The Retailer Winter edition_2020

retail disruption and innovation

Five big retail innovations and disruptions

RALPH ROBINSON RETAIL PRINCIPAL BJSS Ltd

RETAIL HAS BEEN IN A DEEP SLUMBER FOR THE LAST FEW YEARS BUT NRF’S 2020 CONFERENCE SHOWS DEFINITE SIGNS THAT IT’S WAKING UP. Each year, thousands of the world’s top retailers and service providers descend on New York to attend the National Retail Federation’s Big Show, and this year certainly didn’t disappoint. The 3-day conference saw over 40,000 attendees gather to hear how retailers are navigating their businesses through the changing retail landscape, and to experience first-hand the wave of innovations which are disrupting the sector. Here’s BJSS’ view on the 5 you need to know about: Automated Retail In today’s transparent and hyper-competitive retail landscape, automation is the driving force enabling retailers to compete. Process automation, driven by advances in machine learning and AI, is creating flatter organisations with a better trained and trusted workforce, empowered by real-time data and analytics. The winners will be those who recognise the implications of this and react quickly. Put simply: adapt or die. Certain categories will be revolutionised by the Internet of Things (IoT), with connected devices reshaping the consumer decision journey, especially by facilitating automatic replenishment. For example, Laundry care, currently considered a product need, will soon become a subscription-based service model, automatically replenished by the washing machines themselves. Stores Reimagined Since established brands hold much less weight with consumers than they used to, the basis of retail differentiation is shifting away from simply leading on product and price, and towards elevated customer experiences and superior product knowledge. Considering this, there’s no doubt that physical stores can still be highly effective consumer touchpoints, but retailers need to think hard about the role of the store, way beyond its four walls. The store experience must blend tightly with the online one, acting as an enabler for online sales whilst simultaneously offering experiential features that delight and surprise customers. We like how Nike marries in-person experiences with digital capabilities in its stores. At the company’s flagship store, customers can use the Nike app to reserve products for pickup, scan QR codes on mannequins to check for available colours and sizes, pay for merchandise instantly, and book in-store consultations with Nike experts. At the same time, convenience is key, with shoppers expecting both speed and ease. Apparel retailer Ruti, is embracing the AI facial recognition technology to drive a seamless shopping experience by allowing customers who have consented to curate and tailor their preferences each time they visit a store. Whilst fashion is leading the way, many retailers are still lagging behind, so its time to take a long, honest look at both convenience and the omnichannel experience in your stores.

Values not Value The average UK consumer, and society at large, is becoming more demanding: we want to see big businesses show genuine transparency and accountability. Ethically sourced goods and materials, the environmental impact of production and home deliveries are all hot topics on the mind of today’s Gen X and millennial consumers. Whilst, it’s debatable whether they currently have the spending power to drive meaningful shifts in what retailers offer, over the next three years, this generation will soon have the disposable income and spending power to be more selective in where they shop. It is highly likely they will be holding retailers’ values in higher regard than product value. Consumers will be even more conscious of sustainability and want to cut back on consumption and limit their environmental footprints by buying more sustainably. This is what the CEO of IKEA calls ‘mass circularity’ – renting products, rather than owning them. C2C re-selling of products will continue to grow, restraining growth and cutting out retailers further from the purchasing process. Competing through Partnerships Witnessing the seemingly unstoppable growth of retail ecosystems like Alibaba and Amazon, traditional retailers are realising that they can’t go it alone, both because of capability gaps and the sheer financial burden of keeping up with technology cycles. Some retailers have looked horizontally: joining forces with companies from other industries. This allows them to amass consumer touchpoints, gather new consumer data and insights, and access capabilities they couldn’t otherwise afford. Examples include Kroger partnering with Ocado to build 20 automated warehouses in the next three years, several grocers linking up with delivery service Instacart, and McDonald’s working with Uber Eats to offer food delivery from thousands of McDonald’s restaurants around the world. Retailers must determine what they bring to the table in both data and capabilities and how to integrate such partnerships into their strategy. The most successful retailers have embraced technology as the primary driver of commercial effectiveness and cost reduction. Indeed, their use of technology is what set leaders apart from laggards; early adopters are capturing 2 to 5 percent more in EBIT than slower- moving competitors. To stay competitive against the emerging ecosystems and pureplays, retailers must make big bets on which battlegrounds to fight in and, subsequently, which technological, digital and analytical use cases to master. NRF’s innovation stage is a good example of the confusion retailers face: row after row of exciting and tantalising new tech, but how to choose which technology will truly deliver results at scale? Focussed technology or technology focussed?

56 | winter 2020 | the retailer