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World Retail Congress 2023

World Retail Congress 2023: Transforming for resilience

By Miya Knights, Publisher | Thursday April 27 2023 | UPDATED 28.04.23

Purpose, resilience and transformation emerged as the key themes shaping retail priorities and technology investments, Retail Technology discovered in Barcelona this week

Increased sustainability, building resilience in the face of continued uncertainty, and the ongoing transformation to become digital-first businesses are topping retail agendas.

These were the recurrent themes that emerged from discussions among retail leaders at this year’s World Retail Congress (WRC), held in Barcelona earlier this week.

In fact, exclusive research released by Boston Consulting Group at the event revealed their top concerns in 2023 as consumer confidence, rising costs, and supply chain volatility.

In response, the general consensus was that retailers need to go ‘back to basics’ and refocus on how to transform their businesses in ways that support their core competencies.

Going back to basics

Indeed, a number of executives were at pains to remind their peers how brand, product and purpose, alongside the customer, should be their driving forces, strategically and tactically.

Stuart Machin, Marks and Spencer (M&S) CEO, noted how the UK retailer was going back to basics to weather the macroeconomic impact of Covid and recent geopolitical disruption.

The grocery and department store chief said: “At nearly 140 years old, we’re protecting our heritage and going back to our core to put product at the heart of everything we do.”

But he stressed how important it was not to lose sight of what the customer wants digitally, where M&S serves customers across a wide demographic spectrum and age groups.

“We have 16.5 million customers on our Sparks loyalty programme and my team’s told me the card’s going,” he said. “But my mum’s 72, is internet savvy, and yet, still likes the card.”

Understanding the customer

Marcella Wartenbergh, CEO of fashion group AWWG, which includes Pepe Jeans and Hackett brands, agreed it was important to fit the technology to the customer needs.

“We must put the customer at the centre of our decision-making where, ecommerce is just a window to a brand in less well developed regions, like Spain, for instance,” she declared.

Unlike M&S and AWWG, Wumart was founded in 1994 as a digital-first retailer and has since grown to become one of China’s largest supermarket and home improvement chains.

Ying Xu, Wumart CEO, explained how its first store showcased how technology could help retailers better serve their customers. “But the customers shouldn’t see the tech,” she said.

Spotlight on profitability 

Another theme was the role of digital within a customer-centric strategy in helping retailers rightsize their tech strategy. Research found this was vital for maximising profitability.

A joint AlixPartners and WRC 'Digital-First Retail' Report analysed 50 public US retailers across several sectors (including apparel, department stores, hardlines and specialty retail).

The average online penetration of these 50 retailers grew from 9.4% in 2012 to 25.6% in 2022. But their profitability (measured by average EBITDA percentage) declined from 13.8% to just 8.3%.

Régis Schultz, CEO of UK-based sports fashion retailer JD Sports, was clear on the solution: “Don’t do code. We do stores and customer experience. Let tech companies do the code.”

Strategic tech collaboration

As Ocado Solutions CEO and Executive Director, reselling its grocery supply chain systems, Luke Jensen, agreed with Schultz that retailers should stick to what they do best.

“We invest $400 million in R&D [research & development], which only a grocer the size of Walmart could match. But this becomes a shared R&D pool for clients,” he commented.

Artificial intelligence (AI) was perhaps the most talked about technology development that retailers felt they needed to collaborate over in order to take advantage of its benefits.

Carsten Keller, Direct-to-Consumer Vice President for online footwear retailer Zalando, warned the biggest change as a result of AI adoption would be cultural.

Intelligent retail goes artificial

According to Keller: “The biggest challenge in an AI-empowered world is to take your people along with you and make sure they are upskilled to use it to be more productive.”

He also urged retailers to use AI to make the customer experience more exciting. By contrast, other executives were excited over the potential of AI to automate key tasks.

JJ van Oosten, former Chief Digital Officer of home improvement giant, Kingfisher Group, said: “With 20 million SKUs [stock-keeping units], ChatGPT could organise product data.

“AI also has the ability to personalise recommendations in milliseconds based on the channel, where shopping assistant bots and call centres will change drastically.”

Data and sustainability converge

The topic of purposeful retailing and its role in delivering the best customer experience irrespective of sales channel also came up time and again at the event.

Ganesh Subramanian, Founder and CEO at fashion analytics provider Stylumia, summed up discussions by saying: “Build transparency into processes by using data.

“Use the data to reduce waste by putting the customer at the heart of those processes, and use its collective knowledge to democratise intelligence.”

He stated that one Stylumia client had increased the saleability of their products by analysing what colour yellow sold best. Selling more also meant fewer items went to landfill.

“They [analytics engines] are built to optimise economic decisions, but we also need to build engines that can help consumers make more responsible choices too,” he added.

Omnichannel comes of age

While digital, data and AI dominated tech-related topics at WRC this year, maintaining a consistent and seamless customer experience remained a perennial discussion topic.

Even Dame Sharon White, Chairperson of the John Lewis Partnership, admitted online sales had risen a further 20% during the pandemic to make up 60% of the retailer’s sales.

In fact, the food and department store retailer announced the same day that it had made a five-year strategic investment to develop its customer data and loyalty capabilities.

Christophe de Lapuente, Chairman and CEO of Selective Retailing for luxury brand house Moët Hennessy Louis Vuitton (LVMH), said he still felt the term, “omnichannel,” was valid.

He added: “It’s about a world where you give the consumer a choice over where they like to buy. I use the acronym “ATAWAD” – anytime, anywhere, any device. That’s what it’s about.”

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