Opinion / The Future of Retail
The World Retail Congress was held at the spectacularly luxurious Cavalieri Hotel in Rome this year and the industry’s leading retail event saw speeches from serious heavyweights including Sir Tim Berners Lee (yes, inventor of the World Wide Web) along with senior professors and execs from Cass Business School, McKinsey, Wharton, Boston Consulting Group, Deloitte, the World Economic Forum, UKTI and IFC/World Bank Group; not to mention a whole raft of senior figures from key global brands including Google, Coca-Cola, eBay, Mastercard and LVMH, etc – check out a selection of videos here.
Whilst last year's event focused around a feeling in the retail industry that every business was being challenged by innovative technologies, changing consumers and disruptive new competitors; in 2015 the WRC programme took as its theme ‘transforming retail today, tomorrow and beyond’ summing-up an industry zeitgeist that no-one can afford to stand still, and to survive retailers have to transform… everything. Taking each aspect of transformation in turn, day one examined today’s challenges, day two some of the outstanding solutions and strategic responses being developed, with day three providing an early alert to the future trends and next wave of potentially (get set for that word yet again) disruptive developments.
If there was one phrase that WRC speakers and publicity kept referring to this year, it was ‘omni-channel retailing’ – achieving a singular holistic view of the customer across multiple touch points and responding accordingly to their needs. The challenge lies in the execution and implementing the necessary changes – be they organisational structural changes, technology advancements or reformatting processes – to be able to achieve this goal.
Hanging around the pool during the evening drinks reception after each day's events was less than hard work it has to be said, but I can claim to have actually done something in between loitering around the bar i.e. running an innovation masterclass with some excellent speakers inc Anne van Merkensteijn (comms director of Kiko / Percassi and ex P&G marketing director), Ilan Benhaim (director of innovation from Vente Privee) Hari Shetty (global head of retail from Wipro Technologies) and Oskar Hartmann (president of the KupiVip Group). But of all the panels, discussion, briefings and leadership workshops I went to (with Jonathan Alferness, global VP of shopping products at Google giving a particularly notable ‘Next Big Thing’ viewpoint on future trends); for me the standout presentation was a superb talk by Nick Everitt (global insight and strategy director, Planet Retail) and Dr Jonathan Reynolds (Academic Director, Said Business School) on ‘The Retail Business Model of the Future’.
Their WRC talk centred on the Oxford Institute of Retail Management’s collaboration with Planet Retail to leverage its shopper insights ‘Shopology’ survey. Involving 13,500 shoppers across fifteen international markets (across the EU, America, Russia and Asia) in the summer of 2015, this focused on understanding ‘the different trade-offs that shoppers are now making in their choice of retailer, as well as probing the levels of satisfaction with current retail experience to reveal shoppers’ future aspirations for technology, stores and service’.
Their presentation dealt with three key themes: What encourages the choice of retailer; recent experience of using technology when shopping and omni-channel behaviours and attitude.
Key takeaways included:
1. The basic principles of retail are as important as ever. Despite the rapid changes taking place, core retail competencies such as a broad range of products, superior service and brand strength remain essential. However, differences across markets are more pronounced than ever, making the need to move away from a ‘one size fits all’ approach even more apparent.
2. Convenience is being redefined, especially in emerging markets where location on its own is less of a priority for shoppers. More important (across all markets) is the seamless connection between stores and online, with retailers having to deliver speedy service, flexibility and choice across all channels, with ‘cracking the final mile’ a crucial element of success for the future.
3. Emerging markets are at the forefront of technology. Some of the most impressive innovators can be found in markets like Brazil, India and Turkey where there is a significant demand from shoppers for innovative solutions (such as mobile payment and social media). As such, many emerging markets are well positioned to leapfrog developed markets and rapidly break down the barriers to online shopping, especially through the use of mobile.
4. Retailers cannot assume that technology alone will be the answer and it should only be used if it successfully relieves a pressure point or meets a customer need. In developed markets, some technology solutions are ineffectively deployed and, whilst shoppers are more empowered than ever, they will not tolerate retailers who fail to continuously improve the overall shopper experience.
5. Established retailers will need to adapt their business models to achieve sustainable growth. They'll need to be agile and prioritise investment in innovative solutions that exceed customer expectations without affecting profit margins. Management structures will likely be leaner, flatter and more heavily outsourced. Future success will be dependent on radical new innovation, a tighter focus on technology and cost, while creating greater agility in meeting customers’ changing needs.
Based on their findings of their research, they identified three realities that retailers will need to accommodate to live with ever-present disruption.
1. There’s no such thing as “normal”: What you have to get right in each market not just to qualify for shoppers’ consideration, but also to win their custom and continued loyalty is currently different across different locations.
2. Emerging markets driving change: Whilst much is made of the levels of retail innovation in mature markets, it is emerging market shoppers who appear more eager to grasp change.
3. Tackling the trouble with technology: Understand that significant proportions of shoppers are dissatisfied with and disappointed by the quality and reliability of existing technology.
(These realities need to be recognized when developing sustainable business models of the future. They will affect retailer cost and returns and will require established retailers to change their processes, routines, talent mix and organizational structure).
There were numerous other examples of leading-edge presentations given at the Congress (checkout www.worldretailcongress.com for more info) and get in touch with Planet Retail/Inst of Retail Management re: their excellent report, Towards the Retail Business Model of the Future.
Meanwhile, the 2016 World Retail Congress 2016 will be held in Dubai, this time dealing with the theme ‘The challenge of attracting and engaging with customers in the next generation. How can retailers create winning customer experiences in a digital age?’
For which bookings are now being taken…
Contagious correspondent Sean is a Cultural/Social/Brand research consultant and public speaker