Category: Retail trends

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Retail trends Store of the future

The Retail Exchange Podcast: 2020 Review & 2021 Predictions

Flat lay, Studio microphone with professional headphones on a PC keyboard. Black on a black background. Podcasts, radio, streams, blogging, working with sound, recording tracks

Natalie Berg joins Karl McKeever, MD of Visual Thinking, as co-host of The Retail Exchange‘s final podcast episode of the year. 

If you were trying to end this year by winning a prize for its greatest understatement, you could describe 2020 as ‘eventful’. It is difficult in many respects to argue that 2020 was an especially good year. Emerging trends didn’t just gather momentum, they marched forward to turn the industry on its head in ways we could never have imagined. For retail, it’s been a year of contrasting fortunes. Some have faltered. Others have thrived.

To set the tone, we revisit some of the interviews and discussions that have shaped The Retail Exchange’s podcast episodes in 2020, with special co-hosts Karl McKeever and Natalie Berg reflecting on the past year – the challenges faced, things we’ve learned, the opportunities taken – and looking ahead at what’s to come in what we all hope will be a brighter 2021.

You can listen to the full episode here.

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Retail trends

Future of Retail 2020

Several cool colored shirts hang on wooden hangers across a rack.

What will shopping look like in 2021, 2025 and 2030? I had the pleasure of speaking to Raconteur for this annual supplement in The Times. Always an interesting read but especially this year given that we are in the middle of a pandemic that has upended the industry like nothing before. You can catch my thoughts in the following sections:

You can download the full PDF here.

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Retail trends

DTC: 2020 Review and 2021 Expectations

Ding dong, Avon calling!

The direct selling channel is one of the few bright spots in retail right now. But how does a model that is based on human interaction adapt to today’s challenge of social distancing?

This week, I had the pleasure of chairing a roundtable discussion hosted by the Direct Selling Association and the opportunity to learn more about this £2.7 billion-a-year channel of UK retail where products are sold directly to consumers outside of a fixed retail environment.

Panellists included:

  • Cliff Jones, Sales Director, The 1:1 Diet by Cambridge Weight Plan
  • Peter Kropp, Global Director, The Body Shop at Home
  • Alessandro Martinez, Managing Director, Vorwerk UK
  • Susannah Schofield OBE, Director General, The Direct Selling Association
  • Andy Smith, General Manager, Amway UK & Ireland and Chair, The Direct Selling Association

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Here’s what the direct selling channel gets right:

Agility. Direct selling is an inherently nimble, flexible, and low-risk channel. One thing that has become clear this year is that necessity is the mother of invention so when the pandemic hit, at-home demonstrations and shopping parties quickly went virtual. The panellists believe that this blended experience will stick post-COVID as online and offline worlds continue to merge. Pandemic pivots have actually enhanced certain aspects of the CX and enabled brands to reach a broader customer base.

Community. The panellists all stressed the importance of selling an experience, not a product. Moving beyond the transaction to build a community and foster a sense of belonging is going to be vital for traditional retail as we move into 2021. The pandemic has reinforced the importance of strengthening community in a digital setting – an active online community that swaps ideas, recipes and advice will garner greater loyalty in the physical world.

Brand evangelism starts internally. The very nature of this model grants its ‘consultants’ a significant amount of autonomy which empowers and enables them to offer a highly personalised, relevant experience to customers. The panellists stressed the importance of authenticity here – consultants are the brand’s first customers; if they don’t believe in the product, they’re not going to not sell it. We must not underestimate the importance of training and supporting consultants/staff. They are the face of the brand and, ultimately, retail’s most important asset.

Some important lessons here for the wider retail industry as we begin to emerge from this crisis. 

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Consumer Retail trends

Peak Car And The Hyper-Local Retail Opportunity

London, UK, September 19, 2020, The UK Government Has Been Encouraging The Public To Use Bicycles As A Means Of Healthy Transport

In my latest long read for Forbes, I explore how London’s green recovery will create opportunities for local retail:

Across the UK, city streets are quietly undergoing radical transformation. Temporary cycle lanes have popped up, footways widened to enable social distancing and, perhaps most drastically, residential roads are being blocked to through traffic. Since May, over 200 of these “low-traffic neighborhood” (“LTN”) trials have launched as more than 50 councils take advantage of the £250 million of emergency “active travel” funding from central government. The vast majority of these LTN schemes are in London. Full disclaimer: I live in one.

Full article can be accessed here.

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Consumer Retail trends Store of the future Technology

When Non-Essential Stores Reopen, Will Shoppers Accept The Friction?

As Britain’s ‘non-essential’ retailers prepare to reopen their doors in the coming weeks, one of the biggest challenges they face will be convincing shoppers to walk through the door. And, no, I don’t just mean from a safety perspective; I’m talking about the additional friction that shoppers will inevitably encounter.

Will customers queue up to enter a department store? Will they want to pop in to a clothing store if they can’t try stuff on? Will they accept less choice on shelves as retailers make space for social distancing measures? If they have picked up a book off the shelf, will they remember to then place it on the special quarantine cart? This might all be worth the hassle – if there was no such thing called the internet.

Don’t get me wrong. Bricks & mortar retailers should get a much-needed initial boost when they reopen. These are uncharted waters, but pent-up demand must be a given when consumers themselves are pent up for months. We are social creatures, and the notion of ‘going shopping’ is inherently a leisure activity. The high street retailers that have thus far survived the so-called ‘retail apocalypse’ are those that focus on all the things shoppers can’t get online – inspiration, discovery, curation, community, experience.

In my latest for Forbes, I explore how this will look in a post-COVID world. Has ‘experiential retail’ finally been relegated to the buzzword archives? Has a pandemic killed the art of browsing? You can read the full article here.

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Amazon Retail trends Store of the future Technology

Amazon Go Grocery – Learning From Tesco’s Fresh & Easy Failure

Picture this – a radical new grocery concept designed to revolutionize how Americans shop. The store is much smaller than your typical supermarket, around 10,000 square feet and stocking an edited range of just several thousand products. The store doesn’t feature banks of traditional checkouts; instead it’s a heavily automated and efficiency-driven experience. There are no bakeries, butchers, or any of the counter services you’d find in most supermarkets.

Nope, I’m not talking about Amazon’s latest cashierless grocery format, Amazon Go Grocery, which launched in Seattle this week. I’m talking about the now defunct Fresh & Easy, Tesco’s failed attempt to crack the US grocery market.

In my latest piece for Forbes, I explore 3 key learnings for Amazon:

1) Have a clear proposition.

2) Destroy the friction, not the experience.

3) Expansion does not indicate success.

You can read the full article here.

Categories
Retail trends Store of the future Technology

Mindful Consumption, Peak Amazon and the Participation Decade – 8 Retail Predictions for 2020

Natalie Berg NBK Retail 2020 trends

What’s in store for the retail sector in 2020? First, let’s be clear about what’s not changing. We’ll continue to see a bifurcation of winners and losers as the industry sheds itself of status quo retailers (translation: brace yourself for more doom and gloom). The ubiquitously connected ‘on-my-terms’ shopper is here to stay. We’ll see a continuation of the convergence of physical and digital retail. The race to stamp out friction and inefficiencies will only accelerate, and reinvention of the physical store will remain top of the boardroom agenda.

Now the fun stuff. In my latest piece for Forbes, I’ve highlighted 8 retail predictions for 2020. You can read more here.

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Retail trends

Tesco can’t emulate the success of Amazon Prime with Clubcard Plus

Subscriptions have become the holy grail for retailers as the sector moves away from competing purely on product and increasingly on service. Recurring revenue and driving loyalty with your most important shoppers—what’s not to like?

Tesco has become the latest retailer to jump on the subscription bandwagon. Britain’s biggest supermarket plans to bundle its grocery, mobile and bank offerings under a new scheme called Clubcard Plus. Here’s how it works: shoppers pay a £7.99 monthly fee in exchange for a 10% discount on two big shops in-store; 10% discount on select private label products; double data from Tesco Mobile and a Tesco Bank credit card with no foreign exchange fees abroad.

As lucrative as subscription models might be, they only work if customers see the value in them. Just ask Jeff Bezos. The aim of Amazon Prime, he says, is to provide so much value that shoppers would be “irresponsible” not to join. A scary thought for any competitor.

With Prime, the value is clear—sheer, unrivaled convenience layered with increasingly indispensable entertainment perks. With Clubcard Plus, the value exchange is a bit murkier. Firstly, if customers want low prices, they’ll head to Aldi or Lidl. They don’t need to fork over £8 a month and jump through a bunch of hoops.

Note: this is an excerpt. Continue reading Natalie’s full article on Forbes.

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Amazon Fulfilment Retail trends Store of the future

Co-opetition hits the high street

Is this the future of the high street?

According to Next’s CEO Lord Simon Wolfson, a partnership with Amazon is one of the ways they can stay “relevant” to shoppers.

And I have to agree. In the UK, Amazon is the 5th largest retailer. Nearly 20% of retail sales now take place online and, although we don’t have official data, I would estimate that Amazon accounts for 40% of that spend.

So how do you evolve?

How do you repurpose your physical space? I’ve said time and again that stores need to become: 1) frictionless; 2) experiential; and 3) a hub for fulfilment. Ticking that last box, hundreds of Next stores will now allow shoppers to collect their Amazon parcels instore through a new program called Amazon Counter.

It’s not dissimilar to Amazon’s US partnership with Kohls, which has been wildly successful and is now being rolled out across the entire store estate. Kohl’s stores however also handle Amazon returns and I imagine this will come in time as they look to address what is very much the Achilles heel of e-commerce.

Meanwhile, in France, Casino recently announced plans to expand its partnership with Amazon by adding 1,000 collection lockers to its supermarkets. Next isn’t the only one willing to dance with the devil.

Co-opetition: it’s only the beginning

Co-opetition was a key theme throughout our book. In Chapter 2: Why Amazon is Not Your Average Retailer, we wrote:

“In the future, more retailers will run on Amazon’s rails. Retailers themselves are increasingly content to overlook the huge competitive threat posed by Amazon to take advantage of their physical and digital infrastructure. Some may consider it playing with fire – certainly retailers like Toys R Us, Borders and Circuit City would. They were among Amazon’s very first ‘frenemies’ in the early noughties when they outsourced their e-commerce business to the giant – all three have since gone bankrupt. But we believe more retailers will cozy up to Amazon if it helps them to achieve greater reach (marketplace), drive traffic to stores (Amazon pop-ups, click & collect, instore returns) or improve the customer experience (same-day delivery, voice-activated shopping). The unique dual role of competitor and service provider is becoming more apparent by the day. ‘Co-opetition’ is a key theme for the future.” [Berg & Knights. Amazon: How the World’s Most Relentless Retailer will Continue to Revolutionize Commerce, p23, Kogan Page.]

Later in our book, Miya and I predicted that Amazon would team up with a retailer like M&S or Debenhams; Next is actually a far better fit so consider this a coup for Amazon.

More than half of Next’s sales now take place online and a good chunk of those are collected instore. They recognized early on the importance of repurposing their stores to cater to today’s ‘on-my-terms shopper’.

Despite falling like-for-likes, Next is yet to embark on a radical store closure plan. They understand that the store’s role is no longer purely about selling and that having a strong physical presence is an incredibly valuable way to engage with shoppers, let them try stuff on, collect and return orders (as evidenced today) and also offer an experience they can’t get online. I’d argue prosecco bars and hair salons may be a step too far (Debenhams is closing its instore gyms, anyone surprised?) but certainly coffee shops and collaboration with other retailers like HEMA, Paperchase, Mamas + Papas is the way forward for a high street retailer like Next.

Amazon is not a credible fashion destination

Next’s willingness to partner with Amazon is also a sign that they don’t see them as a threat, despite Amazon building up its own arsenal of fashion brands. Never underestimate Amazon, of course, and I certainly don’t doubt that they can sell ‘clothes’ but I just can’t see them cracking ‘fashion’. But more on that another day.

Categories
Retail trends Store of the future Technology

Why the digital store is the future of retail

I’m so excited to launch, in partnership with retail technology leader Red Ant, the first of a three-part series of whitepapers to explore how the retail industry will have to embrace the digital store and seamless shopping to survive, from frictionless checkout to hyper-personalisation and clienteling. There’s no doubt that the industry has undergone seismic change in the last few years, and it’s not over yet.

Why the store is not dead

Over the past decade, we’ve witnessed the birth of the ‘on-my-terms’ shopper and the seemingly unstoppable rise of e-commerce. Today’s ubiquitously connected shoppers are firmly in the driving seat, and retailers are scrambling to keep up with dramatic shifts in both customer behaviour and expectations.

It’s clear that not all retailers have been equipped to deal with the accelerated pace of change facing the industry. As such, we’ve seen high-profile casualties on the high street as well as record numbers of job losses and store closures. And we should be bracing ourselves for more short-term pain as the industry reconfigures for the digital age. Although it’s not quite a retail apocalypse, there are a couple of important points that we must acknowledge:

  • We have an oversupply of retail space. According to the Office for National Statistics, online sales accounted for less than 5% of UK retail sales in 2009. Fast forward to 2019 – a whopping 20% of retail sales now take place online. Although e-commerce shouldn’t be viewed as the death knell for the high street, retailers must streamline their store portfolios to better reflect consumer demand. The future is fewer, more impactful stores.
  • There is no room for mediocre retail. In today’s climate, you have to be on top of your game. The retailers that are struggling right now share some common traits – they lack agility, differentiation, relevance. They try to be all things to all people. They don’t have a compelling purpose. And having an iconic brand doesn’t make you immune to the broader challenges facing the high street. This is retail Darwinisim – put simply, you evolve or die. But, for those brands willing to adapt, this is a fantastically exciting time to be in retail.

Stores will undoubtedly continue to play a critical role in retail for decades to come, but, in a nutshell, customers will expect to shop on their terms, not the terms dictated to them by the retailer. This means that high street retailers need to ensure they’re saving customers’ time or enhancing it. There is no longer a middle ground. We believe that stores of the future will be:

  • Frictionless – to keep up with online retail
  • Experiential – to distance themselves from online retail
  • A hub for fulfilment – to bridge the gap between online and offline worlds

Those retailers who use the right digital platform to transform and tailor in-store experiences will be able to ensure differentiation from rivals and relevance to customers.

Download Store of the Future: The Digital Store now to get the full picture.