Future of Retail

INDEPENDENT PUBLICATION BY RACONTEUR.NET #0572 07/03/2019 FUTURE OF RETAIL

RETAIL IS MORE MAKING ETHICAL FUTURE LOOKS BRIGHT 03 THAN JUST A JOB 06 SHOPPING SMARTER 12 FOR MODEST FASHION RACONTEUR.NET 03

FUTURE RETAIL CAREERS OF RETAIL Making retail more Distributed in than 'just a job' Published in association with In a sector known for high turnover, some brands are realising the benefits of nurturing and investing in employees to develop long careers

Ana Santi only works on Saturdays. Those cus- Contributors tomers know that, so that’s when they ost of us, at some point, have visit the store.” Amy Hawkins Ana Santi M worked in retail on the shop How retailers choose to engage China-based journalist, she Former editor at Drapers floor. During school holi- with, and thus retain, retail staff writes about technology and commentator for days, in-between jobs, while trying depends on their size and type of and culture, and has the BBC and Sky News, to work out what career to pursue. business. Mr Ruis says: “At the pre- appeared in The Guardian, she writes extensively The Sunday Times, Foreign across fashion, business Perhaps it is, in part, this attitude of mium end, you talk more to custom- Policy and others. and culture. a temporary, passing endeavour that ers, you engage in conversation. John leads to a high turnover of store staff Lewis is a great example because of in the retail industry. its pension and bonus schemes. If Daniela Morosini Gouri Sharma Latest official figures show that the you’re a Tesco or M&S, the environ- Award-winning beauty Independent journalist writer and trend-spotter, formerly with Al Jazeera average staff turnover in the UK was ment is more about productivity, so she contributes to a number English, she writes 16.5 per cent in 2016, a figure which the opportunities are different.” of titles including Vogue, extensively on culture, includes sectors with very high turn- Indeed, Marks & Spencer has Refinery29 and WGSN. current affairs and over, such as construction and retail. pledged to support its staff by provid- emerging trends. “Some people are attracted to retail ing one million hours of work-time because it’s flexible. It offers part-time community volunteering between Joe McGrath Joel Clark Editor of Index Trader and Former staff writer and hours, for example, so quite often, 2017 and 2025. The retailer’s focus Insolvency Today, he was editor at Risk.net and people do move on, and that’s OK. It’s is firmly on employee wellbeing, previously editor of What FX Week, he covers pointless to fight it,” says Peter Ruis, pledging to launch an independently Investment magazine financial markets, managing director, international, benchmarked health and wellbeing and deputy editor of healthcare, workplace and at lifestyle retailer Anthropologie. framework to support M&S staff on Money Management. environmental issues. “Others, like graduates, see it as a way physical and mental health issues. in to the brand. At Anthropologie, There are plans for health and well- Oliver Balch Rich McEachran we’ve had retail staff move into buy- being learning and support to be Journalist specialising in Journalist covering tech, ing, merchandising, public relations, included in all employability pro- sustainability, business startups and innovation, at junior level.” grammes by 2022, together with men-

and travel. He is the author he writes for The Guardian, Artificial Photography/Unsplash of travelogues on South The Telegraph and The key is to identify the retail assis- tal health training. America, India and Wales. Professional Engineering. tants with a passion for customer “M&S has always taken employee service and nurture them from the the confidence and knowledge to really want to have a conversation wellbeing seriously and we have an very beginning. “If you get them sell,” says Karen Millen's global retail with the customer, who want to sell, established wellbeing programme,” on to a management training pro- director Louise Mitchell. “We’re look- who love being with the product,” says Beth Rochford, M&S wellbeing gramme straightaway, they’re more ing to launch the app internation- says Ms Mitchell. “They have their manager. “It includes a dedicated likely to stay in the business,” says Mr ally this year. We’re also looking at own blogs and strong following on online mental wellbeing area on our Ruis. “The issue is how much they’re how we can bring online and in-store social media.” wellbeing portal with tools and mate- engaged in the business as a whole together even more. For example, you And flexibility, which has previ- rials from mental health experts Publishing manager Head of production and how much the brand invests in see a dress online, but you’re not sure ously contributed to retail’s high designed to support M&S employees Ellen Shannon Justyna O'Connell them. If you create opportunities for about the fit. So, we connect you to a turnover, is now becoming an attrac- and line managers alike in both pre- them, you create loyalty.” stylist at store level, either by phone tive proposition for longevity. “The vention and support.” Associate editor Digital content executive At Karen Millen, the womenswear or video.” future of work is about being flexible; Research by the Chartered Institute Peter Archer Fran Cassidy retailer has invested in a new in-store Over the last year, Karen Millen’s people are not having life jobs any- of Personnel and Development Managing editor Design app through a partnership with approach to recruiting store staff has more,” Ms Mitchell adds. “For exam- and consultancy firm Lane Clark & Benjamin Chiou Grant Chapman Mercaux aimed at equipping employ- evolved beyond simply filling a shop- ple, we have a great store stylist with Peacock, published in November, Kellie Jerrard ees with the technology needed to floor vacancy. “We hire people who her own Instagram following and who says employers are increasingly pri- Harry Lewis-Irlam deliver a better customer experience. oritising development and wellbeing Celina Lucey Samuele Motta The app is an end-to-end solu- of staff, with 97 per cent of employ- tion that brings digital and in-store EMPLOYMENT OF RETAIL ASSISTANTS IN THE UK ers planning to maintain or increase Head of design together to better equip shop staff, spending on employee benefits over Tim Whitlock providing them with practical, real- the next two years; the main internal time information on stock and deliv- drivers being to attract, recruit and eries. It also combines with more retain employees. creative functions, such as outfit M&S has also set up an employ-

Although this publication is funded through advertising and building and styling, with inspiration ee-led group called the Buddy sponsorship, all editorial is without bias and sponsored features from marketing lookbooks and social Network so colleagues can sup- 13,000 are clearly labelled. For an upcoming schedule, partnership media. After successful trials, it was 9,000 port each other’s wellbeing through inquiries or feedback, please call +44 (0)20 3877 3800 or rolled out to all stores last month. 951,000 443,000 face-to-face chats in London and email [email protected] With the app available on each Manchester, or with conference Raconteur is a leading publisher of special-interest content and store’s multiple iPads, shop assistants calls, as more than half the network’s research. Its publications and articles cover a wide range of topics, can engage customers with outfit sug- members are based in stores. including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in gestions and check availability across Clearly, smart retailers have not The Times and The Sunday Times as well as online at raconteur.net the Karen Millen retail portfolio and placed all their eggs in a digital bas- The information contained in this publication has been obtained online, and place orders. Crucially, ket, but instead have found news ways from sources the Proprietors believe to be correct. However, the app connects all retail employees to empower the people who engage no legal liability can be accepted for any errors. No part of this in Karen Millen’s UK stores, so they with their customers face to face. publication may be reproduced without the prior consent of the can communicate and share ideas Through technology, flexible working Publisher. © Raconteur Media across the country. Full-time Part-time Full-time Part-time and a holistic approach to employees, “We looked at the tools we could employees employees self-employed self-employed retailers have given store staff some- @raconteur /raconteur.net @raconteur_london provide that would give retail staff Office for National Statistics 2018 thing of true value, a career.

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HIGH STREET Looking back to the future high street As large chain stores struggle to compete with the rise of online sales, Artur Kraft/Unsplash independent and artisan retailers are stepping up to take their place on the high street Keep tags on products

and customer service Good & Proper Tea “We sell tea online to cafés Joel Clark NFC and RFID tags make products smart, and enable and restaurants, as well Like many successful as directly to customers, retailers to identify, authenticate and track stock, ake a walk down any high businesses, Good & Proper and it is important for T street and there is a clear Tea was born out of personal both those channels that as well as add value for customers distinction between shops experience. Founder Emilie we have a tea bar as well. that have existed in some form for Buchanan Street Holmes, a lifelong tea drinker, Tea is very sensorial, so we in Glasgow centuries and newcomers. You may became frustrated with the invite customers in to taste see a traditional butchers, bak- endless proliferation of trendy and experience the tea t’s nearly 50 years since But nowadays, product digitisation ers or barbers, but then there are “We were pretty much the first It’s not a trend that gets much air- The new venture is underpinned by coffee shops and the apparent and understand the brand, I the first adidas FIFA World can be used to change customer expe- those shops that have sprung up designated shop in London selling time these days, as the news is filled the same philosophy that he applied neglect of tea. everything from the cups Cup match ball, the Telstar, rience to build a much closer relation- much more recently, responding to vape products, but there was some with the many well-known high to vaping of supporting consumers In 2012, she bought a 1974 to the furniture, decor and was unveiled at the 1970 tournament ship and broader understanding of the It’s time for brand changing consumer demands and nervousness and anxiety among street stores struggling for survival. and providing a personalised envi- Citroën-H van and put it atmosphere is all a big part of in Mexico. consumer. It’s time for brand owners the evolution of technology. customers at that time, so it made Marks & Spencer plans to close 100 If you’re going to have a lease ronment for them to explore a new on crowdfunding platform what makes us who we are,” For last year’s World Cup, the iconic and retailers to dive deeper, enhancing owners and retailers to Vape Emporium in Hampstead, sense to open a store where we stores by 2022. Tesco is closing its and pay rent and business rates, concept. “This is still a relatively new Kickstarter where her plan to says Mrs Holmes. ball was transformed using tech- customer engagement. dive deeper, enhancing north London, can certainly be could explain the concept of vap- fresh food counters at 90 stores. treatment in the UK and people need convert it into a mobile tea bar As an ambitious artisan nology that is changing the face of The key is creating a secure, unique classed in the latter category. ing, answer questions and reassure Even the John Lewis Partnership there has to be a reason to have a space where they can have their attracted 372 backers. More business, Good & Proper Tea retail across the globe. Embedded ID for each piece of merchandise, customer engagement Driven by the ban on smoking in buyers,” Mr Logan explains. has seen a slump in profits amid that physical presence, and that questions answered, just as they did than six years after the first does a great deal more than in the Telstar 18 was a near-field using radio-frequency identification public places and the prolifera- The success of Vape Emporium – challenging trading conditions. with vapes,” he says. cup was brewed from the van simply selling tea. From tasting communication (NFC) tag through (RFID) technology to embed digital tags tion of healthier alternatives, vape its turnover grew from £200,000 Concentrate only on the household is all about people Willingness to adapt to changing in December 2012, Good & evenings and author interviews to which consumers with a smartphone that can benefit retailer and consumer shops have sprung up everywhere in its first year to £940,000 in names and it would be easy to con- market conditions and provide a Proper Tea now sells its wide gift sets, recipes and educational could gain access to a whole range of alike. Brands such as adidas, Mammut in recent years, but Vape Emporium year three, with a second shop clude that the high street’s days are positive customer experience are range of teas to businesses resources, the business offers exclusive content. and many others are using NFC tags engagement on a large scale. Behind was one of the first. Former smoker opened in Richmond in 2015 – numbered. But successful independ- among the traits required for an and individuals through both a one-stop shop for tea lovers, It’s an example of how product already to interact with customers; one the scenes in the office, the factory Andy Logan established the busi- may be a subtle sign of a larger ent businesses may have a brighter to succeed, from managing punitive independent retailer to be success- its website and flagship tea bar showing the value of a hybrid digitisation is transforming retail. tap with a smartphone can open up a and the shop floor, product digitisation ness online in 2013 and opened the change taking hold on the high future than their larger brethren and leases and rental costs to creating a ful. Others include the creation of in London’s Clerkenwell. model that combines online sales Technology’s benefits are no longer world of added value for the consumer. using RFID technology brings further shop the following year when he street. Independent, artisan retail- the high street could ultimately look digital presence that puts them on a digital experience that comple- From the earliest days of the with offline experiences. confined to the back office, though Embedding NFC tags in products margin-boosting benefits. realised that the newness of vap- ers offering a personalised service more like it did a generation ago, with the map without cannibalising the ments the physical presence and tea van, affectionately known “The physical outlet is not a improving inventory management enables the retailer to continue a rela- Inventory can be accurate to 98 per ing called for a more personalised that cannot be found online have a independent shops stepping up to fill in-person sales experience. the ability to connect positively as Watson, to the bustling tea profit centre where you can and operational efficiency are tionship that otherwise can be broken cent, with a 50 per cent reduction in sales experience. chance to thrive. the gaps left by the large chain stores. Retail commentator Michael with the local community. bar that opened in 2016, the expect to get thousands of still important. once the consumer walks out of a store. out-of-stocks. Sales can be boosted “I don’t believe our high streets are Weedon believes the successful business has always placed people through the door each One tap can provide access to inspira- by up to 20 per cent, as products are dying; I believe they are evolving,” independent retailers are those a premium on the physical day, but it exists as part of the tional videos, for example, or can allow directed to exactly the right place at the purchaser to authenticate a prod- the right time. Online purchases can be HOW BRITONS FEEL ABOUT THEIR HIGH STREET says Martin Newman, retail expert that can find an effective way to presence, recognising that wider fabric of the brand. In the and founder of the Customer First bring customers into their shops while many customers online world we are invisible, The cost of counterfeiting uct or trigger a warranty. fulfilled with confidence, supply chain Survey of 300,000 members of the public Group. “The big town centres have and retain them. Book shops with might choose to buy tea but by having a physical has grown... It can unlock exclusive and dynamic errors are reduced and merchandise become very homogenous with the in-house coffee counters are an online, a physical space is an presence we can deliver a much content such as snow reports or con- made available across a network of Worried about nect the buyer to cool games and chal- stores. Shop assistants have quick and 74% same national chains. Consumers obvious example, but this model can indispensable companion to more personal experience,” my high street invest time and money to visit the extend to other sectors as well, such 61% the online portal. says Mrs Holmes. lenges. It can also provide informa- easy access to product information, high street, but much of what is as chocolate shops offering choco- 150% tion about manufacturing processes providing more time to help custom- Worried about or materials, enabling consumers to ers with purchases. Tags can also guard 70% offered by the large chains can now late-making experiences or liquor shops closing be bought online.” shops providing tasting sessions. of UK consumers are concerned that see the quality of the goods being against losses from theft and speed up As the large chain stores strug- “If you’re going to have a lease and their high street will disappear over be successful. The group esti- Having worked in the corpo- purchased. Embedded tags offer the checkout procedures. the next ten years Would like more gle to compete with the growth pay rent and business rates, there has mates that across roughly 5,000 rate world before founding Vape consumer so much more than just the It’s an impressive list of benefits. % and better shops 58 of online retailing, independents to be a reason to have that physical high street communities in the Emporium, Mr Logan had savings physical item purchased. Product digitisation turns offline prod- KIS Finance 2019 could take their place, from toy presence and that is all about people. UK, there are around 500,000 that he was able to invest to fund For high-value luxury brands, NFC tags ucts into online platforms, enabling Worried about the shops, book shops and jewellers to Shops need to be able to draw cus- outlets of which up to 300,000 startup costs, but exorbitant rental can authenticate a product for both retailers to deepen a relationship with variety of shops 56% butchers, fishmongers and bakeries. tomers in and keep them there; it’s all are independents. costs and demands for large upfront manufacturer and consumer. The tags existing customers, reducing the need “It is the independent retailers and about stickiness,” says Mr Weedon. “This is the most transform- The proportion of independents payments can create insurmountable cannot be cloned or removed, helping to spend time and money chasing new Would like the artisans that will fill the gap by It was the personalised experience ative era in the history of high may well rise as the high street obstacles for independent businesses. to protect a brand owner from coun- buyers. It’s the future of retail. improved/free 45% offering a more personalised experi- that gave Mr Logan an edge in the street retailing and those shops evolves in coming years. This will “Rental costs are a huge problem in less than a decade terfeits, grey and diversion markets or parking ence,” says Mr Newman. “We already early days of the Vape Emporium, but that are doubling down, investing rely not only on businesses get- and made it difficult for us to raise reassure the customer that they are purchasing the real deal. Given that the For more information please visit Would like lower see this in the more successful town now that vapes have become more in their businesses and evolving ting their strategy right, from money at the start,” says Mr Logan. business rates 42% centres that are mainly populated by widely available and better under- with the times are thriving,” says developing a clear business model “Landlords have become greedy over global impacts of counterfeiting and www.smartrac-group.com independent businesses.” stood, he has had to evolve. With the Alex Schlagman, co-founder of to embracing digital, while strik- the years because the big chains had piracy are expected to reach $4.2 tril- Would like a It is not quite as straightforward recent surge of interest in cannabid- SaveTheHighStreet.org. ing the right balance between deep pockets and could afford to trn lion by 2022, that’s a significant value. return to smaller, 35% as reverting to times gone by, of iol (CBD) as a healing therapy, he con- SaveTheHighStreet has con- online and offline sales, but also pay, but it means many smaller busi- $4.2 But the process works both ways local shops course. High street retailers must verted part of the Hampstead store ducted extensive research into on landlords being more flexible nesses are crippled before they have are expected to be drained as NFC tags offer the retailer an

Maybe 2018 overcome a maelstrom of challenges into a CBD shop in December 2018. how independent retailers can with leases. even started.” from the global economy unprecedented level of customer 04 FUTURE OF RETAIL RACONTEUR.NET 05 Commercial feature

Maybe 2018 overcome a maelstrom of challenges into a CBD shop in December 2018. how independent retailers can with leases. even started.” from the global economy unprecedented level of customer 06 FUTURE OF RETAIL RACONTEUR.NET 07 CommercialCommercial featurefeature

salmon. Prospective shoppers just Co-Op has need to click on the QR code and their ETHICAL SPENDING IN THE UK announced that its smartphone screens light up with 286 London stores Sales growth in selected categories RETAIL PHYSICAL AND DIGITAL STRATEGY will be joining the details about where, when and how (2010-2017) CoGo platform the fish was caught. Mr O’Gorman echoes the belief that data-driven disclosure could be a win for retailers. Agility: the By embracing transparency, brand-owners can increase BEFORE 2000 consumer loyalty while 147% number-one also giving their products a Rainforest Produce Distribute Deliver Sell Consume personalised edge, he says. Alliance “There’s a demand for con- food and requirement nection and authentic sto- drink ries out there in the market. Embracing innovations such as OpenSC gives every product an indi- for success in SOCIAL WHOLESALE TV vidual identity and an individual SEARCH ETAIL WEB story,” says Mr O’Gorman.

TODAY MARKETPLACE SHOP APP From a business perspective, the digital age this is where ethical shopping 95% Buying to re- CSE MOBILE PRINT starts to get super interesting. use (clothing) In the marketplace of the future, As the retail landscape becomes Produce Consume retailers must not only know the likes Channels - Gatekeepers and dislikes of their individual cus- increasingly complex, and the number of tomers, they must tailor their offer in shopping and marketing channels grow, a way that reflect this. Ethical innovators such as CoGo the product information displayed is to customer expectations and retailers Using the cloud-based software, % how can businesses stay agile, relevant and OpenSC are blazing a trail for 90 Ethical cleaning accurate and unified, albeit not uni- that don’t respond will be vulnerable. businesses can automate manual pro- this kind of hyper-personalisa- products and ahead of the competition? form, across all touch points. Missing, It says: “New technologies have put cesses, validate their data and struc- tion, according to Will O’Connor, mismatching and incorrect prod- customers in the driver’s seat. We are ture their feed to distribute high-qual- Co-op co-founder of The iO Group, a health uct information will decrease trust quickly moving towards a reality in ity, enriched, contextualised product and retail consultancy. and reliability, negatively impact the which everything happens in real time. data to all their channels partners. ETHICAL SHOPPING form, and so can target their improve- “The web, digitisation of data and n 1995, the retail land- However, the shop window is now very shopping experience and ultimately The natural outcome is that people want Productsup has enabled more than ments accordingly. the march of machine-learning 57% scape looked very different. different. Customers making their pur- decrease conversion opportunities. that instant gratification. This has had a 800 businesses around the world Fairtrade food I This feedback loop was another make possible a level of bespoke con- and drink Reaching potential custom- chasing decisions do so through all sorts It is becoming increasingly difficult deep impact on customer expectation. connect to more channels, scale their driver for Co-op to get involved. As a sumer focus that the mass consumers was easy. Product manufacturers of digital shop windows, ranging from for businesses to keep up with the rate “The need for speed will only increase business and reach more customers. It spokesperson says: “CoGo links busi- erism of the 20th century could not signed agreements with distributors search and social channels to market- of change and development. Brands as technology enables and advances. is used by some of the most reputable Ethical retail nesses to consumers’ payment cards, achieve,” he says. 52% and consumers headed to shops to places and price comparison sites. and retailers are battling a growing The point of engagement and the point retail brands in the world. Major cor- providing insight on how spend- Not all retailers care about eth- Ethical make purchases. Brands, manufacturers and distribu- number of channels, growing complex- of transaction are converging, mean- porations which have recognised the ing is benefiting them and their ics, by any means. But all accept cosmetics But 1995 was a year in which a revo- tors are all at the mercy of these digital ity within those channels, constantly ing brands that can offer immediacy, power of the software include super- communities.” the importance of personalisa- lution began. Shoppers driving to their gatekeepers that stand between them changing channel requirements and instant gratification, personalisation, market giant Walmart, Swedish home made easier The system isn’t perfect. Getting tion for their future success. If local superstores had no idea that two and the final customer. For their prod- completely new technologies. To sur- authenticity and accessibility will win.” furnishings brand IKEA and fashion Co-op on board marks a big coup, responding to shoppers’ ethical % American entrepreneurs were laying uct data to be accepted by these chan- vive they need to stay agile. Some businesses are still behind on chain Superdry. 50 Charity shop but CoGo’s network of participating preferences can help crack this the foundations for a new retail world, nels, they need to ensure their prod- their digital transformation journey. “Productsup is a great platform for products retailers is still too small to light the challenge, then respond they most with the launch of Amazon and eBay. uct data feed has been customised for IMPROVING AGILITY Others were born there, but their pro- feed management that allows us to with new tech whole high street with an ethical hew. certainly should. Ethical Consumer 2018 More than two decades later, there each and every channel. Agility is the key to success in the digital cess of integrating to new channels is control the selling of our wide range Also there’s the issue of trust. Apps have been many casualties from this Whether it’s Amazon, Bing, Facebook era. As online competition increases, slow, inefficient and resource inten- of products,” says Victoria Eugenia like CoGo can point you easily enough digital revolution. The victors in the or Google, channels have built up dig- it will become increasingly impor- sive. For them, it is particularly crucial del Hoyo, digital specialist for search The rise of the conscious consumer has towards a vegan café or a fairtrade flo- battle for survival haven’t taken their ital walls around themselves, by defin- tant for companies to stay on top of to find a feed management solution engine optimisation (SEO) and analytics rist, but can you be sure the retailer Consumers are demanding stores online, they have built their ing their own set of rules and require- the updates for feed specifications that will allow their business to scale at IKEA. Her comments are echoed by pushed retailers to be more transparent isn’t fibbing? more than ever that the effect entire kingdoms online from the get-go. ments for how product information for each channel, in order to increase and streamline. dozens of customers. It marks a legitimate concern. The retailers have on people is In 2018, research by consulting group should be delivered. In order to ensure product visibility and unlock the reve- While you can secure an external “It used to be a challenge to update and aware of where their goods come from requirement for participating retail- positive, from the farm to Forrester found that digital touch their product content is accepted, nue generating potential of both major agency to manage your product data some of the responses and keep up ers to meet credible, independent cer- the fork or from the cotton points are now likely to affect more companies must adjust and structure and niche platforms. feeds, it is best practice to keep the with the changes that Google would

tification standards lies at the heart Images Images/Getty Hero plantation to the clothing store. than half of all US retail sales. Forrester their feed accordingly for every indi- In its 2018 Global Retail Trends report, feed management process in-house. make, but now it’s a lot easier,” says and soul of CoGo’s model. With climate change seen as the says corporate ecommerce teams vidual channel. consultancy group KPMG warns that This gives your marketers full control Adam Miller, marketing technology “I wouldn’t have given up my defining existential threat of our should invest in technology, merchan- To remain competitive, they also digital advances had now fed through and understanding over their prod- and SEO manager at Hostelworld. “We job to set up this company if I time, consumers will increasingly dising fulfilment and marketing to com- need to do it at speed. uct data and shopping feeds, enabling can concentrate on testing, onboard- Oliver Balch “We’ve seen a doubling of spending by didn’t feel it was creating real insist that businesses must pete in this new digital world. “Brands and retailers must deliver them to transform it as needed and ing new partners and maintaining the existing stores because of the ethical impact in the world,” says Mr steward the environment wisely. The battle to stand out is certainly targeted content to an ever-growing ultimately leverage the revenue gener- existing feeds.” and sustainable business practices Gleisner, a former economist at the Retailers also need to be aware becoming more difficult. The latest set of direct, social and marketplace ating potential of their channels. hopping with your con- they have.” New Zealand Treasury. how technology is shaping the Magna Advertising Forecast report, channels,” says Forrester analyst Bruce S science presents a perpet- This win-win proposition has won Veterans of ethical certification are new retail epoch that awaits. published in December, shows that dig- Eppinger. “To win, serve and retain WINNING THE BATTLE ual dilemma. On the one the ear of Co-op, announcing that a little more cautious. One fear cen- Consumers relish the speed, ital advertising spend increased globally customers, sellers must provide con- Brands, manufacturers and Productsup provides an award-winning For further information please email hand, no one wants to feel like a hyp- its 286 London stores will be joining tres on the proliferation of different convenience and value that for the ninth consecutive year in 2018. tent that’s unique to a buyer’s locale, distributors are all at the mercy software solution that helps ecom- [email protected] ocrite. On the other, who realistically the platform. The move sees the UK standards. As Mike Barry, director the web and technology have need, occasion, persona and channel merce players break through the digital or visit productsup.com has the time to audit their weekly supermarket join high street brands of sustainable business at Marks & delivered. The marriage of data UNDERSTANDING THE CHALLENGE at every step of the customer journey.” of these digital gatekeepers walls that have emerged. It seamlessly shopping basket? Wahaca and Caravan on CoGo’s net- Spencer, notes: “At some stage, you’re Becoming a and increasingly sophisticated The ingredients to retail success in The greater a company’s inventory that stand between them connects brands and retailers to the The result is often a practical, yet work, which now extends to well literally going to have to compare conscious retailer artificial intelligence will deliver today’s digital landscape are the same and the more channels they partner global network of shopping and mar- uneasy, compromise: we’ll avoid the over 100 participating retailers. apples with apples.” hyper-personalisation. This will as they always were: visibility and agility. with, the harder it becomes to ensure and the final customer keting channels. stuff we think is “bad” (battery chick- So does the app’s pledge to make New technologies may help bring enable brands finally to get close ens, farmed salmon, palm oil) and ethical shopping easier stack up? some clarity. Environmental char- Will O'Connor, co-founder to the fabled single-customer cross our fingers about the rest. And, either way, what does the emer- ity WWF, for example, recently of retail and health advisory view, permitting them to fine- HISTORICAL CHANNEL DEVELOPMENT IN MARKETING AND MARKETPLACES Enter CoGo. Originally from New gence of smart, data-driven services launched a service in Australia company The iO Group, offers his tune their goods and services. Zealand, this app-based service signal for the future of retail? called OpenSC that uses blockchain thoughts on conscious retailing Retailers can future-proof launched in London earlier this year CoGo’s simple interface unques- technology to track products from themselves by engaging with these with the promise of “making ethical tionably reduces the hassle factor of source to shelf. Retailing is changing fast. Two two trends of sustainability and CJ Affiliate, Awin AdRoll, Criteo, Google Shopping Pinterest promoted pins, Twitter commerce ads, Facebook living easy”. ethically conscious shopping. The The genius of blockchain is that centuries of analogue-only retail customer-centric technology. The Pronto, Sociomantic, Facebook dynamic product Instagram, Amazon sponsored video ads, AliExpress, Sears ads, Twitter buy now button, products, Pricesearcher, Google Area 12 As co-founder Ben Gleisner days of searching for certification information cannot be tampered are now in their twilight hour. The triple bottom line – people, planet YouTube shopping ads newegg, Walmart explains, the basic premise is sim- labels and reading through the small with. So assuming the initial data future for retailing will require and profit – and tech-enabled ple: consumers just need to plug in print could be behind us. about a product’s origins are bona the twin issues of sustainability new possibilities, such as hyper- their ethical preferences, and the app So too is the need to lobby your fide, they will remain that way forever and technology-enabled personalisation, are two areas that points them to products and services favourite brands. Thanks to CoGo’s and a day. personalisation to be front and all retailers must address in their Increase in marketplaces Massive launch of Trends: chatbots AR and Affiliate networks that best fit their values. platform, participating retailers now WWF Australia’s chief executive centre in retailers’ strategies. strategies going forward. and invention of retargeting product ad platforms and voice VR Participating shop-owners also have visibility of their consumers’ Dermot O’Gorman gives the exam- stand to benefit. Mr Gleisner adds: ethical preferences, in aggregated ple of buying wild-caught Patagonian 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 06 FUTURE OF RETAIL RACONTEUR.NET 07 CommercialCommercial featurefeature

tification standards lies at the heart Images Images/Getty Hero plantation to the clothing store. than half of all US retail sales. Forrester their feed accordingly for every indi- In its 2018 Global Retail Trends report, feed management process in-house. make, but now it’s a lot easier,” says and soul of CoGo’s model. With climate change seen as the says corporate ecommerce teams vidual channel. consultancy group KPMG warns that This gives your marketers full control Adam Miller, marketing technology “I wouldn’t have given up my defining existential threat of our should invest in technology, merchan- To remain competitive, they also digital advances had now fed through and understanding over their prod- and SEO manager at Hostelworld. “We job to set up this company if I time, consumers will increasingly dising fulfilment and marketing to com- need to do it at speed. uct data and shopping feeds, enabling can concentrate on testing, onboard- Oliver Balch “We’ve seen a doubling of spending by didn’t feel it was creating real insist that businesses must pete in this new digital world. “Brands and retailers must deliver them to transform it as needed and ing new partners and maintaining the existing stores because of the ethical impact in the world,” says Mr steward the environment wisely. The battle to stand out is certainly targeted content to an ever-growing ultimately leverage the revenue gener- existing feeds.” and sustainable business practices Gleisner, a former economist at the Retailers also need to be aware becoming more difficult. The latest set of direct, social and marketplace ating potential of their channels. hopping with your con- they have.” New Zealand Treasury. how technology is shaping the Magna Advertising Forecast report, channels,” says Forrester analyst Bruce S science presents a perpet- This win-win proposition has won Veterans of ethical certification are new retail epoch that awaits. published in December, shows that dig- Eppinger. “To win, serve and retain WINNING THE BATTLE ual dilemma. On the one the ear of Co-op, announcing that a little more cautious. One fear cen- Consumers relish the speed, ital advertising spend increased globally customers, sellers must provide con- Brands, manufacturers and Productsup provides an award-winning For further information please email hand, no one wants to feel like a hyp- its 286 London stores will be joining tres on the proliferation of different convenience and value that for the ninth consecutive year in 2018. tent that’s unique to a buyer’s locale, distributors are all at the mercy software solution that helps ecom- [email protected] ocrite. On the other, who realistically the platform. The move sees the UK standards. As Mike Barry, director the web and technology have need, occasion, persona and channel merce players break through the digital or visit productsup.com has the time to audit their weekly supermarket join high street brands of sustainable business at Marks & delivered. The marriage of data UNDERSTANDING THE CHALLENGE at every step of the customer journey.” of these digital gatekeepers walls that have emerged. It seamlessly shopping basket? Wahaca and Caravan on CoGo’s net- Spencer, notes: “At some stage, you’re Becoming a and increasingly sophisticated The ingredients to retail success in The greater a company’s inventory that stand between them connects brands and retailers to the The result is often a practical, yet work, which now extends to well literally going to have to compare conscious retailer artificial intelligence will deliver today’s digital landscape are the same and the more channels they partner global network of shopping and mar- uneasy, compromise: we’ll avoid the over 100 participating retailers. apples with apples.” hyper-personalisation. This will as they always were: visibility and agility. with, the harder it becomes to ensure and the final customer keting channels. stuff we think is “bad” (battery chick- So does the app’s pledge to make New technologies may help bring enable brands finally to get close ens, farmed salmon, palm oil) and ethical shopping easier stack up? some clarity. Environmental char- Will O'Connor, co-founder to the fabled single-customer cross our fingers about the rest. And, either way, what does the emer- ity WWF, for example, recently of retail and health advisory view, permitting them to fine- HISTORICAL CHANNEL DEVELOPMENT IN MARKETING AND MARKETPLACES Enter CoGo. Originally from New gence of smart, data-driven services launched a service in Australia company The iO Group, offers his tune their goods and services. Zealand, this app-based service signal for the future of retail? called OpenSC that uses blockchain thoughts on conscious retailing Retailers can future-proof launched in London earlier this year CoGo’s simple interface unques- technology to track products from themselves by engaging with these with the promise of “making ethical tionably reduces the hassle factor of source to shelf. Retailing is changing fast. Two two trends of sustainability and CJ Affiliate, Awin AdRoll, Criteo, Google Shopping Pinterest promoted pins, Twitter commerce ads, Facebook living easy”. ethically conscious shopping. The The genius of blockchain is that centuries of analogue-only retail customer-centric technology. The Pronto, Sociomantic, Facebook dynamic product Instagram, Amazon sponsored video ads, AliExpress, Sears ads, Twitter buy now button, products, Pricesearcher, Google Area 12 As co-founder Ben Gleisner days of searching for certification information cannot be tampered are now in their twilight hour. The triple bottom line – people, planet YouTube shopping ads newegg, Walmart explains, the basic premise is sim- labels and reading through the small with. So assuming the initial data future for retailing will require and profit – and tech-enabled ple: consumers just need to plug in print could be behind us. about a product’s origins are bona the twin issues of sustainability new possibilities, such as hyper- their ethical preferences, and the app So too is the need to lobby your fide, they will remain that way forever and technology-enabled personalisation, are two areas that points them to products and services favourite brands. Thanks to CoGo’s and a day. personalisation to be front and all retailers must address in their Increase in marketplaces Massive launch of Trends: chatbots AR and Affiliate networks that best fit their values. platform, participating retailers now WWF Australia’s chief executive centre in retailers’ strategies. strategies going forward. and invention of retargeting product ad platforms and voice VR Participating shop-owners also have visibility of their consumers’ Dermot O’Gorman gives the exam- stand to benefit. Mr Gleisner adds: ethical preferences, in aggregated ple of buying wild-caught Patagonian 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 08 FUTURE OF RETAIL RACONTEUR.NET 09 Commercial feature

DIRECT TO CONSUMER OPINION Subscription sales are revamping retail How technology ‘CEOs need to invest Direct-to-consumer offerings, such Harry’s more in shops, but our is reshaping the as subscription boxes and buyer’s broken business rates shopping experience clubs, are shaking system means they are up traditional As an increasingly omnichannel industry, retail has undergone a retail market punished for doing so’ significant shift to connect the digital and physical worlds seamlessly dynamics by giving consumers a more t’s been a tough few years a retail destination, they want a he efficiency and immediacy of personalised service I for retail. Well known location to meet, to eat and drink, a T online shopping has cultivated brands such as Toys R place for services and experiences, a desire among consumers for Us and Maplin no longer grace as well as shop. Retailers that can the same experience in-store, with the our high streets and retail parks. successfully reinvent themselves added value of human interaction. This Journalists do not ask me if there will reap the rewards through more combination of digitisation and growing will be more to come, but who they customers and higher sales. customer expectation has reshaped the Daniela Morosini are likely to be. Yet a rising tide of public policy shopping experience, and transformed A seismic shift is taking place in costs emanating from government the role of physical retail stores. he chance to control your retail. New technologies are both make an investment in our high T brand voice, no jostling with driving and reinforcing a change in streets almost impossible. Business Changing role of the store competitors for shelf space the way we buy things. The inter- rates, which fall disproportionately The ability to switch rapidly between and real-time feedback from custom- net is liberating us. It enables us on retail, continue to skyrocket. online and offline shopping means ers on what they like and what they’re to shop at home, at work and a mil- The apprenticeship levy is so stores have evolved beyond simply indifferent to. The benefits of the lion places in between. It lets us inflexible as to become little more being a sales channel. direct-to-consumer (D2C) model are compare prices while we stand on than a tax on employment. Even Olga Kotsur, co-founder and chief varied and very tempting. the part of consumers and a desire to Transparency is Beauty Pie’s bread Shaving worth $1 billion by 2021,” says Mr requests from customers saying how the shop floor and access product initiatives supported by retailers, executive of leading retail technology It seems like every other day we stand out on the part of brands. The and butter, and their website lists the subscription Price. “I keep a personal list of all the much more beneficial it would be to reviews even as we get advice from such as the new living wage, can platform Mercaux, says: “Stores now hear of another old high street bul- entrepreneur behind Fit Flop, Bliss full breakdown of every price, includ- service Harry’s new boxes I see launching and about their shave." the in-store experts. impose significant costs on strug- serve as a showroom and marketing says because of its wark shuttering stores or see a vir- and Soap & Glory, Marcia Kilgore ing packaging, development and raw close relationships 50 per cent of my list launched just The conglomerates have been tak- Internet shopping now accounts gling businesses. These costs add channel, becoming a destination for tual retailer with a super-stream- launched Beauty Pie in 2016. Its lux- ingredients. There’s no way Beauty with customers, last year.” ing notice, with Unilever acquiring for around 30 per cent of all non- up; ask House of Fraser, ask HMV, consumers to experience, explore and lined website announcing ury beauty products can be pur- Pie could offer their super-low mem- subscriber The boxes largely fall into two cat- similar brand Dollar Shave Club for food purchases and the proportion ask Patisserie Valerie. engage with products, and connect feedback eye-watering profits, so it’s no sur- chased from their website for a luxury bers’ prices if they had to factor in the egories: “surprise and delight” is a $1 billion in 2016, Colgate-Palmolive of food bought online is also grow- Chief executives of leading busi- with a brand regardless of where the has enabled prise that D2C is considered the price tag or instead customers can pay costs of a department store outlet. them to make tailored treat delivered every month, taking a minority stake in contact ing. And there are many other tech- nesses tell me they need to invest transaction ultimately takes place. modern option by many. £10 a month membership and buy the “High tech skincare does have improvements to such as Craft Gin Club, The Cheese lens subscription service Hubble nologies changing how we shop. more in their shops, but our broken “Stores have become a hub for Industry newcomers and veterans products at cost price. An otherwise some expensive ingredients, but by its products Geek or Birchbox, which sends a selec- and Nestlé taking a majority stake Self-scan machines have become a business rates system means they brands to cultivate loyalty among cus- and clientelling capabilities to the Ms Kotsur says: “Currently retailers’ alike are increasingly choosing to £100 night cream is just £11.33 for the time you get to retail, the cost tion of curated beauty products. Then in Tails.com, the tailored dog food ubiquitous part of our grocery shop. are punished for doing so. While tomers via a personalised in-store shop floor for a truly personalised IT systems possess powerful informa- shake off the shackles of the middle- members, while a £20 mascara comes could be ten times that, easily,” she there’s everyday essentials, such as delivery service. Apps provide help in finding, sizing politicians decry the empty shop experience. They also need to fulfil customer experience. tion about products and customers, but man and go it alone, with new innova- in at £3.36. says. “The markups are huge and the pet food, coffee beans and, most nota- In many ways, it’s an extension and buying products, and the use of fronts on many of their local high orders across all channels, and serve retailers do not use it in-store. All this tions such as subscription boxes and According to Ms Kilgore: “Consumers retailer often takes up to 60 per cent bly, razors. of culture we already choose with augmented reality will only make streets, they have also created a tax as a data collection and insight centre.” Human factor information available on the app does buyer’s clubs giving the consumer want so much information these days, of the price, so you have to inflate your “Gillette had something like a 74 many of us having Spotify, Netflix this easier for customers. Social system which discourages retailers To adapt to recent changes and be Indeed, the leading differentiator not only help sales people in their daily more choice. But how far can the there’s nowhere for brands to hide, and price to break even. You end up com- per cent share of the shaving market or Amazon Prime subscriptions. media lets us share advice, experi- from taking them over. successful, Mercaux advocates that between online and offline shopping activities, but also vastly improve the movement go? And what limits exist? you shouldn’t have to. If you execute promising on the quality of the prod- in 2012. Just four years later, that was D2C enables brands to immerse ences and reviews with thousands Britain is a leader in retail. retailers should look towards empow- is the human aspect. Research by PwC experience for customers.” Much of the appeal of D2C has to your ideas well and don’t cut corners, uct somewhere and that’s not good for down to 50 per cent,” says Mr Price. customers in their ecosystem and of other people. Tourists travel from around the ering their most valuable resource, found that 71 per cent of consumers Testament to Mercaux’s success, Karen do with a desire for knowledge on retail isn’t hard.” consumers or for the brand.” What resulted in such a drop? The control their messaging from the The difference between the world to take advantage of our shop- their salespeople in stores. said store associates have a significant Millen experienced a 7 per cent uplift in One thing that helped ease con- arrival of brands such as Harry’s, a point of purchase right through to brands that thrive, those that sur- ping. But we cannot take this for Mercaux’s customers, including brands impact on their shopping experience. sales following the adoption of the app sumer anxiety about buying direct D2C offering founded by Andy Katz- customer service. The experience vive and those that ultimately fail granted. We are at a fork in the road. such as Karen Millen, Nike and French Ms Kotsur says: “Sales personnel are that is used by salespeople approxi- from a brand has been low-cost ship- Mayfield and Jeff Raider, which ena- feels more personalised for the cus- can usually be found in their abil- Do we leave businesses and brands, Connection, agree. They have invested in not only expected to sell products, mately 2,000 times per store per week. D2C OPPORTUNITIES FOR RETAILERS ping and painless returns, something bles customers to sign up for a shaving tomer, as well as being cheaper per ity to embrace these changes in high streets and shopping centres arming salespeople with digital tools that but are also increasingly viewed by Not only does Mercaux’s solution Opportunities and benefits vary depending on the type and maturity of the brand subscriptions specialist Steve Price plan. You’ll get premium German- product and more streamlined. consumer habits. Successful retail- to stumble on? Or, supported by not only help their staff stay effective retailers as valued brand ambassa- empower sales associates, it also pro- warns isn’t sustainable. “There’s a made blades and other shaving para- The model is yet another threat to ers are blurring the lines between sensible government policies, do and knowledgeable in the increasingly dors, personal stylists and product vides retailers with vital information Traditional distribution channels D2C ceiling to how long brands will be phernalia delivered to your door, with the traditional retail landscape. As the digital and physical expe- we help retail and its three million complex retail environment, but also experts. They must display a combi- about in-store activity, providing real- able to continue offering free ship- a Harry’s blade costing £1.88 to a com- Mr Price puts it: “There are a lot of rience. Consumers may browse employees thrive, creating a future help them provide a totally new level of nation of hard skills with softer, ser- time visibility of customer behaviour and Finite Customer reach Unlimited ping without ending up in financial or petitor’s £3.05. ghosts on the high street.” online before purchasing in-store of better jobs, innovative technolo- customer experience. vice-orientated skills to serve these enabling retailers to develop a single cus- logistical trouble,” he says. UK general manager Matt Hiscock Of course, that’s not to say that or choose to test a product in-store gies and world-leading retail? That On the one hand, Mercaux delivers increasing expectations.” tomer view across channels: a “golden Mass market Personalisation Personalised Another factor that may give brands explains their personal touch. going D2C is a magic bullet. As Mr before making a final purchase is the future I want to see. all the product recommendations and For Mercaux, the answer lies in record” previously reserved for online. pause for thought is that many large “Because of our close relation- Price notes, consumers aren’t loyal online. All this helps to explain why stock information online and offline, empowering sales assistants through With Mercaux in stores, retailers are Basic Customer loyalty Advanced retailers invest heavily in their own ships, we receive tons of feedback in the same way to FMCG. "No one eight of the top ten internet retail- allowing salespeople to sell effectively cutting-edge technology. The compa- able to digitise the actions of sales per- brands. “If you search for batteries on from customers that helps us make feels an affinity to the company that ers also have a physical presence on across all channels without leaving a ny’s modular platform features a sales sonnel, enabling them to know which are Limited, Access to Comprehensive, Amazon, the first thing that will come improvements to our products,” he delivers them fish food. It’s a ser- the high street. customer. On the other hand, it brings assistant application consisting of a the most popular products, which sizes periodic customers real-time up is their own Amazon Basics line,” says. “For example, we added a trim- vice," he explained. "These brands But responding to the biggest shift digital content, styling suggestions suite of solutions that cover the cus- are in greatest demand or how many cus- says Mr Price. mer blade to our second generation need to offer something extra, like in consumer behaviour in a genera- tomer journey in-store from discovery tomers made inquiries. It paints a full pic- Partial control Pricing Full control Ms Kilgore adds: “If you’re stocked razors because we received so many a magazine or some kind of treat tion takes investment. As the role of of products through to personal styl- ture and builds communication between someplace else, that retailer will get to make the experience feel special physical and digital stores change, ing and the ability to check out straight headquarters and the sales force. Slow Speed to market Fast all of your sales data in real time. and exciting, and really make the retailers must roll out new technol- from the shop floor. There is undoubtedly more change yet They’ll know exactly what’s selling most of what’s in that box." ogy, bring in new expertise, retrain The app empowers staff with real- to come, but for those who adopt the Limited control Merchandising Full control and why, while you’re scrambling to Dollar Shave Club, for example, staff and all while maintaining the time product and stock information, right technology and invest in their staff, stay on top of things. Sometimes, they sends out the non-shave-related _ competitive prices we are used to. 2k+ artificial intelligence-driven alterna- the future of retail looks positive. Limited Product assortment Full will even copy whatever’s working MEL Magazine_, while D2C beauty Many high streets across the interactions per store tive products and styling suggestions, per week from your brand; why wouldn’t they, The markups are huge and the brand Glossier include stickers and country are working towards this an in-app looks creation tool, as well For more information please visit when they have all that sales data?” free samples. Free shipping isn’t reinvention, making themselves as inspirational marketing content. www.mercaux.com High Capital expenditure Low Another way that D2C brands are retailer often takes up to 60 per enough – nor will it last forever – “places to be”. Others continue to Mercaux also enables salespeople to making a splash is through subscrip- so to keep people buying, customer struggle with 2018 seeing a slew of Helen Dickinson access customer profiles featuring pur- High Low cent of the price, so you have to Overheads tion boxes and plans. “The subscrip- service is incredibly important. large retailers going into adminis- Chief executive +7% chase history and preferences to per- Deloitte tion box industry is projected to be inflate your price to break even And there’s no shortcut for that. tration. The public want more than British Retail Consortium sales uplift sonalise the interaction. 08 FUTURE OF RETAIL RACONTEUR.NET 09 Commercial feature

MOST ATTRACTIVE QUALITIES IN A BRAND Percentage of consumers who said the following attracts them to buy from certain brands over others, beyond price and quality; based on a survey of nearly 30,000 consumers worldwide

CONSCIOUS Great culture – it does what it says it will do and delivers on its promises 66% Transparency with issues such where it sources materials 66%

Treats its employees well 65%

Believes in reducing plastics and improving the environment 62%

CONSUMERISM Ethical values and authenticity in everything it does 62% Customers these days are a passionate bunch: they're passionate about the products Passion about the products/services it sells 62% they buy and passionate about the brands they buy from. And with two out of every Stands for something bigger than just products/services 52% three shoppers now considered to be a 'belief-driven buyer', companies would be wise Stands for societal and cultural issues they believe in 50% to take notice, as ignoring the reasons behind conscious consumerism could damage Supports and acts upon causes we have in common 50% sales and reputations. However, with a large numbers of customers still ranking price Connects me to others like me and gives me a sense of community 38% as the single biggest factor in their purchase decisions, retailers are being pressured to Takes a political stance on issues close to my heart 37%

be more ethical and sustainable in their practices...for the same amount of money EY 2018

THE RISE OF BELIEF-DRIVEN BUYERS YOUNGER CONSUMERS WILLING TO PAY MORE BELIEF-DRIVEN BUYING BY COUNTRY Whether consumers would choose, switch, avoid or boycott a brand based on its stand on societal issues Percentage of different generations willing to pay at least 20 per cent more for Percentage of consumers who would choose, switch, avoid or boycott a brand based 68% ethical products on its stand on societal issues of consumers rate ethical 2017 2018 behaviour as important when shopping, but only... 78% 69% 68% 65% 60% 59% 57% 54% 49% 36% 32% Generation Y Rarely buy on belief or punish brands for 53% say they are willing to taking a stand pay more for an ethically 34% sourced product Generation Z 77% cite price as the biggest 5% single factor affecting Baby boomers their shopping behaviour, 17% ahead of quality and 34% functionality Generation X China Brazil India France Japan United UK Germany Depending on States the issue and the EY 2018 Edelmen 2018 EY 2018 brand, they will change their buying 25% behavior based on the brand’s stand ETHICAL PLEDGES BY RETAIL BRANDS Commitments to sustainable and ethical causes in recent years +13pts 64% 30% of shopper are now said to 26% Have strongly held, be belief-driven buyers Will use 100 per Will stop using Targeting zero Offering free Will stop burning Launched its first Launched a Known for its passionate beliefs. cent recycled or single-use straws emissions for home recycling of its unsaleable stock; shampoo bottle new collection cruelty-free The brands they buy sustainably sourced by 2020; plans to delivery globally toys and games historically it made of 25 per cent of apparel and ethos, the brand is are one important materials by 2030, develop 100 per by 2025 destroyed unsold recycled plastic in footwear made currently working up from 35 per cent recyclable and clothes, accessories 2018; will be rolled from recycled with a biotechnology way they express cent in 2017 disposable cups and perfume “to out to 500 million ocean plastic company to create those beliefs protect its brand” bottles per year. vegan silk

Edelman 2018 10 FUTURE OF RETAIL RACONTEUR.NET 11

CONSCIOUS Great culture – it does what it says it will do and delivers on its promises 66% Transparency with issues such where it sources materials 66%

Treats its employees well 65%

Believes in reducing plastics and improving the environment 62%

be more ethical and sustainable in their practices...for the same amount of money EY 2018

Edelman 2018 12 FUTURE OF RETAIL RACONTEUR.NET 13 Commercial feature

with models wearing a hijab, and MODEST FASHION the Net-a-Porter website features a modest fashion section. Kulsum Patel, director and Modest fashion is co-founder of Ayah, a UK modest fashion consultancy service, to compliment the Modest fashion says: “One thing that will always diverse lifestyles of attract interest from businesses, brands and then in turn consum- all types of women, Ben Gabbe/Getty Images for Sherri Hill Visual search ers is when you see large figures no matter what goes global like this attached to an industry. Small businesses have been doing their faith or culture this kind of work for years, but it's is the next only now that big brands in the as big brands West are recognising there's this whole catchment of women they haven't tapped into yet. Now they But, as designer Ms Bagas says, battlefield are wanting a piece of the pie.” modest fashion doesn't just appeal to take notice Much of the push has come Muslim women. She says her designs from social media influenc- – vintage gowns, long and baggy top- ers including British-Egyptian and-trouser sets and bridal wear – in retail Instagrammer and YouTuber Dina are popular with a range of women. Torkia. The 29 year old has spoken “My clients include Jewish, Arab about the challenges she faced women and non-Muslims,” she trying to balance her faith with says. “Modest fashion is not just for AI-powered visual search is gaining rapid her fashion, and in 2011 started Muslim women, it's to complement adoption among retailers, helping customers her fashion blog. She quickly grew the diverse lifestyles of all types of in popularity and now has more women, no matter their faith or cul- find the products that inspire them. Retailers than two million Instagram fol- ture, who want to implement mod- lowers and YouTube subscribers esty into their dress code.” that have adopted the technology report combined. Her tutorial on 20 dif- And it's this wide appeal that's ferent ways to tie an hijab has been putting modest fashion in style for a significant increase in conversion rates viewed 1.2 million times and late all seasons. and average order value. Meet the company last year she released her debut Ms Patel concludes: “Choices for book Modestly on being a modern the modest women have always making it a reality Muslim Brit. been there, but it's never been Ms Patel says: “What you're find- created in a way where it is eas- ing now is big brands like Amazon ily accessible for women in the and John Lewis teaming up with West. It's great to see big brands these influencers to promote their being more inclusive, but I think arfetch is an online retailer Hilfiger, Marks & Spencer, Bonprix, products. These brands pay these it's going to take some time before F selling luxury menswear and PrettyLittleThing and many more. It influencers and then there's a they get the balance right. It is cur- womenswear, a sector with is renowned for the high accuracy of whole campaign that dominates rently being identified with Islam, ferocious competition. So, to distin- its search results, speed, and ease of their social media posts. The but the more attention it gets and guish itself from rivals, Farfetch offers implementation, making it the leader brands know there is a following the more mainstream it becomes, customers a radical new technology in the field. out there and this is the best way to the more people will realise it's not known as visual search. For a brand such as Marks & Spencer, has their own version or level of Halima Aden on the attract the industry and the mod- an alien concept. All I see is this It works like this. Customers use the partnering with Syte is an opportunity to The future remains bright for modest modesty, but it attracts women runway for Sherri est woman client.” industry growing.” Farfetch app to upload a photograph help consumers take control of the way Hill show during who don't want to show flesh just fashion as Western retailers realise New York Fashion of an item of clothing. It could be a they discover products, enhancing their because it's being advertised. Week in February photo of a friend or a screen grab of consumer experience. Modest fashion gives the mod- a celebrity they’ve seen on Instagram. Jim Cruickshank, head of digital prod- the huge potential of this growing HOW MUSLIM WOMEN FEEL ABOUT THE UK HIGH STREET ern modest woman something she An artificial intelligence (AI) engine uct and user experience at Marks & and lucrative market wants to wear, without her having Survey of 500 Muslim women nationwide then decodes the image, identifying Spencer, says: “We know our customers to compromise on style.” the colour, style and fabric of items of are busier than ever and are often most While it maybe emerging in the A A clothing in the frame. Then Farfetch inspired when they’re out and about. For example, consumers can use visual customers to know technical fashion West, the industry has been cater- 93% publishes similar items for the cus- Style Finder [a Syte-powered tool] search to locate clothes similar to those The benefits of AI-powered terms. How many men know the differ- ing to Muslim women in places Gouri Sharma say a modest line would tomer to browse. helps customers instantly find what worn by their heroes and heroines. Or visual search: ence between a pea coat and duster like the Gulf, Indonesia and encourage them to visit a store It’s quick and intuitive. Finding the they’re looking for, without the need to Syte offers an AI stylist platform that jacket? Visual search means they don’t Malaysia for years, and sales figures shoe Emma Watson wore to the Oscars manually search and filter through our discovers products in Instagram images need to. t’s no wonder modest suggest an increasingly lucrative or something similar to that cute products.” of social media influencers posing in a Major retailers are all moving towards B I fashion has been turning global market. sarong your bestie wore to the beach is Image search is just one of the ways particular style. Seeing how a fashion visual search. Amazon adopted visual heads of late. An untapped According to a 2018 report by 86% astonishingly simple. Syte can help retailers. A parallel offering icon looks in a slate-grey Astrakhan coat 3.5x search in 2014, followed by Target, uplift in average conversion global billion-dollar market com- DinarStandard and Reuters, feel ignored by high Young customers adore it. It fits their is the “view similar” function. Customers may convince the consumer to press Macy’s, Pinterest and eBay. Visual search bined with a host of social media Muslim consumers spent an esti- street fashion brands B way of shopping, putting images at find an item they like in the retailer’s the buy button. delivers 48 per cent more product views, influencers, has pushed styles into mated $270 billion on modest fash- the heart of the experience, natural store, then click an icon to view a range The impact of Syte on revenues is according to research by BloomReach. catwalks, catalogues and ad cam- ion in 2017, compared with $243 for the Instagram generation. It also of similar products also offered by the measurable. An ecommerce executive Customers are 57 per cent more likely to paigns. As more major fashion billion in 2015. Sales are expected C encourages spontaneous purchases. retailer. Some may be cheaper or offer a at Boohoo.com, which enthusiastically return to a site with visual search. brands get on board and it attracts to reach $361 billion by 2023. 75% As Accenture found: “Gen Z consum- twist on the style. It’s a fun and practical embraces Syte’s visual search, says: 8-13% Adding Syte to a retail website is more fashion-conscious women, Shifts are occurring across the put products back ers place a greater emphasis than mil- way to explore an online store. “We see increases in engagement com- typical conversion rates simple. It takes as little as one line of the modest fashion industry looks industry. For the first time in its when shopping lennials on turning to social media for Product tagging can be done automat- pared to visitors who don’t use search. code, depending on the personalisation set to only get bigger. 102-year history, last year British because they do inspiration. And nearly 60 per cent ically by Syte. The traditional method Conversion rates are 85 per cent higher of the user experience and interface. A not meet their What then, is modest fashion? Vogue put Somali-American model more say they made a purchase just is labour intensive, with manual oper- and pages per session more than 125 per software-as-a-service business model, requirements There are many definitions, but Halima Aden, its first woman because they wanted to buy some- atives entering terms such as “polka cent higher. Visitors who engage with a based on traffic and expected volume of essentially it describes clothes wearing a hijab, on the cover. In thing or because they randomly saw an dot”, “skirt”, “maxi”, “women’s”, “high ‘view similar’ on the product page have a % users, means the technology is available that cover much of the body, with- 2017, modest fashion became the 2-11 D item they liked.” Someone admiring a waisted”, “satin” and so on. Syte can conversion rate over 100 per cent higher. uplift in total online sales to retailers and app-makers alike. out skimping on style. For mod- newest kid on the runway block C % friend’s outfit can instantly find some- automate the entire tagging process. And the average order value is 12 per cent “I believe this is the new experi- est fashionistas, it’s not what you with the first London Modest 63 thing similar online using only an image. This slashes back-office costs. Retailers higher. Lastly, pages per session are 135 ence. I see something I like, I simply believe high street show, it’s what you don’t show and, Fashion Week, where 40 designers brands appropriate The arrival of visual search in retail can do predictions and analytics. And per cent higher.” point at it and I get it,” Ms Pinto crucially, the way in which you from across the globe showcased cultural dress, rather is in a large part due to Syte, a visual AI consumers have an alternative way to Naturally, Syte isn’t the only provider with similar looking items and delivers Fryman sums up. Visual search is set don’t show it. The array of styles their designs of turbans, hijabs, than catering to company with offices in Tel Aviv, London search the store, increasing basket sizes of visual search AI. But according to quality, organic traffic to retailers,” says to change retail, forever. Syte is help- include dresses with high neck- full-length dresses and burkinis. actual fashion needs E and Geneva. “Syte connects consumers’ and engagement. Gartner, it is an outstanding performer, Ms Pinto Fryman. Retailers can showcase ing retailers take full advantage of this lines and long sleeves, kimonos, Some of the biggest brands inspiration and the real world with retail- Perhaps the biggest impact is the way named a Cool Vendor in retail in 2018. their products on Bixby by signing up to revolutionary new concept. head scarves, no-cleavage gar- have also started to incorporate ers’ inventory, no translation needed,” retailers can harness the power of social The biggest proof is Syte being chosen the database via Syte and have access to ments and looser fightings. modest fashion into their col- E says Lihi Pinto Fryman, Syte’s chief mar- media influencers. Consumers rely on by Samsung to power visual search on its millions of gen Z and millennial shoppers. To find out more please visit Syte.ai UK-based designer Saleha Bagas lections, including DKNY and 16% D keting officer and co-founder. Instagram, Pinterest and Facebook influ- smartphone AI, called Bixby. Visual search is a technology retail- has been running her online mod- Mango, which have both launched Syte provides visual search for some encers for tips and trends. Syte creates a “Consumers just have to open their ers must embrace. It removes language higher spending by Muslim est fashion brand for the past Ramadan lines. H&M, Nike and women on fashion than the of the world’s largest retailers and direct connection between key influenc- camera and point it at something they barriers, perfect for attracting interna- five years. She says: “Everybody Gap have also launched campaigns average British consumer ODD 2019 marketplaces including Argos, Tommy ers, the store and consumers. like. Syte immediately provides them tional buyers. It eliminates the need for 12 FUTURE OF RETAIL RACONTEUR.NET 13 Commercial feature

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Smartphones 01 In the immediate future at least, bricks- and-mortar stores won’t remove human staff

Pressmaster/Shutterstock altogether. They might not be stocking shelves – that will be left to robots – but they will be walking around with smartphones in their hands that shoppers will simply tap with their own CUSTOMER EXPERIENCE device to complete their purchase.

Rewards 02 While it might be harder to attract new customers than it is to retain them, consumers A day in prefer not to have to wait to receive meaningful benefits. A way around this will be to offer mobile scan-and-go payment technology that enables customers to pay with a mixture of credit or the life of debit cards and loyalty points or vouchers. Some supermarkets already allow their customers to exchange points for vouchers that can be spent the future at self-service checkouts. Checkout free Three payment innovations 03 Thanks to a combination of artificial intelligence, cameras and sensors, retailers customer Last impressions count. A bricks-and-mortar can identify customers upon arrival, who scan store can be set up to make it easy for products as they pick them up, and then charge consumers to select the items they want and a credit card on file once the customers leave Exploring how one shopper of the even try them on. But if customers are unable the store. Amazon opened its first checkout- to pay quickly and smartly, they could walk away free grocery store last year. To begin shopping, future goes about her day reveals without completing their purchasing journey. customers have to scan a smartphone app Here are three ways payments in bricks-and- and pass through a turnstile. The number of exciting possibilities for what’s in store mortar stores are likely to change in the future Amazon Go stores has since grown to ten across for omni-channel retailing of omnichannel retailing. Chicago, Seattle and San Francisco.

buy into the brand and even make customers, providing directions, Rich McEachran future purchases online.” answering queries and even hand- Ms Finguerut believes another ing out samples of pulled pork. It eet Alice. She’s 32, works in In the future, our shopper Alice omni-channel retailing trend that was sacked within its first week M corporate events and is by all wakes up on a Saturday morn- we will see emerge is the ability to after giving poor directions and For customers, accounts your average young ing and realises she needs to buy book a slot in such a changing room being over-generous with the por- the shopping professional who enjoys spending a a dress for a work function that’s to try on a wishlist of clothes. “Kind tions of pork. portion of her disposable income on taking place in a few weeks’ time. of like click and collect, but without Alice doesn’t have to worry about experience will clothes. She also has a busy social life She opens up her laptop, enters her the upfront payment and being able interacting with robots like Fabio, outside of work and so, when it comes to details and customises the style, Alice decides that she wants a then replenished. This means she experimenting with innovation in to try before you buy,” she says. though. Once she knows that her improve with the shopping, wants smooth omni-chan- colour and fabric of her desired new pair of jeans. Even though doesn’t have to fumble about try- this way since 2017. The technol- On her way home, our shopper products are in stock, she adds hope that they will nel retailing. This includes convenient dress. It’s then delivered to her she is able to use 3D visualisation ing to get a shop assistant’s atten- ogy featured in its store in Noho, Alice needs some groceries, so them to her virtual shopping bas- delivery and collection options, fast apartment 14 days later. tools before purchasing online to tion. Once she’s happy with her Manhattan, includes some of what she heads to the local supermarket on the app and then her gro- always be able to and frictionless payments, and better This is exactly the type of ser- imagine what the jeans will look choice, she’s able to pay for the is described above and also custo- ket. Before she arrives, she checks ceries are ready for her to pick up purchase what in-store experiences. vice that London-based start-up like on her, saving her time and a item in the changing room and misable lighting and music to cre- her phone to see if the items she from the supermarket and pay for According to a 2018 survey of more Flair Atelier is promising to offer. trip to the shops, she would prefer go on her way, avoiding the need ate ambience. Malena Finguerut, requires are in stock. An app is able within quarter of an hour. they’re looking than 3,500 shoppers by digital com- Each order made through the plat- to know whether they’re going to be to queue. who works at click and collect ser- to give her this real-time informa- Alice returns home content that for without delay, merce consultancy Salmon, 43 per form is sent to its tailors in Italy. a comfortable fit. The American women’s cloth- vices company HubBox – it has tion thanks to robots going up and her omni-channel retailing trip has cent and 49 per cent of UK and US And because each dress is made She heads to a brick-and-mor- ing brand Reformation has been partnered with Boohoo and Jack down aisles, monitoring stock lev- been hassle-free and seamless. whenever they need it total spend is online. Just over half (51 to order, it means there’s no mass tar store, which is being operated Wills – recently visited the store in els, on a regular basis. per cent) of consumers start their jour- production and no material going by just one member of staff, who New York. Bossa Nova Robotics has intro- ney on Amazon, while 55 per cent end to waste. offers customers a drink when they “The whole experience is provid- duced such automated robots into DIGITAL SHOPPING WISH LIST their journey on the e-commerce site. “Customisation is going to be a arrive. Once there, Alice uses a tab- ing a solution to the human awk- Walmart in the US and, soon, super- While digital shopping will con- key trend [in fashion]. We are going let to select any items of clothing, wardness of trying to get clothes in markets across the UK. Its robots What consumers want from technology in store and online tinue to grow, this isn’t to say that to see a shift from traditional to which are then delivered straight different sizes once in a changing can keep a tally of stock at twice Online In store brick-and-mortar stores will dis- on-demand manufacturing [of into a double-door wardrobe in a Customisation is going to be a room,” says Ms Finguerut. “This the efficiency of a human staff appear completely. Instead they bespoke, tailored dresses and changing room. If she wants to try will shape future retail habits. I member, according to Red McKay, Site/app that loads quickly will be reinventing themselves suits],” says co-founder Marianna on a different size, she requests key trend. We are going to see try on a lot more sizes and styles the company’s European manag- 57% and co-existing alongside e-com- Ferro. “Flair Atelier is putting it via another tablet, places the that I might not otherwise, increasing director. a shift from traditional to on- Appealing design and videos merce stores in an omni-channel the consumer at the heart of item that doesn’t fit her back into ing the likelihood of me making a “The result of incorporating retailing environment. the process.” the wardrobe, and the clothes are demand manufacturing purchase. I’m also more likely to this technology into future brick- 54% and-mortar stores is simple,” says Digital coupons or online reward/loyalty apps Mr McKay. “For retailers, sales 45% and profit margins will increase Online ordering for instant pick-up in store with better availability of products. For customers, the shopping 45% experience will improve with the hope that they will always be able Automated checkout to purchase what they’re looking 36% for without delay, whenever they Smart shelves with sensors to maintain inventory need it.” 29% Robots operating on shop floors is a contentious issue. Margiotta, Virtual/augmented reality an independent grocery chain in 23% Edinburgh, was the first Scottish Pop-up store openings retailer to hire a robot into one of 22% its stores at the start of last year. Fabio was tasked with welcoming Riverbed 2019 14 FUTURE OF RETAIL RACONTEUR.NET 15

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Smartphones 01 In the immediate future at least, bricks- and-mortar stores won’t remove human staff

Jessops

When photographic retailer Jessops went into administration in January 2013, 187 branches closed their TURNAROUNDS doors. The business failure of a com-

pany, which had been trading for 78 Images Keeble/Getty John years, came as a result of competition from digital alternatives and the burden of high property rents. Four beacons But all was far from lost. A few weeks later, celebrity entrepreneur Peter Jones, of BBC TV’s Dragons’ Den fame, stepped in to revital- ise the business. Having initially of hope amid started again with just two stores in London and Birmingham, he would 2 go on to rebuild the Jessops portfo- just selling cameras in glass dis- responded. “Those creditors who lio, through the strategic reopen- play cases. These new, modern lost money or the landlords who ing of stores in profitable locations outlets offered express photo- lost tenants, or were forced to rent retail gloom and partnerships with other retail- graphic processing in 25 minutes, at a lower yield, might not see it as ers, including opening branches and employed experts to advise on a turnaround, but the business was within Sainsbury’s supermarkets. equipment and techniques. rescued. Jobs were saved and the From luxury retailers to discount stores, retail Crucially, the digital offering of the K2 Partners’ Tony Groom says business has become profitable,” he company was also overhauled. Jessops is a prime example of says. “You could argue that a camera business failures are strewn throughout the sector, In-store things were different too. where the fundamental business is just a commodity, until you realise but despite the gloom there is a handful of The newly revamped shops weren’t model was changed and customers you might need some advice.” businesses offering hope to the strugglers

Joe McGrath

n the world of retail, busi- institutional investors and lend- but we are in a perfect storm, with I ness failures are easy to ers are looking for assurances that rising rates, falling footfall and a Images Keeble/Getty John find. Identifying suc- the loans they have made [to land- fragile labour market.” cessful turnarounds, on the other lords] are safe.” Mr Murphy’s sentiments are hand, is far more difficult. Even The issue of property rents is the shared by many in the industry. the professionals paid to inject number-one recurring issue in the In fact, of six insolvency and turn- new life into troubled businesses failure of retail businesses during the around practitioners, only two admit that the high street is not the past decade. While turnaround prac- could offer what they believe to be place to hunt. titioners are urging the use of rents genuine success stories. However, “The general consensus is that that are linked to a retailer’s income, while the successes may be few the high street will see many more landlords are reluctant to accept and far between, there are a hand- failures in the year ahead,” says such terms as their lenders want cer- ful which act as a beacon of hope Simon Thomas, partner at corpo- tainty of their ability to repay loans. to strugglers. The key, it seems, 3 rate recovery group Moorfields. “The tide is going out and we are could be to cut back significantly Ryman collapsed in 1995 under the bur- ordering and introduced a mail order “People know there has to be starting to see who doesn’t have on fixed costs, change the manage- den of high rents. service a year after the purchase, fol- a correction on the high street. bathing shorts on,” says Tony ment team and completely revamp Another TV entrepreneur cred- Having operated his own conces- lowed by a website two years’ later. Retailers cannot afford the cur- Murphy, director at Harrisons. the revenue model. ited with a successful turna- sions in larger Ryman stores prior The company’s marketing was over- rent level of rents, valuations “Landlords are vehemently against Here are four businesses that man- round has also graced the panel of to the firm’s collapse, he used this hauled, spearheaded by high-profile are coming under pressure from company voluntary arrangements, aged to turn around their fortunes: Dragons’ Den. Theo Paphitis, who relationship with the directors and sponsorship of the English Football these days is better known as the snapped up the company’s assets League, a deal that would run for 20 chancellor of Solent University, from the receivers. years. The company now has more took stationery retailer Ryman Even way back in the mid-nineties, than 200 stores nationwide and a Music Room Direct by the scruff of the neck when it he recognised the power of direct successful digital platform.

Specialist mail order group Music Room Direct brought in turnaround

Music Room Direct Room Music practitioners when their fixed costs Theo Fennell began to erode the business’s via- bility. The company, which special- In 2017, high-end jewellery group Theo ises in music-themed arts and craft Fennell, founded in 1982, called in gifts, was struggling with the finan- administrators after the company was cial burden of maintaining a large unable to escape a host of fixed costs. warehouse. While technically not a business

When turnaround practitioners Peter Hogan/Alamy Stock Photo failure, the company was juggling looked at the figures, the big ware- rent commitments at premium loca- house was deemed to be a fixed cost tions in London’s Chelsea and in that could no longer be justified. Harrods’ department store, and Instead, the business was restruc- employed around 50 people when it tured into a digital retailer with called in insolvency group BDO to dis- a smaller stock. Items that could cuss a rescue. not be accommodated in the new, However, the jewellery designer smaller, storage space were ordered himself would later play a key role in directly from the manufacturer. the rescue of the business, leading “What we did was remove all the a management buyout of the group, fixed costs,” explains turnaround having wooed private equity inves- practitioner Tony Groom of K2 tors. Within a few weeks, Theo Fennell Partners. “The business had been had secured a deal with smaller busi- operating for around a decade as a ness investor Enact, which is man- catalogue business and what we did aged by the better-known Endless was turn it into an online retailer. private equity group. The company Every sale now makes money for the refocused on producing a greater company and the stock sits on the number of bespoke pieces for custom- 1 balance sheet.” 4 ers and reducing its cost base. 16 FUTURE OF RETAIL RACONTEUR.NET 17

Jessops

When photographic retailer Jessops went into administration in January 2013, 187 branches closed their TURNAROUNDS doors. The business failure of a com-

Joe McGrath

Specialist mail order group Music Room Direct brought in turnaround

The real challenge for Starbucks and Luckin is not to steal customers AI-based solutions help meet from each other, but to expand the WANG ZHAO/AFP/Getty Images ZHAO/AFP/Getty WANG consumer base of coffee drinkers increasing customer expectations Few industries have been as fundamentally impacted by the digital revolution as retail China and the United States. While drink-in café culture Chinese consumers have a his- lags behind ecommerce in cof- tory of boycotting foreign compa- fee retail, there is a growing taste nies; in 2017, the South Korean con- for boutique destinations, espe- umerous high-street retail- glomerate Lotte was forced to close cially in China’s metropolitan N ers have closed down and nearly all its supermarkets in China hubs. Starbucks opened its big- been replaced by once after outrage at the installation of gest branch in the world, styled as up-start ecommerce firms that have a US missile-defence system on an artisan roastery, in Shanghai in now become household names in Lotte-owned land in South Korea. late-2017. their own right. There are many rea- Although aimed at North Korea, But there has been some fallout sons behind this shift, including rising China believed the move made from ecommerce’s seemingly inex- overheads and poor management, but Chinese military secrets vulnerable. orable rise in China’s food and bev- a considerably improved customer Starbucks has so far escaped erage sector in its impact on the experience is the key factor that is such a fall from grace, but ongo- environment. According to The driving consumers to innovative online ing tensions could jeopard- Economist, 65 million meal con- shopping platforms. ise the American coffee chain’s tainers are discarded every day in “When you consider what is making second-biggest global market. China. A Luckin delivery comes these companies successful, the fact Starbucks hopes to have 6,000 with at least two layers of dispos- that they are constantly looking for stores in China by 2022. able packaging, whereas Starbucks ways to create strong relationships with COFFEE Professor Towson argues that the sells reusable coffee cups. There is their customers, through making their real challenge for Starbucks and also the resource cost of sending experience personalised and unique, Luckin is not to steal customers deliverymen on mopeds around stands as a clear strength,” says Ivan from each other, but to expand the the city to deliver single coffees to Mazour, founder and chief executive consumer base of coffee drinkers. thirsty customers. of Ometria, a retention marketing plat- “Increasing consumption in China Ms Zhang is among those who form for retailers. The Chinese coffee At a time of intense competition in the is the mother of all coffee opportu- believe there should be a system nities,” he says. of recycling the packaging. “It is a retail industry, it is vital for firms to offer a But most consumers do see common problem with all kuaidi meaningful point of difference as it’s no chain that wants to there being a choice between the [delivery] services,” she says. “On longer enough to compete on common- two. Despite Luckin’s homegrown the one hand, you have to make place benefits such as free delivery and appeal, some remain unconvinced. your products look nice and profes- returns. The only meaningful differentia- Jasmine Xie, 23, runs a creative sional, but on the other, it’s hard to tor left is the customer experience, with take down Starbucks talent and production company in keep it environmentally friendly.” customers who feel they have received Beijing. She thinks the Starbucks China is still a relatively cof- a truly special and unique experience brand is still more “cool” than fee-light nation. Per capita con- being far more likely to come back and Luckin. “We all know Starbucks sumption averages only three cups buy from that retailer again. A startup is on a reducing operational costs, and Luckin employee for bulk orders, making it popular coffee isn’t great, but the cups a year, compared with 250 cups in Customer expectations have signif- customers order via a dedicated preparing orders with office workers. For Ms Zhang, have already become a kind of the UK and 363 cups in America. icantly increased over the past few “The marketers we work with are understand their interests, retail- “It all starts from understanding at a branch of the years, directly due to the personalised excited about the creative side of data- ers need to utilise innovative AI tech- the customer. Without this, you can’t mission to overtake app rather than visiting a store. fast-growing chain value is the main appeal. “The fashion accessory,” she says. “It’s However, it is a market that is rap- “Food and beverage is getting in Beijing price is cheaper than Starbucks,” cool to walk around with a cup of idly expanding; it has grown eight experiences provided by tech giants driven solutions; they are actively look- nologies to bridge this gap. The same create a great experience for them the biggest coffee seriously disrupted by digital in she says. “If the quality is fairly Starbucks; we also spot it in street- times faster than the world aver- such as Netflix, Amazon and Google. ing for ways to create experiences cus- research also indicated that customers or establish a long-term relationship. chain in the world China,” says Professor Jeffrey similar, why wouldn’t you choose style shots of celebrities, models, age, according to the International But the true power of technology has tomers value. A perfect AI system won’t are happy to see what improvements AI Without unifying all the data relating Towson of Peking University. something cheaper?” But she is also fashionable people.” Coffee Organisation. With millen- yet to be harnessed by the vast major- be visible to the customer, but it will can bring to their shopping experience, % to each customer, it’s difficult to fully ity of retailers that are on the whole facilitate great experiences for shop- with 62 per cent of consumers com- 75 interpret what the customer wants,” through its stripped- “Delivery on demand is common.” motivated by patriotism. “This is a Ms Xie appreciates the atmos- nials accounting for 40 per cent of But until last year, Starbucks didn’t local brand and we are supposed to phere of Starbucks’ drink-in coffee-drinking, there are no signs still using generic marketing cam- pers,” says Mr Mazour. fortable with the prospect of brands explains Mr Mazour. back, streamlined offer delivery, which Professor support local brands,” she adds. branches. “The [Starbucks] store of the taste for caffeine abating, and paigns lacking the precision of artifi- Over the next couple of years, AI will using AI to make marketing better. of consumers do not feel A retail-specific solution that con- Towson describes as “almost a Some analysts have speculated feels almost like home and you for most retailers environmental cial intelligence or AI-based solutions. continue to improve how retailers Ometria’s customer intelligence that brands fully understand nects every possible customer touch approach crime in China”. that Starbucks will be a victim of the know the quality of the space is concerns will be secondary to cash- The gulf between the experience that understand their customers interests layer applies AI technology to each their interests point, predicts their future behaviour Criminal or not, it meant fallout from the trade war between going to be good,” she says. ing in on this golden opportunity. people are getting from innovative and work in unison with machines to individual customer and works out an and then powers all the marketing Starbucks was missing out on a companies and slow-moving retailers ensure the most personalised messages individual’s affinity towards a category, experiences can be a game-changer $37-billion take-away industry is clear to see. are being promoted. brand or message and then enables the for forward-thinking retailers. until last August when it part- “The biggest shift in the way retailers Mr Mazour knows first hand that this marketer to send the message only to Ometria have become the experts STARBUCKS V LUCKIN, BY NUMBER OF OUTLETS nered with the Chinese tech giant market to potential customers is that innovation is happening now. “We are that audience, safe in the knowledge % at building unique cross-channel Approximate numbers of both company-owned and licensed stores to the nearest 100 they are urgently realising the need to already many steps along the journey. they will be engaged. 62 marketing experiences in this new Alibaba to offer delivery. Luckin match these improving experiences We work with more than 150 retailers “The results of our pilot project led to AI-powered retail space. is also beating Starbucks on Starbucks Luckin price. A latte from the American 4,500 seen in other sectors. Many retail- that have received approval from over a 40 per cent increase in revenue from of consumers are fine with the “We are not just the technology pro- chain costs $4.28 compared with ers are now actively looking to create 100 million customers to use their data the targeted message, illustrating that a prospect of brands using AI to vider, but also a key partner to the Luckin’s $3.54. experiences unique to every customer to improve their experiences,” he adds. predictive understanding of customers make marketing better retail brands we work with and help Luckin’s sudden popularity has 3,600 4,200 to meet these demanding consumers Data-driven insights give retailers the not only improves engagement levels, them transition from the old world Amy Hawkins won it a spot on the fast-growing needs,” says Mr Mazour. power to understand deeply the com- but also increases sales,” says Mr Mazour. of ineffective campaign-based mar- list of Chinese unicorns; despite 2,900 Machine-learning technologies and munication preferences of each indi- The ability to personalise marketing keting to a perfect world of marketing hinese startup Luckin recording a loss of $116.34 mil- AI tools are playing a key role in the vidual consumer, ensuring they remain messages is more than just valuable to experiences that customers will love,” C Coffee has a mission: lion last year, it closed 2018 with a drive for more personalised customer engaged. Many of these preferences retailers, it’s essential to their survival Mr Mazour concludes. “To defeat Starbucks in $200-million funding round that communications. As the number of will shift over time, requiring retailers in an increasingly competitive mar- 60% China,” according to chief operat- took its valuation to $2.2 billion. ecommerce customers around the to update their customer profiles on an ketplace. The traditional way of mar- ing officer Qian Zhiya. It’s already According to chief marketing world grows past two billion, the data ongoing basis. keting has always been focused on the 2,000 making good headway, last year officer Yang Fei, the multi-million points created by these shoppers will The end-goal is to get the customer concept of a campaign, but retailers of millennials would be willing opening its first 2,000 branches in loss was in line with the company’s become even more difficult to manage profile to be as close as possible to the are now able to change this outdated to actively give away more data For more information please China, while Starbucks has 3,600. expansion goals. “What we want at and effectively analyse. internal mindset of the consumer, as approach and create unique messages about themselves in return for contact [email protected] The company has since announced the moment is scale and speed,” Processing all types of customer new customers are unlikely to become that resonate with customers. better marketing experiences or visit www.ometria.com plans to open a further 2,500 out- he says. data, and using them to create a mean- regular buyers if they have a bad experi- As the interactions between cus- lets in 2019. Rebecca Zhang, 34, a travel agent 0 ingful and predictive understanding ence with a brand. tomers and brands continue to evolve, The research was conducted by Censuswide, with Luckin’s success lies in its inno- in Beijing, orders Luckin on a 2017 2018 2019 of customer behaviour in real-time, is With research commissioned by Ometria can help retailers to become 1,006 general respondents in the UK between June simply not something a human can do Ometria finding that 75 per cent of better equipped to meet increasing 13-14, 2018. Censuswide abide by and employ members vative business model; most of weekly basis with her colleagues; of the Market Research Society which is based on the its branches are take-away only, the coffee company offers discounts *Based on Starbucks' pledge for net new store growth of 600 per year Starbucks/Luckin 2019 without AI. consumers do not feel brands fully consumer expectations. ESOMAR principles 18 FUTURE OF RETAIL RACONTEUR.NET 19 Commercial feature