BERLIN — The future is mobile, localized and personal in a seamlessly integrated omni-channel retail world, according to speakers and attendees at the 2011 World Retail Congress, which closed here Wednesday.
Despite Eurozone jitters and overall economic uncertainty, the mood at the three-day event was more “get up and go” than doom and gloom. Brick-and-mortar is far from dead, with surveys presented at the congress indicating even digital natives see physical stores in their shopping future. However, to keep them healthy, the prescription now calls for an intensified focus on private brands with a clear profile (versus yesteryear’s faceless private labels), and using technology to allow for expanded merchandise offerings in smaller stores. As Myer Ltd. chief executive officer Bernie Brookes summed it up, “Make your smallest store your largest store by having complete access to your assortment online, at the store.”
Know your customer was the common mantra, though processing the ever-increasing flood of data into meaningful insights was cited as a key challenge. And innovation and creativity, far from being optional extras, are now seen as essential.
“We can say with confidence that mobile is indeed the next engagement platform for shoppers,” stated Alan Threadgold, head of retail strategy for Leo Burnett. In a survey of 4,200 shoppers in the U.K. and the U.S., 50 percent in the U.K. already said they wanted to use their mobile devices for various facets of shopping, be it scanning bar codes for more information, downloading shopping lists, using apps to buy or other activities.
“The mobile phone and the ability to use it in your commercial decisions adds a whole other level,” Matt Brittin, Google managing director, U.K. and Ireland, pointed out. He estimated 5 billion people will be connected to the Internet via their phones in five years, and right now 20 percent of Google searches are happening on smartphones. “It’s a huge change. If you’re not present on mobiles, it’s like having your shops closed on Tuesdays, because that’s the amount of people who are coming to look for you and you aren’t there,” he admonished retailers.
Warnaco Group Inc. president and ceo Joe Gromek concurred. “It’s absolutely necessary we all understand and have a plan to take advantage of the new technological developments involving mobile and what’s to come,” he told WWD. “In the States, we’re still primarily oriented towards e-commerce versus mobile commerce in the rest of the world — possibly because we’re landline locked. But we have to move forward faster.”
It seems to be an area where risk is worth taking. When Debenhams surveyed customers at the beginning of last year, consumers said they did not want the shop going mobile. Ignoring that suggestion, the company went full steam instead with an iPhone app, resulting in 700,000 downloads in nine months and sales of 2.5 million pounds, or $3.9 million. A year later, surveyed customers said mobile commerce was in their top 10 list of things they want from Debenhams.
No matter how international retail operations become, the focus is becoming more and more local. For Michael Massey, ceo of Collective Brands Inc., the congress confirmed that localization and individualization in messaging your product assortment are of utmost importance. “Individualization along the lines of ‘My Macy’s’ is something we strive to do around the world. Retailers that can individualize their assortment by store or store group will have a tremendous advantage,” he commented. Collective Brands is active in 27 countries. “It’s about knowing your customer and using that knowledge locally,” he said.
“One of the things that has to be dealt with is how to become hyper-local. Retail has become so homogenized, it’s a question of bringing individuality back to the local store. It’s a small wave, perhaps, but it’s the next wave,” said Matt Rubel, senior adviser, TPG Capital. “You have to empower management at the store level, giving them the ability to make choices in assortment at the local level.”
Personalized offerings and developing that specialized “market to me” experience, however, still have a long way to go. Oracle Retail’s consumer research indicated that eight out of 10 personalized recommendations currently fail.
Private brands were another big topic this year. Rick Darling, president of Li & Fung USA, said, “Europeans are now recognizing their time to differentiate themselves with exclusive brands. It’s a big opportunity — for both retailers and the supply side.”
Daniel Terberger, ceo of Katag AG, agreed. “Private brands, instead of private labels, is one of the big chances in this environment.”
Macy’s was cited as a prime example, and vice chairman Janet Grove was on hand to shed some light on the retailer’s experience. “We are very fortunate at Macy’s to have established a private brand business versus a private label business many, many years ago. In the last eight to 10 years we’ve doubled the women’s apparel branded business at Macy’s, to the degree that we have grown at three to four times the market,” she said.
Today’s multitasking consumers demand multichannel shopping experiences. Yet, as Oracle’s Mike Webster pointed out, “the irony of all of this discussion around channels is that customers, consumers, shoppers, don’t define themselves in terms of channels.” Customers no longer differentiate between a store’s offerings and performance across platforms; they expect the best at all times.
Moreover, they “absolutely expect to be able to move seamlessly between channels. It’s not about seeing channels as living separately but about making connections between all points of communication,” noted Leo Burnett’s Threadgold.
The potential “start of an omni-channel retail experience,” Adidas’ adiVERSE virtual footwear wall won kudos in Berlin. Chris Aubrey, vice president of global retail marketing sport performance at the activewear brand, said, “This virtual footwear wall could be a huge step forward in terms of how to blur the lines between the digital and physical retail worlds.” Developed in response to consumer insights showing that shoppers expected the full Adidas range in branded outlets regardless of shop size, the virtual wall also gives customers a novel reason to set foot in brick-and-mortar stores, letting them see and play with all Adidas has to offer — life-size and in 3-D and fueled by gaming technology to “future-proof” the project.
Having more than one channel, however, doesn’t make you multichannel, speakers warned. “Please don’t just put your Web site on a kiosk,” pleaded David Judge, creative director of Start JudgeGill, which worked on Adidas’ digital shopping wall. “The Internet is in effect functionality that you can be inspired by and draw into your store,” he said, suggesting that existing online offerings such as Polyvore’s user-made fashion collages or Facebook’s “like” button could be utilized to let shoppers easily communicate favorite styles and buying preferences.
Also, said Debenhams director of e-commerce Simon Forster, a company’s Web presence must be comprehensive. “If you don’t have things on your Web site, consumers will assume you don’t have them.”
On the financial front, Ira Kalish, director of global research at Deloitte, was one to paint the mood black.
The worst-case scenario: the global economy may not merely be tiptoeing toward the abyss, he told the congress, but is already there.
He noted the U.S. economy has stalled and is going into double-dip recession or slow growth similar to Japan 20 years ago. Europe is facing recession or deep recession, and a Eurozone collapse would have a catastrophic impact way beyond its borders. China is at risk of an economic crisis, spurred by too much growth coming from investment rather than adequate consumer spending, while, demographically, the nation’s one-child policy could mean a labor shortage in the foreseeable future. Just coming out of deep recession, the tsunami derailed Japan, and while spending on reconstruction is funding much via higher taxes, they will, in turn, pressure consumer purchasing power.
However, with luxury sales not only renewed but surging worldwide, Tag Heuer ceo Jean-Christophe Babin found many grounds for optimism. The macro trends show a growing affection for brands, he said, plus a rising middle, upper-middle and rich class developing throughout the world. “At the end of the day, 2011 has been a year of many disasters, but 2011 also saw the highest ever global GDP. Mankind has never been so rich,” he declared. “Globally speaking, 2011 was a great year for luxury.”
Neiman Marcus Inc. chairman Burt Tansky, who was inducted into the Retail Hall of Fame this congress session, also said the luxury zone was “OK at the moment. She’s back and buying, and I think that will continue,” he said of the top-end consumer.
Darling of Li & Fung told WWD, “There’s certainly much more optimism about the European situation amongst European business leaders on the ground here. Many more believe that it will be resolved on an amicable level than we hear in the U.S.,” he said.