Future Retail Briefing

SMART STORES

McDonald’s contemplates selling off a branch of Dynamic Yield

McDonald’s is considering selling a stake in Dynamic Yield, a digital start-up it acquired for over $300m in 2019. Dynamic Yield uses customer data to provide personalised digital ads and offers; however, the technology has failed to boost sales by the projected 1% at certain stores after being installed in the US, Canada and Australia. Deliveries have helped increase McDonald’s sales during the Covid-19 pandemic so the restaurant chain will hold on to Dynamic Yield for drive-thrus but it is aiming to sell the part of the business that serves other retailers.

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Fast-food chains have been investing in new technologies to reinforce their drive-thru capabilities, a strategy that has become more crucial amid the coronavirus pandemic with eat-in locations closed. McDonald’s has previously relied on Dynamic Yield to improve customer engagement through personalised advertising and event-based messaging – for example, suggesting products based on the weather.

McDonald’s expanded its drive-thru technology arsenal further through the acquisition of Apprente. This partnership offers customers an AI-backed voice-recognition system at drive-thrus, on mobile or at kiosks. Increased spending on AI-enabled drive-thru solutions aims to streamline the ordering process as over 70% of all McDonald’s orders come from this avenue.

Smaller chains are also experimenting with AI technology. White Castle, for example, has installed digital voice assistants and number plate-recognition technology at drive-thrus. Customers opting in to the scheme can be identified by the recognition system, which remembers ordering habits and offers personalised menu options.

The introduction of biometric payment methods, such as PopID’s facial recognition system, at restaurants could also improve the ordering process and cut waiting times.

RETAIL INFRASTRUCTURE

FOOD SUSTAINABILITY

Tetra Pak uses recycled polymers in packaging

Tetra Pak has created a recycled polymer material for its packaging, in collaboration with chemical company Ineos. The packaging material replaces oil-based components with polymers derived from waste plastic, while retaining “identical specifications” to virgin plastic, the firm said. As part of Tetra Pak’s plans to offer the world’s “most sustainable food package”, two of its facilities in Europe are now utilising the polymer, which can be used for caps, tops, coatings and cartons. Further sites can be certified for production, if and when market demand dictates, the company noted.

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Ineos leverages Plastic Energy’s Thermal Anaerobic Conversion (TAC) to recycle contaminated plastic waste – the feedstock – into a useable packaging product.

During the process, certain elements, including metals, heavier plastics and humidity contained within plastics are removed from the feedstock to maintain plastics that can be recycled. TAC is applied to heat the feedstock without oxygen, breaking down the polymer molecules to produce a saturated hydrocarbon vapour. The vapour is then separated into raw diesel and naphtha to be sold back to petrochemical firms for virgin plastic production. RSB’s certification validates Tetra Pak’s carton packaging through its chain of custody model and is verified by a third-party auditor.

Plastic Energy has also partnered with Tesco to use this method for food-grade packaging. It aims to improve the UK’s recycling numbers – the country uses 400,000 mt of soft plastic annually, but recycles just 21,000, according to a 2019 survey.

Unilever-owned ice cream brand Magnum has also re-imagined its packaging. It has started using recycled polypropylene plastic (rPP) for tubs and lids in its pint range and aims to have all tubs made from recycled plastic by 2025.

Developing recycling technologies will likely be crucial as other major food and beverage companies announce sustainability targets. Greggs and Coca-Cola, for example, have both recently unveiled ambitious recycling initiatives.

PAYMENTS INNOVATION

DIGITAL CURRENCIES AND REWARD SCHEMES

Japanese retailer Rakuten allows customers to pay with bitcoin

Rakuten members with a trading account can now buy products from the likes of McDonald’s, FamilyMart and Seiyu using bitcoin, bitcoin cash and ether. It follows a closer integration of cryptocurrencies with the Japanese retailer’s e-money service, payment app and wallet. Rakuten said the minimum spend was JPY1,000 ($9.40) while a monthly upper limit of around JPY100,000 applied, but customers would not be charged a fee for converting fiat, e-money or crypto holdings.

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This announcement expands upon Rakuten’s previous embrace of cryptocurrency. The company, for example, launched a service allowing customers to convert Rakuten Super Points earned via its loyalty programme to crypto assets such as bitcoin and ether via its Rakuten Wallet application. This enables customers to spend loyalty points by converting them to cryptocurrency at partnering stores including McDonald’s and FamilyMart.

Rakuten has also previously offered customers the opportunity to withdraw crypto assets via a bank, though third-party involvement incurs a fixed handling fee of JPY300 for each transaction. The absence of a banking institution in Rakuten’s new scheme could explain why there is no such charge.

Blockchain has been touted as a solution for customer reward schemes because the application of smart contracts provides an automated, coded management system reducing the likelihood of errors or fraud. Aside from Rakuten’s announcement, other global e-commerce players are beginning to consider digital currencies. Amazon, for example, hopes to establish a digital and emerging payments division in Mexico, though few details have been provided.

Introducing alternatives to cash has been a priority for Japan as it aims to expand its payments infrastructure. Prime Minister Shinzo Abe hopes to have 40% of all payments cashless by 2025. The process has been accelerated ahead of the Tokyo Olympic Games with Mitsubishi UFJ Financial Group partnering with Akami to construct a consumer-facing payments network to cope with anticipated transaction numbers.

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