1) Emirates expands in-flight entertainment to more than eight months worth of content while other airlines cut back.

WHAT HAPPENED: While other airlines restrict expenditures on in-flight media, Emirates is investing and licensing as much as it can—just the latest move to become the go-to luxury travel brand.

Why it matters

  • As more airlines try to save by adding more seats, selling as many tickets as possible, and encouraging travelers to bring their own devices to watch TV and movies during flights, Emirates continues to move in the opposite direction. Most recently, it debuted a new version of its information, communications and entertainment system, which includes 3,500 channels, 1,000 international movies, hundreds of TV channels, video games, podcasts and endless music options. It also worked with Bowers & Wilkins, a high-end audio equipment brand, to create noise-cancelling headphones. Before their flight, travelers can use the Emirates app to create a media wishlist that will sync with their individual screen upon boarding the plane.
  • Emirates receives 500,000 first- and business-class travelers each month, and this media buildout is meant to cater to their needs; According to one customer experience employee, the goal is for guests to say, “I wish the flight were longer.” Providing passengers with practically infinite in-flight entertainment opportunities not only strengthens the company’s luxury feel—a brand it is building by accounting for every part of the pre-, post-, and in-flight experience—but it also matches the growing expectation among consumers for on-demand media, even if they’re cruising at an altitude of 35,000 feet above ground.

2) With warehouse square footage in demand, Walmart, Target and other retailers double down on pre-existing stores as fulfillment centers.

WHAT HAPPENED: Demand for warehouse space surpassed supply by 29 million square feet in 2018, according to the real estate market research firm CBRE—but more retailers are vertically integrating, looking to their current real estate for fulfillment needs.

Why it matters

  • Industrial real estate has fallen to a record low since 2000, with only 7% of warehouse square footage available. This imbalance between supply and demand is a result of both a strong U.S. economy; the ongoing trade war, which is pushing more companies to relocate their supply chain to the U.S.; and the continued growth of ecommerce. If and when the economy falters, however, ecommerce activity, and the logistics challenges it produces, aren’t going to die down. Only 10% of industrial real estate was constructed within the last decade, meaning that beyond the overall lack of space, the majority of warehouses are not outfitted in modern technology.
  • At the same time, however, more companies are vertically integrating their supply chains. Related, the real estate company that developed Hudson Yards, just purchased the logistics and fulfillment company Quiet Logistics to serve its tenants and properties. And both Target and Walmart are retrofitting stores as fulfillment centers for online orders. For Walmart, whose footprint is so pervasive that more than 90% of Americans live within ten miles of a store, using stores as distribution centers could dramatically cut shipping costs and help solve the “last-mile” issue by inciting more customers to pick up their orders in person, rather than wait for delivery. The company already started using pickup towers that operate like vending machines at some stores, and has a lot to gain from shoppers who pick up their online order in store and decide to shop for additional items in person.
  • Though maintaining inventory poses a challenge, the vast majority of Walmart’s 5,355 U.S. stores are supercenters—an average of 182,000 square feet each. It also operates more than 150 distribution centers. In contrast, Target operates 1,844 stores at an average of 130,000 square feet and 40 distribution centers at an average of more than 51,700 square feet. Amazon has about 100 fulfillment centers in North America, but it also operates 475 Whole Foods locations at an average of 43,000 square feet, some of which it uses for Amazon Lockers.

3) Dollar Tree consolidates while Dollar General grows.

WHAT HAPPENED: Dollar Tree will shut down nearly 400 stores in 2019 while Dollar General plans to open 975 new locations.

Why it matters

  • The discount mass retailer market retains, and is likely to gain greater traction in the event of a future recession. If anything, digital counterparts like Wish and Brandless show that the sector is growing. But Dollar Tree’s consolidation illustrates that these companies still need to adapt to changing customer interests to stay relevant. The two retailers battled over Family Dollar back in 2015, which Dollar Tree ultimately acquired, but the merger has actually hampered its growth. In addition to shuttering 400 Family Dollar locations, it will also transform 200 locations into Dollar Trees—proof that the two never fully integrated. Overall, Dollar Tree operates 15,000 stores in the U.S.
  • Though it lost out on the acquisition, it looks as though Dollar General’s strategy is paying off. Traditionally, Dollar General has focused on rural and suburban demos (the company says that 75% of its stores are in towns with a population of 20,000 or less). But now, it is beginning to experiment with urban storefronts, encroaching further on Family Dollar’s territory. In November 2018, Dollar General launched DGX—about half the typical size of 9,000-square-foot Dollar General stores—to target younger shoppers in urban areas. Dollar General now plans to open 975 new stores, ten of which will be smaller DGX storefronts, in addition to 1,000 remodeled locations and 100 relocated stores. It is also building out DG Fresh—which aims to expand fresh and frozen produce—from the 300 stores where it is currently available, and Fast Track, which will soon go live to enhance customer experience and labor productivity at its more than 15,300 locations. This is further proof that even as it grows, Dollar General is putting energy into differentiation, which will help it tap into more demographics.

4) Checkout on Instagram removes friction between brands and shoppers, giving Facebook’s ecommerce efforts a second chance.

WHAT HAPPENED: Twenty-three beauty and fashion brands are participating in Instagram’s new shopping program that lets users make in-app purchases.

Why it matters

  • Instagram has been building up its shopping capabilities for months. In September 2018, the company introduced a feature in Instagram Stories that redirected users who swiped up to the brand’s site where they could make a purchase. But the latest addition, “Checkout on Instagram,” shows users a button that lets them pay without leaving the app. (Shoppers must enter their billing and shipping information on Instagram, which will save it for future purchases.) The brands involved in the beta test boast some of the largest Instagram followings—Adidas (23.3 million), Kylie Cosmetics (19.9 million) and Nike (85.8 million).
  • Facebook, whose short-lived ecommerce effort fizzled long ago, now has a second chance to make it work. Instagram, which has brought newfound glory to Facebook’s portfolio in more ways than one—in October 2018, Instagram’s ad revenue was projected to soon surpass that of Facebook—and the new shopping feature will also help Instagram to diversify its revenue as it collects commissions from participating brands. Facebook has also pointed to commerce and payments as a main focus for the future, which could mean expanding Instagram’s checkout feature to other apps like Facebook Messenger or WhatsApp, or creating a standalone app for Instagram shopping. As for brands, Instagram is providing an increasingly meaningful and alternative distribution channel to Amazon. The social media company reported that, as of February 2019, more than 130 million users tapped product tags in shopping posts each month—up from 90 million in September 2018, but only a fraction of its more than 1 billion monthly active users in 2018. As the number of Instagram users grows, brands utilizing Instagram Checkout will be able to gain more directly from shoppers on the app, where they already are spending a significant amount of time.