Mar 24, 2016 - To meet demand, retailers must quickly collect, analyze ... When your business thinks, you can outthink.
CONGRESS REPORT DAY3 12-14 APRIL 2016 MADINAT JUMEIRAH | DUBAI
WE NO LONGER GO ONLINE, WE LIVE ONLINE. THIS IS HAVING A POWERFUL EFFECT ON US AS PEOPLE, INCLUDING HOW WE BUY STUFF Eric Tholome PRODUCT MANAGEMENT DIRECTOR | GOOGLE
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HIGHLIGHTS
DAY 3 HIGHLIGHTS AT A GLANCE
HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai receiving delegates and speakers from World Retail Congress.
THE FINAL DAY OF THE WORLD RETAIL CONGRESS AND WE LOOK BACK AT A ROYAL VISIT, PACKED AGENDA AND THE WORLD RETAIL AWARDS
/03
Welcome to the cognitive era.
BE THERE? BE USEFUL AND BE ACCOUNTABLE SAYS GOOGLE Online giant Google laid out three ‘mindset shifts’ needed for retailers to leverage mobile Google product development director Eric Tholome told World Retail Congress delegates in Dubai on the final day that retailers need to adopt a fresh approach to mobile in order to engage and capture consumer spending. He set the scene as he stressed: “We no longer go online, we live online. This is having a powerful effect on us as people, including how we buy stuff...We need people inside retail companies not to be thinking about stores or online but to be thinking like the consumer.” Tholome put forward a three point plan to achieve a “mindset shift”, which he dubbed “be there, be useful and be approachable”, as he espoused the power of mobile in particular. “Be there includes the three stages from ‘I need some ideas’ to ‘which one is best’ to ‘I want to buy it’,” he said. “An example is Media Saturn, which shifted to a store strategy based on screen planning [mobile, computer, store] and put its store inventory on Google. It achieved a 25% increase in mobile sales and a 5% increase in total sales.” Tholome also emphasised the need to “be useful” as he cited Sephora, which recognised that many of its in-store customers were using how-to videos for make-up and so created its own short tutorials, designed to be mobile-friendly.
We no longer go online, we live online. This is having a powerful effect on us as people, including how we buy stuff.
RETAILERS MUST SHIFT FOCUS TO SEAMLESS APPROACH “The landscape of omni-channel has been about fulfilment. That makes a lot of sense. But the next step in the evolution is to really get into experience,” said David Munczinski, founder and CEO of Brickwork Software at World Retail Congress yesterday. In a panel debate on ‘The next retail revolution’, Ken Seiff, managing partner at Beanstalk Ventures, agreed but pointed out that radical transformation could be cost prohibitive for retailers. Instead he recommended finding solutions that allowed retailers to adapt what they have. “The system is broken because the industry has been treating omni-channel in snap shots when really it is more like the moving images of video,” he said. “This has happened because the development has been focused on online and stores separately, without going back and forth, which is what consumers do. What we need is to find solutions that allow existing retailers to bridge their legacy systems without new players being able to usurp them.”
Eric Tholome,
PRODUCT MANAGEMENT DIRECTOR | GOOGLE
“Content should be fast and easy and it should make buying simple,” he said. Tholome said that retailers needed to “move beyond the last click” in their evaluation of omni-channel strategies and said “you need to measure digital’s impact on store visits and on store sales.”
HOW THE NUMBERS ADD UP FOR STORES AND MOBILE
57% The decline in foot traffic in-store in the US over the past five years 04 /
2.6x
The value per person of each store visit over the same period
64% In-store sales influenced by digital
If as a retailer you are not competing on convenience, then you must compete on experience.
The way consumers research, interact and purchase goods and services has dramatically changed. To meet demand, retailers must quickly collect, analyze and act on information to set them apart from their competitors. Cognitive computing from IBM understands virtually all types of data, and it reasons and learns over time, letting you turn insight into action. Retailers can use cognitive computing to differentiate themselves with customers and throughout the value chain. How can IBM help you become as responsive and relevant as you can be? When your business thinks, you can outthink.
IBM and its logo and ibm.com are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. See current list at ibm.com/trademark. Other product and service names might be trademarks of IBM or other companies. ©International Business Machines Corp. 2015.
RETAIL INSIGHT
David Munczinski,
FOUNDER AND CEO | BRICKWORK SOFTWARE
Visit ibm.com/retail
outthink demand
AWARDS
WORLD RETAIL AWARDS 2016 This year’s awards were presented at the Madinat Jumeirah on the final night The winners of the 10th Edition of the World Retail Awards were finally revealed at a gala event last night, with the awards recognising companies from Australia, China, India, the US, and the UK and introducing some new categories for 2016, including a special award honouring the memory of legendary retail designer Sir Rodney Fitch. Amid the celebrations, to mark the tenth edition of the World Retail Awards, Zadrian Smith, fashion director, Juliette, put together a fashion show. Those showcased included Hussein Bazaza, Dima Ayad, Abed Mahfouz, Bil Arabi and Nadya Hasan. “We wanted to do something very special this year and showcase the best of Middle Eastern design, displaying the opulent and rich traditional and contemporary designs that have placed the Middle East as an important gateway between eastern and western design within the fashion industry,” he said. Attendees were also entertained by pianists and a jazz singer performing an eclectic mix of jazz and contemporary hits to set the scene.
All the winners 2016: The people, companies and projects honoured last night
The Madinat Jumeirah provided a stunning venue for the Awards
Zadrian Smith, fashion director, Juliette, put together the fashion show
2016 WORLD RETAIL AWARDS WINNERS FUTURE RETAIL CHALLENGE Sponsored by: Chalhoub Group Fashion Institute of Technology New York
BEST CROSS CHANNEL CONSUMER EXPERIENCE Sponsored by: JDA
GOME Electrical Appliances Holding Limited
BEST HOLIDAY SEASON ADVERTISING CAMPAIGN
John Lewis
RESPONSIBLE RETAILER OF THE YEAR Sponsored by: Majid Al Futtaim
RETAILER OF THE YEAR Sponsored by: IBM
STORE DESIGN OF THE YEAR Sponsored by: Global Rich Business
RETAIL TRANSFORMATION AND REINVENTION Sponsored by: BCG
THE RODNEY FITCH AWARD FOR INNOVATION AND CREATIVITY
OUTSTANDING LEADERSHIP AWARD
Lush Fresh Handmade Cosmetics
Fang Suo Commune, Chengdu store
Eight Inc.
YOUNG RETAIL ENTREPRENEUR OF THE YEAR Sponsored by: Magrabi
T.J. Maxx/The TJX Companies Inc.
Aditya Birla Retail Ltd
Dr Gordon Campbell, Consultant to the Board and Former CEO, SPAR International
Julie Stevanya, Stylerunner
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RETAIL INSIGHT
NEW CHINESE REGULATIONS TO HAVE “PROFOUND EFFECT” ON SOURCING Li & Fung Group CEO urges retailers to move quickly to keep up with constant change Significant changes in Chinese policy will have a “huge profound impact on the entire world of sourcing,” asserted Li & Fung Group CEO Spencer Fung at the World Retail Confgress in Dubai. Speaking on the theme of ‘The future is here – it’s global, it’s complex’, Fung highlighted global changes across retail, distribution and the supply chain that retailers needed to be aware of no matter where their business was based. Fung highlighted China as the “biggest juggernaut” in the “whole supply chain world”, urging retailers to make sure they are aware of, and heed, any changes in this market. His own company, Fung Group, sources “more than 50% of goods” from China, and Fung estimated a “high proportion” of goods for all companies comes from China purely due to its sheer capacity. “China has gone through an immense amount of change in the last couple of years on the production side. In the last 12 Five Year Plan there was a stipulation of minimum wage increase of 13.5% every year. That really created an inflationary environment within China - on the production side and also on the consumer side - that really affected how we source goods and how a lot of people source goods,” explained Fung. However, he said another change was afoot, with this policy about to be reversed, meaning retailers need to adapt quickly. “Now there a huge change happening right now and I’m not sure if that’s been picked up by the news too much at the moment,” warned Fung. “The new ‘13th Five Year Plan’, if you look at the minimum wage policy, there is no national minimum wage policy anymore. The government is allowing each province to decide what to do with the minimum wage so there’s no 8/
LEVI’S CALLS FOR METRIC FOR EXPERIENCE In a streaming session entitled ‘Retail transformation, changing space into an experience’, Levi’s VP global DTC merchandising, Simon Haskell, said a metric was needed for experience that allowed it to be considered as part a “holistic view on return on investment”. “There are a lot of rational KPIs but people are irrational, we are emotional beings,” he said. Bikini Berlin creative director Nicole Srock Stanley said of her boutique pop-up mall in the German capital that establishing a location that entices people to come is at the forefront of the centre’s strategy. “If people come for fun, entertainment, joy, then you will sell them something too.” It was a theme picked up by HMV chairman Paul McGowan, who said that despite having an accountancy background he had been given a role as “director of fun”. Outlining the music and video retailer’s live events he said: “It’s the entertainment industry, it’s supposed to be fun. That interacts with online, because we produce content through the band performances. In an industry dominated by digital, we are driving up physical music sales.”
If you’re buying from China and you are thinking that wages will go up and up and up forever... you’ve got to rethink again. Spencer Fung, CEO | LI & FUNG
minimum,” he revealed. As a result, China’s biggest production province, Guangdong, immediately announced that the minimum wage would be frozen for two years. “That has a huge profound effect on the entire world of sourcing and for all retailers,” Fung asserted. “If you’re buying from China and you are thinking that wages will go up and up and up forever and started moving production let’s say to nearby countries and other countries, you’ve got to rethink again,” he warned.
For us as a small and specialist mall it is about authenticity and pushing the venue. Nicole Srock Stanley,
CREATIVE DIRECTOR | BIKINI BERLIN
RETAIL INSIGHT
COMPANY CULTURE “THE ESSENCE” OF TESCO BANK SUCCESS Principles of ambition and authenticity ring true despite digital revolution
CEO Viewpoint 2016: The journey to profitable omni-channel commerce The age of me commerce has arrived. The consumer is the new boss. The third annual JDA/PwC global survey of more than 300 retailers finds that only 18% of CEOs say they have eliminated operational silos and are delivering seamless omni-channel shopping experiences for their customers. How do your omni-channel credentials weigh up?
Download the report:
jda.com/ceo2016
In an address centred around the importance of great leadership in financial services at the World Retail Congress, Tesco group strategy director and Tesco Bank CEO Benny Higgins said that commitment to company culture was the “essence” of the bank’s success. Higgins revealed that Tesco Bank had grown customers by almost a third to 7.6 million over the past seven years. “The number of customers who trust us with their deposits has more than doubled in that time and the number of customers who borrow money from us has risen by 75%,” he added. “Since we set out on this journey we now have 90% of our customers buy and shop with us online so we are very much a digital bank. Also, interestingly, customers of Tesco who become Tesco bank customers subsequently spend 12% more with Tesco in the shops,” continued Higgins. Likewise, he said customers of Tesco who become Tesco Bank customers become 2% more likely to stay with Tesco. Looking forward, Higgins acknowledged that the digital revolution would drive great change in retail and banking, but said “forces unknown” would largely
The convenience of buying online means that “sooner or later” the majority of retail will move online, said Dr Eyad Alkassar, managing director – Middle East of Rocket Internet Group, founder of online fashion portal, Namshi. “It’s much easier to buy online. You have a much bigger shelf,” said Alkassar, who described the industry as in “transition” and said that the reason the move to online had not progressed further was because online players have not yet made purchasing and delivery fast enough. Stefan Siegel, founder and CEO, Not Just A Label, accepted that the “first reason for online shopping is always convenience”, but said this “is only true for certain product categories”. He said that to better compete with online, the “bricks and mortar” needed to include more of an experience in the shopping process.
shape the outcome. What would be important to maintaining success, he asserted, was the application of the principles on which Tesco has been founded – authenticity, objectivity, ambition and a focus, above all, on customers.
MARKS & SPENCER LINKS STAFF BONUSES TO SUSTAINABILITY Marks & Spencer employee bonuses are linked to sustainability targets, Adam Elman, the retailer’s global head of Plan A & Sustainability revealed at the World Retail Congress. Elman heads up Plan A, Marks and Spencer’s sustainability strategy that comprises 100 ethical and environmental goals. “We’ve got these big bold targets that we’re going after,” said
NAMSHI FOUNDER CLAIMS RETAIL WILL MOVE ONLINE
Elman. “It’s not going to work with the team on the side of the business. Everyone is really clear across the business about their role on delivering these targets. People are bonused on doing this. “This is as important to us as hitting our margin targets, hitting our sales targets, hitting availability targets – why would this be any less important?”
The first reason for online shopping is always convenience. Stefan Siegl,
CEO | NOT JUST A LABEL
/11
Strip Back to Basics Peeling off the first layer was a challenge. I felt so exposed, but in a good way. With every item I shed, a core truth was being revealed. Did it feel natural? Not entirely. But what I soon discovered was a real
SAVE THE DATE 12-13 OCTOBER 2016 Retail Congress Asia Pacific will take place in vibrant Kuala Lumpur on 12-13 October 2016. Join this exclusive networking event while gathering insights into growth market opportunities, enhancing the customer experience, how to profitably deliver an omnichannel strategy and more.
eye-opener. Not just to me, but to everyone. After I summoned the courage to strip right down, and we all took a good look, I felt renewed. Like the weight REGISTER YOUR INTEREST AT: RETAILCONGRESSASIA.COM
of history had been removed from my shoulders and my future path was clear. I had uncovered who I truly was and laid bare my full potential. When it began, I was a business. When it was complete, I was a business reinvented.
SECURE YOUR SPOT FOR AFRICA 2016 The 4th annual Retail Congress Africa will return to Cape Town from 1-2 November, 2016. Join industry leaders to get access to the latest insights and opportunities in this burgeoning retail market.
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THE FINAL WORD AROUND THE 2016 WORLD RETAIL CONGRESS The event was as ever full of great content, comments and communication on the stage, during networking and in streaming sessions
Global Powers of Retailing 2016 Navigating the new digital divide This report analyses the performance of the 250 largest retailers around the world based on publicly available data. Please visit www.deloitte.com/globalpowersretailing to download the report
For any retailer thinking about going international you absolutely need to put senior management behind it and believe in the vision.
We acquired HMV in 90 minutes with no due diligence but the germ of an idea of what to do.
I would like to have an algorithm, something that says ‘hey, your experiences are up or down.
Norman Jaskolka,
Paul McGowan,
Simon Haskall,
The biggest problem of bricks and mortar is we have stopped in some way including the experience in the shopping process.
Maybe in future bricks and mortar stores will have entry fees where you have to pay to visit them; maybe Dubai Mall will have an entry fee.
This forecasts the impending death of the merchant prince.
Stefan Siegel,
Eyad Alkassar,
PRESIDENT | ALDO INTERNATIONAL
FOUNDER AND CEO | NOT JUST A LABEL
14 /
CHAIRMAN | HMV
MANAGING DIRECTOR MIDDLE EAST | ROCKET INTERNET GROUP
VP GLOBAL DTC MERCHANDISING | LEVI’S
Paul Charron,
CHAIRMAN | AMERICAN APPAREL, ON THE FINDINGS OF The DNA of the Future Retail CEO
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