By Jill Higgins, partner at Kinnersley Kent Design. Article first appeared on LinkedIn.
This month I attended the World Retail Congress in Dubai where I spoke as part of a panel on the future of retail design.
Here’s a debrief on some of the main themes of the congress, based on my panel discussion and the keynote presentations:
1. BUSINESS IS ANYTHING BUT USUAL – RETAILERS NEED AGILITY IN THE FACE OF VOLATILITY
Retail consumption is down, especially in the West, as customers buy less ‘stuff’ and instead spend more on experiences such as travel and dining out.
The World Trade Organisation’s Yonov Frederick Agah described how world trade growth has been stagnant since 2010, and although short-term indicators point to recovery, the environment is risky. He identified these risks as high inflation, the rise of populist governments and protectionist measures. All of these pose a threat to ‘frictionless supply chains’ and could negatively affect retail.
Several speakers highlighted a global ‘winner takes it all’ trend, where giants such as Amazon gain huge market share while many traditional retailers struggle. Some retailers seemed resigned to the idea that they can’t compete directly with Amazon. Ingenious start-up company Boxed.com showed that there is still space for innovation and disruption – describing itself as a wholesaler vs. Amazon’s ‘Walmart’ B2C offering, the pure play retailer delivers bulk goods directly to consumers. Meanwhile, UK online supermarket Ocado has developed proprietary swarm robotics at their warehouses, meaning 50 items can be collected for delivery in only 5 minutes. CEO Tim Steiner said they see themselves as much as a technology company as a retailer, and are achieving double-digit growth.
One thing is clear – retailers must be nimble and move much faster to compete today and stay relevant tomorrow.
2. FOCUS ON THE CUSTOMER TO SURVIVE
In line with the overarching conference topic ‘Reinventing the Customer Experience’, focusing on the customer was the primary theme across all sessions. It was great to see this is a priority for retail leaders globally given that ‘experience’ is increasingly the determining factor between brands.
As stated by Sir Ian Cheshire of Debenhams, mobile has been the main game changer – it’s caused a social revolution and a new relationship with the customer. One of the main challenges arising from this omnichannel world is how to have a single view of the customer. Robert Welanetz, CEO of Majid Al Futtaim described how despite the adoption of online shopping being comparatively slow in UAE, 75% of customers research online before visiting a physical store. He talked about how for Majid Al Futtaim, as the owner and operator of malls, stores and hotels, the challenge is how to recognise the same customer across each division and then personalise the customer experience without compromising privacy.
Karen Katz, CEO of US department store Neiman Marcus, gave an engaging example of a typical customer journey, starting on social media. Katz described how 80% of their customers start researching online first yet 85% still want to complete the purchase in-store. To help offer an omnichannel experience, Neiman Marcus sales associates are equipped with an iPhone and iSell app that gives them a view of customers’ shopping history and preferences, as well as company inventory and marketing information. With the NM customer app, the customer can record, review and share the clothes she’s tried on in-store via a ‘Memory Mirror’ and make appointments with her favourite sales associates.
3. 'BRAND' IS MORE IMPORTANT THAN EVER
Now customers can find the cheapest price for the same product online, retailers need to look beyond ‘practical’ considerations such as price or convenience to build a customer relationship and win loyalty. Ultimately, only one brand can be the cheapest or offer the fastest delivery, so retailers need to create more emotive reasons why customers should choose them.
As Chieh Huang, founder of Boxed.com described it, value is no longer just about price; it’s about a unique mix of price + convenience + brand. Adding to this list, retailers also need the right mix of exclusive, quality products.
Each retailer needs a distinct philosophy that sets it apart from competitors. TOMS is a well-known example of a brand with a famous brand philosophy – Helen Thompson, Managing Director EMEA, outlined the company’s ‘one for one’ mission where for each pair of shoes sold one is donated to a child in need. In doing so, TOMS is selling far more than shoes; the value to the customer is in the meaning rather than the price or even the product. What a brand stands for is hugely important, especially for millennial and Gen Z customers who see the brands they choose as a reflection on them.
4. CREATE DESTINATION STORES
We all know the role of the store is in flux as customers change the way they shop. In response, many retailers said they are downsizing their portfolios and investing instead in fewer, key flagship locations.
In my panel discussion on the future of retail design, chaired by Nisreen Shocair, President of Virgin Megastore, we agreed that the future of brick-and-mortar retail is in offering customers something special and exciting that they can’t get anywhere else. Physical retail is still one of the main ways retailers can build a powerful, emotional connection with the customer and offer tactile interaction with the product. The fact that so many successful pure play retailers are opening up stores and pop-ups shows this as relevant today as ever.
Younger customers simply don’t see the different in channels that older shoppers see, so retailers need to stop thinking in terms of online vs. offline. This doesn’t mean that physical store has to mimic the online experience – it should offer something distinct and memorable. I believe that one of the best uses of technology in-store is simply to facilitate transactional, ‘low grade’ interactions such as taking payment, freeing up employees up to focus on personal interactions such as providing assistance or advice. Crucially, however a brand is experienced, each channel needs to communicate the same philosophy.
I put forward the view that retail spaces should be more about human experience than selling. Retailers can learn a lot from hospitality, where customers are already ‘guests’ and the focus is often on offering an immersive experience.
5. YOUR STAFF ARE YOUR BIGGEST ASSET
While customers were talked about in all sessions, staff were mentioned far less. This was surprising given that human interaction is one of the main ways to build a connection with customers.
Notable exceptions included Eric Petersen from Lululemon, who explained how their strong focus on the personal development of their staff includes ‘10 year vision’ programmes where they agree personal, health and professional goals with employees. The retailer commits to helping each individual achieve their goals – even if a goal is ultimately to work somewhere else. On the store floor, store managers are given a high degree of control over merchandising, recognising they know and understand their local communities better than head office.
When retailers did speak about their people, a common thread was on empowering and entrusting them greater freedom rather than focusing on handbooks. Accompanying this positive shift is greater data sharing between stores and HQ, meaning more transparency – and also greater accountability from store managers.
Neel Singh, VP of Global Retail & Franchise at Adidas, outlined how they are undergoing a strategic shift in how they interact with customers. Moving away from their former ‘7 Steps’ training manual, employees are encouraged to be themselves. They are being given more freedom on the ground, for example being able to buy a customer a cake if it’s their birthday. This is a huge challenge given the sheer scale of operations; with 35,000 staff globally, Adidas see local store managers as being the main agents of change.
Joe & The Juice’s founder Kaspar Basse gave a contrary view to every other speaker at the congress, memorably stating “we don’t give a ___ about customers.” His point was that a better experience can only be achieved by building your employees. He said Joe & The Juice put so much into their people that they don’t need to worry about “letting them loose” with customers. Kaspar said rather than making people’s jobs easy, we need to make them difficult – given that many jobs could soon be done by machines, human intimacy (and autonomy) is what creates real difference.
On the ground staff are a key asset for retailers to understand what is and isn’t working and shouldn’t be overlooked when considering customer experience.
If you’d like to hear more on how the above relates to the future of physical retail feel free to contact us for a copy of our latest whitepaper Retail Spaces – putting the customer at the heart of the experience, published for the World Retail Congress.