Driverless cars will change everything about retail hotspots

In his autobiography Sam Walton described why he preferred a small propeller plane to a jet.  He could fly closer to the ground and see how America’s towns and cities were growing.  Having scouted out the traffic flows and selected the ideal location, he would often land and strike an immediate deal with the local farmer.

Ian MacLaurin saw from the late 80s how the car-owning family was likely to prefer shopping out of town.  At the time Tesco was heavily criticised by analysts for ramping up debt to acquire new superstore sites, but it built the platform for two decades of market leadership. Taking the long view on property has always been central to successful retail strategy.

Profound shift

So much of the development of urban landscape is determined by the motor car.  Since the 1950s it has driven sprawling suburbanisation and out-of-town development.  But within the timescale of property decision making – say up to 25 years – cities and suburbs are likely to change out of recognition again. For this will be the timescale over which autonomous vehicles uproot everything we think we know about locations.

Tesla is a remarkable company but leads us to assume that autonomous vehicles (AVs) will just be like current ones but with the freedom to kick back and watch Netflix. This is the equivalent of the horseless carriage, with the coachmen still sitting high up front. “Driverless cars” of the future will be as similar to today’s cars as the “wireless phone” in your pocket is similar to the phone you used in the 1980s.

Many journeys will be taken by Uber-like ride-hailing or Zipcar-like sharing models. Vehicles will be suited to the ride, with options from mobile workstations to sleeping pods or motor homes. But the cost of AVs – and of course insurance – will fall so much that OC&C (in a study released this month) predicts personal vehicle ownership will still be favoured by many. Either way journeys will be low cost and on demand.

So where will people choose to live when transport is cheap, journeys faster, and time spent in transit can be productive? Our view is that there will be polarisation of both residential and retail locations.

Easier transport suggests a population move out to fragmented, less expensive exurbs. Here private vehicle ownership will remain popular. Miles travelled will increase, but journeys will be more pleasant. Fewer, better malls and retail parks will be needed, as they will be within easier reach of more people.  Parking lots will become redundant – vehicles will just drop off and then wait elsewhere or pick up a shared ride. So much more space will be available for retail, entertainment and leisure.

Meanwhile city centres could thrive too, with dense knowledge clusters, creative industries and educational campuses. Eliminating parked cars could free up 20% of total space for attractive new uses.

“Future real estate hot spots may be in resurgent exurbs, or in service units at urban peripheries, or in micro-convenience in city centres”

City-dwellers may choose to give up private vehicle ownership, and call on shared mobility solutions when needed. Automated mobile pods will bring most of their needs into the city on demand. Retail goods will be shuttled in from dark stores, fresh food from vertical farms, or meals to order from shared kitchens, all located around the city periphery. In fact there may be many more AVs moving stuff than moving humans. Very little traditional physical retail will be needed within the city, or find it economical to operate there.

If this view is right then future real estate hot spots may be in resurgent exurbs, or in service units at urban peripheries, or in micro-convenience in city centres.

It was relatively easy to predict mass car ownership, but it took Sam Walton or Ian MacLaurin to see where value would be created in retail real estate, and decades to prove them right.  The next technology shift in mobility could be just as profound. Maybe there will be more new billionaires in retail and real estate than in production of the new vehicles.

This article appeared in Retail Week 1st November 2019

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Avoid the tyranny of choice

The gloomy Danish philosopher Kierkegaard found much of life to be painful, but it can be assumed he would have harboured a particular ennui for online shopping.  Too many options, especially when combined with the stress of information acquisition, create what he called the “tyranny of choice”. Hesitation leads to worry and even a good decision can be plagued by angst over the alternatives not taken.  It’s the reason Kierkegaard broke off his engagement – and then regretted it when the young lady married another.

Type “men’s trousers” into Amazon and over 70 000 results are available. The limited filter buttons are of little use in finding the item which might suit your style or fit. This is not a good customer experience.

“After 25 years and hundreds of billions in investment, online has still captured less than 20 per cent of retail”

It’s one of the reasons online shopping has been so unsuccessful – seriously.  After 25 years and hundreds of billions of investment, it has still captured less than 20 per cent of retail.

Online shopping is great at shipping the best-selling Avengers Blu-ray everyone wants, fast and fairly cheap. Or, it brilliantly solves your directed search for that obscure long-tail replacement freezer basket.

But it’s not so good a browsing in the middle tail, where you need guided discovery and inspiration, where you are not sure what you want or don’t even know you want it at all. These missions are where good stores with judicious curation and human guidance are still winning, and for as long as they do so online penetration will continue to slow.

Too much

In one episode of “The Simpsons”, Homer visits a new superstore, Monstromart, whose chirpy strapline is “where shopping is a baffling ordeal”.  Stores should not attempt to compete with the internet. Expanding ranges, endless aisles and drop shipping confuse and exhaust the customer.  Throw someone one tennis ball and they’ll catch it: throw them a bunch and they’ll drop the lot.

You cannot possibly approach the infinite shelf space and ever-expanding range of a marketplace. But you can create a better selection, for your customers, than its page-one results.

“Pinterest, Etsy, Stitch Fix and others are building solutions to the question ‘what might I like?’ rather than ‘find me this’” 

Amazon or Google will probably solve discovery and comparison eventually. The promise of AI may mean that recommendations become relevant.  The algorithm may get that because you once searched for a scooter, you either ended up buying one or decided not to, rather than collecting a garage-full.  Pinterest, Etsy, Stitch Fix and others are building solutions to the question “what might I like” rather than “find me this”.  But until online shopping solves its biggest remaining challenge, shops have a role.

In our analytics work, we almost invariably find that retailers can eliminate at least 10 to 20 per cent of SKUs while increasing profitability and satisfaction. The key is to find the right SKUs to cut – those that add no meaningful choice, which are unimportant to high-value customers, which cannibalise higher-margin alternatives, which clog up inventory and space, and which degrade and clutter the customer’s experience.  That’s simple retailing. As Homer Simpson might say (or was it Kierkegaard?) – “Doh!”.

This article first appeared in Retail Week 1st August 2019

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Why you are not a digital retailer

In all the retail digital transformations I’ve been involved in over the past two decades, a simple truth has emerged. The successful ones brace themselves for a breakneck pace of change – to move at digital speed. And they see transformation not as a programme but as a continuously accelerating commitment to stay ahead of the customer.

The transformation programmes which failed did not do so because the risks taken were too big, nor because they invested too fast. They did so because they moved too slowly. Complex steering committees, aligning matrixes between the new business and the legacy business, nudging forward the culture – these all left them standing.

You are almost certainly not moving fast or far enough. To test that, I offer you nine reasons why you are not (yet) a digital retailer:

  1. You have a head of digital. Digital is not a channel, or a project, or a capability. It is where your customers already live. Who is Amazon’s head of digital, or Apple’s?  It’s Jeff Bezos and Tim Cook.  The CEO should take charge.

 

  1. You’re talking customer segments. You do so because you lack the data and insight to understand individual customers or to offer them a unique experience. Segments are OK for marketing. True digital businesses integrate into each customer’s life.

 

  1. You have an “agile team”. Agile teams get frustrated when their innovations need to be scaled up through operational functions. The principles of agile – distributed governance, rapid prototyping and fast feedback – are relevant everywhere.

 

  1. You’re launching a “store of the future”. Digital requires many touchpoints – ship from store, pickups, showroom, brand experience, service, pop-ups, etc. Most retailers try to cram all these ideas into one repurposed, compromised space. The key is to intercept each customer journey with the relevant offer.

 

  1. You’re measuring online customer behaviour. Good, but if you’re not capturing the same experience and engagement data in stores, you’re missing the whole customer view. You should monitor value to the brand irrespective of which channel the customer chooses.

 

  1. Your org chart has added new roles and titles. You’ve renamed your marketing chief as “customer director” and added a role or two such as Chief Data Officer. But structurally the organisation has not changed. To be fully digital, you need to organise around the new functions of customer experience design and ecosystem partnership development. Meanwhile, AI is eliminating whole swathes of the organisation.

 

  1. You are hiring more retailers. The scarce skills needed to be competitive in the future do not include retail experience. You already have plenty of that. You need data scientists, technologists, machine learning specialists, and above all people who bring challenge and creativity. Hiring more retailers is only going to reduce your chance of survival.

 

  1. You have few millennials and Gen Zs in positions of influence… Globally, millennials first outnumbered baby boomers more than a quarter of a century ago, and yet who is making your strategic decisions? Generation Z is the first truly digitally native generation: its oldest members are just turning 21. If you’re struggling to hire them, perhaps the problem is …

 

  1. … you can’t articulate your purpose. Societal purpose is a core motive for millennials and Gen Z selecting a brand or an employer. But this goes beyond ethical compliance, it means finding a unique, genuine and meaningful role in the world.

 

This article appeared in Retail Week 10th May 2019

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Retail is not transforming, it is dissolving

Many commentators, myself included, have shared their thoughts in Retail Week’s Opinion column on “the future of retail”. We all conclude that retail is undergoing rapid transformation. And yet, I think, we have all missed the point.

For retail is not just changing – it is dissolving. In a decade will there even be a discrete retail industry, with its leading players, career paths, trade body, conferences, weekly newspaper or even, dare I say, consultants?

WeChat is China’s “app for everything”, starting with messaging but now including video, gaming, advertising, payments, micro stores, city services and so on. It both competes with and provides a channel for retailers. Do we call it retail? A platform? A super app?

In the US, Amazon’s e-commerce revenues are as big as those of all other retailers put together. Yet it can hardly be called a retailer. Amazon’s most recent trading statement gave 78 mentions to AWS, 26 for Alexa and 24 for Prime – but mentioned retail only twice.

While it is true that these ecosystem giants are disrupting retail, that is to misunderstand their aim. They don’t tend to think of conventional industry definitions at all. They have been successful because they have created customer journeys that stretch seamlessly across old boundaries. Disruption of traditional industries is the collateral consequence, not the objective.

Crossing boundaries

As these digital trends make themselves felt, retail is both unbundling and reaggregating beyond any traditional boundaries. Segments of the value chain such as curation (video bloggers or Instagram influencers), digital merchandising (such as Flywheel), logistics or payments are becoming roles for newly-formed specialists, slotting frictionlessly into the ecosystem. And as brands like Nike build on these new players to extend their direct-to-consumer experience, they move away from retail.

“Retailers have always added new revenue streams in media, services or finance. But now these entire worlds are colliding”

Meanwhile a retailer of beauty products might integrate previously disconnected sectors like content, advice, tutorials and celebrity-led social media into a customer-centred solution.

Of course, retailers have always added new revenue streams in media, services or finance. But now these entire worlds are colliding and merging into a consumer ecosystem.

The traditional retail black tie dinners, a friendly forum for competitors to toast their industry, have begun to take on the atmosphere of the besieged fearing the existential threat without. Too many of their retail compatriots have fallen prey to lateral moves from other industries.

And yet, the best response may not be to patch the walls and defend the retail fortress but to abandon it, at least as a definitional constraint. Blockbuster thought it was in the business of renting DVDs, whereas Netflix defined its purpose as always-on entertainment.

How to survive

How should retailers respond to the dissolving boundaries of their industry?

First, focus at least as much on players beyond retail as your conventional competitors within it. Pay special focus to those who know more about your customers than you do, even if they don’t appear to overlap today.

“Retail as an industry has been shocking at allowing others to abscond with its data”

Second, in this new world collaboration is as important as competition. Succeeding in an ecosystem means joining up offerings to complete a customer journey.

Third, define yourself and your opportunity by reference to customers, not to a vertical industry. Take the offensive not the defensive. Your market is your customers’ total consumption and your path to it is their attention and trust.

Fourth, invest heavily to build unique data and insight which allows you to predict customers’ underlying needs. Retail as an industry has been shocking at allowing others to abscond with its data, from Visa and Mastercard, to IRI and Nielsen, to Nectar, to Google and Facebook.

And finally build new talent and capabilities, not just in digital skills and extra-sectoral experience, but for the diversity and creativity to break down old boundaries.

This article appeared in Retail Week 22nd February 2019

 

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Fairtrade ensures supply chain security as well as trade justice

The aroma of a coffee plantation in full bloom is sweetly intoxicating. Jinaldo encouraged me to sniff the white flowers on the tall, delicate trees and compare their complex bouquets.  “Vanilla, fruits, honey, perhaps chocolate?” I suggested.  Good, he responds proudly.  In 210 days, the red cherries will start to appear.

Blossom lasts only four days each spring, so my visit to Dois Córregos in Brazil was fortuitous. It’s one of several trips during my past six years as chair of Fairtrade Foundation, and each has given an amazing insight into the people who grow our food or cotton, or mine our gold or silver.

Just two generations ago, Jinaldo’s family were working as labourers on sugar plantations.  As sugar became uneconomic, the owners moved out and the workers tried to subsist by growing coffee on small plots.  But the low, volatile wholesale price made it hard to sustain a family.

“In 2006 the families of Dois Córregos decided to group into a co-operative and to join Fairtrade. This gave them a guarantee of a minimum price plus an extra premium”

Over a strongly brewed cup of the real stuff, Pedro, Jinaldo’s father, told me that he had feared all four of his sons would migrate to the slums of São Paulo in search of work.

In 2006 the families of Dois Córregos decided to group into a co-operative and to join Fairtrade. This gave them a guarantee of a minimum price plus an extra premium. Wisely the co-operative invested the premium in harvesting and grading equipment which enabled them to improve quality. Jinaldo could now afford to visit other Fairtrade growers to share best practices. Chemicals were mostly eliminated from the growing cycle, through use of complementary soil-improving crops.

Now their coffee wins prizes in the “Espaço Café Brasil” and is bought directly by international retailers and coffee chains.  Rising quality and yield means Jinaldo’s income has more than doubled. His own young children can study at school rather than labour in the fields or think about leaving for the city.

Our responsibility

The injustice of the global system often leads us to see the poor as helpless victims.  But what these trips remind me is that smallholder famers are entrepreneurs who just need a fair start to improve their own livelihoods.

Worldwide, there are 25 million coffee-farming families. Brazil and Columbia, which together produce half of the world’s crop, recently put out a statement confirming that prices are now below production costs and that abusive practices such as payment terms of more than 200 days are causing severe hardship for grower communities.

“It is a paradox that no UK coffee drinker would insist on haggling the grower down to a dollar a day if he stood in front of them”

But we should be optimistic.  Many retailers and brands are now following or even emulating Fairtrade’s lead.  They’re becoming aware that trade which can’t sustain producer communities is not just immoral, it’s bad business. If the next generation doesn’t stay on the land or invest in resilience then supply security is at risk.

And the UK consumer is becoming more responsible and ethically aware. At a time when trust is falling generally, 83 per cent of people say they trust Fairtrade.  Sales grew by 7 per cent last year. I think this is because through a simple act of reaching for a Fairtrade product, one person can choose in a tiny way to change the world.

It is a paradox that no UK coffee drinker would insist on haggling the grower down to a dollar a day if he stood in front of them. Even the supermarket buyer doesn’t intend this. But separated by distance and an opaque supply chain, this is what happens.

So as I hand over the chair position to Lord Mark Price, the former managing director of Waitrose and UK trade minister, I’ll continue to be a Fairtrade consumer and always try to remember the people behind the goods I buy.

This article appeared in Retail Week 9th November 2018

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A question of trust

We often hear that we are in a general crisis of trust.  Not only among brands, but also bankers, politicians, the media, and nearly all institutions.

Should retailers be concerned about this?

On the one hand, yes: each year, OC&C’s Retail Index shows that trust is the brand attribute most closely correlated to overall brand health.  More important even than value, or service, or quality.

I find retailers frequently bemoan that millennials are less willing to trust the big, familiar brands than their parents were.  We are doing our best, it’s the customer who’s changed!

And yet, the evidence for a universal decline in trust is weak.  Just a decade ago if someone had told you they were about to let complete strangers stay in their home while they went away on holiday, you would have regarded them as unhinged. Or, if a friend climbed into an unknown car at the end of the evening, you would be concerned for their safety.  But Airbnb and Uber have designed their models around trust.

The trust equation

It seems that rather than lamenting the non-trusting behaviour of millennials, retailers would do better to think about how to build their own trustworthiness.  And to answer this critical question:  are you willing to do what it takes to earn your customers’ trust?

At OC&C, we train our consultants on what it takes to become a “trusted adviser”.  In consulting, building a trusted relationship with your clients can lead to many benefits: more future work, more referrals, and more satisfying and impactful engagements.  The same is true of retail brands.

We use this way of expressing the components of trust, first developed at Harvard by David Maister:

Trust = Credibility x Reliability x Vulnerability

Think of Amazon.  Credibility is the impressive system behind “order now for delivery tomorrow”.  Reliability is the fact that it does turn up, on time, time after time.  And Vulnerability is processing a refund, without question, even before receiving the return.

Note the variables are multiplied together: If any is absent, trust is impossible.

Retailers say they want a relationship, but they still act like what they are really interested in is a one-night stand”

Vulnerability is perhaps the most intriguing. It implies exposing weakness to the customer. Some brands do this by listing even their most unfavourable customer reviews. By not dismissing their failures, but acknowledging them. By breaking the fourth wall and exchanging with customers at a human level. By being honest when they’re not the best for every need, and allowing or even encouraging the customer to go elsewhere.

What I like about this equation is its use to determine, diagnose, and repair trust – or it would be better to say, trustworthiness.

End ‘us and them’

However there is one further important part of the equation.  The three components above are then divided by “self-orientation”.  To be trusted, one must achieve low self-orientation, that is, not putting oneself (or one’s brand) above the interest of others. It’s the most difficult to achieve and to show.

Most retailer-customer interactions involve little if any commitment to each other beyond the current sale. The prevailing principle is “buyer beware.”  Even retailers who issue loyalty cards and talk of relationships, generally use the data to maximise short-term sales. However much retailers claim to be customer-centric, the customer is still generally “them” – someone to be “managed”.  Retailers say they want a relationship, but they still act in ways that suggest what they are really interested in is a one-night stand. When retailers talk about customer value, they mean value to themselves, not value for the customer.

If you treat customers as “them”, they will treat you as unworthy of their trust. They will ask “why would I want a relationship with you?”

Low self-orientation is rare, because in all of us the desire to win can be stronger than the desire to help the customer.  It can mean foregoing the easy sale. It can mean focusing on the future at the expense of the present.

Retailers should decide if they really want the benefits of trust, and whether they’re willing to make the transition from sellers to relationship partners.

This article appeared in Retail Week, 24th August 2018

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Improving is not winning

The roll call of failed or struggling retailers is growing: Toys R Us, Maplin, Poundworld, Carpetright, Mothercare, House of Fraser.  Many more will be added.

In the long view, retail has always been an industry of creative destruction. Assets have repeatedly turned into liabilities as independents gave way to chain stores, department stores to category killers, high streets to malls, specialists to mass merchandisers, and now physical to digital. Few retail brands thrive for more than a generation.   Of the world’s top 10 retailers twenty years ago, only two remain in that list today.

“All these winners are absolutely clear who they target and what they do for their customer”

But for every struggler, I can name you a winner.  Somehow, Aldi, B&M, Lidl and Primark didn’t read the news that physical retail is dead. Holland & Barrett, Lush, Mountain Warehouse or Smyths Toys forgot that specialist retailers are being devoured by Amazon.  Harrods and Selfridges didn’t get the report on the death of the department store. Someone needs to tell Ikea, The Range and Screwfix that home spending is slumping. And Asos, Boohoo, JD Sports, Jigsaw, Joules, Missguided, Quiz, Superdry and Ted Baker have never heard of “peak stuff”.

All these winners are absolutely clear who they target, and what they do for their customer. All are rigorously dedicated to that focus and resist the temptation to overextend or stretch away from their core.

No strategy

Conversely, many less disciplined retailers got hooked on growth beyond the point of diminishing returns.  They opened more and bigger stores, proliferated ranges, and chased after less profitable and less loyal customers.  While eking out the last drops of growth, the market was moving away from them. They lost focus.  And now in response, we see too many of them have the same business plan (it doesn’t deserve to be called a strategy), and it’s essentially a plan to correct the unfocused overextension of the past.  Close or shrink underperforming stores, rationalise ranges, simplify promotions, return to the core customer, get multichannel working, reduce overheads.  These things are necessary but they only postpone the day of reckoning.

I say these things are not strategies, because they do not represent choices.  “We are going to make our store estate fit for the future, speed up our supply chain and cut inefficiency” are vitally important things to do, but do not make up a strategy because no-one could reasonably argue for the opposite.   No choice has been made of what — and what not – to stand for.

The survivors

Ikea succeeds because the entire business model is structured around solving one very clear purpose for the customer – help me get my place kitted out today.  If you need that apartment you just rented or your son’s new student digs to be ready for moving in, it does the job quicker and better than any alternative.

Aldi succeeds not only because it provides great value, but because it is simple and quick to shop.  No customer has a mission called “I really need to spend forty minutes battling round a superstore today”. Aldi strictly protects this advantage through its one-in-one-out ranging.

Burberry has a vision to become the brand of choice for one core customer group – luxury millennials. Investment is targeted on the channels that carry the most influence, social media is central to brand building, while distribution ensures immediate gratification.

Customers want to bring these retailers into their lives because they fulfil a unique purpose better than anyone else.

Many retailers are following urgent, and overdue, action plans.  But improvement is not winning. Only those with a clear customer purpose, uniquely well executed, will survive.  Most will not.

This article appeared in Retail Week 22nd June 2018

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Remodelling the brand / retailer deal

It’s not easy to spot retail history in the making.  WalMart’s acquisition of Asda in 1999 was perhaps less seismic than predicted at the time.  Almost no one mentioned shopping when Apple launched the iPhone in January 2007.

But 25th October 2017 may prove to be a seminal day for retail.  No, not Amazon’s take over of Whole Foods, although that has started shocks that will rumble through the industry for decades to come. This was the day that Nike announced a massive withdrawal of distribution from “undifferentiated” retailers.

Retailers who rely on third-party brands – such as department stores or category specialists – are hardly unaware of the threats they face.  Amazon’s dynamic pricing, the appearance of brands in discount or “off price” channels, and the costs of getting their multichannel offer working preoccupy them daily.

A common enemy

Nor is it as if brands wish to abandon wholesale distribution and rely on their solus stores or digital channels. They fear an Amazon-dominated future just as much as the retailers do. They recognise that physical retail is essential for customer acquisition, engagement and service.  Such is the degree of channel hopping that a recent OC&C study shows that in apparel across UK, France and Germany, 58% of customer journeys involve a digital touchpoint but 79% include a visit to a store.

But multi-brand retail is not delivering for brands.  Impoverished by deflection of investment to online channels, store environments are tired and dull.  Fixated on declining like-for-likes which appear to show no business case for anything but closure, retailers are caught in a doom loop of deteriorating and shrinking store estates.

Brand owners do not readily withdraw from volume — in Nike’s case slashing from 30,000 to just forty the number of retail partners it wants to showcase its brand.  The scale of the move highlights just how toxic the boring middle-market of retail has become for any labels who care about their brand equity.

“Sales assistants are not costs to be managed down, but cast members bringing the brands to life. But to justify continued investment, new performance metrics are needed”

Retailers and brands need a new partnership, one that admits a common enemy and which joins forces to reinforce what physical retail can uniquely do. The old models of “wholesale” or “concession” just represent different ways of slicing a diminishing pie.

Stores are not only machines for transactions, they are special media able to host entertainment and experience for a brand.  Sales assistants are not costs to be managed down, but cast members bringing the brands to life.

New performance metrics

But to justify continued investment, new performance metrics are needed.  Like-for-like sales at the catchment level, including online, is better than a store-only view: after all OC&C typically finds that a third of web sales are store-enabled (showroomed or clicked and collected).

But additional store metrics borrowed from the media industry should be captured too:  eyeballs (footfall), dwell time, engagement, repeat visit and retention.  If a multi-brand store owns access to high-value customers and entices them to physically experience a new brand, then it can justify its role and negotiate a share of customer value whether the sale takes place then or later, in the store or through the brands’ other channels.

Share and share alike

To do this requires retailers and brands to overcome their reluctance to sharing customer data, and to work together to earn customer loyalty and retention.  We still find department stores who, Canute-like, ban their brand partners from using iPads to show extended range, or from guiding the customer to available stock in another channel.

Multi-brand, multi-channel retailers who have a future will see themselves as merchants of theatre, not of product.  Their prime aim will be to work with brands to drive engagement and experience, which in turn drive customer loyalty and sales.  But these sales may be realised through any channel:  their own, but also their brand partners’.  The economic deal will include media fees and sharing of customer lifetime value, not just product margin.   Nike has signalled nothing less than a new model of retailing.

This article appeared in Retail Week 23rd February 2018

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How the world sees us

New European 231117My essay in The New European, 23 November 2017, also previously appearing on the website of  These Islands.

The full essay may be seen here.

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The future of retail: You ain’t seen nothing yet

For some time retail has been “omnichannel” and then “mobile first”. But mobile is moving into the maturity phase.  As one S-curve of adoption slackens off, the next one picks up. So what’s next?

Rather than a single answer to that question, there are a set of related technologies coming within the five-to-10 year timeframe: they include the internet of things, virtual and augmented reality, artificial intelligence, robotics and automation, and autonomous vehicles.

It’s hard to imagine how the how the world will change, again. It’s like being at the launch of the Apple iPhone ten years ago where we still speculated what it might actually be used for. But let’s have a go.

Predicting the future

There will be multiple new interfaces — or perhaps better to say no interfaces. We already see this, with Amazon Echo in every room, Apple earpods, and virtual assistants listening out for when and how they can help.

The smartphone is going to die, the way pagers and fax machines have done. We’re at least 5 and maybe 10 years away, but when it does the idea of holding in your hand the window to an online world will seem quaint. There will be no distinction between the real and virtual worlds. In your connected home, in your car, through your glasses or lenses, through wearables, robots and hundreds of connected devices, the internet will just be part of your world.

Then search is going to die, and be replaced with contextual suggest and assist. In fact the internet, in the sense of a place to be searched, is going to disappear. Tomorrow’s Siri will know you and integrate you with the internet of things. Facebook Messenger already recognises when users are conversing about payments or taxis for example and steps in with assistance. So online shopping will no longer be something that we “do”, it will be something that just “is”.

Brands will change, and maybe advertising will die. When your washing machine can reorder its own detergent, in effect you subscribe to the product. When you shout at Amazon Echo “hey we need more toothpaste”, then the brand is locked in, as is your channel. This is why brands are trying to escape indirect distribution and reach consumers directly.

Today internet retailing is good at shopping, at “find me this book”. It is bad at browsing, at inspiration, at “I need a new outfit”. This is where physical stores have kept a role. But when artificial intelligence has looked at every page of Elle and Vogue, and then at every image of you on Facebook and then at every Instagram photo or video of people with similar profiles to you, then it might be quite good at making curated recommendations, and doing so at automated scale.

A new reality

With virtual reality, online experiences are going to be better than store experiences. You may meet with a virtual designer world who will excite you with bespoke clothes fitted to your unique size. We will buy from experiences, not from online stores.

If autonomous cars solve congestion and remove parking, what will cities look like, will out of town retailing get reborn, or will the high street? Where are you willing to live and travel if an on-demand ride costs almost nothing and you don’t have to park?

What does this all mean for retailing? For those who think the S-curve of ecommerce is flattening out, and online penetration might start to slow, I don’t think we’ve seen anything yet. Get ready for the model of retail to change completely, again.

This article appeared in Retail Week, 17th November 2017

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