investments out of 24 investments in total in the country, FinTech represents more than 10% of the investor portfolio allocation locally. The investor has taken part in two notable fundraisings: KFit ($15 million) and the FinTech iMoney Group ($7 million).
Cradle: Established in 2003 by the Malaysian Ministry of Finance, the firm is an early-stage startup influencer which aims to fund potential and high-caliber tech startups through its Cradle Investment Program (CIP). Cradle has participated in 3 FinTech fundraising in Malaysia out of 14 investments in total in the country, where 2 of the companies raised over $7 million from their investors. Cradle was part of the iMoney Group fundraising and is one of the top three most active FinTech investors locally.
Mavcap: Mavcap is a Malaysian private equity & venture capital firm that specializes in seed/startup, early-to-late-stage startups, mezzanine, emerging growth, and growth capital investments, with more than 30 million available in its two funds. Mavcap targets the FinTech Sector, the ICT industry, and other high-growth industries such as e-tourism, e-commerce, biotech, and the Internet of Things. The fund typically invests $0.25–$5.2 million. The firm has participated in three FinTech funding rounds in Malaysia out of 26 investments. The three companies raised less than $1 million from their investors. Besides, Mavcap has co-invested along with other investors in two of the largest cross-industry fundraisings in Malaysia: KFit ($15 million) and Sentinext Therapeutics ($14 million).
Gobi Partners: It is a Chinese early-stage & growth/expansion venture capital firm which invests in the telco, media, technology, and FinTech sectors founded in 2002 with more than $350 million raised through its different funds. It seeks to invest $0.25–$15 million. The firm has participated in two FinTech fundraising in Malaysia, where the companies raised over $8 million from their investors. With two FinTech investments out of 14 investments in total in the country, FinTech represents more than 15% of the investor portfolio allocation locally. The VC fund co-invested along with other investors in the second-largest FinTech deal in Malaysia, Jirnexu ($8 million). It has also invested in Carsome ($8.35 million) and iPrice ($5.75 million).
Rebright Partners: Rebright Partners is a Japanese venture capital firm founded in 2008. The fund has raised over $20 million from its limited partners. The firm specializes in early-stage, seed, and startup-stage investments. Rebright primarily invests in internet, consumer internet, gaming, mobile apps, e-commerce & m-commerce, digital media, and mobile services. It seeks to invest $0.1–1 million. The firm has participated in two FinTech funding rounds in Malaysia, where the two companies raised over $6 million from investors. The fund made all its investments in the country in the financial technology sector. Rebright has also co-invested in the iMoney Group.
Note: All figures in USD
A look at the companies demoing live at FinovateSpring on May 8 through 10, 2019 in San Francisco, California. Register today and save your spot.
Lleida.net is a digital witness operator providing a contracting solution as the vehicle for sending unstructured information to signatories in a time-saving, legally valid way.
Features
• End-to-end framework for reliable online contracting
• No hardware or software infrastructure to be deployed
• Digitally signed documentary evidence provided; available in a “durable media”
Why it’s great
Registered Email Contract is the solution to time consuming, structured contracting processes.
Presenters
Sisco Sapena, CEO
Sapena studied as a technical agricultural engineer and holds a postgraduate in Telematics. He is one of Spain’s internet pioneers and takes Lleida.net around the world always focusing on innovation.
LinkedIn
Alba Sapena, CEO Assistant
Blogger since she was 14, passionate about books and photography, she’s one of the Lleida.net Social Media managers.
LinkedIn
In multiple large metropolitan areas of the United States, market share data indicates that Kroger is gaining traction. The grocer operates Kroger stores along with regional brands such as Fry’s, King Soopers and Harris Teeter, Cincinnati.com reported.
In Cincinnati, for instance, the supermarket chain’s share has grown 4.9 percent over the past two years. It has reportedly arrived at nearly half – or 49.3 percent – of the total $6.1 billion in grocery sales last year in the region. Some areas where Kroger gained extra sales were places where the grocer brought additional locations online. In other cases, however, the gains came in areas where the retailer had cut back on a few stores.
Bartlett & Co. Principal Terry Kelly noted the results were promising, and, as the report noted, “suggesting Kroger’s price cuts were working to gain it new customers.” Kelly added that “Kroger is used to this type of warfare.” Even so, now that Amazon has ownership of Whole Foods Market, the rivalry will still be strong. “Call us back when Amazon has fully implemented its strategy,” Kelly said.
The news comes after it was reported earlier this month that Amazon plans to slash prices on hundreds of Whole Foods items to bring in more customers and change the brand’s image. The lower prices were said to impact 500-plus items, with a focus on produce and meat. (Whole Foods actually raised prices in February due to higher ingredient and transport costs.) The price cuts were said to be initiated on April 3, with some products discounted by as much as 20 percent. Amazon is said to be fighting back against Whole Foods’ reputation as a high-priced grocer, as retailers such as Kroger and Walmart are keeping their prices down.
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Latest Insights:
Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report.
Grocery retailers are opening new stores in cities that aren’t only designed as places for consumers to pick up their weekly groceries: They’re turning them into culinary destinations with eateries as well as features designed for city living. Wegmans, for instance, is opening a store at Brooklyn’s Navy Yard that is replete with dining experiences.
The 74,000 square-foot space, which is scheduled to open in the fall, will feature a second-floor mezzanine complete with almost 100 seats for a market café. At the same time, the store will have a bar that offers food, beer, wine and spirits. The store will also have a novel design: The retailer will put into place low-iron glass instead of tinted glass that many supermarkets use to cut back on energy expenses. Luxury retailers usually have that type of glass installed, and it’s easier to see inside. The store will also have spaces set aside for Uber pickups, which Bloomberg calls “a New York necessity.”
Wegmans, which has just under 100 stores in six states, has designed stores around other environments. In Natick, Mass., for instance, the company opened its first store that was at a mall in 2018. That two-story location features a shopping escalator cart as well as a skywalk linked to a parking garage. And the location, Bloomberg says, presents “a huge opportunity” for the company. Just under 3 million people reside within a five-mile range of the Navy Yard. The average household income, the news outlet reports, is “well above $100,000.” Even so, Wegmans enters a highly competitive field in New York with local chains such as D’Agostino and Fairway along with produce stands and other players.
The retailer, however, has been ranked as the top grocery store in the U.S. per one survey. Even so, the report notes, “The move will be a big test of whether Wegmans can duplicate the phenomenal success it’s had in smaller locales in the crowded New York market.” That’s not to mention the chain’s loyal fans — including a sports superstar upstate: Richie Incognito, Buffalo Bills’ offensive lineman said in a 2016 tweet that the chain “was a big part of me resigning in Buffalo.”
Wegmans is not the only supermarket retailer opening up city stores with dining components: Whole Foods Market’s 70,000-square-foot store in Atlanta, for instance, showcases four eateries — including a rooftop experience. Whole Foods Market South Region President Bobby Turner said, according to reports, “We worked hard to create a place that offers our neighbors a destination to get together, enjoy great food and connect with members of the local community through a variety of culinary, wellness and cultural events.”
From Whole Foods Market to Wegmans, grocers are opening stores that aren’t just places to shop, but destinations for dining in their own right.
In Other Brick-and-Mortar Retail News
Walmart plans to revamp 500 of its U.S. store locations in an effort to keep its physical retail presence relevant in the eCommerce age. The improvements reportedly include wider aisles and brighter lighting as well as self-checkouts. Individual plans encompass a $265 million investment for Texas, a $173 million investment for Florida, and a $145 million investment for California. The retailer spent approximately $2.2 billion in 2018 on 500 remodels, according to reports.
GlobalData Retail Managing Director Neil Saunders said, according to reports, “All retailers are under pressure to do it, although whether and how much they’re doing it is very variable. Walmart is not doing massive refurbishments with major changes. It really is a refresh, to make the store experience a lot more pleasant.”
In other news, VillageMD and Walgreens have teamed up to provide adult patients with primary healthcare services in the Houston, Texas area. The “Village Medical at Walgreens” clinics will offer comprehensive primary care services that are integrated with nurses, social workers and pharmacists to meet the needs of patients. The clinic patients will also tap into the patent-pending docOS system of VillageMD.
Pat Carroll, M.D., Walgreens chief medical officer and group vice president, healthcare services and clinical programs, said in an announcement, “This collaboration with VillageMD demonstrates our ongoing commitment to create neighborhood health destinations that bring affordable health care services to customers and provide a differentiated patient experience to the communities we serve.”
On another note, UBS says merchants will have the need to close stores as eCommerce sales proliferate in the U.S. The firm contends that merchants in the clothing, home furnishing and consumer electronics spaces will have to close more stores. “Store rationalization needs to accelerate meaningfully as online penetration continues to rise,” the investment firm said in a note to clients. Roughly 75,000 more retail stores with the exception of restaurants will need to close, according to analysts, with the assumption that online shopping’s share of retail sales in the U.S. arrives at 25 percent by 2026.
Within the 75,000 figure, it was estimated that 21,000 clothing locations, 8,000 home furnishing locations and 1,000 home improvement locations should close. The investment firm also examined the productivity of retail locations across the country and noted that it accelerated through last year. “We believe this pace of store productivity improvement is unlikely to be sustained in 2019 as the boost from fiscal stimulus fades,” the firm noted.
To keep tabs on the latest retail trends, check next week’s Retail Pulse.
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Latest Insights:
Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our 2019 Where Will We Bank Next Study.
The speed at which financial institutions are expected to meet changing customer demands drove Chicago-based fintech Amount and TD Bank into a strategic partnership that will have the bank using Amount’s platform to make personal loans. In addition to smoothing out the customer journey by using Amount, the fintech will also allow the bank to …Read More