Lessons from the frontline – World Retail Congress

Every retail marketer can learn from a quality international conference, and they don’t come any bigger than the World Retail Congress. Sean McDonell, National Sales Manager, Salmat, shares his insights exclusively with Power Retail readers from the WRC 2010 in Berlin.

DAY 1:

Communications Masterclass

Guy Bellamy, Managing Director, FD Consumer Dynamics, delivered research into news media and the way consumers are engaging with news content.

Guy set the scene of a changing retail landscape. Post the GFC in the UK, 35% of consumers indicated they would avoid high street sales to avoid impulse buying (Sept 2010) – an interesting consideration when advertising and ‘sales’ have often been the solution in slow markets.

  • Looking at media popularity and influence, online had the biggest influence on those above 45 years at 60%, while TV influenced more of the younger than 35 years audience at 83%
  • When required to pay for news, 93% of respondents indicated their relationship with news would change online. 37% would become more choosey in what to follow, 28% would follow less and 24% would follow fewer sources.
  • Interestingly, 60% would drop online media before TV (streamed) 51%, radio (streamed) 42%, city paper 27%, local paper 21% and mobile 20%.Considerations

o    Consumers are spending more time following news, so as retailers how are we communicating?

o    Popularity and media influence are not the same thing

o    Understand the media mood of your audiences and the topics they want to follow

o    How many stories are about you? How many are about the customer?

o    Media landscape – consider an ‘and, and…’ approach rather than an ‘either, or’ one

*All research was UK specific

Making sense of it all – responding to the challenges of the post-recession world

Chaired by Patience Wheatcroft from the Wall Street Journal, this session opened with overviews from Deloitte and the European Central Bank.

Firstly, Dr Ira Kalish from Deloitte presented a global economic and retail outlook, with what to expect in 2011 and beyond.

  • Across the US, expect more consolidation and more non-mall locations as retailers focus on consumer experience and individual branding.
  • In Europe there is need for reform in Southern Europe (Greece, Portugal, Spain) while demand in Germany and France is still strong.
  • Dr Ira noted that many foreign multi-nationals had ‘given up’ on the emerging Japan market as it is simply too difficult to succeed. Locally there has been exceptional growth of a number of specialty retailers.
  • India and Brazil are set for continued economic growth. There is rapid retail modernisation and improvement in income distribution, ‘poor to middle class’.
  • Russia hit hard by GFC, with recession recovery driven by energy – oil and gas. This recovery is driving a strong consumer sector.

Gertrude Tumpel-Gugerall from the European Central Bank (ECB) highlighted that there is momentum in the ‘Eurozone’ GFC recovery, however detailed challenges still lay ahead in retail.

  • Q2 sales from 2008 against 2010 are significantly down across many Eurozone countries (down about 2% overall)
  • Greece 17%, Slovakia 14%, Slovenia 12%, Spain 7%, Malta 7%, Ireland 6%, The Netherlands 6% and Cyprus 5% were all down by more than 5%
  • Only Luxemberg 7%, France 3% and Austria 3% had an increase in retail sales in 2010 against 2008 Q2
  • Interestingly, banks are slow to embrace mobile technologies. More persuasion is needed to shift traditional wallets to mobile phones.

Sir Stuart Rose from Marks & Spencer provided advice for retail moving forward:

  • Focus on product innovation and embrace technology
  • The consumer wants endless amount of options, and if you’re not in the option game you’re a loser.
  • Sustainability = trust – go green with no cost, or with less cost.

Mindy Grossman, CEO at HSN Inc (US Home Shopping Network) indicated that in a competitive retail world, having clarity for your brand, vision and a compelling experience is paramount to success post GFC. Interestingly, HSN is one of the biggest content contributors to Youtube.

  • Foot traffic, or indeed website traffic, and the concept of getting consumers there is gone – access is on the consumer’s terms.
  • Senior leadership was identified as a key element for success in an evolving retail environment – Grossman suggested a culture towards like objectives and collaboration across organisation was paramount. She noted HSN’s improving staff engagement scores reflect the business’s success.
  • Retailers cannot continue to cost cut, but must focus on ROI and operational disciplines. Consumers want to engage with ethical companies, but don’t go green for the sake of it – you must have a logical value proposition.

Heinz Krogner, Chairman of Esprit believes retailers have an opportunity to strengthen their current position. “Sharpen your image, tell your customers who you are,” he urges.

  • You must continue to grow – if you shrink, you are gone
  • Target your audience – give your consumers a range of options to engage with you, and focus on retention rather than acquisition
  • You must move faster in a virtual world. The younger generation doesn’t differentiate channels – 5% of apparel purchases are made online in Europe currently, and in five years it will grow to 40%.

Phillip Schindler, VP Europe at Google, said the traditional purchasing process is being ripped apart. Navigation 10 years ago was across a few sites – now there is an information explosion online with the web being the best business partner you can have.

  • Is the mobile phone becoming the new wallet? By 2015 mobile web will surpass PC, with 1 in 5 mobiles currently sold being smart phones. Retailers’ focus now is around all things mobile and search-centric navigation.
  • Google research suggests $1 invested in search = $10 in sales.
  • 60% of retail sales are influenced by online research, with 30% of US consumers comparing prices in store.
  • As phone technology develops, improved connectivity will see the mobile become a richer retail device.
  • The discussion is no longer offline and/vs online – at Google, they talk about ‘no line’.

How multichannel is transforming the retail model

This was presented by Tony Stockil, CEO of Javelin Group, who presented detailed research and learnings from client experience on the important web to store trend. He outlined the key processes in implementing e-commerce and multichannel retail:

  • Define the strategy, plan the operations, select the technologies, build the solutions
  • Drivers of e-commerce and market penetration are wealthy populations; internet/broadband penetrations; home shopping infrastructure; centralised retail; concentrated populations.
  • E-commerce penetration in leading markets is US 6%, UK 8%, Germany 4%, France 3%, Spain 1%
  • Of the UK’s 8%, e-commerce sales are dominated by store-based retailers at 59% (35% non food, 24% grocery), with 27% pureplay dotcoms and 14% for cataloguers. Interestingly, France is dominated by dotcoms and French cataloguers.
  • The UK non-food retail market will shift further towards multichannel retail over the next 10 years
  • Multichannel Retail is here: electronics, home improvements, furniture and homewares will drive the web to store growth

What are your thoughts on these insights? Learn something new or as expected? Share your own insights into the world of online retail below.

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