How do customers become fans? What keeps department stores from becoming extinct and how does customer data help to provide perfect service? Retail experts provided answers at the GDI International Retail Summit. A summary.
“The best technology companies are increasingly also trade-relevant," predicted GDI CEO David Bosshart. The ones who are able to quickly implement new technologies have advantages. It is about looking at which stages of the value-added chain are still needed.
Those who are clever and fast as Uber would have a big learning advantage, even if they had to row back a little bit in between. "The best minds in an industry are never on the regulatory side."
It is no longer primarily products which retail offers, but increasingly services. These should be easy to understand and easy and safe to use. The value-added chain is changing into a value-added network.
The increasing data stream is changing the structure of the competition. Today, every retailer is also a media company and logistics provider. Traders should ask themselves: "How do I get access to data that is relevant to my business?”
Chris Sanderson: "As an industry, we are 50 years behind technology."
“Sucessful retail is about one simple thing: knowing your customers to deliver what they don't even know they require.," said Chris Sanderson, co-founder of The Future Laboratory.
Desiring a product is deeply human. “I shop, therefore I am." Therefore, it is essential to better understand ones customers. With his consulting firm, Sanderson is currently developing a platform that will be able to precisely identify the wishes of a company’s customers.
Sanderson encouraged the retailers: "We will still want to go to stores in 2050," but he also warned: "Most stores today feel like a morgue, bring action to your stores!, thats what generation D looking for!“
The Millennials have now settled in their homes, and their shopping behaviour is changing. This generation would rather borrow than buy. Possession is less important to them than health and sustainability.
The Jonesers' generation, 50 years and older, were largely ignored by retailers. These customers would have time and money, but felt forgotten by retail. Anti-age
ing products are not what they were looking for. Currently, 50 % of the inhabitants of the US are over 50 years old, a target group with potential.
The generation of baby boomers would not be impressed by products, but by the experiences of shopping.
Even if target groups could be clearly defined, brands should look to develop cross-generational products: "The step from demographics to psychography." And brands should ask themselves what it means to respond to the wishes of the generations and not just to design products for them.
Daniel Grieder: "It's no longer the big ones who eat the little ones. It's the fast ones that eat the slow ones."
According to Hilfiger CEO Daniel Grieder, innovations are not a question of age, but of mindset. Four strategic key issues are important to his company: a rolling (flexible) vision that can be adapted, products, speed and customer focus; and digitisation.
For speed and customer focus, it is essential to get as much data as possible from the customer to find out what he or she wants.
The growing impatience of the customers is like a Formula 1 race: "The information is collected in the garage, the shop and immediately brought into the next race, the next collection."
Tommy Hilfiger was the first company in the industry to have a digital showroom where buyers place their orders virtually. The order volume could thus be increased.
Grieder sees tomorrow's store as a 1/3 traditional retail store, 1/3 digital and 1/3 social environment where the experience counts. The new currency is no longer sales, but innovations per square metre.
The American brand is currently testing a personalisation lab in London where customers can have their clothes customised to their needs. Shopping screens, endless aisles and smart mirrors are further features of the store of the future.
Innovation is not only needed in the store, however, but also in the processes. "We have to increase our speed in order to be able to respond more quickly to the needs of our customers," says Grieder. "It's not the big ones anymore that eat the little ones. It is the fast ones who eat the slow ones," he added. In addition, it should no longer matter whether the customer buys online or in the shop. In the supply chain of the future, a large part of the collection will be digitally created and then go directly into production.
His young customers wanted to know where the clothes they bought came from. "We must offer this great transparency."
Barbara Gherardi: "With Fico Eataly World, we take our customers on an educational trip."
The Fico Eataly World food theme park opens in Bologna on 15 November. “It will be the world's first park to tell the story of our food from beginning to end," explained Barbara Gherardi of Eataly. On an area of 100,000 square metres, 140 establishments tell the story of food "from farm to fork". "Fico's goal is to take people on an educational trip."
Visitors can taste, test, try out street food, dine in local restaurants and see how products such as fruit, fish, oil or wine are processed.
Herbert Bolliger: "Slowly the chance for a hard discounter is developing again"
"I never thought Zalando's business idea would pay off with 60 % returns. I was surprised by that," admitted Herbert Bolliger, Chief Executive Officer of the Federation of Migros Cooperatives, at the GDI International Retail Summit.
In addition to digitalisation with self-checkout and apps, there is also a counter-trend in which customers wanted to experience the original. "You can overdo it as well. You have to find a good balance and don't decorate your store with screens all over."
Responding to the tough competition from discounters, Bolliger admitted: "I am surprised that discounters here in Switzerland are getting so close to our range of products and establishing themselves in the direction of supermarkets. Slowly the opportunity for a hard discounter is starting to develop again."
He advised his soon-to-be successor, Fabrice Zumbrunnen: "In times of rapid change, it is the task of managers to strike the right stakes." "You also need to have the courage to say no, or to jump on the bandwagon at a later stage.”
Markus Kaser: "We look around a lot in gastronomy and hotels. There's a lot going on there on the subject of humanity.”
Markus Kaser, CEO of Interspar Austria, said that his supermarket chain wanted to be modern and uncomplicated, which is probably one of the biggest challenges at the moment. In this process of change, the company looked a lot at the gastronomy and hotel industry: "Much is happening there on the subject of humanity. There's a lot to learn as a retailer."
The individual areas in the supermarket (bakery, café, meat counter) should behave like the best in the respective industry. Many of the ideas that were newly introduced in supermarkets came from other market participants: natural food or a craft beer shelf, and the supermarket chain set up the "Klosterladen" with a monk.
Willy Oergel: "Department stores have to transform themselves from a point of sale to a point of customer experience”
“One must have courage to do things differently, even if there is resistance," Willy Oergel, CEO of E. Breuninger, opened his lecture. Today it is not just about technology, but also about mentality: "Department stores have to change from a point of sale to a point of customer experience."
Breuninger has a stage, where it can make the difference, create experiences and trigger emotions. Absolute customer focus is the key to success. However, it must be based on the company's DNA, it cannot be put on from one day to the next.
Ultimately, it was all about customer experience, for which all points of contact between the customer and the company must be redefined. For Breuninger, this means today: in-store orders, click-and-collect pick-ups and changing rooms with "Magic Mirrors". "I believe in the future of multichannel."
But in order for the department store to be able to survive in the future, a rethinking at all levels is needed: "We have recognised that the speed of change also requires a new management system.”
Nick Brackenbury: "The next step in retail comes from products already having them where people are even before they know they want to buy them"
Even if the app of the e-commerce start-up NearSt is not yet running smoothly, customers would love it, said start-up CEO Nick Brackenbury. The apps enables customers to order products in the shops of your city.
Amazon's decision to open physical shops in city centres gives him hope that people will use his app.
"The next step in retail comes from products already having them where people are even before they know they want to buy them.“
The most important innovations in retailing are: predictive retail, social shopping and location aware shopping.
Interview with Nick Brackenbury & Thomas Herbert: "I don't say 'This is too crazy' anymore. Anything seems possible."
Nick Brackenbury's biggest challenge for his e-commerce app is outdated POS systems, where it is difficult to dock with today's technology.
For Thomas Herbert, the biggest challenge is to keep the customer in the center of attention. And nothing surprises him any more: "If someone had told me earlier this year that Amazon would buy Whole Foods, I wouldn't have believed him. So I don't say 'This is too crazy' anymore. Anything seems possible."
Amber Case: "Machines shouldn't act like humans. Humans shouldn't act like machines."
We live in an era where technology is constantly interrupting us," said Harvard researcher Amber Case. That's why we need "Calm Technology", which integrates silently into our lives. “The world is not a desktop, we have to restructure how we design these devices so they don't get all our attention." A good example of this is a tea kettle, which only informs us when the water is hot.
Another method is to make the invisible visible, such as blue and red light, indicating the temperature of tap water. "Machines shouldn't act like humans. Humans shouldn't act like machines."
The right amount of technology is the minimum amount needed to solve a problem. Technology should also adhere to social standards. Calm Technology enables people to achieve the same goals as before, but with less mental effort.
Stéphane Garelli: "The real problem we have today is the unemployment of capital"
“The real problem we have today is the unemployment of capital," criticised Stéphane Garelli, professor at IMD Business School and the University of Lausanne. We had a lot of money on the market, but it didn't do anything. Globalisation, a lot of cash and tax optimization led to mergers & acquisitions and the formation of large corporations.
China is now buying many companies overseas. Its M&A volume amounted to 225 billion US dollars in 2016. Also, a lot of money comes from companies in emerging markets. This is a great revolution.
Robots would replace more and more workplaces. Bill Gates therefore recommends that robots be taxed. But: what is a robot?
A new generation of self-absorbed selfie users who are tech-savvy is on the rise. This would result in a young employee with two years of work experience earning the same money as a 50-year-old because of his technological lead.
Josie Cartridge: "Forget your retail rules: customers are now in charge"
Josie Cartridge, customer director of fashion brand River Island, gave a tip to those present: "Forget your retail rules: customers are now in charge."
Every shopping tour today starts on a smartphone. The historical classification according to sales channels is outdated and creates chaos at a time when customers were expecting a comprehensive experience on all channels.
Brands' influence has also shrunk: "Brand loyalty no longer exists" - today, brands have to convince customers with their service and shopping experience and appeal to their customers on an emotional level.
River Island uses information about how customers interacted with their smartphone in the store and replenish their inventory using online search volume for specific products. On Snapchat, location-based ads would be played.
Her advice to the retailers in the audience: "Don't be afraid to try something new. It's all about testing and learning.” Brands should stay true to their values and not copy everything or go along with every hype.
Christian Viatte: "In an 'always-on-world', the service must be immediate."
Crowdservice Mila provides services based on the sharing economy concept. Private individuals offer neighborhood help via the platform. CEO Christian Viatte knows: "If you want to offer crowd services, you need a critical mass of service providers that participate". 90 % of all orders are now assigned within one hour at Swisscom, a user of Mila's offer. Viatte also said, "In an always-on-world, the service must be immediate."
The service staff involved deliver and configure, install and troubleshoot. This is how satisfied customers are created at low costs.
The service of the future can be provided by robots using artificial intelligence. Personal, local and authentic service, however, will become more important again due to automation. "Bots and humans will complement each other perfectly."
Charlotte Kenny: "Find the emotional side of your product and make it human"
There is no off-season in fan management," said Charlotte Kenny, head of fan services at Arsenal. With a team of 35 employees, she handles one million fan requests each year.
“The advantage for our customers: Fans give us their data without any compensation, so that they feel the belong to the club.” The quality of the service does not play such a big role as long as Arsenal wins. But as soon as this was not the case, the complaints increased by 50-60 %, also about things that had nothing to do with the game itself. "We manage emotions, not simple requests."
The service team would have thought about the use of chatbots. However, these could only be used for frequently asked questions in order not to endanger the fan relationship.
Kenny’s advice for retailers: "Find the emotional side of your product and make it human."
Patrick Schrems-Moreira: "Brands don't have to be perfect, but authentic."
Patrick Schrems-Moreira, Global Director of Retail Concepts at Adidas, gave the audience the following tip: "Give the do-it-yourself generation a unique experience that they can't find online.”
One target group of Adidas, along with the Y and Z generations, are the "creators": creative minds who no longer defined themselves by products and sought a higher sense of meaning in their lives.
Schrems-Moreira derived his brand philosophy from this: "We have to stand for something. If we don't, this is one of the biggest mistakes we can make in the future." In return, "brands don't have to be perfect anymore, but authentic."
Personalisation is the buzzword of the hour. However, individualisation should not stop with the products. Brands should also make the brand experience as personal as possible.
Farrah Hamid: "Our business model is a real light-model: no fixed costs, no training or full-time employees."
The London-based beauty delivery service Prettly offers beauty treatments from 7.30 a. m. to 11 p. m. in the evening by beauty professionals who come home to their clients. Prettly takes 20 % commission, which is favourable compared to the rest of the industry, says co-founder Farrah Hamid.
The start-up sees great opportunities as 58 % of women in the UK do not know that beauty on demand services exist at all.
What the Prettly team has learned since its foundation: "Measure and test everything, don't ignore the importance of the brand, define brand values, understand changing customer expectations, make the best of small teams, and get to know your competition."
Mario Sixtus: "The best recommendations are given to those who let themselves be watched in life."
Amazon generates 35 % of its turnover through recommendation systems. And the journalist and documentary filmmaker Sixtus is convinced that this still has upside potential: "Recommendation systems will become more than just a nice-to-have. They are about to make a fundamental change in shopping."
However, good recommendations are still very difficult to implement today, such as mediocre algorithms at Spotify, Netflix and Co. proved.
The willingness to be transparent is the cornerstone of good recommendations: "The best recommendations are given to those who let themselves be watched in life." This would mean that dealing with one's own private sphere would be as individual as, for example, eating habits.