The digital revolution was the hot topic at the World Retail Congress last week and is changing every aspect of the industry.
The multichannel revolution isn’t just changing retailing in the UK.
Anyone present at the World Retail Congress in Berlin last week would have been left in no doubt that while UK retailers might have had to adapt quicker to the changes the web is bringing about, the whole world of retail is going through a fundamental shift.
Whatever aspect of retailing the session was focused on, the influence of multichannel was never far away.
The digital revolution came up time and again during the conference, which attracted an audience of more than 1,000 to the German capital’s InterContinental Hotel.
The tone was set by the first session of the congress, which was dominated by opportunities that the digital revolution provides. Google vice-president for Northern and Central Europe Philipp Schindler said retailers needed to be aware of how consumers navigate the web and the growth in online use on mobile phones.
Web chat
Even Marks & Spencer chairman Sir Stuart Rose was getting in on the act. Rose told the conference that the internet was becoming increasingly important for “conversations with customers” and that “you have to treat the internet as your friend, and ignore it at your peril”.
Schindler explained the volume of information on the web had “exploded” and was influencing both online and offline purchases. He said: “More than 60% of retail sales aresignificantly influenced by what people are doing online” and that most information was sought online via searches. He said, for example, half a billion searches are carried out each day on YouTube.
The growing role of mobile commerce was a key subject of discussion throughout the three days. Schindler urged retailers to capture the growth in online sales on mobile phones, saying etail giant eBay sells a product via its mobile site every two seconds. He said that 30% of US adults use phones in-store to compare prices or look up information before they buy. “The mobile phone could become the next wallet,” he said.
Speaking at another session at the conference, National Retail Federation (NRF) president and chief executive Matthew Shay agreed. He said that in a recent NRF study more than half of 18 to 25-year-old respondents said that they intended to do some of their Christmas shopping on their mobile phones. “There will be more m-commerce this holiday season than ever before,” he said.
A recurring theme was that online puts the consumer in charge. Home Shopping Network chief executive Mindy Grossman said the growth in online means “you have to be where the consumer is, and where they want you”.
Rose agreed: “Consumers want an endless amount of options and if you’re not in the options game, you are a loser.” He said online was “already our largest store” and while “we still want the bricks-and-mortar experience, the internet will be the advance guard into new markets”.
Grossman gave the launch of Mary J Blige’s perfume in the US earlier this year as an example of online growth - “the first time a perfume has been launched not in bricks-and-mortar stores”. Instead, Home Shopping Network used social media such as Facebook and inviting bloggers to experience the brand. “We’re not selling products on Facebook but we’re creating a community that feeds itself,” she said.
The digital world also gives retailers much greater insight into how consumers behave, a theme of a session on day two chaired by legendary marketing guru and WPP Group chief executive Sir Martin Sorrell. Kingfisher chief executive Ian Cheshire said that the retailer derived enormous benefit from the data it had on customers, but it needed analytics to leverage it. Innovation and differentiation - including the development of own-label products - help Cheshire’s business to fight back against commoditisation and search engine comparison sites.
Customers will play a bigger part in the development of products, services and retail concepts. “We have been the editor of choice, but we are about to see a more collaborative process emerge,” Cheshire said.
Catching on
Growth in online is forcing retailers to assess their bricks-and-mortar operations, but that does not mean retailers shouldn’t open new shops. EBay Germany managing director Stephen Zoll said “clicks can complement bricks” and “online should not be seen as something that will cannibalise stores”.
However, it was not all about online sales, and the role of social and interactive media was emphasised. Patrick Dickinson, vice-president for marketing with Canadian retailer The Hudson Bay Company, told how it had reached out to younger shoppers in the French-speaking province of Quebec by co-creating and sponsoring a fashion-based TV series. The exercise succeeded in giving the company’s The Bay chain credibility among fashion-conscious shoppers, as proved by its Quebec stores outperforming the rest of the business.
Land Securities commercial director Ronan Faherty said that as a developer/landlord it was increasingly focusing on how it might embrace and use social networking and other technological advances.
Faherty said that Land Securities had used Facebook as part of its marketing campaign for its new scheme in Leeds and had achieved positive local consumer engagement.
“We are looking at the complete customer journey, right from when they leave home to come to one of our shopping centres,” he said. “Public realm in our centres is becoming incredibly important. Once you create the right environment, then you get dwell.”
Mango executive vice-president, international expansion, Isak Halfon added that he believed shoppers would be drawn to large regional shopping centres and that adapting to a new technological age would be far more difficult for smaller shopping centres. “I believe the future will be about the large, iconic shopping centres,” he reflected.
People Power Stores’ big difference
What can you find in Bloomingdale’s 59th Street flagship store in Manhattan that customers can’t get elsewhere within 10 blocks? That was the question the department store chain’s chairman and chief executive Mike Gould (pictured) posed at the World Retail Congress in Berlin.
The answer? The people, and in a thought-provoking interview with Financo chairman Gilbert Harrison at the Congress, Gould explained how his staff and the customer proposition they delivered were crucial. He said his role in the company was to give everyone the opportunity to be more than they thought they could be.
Gould said the lack of newness in US fashion had led him to look overseas for brand partners, explaining that the arrival of All Saints, LK Bennettand topshop“>Topshopin Bloomingdale’s delivered some excitement to his contemporary clothing offer. His desire to have brands such as All Saints in his stores has led him to compromise and lease out concession space.
Gould said the business’s future was in the US, despite projects such as its Dubai store. “We can’t take our eye off the brand in the States,” he added.
Another legend of US retailing on the stage was Crate & Barrel chairman and co-founder Gordon Segal who discussed the challenge of recreating the store experience and customer loyalty online.
“The internet doesn’t give you the same wonderful feeling when they get excited in your store,” said homewares legend Segal. “We talk all the time in our sales training about engaging customers with the product, getting them to touch it, to feel it.” But he said Crate & Barrel was “working hard on a comprehensive social networking strategy”.
Cartoon Clever: T-shirts take top spot
‘Animation is creation’ was the tagline for the T-shirt Nation concept presented by students from Rikkyo University in Tokyo, who won the Retail Futures Challenge. Building on the Japanese obsession with animation and comics, the students proposed a store where customers could choose and personalise T-shirts featuring animated characters. Customers would be able to share their designs, and others would be able to buy them.
At the same time multimedia content would be available to download to customers’ mobile devices. A second flagship store, in Europe, would be located in Berlin, to capitalise on the popularity of Japanese animation in Germany.
The Tokyo team (pictured) beat groups from London, New York, Hong Kong, Milan and Mumbai. Each entry was displayed in a shop window at the congress, merchandised with the help of Skillsmart Retail.
The London team of Helen Glynn, Helena Smith and Jordana Taylor from the Fashion Retail Academy used the traditional British pub as the theme for menswear retailer Apples & Pears.
The entry played on the heritage of the East End pub and the cheekiness of rhyming slang. The team planned to take over bars that had closed down, keeping the original fixtures and fittings, and turn them into a shopping, services and leisure space for men. Their idea was selected as the UK entry by a panel of distinguished judges including Sir Philip Green, Sir Stuart Rose, former Tesco clothing boss Terry Green,
Oracle senior director Sarah Taylor and Land Securities commercial director Ronan Faherty.
Best of the rest
- Retailers will need to adopt a number of concurrent supply chain strategies as they cope with rising labour costs, external environmental issues and fast fashion trend requirements, New Look chief executive Carl McPhail told delegates at the World Retail Congress. McPhail said New Look had shifted some production from China to countries closer to the UK such as Turkey and North Africa, both to help maintain the retailer’s constant replenishment of fresh stock and to cope with fast-moving trends.
- Only 17% of retail chief executives and board directors are actively engaged in succession planning, according to a report published at World Retail Congress. The research by executive search firm Korn Ferry found that 70% of chief executives and board members surveyed thought the quality of their senior management had been key to surviving the downturn, but 45% feared that executive turnover would be a serious issue for their businesses over the next two to three years.
- Funding is out there for deals involving large retailers with dominant market positions, but is still harder to come by for smaller distress transactions, a session at the World Retail Congress heard. Bain Capital Europe managing director Felipe Merry del Val said that in the US “quality assets continued to perform and the winners have attracted capital”, while in Europe he added that “very good assets that have performed well in the recession and consolidated their leadership through the downturn have been able to attract capital”.
- Value retailers will only compete successfully with mainstream rivals by offering products of the same quality but at a lower price, the World Retail Congress heard. “If you want to make money in value retailing you need to have the same quality as other retailers and save money on costs,” said Netto managing director of International Claus Juel-Jensen. However, he warned that mainstream rivals often tried to portray the discounters’ products as being lower quality, which he described as an “illusion”.
- Loyalty, customer data and the growing importance of the customer also emerged as key themes at the Congress and WPP Group chief executive Sir Martin Sorrell congratulated retailers on their skillful reaction to changing consumer behaviour through the credit crunch.
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