The Retailer Winter Edition 2023

WINTER 2023

Embracing the data economy in 2023 DIGITAL SOLUTIONS

SECURITY & LEGAL

7 steps to net zero SUSTAINABILITY

THE FUTURE OF RETAIL

Addressing the rising cybersecurity threat

Can the promise of the metaverse support our high streets?

digital TRANSFORMATION

Digital transformation is the key to future success for retailers. It’s a big issue for retail CEOs, who admit they are not fully prepared, which creates opportunities, as well as significant operational and reputational risks.

We have a series of upcoming virtual and in-person events for retailer members

The BRC is working with both Strategic and Contributing Partners to drive a digital thought-led agenda under four key pillars:

CUSTOMER EXPERIENCE

BRC DATA DEEP DIVE CUTTING COSTS NOT CORNERS MEETING THE CHALLENGES OF PRIVACY AND DATA PROTECTION SETTINGDIGITALTRANSFORMATION GOALS SEMINAR

TECHNOLOGY & INFRASTRUCTURE

LEADERSHIP & CULTURE

BRC DIGITAL MATURITY AND INNOVATION FORUM See website for more details

TALENT & SKILLS

TO PARTNER WITH US AND HELP US BUILD THE FORWARD AGENDA ON OUR DIGITAL TRANSFORMATION CHANGE PROGRAMME SEE OUR PARTNERSHIP BROCHURE AND GET IN TOUCH! PLEASE CONTACT DIANE AND SUSAN FOR MORE INFORMATION PARTNERSHIPS@BRC.ORG.UK

HAS COVID BEEN A SUCCESS FOR RETAIL?

Helen Dickinson OBE Chief Executive British Retail Consortium

When 2022 began, we thought the worst was over. The Christmas Covid wave was paving the way to a spending boost, as we unlocked from pandemic-behaviours. Yet the war in Ukraine put inflation, already at a 30-year high, into overdrive. Energy prices rose, fertilizer and animal feed costs rose, transport costs rose, basically every cost line rose while real incomes of customers fell. Demand faltered and government went into tail spin. Fast forward to December. Sales were a little better than many expected – the December BRC-KPMG Retail Sales Monitor showed a seemingly decent 6.9% growth. Yet with double digit inflation, last week’s ONS figures confirmed that December was the ninth consecutive month of volume declines. Smaller retailers were hit harder but many also benefitted more from the government support on energy. Larger businesses were better positioned to absorb some of the cost increases but as many had hedged energy contracts at least partially through last year, some of the support didn’t hit the sides. So, what next? Consumer confidence (according to GfK) languishes at a depressing -45, having hovered around the -40s since May. This is worse than the depths of the pandemic, and shows little sign of meaningful improvement. But, as the inflationary pressures begin to annualise – filtering out of the Consumer Price Index – consumer confidence may begin to return. On New Year's Day, as many of us were shaking off the celebrations of the night before, we put out our forecast for sales in the year ahead. Our analysis suggests that year on year sales growth, at 3.1% in 2022, is set to drop to between 1% and 2.3% in the first half of 2023. With inflation expected to remain high, this will still represent further falls in volumes. Yet, having fallen out the frying pan into the fire, the second half of the year will at least have returned the industry to the pan, and beginning to slowly, but confidently climb back up the handle. Our analysis shows retail sales rising to between 3.6% and 4.7% from July to December, catching up with inflation as the latter falls throughout the year. Yes, the next few months are likely to be challenging for many but perhaps we are reaching the eye of storm. Surelymanaging the next year must be all about containing the impact of the down turn but not letting go of building the longer-term foundations to capitalise on the opportunities when the recovery comes. That’s true for individual businesses and true for how we think about our work for the industry. Our “Today Agenda” focuses on the issues of the here and now. In November, after months of lobbying from the BRC and others on business rates, the Chancellor announced changes which we estimate are worth a saving for retail of approximately £1.5bn pa. For us there is plenty to go for this year as we face into some big regulatory issues, extended producer responsibility, changes to digital data and consumer regulations and labour shortages – all in a politically charged environment and in the lead up to a general election by 2024 at the latest. And in building the long term foundations, our members continue working on our collaborative multi-year ‘Change Programmes’ to help drive change across the industry faster than it would achieve on its own. Climate Action, Talent and D&I and digital transformation. Great businesses are putting these issues at the heart of their operations. It is one thing to bring down costs for the year ahead, but meaningless if your competitors are shifting their business model to lower costs and improve productivity for the decades to come. Take sustainability. Ultimately retailers face a series of questions. How to be ethical but affordable. Green but profitable. Maybe they are not either or. From reducing packaging to cutting energy use, such actions not only help the country tackle climate change but help retailers reduce energy use and cut future costs. Especially important as the cost of living crisis continues to bite, eating into consumer spending power, and limiting the ability for them to handle further price rises. Building for the long term while navigating the immediate challenges. The winners will be those meeting the needs of their customers. They will be the ones who understand that we all have a part to play in the cost of living crisis.

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Yes, the next few months are likely to be challenging for many but perhaps we are reaching the eye of storm.”

THIS ISSUE

SECURITY & LEGAL

DIGITAL SOLUTIONS

18

06

WORKER PROTECTION BILL AND THIRD PARTY HARASSMENT Christina Tolvas-Vincent, Dan Fawcett // Womble Bond Dickinson

The Product Approach: the key to a successful digital transformation Alex Antonov // Unlimint

08

Why a tech-enabled frontline is the recipe for standout service in 2023 Olaf Akkerman // Microsoft

20

TRUST IS NOT ENOUGH TO SECURE YOUR SUPPLY CHAIN Keiron Holyome // BlackBerry

10

THE VIP CODE: EMBRACING PERSONALISED SERVICES FOR CUSTOMER LOYALTY Sarah Friswell // Red Ant

22 24

RETAILERS: GET READY FOR PROTECT DUTY Dan Fox, Scott Bolton // AON

VIRTUALLY IDENTICAL: LEGAL CONSIDERATIONS DIGITAL TWINS IN THE METAVERSE Gareth Stokes, Kurt Davies // DLA Piper

12

FIVE WAYS RETAILERS WILL EMBRACE THE DATA ECONOMY IN 2023 Paul Winsor // Snowflake

26

HOW RETAILERS CAN ADDRESS THE RISING CYBERSECURITY THREAT Philip Duerden // Thales

BANKING & PAYMENTS

14

DESPITE A ROCKY YEAR, BNPL REMAINS STRONG Monica Eaton // Chargebacks911

SUSTAINABILITY

16

HOW RETAILERS CAN UNLEASH THE POWER OF PAY TO REACH NEXT-LEVEL COMMERCE Kevin Carson // FreedomPay

28

7 NEXT STEPS TO NET ZERO AndrewWalker // Amber

30

USING SUSTAINABLE CHEMISTRY TO DEVELOP SAFE CONSUMER PRODUCTS Craig Rowlands // UL Solutions

32

TRADING IN FRANCE – EPR FOR TEXTILES James Beard // Valpak

16

THE FUTURE OF RETAIL

34

THE NEW FACE OF VERTICAL DISTRIBUTION - A MAKEOVER THAT WAS LONG OVERDUE Graeme Young, Rhiannon Pugh, Siobhan Kahmann // CMS

36

THE DIRECT-TO-CONSUMER OPPORTUNITY James Humphrey // Salsify

38

CAN THE PROMISE OF THE METAVERSE SUPPORT OUR HIGH STREETS? Mary Wallace // IBM

40

PARCEL DELIVERY: A MODERN-DAY MIRACLE? Elliott Goldstein // The MBS Group

42

Price isn’t everything Chris Field //Retail Connections

FROM THE BRC

44

HIGH INFLATION AND DISCOUNTING DRIVES CHRISTMAS SALES Insights Team // BRC

45

SPOTLIGHT INTERVIEWWITH BRC GRADUATE // BRC

48

DIGITAL HUB // BRC

brought to you by

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THE PRODUCT APPROACH: THE KEY TO A SUCCESSFUL DIGITAL TRANSFORMATION

Alex Antonov Chief Product Officer Unlimint

D igital Transformation is quite a vast term that doesn’t have a clear description, and its goals vary from company to company. A common trait, however, is optimizing a compa ny’s business processes with the help of mod ern technology and practices. To beginwith, we need to questionwhy a business would need this in the first place. The answer is simple, to stay afloat. Every company aspires to spend less, earn more and rapidly adapt to the industry’s changing landscape to surpass the competition. In addition, the current level of technological development allows any process in the company to be optimized, making it faster and more precise, sometimes even completely removing the human factor from it, while modern managerial practices allow a certain level of flexibility for prompt reactions to market changes. But where should you start? How do you guarantee you plan and distribute the resources and budgets correctly so your business can make the most out of its Digital Transformation? After all, unless you are Amazon or Walmart, you really won’t be able to fully digitalize all of the company’s processes. In my opinion, the best way to approach this is the Product Approach, a company’s work organization method that predominantly focuses on developing products to satisfy the maximum of customers’ requirements. Teams implementing this approach have business KPIs and base their decisions on measurable customer satisfaction metrics. The product, in this approach, is seen as a set of results that the customer expects to receive, as well as the actual process of achieving them. A product can be both an online shop or company website, or a CRM system or delivery service, while a customer can both be external (a shopper) or internal (warehouse employee).

Let’s look at the stages of this approach’s implementation: Stage 1 – Task Setting: Like any other task, Digital Transformation requires us to establish the problem, set the right tasks, and assess the capabilities before we proceed. For example, your goal might be to improve customer service quality by organizing delivery in narrow timeslots or increasing your website’s conversions. The main thing to remember is that a goal must always have a measurable criterion of achievement: NPS, number of orders, cart abandonment rate, etc. At the end of this stage, a Product Owner needs to be assigned, who can be chosen internally or hired externally. Stage 2 – Planning: After the goals are set, it is time to decide what kind of product will be created as part of the Digital Transformation. This doesn’t always imply an actual development process and often requires several pinpointed changes using existing tools or integrating modern market solutions. The journey towards the goal needs to be set in the form of a Roadmap, during the formation of which the Product Owner needs always to answer the following questions: • What are the customers needs? • What solutions or practices are available today to satisfy these needs? • What value will the developed product bring? • Does it have development potential? • How much will it cost?

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growth and evolution.” ‘‘

I believe that once begun, it needs to become a constant ongoing process that walks hand in hand with the company’s

Nevertheless, completing the roadmap is an essential mark in that journey. The moment when you can look back, carefully dissect the results delivered and retrospectively analyze everything with the top management and teams. Here are some key global metrics that you need to base your analysis on: • Time and money invested in the creation of an MVP and product launch • Number of clients that have been working with the product • Funds growth due to the launch of the product • The digital transformation’s ROI No company can constantly ride the wave of success in our fast-paced reality. We can see proof of that in the number of businesses that fell victim to the pandemic and the changing geopolitical situation. But, on the other hand, change always brings new opportunities, and the Product approach, with its flexibility, is a great solution to maintain the life cycle of a business and leverage them. In regards to digital transformation, I believe that once begun, it needs to become a constant ongoing process that walks hand in hand with the company’s growth and evolution.

In an ideal world, the roadmap needs to reflect the whole journey of Digital Transformation until the goal is achieved, yet in reality, it rarely remains unchanged during the entire cycle. This is why a massive advan tage of the Product Approach is that it allows a certain flexibility due to its iteration process of realization. It will enable you to move towards your goal iteration by iteration, starting with an MVP of the solution to test your hypothesis and asses the results, allowing you to correct the roadmap to remain on the right path. After all, it is better to spend a couple of weeks building an MVP to establish that a wrong direction was chosen rather than spend a year developing the complete solution only to realize that it has failed and everything was in vain. Stage 3 – Realization: The next step is bringing the roadmap to life. To do that, you need to create a specific environment: • First and foremost, you need to build a team around the product owner who will solve the tasks. The team needs to be independ ent, consist of all the required specialists, and focus on reaching the digital transformation targets. • The team needs to proceed via iterations, and ideally, after every iteration that ends with implementation or testing, metrics estab lished during the planning stage need to be analyzed. • The product owner must have the power to manage the team, the project’s budget, and the top management’s support and trust. The top managers must be confident that the set goals will be reached, and it is the product owners’ job to maintain this confidence by constantly demonstrating the delivered results. Stage 4 – Analyzing results: The end of all works and delivery of all the results written in the roadmap usually do not signify the end of the Digital Transformation. Many of my colleagues and I believe that true digital transformation is a never-ending process because the market and competition constantly evolve.

ALEX ANTONOV

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WHY A TECH-ENABLED FRONTLINE IS THE RECIPE FOR STANDOUT SERVICE IN 2023

Olaf Akkerman Managing Director, Retail and Consumer Goods Industry Microsoft UK

U nlocking a positive cus tomer experience with an engaged and empowered frontline workforce

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Well equipped? To remain competitive in 2023, retail leaders should prioritise their employees’ wellbeing and engagement to unlock the positive customer experience that will differentiate them from the pack. That’s no small feat in a cost-con strained environment, but technology can help. Microsoft recently carried out research as part of our ongoing Work Trend Index, sur veying thousands of frontline employees and managers in eight industries across five conti nents – including a specific focus on retail. The results shed light on the role for technology in enabling your frontline staff to deliver standout service in 2023. Just over a third of retail workers told us that they are not equipped with the digital tools, tech or solutions they need. Far from fearing the encroachment of technology, three fifths (60%) of retail workers are excited about the job opportunities that technology can create. Areas where frontline workers told us they feel that tech can help with most includes team scheduling, onboarding new teammates, automating repetitive tasks, providing real-time task updates, and managing appointments. Automate to liberate Retail staff are particularly interested in tools that save time and energy by working more efficiently and automating or accelerating lower-value tasks. By streamlining mundane, repetitive work, staff can be freed up to pro vide a more imaginative and personal service to customers – or simply to make their days a little easier. For example, the Shifts app inMicrosoftTeams helps retail managers quickly create, update and manage store associate shift schedules, and message people individually or together, while also making it easy for staff to see rotas and make requests. Meanwhile the Bookings feature can automate customer appointment scheduling and management while the Planner feature can help organise teamworkwith visual task management.

To remain competitive in 2023, retail leaders should prioritise their employees’ wellbeing and engagement to unlock the positive cus tomer experience that will differentiate them.”

Many retailers will be pleased with 2022’s Christmas performance, which saw sales rise 3.1% compared to the festive period of 2021, according to data from the British Retail Consortium (BRC) and KPMG. As Helen Dickinson OBE, Chief Executive of the BRC has said: “After an exceptionally challenging year which saw inflation climb and consumer con fidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer.” However, with growth remaining below infla tion, retail leaders would be forgiven for eyeing with caution a challenging year ahead. To pro tect margins this year, cost management will be an essential ingredient for success. And with expectations of a personalised customer service continuing to grow, retail leaders will need to innovate and transform how they engage cus tomers to deliver quality experiences for less. At the heart of this is people. A physical retail experience is only as good as the people who are delivering it – the store associates. Retailers should ask themselves if their frontline work force is supported, engaged and equippedwith the tools and flexibility needed to deliver the service that customers expect.

Culture connection Most frontline retail workers told us they feel that leadership does not prioritise building workplace culture. 2020 brought many frontline retail workers closer together as they valiantly kept local services and commerce running through the pandemic, but it’s vital to help people feel connected to thewider organisation too. Especially as ‘head office’ staff are now likely to be dispersed in a hybridworking model. An integrated employee experience plat form can help centralise key information and resources. It gives associates a bridge into your organisation’s caring culture, direct access to daily support, and a place to be publicly rec ognised by leadership. One organisation utilising technology to better connect management and frontline workers is British retailer Marks and Spencer , which has provided store managers with a Surface Go – a portable touchscreen 2-in-1 PC – so they have all the information they need at their finger tips, including sales reports and back-of-store inventories, giving them more time to spend supporting store associates and responding to customer demand.

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Don’t ask, ‘What hap pens if I train them and they leave?’, ask ‘What if I don’t train them and they stay?”

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Right from the start More than half of retail workers say they receive no formal training, evenwhen they can access the tools they need. The short-term or seasonal nature of some retail work is not a reason to not invest in training. As the old saying goes – don’t ask, ‘What happens if I train them and they leave?’, ask ‘What if I don’t train them and they stay?’ Retail staff want to learn, but they need support to do so. Technology can help to lower the training and development costs for organisations. For example, Microsoft Viva Learning is a central ised training hub that sits in Microsoft Teams to help retail staff more seamlessly integrate learning and skills development into their day. Technology solutions such as this make it easy for store associates to access learning materials and share and discuss the content in digital communication channels.

By equipping frontline workers with the right technology this year, they can be freed from lengthy operational processes, be better con nected to the culture and leadership of your organisation, and better supported with the skills needed to deliver theirwork. This needn’t require significant new investment – indeed many of these features are either already included in the technology retailers have in place, or represent minor add-ons. But together they can help to create happier, better-informed andmore empowered frontline retail colleagues – the recipe for standout service in 2023.

Olaf Akkerman microsoft.com/en-gb/industry/retail/ microsoft-cloud-for-retail

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THE VIP CODE: EMBRACING PERSONALISED SERVICES FOR CUSTOMER LOYALTY

Sarah Friswell CEO Red Ant

B uilding consumer trust and competitive edge with personalised and curated customer engagement

But it’s not just tech that retailers will need to deliver in 2023. Store associates that can effectively hand hold a customer through their browsing and buying experiences are vital to provide these truly personalised services. Despite the availability of self-service features, customers strongly prefer support from human agents. A survey by Capterra revealed that receiving customer support via the phone is the preference for 42% of customers, followed by 39% saying live chat with a human agent via a website or apps such as WhatsApp. Clienteling, the tech-based retail strategy of pro viding one-to-one customer support through customers’ purchases, both in-store and online, can enable brands tomeet consumers’ changing purchase expectations based on social respon sibility, inclusiveness and environmental impact. The role of clienteling in building customer loyalty Adopting a clienteling solution as part of an omnichannel strategy allows retailers to empower store associates with the right product and customer information to create better customer experiences as well as boosting their productivity. RedAnt’s OnePoll survey of 1,000 store associates with access to clienteling tools reveals that 63% say the tools have helped them increase sales. With the harnessing of customer and prod uct data at the core of game-changing retail strategies, brands can share relevant products, support questions around sustainability and other product details, communicate progress of a delivery, and cross- and upsell suitable products through in-app communication. Clienteling can also help optimise the retail er’s stock management and prevent inventory distortion, where under- or overstocking of products can result in loss of profit.

Streamlining conversational commerce with a unified chat screen allows a brand to send messages via each customer’s preferred channel, including video calls, push notification, email, text andWhatsApp. New collections and inspi ration boards can be shared through 1-to-1 or group communications, and customers can build wish lists for in-store appointments and virtual consultations. Integrated video consul tations allow in-store retailers to connect with customers wherever they are. Retailers that effectively adopt clienteling can transform their brands and elevate their CX within a short space of time, for long term benefits. This might reap rewards such as a 400% increase on repeat purchases or up to 250% year on year growth. Interactions must be seamless as customers pivot from smartphone to online and chatbot to human advisor. But success is about far more than being reactive. Reaching out to engage customers using dedicated technology such as artificial intelligence (AI) and data analytics is becoming essential. As a market sector, AI in retail is anticipated to reach $24.1 billion globally by 2028, increasing by a compound annual growth rate of 24.4% - the majority (83%) of leading retail executives surveyed by ResearchManagement Group had “substantial plans” to adopt and leverage AI. Using AI for proactive customer engagement

As the retail tech capabilities of digital-first retailers have accelerated customer expecta tions, consumers nowexpect brands to engage with them in a highly personalised way – to make them feel special. This includes relevant product recommendations and broader choices for payment, delivery and return. Hyper-personalised shopping experiences are not only the secret to making sales, but to effectively cross-sell, upsell and build brand loyalty. In fact, a staggering 91% of consumers are more likely to shop with brands who rec ognise, remember, and provide relevant offers and recommendations. The most advanced customer experiences are being presented by brands in exclusive desti nations, such as the UAE, where the luxury ‘VIP treatment’ has become an everyday commodity accessible to everyone. Influenced by global travel and technology, first class experiences are no longer the domain of designer brands, but a universal expectation for all brands to attract, engage, and retain customers. Central to this, effective store associate engage ment has become vital to store reputation. Customers expect the store associate to be proactive in their communication, with the right information to hand while advising. In today’s terms, true personalisation isn’t just targeted advertising – it means being able to share a lookbook via email to customers, allowing them to join the product waitlist on the website or recommending products which are suitable in a video consultation. Or it could be enabling shared baskets which allow a cus tomer to complete their purchase once they’ve left the store, or to choose how they pick up their purchase with BOPIS or BOPAK. All of these scenarios are now table stakes for a high performing brand. What personalised services means in 2023

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AI-driven insights are defining a new era for retail, where retailers can truly understand their customers and what makes them tick to boost customer loyalty and increase revenue.”

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AI-driven insights are defining a new era for retail, where retailers can truly understand their customers and what makes them tick to boost customer loyalty and increase reve nue. Data rich retailers can use AI to improve search and recommendations for customers, enabling them to find the exact items they want as quickly as possible. It’s the secret to hyper-personalisation, and to support sustain able retail strategies which are snowballing in priority for retail leaders. Data is the key to personalising customer experiences Key technology focus areas to drive retail customer engagement should include clien teling and virtual consultations, assisted sales, omnichannel point of sale (PoS), and click and collect/BOPAK (buy online pay at kiosk).

Building more curated purchases will reduce returns and create memorable shopping expe riences that turn consumers into powerful brand ambassadors and impact the bottom line. Brands ready to adapt to shifting consumer demands through tech tools and innovation will embrace retail success.

Building more curated purchases will reduce returns and create memorable shopping experiences that turn consumers into powerful brand ambassadors.”

Sarah Friswell

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FIVE WAYS RETAILERS WILL EMBRACE THE DATA ECONOMY IN 2023

Paul Winsor Industry Principal Retail & CPG Snowflake

I n an increasingly complex and competitive market, data offers substantial opportu nities for retailers and CPG companies to diversify and grow.

Data monetisation will offer new diversification possibilities

Data monetisation isn’t a new concept. In fact, retailers have been mon etising sales and stock data for decades. But there’s been little appetite to drive revenue from anonymised customer data due to security and compliance concerns – not to mention a false perception that customers will object to their data being resold. As more brands move to the cloud and realise the sophisticated data governance and sharing capabilities it offers, 2023 looks like the year where data monetisation will dominate boardroom conversations. By monetising their data correctly – as demonstrated by US retail data science company 84.51˚ – to make better business decisions, and streamlining howconsumer packaged goods (CPG) companies can acquire this data, brands stand to benefit from a significant new revenue stream. Only the top retail media networks will survive According to a recent estimation by BCG , the retail media market –where third parties buy advertising space on a retailer’s platform – will grow by a quarter each year over the next five years. And it will account for 25% of digital media spend, or $100 billion, by 2026. This shouldn’t come as a surprise. As costs are squeezed, and online growth slows, retailers are increasingly looking beyond traditional channels to launch or expand their retail media platforms. But this also means that there will be substantial competition in the space. As more brands realise the opportunity to attract CPG buyers without needing to scale, it’s likely that only between the top 5 and 10 retail media networks will survive. Those that thrivewill offer maximumvalue through greater performance measurement standardisation, leading to a booming, albeit concentrated, advertising ecosystem. Watch this space.

Retailers have it tough. Not only have they weathered a pandemic that created once-in-a-generation supply chain disruption, but now, they’re gripped by an economic crisis that’s seen consumer demand drop to historic lows, meaning most are fighting even harder for market share. Gone are the days when brands could stay competitive through innova tive ecommerce and outstanding customer service. To stay relevant in 2023 and earn the custom of those reluctant to spend, retailers need the agility to manage macroeconomic trends. Failure to do so will only see more recognisable brands hit the headlines for the wrong reasons. Here are five ways I predict retailers will embrace data as a key differ entiator in 2023. Immersive experiences will encourage new engagement As macroeconomic factors continue to increase consumer uncertainty, it’s more important than ever for brands to collect, process, and analyse insightful customer data. But in return for their data, customers expect greater personalisation. One innovative way to do this is through in-store immersive retail experiences. Think of it as blending the ecommerce and bricks and mortar worlds, where technology can create unique and differentiated shopping experiences that improve CX. Moreover, these experiences create a significant opportunity for brands to capture critical first-party data on their customers’ habits and needs – funnelled through propensity and recommendation models to fuel unique insights. It’s something I recently discussed with River Island CIOAdamWarne . By using radio frequency identification (RFID) tagging in its new “smart” changing rooms, River Island offers its customers ecommerce-style insights and gains invaluable product performance data in return.

greater personalisation.” ‘‘

In return for their data, customers expect

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this year.” ‘‘

Open data sharing will bolster disrupted supply chains As retailers strive for just-in-time and just-in-case fulfilment to combat shortages and oversupplies caused by supply chain disruption, brands and CPG companies will double down on open data sharing this year to help reduce and even avoid these extremes – building greater supply chain resilience and driving sales. The ability to enable frictionless data collaboration without moving or copying data is transforming how data is used across retail – helping optimise stock levels and ensuring the right products are available when and where customers want them. These data-sharing collaborations between retailers and CPG organi sations are helping reduce oversupplying while offering more products to customers. It’s something grocery retailer Albertsons and food man ufacturer Kraft Heinz have used to great success, sharing data between their organisations to reduce out-of-stock items by 20%. A cloud data platform could be your best investment this year While these five predictions hold significant growth and CX potential for retailers and CPG organisations, they also all have one thing in common: they rely on accurate and timely data. One thing for certain is that maximising cloud data platform investment is an ideal way to tackle market fluctuations and deliver enhanced, person alised, and more immersive customer experiences in 2023 – and beyond.

The ability to report, compare, bench mark, and analyse ESG performance against predefined goals will be critical

More brands will experimentwith data tracking to measure sustainability As shoppers become more ethicallyminded and demand detailed product sourcing information, retailers have made substantial efforts to highlight their environmental, social, and governance (ESG) goals to customers, investors, and the wider market. While there’s no silver bullet solution for tackling sustainability, the ability to report, compare, benchmark, and analyse ESG performance against predefined goals will be critical this year. This is because, despite economic headwinds, the most savvy retailers and CPG businesses will maintain and even increase their focus on sustainability, tying goals to consumer sentiment and even executive compensation. For example, I predict we’ll see companies experiment with new track ing metrics – such as the percentage of empty space in ecommerce packaging and how to reduce returns. We’ll also see a significant rise in organisations looking to enhance how they use data platforms to measure and communicate their progress in meeting sustainability goals.

Paul Winsor

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DESPITE A ROCKY YEAR, BNPL REMAINS STRONG

Monica Eaton Founder Chargebacks911

B uy now pay later—or BNPL—is very popular with both merchants and consumers. The payment model allows consumers to arrange flexible payment plans without the hassle of credit approval. For merchants, BNPL presents the opportunity to capture sales from previously untapped revenue streams and expand their customer base. Emerging BNPL giants like Klarna and Afterpay offer simplistic, four-installment payments options. Consumers enjoy easy sign-up, while merchants get helpful support. All that being said, there have been a number of concerns about BNPL as a payment method in recent months. The Trouble With BNPL First, it’s important to recognize that an objective, “perfect” payment platform does not exist. Every payment system in theworld struggleswith issues like fraud, charge backs, and customer satisfaction. On that score, BNPL is in good company. At issue is the fact that BNPL does proffer a complex series of issues that are unique to the platform itself. In June, The Guardian reported that one-third of BNPL users in the UK said they were unable to make payments for a purchase they’d made. This is a troubling matter; some would argue that BNPL options create perverse incentives, leading people to spend beyond their means and end up getting into debt. Whenmagnified to scale, the broader implications of such concerns could lay the groundwork for a potential credit crisis. BNPL Remains a Popular Option Despite the problems outlined above, data from the 2022 Chargeback Field Report shows that BNPL is still hot among consumers andmerchants. Interest shows no real signs of slowing. Thus, it’s best to figure out the right way of adapting to a post-BNPL market. The UK government and the Financial Conduct Authority (FCA) were making moves to subject BNPL lenders to greater regulation. This may be a good start, but ultimately, the key to the success—or failure—of BNPL will depend on how risk factors like consumer behavior, fraud, and other pitfalls are managed.

Any alternative payment platformwill present its own series of challenges; BNPL is no different. To implement wisely, retailers must proceed with caution…and with a plan. Being aware of the drawbacks associatedwith BNPL provides the oppor tunity to craft and refine an actionable mitigation strategy in advance of implementation. Encouraging consumers to shop responsibly isn’t merely the realm of the finance company. Merchants have a responsibility here, as well. Implement BNPL Wisely Much of the onus for a positive BNPL experience restswith themerchants that employ the method. That’s why they must deploy best practices to ensure responsible and proper use. For instance, retailers should: Communicate Clearly The buyer should have a full understanding of the final costs, payment amounts, and terms before completing checkout. This does more than ensure responsible BNPL use. It also communicates to customers that they are shoppingwith an ethical and responsible brand and never leaves them guessing about terms and conditions. Avoid Financing for Low-Ticket Products BNPL has been known to encourage customers to spend outside of their means. To combat this, merchants can set restrictions on itemfinancing to prevent the customer fromoverreliance and exceeding budgetary concerns. While many BNPL companies already do this, merchants can take it a step further by limiting carts in advance of financing, or setting stricter limits for the kinds of purchases that can swiftly add up. Provide a Financing Calculator Encouraging smart money habits is another tactic that can be setup in advance of customer checkout. Keeping a running tally of the projected monthlypayment, alongside the customer’s shopping cart, can be immensely helpful for consumers and merchants alike. Thisway, the customer is leftwith zero illusions about the purchases they are making, how much they will cost to finance, and how often those payments will be processed.

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Partner with Reputable Brands Most merchants wouldn’t be likely to partner with a BNPL brand that prioritizes net totals over customer affordability. Regardless, this point is still worth mentioning. If a company approves absolutely everyone, and promotes large-scale purchaseswithout much equity, that should be seen as a sign of suspicious lending practices. It maybe time to search for amore reputable partnership. Set your own Reminders and Incentives A merchant’s responsibility to their customers doesn’t halt at the BNPL approval stage. Merchants may take the time to offer reminders and incentives for BNPL customers and consider this an opportunity to better connect with that customer base. In any case, increasedmerchant involvement in the payment process might be the right tack to take. How that pans out depends on the merchant, the finance company, and lastly, any incoming governmental regulations. The Bottom Line Ultimately, the key to BNPL’s success—or failure—will be how risk factors like consumer behavior, fraud, and other pitfalls are managed. Although BNPL is likelyon the fast track to increased governmental regulation, retailers should be taking it upon themselves to encourage responsible BNPL use. After all, merchants stand to profit from BNPL’s outstanding growth as well. Meaning they, too, bear much of the responsibility for any credit emergencies that arise from its use.

Monica Eaton info@chargebacks911.com 877.634.9808

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HOW RETAILERS CAN UNLEASH THE POWER OF PAY TO REACH NEXT-LEVEL COMMERCE

Kevin Carson Vice President - Global Business Development FreedomPay

W ith 2023 already underway, new play ers in the retail industry are fighting to make a name for themselves, while well-established names seek to strengthen their position amongst the competition. From new technologies and evolving shopper trends, to data privacy laws and geopolitics, there are a number of external forces for retailers to consider. The year ahead will undoubtedly be tough, but pressures can be turned into opportunities, and businesses will begin to see a noticeable increase in customer loyalty and profit as a result. Through targeted strategy and working with the right unified payment platform, brands can take their business to the next level. They just need to unleash the power of pay. Navigating a new retail landscape It’s no secret that the past few years have been disruptive to the retail industry. The pandemic has majorly changed the retail landscape, with more customers than ever before turning to theWeb for their shopping needs and expecting a fast, seamless journey from browsing to checkout. Once theworld returned to the high street, those expectations certainly didn’t wane—people continued to seek smooth purchasing experiences as well as simple (contactless) methods of payment. While life in the UK has mostly returned to ‘normal’, increased pressure on supply chains and economic uncertainty remains. However, advance ments in payment tech provide retailers with ways to overcome these challenges and get ahead of the competition. Embracing new payment tools, adopting an omnichannel strategy and prioritising the implementation of personalised data, insights and enhanced security measures are all essential to elevating customer experience. The good news is, it’s easy to achieve with the right payment partner by your side. Driving customer experience and building loyalty To ensure success, brands must take advantage of a digitised retail sector and find ways to enable a cohesive and innovative user experience throughout the purchasing process. An experienced payment partner can help aggregate transactional data, allowing merchants to understand customers’ preferences and thus build loyalty. Here are three elements to consider when taking a customer-focused approach to payments:

While life in the UK has mostly returned to ‘normal’, increased pressure on supply chains and economic uncertainty remains. Customers are becoming increasingly concerned with brand reputation, and retailers’ environmental, social and gov ernance standards (ESG) will have a large impact on customer perceptions.” Creating value through ESG Data insights can also build loyalty by helping companies with their environmental efforts. They assist in reducing the amount of waste busi nesses produce (and the associated costs) by anticipating customer habits and requirements, in addition to accurately targeting loyalty incentives. Customers are becoming increasingly concerned with brand reputation, and retailers’ environmental, social and governance standards (ESG) will have a large impact on customer perceptions, as well as on those of investors, governments and stakeholders. And, as with many aspects of the retail experience today, companies which limit their environmental impact and focus on their societal contributions are especially valued by younger shoppers, who have a large saywhen it comes to brands’ reputation. ‘‘ The rise of the Gen-Z shopper A primary concern among shoppers today, particularly younger genera tions, is privacy. A recent study found that Gen Z-ers are more advanced than millennials and baby boomers in terms of data privacy and sharing, and far more willing to share biometrics information than their social media details. And, while inflation is of course on the forefront of peo ple’s minds, Gen-Z customers are feeling overall more positive than other age groups when it comes to spending. Now is therefore the time for retailers to meet the demands of this tech-savvy generation by providing secure, digitised checkout processes that optimise their shopping experience, and various contactless payment methods (including alternative services like Google Pay and Apple Pay).

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Personalised incentives In the current economic climate, people need a good reason to staywith brands they may no longer be able to shop with as often. In addition to competitive prices, retailers will have to offer discounts, cash rewards and virtual punch cards to guarantee repeat business. It will also be important to provide these awards in a relevant and timely manner. This increases customer engagement and helps them to feel valued as their shopping experience is personalised. But digitally implementing incentive programmes can be difficult, and they are often subject to hiccups at the checkout stage. They also need to take into consideration data privacy, security and regulations. A pay ment platform partner can incorporate any incentive programme directly into the checkout flow across any channel and multiple checkout systems, and in full compliance with customer confidentiality. This will ensure shopper satisfaction from start to finish of their purchasing journey. Outwith the old, in with the new Innovation is key to any business’s success and brands now have an opportunity to make lasting changes. Taking a page out of hospitality’s book—a sector which increased security and enhanced guest experi ence through digital processes such as online, contactless check-in and mobile key generation—retailers can utilise a range of new digital tools to improve the way they do business. Whether it’s setting up advanced data analytics, building self-serve

kiosks using AI and cameras, or facilitating touchless commerce (such as Amazon Go), brands will notice that non-traditional payment methods backed by innovative tech continue to increase revenue and reduce touch points for customers’ convenience. The individual customer has become a target which is fickle and fast-mov ing. Merchants must therefore focus on driving more of an experience for customers. And with so many ways to drive that experience, the question simply is: how can we help? To readmore about the current and future landscape of payments and how to unleash the power of pay, read FreedomPay’s latest white paper here.

Kevin Carson

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WORKER PROTECTION BILL AND THIRD PARTY HARASSMENT

Christina Tolvas-Vincent Partner Womble Bond Dickinson (UK) LLP

Dan Fawcett Legal Director Womble Bond Dickinson (UK) LLP

W hat the proposed changes mean for retailers and their employees

What practical steps can retailers take to prepare? As staff welfare and D&I are significant priori ties for retailers, these potential legal changes present an opportunity to reflect on current policies and procedures and consider whether there is something more that could be done to protect employees from harassment. Even if the new law is delayed or abandoned, changes made in readiness for it may yield positive benefits for employees. So, what can retailers do to ensure that they are taking all reasonable steps to prevent sexual harassment or third party harassment? Sexual harassment may be the easier of the two to tackle. Given #MeToo and the ever increasing focus on D&I many retailers may already be ahead of the game on taking steps to prevent it. However, it is well worth retailers reviewing their approach to ensure that: • Equality and/or Bullying and Harassment policies explicitly address sexual harassment; • Diversity training expressly deals with sexual harassment; • Managers receive training to a higher level so they are equipped to call out discriminatory behaviour; and • There is evidence that decisive action is taken when harassment complaints are upheld.

Howwill the new rights work? The duty to take all reasonable steps to prevent sexual harassment will not create a new right for employees to bring Employment Tribunal claims. However, it increases the potential finan cial penalty if a successful sexual harassment claim is brought against an employer under the existing harassment provisions. In that situation, an Employment Tribunal would be required to consider the employer’s compliance with the duty and, if there has been non-compliance, it could uplift an employee’s compensation by up to 25%. The reintroduction of third party harassment does, however, create a new right for employees to bring claims. This is the area where we see the greatest risk for retailers. The old third party harassment provisions essentially operated a “three strikes” rule. An employer would only be liable for harassment of an employee by a third party in circumstances where there had already been two previous incidents of such harassment. However, under the proposed new law an employer will be liable where: • A third party harasses an employee in the course of that employee’s employ ment; and • The employer has failed to take all rea sonable steps to prevent the third party from doing so. We have previously dealt with cases in which retail staff have been subjected to racial abuse by customers. Under the old lawa retailerwould not be liable for a one-off incident. However, under the proposed new law they would be. Given the substantial numbers of customers and other third parties retail staff will interact with on a daily basis this creates significant risk for retailers.

Howcan retailers prepare? The Government is supporting a private mem bers bill known as the Worker Protection (Amendment of EqualityAct) Bill 2022, which is designed to improve the protection from harassment under the Equality Act 2010. The bill is currently going through the par liamentary process and we do not yet know when (or if) it will come into force. However, it could have significant impacts for retailers and it would be advisable for retailers to start planning for how they will comply with the new law. Additionally, any new steps retailers take at this stage will no doubt help with their Diversity and Inclusion (D&I) agenda and help deliver a more positive work environment. What does the new law do? The new law is designed to remedy deficien cies in employees’ current protections from harassment. It would: • Introduce a new duty to take all reason able steps to prevent sexual harassment; and • Introduce liability for harassment of employees by third parties. In simple terms, harassment in this context means unwanted words or behaviour that are related to a protected characteristic (such as race or sexual orientation) and which have the purpose or effect of causing offence or violating an employee’s dignity. The concept of protection from third party harassment is not new. It was first introduced through the Equality Act 2010. However, the protections introduced in 2010 were limited in effect and claims were rare. Theywere then repealed in 2013. In contrast, the proposed new provisions will be much easier for employees to rely on and the risk of claims is much greater.

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As staff welfare and D&I are significant priori ties for retailers, these potential legal changes present an opportunity to reflect on current poli cies and procedures.”