Retail is heading towards an uncertain but exciting future
The retail industry has a great deal of exciting challenges ahead of it. It is no surprise that the 2015 Retail Day's theme was "transforming retail". According to Prof. Gino Van Ossel (Vlerick), the three primary reasons why transformation is this high on the retail industry's agenda are
- The importance of technology: although technological possibilities are endless, the future success of retailers is highly dependent on an intelligent deployment of technology;
- The evolution of the customer: the customer behaviour has fundamentally changed; the interaction between retailer and customer has changed dramatically. Today, consumers decide the where, when and how, which results in an explosion of channels and touchpoints.
- The competition: new players generate stress in the market (see for example the disruptive models) which in turn causes retailers to experiment and look for new possibilities. In parallell, new macrotrends are emerging and retailers have to take these into account.
The need for a transformation of the industry is indisputable. The customer is in the driver's seat and retailers seem to be left to simply following that every customer's whim. E-commerce is not the threat, but the consumer is: he's a few steps ahead of the retail industry. The perspective has to move from product-centric to customer-centric, which means that the industry will have to enter a dialogue with that very customer. Pushing a format unidirectionally is no longer an option.
At the same time however, Paul Nijhof (formerly at Wehkamp.nl, Otto Group and Thuiswinkel) warns that retailers should not move too far away from their own identities. Retailers need to make clear choices about what they stand for, and communicate those value across the board. Anyone who does not do so will suffer the consequences of undistinctiveness. What to change and what to keep are the fundamental questions to ask. Clearly, the DNA of a company should not be tampered with.
(Incidentally, customer-centricity and focusing on your own strengths as a weapon against disruption has been the topic of previous posts by The Reference).
To illustrate the point, Nijhof makes the difference between product providers and solution providers. Product providers have a more masculine DNA (focusing on product, specifications, rationally driven categories, price, economics of scale, long tail optimization) while solution providers have a more feminine DNA (solution instead of product, inspiration, relation, emotion driven, brand, local hero, curated sales, creation). Nevertheless, retailers should experiment. New ideas that fit the consistency of the brand (we prefer "brand coherence" though) should be rolled out as fast as possible. "Fail fast, learn fast" and "better roughly right than perfectly late" are two of the applicable mottos.
Kipling (VF Europe), represented by Johan Vercammen (Retail Director) and Gwenda Van Vliet (Global Marketing Director), is a company fully en route to digitally-fuelled transformation. Their "Spark Your City" initiative is centered around non-branded communication with the goal of reaching an audience that is not familiar with their brands, or has a neutral to negative attitude to it. The innovation lies in the fact that VF Europe invests in the beginning of the chain, only to make the connection with the brand in a later phase.
Retail Day 2015 has shown that brands and retailers today are most of all in search of their inner values, identity and DNA. Consequently communicating those values through practical and concrete initiatives that charm and delight customers is the way to differentiation and ultimately increased profitability. Experimenting and evaluating is the only way of making sure that the right choices are being made while technology remains the ideal enabler -- provided the strategy is clear and sound.Subscribe to our newsletter. In it, we collect all our relevant news, expert tips and tricks and our most recent blog posts.