Top 5 Commerce Stories

The best stories weekly — what they are and what they mean

Co-op Adds Facial Recognition To Stores — At What Cost?

1. British supermarket chain, Co-op, has come under fire for adding facial recognition technology to 18 stores that alerts staff if someone enters who has a past record of “theft or anti-social behaviour”. Wired magazine scooped the story after the grocer’s Loss Prevention Officer — Gareth Lewis — posted about it on a company blog. Responding to the article a spokesperson said: “Only images of individuals known to have offended within our premises, including those who have been banned/excluded, are used on our facial recognition platform”. The company behind the technology, Facewatch, claims that their system does not store or add everyone’s faces to a central database but instead cross-references watchlists provided by the retailers containing “subjects of interest”, who are individuals “reasonably suspected” of carrying out crimes, witnessed by CCTV or staff members. Worryingly, an individual does not have to be charged or convicted with a crime to be flagged and their data is kept for two years. Civil liberties campaigners have raised alarm bells about the ethics of live face-scanning; its stance of presuming guilt and concerns about where the information ends-up (ie. with the police). Indeed, consumers should be wary of stores becoming increasingly automated and camera-heavy, especially as some brands have halted surveillance due to biases.
2. Despite the news this week that Facebook has added commerce capabilities to Instagram Reels, their answer to Tik Tok, the big story was about WhatsApp Carts. WhatsApp is a messaging service — that has enjoyed moderate success in the U.S. but is incredibly popular globally, not least in India and Brazil — through which 175m people contact business daily, typically with customer service questions. Now Carts allows companies to promote their products via in-conversation catalogues and lets consumers add multiple items into a single basket and buy. There is huge mileage in ‘conversational commerce’, either for automated or real one-to-one interactions between brands and consumers (e.g. personal stylists), and also for influencers and brand ambassadors who curate groups to which they sell (e.g. an ‘eAvon Lady’). Facebook has traditionally charged businesses to use WhatsApp as a communications tool — which it will enhance following the purchase of Kustomer — but this move provides a way for businesses to look beyond rationalisation into revenue. Intriguingly, Facebook’s platforms are all building slightly different commerce models amid fresh legal challenges to break-up the company.
3. Entertainment D2C is having a moment. Following the announcement last week that Warner Bros. would release its 2021 blockbusters — such as Wonder Woman: 1984 and The Matrix 4 — on HBO Max and in theatres simultaneously, Disney just committed to spending $14–16bn to promote its streaming services. The brand revealed they have 73m subscribers but are aiming to hit 230m-260m by 2024! Disney’s strategy revolves mainly around Star Wars, Marvel, and their heartland of character movies; although unlike Warner and Netflix, they will release some major films in cinemas. What’s more, they are adding Star (Hulu for non-U.S. markets) into Disney+ across Europe, New Zealand, and Canada, thereby providing additional non-franchise content. However, critics suspect that this will come at a heavy cost to customers — indeed, both Disney and Netflix have admitted that they will hike subscription prices. Meanwhile, Amazon is looking to third-party relationships, having struck a deal with the pay TV operator Sky to stream content on Sky’s channels across Europe.
4. After some astonishing ups from Black Friday and Cyber Monday comes some equally startling downs, in this case returns, with $70.5bn worth of U.S. holiday purchases predicted to be sent back by customers. Estimates suggest that this is a +73% jump vs. 5-year averages, fueled by the rise in eCommerce during the pandemic. According to CBRE, a leading commercial real estate firm, an additional 400m square feet of warehouse space could be needed over the next five years simply to process returns! The associated costs might well see brick and mortar brands increasingly convert space in-store for logistics and potentially offering rewards for returning products there instead. Other side effects could be shorter windows to return items as retailers try to get the stock back on the shelf at full price.
5. And finally! Ikea has announced that it will halt production of its a physical catalogue. For over 70 years the publication has been a staple for amateur interior designers, peaking at 200m copies produced in 2016. The move is in-line with a wider push towards digital transformation. Indeed, just this year they reproduced the entire magazine in the video game, Animal Crossing. #PinterestMadeMeDoIt