PARIS — Change was in the air at the World Retail Congress.
Not only is some new technological innovation unveiled almost daily, merchants are now courting an increasingly global consumer who wants more than just product, but also an experience.
“This is a period of the greatest change that any of us have ever seen in our careers in retail,” said Stephen Sadove, former chairman and chief executive officer of Saks Inc., at the recent gathering here. “The important question to me is what are we doing as leaders to drive these disrupters into our organizations? How do we make sure we are fresh and young in our thinking?”
He highlighted the importance of being open to new ideas, notably when it comes to integrating tech innovation.
Most retailers are embracing the omnichannel future and knitting together their online and offline operations. And some, are looking to gain a foothold through acquisitions. Neiman Marcus recently cut a deal to buy Mytheresa.com and Printemps linked with Placedestendances.com.
But that doesn’t mean the whole world has gone digital.
The latest statistics reveal that bricks-and-mortar stores still represent the lion’s share of global sales. According to a survey of 250 retail leaders released by event organizer I2I Events, 68 percent of retail sales still take place in physical outlets, compared with only 16 percent online.
Even so, Ron Frasch, operating partner at Castanea Partners and former Saks executive, noted that while only 2 percent of luxury goods are bought online, 20 percent of purchases are “induced” over the Internet, illustrating the importance of having strong Web capabilities.
Many retailers are betting on the strength of combining online and offline operations. And some at the Congress noted that, while e-commerce pure players have long been seen as a major threat to traditional bricks-and-mortar stores, many of the biggest online players still don’t make money.
“Nobody talks about the bottom line,” said Li & Fung Limited chairman William Fung at the three-day event, which closed Oct. 1. “Amazon is not profitable.”
Trends like showrooming and click-and-collect services are now showing stronger growth than pure players, Fung said.
There are a slew of startups with tech solutions for the omnichannel world, including Avenue Imperial. The UK-based firm, which counts Jimmy Choo and The Corner Berlin among its customers, offers a “V-tail” concept that it likens to Google Street View for stores, allowing consumers to browse a virtual store, interact with sales staff and link to e-commerce from anywhere in the world.
And there are plenty of online brands venturing into world of physical retail.
Australia-based Shoes of Prey, for instance, was initially an online-only player. But the made-to-order brand entered department store David Jones’ Sydney flagship in February 2013.
“The store is by far the strongest customer-acquisition channel,” said founder Michael Fox, adding that sales there average three to four times those of neighboring concessions.
Others, from Rent The Runway to Bonobos, have made a similar move and opened their own outposts for consumers to interact with their brands.
“The opportunity to be omnichannel is paramount today,” said Frasch. “I love the idea of some of the pure players opening brick-and-mortar. It’s very difficult to build a brand if you are only online.”
Not all of the changes sweeping through retail are technology based.
Fung described how policy changes in China, notably wage increases, will impact the market in the future, pushing up prices and lowering margins as the country moves from a manufacturing to a consumer economy. That could make it harder for retailers to compete on price alone.
Given all these changes and more, attendees argued that boosting exclusivity and service will be the best avenues for future growth.
“How [do you] create exclusivity in a world where everything is available everywhere, all the time?” asked Printemps chairman and chief executive officer Paolo de Cesare. “How do you stay relevant?”
Cesare referred to the 14 percent decline in French apparel sales over the past six years, and spoke of the importance of changing from a model based just on selling products to one based on creating experiences.
For Printemps, this has involved building stronger relationships with brands to offer exclusive products and services as well training sales associates to offer better service.
Mining big data is seen as an important way for retailers to understand exactly who their consumers are and refine the shopping experience accordingly, as well as targeting consumers before they travel, no matter their country of origin.
“Our research is helping us generate much more cross-border flow,” said Ann Cairns, president of international markets at Mastercard. “[You need to] define where your big catchment audiences are in the future.”