News roundup: Wildfires’ impact, Japan’s electric pivot, retail innovation
IBM’s take on this week in news
This week:
- Wildfires upend California’s food and wine industries
- From TVs to electric car batteries — Panasonic’s bold move in Japan
- Columbus, Ohio is the epicenter of retail innovation?
By the numbers:
California wildfires are also damaging the wine and almond supply chain
As Californians assess the physical and emotional costs of the Northern California wildfires, the long-term economic consequences remain a key concern. Some predict the devastation may cost the US economy $85 billion.[1]
The impact on key industries is becoming clear. The fires have charred 220,000 acres, much of it in the wine country of Napa, Sonoma and Mendocino counties.[2] “The loss of those grapes, they’re effectively irreplaceable for that five-year period at least,” said Rob McMillan, executive vice president and founder of Silicon Valley Bank’s wine division.[3] The smoke may even taint grapes far from the fire’s path, severely limiting vintages for next few years. That’s a huge blow for California’s wine industry, a $58 billion sector with a global reach. California is the fourth largest producer of wine after Spain, France and Italy. The state exported $685 million in wine to the EU alone.[4]
The fires hit other agricultural communities hard. California produces 82% of the world’s almonds, with robust demand coming from emerging consumer markets like China and India.[5]
The Angle:
An unpredictable wildfire in one part of the world can produce ripples through supply chains around the world. That’s why more companies — including the wine industry — are relying on AI to help keep their businesses running smoothly.
Wildfires can cause huge devastation for people and businesses alike. IBM is proudly supporting relief efforts through organizations including the American Red Cross. Our company encourages all of our employees to donate to help this region rebuild.
Panasonic turns Japanese TV factory into battery plant
The rush to join the electric car revolution is underway. A prime example is Panasonic, which is pivoting from TV production to car batteries in anticipation of a surge in electric vehicle demand.
With a fading presence in television, Panasonic hopes a shift away from its consumer electronics origins will spark revenue growth. It’s a smart play, as Panasonic’s automobile battery sales have been forecasted to grow to $4 billion a year by March 2019, largely due to the company’s partnership with Tesla.[6] Overall, the market for lithium-ion batteries is expected to exceed $33 billion by 2019, according to global market research firm SIS International Research.[7]
Asia’s wider electronics industry is poised to move its focus from households to more lucrative corporate customers. Sony is investing heavily in producing image sensors for iPhones and connected cars. And Samsung completed an $8 billion dollar deal with parts maker Harman to become more of a car technology supplier.[8]
Governments around the world are embracing electric vehicles and pledging to end sales of combustion engines. India will go electric by 2030, and Great Britain and France will make the leap by 2040. The cost to produce electric vehicles will get cheaper if governments keep providing incentives.
The Angle:
Specialized manufacturing creates a need for new plants, new products, and new processes — are existing players equipped to respond? Manufacturing electric cars is simpler than combustion engine vehicles, opening the door for companies like Apple and Dyson to get into the car building business.
Retail’s Silicon Valley
The capital of retail innovation is… Columbus, Ohio?
You read that right. According to the New York Times[9], the Buckeye State’s capital is an ideal laboratory for retailers looking to try out new ways to attract customers. Here, McDonald’s offers table service, robots take orders at Wendy’s, Chipotle has a chain that serves hamburgers and Eddie Bauer has a dressing room for winter apparel cooled to 13 degrees Fahrenheit.
Why Columbus? Retail executives love to experiment in the city because of its size, location and demographics. It’s close to other major cities, making distribution relatively simple. It’s small enough for companies to affordably test advertising campaigns. And its population is diverse enough to serve as a good testing market for concepts that could one day spread across the country.
Despite the city’s unique status, retailers in Columbus are struggling in many of the same ways retailers are struggling everywhere else. As stocks have declined, the number of retail jobs there has dropped from 93,000 to 68,000 since 2001. But could right transformation spur a renaissance?
The Angle:
As the Times reports, at a time when many legacy retailers are losing customers to “upstart brands powered by social media,” experimentation is more urgent than ever. As a result, many major brands are thinking outside the box and radically reimagining their brick and mortar stores. Some are ditching their stockrooms and making their stores more like showrooms. Others are empowering their employees with technology that lets them know and engage customers like never before. There may not be a silver bullet, but places like Columbus show that retailers are thinking creatively to find solutions.
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[1] http://www.foxnews.com/weather/2017/10/13/devastating-california-wildfires-predicted-to-cost-us-economy-85-billion/
[2] https://www.cnbc.com/2017/10/13/california-wildfire-disaster-could-bring-local-fiscal-pain-for-years.html
[3] https://www.bloomberg.com/news/articles/2017-10-11/wildfires-wreak-havoc-on-california-s-58-billion-wine-industry
[4] https://www.wineinstitute.org/resources/pressroom/02142017
[5] https://www.wineinstitute.org/resources/pressroom/02142017
[6] http://www.teslarati.com/tesla-partner-panasonic-20-30-percent-energy-density-increase/
[7] https://www.sisinternational.com/publications/lithium-ion-battery-and-beyond/
[8] https://www.ft.com/content/5277dafa-b54a-11e6-ba85-95d1533d9a62
