Retail expert Maureen Hinton joins Natalie to discuss retailer resilience. Which fashion retailers are defying the economic climate and what is the secret to their success? Maureen also shares her views on the state of the consumer and whether the Black Friday deals will sizzle or fizzle.
Collins Dictionary has announced that ‘AI’ is the Word of Year for 2023. Miya Knights, Retail Consultant and Publisher of Retail Technology Magazine, joins Natalie to discuss the wide-ranging implications of artificial intelligence. They break down the learnings from last week’s first ever AI Safety Summit, held at Bletchley Park, exploring both short-term and longer-term risks posed by the technology.
They then move into a conversation about AI’s impact on the retail sector and how it will transform the way we shop, exploring the many opportunities for retailers – from driving back-end efficiencies to utilising AI-powered shopping assistants to deliver more tailored customer experiences.
🔹 5m: Business rates 🔹 10m: Store closures – is there more rightsizing to do or has the industry now recalibrated? 🔹 14m: Wilko’s demise and rebirth: what went wrong and how will the new stores be different? 🔹 21m: Back from the brink: how to revive defunct brands 🔹 28m: Mixed fashion fortunes: Is Asos still relevant and what’s the secret to Next’s resilience? 🔹 37m: New Channel 5 Lidl documentary 🔹 40m: Future of the high street
If you’re not innovating, you’re standing still and that is the most dangerous place to be in retail. Perpetual disruption requires perpetual innovation.
The most successful retailers today are those that reject the status quo. They foster a culture of innovation and fast failure. Everything they do begins and ends with the customer. They understand that they have to keep moving, constantly evolving their proposition, and experimenting with new technologies in order to stay relevant in this digital era.
That’s easier said than done in the current climate. Ongoing cost pressures and soft consumer demand mean that retailers must deal with more pressing, short-term challenges. In times like these, innovation can often get put to the back burner.
However, now more than ever, it’s essential that retailers embrace technology as a means of driving efficiencies as well as enhancing the customer experience. I keep coming back to the phrase ‘tech-enabled human touch’. In my view, this is what’s going to separate the retail winners from the losers going forward. Store associates are a retailer’s most valuable asset. Equipping them with the right digital tools means that they can quickly address any customer pain points and cut friction from the in-store experience (ie. help a shopper to find an item on the shelf, reorder an item that is out of stock, or check a customer out on the spot with a mobile POS device).
And, with greater transparency around a customer’s shopping habits across both physical and digital channels, it also enables staff to offer a more deeply customised experience. This is only going to improve as retailers look to AI to power those more personalised recommendations.
And things are moving quickly. At a client event in Cannes earlier this month, Manhattan Associates CEO Eddie Capel reminded us that it took Netflix ten years to get to 100 million users. It took TikTok 9 months. And for ChatGPT – just two months.
Generative AI will transform retail. This is an industry that is accustomed to a certain level of disruption, but today technology is progressing at a mind-boggling pace. Many believe we are on the cusp of another ‘smartphone moment’ where an immersive digital world is about to transform our lives.
But will we all be donning VR headsets and living in the metaverse? I don’t think so. When exploring these new disruptive technologies, it can be difficult to separate the hype from reality. When it comes to the metaverse, there is much scepticism and general befuddlement. What is it? How do you enter it? Is anyone even there?
It’s difficult to define right now because it’s still being built. And if you ask those who are building it what the metaverse is, you’ll get a ton of different answers. This means that to the layperson consumer it can be a difficult, almost impossible, concept to grasp.
However, just as retailers have digitised their physical stores, they must now turn their focus to making our digital experiences more immersive. Today, online shopping is still fairly one-dimensional. It’s transactional. But it’s moving in the right direction – it’s becoming more engaging and discovery-led. For example, retailers are increasingly using video and 3D images (often AI-generated) to create more contextual experiences for online shoppers. Augmented reality (AR) is bridging the gap between physical and digital retail, especially in beauty, luxury, footwear and home. Virtual shopping consultations are connecting online shoppers with in-store staff, again harnessing expertise to elevate the customer experience. Liveshopping, too, is picking up momentum and social commerce is taking the discoverable and making it transactional. People used to find products; today products find people.
If we look even further into the future, we won’t know where the physical world ends and the digital one begins. Our AI-powered shopping assistants will make our lives easier and more connected than ever before (Bill Gates even thinks they will kill off Amazon and Google search). Virtual showrooms will never replace the physical store but they will become the next best thing. And spatial commerce has the potential to completely redefine the online shopping experience.
The future is wildly exciting for retail. Don’t get left behind.
This commentary originally featured in the KPMG/Retail Next Retail Think Tank Q3 whitepaper. Read in full.
TLDL: Victoria Secret’s newfound conscience and subsequent brand overhaul whiffed of inauthenticity. Too much, too soon… alienating both those in favour (who perhaps questioned the integrity of such a radical makeover) and those not.
Don’t get me wrong, there still very much appears to be a desire to shop in an environmentally conscious way – but consumers are currently less willing (or able) to pay for it. Of the 6,000 global consumers surveyed by Manhattan Associates, 45% said they still consider sustainability a top or important consideration when choosing where to shop, but this is down slightly on the 50% who agreed with that statement last year.
Persistent economic concerns have curbed consumers’ appetite for sustainable shopping. In the current climate, frugality trumps sustainability. The perception, and at times reality, that green products come at a price premium has led shoppers to abandon their eco credentials to switch to low-cost alternatives.
The Manhattan survey presented consumers with pairs of priorities (ie. “cheaper” vs “environmental friendliness” in terms of brand, product and delivery) and asked them to select which they are currently choosing. Unsurprisingly, “cheaper” prevailed the majority of the time.
But challenging financial times do not impact all consumers equally. More mature demographics are likely to be most insulated, with 1 in 5 (20%) consumers aged 65 years and over reporting that there is that the cost-of-living crisis has had no impact at all on their shopping habits. Yet this is the group least likely to take sustainability into consideration when choosing where to shop: over 20% of older shoppers said that sustainability is not important or not at all a consideration for them when selecting a retailer. This contrasts sharply with the 55% of 18-24-year-olds who consider sustainability an essential or important consideration.
So what does this tell retailers? It’s never been more important to know your customer! One size most certainly does not fit all. At a strategic level, retailers need to roll out the red carpet for their most loyal customers and ensure they are living up to their brand values. At an operational level, hyper-localised product assortments and more targeted, real-time promotions will help them to cater to varying customer demands.
The whitepaper also addresses the elephant in the room – the environmental impact of e-commerce deliveries. When consumers were asked about their most important delivery consideration, only 8% cited the impact on the environment. Cost and convenience are naturally going to be top considerations, but I think the lack of transparency and awareness around the carbon impact is also a factor here. The uncomfortable truth is that retailers have spent the past decade training shoppers to expect fast and free delivery, regardless of the financial or environmental cost.
The tide, however, is beginning to turn. Some retailers have quietly started charging for delivery and returns, while others have implemented more sustainable delivery options in a bid to decarbonise the last mile. Reduced packaging for home deliveries and ‘packageless’ collections and returns are starting to gain momentum. And, with many retailers now able to provide near real-time inventory visibility, consumers can make smarter decisions about which stores to visit or which delivery options to choose, which can significantly minimise miles travelled and open up a variety of greener last-mile delivery options.
Retailers are still in the nascent stages of giving customers greater control post-purchase, but this will evolve in the future as retailers recognise the triple benefits – profits, pockets and planet. So what exactly can be done? Offering no-rush/green delivery, letting shoppers select the day of their delivery, encouraging shoppers to consolidate orders and even letting them make basket edits after the transaction. That’s right, in the future, more retailers will allow shoppers to alter online orders right up to the point a shipment leaves the warehouse, store or microfulfilment centre. With these longer ‘order modification’ grace windows, retailers can not only enhance the customer experience but also reduce split-shipments and, in theory, unnecessary returns.
Ultimately, the onus is on the retailer to initiate change. When retailers were asked to select their top 3 business priorities for 12 months, only around 1 in 5 retailers called out creating a more sustainable and environmentally aware supply chain (21%) and doing more to minimise the environmental impact of their organisation (22%).
I believe, broadly speaking, that consumers want to make better choices but the lack of awareness, lack of alternatives and perhaps a view that the onus should be on the retailer – not the consumer – to fund this shift is hindering progress. Consumers may think of themselves as altruistic – but at the sake of convenience? I don’t think so. Retailers need to become more transparent and ultimately provide consumers with compelling incentives to alter their shopping habits.
Perhaps we will only see meaningful change with regulation, but as a starting point retailers should be prioritising operational efficiencies that allow them to simultaneously progress the sustainability agenda. After all, financial and environmental sustainability often go hand in hand.
George Nott, Technology Editor at The Grocer, joins Natalie to discuss the evolution of quick commerce. They examine the latest Uber Eats / Getir collaboration, how traditional supermarkets are responding to the quick commerce trend and whether the world is ready for AI-powered conversational shopping experiences.
Fun Fact: Did you know ‘getir’ means ‘bring’ in Turkish?