Digital Transformation Project | Team 56 – Social Technology within the Supermarket Industry

13

October

2016

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Everybody needs their groceries. It doesn’t matter how much you earn or what your social status is, once every couple days you just have to run to the stores get your basic supplies. The supermarket industry is very traditional. There isn’t much innovation in the industry and this is also visible in the market growth of some of the larger supermarket chains. For our digital transformation project, we take Albert Heijn (AH) as example to illustrate the static nature of the supermarket business.

 

Albert Heijn

AH acknowledged that there is very limited growth in the existing markets. Customers don’t switch from supermarket that quickly. Although Albert Heijn keeps growing, this is only due to opening new stores and entering new market. This is, of course, very important, but it doesn’t mean that they should ignore their current markets. Expanding/enlarging existing markets is less expensive than opening new ones. Albert Heijn did change some things in the last years/decades. Examples are the introduction of the “Bonuskaart” or the introduction of self-scanning devices which make it possible to pay without a cashier, but this isn’t enough.

 

Social Technologies

As in almost all sectors, development in technology is having a huge impact on retailers. The ubiquity of smart devices and real-time access to customer information give Albert Heijn the ability to serve customers in new and better ways. Furthermore, it creates the opportunity to build a more intimate relationship with the consumers in both the physical stores and online. Social Technology is the key in expanding their current markets. You may think “how are social technologies disruptive, AH already uses social media sites like Facebook and Twitter?” Well it is true that they already use forms of social technology, but this is purely from an advertisement perspective. Online Media sites are used to communicate with their costumers, but this communication is often coming from one-way and it is highly impersonal. A more evolutionary phase of social technologies have to emerge. A phase in which communication is two-ways. Both parties can send and receive messages through which an active community can be created.

 

Recommendations

Albert Heijn could be benefitting from active communities. Through social technology, customers should be involved in certain decision processes like assortment and pricing strategies. These changes can realize a more diverse assortment for the supermarket and more diversity will also attract more customers and increase customer loyalty. It doesn’t necessarily have to be that expensive for AH, because they can charge the consumers what they are willing to pay. If a small group of customers are willing to pay those more for a specific product, AH can seize a larger market share and increase customer loyalty without margin loss. Social technologies could be a crucial factor in disrupting existing markets within the supermarket industry.

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Sky’s the limit

18

September

2016

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Almost everyone takes storage space into consideration when buying a new smartphone. However, a lot of people are easier satisfied with relatively less storage space compared to some years ago. Cloud storage is the main reason why physical storage space is becoming less important.  I think we all heard people saying “I don’t need that much space on my phone because I put everything in the cloud”, but what does that really mean and is this a positive change from a consumer’s perspective?

Clouds on the ground

If you are not familiar with the technology behind cloud storage, don’t worry, I will briefly describe and explain how cloud storage works. When you upload a file on Google Drive for example, it will send your digital data to logical pools within servers (often multiple locations).  These servers are usually placed in large data storage parks owned by hosting companies. Hosting companies/providers are responsible for keeping the data available and accessible, and the physical environment protected and running. Web service applications are programs that let you access these data locations. Dropbox, Google Drive, One Drive are all examples of interfaces that use web service applications to access these data.  So in reality, a cloud is a large building filled with black/grey boxes containing trillions of digital MB’s.

Cloud nine

Cloud storage seems like good development. It has multiple benefits for both consumers and businesses. The most obvious reason is storage availability. Like I already mentioned in the introduction, there is no need to buy a 128Gb iPhone, because you can store most of your data online. This does also count for all your other devices like laptops, desktops, tablets etc.  It will save most people money on the long run. This does not mean that cloud storage is free, but in a lot of cases in it is cheaper than conventional hard disks.  Another important benefit of cloud storage is convenience and accessibility. Many modern counties have stable and fast internet connection. This means that your data is accessible at any time at every device and location. This is super convenient, because it saves time managing all your files and information. The last benefit I want to mention is security. Consumers that make use of cloud storage don’t have to worry about the security and safety of their data.  Hosting companies who are specialized in protecting data, are responsible for keeping your files save.

Dark cloud

While cloud storage has its benefits, there are many data scientists/experts that aren’t that positive about this development. They say that using cloud services means, “you’re trading security and reliability for convenience. Cloud storage providers want you to think they can do a better job of protecting your data than you could. Yet there is zero guarantee that your cloud vendor is maintaining better security on its systems than you do on your own”. There is truth in this statement. Of course, storage providers are heavily invested (more invested than you and me) in protecting data, but they are a much larger target for cybercriminals as well. Second point I want to make is about privacy. You are basically giving your data away when uploading files.  There are obviously restriction regarding provider’s rights to use your data, but this doesn’t prevent firms like Google to analyze and use your data for their own benefit.

I think cloud services are good a development. It makes our life’s just a bit easier, however, I’m not sure about the idea of moving towards a world in which everything is stored in servers. In my opinion, It is good to maintain some form of decentralization to ensure our safety and privacy.

 

Bronnen:

http://computer.howstuffworks.com/cloud-computing/cloud-storage.htm

http://computer.howstuffworks.com/cloud-computing/files-safe-in-the-cloud.htm

http://www.cio.com/article/2377060/cloud-computing/9-things-you-need-to-know-before-you-store-data-in-the-cloud.html

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Streaming: the future of music or the end of artists?

11

September

2016

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What is the last time that you bought a song or an album?

Probably a long time ago. Almost no one buys music anymore. In the new age of internet musicians have to focus on concert/festival bookings and sponsor deals to earn one’s daily bread. When Internet became affordable and available for the “ordinary” people, many started illegally downloading their MP3’s from sites like The Pirate Bay. Nowadays, music streaming services like Pandora, Apple music and Spotify are becoming more and more popular. These streaming services seem ideal as a new platform to listen to music. Music is easy accessible, there is huge variety in music and foremost, everything is legal. Take Spotify as an example, a Swedish music, podcast and video streaming service earning their money with ads or subscription fees if you are a premium user. Spotify negotiates with record labels and if they come to an agreement, the company pays for the respective license and royalties to have the rights of the content. Since the introduction of streaming services like Spotify, illegal downloading and piracy have significantly dropped. It looks like artists can rely on selling their records again, but this doesn’t seem to be the case. At least, if we have to believe some artists who publicly discredited Spotify by saying they’re are being exploited.

Spotify’s income structure

I want to go more deeply into Spotify’s income structure to explain the ambiguities around the streaming services. When Spotify wants to acquire a song or album, they approach the record label. The two parties negotiate about a fixed price for the rights to make the song digitally available. If the firms come to an understanding, the record label will ask for a royalty rate. This is the amount that the artists get per stream. These rates are different between free and premium users. Taylor Swift pulled her music from Spotify after they refused to make her new album only available for paid users. Other artists including The Black Keys followed her by removing some albums or songs from Spotify. There is no difference in content availability between the paid- and non-paid users which result in musicians debating the compensations they get.

The future, not the end

In some eyes, Spotify is seen as a villain in the music industry. However, I think that streaming services are necessary to keep the industry moving forward. The world is changing and so do we. People are not willing to pay for songs or albums. However, many people are interested in paying for music in general. Paying a monthly fee to listen to all music that is available (and in the case of Spotify, that is a lot) is for many worth the investment. In comparison to torrents, the artists get actually paid by these royalty rates. The average rates are between 0.006 and 0.0084 USD. This doesn’t look like much, but take Beyonce’s “Drunk in Love” with more than 134 million streams, this equals between 804,000 and 1.3 million dollars that goes directly to the artist. Of course, selling 1.3 million singles in a store or directly via the artists own website would result in more earnings, but the reality is that there aren’t many willing to do that. The content that is available on Spotify is growing each day and so are the subscribed users. Wrapping thing up, I think music streaming services are a good development in the music industry, what do you think?

 

Sources:

http://www.cheatsheet.com/business/why-streaming-is-the-future-of-the-music-industry-not-its-end/

https://www.spotifyartists.com/spotify-explained/

http://pitchfork.com/features/article/9896-is-the-era-of-free-streaming-music-coming-to-an-end/

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