This year’s Shoptalk was one of the first big retail shows to come back in real life after a two-year hiatus and Andrew Busby, founder of Retail Reflections, was there to report on it and give his personal takes
Shoptalk brings people together (over 10,000 of them) from around the world and is a key fixture in the retail calendar.
Here are some of the highlights:
There were panels focusing on retail innovation and trends from Europe, then China and finally Latin America. However, there was one common theme: personalisation and humanising the digital experience.
In Europe, IKEA is focusing on speeding up the pace of digitalisation transformation driven by consumer demand. The Liverpool stores in Mexico noted that click and collect is almost ubiquitous for one simple reason: you can’t leave a package outside the door in Mexico.
It was standing room only for the China panel and we heard practically one thing only: Live streaming. By the end of 2022, the live streaming market in China is forecast to hit $4 trillion. But another fascinating trend in China is also all about humanising the digital experience.
In Latin America, the market is shaped by consumer expectations where the subscription model is rejected, and free home delivery is the norm. As if to crystalize the fact that retail across the globe is the same but different, Mexican consumers frequently visit shopping centers. Why? Because it’s a safe place to be.
It’s not every day that you get to hear about the forces shaping retail in 2022 from three major consultancies.
On this day: Bain & Company, Boston Consulting Group and NielsenIQ.
Here is a summary:
Aaron Cheris from Bain & Company said that retailers who can “see” across their end-to-end value chain will drive higher revenue growth, lower costs, increase market share, see better returns on investment and deliver improved stakeholder returns. So, there are many reasons to embrace sustainability initiatives.
Next up was Lauren Weiner from Boston Consulting Group who shared her thoughts on why retailers need to become media organisations. But to do so they need to build the right platform in order to compete.
Lorelei Bergin from NielsenIQ covered the third force shaping retail this year, namely inflation. She said this is going to impact the relationship between retailers and their customers: As the latter’s behaviour shifts through necessity, retailers will be scrambling - but technology will bridge the gap.
Lead with data to help retailers understand their customers and their behavioural shifts. “Digital used to be an outpost for the store - a nice little business - and now the store is a critical component of any digital strategy,” said Harvey Bierman, Chief Digital Officer at Christy Sports.
Everyone I spoke to at the conference said how delighted they were to be back in real life and this was echoed by the organisers. But, at the same time, speaker after speaker hailed the metaverse as “the next big thing” for retail. So, which one is it? Physical or virtual or can we have both?
Until we arrive at the metaverse future, there are some fundamentals we need to consider and that means consumer behavior and the role of stores.
And in a panel session it was my fellow RETHINK Retail influencer, Hitha Herzog who said that consumers want more access and that adding more channels adds to the shopping experience. Though this is a challenge for retailers, in that it is up to them to figure out how to target each individual consumer.
The discussion moved on to convenience and what shoppers are seeking, whether it be contactless payments, grab and go technology or easy checkout, and this threw up an interesting question: Can shopping ever become too convenient?
This point was echoed by Target. It shared that 95% of all e-commerce orders are fulfilled from stores, and to ease the customer experience, it is opening drive-through returns hubs where customers can take their return items without having to leave their car.
Stores and inventory
Antonio Nieves, CEO of Interior Define, refers to its stores as studios - and they don’t carry any inventory.
This was a different perspective from Macy’s chief store officer, Marc Mastronardi, who said it is looking at all their stores through the eyes of the consumer. Do they shop there? Use them as fulfilment hubs? Or use them primarily to browse and purchase online?
Whatever the answer, it serves to demonstrate that stores remain and will always remain a crucial and central part of retail businesses (pure-play aside). The emerging challenge however is digitalising them while retaining the human connection.
And this effectiveness of stores was underlined by Interior Define who said that when they open a physical space, conversion rates go up 2/3%.
The message from Shoptalk today was that whilst we all love to shop online, we love to shop in store even more. The store is dead, long live the store.
Shoptalk wrap up - the top eleven takeaways. This is a summary of the top eleven trends emerging from the conference as discussed in a panel session. My notes from the discussion and also my personal take on each:
The store is back
Part of the American culture is that shopping is part of media and entertainment. “The store is back but it has to be worth it”
Great to discuss just what is a store now? The role and purpose is evolving from shopping to browsing to becoming a fulfilment centre.
As one of the panellists commented, “In 2019 stores were considered a liability”. Amazing to reflect on that now in the context of retail in 2022. And also heartening to hear that the value of the store associate is becoming more and more appreciated.
Andrew Busby: stores never went away, it was just the popular view which grabbed headlines which said they did. It’s just that they will need to be better than before.
Profits are the new sales
2022 is the year when we’re going to be talking about profits (again). There’s been an awakening amongst investors that you can’t lose money indefinitely. Investors are getting impatient with the rate of customer acquisition.
We are now moving into retention models. We’ve seen some brands catapult to $100m in two years. Interesting that in order to drive profit many brands such as Warby Parker are opening more stores.
AB: Return on investment will become more critical than ever however the nature of retail is that it should be medium to long term. Will investors be patient of that?
New channels – content as commerce, metaverse & livestreaming
We are losing the definition of channels – consumers don’t shop in channels – will the metaverse be the means by which all the channels converge? Examples of brands playing in the metaverse are Pacsun, Estee Lauder and Forever 21 they are all reinventing their brands in the metaverse.
AB: the poll taken of the audience during this discussion reflected my thoughts, in the next 12 months the metaverse isn’t going to be as important as livestreaming. But whatever we think of the metaverse, it is a thing and cannot be ignored.
Checkout & payments – frictionless & flexible (consumer choice)
Consumers want choices to co-exist – if it creates extra steps in the process to create personalisation, give the consumer the choice.
Consumers who have the option to use a payment plan are purchasing more aspirational items eg. Klarna and other buy now pay later are driving bigger basket sizes.
AB: payment options and ease of checkout both online or in store are embedded in the customer experience.
Different customer bases eg. Gen Z have a very specific way of viewing the world – so where do you start in determining your brand?
Understanding what is authentic to your brand is incredibly important. Brands need to listen in order to understand. Brands should not fear to co-create with the consumer.
AB: consumers will more and more gravitate to brands which mirror their values.
Sustainability – a data problem
The success of sustainability initiatives is proving difficult to measure. Brands are all about making ESG claims for 2025, 2030 etc but the challenge is holding them to account.
Should sustainability equate to purpose? The nature of sustainability means that it is a journey and a process of continual improvement.
AB: greenwashing is an ongoing problem and the consumer is being fed information which can be misleading. More transparency is needed.
Loyalty is the gateway to personalisation. Personalisation is now with a small ‘p’ – in other words, 4/5 years ago we were charging into it, now we’re easing into it. The panel made the interesting observation that brands and retailers need to respect the mood their customer when approaching them.
AB: In order to join a conversation, brands need to seek permission to do so.
Consumer personalities and 9. Next frontier of data = emotional intelligence
Every company is a technology company and underlying that is data. Customer data, inventory data. AI and machine learning can try to interpret that however we need to do a better job of looking at the signals.
AB: brands and retailers have an abundance of data and they have an obligation to use it in a responsible manner. Which means being relevant and in context.
Cookie-less world get used to it
Marketing in a cookie-less world. Brands will need to migrate to other methods and opportunities such as TikTok, which in turn means we’re moving to a longer term view. The nature of digital marketing is evolving and the good news is that it is moving away from a transactional model.
AB: this goes hand in hand with loyalty and personalisation and can be interpreted as a more mature way of brands engaging with their customers.
Supply chain challenges
Well, it’s my comments here as the panel ran out of time!
AB: supply chain issues will continue throughout 2022 however a slow down in consumer spending caused by the cost of living crisis will mitigate this to an extent.
And that’s a wrap from Shoptalk 2022. Plenty to digest from a conference packed with content. By which time, Shoptalk Europe in London 6-8 June will be upon us. I can hardly wait.